AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
AASTROM BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 2834 94-3096597
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
----------------
24 FRANK LLOYD WRIGHT DRIVE
P.O. BOX 376
ANN ARBOR, MICHIGAN 48106
(313) 930-5555
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
R. DOUGLAS ARMSTRONG, PH.D.
PRESIDENT, CHIEF EXECUTIVE OFFICER
AASTROM BIOSCIENCES, INC.
24 FRANK LLOYD WRIGHT DRIVE
P.O. BOX 376
ANN ARBOR, MICHIGAN 48106
(313) 930-5555
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
COPIES TO:
T. KNOX BELL, ESQ. RICHARD R. PLUMRIDGE, ESQ.
DOUGLAS J. REIN, ESQ. MICHAEL A. CONZA, ESQ.
MATT KIRMAYER, ESQ. BROBECK PHLEGER & HARRISON LLP
DAYNA J. PINEDA, ESQ. 1301 AVENUE OF THE AMERICAS
GRAY CARY WARE & FREIDENRICH NEW YORK, NEW YORK 10019
4365 EXECUTIVE DRIVE, SUITE 1600
SAN DIEGO, CALIFORNIA 92121
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Common Stock, No Par Value................. $37,375,000 $11,326
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(1) Estimated solely for the purpose of computing the registration fee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission acting pursuant to said
Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Dated November 1, 1996
3,250,000 Shares
[LOGO] AASTROM BIOSCIENCES INC
Common Stock
--------------
All of the shares of Common Stock, no par value per share (the "Common
Stock"), offered are being sold by Aastrom Biosciences, Inc. ("Aastrom" or the
"Company").
Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering
price will be between $8.00 and $10.00 per share. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. Application will be made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "ASTM."
--------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 5 OF THIS PROSPECTUS.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- ------------------------------------------------------------------------------------------
Per Share........................ $ $ $
Total(3)......................... $ $ $
- ------------------------------------------------------------------------------------------
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting expenses payable by the Company, estimated to be $900,000.
(3) The Company has granted to the Underwriters an option, exercisable within
30 days of the date hereof, to purchase an aggregate of up to 487,500
additional shares at the Price to Public less Underwriting Discounts and
Commissions to cover over-allotments, if any. If all such additional shares
are purchased, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
--------------
The Common Stock is offered by the several Underwriters named herein when, as
and if received and accepted by them, subject to their right to reject orders
in whole or in part and subject to certain other conditions. It is expected
that delivery of the certificates for the shares will be made at the offices of
Cowen & Company, New York, New York, on or about , 1996.
--------------
COWEN & COMPANY J.P. MORGAN & CO.
, 1996
[COLOR FLOW CHART DEPICTING "STEM CELL THERAPY METHODS"
DESCRIBING STEM CELL THERAPY UTILIZING BONE MARROW HARVEST,
PROGENITOR BLOOD CELL MOBILIZATION AND THE AASTROM CPS]
[COLOR PHOTOGRAPH OF A PROTOTYPE OF THE AASTROM CPS WITH A
CLINICIAN INNOCULATING CELLS]
A prototype of the Aastrom CPS is currently being used in a clinical trial
and ongoing development activities are directed at completing production level
components of the Aastrom CPS. The Company may not market the Aastrom CPS
unless and until FDA and other necessary regulatory approvals are received.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
2
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Prospective investors should carefully consider
the information set forth under the heading "Risk Factors."
THE COMPANY
Aastrom Biosciences, Inc. is developing proprietary process technologies and
devices for a range of cell therapy applications, including stem cell therapies
and gene therapy. The Company's lead product under development, the Aastrom
Cell Production System (the "Aastrom CPS") consists of a clinical cell culture
system with disposable cassettes and reagents for use in the rapidly growing
stem cell therapy market. The Company believes that the Aastrom CPS method will
be less costly, less invasive and less time consuming than currently available
stem cell collection methods. The Aastrom CPS is designed as a platform product
which implements the Company's pioneering stem cell replication technology and
which the Company believes can be modified to produce a wide variety of cell
types for emerging therapies. The Aastrom CPS is currently in a pre-pivotal
clinical trial under an Investigational Device Exemption for autologous stem
cell therapy. The Company has entered into a strategic collaboration for the
development of the Aastrom CPS in stem cell therapy with Cobe BCT, Inc., a
subsidiary of Gambro AB and a world leader in blood cell processing products.
In ex vivo gene therapy, the Company is developing a proprietary directed
motion gene transfer process (the "Aastrom Gene Loader") and the Aastrom CPS to
enable high efficiency genetic modification and production of cells.
Stem cell therapy is a rapidly growing form of cell therapy used to restore
blood and immune system function to cancer patients following chemotherapy or
radiation therapy. The Company estimates that over 35,000 stem cell therapy
procedures were completed worldwide in 1995 and that the number of such
procedures is growing at a compound annual rate of over 20%. Other novel cell
therapies are under development by third parties, including stem cell therapy
for the treatment of autoimmune diseases and for augmenting recipient
acceptance of organ transplants. Current stem cell therapy methods, including
bone marrow harvest and peripheral blood progenitor cell mobilization, are
costly, invasive and time-consuming for both medical personnel and patients.
Technologies which facilitate a more readily available source of cells may
contribute to additional growth in cell therapy procedures. Umbilical cord
blood ("UCB") is emerging as a new source of cells for stem cell therapy,
offering additional market opportunity, although the more widespread use of UCB
transplants has been restricted by cell quantity limitations.
The Company believes that the Aastrom CPS will offer significant advantages
over traditional cell collection methods. Compared with current stem cell
collection methods, the Aastrom CPS is expected to involve one patient visit
rather than approximately five to seven visits, less than two hours of
procedure time rather than in excess of twenty hours of procedure time and
approximately four to ten patient needle sticks rather than twenty-five or more
patient needle sticks. The Aastrom CPS may permit higher and more frequent
doses of chemotherapy to be administered to cancer patients by enabling the
production of multiple doses of therapeutic stem cells from patient samples
taken at the initial collection.
Aastrom is currently conducting a pre-pivotal autologous stem cell therapy
trial. The trial is designed to show that cells produced in the Aastrom CPS can
by themselves safely enable recovery of bone marrow and cells of the blood and
immune systems in accordance with trial endpoints in patients who have received
ablative chemotherapy. Based on the outcome of this and other related trials,
the Company intends to seek FDA approval to begin a multi-center pivotal trial
for use of the Aastrom CPS in stem cell therapy. It is anticipated that the
results of this pivotal trial will be used to support the Company's Pre-Market
Approval ("PMA") submission to the FDA. In the near future, the Company plans
to initiate a stem cell therapy clinical trial in France, the results of which
are expected to be used for the CE Mark registration necessary to market the
Aastrom CPS in Europe.
The Company's business strategy is to: (i) establish a consumable-based
business model; (ii) focus initially on the currently-reimbursed stem cell
therapy market; (iii) leverage Aastrom's cell production technology across
multiple cell therapy market opportunities; and (iv) market through
collaborative relationships.
Aastrom has entered into a strategic collaboration with Cobe BCT to support
the development and marketing of the Aastrom CPS in the field of stem cell
therapy. In 1993, the Company entered into a series of agreements in which Cobe
BCT purchased $15,000,000 of the Company's equity securities and acquired the
worldwide distribution rights to the Aastrom CPS for stem cell therapy. Under
the terms of the collaboration, Aastrom retains manufacturing rights as well as
the majority share of all revenue generated by Cobe BCT's sale of the Aastrom
CPS. Aastrom also retains all marketing and distribution rights to the Aastrom
CPS for other cell types and ex vivo gene therapy applications, including stem
cells.
The Company's patent portfolio includes patents relating to both stem and
progenitor cell production, processes for the genetic modification of stem and
other cell types, and cell culture devices for human cells. As of September 30,
1996, the Company had exclusive rights to five issued U.S. and three foreign
patents, and a number of U.S. patent applications and certain corresponding
foreign applications.
3
THE OFFERING
Common Stock offered...... 3,250,000 shares
Common Stock to be out- 13,235,734 shares(1)
standing after this of-
fering...................
Use of proceeds........... For clinical trials, the development and manufacture
of the Aastrom CPS, research and development of
other product candidates, working capital and other
general corporate purposes.
Proposed Nasdaq National ASTM
Market symbol............
SUMMARY FINANCIAL DATA
THREE MONTHS
YEAR ENDED JUNE 30, ENDED SEPTEMBER 30,
--------------------------------------------------------------- ---------------------------
1992 1993 1994 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------- ----------- --------------
STATEMENT OF OPERATIONS
DATA:
Total revenues.......... $ -- $ 784,000 $ 872,000 $ 517,000 $ 1,609,000 $ 211,000 $ 224,000
Costs and expenses:
Research and
development........... 1,090,000 2,600,000 5,627,000 4,889,000 10,075,000 1,195,000 3,160,000
General and
administrative........ 272,000 1,153,000 1,565,000 1,558,000 2,067,000 446,000 452,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total costs and
expenses............. 1,362,000 3,753,000 7,192,000 6,447,000 12,142,000 1,641,000 3,612,000
Other income, net....... 94,000 122,000 180,000 213,000 616,000 131,000 115,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net loss................ $(1,268,000) $(2,847,000) $(6,140,000) $(5,717,000) $(9,917,000) $(1,299,000) $(3,273,000)
=========== =========== =========== =========== =========== =========== ===========
Pro forma net loss per
share(2)............... $ (.32) $ (.49) $ (.82) $ (.66) $ (.98) $ (.13) $ (.32)
=========== =========== =========== =========== =========== =========== ===========
Pro forma weighted
average number of
shares outstanding(2).. 3,919,000 5,840,000 7,461,000 8,644,000 10,103,000 10,094,000 10,107,000
=========== =========== =========== =========== =========== =========== ===========
SEPTEMBER 30, 1996
---------------------------
ACTUAL AS ADJUSTED(3)
----------- --------------
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.................................. $ 7,108,000 $33,410,500
Working capital.................................................................... 6,540,000 32,842,500
Total assets....................................................................... 8,931,000 35,233,500
Deficit accumulated during the development stage................................... (30,298,000) (30,298,000)
Total stockholders' equity......................................................... 7,618,000 33,920,500
- -------
(1) Excludes options and warrants to purchase 1,132,361 shares of Common Stock
at a weighted average exercise price of $6.50 per share, assuming the
closing of this offering at a price of $9.00 per share. See "Management--
Stock Option and Employee Benefit Plans" and Notes 4 and 9 of Notes to
Financial Statements.
(2) See Note 1 of Notes to Financial Statements for information concerning the
computation of pro forma net loss per share and shares used in computing
pro forma net loss per share.
(3) Adjusted to reflect the sale by the Company of 3,250,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $9.00
per share, after deduction of estimated underwriting discounts and
commissions and estimated offering expenses. See "Use of Proceeds" and
"Capitalization."
Unless otherwise indicated, all information contained in this Prospectus (i)
gives effect to a two-for-three reverse stock split to be effected prior to the
closing of this offering, (ii) gives effect to the conversion of all
outstanding shares of the Company's Preferred Stock into 8,098,422 shares of
Common Stock upon the closing of this offering, (iii) gives effect to the
filing of an Amended and Restated Articles of Incorporation upon the closing of
this offering to, among other things, create a new class of undesignated
preferred stock and (iv) assumes no exercise of the Underwriters' over-
allotment option. See "Description of Capital Stock" and "Underwriting." This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed in "Risk
Factors."
4
RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should consider the following risk factors in evaluating the Company
and its business before purchasing any of the Common Stock offered hereby.
UNCERTAINTIES RELATED TO PRODUCT DEVELOPMENT AND MARKETABILITY
The Company has not completed the development or clinical trials of any of
its cell culture technologies or product candidates and, accordingly, has not
begun to market or generate revenue from their commercialization. Furthermore,
the Company's technologies and product candidates are based on cell culture
processes and methodologies which are not widely employed. Commercialization
of the Company's lead product candidate, the Aastrom CPS, will require
substantial additional research and development by the Company as well as
substantial clinical trials. There can be no assurance that the Company will
successfully complete development of the Aastrom CPS or its other product
candidates, or successfully market its technologies or product candidates,
which lack of success would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company or its collaborators may encounter problems and delays relating
to research and development, regulatory approval and intellectual property
rights of the Company's technologies and product candidates. There can be no
assurance that the Company's research and development programs will be
successful, that its cell culture technologies and product candidates will
facilitate the ex vivo production of cells with the expected biological
activities in humans, that its technologies and product candidates, if
successfully developed, will prove to be safe and efficacious in clinical
trials, that the necessary regulatory approvals for any of the Company's
technologies or product candidates and the cells produced in such products
will be obtained or, if obtained, will be as broad as sought, that patents
will issue on the Company's patent applications or that the Company's
intellectual property protections will be adequate. The Company's product
development efforts are primarily directed toward obtaining regulatory
approval to market the Aastrom CPS as an alternative to the bone marrow
harvest and peripheral blood progenitor cell ("PBPC") stem cell collection
methods. These stem cell collection methods have been widely practiced for a
number of years, and there can be no assurance that any of the Company's
technologies or product candidates will be accepted by the marketplace as
readily as these or other competing processes and methodologies, or at all.
The failure by the Company to achieve any of the foregoing would have a
material adverse effect on the Company's business, financial condition and
results of operations.
UNCERTAINTIES RELATED TO CLINICAL TRIALS
The approval of the United States Food and Drug Administration (the "FDA")
will be required before any commercial sales of the Company's product
candidates may commence in the United States, and approvals from foreign
regulatory authorities will be required before international sales may
commence. Prior to obtaining necessary regulatory approvals, the Company will
be required to demonstrate the safety and efficacy of its processes and
product candidates and the cells produced by such processes and in such
products for application in the treatment of humans through extensive
preclinical studies and clinical trials. To date, the Company has only tested
the safety of cells produced in the cell culture chamber predecessor of the
Aastrom CPS, and only in a limited numbers of patients. The Company is
currently conducting a pre-pivotal clinical trial to demonstrate the safety
and biological activity of patient-derived cells produced in the Company's
cell culture chamber in a limited number of patients with breast cancer and,
if the results from this pre-pivotal trial are successful, the Company intends
to seek clearance from the FDA to commence its pivotal clinical trial. The
results of preclinical studies and clinical trials of the Company's product
candidates, however, may not necessarily be predictive of results that will be
obtained from subsequent or more extensive clinical trials. Further, there can
be no assurance that pre-pivotal or pivotal clinical trials of any of the
Company's product candidates will demonstrate the safety and efficacy of such
products, or of the cells produced in such products, to the extent necessary
to obtain required regulatory approvals or market acceptance.
The ability of the Company to complete its clinical trials in a timely
manner is dependent upon many factors, including the rate of patient
enrollment. Patient enrollment is a function of many factors, including the
size of the patient population, the proximity of suitable patients to clinical
sites and the eligibility criteria for the
5
study. The Company has experienced delays in patient accrual in its current
pre-pivotal clinical trial. Further delays in patient accrual, in the
Company's current pre-pivotal clinical trial or in future clinical trials,
could result in increased costs associated with clinical trials or delays in
receiving regulatory approvals and commercialization, if any. Furthermore, the
progress of clinical investigations with the Aastrom CPS and the Company's
other product candidates will be monitored by the FDA, which has the authority
to cease clinical investigations, at any time, due to patient safety or other
considerations. Any of the foregoing would have a material adverse effect on
the Company's business, financial condition and results of operations. See "--
Uncertainty of Regulatory Approval" and "--Extensive Government Regulation."
The Company's current pre-pivotal trial is designed to demonstrate specific
biological safety and activity of cells produced in the Aastrom CPS, but is
not designed to demonstrate long-term sustained engraftment of such cells. The
patients enrolled in this pre-pivotal trial will have undergone extensive
chemotherapy treatment prior to the infusion of cells produced in the Aastrom
CPS. Such treatments will have substantially weakened these patients and may
have irreparably damaged their hematopoietic systems. Due to these and other
factors, there is risk that one or more of these patients may die or suffer
severe complications during the course of the pre-pivotal trial. Further,
there can be no assurance that patients receiving cells produced with the
Company's technologies and product candidates will demonstrate long-term
engraftment in a manner comparable to cells obtained from current stem cell
therapy procedures, or at all. The failure to adequately demonstrate the
safety or efficacy of the Company's technologies and product candidates,
including long-term sustained engraftment, or the death of, or occurrence of
severe complications in, one or more patients could substantially delay, or
prevent, regulatory approval of such product candidates and have a material
adverse effect on the Company's business, financial condition and results of
operations.
MANUFACTURING AND SUPPLY UNCERTAINTIES; DEPENDENCE ON THIRD PARTIES
The Company does not operate and has no current intention to operate
manufacturing facilities for the production of its product candidates. The
Company currently arranges for the manufacturing of its product candidates and
their components with third parties, and expects to continue to do so in the
forseeable future. The Company has entered into collaborative product
development agreements with SeaMED Corporation ("SeaMED") and Ethox
Corporation ("Ethox") for the collaborative development and manufacture of
certain components of the Aastrom CPS. The Company is also dependent upon
Immunex Corporation ("Immunex"), Life Technologies, Inc., Biowhittaker and
Anchor Advanced Products for the supply of certain cytokines, serum, media and
injection molded materials, respectively, to be used in conjunction with, or
as components of, the Aastrom CPS. With regard to cytokines that are not
commercially available from other sources, Immunex is currently the Company's
sole supplier and few alternative supply sources exist. Apart from SeaMED,
Ethox and Immunex, the Company currently does not have contractual commitments
from any of these manufacturers or suppliers. There can be no assurance that
the Company's supply of such key cytokines, components and other materials
will not become limited, be interrupted or become restricted to certain
geographic regions. Furthermore, the Company currently only has the right to
distribute cytokines obtained from Immunex in the United States and there can
be no assurance that the Company will be able to obtain the worldwide right to
distribute such cytokines or manufacture such cytokines by or for itself in
the event that the Company's agreement with Immunex is terminated. There can
also be no assurance that the Company will be able to obtain alternative
components and materials from other manufacturers on terms or in quantities
acceptable to the Company or that the Company will not require additional
cytokines, components and other materials to manufacture or use its product
candidates. In the event that any of the Company's key manufacturers or
suppliers fail to perform their respective obligations or the Company's supply
of such cytokines, components or other materials become limited or
interrupted, the Company would not be able to market its product candidates on
a timely and cost-competitive basis, if at all which would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Like SeaMED and Ethox, other suppliers would need to meet FDA manufacturing
requirements and undergo rigorous facility and process validation tests
required by federal and state regulatory authorities. Any significant delays
in the completion and validation of such facilities could have a material
adverse effect on the
6
ability of the Company to complete clinical trials and to market its products
on a timely and profitable basis, which in turn would have a material adverse
effect on the Company's business, financial condition and results of
operations.
There can also be no assurance that the Company will be able to continue its
present arrangements with its suppliers, supplement existing relationships or
establish new relationships or that the Company will be able to identify and
obtain the ancillary materials that are necessary to develop its product
candidates in the future. The Company's dependence upon third parties for the
supply and manufacture of such items could adversely affect the Company's
ability to develop and deliver commercially feasible products on a timely and
competitive basis.
HISTORY OF OPERATING LOSSES; ANTICIPATION OF FUTURE LOSSES
The Company is a development stage company and there can be no assurance
that its product applications for cell therapy will be successful. The Company
has not yet completed the development and clinical trials of any of its
product candidates and, accordingly, has not yet begun to generate revenues
from the commercialization of any of its product candidates. Aastrom was
incorporated in 1989 and has experienced substantial operating losses since
inception. As of September 30, 1996, the Company has incurred net operating
losses totaling approximately $30.3 million. Such losses have resulted
principally from costs incurred in the research and development of the
Company's cell culture technologies and the Aastrom CPS, general and
administrative expenses, and the prosecution of patent applications. The
Company expects to incur significant and increasing operating losses for at
least the next several years, primarily owing to the expansion of its research
and development programs, including preclinical studies and clinical trials.
The amount of future losses and when, if ever, the Company achieves
profitability are uncertain. The Company's ability to achieve profitability
will depend, among other things, on successfully completing the development of
its product candidates, obtaining regulatory approvals, establishing
manufacturing, sales and marketing arrangements with third parties, and
raising sufficient funds to finance its activities. No assurance can be given
that the Company's product development efforts will be successful, that
required regulatory approvals will be obtained, that any of the Company's
product candidates will be manufactured at a competitive cost and will be of
acceptable quality, or that the Company will be able to achieve profitability
or that profitability, if achieved, can be sustained.
LIMITED SALES AND MARKETING CAPABILITIES; DEPENDENCE ON COLLABORATIVE
RELATIONSHIPS
The Company has limited internal sales, marketing and distribution
capabilities. If any of the Company's product candidates are successfully
developed and the necessary regulatory approvals are obtained, the Company
intends to market such products through collaborative relationships with
companies that have established sales, marketing and distribution
capabilities. The Company has established a strategic alliance with Cobe
Laboratories, Inc. and Cobe BCT, Inc. (collectively, "Cobe") for the worldwide
distribution of the Aastrom CPS for stem cell therapy and related uses. Cobe
has the right to terminate its Distribution Agreement with the Company upon
twelve month's notice upon a change of control of the Company, other than to
Cobe, or at any time after December 31, 1997, if Cobe determines that
commercialization of the Aastrom CPS for stem cell therapy on or prior to
December 31, 1998 is unlikely. See "--Consequences of Cobe Relationship."
The amount and timing of resources that Cobe commits to its strategic
alliance activities with the Company are, to a significant extent, outside of
the control of the Company. There can be no assurance that Cobe will pursue
the marketing and distribution of the Company's products, continue to perform
its obligations under its agreements with the Company or that the Company's
strategic alliance with Cobe will result in the successful commercialization
and distribution of the Company's technologies and product candidates. There
can also be no assurance that Cobe will be successful in its efforts to market
and distribute the Company's products for stem cell therapy. The suspension or
termination of the Company's strategic alliance with Cobe or the failure of
the strategic alliance to be successful would have a material adverse effect
on the Company's business, financial condition and results of operations.
Subject to the contractual requirements of the Cobe relationship, the
Company will seek to enter into other agreements relating to the development
and marketing of product candidates and in connection with such
7
agreements may rely upon corporate partners to conduct clinical trials, seek
regulatory approvals for, manufacture and market its potential products. There
can be no assurance that the Company will be able to establish collaborative
relationships for the development or marketing of the Company's product
candidates on acceptable terms, if at all. The inability of the Company to
establish such collaborative relationships may require the Company to curtail
its development or marketing activities with regard to its potential products
which would have a material adverse effect on the Company's business,
financial condition and results of operations.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
To date, Aastrom has funded its operations primarily through the sale of
equity securities and corporate collaborations. The Company anticipates that
the net proceeds of this offering, together with the Company's available cash
and expected interest income thereon, will be sufficient to finance its
research and development and other working capital requirements for 18 months
or less. This estimate is based on certain assumptions which could be
negatively impacted by the matters discussed under this heading and elsewhere
under the caption "Risk Factors." In order to grow and expand its business,
and to introduce its product candidates into the marketplace, the Company will
need, among other things, to raise additional funds.
The Company's future capital requirements will depend upon many factors,
including, but not limited to, continued scientific progress in its research
and development programs, costs and timing of conducting clinical trials and
seeking regulatory approvals and patent prosecutions, competing technological
and market developments, possible changes in existing collaborative
relationships, the ability of the Company to establish additional
collaborative relationships, and effective commercialization activities and
facilities expansions if and as required. Because of the Company's potential
long-term funding requirements, it may attempt to access the public or private
equity markets if and whenever conditions are favorable, even if it does not
have an immediate need for additional capital at that time. There can be no
assurance that any such additional funding will be available to the Company on
reasonable terms, or at all. If adequate funds are not available, the Company
may be required to delay or terminate research and development programs,
curtail capital expenditures, and reduce business development and other
operating activities. If the Company is not successful in finding, entering
into and maintaining arrangements with collaborative partners, its development
efforts could be delayed. Furthermore, there can be no assurance that the
Company will be able to implement collaborative development agreements under
acceptable terms. Any of the foregoing capital constraints would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
UNCERTAINTY OF REGULATORY APPROVAL; EXTENSIVE GOVERNMENT REGULATION
The Company's research and development activities, preclinical studies,
clinical trials, and the anticipated manufacturing and marketing of its
product candidates are subject to extensive regulation by the FDA and other
regulatory authorities in the United States. These activities are also
regulated in other countries where the Company intends to test and market its
product candidates. The approval of the FDA will be required before any
commercial sales of the Company's product candidates may commence in the
United States. Additionally, the Company will be required to obtain approvals
from foreign regulatory authorities before international sales may commence.
The Company's products are potentially subject to regulation as medical
devices under the Federal Food, Drug, and Cosmetic Act, or as biological
products under the Public Health Service Act, or both. Different regulatory
requirements may apply to the Company's products depending on how they are
categorized by the FDA under these laws. To date, the FDA has indicated that
it intends to regulate the Aastrom CPS for stem cell therapy as a Class III
medical device through the Center for Biologics Evaluation and Research.
However, there can be no assurance that the FDA will ultimately regulate the
Aastrom CPS for stem cell therapy as a medical device or that regulatory
approval for such product will be obtained in a timely fashion or at all.
Further, it is unclear whether the FDA will separately regulate the cell
therapies derived from the Aastrom CPS. The FDA is in the process of
developing its requirements with respect to somatic cell therapy and gene cell
therapy products, and recently proposed a new type of license for autologous
cells manipulated ex vivo and
8
intended for structural repair or reconstruction; autologous cells are cells
obtained from, and administered to, the same patient. This proposal may
indicate that the FDA will impose a similar approval requirement on other
types of autologous cellular therapies, such as autologous cells for stem cell
therapy. Any such additional regulatory or approval requirement could
significantly delay the introduction of the Company's product candidates to
the market, and have a material adverse effect on the Company's business,
financial condition and results of operations. Until the FDA issues definitive
regulations covering the Company's product candidates, the regulatory
requirements for approval of such product candidates will continue to be
subject to significant uncertainty.
Before marketing, the Aastrom CPS or other product candidates developed by
the Company must undergo an extensive regulatory approval process. The
regulatory process, which includes preclinical studies and clinical trials to
establish safety and efficacy, takes many years and requires the expenditure
of substantial resources. Data obtained from preclinical and clinical
activities are susceptible to varying interpretations which could delay, limit
or prevent FDA approval. In addition, delays or rejections may be encountered
based upon changes in FDA policy for medical product approvals during the
period of product development and FDA regulatory review of applications
submitted by the Company for product approval. Similar delays may also be
encountered in foreign countries. There can be no assurance that, even after
the expenditures of substantial time and financial resources, regulatory
approval will be obtained for any products developed by the Company. Moreover,
if regulatory approval of a product is obtained, such approval may be subject
to limitations on the indicated uses for which it may be marketed. Further,
even if such regulatory approval is obtained, a marketed product, its
manufacturer and its manufacturing facilities are subject to continual review
and periodic inspections by the FDA, and later discovery of previously unknown
problems with a product, manufacturer or facility may result in restrictions
on such product or manufacturer, including a withdrawal of the product from
the market. Failure to comply with the applicable regulatory requirements can,
among other things, result in fines, suspensions of regulatory approvals,
product recalls, operating restrictions and criminal prosecution. Further,
additional government regulation may be established which could prevent or
delay regulatory approval of the Company's products. See "Business--Government
Regulation."
CONSEQUENCES OF COBE RELATIONSHIP
Following the completion of this offering, Cobe will be the largest single
shareholder of the Company, beneficially owning approximately 19% of the
outstanding Common Stock. In addition, Cobe has certain preemptive rights to
maintain its relative percentage ownership and voting interest in the Company
following this offering, and has the right, for a period of three years
following this offering, to purchase from the Company an amount of Common
Stock equal to 30% of the Company's fully diluted shares after the exercise of
such option, at a purchase price equal to 120% of the public market trading
price of the Company's Common Stock. If such option is exercised, Cobe would
significantly increase its ownership interest in the Company and, as a
consequence of such share ownership, obtain effective control of the Company.
Such effective control would include the ability to influence the outcome of
shareholder votes, including votes concerning the election of directors, the
amendment of provisions of the Company's Restated Articles of Incorporation or
Bylaws, and the approval of mergers and other significant transactions. Cobe
also has been granted a "right of first negotiation" in the event that the
Company determines to sell all, or any material portion, of its assets to
another company or to merge with another company. Furthermore, the Company has
agreed to use reasonable and good faith efforts to cause a nominee designated
by Cobe to be elected to the Board of Directors for as long as Cobe owns at
least 15% of the outstanding Common Stock. In addition, Edward C. Wood, Jr.,
the President of Cobe BCT, is a director of the Company. The existence of the
foregoing rights or the exercise of such control by Cobe could have the effect
of delaying, deterring or preventing certain takeovers or changes in control
of the management of the Company, including transactions in which shareholders
might otherwise receive a premium for their shares over then-current market
prices. See "Description of Capital Stock--Rights of Cobe."
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS
Aastrom's success depends in part on its ability, and the ability of its
licensors, to obtain patent protection for its products and processes,
preserve its trade secrets, defend and enforce its rights against infringement
and
9
operate without infringing the proprietary rights of third parties, both in
the United States and in other countries. The validity and breadth of claims
in medical technology patents involve complex legal and factual questions and,
therefore, may be highly uncertain. No assurance can be given that any patents
based on pending patent applications or any future patent applications of the
Company or its licensors will be issued, that the scope of any patent
protection will exclude competitors or provide competitive advantages to the
Company, that any of the patents that have been or may be issued to the
Company or its licensors will be held valid if subsequently challenged or that
others will not claim rights in or ownership of the patents and other
proprietary rights held or licensed by the Company. Furthermore, there can be
no assurance that others have not developed or will not develop similar
products, duplicate any of the Company's products or design around any patents
that have been or may be issued to the Company or its licensors. Since patent
applications in the United States are maintained in secrecy until patents
issue, the Company also cannot be certain that others did not first file
applications for inventions covered by the Company's and its licensors'
pending patent applications, nor can the Company be certain that it will not
infringe any patents that may issue to others on such applications. The
Company relies on certain licenses granted by the University of Michigan and
Dr. Cremonese for the majority of its patent rights. If the Company breaches
such agreements or otherwise fails to comply with such agreements, or if such
agreements expire or are otherwise terminated, the Company may lose its rights
under the patents held by the University of Michigan and Dr. Cremonese, which
would have a material adverse effect on the Company's business, financial
condition and results of operation. See "Business--Patents and Proprietary
Rights--University of Michigan Research Agreement and License Agreement" and
"Business--Patents and Proprietary Rights--License Agreement with J.G.
Cremonese." The Company also relies on trade secrets and unpatentable know-how
which it seeks to protect, in part, by confidentiality agreements with its
employees, consultants, suppliers and licensees. There can be no assurance
that these agreements will not be breached, that the Company would have
adequate remedies for any breach, or that the Company's trade secrets or
unpatentable know-how will not otherwise become known or be independently
developed by competitors.
The Company's success will also depend in part on its ability to develop
commercially viable products without infringing the proprietary rights of
others. The Company has not conducted freedom of use patent searches and no
assurance can be given that patents do not exist or could not be filed which
would have an adverse effect on the Company's ability to market its products
or maintain its competitive position with respect to its products. If the
Company's technology components, devices, designs, products, processes or
other subject matter are claimed under other existing United States or foreign
patents or are otherwise protected by third party proprietary rights, the
Company may be subject to infringement actions. In such event, the Company may
challenge the validity of such patents or other proprietary rights or be
required to obtain licenses from such companies in order to develop,
manufacture or market its products. There can be no assurance that the Company
would be able to obtain such licenses or that such licenses, if available,
could be obtained on commercially reasonable terms. Furthermore, the failure
to either develop a commercially viable alternative or obtain such licenses
could result in delays in marketing the Company's proposed products or the
inability to proceed with the development, manufacture or sale of products
requiring such licenses, which could have a material adverse effect on the
Company's business, financial condition and results of operations. If the
Company is required to defend itself against charges of patent infringement or
to protect its own proprietary rights against third parties, substantial costs
will be incurred regardless of whether the Company is successful. Such
proceedings are typically protracted with no certainty of success. An adverse
outcome could subject the Company to significant liabilities to third parties,
and force the Company to curtail or cease its development and sale of its
products and processes. See "Business--Patents and Proprietary Rights."
NO ASSURANCE OF THIRD PARTY REIMBURSEMENT
The Company's ability to successfully commercialize its product candidates
will depend in part on the extent to which payment for the Company's products
and related treatments will be available from government healthcare programs,
such as Medicare and Medicaid, as well as private health insurers, health
maintenance organizations and other third party payors. Government and other
third-party payors are increasingly attempting to contain health care costs,
in part by challenging the price of medical products and services.
Reimbursement by third-party payors depend on a number of factors, including
the payor's determination that use of the product
10
is safe and effective, not experimental or investigational, medically
necessary, appropriate for the specific patient and cost-effective. Since
reimbursement approval is required from each payor individually, seeking such
approvals is a time-consuming and costly process which will require the
Company to provide scientific and clinical support for the use of each of the
Company's products to each payor separately. Significant uncertainty exists as
to the payment status of newly approved medical products, and there can be no
assurance that adequate third-party payments will be available to enable the
Company to establish or maintain price levels sufficient to realize an
appropriate return on its investment in product development. If adequate
payment levels are not provided by government and third-party payors for use
of the Company's products, the market acceptance of those products will be
adversely affected.
There can be no assurance that reimbursement in the United States or foreign
countries will be available for any of the Company's product candidates, that
any reimbursement granted will be maintained, or that limits on reimbursement
available from third-party payors will not reduce the demand for, or
negatively affect the price of, the Company's products. The unavailability or
inadequacy of third-party reimbursement for the Company's product candidates
would have a material adverse effect on the Company. Finally, the Company is
unable to forecast what additional legislation or regulation relating to the
healthcare industry or third-party coverage and reimbursement may be enacted
in the future, or what effect such legislation or regulation would have on the
Company's business.
COMPETITION AND TECHNOLOGICAL CHANGE
The Company is engaged in the development of medical products and processes
which will face competition in a marketplace characterized by rapid
technological change. Many of the Company's competitors have significantly
greater resources than the Company, and have developed and may develop product
candidates and processes that directly compete with the Company's products.
Moreover, competitors that are able to achieve patent protection, obtain
regulatory approvals and commence commercial sales of their products before
the Company, and competitors that have already done so, may enjoy a
significant competitive advantage. The Company's product development efforts
are primarily directed toward obtaining regulatory approval to market the
Aastrom CPS for stem cell therapy. That market is currently dominated by the
bone marrow harvest and PBPC collection methods. The Company's clinical data,
although early, is inconclusive as to whether or not cells expanded in the
Aastrom CPS will enable hematopoietic recovery within the time frames
currently achieved by the bone marrow harvest and PBPC collection methods. In
addition, the bone marrow harvest and PBPC collection methods have been widely
practiced for a number of years and, recently, the patient costs associated
with these procedures have begun to decline. There can be no assurance that
the Aastrom CPS method, if approved for marketing, will prove to be
competitive with these established collection methods on the basis of
hematopoietic recovery time, cost or otherwise. The Company also is aware of
certain other products manufactured or under development by competitors that
are used for the prevention or treatment of certain diseases and health
conditions which the Company has targeted for product development. In
particular, the Company is aware that competitors such as Amgen, Inc.,
CellPro, Incorporated, Systemix, Inc., Baxter Healthcare Corp. and Rhone-
Poulenc Rorer Inc. ("RPR") are in advanced stages of development of
technologies and products for use in stem cell therapy and other market
applications currently being pursued by the Company. In addition, Cobe, a
significant shareholder of the Company, is a market leader in the blood cell
processing products industry and, accordingly, a potential competitor of the
Company. There can be no assurance that developments by others will not render
the Company's product candidates or technologies obsolete or noncompetitive,
that the Company will be able to keep pace with new technological developments
or that the Company's product candidates will be able to supplant established
products and methodologies in the therapeutic areas that are targeted by the
Company. The foregoing factors could have a material adverse effect on the
Company's business, financial condition and results of operations.
HAZARDOUS MATERIALS
The Company's research and development activities involve the controlled use
of hazardous materials, chemicals and various radioactive compounds. The
Company is subject to federal, state and local laws and
11
regulations governing the use, manufacture, storage, handling and disposal of
such materials and certain waste products. In the event of any contamination
or injury from these materials, the Company could be held liable for any
damages that result and any such liability could exceed the resources of the
Company. Furthermore, the failure to comply with current or future regulations
could result in the imposition of substantial fines against the Company,
suspension of production, alteration of its manufacturing processes or
cessation of operations. There can be no assurance that the Company will not
be required to incur significant costs to comply with any such laws and
regulations in the future, or that such laws or regulations will not have a
material adverse effect on the Company's business, financial condition and
results of operations. Any failure by the Company to control the use,
disposal, removal or storage of, or to adequately restrict the discharge of,
or assist in the cleanup of, hazardous chemicals or hazardous, infectious or
toxic substances could subject the Company to significant liabilities,
including joint and several liability under certain statutes. The imposition
of such liabilities would have a material adverse effect on the Company's
business, financial condition and results of operations.
POTENTIAL PRODUCT LIABILITY; AVAILABILITY OF INSURANCE
The Company is, and will continue to be, subject to the risk of product
liability claims alleging that the use of its products has adverse effects on
patients. This risk exists for product candidates tested in human clinical
trials as well as products that are sold commercially, if any. Further, given
the medical conditions for which the Aastrom CPS is expected to be utilized,
any product liability claim could entail substantial compensatory and punitive
damages. The assertion of product liability claims against the Company could
result in a substantial cost to, and diversion of efforts by, the Company.
There can be no assurance that the Company would prevail in any such
litigation or that product liability claims, if made, would not result in a
recall of the Company's products or a change in the indications for which they
may be used. The Company maintains product liability insurance coverage in the
aggregate of $5,000,000 for claims arising from the use of its product
candidates in clinical trials. There can be no assurance that the Company will
be able to maintain such insurance or obtain product liability insurance in
the future to cover any of its product candidates which are commercialized or
that such existing or any future insurance and the resources of the Company
would be sufficient to satisfy any liability resulting from product liability
claims. Consequently, a product liability claim or other claim with respect to
uninsured or underinsured liabilities could have a material adverse effect on
the Company's business, financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends in large part upon the Company's ability
to attract and retain highly qualified scientific and management personnel.
The Company faces competition for such personnel from other companies,
research and academic institutions and other entities. There can be no
assurance that the Company will be successful in hiring or retaining key
personnel. See "Business--Employees" and "Management."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market following
this offering could adversely affect the prevailing market price of the Common
Stock and the Company's ability to raise capital in the future. Upon
completion of this offering, the Company will have a total of 13,235,734
shares of Common Stock outstanding, of which the 3,250,000 shares offered
hereby will be freely tradeable without restriction under the Securities Act
of 1933, as amended (the "Securities Act") by persons other than "affiliates"
of the Company, as defined under the Securities Act. The remaining 9,985,734
shares of Common Stock outstanding are "restricted securities" as the term is
defined by Rule 144 promulgated under the Securities Act (the "Restricted
Shares"). Of the 9,985,734 Restricted Shares, 6,996,920 shares may be sold
under Rule 144, subject in some cases to certain volume restrictions and other
conditions imposed thereby. An additional 152,056 shares will become eligible
for sale 90 days after completion of the offering pursuant to Rule 144 and
701. The remaining 2,836,758 shares will be eligible for sale upon the
expiration of their respective holding periods as set forth in Rule 144. The
Securities and Exchange Commission has proposed certain amendments to Rule 144
that would reduce by one year the holding periods required for shares subject
to Rule 144 to become eligible for resale in
12
the public market. This proposal, if adopted, would permit earlier resale of
shares of Common Stock currently subject to holding periods under Rule 144. No
assurance can be given concerning whether or when the proposal will be adopted
by the Securities and Exchange Commission. Furthermore, 9,810,503 of the
Restricted Shares are subject to lock-up agreements expiring 180 days
following the date of this Prospectus. Such agreements provide that Cowen &
Company may, in its sole discretion and at any time without notice, release
all or a portion of the shares subject to these lock-up agreements. Upon the
expiration of the lock-up agreements, 7,148,976 of the 9,985,734 Restricted
Shares may be sold pursuant to Rule 144 or 701, subject in some cases to
certain volume restrictions imposed thereby. Certain existing stockholders
have rights to include shares of Common Stock owned by them in future
registration by the Company for the sale of Common Stock or to request that
the Company register their shares under the Securities Act. See "Description
of Capital Stock--Registration Rights." Following the date of this Prospectus,
the Company intends to register on one or more registration statements on Form
S-8 approximately 1,837,160 shares of Common Stock issuable under its stock
option and stock purchase plans. Of the 1,837,160 shares issuable under its
stock option and stock purchase plans, 336,254 shares are subject to
outstanding options as of September 30, 1996, 318,920 of which shares are
subject to lock-up agreements. Shares covered by such registration statements
will immediately be eligible for sale in the public market upon the filing of
such registration statements. In addition, the Company has issued warrants to
purchase 69,444 shares of Common Stock which become exercisable 90 days after
the closing of this offering and, upon the effective date of this offering,
will grant an immediately exercisable option to purchase 333,333 shares of
Common Stock, which shares are subject to a lock-up agreement. See
"Management--Benefit Plans," "Certain Transactions" and "Shares Eligible for
Future Sale."
CONTROL BY EXISTING MANAGEMENT AND SHAREHOLDERS
Upon completion of this offering, the Company's directors, executive
officers, and certain principal shareholders, including Cobe, affiliated with
members of the Board of Directors and their affiliates will beneficially own
approximately 39% of the Common Stock (approximately 38% if the Underwriters'
over-allotment option is exercised in full). Accordingly, such shareholders,
acting together, may have the ability to exert significant influence over the
election of the Company's Board of Directors and other matters submitted to
the Company's shareholders for approval. The voting power of these holders may
discourage or prevent certain takeovers or changes in control of the
management of the Company unless the terms are approved by such holders. See
"Principal Shareholders."
NO PRIOR PUBLIC MARKET; POSSIBLE STOCK PRICE VOLATILITY
Prior to this offering there has been no public market for the Common Stock,
and an active public market for the Common Stock may not develop or be
sustained. The initial public offering price will be determined through
negotiation between the Company and the Representatives of the Underwriters
based on several factors that may not be indicative of future market prices.
See "Underwriting" for a discussion of the factors considered in determining
the initial public offering price. The trading price of the Common Stock and
the price at which the Company may sell securities in the future could be
subject to wide fluctuations in response to announcements of clinical results,
research activities, technological innovations or new products by the Company
or competitors, changes in government regulation, developments concerning
proprietary rights, variations in the Company's operating results,
announcements by the Company of regulatory developments, litigation, disputes
concerning patents or proprietary rights or public concern regarding the
safety, efficacy or other implications of the products or methodologies to be
developed by the Company or its collaborators or enabled by the Company's
technology, general market conditions, the liquidity of the Company or its
ability to raise additional funds, and other factors or events. In addition,
the stock market has experienced extreme fluctuations in price and volume.
This volatility has significantly affected the market prices for securities of
emerging biotechnology companies for reasons frequently unrelated to or
disproportionate to the operating performance of the specific companies. These
market fluctuations as well as general fluctuations in the stock markets may
adversely affect the market price of the Common Stock.
ANTI-TAKEOVER EFFECT OF CHARTER AND BY-LAW PROVISIONS AND MICHIGAN LAW
The Company's Restated Articles of Incorporation authorize the Board of
Directors to issue, without shareholder approval, 5,000,000 shares of
Preferred Stock with voting, conversion, and other rights and
13
preferences that could materially and adversely affect the voting power or
other rights of the holders of Common Stock. The issuance of Preferred Stock
or of rights to purchase Preferred Stock could be used to discourage an
unsolicited acquisition proposal. The Company's Bylaws contain procedural
restrictions on director nominations by shareholders and the submission of
other proposals for consideration at shareholder meetings. The possible
issuance of Preferred Stock and the procedures required for director
nominations and shareholder proposals could discourage a proxy contest, make
more difficult the acquisition of a substantial block of Common Stock, or
limit the price that investors might be willing to pay in the future for
shares of Common Stock. In addition, certain provisions of Michigan law
applicable to the Company could also delay or make more difficult a merger,
tender offer, or proxy contest involving the Company. See "Description of
Capital Stock."
IMMEDIATE AND SUBSTANTIAL DILUTION; ABSENCE OF DIVIDENDS
Purchasers of the Common Stock in this offering will experience immediate
and substantial dilution in the net tangible book value of the Common Stock.
Additional dilution is likely to occur upon the exercise of outstanding
options granted by the Company. The Company has never paid cash dividends and
does not anticipate paying any cash dividends in the foreseeable future. See
"Dilution" and "Dividend Policy."
THE COMPANY
Aastrom was incorporated in Michigan in March 1989 under the name Ann Arbor
Stromal, Inc. In 1991, the Company changed its name to Aastrom Biosciences,
Inc. The Company's principal executive offices are located at 24 Frank Lloyd
Wright Drive, P.O. Box 376, Ann Arbor, Michigan 48106 and its telephone number
is
(313) 930-5555. Aastrom(TM) and the Company's stylized logo are trademarks of
the Company. Leukine and Neupogen are registered trademarks of Immunex
Corporation and Amgen, Inc., respectively.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,250,000 shares of
Common Stock offered hereby are estimated to be $26,302,500 ($30,382,875 if
the Underwriters exercise their over-allotment option in full), at an assumed
initial public offering price of $9.00 per share and after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company.
The net proceeds from this offering are expected to be used to fund product
development of the Aastrom CPS, other research and development activities,
including pre-pivotal and pivotal clinical trials of the Aastrom CPS, and for
working capital and other general corporate purposes, including scheduled
repayments of obligations under equipment leases. The Company has $339,000 of
outstanding equipment lease commitments as of September 30, 1996 with final
payments due between November 1996 and May 1999 and bear interest ranging from
9.7% to 12.1%.
The Company anticipates that the net proceeds of this offering, together
with the Company's available cash and expected interest income thereon, should
be sufficient to finance the Company's research and development and other
working capital requirements for approximately 18 months. This estimate is
based on certain assumptions which could be negatively impacted by the matters
discussed in "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources." Pending such uses, the net proceeds will be invested in short-
term, interest bearing investment grade securities.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not anticipate paying such cash dividends in the foreseeable
future. The Company currently anticipates that it will retain all future
earnings, if any, for use in the development of its business.
14
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
September 30,1996, and (ii) on a pro forma as adjusted basis to reflect the
conversion of all outstanding shares of Preferred Stock into Common Stock upon
the closing of this offering and the receipt of the estimated net proceeds
from the Company's sale of 3,250,000 shares of Common Stock pursuant to this
offering. See "Use of Proceeds" and "Certain Transactions."
SEPTEMBER 30, 1996
-------------------------
PRO FORMA
ACTUAL AS ADJUSTED
----------- ------------
Long-term portion of capital lease obligations(1).... $ 147,000 $ 147,000
Stockholders' equity(2):
Preferred stock, no par value: 10,157,647 shares au-
thorized, 9,657,648 shares issued and outstand-
ing, actual; 5,000,000 shares authorized, no
shares issued and outstanding, as adjusted....... 37,718,000 --
Common stock, no par value: 18,500,000 shares autho-
rized, 1,887,312 shares issued and outstanding,
actual; 40,000,000 shares authorized, 13,235,734
issued and outstanding, as adjusted, in each case
net of stockholder notes receivable.............. 198,000 64,218,500
Deficit accumulated during the development stage..... (30,298,000) (30,298,000)
----------- ------------
Total stockholders' equity........................... 7,618,000 33,920,500
----------- ------------
Total capitalization................................. $ 7,765,000 $ 34,067,500
=========== ============
- --------
(1) See Note 7 of Notes to Financial Statements.
(2) Excludes options and warrants to purchase 1,132,361 shares of Common Stock
at a weighted average exercise price of $6.50 per share, assuming the
closing of this offering at a price of $9.00 per share. See "Management--
Stock Option and Employee Benefit Plans" and Notes 4 and 9 of Notes to
Financial Statements.
15
DILUTION
The Company's pro forma net tangible book value at September 30, 1996 was
approximately $7,618,000 or $.76 per share. Pro forma net tangible book value
per share represents the amount of the Company's shareholders' equity, less
intangible assets, divided by 9,985,734, the number of shares of Common Stock
outstanding as of September 30, 1996, after giving effect to the automatic
conversion of all Preferred Stock into Common Stock upon the closing of this
offering.
After giving effect to the sale of 3,250,000 shares of Common Stock in this
offering at an assumed initial public offering price of $9.00 per share and
after deducting underwriting discounts and commissions and estimated offering
expenses payable by the Company, the pro forma net tangible book value of the
Company as of September 30, 1996 would have been $33,920,500, or $2.56 per
share. This represents an immediate increase in pro forma net tangible book
value of $1.80 per share to existing stockholders and an immediate dilution in
pro forma net tangible book value of $6.44 per share to purchasers of Common
Stock in this offering, as illustrated in the following table:
Assumed initial public offering price per share............... $9.00
Pro forma net tangible book value per share as of September
30, 1996.................................................... $ .76
Increase per share attributable to new investors............. 1.80
-----
Pro forma net tangible book value per share after this offer-
ing.......................................................... 2.56
-----
Dilution per share to new investors........................... $6.44
=====
Utilizing the foregoing assumptions, the following table summarizes the
total consideration paid to the Company and the average price per share paid
by the existing stockholders and by purchasers of shares of Common Stock in
this offering:
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- -------------
Existing stockholders... 9,985,734 75% $38,083,000 57% $3.81
New investors........... 3,250,000 25% 29,250,000 43% 9.00
---------- --- ----------- ---
Total................. 13,235,734 100% $67,333,000 100%
========== === =========== ===
- --------
The foregoing excludes options and warrants to purchase 1,132,361 shares of
Common Stock at a weighted average exercise price of $6.50 per share, assuming
the closing of this offering at a price of $9.00 per share. In the event such
options and warrants are exercised, investors may experience further dilution.
See "Management--Stock Option and Employee Benefit Plans" and Notes 4 and 9 of
Notes to Financial Statements.
16
SELECTED FINANCIAL DATA
The statement of operations data for the fiscal years ended June 1994, 1995
and 1996, and the balance sheet data at June 30, 1995 and 1996, are derived
from, and are qualified by reference to, the audited financial statements
included elsewhere in the Prospectus and should be read in conjunction with
those financial statements and notes thereto. The statement of operations data
for the fiscal years ended June 30, 1992 and 1993, and the balance sheet data
at June 30, 1992, 1993 and 1994, are derived from audited financial statements
not included herein. The information presented below for the three-month
periods ended September 30, 1995 and 1996, and as of September 30, 1996, have
been derived from the unaudited financial statements of the Company. In the
opinion of the Company's management, the unaudited financial statements have
been prepared by the Company on a basis consistent with the Company's audited
financial statements and include all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the financial
position and the results of operations for those periods. Operating results
for the three-month period ended September 30, 1996 are not necessarily
indicative of the results that will be achieved for the entire year ended June
30, 1997. The data set forth below are qualified by reference to, and should
be read in conjunction with, the financial statements and notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
THREE MONTHS
YEAR ENDED JUNE 30, ENDED SEPTEMBER 30,
--------------------------------------------------------------- ------------------------
1992 1993 1994 1995 1996 1995 1996
----------- ----------- ----------- ----------- ----------- ----------- -----------
STATEMENT OF OPERATIONS DATA:
Revenues:
Research and development
agreements................. $ -- $ -- $ 49,000 $ 396,000 $ 1,342,000 $ 172,000 $ 195,000
Grants...................... -- 784,000 823,000 121,000 267,000 39,000 29,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues.............. -- 784,000 872,000 517,000 1,609,000 211,000 224,000
Costs and expenses:
Research and development.... 1,090,000 2,600,000 5,627,000 4,889,000 10,075,000 1,195,000 3,160,000
General and administrative.. 272,000 1,153,000 1,565,000 1,558,000 2,067,000 446,000 452,000
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total costs and expenses.... 1,362,000 3,753,000 7,192,000 6,447,000 12,142,000 1,641,000 3,612,000
Loss before other income and
expense..................... (1,362,000) (2,969,000) (6,320,000) (5,930,000) (10,533,000) (1,430,000) (3,388,000)
Other income (expense):
Interest income............. 94,000 148,000 245,000 279,000 678,000 149,000 126,000
Interest expense............ -- (26,000) (65,000) (66,000) (62,000) (18,000) (11,000)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net loss..................... $(1,268,000) $(2,847,000) $(6,140,000) $(5,717,000) $(9,917,000) $(1,299,000) $(3,273,000)
=========== =========== =========== =========== =========== =========== ===========
Pro forma net loss per
share(1).................... $ (.32) $ (.49) $ (.82) $ (.66) $ (.98) $ (.13) $ (.32)
=========== =========== =========== =========== =========== =========== ===========
Pro forma weighted average
number of shares
outstanding(1).............. 3,919,000 5,840,000 7,461,000 8,644,000 10,103,000 10,094,000 10,107,000
=========== =========== =========== =========== =========== =========== ===========
JUNE 30, SEPTEMBER 30,
------------------------------------------------------------- -------------
1992 1993 1994 1995 1996 1996
---------- ---------- ----------- ----------- ----------- -------------
BALANCE SHEET DATA:
Cash, cash equivalents
and
short-term invest-
ments................. $5,640,000 $3,085,000 $ 6,730,000 $11,068,000 $10,967,000 $ 7,108,000
Working capital........ 5,399,000 2,744,000 6,187,000 10,319,000 9,851,000 6,540,000
Total assets........... 6,414,000 4,156,000 8,227,000 12,551,000 12,673,000 8,931,000
Deficit accumulated
during the
development stage..... (2,404,000) (5,251,000) (11,391,000) (17,108,000) (27,025,000) (30,298,000)
Total stockholders' eq-
uity.................. 6,104,000 3,268,000 6,985,000 11,186,000 10,850,000 7,618,000
- --------
(1) See Note 1 of Notes to Financial Statements for information concerning the
computation of pro forma net loss per share and shares used in computing
pro forma net loss per share.
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Since inception, the Company has been in the development stage and engaged
in research and product development, conducted both on its own behalf and in
connection with various collaborative research and development agreements with
other entities. The Company expects that its revenue sources for at least the
next several years will continue to be limited to grant revenues and research
funding, milestone payments and licensing fees from potential future corporate
collaborators. The timing and amount of such future revenues, if any, will be
subject to significant fluctuations, based in part on the success of the
Company's research activities and the timing of the achievement of certain
milestones. Substantially all of the Company's revenues from product sales, if
any, will be subject to royalty payments ranging from 2% to 5%. Further, under
the Company's Distribution Agreement with Cobe, Cobe will perform marketing
and distribution activities and in exchange will receive from 38% to 42% of
the Company's product sales in the area of stem cell therapy, subject to
negotiated discounts and volume-based adjustments. Research and development
expenses may fluctuate due to the timing of expenditures for the varying
stages of the Company's research and clinical development programs. Research
and development expenses will increase as product development programs and
applications of the Company's products progress through research and
development stages. Under the Company's License Agreement with Immunex, annual
renewal fees of $1,000,000 are payable in each of the next four years. Under
the Company's Distribution Agreement with Cobe, regulatory approval activities
for the Company's products for stem cell therapies outside of the United
States will be conducted, and paid for, by Cobe. As a result of these factors,
the Company's results of operations have, and are expected to continue to,
fluctuate significantly from year to year and from quarter to quarter and
therefore may not be comparable to or indicative of the results of operations
for other periods.
Over the past several years, the Company's net loss has primarily increased,
consistent with the growth in the Company's scope and size of operations. In
the near term, the Company plans additional moderate growth in employee
headcount necessary to address increasing requirements in the areas of product
development, research, clinical and regulatory affairs and administration.
Assuming capital is available to finance such growth, the Company's operating
expenses will continue to increase as a result. At least until such time as
the Company enters into arrangements providing research and development
funding, the net loss will continue to increase as well. The Company has been
unprofitable since its inception and does not anticipate having net income for
several years. Through September 30, 1996, the Company had an accumulated
deficit of $30,298,000. There can be no assurance that the Company will be
able to achieve profitability on a sustained basis, if at all.
This Prospectus contains, in addition to historical information, forward-
looking statements that involve risks and uncertainties. The Company's actual
results could differ materially from the results discussed in the forward-
looking statements. Factors that could cause or contribute to such differences
include those discussed under this caption, as well as those discussed under
the caption "Risk Factors" and elsewhere in this Prospectus.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Total revenues were $224,000 for the three months ended September 30, 1996
compared to $211,000 for the same period in 1995. These revenues consist
primarily of research and development revenue under the Company's research
collaboration with RPR, which was terminated in September 1996. See "Certain
Transactions."
Total costs and expenses were $3,612,000 for the three months ended
September 30, 1996 compared to $1,641,000 for the same period in 1995. The
increase in costs and expenses in 1996 is primarily the result of an increase
in research and development expenses to $3,160,000 in 1996 from $1,195,000 in
1995 and to a lesser extent by general and administrative expenses, which
increased to $452,000 for the three months ended September 30, 1996 from
$446,000 for the same period in 1995.
18
Interest income was $126,000 for the three months ended September 30, 1996
compared to $149,000 for the same period in 1995 and reflects a decrease in
the levels of cash, cash equivalents and short-term investments in 1996.
The Company's net loss increased to $3,273,000 for the three months ended
September 30, 1996 from $1,299,000 for the same period in 1995, primarily as a
result of increased costs and expenses in 1996.
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
Total revenues were $1,609,000 in 1996, $517,000 in 1995, and $872,000 in
1994. Grant revenues increased to $267,000 in 1996 from $121,000 in 1995,
which had decreased from $823,000 in 1994, reflecting the timing of grant
awards and related research activities and funding under the grants. Grant
revenues accounted for 17%, 23% and 94% of total revenues for the years ended
June 30, 1996, 1995 and 1994, respectively. Revenues from research and
development agreements totaled $1,342,000 in 1996, $396,000 in 1995 and
$49,000 in 1994, reflecting research funding received by the Company under its
collaboration with RPR which commenced in September 1995. Revenues from RPR
accounted for 83% and 48% of such revenue in 1996 and 1995, respectively. In
September 1996, the Company's research collaboration with RPR terminated.
Total costs and expenses were $12,142,000 in 1996, $6,447,000 in 1995, and
$7,192,000 in 1994. The increase in 1996 costs and expenses, compared with
1995, is primarily the result of an increase in research and development
expense to $10,075,000 in 1996 from $4,889,000 in 1995. The increase in
research and development expense reflects an increase in research, clinical
development and product development activities. The decrease in costs and
expenses in 1995, compared with 1994, is primarily the result of a decrease in
research and development expense to $4,889,000 in 1995 from $5,627,000 in
1994. General and administrative expenses were $2,067,000 in 1996, $1,558,000
in 1995 and $1,565,000 in 1994. The increase in general and administrative
expenses in 1996 is the result of increasing finance, legal and other
administrative and marketing expenses which are expected to continue to
increase in support of the Company's increasing product development and
research activities. The decrease in general and administrative expense in
1995 is reflective of generally lower spending in 1995 as compared to 1994.
Interest income was $678,000 in 1996, $279,000 in 1995, and $245,000 in
1994. The increases in interest income in 1996 and 1995 are due primarily to
corresponding increases in the levels of cash, cash equivalents and short-term
investments for such periods. Interest expense was $62,000 in 1996, $66,000 in
1995, and $65,000 in 1994, reflecting varying amounts outstanding under
capital leases during the periods.
The Company's net loss was $9,917,000 in 1996, $5,717,000 in 1995, and
$6,140,000 in 1994. The Company expects to report substantial net losses for
at least the next several years.
The Company has not generated any net income to date and therefore has not
paid any federal income taxes since inception. At June 30, 1996, the Company
had deferred tax assets totaling $9,650,000 consisting primarily of net
operating loss and research tax credits that begin to expire from 2004 through
2011, if not utilized. A full valuation allowance for deferred tax assets has
been provided. Utilization of federal income tax carryforwards is subject to
certain limitations under Section 382 of the Internal Revenue Code of 1986, as
amended. The completion of this offering is likely to limit the Company's
ability to utilize federal income tax carryforwards under Section 382. The
annual limitation could result in expiration of net operating losses and
research and development credits before their complete utilization.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private placements of Preferred Stock and other equity investments, which from
inception, have totaled approximately $37,916,000, and to a lesser degree,
through grant funding, payments received under research agreements and
collaborations, interest
19
earned on cash, cash equivalents, and short-term investments, and funding
under equipment leasing agreements. These financing sources have historically
allowed the Company to maintain adequate levels of cash and other liquid
investments.
The Company's combined cash, cash equivalents and short-term investments
totaled $10,967,000 at June 30, 1996, a decrease of $101,000 from June 30,
1995. The primary uses of cash, cash equivalents and short-term investments
during the year ended June 30, 1996 included $8,967,000 to finance the
Company's operations and working capital requirements, $445,000 in capital
equipment additions and $270,000 in scheduled debt payments. During the year
ended June 30, 1996, the Company received $3,500,000 in equity payments from
RPR and $5,965,000 in net proceeds from the sale of Series E Convertible
Preferred Stock. The Company plans to continue its policy of investing excess
funds in short-term, investment-grade, interest-bearing instruments.
The Company's combined cash, cash equivalents and short-term investments
totaled $7,108,000 as of September 30, 1996 compared to $10,967,000 at June
30, 1996. The decrease was primarily attributable to the use of $3,614,000 to
fund operations and working capital requirements during the period and to a
lesser degree by $173,000 in capital equipment purchases and $73,000 in
scheduled debt payments.
In October 1996, the Company executed a financing commitment to provide the
Company with up to $5,000,000 in additional equity funding from Cobe and
$5,000,000 under a convertible loan agreement with another current investor.
In connection with the convertible loan agreement, the Company has issued
warrants to purchase 69,444 shares of Common Stock for securing the
commitment. The warrants expire on October 15, 2000 if not exercised, and may
be exercised, in whole or in part, at a price equal to the lesser of (a) $9.00
per share, which price increases by $3.00 per share on each anniversary of the
closing of the offering being made hereby; or (b) 85% of the fair market value
of the Company's Common Stock at the time of exercise. As of the date of this
Prospectus, the Company has not obtained any financing under these
commitments. These funding commitments expire upon the closing of this
offering.
The Company's future cash requirements will depend on many factors,
including continued scientific progress in its research and development
programs, the scope and results of clinical trials, the time and costs
involved in obtaining regulatory approvals, the costs involved in filing,
prosecuting and enforcing patents, competing technological and market
developments and the cost of product commercialization. The Company does not
expect to generate a positive cash flow from operations for several years, if
at all, due to the expected increase in spending for research and development
programs and the expected cost of commercializing its product candidates. The
Company may seek additional funding through research and development
agreements with suitable corporate collaborators and through public or private
financing transactions. The Company anticipates that the net proceeds of this
offering, together with the Company's available cash and expected interest
income thereon, will be sufficient to finance its research and development and
other working capital requirements for 18 months or less. This estimate is
based on certain assumptions which could be negatively impacted by the matters
discussed under this heading and elsewhere under the caption "Risk Factors."
The Company expects that its primary sources of capital for the foreseeable
future will be through collaborative arrangements and through the public or
private sale of its equity securities. There can be no assurance that such
collaboration arrangements, or any public or private financing transaction,
will be available on acceptable terms, if at all, or can be sustained on a
long-term basis. If adequate funds are not available, the Company may be
required to delay, reduce the scope of, or eliminate one or more of its
research and development programs, which may have a material adverse effect on
the Company's business. See "Risk Factors--Future Capital Needs; Uncertainty
of Additional Funding" and Notes to Financial Statements.
RECENT PRONOUNCEMENTS
During October 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation," which
establishes a fair value based method of accounting for stock-based
compensation and incentive plans and requires additional disclosures for those
companies that elect not to adopt
20
the new method of accounting. Adoption of the new accounting pronouncement is
required for the Company's fiscal year beginning July 1, 1996 and the Company
intends to provide the additional disclosures required by the pronouncement in
its financial statements for the year ended June 30, 1997.
During March 1995, the Financial Accounting Standards Board issued Statement
No. 121, ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which requires the Company to review
for impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets whenever events or changes in circumstances
indicate that the carrying amount of an asset might not be recoverable. In
certain situations, an impairment loss would be recognized. SFAS 121 will
become effective for the Company's fiscal year beginning July 1, 1996.
Management has studied the effect of implementing SFAS 121 and, based upon its
initial evaluation, does not expect it to have a significant impact on the
Company's financial condition or results of operations.
21
BUSINESS
OVERVIEW
Aastrom is developing proprietary process technologies and devices for a
range of cell therapy applications, including stem cell therapies and gene
therapy. The Company's lead product under development, the Aastrom Cell
Production System (the "Aastrom CPS"), consists of a clinical cell culture
system with disposable cassettes and reagents for use in the rapidly growing
stem cell therapy market. The Company believes that the Aastrom CPS method
will be less costly, less invasive and less time consuming than currently
available stem cell collection methods. The Aastrom CPS is designed as a
platform product which implements the Company's pioneering stem cell
replication technology and which the Company believes can be modified to
produce a wide variety of cell types for emerging therapies. The Aastrom CPS
is currently in a pre-pivotal clinical trial under an IDE for autologous stem
cell therapy. The Company has entered into a strategic collaboration for the
development of the Aastrom CPS in stem cell therapy with Cobe BCT, Inc., a
subsidiary of Gambro AB and a world leader in blood cell processing products.
Additionally, Aastrom is developing products and processes for the delivery of
ex vivo gene therapy that are designed to address the production of gene-
modified cells.
CELL THERAPY
Cell therapy is the use of human cells to treat a medical disorder. The most
common types of cell therapy, blood and platelet transfusions, have been
widely used for many decades. More recently, bone marrow-derived cells have
been used to restore the bone marrow and the blood and immune system cells
which are damaged by chemotherapy and radiation therapy during the treatment
of many cancers. Transplantation of these cells is known as stem cell therapy.
Other cell therapies have recently been used for generating skin and cartilage
tissue and additional cell therapies are being developed by various companies
and researchers to restore immune system cells as well as bone, kidney, liver,
vascular and neuronal tissues.
Cell therapies require the collection of cells, either from the patient or a
suitably matched donor. These cells are typically processed and stored for
administration to the patient. Although cell therapy is being developed for
use in an increasing number of diseases, widespread application of new cell
therapies remains limited by the difficulties and expense associated with
current cell collection and processing procedures. The problems of current
cell collection techniques are exemplified in the area of stem cell therapy
where the patient or donor undergoes invasive, time-consuming and costly
procedures to collect the large volume of cells currently required for
effective treatment. The Company believes an alternative to collecting the
required therapeutic dose of cells is to grow these cells ex vivo from a small
starting volume. However, ex vivo cell expansion, when biologically possible,
has typically required costly techniques, facilities and operations to comply
with FDA good manufacturing practices ("GMP"), which are not generally
available in hospitals. As a result, cells needed for such therapies often
require specialized cell production facilities which use labor-intensive,
manual cell culture techniques.
There are numerous forms of cell therapy at an early stage of development.
One such example is ex vivo gene therapy, in which genes are introduced into
target cells in order to selectively correct or modulate disease conditions,
or to modify cells for production of a therapeutic protein. The Company
believes that the successful practice of ex vivo gene therapy will require the
development of processes and products for the reliable, high-efficiency
transfer of genes into cells and a means to produce the necessary dose of the
genetically modified cells under GMP conditions.
STEM CELL THERAPY
Stem cell therapy is used to treat cancer patients who undergo chemotherapy
or radiation therapy at dose levels that are toxic to the hematopoietic
system, which is comprised of the bone marrow and cells of the blood and
immune systems. The objective of stem cell therapy is to restore the
hematopoietic system via the infusion and subsequent engraftment of healthy
cells to replace bone marrow and result in the rapid recovery of neutrophils
and platelets that have been destroyed by chemotherapy and radiation therapy.
Stem cell therapy
22
reduces the risk of life-threatening infections and bleeding episodes
following cancer treatments. In order to treat many cancers, high intensity
chemotherapy or radiation is often required, which may severely destroy
("myeloablation") or partially destroy ("myelosuppression") the patient's
hematopoietic system.
Cells required for effective stem cell therapy include stem cells, to
replenish depleted bone marrow and provide a long-term ongoing source of the
multilineage progenitor cells of the blood and immune systems, and early and
late stage hematopoietic progenitor cells, to provide for rapid neutrophil and
platelet recoveries. Stromal accessory cells are believed to further augment
the growth of bone marrow. In the adult, all of these cell types originate in
the bone marrow. These cells are currently collected from the donor or patient
directly through multiple syringe aspirations under anesthesia, known as bone
marrow collection, or through blood apheresis following treatment with drugs
which cause cells to be released or mobilized from the bone marrow into the
blood. This latter technique is known as a peripheral blood progenitor cell
("PBPC") collection. See "--Current Stem Cell Collection Methods." Recently,
it has been demonstrated that the blood cells found in the umbilical cord of
newborn infants include cells effective for stem cell therapy. This source of
cells is being explored by physicians as a major new direction in stem cell
therapy, but is currently limited by difficulties in obtaining sufficient
quantities of these cells.
Once collected, the stem cell mixture is infused intravenously and the stem
and stromal accessory cells migrate into the bone cavity where they engraft to
form a new marrow. The hematopoietic progenitor cell components of the cell
mixture provide early restoration of circulating white blood cells and
platelets. The replenished bone marrow will normally provide long-term
hematopoietic function, but complete restoration of bone marrow may take years
following myeloablative cancer therapy. When the patient's hematopoietic
system is malignant, such as in the case of leukemia, cells from a suitable
donor are generally required in order to avoid reintroducing the disease
during cell infusion. Such donor derived transplants are termed "allogeneic"
transplants. Procedures using cells derived from the patient are termed
"autologous" transplants.
STEM CELL THERAPY MARKET OPPORTUNITY
The benefits of stem cell therapy in the treatment of cancer patients have
been well established over the past two decades. Stem cell therapy, in the
form of bone marrow transplantation, was originally used in patients who had
received treatment for blood and bone marrow cancers such as leukemia, and
genetic diseases of the blood. However, because stem cell therapy has been
shown to promote the rapid recovery of hematopoietic function, it is now being
increasingly used to enable patients with other forms of cancer to receive
high dose or multicycle chemotherapy and radiation treatments. These high
intensity therapies have a greater probability of eradicating dose sensitive
cancers but, because of their hematopoietic toxicity, cannot generally be
given without stem cell therapy. As a result, some patients are treated with
lower and less effective doses, and fewer cycles, of therapy than might
otherwise be used.
The Company estimates that over 35,000 stem cell therapy procedures were
completed worldwide in 1995, and that the number of such procedures is growing
at a compound annual rate of over 20%. This growth has been driven by
encouraging clinical results in the treatment of dose-sensitive solid tumors,
such as breast and ovarian cancers. The Company expects that stem cell therapy
procedures will continue to grow due to increased incidence and prevalence of
cancer, continued clinical demand for myelotoxic cancer treatment, and the
increased cost effectiveness of stem cell therapy treatments.
Stem cell therapy may also enhance the effectiveness of blood cell growth
factors. The timing and extent of additional cycles of chemotherapy is often
limited by the recovery of a patient's white blood cells and platelets because
a delayed recovery of these cells can leave the patient susceptible to life-
threatening infection and bleeding episodes, and this limitation may allow for
the regrowth of residual tumor cells. Many cancer patients are routinely
treated with growth factors including G-CSF, such as Neupogen and GM-CSF, such
as Leukine, which enhance the development of mature circulating white blood
cells and platelets from the early progenitor bone-marrow derived cells,
thereby decreasing the time between cycles of therapy and the probability of
infection. However, during high dose or multi-cycle therapy, the stem and
progenitor cells on which these growth
23
factors act are often depleted. Without these cells, growth factors have a
limited or negligible effect. Stem cell therapy generally enhances the
effectiveness of growth factors by introducing target stem and progenitor
cells for growth factors to act upon such that patients generally exhibit a
more rapid and consistent hematopoietic recovery.
CURRENT STEM CELL COLLECTION METHODS
Currently, the bone marrow-derived cells required for stem cell therapy are
collected primarily either through the bone marrow harvest method or the PBPC
collection method.
Bone Marrow Harvest
A traditional bone marrow harvest is a costly and invasive surgical
procedure in which a physician removes approximately one liter of bone marrow
from a patient or donor. This volume of bone marrow is removed using needles
inserted into the cavity of the hip bone. The bone marrow harvest procedure
typically requires between two to four hours of operating room time, with the
physician often making more than 100 separate puncture sites in the hip bone
to collect the necessary amount of bone marrow. Due to the length of the
procedure and the trauma to the patient, general surgical anesthesia is
administered and the patient is typically hospitalized for a day. Frequently,
the patient suffers pain from the procedure for several days after being
discharged from the hospital. Furthermore, complications resulting from the
general anesthesia or invasive nature of the procedure occur in a small
percentage of patients. Bone marrow harvest provides a reliable source of stem
and stromal accessory cells and has been the preferred source of cells in
allogeneic transplants.
PBPC Mobilization and Collection
PBPC mobilization is a newer technique in which bone marrow-derived cells
are harvested from a patient's or donor's circulating blood, rather than from
bone marrow. In a PBPC mobilization procedure, the patient receives multiple
injections of growth factors or cytotoxic drugs, or both, over the course of a
week or more, which cause stem and progenitor cells resident in the bone
marrow to mobilize into the circulating blood. The mobilized cells are then
collected by connecting the patient to a blood apheresis device, which draws
and returns large volumes of the patient's or donor's blood in order to
selectively remove the therapeutic volume of stem and progenitor cells. Each
collection procedure typically lasts for two to six hours and is typically
repeated on two to eight consecutive days. Specialized laboratory testing over
the period of mobilization and cell harvesting is necessary to determine that
a sufficient quantity of desired cells has been collected, adding to the cost
of the procedure. The PBPC process has become the predominant procedure in
autologous stem cell therapy.
Procedure Considerations
Although stem cell therapy is being utilized to treat more patients for a
broader range of diseases, its availability continues to be limited by the
high costs of procuring cells, the invasive nature of traditional cell
procurement techniques, and by the technical difficulties related to those
collection procedures. The Company estimates that current costs for bone
marrow harvest and processing are approximately $10,000 to $15,000 per
procedure, with considerable variability between institutions. The Company
estimates that current costs for PBPC collection, including mobilization with
growth factors, are approximately $12,000 to $20,000 for a two to three cycle
procedure, with considerable variability between institutions depending on the
total volume, time and number of aphereses required.
Overall costs of stem cell therapy include the costs of the cell collection
procedure, and the costs associated with supporting the patient during post-
transplant recovery. Post-transplant costs include hospitalization time,
antibiotic support, management of adverse reactions to the large volume cell
infusions, and infusions of platelets and red blood cells. Any new stem cell
therapy process will generally need to provide similar recovery endpoints to
be competitive with the current procedures. In this regard, PBPC procedures
have gained popularity compared with bone marrow harvests because the number
of platelet transfusions is reduced for some patients.
24
Recently, products to implement a cell isolation method known as CD34
selection have been developed by other companies in conjunction with bone
marrow harvest and PBPC collections. CD34 selection is a process designed to
isolate specific types of cells in order to decrease storage and infusion
problems associated with the large volume of fluids collected in bone marrow
or multiple apheresis procedures. CD34 selection is used after the initial
collection of stem and progenitor cells and, therefore, does not address the
difficulties or costs associated with the basic cell collection procedures. To
date, the CD34 selection procedure has demonstrated limited therapeutic
benefit to the patient, but substantially increases the costs of the
procedure. A future objective of CD34 selection is to assist in depleting
tumor cells from the transplant cells collected, thereby expanding the
availability of stem cell therapy to new patient populations.
UMBILICAL CORD BLOOD
Umbilical cord blood ("UCB"), which is collected directly from the umbilical
cord after delivery, without pain or risk to the infant or the mother, is
emerging as a new source of cells for stem cell therapy. UCB has been reported
to have stem cell concentrations that are much higher than that typically
obtained from traditional bone marrow and PBPC collection methods. After
collection, UCB is typically frozen for later use in a stem cell therapy
procedure. Storage of UCB samples involves small volumes of cells, compared to
typical bone marrow or PBPC storage. Accordingly, the costs of collection and
storage of UCB cells are comparatively low. This source of cells is also
"tumor-free," such that UCB would be preferred for many current stem cell
therapy procedures in metastatic cancer patients. Before UCB can become a
major supply source for stem cell therapy, a coordinated UCB banking system
must emerge. In this regard, several organized UCB banking institutions have
been established to date, and the group is growing in both number and size.
One current disadvantage of UCB is the relatively low number of available
cells. Unlike bone marrow or PBPC harvest, where the collection of more cells
to meet a particular treatment is typically achievable, the number of cells
available from a UCB donor is limited. This problem is exacerbated by the
required cryopreservation of the cells, which causes a significant cell loss.
The resultant low cell number is believed to be responsible for the longer
hematopoietic recovery times observed with UCB transplants, as compared with
bone marrow or PBPC transplants. Further, because of the low cell number, UCB
transplants are typically restricted to small patients. Therefore, increasing
the number of therapeutic cells from a UCB sample would facilitate the more
widespread use of UCB transplants. Aastrom believes that providing the
transplant site with the capability to carry out the UCB cell expansion will
be a major factor in the increased use of UCB for stem cell therapy and a
significant business opportunity.
AASTROM TECHNOLOGY
Aastrom is developing proprietary process technologies that are pioneering
the ex vivo production of human stem and progenitor cells. The Company has
also developed a proprietary cell culture device that mimics the biological
and physical environment necessary for the growth of certain human cells and
tissues, including bone marrow. The Company's initial product candidate, the
Aastrom CPS, utilizes the Company's process technology and is designed to
enable the ex vivo production of human stem and progenitor cells as an
alternative to the bone marrow harvest and PBPC mobilization methods and as an
enhancement to the UCB collection method. The Company believes that the
Aastrom CPS may be used for other cell production processes which are being
developed by third parties and, in combination with the Company's proprietary
gene transfer process, may have application in the developing field of ex vivo
gene therapy.
CORE TECHNOLOGY
Stem Cell Growth Process
Aastrom has developed proprietary process technologies for ex vivo
production of therapeutic stem and progenitor cells as well as other key cells
found in human bone marrow. The Company's proprietary process entails the
placement of a stem cell mixture in a culture environment that mimics the
biology and physiology of
25
natural bone marrow. This process enables the stem and early and late-stage
progenitor cells needed for an effective stem cell therapy procedure to be
concurrently expanded. Growth factors can be added to stimulate specific cell
lineages to grow or to increase cell growth to meet a particular therapeutic
objective. The stem cell growth process can best be completed with little or
no additional stem cell selection or purification procedures. This stem cell
replication process can also enable or augment the genetic modification of
cells by providing the cell division step needed for new genes to integrate
into the stem cell DNA. Currently available cell culture methods tend to
result in a loss of stem cells, either through death or through
differentiation into mature cells. The Company has exclusive license to two
U.S. patents and additional applications that cover these processes. See "--
Additional Stem Cell and Other Cell Therapies."
Aastrom Cell Culture Chamber
Aastrom has developed a proprietary cell culture chamber to implement the
Company's process technology. The culture chamber produces cells on a clinical
scale, and allow for simple, sterile recovery of the cells for therapeutic
use. The Company believes that the Aastrom cell culture chamber may also be
used for growing other human therapeutic cells, such as T-Cells used for
lymphocyte therapies, chondrocytes for cartilage replacement, and mesenchymal
tissues for bone and cartilage replacement. The Company holds exclusive
licenses to two U.S. patents and additional applications for its cell culture
chamber device technology. See "--Additional Stem Cell and Other Cell
Therapies."
Efficient Gene Transfer
Aastrom has developed proprietary processes and device technology that
enables increased efficiency of vector-mediated gene transfer into cells as
compared to conventional procedures. This directed-motion gene transfer or
gene loading technology is intended to have applications for most cell and
tissue types and most vector technologies. The Company intends to develop
products based upon its gene loading technology that it believes will
facilitate the advancement of numerous gene therapy protocols into the clinic
and ultimately the market. The Company has received a U.S. Patent and has
additional applications for this technology. See "Aastrom Product Candidates
For Ex Vivo Gene Therapy."
THE AASTROM CPS
The Aastrom CPS is the Company's lead product under development for multiple
cell therapy applications, including stem cell therapy. The Aastrom CPS is a
proprietary system that the Company believes will enable the large scale ex
vivo production of a variety of therapeutic cells at health care facilities,
independent laboratories, transplant centers and blood banks, and has been
designed to implement Aastrom's stem cell growth process as well as processes
for the production of other cell types.
The Aastrom CPS is comprised of several components, including single-use
disposable cassettes and reagents and microprocessor-controlled instruments,
which are at various stages of development. The Cell Cassette is a single-use
disposable cartridge which contains the Aastrom cell culture chamber and the
related media supply waste reservoirs and harvest bag. The microprocessor-
controlled instruments include the Incubator which controls the culture
conditions for the operation of the Cell Cassette, and the Processor which
automates the priming and harvesting of the cells from the cell cassette. The
System Manager is a user interface computer that is being developed to
simultaneously track and monitor the cell production process in over thirty
CPS Incubators and record relevant process variables and operator actions.
Prototype components of the Aastrom CPS are currently being used in a clinical
trial and ongoing development activities are directed at completing other
production level components of the Aastrom CPS.
The Aastrom CPS is designed to be operated with minimal operator activity by
a medical or laboratory technician and can implement clinical scale cell
production at the patient care site. The end product of the Aastrom process is
a sterile bag of cells. The control and documentation features of the Aastrom
CPS have been designed to meet GMP requirements for the therapeutic production
of cells.
26
AASTROM CPS FOR STEM CELL THERAPY
The Company's initial application for the Aastrom CPS is expected to be in
the growing field of stem cell therapy, where the Company believes that the
Aastrom CPS may address many of the limitations of existing procedures. The
Aastrom CPS is based on a comparatively simple process in which a small volume
of bone marrow cells are collected from the patient or donor using a needle
aspiration procedure under a local anesthetic or sedative. This cell mixture
is quantified, and an appropriate volume of cells is then inoculated into one
or more cell cassettes with the necessary growth media. Therapeutic growth-
factor-stimulated cells are produced using the Aastrom CPS in approximately 12
to 13 days, with no further patient involvement. Depending upon the cell
quantity necessary for a therapeutic application, single or multiple cell
cassettes may be required, with a different volume requirement of starting
cells. The Aastrom CPS has been designed to minimize operator involvement
during the cell production process, and the steps required before and after
the Aastrom CPS are standard laboratory procedures.
Advantages of Aastrom CPS
The Company believes that the Aastrom CPS, if approved for commercial sale
by the FDA and foreign regulatory agencies, will provide improvements and
efficiencies over traditional cell collection processes. The following table
illustrates some potential advantages of the Aastrom CPS compared to
approximated patient visits, procedure time and needle sticks in connection
with currently established cell collection techniques:
CELL SOURCE VISITS(1) PROCEDURE TIME (HOURS) NEEDLE STICKS(2)
----------- --------- ---------------------- ----------------
Bone Marrow Harvest(3)..... 6 22 100+
PBPC Mobilization and Col-
lection(4)................ 5-7 23-27 20-30
Aastrom CPS(5)............. 1 1-2 4-10
--------
(1) Includes all outpatient, inpatient, and home care episodes.
(2) Includes bone marrow aspirates, blood samples, catheter placements, and
subcutaneous injections.
(3) Includes operating room procedure and all preparatory screening and
testing.
(4) Based on two to three 4-hour rounds of PBPC mobilization and collection
after sequential G-CSF blood mobilization injections.
(5) Based on data accumulated during the Company's clinical trials.
Reduced Cost. The Company believes the Aastrom CPS has the potential to
replace more costly, labor intensive and invasive cell collection procedures
currently employed for stem cell therapy and to reduce physician, staff and
patient time requirements.
Reduced Patient and Physician Burden. Cell production with the Aastrom CPS
is expected to require the collection of a small volume of starting material
compared to current collection procedures, eliminating the requirement for
general surgical anesthesia, multiple drug injections and blood apheresis.
Patient benefits include fewer needle sticks than with current cell collection
methods and a reduction in overall patient procedure time. Additionally,
Aastrom's process for cell expansion is expected to minimize the time
requirement for physicians compared with bone marrow harvest.
Enhanced Multicycle High-Dose Chemotherapy. The long restoration period for
the hematopoietic system following myeloablative therapy effectively limits
patients to one opportunity for cell collection prior to cancer therapy. The
Aastrom CPS may enhance the practice of multi-cycle, high-dose chemotherapy by
providing the ability to produce a therapeutic dose of cells from a small
starting volume. The initial cell collection can be divided into multiple
samples and stored frozen until expansion at a later time is required.
Reduced Quantity of Lymphocytes. The Company believes its approach to stem
cell therapy may provide an additional benefit over current methods by
depleting potentially harmful cells such as T-cells and B-cells. These cells
are believed to be primarily responsible for graft-versus-host disease, a
common manifestation of allogeneic transplants in which the grafted donor's
cells attack the host's tissues and organs.
27
Tumor Cell Purging. Cancer patients with tumor metastases, in which the
cancer has spread to the blood and bone marrow, have not traditionally been
candidates for autologous stem cell transplants because transplant may
reintroduce cancer cells into the patient. Additionally patients may have
undetected tumor cells in their marrow or PBPC transplant, which can
reestablish the cancer in the patient following transplant. The Aastrom CPS
process may offer benefits for these groups of patients. The Company and other
investigators have shown that some primary human tumor cells die or do not
grow during hematopoietic cell culture. Further, the smaller volume of
starting cells used for the Aastrom CPS compared with BMT or PBPC transplants
shall provide approximately 10 to 70 fold less tumor cells in a transplant.
This combination of passive depletion during culture with the lower starting
volume of tumor cells may result in a tumor-free or tumor-reduced cell product
for transplant. The benefit of such tumor depletion, if any, will vary
depending upon the type of cancer and state of disease.
CLINICAL DEVELOPMENT
The Company's clinical development plan is initially to obtain regulatory
approval in the United States to market the Aastrom CPS for autologous stem
cell therapy and in Europe for more general cell therapy applications. The
Company also intends to pursue approval of the Aastrom CPS for additional
clinical indications.
The Company believes that the Aastrom CPS for stem cell therapy will be
regulated as a medical device and that the Company will be required to submit
a PMA application to, and obtain approval from, the FDA to allow it to market
this product in the United States. In order to obtain PMA approval, the
Company will be required to complete clinical trials under an IDE. See "--
Government Regulation--Devices."
In a dose-ranging study conducted by the University of Michigan (the
"University") in 1993, ex vivo produced cells utilizing the Company's
proprietary cell production technology were infused into seven patients with
non-Hodgkin's lymphoma after they received myeloablative chemotherapy. These
patients also received cells obtained from either an autologous bone marrow
harvest or PBPC procedure. No safety issues attributable to the infused cells
were observed in this trial and the patients exhibited recovery profiles
consistent with traditional transplantation techniques.
Aastrom completed the first feasibility trial of its cell production system
technology under an IDE at the MD Anderson Cancer Center in October 1995. In
this trial, ten breast cancer patients, who were subjected to myeloablative
chemotherapy, were treated with cells obtained from a bone marrow harvest and
with cells produced from a sample of such cells with a predecessor of the
Aastrom CPS. The patients exhibited standard clinical recoveries, providing
evidence of the clinical safety of cells obtained from the Company's cell
production process and of the feasibility of cell production with a
predecessor of the Aastrom CPS by clinical personnel at an investigational
site.
Aastrom is currently conducting a pre-pivotal stem cell therapy clinical
trial under an IDE reviewed with the FDA. This clinical trial is designed to
demonstrate that cells produced using the Aastrom CPS can provide
hematopoietic recovery in accordance with trial endpoints in breast cancer
patients who have received myeloablative chemotherapy. Bone marrow obtained
from the patient by traditional methods will be available for precautionary
reasons at defined clinical stages. The results from the five patients accrued
at the first trial site have provided evidence of the clinical safety of the
Aastrom CPS-produced cells in patients and that the hematopoietic recovery
endpoints specified for the trial are achievable. The patients at this trial
site were Stage IV breast cancer patients who had received significant prior
cytotoxic therapies for their cancer. Four of these five patients received the
precautionary back-up marrow pursuant to the trial protocol. Preliminary
results from the first trial site were reviewed with the FDA, and the IDE was
amended to expand the trial to a second site. The amended IDE provided for the
enrollment of Stage II, III and IV patients, and a delayed use of the
precautionary back-up bone marrow. As of the date of this Prospectus, patient
accrual is ongoing and patient data from this site provides further evidence
that the hematopoietic recovery endpoints specified for the trial are
achievable.
28
The objective of the current and anticipated future trials is to establish
the protocol for the pivotal trial of the Aastrom CPS in autologous stem cell
therapy. Provided that these pre-pivotal trials provide evidence of
feasibility and safety of the cells produced in the Aastrom CPS, the Company
anticipates initiating a pivotal clinical trial at multiple sites, with the
patient enrollment typical to support a PMA filing. See "Risk Factors--
Uncertainties Related to Preclinical and Clinical Testing."
Aastrom, in partnership with Cobe, intends to initiate a clinical trial in
France in early 1997 to evaluate the use of Aastrom CPS cells to promote
hematopoietic recovery in breast cancer patients undergoing aggressive
myelosuppressive chemotherapy. The Company intends to seek approval to market
the Aastrom CPS in Europe through CE Mark Registration. See "--Government
Regulation--Regulatory Process in Europe."
The preliminary results of the Company's pre-pivotal trial may not be
predictive of results that will be obtained from subsequent patients in the
trial or from more extensive trials. Further, there can be no assurance that
the Company's pre-pivotal or pivotal trial will be successful, or that PMA
approval or required foreign regulatory approvals for the Aastrom CPS will be
obtained in a timely fashion, or at all.
BUSINESS STRATEGY
Aastrom's objective is to build a leadership position in cell therapy
process technology. The primary elements of the Company's business strategy
are as follows:
Establish Consumable Based Business Model. Aastrom's strategy is to sell the
Aastrom CPS to institutions, hospitals, and other clinical care or commercial
cell production facilities that are administering cell therapy. The Company
plans to obtain ongoing revenue from the sale of single-use disposable Cell
Cassettes and related cell culture media and reagents, which are utilized in
individual cell therapy applications. After cells are cultured in the Cell
Cassette, the cassette is discarded and a new cassette is utilized for a
subsequent patient. Along with ongoing revenue from the sale of instruments
and disposables for cell therapy applications, the Company believes it will be
able to obtain license revenue from its stem cell therapy applications for its
proprietary stem cell processes.
Focus Initially on Established and Reimbursed Therapies. Aastrom will seek
to establish the use of the Aastrom CPS in the field of stem cell therapy for
the treatment of toxicity resulting from many cancer therapies, including
those for breast cancer, lymphoma, ovarian cancer, germ cell cancers,
leukemias and aplastic anemias. Stem cell therapy is a well-established and
growing treatment modality in cancer therapy, and current cell collection
procedures are widely reimbursed by third party payors.
Leverage Platform Technology Across Multiple Market Opportunities. In
addition to stem cell therapy applications, the Company believes that the
Aastrom CPS may serve as a platform product that can be used to produce a
variety of other cells for multiple therapeutic applications, such as T-cells
for use in lymphocyte therapies, chondrocytes for cartilage replacement, and
mesenchymal cells for use in certain solid tissue therapies. The Company
believes that if the Aastrom CPS is well established as a method for cell
production for use in stem cell therapy, the system will be positioned for
commercialization of new cell and ex vivo gene therapies that are under
development.
Market Through Collaborative Relationships. The Company plans to reach end
user markets through collaborative relationships with companies that have
established positions in those markets. In 1993, the Company formed a
strategic partnership with Cobe, a world leader in the marketing and
distribution of blood cell processing equipment and disposables. Cobe is the
Company's exclusive, worldwide distributor of the Aastrom CPS for stem cell
therapy applications, not including stem cell gene therapy. The Company will
seek to establish additional collaborations for other cell therapies as those
therapies and the Company's product lines develop. See "Business--Strategic
Relationships."
29
ADDITIONAL STEM CELL AND OTHER CELL THERAPIES
The Company believes that the Aastrom CPS hardware and disposables may be
developed to serve as platform products for application in a variety of other
cell therapies in addition to stem cell therapy. The Company believes that the
Aastrom CPS has the potential to supplant current manual cell culture methods
to produce therapeutic quantities of cell types such as T-cells, chondrocytes,
mesenchymal cells, keratinocytes, neuronal cells and dendritic cells.
Currently such cells are often produced in specialized facilities generally
using manual cell culture techniques which limit the effective
commercialization of these cell types for therapy. Potential advantages of the
Aastrom CPS in these therapies may include: (i) reducing labor and capital
costs; (ii) enhancing process reliability; (iii) automating quality assurance;
and (iv) reducing the need for environmentally controlled facilities.
Modification of such processes and application of the Company's products to
the expansion of other cell types may require substantial additional
development of specialized culture environments and which may need to be
incorporated within the Company's existing cell cassettes. There can be no
assurances that the Company will be able to successfully modify or develop
existing or future products to enable such additional cell production
processes. Furthermore, other than a limited application of chondrocyte
therapy, novel cell therapies are still in early stages of development by
third parties. The Company's business opportunity is dependent upon successful
development and regulatory approval of these novel cell therapies. No
assurance can be given that such novel therapies will be developed or approved
or that the Company's processes or product candidates will find successful
application in such therapies. See "--Business Strategy" and "--Clinical
Development" and "Use of Proceeds."
Immunotherapies
Immunotherapy involves using cells of the immune system to eradicate a
disease target. T-cell lymphocytes and dendritic cells are being actively
investigated by other companies for this purpose, and these procedures require
ex vivo cell production.
T-cells, a class of lymphocyte white blood cells, play a critical role in
the human immune system and are responsible for the human immune response in a
broad spectrum of diseases, including cancers and infectious diseases.
Cytotoxic T-lymphocytes ("CTLs") is a new process that involves collecting T-
cells from a patient and culturing them in an environment resulting in T-cells
with specificity for a particular disease target. Clinical trials by third
parties have been completed demonstrating CTL effectiveness for certain
diseases. The ex vivo production of these cells under conditions for use in
medical treatment represents a critical step in the advancement of this
therapy.
Dendritic cells (the potent antigen presenting cells) are believed to play
an important role in the function of the immune system. Researchers believe
that cultured dendritic cells could augment the natural ability of a patient
to present antigens from the infectious agents to the immune system and aid in
the generation of a cytotoxic T-cell response to the infectious agent. The
Company intends to explore application of its products and processes for the
expansion of dendritic cells.
Solid Tissue Cell Therapies
One of the newest areas of cell therapy involves the production of
chondrocytes for the restoration of cartilage. Chondrocyte therapy involves
the surgical removal of a small amount of tissue from the patient's knee and a
therapeutic quantity of chondrocytes is produced from this surgical biopsy.
The cells are then implanted into the patient's knee. Published reports
indicate that such cells then reestablish mature articular cartilage.
Currently, this cell production process is completed in highly specialized
laboratory facilities using trained scientists and manual laboratory
procedures. The Aastrom CPS has the potential to reduce costs associated with
the cell production procedure and may eventually facilitate the transfer of
the cell production capability away from specialized facilities directly to
the clinical care sites.
30
Other Stem Cell Therapies
Autoimmune Diseases. Stem cell therapy is under clinical investigation for
the treatment of other diseases. Clinical studies have suggested a potential
role for stem cell therapy in treatment of autoimmune diseases such as
rheumatoid arthritis, multiple sclerosis and lupus erythematosus. The generic
cause of these diseases is a malfunctioning immune system, including T-
lymphocytes. Clinical trials in which the patient receives treatment resulting
in immune ablation (usually involving myelotoxic cancer drugs or radiation),
followed by stem cell therapy to restore the bone marrow and cells of the
blood and immune system, have demonstrated remission of the autoimmune disease
in some patients.
Organ Transplantation. Recently, a number of academic and corporate
researchers and companies have identified the potential use of stem cell
therapy to facilitate successful solid organ and tissue transplants between
human donors and recipients, as well as using organs from non-human species
for transplantation into humans. These proposed applications are based on the
observation that donor-specific bone marrow, infused concurrent with or prior
to the organ transplant, can provide for reduction of the normal immune
rejection response by the transplant recipient (e.g. heart, lung, liver or
kidney transplants).
A major limitation to the use of stem cell therapy in solid organ transplant
is the limited availability of sufficient amounts of bone marrow to obtain a
desired therapeutic response of immune tolerization. This limitation is
particularly problematic when cadaveric donor organs are available, which has
traditionally been the source of cells for these procedures. Bone marrow is
also often available from the cadaveric donor, but only in a limited amount.
Normally this amount may be sufficient for one transplant, but a donor might
provide multiple organs for transplant into multiple recipients. Aastrom
believes that the ability to expand the available bone marrow ex vivo will
enhance the use of stem cell therapy for such transplant procedures.
AASTROM PRODUCT CANDIDATES FOR EX VIVO GENE THERAPY
A novel form of cell therapy is ex vivo gene therapy. For this type of cell
therapy, cells procured from the patient or a donor are genetically modified
prior to their infusion into the patient. Analogous to other cell therapies,
the ability to produce a therapeutic dose of these gene-modified cells is a
major limitation to the commercialization of these cell therapies. This
limitation is further exacerbated by the additional requirement that the cells
be genetically modified under conditions that are sterile and comply with GMP.
Gene therapy is a therapeutic modality that holds the potential to
significantly impact the delivery of healthcare and the delivery of
therapeutically useful protein-based drugs within the body. Gene therapies are
generally targeted at the introduction of a missing normal gene into otherwise
defective human tissue, or the introduction of novel biologic capability into
the body via the introduction of a gene not ordinarily present (for example,
genes providing for the enhanced recognition and destruction or inhibition of
the HIV-1 virus). The major developmental focus of the ex vivo gene therapy
industry has been to identify the therapeutic gene of interest, insert it into
a suitable vector that can be used to transport and integrate the gene into
the DNA of the target cell, and then cause the gene to become expressed. For
gene therapy to progress to clinical applications, a process to produce a
sufficient quantity of therapeutic cells is required as is an efficient means
to insert the gene vector into target cells. Gene therapy is still in an early
stage of development by third parties. The Company's business opportunity is
dependent upon the successful development and regulatory approval of
individual gene therapy applications. No assurance can be given that such
applications will be developed or approved or that the Company's processes or
product candidates will find successful applications in such therapies.
THE AASTROM CPS FOR GENE THERAPY (GT-CPS)
The Aastrom CPS has been developed to produce cells for therapy. Clinical
cell production is a limiting requirement for gene therapy to effectively move
into medical practice, and as such, the Company believes that the Aastrom CPS
may be useful in many potential ex vivo gene therapy applications.
31
Further, the Company's proprietary stem cell production process technology
implemented by the Aastrom CPS provides the conditions for clinical scale stem
cell division, and enables or enhances the introduction of therapeutic genes
into stem cell DNA. The Company believes that its technology may also enable
expansion of more mature progeny of these stem cells to create a gene therapy
cell product with potential short and long term therapeutic effect.
The Company has two principal objectives for the development of Aastrom GT-
CPS: (i) the enablement of stem cell gene therapies for a variety of
hematologic and other disorders, based on the GT-CPS's ability to enable large
scale stem cell division ex vivo; and (ii) the enablement of gene transfer and
therapeutic cell production by local and regional primary patient care
facilities and ancillary service laboratories.
THE AASTROM GENE LOADER
The Aastrom Gene Loader product technology, which is under development, is
being designed to transfer new therapeutic genes, which are carried by vectors
into the target cell. This process, which is typically inefficient in many
human cells, has represented a major hurdle preventing many ex vivo gene
therapies from moving forward in the clinic. The Aastrom Gene Loader will
incorporate the Company's proprietary directed motion gene transfer technology
and is expected to incorporate single-use sterile disposables, operated by
dedicated instrumentation.
A major product objective of the Aastrom Gene Loader is the enhancement of
gene transfer efficiencies and reliability. Improving gene vector efficiencies
may enable a wide spectrum of gene therapies currently unable to realize
clinical application.
The Company believes that these issues represent a general bottleneck for
other companies pursuing ex vivo gene therapy clinical applications. The
Company's technology may favorably influence these gene therapy applications,
the development of which are impeded due to low transduction efficiencies and
the resultant need for use of extreme quantities of gene vectors and/or target
"delivery" tissues.
STRATEGIC RELATIONSHIPS
On October 22, 1993, the Company entered into a Distribution Agreement (the
"Distribution Agreement") with Cobe, a subsidiary of Gambro AB, for Cobe to be
the Company's exclusive, worldwide distributor of the Aastrom CPS for stem
cell therapy applications (the "Stem Cell Therapy Applications"). The Company
has retained the right to market the Aastrom CPS for uses outside the Stem
Cell Therapy Applications, such as for all gene therapy applications and for
production of other cells and tissues. The initial term of the Distribution
Agreement expires on October 22, 2003, and Cobe has the option to extend the
term for an additional ten-year period. The Company is responsible for the
expenses to obtain FDA and other regulatory approval in the United States,
while Cobe is responsible for the expenses to obtain regulatory approval in
foreign countries to allow for worldwide marketing of the Aastrom CPS for Stem
Cell Therapy Applications. See "Risk Factors--Consequences of Cobe
Relationship."
Under the terms of the Distribution Agreement, the Company will realize
approximately 60% and 58% of the net sales price at which Cobe ultimately
sells the Aastrom CPS in the United States and Europe, respectively, for Stem
Cell Therapy Applications, subject to certain negotiated discounts and volume-
based adjustments. The Company is also entitled to a premium on United States
sales in any year in which worldwide sales exceed specified levels.
The Distribution Agreement may be terminated by Cobe upon twelve (12) months
prior notice to the Company in the event that any person or entity other that
Cobe beneficially owns more than 50% of the Company's outstanding Common Stock
or voting securities. The Distribution Agreement may also be terminated by
Cobe at any time after December 31, 1997 if Cobe determines that
commercialization of the Aastrom CPS for stem cell therapy on or prior to
December 31, 1998 is unlikely.
32
In conjunction with the Distribution Agreement, the Company also entered
into a Stock Purchase Agreement with Cobe, whereby Cobe acquired certain
option, registration, preemptive and other rights pertaining to shares of the
Company's stock. See "Description of Capital Stock--Rights of Cobe."
MANUFACTURING
The Company has no current intention of internally manufacturing its product
candidates and accordingly is developing relationships with third party
manufacturers which are FDA registered as suppliers for the manufacture of
medical products.
On May 10, 1994, the Company entered into a Collaborative Product
Development Agreement with SeaMED Corporation, ("SeaMED"). Pursuant to this
agreement, the Company and SeaMED will collaborate on the further design of
certain instrument components in the Aastrom CPS, and enable SeaMED to
manufacture pre-production units of the instrument components for laboratory
and clinical evaluation. The Company is paying SeaMED for its design and pre-
production work on a "time and materials" basis, utilizing SeaMED's customary
hourly billing rates and actual costs for materials. Subject to certain
conditions, the Company has committed to enter into a manufacturing agreement
with SeaMED for commercial manufacture of the instrument components for three
years after shipment by SeaMED of the first commercial unit pursuant to a
pricing formula set forth in the agreement. The Company retains all
proprietary rights to its intellectual property which is utilized by SeaMED
pursuant to this agreement.
On November 8, 1994, the Company entered into a Collaborative Product
Development Agreement with Ethox Corporation ("Ethox"). Pursuant to this
Agreement, the Company and Ethox will collaborate on the further design of
certain bioreactor assembly and custom tubing kit components of the Aastrom
CPS, and enable Ethox to manufacture pre-production units of such components
for laboratory and clinical evaluation. The Company is paying Ethox for its
design and production work on a "time and materials" basis, utilizing Ethox's
customary hourly billing rates and actual costs for materials. The Company
retains all proprietary rights to its intellectual property which are utilized
by Ethox pursuant to this Agreement.
In April 1996, the Company entered into a five-year License and Supply
Agreement with Immunex to purchase and resell certain cytokines and ancillary
materials for use in conjunction with the Aastrom CPS. The agreement required
the Company to pay Immunex an initial up-front fee of $1,500,000 to be
followed by subsequent annual fee payments equal to $1,000,000 per year during
the term of the agreement in addition to payment for supplies purchased by the
Company. The agreement may be terminated by the Company at any time subject to
the payment to Immunex of a specified amount for liquidated damages. Immunex
may terminate the agreement in the event that the Company fails to purchase a
minimum amount of its forecasted annual needs.
There can be no assurance that the Company will be able to continue its
present arrangements with its suppliers, supplement existing relationships or
establish new relationships or that the Company will be able to identify and
obtain the ancillary materials that are necessary to develop its product
candidates in the future. The Company's dependence upon third parties for the
supply and manufacture of such items could adversely affect the Company's
ability to develop and deliver commercially feasible products on a timely and
competitive basis. See "Risk Factors--Manufacturing and Supply Uncertainties;
Dependence on Third Parties."
PATENTS AND PROPRIETARY RIGHTS
The Company's success depends in part on its ability, and the ability of its
licensors, to obtain patent protection for its products and processes. The
Company and its licensors are seeking patent protection for technologies
related to (i) human stem and progenitor cell production processes; (ii)
bioreactors and systems for stem and progenitor cell production and production
of other cells; and (iii) gene transfer devices and processes. The Company has
exclusive license rights to five issued United States patents that together
claim (i) certain methods for ex vivo stem cell division and stable genetic
transformation, optimization of hematopoietic progenitor cell cultures and
increasing the metabolism or growth factor secretion of stromal cells, in a
33
continuously or periodically perfused liquid culture medium; (ii) certain
devices for the simultaneous culture of stem cells and hematopoietic cells;
and (iii) certain methods of infecting or transfecting target cells with
genetic vectors. Patents equivalent to two of these United States patents have
also been issued in other jurisdictions: one in Australia and another in
Canada and under the European Patent Convention. These eight issued patents
are due to expire beginning in 2006, through 2013. In addition, the Company
and its exclusive licensors have filed applications for patents in the United
States and equivalent applications in certain other countries claiming other
aspects of the Company's products and processes, including five United States
patent applications and corresponding applications in other countries related
to various components of the Aastrom CPS. Of these pending patent
applications, the Company has received notices of allowance for certain claims
in a United States application relating to methods for obtaining ex vivo stem
cell division, and claims in a European Patent Convention application and in a
United States application relating to methods for efficient proliferation of
hematopoietic cells in culture.
The validity and breadth of claims in medical technology patents involve
complex legal and factual questions and, therefore, may be highly uncertain.
No assurance can be given that any patents based on pending patent
applications or any future patent applications of the Company or its licensors
will be issued, that the scope of any patent protection will exclude
competitors or provide competitive advantages to the Company, that any of the
patents that have been or may be issued to the Company or its licensors will
be held valid if subsequently challenged or that others will not claim rights
in or ownership of the patents and other proprietary rights held or licensed
by the Company. Furthermore, there can be no assurance that others have not
developed or will not develop similar products, duplicate any of the Company's
products or design around any patents that have been or may be issued to the
Company or its licensors. Since patent applications in the United States are
maintained in secrecy until patents issue, the Company also cannot be certain
that others did not first file applications for inventions covered by the
Company's and its licensors' pending patent applications, nor can the Company
be certain that it will not infringe any patents that may issue to others on
such applications.
The Company relies on certain licenses granted by the University of Michigan
and Dr. Cremonese for the majority of its patent rights. If the Company
breaches such agreements or otherwise fails to comply with such agreements, or
if such agreements expire or are otherwise terminated, the Company may lose
its rights under the patents held by the University of Michigan and Dr.
Cremonese, which would have a material adverse effect on the Company's
business, financial condition and results of operation. See "--University of
Michigan Research Agreement and License Agreement" and "--License Agreement
with J.G. Cremonese."
The Company also relies on trade secrets and unpatentable know-how which it
seeks to protect, in part, by confidentiality agreements. It is the Company's
policy to require its employees, consultants, contractors, manufacturers,
outside scientific collaborators and sponsored researchers, and other advisors
to execute confidentiality agreements upon the commencement of employment or
consulting relationships with the Company. These agreements provide that all
confidential information developed or made known to the individual during the
course of the individual's relationship with the Company is to be kept
confidential and not disclosed to third parties except in specific limited
circumstances. The Company also requires signed confidentiality or material
transfer agreements from any company that is to receive its confidential data.
In the case of employees, consultants and contractors, the agreements
generally provide that all inventions conceived by the individual while
rendering services to the Company shall be assigned to the Company as the
exclusive property of the Company. There can be no assurance, however, that
these agreements will not be breached, that the Company would have adequate
remedies for any breach, or that the Company's trade secrets or unpatentable
know-how will not otherwise become known or be independently developed by
competitors.
The Company's success will also depend in part on its ability to develop
commercially viable products without infringing the proprietary rights of
others. The Company has not conducted freedom of use patent searches and no
assurance can be given that patents do not exist or could not be filed which
would have an adverse effect on the Company's ability to market its products
or maintain its competitive position with respect to its products. If the
Company's technology components, devices, designs, products, processes or
other subject matter are claimed under other existing United States or foreign
patents or are otherwise protected by third party
34
proprietary rights, the Company may be subject to infringement actions. In
such event, the Company may challenge the validity of such patents or other
proprietary rights or be required to obtain licenses from such companies in
order to develop, manufacture or market its products. There can be no
assurances that the Company would be able to obtain such licenses or that such
licenses, if available, could be obtained on commercially reasonable terms.
Furthermore, the failure to either develop a commercially viable alternative
or obtain such licenses could result in delays in marketing the Company's
proposed products or the inability to proceed with the development,
manufacture or sale of products requiring such licenses, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. If the Company is required to defend itself against
charges of patent infringement or to protect its own proprietary rights
against third parties, substantial costs will be incurred regardless of
whether the Company is successful. Such proceedings are typically protracted
with no certainty of success. An adverse outcome could subject the Company to
significant liabilities to third parties and force the Company to curtail or
cease its development and sale of its products and processes.
Certain of the Company's and its licensors' research has been or is being
funded in part by the Department of Commerce and by a Small Business
Innovation Research Grant obtained from the Department of Health and Human
Services. As a result of such funding, the United States Government has
certain rights in the technology developed with the funding. These rights
include a non-exclusive, paid-up, worldwide license under such inventions for
any governmental purpose. In addition, the government has the right to require
the Company to grant an exclusive license under any of such inventions to a
third party if the government determines that (i) adequate steps have not been
taken to commercialize such inventions, (ii) such action is necessary to meet
public health or safety needs or (iii) such action is necessary to meet
requirements for public use under federal regulations. Additionally, under the
federal Bayh Dole Act, a party which acquires an exclusive license for an
invention that was partially funded by a federal research grant is subject to
the following government rights: (i) products using the invention which are
sold in the U.S. are to be manufactured substantially in the U.S., unless a
waiver is obtained; (ii) if the licensee does not pursue reasonable
commercialization of a needed product using the invention, the government may
force the granting of a license to a third party who will make and sell the
needed product; and (iii) the U.S. government may use the invention for its
own needs.
UNIVERSITY OF MICHIGAN RESEARCH AGREEMENT AND LICENSE AGREEMENT
In August 1989, the Company entered into a Research Agreement ("Research
Agreement") with the University, pursuant to which the Company funded a
research project at the University under the direction of Stephen G. Emerson,
M.D., Ph.D., as the principal inventor, together with Michael F. Clarke, M.D.,
and Bernhard O. Palsson, Ph.D., as co-inventors. Pursuant to this Research
Agreement, the Company was granted the right to acquire an exclusive,
worldwide license to utilize all inventions, know-how and technology derived
from the research project. By Extension Agreements, the Company and the
University extended the scope and term of Research Agreement through December,
1994.
On March 13, 1992, the Company and the University entered into the License
Agreement, as contemplated by the Research Agreement. There have been
clarifying amendments to the License Agreement, dated March 13, 1992, October
8, 1993 and June 21, 1995. Pursuant to this License Agreement, (i) the Company
acquired exclusive worldwide license rights to the patents and know-how for
the production of blood cells and bone marrow cells as described in the
University's research project or which resulted from certain further research
conducted through December 31, 1994, and (ii) the Company is obligated to pay
to the University a royalty equal to 2% of the net sales of products which are
covered by the University's patents. Unless it is terminated earlier at the
Company's option or due to a material breach by the Company, the License
Agreement will continue in effect until the latest expiration date of the
patents to which the License Agreement applies.
LICENSE AGREEMENT WITH J. G. CREMONESE
In July 1992, the Company entered into a License Agreement with Joseph G.
Cremonese pursuant to which the Company obtained exclusive worldwide license
rights for all fields of use, to utilize U.S. Patent No. 4,839,292, entitled
"Cell Culture Flask Utilizing a Membrane Barrier," which patent was issued to
35
Dr. Cremonese on June 13, 1989, and to utilize any other related patents that
might be issued to Dr. Cremonese. Pursuant to this License Agreement, the
Company has reimbursed Dr. Cremonese for $25,000 of his patent costs. Under
the terms of the License Agreement, the Company is to pay to Dr. Cremonese a
royalty of 3% of net sales of the products which are covered by said patent,
subject to specified minimum royalty payments ranging from $20,000 to $50,000
per year, commencing in calendar year 1997. Unless it is terminated earlier at
the Company's option or due to default by the Company, the License Agreement
will continue in effect until the latest expiration date of the patents to
which the License Agreement applies.
GOVERNMENT REGULATION
The Company's research and development activities and the manufacturing and
marketing of the Company's products are subject to the laws and regulations of
governmental authorities in the United States and other countries in which its
products will be marketed. Specifically, in the United States the FDA, among
other activities, regulates new product approvals to establish safety and
efficacy of these products. Governments in other countries have similar
requirements for testing and marketing. In the U.S., in addition to meeting
FDA regulations, the Company is also subject to other federal laws, such as
the Occupational Safety and Health Act and the Environmental Protection Act,
as well as certain state laws.
REGULATORY PROCESS IN THE UNITED STATES
To the Company's knowledge, it is the first to develop a culture system for
ex vivo human cell production to be sold for therapeutic applications.
Therefore, to a certain degree, the manner in which the FDA will regulate the
Company's products is uncertain.
The Company's products are potentially subject to regulation as medical
devices under the Federal Food, Drug, and Cosmetic Act, and as biological
products under the Public Health Service Act, or both. Different regulatory
requirements may apply to the Company's products depending on how they are
categorized by the FDA under these laws. To date, the FDA has indicated that
it intends to regulate the Aastrom CPS product for stem cell therapy as a
Class III medical device through the Center for Biologics Evaluation and
Research. However, there can be no assurance that FDA will ultimately regulate
the Aastrom CPS as a medical device.
Further, it is unclear whether the FDA will separately regulate the cell
therapies derived from the Aastrom CPS. The FDA is still in the process of
developing its requirements with respect to somatic cell therapy and gene cell
therapy products and has recently issued a draft document concerning the
regulation of umbilical cord blood stem cell products. If the FDA adopts the
regulatory approach set forth in the draft document, the FDA may require
separate regulatory approval for such cells in some cases. The FDA also
recently proposed a new type of license, called a biologic license application
("BLA"), for autologous cells manipulated ex vivo and intended for structural
repair or reconstruction. This proposal may indicate that the FDA will extend
a similar approval requirement to other types of autologous cellular
therapies, such as autologous cells for stem cell therapy. Any such additional
regulatory or approval requirements could significantly delay the introduction
of the Company's product candidates to the market, and have a material adverse
impact on the Company.
Approval of new medical devices and biological products is a lengthy
procedure leading from development of a new product through preclinical and
clinical testing. This process takes a number of years and the expenditure of
significant resources. There can be no assurance that the Company's product
candidates will ultimately receive regulatory approval.
Regardless of how the Company's product candidates are regulated, the
Federal Food, Drug, and Cosmetic Act and other Federal statutes and
regulations govern or influence the research, testing, manufacture, safety,
labeling, storage, recordkeeping, approval, distribution, use, reporting,
advertising and promotion of such products. Noncompliance with applicable
requirements can result in civil penalties, recall, injunction or seizure of
products, refusal of the government to approve or clear product approval
applications or to allow the Company to enter into government supply
contracts, withdrawal of previously approved applications and criminal
prosecution.
36
DEVICES
In order to obtain FDA approval of a new medical device sponsors must
generally submit proof of safety and efficacy. In some cases, such proof
entails extensive clinical and preclinical laboratory tests. The testing,
preparation of necessary applications and processing of those applications by
the FDA is expensive and may take several years to complete. There can be no
assurance that the FDA will act favorably or in a timely manner in reviewing
submitted applications, and the Company may encounter significant difficulties
or costs in its efforts to obtain FDA approvals which could delay or preclude
the Company from marketing any products it may develop. The FDA may also
require postmarketing testing and surveillance of approved products, or place
other conditions on the approvals. These requirements could cause it to be
more difficult or expensive to sell the products, and could therefore restrict
the commercial applications of such products. Product approvals may be
withdrawn if compliance with regulatory standards is not maintained or if
problems occur following initial marketing. For patented technologies, delays
imposed by the governmental approval process may materially reduce the period
during which the Company will have the exclusive right to exploit such
technologies.
If human clinical trials of a proposed device are required and the device
presents significant risk, the manufacturer or distributor of the device will
have to file an IDE application with the FDA prior to commencing human
clinical trials. The IDE application must be supported by data, typically
including the results of pre-clinical and laboratory testing. If the IDE
application is approved, human clinical trials may commence at a specified
number of investigational sites with the number of patients approved by the
FDA.
The FDA categorizes devices into three regulatory classifications subject to
varying degrees of regulatory control. In general, Class I devices require
compliance with labeling and recordkeeping regulations, GMPs, 510(k) pre-
market notification, and are subject to other general controls. Class II
devices may be subject to additional regulatory controls, including
performance standards and other special controls, such as postmarket
surveillance. Class III devices, which are either invasive or life-sustaining
products, or new products never before marketed (for example, non-
"substantially equivalent" devices), require clinical testing to demonstrate
safety and effectiveness and FDA approval prior to marketing and distribution.
The FDA also has the authority to require clinical testing of Class I and
Class II devices.
If a manufacturer or distributor of medical devices cannot establish that a
proposed device is substantially equivalent, the manufacturer or distributor
must submit a PMA application to the FDA. A PMA application must be supported
by extensive data, including preclinical and human clinical trial data, to
prove the safety and efficacy of the device. Upon receipt, the FDA conducts a
preliminary review of the PMA application. If sufficiently complete, the
submission is declared filed by the FDA. By regulation, the FDA has 180 days
to review a PMA application once it is filed, although PMA application reviews
more often occur over a significantly protracted time period, and may take
approximately one year or more from the date of filing to complete.
Some of the Company's products may be classified as Class II or Class III
medical devices. The Company has submitted and obtained FDA approval for
several IDEs for the Aastrom CPS, and is currently conducting clinical studies
under these IDEs. The Company believes that the Aastrom CPS product will be
regulated by the FDA as a Class III device, although there can be no assurance
that the FDA will not choose to regulate this product in a different manner.
The Company and any contract manufacturer are required to be registered as a
medical device manufacturer with the FDA. As such, they will be inspected on a
routine basis by the FDA for compliance with the FDA's GMP regulations. These
regulations will require that the Company and any contract manufacturer
manufacture products and maintain documents in a prescribed manner with
respect to manufacturing, testing, distribution, storage, design control and
service activities, and that adequate design and service controls are
implemented. The Medical Device Reporting regulation requires that the Company
provide information to the FDA on deaths or serious injuries alleged to be
associated with the use of its devices, as well as product malfunctions that
are
37
likely to cause or contribute to death or serious injury if the malfunction
were to recur. In addition, the FDA prohibits a company form promoting an
approved device for unapproved applications and reviews company labeling for
accuracy.
BIOLOGICAL PRODUCTS
For certain of the Company's new products which may be regulated as
biologics, the FDA requires (i) preclinical laboratory and animal testing,
(ii) submission to the FDA of an investigational new drug ("IND") application
which must be effective prior to the initiation of human clinical studies,
(iii) adequate and well-controlled clinical trials to establish safety and
efficacy of the product for its intended use, (iv) submission to the FDA of a
product license application ("PLA") and establishment license application
("ELA") and (v) review and approval of the PLA and ELA as well as inspections
of the manufacturing facility by the FDA prior to commercial marketing of the
product.
Preclinical testing covers laboratory evaluation of product chemistry and
formulation as well as animal studies to assess the safety and efficacy of the
product. The results of these tests are submitted to the FDA as part of the
IND. Following the submission of an IND, the FDA has 30 days to review the
application and raise safety and other clinical trial issues. If the Company
is not notified of objections within that period, clinical trials may be
initiated. Clinical trials are typically conducted in three sequential phases.
Phase I represents the initial administration of the drug or biologic to a
small group of humans, either healthy volunteers or patients, to test for
safety and other relevant factors. Phase II involves studies in a small number
of patients to assess the efficacy of the product, to ascertain dose tolerance
and the optimal dose range and to gather additional data relating to safety
and potential adverse effects. Once an investigational drug is found to have
some efficacy and an acceptable safety profile in the targeted patient
population, multi-center Phase III studies are initiated to establish safety
and efficacy in an expanded patient population and multiple clinical study
sites. The FDA reviews both the clinical plans and the results of the trials
and may request the Company to discontinue the trials at any time if there are
significant safety issues.
The results of the preclinical tests and clinical trials are submitted to
the FDA in the form of a PLA for marketing approval. The testing and approval
process is likely to require substantial time and effort and there can be no
assurance that any approval will be granted on a timely basis, if at all.
Additional animal studies or clinical trials may be requested during the FDA
review period that may delay marketing approval. After FDA approval for the
initial indications, further clinical trials may be necessary to gain approval
for the use of the product for additional indications. The FDA requires that
adverse effects be reported to the FDA and may also require post-marketing
testing to monitor for adverse effects, which can involve significant expense.
Under current requirements, facilities manufacturing biological products
must be licensed. To accomplish this, an ELA must be filed with the FDA. The
ELA describes the facilities, equipment and personnel involved in the
manufacturing process. An establishment license is granted on the basis of
inspections of the applicant's facilities in which the primary focus is on
compliance with GMP and the ability to consistently manufacture the product in
the facility in accordance with the PLA. If the FDA finds the inspection
unsatisfactory, it may decline to approve the ELA, resulting in a delay in
production of products. Although reviewed separately, approval of both the PLA
and ELA must be received prior to commercial marketing of a cellular biologic.
As part of the approval process for human biological products, each
manufacturing facility must be registered and inspected by FDA prior to
marketing approval. In addition, state agency inspections and approvals may
also be required for a biological product to be shipped out of state.
REGULATORY PROCESS IN EUROPE
The Company believes that the Aastrom CPS will be regulated in Europe as a
Class IIb medical device, under the authority of the new Medical Device
Directives ("MDD") being implemented by European Union ("EU") member
countries. This classification applies to medical laboratory equipment and
supplies including,
38
among other products, many devices that are used for the collection and
processing of blood for patient therapy. Certain ancillary products (e.g.,
biological reagents) used with the Aastrom CPS may be considered Class III
medical devices.
The MDD regulations vest the authority to permit affixing of the "CE Mark"
with various "Notified Bodies." These are private and state organizations
which operate under license from the EU to certify that appropriate quality
assurance standards and compliance procedures are followed by developers and
manufacturers of medical device products or, alternatively, that a
manufactured medical product meets a more limited set of requirements.
Notified Bodies are also charged with responsibility for determination of the
appropriate standards to apply to a medical product. Receipt of permission to
affix the CE Mark enables a company to sell a medical device in all EU member
countries. Other registration requirements may also need to be satisfied in
certain countries, although there is a general trend among EU member countries
not to impose additional requirements beyond those specified for CE Mark
certification.
COMPETITION
The biotechnology and medical device industries are characterized by rapidly
evolving technology and intense competition. The Company's competitors include
major pharmaceutical, medical device, medical products, chemical and
specialized biotechnology companies, many of which have financial, technical
and marketing resources significantly greater than those of the Company. In
addition, many biotechnology companies have formed collaborations with large,
established companies to support research, development and commercialization
of products that may be competitive with those of the Company. Academic
institutions, governmental agencies and other public and private research
organizations are also conducting research activities and seeking patent
protection and may commercialize products on their own or through joint
ventures. The Company's product development efforts are primarily directed
toward obtaining regulatory approval to market the Aastrom CPS for stem cell
therapy. That market is currently dominated by the bone marrow harvest and
PBPC collection methods. The Company's clinical data, although early, is
inconclusive as to whether or not cells expanded in the Aastrom CPS will
enable hematopoietic recovery within the time frames currently achieved by the
bone marrow harvest and PBPC collection methods. In addition, the bone marrow
harvest and PBPC collection methods have been widely practiced for a number of
years and, recently, the patient costs associated with these procedures have
begun to decline. There can be no assurance that the Aastrom CPS method, if
approved for marketing, will prove to be competitive with these established
collection methods on the basis of hematopoietic recovery time, cost or
otherwise. The Company is aware of certain other products manufactured or
under development by competitors that are used for the prevention or treatment
of certain diseases and health conditions which the Company has targeted for
product development. In particular, the Company is aware that competitors such
as Amgen, Inc., CellPro, Incorporated, Systemix, Inc., Baxter Healthcare Corp.
and RPR are in advanced stages of development of technologies and products for
use in stem cell therapy and other market applications currently being pursued
by the Company. In addition, Cobe, a significant stockholder of the Company,
is a market leader in the blood cell processing products industry and,
accordingly, a potential competitor of the Company. There can be no assurance
that developments by others will not render the Company's product candidates
or technologies obsolete or noncompetitive, that the Company will be able to
keep pace with new technological developments or that the Company's product
candidates will be able to supplant established products and methodologies in
the therapeutic areas that are targeted by the Company. The foregoing factors
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company's products under development are expected to address a broad
range of existing and new markets. The Company believes that its stem cell
therapy products will, in large part, face competition by existing procedures
rather than novel new products. The Company's competition will be determined
in part by the potential indications for which the Company's products are
developed and ultimately approved by regulatory authorities. In addition, the
first product to reach the market in a therapeutic or preventive area is often
at a significant competitive advantage relative to later entrants to the
market. Accordingly, the relative speed with
39
which the Company or its corporate partners can develop products, complete the
clinical trials and approval processes and supply commercial quantities of the
products to the market are expected to be important competitive factors. The
Company's competitive position will also depend on its ability to attract and
retain qualified scientific and other personnel, develop effective proprietary
products, develop and implement production and marketing plans, obtain and
maintain patent protection and secure adequate capital resources. The Company
expects its products, if approved for sale, to compete primarily on the basis
of product efficacy, safety, patient convenience, reliability, value and
patent position.
FACILITIES
The Company leases approximately 20,000 square feet of office and research
and development space in Ann Arbor, Michigan under a lease agreement expiring
in May 1998. The lease is renewable at the option of the Company for up to an
additional five-year term. The Company believes that its facilities will be
adequate for its currently anticipated needs. Contract manufacturing or
additional facilities will be required in the future to support expansion of
research and development and to manufacture products.
EMPLOYEES
As of September 30, 1996, the Company employed approximately 61 individuals
full-time. A significant number of the Company's management and professional
employees have had prior experience with pharmaceutical, biotechnology or
medical product companies. None of the Company's employees are covered by
collective bargaining agreements, and management considers relations with its
employees to be good.
LEGAL PROCEEDINGS
The Company is not party to any material legal proceedings, although from
time to time it may become involved in disputes in connection with the
operation of its business.
40
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information concerning directors and executive
officers of the Company:
NAME AGE POSITION
---- --- --------
Robert J. Kunze(2)(3)............ 61 Chairman of the Board; Director
R. Douglas Armstrong, Ph.D.(3)... 43 President and Chief Executive Officer; Director
James Maluta..................... 49 Vice President, Product Development
Todd E. Simpson.................. 35 Vice President, Finance & Administration; Chief
Financial Officer; Secretary; and Treasurer
Walter C. Ogier.................. 39 Vice President, Marketing
Thomas E. Muller, Ph.D........... 61 Vice President, Regulatory Affairs
Alan K. Smith, Ph.D.............. 41 Vice President, Research
Stephen G. Emerson, M.D., Ph.D... 42 Director; Scientific Advisor
Albert B. Deisseroth, M.D.,
Ph.D.(2)........................ 55 Director; Scientific Advisor
G. Bradford Jones(1)(3).......... 41 Director
Horst R. Witzel, Dr.-Ing......... 69 Director
Edward C. Wood, Jr.(1)(3)........ 51 Director
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Executive Committee.
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. The Company's
Bylaws provide that the Board of Directors will consist of between five and
nine members, and the number of directors is currently set at seven members.
The Bylaws also provide that the Board of Directors will serve staggered
three-year terms, or until their successors are elected and qualified. The
terms of office of the Company's current directors expire as follows: Mr.
Jones, Dr. Deisseroth and Mr. Wood, 1999; Mr. Kunze and Dr. Emerson, 1998; and
Dr. Armstrong and Dr. Witzel, 1997. Officers are elected by and serve at the
discretion of the Board of Directors. There are no family relationships among
the directors or officers of the Company.
Robert J. Kunze a director of the Company since its inception in 1989, is a
founder of the Company and served as its President and Chief Executive Officer
through May 1991. Since 1987, he has been a General Partner of H&Q Life
Science Venture Partners, a venture capital fund specializing in medical
products and biotechnology investments. Previous to that, Mr. Kunze was
Managing Partner of Hambrecht & Quist Venture Partners. Prior to that he
served as a senior executive with W.R. Grace & Co. and General Electric. Mr.
Kunze also serves on the Board of Directors of Escalon Medical Corporation.
R. Douglas Armstrong, Ph.D. joined the Company in June 1991 as a director
and as its President and Chief Executive Officer. From 1987 to 1991, Dr.
Armstrong served in different capacities, including as Executive Vice
President and a Trustee of the La Jolla Cancer Research Foundation ("LJCRF"),
a 250-employee scientific research institute located in San Diego, California.
Dr. Armstrong received his doctorate in Pharmacology and Toxicology from the
Medical College of Virginia, and has held faculty and staff positions at Yale
University, University of California, San Francisco, LJCRF and University of
Michigan. Dr. Armstrong also serves on the Board of Directors of Nephros
Therapeutics, Inc.
James Maluta joined the Company in August 1992 as Vice President, Product
Development. Mr. Maluta has a broad background in the development and
manufacturing of medical devices, with 25 years of experience in the industry,
principally with OHMEDA and with Cobe BCT, Inc. While with Cobe BCT, Inc., Mr.
Maluta was Program Manager for the Cobe Spectra Apheresis System, a device for
blood cell processing and apheresis. Mr. Maluta held other engineering
management positions and also was director of Quality Assurance for Cobe BCT.
Mr. Maluta received his degree in electrical engineering from the University
of Wisconsin.
41
Todd E. Simpson joined the Company in January 1996 as Vice President,
Finance and Administration and Chief Financial Officer and is also the
Company's Secretary and Treasurer. Prior to that, Mr. Simpson was Treasurer of
Integra LifeSciences Corporation ("Integra"), a biotechnology company, which
acquired Telios Pharmaceuticals, Inc. ("Telios") in August 1995 in connection
with the reorganization of Telios under Chapter 11 of the U.S. Bankruptcy
Code. Mr. Simpson served as Vice President of Finance and Chief Financial
Officer of Telios up until its acquisition by Integra and held various other
financial positions at Telios after joining that company in February 1992.
Telios was a publicly-held company engaged in the development of
pharmaceutical products for the treatment of dermal and ophthalmic wounds,
fibrotic disease, vascular disease, and osteoporosis. From August 1983 through
February 1992, Mr. Simpson practiced public accounting with the firm of Ernst
& Young, LLP. Mr. Simpson is a Certified Public Accountant and received his
B.S. degree in Accounting and Computer Science from Oregon State University.
Walter C. Ogier joined the Company in March 1994 as Director of Marketing
and was promoted to Vice President, Marketing during 1995. Prior to that, Mr.
Ogier was at Baxter Healthcare Corporation's Immunotherapy Division, where he
served as Director, Business Development from 1992 to 1994 and as Manager,
Marketing and Business Development in charge of the company's cell therapy
product lines from 1990 to 1992. Mr. Ogier previously held positions with
Ibbottson Associates and with the Business Intelligence Center at SRI
International (formerly Stanford Research Institute). Mr. Ogier received his
B.A. degree in Chemistry from Williams College in 1979 and his Masters of
Management degree from the Yale School of Management in 1987.
Thomas E. Muller, Ph.D. joined the Company in May 1994 as Vice President,
Regulatory Affairs. Prior to that, Dr. Muller was Director, Biomedical Systems
with W.R. Grace & Company in Lexington, Massachusetts. Prior to this, Dr.
Muller was Vice President, Engineering and Director of Research and
Development with the Renal Division of Baxter Healthcare in Deerfield,
Illinois. Dr. Muller has also served as Adjunct Professor at Columbia
University and as Visiting Professor at the University of Gent, Belgium. Dr.
Muller graduated from the Technical University in Budapest, Hungary, in 1956
with a B.S. in Chemical Engineering. Dr. Muller received his M.S. degree in
1959 and was awarded a Ph.D. in 1964, both in Polymer Chemistry, from McGill
University.
Alan K. Smith, Ph.D. joined the Company in November 1995 as Vice President,
Research. Previously, Dr. Smith was Vice President of Research and Development
at Genetic Sciences, Inc., a developmental stage bone marrow transplantation
company. Prior to that, Dr. Smith held the position of Director, Cell
Separations Research and Development of the Immunotherapy Division of Baxter
Healthcare Corporation. In this capacity, he was responsible for the research
and development activities for a stem cell concentration system approved for
clinical use in Europe and currently in pivotal clinical trials in the United
States. Dr. Smith has also held positions as Research and Development Manager
at BioSpecific Technologies, as Director of Biochemistry at HyClone
Laboratories and as a member of the Board of Directors of Dallas Biomedical.
Dr. Smith received his B.S. degree in Chemistry from Southern Utah State
College in 1976 and a Ph.D. in Biochemistry from Utah State University in
1983.
Stephen G. Emerson, M.D., Ph.D. a director since the inception of the
Company in 1989, is a scientific founder of the Company and has been an active
advisor of the Company since that time. Dr. Emerson has been a Professor of
Medicine at the University of Pennsylvania since 1994 where he serves as head
of Hematology and Oncology. From 1991 to 1994, Dr. Emerson was an Associate
Professor of Medicine at the University of Michigan. Dr. Emerson received his
doctorate degrees in Medicine and Cell Biology/Immunology from Yale
University. He completed his internship and residency at Massachusetts General
Hospital and his clinical and research fellowship in hematology at the Brigham
and Women's Hospital, the Dana-Farber Cancer Institute and Children's Hospital
Medical Center.
Albert B. Deisseroth, M.D., Ph.D. a director since August 1991, currently
serves as an Ensign Professor of Medicine and the Chief, Section of Medical
Oncology at Yale University and is a professor at both the University of Texas
Graduate School of Biomedical Sciences and the University of Texas Health
Science Center Medical
42
School in Houston, Texas. Prior to that, Dr. Deisseroth had been Chairman of
the Department of Hematology and a Professor of Medicine and Cancer Treatment
and Research at the University of Texas, M.D. Anderson Cancer Center in
Houston, Texas. Previous to this, Dr. Deisseroth served as Professor of
Medicine at the University of California, San Francisco, and Chief,
Hematology/Oncology at the San Francisco Veteran's Administration Medical
Center. Dr. Deisseroth received his doctorate degrees in Medicine and
Biochemistry from the University of Rochester. Dr. Deisseroth is currently a
member of the Scientific Advisory Boards of Ingenex, Inc., Genvec, Inc. and
Incell.
G. Bradford Jones a director since April 1992, is a general partner of
Brentwood V Ventures, L.P., the general partner of Brentwood Associates V,
L.P. Brentwood Associates V, L.P. is a partnership organized by the firm
Brentwood Venture Capital, which Mr. Jones joined in 1981. Mr. Jones was
elected to the Board of Directors of the Company pursuant to the terms of the
Series B Preferred Stock Purchase Agreement dated April 7, 1992 with the
Company, of which Brentwood Associates V, L.P. is a party. Mr. Jones received
a B.A. degree in Chemistry and an M.A. degree in Physics from Harvard
University and M.B.A. and J.D. degrees from Stanford University. Mr. Jones
also serves on the Board of Directors of Interpore International, ISOCOR, Onyx
Acceptance Corporation, Plasma & Materials Technologies, and several
privately-held companies.
Horst R. Witzel, Dr.-Ing. a director since June 1994, served as Chairman of
the Board of Executive Directors of Schering AG in Berlin, Germany from 1986
until his retirement in 1989, whereupon he became a member of the Supervisory
Board of Schering AG until 1994. Prior to that, Dr. Witzel held various
leadership positions in research and development with Schering AG where he was
responsible for worldwide production and technical services. Dr. Witzel
received his doctorate in chemistry from the Technical University of West
Berlin. Dr. Witzel also serves on the Board of Directors of The Liposome
Company, Inc. and Cephalon, Inc. and is a member of the Supervisory Board of
Brau and Brunnen AG.
Edward C. Wood, Jr. a director since August 1994, has served as president of
Cobe BCT, Inc., a division of Cobe Laboratories, Inc., since 1991. Cobe is a
subsidiary of Gambro AB, a Swedish company, a world leader in blood cell
processing products. Prior to that, Mr. Wood held various positions in
manufacturing, research and development, and marketing with Cobe. Mr. Wood
received degrees in chemistry from Harvey Mudd College and in management from
the University of Colorado.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company has adopted provisions in its Restated Articles of Incorporation
that limit the liability of its directors for monetary damages arising from a
breach of their fiduciary duty as directors, except under certain
circumstances which include breach of the director's duty of loyalty to the
Company or its shareholders, acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of the law.
The Company's Bylaws provide that the Company shall indemnify its directors
to the fullest extent authorized or permitted by the Michigan Business
Corporation Act. Additionally, the Company has entered into an Indemnification
Agreement, originally dated as of December 14, 1993 (the "Indemnification
Agreement"), with certain of its directors, officers and other key personnel,
which may, in certain cases, be broader than the specific indemnification
provisions contained under applicable law. The Indemnification Agreement may
require the Company, among other things, to indemnify such officers, directors
and key personnel against certain liabilities that may arise by reason of
their status or service as directors, officers or employees of the Company, to
advance the expenses incurred by such parties as a result of any threatened
claims or proceedings brought against them as to which they could be
indemnified, and to cover such officers, directors and key employees under the
Company's directors' and officers' liability insurance policies to the maximum
extent that insurance coverage is maintained.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification by
the Company will be required or permitted. The Company is not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.
43
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or earned by the
Company's Chief Executive Officer and all other executive officers of the
Company whose salary and bonus for services rendered in all capacities to the
Company during the fiscal year ended June 30, 1996 exceeded $100,000 (the
"named executive officers"):
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------------------
NAME AND 1996 OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) COMPENSATION ($)
------------------ ---- ---------- --------- ---------------- ----------------
R. Douglas Armstrong, 1996 $156,962 $55,000 -- $8,885(1)
Ph.D...................
President and Chief Ex-
ecutive Officer
James Maluta............ 1996 $118,942 $10,000 -- --
Vice President, Product
Development
Thomas E. Muller, Ph.D.. 1996 $118,560 -- -- --
Vice President, Regula-
tory Affairs
Walter C. Ogier......... 1996 $106,250 $ 7,500 -- --
Vice President, Market-
ing
- --------
(1) Consists of vacation pay to Dr. Armstrong in 1996.
1996 Option Grants
The following table contains information about the stock option grants to
the named executive officers in 1996:
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
------------------------------------------------------------ -------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED TO EXERCISE OR
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------------------ ------------------ ----------- ---------- -------- ---------
R. Douglas Armstrong,
Ph.D. ................. -- -- -- -- -- --
James Maluta............ -- -- -- -- -- --
Thomas E. Muller, Ph.D.. 6,667 4.3% 1.20 02/14/06 5,000 12,734
Walter C. Ogier......... 6,667 4.3% 1.20 02/14/06 5,000 12,734
- --------
(1) The 5% and the 10% assumed rates of appreciation are established by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future Common Stock price. If the
Common Stock price of $1.20 on the date of grant for the options granted
in 1996 were to appreciate at the rates indicated, it would be $1.95 per
share (at a 5% compounded appreciation) and $3.11 per share (at a 10%
compounded appreciation) on the date of expiration of those options.
44
Option Exercises and Year-End Values
The following table provides information about the number of shares issued
upon option exercise by the named executive officers during 1996, and the
value realized by the named executive officers. The table also provides
information about the number and value of options held by the named executive
officers at June 30, 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)(1)
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ----------- ----------- ------------- ----------- -------------
R. Douglas Armstrong,
Ph.D................... -- -- -- -- -- --
James Maluta............ 29,999 86,847 16,668 -- $48,254 --
Thomas E. Muller, Ph.D.. -- -- 15,000 18,334 29,925 $36,576
Walter C. Ogier......... 5,000 9,975 13,750 21,250 27,431 42,394
- --------
(1) The option value represents fair market value of the underlying securities
on the exercise date minus the aggregate exercise price of such options,
multiplied by the number of shares of Common Stock subject to the option.
For purposes of this calculation, a fair market value of $3.20 per share
was used, the fair market value of the securities as determined by the
Board of Directors on June 30, 1996.
No compensation intended to serve as incentive for performance to occur over
a period longer than one fiscal year was paid pursuant to a long-term
incentive plan during the last fiscal year to any of the persons named in the
Summary Compensation Table. The Company does not have any defined benefit or
actuarial plan with any of the persons named in the Summary Compensation Table
under which benefits are determined primarily by final compensation or average
final compensation and years of service.
EMPLOYMENT AGREEMENTS
The Company has a policy of entering into employment agreements with all of
its employees, and has entered into such agreements with all of its executive
officers other than Dr. Armstrong. Such employment agreements generally
establish salary levels (which are subject to periodic review) and provide for
customary fringe benefits such as vacation leave, sick leave and health
insurance. The agreements also generally provide for the protection of
confidential information and the assignment to the Company of inventions
conceived by the employee during his or her employment and permit the
termination of the employment relationship by either party upon fourteen days
prior written notice. The following is a summary of the employment agreements
between the Company and its executive officers.
The Company entered into employment agreements with no defined terms with
James Maluta, Walter C. Ogier, Thomas E. Muller, Ph.D., Alan K. Smith, Ph.D.
and Todd E. Simpson in June 1992, February 1994, April 1994, October 1995 and
December 1995, respectively. Pursuant to these agreements, the Company agreed
to pay Messrs. Maluta, Ogier, Muller, Smith and Simpson annual base salaries
of $90,000, $87,500, $110,000, $122,500 and $122,500, certain of which base
salaries have been increased by the Board of Directors and are subject to
annual review and adjustment. Pursuant to the terms of the foregoing
employment agreements, either party may generally terminate the employment
relationship without cause at any time upon 14 days prior written notice to
the other party or immediately with cause upon notice.
45
STOCK OPTION AND EMPLOYEE BENEFIT PLANS
1989 STOCK OPTION PLAN
In 1989, the Company established the 1989 Stock Option Plan. As of September
30, 1996, options to purchase an aggregate of 932,266 shares of Common Stock
have been exercised at $0.15 per share. Options to purchase 13,127 shares of
Common Stock at $0.15 per share were cancelled unexercised. No additional
shares remain available for grant under the 1989 Stock Option Plan.
ANCILLARY PLAN
In 1991, the Company established an Ancillary Plan to grant options to
individuals who were not eligible to receive options under the 1989 Stock
Option Plan. Options to purchase an aggregate of 7,498 shares of the Company's
Common Stock were granted under the Ancillary Plan, of which options to
purchase 4,328 shares have been exercised at $0.15 per share and the remaining
options to purchase 3,170 shares have been cancelled. No additional shares
remain available for grant under the Ancillary Plan.
AMENDED AND RESTATED 1992 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
In 1992, the Company adopted the 1992 Incentive and Non-Qualified Stock
Option Plan (the "1992 Plan"), providing for the grant of options to purchase
666,667 shares of Common Stock. The Company allocated an additional 100,000
shares of Common Stock during 1992, an additional 333,333 shares of Common
Stock in 1994 and an additional 800,000 shares of Common Stock in 1996 to the
1992 Plan, resulting in a total share reserve of 1,900,000 shares. The 1992
Plan was amended and restated to its current form in 1996. Options under the
1992 Plan for a total of 462,840 shares have been exercised as of September
30, 1996. As of September 30, 1996, options to purchase 336,254 shares of
Common Stock were outstanding with a weighted average exercise price of $1.27
per share.
The 1992 Plan provides for grants to employees and officers of "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended, provided that such employee or officer is an employee on
the date of grant. The 1992 Plan also provides for grants to employees,
officers, consultants or service providers of nonqualified stock options. The
1992 Plan previously has been administered by the Board of Directors, but is
currently administered by the Compensation Committee of the Board of Directors
(the "Committee"). Each option granted pursuant to the 1992 Plan is authorized
by the Committee and evidenced by a notice in such form as the Committee may
from time to time determine.
The exercise price of each incentive stock option granted under the 1992
Plan must be at least equal to the fair market value of a share of Common
Stock on the date of grant, except for incentive stock options granted to
individuals who, at the time of grant, own stock possessing more than 10% of
the total combined voting power of the Company, which options must have an
exercise price of at least 110% of the fair market value of a share of Common
Stock on the date of grant and must expire five years from the date of grant.
The exercise price of each nonqualified stock option granted under the 1992
Plan must be at least 85% of the fair market value of the shares on the date
of grant. No option shall be treated as an incentive stock option to the
extent that such option would cause the aggregate fair market value
(determined as of the date of grant of such option) of the shares with respect
to which incentive stock options are exercisable by such optionee for the
first time during any calendar year to exceed $100,000. The terms of all
incentive stock options and nonqualified stock options granted under the 1992
Plan may not exceed ten years. The exercise price may be paid in cash or, at
the Committee's discretion, by delivery of previously owned shares of the
Company's Common Stock, by a combination of cash and shares, or any other form
of legal consideration acceptable to the Committee. Options under the 1992
Plan generally may not be granted after April 2006.
46
The 1992 Plan provides that if the Company is a party to any merger in which
the Company is not the surviving entity, any consolidation or dissolution
(other than the merger or consolidation of the Company with one or more of its
wholly-owned subsidiaries), the Company must cause any successor corporation
to assume the options or substitute similar options for outstanding option or
continue such options in effect. In the event that any successor to the
Company in a merger, consolidation or dissolution will not assume the options
or substitute similar options, then with respect to options held by optionees
performing services for the Company, the time for exercising such options will
be accelerated and such options will be terminated if not exercised prior to
such merger, consolidation or dissolution.
1996 OUTSIDE DIRECTORS STOCK OPTION PLAN
A total of 150,000 shares of Common Stock have been reserved for issuance
under the Company's 1996 Outside Directors Stock Option Plan (the "Directors
Plan"). As of the effective date of this offering, no options have been
granted under the Directors Plan. The Directors Plan provides for the
automatic granting of non-qualified stock options to directors of the Company
who are not employees of the Company ("Outside Directors"). Under the
Directors Plan, each Outside Director serving on the effective date of this
Offering or elected after the date of this offering will automatically be
granted an option to purchase 5,000 shares of Common Stock on the effective
date of this offering or on the date of his or her election or appointment. In
addition, each serving Outside Director will thereafter automatically be
granted an option to purchase 5,000 shares of Common Stock following each
annual meeting of stockholders after their election, provided that the Outside
Director continues to serve in such capacity and that the Outside Director has
served continuously as a director for at least six months. The exercise price
of the options in all cases will be equal to the fair market value of the
Common Stock on the date of grant. Options granted under the Directors Plan
generally vest over a one-year period in equal monthly installments and must
be exercised within ten years from the date of grant.
1996 EMPLOYEE STOCK PURCHASE PLAN
A total of 250,000 shares of the Company's Common Stock have been reserved
for issuance under the Company's 1996 Employee Stock Purchase Plan (the
"Purchase Plan"), none of which have been issued. The Purchase Plan permits
eligible employees to purchase Common Stock at a discount through payroll
deductions, during sequential 24-month offering periods. Each offering period
is divided into four consecutive six-month purchase periods. Unless otherwise
provided by the Board of Directors prior to the commencement of an offering
period, the price at which stock is purchased under the Purchase Plan for such
offering period is equal to 85% of the lesser of the fair market value of the
Common Stock on the first day of such offering period or the last day of the
purchase period of such offering period. The initial offering period will
commence on the effective date of this offering.
SECTION 401(K) PLAN
Effective January 1, 1994, the Company adopted the Aastrom Biosciences, Inc.
401(k) Plan (the "Plan"). The Plan is intended to be a qualified retirement
plan under the Internal Revenue Code. Employees of the Company are eligible to
participate in the Plan upon the completion of three consecutive months of
employment. Participants may make salary deferral contributions to the Plan of
up to 15% of compensation, subject to the limitations imposed under the
Internal Revenue Code. The Company may, but is not required to, make matching
contributions to the Plan based on the participants' salary-defined
contributions. Employer contributions are subject to a graduated vesting
schedule based upon an employee's years of service with the Company. It is not
anticipated that the Company will make any contributions to the Plan for the
1997 Plan Year. All contributions to the Plan are held in a trust which is
intended to be exempt from income tax under Section 501(a) of the Internal
Revenue Code. The Plan's trustees are R. Douglas Armstrong and Todd E.
Simpson. Participants may direct the investment of their contributions among
specified Merrill Lynch investment funds. The Plan may be amended or
terminated by the Company at any time, subject to certain restrictions imposed
by the Internal Revenue Code and the Employee Retirement Income Security Act
of 1974.
47
COMPENSATION OF DIRECTORS
Directors of the Company do not receive cash for services provided as a
director, however, directors who are not employees of the Company will receive
annual grants of options to purchase Common Stock in accordance with the
Directors Plan. No stock options nor any other form of non-cash compensation
was granted to directors of the Company during the Company's fiscal year
ending June 30, 1996. See "Stock Option and Employee Benefit Plans--1996
Outside Directors Stock Option Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the fiscal year ended June 30, 1996, Robert J. Kunze, formerly an
officer of the Company until 1991, R. Douglas Armstrong, President and Chief
Executive Officer of the Company, and G. Bradford Jones were the members of
the Compensation Committee of the Board of Directors. Dr. Armstrong resigned
from the Compensation Committee and was replaced by Albert B. Deisseroth,
M.D., Ph.D. on April 30, 1996, however, Mr. Kunze continues to be a member of
this committee.
48
CERTAIN TRANSACTIONS
During the last three fiscal years, the Company sold Preferred Stock to
certain holders of more than 5% of the outstanding shares of the Company, or
to their affiliates, as described below.
In April 1995, the Company sold 775,001 shares of Series D Preferred Stock
at a price per share of $4.00 to the following investors: (i) H&Q Life Science
Technology Fund I purchased 167,001 shares for a purchase price of $668,004,
(ii) H&Q London Ventures purchased 100,000 shares for a purchase price of
$400,000, (iii) Brentwood Associates V, L.P. ("Brentwood") purchased 231,250
shares for a purchase price of $925,000, (iv) Windpoint Partners II, L.P.
purchased 89,250 shares for a purchase price of $357,000, and (v) the State
Treasurer of the State of Michigan ("Michigan") purchased 187,500 shares for a
purchase price of $750,000. In May 1995, Cobe purchased 1,250,000 shares of
Series D Preferred Stock for a purchase price of $5,000,000. Upon the closing
of this offering, each outstanding share of Series D Preferred Stock will be
converted into two-thirds of a share of Common Stock.
In April 1995, Dr. Armstrong and Dr. Emerson agreed to grant to Brentwood an
option to purchase up to 28,000 shares and 14,667 shares of Common Stock,
respectively, and, together with two other shareholders of the Company, an
aggregate of up to 66,667 shares of Common Stock at a purchase price of
$100,000. Brentwood exercised this option in April, 1996 purchasing an
aggregate of 66,667 shares of Common Stock at a purchase price of $100,000
from such shareholders.
In September 1995, the Company and RPR entered into a collaborative
relationship for use of the Aastrom CPS as a component of its lymphoid cell
therapy program. On September 6, 1996, RPR notified the Company that it would
not exercise its option to continue the collaboration. As a result, $3,500,000
million of option payments previously paid to the Company by RPR were
converted into 205,882 shares of the Company's Series E Preferred Stock.
In October 1995, the Company repurchased 62,500 shares of Series D Preferred
Stock from Brentwood at the original purchase price of $250,000 and in
December 1995 resold these shares to Northwest Ohio Venture Fund, a
shareholder of the Company, for a total purchase price of $250,000.
In January 1996, the Company sold 1,411,765 shares of Series E Preferred
Stock at a price per share of $4.25 to the following investors: (i) Michigan
purchased 470,588 shares for a total purchase price of $1,999,999, and (ii)
SBIC Partners, L.P. purchased 941,777 shares for a total purchase price of
$4,000,002. Upon the closing of this offering, each share of Series E
Preferred Stock will be converted into two-thirds of a share of Common Stock.
On November 18, 1993, in connection with the purchase of Common Stock upon
exercise of stock options granted to R. Douglas Armstrong under the 1989 Stock
Option Plan, the Company loaned to Dr. Armstrong $120,000 at an interest rate
of 4% per annum pursuant to a full recourse promissory note. Interest on the
note is payable on an annual basis and principal and accrued but unpaid
interest is due on June 30, 1997. Dr. Armstrong is the President and Chief
Executive Officer and is a director of the Company.
On October 20, 1993, in connection with the purchase of Common Stock upon
exercise of stock options granted to Stephen G. Emerson under the 1989 Stock
Option Plan, the Company loaned to Dr. Emerson $47,303 at an interest rate of
6% per annum pursuant to a full recourse promissory note. Interest on the note
is payable on an annual basis and principal and accrued but unpaid interest is
due June 30, 1997. The loan is secured by 258,687 shares of Common Stock held
by Dr. Emerson. Dr. Emerson is a director of the Company.
In October 1996, the Company executed a financing commitment with Cobe to
provide the Company with up to $5,000,000 (the "Equity Commitment") and up to
$5,000,000 in funding from Michigan under a convertible loan commitment
agreement ("Convertible Loan Commitment"). As of the date of this Prospectus,
the Company has not obtained any financing under these commitments. Both the
Equity Commitment and the Convertible Loan Commitment will terminate upon the
consummation of this offering.
49
Under the terms of the Equity Commitment, the Company has an option to sell
up to $5,000,000 of Series F Preferred Stock at a price of $6.00 per share to
Cobe upon at least ninety days notice, which notice may be given at any time
until September 1, 1997. Cobe's obligation to purchase such shares will
terminate upon the closing of this offering. Although no shares of Series F
Preferred Stock are outstanding, any outstanding shares of Series F Preferred
Stock would convert upon the closing of this offering into Common Stock based
upon a conversion price of 80% of the price of two-thirds of a share of Common
Stock sold in this offering. To the extent shares are sold to Cobe under the
Equity Commitment, Cobe's preemptive right in the Company's next financing and
the Company's Put Option to Cobe would be reduced.
Upon the sale of $5,000,000 of Series F Preferred Stock under the Equity
Commitment, the Company becomes entitled to borrow funds from Michigan under
the Convertible Loan Commitment. The Company may borrow such funds upon at
least 45 days notice, which notice may be given during a period commencing on
October 15, 1996 and ending on November 1, 1997. Upon the completion by the
Company of a Qualifying Financing (as defined in the Convertible Loan
Commitment), the Company has the option to repay outstanding principal and
interest under the Convertible Loan Commitment in cash or to convert such
borrowings into convertible Preferred Stock at a conversion price equivalent
to 90% of the price per share in such financing. Under certain circumstances,
the Convertible Loan Commitment converts or is convertible into Series G
Preferred Stock. Interest accrues at an annual rate of 10% under the
Convertible Loan Commitment, and the Company may repay such principal and
interest at any time without penalty.
The Company has issued warrants to Michigan to purchase 69,444 shares of
Common Stock as consideration for securing the Convertible Loan Commitment and
has agreed to issue additional warrants to purchase 8,333 shares of Common
Stock for each $1,000,000 borrowed under the Convertible Loan Commitment, as
adjusted to the level of borrowing. The warrants become exercisable 90 days
after the closing of this offering. The warrants expire on October 15, 2000 if
not exercised, and may be exercised, in whole or in part, at a price equal to
the lesser of (a) $9.00 per share, which price increases by $3.00 per share
upon each anniversary of the closing of the offering made hereby; and (b) 85%
of the fair market value of the Company's Common Stock at the time of
exercise.
50
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the shares of the Company's Common Stock as of September 30,
1996, and as adjusted to give effect to the sale of 3,250,000 shares of Common
Stock in this offering assuming (a) conversion of all of the Company's
outstanding shares of Preferred Stock into Common Stock and (b) no exercise of
the Underwriters' over-allotment option, and as adjusted to reflect the sale
of shares offered in this offering, (i) by each person the Company knows to be
the beneficial owner of 5% or more of the outstanding shares of Common Stock,
(ii) each named executive officer listed in the Summary Compensation Table,
(iii) each director of the Company, and (iv) all executive officers and
directors of the Company as a group.
PERCENTAGE BENEFICIALLY
OWNED(1)
---------------------------
SHARES BENEFICIALLY BEFORE THE AFTER THE
BENEFICIAL OWNER OWNED(1) OFFERING OFFERING
- ---------------- ------------------- ------------ -----------
H&Q Life Science(2)......... 1,061,334 10.6% 8.0%
Technology Fund I
One Bush Street, 18th Floor
San Francisco, CA 94104
H&Q London Ventures......... 816,666 8.2% 6.2%
One Bush Street, 18th Floor
San Francisco, CA 94104
State Treasurer of the State 1,338,724 13.4% 10.1%
of Michigan,(3)............
Custodian of certain re-
tirement systems
c/o Venture Capital Divi-
sion
430 West Allegan
Lansing, MI 48992
SBIC Partners, L.P.......... 627,451 6.3% 4.7%
201 Main Street, Suite 2302
Fort Worth, TX 76102
Brentwood Associates V, 745,831 7.5% 5.6%
L.P.(4)....................
11150 Santa Monica Blvd.,
Suite 1200
Los Angeles, CA 90025
Wind Point Partners II, 559,500 5.6% 4.2%
L.P........................
676 N. Michigan Ave., Suite
3300
Chicago, IL 60611
Cobe Laboratories, Inc.(5).. 2,499,999 25.0% 18.9%
1185 Oak Street
Lakewood, CO 80215
R. Douglas Armstrong, 501,555 5.0% 3.8%
Ph.D.(6)...................
Albert B. Deisseroth, M.D., 25,000 * *
Ph.D. .....................
Stephen G. Emerson, M.D., 256,789 2.6% 1.9%
Ph.D. .....................
G. Bradford Jones(7)........ 745,831 7.5% 5.6%
Robert J. Kunze(8).......... 1,061,334 10.6% 8.0%
James Maluta(9)............. 83,333 * *
Thomas E. Muller, Ph.D.(10). 15,000 * *
Walter C. Ogier(11)......... 20,833 * *
Horst R. Witzel, Dr.- 8,237 * *
Ing.(12)...................
Edward C. Wood, Jr.(13)..... 2,499,999 25.0% 18.9%
All officers and directors 5,237,911 52.1% 39.4%
as a group (12 per-
sons)(14)..................
- --------
* Represents less than 1% of outstanding Common Stock or voting power.
51
(1) Shares beneficially owned and percentage of ownership are based on
9,985,734 shares of Common Stock outstanding before this offering and
13,235,734 shares of Common Stock outstanding after the closing,
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or disposition power with respect to
securities.
(2) Robert J. Kunze, Chairman of the Board of the Company, is a general
partner of H&Q Life Science Venture Partners. See footnote 8, below.
(3) Does not include 69,444 shares issuable upon exercise of warrants held by
Michigan that are exercisable 90 days after the closing of this offering.
(4) G. Bradford Jones, a director of the Company, is a general partner of
Brentwood Associates V Ventures, L.P., which is the general partner of
Brentwood Associates V, L.P. See footnote 7, below.
(5) In addition, pursuant to a Stock Purchase Agreement dated October 22, 1993
between Cobe and the Company, Cobe has an option to purchase from the
Company an amount of Common Stock equal to 30% of the Company's fully
diluted shares after the exercise of such option, at a purchase price
equal to 120% of the public market trading price of the Company's Common
Stock for a three-year period following the closing of this offering. Cobe
also has a right of first negotiation in the event the Company receives
any proposal concerning, or otherwise decides to pursue, a merger,
consolidation or other transaction in which all or a majority of the
Company's equity securities or all or substantially all of the Company's
assets, or any material portion of the assets of the Company used by the
Company in performing its obligations under the Distribution Agreement
would be acquired by a third party outside of the ordinary course of
business. Edward C. Wood, Jr., a director of the Company, is the President
of Cobe BCT, Inc., an affiliate of Cobe. See footnote 13, below.
(6) Does not include 333,333 shares issuable upon exercise of options held by
Dr. Armstrong that are exercisable upon the effective date of this
offering.
(7) Consists of 745,831 shares held by Brentwood Associates V, L.P. See
footnote 4, above. Mr. Jones, as a general partner of Brentwood Associates
V Ventures, L.P., which is the general partner of Brentwood Associates V,
L.P., may be deemed to beneficially own such shares, but Mr. Jones
disclaims beneficial ownership of all such shares except to the extent of
his pecuniary interest therein.
(8) Consists of 1,061,334 shares held by H&Q Life Science Technology Fund I.
See footnote 2, above. Mr. Kunze, as a general partner of H&Q Life Science
Venture Partners, may be deemed to beneficially own such shares, but Mr.
Kunze disclaims beneficial ownership of all such shares except to the
extent of his pecuniary interest therein.
(9) Includes 16,668 shares issuable upon exercise of options held by Mr.
Maluta that are exercisable within the 60-day period following September
30, 1996. Also includes 66,665 shares held of record by James Maluta and
Deborah Vincent, as Trustees, with shared voting and investment power, of
the James Maluta and Deborah Vincent Living Trust dated October 26, 1993.
(10) Consists of 15,000 shares issuable upon exercise of options held by Dr.
Muller that are exercisable within the 60-day period following September
30, 1996.
(11) Includes 15,833 shares issuable upon exercise of options held by Mr.
Ogier that are exercisable within the 60-day period following September
30, 1996.
(12) Includes 2,237 shares issuable upon exercise of options held by Dr.
Witzel that are exercisable within the 60-day period following September
30, 1996.
(13) Consists of 2,499,999 shares held by Cobe. See footnote 5, above. Mr.
Wood, as the President of Cobe BCT, Inc., an affiliate of Cobe, may be
deemed to beneficially own such shares, but Mr. Wood disclaims beneficial
ownership of all such shares.
(14) Includes 69,738 shares issuable upon exercise of options that are
exercisable within the 60-day period following September 30, 1996. Does
not include 333,333 shares issuable upon exercise of options that are
exercisable upon the effective date of this offering.
52
DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering, the authorized capital stock of the
Company will consist of 40,000,000 shares of Common Stock, no par value per
share, and 5,000,000 shares of Preferred Stock, no par value per share.
COMMON STOCK
As of September 30, 1996, without giving effect to the conversion of each
share of Preferred Stock into Common Stock upon the closing of this offering,
there were 1,887,312 shares of Common Stock outstanding held of record by 32
shareholders.
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Subject to preferences that may
be applicable to outstanding shares of Preferred Stock, the holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior liquidation rights of holders of Preferred Stock
then outstanding. The Common Stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are
fully paid and nonassessable. The rights, preferences and privileges of
holders of Common Stock are subject to, and may be adversely affected by, the
rights of the holders of any shares of any Preferred Stock which the Company
may designate and issue in the future.
PREFERRED STOCK
As of the closing of the offering, no shares of Preferred Stock will be
outstanding. Thereafter, the Board of Directors will be authorized, without
further shareholder approval, to issue up to 5,000,000 shares of Preferred
Stock in one or more series and to fix the rights, preferences, privileges and
restrictions granted or imposed upon any unissued shares of Preferred Stock
and to fix the number of shares constituting any series and the designations
of such series.
The issuance of Preferred Stock may have the effect of delaying or
preventing a change in control of the Company. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
the holders of Common Stock or could adversely affect the rights and powers,
including voting rights, of the holders of the Common Stock. In certain
circumstances, such issuance could have the effect of decreasing the market
price of the Common Stock. The Company currently has no plans to issue any
shares of Preferred Stock.
MICHIGAN LAW AND CERTAIN CHARTER PROVISIONS
The Company is a Michigan corporation and is subject to certain anti-
takeover provisions of the Michigan Business Corporation Act (the "MBCA")
which could delay or make more difficult a merger or tender offer involving
the Company. Chapter 7A of the MBCA prevents, in general, an "interested
shareholder" (defined generally as a person owning 10% or more of a
corporation's outstanding voting shares) from engaging in a "business
combination" (as defined therein) with a Michigan corporation unless: (a) the
Board of Directors issues an advisory statement, holders of 90% of the shares
of each class of stock entitled to vote approve the transaction, and holders
of two-thirds of the "disinterested" shares of each class of stock approve the
transaction; or (b) the interested shareholder has been an interested
shareholder for at least five years and has not acquired beneficial ownership
of any additional shares of the corporation subsequent to the transaction
which resulted in such shareholder being classified as an interested
shareholder, and meets certain requirements, including, but not limited to,
provisions relating to the fairness of the price and the form of consideration
paid; or (c) the Board of Directors, by resolution, exempts a particular
interested shareholder from these provisions prior to the interested
53
shareholder becoming an interested shareholder. The MBCA also contains certain
other provisions which could have anti-takeover effects, including, but not
limited to, Section 368, which pertains to "greenmail."
The Company's Bylaws provide that the Board of Directors is divided into
three classes of directors, with each class serving a staggered three-year
term. The classification system of electing directors may tend to discourage a
third party from making a tender offer or otherwise attempting to obtain
control of the Company and may maintain the incumbency of the Board of
Directors, as it generally makes it more difficult for shareholders to replace
a majority of the directors. The Company's Restated Articles of Incorporation
eliminate the right of shareholders to act without a meeting and do not
provide for cumulative voting in the election of directors. The amendment of
any of these provisions would require approval by holders of at least two-
thirds of the shares of outstanding Common Stock.
The foregoing and other statutory provisions and provisions of the Company's
Restated Articles of Incorporation could have the effect of deterring certain
takeovers or delaying or preventing certain changes in control or management
of the Company, including transactions in which shareholders might otherwise
receive a premium for their shares over then-current market prices.
REGISTRATION RIGHTS
Pursuant to the Amended and Restated Investors Rights Agreement, dated as of
April 7, 1992, as amended (the "Investors Agreement"), certain holders of
outstanding shares of Common Stock, including shares of Common Stock issuable
upon conversion of the Preferred Stock (the "Registrable Securities"), are
entitled to certain demand and incidental registration rights with respect to
such shares, subject to certain customary limitations. Under the Investors
Agreement, subject to certain exceptions, the holders of at least 50% of the
Registrable Securities may require the Company to use its diligent best
efforts to register Registrable Securities for public resale on one occasion
(so long as such registration includes at least 20% of the Registrable
Securities or a lesser percentage if the anticipated aggregate offering price
net of underwriting discounts and commissions would exceed $2 million). In
addition, whenever the Company proposes to register any of its securities
under the Act, holders of Registrable Securities are entitled, subject to
certain restrictions (including customary underwriters "cut back"
limitations), to include their Registrable Securities in such registration.
Subject to certain limitations, the holders of Registrable Securities may also
require the Company to register such shares on Form S-3 no more than once
every twelve months, provided that the anticipated aggregate proceeds would
exceed $500,000. The Company is required to bear all registration and selling
expenses (other than underwriter's discounts and commissions and more than a
single special counsel to the selling shareholders) in connection with the
registration of Registrable Securities in one demand registration and two
piggy-back registrations. The participating investors are required to bear all
expenses in connection with the registration of Registrable Securities on Form
S-3.
Registration rights may be transferred to an assignee or transferee provided
that such assignee or transferee acquires at least 66,667 shares of the
Registrable Securities held by the transferring holder (13,333 shares in the
case of a transfer from the holder of certain stock options). These
registration rights may be amended or waived (either generally or in a
particular instance) only with the written consent of the Company and the
holders of a majority of the Registrable Securities then outstanding.
The registration rights granted under the Investors Agreement shall not be
exercisable by a holder during the period in which the holder may sell all of
the holder's shares under Rule 144 or Rule 144A during a single 90-day period.
Pursuant to the Stock Purchase Agreement between the Company and Cobe, dated
October 22, 1993 (the "Cobe Stock Agreement"), the Company granted to Cobe
certain stock registration rights for any and all of the Company's Common
Stock which Cobe acquires by conversion or otherwise. Cobe's stock
registration rights commence 30 months following an initial public offering,
or earlier in the event of any termination of the Distribution Agreement.
Pursuant to Cobe's registration rights, Cobe is entitled to two demand
registration rights, and an unlimited number of piggyback registration rights.
Cobe's stock registration rights are subject to
54
customary underwriter's "cut back" requirements. The registration rights
granted to Cobe shall not be exercisable during the period in which Cobe has
the ability to sell all of its shares pursuant to Rule 144 during a single
ninety-day period. Subject to certain conditions, these registration rights
may be transferred with the transfer of stock to certain affiliates of the
transferor or to a transferee who acquires the greater of 66,667 shares or 20%
of the transferor's registrable stock.
RIGHTS OF COBE
Pursuant to the Cobe Stock Agreement, Cobe purchased an aggregate of
$10,000,000 of shares of the Company's Series C Preferred Stock. Such shares
of Series C Preferred Stock will automatically convert into 1,666,666 shares
of Common Stock upon consummation of the offering.
Pursuant to the Cobe Stock Agreement, Cobe also has certain preemptive
rights to purchase a portion of any new stock issued by the Company, subject
to certain exceptions, so as to enable Cobe to maintain its relative
percentage ownership and voting power interests in the Company. Under the
terms of the Cobe Stock Agreement, the Company also has the right to require
Cobe to purchase stock issued by the Company in certain qualifying offerings,
under certain circumstances (the "Put Option"). The Put Option may generally
require Cobe to purchase up to 25% of the stock issued by the Company in a
qualifying offering upon the same terms and conditions as the underwriters or
other purchasers participating in the offering provided that Cobe shall not be
required to purchase stock having an aggregate purchase price of more than $5
million. If the Company exercises its Put Option with respect to any such
qualifying offering, Cobe has the option to purchase the greater of up to 40%
of the number of shares to be offered in the qualifying offering or the number
of shares necessary to maintain its percentage ownership interest in the
Company.
Additionally, for a three-year period following the Company's completion of
its initial public offering of stock, Cobe will have an option to purchase
from the Company a quantity of new shares of the Company's Common Stock at a
price equal to 120% of the public market trading price for the Company's
Common Stock. The quantity of Common Stock to be purchased if Cobe exercises
this option shall be equal to 30% of the Company's fully diluted shares after
the exercise of this option.
In the Cobe Stock Agreement, the Company also granted to Cobe a "right of
first negotiation" in the event the Company receives any proposal concerning,
or otherwise decides to pursue, a merger, consolidation or other transaction
in which all or a majority of the Company's equity securities or all or
substantially all of the Company's assets, or any material portion of the
assets of the Company used by the Company in performing its obligations under
the Distribution Agreement would be acquired by a third party outside of the
ordinary course of business.
Pursuant to the Stock Purchase Commitment Agreement with Cobe, dated October
29, 1996, the Company agreed to use reasonable and good faith efforts to cause
a nominee of Cobe, who must be deemed by the Board of Directors to be
qualified to be elected to the Board of Directors for as long as Cobe owns at
least 15% of the outstanding Common Stock.
55
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 13,235,734 shares of
Common Stock outstanding, assuming no exercise of any outstanding options
under any of the Company's option plans after September 30, 1996. Of these
shares, the 3,250,000 shares of Common Stock sold in this offering will be
freely transferable without restriction under the Securities Act unless they
are held by the Company's affiliates as that term is used in Rule 144 under
the Securities Act.
The remaining 9,985,734 shares (the "Restricted Shares") were issued and
sold by the Company in private transactions in reliance upon exemptions from
registration contained in the Act. A total of 6,873 Restricted Shares held for
more than three years by shareholders who are not affiliates of the Company
and who are not subject to the lock-up agreements described below will be
eligible for sale in the public market in reliance upon Rule 144(k)
immediately following the commencement of this offering. A total of 8,735,744
additional outstanding shares will be eligible for sale in the public market
commencing 180 days from the date of this Prospectus without restriction,
other than volume limitations in certain instances, upon the expiration of
certain lock-up agreements referred to below. As of the date 90 days after the
date of this Prospectus, 31,014 additional shares will be available for sale
pursuant to Rule 144 or 701 under the Act, and 1,212,103 Restricted Shares
will have been held for less than two years and will not be eligible for sale
in the market until they have met the two-year holding period requirements of
Rule 144. The executive officers and directors of the Company, and certain
other stockholders and optionholders of the Company, have executed 180-day
lock-up agreements. Cowen & Company may release some or all of the shares
subject to lock-up agreements at any time without notice.
In general, under Rule 144, a person (or persons whose shares are
aggregated), stockholders, including an affiliate, who has beneficially owned
shares for at least two years is entitled to sell in broker transactions,
within any three-month period, commencing 90 days after this offering, a
number of shares that does not exceed the greater of (i) 1% of the then
outstanding Common Stock (approximately 132,357 shares immediately after this
offering assuming no exercise of the Underwriters' over-allotment option) or
(ii) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding the sale, subject to the filing of a Form 144 with
respect to the sale and other limitations. In general, shares issued in
compliance with Rule 701 may be sold by non-affiliates subject to the manner
of sale requirements of Rule 144, but without compliance with the other
requirements of Rule 144. Affiliates may sell shares they acquired under Rule
701 in compliance with the provisions of Rule 144, except that there is no
required holding period. A person who is not an affiliate, has not been an
affiliate within three months prior to sale and has beneficially owned the
Restricted Shares for at least three years, is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
The Company intends to file a registration statement under the Securities
Act to register Common Stock reserved for issuance under its 1992 Plan,
Directors Plan and Purchase Plan. Such registration statement is expected to
become effective approximately 90 days after the date of this Prospectus.
Shares issued upon exercise of outstanding stock options under such plan after
the effective date of such registration statement generally will be available
for sale in the public market. As of September 30, 1996, options to purchase a
total of 336,254 shares of Common Stock were outstanding and 1,100,906 options
remained available for grant under the 1992 Plan. No options have been granted
under the Directors Plan.
The Company has also agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or any rights to acquire
Common Stock for a period of 180 days after the date of this Prospectus,
without the prior written consent of the Underwriters, subject to certain
limited exceptions (including exercises of stock options).
Prior to this offering, there has been no public market for the Common Stock
of the Company. No prediction can be made regarding the effect, if any, that
the sale or availability for sale of shares of additional Common Stock will
have on the market price of the Common Stock. Nevertheless, sales of
substantial numbers of shares by existing stockholders or by stockholders
purchasing in their offering could have a negative effect on the market price
of the Common Stock.
56
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Cowen & Company and J.P. Morgan Securities Inc., have severally agreed to
purchase from the Company the following respective number of shares of Common
Stock at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
----------- ------------
Cowen & Company................................................
J.P. Morgan Securities Inc.....................................
---------
Total........................................................ 3,250,000
=========
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the Common Stock offered hereby if any of such shares are
purchased.
The Company has been advised by the Representatives of the Underwriters that
the Underwriters propose to offer the shares of Common Stock to the public at
the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallot, a concession not in excess of $ per share to certain other
dealers. After the initial public offering, the offering price and other
selling terms may be changed by the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 487,500
additional shares of Common Stock at the initial public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to 3,250,000, and the Company
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover over-
allotments made in connection with the sale of the Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on
the same terms as those on which the 3,250,000 shares are being offered.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company and its directors and officers, and certain of its other
stockholders and optionholders, have entered into agreements providing that,
for a period of 180 days after the date of this Prospectus, they will not,
without the prior written consent of Cowen & Company, offer, sell, contract to
sell or otherwise dispose of any shares of Common Stock or any securities
convertible into, or exchangeable for, or warrants to purchase, any shares of
Common Stock, or grant any option to purchase or right to acquire or acquire
any option to dispose of any shares of Common Stock, except in certain limited
circumstances. See "Shares Eligible for Future Sale."
The Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.
57
Prior to this offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price for the Common
Stock has been determined by negotiations between the Company and the
Representatives of the Underwriters. Among the factors considered in such
negotiations were prevailing market conditions, the results of operations of
the Company in recent periods, the market capitalizations and stages of
development of other companies that the Company and the Representatives of the
Underwriters believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development, and other factors deemed relevant.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is . Its
telephone number in , is .
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Pepper, Hamilton & Scheetz, Detroit, Michigan. Michael B. Staebler,
a partner at Pepper, Hamilton & Scheetz, is the beneficial owner of 3,333
shares of Common Stock. Gray Cary Ware & Freidenrich, A Professional
Corporation, San Diego, California, has acted as special counsel to the
Company in connection with the offering. Certain legal matters in connection
with this offering will be passed upon for the Underwriters by Brobeck Phleger
& Harrison LLP, New York, New York.
EXPERTS
The balance sheets of the Company as of June 30, 1995 and 1996, and the
statements of operations, stockholders' equity, and cash flows for the years
ended June 30, 1994, 1995 and 1996 and the cumulative period from March 24,
1989 (inception) to June 30, 1996 included in this Prospectus, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given upon the authority of that firm as experts in
accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-1 under the
Securities Act of 1933, as amended, with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is
made to the Registration Statement and the exhibits and schedules filed as a
part thereof. Statements contained in this Prospectus as to the contents of
any contract or any other document referred to are not necessarily complete,
and, in each instance, if such contract or document is filed as an exhibit,
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference to such exhibit. The Registration Statement,
including exhibits and schedules thereto, may be inspected without charge at
the Commission's principal office in Washington, D.C., and copies of all or
any part thereof may be obtained from such office after payment of fees
prescribed by the Commission.
The Company intends to furnish to its shareholders annual reports containing
financial statements audited by its independent certified public accountants
and make available to its stockholders quarterly reports containing unaudited
financial data for the first three quarters of each fiscal year.
58
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Independent Accountants........................................ F-2
Balance Sheets as of June 30, 1995 and 1996 and September 30, 1996
(Unaudited)............................................................. F-3
Statements of Operations for the years ended June 30, 1994, 1995 and
1996, for the period from March 24, 1989 (Inception) to June 30, 1996,
for the three months ended September 30, 1995 and 1996 (Unaudited) and
for the period from March 24, 1989 (Inception) to September 30, 1996
(Unaudited)............................................................. F-4
Statements of Stockholders' Equity from March 24, 1989 (Inception) to
June 30, 1996 and for the three months ended September 30, 1996
(Unaudited)............................................................. F-5
Statements of Cash Flows for the years ended June 30, 1994, 1995 and
1996, for the period from March 24, 1989 (Inception) to June 30, 1996,
for the three months ended September 30, 1995 and 1996 (Unaudited) and
for the period from March 24, 1989 (Inception) to September 30, 1996
(Unaudited)............................................................. F-6
Notes to Financial Statements............................................ F-7
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Aastrom Biosciences, Inc.:
We have audited the accompanying balance sheets of Aastrom Biosciences, Inc.
(a Michigan corporation in the development stage) as of June 30, 1995 and
1996, and the related statements of operations, stockholders' equity, and cash
flows for the years ended June 30, 1994, 1995 and 1996, and the cumulative
period from March 24, 1989 (inception) to June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aastrom Biosciences, Inc.
as of June 30, 1995 and 1996, and the results of its operations and its cash
flows for the years ended June 30, 1994, 1995 and 1996, and the cumulative
period from March 24, 1989 (inception) to June 30, 1996, in conformity with
generally accepted accounting principles.
Detroit, Michigan
August 9, 1996
To the Board of Directors of
Aastrom Biosciences, Inc.:
The financial statements herein have been adjusted to give effect to the 2
for 3 reverse stock split of the Company's outstanding Common Shares as
described more fully in Note 1 to the financial statements. The above report
is in the form that will be signed by Coopers & Lybrand L.L.P. upon the
effectiveness of such split assuming that, from October 31, 1996 to the
effective date of such split, no other events shall have occurred that would
affect the accompanying financial statements or notes thereto.
Coopers & Lybrand L.L.P.
Detroit, Michigan
October 31, 1996
F-2
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
PRO FORMA
STOCKHOLDERS'
JUNE 30, EQUITY AT
------------------------- SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996 1996
------------------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents........... $ 2,680,000 $10,967,000 $ 5,908,000
Short-term investments. 8,388,000 -- 1,200,000
Receivables............ 99,000 81,000 220,000
Prepaid expenses....... 105,000 437,000 378,000
------------ ----------- -----------
Total current assets. 11,272,000 11,485,000 7,706,000
PROPERTY, NET............ 1,279,000 1,188,000 1,225,000
------------ ----------- -----------
Total assets......... $ 12,551,000 $12,673,000 $ 8,931,000
============ =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and
accrued expenses...... $ 328,000 $ 1,192,000 $ 841,000
Accrued employee
expenses.............. 130,000 97,000 80,000
Current portion of
capital lease
obligations........... 270,000 223,000 192,000
Deferred revenue....... 225,000 122,000 53,000
------------ ----------- -----------
Total current
liabilities......... 953,000 1,634,000 1,166,000
CAPITAL LEASE
OBLIGATIONS............. 412,000 189,000 147,000
COMMITMENTS (Note 7)
STOCKHOLDERS' EQUITY:
Preferred Stock, no par
value, shares
authorized--8,540,000,
9,951,765 and
10,157,647,
respectively, issued and
outstanding--8,040,001,
9,451,766 and 9,657,648,
respectively (none--pro
forma), (liquidation
preference of
$34,560,000 and
$35,375,000 at June 30,
1996 and September 30,
1996, respectively)..... 28,253,000 34,218,000 37,718,000 $ --
Common Stock, no par
value, shares
authorized--17,000,000,
18,500,000 and
18,500,000,
respectively, issued and
outstanding--1,731,463,
1,886,479 and 1,887,312,
respectively
(9,985,734--pro forma).. 241,000 324,000 365,000 38,083,000
Deficit accumulated
during the development
stage................... (17,108,000) (27,025,000) (30,298,000) (30,298,000)
Stockholder notes
receivable.............. (198,000) (167,000) (167,000) (167,000)
Stock purchase rights.... -- 3,500,000 -- --
Unrealized losses on
investments............. (2,000) -- -- --
------------ ----------- ----------- -----------
Total stockholders'
equity................ 11,186,000 10,850,000 7,618,000 $ 7,618,000
------------ ----------- ----------- ===========
Total liabilities and
stockholders'
equity.............. $ 12,551,000 $12,673,000 $ 8,931,000
============ =========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
MARCH 24,
MARCH 24, 1989
1989 THREE MONTHS ENDED (INCEPTION)
YEAR ENDED JUNE 30, (INCEPTION) SEPTEMBER 30, TO
-------------------------------------- TO JUNE 30, ------------------------ SEPTEMBER 30,
1994 1995 1996 1996 1995 1996 1996
----------- ----------- ------------ ------------ ----------- ----------- -------------
(UNAUDITED) (UNAUDITED)
REVENUES:
Research and
development
agreements............ $ 49,000 $ 396,000 $ 1,342,000 $ 1,787,000 $ 172,000 $ 195,000 $ 1,982,000
Grants................. 823,000 121,000 267,000 1,995,000 39,000 29,000 2,024,000
----------- ----------- ------------ ------------ ----------- ----------- ------------
Total revenues....... 872,000 517,000 1,609,000 3,782,000 211,000 224,000 4,006,000
COSTS AND EXPENSES:
Research and
development........... 5,627,000 4,889,000 10,075,000 25,075,000 1,195,000 3,160,000 28,235,000
General and
administrative........ 1,565,000 1,558,000 2,067,000 7,089,000 446,000 452,000 7,541,000
----------- ----------- ------------ ------------ ----------- ----------- ------------
Total costs and
expenses............ 7,192,000 6,447,000 12,142,000 32,164,000 1,641,000 3,612,000 35,776,000
----------- ----------- ------------ ------------ ----------- ----------- ------------
LOSS BEFORE OTHER INCOME
AND EXPENSE............ (6,320,000) (5,930,000) (10,533,000) (28,382,000) (1,430,000) (3,388,000) (31,770,000)
----------- ----------- ------------ ------------ ----------- ----------- ------------
OTHER INCOME (EXPENSE):
Interest income........ 245,000 279,000 678,000 1,576,000 149,000 126,000 1,702,000
Interest expense....... (65,000) (66,000) (62,000) (219,000) (18,000) (11,000) (230,000)
----------- ----------- ------------ ------------ ----------- ----------- ------------
Other income......... 180,000 213,000 616,000 1,357,000 131,000 115,000 1,472,000
----------- ----------- ------------ ------------ ----------- ----------- ------------
NET LOSS................ $(6,140,000) $(5,717,000) $ (9,917,000) $(27,025,000) $(1,299,000) $(3,273,000) $(30,298,000)
=========== =========== ============ ============ =========== =========== ============
PRO FORMA NET LOSS PER
SHARE.................. $ (.82) $ (.66) $ (.98) $ (.13) $ (.32)
=========== =========== ============ =========== ===========
Pro forma weighted
average number of
common and common
equivalent shares
outstanding............ 7,461,000 8,644,000 10,103,000 10,094,000 10,107,000
=========== =========== ============ =========== ===========
The accompanying notes are an integral part of these financial statements.
F-4
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
DEFICIT
ACCUMULATED
PREFERRED STOCK COMMON STOCK DURING THE STOCKHOLDER STOCK UNREALIZED
---------------------- ------------------- DEVELOPMENT NOTES PURCHASE GAINS (LOSSES)
SHARES AMOUNT SHARES AMOUNT STAGE RECEIVABLE RIGHTS ON INVESTMENTS
--------- ----------- --------- -------- ------------ ----------- ---------- --------------
Balance, March
24, 1989
(Inception).... -- $ -- -- $ -- $ -- $ -- $ -- $ --
Non-cash
issuance of
Common Stock... 454,545 --
Issuance of
Series A
Preferred Stock
at $1.00 per
share in August
1989........... 1,500,000 1,500,000
Net loss........ (500,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1990....... 1,500,000 1,500,000 454,545 -- (500,000) -- -- --
Issuance of
Series A
Preferred Stock
in March 1991
at $1.00 per
share, net of
issuance costs
of $5,000...... 1,000,000 995,000
Net loss........ (636,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1991....... 2,500,000 2,495,000 454,545 -- (1,136,000) -- -- --
Issuance of
Series B
Preferred Stock
in April 1992
at $2.00 per
share, net of
issuance costs
of $46,000..... 3,030,000 6,014,000
Net loss........ (1,268,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1992....... 5,530,000 8,509,000 454,545 -- (2,404,000) -- -- --
Issuance of
Common Stock
for services... 33,333 10,000
Exercise of
stock option... 6,873 1,000
Net loss........ (2,847,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1993....... 5,530,000 8,509,000 494,751 11,000 (5,251,000) -- -- --
Issuance of
Series C
Preferred Stock
in October 1993
at $1,000 per
share, net of
issuance costs
of $175,000.... 10,000 9,825,000
Exercise of
stock options.. 1,222,609 229,000 (198,000)
Net loss........ (6,140,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1994....... 5,540,000 18,334,000 1,717,360 240,000 (11,391,000) (198,000) -- --
Issuance of
Series D
Preferred Stock
in April and
May 1995 at
$4.00 per
share, net of
issuance costs
of $81,000..... 2,500,001 9,919,000
Exercise of
stock options.. 39,103 8,000
Retirement of
Common Shares
outstanding.... (25,000) (7,000)
Unrealized loss
on investments. (2,000)
Net loss........ (5,717,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1995....... 8,040,001 28,253,000 1,731,463 241,000 (17,108,000) (198,000) -- (2,000)
Issuance of
Series E
Preferred Stock
in January 1996
at $4.25 per
share, net of
issuance costs
of $35,000..... 1,411,765 5,965,000
Exercise of
stock options.. 130,016 53,000
Issuance of
Common Stock at
$1.20 per
share.......... 25,000 30,000
Issuance of
Stock Purchase
Rights for cash
in September
1995 and March
1996........... 3,500,000
Repurchase of
Series D
Preferred Stock
at $4.00 per
share.......... (62,500) (250,000)
Sale of Series D
Preferred Stock
at $4.00 per
share.......... 62,500 250,000
Principal
payment
received under
stockholder
note
receivable..... 31,000
Unrealized gain
on investments. 2,000
Net loss........ (9,917,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance, June
30, 1996....... 9,451,766 34,218,000 1,886,479 324,000 (27,025,000) (167,000) 3,500,000 --
Unaudited:
Exercise of
stock options.. 833 1,000
Issuance of
Series E
Preferred Stock
to RPR at
$17.00 per
share.......... 205,882 3,500,000 (3,500,000)
Compensation
expense related
to stock
options
granted........ 40,000
Net loss........ (3,273,000)
--------- ----------- --------- -------- ------------ --------- ---------- ---------
Balance,
September 30,
1996
(Unaudited).... 9,657,648 $37,718,000 1,887,312 $365,000 $(30,298,000) $(167,000) $ -- $ --
========= =========== ========= ======== ============ ========= ========== =========
TOTAL
STOCKHOLDERS'
EQUITY
-------------
Balance, March
24, 1989
(Inception).... $ --
Non-cash
issuance of
Common Stock... --
Issuance of
Series A
Preferred Stock
at $1.00 per
share in August
1989........... 1,500,000
Net loss........ (500,000)
-------------
Balance, June
30, 1990....... 1,000,000
Issuance of
Series A
Preferred Stock
in March 1991
at $1.00 per
share, net of
issuance costs
of $5,000...... 995,000
Net loss........ (636,000)
-------------
Balance, June
30, 1991....... 1,359,000
Issuance of
Series B
Preferred Stock
in April 1992
at $2.00 per
share, net of
issuance costs
of $46,000..... 6,014,000
Net loss........ (1,268,000)
-------------
Balance, June
30, 1992....... 6,105,000
Issuance of
Common Stock
for services... 10,000
Exercise of
stock option... 1,000
Net loss........ (2,847,000)
-------------
Balance, June
30, 1993....... 3,269,000
Issuance of
Series C
Preferred Stock
in October 1993
at $1,000 per
share, net of
issuance costs
of $175,000.... 9,825,000
Exercise of
stock options.. 31,000
Net loss........ (6,140,000)
-------------
Balance, June
30, 1994....... 6,985,000
Issuance of
Series D
Preferred Stock
in April and
May 1995 at
$4.00 per
share, net of
issuance costs
of $81,000..... 9,919,000
Exercise of
stock options.. 8,000
Retirement of
Common Shares
outstanding.... (7,000)
Unrealized loss
on investments. (2,000)
Net loss........ (5,717,000)
-------------
Balance, June
30, 1995....... 11,186,000
Issuance of
Series E
Preferred Stock
in January 1996
at $4.25 per
share, net of
issuance costs
of $35,000..... 5,965,000
Exercise of
stock options.. 53,000
Issuance of
Common Stock at
$1.20 per
share.......... 30,000
Issuance of
Stock Purchase
Rights for cash
in September
1995 and March
1996........... 3,500,000
Repurchase of
Series D
Preferred Stock
at $4.00 per
share.......... (250,000)
Sale of Series D
Preferred Stock
at $4.00 per
share.......... 250,000
Principal
payment
received under
stockholder
note
receivable..... 31,000
Unrealized gain
on investments. 2,000
Net loss........ (9,917,000)
-------------
Balance, June
30, 1996....... 10,850,000
Unaudited:
Exercise of
stock options.. 1,000
Issuance of
Series E
Preferred Stock
to RPR at
$17.00 per
share.......... --
Compensation
expense related
to stock
options
granted........ 40,000
Net loss........ (3,273,000)
-------------
Balance,
September 30,
1996
(Unaudited).... $7,618,000
=============
The accompanying notes are an integral part of these financial statements.
F-5
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
MARCH 24,
MARCH 24, 1989
1989 THREE MONTHS ENDED (INCEPTION)
YEAR ENDED JUNE 30, (INCEPTION) SEPTEMBER 30, TO
------------------------------------- TO JUNE 30, ------------------------ SEPTEMBER 30,
1994 1995 1996 1996 1995 1996 1996
----------- ----------- ----------- ------------ ----------- ----------- -------------
(UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES:
Net loss............... $(6,140,000) $(5,717,000) $(9,917,000) $(27,025,000) $(1,299,000) $(3,273,000) $(30,298,000)
Adjustments to
reconcile net loss to
net cash used for
operating activities:
Depreciation and
amortization........ 248,000 329,000 536,000 1,267,000 91,000 136,000 1,403,000
Loss on property held
for resale.......... -- -- -- 110,000 -- -- 110,000
Amortization of
discounts and
premiums on
investments......... -- (9,000) (110,000) (119,000) (48,000) -- (119,000)
Expense related to
stock and stock
options granted..... -- -- -- 10,000 -- 40,000 50,000
Changes in assets and
liabilities:
Receivables........ 11,000 132,000 18,000 (81,000) 4,000 (139,000) (220,000)
Prepaid expenses... (17,000) (59,000) (332,000) (437,000) 27,000 59,000 (378,000)
Accounts payable
and accrued
expenses.......... (45,000) (40,000) 864,000 1,192,000 (35,000) (351,000) 841,000
Accrued employee
expenses.......... 53,000 28,000 (33,000) 97,000 (58,000) (17,000) 80,000
Deferred revenue... 146,000 79,000 (103,000) 122,000 (172,000) (69,000) 53,000
----------- ----------- ----------- ------------ ----------- ----------- ------------
Net cash used for
operating activities.. (5,744,000) (5,257,000) (9,077,000) (24,864,000) (1,490,000) (3,614,000) (28,478,000)
INVESTING ACTIVITIES:
Organizational costs... -- -- -- (73,000) -- -- (73,000)
Purchase of short-term
investments........... (967,000) (10,981,000) -- (11,948,000) -- (1,200,000) (13,148,000)
Maturities of short-
term investments...... -- 3,567,000 8,500,000 12,067,000 2,500,000 -- 12,067,000
Capital purchases...... (320,000) (118,000) (445,000) (1,718,000) (15,000) (173,000) (1,891,000)
Proceeds from sale of
property held for
resale................ -- -- -- 400,000 -- -- 400,000
----------- ----------- ----------- ------------ ----------- ----------- ------------
Net cash provided by
(used for) investing
activities............ (1,287,000) (7,532,000) 8,055,000 (1,272,000) 2,485,000 (1,373,000) (2,645,000)
FINANCING ACTIVITIES:
Issuance of Preferred
Stock................. 9,825,000 9,919,000 5,965,000 34,218,000 -- -- 34,218,000
Issuance of Common
Stock................. 31,000 1,000 83,000 116,000 3,000 1,000 117,000
Payments received for
stock purchase rights. -- -- 3,500,000 3,500,000 1,500,000 -- 3,500,000
Payments received under
stockholder notes..... -- -- 31,000 31,000 -- -- 31,000
Principal payments
under capital lease
obligations........... (147,000) (214,000) (270,000) (762,000) (65,000) (73,000) (835,000)
----------- ----------- ----------- ------------ ----------- ----------- ------------
Net cash provided by
(used for) financing
activities............ 9,709,000 9,706,000 9,309,000 37,103,000 1,438,000 (72,000) 37,031,000
----------- ----------- ----------- ------------ ----------- ----------- ------------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............ 2,678,000 (3,083,000) 8,287,000 10,967,000 2,433,000 (5,059,000) 5,908,000
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD.... 3,085,000 5,763,000 2,680,000 -- 2,680,000 10,967,000 --
----------- ----------- ----------- ------------ ----------- ----------- ------------
CASH AND CASH
EQUIVALENTS AT END OF
PERIOD................. $ 5,763,000 $ 2,680,000 $10,967,000 $ 10,967,000 $ 5,113,000 $ 5,908,000 $ 5,908,000
=========== =========== =========== ============ =========== =========== ============
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW
INFORMATION:
Interest paid.......... $ 65,000 $ 66,000 $ 62,000 $ 219,000 $ 18,000 $ 11,000 $ 230,000
=========== =========== =========== ============ =========== =========== ============
SUPPLEMENTAL DISCLOSURES
OF NON-CASH INVESTING
AND FINANCING
ACTIVITIES:
Additions to capital
lease obligations..... $ 348,000 $ 270,000 $ -- $ 1,174,000 $ -- $ -- $ 1,174,000
=========== =========== =========== ============ =========== =========== ============
The accompanying notes are an integral part of these financial statements.
F-6
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Overview--Aastrom Biosciences, Inc. (the "Company") was incorporated in
March 1989 ("Inception") under the name Ann Arbor Stromal, Inc. The Company
changed its name in 1991 concurrent with the commencement of employee-based
operations. The Company is in the development stage with its principal
business activities being research and product development, conducted both on
its own behalf and in connection with various collaborative research and
development agreements with other companies, involving the development of
processes and instrumentation for the ex-vivo production of human stem cells
and their progeny, and hematopoetic and other tissues. Successful future
operations are subject to several technical and business risks, including
satisfactory product development and obtaining regulatory approval and market
acceptance for its products.
Significant Revenue Relationships--Two companies accounted for 77% of total
revenues for the year ended June 30, 1995 and one company accounted for 83% of
total revenues for the year ended June 30, 1996. These two companies have
accounted for 47% of total revenues for the period from Inception to June 30,
1996. One company accounted for 82% and 87% of total revenues for the three
months ended September 30, 1995 and 1996, respectively, and two companies
accounted for 49% of total revenues for the period from Inception to September
30, 1996. Grant revenues consist of grants sponsored by the U.S. government.
Cash and Cash Equivalents--Cash and cash equivalents include cash and short-
term investments with original maturities of three months or less.
Short-Term Investments--Short-term investments consist of U.S. government
securities and commercial paper with original maturities of over three months
but less than one year. Short-term investments are classified as available-
for-sale, and are carried at market value, in accordance with Financial
Accounting Standards Board Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which was adopted July 1, 1994.
Application of this pronouncement results in the inclusion of unrealized gains
and losses on investments in stockholders' equity. Application of this
accounting treatment in prior periods would not have materially changed the
amounts as presented.
Diversity of Credit Risk--The Company invests its excess cash in U.S.
government securities and commercial paper, maintained in U.S. financial
institutions, and has established guidelines relative to diversification and
maturities in an effort to maintain safety and liquidity. The Company plans to
continue to invest its excess funds in short-term, investment grade, interest-
bearing instruments. These guidelines are periodically reviewed and modified
to take advantage of trends in yields and interest rates. The Company has not
experienced any significant losses on its cash equivalents or short-term
investments.
Property--Property is recorded at cost and depreciated or amortized using
the straight-line method over the estimated useful life of the asset
(primarily five years) or the remaining lease term, if shorter, with respect
to leasehold improvements and certain capital lease assets.
Revenue Recognition--Revenue from grants and research agreements is
recognized on a cost reimbursement basis consistent with the performance
requirements of the related agreement. Funding received in advance of costs
incurred is presented as deferred revenue in the accompanying financial
statements.
Research and Development Costs--Research and development costs are expensed
as incurred. Such costs and expenses related to programs under collaborative
agreements with other companies totaled $49,000, $146,000 and $1,294,000 for
the years ended June 30, 1994, 1995 and 1996, respectively, and $1,489,000 for
the period from Inception to June 30, 1996 and $158,000, $117,000 and
$1,606,000 for the three months ended September 30, 1995 and 1996 and for the
period from Inception to September 30, 1996, respectively.
F-7
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
Restatement of Common Stock Information--The Company's Board of Directors
authorized a two-for-three reverse stock split of the Company's Common Stock
("Reverse Stock Split") to be effected prior to the closing of the proposed
IPO. Accordingly, all references in the accompanying financial statements to
common share or per common share information have been restated to reflect the
Reverse Stock Split.
Pro Forma Information (Unaudited)--Pro forma net loss per share is computed
using the weighted average number of common and common equivalent shares
outstanding during the period. Common equivalent shares are not included in
the per-share calculation where the effect of their inclusion would be anti-
dilutive, except that common and common equivalent shares issued during the 12
month period preceding the filing of the registration statement for the
proposed initial public offering ("IPO"), contemplated in the Prospectus in
which these financial statements are included, at a price below $8.00 per
share (the lowest expected selling price in the proposed IPO) are considered
to be cheap stock and have been included in the calculation as if they were
outstanding for all periods using the treasury stock method, if applicable,
even though their inclusion is anti-dilutive. Upon the completion of the
Company's proposed IPO, all 9,657,648 shares of the Company's outstanding
Preferred Stock will automatically convert into 8,098,422 shares of Common
Stock. As a result, all outstanding shares of Preferred Stock are assumed to
have been converted to Common Stock at the time of issuance, except for those
shares considered to be cheap stock which are treated as outstanding for all
periods presented. The pro forma effect of these conversions has been
reflected in the accompanying balance sheet assuming the conversion had
occurred on September 30, 1996.
Historical net loss per share information is not considered meaningful due
to the significant changes in the Company's capital structure which will occur
upon the closing of the proposed IPO; accordingly, such per-share data
information is not presented.
Use of Estimates--The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
that affect the amounts reported in the financial statements and disclosures
made in the accompanying notes to financial statements. Actual results could
differ from those estimates.
Financial Instruments--Management evaluates the fair value of those assets
and liabilities identified as financial instruments under Statement of
Financial Accounting Standards No. 107 and estimates that the fair value of
such financial instruments generally approximates the carrying value in the
accompanying financial statements. Fair values have been determined through
information obtained from market sources and management estimates.
Recent Pronouncements--During October 1995, the Financial Accounting
Standards Board issued Statement No. 123, "Accounting for Stock-Based
Compensation," which establishes a fair value based method of accounting for
stock-based compensation and incentive plans and requires additional
disclosures for those companies that elect not to adopt the new method of
accounting. Adoption of this pronouncement is required for the Company's
fiscal year beginning July 1, 1996 and the Company intends to provide the
additional disclosures required by the pronouncement in its financial
statements for the year ended June 30, 1997.
During March 1995, the Financial Accounting Standards Board issued Statement
No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," which requires the Company to review
for impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets whenever events or changes in circumstances
indicate that the carrying amount of an asset
F-8
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
might not be recoverable. In certain situations, an impairment loss would be
recognized. SFAS 121 will become effective for the Company's fiscal year
beginning July 1, 1996. Management has studied the effect of implementing SFAS
121 and, based upon its initial evaluation, does not expect it to have a
significant impact on the Company's financial condition or results of
operations.
Unaudited Financial Information--The financial information as of September
30, 1996, and for the three-month periods ended September 30, 1995 and 1996,
and for the period from Inception to September 30, 1996, is unaudited. In the
opinion of management, such information contains all adjustments, consisting
only of normal recurring accruals, necessary for a fair statement of the
results of operations for the interim periods. The results of operations for
the three months ended September 30, 1996, are not necessarily indicative of
the results to be expected for the full year.
2. SHORT-TERM INVESTMENTS
All short-term investments are available-for-sale, and have maturities of
one year or less and are summarized as follows:
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
June 30, 1995:
U.S. Government Securities.... $4,890,000 $ -- $ (2,000) $4,888,000
Commercial Paper.............. 3,500,000 -- -- 3,500,000
---------- -------- -------- ----------
$8,390,000 $ -- $ (2,000) $8,388,000
========== ======== ======== ==========
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
September 30, 1996 (Unaudited):
U.S. Government Securities.... $1,200,000 $ -- $ -- $1,200,000
========== ======== ======== ==========
3. PROPERTY
Property consists of the following:
JUNE 30,
---------------------- SEPTEMBER 30,
1995 1996 1996
---------- ---------- -------------
(UNAUDITED)
Machinery and equipment............... $1,140,000 $1,337,000 $1,341,000
Office equipment...................... 405,000 482,000 604,000
Leasehold improvements................ 380,000 520,000 567,000
---------- ---------- ----------
1,925,000 2,339,000 2,512,000
Less accumulated depreciation and
amortization......................... (646,000) (1,151,000) (1,287,000)
---------- ---------- ----------
$1,279,000 $1,188,000 $1,225,000
========== ========== ==========
Equipment under capital leases totaled $1,162,000, $1,131,000 and $1,131,000
at June 30, 1995 and 1996 and September 30, 1996, respectively, with related
accumulated amortization of $407,000, $622,000 and $679,000, respectively
(Note 7).
F-9
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
4. STOCKHOLDERS' EQUITY:
Preferred Stock--The Company has the following outstanding Convertible
Preferred Stock:
SHARES SHARES ISSUED AND OUTSTANDING LIQUIDATION PREFERENCE AT
AUTHORIZED --------------------------------- -------------------------
SEPTEMBER 30, JUNE 30, JUNE 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
1996 1995 1996 1996 1996 1996
------------- --------- --------- ------------- ----------- -------------
(Unaudited) (Unaudited) (Unaudited)
Series A................ 2,500,000 2,500,000 2,500,000 2,500,000 $ 2,500,000 $ 2,500,000
Series B................ 3,030,000 3,030,000 3,030,000 3,030,000 6,060,000 6,000,000
Series C................ 10,000 10,000 10,000 10,000 10,000,000 10,000,000
Series D................ 3,000,000 2,500,001 2,500,001 2,500,001 10,000,000 10,000,000
Series E................ 1,617,647 -- 1,411,765 1,617,647 6,000,000 6,875,000
---------- --------- --------- --------- ----------- -----------
10,157,647 8,040,001 9,451,766 9,657,648 $34,560,000 $35,375,000
========== ========= ========= ========= =========== ===========
All preferred shares have voting rights equal to the equivalent number of
common shares into which they are convertible. Conversion rights on all
outstanding classes of preferred stock are on a two-for-three basis to give
effect for the Reverse Stock Split, except for the Series C Preferred Stock,
each share of which is convertible into approximately 250 shares of Common
Stock. Conversion rights on certain classes of preferred stock are subject to
anti-dilution adjustments. Dividends accrue annually at 8% on all series of
Preferred Stock, but do not accumulate. No cash dividends have been declared
or paid through September 30, 1996. Dividends and liquidation preferences on
the Series B, Series C and Series D Preferred Stock are senior to those of the
Series A Preferred Stock. Dividends and liquidation preferences on the Series
E Preferred Stock are senior to those of all other outstanding series of
preferred stock. Conversion of preferred stock is automatic in the event of
the closing of an underwritten public stock offering meeting certain minimum
requirements such as the offering contemplated by the Prospectus in which
these financial statements are included.
Cobe Laboratories, Inc. Stock Purchase Rights--In connection with the
purchase of the Series C Preferred Stock by Cobe Laboratories, Inc. ("Cobe")
in October 1993, Cobe received a preemptive right to purchase a pro-rata
portion of any newly issued shares of stock by the Company in order to
maintain its then current percentage ownership interest. Any such purchase of
newly issued shares shall be at the net price to the Company after deducting
underwriters' discounts and commissions, if any. Cobe has waived its right to
such discount on its intended purchase of shares in the proposed IPO. The
Company has an option ("Put Option") to require Cobe to purchase the lesser of
20%, or $5,000,000, in an offering of equity securities meeting certain
minimum requirements. In the event that the Company exercises the Put Option,
Cobe then has the option to purchase up to 40% of that offering.
During the three-year period following the completion of an initial public
offering of Common Stock by the Company, Cobe has an option to purchase
additional shares from the Company equal to 30% of the total number of shares
outstanding assuming exercise of the option. Such option, if exercised, must
be exercised in full with the purchase price of the shares being established
at 120% of the public market trading price as determined by the 30-day average
market price preceding the date of exercise of the option.
The Company has granted Cobe a right of first negotiation in the event the
Company receives any proposal concerning, or otherwise decides to pursue, a
merger, consolidation or other transaction in which all or a majority
F-10
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
of the Company's equity securities or all or substantially all of the
Company's assets, or any material portion of the assets of the Company used by
the Company in performing its obligations under the Distribution Agreement
(Note 6) would be acquired by a third party outside of the ordinary course of
business.
Stock Option Plans--The Company has various stock option plans which provide
for the issuance of nonqualified and incentive stock options to acquire up to
2,836,594 shares of Common Stock. Such options may be granted by the Company's
Board of Directors to certain of the Company's founders, employees, directors
and consultants. The exercise price of incentive stock options shall not be
less than the fair market value of the shares on the date of grant. In the
case of individuals who are also holders of 10% or more of the outstanding
shares of Common Stock, the exercise price of incentive stock options shall
not be less than 110% of the fair market value of the shares on the date of
grant. The exercise price of non-qualified stock options shall not be less
than 85% of the fair market value on the date of grant. Options granted under
these plans expire no later than ten years from the date of grant and
generally become exercisable ratably over a four-year period following the
date of grant.
For certain options granted, the Company recognizes compensation expense for
the difference between the deemed value for accounting purposes and the option
exercise price on the date of grant. During the three-month period ended
September 30, 1996, compensation expense totaling approximately $40,000 has
been charged with respect to these options. Additional future compensation
expense with respect to the issuance of such options totals approximately
$130,000 and will be recognized through October 2000.
F-11
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
The following table summarizes option activity under the Company's stock
option plans:
OPTIONS
OPTIONS AVAILABLE EXERCISE PRICE
OUTSTANDING FOR GRANT PER SHARE
----------- ---------- --------------
March 24, 1989(Inception)
Options authorized................. -- 1,703,261
Options granted.................... 1,528,778 (1,528,778) $ .15 - $ .30
Options exercised.................. (6,873) -- $ .15 - $ .15
Options canceled................... (13,793) 13,793 $ .15 - $ .15
---------- ----------
Balance, June 30, 1993............... 1,508,112 188,276 $ .15 - $ .30
Options granted.................... 198,333 (198,333) $ .30 - $1.20
Options exercised.................. (1,222,609) -- $ .15 - $ .30
Options canceled................... (90,171) 90,171 $ .15 - $1.20
---------- ----------
Balance, June 30, 1994............... 393,665 80,114 $ .15 - $1.20
Options authorized................. -- 333,333
Options granted.................... 55,333 (55,333) $ 1.20 - $1.20
Options exercised.................. (39,103) -- $ .30 - $ .30
Options canceled................... (60,230) 60,230 $ .30 - $1.20
---------- ----------
Balance, June 30, 1995............... 349,665 418,344 $ .15 - $1.20
Options authorized................. -- 800,000
Options granted.................... 155,337 (155,337) $ 1.20 - $3.20
Options exercised.................. (130,016) -- $ .15 - $1.20
Options canceled................... (44,690) 44,690 $ .30 - $1.20
---------- ----------
Balance, June 30, 1996............... 330,296 1,107,697 $ .30 - $3.20
Unaudited:
Options granted.................... 13,334 (13,334) $ 3.20 - $3.20
Options exercised.................. (833) -- $ 1.20 - $1.20
Options canceled................... (6,543) 6,543 $ 1.20 - $1.20
---------- ----------
Balance, September 30, 1996
(Unaudited)......................... 336,254 1,100,906 $ .30 - $3.20
========== ==========
Options Exercisable, 101,021
June 30, 1996....................... ========== $ .30 - $1.20
September 30, 1996 (Unaudited)...... 122,612 $ .30 - $1.20
==========
Common Shares Reserved--The Company has reserved shares of Common Stock for
future issuance as follows:
JUNE 30, SEPTEMBER 30,
1996 1996
--------- -------------
(Unaudited)
Issuance under 1992 Stock Option Plan................ 1,437,993 1,437,160
Conversion of preferred stock........................ 7,961,168 8,098,422
--------- ---------
9,399,161 9,535,582
========= =========
F-12
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
5. FEDERAL INCOME TAXES
Deferred tax assets consist of the following:
JUNE 30,
------------------------
1995 1996
----------- -----------
Net operating loss carryforwards................... $ 5,280,000 $ 9,210,000
Tax credits and other.............................. 360,000 440,000
----------- -----------
Gross deferred tax assets.......................... 5,640,000 9,650,000
Deferred tax assets valuation allowance............ (5,640,000) (9,650,000)
----------- -----------
$ -- $ --
=========== ===========
Due to the historical losses incurred by the Company, a full valuation
allowance for deferred tax assets has been provided. If the Company achieves
profitability, these deferred tax assets may be available to offset income
taxes. The Company's net operating loss and tax credit carryforwards will
expire from 2004 through 2011, if not utilized.
The Company's ability to utilize its net operating loss and tax credit
carryforwards would be limited in the event of a future change in ownership
for tax purposes. Such a change in ownership may likely occur upon the
completion of an initial public offering of the Company's Common Stock.
6. LICENSES, ROYALTIES AND COLLABORATIVE AGREEMENTS
University of Michigan--In March 1989, the Company entered into a research
agreement with the University of Michigan (the "University") for the
development of an adaptable, high-efficiency blood cell factory and to conduct
related research. Under the terms of this research agreement, as amended, the
Company agreed to reimburse the University for research costs in this regard
through the date of its expiration in December 1994. Payments made to the
University under the aforementioned agreements totaled $316,000, $121,000 and
$2,521,000 for the years ended June 30, 1994, 1995, for the period from
Inception to June 30, 1996. As part of this relationship, the Company issued
to the University 454,545 shares of Common Stock in August 1989. No value has
been assigned to these shares in the accompanying financial statements. In
March 1992, the Company entered into a license agreement for the technology
developed under the research agreement. The license agreement, as amended,
provides for a royalty to be paid to the University equal to 2% of net sales
of products containing the licensed technology sold by the Company.
Cobe BCT, Inc.--In connection with the issuance of the Series C Preferred
Stock to Cobe in October 1993, the Company and Cobe BCT, Inc. ("Cobe BCT"), an
affiliate of Cobe, entered into an agreement which grants to Cobe BCT
exclusive worldwide distribution and marketing rights to the Company's Cell
Production System ("CPS") for stem cell therapy applications ("Distribution
Agreement"). The term of the Distribution Agreement is ten years, with an
option, exercisable by Cobe BCT, to extend the term for an additional ten
years. Pursuant to the Distribution Agreement, Cobe BCT will perform worldwide
marketing and distribution activities of the CPS for use in stem cell therapy
and will receive a share of the resulting net sales, as defined, ranging from
38% to 42%, subject to certain negotiated discounts and volume-based
adjustments.
F-13
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
The agreements establishing this collaboration provided for payments
totaling $5,000,000 to be made by Cobe BCT upon the Company meeting certain
development milestones. In May 1995, the Company accepted, as part of the sale
of the Series D Preferred Stock, an equity investment of $5,000,000 from Cobe
in lieu of those future milestone payments.
M.D. Anderson Cancer Center--In December 1992, the Company entered into a
research agreement with the University of Texas, M.D. Anderson Cancer Center
("M.D. Anderson"). Under this agreement, the Company funded certain research
being conducted at M.D. Anderson and issued to M.D. Anderson 33,333 shares of
its Common Stock subject to vesting rights over the succeeding four year
period. In November 1994, the Company and M.D. Anderson terminated the
collaboration and 25,000 shares of Common Stock held by M.D. Anderson were
returned to the Company.
License and Royalty Agreements--In July 1992, the Company licensed certain
cell culture technology under which it obtained an exclusive worldwide license
to the technology in exchange for a royalty of up to 3% of net sales on
products utilizing the licensed technology.
In March 1996, the Company executed a license agreement which provides for
the use of licensed products in the CPS. Pursuant to this license agreement,
the Company recorded a charge to research and development expense of
$1,500,000 representing the license fee payable upon execution of the
agreement. The license agreement provides for annual renewal fees of
$1,000,000 over the five year license term and can be extended at the
Company's option for an additional five years.
Rhone-Poulenc Rorer Inc.--In September 1995, the Company entered into a
research and development collaboration with Rhone-Poulenc Rorer Inc. ("RPR"),
granting RPR a right to license the Company's CPS for Lymphoid cell
applications. Prior to the establishment of this collaboration, the Company
received a option fee of $250,000 and a development deposit of $225,000 to
initiate the preliminary research and development plan. Pursuant to the
agreements establishing this collaboration, RPR was obligated to fund certain
costs associated with the development of the CPS for Lymphoid cell
applications and was entitled to make equity purchases of up to $12,500,000
subject to the Company's satisfaction of certain milestones and RPR's decision
to exercise certain options. As of June 30, 1996, the Company has received
$3,500,000 in equity payments and recognized $1,342,000 in research revenue
through June 30, 1996 and $1,537,000 through September 30, 1996. The remaining
$9,000,000 equity payment was to be paid by RPR by October 1996 pending RPR's
evaluation of the research efforts for Lymphoid cell applications and its
decision to proceed with the collaboration (Note 9).
7. COMMITMENTS
The Company leases certain machinery and equipment and office equipment
under capital leases. Obligations under these leasing arrangements bear
interest at rates ranging from 9.7% to 12.1% and mature at dates ranging from
November 1996 to May 1999. Additionally, the Company leases its facilities
under an operating lease which expires in May 1998, at which time the Company
has the option to renew the lease for an additional period of up to five
years.
F-14
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
Future minimum payments under capital leases and non-cancelable operating
leases are as follows:
CAPITAL OPERATING
LEASES LEASES
-------- ---------
Year Ended June 30,
1997................................................ $255,000 $453,000
1998................................................ 138,000 435,000
1999................................................ 69,000 --
-------- --------
Total minimum lease payments.......................... 462,000 $888,000
========
Less amount representing interest..................... (50,000)
--------
Obligations under capital lease....................... $412,000
========
Certain of the Company's capital lease agreements contain restrictive
provisions which require that the Company's total assets exceed its total
liabilities by at least $1,000,000. Should the Company fall out of compliance
with this provision, and a waiver cannot be obtained from the lessor,
remaining amounts due under the leases become immediately due and payable.
Rent expense for the years ended June 30, 1994, 1995 and 1996, was $176,000,
$241,000 and $338,000, respectively, and for the period from Inception to June
30, 1996 was $822,000. Rent expense for the three months ended September 30,
1995 and 1996, was $83,000 and $107,000, respectively, and for the period from
Inception to September 30, 1996 was $929,000.
8. EMPLOYEE SAVINGS PLAN
The Company has a 401(k) plan that became effective in January 1994. The
plan allows participating employees to contribute up to 15% of their salary,
subject to annual limits and minimum qualifications. The Board may, at its
sole discretion, approve Company contributions. Through June 30, 1996, the
Company has made no contributions to the plan.
9. SUBSEQUENT EVENTS (UNAUDITED)
In September 1996, RPR notified the Company of its intent to terminate its
collaboration with the Company. This notification was made after RPR had
determined that for strategic reasons its support for the development of the
technologies being pursued under the collaboration would be discontinued. As a
result of this termination, no further equity payments or research funding is
due from RPR and RPR's license rights to the Company's CPS for Lymphoid cell
applications are terminated. Upon termination of the collaboration, RPR became
entitled to receive shares of the Company's Series E Preferred Stock at $17.00
per share for the $3,500,000 in equity payments made by RPR under the
collaboration. Accordingly, the accompanying financial statements as of
September 30, 1996 reflect the issuance of 205,882 shares of Series E
Preferred Stock issuable to RPR in this regard.
In October 1996, the Company executed a financing commitment for up to
$5,000,000 in additional equity funding from Cobe ("Equity Commitment") and
$5,000,000 in funding under a convertible loan agreement ("Convertible Loan
Commitment") with another current investor. Under the terms of the Equity
Commitment,
F-15
AASTROM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE THREE-MONTH
PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
the Company may sell up to $5,000,000 of preferred stock at $6.00 per share
during a funding period that extends from January 1997 to December 1997. The
conversion rights of such preferred stock will be adjusted to provide for a
conversion at 80% of the per share price in the Company's next financing, as
adjusted for the Reverse Stock Split, and provided that such financing meets
certain minimum requirements ("Qualifying Financing"), such as the proposed
IPO in which these financial statements appear. If such a financing is not
completed by December 1997, then the conversion rights of this class of
preferred stock into Common Stock will be set at $6.98 per share of Common
Stock. To the extent shares are sold to Cobe under the Equity Commitment, its
preemptive right in the Company's next Qualifying Financing and the Company's
Put Option to Cobe is reduced to the extent of its purchase.
Upon the sale of $5,000,000 in preferred stock under the Equity Commitment,
the Company becomes entitled to borrow funds under the Convertible Loan
Commitment. Such funds may be borrowed by the Company during a funding period
that extends from January 1997 to September 1997. Upon the completion of a
Qualifying Financing by the Company, the Company has the option to repay
outstanding borrowings under the Convertible Loan Commitment, in cash, or to
convert such borrowings into preferred stock. The conversion rights of such
class of preferred stock will be adjusted to provide for a conversion at 90%
of the per share price in the Company's next Qualifying Financing, as adjusted
for the Reverse Stock Split. If such financing is not completed by December
1997, then the conversion rights of this class of preferred stock will be set
at $6.98 per share of Common Stock. Interest accrues at 10% on amounts
borrowed under the Convertible Loan Commitment, which is due at maturity, and
may be retired in a manner consistent with principal. The Company may repay
borrowed amounts at anytime prior to the maturity date which is established
for all amounts borrowed as one year from the date of the first borrowing.
In connection with the Convertible Loan Commitment, the Company has issued
warrants to purchase 69,444 shares of Common Stock for securing the
commitment. The Company will issue additional warrants to purchase 8,333
shares of Common Stock for each $1,000,000 borrowed under the Convertible Loan
Commitment, with such additional warrants to be prorated to the level of
borrowing. The warrants expire on October 15, 2000 if not exercised, and may
be exercised, in whole or in part, at a price equal to the lesser of (a) $9.00
per share, which price increases by $3.00 per share on each anniversary of the
closing of the offering being made in the Prospectus to which these financial
statements are included; or (b) 85% of the fair market value of the Company's
Common Stock at the time of exercise.
The Equity Commitment and the Convertible Loan Commitment expire upon the
closing of an initial public offering by the Company.
F-16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company or any of the
Underwriters or any other person. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any security other than the shares
of Common Stock offered, nor does it constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered to any person in
any jurisdiction or in which it is unlawful to make such offer or solicitation
to such person. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
-------------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
The Company............................................................... 14
Use of Proceeds........................................................... 14
Dividend Policy........................................................... 14
Capitalization............................................................ 15
Dilution.................................................................. 16
Selected Financial Data................................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Business.................................................................. 22
Management................................................................ 41
Certain Transactions...................................................... 49
Principal Stockholders.................................................... 51
Description of Capital Stock.............................................. 53
Shares Eligible for Future Sale........................................... 56
Underwriting.............................................................. 57
Legal Matters............................................................. 58
Experts................................................................... 58
Additional Information.................................................... 58
Index to Financial Statements............................................. F-1
-------------------
Until , 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock offered, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their unsold allotments or
subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,250,000 Shares
[LOGO] AASTROM BIOSCIENCES INC
Common Stock
-------------------
PROSPECTUS
-------------------
COWEN & COMPANY
J.P. MORGAN & CO.
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Other expenses in connection with the registration of the securities
hereunder, which will be paid by the Company, will be substantially as
follows:
ITEM AMOUNT
---- --------
Securities and Exchange Commission registration fee................ $ 11,326
NASD filing fee.................................................... 4,238
Nasdaq National Market fee......................................... 50,000
Blue sky qualification fees and expenses........................... 20,000
Accounting fees and expenses....................................... 85,000
Legal fees and expenses............................................ 350,000
Printing and engraving expenses.................................... 115,000
Transfer agent and registrar fees.................................. 7,500
Officers' and Directors' Insurance................................. 200,000
Miscellaneous expenses............................................. 56,936
--------
Total............................................................ $900,000
========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1561 through 1565 of the Michigan Business Corporation Act (the
"MBCA") authorize a corporation to grant or a court to award, indemnity to
directors, officers, employees and agents in terms sufficiently broad to
permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act of 1933.
The Bylaws of the Company (see Exhibit 3.4), provide that the Company shall,
to the fullest extent authorized or permitted by the MBCA, or other applicable
law, indemnify a director or officer who was or is a party or is threatened to
be made a party to any proceeding by or in the right of the Company to procure
a judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Company, against expenses,
including actual and reasonable attorneys' fees, and amounts paid in
settlement incurred in connection with the action or suit, if the indemnitee
acted in good faith and in a manner the person reasonably believed to be in,
or not opposed to, the best interests of the Company or its shareholders. This
section also authorizes the Company to advance expenses incurred by any agent
of the Company in defending any proceeding prior to the final disposition of
such proceeding upon receipt of an undertaking by or on behalf of the agent to
repay such amount unless it shall be determined ultimately that the agent is
entitled to be indemnified.
The Bylaws also authorize the Company to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Company against any liability asserted against or incurred by such person
in such capacity or arising out of such person's status as such, regardless of
whether the Company would have the power to indemnify such person against such
liability under the provisions of the MBCA.
The Company has entered into an indemnification agreement with certain of
its directors, officers and other key personnel, which contains provisions
that may in some respects be broader than the specific indemnification
provisions contained under applicable law. The indemnification agreement may
require the Company, among other things, to indemnify such directors, officers
and key personnel against certain liabilities that may arise by reason of
their status or service as directors, officers or employees of the Company, to
advance the expenses incurred by such parties as a result of any threatened
claims or proceedings brought against them as to which
II-1
they could be indemnified, and, to the maximum extent that insurance coverage
of such directors, officers and key employees under the Company's directors'
and officers' liability insurance policies is maintained.
Section 1209 of the MBCA permits a Michigan corporation to include in its
Articles of Incorporation a provision eliminating or limiting a director's
liability to a corporation or its shareholders for monetary damages for
breaches of fiduciary duty. The enabling statute provides, however, that
liability for breaches of the duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct or knowing violation of the law, or
the receipt of improper personal benefits cannot be eliminated or limited in
this manner. The Company's Restated Articles of Incorporation include a
provision which eliminates, to the fullest extent permitted by the MBCA
director liability for monetary damages for breaches of fiduciary duty.
Section 6 of the Underwriting Agreement filed as Exhibit 1.1 hereto sets
forth certain provisions with respect to the indemnification of certain
controlling persons, directors and officers against certain losses and
liabilities, including certain liabilities under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a)ISSUANCES OF COMMON STOCK
Since October 1, 1993, the Company has sold the following shares of Common
Stock:
In October 1995, the registrant issued 37,500 shares of Common Stock to
Albert B. Deisseroth at a price of $.80 per share.
(b) ISSUANCES OF SHARES OF PREFERRED STOCK
Since October 1, 1993, the Company has sold the following shares of
Preferred Stock:
In October 1993, the registrant issued 10,000 shares of Series C Preferred
Stock to Cobe at a price of $1,000 per share.
In April and May 1995, the registrant issued an aggregate of 2,500,001
shares of Series D Preferred Stock to 11 accredited investors at a price of
$4.00 per share.
In December 1995, the registrant issued 62,500 shares of Series D Preferred
Stock to Northwest Ohio Venture Fund, L.P. at a purchase price of $4.00 per
share.
In January 1996, the registrant issued an aggregate of 1,411,765 shares of
Series E Preferred Stock to SBIC Partners, L.P. and the State Treasurer of the
State of Michigan at a purchase price of $4.25 per share.
Pursuant to a Governance Agreement between the Company and Rhone-Poulenc
Rorer Inc. ("RPR"), dated September 15,1995, RPR terminated its contractual
relationship with the Company on September 6, 1996. As a result of such
termination, the Company became obligated to issue 205,882 shares of Series E
Preferred Stock to RPR at a purchase price of $17.00 per share.
The Company believes that each such sale and issuance of securities was
exempt from registration pursuant to Section 4(2) of the Securities Act of
1933, as amended.
(c) OPTION ISSUANCES TO, AND EXERCISES BY, EMPLOYEES AND DIRECTORS
From January 18, 1990 to the present, the registrant has granted options to
purchase a total of 2,945,174 shares of Common Stock at exercise prices
ranging from $.10 to $2.13 per share to 95 employees and one non-employee
director. No consideration was paid to the Registrant by any recipient of any
of the foregoing options for the grant of any such options. From October 30,
1992 to the present, the Registrant issued a total of 2,829,735 shares of
Common Stock to 26 employees and one non-employee director upon exercise of
stock options at exercise prices ranging from $.10 to $2.13 per share.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
II-2
The issuances described in Items 15(a) were exempt from registration under
the Securities Act in reliance on Section 4(2) of the Securities Act as
transactions by an issuer not involving a public offering. The issuances
described in Item 15(b) were exempt from registration under the Securities Act
in reliance on Rule 701 promulgated thereunder as transactions pursuant to
compensatory benefit plans and contracts relating to compensation. The
recipients of securities in each such transaction represented their intention
to acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends were
affixed to the share certificates and other instruments issued in such
transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
1.1* Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation.
3.2* Form of Restated Articles of Incorporation (to be filed with the
Secretary of State of the State of Michigan prior to the closing of
this offering).
3.3 Bylaws, as amended.
4.1* Specimen Common Stock Certificate.
4.2 Amended and Restated Investors' Rights Agreement dated April 7, 1992.
5.1* Opinion of Pepper, Hamilton & Scheetz, counsel to the Company, with
respect to the legality of the securities being registered, including
their consent to being named in the Registration Statement.
10.1 Form of Indemnification Agreement.
10.2 1989 Stock Option Plan and form of agreement thereunder.
10.3 Ancillary Stock Option Plan and form of agreement thereunder.
10.4 401(k) Plan.
10.5 Amended and Restated 1992 Incentive and Non-Qualified Stock Option
Plan and forms of agreements thereunder.
10.6 1996 Outside Directors Stock Option Plan and forms of agreements
thereunder.
10.7 1996 Employee Stock Purchase Plan and form of agreement thereunder.
10.8 Form of Employment Agreement.
10.9 Stock Purchase Agreement dated October 22, 1993 between Cobe
Laboratories, Inc. and the Company and amendment thereto dated
October 29, 1996.
10.10** Distribution Agreement dated October 22, 1993 between Cobe BCT,
Inc. and the Company and amendments thereto dated March 29, 1995,
September 11, 1995 and October 29, 1996.
10.11 License Agreement dated July 17, 1992 between J.G. Cremonese and the
Company and related addenda thereto dated July 14, 1992 and July 7,
1993.
10.12** Collaborative Product Development Agreement dated May 10, 1994
between SeaMED Corporation and the Company.
10.13** Collaborative Product Development Agreement dated November 8, 1994
between Ethox Corporation and the Company.
II-3
10.14** License and Supply Agreement dated April 1, 1996 between Immunex
Corporation and the Company.
10.15 Lease Agreement dated May 18, 1992 between Domino's Farms Holding,
L.P. and the Company and amendments thereto dated February 26, 1993,
October 3, 1994, November 16, 1994 and July 29, 1996.
10.16 Clinical Trial Agreement dated April 19, 1996 between the Company and
the University of Texas M.D. Anderson Cancer Center.
10.17 License Agreement dated March 13, 1992 between the Company and the
University of Michigan and amendments thereto dated March 13, 1992,
October 8, 1993 and June 21, 1995.
10.18 Employee Proprietary Information and Invention Agreement effective
June 1, 1991 between the Company and R. Douglas Armstrong.
10.19 Employment Agreement dated June 19, 1992 between the Company and
James Maluta.
10.20 Employment Agreement dated December 8, 1995 between the Company and
Todd E. Simpson, C.P.A.
10.21 Employment Agreement dated February 10, 1994 between the Company and
Walter C. Ogier.
10.22 Employment Agreement dated April 19, 1994 between the Company and
Thomas E. Muller, Ph.D.
10.23 Employment Agreement dated October 26, 1995 between the Company and
Alan K. Smith, Ph.D.
10.24 Promissory Note dated November 18, 1993 for $120,000 loan by the
Company to R. Douglas Armstrong and amendment thereto dated October
30, 1996.
10.25 Promissory Note dated October 20, 1993 for $47,303 loan by the
Company to Stephen G. Emerson, M.D., Ph.D and amendment thereto dated
October 30, 1996.
10.26 Consulting Agreement dated June 1, 1995 between the Company and
Stephen G. Emerson, M.D., Ph.D.
10.27 Clinical Trial Agreement dated August 28, 1996 between the Company
and Loyola University Medical Center Cancer Center.
10.28 Stock Purchase Commitment Agreement dated October 29, 1996 between
Cobe Laboratories, Inc. and the Company.
10.29 Convertible Loan Commitment Agreement dated October 15, 1996 between
the State Treasurer of the State of Michigan and the Company.
10.30* Forms of Subscription Agreement for the purchase of Series D
Preferred Stock.
10.31* Stock Purchase Agreement dated January 8, 1996 among the Company,
SBIC Partners, L.P. and the State Treasurer of the State of
Michigan.
11.1 Computation of earnings per share.
23.1 The consent of Coopers & Lybrand, L.L.P.
23.2* The consent of Pepper, Hamilton & Scheetz is contained in their
opinion filed as Exhibit 5.1 of the Registration Statement.
II-4
24.1 Power of Attorney is contained on the signature page of this
Registration Statement (see page II-6).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
27.3 Financial Data Schedule.
27.4 Financial Data Schedule.
27.5 Financial Data Schedule.
27.6 Financial Data Schedule.
- --------
*To be filed by Amendment.
**The Company has applied for confidential treatment with respect to certain
portions of these documents.
(b)Financial Statement Schedules
Schedules other than those referred to above have been omitted because they
are not applicable or not required under the instructions contained in
Regulation S-X or because the information is included elsewhere in the
Financial Statements or the notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Ann Arbor, State of
Michigan, on the 1st day of November, 1996.
AASTROM BIOSCIENCES, INC.
/s/ R. Douglas Armstrong
By: ___________________________________
R. Douglas Armstrong, Ph.D.
President and Chief Executive
Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints R. Douglas Armstrong and Todd E.
Simpson, or either of them, as his attorney-in-fact, each with full power of
substitution for him in any and all capacities, to sign any and all amendments
to this Registration Statement, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each said attorney-in-
fact or his substitute or substitutes may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ R. Douglas Armstrong
____________________________________ President, Chief Executive Officer, November 1, 1996
R. Douglas Armstrong, Ph.D. and Director (Principal Executive Officer)
/s/ Todd E. Simpson
____________________________________ Vice President, Finance & Administration November 1, 1996
Todd E. Simpson and Chief Financial Officer (Principal
Financial and Accounting Officer)
/s/ Robert J. Kunze
____________________________________ Chairman of the Board and Director November 1, 1996
Robert J. Kunze
/s/ Albert B. Deisseroth
____________________________________ Director November 1, 1996
Albert B. Deisseroth, M.D., Ph.D.
/s/ Stephen G. Emerson
____________________________________ Director November 1, 1996
Stephen G. Emerson, M.D., Ph.D.
/s/ G. Bradford Jones
____________________________________ Director November 1, 1996
G. Bradford Jones
/s/ Horst R. Witzel
____________________________________ Director November 1, 1996
Horst R. Witzel, Dr.-Ing.
/s/ Edward C. Wood
____________________________________ Director November 1, 1996
Edward C. Wood, Jr.
II-6
EXHIBIT INDEX
1.1* Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation.
3.2* Form of Restated Articles of Incorporation (to be filed with the
Secretary of State of the State of Michigan prior to the closing of
this offering).
3.3 Bylaws, as amended.
4.1* Specimen Common Stock Certificate.
4.2 Amended and Restated Investors' Rights Agreement dated April 7, 1992.
5.1* Opinion of Pepper, Hamilton & Scheetz, counsel to the Company, with
respect to the legality of the securities being registered, including
their consent to being named in the Registration Statement.
10.1 Form of Indemnification Agreement.
10.2 1989 Stock Option Plan and form of agreement thereunder.
10.3 Ancillary Stock Option Plan and form of agreement thereunder.
10.4 401(k) Plan.
10.5 Amended and Restated 1992 Incentive and Non-Qualified Stock Option
Plan and forms of agreements thereunder.
10.6 1996 Outside Directors Stock Option Plan and forms of agreements
thereunder.
10.7 1996 Employee Stock Purchase Plan and form of agreement thereunder.
10.8 Form of Employment Agreement.
10.9 Stock Purchase Agreement dated October 22, 1993 between Cobe
Laboratories, Inc. and the Company and amendment thereto dated
October 29, 1996.
10.10** Distribution Agreement dated October 22, 1993 between Cobe BCT,
Inc. and the Company and amendments thereto dated March 29, 1995,
September 11, 1995 and October 29, 1996.
10.11 License Agreement dated July 17, 1992 between J.G. Cremonese and the
Company and related addenda thereto dated July 14, 1992 and July 7,
1993.
10.12** Collaborative Product Development Agreement dated May 10, 1994
between SeaMED Corporation and the Company.
10.13** Collaborative Product Development Agreement dated November 8, 1994
between Ethox Corporation and the Company.
10.14** License and Supply Agreement dated April 1, 1996 between Immunex
Corporation and the Company.
10.15 Lease Agreement dated May 18, 1992 between Domino's Farms Holding,
L.P. and the Company and amendments thereto dated February 26, 1993,
October 3, 1994, November 16, 1994 and July 29, 1996.
10.16 Clinical Trial Agreement dated April 19, 1996 between the Company and
the University of Texas M.D. Anderson Cancer Center.
10.17 License Agreement dated March 13, 1992 between the Company and the
University of Michigan and amendments thereto dated March 13, 1992,
October 8, 1993 and June 21, 1995.
10.18 Employee Proprietary Information and Invention Agreement effective
June 1, 1991 between the Company and R. Douglas Armstrong.
10.19 Employment Agreement dated June 19, 1992 between the Company and
James Maluta.
10.20 Employment Agreement dated December 8, 1995 between the Company and
Todd E. Simpson, C.P.A.
10.21 Employment Agreement dated February 10, 1994 between the Company and
Walter C. Ogier.
10.22 Employment Agreement dated April 19, 1994 between the Company and
Thomas E. Muller, Ph.D.
10.23 Employment Agreement dated October 26, 1995 between the Company and
Alan K. Smith, Ph.D.
10.24 Promissory Note dated November 18, 1993 for $120,000 loan by the
Company to R. Douglas Armstrong and amendment thereto dated October
30, 1996.
10.25 Promissory Note dated October 20, 1993 for $47,303 loan by the
Company to Stephen G. Emerson, M.D., Ph.D and amendment thereto dated
October 30, 1996.
10.26 Consulting Agreement dated June 1, 1995 between the Company and
Stephen G. Emerson, M.D., Ph.D.
10.27 Clinical Trial Agreement dated August 28, 1996 between the Company
and Loyola University Medical Center Cancer Center.
10.28 Stock Purchase Commitment Agreement dated October 29, 1996 between
Cobe Laboratories, Inc. and the Company.
10.29 Convertible Loan Commitment Agreement dated October 15, 1996 between
the State Treasurer of the State of Michigan and the Company.
10.30* Forms of Subscription Agreement for the purchase of Series D
Preferred Stock.
10.31* Stock Purchase Agreement dated January 8, 1996 among the Company,
SBIC Partners, L.P. and the State Treasurer of the State of
Michigan.
11.1 Computation of earnings per share.
23.1 The consent of Coopers & Lybrand, L.L.P.
23.2* The consent of Pepper, Hamilton & Scheetz is contained in their
opinion filed as Exhibit 5.1 of the Registration Statement.
24.1 Power of Attorney is contained on the signature page of this
Registration Statement (see page II-6).
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
27.3 Financial Data Schedule.
27.4 Financial Data Schedule.
27.5 Financial Data Schedule.
27.6 Financial Data Schedule.
- --------
*To be filed by Amendment.
**The Company has applied for confidential treatment with respect to certain
portions of these documents.
Inside back cover page of Prospectus
------------------------------------
[COLOR DIAGRAM OF CELL LINEAGES OF HUMAN BONE MARROW STEM CELLS]
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MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- -----------------------------
- -----------------------------
- -------------------------------------------------
Name
T. Knox Bell, Esq.
- -------------------------------------------------
Address
Gray Cary Ware & Freidenrich
4365 Executive Drive, Suite 1600
- -------------------------------------------------
City State Zip Code
San Diego CA 92121 EFFECTIVE DATE
- ------------------------------------------------- -----------------------------
Document will be returned to the name and address you enter above
RESTATED ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972, the undersigned
corporation executes the following Articles:
- --------------------------------------------------------------------------------
1. The present name of the corporation is:
Aastrom Biosciences, Inc.
2. The identification number assigned by the Bureau is: 529-456
-------
3. All former names of the corporation are:
Ann Arbor Stromal, Inc.
4. The date of filing the original Articles of Incorporation was: March 24, 1989
---------------
- --------------------------------------------------------------------------------
The following Restated Articles of Incorporation supersede the Articles of
Incorporation as amended and shall be the Articles of Incorporation for the
corporation:
ARTICLE I
- --------------------------------------------------------------------------------
The name of the corporation is:
Aastrom Biosciences, Inc.
- --------------------------------------------------------------------------------
ARTICLE II
- --------------------------------------------------------------------------------
The purpose or purposes for which the corporation is formed are:
To engage in any activity within the purpose for which
corporations may be organized under the Michigan Business Corporation
Act.
- --------------------------------------------------------------------------------
ARTICLE III
- --------------------------------------------------------------------------------
The total authorized shares:
Common shares 20,300,000 Preferred shares 10,990,980
-------------------------- --------------------
A statement of all or any of the relative rights, preferences and limitations
of the shares of each class is as follow:
See Rider attached hereto and made a part hereof.
- --------------------------------------------------------------------------------
ARTICLE IV
- --------------------------------------------------------------------------------
1. The address of the current registered office is:
36th Floor, 100 Renaissance Center, Detroit, Michigan 48243
---------------------------------------------- ---------------------
(Street Address) (Zip Code)
2. The mailing address of the current registered office, if different than
above:
Michigan
----------------------------------------------, ---------------------
(Street Address or P.O. Box) (City) (Zip Code)
3. The name of the current resident agent is: Michael B. Staebler
-----------------------------------
- --------------------------------------------------------------------------------
ARTICLE V (Optional. Delete if not applicable)
- --------------------------------------------------------------------------------
When a compromise or arrangement or a plan of reorganization of this corporation
is proposed between this corporation and its creditors or any class of them or
between this corporation and its shareholders or any class of them, a court of
equity jurisdiction within the state, on application of this corporation or of a
creditor or shareholder thereof, or on application of a receiver appointed for
the corporation, may order a meeting of the creditors or class of creditors or
of the shareholders or class of shareholders to be affected by the proposed
compromise or arrangement or reorganization, to be summoned in such manner as
the court directs. If a majority in number representing 3/4 in value of the
creditors or class of creditors, or of the shareholders or class of shareholders
to be affected by the proposed compromise or arrangement or a reorganization,
agree to a compromise or arrangement or a reorganization of this corporation as
a consequence of the compromise or arrangement, the compromise or arrangement
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or on
all the shareholders or class of shareholders and also on this corporation.
- --------------------------------------------------------------------------------
ARTICLE VI (Optional. Delete if not applicable)
- --------------------------------------------------------------------------------
Any action required or permitted by the Act to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice,
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote on the action were present and
voted. The written consents shall bear the date of signature of each shareholder
who signs the consent. No written consents shall be effective to take the
corporate action referred to unless, within 60 days after the record date for
determining shareholders entitled to express consent to or to dissent from a
proposal without a meeting, written consents dated not more than 10 days before
the record date and signed by a sufficient number of shareholders to take the
action are delivered to the corporation. Delivery shall be to the corporation's
registered office, its principal place of business, or an officer or agent of
the corporation having custody of the minutes of the proceedings of its
shareholders. Delivery made to a corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to shareholders who would have
been entitled to notice of the shareholder meeting if the action had been taken
at a meeting and who have not consented in writing.
- --------------------------------------------------------------------------------
Article VII. (Additional provisions, if any, may be inserted here; attach
additional pages if needed.)
See Rider attached hereto and made a part hereof.
5. COMPLETE SECTION (a) IF THE RESTATED ARTICLES WERE ADOPTED BY THE UNANIMOUS
CONSENT OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD OF
DIRECTORS; OTHERWISE, COMPLETE SECTION (b). DO NOT COMPLETE BOTH.
a. [ ] These Restated Articles of Incorporation were duly adopted on the
____________ day of
____________, 19 __________ in accordance with the provisions of
Section 642 of the Act by the unanimous consent of the
incorporator(s) before the first meeting of the Board of Directors.
Signed this ________ day of ___________________, 19 ___________.
______________________________________ ______________________________
______________________________________ ______________________________
(Signatures of Incorporators: Type or Print Name Under Each Signature)
b. [X] These Restated Articles of Incorporation were duly adopted on the
31st day of October, 1996 in accordance with the provisions of
Section 642 of the Act and: (check one of the following)
[ ] were duly adopted by the Board of Directors without a vote of
the shareholders. These Restated Articles of Incorporation only
restate and integrate and do not further amend the provisions of
the Articles of Incorporation as heretofore amended and there is
no material discrepancy between those provisions and the
provisions of these Restated Articles.
[ ] were duly adopted by the shareholders. The necessary number of
shares as required by statute we voted in favor of these
Restated Articles.
[X] were duly adopted by the written consent of the shareholders
having not less than the minimum number of votes required by
statute in accordance with Section 407(1) of the Act. Written
notice to shareholders who have not consented in writing has
been given. (Note: Written consent by less than all of the
shareholders is permitted only if such provision appears in the
Articles of Incorporation.)
[ ] were duly adopted by the written consent of all the shareholders
entitled to vote in accordance with section 407(2) of the Act.
Signed this 31st day of October, 1996.
By /s/ R. Douglas Armstrong
----------------------------------------------------------
(Only Signature of President, Vice-President, Chairperson,
or Vice-Chairperson)
R. Douglas Armstrong, Ph.D. President
---------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
Name of person or organization Preparer's name and business
remitting fees: telephone number:
- ---------------------------------- ----------------------------------
( )
- ---------------------------------- ----------------------------------
- --------------------------------------------------------------------------------
INFORMATION AND INSTRUCTIONS
1. The articles of incorporation cannot be restated until this form, or a
comparable document, is submitted.
2. Submit one original of this document. Upon filing, the document will be
added to the records of the Corporation and Securities Bureau. The original
will be returned to the address appearing in the box on the front as
evidence of filing.
Since this document will be maintained on optical disk media, it is
important that the filing be legible. Documents with poor black and white
contrast, or otherwise illegible, will be rejected.
3. This document is to be used pursuant to sections 641 through 643 of the Act
for the purpose of restating the articles of incorporation of a domestic
profit corporation. Restated articles of incorporation are an integration
into a single instrument of the current provisions of the corporation's
articles of incorporation, along with any desired amendments to those
articles.
4. Restated articles of incorporation which do not amend the articles of
incorporation may be adopted by the board of directors without a vote of the
shareholders. Restated articles of incorporation which amend the articles of
incorporation require adoption by the shareholders. Restated articles of
incorporation submitted before the first meeting of the board of directors
require adoption by all of the incorporators.
5. Item 2 - Enter the identification number previously assigned by the Bureau.
If this number is unknown, leave it blank.
6. The duration of the corporation should be stated in the restated articles of
incorporation only if it is not perpetual.
7. This document is effective on the date endorsed "filed" by the Bureau. A
later effective date, no more than 90 days after the date of delivery, may
be stated as an additional article.
8. If the restated articles are adopted before the first meeting of the board
of directors, item 5(a) must be completed and signed in ink by a majority of
the incorporators. Other restated articles must be signed by the president,
vice-president, chairperson or vice-chairperson.
9. FEES: Make remittance payable to the State of Michigan. Include corporation
name and identification number on check or money order.
NONREFUNDABLE FEE.................................................... $10.00
TOTAL MINUMUM FEE.................................................... $10.00
ADDITIONAL FEES DUE FOR INCREASED AUTHORIZED SHARES ARE:
each additional 20,000 authorized shares or portion thereof. $30.00
maximum fee for first 10,000,000 authorized shares....... $5,000.00
each additional 20,000 authorized shares or portion
thereof in excess of 10,000,000 shares.................... $30.00
maximum fee per filing for authorized shares in excess of
10,000,000 shares.................................... $200,000.00
10. Mail form and fee to: The office is located at:
Michigan Department of Commerce 6546 Mercantile Way
Corporation and Securities Bureau Lansing, MI 48910
Corporation Division Telephone: (517) 334-6302
P.O. Box 30054
Lansing, MI 48909-7554
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RIDER TO ARTICLE III
--------------------
PART A: COMMON STOCK
Section 1. Voting Rights. The holders of shares of Common Stock shall be
entitled to one vote for each share so held with respect to all matters voted on
by the shareholders of the corporation, subject in all cases to Section 4 of
Part B of this Article III.
Section 2. Liquidation Rights. The rights of the holders of Common Stock
upon any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation shall be as set forth in Section 3 of Part B of this
Article III. However, all distributions made or funds paid to the holders of
Common Stock upon the occurrence of such an event shall be made on the basis of
the number of shares of Common Stock held by each of them.
Section 3. Dividends. Dividends may be paid on the Common Stock as and when
declared by the Board of Directors, subject in all cases to Section 2 of Part B
of this Article III.
PART B: PREFERRED STOCK
Section 1. Designation. The Preferred Stock shall consist of six series to
be designated and known as "Series A Preferred Stock" (or "Series A"), "Series
B Preferred Stock" (or "Series B"), "Series C Preferred Stock" (or "Series C"),
"Series D Preferred Stock" (or "Series D"), "Series E Preferred Stock" (or
"Series E") and "Series F Preferred Stock" (or "Series F"). All series of
Preferred Stock shall be identical with each other in all respects except as
otherwise provided herein. As used herein, the term "Preferred Stock" without
designation shall refer to shares of Series A, Series B, Series C, Series D,
Series E and Series F Preferred Stock, or to shares of any series. The number
of shares constituting each such series of Preferred Stock shall be as set
forth below:
. Series A Preferred Stock: 2,500,000 shares.
. Series B Preferred Stock: 3,030,000 shares.
. Series C Preferred Stock: 10,000 shares.
. Series D Preferred Stock: 3,000,000 shares.
. Series E Preferred Stock: 1,617,647 shares.
. Series F Preferred Stock: 833,333 shares.
Section 2. Dividends. Dividends are payable when and as declared by the
Board of Directors subject to the restrictions imposed by the Michigan Business
Corporation Act. Dividends on the Preferred Stock shall not be cumulative and
no right to such dividends shall accrue to holders of Preferred Stock unless
declared by the Board of Directors. Holders of outstanding shares of certain
series of Preferred Stock
shall be entitled to receive dividends in preference to any dividend (whether in
cash, securities of the Corporation or other property) on certain other shares
of capital stock of the Corporation, as set forth below in terms of four
"Levels," to be designated and known as "Level 1," "Level 2," "Level 3" and
"Level 4." No dividends or other distributions shall be made with respect to a
particular Level until all dividends on the preceding Levels have been paid on
or set apart for payment. For example, dividends on Level 3 shall not be paid or
set apart for payment until full dividends on Level 1 and Level 2 have been paid
or set apart for payment. Dividends, if paid, must be paid on, or, if declared
and set apart for payment on, must be declared and set apart for payment on, all
outstanding shares of capital stock on a particular Level contemporaneously, and
if less than full dividends are paid on or if declared and set apart for payment
on a particular Level, then the same percentage of the respective dividend rate
on all shares on such Level shall be paid or declared and set apart for payment.
. Level 1: $0.48 per share of Series F Preferred Stock; and
$0.34 per share of Series E Preferred Stock
. Level 2: $0.32 per share of Series D Preferred Stock;
$80.00 per share of Series C Preferred Stock; and
$0.16 per share of Series B Preferred Stock.
. Level 3: $0.08 per share of Series A Preferred Stock.
. Level 4: If a dividend is declared with respect to the
Common Stock, then a contemporaneous dividend must
be declared with respect to the Series E and Series
F Preferred Stock in an amount equal to that which
would be received if the Series E and Series F
Preferred Stock had been converted to Common Stock
on the declaration date of such dividend.
Section 3. Liquidation Preference.
3.1 Preferential Amounts. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, any distribution of
the assets or surplus funds of the Corporation to holders of shares of capital
stock of the Corporation by reason of their ownership thereof must take place as
set herein. Holders of shares of certain series of Preferred Stock shall be
entitled to receive such distributions prior and in preference to any such
distributions on certain other shares of capital stock of the Corporation, as
set forth below in terms of four "Tiers," to be designated and known as "Tier
1," "Tier 2," "Tier 3" and "Tier 4." No such distributions shall be made with
respect to a particular Tier until all such preferential distributions on the
preceding Tiers have been made. For example, such distributions on Tier 3 shall
not be made until the full preferential distributions on Tier 1 and Tier 2 have
been made. If the assets or surplus funds of the Corporation available for
distribution to stockholders are insufficient to permit payment in full of
amounts to which the holders of the outstanding
2
shares on a particular Tier are entitled pursuant to this Section 3, then such
available assets and funds shall be distributed ratably among the holders of the
outstanding shares on such Tier in proportion to the full preferential
distribution each such holder is otherwise entitled to receive. The preferential
amounts set forth below shall be adjusted for any stock dividends, combinations
or splits with respect to such shares.
. Tier One: $6.00 per share of Series F Preferred Stock, plus all
accrued or declared but unpaid dividends thereon (the
"Series F Preferential Amount"); and
$4.25 per share of Series E Preferred Stock, plus all
accrued or declared but unpaid dividends thereon (the
"Series E Preferential Amount").
. Tier Two: $4.00 per share of Series D Preferred Stock, plus all
accrued or declared but unpaid dividends thereon (the
"Series D Preferential Amount");
$1,000.00 per share of Series C Preferred Stock, plus
all accrued or declared but unpaid dividends thereon
(the "Series C Preferential Amount"); and
$2.00 per share of Series B Preferred Stock, plus all
accrued or declared but unpaid dividends thereon (the
"Series B Preferential Amount").
. Tier Three: $1.00 per share of Series A Preferred Stock, plus
all accrued or declared but unpaid dividends thereon
(the "Series A Preferential Amount").
3.2 Participation of Preferred Stock. After the payment or setting apart
for payment of the Series A Preferential Amount, the Series B Preferential
Amount, the Series C Preferential Amount, the Series D Preferential Amount, the
Series E Preferential Amount and the Series F Preferential Amount, the remaining
assets or surplus funds of the Corporation available for distribution upon such
liquidation, dissolution or winding up shall be divided pro rata among the
holders of Common Stock and Preferred Stock, treating the Preferred Stock as if
converted to Common Stock on the date of such liquidation, dissolution or
winding up.
3.3 Limits on Participation. In the event of such distribution upon a
liquidation, dissolution or winding up of the Corporation, the amount otherwise
payable to a holder of Preferred Stock shall not exceed the amount per share set
forth opposite the name of the particular series of Preferred Stock, as set
forth below and as adjusted for any stock dividends, combinations or splits with
respect to such shares.
. Series A Preferred Stock: $5.00 per share.
. Series B Preferred Stock: $6.00 per share.
. Series C Preferred Stock: $2,500.00 per share.
. Series D Preferred Stock: $6.00 per share.
3
. Series E Preferred Stock: $6.00 per share.
. Series F Preferred Stock : $9.00 per share.
3.4 Consolidation or Merger. A consolidation or merger of the Corporation
with or into another corporation or entity shall be regarded as a liquidation,
dissolution or winding up of the Corporation with respect to the Preferred Stock
within the meaning of this Section 3 unless such consolidation or merger is not
intended to effect a change in the ownership or control of the Corporation or of
its assets and is not intended to alter materially the business or assets of the
Corporation, including, by way of example and without limiting the generality of
the foregoing: (i) a consolidation or merger which merely changes the identity,
form or place of organization of the Corporation, or which is between or among
the Corporation and any of its direct or indirect subsidiaries, or (ii)
following such merger or consolidation, shareholders of the Corporation
immediately prior to such event own not less than 51% of the voting power of
such corporation immediately after such merger or consolidation on a pro rata
basis.
Section 4. Voting Rights.
4.1 General. Except as otherwise required by law, the holder of each share
of Preferred Stock issued and outstanding shall have the number of votes equal
to the number of shares of Common Stock into which such shares of Preferred
Stock could be converted at the record date for determination of the
shareholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class.
4.2 Merger or Sale of Assets. Consent of the holders of at least the
percentage or ratio of the outstanding shares of the class or series set forth
opposite the name of such particular class or series of capital stock of the
Corporation, as set forth below, shall be required for any action which results
in a consolidation or merger which would be treated as a liquidation,
dissolution or winding up of the Corporation under Section 3.4, or the
liquidation, sale or assignment of all or substantially all of the assets of the
Corporation.
. Common Stock and Preferred Stock, with the exception of
Series C Preferred Stock: 2/3.
. Series A Preferred Stock: 2/3.
. Series B Preferred Stock: 2/3.
. Series D Preferred Stock: 2/3.
. Series E Preferred Stock: 51%.
. Series F Preferred Stock: 51%.
4.3 Changes Affecting a Particular Series. Consent of the holders of at
least the percentage or ratio of the outstanding shares of a particular series
of Preferred Stock set forth opposite the name of such series, as set forth
below, with only the affected series
4
voting and with each such affected series voting as a separate class, shall be
required for any action which: (a) alters the rights, preferences, privileges
or restrictions of such series; (b) increases or decreases the authorized
number of shares of such series; or (c) creates any new class or series of
capital stock of the Corporation having rights, preferences or privileges
senior to or on a parity with such series.
. Series A Preferred Stock: 2/3.
. Series B Preferred Stock: 2/3.
. Series C Preferred Stock: Majority.
. Series D Preferred Stock: 2/3.
. Series E Preferred Stock: 51%.
. Series F Preferred Stock: 51%.
4.4 Other Actions. Consent of the holders of at least the percentage or
ratio of the outstanding shares of a particular series of Preferred Stock set
forth opposite the name of such series, as set forth below, with each such
series voting as a separate class, shall be required for: (a) any purchase or
redemption by the Corporation of any shares of Preferred Stock; (b) any
repurchase by the Corporation of any shares of Common Stock, other than
repurchases from directors, employees and consultants of the Corporation which
do not in any consecutive twelve-month period exceed One Hundred Thousand
Dollars ($100,000); (c) any declaration or payment by the Corporation of a
dividend or distribution on account of the Common Stock prior to the conversion
of all shares of Preferred Stock, other than a dividend or distribution payable
in shares of Common Stock or otherwise taken into account by the anti-dilution
provisions set forth in these Articles of Incorporation for the benefit of the
Preferred Stock; (d) the sale by any wholly-owned subsidiary of the Corporation
of any shares of its stock to a third person; and (e) any amendment to these
Articles of Incorporation.
. Series A Preferred Stock: 2/3.
. Series B Preferred Stock: 2/3.
. Series D Preferred Stock: 2/3.
. Series E Preferred Stock: 51%.
. Series F Preferred Stock: 51%.
4.5 Series C Quorum Requirement. At any meeting of the holders of all
outstanding shares of Preferred Stock to vote as a class, the presence in person
or by proxy of the holders of a majority of the outstanding shares of Series C
Preferred Stock shall be required to constitute a quorum; in the absence of a
quorum a majority of the holders present in person or by proxy shall have the
power to adjourn the meeting from time to time without notice, other than
announcement at the meeting, until a quorum shall be present.
Section 5. Redemption. The Preferred Stock is not redeemable.
Section 6. Conversion of Preferred Stock. The holders of Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
5
6.1 Conversion Prices.
6.1.1 Series A, Series B, Series C, Series D and Series E Preferred
Stock.
Upon any conversion of Series A, Series B, Series C, Series D and Series E
Preferred Stock into Common Stock pursuant to this Section 6, each such share of
such series of Preferred Stock shall be converted into such number of fully paid
and nonassessable shares of Common Stock as is determined by taking the
respective preferential amount for such series of Preferred Stock, as set forth
below:
. Series A Preferred Stock: $1.00;
. Series B Preferred Stock: $2.00;
. Series C Preferred Stock: $1,000.00;
. Series D Preferred Stock: $4.00;
. Series E Preferred Stock: $4.25;
and dividing such preferential amount set forth above by the
respective conversion price for such series of Preferred Stock, as set forth
below:
. "Series A Conversion Price": $1.00;
. "Series B Conversion Price": $2.00;
. "Series C Conversion Price": $4.00;
. "Series D Conversion Price": $4.00;
. "Series E Conversion Price": $4.25.
The Applicable Conversion Price (as defined below in Section 6.1.3)
for each such series shall be subject to adjustment as provided below in Section
6.5.
6.1.2 Series F Preferred Stock. Upon any conversion of Series F
Preferred Stock into Common Stock pursuant to this Section 6, each such share of
Series F Preferred Stock shall be converted into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $6.00 by the
Series F Conversion Price, as such Series F Conversion Price is determined
pursuant to Section 6.3.4.
6.1.3 Applicable Conversion Price. The term "Applicable Conversion
Price" shall refer to the Series A Conversion Price with respect to the Series A
Preferred Stock, the Series B Conversion Price with respect to the Series B
Preferred Stock, the Series C Conversion Price with respect to the Series C
Preferred Stock, the Series D Conversion Price with respect to the Series D
Preferred Stock, the Series E Conversion Price with respect to the Series E
Preferred Stock and the Series F Conversion price with respect to the Series F
Preferred Stock, subject to adjustment as provided below in Section 6.5.
6
6.2 Voluntary Conversion.
6.2.1 Series A, Series B, Series D and Series E Preferred Stock.
Each share of Series A, Series B, Series D, and Series E Preferred Stock shall
be convertible into Common Stock, at the option of the holder thereof, at any
time after the date of issuance of such share at the office of the Corporation
or any transfer agent for such stock.
6.2.2 Series C Preferred Stock. Each share of Series C Preferred
Stock shall be convertible into Common Stock, at the option of the holder
thereof, at any time after April 1, 1998, at the office of the Corporation or
any transfer agent for such stock.
6.3 Automatic Conversion.
6.3.1 Series A, Series B and Series D Preferred Stock. Each share of
Series A, Series B and Series D Preferred Stock shall automatically be converted
into shares of Common Stock at the then effective Applicable Conversion Price
immediately upon the closing of the sale of the Corporation's Common Stock in a
firm commitment, underwritten public offering registered under the Securities
Act of 1933, as amended (the "Securities Act") (other than a registration
relating solely to a transaction under Rule 145 under the Securities Act or any
successor thereto or to an employee benefit plan of the Corporation) at a public
offering price (prior to underwriter commissions and expenses) equal to or
exceeding $4.26 per share of Common Stock, as adjusted for any stock dividends,
combinations or splits with respect to such shares, and the gross proceeds of
which exceed $10,000,000. In addition, each share of Series A, Series B and
Series D Preferred Stock shall automatically be converted into shares of Common
Stock at the then effective Applicable Conversion Price for such particular
series upon the conversion of a majority of the shares of such particular series
then outstanding.
6.3.2 Series C Preferred Stock. Each share of Series C Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Series C Conversion Price immediately upon the closing of the sale of
the Corporation's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act (other than a registration relating
solely to a transaction under Rule 145 under the Securities Act or any successor
thereto or to an employee benefit plan of the Corporation).
6.3.3 Series E Preferred Stock. Each share of Series E Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Series E Conversion Price immediately upon the closing of the sale of
the Corporation's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act (other than a registration relating
solely to a transaction under Rule 145 under the Securities Act or any successor
thereto or to an employee benefit plan of the Corporation) at a public offering
price (prior to underwriter commissions and expenses) equal to or exceeding
$4.26 per share of Common Stock, as adjusted for any stock dividends,
combinations or splits with respect to such shares, and the gross proceeds of
which exceed $12,500,000. In addition, each share of Series E Preferred Stock
shall
7
automatically be converted into shares of Common Stock at the then effective
Series E Conversion Price upon the conversion of a majority of the shares of
Series E Preferred Stock then outstanding.
6.3.4 Series F Preferred Stock. Each share of Series F Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Series F Conversion Price as follows:
(a) Initial Public Offering. Each share of Series F Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Series F Conversion Price immediately upon the closing of the sale of
the Corporation's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act (other than a registration relating
solely to a transaction under Rule 145 under the Securities Act of any successor
thereto or to an employee benefit plan of the Corporation). In the event that
the conversion of Series F Preferred Stock shall occur pursuant to this Section
6.3.4(a), the Series F Conversion Price shall equal eighty percent (80%) of the
price per share of the Common Stock sold in such initial public offering (prior
to any underwriter commissions, fees or discounts), and such conversion shall
occur following any adjustment to the Series F Conversion Price pursuant to
Section 6.5.
(b) Qualifying Financing. Each share of Series F Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Series F Conversion Price immediately upon the closing of a non-public
equity financing (including a transaction with multiple closings for the sale of
shares of the same class at the same price per share within any twelve-month
period) wherein the aggregate consideration for such issuance received by the
Corporation is at least $10,000,000, of which at least $1,000,000 is from new
investors, and the Corporation is not subjected to any restrictions imposed by
the investors in such equity financing upon the use of such funds. In the event
that the conversion of the Series F Preferred Stock into shares of Common Stock
shall occur pursuant to this Section 6.3.4(b), the Series F Conversion Price
shall equal eighty percent (80%) of the price per share (on an "as converted"
into Common Stock basis) paid in said non-public equity financing, and such
conversion shall occur following any adjustment to the Series F Conversion Price
pursuant to Section 6.5.
(c) Merger, etc.. Each share of Series F Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series F Conversion Price immediately prior to the closing of a consolidation or
merger of the Corporation with or into another corporation which would be
treated as a liquidation, dissolution or winding up pursuant to Section 3.4 or
the sale or conveyance to another corporation of all or substantially all of the
assets of the Corporation, which results in aggregate consideration to the
Corporation or its shareholders with a fair market value of at least
$85,000,000, as determined in good faith by the Board of Directors of the
Corporation. In the event that the conversion of the Series F Preferred Stock
into shares of Common Stock shall occur pursuant to this Section 6.3.4(c), the
Series F Conversion Price shall equal eighty percent (80%) of the value per
share (on an "as
8
converted" into Common Stock basis) realized by the Company's shareholders from
the consideration received in said consolidation or merger, which value shall be
determined by the mutual agreement between the Company and the Purchaser. If the
Company and the Purchaser do not reach mutual agreement as to said value, then
said value shall be determined by a nationally recognized investment banking
firm which is mutually selected by the Company and the Purchaser, with the fees
for obtaining said valuation determination to be borne equally by the Company
and the Purchaser. Such conversion shall occur following any adjustment to the
Series F Conversion Price pursuant to Section 6.5.
(d) Operational Plan. Each share of Series F Preferred Stock
shall automatically be converted into shares of Common Stock at the then
effective Series F Conversion Price immediately upon the adoption by resolution
of the Corporation's Board of Directors of an operational plan for the
Corporation which provides for the Corporation to continue its operations in the
ordinary course of business through revenues, working capital or other resources
through at least December 31, 1998 without any further infusion of capital from
investors through debt or equity investment in the Corporation; provided,
however, that any such operational plan, as determined in good faith by the
Corporation's Board of Directors, must be consistent with the intent of the then
current annual Product Development Plan pursuant to the Distribution Agreement
by and between the Corporation and Cobe BCT, Inc., dated October 22, 1993. In
the event that the conversion of the Series F Preferred Stock into shares of
Common Stock shall occur pursuant to this Section 6.3.4(d), the Series F
Conversion Price shall equal eighty percent (80%) of the fair market value of a
share of Series F Preferred Stock, as determined by the mutual agreement of the
Company and the Purchaser. If the Company and the Purchaser do not reach mutual
agreement as to said value, then said value shall be determined by a nationally
recognized investment banking firm which is mutually selected by the Company and
the Purchaser, with the fees for obtaining said valuation determination to be
borne equally by the Company and the Purchaser. Such conversion shall occur
following any adjustment to the Series F Conversion Price pursuant to Section
6.5.
(e) December 1, 1997. If not earlier converted pursuant to this
Section 6.3.4, each share of Series F Preferred Stock shall automatically be
converted into shares of Common Stock at the then effective Series F Conversion
Price on December 1, 1997; provided, however, that in the event that prior to
December 1, 1997, the Corporation has entered into a letter of intent (whether
or not such letter of intent is intended to be binding or non-binding on the
Corporation) which contemplates a transaction which would trigger automatic
conversion of the Series F Preferred Stock into Common Stock pursuant to
paragraph (a), (b) or (c) of this Section 6.3.4 and contemplates the
consummation of the closing of such transaction on or before February 1, 1998,
then each share of Series F Preferred Stock shall automatically be converted
into shares of Common Stock at then effective Series F Conversion Price on
February 2, 1998. In the event that the conversion of the Series F Preferred
Stock into shares of Common Stock shall occur pursuant to this Section 6.3.4(e),
the Series F Conversion Price shall be $4.65, as adjusted pursuant to Section
6.5.
9
6.4 Mechanics of Conversion. No fractional shares of Common Stock shall
be issued upon conversion of shares of Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Applicable Conversion Price for the series. Before any holder of
Preferred Stock shall be entitled to convert the same into shares of Common
Stock pursuant to Section 6.2, such holder shall surrender the certificate or
certificates therefor at the principal office of the Corporation or of any
transfer agent for such stock and shall give written notice to the Corporation
at such office that such holder elects to convert the same and shall state
therein the name or names of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Preferred Stock, or to their respective nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which such holder or nominee shall be entitled as aforesaid, together with
cash in lieu of any fraction of a share. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
6.5 Adjustments to Conversion Prices.
6.5.1 Special Definitions. For purposes of this Section 6.5, the
following definitions shall apply:
(a) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities (defined below).
(b) "Original Issue Date" shall mean the date on which a share
of a particular series of Preferred Stock was first issued.
(c) "Convertible Securities" shall mean any evidence of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(d) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Section 6(D)(3) deemed to be issued) by the
Corporation after the Original Issue Date, other than shares of Common Stock
issued or issuable:
(i) upon conversion of shares of Preferred Stock;
(ii) to the University of Michigan, Stephen G. Emerson,
Bernhard O. Palsson, Michael F. Clarke, or to the officers, employees,
consultants or directors of the Corporation pursuant to any stock purchase plan
or arrangement, stock
10
option plan, or other stock incentive plan or agreement approved by the
Corporation's Board of Directors; or
(iii) by way of dividend or other distribution on shares
excluded from the definition of Additional Shares of Common Stock by the
foregoing clauses (i) or (ii), or this clause (iii).
6.5.2 No Adjustment of Applicable Conversion Price. No adjustment in
the Applicable Conversion Prices for the series of Preferred Stock shall be made
with respect to the issuance of Additional Shares of Common Stock or otherwise,
unless the consideration per share (determined pursuant to Section 6.5.5 hereof)
for an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Applicable Conversion Price for such series in
effect on the date of, and immediately prior to, the issue of such Additional
Share of Common Stock.
6.5.3 Deemed Issuances of Additional Shares of Common Stock.
(a) Options and Convertible Securities. In the event the
Corporation at any time or from time to time after the Original Issue Date of a
particular series shall issue any Options or Convertible Securities or shall fix
a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent adjustment of such number)
of Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued with
respect to the Preferred Stock unless the consideration per share (determined
pursuant to Section 6.5.5 hereof) of such Additional Shares of Common Stock
would be less than the Applicable Conversion Price of such series in effect on
the date of and immediately prior to such issue, or such record date, as the
case may be, and provided further that in any case in which Additional shares of
Common Stock are deemed to be issued the following provisions shall apply:
(i) Exercise or Conversion. No further adjustment in the
Applicable Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities.
(ii) Increase or Decrease. If such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation, or decrease in the
number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Applicable Conversion Price computed upon the original
issue thereof (or upon the
11
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities.
(iii) Expiration. Upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Applicable Conversion Prices computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as follows:
(A) Underlying Common Stock. In the case of Convertible
Securities or Options for Common Stock, any such subsequent adjustments shall be
recomputed as if the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange.
(B) Underlying Convertible Securities. In the case of
Options for Convertible Securities, any such subsequent adjustments shall be
recomputed as if only the Convertible Securities, if any, actually issued upon
the exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
(determined pursuant to Section 6.5.5 upon the issue of the Convertible
Securities with respect to which such Options were actually exercised.
(iv) Limitation. No readjustment pursuant to clause (ii) or
(iii) above shall have the effect of increasing the Applicable Conversion Price
to an amount which exceeds the lower of (A) such Applicable Conversion Price on
the original adjustment date, or (B) such Applicable Conversion Price that would
have resulted from any issuance of Additional Shares of Common Stock between the
original adjustment date and such readjustment date (nor shall any shares issued
upon conversion prior to such readjustment be affected by such readjustment).
(v) Short-Term Options. In the case of any Options that
expire by their terms not more than thirty (30) days after the date of issue
thereof, no adjustment of the Applicable Conversion Price shall be made until
the expiration or exercise of all such Options, whereupon such adjustment shall
be made in the same manner as provided in clause (iii) above.
12
(vi) Date of Issuance. If such record date shall have been
fixed and such Options or Convertible Securities are not issued on the date
fixed therefor, the adjustment previously made in the Applicable Conversion
Price which became effective on such record date shall be cancelled as of the
close of business on such record date, and thereafter the Applicable Conversion
Price shall be adjusted pursuant to this Section 6.5.3 as of the actual date of
their issuance.
(b) Stock Dividends, Stock Distributions and Subdivisions. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall declare or pay any dividend or make any other distribution on the
Common Stock payable in Common Stock, or effect a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then and in any such event, Additional Shares of
Common Stock shall be deemed to have been issued as follows:
(i) Dividend or Distribution. In the case of any such
dividend or distribution, immediately after the close of business on the record
date for the determination of holders of any class of securities entitled to
receive such dividend or distribution.
(ii) Subdivision. In the case of any such subdivision, at
the close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not
have been fully paid on the date fixed therefor, the adjustment previously made
in the Applicable Conversion Price which became effective on such record date
shall be cancelled as of the close of business on such record date, and
thereafter the Applicable Conversion Price shall be adjusted pursuant to this
Section 6.5.3 as of the time of actual payment of such dividend.
6.5.4 Anti-Dilution Adjustment of Applicable Conversion Price Upon
Issuance of Additional Shares of Common Stock.
(a) Series A, Series B and Series E Preferred Stock. In the event
the Corporation, at any time after the Original Issue Date, shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 6.5.3 but excluding Additional Shares of
Common Stock issued pursuant to Section 6.5.3(b) which event is dealt with in
Section 6.5.6 hereof) without consideration or for a consideration per share
less than the Series A Conversion Price, Series B Conversion Price or Series E
Conversion Price in effect on the date of and immediately prior to such
issuance, then and in such event, the Applicable Conversion Price for the
affected Series A, Series B and Series E Preferred Stock, respectively, shall be
reduced, concurrently with such issuance, in order to increase the number of
shares of Common Stock into which shares of such series of Preferred Stock is
convertible, to a price (calculated to the nearest cent) determined by the
following formula:
13
C
-----
CP(1) = CP(O) x CS + CP(O)
----------
CS + AS
where:
CP(O) = the Applicable Conversion Price for Series A, Series B or Series E
Preferred Stock in effect on the date of and immediately prior to such
issuance;
CP(1) = the Applicable Conversion Price for Series A, Series B or Series E
Preferred Stock as so adjusted;
CS = the number of shares of Common Stock outstanding immediately prior to
such issuance (including shares of Common Stock issuable upon conversion or
exercise of any Convertible Securities or Options);
C = the aggregate consideration received by the Corporation for the total
number of Additional Shares of Common Stock so issued; and
AS = the number of such Additional Shares of Common Stock so issued.
Notwithstanding the foregoing, the Applicable Conversion Price for Series A,
Series B or Series E Preferred Stock shall not be so reduced if the amount of
such reduction would be an amount less than $0.01, but any such amount shall be
carried forward and applied toward any subsequent reduction which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
$0.01 or more.
(b) Series D Preferred Stock.
(i) Ratchet Adjustment. In the event the Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 6.5.3, but excluding Series D
Preferred Stock and Additional Shares of Common Stock issued pursuant to Section
6.5.3(b) (which event is dealt with in Section 6.5.6 hereof)), either without
consideration or for a consideration per share less than the Series D Conversion
Price in effect on the date of and immediately prior to such issuance, wherein
the aggregate consideration for such issuance received by the Corporation is at
least $2,000,000, the following will be applicable:
(A) Single Transaction. In a private financing
transaction (including a transaction with multiple closings for the sale of
shares of the same class at the same price per share within any twelve-month
period), the Series D Conversion Price shall be reduced concurrently with such
issuance to a price equal to the consideration per share (as determined pursuant
to Section 6.5.5 hereof) received by
14
the Corporation for such Additional Shares of Common Stock; provided, however,
that in no event shall the Series D Conversion Price be reduced to less than
$3.00.
(B) Multiple Transactions. In multiple transactions at
different per share prices during any twelve-month period, the Series D
Conversion Price shall be reduced to an amount equal to the weighted average
consideration received by the Corporation for such Additional Shares of Common
Stock during such twelve-month period (but in no event shall the Series D
Conversion Price be reduced to less than $3.00. Such weighted average
consideration shall be determined by dividing the aggregate consideration
received by the Corporation for the Additional Shares of Common Stock over such
twelve-month period by the aggregate number of Additional Shares of Common Stock
issued over the same period.
(ii) Formula Adjustment. In the event the Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 6.5.3 but excluding Series D
Preferred Stock and Additional Shares of Common Stock issued pursuant to Section
6.5.3(b), which event is dealt with in Section 6.5.6 for a per share
consideration less than the Series D Conversion Price in effect on the date of
and immediately prior to such issuance, in a single transaction or in a series
of transactions, and for aggregate consideration less than $2,000,000 during any
twelve-month period, then the Series D Conversion Price shall be adjusted for
such Additional Shares of Common Stock pursuant to the formula provided in
Section 6.5.4(a) as if the Series D Preferred Stock were Series B Preferred
Stock (except for the Applicable Conversion Price which shall be the Series D
Conversion Price).
(iii) Single Adjustment. For purposes of this Section
6.5.4(b) any issuance of Additional Shares of Common Stock shall be included in
only one twelve-month period (and in only one adjustment of the Series D
Conversion Price), which period shall be the earliest twelve-month period which
may be applicable (and which adjustment shall be the adjustment to be made with
respect to the earliest applicable twelve-month period). After the first twelve-
month period with respect to which an adjustment is made to the Series D
Conversion Price, any new twelve-month period shall be deemed to commence on the
date of issuance of Additional Shares of Common Stock first occurring more than
twelve months following the date of issuance of Additional Shares of Common
Stock which caused the most recent prior twelve-month period to begin.
(c) Series F Preferred Stock. In the event the Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 6.5.3, but excluding Series F
Preferred Stock and Additional Shares of Common Stock issued pursuant to Section
6.5.3(b), which event is dealt with in Section 6.5.6, either without
consideration or for a consideration per share less than the Series F Conversion
Price in effect on the date of and immediately prior to such issuance, in a
private financing transaction (including a transaction with multiple closings
for the sale of shares of the same class at the same
15
price per share within any twelve-month period), wherein the aggregate
consideration for such issuance received by the Corporation is at least
$1,000,000, then the Series F Conversion Price shall be adjusted for such
Additional Shares of Common Stock pursuant to the formula provided in Section
6.5.4(a) as if the Series F Preferred Stock were Series B Preferred Stock
(except the Applicable Conversion Price shall be the Series F Conversion Price);
provided, however, that the adjustment to the Series F Conversion Price provided
for in this Section 6.5.4(c) shall apply only to the Corporation's first such
private financing following the Original Issue Date of the Series F Preferred
Stock.
6.5.5 Determination of Consideration. For purposes of this Section
6.5 the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property. Such consideration shall be computed as
follows:
(i) Cash. Insofar as it consists of cash, such
consideration shall be computed at the aggregate amount of cash received by the
Corporation;
(ii) Property. Insofar as it consists of property other
than cash, such consideration shall be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board of Directors; and
(iii) Combination. In the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, such consideration shall be the
proportion of such consideration so received, computed as provided in clauses
(i) and (ii) above, as determined in good faith by the Board of Directors.
(b) Options and Convertible Securities. The consideration per
share received by the Corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to Section 6.5.3(a), relating to Options and
Convertible Securities, shall be determined by dividing:
(i) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities; by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained
16
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
6.5.6 Adjustment for Dividends or Combinations.
(a) Stock Dividends, Distributions or Subdivisions. In the
event the Corporation shall issue Common Stock pursuant to Section 6.5.3(b) in a
stock dividend, stock distribution or subdivision, the Applicable Conversion
Price in effect immediately prior to such stock dividend, stock distribution or
subdivision shall, concurrently with the effectiveness of such stock dividend,
stock distribution or subdivision, be proportionately decreased.
(b) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Applicable Conversion Price in effect immediately prior to such combination
or consolidation shall, concurrently with the effectiveness of such combination
or consolidation, be proportionately increased.
6.5.7 Adjustment for Merger or Reorganization. In the event of any
consolidation or merger of the Corporation with or into another corporation or
the sale or conveyance of all or substantially all of the assets of the
Corporation to another corporation, each share of Series A, Series B, Series C,
Series D and Series E Preferred Stock shall thereafter be convertible into the
number of shares of stock or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such series would have been entitled upon such consolidation,
merger or conveyance, and, in any such case, appropriate adjustment (as
determined by the Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and interest thereafter
of the holders of the series, in order that the provisions set forth herein
(including provisions with respect to changes in and other adjustments of the
Applicable Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of that series of Preferred Stock.
However, in the case of any merger or consolidation which is treated as a
liquidation, dissolution or winding up of the affairs of the Corporation
pursuant to Section 3.4, each share of Series A, Series B, Series C, Series D
and Series E Preferred Stock shall not be converted into shares of stock or
other securities or property of the resulting corporation, but shall be
cancelled and surrendered to the Corporation upon distribution to the holders of
Series A, Series B, Series C, Series D and Series E Preferred Stock of all cash
or other property to which they are entitled pursuant to Section 3 as a result
of such transaction being treated as a liquidation, dissolution, or winding up
under Section 3.4.
6.5.8 Adjustment to Series C Conversion Price for Distributions to
Holders of Common Stock. In the event that the Corporation shall distribute to
the holders of its Common Stock (whether pursuant to a reclassification, merger
or consolidation or
17
otherwise) evidences of its indebtedness or assets (including cash, securities,
intangible assets or other property), then the Series C Conversion Price shall
be adjusted so that the number of shares of Common Stock into which a share of
Series C Preferred Stock is convertible equals the number of shares of Common
Stock determined as follows: multiply the number of shares of Common Stock into
which each share of Series C Preferred Stock is convertible at the then
effective Series C Conversion Price by a fraction, the numerator of which shall
be the Series C Conversion Price effective on the record date for determination
of shareholders entitled to receive such distribution, and the denominator of
which shall be such Series C Conversion Price less the fair market value of such
property, as determined in good faith by the Board of Directors of the
Corporation, distributed with respect to each share of Common Stock. Such
adjustment to the Series C Conversion Price shall be made whenever any such
distribution is made.
6.6 No Impairment. The Corporation will not, by amendment of these
Restated Articles of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Preferred Stock against impairment.
6.7 Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Applicable Conversion Prices pursuant to this Section 6,
the Corporation at its expense shall promptly compute such adjustments or
readjustments in accordance with the terms hereof and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time from any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Applicable Conversion Price at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of such holder's shares of Preferred
Stock.
6.8 Notices of Record Date. In the event of any taking by the Corporation
of a record of the holders of any class of securities (other than Preferred
Stock) for the purposes of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend which is the same as cash
dividends paid in previous quarters) or other distribution, the Corporation
shall mail to each holder of Preferred Stock at least ten (10) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend or distribution.
6.9 Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common
18
Stock as shall from time to time be sufficient to effect conversion of the
Preferred Stock. The Corporation shall not take any corporate action which would
require an adjustment in the number of shares of Common Stock into which any
share of Preferred Stock is convertible unless either (i) immediately after such
corporate action is taken and the transactions contemplated thereby are
consummated, the number of authorized and unissued shares of Common Stock would
be sufficient to effect the conversion of all outstanding shares of Preferred
Stock at the Applicable Conversion Prices then in effect, or (ii) concurrently
with the taking of such corporate action, the Corporation shall take such
corporate action as, in the opinion of its counsel, may be necessary to increase
its authorized and unissued shares of Common Stock to such number as shall be
sufficient to provide for such conversion.
6.10 Taxes Upon Conversion of Series C Preferred Stock. The
Corporation shall pay any and all taxes that may be payable in respect of the
issue or delivery of shares of Common Stock on conversion of shares of Series C
Preferred Stock pursuant hereto. The Corporation shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
the shares of Series C Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid.
19
RIDER TO ARTICLE VII
--------------------
ARTICLE VII
1. Director Liability. A director of the Corporation shall not be
personally liable to the Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director. However, this provision does not
eliminate or limit the liability of a director for any of the following:
(a) any breach of the director's duty of loyalty to the
Corporation or its shareholders;
(b) any acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;
(c) a violation of Section 551(1) of the Michigan Business
Corporation Act, as amended (the "MBCA");
(d) a transaction from which the director derived an improper
personal benefit; or
(e) an act or omission occurring before the date these Articles
of Incorporation became effective in accordance with the pertinent provisions of
the MBCA.
Any repeal, amendment or other modification of this Article VII shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal, amendment or other modification.
If the MBCA is amended, after this Article becomes effective, to
authorize corporate action further eliminating or limiting personal liability of
directors, then the liability of directors shall be eliminated or limited to the
fullest extent permitted by the MBCA as so amended.
2. Control Share Acquisitions. Chapter 7B of the MBCA, known as the
"Stacey, Bennett, and Randall shareholder equity act," does not apply to control
share acquisitions of shares of the Corporation.
20
EXHIBIT 3.3
BYLAWS
OF
AASTROM BIOSCIENCES, INC.
BYLAWS
OF
AASTROM BIOSCIENCES, INC.
ARTICLE I GENERAL
------------------
Section 1.1 The name, location of principal office, and purposes of the
Corporation shall be as set forth in the Articles of Incorporation. The powers
of the Corporation and of its directors and shareholders, and all matters
concerning the conduct and regulation of the business of the Corporation, shall
be subject to such provisions in regard thereto, if any, as are set forth in
said Articles of Incorporation.
Section 1.2 All references in these Bylaws to the Articles of
Incorporation shall be construed to mean the Articles of Incorporation of the
Corporation as amended from time to time.
Section 1.3 The registered office of the Corporation may be the same as
the principal office of the Corporation, but in any event must be located in the
State of Michigan, and must be the business office of the registered agent, as
required by the Michigan Business Corporation Act (the "MBCA"). The Corporation
may have business offices at such other places, either within or without the
State of Michigan, as the Board of Directors may designate or as the business of
the Corporation may require from time to time.
ARTICLE II SHAREHOLDERS
------------------------
Section 2.1 Annual Meeting. The annual meeting of the shareholders of the
--------------
Corporation shall be held at the principal office of the Corporation, or at such
other place as may be set forth in the notice thereof, in August or September of
each year, at a date and time as designated by the Board of Directors, for the
purpose of election of Directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting. The
Board of Directors, for good and sufficient reasons, may schedule the annual
meeting at any other time, and notice shall be given or waived as provided in
Section 2.4 hereof.
Section 2.2 Special Meetings. Special Meetings of the shareholders
----------------
(or of any specific class thereof), for any purpose or purposes, unless
otherwise prescribed by statute or by the Articles of Incorporation, may be
called by the President and shall be called by the President or Secretary at the
request in writing of a majority of the Board of Directors, or at the request in
writing of a shareholder or shareholders owning at least ten percent (10%) of
the number of shares of stock (or, with respect to meetings of a specific class,
the number of shares of such specific class thereof) of the Corporation issued
and outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting. Upon the closing of the first sale of the
Corporation's common stock
-2-
pursuant to a firmly underwritten registered public offering (the "IPO"),
special meetings of the shareholders may be called only by the President and
shall be called by the President at the request in writing of a majority of the
Directors then in office, and shall be held at such place, on such date, and at
such time as the President or shall fix. Business transacted at special
meetings shall be confined to the purpose or purposes stated in the notice.
Section 2.3 List of Shareholders. The officer who has charge of the stock
--------------------
ledger of the Corporation shall prepare and make, at least ten (10) days before
every meeting of shareholders, a complete list of the shareholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each shareholder and the number of shares registered in the name of each
shareholder. Such list shall be open to the examination of any shareholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
Section 2.4 Notice of Meetings. Written notice of the time, place and
------------------
purposes of the meeting of shareholders shall be given not less than 10 nor
more than 60 days before the date fixed for such meeting to each shareholder of
record entitled to vote at the meeting. Notice shall be deemed duly served when
the same has been personally delivered or deposited in the United States Mail,
with postage fully prepaid, addressed to the shareholder at such shareholder's
address as it appears on the records of the Corporation. Written notice may
also be given by facsimile or telegram, and such notice shall be deemed to be
given when the recipient receives the notice personally, or when confirmation of
transmission of the notice to the shareholder's address as it appears on the
books and records of the Corporation has been delivered to the Corporation or to
the equipment transmitting such notice. Such notice shall be given by or under
the direction of the Secretary of the Corporation, and in the absence or refusal
of the Secretary to give such notice, notice shall be given by or under the
direction of any other officer of the Corporation. No notice need be given of
an adjourned meeting of the shareholders provided the time and place to which
such meeting is adjourned is announced at the meeting at which the adjournment
is taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote at the meeting. A waiver of such
notice in writing, signed by a person entitled to said notice, whether before or
after the time of the meeting, shall be deemed equivalent to said notice.
Attendance of a person at a meeting of shareholders, in person or by proxy,
shall constitute a waiver of such notice, except when the attendance is for the
express and sole purpose of objecting to the transaction of any business,
-3-
clearly stated at the commencement of the meeting, by reason of a claim that a
meeting was not lawfully called or convened.
Section 2.5 Transaction of Business. At an annual or special meeting of
-----------------------
the shareholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Secretary or other officer of the
Corporation, (b) properly brought before the meeting by or at the direction of
the Board of Directors, (c) properly brought before an annual meeting by a
shareholder, or (d) properly brought before a special meeting by a shareholder,
but if, and only if, the notice of a special meeting provides for business to be
brought before the meeting by shareholders. For business to be properly brought
before a meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder proposal to be presented at an annual meeting shall be received at
the Corporation's principal executive offices not less than 120 calendar days in
advance of the date that the Corporation's (or the Corporation's predecessor's)
proxy statement was released to shareholders in connection with the previous
year's annual meeting of shareholders, except that if no annual meeting was held
in the previous year or the date of the annual meeting has been changed by more
than 30 calendar days from the date contemplated at the time of the previous
year's proxy statement, or in the event of a special meeting, notice by the
shareholder to be timely must be received not later than the close of business
on the tenth day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. A shareholder's notice to
the Secretary shall set forth as to each matter the shareholder proposes to
bring before the annual or special meeting (a) a brief description of the
business desired to be brought before the annual or special meeting and the
reasons for conducting such business at the special meeting, (b) the name and
address, as they appear on the Corporation's books, of the shareholder proposing
such business, (c) the class and number of shares of the Corporation which are
beneficially owned by the shareholder, and (d) any material interest of the
shareholder in such business.
Section 2.6 Quorum. The holders of a majority of the stock issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders (or any
specific class thereof) for the transaction of business except as otherwise
provided by statute or by the Articles of Incorporation. If, however, such
quorum shall not be present or represented by any meeting of the shareholders,
the chairman of the meeting or the holders of a majority of shares of stock
entitled to vote thereat who are present, in person or represented by proxy,
shall have the power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented.
-4-
Section 2.7 Voting and Record Date. In order that the Corporation
----------------------
may determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution of allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be (i) more than sixty (60) nor less than ten (10)
days before the date of such meeting, nor (ii) more than ten (10) days after the
date upon which the resolution fixing the record date is adopted by the Board of
Directors for action by shareholder consent in writing without a meeting, nor
(iii) more than sixty (60) days prior to any other action. If a record date is
not fixed (a) the record date for determination of shareholders entitled to vote
at a meeting of shareholders shall be the close of business on the day next
preceding the day on which notice of such meeting is given, and (b) the record
date for determining shareholders for any purpose other than that specified in
subdivision (a) shall be the close of business on the day on which the
resolution of the Board relating thereto is adopted. When a determination of
shareholders of record entitled to vote at a meeting of shareholders has been
made as provided in this Section, the determination applies to any adjournment
of the meeting, unless the Board fixes a new record date under this Section for
the adjourned meeting.
Section 2.8 Proxies. A proxy, given by a shareholder to another person,
-------
authorizing such other person to vote the shares of such shareholder, shall be
in writing and signed by the shareholder or his authorized agent or
representative. A proxy shall not be valid after the expiration of three (3)
years from its date unless otherwise provided therein. All proxies shall be
filed with the Secretary at or before the meeting at which they are intended to
be used. A proxy shall be deemed sufficient if it appears on its face to confer
the requisite authority and is signed by the owner of the stock to be voted. No
witnesses to the execution of any proxy shall be required.
Section 2.9 Inspectors. The Board of Directors, in advance of a
----------
shareholders meeting, may appoint one or more inspectors to act at the meeting
or any adjournment thereof. If inspectors are not so appointed, the person
presiding at a shareholders meeting may, and on request of a shareholder
entitled to vote thereat shall, appoint one or more inspectors. In case a
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the person presiding thereat. The inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine
challenges and questions arising in connection with the right to vote, count and
tabulate votes, ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness
-5-
to all shareholders. On request of the person presiding at the meeting or a
shareholder entitled to vote thereat, the inspectors shall make and execute a
written report to the person presiding at the meeting of any of the facts found
by them and matters determined by them. The report shall be prima facie
evidence of the facts stated and of the vote as certified.
Section 2.10 Action by Written Consent. The shareholders of the
-------------------------
Corporation shall have the ability to take action without a meeting only as
provided in the Articles of Incorporation.
Section 2.11 Voting of Shares by Certain Holders.
-----------------------------------
(a) Voting by Trustee or Fiduciary. Shares standing in the name of
------------------------------
any person as trustee or other fiduciary may be voted and all rights incident
thereto may be exercised only by the trustee or other fiduciary, in person or by
proxy, and without proof of authority.
(b) Voting of Pledged Stock. Unless the Corporation has specific
-----------------------
written instructions to the contrary, from the pledgee and pledgor, pledged
stock may be voted by the pledgor only.
(c) Voting by Guardian of Incompetent. Shares standing in the name
---------------------------------
of a person adjudged incompetent may be voted and all rights incident thereto
may be exercised only by his guardian, in person or by proxy.
(d) Voting by Executor or Administrator. Shares standing in the
-----------------------------------
name of a deceased person may be voted and all rights incident thereto may be
exercised only by his executor or administrator, in person or by proxy.
(e) Voting by Guardian of Minor. Shares standing in the name of a
---------------------------
minor may be voted and all rights incident thereto may be exercised by his
guardian, in person or by proxy, or in the absence of such representation by his
guardian, by the minor, in person or by proxy, whether or not the Corporation
has notice, actual or constructive, of the nonage or the appointment of a
guardian, and whether or not a guardian has been in fact appointed.
(f) Voting of Shares in Name of Corporation. Shares standing in
---------------------------------------
the name of a corporation, domestic or foreign, may be voted or represented and
all rights incident thereto may be exercised on behalf of that corporation by
the persons described in any of the following subdivisions:
(1) Any officer of the Corporation authorized so to do by the
Bylaws of that Corporation.
-6-
(2) Any person authorized so to do by resolution of the Board of
Directors or a duly authorized committee of the Board of Directors of that
Corporation.
(3) Any person authorized so to do by proxy or power of attorney
duly executed by the President or Vice President and Secretary or Assistant
Secretary of that Corporation.
However, such shares may be voted or represented by the persons
described in any subdivision only in the absence of vote or representation by
the persons described in a preceding subdivision of this subparagraph.
(g) Voting Shares in Names of Two or More Persons. Shares standing
---------------------------------------------
in the names of two or more persons shall be voted or represented in accordance
with the vote or consent of the majority of the persons in whose names the
shares stand. If only one such person is present in person or by proxy, he may
vote all the shares, and all the shares standing in the names of such persons
are represented for the purpose of determining a quorum. This applies to the
voting of shares by two or more administrators, executors, trustees, or other
fiduciaries, unless the instrument or order of court appointing them otherwise
directs.
ARTICLE III BOARD OF DIRECTORS
-------------------------------
Section 3.1 General Powers. The property, affairs and business of the
--------------
Corporation shall be managed by the Board of Directors.
Section 3.2 Number, Qualification and Term of Office. Unless otherwise
----------------------------------------
provided in the Articles of Incorporation, the Board of Directors shall be
divided into three classes, as nearly equal in numbers as the then total number
of directors constituting the entire Board of Directors permits, with the term
of office of one class expiring each year. The term of office of directors in
the first class shall expire at the first annual meeting of shareholders after
their election, the term of office of directors in the second class shall expire
at the second annual meeting of shareholders after their election, and the term
of office of directors in the third class shall expire at the third annual
meeting of shareholders after their election. The directors elected at the 1994
Annual Shareholders Meeting will be classified into terms of one, two or three
years, by resolution of the Board of Directors. At each annual meeting of
shareholders after such classification of the Board of Directors, a number of
directors equal to the number of the class whose term expires at the meeting
shall be elected to hold office until the third succeeding annual meeting.
Directors shall hold office until the next election of the class for which such
directors shall have been chosen and until their successors are elected and
qualified, except in the case of the death, resignation or removal of any
Director. Directors need not be shareholders of the Corporation. The size of
the
-7-
Board of Directors shall be within the range of five to nine directors, with the
exact size to be fixed from time to time by resolution of the Board of
Directors.
Section 3.3 Vacancies. The shareholders may, at any meeting called for
---------
such purpose, by a vote of a majority of the capital stock issued and
outstanding and entitled to vote thereon, remove any Director from office, with
or without cause. Any Director may resign by written notice to the President,
such resignation to be effective upon its receipt by the President or at such
subsequent time as may be specified in the notice of resignation. Subject to
the rights of the holders of any series of Preferred Stock then outstanding,
newly created directorships resulting from any increase in the authorized number
of Directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification or other cause may be filled only by a
majority vote of the directors then in office, though less than a quorum, and
Directors so chosen shall hold office for a term expiring at the next annual
meeting of shareholders at which the term of office of the class to which they
have been elected expires, except in the case of death, resignation or removal
of any Director. No decrease in the number of Directors constituting the Board
of Directors shall shorten the term of any incumbent Director. Acceptance of
resignation shall not be necessary for it to be effective.
Section 3.4 Meetings of the Board of Directors. The Board of Directors
----------------------------------
shall hold an annual meeting immediately following the annual shareholders
meeting, for the purpose of electing officers and for the transaction of such
other business as may properly come before the meeting. No notice of such
annual meeting shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be present, unless
said meeting is held, by a consent of a majority of the Directors of such new
Board, at a time and place other then at the place of holding and immediately
following the annual meeting of shareholders. Special meetings of the Board of
Directors may be held at any place either within or without the State of
Michigan at any time pursuant to resolution adopted by the Board of Directors or
upon call of the President or any two (2) officers.
Section 3.5 Notice of Meetings. Notice of meetings of Directors shall be
------------------
given or waived in the same manner as notice of meetings of shareholders, as
provided in Section 2.4, except that notice of Directors meetings shall be given
not later than two (2) nor more than ten (10) days prior to such meetings.
Section 3.6 Quorum and Required Vote of Board. A majority of the total
---------------------------------
number of Directors shall constitute a quorum for the transaction of business,
and the act of a majority of the Directors present at any meeting at which a
quorum is present shall be the act of the Board of Directors. Amendment of
these Bylaws by the Board requires the vote of not less than a majority of the
members of the Board then in office.
-8-
Section 3.7 Telephonic Meetings. A member of the Board or of a committee
-------------------
designated by the Board may participate in a meeting by means of conference
telephone or similar communications equipment by which all persons participating
in the discussion can hear each other. Participation in a meeting pursuant to
this provision constitutes presence in person at the meeting.
Section 3.8 Board Action Without Meeting. If all of the Directors then
----------------------------
constituting the Board of Directors of the Corporation or of any committee of
the Board of Directors shall severally and/or collectively consent in writing to
any action to be taken, such action shall have the same effect as though it had
been authorized at a duly called and properly held meeting of the Board of
Directors or such committee. Such written consent shall be filed with the
minutes of the proceedings of the Board.
Section 3.9 Committees. The Board of Directors may, by resolution or
----------
resolutions, passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of two (2) or more of the
Directors of the Corporation, which, to the extent provided in said resolution
or resolutions or in other provisions of these Bylaws, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may have the power to authorize the seal of
the Corporation to be affixed to all papers which may require it. However, such
a committee does not have the power or authority to amend the Bylaws of the
Corporation, fill vacancies on the Board of Directors, or fix compensation of
the Directors serving on the Board of Directors or on a committee; and, unless
the resolution of the Board of Directors creating such committee or the Articles
of Incorporation expressly so provide, such a committee does not have the power
or authority to declare a dividend or to authorize the issuance of stock. Any
such committee, and each member thereof, shall serve at the pleasure of the
Board of Directors. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors and each committee shall elect a chairman and secretary if one is not
named by the Board of Directors. Each committee shall keep regular minutes of
its meetings and report to the Board of Directors when required.
Section 3.10 Compensation. By resolution of the Board of Directors, the
------------
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board, and may be paid a fixed sum for attendance. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of the committees shall be allowed
similar compensation for attending committee meetings.
Section 3.11 Presumption of Assent. A Director of the Corporation who is
---------------------
present at a meeting of the Board at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to
-9-
such action with the person acting as Secretary of the meeting before the
adjournment thereof, or by registered mail to such Secretary immediately after
the adjournment thereof. This shall not apply to a Director who voted in favor
of such action.
ARTICLE IV OFFICERS AND AGENTS
-------------------------------
Section 4.1 General. The Corporation shall have a President, a Secretary,
-------
and a Treasurer, and, if desired, a Chairman of the Board and one or more Vice
Presidents, Assistant Secretaries and Assistant Treasurers. All officers of the
Corporation shall be elected by the Directors and shall hold office until their
successors are elected and qualified. The Corporation may also have such other
officers, agents and factors as may be deemed necessary for the transaction of
the business of the Corporation, who shall be chosen in such manner and hold
their offices for such terms and have such authority and duties as may be
determined by the Board of Directors. The Board of Directors may secure the
fidelity of any and/or all of such officers by bond or otherwise and may also
provide for the qualification of any or all of such officers before any person
authorized by law to administer an oath. The Board of Directors, by resolution,
may require any or all of the officers of the Corporation to give bonds, in
favor of the Corporation, with sufficient surety or sureties, and in such
amounts as the Board of Directors may fix, conditioned on the faithful
performance of the duties of their respective offices. The President shall be
chosen from among the Directors. Any two offices except those of President and
Vice President may be held by the same person but no officer shall execute,
acknowledge or verify any instrument in more than one capacity. Subject to
these Bylaws, each officer shall have in addition to the duties and powers
herein set forth, such duties and powers as are commonly incident to his office,
and such duties and powers as the Board of Directors shall from time to time
designate. In all cases where the duties of any officer, agent or employee are
not specifically prescribed by the Bylaws or by the Board of Directors, such
officer, agent or employee shall obey the orders and instructions of the
President. Compensation of the officers shall be as authorized by the Board of
Directors.
Section 4.2 Duties of the President. The President shall, subject to the
-----------------------
direction and under the supervision of the Board of Directors, be the chief
executive officer of the Corporation and shall have general and active control
of its affairs and business and general supervision over its officers, agents
and employees. The President shall also appoint and discharge all subordinate
agents and employees and fix their salaries, subject to review by the Board of
Directors, and shall designate their duties. He shall preside at all meetings
of the shareholders and, unless a Chairman of the Board has been elected, at all
meetings of the Board of Directors, at which he is present. The President shall
have custody of the Treasurer's bond, if any.
Section 4.3 Duties of the Chairman of the Board. The Board of Directors
-----------------------------------
may elect or appoint a Chairman of the Board. The Chairman of the Board shall,
if
-10-
present, preside at all meetings of the Board of Directors and shall exercise
and perform such other powers and duties as may be assigned to him from time to
time by the Board of Directors or prescribed by these Bylaws.
Section 4.4 Duties of the Vice President. The Board of Directors may
----------------------------
elect or appoint one or more Vice Presidents. The Vice Presidents, if such be
elected, shall, subject to the direction and under the supervision of the
President, be the assistant chief executive officer of the Corporation and shall
assist the President in the general and active control of its affairs in
business. The Vice Presidents shall perform all the duties of the President in
case of the absence or disqualification of the President. Any of such Vice
Presidents shall preside at all meetings of the shareholders in the absence or
unavailability of the President.
Section 4.5 Duties of the Secretary. The Secretary shall: (a) keep the
-----------------------
minutes of the proceedings of the shareholders and of the Board of Directors in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the Corporation and
ensure that the seal of the Corporation is affixed to all documents the
execution of which on behalf of the Corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; and (e) perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors. The Secretary also shall have charge of the stock ledger (which may,
however, be kept by any transfer agent or agents of the Corporation under the
direction of the Secretary), the original or duplicate of which shall, at all
times, during the usual hours for business, be open to the examination of every
shareholder at the principal office or place of business of the Corporation in
Michigan. In the absence of the Secretary from any meeting, a temporary
Secretary shall be chosen, who shall be sworn to the faithful discharge of his
duty and shall record the proceedings of such meeting in the aforesaid books.
Section 4.6 Duties of the Treasurer. The Treasurer shall, subject to the
-----------------------
direction and under the supervision of the Board of Directors, the President and
the Vice President, have the care and custody of the funds and valuable papers
of the Corporation, except his own bond, and he shall have power to endorse for
deposit or collection all notes, checks, drafts and other obligations for the
payment of money to the Corporation or its order. He shall keep, or cause to be
kept, at the principal office of the Corporation accurate books of account,
which shall be the property of the Corporation. He shall disburse the funds of
the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the President and
Directors, when they so direct, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.
-11-
Section 4.7 Assistant Secretaries and Assistant Treasurers. The Assistant
----------------------------------------------
Secretary or Assistant Secretaries, in the absence or disability of the
Secretary, shall perform the duties and exercise the powers of the Secretary.
The Assistant Treasurer or Assistant Treasurers, in the absence or disability of
the Treasurer, shall perform the duties and exercise the powers of the
Treasurer. Any Assistant Treasurer, if required by the Board, shall keep in
force a bond as provided in Section 4.1. The Assistant Secretaries and
Assistant Treasurers, in general, shall exercise and perform such other powers
and duties as shall be assigned to them by the Secretary or by the Treasurer,
respectively, or by the Board of Directors or the President.
Section 4.8 Vacancies. The Board of Directors may, at any meeting called
---------
for the purpose, by vote of a majority of their number, remove from office any
officer of the Corporation, with or without cause. Any officer may resign by
written notice to the President, which resignation may be effective upon its
receipt by the President or at such subsequent time as may be specified in the
notice of resignation, PROVIDED, HOWEVER, that the resignation of the President
shall be submitted to the Board of Directors. The Board of Directors may, at
any meeting, accept the resignation of any officer or remove or accept the
resignation of any agent or member of a committee, and may fill such vacancy for
the unexpired term and until the successor thereof shall be duly elected and
qualified. Acceptance of resignation shall not be necessary for it to be
effective.
ARTICLE V CAPITAL STOCK
------------------------
Section 5.1 Issuance. The shares of capital stock of the Corporation
--------
shall be issued by the Board of Directors in such amounts, at such times, for
such consideration, and on such terms and conditions as the Board shall deem
advisable, subject to the provisions of the Articles of Incorporation of the
Corporation and the further provisions of these Bylaws.
Section 5.2 Stock Certificates. The shares of the capital stock of the
------------------
Corporation shall be represented by certificates signed and sealed in accordance
with the provisions of the laws of the State of Michigan. Certificates shall
have a form and content complying with the laws of the State of Michigan and
approved by the Board of Directors of the Corporation. Certificates of stock
shall bear the signature of the President, and shall be signed by the Secretary,
Assistant Secretary, or any other officer appointed by the Board of Directors
for the purpose, to be known as an Authorized Officer. The signatures of the
officers may be facsimiles if the certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or its
employee. In case an officer who has signed or whose facsimile signature has
been placed upon a certificate ceases to be such officer before the certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer at the date of issue. Each certificate shall recite on its
face the stock represented thereby is transferable only upon the books of the
Corporation properly endorsed. A certificate
-12-
representing shares issued by a corporation which is authorized to issue shares
of more than one class shall set forth on its face or back or state that the
Corporation will furnish to a shareholder upon request and without charge a full
statement of the designation, relative rights, preferences and limitations of
the shares of each class authorized to be issued, and if the Corporation is
authorized to issue any class of shares in series, the designation, relative
rights, preferences and limitations of each series so far as the same have been
prescribed and the authority of the Board to designate and prescribe the
relative rights, preferences and limitations of other series.
Section 5.3 Transfers. Upon surrender to the Corporation or the transfer
---------
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5.4 Ownership. The Corporation shall be entitled to treat the
---------
person in whose name any share of stock is registered as the owner thereof for
purposes of dividends and other distributions in the course of business, or in
the case of recapitalization, consolidation, merger, reorganization, sale of
assets, liquidation or otherwise and for the purpose of votes, approvals and
consents by shareholders, and for the purpose of notice to shareholders, and for
all other purposes whatever, and shall not be bound to recognize any equitable
or other claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice thereof, save as expressly
required by the laws of the State of Michigan.
Section 5.5 Replacement of Certificates. Upon the presentation to the
---------------------------
Corporation of a proper affidavit attesting the loss, destruction or mutilation
of any certificate for shares of stock of the Corporation, the Board of
Directors may direct the issuance of a new certificate in lieu of and to replace
the certificate so alleged to be lost, destroyed and mutilated. The Board of
Directors may require as a condition precedent to the issuance of a new
certificate any or all of the following, to wit: (a) Additional evidence of the
loss, destruction or mutilation claimed; (b) Advertisement of the loss in such
manner as the Board of Directors may direct or approve; (c) A bond or agreement
of indemnity, in such form and amount and with such surety (or without surety)
as the Board of Directors may direct or approve; or (d) The order or approval of
a court.
Section 5.6 Transfer Agent and Registrar. The Board of Directors may
----------------------------
appoint a transfer agent and a registrar for the registration of transfers of
its securities.
Section 5.7 Regulations. The Board of Directors shall have power and
-----------
authority to make all such rules and regulations as the Board shall deem
expedient
-13-
regulating the issue, transfer and registration of certificates for shares of
this Corporation.
Section 5.8 Dividends. The Board of Directors, in its discretion from
---------
time to time, may declare dividends upon the capital stock from the surplus of
the Corporation as permitted by the MBCA, subject to the Articles of
Incorporation.
Section 5.9 Reserves. Before payment of any dividend, there may be set
--------
aside out of any funds of the Corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Directors shall think conducive to the interest of
the Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
ARTICLE VI INDEMNIFICATION OF OFFICERS, DIRECTORS,
----------------------------------------------------
EMPLOYEES AND AGENTS
--------------------
Section 6.1 Indemnification of Directors and Officers: Claims by Third
----------------------------------------------------------
Parties. The Corporation shall, to the fullest extent authorized or permitted
- -------
by the MBCA or other applicable law, as the same presently exists or may
hereafter be amended, indemnify a director or officer (the "Indemnitee") who was
or is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal, other than an action by or in
the right of the Corporation, by reason of the fact that he or she is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement actually and reasonably incurred by him or her in connection
with the action, suit, or proceeding, if the Indemnitee acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation or its shareholders, and with respect to a criminal
action or proceeding, if the Indemnitee had no reasonable cause to believe his
or her conduct was unlawful. The termination of an action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the Indemnitee
did not act in good faith and in a manner which he or she reasonably believed to
be in or not opposed to the best interests of the Corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
-14-
Section 6.2 Indemnification of Directors and Officers: Claims Brought By
------------------------------------------------------------
or In the Right of the Corporation. The Corporation shall, to the fullest
- ----------------------------------
extent authorized or permitted by the MBCA or other applicable law, as the same
presently exists or may hereafter be amended, indemnify a director or officer
(the "Indemnitee") who was or is a party to or is threatened to be made a party
to a threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against expenses, including actual and reasonable attorneys' fees, and
amounts paid in settlement incurred by the person in connection with the action
or suit, if the Indemnitee acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation or its shareholders. However, indemnification under this Section
shall not be made for a claim, issue, or matter in which the Indemnitee has been
found liable to the Corporation unless and only to the extent that the court in
which the action or suit was brought has determined upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, the Indemnitee is fairly and reasonably entitled to indemnification for
the expenses which the court considers proper.
Section 6.3 Actions by the Indemnitee. Notwithstanding the provisions of
-------------------------
Sections 6.1 and 6.2, the Corporation shall not indemnify an Indemnitee in
connection with any action, suit, proceeding or claim (or part thereof) brought
or made by such Indemnitee; unless such action, suit, proceeding or claim (or
part thereof) (i) was authorized by the Board of Directors of the Corporation,
or (ii) was brought or made to enforce this Article and such Indemnitee has been
successful in such action, suit, proceeding or claim (or part thereof).
Section 6.4 Approval of Indemnification. An indemnification under
---------------------------
Sections 6.1 or 6.2 hereof, unless ordered by a court, shall be made by the
Corporation only as authorized in the specific case upon it determination that
indemnification of the Indemnitee is proper in the circumstances because such
Indemnitee has met the applicable standard of conduct set forth in Sections 6.1
and 6.2. This determination shall be made in any of the following ways:
(a) By a majority vote of a quorum of the Board consisting of
Directors who were not parties to the action, suit, or proceeding.
(b) If the quorum described in subdivision (a) is not obtainable,
then by a majority vote of it committee of Directors who are not parties to the
action. The committee shall consist of not less than two (2) disinterested
Directors.
(c) By independent legal counsel in a written opinion.
-15-
(d) By the shareholders.
Section 6.5 Advancement of Expenses. Expenses incurred in defending a
-----------------------
civil or criminal action, suit, or proceeding described in Section 6.1 or 6.2
above shall be paid by the Corporation in advance of the final disposition of
the action, suit, or proceeding upon receipt of an undertaking by or on behalf
of the Indemnitee to repay the expenses if it is ultimately determined that the
Indemnitee is not entitled to be indemnified by the Corporation. The
undertaking shall be by unlimited general obligation of the person on whose
behalf advances are made but need not be secured.
Section 6.6 Partial Indemnification. If an Indemnitee is entitled to
-----------------------
indemnification under Section 6.1 or 6.2 for a portion of expenses including
attorneys' fees, judgments, penalties, fines, and amounts paid in settlement,
but not for the total amount thereof, the Corporation shall indemnify the
Indemnitee for the portion of the expenses, judgments, penalties, fines, or
amounts paid in settlement for which the Indemnitee is entitled to be
indemnified.
Section 6.7 Indemnification of Employees and Agents. Any person who is
---------------------------------------
not covered by the foregoing provisions of this Article and who is or was an
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
may be indemnified to the fullest extent authorized or permitted by the MBCA or
other applicable law, as the same exists or may hereafter be amended, but in the
case of any such amendment, only to the extent such amendment permits the
Corporation to provide broader indemnification rights than before such
amendment, but in any event only to the extent authorized at any time or from
time to time by the Board of Directors.
Section 6.8 Other Rights of Indemnification. The indemnification or
-------------------------------
advancement of expenses provided under Sections 6.1 to 6.7 is not exclusive of
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under the Articles of Incorporation, Bylaws, or a
contractual agreement. However, the total amount of expenses advanced or
indemnified from all sources combined shall not exceed the amount of actual
expenses incurred by the person seeking indemnification or advancement of
expenses. The indemnification provided for in Sections 6.1 to 6.7 continues as
to a person who ceases to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of the person.
Section 6.9 Definitions. "Other enterprises" shall include employee
-----------
benefit plans; "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and "serving at the request of the
corporation" shall include any service as a director, officer, employee, or
agent of the corporation which imposes duties on, or involves services by, the
director, officer, employee,
-16-
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be considered to have acted in a manner "not
opposed to the best interests of the corporation or its shareholders" as
referred to in Sections 6.1 and 6.2.
Section 6.10 Application to a Resulting or Surviving Corporation or
------------------------------------------------------
Constituent Corporation. The definition for "corporation" found in Section 569
- -----------------------
of the MBCA, as the same exists or may hereafter be amended, is and shall be,
specifically excluded from application to this Article. The indemnification and
other obligations of the Corporation set forth in this Article shall be binding
upon any resulting or surviving corporation after any merger or consolidation of
the Corporation. Notwithstanding anything to the contrary contained herein or
in Section 569 of the MBCA, no person shall be entitled to the indemnification
and other rights set forth in this Article for acting as a director or officer
of another corporation prior to such other corporation entering into a merger or
consolidation with the Corporation.
Section 6.11 Contract With the Corporation. The right to indemnification
-----------------------------
conferred in this Article VI shall be deemed to be a contract between the
Corporation and each director or officer who serves in any such capacity at any
time while this Article VI is in effect, and any repeal or modification of any
such law or of this Article VI shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts. In the event this Article is
repealed or modified, the Corporation shall give written notice thereof to the
directors and officers and any such repeal or modification shall not be
effective for a period of sixty (60) days after such notice is delivered.
Section 6.12 Liability Insurance. The Corporation shall have the power to
-------------------
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any liability asserted against and incurred by such
person in any such capacity or arising out of such person's status as such,
regardless of whether the Corporation would have the power to indemnify such
person against such liability under the provisions of the MBCA.
Section 6.13 Severability. Each and every paragraph, sentence, term and
------------
provision of this Article VI shall be considered severable in that, in the event
a court finds any paragraph, sentence, term or provision to be invalid or
unenforceable, the validity and enforceability, operation, or effect of the
remaining paragraphs, sentences, terms, or provisions shall not be affected, and
this
-17-
Article VI shall be construed in all respects as if the invalid or unenforceable
matter had been omitted.
Section 6.14 Enforcement. If a claim under this Article is not paid in
-----------
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the MBCA for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, a committee
thereof, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because such claimant has met the
applicable standard of conduct set forth in the MBCA nor an actual determination
by the Corporation (including its Board of Directors, a committee thereof,
independent legal counsel, or its shareholders) that the claimant has not met
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
ARTICLE VII EXECUTION OF PAPERS
--------------------------------
The officers of the Corporation may sell any or all of its holdings of
stock, bonds, or securities of other corporations, or government securities;
sign all deeds, mortgages, assignments of mortgages, discharges of mortgages,
bills of sale, leases and other conveyances and transactions of any interest in
property, real, personal or mixed, to the extent that the Board of Directors of
the Corporation may from time to time specify in resolutions approved by the
Board. The Board may in any instance designate the officers and agents who
shall have authority to execute any contract, conveyance or other instrument on
behalf of the Corporation, and may also ratify and affirm such execution. Any
such instrument or document shall be binding on the Corporation if executed by
the President or a Vice President. In addition, any such instrument or document
shall be binding on the Corporation if signed by any other officer designated by
the Board on behalf of the Corporation.
ARTICLE VIII BANKING
---------------------
Section 8.1 Bank Accounts. The Board of Directors shall by resolution
-------------
designate the bank or banks in which the funds of the Corporation shall be
deposited, and such funds shall be deposited in the name of the Corporation and
-18-
shall be subject to checks drawn as authorized by resolution of the Board of
Directors.
Section 8.2 Borrowing. To the extent authorized by law, the Corporation
---------
may, wherever its general interests and corporate purpose require the same,
borrow money and issue its promissory notes, debentures or bonds for the
repayment thereof with interest, and may in like case mortgage, pledge or
encumber its property as security for its debts or other lawful engagements.
ARTICLE IX VOTING STOCK IN OTHER CORPORATIONS
----------------------------------------------
Unless otherwise ordered by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote at any meetings of shareholders of any corporation in which
this Corporation may hold stock, and at any such meeting shall possess and may
exercise any and all of the rights and powers incident to the ownership of such
stock, PROVIDED, HOWEVER, that such rights shall be exercised in the best
interests of this Corporation. The Board of Directors may, by resolution, from
time to time confer like powers upon any other person or persons, but the same
shall not be effective unless actually received by such other corporation prior
to the meeting of shareholders in which such other person is to act. The
President, or in his absence or disability, a Vice President of the Corporation,
may authorize from time to time the signature and issuance of proxies to vote
such stock of other corporations owned by this Corporation, and all such proxies
shall be signed in the name of this Corporation by the President or Vice
President and the Secretary or Assistant Secretary, or by any two officers
authorized by the Board of Directors.
ARTICLE X SUBSIDIARIES
-----------------------
The Board of Directors may establish, reorganize and/or dissolve
wholly- or partly-owned subsidiaries of the Corporation. The Articles of
Incorporation and Bylaws of any such subsidiary shall not, without approval of
the shareholders of this Corporation, substantially differ from the Articles of
Incorporation and Bylaws, respectively, of this Corporation.
ARTICLE XI FISCAL YEAR
----------------------
Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall end on the last day of June.
ARTICLE XII CORPORATE BOOKS AND RECORDS
----------------------------------------
The Corporation shall keep books and records of account and minutes of
the proceedings of its shareholders, Board of Directors and executive
committees, if any. The books, records and minutes may be kept outside this
state. The Corporation shall keep at its registered office, or at the office of
its
-19-
transfer agent within or without this state, records containing the names and
addresses of all shareholders, the number, class and series of shares held by
each and the dates when they respectively became holders of record thereof. Any
of such books, records or minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time. The
Corporation shall convert into written form without charge any such record not
in such form, upon written request of a person entitled to inspect them.
ARTICLE XIII AMENDMENTS
------------------------
Except as otherwise expressly provided in the Articles of
Incorporation or in these Bylaws, these Bylaws may be altered, amended or
repealed by any duly adopted resolution of the Board of Directors or at any
annual or special meeting of the shareholders. The Board of Directors, however,
shall not adopt or alter any Bylaws fixing the number, qualifications,
classifications or term of office of Directors. If the amendment is to be
adopted at a special meeting of the shareholders, the notice thereof shall
specify the subject matter of the proposed alteration, amendment or repeal and
the Articles of these Bylaws to be affected thereby. Bylaws adopted by the
Directors may be altered or repealed by the Directors or shareholders.
Provided, further, that neither the time nor the place for the election of
Directors shall be changed within sixty (60) days next preceding the day on
which any election of Directors is to be held, and provided further that a
notice of any such change shall be given to each shareholder at least twenty
(20) days before the next election is held, in person or by letter mailed to his
last known post office address.
ATTEST:
/s/ TODD E. SIMPSON
__________________________
TODD E. SIMPSON, SECRETARY
Includes amendments approved through April 30, 1996
EXHIBIT 4.2
AASTROM BIOSCIENCES, INC.
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
- --------------------------------------------------------------------------------
April 7, 1992
TABLE OF CONTENTS
Page
----
SECTION 1 - Definitions.................................. 2
1.1 Certain Definitions.......................... 2
SECTION 2 - Restrictions on Transferability of
Securities; Compliance with Securities Act... 4
2.1 Restrictions on Transferability.............. 4
2.2 Restrictive Legend........................... 4
2.3 Notice of Proposed Transfers................. 5
2.4 Requested Registration....................... 6
2.5 Company Registration......................... 9
2.6 Registrations on Form S-3.................... 10
2.7 Expenses of Registration..................... 11
2.8 Registration Procedures...................... 12
2.9 Indemnification.............................. 12
2.10 Information by Holder........................ 14
2.11 Rule 144 Reporting........................... 14
2.12 "Market Stand-off" Agreement................. 15
2.13 Transfer of Registration Rights.............. 15
2.14 Suspension of Registration Rights............ 16
2.15 Certain Limitations in Connection with Future
Grants of Registration Rights............... 16
SECTION 3 - Affirmative Covenants........................ 16
3.1 Financial Information........................ 16
3.2 Other Information............................ 17
3.3 Inspection Rights............................ 18
3.4 Assignment of Rights to Information.......... 18
3.5 Confidentiality.............................. 18
3.7 Insurance 19
3.8 Board of Directors........................... 19
SECTION 4 - Right of First Refusal....................... 19
4.1 Right of First Refusal....................... 19
4.2 Waiver 20
SECTION 5 - University Warrants.......................... 21
5.1 Termination of Warrant Rights................ 21
SECTION 6 - Miscellaneous................................ 21
6.1 Amendment of Investors' Rights Agreement..... 21
6.2 Governing Law................................ 21
6.3 Successors and Assigns....................... 21
6.4 Notices 21
6.5 Delays or Omissions.......................... 22
6.6 Counterparts................................. 22
i.
6.7 Severability................................. 22
6.8 Amendments................................... 22
ii.
AASTROM BIOSCIENCES, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the "Agreement") is
entered into as of April 7, 1992, by and among AASTROM BioSciences, Inc., a
Michigan corporation formerly doing business as Ann Arbor Stromal, Inc. (the
"Company"), the investors listed on the Schedule of Investors attached hereto as
Exhibit A (individually, an "Investor" and collectively, the "Investors"), as
that exhibit may be amended from time to time, Stephen G. Emerson, Bernhard O.
Palsson and Michael F. Clarke (individually, a "Founder" and collectively, the
"Founders"), Dr. R. Douglas Armstrong ("Armstrong") and the Regents of the
University of Michigan, a constitutional corporation of the State of Michigan
(the "University"). For the purposes of this Agreement, the Founders and
Armstrong shall be collectively referred to as the "Option Holders."
RECITALS:
--------
A. The Company has issued shares of its Common Stock to the University and
has granted, and may, in the future, grant, stock options to the Founders
pursuant to the Company's Stock Option Plans.
B. The Company has issued two million five hundred thousand (2,500,000)
shares of its Series A Preferred Stock to certain of the Investors (the "Series
A Investors") pursuant to that certain Series A Preferred Stock Purchase
Agreement, dated as of August 17, 1989.
C. Pursuant to that certain Investors' Rights Agreement dated August 17,
1989 among the Company, the Series A Investors, the Founders and the University
(the "Investors' Rights Agreement"), the Company granted certain rights and the
parties made certain covenants with respect to the Series A Preferred Stock and
the Common Stock of the Company.
D. Since the execution of the Investors' Rights Agreement, the Company has
engaged Armstrong as its president and has granted, and may, in the future,
grant, stock options to Armstrong pursuant to the Company's Stock Option Plans.
E. Certain of the Investors (the "Series B Investors") are purchasing
concurrently herewith three million thirty thousand (3,030,000) shares of Series
B Preferred Stock and desire to obtain the same rights as are contained in the
Investors' Rights Agreement.
F. The Company, the Series A Investors, the Founders and the University
desire to grant to the Series B Investors and
1
Armstrong the same rights as were granted under the Investors' Rights Agreement
and to amend and restate such Agreement.
G. The parties intend that this Agreement supersede the Investors' Rights
Agreement and, in that regard, the parties to the Investors' Rights Agreement
will waive certain rights contained in such Investors' Rights Agreement,
specifically (i) the right of first refusal to purchase on a pro rata basis the
shares of Series B Preferred Stock being issued concurrently herewith and (ii)
the right of the University to obtain certain warrants to purchase Common Stock.
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth in this Agreement and in the
agreements pursuant to which the Investors acquired their securities in the
Company, the parties mutually agree as follows:
SECTION 1
Definitions
-----------
1.1 Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
------------
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Restricted Securities" shall mean the securities of the Company required
---------------------
to bear the legend set forth in Section 2.2 hereof.
"Shares" shall mean the securities of the Company held by the Investors as
------
described on Exhibit A.
2
"Options" shall mean any and all stock options granted to any of the
-------
Option Holders, as of the date hereof or thereafter, pursuant to any stock
option plan or agreement approved by the Company's Board of Directors.
"Registrable Securities" shall mean any shares of the Company's Common
----------------------
Stock (i) issued or issuable pursuant to the conversion of the Shares, (ii) held
as of August 17, 1989 by the University, (iii) issued or issuable upon exercise
of the Options, or (iv) issued as a dividend or other distribution with respect
to, or in exchange or in replacement of, the Shares or such Common Stock or
Preferred Stock, excluding in all cases, however (including exclusion from the
calculation of the number of outstanding Registrable Securities), any
Registrable Securities sold by a person in a transaction, including a
transaction pursuant to a registration statement under Section 2 hereof or a
transaction pursuant to Rule 144, in which such person's rights under Section 2
are not transferred.
The terms "register," "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in
---------------------
complying with Sections 2.4, 2.5 and 2.6 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single special
counsel for the Holders, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration other than a
registration pursuant to Section 2.4, in which event such special audit expenses
will be paid by the holders of the securities so registered pro rata on the
basis of the number of shares so registered, (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company).
"Holder" shall mean any holder of outstanding Registrable Securities or
------
securities convertible into or exercisable for Registrable Securities.
"Initiating Holders" shall mean the holder or holders of fifty percent
------------------
(50%) or more of the combination of the then outstanding Shares and Common Stock
issued upon conversion of the Shares.
"New Securities" shall mean any Common Stock or Preferred Stock of the
--------------
Company, whether now authorized or not, and rights, options or warrants to
purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are,
3
or may become, convertible into said Common Stock or Preferred Stock; provided,
however, that "New Securities" does not include (i) securities issuable upon
conversion of or with respect to the Shares; (ii) securities offered to the
public pursuant to a registration statement filed under the Securities Act;
(iii) securities issued pursuant to the acquisition of another corporation by
the Company by merger, purchase of substantially all of the assets, or other
reorganization whereby the Company (or the Company's shareholders immediately
prior to such event) owns (or own, on a pro rata basis) not less than fifty-one
percent (51%) of the voting power of such corporation immediately after such
event; (iv) shares of the Company's Common Stock (or related options) issued to
employees, officers or directors of or consultants to the Company (including,
but not limited to, shares issued to the Option Holders) pursuant to any
employee stock offering, plan, or arrangement approved by the Board of
Directors; or (v) shares of the Company's Common Stock or Preferred Stock issued
in connection with any stock split, stock dividend, or recapitalization by the
Company.
SECTION 2
Restrictions on Transferability of
Securities; Compliance with Securities Act
------------------------------------------
2.1 Restrictions on Transferability. The Shares, any Common Stock into
-------------------------------
which the Shares may be convertible, the Common Stock and Options held by the
Option Holders and the University shall not be transferable except upon the
conditions specified in this Agreement, which conditions are intended to insure
compliance with the provisions of the Securities Act, or, in the case of Section
2.12 hereof, to assist in an orderly distribution. Each Investor will cause any
proposed transferee of the Shares (or of the Common Stock into which the Shares
may be convertible) held by an Investor to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement. Each Option Holder and the University will cause any proposed
transferee of Common Stock held by an Option Holder or the University,
respectively, to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
2.2 Restrictive Legend. Each certificate representing (i) the Shares,
------------------
(ii) shares of the Company's Common Stock issued upon conversion of the Shares,
(iii) any securities issued in respect of the Shares or such Common Stock, or
(iv) shares of the Company's Common Stock, Preferred Stock or Options held by an
Option Holder or the University shall (unless otherwise permitted by the
provisions of Section 2.3 below) be stamped or otherwise imprinted with a legend
in the following form (in addition to any legend required under applicable state
securities laws):
4
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, HAVE BEEN ISSUED
PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OF SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED,
EXCEPT AS PERMITTED PURSUANT TO 17 C.F. R SECTION 230.144, OR THERE IS
IN EFFECT A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING SUCH SECURITIES, OR THE ISSUER RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY
SATISFACTORY TO THE ISSUER, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION,
QUALIFICATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS.
SALE OR OTHER TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE
IS ALSO RESTRICTED BY THE TERMS OF STOCK PURCHASE AGREEMENTS BETWEEN
THE ISSUER AND THE PURCHASERS LISTED THEREIN AND BY THE TERMS OF THAT
CERTAIN AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT BETWEEN THE
ISSUER AND THE OTHER PARTIES THERETO. COPIES OF SUCH DOCUMENTS MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF THIS
CERTIFICATE TO THE SECRETARY OF THE ISSUER AT ITS PRINCIPAL EXECUTIVE
OFFICES.
2.3 Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 2.3. Prior to any proposed
transfer of any Restricted Securities unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in the following cases, with respect to which the
requirements set forth in the balance of this sentence need not be complied
with: transactions in compliance with Rule 144 so long as the Company is
furnished with evidence of compliance with such Rule, including without
limitation, an opinion of counsel to such effect; transactions involving the pro
rata distribution of Restricted Securities by any holder which is a general or
limited partnership to any of its partners, or retired partners, or to the
estate of any of its partners or retired partners; transactions involving the
transfer of Restricted Securities by any holder who is an individual to his
family members or to a trust for the benefit of such holder or his family
members; or transfers not involving a change in beneficial ownership) by which
the requirements set forth in the balance of this sentence need not be complied
with: transactions in compliance with Rule 144 so long as the Company is
furnished with evidence of compliance with such Rule, including without
limitation, an opinion of counsel to such effect; transactions involving the pro
rata distribution of Restricted Securities by any holder which is a general or
limited partnership to any of its partners, or retired partners, or to the
estate of any of its partners or retired partners; transactions involving the
transfer of Restricted Securities by any holder who is an individual to his
family members or to a trust for the benefit of such holder or his family
members; or transfers not involving a change in beneficial ownership) by
5
either (i) an unqualified written opinion of legal counsel who shall be
reasonably satisfactory to the Company addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, (ii) a "no action" letter from the
Commission to the effect that the distribution of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, or (iii) such other showing that may
be reasonably satisfactory to legal counsel to the Company, whereupon the holder
of such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by the holder to
the Company. Each certificate evidencing the Restricted Securities transferred
as above provided shall bear the appropriate restrictive legend set forth in
Section 2.2 above, except that such certificate shall not bear such restrictive
legend if in the opinion of counsel for the Company such legend is not required
in order to establish compliance with any provisions of the Securities Act.
2.4 Requested Registration.
----------------------
(a) Request for Registration. In case the Company shall receive from
------------------------
Initiating Holders after the first anniversary of the Company's initial public
offering, or after January 1, 1994, whichever shall occur first, a written
request that the Company effect any registration (other than a registration on
Form S-3 or any related form of Registration Statement) covering the
registration of at least twenty percent (20%) of their Registrable Securities
(or a lesser percentage if the anticipated aggregate offering price net of
underwriting discounts and commissions, would exceed $2,000,000), the Company
will:
(i) promptly give written notice of the proposed registration to
all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided that prior to the Company's initial public offering, no Initiating
Holder may make a written request that the Company effect any registration
6
unless the aggregate anticipated offering price would exceed, net of
underwriting discounts and commissions, $5,000,000; and provided further that
the Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act; or
(B) During the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on a date six (6)
months following the effective date of, a registration statement pertaining to
an underwritten public offering of securities filed for the account of the
Company (other than a registration relating solely to employee benefit plans or
a registration relating solely to a Commission Rule 145 transaction), provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective and the Company's estimate
of the date of filing such registration statement is made in good faith; or
(C) After the Company has effected one registration pursuant to
this Section 2.4 and such registration has been declared or ordered effective.
Subject to the foregoing clauses (A), (B) and (C) and to Section 2.4(c),
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request of the Initiating Holders.
(b) Underwriting. If the Holders intend to distribute the Registrable
------------
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to Section 2.4 and
the Company shall include such information in the written notice referred to in
Section 2.4(a)(i). The right of any Holder to registration pursuant to Section
2.4 shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent requested (unless otherwise mutually agreed by a majority in interest
of the Holders and such Holder) to the extent provided herein. The Company
shall (together with all Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters of recognized national standing
selected for such underwriting by the Company with the
7
approval of a majority in interest of the participating Holders.
Notwithstanding any other provision of this Section 2.4, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten or that applicable state law prohibits the registration of
any Holders' Registrable Securities because of the failure or lack of obligation
of such Holder to contribute to the cost of such registration and so advises the
participating Holders in writing, then the Company shall so advise all Holders
(except those Holders who have indicated to the Company their decision not to
distribute any of their Registrable Securities through such underwriting) and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all such Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities owned by such Holders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation or such state law shall be included in
such registration.
If any Holder disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the underwriter
and the other Holders. The Registrable Securities and/or other securities so
withdrawn from such underwriting shall also be withdrawn from such registration;
provided, however, that, if by the withdrawal of such Registrable Securities a
greater number of Registrable Securities held by other Holders may be included
in such registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used above in determining the
underwriter limitation.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account or the
account of others in such registration if the underwriter so agrees and if the
number of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited.
(c) Delay of Registration. If the Company shall furnish to the
---------------------
Holders a certificate signed by the President of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed on or before the date filing would be required and it is
therefore essential to defer the filing of such registration statement, then the
Company may direct that such request for registration be delayed not in excess
of one hundred
8
and fifty (150) days, such right to delay a request to be exercised by the
Company not more than twice in any one-year period.
2.5 Company Registration.
--------------------
(a) If at any time or from time to time, the Company shall determine
to register any of its Common Stock, for its own account or for the account of
others (other than the Holders), other than a registration relating solely to
employee benefit plans or a registration relating solely to a Commission Rule
145 transaction or a registration on any registration form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Securities, the
Company will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within twenty (20) days after receipt of such written notice from
the Company, by any Holder or Holders. The rights of a particular Holder under
this Section 2.5 shall terminate five (5) years after the effective date of the
Company's initial underwritten public offering.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.5(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company.
Notwithstanding any other provision of this Section 2.5, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities from such registration and underwriting. The Company shall so advise
9
all Holders (except those Holders who have indicated to the Company their
decision not to distribute any of their Registrable Securities through such
underwriting), and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among such
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities owned by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration.
If any Holder disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided,
however, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities in the same proportion used above in determining the underwriter
limitation.
2.6 Registrations on Form S-3.
-------------------------
(a) If (i) Holders of Registrable Securities request in writing
(specifying that the request is being made pursuant to this Section 2.6) that
the Company file a registration statement on Form S-3 (or any successor form to
Form S-3 regardless of its designation) for a public offering of shares of
Registrable Securities the reasonably anticipated aggregate proceeds of which
would exceed $500,000, and (ii) the Company is a registrant entitled to use Form
S-3 to register such shares, and (iii) the Company has not filed a registration
statement pursuant to this Section 2.6 within the twelve (12) months immediately
prior to the requested filing date, then the Company shall cause such shares,
and any additional shares included pursuant to Section 2.6(b), to be registered
on Form S-3 (or any successor form to Form S-3).
(b) Prior to effecting a registration of Registrable Securities
pursuant to Section 2.6(a), the Company shall (i) give to each Holder written
notice of the intended registration and (ii) include in such registration any
additional Registrable Securities specified in any written request or requests
by additional Holders received within fifteen (15) days after such written
notice is given.
10
(c) All expenses incurred in connection with any registrations
requested pursuant to this Section 2.6 including, without limitation, all
registration, qualification, printing, and accounting fees, and fees and
disbursements of counsel for the Company, shall be borne by the Holder or
Holders participating in such registration on the basis of the amount of
securities so registered.
(d) The Holders' rights to registration under this Section 2.6 are in
addition to, and not in lieu of, their rights to registration under Sections 2.4
and 2.5.
2.7 Expenses of Registration.
------------------------
(a) All Registration Expenses (exclusive of underwriting discounts and
commissions and more than a single special counsel to the selling shareholders)
incurred in connection with the first registration pursuant to Section 2.4 shall
be borne by the Company. The Company shall not, however, be required to pay for
expenses of any registration proceeding begun pursuant to Section 2.4, the
request of which has been subsequently withdrawn by the Initiating Holders
(unless the withdrawal is based upon material adverse information concerning the
Company of which the Initiating Holders were not aware at the time of such
request and the Holders of a majority of Registrable Securities agree to forfeit
their right to one requested registration pursuant to Section 2.4 in which event
such right shall be forfeited by all Holders), in which case such expenses shall
be borne by the holders of securities (including Registrable Securities)
requesting such registration in proportion to the number of shares for which
registration was requested and such registration shall not be counted as a
registration pursuant to Section 2.4 for purposes of Section 2.4(a)(ii)(B).
(b) All Registration Expenses (exclusive of underwriting discounts and
commissions and more than a single special counsel to the selling shareholders)
incurred in connection with the first two registrations pursuant to Section 2.5
shall be borne by the Company. In each subsequent registration of Registrable
Securities effected pursuant to Section 2.5, the Holders who include Registrable
Securities in such registration shall bear any additional registration and
qualification fees and expenses (including underwriters' discounts and
commissions), and any additional costs and disbursements of counsel for the
Company that result from the inclusion of the Registrable Securities in such
registration, with such additional expenses of the registration being borne by
all such Holders pro rata on the basis of the amount of Registrable Securities
so registered; provided, however, that if any such cost or expense is
attributable solely to one selling Holder and does not constitute a normal cost
or expense of such a
11
registration, such cost or expense shall be allocated to that selling Holder. In
addition, each selling Holder shall bear the fees and costs of its own counsel.
2.8 Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 2,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Keep such registration, qualification or compliance effective for
a period of one hundred and twenty (120) days or until the Holder or Holders
have completed the distribution described in the registration statement relating
thereto, whichever first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
2.9 Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers,
directors, employees, agents, partners and legal counsel, and each person
controlling such Holder, with respect to which registration, qualification or
compliance has been effected pursuant to this Section 2, and each underwriter,
if any, and each person who controls any underwriter against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on (i) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other similar document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to skate therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, or (ii) any violation by
the Company of any federal, state or common law rule or regulation applicable to
the Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its officers,
directors, employees, agents, partners and legal counsel, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred, provided that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company
12
by an instrument duly executed by such Holder or underwriter and specifically
for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors,
officers, employees and agents each legal counsel and independent accountant of
the Company, each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act, and each other such
Holder, each of its officers, directors, and partners and each person
controlling such Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other similar document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and will reimburse the
Company, such Holders, such directors, officers, employees, agents, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, as incurred, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and specifically for use therein; provided,
however, that the obligations of such Holders hereunder shall be limited to an
amount equal to the proceeds to each such Holder of Registrable Securities sold
as contemplated herein.
(c) Each party entitled to indemnification under this Section 2.9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of
13
interest. The failure of any Indemnified Party to give notice as provided herein
shall relieve the Indemnifying Party of its obligations under this Section 2
only to the extent that such failure to give notice shall materially adversely
prejudice the Indemnifying Party in the defense of any such claim or any such
litigation. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation (without any obligation of performance or admission by the
Indemnified Party).
(d) Notwithstanding anything contained in this Section 2.9 to the
contrary, the Company shall have the right and the ability to provide the
necessary undertakings to the Commission in connection with any registration.
2.10 Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 2.
2.11 Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Use its best efforts to facilitate the sale of the Restricted
Securities to the public, without registration under the Securities Act,
pursuant to Rule 144 under the Securities Act, provided that this shall not
require the Company to file reports under the Securities Act and the Exchange
Act at any time prior to the Company's being otherwise required to file such
reports.
(b) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after ninety (90) days after the effective date of
the first registration under the Securities Act filed by the Company for an
offering of its securities to the general public;
(c) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange
14
Act, as amended (at any time after it has become subject to such reporting
requirements);
(d) So long as any Holder holds any Restricted Securities to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as a Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
2.12 "Market Stand-off" Agreement. Each Holder of more than one percent
---------------------------
(1%) of the Company's outstanding voting stock agrees not to sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the Company
held by it during the one hundred fifty (150) day period following the effective
date of a registration statement of the Company filed under the Securities Act
if so requested by the Company and underwriter of Common Stock (or other
securities) of the Company, provided that:
(a) such agreement shall apply only to the first underwritten
registered public offering of the Company; and
(b) all officers and directors of the Company and all other holders of
at least one percent (1%) of the Company's voting securities enter into similar
agreements. The Company may impose stop-transfer instructions with respect to
the shares (or securities) subject to the foregoing restriction until the end of
such period.
2.13 Transfer of Registration Rights. The rights to cause the Company to
-------------------------------
register securities granted under this Section 2 may be assigned or otherwise
conveyed by (i) any Holder (other than an Option Holder) only to a transferee or
assignee in a private transaction to whom not less than 100,000 shares of
Registrable Securities are conveyed (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock splits,
and the like) or (ii) an Option Holder in the manner set forth above or
otherwise only to another Holder or to a family member or to a trust for the
benefit of such Option Holder or family members in a private transaction to whom
not less than 20,000 shares of Registrable Securities are conveyed (as presently
constituted and subject to subsequent adjustments as set forth above); provided
that the Company is given written notice by such transferee at the time of or
within
15
a reasonable time after said transfer, stating the name and address of said
transferee and said transferee's agreement to be bound by the provisions of this
Agreement.
2.14 Suspension of Registration Rights. The registration rights granted
---------------------------------
pursuant to this Section 2 shall not be exercisable by any Holder during the
period in which such Holder has the ability to sell all of the Shares held by
such Holder under Rule 144 or Rule 144A during a single ninety (90) day period.
2.15 Certain Limitations in Connection with Future Grants of Registration
--------------------------------------------------------------------
Rights. From and after the date of this Agreement, the Company shall not enter
- ------
into any agreement with any holder or prospective holder of any securities of
the Company providing for the granting to such holder of registration rights
unless such agreement:
(a) includes the equivalent of Section 2.12 as a term; and
(b) contains provisions substantially similar to those contained in
Sections 2.4(b) and 2.5(b) with respect to the allocation of Registrable
Securities to be included in an underwritten public offering if marketing
factors require a limitation on the number of such securities to be included.
Notwithstanding the foregoing, from and after the date hereof the Company
shall not enter into any agreement with any person or persons providing for the
granting to such holder registration rights superior to those granted to Holders
pursuant to this Section 2, or of registration rights which might cause a
reduction in the number of shares includable by the Holders in any offering
pursuant to Section 2.4 or in any offering subject to Section 2.5.
SECTION 3
Affirmative Covenants
---------------------
Notwithstanding any provision of the Company's Bylaws regarding
delivery or non-delivery of financial information to shareholders of the
Company, the Company hereby covenants and agrees as follows:
3.1 Financial Information. The Company will furnish the following
---------------------
information to each Holder (other than the Option Holders) for so long as it is
a holder of any Shares or Common Stock issued upon conversion thereof, or of
450,000 shares or more of Common Stock:
16
(a) As soon as practicable after the end of each fiscal year, and
in any event within one hundred and twenty (120) days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as of the end of such
fiscal year, and consolidated statements of income, shareholders' equity and
cash flows of the Company and its subsidiaries, if any, for such year, prepared
in accordance with generally accepted accounting principles and setting forth in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and with an audit opinion thereon from independent public
accountants of recognized national standing selected by the Company.
(b) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company, and in
any event within forty-five (45) days thereafter, a consolidated balance sheet
of the Company and its subsidiaries, if any, as of the end of each such
quarterly period, and consolidated statements of income, shareholders' equity
and cash flows of the Company and its subsidiaries, if any, for such period and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made. Said financial statements shall be signed by an officer of the Company who
shall state that such financial statements are in accordance with generally
accepted accounting principles, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made.
3.2 Other Information. The Company shall furnish the following
-----------------
information to each Holder (other than the Option Holders) for so long as it
(together with its affiliates) holds 450,000 or more Shares (on an as-converted-
to-Common-Stock basis) or shares of Common Stock.
(a) As soon as practicable after the end of each fiscal month,
and in any event within thirty (30) days thereafter, a consolidated balance
sheet of the Company and its subsidiaries, if any, as at the end of such month,
and a consolidated statement of income of the Company and its subsidiaries, if
any, for such month, and for the current fiscal year to date, in each case
setting forth in comparative form the Company's and its subsidiaries', if any,
projected consolidated balance sheets and projected consolidated statements of
income for the corresponding periods as set forth in the annual budget (as
prepared pursuant to Section 3.2(b)), prepared in accordance with generally
accepted accounting principles, all in reasonable detail and certified subject
to changes resulting from year-end audit adjustments, by the principal financial
officer of the Company; provided, however, that any financial statements
provided hereunder need not contain any footnotes. To such
17
financial statements there shall be appended a discussion and analysis, in
reasonable detail, of such financial statements and the general business
condition and prospects of the Company by management of the Company so as to
assist the recipients in understanding and interpreting such financial
statements.
(b) After adoption by the Board of Directors, but not later than
thirty (30) days prior to beginning of each fiscal year, an annual budget for
such year which shall include monthly capital and operating expense budgets,
cash flow statements, projected balance sheets and profit and loss statements
for each month and for the end of such year itemized in such detail as the Board
of Directors may reasonably determine. Approval of such budgets, statements and
projections shall be required by a majority of the Board of Directors.
(c) Within thirty (30) days after a material change has been made
in the annual budget specified in Section 3.2(b) previously delivered, revised
budgets, statements or projections (as so specified).
(d) Copies of all reports, registration statements and other
material filed by the Company or any subsidiary with the Commission or with any
national securities exchange on which securities of the Company or any
subsidiary may be listed.
(e) The covenants provided in this Section 3.2 shall be suspended
for so long as the Company is subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act.
3.3 Inspection Rights. Each holder (other than the Option Holders)
-----------------
of any Shares or Common Stock issued upon conversion thereof, or of 450,000 or
more shares of Common Stock shall have the right to visit and inspect any of the
properties of the Company or any of its subsidiaries, and to discuss their
affairs, finances and accounts with their officers, all at such reasonable times
and as often as may be reasonably requested.
3.4 Assignment of Rights to Information. The rights granted pursuant
-----------------------------------
to Sections 3.1, 3.2 and 3.3 may be assigned or otherwise conveyed by any Holder
or by any subsequent transferee of any such rights; provided that the Company is
given notice of the assignment or conveyance; and provided further that if the
Company reasonably believes that it is necessary to protect proprietary
information, the Company may edit such information delivered to a transferee.
3.5 Confidentiality. Each Holder agrees that it will keep
---------------
confidential and will not, except as required by law, including without
limitation freedom of information acts, disclose or divulge any confidential,
proprietary or secret information which
18
such Holder may obtain from the Company, and which the Company has prominently
marked "confidential", "proprietary" or "secret" or has otherwise identified as
being such, pursuant to financial statements, reports and other materials
submitted by the Company as required hereunder, or pursuant to visitation or
inspection rights granted hereunder unless such information is or becomes known
to the Holder from a source other than the Company (unless such Holder knows
that such information was improperly obtained from the Company) or is or becomes
publicly known, or unless the Company gives its written consent to the Holder's
release of such information, except that no such written consent shall be
required (and Holder shall be free to release such information) if such
information is to be provided to Holder's lawyer or accountant, or to an
officer, director or partner of a Holder.
3.6 Employee Agreements. Those current and future employees and
-------------------
officers of and consultants to the Company designated by the Board of Directors
shall be required to execute a proprietary information agreement substantially
in the form attached hereto as Exhibit B with such amendments thereto as the
Board of Directors may from time to time deem appropriate.
3.7 Insurance. As soon as possible after the date hereof the Company
---------
shall obtain and keep adequate insurance on its properties, by financially sound
and reputable insurers, of a character and in such amounts and on such terms
usually insured by corporations engaged in the same or a similar business
against loss or damage resulting from fire or other risks insured against by
extended coverage and of the kind customarily insured against by such
corporations, and maintain in full force and effect public liability insurance
against claims for personal injury, death or property damage occurring upon, in,
about or in connection with the use of any of its properties, and maintain such
other insurance as may be required by law or other agreements to which the
Company is or shall become a party.
3.8 Board of Directors. The Company shall reimburse directors of the
------------------
Company for their reasonable expenses (including travel, meals and lodging)
incurred in the service of the Company, including the attendance at Board of
Directors meetings, pursuant to policies established by the Board of Directors.
SECTION 4
Right of First Refusal
----------------------
4.1 Right of First Refusal. The Company hereby grants to each Holder
----------------------
the right of first refusal to purchase, pro rata, New Securities that the
Company may, from time to time, propose to sell and issue. Each Holder's pro
rata share, for purposes of this right of first refusal, is the ratio of the
number of
19
shares of Common Stock (and shares of Common Stock issuable upon conversion of
securities convertible into shares of Common Stock), excluding the number of
shares of Common Stock which may be issued upon exercise of any Option, actually
held by such Holder, to the total number of outstanding shares of Common Stock
(calculated on a fully diluted basis) of the Company. This right of first
refusal shall be subject to the following provisions:
(a) In the event that the Company proposes to undertake an issuance of
New Securities, it shall give each Holder written notice of its intention,
describing the type of New Securities, the price, and the general terms upon
which the Company proposes to issue the same. Each Holder shall have ten (10)
business days from the date of receipt of any such notice to agree to purchase
its pro rata share of such New Securities for the price and upon the general
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased. Each Holder
shall have a right of over allotment such that if any Holder fails to exercise
its right hereunder to purchase its pro rata portion of New Securities, the
Company shall so notify the other Holders and the other Holders may purchase the
non-purchasing Holder's portion on a pro rata basis, within ten (10) days from
the date of such notice.
(b) In the event that a Holder fails to exercise in full the right of
first refusal within said ten (10) day period (plus ten (10) day period, if
applicable) the Company shall have ninety (90) days thereafter to sell the New
Securities respecting which the Holders' rights were not exercised, at a price
and upon general terms no more favorable to the purchasers thereof than
specified in the Company's notice. In the event the Company has not sold the
New Securities within such ninety (90) day period, the Company shall not
thereafter issue or sell any New Securities, without first offering such
securities to the Holders in the manner provided above.
(c) The right of first refusal granted under this Agreement shall
expire upon the closing of the first firmly underwritten public offering of
Common Stock of the Company pursuant to a registration statement filed with, and
declared effective by, the Commission under the Securities Act, covering the
offer and sale of Common Stock to the public at a per-share price (prior to
underwriters' commissions and expenses) of at least $5.00 (as adjusted for any
combinations, consolidations, stock distributions or stock dividends with the
respect to such stock) and at an aggregate offering price of not less than
$10,000,000.
(d) This right of first refusal is assignable only in connection with
a sale of Shares or Common Stock issued on conversion thereof.
20
4.2 Waiver. The Series A Investors, the Founders and the University
------
each hereby waive their respective rights under Section 4.1 of the Investors'
Rights Agreement to purchase their pro rata share of the Series B Preferred
Stock being issued to the Series B Investors pursuant to that certain Series B
Preferred Stock Purchase Agreement of even date herewith (the "Series B
Agreement").
SECTION 5
University Warrants
-------------------
5.1 Termination of Warrant Rights. The right of the University to
-----------------------------
obtain warrants to purchase Common Stock of the Company, contained in Section
5.1 of the Investors' Rights Agreement, is hereby terminated.
SECTION 6
Miscellaneous
-------------
6.1 Amendment of Investors' Rights Agreement. Effective and
----------------------------------------
contingent upon the closing of the sale of the Series B Preferred Stock pursuant
to the Series B Agreement, all of the provisions of the Investors' Rights
Agreement shall be null and void and superseded by this Agreement. The parties
to such Investors' Rights Agreement forever release, waive and disclaim any and
all rights under such Agreement. The parties hereto further agree that this
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subjects hereof and thereof, except that no
provision, condition or term of this Agreement, including but not limited to
Section 6.8 below, is intended to explicitly or implicitly alter or allow to be
altered any provision, condition or term of the UM-Ann Arbor Stromal Agreement.
6.2 Governing Law. This agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Michigan applicable to contracts
between Michigan residents entered into and to be performed entirely within the
State of Michigan.
6.3 Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
6.4 Notices. All notices and other communications required or
-------
permitted hereunder shall be in writing and shall be effective five (5) days
after mailed by first-class mail, postage prepaid,
21
or otherwise delivered by hand or by messenger, addressed (a) if to an Investor
at such Investor's address set forth on Exhibit A, or at such other address as
such Investor shall have furnished to the Company in writing, or (b) if to any
other Holder, at such address as such Holder shall have furnished the Company in
writing, or, until any such Holder so furnishes an address to the Company, then
to and at the address of the last holder of such Registerable Securities who has
so furnished an address to the Company, or (c) if to the Company, at such
address as the Company shall have furnished to each Holder in writing.
6.5 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any holder of any Registerable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such Holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this agreement, or by law or otherwise afforded to any Holder, shall be
cumulative and not alternative.
6.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the Holders,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
6.7 Severability. In the case any provision of this Agreement shall
------------
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.8 Amendments. The provisions of this Agreement may be amended at
----------
any time and from time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by the
Company and by the Holders of a majority of the number of shares of Registrable
Securities (or securities convertible into Registrable Securities) outstanding
as of the date of such amendment or waiver. Each party to this Agreement
acknowledges that by the operation of this Section the holders of a majority of
the outstanding Registrable Securities may have the right and power to diminish
or eliminate all rights of such holder under this Agreement.
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
COMPANY:
AASTROM BIOSCIENCES, INC.
By /s/ R. DOUGLAS ARMSTRONG
-----------------------------------
Dr. R. Douglas Armstrong
President
INVESTORS:
H&Q LIFE SCIENCE TECHNOLOGY FUND I
By /s/ JACKIE BERTERRETCHE
--------------------------------
Title Attorney-In-Fact
--------------------------------
H&Q LONDON VENTURES
By /s/ JACKIE BERTERRETCHE
---------------------------------
Title Attorney-In-Fact
---------------------------------
STATE TREASURER OF THE STATE OF MICHIGAN
CUSTODIAN OF PUBLIC SCHOOL EMPLOYEES'
RETIREMENT SYSTEM; STATE EMPLOYEES'
RETIREMENT SYSTEM; MICHIGAN STATE POLICE
RETIREMENT SYSTEM; JUDGES' RETIREMENT
SYSTEM; AND PROBATE JUDGES' RETIREMENT
SYSTEM
By /s/ PAUL E. RICE
---------------------------------
Title Paul E. Rice, Administrator
---------------------------------
Venture Capital and LBO Division
23
BRENTWOOD ASSOCIATES V, L.P.
By: Brentwood V Ventures, L.P.
Its General Partner
By /s/ G. BRADFORD JONES
------------------------------------
WIND POINT PARTNERS II, L.P.
By /s/ ROBERT CUMMINGS
------------------------------------
Title General Partner
---------------------------------
GC&H PARTNERS
By /s/ EDWIN E. HUDDLESON, JR.
------------------------------------
Title General Partner
---------------------------------
/s/ MICHAEL B. STAEBLER
---------------------------------------
Michael B. Staebler, Esq.
OPTION HOLDERS:
/s/ STEPHEN G. EMERSON
---------------------------------------
Stephen G. Emerson
/s/ BERNHARD O. PALSSON
---------------------------------------
Bernhard O. Palsson
/s/ MICHAEL F. CLARKE
---------------------------------------
Michael F. Clarke
/s/ R. DOUGLAS ARMSTRONG
---------------------------------------
R. Douglas Armstrong
26
THE REGENTS OF THE UNIVERSITY OF MICHIGAN:
By /s/ NORMAN G. HERBERT
---------------------------------------
Norman G. Herbert
Title Investment Officer/Treasurer
------------------------------------
By /s/ C.W. MATTHEWS
---------------------------------------
C.W. Matthews
Title Associate Vice President for
------------------------------------
Finance and Controller
------------------------------------
34
EXHIBIT A
---------
Series A Investors Shares
- ------------------ ---------
H&Q Life Science Technology Fund I 875,000
One Bush Street, 18th Floor
San Francisco, CA 94104
H&Q London Ventures 875,000
One Bush Street, 18th Floor
San Francisco, CA 94104
State Treasurer of the State of 750,000
Michigan, Custodian of Certain
Retirement Systems
c/o Venture Capital Division
430 West Allegan, First Floor
Treasury Building
Lansing, MI 48933
---------
TOTAL 2,500,000
Series B Investors Shares
- ------------------- ---------
Brentwood Associates, V., L.P. 850,000
11150 Santa Monica, Blvd.
Suite 1200
Los Angeles, CA 90025
Attn: Brad Jones
Wind Point II, L.P. 750,000
321 North Clark Street
Chicago, IL 60610
Attn: Robert Cummings
H&Q Life Science Technology Fund I 540,000
One Bush Street, 18th Floor
San Francisco, CA 94104
Attn: Robert Kunze
H&Q London Ventures 360,000
One Bush Street, 18th Floor
San Francisco, CA 94104
Attn: Robert Kunze
i.
State Treasurer of the State 500,000
of Michigan, Custodian of
Certain Retirement Systems
c/o Venture Capital Division
430 West Allegan
Lansing, Michigan 48992
Attn: Joseph Taylor
GC&H Partners 25,000
c/o Cooley Godward Castro
Huddleson & Tatum
One Maritime Plaza
20th Floor
San Francisco, CA 94111
Attn: Jeanne Meyer
Michael B. Staebler, Esq. 5,000
c/o Pepper, Hamilton & Scheetz
100 Renaissance Center
Suite 3600
Detroit, Michigan 48243
---------
TOTALS 3,030,000
ii.
EXHIBIT "A"
-----------
AASTROM BIOSCIENCES, INC.
P.O. Box 130469
Ann Arbor, Michigan 48113-0469
Gentlemen:
1. The following is a complete list of all inventions or improvements
relevant to the subject matter of my service as a director of AASTROM
BIOSCIENCES, INC. (the "Company") that have been made or conceived or first
reduced to practice by me alone or jointly with others prior to my becoming a
director of the Company:
_____ No inventions or improvements.
_____ See below:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_____ Due to confidentiality agreements with prior employer, I cannot
disclose certain inventions that would otherwise be included on the
above-described list.
_____ Additional sheets attached.
2. I propose to bring to my service as a director the following
devices, materials and documents of a former employer or other person to whom I
have an obligation of confidentiality that are not generally available to the
public, which materials and
A-1
documents may be used in my service as a director pursuant to the express
written authorization of my former employer or such other person (a copy of
which is attached hereto):
_____ No materials.
_____ See below.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_____ Additional sheets attached.
Dated: ____________________, 19____.
Very truly yours,
________________________________________
A-2
EXHIBIT B
AASTROM BIOSCIENCES, INC.
DIRECTOR PROPRIETARY INFORMATION AND INVENTION AGREEMENT
--------------------------------------------------------
In consideration of my service as a director or continued service as a
director of AASTROM Biosciences, Inc. ("the Company"), I hereby agree as
follows:
1. Recognition of Company's Rights; Nondisclosure. At all times during
----------------------------------------------
the term of my service as a director and thereafter, I will hold in strictest
confidence and will not disclose or use any of the Company's Proprietary
Information (defined below), except as such disclosure or use may be required in
connection with my work for the Company, or unless an officer of the Company
expressly authorizes such disclosure or use. I assign to the Company any rights
I may have or acquire in such Proprietary information and recognize that all
Proprietary information shall be the sole property for the Company and its
successors and assigns, and the Company and its successors and assigns shall be
the sole owner of all patents, copyrights, and other rights in connection
therewith.
The term "Proprietary Information" shall mean all of the confidential or
proprietary information of the Company, including, but not limited to:
a. inventions, trade secrets, ideas, processes, formulas, source
codes, data, programs, other original works or authorship, know-how,
improvements, discoveries, developments, designs and techniques, (hereinafter
collectively referred to as "Inventions"); and
b. plans for research, development, new products, marketing and
selling; financial statements; licenses; prices and costs; information
concerning suppliers and customers; and information regarding the skills and
compensations of employees of the Company.
Notwithstanding the foregoing, Proprietary information shall not include:
---------
a. information which at the time of disclosure to the undersigned
is in the public domain,
b. information which was received by the undersigned from a third
party having the legal right to transmit the same to the undersigned, or
c. information which was independently developed by the
undersigned without reliance on any information received from the Company.
I understand, in addition, that the Company has received and in the future
will receive from third parties confidential or proprietary information ("Third
Party Information") subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. During the term of my service as director and thereafter, I will hold
Third Party Information in the strictest confidence and will not disclose or use
Third Party Information except as permitted by the agreement between the Company
and such third party, unless expressly authorized to act otherwise by an officer
of the Company.
2. Assignment of Proprietary Rights. I hereby assign to the Company and
--------------------------------
its successors and assigns all my right, title and interest in and to any and
all inventions whether or not patentable or registrable under copyright or
similar statutes, made or conceived or reduced to practice or learned by me,
either alone or jointly with others, during the term of my service as a director
with the Company. I agree that all such inventions are the sole property of the
Company and its successors and assigns.
I also assign to or as directed by the Company all my right, title and
interest in and to any and all inventions, full title to which is required to be
in the United States by a contract between the Company and the United States or
any of its agencies. Inventions assigned to or as directed by the Company by
this paragraph 2 are hereinafter referred to as "Company Inventions."
Provided however, the foregoing assignment of inventions applies only to
inventions related to the technology and business of the Company, but not to any
---
other inventions which I may make independent from my service with the Company,
or that I may make as part of a formalized collaboration with the Company that
is outside of my role as a director (any such collaboration being established
and mutually agreed to in writing).
3. Enforcement of Proprietary Rights. I will assist the Company in
---------------------------------
every proper way to obtain and from time to time enforce United States and
foreign patents, copyright and other rights and protections relating to Company
inventions in any and all countries. To that end I will execute, verify and
deliver such documents and perform such other acts (including appearances as a
witness) as the Company may reasonably request for use in applying for,
obtaining, sustaining and enforcing such patents, copyrights and other rights
and protections on Company inventions. In addition, I will execute, verify and
deliver assignments of such patents, copyrights, and other rights and
protections to the Company or its designee. My obligation to assist the Company
in obtaining and enforcing patents, copyrights, and other rights and protections
relating to such Company Inventions in any and all countries shall continue
beyond the termination of my service as a director, but the Company shall
compensate me at a reasonable
-2-
rate after my termination for the time actually spent by me at the Company's
request on such assistance.
In the event the Company is unable, after reasonable effort, to secure my
signature on any document needed to apply for or prosecute any patent,
copyright, or other right or protection relating to a Company Invention, I
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents as my agent and attorney in fact, to act for an in my behalf
to execute, verify and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of patents, copyrights,
and other rights and protections thereon with the same legal force and effect as
if executed by me.
4. Obligation to Keep Company Informed. During the term of my service
-----------------------------------
as a director, I will disclose to the Company promptly, fully and in writing any
and all inventions. in addition, after termination of my service as a director,
I will disclose all patent applications filed by me within a year after
termination of my service as a director. I agree that any patent application
filed within a year after termination of my service as a director shall be
presumed to relate to an invention made during the term of my service as a
director unless I can sustain the burden of proving the contrary.
5. Prior Inventions. Inventions if any, patented or unpatented, which I
----------------
made prior to the commencement of my service as a director with the Company, are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit A attached hereto, a complete list of all inventions
that I have, alone or jointly with other, conceived, developed or reduced to
practice or caused to be conceived, developed, or reduced to practice, prior to
the commencement of my service as a director with the Company, that I consider
to not be Company property and that I wish to have excluded from the scope of
this Agreement.
6. No Improper Use of Materials. During my service as a director at the
----------------------------
Company, I will not improperly use or disclose any confidential information or
trade secrets, if any, of any former or current employer, and I will not bring
onto the premises of the Company any unpublished documents or any property
belonging to any former or current employer unless consented to in writing by
that employer.
7. No Conflicting Obligation. I represent that my performance of all
-------------------------
terms of this Agreement and as a director of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my service as a director by the Company. I have
not
-3-
entered into, and I agree I will not enter into, any agreement either written or
oral in conflict herewith.
8. Effect of Termination. Upon the termination of my service as a
---------------------
director with the Company, I understand that the Company and I shall be released
from all obligations and liabilities to the other occurring or arising after the
date of such termination, except that any termination of my service as a
director with the Company shall not relieve me of my obligations under Sections
1, 2, 3, 4, and 6 hereof, nor shall any such termination relieve me or the
Company from any liability arising from any breach of the provisions contained
herein. When I discontinue my service as a director of the Company, I will
deliver to the Company any and all drawings, notes, memoranda, specifications,
devices, documents, together with all copies thereof, and any other material
containing or disclosing any Company Inventions, Third Party Information or
Proprietary Information of the Company.
9. Legal and Equitable Remedies. Because my services are personal and
----------------------------
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief without prejudice to any other rights and
remedies that the Company may have for a breach of this Agreement.
10. Notices. Any notices required or permitted hereunder shall be given
-------
to the appropriate party at the address specified below or at such other address
as the party shall specify in writing.
Such notice shall be deemed given upon personal delivery to the appropriate
address or sent by certified or registered mail, three days after the date of
mailing.
11. Miscellaneous. I agree that, with respect to the subject matter
-------------
hereof, this Agreement constitutes my entire agreement with the Company,
superseding any previous oral or written communications, representations,
understandings, or agreements with the Company or any officer or representative
thereof. This Agreement shall inure to the benefit of the successors and assigns
of the company, and shall be binding upon my successors and assigns. To the
extent that any of the agreements set forth herein, or any word, phrase, clause,
or sentence hereof shall be found to be illegal or unenforceable for any reason,
such agreement, word, phrase, clause, or sentence shall be modified or deleted
in such a manner so as to make the Agreement, as modified, legal and enforceable
under applicable laws. This Agreement shall be governed by the laws of the State
of Michigan, as those laws are applied by Michigan courts to
-4-
contracts between Michigan residents made and to be performed within the state
of Michigan, which state shall have jurisdiction of the subject matter hereof.
This Agreement may not be changed, modified, released, discharged, abandoned, or
otherwise amended, in whole or in part, except by an instrument in writing
signed by the company and me.
This Agreement shall be effective as of the first day of my service as a
director with the company, namely: _____________________, 19_____.
Date: ___________________ ___________________________________________________
___________________________________________________
Address
___________________________________________________
___________________________________________________
-5-
EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This Agreement is made as of __________, between Aastrom Biosciences, Inc.,
a Michigan corporation (the "Company"), and those certain officers and directors
of the Company designated on the signature page of this Agreement as Indemnitees
(hereinafter referred to individually as an "Indemnitee" and collectively as the
"Indemnitees").
RECITALS
A. It is essential to the Company to attract and retain as directors
and officers the most capable persons available.
B. Both the Company and Indemnitees recognize the increased risk of
litigation and other claims being asserted against directors and officers of
companies in today's environment.
C. While basic protection against undue risk of personal liability of
directors and officers may be provided through insurance coverage, it has become
increasingly difficult to obtain such insurance on terms providing reasonable
protection at reasonable cost.
D. The Restated Articles of Incorporation and the Bylaws of the
Company permit the Company to indemnify and advance expenses to its directors
and officers to the full extent permitted by law; and Indemnitees have been
serving and continue to serve as directors and officers of the Company in part
in reliance on such Restated Articles of Incorporation and Bylaws.
E. In recognition of Indemnitees' need for substantial protection
against personal liability, the increasing difficulty in obtaining satisfactory
insurance coverage, and Indemnitees' reliance on the aforesaid Restated Articles
of Incorporation and Bylaws, and in part to provide Indemnitees with specific
contractual assurance that the protection promised by the Restated Articles of
Incorporation and Bylaws will be available to Indemnitees (regardless of, among
other things, any amendment to or revocation of such Restated Articles of
Incorporation or Bylaws or any change in the composition of the Company's Board
of Directors), the Company wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to Indemnitees to the fullest
extent permitted by law and as set forth in this Agreement, and, to the extent
insurance coverage is maintained, for the continued coverage of Indemnitees
under the Company's directors' and officers', liability insurance policies.
NOW, THEREFORE, in consideration of Indemnitees' service to the
Company, or Indemnitees' service to another enterprise at the request of the
Company, the parties hereto agree as follows:
1. Certain Definitions. As used herein, the following terms shall
-------------------
refer to the following events or have the following meanings, as the case may
be:
a. Change in Control is an event which shall be deemed to have
-----------------
occurred if any one or more of the following events occur: (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) hereafter becomes the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company
representing twenty percent or more of the total voting power represented by the
Company's then outstanding Voting Securities, excluding, however, a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or a corporation owned directly or indirectly by the shareholders of the Company
in substantially the same proportions as their ownership of stock of the
Company; or (ii) during any period of two consecutive years, individuals who, at
the beginning of such period, constitute the Board of Directors of the Company
and any new director whose election by the Board of Directors or nomination for
election by the Company's shareholders was approved by a vote of at least two-
thirds of the directors then still in office, cease for any reason to constitute
a majority of the Board of Directors; or (iii) the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 80 percent of the total voting power represented
by the Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (iv) the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all the Company's assets.
b. Claim means (i) any threatened, pending or completed action,
-----
suit or proceeding, whether civil, criminal, administrative or investigative, or
(ii) any inquiry or investigation, whether instituted by the Company or any
other party, that any of the Indemnitees in good faith believes might lead to
the institution of any such action, suit or proceeding.
c. Expenses means, without limitation, attorneys' fees and all
--------
other costs, expenses and obligations paid or incurred in connection with (i)
investigating, defending, being a witness in or participating in (including on
appeal), any Claim relating to any Indemnifiable Event, or (ii) preparing to
defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
d. Indemnifiable Event means any event or occurrence related to
-------------------
the fact that any of the Indemnitees is or was a director, officer, employee,
agent, trustee or fiduciary of the Company, or is or was serving at the request
of the Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, or by reason of anything done or not done by any of the
Indemnitees in any such capacity for which under applicable law a California
corporation may indemnify Indemnitees, as such law exists from time to time.
e. Indemnitees means the officers and directors of the Company
-----------
as of the date of this Agreement and any future duly elected officers and
directors of the Company designated on and executing the signature page of this
Agreement as Indemnitees. "Indemnitee" means any one of the Indemnitees.
f. Independent Legal Counsel means an attorney or firm of
-------------------------
attorneys, selected in accordance with the provisions of Section 3, who shall
not have otherwise performed services within the last three years for the
Company or the Indemnitee seeking indemnification (other than services with
respect to matters concerning the rights of any of the Indemnitees under this
Agreement).
g. Reviewing Party means (i) Independent Legal Counsel or (ii)
---------------
any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
who is not a party to the particular Claim for which Indemnitee is seeking
indemnification.
h. Voting Securities means any securities of the Company
-----------------
which entitle their holders to vote generally in the election of directors.
2. Basic Indemnification Arrangement.
---------------------------------
a. Indemnification. In the event Indemnitee was, is or
---------------
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason of an
Indemnifiable Event, the Company shall indemnify Indemnitee, to the fullest
extent permitted by law and as soon as practicable (but in any event no later
than thirty days after written demand is presented to the Company), against any
and all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Claim. If requested by Indemnitee, the
Company shall advance (within two business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance").
b. Exception; Determination That Indemnification or
--------------------------------------------- --
Advances Not Permitted. Except as provided in Section 2(c), the obligations of
- ----------------------
the Company
under Section 2(a) shall be subject to the condition that a Reviewing Party
shall not have determined that Indemnitee would not be permitted to be
indemnified under applicable law. Except as provided in Section 2(c), the
obligation of the Company under Section 2(a) to make an Expense Advance shall be
subject to the condition that, if, when and to the extent a Reviewing Party
determines that Indemnitee would not be permitted to be indemnified under
applicable law, the Indemnitee shall reimburse the Company for all such Expense
Advances theretofore paid. For purposes of this Section 2(b), if the Reviewing
Party is Independent Legal Counsel, then any such determination shall be
rendered in the form of a written opinion.
c. Initiation of Action Concerning Right to Indemnification. In
--------------------------------------------------------
the event Indemnitee has commenced or thereafter commences legal proceedings in
a court of competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made by a
Reviewing Party that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and Indemnitee shall not be required to
reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto. Indemnitee shall have the right to
commence litigation in any court in the State of Michigan having subject matter
jurisdiction and in which venue is proper in order to seek an initial
determination by the court as to whether Indemnitee is entitled to
indemnification and Expense Advances hereunder or in order to challenge an
unfavorable determination by a Reviewing Party, including the legal or factual
bases for such unfavorable determination. The Company hereby consents to service
of process and to appear in any such proceeding. Unless contested by the
Indemnitee as contemplated by this Section 2(c), any determination by a
Reviewing Party shall be conclusive and binding on the Company and Indemnitee.
d. Reviewing Party. For purposes of this Section 2, the
---------------
Reviewing Party shall be selected by the Board of Directors in circumstances
where there has not been a Change in Control. In circumstances where there has
been a Change in Control (other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control), the Reviewing Party shall be the Independent
Legal Counsel referenced in Section 3.
3. Change in Control. The Company agrees that if there is a Change
-----------------
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Indemnitee under this Agreement or
any other agreement or Company Bylaw now or hereafter in effect relating to
Claims for Indemnifiable Events, the Company shall seek legal advice only from
Independent Legal Counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such Independent Legal
Counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
the Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of Independent Legal Counsel and to
fully indemnify such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or such counsel's engagement pursuant hereto.
4. Indemnification for Additional Expenses. In connection with any
---------------------------------------
action brought by Indemnitee for (i) indemnification or advance payment of
Expenses under this Agreement or any other agreement or Company Bylaw now or
hereafter in effect relating to Claims for Indemnifiable Events and/or (ii)
recovery under any directors' and officers' liability insurance policy
maintained by the Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance payment of Expenses
or insurance recovery, as the case may be, the Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees) which are
incurred by Indemnitee and, if requested by Indemnitee, shall (within two
business days of such request) advance such expenses to Indemnitee.
5. Partial Indemnity; Expenses. If Indemnitee is entitled under
---------------------------
any provision of this Agreement to indemnification by the Company for some or a
portion of Expenses, judgments, fines, penalties or amounts paid in settlement
of a Claim but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense (including dismissal without prejudice) of any or all Claims relating in
whole or in part to an Indemnifiable Event, or in defense of any issue or matter
relating in whole or in part to an Indemnifiable Event, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
6. Burden of Proof. In connection with any determination by a
---------------
Reviewing Party as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not entitled to indemnification.
7. No Presumptions. For purposes of this Agreement, the
---------------
termination of any claim, action, suit or proceeding by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or did have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. Neither the failure of a Reviewing Party to have
made a determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by a Reviewing
Party that Indemnitee has not met such standard of conduct or did not have
such belief, prior to the commencement of legal proceedings by Indemnitee as
contemplated in Section 2(c), shall be a defense to Indemnitee's claim or create
a presumption that Indemnitee has not met any particular standard of conduct or
did not have any particular belief.
8. Nonexclusivity, Etc. The rights of the Indemnitees hereunder
--------------------
shall be in addition to any other rights Indemnitees may have under the
Company's Restated Articles of Incorporation, Bylaws, the applicable corporate
law, or otherwise. To the extent that a change in the applicable corporate law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Restated Articles
of Incorporation, Bylaws and this Agreement, it is the intent of the parties
hereto that Indemnitees shall enjoy by this Agreement the greater benefits so
afforded by such change.
9. Liability Insurance. To the extent the Company maintains an
-------------------
insurance policy or policies providing directors' and officers' liability
insurance, Indemnitees shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
10. Period of Limitations. No legal action shall be brought and no
---------------------
claim or cause of action shall be asserted by or in the right of the Company
against any of the Indemnitees, Indemnitees' spouses, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such claim or cause of action. Any claim or cause of action
of the Company shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two-year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
claim or cause of action, such shorter period shall govern.
11. Amendments, Etc. Any amendment to this Agreement necessitated
---------------
by the election of a person who is not a party to this Agreement to the position
of director and/or officer of the Company need only by executed by the Company
and such person as an Indemnitee; provided, however, that no other supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of any of the Indemnitees. Indemnitees shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable
--------------------------
under this Agreement to make any payment in connection with any Claim made
against any of the Indemnitees to the extent any of the Indemnitees has
otherwise actually received payment (under any insurance policy, Bylaw or
otherwise) of the amounts otherwise indemnifiable hereunder.
14. Binding Effect, Etc. This Agreement shall be binding upon and
--------------------
inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company), assigns, spouses, heirs, executors and personal
and legal representatives. This Agreement shall continue in effect regardless
of whether Indemnitees continue to serve as officers and directors of the
Company or of any other enterprise at the Company's request.
15. Severability. The provisions of this Agreement shall be
------------
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect. The validity and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
and shall remain enforceable to the fullest extent permitted by laws.
16. Counterparts. This Agreement may be executed in any number of
------------
identical counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument when each
party has signed one such counterpart.
17. Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of Michigan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
AASTROM BIOSCIENCES, INC.
By:________________________________
R. Douglas Armstrong, Ph.D.,
President
The following officers and directors are covered by this Agreement as
Indemnitees:
______________________________ ______________________________
Name: Name:
Title: Title:
______________________________ ______________________________
Name: Name:
Title: Title:
______________________________ ______________________________
Name: Name:
Title: Title:
EXHIBIT 10.2
ANN ARBOR STROMAL, INC.
1989 STOCK OPTION PLAN
Adopted August 15, 1989
1. PURPOSE.
(a) The purpose of the Plan is to provide a means which selected
key employees and directors (if declared eligible under paragraph 4) of and
consultants to Ann Arbor Stromal, Inc., a Michigan corporation (the "Company"),
and its Affiliates, as defined in subparagraph 1(b), may be given an opportunity
to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 425(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now employed by or serving as consultants or directors to
the Company, to secure and retain the services of new employees/persons capable
of filling such positions, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan
shall, in the discretion of the Board of Directors of the Company (the "Board")
or any committee to which responsibility for administration of the Plan has been
delegated
1.
pursuant to subparagraph 2(c), be either incentive stock options as that term is
used in Section 422A of the Code ("Incentive Stock Options"), or options which
do not qualify as incentive stock options ("Supplemental Stock Options"). All
options shall be separately designated Incentive Stock Options or Supplemental
Stock Options at the time of grant, and in such form as issued pursuant to
paragraph 5, and a separate certificate or certificates shall be issued for
shares purchased on exercise of each type of option. An option designated as a
Supplemental Stock Option shall not be treated as an incentive stock option.
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Board unless and until
the Board delegates administration to a committee, as provided in subparagraph
2(c). Whether or not the Board has delegated administration, the Board shall
have the final power to determine all questions of policy and expediency that
may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted options; when and how the option shall
be granted; whether the option will be an Incentive Stock Option or a
Supplemental Stock Option; the provisions of each option granted (which need not
be identical), including the time or times during the term of each option within
which all or portions of such option may be exercised; and the
2.
number of shares for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members (the "Committee"), all of
the members of which Committee shall be disinterested persons, if required and
as defined by the provisions of subparagraph 2(d). If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan. Additionally, prior to the date of the first
3.
registration of an equity security of the Company under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
notwithstanding anything to the contrary contained herein, the Board may
delegate administration of the Plan to any person or persons and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated.
(d) The term "disinterested person," as used in this Plan, shall
mean an administrator of the Plan, whether a member of the Board or of any
Committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c): (i) who is not at the time he or she
exercises discretion in administering the Plan eligible and has not at any time
within one year prior thereto been eligible for selection as a person to whom
stock may be allocated or to whom stock options or stock appreciation rights may
be granted pursuant to the Plan or any other plan of the Company or any of its
affiliates entitling the participants therein to acquire stock, stock options or
stock appreciation rights of the Company or any of its affiliates; or (ii) who
is otherwise considered to be a "disinterested person" in accordance with the
rules, regulations or interpretations of the Securities and Exchange Commission.
Any such person shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
4.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that such
requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate one million
three hundred sixty-three thousand six hundred thirty-six (1,363,636) shares of
the Company's common stock. If any option granted under the Plan shall for any
reason expire or otherwise terminate without having been exercised in full, the
stock not purchased under such option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an eligible
person under the Plan only if the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which incentive stock
options (as defined in the Code) granted after 1986 are exercisable for the
first time by such optionee during any calendar year under all incentive stock
option plans of the Company and its Affiliates does not exceed one hundred
thousand dollars ($100,000). Should it be determined
5.
that an option granted under the Plan exceeds such maximum for any reason other
than the failure of a good faith attempt to value the stock subject to the
option, such option shall be considered a Supplemental Stock Option to the
extent, but only to the extent, of such excess; provided, however, that should
it be determined that an entire option or any portion thereof does not qualify
for treatment as an incentive stock option by reason of exceeding such maximum,
such option or the applicable portion shall be considered a Supplemental Stock
Option.
4. ELIGIBILITY.
-----------
(a) Incentive Stock Options may be granted only to employees
(including officers) of the Company or its Affiliates. A director of the Company
shall not be eligible to receive Incentive Stock Options unless such director is
also an employee (including an officer) of the Company or any Affiliate.
Supplemental Stock Options may be granted only to key employees (including
officers) of, directors of or consultants to the Company or its Affiliates. A
director of the Company shall not be eligible for a Supplemental Stock Option
unless such director is also a key employee (including an officer) of or
consultant to the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits of
the Plan unless and until such director is expressly declared eligible to
participate in the Plan by action of the Board or the Committee, and only if, at
any time discretion is exercised by the Board in the selection of a director as
a person
6.
to whom options may be granted, or in the determination of the number of shares
which may be covered by options granted to a director: (i) a majority of the
Board and a majority of the directors acting in such matter are disinterested
persons, as defined in subparagraph 2(d); (ii) the Committee consists solely of
"disinterested persons" as defined in subparagraph 2(d); or (iii) the Plan
otherwise complies with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect. The Board shall otherwise comply
with the requirements of Rule 16b-3 promulgated under the Exchange Act, as from
time to time in effect. This subparagraph 4(b) shall not apply prior to the date
of the first registration of an equity security of the Company under Section 12
of the Exchange Act.
(c) No person shall be eligible for the grant of an option under
the Plan if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 425(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates unless the exercise price of such option is at least
one hundred ten percent (110%) of the fair market value of such stock at the
date of grant and the term of the option does not exceed five (5) years from the
date of grant.
5. OPTION PROVISIONS.
-----------------
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be
7.
identical, but each option shall include (through incorporation of provisions
hereof by reference in the option or otherwise) the substance of each of the
following provisions:
(a) The term of any option shall not be greater than twelve (12)
years from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the fair market value of the stock
subject to the option on the date the option is granted. The exercise price of
each Supplemental Stock Option shall be not less than eighty-five percent (85%)
of the fair market value of the stock subject to the option on the date the
option is granted.
(c) The purchase price of stock acquired pursuant to an option
shall be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the time of the grant or
exercise of the option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the option is granted or to
whom the option is transferred pursuant to subparagraph 5(d), or (C) in any
other form of legal consideration that may be acceptable to the Board or the
Committee.
8.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) An option shall not be transferable except by will or by the
laws of descent and distribution, and shall be exercisable during the lifetime
of the person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods, the
option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the option
was not fully exercised. During the remainder of the term of the option (if its
term extends beyond the end of the installment periods), the option may be
exercised from time to time with respect to any shares then remaining subject to
the option. The provisions of this subparagraph 5(e) are subject to any option
provisions governing the minimum number of shares as to which an option may be
exercised.
9.
(f) The Company may require any optionee, or any person to whom
an option is transferred under subparagraph 5(d), as a condition of exercising
any such option, (1) to give written assurances satisfactory to the Company as
to the optionee's knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters,
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the option; and
(2) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then currently effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
(g) An option shall terminate three (3) months after termination
of the optionee's employment or relationship as a consultant or director with
the Company or an Affiliate, unless (i) such termination is due to such person's
permanent and total
10.
disability, within the meaning of Section 422A(c)(7) of the Code, in which case
the option may, but need not, provide that it may be exercised at any time
within one (1) year following such termination of employment or relationship as
a consultant or director; or (ii) the optionee dies while in the employ of or
while serving as a consultant or director to the Company or an Affiliate, or
within not more than three (3) months after termination of such relationship, in
which case the option may, but need not, provide that it may be exercised at any
time within eighteen (18) months following the death of the optionee by the
person or persons to whom the optionee's rights under such option pass by will
or by the laws of descent and distribution; or (iii) the option by its terms
specifies either (a) that it shall terminate sooner than three (3) months after
termination of the optionee's employment or relationship as a consultant or
director, or (b) that it may be exercised more than three (3) months after
termination of the relationship with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any option or to
permit anyone to exercise the option after expiration of its term, nor shall it
be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment or relationship as a consultant or director.
(h) The option may, but need not, include a provision whereby
the optionee may elect at any time during the term of his
11.
or her employment or relationship as a consultant or director with the Company
or any Affiliate to exercise the option as to any part or all of the shares
subject to the option prior to the stated vesting date of the option or of any
installment or installments specified in the option. Any shares so purchased
from any unvested installment or option may be subject to a repurchase right in
favor of the Company or to any other restriction the Board or the Committee
determines to be appropriate.
(i) To the extent provided by the terms of an option, the
optionee may satisfy any federal, state or local tax withholding obligation
relating to the exercise of such option by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold from the shares of the common stock otherwise issuable to
the participant as a result of the exercise of the stock option a number of
shares having a fair market value less than or equal to the amount of the
withholding tax obligation; or (3) delivering to the Company owned and
unencumbered shares of the common stock having a fair market value less than or
equal to the amount of the withholding tax obligation.
6. COVENANTS OF THE COMPANY.
------------------------
(a) During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of stock required
to satisfy such options.
12.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option granted
under the Plan or any stock issued or issuable pursuant to any such option. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such options unless and until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
--------------------------
Proceeds from the sale of stock pursuant to options granted under
the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
-------------
(a) The Board or the Committee shall have the power to
accelerate the time during which an option may be exercised or the time during
which an option or any part thereof will vest pursuant to subparagraph 5(e),
notwithstanding the provisions in the option stating the time during which it
may be exercised or the time during which it will vest.
13.
(b) Neither an optionee nor any person to whom an option is
transferred under subparagraph 5(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for exercise
of the option pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the
Plan, the Company shall make available to the holder of such option, not later
than one hundred twenty (120) days after the close of each of the Company's
fiscal years during the option term, upon request, such financial and other
information regarding the Company as comprises the annual report to the
shareholders of the Company provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option
granted pursuant thereto shall confer upon any eligible employee or optionee any
right to continue in the employ of the Company or any Affiliate (or to continue
acting as a consultant or director) or shall affect the right of the Company or
any Affiliate to terminate the employment or consulting relationship or
directorship of any eligible employee or optionee with or without cause. In the
event that an optionee is permitted or otherwise entitled to take a leave of
absence, the Company shall have the unilateral right to (i) determine whether
such leave of absence will be treated as a termination of employment for
purposes of paragraph 5(g) hereof and corresponding provisions of
14.
any outstanding options, and (ii) suspend or otherwise delay the time or times
at which the shares subject to the option would otherwise vest.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; or (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise then to the
extent permitted by applicable law: (i) any surviving corporation shall assume
any options outstanding under the Plan or shall substitute similar options for
those outstanding under the Plan, or (ii) such options shall continue in full
force and effect. In the event any surviving corporation
15.
refuses to assume or continue such options, or to substitute similar options for
those outstanding under the Plan, then, with respect to options held by persons
then performing services as employees or as consultants or directors for the
Company as the case may be, the time during which such options may be exercised
shall be accelerated and the options terminated if not exercised prior to such
event.
10. AMENDMENT OF THE PLAN.
---------------------
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in paragraph 9 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for options
under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires shareholder
approval in order for the Plan to satisfy the requirements of Section 422A(b) of
the Code); or
(iii) Modify the Plan in any other way if such
modification requires shareholder approval in order for the Plan to satisfy the
requirements of Section 422A(b) of the Code or to comply with the requirements
of Rule 16b-3 promulgated under the Exchange Act.
16.
(b) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide optionees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to employee incentive
stock options and/or to bring the Plan and/or incentive stock options granted
under it into compliance therewith.
(c) Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the
option was granted and (ii) such person consents in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN.
-------------------------------------
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate ten (10) years from the date
the Plan is adopted by the Board or approved by the shareholders of the Company,
whichever is earlier. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while the
Plan is in effect shall not be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the option was
granted.
12. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective as determined by the Board, but no
options granted under the Plan shall be exercised
17.
unless and until the Plan has been approved by the shareholders of the Company.
18.
INCENTIVE STOCK OPTION AGREEMENT
OPTIONEE:
AASTROM Biosciences, Inc., formerly known as Ann Arbor Stromal, Inc.,
(the "Company"), pursuant to its 1989 Stock Option Plan (the "Plan"), hereby
grants to you, the Optionee named above, an option to purchase shares of the
common stock of the Company ("Common Stock"). This option is intended to
qualify as an "incentive stock option" within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"). The
date of grant of this option is ____________.
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option
is ___________. Subject to the limitations contained herein, this
option shall be exercisable with respect to each installment shown
below on or after the date of vesting applicable to such
installment, as follows:
Number of Shares Date of Earliest Exercise
---------------- -------------------------
(Installment) (Vesting)
provided, however, you will be entitled to exercise this option with respect to
all of the shares of Common Stock subject to this
-1-
Incentive Stock Option Agreement
Page 2
option is your employment by the Company is terminated upon or at any time
within six (6) months after the date of a "change of control" of the
Company (as defined below), unless such termination is for cause (as
defined below). For purposes of this Agreement, a "change of control" shall
be deemed to have occurred if in a single transaction or a series of
related transactions occurring within a twelve month period: all or
substantially all of the business or assets of the Company is sold,
transferred or leased; the Company is merged into or consolidated with
another entity and, as a result, the shareholders of the Company
immediately prior to the merger own less than 51% of the voting capital
stock of the successor corporation; there is a change of control of 51% or
more of the outstanding capital stock of the Company on a fully diluted
basis; or a new shareholder acquires the right to elect a majority of the
board of directors. The date of such "change of control" for purposes of
this Agreement shall be the date of the closing of the transaction which is
deemed to constitute a change of control under the foregoing sentence, or
if a series of related transactions is deemed to constitute a change of
control, the date of the closing of the last transaction in the series. For
purposes of this Agreement, "cause" shall include disclosure of any
proprietary information of the Company or of any third party in violation
of the Proprietary Information and Invention Agreement between you and the
Company; any commission of a felony; willful misconduct; or any commission
of any act or series of acts of dishonesty which are injurious to the best
interests of the Company.
2. a. The exercise price of this option is ________ per share, being not less
than the fair market value of the Common Stock on the date of grant of
this option.
b. Payment of the exercise price per share is due in full in cash
(including check) upon exercise of the option with respect to all or
any part of each installment which has become exercisable by you.
Notwithstanding the foregoing, this option may be exercised pursuant to
a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or
-2-
Incentive Stock Option Agreement
Page 3
check) by the Company prior to the issuance of
Common Stock.
3. The minimum number of shares with respect to which this option may be
exercised at any one time is one hundred (100) except (a) as to an
installment subject to exercise, as set forth in paragraph 1, which
amounts to fewer than one hundred (100) shares, in which case, as to
the exercise of that installment, the number of shares in such
installment shall be the minimum number of shares, and (b) with respect
to the final exercise of this option this paragraph 3 shall not apply.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or if such shares are not then
so registered, the Company has determined that such exercise and
issuance is exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless sooner
terminated as set forth below or in the Plan, terminates ten (10) years
from the date this option is granted. This option shall terminate prior
to the expiration of its term as follows: this option shall terminate
three (3) months after the termination of your employment with the
Company or an affiliate of the Company (as defined in the Plan) for any
reason or for no reason (including without limitation a termination in
connection with a "change of control" of the Company, as defined in
paragraph 1 hereof) unless:
a. such termination of your employment is due to your permanent and
total disability (within the meaning of Section 422A(c)(7) of the
Code), in which event the option shall terminate on the earlier of
the termination date set forth above or one (1) year following such
termination of employment; or
b. such termination of employment is due to your death, in which event
the option shall terminate on the earlier of the termination date
set forth above or eighteen (18) months after your death; or
c. during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph
4 above, in which
-3-
Incentive Stock Option Agreement
Page 4
event the option shall not terminate until the earlier of the
termination date set forth above or until it shall have been
exercisable for an aggregate period of three (3) months after
termination of employment; or
d. exercise of the option within three (3) months after termination of
your employment with the Company or with an affiliate would result
in liability under section 16(b) of the Securities Exchange Act of
1934, in which case the option will terminate on the earlier of (i)
the termination date set forth above, (ii) the tenth (10th) day
after the last date upon which exercise would result in such
liability or (iii) six (6) months and ten (10) days after the
termination of your employment with the Company or an affiliate.
However, this option may be exercised following termination of
employment only as to that number of shares as to which it was
exercisable under the provisions of paragraph 1 of this option on
the date of termination of employment.
6. a. This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate,
during regular business hours, together with such additional
documents as the Company may then require pursuant to subparagraph
5(f) of the Plan.
b. By exercising this option you agree that:
(i) The Company may require you to enter an arrangement providing
for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the
exercise of this option; (2) the lapse of any substantial risk
of forfeiture to which the shares are subject at the time of
exercise; or (3) the disposition of shares acquired upon such
exercise;
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any
-4-
Incentive Stock Option Agreement
Page 5
disposition of any of the shares of the Common Stock issued upon
exercise of this option that occurs within two (2) years after
the date of grant of the option hereunder or within one (1) year
after such shares of Common Stock are transferred upon exercise
of this option; and
(iii) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the
offering of any securities of the Company under the Act, require
that you do not sell or otherwise transfer or dispose of any
shares of Common Stock or other securities of the Company during
such period (not to exceed one hundred fifty (150) days)
following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may
be requested by the Company or the representative of the
underwriters; provided, however, that such restriction shall
apply only if, on the Effective Date, you are an officer,
director, or owner of more than one percent (1%) of the
outstanding securities of the Company. For purposes of this
restriction, you will be deemed to own securities which (i) are
owned directly or indirectly by you, including securities held
for your benefit by nominees, custodians, brokers or pledgees;
(ii) may be acquired by you within sixty (60) days of the
Effective Date; (iii) are owned directly or indirectly, by or for
your brothers or sisters (whether by whole or half blood),
spouse, ancestors and lineal descendants; or (iv) are owned,
directly or indirectly, by or for a corporation, partnership,
estate or trust of which you are a shareholder, partner or
beneficiary but only to the extent of your proportionate interest
therein as a shareholder, partner or beneficiary thereof. You
further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing
restrictions until the end of such period.
-5-
Incentive Stock Option Agreement
Page 6
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by
you.
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your
part to continue in the employ of the Company, or of the Company to
continue your employment with the Company.
9. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you
at the address specified below or at such other address as you
hereafter designate by written notice to the Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of
this option, including without limitation the provisions of paragraph
5 of the Plan relating to option provisions, and is further subject to
all interpretations, amendments, rules and regulations which may from
time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those
of the Plan, the provisions of the Plan shall control; provided,
however, that you shall be entitled to receive stock options on
additional shares of the Corporation's common stock to protect you
against dilution of your share holding to the full extent provided by
your Employment Agreement with the Company.
Dated as of the ____ day of ___________, 19__.
Very truly yours,
AASTROM BIOSCIENCES, INC.
By:
--------------------------------------
Duly authorized on behalf of
the Board of Directors.
-6-
Incentive Stock Option Agreement
Page 7
The undersigned:
a. Acknowledges receipt of the foregoing and the attachments
referenced therein and understands that all rights and
liabilities with respect to this option are set forth in the
option and the Plan; and
b. Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee
and the Company and its affiliates regarding the acquistion of
stock in the Company and supersedes all prior oral and written
agreements on that subject.
-------------------------
OPTIONEE
Address:
Attachment:
1989 Stock Option Plan
Stock Transfer Restriction and Buy-Out Agreement
-7-
EXHIBIT 10.3
ANCILLARY STOCK OPTION PLAN
THIS ANCILLARY STOCK OPTION PLAN (the "Ancillary Plan") is made as of
August 6, 1991, by Aastrom Biosciences, Inc. (the "Company"), with respect to
the facts set forth below.
RECITALS
A. On August 15, 1989, the Company formally approved the 1989 Stock
Option Plan (the "1989 Plan"), pursuant to which the Board of Directors of the
Company (the "Board") is authorized to grant tax qualified "incentive stock
options" to employees of the Company or its affiliates and tax nonqualified
"supplemental stock options" to employees, officers, employed directors and
consultants of the Company or its affiliates.
B. In order to advance the growth and prosperity of the Company, the
Board believes that it is in the best interests of the Company to also grant
stock options on certain occasions to certain parties and persons selected by
the Board who are not otherwise eligible to receive stock options under the
terms of the 1989 Plan.
AGREEMENT
NOW, THEREFORE, Company hereby authorizes and establishes this
Ancillary Plan, pursuant to the terms and conditions set forth below.
1. Purpose. The purpose of the Ancillary Plan is to advance the
growth and prosperity of the Company and its shareholders by providing
incentives to certain parties and persons selected by the Board who are not
otherwise eligible to receive stock options under the 1989 Plan. The stock
options granted pursuant to this Ancillary Plan shall be treated as
"nonqualified tax options" under the U.S. Internal Revenue Code.
2. Term. The term of this Ancillary Plan shall commence on the
date set forth above and shall terminate upon resolution by the Board.
3. Shares of Stock Subject to this Ancillary Plan. The shares of
Common Stock which may be issued pursuant to the Ancillary Plan upon exercise of
stock options shall not exceed in the aggregate Fifty Thousand (50,000) shares
of the Company's Common Stock, unless otherwise approved by the Board by vote of
not less than two thirds (2/3) of the Board. Such shares of Common Stock shall
be authorized and unissued shares. The shares allocated to this Ancillary Plan
and the stock options granted pursuant to this Ancillary Plan are in addition
to, and not part of, the shares allocated to and granted pursuant to the 1989
Plan.
4. Administration of the Plan. The Board shall administer the
Ancillary Plan, select the persons to whom stock options shall be granted,
determine the number of shares of Common Stock to be optioned and awarded,
determine the purchase price per share of Common Stock deliverable upon the
exercise of a stock option, determine the method of payment upon the exercise of
an option, and interpret, construe and implement the provisions of this
Ancillary Plan. An option may be exercisable at any time from time to time,
subject to such timing, performance criteria, conditions and restrictions as
determined by the Board on a case by case basis for each option as set forth in
the Stock Option Agreements.
5. Stock Option Agreements. The granting of stock options shall be
evidenced by a Stock Option Agreement, containing such terms and conditions as
the Board of Directors shall deem appropriate. The provisions of the Stock
Option Agreements granted pursuant to this Ancillary Plan need not be identical,
may be similar to or different from the form of Stock Option Agreements granted
under the 1989 Plan, and may be customized as determined by the Board on a case
by case basis.
6. Amendment of this Ancillary Plan. This Ancillary Plan may, at
any time or from time to time, be terminated, modified or amended by the Board.
7. Approval. Approved by the Board on August 6, 1991.
/s/ R. DOUGLAS ARMSTRONG
--------------------------
R. Douglas Armstrong, Ph.D
President/CEO
ANCILLARY STOCK OPTION AGREEMENT
Optionee:
AASTROM Biosciences, Inc., formerly known as Ann Arbor Stromal, Inc., (the
"Company"), pursuant to its Ancillary Stock Option Plan dated August 6, 1991
(the "Plan"), has granted to you, the Optionee named above, an option to
purchase shares of the common stock of the Company ("Common Stock"). This
option is not intended to qualify and will not be treated as an "incentive stock
option" within the meaning of Section 422A of the Internal Revenue code of 1986,
as amended from time to time (the "Code"). The date of grant of this option is
as of _________________, ____.
The grant hereunder is a matter of separate inducement and agreement in
connection with your services to the Company and not in lieu of any other
compensation for services, and is intended to comply with the provisions of Rule
701 promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act"), and applicable state law exemptions from
registration.
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_____________________. Subject to the limitations contained herein,
including without limitation Section 5 hereof, this option shall be
exercisable with respect to each installment shown below on or after
the date of vesting applicable to such installment, as follows:
Number of Shares Date of Earliest Exercise
---------------- ------------------------
(Installment) (Vesting)
Ancillary Stock Option Agreement
Page 2
2. a. The exercise price of this option is ___________ per share, being
not less than the fair market value of the Common Stock on the
date of grant of this option.
b. Payment of the exercise price per share is due in full in cash
(including check) upon exercise of all or any part of each
installment which has become exercisable by you. Notwithstanding
the foregoing, this option may be exercised pursuant to a program
developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by
the Company prior to the issuance of Common Stock.
3. The minimum number of shares with respect to which this option may be
exercised at any one time is one hundred (100) except (a) as to an
installment subject to exercise, as set forth in paragraph 1, which
amounts to fewer than one hundred (100) shares, in which case, as to
the exercise of that installment, the number of shares in such
installment shall be the minimum number of shares, and (b) with
respect to the final exercise of this option this paragraph 3 shall
not apply.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or if such shares are not
then so registered, the exercise and issuance of such shares would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below, terminates twelve (12) years
from the date this option is granted. This option shall terminate
prior to the expiration of its term as follows: this option shall
terminate three (3) months after the termination of your participation
in the University of Michigan ex vivo bone marrow project more fully
described in that certain Option Agreement dated March 24, 1989,
between the Company, the University of Michigan and H&Q Life Science
Technology Fund 1 (hereinafter such participation in the ex vivo bone
marrow project
Ancillary Stock Option Agreement
Page 3
shall be referred to as "Employment") for any
reason or for no reason unless:
a. such termination of your Employment is due to
your permanent and total disability (within
the meaning of Section 422A(c)(7) of the
Code), in which event the option shall
terminate on the earlier of the termination
date set forth above or one (1) year
following such termination of Employment; or
b. such termination of Employment is due to your
death, in which event the option shall
terminate on the earlier of the termination
date set forth above or eighteen (18) months
after your death; or
c. during any part of such three (3) month
period the option is not exercisable solely
because of the condition set forth in
paragraph 4 above, in which event the option
shall not terminate until the earlier of the
termination date set forth above or until it
shall have been exercisable for an aggregate
period of three (3) months after the
termination of Employment; or
d. exercise of the option within three (3)
months after termination of your Employment
would result in liability under section 16
(b) of the Securities Exchange Act of 1934,
in which case the option will terminate on
the earlier of (i) the tenth (10th) day after
the last date upon which exercise would
result in such liability or (ii) six (6)
months and ten (10) days after the
termination of your Employment; or
e. such termination of your Employment is a
temporary leave of absence occasioned by your
resuming studies at the University of
Michigan toward a doctorate degree, in which
event vesting of installments of this option
as set forth in Section 1 scheduled for any
date after the date on which the leave of
absence commenced (the "Leave Date") will be
suspended, and the vesting schedule set forth
in Section 1 shall be deemed to have been
amended as follows. Should you Employment
Ancillary Stock Option Agreement
Page 4
resume at any time during the two (2) year
period after the Leave Date, vesting of
installments of this option will resume, with
the first suspended installment vesting on
the date that your Employment resumes, the
second suspended installment vesting 3 months
thereafter, and so on, so that each
succeeding suspended installment vests 3
months after the date on which the previous
suspended installment vested. If your
Employment does not resume during the two (2)
year period after the Leave Date, this option
will be deemed to have terminated on the
Leave Date, and only those shares that vested
on or prior to the Leave Date will be
exercisable.
f. The termination of this option pursuant to
this Section 5 shall apply only to those
shares not yet vested according to the
schedule contained in Section 1 herein, and
any provision herein or in the Plan
notwithstanding, shall not apply to such
vested shares. Any shares that have vested
hereunder shall remain exercisable for the
twelve (12) year period specified in this
Section 5.
However, this option may be exercised
following termination of Employment only as
to that number of shares as to which it was
exercisable under the provisions of paragraph
1 of this option on the date of termination
of Employment.
6. a. This option may be exercised, to the extent
specified above, by delivering a notice to
exercise (in a form designated by the
Company) together with the exercise price to
the Secretary of the Company, or to such
other person as the Company may designate,
during regular business hours, together with
such additional documents as the Company may
then require pursuant to subparagraph 5(f) of
the Plan.
Ancillary Stock Option Agreement
Page 5
b. By exercising this option you agree that:
(i) the Company may require you to enter an arrangement providing
for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of
(1) the exercise of this option; (2) the lapse of any
substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of
shares acquired upon such exercise;
(ii) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the
offering of any securities of the Company under the Act,
require that you not sell or otherwise transfer or dispose of
any shares of Common Stock or other securities of the Company
during such period (not to exceed one hundred fifty (150)
days) following the effective date (the "Effective Date") of
the registration statement of the Company filed under the Act
as may be requested by the Company or the representative of
the underwriters; provided, however, that such restriction
shall apply only if, on the Effective Date, you are an
officer, director, or owner of more than one percent (1%) of
the outstanding securities of the Company. For purposes of
this restriction, you will be deemed to own securities which
(i) are owned directly or indirectly by you, including
securities held for your benefit by nominees, custodians,
brokers or pledgees; (ii) may be acquired by you within sixty
(60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for your brothers or sisters (whether by
whole or half blood), spouse, ancestors and lineal
descendants; or (iv) are owned, directly or indirectly, by or
for a corporation, partnership, estate or trust of which you
are a shareholder, partner or
Ancillary Stock Option Agreement
Page 6
beneficiary, but only to the extent of your proportionate
interest therein as a shareholder, partner or beneficiary
thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to
the foregoing restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by
you.
8. Upon exercise of the option in whole or in part, you will be required
to execute a Stock Transfer Restriction and Buy-Out Agreement
substantially in the form attached hereto, which sets forth
restrictions on transfer of the Stock and gives the Company the right
to purchase the Stock under certain circumstances.
9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your
part to continue Employment, or of the Company to employ you.
10. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at
the address specified below or at such other address as you hereafter
designate by written notice to the Company.
11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of
this option, including without limitation the provisions of paragraph 5
of the Plan relating to stock option agreements, and is further subject
to all interpretations, amendments, rules and regulations which may
from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of this option and
those of the Plan, the provisions of the Plan shall control.
Ancillary Stock Option Agreement
Page 7
Dated as of the ____ day of _______________________, 19__.
Very truly yours,
AASTROM BIOSCIENCES, INC.
By:
--------------------------------------
R. Douglas Armstrong, Ph.D.
President/CEO
Duly authorized on behalf of the
Board of Directors
The undersigned:
a. Acknowledges receipt of this Agreement and the attachments referenced
therein and understands that all rights and liabilities with respect
to this option are set forth in this Agreement and the Plan; and
b. Acknowledges that as of the date of grant of this option, this
Agreement sets forth the entire understanding between the undersigned
optionee and the Company its affiliates regarding the acquisition of
stock in the Company and supersedes all prior oral and written
agreements on that subject.
-----------------------------------------
OPTIONEE
Address:
---------------------------------
Attachments:
Ancillary Stock Option Plan dated August 6, 1991
Stock Transfer Restriction and Buy-Out Agreement
EXHIBIT 10.4
--------------------
MERRILL LYNCH
----------
SPECIAL
----------
PROTOTYPE DEFINED
CONTRIBUTION PLAN
--------------------
401(k) PLAN
EMPLOYEE THRIFT PLAN
PROFIT-SHARING PLAN
ADOPTION AGREEMENT
THIS PROTOTYPE PLAN AND ADOPTION AGREEMENT ARE IMPORTANT LEGAL INSTRUMENTS WITH
LEGAL AND TAX IMPLICATIONS FOR WHICH THE SPONSOR, MERRILL LYNCH, PIERCE, FENNER
& SMITH, INCORPORATED DOES NOT ASSUME RESPONSIBILITY. THE EMPLOYER IS URGED TO
CONSULT WITH ITS OWN ATTORNEY WITH REGARD TO THE ADOPTION OF THIS PLAN AND ITS
SUITABILITY TO ITS CIRCUMSTANCES.
ADOPTION OF PLAN
- ----------------
The Employer named below hereby establishes or restates a profit-sharing
plan that includes a [X] 401(k), [_] profit-sharing and/or [_] thrift plan
feature (the "Plan") by adopting the Merrill Lynch Special Prototype Defined
Contribution Plan and Trust as modified by the terms and provisions of this
Adoption Agreement.
EMPLOYER AND PLAN INFORMATION
- -----------------------------
Employer Name:* Aastrom Biosciences. Inc.
-----------------------------
Business Address: P.O. Box 376
-----------------------------
Ann Arbor. MI 48106
-----------------------------
Telephone Number: (313) 930-5555
-----------------------------
Employer Taxpayer I.D. Number: 94-3096597
-----------------
Employer Taxable Year ends on: June 30th
-----------------
Plan Name: Aastrom Biosciences, Inc. 401(k) Plan
-------------------------------------
Plan Number: 001
---
401(k) PROFIT- THRIFT
SHARING
Effective Date of Adoption: 01/01/94
-------- ------- -------
Tax Reform Act of 1986
Restatement Date:
-------- ------- -------
Original Effective Date:
-------- ------- -------
IF THIS PLAN IS A CONTINUATION OR AN AMENDMENT OF A PRIOR PLAN, ALL OPTIONAL
FORMS OF BENEFITS PROVIDED IN THE PRIOR PLAN MUST BE PROVIDED UNDER THIS PLAN TO
ANY PARTICIPANT WHO HAD AN ACCOUNT BALANCE, WHETHER OR NOT VESTED, IN THE PRIOR
PLAN.
- -----------------
* If there are any Participating Affiliates in this Plan, list below the
proper name of each Participating Affiliate.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-2-
ARTICLE I. DEFINITIONS
-----------
A. "COMPENSATION"
-------------
(1) With respect to each Participant except as provided below, Compensation
shall mean the (select all those applicable for each column):
401(k) AND/ PROFIT
OR THRIFT SHARING
[X] [_] (a) amount reported in the "Wages Tips and Other
Compensation" Box on Form W-2 for the applicable period
selected in Item 5 below.
[_] [_] (b) compensation for Code Section 415 safe-harbor purposes
(as defined in section 3.9.1(H)(i) of basic plan
document #03) for the applicable period selected in Item
5 below.
[_] [_] (c) amount reported pursuant to Code Section 3401 (a) for the
applicable period selected in Item 5 below.
[_] [_] (d) all amounts received (under either option (a) or (b)
above) for personal services rendered to the Employer but
excluding (select one):
[_] overtime
[_] bonuses
[_] commissions
[_] amounts in excess of $
----------------------
[_] other (specify)
-----------------------------------.
(2) Treatment of Elective Contributions (select one):
[X] (a) For purposes of contributions, Compensation shall include
Elective Deferrals and amounts excludable from the gross
income of the Employee under Code Section 125, Code Section
402(e)(3), Code Section 402(h) or Code Section 403(b)
("elective contributions").
[_] (b) For purposes of contributions, Compensation shall not include
"elective contributions."
(3) CODA Compensation (select one):
[X] (a) For purposes of the ADP and ACP Tests, Compensation shall
include "elective contributions."
[_] (b) For purposes of the ADP and ACP Tests, Compensation shall not
include "elective contributions."
3
(4) With respect to Contributions to an Employer Contributions Account,
Compensation shall include all Compensation (select one):
[_] (a) during tile Plan Year in which the Participant enters the
Plan.
[X] (b) after the Participant's Entry Date.
(5) The applicable period for determining Compensation shall be (select
one):
[X] (a) the Plan Year.
[_] (b) the Limitation Year.
[_] (c) the consecutive 12-month period ending on _________________.
B. "DISABILITY"
------------
(1) Definition
----------
Disability shall mean a condition which results in the Participant's
(select one):
[_] (a) inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months.
[_] (b) total and permanent inability to meet the requirements of the
Participant's customary employment which can be expected to last
for a continuous period of not less than 12 months.
[_] (c) qualification for Social Security disability benefits.
[X] (d) qualification for benefits under the Employer's long-term
disability plan.
(2) Contributions Due to Disability (select one):
-------------------------------
[X] (a) No contributions to an Employer Contributions Account will be made
on behalf of a Participant due to his or her Disability.
[_] (b) Contributions to an Employer Contributions Account will be made on
behalf of a Participant due to his or her Disability provided that
-------------
the Employer elected option (a) or (c) above as the definition of
Disability, contributions are not made on behalf of a Highly
Compensated Employee, the contribution is based on the Compensation
each such Participant would have received for the Limitation Year
if the Participant had been paid at the rate of Compensation paid
immediately before his or her Disability, and contributions made on
behalf of such Participant will be nonforfeitable when made.
4
C "EARLY RETIREMENT" is (select one):
--------------------
[_] (1) not permitted.
[X] (2) permitted if a Participant terminates Employment before Normal
Retirement Age and has (select one):
[_] (a) attained age .
-----
[X] (b) attained age 55 and completed 10 Years of Service.
-- --
[_] (c) attained age and completed Years of Service
----- -----
as a Participant.
D. "ELIGIBLE EMPLOYEES" (select one):
-------------------
[X] (1) All Employees are eligible to participate in the Plan.
[_] (2) The following Employees are not eligible to participate in the
Plan (select all those applicable):
[_] (a) Employees included in a unit of Employees covered by a
collective bargaining agreement between the Employer or a
Participating Affiliate and the Employee representatives
(not including any organization more than half of whose
members are Employees who are owners, officers, or
executives of the Employer or Participating Affiliate) in
the negotiation of which retirement benefits were the
subject of good faith bargaining, unless the bargaining
agreement provides for participation in the Plan.
[_] (b) non-resident aliens who received no earned income from the
Employer or a Participating Affiliate which constitutes
income from sources within the United States.
[_] (c) Employees of an Affiliate.
[_] (d) Employees employed in or by the following specified
division, plant, location, job category or other
identifiable individual or group of Employees:
-----------------------------------------------------
-----------------------------------------------------
5
B. "ENTRY DATE"
------------
Entry Date shall mean (select as applicable):
401(k)
AND/OR PROFIT-
THRIFT SHARING
[_] [_] (1) If the initial Plan Year is less than twelve months, the
day of and thereafter:
------ -----
[_] [_] (2) the first day of the Plan Year following the date the
Employee meets the eligibility requirements. if the Employer
elects this option (2) establishing only one Entry Date, the
eligibility "age and service" requirements elected in Article
II must be no more than age 20-1/2 and 6 months of service.
[X] [_] (3) the first day of the month following the date the Employee
meets the eligibility requirements.
[_] [_] (4) the first day of the Plan Year and the first day of the
seventh month of the Plan Year following the date the
Employee meets the eligibility requirements.
[_] [_] (5) the first day of the Plan Year, the first day of the fourth
month of the Plan Year, the first day of the seventh month of
the Plan Year, and the first day of the tenth month of the
Plan Year following the date the Employee meets the
eligibility requirements.
[_] [_] (6) other:
------------------------------------------------------
-------------------------------------------------------------
provided that the Entry Date or Dates selected are no later
than any of the options above.
F. "HOURS OF SERVICE"
------------------
Hours of Service for the purpose of determining a Participant's Period of
Severance and Year of Service shall be determined on the basis of the method
specified below:
(1) Eligibility Service: For purposes of determining whether a Participant
-------------------
has satisfied the eligibility requirements, the following method shall
be used (select one):
401(k)
AND/OR PROFIT-
THRIFT SHARING
[X] [_] (a) elapsed time method
[_] [_] (b) hourly records method
6
(2) Vesting Service: A Participant's nonforfeitable interest shall be
----------------
determined on the basis of the method specified below (select one):
[_] (a) elapsed time method
[X] (b) hourly records method
[_] (c) if this item (c) is checked, the Plan only provides for
contributions that are always 100% vested and this item (2)
will not apply.
(3) Hourly Records: For the purpose of determining Hours of Service under
--------------
the hourly record method (select one):
[X] (a) only actual hours for which an Employee is paid or entitled to
payment shall be counted.
[_] (b) an Employee shall be credited with 45 Hours of Service if such
Employee would be credited with at least 1 Hour of Service
during the week.
G. "INTEGRATION LEVEL"
-------------------
[X] (1) This Plan is not integrated with Social Security.
[_] (2) This Plan is integrated with Social Security. The Integration
Level shall be (select one):
[_] (a) the Taxable Wage Base.
[_] (b) $ (a dollar amount less than the Taxable Wage Base).
------
[_] (c) % of the Taxable Wage Base (not to exceed 100%).
------
[_] (d) the greater of $10,000 or 20% of the Taxable Wage Base.
H. "LIMITATION COMPENSATION"
-------------------------
For purposes of Code Section 415, Limitation Compensation shall be
compensation as determined for purposes of (select one):
[_] (1) Code Section 415 Safe-Harbor as defined in Section
3.9.1(H)(i) of basic plan document #03.
[X] (2) the "Wages, Tips and Other Compensation" Box on Form W-2.
[_] (3) Code Section 3401(a) Federal Income Tax Withholding.
I. "LIMITATION YEAR"
-----------------
For purposes of Code Section 415, the Limitation Year shall be (select one):
[X] (1) the Plan Year.
[_] (2) the twelve consecutive month period ending on the day of the
----
month of .
------
7
J. "NET PROFITS" are (select one):
-------------
[X] (1) not necessary for any contribution.
[_] (2) necessary for (select all those applicable):
[_] (a) Profit-Sharing Contributions.
[_] (b) Matching 401(k) Contributions.
[_] (c) Matching Thrift Contributions.
K. "NORMAL RETIREMENT AGE"
-----------------------
Normal Retirement Age shall be (select one):
[X] (1) attainment of age 65 (not more than 65) by the Participant.
[_] (2) attainment of age (not more than 65) by the Participant or the
----
anniversary (not more than the 5th) of the first day of the
-----
Plan Year in which the Eligible Employee became a Participant
whichever is later.
[_] (3) attainment of age (not more than 65) by the Participant or
----
the anniversary (not more than the 5th) of the first day on
-----
which the Eligible Employee performed an hour of Service,
whichever is later.
L. "PARTICIPANT DIRECTED ASSETS" are:
----------------------------------
401(k) AND/ PROFIT-
OR THRIFT SHARING
[X] [_] (1) permitted.
[_] [_] (2) not permitted.
M. "PLAN YEAR"
-----------
The Plan Year shall end on the 31ST day of DECEMBER.
N. "PREDECESSOR SERVICE"
---------------------
Predecessor service will be credited (select one):
[X] (1) only as required by the Plan.
[_] (2) to include, in addition to the Plan requirements and subject to
the limitations set forth below, service with the following
predecessor employer(s) determined as if such predecessors were
the Employer:
------------------------------------------------
8
Service with such predecessor employer applies [select either or
both (a) and/or (b); (c) is only available in addition to (a)
and/or (b)]:
[_] (a) for purposes of eligibility to participate;
[_] (b) for purposes of vesting;
[_] (c) except for the following service:
---------------------
O. "VALUATION DATE"
----------------
Valuation Date shall mean (select one for each column, as applicable):
401(k) AND/ PROFIT-
OR THRIFT SHARING
[_] [_] (1) the last business day of each month.
[_] [_] (2) the last business day of each quarter within the Plan
Year.
[_] [_] (3) the last business day of each semi-annual period within
the Plan Year.
[_] [_] (4) the last business day of the Plan Year.
[X] [_] (5) other: DAILY.
ARTICLE II. PARTICIPATION
-------------
PARTICIPATION REQUIREMENTS
--------------------------
An Eligible Employee must meet the following requirements to become a
Participant (select one or more for each column, as applicable):
401(k) AND/ PROFIT-
OR THRIFT SHARING
[_] [_] (1) Performance of one Hour of Service.
[_] [_] (2) Attainment of age (maximum 20 1/2) and completion of
---
(not more than 1/2) Years of Service. If this
-----
item is selected, no Hours of Service shall be counted.
[X] [_] (3) Attainment of age (maximum 21) and completion of 1/4
--- ---
Year(s) of Service. if more than one Year of Service is
selected, tile immediate 100% vesting schedule must be
selected in Article VII of this Adoption Agreement.
9
[_] [_] (4) Attainment of age (maximum 21) and completion of
----
Years of Service. If more than one Year of Service
---
is selected, the immediate 100% vesting schedule must be
selected in Article VII of this Adoption Agreement.
[X] [_] (5) Each Employee who is an Eligible Employee on 01/01/94
--------
will be deemed to have satisfied the participation
requirements on the effective date without regard to
such Eligible Employee's actual age and/ or service.
ARTICLE III. 401(k) CONTRIBUTIONS AND ACCOUNT ALLOCATION
-------------------------------------------
A. ELECTIVE DEFERRALS
------------------
If selected below, a Participant's Elective Deferrals will be (select all
applicable):
[X] (1) a dollar amount or a percentage of Compensation, as specified by
the Participant on his or her 401(k) Election form, which may not
exceed 15% of his or her Compensation.
[_] (2) with respect to bonuses, such dollar amount or percentage as
specified by the Participant on his or her 401(k) Election form with
respect to such bonus.
B. MATCHING 401(k) CONTRIBUTIONS
-----------------------------
If selected below, the Employer may make Matching 401(k) Contributions for
each Plan Year (select one):
[X] (1) Discretionary Formula:
Discretionary Matching 401(k) Contribution equal to such a dollar
amount or percentage of Elective Deferrals, as determined by the
Employer, which shall be allocated (select one):
[_] (a) based on the ratio of each Participant's Elective Deferral
for the Plan Year to the total Elective Deferrals of all
Participants for the Plan Year. If inserted, Matching
40l(k) Contributions shall be subject to a maximum amount
of $ for each Participant or % of each
--------- ----
Participant's Compensation.
10
[X] (b) in an amount not to exceed % of each Participants
----
first % of Compensation contributed as Elective
---
Deferrals for the Plan Year. If any Matching 40l(k)
Contribution remains, it is allocated to each such
Participant in an amount not to exceed % of the next
----
% of each Participant's Compensation contributed as
----
Elective Deferrals for the Plan Year.
Any remaining Matching 40l(k) Contribution shall be allocated to each such
Participant in the ratio that such Participant's Elective Deferral for the
Plan Year bears to the total Elective Deferrals of all such Participants for
the Plan Year. If inserted, Matching 40l(k) Contributions shall be subject
to a maximum amount of $ for each Participant or % of each
-------- -----
Participant's Compensation.
[_] (2) Nondiscretionary Formula:
A nondiscretionary Matching 40l(k) Contribution for each Plan Year
equal to (select one):
[_] (a) % of each Participant's Compensation contributed as
------
Elective Deferrals. If inserted, Matching 40l(k)
Contributions shall be subject to a maximum amount of
$ for each Participant or % of each Participant's
------ -----
Compensation.
[_] (b) % of the first % of the Participant's
----- ------
Compensation contributed as Elective Deferrals and %
------
of the next % of the Participant's Compensation
------
contributed as Elective Deferrals. If inserted, Matching
40l(k) Contributions shall be subject to a maximum amount
of $ for each Participant or % of each
------- ------
Participant's Compensation.
C. PARTICIPANTS ELIGIBLE FOR MATCHING 401(k) CONTRIBUTION ALLOCATION
-----------------------------------------------------------------
The following Participants shall be eligible for an allocation to their
Matching 401(k) Contributions Account (select all those applicable):
[_] (1) Any Participant who makes Elective Deferrals.
[_] (2) Any Participant who satisfies those requirements elected by the
Employer for an allocation to his or her Employer Contributions
Account as provided in Article IV Section C.
[_] (3) Solely with respect to a Plan in which Matching 40l(k)
Contributions are made quarterly (or on any other regular interval
that is more frequent than annually) any Participant whose 40l(k)
Election is in effect throughout such entire quarter (or other
interval).
11
D. QUALIFIED MATCHING CONTRIBUTIONS
--------------------------------
If selected below, the Employer may make Qualified Matching Contributions for
each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
[_] (a) all Participants who make Elective Deferrals in that Plan
Year.
[X] (b) only those Participants who are Nonhighly Compensated
Employees and who make Elective Deferrals for that Plan
Year.
(2) Qualified Matching Contributions will be contributed and allocated
to each Participant in an amount equal to:
[_] (a) % of the Participant's Compensation contributed as
----
Elective Deferrals. If inserted, Qualified Matching
Contributions shall not exceed % of the Participant's
-----
Compensation.
[X] (b) Such an amount determined by the Employer, which is
needed to meet the ACP Test.
(3) In its discretion, the Employer may elect to designate all or any
part of Matching 401(k) Contributions as Qualified Matching
Contributions that are taken into account as Elective Deferrals --
included in the ADP Test and excluded from the ACP Test -- on
behalf of (select one):
[_] (a) all Participants who make Elective Deferrals for that
Plan Year.
[X] (b) Only Participants who are Nonhighly Compensated Employees
who make Elective Deferrals for that Plan Year.
E. QUALIFIED NONELECTIVE CONTRIBUTIONS
-----------------------------------
If selected below, the Employer may make Qualified Nonelective Contributions
for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Nonelective
Contributions on behalf of (select one):
[_] (a) all Eligible Participants.
[X] (b) only Eligible Participants who are Nonhighly Compensated
Employees.
12
(2) Qualified Nonelective Contributions will be contributed and allocated
to each Eligible Participant in an amount equal to (select one):
[_] (a) % (no more than 15%) of the Compensation of each Eligible
----
Participant eligible to share in the allocation.
[X] (b) Such an amount determined by the Employer, which is needed to
meet either the ADP Test or ACP Test.
(3) At the discretion of the Employer, as needed and taken into account
as Elective Deferrals included in the ADP Test on behalf of (select
one):
[_] (a) all Eligible Participants.
[X] (b) only those Eligible Participants who are Nonhighly Compensated
Employees.
F. ELECTIVE DEFERRALS USED IN ACP TEST (select one):
-----------------------------------
[X] (1) At the discretion of the Employer, Elective Deferrals may be used
to satisfy tile ACP Test.
[_] (2) Elective Deferrals may not be used to satisfy the ACP Test.
G. MAKING AND MODIFYING A 401(k) ELECTION
--------------------------------------
An Eligible Employee shall be entitled to increase, decrease or resume his or
her Elective Deferral percentage with the following frequency during the Plan
Year (select one):
[_] (1) annually.
[_] (2) semi-annually.
[X] (3) quarterly.
[_] (4) monthly
[_] (5) other (specify): .
--------
Any such increase, decrease or resumption shall be effective as of the first
payroll period coincident with or next following the first day of each period
set forth above. A Participant may completely discontinue making Elective
Deferrals at any time effective for the payroll period after written notice
is provided to the Administrator.
13
ARTICLE IV. PROFIT-SHARING CONTRIBUTIONS
----------------------------
AND ACCOUNT ALLOCATION
----------------------
A. PROFIT-SHARING CONTRIBUTIONS
----------------------------
If selected below, the following contributions for each Plan Year will be
made:
Contributions to Employer Contributions Accounts (select one):
[_] (a) Such an amount, if any, as determined by the Employer.
[_] (b) % of each Participant's Compensation.
------
B. ALLOCATION OF CONTRIBUTIONS TO EMPLOYER CONTRIBUTIONS ACCOUNTS (select one):
--------------------------------------------------------------
[_] (1) Non-Integrated Allocation
The Employer Contributions Account of each Participant eligible to
share in the allocation for a Plan Year shall be credited with a
portion of the contribution, plus any forfeitures if forfeitures are
reallocated to Participants, equal to the ratio that the
Participant's Compensation for the Plan Year bears to the
Compensation for that Plan Year of all Participants entitled to share
in the contribution.
[_] (2) Integrated Allocation
Contributions to Employer Contributions Accounts with respect to a
Plan Year, plus any forfeitures if forfeitures are reallocated to
Participants, shall be allocated to the Employer Contributions
Account of each eligible Participant as follows:
(a) First, in the ratio that each such eligible Participant's
Compensation for the Plan Year bears to the Compensation for
that Plan Year of all eligible Participants but not in excess of
3% of each Participant's Compensation.
(b) Second, any remaining contributions and forfeitures will be
allocated in the ratio that each eligible Participant's
Compensation for the Plan Year in excess of the Integration
Level bears to all such Participants' excess Compensation for
the Plan Year but not in excess of 3%.
-14-
(c) Third, any remaining contributions and forfeitures will be
allocated in the ratio that the sum of each Participant's
Compensation and Compensation in excess of the Integration Level
bears to the sum of all Participants' Compensation and
Compensation in excess of the Integration Level, but not in
excess of the Maximum Profit-Sharing Disparity Rate (defined
below).
(d) Fourth, any remaining contributions or forfeitures
will be allocated in the ratio that each Participant's
Compensation for that year bears to all Participants'
Compensation for that year.
The Maximum Profit-Sharing Disparity Rate is equal to the lesser of:
(a) 2.7% or
(b) Tile applicable percentage determined in accordance with the
following table:
IF THE INTEGRATION
LEVEL IS (AS A % OF THE APPLICABLE
THE TAXABLE WAGE BASE ("TWB")). PERCENTAGE IS:
20% (or $10,000 if greater)
or less of the TWB 2.7%
More than 20% (but not less
than $10,001 ) but not more
than 80% of the TWB 1.3%
More than 80% but not less
than 100% of the TWB 2.4%
100% of the TWB 2.7%
-15-
C. PARTICIPANTS ELIGIBLE FOR EMPLOYER CONTRITION ALLOCATION
--------------------------------------------------------
The fo11owing Participants shall be eligible for an allocation to their
Employer Contributions Account (select all those applicable):
[_] (1) Any Participant who was employed during the Plan Year.
[_] (2) In the case of a Plan using the hourly record method for determining
Vesting Service, any Participant who was credited with a Year of
Service during the Plan Year.
[_] (3) Any Participant who was employed on the last day of the Plan Year.
[_] (4) Any Participant who was on a leave of absence on the last day of the
Plan Year.
[_] (5) Any Participant who during the Plan Year died or became Disabled
while an Employee or terminated employment after attaining Normal
Retirement Age.
[_] (6) Any Participant who was credited with at least 501 Hours of Service
whether or not employed on the last day of the Plan Year.
[_] (7) Any Participant who was credited with at least 1,000 Hours of
Service and was employed on the last day of the Plan Year.
ARTICLE V. THRIFT CONTRIBUTIONS
--------------------
THIS ARTICLE IS NOT APPLICABLE
A. EMPLOYEE THRIFT CONTRIBUTIONS
-----------------------------
If selected below, Employee Thrift Contributions, which are required for
Matching Thrift Contributions, may be made by a Participant in an amount
equal to (select one):
[_] (1) A dollar amount or a percentage of the Participant's Compensation
which may not be less than % nor may not exceed % of his or her
---- --
Compensation.
[_] (2) An amount not less than % of and not more than % of each
--- ---
Participant's Compensation.
-16-
B. MAKING AND MODIFYING AN EMPLOYEE THRIFT CONTRIBUTION ELECTION
-------------------------------------------------------------
A Participant shall be entitled to increase, decrease or resume his or her
Employee Thrift Contribution percentage with the following frequency during
the Plan Year (select one):
[_] (1) annually
[_] (2) semi-annually
[_] (3) quarterly
[_] (4) monthly
[_] (5) other (specify)
-----------------------
Any such increase, decrease or resumption shall be effective as of the first
payroll period coincident with or next following the first day of each period
set forth above. A Participant may completely discontinue making Employee
Thrift Contributions at any time effective for the payroll period after
written notice is provided to the Administrator.
C. THRIFT MATCHING CONTRIBUTIONS
-----------------------------
If selected below, the Employer will make Matching Thrift Contributions for
each Plan Year (select one):
[_] (1) Discretionary Formula:
A discretionary Matching Thrift Contribution equal to such a dollar
amount or percentage as determined by the Employer, which shall be
allocated (select one):
[_] (a) based on the ratio of each Participant's Employee Thrift
Contribution for the Plan Year to the total Employee Thrift
Contributions of all Participants for the Plan Year. If inserted,
Matching Thrift Contributions shall be subject to a maximum
amount of $ for each Participant or % of each
------- -----
Participant's Compensation.
[_] (b) in an amount not to exceed % of each Participant's first
-----
% of Compensation contributed as Employee Thrift
------
Contributions for the Plan Year. If any Matching Thrift
Contribution remains, it is allocated to each such Participant
in an amount not to exceed % of the next % of each
--- ---
Participant's Compensation contributed as Employee Thrift
Contributions for the Plan Year.
Any remaining Matching Thrift Contribution shall be allocated to
each such Participant in the ratio that such Participant's
Employee Thrift Contributions for the Plan Year bears to the
total Employee Thrift Contributions of all such Participants for
the Plan Year. If inserted, Matching Thrift Contributions shall
be subject to a maximum amount of $ for each Participant or
-----
% of each Participant's Compensation.
------
-17-
[_] (2) Nondiscretionary Formula:
A nondiscretionary Matching Thrift Contribution for each Plan Year
equal to (select one):
[_] (a) % of each Participant's Compensation contributed as
------
Employee Thrift Contributions. If inserted, Matching Thrift
Contributions shall be subject to a maximum amount of
$ for each Participant or % of each Participant's
------ ----
Compensation.
[_] (b) % of the first % of the Participant's Compensation
----- ----
contributed as Employee Thrift Contributions and % of the
----
next % of the Participant's Compensation contributed as
------
Employee Thrift Contributions. If inserted, Matching Thrift
Contributions shall be subject to a maximum amount of $
------
for each Participant or % of each Participant's
-----
Compensation.
D. QUALIFIED MATCHING CONTRIBUTIONS
--------------------------------
If selected below, the Employer may make Qualified Matching Contributions
for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
[_] (a) all Participants who make Employee Thrift Contributions.
[_] (b) only those Participants who are Nonhighly Compensated
Employees and who make Employee Thrift Contributions.
(2) Qualified Matching Contributions will be contributed and allocated
to each Participant in an amount equal to:
[_] (a) % of the Participant's Employee Thrift Contributions.
----
If inserted, Qualified Matching Contributions shall not
exceed % of the Participant's Compensation.
------
[_] (b) such an amount, determined by the Employer, which is
needed to meet the ACP Test.
ARTICLE VI. PARTICIPANT CONTRIBUTIONS
-------------------------
PARTICIPANT VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS
- -------------------------------------------------
Participant Voluntary Nondeductible Contributions are (select one):
[_] (a) permitted.
[X] (b) not permitted.
18
ARTICLE VII. VESTING
-------
A. EMPLOYER CONTRIBUTION ACCOUNTS
------------------------------
(1) A Participant shall have a vested percentage in his or her Profit-Sharing
Contributions, Matching 401(k) Contributions and/or Matching Thrift
Contributions, if applicable, in accordance with the following schedule
(Select one):
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
- ------------- --------------
[_] [_] (a) 100% vesting immediately upon participation.
[_] [_] (b) 100% after (not more than 5) years of Vesting
---
Service.
[X] [X] (c) Graded vesting schedule:
0% 0% after 1 year of Vesting Service;
-- --
20% 20% after 2 years of Vesting Service;
-- --
40% 40% (not less than 20%) after 3 years of Vesting Service;
-- --
60% 60% (not less than 40%) after 4 years of Vesting Service;
-- --
80% 80% (not less than 60%) after 5 years of Vesting Service;
-- --
100% 100% (not less than 80%) after 6 years of Vesting Service;
--- ---
100% after 7 years of Vesting Service.
19
(2) Top Heavy Plan
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
- ------------- --------------
Vesting Schedule (Select one):
[_] [_] (a) 100% vesting immediately upon participation.
[_] [_] (b) 100% after ___ (not more than 3) years of
Vesting Service.
[X] [X] (c) Graded vesting schedule:
0% 0% after 1 year of Vesting Service;
-- --
20% 20% (not less than 20%) after 2 years of Vesting Service.
-- --
40% 40% (not less than 40%) after 3 years of Vesting Service.
-- --
60% 60% (not less than 60%) after 4 years of Vesting Service.
-- --
80% 80% (not less than 80%) after 5 years of Vesting Service.
-- --
100% after 6 years of Vesting Service.
Top Heavy Ratio:
(a) If the adopting Employer maintains or has ever maintained a qualified
defined benefit plan, for purposes of establishing present value to
compute the top-heavy ratio, any benefit shall be discounted only for
mortality and interest based on the following:
Interest Rate: 8 %
------
Mortality Table: UP' 84
------
(b) For purposes of computing the top-heavy ratio, the valuation date
shall be the last business day of each Plan Year.
20
B. ALLOCATION OF FORFEITURES
-------------------------
Forfeitures shall be (select one from each applicable column):
MATCHING 401(k)
AND/OR MATCHING
THRIFT PROFIT-SHARING
CONTRIBUTIONS CONTRIBUTIONS
- ------------- -------------
[X] [_] (1) used to reduce Employer contributions for succeeding
Plan Year.
[_] [_] (2) allocated in the succeeding Plan Year in the ratio
which the Compensation of each Participant for
the Plan Year bears to the total Compensation of
all Participants entitled to share in the
Contributions. If the Plan is integrated with
Social Security, forfeitures shall be allocated
in accordance with the formula elected by the
Employer.
C. VESTING SERVICE
---------------
For purposes of determining Years of Service for Vesting Service [select (1)
or (2) and/or (3)]:
[X] (1) All Years of Service shall be included.
[_] (2) Years of Service before the Participant attained age 18 shall be
excluded.
[_] (3) Service with the Employer prior to the effective date of the Plan
shall be excluded.
ARTICLE VIII. DEFERRAL OF BENEFIT DISTRIBUTIONS,
IN-SERVICE WITHDRAWALS AND LOANS
--------------------------------
A. DEFERRAL OF BENEFIT DISTRIBUTIONS
---------------------------------
401(k) AND/ PROFIT-
OR THRIFT SHARING
----------- -------
[_] [_] If this item is checked, a Participant's vested benefit
in his or her Employer Accounts shall be payable as soon as practicable
after the earlier of: (1) the date the Participant terminates Employment
due to Disability or (2) the end of the Plan Year in which a terminated
Participant attains Early Retirement Age, if applicable, or Normal
Retirement Age.
21
B. IN-SERVICE DISTRIBUTIONS
------------------------
[X] (1) In-service distributions may be made from any of the Participant's
vested Accounts, at any time upon or after the occurrence of the
following events (select all applicable):
[X] (a) a Participant's attainment of age 59-1/ 2.
[X] (b) due to hardships as defined in Section 5.9 of the Plan.
[_] (2) In-service distributions are not permitted.
C. LOANS ARE:
---------
401(k) AND/ PROFIT-
OR THRIFT SHARING
- ----------- -------
[X] [_] (1) permitted.
[_] [_] (2) not permitted.
ARTICLE IX. GROUP TRUST
-----------
[_] If this item is checked, the Employer elects to establish a Group Trust
consisting of such Plan assets as shall from time to time be transferred to
the Trustee pursuant to Article X of the Plan. The Trust Fund shall be a
Group Trust consisting of assets of this Plan plus assets of the following
plans of the Employer or of an Affiliate:
- --------------------------------------
ARTICLE X. MISCELLANEOUS
-------------
A. IDENTIFICATION OF SPONSOR
-------------------------
The address and telephone number of the Sponsor's authorized representative
is 800 Scudders Mill Road, Plainsboro, New Jersey 08536; (609) 282-2272. This
--------
authorized representative can answer inquiries regarding the adoption of the
Plan, the intended meaning of any Plan provisions, and the effect of the
opinion letter.
The Sponsor will inform the adopting Employer of any amendments made to the
Plan or the discontinuance or abandonment of the Plan.
22
B. PLAN OF REGISTRATION
--------------------
1. Initial Registration
--------------------
This Plan must be registered with the Sponsor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, in order to be considered a
Prototype Plan by the Sponsor. Registration is required so that the
Sponsor is able to provide the Administrator with documents, forms and
announcements relating to the administration of the Plan and with Plan
amendments and other documents, all of which relate to administering the
Plan in accordance with applicable law and maintaining compliance of the
Plan with the law.
The Employer must complete and sign the Adoption Agreement. Upon
receipt of the Adoption Agreement, the Plan will be registered as a
Prototype Plan of Merrill Lynch, Pierce, Fenner & Smith Incorporated. The
Adoption Agreement will be countersigned by an authorized representative
and a copy of the countersigned Adoption Agreement will be returned to the
Employer.
2. Registration Renewal
--------------------
Annual registration renewal is required in order for the Employer to
continue to receive any and all necessary updating documents. There is an
annual registration renewal fee in the amount set forth with the initial
registration material. The adopting Employer authorizes Merrill Lynch,
Pierce, Fenner & Smith Incorporated, to debit the account established for
the Plan for payment of agreed upon annual fee; provided, however, if the
assets of an account are invested solely in Participant-Directed Assets, a
notice for this annual fee will be sent to the Employer annually. The
Sponsor reserves the right to change this fee from time to time and will
provide written notice in advance of any change.
C. PROTOTYPE REPLACEMENT PLAN
--------------------------
This Adoption Agreement is a replacement prototype plan for the (1)
Merrill Lynch Special Prototype Defined Contribution Plan and Trust -
40l(k) Plan #03-004 and (2) Merrill Lynch Asset Management, Inc., Special
Prototype Defined Contribution Plan and Trust - 401 (k) Plan Adoption
Agreement #03-004.
D. RELIANCE
--------
The adopting Employer may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this Plan
is qualified under Code Section 401. In order to obtain reliance, the
Employer must apply to the appropriate date Key District Director of the
Internal Revenue Service for a determination letter with respect to the
Plan.
-23-
EMPLOYER
Dated: 1/3 , 1994 By: /s/ R. Douglas Armstrong
-------- -- ------------------------------------------
To be executed by the sole proprietor, an
authorized partner or corporate officer, as
appropriate.
R. DOUGLAS ARMSTRONG
-------------------------------------------------
Print Name
PRESIDENT and CEO
-------------------------------------------------
Title, if a corporate officer
-------------------------------------------------
SPONSOR ACCEPTANCE
- ------------------
Subject to the terms and conditions of the Prototype Plan and this Adoption
Agreement, this Adoption Agreement is accepted by Merrill Lynch, Pierce, Fenner
& Smith Incorporated as the Prototype Sponsor.
Authorized Signature: /s/ Rebecca Freberg
---------------------------------------------------------
-24-
MERRILL LYNCH TRUST COMPANY IS NOT A TRUSTEE
ACCEPTANCE BY TRUSTEE(S)
A. This Trustee Acceptance is to be completed only if the Employer appoints one
or more Trustees and does not appoint a Merrill Lynch Trust Company as
Trustee.
The undersigned hereby accept all of the terms, conditions, and obligations
of appointment as Trustee under the Plan. If the Employer has elected a Group
Trust in this Adoption Agreement, the undersigned Trustee(s) shall be the
Trustee(s) of the Group Trust.
as TRUSTEE
/s/ R. DOUGLAS R. ARMSTRONG R. DOUGLAS ARMSTRONG
--------------------------- --------------------
(Signature) (print or type name)
as TRUSTEE
/s/ TODD E. SIMPSON TODD E. SIMPSON
--------------------------- --------------------
(Signature) (print or type name)
as TRUSTEE
--------------------------- --------------------
(Signature) (print or type name)
as TRUSTEE
--------------------------- --------------------
(Signature) (print or type name)
Dated: , 19
------------ --
-25-
MERRILL LYNCH TRUST COMPANY AS TRUSTEE
This Trustee Acceptance and designation of Investment Committee are to be
completed only when a Merrill Lynch Trust Company is appointed as Trustee.
The undersigned hereby accept all of the terms, conditions, and obligations
of appointment as Trustee under the Plan, If the Employer has elected a Group
Trust in this Adoption Agreement, the undersigned Trustee(s) shall be the
Trustee(s) of the Group Trust.
SEAL MERRILL LYNCH TRUST COMPANY
------------------------------
Dated: , 19 By:
----------- -- -------------------------------
DESIGNATION OF INVESTMENT COMMITTEE
The Investment Committee for the Plan is (print or type name):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
-26-
MERRILL LYNCH TRUST COMPANY IS ONE OF THE TRUSTEES
This Trustee Acceptance is to be completed only if, in addition to a Merrill
Lynch Trust Company as Trustee, the Employer appoints an additional Trustee
of a second trust fund.
The undersigned hereby accept all of the terms, conditions, and obligations
of appointment as Trustee under the Plan. If the Employer has elected a
Group Trust in this Adoption Agreement, the undersigned Trustee(s) shall
be the Trustee(s) of the Group Trust.
as TRUSTEE
-------------------------------- ----------------------------------
(Signature) (print or type name)
Dated: , 19
------------ --
SEAL MERRILL LYNCH TRUST COMPANY
----------------------------------
Dated: , 19 By:
----------- --- ---------------------------------
DESIGNATION OF INVESTMENT COMMITTEE
The Investment Committee for the Plan is (print or type name):
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
-27-
AASTROM BIOSCIENCES, INC.
AMENDED AND RESTATED
1992 INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN
(AS AMENDED EFFECTIVE OCTOBER 30, 1996)
Section 1. Purpose.
The purpose of the 1992 Incentive and Non-qualified Stock Option Plan (the
"Plan") of Aastrom Biosciences, Inc. (the "Company") is to encourage stock
ownership by directors, officers, employees of and consultants to the Company
and its Affiliates and others who directly or indirectly provide goods or
services to the Company and its Affiliates by issuing options to purchase shares
of the Company's stock ("Options," and individually an "Option"), enabling such
persons to acquire or increase their proprietary interest in the Company and
thereby encouraging them to remain in the employ or remain directors of or
consultants to the Company and its Affiliates or continue providing goods or
services to the Company and its Affiliates. The term "Affiliates" as used herein
shall include any parent corporation or subsidiary corporation as defined in
Sections 424(e) and (f) respectively of the Internal Revenue Code of 1986, as
amended (the "Code"). The Options issued pursuant to the Plan are intended to
constitute either incentive stock options within the meaning of Section 422 of
the Code, or non-qualified stock options, at the discretion of the Option
Committee (as hereinafter defined) of the board of directors of the Company (the
"Board of Directors") at the time of grant. The type of Options granted will be
specified in the letter of grant to the person who is granted the Options (the
"Optionee"). The terms of this Plan shall be incorporated in the grant letter.
Section 2. Administration.
The Plan will be administered by the Board of Directors or a committee of
two or more members of the Board or Directors (such member or the Board of
Directors acting as Plan administrators shall be referred to herein as the
"Option Committee"). If the Company or an Affiliate is a "publicly held
corporation" within the meaning of Section 162(m) of the Code, the Board may
establish a Committee of "outside directors" within the meaning of Section
162(m) to approve the grant of any Option which might reasonably be anticipated
to result in the payment of employee remuneration that would otherwise exceed
the limit on employee remuneration deductible for income tax purposes pursuant
to Section 162(m).
The interpretation and construction by the Option Committee of any
provision of the Plan will be final. Anything herein to the contrary
notwithstanding, no member of the Board of Directors or the Option Committee
will be liable for any action or determination made in good faith with respect
to the Plan or any Option granted under it.
Section 3. Eligibility.
Directors, officers and employees of the Company and its Affiliates who are
expected to make significant contributions to the long term success of the
Company are eligible to receive incentive stock options under the Plan, as may
be determined from time to time by the Option Committee. Directors, officers and
employees of and consultants to the Company and its Affiliates, and others who
directly or indirectly provide goods or services to the Company and its
Affiliates, are eligible to receive non-qualified options under the Plan, as may
be determined from time to time by the Option Committee. A director, officer,
employee, consultant or other person who is granted an Option is an Optionee
(which term also includes the Optionee's legal representative under Section 5(g)
hereof). An Optionee may be granted more than one Option.
For purposes of the foregoing paragraph, "employees" shall include
prospective employees to whom Options are granted in connection with written
offers of employment with the Company or one of its Affiliates, and
"consultants" shall include prospective consultants to whom Options are granted
in connection with written offers of engagement with the Company or one of its
Affiliates.
Any person who is not an employee on the date of Option grant may only be
granted a non-qualified stock option. A director who is not an employee or
officer of or consultant to the Company or its Affiliates, or who does not
directly or indirectly provide goods or services to the Company or its
Affiliates, shall not be eligible to receive non-qualified stock options.
Notwithstanding the foregoing, no director of the Company who is not also
an employee of the Company may be granted an Option at any time that any class
of equity security of the Company is registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Section 4. Stock.
The stock subject to an Option will be shares of the Company's authorized
but unissued or reacquired Common Stock, no par value (the "Shares"). Options
shall not be issued with respect to more than One Million
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Nine Hundred Thousand (1,900,000) Shares, after giving effect to the two-for-
three reverse stock split approved by the Board of Directors on April 30, 1996,
and subject to further adjustment as provided in Section 5(i) hereof. If an
outstanding Option for any reason expires or is terminated or canceled or Shares
acquired, subject to repurchase, upon the exercise of an Option are repurchased
by the Company, the Shares allocable to the unexercised portion of such Option,
or such repurchased Shares, shall again be available for issuance under the
Plan.
Section 5. Terms and Conditions of Options.
Each Option granted pursuant to the Plan will be authorized by the Option
Committee and will be evidenced by a notice (the "Option Notice") in such form
as the Option Committee may from time to time determine. Each Option Notice will
include the information required in subparagraphs (a), (b) and (c) of this
Section 5 and will be in conformity with and will incorporate by reference all
other terms and conditions of the Plan, including the following terms and
conditions:
(a) Number of Shares. The number of Shares subject to the Option will
be stated in the Option Notice.
(b) Exercise Price. In the case of incentive stock options, the price
per Share payable on the exercise of the Option will be stated in the Option
Notice and will be not less than 100% of the fair market value per share of the
outstanding shares of Common Stock of the Company on the date the Option is
granted, without regard to any restriction other than a restriction which will
never lapse. In the case of a non-qualified stock option, the price per Share
payable upon exercise of the Option shall be stated in the Option Notice and
will be not less than 85% of the fair market value per share of the outstanding
shares of Common Stock of the Company on the date the Option is granted, without
regard to any restriction other than a restriction which will never lapse.
Unless the Company's Common Stock is quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or listed on a
recognized securities exchange, the fair market value, for purposes of complying
with the foregoing sentence with respect to incentive stock options, shall be as
determined by the Option Committee in its sole discretion. If the Company's
Common Stock is either quoted on NASDAQ or listed on a recognized securities
exchange, the fair market value shall be the representative closing price of the
stock as obtained from NASDAQ or such recognized securities exchange on the date
of the grant of the Option, or if there is no such quotation on the date of the
grant of the Option on the preceding business day.
(c) Form of Option. The Option Notice will state whether the Option
granted is an incentive stock option or a non-qualified stock
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option, and will constitute a binding determination as to the form of Option
granted. At the discretion of the Option Committee, the Option Notice may
require the Optionee to execute a Stock Transfer Restriction and Buy-Out
Agreement, or such other agreements as the Option Committee considers
appropriate.
(d) Payment. The price payable on the exercise of the Option in whole
or in part will be equal to the Option price multiplied by the number of Shares
as to which the Option is exercisable, and shall be paid in full upon exercise
of any Option, either (i) in cash, (ii) at the discretion of the Option
Committee either at the time the Option is granted or exercised, by delivering
to the Company Shares having a fair market value, as of the close of business on
the day preceding such delivery, equal to the aggregate exercise price of the
Shares being purchased on exercise of the Options, (iii) by a combination of
such cash and shares, or (iv) any other form of legal consideration that may be
acceptable to the Option Committee. In the case of any deferred payment
arrangement, interest shall be payable at least annually at the minimum
applicable federal rate under Section 1274(d) of the Code to avoid imputed
interest to the Company under the Code.
Anything to the contrary herein notwithstanding, all payments required to
be made by the Company hereunder to an Optionee, his legal representative, his
heir or devisee, shall be subject to the withholding of such amounts as the
Company may determine that it is required to withhold pursuant to any applicable
federal, state or local law or regulation. To the extent provided in the terms
of the Option, and to the extent allowed under the Exchange Act, the Optionee
may satisfy any federal, state or local tax withholding obligation relating to
the exercise of such Option by one or more of the following: (1) tender of a
cash payment; (2) authorization of the Company to withhold Shares otherwise to
be issued pursuant to the Option of a value not in excess of the withholding tax
obligation; or (3) delivering to the Company unencumbered Shares owned by the
Optionee of a value not in excess of the withholding tax obligation.
(e) Notwithstanding any other provision of this Plan:
(i) No Option shall be granted under this Plan more than ten (10)
years after April 30, 1996. Notwithstanding the foregoing, if the maximum number
of Shares issuable pursuant to the Plan as provided in Section 4 has been
increased at any time (other than pursuant to Section 5(i)), all Options shall
be granted, if at all, no later than the last day preceding the tenth (10th)
anniversary of the earlier of (a) the date on which the latest such increase in
the maximum number of Shares issuable under the Plan was approved by the
stockholders of the Company or (b) the date such amendment was adopted by the
Board of Directors.
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(ii) No incentive stock option granted under this Plan shall be
exercisable later than ten (10) years from the date of grant.
(iii) No Option granted to any Optionee shall be treated as an
incentive stock option, to the extent such Option would cause the aggregate fair
market value (determined as of the date of grant of each such Option) of the
Shares with respect to which incentive stock options are exercisable by such
Optionee for the first time during any calendar year to exceed $100,000. For
purposes of determining whether an incentive stock option would cause the
aggregate fair market value of the Shares to exceed the $100,000 limitation,
such incentive stock options shall be taken into account in the order granted.
For purposes of this subsection, incentive stock options include all incentive
stock options under all plans of the Company (or one of its Affiliates) that are
incentive stock option plans within the meaning of Section 422 of the Code. If
the Code is amended to provide for a different limitation from that set forth in
this subsection, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code.
(iv) Options granted pursuant to this Plan may be exercised in
any order elected by the Optionee whether or not the Optionee holds any
unexercised Options under this Plan or any other Plan of the Company.
(v) Notwithstanding any provision herein to the contrary, no
incentive stock option shall be granted under this Plan to any person who, at
the time of the grant of such Option, owns stock possessing more than 10% of the
total combined voting power of all classes of the stock of the Company or any
affiliate, unless the option price at the time the Option is granted is at least
110 percent (110%) of the fair market value of the stock, and subject to the
condition that the Option expires five years from the Option grant date.
(vi) No Option granted under this Plan may be transferred except
by will or by the laws of descent and distribution.
(f) Term and Exercise of Options.
(i) Subject to the provisions of Section 5(e)(i), (ii) and (v)
hereof, Options granted hereunder may be exercisable in whole or in part at such
time or times as the Option Committee shall designate when granting such
Options. However, no Option granted to a prospective employee or prospective
consultant may become exercisable prior to the date on which such person
commences service with the Company or one of its Affiliates.
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(ii) Unless sooner terminated as provided in this Plan, each
Option shall expire no later than ten years from the date of grant and shall be
void and unexercisable thereafter. An Option may be exercised only by the
Optionee and may not be exercised by any other person except as provided in
Section 5(g) hereof.
(g) Termination of Options Granted to Employees and Directors.
(i) Except as provided herein and unless otherwise specified in
the Option Notice, Options shall terminate when the Optionee ceases to be
employed by the Company or ceases to be a director of the Company.
(ii) Unless otherwise specified in the Option Notice, upon the
death of an Optionee while in the employ of the Company or while a director of
the Company, Options held by such Optionee which are exercisable on the date of
his or her death shall be exercisable by his or her executor(s) or
administrator(s) for a period of eighteen (18) months following the date of such
Optionee's death.
(iii) Unless otherwise specified in the Option Notice, upon
termination of an Optionee's employment with the Company (or if the Optionee is
a director only, upon termination of the Optionee's term of office, or if the
Optionee is both an employee and a director, upon termination of both) for any
reason other than "Cause," as defined in Section 5(g)(v), or for retirement or
permanent disability as set forth in Section 5(g)(iv) with respect to non-
qualified stock options, Options exercisable by such Optionee on the date of
termination of employment shall be exercisable by the Optionee (or in the case
of the Optionee's death subsequent to termination of employment, by the
Optionee's executor(s) or administrator(s)) for a period of three (3) months
from the date of such Optionee's termination of employment.
(iv) Solely with respect to non-qualified stock options, unless
otherwise specified in the Option Notice, upon termination of an Optionee's
employment with the Company (or if the Optionee is a director only, upon
termination of the Optionee's term of office, or if the Optionee is an employee
and a director, upon termination of both) for reasons of retirement or permanent
disability, non-qualified stock options exercisable by the Optionee on the date
of termination of employment shall be exercisable by such Optionee (or in the
case of the Optionee's death subsequent to termination of employment, by the
Optionee's executor(s) or administrator(s)) for a period of one (1) year from
the date of such Optionee's termination of employment; provided, however, that
if such
-6-
Optionee shall commence any employment during this one (1) year period with a
competitor of the Company (including, but not limited to, full or part-time
employment or independent consulting work), as determined solely in the judgment
of the Board of Directors, all Options held by such Optionee which have not yet
been exercised shall terminate immediately upon commencement thereof.
(v) Unless otherwise specified in the Option Notice, upon the
termination of an Optionee's employment (or if the Optionee is a director only,
upon termination of the Optionee's term of office, or if the Optionee is both an
employee and a director, upon termination of both) for "Cause," as defined in
this Section 5(g)(v), all Options held by such Optionee shall terminate
concurrently with receipt by the Optionee of oral or written notice that his or
her employment has been terminated. For the purposes of this Plan, termination
for "Cause" shall include termination by reason of being convicted of any felony
or committing willful and gross negligence or willful and gross misconduct in
carrying out duties properly assigned to such Optionee by the Company.
(vi) The Option Notice may provide that the Options issued
thereunder may be exercised for one year following the "disability" of the
Optionee as such term is defined in Section 22(c)(3) of the Code.
(vii) In the case of a leave of absence taken by an Optionee,
the Company shall have the unilateral right to (1) determine whether such leave
of absence shall be treated as a termination of employment, and (2) suspend or
otherwise delay the time or times at which the Shares subject to the Option
would otherwise vest.
(viii) Options granted to employees and directors of the Company
and its Affiliates may be terminated at any time by agreement between the
Company and the Optionee.
(h) Termination of Options Granted to Non-Employees.
(i) With respect to Options granted to persons who are not
employees or directors of the Company or its Affiliates, the Option Notice shall
state the conditions, if any, under which the Options shall terminate.
(ii) Options granted to persons who are not employees or
directors of the Company or its Affiliates may be terminated at any time by
agreement between the Company and the Optionee.
-7-
(i) Recapitalization.
(i) Subject to any required action by the stockholders, if any,
the number of Shares as to which Options may be granted under this Plan and the
number of Shares subject to outstanding Options and the Option prices thereto
will be adjusted proportionately for any increase or decrease in the number of
outstanding shares of Common Stock of the Company resulting from stock splits
and reverse stock splits, but not for stock dividends. The number of Shares will
be adjusted to the nearest whole share. Any stock dividend resulting in an
increase of five percent (5%) or more in the outstanding Common Stock shall be
deemed a stock split.
(ii) If the Company is a party to any merger in which the
Company is not the surviving entity, any consolidation or dissolution (other
than the merger or consolidation of the Company with one or more of its wholly-
owned subsidiaries), the Company, in the discretion of the Option Committee and
to the extent permitted by law, (1) will cause any successor corporation to
assume the Options outstanding hereunder or substitute similar options to those
outstanding hereunder, or (2) will continue such Options in full force and
effect. In the event that any successor to the Company in a merger,
consolidation or dissolution will not assume the Options or substitute similar
Options then, with respect to Options held by Optionees then performing services
for the Company, the time for exercising such Options will be accelerated and
the Options will be terminated if not exercised prior to the merger,
consolidation or dissolution.
(iii) Except as expressly provided in this Section 5(i), the
Optionee will have no rights by reason of (1) any subdivision or consolidation
of shares of stock of any class of the Company; (2) payment of any stock
dividend by the Company; (3) any other increase or decrease in the number of
shares of stock of any class of the Company; or (4) by reason of any
dissolution, liquidation, merger, consolidation or spin-off of assets or stock
of another corporation.
(iv) The grant or existence of any Option shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge, consolidate, dissolve, liquidate, sell or transfer all
or any part of its stock or assets.
(j) Rights as a Stockholder. The Optionee will have no rights as a
stockholder of the Company with respect to any Shares subject to an Option until
such Option has been exercised and a certificate with respect to the Shares
purchased upon exercise has been issued to him or
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her. No adjustment will be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date the Shares so purchased have been
issued. Throughout the term of any Option issued hereunder, the Company shall
make available to each Optionee, not less than 120 days after the close of each
fiscal year of the Company, upon request by the Optionee, any financial or other
information contained in the annual report to the shareholders of the Company as
provided in the Company's by-laws.
(k) Modification, Extension and Renewal of Option. Subject to the
terms and conditions of the Plan, the Option Committee may modify, extend or
renew an Option, or accept the surrender of an Option (to the extent not
theretofore exercised), provided that no incentive stock option may be modified,
extended or renewed if such action would cause it to cease to be an "incentive
stock option" under the Code. Notwithstanding the foregoing, no modification of
an Option which adversely affects the Optionee shall be made without the consent
of the Optionee.
(l) Purchase for Investment. The issuance of Shares on exercise of
the Option will be conditioned on obtaining appropriate representations and
warranties of the Optionee that the purchase of Shares thereunder will be for
investment, and not with a view to the public resale or distribution thereof,
unless the Shares subject to the Option are registered under the Securities Act
of 1933, as amended (the "Act"), and comply with any other law, regulation or
rule applicable thereto. Unless the Shares are registered under the Act, the
Optionee shall acknowledge that the Shares purchased on exercise of the Option
are not registered under the Act and may not be sold or otherwise transferred
unless the Shares have been registered under the Act in connection with the sale
or other transfer, or that counsel satisfactory to the Company is of the opinion
that the sale or other transfer is exempt from registration under the Act, and
unless said sale or transfer is in compliance with any other applicable law,
including all applicable state securities laws.
(m) No Rights to Employment. Officers or employees granted Options
under this Plan shall not have any right to continue in the employment of the
Company or its Affiliates by reason of the existence of such Options and
consultants granted Options under this Plan shall not have any right to continue
as consultants to the Company or its Affiliates by reason of the existence of
such options. Persons who directly or indirectly provide goods or services to
the Company or its Affiliates shall not have any right to continue providing
such goods and services by reason of the existence of such Options. An Optionee
who is not an employee of the Company or its Affiliates shall have no right to
become an employee, or to obtain any benefit of employment, by reason of having
been granted
-9-
Options under this Plan. An Optionee whose employment is terminated shall have
no rights against the Company by reason of the termination of such Option
whether the termination of the employment be with or without "Cause," as defined
in Section 5(g)(iv).
(n) Other Provisions. The Option Notice may contain such other
provisions as the Option Committee in its discretion deems advisable and which
are not inconsistent with the provisions of this Plan, including, without
limitation, restrictions upon the exercise of the Option.
Section 6. Amendment of the Plan.
Insofar as permitted by law and the Plan, the Option Committee may from
time to time suspend or discontinue the Plan or revise or amend it in any
respect whatsoever with respect to any Shares at the time not subject to an
Option; provided, however, that without approval of the stockholders, no such
revision or amendment may change the aggregate number of Shares for which
Options may be granted hereunder, change the designation of the class of
employees eligible to receive Options or decrease the price at which Options may
be granted.
Any other provision of this Section 6 notwithstanding, the Option Committee
or the Board of Directors specifically is authorized to adopt any amendment to
this Plan deemed by the Board of Directors to be necessary or advisable to
assure that the incentive stock options or the non-qualified stock options
available under the Plan continue to be treated as such, respectively, under the
law.
Section 7. Application of Funds.
The proceeds received by the Company from the sale of Shares pursuant to
the exercise of Options will be used for general corporate purposes.
Section 8. No Obligation to Exercise Option.
The granting of an Option will impose no obligation upon the Optionee to
exercise such Option.
Section 9. Restrictions on Sale of Shares. Optionee may not dispose of
any Shares received under the Plan within one hundred and eighty (180) days of
the date on which the Company's initial S-1 Registration Statement for
registration of the Company's common stock under the Securities Act of 1933, as
amended, is declared effective.
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Section 10. Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board of Directors or
officers or employees of the Company or one of its Affiliates, members of the
Board of Directors and any officers or employees of the Company or any one of
its Affiliates to whom authority to act for the Board of Directors is delegated
shall be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided, however,
that within sixty (60) days after the institution of such action, suit or
proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
Section 11. Approval of Stockholders.
This Plan shall become effective on the date that it is adopted by the
Board of Directors; provided, however, that it shall become null and void if it
is not approved by a majority of the holders of the Company's Common Stock
within one year (365 days) of its adoption by the Board of Directors. The Option
Committee may grant Options hereunder prior to approval of the Plan or any
material amendments thereto by the holders of a majority of the Company's Common
Stock; provided, however, that no Option so granted shall be exercisable within
365 days of the date of the adoption or material amendment of the Plan, and all
Options so granted shall terminate and become null and void if the Plan is not
approved by a majority of the holders of the Company's Common Stock within 365
days of its adoption or material amendment.
-11-
AASTROM BIOSCIENCES, INC.
1992 EMPLOYEE INCENTIVE
STOCK OPTION AGREEMENT
AASTROM BIOSCIENCES, INC., a Michigan corporation (the "Company"), hereby
grants to __________________ ("Optionee"), an option to purchase a total of
_________________ shares (the "Shares") of common stock of the Company, at the
price determined as provided herein, and in all respects subject to the terms,
definitions and provisions of the Company's 1992 Incentive and Non-Qualified
Stock Option Plan (the "Plan") incorporated herein by reference. Terms which are
defined in the Plan shall have the same meanings when used herein.
1. Nature of the Option. This Option is an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. Exercise Price. The option price shall be __________________ for each
Share (the "Exercise Price"), which is not less than the fair market value of
each Share on the date hereof. The Option Price shall be adjusted
proportionately for increases or decreases in the number of outstanding Shares
resulting from stock splits.
3. Exercise of Option. Subject to Section 6 hereof, this Option shall be
exercisable during its term as follows:
(a) Right to Exercise. This Option shall be exercisable with respect
to ________________ Shares on ___________ and shall be exercisable with respect
to an additional _______________ Shares on the first day of every third month
thereafter, as long as Optionee remains an employee or director of the Company.
(b) Method of Exercise. This Option shall be exercisable by written
notice in the form of Exhibit A attached hereto. Such written notice shall be
signed by Optionee and shall be delivered in person, by certified mail, or by
such other means as the Company may permit to the Secretary of the Company. The
written notice shall be accompanied by payment of the aggregate Exercise Price.
No Shares will be issued pursuant to the exercise of this Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed.
(c) Number of Shares Exercisable. Each exercise of this Option in
part shall reduce, pro tanto, the total number of Shares that may thereafter be
purchased under such Option.
4. Optionee's Representations. If the shares which may be purchased
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), at the time this
Option is exercised, Optionee shall, concurrently with the exercise of all or
any portion of this Option, deliver to the Company his Investment Representation
Statement in the form attached hereto as Exhibit B.
5. Method of Payment. Payment of the Exercise Price, may be in any of the
following forms, or a combination thereof, in the discretion of the Company:
(a) cash or check in the full amount of the aggregate Exercise Price;
or
(b) surrender to the Company of other shares of Common Stock of the
Company having a fair market value on the date of surrender equal to the
aggregate Exercise Price of the Shares as to which this Option is being
exercised. If the Company's Common Stock is then quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") or
listed on a recognized securities exchange, the fair market value of the shares
shall be the representative closing price of the stock as obtained from Nasdaq
or such recognized securities exchange on the date of the exercise of the
Option, or if there is no such quotation on the date of the exercise, on the
last trading day prior to the date of exercise. If the Company's Common Stock is
not quoted on Nasdaq or listed on a recognized securities exchange, the fair
market value of such shares shall be as determined by the Board of Directors in
its sole discretion; or
(c) promissory note, bearing a reasonable rate of interest, requiring
at least annual payments of accrued interest, maturing in not more than four (4)
years, secured by the shares purchased, and being a full recourse obligation of
the Optionee. Such recourse promissory note shall be in a form satisfactory to
the Company, and the Company may require the Optionee to deposit any shares
securing the promissory note with an agent designated by the Company under the
terms and conditions of escrow and security agreements approved by the Company.
It shall be at the sole and absolute discretion of the Company's Board of
Directors as to whether or not the Optionee is allowed to exercise this Option
by a
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promissory note payment, and the Optionee shall have no right to do so unless
the Board of Directors expressly exercises its discretion to allow the use of a
promissory note. Any such approval by the Board of Directors shall not
constitute a precedent for any subsequent exercise of this Option by the
Optionee.
(d) through "Cashless Exercise." A "Cashless Exercise" means the
assignment in a form acceptable to the Company of the proceeds of a sale or loan
with respect to some or all of the Shares of Common Stock acquired upon the
exercise of the Option pursuant to a program or procedure approved by the
Company (including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to decline to
approve or terminate any such program or procedure.
6. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such Shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
7. Termination of Options.
(a) Except as provided herein, this Option shall terminate at such
time as Optionee ceases to be employed by the Company or ceases to be a director
of the Company.
(b) Upon the death of Optionee while in the employ of the Company or
while a director of the Company, Options held by Optionee which are exercisable
on the date of his or her death shall be exercisable by his or her executor(s)
or administrator(s) for a period of eighteen (18) months following the date of
Optionee's death.
(c) Upon termination of Optionee's employment with the Company (or if
Optionee is a director only, upon termination of the Optionee's term of office,
or if the Optionee is both an employee and a director, upon termination of both)
for any reason other than death,
-3-
disability or "Cause," as defined in Section 7(d), Options exercisable by
Optionee on the date of termination of employment shall be exercisable by
Optionee (or in the case of the Optionee's death subsequent to termination of
employment, by the Optionee's executor(s) or administrator(s)) for a period of
three (3) months from the date of Optionee's termination of employment.
(d) Upon the termination of Optionee's employment (or if Optionee is
a director only, upon termination of Optionee's term of office, or if Optionee
is both an employee and a director, upon termination of both) for "Cause," as
defined in this Section 7(d), all Options held by Optionee shall terminate
concurrently with receipt by the Optionee of oral or written notice that his or
her employment has been terminated. Termination for "Cause" shall include
termination by reason of being convicted of any felony or committing willful and
gross negligence or willful and gross misconduct in carrying out duties properly
assigned to Optionee by the Company.
(e) Upon termination of Optionee's employment due to the "disability"
of Optionee as such term is defined in Section 22(c)(3) of the Code an Option
exercisable by Optionee on the date of termination shall be exercisable by
Optionee (or Optionee's legal guardian or representative) for a period of one
(1) year from the date of Optionee's termination of employment.
(f) Notwithstanding the provisions of subsections (b), (c) and (e)
above, if a sale within the applicable time periods set forth in subsections
(b), (c) and (e) of this Section 7 of shares acquired upon the exercise of the
Option would subject the Optionee to suit under Section 16(b) of the Exchange
Act, the Option shall remain exercisable until the earliest to occur of (i) the
tenth (10th) day following the date on which a sale of such shares by the
Optionee would no longer be subject to such suit, (ii) the one hundred and
ninetieth (190th) day after the Optionee's termination of employment or service,
or (iii) the Option term date determined pursuant to Section 8. The Company
makes no representation as to the tax consequences of any such delayed exercise.
The Optionee should consult with the Optionee's own tax advisor as to the tax
consequences to the Optionee of any such delayed exercise.
8. Non-Transferability of Option. This Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner during the
lifetime of Optionee other than by will or the laws of descent and distribution,
and may be exercised during the lifetime of the Optionee
-4-
only by him or her. The terms of this Option shall be binding upon the
executors, administrators, heirs and successors of the Optionee.
9. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
term only in accordance with the terms of the Plan and this Option.
10. Early Disposition of Stock. Optionee hereby agrees that if he disposes
of any Shares received under this Option within one (1) year after such Shares
were transferred to him, or within two (2) years of the grant of this Option, he
will notify the Company in writing within 30 days after the date of any such
disposition.
11. Acknowledgment. The Optionee acknowledges receipt of a copy of the
Plan, which is annexed hereto as Exhibit C. The Optionee represents that he has
read the terms and provisions of the Plan and accepts this Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Plan.
12. Entire Agreement. This Agreement, together with the exhibits attached
hereto, represents the entire agreement between the parties.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Michigan.
14. Amendment. This Agreement may only be amended by a writing signed by
each of the parties hereto.
DATE OF GRANT: ________________________
AASTROM BIOSCIENCES, INC.
By:___________________________
R. Douglas Armstrong, Ph.D.
Its: President and CEO
-5-
Agreed to this ___ day of
___________________, 19__
__________________________
Optionee
-6-
EXHIBIT A
---------
NOTICE OF EXERCISE
-------------------
[Date]
AASTROM Biosciences, Inc.
Domino's Farms, Lobby L
P.O. Box 376
Ann Arbor, MI 48106
Attn.: Corporate Secretary
Dear Madam or Sir:
I hereby notify AASTROM Biosciences, Inc. of my intent to exercise
___________ Options granted to me pursuant to a Stock Option Agreement dated
_______________ at an exercise price of $______ per share. I have enclosed a
check for $________.
I hereby agree that if I dispose of any Shares received upon exercise
of the Option within one (1) year after this date of exercise, or within two (2)
years after the Date of Grant of this Option, I will notify the Company in
writing within 30 days after the date of any such disposition.
____________________________________
[Signature of Optionee]
____________________________________
[Print Name of Optionee]
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: [ ]
COMPANY: Aastrom Biosciences, Inc.
SECURITY: COMMON STOCK
AMOUNT: [ ] SHARES
DATE: [ ]
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company, the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired all such information about the Company as I deem
necessary and appropriate to enable me to reach an informed and knowledgeable
decision to acquire the Securities. I am purchasing these Securities for my own
account for investment and not with a view to, or for the resale in connection
with, any "distribution" thereof for purposes for the Securities Act of 1933, as
amended ("Securities Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein.
(c) I further understand that the Securities may not be sold publicly
and must be held indefinitely unless they are subsequently registered under the
Securities Act or unless an exemption from registration is available. I am able,
without impairing my financial condition, to hold the Securities for an
indefinite period of time and to suffer a complete loss of my investment. I
understand that the Company is under no obligation to register the Securities.
In addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, including, among other things: (1)
the availability of certain public information about the Company; (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and (3)
in the case of an affiliate, or of a non-affiliate who has held the securities
less than three years, the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I further understand that at the time I wish to sell the
Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that, in
such event, I would be precluded from selling the Securities under Rule 144 even
if the two-year minimum holding period had been satisfied. I understand that the
Company is not currently required to file reports pursuant to the Securities
Exchange Act of 1934, as amended, and is under no obligation to make Rule 144
available.
(f) I further understand that, in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the Securities and Exchange Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
Signature of Purchaser:
_________________________
Name:
Date: ____________________
AASTROM BIOSCIENCES, INC.
1992 EMPLOYEE NON-QUALIFIED
STOCK OPTION AGREEMENT
AASTROM BIOSCIENCES, INC., a Michigan corporation (the "Company"),
hereby grants to _______________________ ("Optionee"), an option to purchase a
total of ____________ shares (the "Shares") of common stock of the Company, at
the price determined as provided herein, and in all respects subject to the
terms, definitions and provisions of the Company's 1992 Incentive and Non-
Qualified Stock Option Plan (the "Plan") incorporated herein by reference.
Terms which are defined in the Plan shall have the same meanings when used
herein.
1. Nature of the Option. This Option is a non-qualified stock option and is
not intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The option price shall be $_______________ for each
Share (the "Exercise Price"), which is not less than the fair market value of
each Share on the date hereof. The Option Price shall be adjusted
proportionately for increases or decreases in the number of outstanding Shares
resulting from stock splits.
3. Exercise of Option. Subject to Section 6 hereof, this Option shall be
exercisable during its term as follows:
(a) Right to Exercise. This Option shall be exercisable with respect
to ______________ Shares on ______________ and shall be exercisable with respect
to an additional __________________ Shares on the first day of every third month
thereafter, as long as Optionee remains an employee, director or consultant of
the Company.
(b) Method of Exercise. This Option shall be exercisable by written
notice in the form of Exhibit A attached hereto. Such written notice shall be
signed by Optionee and shall be delivered in person, by certified mail, or by
such other means as the Company may permit to the Secretary of the Company. The
written notice shall be accompanied by payment of the aggregate Exercise Price.
No Shares will be issued pursuant to the exercise of this Option unless
such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed.
(c) Number of Shares Exercisable. Each exercise of this Option in part
shall reduce, pro tanto, the total number of Shares that may thereafter be
purchased under such Option.
4. Optionee's Representations. If the Shares which may be purchased
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), at the time this
Option is exercised, Optionee shall, concurrently with the exercise of all or
any portion of this Option, deliver to the Company his Investment Representation
Statement in the form attached hereto as Exhibit B.
5. Method of Payment. Payment of the Exercise Price, may be in any of the
following forms, or a combination thereof, in the discretion of the Company:
(a) cash or check in the full amount of the aggregate Exercise Price;
or
(b) surrender to the Company of other shares of Common Stock of the
Company having a fair market value on the date of surrender equal to the
aggregate Exercise Price of the Shares as to which this Option is being
exercised. If the Company's Common Stock is then quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") or
listed on a recognized securities exchange, the fair market value of the shares
shall be the representative closing price of the stock as obtained from the
Nasdaq or such recognized securities exchange on the date of the exercise of the
Option, or if there is no such quotation on the date of the exercise, on the
last trading day prior to the date of exercise. If the Company's Common Stock is
not quoted on Nasdaq or listed on a recognized securities exchange, the fair
market value of such shares shall be as determined by the Board of Directors in
its sole discretion; or
(c) promissory note, bearing a reasonable rate of interest, requiring
at least annual payments of accrued interest, maturing in not more than four (4)
years, secured by the shares purchased, and being a full recourse obligation of
the Optionee. Such recourse promissory note shall be in a form satisfactory to
the Company, and the Company may require the Optionee to deposit any shares
securing the promissory note
-2-
with an agent designated by the Company under the terms and conditions of escrow
and security agreements approved by the Company. It shall be at the sole and
absolute discretion of the Company's Board of Directors as to whether or not the
Optionee is allowed to exercise this Option by a promissory note payment, and
the Optionee shall have no right to do so unless the Board of Directors
expressly exercises its discretion to allow the use of a promissory note. Any
such approval by the Board of Directors shall not constitute a precedent for any
subsequent exercise of this Option by the Optionee.
(d) through "Cashless Exercise". A "Cashless Exercise" means the
assignment in a form acceptable to the Company of the proceeds of a sale or loan
with respect to some or all of the Shares of Common Stock acquired upon the
exercise of the Option pursuant to a program or procedure approved by the
Company (including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to decline to
approve or terminate any such program or procedure.
6. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such Shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
7. Termination of Options.
(a) Except as provided herein, this Option shall terminate at such
time as Optionee ceases to be employed by the Company or ceases to be a director
of or consultant to the Company.
(b) Upon the death of Optionee while in the employ of the Company or
while a director of or consultant to the Company, Options held by Optionee which
are exercisable on the date of his or her death shall be exercisable by his or
her executor(s) or administrator(s) for a period of eighteen (18) months
following the date of Optionee's death.
-3-
(c) Upon termination of Optionee's employment with or service as a
consultant to the Company (or if Optionee is a director only, upon termination
of the Optionee's term of office, or if the Optionee is both an employee and a
director, upon termination of both) for any reason other than death, disability
or "Cause," as defined in Section 7(d), Options exercisable by Optionee on the
date of termination of employment or service shall be exercisable by Optionee
(or in the case of the Optionee's death subsequent to termination of employment,
by the Optionee's executor(s) or administrator(s)) for a period of three (3)
months from the date of Optionee's termination of employment or service.
(d) Upon the termination of Optionee's employment or service as a
consultant (or if Optionee is a director only, upon termination of Optionee's
term of office, or if Optionee is both an employee and a director, upon
termination of both) for "Cause," as defined in this Section 7(d), all Options
held by Optionee shall terminate concurrently with receipt by the Optionee of
oral or written notice that his or her employment or service has been
terminated. Termination for "Cause" shall include termination by reason of being
convicted of any felony or committing willful and gross negligence or willful
and gross misconduct in carrying out duties properly assigned to Optionee by the
Company.
(e) Upon termination of Optionee's employment or service as a
consultant due to the "disability" of Optionee as such term is defined in
Section 22(c)(3) of the Code an Option exercisable by Optionee on the date of
termination shall be exercisable by Optionee (or Optionee's legal guardian or
representative) for a period of one (1) year from the date of Optionee's
termination of employment or service.
(f) Notwithstanding the provisions of subsections (b), (c) and (e)
above, if a sale within the applicable time periods set forth in subsections
(b), (c) and (e) of this Section 7 of shares acquired upon the exercise of the
Option would subject the Optionee to suit under Section 16(b) of the Exchange
Act, the Option shall remain exercisable until the earliest to occur of (i) the
tenth (10th) day following the date on which a sale of such shares by the
Optionee would no longer be subject to such suit, (ii) the one hundred and
ninetieth (190th) day after the Optionee's termination of employment or service,
or (iii) the Option term date determined pursuant to Section 8. The Company
makes no representation as to the tax consequences of any such delayed exercise.
The Optionee should consult with the Optionee's own tax advisor as to the tax
consequences to the Optionee of any such delayed exercise.
-4-
8. Non-Transferability of Option. This Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner during the
lifetime of Optionee other than by will or the laws of descent and distribution,
and may be exercised during the lifetime of the Optionee only by him or her. The
terms of this Option shall be binding upon the executors, administrators, heirs
and successors of the Optionee.
9. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
term only in accordance with the terms of the Plan and this Option.
10. Early Disposition of Stock. Optionee hereby agrees that if he disposes
of any Shares received under this Option within one (1) year after such Shares
were transferred to him, he will notify the Company in writing within 30 days
after the date of any such disposition.
11. Acknowledgment. The Optionee acknowledges receipt of a copy of the
Plan, which is annexed hereto as Exhibit C. The Optionee represents that he has
read the terms and provisions of the Plan and accepts this Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Plan.
12. Entire Agreement. This Agreement, together with the exhibits attached
hereto, represents the entire agreement between the parties.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Michigan.
14. Amendment. This Agreement may only be amended by a writing signed by
each of the parties hereto.
DATE OF GRANT: ___________________
AASTROM BIOSCIENCES, INC.
By: _________________________________
-5-
R. Douglas Armstrong, Ph.D.
Its: President and CEO
Agreed to this ___ day of
___________________, 19__.
__________________________
Optionee
-6-
EXHIBIT A
---------
NOTICE OF EXERCISE
----------------
[Date]
AASTROM Biosciences, Inc.
Domino's Farms, Lobby L
P.O. Box 376
Ann Arbor, MI 48106
Attn.: Corporate Secretary
Dear Madam or Sir:
I hereby notify AASTROM Biosciences, Inc. of my intent to exercise
___________ Options granted to me pursuant to a Stock Option Agreement dated
_______________ at an exercise price of $______ per share. I have enclosed a
check for $________.
___________________________________
[Signature of Optionee]
___________________________________
[Print Name of Optionee]
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: [ ]
COMPANY: Aastrom Biosciences, Inc.
SECURITY: COMMON STOCK
AMOUNT: [ ] SHARES
DATE: [ ]
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company, the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired all such information about the Company as I deem
necessary and appropriate to enable me to reach an informed and knowledgeable
decision to acquire the Securities. I am purchasing these Securities for my own
account for investment and not with a view to, or for the resale in connection
with, any "distribution" thereof for purposes for the Securities Act of 1933, as
amended ("Securities Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein.
(c) I further understand that the Securities may not be sold publicly
and must be held indefinitely unless they are subsequently registered under the
Securities Act or unless an exemption from registration is available. I am able,
without impairing my financial condition, to hold the Securities for an
indefinite period of time and to suffer a complete loss of my investment. I
understand that the Company is under no obligation to register the Securities.
In addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or
from an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, including, among other things: (1) the
availability of certain public information about the Company; (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and (3)
in the case of an affiliate, or of a non-affiliate who has held the securities
less than three years, the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I further understand that at the time I wish to sell the
Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that, in
such event, I would be precluded from selling the Securities under Rule 144 even
if the two-year minimum holding period had been satisfied. I understand that the
Company is not currently required to file reports pursuant to the Securities
Exchange Act of 1934, as amended, and is under no obligation to make Rule 144
available.
(f) I further understand that, in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the Securities and Exchange Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
Signature of Purchaser:
_________________________
Name:
Date: ____________________
EXHIBIT 10.6
AASTROM BIOSCIENCES, INC.
1996 OUTSIDE DIRECTORS STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
---------------------------------------
1.1 ESTABLISHMENT. The Aastrom Biosciences, Inc. 1996 Outside
Directors Stock Option Plan (the "Plan") is hereby established effective as of
the effective date of the initial registration by the Company of its Stock under
Section 12 of the Exchange Act (the "Effective Date").
1.2 PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract and retain highly qualified persons to serve as Outside Directors of
the Company and by creating additional incentive for Outside Directors to
promote the growth and profitability of the Participating Company Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed.
2. DEFINITIONS AND CONSTRUCTION.
----------------------------
2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means a committee of the Board duly appointed to
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
(d) "COMPANY" means Aastrom Biosciences, Inc., a Michigan
corporation, or any successor corporation thereto.
1
(e) "CONSULTANT" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.
(f) "DIRECTOR" means a member of the Board or the board of
directors of any other Participating Company.
(g) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan .
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(i) "FAIR MARKET VALUE" means, as of any date, if there is then
a public market for the Stock, the closing price of the Stock (or the mean of
the closing bid and asked prices of the Stock if the Stock is so reported
instead) as reported on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") System, the NASDAQ National Market System or such other
national or regional securities exchange or market system constituting the
primary market for the Stock. If the relevant date does not fall on a day on
which the Stock is trading on NASDAQ, the NASDAQ National Market System or other
national or regional securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date. If there is then no public market for
the Stock, the Fair Market Value on any relevant date shall be as determined by
the Board without regard to any restriction other than a restriction which, by
its terms, will never lapse.
(j) "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan.
(k) "OPTIONEE" means a person who has been granted one or more
Options.
(l) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee.
(m) "OUTSIDE DIRECTOR" means a Director of the Company who is
not an Employee.
2
(n) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(o) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(p) "PARTICIPATING COMPANY GROUP" means, at any point in time,
all corporations collectively which are then Participating Companies.
(q) "RULE 16b-3" means Rule 16b-3 as promulgated under the
Exchange Act, as amended from time to time, or any successor rule or regulation.
(r) "SERVICE" means the Optionee's service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. The Optionee's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption
or termination of the Optionee's Service. The Optionee's Service shall be deemed
to have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a
Participating Company.
(s) "STOCK" means the common stock, no par value, of the
Company, as adjusted from time to time in accordance with Section 4.2.
(t) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
use of the term "or" shall include the conjunctive as well as the disjunctive.
3. ADMINISTRATION.
--------------
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board, including any duly appointed Committee of the Board. All questions of
interpretation of the Plan or of any Option shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an
interest in the Plan or such Option. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election which is the responsibility
of or which is
3
allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, determination or election.
3.2 LIMITATIONS ON AUTHORITY OF THE BOARD. Notwithstanding any
other provision herein to the contrary, the Board shall have no authority,
discretion, or power to select the Outside Directors who will receive Options,
to set the exercise price of the Options, to determine the number of shares of
Stock to be subject to an Option or the time at which an Option shall be
granted, to establish the duration of an Option, or to alter any other terms or
conditions specified in the Plan, except in the sense of administering the Plan
subject to the provisions of the Plan.
4. SHARES SUBJECT TO PLAN.
----------------------
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be one hundred fifty thousand (150,000) (on a
post-split basis following the two-for-three reverse stock split of the Stock
approved by the Board on April 30, 1996) and shall consist of authorized but
unissued shares or reacquired shares of Stock or any combination thereof. If an
outstanding Option for any reason expires or is terminated or canceled or shares
of Stock acquired, subject to repurchase, upon the exercise of an Option are
repurchased by the Company, the shares of Stock allocable to the unexercised
portion of such Option, or such repurchased shares of Stock, shall again be
available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan, to the "Initial Option" and "Annual Option" (as defined in
Section 6.1), and to any outstanding Options, and in the exercise price of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to an "Ownership Change
Event" as defined in Section 8.1) shares of another corporation (the "NEW
SHARES"), the Board may unilaterally amend the outstanding Options to provide
that such Options are exercisable for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise price of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its sole discretion. Notwithstanding the foregoing,
any fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded down to the nearest whole number, and in no event may the
exercise price of any Option be decreased to an amount less than the par value,
if any, of the stock subject to the Option.
4
5. Eligibility and Type of Options.
-------------------------------
5.1 PERSONS ELIGIBLE FOR OPTIONS. An Option shall be granted only to
a person who, at the time of grant, is an Outside Director.
5.2 OPTIONS AUTHORIZED. Options shall be nonstatutory stock options;
that is, options which are not treated as incentive stock options within the
meaning of Section 422(b) of the Code.
6. Terms and Conditions of Options. Options shall be evidenced by Option
-------------------------------
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:
6.1 AUTOMATIC GRANT OF OPTIONS. Subject to execution by an Outside
Director of the appropriate Option Agreement, Options shall be granted
automatically and without further action of the Board, as follows:
(a) INITIAL OPTION. Each person who (i) is an Outside Director
on the Effective Date, or (ii) first becomes an Outside Director after the
Effective Date shall be granted an Option to purchase five thousand (5,000)
shares of Stock on the Effective Date or the date he or she first becomes an
Outside Director, respectively (an "Initial Option").
(b) ANNUAL OPTION. Each Outside Director (including any
Director of the Company who previously did not qualify as an Outside Director
but who subsequently becomes an Outside Director) shall be granted, on the date
immediately following the date of each annual meeting of the stockholders of the
Company (an "Annual Meeting") following which such person remains an Outside
Director, an Option to purchase five thousand (5,000) shares of Stock (an
"Annual Option"). Notwithstanding the foregoing, an Outside Director who has not
served continuously as a Director of the Company for at least six (6) months as
of the date immediately following such Annual Meeting shall not receive an
Annual Option on such date.
(c) RIGHT TO DECLINE OPTION. Notwithstanding the foregoing, any
person may elect not to receive an Option by delivering written notice of such
election to the Board no later than the day prior to the date such Option would
otherwise be granted. A person so declining an Option shall receive no payment
or other consideration in lieu of such declined Option. A person who has
declined an Option may revoke such election by delivering written notice of such
revocation to the Board no later than the day prior to the date such Option
would be granted pursuant to Section 6.1(a) or (b), as the case may be.
5
6.2 DISCRETION TO VARY OPTION SIZE. Notwithstanding any provision of
the Plan to the contrary, the Board may, in its sole discretion, increase or
decrease the number of shares of Stock that would otherwise be subject to one or
more Initial Options or Annual Options to be granted pursuant to Section 6.1 if,
at the time of such exercise of discretion, the exercise of such discretion
would not otherwise preclude any transaction in an equity security of the
Company by an officer or Director of a Participating Company from being exempt
from Section 16(b) of the Exchange Act pursuant to Rule 16b-3.
6.3 EXERCISE PRICE. The exercise price per share of Stock subject
to an Option shall be the Fair Market Value of a share of Stock on the date the
Option is granted.
6.4 EXERCISE PERIOD. Each Option shall terminate and cease to be
exercisable on the date ten (10) years after the date of grant of the Option
unless earlier terminated pursuant to the terms of the Plan or the Option
Agreement.
6.5 RIGHT TO EXERCISE OPTIONS.
Except as otherwise provided in the Plan or in the Option
Agreement, an Option shall (a) first become exercisable on the date which is one
(1) month after the date on which the Option was granted (the "Initial Vesting
Date"); and (b) be exercisable on and after the Initial Vesting Date and prior
to the termination thereof in an amount equal to the number of shares of Stock
initially subject to the Option multiplied by the Vested Ratio as set forth
below, less the number of shares previously acquired upon exercise thereof. The
Vested Ratio described in the preceding sentence shall be determined as follows:
Vested Ratio
------------
Prior to Initial Option Vesting Date 0
On Initial Vesting Date, provided 1/12
the Optionee's Service is continuous
from the date of grant of the Option
until the Initial Vesting Date
Plus
----
For each full month of 1/12
of the Optionee's continuous
6
Service from the Initial
Vesting Date until the Vested
Ratio equals 1/1, an additional
6.6 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value not less than the exercise price, (iii) by
the assignment of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a "CASHLESS EXERCISE"), or (iv) by any combination thereof.
7
(b) TENDER OF STOCK. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.
(c) CASHLESS EXERCISE. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.
6.7 TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value equal to all or any part of the federal,
state, local and foreign taxes, if any, required by law to be withheld by the
Participating Company Group with respect to such Option or the shares acquired
upon exercise thereof. Alternatively or in addition, in its sole discretion,
the Company shall have the right to require the Optionee to make adequate
provision for any such tax withholding obligations of the Participating Company
Group arising in connection with the Option or the shares acquired upon exercise
thereof. The Company shall have no obligation to deliver shares of Stock until
the Participating Company Group's tax withholding obligations have been
satisfied.
7. STANDARD FORM OF OPTION AGREEMENT.
---------------------------------
7.1 INITIAL OPTION. Unless otherwise provided for by the Board at
the time an Initial Option is granted, each Initial Option shall comply with and
be subject to the terms and conditions set forth in the form of Nonstatutory
Stock Option Agreement for Outside Directors (Initial Option) adopted by the
Board concurrently with its adoption of the Plan and as amended from time to
time.
7.2 ANNUAL OPTION. Unless otherwise provided for by the Board at the
time an Annual Option is granted, each Annual Option shall comply with and be
subject to the terms and conditions set forth in the form of Nonstatutory Stock
Option Agreement for Outside Directors (Annual Option) adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.
7.3 AUTHORITY TO VARY TERMS. Subject to the limitations set forth in
Section 3.2, the Board shall have the authority from time to time to vary the
terms of any of the standard forms of Option Agreement described in this Section
7 either in connection with the grant or amendment of an individual Option or in
connection with the authorization of a new standard form or forms; provided,
8
however, that the terms and conditions of any such new, revised or amended
standard form or forms of Option Agreement are not inconsistent with the terms
of the Plan. Such authority shall include, but not by way of limitation, the
authority to grant Options which are immediately exercisable subject to the
Company's right to repurchase any unvested shares of Stock acquired by the
Optionee upon the exercise of an Option in the event such Optionee's Service is
terminated for any reason.
8. TRANSFER OF CONTROL.
-------------------
8.1 DEFINITIONS.
(a) AN "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a
party;
(iii) the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company
9
or multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a
Transfer of Control, any unexercisable or unvested portion of the outstanding
Options shall be immediately exercisable and vested in full as of the date ten
(10) days prior to the date of the Transfer of Control. The exercise or vesting
of any Option that was permissible solely by reason of this Section 8.2 shall be
conditioned upon the consummation of the Transfer of Control. In addition, the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof, as the case may be (the "ACQUIRING CORPORATION"), may
either assume the Company's rights and obligations under outstanding Options or
substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation's stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Transfer of
Control nor exercised as of the date of the Transfer of Control shall terminate
and cease to be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, shares acquired upon exercise of an Option prior
to the Transfer of Control and any consideration received pursuant to the
Transfer of Control with respect to such shares shall continue to be subject to
all applicable provisions of the Option Agreement evidencing such Option except
as otherwise provided in such Option Agreement. Furthermore, notwithstanding
the foregoing, if the corporation the stock of which is subject to the
outstanding Options immediately prior to an Ownership Change Event described in
Section 8.1(a)(i) constituting a Transfer of Control is the surviving or
continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code, the outstanding Options
shall not terminate.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
-----------------------------
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
10. INDEMNIFICATION. In addition to such other rights of indemnification
---------------
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such
10
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such person is liable for gross negligence,
bad faith or intentional misconduct in duties; provided, however, that within
sixty (60) days after the institution of such action, suit or proceeding, such
person shall offer to the Company, in writing, the opportunity at its own
expense to handle and defend the same.
11. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend
--------------------------------
the Plan at any time. However, subject to changes in the law or other legal
requirements that would permit otherwise, without the approval of the Company's
stockholders, there shall be (a) no increase in the total number of shares of
Stock that may be issued under the Plan (except by operation of the provisions
of Section 4.2), and (b) no other amendment of the Plan that would require
approval of the Company's stockholders under any applicable law, regulation or
rule. In any event, no termination or amendment of the Plan may adversely affect
any then outstanding Option, or any unexercised portion thereof, without the
consent of the Optionee, unless such termination or amendment is necessary to
comply with any applicable law or government regulation.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing AASTROM Biosciences, Inc. 1996 Outside Directors Stock Option Plan
was duly adopted by the Board on April 30, 1996.
/s/ Todd E. Simpson
___________________________________
Todd E. Simpson, Secretary
11
AASTROM BIOSCIENCES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
FOR OUTSIDE DIRECTORS
(INITIAL OPTION)
THIS NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS (INITIAL
OPTION) (the "OPTION AGREEMENT") is made and entered into as of
, 199 , by and between Aastrom Biosciences, Inc. and
- -------------- -
- -----------------------------------------------------------------------------
(the "OPTIONEE").
The Company has granted to the Optionee an option to purchase certain
shares of Stock, upon the terms and conditions set forth in this Option
Agreement (the "OPTION").
1. DEFINITIONS AND CONSTRUCTION.
----------------------------
1.1 DEFINITIONS. Whenever used herein, the
following terms shall have their respective meanings set forth below:
(a) "DATE OF OPTION GRANT" means , 199 .
----------- -
(b) "NUMBER OF OPTION SHARES" means five thousand (5,000)
shares of Stock, as adjusted from time to time pursuant to Section 9.
(c) "EXERCISE PRICE" means $ per
-----------
share of Stock, as adjusted from time to time pursuant to Section 9.
(d) "INITIAL EXERCISE DATE" means the Initial
Vesting Date.
(e) "INITIAL VESTING DATE" means the date
occurring one (1) month after the Date of Option Grant.
12
(f) "VESTED RATIO" means, on any relevant date, the ratio
determined as follows:
Vested Ratio
------------
Prior to Initial Vesting Date 0
On Initial Vesting Date, 1/12
provided the Optionee's Service
is continuous from the Date of
Option Grant until the Initial
Vesting Date
PLUS
- ----
For each full month of the 1/12
Optionee's continuous Service
from the Initial Vesting Date
until the Vested Ratio equals
1/1, an additional
(g) "OPTION EXPIRATION DATE" means the date ten (10) years
after the Date of Option Grant.
(h) "BOARD" means the Board of Directors of the Company.
If one or more Committees have been appointed by the Board to administer the
Plan, "Board" shall also mean such Committee(s).
(i) "CODE" means the Internal Revenue Code of 1986,
as amended, and any applicable regulations promulgated thereunder.
(j) "COMMITTEE" means a committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by
the Board. Unless the powers of the Committee have been specifically limited,
the Committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law.
(k) "COMPANY" means Biosciences, Inc., a Michigan corporation, or any
successor corporation thereto.
(l) "CONSULTANT" means Aastrom any person, including an advisor,
engaged by a Participating Company to render services other than as an Employee
or a Director.
13
(m) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.
(n) "DISABILITY" means the permanent and total disability of
the Optionee within the meaning of Section 22(e)(3) of the Code.
(o) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan.
(p) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(q) "FAIR MARKET VALUE" means, as of any date, if there is
then a public market for the Stock, the closing price of the Stock (or the mean
of the closing bid and asked prices of the Stock if the Stock is so reported
instead) as reported on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") System, the NASDAQ National Market System or such other
national or regional securities exchange or market system constituting the
primary market for the Stock. If the relevant date does not fall on a day on
which the Stock is trading on NASDAQ, the NASDAQ National Market System or other
national or regional securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date. If there is then no public market for
the Stock, the Fair Market Value on any relevant date shall be as determined by
the Board without regard to any restriction other than a restriction which, by
its terms, will never lapse.
(r) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(s) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(t) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.
(u) "PLAN" means the Aastrom Biosciences, Inc. 1996 Outside Directors
Stock Option Plan.
14
(v) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(w) "SERVICE" means the Optionee's service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. The Optionee's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption
or termination of the Optionee's Service. The Optionee's Service shall be deemed
to have terminated either upon an actual termination of Service or upon the
corporation for which the Optionee performs Service ceasing to be a
Participating Company.
(x) "STOCK" means the common stock, no par value of the
Company, as adjusted from time to time in accordance with Section 9.
(y) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
1.2 CONSTRUCTION. Captions and titles contained herein are
for convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural, the plural shall include the
singular, and the term "or" shall include the conjunctive as well as the
disjunctive.
2. TAX STATUS OF THE OPTION. This Option is intended to be a
------------------------
nonstatutory stock option and shall not be treated as an incentive stock option
within the meaning of Section 422(b) of the Code.
3. ADMINISTRATION. All questions of interpretation concerning this
--------------
Option Agreement shall be determined by the Board, including any duly appointed
Committee of the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
4. EXERCISE OF THE OPTION.
----------------------
4.1 RIGHT TO EXERCISE. Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Exercise Date
and prior to the termination of the Option (as provided in Section 6)
in an amount not to exceed the Number of Option
15
Shares multiplied by the Vested Ratio less the number of shares previously
acquired upon exercise of the Option. In no event shall the Option be
exercisable for more shares than the Number of Option Shares.
4.2 METHOD OF EXERCISE. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such
other representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in Section 6, accompanied by full payment of the
aggregate Exercise Price for the number of shares of Stock being purchased. The
Option shall be deemed to be exercised upon receipt by the Company of such
written notice and the aggregate Exercise Price.
4.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below, payment of the aggregate Exercise Price for the number of shares of Stock
for which the Option is being exercised shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of whole shares of Stock owned by
the Optionee having a Fair Market Value not less than the aggregate Exercise
Price, (iii) by means of a Cashless Exercise, as defined in Section 4.3(c), or
(iv) by any combination of the foregoing.
(b) TENDER OF STOCK. Notwithstanding the foregoing, the Option may
not be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock. The
Option may not be exercised by tender to the Company of shares of Stock unless
such shares either have been owned by the Optionee for more than six (6) months
or were not acquired, directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. A "Cashless Exercise" means the assignment in
a form acceptable to the Company of the proceeds of a sale or loan with respect
to some or all of the shares of Stock acquired upon the exercise of
16
the Option pursuant to a program or procedure approved by the Company
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to decline to
approve or terminate any such program or procedure.
4.4 TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
agrees to make adequate provision for any sums required to satisfy the federal,
state, local and foreign tax withholding obligations of the Participating
Company Group, if any, which arise in connection with the Option, including,
without limitation, obligations arising upon (i) the exercise, in whole or in
part, of the Option, (ii) the transfer, in whole or in part, of any shares
acquired upon exercise of the Option, or (iii) the lapsing of any restriction
with respect to any shares acquired upon exercise of the Option.
4.5 CERTIFICATE REGISTRATION. Except in the event the Exercise Price
is paid by means of a Cashless Exercise, the certificate for the shares as to
which the Option is exercised shall be registered in the name of the Optionee,
or, if applicable, the heirs of the Optionee.
4.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of shares of Stock upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of shares of Stock upon exercise would
constitute a violation of any applicable federal, state or foreign securities
laws or other law or regulations or the requirements of any stock exchange or
market system upon which the Stock may then be listed. In addition, the Option
may not be exercised unless (i) a registration statement under the Securities
Act shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from
any regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares subject to the Option shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications
17
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation and to make any representation or warranty with respect
thereto as may be requested by the Company.
4.7 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NONTRANSFERABILITY OF THE OPTION. The Option may be exercised during
--------------------------------
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no
-------------------------
longer be exercised on the first to occur of (a) the Option Expiration Date, (b)
the last date for exercising the Option following termination of the Optionee's
Service as described in Section 7, or (c) a Transfer of Control to the extent
provided in Section 8.
7. EFFECT OF TERMINATION OF SERVICE.
--------------------------------
7.1 OPTION EXERCISABILITY.
(a) DISABILITY. If the Optionee's Service with the Participating
Company Group is terminated because of the Disability of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or the
Optionee's guardian or legal representative) at any time prior to the expiration
of twelve (12) months after the date on which the Optionee's Service terminated,
but in any event no later than the Option Expiration Date.
(b) DEATH. If the Optionee's Service with the Participating Company
Group is terminated because of the death of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee (or the Optionee's legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee's death) at any time prior to the expiration of twelve
(12) months after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date. The Optionee's Service
shall be deemed to have terminated on account of death if the Optionee dies
within three (3) months after the Optionee's termination of Service.
18
(c) OTHER TERMINATION OF SERVICE. If the Optionee's Service with the
Participating Company Group terminates for any reason, except Disability or
death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee's Service terminated, may be exercised by the
Optionee within three (3) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date.
7.2 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.
7.3 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(B). Notwithstanding
the foregoing, if a sale, within the applicable time periods set forth in
Section 7.1, of shares acquired upon the exercise of the Option would subject
the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.
8. OWNERSHIP CHANGE AND TRANSFER OF CONTROL.
----------------------------------------
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred
if any of the followin g occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a
party;
(iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, the "Transaction")
wherein the stockholders of the Company immediately before the Transaction do
not retain imme diately after the Transaction, in substantially the
19
same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTION. In the event of a
Transfer of Control, any unexercised portion of the Option shall be immediately
exercisable and vested in full as of the date ten (10) days prior to the date of
the Transfer of Control. Any exercise of the Option that was permissible solely
by reason of this Section 8.2 shall be conditioned upon the consummation of the
Transfer of Control. In addition, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and obligations
under the Option or substitute for the Option a substantially equivalent option
for the Acquiring Corporation's stock. The Option shall terminate and cease to
be outstanding effective as of the date of the Transfer of Control to the extent
that the Option is neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised as of the
date of the Transfer of Control. Notwithstanding the foregoing, shares acquired
upon exercise of the Option prior to the Transfer of Control and any
consideration received pursuant to the Transfer of Control with respect to such
shares shall continue to be subject to all applicable provisions of this Option
Agreement except as otherwise provided herein. Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the Option
immediately prior to an Ownership Change Event described in Section 8.1(a)(i)
constituting a Transfer of Control is the surviving or continuing corporation
and immediately after such Ownership Change Event less than fifty percent (50%)
of the total combined voting power of its voting stock is held by another
corporation or by other corporations that are members of an affiliated group
within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the Option shall not terminate.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
--------------------------------------------
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
20
converted into, or otherwise become (whether or not pursuant to an Ownership
Change Event) shares of another corporation (the "NEW SHARES"), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise Price shall be adjusted in a fair and equitable manner, as determined
by the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 9 shall
be rounded down to the nearest whole number, and in no event may the Exercise
Price be decreased to an amount less than the par value, if any, of the stock
subject to the Option.
10. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a
------------------------
stockholder with respect to any shares covered by the Option until the date of
the issuance of a certificate for the shares for which the Option has been
exercised (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company). No adjustment shall be
made for dividends, distributions or other rights for which the record date is
prior to the date such certificate is issued, except as provided in Section 9.
11. LEGENDS. The Company may at any time place legends referencing any
-------
applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to carry out
the provisions of this Section.
12. BINDING EFFECT. Subject to the restrictions on transfer set forth
--------------
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
13. TERMINATION OR AMENDMENT. The Board may terminate or amend the Plan
------------------------
or the Option at any time; provided, however, that no such termination or
amendment may adversely affect the Option or any unexercised portion hereof
without the consent of the Optionee unless such termination or amendment is
necessary to comply with any applicable law, regulation or rule. No
amendment or addition to this Option Agreement shall be effective unless in
writing.
14. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
--------------------
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group with respect to such subject
matter other
21
than those as set forth or provided for herein. To the extent contemplated
herein, the provisions of this Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.
15. APPLICABLE LAW. This Option Agreement shall be governed by the laws
--------------
of the State of Michigan as such laws are applied to agreements between Michigan
residents entered into and to be performed entirely within the State of
Michigan.
AASTROM BIOSCIENCES, INC.
By:________________________________
Title:_______________________________
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
OPTIONEE
Date:_______________________________ ____________________________________
22
AASTROM BIOSCIENCES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
FOR OUTSIDE DIRECTORS
(ANNUAL OPTION)
THIS NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS (ANNUAL
OPTION) (the "OPTION AGREEMENT") is made and entered into as of
,199 by and between Aastrom Biosciences, Inc. and
- -------- - ------------------------
(the "OPTIONEE").
The Company has granted to the Optionee an option to purchase certain
shares of Stock, upon the terms and conditions set forth in this Option
Agreement (the "OPTION").
1. DEFINITIONS AND CONSTRUCTION.
----------------------------
1.1 DEFINITIONS. Whenever used herein, the
following terms shall have their respective meanings set forth below:
(a) "DATE OF OPTION GRANT" means ,199 .
----------- -
(b) "NUMBER OF OPTION SHARES" means five thousand (5,000)
shares of Stock, as adjusted from time to time pursuant to Section 9.
(c) "EXERCISE PRICE" means $ ____________ per
share of Stock, as adjusted from time to time pursuant to Section 9.
(d) "INITIAL EXERCISE DATE" means the Initial
Vesting Date.
(e) "INITIAL VESTING DATE" means the date
occurring one (1) month after the Date of Option Grant.
23
(f) "VESTED RATIO" means, on any relevant date, the ratio
determined as follows:
Vested Ratio
------------
Prior to Initial Vesting Date 0
On Initial Vesting Date, 1/12
provided the Optionee's Service
is continuous from the Date of
Option Grant until the Initial
Vesting Date
Plus
- ----
For each full month of the 1/12
Optionee's continuous Service
from the Initial Vesting Date
until the Vested Ratio equals
1/1, an additional
(g) "OPTION EXPIRATION DATE" means the date ten (10) years after
the Date of Option Grant.
(h) "BOARD" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the Plan, "Board"
shall also mean such Committee(s).
(i) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(j) "COMMITTEE" means a committee of the Board duly appointed to
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted in the Plan, including,
without limitation, the power to amend or terminate the Plan at any time,
subject to the terms of the Plan and any applicable limitations imposed by law.
(k) "COMPANY" means Aastrom Biosciences, Inc., a Michigan corporation,
or any successor corporation thereto.
(l) "CONSULTANT" means Aastrom any person, including an advisor,
engaged by a Participating Company to render services other than as an Employee
or a Director.
24
(m) "DIRECTOR" means a member of the Board or of the board of
directors of any other Participating Company.
(n) "DISABILITY" means the permanent and total disability of the
Optionee within the meaning of Section 22(e)(3) of the Code.
(o) "EMPLOYEE" means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of a
Participating Company; provided, however, that neither service as a Director nor
payment of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.
(p) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(q) "FAIR MARKET VALUE" means, as of any date, if there is then a
public market for the Stock, the closing price of the Stock (or the mean of the
closing bid and asked prices of the Stock if the Stock is so reported instead)
as reported on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") System, the NASDAQ National Market System or such other
national or regional securities exchange or market system constituting the
primary market for the Stock. If the relevant date does not fall on a day on
which the Stock is trading on NASDAQ, the NASDAQ National Market System or other
national or regional securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date. If there is then no public market for
the Stock, the Fair Market Value on any relevant date shall be as determined by
the Board without regard to any restriction other than a restriction which, by
its terms, will never lapse.
(r) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(s) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(t) "PARTICIPATING COMPANY GROUP" means, at any point in time, all
corporations collectively which are then Participating Companies.
(u) "PLAN" means the Aastrom Biosciences, Inc. 1996 Outside Directors
Stock Option Plan.
25
(v) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(w) "SERVICE" means the Optionee's service with the Participating
Company Group, whether in the capacity of an Employee, a Director or a
Consultant. The Optionee's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption
or termination of the Optionee's Service. The Optionee's Service shall be
deemed to have terminated either upon an actual termination of Service or upon
the corporation for which the Optionee performs Service ceasing to be a
Participating Company.
(x) "STOCK" means the common stock, no par value, of the Company, as
adjusted from time to time in accordance with Section 9.
(y) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Code.
1.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural, the plural shall include the
singular, and the term "or" shall include the conjunctive as well as the
disjunctive.
2. TAX STATUS OF THE OPTION. This Option is intended to be a
------------------------
nonstatutory stock option and shall not be treated as an incentive stock option
within the meaning of Section 422(b) of the Code.
3. ADMINISTRATION. All questions of interpretation concerning this
--------------
Option Agreement shall be determined by the Board, including any duly appointed
Committee of the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
4. EXERCISE OF THE OPTION.
----------------------
4.1 RIGHT TO EXERCISE. Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Exercise Date and prior to
the termination of the Option (as provided in Section 6) in an amount not to
exceed the Number of Option
26
Shares multiplied by the Vested Ratio less the number of shares previously
acquired upon exercise of the Option. In no event shall the Option be
exercisable for more shares than the Number of Option Shares.
4.2 METHOD OF EXERCISE. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such
other representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in Section 6, accompanied by full payment of the
aggregate Exercise Price for the number of shares of Stock being purchased. The
Option shall be deemed to be exercised upon receipt by the Company of such
written notice and the aggregate Exercise Price.
4.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below, payment of the aggregate Exercise Price for the number of shares of Stock
for which the Option is being exercised shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of whole shares of Stock owned by
the Optionee having a Fair Market Value not less than the aggregate Exercise
Price, (iii) by means of a Cashless Exercise, as defined in Section 4.3(c), or
(iv) by any combination of the foregoing.
(b) TENDER OF STOCK. Notwithstanding the foregoing, the Option may
not be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock. The
Option may not be exercised by tender to the Company of shares of Stock unless
such shares either have been owned by the Optionee for more than six (6) months
or were not acquired, directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. A "CASHLESS EXERCISE" means the assignment in
a form acceptable to the Company of the proceeds of a sale or loan with respect
to some or all of the shares of Stock acquired upon the exercise of
27
the Option pursuant to a program or procedure approved by the Company
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to decline to
approve or terminate any such program or procedure.
4.4 TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
agrees to make adequate provision for any sums required to satisfy the federal,
state, local and foreign tax withholding obligations of the Participating
Company Group, if any, which arise in connection with the Option, including,
without limitation, obligations arising upon (i) the exercise, in whole or in
part, of the Option, (ii) the transfer, in whole or in part, of any shares
acquired upon exercise of the Option, or (iii) the lapsing of any restriction
with respect to any shares acquired upon exercise of the Option.
4.5 CERTIFICATE REGISTRATION. Except in the event the Exercise Price
is paid by means of a Cashless Exercise, the certificate for the shares as to
which the Option is exercised shall be registered in the name of the Optionee,
or, if applicable, the heirs of the Optionee.
4.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of shares of Stock upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of shares of Stock upon exercise would
constitute a violation of any applicable federal, state or foreign securities
laws or other law or regulations or the requirements of any stock exchange or
market system upon which the Stock may then be listed. In addition, the Option
may not be exercised unless (i) a registration statement under the Securities
Act shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED
EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from
any regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
shares subject to the Option shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications
28
that may be necessary or appropriate, to evidence compliance with any applicable
law or regulation and to make any representation or warranty with respect
thereto as may be requested by the Company.
4.7 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NONTRANSFERABILITY OF THE OPTION. The Option may be exercised during
--------------------------------
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no
-------------------------
longer be exercised on the first to occur of (a) the Option Expiration Date, (b)
the last date for exercising the Option following termination of the Optionee's
Service as described in Section 7, or (c) a Transfer of Control to the extent
provided in Section 8.
7. EFFECT OF TERMINATION OF SERVICE.
--------------------------------
7.1 OPTION EXERCISABILITY.
(a) DISABILITY. If the Optionee's Service with the Participating
Company Group is terminated because of the Disability of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or the
Optionee's guardian or legal representative) at any time prior to the expiration
of twelve (12) months after the date on which the Optionee's Service terminated,
but in any event no later than the Option Expiration Date.
(b) DEATH. If the Optionee's Service with the Participating Company
Group is terminated because of the death of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee (or the Optionee's legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee's death) at any time prior to the expiration of twelve
(12) months after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date. The Optionee's Service
shall be deemed to have terminated on account of death if the Optionee dies
within three (3) months after the Optionee's termination of Service.
29
(c) OTHER TERMINATION OF SERVICE. If the Optionee's Service with the
Participating Company Group terminates for any reason, except Disability or
death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee's Service terminated, may be exercised by the
Optionee within three (3) months after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date.
7.2 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.
7.3 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(B). Notwithstanding
the foregoing, if a sale, within the applicable time periods set forth in
Section 7.1, of shares acquired upon the exercise of the Option would subject
the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee's termination of Service, or (iii) the Option Expiration
Date.
8. OWNERSHIP CHANGE AND TRANSFER OF CONTROL.
----------------------------------------
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the
30
same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTION. In the event of a
Transfer of Control, any unexercised portion of the Option shall be immediately
exercisable and vested in full as of the date ten (10) days prior to the date of
the Transfer of Control. Any exercise of the Option that was permissible solely
by reason of this Section 8.2 shall be conditioned upon the consummation of the
Transfer of Control. In addition, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and obligations
under the Option or substitute for the Option a substantially equivalent option
for the Acquiring Corporation's stock. The Option shall terminate and cease to
be outstanding effective as of the date of the Transfer of Control to the extent
that the Option is neither assumed or substituted for by the Acquiring
Corporation in connection with the Transfer of Control nor exercised as of the
date of the Transfer of Control. Notwithstanding the foregoing, shares acquired
upon exercise of the Option prior to the Transfer of Control and any
consideration received pursuant to the Transfer of Control with respect to such
shares shall continue to be subject to all applicable provisions of this Option
Agreement except as otherwise provided herein. Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the Option
immediately prior to an Ownership Change Event described in Section 8.1(a)(i)
constituting a Transfer of Control is the surviving or continuing corporation
and immediately after such Ownership Change Event less than fifty percent (50%)
of the total combined voting power of its voting stock is held by another
corporation or by other corporations that are members of an affiliated group
within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the Option shall not terminate.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
--------------------------------------------
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
31
converted into, or otherwise become (whether or not pursuant to an Ownership
Change Event) shares of another corporation (the "NEW SHARES"), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise Price shall be adjusted in a fair and equitable manner, as determined
by the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 9 shall
be rounded down to the nearest whole number, and in no event may the Exercise
Price be decreased to an amount less than the par value, if any, of the stock
subject to the Option.
10. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a
------------------------
stockholder with respect to any shares covered by the Option until the date of
the issuance of a certificate for the shares for which the Option has been
exercised (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company). No adjustment shall be
made for dividends, distributions or other rights for which the record date is
prior to the date such certificate is issued, except as provided in Section 9.
11. LEGENDS. The Company may at any time place legends referencing any
-------
applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to carry out
the provisions of this Section.
12. BINDING EFFECT. Subject to the restrictions on transfer set forth
--------------
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
13. TERMINATION OR AMENDMENT. The Board may terminate or amend the Plan
------------------------
or the Option at any time; provided, however, that no such termination or
amendment may adversely affect the Option or any unexercised portion hereof
without the consent of the Optionee unless such termination or amendment is
necessary to comply with any applicable law or government regulation. No
amendment or addition to this Option Agreement shall be effective unless in
writing.
14. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
--------------------
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group with respect to such subject
matter other
32
than those as set forth or provided for herein. To the extent contemplated
herein, the provisions of this Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.
15. APPLICABLE LAW. This Option Agreement shall be governed by the laws
--------------
of the State of Michigan as such laws are applied to agreements between Michigan
residents entered into and to be performed entirely within the State of
Michigan.
AASTROM BIOSCIENCES, INC.
By:________________________________
Title:_______________________________
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
OPTIONEE
Date:_______________________________ ____________________________________
33
than those as set forth or provided for herein. To the extent contemplated
herein, the provisions of this Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.
15. APPLICABLE LAW. This Option Agreement shall be governed by the laws
--------------
of the State of Michigan as such laws are applied to agreements between Michigan
residents entered into and to be performed entirely within the State of
Michigan.
AASTROM BIOSCIENCES, INC.
By:________________________________
Title:_______________________________
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
OPTIONEE
Date:_______________________________ ____________________________________
34
EXHIBIT 10.7
AASTROM BIOSCIENCES, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
---------------------------------------
1.1 ESTABLISHMENT. The Biosciences, Inc. 1996 Employee Stock
Purchase Plan (the "Plan") is hereby established effective as of the effective
date of the initial registration by the Company of its Stock under Section 12 of
the Exchange Act (the "Effective Date").
1.2 PURPOSE. The purpose of the Plan to provide Eligible Employees
of the Participating Company Group with an opportunity to acquire a proprietary
interest in the Company through the purchase of Stock. The Company intends that
the Plan shall qualify as an "employee stock purchase plan" under Section 423 of
the Code (including any amendments or replacements of such section), and the
Plan shall be so construed.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.
2. DEFINITIONS AND CONSTRUCTION.
----------------------------
2.1 DEFINITIONS. Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means a committee of the Board duly appointed
to administer the Plan and having such powers as shall be specified by the
Board. Unless the powers of the Committee have been specifically limited, the
Committee shall have all of the powers of the Board granted herein, including,
without limitation, the power to amend or terminate the Plan at any time,
subject to the terms of the Plan and any applicable limitations imposed by law.
1
(d) "COMPANY" means Biosciences, Inc., a Michigan corporation,
or any successor corporation thereto.
(e) "COMPENSATION" means, with respect to an Offering Period
under the Plan, all amounts paid in cash in the forms of base salary,
commissions, overtime, bonuses, annual awards, other incentive payments, shift
premiums, and all other compensation paid in cash during such Offering Period
before deduction for any contributions to any plan maintained by a Participating
Company and described in Section 401(k) or Section 125 of the Code. Compensation
shall not include reimbursements of expenses, allowances, long-term disability,
workers' compensation or any amount deemed received without the actual transfer
of cash or any amounts directly or indirectly paid pursuant to the Plan or any
other stock purchase or stock option plan.
(f) "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in Section 5 for eligibility to participate in the Plan.
(g) "EMPLOYEE" means any person treated as an employee
(including an officer or a director who is also treated as an employee) in the
records of a Participating Company and for purposes of Section 423 of the Code;
provided, however, that neither service as a director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan.
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(i) "FAIR MARKET VALUE" means, as of any date, if there is then
a public market for the Stock, the closing price of a share of Stock (or the
mean of the closing bid and asked prices of a share of Stock if the Stock is so
reported instead) as reported on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") System, the NASDAQ National Market System or such
other national or regional securities exchange or market system constituting the
primary market for the Stock. If the relevant date does not fall on a day on
which the Stock is trading on NASDAQ, the NASDAQ National Market System or other
national or regional securities exchange or market system, the date on which the
Fair Market Value shall be established shall be the last day on which the Stock
was so traded prior to the relevant date, or such other appropriate day as shall
be determined by the Board, in its sole discretion. If there is then no public
market for the Stock, the Fair Market Value on any relevant date shall be as
determined by the Board without regard to any restriction other than a
restriction which, by its terms, will never lapse. Notwithstanding the
foregoing, the Fair Market Value per share of Stock on the Effective Date shall
be deemed to be the public offering price set forth in the final prospectus
filed with the Securities and Exchange Commission in connection with the initial
public offering of the Stock.
2
(j) "OFFERING" means an offering of Stock as provided in
Section 6.
(k) "OFFERING DATE" means, for any Offering Period, the first
day of such Offering Period.
(l) "OFFERING PERIOD" means a period determined in accordance
with Section 6.1.
(m) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(n) "PARTICIPANT" means an Eligible Employee participating in
the Plan.
(o) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation which the Board determines should be
included in the Plan. The Board shall have the sole and absolute discretion to
determine from time to time what Parent Corporations or Subsidiary Corporations
shall be Participating Companies.
(p) "PARTICIPATING COMPANY GROUP" means, at any point in time,
the Company and all other corporations collectively which are then Participating
Companies.
(q) "PURCHASE DATE" means, for any Purchase Period, the last
day of such Purchase Period.
(r) "PURCHASE PERIOD" means a period determined in accordance
with Section 6.2.
(s) "PURCHASE PRICE" means the price at which a share of Stock
may be purchased pursuant to the Plan, as determined in accordance with Section
9.
(t) "PURCHASE RIGHT" means an option pursuant to the Plan to
purchase such shares of Stock as provided in Section 8 which may or may not be
exercised at the end of an Offering Period. Such option arises from the right of
a Participant to withdraw such Participant's accumulated payroll deductions (if
any) and terminate participation in the Plan or any Offering therein at any time
during a Purchase Period.
(u) "STOCK" means the common stock, no par value, of the
Company, as adjusted from time to time in accordance with Section 4.2.
3
(v) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
use of the term "or" shall include the conjunctive as well as the disjunctive.
3. ADMINISTRATION. The Plan shall be administered by the Board, including
--------------
any duly appointed Committee of the Board. All questions of interpretation of
the Plan or of any Purchase Right shall be determined by the Board and shall be
final and binding upon all persons having an interest in the Plan or such
Purchase Right. Subject to the provisions of the Plan, the Board shall
determine all of the relevant terms and conditions of Purchase Rights granted
pursuant to the Plan; provided, however, that all Participants granted Purchase
Rights pursuant to the Plan shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code. All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.
4. SHARES SUBJECT TO PLAN.
----------------------
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be two hundred fifty thousand (250,000) (on a
post-split basis following the two-for-three reverse stock split of the Stock
approved by the Board on April 30, 1996) and shall consist of authorized but
unissued or reacquired shares of the Stock, or any combination thereof. If an
outstanding Purchase Right for any reason expires or is terminated or canceled,
the shares of Stock allocable to the unexercised portion of such Purchase Right
shall again be available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company, or
in the event of any merger (including a merger effected for the purpose of
changing the Company's domicile), sale of assets or other reorganization in
which the Company is a party, appropriate adjustments shall be made in the
number and class of shares subject to the Plan, to the Per Offering Share Limit
set forth in Section 8.1 and to each Purchase Right and in the Purchase Price.
5. ELIGIBILITY.
-----------
5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Any Employee of a Participating
Company is eligible to participate in the Plan except the following:
(a) Employees who are customarily employed by the Participating
Company Group for twenty (20) hours or less per week;
4
(b) Employees who are customarily employed by the Participating
Company Group for not more than five (5) months in any calendar year; and
(c) Employees who own or hold options to purchase or who, as a
result of participation in the Plan, would own or hold options to purchase,
stock of the Company or of any Parent Corporation or Subsidiary Corporation
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of such corporation within the meaning of Section
423(b)(3) of the Code.
5.2 LEASED EMPLOYEES EXCLUDED. Notwithstanding anything herein to the
contrary, any individual performing services for a Participating Company solely
through a leasing agency or employment agency shall not be deemed an "Employee"
of such Participating Company.
6. OFFERINGS.
---------
6.1 OFFERING PERIODS. Except as otherwise set forth below, the Plan
shall be implemented by sequential Offerings of approximately twenty-four (24)
months duration (an "OFFERING PERIOD"); provided, however that the first
Offering Period shall commence on the Effective Date and end on August 31, 1998
(the "INITIAL OFFERING PERIOD"). Subsequent Offerings shall commence on the
first days of March and September of each year and end on the last days of the
second February and August, respectively, occurring thereafter. Notwithstanding
the foregoing, the Board may establish a different term for one or more
Offerings or different commencing or ending dates for such Offerings; provided,
however, that no Offering may exceed a term of twenty-seven (27) months. An
Employee who becomes an Eligible Employee after an Offering Period has commenced
shall not be eligible to participate in such Offering but may participate in any
subsequent Offering provided such Employee is still an Eligible Employee as of
the commencement of any such subsequent Offering. Eligible Employees may not
participate in more than one Offering at a time. In the event the first or last
day of an Offering Period is not a business day, the Company shall specify the
business day that will be deemed the first or last day, as the case may be, of
the Offering Period.
6.2 PURCHASE PERIODS. Each Offering Period shall consist of four (4)
consecutive purchase periods of approximately six (6) months duration
(individually, a "PURCHASE PERIOD"). The Purchase Period commencing on the
Offering Date of the Initial Offering Period shall end on February 28, 1997. A
Purchase Period commencing on the first day of March shall end on the last day
of the next following August. A Purchase Period commencing on the first day of
September shall end on the last day of the next following February.
Notwithstanding the foregoing, the Board may establish a different term for one
or more Purchase Periods or different commencing or ending dates for such
Purchase
5
Periods. In the event the first or last day of a Purchase Period is not a
business day, the Company shall specify the business day that will be deemed the
first or last day, as the case may be, of the Purchase Period.
6.3 GOVERNMENTAL APPROVAL; STOCKHOLDER APPROVAL. Notwithstanding any
other provision of the Plan to the contrary, any Purchase Right granted pursuant
to the Plan shall be subject to (a) obtaining all necessary governmental
approvals or qualifications of the sale or issuance of the Purchase Rights or
the shares of Stock and (b) obtaining stockholder approval of the Plan.
Notwithstanding the foregoing, stockholder approval shall not be necessary in
order to grant any Purchase Right granted in the Plan's Initial Offering Period;
provided, however, that the exercise of any such Purchase Right shall be subject
to obtaining stockholder approval of the Plan.
7. PARTICIPATION IN THE PLAN.
-------------------------
7.1 INITIAL PARTICIPATION. An Eligible Employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements of Section 5 and delivering to the Company's payroll office or
other office designated by the Company not later than the close of business for
such office on the last business day before such Offering Date (the
"SUBSCRIPTION DATE") a subscription agreement indicating the Employee's election
to participate in the Plan and authorizing payroll deductions. An Eligible
Employee who does not deliver a subscription agreement to the Company's payroll
or other designated office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such Employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Company may, from time to time, change the
Subscription Date as deemed advisable by the Company in its sole discretion for
proper administration of the Plan.
7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (a) ceases to be an Eligible Employee, (b)
withdraws from the Plan pursuant to Section 14.2 or (c) terminates employment as
provided in Section 15. If a Participant automatically may participate in a
subsequent Offering Period pursuant to this Section 7.2, then the Participant is
not required to file any additional subscription agreement for such subsequent
Offering Period in order to continue participation in the Plan. However, a
Participant may file a subscription agreement with respect to a subsequent
Offering Period if the Participant desires to change any of the Participant's
elections contained in the Participant's then effective subscription agreement.
6
8. RIGHT TO PURCHASE SHARES.
------------------------
8.1 PURCHASE RIGHT. Except as set forth below, during an Offering
Period each Participant in such Offering Period shall have a Purchase Right
consisting of the right to purchase that number of whole shares of Stock arrived
at by dividing Fifty Thousand Dollars ($50,000) by the Fair Market Value of a
share of Stock on the Offering Date of such Offering Period; provided, however,
that such number shall not exceed five thousand (5,000) shares (the "Per
Offering Share Limit"). Shares of Stock may only be purchased through a
Participant's payroll deductions pursuant to Section 10.
8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. Notwithstanding the
foregoing, if the Board shall establish an Offering Period of less than twenty-
three and one-half (23 1/2) months or more than twenty-four and one-half (24
1/2) months in duration, (a) the dollar amount in Section 8.1 shall be
determined by multiplying $2,083.33 by the number of months in the Offering
Period and rounding to the nearest whole dollar, and (b) the Per Offering Share
Limit shall be determined by multiplying 208.33 shares by the number of months
in the Offering Period and rounding to the nearest whole share. For purposes of
the preceding sentence, fractional months shall be rounded to the nearest whole
month.
9. PURCHASE PRICE. The Purchase Price at which each share of Stock may be
--------------
acquired in a given Offering Period pursuant to the exercise of all or any
portion of a Purchase Right granted under the Plan shall be set by the Board;
provided, however, that the Purchase Price shall not be less than eighty-five
percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on
the Offering Date of the Offering Period, or (b) the Fair Market Value of a
share of Stock on the Purchase Date of the Offering Period. Unless otherwise
provided by the Board prior to the commencement of an Offering Period, the
Purchase Price for that Offering Period shall be eighty-five percent (85%) of
the lesser of (a) the Fair Market Value of a share of Stock on the Offering Date
of the Offering Period, or (b) the Fair Market Value of a share of Stock on the
Purchase Date of the Offering Period.
10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION. Shares of
--------------------------------------------------------
Stock which are acquired pursuant to the exercise of all or any portion of a
Purchase Right for an Offering Period may be paid for only by means of payroll
deductions from the Participant's Compensation accumulated during the Offering
Period. Except as set forth below, the amount of Compensation to be deducted
from a Participant's Compensation during each pay period shall be determined by
the Participant's subscription agreement.
10.1 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall continue to
the end of the Offering Period unless sooner altered or terminated as provided
in the Plan.
7
10.2 LIMITATIONS ON PAYROLL DEDUCTIONS. The amount of payroll
deductions with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed ten percent (10%) of the
Participant's Compensation for such pay period. Notwithstanding the foregoing,
the Board may change the limits on payroll deductions effective as of a future
Offering Date, as determined by the Board. Amounts deducted from Compensation
shall be reduced by any amounts contributed by the Participant and applied to
the purchase of Company stock pursuant to any other employee stock purchase plan
qualifying under Section 423 of the Code.
10.3 ELECTION TO DECREASE OR STOP PAYROLL DEDUCTIONS. During an
Offering Period, a Participant may elect to decrease the amount deducted or stop
deductions from his or her Compensation by filing an amended subscription
agreement with the Company on or before the "Change Notice Date." The "CHANGE
NOTICE DATE" shall initially be the seventh (7th) day prior to the end of the
first pay period for which such election is to be effective; however, the
Company may change such Change Notice Date from time to time. A Participant may
not elect to increase the amount deducted from the Participant's Compensation
during an Offering Period.
10.4 PARTICIPANT ACCOUNTS. Individual Plan accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.
10.5 NO INTEREST PAID. Interest shall not be paid on sums deducted
from a Participant's Compensation pursuant to the Plan.
10.6 COMPANY ESTABLISHED PROCEDURES. The Company may, from time to
time, establish or change (a) a minimum required payroll deduction amount for
participation in an Offering, (b) limitations on the frequency or number of
changes in the rate of payroll deduction during an Offering, (c) an exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars, (d)
payroll deduction in excess of or less than the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of subscription agreements, (e) the date(s) and manner by which the
Fair Market Value of a share of Stock is determined for purposes of
administration of the Plan, or (f) such other limitations or procedures as
deemed advisable by the Company in the Company's sole discretion which are
consistent with the Plan and in accordance with the requirements of Section 423
of the Code.
11. PURCHASE OF SHARES.
------------------
11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
Period, each Participant who has not withdrawn from the Offering or
8
whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole shares of Stock arrived at by
dividing the total amount of the Participant's accumulated payroll deductions
for the Purchase Period by the Purchase Price; provided, however, in no event
shall the number of shares purchased by the Participant during an Offering
Period exceed the number of shares subject to the Participant's Purchase Right.
No shares of Stock shall be purchased on a Purchase Date on behalf of a
Participant whose participation in the Offering or the Plan has terminated on or
before such Purchase Date.
11.2 RETURN OF CASH BALANCE. Any cash balance remaining in the
Participant's Plan account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole share of Stock, the Company may establish
procedures whereby such cash is maintained in the Participant's Plan account and
applied toward the purchase of shares of Stock in the subsequent Purchase Period
or Offering Period.
11.3 TAX WITHHOLDING. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant disposes of some or
all of the shares of Stock he or she acquires under the Plan, the Participant
shall make adequate provision for the foreign, federal, state and local tax
withholding obligations of the Participating Company Group, if any, which arise
upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant's compensation the amount necessary to meet
such withholding obligations.
11.4 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which such Purchase Right relates shall expire immediately upon the end of such
Offering Period.
12. MARKET STAND-OFF PERIOD. No Participant shall, for a period of 180
-----------------------
days following the Purchase Date upon which a share of Stock is acquired,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose (other than to donees who agree to be similarly bound) of such share
of Stock. The restriction on transfer of this Section 12 shall terminate
immediately upon a Transfer of Control, as defined in Section 16.
13. LIMITATIONS ON PURCHASE OF SHARES; RIGHTS AS A STOCKHOLDER.
----------------------------------------------------------
13.1 FAIR MARKET VALUE LIMITATION. Notwithstanding any other provision
of the Plan, no Participant shall be entitled to purchase shares of Stock
9
under the Plan (or any other employee stock purchase plan which is intended to
meet the requirements of Section 423 of the Code sponsored by the Company or a
Parent Corporation or Subsidiary Corporation at a rate which exceeds $25,000 in
Fair Market Value, which Fair Market Value is determined for shares purchased
during a given Offering Period as of the Offering Date for such Offering Period
(or such other limit as may be imposed by the Code), for each calendar year in
which the Participant participates in the Plan (or any other employee stock
purchase plan described in this sentence).
13.2 PRO RATA ALLOCATION. In the event the number of shares of Stock
which might be purchased by all Participants in the Plan exceeds the number of
shares of Stock available in the Plan, the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Company shall determine to be equitable.
13.3 RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant shall have no
rights as a stockholder by virtue of the Participant's participation in the Plan
until the date of the issuance of a stock certificate for the shares of Stock
being purchased pursuant to the exercise of the Participant's Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate is issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Participating Company Group or interfere in any way with any right
of the Participating Company Group to terminate the Participant's employment at
any time.
14. WITHDRAWAL.
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14.1 WITHDRAWAL FROM AN OFFERING. A Participant may withdraw from an
Offering by signing and delivering to the Company's payroll or other designated
office a written notice of withdrawal on a form provided by the Company for such
purpose. Such withdrawal may be elected at any time prior to the end of an
Offering Period; provided, however, if a Participant withdraws after the
Purchase Date for a Purchase Period of an Offering, the withdrawal shall not
affect shares of Stock acquired by the Participant in such Purchase Period.
Unless otherwise indicated, withdrawal from an Offering shall not result in a
withdrawal from the Plan or any succeeding Offering therein. By withdrawing from
an Offering effective as of the close of a given Purchase Date, a Participant
may have shares of Stock purchased on such Purchase Date and immediately
commence participation in the new Offering commencing immediately after such
Purchase Date. A Participant is prohibited from again participating in an
Offering at any time following withdrawal from such Offering. The Company may
impose, from time to time, a requirement that the notice of withdrawal be on
file with the Company's payroll office or other designated office for a
reasonable period prior to the effectiveness of the Participant's withdrawal
from an Offering.
10
14.2 WITHDRAWAL FROM THE PLAN. A Participant may withdraw from the
Plan by signing and delivering to the Company's payroll office or other
designated office a written notice of withdrawal on a form provided by the
Company for such purpose. Withdrawals made after a Purchase Date shall not
affect shares of Stock acquired by the Participant on such Purchase Date. In the
event a Participant voluntarily elects to withdraw from the Plan, the
Participant may not resume participation in the Plan during the same Offering
Period, but may participate in any subsequent Offering under the Plan by again
satisfying the requirements of Sections 5 and 7.1. The Company may impose, from
time to time, a requirement that the notice of withdrawal be on file with the
Company's payroll office or other designated office for a reasonable period
prior to the effectiveness of the Participant's withdrawal from the Plan.
14.3 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's withdrawal
from an Offering or the Plan pursuant to Sections 14.1 or 14.2, respectively,
the Participant's accumulated payroll deductions which have not been applied
toward the purchase of shares of Stock shall be returned as soon as practicable
after the withdrawal, without the payment of any interest, to the Participant,
and the Participant's interest in the Offering or the Plan, as applicable, shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.
14.4 AUTOMATIC WITHDRAWAL FROM AN OFFERING. If the Fair Market Value
of a share of Stock on a Purchase Date of an Offering (other than the final
Purchase Date of such Offering) is less than the Fair Market Value of a share of
Stock on the Offering Date for such Offering, then every Participant shall
automatically (a) be withdrawn from such Offering at the close of such Purchase
Date and after the acquisition of shares of Stock for such Purchase Period and
(b) be enrolled in the Offering commencing on the first business day subsequent
to such Purchase Period. A Participant may elect not to be automatically
withdrawn from an Offering Period pursuant to this Section 14.4 by delivering to
the Company not later than the close of business on the last day before the
Purchase Date a written notice indicating such election.
11
15. TERMINATION OF EMPLOYMENT OR ELIGIBILITY. Termination of a
----------------------------------------
Participant's employment with a Participating Company for any reason, including
retirement, disability or death or the failure of a Participant to remain an
Eligible Employee, shall terminate the Participant's participation in the Plan
immediately. In such event, the payroll deductions credited to the
Participant's Plan account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the Participant's
death, to the Participant's legal representative, and all of the Participant's
rights under the Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this Section 15. A Participant whose
participation has been so terminated may again become eligible to participate in
the Plan by again satisfying the requirements of Sections 5 and 7.1.
16. TRANSFER OF CONTROL.
-------------------
16.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company a party; (iii) the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or (iv) a liquidation or dissolution of the
Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
16.2 EFFECT OF TRANSFER OF CONTROL ON PURCHASE RIGHTS. In the event of
a Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "ACQUIRING
12
CORPORATION"), may assume the Company's rights and obligations under the Plan or
substitute substantially equivalent Purchase Rights for stock of the Acquiring
Corporation. If the Acquiring Corporation elects not to assume or substitute
for the outstanding Purchase Rights, the Board may, in its sole discretion and
notwithstanding any other provision herein to the contrary, adjust the Purchase
Date of the then current Purchase Period to a date on or before the date of the
Transfer of Control, but shall not adjust the number of shares of Stock subject
to any Purchase Right. All Purchase Rights which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Transfer of
Control nor exercised as of the date of the Transfer of Control shall terminate
and cease to be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, if the corporation the stock of which is subject
to the outstanding Purchase Rights immediately prior to an Ownership Change
Event described in Section 16.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of section 1504(a) of the Code
without regard to the provisions of section 1504(b) of the Code, the outstanding
Purchase Rights shall not terminate unless the Board otherwise provides in its
sole discretion.
17. NONTRANSFERABILITY OF PURCHASE RIGHTS. A Purchase Right may not be
-------------------------------------
transferred in any manner otherwise than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. The Company, in its absolute discretion, may impose
such restrictions on the transferability of the shares purchasable upon the
exercise of a Purchase Right as it deems appropriate and any such restriction
shall be set forth in the respective subscription agreement and may be referred
to on the certificates evidencing such shares.
18. REPORTS. Each Participant who exercised all or part of his or her
-------
Purchase Right for a Purchase Period shall receive, as soon as practicable after
the Purchase Date of such Purchase Period, a report of such Participant's Plan
account setting forth the total payroll deductions accumulated, the number of
shares of Stock purchased, the Purchase Price for such shares, the date of
purchase and the remaining cash balance to be refunded or retained in the
Participant's Plan account pursuant to Section 11.2, if any. Each Participant
shall be provided information concerning the Company equivalent to that
information generally made available to the Company's common stockholders.
19. RESTRICTION ON ISSUANCE OF SHARES. The issuance of shares under the
---------------------------------
Plan shall be subject to compliance with all applicable requirements of foreign,
federal or state law with respect to such securities. A Purchase Right may not
be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable foreign, federal or state securities laws or other
law or regulations. In addition, no Purchase Right may be exercised unless (a)
a
13
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.
20. LEGENDS. The Company may at any time place legends or other
-------
identifying symbols referencing any applicable foreign, federal or state
securities law restrictions or any provision convenient in the administration of
the Plan on some or all of the certificates representing shares of Stock issued
under the Plan. The Participant shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to a Purchase Right in the possession of the Participant in order to
carry out the provisions of this Section. Unless otherwise specified by the
Company, legends placed on such certificates may include but shall not be
limited to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF MADE ON OR BEFORE ______________, 19__. THE REGISTERED
HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER'S
NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN
EMPLOYEE STOCK PURCHASE PLAN, PURSUANT TO WHICH THE SHARES MAY NOT BE SOLD,
TRANSFERRED, OR DISPOSED OF (OTHER THAN TO DONEES WHO AGREE TO BE SIMILARLY
BOUND) UNTIL ___________, 19__."
21. NOTIFICATION OF SALE OF SHARES. The Company may require the
------------------------------
Participant to give the Company prompt notice of any disposition of shares
14
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
Purchase Right. The Company may require that until such time as a Participant
disposes of shares acquired upon exercise of a Purchase Right, the Participant
shall hold all such shares in the Participant's name (and not in the name of any
nominee) until the lapse of the time periods with respect to such Purchase Right
referred to in the preceding sentence. The Company may direct that the
certificates evidencing shares acquired by exercise of a Purchase Right refer to
such requirement to give prompt notice of disposition.
22. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time amend
------------------------------------
or terminate the Plan, except that (a) such termination shall not affect
Purchase Rights previously granted under the Plan, except as permitted under the
Plan, and (b) no amendment may adversely affect a Purchase Right previously
granted under the Plan (except to the extent permitted by the Plan or as may be
necessary to qualify the Plan as an employee stock purchase plan pursuant to
Section 423 of the Code or to obtain qualification or registration of the shares
of Stock under applicable foreign, federal or state securities laws). In
addition, an amendment to the Plan must be approved by the stockholders of the
Company within twelve (12) months of the adoption of such amendment if such
amendment would authorize the sale of more shares than are authorized for
issuance under the Plan or would change the definition of the corporations that
may be designated by the Board as Participating Companies.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing AASTROM Biosciences, Inc. 1996 Employee Stock Purchase Plan was
duly adopted by the Board of Directors of the Company on April 30, 1996.
/s/ Todd E. Simpson
--------------------------
Todd E. Simpson, Secretary
15
AASTROM BIOSCIENCES, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
[_] Original Application
[_] Change in Percentage of Payroll Deductions
I hereby elect to participate in the 1996 Employee Stock Purchase Plan (the
"Plan") of AASTROM Biosciences, Inc. (the "COMPANY") and subscribe to purchase
shares of the Company's common stock as determined in accordance with the terms
of the Plan.
I hereby authorize payroll deductions in the amount of ______________
percent (in 1% increments not to exceed 10%) of my "COMPENSATION" (as defined in
the Plan) from each paycheck throughout the "OFFERING PERIOD" (as defined in the
Plan) in accordance with the terms of the Plan. I understand that these payroll
deductions will be accumulated for the purchase of shares of common stock of the
Company at the applicable purchase price determined in accordance with the Plan.
I further understand that, except as otherwise set forth in the Plan, shares
will be purchased for me automatically on the last day of each Purchase Period
unless I withdraw from the Plan or from the Offering by giving written notice to
the Company or unless I terminate employment.
I further understand that I will automatically participate in each
subsequent Offering which commences immediately after the last day of an
Offering in which I am participating under the Plan until such time as I file
with the Company a notice of withdrawal from the Plan on such form as may be
established from time to time by the Company or I terminate employment.
Shares purchased for me under the Plan should be issued in the name set
forth below. (I understand that shares may be issued either in my name alone or
together with my spouse as community property or in joint tenancy.)
NAME:
-------------------------------------------------------------
ADDRESS:
-------------------------------------------------------------
MY SOCIAL SECURITY NUMBER:
-------------------------------------------
I hereby authorize withholding from my compensation in order to satisfy the
foreign, federal, state and local tax withholding obligations, if any, which may
arise upon my purchase of shares under the Plan and/or upon my disposition of
shares I acquired under the Plan. I hereby agree that until I dispose of the
shares, unless otherwise permitted by the Company, I will hold all shares I
acquire under the Plan in the name entered above (and not in the name of any
nominee) for at least two (2) years from the first day of the Offering Period in
which, and at least one (1) year from the Purchase Date on which, I acquired
such shares. I further agree that I will promptly notify the Chief Financial
Officer of the Company in writing of any transfer of such shares prior to the
end of the periods referred to in the preceding sentence.
I am familiar with the provisions of the Plan and hereby agree to
participate in the Plan subject to all of the provisions thereof. I understand
that any shares purchased under the Plan are subject to a 180-day "market stand-
off" period, as provided in the Plan. I understand that the Board of Directors
of the Company reserves the right to amend the Plan and my right to purchase
stock under the Plan as may be necessary to qualify the Plan as an employee
stock purchase plan as defined in section 423 of the Internal Revenue Code of
1986, as amended, or to obtain qualification or registration of the Company's
common stock to be issued out of the Plan under applicable foreign, federal and
state securities laws. I understand that the effectiveness of this subscription
agreement is dependent upon my eligibility to participate in the Plan.
Date: ________________________ Signature: _______________________________
Name Printed: ____________________________
16
AASTROM BIOSCIENCES, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I hereby elect to withdraw from the current offering (the "CURRENT
OFFERING") of the common stock of AASTROM Biosciences, Inc. (the "COMPANY")
under the Company's 1996 Employee Stock Purchase Plan (the "PLAN").
MAKE ONE ELECTION UNDER SECTION A AND ONE ELECTION UNDER SECTION B:
A. Current Offering. As to my participation in the current purchase period
----------------
(the "Current Purchase Period") of the Current Offering under the Plan, I
elect as follows (check one):
______ 1. I elect to terminate my participation in the Current Purchase Period
immediately.
I hereby request that all payroll deductions credited to my account
under the Plan (if any) not previously used to purchase shares under
the Plan shall not be used to purchase shares on the last day of the
---
Current Purchase Period. Instead, I request that all such amounts be
paid to me as soon as practicable. I understand that this election
immediately terminates my interest in the Current Offering.
______ 2. I elect to terminate my participation in the Current Offering
following my purchase of shares on the last day of the Current
Purchase Period.
I hereby request that all payroll deductions credited to my account
under the Plan (if any) not previously used to purchase shares under
the Plan shall be used to purchase shares on the last day of the
Current Purchase Period. I understand that this election will
terminate my interest in the Current Offering immediately following
such purchase. I request that any cash balance remaining in my
account under the Plan after my purchase of shares be returned to me
as soon as practicable.
I understand that if no election is made as to participation in the Current
Offering under the Plan, I will be deemed to have elected to participate in the
Current Offering.
B. Future Offerings. As to my participation in future offerings of common
----------------
stock under the Plan, I elect as follows (check one):
______ 1. I elect to participate in future offerings under the Plan.
I understand that by making this election I will participate in the
next offering under the Plan commencing subsequent to the Current
Offering, and in each subsequent offering commencing immediately
after the last day of an offering in which I participate, until such
time as I elect to withdraw from the Plan or from any such
subsequent offering.
______ 2. I elect not to participate in future offerings under the Plan.
---
I understand that by making this election I terminate my interest in
the Plan and that no further payroll deductions will be made unless
I elect in accordance with the Plan to become a participant in
another offering under the Plan.
I understand that if no election is made as to participation in future
offerings under the Plan, I will be deemed to have elected to participate in
such future offerings.
Date: Signature:
---------------- -------------------------------------------
Name Printed:
----------------------------------------
17
Employment Agreement
This Employment Agreement (the "Agreement") is entered into as of __________
1996, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Employer") and [name] ("Employee").
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon the terms and conditions set forth herein.
2. DUTIES Employee is engaged as an [position]. Employee shall perform
faithfully and diligently the duties customarily performed by persons in the
position for which employee is engaged, together with such other reasonable and
appropriate duties as Employer shall designate from time to time. Employee shall
devote Employee's full business time and efforts to the rendition of such
services and to the performance of such duties. As a full-time employee of
Employer, Employee shall not be entitled to provide consulting services or other
business or scientific services to any other party, without the prior written
consent of Employer.
3. COMPENSATION
3.1 BASE SALARY During the term of this Agreement, as compensation
for the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of
[salary written] Dollars ($[salary]), payable in arrears in equal bi-weekly
installments, less required deductions for state and federal withholding tax,
Social Security and all other employee taxes and payroll deductions. The base
salary shall be subject to review and adjustment on an annual basis.
4. TERM
4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence [start_date].
4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this right
of termination at will, Employer shall first either (i) discuss with Employee
the needs of Employer and why Employee no longer meets those needs, or (ii)
discuss with Employee any concerns or dissatisfactions which Employer has with
Employee's performance, and give to Employee a reasonable
Employment Agreement
Page 2
opportunity to remedy those concerns or dissatisfactions, to the reasonable
satisfaction of Employer.
4.3 TERMINATION FOR CAUSE Either party may terminate this
employment relationship immediately upon notice to the other party in the event
of any good cause, such as a default, dishonesty, neglect of duties, failure to
perform by the other party, or death or disability of Employee.
4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. FRINGE BENEFITS
5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate
sick leave or other Fringe Benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, Employee shall not be entitled to
receive payments in lieu of said Fringe Benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.
6. INVENTIONS, TRADE SECRETS AND CONFIDENTIALITY
6.1 DEFINITIONS
6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or
know-how related thereto, relating to any present or anticipated business or
activities of Employer.
6.1.2 Trade Secret Defined. As used herein "Trade Secret"
means, without limitation, any document or information relating to Employer's
products, processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to
Employment Agreement
Page 3
Employee as a consequence of or through Employee's employment by Employer
(including documents, information or Inventions conceived, originated,
discovered or developed by Employee), which is not generally known in the
relevant trade or industry.
6.2 INVENTIONS
6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise.
6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee's employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."
6.2.3 Exclusion Notice. The Assignment by Employee of
Inventions under this Agreement does not apply to any Inventions which are owned
or controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention
---
or idea: (i) was created or conceived without the use of any of Employer's
equipment, supplies, facilities, or trade secret information, and (ii) was
developed entirely on Employee's own time, and (iii) does not relate to the
business of Employer, and (iv) does not relate to Employer's actual or
demonstrably anticipated research or development, and (v) does not result from
any work performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in Fact. Both before and
after termination of this Agreement (and with reasonable compensation paid by
Employer to Employee after termination), Employee
Employment Agreement
Page 4
agrees to assist the Employer to apply for, obtain and enforce patents on, and
to apply for, obtain and enforce copyright protection and registration of, the
Inventions described in Section 6.2.2 in any and all countries. To that end,
Employee shall (at Employer's request) without limitation, testify in any
proceeding, and execute any documents and assignments determined to be necessary
or convenient for use in applying for, obtaining, registering and enforcing
patent or copyright protection involving any of the Inventions. Employee hereby
irrevocably appoints Employer, and its duly authorized officers and agents, as
Employee's agent and attorney-in-fact, to act for and in behalf of Employee in
filing all patent applications, applications for copyright protection and
registration, amendments, renewals, and all other appropriate documents in any
way related to the Inventions described in Section 6.2.2.
6.3 TRADE SECRETS
6.3.1 Acknowledgement of Proprietary Interest. Employee
recognizes the proprietary interest of Employer in any Trade Secrets of
Employer. Employee acknowledges and agrees that any and all Trade Secrets of
Employer, whether developed by Employee alone or in conjunction with others or
otherwise, shall be and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee
acknowledges and agrees that Employer is entitled to prevent the disclosure of
Trade Secrets of Employer. As a portion of the consideration for the employment
of Employee and for the compensation being paid to Employee by Employer,
Employee agrees at all times during the term of the employment by Employer and
thereafter to hold in strictest confidence, and not to use, disclose or allow to
be disclosed to any person, firm, or corporation, Trade Secrets of Employer,
including Trade Secrets developed by Employee, other than disclosures to persons
engaged by Employer to further the business of Employer, and other than use in
the pursuit of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents
and warrants that if Employee has any confidential information belonging to
others, Employee will not use or disclose to Employer any such information or
documents. Employee represents that his employment with Employer will not
require him to violate any obligation to or confidence with any other party.
6.4 NO ADVERSE USE Employee will not at any time use Employer's
Trade Secrets or Inventions in any manner which may directly or indirectly have
an adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.
6.5 RETURN OF MATERIALS AT TERMINATION In the event of any
termination of Employee's employment, Employee will promptly deliver to Employer
all materials, property, documents, data, and other information belonging to
Employer or pertaining to Trade Secrets or Inventions. Employee
Employment Agreement
Page 5
shall not take any materials, property, documents or other information, or any
reproduction or excerpt thereof, belonging to Employer or containing or
pertaining to any Trade Secrets or Inventions.
6.6 REMEDIES UPON BREACH In the event of any breach by Employee of
the provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin Employee from violating any of the terms
of this Section 6, to enforce the specific performance by Employee of any of the
terms of this Section 6, and to obtain damages for any of them, but nothing
herein contained shall be construed to prevent such remedy or combination of
remedies as Employer may elect to invoke. The failure of Employer to promptly
institute legal action upon any breach of this Section 6 shall not constitute a
waiver of that or any other breach hereof.
7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder, lender or agent of any other entity which is engaged in
any business of the same nature as, or in competition with, the business in
which Employer is now engaged, or in which Employer becomes engaged during the
term of Employee's employment, or which is involved in science or technology
which is similar to Employer's science or technology.
8. GENERAL PROVISIONS
8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.
8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.
8.3 ENTIRE AGREEMENT This Agreement constitutes the entire
agreement between the parties with respect to the employment of Employee. This
Agreement supersedes all prior agreements, understandings, negotiations and
representation with respect to the employment relationship.
8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of Employer. Employee shall not be entitled to assign
any of Employee's rights or obligations under this Agreement.
8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such
Employment Agreement
Page 6
provision, or prevent that party thereafter from enforcing each and every other
provision of this Agreement.
8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
EMPLOYER:
AASTROM BIOSCIENCES, INC.
By: _____________________________________
R. Douglas Armstrong, Ph.D.
President and Chief Executive Officer
EMPLOYEE:
_______________________________
Address: __________________________________
__________________________________
Exhibit A
List of Prior Inventions
(Section 6.2.3)
None, other than the following:
- --------------------------------------------------------------------------------
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EXHIBIT 10.9
EXECUTION COPY
===================================
----------------------
STOCK PURCHASE AGREEMENT
----------------------
Between
COBE LABORATORIES, INC.
and
AASTROM BIOSCIENCES, INC.
Dated as of October 22, 1993
===================================
Section i Page
- ------- ----
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01 Definitions................................................. 1
ARTICLE II
PURCHASE AND SALE OF SHARES;
CLOSING
2.01 Authorization, Purchase and Sale of Shares.................. 12
2.02 Closing..................................................... 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization, Authority and Qualification of the Company;
No Subsidiaries............................................. 13
3.02 Restated Articles of Incorporation and By-Laws ............. 14
3.03 Capitalization.............................................. 14
3.04 Authority................................................... 15
3.05 No Conflict................................................. 15
3.06 Common Stock; Preferred Stock............................... 15
3.07 Compliance with Laws........................................ 16
3.08 Governmental Consents and Approvals......................... 16
3.09 Financial Information....................................... 16
3.10 Absence of Certain Changes, Events and Conditions;
Conduct in the Ordinary Course.............................. 17
3.11 Employee Benefit Plans...................................... 18
3.12 Leased Real Property........................................ 19
3.13 Intellectual Property....................................... 20
3.14 Environmental Matters....................................... 23
3.15 Litigation.................................................. 23
3.16 Agreements.................................................. 23
3.17 Certain Interests........................................... 24
3.18 Licenses and Permits........................................ 24
Section ii Page
- ------- ----
3.19 Private Offering............................................ 25
3.20 Brokers..................................................... 25
3.21 General Solicitation........................................ 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
4.01 Organization of the Purchaser............................... 25
4.02 Authority................................................... 25
4.03 No Conflict................................................. 26
4.04 Securities Act.............................................. 26
4.05 Governmental Consents and Approvals......................... 27
4.06 Brokers..................................................... 27
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Access to Information; Confidentiality...................... 27
5.02 Registration Rights......................................... 28
5.03 Purchaser's Option.......................................... 28
5.04 Purchaser's Preemptive Rights............................... 29
5.05 Company Put Option.......................................... 31
5.06 Standstill Agreement........................................ 33
5.07 Purchaser's Right of First Negotiation...................... 33
5.08 Legend...................................................... 34
5.09 Board Observer; Board Representation........................ 35
5.10 Regulatory Approvals........................................ 36
5.11 Reservation of Shares....................................... 36
5.12 Voting Rights; Rights Plan.................................. 37
5.13 Survival of Representations and Warranties.................. 38
5.14 Company's Right of First Negotiation........................ 38
ARTICLE VI
TERM, TERMINATION, AMENDMENT AND WAIVER
6.01 Term........................................................ 38
6.02 Amendment................................................... 38
6.03 Waiver...................................................... 38
Section iii Page
- ------- ----
ARTICLE VII
GENERAL PROVISIONS
7.01 Notices..................................................... 39
7.02 Entire Agreement; Assignment................................ 40
7.03 Parties in Interest......................................... 40
7.04 Governing Law............................................... 40
7.05 Headings.................................................... 40
7.06 Severability................................................ 40
7.07 Counterparts................................................ 41
7.08 Specific Performance........................................ 41
7.09 Waiver of Trial by Jury..................................... 42
EXHIBIT 2.02(b)(ii) Form of Opinion of Pepper, Hamilton & Scheetz
EXHIBIT 2.02(b)(iv) Restated Articles of Incorporation
EXHIBIT 2.02(b)(vii) Stockholders' Agreement
EXHIBIT 2.02(b)(viii) Form of Distribution Agreement
EXHIBIT 5.02 Registration Rights
DISCLOSURE SCHEDULE
STOCK PURCHASE AGREEMENT dated as of October __, 1993 between
AASTROM BIOSCIENCES, INC., a Michigan corporation (the "Company"), and COBE
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LABORATORIES, INC., a Colorado corporation (the "Purchaser").
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W I T N E S S E T H:
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WHEREAS, the Company desires to authorize, issue, and sell to the
Purchaser, and the Purchaser desires to purchase from the Company, the Shares
(as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.01. Definitions. As used in this Agreement, the following terms
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shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
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investigation by or before any federal, state or local or any foreign
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal or judicial or arbitral body.
"Affiliate" means, with respect to any specified Person, any other Person
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that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" or "this Agreement" means this Stock Purchase Agreement dated
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as of October , 1993 between the Company and the Purchaser (including the
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Exhibits hereto and the Disclosure Schedule) and all amendments made in
accordance with the provisions of Section 6.02.
"Applicable Percentage" has the meaning specified in Section 5.04(d).
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"Applicable Preemptive Price" means (a) if the Issuance is or was a Public
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Offering, the quotient of (i) the aggregate price to the public of the New
Voting Securities sold by the Company in such Public Offering, less underwriting
discounts and commissions , divided by (ii) the number of New Voting Securities
sold by the Company in such Public Offering; (b) if the Issuance is or was a
Private Placement, the Private Placement Price paid to the Company by Persons
other than the Purchaser in such Private Placement; (c) if the Issuance is or
was a Non-Cash Transaction and the New Voting Securities to be issued are
publicly traded prior to such Issuance, the Market Price on the date of the
Post-Determination Subscription Notice; (d) if the Issuance is or was a Non-Cash
Transaction not described in (c) above in which
a monetary value of the New Voting Securities is established, such value; and
(e) otherwise, the greater of (i) the Compounded Private Placement Price or
(ii) $8 per share of Common Stock. For purposes of calculating the Applicable
Preemptive Price, the price of shares of Non-Coupon Preferred Stock shall be
calculated based upon the number of shares of Common Stock into which such
shares of Non-Coupon Preferred Stock are convertible at the time of such
calculation.
"Articles" means the Restated Articles of Incorporation attached as Exhibit
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2.02(b)(iv) hereto establishing and designating the Preferred Stock.
"Board" means the Board of Directors of the Company.
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"Business Combination" has the meaning specified in Section 5.07.
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"Business Combination Notice" has the meaning specified in Section 5.07.
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"Business Day" means any day that is not a Saturday, a Sunday or other day
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on which banks are required or authorized by law to be closed in Denver,
Colorado or Ann Arbor, Michigan.
"By-Laws" means the Restated By-Laws of the Company, as amended through the
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date hereof.
"Chapter 7B" means Chapter 7B (known as the "Stacey, Bennett and Randall
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Shareholder Equity Act") of the MBCA.
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"Closing" means the completion of the transactions specified herein
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relating to the purchase and sale of the Shares as contemplated by Section 2.02
hereof.
"Code" means the Internal Revenue Code of 1986, as amended, together with
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the rules and regulations promulgated thereunder.
"Common Stock" means the common shares of the Company, no par value.
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"Company" has the meaning specified in the recitals to this Agreement.
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"Company Benefit Plans" has the meaning specified in Section 3.11(a).
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"Company Option" has the meaning specified in Section 5.05(a).
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"Company's Accountants" means Coopers & Lybrand, independent accountants of
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the Company.
"Compounded Private Placement Price" means the Private Placement Price for
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the last Private Placement preceding the date on which the Compounded Private
Placement Price is calculated, plus interest on such Private Placement Price
compounded annually at a rate of 15
percent from the date of the closing of such preceding Private Placement to the
date of calculation.
"Confidential Information" means all confidential or secret data, reports,
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interpretations, forecasts, records, marketing, sales and other commercial data
or reports, trade secrets information, know-how, methods, procedures, designs,
technology, inventions, ideas, specifications, plans, patent applications and
related correspondence, or other information that the parties hereto provide to
each other in connection with the transactions contemplated by this Agreement,
together with analyses, compilations, studies or other documents, whether
prepared by their respective agents or attorneys, which contain or otherwise
reflect such information; provided, however, that the following will not
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constitute Confidential Information for purposes of this Agreement:
(a) information which was in one of such parties' possession prior to its
receipt from the other of such parties;
(b) information which is obtained by one of such parties from a third
person who, insofar as is known to such party, is not prohibited from
transmitting the information to such party by a contractual, legal or
fiduciary obligation to the other of such parties; and
(c) information which is or becomes publicly available through no fault of
either of such parties.
"Control" (including the terms "controlled by" and "under common
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control with"), with respect to the relationship between or among two or more
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Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Conversion Determination Date" has the meaning specified in Section
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5.04(a).
"Disclosure Schedule" means the Disclosure Schedule attached hereto,
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dated as of the date hereof, delivered and forming a part of this Agreement.
"Distribution Agreement" means the Distribution Agreement, dated as of
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the date hereof, between the Company and an Affiliate of the Purchaser,
substantially in the form of Exhibit 2.02(b)(viii) hereto, as it may be amended
from time to time in accordance with its terms.
"Encumbrance" means any security interest, pledge, mortgage, lien,
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charge, encumbrance, adverse claim, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Environmental Laws" means any federal, state, local or foreign law,
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regulation, agency interpretation, policy, order, decree, judgment, or judicial
opinion relating to (A) the manufacture, transport, use, treatment, storage,
recycling, disposal, release or threatened release of Hazardous Substances or
(B) relating to the preservation, restoration, or protection of natural
resources or health.
"Environmental Permits" means any permit, license, approval,
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identification number or other authorization involving Hazardous Substances or
required under any Environmental Law.
"Equity Securities" means shares of Common Stock and any other
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securities convertible into, or exchangeable for, shares of Common Stock or
giving the holder the right to acquire shares of Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
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incorporated) that is part of the same controlled group as, or under common
control with, the Company within the meaning of Section 414(b)(c)(m) or (o) of
the Code.
"Exchange Act" means the Securities and Exchange Act of 1934, as
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amended, together with the rules and regulations promulgated thereunder.
"Exclusivity Period" has the meaning specified in Section 5.07.
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"Financial Statements" has the meaning specified in Section 3.09.
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"Fully Diluted Outstanding Common Stock" means all of the outstanding
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Common Stock, all shares of Common Stock that can be acquired by any Person upon
conversion of the Shares and all shares of Common Stock that can be acquired
upon conversion or exchange of any other convertible or exchangeable securities
of the Company or pursuant to outstanding options, warrants or other securities
or arrangements having a conversion, exchange or exercise price that is less
than or equal to the Option Price and excluding the shares of Common Stock
subject to the Option and any shares of Common Stock held in the treasury of the
Company.
"GAAP" means U.S. generally accepted accounting principles and
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practices in effect from time to time applied consistently throughout the
periods involved.
"Hazardous Substances" means any matter containing substances which
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are: (A) listed, classified or regulated pursuant to any Environmental Law,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. (S) 9601 et seq.; the
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Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.; the Federal
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Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.; the Toxic Substances
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Control Act, 15 U.S.C. (S) 2601 et seq.; and the Clean Air Act, 42 U.S.C.
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(S) 7401 et seq.; each as
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amended; (B) any petroleum products or by-products, asbestos-containing
material, polychlorinated biphenyls, radioactive materials or radon gas; or
(C) any other matter to which exposure is prohibited, limited or regulated by
any government authority or Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
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1976, as amended, and the rules and regulations promulgated thereunder.
"Initial Public Offering" means the initial offering to the public by
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the Company of shares of Common Stock registered under the Securities Act.
"Intellectual Property" means (a) inventions, whether or not
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patentable, whether or not reduced to practice, and whether or not yet made the
subject of a pending patent application or applications, (b) ideas and
conceptions of potentially patentable subject matter, including, without
limitation, any patent disclosures, whether or not reduced to practice and
whether or not yet made the subject of a pending patent application or
applications, (c) national (including the United States) and multinational
statutory invention registrations, patents, patent registrations and patent
applications (including all reissues, divisions, continuations, continuations-
in-part, extensions and reexaminations) and all rights therein provided by
international treaties or conventions and all improvements to the inventions
disclosed in each such registration, patent or application, (d) trademarks,
service marks, trade dress, logos, trade names and corporate names, whether or
not registered, including all common law rights, and registrations and
applications for registration thereof, including, but not limited to, all marks
registered in the United States Patent and Trademark Office, the Trademark
Offices of the States and Territories of the United States of America, and the
Trademark Offices of other nations throughout the world, and all rights therein
provided by international treaties or conventions, (e) copyrights (registered or
otherwise) and registrations and applications for registration thereof, and all
rights therein provided by international treaties or conventions, (f) computer
software, including, without limitation, source code, operating systems and
specifications, data, data bases, files, documentation and other materials
related thereto, data and documentation, (g) trade secrets and confidential,
technical and business information (including ideas, formulas, compositions,
inventions, and conceptions of inventions whether patentable or unpatentable and
whether or not reduced to practice), (h) whether or not confidential, technology
(including know-how and show-how), manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, (i) copies and
tangible embodiments of all the foregoing, in whatever form or medium, (j) all
rights to obtain and rights to apply for patents, and to register trademarks and
copyrights, and (k) all rights to sue or recover and retain damages and costs
and attorneys' fees for present and past infringement of any of the foregoing.
"Interim Financial Statements" has the meaning specified in Section
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3.09.
"IRS" means the United States Internal Revenue Service.
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"Issuance" means a Post-Conversion Issuance or a Pre-Conversion
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Issuance.
"Leased Real Property" means the real property leased by the Company,
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together with, to the extent leased by the Company, all buildings and other
structures, facilities or improvements presently or hereafter located thereon,
all fixtures, systems, equipment and items of personal property of the Company
attached or appurtenant thereto and all easements, licenses, rights and
appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities and obligations,
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whether accrued or fixed, absolute or contingent, mature or unmatured or
determined or determinable, including, without limitation, those arising under
any law, rule, regulation, or order by a governmental authority and those
arising under any contract, agreement, commitment or undertaking.
"Licensed Intellectual Property" means all Intellectual Property
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licensed or sublicensed to the Company from a third party.
"Market Price" of a security means the average of the daily closing
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prices of such security for the 30 consecutive trading days immediately
preceding the day as of which "Market Price" is being determined. The closing
price for each day shall be the last sale price regular way or, in case no such
sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case on the New York Stock Exchange, or, if such
securities are not listed or admitted to trading on the New York Stock Exchange,
on the principal national securities exchange on which such securities are
listed or admitted to trading, or if such securities are not so listed or
admitted to trading but are listed in NASDAQ'S National Market System, the
closing price of such security regular way as reported by the National Market
System, or if the securities are not so listed or admitted to trading, the last
reported bid price as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or through a similar organization if NASDAQ is no
longer reporting such information.
"Material Adverse Effect" means any circumstance, change, event,
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transaction, loss, failure, effect on the business of the Company or other
occurrence that is, or could be, materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets, Liabilities, results of operations or prospects of the
Company.
"MBCA" means the Michigan Business Corporation Act, effective
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January 1, 1973, as amended.
"New Voting Securities" means any shares of Common Stock (or other
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securities representing the common equity of the Company), any securities that
are convertible into or exchangeable for or otherwise give the holder the right
to acquire shares of Common Stock (or such other securities) or other Voting
Securities that are issued by the Company after the date hereof, other than
shares of Common Stock issued upon conversion of the Shares and Permitted
Employee Stock.
"Non-Cash Transaction" means any Issuance other than a Public Offering
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or a
Private Placement.
"Non-Coupon Preferred Stock" means the Shares and any other preferred
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stock of the Company that carries no fixed dividend and is convertible by the
holder into shares of Common Stock.
"Observation Period" has the meaning specified in Section 5.09(a).
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"Option" has the meaning specified in Section 5.03(a).
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"Option Closing" has the meaning specified in Section 5.03(c).
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"Option Closing Date" has the meaning specified in Section 5.03(c).
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"Option Notice Date" has the meaning specified in Section 5.03(c).
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"Option Period" has the meaning specified in Section 5.03(b).
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"Option Price" means a price per Option Share equal to 120% of the
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Market Price on the Option Notice Date.
"Option Shares" means the number of newly issued shares of Common
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Stock which, immediately following the issuance thereof, will be equal to 30
percent of the Fully Diluted Outstanding Common Stock, and "Option Share" means
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one of the Option Shares.
"Out of the Money Price" means a conversion, exchange or exercise
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price that is equal to or greater than the Option Price.
"Out of the Money Option Stock" means any Common Stock issued or to be
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issued by the Company upon conversion or exchange of any convertible or
exchangeable securities of the Company or pursuant to the exercise of any
outstanding options, warrants or other securities having an Out of the Money
Option Price.
"Owned Intellectual Property" means all Intellectual Property, other
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than the Licensed Intellectual Property, in and to which the Company holds, or
has a right to hold, any right, title and interest.
"Permitted Encumbrances" means such of the following as to which no
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enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business; and (c) pledges or
deposits to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations.
"Permitted Employee Stock" means (a) shares of Common Stock or options
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to
purchase Common Stock issued to employees of the Company after the Initial
Public Offering, (b) all shares issuable to employees or consultants of the
Company pursuant to options issued by the Company prior to the date hereof,
(c) all options and shares issuable pursuant to the Stock Option Plans, up to
the sum of (i) the aggregate number of shares authorized in the Stock Option
Plans as of the date hereof and (ii) up to an additional 300,000 shares of
Common Stock issuable pursuant to options granted after the date hereof, and (d)
an additional number of shares of Common Stock (or options therefor) equal to
not more than 25% of the additional shares (of Common Stock or of Non-Coupon
Preferred Stock) issued by the Company from and after the date hereof (including
the Shares) until one day prior to the date of the Initial Public Offering.
"Person" means an individual, corporation, partnership, association,
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trust, joint venture, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
"Post-Determination Issuance" has the meaning specified in Section
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5.04(a).
"Post-Determination Issuance Notice" has the meaning specified in
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Section 5.04(a).
"Post-Determination Preemptive Right" has the meaning specified in
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Section 5.04(b).
"Post-Determination Subscription Notice" has the meaning specified in
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Section 5.04(a).
"Post-Option Issuance" has the meaning specified in Section 5.03(g).
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"Post-Option Issuance Notice" has the meaning specified in Section
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5.03(g).
"Post-Option Purchase Right" has the meaning specified in Section
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5.03(g).
"Pre-Determination Issuance" has the meaning specified in Section
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5.04(d).
"Pre-Determination Preemptive Rights" has the meaning specified in
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Section 5.04(d).
"Preferred Stock" means the shares of Series C convertible preferred
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stock of the Company to be issued pursuant to this Agreement.
"Private Placement" means an Issuance for cash other than a Public
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Offering.
"Private Placement Price" means the quotient of (i) the aggregate
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price paid to the Company in a Private Placement less the sales agency and
placement fees of such Private Placement borne by the Company, divided by
(ii) the number of securities sold by the Company in such Private Placement. For
purposes of calculating the Private Placement Price, the price of shares of Non-
Coupon Preferred Stock shall be calculated based upon the number of shares
of Common Stock into which such shares of Non-Coupon Preferred Stock are
convertible at the time of such calculation.
"Public Offering" means a public offering of New Voting Securities
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registered on a registration statement under the Securities Act.
"Purchase Price" has the meaning specified in Section 2.01.
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"Purchaser" has the meaning specified in the recitals to this
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Agreement.
"Purchaser Designees" has the meaning specified in Section 5.09(b).
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"Purchaser Observer" has the meaning specified in Section 5.09(a).
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"Put Notice" has the meaning specified in Section 5.05(b).
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"Qualifying IPO" has the meaning specified in Section 5.05(a).
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"Qualifying Private Placement" has the meaning specified in Section
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5.05(a).
"Registration Rights" means the registration rights of the Purchaser
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as set forth in Exhibit 5.02 hereto.
"Reserve Amount" has the meaning specified in Section 5.11.
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"Restated Articles of Incorporation" means the Restated Articles of
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Incorporation of the Company, as amended through the date hereof.
"Securities Act" means the Securities Act of 1933, as amended,
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together with the rules and regulations promulgated thereunder.
"Series A Preferred Stock" means the Series A preferred stock of the
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Company.
"Series B Preferred Stock" means the Series B preferred stock of the
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Company.
"Shares" has the meaning specified in Section 2.01.
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"Stock Option Plans" means the Company's 1992 Stock Option Plan, the
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1989 Stock Option Plan and the Ancillary Stock Option Plan.
"Subsidiaries" means any and all corporations, partnerships, joint
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ventures, associations and other entities controlled by the Company directly or
indirectly through one or more intermediaries.
"Total Voting Power" means the combined voting power of all the Voting
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Securities.
"Voting Securities" means any shares of any class of capital stock of
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the Company entitled to vote generally in the election of directors.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
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SECTION 2.01. Authorization, Purchase and Sale of Shares. Upon the
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terms set forth herein, at the Closing, the Company shall authorize, issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, 10,000
shares of Preferred Stock (the "Shares") for a purchase price of $10,000,000
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(the "Purchase Price"). The Company hereby acknowledges receipt of $1,000,000
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received from the Purchaser by the Company prior to the date hereof, which
$1,000,000 shall be a credit against the Purchase Price.
SECTION 2.02. Closing. (a) The Closing of the purchase and sale
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shall take place simultaneously with the execution of this Agreement at the
offices of the Company in Ann Arbor, Michigan.
(b) At the Closing, the Company shall deliver or cause to be
delivered to the Purchaser: (i) stock certificates evidencing the Shares
registered in the name of the Purchaser; (ii) a legal opinion from Pepper,
Hamilton & Scheetz, Michigan, legal counsel to the Company substantially in the
form of Exhibit 2.02(b)(ii) hereto; (iii) a receipt for the Purchase Price;
(iv) a copy of the Restated Articles of Incorporation certified by the
Corporations and Securities Bureau of the Department of Commerce of the State of
Michigan and a copy of the By-Laws certified by the Secretary of the Company;
(v) a certificate from the Corporations and Securities Bureau of the Department
of Commerce, certifying as to the good standing of the Company under the laws of
such state; (vi) evidence reasonably satisfactory to the Purchaser of the
adoption by the Board of the Company of actions duly approving this Agreement,
the Distribution Agreement and the transactions contemplated hereby and thereby;
(vii) agreements executed by H & Q Life Science Technology Fund I, H & Q London
Ventures, Brentwood Associates V, L.P., Wind Point II, L.P. and State Treasurer
of State of Michigan, as custodian for certain pension funds, which shareholders
of the Company hold in excess of 80% of the Voting Securities of the Company, in
the form of Exhibit 2.02(b)(vii) hereto agreeing (A) to vote shares held by such
shareholder against any proposal to amend the By-Laws or the Restated Articles
of Incorporation so as to make Chapter 7B of the MBCA applicable to acquisitions
of shares of Common Stock or Voting Securities and (B) to vote in favor of the
Purchaser Designees as directors; and (viii) a copy of the Distribution
Agreement, duly executed by the Company.
(c) At the Closing, the Purchaser shall deliver to the Company:
(i) the Purchase Price, by wire transfer, to an account or accounts designated
by the Company at least five Business Days prior to the Closing Date; (ii) a
receipt for the Shares; and (iii) a copy of the Distribution Agreement duly
executed by the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company represents and warrants to the Purchaser that:
SECTION 3.01. Organization, Authority and Qualification of the
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Company; No Subsidiaries. The Company is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Michigan and has
all necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on the business of the
Company as it has been and is currently conducted. The Company is duly licensed
or qualified to do business and is in good standing in Michigan which is the
only jurisdiction in which the properties owned or leased by it or the operation
of its business makes such licensing or qualification necessary or desirable.
The Company has no Subsidiaries.
SECTION 3.02. Restated Articles of Incorporation and By-Laws. The
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Company has heretofore furnished to the Purchaser a complete and correct copy of
the Restated Articles of Incorporation and the By-Laws, each as amended to date,
each of which is in full force and effect. The Company is not in violation of
any of the provisions of the Restated Articles of Incorporation or By-Laws.
SECTION 3.03. Capitalization. (a) The authorized capital stock of
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the Company consists of (x) 5,540,000 shares of Preferred Stock, consisting of
2,500,000 issued and outstanding shares of Series A Preferred Stock, 3,030,000
issued and outstanding shares of Series B Preferred Stock and the Shares, none
of which is issued, outstanding or reserved for issuance, except pursuant to
this Agreement, and (y) 15,000,000 shares of Common Stock, of which
(i) 1,736,219 shares of Common Stock are issued and outstanding, all of which
are validly issued, fully paid and nonassessable (except as noted in Section
3.03(a) of the Disclosure Schedule), (ii) 5,530,000 shares of Common Stock are
reserved for issuance upon conversion of the Series A and Series B Preferred
Stock, (iii) no shares of Common Stock are held in the treasury of the Company
and (iv) an aggregate of 1,573,940 shares of Common Stock are reserved for
issuance pursuant to the Company's Stock Option Plans. None of the issued and
outstanding shares of Common Stock was issued in violation of any preemptive
rights.
(b) Except as set forth in Section 3.03(b) of the Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which the Company or, to the
knowledge of the Company, any of its stockholders is a party or obligating the
Company or any of its stockholders to issue or to sell any shares of capital
stock of, or other equity interests in, the Company. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any of the capital stock of the Company or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
(c) Except as set forth in Section 3.03(c) of the Disclosure
Schedule, the Company is not party to any agreement granting registration rights
to any Person with respect to any equity or debt securities of the Company.
SECTION 3.04. Authority. The Company has all necessary corporate
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power and authority to execute and deliver this Agreement and the Distribution
Agreement and to perform its obligations and to consummate the transactions
contemplated hereunder and thereunder. The execution, delivery and performance
of this Agreement and the Distribution Agreement by the Company have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or the Distribution Agreement or to consummate the transactions contemplated by
this Agreement or the Distribution Agreement. This Agreement and the
Distribution Agreement have been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
the Purchaser and payment for the Shares as contemplated by this Agreement,
constitute the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their terms.
SECTION 3.05. No Conflict. The execution and delivery of this
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Agreement and the Distribution Agreement by the Company do not, and the
performance of this Agreement and the Distribution Agreement by the Company will
not, (i) conflict with or violate the Restated Articles of Incorporation or By-
Laws, (ii) conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to the Company or by which its properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of the Company pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, insurance policy or
other instrument or obligation to which the Company is a party, or by which the
Company or its properties are bound or affected.
SECTION 3.06. Common Stock; Preferred Stock. All Shares and all
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shares of Common Stock subject to issuance as contemplated by this Agreement
(including, without limitation, the Common Stock issuable upon conversion of the
Shares and pursuant to Article V of this Agreement), upon such issuance against
payment therefor in accordance herewith or upon conversion of the Shares, as the
case may be, shall (i) be duly authorized, validly issued, fully paid and
nonassessable and (ii) be free and clear of all Encumbrances of any kind
whatsoever (including, without limitation, any preemptive rights of any other
stockholder of the Company). Upon issuance in accordance with the Articles and
herewith, all such shares of Common Stock shall have accorded to them full
voting rights. Upon issuance in accordance herewith, the Shares will have the
rights, including, without limitation, the voting rights, set forth in the
Articles.
SECTION 3.07. Compliance with Laws. Except as set forth in Schedule
--------------------
3.07 of the Disclosure Schedule and as would not have a Material Adverse Effect,
to the best knowledge of the Company, the Company is not in conflict with, or
violation of, any law, rule, regulation, order, judgment or decree applicable to
the Company or by which the Company or any of its properties are bound or
affected.
SECTION 3.08. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement by the Company do not and will not
require any consent,
approval, authorization or other order of, action by, filing with or
notification to any governmental or regulatory authority, domestic or foreign,
except (a) as described in Section 3.08 of the Disclosure Schedule and (b) to
the extent applicable, upon issuance of shares of Common Stock pursuant to
Article V of this Agreement and upon a conversion of the Shares as provided for
in the Articles, the notification requirements of the HSR Act.
SECTION 3.09. Financial Information. True and complete copies of (i)
---------------------
the audited balance sheets of the Company for each of the fiscal years ended as
of June 30, 1992 and June 30, 1993, and the related audited statements of income
and cash flows of the Company, together with all related notes thereto,
accompanied by the reports thereon of the Company's Accountants (collectively,
the "Financial Statements") and (ii) the unaudited balance sheet of the Company
--------------------
as of August 31, 1993, and the related unaudited statements of income and cash
flow, together with all related notes thereto (collectively referred to herein
as the "Interim Financial Statements"), are set forth in Section 3.09 of the
----------------------------
Disclosure Schedule. The Financial Statements and the Interim Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of the Company, (ii) present fairly the financial condition,
results of operations and cash flows of the Company as of the dates thereof or
for the periods covered thereby, (iii) have been prepared in accordance with
U.S. GAAP applied on a basis consistent with the past practices of the Company
and (iv) include all adjustments (consisting only of normal recurring accruals)
that are necessary for a fair presentation of the financial condition of the
Company, the results of the operations and cash flows of the Company as of the
dates thereof or for the periods covered thereby; provided, however, that the
-----------------
Interim Financial Statements are subject to normal year-end adjustments, none of
which are expected to be material in amount, and to the inclusion of footnotes
with respect to the matters covered by the footnotes in the Financial
Statements.
SECTION 3.10. Absence of Certain Changes, Events and Conditions;
--------------------------------------------------
Conduct in the Ordinary Course. (a) Since June 30, 1993, except as disclosed
- ------------------------------
in Schedule 3.10(a) of the Disclosure Schedule, there has not been any change
having a Material Adverse Effect. Except as disclosed in Schedule 3.10(a) of
the Disclosure Schedule, there are no conditions known to the Company existing,
with respect to the research, markets, proposed development and marketing plans,
products, facilities, existing and prospective technologies, capabilities or
personnel of the Company that reasonably would be expected to have a Material
Adverse Effect.
(b) Since June 30, 1993, the Company has been operated only in the
ordinary course. As amplification and not limitation of the foregoing, except
as disclosed in Schedule 3.10(b) of the Disclosure Schedule, the Company has
not, since June 30, 1993:
(i) permitted or allowed any of the assets or properties (whether
tangible or intangible) of the Company to be subjected to any Encumbrance,
other than Permitted Encumbrances;
(ii) made any loan to, guaranteed any indebtedness of or otherwise
incurred any indebtedness on behalf of any Person;
(iii) failed to pay any creditor any amount owed to such creditor when
due;
(iv) redeemed any of the capital stock or declared, made or paid any
dividends or distributions (whether in cash, securities or other property)
to the holders of capital stock of the Company;
(v) made any material changes in the customary methods of operations
of the Company;
(vi) merged with, entered into a consolidation with or acquired an
interest in, any Person or acquired a substantial portion of the assets or
business of any Person or any division or line of business thereof, or
otherwise acquired any material assets other than in the ordinary course of
business consistent with past practice;
(vii) made any capital expenditure or commitment for any capital
expenditure in excess of $200,000 individually or $750,000 in the
aggregate;
(viii)issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same, of,
or any other interest in, the Company;
(ix) entered into any agreement, arrangement or transaction with any
of its directors, officers, employees or shareholders (or with any
relative, beneficiary, spouse or Affiliate of such Person);
(x) made any change in any method of accounting or accounting
practice or policy used by the Company, other than such changes required by
U.S. GAAP;
(xi) disclosed any secret or confidential Intellectual Property
(except by way of issuance of a patent) or permitted to lapse or go
abandoned any Intellectual Property (or any registration or grant thereof
or any application relating thereto) to which, or under which, the Company
has any right, title, interest or license; or
(xii) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.09 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights
or commitments with respect to any of the actions specified in this Section
3.10, except as expressly contemplated by this Agreement.
SECTION 3.11. Employee Benefit Plans. (a) With respect to each
----------------------
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA),
---------------------
maintained or contributed to by the Company or any of its ERISA Affiliates or
with respect to which the Company or any of its ERISA Affiliates could incur
liability under Section 4069, 4201 or 4212(c) of ERISA (the "Company Benefit
----------------
Plans"), the Company has made available to the Purchaser a true and correct copy
- ------
of (i) the most recent annual report (Form 5500) filed with the IRS, (ii) such
Company Benefit Plan, (iii) each trust agreement relating to such Company
Benefit Plan, (iv) the most recent summary plan description for each Company
Benefit Plan for which a summary plan description is required and (v) the most
recent determination letter issued by the IRS with respect to any Company
Benefit Plan
qualified under Section 401(a) of the Code.
(b) Except as set forth in Section 3.11(b) to the Disclosure
Schedule, none of the Company Benefit Plans promises or provides retiree medical
or life insurance benefits to any person. Each Company Benefit Plan intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS to the effect that it is so qualified and
nothing has occurred since the date of such letter to affect the qualified
status of such plan. Except for the Stock Option Plans, none of the Company
Benefit Plans in effect on the date hereof would result, separately or in the
aggregate, in the payment of any material "excess parachute payment" within the
------------------------
meaning of Section 280G of the Code. Each Company Benefit Plan has been
operated in all material respects in accordance with its terms and the
requirements of applicable Law. Except as set forth in Section 3.11(b) to the
Disclosure Schedule, none of the Company Benefit Plans is subject to Title IV of
ERISA, and neither the Company nor any of its ERISA Affiliates has incurred, or
reasonably expects to incur, any direct or indirect liability under or by
operation of Title IV or ERISA.
(c) With respect to the Company Benefit Plans, other than claims for
benefits, no event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances, in connection with which the
Company or any of its ERISA Affiliates could be subject to any liability under
the terms of such Company Benefit Plans, ERISA, the Code or any other applicable
Law, which would, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.12. Leased Real Property. (a) The Company owns no real
--------------------
property.
(b) Section 3.12(b) of the Disclosure Schedule contains a list of all
of the Leased Real Property. Except as described in such Section of the
Disclosure Schedule, (i) there is no material violation of any law, rule or
regulation by the Company or known to the Company relating to any of the Leased
Real Property, (ii) the Company is in peaceful and undisturbed possession of the
Leased Real Property, and so long as the lease remains in effect, there are no
contractual or legal restrictions that preclude or restrict the ability to use
the premises for the purposes for which they are currently being used and (iii)
the Company has not leased or subleased any parcel or any portion of any parcel
of Leased Real Property to any other Person, nor has the Company assigned its
interest under any lease or sublease listed in Section 3.12(b) of the Disclosure
Schedule to any third party.
(c) The Company has, or has caused to be, delivered to the Purchaser
true and complete copies of all leases and subleases listed in Section 3.12(b)
of the Disclosure Schedule. Each of such leases and subleases is in full force
and effect and constitutes a legal, valid and binding obligation of the
respective parties thereto, and except as set forth on Schedule 3.12(c) of the
Disclosure Schedule, the Company is not in default or breach of (with or without
the giving of notice or the passage of time) any such leases or subleases. To
the knowledge of the Company, no third party is in material breach of any of
such leases or subleases.
SECTION 3.13. Intellectual Property. (a) Except as set forth in
---------------------
Schedule 3.13
of the Disclosure Schedule: (i) all the Owned Intellectual Property is owned by
the Company, free and clear of any Encumbrance and (ii) no Actions have been
made or asserted or are pending (nor, to the best knowledge of the Company after
due inquiry, has any such Action been threatened) against the Company either
(A) based upon or challenging or seeking to deny or restrict the use by the
Company of any of the Owned Intellectual Property or (B) alleging that any
services provided, or products manufactured or sold by the Company are being
provided, manufactured or sold in violation of any patents or trademarks, or any
other rights of any Person. To the best knowledge of the Company after due
inquiry, no Person is using any patents, copyrights, trademarks, service marks,
trade names, trade secrets or similar property that are confusingly similar to
the Owned Intellectual Property or that infringe upon the Owned Intellectual
Property or upon the rights of the Company therein. Except as disclosed in
Section 3.12 of the Disclosure Schedule, the Company has not granted any license
or other right to any other Person with respect to the Owned Intellectual
Property. The consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any of the Owned
Intellectual Property.
(b) Except as set forth on Section 3.13(b) of the Disclosure
Schedule, each license and sublicense with respect to the Licensed Intellectual
Property:
(i) is valid and binding and in full force and effect and represents
the entire agreement between the respective licensor and licensee with
respect to the subject matter of such license or sublicense;
(ii) except as otherwise set forth in Section 3.13(b)(ii) of the
Disclosure Schedule, will not cease to be valid and binding and in full
force and effect on terms identical to those currently in effect as a
result of the consummation of any of the transactions contemplated by this
Agreement, nor will the consummation of the transactions contemplated by
this Agreement constitute a breach or default under such license or
sublicense or otherwise give the licensor or sublicensor a right to
terminate such license or sublicense;
(iii) no Actions have been made or asserted or are pending (nor, to
the best knowledge of the Company after due inquiry, has any such Action
been threatened) against the Company either (A) based upon or challenging
or seeking to deny or restrict the use by the Company of any of the
Licensed Intellectual Property or (B) alleging that any Licensed
Intellectual Property is being licensed, sublicensed or used in violation
of any patents or trademarks, or any other rights of any Person; and
(iv) to the knowledge of the Company, no Person is using any patents,
copyrights, trademarks, service marks, trade names, trade secrets or
similar property that are confusingly similar to the Licensed Intellectual
Property or that infringe upon the Licensed Intellectual Property or upon
the rights of the Company therein.
(c) Except as otherwise disclosed in Section 3.13(c) of the
Disclosure Schedule, with respect to each such license or sublicense of Licensed
Intellectual Property: (i) the Company has not received any notice of
termination or cancellation under such license or
sublicense and no licensor or sublicensor has any right of termination or
cancellation under such license or sublicense except in connection with the
default of the Company thereunder, (ii) the Company has not received any notice
of a breach or default under such license or sublicense, which breach or default
has not been cured and (iii) the Company has not granted to any other Person any
rights, adverse or otherwise, under such license or sublicense.
(d) Neither the Company nor (to the knowledge of the Company) any
other party to such license or sublicense of Licensed Intellectual Property is
in breach or default in any material respect, and, to the best knowledge of the
Company after due inquiry, no event has occurred that, with notice or lapse of
time would constitute such a breach or default or permit termination,
modification or acceleration under such license or sublicense.
(e) Except as set forth in Section 3.13(e) of the Disclosure
Schedule, the Company is not aware of any reason that would prevent any pending
applications to register trademarks, service marks or copyrights or any pending
patent applications from being granted.
(f) The Company has taken all reasonable security measures to protect
the secrecy, confidentiality and value of all Intellectual Property required to
conduct its business. Each founder, officer, director and employee of the
Company has executed a Proprietary Information and Inventions Agreement in the
Company's standard form, each such agreement is in full force and effect as of
the date hereof and to the best of the Company's knowledge, none of the
Company's current or former officers, employees or consultants is or will be in
violation thereof. The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees or consultants (or people it
currently intends to hire) made prior to their employment by or consultancy to
the Company, other than inventions which have been licensed to the Company.
(g) Section 3.13(g) of the Disclosure Schedule sets forth a complete
list of all patent applications in which the Company has an interest. The
Company believes that the inventions described in such applications are
patentable, that the claims made therein should issue in all material respects
and that the patents, if issued, would cover all techniques currently known to
the Company to grow human stem cells in culture.
(h) Except as disclosed in Section 3.13(h) of the Disclosure
Schedule, no consultant to or employee of the Company has granted any license or
other right to any Person other than the Company with respect to the Owned
Intellectual Property. The Company is not aware that any of its employees or
consultants is obligated under any contract (including licenses, covenants or
commitments of any nature) or any order of any court or administrative agency,
that would interfere with the use of such employee's or consultant's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted.
SECTION 3.14. Environmental Matters. Except as would not have a
---------------------
Material Adverse Effect, the Company, to the best of its knowledge, (a) is not
violating and has not in the past violated any Environmental Law or Permit,
(b) is not exposed to any claims of liability for any off-site disposal or
contamination, (c) has not received notice of any claim or threatened
claim relating to any Environmental Permit, Environmental Law or otherwise
relating to any Hazardous Substance and (d) is not aware of any circumstance
likely to result in claims, liability, investigation, monitoring or remediation
costs or restrictions on the ownership, use, or transfer of any Real Property or
Environmental Permit pursuant to any Environmental Law. With respect to its
period of ownership or use of any property, there has not been any
contamination, release or threat of release at any currently or formerly owned,
leased or used real property that would have a Material Adverse Effect.
SECTION 3.15. Litigation. There is no pending or, to the knowledge
----------
of the Company, threatened litigation, arbitration or governmental investigation
or legal, administrative or regulatory proceeding against the Company or to
which any of its properties is or would be subject that (a) if adversely
determined, would have a Material Adverse Effect or (b) relates to this
Agreement or the Distribution Agreement or the transactions contemplated hereby
and thereby. Except as set forth in Schedule 3.15 of the Disclosure Schedule,
there are no material citations, fines or penalties heretofore asserted against
the Company under any federal, state or local law that remain unpaid or that
otherwise bind the assets of the Company.
SECTION 3.16. Agreements. Section 3.16 of the Disclosure Schedule
----------
lists each agreement, contract (other than leases of Leased Real Property),
license commitment or instrument (including any and all amendments thereto) to
which the Company is a party, involving aggregate annual payments of at least
$200,000 or which is material, individually or in the aggregate, to the
business, operations or financial condition of the Company, each of which is in
full force and effect and constitutes a legal, valid and binding obligation of
the respective parties thereto, and except as set forth on Schedule 3.16 of the
Disclosure Schedule, the Company is not in default or breach of (with or without
the giving of notice or the passage of time) any such agreement or instrument.
To the knowledge of the Company, no third party is in material breach of any
such agreements. The Company has caused to be delivered to the Purchaser true
and complete copies of all such agreements, including all amendments thereto.
SECTION 3.17. Certain Interests. (a) Except as disclosed in Section
-----------------
3.17(a) of the Disclosure Schedule, no officer or director of the Company and no
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer or director:
(i) has any direct or indirect financial interest in any competitor,
supplier or customer of the Company, provided, however, that the ownership
-------- -------
of securities representing no more than one percent of the outstanding
voting power of any competitor, supplier or customer, and which are listed
on any national securities exchange or traded actively in the national
over-the-counter market, shall not be deemed to be a "financial interest"
so long as the Person owning such securities has no other connection or
relationship with such competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or in part, or has any
other interest in any tangible or intangible property which the Company
uses or has used in the conduct of the Business or otherwise;
(iii) has outstanding any indebtedness to the Company; or
(iv) has any contract or agreement with the Company.
(b) Except as disclosed in Section 3.17(b) of the Disclosure
Schedule, the Company has no Liability or any other obligation of any nature
whatsoever to any officer, director or shareholder of the Company or to any
relative or spouse (or relative of such spouse) who resides with, or is a
dependent of, any such officer, director or shareholder.
SECTION 3.18. Licenses and Permits. Except as would not have a
--------------------
Material Adverse Effect, the Company, to the best of its knowledge, has all
governmental licenses, permits and other governmental authorizations and
approvals required for the conduct of its businesses as now conducted, and all
such licenses, permits, authorizations and approvals will remain in full force
and effect immediately following the consummation of the transactions hereunder.
SECTION 3.19. Private Offering. No form of general solicitation or
----------------
general advertising (including, without limitation, advertisements, articles,
notices or other communications published in any newspaper, magazine or other
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising)
was used by the Company or any other Person acting on behalf of the Company in
respect of the Shares or in connection with the offer and sale of the Shares.
SECTION 3.20. Brokers. No broker, finder or investment banker, other
-------
than Hambrecht & Quist (whose fees shall be paid by the Company), is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions hereunder based upon arrangements made by or on behalf of the
Company. All arrangements between the Company and Hambrecht & Quist with
respect to such fees have been disclosed to the Purchaser.
SECTION 3.21. General Solicitation. The Company has not made any
--------------------
general advertising or general solicitation with respect to the purchase of the
Shares, the Option or any shares of Common Stock into which the Shares may be
converted or for which the Option may be exercised, or any other securities of
the Company that may be purchased pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Company that:
SECTION 4.01. Organization of the Purchaser. The Purchaser is a
-----------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado.
SECTION 4.02. Authority. The Purchaser has all necessary corporate
---------
power and authority to execute and deliver this Agreement and the Distribution
Agreement and to perform its obligations and to consummate the transactions
contemplated hereunder and thereunder. The execution, delivery and performance
of this Agreement and the Distribution Agreement by the Purchaser have been duly
and validly authorized by all necessary corporate action of the Purchaser and no
other corporate proceedings on the part of the Purchaser are necessary to
authorize this Agreement or the Distribution Agreement or to consummate the
transactions contemplated by this Agreement or the Distribution Agreement. This
Agreement and the Distribution Agreement have been duly and validly executed and
delivered by the Purchaser and, assuming the due authorization, execution and
delivery hereof by the Company, constitute the legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
their terms.
SECTION 4.03. No Conflict. The execution and delivery of this
-----------
Agreement and the Distribution Agreement by the Purchaser do not, and the
performance of this Agreement and the Distribution Agreement by the Purchaser
will not, (i) conflict with or violate the articles of incorporation or by-laws
of the Purchaser, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to the Purchaser or by which it or its
properties are bound or affected or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an Encumbrance on
any of the properties or assets of the Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Purchaser is a party or by which the
Purchaser or any of its properties is bound or affected.
SECTION 4.04. Securities Act. The Purchaser is an "accredited
--------------
investor", as that term is defined in Regulation D promulgated under the
Securities Act. The Purchaser received no general advertising or general
solicitation with respect to the purchase of the Shares, the Option or any
shares of Common Stock into which the Shares may be converted for which the
Option may be exercised, or any other securities of the Company that may be
purchased pursuant hereto. The Purchaser is acquiring the Shares and the
Option, and all shares of Common Stock into which the Shares may be converted,
solely for its own account, as principal, for investment purposes only and not
with a view to, or for, resale or distribution thereof. The Purchaser has no
present intention, agreement or arrangement to resell, assign, transfer or
otherwise dispose of all or any part of the Shares, the Option or any shares of
Common Stock into which the Shares may be converted. The Purchaser understands
that in reliance upon the foregoing representation and warranty, the offer and
sale of the Shares and the Option are not registered under the Securities Act or
any state securities law. The Purchaser will not sell, assign, transfer or
otherwise dispose of the Shares, the Option or the shares of Common Stock into
which the Shares may be converted or for which the Option may be exercised
except pursuant to a registration under the Securities Act and applicable state
securities laws or an exemption therefrom.
SECTION 4.05. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery
and performance of this Agreement by the Purchaser do not and will not require
any consent, approval, authorization or other order of, action by, filing with
or notification to any governmental or regulatory authority, domestic or
foreign, except (a) as described in Section 4.05 of the Disclosure Schedule and
(b) to the extent applicable, upon issuance of shares of Common Stock pursuant
to Article V of this Agreement and upon a conversion of the Shares as provided
for in the Articles, the notification requirements of the HSR Act.
SECTION 4.06. Brokers. No broker, finder or investment banker, other
-------
than Lehman Brothers Inc. (whose fees shall be paid by the Purchaser), is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions hereunder, based upon arrangements made by or on behalf of
the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Access to Information; Confidentiality. The Company
--------------------------------------
shall, and shall cause its officers, directors, employees, auditors and other
agents to, provide to the Purchaser such financial, operating and other data and
information with respect to the business and properties of the Company as the
Purchaser shall reasonably request to monitor the investment made pursuant
hereto and to exercise its rights hereunder. The Purchaser and the Company
agree to keep secret and not to disclose to any third party any Confidential
Information of the other that may from time to time be received from the other
party; provided, however, that the Purchaser may disclose such information to
-------- -------
its Affiliates which agree to be bound by the provisions of this Section 5.01.
The Confidential Information exchanged between the parties pursuant to this
Agreement shall not be used by the receiving party for any purpose other than
for purposes of carrying out covenants or other obligations contained in this
Agreement.
SECTION 5.02. Registration Rights. The Company hereby grants to the
-------------------
Purchaser the registration rights set forth in Exhibit 5.02.
SECTION 5.03. Purchaser's Option. (a) The Company hereby grants to
------------------
the Purchaser an irrevocable option (the "Option") to purchase all, but not less
------
than all, of the Option Shares at the Option Price in accordance with this
Section 5.03.
(b) The Purchaser may exercise the Option at any time during the
three-year period commencing on the closing date of the Initial Public Offering
(the "Option Period"). Upon the expiration of the Option Period, the right to
-------------
exercise the Option under this Section 5.03 shall expire and be of no further
force and effect. Notwithstanding any such expiration, the Purchaser shall be
entitled to acquire the Option Shares with respect to which it has exercised the
Option in accordance with the terms hereof during the Option Period.
(c) If the Purchaser wishes to exercise the Option, it shall deliver
to the Company a written notice; the date such notice is delivered to the
Company by the Purchaser being the "Option Notice Date") specifying (i) the
------------------
Purchaser's intention to acquire the Option Shares and
(ii) a place and date not earlier than five business days nor later than fifteen
business days (the "Option Closing Date") from the Option Notice Date for the
-------------------
closing of such acquisition (the "Option Closing"). The Purchaser shall also
--------------
deliver to the Company at the Option Closing an opinion of counsel (it being
agreed that Shearman & Sterling shall be deemed satisfactory) in form and
substance reasonably satisfactory to the Company and its counsel or other
evidence reasonably satisfactory to the Company and its counsel that the
acquisition of the Option Shares by the Purchaser complies with the Securities
Act and with any applicable state securities laws.
(d) On the Option Closing Date, the Purchaser shall pay to the
Company, in immediately available funds by wire transfer to a bank account
designated in writing by the Company, an amount equal to the Option Price
multiplied by the number of Option Shares.
(e) At the Option Closing, simultaneously with the delivery of the
consideration specified in paragraph (d) of this Section 5.03, the Company shall
deliver to the Purchaser a certificate or certificates representing the Option
Shares registered in the name of the Purchaser.
(f) The Option may be transferred to any Affiliate of the Purchaser
but is not otherwise transferable without the prior written consent of the
Company.
(g) (i) In the event that, at any time following the exercise of the
Option, the Company issues (a "Post-Option Issuance") any Out of the Money
--------------------
Option Stock, it shall deliver written notice of such intention (the "Post-
----
Option Issuance Notice") to the Purchaser within 30 days after the date of such
- ----------------------
Post-Option Issuance. The Post-Option Issuance Notice shall set forth the
number of shares of Common Stock issued and the applicable Out of the Money
Option Price.
(ii) In connection with each Post-Option Issuance, the Purchaser shall
have the right (the "Post-Option Purchase Right") to purchase from the Company
--------------------------
at the Option Price the number of shares of Common Stock equal to 30 percent of
the aggregate of the total number of shares of Out of the Money Option Stock
issued in such Post-Option Issuance plus the number of shares of Common Stock to
be issued to the Purchaser upon exercise of the Post-Option Purchase Right.
(iii) In the event that the Purchaser wishes to exercise its Post-
Option Purchase Right, it shall deliver to the Company, within thirty days after
the date of the Post-Option Issuance a written notice in which the Purchaser
agrees to purchase at the Option Price the number of shares of Common Stock
which the Purchaser is entitled to purchase upon exercise of the Post-Option
Purchase Right.
SECTION 5.04. Purchaser's Preemptive Rights. (a) In the event that
-----------------------------
the Company proposes to issue (a "Post-Determination Issuance") any New Voting
---------------------------
Securities, and such issuance will occur at any time following the date when the
conversion price for the Shares has been determined in accordance with the
Restated Articles of Incorporation (the "Conversion Determination Date"), it
-----------------------------
shall deliver written notice of such intention (the "Post-Determination Issuance
---------------------------
Notice") to the Purchaser not less than 30 days prior to (i) the date of initial
- ------
filing of a registration statement, in the case of a Public Offering or (ii) the
expected date of issuance,
in the case of any other Post-Determination Issuance. The Post-Determination
Issuance Notice shall set forth in reasonable detail the terms of such Post-
Determination Issuance, including, without limitation, (A) a description, and
the number, of New Voting Securities proposed to be issued, (B) in the case of a
Public Offering, the estimated price to the public, underwriting discount and
commissions, expenses and underwriters of the Public Offering, (C) in the case
of a Private Placement, the sales price, to the extent then known by the
Company, and the identity of the proposed purchasers, and (D) in the case of a
Non-Cash Transaction, a description of such transaction, including, without
limitation, the consideration and the parties thereto. If information concerning
the identity of proposed purchasers in a Private Placement becomes known to the
Company subsequent to the delivery of the Post-Determination Issuance Notice,
the Company shall, promptly after gaining such knowledge, deliver such
information to the Purchaser in writing.
(b) In connection with each Post-Determination Issuance, the
Purchaser shall have the right (the "Post-Determination Preemptive Right") to
-----------------------------------
purchase from the Company at the Applicable Preemptive Price simultaneously
with, and otherwise upon the terms and subject to the conditions of, the Post-
Determination Issuance up to the number of shares of Common Stock or other
Voting Securities, as the case may be, necessary to permit the Purchaser to
maintain the percentage of the outstanding Common Stock owned by the Purchaser
and the percentage of Total Voting Power the Purchaser had, in each case,
immediately prior to such Post-Determination Issuance (including, for purposes
of calculating such percentage, all shares of Common Stock or other Voting
Securities that the Purchaser has the right to acquire upon exercise of options
or warrants, conversion or exchange of other securities or otherwise, if the
Option has not yet been exercised, excluding the shares of Common Stock subject
to the Option).
(c) In the event that the Purchaser wishes to exercise its Post-
Determination Preemptive Right, it shall deliver to the Company, not later than
ten days prior to the proposed date of the initial filing of the registration
statement, in the case of a Public Offering, and the proposed date of issuance,
in any other case, a written notice (a "Post-Determination Subscription Notice")
--------------------------------------
in which the Purchaser specifies the number of New Voting Securities which the
Purchaser elects to purchase and in which the Purchaser agrees to purchase such
specified number of New Voting Securities at the Applicable Preemptive Price
subject to the same conditions as the Post-Determination Issuance.
(d) In the event that the Company issues (such issuance being a "Pre-
---
Determination Issuance") any New Voting Securities during the period beginning
- ----------------------
on the date hereof and ending on and including the Conversion Determination
Date, then the Purchaser shall have the option (the "Pre-Determination
-----------------
Preemptive Rights) to purchase from the Company at the Applicable Preemptive
- -----------------
Price for each such Pre-Determination Issuance up to the number of New Voting
Securities issued in each such Pre-Determination Issuance equal to the
Applicable Percentage. The "Applicable Percentage" means the greater of (i) the
---------------------
percentage of outstanding Common Stock (including any other securities
representing common equity) and (ii) the percentage of Total Voting Power, in
either case that would have been held by the Purchaser if the Shares had been
converted into shares of Common Stock immediately
prior to such Pre-Determination Issuance at the conversion price of the Shares
on the Conversion Determination Date (including, for purposes of calculating
such percentage, all shares of Common Stock or other Voting Securities that the
Purchaser has the right to acquire upon exercise of options or warrants,
conversion or exchange of other securities or otherwise, but if the Option has
not yet been exercised, excluding the shares of Common Stock subject to the
Option).
(e) In the event that the Purchaser wishes to exercise the Pre-
Determination Preemptive Right, it shall deliver to the Company, at any time
during the period commencing on the Conversion Determination Date and ending
thirty days thereafter, a written notice in which the Purchaser specifies the
number of New Voting Securities which the Purchaser elects to purchase and in
which the Purchaser agrees to purchase such specified number of New Voting
Securities at the Applicable Preemptive Prices. The closing of the purchase of
New Voting Securities upon the Purchaser's exercise of the Pre-Determination
Preemptive Right shall take place within five days of the receipt of the written
notice referred to in the immediately preceding sentence.
SECTION 5.05. Company Put Option. (a) The Company may, at its
------------------
option, require the Purchaser to purchase (the "Company Option") in accordance
--------------
with the terms of this Section 5.05, Equity Securities in conjunction with
either (i) the Initial Public Offering if the aggregate proceeds to the Company
therefrom, net of underwriting discounts, commissions and other expenses, are
not less than $17.5 million in cash (including the purchase price payable by the
Purchaser pursuant to this Section 5.05) (a "Qualifying IPO") or (ii) any
--------------
Private Placement of Equity Securities in which the proceeds to the Company, net
of expenses, are not less than $10 million in cash (including the purchase price
payable by the Purchaser pursuant to this Section 5.05) (a "Qualifying Private
------------------
Placement").
- ---------
(b) In the event that the Company wishes to exercise the Company
Option, it shall deliver written notice of such exercise (the "Put Notice") to
----------
the Purchaser not less than 30 days prior to (i) the closing date of a
Qualifying Private Placement or (ii) the date of the filing with the Securities
and Exchange Commission of a registration statement for the Qualifying IPO.
Upon delivery of the Put Notice, the Purchaser shall be obligated to purchase
from the Company, upon the same terms and subject to the same conditions as the
underwriters in the case of a Qualifying IPO, and the other purchasers of Equity
Securities in the case of a Qualifying Private Placement, the number of Equity
Securities equal to not more than 25 percent of (x) the Equity Securities
purchased by the underwriters (excluding Equity Securities purchased by such
underwriters pursuant to any over-allotment option) in the case of a Qualifying
IPO or (y) the Equity Securities purchased by other purchasers in the case of a
Qualifying Private Placement.
(c) Notwithstanding any other provision of this Section 5.05 to the
contrary, (i) the Purchaser shall not be required to purchase Equity Securities
having an aggregate purchase price of more than $5 million pursuant to the
Company Option; (ii) the Purchaser shall not be required to purchase pursuant to
the Company Option any Equity Securities being offered in conjunction with any
securities other than Equity Securities; (iii) the Purchaser shall not be
required to purchase Equity Securities if such purchase is prohibited by law, if
any regulatory
approval required to effect any purchase of Equity Securities upon exercise of
the Company Option cannot be obtained or during any waiting period under the HSR
Act or during any other period in which regulatory approvals are sought by the
parties hereto pursuant to Section 5.10, but such purchase shall take place as
promptly as practicable after any requisite waiting period has passed and any
required notification period has expired or been terminated, or such approval
has been obtained; and (iv) the Purchaser shall not be required to purchase
Equity Securities pursuant to the Company Option if the Company (A) becomes
insolvent, (B) a bankruptcy petition is filed with respect to the Company or any
of its Subsidiaries, (C) is adjudicated as a bankrupt pursuant to an involuntary
petition in bankruptcy, (D) suffers appointment of a temporary or permanent
receiver, trustee or custodian for its business or for all or part of its
assets, where such appointment is not discharged within thirty days, (E) makes
an assignment for the benefit of creditors, (F) is admitted to the benefits of
any procedure for the settlement or postponement of debts, (G) becomes a party
to dissolution proceedings or (H) takes any corporate action with respect to any
of the foregoing.
(d) If the Company exercises the Company Option with respect to any
Qualifying IPO or Qualifying Private Placement, the Purchaser shall have the
right to purchase from the Company in connection with such Qualifying IPO or
Qualifying Private Placement, in lieu of any rights granted to the Purchaser
pursuant to Section 5.04, up to a number of Equity Securities equal to the
greater of (i) forty percent of the Equity Securities sold in such Qualifying
IPO or Qualifying Private Placement or (ii) the number of Equity Securities, if
any, that the Purchaser would have had a right to acquire in accordance with
Section 5.04, notwithstanding the Purchaser's right granted in this Section
5.05(d).
(e) In the event that the Purchaser wishes to exercise the right
granted in Section 5.05(d), it shall deliver to the Company, not later than ten
days prior to (i) the proposed date of the initial filing of the registration
statement, in the case of a Qualifying IPO, or (ii) the closing date, in the
case of a Qualifying Private Placement, a written notice in which the Purchaser
specifies the number of New Voting Securities which the Purchaser elects to
purchase and in which the Purchaser agrees to purchase such specified number of
New Voting Securities upon the same terms and subject to the same conditions as
the underwriters in the case of a Qualifying IPO, and the other purchasers of
Equity Securities in the case of a Qualifying Private Placement. Such right must
be exercised by the Purchaser in accordance with the procedures set forth in
Section 5.04.
SECTION 5.06. Standstill Agreement. Until the earlier of (a) October
--------------------
__, 1998 or (b) the Purchaser's exercise of the Option in accordance with
Section 5.03, the Purchaser shall not, without the prior approval of the Board,
acquire, agree to acquire, or make any proposal to acquire, directly or
indirectly any securities of the Company, except for the acquisition of shares
of Common Stock upon conversion of the Shares and in accordance with Article V
of this Agreement.
SECTION 5.07. Purchaser's Right of First Negotiation. If the Company
--------------------------------------
receives any proposal concerning, or otherwise wishes to pursue, a merger,
consolidation or other transaction in which all or a majority of the Company's
equity securities or Voting Securities,
all or substantially all of the Company's assets, or any material portion of the
assets used by the Company in performing its obligations under the Distribution
Agreement would be acquired outside of the ordinary course of business of the
Company by any Person (a "Business Combination"), the Company shall deliver
----------------------
written notice (a "Business Combination Notice") of such proposal or intention
---------------------------
to the Purchaser, in the case of a proposal, setting forth the terms of the
proposal in reasonable detail. Upon receipt of a Business Combination Notice,
the Purchaser shall have the exclusive right to negotiate with the Company
concerning a Business Combination, which right shall expire (such period being
the "Exclusivity Period") upon the earliest to occur of (a) the thirtieth day
------------------
following the commencement of the Exclusivity Period if the Purchaser shall have
failed to commence good faith negotiations with the Company with respect to a
Business Combination during such thirty day period, (b) either the Purchaser or
the Company shall, following such thirty-day period, notify the other that it
has reasonably determined that continued negotiations are unlikely to result in
a Business Combination and (c) on the 120th day following the date of the
Business Combination Notice if the Purchaser and the Company fail to enter into
a definitive agreement to effect a Business Combination within such 120 day
period. During the Exclusivity Period, the Company shall not engage in any
discussions, negotiations, arrangements or understandings with, or provide any
non-public or confidential information to, any Person other than the Purchaser
with respect to a Business Combination. The Company and the Purchaser agree that
all communications between the parties during the Exclusivity Period will be
kept strictly confidential and the contents of those communications will not be
disclosed to any other person except as, and to the extent, required by
applicable law. For one year following the Exclusivity Period, the Company may
only enter into a Business Combination with a Person other than the Purchaser if
the terms of the Business Combination with such other Person, taken as a whole,
are more favorable to the Company and its stockholders than the most favorable
terms of a Business Combination proposed to the Company by the Purchaser during
the Exclusivity Period.
SECTION 5.08. Legend. The Purchaser agrees that all certificates
------
representing the Shares and the shares of Common Stock to be issued upon
conversion of the Shares or pursuant to this Article V shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY
STATE AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREUNDER."
The Purchaser agrees to comply with the foregoing transfer restriction legend;
and the Purchaser acknowledges that a transfer restriction will be maintained by
the Company's stock transfer agent. The legend set forth in this Section 5.08
shall be removed by delivery of substitute certificate(s) without such legend if
the Purchaser shall have delivered to the Company an opinion of counsel (it
being agreed that Shearman & Sterling shall be deemed satisfactory) in form and
substance reasonably satisfactory to the Company and its counsel, to the effect
that such legend is not required for purposes of compliance with the Securities
Act.
SECTION 5.09. Board Observer; Board Representation. (a) During the
------------------------------------
period (such period being the "Observation Period") commencing on the
------------------
Purchaser's acquisition of any Equity Securities pursuant to Section 5.05 and
ending on the earlier to occur of (i) the Purchaser's exercise of the Option and
(ii) the Purchaser's sale of any of such Equity Securities acquired pursuant to
Section 5.05, the Purchaser shall be entitled to have present at all meetings of
the Board one Person designated by the Purchaser and reasonably acceptable to
the Company (the "Purchaser Observer"). During the Observation Period, the
------------------
Company (i) shall deliver notice of all meetings of the Board to the Purchaser
Observer simultaneously with, and in the same form as, notice to the directors
of the Company and (ii) shall deliver to the Purchaser copies of all written
materials furnished to the Board simultaneously with the delivery of such
written materials to the Board.
(b) From and after the Purchaser's exercise of the Option, (i) the
Purchaser shall have the right to designate a percentage of directors of the
Company (such persons being the "Purchaser Designees") equal to the percentage
-------------------
of outstanding shares of Common Stock, on a fully diluted basis, owned by the
Purchaser, rounded down to the next whole number, and (ii) at least one
Purchaser Designee shall be a member of each Committee of the Board as long as
the Purchaser owns at least 25% of the outstanding shares of Common Stock;
provided, however, that if at any time following such exercise of the Option,
- -------- -------
but only for so long as the Purchaser continues to own a majority of the
outstanding shares of Common Stock, the Purchaser owns a majority of the
outstanding shares of Common Stock, the Purchaser Designees shall constitute a
majority of the directors of the Company and a majority of the members of each
Committee of the Board. The Company agrees to take all action permitted by the
MBCA necessary to cause the Purchaser Designees to become members of the Board.
If the Board is divided into more than one class, the Purchaser Designees shall
be distributed as equally as possible among such classes.
(c) The Board shall recommend to the stockholders of the Company for
election the Purchaser Designees who are nominated by the Company to serve as
members of the Board, and the Company shall use its reasonable best efforts to
solicit proxies from stockholders to vote in favor of such Purchaser Designees.
In the event that a vacancy is created on the Board at any time by the death,
disability, retirement, resignation or removal (with or without cause) of a
Purchaser Designee, the Purchaser shall cause such Purchaser Designee to be
elected to the Board to fill such vacancy.
SECTION 5.10. Regulatory Approvals. If the Purchaser's acquisition
--------------------
of any of the shares of Common Stock or Voting Securities subject to issuance
pursuant to this Agreement (including, without limitation, the Common Stock or
Voting Securities issuable upon conversion of the Preferred Stock or pursuant to
Article V of this Agreement), requires approval of, or prior notification to,
any regulatory authority pursuant to the HSR Act or otherwise, the Purchaser
shall promptly file the required application for approval or notice and shall
expeditiously process such notice or application, as the case may be, and the
Company shall use all reasonable efforts to cooperate with the Purchaser in the
filing of any such notice or application and the obtaining of any such approval.
If the closing of the acquisition of shares of Common Stock or Voting Securities
pursuant to this Article V cannot be consummated by reason of any applicable
judgment, decree, order, law or regulation, such Closing shall take
place as promptly as practicable after the date on which such restriction has
expired or been terminated; without limiting the foregoing, if prior approval
of, notification to or filing with, any regulatory authority is required
pursuant to the HSR Act or otherwise, such closing shall take place as promptly
as practicable after any requisite waiting period has passed and any required
notification period has expired or been terminated, or such approval has been
obtained.
SECTION 5.11. Reservation of Shares. The Company shall at all times
---------------------
reserve and keep available, free from preemptive rights (other than those of the
Purchaser), out of its authorized and unissued Common Stock and Voting
Securities the number of shares of Common Stock and Voting Securities subject to
issuance upon conversion of the Shares
(the "Reserve Amount"). The Company shall not take any corporate action which
--------------
would require an adjustment in the number of shares of Common Stock and Voting
Securities, unless either (i) immediately after such corporate action is taken
and the transactions contemplated thereby are consummated, the number of
authorized and unissued shares of Common Stock would equal or exceed the Reserve
Amount, or (ii) concurrently with the taking of such corporate action, the
Company shall take such corporate action as may be necessary to increase its
authorized and unissued shares of Common Stock to such number as shall equal or
exceed the Reserve Amount. The Company shall from time to time as necessary to
fulfill the commitments made in this Article V authorize and make available,
free from preemptive rights (other than those of the Purchaser), the number of
shares of Common Stock and Voting Securities subject to issuance pursuant to
this Article V.
SECTION 5.12. Voting Rights; Rights Plan. (a) The Company shall not
--------------------------
take any action to amend the By-Laws or Restated Articles of Incorporation so as
to make Chapter 7B of the MBCA, or any successor thereto, applicable to any
acquisition of shares of Common Stock or other Voting Securities by the
Purchaser. In the event that the Restated Articles are amended so as to make
Chapter 7B of the MBCA, or any successor thereto, applicable to any acquisition
of shares of Common Stock or other Voting Securities by the Purchaser, the
Company shall take such actions as shall be necessary and permitted by the MBCA
so that (a) the shares of Common Stock or other Voting Securities that the
Purchaser is entitled to acquire upon conversion of the Shares or pursuant to
Article V hereof will, upon such issuance, and (b) the Shares will, in
accordance with their terms, be duly accorded full voting rights. The Company
shall use its best efforts, including the solicitation of votes by proxy, to
obtain such votes of shareholders of the Company as shall be necessary to accord
the Purchaser with such full voting rights.
(b) The Company shall not adopt a shareholder rights plan, enter into
any agreement, arrangement or understanding or grant any warrants, options,
rights or any other privileges which, upon acquisition by the Purchaser of
shares of Common Stock or other Voting Securities upon conversion of the Shares
or pursuant to Article V hereof, would result in the Purchaser, in its capacity
as a holder of such securities, being subject to different rights and
obligations as all other holders of Common Stock or Voting Securities, as a
result of such acquisition.
SECTION 5.13. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company in Article III and the Purchaser
in Article IV shall survive the
Closing until October , 1996.
---
SECTION 5.14. Company's Right of First Negotiation. If the Purchaser
------------------------------------
elects to pursue a sale of all of the Company's Equity Securities and Voting
Securities acquired pursuant to this Agreement ( a "Purchaser's Equity Sale"),
-----------------------
the Purchaser shall deliver written notice (a "Purchaser's Equity Sale Notice")
------------------------------
of such intention to the Company. Upon receipt of a Purchaser's Equity Sale
Notice, the Company shall have the exclusive right to negotiate with the
Purchaser concerning a Purchaser's Equity Sale, which right shall expire upon
the thirtieth day following the receipt of such notice. The Company and the
Purchaser agree that all communications between the parties during such period
will be kept strictly confidential and the contents of those communications will
not be disclosed to any other person except as, and to the extent, required by
applicable law.
ARTICLE VI
TERM, TERMINATION, AMENDMENT AND WAIVER
---------------------------------------
SECTION 6.01. Term. Unless otherwise terminated by a written
----
instrument executed by each of the Company and the Purchaser, this Agreement
shall be in full force and effect until the expiration or termination of the
Distribution Agreement in accordance with the terms thereof, whereupon the
rights and obligations of the parties under this Agreement shall terminate.
SECTION 6.02. Amendment. This Agreement may not be amended or
---------
modified except by an instrument in writing signed by each of the parties
hereto.
SECTION 6.03. Waiver. Either party hereto may (a) waive any
------
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (b) waive compliance with any of the
agreements contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party to be bound thereby. The
failure of either party to assert any of its rights hereunder shall not
constitute a waiver of any such rights.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 7.01. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to the Purchaser:
Cobe Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Edward Wood
Telecopy: (303) 231-4160
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Peter D. Lyons, Esq.
Telecopy: (212) 848-7179
(b) if to the Company:
Aastrom Biosciences, Inc.
P.O. Box 376 - (Mail)
Ann Arbor, Michigan 48105
Dominos Farms, Lobby L - (Direct Delivery)
Attention: R. Douglas Armstrong, Ph.D.
President and Chief Executive Officer
Telecopy: (313) 665-0485
with a copy to:
Gray, Cary, Ames & Frye
401 B Street, Suite 1700
San Diego, California 92101
Attention: T. Knox Bell, Esq.
Telecopy: (619) 236-1048
SECTION 7.02. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, other than by
the Purchaser to its Affiliates (in which event the Purchaser shall continue to
remain fully liable under this Agreement), without the express written consent
of the Purchaser and the Company (which consent may be granted or withheld in
the sole discretion of the Company or the Purchaser). Any assignment to an
Affiliate of the Purchaser shall not become effective until such Affiliate has
agreed to be bound by the terms of this Agreement.
SECTION 7.03. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and in Exhibit 5.02,
and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 7.04. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed entirely within that state.
SECTION 7.05. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.06. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any law, rule,
regulation or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
SECTION 7.07. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 7.08. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
SECTION 7.09. WAIVER OF TRIAL BY JURY. THE PURCHASER AND THE COMPANY
-----------------------
HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Purchaser and the Company have each caused
this Agreement to be executed by its duly authorized officer as of the date
first written above.
COBE LABORATORIES, INC.
By: /s/ MATS WAHLSTROM
------------------------------
Name: Mats Wahlstrom
Title: President
AASTROM BIOSCIENCES, INC.
By: /s/ R. DOUGLAS ARMSTRONG
------------------------------
Name: R. Douglas Armstrong
Title: President and
Chief Executive Officer
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment is entered into as of October 29, 1996 by and between
Cobe Laboratories, Inc., a Colorado corporation (the "Purchaser") and Aastrom
Biosciences, Inc., a Michigan corporation (the "Company") with respect to that
certain Stock Purchase Agreement between the Purchaser and the Company, dated as
of October 22, 1993 (the "Stock Purchase Agreement").
1. Pursuant to Section 5.04 of the Stock Purchase Agreement,
the Purchaser has certain preemptive rights to purchase additional capital stock
of the Company. Pursuant to Section 5.05 of the Stock Purchase Agreement, the
Company has a "put option" to require the Purchaser to purchase certain
additional capital stock in the Company.
2. As specified in the definition set forth in the Stock
Purchase Agreement, the "Applicable Preemptive Price" for the Purchaser to pay
for purchasing the Company's capital stock in a public offering of stock by the
Company is the public offering price, less underwriting discounts and
commissions (e.g., a 7% underwriter's discount).
3. If the Company exercises its "put option" as specified in
Section 5.05 of the Stock Purchase Agreement, the price per share payable by the
Purchaser is the public offering price per share, less underwriting discounts
and commissions (e.g., a 7% underwriter's discount).
4. The Purchaser and the Company hereby amend the Stock
Purchase Agreement, and particularly the sections referenced above, so as to
provide for the Purchaser to pay the same purchase price per share as is paid by
a public purchaser in the public stock offering, if and when the Purchaser
purchases capital stock of the Company pursuant to Section 5.04 and/or 5.05
pursuant to a public stock offering, without the Purchaser being entitled to a
price discount for the underwriter's discounts or commissions. This foregoing
amendment applies only to capital stock purchased by the Purchaser from the
Company at the time of the Company's initial public offering of stock.
5. The Purchaser is agreeing to the foregoing modifications to
the stock purchase price in consideration and recognition of the terms in that
certain Stock Purchase Agreement (for Series F Preferred stock) between the
Purchaser and the Company, and other good and valuable consideration, receipt of
which is hereby acknowledged by the Purchaser.
6. Terms defined in the Stock Purchase Agreement shall have the
same meaning in this Amendment.
7. Excepting only as otherwise set forth above, all other terms
and provisions of the Stock Purchase Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company and the Purchaser each have caused
this Amendment to be executed by its duly authorized officer as of date first
written above.
COBE LABORATORIES, INC.
By: /s/ Edward C. Wood
-------------------
AASTROM BIOSCIENCES, INC.
By: /s/ R. Douglas Armstrong
-------------------------
EXHIBIT 10.10
EXECUTION COPY
DISTRIBUTION AGREEMENT
Between
COBE BCT, INC.
and
AASTROM BIOSCIENCES, INC.
Dated as of October 22, 1993
TABLE OF CONTENTS
-----------------
Section Page
- -----------------------------------------------------------------------------
ARTICLE I
DEFINITIONS
1.01 Definitions....................................................... 1
ARTICLE II
APPOINTMENT AS DISTRIBUTOR
2.01 Appointment and Acceptance; Products;
Exclusivity; Affiliate Sales...................................... 11
2.02 Relationship; Subdistributors..................................... 14
2.03 Purpose; Development Programs..................................... 15
2.04 Review of Programs and ACL........................................ 19
2.05 Annual Customer Review; Change of Use............................. 21
ARTICLE III
SUPPLIER'S UNDERTAKINGS
3.01 Product Development Program; Diligence............................ 23
3.02 Product Specifications............................................ 23
3.03 Training by the Supplier.......................................... 23
3.04 Sole Distributor.................................................. 24
3.05 Enforcement of Intellectual Property Rights....................... 24
3.06 Manufacturing and Labeling; Product Name; Parts................... 25
3.07 Regulatory Approvals.............................................. 26
3.08 Intellectual Property Indemnification............................. 26
3.09 Insurance; Indemnification for Product Liability.................. 26
3.10 Forecasting Unit Demand........................................... 28
ARTICLE IV
DISTRIBUTOR'S UNDERTAKINGS
4.01 Market Development Program; Diligence............................. 28
4.02 Training by the Distributor....................................... 29
4.03 Advertising....................................................... 29
4.04 Warranties; Service............................................... 29
4.05 Notice of Infringement............................................ 30
Section Page
- ------------------------------------------------------------------------------
4.06 License........................................................... 30
4.07 Regulatory Approvals.............................................. 30
4.08 Competitive Products.............................................. 31
4.09 Insurance......................................................... 31
4.10 Solutions and Growth Medium....................................... 32
4.11 Information Concerning Pricing.................................... 33
4.12 Indemnification for Product Liability............................. 34
ARTICLE V
DISTRIBUTOR PURCHASES OF THE PRODUCTS
5.01 Orders............................................................ 34
5.02 Purchase Price; Periodic Adjustments.............................. 34
5.03 Monthly Report; Monthly Payment; Distributor Fee.................. 37
5.04 Deliveries........................................................ 38
ARTICLE VI
TRADEMARKS AND TRADE NAMES
6.01 License........................................................... 38
6.02 Licenses to Third Parties......................................... 38
6.03 Effect of Use..................................................... 38
6.04 Cessation of Use.................................................. 39
ARTICLE VII
TERM; TERMINATION
7.01 Term.............................................................. 39
7.02 Notice of Breach.................................................. 39
7.03 Cure Period....................................................... 39
7.04 Objection; Negotiation............................................ 40
7.05 Remedy; Partial Termination; Termination Upon Bankruptcy.......... 40
7.06 Other Remedies.................................................... 42
7.07 Effect of Termination by Distributor.............................. 42
7.08 Attorney's Fees and Costs......................................... 43
7.09 Interest.......................................................... 43
7.10 Transition Upon Termination....................................... 43
Section Page
- ------------------------------------------------------------------------------
ARTICLE VIII
CONFIDENTIALITY
8.01 Confidentiality................................................. 44
8.02 Survival of Covenants to Keep Secret............................ 44
8.03 No License...................................................... 44
ARTICLE IX
FORCE MAJEURE
9.01 Force Majeure................................................... 45
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 Amendment; Alteration........................................... 45
10.02 Notice.......................................................... 46
10.03 Arbitration..................................................... 46
10.04 Governing Law................................................... 47
10.05 Waiver.......................................................... 47
10.06 Entire Agreement; Assignment.................................... 47
10.07 Parties in Interest............................................. 47
10.08 Severability.................................................... 48
10.09 Headings........................................................ 48
10.10 Counterparts.................................................... 48
10.11 Approvals....................................................... 48
SCHEDULES
Schedule A -- Product Development Program
Schedule B -- Market Development Program
Schedule C -- Annual Commitment List
EXECUTION COPY
DISTRIBUTION AGREEMENT
----------------------
DISTRIBUTION AGREEMENT dated as of October 22, 1993 between AASTROM
BIOSCIENCES, INC., a Michigan corporation (the "Supplier"), and COBE BCT, INC.,
--------
a Colorado corporation (the "Distributor").
-----------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Supplier wishes to create, develop and manufacture and
supply Products (as defined below) and to have the Products marketed worldwide;
WHEREAS, the Distributor wishes to sell, market and distribute the
Products worldwide; and
WHEREAS, the Supplier wishes that the Distributor distribute the
Products worldwide;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the Supplier and the Distributor agree as
follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. Definitions. As used in this Agreement, the following
-----------
terms shall have the following meanings:
"ACL" has the meaning specified in Section 2.04(b).
---
"Actual International Direct Sales" means for any Direct Sales Country
---------------------------------
the unit Sales of any of the Products other than Spare Parts by the Distributor
to Stem Cell Therapy Customers in such Direct Sales Country in which the
purchase price is due and payable in cash from the purchaser of such Products
substantially contemporaneously with (i.e., within 60 days of) such Sales in
----
such Country expressed in the official currency unit of such Country.
"Actual International Direct Sales Amount" for any Product in any
----------------------------------------
Direct Sales Country for any calendar month means the Actual International
Direct Sales of such Product during such month in such Country multiplied by the
greater of (a) the Average International Direct Selling Price for such Product
for such Country and (b) the Minimum International Direct Selling Price for such
Product for such Country expressed in the official currency unit of such
Country.
Page 2
"Actual Subdistributor Sales" means the unit Sales of the Products
---------------------------
other than Spare Parts by the Distributor to Subdistributors outside the United
States (other than Direct Sales Countries) in which the purchase price is due
and payable in cash from the purchaser of such Products substantially
contemporaneously with (i.e., within 60 days of) such Sales.
----
"Actual Subdistributor Sales Amount" for any Product for any calendar
----------------------------------
month means the Actual Subdistributor Sales of such Product during such month
multiplied by the greater of (a) the Average Subdistributor Selling Price for
such Product and (b) the Minimum Subdistributor Selling Price for such Product.
"Average Subdistributor Selling Price" means, for any Product for any
------------------------------------
calendar month, the aggregate selling price, net of any applicable discounts,
less any payments made to Subdistributors, of Actual Subdistributor Sales
divided by the quantity of such Product sold during such calendar month.
"Affiliate" means (a) with respect to the Distributor, any Person
---------
other than the Distributor (i) that is controlled, either directly or
indirectly, by Investment AB Cardo, (ii) for which a Person controlled, either
directly or indirectly, by Investment AB Cardo is the principal manager, or
(iii) in which Investment AB Cardo has an equity ownership interest of ten
percent or more; and (b) with respect to the Supplier, any Person other than the
Supplier (i) that is controlled, either directly or indirectly, by the Supplier,
(ii) for which the Supplier is the principal manager or (iii) in which the
Supplier has an equity ownership interest of ten percent or more.
"Affiliate Sales" has the meaning specified in Section 2.01(d).
---------------
"Agreement" or "this Agreement" means this Distribution Agreement
--------- --------------
dated as of October 22, 1993 between the Supplier and the Distributor (including
the schedules hereto) and all amendments, modifications and supplements made in
accordance with Section 10.01 hereof.
"Average International Direct Selling Price" means, for any Product in
------------------------------------------
any Direct Sales Country for any calendar month, the aggregate selling price,
net of all applicable discounts, less any payments made to Subdistributors (all
expressed in the offficial currency of such Country), of all Actual
International Direct Sales of such Product in such Country during such calendar
month, divided by the quantity of such Product sold during such calendar month
in such Country expressed in the official currency unit of such Country.
"Base Term" has the meaning specified in Section 7.01.
---------
"BIU" has the meaning specified in Section 2.01(a)(i).
---
"Change of Use" has the meaning specified in Section 2.04(a).
-------------
Page 3
"Co-Marketing Arrangement" has the meaning specified in Section
------------------------
7.05(b).
"Competitive Product" means any product (other than the Distributor's
-------------------
Products) that competes with the Products for use by the same Customer such that
the Customer might use such product instead of any of the Products.
"Complete System Sale" means the Sale by the Distributor to one or
--------------------
more Stem Cell Therapy Customers of all of the Products specified in (i), (iii),
(vii), (x) and (xi) of Section 2.01(a) at such time as all of the Products
specified in (ii), (v), (vi), (viii) and (ix) of Section 2.01(a) are generally
available for purchase by Customers and have been delivered to the Distributor
or in the Distributor's reasonable judgment, are available for delivery, to the
Distributor.
"Confidential Information" means all confidential or secret data,
------------------------
reports, interpretations, forecasts, records, marketing, sales and other
commercial data or reports, trade secret information, know-how methods,
procedures, designs, technology, inventions, ideas, specifications, plans,
patent applications and related correspondence, or other information that the
parties hereto provide to each other in connection with this Agreement, together
with analyses, compilations, studies or other documents, whether prepared by
their respective agents or attorneys, which contain or otherwise reflect such
information; provided, however, that the following shall not constitute
-------- -------
Confidential Information for purposes of this Agreement:
(a) information which was in one of such parties' possession prior to
its receipt from the other of such parties;
(b) information which is obtained by one of such parties from a third
person who, insofar as is known to such party, is not prohibited from
transmitting the information to such party by a contractual, legal or
fiduciary obligation to the other of such parties; and
(c) information which is or becomes publicly available through no
fault of either of such parties.
"Control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with"), with respect to the relationship between or among two or more
- ------------
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
Page 4
"Customer" means any party to whom Products are sold or reasonably are
--------
expected to be sold. Different units within a single Person (e.g., a blood
----
bank, an apheresis center, a transplant center) will be considered separate
Customers for purposes of this Agreement if each such unit has the primary
decision-making authority for the purchase of the Products, notwithstanding the
fact that payment for the Products may be issued by the same Person.
"Customer License" has the meaning specified in Section 2.01(a).
----------------
"Customer Service Information" has the meaning specified in Section
----------------------------
2.04(b).
"Deductible" has the meaning specified in Section 3.09(b).
----------
"Deemed International Direct Sales" means, for any Product (other than
---------------------------------
Spare Parts) in any Direct Sales Country for any calendar month, the aggregate
unit sales of such Product by the Distributor to Stem Cell Therapy Customers,
other than Actual International Direct Sales.
"Deemed International Direct Sales Amount" for any Direct Sales
----------------------------------------
Country calendar month means the Deemed International Direct Sales of each
Product in any Direct Sales Country during such calendar month multiplied by the
greater of (a) the Average International Direct Selling Price for such Product
in such Direct Sales Country and (b) the Minimum International Direct Selling
Price for such Product for any Direct Sales Country expressed in the official
currency unit of such Country.
"Deemed Subdistributor Sales" means, for any Product (other than Spare
---------------------------
Parts) for any calendar month, the aggregate unit Sales of such Product by the
Distributor, other than Actual Subdistributor Sales.
"Deemed Subdistributor Sales Amount" for any calendar month means the
----------------------------------
Deemed Subdistributor Sales of each Product during such calendar month
multiplied by the greater of (a) the Average Subdistributor Selling Price for
such Product and (b) the Minimum Subdistributor Selling Price for such Product.
"Direct Sales Countries" has the meaning specified in Section 2.02(c).
----------------------
"Disposables" has the meaning specified in Section 2.01(a).
-----------
"Distributor" has the meaning set forth in the preamble to this
-----------
Agreement.
"Distributor Customer Service Information" has the meaning specified
----------------------------------------
in Section 2.04(b).
Page 5
"Distributor Indemnified Person" has the meaning specified in Section
------------------------------
4.12.
"Distributor's Notice of Breach" has the meaning specified in Section
------------------------------
7.02.
"Distributor's Products" means (i) the Spectra Apheresis System, (ii)
----------------------
the 2991 Blood Cell Processor, (iii) stem cell freezing solutions and protocols,
(iv) immunological tumor purging systems that do not provide for positive
selection of stem cells, (v) all improvements or enhancements to any of the
foregoing and (vi) any
successor product to any of the foregoing that is not a Competitive Product.
"Equipment" has the meaning specified in Section 2.01(a).
---------
"Excess Payments" has the meaning specified in Section 4.09.
---------------
"Exchange Rate" means, with respect to any Direct Sales Country for
-------------
any calendar month the average monthly market rate at which the official
currency unit of such Country is exchangeable into one U.S. dollar.
"FDA" means the United States Food & Drug Administration.
---
"Fiscal Year" means any fiscal year ended June 30.
-----------
"Growth Medium" has the meaning specified in Section 2.01(a).
-------------
"Infringement" has the meaning specified in Section 3.05.
------------
"Intellectual Property Rights" means any rights to any patents, patent
----------------------------
rights, copyrights, trademarks, service
marks, trade names, trademark rights, trade name rights or trade secrets.
"International Direct Monthly Purchase Price" has the meaning
-------------------------------------------
specified in Section 5.02(c).
"International Direct Products" means the Products other than Spare
-----------------------------
Parts sold by the Distributor to Stem Cell Therapy Customers in Direct Sales
Countries.
"IP Enforcement Actions" has the meaning specified in Section 3.05.
----------------------
"IP Enforcement Costs" has the meaning specified in Section 3.05.
--------------------
"Joint Registration" has the meaning specified in Section 4.07.
------------------
"License" has the meaning specified in Section 7.07(a).
-------
Page 6
"Market Development Program" means the program attached hereto as
--------------------------
Schedule B, to promote and market the Products, as such program may be modified
and amended from time to time in accordance with Section 2.04 hereof.
"Milestone Fees" has the meaning specified in Section 5.03(c).
--------------
"Minimum Direct International Selling Price" means, for each Product
------------------------------------------
in each Direct Sales Country, the minimum direct international selling price for
such Product in such Country expressed in the official currency unit of such
Country.
"Minimum Subdistributor Selling Price" means, for each Product, the
------------------------------------
minimum selling price to Subdistributors for such Product.
"Monetary Breach" has the meaning specified in Section 7.03.
---------------
"Monthly Parts Purchase Price" has the meaning specified in Section
---------------------------
5.02(e).
"Monthly Purchase Price" means the sum of the U.S. Monthly Purchase
----------------------
Price, the International Direct Monthly Purchase Price for each Direct Sales
Country, the Monthly Parts Purchase Price and the Subdistributor Purchase Price.
"Monthly Report" has the meaning specified in Section 5.03.
--------------
"Notice of Breach" has the meaning specified in Section 7.02.
----------------
"Objection" has the meaning specified in Section 7.04.
---------
"Party" means a party to this Agreement.
-----
"Permitted Clinical Research Applications" means any clinical or
----------------------------------------
therapeutic use of the Products for any clinical research or trial that is
expected to result in a new application of, or a new FDA-approved indication
for, the Products.
"Person" means any individual, partnership, firm, corporation,
------
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Plan" has the meaning specified in Sections 2.03(e) and (f).
----
"Policy" has the meaning specified in Section 3.09(a).
------
"Premiums" has the meaning specified in Section 3.09(a).
--------
"Pricing Information" has the meaning specified in Section 4.11.
-------------------
Page 7
"Principal Components of the Market Development Program" has the
------------------------------------------------------
meaning specified in Section 2.03(f).
"Principal Components of the Product Development Program" has the
-------------------------------------------------------
meaning specified in Section 2.03(e).
"Principal Objection" has the meaning specified in Section 2.04(b).
-------------------
"Product Development Program" means the program attached hereto as
---------------------------
Schedule A, for the design, creation, validation, manufacture and release of the
Products, as such program may be modified and amended from time to time in
accordance with Section 2.04 hereof.
"Products Liability Cap" has the meaning specified in Section 4.09.
----------------------
"Product Liability Claims" has the meaning specified in Section
------------------------
3.09(a).
"Products" has the meaning specified in Section 2.01(a).
--------
"Programs" means, collectively, the Market Development Program and the
--------
Product Development Program.
"Purchased Spare Parts" has the meaning specified in Section 5.02(e).
---------------------
"Retaliatory IP Claims" has the meaning specified in Section 3.05(a).
---------------------
"Sale" and any grammatical variant thereof means any sale, conditional
----
sale, installment sale, rental, lease or other arrangement whereby the Products
are placed at the disposal of a Customer in exchange for value received or to be
received.
"Sales Threshold" means (x) $60 million in any Fiscal Year up to and
---------------
including 1998, (y) $125 million in the Fiscal Year 1999 and (z) $200 million in
the Fiscal Year 2000 and thereafter.
"SCTIP Rights" has the meaning specified in Section 3.05.
------------
"Sixth Insurance Year" has the meaning specified in Section 4.09.
--------------------
"Solutions" has the meaning specified in Section 2.01(a).
---------
"Spare Parts" has the meaning specified in Section 2.01(a)(ix).
-----------
"Stem Cell Therapy Applications" means applications of the Products
------------------------------
pursuant to which human bone marrow or peripheral blood derived stem and
hematopoietic cells are used primarily for one or more of the following: (a)
restoration of hematopoietic function; (b) augmentation of the recovery of a
previously damaged hematopoietic system; and (c) augmentation of the recovery of
Page 8
previously damaged bone marrow; provided, however, that such cells have not been
-------- -------
altered through the introduction of a new genetic component. Notwithstanding
anything in this Agreement to the contrary, Stem Cell Therapy Applications shall
not include any of the following applications of the Products: (i) all
diagnostic or other non-therapeutic clinical applications; (ii) all gene therapy
or gene transfer applications; (iii) all non-human applications; (iv) all
Permitted Clinical Research applications; and (v) all applications in which the
Products are labelled not for human use.
"Stem Cell Therapy Customers" means Customers who perform, or are
---------------------------
reasonably expected to perform, Stem Cell Therapy Applications.
"Subdistributor Monthly Purchase Price" has the meaning specified in
-------------------------------------
Section 5.02(b).
"Subdistributor Products" means Products other than Spare Parts sold
-----------------------
by the Supplier to the Distributor for resale and distribution to
Subdistributors in countries outside of the United States (other than Direct
Sales Countries).
"Subdistributors" has the meaning specified in Section 2.02(a).
---------------
"Supplier" has the meaning set forth in the preamble to this
--------
Agreement.
"Supplier Customer Service Information" has the meaning specified in
-------------------------------------
Section 2.04(b).
"Supplier Deficiency" has the meaning specified in Section 4.09.
-------------------
"Supplier Indemnified Person" has the meaning specified in Section
---------------------------
3.08.
"Supplier Products Liablity Payments" has the meaning specified in
-----------------------------------
Section 4.09.
"Supplier's New Products" has the meaning specified in Section
-----------------------
2.01(f).
"Supplier's Notice of Breach" has the meaning specified in Section
---------------------------
7.02.
"Supplier's Other Products" means the Supplier"s products (other than
-------------------------
the Products) that utilize some or all of the Products as components and that
are not Competitive Products.
"Supplier Products Liability Payments" has the meaning specified in
------------------------------------
Section 4.09.
"Supplier's Share" has the meaning specified in Section 4.10.
----------------
"Target Prices" has the meaning specified in Section 2.03(f).
-------------
Page 9
"Upcharges" means amounts included in the Distributor"s selling price
---------
for Actual U.S. Sales, Actual International Direct Sales, or the Actual
Subdistributor Sales of Disposables to a Stem Cell Therapy Customer (in the case
of Actual U.S. Sales and Actual International Direct Sales) or to a
Subdistributor (in the case of Actual Subdistributor Sales) in any calendar
month that reflect the Distributor's depreciation of, and interest on, Equipment
or rental, lease or other deferred payments for Equipment, where the value of
such Equipment previously has been included in one of the formulae set forth in
Section 5.02(a), (b), or (c) in Deemed U.S. Sales, Deemed International Direct
Sales or Deemed Subdistributor Sales, respectively.
"Unreimbursed Losses" has the meaning specified in Section 3.09(b).
-------------------
"U.S. Monthly Purchase Price" has the meaning specified in Section
---------------------------
5.02(a).
"U.S. Products" means the Products other than Spare Parts sold by the
-------------
Distributor to Stem Cell Therapy Customers in the United States.
"Worldwide Sales" means the sum of the (i) Deemed International Sales
---------------
Amount, (ii) Deemed U.S. Sales Amount, (iii) Deemed Subdistributor Sales Amount,
(iv) Actual International Direct Sales, (v) Actual U.S. Sales and (vi) Actual
Subdistributor Sales.
ARTICLE II
APPOINTMENT AS DISTRIBUTOR
--------------------------
SECTION 2.01. Appointment and Acceptance; Products; Exclusivity;
--------------------------------------------------
Affiliate Sales. (a) The Supplier hereby appoints the Distributor, and the
- ---------------
Distributor hereby accepts appointment, in each case on the terms and subject to
the conditions of this Agreement, as the Supplier's worldwide distributor for
Stem Cell Therapy Applications of the following products, or such alterations
to, or replacements for, such products as may be developed in accordance with
the Product Development Program (collectively, the "Products"):
--------
(i) a biochamber incubation unit (a "BIU") that controls the biological
---
and physical environment during the expansion process;
(ii) a BIU monitor module that provides a central display, an operator
input device and a printer;
(iii) an inoculation and harvest unit that facilitates the initial
filling and inoculation of cells, as well as the final harvest of cells at
the completion of the expansion process;
Page 10
(iv) a system rack to integrate conveniently the multiple biochamber and
incubation units with the companion monitor modules (together with the
products described in (i), (ii) and (iii) above and the improvements and
enhancements hereto and thereto, the "Equipment");
---------
(v) an incubation and growth medium required by the cell culture, which
shall include to the extent required, growth factors, glutamine,
antibiotics, serums and other substances ("Growth Medium");
-------------
(vi) harvest reagents which facilitate the removal of the expanded cells
from the biochamber (together with the Growth Medium and all improvements
and enhancements hereto and thereto, the "Solutions");
---------
(vii) a disposable biochamber cartridge where the growth and expansion
of cells takes place (together with all improvements and enhancements
hereto and the Solutions, the "Disposables");
-----------
(viii) all improvements and enhancements to the products described in
(i) through (vii) above;
(ix) spare parts for the Equipment ("Spare Parts");
-----------
(x) a license for the use of such products solely for Stem Cell Therapy
Applications (the "Customer License"); and
----------------
(xi) instructions for the use of each of such products, other than
the Customer License.
(b) Except as provided in Section 2.01(d), the Distributor and each
Subdistributor shall sell the Products only in conjunction with Customer
Licenses.
(c) Except as otherwise specifically provided in this Section 2.01
and in Sections 4.01(b) and 7.05(b), the Supplier shall not (i) authorize any
Person other than the Distributor to act as a distributor of any of the Products
(or any product that includes any Product as a component) to, or for resale to,
Customers whose predominant use of the Products is, or reasonably is expected to
be, for Stem Cell Therapy Applications or (ii) market, promote, Sell or
distribute any of the Products (or any product that includes any Product as a
component), directly or indirectly, to, or for resale to, any Stem Cell Therapy
Customer.
(d) Notwithstanding any provision of this Agreement to the contrary,
the Supplier may Sell the Products to its Affiliates for Stem Cell Therapy
Applications by such Affiliates, but not for resale to Persons which are not
Affiliates of the Supplier, and may make such Sales with a license for use of
the Products for Stem Cell Therapy Applications, and the Distributor may Sell
the Products to its Affiliates for applications other than Stem Cell Therapy
Applications by such Affiliates, but not for resale to Persons which are not
Affiliates of the Distributor, and
10
Page 11
may make such Sales with a license for use of the Products for applications
other than Stem Cell Therapy Applications (such Sales by either the Distributor
or the Supplier being "Affiliate Sales"). If the aggregate purchase price
---------------
received by the Supplier for all its Affiliate Sales during any fiscal year
exceeds five percent of the Worldwide Sales during such Fiscal Year, the
Supplier shall pay to the Distributor, within 90 days after the end of such
Fiscal Year, cash in an amount equal to thirty percent of the excess of such
aggregate purchase price over the amount equal to five percent of Worldwide
Sales during such fiscal year. If the aggregate purchase price received by the
Distributor for all its Affiliate Sales during any calendar year exceeds five
percent of the aggregate purchase price received by the Supplier for Sales of
the Products during such Fiscal Year to Customers that are not Stem Cell Therapy
Customers, the Distributor shall pay to the Supplier, within 90 days after the
end of such Fiscal Year, cash in an amount equal to ninety percent of the excess
of such aggregate purchase price over the amount equal to five percent of such
Sales by the Supplier. All calculations pursuant to this Section 2.03(d) of the
aggregate purchase price received by the Supplier or the Distributor shall be
made in accordance with the calculation of Worldwide Sales. The Supplier and the
Distributor shall, promptly following the end of each fiscal year, make
available to each other such information as is reasonably necessary to audit the
Affiliate Sales of the other party.
(e) The Supplier expressly reserves the right to market, sell and
distribute (either directly or through its designees) (i) the Products to its
Affiliates for Stem Cell Therapy Applications as provided in Section 2.03(d),
(ii) the Products to any Customer for applications other than Stem Cell Therapy
Applications, and (iii) the Supplier's Other Products to any Customer for any
application. Except as provided in Section 2.03(d), the Supplier shall sell the
Products to Customers that are not Stem Cell Therapy Customers only in
conjunction with a license to use the Products solely for applications other
than Stem Cell Therapy Applications. The Distributor is not authorized by the
Supplier to distribute the Products to any Person other than a Stem Cell Therapy
Customer.
(f) The Supplier agrees to appoint the Distributor, and the
Distributor agrees to accept appointment, as the Supplier's sole worldwide
distributor of any of the Supplier's products that are successors to, or
replacements of, the Products and are also Competitive Products (the "Supplier's
----------
New Products"). Sales of the Supplier's New Products by the Supplier to the
- ------------
Distributor pursuant to such distribution arrangement shall be at fixed prices
and on other terms to be negotiated by the Supplier and the Distributor in good
faith, taking into account the terms of this Agreement, as it is in effect at
such time, the respective costs of the Supplier and the Distributor in
developing, producing and marketing the Supplier's New Products and market
conditions at such time.
SECTION 2.02. Relationship; Subdistributors. (a) The Distributor
-----------------------------
shall conduct its business in the purchase and resale of the Products as a
principal for its own account. This Agreement does not in any way create the
relationship of principal and agent, partners, joint venturers, master and
servant, or any similar relationship, between the Supplier and the Distributor.
Page 12
(b) The Distributor shall have the right to appoint and to use any
independent selling representative, agent, associate distributor or
subdistributor who agrees to be bound by all applicable terms of this Agreement
(collectively, the "Subdistributors") and who is designated in accordance with
---------------
Market Development Program. The Distributor shall use all reasonable efforts to
cause the Subdistributors to comply with their obligations under this Agreement.
(c) The Distributor shall either Sell the Products directly to Stem
Cell Therapy Customers (i.e., through the Distributor's own employed sales
force) in each of the countries listed below:
Australia Holland
Austria Italy
Belgium Japan
Canada Spain
France Switzerland
Germany United Kingdom
(collectively, the "Direct Sales Countries"; each being a "Direct Sales
---------------------- ------------
Country"), or make payments to the Supplier in accordance with Section 2.02(e).
(d) The Distributor may Sell the Products to Stem Cell Therapy
Customers through Subdistributors, each of whom shall be identified to the
Supplier, in countries other than the Direct Sales Countries and the United
States.
(e) If the Distributor uses Subdistributors to sell the Products to
Stem Cell Therapy Customers in the Direct Sales Countries and the United States,
the Distributor shall bear all costs and discounts attributable to the
Subdistributor, unless otherwise expressly approved by the Supplier.
SECTION 2.03. Purpose; Development Programs. (a) The Supplier and
-----------------------------
the Distributor each acknowledges that it has entered into this Agreement in
order to develop a respected image of the Products among Stem Cell Therapy
Customers, to develop the Products so that they can be Sold to Stem Cell Therapy
Customers as promptly as practicable and to develop a market for the Products
among Stem Cell Therapy Customers, in each case in a manner that maximizes the
financial returns to both the Supplier and the Distributor.
(b) As the Supplier's worldwide distributor of the Products for Stem
Cell Therapy Applications, the Distributor shall use reasonable best efforts to
develop and implement a worldwide plan for marketing and Sales of the Products
for Stem Cell Therapy Applications so that the Products will be Sold for Stem
Cell Therapy Applications worldwide promptly after such Sales become feasible,
the market share of the Products for Stem Cell Therapy Applications will be high
and the prices of the Products for Stem Cell Therapy Applications, will be
commensurate with the market value of the Products, in each case in a
Page 13
manner that maximizes the financial returns of both the Distributor and the
Supplier.
(c) The Supplier shall use reasonable best efforts promptly to develop
and produce Products that are high quality, cost competitive, cost effective for
Stem Cell Therapy Customers and capable of achieving widespread acceptance among
Stem Cell Therapy Customers, in each case in a manner that maximizes the
financial returns of both the Supplier and the Distributor.
(d) To achieve the goals set forth in Sections 2.03(a), (b) and (c),
the Supplier and the Distributor have developed the Product Development Program
and the Market Development Program, each of which will be designed to comply
with the applicable standards of the ISO 9000 Series of the International
Standards Organization and will be amended from time to time in accordance with
the terms of this Agreement.
(e) The Product Development Program will at all times include the
following components (the "Principal Components of the Product Development
-----------------------------------------------
Program"), together with such other components as the Supplier may deem
- -------
appropriate:
(i) a plan, which shall include, without limitation, a strategy, a
rationale, budgets, tactics, contingency plans and staffing and a projected
timetable (collectively, a "Plan") to develop the Products for sale to Stem
----
Cell Therapy Customers;
(ii) a Plan for obtaining (A) the approval of (x) the FDA and any other
United States governmental authority necessary for the Sale of the Products
to Stem Cell Therapy Customers in the United States and (y) the
Underwriter's Laboratory and (B) support for the claims set forth in the
Market Development Program;
(iii) the specifications of each Product, including, without limitation,
specifications for performance and reliability of each Product and each
component thereof;
(iv) a Plan for validating the performance and reliability specifications
for the Products set forth in the Product Development Program and the
Product claims (including, without limitation, cost effectiveness claims)
and service goals set forth in the Market Development Program;
(v) a quality assurance Plan;
(vi) a Plan for manufacturing, or causing the Products to be
manufactured, so that the Products can be delivered for sale to Stem Cell
Therapy Customers in a manner consistent with the Market Development
Program, including, without limitation, (A) specifications of, and a
timetable
Page 14
for, the production capacity to be available for the supply of each of the
Products; (B) Plans and leadtimes for the production of prototype, pilot and
production models; (C) a Plan for identifying, qualifying, contracting with
and auditing third parties for the manufacture of the Products; and (D)
Plans for addressing situations in which the Distributor's orders for the
Products exceeds the Supplier's capacity to deliver the Products; and
(vii) a Plan for developing enhancements to the Products in response to
evolving market needs.
(f) The Market Development Program will at all times include the
following components (the "Principal Components of the Market Development
----------------------------------------------
Program"), together with such other components as the Distributor may deem
- -------
appropriate:
(i) a plan, which shall include, without limitation, a strategy, a
rationale, budgets, tactics, contingency plans and staffing and a projected
timetable (collectively, a "Plan") to obtain all non-U.S. approvals market,
----
sell and distribute the Products to Stem Cell Therapy Customers;
(ii) the targets for average prices of the Products for Sales in the
United States, in each Direct Sales Country (expressed in the official
currency unit of such Country) and elsewhere outside the United States,
including targets for prices to Subdistributors, all subject to approval by
Supplier ("Target Prices");
-------------
(iii) the Minimum U.S. Selling Price and Minimum Subdistributor Selling
Price and the Minimum International Direct Selling Price in each of the
Direct Sales Countries (expressed in the official currency unit of such
Country) of each of the Products, as approved by the Supplier;
(iv) a mechanism for monitoring the development and growth of the
market for the Products;
(v) criteria for targeting Customers and targets for sales volume and
market share in each of the countries where the Products are to be sold, all
as agreed upon by the Supplier and the Distributor;
(vi) criteria for targeting Customers and targets for sales volume and
market share in each of the countries where the Products are to be sold, all
as agreed upon by the Supplier and the Distributor;
(vii) a warranty program for the Products, as agreed upon by the
Supplier and the Distributor, as well as a program for providing customer
service and customer support to Stem Cell Therapy Customers beyond the scope
of such warranties;
Page 15
(viii) a Plan for developing customer relations, Customer contacts, Sales
lead follow up and monitoring customer satisfaction with, the Products and,
the Distributor's and each Subdistributor's performance;
(ix) a program for the Distributor's training of Stem Cell Therapy
Customers and for the Supplier's training of the Distributor's personnel who
will provide training to the Distributors' and the Subdistributors'
personnel who will provide such training to Stem Cell Therapy Customers and
to the Distributor's and the Subdistributors' personnel who will provide
customer engineering and customer support to Stem Cell Therapy Customers;
(x) guidelines and procedures for coordinating contacts of Stem Cell
Therapy Customers by the Supplier with contacts by the Distributor; and
(xi) a Plan for forecasting demand for the Products by Stem Cell
Therapy Customers.
SECTION 2.04. Review of Program and ACL. (a) The Supplier and the
-------------------------
Distributor contemplate that the Programs will be amended to address issues that
cannot yet be addressed and also will be amended in response to unforeseen
events, changes in circumstances and evolving market needs. Accordingly, the
Supplier and the Distributor shall meet no more than four times per year to
discuss amendments to each of the Programs.
(b) Before the beginning of each Fiscal Year during the term of this
Agreement, the Supplier and the Distributor shall mutually establish an annual
commitment list (the "ACL"), which shall set forth: (i) the principal
---
commitments and specific objectives that either the Supplier or the Distributor
reasonably believes is important to achieve during the next Fiscal Year to
accomplish the objectives set forth in Sections 2.03(a), (b) and (c) of this
Agreement and to discharge the obligations of the Supplier and the Distributor
under the Programs; (ii) those objectives or commitments of either the Supplier
or the Distributor that require mutual agreement or coordination between the
Distributor and the Supplier; and (iii) any change from the ACL of the preceding
year, the Product Development Program or the Market Development Program, in
either case that will materially affect either the timing of, or the mechanism
for, the development of the Products for, or the delivery and/or marketing of
the Products to, Stem Cell Therapy Customers. No provision of the ACL shall be
changed, amended, or modified without the prior approval of the Supplier and the
Distributor. Each of the Supplier and the Distributor shall use reasonable best
efforts diligently to achieve each of the goals and objectives set forth on the
ACL. If the Supplier and the Distributor are unable to reach mutual agreement
on the inclusion of any commitment or objective on the ACL, then the Supplier
and the Distributor will negotiate in good faith for 30 days in an attempt to
resolve such disagreement. If the parties are unable to resolve such
disagreement during such 30-day period, then either the Supplier or the
Distributor may submit such disagreement to arbitration in accordance with
Section 10.03. The Parties shall use their reasonable
Page 16
best efforts to cause such arbitration to result in a decision within 40 days
after submission thereto.
(c) In connection with the preparation of the ACL and as otherwise
reasonably required, the Market Development Program and the Product Development
Program shall, at all times, include each of the Principal Components thereof
set forth in Section 2.03 of this Agreement and such other items as are
reasonably required to achieve the goals and objectives set forth in Sections
2.03(a), (b) and (c) of this Agreement. The Supplier and the Distributor shall
give each other such information as is reasonably necessary to evaluate, and
shall give due consideration to the views and recommendations of the other with
respect to, all components of each of the Programs. The Product Development
Program and the Market Development Program shall include sufficient details to
enable the Distributor and the Supplier, respectively, to have a reasonable
basis to assess the probability of achieving the goals and objectives set forth
in the ACL and in Sections 2.03(a), (b) and (c) of this Agreement. Subject to
the right of objection (and resolution of such objection) set forth below, the
Supplier shall be free to amend the Product Development Program without the
consent of the Distributor, and the Distributor shall be free to amend the
Market Development Program without the consent of the Supplier. The Supplier
may object to any amendment of, or failure to amend, any Principal Component of
the Market Development Program, and the Distributor may object to any amendment
of, or failure to amend, any Principal Component of the Product Development
Program on the basis (i) that such amendment, or failure to amend, is not
reasonably consistent with the goals and objectives set forth in the ACL or
Sections 2.03(a), (b) and (c) of this Agreement, or (ii) that, as a result of
such amendment, or failure to amend, the parties are not reasonably likely to
achieve the goals and objectives embodied in such Principal Component. If the
Supplier and the Distributor are unable to agree on a Principal Component of
either Program the Supplier and the Distributor, each shall endeavor to resolve
the disagreement within such 30-day period. If the Supplier and the Distributor
are unable to resolve such disagreement within such 30-day period, either party
shall be free to implement the Principal Component in question until such
disagreement is resolved, unless the other party reasonably believes that the
failure to resolve such disagreement will have an immediate adverse effect on
the ability of the parties to implement the goals and objectives set forth in
the ACL. In that case, either Party may cause the disagreement to be submitted
immediately to arbitration in accordance with Section 10.03, and the Parties
shall use their reasonable best efforts to cause such arbitration to be decided
within 40 days after submission. If neither Party believes that there will be
any such immediate adverse effect, then the Parties will continue to endeavor to
resolve the disagreement for an additional period of six months. If the Parties
are unable to resolve such disagreement within such six-month period, then the
disagreement may be submitted to arbitration in accordance with Section 10.03.
The Parties shall use their reasonable best efforts to cause such arbitration to
result in a decision within a 40 day period.
Page 17
(d) A copy of the ACL for the Fiscal Year ending June 30, 1994 is
attached hereto as Schedule C.
SECTION 2.05. Annual Customer Review; Change of Use. (a) The parties
-------------------------------------
acknowledge that following the sale of any Product to any Customer, such
Customer may subsequently (i) use such Product for applications other than those
disclosed to the Supplier or the Distributor prior to such sale or (ii) change
its use from Stem Cell Therapy Applications to other applications, or vice versa
(a "Change of Use"). Notwithstanding anything in this Agreement to the
-------------
contrary, the Distributor, or any Subdistributor, shall not be in breach of this
Agreement if the Distributor (or such Subdistributor, as the case may be) acts
in good faith and uses reasonable best efforts to ensure that it sells Products
only to Stem Cell Therapy Customers, even though a Customer's predominant use of
a Product may be for applications other than Stem Cell Therapy Applications.
Similarly, notwithstanding anything in this Agreement to the contrary, the
Supplier or any of its other distributors shall not be in breach of this
Agreement if the Supplier (or such other distributor, as the case may be) acts
in good faith and uses reasonable best efforts to ensure that it sells Products
only to Persons other than Stem Cell Therapy Customers, even though a Person's
predominant use of a Product may be for Stem Cell Therapy Applications.
(b) The Supplier and the Distributor shall meet within three months
after the end of each Fiscal Year during the term of this Agreement during which
sales of the Products are made by either the Distributor, any Subdistributor or
the Supplier or any of its other distributors to determine the extent to which
the Distributor has sold Products to Customers other than Stem Cell Therapy
Customers, the extent to which the Supplier has sold Products to Stem Cell
Therapy Customers and the extent to which Customers of the Distributor or the
Supplier have effected a Change of Use. At such meeting or meetings, the
Distributor shall make available to the Supplier a survey of the Distributor's
Customers whose purchases represent at least 80% of the Sales by the Distributor
during such Fiscal Year (the "Distributor Customer Service Information"). The
----------------------------------------
Distributor Customer Service Information shall also provide a reasonable
estimate of the expected predominant use of the Products by such Customers in
the following Fiscal Year. The Supplier shall furnish the Distributor with
comparable information regarding the Supplier's Sales of Products to Customers
other than Stem Cell Therapy Customers (the "Supplier Customer Service
-------------------------
Information"; and, together with the Distributor Customer Service Information,
- -----------
the "Customer Service Information").
----------------------------
(c) If it is determined:
(i) that at the time of the Supplier's Sale of any Equipment to a
Customer (other than an Affiliate of the Supplier), the Supplier knew or
reasonably should have known that such Customer's intended predominant use
of such Equipment was for Stem Cell Therapy Applications, the
Page 18
Supplier shall pay to the Distributor an amount equal to 40% of all amounts
received by the Supplier in payment for such Equipment;
(ii) that a Customer of the Supplier (other than an Affiliate of the
Supplier) uses any Disposable purchased from the Supplier for Stem Cell
Therapy Applications, the Supplier shall pay to the Distributor an amount
equal to 30% of all amounts received by the Supplier as payment for such
Disposable;
(iii) that at the time of the Distributor's (or any Subdistributor's)
Sale of any Equipment to any Customer (other than an Affiliate), the
Distributor (or such Subdistributor) knew or reasonably should have known
that such Customer's intended predominant use of such Equipment was not for
Stem Cell Therapy Applications, the Distributor (or such Subdistributor)
shall pay to the Supplier all amounts received by the Distributor (or such
Subdistributor) in payment for such Equipment; and
(iv) that a Customer of the Distributor other than an Affiliate of the
Distributor (or any subdistributor) has used any Disposable purchased from
the Distributor (or such Subdistributor) for any application other than a
Stem Cell Therapy Application, the Distributor (or such Subdistributor)
shall pay to the Supplier an amount equal to 90% of all amounts received by
the Distributor (or such Subdistributor) in payment for such Disposable.
(d) The Supplier and the Distributor shall make available to each
other such information as is reasonably necessary to audit the Sales of the
other party described in 2.05(c) above.
(e) If it is determined by the Supplier and the Distributor, based on
the Customer Service Information or otherwise, (i) that a Customer of the
Supplier has effected a Change of Use, such Customer may be redesignated, at the
Supplier's option, as being a Stem Cell Therapy Customer and, accordingly, a
Customer that the Distributor will have the responsibility to serve, or (ii)
that a Customer of the Distributor has effected a Change of Use, such Customer
may be redesignated, at the Distributor's option, as not being a Stem Cell
Therapy Customer and, accordingly, a Customer that the Supplier will have the
responsibility to serve. Upon any such redesignation, the Supplier and the
Distributor shall develop a program that is reasonably acceptable to each party
and such Customer for the orderly transition of responsibility for such Customer
over a reasonable period of time not to exceed one year.
Page 19
ARTICLE III
SUPPLIER'S UNDERTAKINGS
-----------------------
SECTION 3.01. Product Development Program; Diligence. The Supplier
--------------------------------------
shall use reasonable best efforts to implement its obligations under the Product
Development Program and the Market Development Program diligently.
SECTION 3.02. Product Specifications. The Supplier shall supply the
----------------------
Products in accordance with the product specifications set forth in, and the
other applicable provisions of, the Product Development Program and the Market
Development Program.
SECTION 3.03. Training by the Supplier. (a) The Supplier shall, in
------------------------
accordance with the provisions of Section 6.2 of Market Development Plan (which
provisions may not be changed without the Supplier's approval), provide
technical and commercial training with respect to the Products to the
Distributor's personnel. To facilitate the Distributor's ability to be self-
reliant in providing such training, the Supplier shall provide a license to the
Distributor to use such technical information and know-how as the Supplier
reasonably believes is necessary for such training. The Supplier shall not
charge the Distributor for such training, but all costs incurred by personnel of
the Distributor in the course of such training shall be the responsibility of
the Distributor.
(b) As reasonably requested in writing by the Distributor, at any time
and from time to time, the Supplier shall, at reasonable compensation rates
chargeable to the Customer, provide training in applications other than Stem
Cell Therapy Applications to the Distributor's Customers who wish to use the
Products for applications other than Stem Cell Therapy Applications.
SECTION 3.04. Sole Distributor. Unless this Agreement has been
---------------
terminated by the Supplier in part in accordance with Section 7.05(b), the
Supplier hereby grants (a) the Distributor the right during the term of this
Agreement to indicate in appropriate ways (e.g., on its letterhead and billing
----
forms and through signs) that it is the only authorized distributor for the
Products to Stem Cell Therapy Customers and (b) any Subdistributor that has been
approved by the Supplier the right during the term of this Agreement to indicate
in appropriate ways (e.g., on its letterhead and billing forms and through
----
signs) that it is an authorized Subdistributor of the Products to Stem Cell
Therapy Customers or that it is the only authorized Subdistributor of the
Products to Stem Cell Therapy Customers within a geographic segment.
SECTION 3.05. Enforcement of Intellectual Property Rights. Promptly
-------------------------------------------
upon receipt of notice of any infringement or threatened infringement
("Infringement") by third parties of the Supplier's Intellectual Property Rights
- --------------
relating to the Sale of the Products to Stem Cell Therapy Customers ("SCTIP
-----
Rights"), the Supplier shall, unless such notice was received pursuant to
- ------
Section
Page 20
4.05 hereof, promptly notify the Distributor of any such Infringement, and, as
promptly as practicable thereafter, the Supplier and the Distributor shall
jointly determine whether to take action to prevent such Infringement and
otherwise to enforce the SCTIP Rights (all such actions being "IP Enforcement
--------------
Actions"). In making such determination, the Supplier and the Distributor shall
- -------
consider the impact that such Infringement is expected to have on Sales of the
Products to Stem Cell Therapy Customers, the likelihood that such IP Enforcement
Action will be successful, the expected cost of such IP Enforcement Action, the
likelihood that such IP Enforcement Action will result in intellectual property
claims against the Supplier or the Distributor ("Retaliatory IP Claims") and the
---------------------
potential impact of any Retaliatory IP Claims on the Supplier and the
Distributor. No IP Enforcement Action to enforce the SCTIP Rights will be
undertaken without the consent of both the Supplier and the Distributor. If any
such IP Enforcement Action is undertaken, the Supplier and the Distributor shall
jointly retain a single counsel reasonably satisfactory to each of the Supplier
and the Distributor, and all decisions relating to such IP Enforcement Action
and the defense of any Retaliatory IP Claims shall be reasonably satisfactory to
each of the Supplier and the Distributor. Sixty percent of all costs of
prosecuting IP Enforcement Actions relating to SCTIP Rights and defending any
Retaliatory IP Claims, including, without limitation, reasonable fees and
disbursement of counsel, any reasonable out-of-pocket expenses incurred by the
Supplier and the Distributor and any damages awarded against (or amount paid in
settlement by) either the Supplier or the Distributor in any Retaliatory IP
Claim (all such costs being "IP Enforcement Costs") shall be borne by the
--------------------
Supplier and forty percent of such IP Enforcement Costs shall be borne by the
Distributor, unless, and to the extent that, such IP Enforcement Action also
benefits the Supplier's Sales of Products to Persons other than Stem Cell
Therapy Customers, in which case the Distributor's share of such IP Enforcement
Costs shall be reduced proportionally to reflect the benefit derived by each
Party. All amounts received by the Supplier and the Distributor, whether as a
result of damages awarded, settlement payments or otherwise, as a result of any
IP Enforcement Action relating to SCTIP Rights, shall be shared by the Supplier
and the Distributor in proportion to their respective share of the IP
Enforcement Costs for such IP Enforcement Action.
SECTION 3.06. Manufacturing and Labeling; Product Name; Parts. (a)
-----------------------------------------------
The Supplier shall manufacture the Products, or cause the Products to be
manufactured, in accordance with the Product Development Program. The
Supplier's obligation under this Section 3.06 to manufacture the Products shall
include the affixing on the Products of labels agreed upon by the Supplier and
the Distributor; provided, however, that any costs associated with the labeling
of Products with the Distributor's name that would not be incurred but for such
labeling will be at the Distributor's expense. The Products shall be labeled as
a Product of both the Supplier and the Distributor, with the Distributor's name
at least as prominent as the Supplier's name, unless otherwise required by law,
in which case the Distributor's name shall be as prominent relative to the
Supplier's name as shall be permitted by law.
Page 21
(b) The Supplier shall have the right to name the Products and shall,
in exercising such right, give due consideration to the views and
recommendations of the Distributor.
(c) The Supplier shall maintain a stock of Spare Parts for the
Products in accordance with the Market Development Program. Spare Parts shall
be priced in accordance with Section 5.02(e) of this Agreement.
SECTION 3.07. Regulatory Approvals. (a) At its own expense, the
--------------------
Supplier shall, in accordance with the Product Development Program, use
reasonable best efforts diligently to obtain, in the name of the Supplier, all
authorizations, consents, orders and approvals of all governmental authorities
in the United States that may be or become necessary for the Distributor to sell
the Products to Stem Cell Therapy Customers in the United States.
(b) The Supplier shall provide to the Distributor such assistance,
including, without limitation, providing at no charge all Products necessary for
clinical trials and making any modifications to Products, as the Distributor may
reasonably request to obtain the regulatory approvals necessary to sell the
Products to Stem Cell Therapy Customers in countries other than the United
States specified in the Market Development Program.
SECTION 3.08. Intellectual Property Indemnification. The Supplier
-------------------------------------
agrees to indemnify and hold harmless the Distributor and its Affiliates and all
Subdistributors and their affiliates and their respective officers, directors,
employees and agents (each such person being a "Supplier Indemnified Person")
---------------------------
from and against any losses, claims, damages or liabilities and to reimburse
each Indemnified Person for all expenses (including reasonable fees and expenses
of counsel) as they are incurred, related to, arising out of or in connection
with defending any action, claim, suit, investigation or proceeding (other than
a Retaliatory IP Claim) in which a Person other than the Distributor claims or
alleges that the sale of the Products by the Distributor to any Stem Cell
Therapy Customer conflicts with or infringes on the Intellectual Property Rights
of, or other intellectual property owned or licensed by, such Person.
SECTION 3.09. Insurance; Indemnification for Product Liability. (a)
------------------------------ -----------------
The Supplier agrees to obtain an insurance policy or policies (the "Policy") on
------
terms and conditions and in amounts reasonably acceptable to the Distributor
covering losses, claims, damages, liabilities or expenses (including reasonable
fees and expenses of counsel) incurred by the Supplier related to, or arising
out of, any action, claim, suit, investigation or proceeding, in which a Person
claims or alleges that any Product distributed by the Distributor pursuant to
this Agreement has caused such Person to sustain any personal injury, property
damage, wrongful death or any other tortious harm as a result of any
manufacturing defect in (including, without limitation, any latent defect in),
or any defective design of, or an inadequacy of warnings on, the Products (such
Page 22
claims or allegations being a "Products Liability Claims"). The Supplier agrees
-------------------------
to use reasonable best efforts to have all Supplier Indemnified Persons named as
additional insureds on the Policy, which shall provide that it may not be
cancelled without 30 days" notice to the Distributor and that the Distributor
shall have the right, but no obligation, to pay any premiums due under the
Policy (the "Premiums"). The Policy shall be primary insurance with respect to
--------
Product Liability Claims, and any insurance obtained by the Distributor shall be
excess insurance. The Parties recognize that the nature of product liability
claims and insurance available to cover product liability claims will change
over the coming years and will vary from country to country. It is the
agreement and goal of the Parties to obtain from time to time such liability
insurance which protects both the Supplier and the Distributor to the maximum
extent reasonably feasible, at prices which are commercially reasonable. To the
extent reasonably feasible, both Parties shall endeavor to use the same counsel
to defend both the Supplier and the Distributor in any Products Liability Claim.
Both the Supplier and the Distributor shall, to the extent it does not increase
its own risk of liability, cooperate with each other in the defense of any
Product Liability Claim so as to minimize the risk of any liability to the other
party.
(b) The Supplier shall pay all Premiums and any losses, claims,
damages or liabilities for Products Liability Claims to the extent not payable
under the Policy (such losses, claims, damages, liabilities being "Unreimbursed
------------
Losses"), including, without limitation (including reasonable fees and expenses
- ------
of counsel) any portion of any Unreimbursed Loss the Insurance Carrier is not
obligated to pay because of any deductible, self-insured retention or similar
provision of the Policy (a "Deductible"). The Supplier shall receive a
----------
contribution from the Distributor toward the Premiums and shall share in the
satisfaction of any Unreimbursed Losses in accordance with Sections 4.09(b) and
(c) hereof.
(c) The Supplier (i) shall not amend, change or cancel the Policy
without the consent of the Distributor (which consent shall not unreasonably be
withheld) and (ii) shall inform the Distributor in writing in the event that any
products other than the Products distributed by the Distributor are covered by
the Policy.
(d) The Supplier shall, subject to the limitation set forth in Section
4.09(c), indemnify and hold harmless each Supplier Indemnified Person from and
against any Unreimbursed Losses (except Deductibles).
SECTION 3.10. Forecasting Unit Demand. The Supplier and the
-----------------------
Distributor shall agree upon a process of unit demand forecasting that meets the
needs of the Supplier, the Distributor, and any sub-Suppliers to be used by the
Supplier. A mechanism that the Supplier and the Distributor believe is workable
is described in the Market Development Program, but both the Supplier and the
Distributor recognize that this mechanism must be modified periodically as
product and component lead times and delivery mechanisms are better understood
by the Supplier and the Distributor.
Page 23
ARTICLE IV
DISTRIBUTOR'S UNDERTAKINGS
--------------------------
SECTION 4.01. Market Development Program; Diligence. (a) The
-------------------------------------
Distributor shall use reasonable best efforts to implement its obligations under
the Market Development Program and the Product Development Program diligently.
In performing its obligations under the Market Development Program, the
Distributor shall provide to Stem Cell Therapy Customers financing options
suitable for the market environment.
(b) Notwithstanding anything in this Agreement to the contrary, if the
Distributor identifies to the Supplier potential Stem Cell Therapy Customers in
the United States to whom the Distributor reasonably believes it cannot
effectively sell the Products, the Supplier may sell the Products to such Stem
Cell Therapy Customers, directly, or through a distributor or sales agent
(identified to the Distributor) who expressly agrees in writing to be bound by
all of the restrictions on sales of the Products which are applicable to the
Supplier under this Agreement. Upon the identification of such Stem Cell
Therapy Customers by the Distributor to the Supplier, the Distributor shall have
no further obligation under this Agreement to attempt to sell Products to such
Customers.
SECTION 4.02. Training by the Distributor. (a) The Distributor
--------------------------
shall, in accordance with the Market Development Program, provide commercial and
technical training with respect to the Products to its, and the Subdistributors'
personnel who will provide training, customer service and support to Stem Cell
Therapy Customers.
(b) As reasonably requested in writing by the Supplier, at any time and
from time to time, the Distributor shall, at reasonable compensation rates
chargeable to the customer, provide training in Stem Cell Therapy Applications
to the Supplier's Customers who wish to use the Products for such applications.
SECTION 4.03. Advertising. The Distributor and each Subdistributor
-----------
shall submit to the Supplier, prior to its use by the Distributor or such
Subdistributor, all advertising copy concerning the Products and shall not use
such copy without the consent of the Supplier (which shall not be unreasonably
withheld); provided, however, that in no event shall the Supplier have any
obligation to share in advertising or other promotional costs incurred by the
Distributor or Subdistributor.
SECTION 4.04. Warranties; Service. (a) The Distributor and each
-------------------
Subdistributor shall extend warranties, which in accordance with the Market
Development Program, shall be mutually approved by the Supplier and the
Distributor, and perform warranty service on the Products sold to Stem Cell
Page 24
Therapy Customers by the Distributor or any such Subdistributor, as the case may
be.
(b) The Monthly Purchase Price shall be reduced in accordance with
Section 5.02 by an amount equal to the costs reasonably incurred by the
Distributor in providing warranty service to Stem Cell Therapy Customers in
accordance with the Market Development Program. Any costs incurred by the
Distributor or any Subdistributor in providing extended warranty or maintenance
service beyond the standard warranty period provided in the Market Development
Program shall be borne solely by the Distributor or such Subdistributor.
(c) The Distributor and each Subdistributor shall, in accordance with
the Market Development Program, provide service and customer support for the
Products to Stem Cell Therapy Customers which have purchased Products from the
Distributor or such Subdistributor, as the case may be. The provision of such
service and support shall be priced so as not to be a disincentive to Stem Cell
Therapy Customers to purchase the Products.
(d) The Supplier shall assist the Distributor in providing warranty
service and other services to Stem Cell Therapy Customers, as reasonably
requested by the Distributor, at prices or rates to be negotiated in good faith
by the Supplier and the Distributor.
SECTION 4.05. Notice of Infringement. The Distributor and each
----------------------
Subdistributor shall promptly notify the Supplier in writing if it becomes aware
of any infringement or threatened infringement of any SCTIP Rights.
SECTION 4.06. License. The Distributor hereby grants to the Supplier
-------
a license to the Distributor's trademarks and trade names specified in the
Market Development Program for the sole purpose of the Supplier's affixing of
such trademarks and trade names to the Products sold to the Distributor pursuant
to this Distribution Agreement and the packaging for the Products as
contemplated in Section 3.06(a) hereof.
SECTION 4.07. Regulatory Approvals. (a) At its own expense, the
--------------------
Distributor shall use reasonable best efforts diligently to obtain, in the
Supplier's name and the Distributor's name (a "Joint Registration"), all
------------------
authorizations, consents, orders and approvals of all non-U.S. governmental
authorities, and to complete clinical trials, that may be or become necessary to
sell the Products to Stem Cell Therapy Customers in the countries other than the
United States specified in the Market Development Program; provided, however,
that if the law of one of such countries prohibits or otherwise restricts such
Joint Registration, the Distributor shall use reasonable best efforts to obtain
such Joint Registration to the extent permitted by such law and otherwise shall
use reasonable best efforts to obtain such registrations in the Distributor's
name. The Distributor shall be responsible for the cost of all clinical trials
(other than the cost of the
Page 25
Products required for such trial, which shall be provided by the Supplier at no
charge) necessary to obtain such non-U.S. approvals.
(b) If this Agreement is terminated in its entirety or with respect to
any country other than the United States, the Distributor shall use reasonable
best efforts to provide information on clinical trials and such other
information (other than confidential business information) as is reasonably
necessary to enable the Supplier to obtain registration in its name in such
country.
SECTION 4.08. Competitive Products. (a) In order to fulfill its
--------------------
obligations with respect to promoting the Sale of the Products, except as
provided in Section 4.10 of this Agreement, the Distributor and its Affiliates
shall not, and shall not attempt to, Sell, directly or indirectly, to any Stem
Cell Therapy Customer any Competitive Product for Stem Cell Therapy
Applications, other than the Distributor's Products and other products that are
sold by the Distributor as an adjunct or complement to the Products; provided,
however, this prohibition shall not apply to the Sale of Competitive Products in
any geographical area with respect to which this Agreement has been terminated
or in which a Co-Marketing Arrangement has been established.
(b) Unless otherwise agreed by the Supplier, each Subdistributor shall
agree to be bound by this Section 4.08 prior to the Sale of the Products to such
Subdistributor.
SECTION 4.09. Insurance. (a) To assist the Supplier in satisfying
---------
its obligation set forth in Section 3.09(a) hereof to obtain the Policy, the
Distributor shall recommend the Supplier to the Distributor's insurance carrier,
it being understood that such obligations do not depend on the responsiveness of
such carrier.
(b) Within 30 days after the Distributor's receipt of reasonably
satisfactory evidence of the payment of the Premium, the Distributor shall pay
to the Supplier 40% of the Premium, 40% of amounts which the Supplier is
obligated to bear as a Deductible, and 40% of the Unreimbursed Losses; provided,
however, that the Distributor's obligation to pay the Premium and the Deductible
and the Unreimbursed Losses for the fifth Fiscal Year following the first Fiscal
Year in which the Supplier first purchases products liability insurance (such
year being the "Sixth Insurance Year") and each year thereafter shall not exceed
--------------------
0.4% of Worldwide Sales during such Fiscal Year (such amount being the "Products
--------
Liability Cap"); and, provided further, that if the Policy at any time covers
- -------------
products other than the Products distributed by the Distributor pursuant to this
Agreement, the Premiums, the Deductibles and the Unreimbursed Losses payable to
the Supplier by the Distributor shall be reduced to a percentage equal to 40%
multiplied by the percentage of the Supplier's total revenues that is
represented by revenues received by the Supplier for Sales of the products by
the Distributor pursuant to this Agreement.
Page 26
(c) If the aggregate unreimbursed amounts paid by the Supplier during
any Fiscal Year with respect to Product Liability Claims, including amounts of
Premiums, Deductibles and Unreimbursed Losses that are not reimbursed by the
Distributor under this Section 4.09 (the "Supplier Products Liability Payments")
------------------------------------
exceeds 60% (subject to upward adjustment in accordance with the second proviso
of Section 4.09(b)) of the aggregate amounts paid with respect to such
liabilities, and the Products Liability Cap for such Fiscal Year exceeds the sum
of the aggregate amounts paid by the Distributor to the Supplier under Section
4.09(b) for such Fiscal Year that are paid by the Distributor and not reimbursed
by the Supplier, then the Distributor shall pay to the Supplier the amount of
such excess (the "Excess Payments"). The Distributor shall make Excess Payments
---------------
in each Fiscal Year until the sum of the Excess Payments in such Fiscal Year and
all preceding Fiscal Years beginning with the Sixth Insurance Year is equal to
the Supplier Deficiency in that Fiscal Year and all preceding Fiscal Years
beginning with the Sixth Insurance Year. The "Supplier Deficiency" for any
-------------------
Fiscal Year shall be equal to the excess of the actual amount of the Products
Liability Payments for such Fiscal Year over the amount that such Products
Liability Payments would have been but for the Products Liability Cap.
SECTION 4.10. Solutions and Growth Medium. Notwithstanding any other
---------------------------
provision in this Agreement to the contrary, if it is in the Customers' best
interests or if sale of the Growth Medium or Solutions is prohibited by local
law or regulation or otherwise is commercially impracticable, the Distributor
may obtain Solutions and Growth Medium from a source other than the Supplier and
sell such other Solutions and Growth Medium to any Stem Cell Therapy Customer.
If the Distributor makes any such Sales to Stem Cell Therapy Customers, the
Distributor shall pay to the Supplier, in those cases in which the use of such
other Solutions or Growth Medium is prohibited by law or otherwise is
commercially impracticable, an amount equal to the lesser of: (a) a royalty
equal to 10% of the Distributor's net selling price of such sales and (b) an
amount equal to 60% of the Distributor's gross margin realized on such sales of
the Solutions and/or Growth Medium (said 60% amount being defined as the
"Supplier's Share"), and, in those cases in which the use of such other
- -----------------
Solutions or Growth Medium is legally or practically required, the Supplier's
Share. Such payments shall be made by the Distributor to the Supplier within 30
days following the month in which the sale occurred.
SECTION 4.11. Information Concerning Pricing. (a) The Distributor
------------------------------
shall provide to the Supplier the following information regarding the prices at
which Products are Sold by the Distributor to Stem Cell Therapy Customers
pursuant to this Agreement (the "Pricing Information"): the average, highest
-------------------
and lowest selling prices of each of the Products (specified by catalogue
number) in each country and to each Subdistributor. The Supplier and the
Distributor shall review the Pricing Information at least once a year. In light
of such Pricing Information, the Supplier and the Distributor annually shall (i)
agree to Target Prices, the Minimum U.S. Selling Price, the Minimum
Subdistributor Selling Price and the Minimum Direct International Selling Price
in each of the Direct Sales
Page 27
Countries for each of the Products and (ii) develop goals and objectives to be
included in the ACL for such year to maximize the financial returns of both the
Supplier and the Distributor.
(b) The Supplier and the Distributor each shall endeavor in good faith
to establish, within three years after the payment of the latter of the
Milestone Fees, fixed prices (which shall be revised and adjusted annually) at
which the Supplier shall Sell Products to the Distributor pursuant to this
Agreement, it being recognized, however that neither party shall be obligated to
agree to fixed pricing unless the party determines it to be in its own best
interests. Once such prices are established, they shall replace the pricing
formulae set forth below in Section 5.02 and shall be consistent with the
following goals and objectives: (i) to price the Products to maximize their
value; (ii) to share mutually in the revenues and benefits from Sales of the
Products; and (iii) to exchange openly information regarding Sales prices and
production costs.
(c) Notwithstanding anything in this Agreement to the contrary, the
Distributor's obligations under Sections 2.03(a) and (b) and Section 4.01 shall
not require the Distributor to make any Sales of Products, which, in the
judgment of the Distributor, are reasonably likely to cause the Average U.S.
Selling Price, the Average International Direct Selling Price in any Direct
Sales Country and the Average Subdistributor Selling Price to be less than the
Minimum U.S. Selling Price, or the Minimum International Direct Selling Price in
such Direct Sales Country and the Minimum Subdistributor Selling Price,
respectively, during the month in which such Sales otherwise would be made.
SECTION 4.12. Indemnification for Product Liability. The Distributor
-------------------------------------
agrees to indemnify and hold harmless the Supplier and its Affiliates and their
respective officers, directors, employees and agents (each such person being a
"Distributor Indemnified Person") from and against any losses, claims, damages
- -------------------------------
or liabilities not subject to the Policy and to reimburse each Distributor
Indemnified Person for all expenses (including reasonable fees and expenses of
counsel) not subject to the Policy as they are incurred, related to, arising out
of or in connection with defending any action, claim, suit, investigation or
proceeding in which a Person claims or alleges that the claims made beyond those
in the Market Development Program, or the training, service or repair
undertaken, by the Distributor, or such Subdistributor, with respect to the
Products has caused such Person to sustain any personal injury, property damage,
wrongful death or any other tortious harm.
Page 28
ARTICLE V
DISTRIBUTOR PURCHASES OF THE PRODUCTS
-------------------------------------
SECTION 5.01. Orders. Orders for Products placed by the Distributor
------
shall conform to, and shall be filled in accordance with, the Programs.
SECTION 5.02. Purchase Price; Periodic Adjustments. (a) The
------------------------------------
aggregate purchase price to be paid to the Supplier by the Distributor for U.S.
Products Sold during any calendar month (the "U.S. Monthly Purchase Price")
---------------------------
shall be calculated according to the following formula:
*
where "P" is the U.S. Monthly Purchase Price, "SP" is the aggregate of the
Actual U.S. Sales Amount for each of the Products during such calendar
month, "DS" is the Deemed U.S. Sales Amount during such calendar month, "U"
is the aggregate dollar amount of Upcharges included in the selling price of
the Actual U.S. Sales Amount during such calendar month, "F" is the
applicable aggregate unreimbursed freight and handling charges for the
Actual U.S. Sales, the Deemed U.S. Sales and the Purchased Spare Parts used
for warranty service provided in accordance with the Programs during such
calendar month borne by the Distributor, "R" is the aggregate amount
credited by the Distributor during such calendar month for returns of U.S.
Products as reflected in the applicable credit invoices, "W" is the
Distributor"s cost of providing warranty service during such calendar month
(i.e., travel and other out-of-pocket expenses and cost of warranty service
---
at applicable hourly rates, but excluding the cost of Purchased Spare Parts)
to Stem Cell Therapy Customers in the United States pursuant to, and in
accordance with, Section 4.04(a), all as reflected in the relevant Monthly
Report, and "X" is * (or, if 5.02(d) is applicable, *
(b) The aggregate purchase price to be paid to the Supplier by the
Distributor for Subdistributor Products Sold during any calendar month (the
"Subdistributor Monthly Purchase Price") shall be calculated according to the
- --------------------------------------
following formula:
*
where "P" is the Subdistributor Monthly Purchase Price, "SP" is the
aggregate of the Actual Subdistributor Sales Amounts for each of the
Products during such calendar month, "DS" is the Deemed Subdistributor Sales
Amount during such calendar month, "U" is the aggregate dollar amount of
Upcharges included in the selling price of the Actual
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
Page 29
Subdistributor Sales Amount during such calendar month, "F" is the
applicable aggregate unreimbursed freight and handling charges for the
Actual Subdistributor Sales and the Deemed Subdistributor Sales and the
Purchased Spare Parts used for warranty service for Subdistributor Products
provided in accordance with the Programs during such calendar month borne
by the Distributor, "R" is the aggregate amount credited by the Distributor
during such calendar month for returns of Subdistributor Products as
reflected in the applicable credit invoices, "W" is the Distributor"s cost
of providing warranty service on Subdistributor Products during such
calendar month (i.e., travel and other out-of-pocket expenses and cost of
---
warranty service at applicable hourly rates, but excluding the cost of
Purchased Spare Parts) to Stem Cell Therapy Customers outside of the United
States pursuant to, and in accordance with, Section 4.04(a), and "X" is *
(c) The aggregate purchase price to be paid to the Supplier by the
Distributor for International Direct Products Sold in each Direct Sales Country
during any calendar month (the "International Direct Monthly Purchase Price")
-------------------------------------------
shall be calculated according to the following formula:
*
where "P" is the International Direct Monthly Purchase Price, "SP" is the
aggregate of the Actual International Direct Sales Amount for each of the
Products in such Country during such calendar month, "DS" is the Deemed
International Direct Sales Amount in such Country during such calendar
month, "U" is the aggregate dollar amount of Upcharges included in the
selling price of the Actual International Direct Sales Amount during such
calendar month, "F" is the applicable aggregate unreimbursed freight and
handling charges for the Actual International Direct Sales in such Country,
the Deemed International Direct Sales and the Purchased Spare Parts used for
warranty service provided in such Country in accordance with the Programs
during such calendar month borne by the Distributor, "R" is the aggregate
amount credited by the Distributor during such calendar month for returns of
International Direct Products in such Country as reflected in the applicable
credit invoices, "W" is the Distributor's cost of providing warranty service
on International Direct Products in such Country during such calendar month
(i.e., travel and other out-of-pocket expenses and cost of warranty service
---
at applicable hourly rates, but excluding the cost of Purchased Spare Parts)
to Stem Cell Therapy Customers in such Direct Sales Country pursuant to, and
in accordance with, Section 4.04(a), all as reflected in the relevant
Monthly Report, and "X" is * The International Direct Monthly Purchase
Price for each Direct Sales Country shall be converted
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
Page 30
from the official currency unit of such Country into U.S. dollars at the
Exchange Rate for the month in which the Sales represented by such
International Direct Monthly Purchase Price were made.
(d) If Worldwide Sales exceed the Sales Threshold in any Fiscal Year,
then the U.S. Monthly Purchase Price for all Sales in excess of such threshold
shall be calculated based upon the formula in subsection 5.02(a) above, except
that "X" shall equal *
(e) The aggregate purchase price (the "Monthly Parts Purchase Price")
----------------------------
to be paid to the Supplier by the Distributor for Spare Parts purchased by the
Distributor, whether purchased for a warranty service in accordance with Section
4.04(a) or otherwise (the "Purchased Spare Parts"), in any calendar month, shall
---------------------
be calculated according to the following formula:
*
where "P" is the Monthly Parts Purchase Price, "C" is the Supplier's cost of
producing such Purchased Spare Parts, "R" is the aggregate price paid by the
Distributor to the Supplier for the Spare Parts returned by Stem Cell
Therapy Customers during such calendar month and the freight paid the
Distributor with respect to such returns, "WC" is the purchase price paid to
the Supplier by the Distributor for Spare Parts used for warranty service
provided in such month by the Distributor to Stem Cell Therapy Customers
pursuant to, and in accordance with, Section 4.04(a).
SECTION 5.03. Monthly Report; Monthly Payment; Distributor Fee. (a)
-----------------------------------------------
Within thirty days after the end of each calendar month, the Distributor shall
prepare and deliver to the Supplier a report (the "Monthly Report") stating,
--------------
among other things, the aggregate amount of Worldwide Sales, specifying sales by
the Distributor of U.S. Products and International Products during such month.
At the time of delivery of the monthly report, the Distributor shall pay the
Monthly Purchase Price. The Distributor shall assume responsibility for all
amounts that become uncollectible from its Customers and any collection costs
incurred in pursuit of such amounts.
(b) Within five business days after the Distributor's first issuance
of an invoice (or invoices) evidencing that the Complete System Sale has
occurred, the Distributor shall pay to the Supplier a fee of *
(c) Within thirty business days after final written approval by the
FDA of the Products for Sales in the United States for any clinical indications
for Stem Cell Therapy Applications, the Distributor shall pay to the Supplier a
fee of * (together with the fees specified in Section 5.03(b), the
"Milestone Fees").
- ---------------
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
Page 31
SECTION 5.04. Deliveries. The Supplier shall deliver the Products in
----------
accordance with each firm order by the Distributor. Unless otherwise agreed by
the Supplier and the Distributor, delivery shall be F.O.B. at the Supplier's
place of manufacture ("ex works"). Title to the Products Sold to the
Distributor by the Supplier pursuant to this Agreement shall pass from the
Supplier to the Distributor upon the Distributor's acceptance of the Products at
the Supplier's place of manufacture. All of the costs of transportation
(including insurance) shall be borne by the Distributor and included in "F" in
the formulae set forth in Section 5.02 above.
ARTICLE VI
TRADEMARKS AND TRADE NAMES
--------------------------
SECTION 6.01. License. To the extent permitted by law, the Supplier
-------
hereby grants to the Distributor and each Subdistributor a license and right to
use during the existence of this Agreement any trademark and trade name of the
Supplier associated with the Products for the sole purpose of Selling, and
promoting the Sale of, the Products in accordance with this Agreement. The
Distributor shall take no steps to register the Supplier's trademarks or trade
names.
SECTION 6.02. Licenses to Third Parties. The Supplier shall not grant
-------------------------
to any person other than the Distributor a right or license to use during the
term of this Agreement any trademark or trade name of the Supplier for the
purpose of Selling, or promoting the Sale of, the Products to Stem Cell Therapy
Customers unless the Supplier has established a Co-Marketing Arrangement in
accordance with Section 7.05(b).
SECTION 6.03. Effect of Use. Any trademarks and trade names licensed
-------------
to the Distributor hereunder are, and shall remain the exclusive property of,
the Supplier, and nothing contained herein shall grant or be construed as
granting to the Distributor any right, title or interest in the Supplier's
trademark or trade name not specifically set forth in Section 6.01. Any trade
names or trademarks developed for the Products during the term of this Agreement
shall be owned solely by the Supplier, but shall be licensed to the Distributor
in accordance with Section 6.01.
SECTION 6.04. Cessation of Use. Upon the later of expiration or
----------------
termination of this Agreement or the license rights granted to the Distributor
pursuant to Section 7.07 hereof, the Distributor shall forthwith cease any and
all use of, and shall not use or have any right to use, any trademark or trade
name of the Supplier licensed to the Distributor hereunder.
Page 32
ARTICLE VII
TERM; TERMINATION
-----------------
SECTION 7.01. Term. Unless earlier terminated pursuant to Section
----
7.02 hereof, the term of this Agreement shall commence on the date first above
written and end on October 22, 2003 (the "Base Term"). At the end of the Base
---------
Term, the Distributor shall have the option to renew this Agreement for one
additional ten-year period, which, except as otherwise specifically provided in
this Section 7.01, shall be upon the terms and conditions in effect at the
expiration of the Base Term. The Distributor may exercise this option by
providing written notice to the Supplier not less than 365 days prior to the
expiration of the Base Term. At the end of such additional ten-year term, the
parties may extend this Agreement for a subsequent ten-year period only by
mutual agreement.
SECTION 7.02. Notice of Breach. If the Supplier has materially
----------------
breached its obligations under this Agreement, the Distributor shall deliver to
the Supplier written notice of such breach (the "Distributor's Notice of
-----------------------
Breach"). If the Distributor has materially breached its obligations under this
Agreement, the Supplier shall deliver to the Distributor written notice of such
breach (the "Supplier's Notice of Breach"; and, together with the Distributor's
---------------------------
Notice of Breach, a "Notice of Breach"). Any Notice of Breach shall describe
----------------
such breach in reasonable detail.
SECTION 7.03. Cure Period. If the alleged breach by the Supplier or
-----------
the Distributor can be cured by the payment of money (a "Monetary Breach"), the
---------------
breaching Party may cure such Monetary Breach at any time within ten days after
the existence of the Monetary Breach and the amount owed has been established.
If the breach is not a Monetary Breach and reasonably can be cured within thirty
days, then the breaching Party may cure the breach within thirty days after
delivery of the Notice of Breach. If the breach is not a Monetary Breach and
reasonably cannot be cured within thirty days, then the breaching Party may
submit to the nonbreaching Party within thirty days after delivery of the Notice
of Breach a written plan to effect a cure as soon as reasonably practicable, but
in any event within one year following the receipt of the Notice of Breach from
the nonbreaching party, and the breaching Party shall diligently, promptly and
continuously pursue such plan until the breach has been cured.
SECTION 7.04. Objection; Negotiation. (a) If either Party disputes
---------------------
an assertion by the other Party that it has materially breached this Agreement,
as specified in any Notice of Breach, then the allegedly breaching Party may, in
lieu of proceeding with a remedy of such alleged breach, deliver to the other
Party a written objection (the "Objection") within fifteen days after receipt of
---------
the Notice of Breach. Any Objection shall set forth in reasonable detail the
basis for the objection to the breach alleged in the Notice of Breach.
Page 33
(b) For a period of up to thirty days after the delivery of the
Objection, the Parties shall pursue good faith negotiations to attempt to
resolve mutually the Parties' differences concerning the Notice of Breach and
the Objection. If the Parties have not reached a mutually satisfactory
resolution within said thirty days, then either Party may submit the matter for
resolution by binding arbitration pursuant to Section 10.03.
SECTION 7.05. Remedy; Partial Termination; Termination Upon
---------------------------------------------
Bankruptcy. (a) If the Supplier fails to cure any material breach within the
time periods specified in Section 7.03 above, the Distributor may terminate this
Agreement.
(b) If the Distributor fails to cure any material breach within the
time periods specified in Section 7.03 above, the Supplier may terminate this
Agreement, and the Distributor's right to act as the Distributor, on a worldwide
basis, or with respect to specific geographic areas, or the Supplier may permit
the Distributor to continue to act as a distributor of the Products but may
appoint other distributors of the Products or the Supplier may distribute the
Products itself, in each case either on a worldwide basis or with respect to one
or more geographic areas (such arrangement being a "Co-Marketing Arrangement").
------------------------
If the Supplier exercises its right under this Section 7.05(b) to establish a
Co-Marketing Arrangement, the prices to be paid to the Supplier by the
Distributor for the Products distributed by the Distributor in each geographic
area in which a Co-Marketing Arrangement is established shall be fair and
reasonable fixed prices for each of the Products determined in good faith
negotiations by the Supplier and the Distributor, based upon the amounts paid to
the Supplier by the Distributor for each of the Products during the period
preceding such termination, which prices shall then be renegotiated annually
based upon then current market conditions. Effective one year after delivering
written notice to the other Party, either Party may terminate the Distributor's
right to Sell in countries where a Co-Marketing Arrangement has been
established.
(c) This Agreement shall terminate immediately upon written notice by
either party to the other (i) in the event that a bankruptcy petition is filed
with respect to the party notified pursuant to this subparagraph or (ii) in the
event that the party notified pursuant to this subparagraph (A) becomes
insolvent; (B) is adjudicated as a bankrupt pursuant to an involuntary petition
in bankruptcy; (C) suffers appointment of a temporary or permanent receiver,
trustee or custodian for its business or for all or part of its assets, where
such appointment is not discharged within thirty days; (D) makes an assignment
for the benefit of creditors; (E) is admitted to the benefits of any procedure
for the settlement or postponement of debts; (F) becomes a party to dissolution
proceedings; or (G) takes any corporate action with respect to any of the
foregoing.
Page 34
(d) The Distributor may terminate this Agreement upon twelve months'
advance written notice to the Supplier in the event that any Person other than
the Distributor during the term of this Agreement beneficially owns more than 50
percent (measured either by value or voting rights) of the outstanding Common
Stock or voting securities of the Supplier.
(e) The Distributor may terminate this Agreement at any time after
December 31, 1997 if it reasonably determines that the Supplier is unlikely to
be able to produce Products that can be sold to Stem Cell Therapy Customers on a
competitive basis on or prior to December 31, 1998. The Supplier may terminate
this Agreement at any time after the second anniversary of the payment of the
later of the Milestone Fees if the Supplier reasonably determines, taking into
account the fact that there is no established market for the Products, that the
Distributor is unlikely to be able to develop a market for the Products among,
or to market the Products effectively to, Stem Cell Therapy Customers.
SECTION 7.06. Other Remedies. In the event of a breach of this
--------------
Agreement, the nonbreaching Party shall be entitled to pursue, in addition to
the remedies specified in this Article VII, any and all equitable or legal
remedies available to it as a result of the breach, through the arbitration
proceeding or the limited court actions as permitted by Section 10.03. If
either Party elects to terminate this Agreement in accordance with this Article
VII, such termination shall not preclude the nonbreaching Party from pursuing
such additional remedies and collecting any damages to which the nonbreaching
Party may be entitled.
SECTION 7.07. Effect of Termination by Distributor. (a) In the event
------------------------------------
that the Distributor terminates this Agreement in accordance with Section
7.05(a) hereof, and the Distributor has paid all of the Milestone Fees, then the
Supplier shall (i) grant to the Distributor, effective upon notice by the
Distributor to the Supplier following such termination, a non-exclusive
perpetual license with no rights to grant a sublicense (other than a sublicense
to manufacture) (the "License") of all patents and other intellectual property
-------
necessary or useful to manufacture, use, market and sell the Products to Stem
Cell Therapy Customers solely for the use, manufacture, marketing and sale of
the Products for Stem Cell Therapy Applications and (ii) provide to the
Distributor all technical or other information relating to the processes covered
by the License. In addition, the Distributor shall, if requested by the
Supplier, manufacture products for the Supplier's use and sale that are similar
to the Products sold in the Stem Cell Therapy Market. The prices to be paid to
the Distributor by the Supplier for the Products manufactured by the Distributor
shall be fixed prices for each of the Products, based upon the amounts paid to
the Supplier by the Distributor for each of the Products during the period
preceding such termination, as negotiated in good faith by the Distributor and
the Supplier. Such negotiated prices shall be applicable for one year, and
shall be renegotiated and redetermined annually based upon the then current
market conditions.
Page 35
(b) Under the License, the Distributor shall pay to the Supplier on a
monthly basis a royalty fee equal to 15% of the sales price to Customers (net of
freight, delivery and returns) for Products sold during each month using such
License, subject to reduction for any amounts payable by the Distributor to any
third party pursuant to any agreement between the Supplier and such third party
with respect to any Intellectual Property Rights granted to the Distributor
under the License.
(c) The License shall not affect any other right or remedy of the
Distributor arising from the Supplier's nonperformance of this Agreement.
SECTION 7.08. Attorneys' Fees and Costs. In the event of any
-------------------------
arbitration or court proceedings with respect to a breach, an alleged breach, a
dispute as to the interpretation of this Agreement, or any other dispute
concerning this Agreement, the Party who most prevails in such proceedings shall
be entitled to recover from the other Party the reasonable attorneys' fees and
other reasonable costs incurred by the prevailing Party in connection with such
proceedings, in such amounts as the arbitrator or the court deems appropriate
and fair. The arbitrator in such arbitration proceedings shall determine the
prevailing Party, and the amount of attorneys' fees and other costs to be paid
by the other Party to the prevailing Party.
SECTION 7.09. Interest. If a Party fails to pay any amount when due,
--------
such amount shall thereafter bear interest until such amount, together with such
interest, is paid in full at a rate equal to the rate announced from time to
time by Citibank as its base rate of interest plus two percent.
SECTION 7.10. Transition Upon Termination. (a) Upon any termination
---------------------------
of this Agreement, in whole or in part, the Distributor and the Supplier each
shall use reasonable and good faith efforts to accomplish an orderly transition
of marketing responsibilities, from the Distributor to the Supplier (or the
Supplier's designee).
(b) If this Agreement is terminated the Distributor shall make
available to the Supplier (i) a list of each Customer and Subdistributor which
purchased Equipment from the Distributor, identifying the Equipment purchased by
each such Customer and Subdistributor, (ii) a list of each Customer and
Subdistributor which purchased Disposables during the 24 calendar months
immediately preceding such termination, identifying the types and quantities of
Disposables purchased by each such Customer and Subdistributor during the last
24 months, and (iii) a copy of each customer record of service performed within
the last 24 calendar months for the Customers listed in subparagraphs (i) and
(ii) above. Notwithstanding the foregoing, however, if the Supplier establishes
a Co-Marketing Arrangement pursuant to Section 7.05(b) pursuant to which the
Distributor is allowed to continue to distribute Products in one or more
specific geographical areas, then the Distributor shall not
Page 36
be required to furnish to the Supplier the foregoing lists and records for such
geographical areas.
ARTICLE VIII
CONFIDENTIALITY
---------------
SECTION 8.01. Confidentiality. (a) The Distributor and the Supplier
---------------
agree to keep secret and not to disclose to any third party any Confidential
Information of the other that may from time to time be received from the other
party in connection with the transactions contemplated by this Agreement;
provided, however, that the Distributor may disclose such information to its
Affiliates. The Confidential Information exchanged by the parties in connection
with this Agreement shall not be used by the receiving party for any purpose
other than for purposes of carrying out this Agreement during its term. The
Supplier may disclose the Distributor's Confidential Information to the
Supplier's employees and agents to the extent necessary to enable such employees
and agents to perform the Supplier's responsibilities under this Agreement, and
the Distributor may disclose the Supplier's Confidential Information to the
Distributor's employees and agents and the Distributor's Subdistributors and
their employees and agents to enable (i) such employees and agents to perform
the Supplier's responsibilities under the Agreement and (ii) such
Subdistributors to the extent necessary to assist the Distributor in the
performance of its obligations under this Agreement.
(b) The foregoing confidentiality obligations are subject to an
exception for any disclosure that becomes legally required by subpoena or other
legal process; provided, however, that the Party who so becomes legally
obligated shall give written notice to the other Party of such required
disclosure as promptly as practicable after the Party becomes aware of such
disclosure requirements.
SECTION 8.02. Survival of Covenants to Keep Secret. The parties'
------------------------------------
obligations under this Article VIII shall survive expiration or termination of
this Agreement.
SECTION 8.03. No License. Except as otherwise provided in this
----------
Agreement, nothing in this Agreement shall be construed to constitute a grant of
any licensing rights from the Supplier to the Distributor to make the Products
or to use the Products (other than a demonstration use for marketing to
potential customers).
Page 37
ARTICLE IX
FORCE MAJEURE
-------------
SECTION 9.01. Force Majeure. (a) If either party is rendered unable,
-------------
in whole or in part, to carry out its obligations under this Agreement by reason
of force majeure, and if such party gives prompt written notice to the other
party describing the details giving rise to such party's claim of force majeure,
then the party claiming force majeure shall be excused from performing its
obligations hereunder, but only for so long as that party remains unable by
reason of force majeure so to perform. Such cause of the party's inability to
perform shall be remedied to the extent possible with all reasonable speed. As
used herein, force majeure means Acts of God, labor disputes, acts of public
enemies, wars, blockades, insurrections, riots, epidemics, quarantine
restrictions, landslide, lightning, earthquakes, fires, storms, floods,
washouts, arrests, restraints of rulers and people, civil disturbances, acts of
any governmental or local authority, inability to obtain transport or supplies
for any reason, and other acts that are not within the control of the party
claiming excuse from performance and that could not have been avoided or
overcome by such party using due diligence. The lack of financial resources
shall not constitute force majeure.
(b) If any event of force majeure materially impairs the Distributor's
ability to sell the Products or the Supplier's ability to manufacture the
Product, then during the pendency of that force majeure event, the Supplier may
sell the Products or the Distributor may manufacture the Products (as the case
may be) that would otherwise have been sold by the Distributor or manufactured
by the Supplier, but for the force majeure event.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
SECTION 10.01. Amendment; Alteration. No amendment, change,
---------------------
alteration, modification of, or addition to, this Agreement shall be effective
unless in writing and properly executed by each of the parties hereto.
SECTION 10.02. Notice. All notices, requests, claims, demands,
------
waivers and other communications hereunder shall be in writing (including
telecopier or facsimile or similar writing) and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) if delivered in
person,
Page 38
by courier service, by cable, telegram, telex, telecopier or facsimile or by
registered or certified mail (postage prepaid, return receipt requested) as
follows:
(a) if to the Distributor:
Cobe BCT, Inc.
1185 Oak Street
Lakewood, CO 80215
Telecopy: 303-231-4160
Attention: Edward Wood
(b) if to the Supplier:
Aastrom Biosciences, Inc.
(Mail: P.O. Box 376)
Ann Arbor, MI 48105
(Direct Delivery:
Dominos Farms, Lobby L)
Telecopy: 313-665-0485
Attention: R. Douglas Armstrong, PhD
President and
Chief Executive Officer
or to such other address as either party may have furnished to the other in
writing in accordance herewith. All notices, requests, claims, demands, waivers
and other communications hereunder shall be deemed to have been received on the
date of personal delivery, cable, telegram, telex, telecopier (with copy by
mail) or facsimile transmission (with copy by mail), or on the fifth business
day (or, in the case of international post, on the fifteenth business day) after
the mailing thereof, except that notices of changes of address shall be
effective only upon receipt.
SECTION 10.03. Arbitration. All claims and disputes relating to this
-----------
Agreement shall be subject to binding arbitration, at the option of the Supplier
or the Distributor, in Chicago, Illinois in accordance with the Arbitration
Rules of the American Arbitration Association. Written notice of demand for
arbitration shall be filed with the other party to this Agreement and with the
American Arbitration Association within a reasonable time after the dispute has
arisen. Any award or decision rendered in such arbitration process may be
entered as a judgement against a Party in any court of competent jurisdiction
over the Party. Nothing in this Section shall limit either the Supplier's or
the Distributor's right to obtain a preliminary injunction or temporary
restraining order pertaining or relating to an arbitrable dispute or controversy
against the other party, pending resolution of said dispute or controversy by
the arbitration process. The Distributor and the Supplier hereby irrevocably
submit to the jurisdiction of any state or federal court in Michigan or Colorado
in any action or proceeding arising out of or relating to this Agreement or any
other agreement or transaction
Page 39
contemplated hereby, or any arbitration award or decision arising from this
Agreement. The Distributor and the Supplier hereby irrevocably waive, to the
fullest extent they may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding.
SECTION 10.04. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed entirely within that state.
SECTION 10.05. Waiver. Either party hereto may waive compliance with
------
any of, or extend the time for performance of, the agreements contained herein.
Any such waiver or extension shall be valid if set forth in an instrument in
writing signed by the party to be bound thereby. The failure of either party to
assert any of its rights hereunder shall not constitute a waiver of any such
rights.
SECTION 10.06. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, other than by
the Distributor to its Affiliates, without the express written consent of the
Distributor and the Supplier (which consent may be granted or withheld in the
sole discretion of the Supplier or the Distributor); provided that any
--------
assignment by the Distributor to its Affiliates does not relieve the Distributor
of its obligations hereunder.
SECTION 10.07. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 10.08. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any law, rule,
regulation or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
SECTION 10.09. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
Page 40
SECTION 10.10. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.11. Approvals. Whenever a matter is subject to the
---------
approval of the other Party, a Party shall not unreasonably withhold its
approval.
IN WITNESS WHEREOF, the Distributor and the Supplier each have caused
this Agreement to be executed by its duly authorized officer as of the date
first above written.
COBE BCT, INC.
By: /s/ EDWARD WOOD
----------------------------
Edward Wood
President
AASTROM BIOSCIENCES, INC.
By: /s/ R. DOUGLAS ARMSTRONG
-------------------------------
R. Douglas Armstrong, Ph.D.
President and Chief
Executive Officer
SCHEDULE A
PRODUCT DEVELOPMENT PROGRAM
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
SCHEDULE B
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
Revision of Schedule C of the 11/1/93 Distribution Agreement
1994-1995 Annual Commitment List
--------------------------------
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
SUPPLEMENTAL AGREEMENT
This Agreement is entered into as of March 29, 1995, by and between Aastrom
Biosciences, Inc., a Michigan corporation ("Aastrom"), Cobe Laboratories, Inc.,
a Colorado corporation ("Cobe Lab"), and Cobe BCT, Inc., a Colorado corporation
("Cobe BCT"), with respect to the following facts:
A. Pursuant to Section 5.05 of that certain Stock Purchase Agreement
between Aastrom and Cobe Lab, dated October 22, 1993 (the "Stock Purchase
Agreement"), Aastrom has a "put option" to require Cobe Lab to purchase stock
issued by Aastrom in a "Qualifying Private Placement" (as defined in the Stock
Purchase Agreement), under certain circumstances.
B. Pursuant to Section 5.03 of the Distribution Agreement between Aastrom
and Cobe BCT, dated as of October 22, 1993 (the "Distribution Agreement"), Cobe
BCT is obligated to pay to Aastrom a $5 million fee upon the occurrence of
specified events (the "Milestone Fees").
C. Aastrom is in the process of offering for sale a new series of preferred
stock, designated as Series D Preferred Stock.
WHEREFORE, the parties hereto mutually agree as follows:
1. Cobe Lab agrees that if Aastrom sells shares of its Series D
Preferred Stock in a private placement on or before April 22, 1995 in which (i)
the cash proceeds to Aastrom from such sales to investors other than Cobe Lab
equal at least $5 million, and (ii) persons other than holders of Series A
Preferred Stock and Series B Preferred Stock and their affiliates purchase
shares of Series D Preferred Stock having an aggregate purchase price of at
least $1 million (the "Private Placement"), then upon request by Aastrom by May
31, 1995, Cobe Lab will purchase shares of Series D Preferred Stock having an
aggregate purchase price of $5 million for the same price per share and on the
same terms and conditions as such other investors; provided, that such terms and
conditions must be reasonably satisfactory to Cobe Lab (the "Cobe Share
Purchase").
2. Aastrom, Cobe Lab and Cobe BCT agree that if the Cobe Share
Purchase is consummated:
(i) The Private Placement will not be deemed to be a Qualifying
Private Placement for purposes of Section 5.05 of the Stock Purchase Agreement,
and Aastrom will retain its "put option" for the next Qualifying Private
Placement or a Qualifying IPO;
(ii) Upon the consummation of the Cobe Share Purchase, Section
1.01 of the Distribution Agreement shall be amended by deleting the
1
definition of "Milestone Fees" and replacing such definition with the following
words:
"Milestone Events" means each of (i) the
Distributor's first issuance of an invoice (or invoices)
evidencing that the Complete System Sale has occurred
and (ii) the final written approval by the FDA of the
Products for Sales in the United States for any clinical
indications for Stem Cell Therapy Applications."
(iii) Upon the consummation of the Cobe Share Purchase, Section
4.11(b) of the Distribution Agreement shall be amended by deleting the words
"within three years after the payment of the latter Milestone Fee" and replacing
such words with the words "within three years after the later to occur of the
Milestone Events");
(iv) Upon the consummation of the Cobe Share Purchase, Section
5.03 of the Distribution Agreement shall be amended by deleting paragraphs
5.03(b) and 5.03(c) in their entirety and by redesignating paragraph 5.03(a) as
Section 5.03;
(v) Upon the consummation of the Cobe Share Purchase, Section
7.05(e) of the Distribution Agreement shall be amended by deleting the words
"the second anniversary of the payment of the later of the Milestone Fees" and
replacing such words with the words "the second anniversary of the later to
occur of the Milestone Events"; and
(vi) Upon the consummation of the Cobe Share Purchase, Section
7.07(a) of the Distribution Agreement shall be amended by deleting the words
"and the Distributor has paid all of the Milestone Fees," and replacing such
words with the words "and both Milestone Events have occurred".
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date set forth above.
AASTROM BIOSCIENCES, INC. COBE LABORATORIES, INC.
By:/s/ R. Douglas Armstrong By:/s/
------------------------- ------------------------
COBE BCT, INC.
By:/s/ Edward C. Wood, Jr.
-----------------------
2
AMENDMENT
to
RESTATED DISTRIBUTION AGREEMENT
between
COBE BCT, INC. and
AASTROM BIOSCIENCES, INC.
This Amendment is made as of September 11, 1995, to that certain Restated
Distribution Agreement dated as of October 22, 1993, between AASTROM
Biosciences, Inc., a Michigan corporation (the "Supplier"), and Cobe BCT, Inc.,
a Colorado corporation (the "Distributor") (the "Restated Distribution
Agreement").
1. The terms which are defined in the Restated Distribution Agreement
shall have the same meaning in this Amendment as defined in the Restated
Distribution Agreement.
2. The definition of "Stem Cell Therapy Applications" in the Restated
Distribution Agreement is hereby amended to add the words "or umbilical cord
blood" on the second line, so that the first two and one-half lines read as
follows:
"Stem Cell Therapy Applications" means
applications of the Products pursuant to which human
bone marrow or peripheral blood or umbilical cord blood
derived stem and hematopoietic cells are used primarily
for one or more of the following:...
3. There shall be added to Section 1.01 of the Restated Distribution
Agreement: new defined terms, as follows:
"Lymphoid Cell" means lymphoid stem cell (e.g.,
any cell capable of generating cells solely of lymphoid
lineage) and any cell derived therefrom, including but not
limited to, the subcortical thymocyte, cortical thymocyte,
medullary thymocyte, lymphocyte, B-cell, plasma cell,
immunoblast, lymphoplasmacytoid cell and the NK-cell.
"Lymphoid Cell Applications" means any
expansion, selection or genetic manipulation,
including genetic transformation, of Lymphoid Cells,
provided that either the starting cell population is a
lymphoid selected cell mixture, or that the mature
lymphoid cell production is not derived ex vivo from a
pre-lymphoid cell-type (e.g., multipotent stem cell).
1
4. The first sentence in Section 2.01(d) of the Restated Distribution
Agreement is hereby amended to add the words "(excluding, however, for Lymphoid
Cell Applications)" in two locations, so that the first sentence as amended
reads as follows:
(d) Notwithstanding any provision of this Agreement to the
contrary, the Supplier may Sell the Products to its Affiliates for Stem
Cell Therapy Applications by such Affiliates, but not for resale to Persons
which are not Affiliates of the Supplier, and may make such Sales with a
license for use of the Products for Stem Cell Therapy Applications, and the
Distributor may Sell the Products to its Affiliates for applications other
than Stem Cell Therapy Applications (excluding, however, Lymphoid Cell
Applications) by such Affiliates, but not for resale to Persons which are
not Affiliates of the Distributor, and may make such Sales with a license
for use of the Products for applications other than Stem Cell Therapy
Applications (excluding, however, for Lymphoid Cell Applications) (such
permitted Sales by either the Distributor or the Supplier being "Affiliate
Sales").
5. Excepting only as otherwise set forth above, all other terms and
provisions of the Restated Distribution Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the Distributor and the Supplier each have caused this
Amendment to be executed by its duly authorized officer as of the date first
written above.
COBE BCT, INC.
By: /s/ EDWARD WOOD
-----------------------------------------
Edward Wood, President
AASTROM BIOSCIENCES, INC.
By: /s/ R. DOUGLAS ARMSTRONG
-----------------------------------------
R. Douglas Armstrong, Ph.D.,
President and Chief Executive Officer
2
AMENDMENT TO
RESTATED DISTRIBUTION AGREEMENT
This Amendment is made as of October 29, 1996 to that certain Restated
Distribution Agreement dated as of October 22, 1993, between Aastrom
Biosciences, Inc., a Michigan corporation (the "Supplier") and Cobe BCT, a
Colorado corporation (the "Distributor") (the "Restated Distribution
Agreement").
1. With respect to the Purchase Price payable by the Distributor to
the Supplier for the Product as specified in Article V of the Restated
Distribution Agreement, the parties hereby agree that the Distributor shall be
entitled to a 5% discount on the Purchase Price for all of the Product purchased
until the aggregate of said discount equals a total of $350,000, increased by
25% per annum, compounded annually, from December 15, 1996, until the date the
first $200,000 in aggregate discounts are actually realized and credited. Said
aggregate discount, including the compounded increase, shall hereinafter be
called the "Aggregate Discount". If the Aggregate Discount has not been realized
by the second anniversary of the first commercial sale of the Product by the
Distributor, then the discount on subsequent sales of the Product from the
Supplier to the Distributor shall be at 10% (rather than 5%), until the
Aggregate Discount is realized by the Distributor.
2. An example of the calculations for the Aggregate Discount
specified in Section 1 above is as follows:
a. First Product sold to Distributor (12/15/97)
b. First $200,000 discount credit at 5% actually
realized by Distributor (12/15/98)
c. Aggregate Discount ($350,000 x 1.25/2/) as of
12/15/98: 546,875
d. Less $200,000 discount credit at 5% actually
realized as of 12/15/98: (200,000)
---------
e. Net balance of Aggregate Discount as of
12/15/98: 346,875
f. Further $300,000 discount credit at 5% actually
realized from 12/16/98 to 12/15/99: (300,000)
---------
g. Net balance of Aggregate Discount as of
12/15/99: 46,875
h. Further $46,875 discount credit at 10% actually
realized after 12/15/99: (46,875)
---------
i. Aggregate Discount is fully realized.
3. The Supplier has agreed to the foregoing discount in consideration
and recognition of the assistance which the Distributor has given to the
Supplier in the development of the Product.
4. Terms defined in the Restated Distribution Agreement shall have
the same meaning in this Amendment.
5. Excepting only as otherwise expressly set forth above, all other
terms and provisions of the Restated Distribution Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the Distributor and the Supplier each have caused this
Amendment to be executed by its duly authorized officer as of the date first
written above.
COBE BCT, INC.
By: /s/ Edward C. Wood
--------------------
AASTROM BIOSCIENCES, INC.
By: /s/ R. Douglas Armstrong
--------------------------
1
EXHIBIT 10.11
LICENSE AGREEMENT
by and between
AASTROM BIOSCIENCES, INC.,
a Michigan corporation
and
JOSEPH G. CREMONESE
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions..................................................... 1
2. License Terms and Conditions.................................... 3
2.1 Grant of License........................................... 3
2.2 Reimbursement of Patent Costs.............................. 3
2.3 Royalties.................................................. 4
2.3.1 Percentage Royalty.................................. 4
2.3.2 Credits Against Royalties........................... 4
2.3.3 Minimum Annual Royalty.............................. 4
2.3.4 Most Favored Licensee............................... 4
2.4 Combination Product........................................ 5
2.4.1 Definition of Combination Product................... 5
2.4.2 Net Sales of Combination Product.................... 5
2.5 Component Product.......................................... 5
2.5.1 Definition of Component Product..................... 5
2.5.2 Net Sales of Component Product...................... 6
2.6 Quarterly Payments......................................... 6
2.7 Term....................................................... 6
2.8 Sublicense Rights.......................................... 7
2.9 Duration of Royalty Obligations............................ 7
2.10 Reports................................................... 7
2.11 Records................................................... 7
2.12 Foreign Taxes............................................. 8
3. Patent Matters.................................................. 8
3.1 Validity of Licensed Patents............................... 8
3.2 Patent Prosecution and Maintenance......................... 8
3.3 Information to Licensor.................................... 9
3.4 Patent Costs............................................... 9
3.5 Ownership.................................................. 9
3.6 Infringement Actions....................................... 9
3.6.1 Prosecution and Defense of Infringements............ 9
3.6.2 Allocation of Recovery.............................. 9
4. Obligations Related to Commercialization........................ 10
4.1 Commercial Development Obligation.......................... 10
4.2 Milestone.................................................. 10
4.3 Governmental Approvals and Marketing of Licensed
Products................................................... 10
4.4 Product Liability Indemnity................................ 10
5. Representations and Warranties.................................. 11
6. Interests in Intellectual Property Rights....................... 11
6.1 Preservation of Title...................................... 11
6.2 Ownership of Improvements.................................. 11
6.2.1 Developed by Licensee............................... 11
6.2.2 Developed by Licensor............................... 11
-i-
7. Confidentiality and Publication................................. 11
7.1 Treatment of Confidential Information...................... 11
7.2 Publications............................................... 11
8. Termination..................................................... 12
8.1 Termination Upon Default................................... 12
8.2 Transfer Upon Bankruptcy or Insolvency..................... 12
8.3 Rights Upon Expiration..................................... 12
8.4 Rights Upon Termination.................................... 12
8.5 WorkinProgress............................................. 13
9. Binding Upon Successors and Assigns............................. 13
10. General Provisions.............................................. 13
10.1 Independent Contractors................................... 13
10.2 Arbitration............................................... 13
10.3 Entire Agreement; Modification............................ 13
10.4 Governing Law............................................. 14
10.5 Severability.............................................. 14
10.6 No Waiver................................................. 14
10.7 Attorneys' Fees........................................... 14
10.8 Notices................................................... 14
-ii-
LICENSE AGREEMENT
This License Agreement is entered into and made effective as of July 17
, 1992, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Licensee") whose address is Post Office Box 376, Ann Arbor, Michigan 48106,
and JOSEPH G. CREMONESE, an individual ("Licensor") whose address is 227 Maple
Drive, Greensburg, Pennsylvania 15601, with respect to the facts set forth
below.
RECITALS
--------
A. Licensee is engaged in development of cell culture technology,
including products which are automated culture systems or bioreactors.
B. Licensor has disclosed to Licensee certain technology described in
Patent '292 (defined below), a copy of which has been delivered to Licensee.
C. Licensor has the exclusive right to grant a license to the technology
described in Patent '292 and the Licensed Patents and Licensed Technology
(defined below).
D. Licensor desires to grant to Licensee, and Licensee wishes to acquire,
an exclusive worldwide right and license to the technology described in Recital
C, subject to the terms and conditions set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, Licensor and Licensee hereby agree as follows:
1. Definitions. Capitalized terms shall have the meaning set forth
-----------
below.
Affiliate. The term "Affiliate" shall mean any entity which
---------
directly or indirectly controls, is controlled by or is under common control
with Licensee. The term "control" as used herein means the possession of the
power to direct or cause the direction of the management and the policies of an
entity, whether through the ownership of a majority of the outstanding voting
securities or by contract or otherwise.
Combination Product. The term "Combination Product" shall have the
-------------------
meaning as defined in Section 2.4.1 below.
-1-
Component Product. The term "Component Product" shall have the
-----------------
meaning as defined in Section 2.5.1 below.
Confidential Information. The term "Confidential Information" shall
------------------------
mean any and all proprietary or confidential information of Licensor or Licensee
which may be exchanged between the parties at any time and from time to time
during the term of this Agreement. Information shall not be considered
confidential to the extent that it:
a. Is publicly disclosed through no fault of any party
hereto, either before or after it becomes known to the receiving party; or
b. Was known to the receiving party prior to the date of
this Agreement, which knowledge was acquired independently and not from the
other party hereto (or such party's employees or agents); or
c. Is subsequently disclosed to the receiving party in good
faith by a third party who has a right to make such disclosure; or
d. Has been published by a third party as a matter of right.
Licensed Patents. The term "Licensed Patents" shall mean Patent
----------------
'292, plus all patents issued based on divisionals, continuations,
continuations-in-part, reissues, re-examinations and extensions of Patent '292,
together with all corresponding foreign patents, and together with all related
pending patent applications and inventor's certificates, and together with all
patents and patent applications covering improvements to the inventions
described in the foregoing. Without limiting the generality of the foregoing,
Licensed Patents shall include U.S. Patent No. 4,839,292; Canadian Patent
Application Serial No. 577,082, filed September 7, 1988; European Patent
Application Serial No. 88,201,922.7, filed September 6, 1988, designating the
following countries: Austria, Belgium, France, Greece, Italy, Luxembourg,
Netherlands, Spain, Sweden, Switzerland, Liechtenstein, United Kingdom, and West
Germany; and a new patent application which is being prepared and is entitled
"Cell Growth and Perfusion Bag".
Licensed Product. The term "Licensed Product" shall mean any
----------------
product or process which cannot be developed, manufactured, used or sold without
infringing on the valid claims of the Licensed Patents.
Licensed Technology. The term "Licensed Technology" shall mean the
-------------------
Licensed Patents, plus all improvements thereto developed by Licensor, and all
related data, know-how and technology.
-2-
Net Sales. The term "Net Sales" shall mean the gross amount
---------
received by Licensee, or its Affiliates and sublicensees, or any of them, on
sales of Licensed Products, net of (i) discounts actually given, (ii) credits
for claims, allowances, retroactive price reductions or returned goods, (iii)
prepaid freight (iv) sales taxes or other governmental charges paid in
connection with sales of Licensed Products (but excluding what is commonly known
as income taxes), and (v) the patent protection expenses described in the last
sentence of this paragraph. For purposes of determining Net Sales, a sale shall
be deemed to have occurred when a Licensed Product is shipped for delivery and
paid for. Sales of Licensed Products by Licensee or its Affiliates or a
sublicensee thereof to any Affiliate or sublicensee which is a reseller thereof
shall be excluded, and only the subsequent sales of such Licensed Products by
Affiliates or sublicensees to unrelated parties shall be deemed Net Sales
hereunder. In the event that a Licensed Product is a Combination Product, then
the Net Sales from said Licensed Product/Combination Product shall be determined
in accordance with the formula set forth in Section 2.4 below. In the event that
a Licensed Product is a Component Product, then the Net Sales from said Licensed
Product/Component Product shall be determined in accordance with the formula set
forth in Section 2.5 below. To the extent Licensee incurs any expenses (such as
attorneys' fees or settlement payments, as examples) to protect the Licensed
Patents against claims of invalidity, or to enforce the Licensed Patents against
infringers, or to defend against claims that the Licensed Products infringe the
patents of third parties, then said expenses shall be a deduction against the
gross amounts for calculating Net Sales.
Patent '292. The term "Patent '292" shall mean U.S. Patent No.
-----------
4,839,292 entitled "Cell Culture Flask Utilizing a Membrane Barrier," issued to
Licensor on June 13, 1989.
PTO. The term "PTO" shall mean the United States Patent and
---
Trademark Office.
2. License Terms and Conditions.
----------------------------
2.1 Grant of License. Licensor hereby grants to Licensee an
----------------
exclusive, worldwide license to use, make, have made and sell all products
and/or processes utilizing the Licensed Technology, with the full right to grant
sublicenses, subject to the terms of this Agreement.
2.2 Reimbursement of Patent Costs. As a part of the consideration
-----------------------------
for the exclusive license granted pursuant to Section 2.1 hereof, Licensee shall
reimburse Licensor for Licensor's out-of-pocket costs incurred for patent
attorney fees and patent application filing fees in connection with the Licensed
Patents, up to an aggregate maximum of $25,000. Such reimbursement shall be
subject to Licensor's presentation of appropriate documentation of Licensor's
payment of such expenses.
-3-
No payment shall be payable by Licensee hereunder unless and until the issue of
the validity of the claims as now stated in the Licensed Patents as described in
Section 3.1 hereof is resolved favorably to Licensor's reasonable satisfaction,
or, upon the expiration of one (1) year after the date of this Agreement if no
request for re-examination of the Licensed Patents is made within such period.
All payments made by Licensee to Licensor pursuant to this Section 2.2 shall be
credited against Licensee's obligation to pay royalties as set forth in Section
2.3 hereof.
2.3 Royalties.
---------
2.3.1 Percentage Royalty. As additional consideration for
------------------
the exclusive license granted pursuant to Section 2.1 hereof, Licensee shall pay
to Licensor a continuing royalty on a country-by-country basis in the amount of
(i) three percent (3%) of Net Sales of Licensed Products made, used or sold in
any country where the Licensed Technology utilized therein is protected by a
valid patent.
2.3.2 Credits Against Royalties. Licensee shall be entitled
-------------------------
to a credit against royalties payable hereunder in an amount equal to the
payments made by Licensee under Sections 2.2 and 3.4 hereof.
2.3.3 Minimum Annual Royalty. From and after January 1,
----------------------
1997, Licensee shall pay to Licensor minimum annual royalties as set forth
herein. The minimum annual royalty for the calendar year 1997 shall be $20,000.
For the three years thereafter, the minimum annual royalty for each subsequent
calendar year shall increase by $10,000, such that for all years after and
including the calendar year 2000, the minimum annual royalty shall be $50,000.
Any percentage royalties accrued and paid to Licensor (but not taken as a credit
pursuant to Section 2.3.2 hereof) for any calendar year shall be credited
against the minimum royalty payable for such calendar year. The payment of any
shortfall between actual royalties paid and the minimum annual royalty
applicable to such calendar year shall be payable to Licensor within sixty (60)
days after the last day of such calendar year. Licensor's sole remedy for any
failure by Licensee to pay the minimum annual royalty required hereunder shall
be to convert the exclusive license granted hereunder to a nonexclusive license
upon the expiration of sixty (60) days' written notice of Licensor's intention
to so convert the license, without Licensee's payment of any delinquent minimum
annual royalty. Such conversion would not relieve Licensee from payment of
royalties as described in Section 2.3.1.
2.3.4 Most Favored Licensee. If this license becomes non-
---------------------
exclusive and if Licensor grants a license to use the Licensed Patents to any
third party at a royalty rate lower than three percent (3%), then the royalty
rate payable by
-4-
Licensee under this Agreement shall be reduced to the same rate payable by the
third party.
2.4 Combination Product.
-------------------
2.4.1 Definition of Combination Product. As used herein,
the term "Combination Product" shall mean a Licensed Product which cannot be
manufactured, used or sold without (i) infringing the Licensed Patents, and also
(ii) infringing one or more patents held by Licensee or a third party (referred
to herein as "other patent rights").
2.4.2 Net Sales of Combination Product. The Net Sales
--------------------------------
of a Combination Product shall be determined in accordance with the following
formula:
A
X = - x C
B , where
X = the Net Sales attributable to the portion of the
Combination Product which is attributable to the Licensed
Patents, on which Net Sales Licensee shall pay the royalty
rate set forth in Section 2.3.1; and
A = the value of the contribution of the Licensed
Patents (as compared to the value of the contributions of
the rights) used in the Combination Product; and
B = The aggregate value of all patent rights used
for the Combination Product, consisting of both the
Licensed Patents and all other patent rights used in the
Combination Product; and
C = the Net Sales for the Combination Product.
The values described above shall be determined by the parties hereto in good
faith. In the absence of agreement as to said values, the values shall be
determined by arbitration in accordance with the provisions of Section 10.2
hereof.
2.5 Component Product.
-----------------
2.5.1 Definition of Component Product. As used herein,
-------------------------------
the term "Component Product" shall mean a Licensed Product which is a distinct
component of a product which contains multiple components (including, as an
example of additional components, proprietary methods sold or licensed with the
Component Product).
-5-
2.5.2 Net Sales of Component Product. The Net Sales of a
------------------------------
Component Product shall be determined in accordance with the following formula:
A
X = - x C
B , where
X = the Net Sales attributable to the Component
Product, on which Licensee is obligated to pay the royalty
rate set forth in Section 2.3.1; and
A = the value of the Component Product, based upon
costs to manufacture the Component Product, or the sales
price of the Component Product if it is sold separately;
and
B = The value of the aggregate product, with all
components (including methods sold or licensed with the
Component Product), including the Component Product, based
upon the same criteria as used for A above; and
C = the Net Sales for the aggregate product.
The values described above shall be determined by the parties in good faith. In
the absence of agreement as to said values, the values shall be determined by
arbitration in accordance with the provisions of Section 10.2 hereof.
2.6 Quarterly Payments.
------------------
2.6.1 Sales by Licensee. With regard to Net Sales made
-----------------
by Licensee or its Affiliates, royalties shall be payable by Licensee quarterly,
within ninety (90) days after the end of each calendar quarter, based upon Net
Sales of Licensed Products during such preceding calendar quarter, commencing
with the calendar quarter in which the first commercial sale of any Licensed
Product is made.
2.6.2 Sales by Sublicensees. With regard to Net Sales
---------------------
made by sublicensees of Licensee or its Affiliates, royalties shall be payable
by Licensee quarterly, within one hundred twenty (120) days after the end of
each calendar quarter, based upon the Net Sales of Licensed Products by such
sublicensee during such preceding calendar quarter, commencing with the calendar
quarter in which the first commercial sale of any Licensed Product is made by
such sublicensee.
2.7 Term. The term of this Agreement and the license granted
----
hereunder shall commence on the date set forth in the preamble paragraph of this
Agreement, and unless sooner
-6-
terminated by Licensee upon delivery of thirty (30) days' written notice or in
accordance with the provisions of Section 8.1 hereof, the term of this Agreement
and the license granted hereunder shall expire when the last patent licensed
hereunder has expired.
2.8 Sublicense Rights. Licensee shall have the sole and
-----------------
exclusive right to grant sublicenses to any party with respect to the rights
conferred upon Licensee under this Agreement, provided, however, that any such
sublicense shall be subject in all respects to all of the provisions contained
in this Agreement (but not including the payment of patent costs pursuant to
Sections 2.2 and 3.4 hereof and the obligation to pay minimum annual royalties
pursuant to Section 2.3.3 hereof). Licensee shall pay Licensor, or cause its
Affiliates or sublicensees to pay Licensor, the same royalties on all Net Sales
of such Affiliate or sublicensee the same as if such Net Sales had been made by
Licensee. Each Affiliate and sublicensee shall report its Net Sales to Licensor
through Licensee, which Net Sales shall be aggregated with any Net Sales of
Licensee for purposes of determining the Net Sales upon which royalties are to
be paid to Licensor. Any royalties paid to Licensor with respect to Net Sales of
any Affiliate or any sublicensee of Licensee or any Affiliate shall be credited
against Licensee's minimum annual royalty obligations hereunder.
2.9 Duration of Royalty Obligations. The royalty obligations
-------------------------------
of Licensee as to each Licensed Product shall terminate on a country-by-country
basis concurrently with the expiration of the last to expire of the patents
licensed hereunder utilized by or in such Licensed Product in each such country.
Notwithstanding any other provision of this Agreement, in the event that, based
upon a challenge by a party other than Licensee, its Affiliates or sublicensees,
the existing favorable claims of the Licensed Patents are held to be invalid by
the PTO or any competent court of law, Licensee may terminate this Agreement and
Licensee thereafter shall have no further obligation to pay any royalties
hereunder.
2.10 Reports. Licensee shall furnish to Licensor at the same
-------
time as each royalty payment is made by Licensee, a written report of Net Sales
of Licensed Products and the royalty due and payable thereon, including a
description of any offsets or credits deducted therefrom, on a product-by-
product and country-by-country basis, for the calendar quarter upon which such
royalty payment is based.
2.11 Records. Licensee shall keep, and cause its Affiliates
-------
and sublicensees to keep, complete records and accounts of all sales of Licensed
Products in sufficient detail to enable the royalties payable on Net Sales of
each Licensed Product to be determined. Licensor shall have the right to appoint
an independent certified public accounting firm approved by Licensee, which
approval shall not be unreasonably withheld,
-7-
to audit, upon delivery of advance written notice and during normal business
hours without interruption of normal business operations, the records of
Licensee, its Affiliates and sublicensees as necessary to verify the royalties
payable pursuant to this Agreement. Licensee, its Affiliates and sublicensees
shall pay to Licensor an amount equal to any additional royalties to which
Licensor is entitled as disclosed by the audit. Such audit shall be at
Licensor's expense. Licensor may exercise its right of audit hereunder no more
frequently than once in any calendar year. The accounting firm shall disclose to
Licensor only such information as is necessary to verify the accuracy of the
royalty payments required hereunder, and all such information shall be treated
as Confidential Information by Licensor. Licensee, its Affiliates and
sublicensees shall preserve and maintain all records required for audit for a
period of three (3) years after the calendar quarter to which the record
applies.
2.12 Foreign Taxes. Any tax required to be withheld by
-------------
Licensee under the laws of any foreign country for the account of Licensor shall
be paid by Licensee for and on behalf of Licensor to the appropriate
governmental authority and deducted from any royalties payable by Licensee
hereunder.
3. Patent Matters.
--------------
3.1 Validity of Licensed Patents. The parties hereto
----------------------------
acknowledge that there may be an issue concerning the validity of some of the
claims of the existing Licensed Patents. In order to resolve such issue,
Licensee may, in the exercise of its sole discretion and at its sole expense,
request a re-examination of the existing Licensed Patents by the PTO and the
applicable foreign agencies. Each of the parties hereto shall exercise good
faith and due diligence in their efforts to establish the validity of the
existing Licensed Patents.
3.2 Patent Prosecution and Maintenance. From and after the
----------------------------------
date of this Agreement, the provisions of this Section 3.2 shall control the
prosecution and maintenance of the Licensed Patents. Licensee shall direct and
control (i) the maintenance of Patent '292 and the re-examination of Patent '292
described in Section 3.1 hereof; (ii) the preparation, filing and prosecution of
all other domestic and foreign patent applications relating to Licensed
Technology (including any interferences and foreign oppositions); and (iii) the
maintenance of any patents issuing therefrom. Licensee shall select the patent
attorney, and the fees and expenses incurred by Licensee with respect to
services performed by such patent counsel and any filing or other fees shall be
paid as set forth below in Section 3.4. Licensor shall assist Licensee and
patent counsel retained by Licensee as necessary to accomplish the patent
processes described hereunder. Licensor shall sign all documents which are
reasonably necessary to enable Licensee to prosecute and maintain all patent
matters. Licensee shall use good faith and due diligence in determining
-8-
which foreign countries, in addition to the U.S.A., in which to file for and
maintain patent rights, depending on the commercial benefits Licensee can
reasonably anticipate in each country. In as much as Licensee is paying the
patent costs, the ultimate decision as to all of these patent prosecution and
maintenance matters shall be made by Licensee.
3.3 Information to Licensor. Licensee shall keep Licensor
-----------------------
informed with regard to the patent application, re-examination and maintenance
processes. Licensee shall deliver to Licensor copies of all patent applications,
amendments, related correspondence, and other related matters.
3.4 Patent Costs. The parties hereto agree that the exclusive
------------
license granted hereunder is in part in consideration for Licensee's assumption
of patent costs and expenses as described herein. Licensee shall pay for all
expenses incurred by Licensee pursuant to Sections 3.1 and 3.2 hereof, in
addition to patent costs paid by Licensee as set forth in Section 2.2 hereof.
3.5 Ownership. Patent '292 and the patent applications filed
---------
and the patents obtained by Licensee pursuant to Section 3.2 hereof shall be
owned solely by Licensor, and included in the exclusive license granted
hereunder.
3.6 Infringement Actions.
--------------------
3.6.1 Prosecution and Defense of Infringements. Licensee
----------------------------------------
shall have the right but not the obligation to prosecute any and all
infringements of any patent licensed hereunder and to defend all charges of
infringement arising as a result of the exercise by Licensee, its Affiliates or
sublicensees of the rights granted hereunder. Licensee may enter into
settlements, stipulated judgments or other arrangements respecting such
infringement, at its own expense. Licensor shall permit any action to be brought
in his name if required by law, and Licensee shall hold Licensor harmless from
any costs, expenses of liability respecting all such infringements or charges of
infringement, except such infringements as shall result from any breach of
warranty made by Licensor herein. Licensor agrees to provide all necessary
assistance of a technical nature which Licensee may require in any litigation
arising with respect to the Licensed Technology. In the event Licensee elects
not to prosecute any infringement, Licensee shall notify Licensor in writing
promptly and Licensor shall have the right to prosecute such infringement on his
own behalf. If Licensee elects to prosecute an infringement, then Licensor shall
not be entitled to do so.
3.6.2 Allocation of Recovery. Any damages or other
----------------------
recovery from an infringement action undertaken by Licensee pursuant to Section
3.6.1 shall be retained by Licensee as its exclusive property; but any such
recovery, net of
-9-
Licensee's costs of litigation, shall be treated as "Net Sales" and Licensee
shall pay a royalty thereon pursuant to Section 2.3.1 above. If Licensee elects
to not prosecute an infringement, and Licensor does prosecute said infringement,
then Licensee shall retain any recovery received from said prosecution.
4. Obligations Related to Commercialization.
----------------------------------------
4.1 Commercial Development Obligation. In order to
---------------------------------
maintain Licensee's exclusive license rights granted hereunder in force,
Licensee shall use reasonable efforts and due diligence to develop the Licensed
Technology into commercially viable Licensed Products, as promptly as is
reasonably and commercially feasible, and thereafter to produce and sell
reasonable quantities of Licensed Products. Licensee shall keep Licensor
generally informed as to Licensee's progress in such development, production and
sale, including its efforts, if any, to sublicense Licensed Technology.
4.2 Milestone. If Licensee has not, by July 1, 1998,
---------
pursued reasonable efforts and due diligence to develop the Licensed Technology
into commercially viable Licensed Products, such that there is a reasonable
probability of Net Sales forthcoming, then Licensor may require Licensee to pay
to Licensor a one-time payment of Fifty Thousand Dollars ($50,000) as a
condition to retaining the exclusivity of the license granted hereunder in
force. If said payment is so required and not paid, then Licensee's rights
under this Agreement shall become non-exclusive and no minimum royalties shall
thereafter be payable. If Licensor concludes that Licensee has failed to pursue
said reasonable efforts and due diligence, then Licensor shall give written
notice of said conclusion to Licensee, and Licensee shall have three months
after receipt of said notice to cure the failure. If there is a dispute as to
whether there is a failure or a cure, the dispute shall be resolved by
arbitration pursuant to Section 10.2 below.
4.3 Governmental Approvals and Marketing of Licensed
------------------------------------------------
Products. Licensee shall be responsible for obtaining all necessary governmental
- --------
approvals for the development, production, distribution, sale and use of any
Licensed Product, at Licensee's expense. Licensee shall have sole responsibility
for any warning labels, packaging and instructions as to the use of Licensed
Products and for the quality control for any Licensed Product.
4.4 Product Liability Indemnity. Licensee hereby agrees
---------------------------
to indemnify, defend and hold harmless Licensor from and against any liability
or expense arising from any product liability claim asserted by any party as to
any Licensed Product made or sold by Licensee or its Affiliates and
sublicensees, other than any claim which arises due to a breach by Licensor of
any warranty made herein.
-10-
5. Representations and Warranties. Licensor hereby represents and
------------------------------
warrants that (i) he is the rightful owner of the Licensed Technology, (ii) the
Licensed Technology is not subject to any lien, license, assignment, security
interest or other encumbrances, (iii) he has made full disclosure to Licensee of
all communications with respect to the Licensed Technology with the PTO and any
foreign patent agencies, (iv) he has the power and authority to enter into this
Agreement and grant the license provided for hereunder, and (v) except as
disclosed to Licensee, Licensor has no knowledge that the Licensed Technology
infringes any patents or other intellectual property rights of third parties, or
that any third party is in any way infringing the Licensed Technology covered by
this Agreement.
6. Interests in Intellectual Property Rights.
-----------------------------------------
6.1 Preservation of Title. Licensor shall retain full
---------------------
ownership and title to Licensed Technology, Patent '292 and any other patents
licensed hereunder and shall use his reasonable best efforts to preserve and
maintain such full ownership and title.
6.2 Ownership of Improvements.
-------------------------
6.2.1 Developed by Licensee. Any improvements to
---------------------
Licensed Technology conceived, developed or reduced to practice by Licensee, its
Affiliates or sublicensees or their employees shall remain the sole and
exclusive property of such party, and shall not be included in Licensed
Technology hereunder.
6.2.2 Developed by Licensor. Any improvements to
---------------------
Licensed Technology conceived, developed or reduced to practice by Licensor
during the term of this Agreement shall be included in Licensed Technology and
subject to the exclusive license granted hereunder.
7. Confidentiality and Publication.
-------------------------------
7.1 Treatment of Confidential Information. The parties agree
-------------------------------------
that during the term of this Agreement, and for a period of three (3) years
after this Agreement terminates, a party receiving Confidential Information of
the other party will (i) maintain in confidence such Confidential Information to
the same extent such party maintains its own proprietary industrial information,
(ii) not disclose such Confidential Information to any third party without prior
written consent of the other party and (iii) not use such Confidential
Information for any purpose except those permitted by this Agreement.
7.2 Publications. In order to protect the rights granted to
------------
Licensee hereunder, Licensor shall submit to Licensee copies of proposed
publications of Licensor which contain subject matter relating to intellectual
property licensed hereunder and
-11-
afford Licensee sixty (60) days to review such proposed publications. Upon
timely written request by Licensee, Licensor shall delay any such publication to
facilitate the preparation and filing of a patent application, which delay shall
not exceed ninety (90) days from the date Licensee requests such delay.
8. Termination.
-----------
8.1 Termination Upon Default. Upon the failure of a party to
------------------------
perform any obligation required of it or him to be performed hereunder, and the
failure to cure within thirty (30) days after receipt of written notice from the
other party specifying in reasonable detail the nature of such default, the non-
defaulting party may deliver to the defaulting party written notice of intent to
terminate, such termination to be effective upon the date set forth in such
notice.
Such termination rights shall be in addition to and not in
substitution for any other remedies that may be available to the non-defaulting
party. Termination pursuant to this Section 8.1 shall not relieve the defaulting
party from liability and damages to the other party for breach of this
Agreement. Waiver by either party of a single default or a succession of
defaults shall not deprive such party of any right to terminate this Agreement
arising by reason of any subsequent default.
8.2 Transfer Upon Bankruptcy or Insolvency. In the event of
--------------------------------------
the bankruptcy or insolvency of Licensee, this Agreement and the rights granted
to Licensee hereunder may be transferred by Licensee or any trustee appointed
for the estate of Licensee, provided such transferee shall agree in writing to
comply with all of the terms and conditions set forth herein and to cure any
financial defaults by Licensee.
8.3 Rights Upon Expiration. Neither party shall have any
----------------------
further rights or obligations upon the expiration of this Agreement other than
the obligation of Licensee to make any and all reports and payments for the
final quarter period. Provided, however, that upon such expiration, each party
shall be required to continue to abide by its non-disclosure obligations as
described in Section 7.1, and Licensee shall continue to abide by its obligation
to indemnify Licensor as described in Section 4.4 for products sold prior to the
termination.
8.4 Rights Upon Termination. Notwithstanding any other
-----------------------
provision of this Agreement, upon any termination of this Agreement prior to the
regularly scheduled expiration date of this Agreement, the license granted
hereunder shall terminate. Except as otherwise provided in Section 8.5 of this
Agreement with respect to work-in-progress, upon such termination, Licensee
shall have no further right to develop, manufacture or sell any Licensed
Products, or to otherwise use any Licensed Technology. Any such termination
shall not relieve either party from any obligations accrued to the date of such
termination. Upon such
-12-
termination, each party shall be required to abide by its nondisclosure
obligations as described in Section 7.1, and, provided termination was not
initiated by Licensee due to Licensor's breach hereunder, Licensee shall
continue to abide by its obligations to indemnify Licensor as described in
Section 4.4 for products sold prior to the termination.
8.5 Work-in-Progress. Upon any early termination of this
----------------
Agreement and the license granted hereunder, Licensee shall be entitled to
finish any work-in-progress and to sell any completed inventory of Licensed
Products which remain on hand as of the date of termination, so long as Licensee
pays to Licensor the royalties applicable to such sales in accordance with the
terms and conditions as set forth in this Agreement .
9. Binding Upon Successors and Assigns. This Agreement shall be
-----------------------------------
binding upon and inure to the benefit of any successors in interest and assigns
of Licensor and Licensee. Any such successor or assignee shall expressly assume
in writing the performance of all the terms and conditions of this Agreement to
be performed by the assigning party.
10. General Provisions.
------------------
10.1 Independent Contractors. The relationship between
-----------------------
Licensor and Licensee is that of independent contractors. Licensor and Licensee
are not joint venturers, partners, principal and agent, master and servant,
employer or employee, and have no other relationship other than independent
contracting parties. Licensor and Licensee shall have no power to bind or
obligate each other in any manner, other than as is expressly set forth in this
Agreement.
10.2 Arbitration. Any matter or disagreement arising under
-----------
this Agreement shall be submitted for decision to a panel of three neutral
arbitrators with expertise in the subject matter to be arbitrated. One
arbitrator shall be selected by each party and the two arbitrators so selected
shall select the third arbitrator. The arbitration shall be conducted in
accordance with the Rules of the American Arbitration Association. The decision
and award rendered by the arbitrators shall be final and binding. Judgment upon
the award may be entered in any court having jurisdiction thereof. Any
arbitration shall be held in Ann Arbor, Michigan, or such other place as may be
mutually agreed upon in writing by the parties.
10.3 Entire Agreement; Modification. This Agreement sets
------------------------------
forth the entire agreement and understanding between the parties as to the
subject matter hereof. There shall be no amendments or modifications to this
Agreement, except by a written document which is signed by both parties.
-13-
10.4 Governing Law. This Agreement shall be construed and
-------------
enforced in accordance with the laws of the State of Michigan.
10.5 Severability. If any one or more of the provisions of
------------
this Agreement is held to be invalid or unenforceable by a court of competent
jurisdiction, it shall be considered severed from this Agreement and shall not
serve to invalidate the remaining provisions thereof. The parties shall make a
good faith effort to replace any invalid or unenforceable provision with a valid
and enforceable provision such that the objectives contemplated by them when
entering this Agreement may be realize d.
10.6 No Waiver. Any delay in enforcing a party's rights under
---------
this Agreement or any waiver as to a particular default or other matter shall
not constitute a waiver of such party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.
10.7 Attorneys' Fees. In the event of a dispute between the
---------------
parties hereto or in the event of any default hereunder, the party prevailing in
the resolution of any such dispute or default shall be entitled to recover its
reasonable attorneys' fees and other costs incurred in connection with resolving
such dispute or default.
10.8 Notices. Any notices required by this Agreement shall be
-------
in writing, shall refer to this Agreement and shall be sent by registered or
certified mail, postage prepaid, or by telefax, telex or cable, charges prepaid,
or by overnight courier, charges prepaid to the addresses set forth below unless
subsequently changed by written notice to the other party:
For Licensee: Aastrom Biosciences, Inc.
Post Office Box 376
Ann Arbor, Michigan 48106
Attention: R. Douglas Armstrong, Ph.D.
President/CEO
Fax No.: (313) 665-0485
For Licensor: Joseph G. Cremonese
227 Maple Drive
Greensburg, Pennsylvania 15601
Fax No.: (412) 838-7780
Notice shall be deemed delivered upon the earlier of (i) when received, (ii)
three (3) days after deposit into the mail, or (iii) the date notice is sent via
telefax, telex or cable,
-14-
(iv) the day immediately following delivery to overnight courier (except Sunday
and holidays).
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date set forth above.
LICENSOR: LICENSEE:
AASTROM BIOSCIENCES, INC.
/s/ Joseph G. Cremonese By: /s/ R. Douglas Armstrong
- -------------------------- ----------------------------
Joseph G. Cremonese R. Douglas Armstrong, Ph.D.
7-17-92 President/CEO
8/5/92
-15-
July 7, 1993
Mr. Joseph G. Cremonese
227 Maple Drive
Greensburg, PA 15601
Dear Joe,
In follow-up to our discussion, this letter is to formalize our understanding
for extension of our license agreement. More specifically, we mutually agree
to allow AASTROM a 1-month extension to initiate a re-examination request for
Patent #4,839,292, as per sections 2.2 and 3.1 of our July 17, 1992, License
Agreement. All other provisions of the License Agreement are unmodified.
To represent your agreement with this, please sign as indicated below.
Thank you.
Sincerely,
/s/ R. DOUGLAS ARMSTRONG
- ---------------------------
R. Douglas Armstrong, Ph.D.
President and CEO
RDA:pp
I agree to the terms as indicated above.
/s/ JOSEPH G. CREMONESE 7/8/93
- ---------------------------------
Joseph G. Cremonese
EXHIBIT 10.12
COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT
(Instrument)
TABLE OF CONTENTS
-----------------
Page
----
1. Responsibilities of Aastrom.............................................. 2
1.1 Project Management................................................. 2
1.2 Specifications..................................................... 2
2. Responsibilities of SeaMED............................................... 2
2.1 Design Collaboration............................................... 2
2.2 Delivery of Preproduction Units.................................... 3
2.3 Maintenance of Adequate Facilities and Manufacturing Practices..... 4
2.4 No Subcontracting.................................................. 5
2.5 Inventory and Insurance............................................ 5
2.6 Transit............................................................ 5
2.7 Financial Condition................................................ 5
3. Acceptance Procedures.................................................... 5
4. Compensation............................................................. 6
5. Warranties............................................................... 6
5.1 SeaMED's Warranty.................................................. 6
5.2 Limitation on Liability............................................ 6
5.3 Disclaimer of Warranties........................................... 7
5.4 Aastrom's Warranty................................................. 7
6. Phase II Manufacture..................................................... 7
6.1 Manufacturing Agreement............................................ 7
6.2 Phase II Manufacturing Drawings and Process........................ 9
6.3 Transition Cooperation............................................. 9
6.4 Compensation....................................................... 9
7. Records; Inspection...................................................... 9
8. Indemnification.......................................................... 9
8.1 By SeaMED.......................................................... 9
8.2 By Aastrom......................................................... 10
8.3 Patent Infringement................................................ 10
8.4 Control of Action.................................................. 10
8.5 Insurance.......................................................... 10
9. Exclusivity.............................................................. 11
9.1 Continuing Prohibition............................................. 11
-i-
9.2 No Similar Product................................................ 11
9.3 No Use of Aastrom's Proprietary Information....................... 11
10. Proprietary Information.................................................. 12
10.1 Aastrom's Property; Use of Property by SeaMED..................... 12
10.2 Inventions........................................................ 12
10.3 Nondisclosure..................................................... 12
10.4 Confidentiality................................................... 12
11. Term..................................................................... 13
12. Default and Termination.................................................. 13
12.1 Breach............................................................ 13
12.2 Remedy............................................................ 14
13. Miscellaneous............................................................ 14
13.1 Independent Contractors........................................... 14
13.2 Causes Beyond Control............................................. 14
13.3 Successors and Assigns............................................ 14
13.4 Applicable Law.................................................... 15
13.5 Severability...................................................... 15
13.6 Entire Agreement; Modification and Waiver......................... 15
13.7 Counterparts...................................................... 15
13.8 Dispute Resolution................................................ 15
13.9 Notices........................................................... 15
EXHIBITS
A General Description of the System and the Instrument
B Specifications and Functional Requirements for the Instrument
C Time and Quantity Schedule - Preproduction Units
C1 Pricing for Precommercial Units
D Manufacturing Drawings for the Instrument
E Compensation Schedule for Design Work and Manufacturing
Preproduction Units
F Summary of Manufacturing Agreement for Phase II
-ii-
COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT
(Instrument)
This Collaborative Product Development Agreement (the "Agreement") is
entered into as of May 10, 1994, by and between Aastrom Biosciences, Inc., a
------
Michigan corporation ("Aastrom"), and SeaMED Corporation, a Delaware corporation
("SeaMED").
A. Aastrom is in the final stages of research and development for a
proprietary Cell Expansion System which is used for stem cell growth (the
"System"). The System includes an instrument or instruments (the "Instrument")
and a disposable biochamber cartridge. Aastrom has completed a working
prototype model of the System; and Aastrom now needs to complete the design of
the Instrument and to obtain (i) pre-production models defined as pre-revision
Rev. A specification units (hereinafter called "preproduction units") of the
Instrument for laboratory and clinical evaluation, and (ii) pre-commercial
models, defined as units made once the release occurs for Rev. A specification
units (hereinafter called "precommercial units") of the Instrument for
laboratory and clinical evaluation. Attached hereto as Exhibit A is a general
description of the System, including the Instrument.
B. SeaMED has expertise and experience in the development and manufacture
of medical instruments which are somewhat similar to the Instrument, and SeaMED
is prepared to collaborate with Aastrom for completing the necessary design work
on the Instrument to enable SeaMED to produce preproduction units and
precommercial units of the Instrument for laboratory and clinical evaluation as
outlined in the SeaMED Project Plan, Drawing Number 908180, draft dated 2-2-94.
C. As further described in this Agreement, (i) the design and manufacture
of preproduction units and precommercial units of the Instrument shall be
referred to as Phase I, and (ii) the subsequent manufacture of commercial units
(defined as any unit that is sold) of the Instrument shall be referred to as
Phase II.
D. Pursuant to the terms of this Agreement, during Phase I SeaMED shall
(i) collaborate with and assist Aastrom to design the preproduction units and
precommercial units of the Instrument, and (ii) manufacture the preproduction
units and precommercial units of the Instrument. At least six months prior to
the expected commencement of Phase II, Aastrom and SeaMED shall pursue good
faith negotiations for entering into a Manufacturing Agreement for SeaMED to
manufacture the commercial units of the Instrument, as further described in
1
Section 6 of this Agreement. Because of foreign governmental approval
requirements, it is possible that there still will be some preproduction units
and precommercial units being made during Phase I, while at the same time there
will be some commercial units being made during Phase II.
E. Aastrom has contracted with Roecker Design Group, and Aastrom may also
contract with other design specialists for assistance with specified aspects of
the System and/or Instrument (collectively called the "Other Design
Contractors").
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Responsibilities of Aastrom.
---------------------------
1.1 Project Management. Aastrom shall be responsible for overall
------------------
project management relating to the development of the Instrument.
1.2 Specifications. Aastrom shall collaborate with SeaMED and the
--------------
Other Design Contractors on completing the design work for the Instrument. With
assistance from SeaMED as more fully described in Section 2 below, Aastrom shall
develop the final specifications and functional requirements for the
preproduction units and precommercial units (including applicable test criteria)
(the "Specifications"). Upon completion of the Specifications, Aastrom shall
promptly provide SeaMED with a copy of the Specifications, and the
Specifications shall be incorporated herein as Exhibit B hereto.
2. Responsibilities of SeaMED.
--------------------------
2.1 Design Collaboration. SeaMED shall collaborate with Aastrom
--------------------
and the Other Design Contractors on completing the design work for the
Instrument. The time schedule for completing such design work shall be as set
forth in Exhibit C. Without limiting the foregoing, SeaMED shall:
(a) Assist Aastrom with respect to planning for all
manufacturing issues that are likely to arise in connection with the design work
and development of the Instrument, including issues relating to the Phase I and
Phase II manufacturing process development and validation, component sourcing,
and the creation of Device Master record documentation requirements;
(b) Review the Instrument software design and documentation,
and provide third party quality assurance, including specification review, code
audits, verification and validation testing, to ensure to the best of
2
SeaMED's ability that they are in compliance with all applicable guidelines of
the U.S. Food and Drug Administration;
(c) Assist Aastrom to establish a reliability goal for the Instrument,
calculate the reliability of the preproduction units and precommercial units at
certain established review points during the design and development of the
Instrument, and perform demonstration tests on pilot production units produced
by SeaMED; and
(d) Determine all necessary requirements for certification of the
Instrument by UL, CSA, IEC, TUV and EC, and to review the design of the
Instrument at various key points during the product development stage to
determine compliance with such requirements, and coordinate the testing of the
Instrument for compliance with such requirements and the submission of the
Instrument for certification by each of such entities.
(e) Prepare working drawings for manufacturing and testing the
preproduction units and the precommercial units of the Instrument, including
without limitation, (i) specifications for component parts to be acquired from
specified vendors, (ii) drawings and specifications for component parts, (iii)
test and acceptance procedures and criteria, (iv) subassembly specifications,
drawings and requirements, (v) costed bill of materials, and (vi) product
specific manufacturing procedures, device master record, routing and processes
(collectively called the "Manufacturing Drawings"), which Manufacturing Drawings
shall be subject to the prior written approval of Aastrom, shall be owned by
Aastrom, and shall ultimately be incorporated herein as Exhibit D. If said
manufacturing drawings reference general policies and procedures of SeaMED, such
as SeaMED's Quality System, then such general policies and procedures shall
remain the property of SeaMED, but Aastrom shall be given a copy of the same.
As modifications are made from time to time to the Manufacturing Drawings by
mutual agreement, SeaMED shall furnish to Aastrom an updated copy thereof.
(f) To the extent required for submittal to the U.S. Food and Drug
Administration ("FDA") (or comparable foreign agencies) for Aastrom's IDE and/or
PMA (or comparable foreign approvals), prepare a detailed description of
SeaMED's manufacturing methods, processes, procedures and facility applicable to
Aastrom's Instrument.
2.2 Delivery of Preproduction Units. Following Aastrom's approval of the
-------------------------------
Manufacturing Drawings prepared by SeaMED, in accordance with the time and
quantity schedule specified in Exhibit C attached hereto, and the pricing
specified in Exhibit E, SeaMED shall manufacture and deliver to Aastrom at its
Ann Arbor, Michigan facility, a number of the preproduction units of the
Instrument, in compliance with the Specifications and the Manufacturing
Drawings,
3
for use in clinical tests of the System. The exact number of said preproduction
units, and any variations thereof, shall be as specified by Aastrom in a
purchase order, subject to SeaMED's reasonable approval, which approval will not
be withheld unreasonably. As Aastrom's clinical tests of the System proceed,
and depending on the outcome of those tests, Aastrom may place purchase orders
for additional units of the preproduction unit; and SeaMED shall manufacture and
sell said additional preproduction units on the same terms and conditions as set
forth herein. Provided, however, the maximum number of preproduction units
shall be as specified in Exhibit C.
2.2.1 Delivery of Precommercial Units. Once Aastrom has released
-------------------------------
for manufacture the Rev. A specifications for the precommercial units, SeaMED
shall manufacture and deliver to Aastrom at its Ann Arbor, Michigan facility, a
number of the precommercial units of the Instrument, in compliance with the Rev.
A Specifications and the related manufacturing Drawings, for use in clinical
tests of the System. The exact number of said precommercial units shall be
specified by Aastrom in a purchase order, subject to SeaMED's reasonable
approval, which approval will not be withheld unreasonably. The purchase and
sale of the precommercial units shall be in accordance with the terms specified
on Exhibit C-1 attached hereto. Delivery of precommercial units will be within
twenty (20) weeks after SeaMED receives a firm purchase order for the specified
number of units. A specific schedule will be determined at the time of the
purchase order placement.
2.3 Maintenance of Adequate Facilities and Manufacturing
----------------------------------------------------
Practices. SeaMED shall maintain adequate personnel and facilities to perform
- ---------
its obligations under this Agreement. SeaMED shall assemble all of the
preproduction units and precommercial units in an environment where good
manufacturing practices are followed. Inasmuch as SeaMED's FDA facility
registration and inspection record are extremely important to Aastrom's ability
to obtain prompt FDA approval for Aastrom's System, SeaMED hereby agrees to use
its best efforts to maintain in good standing all appropriate FDA facility
registrations and inspection records. SeaMED shall immediately report to
Aastrom in writing any adverse events, circumstances, or potential problems
relating to SeaMED's FDA registrations and inspections that could adversely
effect Aastrom's product or the System approval. SeaMed shall furnish to
Aastrom a copy of the FDA facility registrations and inspection reports
applicable as of the date of this Agreement, plus each subsequent FDA
registration or inspection report during the term of this Agreement. SeaMED
shall allow Aastrom and its agent to review and inspect SeaMED's facilities, and
FDA compliance files, and correspondence to and from the FDA regarding
inspections, registrations, and audits that pertain directly to Aastrom's
product or the System's regulatory submission. SeaMED will inform Aastrom of
any negative findings regarding other products (although the product and company
will remain confidential) or processes that may have an impact on
4
Aastrom's product or regulatory submission. To the extent that European
Economic Community standards apply to SeaMED's facility and manufacturing
practices for units to be used in Europe, SeaMED will also comply with said
standards.
2.4 No Subcontracting. No part of SeaMED's obligations under
-----------------
this Agreement shall be subcontracted by SeaMED that would impact Aastrom's PMA
approval, without the prior written approval of Aastrom.
2.5 Inventory and Insurance. All inventory of components and
-----------------------
materials purchased by SeaMED to make the Instrument shall be owned by SeaMED
and shall be insured against risk of loss by SeaMED. Any components and
materials purchased by Aastrom and delivered to SeaMED for SeaMED to use to make
the Products shall be covered by SeaMED's insurance policy for risk of loss
while said items remain in SeaMED's facility, with Aastrom being the loss payee
therefor.
2.6 Transit. SeaMED shall arrange for shipment of the Instrument by
-------
a common carrier approved by Aastrom, to a destination specified by Aastrom.
Title and risk of loss to the Instrument shall pass from SeaMED to Aastrom when
the Instruments are delivered to a common carrier for shipment to Aastrom's
designation.
2.7 Financial Condition. Each party shall furnish to the other
-------------------
party a copy of the party's quarterly financial statements and a copy of the
party's annual financial statements, within forty-five (45) days after each
quarter-end and ninety (90) days after the party's fiscal year-end. Each party
shall give written notification to the other party of any material adverse
financial condition affecting the party, including without limitation: (i) the
filing of a significant lawsuit against the party, (ii) the lack of cash funds
available to pay all obligations of the party as they become due, (iii) the lack
of resources available to enable the party to fully and promptly perform its
obligations under this Agreement on schedule, or (iv) any other condition which
may jeopardize or impair the full and prompt performance by the party of its
obligations under this Agreement. Said notification shall be given within five
(5) days after the occurrence or realization of said adverse condition.
3. Acceptance Procedures. Delivery of each of the preproduction units
---------------------
and precommercial units shall be deemed accepted by Aastrom unless SeaMED is
notified in writing of Aastrom's rejection of such delivery within thirty (30)
days after the delivery date due to a failure thereof to comply with the
Specifications and/or the Manufacturing Drawings, including the test criteria.
In the event SeaMED receives such notice, SeaMED shall diligently attempt to
promptly resolve any such failure, and to deliver a unit which conforms to the
5
Specifications and the Manufacturing Drawings. In the event SeaMED cannot
resolve any such failure and deliver a unit that conforms to the Specifications
and the Manufacturing Drawings within thirty (30) days of receipt of such
notice, Aastrom may terminate this Agreement pursuant to Section 12 below.
4. Compensation. Aastrom shall compensate SeaMED for SeaMED's
------------
design work and preproduction unit manufacture on a "time and materials" basis,
as further described on Exhibit E. Aastrom shall compensate SeaMED for the
precommercial units manufactured pursuant to the maximum pricing formula as
specified in Exhibit C-1 attached hereto, subject to the definitions and pricing
schedule considerations in Section 4.1 of Exhibit F attached hereto. SeaMED
shall submit to Aastrom a monthly invoice for said design work, and SeaMED shall
invoice for units manufactured upon shipment of the units, and each invoice
shall be accompanied by such supporting details as Aastrom may reasonably
request. Aastrom shall pay said invoice within thirty (30) days after the
invoice and supporting details are received by Aastrom.
5. Warranties.
----------
5.1 SeaMED's Warranty. SeaMED warrants that each of the units
-----------------
(i) shall be manufactured in full compliance with the Specifications and the
Manufacturing Drawings, (ii) shall be free from defects in material and
workmanship, and (iii) shall be free from defects in design as to those specific
elements for which SeaMED was primarily responsible for the design. As to
elements of the unit for which SeaMED was not primarily responsible for the
---
design, SeaMED is not making any warranty as to design. SeaMED further warrants
that the manufacture, assembly and delivery of the units hereunder shall be (i)
in compliance with all applicable federal, state and local laws, rules,
regulations and executive orders, including without limitation, all of the
employee compensation, health and safety and environmental laws applicable to
SeaMED's facility, and all U.S. customs laws and regulations, and U.S. Food and
Drug Administration ("FDA") regulations, and applicable foreign regulations, and
(ii) performed in a professional, workmanlike manner in accordance with
prevailing industry standards. SeaMED understands that Aastrom may sell the
units to hospital customers or other users. SeaMED agrees that the foregoing
warranties are for the benefit of Aastrom and any ultimate end-user of the
units.
5.2 Limitation on Liability. SeaMED shall either repair or
-----------------------
replace or provide to Aastrom full credit for the purchase price of any unit
which is defective due to SeaMED's failure to comply with the foregoing
warranty. Any such warranty repairs or replacements shall be completed within
thirty (30) days after the date on which any defective unit is delivered to
SeaMED. All shipping and other costs incurred in connection with the repair or
replacement of any
6
defective unit shall be borne by and for the account of SeaMED. Except as
specified in Section 8, SeaMED shall have no liability to Aastrom for any
consequential damages or loss, including but not limited to loss of profits or
goodwill, additional expenses incurred, or other damages.
5.3 Disclaimer of Warranties.
------------------------
EXCEPT FOR THE WARRANTIES SET FORTH IN THIS SECTION, SEAMED DISCLAIMS ANY
AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
5.4 Aastrom's Warranty. Aastrom warrants that all elements of
------------------
the Instrument units for which SeaMED was not primarily responsible for the
design shall be free from defects in design.
6. Phase II Manufacture.
--------------------
6.1 Manufacturing Agreement. Subject to satisfying the
-----------------------
prerequisites listed below, Aastrom and SeaMED will enter into a Manufacturing
Agreement for Phase II manufacture of commercial units of the Instrument in
accordance with the terms set forth in Exhibit F attached hereto. At the option
and discretion of Aastrom, Aastrom may waive any one or more of said
prerequisites. Said prerequisites are:
(a) SeaMED has performed its obligations during Phase I in a
diligent, prompt and effective manner, to the reasonable satisfaction of
Aastrom, without any defaults by SeaMED.
(b) SeaMED has manufactured the preproduction units and
precommercial units of the Instrument during Phase I in full compliance with the
Manufacturing Drawings and the Specifications, and SeaMED has delivered the
quantities of same on a timely schedule as ordered, and SeaMED has complied
fully with its obligations under this Agreement.
(c) SeaMED has successfully controlled the costs to manufacture
the preproduction units and precommercial units, on a reasonable and cost
effective basis.
(d) SeaMED has adequate facilities, equipment, personnel,
governmental approvals, and manufacturing capacity to manufacture the quantities
7
of the commercial units of the Instruments needed by Aastrom during Phase II;
and SeaMED shall furnish to Aastrom reasonable evidence to verify the same.
(e) SeaMED's facility has received all necessary approvals from
the FDA and from the European Community (or other necessary foreign agencies) to
manufacture the commercial units of the Instrument.
(f) SeaMED's financial condition is sound and stable, such that
there are no reasonable doubts as to SeaMED's financial ability to remain in
business and perform its obligations contemplated under the Manufacturing
Agreement, and SeaMED shall furnish to Aastrom reasonable evidence to verify the
same.
(g) SeaMED is able and willing to manufacture the commercial
units of the Instrument on a cost effective and efficient basis, on a timely
production schedule, and on a high quality basis, pursuant to mutually approved
pricing and delivery schedules, all in accordance with the Manufacturing
Agreement, and SeaMED shall furnish to Aastrom reasonable evidence to verify the
same.
(h) SeaMED maintains the insurance coverage as specified in the
Manufacturing Agreement and SeaMED shall furnish to Aastrom reasonable evidence
to verify the same.
(i) Aastrom is satisfied with the results of its clinical trials
and the market potential for the Instrument, such that Aastrom is prepared to
proceed with Phase II and the manufacture and sale of commercial units.
(j) SeaMED approves any modifications to the Phase II
Manufacturing Drawings for the Instrument which Aastrom determines to be needed.
(k) SeaMED approves the quantities and delivery schedule
determined by Aastrom to be needed to meet the market needs for the commercial
units of the Instrument.
If Aastrom concludes that the foregoing prerequisites are satisfied,
then Aastrom and SeaMED will enter into a Manufacturing Agreement in accordance
with the terms set forth in Exhibit F. Provided however, SeaMED may decline to
enter into such a Manufacturing Agreement only if one or more of the following
circumstances occurs:
(l) Aastrom has defaulted on its obligations under this
Agreement.
8
6.2 Phase II Manufacturing Drawings and Process. At least six (6)
-------------------------------------------
months prior to the expected commencement of Phase II, (i) SeaMED shall prepare
and deliver to Aastrom any recommended revisions to the Manufacturing Drawings
for the Instrument that may be needed for efficient and cost-effective
manufacturing and testing of the commercial units of the Instrument, and (ii)
SeaMED shall prepare and deliver to Aastrom a complete and detailed written
package of documents which fully describes the manufacturing process for the
manufacturing and testing of the commercial units of the Instrument, including
without limitation, all items referenced in Sections 2.1(e) as the Manufacturing
Drawings and 2.1(f). The foregoing shall hereinafter collectively be referred
to as the "Phase II Manufacturing Drawings and Process." As modifications are
made from time to time to said Phase II Manufacturing Drawings and Process by
mutual agreement, SeaMED shall furnish to Aastrom an updated copy thereof.
6.3 Transition Cooperation. If this Agreement is terminated,
----------------------
SeaMED shall provide to Aastrom, or its designee, all necessary Instrument
information, documentation, equipment lists, material lists, traceable
recordings, tooling, suppliers, Phase II Manufacturing Drawings and Process, and
description of manufacturing methods and processes (including device master
list) required by governmental agencies, to enable the continued manufacture of
the Instrument.
6.4 Compensation. If this Agreement is terminated by SeaMED,
------------
then the transition services specified in Sections 6.2 and 6.3 shall be provided
by SeaMED, without charge to Aastrom. If Aastrom terminates this Agreement,
then Aastrom shall compensate SeaMED for SeaMED's transition services specified
in Section 6.2 and 6.3 above in accordance with the Compensation Schedule
attached hereto as Exhibit E.
7. Records; Inspection. SeaMED shall keep accurate and complete
-------------------
records with respect to its design work and manufacture of the Instrument
preproduction units and precommercial units, including all records of time
worked and other costs. At Aastrom's request, SeaMED shall allow Aastrom or its
designee to inspect and audit such records to verify actual costs and
reasonableness of allocation methodologies. Additionally, at Aastrom's request,
SeaMED shall allow Aastrom to inspect the facility where the Instrument units
are manufactured.
8. Indemnification.
---------------
8.1 By SeaMED. SeaMED shall indemnify, defend and hold harmless
---------
Aastrom and its officers, directors, employees and agents for any loss, claim,
cost or damage arising out of any claim or action for bodily injury based on the
use of any Instrument preproduction units and precommercial units to the extent
such loss, claim, cost or damage results, directly or indirectly, (i) from a
9
breach by SeaMED of its warranties as set forth in this Agreement, or (ii) from
any negligent, willful or intentional acts by SeaMED.
8.2 By Aastrom. Aastrom shall indemnify, defend and hold harmless
----------
SeaMED and its officers, directors, employees and agents for any loss, claim,
cost or damage arising out of any claim or action for bodily injury based on the
use of any Instrument preproduction units and precommercial units to the extent
such loss, claim, cost or damage does not result from SeaMED's acts described in
Section 8.1 above, but rather results, directly or indirectly, (i) from the
negligent, willful or intentional acts of Aastrom or its agents (other than
SeaMED), (ii) from a breach by Aastrom of its warranties with respect to the
Instrument preproduction unit, or (iii) from any product liability claim related
to or arising out of the Instrument preproduction units and precommercial units,
other than those claims described in Section 8.1 above.
8.3 Patent Infringement. Aastrom shall indemnify and hold SeaMED
-------------------
harmless from any loss, damage, or cost (including reasonable attorneys' fees
and expenses) arising from any claim that the Instrument or its operation
infringes a United States patent, trademark, copyright, or other proprietary
right, including trade secrets. SeaMED shall indemnify and hold Aastrom harmless
from any loss, damage, or cost (including reasonable attorneys' fees and
expenses) arising from any claim that SeaMED's manufacturing processes or
methods infringes a United States patent or other proprietary right, including
trade secrets.
8.4 Control of Action. In the event any lawsuit for which indemnity
-----------------
is applicable, Aastrom will control the defense and selection of defense
counsel, and SeaMED will be entitled to participate therein by selecting co-
counsel reasonably satisfactory to Aastrom. Aastrom shall have the right to
direct and control such defense, to settle any dispute, and SeaMED shall be
responsible for payment of any settlement to which SeaMED has consented, such
consent not to be unreasonably withheld. In conducting the defense and
negotiating any settlement, Aastrom's counsel shall give due consideration to
suggestions of SeaMED's co-counsel.
8.5 Insurance. SeaMED agrees to provide and maintain at its sole
---------
expense comprehensive general liability insurance, including product liability
insurance, covering worldwide sales, covering bodily injury and property damage
to third parties for accidents or injuries arising out of the use of the
Instrument preproduction units and precommercial units manufactured by SeaMED.
Said insurance shall have a combined single limit of $2 million per occurrence,
as a total limit of liability for any one occurrence with respect to bodily
injury and property damage, with a deductible of no higher than $25,000, and
with no aggregate annual limit. SeaMED will furnish to Aastrom certificates of
insurance evidencing that such insurance is in effect, and that Aastrom is named
as an additional insured
10
party thereunder. Such certificates shall provide that in the event such
insurance should be materially adversely changed or terminated for any reason,
the insurance company will give Aastrom thirty (30) days' prior written notice
of such change or termination.
9. Exclusivity.
-----------
9.1 Continuing Prohibition. At all times both during and after
----------------------
the term of this Agreement, SeaMED shall not make or sell, or enable others to
make or sell, the Instrument, excepting only for making and selling the
Instrument for Aastrom. Similarly, at all times SeaMED shall not use, or enable
others to use, any of Aastrom's proprietary information as further described in
Section 10 below.
9.2 No Similar Product. (a) During the term of this Agreement,
------------------
and during the term of any similar manufacturing agreement between SeaMED and
Aastrom, and for a period of three (3) years thereafter, SeaMED shall not
participate in the design or development by any party other than Aastrom of any
cell expansion system which uses any technologies which are similar to one or
more of the significant proprietary technologies utilized by the Instrument;
provided, however, SeaMED may continue to perform its existing customer
agreements which are in place as of the date hereof, and SeaMED may manufacture
products that have cell culture applications so long as said products are not
competitive with Aastrom's Instrument and so long as said products do not use
substantially identical subassemblies; (b) During the term of this Agreement,
and during the term of any manufacturing agreement between SeaMED and Aastrom,
SeaMED shall not manufacture, assemble, produce, ship or in any other way make
available for use or distribution, by any party other than Aastrom, any cell
expansion system which uses any technologies which are similar to one or more of
the significant proprietary technologies utilized by the Instrument.
9.3 No Use of Aastrom's Proprietary Information. Even after the
-------------------------------------------
three (3) years specified in Section 9.2(a) above, SeaMED shall not thereafter
render any services or make or sell any product for any other party which
services or products use or arise out of technology developed or owned by
Aastrom or developed by SeaMED on behalf of Aastrom. Such methods or systems
shall include, without limitation, those presently in the course of development
by Aastrom and those which shall be developed by SeaMED and/or Aastrom and/or
the Other Design Contractors in furtherance of this Agreement. SeaMED
acknowledges and agrees that Aastrom has a legitimate business purpose in
precluding SeaMED from divulging or otherwise using any and all information
derived by SeaMED in the course of performing this Agreement, and that Aastrom
intends to use the Instrument and related methods and systems for its own
business purpose and competitive advantage in the marketplace.
11
10. Proprietary Information.
-----------------------
10.1 Aastrom's Property; Use of Property by SeaMED. SeaMED
---------------------------------------------
recognizes the proprietary interest of Aastrom in the techniques, designs,
specifications, drawings and other technical data now existing or developed
during the term of this Agreement relating to the System. SeaMED acknowledges
and agrees that such techniques, designs, specifications, drawings and technical
data relating to the System, whether developed by SeaMED alone, in conjunction
with others, or otherwise, shall be and is the property of Aastrom. SeaMED
shall cooperate fully in communicating to Aastrom or its agents the property
described above. SeaMED hereby waives any and all right, title and interest in
and to such proprietary information. SeaMED shall have the right to use any
technology, information, samples, documents and other proprietary information of
Aastrom provided in connection with the collaboration described herein solely
and exclusively for the purpose of conducting such development and design
efforts related to the Instrument and manufacturing the System for Aastrom and
for no other purpose.
10.2 Inventions. As to any improvement to the Instrument, any
----------
component thereof or any disposable used in connection therewith, which is made
by SeaMED's employees or agents in the course of SeaMED's work for Aastrom, or
as a result thereof, which improvement constitutes a patentable invention,
SeaMED hereby agrees to promptly disclose the same to Aastrom, and SeaMED hereby
agrees to assign to Aastrom, and SeaMED hereby agrees to cause the
inventor/employee to assign to Aastrom, all ownership rights in the invention;
and SeaMED shall cause said inventor/employee to sign appropriate patent
applications prepared at the expense of Aastrom.
10.3 Nondisclosure. SeaMED acknowledges and agrees that Aastrom
-------------
is entitled to prevent Aastrom's competitors from obtaining and utilizing
Aastrom's trade secrets. SeaMED agrees during the term hereof and thereafter to
hold Aastrom's trade secrets and other confidential or proprietary information
in strictest confidence and not to use them for purposes other than performance
hereunder, and not to disclose them or allow them to be disclosed, directly or
indirectly, to any other person or entity, other than to persons engaged by
SeaMED for the purpose of performance hereunder, without Aastrom's prior written
consent. SeaMED acknowledges the confidential nature of its relationship with
Aastrom and of any information relating to the Instrument, Aastrom, or its
distributors, agents, clients or customers which SeaMED may obtain during the
term hereof. SeaMED also agrees to place any persons to whom said information is
disclosed for purposes of performance hereunder under a legal obligation to
treat such information as strictly confidential.
10.4 Confidentiality. The provisions and arrangements made
---------------
under this Agreement are confidential between parties. Each party shall protect
12
confidential information in the same manner it protects its own confidential
materials. Neither party shall make any reference to this Agreement or any
provision hereof in any publicly disseminated literature, printed matter, or
other publicity issued by or for it, except (i) as required by law, (ii) in
connection with a public or private offer or sale of securities, a business
collaboration or transaction, or a governmental or industry regulatory
communication, or (iii) in a fashion and at a time mutually agreed upon by both
parties after the execution of this Agreement. After Aastrom has sold an
Instrument in the ordinary course of business, SeaMED may add Aastrom to
SeaMED's list of customers and may show external product photographs for
marketing purposes.
11. Term. The term of this Agreement shall commence on the date
----
first written above and shall continue in full force and effect until terminated
as set forth herein. Either party may terminate this Agreement without cause
upon at least six (6) months' prior written notice. Upon any termination of
this Agreement, (i) both parties shall fully perform all of their obligations
accruing up through the date of termination and (ii) SeaMED will immediately
return to Aastrom all tools and tooling, components, work-in-process,
preproduction units, and any other items which have been or will be paid for by
Aastrom, plus any information, Manufacturing Drawings, description of
manufacturing methods and processes required by governmental agencies, and all
other items related to the Instrument. Additionally, to the extent applicable,
the obligations under Sections 5, 7, 8, 9, 10 and 13 shall survive any
termination of this Agreement for a period of ten (10) years after the
termination of this Agreement.
12. Default and Termination.
-----------------------
12.1 Breach. The occurrence of any one or more of the
------
following events shall constitute an event of default hereunder, and upon the
expiration of any applicable time period for a cure, shall constitute a breach
of this Agreement, giving rise to the rights identified in Section 12.2 hereof:
(a) If Aastrom shall default hereunder in the payment of funds
when due and such default continues for a period of thirty (30) days after
written notice thereof;
(b) Subject to subsections (d) and (e) below, if either party
fails to faithfully perform or observe any agreement or condition to be
performed by such party (including without limitation, the delivery obligations
set forth on Exhibit C), and if such default continues for a period of thirty
(30) days after written notice thereof, specifying the nature of such default;
(c) If any proceeding is commenced by or for either party under
any of the bankruptcy laws, or if either party is adjudged insolvent by any
court,
13
makes an assignment for the benefit of creditors, or enters into a general
extension agreement with creditors;
(d) If SeaMED shall breach its obligation to timely repair any
defective Instrument preproduction unit pursuant to Section 3; or
(e) If SeaMED shall breach its obligations of exclusivity or
confidentiality set forth in Sections 9 or 10 hereof.
12.2 Remedy. In addition to all rights and remedies provided
------
under law, the nondefaulting party shall have the right, in the event of
default, to terminate this Agreement and any obligations imposed on such
nondefaulting party hereunder, provided, however, that, to the extent
applicable, the obligations under Sections 5, 7, 8, 9, 10 and 13 shall survive
any termination of this Agreement.
13. Miscellaneous.
-------------
13.1 Independent Contractors. The relationship between Aastrom
-----------------------
and SeaMED hereunder shall be that of independent contractors, and nothing in
this Agreement shall be deemed to constitute a joint venture, partnership,
agency or employer/employee arrangement between the parties. Neither party
shall have any authority or power to bind the other party or to contract in the
name of, or make any representations or warranties, express or implied, on
behalf of the other party, or otherwise create any liability against the other
party in any way for any purpose.
13.2 Causes Beyond Control. The parties hereto shall not be
---------------------
responsible for any loss or breach due to delay in delivery or performance
hereunder caused by governmental regulations, controls or directions, outbreak
of a state of emergency, hostilities, civil commotion, riots, epidemics, acts of
God, other natural casualties, fires, strikes, walkouts or other similar cause
or causes beyond the control of the parties. In the event that any party shall
be delayed in, or prevented from, performing its obligations under this
Agreement as a result of any of the foregoing, such party shall promptly notify
the other party of such delay or cessation in performance. In the event that
such party is unable to resume performance hereunder within sixty (60) days of
the date on which its performance was suspended, the other party shall have the
right to terminate this Agreement upon ten (10) days prior written notice.
13.3 Successors and Assigns. The rights and remedies of Aastrom
----------------------
under this Agreement shall inure to the benefit of the successors, assigns and
transferees of Aastrom. SeaMED shall have no right to assign, transfer or
otherwise dispose of its rights under this Agreement or to assign the burdens
hereof, without the prior written consent of Aastrom.
14
13.4 Applicable Law. The construction of this Agreement, and the
--------------
rights and liabilities of the parties hereto, shall be governed by the laws of
the State of Michigan.
13.5 Severability. Each term, condition or provision of this
------------
Agreement shall be viewed as separate and distinct, and in the event that any
such term, condition or provision shall be held by a court of competent
jurisdiction to be invalid, the remaining provisions shall continue in full
force and effect.
13.6 Entire Agreement; Modification and Waiver. This Agreement
-----------------------------------------
contains the entire agreement and understanding between the parties and
supersedes all prior agreements and understandings between them relating to the
subject matter hereof. This Agreement may not be amended or modified except by
an instrument in writing, signed by duly authorized representatives of both
parties. The waiver, express or implied, by any party of any right hereunder or
of any failure to perform or breach hereof by any other party shall not be
deemed to constitute a waiver of any other right hereunder or of any claim in
respect of any other failure to perform or breach.
13.7 Counterparts. This Agreement may be executed in
------------
counterparts all of which together shall constitute one and the same instrument.
13.8 Dispute Resolution. Any controversy or claim arising out of
------------------
or relating to this Agreement, or the breach or interpretation hereof, shall be
resolved through good faith negotiation between the principals of the parties
hereto. Any controversy or claim not resolved by mutual agreement shall be
submitted to binding arbitration in Ann Arbor, Michigan, in accordance with the
rules of the American Arbitration Association ("AAA") as then in effect; and
judgment upon the award rendered in such arbitration shall be final and may be
entered in any court having jurisdiction thereof. Notice of the demand for
arbitration shall be filed in writing with the other party to this Agreement and
with the AAA. In no event shall the demand for arbitration be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute of
limitations. This agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law. The party most prevailing in said
arbitration, as determined by the arbitrator based upon the parties' respective
claims and positions, shall be entitled to recover from the non-prevailing party
all attorneys' fees and other costs incurred in connection with the arbitration
proceeding.
13.9 Notices. All notices and other communications permitted or
-------
required under this Agreement shall be in writing and shall be deemed to have
been given when received at the addresses set forth on the signature page
hereof, or at such other address as may be specified by one party in writing to
the other.
15
Said written notice may be given by mail, telecopy, rush delivery service,
personal delivery or any other means.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AASTROM:
AASTROM BIOSCIENCES, INC.
a Michigan corporation
By:/s/ R. DOUGLAS ARMSTRONG
--------------------------------
Name: R. Douglas Armstrong, Ph.D.
---------------------------
Title: President and CEO
----------------------------
P. O. Box 376
Ann Arbor, MI 48106
Attn: R. Douglas Armstrong, Ph.D.
Fax: (313) 665-0485
SEAMED:
SEAMED CORPORATION,
a Delaware corporation
By: /s/ W. ROBERT BERG
-------------------------------
Name: W. Robert Berg
Title: President/CEO
11810 North Creek Parkway North
Bothell, WA 98011
Attn: W. Robert Berg
Fax: (206) 487-1736
16
EXHIBITS
A General Description of the System and the Instrument
B Specifications and Functional Requirements for the Instrument
C Time and Quantity Schedule - Preproduction Units
C-1 Pricing for Precommercial Units
D Manufacturing Drawings for the Instrument
E Compensation Schedule for Design Work and Manufacturing
Preproduction Units
F Summary of Manufacturing Agreement for Phase II
17
EXHIBIT A
General Description of the System and the Instrument
1.1 The Aastrom Cell Expansion System represents technology for the ex vivo
growth and expansion of human stem and hematopoietic progenitor cells. The
system is intended to provide cells in sufficient volume and with the
necessary characteristics to complete a bone marrow transplantation or a
nadir prevention/rescue resulting from therapies such as high dose
chemotherapy or radiation. These cells are grown from a small starting
population of cells normally obtained from the bone marrow or peripheral
blood. The use of Cell Expansion System provides for production of cells
that can be infused to augment recovery of a compromised hematopoietic
system.
1.2 The Cell Expansion System consists of (1) a disposable biochamber cartridge
where the growth and expansion of cells takes place, (2) a biochamber
incubation unit and companion monitor module that controls the biological
and physical environment during the expansion process, (3) an
inoculation/harvest unit that facilitates the initial filling and
inoculation of cells as well as the final harvest of cells at the
completion of the expansion process, (4) growth medium as required by the
cell culture (to which specified growth factors and glutamine are added),
(5) harvest reagents which facilitate the removal of the expanded cells
from the biochamber, (6) a system rack will be available to conveniently
integrate multiple biochamber incubation units with the monitor module.
1.2.1. The disposal biochamber cartridge (DBC) contains the medium
contact components for the incubation period and provides a
functionally closed environment in which the cell expansion can
occur. The cartridge is provided fully assembled in a sterile
package.
In addition to a cell growth chamber, the medium contact
components include a reservoir for medium supply, a pump
mechanism for delivery of the medium to the growth chamber,
valves to facilitate filling and harvesting, a reservoir for the
collection of waste medium exiting the growth chamber, and a
reservoir for the collection of harvested cells.
The cartridge also includes a gas chamber which is supplied with
a controlled mixture of gases for pH stability and oxygenation of
the growth chamber through a gas permeable, hydrophobic membrane
that separates the two chambers.
1
The cartridge also includes a provision for heat transfer to the
growth chamber and away from the medium supply reservoir to
facilitate temperature control.
A biochamber key containing a non-volatile memory device is
attached to the DBC at the beginning of use and accessed by the
system electronics during the cell expansion process to record
pertinent data. The key is detached after cell harvest, and
archived as part of the patient specific cell expansion record.
1.2.2. The biochamber incubation unit (BIU) provides the biological and
physical environment to support the cell growth process. The
biochamber cartridge is inserted into the BIU after inoculation
is complete. The BIU controls: the flow of medium to the growth
chamber; the temperature of the growth medium supply compartment;
the temperature of the growth chamber compartment; and the
concentration and flow rate of gases delivered to the gas
chamber. The BIU also monitors the density of cells in the
growth chamber and various safety/alarm parameters to assure that
the cell expansion process is proceeding as expected.
The unit receives commands from keys on its front panel and
communicates with the operator through a central BIU monitor
module (BIUMM). An integral BIU display also provides
information to the operator. Up to twelve biochamber incubation
units can be connected to the monitor module. Each BIU has its
own micro processor based control system and operates
independently of the monitor module. As such, it will continue
to function in the event of failure of the monitor module.
1.2.3. The inoculation/harvest unit (IHU) performs the initial filling
of the biochamber cartridge with growth medium (supplemented with
growth factors) and the inoculation of cells. The same unit also
performs the removal of the cells from the growth chamber at the
completion of the cell expansion process. The system design
provides for the appropriate level of sterility assurance during
the inoculation and harvest procedures.
1.2.3.1 During initial set up and fill, the operator loads the
biochamber cartridge into the IHU, connects the medium
supply (supplemented with growth factors) to the
cartridge and transfer the medium to the internal
reservoir. The operator is prompted to
2
manually inject the cells into the cartridge at the
appropriate time. The process then continues under
software control until the cartridge is ready to be
placed in the biochamber incubation unit for cell
expansion.
1.2.3.2. At the completion of the expansion process, the
operator loads the biochamber back into the IHU,
attaches the harvest reagents, and harvesting of the
expanded cells proceeds under software control. At the
completion of the harvest process, the expanded cell
product is contained in a single bag to facilitate
washing and preparation for direct infusion or
cryopreservation.
1.2.4. The standard growth medium for the expansion of hematopoietic
cells will be distributed as a separate item in packaging that
will facilitate the addition of growth factors and glutamine
followed by sterile connection to the biochamber cartridge just
prior to use.
1.2.5. The harvest reagents needed for the process will be distributed
as separate items in packaging that will facilitate an aseptic
connection to the biochamber cartridge for cell harvest.
1.2.6. The system rack conveniently integrates several BIUs and a
monitor module. The rack organizes connections to the facility
and the inter connections between the various modules.
The Instrument consists of the components described in paragraphs 1.2.2
(BIU), 1.2.3 (IHU), and 1.2.6 (Rack).
3
EXHIBIT B
Functional Requirements and Specifications for the Instrument
(to be added per Section 1.2)
See generally Exhibit A. See also the SeaMED Project Plan, Drawing Number
908180, draft dated 2-2-94, which is incorporated herein. Additional functional
requirements and specifications for the Instrument will be added by Aastrom
during the course of the work.
EXHIBIT C
Time and Quantity Schedule --
Preproduction Units
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT C-1
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT D
Manufacturing Drawings for the Instrument
(to be added per Section 2.1(e))
EXHIBIT E
Compensation Schedule for Design Work
and Manufacturing Preproduction Units
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT F
Summary of Manufacturing Agreement for Phase II
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT 10.13
COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT
-------------------------------------------
Bioreactor Assembly
and
Tubing Kit
TABLE OF CONTENTS
-----------------
Page
----
1. Responsibilities of Aastrom........................................... 2
1.1 Project Management.............................................. 2
1.2 Specifications.................................................. 2
2. Responsibilities of Company........................................... 2
2.1 Design Collaboration............................................ 2
2.2 Delivery of Products............................................ 3
2.3 Maintenance of Adequate Facilities and Manufacturing Practices.. 3
2.4 No Subcontracting............................................... 4
2.5 Inventory Insurance............................................. 4
2.6 Transit......................................................... 4
2.7 Financial Condition............................................. 4
3. Acceptance Procedures................................................. 4
4. Compensation.......................................................... 5
5. Company's Warranty.................................................... 5
6. Records; Inspection................................................... 5
7. Patent Infringement; Insurance........................................ 6
7.1 Patent Infringement............................................. 6
7.2 Insurance....................................................... 6
8. Exclusivity........................................................... 6
8.1 Continuing Prohibition.......................................... 6
8.2 No Similar Product.............................................. 6
8.3 Disclosure...................................................... 6
9. Ownership of Technology; Confidentiality.............................. 7
9.1 Ownership of Technology......................................... 7
9.2 Confidential Information........................................ 7
(a) Title to Confidential Information and Related Documents.... 8
(b) Nondisclosure or Use of Confidential Information........... 8
(c) Protection of Confidential Information..................... 8
-i-
(d) Confidential Information.................................... 8
9.3 Other Design Contractors......................................... 8
9.4 Privacy of Agreement............................................. 9
10. Term................................................................... 9
11. Default and Termination................................................ 9
11.1 Breach........................................................... 9
11.2 Remedy........................................................... 10
12. Miscellaneous.......................................................... 10
12.1 Independent Contractors.......................................... 10
12.2 Causes Beyond Control............................................ 10
12.3 Successors and Assigns........................................... 10
12.4 Applicable Law................................................... 11
12.5 Severability..................................................... 11
12.6 Entire Agreement; Modification and Waiver........................ 11
12.7 Counterparts..................................................... 11
12.8 Dispute Resolution............................................... 11
12.9 Notices.......................................................... 11
Exhibits:
- --------
A Description of Product
B Company's Project Plan
C Specifications for the Product
D Manufacturing Drawings
-ii-
COLLABORATIVE PRODUCT DEVELOPMENT AGREEMENT
-------------------------------------------
Bioreactor Assembly
and
Tubing Kit
This Agreement (the "Agreement") is entered into as of 11/8, 1994, by and
----
between Aastrom Biosciences, Inc., a Michigan corporation ("Aastrom"),
and Ethox Corp., a New York corporation ("Company").
RECITALS
--------
A. Aastrom is in the final stages of research and development for a
proprietary, manually operated, bioreactor assembly and custom tubing kit
(collectively hereinafter referred to as the "Product" and individually referred
to as the "Bioreactor" or the "Tubing Kit"). The Product is more fully
described on Exhibit A attached hereto.
B. Aastrom has completed working prototype models of the Product; and
Aastrom now needs to obtain pre-production units of the Product for laboratory
and clinical evaluation.
C. Company has expertise and experience in the development and manufacture
of medical products which are somewhat similar to the Product. Company is
prepared to collaborate with Aastrom for completing the necessary design work on
the Product to enable Company to manufacture the Product.
D. Company has prepared a Project Plan, attached hereto as Exhibit B,
which specifies the Company's resources and activities to be applied and used
for performing this Agreement. Said Project Plan includes Company's pricing and
an estimate of the time, materials and costs for Company to perform under this
Agreement as the design stood at the time on April 10, 1994. With changes in
the design and specifications it is contemplated that Company pricing and
estimates will be subject to change.
E. Aastrom has contracted with Roecker Design Group, and Aastrom may also
contract with other design specialists for assistance with specified aspects of
the Product (collectively called the "Other Design Contractors"), subject to the
provisions hereof.
1
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Responsibilities of Aastrom.
---------------------------
1.1 Project Management. Aastrom shall be responsible for
------------------
overall project management relating to the development of the Product.
1.2 Specifications. Aastrom shall collaborate with Company and
--------------
the Other Design Contractors on completing the design work for the Product. With
assistance from Company as more fully described in Section 2 below, Aastrom
shall develop the final specifications and functional requirements for the
Product, including applicable test criteria (the "Specifications"). It shall be
solely Aastrom's responsibility to assure that the Specifications are safe and
effective and to make the decision that the Specifications are complete. Upon
completion of the Specifications, Aastrom shall promptly provide Company with a
copy of the Specifications, and if the parties mutually agree, the
Specifications shall be attached as Exhibit C hereto. Prior to completion of the
Specifications, the parties shall use the preliminary design specifications
referenced on Exhibit C.
2. Responsibilities of Company.
---------------------------
2.1 Design Collaboration. Company shall collaborate with
--------------------
Aastrom and the Other Design Contractors to assist Aastrom in completing the
design work for the Product. Company shall perform its responsibilities under
this Agreement in accordance with the Project Plan attached hereto as Exhibit B;
provided, however, it is understood that with changes in the design and
specifications, it is contemplated that Company's pricing and estimates of time,
materials and costs will be subject to change. Without limiting the foregoing,
Company shall:
(a) Assist Aastrom with respect to planning for all
manufacturing issues that are likely to arise in connection with the design work
and development of the Product, including issues relating to the manufacturing
process development and validation, component sourcing, and the creation of
Device Master record documentation requirements.
(b) Prepare working drawings in accordance with the
Specifications for manufacturing and testing the Product (the "Manufacturing
Drawings"), which Manufacturing Drawings shall be owned by Aastrom and shall,
subject to the prior written approval of Aastrom and Company, ultimately be
attached hereto as Exhibit D. Said Manufacturing Drawings shall include the
Device Master Record and (i) specifications for component parts to be acquired
from specified vendors, (ii) drawings and specifications for component parts,
(iii) test and acceptance procedures and criteria, (iv) subassembly
specifications,
2
drawings and requirements, and (v) product specific manufacturing procedures,
routing and processes. Said Manufacturing Drawings may reference general
policies and procedures of Company, such as Company's quality system; and
Company's general policies and procedures shall remain the property of Company.
As modifications are made from time to time to the Manufacturing Drawings by
mutual agreement, Company shall furnish to Aastrom an updated copy thereof.
(c) Prepare a gamma sterilization validation plan and
conduct the required laboratory tests to achieve a 10/-6/ sterility assurance
level for the Product.
(d) To the extent required for submittal to the U.S. Food
and Drug Administration ("FDA") for Aastrom's IDE and/or PMA, prepare a detailed
description of Company's manufacturing methods, processes, procedures and
facility applicable to Aastrom's Product.
2.2 Delivery of Products. Following Aastrom's determination that
--------------------
the Manufacturing Drawings prepared by Company are in accordance with the
Specifications, Company shall manufacture and deliver to Aastrom at its Ann
Arbor, Michigan facility a number of the prototypes of the Products, in
compliance with the Specifications and the Manufacturing Drawings, for use in
clinical tests of the Product. The exact number of the Product to be
manufactured, and the delivery schedule thereof, shall be as specified by
Aastrom in separate purchase orders, subject to Company's approval, which
approval will not be withheld unreasonably. Said purchase orders normally will
be for 15 units of the Bioreactor at a time, with delivery to be within three
weeks, and for 150 units of the Tubing Kit at a time, with delivery to be within
eight weeks. The pricing on said purchase orders shall be in accordance with the
pricing set forth in Exhibit B; provided, however, it is understood that with
changes in the design and specifications, it is contemplated that Company's
pricing and estimates of time, materials and costs will be subject to change. As
Aastrom's tests of the Product proceed, and depending on the outcome of those
tests, Aastrom may place additional purchase orders for the same or larger lot
sizes of the Product; and Company shall manufacture and sell said additional
units of the Product on the same terms and conditions as set forth above.
2.3 Maintenance of Adequate Facilities and Manufacturing
----------------------------------------------------
Practices. Company shall maintain adequate personnel and facilities to perform
- ---------
its obligations under this Agreement. Company shall manufacture and assemble all
of the Product in an environment where good manufacturing practices ("GMP") are
followed. Inasmuch as Company's FDA facility registration and inspection record
are extremely important to Aastrom's ability to obtain prompt FDA approval for
the Product, Company hereby agrees to use its best efforts to maintain in good
standing all appropriate FDA facility registrations and inspection records.
Company shall immediately report to Aastrom in writing any adverse events,
circumstances, or potential problems relating to Company's FDA registrations and
inspections that
3
could adversely affect availability or approval of the Product. Company shall
allow Aastrom and its agents (such agent to be acceptable to Ethox, with
approval not to be unreasonably withheld) to review and inspect Company's
facilities, FDA compliance files, and correspondence to and from the FDA
regarding inspections, registrations, and audits that pertain to the Product or
the Aastrom's regulatory submission. To the extent Aastrom shall determine that
European Economic Community standards apply to Company's facility and
manufacturing practices for units of the Product to be used in Europe, Aastrom
will provide details of said standards to Company, and Company shall make every
reasonable effort to comply with said standards.
2.4 No Subcontracting. No part of Company's obligations under this
-----------------
Agreement which are being subcontracted by Company will be changed without
Aastrom's approval if such change would impact Aastrom's FDA approval, without
the prior written approval of Aastrom.
2.5 Inventory Insurance. All inventory of components and materials
-------------------
purchased by Company to make the Products shall be owned by Company and shall be
insured against risk of loss by Company. Any components and materials purchased
by Aastrom and delivered to Company for Company to use to make the Products
shall be covered by Company's insurance policy for risk of loss while said items
remain in Company's facility.
2.6 Transit. Company shall arrange for shipment of the Products by a
-------
common carrier approved by Aastrom, to a destination specified by Aastrom. The
costs of shipment and insurance during transit shall be borne by Aastrom. Title
and risk of loss to the Products shall pass from Company to Aastrom when the
Products are delivered to a common carrier for shipment to Aastrom's
designation.
2.7 Financial Condition. Company and Aastrom shall each give written
-------------------
notification to the other of any material adverse financial condition affecting
either, including without limitation the lack of resources available to enable
either to fully and promptly perform its obligations under this Agreement on
schedule, and any other conditions which may jeopardize or impair the full and
prompt performance by either of its obligations under this Agreement. Said
notification shall be given within five (5) days after the occurrence or
realization of said adverse condition.
3. Acceptance Procedures. Delivery of each unit of the Product
---------------------
shall be deemed accepted by Aastrom unless Company is notified in writing of
Aastrom's rejection of such delivery within thirty (30) days after the delivery
date due to a non-conformance with the Specifications and/or the Manufacturing
Drawings (which shall include acceptance criteria). In such case, Aastrom shall
advise Company of Aastrom's acceptance criteria and the details of how Aastrom
believes that there has been a non-conformance. In the event Company receives
4
such notice and advise, Company shall diligently attempt to promptly resolve any
such non-conformance. In the event Company cannot resolve any such non-
conformance and deliver a Product that conforms to the Specifications and the
Manufacturing Drawings within a time period not to exceed six (6) weeks of
receipt of such notice, Aastrom may pursue remedies pursuant to Section 12
below.
4. Compensation. Aastrom shall compensate Company for Company's
------------
assistance, manufacture and assembly of the Products on a "time and materials"
basis, as further described on Exhibit B. Company shall submit to Aastrom a
monthly invoice for said work, together with such supporting details as Aastrom
may reasonably request. Aastrom shall pay said invoice within thirty (30) days
after the invoice and supporting details are received by Aastrom.
5. Company's Warranty. Company warrants that each unit of the
------------------
Product shall comply in all respects with the Specifications and the
Manufacturing Drawings and shall be free from defects in material and
workmanship. Company shall either repair or replace or provide to Aastrom full
credit for the purchase price of any Product which Aastrom finds to be defective
due to Company's failure to comply with said warranty. If credit is not given
by Company, then any such warranty repairs or replacements shall be completed
within a time period not to exceed six (6) weeks of the date on which Company
receives notice of any such non-compliance. All shipping and other costs
incurred in connection with the repair or replacement of any such non-complying
Product shall be for the account of Company. Company further warrants that the
manufacture, assembly and delivery of the Products hereunder shall be (i) in
compliance with all applicable federal, state and local laws, rules, regulations
and executive orders known or reasonably expected to be known by Company, and
(ii) performed in a professional, workmanlike manner in accordance with
prevailing industry standards.
THE WARRANTIES SET FORTH IN THIS SECTION 5 ARE EXCLUSIVE AND IN
LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED.
6. Records; Inspection. Company shall keep accurate and complete
-------------------
records with respect to its work and manufacture of the Product to the extent
necessary to attempt to satisfy any FDA requirements and to verify the time
worked and material costs invoiced by Company to Aastrom. At Aastrom's request,
Company shall allow Aastrom or its accountant to inspect and audit such records.
Additionally, at Aastrom's request, Company shall allow Aastrom and/or Aastrom's
consultant (such consultant to be subject to Ethox's approval, and such approval
will not be unreasonably withheld) to inspect the facility where the Products
are manufactured. All inspections shall be upon reasonable notice and during
regular business hours and shall require execution of confidentiality agreements
satisfactory to Company.
5
7. Patent Infringement; Insurance.
------------------------------
7.1 Patent Infringement. Aastrom shall indemnify and hold Company
-------------------
harmless from any loss, damage, or cost (including reasonable attorneys' fees
and expenses) arising from any claim that the Product or its operation infringes
a United States patent, trademark, copyright, or other proprietary right,
including trade secrets. In the event any lawsuit for which indemnity is
applicable, Aastrom will control the defense and selection of defense counsel,
and Company will be entitled to participate therein (at Company's expense) by
selecting co-counsel reasonably satisfactory to Aastrom. Aastrom shall have the
right to direct and control such defense, to settle any dispute. Company shall
be responsible for payment of any settlement to which Company has consented, and
such consent shall not be unreasonably withheld. In conducting the defense and
negotiating any settlement, Aastrom's counsel shall give due consideration to
suggestions of Company's co-counsel.
7.2 Insurance. Company and Aastrom shall each provide and maintain
---------
$1 million comprehensive general liability insurance and product liability
insurance . Company will furnish to Aastrom, and Aastrom will furnish to
Company, certificates of insurance evidencing that such insurance is in effect.
Aastrom's requirement hereunder is contingent upon its successful obtaining of
such coverage.
8. Exclusivity.
-----------
8.1 Continuing Prohibition. At all times both during and after the
----------------------
term of this Agreement, Company shall not make or sell, or enable others to make
or sell, the Product which is the subject of this Agreement, excepting only for
making and selling the Product for Aastrom.
8.2 No Similar Product. During the term of this Agreement, (i)
------------------
Company shall not manufacture, assemble, produce, ship or in any other way make
available for use or distribution, by any party other than Aastrom, any product
or system which is functionally similar to the Product, and (ii) Company shall
not in any way accept engagement with, or render service to, any other
individual, firm or corporation, as a consultant, instructor, expert, designer,
manufacturer or producer, or act in any other capacity, which engagement or
rendition of services involves the development or production of any product or
system which is functionally similar to the Product. As used in this section, a
hematopoietic stem cell expansion product or system is not "functionally
---
similar" if it utilizes distinctly different methods or distinctly different
disposable components than are utilized for Aastrom's Product.
8.3 Disclosure. Company advises Aastrom that Company is currently
----------
manufacturing a line of products referred to as the Stericell product line which
are used for cell culture, and a product named Stempak which is utilized for
6
stem cell processing. In addition, Company has contract relationships, and is
working with other companies to develop relationships, for cell processing
devices which, to the best of Company's belief, function in a significantly
different manner than Aastrom's Product.
9. Ownership of Technology; Confidentiality.
----------------------------------------
9.1 Ownership of Technology.
-----------------------
(a) Except as set forth in Section 9.1(c) below, Aastrom shall
retain and own all right, title, and interest in any invention, technology or
development, whether or not patentable, which it now has or which arises in
connection with the Product during the course of the Company's performance of
this Agreement. Any invention made by Company in connection with Company's work
with the Product, which invention is an improvement or variation to the Product,
shall be owned by Aastrom and assigned to Aastrom by Company. Company shall
cooperate with Aastrom and take all steps reasonably required, including
executing assignments, to aid Aastrom in securing any patent or other protection
which may be appropriate, and Aastrom shall bear the expense in connection
therewith.
(b) All tools and tooling which were paid for by Aastrom (either
separately or as part of the price for the Product sold by Company to Aastrom)
shall be owned by Aastrom. The Manufacturing Drawings (including the device
master records) shall be owned by Aastrom.
(c) Company shall retain all of its right, title, and interest in
and to its proprietary knowledge in fabrication methods which it currently has,
and in and to such additional knowledge in fabrication methods Company may
develop at its sole expense (and for which Aastrom is not invoiced) as a part of
the Company's performance of this Agreement. As to any fabrication methods
developed by Company from efforts for which Aastrom is invoiced, said
fabrication methods shall be deemed developed for Aastrom as a "work for hire,"
and Aastrom shall have sole ownership thereof. Company shall retain a royalty
free license to make, use, sell or otherwise promote any such fabrication
methods which are developed by Company but owned by Aastrom, so long as such
undertaking does not directly or indirectly cause competition to Aastrom
products or business activities.
9.2 Confidential Information. The parties recognize that during the
------------------------
course of Company's performance of this Agreement, it may be necessary that
either or both parties be given access to certain Confidential Information of
the other. The following subparagraphs shall be applicable to such Confidential
Information and the words "Recipient" and "Disclosing Party" shall be
7
interchangeable as between Aastrom and Company as appropriate under the
circumstances.
(a) Title to Confidential Information and Related Documents.
-------------------------------------------------------
Recipient hereby acknowledges that the Confidential Information and all related
documents, drawings, sketches, designs, products, or samples disclosed or
furnished hereunder are the sole and exclusive property of Disclosing Party.
Recipient hereby agrees to return all such documents, drawings, sketches,
designs, products, or samples furnished to it hereunder, together with all
copies thereof except for one archive copy, promptly upon the request of
Disclosing Party.
(b) Nondisclosure or Use of Confidential Information. Recipient
------------------------------------------------
hereby agrees that it shall hold all Confidential Information disclosed to it in
strict confidence, that it will use the same only for the purpose of performing
this Agreement and for no other purpose whatsoever, and that it will not
disclose the same to any third parties (except to its employees to the extent
such disclosure is necessary for purposes of performing this Agreement) except
to the extent Disclosing Party agrees to in writing.
(c) Protection of Confidential Information. Recipient agrees that
--------------------------------------
it will observe reasonable precautions and procedures to protect and preserve
all Confidential Information and related documents, drawings, sketches, designs,
products, or samples disclosed or furnished to it hereunder, using such
precautions which shall be no less rigorous than those used by Recipient to
protect its own trade secrets and confidential data. In addition, Recipient
warrants that it has or will obtain written agreements of confidentiality with
its employees for the protection of information of the subject nature both
during and after employment.
(d) Confidential Information. "Confidential Information" as used
------------------------
herein shall mean all information, discoveries, inventions, improvements or
innovations which are maintained as confidential by the party having the same.
Provided, however, Confidential Information shall not include information,
discoveries, inventions, improvements, or innovations (a) which at the time of
disclosure is a part of the public domain; (b) which subsequently becomes a part
of the public domain by publication or otherwise through no fault of Recipient;
(c) which Recipient can show was contained in its possession at the time of
disclosure; (d) which is subsequently disclosed to Recipient by a third party
not in violation of any rights of, or obligations to, Disclosing Party; or (e)
which is disclosed in a patent or publication anywhere.
9.3 Other Design Contractors. To the extent any Confidential
------------------------
Information of Company is to be furnished to the Roecker Design Group or any
Other Design Contractors, it shall be the obligation of Aastrom to provide
Company with confidentiality agreements executed by such design contractors, and
said confidentiality agreements shall be in a form reasonably acceptable to
Company.
8
9.4 Privacy of Agreement. Neither party shall make any reference to
--------------------
this Agreement or any provision hereof in any publicly disseminated literature,
printed matter, or other publicity issued by or for it, except (i) as required
by law, (ii) in connection with a public or private offer or sale of securities,
a business collaboration or transaction, or a governmental or industry
regulatory communication, or (iii) in a fashion and at a time mutually agreed
upon by both parties after the execution of this Agreement. After release of
the product for commercial sale, Company may add Aastrom to Company's list of
customers and may show external product photographs for marketing purposes, and
Aastrom may add Company to Aastrom's list of vendors and subcontractors.
10. Term. The term of this Agreement shall commence on the date first
----
written above and shall continue in full force and effect until completion
of Aastrom's need for the Products, or until terminated as set forth herein.
Either party may terminate this Agreement without cause upon at least six (6)
months' prior written notice. Upon any termination of this Agreement, (i) both
parties shall fully perform all of their obligations accruing up through the
date of termination and (ii) Company will immediately deliver to Aastrom the
Manufacturing Drawings, all tools and tooling owned by Aastrom, and any
prototypes, components, information, and work-in-process related to the Product.
Additionally, to the extent applicable, the obligations under Sections 5, 6, 7,
8, 9 and 12 shall survive any termination of this Agreement.
11. Default and Termination.
-----------------------
11.1 Breach. The occurrence of any one or more of the following
------
events shall constitute an event of default hereunder, and upon the expiration
of any applicable time period for a cure, shall constitute a breach of this
Agreement, giving rise to the rights identified in Section 11.2 hereof:
(a) If Aastrom shall default hereunder in the payment of funds
when due and such default continues for a period of thirty (30) days after
written notice thereof;
(b) If either party fails to faithfully perform or observe any
agreement or condition to be performed by such party, and if such default
continues for a period of thirty (30) days after written notice thereof,
specifying the nature of such default;
(c) If any proceeding is commenced by or for either party under
any of the bankruptcy laws, or if either party is adjudged insolvent by any
court, makes an assignment for the benefit of creditors, or enters into a
general extension agreement with creditors;
9
(d) If Company shall breach its obligation to timely give credit
for or to repair any non-conforming Product prototype pursuant to Section 3; or
(e) If either party shall breach its obligations set forth in
Sections 8 or 9 hereof.
11.2 Remedy. In addition to all rights and remedies provided under
------
law, the nondefaulting party shall have the right, in the event of default, to
terminate this Agreement and any obligations imposed on such nondefaulting party
hereunder, provided, however, that, to the extent applicable, the obligations
under Sections 5, 6, 7, 8, 9, and 13 shall survive any termination of this
Agreement.
12. Miscellaneous.
-------------
12.1 Independent Contractors. The relationship between Aastrom and
-----------------------
Company hereunder shall be that of independent contractors, and nothing in this
Agreement shall be deemed to constitute a joint venture, partnership, agency or
employer/employee arrangement between the parties. Neither party shall have any
authority or power to bind the other party or to contract in the name of, or
make any representations or warranties, express or implied, on behalf of the
other party, or otherwise create any liability against the other party in any
way for any purpose.
12.2 Causes Beyond Control. The parties hereto shall not be
---------------------
responsible for any loss or breach due to delay in delivery or performance
hereunder caused by governmental regulations, controls or directions, outbreak
of a state of emergency, hostilities, civil commotion, riots, epidemics, acts of
God, other natural casualties, fires, strikes, walkouts or other similar cause
or causes beyond the control of the parties. In the event that any party shall
be delayed in, or prevented from, performing its obligations under this
Agreement as a result of any of the foregoing, such party shall promptly notify
the other party of such delay or cessation in performance. In the event that
such party is unable to resume performance hereunder within sixty (60) days of
the date on which its performance was suspended, the other party shall have the
right to terminate this Agreement upon ten (10) days prior written notice.
12.3 Successors and Assigns. Neither party shall have a right to
----------------------
assign, transfer or otherwise dispose of its rights under this Agreement or to
assign the burdens hereof, without the prior written consent of the other party.
Notwithstanding the foregoing, the rights and obligations of a party shall
automatically transfer to a successor entity, without the need for any consent,
in the event of a merger between the party and the successor, or in the event of
a sale of substantially all of the assets of that party to the successors.
10
12.4 Applicable Law. The construction of this Agreement, and the
--------------
rights and liabilities of the parties hereto, shall be governed by the laws of
the State of Michigan.
12.5 Severability. Each term, condition or provision of this
------------
Agreement shall be viewed as separate and distinct, and in the event that any
such term, condition or provision shall be held by a court of competent
jurisdiction to be invalid, the remaining provisions shall continue in full
force and effect.
12.6 Entire Agreement; Modification and Waiver. This Agreement
-----------------------------------------
contains the entire agreement and understanding between the parties and
supersedes all prior agreements and understandings between them relating to the
subject matter hereof. This Agreement may not be amended or modified except by
an instrument in writing, signed by duly authorized representatives of both
parties. The waiver, express or implied, by any party of any right hereunder or
of any failure to perform or breach hereof by any other party shall not be
deemed to constitute a waiver of any other right hereunder or of any claim in
respect of any other failure to perform or breach.
12.7 Counterparts. This Agreement may be executed in counterparts
------------
all of which together shall constitute one and the same instrument.
12.8 Dispute Resolution. Any controversy or claim arising out of or
------------------
relating to this Agreement, or the breach or interpretation hereof, shall be
resolved through good faith negotiation between the principals of the parties
hereto. Any controversy or claim not resolved by mutual agreement shall be
submitted to binding arbitration in Cleveland, Ohio, or in such other city as
the parties may mutually agree, in accordance with the rules of the American
Arbitration Association ("AAA") as then in effect; and judgment upon the award
rendered in such arbitration shall be final and may be entered in any court
having jurisdiction thereof. Notice of the demand for arbitration shall be
filed in writing with the other party to this Agreement and with the AAA. In no
event shall the demand for arbitration be made after the date when institution
of legal or equitable proceedings based on such claim, dispute or other matter
in question would be barred by the applicable statute of limitations. This
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. The party most prevailing in said arbitration, as determined
by the arbitrator based upon the parties' respective claims and positions, shall
be entitled to recover from the non-prevailing party all attorneys' fees and
other costs incurred in connection with the arbitration proceeding.
12.9 Notices. All notices and other communications permitted or
-------
required under this Agreement shall be in writing and shall be deemed to have
been given when received at the addresses set forth on the signature page
hereof, or at such other address as may be specified by one party in writing to
the other.
11
Said written notice may be given by mail, telecopy, rush delivery service,
personal delivery or any other means.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AASTROM:
AASTROM BIOSCIENCES, INC.
a Michigan corporation
By:
Name: /s/ R. DOUGLAS ARMSTRONG
------------------------
Title: President/CEO
------------------------
Address: P. O. Box 376
Ann Arbor, MI 48106
Attn: James Maluta
Fax: (313) 665-0485
COMPANY:
ETHOX CORP.
a New York corporation
By: /s/ FRANK P. WILTON
-------------------
Name: Frank P. Wilton
Title: President
Address: 251 Seneca Street
Buffalo, NY
Attn: Frank P. Wilton
Fax: (716) 842-4040
12
EXHIBITS
A Description of Product (Bioreactor Assembly and Custom Tubing
Kit)
B Company's Project Plan
C Specifications for the Product
D Manufacturing Drawings for the Product
13
EXHIBIT A
Description of Product
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT B
Company's Project Plan
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT C
Time and Quantity Schedule --
Preproduction Units
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT C-1
Pricing for Precommercial Units/1/
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT D
Manufacturing Drawings (Device Master Record)
for the Product
(to be added per Section 2.1(b))
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
EXHIBIT 10.14
LICENSE AND SUPPLY AGREEMENT
This License and Supply Agreement, effective as of April 1, 1996,
-------
(the "Effective Date") is made by and between Aastrom Biosciences, Inc., a
Michigan corporation having its principal place of business at Lobby L, Domino's
Farms, Ann Arbor, Michigan 48106 ("AASTROM") and Immunex Corporation, a
Washington corporation having its principal place of business at 51 University
Street, Seattle, Washington 98101 ("IMMUNEX").
AGREEMENT
---------
In consideration of the mutual covenants and undertakings set forth
herein, IMMUNEX and AASTROM hereby agree as follows:
1. BACKGROUND
----------
1.1 Development and Supply of Products and Technology.
-------------------------------------------------
IMMUNEX has discovered and developed Cytokines (Pixykine(R) PIXY321, Flt3 ligand
and Leukine(R) GM-CSF) and enzyme-linked immunoassay ("ELISA") reagents for the
Cytokines ("Ancillary Materials"), that are collectively referred to herein as
"Supplied Products," and certain cell culture technology, that together with
Supplied Products are "Licensed Technology," and is the owner of certain patent
rights relating to the Licensed Technology ("Licensed Patent Rights") that may
be useful in or relate to the field of extracorporeal cell culture and
transplantation ("ECCAT"). IMMUNEX intends to supply AASTROM with Supplied
Product and to provide a nonexclusive license to AASTROM to the Licensed
Technology and Licensed Patent Rights for Supplied Product purchased by AASTROM,
subject to the terms of this Agreement.
1.2 Purchase and Use of Supplied Product and Licensed Technology.
------------------------------------------------------------
AASTROM is a developer of certain ECCAT systems (instrumentation and single-use
plastic disposables operated by the instrumentation, referred to herein as the
"Systems") and desires to purchase Supplied Products from IMMUNEX for
distribution, sale and use with the Systems. AASTROM also desires access to the
Licensed Technology and Licensed Patent Rights to make, use and sell the Systems
and services incorporating the Licensed Technology or otherwise covered by the
Licensed Patent Rights.
2. DEFINITIONS
-----------
2.1 All initially capitalized terms shall have the meanings specified
below:
"Affiliate" shall mean any entity that directly or indirectly
---------
controls, is controlled by or is under common control with a party to this
Agreement. The term "control" as used herein shall mean the possession of the
power to direct or cause the direction of the management and the policies of an
entity, whether through the ownership of a majority of the outstanding voting
securities or by contract or otherwise.
"Ancillary Materials" shall mean ELISA reagents that are useful in
-------------------
assay or quantification of Cytokines, and other materials made available by
IMMUNEX to AASTROM to facilitate use of Licensed Technology.
"Calendar Quarter" shall mean each three-month period commencing
----------------
January 1, April 1, July 1 and October 1 of each year during the Term.
1
"Calendar Year" shall mean each twelve-month period commencing the
-------------
first Calendar Quarter following the Effective Date of each year during the
Term.
"Confidential Information" shall mean any and all proprietary or
------------------------
confidential information owned by AASTROM or IMMUNEX that is provided to the
other party. Confidential Information shall not be deemed to include
information that:
(a) is or becomes known publicly through no fault of the recipient;
(b) is learned by the recipient from a Third Party entitled to
disclose it;
(c) is developed by the recipient independently of information
obtained from the disclosing party;
(d) is already known to the recipient before receipt from the
disclosing party, as shown by prior written records; or
(e) is released with the prior written consent of the disclosing
party.
"Cytokine" shall mean an IMMUNEX cytokine product identified
--------
in Exhibit B.
"Effective Date" shall mean the date set forth in the first
--------------
paragraph of this Agreement.
"FDA" shall mean the United States Food and Drug Administration or any
---
successor agency vested with administrative and regulatory authority to approve
testing and marketing of human pharmaceutical or biological therapeutic products
in the United States.
"Field" shall mean development, manufacture, testing, use and sale of
-----
systems, techniques, equipment, devices and associated technologies for
explanation, separation, culture, testing and transplantation of cells, referred
to collectively as "extracorporeal cell culture and transplantation" ("ECCAT").
The Field excludes all parenteral or in-vivo uses of Cytokines or Supplied
Products, which are expressly reserved to IMMUNEX.
"Force Majeure" shall mean any act of God or the public enemy, any
-------------
accident, explosion, fire, storm, earthquake, flood, drought, peril of the sea,
riot, embargo, war or foreign, federal, state or municipal order issued by a
court or other authorized official, seizure, requisition or allocation, any
failure or delay of transportation, shortage of or inability to obtain supplies,
equipment, fuel or labor or any other circumstance or event beyond the
reasonable control of the party relying upon such circumstance or event;
provided, however, that no such Force Majeure circumstance or event shall excuse
any failure or delay beyond a period exceeding one hundred eighty (180) days
from the date such performance would have been due but for such circumstance or
event.
"GMP" shall mean the regulatory requirements for good manufacturing
---
practices promulgated by the FDA under the Federal Food, Drug and Cosmetic Act,
as amended, 21 C.F.R. et seq.
"Improvement" shall mean any invention or improvement involving a
-----------
Cytokine or Licensed Technology that is made by employees of AASTROM, whether
solely or jointly with employees of IMMUNEX.
"Licensed Patent Rights" shall mean the patents and patent
----------------------
applications identified in Exhibit A; any divisional, continuation or
continuation-in-part applications that
2
claim priority based upon such applications; any patents that issue in respect
of the foregoing applications; and any reissues or extensions of such patents,
and any other patents or patent applications owned or controlled by IMMUNEX that
are necessary and useful to permit AASTROM to use and sell Licensed Technology
in the Field.
"Licensed Technology" shall mean the Cytokines, Ancillary Reagents,
-------------------
and any related technology, know-how, data, information and results that IMMUNEX
has a right to disclose or transfer to AASTROM, and that is necessary or useful
to permit AASTROM to use the Cytokines or Ancillary Materials and is transferred
to AASTROM.
"Licensed Trademarks" shall mean Cell Software(TM), Leukine(R) and
-------------------
Pixykine(R).
"Manufacturing Regulatory Documentation" shall mean a Drug Master File
--------------------------------------
or other Regulatory Filing owned by IMMUNEX and filed with the FDA that contains
definitive technical information concerning a Supplied Product.
"Order" shall mean each quantity of a Supplied Product sold to AASTROM
-----
under a separate invoice.
"Person" shall mean any individual, partnership, corporation, firm,
------
association, unincorporated organization, joint venture, trust or other entity.
"Purchase Order" shall have the meaning specified in Section 3.9
--------------
hereof.
"Regulatory Filing" shall mean a filing with a regulatory agency, for
-----------------
example, the FDA, that concerns a Cytokine or use of a Cytokine in the Field.
"Supplied Product(s)" shall mean Cytokines and Ancillary Materials
-------------------
produced by IMMUNEX for AASTROM; or, as permitted under this Agreement, produced
by AASTROM or a Third Party.
"Supply Price" shall mean the price paid by AASTROM to IMMUNEX to
------------
obtain Supplied Product for sale or distribution to end users of Licensed
Technology.
"Systems" shall mean AASTROM's ECCAT systems, consisting of certain
-------
instrumentation and single-use plastic disposables for use with the
instrumentation, as well as any related documentation.
"Territory" shall mean North America, consisting of the United States
---------
of America and Canada, and their respective territories and possessions.
"Third Party" shall mean any Person other than a party to this
-----------
Agreement or an Affiliate.
3. SUPPLY AND USE OF MATERIALS
---------------------------
3.1 Supply of Supplied Products. Subject to the terms of this Agreement,
----------------------------
IMMUNEX shall manufacture and sell to AASTROM, and AASTROM shall purchase
exclusively from IMMUNEX, AASTROM's requirements of the Supplied Products for
sale or use by AASTROM in conjunction with the Systems. AASTROM shall not be
obligated to purchase its requirements of GM-CSF from IMMUNEX in countries other
than the United States. All Supplied Products shall be sold and delivered to
AASTROM in the Territory, and all sales shall be deemed to have been made in the
United States.
3
3.2 Supply Price. The Supply Price applicable to the Supplied Products to
------------
be sold by IMMUNEX to AASTROM pursuant to Section 3.1 hereof shall be that set
forth in Exhibit B, which is attached hereto and made a part of this Agreement.
3.3 Supply of Research Quantities of Cytokines for Preclinical Research.
-------------------------------------------------------------------
IMMUNEX shall provide reasonable research quantities of Cytokines and Ancillary
Materials to AASTROM solely for AASTROM's own use in preclinical research, and
not for resale or distribution to any other Person, at no charge to AASTROM.
3.4 Technical Assistance. Upon request and at no charge, IMMUNEX shall make
--------------------
its employees available (at their normal places of employment or by telephone)
to provide reasonable levels of technical assistance to AASTROM concerning
AASTROM's use of the Supplied Products or AASTROM's preparation of Regulatory
Filings.
3.5 Regulatory Filings. AASTROM shall file and be the owner of record for
------------------
all Regulatory Filings developed by AASTROM applicable to use of Supplied
Products with the Systems. IMMUNEX shall permit AASTROM to cross-reference its
Drug Master Files and Regulatory Filings to enable AASTROM to complete
Regulatory Filings applicable to the Systems. IMMUNEX owns, and shall retain all
right, title and interest in and to the Manufacturing Regulatory Documentation,
and any other Regulatory Filing prepared and submitted by IMMUNEX to obtain or
maintain regulatory approval of a Supplied Product. Each party shall, upon
request and at no charge to the other, reasonably cooperate with and assist the
other in preparing Regulatory Filings. Such cooperation shall extend to
reasonable consultation by telephone or at the cooperating party's normal
business location, but shall not include preparation of Regulatory Filings for
the other party. All nonpublic information provided by one party to the other in
preparing Regulatory Filings shall be deemed to be Confidential Information of
the disclosing party. AASTROM's or IMMUNEX's right to cross-reference any
Regulatory Filings owned by the other shall not extend to any Confidential
Information of any Third Party that may be incorporated into a Regulatory
Filing.
3.6 Clinical Studies. AASTROM shall be independently and solely responsible
----------------
for the design, implementation and evaluation of any human clinical studies used
to obtain clinical data for use in preparing Regulatory Filings. AASTROM shall
provide IMMUNEX with a complete copy of any clinical study protocol in which
Supplied Products are used, as well as copies of any final abstracts or
publications concerning the results of such study. AASTROM shall report any
serious and unexpected adverse event that occurs in a clinical study involving
Supplied Products. This report shall be provided by telephone or fax to the
Professional Services Department at IMMUNEX (fax: 800-221-6820) as soon as
possible and shall be confirmed and updated in writing within 24 hours after
occurrence.
3.7 Manufacture of Product for Clinical Studies and Commercial Sale.
---------------------------------------------------------------
During the term of this Agreement, and for an additional one year period if
IMMUNEX notifies AASTROM that it will not renew the Agreement under Section 8.7,
and for two additional years should IMMUNEX cease supply per the terms of this
Agreement under Section 3.19, IMMUNEX shall use reasonable commercial efforts to
manufacture all of the requirements of AASTROM for each Supplied Product and
release all quantities ordered by AASTROM in the Calendar Quarter specified in
each accepted Purchase Order. IMMUNEX's supply obligations shall be limited in
any year, at its option, to the projected number of vials of each Supplied
Product specified by AASTROM in the Annual Requirements Forecast. In the event
of any supply constraint, IMMUNEX shall allocate the available quantities of
Supplied Products among itself and its licensees in a fair and equitable manner.
Each Supplied Product released to AASTROM for clinical studies or commercial
sale shall be
4
manufactured in material compliance with current GMP and according to
manufacturing information in the Manufacturing Regulatory Documentation. IMMUNEX
shall perform sufficient quality control testing of all Supplied Products
released to AASTROM to establish compliance with any release specifications
required by the Manufacturing Regulatory Documentation.
3.8 Annual Requirements Forecast. AASTROM shall inform IMMUNEX of its
----------------------------
forecasted requirements for each Supplied Product to be released to AASTROM
during each Calendar Year ("Annual Requirements Forecast"). Within 30 days
following the Effective Date, AASTROM shall provide IMMUNEX with a forecast of
its Supplied Product requirements by Calendar Quarter for the remainder of 1996.
On or before July 31 of each Calendar Year during the Term, AASTROM shall
provide IMMUNEX with a forecast of its Supplied Product requirements for each
Calendar Quarter of the following Calendar Year. Each such Annual Requirements
Forecast shall not constitute a Purchase Order but rather a non-binding estimate
to assist IMMUNEX in scheduling its facilities to manufacture Supplied Products.
In the event that AASTROM shall, during the first three Calendar Quarters of any
Calendar Year, fail to provide IMMUNEX with Purchase Orders for at least 25% of
the quantity of each Supplied Product specified in the Annual Requirements
Forecast applicable to such Calendar Year, IMMUNEX shall have the right to cease
supply of such Supplied Product pursuant to Section 3.19 hereof following notice
to AASTROM. Following the effective date of such notice, IMMUNEX shall provide
AASTROM with thirty (30) days in which to submit a Purchase Order that will
increase the quantity of Supplied Product subject to AASTROM's Purchase Orders
in such Calendar Year to at least 25% of the Annual Requirements Forecast
applicable to such Calendar Year.
3.9 Purchase Orders. On or before the first day of each Calendar Quarter
---------------
during the Term, AASTROM shall provide IMMUNEX with a Purchase Order specifying
the quantity of each Supplied Product to be released to AASTROM in the following
Calendar Quarter and a schedule specifying the dates upon which such quantity,
or any fraction thereof, is to be released to AASTROM. Following acceptance by
IMMUNEX, a Purchase Order shall not be cancelable by AASTROM without the consent
of IMMUNEX. AASTROM may submit additional Purchase Orders during each Calendar
Quarter which IMMUNEX shall accept, provided that adequate quantities of
Supplied Products are available for supply to AASTROM and that such Purchase
Orders otherwise comply with all other terms of this Agreement. IMMUNEX shall
have no obligation to undertake additional production or vialing campaigns to
produce any Supplied Products for AASTROM that have not been specified in an
Annual Requirements Forecast or a Purchase Order provided in accordance with
this Section 3.9.
3.10 Supplied Product Specifications; Development of New Formulations.
----------------------------------------------------------------
Immediately following the Effective Date, IMMUNEX shall provide Supplied
Products to AASTROM in the available vialed formulations and vial sizes
specified in the current Drug Master Files applicable to such Supplied Products.
As new vialed formulations or vial sizes become available, IMMUNEX shall provide
such new formulations or vial sizes to AASTROM and cause the Manufacturing
Regulatory Documentation to be amended or supplemented to reflect all
specifications applicable to such new formulations or vial sizes. IMMUNEX shall
use reasonable commercial efforts to develop a 250 ug vialed formulation of each
of PIXY321 and Flt3L. IMMUNEX shall have no obligation under this Agreement to
develop any other vial sizes or formulations for AASTROM.
3.11 Specification Changes. Unless otherwise agreed by the parties,
---------------------
IMMUNEX shall have no obligation to manufacture any Cytokine for AASTROM
according to processes or specifications that vary from those set forth in the
applicable Manufacturing
5
Regulatory Documentation. Following the establishment of a standard formulation
for each Cytokine, IMMUNEX shall use reasonable commercial efforts to maintain
the integrity and consistency of all specifications applicable to Cytokines. In
the event that IMMUNEX deems it necessary to revise any specifications,
procedures or Manufacturing Regulatory Documentation applicable to a Cytokine,
IMMUNEX shall provide reasonable advance notice of any such revision to AASTROM.
All specification changes that result in procedures or limits that exceed or
differ from those set forth in the Manufacturing Regulatory Documentation shall
be submitted to the FDA before being implemented. IMMUNEX shall take reasonable
actions in consultation with AASTROM to ensure that any such changes do not
compromise any clinical study or Regulatory Filing of AASTROM.
3.12 Quality Control Testing and Release of Products. Following manufacture
-----------------------------------------------
of each lot from which any Order is to be provided to AASTROM hereunder, IMMUNEX
shall perform all quality control testing required to establish compliance of
the lot with applicable specifications. A certificate of analysis shall be
issued upon satisfactory completion of quality control testing of such lot. If
quality control testing is successfully completed and a Purchase Order has been
received, an Order shall be released to AASTROM on the date specified in the
Purchase Order (the "Release Date"). Upon the Release Date, (a) IMMUNEX shall
ship the Order to a location in the Territory as instructed by AASTROM, (b) upon
receipt, title to such Order shall transfer to AASTROM, and (c) AASTROM shall be
invoiced for the Order at the Supply Price at that time in effect.
3.13 Documentation. Not later than the time of delivery of each Order,
-------------
IMMUNEX shall provide AASTROM with a certificate of analysis applicable to each
lot of Supplied Products included in each Order released to AASTROM. IMMUNEX
shall document each step of the manufacturing and processing procedure and shall
maintain retention samples of each lot in accordance with applicable FDA
requirements. Complete batch records for all Supplied Products manufactured for
AASTROM shall be maintained at IMMUNEX for inspection at any time by AASTROM at
IMMUNEX's place of business upon reasonable notice to IMMUNEX. Any proprietary
information of IMMUNEX contained in such batch records shall be deemed to be
Confidential Information of IMMUNEX.
3.14 Storage and Shipping. Following release, each Order shall be held for
--------------------
AASTROM by IMMUNEX in secure storage for use by or shipment to AASTROM or to
such other recipient as instructed by AASTROM. All Orders shall be shipped FOB
IMMUNEX's United States facility to a location in the Territory as designated by
AASTROM with the insurance paid by IMMUNEX. AASTROM shall be responsible for all
shipping charges, which shall be itemized on each invoice by IMMUNEX. Title to
and risk of loss for each Order shall transfer to AASTROM upon delivery to
AASTROM's designated delivery location. AASTROM shall provide IMMUNEX with a
specific list of approved carriers that meet AASTROM's specifications for
handling during shipment. AASTROM shall be solely responsible for any
reshipments of Supplied Products or any shipments of Supplied Products outside
the Territory.
3.15 Minimum Order Quantity. IMMUNEX will not act in the capacity of a
----------------------
distributor of Supplied Products to AASTROM's customers. At any time during the
Term of this Agreement, IMMUNEX may establish reasonable minimum Order
quantities (which will not exceed, absent AASTROM's consent, one Calendar
Quarter's projected purchases as set forth in the applicable Annual Requirements
Forecast) if AASTROM does not provide Purchase Orders specifying economically
efficient Order quantities, or otherwise increase the prices charged to AASTROM
for Supplied Products to include any additional costs incurred in filling
Purchase Orders that do not meet reasonable minimum quantities.
6
3.16 Acceptance; Payment Terms. Payment for each Order released to AASTROM
-------------------------
shall be due forty-five (45) days following delivery and invoice, during which
period AASTROM shall perform its acceptance testing. IMMUNEX shall provide
AASTROM with descriptions of its release testing procedures and specifications
to permit AASTROM to conform its acceptance testing to the methods used by
IMMUNEX. If AASTROM provides evidence that such Order fails to meet the release
specifications set forth in the Manufacturing Regulatory Documentation that are
at that time in effect, payment shall not be due until the failure is corrected.
If the results of quality control testing by AASTROM do not agree with those
obtained by IMMUNEX, AASTROM shall promptly so notify IMMUNEX and the acceptance
period shall be extended forty-five (45) days to enable the parties to retest
the Order or otherwise attempt to reconcile their differences. In the event that
such differences cannot be resolved by the parties, the parties shall designate
an independent testing laboratory to test the Order. The findings of such
independent testing laboratory shall be binding on the parties, absent manifest
error. The expenses shall be borne by the party adversely affected by such
findings. IMMUNEX shall have no obligation to supply additional Orders of
Supplied Products to AASTROM if AASTROM declines to accept any Order due to the
application of any specifications or acceptance testing procedures that are
different from the release testing procedures and specifications employed by
IMMUNEX, if such Order otherwise complies with the procedures and specifications
employed by IMMUNEX. A late payment charge of 1% of the outstanding unpaid
balance per month shall be payable if invoiced charges are not paid when due.
3.17 Facility Visits. Upon reasonable prior notice to IMMUNEX, AASTROM or
---------------
its designee may (but shall not be required to) have its representatives audit
IMMUNEX's production of Supplied Products for material compliance with current
GMP, including observing at any time the manufacture of any Supplied Product, or
any quality control or other services provided by IMMUNEX. These representatives
shall comply with all applicable safety and security rules while present at
facilities owned or operated by IMMUNEX.
3.18 Scheduling of Campaigns; Delays. IMMUNEX shall employ reasonable
-------------------------------
commercial efforts to maintain inventories of all Supplied Products sufficient
to meet AASTROM's commercial requirements as specified in each Annual
Requirements Forecast. IMMUNEX shall promptly advise AASTROM of significant
unanticipated delays in the release of any Order. IMMUNEX shall not be liable to
AASTROM for any delay in providing any Order, or the documentation relating to
any Order, if such delay is caused by Force Majeure.
3.19 Alternate Source of Supply. In the event that IMMUNEX elects to
--------------------------
discontinue supplying AASTROM with any Supplied Product as provided in Section
3.8 above, or is prevented by Force Majeure from supplying AASTROM with any
Supplied Product for a period of at least one hundred eighty (180) days, IMMUNEX
shall use reasonable commercial efforts to grant AASTROM a nonexclusive license
to make or have made the Cytokine corresponding to such Supplied Product for use
or sale in the Field and Territory, transfer to AASTROM or its designee (which
could include, for example, a mutually acceptable contract manufacturer) all
Licensed Technology and any available license rights (apart from facilities,
commercially available raw materials or equipment) that are necessary or useful
in manufacturing such Cytokine in an alternative facility, and shall use
reasonable commercial efforts to cooperate with AASTROM to continue to supply
Supplied Product from its inventories to meet AASTROM's requirements for
Supplied Product until an alternate source of supply is established. IMMUNEX
shall not be obligated to grant such licenses or transfer any technologies in
the event that a dispute over acceptance procedures or specifications cannot be
resolved as provided in Section 3.16 hereof, or IMMUNEX and AASTROM are unable
to resolve any dispute over pricing. In such event, AASTROM
7
shall be entitled to terminate this Agreement, subject to the liquidated damages
provisions of Section 8.4 hereof.
3.20 Place of Payment. Payments by AASTROM to IMMUNEX will be made in
----------------
United States Dollars by wire transfer to an account designated by IMMUNEX
located in the United States.
4. GRANT OF LICENSE
----------------
4.1 License. IMMUNEX hereby grants AASTROM a nonexclusive license under
-------
the Licensed Patents and Licensed Technology, to use and sell the Supplied
Products in the Field and Territory. The license granted hereunder includes the
right to grant sublicenses to purchasers or distributors of the Systems, to
preclinical or clinical investigators, or Affiliates of AASTROM, to use or sell
the Supplied Products in the Field and Territory, but excludes the right to sell
or to use the Supplied Products outside the Field and Territory. The scope of
the Territory to which this license applies may be amended during the Term.
4.2 Expanded Territorial Rights. IMMUNEX and AASTROM each desire to extend
---------------------------
the Territory to which the license granted pursuant to Section 4.1 hereof
applies to include all countries in the world ("Expanded Territorial Rights").
IMMUNEX has commenced negotiations with American Cyanamid Company and American
Home Products Corporation ("AHP") to obtain rights under prior agreements with
such companies enabling IMMUNEX to grant the Expanded Territorial Rights to
AASTROM. IMMUNEX shall continue such negotiations, and any other negotiations
that it deems reasonably necessary to secure appropriate licenses and rights
necessary to extend and protect such Expanded Territorial Rights. Pending
resolution of such negotiations, IMMUNEX will not object to the commencement of
any clinical trials by AASTROM outside of the Territory using Supplied Products
sold to AASTROM in the Territory. If such negotiations are successful, IMMUNEX
shall immediately amend this Agreement, at no additional charge or fee to
AASTROM, to grant AASTROM Expanded Territorial Rights.
4.3 Licensed Trademarks. IMMUNEX hereby grants AASTROM a nonexclusive
-------------------
license to make, have made, use and sell products and services using the
Licensed Trademarks in the Field and Territory, solely in connection with
AASTROM's use, sale and distribution of Supplied Products for use in conjunction
with the Systems. AASTROM's use of Licensed Trademarks shall at all times comply
with all reasonable instructions and specifications provided by IMMUNEX.
4.4 Non-competition. During the term of this Agreement, neither IMMUNEX nor
---------------
any Affiliate of IMMUNEX shall directly compete with AASTROM by selling Supplied
Products to AASTROM's customers for use with the Systems. AASTROM shall not sell
or distribute Supplied Products to customers of IMMUNEX or customers of other
companies to which IMMUNEX provides Supplied Products for use with proprietary
systems of such other companies. In the event that IMMUNEX enters into any
subsequent supply or license agreements with other companies for Supplied
Products, IMMUNEX shall obtain a covenant from such companies that they will not
sell or distribute Supplied Products to AASTROM's customers for use with the
Systems.
5. FEES AND ROYALTIES
------------------
5.1 Fees. In consideration of the value of research and development
----
previously conducted by IMMUNEX in developing the----Supplied Products
and Ancillary Materials and in assisting AASTROM with its development
efforts prior to the Effective Date,
8
AASTROM shall pay IMMUNEX a Signing Fee of $1,500,000, due and payable thirty
(30) days following the Effective Date. In order to maintain its license and
supply rights, AASTROM shall pay IMMUNEX an annual Fee of $1,000,000, which
shall be due and payable on each one year anniversary of the Effective Date
during the Term. If any such Annual Fee is not paid when due, IMMUNEX shall have
the right to terminate this Agreement for material breach, upon notice to
AASTROM as provided in Section 8.2(a) hereof.
5.2 Royalties. AASTROM shall have no obligation to pay royalties to IMMUNEX
---------
in respect of the licenses granted to AASTROM under Section 4 hereof, or
otherwise in respect of the use or sale of Supplied Products that are supplied
by IMMUNEX. In the event that AASTROM or its designee manufactures any Cytokine
that is subject to Licensed Patent Rights or is manufactured using Licensed
Technology transferred by IMMUNEX to AASTROM or AASTROM's designee as provided
in Section 3.19 hereof, AASTROM shall pay IMMUNEX royalties in respect of the
net sales value of such Cytokine, as well as pay any royalties to Third Parties
that IMMUNEX would have been obligated to pay in respect of the net sales value
of such Cytokine. The royalties payable to IMMUNEX by AASTROM, as well as all
other terms applicable to the reporting any payment of such royalties, shall be
determined by good-faith negotiation between IMMUNEX and AASTROM, taking into
account the value of the Licensed Technology, customary commercial practices in
the U.S. biotechnology, pharmaceutical and medical device industries, and other
relevant factors.
5.3 Records. AASTROM shall keep and maintain, in accordance with generally
-------
accepted accounting principles, proper and complete records and books of account
documenting all sales or other dispositions of Supplied Products as well as
sales or other dispositions of the Systems that include Supplied Products. At
IMMUNEX's request and expense, AASTROM shall permit an independent public
accounting firm selected by IMMUNEX to have access, not more than once in any
consecutive four Calendar Quarters, to such books and records for the sole
purpose of verifying sales reported by AASTROM to IMMUNEX for purposes of
Exhibit B, or for calculating any royalties due IMMUNEX.
6. INTELLECTUAL PROPERTY
---------------------
6.1 Inventions. AASTROM shall inform IMMUNEX of any material Improvement
----------
that is made by its employees, provided such Improvement has been formalized as
a disclosure. Title to any invention made by an employee or employees of either
party in connection with its activities under this Agreement shall vest in the
employer of such employee or employees in accordance with the patent laws of the
United States. Inventions made jointly by one or more employees of each party
shall be jointly owned. Each party shall inform the other in the event that its
employees report the making of a joint invention. Each party shall cooperate
with the other in completing any patent applications to secure patent rights for
inventions in which the other has an ownership interest, and in perfecting such
other party's legal title thereto. If AASTROM does not itself elect to obtain
patent coverage in any territory for any disclosed Improvement that is made
solely by its employees, it shall provide IMMUNEX with the opportunity to
prepare and file appropriate patent applications covering the disclosed
Improvement. Any patent rights resulting from such patent applications will be
included within the scope of Licensed Patent Rights.
6.2 Notification and Abatement of Patent Infringement. AASTROM shall notify
-------------------------------------------------
IMMUNEX of any infringement known to AASTROM by any Person of any Licensed
Patent Rights that apply also to operations of AASTROM, and shall provide
IMMUNEX with the available evidence, if any, of such infringement. If such
infringement is demonstrated by AASTROM to have resulted in competitive harm, or
would reasonably be
9
expected to result in harm to AASTROM, AASTROM shall have the right to request
that IMMUNEX commence suit or otherwise abate such infringement. If, following
such notice, IMMUNEX has not commenced such suit within one hundred eighty (180)
days following such notice, AASTROM shall have the right to suspend payment of
any annual fees or royalties payable hereunder (but not any payments for
Supplied Products) until IMMUNEX commences such suit or otherwise abates the
infringement by licensing or otherwise. IMMUNEX shall not be obligated to
undertake any patent enforcement activities if AASTROM has not paid IMMUNEX
total annual fees equal to at least $3,500,000.
IMMUNEX shall not be obligated to enforce Licensed Patent Rights against
more than one infringer at any one time.
6.3 General Obligation of Confidentiality. During the Term and for a period
-------------------------------------
of five (5) years thereafter, AASTROM and IMMUNEX shall maintain in confidence
the respective Confidential Information received or obtained from the other
party, and use such Confidential Information solely for the purposes
contemplated and permitted by this Agreement. Each party shall maintain
communications to each other in confidence. Each party acknowledges that all
Confidential Information exchanged or developed hereunder shall be owned by the
transferor and shall continue to be owned by the transferor following transfer.
6.4 Permitted Disclosures. Notwithstanding Section 6.3 hereof, IMMUNEX and
---------------------
AASTROM shall, to the extent necessary, have the right to disclose and use
Confidential Information of the other party:
(a) to prepare or supplement any Regulatory Filing applicable to the
use of a Supplied Product in the Field, or otherwise to assist in securing
institutional or government approval to clinically test or government approval
to market a Supplied Product for use in the Field; or
(b) where the disclosure and use of the Confidential Information will
be useful or necessary to the procurement of Licensed Patent Rights;
provided that the affected party shall have been notified of such disclosure and
that any such disclosure shall be in confidence and subject to provisions the
same, or substantially the same, as those in Section 6.3 hereof, whenever
reasonably possible.
6.5 Publicity, Use of Names or Trademarks. Neither party shall originate
-------------------------------------
any press release concerning this Agreement or the subject matter hereof without
the prior written approval of the other party, which approval shall not be
unreasonably withheld. Except as provided in Section 4.3 hereof with respect to
Licensed Trademarks, neither party shall have the right to use the name or any
trade name or trademark of the other in any form of publicity, advertising, or
solicitation without the prior written approval of the other party. The
trademarks Immunex(R), Leukine(R), Pixykine(R) and Cell Software(TM) are the
exclusive property of IMMUNEX.
7. WARRANTIES AND REPRESENTATIONS
------------------------------
7.1 Warranties and Representations of IMMUNEX. IMMUNEX represents and
-----------------------------------------
warrants to AASTROM that:
(a) IMMUNEX is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington and has all necessary
corporate power to enter into and perform its obligations under this Agreement;
10
(b) the execution, delivery and performance of this Agreement by
IMMUNEX have been duly authorized and approved by all necessary corporate
action, and that the Agreement is binding upon and enforceable against IMMUNEX
in accordance with its terms (subject to bankruptcy and similar laws affecting
the rights of creditors generally);
(c) IMMUNEX is the owner of the Licensed Patent Rights, Licensed
Technology and Licensed Trademarks, and has the right to grant AASTROM the
licenses granted hereunder, subject to any dominating patent rights of third
parties (for example, IL-3 or GM-CSF patents owned or controlled by Genetics
Institute, Inc. or Sandoz AG) and the rights of AHP under applicable agreements
with IMMUNEX;
(d) IMMUNEX is not aware of any special or unusual hazards that would
arise as a result of AASTROM's use of Licensed Technology as permitted
hereunder;
(e) Each lot of each Supplied Product delivered to AASTROM hereunder
shall be manufactured, tested and released in material compliance with current
GMP and the applicable Manufacturing Regulatory Documentation; and
(f) Any documentation provided to AASTROM by IMMUNEX concerning any
Supplied Product or Drug Master File shall be accurate in all material respects.
7.2 Warranties and Representations of AASTROM. AASTROM represents and
warrants to IMMUNEX that:
(a) AASTROM is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan and has all necessary
corporate power to enter into and perform its obligations under this Agreement;
(b) the execution, delivery and performance of this Agreement by
AASTROM have been duly authorized and approved by all necessary corporate
action, and that the Agreement is binding upon and enforceable against AASTROM
in accordance with its terms (subject to bankruptcy and similar laws affecting
the rights of creditors generally); and
(c) AASTROM shall use the Licensed Technology in compliance with all
applicable federal, state and local laws and regulations.
7.3 Limitation of Liability. IMMUNEX has no knowledge or awareness of or
-----------------------
control over the manner in which AASTROM intends to use the Licensed Technology.
IMMUNEX shall not be liable to AASTROM for any losses, damages, costs or
expenses of any nature incurred or suffered by AASTROM or by a Third Party,
arising out of any dispute or other claims or proceedings made by or brought
against AASTROM, (including, without limitation, product liability claims and
claims by a Third Party alleging infringement of its intellectual property
rights by the use or sale of any Supplied Product or System), nor shall IMMUNEX
be responsible in any way for dealing with any such disputes, claims or
proceedings, except to the extent that any such dispute, claim or proceeding
arises from (a) a breach by IMMUNEX of any warranty set forth in Section 7.1
hereof, or (b) any failure by IMMUNEX to manufacture, test, document or release
any Supplied Product in material compliance with current GMP and the applicable
Manufacturing Regulatory Documentation. IMMUNEX shall not be responsible to
AASTROM for any interruption in supply that is caused by Force Majeure. EXCEPT
AS SET FORTH IN SECTION 7.1(e) HEREOF, IMMUNEX MAKES NO PRODUCT WARRANTY,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IMMUNEX
11
SHALL NOT BE LIABLE FOR ANY USE OF LICENSED TECHNOLOGY BY AASTROM OR FOR ANY
LOSS, CLAIM, DAMAGE, OR LIABILITY, OF ANY KIND OR NATURE, WHICH MAY ARISE FROM
OR IN CONNECTION WITH THIS AGREEMENT OR FROM THE USE, HANDLING OR STORAGE OF THE
SUPPLIED PRODUCTS OR ANCILLARY MATERIALS. NEITHER PARTY TO THIS AGREEMENT SHALL
BE ENTITLED TO RECOVER FROM THE OTHER ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES.
7.4 AASTROM's Right to Indemnification. IMMUNEX shall indemnify each of
----------------------------------
AASTROM, its successors and assigns, and the directors, officers, employees,
agents and counsel thereof (the "AASTROM Indemnitees"), pay on demand and
protect, defend, save and hold each AASTROM Indemnitee harmless from and
against, on an after-tax basis, any and all liabilities, damages, losses,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees) (any of the
foregoing, a "Claim") incurred by or asserted against any AASTROM Indemnitee of
whatever kind or nature, including, without limitation, any claim or liability
based upon negligence, warranty, strict liability, violation of government
regulation or infringement of patent or other proprietary rights, arising from
or occurring as a result of (a) the use of any Licensed Technology by IMMUNEX or
any Affiliate, agent or Third Party licensee of IMMUNEX (other than AASTROM) or
(b) any breach of this Agreement by IMMUNEX, (including (i) any breach by
IMMUNEX of any warranty set forth in Section 7.1 hereof, or (ii) any failure by
IMMUNEX to manufacture, test, document or release any Supplied Product in
material compliance with current GMP and the applicable Manufacturing Regulatory
Documentation) except in any case claims resulting from the gross negligence or
willful misconduct of AASTROM. AASTROM shall promptly notify IMMUNEX of any
Claim, upon becoming aware thereof, and permit IMMUNEX at IMMUNEX's cost to
defend against such Claim and shall cooperate in the defense thereof. Neither
IMMUNEX nor AASTROM shall enter into, or permit, any settlement of any such
Claim without the express written consent of the other party. AASTROM may, at
its option and expense, have its own counsel participate in any proceeding that
is under the direction of IMMUNEX and will cooperate with IMMUNEX or its insurer
in the disposition of any such matter.
7.5 IMMUNEX Right to Indemnification. AASTROM shall indemnify each of
--------------------------------
IMMUNEX, its successors and assigns, and the directors, officers, employees,
agents and counsel thereof (the "IMMUNEX Indemnitees"), pay on demand and
protect, defend, save and hold each IMMUNEX Indemnitee harmless from and
against, on an after-tax basis, any and all Claims incurred by or asserted
against any IMMUNEX Indemnitee of whatever kind or nature, including, without
limitation, any claim or liability based upon negligence, warranty, strict
liability or violation of government regulation, arising from or occurring as a
result of (a) the use of any Supplied Product, Licensed Technology or Licensed
Patent Rights by AASTROM or any Affiliate, agent or employee of AASTROM, (b) any
breach of this Agreement by AASTROM, or (c) infringement of patent or other
proprietary rights of a Third Party, except in any case claims resulting from
the gross negligence or willful misconduct of IMMUNEX. IMMUNEX shall promptly
notify AASTROM of any Claim, upon becoming aware thereof, and permit AASTROM at
AASTROM's cost to defend against such Claim and shall cooperate in the defense
thereof. Neither IMMUNEX nor AASTROM shall enter into, or permit, any settlement
of any such Claim without the express written consent of the other party.
IMMUNEX may, at its option and expense, have its own counsel participate in any
proceeding that is under the direction of AASTROM and will cooperate with
AASTROM or its insurer in the disposition of any such matter.
12
8. TERM AND TERMINATION
--------------------
8.1 Normal Termination. Unless terminated early or renewed as provided
------------------
hereunder, this Agreement shall commence on the Effective Date and shall
terminate upon the fifth (5th) anniversary of the Effective Date (the "Term").
8.2 Termination by IMMUNEX. IMMUNEX shall have the right to terminate this
----------------------
Agreement, including the licenses granted pursuant to Sections 4.1 and 4.2
hereof, effective immediately upon written notice of termination to AASTROM in
the event that:
(a) AASTROM fails to perform or observe or otherwise breaches any of
its material obligations under this Agreement and such failure or breach
continues unremedied for a period of sixty (60) days after receipt by AASTROM of
written notice thereof from IMMUNEX;
(b) a proceeding or case shall be commenced without the application or
consent of AASTROM and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the following shall be
entered and continue unstayed and in effect, for a period of forty-five (45)
days from and after the date service of process is effected upon AASTROM,
seeking (i) AASTROM's liquidation, reorganization, dissolution or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidation or the like of AASTROM or of all or any
substantial part of its assets, or (iii) similar relief in respect of AASTROM
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
the composition or readjustment of debts.
8.3 Termination by AASTROM for Cause other than Material Breach by IMMUNEX.
----------------------------------------------------------------------
Subject to Section 8.4 hereof, AASTROM shall have the right to terminate this
Agreement at any time, effective immediately upon written notice of termination
to IMMUNEX.
8.4 Liquidated Damages upon Early Termination. Following the Effective Date,
-----------------------------------------
Immunex will commit personnel, incur expenses and devote its resources to
develop specialized formulations or vial sizes for the Supplied Products. In the
event that AASTROM terminates this Agreement pursuant to Section 8.3 hereof
prior to the payment to IMMUNEX of Annual Fees under Section 5.1 hereof equal to
* AASTROM shall pay IMMUNEX liquidated damages that are equal to *
Such liquidated damages shall be paid by AASTROM to IMMUNEX within thirty (30)
days following receipt of an invoice detailing the calculation thereof.
8.5 Termination by AASTROM for Material Breach. AASTROM shall have the right
------------------------------------------
to terminate this Agreement, including the licenses granted pursuant to Sections
4.1 and 4.2 hereof, effective immediately upon written notice of termination to
IMMUNEX in the event that:
(a) IMMUNEX fails to perform or observe or otherwise breaches any of
its material obligations under this Agreement and such failure or breach
continues unremedied
*CONFIDENTIAL PORTION REDACTED AND FILED SEPARATELY WITH THE COMMISSION
13
for a period of sixty (60) days after receipt by IMMUNEX of written notice
thereof from AASTROM;
(b) a proceeding or case shall be commenced without the application or
consent of IMMUNEX and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the following shall be
entered and continue unstayed and in effect, for a period of forty-five (45)
days from and after the date service of process is effected upon IMMUNEX,
seeking (i) IMMUNEX's liquidation, reorganization, dissolution or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidation or the like of IMMUNEX or of all or any
substantial part of its assets, or (iii) similar relief in respect of IMMUNEX
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
the composition or readjustment of debts.
8.6 Effect of Termination. In the event of any termination of this
---------------------
Agreement, all amounts previously invoiced and unpaid, or any accrued royalties
due IMMUNEX, shall be due and payable as of the time of termination, except for
any liquidated damages due pursuant to Section 8.4 which shall be paid as
provided therein. Upon termination, all rights and licenses granted pursuant to
Section 4.1 and 4.2 hereof shall immediately terminate, but the provisions of
Sections 6.3 and 6.4 hereof relating to Confidential Information and AASTROM
shall cease use of all IMMUNEX trademarks. The liability and indemnification
provisions of Sections 7.3, 7.4 and 7.5 hereof shall survive termination or
expiration of this Agreement only with respect to Claims that arose from acts or
circumstances that occurred prior to termination.
8.7 Renewal. Subject to the provisions set forth below and in Sections 3.19
-------
and 5.2, Immunex hereby grants AASTROM an option to renew this Agreement, or any
amendment or renewal thereof, for an additional five (5) year term to commence
upon expiration of the Term, provided that AASTROM notifies IMMUNEX of its
intent to renew at least one year prior to the fifth (5th) anniversary of the
Effective Date. AASTROM and IMMUNEX will negotiate the Supply Price applicable
to the Supplied Product for the Renewal Term in good faith, said Supply Price to
reflect any reasonable changes in manufacturing costs incurred by IMMUNEX that
would cause a decreased profit margin to IMMUNEX in comparison with that
attained during the initial term of the Agreement, AASTROM's profit margin on
sales of the Systems, or any increases or decreases in the price charged by
AASTROM or its licensees to customers for the Systems. If IMMUNEX elects to not
renew the Agreement, then IMMUNEX will continue to supply AASTROM with Licensed
Technology for two additional years from the date of written notification to
AASTROM of IMMUNEX's intent not to renew, during which period IMMUNEX shall
grant the licenses and transfer to AASTROM or its designee the Licensed
Technology (apart from facilities, equipment or commercially available supplies)
that is necessary or useful to manufacture Supplied Product in an alternative
facility as provided in Section 3.19.
9. MISCELLANEOUS PROVISIONS
------------------------
9.1 No Implied Waivers; Rights Cumulative. No failure on the part of IMMUNEX
-------------------------------------
or AASTROM to exercise and no delay in exercising any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, including, without limitation, the right or power to terminate this
Agreement, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
14
9.2 Survival. All agreements, covenants, representations, warranties and
--------
indemnities set forth in this Agreement shall survive the execution and delivery
of this Agreement.
9.3 Notices. All notices, requests and other communications to IMMUNEX or
-------
AASTROM hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy (fax) or other electronic facsimile
transmission or by registered mail, or certified mail, return receipt requested,
postage prepaid, in each case to the respective address specified below (or to
such address as may be specified in writing to the other party hereto):
Immunex Corporation
51 University Street
Seattle, Washington 98101
Attention: General Counsel
FAX: (206) 233-0644
Aastrom Biosciences, Inc.
Lobby L, Domino's Farms
Ann Arbor, Michigan 48106
Attention: President
FAX: (313) 665-0485
9.4 Further Assurances. Each of IMMUNEX and AASTROM agrees to duly execute
------------------
and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including,
without limitation, the filing of such additional assignments, agreements,
documents and instruments, that may be necessary or as the other party hereto
may at any time and from time to time reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes of, or to
better assure and confirm unto such other party its rights and remedies under,
this Agreement.
9.5 Successors and Assigns. The terms and provisions of this Agreement shall
----------------------
inure to the benefit of, and be binding upon, IMMUNEX, AASTROM, and their
respective successors and permitted assigns as provided in this Section. IMMUNEX
shall have the right to assign or otherwise transfer any of its rights and
interests, or delegate any of its obligations, to an Affiliate of IMMUNEX
provided that such Affiliate agrees in writing to carry out in full any
obligations to AASTROM that are assigned to it. Either party shall have the
right to assign all of its rights and interests and delegate all of its
obligations under this Agreement to any Person that is the successor in interest
to the assigning party in any merger, consolidation or sale involving
substantially all of the business and assets of the assigning party. Any other
assignment or delegation shall only be valid and effective if the other party
has provided its prior express written consent. Any attempt to assign or
delegate any portion of this Agreement in violation of this Section shall be
null and void. Subject to the foregoing, any reference to IMMUNEX or AASTROM
hereunder shall be deemed to include the successors thereto and assigns thereof.
9.6 Amendments. No amendment, modification, waiver, termination or discharge
----------
of any provision of this Agreement, nor consent to any departure by IMMUNEX or
AASTROM therefrom, shall in any event be effective unless the same shall be in
writing specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by IMMUNEX and
AASTROM,
15
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement, course of dealing or performance or any other matter
not set forth in an agreement in writing and signed by IMMUNEX and AASTROM.
9.7 Governing Law. This Agreement shall in all respects, including all
-------------
matters of construction, validity and performance, be governed by, and construed
and enforced in accordance with, the laws of the state of Washington applicable
to contracts entered into in that state between citizens of that state and to be
performed wholly within that state without reference to any rules governing
conflicts of laws.
9.8 Severability. If any provision hereof should be held invalid, illegal
------------
or unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, IMMUNEX and AASTROM hereby waive any
provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
9.9 Headings. Headings used herein are for convenience only and shall not
--------
in any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
9.10 Execution in Counterparts. This Agreement may be executed in any number
-------------------------
of counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
9.11 Entire Agreement. This Agreement constitutes, on and as of the date
----------------
hereof, the entire agreement of IMMUNEX and AASTROM with respect to the subject
matter hereof, and all prior or contemporaneous understandings or agreements,
whether written or oral, between IMMUNEX and AASTROM with respect to such
subject matter are hereby superseded in their entireties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
IMMUNEX CORPORATION AASTROM BIOSCIENCES, INC.
By /s/ Scott G. Hallquist By /s/ R. Douglas Armstrong
---------------------- ------------------------
Title Senior Vice President Title President/CEO
--------------------- -------------
16
EXHIBIT A: LICENSED PATENT RIGHTS
NOTE: LICENSE TO INTERNATIONAL RIGHTS IS SUBJECT TO PRIOR CONSENT OF AMERICAN
HOME PRODUCTS CORPORATION
Technology Country (Application SN) Filing Date
Patent Number (Priority Date)
- ---------------------------------------------------------------------------------------
PIXYKINE(R) United States 5,073,627 8/14/90 (8/22/89)
rh GM-CSF/IL-3 fusion 5,108,910 3/22/91 (8/22/89)
protein
Australia 632372 8/14/90 (8/22/89)
Canada (2,054,608) 10/31/91 (8/22/89)
Germany DD297,188 8/22/90 (8/22/89)
Europe 0489116 8/14/90 (8/22/89)
Austria 0489116 8/14/90 (8/22/89)
Belgium 0489116 8/14/90 (8/22/89)
Denmark 0489116 8/14/90 (8/22/89)
France 0489116 8/14/90 (8/22/89)
Italy 0489116 8/14/90 (8/22/89)
Germany 0489116 8/14/90 (8/22/89)
Luxembourg 0489116 8/14/90 (8/22/89)
Liechtenstein 0489116 8/14/90 (8/22/89)
Netherlands 0489116 8/14/90 (8/22/89)
Spain 0489116 8/14/90 (8/22/89)
Sweden 0489116 8/14/90 (8/22/89)
Switzerland 0489116 8/14/90 (8/22/89)
United Kingdom 0489116 8/14/90 (8/22/89)
Finland (920764) 8/14/90 (8/22/89)
Ireland 64202 8/21/90 (8/22/89)
Japan (513381/90) 8/14/90 (8/22/89)
Mexico (92 03426) 6/25/92 (8/22/89)
Malaysia (PI9102157) 11/22/91 (8/22/89)
Norway (920703) 8/14/90 (8/22/89)
Philippines (44030) 3/11/92 (8/22/89)
PCT (PCT/US90/04599) 8/14/90 (8/22/89)
- ---------------------------------------------------------------------------------------
17
- ---------------------------------------------------------------------------------------
rh Flt3L United States (08/243,545) 5/11/94 (5/24/93)
(08/444,626) 5/19/95 (5/24/93)
(08/444,632) 5/19/95 (5/24/93)
(08/444,625) 5/19/95 (5/24/93)
(08/444,627) 5/19/95 (5/24/93)
Australia 69877/94 5/12/94
Canada 5/12/94
Europe (94303575.8) 5/19/95 (5/24/93)
Finland 955646 5/12/94
Israel (109677) 5/18/94 (5/24/93)
Japan 500715/95 5/12/94
Korea 705236/1995 5/12/94
Mexico (943806) 5/23/94 (5/24/93)
Malaysia (PI 9401321) 5/24/94 (5/24/93)
Norway 954735 5/12/94
New Zealand 267541 5/12/94
South Africa 94/3490 5/20/94 (5/24/93)
Thailand (022529) 5/23/94 (5/24/93)
Taiwan (83105225) 6/8/94 (6/8/94)
Taiwan (83110743) 11/18/94 (11/18/94)
PCT (PCT/US94/05365) 5/12/94 (5/24/93)
- ---------------------------------------------------------------------------------------
Method for Improving United States 5,199,942 9/26/91 (6/7/91)
Autologous
Transplantation Australia (21793/92) 6/5/92 (6/7/91)
Canada (2,109,699) 6/5/92 (6/7/91)
Europe (92913333.8) 6/5/92 (6/7/91)
Japan (500649/93) 6/5/92 (6/7/91)
PCT (PCT/US92/04686) 6/5/92 (6/7/91)
- ---------------------------------------------------------------------------------------
Extracorporeal Cell United States (08/399,404) 3/6/95 (3/6/95)
Culture and
Transplantation Kits PCT (PCT/US95/02886) 3/7/95 (3/6/95)
- ---------------------------------------------------------------------------------------
LEUKINE(R) United States 5,391,485 8/6/85
rh GM-CSF 5,229,496 10/6/88
5,393,870 5/27/93
Canada (514,337) 7/22/86
- ---------------------------------------------------------------------------------------
18
EXHIBIT B: PRICE OF SUPPLIED PRODUCT
*
*CONFIDENTIAL PORTION REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
19
EXHIBIT 10.15
LEASE
-----
THIS LEASE is made as of this 18 day of May, 1992, between the following
parties:
LANDLORD: TENANT
Domino's Farms Holding AASTROM Biosciences, Inc.
Limited Partnership Post Office Box 130469
(a Michigan corporation) Ann Arbor, Michigan 48113-0469
24 Frank Lloyd Wright Drive
Ann Arbor, MI 48105
LEASE OF PREMISES:
- -----------------
In consideration of the rents to be paid and the covenants and
agreements to be performed hereunder, Landlord hereby leases to TENANT and
TENANT hereby leases from Landlord the PREMISES (defined below).
SUMMARY OF LEASE TERMS:
The following is intended to summarize certain basic terms of this
Lease, and is not intended to be exhaustive. In the event anything set forth in
this Summary of Lease Terms ("SUMMARY") conflicts with the other specific
provisions of this Lease contained in the Standard Lease Terms, the latter shall
be deemed to control.
A. BUILDING:
The office building known as Phase 5 of the Domino's Farms Prairie
House Office Complex and located at 24 Frank Lloyd Wright Drive, Ann
Arbor, MI 48105.
B. PREMISES:
OFFICE/LABORATORY SQUARE FOOTAGE:
Approximately 4,592 of usable square feet of space.
Location: Office and laboratory space located between column lines 25
and 29, and A and C, on Level 2 of Phase 5. Perimeters of
premises are as defined by BOMA (Building Owners & Managers
Association) standards, and are as shown on Rider A-1.
Address: 24 Frank Lloyd Wright Drive
Ann Arbor, MI 48105
C. TERM:
COMMENCEMENT DATE: 1. , 19
(check one) ------ ---------- ---------
XX 2. See Section 3.03
----
EXPIRATION DATE: Two years and eight months after Commencement
Date, subject to renewal as set forth in Rider
D.
D. RENT:
Months 1 and 2 The monthly rental charge will be equal to $2.31
per square foot for utilities, or $883.96.
Months 3-32 The monthly rental charge will be $8,919.96. This
amount is equal to $107,039.52 annually, based
upon a gross amount of $23.31 per square foot
($21.00 per square foot for rent plus $2.31 per
square foot for utilities).
E. PERMITTED USES: Office and laboratory
F. SECURITY DEPOSIT: $8,919.96
G. TENANT'S PROPORTIONATE SHARE: Not applicable
H. LANDLORD'S AGENT: Domino's Farms Corporation
I. MAILING ADDRESS: Domino's Farms Corporation
24 Frank Lloyd Wright Drive
P.O. Box 445
Ann Arbor, MI 48105
RIDERS ATTACHED:
- ---------------
RIDER A Floor Plan of Building
Layout of Space Site Plan
RIDER B Work Agreement
RIDER C Rules and Regulations
RIDER D Addendum to Lease
RIDER E Right of First Refusal
RIDER F Attornment
RIDER G Hazardous Materials
RIDER H To Be Attached at Lease Commencement:
Construction Documents
Specifications
Warranties and Manuals
List of Tenant-owned Equipment
Financial Compilation
STANDARD LEASE TERMS
- --------------------
SECTION 1
DEFINITIONS
1.01 Definitions: In addition to words and phrases defined in these
-----------
Standard Lease Terms, the words and phrases in the Summary of Lease Terms shall
have the meanings set forth therein.
SECTION 2
AMENITIES AND COMMON AREA
2.01 Amenities: Tenant's lease of the Premises shall include the
---------
nonexclusive right to the use of such building amenities as are generally made
available to tenants of the Building.* The use and the availability of all such
amenities shall be subject to the reasonable rules and regulations established
by Landlord or the respective proprietor or operator of such amenities and
subject to such prices or fees as may be established from time to time for the
use of availability of any amenity. In addition, Tenant shall be entitled to
unreserved parking spaces in the parking area provided for the Building,
together with the nonexclusive right to use the walkways and other means of
ingress and egress over the land surrounding the Building, and all other rights
of ingress and egress provided for use in common by all owners and tenants of
the Building.
2.02 Common Area: The term "Common Area" means that part of the Building
-----------
intended by Landlord for the common use of all tenants, including, but not
limited to, lobbies, public entrances, restrooms, stairways, elevators,
corridors, parking areas and walkways. Tenant, and its employees and licensees,
shall have the nonexclusive right to use the Common Area with other tenants and
other persons permitted by Landlord to use the same. Tenant shall not take any
action which would interfere with the rights of other persons to use the Common
Area.
SECTION 3
THE TERM
3.01 Term: The Term of this Lease and the payment of rent hereunder, shall
----
commence on the Commencement Date and shall end on the Expiration Date.
3.02 Commencement Date - Date Certain: If item C1 of the Summary of Lease
--------------------------------
Terms is checked and a date inserted, the Commencement Date shall be such date.
In that case Landlord agrees to substantially complete the improvements to the
Building listed on the Work Agreement executed by Tenant and Landlord and
attached as Rider B (the "Work Agreement") before the Commencement Date.
3.03 Commence Date - Substantial Completion: If item C2 of the Summary
--------------------------------------
Lease Terms is checked or if neither item C1 nor item C2 are checked, the
Commencement Date shall be as set forth in this Section 3.03.
A. Notice of Substantial Completion. Landlord shall give Tenant ten (10)
--------------------------------
business days prior written notice of the anticipated date of
substantial completion of the work to be performed by Landlord in the
Premises pursuant to the provisions of the Work Agreement, which is
attached hereto as Rider B (the "Work Agreement") and incorporated
herein.
*See Rider D
-3-
The Premises shall be deemed substantially complete when Landlord has
substantially completed the work required to be performed by Landlord
for Tenant as provided in the Work Agreement.
B. Delays. If there is a delay in the substantial completion of the
------
Premises, or any portion thereof, due to (a) any act or omission of
the Tenant, its architects, space designers, agents, or employees, as
set forth in the Work Agreement including, without limitation, delays
due to changes in the "Work" (as defined in the Work Agreement), or
any other work to be done by the Landlord, or delays in submission of
information, approving working drawings or estimates or giving
authorizations or approvals, (b) any additional time for completion of
such Work which may be required because of the inclusion in the Work
of any work which may hereinafter be referred to in this Lease or the
Work Agreement as "Additional Work" or (c) the noncompletion by the
Landlord of any Work, whether in connection with the layout or finish
of the Premises or otherwise, which the Landlord is not required to do
by the terms hereof until after the Commencement Date; then, the
Premises, or such portion, shall be deemed substantially complete and
available for occupancy on the date when the Premises or such portion
would have been available but for such delay, even though the Work or
Additional Work to be done by Landlord has not been commenced or
completed. Any reasonable and necessary additional cost to Landlord to
complete the Premises occasioned by such delay shall be paid as
additional rent upon demand. For the purposes of the preceding
sentence, "additional cost to Landlord" shall mean the total cost
incurred in excess of the aggregate cost which the Landlord would have
incurred to complete the Premises if there had been no such delay.
With respect to delays occasioned by the inclusion of "Additional
Work" referred to in (b) above, Landlord shall advise Tenant in
writing of the approximate number of days the Work will delay the
substantial completion of the Premises.
C. Termination. In the event the Premises shall not have been
-----------
substantially completed by Landlord on or prior to three months after
the date of this Lease, as such date may be extended by reason of
strikes, lockout, civil commotion, warlike operation, invasion,
rebellion, hostilities, governmental regulations or controls,
inability to obtain labor or materials despite reasonable diligence,
Acts of God, or other similar causes beyond Landlord's control, then
and in that event either Landlord or Tenant shall be entitled to
cancel this Lease by written notice to the other and upon such
cancellation, neither party shall have any further liability to the
other hereunder.
3.04 Taking of Possession: The taking of possession of the Premises shall be
--------------------
deemed an acceptance of the same by Tenant, and shall be deemed in any event
substantial completion by Landlord of all of the improvements listed on the Work
Agreement. For the purposes of this Section, the work to be done by Landlord
shall be deemed substantially complete even though minor details or adjustments
which shall not materially interfere with Tenant's use and occupancy of the
Premises may not then have been completed, but which work Landlord agrees will
thereafter be promptly completed.
3.05 Waivers: Tenant expressly waives any right to rescind this Lease and
-------
further expressly waives the right to recover any damages, direct or indirect,
which may result from Landlord's failure to deliver possession of the Premises
on the Commencement
-4-
Date. The Commencement Date shall not be postponed or delayed by reason of or
arising out of delays occasioned by Tenant.
3.06 Confirmation of Lease Term: Promptly after the Commencement Date,
--------------------------
Landlord and Tenant will execute an agreement in recordable form, hereafter
referred to as the "Commencement Date Agreement", stating, among other things,
the Commencement Date and Expiration Date of the Term of this Lease. Tenant's
failure or refusal to sign the same shall in no event affect Landlord's
designation of the Commencement Date.
SECTION 4
THE BASE RENT
4.01 Base Annual Rental: Tenant agrees to pay to Landlord the Base Annual
------------------
Rental for the original Term of this Lease without right of set-off or abatement
(except as specifically provided in Section 9 or 11).
4.02 Base Monthly Rental: The Base Annual Rental shall be payable in monthly
-------------------
installments equal to the Base Monthly Rental, in advance, without any set-offs
or deductions (except as specifically provided in Section 9 or 11), on the first
day of each month (the "Rent Day") during the Term of this Lease at the address
shown in Paragraph I of the Summary, or at such other place as Landlord from
time to time may designate in writing. In the event the Commencement Date is
other than the first day of a calendar month, the rental for the first and last
partial months shall be prorated based on the actual number of days of such
months included within the Lease Term and based upon the amount of the Base
Monthly Rental.
SECTION 5
LATE CHARGES AND INTEREST
5.01 Late Charges: Any rent or other sums payable by Tenant to Landlord
------------
under this Lease which are not paid by Tenant and received and accepted by
Landlord within seven (7) days after they are due will be subject to a onetime
late charge of five percent (5%) of the amount due. Such late charges will be
due and payable as additional rent on or before the next Rent Day.
5.02 Interest: Any rent, late charges or other sums, if any, payable by
--------
Tenant to Landlord under this Lease not paid within thirty (30) days after the
same are due will bear interest at a per annum rate of eleven (11%) percent;
provided however, if such rate exceeds the maximum rate of interest permitted by
law under such encumbrances, then such rate shall be reduced to the
maximum permissible rate. Such interest will be due and payable as additional
rent on or before the next Rent Day, and will accrue from the date that such
rent, late charges or other sums are first payable under the provisions of this
Lease until actually paid by Tenant.
5.03 Default: Any default in the payment of rent, late charges or other sums
-------
will not be considered cured unless and until the late charges and interest due
hereunder are paid by Tenant to Landlord. If Tenant defaults in paying such late
charges and/or interest, Landlord will have the same remedies as on default in
the payment of rent. The obligation hereunder to pay late charges and interest
exists in addition to, and not in the place of, the other default provisions of
this Lease.
-5-
SECTION 6
TAXES, ASSESSMENTS, UTILITIES, SERVICES
6.01 Personal Property Taxes: Tenant shall be responsible for and pay all
-----------------------
personal property taxes assessed against Tenant's fixtures, equipment and other
property of Tenant located on the Premises.
6.02 Taxes and Assessments:
---------------------
6.03 Utilities:
---------
-6-
A. Utilities to be Furnished: So long as Tenant is not in default
-------------------------
under the terms of this Lease, Landlord shall furnish the following
utilities ("Utilities"):
(1). Electricity
(2). Air conditioning and heat during the appropriate season, as
provided in the Rules and Regulations attached as Rider C; and
(3). Hot and cold water for lavatory purposes.
B. Tenant's Utilities Share: Tenant agrees to pay to Landlord, as
------------------------
Additional Rent for the Premises, $2.31 per square foot for utility
charges.
6.04 Telecommunications: Tenant shall arrange and pay for its own telephone
------------------
or other telecommunications services, subject to Landlord's prior written
approval of the means of installation of such service(s).
SECTION 7
USE OF PREMISES
7.01 Permitted Uses: The Premises will be used and occupied by Tenant for
--------------
the Permitted Uses and for no other purpose without prior written consent of
Landlord. Tenant agrees that it will not use or permit any person to use the
Premises or any part thereof for any use or purposes in violation of the laws of
the United States, the laws, ordinances or other regulations of the State and
municipality in which the Premises are located, or of any other lawful
authorities. During the Term or any extension, Tenant will keep the Premises and
every part thereof in a clean and wholesome condition and will comply with all
lawful health and police regulations and with the Rules and Regulations attached
as Rider C.
7.02 Rules and Regulations: The Landlord may, from time to time, establish
---------------------
reasonable rules and regulations ("Rules and Regulations") for use of the
Premises, the Building and the Common Areas by Tenant and all other persons.
Those Rules and Regulations in effect on the date of this Lease are attached as
Rider C. All such rules and regulations may be amended or replaced, at
Landlord's option, upon written notice to Tenant (sent by mail or otherwise
delivered to the Premises). All such amendments or replacements shall be deemed
to automatically amend and replace those Rules and Regulations set forth in
Rider C.
SECTION 8
INSURANCE
8.01 Liability Insurance: Tenant shall obtain, at its own expense,
-------------------
comprehensive general liability insurance coverage, including blanket
contractual coverage, against claims for or arising out of bodily injury, death
or property damage occurring in, on or about the Premises, which policy or
policies shall name Landlord as an additional insured. The policy may be either
a dual limit policy in the amounts of $1,000,000 per person and $1,000,000 per
occurrence for bodily injury and $1,000,000 per occurrence for property damage
or a single limit policy in the amount of $1,000,000. Landlord may require that
the limits of such insurance be increased in reasonably appropriate amounts as
-7-
may be determined by Landlord or any mortgagee of the Building; provided,
however, that the amount of coverage will not be increased more frequently than
at one (1) year intervals. Such policy shall be issued by an insurance company
acceptable to Landlord. The policy procured by Tenant under this Subsection
8.01 must provide for at least thirty (30) days' written notice to Landlord of
any cancellation. On or before the Commencement Date, Tenant shall deliver to
Landlord, at Landlord's option, a certificate of insurance or a certified copy
of the original policy, together with receipts evidencing payment of the
premiums therefor. Tenant will deliver certificates of renewal for such
policies to Landlord at least thirty (30) days prior to the expiration dates
thereof. The insurance provided by Tenant under this Subsection 8.01 may be in
the form of a blanket insurance policy covering other properties as well as the
Premises; provided, however, that Tenant must furnish Landlord with a written
statement from the insurer(s) under such policy or policies which statement
shall (i) specify the policy limits of the policy or policies, (ii) state that
the Premises and this Lease are covered by such policy or policies and (iii)
state the amount of total insurance allocated to the Premises; provided,
further, that any such policy or policies of blanket insurance must, as to the
Premises, otherwise comply as to insurance amounts, endorsements, notice of
cancellation and coverage with the other provisions of this Subsection 8.01.
8.02 Insurance for Leasehold Improvements: Tenant shall obtain, at its
------------------------------------
own expense, a policy to insure the leasehold improvements to be made to the
Premises and any other fixtures or equipment of Tenant which will remain the
property of Landlord under Section 18 of this Lease. The policy shall name
Landlord as an additional insured for full replacement cost against loss by
fire, with standard extended risk coverage, vandalism, malicious mischief,
sprinkler leakage and all other risk perils.
8.03 Replacement Cost: Tenant may, at his or her option, maintain
----------------
insurance for full replacement cost of property of Tenant located in or about
the Premises. Landlord shall not be responsible for any damage or loss to
property of the tenant located in or about the premises.
DAMAGE
9.01 Damage: If the Premises are damaged or destroyed in whole or in part
------
by any fire or other casualty during the Term hereof, Landlord, to the extent
insurance proceeds are available to Landlord, will repair and restore the same
to good tenantable condition with reasonable dispatch, and that the rent herein
provided for shall abate entirely in case the entire Premises are untenantable
and pro rata on an equitable basis for the portion rendered untenantable,
--------
in case a part only is untenantable, until the same shall be restored to a
tenantable condition. The foregoing shall be subject to all of the following:
(i) if Tenant shall fail to adjust its own insurance or to remove its damaged
goods, wares, equipment or property within a reasonable time, and as a result
thereof the repairing and restoration is delayed, there shall be no abatement of
rental during the period of such resulting delay; (ii) that there shall be no
abatement of rental if such fire or other cause damaging or destroying the
Premises shall result from the negligence or willful act of Tenant, its agents,
servants, visitors, licensees, invitees or employees; (iii) that if Tenant shall
use any part of the Building other than the Premises for storage, during the
period of repair, a reasonable charge shall be made therefor against Tenant;
(iv) that in case the Premises or the Building shall be destroyed to the extent
of more than one-half (1/2) of the value thereof, Landlord may at its option
terminate this Lease
-8-
forthwith by a written notice to Tenant stating the date upon which this Lease
will terminate.
SECTION 10
MAINTENANCE AND REPAIRS
10.01 Maintenance and Repairs: Landlord will maintain, repair and keep
-----------------------
all structural, electrical, mechanical and plumbing systems of the Building
(other than such systems installed by Tenant) and any other improvements on the
land which serve the entire Building, including the parking lot, at all times,
in good appearance and repair except for reasonable and normal wear and tear.
Landlord will also maintain the grounds, sidewalks, driveways and parking areas.
Landlord assumes the responsibility for the operation, security, management,
maintenance and repair of the Common Area.
10.02 Cost of Repairs. From and after the date Tenant takes possession
---------------
of the Premises, and excluding and items described in the Work Agreement as
Landlord's Work and those items subject to the preceding Section 10.01, any
repairs, additions or alterations to the Building including any of its systems
(e.g., plumbing, electrical, mechanical) structural or nonstructural, or to the
Premises, which are required by any law, statute, ordinance, rule, regulation
or governmental authority or insurance carrier, including, without limitation,
OSHA, arising out of Tenant's use or occupancy of the Premises, will be made by
Landlord at Tenant's expense including, without limitation, those which require
the making of any structural, unforseen or extraordinary changes. The foregoing
shall not apply to any such repairs that are required because of Landlord's use
of the Building generally as an office building. Tenant agrees to pay the total
costs incurred by Landlord for repairs made under this Subsection 10.02 within
thirty (30) days after the delivery of an invoice for same. All amounts payable
under this Section 10.02 will be additional rental and failure by Tenant to pay
them when due will be a default under this Lease and, in addition to any other
remedies provided in this Lease upon default, will result in the assessment of
late charges and interest as set forth in Section 5.
10.03 Maintenance: Tenant agrees at its own expense to maintain the Premises
-----------
and all improvements thereto, including any improvements made by Tenant, at all
times in good appearance and repair except for reasonable and normal wear and
tear.
10.04 Janitorial Services: Landlord will provide janitorial services to the
-------------------
Premises. Tenant is responsible for the removal of any and all hazardous
materials, to be handled in accordance with Rider G of this lease.
SECTION 11
INTERRUPTION OF SERVICES OR UTILITIES
11.01 Interruption of Utilities: Interruption or curtailment of any Utility
-------------------------
for any reason or interruption or curtailment of any service maintained in the
Building, if caused by strikes, mechanical difficulties, or any causes or acts
beyond Landlord's control, whether similar or dissimilar to those enumerated,
shall not entitle Tenant to any claim against Landlord or to any abatement in
rent, nor shall the same constitute constructive or partial eviction, unless
Landlord fails to take such measures as may be reasonable in the circumstances
to restore the service or Utility without undue delay. In the event that the
Tenant would elect to bring in portable generators or other similar equipment,
Landlord will cooperate with installation of If the Premises are rendered
untenantable in whole or in part for a period of over three (3) full business
days, by the making of repairs, replacements or additions, other than those made
at Tenant's request or caused by misuse or neglect by Tenant or Tenant's agents,
servants,
-9-
visitors, invitees, licensees or employees or those required by any governmental
authority due to the nature of Tenant's use of the Premises, there shall be a
proportionate abatement of rent during the period of such untenantability.
SECTION 12
PAYMENT FOR SERVICES RENDERED BY LANDLORD
12.01 Payment for Services: If Landlord at any time (i) does any work
--------------------
or performs any service in connection with the Premises, or (ii) supplies any
materials to the Premises, and the cost of such services, work or materials is
Tenant's responsibility under the provisions of this Lease, Landlord will
invoice Tenant for the reasonable cost, payable on the next Rent Day or within
ten (10) days after delivery of the invoice, whichever is later. This Section
12.01 will apply to any such work, service or materials, whether furnished at
Tenant's request or on its behalf and whether furnished or caused to be
furnished by Landlord, its agents, employees or contractors. All amounts payable
under this Section 12.01 will be additional rental and failure by Tenant to pay
them when due will be a default under this Lease and, in addition to any other
remedies provided in this Lease upon default, will result in the assessment of
late charges and interest under Section 5. This Section 12.01 shall not apply to
Total Tax Assessments as defined in Section 6 nor to Utility Expenses as defined
in Section 19.01.
SECTION 13
ALTERATIONS
13.01 Alterations: Landlord will make any structural alterations, additions,
-----------
or improvements, exterior or interior, to the Premises including alterations
made at the request of Tenant and which have been approved by Landlord.
Landlord's consent for any interior improvements will not be unreasonably
withheld; provided that Landlord's consent to exterior improvements may be
withheld in Landlord's sole and absolute discretion. Any modification of the
Premises other than as specifically set forth in the Work Agreement as
Landlord's expense will be at the expense of Tenant.
13.02 Restoration of Premises: All alterations, additions and improvements
-----------------------
made by either of the parties hereto on the Premises will be the property of
Landlord and will remain on and be surrendered with the Premises at the
termination of this Lease provided, however, that Tenant shall remove, at
Landlord's option, all alterations, additions or improvements to the Premises
made for Tenant and Tenant shall pay to Landlord to restore the Premises to the
conditions stated in the Work Agreement, (Rider B), if notified in writing by
Landlord.
SECTION 14
LIENS
14.01 Liens: After the Commencement Date, Tenant will keep the Building,
-----
Premises and surrounding land free of liens of any sort attributable to the acts
of Tenant and will hold Landlord harmless from any liens which may be placed on
the Building, Premises or surrounding land except those attributable to the acts
of Landlord or other tenants.
SECTION 15
EMINENT DOMAIN
15.01 Eminent Domain: If the Premises or any part thereof are taken by any
--------------
public authority under power of eminent domain, or by private
-10-
sale in lieu of eminent domain, this Lease will terminate as of the date of such
taking or sale, and Tenant may receive a pro rata refund of any rents, deposits
or other sums paid in advance. Landlord reserves the right, however, to elect
to demolish, rebuild or reconstruct the Building if any portion of the Building
is so taken, and if Landlord so elects, whether or not the Premises are involved
in the taking, this Lease may be terminated by Landlord on 90 days written
notice to Tenant and the rent will be adjusted to the date Tenant's
possession of the Premises is terminated.
15.02 Condemnation Award: The whole of any award or compensation for any
------------------
portion of the Premises taken, condemned or conveyed in lieu of taking or
condemnation shall be solely the property of and payable to Landlord. Nothing
herein contained shall be deemed to preclude Tenant from seeking at its own cost
and expense, an award from the condemning authority for loss of its business,
the value of any trade fixtures or other personal property of Tenant in the
Premises or moving expenses, provided that the award for such claim or claims
shall not be in diminution of the award made to Landlord.
SECTION 16
ASSIGNMENT OR SUBLETTING
16.01 Assignment or Subletting: Tenant agrees not to assign or in any manner
------------------------
transfer this Lease or any interest in this Lease without the previous written
consent of Landlord, and not to sublet the Premises or any part of the Premises
or allow anyone to use or to come in, with, through or under it without like
consent, which consent, in each case, will not be unreasonably withheld. Upon
any attempted unconsented to assignment or sublease, Landlord shall have the
right to terminate this Lease. One such consent will not be deemed a consent to
any subsequent assignment, subletting, occupation or use by any other person.
Any sublease on the Premises executed by Tenant and a third party must terminate
when the Term of this Lease expires. The acceptance of rent from an assignee,
subtenant or occupant will not constitute a release of Tenant from the further
performance of the obligations of Tenant contained in this Lease. In the event
of any such assignment or sublease of all or any portion of the Premises where
the rental or other consideration reserved in the sublease or by the assignment
exceeds the rental or pro rata portion of the rental, as the case may be, for
such space reserved in this Lease, Tenant agrees to pay Landlord monthly, as
additional rent, on the Rent Day, the excess of the rental net of recovery of
Tenant-paid improvement costs or other consideration reserved in the sublease
or assignment over the rental reserved in this Lease applicable to the
subleased/assigned space.
SECTION 17
INSPECTION AND ALTERATION OF PUBLIC PORTIONS
17.01 Inspection: Tenant agrees to permit Landlord and the authorized
----------
representatives of Landlord to enter the Premises at all times for the purpose
of inspecting the same, subject to confidentiality agreements if requested by
Tenant.
17.02 Right to Enter and Alter Premises: Upon notice from Landlord, Tenant
----------------------------------
shall permit Landlord to erect, use and maintain pipes and conduits in and
through the Premises. Landlord or its agents or designees shall have the right
to enter the Premises, for the purpose of making such repairs or alterations as
Landlord shall be required or shall have the right to make by the provisions of
this Lease and, subject to the foregoing, shall also have the right to enter the
Premises for the purpose of exhibiting them to prospective purchasers or lessees
of the Building or to prospective mortgages or to prospective assignees
-11-
of any such mortgages. Landlord shall be allowed to take all material into and
upon the Premises that may be required for the repairs or alterations above
mentioned without the same constituting an eviction of Tenant in whole or in
part, and the rent reserved shall in no wise abate, except as otherwise provided
in this Lease, while said repairs or alterations are being made.
17.03 Right to Show Premises: During the three (3) months prior to the
----------------------
expiration of the Term of this Lease, Landlord may exhibit the Premises to
prospective tenants during normal business hours.
17.04 Right to Alter Public Portions of Buildings: Landlord shall have the
-------------------------------------------
right at any time without thereby creating an actual or constructive eviction or
incurring any liability to Tenant therefore, to change the arrangement or
location of entrances, passageways, doors, and doorways, corridors, stairs,
toilets and other like public service portions of the Building. Tenant shall at
all times be provided with an entrance to the Premises.
17.05 Name of Building: Landlord shall have the right at any time to name the
----------------
Building for any person(s) or tenant(s) and to change any and all such names at
any time thereafter.
SECTION 18
FIXTURES AND EQUIPMENT
18.01 Landlord's Property: All fixtures and equipment paid for by Landlord
-------------------
and all improvements, fixtures and equipment which may be paid for and placed on
the Premises by Tenant from time to time but which are so incorporated and
affixed to the Premises that their removal would involve damage or structural
change to the Premises, will be and remain the property of Landlord, excepting
those items specifically listed in the Work Agreement. Tenant will be
responsible for the cost of repair due to removal of specified items.
18.02 Tenant's Property: All improvements, furnishings, equipment and
-----------------
fixtures other than those specified in Subsection 18.01, which are paid for and
placed on the Premises by Tenant from time to time will remain the property of
Tenant and be removed by Tenant at the expiration of the Lease.
SECTION 19
UTILITY EXPENSES
19.01 Definitions:
-----------
(i) "Utility Expenses" means any and all charges for heat, air
conditioning, ventilating, and steam, gas, electricity, water or
other fuels made against the Entire Premises and all labor services
and materials related thereto which are delivered or provided to or
with respect to the Entire Premises.
(ii) "Tenant's Proportionate Share of Utilities" means Utility Expenses
multiplied by the percentage set forth in Paragraph G of the Summary.
(iii) "Utility Expense Statements" means written statements, certified
by Landlord, showing the amounts of Utility Expenses for each calendar
year which includes any portion of the Term or any renewal or extension
thereof.
19.02 Utility Expenses: Tenant will pay to Landlord as Additional Rent $2.31
-----------------
per square foot for Utility Expenses.
-12-
Payments due pursuant to this Section will be due at the time specified in
Section 6.03.
19.03 Utility Expense Statement: Any Utility Expense Statement sent to
-------------------------
Tenant shall be conclusively binding upon Tenant unless, within thirty (30) days
after such statement is sent, Tenant shall send a written notice to Landlord
objecting to such statement and specifying the respects in which such statement
is claimed to be incorrect. If such notice is sent, either party may refer the
decision of the issues raised by such notice to Arthur Andersen & Co., or any
successor firm, or other reputable independent firm of certified public
accountants selected by Landlord, and the decision of such accountants shall be
conclusively binding upon the parties. The fees and expenses involved in such
decision shall be borne by the unsuccessful party (and if both parties are
partially unsuccessful, the accountants shall apportion such fees and expenses
between the parties, based on the degree of success of each party).
SECTION 20
NOTICES OR DEMANDS
20.01 Notices or Demands. All bills, notices, statements, communications
------------------
or demands (collectively, "notices or demands") upon Landlord or Tenant desired
or required to be given under any of the provisions hereof must be in writing.
Any such notices or demands from Landlord to Tenant will be deemed to have been
duly and sufficiently given if a copy thereof has been personally delivered or
mailed by United States mail in an envelope properly stamped and addressed to
Tenant at the address of the Premises or at such other address as Tenant may
have last furnished in writing to Landlord for such purpose. Any such notices
or demands from Tenant to Landlord will be deemed to have been duly and
sufficiently given if personally delivered to Landlord or mailed by United
States mail in an enveloped properly stamped and addressed to Landlord at the
address set forth in this Lease. The effective date of such notice or demand
will be deemed to be the time when personally delivered or mailed as herein
provided.
SECTION 21
BREACH; INSOLVENCY; RE-ENTRY
21.01 Default: If any rental payable by Tenant to Landlord remains unpaid
-------
for more than seven (7) days after written notice to Tenant of nonpayment, or if
Tenant violates or defaults in the performance of any of its obligations in this
Lease and the
-13-
violation or default continues for a period of ten (10) days after written
notice, then Landlord may (but will not be required to) declare this Lease
forfeited and the Term ended, or re-enter the Premises, or may exercise all
other remedies available under Michigan law. Landlord will not be liable for
damages to person or property by reason of any legitimate re-entry or
forfeiture, and Landlord will be aided and assisted by Tenant, its agents,
representatives and employees. Tenant, by the execution of this Lease, waives
notice of re-entry by Landlord. In the event of re-entry by Landlord without
declaration of forfeiture, the liability of Tenant for the rent provided herein
will not be relinquished or extinguished for the balance of the Term, and any
rentals prepaid may be retained by Landlord and applied against the costs of re-
entry, or the costs of enforcement of this Lease, including the cost of any
proceeding under the Federal Bankruptcy Code.
21.02 Bankruptcy: If Tenant is adjudged bankrupt or insolvent, files or
----------
consents to the filing of a petition in bankruptcy under Federal or State law,
applies for or consents to the appointment of a receiver for all or
substantially all of its assets, or makes a general assignment for the benefit
of its creditors, then Tenant shall be in default under this Lease and, to the
extent from time to time permitted by applicable law, including but not limited
to the Federal Bankruptcy Code, Landlord shall be entitled to exercise all
remedies set forth in Section 21.01. In a reorganization under Chapter 11 of the
Federal Bankruptcy Code, the debtor or trustee must assume this Lease or assign
it within sixty (60) days from the filing of the proceeding, or he shall be
deemed to have rejected and terminated this Lease. Tenant acknowledges that its
selection to be the tenant hereunder was premised in material part on Landlord's
determination of Tenant's creditworthiness and the character of its occupancy
and use of the Premises would be compatible with the nature of the Premises and
other adjacent properties and tenants of Landlord. Therefore, if Tenant, as
debtor, or its trustee elects to assume this Lease, in addition to complying
with all other requirements for assumption under the Federal Bankruptcy Code,
then Tenant, as debtor, or its trustee or assignee, as the case may be, must
also provide the adequate assurance of future performance, including but not
limited to a deposit, the amount of which shall be reasonably determined based
on the duration of time remaining in the Term, the physical condition of the
Premises at the time the proceeding was filed, and such damages as may be
reasonably anticipated after reinstatement of the Lease.
21.03 Re-Leasing of Premises: In the event of declaration of forfeiture
----------------------
at or after the time of re-entry, Landlord may re-lease the Premises or any
portion(s) of the Premises for a term or terms and at a rent which may be less
than or exceed the balance of the term of and the rent reserved under this
Lease. In such event Tenant will pay Landlord as liquidated damages for
Tenant's default any deficiency between the total rent reserved and the net
amount, if any, of the rents collected on account of the lease or leases of the
Premises which otherwise would have constituted the balance of the term of this
Lease. In computing such liquidated damages, there will be added to the
deficiency reasonable expenses which Landlord may incur in connection with
re-leasing, such as legal expenses, attorney's fees, brokerage fees and
expenses, advertising and for keeping the Premises in good order or for
preparing the Premises for re-leasing. Any such liquidated damages will be paid
in monthly installments by Tenant on the Rent Day and any such suit brought to
collect the deficiency for any month will not prejudice Landlord's right to
collect the deficiency for any subsequent month by a similar proceeding. In
lieu of the foregoing computation of liquidated damages, Landlord may elect, at
its sole option, to receive
-14-
liquidated damages in one payment equal to any deficiency between the total rent
reserved hereunder and the fair and reasonable rental of the Premises, both
discounted at five (5%) percent per annum to present value at the time of
declaration of forfeiture.
21.04 Failure to Re-Lease Premises: Whether or not forfeiture has been
----------------------------
declared, Landlord will attempt to re-lease the Premises, however, Landlord will
not be responsible in any way for failure to re-lease the Premises, or in the
event that the Premises are re-leased, for failure to collect the rent under
such re-leasing. The failure of Landlord to re-lease all or any part of the
Premises will not release or affect Tenant's liability for rent or damages.
SECTION 22
SURRENDER OF PREMISES ON TERMINATION
22.01 Condition of Premises Upon Termination: At the expiration (or earlier
--------------------------------------
termination) of the Term, Tenant will surrender the Premises broom clean and in
as good condition and repair as they were at the time Tenant took possession,
reasonable wear and tear excepted, and promptly upon surrender will deliver all
keys and building security cards for the Premises to Landlord at the place then
fixed for payment of rent. All reasonable costs and expenses incurred by
Landlord in connection with repairing or restoring the Premises to the condition
called for herein, together with the costs, if any, of removing from the
Premises any property of Tenant left therein, together with liquidated damages
in an amount equal to the amount of minimum net rental plus all other charges
which would have been payable by Tenant under this Lease if the term of this
Lease had been extended for the period of time reasonably required for Landlord
to repair or restore the Premises to the condition called for herein, shall be
invoiced to Tenant and shall be payable within ten (10) days of the date of such
invoice.
22.02 Storage of Tenant's Property: If Tenant fails to remove all its
----------------------------
property (or property of others in its possession) from the Premises on
termination of this Lease (for any cause), Landlord at its option may remove the
property in any manner that it chooses and may store the property without
liability to Tenant for loss, whether based on contract, tort or otherwise.
Tenant agrees to pay Landlord on demand any and all expenses incurred in such
removal, including court costs, attorneys' fees and storage charges on the
property for any length of time it is in Landlord's possession. Tenant will
indemnify and hold Landlord harmless from any claim by third parties with
respect to property owned or claimed by them, left in the Premises by Tenant,
and removed by Landlord pursuant to this paragraph. Under no circumstances will
Landlord be obligated to retain any property left on the Premises or in
Landlord's possession longer than two (2) months after termination of this Lease
(for any cause) and Landlord may after two (2) months dispose of the property in
any manner it deems appropriate, including public or private sale or by
destruction, discard or abandonment and the proceeds of any such sale will be
applied against any sums due Landlord under this Lease.
SECTION 23
PERFORMANCE BY LANDLORD OF THE COVENANTS OF TENANT
23.01 Tenant's Failure to Perform: If Tenant fails to pay any sum of money,
----------------------------
other than rental, required to be paid hereunder or fails to perform any act on
its part to be performed hereunder and such failure shall continue for a period
of ten (10) days (or a reasonable period of less than ten (10) days when life,
person or property is in jeopardy), Landlord may (but shall
-15-
not be required to), and without waiving or releasing Tenant from any of
Tenant's obligations, make any such payment or perform any such other act. All
sums paid by Landlord and all reasonable incidental costs, including without
limitation the cost of repair, maintenance or restoration of the Premises if so
performed by Landlord hereunder, shall be deemed additional rental and, together
with interest thereon at the rate set forth in Section 5.02 from the date of
payment by Landlord until the date of repayment by Tenant to Landlord, shall be
payable to Landlord within fifteen (15) days after receipt of invoice by Tenant.
On default in such payment, Landlord shall have the same remedies as on default
in payment of rent. The rights and remedies granted to Landlord under this
Section 23 shall be in addition to and not in lieu of all other remedies, if
any, available to Landlord under this Lease or otherwise, and nothing herein
contained shall be construed to limit such other remedies of Landlord with
respect to any matters covered herein.
SECTION 24
SUBORDINATION; ESTOPPEL CERTIFICATES
24.01 Subordination: Tenant agrees, that at Landlord's option, this Lease may
-------------
be either subordinate or paramount to any construction loans, mortgages, trust
deeds and ground or underlying leases now or hereafter affecting the Premises
and to any and all advances to be made thereunder, and to the interest and
charge thereon, and all renewals, replacements and extensions thereon, provided
the mortgagee, lessor or trustee named in any such mortgages, trust deeds or
leases agrees to recognize the lease of Tenant in the event of foreclosure or
other enforcement of such instruments (and, if requested by Tenant, shall enter
into a non-disturbance agreement with Tenant) if Tenant is not in default.
This section shall be self-operative and no further instrument shall be
required. However, Tenant will execute promptly any instrument or certificate
that Landlord may reasonably request confirm such subordination or superior
status, subject to Tenant's receipt of a non-disturbance agreement, if so
requested, and hereby irrevocably appoints Landlord as Tenant's attorney-in-fact
to execute such instrument or certificate on its behalf.
SECTION 25
SUBSTITUTE SPACE
SECTION 26
-16-
QUIET ENJOYMENT
26.01 Quiet Enjoyment: Landlord agrees that at all times when Tenant
---------------
is not in default under the provisions and during the Term of this Lease,
Tenant's quiet and peaceable enjoyment of the Premises will not be disturbed or
interfered with by Landlord or any person claiming by, through, or under
Landlord.
SECTION 27
HOLDING OVER
27.01 Holding Over: If Tenant remains in possession of the Premises after
------------
expiration of this Lease without executing a new lease, it will be deemed to be
occupying the Premises as a tenant from month-to-month, subject to all the
provisions of this Lease to the extent that they can be applicable to a
month-to-month tenancy, except that the minimum rental for each month will be
one hundred percent (100%) of the Base Monthly Rental.
SECTION 28
REMEDIES NOT EXCLUSIVE; WAIVER
28.01 Remedies: Each and every of the rights, remedies and benefits provided
---------
by this Lease are cumulative and are not exclusive of any other of said rights,
remedies and benefits, or of any other rights, remedies and benefits allowed by
law.
28.02 Waiver of Covenant: One or more waivers of any covenant or condition by
------------------
Landlord will not be construed as a waiver of a further or subsequent breach of
the same covenant or condition, and the consent or approval by Landlord to or of
any act by Tenant requiring Landlord's consent or approval will not be deemed to
waive or render unnecessary Landlord's consent to or approval of any subsequent
similar act by Tenant.
SECTION 29
WAIVER OF SUBROGATION
29.01 Waiver of Subrogation: Landlord and Tenant shall obtain permission
---------------------
from each insurer to, and to the extent so permitted, hereby waive any and all
right of recovery against each other for any loss or damage caused by fire or
any of the risks covered by standard fire and extended coverage, vandalism and
malicious mischief insurance policies.
SECTION 30
INDEMNIFICATION
30.01 Indemnification: Tenant at its expense will defend, indemnify and save
---------------
Landlord and its licensees, servants, agents, employees and contractors,
harmless from any claim or condition of the Premises, the use or misuse thereof
by Tenant or any other person, the acts or omissions of Tenant, its clients,
customers, invitees, licensees, servants, agents, employees or contractors, the
failure of Tenant to comply with any provision of this Lease, or any other event
occurring on the Premises, whatever the cause; provided, however, that nothing
herein shall be construed to require Tenant to indemnify Landlord or its
licensees, servants, agents, employees, and contractors against Landlord's or
its licensees' servants' agents', employees' and contractors' own acts,
omissions or neglect.
SECTION 31
-17-
ASSIGNMENT BY LANDLORD
31.01 Assignment by Landlord: The term "Landlord" as used in this Lease so
----------------------
far as covenants, agreements, stipulations or obligations on the part of the
Landlord are concerned is limited to mean and include only the owner or owners
of fee title (or of a ground leasehold interest or land contract vendee's
interest) to the Premises at the time in question, and in the event of any
transfer or transfers of the title to such fee the Landlord herein named (and
in case of any subsequent transfers or conveyances the then grantor) will
automatically be freed and relieved from and after the date of such transfer or
conveyance of all liability for the performance of any covenants or obligations
on the part of the Landlord contained in this Lease thereafter to be performed.
31.02 Landlord's Default: If Landlord fails to perform any provision of this
------------------
Lease upon Landlord's part to be performed, and if as a consequence of such
default Tenant recovers a money judgment against Landlord, such judgment may be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Premises and out of rents or other income from such property receivable by
Landlord and Landlord shall not be personally liable for any deficiency.
SECTION 32
SECURITY DEPOSIT
32.01 Security Deposit: Landlord hereby acknowledges the receipt of the
----------------
Security Deposit. If Tenant defaults in any of the provisions of this Lease,
Landlord may use, apply or retain all or any part of the Security Deposit for
the payment of rents and/or other charges which are the obligation of Tenant
under this Lease in default or for any other sum which Landlord may expend by
reasons of Tenant's default, including any damages or deficiency in the
releasing of the Premises. If Tenant fully complies with all the provisions of
this Lease, the Security Deposit, or balance thereof, will be returned to Tenant
without interest after (i) the termination of this Lease, (ii) the removal of
Tenant, and (iii) the surrender of possession of the Premises to Landlord.
Unless Landlord is shown evidence satisfactory to it that the right to receive
the Security Deposit has been assigned, Landlord may return the Security Deposit
to the original Tenant regardless of one or more assignments of the Lease
itself.
SECTION 33
MOVEMENT OF TENANT'S PROPERTY
33.01 Moving Tenant's Property: All activities of Tenant in connection with
------------------------
(a) Tenant's move into the Premises at the commencement of this Lease, (b) the
movement of equipment, furniture or other bulky items into, out of or within the
Premises during the Term, or (c) Tenant's move out of the Premises at any time
(whether or not on the termination of this Lease) will be subject to the
following:
A. Designated Access. All furniture, equipment and all other
-----------------
items of personal property being moved or transferred will enter and
leave the Building solely through and by way of such area or entrance
as may be designated from time to time by Landlord for such purposes;
B. Tenant Responsible. Tenant will be responsible for the active
------------------
supervision (on-site) of all workmen and others
-18-
performing the move, and will indemnify and hold harmless Landlord
against and from all liability for damage to property (whether belonging
to landlord, other tenants or any other person) and injuries to persons
in connection with the move and the actions, or failure to act, or by
those performing the move;
C. Damage. Tenant will be responsible for any damage to the Building,
------
the Common Areas, the Premises, or the premises and property of other
tenants, caused by or incurred in connection with the move or the
activities connected therewith. Landlord will perform such inspection(s)
as Landlord in its sole discretion determines to be appropriate, and
will invoice Tenant for the costs of repair of all such damage or the
replacement, if necessary, of damaged items. All determinations of the
extent of damage and the costs of repair or replacement will be made by
Landlord in the exercise of its reasonable discretion. The invoiced sums
will constitute amounts included within and payable under Section 12,
above.
SECTION 34
NON-TERMINABILITY, COMPLIANCE WITH LAWS, COSTS, SEVERABILITY
34.01 Non-Terminability: Except as otherwise specifically provided in
-----------------
this Lease, this Lease shall neither terminate nor shall Tenant have
any right to terminate this Lease or to be released, relieved or
discharged from any obligations or liabilities hereunder for any
reason whatsoever, including, without limitation:
A. Damage. Any damage to, or destruction of, the Premises or any
------
portion thereof.
B. Condemnation. Any condemnation, confiscation, requisition or
------------
other taking or sale of the possession, use, occupancy or title to
the Premises or any portion thereof;
C. Omission. Any action, omission or breach on the part of Landlord
--------
under this Lease or under any other agreement at the time existing
between Landlord and Tenant.
D. Other Claims. Any claim as a result of any other business
------------
dealings of Landlord and Tenant.
E. Impossibility. The impossibility or illegality of performance by
-------------
Landlord or Tenant or both.
F. Force Majuere. Force majuere.
-------------
G. Governmental Action. Any action or threatened or pending action
-------------------
of any court, administrative agency or other governmental authority.
Except as otherwise specifically provided in this Lease, Tenant shall remain
obligated under this Lease in accordance with its terms, and will not take any
action to terminate, rescind or avoid this Lease for any reason, notwithstanding
any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution or other proceeding affecting Landlord or any assignee
of Landlord or any action with respect to this Lease which may be taken by any
receiver, trustee or liquidator (or other similar official) or by any court. All
payments by Tenant hereunder shall be final and Tenant will not seek to recover
any such payment or any part thereof for any reason. Tenant waives all rights
now or hereafter conferred by statute or otherwise to
-19-
quit, terminated or surrender this Lease, or to any abatement, suspension,
deferment, diminution or reduction of rent, additional rent or other amounts
payable by Tenant hereunder, or for damage, loss, cost or expense suffered by
Tenant, on account of any of the reasons referred to herein or otherwise.
SECTION 35
ENTIRE AGREEMENT
35.01 Entire Agreement: This Lease and the Riders attached hereto and forming
----------------
a part hereof, set forth all of the covenants, agreements, stipulations,
promises, conditions and understandings between Landlord and Tenant concerning
the Premises and there are no covenants, agreements, stipulations, promises,
conditions or understandings, either oral or written, between them concerning
the Premises other than herein set forth.
SECTION 36
RECORDING
36.01 Recording: This Lease shall not be recorded by Tenant nor shall Tenant
---------
file or record a memorandum of lease or affidavit of claim with respect to this
Lease or the Premises. At Landlord's option, Landlord may record this Lease.
Upon Landlord's request, Tenant shall execute and deliver to Landlord a
memorandum of lease or affidavit of claim for recording by Landlord.
SECTION 37
GENERAL
37.01 General Terms: Many references in this Lease to persons, entities and
-------------
items have been generalized for ease of reading. Therefore, reference to a
single person, entity or item will also mean more than one person, entity or
thing whenever such usage is appropriate. Similarly, pronouns of any gender
should be considered interchangeable with pronouns of other genders.
37.02 Joint and Several: All agreements and obligations of Tenant and
-----------------
Landlord under this Lease are joint and several in nature.
37.03 Captions: Captions to sections and paragraphs are provided solely for
--------
the sake of convenience and shall have no substantive effect whatsoever.
37.04 Amendments: This lease can be modified or amended only by a written
----------
agreement signed by Landlord and Tenant.
37.05 Binding Lease: All provisions of this Lease are and will be binding on
-------------
the heirs, executors, administrators, personal representatives successors and
assigns of Landlord and Tenant.
-20-
37.06 Governing Law: The laws of the State of Michigan will control in the
-------------
construction and enforcement of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above written.
WITNESSES: DOMINO'S FARMS HOLDING
LIMITED PARTNERSHIP
(a Michigan Corporation)
/s/ MARGARET T. PARKINSON By: /s/
- ------------------------- ----------------------------
Its: SENIOR VICE PRESIDENT
-----------------------
For: Landlord
AASTROM BIOSCIENCES, INC.
/s/ PATRICIA A. POWELL By: /s/ R. DOUGLAS ARMSTRONG
- ------------------------- -------------------------
Its: President/CEO
-----------------------
For: Tenant
-21-
RIDER A-1
FLOOR PLAN
RIDER A-2
LAYOUT OF SPACE
RIDER A-3
SITE PLAN
RIDER B
WORK AGREEMENT
--------------
The terms and conditions of this Work Agreement shall govern Landlord
and Tenant's participation in the design, construction and installation of
improvements to the Premises in accordance with the Final Plans (as defined
below) and the terms hereof (the "Work"). Tenant acknowledges that it has had an
opportunity to inspect the Premises prior to the execution and delivery of this
Work Agreement. Tenant further acknowledges and agrees that all construction or
improvements to the Premises to the completed at Landlord's expense have been
completed and are accepted by Tenant in an "As Is" condition except for work to
be performed by Landlord pursuant to the Work Agreement. All additional
improvements to the Premises and services incidental or related thereto are
referred to as "Work" and shall be paid for by Landlord and Tenant as set forth
herein.
A. PRE-LEASE WORK
--------------
1. Preliminary Drawings. Landlord and Tenant acknowledge that they have
--------------------
agreed on preliminary drawings prepared by H. Scott Diels,
Architect, at Tenant's direction and containing general design and
technical information for the Work to be performed on the Premises
(the "Preliminary Drawings"), copies of which are attached to this
Lease as Rider A-2, May 4, 1992. The Preliminary Drawings have been
or will be submitted to the Architect and Engineer for preparation
of the Formal Drawings (as defined below).
2. Contractor. Landlord and Tenant acknowledge that the Contractor will
----------
be selected with the approval of Tenant and Landlord.
3. Transition of Administration. Tenant shall inform the Architect,
----------------------------
Engineer and Contractor that Landlord will assume responsibility for
administration and coordination of the Work after execution of the
Lease and that Landlord will be, and perform the obligations of the
"Owner" under the Architect Agreement, the Engineer Agreement and
the Construction Agreement. Tenant shall cooperate with Landlord and
assist in the transition of responsibility for administration and
coordination of the Work. Landlord and Tenant agree that all
communications with, and instructions or directions to, the
Architect, Engineer and Contractor after transition of the Work to
the Landlord will go through Landlord.
B. PROJECT REPRESENTATIVES/FIELD CHANGE ORDERS
-------------------------------------------
1. Landlord's Representative. Landlord's representative in connection
-------------------------
with administration of the Work shall be Larry McGonigal unless
otherwise directed in writing by Landlord ("Landlord's
Representative"). All instructions, requests, or directives from
Tenant to the Landlord, Architect, Engineer or Contractor in
connection with the construction of the Work will be given or
communicated to Landlord's Representative who will in turn contact
or notify the appropriate party.
2. Tenant's Representative. Tenant's representative in connection with
-----------------------
the Work shall be R. Douglas Armstrong unless otherwise directed in
writing by Tenant ("Tenant's Representative"). All requests,
notification, directives, inquiries or information intended for
Tenant shall be given or communicated by Landlord or Landlord's
Representative to Tenant's Representative. Tenant's Representative
shall have access to the Work at all reasonable times for the
purpose of making inspections, taking measurements and observing the
Work and may inspect, copy, and discuss with Landlord's
Representative or other appropriate personnel of Landlord from time
to time the Work and all invoices and documentation in connection
with the Work, Tenant's Representative shall be requested to attend
all regularly scheduled progress meetings related to the Work.
3. Field Change Orders. Tenant's Representative shall have the right to
-------------------
request Field Change Orders in writing. For purposes of this
section, "Field Change Orders" shall mean: (a) a "Change Order" or
"Field Work Order" (as defined in the Contractor Agreement) or
similar request for changes or modifications in the Work; or (b)
revisions to the Final Plans or other work-related documents or
materials requested by Tenant.
4. Approval of Field Change Orders. All Field Change Orders shall be
-------------------------------
approved in writing by both Landlord and Tenant and shall be
acceptable to
Landlord and Tenant in all respects. The cost of any Field Change
Order shall be an additional Work Cost. Tenant's Representative
shall approve all Field Change Orders, changes or modifications to
the Final Plans and any design changes to the Work. Tenant's
Representative, on behalf of Tenant, and Landlord's Representative,
on behalf of Landlord, will promptly respond to any requests or
inquiries of Landlord or Tenant, as the case may be, including
those relating to Field Change Orders, so as not to interfere with
the orderly progress of the Work. Landlord shall have the right to
reject any Field Change Order requested by Tenant which,
individually or in the aggregate, would delay the Commencement Date
of the term of this Lease in excess of fourteen (14) days, unless
in conjunction therewith, Tenant agrees to pay rental for the
Premises as of the date the Commencement Date would have occurred
but for the completion of the Field Change Order. The Landlord's
and Tenant's reasonable judgement as to whether delay may ensue as
a result of Tenant requested Field Change Orders shall be
conclusive.
5. Other Tenant Employee's. Officers, employees or agents of Tenant
-----------------------
other than Tenant's Representatives shall have access to the Work
provided that Tenant notifies Landlord's Representative in advance
and Tenant's Representative or his designee in writing accompanies
such parties during such access. Landlord may deny access to such
parties excluding Tenant's Representative (but access by Tenant's
Representative shall nevertheless be subject to the delay
provisions in Section 3.03 of the Lease) in the event that their
presence materially hampers, interferes with or prevents Landlord,
Architect, Engineer or Contractor from proceeding with the
completion of the Work. Any entry on the Premises by Tenant's
Representative and other officers, agents, employees,
representatives, licensees or invitees of Tenant shall be at their
sole risk. Tenant hereby agrees to indemnify, defend and hold
Landlord harmless from and against any loss, expense, claim,
demand, action or proceeding arising out of or relating to such
access to the Premises other than such losses, expenses, claims,
demands, actions, proceedings caused by the negligence, gross
negligence or willful misconduct of Landlord or its directors,
officers, employees, agents, servants, representatives, invitees or
licensees other than any party performing services under the
Contractor Agreement, Architect Agreement or Engineer Agreement.
6. Consultation/Cooperation. Landlord shall advise Tenant of, and
------------------------
consult with Tenant regarding, all material matters relating to the
Work, including, without limitation, the design, construction and
engineering of the Work, as well as the services performed or to be
performed by the Architect, Engineer and Contractor. Tenant shall
reasonably cooperate with Landlord with respect to such
consultations and shall not act or fail to act in a manner which
will delay the design or construction of the Work. Landlord agrees
to use reasonable efforts to cause Architect, Engineer, Contractor
and all other persons working on or in connection with the Work to
perform and comply with terms of this Agreement and any other
applicable agreement (including, without limitation, pursuing any
applicable legal recourse against such persons). If any one or more
Architect, Engineer or Contractor breach their respective contracts
with Landlord described herein, Landlord may, but shall not be
obligated to, commence civil proceedings to obtain specific
enforcement of such breached contract and/or for any other remedies
or damages available to Landlord. In the event of such a breach and
if Landlord fails or refuses to commence such legal proceedings
against the breaching party for sixty (60) days, Tenant may
commence civil proceedings, at Tenant's sole expense, for specific
enforcement of the breached contract or any other remedies or
damages available to Tenant, and to the extent necessary to permit
and prosecute such proceedings Landlord will assign its rights
under the breached contract or contracts to Tenant and reasonably
cooperate with Tenant in connection therewith.
C. RETENTION OF ARCHITECT, ENGINEER AND CONTRACTOR
-----------------------------------------------
1. Retention of Architect
----------------------
(a) Architect Agreement. Landlord shall retain the Architect to
-------------------
prepare formal design drawings and working drawings and
specifications (collectively the "Formal Drawings"). The Formal
Drawings shall contain design, technical and engineering
specifications for the Work based on the Preliminary Drawings.
Landlord shall negotiate and execute, as Owner, the written
agreement with the Architect governing Architect's
participation in the Work (the "Architect Agreement"). All
Preliminary Services performed by the Architect shall be
included in and made a part of and subject to the terms and
conditions of the Architect Agreement. Landlord shall provide,
upon request, Tenant with a copy of the proposed Architect
Agreement and
shall consult with, and include reasonable suggestions
of, Tenant with respect to the terms and conditions of
the Architect Agreement prior to execution thereof.
Landlord shall be, and perform the obligations of, the
Owner under the Architect Agreement.
(b) Formal Design and Working Drawings. Landlord shall
----------------------------------
submit the Preliminary Drawing to the Architect for
preparation of the Formal Drawings. Landlord and Tenant
shall each have a period of seven (7) days after
receipt of the Formal Drawings to 1) approve such
drawings in writing, or 2) send written notice to the
other party describing any objections to the Formal
Drawings. In the event either Landlord or Tenant sends
a notice of objections to the formal Drawings, Landlord
and Tenant will meet within seven (7) days after such
notice is sent to discuss and resolve those matters
objectionable to Landlord or Tenant. Either Landlord or
Tenant may request the presence of the Architect at
such meeting. Landlord and Tenant agree to use their
good faith efforts in negotiating and preparing revised
Formal Drawings, but the Formal Drawings must be
acceptable to both Landlord and Tenant in all respects.
The Architect shall revise the Formal Drawings in
accordance with those modifications which are approved
by Landlord and Tenant at such meeting. The revised
Formal Drawings shall reflect the agreed to
modifications and shall be given to Tenant and Landlord
for final approval. Tenant and Landlord shall give
final approval of the Formal Drawings in writing within
seven (7) days after receipt of satisfactory Formal
Drawings which reflect the agreed to modifications (the
Formal Drawings, once so approved, are referred to as
"Final Plans").
(c) Landlord's Insurer. The Final Plans, once completed,
------------------
shall be sent to Factory Mutual Insurance Company, the
Landlord's Insurer, ("Insurer") for review and
approval. In the event that Insurer has any objections
to the Final Plans, such Final Plans shall be revised
by the Architect, as expeditiously as possible, in a
manner satisfactory to Insurer, Landlord and Tenant.
(d) Cost of Architectural Services. Landlord and Tenant
------------------------------
acknowledge that Architect has agreed to perform the
services under the Architectual Agreement. Landlord
shall not agree to any increase in fees or authorize
any additional services other than those set forth in
the Architect Agreement, or any change to the Final
Plans, without the prior written consent of Tenant or
Tenant's Representative.
2. Retention of Engineer
---------------------
(a) Engineer Agreement. Landlord shall retain the Engineer
------------------
to prepare designs and specifications with respect to
mechanical engineering and technical aspects of the
Formal Drawings, the Final Plans and the Work and to
the connection and interfacing of the Work with
existing systems or equipment of Landlord (the
"Engineering Report"). Landlord shall negotiate and
execute, as Owner, the written agreement with the
Engineer governing the Engineer's participation in the
Work (the "Engineer Agreement"). All Preliminary
Services and the cost of all Preliminary Services
performed by the Engineer shall be included in and be
made a part hereof and subject to the terms and
conditions of the Engineer Agreement. Landlord shall
provide Tenant with a copy of the proposed Engineer
Agreement and shall consult with Tenant, and include
the reasonable suggestions of, with respect to the
terms and conditions of the Engineer Agreement prior to
execution thereof. Landlord shall be, and perform the
obligations of, the Owner under the Engineer Agreement.
(b) Cost of Engineering Services. Landlord and Tenant
----------------------------
acknowledge that Engineer has agreed to perform the
service under the Engineer Agreement. Landlord shall
not agree to any increase in fees or authorize any
additional services other than those set forth in the
Engineer Agreement, or any change to the Engineering
Report, without the prior written consent of Tenant or
Tenant's Representative.
3. Retention of Contractor
-----------------------
(a) Contractor Agreement. Landlord shall retain the
--------------------
services of the Contractor to construct the Work
according to the Final Plans. Landlord shall negotiate
and execute as Owner, the written agreement with the
Contractor governing construction of the Work
according to the Final Plans (the "Contractor
Agreement"). Landlord shall provide Tenant with a copy of
the proposed Contractor Agreement and shall consult with
Tenant with respect to the terms and conditions of the
Contractor Agreement prior to execution thereof. Landlord
shall be, and perform the obligations of, the Owner under
the Contractor Agreement. The Contractor Agreement shall
include a completion date satisfactory to Tenant (which
date shall not be changed or modified except by an
amendment to the Contractor Agreement with prior written
consent of both landlord and Tenant). Landlord shall not
have any liability whatsoever to Tenant for any cost,
expense, lost profits, damage or other liability suffered
or incurred by Tenant by reason of the Contractor's
failure to complete the Work on or before the completion
date contained in the Contractor Agreement. Landlord
shall use its reasonable best efforts to cause the
Contractor to complete the Work on or before the
Completion Date contained in the Contractor Agreement,
and in any event as soon as possible.
(b) Cost of Construction. Landlord and Tenant acknowledge
--------------------
that Contractor has agreed to perform the services under
the Contractor Agreement. Landlord shall not agree to any
increase in fees, or authorize any additional services
other than those set forth in the Contractor Agreement,
or any Field Change Orders, without the prior written
consent of Tenant or Tenant's Representative.
4. Responsibility for Contents of Plans and Drawings.
-------------------------------------------------
Notwithstanding anything herein to the contrary, Landlord
shall not be responsible for the accuracy, efficacy or
sufficiency of any drawings, plans or specifications to be
provided by any person herein (including without limitation,
those plans, drawings or specifications to be furnished by
Tenant, the Engineer or the Architect) except (i) those
portions of the plans, drawings, and specification provided
by Landlord and (ii) Landlord agrees that the Work as
described in the Final Plans and any Field Change Orders is
sufficient for Landlord's purposes and will meet Landlord's
needs and requirements for improvements to the Building. The
Architect, Engineer and/or Contractor shall be otherwise
responsible for all plans, drawings and specifications
including, without limitation, the Final Plans and any Field
Change Orders, all technical and other examination of the
Premises and shall be exclusively responsible with respect to
verification of actual field conditions and actual field
measurements and a full review of all technical and
engineering requirements with respect to the Premises and
Work to be performed hereunder. In addition, Tenant shall be
exclusively responsible for determining whether the plans,
specifications and drawings including, without limitation,
the Final Plans and any Field Change Orders and the systems
and equipment described therein, meet the needs of the
Tenant.
5. Compliance. Landlord will insure that the Final Plans and all
----------
Work shall comply with and conform to the Building plans and
with all the rules, regulations and other requirements of any
governmental department or agency having jurisdiction over
the construction of the Work. Landlord, Architect or
Contractor shall file all necessary architectural plans,
together with any mechanical plans and specifications, and
any and all other filings necessary to complete the Work in
such form as may be necessary, with the appropriate
governmental and other agencies and obtain those governmental
and other approvals or consents necessary to authorize
completion of the Work, including required permits and zoning
approvals. Any changes required by any governmental or other
agency affecting the construction of the Premises shall be
complied with by Landlord in completing the Work at Tenant's
expense and shall not be deemed to be a violation of the
Final Plans or any provisions of this Work Agreement, and
shall be deemed automatically accepted and approved by
Tenant. Landlord shall cause the Work to be constructed and
completed in accordance with the prevailing and customary
construction standards in accordance with the Final Drawings
and all applicable laws, rules, regulations, ordinances and
codes and shall ensure that safety standards acceptable in
the industry are employed. Landlord shall maintain
appropriate insurance with respect to the work. Tenant shall
reasonably cooperate with the Owner in complying with the
foregoing requirements and Owner shall keep Tenant advised of
the progress in connection with such requirements.
D. WORK COST
---------
1. Work Cost. "Work Cost" shall mean contracted amount with
---------
architect, engineer and contractor, except as adjusted by
Field Change Orders, and all the following:
(a) All filing fees and permit costs incurred in connection
with the Work to the extent not included in contracts
above, and Landlord shall provide receipts for payment
of the same upon Tenant's request.
(b) Legal fees, as mutually agreed upon in writing, in
connection with obtaining governmental approvals of the
Work and Tenant's uses of the Premises.
(c) Litigation costs in connection with the Work Agreement
as mutually agreed upon in writing.
(d) All other costs of the Work mutually agreed upon in
writing.
E. PAYMENT OF WORK COST
--------------------
Tenant shall pay the Work Cost in the following manner:
1. Payment of Work Cost
--------------------
(a) Payment - General. Tenant will make a deposit to the
-----------------
Landlord based on construction estimates (per Rider D).
Landlord will utilize said deposit to pay all
construction related invoices.
(b) Change Orders. Authorized change orders are to be
-------------
accompanied with a check from the Tenant to cover said
amount.
(c) Final Payment. After project is complete and within
-------------
fifteen (15) days after billing is received by Landlord,
a reconciliation will be provided showing total costs.
Tenant will provide final check for the total amount of
the improvements less any previous payments and the
Landlord's contribution when:
(1) Tenant, Architect and Landlord shall have inspected
the Work and determined that the Work is complete
and that all items comprising the Punch List
prepared pursuant to Section 3.03 of this Lease
shall have been completed or corrected. In the event
of any dispute regarding completion, the Architect's
determination shall be final;
(2) Landlord shall have removed or have caused to be
removed, at its expense, from the site of the Work
all material, equipment and structures which are not
part of the Work and shall have made the site of the
Work clean and ready for use; and
(3) Landlord shall have caused to be executed and copies
delivered to Tenant of lien waivers executed
by all persons, firms, and companies who have
provided labor or furnished materials in connection
with the Work including a general release and
specific lien waiver from Contractor both in form
and substance reasonably satisfactory to Tenant.
2. Continuing Obligations. Nothing herein shall be construed to
----------------------
relieve Tenant from any liability for unpaid Work Costs due and
payable pursuant to the terms of this Work Agreement.
F. WARRANTIES
----------
Landlord warrants to Tenant that the Work will be performed in a
workmanlike manner and in accordance with the Final Plans and any
approved changes or modifications thereto and shall comply with
all applicable codes, laws, and regulations. Landlord will obtain
from the Contractor under the terms of the Construction Agreement
such warranties as the Contractor generally provides in connection
with its services. Landlord will use reasonable efforts to have
all such warranties include a provision that they may be assigned
to Tenant at Landlord's option. Upon the completion of the Work,
Landlord shall assign to Tenant those warranties and manuals with
respect to those items described in Rider H to this Lease and such
other items as Tenant is required to maintain or repair pursuant
to the terms of this Lease or otherwise, procured by Landlord from
the Contractor, the Architect, Engineer, or others in connection
with the performance of the Work or and any material or equipment
installed upon the Premises as part of the Work. Landlord shall
retain all other warranties and manuals. If such warranties are
not assignable, Landlord shall pursue and, if possible, obtain
coverage as requested by Tenant for and on behalf of Tenant, under
such warranties (at Tenant's cost and expense). LANDLORD HEREBY
DISCLAIMS ANY AND ALL OTHER
WARRANTIES OF ANY KIND IN CONNECTION WITH THE WORK INCLUDING WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
G. INDEMNIFICATION BY TENANT
-------------------------
To the fullest extent permitted by law, Tenant agrees to defend,
indemnify and hold Landlord, its partners, employees, officers, and agents,
and their legal successors and assigns (herein the "Landlord Indemnitees"),
free and harmless of and from any and all liability, damages, all losses,
costs and expenses, including, without limitation, all Work Cost and
attorney fees, (collectively "Losses") incurred, suffered or required to
be paid by Landlord Indemnitees to the extent that such losses result from
or are attributable to (a) Tenant's failure to pay the Work Cost due and
payable pursuant to this Work Agreement or (b) Landlord's Indemnitees'
reliance on orders, instructions, directives or requests of Tenant in
connection with the construction of the Work and the preparation of the
Final Plans or (c) any negligent or grossly negligent acts, or omissions
and/or intentional malfeasance, of Tenant, its employees, agents, guests
or invitees prior to final completion of the Work, provided however, that
notwithstanding anything herein to the contrary, the foregoing obligation
to indemnify, hold harmless and defend shall not apply to any liability,
damages, losses, costs or expenses attributable to the Landlord's
Indemnitees. If any claim is made by a third party against any Landlord
Indemnitees for which the Landlord Indemnitee seeks indemnification from
Tenant hereunder, Landlord shall give prompt notice to Tenant who shall
have the right at Tenant's sole expense to participate in or control the
defense of such claim at its own expense and through counsel of its own
choice. If after such notice Tenant does not so participate, Tenant shall
nevertheless be bound by the results obtained by Landlord insofar as the
claim against any Landlord Indemnitee is concerned.
H. INDEMNITY BY LANDLORD
---------------------
Landlord shall defend, indemnify and hold harmless Tenant, its affiliates,
and any of their respective directors, officers, employees, agents, servants
and representatives ("Tenant Indemnitees") from and against any and all
liability, damages, all losses, costs and expenses, including reasonable
attorney fees, incurred, suffered or required to be paid by Tenant
Indemnitee, resulting from or caused by or arising out of any action,
omission or operation (i) under this Agreement or in connection with the
Work attributable to Landlord, (ii) under the Architect Agreement, the
Engineer Agreement, the Contractor Agreement or any other construction
related document attributable to Landlord or the performance of any
obligation of Landlord under such agreements or documents, or (iii) relating
to any claim against Tenant arising under the Architect Agreement, the
Engineer Agreement, the Contractor Agreement or any Work related document
provided, however, that the foregoing obligation by the Landlord to defend,
indemnify and hold harmless shall not apply to (x) any liability, damages,
losses, costs or expenses, attributable to the negligence, gross negligence
or willful misconduct of any Tenant Indemnitee, (y) the breach of any
obligation of Tenant hereunder or (z) those matters for which Tenant is
obligated to indemnify Landlord pursuant to Section B(5) of this Work
Agreement. If any claim is made by a third party against any Tenant
Indemnitee for which the Tenant Indemnitee seeks indemnification from
Landlord hereunder, the Tenant Indemnitee shall give prompt notice to
Landlord who shall have the right, at its sole option, to participate in or
control the defense of such claim at its own expense and through counsel of
its own choice. If after such notice Landlord does not so participate,
Landlord shall nevertheless be bound by the results obtained by Tenant
Indemnitee insofar as the claim against Tenant Indemnitee is concerned.
I. OWNERSHIP OF DOCUMENTS, CONFIDENTIALITY
---------------------------------------
Landlord and Tenant shall both be furnished copies of, and own, all
drawings, specifications, manuals for equipment described on Rider H, design
analyses, shop drawings, as-built record prints, calculations, renderings
and any other related documents or materials prepared in connection with the
Work.
J. MISCELLANEOUS
-------------
1. Approvals, Notices. All prints, drawing information and other
------------------
material to be furnished by Tenant to Landlord or by Landlord to
Tenant for approval as required herein shall be addressed to Landlord
or Tenant, as the case may be, at the addresses set forth in the
Summary of Lease Terms. Approvals of such documents shall be sent
in accordance with Section 20 of the Lease relating to notices.
2. Relationship. Landlord and Tenant agree that Landlord is not the
------------
employee or agent of Tenant and with respect to this Work Agreement
is an independent contractor. It is expressly agreed that all persons
engaged in the
performance of the Work hired by Landlord or by any contractor of Landlord
as between Landlord and Tenant shall be conclusively deemed to be employees
or contractors of Landlord and not Tenant. This Agreement shall not
constitute Landlord or any contractor as the agent, partner, or legal
representative of Tenant, and Tenant shall not be responsible in any way
for any obligations or liability incurred or assumed by Landlord or any
contractor (the foregoing shall not in any manner limit the liability of
obligations of Tenant to Landlord hereunder). Landlord shall contract only
in its own name and only for its own account. Each such contract shall
expressly state that the contractor recognizes that, to the extent
permitted by law, it does not have a right to make any claim for payment
directly from Tenant, since the contract has been made exclusively with
Landlord and that, upon the request of Landlord, the contractor shall
provide Landlord with a sworn statement regarding the contractor's right to
receive payments for work or materials provided to the Work.
3. Confidentiality of Work and Plans. Landlord agrees that Landlord will
---------------------------------
maintain the confidentiality of, and not disclose to third persons or
parties, any of the Final Plans, Field Change Orders or other plans or
specifications relating the Work except as Landlord may require for the
construction of the Work, maintenance, operation, financing, insuring, sale
of other conveyance of the Building or as may be required by any
governmental authority, department or agency.
RIDER C
RULES AND REGULATIONS
The Landlord, or the Agent of the Landlord, as the case may be, reserves
the right to make such other further and reasonable rules and regulations as in
its judgment may from time to time be necessary or desirable for the safety and
preservation of good order and prestige therein.
Wherever the word "Tenant" occurs, it is understood and agreed that it
shall mean Tenant's employees, agents, clerks, servants and visitors. Wherever
the word "Landlord" occurs, it is understood and agreed that it shall mean
Landlord's assigns, agents, clerks, servants and visitors.
1. No sign, picture, lettering, notice or advertisement of any kind shall be
painted, taped or displayed on or from the windows, doors, roof or
outside wall of the premises. Landlord shall have the right to approve
all signs, exhibits and displays to be made by Tenant in and from common
areas of the building. All of Tenant's interior sign painting or lettering
shall be approved by Landlord and the cost thereof shall be paid by Tenant.
(See footnote #1)
2. No electric or other wires for any purpose shall be brought into the
premises without Landlord's written permission specifying the manner in
which same may be done. This shall prohibit use of hot plates (cooking) and
only approved electric percolators or coffee makers shall be permitted.
No boring, cutting or stringing of wire shall be done without Landlord's
prior written consent. Tenant shall not disturb or in any way interfere
with the electric light fixtures, and all work upon or alterations to the
same shall be done by persons authorized by Landlord.
3. Water closets and other toilet fixtures shall not be used for any purposes
other than that for which the same is intended, and any damage resulting to
same from Tenant's misuse shall be paid for by Tenant. No person shall
waste water by interfering or tampering with the faucets or otherwise.
4. No person shall disturb the occupants of this or adjoining buildings or
premises by the use of radios, television sets, loud speakers, or musical
instruments, or by making loud or disturbing noises.
5. No bicycle or other vehicle and no pets shall be allowed in offices, hall,
corridors or elsewhere in the building.
6. No floor load exceeding an average rate of 60 pounds of live load per
square foot of floor area can be allowed. Tenant's business machines and
mechanical equipment which cause vibration or noise that may be transmitted
to the building structure or to any other leased space in the building shall
be placed and maintained by Tenant in settings of cork, rubber, spring or
other types of vibration eliminators sufficient to eliminate such vibration
or noise.
7. Any safe, vault, heavy equipment, furniture, or machinery moved in or out
of the premises shall be moved in such manner and at such times as Landlord
shall in each instance approve.
May 20, 1991
8. No additional lock or locks shall be placed on any door in the
building without Landlord's prior written consent. Upon the termination
of this Lease, the Tenant shall surrender to Landlord all keys to the
premises.
9. Tenant shall not install or operate any steam or gas engine or boiler
or carry on any mechanical business on said premises or use oil burning
fluids, or gasoline for heating or lighting or for any other purpose.
(See Rider G.)
10. The premises shall not be used for lodging or sleeping or for any immoral
or illegal purposes.
11. Any newspaper, magazine or other advertising done from the said premises
or referring to the said premises, Domino's Farms or Prairie House, which
in the opinion of the Landlord is objectionable, shall be immediately
discontinued upon notice from the Landlord.
12. The sidewalk, entry, passage hall and stairway shall not be obstructed
or used for any purpose other than those of ingress and egress without
the express written consent of the Landlord.
13. Window coverings other than those which may be provided by Landlord,
either inside or outside of the windows, may only be installed with the
Landlord's prior written consent, and must be furnished, installed and
maintained at the expense of the Tenant and at Tenant's risk, and must be
of such shape, color, material, quality and design as may be prescribed by
the Landlord. Tenant shall exercise reasonable care in placing furniture,
equipment, etc. in such a position as to not obstruct the windows.
14. Tenant will exercise reasonable discretion with regards to thermostat
settings within the tenant space. Acceptable temperatures for heating
will not exceed 72 degrees or fall below 68 degrees for cooling.
15. Tenant will be responsible for vending service located within the tenant
premises. Landlord will designate approved vending contractors within
the building. Tenant will coordinate vending installation with Landlord.
16. Domino's Farms Prairie House is a smoke free building; smoking of cigars,
pipes and cigarettes is not allowed inside the building.
17. Subject to the terms of the Lease between Tenant and Landlord, Landlord
will provide normal heating, ventilation and air conditioning as
reasonably required by prevailing weather conditions to the leased
premises on the following days (except legal holidays):
Monday - Friday from 8:00 a.m. to 6:00 p.m.
Saturday from 8:00 a.m. to 12:00 p.m.
Footnotes: #1 - Tenant will be permitted to provide signage for door
leading from lobby into tenant space. Such signage
must be reviewed and approved by Landlord.
RIDER D
ADDENDUM TO LEASE
TENANT IMPROVEMENT ALLOWANCE
- ----------------------------
The tenant improvement allowance shall equal $29.25 per square foot. Any costs
in excess of this allowance, based upon construction estimates, shall be paid
by the Tenant to the Landlord according to the following payment schedule:
Fifty percent (50%) shall be deposited by Tenant with Landlord prior to
commencement of work.
Forty percent (40%) shall be paid when the project is approximately fifty
percent complete, based upon projected project costs.
The remaining ten percent (10%) shall be held until project completion, and
until a project costs compilation is prepared. At such time, the ten percent
plus any overages or minus any amount under budget will be paid to Landlord.
The Landlord shall provide cold water and sanitary to the leased space. The
cost of internal routing will be a portion of the tenant build improvements.
OPTION FOR RENEWAL
- ------------------
The Tenant will have an option to renew the lease for an additional period of up
to five (5) years, at a rate equal to $21.00 per square foot plus an adjustment
based upon the Consumers Price Index. Once per year for each year during the
renewal term, the rate will be adjusted based upon the Consumers Price Index.
Such increases shall not be less than three (3) percent nor more than seven (7)
percent in any one year.
If Tenant exercises said option to renew, Landlord may elect to install, at
Landlord's expense, a meter for electrical service to the Premises. In such
event, Tenant will then become responsible for monthly electrical charges based
upon actual meter readings. In the event Landlord elects not to install a
meter, then Tenant will be assessed a monthly pro rata share of electrical
charges for Phase 5.
TEMPORARY SPACE
- ---------------
Landlord will provide temporary office space and associated utility costs to the
Tenant at no charge, upon signing of lease, and until Commencement Date of
lease. Said space shall be approximately 1,000 square feet, and location in
building will be at discretion of Landlord based upon availablility of space.
Tenant shall be responsible for telephone, furniture, post office box, moving
charges, and all other associated costs.
AMENITITES
- ----------
As of the Commencement Date of this Lease, the following amenities were
available to tenants in the building. Landlord does not guarantee that all will
be available at all times, and amenities are subject to change at the discretion
of the Landlord.
Ample, free parking Travel Agency
24 hour on-site security staff Fitness center
24 hour access Auto rental agency
A variety of restaurants Dry cleaners
Catering services Clothier & tailor
Conference and Meeting Rooms Sundry shop
Automated teller machine U.S. Post Office
Hair salon Child care facility
RIDER E
RIGHT OF REFUSAL - Page 1
During the Initial Term and Renewal Term, if any, of this Lease, Tenant
shall have a First Right of Refusal ("Right of Refusal") to lease certain
additional space in the Building, under the following terms and conditions:
A. Space. Tenant's Right of Refusal shall apply to the approximately
2,306 square feet of rentable space on the second floor of Phase 5 of the
Building, which is located adjacent to the Premises leased hereunder, and which
is outlined on the attached floor plan.
To the greatest extent possible, Landlord will endeavor to locate
alternative space for any leasing prospects interested in approximately 2,300
square feet.
B. Exercise by Tenant. Tenant shall have the right to exercise its Right
of Refusal in the following manner: If at any time after the date hereof, the
space is vacant, and Landlord intends to let such vacant space, as evidenced by
a written proposal from Landlord (Landlord's Proposal) to a proposed lessee,
then Landlord shall give Tenant written notice of such intention (Notice of
Intent to Lease). Tenant shall have a period of ten (10) business days from the
date of receipt of such Notice of Intent to Lease to exercise its Right of
Refusal by sending written notice to Landlord of such exercise (which notice
must be received by Landlord within such ten (10) day period).
C. Refusal by Tenant. If Tenant does not exercise its Right of Refusal as
to the space covered by a Landlord's Proposal, Landlord shall be free to lease
the space pursuant to the Landlord's Proposal.
If Tenant does not exercise its Right of Refusal and the proposed lessee
does not accept the Landlord's Proposal, Tenant's Right of Refusal with respect
to such space shall be reinstated as set forth above, including, without
limitation, the right to exercise its Right of Refusal as to any subsequent
proposals to lease the space as set forth above.
D. Notices. All notices hereunder shall be sent in compliance with Section
20 of the Lease.
E. Same Lease Terms. Under the exercise of Tenant's Right of Refusal, the
space affected thereby shall be subject to all of the same terms and conditions
of this Lease (including, without limitation, the Renewal Option set forth above
and the Expiration Date) except that (i) additional rent with respect to such
space shall commence ninety (90) days after the exercise of Tenant's Right of
Refusal relating to such space, or upon taking possession of such space, if
sooner; and (ii) Base Annual Rent and Base Monthly Rent for the additional space
taken by Tenant shall be at the same rate in effect for the Premises at the time
of exercise of Tenant's Right of Refusal; and (iii) an allowance for Tenant's
build out of such space shall be given by Landlord at the rate of $28 per square
foot.
RIDER E
RIGHT OF REFUSAL
[CRC]
RIDER F
ATTORNMENT
----------
1. Attornment. Tenant covenants and agrees that, if by reason of default
----------
under any mortgage which may now or hereafter affect the Premises,
including, without limitation, the Mortgage and Security Agreement dated as
of March 29, 1990, between the owner of the Premises hereunder or a
successor in title or interest, as Mortgagor, and Kansallis-Osake-Pankki,
New York Branch, as Mortgagee, and any amendments, supplements or
modifications thereof (the "Mortgage"), the mortgagee thereunder enters into
and becomes possessed of the mortgaged property of which the Premises form a
part either through possession or foreclosure action or proceeding, or in
the event of the sale of the said action or proceeding, or in the event of
the sale of the said mortgaged property as a result of any action or
proceeding to foreclose said mortgage or as a result of a conveyance in lieu
of foreclosure, the Tenant will attorn to the mortgagee or such then owner
as its Landlord under this Lease, unless the mortgagee or such then owner
shall elect to terminate this Lease and the rights of the Tenant hereunder.
The Tenant agrees to execute and deliver, at any time and from time to time,
upon the request of the mortgagee or the then owner of the mortgaged
property, any instrument which may be necessary or appropriate to evidence
such attornment and the Tenant hereby appoints the mortgagee or the then
owner of the Premises the attorney-in-fact, irrevocable, of the Tenant to
execute and deliver for and on behalf of the Tenant any such instrument. The
Tenant further waives the provision of any statute or rule of law now or
hereafter in effect which may terminate this Lease or to surrender
possession of the Premises in the event of foreclosure or any proceeding is
brought by the mortgagee under any such mortgage to terminate the same, and
agrees that unless and until the mortgagee, in connection with any such
proceeding, shall elect to terminate this Lease and the rights of the Tenant
hereunder, this Lease shall not be affected in any way whatsoever by any
such proceeding.
2. Nondisturbance. Notwithstanding the provisions of Paragraph 1 above:
--------------
(a) The mortgagee or the then owner, as the case may be, shall not disturb
Tenant's use and possession of the Premises nor terminate the Lease so
long as Tenant is not in default of the terms of this Lease.
(b) In addition, the mortgagee or the then owner, as the case may be, shall
at all times during Tenant's attornment hereunder, be bound to Tenant
as Landlord under all the terms and conditions of this Lease, provided,
however, that the mortgagee or the then owner, as the case may be,
shall not be (i) liable for the act or omission of any prior landlord
under the Lease (including Landlord); (ii) subject to any offsets or
defenses which Tenant might have against any prior landlord under the
Lease (including Landlord); (iii) bound by any rent or additional rent
which Tenant might have paid for more than the current month to any
prior landlord under the Lease (including Landlord) unless such rent
or additional rent has been delivered to mortgagee or such then owner;
(iv) responsible for any security deposit which Tenant may have paid
to any landlord (including Landlord), unless such deposit has been
delivered to the mortgagee or such then owner, or (v) bound by any
modification, amendment, surrender or cancellation of the Lease made
without the prior written consent of mortgagee or the then owner.
3. No Release of Landlord. This Agreement shall not relieve Domino's Farms
----------------------
Holding Limited Partnership of any obligation as Landlord under the Lease.
RIDER G
HAZARDOUS MATERIALS
-------------------
HAZARDOUS MATERIALS/TENANTS OBLIGATIONS
- ---------------------------------------
A. Definitions: As used in this Section, "Environmental Law" and
-----------
"Hazardous Materials" shall have the following meanings:
1. "Environmental Law" means any applicable federal, state or local
------------------
government law, rule, ordinance or regulation in effect from time
to time relating to the environment, pollution, toxic substances,
Hazardous Materials or solid and/or toxic waste disposal, including,
without limitation, the following statutes and the regulations
promulgated thereunder:
(a) Michigan Solid Waste Management Act, MCLA Section 299.401 et seq.;
------
(b) Michigan Hazardous Waste Management Act, MCLA Section 299.501
et seq.;
------
(c) Federal Resource Conservation and Recovery Act of 1976;
(d) Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980; and
(e) Federal Superfund Amendments and Reauthorization Act of 1986.
2. "Hazardous Materials" means "Hazardous Waste" or "Hazardous Substance"
---------------------
as those terms are currently defined in the Resource Conservation and
Recovery Act of 1976, the Comprehensive Environmental Response,
Compensation Liability Act of 1980 and the Superfund Amendments and
Reauthorization Act of 1986.
B. Use of Premises. Tenant shall not cause or permit the Premises to be used
---------------
to generate, manufacture, refine, transport, treat, store, handle, dispose
of, transfer, produce or process Hazardous Materials in violation of any
Environmental Law. At all times Tenant shall use and dispose of Hazardous
Materials in compliance with all applicable Environmental Law and all
requirements and guidelines of the United States Nuclear Regulatory
Commission. Tenant shall not cause or permit, as a result of any
intentional or unintentional act or omission on the part of Tenant, a
release of Hazardous Materials onto the Premises, the Building or any area
comprising part of the Domino's Farms Prairie House Office Complex in
violation of Environmental Law. Landlord and Tenant will promptly deliver
to the other copies of all notices received from any federal, state or local
authority regarding environmental problems affecting the Premises. The
provisions hereof shall be in addition to any and all other obligations
and liabilities Tenant may have to the Landlord at law or in equity
regarding Tenant's violation of Environmental Law and shall survive
termination of this Lease and the satisfaction of all other obligations
of Tenant hereunder.
C. Presence of Hazardous Materials/Indemnity. If Hazardous Materials are
-----------------------------------------
present on or under the Premises in amounts, concentrations or in a manner
in violation of Environmental Law by reason of the acts or omissions of
Tenant or its agents, representatives, contractors, officers, directors,
employees, licensees or invitees, Tenant shall: (i) conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal and
other actions necessary to clean up and remove all such Hazardous Materials
on, under, from or affecting the Premises in accordance with all applicable
Environmental Law; (ii) defend, indemnify and hold harmless Landlord, its
employees, agents, officers and directors from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs or
expenses (including attorney's fees) of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of or in any way related
to: (A) the presence, disposal, release or threatened release of any such
Hazardous Materials on, over, under, from or affecting the Premises or the
soil, water, vegetation, buildings, personal property, persons or animals
on, in, over or under the Premises; (B) any personal injury (including
wrongful death) or
property damage (real or personal) arising out of or related to such
Hazardous Materials; (C) any lawsuit brought or threatened, settlement
reached or government order relating to such Hazardous Material; and/or (D)
any violation of laws, orders, regulations, requirements or demands of
government authorities, or any reasonable policies or requirements of
Landlord (and in the case Landlord's requirements of which Tenant was
provided prior written notice), which are based upon or in any way related
to such Hazardous Materials, including, without limitation, reasonable
attorney's and reasonable consultant's fees, investigation and laboratory
fees, court costs and out-of-pocket litigation expenses. In no event shall
Tenant have any liability for: (i) conditions not in existence on the day
Landlord, its successors or assigns, takes possession of the Premises from
Tenant, (ii) conditions existing prior to the date Tenant takes possession
of the Premises, or (iii) conditions aggravated or worsened (but only to the
extent so aggravated or worsened) by Landlord, or its successors, assigns or
any third party, after the date Landlord or its successors and assigns takes
such possession of the Premises. Landlord shall give Tenant prompt notice of
any claim or information of which Landlord has knowledge that is likely to
give rise to a claim for defense, indemnity or hold harmless under this
Section, and shall permit Tenant's involvement in the defense of any such
claim as reasonably requested by Tenant. Neither Landlord nor Tenant shall
settle or pay any third party claim with respect to any claim hereunder,
except upon the written approval of both Landlord and Tenant. The provisions
hereof shall be in addition to any and all other obligations and liabilities
Tenant may have to the Landlord at law or in equity and shall survive
termination of this Lease and the satisfaction of all other obligations of
Tenant hereunder.
D. Right of Inspection. Landlord, its successors and assigns shall have the
-------------------
right to inspect the Premises at any reasonable time and from time to time
upon not less than two (2) hours advance notice in order to determine
whether Hazardous Materials are being used in violation of Environmental
Law and whether Tenant is in full compliance with the terms of this Section,
but Landlord shall have no obligation to conduct such inspections. All
such inspections, including, without limitation, investigation, studies,
sampling and testing, shall be at Tenant's expense if the Premises are not
in compliance with this Section, otherwise they shall be at Landlord's
expense. Tenant is authorized to install its own security system for access
to the Premises using so-called security card devices. Tenant shall
immediately release any such security system upon notice from Landlord's
security personnel that an emergency exists requiring access to the
Premises. Inspections by Landlord under this paragraph shall not
unreasonably interfere with the operation of Tenant's business and Landlord
shall comply with Tenant's Confidentiality Requirements (as defined in
Section 17.01 of this Lease) and Tenant's reasonable requests, provided,
however, these provisions are subject to any actions reasonably necessary
to meet or ameliorate any emergency threatening serious bodily injury or
property damage.
E. Effect on Insurance. Notwithstanding anything in this Section to the
-------------------
contrary, Tenant shall not use or occupy or permit the Premises to be
used or occupied, nor do or permit anything to be done in or on the
Premises, in a manner which will in any way make void or voidable any
insurance customary for buildings or property similar to the Premises
(containing terms and conditions customary for insuring buildings or
property similar to the Premises) then in force with respect thereto,
or which will make it unreasonably difficult or impossible to obtain
fire or other insurance (containing terms and conditions customary for
insuring buildings or property similar to the Premises) carried by
Landlord with respect to the property of which the Premises is a part. If
Tenant's failure to comply with the provisions of this Section causes any
insurance premium to be higher than it would otherwise be, Tenant shall
reimburse Landlord, as additional rent, for that part of all insurance
premiums thereafter paid by Landlord which have been changed because of
Tenant's failure.
F. Reports. At reasonable intervals, and at least annually, Tenant shall
-------
provide to Landlord, at Landlord's request, a list of all Hazardous
Materials at any time used, stored, placed or brought onto the Premises
since the date of the last report furnished to Landlord with respect to
Hazardous Materials. In addition, Tenant shall provide to Landlord such
reasonable documentation as Landlord may request to review the methods
and procedures used by the Tenant in handling and disposing of any Hazardous
Materials. If Landlord determines in its reasonable judgment that any
Hazardous Material as it is being used by Tenant (taking into account the
nature of the Hazardous
Material, the manner of its use and the quantities on the Premises) presents an
unreasonable hazard to, or unreasonably endangers the health, safety or welfare
of, the Building's Tenants, or any of them, Tenant shall, as appropriate, upon
written notice from Landlord cease using any such Hazardous Material on the
Premises and immediately dispose of such Hazardous Material in compliance with
all Environmental Law or appropriately modify its use thereof so as to not
render such use unreasonably hazardous or dangerous. In the event that Tenant
disputes Landlord's assessment or designation of any prohibited Hazardous
Material, the matter shall be referred to an Environmental Engineer for
decision. The decision of such Environmental Engineer shall be conclusive on the
parties (except the extent that such decision is overridden by any governmental
authority enforcing any Environmental Law). The fees of such Environmental
Engineer shall be paid by the unsuccessful party and if both parties are
partially unsuccessful, the Environmental Engineer shall apportion such fees and
expenses between the parties, based on the degree of success of each party.
HAZARDOUS MATERIALS/LANDLORD'S OBLIGATION
- -----------------------------------------
A. Representations
---------------
In addition, Landlord represents, warrants and covenants to Tenant that:
1. Landlord has not, and, to Landlord's knowledge no prior owner of the
Building, tenant or prior tenant, occupant or prior occupant of the
Building has, used or permitted the release of any Hazardous Materials
on, from or affecting the Premises in any manner which violates
Environmental Law.
2. Landlord has never received any summons, citation, directive, letter,
notice or other communication, written or oral, regarding any violation
of Environmental Law affecting the Premises, and there have been no
actions commenced to Landlord's knowledge threatened by any party for
noncompliance therewith.
3. Any and all plumbing, sewer and disposal systems, and pipelines and
tanks, located upon or beneath or servicing the Premises will be
maintained in good and safe operating condition and repair and to
Landlord's knowledge are in good and safe operating condition and
repair.
If it is determined during or following the termination or expiration of the
Lease that there is a violation of Environmental Law associated with the
leased premises and the violation was not created by Tenant, its agents,
representatives, contractors, officers, directors, employees, licensees or
invitees in violation of Environmental Law then Landlord agrees to comply
with all federal, state and local laws, ordinances, rules, regulations, and
policies pertaining to such violation that are binding upon Landlord and to
take whatever safety precautions and measures are required or prescribed, at
the Landlord's expense. Landlord also agrees to defend and indemnify Tenant
and its affiliates and their respective agents, representatives,
contractors, officers, directors, employees, licensees and invitees, from
and against all obligations, liabilities, loss, costs, damages, settlement
or expenses of whatsoever kind or nature, known or unknown, contingent or
otherwise, directly or indirectly arising out of or in any way related to
any of the following caused solely by Landlord, its agents, representatives,
contractors, officers, directors, employees, licensees or invitees: (i) the
presence, disposal, release or threatened release of any Hazardous Materials
on, over, under, from or affecting the Premises or the soil, water,
vegetation, buildings, personal property, persons or animals thereon; (ii)
any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials; (iii) any
lawsuit brought or threatened, settlement reached or government order
relating to such Hazardous Materials; and/or (iv) any violations of laws,
regulations, requirements or demands of government authorities which are
based upon or are in any way related to Hazardous Materials, including,
without limitation and in each of the foregoing cases, reasonable attorney
and consultant fees, investigation and laboratory fees, court costs and
litigation expenses. Landlord will notify Tenant in writing immediately of
any condition of which Landlord has knowledge and which involves Hazardous
Materials or violation of Environmental Law which might affect the
Premises.
FIRST AMENDMENT TO LEASE
This Amendment to Lease is made the 26th day of February, 1993, by and between
----
Domino's Farms Holding Limited Partnership, a Michigan Corporation, having
offices at 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48105 ("Landlord"),
and AASTROM Biosciences, Inc., having offices at 24 Frank Lloyd Wright Drive,
Ann Arbor, Michigan 48105 ("Tenant").
WHEREAS, Landlord and Tenant entered into a Lease commencing October 1, 1992
(the "Lease") for approximately 4,592 of usable square feet of office space in
the building commonly known as Domino's Farms Prairie House; and
WHEREAS, Tenant desires modifications to be made to the original lease; and
WHEREAS, Landlord agrees to the modifications proposed by Tenant;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
First Amendment to Lease, the parties agree to the following changes:
Tenant expanded into an additional 191 square feet of usable space.
Construction of said expansion was complete and rent became effective
January 1, 1993.
Per the terms of the original Lease, Landlord will contribute Five
Thousand Three Hundred Forty Eight Dollars ($5,348) towards the
construction costs for said expansion.
The total monthly charge for rent will now be Nine Thousand Two Hundred
Ninety Dollars and Ninety Eight Cents ($9,290.98).
Per the original Lease, Tenant was to pay Landlord a Security Deposit in
the amount of $8,919.96. Said deposit was not paid as of the date of
this Amendment, and Landlord hereby waives requirement for said deposit.
IN WITNESS WHEREOF, this Amendment to Lease is executed on the 26th day of
February, 1993.
DOMINO'S FARMS HOLDING
LIMITED PARTNERSHIP
(A Michigan Corporation)
By: /s/ THOMAS R. MINICK
-----------------------
Thomas R. Minick
Its:
AASTROM BIOSCIENCES, INC.
(A Michigan Corporation)
By: /s/ R. Douglas Armstrong
-------------------------
R. Douglas Armstrong, Ph.D.
Its: President and C.E.O.
[CRC]
SECOND AMENDMENT TO LEASE
This Amendment to Lease is made the third day of October, 1994, by and between
DOMINO'S FARMS HOLDING LIMITED PARTNERSHIP, a Michigan Corporation, having
offices at 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106 ("Landlord"),
and AASTROM BIOSCIENCES, INC. having offices at 24 Frank Lloyd Wright Drive, Ann
Arbor, Michigan 48106 ("Tenant").
WHEREAS, Landlord and Tenant entered into a Lease commencing October 1, 1992
(the "Lease") for approximately 4,592 of usable square feet of office space in
the building commonly known as Domino's Farms Prairie House; and
WHEREAS, modifications were made to the original lease on February 26, 1993
which increased the total usable square feet to 4,783 with a corresponding
increase in rent charge; and
WHEREAS, Tenant desired further modifications to be made to the original lease
and subsequent First Amendment; and
WHEREAS, Landlord agreed to the modifications proposed by Tenant;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Second Amendment to Lease, the parties agree to the following changes:
1. Tenant expanded into the former Allstate Insurance Company suite, effective
July 12, 1993. Said suite is 750 square feet, and is further identified on
the attached floor plan. Tenant accepted space in current configuration;
Landlord painted suite, provided an allowance of $1,200 for carpet
replacement (to be arranged by Tenant), and provided an allowance of $806.30
for installation of soffit lighting (to be arranged by Tenant). No further
contribution was made by Landlord, and no further modifications to space
were made by Tenant. Based upon the necessity of relocation of Allstate
Insurance Company to allow for said expansion, Tenant agreed to pay a pro-
rated share of the unamortized tenant improvement costs initially paid by
the Landlord. A surcharge of $228.45 will be assessed each month through
May 1995 (initial term covered by this Lease agreement).
2. Tenant expanded into an additional 2,115 square feet of usable space,
located between the leased premises and the expansion space described
in Item #1 above. Construction of said space was complete and rent
became effective September 20, 1993.
Per the terms of the original Lease, Landlord contributed Fifty Nine
Thousand, Two Hundred Twenty Dollars ($59,220.00) towards the construction
costs for said expansion. Tenant contracted for and managed construction,
with approval of Landlord.
3. Tenant agreed to lease a storage room located on Level 1 of the Building.
Said room is 868 square feet, of which 728 square feet is usable by Tenant,
and is further identified on the attached floor plan. Tenant agrees to at
all times maintain a five foot (5') clear aisle to doors entering building
mechanical room east of leased storage room. Landlord agrees to provide an
allowance of $600 for installation of electrical power to said room.
Tenant, at its expense, may elect to make additional modifications to room,
and same will be coordinated with Landlord. Rent for said room will be
calculated based upon 728 square feet, at a rate of $8.00 per square foot,
and will equal $485.33 per month.
4. Based upon the changes described in Item #1 and #2 above, the total
monthly charge for rent will now be based upon a total of 7,648 usable
square feet, and will equal $14,856.24. With the surcharge described in
Item #1 above, total monthly rent due for office and lab space will equal
$15,084.69. Total rent due for storage space described in Item #3 above
will equal $485.33.
5. The terms and conditions of the Lease shall remain in full force and
effect except as specifically modified herein.
IN WITNESS WHEREOF, this Second Amendment to Lease is executed on the date
set forth above.
AASTROM BIOSCIENCES, INC.
(A Michigan Corporation)
By: /s/ R. DOUGLAS ARMSTRONG
---------------------------
R. Douglas Armstrong, Ph.D.
Its: President & C.E.O.
DOMINO'S FARMS HOLDING
LIMITED PARTNERSHIP
(A Michigan Corporation)
By: /s/ THOMAS R. MINICK
---------------------------
Thomas R. Minick
Its: Vice President of Services
[CRC]
[CRC]
THIRD AMENDMENT TO LEASE
This Amendment to Lease is made the 16th day of November, 1994, by and
----
between DOMINO'S FARMS HOLDING LIMITED PARTNERSHIP, a Michigan Corporation,
having offices at 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106
("Landlord"), and AASTROM BIOSCIENCES, INC., having offices at 24 Frank Lloyd
Wright Drive, Ann Arbor, Michigan 48106 ("Tenant").
WHEREAS, Landlord and Tenant entered into a Lease commencing October 1, 1992
(the "Lease") for approximately 4,592 of usable square feet of office space
in the building commonly known as Domino's Farms Prairie House; and
WHEREAS, modifications were made to the original lease on February 26, 1993
which increased the total usable square feet to 4,783 with a corresponding
increase in rent charge (First Amendment); and further modifications were
made to the original lease on October 3, 1994 which increased the total usable
square feet to 7,648 and provided for rental of a storage room of 728 square
feet, with corresponding increases in rent charge (Second Amendment); and
WHEREAS, Tenant desires further modifications to be made to the original lease
and subsequent First and Second Amendments; and
WHEREAS, Landlord agrees to the modifications proposed by Tenant;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Third Amendment to Lease, the parties agree to the following changes:
1. Tenant will expand into 6,723 usable square feet located across the
corridor from the existing premises, and further identified on Attachment A.
2. Modifications will be made to the expansion suite. Tenant will be
responsible for development of plans and all aspects of the construction
process. However, plans must be submitted to and approved by Landlord
prior to construction start-up.
3. $188,244 will be contributed by the Landlord to the cost of the tenant
improvements. This sum is equal to $28.00 per square foot. Further, Landlord
will bear responsibility for certain work, to include floor leveling (cement
work), installation of a fire damper, relocation of an alarm panel,
construction of the demising wall along the East wall of the expansion
suite, and installation of a major air supply duct. Upon completion of the
project, as-built drawings and a financial summary will be provided to
Landlord to detail the total scope of the project. Said improvements are
projected to be completed by November 15, 1994.
4. On or before January 1, 1995, Tenant will vacate and be released of all
responsibility for the 750 usable square feet acquired by Tenant on July
12, 1993. Said space is required by Landlord for installation of a
mechanical room. A corresponding reduction in rent will be applied, and
the monthly surcharge for said space will be discontinued.
5. For the period of November 16, 1994 through March 15, 1995, Tenant will
pay no rent for the expansion suite. However, during this time period,
Tenant will pay $7.35 per square foot ($4,117.84 per month) to be applied
to the cost of utilities, maintenance, taxes, grounds, and housekeeping
for the expansion suite.
For the period from March 16, 1995 through May 31, 1995, Tenant will pay
rent for the expansion suite at the same rate provided in the initial lease
($21.00 per square foot plus $2.31 for a utility charge).
6. The Lease will expire on May 31, 1995, and via this Third Amendment,
will be extended for an additional three year term (June 1, 1995 through
May 31, 1998). From June 1, 1995 forward, the rental rate will be
considered a gross rate.
7. Effective June 1, 1995, an annual increase of three percent (3%) will be
applied to the rates for this Lease. Said rates and rents due are detailed
on Attachment B to this Amendment (Rent Payment Schedule).
8. Tenant shall have a right to terminate the Lease during the three year
extension period, in the event of any one of the following:
a.) Landlord is unable to provide acceptable space for further expansion
of the Tenant; or
b.) AASTROM Biosciences, Inc. is acquired by another company and the
company is relocated to a non-Michigan site; or
c.) Zoning or other governmental restrictions limit the Tenant from
conducting business at Domino's Farms.
In the event the Tenant elects to terminate the Lease based upon one of
the stated factors, the following shall apply:
i) Tenant shall provide Landlord with twelve (12) month written notice
of any intent to terminate.
ii) To the extent reasonable, Tenant will assist with location of a
replacement tenant. Subject to Section 16 of the Lease, Tenant may sub-
lease the Premises.
iii) Tenant will re-pay the unamortized tenant improvements stated above
($188,244.00) based upon a three year amortization schedule. Such re-
payment of unamortized tenant improvements will be made only if Tenant is
unable to find a sub-tenant and/or Landlord is unable to lease the premises
essentially "as is" within ninety (90) days following the early termination
date of Lease.
iv) The four month rent abatement will be re-paid if notice to terminate
is given within the initial eighteen months of the three year lease
extension period.
9. Tenant shall have a Second Right of Refusal for the approximately 7,590
square feet located North of and contiguous to the expansion suite.
(As of the date of this Amendment, Parke-Davis has a First Right of
Refusal for said suite.) Tenant shall have a First Right of Refusal for
the approximately 5,000 square feet located North of and contiguous to the
suite covered by the Second Right of Refusal. Said suites are further
identified on Attachment A.
Under the exercise of either Right of Refusal stated above, the terms
and conditions shall be as provided in Rider E of the Lease, with the
exception of paragraph E(iii). For any space previously unoccupied by a
Tenant and in an unfinished status, an allowance in the set amount of
$28.00 per square foot shall be provided. For any space built out and
occupied by another tenant, the Landlord would be responsible for any
negotiated
relocation and associated costs. An allowance to Tenant would be
provided in the amount of $8.00 per square foot for any alterations
resulting in office space, and $12.00 per square foot for any alterations
resulting in laboratory space.
10. Tenant shall have one option to extend the lease for a term up to five
(5) years. Tenant shall notify Landlord in writing of intent to extend
at lease one hundred eighty days (180) prior to lease expiration. Rent
for such extension shall be at a rate equivalent to the rate in effect
during the last year of the lease prior to such proposed extension, with
an adjustment of three percent (3%) applied during the first and each
subsequent year of the extension.
11. The terms and conditions of the Lease shall remain in full force and
effect except as specifically modified herein.
IN WITNESS WHEREOF, this Third Amendment to Lease is executed on the
date set forth above.
AASTROM BIOSCIENCES, INC.
(A Michigan Corporation)
By: /s/ R. DOUGLAS ARMSTRONG
---------------------------
R. Douglas Armstrong, Ph.D.
Its: President and C.E.O.
DOMINO'S FARMS HOLDING
LIMITED PARTNERSHIP
(A Michigan Corporation)
By: /s/ THOMAS R. MINICK
--------------------------
Thomas R. Minick
Its: Vice President of Services
[CRC]
ATTACHMENT B
09-Dec-94
DOMINO'S FARMS PRAIRIE HOUSE
RENT PAYMENT SCHEDULE
AASTROM BIOSCIENCES - PHASE V
- -----------------------------
OFFICE RENT STORAGE CAGE STOREROOM 1994 EXPANSION
(6,898 SQ.FT.) (64 SQ.Ft.) (728 SQ.FT.) (6,723 SQ.FT) TOTAL RENT
==============================================================================================
10/01/94 - 10/31/94 15,084.69 * 64.00 485.33 N/A 15,634.02
11/01/94 - 11/30/94 15,084.69 * 64.00 485.33 2,058.92 ** 17,692.94
12/01/94 - 12/31/94 15,084.69 * 64.00 485.33 4,117.84 ** 19,751.86
01/01/95 - 01/31/95 13,399.37 64.00 485.33 4,117.84 ** 18,066.54
02/01/95 - 02/28/95 13,399.37 64.00 485.33 4,117.84 ** 18,066.54
03/01/95 - 03/31/95 13,399.37 64.00 485.33 8,935.26 *** 22,883.96
04/01/95 - 04/30/95 13,399.37 64.00 485.33 13,059.43 27,008.12
05/01/95 - 05/31/95 13,399.37 64.00 485.33 13,059.43 27,008.12
06/01/95 - 06/30/95 13,801.75 64.00 499.89 13,451.60 27,817.24
07/01/95 - 07/31/95 13,801.75 64.00 499.89 13,451.60 27,817.24
08/01/95 - 08/31/95 13,801.75 64.00 499.89 13,451.60 27,817.24
09/01/95 - 09/30/95 13,801.75 64.00 499.89 13,451.60 27,817.24
10/01/95 - 10/31/95 13,801.75 64.00 499.89 13,451.60 27,817.24
11/01/95 - 11/30/95 13,801.75 64.00 499.89 13,451.60 27,817.24
12/01/95 - 12/31/95 13,801.75 64.00 499.89 13,451.60 27,817.24
01/01/96 - 01/31/96 13,801.75 64.00 499.89 13,451.60 27,817.24
02/01/96 - 02/28/96 13,801.75 64.00 499.89 13,451.60 27,817.24
03/01/96 - 03/31/96 13,801.75 64.00 499.89 13,451.60 27,817.24
04/01/96 - 04/30/96 13,801.75 64.00 499.89 13,451.60 27,817.24
05/01/96 - 05/31/96 13,801.75 64.00 499.89 13,451.60 27,817.24
06/01/96 - 06/30/96 14,215.63 64.00 515.06 13,854.98 28,649.67
07/01/96 - 07/31/96 14,215.63 64.00 515.06 13,854.98 28,649.67
08/01/96 - 08/31/96 14,215.63 64.00 515.06 13,854.98 28,649.67
09/01/96 - 09/30/96 14,215.63 64.00 515.06 13,854.98 28,649.67
10/01/96 - 10/31/96 14,215.63 64.00 515.06 13,854.98 28,649.67
11/01/96 - 11/30/96 14,215.63 64.00 515.06 13,854.98 28,649.67
12/01/96 - 12/31/96 14,215.63 64.00 515.06 13,854.98 28,649.67
01/01/97 - 01/31/97 14,215.63 64.00 515.06 13,854.98 28,649.67
02/01/97 - 02/28/97 14,215.63 64.00 515.06 13,854.98 28,649.67
03/01/97 - 03/31/97 14,215.63 64.00 515.06 13,854.98 28,649.67
04/01/97 - 04/30/97 14,215.63 64.00 515.06 13,854.98 28,649.67
05/01/97 - 05/31/97 14,215.63 64.00 515.06 13,854.98 28,649.67
06/01/97 - 06/30/97 14,641.01 64.00 530.23 14,269.57 29,504.80
07/01/97 - 07/31/97 14,641.01 64.00 530.23 14,269.57 29,504.80
08/01/97 - 08/31/97 14,641.01 64.00 530.23 14,269.57 29,504.80
09/01/97 - 09/30/97 14,641.01 64.00 530.23 14,269.57 29,504.80
10/01/97 - 10/31/97 14,641.01 64.00 530.23 14,269.57 29,504.80
11/01/97 - 11/30/97 14,641.01 64.00 530.23 14,269.57 29,504.80
12/01/97 - 12/31/97 14,641.01 64.00 530.23 14,269.57 29,504.80
01/01/98 - 01/31/98 14,641.01 64.00 530.23 14,269.57 29,504.80
02/01/98 - 02/28/98 14,641.01 64.00 530.23 14,269.57 29,504.80
03/01/98 - 03/31/98 14,641.01 64.00 530.23 14,269.57 29,504.80
04/01/98 - 04/30/98 14,641.01 64.00 530.23 14,269.57 29,504.80
05/01/98 - 05/31/98 14,641.01 64.00 530.23 14,269.57 29,504.80
==============================================================================================
* 1994 OFFICE RENT BASED ON 7,648 SQ. FT. AND INCLUDES THE
ALLSTATE SURCHARGE OF $228.00.
** CAM EXPENSES ONLY - EFFECTIVE 11/16/94
*** CAM EXPENSES AND RENT PRO-RATED TO REFLECT CHANGE EFFECTIVE
ON THE 16TH.
RENTAL AGREEMENT FOR STORAGE SPACE
1. AASTROM BIOSCIENCES, INC. agrees to rent Storage Unit #13, located on
Level 1 of Prairie House, effective March 15, 1993. It is understood that
rental is on a monthly basis, and can be terminated by either Landlord or
Tenant with thirty (30) days written notice.
2. Rent for the period from March 15 through March 31, 1993 is $32.00. Rent for
a full calendar month is $64. Rate is $12 per square foot, based upon 64 square
feet (8' x 8'). The Tenant will be invoiced on a monthly basis, and rent shall
be due on the first day of each month.
3. No security deposit is required, and a key request form must be submitted to
the Control Center for access to the unit. Responsibility for any keys issued
is solely the responsibility of the tenant.
4. The unit will be used only for the storage of property, and will not be used
to store any edible, flammable, explosive, toxic or dangerous materials.
However, Landlord acknowledges that Tenant may store hazardous materials in said
unit, and Tenant agrees that any hazardous materials shall at all times be
stored in appropriate containers. The unit will never be intentionally damaged,
and rubbish will be disposed of in appropriate containers. Access will be only
during normal business hours. No alterations will be made to the unit.
5. Signature below indicates an understanding that Landlord is only renting
space, and will bear no responsibility for damage or loss to personal property
contained within said space. It is an option for the Tenant to secure and
purchase property insurance through an independent agent.
6. This rental agreement is independent and separate from any other lease the
undersigned may have with respect to other space at the Domino's Farms complex.
/s/ R. DOUGLAS ARMSTRONG
-------------------------
For Tenant
/s/ MARGARET PARKINSON
-------------------------
For Landlord
FOURTH AMENDMENT TO LEASE
This Amendment to Lease is made this 29th day of July, 1996, by and between
DOMINO'S FARMS HOLDING LIMITED PARTNERSHIP, a Michigan Corporation, having
offices at 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106 ("Landlord"),
and AASTROM BIOSCIENCES, INC., a Michigan Corporation, having offices at 24
Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106 ("Tenant").
WHEREAS, Landlord and Tenant entered into a Lease commencing October 1, 1992
(the "Lease") for approximately 4,592 of usable square feet of office space in
the building commonly known as Domino's Farms Prairie House; and
WHEREAS, modifications were made to the original lease on February 26, 1993
which increased the total usable square feet to 4,783 with a corresponding
increase in rent charge (First Amendment); and further modifications were made
to the original lease on October 3, 1994 which increased the total usable square
feet to 7,648 and provided for rental of a storage room of 728 square feet, with
corresponding increases in rent charge (Second Amendment); and further
modifications were made to the original lease on November 16, 1994 which
increased the total usable square feet to 14,371 with a corresponding increase
in rent charge (Third Amendment); and
WHEREAS, Tenant desires further modifications to be made to the original lease
and subsequent First, Second and Third Amendments; and
WHEREAS, Landlord agrees to the modifications proposed by Tenant;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Fourth Amendment to Lease, the parties agree to the following changes:
1. Tenant will expand into 5,510 usable square feet, which is further
identified on Attachment A.
2. Modification will be made to the expansion suite. Tenant will be responsible
for development of plans and all aspects of the construction process.
However, plans must be submitted to and approved by Landlord prior to
construction start-up. Upon project completion, Tenant must furnish Landlord
with complete set of "as-built" drawings and a financial summary which
details the total scope of the project.
3. $66,668.00 will be contributed by the Landlord to the cost of the tenant
improvements. Further, Landlord will bear responsibility for certain work,
to include floor leveling (cement work), installation of two fire dampers,
construction of the
demising wall along the North wall of the expansion suite, removal of storm
conductor, removal of double doors on West wall and installation of glass to
match building standard, and upgrade of patio area on West side of suite.
The tenant improvement allowance provided by the Landlord shall be
calculated as follows:
2,550 square feet $17.60 per square foot $44,880.00
1,568 square feet $ 9.43 per square foot $14,786.24
1,392 square feet $ 5.03 per square foot $ 7,001.76
----------------- ----------
5,510 square feet $66,668.00
4. Rent will commence on August 1, 1996 and shall run current with existing
Lease term which will expire on May 31, 1998.
5. An annual increase of three percent (3%) will be applied to the rates for
this Lease. Said rates are as follows:
8/1/96 to 5/31/97 $24.73 per square foot
6/1/97 to 5/31/98 $25.47 per square foot
A portion of the proposed expansion space is considered to be somewhat less
desirable than usual, due to interior location or lower than normal ceiling
height. Such areas amount to 2,808 square feet, and are further defined on
Attachment B. Rental rate for same shall be as follows:
8/1/96 to 5/31/97 $18.00 per square foot
6/1/97 to 5/31/98 $18.54 per square foot
Tenant currently occupies two (2) storage cages located on Level One in
close proximity to the dock. Rental rate for same shall remain at a flat
rate of $12.00 per square foot.
Cage #1 $ 64.00 per month
Cage #2 $336.00 per month
Tenant currently occupies a 728 square foot storage room located on Level
One of the building. Rental rate for same shall increase at a rate of three
percent (3%) per year as follows:
8/1/96 to 5/31/97 $8.49 per square foot
6/1/97 to 5/31/98 $8.74 per square foot
6. Tenant shall have a right to terminate the Lease during the remaining lease
term, in the event of any one of the following:
a) Landlord is unable to provide reasonably acceptable space for further
expansion of the Tenant; or
b) AASTROM Biosciences, Inc. is acquired by another company and the
company is relocated to a non-Michigan site; or
c) Zoning or other governmental restrictions limit Tenant from conducting
business at Domino' Farms.
In the event the Tenant elects to terminate the Lease based upon one of
the above stated factors, the following shall apply:
i) Tenant shall provide Landlord with twelve (12) month written notice of
any intent to terminate.
ii) To the extent reasonable, Tenant will assist with location of a
replacement tenant. Subject to Section 16 the Lease, Tenant may sub-
lease the Premises.
iii) In addition to the financial obligation defined in 8(iii) of the Third
Amendment to Lease, the tenant will re-pay the unamortized tenant
improvements stated above ($66,668.00) based upon a two year
amortization schedule. Such repayment of unamortized tenant
improvements will be made only if Tenant is unable to find a subtenant
and/or Landlord is unable to lease the premises essentially "as is"
within ninety (90) days following the early termination date of Lease.
7. Tenant shall have a First Right of Refusal for the approximately 10,000
square feet located North of and contiguous to the suite covered by this
amendment.
Under the exercise of the Right of Refusal stated above, the terms and
conditions shall be as provided in Rider E of the Lease, with the exception
of paragraph E(iii). For any space previously unoccupied by a Tenant and in
an unfinished status, an allowance in the set amount of $28.00 per square
foot shall be provided. For any space built out and occupied by
another tenant, the Landlord would be responsible for any negotiated
relocation and associated costs. An allowance to Tenant would be
provided in the amount of $8.00 per square foot for any alterations
resulting in office space, and $12.00 per square foot for any alterations
resulting in laboratory space. All such allowances are based upon a five (5)
year lease term.
Additionally, Tenant shall have a First Right of Refusal for the suite
located on Level 3, between Lobby K and Lobby L, and directly above Tenant's
premises. Any Tenant improvement allowance would depend on the proposed
alterations to the suite and length of lease term.
8. Tenant shall retain one option to extend the Lease for a term up to five (5)
years, in whole or in part. Tenant shall notify Landlord in writing of
intent to extend at least one hundred eighty (180) days prior to Lease
expiration. Rent for such extension shall be at a rate equivalent to the
rate in effect during the last year of the Lease prior to such proposed
extension, with an adjustment of three percent (3%) applied during the first
and each subsequent year of the extension.
9. The terms and conditions of the Lease shall remain in full force and effect
except as specifically modified herein.
IN WITNESS WHEREOF, this Fourth Amendment to Lease is executed on the date set
forth above.
AASTROM BIOSCIENCES, INC.
(A Michigan Corporation)
By: /s/ Todd E. Simpson
---------------------------------
Its: Vice President - Financial
Administrator, Chief Financial
Officer
-------------------------------
DOMINO'S FARMS HOLDING LIMITED
PARTNERSHIP
(A Michigan Corporation)
By: /s/
---------------------------------
Its:
--------------------------------
[ATTACHMENT A BLUEPRINT APPEARS HERE]
[ATTACHMENT B BLUEPRINT APPEARS HERE]
DOMINO'S FARMS PRAIRIE HOUSE
RENT PAYMENT SCHEUDLE
STORAGE STORE 1994 1994
OFFICE RENT CAGE ROOM EXPANSION EXPANSION
(6,695 sq. ft) (64 sq. ft.) (728 sq. ft.) (6,723 sq ft.) (5,510 sq. ft) TOTAL RENT
======================================================================================================================
10/01/94 - 10/31/94 15,084.69* 64.00 485.33 -- -- 15,834.02
11/01/94 - 11/30/94 15,084.60* 64.00 485.33 2,058.92** -- 17,692.94
12/01/94 - 12/31/94 15,084.89* 64.00 485.33 4,117.84** -- 19,751.88
01/01/95 - 01/31/95 13,399.87 64.00 485.33 4,117.84** -- 18,066.54
02/01/95 - 02/28/95 13,389.37 64.00 485.33 4,117.84** -- 18,066.54
03/01/95 - 03/31/95 13,399.87 64.00 485.33 8,838.26*** -- 22,883.98
04/01/95 - 04/30/95 13,399.87 64.00 485.33 13,059.49 -- 27,006.18
05/01/95 - 05/31/95 13,399.87 64.00 485.33 13,059.43 -- 27,006.13
06/01/95 - 06/30/95 13,001.75 64.00 499.89 13,451.60 -- 27,817.24
---------------------------------------- ----------------------------
576.00 4,382.53 62,916.16 -- 193,929.36
07/01/95 - 07/31/95 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
08/01/95 - 08/31/95 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
09/01/95 - 09/30/95 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
10/01/95 - 10/31/95 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
11/01/95 - 11/30/95 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
12/01/95 - 12/31/95 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
01/01/96 - 01/31/96 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
02/01/96 - 02/29/96 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
03/01/96 - 03/31/96 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
04/01/96 - 04/30/96 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
05/01/96 - 05/31/96 13,801.75 64.00 499.89 13,451.60 -- 27,817.24
06/01/96 - 06/30/96 14,215.83 64.00 515.06 13,854.98 -- 28,849.87
---------------------------------------- ----------------------------
768.00 6,013.85 161,822.58 -- 334,639.31
07/01/96 - 07/31/96 14,215.63 64.00 515.06 13,854.98 -- 28,649.67
08/01/96 - 08/31/96 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
09/01/96 - 09/30/96 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
10/01/96 - 10/31/96 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
11/01/96 - 11/30/96 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
12/01/96 - 12/31/96 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
01/01/97 - 01/31/97 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
02/01/97 - 02/28/97 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
03/01/97 - 03/31/97 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
04/01/97 - 04/30/97 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
05/01/97 - 05/31/97 14,215.63 64.00 515.06 13,854.98 9,780.37 38,430.04
06/01/97 - 06/30/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
---------------------------------------- ----------------------------
768.00 6,195.89 166,874.35 107,877.05 452,528.23
07/01/97 - 07/31/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
08/01/97 - 08/31/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
09/01/97 - 09/30/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
10/01/97 - 10/31/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
11/01/97 - 11/30/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
12/01/97 - 12/31/97 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
01/01/98 - 01/31/98 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
02/01/98 - 02/28/98 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
03/01/98 - 03/31/98 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
04/01/98 - 04/30/98 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
05/01/98 - 05/31/98 14,641.01 64.00 530.23 14,269.57 10,073.35 39,578.16
---------------------------------------- ----------------------------
704.00 5,892.83 186,988.27 110,806.85 436,359.76
* 1994 Office Rental based on 7,648 sq. ft. and includes the Allstate
surcharge of $228.00
** CAM expenses only - Effective 11/16/94
*** CAM expenses and rent pro-rated to reflect change effective on the 16th.
EXHIBIT 10.16
CLINICAL TRIAL AGREEMENT
------------------------
This Clinical Trial Agreement ("Agreement") is entered into as of the 19 day
--
of April, 1995 (the "Effective Date"), by and among Aastrom Biosciences,
-----
Inc. ("Aastrom"), located at 24 Frank Lloyd Wright Dr., Lobby L, Ann Arbor, MI
48105, and The University of Texas M.D. Anderson Cancer Center (the
"Institution"), located at 1515 Holcombe Blvd., Houston, TX 77030. Definitions
shall have the meaning as set forth in Exhibit A.
RECITALS
WHEREAS, Aastrom is the developer, manufacturer and/or licensee of medical
devices and materials, such as a Cell Production System ("CPS") device and
related materials and device, which have potential medical application for use
in subjects care and research;
WHEREAS, Aastrom desires to conduct a human clinical trial ("Study") of the
CPS in subjects in accordance with a protocol entitled "Feasibility Study of
Expanded Progenitor Cells for Hematopoietic Engraftment in Patients with Breast
Cancer" ("Protocol") which is incorporated herein by reference as Exhibit B
attached hereto;
WHEREAS, the Institution has research, clinical and medical facilities,
technical capabilities and expertise in order to conduct the Study in accordance
with the Protocol;
WHEREAS, the Study contemplated by this Agreement is of mutual interest and
benefit to the Institution and to Aastrom such that the parties hereto desire to
have the Institution conduct the Study under the qualified direction of Richard
E. Champlin, M.D. (the "Principal Investigator"); and
WHEREAS, Aastrom and the Institution agree to conduct the Study in
accordance with the terms and conditions hereinafter set forth.
AGREEMENT
I. CLINICAL TRIAL DESCRIPTION
The Institution agrees to undertake and complete the Study described in the
Protocol in compliance with all applicable laws, rules and regulations
relating to the Study, including without limitation, all laws, rules and
regulations concerning or promulgated by the Food and Drug Administration
("FDA").
Aastrom agrees to loan the Institution the laboratory and clinical
equipment listed in the Schedule of Laboratory and Clinical Equipment on
Exhibit C which are reasonably necessary for the Institution to conduct the
Study. Aastrom shall retain title to all such equipment which shall
promptly be returned to Aastrom upon request by Aastrom.
1
II. FUNDING
Aastrom shall provide payment to the Institution in accordance with the
terms contained in the Schedule of Clinical Trial Milestone Payments
attached as Exhibit D and incorporated herein.
III. CONDUCT OF STUDY
A. Facilities
----------
The Study shall be conducted only at the following location(s): The
University of Texas M.D. Anderson Cancer Center, 1515 Holcombe Blvd.,
Houston, Texas 77030. The CPS and other Study materials may not be
transferred to any other location or to any third party without the
prior written consent of Aastrom.
B. Investigator
------------
The Institution agrees that the Study will be conducted under the
direction of the Principal Investigator in accordance with the
Protocol and the Investigator Agreement (included as Exhibit E of the
Agreement) and incorporated herein by reference. The Principal
Investigator may, subject to the prior written consent of Aastrom,
designate a clinical coordinator and one or more subinvestigators to
assist in conducting the Study. The Institution acknowledges that the
Principal Investigator and subinvestigators have each executed an
Investigator Agreement, copies of which are included in Exhibit E. In
the event that additional subinvestigators are added to the Study,
such subinvestigators must execute and deliver an Investigator
Agreement which shall be deemed incorporated by reference into this
Agreement. In the event the Principal Investigator can no longer
function in such capacity, then Aastrom and the Institution shall
attempt to agree on a replacement. If a mutually acceptable
replacement cannot be agreed upon, this Agreement and the Study at the
Institution shall terminate. The Institution agrees that it will use
its best efforts to recruit qualified subjects for enrollment in the
Study consistent with the guidelines contained in the Protocol and the
best interest of the subjects; however, no subjects shall be enrolled
in the Study if they are currently enrolled in another investigational
study without the prior written consent of Aastrom.
C. Compliance with Protocol
------------------------
Any changes to the Protocol may only be made with the prior written
agreement of Aastrom; provided that during the Study, if the Principal
Investigator feels that it is necessary to deviate from the Protocol
in order to protect the life or physical well-being of a Study subject
before written approval can be obtained, he/she may do so in
accordance with the procedures detailed in the Protocol.
2
D. Institutional Review Board Approval and Informed Consent
--------------------------------------------------------
The Institution will obtain: (i) the approval of the governing the
Institutional Review Board ("IRB") prior to initiating the Study and
thereafter as required by applicable laws, rules and regulations; and
(ii) prior written informed consent of all subjects and/or their legal
guardians in a form that is substantially the same as provided in the
Protocol and satisfactory to both the governing IRB and Aastrom and in
compliance with applicable laws, rules and regulations.
E. Adverse Events
--------------
The Institution shall immediately notify Aastrom (Dr. Thomas E. Muller
at 313/930-5555 and/or by fax at 313/665-0485) of any unanticipated
adverse effect, whether ascribed to the investigational device or not,
in accordance with instructions provided in the Protocol.
IV. STUDY MONITORING AND ACCESS TO FACILITIES
Aastrom's designated representatives and/or authorized representatives of
regulatory agencies may, at all reasonable times, visit the Institution in
order to: (i) determine the adequacy of the facilities; (ii) validate case
reports against original data in the subject medical records and the files
of the Principal Investigator; and (iii) monitor the conduct of the Study
to determine whether the Study is being conducted in compliance with the
Protocol and all applicable laws, rules and regulations. The Institution
agrees to obtain any required subject release(s) to allow Aastrom's
designated representatives, and/or authorized representatives of regulatory
agencies, to conduct such review prior to enrolling each subject in the
Study.
V. REPORTS
The Institution agrees to have the Principal Investigator submit reports to
Aastrom and the reviewing IRB in accordance with the Protocol and all
applicable laws, rule and regulations.
VI. PROPRIETARY RIGHTS
A. Data and Materials
------------------
The Institution understands and agrees that the underlying rights to
the CPS and other intellectual property and materials which are the
subject of the Protocol belong to Aastrom. The parties agree that the
Institution shall retain control over the CPS and Study materials, and
further agree not to allow access to, disclose the existence or nature
of, or transfer the CPS or Study materials to third parties without
advance written approval of Aastrom. Aastrom reserves the right to
distribute the CPS and Study materials to others and to use them for
its own purposes. Title to the CPS and Study materials shall remain
with Aastrom. Further, the Institution agrees that data and materials
derived as a direct result of the Study described in the Protocol
(hereinafter referred to as "Clinical Trial Information") whether
generated by the
3
Institution, the Principal Investigator, and/or their agents or
employees, either solely or jointly with others, is the property of
Aastrom; provided that the Institution and the Principal Investigator
may utilize the Clinical Trial Information in furtherance of academic
publications authorized by this Agreement and for subject care
purposes.
B. Patent Ownership and Related Matters
------------------------------------
The Institution agrees that the Study results and any inventions or
discoveries by the Institution, the Principal Investigator or their agents
or employees during the Study that are modifications, improvements or new
uses applicable to the CPS or that are a direct result of the performance
of the Study in accordance with the detailed testing Protocol provided by
Aastrom to Institution and which are dependent on, or relate to, the Study,
the claims of Aastrom's patentable inventions, the use of the cells
processed through the CPS or Aastrom's Confidential Information shall be
the property of Aastrom. Any invention arising out of the work performed
under this Study solely by the Institution and not covered in the previous
sentence shall be the exclusive property of the Institution (the
"Institution Invention") and shall not be considered a part of Aastrom's
Confidential Information. The Institution shall promptly disclose each
such Institution Invention and the terms under which the Institution would
be prepared to license it. Aastrom shall have a right of first refusal to
exclusively develop, license and commercialize such Institution Invention.
Aastrom shall have sixty (60) days after receipt of such disclosure to
exercise its right of first refusal, and if so exercised, the parties shall
thereafter negotiate a mutually acceptable licensing agreement in good
faith. If the Institution at any time offers such Institution Invention on
terms different than those disclosed to Aastrom, the Institution shall
offer such Institution Invention to Aastrom on such different terms in
accordance with the first right refusal herein. The Institution and
Principal Investigator shall not obtain, or attempt to obtain, patent
coverage on the CPS or its use without the express written consent of
Aastrom. The Institution and the Principal Investigator shall assist
Aastrom in prosecuting any Aastrom patent applications and shall execute
and deliver any and all instruments necessary to make, file and prosecute
all such applications, divisions, continuations, continuations-in-part or
reissues thereof.
VII. WARRANTIES AND REPRESENTATIONS
A. No Warranties
-------------
It is understood that the CPS is experimental in nature, has not been
approved for commercial distribution and is provided hereunder for
investigational purposes only. NEITHER THE INSTITUTION NOR AASTROM
MAKES ANY REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
ANY REPRESENTATION WITH RESPECT TO SAFETY, EFFICACY, MERCHANTABILITY,
FITNESS FOR ANY PURPOSE OR NON-INFRINGEMENT OF ANY INTELLECTUAL
PROPERTY RIGHTS, WITH RESPECT TO THE PRODUCT OR INFORMATION PROVIDED
TO THE OTHER HEREUNDER.
4
B. Representations of the Parties
------------------------------
Each party hereto represents that it has right to enter into and
perform its respective obligations under this Agreement.
C. Representations by the Institution and the Principal Investigator
-----------------------------------------------------------------
The Institution represents that: (i) it has adequate facilities and
staff to conduct the Study in accordance with the Protocol; (ii) the
governing IRB is qualified to review and approve the Study; and
(iii) the Principal Investigator is qualified by education and
training to conduct the Study and has not been disqualified, or
otherwise limited, as a clinical investigator by the FDA or any
other regulatory or administrative body. The Institution represents
that the Principal Investigator and all other investigators and
personnel that may perform services hereunder are its employees and
shall abide by the terms and conditions of this Agreement as if each
were a party hereto.
VIII. LIMITATIONS OF LIABILITY
In no event shall any party be liable to the other party hereto for any
incidental, special or consequential damages.
IX. INDEMNIFICATION
A. Indemnification of Aastrom
--------------------------
Aastrom agrees to indemnify, defend and hold harmless the
Institution, the University of Texas System, and their Regents,
officers, agents and employees from and against any and all claims,
suits, and liabilities (collectively "Liabilities") arising out of
or resulting from the activities to be carried out pursuant to the
obligations of this Agreement, including but not limited to the use
by Aastrom of the results of the Study; provided that such
Liabilities do not arise from:
i. a failure to adhere to the Protocol or written instructions
relative to use of the CPS or other materials utilized in the
Study;
ii. a failure to comply with any applicable law, rule or regulation
relating to the Study, including without limitation, all FDA
regulations or other governmental requirements; or
iii. the negligence or willful misconduct by the regents, officers,
agents or employees of the Institution or the University of
Texas System.
B. Indemnification by the Institution
----------------------------------
The Institution agrees, to the extent allowed by the Constitution
and the laws of the State of Texas, to indemnify, defend and hold
harmless Aastrom and its directors,
5
officers, agents and employees from and against any and all
Liabilities they may suffer in connection with the Study which arise
out of the negligent acts or omissions of the Institution, its
employees or agents pertaining to the activities to be carried out
pursuant to the obligations of this Agreement; provided, however, that
Institution shall not hold Aastrom harmless from claims arising out of
the negligence or willful malfeasance of Aastrom, its directors,
officers, agents or employees, or any person or entity not subject to
Institution supervision or control.
C. Notification
------------
The Institution and Aastrom each agree to notify the other in writing
as soon as they become aware of a claim or action and to, subject to
the statutory duties of the Texas Attorney General, cooperate with the
management and defense of such claim or action. The indemnifying
party agrees, at its own expense, subject to the statutory duties of
the Texas Attorney General, to provide attorneys of its own selection
to defend against any actions brought or filed against the indemnified
party with respect to the subject of indemnity contained herein. The
indemnifying party shall, subject to the statutory duties of the Texas
Attorney General, control the defense of any action; however the
indemnified party may, at its own expense, participate by providing
attorneys of its own selection. No indemnified party shall compromise
or settle any claim of action without the prior written approval of
the indemnifying party.
X. RESTRICTIONS ON USE; COMPLIANCE WITH LAWS
The Institution and the Principal Investigator agree that the CPS will be
used for clinical research purposes only in connection with the Study by
the Principal Investigator and his/her subinvestigators at the
facility(ies) described in Section III.A. under suitable containment
conditions. Neither the Institution nor the Principal Investigator shall
use the CPS for any commercial purposes, including screening, production or
sale. The CPS will not be used in the treatment or diagnosis of human or
animals except for the purpose of conducting the Study as described in the
Protocol. The Institution agrees to comply with all laws, rules and
regulations applicable to the Study and the handling, use and disposal of
any Study materials. The CPS is to be used with caution and prudence since
all of its characteristics are not known.
XI. CONFIDENTIALITY
A. Treatment of Confidential Information
-------------------------------------
The Institution agrees that it will not disclose or use Confidential
Information for any purpose other than the purpose of conducting the
Study, obtaining any required review of the Protocol or its conduct,
or ensuring proper medical treatment of any subject or subject. The
Institution agrees to limit distribution of Aastrom's Confidential
Information to Institution personnel on a need-to-know basis. The
Institution agrees to ensure that its personnel abide by the
confidentiality obligations as set forth herein in accordance with
Section VII.C. The obligations set forth in this Section XI.A. shall
survive for a period of five (5) years following the termination or
expiration of this Agreement.
6
The term "Confidential Information" shall mean any and all oral,
written or tangible proprietary or confidential ideas, inventions,
information, data, plans, materials and know-how or the like owned,
controlled or developed by Aastrom and disclosed to Institution.
Aastrom shall attempt to identify the confidential status of
Confidential Information disclosed hereunder, but the failure to so
mark or identify shall not destroy the confidential nature of such
Confidential Information. Without limiting the generality of the
foregoing, Confidential Information shall include, without limitation,
all clinical trial plans, protocols, information, data analyses,
proprietary equipment, and materials related to the Confidential
Information. Confidential Information shall not include any
information which the Institution can demonstrate:
i. Was known to the Institution prior to receipt from Aastrom,
provided that the Institution promptly notifies Aastrom in
writing of the same promptly after disclosure by Aastrom;
ii. Is or becomes part of the public domain through no act by or on
behalf of the Institution;
iii. Was lawfully received by the Institution or the Principal
Investigator from a third party who had a legal right to disclose
the same; or
iv. Is required by law or regulation to be disclosed.
In the event that Confidential Information is required to be disclosed
pursuant to subsection iv., the Institution will notify Aastrom to
allow Aastrom to assert whatever exclusions or exemptions may be
available to it under such law or regulation.
B. Publicity
---------
No publicity, news releases, or other public announcement, written or
oral, relating to the Agreement, to any amendment hereto or to
performance hereunder or to the existence of an arrangement between
the parties, shall be originated by either party without the prior
written approval, such approval not to be unreasonably withheld, of
the other party except as shall be required by law.
C. Use of Name
-----------
No Party shall use or publicly disclose the name of another party
hereto without the prior written consent, such consent not to be
unreasonably withheld, of such other party except that the name of a
party may be disclosed to regulatory bodies such as the FDA,
Securities and Exchange Commission or as required by law.
XII. PUBLICATION RIGHTS
At least thirty (30) days prior to submission for publication, the
Institution agrees to provide Aastrom a final draft of any manuscript
describing the results obtained by the Institution from
7
the Study. Aastrom shall be permitted to advise as to the implications
of such manuscripts upon patentability of any inventions or the
potential effects on commercialization. The Institution shall, upon
Aastrom's request, delete any of Aastrom's Confidential Information and
shall consider all reasonable editorial suggestions based on sound
scientific and clinical judgment, Aastrom acknowledges that Institution
shall have the final authority to determine the scope and content of
any publication, provided that such authority shall be exercised with
reasonable regard for the commercial interests of Aastrom. Subject to
Aastrom's right to delete such Confidential Information and to propose
mutually agreeable modification of such manuscripts, the Institution
shall have the right to submit the manuscript for publication. However,
if Aastrom determines that any invention disclosed therein is
patentable and that a patent application should be filed on such
invention, Aastrom shall so notify the Institution in writing and the
Institution shall postpone publication for a period not to exceed sixty
(60) days from said notice (unless otherwise mutually agreed in
writing) to provide time for patent applications to be filed.
XIII. TERM AND TERMINATION
A. Term
----
Except as otherwise provided in this section, this Agreement shall
commence on the Effective Date hereof and continue for the period
necessary to satisfy the requirements of the Protocol.
B. Termination
-----------
Aastrom and the Institution shall have the right to terminate this
Agreement at any time without cause upon thirty (30) days prior
written notice. Any party may terminate the Study at any time if,
in its option, it is in the best interest of the Study subjects.
C. Termination Obligations
-----------------------
Any termination of this Agreement shall not relieve any party
hereto of any obligation or liability accrued hereunder prior to
such termination, or rescind or give rise to any right to rescind
anything done hereunder prior to the time such termination becomes
effective; nor shall such termination relieve any party from any
obligation which, by its nature, survives termination including
the obligations set forth in Articles IV through IX, XI and XIV.D.
The parties further agree that all Study data and used and unused
Study equipment, materials and supplies, including the CPS,
provided to the Institution by Aastrom for the purpose of this
Study will be returned to Aastrom promptly upon request by
Aastrom.
8
XIV. MISCELLANEOUS
A. Independent Contractor
----------------------
The Institution recognizes and agrees that it is operating as an
independent contractor and not as an agent of Aastrom. The Agreement
shall not constitute a partnership or joint venture, and no party may
be bound by the other to any contract, or make any representations or
warranties, express or implied, on behalf of another party, or
otherwise create any liability against another party in any way for
any purpose.
B. Assignment
----------
The rights and obligations of the parties under this Agreement shall
bind and inure to the benefit of the successors, assigns and
transferees of the parties; provided, however, this Agreement shall
not be assignable by either party without the prior written consent of
other party.
C. Governing Law
-------------
This Agreement shall be construed and interpreted in accordance with
and governed by the laws of the State of Texas.
D. Alternative Dispute Resolution
------------------------------
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof, including, without limitation, disputes
relating to patent validity or infringement arising under this
Agreement, shall be settled through use of an appropriate method of
Alternative Dispute Resolution, including, without limitations, by
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon an award rendered may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing, the
parties shall be entitled to petition any court of competent
jurisdiction in the event of any alleged breach of Article XI.
E. Entire Agreement; Modification
------------------------------
This Agreement contains the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings
between them relating to the subject matter hereof.
F. Headings
--------
The headings of this Agreement are to facilitate reference only, do
not form a part of this Agreement and shall not effect the
interpretation thereof.
9
G. Severability
------------
If any provision of this Agreement or portion of this Agreement shall
be construed to be a waiver of any other breach of the same or any
other provision.
H. No Waiver
---------
No waiver of a breach by a party of any provision of this Agreement
shall be construed to be a waiver of any other breach of the same or
any other provision.
I. No Implied License
------------------
No right or license to the CPS or to its use is granted by Aastrom or
implied as result of the transmission of the CPS to the Institution
under the supervision of the Principal Investigator, except to the
limited extent necessary to conduct the Study. The transfer of the
CPS provided for herein does not constitute a public disclosure.
J. Necessary Acts
--------------
At the request of Aastrom, the Institution and the Principal
Investigator shall execute any documents and take any actions which
may be necessary, in the opinion of Aastrom, or its legal counsel, to
evidence or perfect any rights of Aastrom hereunder.
K. Counterparts
------------
This Agreement may be executed in counterparts all of which together
shall constitute one and the same instrument.
L. Notices
-------
All notices and other communications permitted or required under this
Agreement shall be in writing and shall be deemed to have been given
when received at the addresses set forth on the signature page hereof,
or at such other address as may be specified by one party in writing
to the other. Said written notice may be given by mail, telecopy,
rush delivery service, telegram, telex, personal delivery or any other
means to the parties at the addresses as follow:
If to the Institution:
Donna S. Gilberg, CPA
Manager, Sponsored Programs
The University of Texas
M.D. Anderson Cancer Center
1515 Holcombe Blvd.
Houston, TX 77030
10
If to the Principal Investigator:
Richard E. Champlin, M.D.
The University of Texas
M.D. Anderson Cancer Center
1515 Holcombe Blvd.
Houston, TX 77030
If to Aastrom:
Thomas E. Muller, Ph.D.
Aastrom Biosciences, Inc.
24 Frank Lloyd Wright Drive, Lobby L
Ann Arbor, MI 48105
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
INSTITUTION: AASTROM:
THE UNIVERSITY OF TEXAS AASTROM BIOSCIENCES, INC.
M.D. ANDERSON CANCER CENTER
By: /s/ DONNA S. GILBERG By: /s/ R. DOUGLAS ARMSTRONG
---------------------------- -----------------------------
Donna S. Gilberg, CPA Name:
Manager, Sponsored Programs Title: President/CEO
Date: 5/10/96 Date: 5/20/96
-------------------------- ----------------------------
I have read this agreement and understand
my obligations hereunder:
By: /s/ RICHARD E. CHAMPLIN
---------------------------
Richard E. Champlin, M.D.
Principal Investigator
Interim Chairman, Dept. Of Hematology
By: /s/ ROBERT C. BAST
---------------------------
Robert C. Bast, Jr., M.D.
Head, Division of Medicine
12
EXHIBIT A
DEFINITIONS
1. Aastrom Aastrom shall have the meaning as set forth in the first
-------
paragraph of this Agreement.
2. Clinical Trial Information Clinical Trial Information shall have the
--------------------------
meaning as set forth in Section VI.A. of this Agreement.
3. Confidential Information Confidential Information shall have the meaning
------------------------
as set forth in Section XI.A.
4. CPS The CPS means the Cell Production System developed by Aastrom for the
---
ex vivo growth and expansion of human stem and hematopoietic progenitor
cells. The CPS consists of : (a) a disposable bioreactor where the growth
and expansion of cells takes place; (b) disposable growth medium as
required by the cell culture (to which specified growth factors and
glutamine are added); and (c) disposable harvest regents which facilitate
the removal of the expanded cells from the cell cassette.
5. Effective Date The Effective Date shall have the meaning as set forth in
--------------
the first paragraph of this Agreement.
6. FDA FDA shall have the meaning as set forth in Article 1 of this
---
Agreement.
7. Institution Institution shall have the meaning as set forth in the first
-----------
paragraph of this Agreement.
8. Institution Invention Institution Invention shall have the meaning set
---------------------
forth in paragraph VI.B. of this Agreement.
9. Principal Investigator Principal Investigator shall have the meaning as
----------------------
set forth in the Recitals on page 1 of this Agreement.
10. Protocol Protocol shall have the meaning as set forth in the Recitals on
--------
page 1 of this Agreement.
11. Study Study shall have the meaning as set forth in the Recitals on page 1
-----
of this Agreement.
1
EXHIBIT B
PROTOCOL
THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
DIVISION OF MEDICINE
CLINICAL FEASIBILITY STUDY OF EXPANDED PROGENITOR CELLS FOR
HEMATOPOIETIC ENGRAFTMENT IN PATIENTS WITH BREAST CANCER
1.0 OBJECTIVES
2.0 BACKGROUND
3.0 BACKGROUND DRUG AND DEVICE INFORMATION
4.0 PATIENT ELIGIBILITY
5.0 TREATMENT PLAN
6.0 PRETREATMENT EVALUATION
7.0 STUDY PROCEDURES AND EVALUATIONS
8.0 DATA COLLECTION
9.0 ADVERSE EVENTS
10.0 STATISTICAL CONSIDERATIONS AND DATA ANALYSIS
11.0 CLINICAL SUPPLIES
12.0 STUDY MONITORING
13.0 INVESTIGATOR OBLIGATIONS
14.0 REFERENCES
APPENDIX A: TOXICITY CRITERIA
APPENDIX B: PATIENT EVALUATION
APPENDIC C: ZUBROD PERFORMANCE STATUS
APPENDIX D: INFORMED CONSENT
APPENDIX E: CASE REPORT FORMS
STUDY CHAIRMAN:
- ----------------------
Richard Champlin, M.D.
STUDY CO-CHAIRMAN:
- ---------------------- -----------------------
Rakesh Mehra, M.D. James Gajewski, M.D.
STUDY COLLABORATORS:
- ------------------------------- -------------------------
Gabriel Hortobagyi, M.D. Zia Rahman, M.D.
- ------------------------------- -------------------------
David Seong, M.D. David Claxton, M.D.
- ------------------------------- -------------------------
Borje S. Andersson, M.D., Ph.D. Koen van Besien, M.D.
- ------------------------------- -------------------------
Donna Przepiorka, M.D., Ph.D. Martin Korbling, M.D.
The Section of Blood and Marrow Transplantation, Departments of Hematology and
Medical Breast and Gynecologic Oncology, Division of Medicine, The University of
Texas, M.D. Anderson Cancer Center, 1515 Holcombe Boulevard, Houston, Texas
77030. Telephone: 713-792-3611 or 713-792-2684.
PROTOCOL ABSTRACT
Protocol:
FEASIBILITY STUDY OF EXPANDED PROGENITOR CELLS FOR HEMATOPOIETIC ENGRAFTMENT IN
PATIENTS WITH BREAST CANCER
Study Chairman: Richard Champlin, M.D.
OBJECTIVES:
Assess the safety of the mixture of early- mid- and late stage bone marrow
derived mononuclear cells produced in the Cell Production System (CPS) (primary
objective and the biologic effect on hematopoietic recovery after infusion of ex
vivo expanded hematopoietic cells following high dose chemotherapy as treatment
of patients with breast cancer.
RATIONALE:
High dose chemotherapy is increasingly used for treatment of malignancies.
Despite infusion of autologous bone marrow or PBPC, patients experience at least
one week of profound pancytopenia prior to engraftment and hematologic recovery.
Recently technology for expansion of hematopoietic progenitors ex vivo has been
developed and we performed a study showing no toxicity and rapid hematopoietic
recovery when given in addition to autologous bone marrow. The expansion
systems produces large numbers of progenitors similar to that present in full
autologous marrow graft and the expansion conditions do not support the growth
of malignant cells, thus the system acts to purge contaminating tumor cells from
the autologous graft. Preliminary studies suggest that infusion of large
numbers of expanded cells may modify the nadir of granulocytopenia and
potentially reduce infectious complications. Recently, Brugger et al reported
rapid engraftment and hematopoetic recovery using ex vivo expanded cells alone.
This study is designed to assess hematopoietic recovery after high dose
chemotherapy and infusion of cells expanded using the Aastrom expansion device.
ELIGIBILITY:
Female patients age 18- 65 years with diagnosis of Stage IV breast carcinoma who
are not eligible for protocols of higher priority and who have received no more
than one chemotherapy regimen for metastatic disease, with chemotherapy
responsive or stable disease at the time of study entry. Zubrod performance
status 0 or 1. Patients must be HIV negative and have a creatinine less than or
equal to 1.5 mg/dl, SGOT, SGPT, & bilirubin less than 2 x normal, normal cardiac
ejection fraction and DLCO greater than 50% of predicted. Patients must have WBC
greater than 3,000/mm/3/. Women of childbearing potential must have a negative
pregnancy test within 3 weeks of initiation of therapy. Exclusion Criteria
include: History of central nervous system (CNS) disease; Concurrent involvement
in any other clinical trial that affects engraftment (e.g. other hematopoietic
growth factors); Previous pelvic radiotherapy; Previous treatment with
mitomycin-C or carmustine (BCNU); any co-morbid conditions which, in the view of
the principal investigators, renders the patient at high risk from treatment
complications; bone marrow involvement with tumor at the time of marrow harvest
as demonstrated by standard histopathological examination of bilateral iliac
marrow biopsies.
TREATMENT PLAN:
Prior to planned marrow transplant, 2.25 x 10/8/ mononuclear cells are
inoculated into 3 Aastrom expansion devices and expanded ex vivo over the next
12 days. Patients receive the following pretransplant regimen: Cyclophosphamide
2.0 gm/m/2/ IV days -7,-6,-5; Thiotepa 240 mg/m/2/IV days -7, -6, -5; Benu 150
mg/m/2/ days -7, -6, -5 with reinfusion of the ex vivo expanded cells on day 0.
Patients with WBC less than .2 by day 12 or less than .5 by day 16 or less than
1.0 after day 21 or platelets less than 20 x 10/9//1 by day 28 or with later
graft failure will receive backup bone marrow, harvested using standard
techniques with greater than 0.5 x 10/6/ CD34 positive cells/kg. SEE PROTOCOL
FOR COMPLETE TREATMENT PLAN
STATISTICAL CONSIDERATION:
10 patients will be treated and receive infusion of ex vivo expanded cells to
meet the objectives of the study, to the toxicity and biologic effects of these
cells on engraftment.
PATIENT EVALUATION:
Pretreatment evaluation will consist of: complete history, physical
- ----------------------------------------
examination, and CBC, diff and platelet count, SMA, cardiac ejection fraction,
DLCO, HIV, hepatitis panel. HTLV1, pregnancy test in women of childbearing
potential, bilateral bone marrow aspirate and biopsy tumor staging (bone scan
with X-ray of hot spots, CXR, CT scan of chest and abdomen, and CEA).
Evaluation following high dose chemotherapy and autologous blood stem cell
- --------------------------------------------------------------------------
transplantation: CBC, diff, platelet counts daily while hospitalized and at
- ----------------
least twice per week as an outpatient until WBC greater than 3000/mcl and
platelets greater than 100,000/mcl. SMA twice per week while hospitalized. Tumor
restaging as indicated including bone scan with X-ray of hot spots, CXR, CT scan
of abdomen, and CEA at 60 days and as indicated thereafter.
ESTIMATED ACCRUAL
10 patients will be required. It is estimated that 2 patients per month will be
accrued: this study accrual will be completed within 6 months.
SITE OF STUDY:
This protocol will be performed in patients both inpatients and outpatients
LENGTH OF STAY:
The total time in hospital is approximately three weeks. This does not
represent an increase over the current standard of care for PBPC mobilization
and transplantation.
RETURN VISITS:
Patients return to MD Anderson daily to three times per week during the
granulocytopenic phase of this treatment up to 28 days post PBPC transplant.
Thereafter, they are seen as per standard practice for disease reassessment and
long term follow up.
HOME CARE:
None, other than outpatient care monitored at MDACC.
WHERE WILL THE STUDY BE CONDUCTED?
Only MDACC
NAME OF SPONSOR OF FUNDING SOURCE
Aastrom Corporation
COMPETING PROTOCOLS
This protocol is the follow-up to DM94-127.
NAME OF RESEARCH NURSE/DATA MANAGER
Marilyn Davis, R.N.
1.0 OBJECTIVE
Assess the safety of the mixture of early-, mid-, and late-stage bone
marrow-derived mononuclear cells produced in the CPS (primary objective),
and the biological effect in terms of hematopoietic recovery after infusion
of ex vivo-produced hematopoietic cells following high dose chemotheraphy
as treatment of patients with breast cancer.
2.0 BACKGROUND
Autologous bone marrow transplantation has been increasingly employed as
supportive therapy for subjects undergoing high dose chemotheraphy or
chemoradiotherapy for malignant diseases, including lymphoma, leukemia, and
breast cancer. Breast cancer is now the most frequent indication for
autologous bone marrow or blood progenitor cell transplantation.
Despite the use of cytokines such as granulocyte-macrophage colony-
stimulating factor (GM-CSF) and granulocyte colony-stimulating factor (G-
CSF) following bone marrow reinfusion, there is an obligate period of
profound pancytopenia lasting 1-3 weeks, and delayed engraftment can occur,
resulting in morbidity or mortality.
The safety, comfort, and cost of stem- and progenitor cell harvest are also
concerns. The standard techniques employed to harvest bone marrow involves
obtaining 500-1500 mL of bone marrow from the marrow donor, usually under
general anesthesia. In addition to the discomfort caused by the hundreds of
marrow aspirates performed, donors are subject to the risks of general
anesthesia. Finally, the bone marrow harvest procedure is expensive.
Alternatively, stem - and progenitor cells can be collected from peripheral
blood by apheresis, but this requires chemotherapy and/or growth factors
for mobilization and multiple collections are generally necessary, which
are costly.
Recently, novel technology has been developed to produce stem- and
progenitor cell populations in vitro, commonly referred to as ex vivo
expansion. Hematopoietic cell expansions achieved with this technology are
based upon the principles of continuous perfusion culture, a bioengineered
metabolic environment, augmented by hematopoietic growth factors. Through
this technology, a small bone marrow or peripheral blood mononuclear cell
population can be perfused ex vivo so that total cell numbers, colony
forming units (CFUs) and long term culture initiating cells (LTC-ICs)
increase up to 20 fold (1-17). In a preliminary study, Brugger et al
-----
recently reported that expanded cells alone can reconstitute hematopoiesis
after high dose chemotheraphy (18).
Important differences exist among approaches, systems and devices used for
ex vivo expansion. This study utilizes the Aastrom CPS, which includes a
cell
culture device and a biological environment designed to allow the establishment
of a stromal adherant layer, using constant perfusion with medium, and
relatively low concentrations of hematopoietic growth factors. Preliminary
studies at MD Anderson Cancer Center (DM94-127), using transplantation of ex
vivo-produced cells prepared with this system, in combination with a standard
autologous marrow transplant, indicate that ex vivo expansion can be performed
reliably and reproducibly, and that no toxicity occurs with intravenous infusion
(19). Ten patients, age 18-60 years with breast carcinoma, were entered into a
study transplanting bone marrow plus ex vivo-produced cells. Bone marrow was
harvested, collecting greater than 2 x 10/8/ nucleated cells/kg and greater than
0.5 x 10/6/ CD34+ cells/kg. Twelve days prior to the planned bone marrow
transplant, 2.25 x 10/8/ mononuclear cells were inoculated into a cell culture
device, part of the CPS, and continuously perfused with medium containing
PIXY321 (5 ng/ml), Epo (0.1 U/ml) and hydrocortisone (5 x 10-6/ M). The
expansion reproducibly increased total nucleated cells, CFU-GM, and long term
culture initiating cells (LTC-IC). Patients received Cyclophosphamide
2.0 g/m/2/d; Thiotepa 240 mg/m/2/d; BCNU 150 mg/m/2/d, Days -7, -6, -5, with
reinfusion of the cryopreserved bone marrow on Day 0 plus the ex vivo-produced
cells four hours later. No toxicity was observed from the expanded cell
infusion. Nadir WBC was less than 0.1/ul. All patients engrafted within narrow
time ranges, with median recovery of WBC greater than 200/ul on Day 8 (range 7-
8) granulocytes greater than 500/ul on Day 11 (range 10-13) and platelets
greater than 25,000/ul on Day 16 (range 13-21) and greater than 50,000 on Day 20
(range 18-27). A median of 4 (range 1-9) platelet and 4 (range 2-9) RBC
transfusions were administered. No grade greater than 2 toxicity occurred from
the chemotherapy or bone marrow infusions. Four patients had infections
unrelated to the infusion of the cells produced in the CPS. These data compare
favorably with 29 historical controls receiving the same chemotherapy and
autoBMT without cell expansion, in which granulocytes recovered to greater than
500 on Day 11 (range 7-29) and platelets to greater than 25,000 and greater than
50,000 on Days 24 (range 9-78) and 28 (range 9-147), respectively.
A potential advantage of collecting a relatively small marrow inoculum is that
the number of contaminating malignant cells is reduced; additionally, growth of
breast cancer cells is not stimulated under these expansion conditions (Brugger
et al).
Application of this technology to autologous bone marrow and peripheral stem
cell transplant offers a potentially attractive means to increase the efficacy
and safety of autologous transplantation, while reducing its complexity and
cost. In particular, this technology could eliminate the need for operative bone
marrow harvests, produce more rapid recovery of hematopoiesis post-transplant,
reduce the length of post-transplant hospitalization, and could increase the
purity of the stem- and progenitor cells transfused. In addition, the inclusion
of cytokine-primed progenitors could result in accelerated hematopoietic
recoveries.
2.1 PREVIOUS PRE-CLINICAL RESEARCH
During hematopoietic expansion culture, total cell numbers increase 8 to 11-fold
over 12 days. This includes nonadherent, loosely adherent, and tightly adherent
cells. Over 80% of the nucleated cells are viable, as shown by exclusion of
propidium iodine stain (4) or Trypan blue dye. These cells have the
morphological distribution of normal bone marrow cells, including blast cells
and maturing granulocyte precursors, maturing erythroid cells, monocytes and
macrophages.
These expanded cells also show typical immunophenotype characteristics of normal
granulocyte, erythroid, monocyte/macrophage megakaryocytic, and blast cells (5).
Cell surface antigens identified using this technique include CD3, CD11b,
CD15, CD20, CD33, CD71, and glycophorin A. While there are minor variations in
staining patterns from sample to sample, the expanded cells are typically less
than 3% CD3+, 20-50% CD11b+, less than 1% CD19+, and 40-70% CD71+. The
frequency of mature T and B lymphocytes in the expanded cell population is
significantly reduced.
As shown in the experiments summarized in the Table below, it was shown by
Aastrom that varying the standard growth factor combination (IL-3+GM-CSF or
PIXY321, Epo, SCF and flt3L) had a direct effect on the productivity of cells in
the CPS, but the relative cell mixture composition remained substantially
similar. These data were obtained in 36-well plate studies. This finding
provided the original justification for selecting the growth factor combination
(Epo + PIXY321 + flt3L) for this study to yield the desired relative composition
and mixture of early-, mid- and late-stage cells produced in the pre-clinical
experiments.
Product/cm/2/
----------------------------------------------
Growth Factors CellsX10/6/ CFU-GM LTC-IC n
- ---------------------- ----------- ------ ------ --
None 0.58 404 yes/a/ 7
Epo, GM-CSF, IL-3, SCF 2.35 4,790 48 23
Epo, GM-CSF, IL-3 1.13 2,060 yes/a/ 3
Epo, PIXY, SCF 1.72 6,960 yes/a/ 4
Epo, PIXY 1.31 3,140 94 13
Epo, PXY, flt3L 1.57 10,580 108 14
/a/LTC-IC were not evaluated, but in these conditions, 24 week CFU-GM producing
cultures were obtained, representing an LTC-IC proxy.
Aastrom has projected, based on this pre-clinical research, that clinical-size
CPSs are expected to yield a mean of 3.0 x 10/9/ cells, 17.7 x 10/6/ CFU-GM and
6.4 x 10/5/ LTC-IC per patient cell yield from the CPS at 1.6 x 10/9/ total
nucleated cells and 7.0 x 10/6 CFU-GM. In an average 70 kg patient, this
translates to a dose of 2 x 10/6/ CFU-GM/kg. The clinically standard ABMT
engrafting dose is reported to be 1 x 10/5/ CFU-GM/kg. Therefore, using the cell
dose and the CFU-GM content in the cells produced in the CPS as a key progenitor
marker, along with the reliable presence of early stage cells (e.g., LTC-IC,
CD34+lin-), there is an expectation that the CPS-produced cells should provide a
minimum full engrafting dose for these subjects, with a greater number expected
for most patients. Should the minimum cell number, 1.6 x 10/9/, not be attained,
the cryopreserved back-up cells will be reconstituted and administered to a
subject on Day 0.
It is anticipated that infusion of ex vivo-produced progentiors generated with
the CPS will enhance engraftment and shorten time to recovery of granulocytes
and platelets and, in so doing, reduce the incidence of infections, febrile
episodes and the need for blood- and platelet transfusions.
2.2 HIGH DOSE CHEMOTHERAPY AND AUTOLOGOUS BONE MARROW TRANSPLANT FOR
METASTATIC BREAST CANCER - MD ANDERSON PROGRAM
Breast cancer is responsive to initial combination chemotherapy for metastatic
disease with a 50-80% response rate and a 10-20% complete response rate, but few
patients are cured and median duration of response is generally less than one
year (20-24). Once patients relapse, the response to second-line therapy is
20-40% with very few complete responses (CR) and a median duration of response
of 2-3 months and a median survival of 12 months.
When patients with metastatic breast cancer receive high-dose chemotherapy,
there is substantially higher complete response rate than that can be achieved
with conventional treatment (25-38). Peters el al (39) used a regimen of
Cyclophosphamide, Cisplatin, and BCNU or Melphalan in 22 ER-negative patients
without prior induction chemotherapy, and reported a 54% CR rate and an overall
response rate of 73% and a median duration of response of 7 months from the time
of transplant. Antman et al recently reported similar results with a
-----
combination of high-dose Carboplatin, Cyclophosphamide and Thiotepa (26); each
study reported approximately 20% 5-year disease-free survival. Application of
the same therapy to patients with Stage II breast cancer with greater than or
equal to 10 positive nodes or Stage III disease has resulted in approximately
70% 5-year disease-free survival, substantially higher than that reported with
standard adjuvant therapy in such patients.
Studies from a number of drug-resistant cell lines suggest that different
alkylating agents may not be cross-resistant, particularly if they interact with
DNA at different sites, or if the alkylating agent previously used may have
specific mechanisms of resistance (such as exaggerated levels of aldehyde
dehydrogenase) in tumor cells resistant to Cyclophosphamide. Cyclophosphamide
and Thiotepa have been shown to have synergistic activity against human breast
cancer in preclinical models (40). These two agents have been used together in
high dose therapy with the reported MTD being 6g/m/2/ of Cyclophosphamide with
720 mg/m/2/ of Thiotepa, with severe mucositis being the dose-limiting toxicity
if one attempts to increase Thiotepa dose further (41,42). None of the 17
patients treated with 6000 mg/m/2/ of Cyclophosphamide and Thiotepa, in doses
ranging from 180 to 720 mg/m/2/ developed mucositis. Mild oral pain and
erythema developed in 2/3 patients treated at the 720 mg/m/2/ level of Thiotepa,
and at 900 mg/m/2/ 3/3 had severe life-threatening but reversible oral and
esophageal mucositis. Cyclophosphamide, BCNU, and Cisplatin has been a commonly
used preparative regimen at other centers for ABMT for breast cancer (33). In
other studies with high dose BCNU, pulmonary complications can be avoided by
lowering the dose of BCNU to 450 mg/m/2/, including the CBT regimen described
below.
Phase I studies of the combination of Cyclophosphamide, BCNU, and Thiotepa with
autologous bone marrow transplantation in high risk patients with metastatic
breast cancer (DM91-031, DM92-060 and DM92-084) were recently evaluated. The
maximum tolerated dose was Cyclophosphamide 6 gm/m/2/, BCNU 450 mg/m/2/ and
Thiotepa 720 mg/m/2/. The regimen produces marked myelosuppression, but with
prompt recovery using autologous bone marrow transplantation. Reponse rates and
survival with autologous bone marrow transplantation are highly dependent on
patient prognostic characteristics, such as prior disease-free interval, sites
and number of metastasis, and response to prior chemotherapy. This regimen has
proven to be highly active. Among patients with a partial response to
chemotherapy, 52% achieved a complete response with this regimen; results were
from comparable to superior to other high dose programs.
3.0 BACKGROUND DRUG AND DEVICE INFORMATION
3.1 DESCRIPTION OF THE CPS
The single-use, sealed, sterile cell culture device in the Aastrom CPS
consists of three rigid plastic parts separated by a gas-permeable, water-
impermeable membrane. The lower cell culture chamber is continuously
perfused by growth medium. The cells expand in culture on the plastic
surface of the cell culture bed. The upper cell culture chamber is
provided with a constant flow of gas, such that oxygenation of the cell
culture bed is accomplished by diffusion across the membrane and through
the culture medium. Carbon dioxide is removed by the same mechanism.
The medium used to perfuse the cultured cells is stored in a closed vessel
in an adjacent refrigerator at 4 degrees C whose only external connection
is by medical grade tubing. A "Y" connector, attached to the effluent
line, allows sampling of the cell product prior to harvest, to test for
bacterial and fungal contaminants. A detailed device description is provided in
the Operator's Manual provided by Aastrom.
3.1.1 CELL CULTURE CONDITIONS
The hematopoietic cells are suspended in tissue culture medium composed of
Iscove's Modified Dulbecco's Media supplemented with 10% fetal bovine serum, 10%
horse serum, hydrocortisone (5 x 10/-6/M), PIXY321 (5 ng/ml), glutamine (4 mM),
Erythropoietin (Epo 0.1 U/ml), flt3L (5 ng/ml), gentamicin sulfate (5 Fg/ml),
vancomycin (20 Fg/ml), sterile water for injection, and are inoculated into the
CPS. The cells are cultured in the CPS for 12 days at 37 degrees C with the
tissue culture medium continuously replaced with fresh medium. Sampling of the
culture medium is carried out 48 hours prior to harvest, to allow testing for
bacterial and fungal contaminants.
To harvest the cells, the non-adherent fraction is removed from the cell culture
device by draining the growth medium from the cell culture device into the
harvest bag. The chamber is then rinsed with 50 ml of Hank's Balanced Salt
solution (HBSS) by injection of the solution with a syringe via an access port.
This is followed by agitation of the cell culture device and collection of the
rinse into the harvest bag. The adherent layer is detached from the cell culture
bed surface by injection of 50 ml of Trypsin-EDTA solution by syringe via an
access port. This is also followed by agitation of the cell production device
and collection of the rinse into the harvest bag. The chamber is then given a
final rinse by injecting 50 ml of HBSS with a syringe via an access port. This
is followed by agitation of the cell production device and collection of the
rinse into the harvest bag.
Following collection, the cells are washed free of culture medium as detailed in
the Operator's Manual. The final product is suspended in appropriate media for
immediate infusion.
3.1.2 CELL CULTURE MEDIA INFORMATION
Studies by Aastrom and the University of Michigan have shown that, after the
cell washing regimen, the added growth factors and other reagents are below
detectable limits, using a very sensitive ELISA assay (R&D Systems, Minneapolis,
MN, and Immunex Research Corporation, Seattle, WA). These levels are well below
the level of biological activity. The horse and fetal calf sera are tested
preclinically for contamination for bacteria, fungi, mycoplasma, endotoxin and
viruses. The expanded cell product is washed (See Operator's Manual) prior to
transfusion. Nonetheless, the human toxicities and contraindications identified
for these drugs are included below:
3.1.2.1 RECOMBINANT HUMAN EPO
Recombinant Human Erythropoietin: Epoetin Alfa, Procrit, NDC 0062-7402-01
Amgen, Thousand Oaks, CA.
Human Toxicity: Toxicities have included hypertension, headache, fever,
seizures, and skin rash. The majority of these subjects had chronic renal
failure, and these adverse events are frequent sequelae of chronic renal failure
and were not necessarily attributable to Epo.
Contraindications: Epo is contraindicated in subjects with: uncontrolled
hypertension, known hypersensitivity to mammalian-derived products, and known
sensitivity to human albumin.
3.1.2.2 PIXY321
PIXY321 is a fusion protein of granulocyte-macrophage colony-stimulating factor
(GM-CSF) and interleukin 3 (IL-3).
3.1.2.3 RECOMBINANT GM-CSF
Human Toxicity: Specific toxicities include peripheral edema, pleural and/or
pericardial effusions, fluid retention, sequestration of granulocytes in the
lung, supraventricular arrhythmia, elevation of serum creatinine, and elevation
of hepatic enzymes.
Contraindications: GM-CSF is contraindicated in subjects with excessive
leukemic blasts in the bone marrow or peripheral blood (greater than 10%), or
with known hypersensitivity to GM-CSF, yeast-derived products, or any component
of the product.
3.1.2.4 FLT3 LIGAND (FLT3L)
The manufacturer of flt3L, Immunex Research and Development Corporation,
Seattle, WA, has advised that a biologic Master File is in preparation for
clinical, in vivo grade flt3L, and that the Master File will be submitted to the
FDA in 1996, and will be available as reference for the purposes of this
clinical feasibility trial (Letter, Immunex to Aastrom, December 11, 1995).
Immunex has also advised that flt3L appeared to be well tolerated when
administered to mice and monkeys for 14 days, at doses up to 400 ug/kg/day.
Based on the safety profile established by Immunex, including the animal data
generated to-date, flt3L has no apparent toxicities, and does not stimulate the
proliferation and detrimental activation of mast cells.
As indicated above, the cells produced in the CPS are washed four times,
resulting in a 5-log reduction in the presence of media components, to levels
below detectable limits. An ELISA, supplied by Immunex, is used to determine
residual flt3L levels subsequent to cell washing.
3.1.2.5 HORSE SERUM
Contraindications: Known hypersensitivity to horse serum.
3.1.2.6 FETAL CALF SERUM
Contraindications: Known hypersensitivity to bovine serum.
3.1.3 INTENDED USE
The intended use of the CPS is to produce human stem- and hematopoietic
progenitor cells to support subjects with compromised hematopoietic systems. A
per-patient cell production procedure, beginning with 225 x 10/6/ nucleated bone
marrow cells per device, will yield at least 1.6 x 10/9/ cells. The cells will
not be infused if the cell yield is below this level; the back-up cells will be
infused in such a case.
3.2 CHEMOTHERAPY DRUG INFORMATION
CYCLOPHOSPHAMIDE NSC# 26271
Synonyms (Trade names, etc.): Cytoxan, Endoxan
Therapeutic Classification: Alkylating agent
Pharmaceutical Data: Oral tablets of 25 mg and 50 mg; powder for
-------------------
injection in vials of 100 mg, 200 mg, and 500 mg.
Solution Preparation: Add 5 ml sterile water for injection or normal
--------------------
saline for injection to 100 mg vial, 10 ml to 200 mg vial, and 25 ml to
500 mg vial. The resulting concentrations will be 20 mg/ml. For
infusion, dilute further with 100-250 ml of D5W or NS and infuse over 15-60
minutes.
Stability and Storage Requirements:
----------------------------------
Prior to mixing: Room temperature
After mixing: Stable for 24 hours at room temperature and 6 days if
refrigerated.
Routes of Administration: Oral, IV Push, IV infusion
------------------------
Usual Dosage Range: Up to 2000 mg/m/2/ as a single dose, repeated every 3
------------------
weeks. Smaller doses may be given more frequently. Doses of up to 1.5
gm/m/2/d x 4 may be used in conjunction with bone marrow transplant.
Known Side Effects and Toxicities: Myelopsuppression (leukopenia greater than
- ---------------------------------
thrombocytopenia), hemorrhagic cystitis, nausea, vomiting, alopecia, and rare
amenorrhea and azoospermia.
Special Precautions: Adequate hydration with 2-3 liters of fluid daily with
- -------------------
copious urine output can prevent cystitis. Due to significant renal excretion,
dose reductions must be made in patients with renal insufficiency.
Status: Commercially available
- ------
Mechanism of Action: Cyclophosphamide is considered a classical bifunctional
- -------------------
alkylating agent, with the predominant alkylation reaction occurring at the 7
nitrogen of guanine. Cyclophosphamide must be activated by liver microsomal
enzymes in order to damage the DNA molecule. Although active throughout the cell
cycle, the agent is most active during the S phase.
Animal Tumor Data: Cyclophosphamide exerts its greatest activity against the
- -----------------
Walker 256 carcinoma, Yoshida ascitic and solid sarcomas, DS-Carcinosarcoma, and
Jensen sarcoma. Activity is also noted against the leukemia L1210,
adenocarcinoma 755 and sarcoma 189 tumors.
Animal Toxicity: Hypoplastic changes in the bone marrow have been noted. Other
- ---------------
pathologic findings include hemorrhagic areas in the gastrointestinal tract,
bladder, and lungs. Leukopenia was observed to a greater degree than
thrombocytopenia.
Human Pharmacology: Cyclophosphamide can be given orally or intravenously,
- ------------------
although oral absorption is incomplete (30-60% of a dose is recoverable in the
stool). Maximum plasma levels are achieved within one hour from an oral dose.
Plasma T-1/2 is 4-6.5 hours. Approximately 60% of an intravenous dose is
recovered in the urine within 24 hours, requiring dosage adjustments in
patients with renal insufficiency. The drug is activated and subsequently
deactivated by liver microsomal enzymes.
References:
- ----------
Bagley, C., et al.: Clinical pharmacology of cyclophosphamide. Cancer Res.
-----------
33:226-233, 1973. Symposium (various authors): Metabolism and mechanism of
action of cyclophosphamide. Cancer Treat. Rep. 60(4):299-525, 1976. Carter,
------------------
S.K.: Cyclophosphamide in solid tumors. Cancer Treat. Rev. 2:295-322, 1975.
------------------
THIOTEPA
Chemistry: Thiotepa, an ethylenimine derivative, is a polyfunctional
- ---------
alkylating agent. The drug occurs as fine, white, crystalline flakes having a
faint odor and is freely soluble in water and in alcohol. The commercially
available powder for injection contains 80 mg of sodium chloride and 50 mg of
sodium bicarbonate so that, following reconstitution with sterile water for
injection, solutions of the drug are isotonic. Reconstituted Thiotepa solutions
containing 10 mg/mL in sterile water for injection may be clear to slightly
opaque and have a pH of 7.6.
Stability: Both Thiotepa powder for injection and reconstituted solutions of the
- ---------
drug should be stored at 2-8 degree C, protected from light. Reconstituted
Thiotepa solutions containing 10 mg/mL in sterile water for injection are stable
for at least 5 days at 2-8 degree C; however, since the solutions do not contain
a preservative, the possibility of microbiologic contamination must be
considered. Solutions which are grossly opaque or contain a precipitate should
not be used. Although Thiotepa is reportedly unstable in acid media, the
manufacturer states that reconstituted solutions of the drug may be diluted with
sodium chloride, dextrose, dextrose and sodium chloride, Ringer's, or lactated
Ringer's injection. The manufacturer also states that Thiotepa solutions
containing 0.5 mg/mL in Ringer's injection are stable for at least 15 days at
room temperature or 2-8 degree C. Reconstituted solutions of Thiotepa are
compatible with 2% procaine hydrochloride injection and/or 0.1% (1:1000)
epinephrine hydrochloride injection.
Pharmacology: Thiotepa, as an alkylating agent, interferes with DNA replication
- ------------
and transcription of RNA, and ultimately results in the disruption of nucleic
acid function. Thiotepa also possesses some immunosuppressive activity.
Following intracavitary administration, thiotepa may control malignant effusions
by a direct anti-neoplastic effect.
Pharmacokinetics:
- ----------------
Absorption: Thiotepa is incompletely absorbed from the GI tract. Variable
absorption also occurs through serous membranes, such as the pleura and
bladder, and from IV injection sites. Absorption through the bladder mucosa may
range from 10% to almost 100% of the instilled dose and is enhanced by extensive
tumor infiltration or acute mucosal inflammation, following endoscopic surgical
procedures or radiation therapy, and in the presence of vesicoureteral reflux.
Following IV administration of Thiotepa C14, serum concentrations of
radioactivity reportedly begin to decline within 10 minutes, but detectable
concentrations persist 72 hours.
Distribution: It is not known if thiotepa or its metabolites are distributed
into milk.
Preparations: Parenteral, for injection, 15 mg.
Carmustine
Synonyms: BCNU, BICNU
Therapeutic Classification: Nitrosourea
Pharmaceutical Data: Each vial contains 100 mg of carmustine. Each
-------------------
vial is packaged with sterile diluent of 3.5 ml of absolute alcohol
USP.
Solution Preparation: Dissolve carmustine first with 3 ml of alcohol
--------------------
diluent. Then add 17 ml water for injection. This results in a
solution concentration of 5 mg/ml with pH 5.0-6.0.
Stability and Storage Requirements: Before mixing: Store unopened
----------------------------------
vials in refrigerator. Vials may be stored at room temperature for 1
month without significant loss of potency. Drug melts and decomposes
at temperatures above 27 degrees C or 80 degrees F. After mixing:
After diluted for infusion, solutions are stable for 24 hours if
protected from light under refrigeration and 2 hours at room
temperature without light protection.
Route of Administration: I.V. infusion only.
-----------------------
Usual Dosage Range: 30-300mg/m/2/ per course. Upper dose range for
------------------
use as single agent, dosage lower in combination with other agents.
Courses usually repeated every 6-8 weeks, or dose may be given in
divided portions at 3-4 week intervals. Courses should not be repeated
until recovery from toxicities of previous course is adequate.
Known Side Effects and Toxicities: The most consistent toxicities
---------------------------------
involve the bone marrow, lymphoid tissue, kidneys, lungs, liver and
GI tract.
Rapid I.V. infusion is associated with intense flushing of the skin
and suffusion of the conjunctiva within 2 hours. Nausea and vomiting
appear within 2 hours and generally last 4 to 6 hours. Burning at the
site of infusion is common. Suppression of the peripheral blood
leukocytes and platelet counts is the most severe toxic manifestation
and the major dose-limiting factor. Toxicity occurs 3-4 weeks after
drug administration and lasts for 2-3 weeks. Elevated SGOT, alkaline
phosphatase and bilirubin can occur 28 to 38 days after treatment but
is reversible. Renal toxicity as measured by unexplained elevations of
BUN was present in 10% of patients but was not related to time, dose,
or schedule of the drug. Pulmonary fibrosis has also been reported
with long-term therapy. The associated mortality rate is high. The
reaction presents either as an insidious cough and dyspnea or sudden
onset of respiratory failure. Also risk of developing second
malignancies (leukemia) with use of nitrosoureas.
Special Precautions: Avoid contact with skin as it might cause known
-------------------
staining.
Status: Commercially available.
------
Mechanism of Action: The mechanism of action of nitrosoureas is
-------------------
assumed to be due to DNA cross linking. Carmustine is an S phase non-
specific drug and inhibits DNA, and to a lesser extent, RNA synthesis.
Alkylation reactions account for the major effect but it is also
thought that carbamylation reactions may contribute significantly to
their cytotoxicity. Rapid improvement in drug-resistant terminal
Hodgkin's disease indicates its lack of cross-resistance to standard
alkylating agents and vinca alkaloids, further suggesting a mode of
action different than alkylation alone. It is thought that the intact
molecule may not be responsible for activity, but rather may be due to
one or more degradation products. Furthermore, the active agent for
tumor cell killing may be different from the agent responsible for
delayed bone marrow toxicity. In addition, it is known that carmustine
interferes selectively with the utilization of histidine.
References:
----------
Carmustine Drug Monograph. American Hospital Formulary Service.
4.0 PATIENT ELIGIBILITY
Female patients, age 18-65 years with diagnosis of Stage IV breast
carcinoma, who have received no more than one chemotherapy regimen for
metastatic disease, with chemotherapy responsive or stable disease at the
time of study entry. Zubrod performance status 0 or 1. Patients must be HIV
negative and have creatinine less than or equal to 1.5 mg/dl; SGOT, SGPT, &
bilirubin less than 2x normal, normal cardiac ejection fraction and DLCO
greater than 50% of predicted. Prior to marrow collection for ex vivo
expansion, patients must have WBC greater than 3,000/mm/3/ and platelet
count greater than 100,000/mm/3/. Women of childbearing potential must have
a negative pregnancy test within 3 weeks of study entry.
Exclusion Criteria include: History of hypersensitivity to horse serum or
fetal calf serum; central nervous system (CNS) disease within 6 months of
study entry; Concurrent involvement in any other clinical trial that
affects engraftment (e.g. other hematopoietic growth factors); treatment
with any growth factors within one week; Previous pelvic radiotherapy
rendering the marrow hypocellular; Previous treatment with Mitomycin-C or
Carmustine (BCNU); any co-morbid condition which, in the view of the
Principal Investigator, renders the patient at high risk from treatment
complications; any evidence of bone marrow involvement with tumor as
demonstrated by standard histopathological examination of bilateral lilac
marrow biopsies within 4 weeks of study entry.
5.0 TREATMENT PLAN
5.1 Registration
All patients must be registered with the Data Management office at
713-792-2926 for entry on study.
5.2 Bone Marrow Harvest
Patients will undergo back-up bone marrow harvest at any time prior to
initiation of the ablative chemotherapy, with cryopreservation, using
standard techniques. Patients must have greater than 2 x 10/8/
nucleated cells per kg harvested, including greater than 0.5 x 10/6/
CD34+ cells/kg.
The bone marrow harvest will be performed by standard technique in an
operating suite under general or epidural anesthesia. In a standard
harvest, approximately 500-1500 ml of marrow is withdrawn. Patients
will have the back-up bone marrow collected simultaneously with the
cells for ex vivo production. If a sufficient number of cells are
collected, the bone marrow collected will be processed and a small
fraction utilized for the ex vivo culture described below, and the
remainder of the cells will be cryopreserved per standard technique
and held as a back-up for use if the prescribed number of cells is not
produced or if graft failure occurs.
5.3 Ex Vivo Cell Production
As mentioned in other parts of the Protocol, at the time of bone
marrow harvest, all harvested marrow will be delivered to the bone
marrow laboratory for processing. A portion of the harvested marrow
will be used for cell production in the CPS and the balance of the
harvested marrow will be cryopreserved. Twelve days prior to the
scheduled bone marrow transplant, 2.5 x 10/8/ mononuclear cells
from freshly collected marrow will be placed into the CPS in the
presence of PIXY321 (5 ng/ml), hydrocortisone (final concentration 5
x 10/-6/ M), glutamine (4mM), gentamicin sulfate (5 Fg/ml),
vancomycin (20 Fg/ml), Epo (0.1 U/ml/day) and flt3L (5 ng/ml). The
tissue culture medium will be supplemented with 10% fetal calf serum
and 10% horse serum. A sample of the harvested marrow will be sent for
bacterial/fungal culture.
The cell production will be performed in the Aastrom CPS, which is
operated in standard, validated laboratory equipment (incubators,
refrigerators, gas pumps) which provide for constant temperature (37
degree C), pH (7.2-7.4), and delivery of sterile air (5% CO\\2\\) to
the hematopoietic cells.
Two days prior to the completion of cell production, the cell culture
effluent will be sampled to allow for bacterial and fungal testing
including gram stain, endotoxin testing and mycoplasma. At the
completion of the cell expansion process (12 days), the non-adherent
fraction will be removed from the cell culture devices by draining the
growth medium from the cell culture devices into the harvest bag. The
devices will then be rinsed by using a syringe to inject 50 ml of an
HBSS solution into an access port. This is followed by agitation of
the cell culture device and collection of the rinse into the harvest
bag. The adherent layer will be detached from the cell culture device
surface by injection of 50 ml of Trypsin-EDTA solution via an access
port. This is again followed by agitation of the cell culture device
and collection of the rinse into the harvest bag. The chamber will be
then given a final rinse with 50 ml of HBSS, again by injection via an
access port. This is followed by agitation of the cell culture device
and collection of the rinse into the harvest bag.
The expanded cells will be washed according to the procedure outlined
in the Operator's Manual.
All subjects will receive freshly harvested expanded cells. The
expanded cells must be greater than 80% viable, as determined by
Trypan blue dye, and the minimum total cell number, as determined by
an automated cell counter, will be 1.6 x 10/9/ cells.
As part of the standard laboratory in this study, the total cell
count, CFU-GM and LTC-IC will be determined for the starting and final
cell number. The pre and post expansion sample will be sent for
cytology and immunocytochemistry for breast cancer cells.
Pre-transplant Evaluation of the cultured Cells: 48 hours prior to the
collection of the expanded cells, the effluent from the CPS will be
tested for bacterial and fungal contamination, as described above. If
the bone marrow cultures are either visibly contaminated or are
positively cultured for bacterial or fungal contamination, or if the
cultures die, the expanded cells will not be returned to the subject,
who will then simply receive her cryopreserved bone marrow.
Flow Cytometry: Aliquots of the ex vivo produced cells (approximately
10 x 10/6/) will be removed at 12 days, placed in a tube containing
sterile buffered medium, and shipped by overnight mail carrier to
Aastrom Biosciences, Inc., Domino's Farms, 24 Frank Lloyd Wright
Drive, Lobby L, Ann Arbor, MI 48105. These cells will be analyzed for
the presence of several cell surface markers (CD34, CD11b, CD15, CD33,
CD3, CD4, CD8, CD19, CD71, and glycophorin A and other appropriate
markers) in the laboratory at Aastrom as potential correlates for the
cell production process. The Aastrom Laboratory operates under GLP
guidelines.
Release Criteria: Cells produced in the Aastrom CPS will be considered
eligible for release and reinfusion if greater than 1.6 x 10/9/ nucleated
cells/kg are recovered after the expansion period and cell washing, and if
greater than 80% of the nucleated cells are viable as judged by exclusion
of Trypan blue dye. Microbial contamination studies collected from the
expansion on Day 10 must be negative.
If the expansion is not deemed sufficient, a patient will receive her
backup marrow instead, without infusion of the expanded cells.
5.4 High Dose CBT and Infusion of Ex Vivo Produced Cells
5.4.1 The CBT Regimen
Cyclophosphamide 2.0 gm/m/2/ IV Days -7, -6, -5 (total dose 6 gm/m/2/) with
Mesna 500 mg/m/2/ IV 1/2 hour before the first dose of Cyclophosphamide
then 2 gm/m/2/ as a continuous infusion over 24 hours for 3 days. Thiotepa
240 mg/m/2/ (total 720 mg/m/2/) will be diluted in normal saline and given
over 4 hours daily Days -7, -6, -5. BCNU 150 mg/m/2/ will be dissolved in
100 ml of D5W and given IV piggyback on Days -7, -6, -5 over 40 minutes
(total dose 450 mg/m/2/). The ex vivo-produced cells are infused
intravenously on Day 0 (the 7th day after the start of chemotherapy).
Patients will be premedicated with Tylenol 650 mg PO, Benadryl 50 mg IVPB
and Hydrocortisone 50 mg IVPB prior to each infusion.
5.4.2 Post-Transplant Growth Factor Support
G-CSF (5 mcg/kg/d) will be administered SQ until granulocytes greater than
2.0 x 10/9//I or greater than 1.0 x 10/9//I for 3 days. If granulocytes
fall to less than 1.0 x 10/9//I, hematopoietic growth factor treatment can
be resumed as indicated to maintain an absolute granulocyte count greater
than 1.0 x 10/9/L. GM-CSF 250 mg/m2/d may be used in patients intolerant to
G-CSF.
5.4.3 Neutrophil Engraftment and Stopping Rules
Neutrophil engraftment is defined as recovery of granulocytes to 0.5 x
10/9//I. Back-up autologous bone marrow will be infused intravenously per
the following stopping rules:
5.4.3.1 Background
. back-up cells will always be administered to subjects on Day + 16 if ANC is
less than 0.5 x 10/9//I;
. if back-up cells are administered to a subject on Day +16, it is
reasonable to assume that an ANC level of 0.5 x 10/9//I can only be
reached between Day +16 and Day +20 if the cells produced in the CPS
alone contribute to a subject's recovery, because the administration
of back-up cells would not be expected to impact engraftment so
rapidly, between Days +16 and +20;
. it is relevant to point out that ANC recovery in the Day +16 to +20
timeframe is often experienced in standard bone marrow
transplantation.
5.4.3.2 Stopping Rules
With the above as background, stopping rules will be as follows:
. the trial will be stopped and reevaluated if two subjects fail to
reach ANC 0.5 x 10/9//I by Day +20, even with the administration of
back-up cells on Day +16;
. the trial will also be stopped and reevaluated if four of the first
five subjects, or if any five of the ten total subjects, required the
administration of back-up cells because they failed to reach ANC 0.5 x
10/9//I on or before Day +16.
6.0 PRETREATMENT EVALUATION
6.1 Complete history and physical examination, including Zubrod
performance status (Appendix C)
6.2 CBC, diff, and platelet count
6.3 SMA 12 and electrolytes
6.4 PT, PTT
6.5 Cardiac ejection fraction
6.6 Pulmonary function - DLCO
6.7 HIV, hepatitis, HTLV-1 (1764 panel)
6.8 Pregnancy test (in fertile women)
6.9 Tumor staging as indicated including bone scan with Xray of hot spots,
CXR, CT scan abdomen, tumor markers, such as CEA will be assessed.
6.10 Bilateral bone marrow aspirate and biopsy
7.0 STUDY PROCEDURES AND EVALUATIONS
7.1 Interim history, physical examination and toxicity assessment daily
while in hospital and at least weekly until WBC greater than 3000 and
platelets greater than 100,000. Toxicity assessment will be made pre-
infusion and 2 and 24 hours post-infusion of both the expanded and
unexpanded bone marrow cells.
7.2 CBC, diff, platelet counts daily while hospitalized and at least twice
per week as an outpatient until WBC greater than 3000/mcl and
platelets greater than 100,000/mcl.
7.3 SMA twice per week while hospitalized. Electrolytes as indicated.
7.4 Tumor restaging as indicated including bone scan with Xray of hot spots,
CXR, CT scan of abdomen, and CEA, at day 60. Subsequent follow up is as
indicated for patients with this malignancy
7.5 Criteria for discharge: A study subject will be eligible for discharge
from the hospital when she meets the following criteria:
afebrile for 2 or more consecutive days, ANC greater than 500 for 3
consecutive days and Zubrod status of 0, 1 or 2.
All study subjects will receive follow-up care and treatment (as
appropriate) by their physician. The subjects' medical records will be
available to medical study monitors should additional information be
required.
8.0 DATA COLLECTION
8.1 General Information
Data will be recorded using the MD Anderson PDMS system at the time of each
evaluation. Data must be recorded for all subjects from whom an Informed
Consent is obtained.
8.2 Contents
Data to be collected at each of the study time period is as follows:
Pre-treatment Evaluation
------------------------
- Eligibility criteria
- Demographic data
- Medical history
- Physical examination
- Laboratory profile
- Bone marrow biopsy
- toxicity status
Baseline (Day 0)
----------------
- Laboratory profile
- Bone marrow/cultured cell profile
- Transfusion record
- Toxicity assessment
- Vital signs
- Concomitant medication(s)
- Infection reporting and adverse effects greater than grade 3 - report
immediately to sponsor as event occurs.
Daily Evaluations (Post-transplant)
-----------------------------------
- Laboratory profile
- Transfusion record
- Toxicity assessment (note preinfusion, 2 hour and 24 post infusion
toxicity assessment above)
- Vital signs
- Concomitant medications
- Infection reporting and grade greater than or equal to 2 adverse
effects - report immediately to sponsor as event occurs.
Hospital Discharge (study completion)
-------------------------------------
- Laboratory profile
- Vital signs
- Toxicity assessment
- Concomitant medications
- Infection reporting and Adverse Effects grade greater than or equal to
3 - Report immediately to sponsor as event occurs.
Early termination or Day 60
---------------------------
- Laboratory profile
- Assessment of late toxicity
- Transfusion record
- Vital signs
- Concomitant medications
- Study completion questionnaire
8.3 Quality System
Quality system procedures are designed to ensure that complete, timely, and
accurate data are submitted, that protocol requirements are followed, and
that complications and/or adverse reactions are immediately identified.
The study monitors will promptly review all incoming data to identify
inconsistent or missing data and adverse effects. Data problems will be
addressed in telephone calls and correspondence to the investigational site
and during site visits. Clinical monitoring procedures are described in
Section 12 of this protocol. The Medical Monitor will receive immediate
notification of adverse reactions Grade greater than or equal to 3. Both the
site and Aastrom will maintain secure hard copy Case Record Forms and data
files.
9.0 ADVERSE EFFECTS
All adverse effects, whether or not considered anticipated, must be
recorded in PDMS. Unanticipated effects, as defined below, must be
reported promptly to
the sponsor for further evaluation and adequate required reporting to IRBs
and investigators.
9.1 Anticipated Adverse Effects
The preliminary clinical experience has not identified any serious adverse
effects on health or safety caused by or associated with the CPS and no
adverse effects related to the ex vivo use flt3 ligand are anticipated.
Patients undergoing high dose chemotherapy are anticipated to experience
anorexia, nausea, vomiting, mucositis, pancytopenia and associated
infections while neutropenia. Some patients may develop organ toxicities
from high dose therapy. The anticipated events are therefore those
associated with bone marrow transplantation and/or chemotherapy.
9.2 Unanticipated Adverse Effects
An unanticipated adverse effect is:
- Any serious effect on health or safety or any life-threatening problem, or
death caused by, or associated with, a device, if that effect, problem, or
death was not previously identified in nature, severity, or degree of
incidence in the investigational plan, or any other unanticipated serious
problem that relates to the rights, safety or welfare of subjects.
[21 CFR 812.3(s)]
- In particular, any unexpected grade III or IV toxicities or any other
serious event that might be attributable to the infusion of the expanded
hematopoietic cells.
Reporting requirements:
- Unanticipated adverse effects should be reported to the Aastrom Study
Director, Thomas E. Muller, Ph.D., Vice President Regulatory Affairs,
immediately by the Investigator and subsequently to BRI.
- Aastrom requires an immediate telephone report followed by a written
report within 5 days.
- An investigator shall submit to Aastrom and the reviewing IRB a report of
any unanticipated adverse device effect occurring as soon as possible, but
no later than 10 working days after the investigator learns of the effect
[21 CFR 812.150(a)(1)]. Aastrom shall immediately conduct an evaluation
and report the results of the evaluation to FDA and to reviewing IRB's and
participating investigator(s) within 10 working days after the sponsor
first receives the notice of the effect [21 CFR 812.150(b)(1)]. If Aastrom
determines that an unanticipated adverse effect presents an unreasonable
risk to subjects, all
investigations or parts of investigations presenting that risk shall be
terminated as soon as possible [21 CFR 812.46(b)].
9.3 DEPARTURE FROM PROTOCOL
When a situation occurs which requires a departure from the protocol, the
Principal Investigator or other physician in attendance will contact the
Medical Monitor by telephone:
Thomas E. Muller, Ph.D.
Vice President Regulatory Affairs
Aastrom Biosciences, Inc.
24 Frank Lloyd Wright, Lobby L
Ann Arbor, MI 48105
Telephone: 313-930-5555
Fax: 313-665-0485
Contact with the Medical Monitor will be made as soon as possible in order
to discuss the situation and agree on an appropriate course of action. The
patient's medical records and source documents will describe the departure
from the protocol and the circumstance requiring it.
10. STATISTICAL CONSIDERATIONS AND DATA ANALYSIS
10.1 Evaluation of the Data
All subjects will be evaluated. Descriptive statistics will be presented for
demographic variables and baseline characteristics such as age, sex, medical
history, physical examination results, cost information (especially as this
relates to morbidity).
The primary endpoint is the safety of the cells produced in the CPS. To
assess the hematopoietic recovery post-infusion with ex vivo-produced
cells, the day of engraftment is defined by the first day on which
granulocytes are greater than 0.5 times 10/9//I are observed. Other
secondary endpoints include nadir WBC and platelet count, febrile days,
treatment related complications, antitumor response, and survival.
Secondary Endpoints:
a. The day of platelet transfusion independence with platelet count greater
than 20,000/mm/3/, 50,000/mm/3/ and 100,000/mm/3/ as defined by first of
two consecutive time points on which platelet counts meet these endpoints
not related to transfusion
b. Packed red blood cell transfusion and platelet transfusion requirements.
c. Number of documented infections.
d. Number of bleeding episodes.
e. Number of days of hospitalization.
f. Tumor response and response duration
g. Patient survival at 90 days post transplant.
10.2 Safety variables
Safety variables summarized will include incidence of adverse effects
(including duration, severity, and outcome). Other safety variables reported
will include the incidence and types of laboratory abnormalities. When the
frequencies are sufficiently large, a Fisher's exact test or Chi-square test
may be used to compare enrolled subjects and historical controls including
approximately 65 patients receiving autologous bone marrow transplants
without expansion using the same preparative regimen (DM92-060).
10.3 Biological Effect Variables
The following biological effects will be summarized:
- Incidence of febrile neutropenia
- Time to platelet transfusion independence
- Antibiotic usage:
Number of days on antibiotics
Number of total antibiotic days (Number antibiotics times number
days)
Number of days on antifungals
Number of days on antivirals
- Number of documented infections
- Time to neutrophil engraftment
- Length of initial hospital stay
11.0 CLINICAL SUPPLIES
A complete CPS description is provided in the Operator's Manual.
11.1 Materials and Supplies
11.1.1 CPS
Aastrom will supply the CPS, which includes the cell culture device. This
device consists of three rigid plastic parts (top, cell bed, and base), and
a gas-permeable, water-impermeable membrane. Additional components include
the means to facilitate air removal, seals to maintain leak-tight
integrity, and mechanical fasteners.
11.1.2 Growth Medium
The culture medium is prepared at the clinical site by supplementing a
custom medium, produced to Aastrom specifications in a FDA-registered
facility in compliance with cGMPs (21 CFR 820), with glutamine and growth
factors in
accordance with a standard operating procedure. Medium components are
shipped to or procured by the clinical trial site according to instuctions,
specifications and acceptance criteria defined by Aastrom.
11.1.3 Supporting Tubing and Materials
Aastrom will supply the supporting tubing, harvest container, and waste
container. These components will be supplied in sterile packages (for
single use only).
11.2 Packaging and Labeling
The package labeling includes the statement "Caution, Investigational
Device-Limited by United States Law to Investigational Use," Lot Number,
"Sterile unless unit package is opened or damaged," and "Manufactured for
Aastrom Biosciences, Inc."
11.3 Assembly
Components of the CPS will be received at the clinical test sites in
sterile packages. The elements of the system will be connected under a
laminar flow hood using aseptic technique provided in the Instructions for
Use. The instructions for use will be provided by Aastrom.
11.4 Storage Requirements
The devices may be stored indefinitely under typical laboratory conditions
(50 degrees F to 90 degrees F) and may be transported at temperatures up to
125 degrees F.
11.5 Retrieval and/or Disposal of Investigational Materials
At the completion of the cell production process and harvest, the devices
will be considered biohazardous waste and disposed of in accordance with
standard procedures at the test site. Record will be made of the date of
disposal and initials of the individual responsible for their disposition.
12.0 STUDY MONITORING
12.1 Medical Monitor
The Medical Monitor will review the investigational plan, review adverse
reactions and/or unanticipated device effects as reported by the
Investigator and interpret clinical results. The Medical Monitor for this
study is:
Thomas E. Muller, Ph.D.
Vice President Regulatory Affairs
Aastrom Biosciences, Inc.
Domino's Farms
24 Frank Lloyd Wright Dr., Lobby L
Ann Arbor, MI 48105
Telephone: 313-930-5555
Fax: 313-665-0485
12.2 Clinical Monitor
Aastrom has designated BRI International, Inc., as Clinical Monitor for this
study. The Clinical Monitor is qualified by training and experience to oversee
the conduct of the study. The Clinical Monitor's responsibilities include
maintaining regular contact with the investigational site, through telephone
contact, correspondence and on-site visits, to ensure that the investigational
plan and FDA regulations are followed, that complete, timely and accurate data
are submitted, that problems with inconsistent and incomplete data are
addressed, and that the site facilities continue to be adequate. Any questions
regarding these matters should be addressed to:
Diane Goleb, Senior Project Director
BRI International, Inc.
15825 Shady Grove Road
Rockville, MD 20850
Telephone: 301-548-0500
Fax: 301-548-0519
12.3 Monitoring Procedures
12.3.1 Preinvestigational Site Visit
The Preinvestigational Site Visit, conducted by the Clinical Monitor, will
involve review of relevant FDA regulations and inspection procedures, the
investigational plan, requirements for IRB review and approval, completion and
submission of forms, record keeping requirements, and administrative reports.
The adequacy of the facilities, the availability of the investigators, the
potential number of study participants, and the provisions for staff support
will also be assessed during the Preinvestigational Site Visit.
12.3.2 Routine Monitoring Visits
Regular clinical monitoring visits to the investigational site will be conducted
by Aastrom and BRI.
To ensure that the Principal Investigator and his staff understand and accept
their defined responsibilities, the Clinical Monitor will maintain regular
correspondence and perform periodic site visits during the course of the study
to verify the continued acceptability of the facilities, compliance with the
investigational plan and relevant FDA regulations, and the maintenance of
complete records. Clinical monitoring will include review and resolution of
missing or inconsistent results and source document checks (i.e.,
comparison of submitted study results to original reports) to assure the
accuracy of the reported data.
The Clinical Monitor will evaluate and summarize the results of each site
visit in written reports, identifying any repeated data problems with any
investigator and specifying recommendations for resolution of noted
deficiencies.
12.3.3 Termination/Close-out Procedures
The Clinical Monitor, BRI, will notify the investigator in writing of study
completion/termination. The letter will include the reason for termination,
document unresolved study discrepancies, and remind the investigator of her
obligation to retain records according to FDA regulations.
BRI will be responsible for meeting the FDA regulations with regards to
record keeping and records retention.
BRI will conduct a standard closure monitoring site visit. The objectives
of the closing visit are:
- verify compliance with protocol and FDA regulations;
- ensure accuracy and completeness of subject and administrative files;
- resolve any outstanding questions/problems;
- verify accountability for the test devices;
- ensure the proper disposition of test devices and completed case
report forms;
- confirm the investigator's understanding of his/her regulatory
obligations, including record retention requirements.
13.0 INVESTIGATOR OBLIGATIONS
13.1 Principal Investigator Responsibilities
13.1.1 Compliance
The Principal Investigator is responsible for ensuring that the study is
conducted according to the signed Investigator Agreement, the
investigational plan, and applicable FDA regulations for protecting the
rights, safety and welfare of subjects under the Investigator's care. The
Principal Investigator must follow the Investigator Agreement, the
investigational plan, and all conditions of FDA and IRB approval.
13.1.2 Awaiting Approval
Written confirmation of IRB approval must be provided to Aastrom prior to
the start of the study. The Principal Investigator may determine whether
potential subjects would be interested in participating in a study but may
not request signature of the Informed Consent or allow any subject to
participate until FDA and the reviewing IRB have approved the study.
13.1.3 Supervising Device Use
The Principal Investigator must supervise all use of the CPS involving
human subjects and may not supply the device to any person not specifically
authorized to receive it according to the investigational plan and
applicable regulations.
13.1.4 Informed Consent
The Principal Investigator shall make known to each subject the nature,
expected duration, and purpose of the study; the administration and hazards
of treatment; and available alternative therapy. Signed, written Informed
Consent must be obtained prior to treatment. The original will be kept by
the Principal Investigator and will be subject to review by Aastrom.
Subjects will be informed that their medical records will be subject to
review by Aastrom and the FDA. Subjects shall be informed that they are
free to refuse participation in this clinical investigation; and if they
participate, that they may withdraw from the study at any time without
prejudicing future care.
13.1.5 Device Disposal
Upon completion or termination of the study or the Principal Investigator's
participation in this study, or at Aastrom's request, the Principal
Investigator must return to Aastrom the device(s) or otherwise dispose of
the device(s) as Aastrom directs.
13.1.6 Reporting Requirements
Any life-threatening and/or unexpected serious (grade 3 or 4) toxicities
will be reported immediately to the Study Chairman who, in turn, will
notify the IRB (Surveillance Committee) and the study sponsor.
13.1.7 Inspections and Records
In accordance with the Investigator Agreement, the Principal Investigator
shall permit authorized FDA employees to enter and inspect any site where
the device or records pertaining to the device are held, and to inspect and
copy all records relating to an investigation, included subject records.
13.1.8 Investigator Records
The Principal Investigator will maintain complete, accurate and current
study records, including the following materials:
- Correspondence with FDA, Aastrom, BRI, and the IRB;
- Record of receipt of the device;
- Instructions for device use;
- Subject Records, including Informed Consent, copies of Case Report Forms
and supporting documents (laboratory reports, medical records, etc.);
- Log Book;
- Current study protocol and a log of any significant protocol deviations
(e.g., lack of informed consent or treatment of ineligible subjects);
- Adverse event reports;
- Certification that the investigational plan has been approved by all of
the necessary approving authorities;
- The approved blank informed consent form and blank subject report forms.
- Signed Investigator's Agreement with CV's of the Principal Investigator
and all participating sub-investigators attached.
These records shall be maintained for a period of 2 years after the latter
of the following two dates: the date on which the investigation is
terminated or completed, or the date that the records are no longer required
for purposes of supporting a premarket approval application or notice of
completion of a product development protocol.
13.1.9 Investigator Reports
The Principal Investigator will be responsible for the following reports:
13.1.9.1 Unanticipated Adverse Effects
The Investigator will report any serious adverse effect, death or life-
threatening problems that may reasonably be regarded as caused by the CPS to
Aastrom and the reviewing IRB as soon as possible but no later than 10
working days after the event. All anticipated serious adverse effects should
be documented with an explanation of any medical treatment administered.
An unanticipated serious adverse effect is defined as any serious adverse
effect on health or safety, or any life-threatening problem or death caused
by, or associated with this device, if that effect, problem, or death was
not previously identified in nature, severity, or degree of incidence in
this investigational plan.
13.1.9.2 Withdrawal of IRB Approval
The Principal Investigator will immediately notify to Aastrom (within 5
working days) if, for any reason, the IRB withdraws approval to conduct the
investigation.
The report will include a complete description of the reason(s) for which
approval was withdrawn.
13.1.9.3 Departure from Protocol
The Principal Investigator shall notify Aastrom and the IRB of any deviation
from the investigational plan made to protect the life or physical well-
being of a subject in an emergency. A full report should be made as soon as
possible and in no case later than 5 working days after the emergency.
NOTE: Except in such an emergency, prior approval by Aastrom is required for
changes in, or deviations from, the investigational plan. If such changes or
deviations may affect the scientific soundness of the plan or the rights,
safety or welfare of subjects, FDA and IRB approval are also required.
13.1.9.4 Progress Reports
The Principal Investigator is required to submit progress and administrative
reports to Aastrom, and to the reviewing IRB. Reports will include the
number of study subjects, a summary of all adverse reactions, and a general
description of the study's progress.
13.1.9.5 Final Report
The Principal Investigator will submit a final report to Aastrom within four
weeks following termination of the study or that site's participation in the
study, and within three months to the IRB.
13.1.9.6 Other Reports
Upon request, the Principal Investigator will provide accurate, complete,
and current information to Aastrom Biosciences, Inc., the FDA, and to the
reviewing IRB.
13.1.9.7 Investigator Materials Accountability
All devices received and used by the Principal Investigator will be
inventoried and accounted for throughout the study. The devices will be
stored in a secured area. Upon study completion, all unused devices will be
returned to Aastrom. A final inventory will then be performed.
13.1.9.8 Laboratory Normal Values
The investigational site must maintain a current copy of normal values used
by that site's clinical laboratory. The Principal Investigator must assess
the clinical significance of all abnormal laboratory values. All clinically
significant abnormalities must be characterized by the Principal
Investigator as treatment-
related, not treatment-related, or of uncertain etiology; all abnormalities
judged treatment-related or of uncertain etiology must be repeated. Any
abnormal values that persist should be followed at the Principal
Investigator's discretion. In some cases, significant changes within the
normal range will require similar judgment.
13.1.9.9 Disclosure of Data
All information concerning this clinical study are considered confidential.
The Principal Investigator agrees to use this information only to accomplish
this study and will not use it for other purposes without Aastrom's written
consent.
It is understood by the Principal Investigator that the information
developed in the clinical study may be disclosed as required to the United
States Food and Drug Administration.
In order to allow for the use of the information derived from the clinical
studies, it is understood that there is an obligation to provide Aastrom
with complete test results and all data developed in the study.
Aastrom has no objection to the publication of the results of this study by
the investigator. However, a pre-publication manuscript must be provided to
Aastrom at least 30 days before the manuscript is submitted to a publisher.
Aastrom agrees that before it publishes any results of the study, a pre-
publication manuscript will be provided to the investigator for review at
least 30 days prior to the submission to a publisher.
13.1.10 Records Retention and Access
FDA regulations require that, following completion of a clinical trial, a
copy of all subject and administrative records pertaining to that study be
maintained by the Investigator for 2 years after FDA approval of the
investigational device, or, if no application for approval is filed or
intended to be filed, for 2 years after all investigations have been
completed, terminated, or discontinued, whichever time period is longer.
Completed data records must be made available for review by Aastrom, the
Clinical Monitor, and FDA. To ensure the accuracy of data submitted, it is
mandatory that representatives of Aastrom and of the FDA have access to
source documents (i.e., subject medical records, charts, laboratory reports,
etc.). Subject confidentiality will be protected at all times.
Aastrom reserves the right to terminate the study for refusal of the
Principal Investigator to supply source documentation of work performed in
this study.
14.0 REFERENCES
1. Traycoff CM, Kosak ST, Grigsby S, Srour EF. Evaluation of ex vivo expansion
potential of cord blood and bone marrow hematopoietic progenitor cells using
cell tracking and limiting dilution analysis. Blood. 1995;85:2059-68.
2. Sandstrom CE, Bender JG, Papoutsakis ET, Miller WM. Effects of CD34/+/ cell
selection and perfusion on ex vivo expansion of peripheral blood mononuclear
cells. Blood. 1995;86:958-70.
3. Moore MAS. Expansion of myeloid stem cells in culture. Seminars in
Hematology. 1995;32:183-200.
4. Verfaillie CM. Direct contact between human primitive hematopoietic
progenitors and bone marrow stroma is not required for long-term in vitro
hematopoiesis. Blood. 1992;79:2821-6.
5. Koller MR, Paisson MA, Manchel I, Paisson BO. Long-term culture-initiating
cell expansion is dependent on frequent medium exchange combined with stromal
and other accessory cell effects. Blood. 1995;86:1784-93.
6. Koller MR, Bender JG, Papoutsakis ET, Miller WM. Effects of synergistic
cytokine combinations, low oxygen, and irradiated stroma on the expansion of
human cord blood progenitors. Blood. 1992;80:403-11.
7. Haylock DN, To LB, Dowse TL, Juttner CA, Simmons PJ. Ex vivo expansion and
maturation of peripheral blood CD34/+/ cells into the myeloid lineage. Blood.
1992;80:1405-12.
8. Rafii S. Shapiro, F, Pettengell R, et al. Human bone marrow microvascular
endothelial cells support long-term proliferation and differentiation of myeloid
and megakaryocytic progenitors. Blood. 1995;86:3353-63.
9. McKenna HJ, De Vries P, Brasel K, Lyman SD, Williams DE. Effect of flt3
ligand on the ex vivo expansion of human CD34/+/ hematopoietic progenitor cells.
Blood. 1995;86:3413-20.
10. Srour EF, Brandt JE, Briddell RA, Grigsby S, Leemhuis T, Hoffman R.
Long-term generation and expansion of human primitive hematopoietic progenitor
cells in vitro. Blood. 1993;81:661-9.
11. Koller MR, Bender JG, Miller WM, Papoutsakis ET. Expansion of primitive
human hematopoietic progenitors in a perfusion bioreactor system with IL-3,
IL-6, and stem cell factor. Bio Technology. 1993;11:358-63.
12. Brandt JE, Briddel RA, Srour EF, Leemhuis TB, Hoffman R. Role of c-kit
ligand in the expansion of human hematopoietic progenitor cells. Blood.
1992;79-634
13. Brugger W, Mocklin W, Heimfeld S, Berenson RJ, Mertelsmann R, Kanz L. Ex
vivo expansion of enriched peripheral blood CD34/+/ progenitor cells by stem
cell factor, interleukin-1b (IL-1b), IL-6, IL-3, interferon-gamma, and
erythropoietin. Blood. 1993;81:2579-84.
14. Koller MR, Emerson SG, Paisson BO. Large-scale expansion of human stem and
progenitor cells from bone marrow mononuclear cells in continuous perfusion
cultures. Blood. 1993;82:378-84.
15. Verfaillie CM, Catanzarro PM, Li W. Macrophage inflammatory protein 1a,
interleukin 3 and diffusible marrow stromal factors maintain human hematopoietic
stem cells for at least eight weeks in vitro. J Exp Med. 1994;179:643-9.
16. Coutinho LH, Will A, Radford J, Schiro R, Testa NG, Dexter TM. Effects of
recombinant human granulocyte colony-stimulating factor (CSF), human granulocyte
macrophage-CSF, and Gibbon interleukin-3 on hematopoiesis in human long-term
bone marrow culture. Blood. 1990;75:2118-29.
17. Shapiro F, Yao T-J, Raptis G, Reich L, Norton L, Moore MAS. Optimization of
conditions for ex vivo expansion of CD34/+/ cells from patients with stage IV
breast cancer. Blood. 1994;84:3567-74.
18. Brugger W, Heimfeld S, Berenson RJ, Mertelsmann R, Kanz L. Reconstitution of
hematopoiesis after high-dose chemotherapy by autologous progenitor cells
generated ex vivo. NEJM. 1995;333:283-7.
19. Champlin RE, Mehra R, Gajewski J, et al. Ex vivo expanded progenitor cell
transplantation in patients with breast cancer. Blood. 1995;(in press):(abs)
20. Hortobagyi GN, Bodey GP, Buzdar AU, et al. Evaluation of high dose versus
standard FAC chemotherapy for advanced breast cancer in protected environment
unit: a prospective randomized study. J Clin Oncol. 1987;5:354-64.
21. Hortobagyi GN. Multidisciplinary management of advanced primary and
metastatic breast cancer. Cancer. 1994;74 Suppl.416-23.
22. Aisner J, Cirrincione C, Perloff M, et al. Combination chemotherapy for
metastatic or recurrent carcinoma of the breast--A randomized phase III trial
comparing CAF versus VATH versus VATH alternating with CMFVP: Cancer and
Leukemia Group B Study 8281. J Clin Oncol. 1995;13:1443-52.
23. Hayes DF, Henderson IC, Shapiro CL. Treatment of metastatic breast cancer:
Present and future prospects. Semin Oncol. 1995;22 Suppl. 5:5-21.
24. Henderson IC. Chemotherapy for advanced disease. In: Harris JR, Hellmans
Henderson IC, Kinne DW, eds. Breast Diseases. Philadelphia: JB Lippincott;
1987:428-79.
25. Cheson BD. Bone marrow transplant trials for breast cancer. Oncology.
1991;5:55-62.
26. Antman K, Ayash L, Elias A, et al. A phase II study of high-dose
cyclophosphamide, thiotepa, and carboplatin with autologous marrow support in
women with measurable advanced breast cancer responding to standard-dose
therapy. J. Clin Oncol. 1992;10:102-10.
27. Eddy DM. High-dose chemotherapy with autologous bone marrow transplantation
for the treatment of metastatic breast cancer. J Clin Oncol. 1992;10:657-70.
28. Broun ER, Sridhara R, Sledge GW, et al. Tandem autotransplantation for the
treatment of metastatic breast cancer. Journal of Clinical Oncology.
1995;13:2050-5.
29. Antman K, Corringham R, De Vries E, et al. Dose intensive therapy in breast
cancer. Bone Marrow Transplant. 1992;10 Suppl. 1:67-73.
30. Bezwoda WR, Seymour L, Dansey RD. High-dose chemotherapy with hematopoietic
rescue as primary treatment for metastatic breast cancer: A randomized trial.
Journal of Clinical Oncology. 1995;13:2483-9.
31. Rosti G, Lasset C, Albertazzi L, et al. The EBMT data on high-dose
chemotherapy in breast cancer. Bone Marrow Transplant. 1992;10 Suppl. 2:37
32. Hryniuk WM, Bush H, The importance of dose intensity in chemotherapy of
metastatic breast cancer. J Clin Oncol. 1984;2:1281-7.
33. Peters WP, Ross M, Vredenburgh JJ, et al. High-dose chemotherapy and
autologous bone marrow support as consolidation after standard-dose adjuvant
therapy for high-risk primary breast cancer. J Clin Oncol. 1993;11:1132-43.
34. Vaughan WP. Autologous bone marrow transplantation in the treatment of
breast cancer: Clinical and technologic strategies. Semin Oncol. 1993;20 Suppl.
6:55-8.
35. Ayash LJ, Elias A, Wheeler C, et al. Double dose-intensive chemotherapy with
autologous marrow and peripheral-blood progenitor-cell support for metastatic
breast cancer: A feasibility study. J Clin Oncol. 1994;12:37-44.
36. Crown J, Vahdat L, Vennelly D, et al. High-intensity chemotherapy with
hematopoietic support in breast cancer. Ann NY Acad Sci. 1993;698:378-88.
37. Dunphy FR, Spitzer G, Buzdar AU, et al. Treatment of estrogen
receptor-negative or hormonally refractory breast cancer with double high-dose
chemotherapy intensification and bone marrow support. J Clin Oncol.
1990;8:1207-16.
38. Hortobagyi GN, Dunphy F, Buzdar AU, Spitzer G. Dose intensity studies in
breast cancer-Autologous bone marrow transplantation. Prog Clin Biol Res.
1990;354B:195-209.
39. Peters WP, Shpall EJ, Jones RB, et al. High Dose combination alkylating
agents with bone marrow support as initial treatment for metastatic breast
cancer. J Clin Oncol. 1988;6:1368-76.
40. Teicher B, Cucchi C, Lee J, et al. Alkylating agents. In vitro studies of
cross-resistence patterns in human tumor cell lines. Cancer Res.
1986;46:4379-83.
41. Williams SF, Bitran JD, Kaminer l, et al. A phase 1-II study of bialkylator
chemotherapy high-dose thiotepa and cyclophosphamide with autologous bone marrow
reinfusion in patients with advanced cancer. J Clin Oncol. 1987;5:260-5.
42. Eder JP, Antman K, Elias A, et al. Cyclophosphamide and thiotepa with
autologous bone marrow transplantation in patients with solid tumors. JNCI.
1988;80:1221-6.
APPENDIX A
TOXICITY CRITERIA
(Bearman et al., J Clin Oncol, 6:1562, 1988)
Grade 1 Grade 2 Grade 3
Cardiac Mild EKG abnormality, Moderate EKG Severe EKG
not requiring medical abnormalities abnormalities with no
intervention; or noted requiring and or only partial
heart enlargement on responding to medical response to medical
CXR with no clinical intervention; or intervention; or
symptoms requiring continuous heart failure with no
monitoring without or only minor
treatment; or response to medical
congestive heart intervention; or
failure responsive decrease in voltage
to digitalis or by more than 50%
diuretics
Bladder Macroscopic hematuria Macroscopic hematuria Hemorrhagic cystitis
after 2 d from last after 7 d from last with frank blood,
chemotherapy dose with chemotherapy dose not necessitating
no subjective symptoms caused by infection; or invasive local
of cystitis and not hematuria after 2 d intervention with
caused by infection with subjective with instillation of
symptoms of cystitis scierosing agents,
not caused by infection nephrostomy or other
surgical procedure
Renal Increase in creatinine Increase in Requires dialysis
up to twice the creatinine above
baseline value recorded twice baseline but
before start of not requiring
conditioning dialysis
Lung Dyspnea without CXR CXR with extensive Interstitial changes
changes not caused by localized infiltrate requiring mechanical
infection or congestive moderate interstitial ventilatory support
heart failure; or CXR changes combined with or greater than 50%
showing isolated dyspnea and not oxygen by facemask
infiltrate or mild caused by infection and not caused by
interstitial changes or CHF; or decrease infection or CHF
without symptoms not in PO2 greater than
caused by infection or 10% from baseline but
congestive heart not requiring
failure mechanical
vertilation or
greater than 50% O2
by facemask and not
caused by infection
or CHF
Hepatic Mild dysfunction with Moderate dysfunction Severe dysfunction
bilirubin 2.1-6 mg/dl; with bilirubin 6.1-20 with bilirubin greater
or weight gain greater mg/dl; or weight gain than 20 mg/dl; or
than 2.5-5% from greater than 5% from hepatic encephalopathy;
baseline of baseline of or ascites compromising
noncardiac origin; or noncardiac origin; respiratory function
SGOT/SGPT increase or SGOT/SGPT increase
more than 2-fold but greater than 5-fold
less that 5-fold from from the lowest
the lowest preconditioning; or
preconditioning clinical ascites or
image documented
ascites
APPENDIX B
Patient Evaluation
Tests Pre During Study Post
History & Physical X
CBC, diff & platelets X daily weekly
SMA 12 X twice per week weekly
PT,PTT X as indicated
Cardiac ejection fraction & EKG X
Pulmonary function-DLCO X
Pregnancy test X
HIV, hepatitis, HTLV-1 X
Bone marrow aspirate and biopsy X
Tumor Staging-Bone scan +Xray of X 3,6,12,18,24
hot spots, CT Abdomen, CXR, and as indicated
CEA, CA-125 as indicated
THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
INFORMED CONSENT
PROTOCOL TITLE: CLINICAL FEASIBILITY STUDY OF EXPANDED
PROGENITOR CELLS FOR HEMATOPOIETIC ENGRAFTMENT
IN PATIENTS WITH BREAST CANCER
1. ____________________________ ____________________
PARTICIPANT'S NAME I.D. NUMBER
You have the right to know about the procedures that are to be used in your
participation in clinical research so as to afford you an opportunity to
make the decision whether or not to undergo the procedure after knowing the
risks and hazards involved. This disclosure is not meant to frighten or
alarm you; it is simply an effort to make you better informed so you may
give or withhold your consent to participate in clinical research. This
informed consent does not supersede other informed consents you may have
signed.
DESCRIPTION OF RESEARCH
- -----------------------
2. PURPOSE OF STUDY: Chemotherapy at standard or usual doses does not always
kill all the cancer cells. In such cases, higher doses of chemotherapy may
be helpful. However, these higher doses may destroy normal bone marrow as
well as cancer cells, so previously collected blood forming bone marrow
cells are given by vein to replace the damaged bone marrow.
The goal of this clinical research study is to determine whether we can
speed up recovery after high-dose chemotherapy and bone marrow transplant
in patients with breast cancer growing the cells in the laboratory before
infusion.
3. DESCRIPTION OF RESEARCH:
This study will include patients with stage 4 breast cancer. 12 days before
treatment begins, about 100 cc of bone marrow will be removed from
patient's hip with a syringe and needle while under general anesthesia. A
sample of the marrow will be placed in an investigational device that will
increase (expand) the number of blood-forming cells (stem cells). Patients
will also have a full bone marrow harvest under anesthesia, (approximately
1 quart), collected at the same time or another occasion. This will be
saved as a back up to be given back by vein in case of poor recovery of
blood counts after infusion of the expanded cells.
The patient will stay in the hospital during the high-dose chemotherapy and
transplant procedure. The chemotherapy drugs in this treatment plan are
cyclophosphamide, carmustine (BCNU), and thiotepa. These drugs in lower
doses are FDA-approved and commercially available. These drugs, at the same
or higher doses, have been used in other bone marrow transplant studies at
M.D. Anderson and are considered active against breast cancer and
reasonably safe. Before treatment begins, a catheter (a special tube) will
be inserted into a vein in the patient's chest. The chemotherapy drugs,
fluids,
antibiotics, bone marrow, and other blood products will be given through
the catheter.
Each drug will be given to the patient for 3 days. One week after the start
of chemotherapy, the patient will receive the expanded blood-forming cells.
Patients will undergo frequent blood tests over the next several weeks to
monitor their recovery and to check for side effects of the treatment. The
patient will probably be in the hospital for about 3 weeks. About 10
patients will take part in this study.
4. RISKS, SIDE EFFECTS, AND DISCOMFORTS TO PARTICIPANTS:
Risks of Bone Marrow Collection
-------------------------------
Bone marrow is collected from several places in the hip with a syringe and
needle while the patient is under general anesthesia. The patient may have
pain at the sites that the marrow was taken from. Rarely, patients have a
reaction to the anestesia (sometimes fatal), bleeding, infection, or injury
to the sciatic nerve, which runs along the leg.
Risks of High Dose Chemotherapy
-------------------------------
Anti-cancer drugs injure normal tissues as well as cancer cells. Side
effects of these drugs may include: hair loss, nausea, vomiting, diarrhea,
mouth ulcers (sores), skin rashes, bleeding and infection, weakness, slight
risk of damage of the heart, lung, liver, kidney, or nervous system.
Most of these side effects can occur even at standard doses of these drugs.
However, using high doses makes it more likely that patients will have
bleeding, infection, and other side effects.
Risks of Bone Marrow Transplant
-------------------------------
In a preliminary study involving 10 patients none had any side effects from
the expanded cell infusion. Potential risks of infusing expanded blood-
forming cells include: shortness of breath, strain on the heart, and
allergic reaction to the chemicals used while processing or storing the
expanded blood-forming cells.
After the high-dose chemotherapy, the patient's blood cell counts fall to
very low values. When blood cell counts are low, the patient is at high
risk for bleeding and infection. At this point, the patient usually
requires antibiotics and transfusions of red blood cells and platelets.
(Red blood cells carry oxygen through the body, and platelets help control
bleeding). Approximately 5% of patients who receive an autologous
transplant for breast cancer die of complications from the transplant,
usually a side effect of the high dose chemotherapy or an infection that
develops while blood counts are low.
This clinical research study may involve unforeseeable risks to the
participant.
4a. This clinical research may involve unforeseeable risks to unborn
children; therefore, the participants should practice adequate
methods of birth control throughout the period of their involvement
in the clinical research study if they are sexually active. To help
prevent injury to children, female participants should refrain from
breast feeding during participation in the clinical research study.
5. POTENTIAL BENEFITS: The expanded blood-forming cells to the bone marrow
that is transplanted may help the bone marrow recover and start producing
new blood cells faster. This would reduce the risk of bleeding and
infection. By starting with a smaller amount of bone marrow and the effects
of the cell culture, it is expected that the chance of malignant cells
being infused is reduced.
Using high doses of the drugs may cause the cancer to shrink more than it
would if lower doses of the same drugs were used.
6. ALTERNATE PROCEDURES OR TREATMENTS:
Common drugs used to treat breast cancer include mitomycin, methotrexate,
doxorubicin, 5-fluorouracil, vinblastine, cyclophosphamide, taxol. Instead
of taking part in the clinical research study described above, patients
could receive one or a combination of these drugs at standard doses. Also,
patients might be able to take part in clinical research studies of other
drugs. Patients could also have a blood stem cell or bone marrow transplant
without receiving the expanded blood-forming cells.
UNDERSTANDING OF PARTICIPANTS
- -----------------------------
7. I have been given an opportunity to ask any questions concerning the
treatment involved and the investigator has been willing to reply to my
inquiries. This treatment will be administered under the above numbered and
described clinical research protocol at this institution. I hereby
authorize Dr. ______________, the attending physician/investigator, and
designated associates to administer the treatment.
8. I have been told and understand that my participation in this clinical
research study is voluntary. I may decide not to participate, or withdraw
my consent and to discontinue my participation in this study at any time.
Such action will be without prejudice and there shall be no penalty or loss
of benefits to which I may otherwise be entitled, and I will continue to
receive treatment by my physician at this institution.
Should I decide not to participate or withdraw from this clinical research
if, I have been advised that I should discuss the consequences or effects
of my decision with the physician.
In addition, I understand that the investigator may discontinue the
clinical research study if, in the sole opinion and discretion of the
investigator, the study or treatment offers me little or no future benefit,
or the supply of medication ceases to be available or other causes prevent
continuation of the clinical research study. The investigator will notify
me should such circumstances arise and my physician will advise me about
available treatments which may be of benefit at that time.
I will be informed of any new findings developed during the course of this
clinical research study which may relate to my willingness to continue
participation in this study.
9. I have been assured that confidentiality will be preserved except that
qualified monitors from Aastrom Biosciences and the Food and Drug
Administration (FDA) may review my medical record if appropriate and
necessary. Qualified monitors shall include assignees authorized by the
Surveillance Committee of this institution provided that confidentiality is
assured and preserved. My name will not be revealed in any reports or
publications resulting from this study, without my expresses consent. In
special circumstances, the FDA might be required to reveal the names of
participants.
10. I have been informed that should I suffer any injury as a result of
participation in this research activity, reasonable medical facilities are
available for treatment at this institution. I understand, however, that I
cannot expect to receive any credit or reimbursement for expenses from this
institution or any financial compensation from this institution for such
injury.
11. I have been informed that I should inquire of the attending physician
whether or not there are any services, investigational agents or devices,
and/or medications being offered by the sponsor of this clinical research
project at reduced cost or without cost. Should the investigational agent
become commercially available during the course of the study. I understand
that I may be required to cover the cost of subsequent doses.
Costs related to my medical care including expensive drugs, tests or
procedures that may be specifically required by this clinical research study
shall be my responsibility unless the sponsor or other agencies contribute
toward said costs. I have been given the opportunity to discuss the expenses
or costs associated with my participation in this research activity.
12. It is possible that this research project will result in the development of
beneficial treatments, new drugs, or possible patentable procedures, in
which event I cannot expect to receive any compensation or benefits from the
subsequent use of information acquired and developed through participation
in this research project.
13. I understand that refraining from breast feeding and practicing effective
contraception are medically necessary and a prerequisite for my
participation in this clinical research study. Should contraception be
interrupted or if there is any suspicion of pregnancy, my participation in
this clinical research study will be terminated at the sole discretion of
the investigator.
14. I may discuss any questions or problems during or after this study with Dr.
Richard Champlin at 713-792-3611. In addition, I may discuss any problems I
may have or any questions regarding my rights during or after this study
with the Chairman of the Surveillance Committee at 713-792-3220 and may in
the event any problem arises during this clinical research contact the
parties named above.
CONSENT
Based upon the above, I consent to participate in the research and have
received a copy of the consent form.
______________________________ ________________________________
DATE SIGNATURE OF PARTICIPANT
_____________________________ ________________________________
WITNESS OTHER THAN PHYSICIAN SIGNATURE OF PERSON RESPONSIBLE
OR INVESTIGATOR AND RELATIONSHIP
I have discussed this clinical research study with the participant and/or his or
her authorized representative, using a language which is understandable and
appropriate. I believe that I have fully informed this participant of the nature
of this study and its possible benefits and risks, and I believe the participant
understood this explanation.
________________________________
PHYSICIAN/INVESTIGATOR
APPENDIX D
THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER
INFORMED CONSENT
PROTOCOL TITLE: FEASIBILITY STUDY OF EXPANDED PROGENITOR CELLS FOR
HEMATOPOIETIC ENGRAFTMENT IN PATIENTS WITH
BREAST CANCER
1. _________________________________ __________________________________
PARTICIPANT'S NAME I.D. NUMBER
You have the right to know about the procedures that are to be used in your
participation in clinical research so as to afford you an opportunity to make
the decision whether or not to undergo the procedure after knowing the risks
and hazards involved. This disclosure is not meant to frighten or alarm you;
it is simply an effort to make you better informed so you may give or
withhold your consent to participate in clinical research. This informed
consent does not supersede other informed consents you may have signed.
DESCRIPTION OF RESEARCH
- -----------------------
2. PURPOSE OF STUDY: Chemotherapy at standard or usual doses does not always
kill all the cancer cells. In such cases, higher doses of chemotherapy may be
helpful. However, these higher doses may destroy normal bone marrow as well
as cancer cells, so a bone marrow transplant is done to replace the damaged
bone marrow.
The goal of this clinical research study is to determine whether we can speed
up recovery after high-dose chemotherapy and bone marrow transplant in
patients with breast cancer growing the cells in the laboratory before
infusion. (See Section 4.1, Risks of Experimental Protocol.)
3. DESCRIPTION OF RESEARCH:
This study will include patients with breast cancer that has spread to the
lymph nodes or to other organs. Twelve days before treatment begins, a full
bone marrow harvest, approximately one quart, will be obtained from the
patients under general anesthesia. An aliquot of the marrow, less than 10%,
will be used to innoculate the investigational device, the Cell Production
System (CPS), and the bulk of the harvest, other 90%, will be cryopreserved
and saved as back-up in case of poor recovery of blood counts after the
infusion of the cells produced in the CPS, or for later therapeutic use, if
necessary.
The patients will stay in the hospital during the high-dose chemotherapy and
transplant procedure. The chemotherapy drugs in this treatment plan are
cyclophosphamide, carmustine (BCNU), and Thiotepa. These drugs in lower doses
are FDA-approved and commercially available. These drugs, at the same or
higher doses, have been used in other bone marrow transplant studies at M.D.
Anderson and are considered active against breast cancer and reasonably safe.
Before treatment begins, a catheter (a special tube) will be inserted into a
vein the patient's chest. The chemotherapy drugs, fluids, antibiotics, bone
marrow, and other blood products will be given through the catheter.
Each drug will be given to the patient for 3 days. One week after the start
of chemotherapy, the patient will receive the expanded blood-forming cells.
Patients will undergo frequent blood tests over the next several weeks to
monitor their recovery and to check for side effects of the treatment. The
patient will probably be in the hospital for about 3 weeks. About 14
patients will take part in this study.
4. RISKS, SIDE EFFECTS, AND DISCOMFORTS TO PARTICIPANTS:
4.1 Risks of Experimental Protocol
------------------------------
I have been advised that the Cell Production System, used in this
experimental protocol, has been evaluated previously in a clinical
feasibility (safety) study without any adverse events (see Section 4.4).
Nevertheless, I understand that this experimental protocol may represent a
relatively high risk clinical procedure that may cause delayed neutropenia
(low white cell counts) and thrombocytopenia (low platelet counts), and
delayed engraftment of my transplant. Prolongation of low white counts or
platelet counts may increase the risk of infection and bleeding, may
prolong hospitalization and can potentially increase the risk of death.
However, the risk of these complications is unknown, and experience with
transplants that have prolonged low white counts and platelet counts do not
appear to have an increased risk of fatal complications. Prolonged time to
engraftment and loss of engraftment can be occasionally seen even when
standard sources of stem cells are used, such as unexpanded bone marrow or
peripheral blood stem cells.
I also understand that every effort will be used to ensure my safety and
recovery, including the availability and potential administration of back-
up bone marrow obtained as part of my bone marrow harvest. The additional
back-up marrow will be given if there is a delay in blood count recovery,
or if blood counts decrease after initial engraftment. I understand that I
have an option to select to have my physician employ alternate procedures
of treatment for my disease, as outlined in Section 6 of this document.
4.2 Risks of Bone Marrow Collection
-------------------------------
Bone marrow is collected (harvested) from several places in the hip with a
syringe and needle while the patient is under general anesthesia. The
patient may have pain at the sites that the marrow was taken from. Rarely,
patients have a reaction to the anesthesia (sometimes fatal), bleeding,
infection, or injury to the sciatic nerve, which runs along the leg.
4.3 Risks of High Dose Chemotherapy
--------------------------------
Anti-cancer drugs injure normal tissues as well as cancer cells. Side
effects of these drugs may include: hair loss, nausea, vomiting, diarrhea,
mount ulcers (sores), skin rashes, bleeding and infection, weakness, slight
risk of damage of the heart, lung, liver, kidney, or nervous system.
Most of these side effects can occur even at standard doses of these drugs.
However, using high doses makes it more likely that patients will have
bleeding, infection, and other side effects.
4.4 Risks of Bone Marrow Transplant
-------------------------------
In a preliminary study involving 10 patients none had any side effects from
the expanded cell infusion. Potential risks of infusing expanded blood-
forming cells include: shortness of breath, strain on the heart, and
allergic reaction to the chemicals used while processing or storing the
expanded blood-forming cells.
After the high-dose chemotherapy, the patient's blood cell counts fall to
very low values. When blood cell counts are low, the patient is at high
risk for bleeding and infection. At this point, the patient usually
requires antibiotics and transfusions of red blood cells and platelets.
(Red blood cells carry oxygen through the body, and platelets help control
bleeding.) Approximately 5% of patients who receive an autologous
transplant for breast cancer die of complications from the transplant,
usually a side effect of the high dose chemotherapy or an infection that
develops while blood counts are low.
This clinical research study may involve unforeseeable risks to the
participant.
This clinical research may involve unforeseeable risks to unborn children;
therefore, the participants should practice adequate methods of birth
control throughout the period of their involvement in the clinical research
study if they are sexually active. To help prevent injury to children,
female participants should refrain from breast feeding during participation
in the clinical research study.
5. POTENTIAL BENEFITS:
The expanded blood-forming cells from the bone marrow that is transplanted
may help the bone marrow recover and start producing new blood cells
faster. This would reduce the risk of bleeding and infection. By starting
with a smaller amount of bone marrow it is expected that the chances of
malignant cells being in the marrow collection is less.
Using higher doses of the drugs may cause the cancer to shrink more than it
would if lower doses of the same drugs were used.
The back-up bone marrow, obtained as part of my bone marrow harvest, may be
available for my further treatment later, should this become necessary.
6. ALTERNATE PROCEDURES OR TREATMENTS:
Common drugs used to treat breast cancer include mitomycin, methotrexate,
doxorubicin, 5-fluorouracil, vinblastine, cyclophosphamide, taxol. Instead
of taking part in the clinical research study described above, patients
could receive one or several of these drugs at standard doses. Also,
patients might be able to take part in clinical research studies of other
drugs. Patients could also have a blood stem cell or bone marrow transplant
without receiving the expanded blood-forming cells.
UNDERSTANDING OF PARTICIPANTS
- -----------------------------
7. I have been given an opportunity to ask any questions concerning the
treatment involved and the investigator has been willing to reply to my
inquiries. This treatment will be administered under the above numbered and
described clinical research protocol at this institution. I hereby
authorize Dr. ___________________, the attending physician/investigator,
and designated associates to administer the treatment.
8. I have been told and understand that my participation in this clinical
research study is voluntary. I may decide not to participate, or withdraw
my consent and to discontinue my participation in this study at any time.
Such action will be without prejudice and there shall be no penalty or loss
of benefits to which I may otherwise be entitled, and I will continue to
receive treatment by my physician at this institution.
Should I decide not to participate or withdraw from this clinical research
if, I have been advised that I should discuss the consequences or effects
of my decision with the physician.
In addition, I understand that the investigator may discontinue the
clinical research study if, in the sole opinion and discretion of the
investigator, the study or treatment offers me little or no future benefit,
or the supply of medication ceases to be available or other causes prevent
continuation of the clinical research study. The investigator will notify
me should such circumstances arise and my physician will advise me about
available treatments which may be of benefit at that time.
I will be informed of any new findings developed during the course of this
clinical research study which may relate to my willingness to continue
participation in this study.
9. I have been assured that confidentiality will be preserved except that
qualified monitors from or representing Aastrom Biosciences and the Food
and Drug Administration may review my medical and hospital records if
appropriate and necessary. Qualified monitors shall include assignees
authorized by the Surveillance Committee of this institution provided that
confidentiality is assured and preserved. My name will not be revealed in
any reports or publications resulting from this study; without my express
consent.
10. I have been informed that should I suffer any injury as a result of
participation in this research activity, reasonable medical facilities are
available for treatment at this institution. I understand, however, that I
cannot expect to receive any credit or reimbursement for expenses from this
institution or any financial compensation from this institution for such
injury.
11. I have been informed that I should inquire of the attending physician
whether or not there are any services, investigational agents or devices,
and/or medications being offered by the sponsor of this clinical research
project at reduced cost or without cost. Should the investigational agent
become commercially available during the course of the study, I understand
that I may be required to cover the cost of subsequent doses.
Costs related to my medical care including expensive drugs, tests or
procedures that may be specifically required by this clinical research
study shall be my responsibility unless the sponsor or other agencies
contribute toward said costs. I have been given the opportunity to discuss
the expenses or costs associated with my participation in this research
activity.
12. It is possible that this research project will result in the development of
beneficial treatments, new drugs, or possible patentable procedures, in
which event I cannot expect to receive any compensation or benefits from
the subsequent use of information acquired and developed through
participation in this research project.
13. I understand that refraining from breast feeding and practicing effective
contraception are medically necessary and a prerequisite for my
participation in this clinical research study. Should contraception be
interrupted or if there is any suspicion of pregnancy, my participation in
this clinical research study will be terminated at the sole discretion of
the investigator.
14. I may discuss any questions or problems during or after this study with Dr.
Richard Champlin at 713/792-3611. In addition, I may discuss any problems I
may have or any questions regarding my rights during or after this study
with the Chairman of the Surveillance Committee at 713/792-3220 and may in
the event of any problem arises during this clinical research contact the
parties named above.
CONSENT
- -------
Based upon the above, I consent to participate in the research and have received
a copy of the consent form.
- ----------------------------- -----------------------------------
DATE SIGNATURE OF PARTICIPANT
- ----------------------------- -----------------------------------
WITNESS OTHER THAN SIGNATURE OF PERSON RESPONSIBLE
PHYSICIAN OR INVESTIGATOR AND RELATIONSHIP
I have discussed this clinical research study with the participant and/or his or
her authorized representative, using a language which is understandable and
appropriate. I believe that I have fully informed this participant of the
nature of this study and its possible benefits and risks, and I believe the
participant understood this explanation.
-----------------------------------
PHYSICIAN/INVESTIGATOR
APPENDIX E
CASE REPORT FORMS
- --------------------------------------------------------------------------------
ELIGIBILITY AASTROM BIOSCIENCES, INC. +
FORM 1 + CPS Replacement Feasibility Trial AAS02
- --------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_][_][_][_][_][_][_][_][_]
P.I. Name Visit Date AAS-2-ELIG-12/1/95
[_][_][_][_][_][_][_][_] [_][_]M [_][_]D [_][_]Y ---------------------
- --------------------------------------------------------------------------------
INCLUSION CRITERIA
- --------------------------------------------------------------------------------
Yes No N/A
("X" one)
1. Subject is female and is greater than or equal to 18 years old and less than or equal to 65 years old........[_]1 [_]2
2. Subject is not pregnant, not lactating, and has a negative serum pregnancy test (within last 2 weeks)........[_]1 [_]2 [_]3
3. Subject is diagnosed with stage II, III, or IV breast carcinoma and has received no more than
two chemotherapy regimens, is currently chemoresponsive or has stable disease................................[_]1 [_]2
4. Subject has a Zubrod performance status of 0 or 1............................................................[_]1 [_]2
5. Subject's baseline laboratory tests are within protocol specified limits (HIV negative and
estimated creatine clearance greater than 50 mL/min; SGOT, SGPT, and bilirubin less than 2x normal:
normal cardiac ejection fraction and DLCO greater than 50% predicted; WBC greater than 3,000/mm/3/ and
platelet count greater than 100,000/mm/3/)...................................................................[_]1 [_]2
6. Subject is a candidate for autologous bone marrow transplantation............................................[_]1 [_]2
7. Subject is willing and able to comply with protocal and follow-up requirements...............................[_]1 [_]2
8. Subject or authorized representative has signed informed consent.............................................[_]1 [_]2
Questions 1 - 8 must be marked "Yes" for study participation.
- ------------------------------------------------------------------------------------------------------------------------------------
EXCLUSION CRITERIA
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
("X" one)
9. Subject has known bone marrow involvement with tumor, as demonstrated by standard
histopathological examination of bilateral iliac marrow biopsies (within last 2 weeks).......................[_]1 [_]2
10. Subject has history of central nervous system (CNS) disease..................................................[_]1 [_]2
11. Subject has known hypersensitivities to bovine and/or horse serum............................................[_]1 [_]2
12. Subject is currently involved in another clinical trial that affects engraftment.............................[_]1 [_]2
13. Subject has been treated with growth factors within the last week (7 days)...................................[_]1 [_]2
14. Subject has had previous pelvic radiotherapy.................................................................[_]1 [_]2
15. Subject has been previously treated with BCNU, mitomycin-C...................................................[_]1 [_]2
16. Subject has a co-morbid condition which, in the view of the Investigator,
renders the subject at high risk from treatment complications................................................[_]1 [_]2
Questions 9 - 16 must be marked "No" for study participation.
- ----------------------------------------------------------------------------------------------------------------------------
+ + / /
-------------------------------- --------------------------
Investigator Signature Date Signed
- --------------------------------------------------------------------------------
Copyright BRI.
- -----------------------------------------------------------------------------------------------------------------------
PRETREATMENT MEDICAL AASTROM BIOSCIENCES, INC.
HISTORY CPS Replacement Feasibility Trial AAS02
FORM 2 + +
- -----------------------------------------------------------------------------------------------------------------------
FF FOR BRI USE ONLY
Subject Initials: ----------------
[_] FI [_] MI [_] LI BRIDOCID:
Social Security Number/Hospital I.D.
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-PTH-11/14/95
[_] [_] [_] [_] [_] [_] [_] [_] -------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
ALL ITEMS MUST BE COMPLETED. MISSING OR INCORRECTLY COMPLETED ITEMS WILL REQUIRE ADDITIONAL FOLLOW-UP.
- ----------------------------------------------------------------------------------------------------------------------
VISIT DATE
- -----------------------------------------------------------------------------------------------------------------------
1. Visit Date:................................................................. [_] [_] [_] [_] [_] [_]
Month Day Year
- -----------------------------------------------------------------------------------------------------------------------
MEDICAL HISTORY
- -----------------------------------------------------------------------------------------------------------------------
IF SUBJECT HAS CURRENT DIAGNOSIS OF CONDITION, PLEASE INDICATE BY MARKING
ABNORMAL AND DESCRIBING THE CONDITION IN THE SPACE PROVIDED.
("X" one) Specify abnormalities other than those associated with
Normal Abnormal the leukemia/lymphoma
2. Skin.......................... [_]1 [_]2 2. ___________________________________________________________
3. Eyes, Ears, Nose, Throat...... [_]1 [_]2 3. ___________________________________________________________
4. Ophthalmic.................... [_]1 [_]2 4. ___________________________________________________________
5. Mouth and Gum................. [_]1 [_]2 5. ___________________________________________________________
6. Respiratory................... [_]1 [_]2 6. ___________________________________________________________
7. Cardiovascular................ [_]1 [_]2 7. ___________________________________________________________
8. Musculoskeletal .............. [_]1 [_]2 8. ___________________________________________________________
9. Gastrointestinal.............. [_]1 [_]2 9. ___________________________________________________________
10. Hepatic....................... [_]1 [_]2 10. ___________________________________________________________
11. Urogenital.................... [_]1 [_]2 11. ___________________________________________________________
12. Renal......................... [_]1 [_]2 12. ___________________________________________________________
13. Endocrine and Metabolic....... [_]1 [_]2 13. ___________________________________________________________
14. Neurological.................. [_]1 [_]2 14. ___________________________________________________________
15. Psychological................. [_]1 [_]2 15. ___________________________________________________________
16. Hematopoietic/Lymphatic....... [_]1 [_]2 16. ___________________________________________________________
17. Extremities................... [_]1 [_]2 17. ___________________________________________________________
18. Allergies..................... [_]1 [_]2 18. ___________________________________________________________
19. Other......................... [_]1 [_]2 19. ___________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------
+ +
______________________________________________ __________/__________/__________
Recorder Signature Date Signed
- -----------------------------------------------------------------------------------------------------------------------
Copyright BRI.
- -----------------------------------------------------------------------------------------------------------------------
PRETREAT, PHYSICAL EXAM AASTROM BIOSCIENCES, INC. +
FORM 3 + CPS Replacement Feasibility Trial AAS02
- -----------------------------------------------------------------------------------------------------------------------
Subject Initials: FOR BRI USE ONLY
[_] FI [_] MI [_] LI BRIDOCID: ----------------
Social Security Number/Hospital I.D.
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name Visit Date AAS-2-FS-12/05/95
[_] [_] [_] [_] [_] [_] [_] [_] [_] [_] M [_] [_] D [_] [_] Y -------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
PHYSICAL EXAMINATION
- ----------------------------------------------------------------------------------------------------------------------
1. HEIGHT....[_][_][_] . [_] cm 2. Weight....[_][_][_] . [_] kg
3. Vital signs:
Temperature Respirations Pulse Blood Pressure
(degrees Celsius) (breaths/min) (beats/min) (mm Hg)
systolic diastolic
[_][_] . [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
("X" one)
Normal Abnormal Specify abnormalities
4. Skin.......................... [_]1 [_]2 _______________________________________________________________
5. Eyes, Ears, Nose, Throat...... [_]1 [_]2 _______________________________________________________________
6. Respiratory................... [_]1 [_]2 _______________________________________________________________
7. Cardiovascular................ [_]1 [_]2 _______________________________________________________________
8. Musculoskeletal............... [_]1 [_]2 _______________________________________________________________
9. Abdomen....................... [_]1 [_]2 _______________________________________________________________
10. Gastrointestinal.............. [_]1 [_]2 _______________________________________________________________
11. Genitourinary................. [_]1 [_]2 _______________________________________________________________
12. Lymphatic..................... [_]1 [_]2 _______________________________________________________________
13. Neurological.................. [_]1 [_]2 _______________________________________________________________
14. Extremities................... [_]1 [_]2 _______________________________________________________________
15. Liver: Palpable [_]1 Non-palpable [_]2 [_][_]cm below right costal margin
16. Spleen: Palpable [_]1 Non-palpable [_]2 [_][_]cm below left costal margin
17. Date ECG taken (within the last 60 days): [_][_] M [_][_] D [_][_] Y
Results: Normal [_]1 Abnormal [_] If abnormal, specify:_________________________________
18. a. Breast cancer stage: I [_]1 II [_]2 III [_]3 IV [_]4
b. Disease status: No evidence of disease [_]1 Residual bone lesion [_]2 No-osseous disease [_]3
19. Zubrod status: [_]
20. Cardiac ejection fraction (within 2 months of harvest date): [_][_]%
21. Pulmonary function (within 2 months of harvest date): DLCO [_][_]%
- -----------------------------------------------------------------------------------------------------------------------
RECORD OF PREPARATIVE REGIMEN
- -----------------------------------------------------------------------------------------------------------------------
22. Number of previous Chemo and/or Radio Therapy regimens [_][_]
23. Preparative regimen:
Chemo/Radio Total Date Started Date Stopped Total Dose
Therapy Daily Dose Administered
__________________________ ________________ ____ M ____ D ____ Y ____ M ____ D ____ Y _______________________
__________________________ ________________ ____ M ____ D ____ Y ____ M ____ D ____ Y _______________________
__________________________ ________________ ____ M ____ D ____ Y ____ M ____ D ____ Y _______________________
__________________________ ________________ ____ M ____ D ____ Y ____ M ____ D ____ Y _______________________
__________________________ ________________ ____ M ____ D ____ Y ____ M ____ D ____ Y _______________________
- -----------------------------------------------------------------------------------------------------------------------
+ +
______________________________________________ __________/__________/__________
Recorder Signature Date Signed
- -----------------------------------------------------------------------------------------------------------------------
Copyright BRI.
- -------------------------------------------------------------------------------------------------------
LABORATORY AASTROM BIOSCIENCES, INC. +
FORM 4 + CPS Replacement Feasibility Trial AAS02
- -------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ------------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name Date AAS-2-LAB-12/07/95
[_] [_] [_] [_] [_] [_] [_] [_] [_][_]M [_][_]D [_][_]Y -----------------------------------
- -------------------------------------------------------------------------------------------------------
LABORATORY TEST RESULTS
- -------------------------------------------------------------------------------------------------------
1. CBC:
a. Hemoglobin (gm/dl)..............................................................[_][_][.][_][_]
b. Hematocrit (%)..................................................................[_][_][.][_][_]
c. Platelet Count (x10/3/ per cumm)................................................ [_][_][_]
d. WBC (x10/3/ per cumm)...........................................................[_][_][.][_][_]
WBC differential:
1) Neutrophils (%)............................................................. [_][_]
2) Lymphocytes (%)............................................................. [_][_]
3) Monocytes (%)............................................................... [_][_]
4) Eosinophils (%)............................................................. [_][_]
5) Basophils (%)............................................................... [_][_]
6) Bands (%)................................................................... [_][_]
7) ANC......................................................................... [_][_][_][_]
2. Coagulation:
a. PT (sec)........................................................................ [_][_][.][_]
b. PTT (sec).......................................................................[_][_][_][.][_]
Chemistry:
a. Sodium (mEq/L).................................................................. [_][_][_]
b. Potassium (mEq/L)............................................................... [_][.][_]
c. Chloride (mEq/L)................................................................ [_][_][_]
d. CO\2\(mEq/L).................................................................... [_][_][.][_]
e. BUN (mg/dl)..................................................................... [_][_]
f. Creatinine (mg/dl).............................................................. [_][_][.][_]
g. Glucose (mg/dl)................................................................. [_][_][_]
h. Total Protein (g/dl)............................................................ [_][_][.][_]
i. Albumin (g/dl).................................................................. [_][.][_]
j. Calcium (mg/dl)................................................................. [_][_][.][_]
k. Uric Acid (mg/dl)............................................................... [_][_][.][_]
l. Total Bilirubin (mg/dl)......................................................... [_][.][_]
m. ALT (SGPT) (IU/L)............................................................... [_][.][_]
n. LDH (IU/L)...................................................................... [_][_][_][_]
o. Alk. Phosphatase (IU/L)......................................................... [_][_][_]
p. Magnesium (mEq/L)............................................................... [_][_][.][_]
4. Other (at pretreatment only) (check one) POS NEG
a. HIV.................................................................................[_] [_]
b. Hepatitis
Hepatitis B surface antigen......................................................[_] [_]
Hepatitis B core antibody........................................................[_] [_]
Hepatitis C virus................................................................[_] [_]
c. HTLV-1 (1764 panel).................................................................[_] [_]
d. Pregnancy test (if applicable)......................................................[_] [_]
e. CMV antibody........................................................................[_] [_]
. If any of the abnormal values are clinically significant, also report on Adverse Event Form
- -------------------------------------------------------------------------------------------------------
Copyright BRI.
- -------------------------------------------------------------------------------------------------------
BM HARVEST PROFILE AASTROM BIOSCIENCES, INC. +
FORM 5 + CPS Replacement Feasibility Trial AAS02
- -------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_] FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-BMH-12/05/95
[_] [_] [_] [_] [_] [_] [_] [_] --------------------------
- -------------------------------------------------------------------------------------------------------
PRE-TREATMENT BONE MARROW EVALUATION
- -------------------------------------------------------------------------------------------------------
1. Bone Marrow Evaluation
a. Type of bone marrow specimen: Aspirate [_]1 Biopsy [_]2 Both [_]3
b. Percent cellularity: [_][_]% (Estimate to nearest 10%)
c. Biopsy results: Marrow involvement [_]1
No marrow involvement [_]2
- -------------------------------------------------------------------------------------------------------
BONE MARROW HARVEST
- -------------------------------------------------------------------------------------------------------
2. Date of harvest: [_][_]M [_][_]D [_][_]Y
3. Total cells obtained: [_____]x10/9/ per kg Volume obtained: [_____]cc Cell concentration: [_____] 10/9/ per ml
Cells cryopreserved (for back-up): [_____]x10/9/ per kg
- -------------------------------------------------------------------------------------------------------
CELL EXPANSION PROFILE
- -------------------------------------------------------------------------------------------------------
4. Days of cell expansion: [_][_]
5. Results of preharvest culture: Positive [_]1 Negative [_]2
6. Cell viability: [_][_]%
7. Cell markers: (Forward sample to Aastrom Biosciences, Inc. for analysis)
8. Were the expanded cells infused to subject? Yes [_]1 No [_]2
If yes:
Date: [_][_]M [_][_]D [_][_]Y Time: (24 hours clock): [_][_] : [_][_]
9. Total number of expanded cells transfused [_____]x 10/9/
- -------------------------------------------------------------------------------------------------------
BACK-UP MARROW INFUSION
- -------------------------------------------------------------------------------------------------------
10. Was the back-up marrow infused to subject? Yes [_]1 No[_]2
If yes:
Date: [_][_]M [_][_]D [_][_]Y Time: (24 hours clock): [_][_] : [_][_]
11. Total number of Back-up marrow cells infused: [_____]x 10/9/
- -------------------------------------------------------------------------------------------------------
+ + / /
---------------------------------------------- -------------------------
Investigator Signature Date Signed
- -------------------------------------------------------------------------------------------------------
Copyright BRI. Forward WHITE and YELLOW copies to BRI. Retain PINK copy for your
files.
- ----------------------------------------------------------------------------------------------------------------
TOXICITY Page 1 of 1 AASTROM BIOSCIENCES, INC. AAS02
FORM 6 + CPS Replacement Feasibility Trial +
- ----------------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI -----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-F6-4/3/96
[_] [_] [_] [_] [_] [_] [_] [_] -----------------------------------------
- ----------------------------------------------------------------------------------------------------------------
INFUSION TOXICITY GRADING
- ----------------------------------------------------------------------------------------------------------------
1. Assessment
Pretreatment............. [_][_]M [_][_]D [_][_]Y 24 Hour.................. [_][_]M [_][_]D [_][_]Y
Day 0 Pre-Infusion:...... [_][_]M [_][_]D [_][_]Y Day [_][_] (Insert Day) [_][_]M [_][_]D [_][_]Y
0-2 Hours Post-infusion
of Expanded Cells:....... [_][_]M [_][_]D [_][_]Y OTHER:................... [_][_]M [_][_]D [_][_]Y
TOXICITY ASSESSMENT
EFFECT Maximum Toxicity Date Maximum Treatment Treatment
Grade at Grade Relatedness Received? Toxicity?
Assessment Occurred (See codes A-E) Yes No New Ongoing
2. Cardiac............... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
3. Bladder............... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
4. Renal................. [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
5. Pulmonary............. [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
6. Hepatic............... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
7. CNS................... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
8. Stomatitis............ [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
9. GI.................... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
(Questions 2-9 use Bearman, et al toxicity grading)
10. Circulatory
a. Hypertension...... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
b. Hypotension....... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
11. Dermatologic
a. Local............. [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
b. Skin rash......... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
c. Blistering........ [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
d. Erythama.......... [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
12. Allergy [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
13. Miscellaneous
a. Weight gain........ [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
b. Weight loss........ [_] [_][_]M [_][_]D [_][_]Y [_]1 [_]1 [_]2 [_]1 [_]2
(Questions 10-13 use SWOG toxicity grading)
- --------------------------------------------------------------------------------------------------------------------
For toxicity grade criteria, please see protocol
Treatment relatedness: A-definitely related B-probably related C-possibly related D-unrelated E-unknown
- --------------------------------------------------------------------------------------------------------------------
+ + / /
----------------------------------------------------- -------------------------------
Investigator Signature Date Signed
- --------------------------------------------------------------------------------------------------------------------
Copyright BRI.
- ------------------------------------------------------------------------------------------------------------
VITAL SIGNS AASTROM BIOSCIENCES, INC. +
FORM 8 + CPS Replacement Feasibility Trial AAS02
- ------------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-VIT-11/15/95
[_] [_] [_] [_] [_] [_] [_] [_] -----------------------------------------
- ------------------------------------------------------------------------------------------------------------
VITAL SIGNS
- ------------------------------------------------------------------------------------------------------------
Maximum Fever
Date Temperature Code* Respirations Pulse Blood Pressure
(degrees Celsius) (see below) (breaths/min) (beats/min) (mm Hg)
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
* Code fever in text field on clinical evaluation form.
FEVER CODES: 1=No fever 3=treatment/medication 5=presumed infection
2=blood products 4=documented infection (positive culture) 9=unexplained
- ------------------------------------------------------------------------------------------------------------
+ + / /
- --------------------------------------- --------------------------------
Recorder Signature Date Signed
- -----------------------------------------------------------------------------------------------------------
Copyright BRI.
- -------------------------------------------------------------------------------------------------------
BM HARVEST PROFILE AASTROM BIOSCIENCES, INC. +
FORM 5 + CPS Replacement Feasibility Trail AAS02
- -------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_] FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-BMH-12/05/95
[_] [_] [_] [_] [_] [_] [_] [_] --------------------------
- -------------------------------------------------------------------------------------------------------
PRE-TREATMENT BONE MARROW EVALUATION
- -------------------------------------------------------------------------------------------------------
1. Bone Marrow Evaluation
a. Type of bone marrow specimen: Aspirate [_]1 Biopsy [_]2 Both [_]3
b. Percent cellularity: [_][_]% (Estimate to nearest 10%)
c. Biopsy results: Marrow involvement [_]1
No marrow involvement [_]2
- -------------------------------------------------------------------------------------------------------
BONE MARROW HARVEST
- -------------------------------------------------------------------------------------------------------
2. Date of harvest: [_][_]M [_][_]D [_][_]Y
3. Total cells obtained: [_____]x10/9/ per kg Volume obtained: [_____]cc Cell concentration: [_____] 10/9/ per ml
Cells cryopreserved (for back-up): [_____]x10/9/ per kg
- -------------------------------------------------------------------------------------------------------
CELL EXPANSION PROFILE
- -------------------------------------------------------------------------------------------------------
4. Days of cell expansion: [_][_]
5. Results of preharvest culture: Positive [_]1 Negative [_]2
6. Cell viability: [_][_]%
7. Cell markers: (Forward sample to Aastrom Biosciences, Inc. for analysis)
8. Were the expanded cells infused to subject? Yes [_]1 No [_]2
If yes:
Date: [_][_]M [_][_]D [_][_]Y Time: (24 hours clock): [_][_] : [_][_]
9. Total number of expanded cells transfused [_____]x 10/9/
- -------------------------------------------------------------------------------------------------------
BACK-UP MARROW INFUSION
- -------------------------------------------------------------------------------------------------------
10. Was the back-up marrow infused to subject? Yes [_]1 No[_]2
If yes:
Date: [_][_]M [_][_]D [_][_]Y Time: (24 hours clock): [_][_] : [_][_]
11. Total number of Back-up marrow cells infused: [_____]x 10/9/
- -------------------------------------------------------------------------------------------------------
+ + / /
---------------------------------------------- -------------------------
Investigator Signature Date Signed
- -------------------------------------------------------------------------------------------------------
Copyright BRI. Forward WHITE and YELLOW copies to BRI. Retain PINK copy for your
files.
- -------------------------------------------------------------------------------------------------------
TRANSFUSIONS AASTROM BIOSCIENCES, INC. +
FORM 7 + CPS Replacement Feasibility Trial AAS02
- -------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. NAME AAS-2-TRAN-11/15/95
[_] [_] [_] [_] [_] [_] [_] [_] -------------------------------
- -------------------------------------------------------------------------------------------------------
TRANSFUSION OF BLOOD PRODUCTS
- -------------------------------------------------------------------------------------------------------
[_]1 "X" If NO transfusions
have been given
Product For Platelet Date
Platelet RBC Specify Type of Product
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
[_]1 [_]2 -------------- [_][_]M [_][_]D [_][_]Y
"1 = random donor, 2 = single donor, 3 = HLA matched
Note: 4 units per transfusion event
- -------------------------------------------------------------------------------------------------------
+ + / /
--------------------------------------------- ---------------------------------
Recorder Signature Date Signed
- -------------------------------------------------------------------------------------------------------
Copyright BRI.
- ----------------------------------------------------------------------------------------------------------------
VITAL SIGNS AASTROM BIOSCIENCES, INC. +
FORM 8 CPS Replacement Feasibility Trial AAS02
- ----------------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-VIT-11/15/95
[_] [_] [_] [_] [_] [_] [_] [_] -----------------------------------------
- ----------------------------------------------------------------------------------------------------------------
VITAL SIGNS
- ----------------------------------------------------------------------------------------------------------------
Maximum Fever
Date Temperature Code* Respirations Pulse Blood Pressure
(degrees Celsius) (see below) (breaths/min) (beats/min) (mm Hg)
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
systolic diastolic
[_][_]M [_][_]D [_][_]Y [_][_] . [_] [_] [_][_] [_][_][_] [_][_][_] / [_][_][_]
* Code fever in text field on clinical evaluation form.
EVER CODES: 1=No fever 3=treatment/medication 5=presumed infection
2=blood products 4=documented infection (positive culture) 9=unexplained
- ----------------------------------------------------------------------------------------------------------------
+ + / /
--------------------------------------- ----------------------------------
Recorder Signature Date Signed
- ----------------------------------------------------------------------------------------------------------------
Copyright BRI
- ----------------------------------------------------------------------------------------------------------------
CONCOMITANT MEDICATIONS AASTROM BIOSCIENCES, INC. +
FORM 5 + CPS Replacement Feasibility Trial AAS02
- ----------------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_] [_] [_] [_] -----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-MED-11/15/95
[_] [_] [_] [_] [_] [_] [_] [_] -----------------------------------------
- ----------------------------------------------------------------------------------------------------------------
CONCOMITANT MEDICATIONS
- ----------------------------------------------------------------------------------------------------------------
List all concomitant medications (including antibiotics, antifungals, and antivirals) taken by the subject
during the study, i.e., pretreatment through hospital discharge.
- ----------------------------------------------------------------------------------------------------------------
Medication Start date Stop date Indication
- ----------------------------------------------------------------------------------------------------------------
1.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
2.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
3.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
4.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
5.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
6.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
7.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
8.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
9.__________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
10._________________________ [_][_]M [_][_]D [_][_]Y [_][_]M [_][_]D [_][_]Y _______________________
- ----------------------------------------------------------------------------------------------------------------
+
+ / /
------------------------------------------------- ---------------------------
Recorder Signature Date Signed
- ----------------------------------------------------------------------------------------------------------------
Copyright BRI.
- --------------------------------------------------------------------------------
INFECTION EVALUATION AASTROM BIOSCIENCES, INC. +
FORM 10 + CPS Replacement Feasibility Trial AAS02
- --------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ------------------
Social Security Number/Hospital I.D.
[_] [_] [_] [_] [_] [_] [_] [_] [_] BRIDOCID:
P.I. Name
[_] [_] [_] [_] [_] [_] [_] [_] AAS-2-INF-11/15/95
-------------------------
INFECTION EVALUATION
- --------------------------------------------------------------------------------
1. Date of onset................[_][_]M [_][_]D [_][_]Y
2. Site of infection: ("X" one)
blood.................................................................[_]1
urninary tract........................................................[_]2
pulmonary.............................................................[_]3
GI tract..............................................................[_]4
other (specify)_______________________________________________________[_]5
3. Has infrection been resolved? Yes [_]1 No [_]2
If yes, date ended...........[_][_]M [_][_]D [_][_]Y
4. Infection Type: ("X" one)
viral (specify agent)_________________________________________________[_]1
bacterial (specify agent)_____________________________________________[_]2
fungal (specify agent)________________________________________________[_]3
protozoan (specify agent)_____________________________________________[_]4
5. Means of diagnosis: ("X" one)
presumed..............................................................[_]1
documented............................................................[_]2
if documented, specify means: ("X" all that apply)
clinical.........................................................[_]1
radiographic.....................................................[_]1
blood culture....................................................[_]1
bronchoscopy specimen............................................[_]1
swab culture.....................................................[_]1
other biopsy specimen............................................[_]1
urinalysis.......................................................[_]1
other (specify)__________________________________________________[_]1
6. Was treatment given? Yes [_]1 No [_]2
If yes, specify treatment ___________________________________________
_________________________________________________________________________
________________________________________________________________________________
+ + / /
--------------------------------------- ---------------------
Investigator Signature Date Signed
- --------------------------------------------------------------------------------
Copyright BRI.
- -------------------------------------------------------------------------------------------------------
ADVERSE EFFECT AASTROM BIOSCIENCES, INC. +
FORM 11 + CPS Replacement Feasibility Trial AAS02
- -------------------------------------------------------------------------------------------------------
Subject Initials FOR BRI USE ONLY
[_]FI [_]MI [_]LI ----------------
Social Security Number/Hospital I.D. BRIDOCID:
[_] [_] [_] [_] [_] [_] [_] [_] [_]
P.I. Name AAS-2-11-11/15/95
[_] [_] [_] [_] [_] [_] [_] [_] ----------------------------------
- -------------------------------------------------------------------------------------------------------
ADVERSE EFFECT
- -------------------------------------------------------------------------------------------------------
COMPLETE THIS FORM FOR EACH UNANTICIPATED ADVERSE DEVICE EFFECT EXPERIENCED.
An UNANTICIPATED adverse effect is any serious effect or health or safety or any
life-threatening problem caused by, or associated with, a device, if that effect
problem, or death was not previously identified in nature, severity, or degree
of incidence in the investigational plan. For this study, this includes:
hypotension, anaphylaxis, serositis, dyspnea and/or hypoxemia, renal or hepatic
dysfunction, or sudden death
- -------------------------------------------------------------------------------------------------------
Serious and unanticipated device effects should be reported by the investigator to Aastrom immediately.
The investigator must report the event to Aastrom and the IRB in writing within
10 working days of learning of the event.
- -------------------------------------------------------------------------------------------------------
1. Description of effect:
------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
2. a. Onset date: [_][_]M [_][_]D [_][_]Y 5. Action taken:
("X" all that apply)
b. Has the event ended? Yes [_]1 Continuing [_]2 None.............................. [_]1
Medication (specify) [_]1
If YES date ---------------
ended: [_][_]M [_][_]D [_][_]Y Other (specify) [_]1
--------------------
-----------------------------------
-----------------------------------
3. Severity of adverse effect:
("X" one) 6. Results:
Mild................................. [_]1 ("X" one)
Moderate............................. [_]2 Resolved with treatment........... [_]1
Severe............................... [_]3 Resolved without treatment........ [_]2
Not resolved, continuing.......... [_]3
4. Relationship of adverse effect to treatment: Death............................. [_]4
("X" one) Outcome unknown................... [_]5
Definitely........................... [_]1
Probably............................. [_]2 7. Assessment:
Possibly............................. [_]3 ("X" one)
Unlikely............................. [_]4 Non-Serious....................... [_]1
Not known............................ [_]5 Serious, expected................. [_]2
Serious, unanticipated............ [_]3
- -------------------------------------------------------------------------------------------------------
+ + / /
- ------------------------------------------- --------------------------------
Investigator Signature Date Signed
- -------------------------------------------------------------------------------------------------------
Copyright BRI.
EXHIBIT C
SCHEDULE OF LABORATORY AND CLINICAL EQUIPMENT
BB-IDE-6427, MDA DM 96-075 EQUIPMENT BUDGET Page 1 of 1
========================================================================================================================
Item Supplier Cat. No. UNIT QTY: UNIT/PKG: PKG: COST/PKG: Total Cost:
========================================================================================================================
Equipment:
- ------------------------------------------------------------------------------------------------------------------------
CCD Handling Fixture Aastrom 1 1 2 $750.00 $1,500.00
- ------------------------------------------------------------------------------------------------------------------------
CCD Support Clamp Aastrom 1 1 6 $50.00 $300.00
- ------------------------------------------------------------------------------------------------------------------------
CO2 Incubator Forma Scientific 3956 1 1 1 $7,000.00 $7,000.00
- ------------------------------------------------------------------------------------------------------------------------
Incubator Organizer Aastrom 2 1 2 $850.00 $1,700.00
- ------------------------------------------------------------------------------------------------------------------------
4 degree C Refrigerator Fisher Scientific 126GW-2 1 1 1 $3,500.00 $3,500.00
- ------------------------------------------------------------------------------------------------------------------------
Media Supply Pump Watson Marlow 202U/AA 3 1 3 $1,400.00 $4,200.00
- ------------------------------------------------------------------------------------------------------------------------
Media Supply Pump Head Watson Marlow 202U/AA 3 1 3 $1,200.00 $3,600.00
- ------------------------------------------------------------------------------------------------------------------------
Electrical Power Strip Aastrom 1 1 1 $14.95 $14.95
- ------------------------------------------------------------------------------------------------------------------------
18 degree C to
50 degree C thermometer SP 2 1 2 $36.00 $72.00
- ------------------------------------------------------------------------------------------------------------------------
neg 5 degree C to
20 degree C thermometer SP 2 1 2 $21.91 $43.82
- ------------------------------------------------------------------------------------------------------------------------
P-1000 Pipetman Gilson 1 1 1 $219.50 $219.50
- ------------------------------------------------------------------------------------------------------------------------
P-200 Pipetman Gilson 1 1 1 $219.50 $219.50
- ------------------------------------------------------------------------------------------------------------------------
P-20 Pipetman Gilson 1 1 1 $219.50 $219.50
- ------------------------------------------------------------------------------------------------------------------------
Gas Regulator Assembly Aastrom 6 1 6 $360.00 $2,160.00
- ------------------------------------------------------------------------------------------------------------------------
Repeater Plpet Eppendorf 1 1 1 $350.00 $350.00
- ------------------------------------------------------------------------------------------------------------------------
Tubing Stretcher Aastrom 1 1 1 $18.00 $18.00
- ------------------------------------------------------------------------------------------------------------------------
Pliers Aastrom 1 1 1 $8.00 $8.00
- ------------------------------------------------------------------------------------------------------------------------
Gas Flow Indicator Aastrom 1 1 1 $130.00 $130.00
- ------------------------------------------------------------------------------------------------------------------------
Gas Humidifier Cap
Adapter Aastrom 9 1 9 $6.00 $54.00
- ------------------------------------------------------------------------------------------------------------------------
Nikon Dark Field
Microscope 1 1 1 $2,600.00 $2,600.00
- ------------------------------------------------------------------------------------------------------------------------
modification of incubator
organizer for horizontal
waste shelves 1 $1,000.00 $1,000.00
- ------------------------------------------------------------------------------------------------------------------------
horizontal waste shelves 8 1 8 $100.00 $800.00
- ------------------------------------------------------------------------------------------------------------------------
CPS Processor Aastrom 1 1 1 $26,940.00 $26,940.00
- ------------------------------------------------------------------------------------------------------------------------
CPS Incubator Aastrom 5 1 5 $15,518.00 $77,590.00
- ------------------------------------------------------------------------------------------------------------------------
Interim Monitor Aastrom 1 1 1 $3,000.00 $3,000.00
- ------------------------------------------------------------------------------------------------------------------------
18 degree C to
50 degree C thermometer SP 2 1 2 $36.00 $72.00
- ------------------------------------------------------------------------------------------------------------------------
neg 5 degree C to
20 degree C thermometer SP 2 1 2 $21.91 $43.82
- ------------------------------------------------------------------------------------------------------------------------
Gas Cylinder Support Scott Medical
Stand 1 1 1 $25.00 $25.00
- ------------------------------------------------------------------------------------------------------------------------
Gas Regulator Assembly Aastrom 3 1 3 $360.00 $1,080.00
- ------------------------------------------------------------------------------------------------------------------------
Tubing Heat Sealer Sebra 1 1 1 $3,298.00 $3,298.00
- ------------------------------------------------------------------------------------------------------------------------
Incubator Rack Metro 2 1 2 $346.00 $692.00
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Manual + Automated CPS Equipment Cost/Study: $142,450.09
- ------------------------------------------------------------------------------------------------------------------------
Prepared By: Judy Douville 5/17/96
EXHIBIT D
SCHEDULE OF CLINICAL TRIAL BUDGET AND MILESTONE PAYMENTS
COMPENSATION AMOUNT AND SCHEDULE
- --------------------------------
1. Compensation Amount.
--------------------
Aastrom agrees to provide, according to the terms and conditions set forth
herein, and contingent upon conducting the Study as specified by the
Protocol, a total compensation of Fifty-Five Thousand and No/100 U.S. Dollars
($55,000.00 U.S.), or Five Thousand Five Hundred and No/100 U.S. Dollars
($5,500.00 U.S.) per subject according to the compensation schedule set forth
below in Section 2 of this Exhibit D. The $5,500 per subject compensation
includes an indirect cost of 25%, and represents any and all compensations
associated with the Study. The total compensation amount is based upon the
actual number of subject to be completed and may be adjusted based upon the
actual number of subjects actually completed. If a subject is dropped from
the Study for any reason, payment for that subject will be prorated.
2. Compensation Schedule.
----------------------
The payee identified in Section 3 of this Exhibit D below will be remunerated
according to the following schedule:
Percentage Amount
---------- ------------
(U.S. DOLLARS)
Initial Payment 25% $13,750.00
------------
50% Subjects Completed 25% $13,750.00
------------
All Subjects Completed 25% $13,750.00
------------
100% Subjects Case Report Forms
Completed and Submitted 15% $ 8,250.00
------------
Final Report 10% $ 5,500.00
------------
1
3. Name and Address of Payee
-------------------------
Payment made to: The University of Texas
M.D. Anderson Cancer Center
Atten: Manager, Sponsored Programs
P.O. Box 297402
Houston, TX 77297
4. TERMINATED STUDY - PAYMENT OBLIGATIONS
--------------------------------------
If either the Institution or Aastrom terminates the Study prior to its
originally planned termination date, Aastrom shall compensate the
Institution based upon the portion of the Study completed at the date of
termination. This partial payment will be prorated according to the number
of satisfactorily completed subject visits.
2
EXHIBIT E
INVESTIGATOR AGREEMENTS
(See Section 13 of Protocol)
1
EXHIBIT 10.17
ATTACHMENT 1
RESEARCH AGREEMENT
UM/Ann Arbor Stromal
LICENSE AGREEMENT
By this Agreement, Ann Arbor Stromal, Inc. (hereinafter "Ann Arbor Stromal") and
the Regents of The University of Michigan, a constitutional corporation of the
State of Michigan (hereinafter "University") agree as follows:
1. INCORPORATION BY REFERENCE
--------------------------
Incorporated by reference with full force and effect to the provisions,
definitions, terms and conditions of this License Agreement (hereinafter
"License") are the provisions, definitions, terms and conditions of the
Research Agreement to which this License is attached, including the Option
Agreement and its Appendices.
2. DEFINITIONS
-----------
2.1 "Effective Date" of this License shall be the date of completed
execution by both Parties in accordance with the provisions of Article
9 entitled "License", in the abovementioned Research Agreement to which
this License is attached.
2.2 "Parties", in singular or plural usage as required by the context,
means Ann Arbor Stromal and/or University.
1
2.3 "Territory" means all countries of the world.
2.4 "Licensed Technology" means all patentable inventions and Know-how for
the production of red blood cells, white blood cells, platelets and
bone marrow cells, which are either described in University Project
proposal, or conceived or reduced to practice as part of Project, or
conceived or reduced to practice, whether or not pursuant to or as
part of the Project, by Drs. Stephen G. Emerson, Michael F. Clarke or
Bernhard O. Palsson, or those working under their direction, during
the term of their participation in the Project and Ann Arbor Stromal's
funding of the Project.
2.5 "Licensed Patent(s)" means any and all pending patent applications(s)
included within Licensed Technology, whether now existing or hereafter
filed, both domestic and foreign, and any patents issuing therefrom.
2.6 "Valid Claim(s)" means any claim(s) pending in a patent application or
in an unexpired patent included within the Licensed Patents which has
not been held unenforceable, unpatentable, or invalid by a decision of
a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and
which has not been admitted to be invalid or unenforceable through
reissue or disclaimer. If in any country there should be two or more
such decisions conflicting with respect to the validity of the same
claim, the decision of the higher or highest tribunal shall thereafter
control;
2
however, should the tribunals be of equal rank, then the decision or
decisions upholding the claim shall prevail when the conflicting
decisions are equal in number, and the majority of decisions shall
prevail when the conflicting decisions are unequal in number.
2.7 "Know-How" means (a) all information, data and knowledge contained in
patent applications or patents which are at anytime included in the
definition of Licensed Patents, and (b) any other methods, procedures,
processes, compositions of matter, biological materials, trade
secrets, experience, work products technical information, inventions,
discoveries, improvements, reports, data, results from experiments,
developmental efforts and demonstrations and subject matter related to
the Project, whether or not contained in Licensed Patents.
2.8 "Product(s)" means any red blood cells, white blood cells, platelets
and bone marrow cells as well as any components, by-products, progeny
or derivatives thereof and any factor, composition, substance,
equipment, mechanism, device or other property and combinations
thereof, the manufacture, use or sale of which would, but for this
License, comprise an infringement of one or more Valid Claims.
2.9 "Combination Sales" shall mean sales of Product by Ann Arbor Stromal,
its Affiliates or subsidiaries as a combined package comprised in part
of Product and in part of one or more other products or parts which
constitute either an
3
active ingredient or a significant delivery system or mechanism and
which could readily be sold by Ann Arbor Stromal, its Affiliates or
subsidiaries and used for their intended purpose by their purchasers
without the incorporation or use of Product.
2.10 "Net Sales" means the sum, over the term of this License, of all
amounts of monies received and all other consideration received (when
in a form other than cash or its equivalent, the fair market value
thereof when received) by Ann Arbor Stromal, its Affiliates or
subsidiaries from purchasers or users from or by reason of the sale,
distribution or use of Product, less any amounts collected for taxes,
including sales and use taxes, customer charges, allowances (including
any allowance for bad debts), import and export duties and other
governmental charges, prompt payment or other customary trade
discounts allowed or taken, credits or refunds for goods returned and
transportation and delivery charges (including insurance premiums).
If Product is sold in Combination Sales, then Net Sales shall be
computed in the following manner: First, gross revenues from the
Combination Sales shall be reduced by any applicable deductions
itemized in the first paragraph of this definition in order to arrive
at "Combination Net Sales"; second, Net Sales shall be calculated by
employing the following formulas:
4
C - p = Net Sales.
In the above formula, "p" is the fair market value of all other
products or parts which constitute an active ingredient or significant
delivery system or mechanism within the Combination Sale and C is
equal to Combination Net Sales.
All fair market value calculations made by Ann Arbor Stromal hereunder
shall be in good faith determined by Ann Arbor Stromal in the event no
market price is available. In the event the University disagrees with
any aspect of Ann Arbor Stromal's implementation of this definition,
University may request that such dispute be submitted to arbitration
as described in Article 17 and Ann Arbor Stromal hereby agrees to
promptly grant and fully cooperate with such request.
2.11 "Affiliate" shall mean any corporation, partnership, proprietorship or
other entity controlled by, controlling, or under common control with
Ann Arbor Stromal, and shall include any corporation, partnership,
proprietorship or other entity directly or indirectly owning, owned by
or under common ownership with the party in question to the
5
extent of twenty-five percent (25%) or more of the equity or voting
shares, including shares owned beneficially by such party.
2.12 "Calendar Quarters" means the three (3) months ending on the last day
of March, June, September and December of each year.
3. GRANTS
------
3.1 Subject to the conditions and provisions of this License, University
hereby grants to Ann Arbor Stromal an exclusive world-wide license,
without the right to grant sublicenses, except as described in
paragraph 3.2 below, under Licensed Patents and to use Know-How to
make, use, and sell Product(s), except that University hereby retains
the right to use Licensed Patents and Know-How solely for research
purposes, and except that to the extent funding from federal agencies
results in Licensed Technology or Licensed Patents in addition to
Project funding, the federal government may have its standard license
rights with respect to such Licensed Technology or Licensed Patents.
3.2 If at any time Ann Arbor Stromal wishes to grant sublicense rights
under its exclusive license rights granted herein, University and Ann
Arbor Stromal shall negotiate in good faith in order to allow Ann
Arbor Stromal to enter into such sublicensing arrangements with a
royalty return on Product(s) to University comparable to royalties
earned by
6
University under this License. Subject only to this understanding and
the need to have any sublicensing arrangements reflect a fair market
value return to Ann Arbor Stromal as in an arms length transaction, it
is the understanding of the parties that Ann Arbor Stromal should be
able to make its own decisions as to the appropriate mechanisms,
including sublicensing, for exploiting the Licensed Technology.
3.3 The University and Ann Arbor Stromal hereby assert that, to the best of
their knowledge as of the date of execution of the Option Agreement,
there do not exist any University patents or pending patents, other
than the Licensed Patents of this License Agreement, which would be
infringed by the practice of the Licensed Patents of this License or
which would otherwise prevent the practice of any of the Valid Claims.
If, however, such University patents or patent applications are
subsequently found to have existed prior to the date of the Option
Agreement, University shall use reasonable efforts to grant to Ann
Arbor Stromal a nonexclusive license to such patents and/or patent
applications, to the extent necessary for the practice of the Licensed
Technology of this License.
4. ROYALTIES
---------
4.1 The license rights granted to Ann Arbor Stromal herein are subject to
Ann Arbor Stromal's payment of royalties to University according to the
provisions of this Section 4.
7
4.2 For Product(s) defined in 2.8 herein, Ann Arbor Stromal will pay
University a royalty equal to two percent (2%) of Net Sales of such
Product(s) by Ann Arbor Stromal and Affiliates for the life of the last
to expire of Licensed Patents.
4.3 Where Net Sales form the basis upon which payment to University is
derived, the obligation to pay University under this Section 4 is
imposed only once with respect to the same unit of Product regardless
of the number of Valid Claims, Licensed Patents or items of Know-How
covering the same; however, for purposes of determination of payments
due hereunder, whenever the term Product may apply to a property during
various stages of manufacture, use or sale, Net Sales, as otherwise
defined shall be derived from the sale, distribution or use of such
Product by Ann Arbor Stromal and Affiliates at the stage of its highest
invoiced value to unrelated third parties.
4.4 If at any time or from time to time an unrelated third party in any
country shall, under right of a compulsory license granted or ordered
to be granted by a competent governmental authority, manufacture, use
or sell any Product with respect to which royalties shall be payable
pursuant to Paragraph 4.2 of this Section, then Ann Arbor Stromal, upon
notice to University and during the period such compulsory license
shall be effective, shall have the right to reduce such royalty on each
unit of Product sold
8
in such country to an amount no greater than the amount payable by said
third party in consideration of its compulsory license.
5. REPORTS
-------
5.1 Within sixty (60) days after the close of each Calendar Quarter during
the term of this License (including the last day of any such Calendar
Quarter following any termination of this License), Ann Arbor Stromal
shall report to University all royalties accruing to University under
Section 4 during such Calendar Quarter. Such quarterly reports shall
indicate for each Calendar Quarter the gross sales and Net Sales of
Product; such reports shall also indicate Net Sales with respect to
which payments are due and the amount of such payments, as well as the
various calculations used to arrive at said amounts, including the
quantity, description (nomenclature and type designation), country of
sale and country of manufacture of Product(s). In case no payment is
due for any such period, Ann Arbor Stromal shall so report.
5.2 Ann Arbor Stromal covenants that it will promptly establish and
consistently employ a system of specific nomenclatures and type
designations for Product(s) so that the various types can be identified
and segregated, and Ann Arbor Stromal and Affiliates will consistently
employ such system when rendering invoices thereon and henceforth
agrees to inform University, or its auditors, when requested as to
9
the details concerning such nomenclature system as well as to all
additions thereto and changes therein.
5.3 Ann Arbor Stromal shall keep and it shall cause its Affiliates to keep,
true and accurate records and books of account containing data
reasonably required for the computation and verification of payments to
be made as provided by this License, which records and books shall be
open for inspection upon reasonable notice during business hours by
inspectors selected by and at the expense of University for the purpose
of verifying the amount of payments due and payable. Said right of
inspection will exist for six (6) years from the date of origination of
any such record and this requirement and right of inspection shall
survive any termination of this License for a period of three (3) years
after such termination. However, in the event that such inspection
reveals an underpayment of royalties to University in excess of five
percent (5%), then said inspection shall be at Ann Arbor Stromal's
expense and such underpayment shall become immediately due and payable
to University.
5.4 The reports provided hereunder shall be certified by an authorized
representative of Ann Arbor Stromal to be correct to the best of Ann
Arbor Stromal's knowledge and information.
10
6. TIMES AND CURRENCIES OF PAYMENTS
--------------------------------
6.1 Payments accrued at the close of each Calendar Quarter shall be due and
payable in Ann Arbor, Michigan on the date each quarterly report,
provided for under Section 5 above, is due and shall be paid in United
States dollars. Ann Arbor Stromal agrees to make all payments due
hereunder to University by check addressed to the University's
Intellectual Properties Office or by wire transfer to the bank account
designated by University with telephonic confirmation of receipt
thereof.
6.2 On all amounts outstanding and payable to University, interest shall
accrue from the date such amounts are due and payable at a rate of two
(2) points above the prime lending rate as established by the Chase
Manhattan Bank, N.A. in New York City, New York, or at such lower rate
as may be required by law.
6.3 Any United States currency payments hereunder shall be determined by
converting foreign currencies into their equivalent in United States
dollars at the exchange rate of such currency as reported (or if
erroneously reported, as subsequently corrected) in the Wall Street
Journal on the last business day of the Calendar Quarter during which
such payments accrue (or if not reported on that date, as quoted by the
Chase Manhattan Bank, N.A. in New York City, New York).
11
7. COMMERCIALIZATION
-----------------
7.1 Ann Arbor Stromal agrees to use commercially reasonable efforts in
proceeding with the development, manufacture, marketing and sale of
Products to commercially exploit the Licensed Technology and in
creating a supply and demand for same; provided, however, Ann Arbor
Stromal shall be entitled to exercise prudent business judgment in
meeting its obligations hereunder.
7.2 Where Ann Arbor Stromal engages in continuing development with respect
to Product(s), Ann Arbor Stromal shall keep University informed of such
developments in writing. Ann Arbor Stromal shall promptly inform
University of any patent applications, or similar applications,
relating to Product(s) or improvements thereon, filed by or on behalf
of Ann Arbor Stromal or Affiliates anywhere in the world.
8. INFRINGEMENT
------------
8.1 In the event a third party is infringing a Valid Claim by making, using
or selling Product(s) as defined herein, Ann Arbor Stromal shall have
the right to bring suit in its own name. University agrees to use
reasonable efforts to cooperate in the prosecution of such suit. Ann
Arbor Stromal shall bear the expense of any such litigation and, except
as described in Paragraph 8.5 below, shall have full authority to
negotiate a settlement on such terms as Ann Arbor Stromal shall
determine. Ann Arbor Stromal shall
12
[COPY TO COME]
13
8.3 In the event that during the term hereof there be made against Ann
Arbor Stromal, any charge for infringement of any third-party patent by
reason of Ann Arbor Stromal's or Affiliate's manufacture or sale of a
Product or any customer's use of the Product which charge is grounded
essentially on an asserted domination by that third-party patent of the
manufacture, sale or use of such Product, Ann Arbor Stromal shall give
written notice thereof to University. Ann Arbor Stromal agrees to
effectuate, if possible, an acceptable change in the Product to avoid
such alleged infringement. If no such satisfactory change can be
effectuated, University and Ann Arbor Stromal agree to collaborate and
enter into discussions with said third party for the purposes of
negotiating a settlement. If no settlement can be agreed upon by Ann
Arbor Stromal, University and the third party, Ann Arbor Stromal shall
have the right, but not the obligation, to defend any suit for
infringement brought against it by the third party, and if required by
law or if requested by University, to join University as a party
defendant. If Ann Arbor Stromal shall elect not to defend such
infringement suit, Ann Arbor Stromal shall promptly notify University
to that effect and University shall thereafter have the obligation to
defend the suit provided Ann Arbor Stromal reimburses the University
within thirty (30) days of invoicing for all cost and expenses
(including reasonable attorney fees), and if required by law or if
requested by Ann Arbor Stromal, to join Ann Arbor Stromal as a party
defendant.
14
8.4 Ann Arbor Stromal will bear the cost of defending claims of
infringement or pursuing infringers, except as allowed in Paragraph 8.2
above. However, Ann Arbor Stromal can be reimbursed for up to one-half
of the unrecovered amount of such actual and reasonable expenses in the
following manner: Ann Arbor Stromal can deduct from royalties otherwise
due and payable to University under the License, up to fifty percent
(50%) until such time as Ann Arbor Stromal has recovered one-half of
its actual, reasonable, and otherwise unrecovered expenses.
University's "obligation" of bearing one-half of Ann Arbor Stromal's
expenses shall not exceed the ability of the above-described mechanism
(i.e., a 50% reduction in royalty payments due and payable) to
reimburse such expenses and University royalty payments otherwise due
shall never be reduced by more than 50%. Ann Arbor Stromal will make an
accounting to University of all such expenses as part of its reporting
obligations under Section 5.
8.5 Neither University nor Ann Arbor Stromal shall compromise or settle any
claim or action in any manner that would affect the rights of the other
Party without the consent of said other Party.
9. TERMINATION
-----------
9.1 With respect to any termination of this License, and except as provided
herein to the contrary, all rights and
15
obligations of the Parties hereunder shall cease with respect thereto,
except as follows:
9.1.1 Obligations to pay royalties and other sums accruing hereunder up to
the day of such termination;
9.1.2 Obligations to pay royalties on Net Sales, subsequent to said date of
termination of Product(s) in Stock at the date of termination with
respect to which stock Ann Arbor Stromal shall have a reasonable time
to sell or liquidate in a reasonable manner as deemed necessary by
Ann Arbor Stromal under the circumstances;
9.1.3 Obligations for record keeping and accounting reports for so long as
Product(s) are sold pursuant to Paragraph 9.1.2 above. At such time
as there are no sales or other dispositions of Product(s) upon
termination of this License, Ann Arbor Stromal shall render a final
report and royalty payment;
9.1.4 University's rights to audit books and records as described in
Section 5 herein;
9.1.5 Obligations of indemnity under Section 18;
9.1.6 Any cause of action or claim of Ann Arbor Stromal or University
accrued or to accrue because of any breach or default by the other
Party hereunder;
9.2 This License will become effective on its Effective Date and, unless
terminated under another, specific provision of
16
this License, will remain in effect until and terminate upon the
expiration of the later of Ann Arbor Stromal's obligation to pay
royalties under Paragraph 4.3 herein or the last to expire of Licensed
Patents. After such full-term termination of this License, Ann Arbor
Stromal shall have the right to make, use and sell Product(s) without
further payment to University hereunder.
9.3 If Ann Arbor Stromal shall at any time default in the payment of any
royalty or the making of any report hereunder, or shall commit any
material breach of any material covenant or promise herein contained,
--------
or shall make any false report and shall fail to remedy any such
default, material breach or report within sixty (60) days after written
notice thereof by University, University may, at its option, terminate
this License by notice in writing to such effect. In the event of such
termination, interest shall continue to accrue as described in
Paragraph 6.2 on any amounts outstanding and payable to University and
any such termination shall be without prejudice to University's other
legal rights for breach of this License.
9.4 In the event that Ann Arbor Stromal desires to terminate this License,
Ann Arbor Stromal shall serve upon University a notice of termination,
including a statement of reasons for such termination, at least six (6)
months before a termination date established by Ann Arbor Stromal. Such
notice shall be deemed by the parties to be final, and immediately upon
service of such notice of termination,
17
University shall have the right to begin negotiations and enter into
agreements with others for the manufacture, sale and use of the
Product(s), and may, at its option, disclose to said others any and all
information related to Product(s) other than Confidential Information
generated or developed solely by Ann Arbor Stromal. During the period
of time from the notice of termination until termination pursuant to
this provision, Ann Arbor Stromal shall continue to commercialize
Product(s) and to make them reasonably available to the public at fair
market value.
10. ASSIGNMENT
----------
This License shall not be transferable or assignable by either Party without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld; and any attempt to transfer or assign this License
without such consent shall be void from the beginning. No transfer or
assignment may be made by Ann Arbor Stromal unless and until the intended
transferee or assignee agrees in writing to accept all of the terms and
conditions of this License. For purposes of implementing this clause the
University's consent may only be withheld:
i) if the University reasonably believes that implementing the terms of
the proposed transfer or assignment could economically discriminate
against the University or its employees holding equity in Ann Arbor
Stromal as compared to any of the other shareholders or investors in
Ann Arbor Stromal or their principals; or
18
ii) if the University reasonably believes that the proposed transfer
or assignment is to a third party which is not in a financial and
technical position at least equivalent to that of Ann Arbor
Stromal for purposes of exploiting and commercializing the
Licensed Technology.
11. REGISTRATION OR RECORDATION
---------------------------
11.1 If the terms of this License, or any assignment or license under this
License are or become such as to require or make it appropriate that
the Agreement or license or any part thereof be registered with or
reported to a national or supranational agency of any area in which Ann
Arbor Stromal, or Affiliates would do business, Ann Arbor Stromal will,
at its expense, undertake such registration or report. Prompt notice
and appropriate verification of the act of registration or report of
any agency ruling resulting from it will be supplied by Ann Arbor
Stromal to University.
11.2 Any formal recordation of this Agreement or any license herein granted
which is required by the law of any country of the Territory as a
prerequisite to enforceability of the Agreement or license in the
courts of any such country or for other reasons shall also be carried
out by Ann Arbor Stromal at its expense, and appropriately verified
proof of recordation shall be promptly furnished to University.
19
12. EXPORT LAWS AND REGULATIONS OF THE UNITED STATES
------------------------------------------------
12.1 The Export Regulations of the United States Department of Commerce
prohibit the exportation from the United States of certain types of
technical data and commodities (listed in the Export Administration
Regulations), unless the exporter (e.g., Ann Arbor Stromal or
Affiliates) has received the required General License or Validated
License, whichever is applicable. In addition, the exporter may be
required to obtain certain written assurances regarding re-export from
the foreign importer for certain types of technical data and
commodities. Prior to its engaging in any export activity, Ann Arbor
Stromal has advised University that it will receive a copy of the then
current Export Administration Regulations of the United States
Department of Commerce and will arrange for a subscription under which
it will receive Supplementary Bulletins from the United States
Department of Commerce upon their issuance. Ann Arbor Stromal hereby
agrees to comply with, and to require Affiliates to comply with, the
Export Administration Regulations of the United States Department of
Commerce; and Ann Arbor Stromal hereby gives University the assurances
called for in the Export Administration Regulations, including the
assurances called for in Part 379.4 and any successor provisions of
such regulations.
12.2 This License shall be subject to all United States Government laws and
regulations now or hereafter applicable to the subject matter of this
License.
20
13. NOTICES
-------
Any notice, request, report, or payment required or permitted to
be given or made under this License by any Party shall be given
by sending such notice by prepaid certified mail, return receipt
requested, or by facsimile transmission to the address set forth
below or such other address as such party shall have specified by
written notice given in conformity herewith. Any notice not so
given shall not be valid unless and until actually received, and
any notice given in accordance with the provisions of this paragraph
shall be effective when mailed:
TO University: The University of Michigan
Intellectual Properties Office
475 East Jefferson, Room 2354
Ann Arbor, Michigan 48109-1248
Attention: File No. 433
TO Ann Arbor Stromal: Robert Kunze
General Partner
H&Q Life Science Technology Fund I
One Bush Street
San Francisco, California 94104
With copy provided to: Kenneth L. Guernsey
Attorney at Law
Cooley, Godward, Castro, Huddleson & Tatum
One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580
14. INVALIDITY
----------
In the event that any term, provision, or covenant of this License shall
be determined by a court of competent jurisdiction to be invalid, illegal,
or unenforceable, that term will be curtailed, limited, or deleted, but
only to the extent necessary
21
to remove such invalidity, illegality, or unenforceability, and the
remaining terms, provisions, and covenants shall not in any way be affected
or impaired thereby. In the event that the time period of any covenant
shall be held unenforceable as a matter of law, said covenant will be
interpreted to be effective for an enforceable time period.
15. ENTIRE AGREEMENT AND AMENDMENT
------------------------------
This License contains the entire understanding of the Parties with respect
to the matter contained herein, and supersedes all prior agreements, oral
or written, and all other communication between them relating to the
subject matter hereof. The Parties hereto may, from time to time during the
continuance of this License, modify, vary or alter any of the provisions of
this License, but only by an instrument duly executed by authorized
officials of both Parties hereto.
16. GOVERNING LAW
-------------
This License and the relationships between the Parties shall be governed in
all respects by the law of the State of Michigan, the United States of
America, except that questions affecting the construction and effect of any
patent shall be determined by the law of the country in which the patent
has been granted.
22
17. ARBITRATION AND DISPUTE RESOLUTION
----------------------------------
Any dispute relating to the interpretation or performance of this Agreement
or the grounds for the termination hereof shall be resolved at the request
of either party through final and binding arbitration by a single
arbitrator in accordance with the Commercial Arbitration rules of the
American Arbitration Association ("AAA"). Such arbitrator shall be selected
by the mutual agreement of the parties or, failing such agreement, shall be
selected according to the relevant AAA rules. The parties shall bear the
costs of such arbitrator and arbitration equally. The prevailing party in
any such arbitration shall be entitled to its reasonable attorney's fees
and costs solely at the discretion of the arbitrator in addition to any
other amount of recovery ordered by such arbitrator. The arbitrator or
court, as the case may be, shall determine which party is the "prevailing
party" for purposes of this section. If judicial enforcement or review of
such arbitrator's award is sought by either party, judgment may be entered
upon such award in any court of competent jurisdiction. Ann Arbor Stromal
hereby consents to venue and personal jurisdiction in Ann Arbor, Michigan
for any such arbitration proceeding and for any court proceeding. The duty
of the parties to arbitrate any dispute relating to the interpretation or
performance of this Agreement or the grounds for the termination thereof
shall survive any termination of this Agreement.
23
18. INDEMNITY: INSURANCE
---------------------
18.1 Ann Arbor Stromal shall defend, indemnify and hold harmless and
shall require Affiliates to defend, indemnify and hold harmless
University, its fellows, officers, employees and agents, for and
against any and all claims, demands, damages, losses, and expenses
of any nature (including attorneys' fees and other litigation
expenses), resulting from, but not limited to, death, personal
injury, illness, property damage or products liability arising from
or in connection with, any of the following:
18.1.1 Any manufacture, use, sale or other disposition by
Ann Arbor Stromal, Affiliates, or other transferees of
Products;
18.1.2 The direct or indirect use of Products by any person;
18.1.3 The use by Ann Arbor Stromal or Affiliates of any invention,
discovery, data, information, product or process related to
Licensed Patents or Know-How.
18.2 University shall be entitled to participate at its option and expense
through counsel of its own selection, and may join in any legal
actions related to any such claims, demands, damages, losses and
expenses under Paragraph 18.1.
24
19. NO WARRANTY: LIMITATIONS OF LIABILITY
--------------------------------------
19.1 UNIVERSITY MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, AND ASSUMES NO
RESPONSIBILITIES WHATEVER WITH RESPECT TO DESIGN, DEVELOPMENT,
MANUFACTURE, USE, SALE OR OTHER DISPOSITION BY ANN ARBOR STROMAL
OR AFFILIATES OF PRODUCTS. Regardless of any testing which may
have been done at University, University makes no representations
regarding how Product can or should be used in any specific process.
19.2 THE ENTIRE RISK AS TO PERFORMANCE OF PRODUCTS IS ASSUMED BY ANN
ARBOR STROMAL AND AFFILIATES. Every user of Product must do its
own verification testing and define for itself any processes for
its use of Product. In no event shall University be responsible
or liable for any direct, indirect, special, incidental, or
consequential damages or lost profits to Ann Arbor Stromal,
Affiliates, users or any other individual or entity regardless of
legal theory. The above limitations on liability apply even though
University may have been advised of the possibility of such damage.
19.3 University represents that to the best of its knowledge and belief
it has the lawful right to grant the license set forth herein
without breaching the terms or conditions of any agreements with
any third parties.
25
20. PUBLICITY
---------
Ann Arbor Stromal agrees to refrain from using and to require
Affiliates to refrain from using quotes or opinions attributed or
attributable to University or any employee of University in publicity,
advertising, or news releases without the prior written approval of an
authorized representative of University. Reports in scientific literature
and presentations of joint research and development work are not considered
publicity.
21. PRODUCT MARKING
---------------
Ann Arbor Stromal and Affiliates agree to mark Products with the
appropriate patent notice as approved by University.
22. NON-WAIVER
----------
No waiver, no matter how long continuing or how many times extended,
by either Party of a breach of any term or condition of this License
shall be considered as a permanent waiver or as an amendment to this
instrument.
23. ARTICLE HEADINGS
----------------
The Article headings herein are for purposes of convenient reference
only and shall not be used to construe or modify the terms written in
the text of this agreement.
26
24. FORCE MAJEURE
-------------
Neither Party hereto shall be deemed to be in default of any provision of
this License, or for any failure in performance, resulting from acts or
events beyond the reasonable control of such Party. For purposes of this
License, such acts shall include, but not be limited to, acts of Good, acts
of civil or military authority, civil disturbance, war, strikes, fires,
power failures, other catastrophes, or other "force majeure" events beyond
the Parties' reasonable control.
25. NO AGENCY RELATIONSHIP
----------------------
Except as clearly and specifically provided under the terms and provisions
of this License, neither Party shall be deemed to be an agent of the
other in connection with the exercise of any rights hereunder, and neither
shall have any right or authority to assume or create any obligation or
responsibility on behalf of the other.
26. CONFIDENTIALITY PROVISIONS
--------------------------
26.1 University and Ann Arbor Stromal each agree not to disclose or use,
except as required by law or contemplated by this License and the
Research Agreement to which this License is attached, the following
("Confidential Information"): (i) any of the terms of this License
and the Exhibits hereto (except for disclosure of basic terms which
may be required under University policy), or (ii) except as otherwise
27
provided for in the Research Agreement's Article 7 (Publications), any
Project related Know-How, data, process, technique, drawing, formula,
future development, or engineering or manufacturing development of either
party and any marketing, business plan, servicing, financial or personnel
matter relating to the other party, its present or future products, sales,
suppliers, customers, employees, investors or business except as Ann Arbor
Stromal finds reasonably necessary to conduct its business or raise
capital or (iii) any information received from the other party which is in
written form and marked "Confidential", "Proprietary", "Secret" or the
like.
26.2 The parties hereto agree that the provisions of this Article 26 shall
survive, whether or not the other provisions hereof remain in full
force and effect, for a period of three (3) years after any termination
of this License.
26.3 Confidential Information shall not include and neither party shall be
obligated to hold in confidence or restrict the use of any information
(i) which is or becomes public knowledge without breach of this License,
(ii) which is or becomes available without a confidentiality restriction
and without breach of this License from a source other than a party
hereto, (iii) which is produced in response to a court order or government
action, (iv) which is disclosed with the other party's prior written
approval, (v) which is independently developed by the party receiving
the Confidential Information from the other party, or (vi) which is known
by other means to the party receiving the
28
Confidential Information at the time of disclosure of same, and in the
case of (v) and (vi), can be established by documentary evidence.
IN WITNESS WHEREOF, each of the Parties hereto has caused this entire
agreement to be executed in duplicate originals by its duly authorized
officer or representative.
FOR THE REGENTS OF
FOR ANN ARBOR STROMAL, INC. THE UNIVERSITY OF MICHIGAN
By /s/ R. DOUGLAS ARMSTRONG By /s/ ROBERT F. GAVIN
--------------------------- ---------------------------
(authorized representative) (authorized representative)
Typed Name R. Douglas Armstrong Typed Name Robert F. Gavin
-------------------- ---------------
Title President and CEO Title Director, Intellectual Properties
----------------- ---------------------------------
Date 3/13/92 Date 3/13/92
------- -------
29
FIRST AMENDMENT TO LICENSE AGREEMENT
This First Amendment to License Agreement is made as of March 13, 1992,
---------------
by and between Aastrom Biosciences, Inc. (formerly Ann Arbor Stromal, Inc.),
a Michigan corporation, (hereinafter "Aastrom") and the Regents of the
University of Michigan, a constitutional corporation of the State of Michigan
(hereinafter "University").
RECITATIONS
The following is a recital of facts underlying this Agreement:
A. On March 13, 1992 the parties hereto have executed a certain License
--------------
Agreement ("License Agreement") as contemplated by a certain Research
Agreement between the parties hereto which was executed by them during
August of 1989 (the "Research Agreement"). Defined terms not otherwise
defined in this First Amendment shall have the meanings set forth in the
License Agreement.
B. The parties now wish to amend the License Agreement in certain respects.
NOW, THEREFORE, in consideration of their mutual promises, the parties hereto
agree as follows:
1. The License Agreement is hereby amended as follows.
(a) Licensed Technology includes:
i) all patent applications, including related foreign patent applications,
and patents issuing therefrom identified in Exhibit A attached hereto;
ii) all Know-How included in patents and patent applications of Exhibit A
and grant proposals, papers, abstracts and other documents described in
Exhibit B attached hereto; and
iii) all additional patentable inventions and Know-How for the production of
red blood cells, white blood cells, platelets and bone marrow cells, which
is either described in University Project proposal, or conceived or reduced
to practice as part of Project, or conceived or reduced to pratice, whether
or not pursuant to or as part of the Project, by Drs. Stephen G. Emerson,
Michael F. Clarke or Bernhard O. Palsson, or those working under their
direction, during the term of their participation in the Project and
Aastrom's funding of the Project.
(b) Section 3.2 of the License Agreement hereby is amended to read in its
entirety as follows:
3.2 Aastrom shall have the right to grant one or more sublicenses for
third parties to use the rights granted to Aastrom under its exclusive
2
license rights granted in this License Agreement; and, subject to approval by
Aastrom, sub-sublicense agreements may also be granted by a third party
sublicensee. All sublicenses and sub-sublicenses, if any, shall provide that the
sublicensee and sub-sublicensee shall comply fully with all provisions of this
License Agreement, including without limitation, paying the same royalty to the
University as is specified in this License Agreement. Notwithstanding any such
sublicensing, Aastrom shall still remain fully responsible and liable for
compliance with all terms of this License Agreement, including compliance by any
and all sublicensees and sub-sublicensees. No consent from University is
required for any sublicense or sub-sublicense, as described above; however,
Aastrom shall provide timely notice of each sublicense hereunder along with
copies of all sublicense agreements. Should Aastrom propose to enter into a
sublicense which reduces any royalties payable to University, or which otherwise
modifies any of the rights of University under this License Agreement, then no
such sublicense can be entered into without the prior written consent of
University and any
3
such sublicense entered into without prior written consent of
University shall be void from the beginning. For example, if the
proposed sublicensee is to issue stock to Aastrom in lieu of
royalties, or if a proposed sublicensee is to make a lump sum front-
end payment as a set-off against or in lieu of future royalties, then
there shall be negotiations between Aastrom and University for an
equitable allocation of said consideration in lieu of royalties, with
the mutual consent of Aastrom and University required for any such
non-conforming sublicense agreement.
2. Article 13 of the License Agreement, entitled "Notices", is amended as
follows:
i) Provision for notice to Robert Kunze and Kenneth Guernsey is hereby
deleted; and
ii) Notice to Aastrom shall be provided to:
Aastrom Biosciences, Inc.
President/CEO
P.O. Box 130469
Ann Arbor, Michigan 48113-0469
4
3. As amended hereby, the License Agreement shall continue in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this First Amendment as of the date
set forth above.
FOR THE REGENTS OF
FOR AASTROM BIOSCIENCES, INC. THE UNIVERSITY OF MICHIGAN
By /s/ R. DOUGLAS ARMSTRONG By /s/ ROBERT F. GAVIN
--------------------------- --------------------------
(authorized representative) (authorized representative)
Typed Name R. Douglas Armstrong Typed Name Robert F. Gavin
-------------------- ---------------
Title President and CEO Title Director, Intellectual Properties
----------------- ---------------------------------
5
EXHIBIT A
License Agreement Amendment dated March 13, 1992
between UM and Aastrom Biosciences
DOCUMENTATION FOR LICENSE AMENDMENT AGREEMENT
1. The following U.S. patent applications and all related foreign applications:
A. U.S. APPLICATION, SER. #07/366,639, OSMMN REF. #2363-022-55
Methods, Compositions and Devices for Growing Cells.
Filed: 6/15/89
B. U.S. APPLICATION, SER. #07/628,343, OSMMN REF. #2363-023-55 CIP
Methods and Compositions for the Ex Vivo Replication of Stem Cells
and for the Optimization of Hematopoietic Progenitor Cell Cultures.
Filed: 12/17/90
E. U.S. APPLICATION, SER. #07/737,024, OSMMN REF. #2363-034-55
Methods and Compositions for the Ex Vivo Replication of Stem Cells,
for the Optimization of Hematopoietic Progenitor Cell Cultures,
and for Increasing the Metabolism, GM-CSF Secretion and/or IL-6
Secretion of Human Stromal Cells.
Filed: 7/29/91
F. U.S. APPLICATION, SER. #07/740,590, OSMN REF. #2363-035-55
Methods for Human Gene Therapy, Including Methods and Compositions
for the Ex Vivo Replication and Stable Genetic Transformation of Human
Stem Cells, for the Optimization of Human Hematopoietic Progenitor Cell
Cultures and Stable Genetic and/or IL-6 Secretion of Human Stromal
Cells.
Filed: 8/5/91
H. U.S. APPLICATION, SER. #07,815,513, OSMMN REF. #2363-036-55
Methods for Regulating the Specific Lineages of Cells Produced in
a Human Hematopoietic Cell Culture, Methods for Assaying the Effect
of Substances on Lineage-Specific Cell Production, and Cell Compositions
Produced by these Cultures.
Filed: 1/2/92
I. U.S. APPLICATION, SER. #07/822,136, OSMMN REF. #2363-055-55
Targeted Virus.
Filed: 1/17/92
J. PENDING U.S. APPLICATION, OSMMN REF. #2363-043-55
Methods, Compositions and Devices for Maintaining and Growing Human
Stem and/or Hematopoietic Cells.
Filed: 3/4/92
Page 1
2/4/92
DESCRIPTION AUTHOR DATE
----------- ------ ----
2. Business Plan and Strategy AASTROM Biosciences, Inc. Dec., 1991
3. Research Plan AASTROM Biosciences, Inc. Sept., 1991
4. Goals, Science/Business, Ann Arbor Stromal, Inc. Undated
Personnel & Structure
5. Research Agreement Appendix C to Option 3/24/89
Agreement
6. SBIR Proposal: Hematopoietic R. Douglas Armstrong 12/12/91
Cell Expansion System
7. NRA-91-OSSA-18 Proposal: Bernard O. Palsson 11/25/91
Shear Sensitivities of Human
Bone Marrow Cultures
8. ACS Proposal: Hematopoietic Bernard O. Palsson 10/30/91
Bioreactor System to Improve
Bone Marrow Transplantation
for Treatment of Cancer
9. Aastrom System One (Version Bernard O. Palsson 10/19/91
1.00 - Draft)
10. NRA-91-OSSA-13 Proposal: Bernard O. Palsson 8/15/91
Reconstructing Human Bone
Marrow Ex Vivo
11. NSF Proposal: Optimal Growth Bernard O. Palsson 7/3/90
Factor Combinations for Human
Bone Marrow Cultures and Large-
Scale Cell Production
12. Naval Medical Command Proposal: Bernard O. Palsson 2/20/89
Ex vivo Bone Marrow:
Construction of a Perfusion
Device
13. SBIR Proposal: Bioreactor for R. Douglas Armstrong 12/12/91
Retrovirus Infection of hemato-
poietic Cells
14. Experiment (Clarke) Michael F. Clarke 1/9/92
15. NIH Proposal: In Vitro Stephen G. Emerson 1/16/92
Expanded Hematopoietic
Progenitors for ABMT
16. NIH Proposal: Stromal Cell Stephen G. Emerson 9/20/91
CSF Regulation and
Hematopoiesis
17. Aplastic Anemia Foundation Stephen G. Emerson 7/1/92 (beg.
of America (Postdoctoral date)
application): Leslie G.
Blesecker
Documentation for License Amendment Agreement
Page 2
2/4/92
DESCRIPTION AUTHOR DATE
----------- ------ ----
18. The Leukemia Society of Stephen G. Emerson 8/29/89
America (Scholarship
application): Stem Cell
Cytoadhesion Molecules in
Chronic Myelogenous Leukemia
19. The Leukemia Society of America Stephen G. Emerson 4/26/91
(Scholarship application -
continuation) Stem Cell
Cytoadhesion Molecules in Chronic
Myelogenous Leukemia
20. NIH Proposal: Optimization and Stephen G. Emerson 7/20/90
Manipulation of Human Marrow Cultures
21. NSF Proposal: (Research Experience Stephen G. Emerson 1/30/89
for Undergraduates) Effect of Serum
Concentration and Perfusion Rate on
Stromal Cell Metabolism
22. NSF Proposal: Contruction and Stephen G. Emerson 5/15/89
Maintenance of Functioning Bone
Marrow Tissue Ex Vivo
23. NSF Proposal: Construction of a Stephen G. Emerson 5/10/88
High Efficiency Ex Vivo Bone Marrow
24. NRA-88-OSSA-5 Proposal: Development Stephen G. Emerson 8/15/88
of a Device for the Large-Scale
Cultivation of Human Bone Marrow:
Space Flight Applications
25. Presidential Initiations Proposal: Stephen G. Emerson Undated
Development of an Artificial Bone
Marrow
26. Paper: In Vitro Myelopoiesis Schwartz RM, Emerson Blood,
Stimulated by Rapid Medium Exchange SG, Clarke MF, Palsson 78:12, pp
and Supplementation with hemato- BO 3155-3161,
poietic Growth Factors (12/15/91)
27. Paper: Can Dexter Cultures Support Varma A, El-Awar FY, Experi-
Stem Cell Proliferation? Palsson BO, Emerson SG, mental
Clarke MF Hematology,
20:87-91
(1992)
28. Paper: Rapid medium perfusion rate Schwartz RM, Palsson PNAS,
significantly increases the BO, Emerson SG 88:6760-
productivity and longevity of human 6764
bone marrow cultures (8/91)
29. Paper: The Construction of High Emerson SG, Palsson BO, J Cell.
Efficiency Human Bone Marrow Tissue Clarke MF Biochem
Ex Vivo 45:268-
272 (1991)
Documentation for License Amendment Agreement
Page 3
2/4/92
DESCRIPTION AUTHOR DATE
----------- ------ ----
30. Paper: Culture Perfusion Schedules Caldwell J, J Cell Phys
Influence the Metabolic Activity and Palsson BO, 147:344-353
Granulocyte-Macrophage Colony- Locey B, (1991)
Stimulating Factor Production Rates Emerson SG
of Human Bone Marrow Stromal Cells
31. Paper: Influence of Medium Exchange Caldwell J, Biotechnol.
Schedules of Metabloic, Growth, and Locey B, Progress
GM-CSF Secretion Rates of Genetically Clarke MF, Vol. 7, No.1
Engineering NIH-3T3 Cells Emerson SG Jan/Feb, 1991
Palsson BO
32. Paper: The Influence of Extra-Cellular Schwartz RM, Submitted to
Matrix and Stroma Remodeling on the Caldwell J, Cytotechnology
Productivity of Long-Term Human Bone Clarke MF, Sept., 1991
Marrow Cultures Emerson SG,
Palsson BO
33. Advanced Technology Program Proposal: R. Douglas 9/24/91
ATP 91-01: Human Stem Cell and Armstrong
Hematopoietic Expansion Systems
34. Thesis: Optimization of Human Long- Richard M. 1991
Term Bone Marrow Cultures Schwartz
35. Chapter: The Role of Physiologic Caldwell J, Undated
Perfusion in the Metabolism and Palsson BO,
Genetic Regulation of Cytokine Clarke MF,
Production in Mesenchymal Stromal Cells Emerson SG
36. UM Disclosure #715 "Mouse Tyrosine Emerson SG Biotechnol
Kinare partial CDNA sequences A1,
A8, P4, P7, P21"
Documentation for License Amendment Agreement
Page 4
2/4/92
SECOND AMENDMENT TO
LICENSE AGREEMENT
This Second Amendment to License Agreement is entered into as of October 8,
1993, by and between Aastrom Biosciences, Inc. (formerly Ann Arbor Stromal,
Inc., a Michigan corporation, hereinafter called "Aastrom"), and the Regents of
the University of Michigan, a constitutional corporation of the State of
Michigan (hereinafter called "University").
RECITATIONS
The following is a recital of facts underlying this Agreement.
A. In August, 1989, the parties hereto entered into a certain Research
Agreement (the "Research Agreement") pursuant to which Aastrom provided
funding to the University for the University to conduct a certain research
project. Pursuant to an Extension Agreement dated March 2, 1992, the
parties extended the term of the Research Agreement until June 30, 1993,
and extended the scope of the research projects and funding under the
Research Agreement. As used hereinafter, the term "Research Agreement"
shall include said Extension Agreement. Pursuant to the Research
Agreement, Aastrom is entitled to an exclusive license to utilize any and
all inventions, technology, and know-how (i) resulting from the research
projects funded by Aastrom at the University, or (ii) related to the
research projects (subject to certain qualifications).
B. On March 13, 1992, the parties entered into a certain License Agreement
(the "License Agreement"), as contemplated by the Research Agreement; and
on March 13, 1992, the parties also entered into that certain First
Amendment to License Agreement (the "First Amendment to License Agreement")
for the purpose of modifying and clarifying certain terms in the original
License Agreement. As used hereinafter, the term "License Agreement" shall
include said First Amendment.
C. Subsequent to entering into the First Amendment to License Agreement, some
additional patent rights, technology, know-how and other intellectual
property rights have been identified which are to be licensed to Aastrom
pursuant to the License Agreement. This Second Amendment is being entered
into for the purpose of identifying said additional rights.
NOW THEREFORE, in consideration of their mutual promises, the parties
hereto agree as follows:
1. LICENSED TECHNOLOGY. In addition to all other Licensed Technology (as
defined in the License Agreement) which is already identified as being
covered by the License Agreement, the Licensed Technology shall also
include the additional patent-
related matters identified in Exhibit A attached hereto, as well as
the additional technology and know-how identified in the documents
described in Exhibits B (1) and B(2) attached hereto, which technology
and know-how have resulted from research pursuant to the Research
Agreement.
2. EFFECT. Excepting only as otherwise expressly set forth above, all
other terms and provisions of the License Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Second Amendment as of the date set
forth above.
FOR: FOR:
THE REGENTS OF
AASTROM BIOSCIENCES, INC. THE UNIVERSITY OF MICHIGAN
BY: /s/ R. DOUGLAS ARMSTRONG BY: /s/ ROBERT L. ROBB
--------------------------- -----------------------------------
R. DOUGLAS ARMSTRONG, PH.D.
PRESIDENT AND CEO ITS: Director Technology/Management
Office
-2-
EXHIBIT A
PATENT MATTERS
All of the following patent applications and patent matters, including all
related foreign patent rights and all patents issued and patent rights related
thereto:
A. U.S. APPLICATION #07/990,299, CAMPBELL & FLORES REF.#P-UM 9380
Novel Embryonic Tyrosine Kinase Sequences and Uses Thereof
Biesecker, Leslie G.; Emerson, Stephen Gx.
filed: 12/8/92
B. PENDING U.S. APPLICATION, CAMPBELL & FLORES REF. #P-UM 9430
P53-Mediated Apoptosis for the Therapeutic Treatment of Diseases
Clarke, Michael F.
C. PENDING U.S. APPLICATION, CAMPBELL & FLORES REF. #P-AA 9609
Directed Motion of Gene-Transfer Vectors for Increased Infectivities
Palsson, Bernhard O.
-3-
EXHIBIT B (1)
Know-how and Technology Items
All of the following and attached grant proposals, papers, abstracts and other
documents, together with all inventions, know-how and/or technology described
therein or resulting therefrom:
DESCRIPTION AUTHOR DATE
1. PAPER: BONE MARROW GUBA, SC; SARTOR, BLOOD
STROMAL FIBROBLASTS SECRETE CL; GOTTSCHALK, LR; 80(5):1190-1198
INTERLEUKIN-6 AND YE-HE,J; SEPT., 1992)
GRANULOCYTE-MACROPHAGE MULLIGAN,T;
COLONY-STIMULATING FACTOR EMERSON,SG
IN THE ABSENCE OF
INFLAMMATORY STIMULATION:
DEMONSTRATION BY SERUM-FREE
BIOASSAY, ENZYME-LINKED
IMMUNOSORBENT ASSAY, AND
REVERSE TRANSCRIPTASE
POLYMERASE CHAIN REACTION
2. ABSTRACT: MOLECULAR GOTTSCHALK, LR; ASH, 1992
REGULATION OF THE HUMAN GIANNOLA, DM;
IL-3 GENE IN T-CELLS: EMERSON, SG
EXPRESSION REQUIRES AN
INTACT AP-1 AND ELF-1
NUCLEAR PROTEIN BINDING SITE
3. ABSTRACT: EX VIVO PALSSON, BO; ASH, 1992
EXPANSION OF HEMATOPOIETIC SCHWARTZ, RM;
PROGENITOR CELLS AND LTCIC PALSSON, M;
BY CONTINUOUS PERFUSION ARMSTRONG, RD;
CULTURE CLARKE, MF;
EMERSON, SG
4. ABSTRACT: IL-1 ALPHA CALDWELL, J; ASH, 1992
AND TNF-ALPHA ACT EMERSON, SG
SYNERGISTICALLY TO
STIMULATE PRODUCTION OF
MYELOID COLONY-STIMULATING
FACTORS BY CULTURED HUMAN
BONE MARROW STROMAL CELLS
AND CLONED STROMAL CELL
STRAINS
5. ABSTRACT: THE CLONING BIESECKER, LG; ASH, 1992
OF 5 NOVEL TYROSINE KINASE GOTTSCHALK, LR;
PARTIAL CDNAS ENCODING EMERSON, SG
CANDIDATE STEM CELL
CYTOKINE RECEPTORS
6. PAPER: IDENTIFICATION BIESECKER, L.G., ET AL PNAS
OF FOUR MURINE CDNAS 90, 7044-7048
ENCODING PUTATIVE PROTEIN (1993)
KINASES FROM PRIMITIVE
EMBRYONIC STEM CELLS
DIFFERENTIATED IN VITRO
-4-
7. PAPER: INTERLEUKIN 6 IS A BIESECKER, LG; EXPERIMENTAL
COMPONENT OF HUMAN UMBILICAL EMERSON, SG HEMATOLOGY,
CORD SERUM AND STIMULATES 21:774-778
HEMATOPOIESIS IN EMBRYONIC STEM 1993
CELLS IN VITRO
8. PAPER: MOLECULAR REGULATION GOTTSCHALK, LR; JOURNAL OF
OF THE HUMAN IL-3 GENE: GIANNOLA, DM; EXPERIMENTAL
INDUCIBLE T-CELL RESTRICTED EMERSON, SG MEDICINE
EXPRESSION REQUIRES INTACT AP-1 IN PRESS
AND ELF-1 NUCLEAR PROTEIN NOV., 1993
BINDING SITES
9. PAPER: IL-1 ALPHA AND CALDWELL, J; JOURNAL OF
TNF-ALPHA ACT SYNERGISTICALLY TO EMERSON, SG CELLULAR
STIMULATE PRODUCTION OF MYELOID PHYSIOLOGY
COLONY-STIMULATING FACTORS BY ACCEPTED
CULTURED HUMAN BONE MARROW 1994
STROMAL CELLS AND CLONED STROMAL
CELL STRAINS
10. ABSTRACT: PHASE I SILVER, SM; ASH, 1993
EVALUATION OF EX VIVO EXPANDED ADAMS, PT;
HEMATOPOIETIC CELLS PRODUCED BY HUTCHINSON, RJ;
PERFUSION CULTURES IN AUTOLOGOUS DOUVILLE, JW;
BONE MARROW TRANSPLANTATION PAUL, LA; CLARKE,
(BMT). MF; PALSSON, BO;
EMERSON, SG
11. ABSTRACT: EXPANSION IN VAN ZANT, G; ASH, 1993
BIOREACTORS OF HUMAN PROGENITOR LARSON, DB;
POPULATIONS FROM CORD BLOOD AND DRUBACHEVSKY, I;
MOBILIZED PERIPHERAL BLOOD PALSSON, M;
EMERSON, SG
12. ABSTRACT: CLINICAL SCALE ARMSTRONG, RD; ASH, 1993
PRODUCTION OF STEM AND KOLLER, MR; PAUL,
HEMATOPOIETIC CELLS EX VIVO L; DOUVILLE, J;
MALUTA, J; FISH,
R; PALSSON, BO;
VAN ZANT, G;
EMERSON,SG
13. ABSTRACT: EXPANSION OF RUMMEL, SA; ASH, 1993
HUMAN HEMATOPOIETIC EMERSON, SG; VAN
STEM/PROGENITOR CELLS RESISTANT ZANT, G
TO TREATMENT WITH
4-HYDROPEROXYCYCLOPHOSPHAMIDE
14. ABSTRACT: BIOREACTOR KOLLER, MR; ASH, 1993
EXPANSION OF WHOLE, NEWSOM, B; VAN
DENSITY-SEPARATED, AND ZANT, G; EMERSON,
CD34-ENRICHED HUMAN BONE MARROW SG, PALSSON, BO
15. SEMINAR: PROGRESS REPORT PETER G. EIPERS 10/19/92
16. PAPER: MEL CELLS, THE CLARKE, MF SUBMITTED TO
ONCOGENE C-MYB NATURE 1/93
-5-
17. PAPER: CELL CYCLE ANALYSIS RYAN, JJ; RIZWAN, MOLECULAR AND
OF P53-INDUCED CELL DEATH IN D; GOTTLIEB, CA; CELLULAR BIOLOGY
MURINE ERYTHROLEUKEMIA CELLS CLARKE, MF 13(1)
(JAN, 1993)
18. SEMINAR: MY PRIMARY OBJECT.. ALICE CURRY 1/25/93
19. SEMINAR: PROGRESS REPORT, PETER G. EIPERS 3/8/93
FEB. 1993
20. SEMINAR: CONSTRUCTION OF A FAISAL EL-AWAR 4/19/93
RETROVIRUS PACKAGING CELL LINE
21. SEMINAR: FIRST CD 18 PETER G. EIPERS 6/14/93
INFECTION........................
22. SEMINAR: GENERATION OF AN ALICE M. CURRY 7/26/93
HIV-BASED PACKAGING LINE
23. PROGRESS REPORTS ALICE M. CURRY JAN., APR., MAY,
JULY, 1993
24. PAPER: EFFECT OF STROMAL AGE EL-AWAR, FY; SUBMITTED TO
ON HEMATOPOIESIS IN HUMAN EMERSON, SG; EXP. HEMATOLOGY
LONG-TERM BONE MARROW CULTURES CLARKE, MF
25. ABSTRACT: EIPERS, PG; ASH, 1993
RETROVIRUS-MEDIATED GENE KRAUSS, JC; TODD,
TRANSFER IN HUMAN BONE MARROW RF; EMERSON, SG;
MONONUCLEAR CELLS GROWN IN PALSSON, BO;
CONTINUOUS PERFUSION CULTURES CLARKE, MF
26. NIH GRANT APPLICATION: MICHAEL F. CLARKE 9/30/93
ANALYSIS OF THE KINETICS OF
HEMATOPOIETIC CELL DIVISION BY
RETROVIRUS TAGGING
27. ABSTRACT: FLOW CYTOMETRIC ROGERS, CE; ASH, 1993
ANALYSIS OF BIOREACTOR EXPANDED BRADLEY, MS;
HUMAN BONE MARROW; ERYTHROID PALSSON, BO;
DEVELOPMENT AND CORRELATION WITH KOLLER, MR
BURST-FORMING UNIT-ERYTHROID
(BFU-E).
28. ABSTRACT: EXTENDED GROWTH OH, DJ; KOLLER, ASH, 1993
OF STEM AND PROGENITOR CELLS MR; PALSSON, BO
FROM ADULT HUMAN BONE MARROW IN
SEQUENTIAL BIOREACTOR CULTURES
29. ABSTRACT: GROWTH FACTOR PALSSON, BO; ASH, 1993
CONSUMPTION AND PRODUCTION IN EX BRADLEY, MS;
VIVO PERFUSION CULTURES OF HUMAN KOLLER, MR
BONE MARROW
30. SEMINAR: INTRO TO MINETTE LEVEE 10/13/92
MICROENCAPSULATION
-6-
31. SEMINAR: FLOW CYTOMETRY & CLARE ROGERS 11/30/92
HUMAN MARROW
32. SEMINAR: CULTIVATION OF DUK JAE OH 1/18/93
BONE MAROW CELLS IN HEMOGEN 107
(DIAMOND SHAPE) REACTORS
33. SEMINAR: ENCAPSULATED BONE LEVEE, MG; LEE, 3/29/93
MARROW CULTURES AS A POTENTIAL GM; PAEK, SH;
ASSAY FOR HUMAN HEMATOPOIETIC PALSSON, BO
PROGENITORS
34. SEMINAR: FLOW CYTOMETRIC ROGERS, CE; 3/29/93
ANALYSIS OF HUMAN MYELOID BRADLEY, S;
LINEAGE DEVELOPMENT IN KOLLER, MR;
HEMATOPOIETIC BIOREACTOR SYSTEMS PALSSON, BO
35. SEMINAR: OXYGEN TRANSPORT PENG, CA; 4/5/93
IN THE HEMOGEN BIOREACTORS PALSSON, BO
36. SEMINAR: TISSUE ENGINEERING BERNHARD O. 4/12/93
PALSSON
37. SEMINAR: DYNAMICS OF CELL PENG, CA; ROGERS, 6/7/93
GROWTH AND DIFFERENTIATION IN C; OH, DJ;
HEMOGENS BRADLEY, S;
PALSSON, BO
38. SEMINAR: METABOLIC STUDY IN DUK JAE OH 8/23/93
BONE MARROW CULTURE
39. MINUTES & NOTES, GENE BERNHARD O. 6/21/93 THRU
THERAPY PROJECT MEETINGS PALSSON ET AL 9/28/93
40. SBIR GRANT APPLICATION: A MANFRED R. KOLLER 8/14/92
CLONAL HEMATOPOIETIC PROGENITOR
CELL ASSAY
41. SBIR GRANT APPLICATON: HIGH R. DOUGLAS 8/14/92
TITER RETROVIRAL SUPERNATANTS ARMSTRONG
-7-
DESCRIPTION AUTHOR DATE
----------- ------ ----
PROPOSALS:
1. American Cancer Society - Development Bernhard O. Palsson 10/15/92
of a Clinical Hematopoietic Bioreactor
System to Improve Bone Marrow Transplan-
tation
2. National Science Foundation - Bernhard O. Palsson 1/27/93
Hematopoietic Bioengineering and
Biotechnology
3. NIH - Bernhard O. Palsson 1/28/93
Hematopoietic Tissue Engineering
4. NIH - Bernhard O. Palsson 5/27/93
Human Hematopoietic Differentiation
and Lineage Development Ex Vivo
PAPERS:
5. The Influence of Extra-Cellular Matrix Schwartz, R.M., Cytotechnology
and Stroma Remodeling on the Productivity Caldwell, J., Clarke, 10:217-224
of Long-Term Human Bone Marrow Cultures M.F., Emerson, S.G., (1993)
and Palsson, B.O.
6. Expansion of Human Bone Marrow Progenitor Palsson, B.O., et al Bio/Technology
Cells in a High Cell Density Continuous 11,368-372
Perfusion System (1993)
7. Large-Scale Expansion of Human Stem and Koller, M.R., Emerson, Blood
Progenitor Cells from Bone Marrow Mono- S.G., and Palsson, B.O. 82,378-384
nuclear Cells in Continuous Perfusion (1993)
Cultures
8. Retroviral Gene Transfer into Human Clarke, M.F., et al The Cancer Bulletin
Hematopoietic Cells Using Rapidly 45:2, 153-158
Perfused Long-Term Bone Marrow Cultures (1993)
9. Tissue Engineering: Reconstitution of Koller, M.R. and Biotechnology &
Human Hematopoiesis Ex Vivo Palsson, B.O. Bioengineering 42,
in press (1993)
7(a)
DESCRIPTION AUTHOR DATE
----------- ------ ----
10. Kinetics of Retroviral Production from Shen, B.O., Clarke, M.F., Biotechnology & Bioengineering
the Amphotropic VCRIP Murine Producer Palsson, B.O. Accepted with revisions
Cell Line
11. Microencapsulated Bone Marrow Cultures Levee, M.G., Lee, G-M., Biotechnology & Bioengineering
as a Potential Assay for Human Hemato- Paek, S-H., Submitted
poietic Progenitor Cells
12. Unilineage Model of Hematopoiesis Peng, C-A., Koller, M.R., Biotechnology & Bioengineering
Predicts Self-Renewal of Stem and and Palsson, B.O. Submitted
Progenitor Cells from Observed Ex Vivo
Growth Patterns
13. Extended Growth of Adult Mononuclear Oh, D.J., Koller, M.F. To be submitted
Human Bone Marrow Cells Through and Palsson, B.O.
Repeated Harvesting and Replating
REPORTS:
14. Development of the HemoGen 106 Bone B.O. Palsson and S-H Paek April 15, 1992
Marrow Expansion System
15. Research and Development Program for B.O. Palsson September 22, 1992
the HemoGen 106 Bioreactor System
(Unfinished document)
16. The HemoGen 107/108 Series: Progress R.M. Schwartz and B.O. October 27, 1992
Report Palsson
17. Progress Report on Residence Time C-A. Peng and B.O. Palsson December 17, 1992
Distribution
18. Partial Cell Harvesting and Replating D.J. Oh and B.O. Palsson December 17, 1992
Experiments
19. Oxygen Transport in the HemoGen C-A. Peng and B.O. Palsson April 5, 1993
Bioreactors
20. Growth Factor Delivery in the HemoGen B.O. Palsson and C-A. Peng May 21, 1993
Bioreactors:
21. Slides to accompany 16 above B.O. Palsson April 12, 1993
22. Dynamics of Cell Growth and B.O. Palsson June 7, 1993
Differentiation in HemoGens
BD
7/20/93
7(b)
Additionally, as specified in the Research Agreement, University hereby licenses
to Aastrom, pursuant to the terms of the License Agreement, all of the
inventions, technology and know-how which are either (i) described in the
Research Projects referenced in the Research Agreement, or (ii) conceived or
reduced to practice as part of said Research Projects, or (iii) conceived or
reduced to practice, whether or not pursuant to or as part of said Research
Projects, by Drs. Stephen G. Emerson, Michael F. Clarke or Bernhard O. Palsson,
or those working under their direction (including without limitation, research
scientists, technicians, and/or post-doctoral training fellows), during the term
of their participation in the Research Projects and Company's funding of the
Research Projects, provided that such inventions, technology and know-how are
related to the work described in said Research Projects. Further, the parties
hereby acknowledge that Drs. Emerson, Clarke and Palsson serve as consultants to
Company, as well as employees of University, and that inventions, know-how and
technology conceived, reduced to practice or developed by these scientists in
the course of their consulting work for Company shall be included in
subparagraph (iii) above, such that they shall be covered by this License
Agreement as Licensed Technology.
-8-
THIRD AMENDMENT TO
LICENSE AGREEMENT
This Third Amendment to License Agreement is entered into as of June 21, 1995,
by and between Aastrom Biosciences, Inc. (formerly Ann Arbor Stromal, Inc., a
Michigan corporation, hereinafter called "Aastrom"), and the Regents of the
University of Michigan, a constitutional corporation of the State of Michigan
(hereinafter called "University").
RECITATIONS
The following is a recital of facts underlying this Agreement.
A. In August, 1989, the parties hereto entered into a certain Research
Agreement (the "Research Agreement") pursuant to which Aastrom provided
funding to the University for the University to conduct a certain research
project. On March 2, 1992, the parties extended the term of the Research
Agreement until June 30, 1993. Pursuant to a further Extension Agreement
dated October 20, 1993, and Request Letter dated June 13, 1994, the term of
the Agreement was further extended to June 30, 1994, and December 31, 1994,
respectively, and the scope of the research projects and funding under the
Research Agreement extended accordingly. As used hereinafter, the term
"Research Agreement" shall include said Extension Agreements and Letter.
Pursuant to the Research Agreement, Aastrom is entitled to an exclusive
license to utilize any and all inventions, technology, and know-how (i)
resulting from the research projects funded by Aastrom at the University,
or (ii) related to the research projects (subject to certain
qualifications).
B. On March 13, 1992, the parties entered into a certain License Agreement
(the "License Agreement"), as contemplated by the Research Agreement; and
on March 13, 1992, the parties also entered into that certain First
Amendment to License Agreement (the "First Amendment to License Agreement")
for the purpose of modifying and clarifying certain terms in the original
License Agreement. On October 8, 1993, the parties entered into a Second
Amendment to License Agreement. As used hereinafter, the term "License
Agreement" shall include said First and Second Amendments and this Third
Amendment.
C. Subsequent to entering into the First and Second Amendments to License
Agreement, some additional patent rights, technology, know-how and other
intellectual property rights have been identified which are to be licensed
to Aastrom pursuant to the License Agreement. This Third Amendment is
being entered into for the purpose of identifying said additional rights.
NOW THEREFORE, in consideration of their mutual promises, the parties
hereto agree as follows:
1. LICENSED TECHNOLOGY. In addition to all other Licensed Technology (as
defined in the License Agreement) which is already identified as being
covered by the License Agreement, the Licensed Technology shall also
include the additional patent-related matters identified in Exhibit A
attached hereto, as well as the additional technology and know-how
identified in the documents described in Exhibits B (1) and B(2)
attached hereto, to the extent such technology and know-how are
described by Section E of the Extension Agreement.
2. EFFECT. Excepting only as otherwise expressly set forth above, all
other terms and provisions of the License Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Third Amendment as of the date set
forth above.
FOR: FOR:
THE REGENTS OF
AASTROM BIOSCIENCES, INC. THE UNIVERSITY OF MICHIGAN
BY: /s/ R. DOUGLAS ARMSTRONG BY: /s/ ROBERT L. ROBB
- ------------------------------ ---------------------------------
R. Douglas Armstrong, Ph.D.
President and CEO ITS: Director, Technology Management
Office
-2-
EXHIBIT A
Patent Matters
All of the following patent applications and patent matters, including all
related foreign patent rights and all patents issued and patent rights related
thereto:
A. U.S. APPLICATION NO. 08/100,337
Filed: 7/30/93; (Continuation to U.S. App. #07/628,343)
B. U.S. APPLICATION NO. 08/164,779
Filed: 12/10/93; (Continuation to U.S. App. #07/737,024)
Amendment filed: 8/1/94
C. AMENDMENT TO U.S. APP. #07/740,590
Filed: 8/9/94
D. U.S. APP. NO. 08/178,433
Filed: 1/6/94 (Continuation to U.S. App. #07/845,969)
E. U.S. APPLICATION, SER. #08/143,751
Methods and Compositions for the ex vivo Replication of Stem Cells, for the
Optimization of Hematopoietic Progenitor Cell Cultures, and for Increasing
the Metabolism, GM-CSF Secretion and/or IL-6 Secretion of Human Stromal
Cells
Filed: 11/1/93 as a divisional of 07/845,969 (ex vivo mitotic stem cells)
------
F. U.S. APPLICATION, SER. #08/187,509
Methods and Compositions for the ex vivo Replication of Stem Cells, for the
Optimization of Hematopoietic Progenitor Cell Cultures, and for Increasing
the Metabolism, GM-CSF Secretion and/or IL-6 Secretion of Human Stromal
Cells
Filed: 1/28/94 as a continuation of 8/100,337, 7/628,343, 7/366,639; to
------
declare interference with Gillis et al patents.
G. U.S. APPLICATION, SER. #08/307,862
Stabilized Virus for Gene Therapy
Filed: 9/15/94
------
H. U.S. APPLICATION, SER. #08/353,531
Methods, Compositions and Apparatus for Cell Transfection
Filed: 12/9/94
------
-3-
EXHIBIT B (1)
KNOW-HOW AND TECHNOLOGY ITEMS
ALL OF THE FOLLOWING AND ATTACHED GRANT PROPOSALS, PAPERS, ABSTRACTS AND OTHER
DOCUMENTS, TOGETHER WITH ALL INVENTIONS, KNOW-HOW AND/OR TECHNOLOGY DESCRIBED
THEREIN TO THE EXTENT DESCRIBED BY SECTION E OF THE EXTENSION AGREEMENT:
DESCRIPTION AUTHOR DATE
1. NIH GRANT APPLICATION: MICHAEL F. CLARKE 1/11/94
ANALYSIS OF HEMATOPOIETIC
CELL DIVISION BY RETROVIRUS
TAGGING*
2. PAPER: EIPERS,P; KRAUSS,J; REC'D. 8/1/94
RETROVIRAL-MEDIATED GENE PALSSON,B; EMERSON,S; TODD,R;
TRANSFER IN HUMAN BONE CLARKE, M.
MARROW CELLS GROWN IN
CONTINUOUS PERFUSION
CULTURE VESSEL*
3. PAPER: TISSUE BERNHARD PALSSON REC'D. 11/21/93
ENGINEERING: ENGINEERING
CHALLENGES
4. PAPER: GROWTH FACTOR BERNHARD PALSSON 1/20/94
CONSUMPTION AND PRODUCTION
IN AASTROM'S PERFUSION
BIOREACTOR SYSTEMS
5. MANUSCRIPT: KINETICS OF ANDREADIS, STYLIANOS; 7/8/94
RETROVIRAL INFECTION AND PALSSON, BERNHARD O.
THE INFLUENCE OF CELL
CYCLE: IMPLICATIONS FOR
GENE THERAPY
6. FOLDER: ALICE CURRY ALICE CURRY 5/31/94
NOTES (75 PAGES)
7. PROGRESS REPORTS ALICE M. CURRY NOV, 1993;
JAN. & FEB,
1994
8. ABSTRACT: LTC-IC KOLLER,M.R.; PALSSON, M.A.; ASH, 1994
EXPANSION REQUIRES RAPID MANCHEL,I; NEWSOM,B.S.;
MEDIUM EXCHANGE COMBINED PALSSON, BERNHARD O.
WITH THE PRESENCE OF
STROMAL AND OTHER ACCESSORY
CELLS
9. ABSTRACT: EXPANSION KOLLER,M.R.; MANCHEL, I; ASH, 1994
POTENTIAL OF CD34+ CELLS PALSSON, M.A.; BROTT,D.A.;
FROM PATIENTS IS LOWER AND SILVER,S.M.; PALSSON,B.O.
MORE STROMAL-DEPENDENT THAN
FROM NORMAL DONORS
*These materials especially may include some inventions, know-how and technology
not described by Section E of the Extension Agreement (and thus not included in
Licensed Technology); including inventions, know-how and technology developed by
or under the direction of Dr. Robert Todd related to leukocyte adhesion
deficiency disease.
-4-
10. SBIR GRANT APPLICATION: BERNHARD O. PALSSON 4/14/94
NOVEL APPROACHES TO (PHASE I)
ENHANCING RETROVIRAL
STABILITY
11. SBIR GRANT APPLICATION: BERNHARD O. PALSSON 4/14/94
HEMATOPOIETIC CELL (PHASE II)
EXPANSION SYSTEM
12. ATP GRANT APPLICATION: R. DOUGLAS ARMSTRONG 6/21/94
GENE TRANSFER SYSTEM FOR
ENABLEMENT OF HUMAN GENE
THERAPY
13. SEMINAR: CD18 CELL PETER EIPERS 10/25/93
EXPANSION*
14. THESIS: MEETING ALICE CHUCK 6/29/94
PRESENTATION
15. THESIS: MEETING ALICE CHUCK 9/28/93
PRESENTATION
16. PAPER: GROWTH FACTOR M.R.KOLLER, M.S. SUBMITTED TO EXP.
CONSUMPTION AND PRODUCTION BRADLEY, B.O.PALSSON HEMATOLOGY, 9/28/94
IN PERFUSION BIOREACTOR
CULTURES OF HUMAN BONE
MARROW CORRELATES WITH
SPECIFIC CELL PRODUCTION
17. ABSTRACT: M.R.KOLLER, B.NEWSOM, KEYSTONE CONFERENCE,
CHARACTERIZATION OF HUMAN C.E.ROGERS, G.VAN TAOS, NM, 2/94
STEM AND PROGENITOR CELL ZANT, S.G.EMERSON,
EXPANSION IN BIOREACTORS B.O.PALSSON
18. PAPER: GROWTH FACTOR M.R.KOLLER, B.O.PALSSON 6/13/94
CONSUMPTION AND PRODUCTION
IN PERFUSION BIOREACTOR
CULTURES OF HUMAN BONE
MARROW
19. INTERNAL REPORT: TIMOTHY M. EISFELD 8/29/94; REVISED
RETROVIRUS PRODUCTION AND 8/30/94
CONCENTRATION PROJECT:
EXPERIENCE WITH THE
OPTICELL SYSTEM; FILE NO.
4.3.1-001
20. INTERNAL REPORT: TIMOTHY M. EISFELD 8/22/94
SUMMARY REPORT ON VIRUS
STABILIZATION PROJECT:
JANUARY 1994 TO PRESENT;
FILE NO. 4.3.2-001
21. PAPER: BIOREACTOR KOLLER,M.R. SUBMITTED TO BLOOD,
EXPANSION OF HUMAN BONE 1994 (MANUSCRIPT NO.
MARROW: COMPARISON OF 1-94-5-192)
UNPROCESSED,
DENSITY-SEPARATED, AND
CD34-ENRICHED CELLS
*These materials especially may include some inventions, know-how and technology
not described by Section E of the Extension Agreement (and thus not included in
Licensed Technology); including inventions, know-how and technology developed by
or under the direction of Dr. Robert Todd related to leukocyte adhesion
deficiency disease.
-5-
22. PAPER: IL-1A REGULATES JERRY CALDWELL, BLOOD 84 (10),
EXPRESSION OF THE 75 KDA STEPHEN G. EMERSON SUPPLEMENT 1,
BUT NOT THE 55 KDA TNF 11/15/94
RECEPTOR BY CDCL STROMAL (NO. 1109)
CELLS: IMPLICATIONS FOR
IL-1/TNF SYNERGY.
*These materials especially may include some inventions, know-how and technology
not described by Section E of the Extension Agreement (and thus not included in
Licensed Technology); including inventions, know-how and technology developed by
or under the direction of Dr. Robert Todd related to leukocyte adhesion
deficiency disease.
-6-
EXHIBIT B(2)
DESCRIPTION AUTHOR DATE
- ----------- ------ ----
PEER-REVIEWED PAPERS:
2. Microencapsulated Human Bone Marrow Cultures: A M. Levee, G.M. Lee, S.H. Paek, Biotechnology & Bioengineering
Potential Culture System for the Clonal Outgrowth B.O. Palsson 43, 734-739 (1994)
of Hemalopoietic Progenitor Cells
3. Retroviral Infection is Limited by Brownian Motion A.S. Chuck, C.A. Peng, M.F. Clarke Submitted to Science Dec. 1993
B.O. Palsson
4. Frequent Harvesting from Perfused Bone Marrow D.J. Oh, M.R. Koller, B.O. Palsson Biotechnology & Bioengineering
Cultures Results in Increased Overall Cell and 44, 609-616 (1994)
Progenitor Expansion
5. Replating of Bioreactor-Expanded Human Bone Marrow D.J. Oh, B.O. Palsson, M.R. Koller Submitted to Experimental
Results in Extended Growth of Primitive and Mature Hematology
Cells May 1994
6. Bioreactor Expansion of Human Bone Marrow: M.R. Koller, I. Manchel et al Submitted to J. Hematotherapy
Comparison of Unprocessed, Density-Separated 9/6/94
and CD34-enriched Cells
7. Unilineage Model of Hematopoiesis Predicts Self- C.A. Peng, M.R. Koller, and Submitted to Biotechnology &
Renewal of Stem and Progenitor Cells from Observed B.O. Palsson Bioengineering 9/93
ex vivo Growth Patterns
-7-
EXHIBIT B(2)
DESCRIPTION AUTHOR DATE
- ----------- ------ ----
CHAPTERS IN BOOKS:
8. The Role of Physiological Perfusion in the J. Caldwell, B.O. Palsson, M.F. Clarke, Johns Hopkins University Press
Metabolism and Genetic Regulation of Cytokine and S.G. Emerson 1993 Baltimore
Production in Mesenchymal Stromal Cells
in The Hematopietic Microenvironment: Eds. M. W. Long and M.S. Wicha
The Functional and Structural Basis of Blood
Cell Development
ABSTRACTS:
9. Biomedical Expansion of Human Stem and Progenitor M.R. Koller, B. Newsom, G. Van NIH Workshop on Hematopoletic
Cells is More Efficient with Mononuclear Cells Zant, S.G. Emerson, B.O. Palsson Stem Cell Purification and
Than with CD34-Enriched Cells Biology, Rockville, MD.,
9/21/1993
10. Growth Factor Consumption and Production in ex B.O. Palsson, M.S. Bradley, and ASH Meeting, St. Louis, MO
vivo Perfusion Cultures of Human Bone Marrow M.R. Koller Dec. 1993
11. Extended Growth of Stem and Progenitor Cells from B.O. Palsson, D.J. Oh, and M.R. ASH Meeting, St. Louis, MO
Adult Human Bone Marrow in Sequential Bioreactor Koller Dec. 1993
Cultures
12. Bioreactor Expansion of Whole, Density-Separated, M.R. Koller, B. Newsom, G. Van ASH Meeting, St. Louis, MO
and CD34-Enriched Human Bone Marrow Zant, S.G. Emerson, B.O. Palsson Dec. 1993
13. Flow Cytometric Analysis of Bioreactor Expanded C.E. Rogers, M.S. Bradley, B.O. ASH Meeting, St. Louis, MO
Human Bone Marrow: Erythroid Development and Palsson, and M.R. Koller Dec. 1993
Correlation with Burst-Forming Unit-Erythroid
(BFU-E)
14. Clinical Scale Production of Stem and Hemato- R.D. Armstrong, M.R. Koller, L. ASH Meeting, St. Louis, MO
poietic Cells Ex Vivo Paul, J. Douville, J. Maluta, R. Fish, Dec. 1993
B.O. Palsson, G. Van Zant, S.G. Emerson
-8-
EXHIBIT B(2)
DESCRIPTION AUTHORS DATE
- ----------- ------- ----
15. Hematopoletic Bioreactor Engineering for B.O. Palsson Engineering Foundation Conference:
Transplantation Rapid Detection and Control Cell Culture Engineering IV, San Diego,
of Progenitor Cell Production CA, March 7-12, 1994
16. Growth Factor Consumption and Production in B.O. Palsson and M.R. Koller American Chemical Soc. Spring
Ex Vivo Perfusion Cultures of Human Bone National Meeting, San Diego, CA
Marrow March 7-12, 1994
Prepared by
Barbara Dunn
8/10/94
-9-
EXHIBIT 10.18
AASTROM BIOSCIENCES, INC.
EMPLOYEE PROPRIETARY INFORMATION AND INVENTION AGREEMENT
--------------------------------------------------------
In consideration of my employment or continued employment by AASTROM
BIOSCIENCES, INC. (the "Company"), and the compensation now and hereafter paid
to me, I hereby agree as follows:
1. Recognition of Company's Rights; Nondisclosure. At all times during
----------------------------------------------
the term of my employment and thereafter, I will hold in strictest confidence
and will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns, and the Company and its assigns shall
be the sole owner of all patent rights, copyrights, mask work rights, trade
secret rights and all other rights throughout the world (collectively,
"Proprietary Rights") in connection therewith.
The term "Proprietary Information" shall mean trade secrets, confidential
knowledge, data or any other proprietary information of the Company. By way of
illustration but not limitation, "Proprietary Information" includes (a)
inventions, mask works, trade secrets, ideas, processes, formulas, source and
object codes, data, programs, other works of authorship, cell lines, know-how,
improvements, discoveries, developments, designs and techniques (hereafter
collectively referred to as "Inventions"); and (b) plans for research,
development, new products, marketing and selling; information regarding business
plans, budgets, and unpublished financial statements; licenses; prices and
costs; information regarding suppliers and customers; and information regarding
the skills and compensation of employees of the Company.
2. Third Party Information. I understand, in addition, that the Company
-----------------------
has received and in the future will receive from third parties confidential or
prorietary information ("Third Party Information") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose or use Third Party Information except as permitted by the
agreement between the Company and such third party, unless expressly authorized
by an officer of the Company in writing.
3. Assignment of Inventions.
------------------------
a. I hereby assign to the Company all my right, title and interest
in and to any and all Inventions (and all Proprietary Rights with respect
thereto) whether or not patentable
or registrable under copyright or similar statutes, made or conceived or reduced
to practice or learned by me, either alone or jointly with others, during the
period of and within the scope of my employment with the Company. I agree that
all such Inventions are the sole property of the Company.
b. I hereby also assign to or as directed by the Company all my
right, title and interest in and to any and all Inventions, full title to which
is required to be in the United States by a contract between the Company and the
United States or any of its agencies.
c. I acknowledge that all original works of authorship which are
made by me (solely or jointly with others) within the scope of my employment and
which are protectable by copyright are "works made for hire," as that term is
defined in the United States Copyright Act (17 U.S.C., Section 101). Inventions
assigned to or as directed by the Company by this paragraph 3 are hereinafter
referred to as "Company Inventions."
4. Enforcement of Proprietary Rights. I will assist the Company in every
---------------------------------
proper way to obtain and from time to time enforce United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end I will execute, verify and deliver such documents and perform such
other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining
and enforcing such Proprietary Rights and the assignment thereof. In addition, I
will execute, verify and delivery assignments of such Proprietary Rights to the
Company or its designee. My obligation to assist the Company with respect to
Proprietary Rights relating to such Company Inventions in any and all countries
shall continue beyond the termination of my employment for a period of one year,
but the Company shall compensate me at a reasonable rate after my termination
for the time actually spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable effort,
to secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and attorney
in fact, to act for and in my behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes of
the preceding paragraph thereon with the same legal force and effect as if
executed by me. I hereby waive and quit claim to the Company any and all claims,
of any nature whatsoever, which I now or may hereafter have for infringement of
any Proprietary Rights assigned hereunder to the Company.
-2-
5. Obligation to Keep Company Informed. During the period of my
-----------------------------------
employment, I will promptly disclose to the Company fully and in writing and
will hold in trust for the sole right and benefit of the Company any and all
Inventions relating to the Company's business. In addition, after termination of
my employment, I will disclose a summary of all patent applications filed by me
within one year after termination of employment.
6. Prior Inventions. Inventions, if any, patented or unpatented, which I
----------------
made prior to the commencement of my employment with the Company are excluded
from the scope of this Agreement. To preclude any possible uncertainty, I have
set forth on Exhibit A attached hereto a complete and exhaustive list of all
inventions that I have, alone or jointly with others, conceived, developed or
reduced to practice or caused to be conceived, developed or reduced to practice
prior to the commencement of my employment with the Company, that I consider to
be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement. If disclosure of any such invention on Exhibit
A would cause me to violate any prior confidentiality agreement, I understand
that I am not to list such inventions in Exhibit A, but am to inform the Company
that all such inventions have not been listed for that reason.
7. Additional Activities. I agree that during the period of my
---------------------
full-time employment by the Company I will not, without the Company's express
written consent, engage in any employment or business activity other than for
the Company, and for the period of my employment by the Company and for one (1)
year after the date of termination of my employment by the Company, I will not
(i) induce any employee of the Company to leave the employ of the Company or
(ii) solicit the business of any client or customer on behalf of a competitor of
the Company (other than on behalf of the Company).
8. No Improper Use of Materials. During my employment by the Company I
----------------------------
will not improperly use or disclose any confidential information or trade
secrets, if any, of any former employers or any other person to whom I have an
obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless consented to in writing by that former employer or person.
9. No Conflicting Obligation. I represent that my performance of all the
-------------------------
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.
-3-
10. Return of Company Documents. When I leave the employ of the Company,
---------------------------
I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, molecules, cells and documents, together with
all copies thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company.
11. Legal and Equitable Remedies. Because my services are personal and
----------------------------
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond, without prejudice to any
other rights and remedies that the Company may have for a breach of this
Agreement.
12. Notices. Any notices required or permitted hereunder shall be given
-------
to the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given upon
personal delivery to the appropriate address or if sent by certified or
registered mail, three days after the date of mailing.
13. General Provisions.
------------------
13.1 Governing Law. This Agreement will be governed by and construed
-------------
according to the laws of the State of Michigan.
13.2 Entire Agreement. This Agreement is the final, complete and exclusive
----------------
agreement of the parties with respect to the subject matter hereof and
supersedes and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement. As used in this Agreement, the
period of my employment includes any time during which I may be retained by the
Company as a consultant.
13.3 Severability. If one or more of the provisions in this Agreement are
------------
deemed unenforceable by law, then the remaining provisions will continue in full
force and effect.
13.4 Successors and Assigns. This Agreement will be binding upon my heirs,
----------------------
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.
-4-
13.5 Survival. The provisions of this Agreement shall survive the
--------
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.
13.6 Employment. I agree and understand that nothing in this
----------
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause.
13.7 Waiver. No waiver by the Company of any breach of this Agreement
------
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall not be required to give notice
to enforce strict adherence to all terms of this Agreement.
This Agreement shall be effective as of the first day of my
employment with the Company, namely: June 1, 1991.
------ --
I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I
MAKE DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE
COMPANY'S CONFIDENTIAL INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.
Dated: 3/30 , 1992
---------- --
________________________________________
Signature
/s/ R. Douglas Armstrong
----------------------------------------
R. Douglas Armstrong, Ph.D.
845 Arlington Blvd.,
----------------------------------------
Address
Ann Arbor, MI 48104
----------------------------------------
ACCEPTED AND AGREED TO:
AASTROM BIOSCIENCES, INC.
By /s/ Robert Kunze
-----------------------------------
Robert Kunze, Chairman
-5-
Schedule I
AASTROM BIOSCIENCES, INC.
University of Michigan
3074 H. H. Dow Building
Ann Arbor, Michigan 48109-2136
Gentlemen:
1. The following is a complete list of all inventions or improvements
relevant to the subject matter of my employment by, and/or services as a
director or an officer to, AASTROM BIOSCIENCES, INC., (the "Company") that have
been made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company:
No inventions or improvements
-----
X See below:
-----
1. U.S. Patent App. #07/685,123 filed 4/12/91:
--------------------------------------------------------------------
"Queuine tRNA Expression as a Diagnostic and Prognostic Marker
--------------------------------------------------------------------
in Differentiation-Related Diseases"
--------------------------------------------------------------------
2. U.S. Patent App. #07/681,889 filed 4/8/91:
--------------------------------------------------------------------
"A Novel 23K Protein with Binding Specificity for Queuine"
Due to confidentiality agreements with prior employer, I cannot
----- disclose certain inventions that would otherwise be included on
the above-described list.
X Additional sheets attached
-----
2. I propose to bring to my employment/service as a director or officer
the following device(s), material(s), and document(s) of a former employer or
other person to whom I have an obligation of confidentiality that are not
generally available to the public, which device(s), material(s) and document(s)
may be used in my employment pursuant to the express written authorization of my
former employer or such other person (a copy of which is attached hereto):
_____ No devices, materials or documents
_____ See below:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
_____ Additional sheets attached
Date: July 23 , 1991
------------------
Very truly yours,
/s/ R. Douglas Armstrong
---------------------------
R. Douglas Armstrong, Ph.D.
I-2
PATENT
Our Docket: P31 8461
IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
In re application of: )
R. DOUGLAS ARMSTRONG )
)
Filed: Herewith )
)
For: QUEUINE-tRNA EXPRESSION )
AS A DIAGNOSTIC AND )
PROGNOSTIC MARKER OF ) 444 South Flower Street
DIFFERENTIATION-RELATED ) Suite 2000
DISEASES ) Los Angeles, California 90071
Hon. Commissioner of Patents
and Trademarks
Washington, D.C. 20231
TRANSMITTAL OF ASSIGNMENT
-------------------------
Dear Sir:
Enclosed is an executed Assignment for the above-identified United States
Patent Application.
A check in the amount of $323.00 is enclosed, $8.00 of which covers the
recordation of the Assignment.
The Commissioner is hereby authorized to charge any additional fees which
may be required, or credit any overpayment to Deposit Account No. 16-2460. A
duplicate copy of this sheet is enclosed.
Respectfully submitted,
/s/ Theresa A. Brown
--------------------------------------
Theresa A. Brown
Reg. No. 32,547
Telephone: (619) 535-9001
Facsimile: (619) 535-8949
PRETTY SCHROEDER,
BRUEGGEMANN & CLARK
444 South Flower Street
Suite 2000
Los Angeles, California 90071
ASSIGNMENT
----------
This Assignment is made by R. Douglas Armstrong of 311 Cole Ranch Road,
Encinitas, California, Assignor, to THE LA JOLLA CANCER RESEARCH FOUNDATION,
Assignee, having a place of business at 10901 N. Torrey Pines Road, La Jolla,
California 92037.
WHEREAS, Assignor has invented a new and useful QUEUINE-tRNA EXPRESSION AS
A DIAGNOSTIC AND PROGNOSTIC MARKER OF DIFFERENTIATION-RELATED DISEASES, for
which an application for United States Letters Patent is filed herewith in the
United States Patent and Trademark Office;
WHEREAS, Assignor believes himself to be the original inventor of the
invention disclosed and claimed in said application for Letters Patent; and
WHEREAS, the parties desire to have a recordable instrument assigning the
entire right, title and interest in and to said invention, said application and
any Letters Patent that may be granted for said invention in the United States
and throughout the world;
NOW, THEREFORE, in accordance with the obligations to assign the invention
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor sells, assigns, and transfers to Assignee, the
entire right, title, and interest in and to said invention, said application and
any Letters Patent that may be granted for said invention in the United States
and throughout the world, including the right to file foreign applications
directly in the name of the Assignee and to claim for any such foreign
applications any priority rights to which such applications are entitled under
international conventions, treaties, or otherwise.
2
Assignor agrees that, upon request and without further compensation, but at
no expense to Assignor, he and his legal representatives and assigns will do all
lawful acts, including the execution of papers and the giving of testimony, that
may be necessary or desirable for obtaining, sustaining, reissuing, or enforcing
Letters Patent in the United States and throughout the world for said invention,
and for perfecting, recording, or maintaining the title of Assignee, its
successors and assigns, to said invention, said application, and any Letters
Patent granted for said invention in the United States and throughout the world.
Assignor represents and warrants that he has not granted and will not grant
to others any rights inconsistent with the rights granted herein.
Assignor authorizes and requests the Commissioner of Patents and Trademarks
of the United States and of all foreign countries to issue any Letters Patent
granted for said invention, whether on said application or on any subsequently
filed division, continuation, continuation-in-part or reissue application, to
Assignee, its successors and assigns, as the assignee of the entire interest in
said invention.
3
IN WITNESS WHEREOF, Assignor has executed this Assignment on the date first
above written.
Assignor: R. DOUGLAS ARMSTRONG
/s/ R. DOUGLAS ARMSTRONG
------------------------------------------
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
On this 12th day of April, in the year 1991, before me personally appeared
personally known to me or proved to me on the basis
- --------------------------
of satisfactory evidence to be the person whose name is subscribed to this
instrument, and acknowledged to me that he executed it.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Crystal K. Herndon
-----------------------------------------
Notary Public in and/for
said County and State
______________________________
| OFFICIAL SEAL |
| CRYSTAL K. HERNDON |
| NOTARY PUBLIC CALIFORNIA |
| SAN DIEGO COUNTY |
| MY COMM. EXPIRES MAR. 7, 1996|
|______________________________|
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of June 19,
1992, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Employer") and JAMES MALUTA ("Employee").
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon the terms and conditions set forth herein.
2. DUTIES Employee is engaged as Vice President, Product Development.
Employee shall perform faithfully and diligently the duties customarily
performed by persons in the position for which employee is engaged, together
with such other reasonable and appropriate duties as Employer shall designate
from time to time. Employee shall devote Employee's full business time and
efforts to the rendition of such services and to the performance of such duties.
As a full-time employee of Employer, Employee shall not be entitled to provide
consulting services or other business or scientific services to any other party,
without the prior written consent of Employer.
3. COMPENSATION
3.1 BASE SALARY During the term of this Agreement, as compensation for
the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee a salary of $90,000 per year,
payable in arrears in equal bi-weekly installments, less required deductions for
state and federal withholding tax, Social Security and all other employee taxes
and payroll deductions. The base salary shall be subject to review and
adjustment on an annual basis.
3.2 BONUS COMPENSATION Employee may receive bonus in the form of a
stock option, stock, or cash, the amount and timing of which shall be determined
in the sole discretion of the Board of Directors of Employer.
4. TERM
4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence no later than August 1, 1992.
4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer
exercises this right of termination at will, Employer shall first either (i)
discuss with Employee the needs of Employer and why Employee no longer meets
those needs, or (ii) discuss with Employee any concerns or dissatisfactions
which Employer has with Employee's performance, and give to Employee a
reasonable opportunity to remedy those concerns or dissatisfactions, to the
reasonable satisfaction of Employer.
4.3 TERMINATION FOR CAUSE Either party may terminate this employment
relationship immediately upon notice to the other party in the event of any good
cause, such as a default, dishonesty, neglect of duties, failure to perform by
the other party, or death or disability of Employee.
4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. FRINGE BENEFITS
5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation and sick leave, or other Fringe Benefits in excess of an unused amount
equal to twice the amount earned for one year. Further, Employee shall not be
entitled to receive payments in lieu of said Fringe Benefits, other than for
unused vacation leave earned and accumulated at the time the employment
relationship terminates.
6. INVENTION, TRADE SECRETS AND CONFIDENTIALITY
6.1 DEFINITIONS
6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, devices, designs, programs (including computer programs), computer
graphics, apparatus, products, as well as improvements thereof or know-how
related thereto, relating to any present or anticipated business or activities
of Employer.
6.1.2 Trade Secret Defined. As used herein "Trade Secret" means,
without limitation, any document or information relating to Employer's products,
processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee's employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.
6.2 INVENTIONS
6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise.
6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee's employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."
6.2.3 Exclusion Notice. The Assignment by Employee of Inventions
under this Agreement does not apply to any Inventions which are owned or
controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer's equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee's own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer's actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in Fact. Both before and
after termination of this Agreement (and with reasonable compensation paid by
Employer to Employee after termination), Employee agrees to assist the Employer
to apply for, obtain and enforce patents on, and to apply for, obtain and
enforce copyright protection and registration of, the Inventions described in
Section 6.2.2 in any and all countries. To that end, Employee shall (at
Employer's request) without limitation, testify in any proceeding, and execute
any documents and assignments determined to be necessary or convenient for use
in applying for, obtaining, registering and enforcing patent or copyright
protection involving any of the Inventions. Employee hereby irrevocably appoints
Employer, and its duly authorized officers and agents, as Employee's agent and
attorney-in-fact, to act for and in behalf of Employee in filing all patent
applications, applications for copyright protection and registration,
amendments, renewals, and all other appropriate documents in any way related to
the Inventions described in Section 6.2.2.
6.3 TRADE SECRETS
6.3.1 Acknowledgment of Proprietary Interest. Employee recognizes
the proprietary interest of Employer in any Trade Secrets of Employer. Employee
acknowledges and agrees that any and all Trade Secrets of Employer, whether
developed by Employee alone or in conjunction with others or otherwise, shall be
and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee
acknowledges and agrees that Employer is entitled to prevent the disclosure of
Trade Secrets of Employer. As a portion of the consideration for the employment
of Employee and for the compensation being paid to Employee by Employer,
Employee agrees at all times during the term of the employment by Employer and
thereafter to hold in strictest confidence, and not to use, disclose or allow to
be disclosed to any person, firm, or corporation, Trade Secrets of Employer,
including Trade Secrets developed by Employee, other than disclosures to persons
engaged by Employer to further the business of Employer, and other than use in
the pursuit of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents
and warrants that if Employee has any confidential information belonging to
others, Employee will not use or disclose to Employer any such information or
documents. Employee represents that his employment with Employer will not
require him to violate any obligation to or confidence with any other party.
6.4 NO ADVERSE USE Employee will not at any time use Employer's Trade
Secrets or Inventions in any manner which may directly or indirectly have an
adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.
6.5 RETURN OF MATERIALS AT TERMINATION In the event of any
termination of Employee's employment, Employee will promptly deliver to Employer
all materials, property, documents, data, and other information belonging to
Employer or pertaining to Trade Secrets or Inventions. Employee shall not take
any materials, property, documents or other information, or any reproduction or
excerpt thereof, belonging to Employer or containing or pertaining to any Trade
Secrets or Inventions.
6.6 REMEDIES UPON BREACH In the event of any breach by Employee of
the provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin Employee from violating any of the terms
of this Section 6, to enforce the specific performance by Employee of any of the
terms of this Section 6, and to obtain damages for any of them, but nothing
herein contained shall be construed to prevent such remedy or combination of
remedies as Employer may elect to invoke. The failure of Employer to promptly
institute legal action upon any breach of this Section 6 shall not constitute a
waiver of that or any other breach hereof.
7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder, lender or agent of any other entity which is engaged in
any business of the same nature as, or in competition with, the business in
which Employer is now engaged, or in which Employer becomes engaged during the
term of Employee's employment, or which is involved in science or technology
which is similar to Employer's science or technology.
8. GENERAL PROVISIONS
8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.
8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.
8.3 ENTIRE AGREEMENT This Agreement constitutes the entire
agreement between the parties with respect to the employment of Employee. This
Agreement supersedes all prior agreements, understandings, negotiations and
representation with respect to the employment relationship.
8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of Employer. Employee shall not be
entitled to assign any of Employee's rights or obligations under this Agreement.
8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.
10. SUPPLEMENTAL MATTERS Pursuant to a separate letter agreement,
Employee shall be entitled to reimbursement for certain relocation costs.
Subject to ultimate decision by Employer's Board of Directors, Employee may
receive a stock option agreement for 125,000 (one hundred twenty five thousand)
shares of Employer's common stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
EMPLOYER:
Aastrom Biosciences, Inc.
By: /s/ R. DOUGLAS ARMSTRONG
---------------------------
R. Douglas Armstrong, Ph.D.
President/CEO
EMPLOYEE:
/s/ James Maluta
- ----------------
James Maluta
Address: 29253 Thimbleberry Lane
Evergreen, CO 80439
Exhibit A
List of Prior Inventions
(Section 6.2.3)
None, other than the following:
None
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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of December 8,
1995, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Employer") and TODD E. SIMPSON, C.P.A. ("Employee").
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon terms and conditions set forth herein.
2. DUTIES Employee is engaged as a Vice President Finance &
Administration and Chief Financial Officer. Employee shall perform faithfully
adn diligently the duties customarily performed by persons in the position for
which employee is engaged, together with such other reasonable and appropriate
duties as Employer shall designate from time to time. Employee shall devote
Employee's full business time and efforts to the rendition of such services or
other business or scientific services to any other party, without the prior
written consent of Employer.
3. COMPENSATION
3.1 BASE SALARY During the term of this Agreement, as compensation
for the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of One
Hundred Twenty-Two Thousand Five Hundred Dollars ($122,500), payable in arrears
in equal bi-weekly installments, less required deductions for state and federal
withholding tax, Social Security and all other employee taxes and payroll
deductions. The base salary shall be subject to review and adjustment on an
annual basis.
4. TERM
4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence on or before January 2, 1996.
4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this
right of termination at will, Employer shall first either (i) discuss with
Employee the needs of Employer and why Employee no longer meets those needs, or
(ii) discuss with Employee any concerns or dissatisfactions which
Employer has with Employee's performance, and give to Employee a reasonable
opportunity to remedy those concerns or dissatisfactions, to the reasonable
satisfaction of Employer.
4.3 TERMINATION FOR CAUSE Either party may terminate this
employment relationship immediately upon notice to the other party in the event
of any good cause, such as a default, dishonesty, neglect of duties, failure to
perform by the other party, or death or disability of Employee.
4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. FRINGE BENEFITS
5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate
sick leave or other Fringe Benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, Employee shall not be entitled to
receive payments in lieu of said Fringe Benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.
6. INVENTION, TRADE SECRETS AND CONFIDENTIALITY
6.1 DEFINITIONS
6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or know-
how related thereto, relating to any present or anticipated business or
activities of Employer.
6.1.2 Trade Secret Defined. As used herein "Trade Secret" means,
without limitation, any document or information relating to Employer's products,
processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee's employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.
6.2 INVENTIONS
6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise.
6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee's employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."
6.2.3 Exclusion Notice. The Assignment by Employee of Inventions
under this Agreement does not apply to any Inventions which are owned or
controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer's equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee's own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer's actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in Fact. Both before and
after termination of this Agreement (and with reasonable
compensation paid by Employer to Employee after termination), Employee agrees to
assist the Employer to apply for, obtain and enforce patents on, and to apply
for, obtain and enforce copyright protection and registration of, the Inventions
described in Section 6.2.2 in any and all countries. To that end, Employee shall
(at Employer's request) without limitation, testify in any proceeding, and
execute any documents and assignments determined to be necessary or convenient
for use in applying for, obtaining, registering and enforcing patent or
copyright protection involving any of the Inventions. Employee hereby
irrevocably appoints Employer, and its duly authorized officers and agents, as
Employee's agent and attorney-in-fact, to act for and in behalf of Employee in
filing all patent applications, applications for copyright protection and
registration, amendments, renewals, and all other appropriate documents in any
way related to the Inventions described in Section 6.2.2.
6.3 TRADE SECRETS
6.3.1 Acknowledgment of Proprietary Interest. Employee recognizes
the proprietary interest of Employer in any Trade Secrets of Employer. Employee
acknowledges and agrees that any and all Trade Secrets of Employer, whether
developed by Employee alone or in conjunction with others or otherwise, shall be
and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee
acknowledges and agrees that Employer is entitled to prevent the disclosure of
Trade Secrets of Employer. As a portion of the consideration for the employment
of Employee and for the compensation being paid to Employee by Employer,
Employee agrees at all times during the term of the employment by Employer and
thereafter to hold in strictest confidence, and not to use, disclose or allow to
be disclosed to any person, firm, or corporation, Trade Secrets of Employer,
including Trade Secrets developed by Employee, other than disclosures to persons
engaged by Employer to further the business of Employer, and other than use in
the pursuit of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents
and warrants that if Employee has any confidential information belonging to
others, Employee will not use or disclose to Employer any such information or
documents. Employee represents that his employment with Employer will not
require him to violate any obligation to or confidence with any other party.
6.4 NO ADVERSE USE Employee will not at any time use Employer's Trade
Secrets or Inventions in any manner which may directly or indirectly have an
adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.
6.5 RETURN OF MATERIALS AT TERMINATION In the event of any
termination of Employee's employment, Employee will promptly deliver to Employer
all materials, property, documents, data, and other information
belonging to Employer or pertaining to Trade Secrets or Inventions. Employee
shall not take any materials, property, documents or other information, or any
reproduction or excerpt thereof, belonging to Employer or containing or
pertaining to any Trade Secrets or Inventions.
6.6 REMEDIES UPON BREACH In the event of any breach by Employee of
the provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin Employee from violating any of the terms
of this Section 6, to enforce the specific performance by Employee of any of the
terms of this Section 6, and to obtain damages for any of them, but nothing
herein contained shall be construed to prevent such remedy or combination of
remedies as Employer may elect to invoke. The failure of Employer to promptly
institute legal action upon any breach of this Section 6 shall not constitute a
waiver of that or any other breach hereof.
7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder of more than 2 1/2 percent, lender or agent of any other
entity which is engaged in any business of the same nature as, or in competition
with, the business in which Employer is now engaged, or in which Employer
becomes engaged during the term of Employee's employment, or which is involved
in science or technology which is similar to Employer's science or technology.
8. GENERAL PROVISIONS
8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.
8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.
8.3 ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties with respect to the employment of Employee. This Agreement
supersedes all prior agreements, understandings, negotiations and representation
with respect to the employment relationship.
8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Employer. Employee shall not be entitled to assign any
of Employee's rights or obligations under this Agreement.
8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
EMPLOYER:
Aastrom Biosciences, Inc.
By: /s/ R. DOUGLAS ARMSTRONG
-------------------------------------
R. Douglas Armstrong, Ph.D.
President and Chief Executive Officer
EMPLOYEE:
/s/ TODD E. SIMPSON
- -----------------------
Todd E. Simpson, C.P.A.
Address: 12623 Salmon River Road
San Diego, CA 92125
Exhibit A
List of Prior Inventions
(Section 6.2.3)
None, other than the following:
As noted in the preceding.
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EXHIBIT 10.21
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of February 10,
1994, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Employer") and WALTER C. OGIER ("Employee").
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon the terms and conditions set forth herein.
2. DUTIES Employee is engaged as Director of Marketing. Employee shall
perform faithfully and diligently the duties customarily performed by persons
in the position for which employee is engaged, together with such other
reasonable and appropriate duties as Employer shall designate for time to time.
Employee shall devote Employee's full business time and efforts to the rendition
of such services and to the performance of such duties. As a full-time employee
of Employer, Employee shall not be entitled to provide consulting services or
other business or scientific services to any other party, without the prior
written consent of Employer.
3. COMPENSATION
3.1 BASE SALARY During the term of this Agreement, as compensation for
the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of
Eighty-Seven Thousand Five Hundred Dollars ($87,500), payable in arrears in
equal bi-weekly installments, less required deductions for state and federal
withholding tax, Social Security and all other employee taxes and payroll
deductions. The base salary shall be subject to review and adjustment on an
annual basis.
4. TERM
4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence on or before March 21, 1994.
4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this right
of termination at will, Employer shall first either (i) discuss with Employee
the needs of Employer and why Employee no longer meets those needs, or (ii)
discuss with Employee any concerns or dissatisfactions which
Employer has with Employee's performance, and give to Employee a reasonable
opportunity to remedy those concerns or dissatisfactions, to the reasonable
satisfaction of Employer.
4.3 TERMINATION FOR CAUSE Either party may terminate this
employment relationship immediately upon notice to the other party in the event
of any good cause, such as a default, dishonesty, neglect of duties, failure to
perform by the other party, or death or disability of Employee.
4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. FRINGE BENEFITS
5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate
sick leave or other Fringe Benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, Employee shall not be entitled to
receive payments in lieu of said Fringe Benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.
6. INVENTION, TRADE SECRETS AND CONFIDENTIALITY
6.1 DEFINITIONS
6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or know-
how related thereto, relating to any present or anticipated business or
activities of Employer.
6.1.2 Trade Secret Defined. As used herein "Trade Secret" means,
without limitation, any document or information relating to Employer's products,
processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee's employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.
6.2 INVENTIONS
6.2.1 Disclosure. Employee shall disclose promptly to Employer each
Invention, whether or not reduced to practice, which is conceived or learned by
Employee (either alone or jointly with others) during the term of his employment
with Employer. Employee shall disclose in confidence to Employer all patent
applications filed by or on behalf of Employee during the term of his employment
and for a period of three (3) years thereafter. Any disclosure of an Invention,
or any patent application, made within one (1) year after termination of
employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise.
6.2.2 Employer Property; Assignment. Employee acknowledges and agrees
that all Inventions which are discovered, conceived, developed, made, produced
or prepared by Employee (alone or in conjunction with others) during the
duration of Employee's employment with Employer shall be the sole property of
Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."
6.2.3 Exclusion Notice. The Assignment by Employee of Inventions
under this Agreement does not apply to any Inventions which are owned or
controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer's equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee's own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer's actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in Fact. Both before and
after termination of this Agreement (and with reasonable compensation paid
by Employer to Employee after termination), Employee agrees to assist the
Employer to apply for, obtain and enforce patents on, and to apply for, obtain
and enforce copyright protection and registration of, the Inventions described
in Section 6.2.2 in any and all countries. To that end, Employee shall (at
Employer's request) without limitation, testify in any proceeding, and execute
any documents and assignments determined to be necessary or convenient for use
in applying for, obtaining, registering and enforcing patent or copyright
protection involving any of the Inventions. Employee hereby irrevocably appoints
Employer, and its duly authorized officers and agents, as Employee's agent and
attorney-in-fact, to act for and in behalf of Employee in filing all patent
applications, applications for copyright protection and registration,
amendments, renewals, and all other appropriate documents in any way related to
the Inventions described in Section 6.2.2.
6.3 TRADE SECRETS
6.3.1 Acknowledgment of Proprietary Interest. Employee recognizes
the proprietary interest of Employer in any Trade Secrets of Employer. Employee
acknowledges and agrees that any and all Trade Secrets of Employer, whether
developed by Employee alone or in conjunction with others or otherwise, shall be
and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee acknowledges
and agrees that Employer is entitled to prevent the disclosure of Trade Secrets
of Employer. As a portion of the consideration for the employment of Employee
and for the compensation being paid to Employee by Employer, Employee agrees at
all times during the term of the employment by Employer and thereafter to hold
in strictest confidence, and not to use, disclose or allow to be disclosed to
any person, firm, or corporation, Trade Secrets of Employer, including Trade
Secrets developed by Employee, other than disclosures to persons engaged by
Employer to further the business of Employer, and other than use in the pursuit
of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents and
warrants that if Employee has any confidential information belonging to others,
Employee will not use or disclose to Employer any such information or documents.
Employee represents that his employment with Employer will not require him to
violate any obligation to or confidence with any other party.
6.4 NO ADVERSE USE Employee will not at any time use Employer's Trade
Secrets or Inventions in any manner which may directly or indirectly have an
adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.
6.5 RETURN OF MATERIALS AT TERMINATION In the event of any termination
of Employee's employment, Employee will promptly deliver to Employer all
materials, property, documents, data, and other information
belonging to Employer or pertaining to Trade Secrets or Inventions. Employee
shall not take any materials, property, documents or other information, or any
reproduction or excerpt thereof, belonging to Employer or containing or
pertaining to any Trade Secrets or Inventions.
6.6 REMEDIES UPON BREACH In the event of any breach by Employee of the
provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin Employee from violating any of the terms
of this Section 6, to enforce the specific performance by Employee of any of
the terms of this Section 6, and to obtain damages for any of them, but nothing
herein contained shall be construed to prevent such remedy or combination of
remedies as Employer may elect to invoke. The failure of Employer to promptly
institute legal action upon any breach of this Section 6 shall not constitute a
waiver of that or any other breach hereof.
7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder, lender or agent of any other entity which is engaged in
any business of the same nature as, or in competition with, the business in
which Employer is now engaged, or in which Employer becomes engaged during the
term of Employee's employment, or which is involved in science or technology
which is similar to Employer's science or technology.
8. GENERAL PROVISIONS
8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.
8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.
8.3 ENTIRE AGREEMENT This Agreement constitutes the entire
agreement between the parties with respect to the employment of Employee. This
Agreement supersedes all prior agreements, understandings, negotiations and
representation with respect to the employment relationship.
8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Employer. Employee shall not be entitled to assign any
of Employee's rights or obligations under this Agreement.
8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
EMPLOYER:
AASTROM BIOSCIENCES, INC.
By: /s/ R. DOUGLAS ARMSTRONG
---------------------------
R. Douglas Armstrong, Ph.D.
President and CEO
EMPLOYEE:
/s/ WALTER OGIER
- --------------------------------
Walter Ogier
Address: 26101 Tono
Mission Viejo, CA 92692
Exhibit A
List of Prior Inventions
(Section 6.2.3)
None, other than the following:
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None.
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EXHIBIT 10.22
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of April 19,
1994, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Employer") and THOMAS E. MULLER, PH.D. ("Employee").
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon the terms and conditions set forth herein.
2. DUTIES Employee is engaged as Vice President Regulatory Affairs.
Employee shall perform faithfully and diligently the duties customarily
performed by persons in the position for which employee is engaged, together
with such other reasonable and appropriate duties as Employer shall designate
from time to time. Employee shall devote Employee's full business time and
efforts to the rendition of such services and to the performance of such duties.
As a full-time employee of Employer, Employee shall not be entitled to provide
consulting services or other business or scientific services to any other party,
without the prior written consent of Employer.
3. COMPENSATION
3.1 BASE SALARY During the term of this Agreement, as compensation
for the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of One
Hundred Ten Thousand Dollars ($110,000), payable in arrears in equal bi-weekly
installments, less required deductions for state and federal withholding tax,
Social Security and all other employee taxes and payroll deductions. The base
salary shall be subject to review and adjustment on an annual basis.
4. TERM
4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence no later than May 9, 1994.
4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this right
of termination at will, Employer shall first either (i) discuss with Employee
the needs of Employer and why Employee no longer meets those needs, or (ii)
discuss with Employee any concerns or dissatisfactions which
Employer has with Employee's performance, and give to Employee a reasonable
opportunity to remedy those concerns or dissatisfactions, to the reasonable
satisfaction of Employer.
4.3 TERMINATION FOR CAUSE Either party may terminate this employment
relationship immediately upon notice to the other party in the event of any good
cause, such as a default, dishonesty, neglect of duties, failure to perform by
the other party, or death or disability of Employee.
4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. FRINGE BENEFITS
5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation in excess of fifteen (15) days. employee shall not earn and accumulate
sick leave or other fringe benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, employee shall not be entitled to
receive payments in lieu of said fringe benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.
6. INVENTION, TRADE SECRETS AND CONFIDENTIALITY
6.1 DEFINITIONS
6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or know-
how related thereto, relating to any present or anticipated business or
activities of Employer.
6.1.2 Trade Secret Defined. As used herein "Trade Secret" means,
without limitation, any document or information relating to Employer's products,
processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee's employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.
6.2 INVENTIONS
6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise.
6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee's employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."
6.2.3 Exclusion Notice. The Assignment by Employee of Inventions
under this Agreement does not apply to any Inventions which are owned or
controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer's equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee's own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer's actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in Fact. Both before and
after termination of this Agreement (and with reasonable compensation paid
by Employer to Employee after termination), Employee agrees to assist the
Employer to apply for, obtain and enforce patents on, and to apply for, obtain
and enforce copyright protection and registration of, the Inventions described
in Section 6.2.2 in any and all countries. To that end, Employee shall (at
Employer's request) without limitation, testify in any proceeding, and execute
any documents and assignments determined to be necessary or convenient for use
in applying for, obtaining, registering and enforcing patent or copyright
protection involving any of the Inventions. Employee hereby irrevocably appoints
Employer, and its duly authorized officers and agents, as Employee's agent and
attorney-in-fact, to act for and in behalf of Employee in filing all patent
applications, applications for copyright protection and registration,
amendments, renewals, and all other appropriate documents in any way related to
the Inventions described in Section 6.2.2.
6.3 TRADE SECRETS
6.3.1 Acknowledgment of Proprietary Interest. Employee recognizes
the proprietary interest of Employer in any Trade Secrets of Employer. Employee
acknowledges and agrees that any and all Trade Secrets of Employer, whether
developed by Employee alone or in conjunction with others or otherwise, shall be
and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee acknowledges
and agrees that Employer is entitled to prevent the disclosure of Trade Secrets
of Employer. As a portion of the consideration for the employment of Employee
and for the compensation being paid to Employee by Employer, Employee agrees at
all times during the term of the employment by Employer and thereafter to hold
in strictest confidence, and not to use, disclose or allow to be disclosed to
any person, firm, or corporation, Trade Secrets of Employer, including Trade
Secrets developed by Employee, other than disclosures to persons engaged by
Employer to further the business of Employer, and other than use in the pursuit
of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents and
warrants that if Employee has any confidential information belonging to others,
Employee will not use or disclose to Employer any such information or documents.
Employee represents that his employment with Employer will not require him to
violate any obligation to or confidence with any other party.
6.4 NO ADVERSE USE Employee will not at any time use Employer's Trade
Secrets or Inventions in any manner which may directly or indirectly have an
adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.
6.5 RETURN OF MATERIALS AT TERMINATION In the event of any
termination of Employee's employment, Employee will promptly deliver to Employer
all materials, property, documents, data, and other information
belonging to Employer or pertaining to Trade Secrets or Inventions. Employee
shall not take any materials, property, documents or other information, or any
reproduction or excerpt thereof, belonging to Employer or containing or
pertaining to any Trade Secrets or Inventions.
6.6 REMEDIES UPON BREACH In the event of any breach by Employee of
the provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin Employee from violating any of the terms
of this Section 6, to enforce the specific performance by Employee of any of the
terms of this Section 6, and to obtain damages for any of them, but nothing
herein contained shall be construed to prevent such remedy or combination of
remedies as Employer may elect to invoke. The failure of Employer to promptly
institute legal action upon any breach of this Section 6 shall not constitute a
waiver of that or any other breach hereof.
7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder, lender or agent of any other entity which is engaged in
any business of the same nature as, or in competition with, the business in
which Employer is now engaged, or in which Employer becomes engaged during the
term of Employee's employment, or which is involved in science or technology
which is similar to Employer's science or technology.
8. GENERAL PROVISIONS
8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.
8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.
8.3 ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties with respect to the employment of Employee. This Agreement
supersedes all prior agreements, understandings, negotiations and representation
with respect to the employment relationship.
8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Employer. Employee shall not be entitled to assign any
of Employee's rights or obligations under this Agreement.
8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
EMPLOYER:
Aastrom Biosciences, Inc.
By: /s/ R. DOUGLAS ARMSTRONG
---------------------------
R. Douglas Armstrong, Ph.D.
President and CEO
EMPLOYEE:
/s/ THOMAS E. MULLER
- -----------------------
Thomas E. Muller, Ph.D.
Address: 388 Lowell Road
Concord, MA 01742
Exhibit A
List of Prior Inventions
(Section 6.2.3)
None, other than the following:
See attached list of patents and publications.
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1- T.E. Muller and C.B. Purves "Xanthation", Technical Report No. 192, Pulp
and Paper Research Institute of Canada (July, 1960).
2- T.E. Muller and C.B. Purves "Xanthation and Dexanthation of Cellulose and
Related Glucose Derivatives", Canadian Textile Journal 42 (March, 1963).
3- T.E. Muller and C. B. Purves "Xanthation", Chapter 43 in "Methods in
Carbohydrate Chemistry", Vol. III, Academic Press, Inc., NY (1963).
4- T.E. Muller and W. J. Alexander "Fractional Turbidimetric Analysis of the
Molar Substitution of Hydroxyethyl Cellulose", Journal of Applied Polymer
Science 10, 1285 (1966).
--
5- G.C. Daul and T.E. Muller "Effect of Orientation and Trace Crosslinking on
the Properties of High Wet Modulus Rayon", Journal of Applied Polymer
Science 12, 487 (1968).
--
6- T.E. Muller and W.J. Alexander "Characterization of the Chain Length
Distribution of Wood Celluloses by Gel Permeation Chromatography", Journal
of Polymer Science Part C, 21, 283 (1968).
--
7- D. Tunc, R.F. Bampton and T.E. Muller "Quantitative Determination of
Xanthate, Byproduct and Total Sulfur in Viscose by Ultraviolet
Spectrophotometry", TAPPI 52, 1882 (1969).
--
8- W.J. Alexander and T.E. Muller "Applications of Gel Chromatography in the
Pulping Process", Journal of Polymer Science Part C, 36, 87 (1971).
--
9- W.J. Alexander and T.E. Muller "Evaluation of Pulps, Rayon Fibers and
Cellulose Acetate by GPC and Other Fractionation Methods", Separation
Sciences 6, (1), 47 (FEB., 1971).
-
10- R.L. Mitchell, T.E. Muller, H.D. Stevens and R.S. Tabke "Process and
Forming Hydroxyl Cellulose Fibers Having Water Absorption and High Water
Retention Properties", U.S. Patent 3,670,069 (June 13, 1972); British
Patent 1,324,373 (July 25, 1973).
11- H.L. Hergert, T.E. Muller and S.E. Church "Chemical Cellulose for High
Performance Rayon", TAPPI 1973 Dissolving Pulps Conference Preprints
(Oct., 1973).
12- H.D. Stevens and T.E. Muller "Process for Producing High Performance
Crimped Rayon Staple Fiber", U.S. Patent 3,720,743 (March 13, 1973);
German Patent 1,342,805 (Jan. 3, 1974); Canadian Patent 960,422 (Jan. 7,
1975).
13- R.L. Mitchell, T.E. Muller, H.D. Stevens and R.S. Tabke "Wet Spinning of
Cellulosic Products", U.S. Patent 3,865,918 (Feb. 11, 1975).
14- T.E. Muller, D.G. Unrau and L.L. Nejelski "The New Rayons", 33rd Annual
Technical Conference Society Plastics Engineers, Atlanta, GA (May 5-8,
1975).
15- T.E. Muller, F.P. Barch and G.C. Daul "High Performance Crimped Rayon
Fiber", Textile Research Journal 46, 184 (1976).
--
16- J.B. Dykes and T.E. Muller "World Textile Fiber Demand Projected to 2000
A.D.; Technology for the Production of a Chemically Crimped HWM Rayon
Fiber", SASMIRA Conference, New Delhi, India (Jan. 19-21, 1976);
"Proceedings of the International Conference on Man-Made Fibres for
Developing Countries" (1976).
17- T.E. Muller and J.B. Dykes "Process Technology and Applications for a
Chemically Crimped HWM Rayon Fiber", Eighth Shirley International Seminar,
Manchester, England (April 27-29, 1976).
18- T.E. Muller "Man-Made Cellulosic Fibers - A View in 1976", Comite
International de la Rayonne et des Fibres Synthetiques, Paris, France
(Oct. 14, 1976).
19- T.E. Muller "Review of Modern Viscose Processing and Recovery Techniques"
Seminars Presented at the U.S. Embassy, Moscow (Jan. 10-12, 1978).
20- H.L. Hergert and T.E. Muller "Modified Cellulosics - An Overview of the
Future", Modified Cellulosics, Academic Press, Inc., NY (1978).
21- T.E. Muller "Research, Development and Production of Silvichemicals",
Natl. Meeting Am. Inst. Chem. Eng., Philadelphia, PA (June 7, 1978).
22- T.E. Muller "Energy and Chemical Requirements for the Manufacture of
Chemical Cellulose from Wood, HWM Rayon Staple Fiber and Polyester Staple
Fiber", Comite International de la Rayonne et des Fibres Synthetiques,
Paris, France (Oct. 1978).
23- T.E. Muller "Cellulosics", Seminars Presented for Chinese Industry,
Shanghai, China (May 20-21, 1979).
24- T.E. Muller "High Wet Modulus Rayon Fiber (Prima)", Industrial Research
IR-100 Award (Oct., 1979).
25- T.E. Muller "New Cellulose Fibers and Processes", Eighteenth International
Man-Made Fibre Conference, Dornbirn, Austria (June 20, 1979); Lenzinger
Berichte 48, 87 (March, 1980).
--
26- T.E. Muller "Developments in the Manufacture of Regenerated Cellulose
Fibers and Films", Chairman, TAPPI Dissolving Pulps Conference, Vienna,
Austria (Oct. 9, 1980).
27- H.O. Jauregui, C. J-P. Mullon, T.E. Muller and B.A. Solomon "Hollow Fiber
Liver Support System", Am. Inst. Chem. Eng. Annual Meeting, San Francisco,
CA (Nov. 5-10, 1989).
28- T.E. Muller, B.A. Solomon, T. Maki, S.J. Sullivan, K.M. Borland, A.P.
Monaco and W.L. Chick "The Hybrid Perfused Pancreas: Successful Treatment
of Severely Diabetic Pancreatectomized Dogs", Tenth Workshop of the
European Association for the Study of Diabetes, Amsterdam, The Netherlands
(Jan. 27-29, 1991).
29- Thomas E. Muller "Maintenance of Normoglycemia in Diabetic Dogs with an
Artificial Pancreas", Presented at Swiss Federal Institute of Technology
(ETH), Zurich, Switzerland (Jan. 31, 1991).
30- T. Maki, C.S. Ubhi, H. Sanchez-Farpon, S.J. Sullivan, K. Borland, T.E.
Muller, B.A. Solomon, W.L. Chick and A.P. Monaco "The Biohybrid Artificial
Pancreas for Treatment of Diabetes in Totally Pancreatectomized Dogs",
XIII Int. Congress of the Transplantation Society (August 19-24, 1990) San
Francisco, CA; Transplantation Proceedings 23 (1), 754-755 (1991).
--
31- W.L. Chick, S.J. Sullivan, K.M. Borland, J.M. Harvey, T.E. Muller, K.E.
Dunleavy, D.P. King, E.J. Doherty, B.A. Solomon and A.L. Foley "Artificial
Pancreatic Perfusion Device", U.S. Patent 5,002,661 (March 26, 1991).
32- Susan J. Sullivan, Takashi Maki, Kermit M. Borland, Michelle D. Mahoney,
Barry A. Solomon, Thomas E. Muller, Anthony P. Monaco, and William L.
Chick "Biohybrid Artificial Pancreas: Long-Term Implantation Studies in
Diabetic, Pancreatectomized Dogs", Science 252, 718 (1991).
---
33- H. Ohzato, M. Carretta, T. Maki, S.J. Sullivan, K. Borland, T.E. Muller,
B.A. Solomon, W.L. Chick and A.P. Monaco "Use of Xenogeneic Islets in
Hybrid Artificial Pancreas for Treatment of Diabetes Without Immuno-
suppression", First International Congress of Xenotransplantation,
Minneapolis Transplant Congress, Minneapolis, MN, August 25-28, 1991;
Transplantation Proceedings 24 (2) 661-662 (1992).
--
34- Takashi Maki, Mauro Carretta, Hiroki Ohzato, Susan J. Sullivan, Robert P.
Lanza, Kermit M. Borland, Thomas E. Muller, Barry A. Solomon, William L.
Chick and Anthony P. Monaco "Islet Xenotransplantation Without Immuno-
suppression Utilizing the Hybrid Artificial Pancreas", Third International
Symposium on Islet Transplantation, Perugia, Italy, (Sept. 26-29, 1991);
Diab. Nutr. Metab. (in Press).
35- Anthony P. Monaco, Takashi Maki, Hiroki Ohzato, Mauro Carretta, Susan J.
Sullivan, Kermit M. Borland, Michelle D. Mahoney, Thomas E. Muller,
Jacqueline M. Wolfrum, Barry A. Solomon and William L. Chick
"Transplantation of Islet Allografts and Xenografts in Totally
Pancreatectomized Diabetic Dogs Using the Hybrid Artificial Pancreas",
Annals of Surgery, 214 (3), 339-362 (1991).
---
36- Takashi Maki, Charanjeit S. Ubhi, Herminio Sanchez-Farpon, Susan J.
Sullivan, Thomas E. Muller, Barry A. Solomon, William L. Chick and Anthony
P. Monaco "Successful Treatment of Diabetes with the Biohybrid Artificial
Pancreas in Dogs", 16th Annual Meeting American Society of Transplant
Surgeons, Chicago, IL (May 30-June 1, 1990); Transplantation 51, 43-51,
--
(1991).
37- R.P. Lanza, D.H. Butler, K.M. Borland, J.E. Staruk, D.L.
Faustman, B.A. Solomon, T.E. Muller, R.G. Rupp, T. Maki, A.P. Monaco and
W.L. Chick "Xenotransplantation of Canine, Bovine, and Porcine Islets in
Diabetic Rats Without Immunosuppression", Proc. Natl. Acad. Sci. USA,
Acad. Sci. USA, 88--11100-11104 (1991).
--
38- T.E. Muller, B.A. Solomon, A.P. Monaco, T. Maki, W.L. Chick, and S.J.
Sullivan "Maintenance of Normoglycemia in Diabetic Dogs with an Artificial
Pancreas", Study Group of the European Association for the Study of
Diabetes, Igls, Austria (Jan. 26-28, 1992).
39- Hugo O. Jauregui and Thomas E. Muller "Long-Term Cultures of Adult
Mammalian Hepatocytes in Hollow Fibers as the Cellular Component of
Extracorporeal (Hybrid) Liver Assist Devices", Artif. Organs 16 (2), 209-
--
212 (1992).
40- S.J. Sullivan, T. Maki, M. Carretta, H. Ohzato, M.D. Mahoney, B.A.
Solomon, T.E. Muller, A.P. Monaco and W.L. Chick "Implantation of the
Biohybrid Pancreas in Diabetic Dogs", Third International Congress on
Pancreatic and Islet Transplantation Symposium on Artificial Insulin
Delivery System, Lyon, France, (June 6-8, 1991); Transplantation
Proceedings 24 (3), 942-944 (1992).
41- S.J. Sullivan, T. Maki, M. Carretta, H. Ohzato, K. Borland, M.D. Mahoney,
T.E. Muller, B.A. Solomon, A.P. Monaco and W.L. Chick "Evaluation of the
Hybrid Artificial Pancreas in Diabetic Dogs", ASAIO Journal Transactions
on Hybrid Organs and Cell Therapy 38 (1), 29 (1992).
--
42- R.P. Lanza, D.H. Butler, K.M. Borland, J.M. Harvey, D.L. Faustman, B.A.
Solomon, T.E. Muller, R.G. Rupp, T. Maki, A.P. Monaco and W.L. Chick
"Successful Xenotransplantation of a Diffusion-Based Biohybrid Artificial
Pancreas: A Study Using Canine, Bovine, and Porcine Islets", First
International Congress on Xenotransplantation, Minneapolis Transplant
Congress, Minneapolis, MN, (August 25-28, 1991); Transplantation
Proceedings 24, 669-671 (1992).
--
43- Thomas E. Muller "Combination Medical Products", Presented at the Joint
FDA-HIMA Conference, Washington, DC (February 11-12, 1992).
44- S. Sullivan, R. Lanza, K. Borland, T. Maki, M. Carretta, H. Ohzato, P.
Lodge, T. Muller, A. Monaco, B. Solomon and W. Chick "Pancreatic Islet
Transplantation Using an Immunoprotective Membrane", 38th Annual Meeting
of the ASAIO Nashville, TN (May 7-9, 1992).
45- Robert P. Lanza, Kermit M. Borland, Susan J. Sullivan, Samuel A. Clark,
Peter Lodge, Mauro Carretta, Thomas E. Muller, Barry A. Solomon, Takashi
Maki, Anthony P. Monaco and William L. Chick "Pancreatic Islet
Transplantation Using Membrane Diffusion Chambers", First Int. Congress
Cell Transplant Society, Pittsburgh, PA (May 31-June 3, 1992);
Transplantation Proceedings 24 (6) 2935-2936 (1992).
--
46- S. Sullivan, K. Borland, T. Maki, M. Carretta, H. Ohzato, P. Lodge, T.
Muller, A. Monaco, B. Solomon and W. Chick, "Islet Transplantation Using
an Immuno-protective Vascular Device", First Int. Congress Cell Transplant
Society, Pittsburgh, PA, (May 31-June 3, 1992).
47- H.O. Jauregui, D. Trenkler, S. Naik, B. Monfils, C. Mullon, T. Muller and
B. Solomon "Use of Artificial (Hybrid) Liver Support System to Treat the
Galactosamine Rabbit Model of Hepatic Encephalopathy", International
Association for the Study of the Liver Biennial Scientific Meeting,
Brighton, England (June 3-6, 1992).
48- R.P. Lanza, K.M. Borland, S.J. Sullivan, P. Lodge, M. Carretta, T.E.
Muller, B.A. Solomon, T. Maki, A.P. Monaco and W.L. Chick, "Treatment of
Severely Diabetic, Pancreatectomized Dogs Using a Diffusion-based Hybrid
Artificial Pancreas", 16th Annual Meeting of American Diabetes
Association, San Antonio, TX, (June 20-23, 1992); Diabetes 41, 886-89
(1992).
49- R.P. Lanza, P. Lodge, K.M. Borland, M. Carretta, S.J. Sullivan, A.M.
Beyer, T.E. Muller, B.A. Solomon, T. Maki, A.P. Monaco and W.L. Chick
"Transplantation of Islet Allografts Using a Diffusion-Based Biohybrid
Artificial Pancreas: Long-Term Studies in Diabetic, Pancreatectomized
Dogs", XIVth International Congress of the Transplantation Society, Paris,
France (August 16-21, 1992); Transplantation Proceedings 25 (1), 978-980
(1993). --
50- Thomas E. Muller "New Combination Therapies", Inst. International Res.
Seminar, Washington, DC, January 25-27 (1993).
51- Thomas E. Muller "Medical Therapies Based on Advanced Biomedical
Engineering Technologies", Visiting Professor Lecture, INFA (International
Faculty of Artificial Organs) Symposium, Univ. Gent. Belgium (Oct. 1,
1993).
52- R.P. Lanza, K.M. Borland, J.E. Staruk, B.A. Solomon, T.E. Muller, B.A.
Solomon, T. Maki, A.P. Monaco and W.L. Chick "Transplantation of Canine
Islets Into Spontaneously Diabetic BB/Wor Rats Without Immuno-
suppression", Endocrinology (in Press).
53- Hugo O. Jauregui, Claudy J. Mullon, Donna M. Trenkler, Sharda Naik, Henry
A. Santangini, Philip J. Press, Thomas E. Muller and Barry A. Solomon
"Hollow Fiber Liver Assist Device for Extracorporeal Treatment of
Experimental Fulminant Hepatic Failure", Proceedings of the National
Academy of Sciences (Submitted).
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of 26 October
1995, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Employer") and ALAN K. SMITH ("Employee").
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT Employer hereby engages Employee, and Employee hereby
accepts such engagement, upon the terms and conditions set forth herein.
2. DUTIES Employee is engaged as a Vice President Research. Employee
shall perform faithfully and diligently the duties customarily performed by
persons in the position for which employee is engaged, together with such other
reasonable and appropriate duties as Employer shall designate from time to time.
Employee shall devote Employee's full business time and efforts to the rendition
of such services and to the performance of such duties. As a full-time employee
of Employer, Employee shall not be entitled to provide consulting services or
other business or scientific services to any other party, without the prior
written consent of Employer.
3. COMPENSATION
3.1 BASE SALARY During the term of this Agreement, as compensation
for the proper and satisfactory performance of all duties to be performed by
Employee hereunder, Employer shall pay Employee at an annual salary rate of One
Hundred Twenty Two Thousand Five Hundred Dollars ($122,500), payable in arrears
in equal bi-weekly installments, less required deductions for state and federal
withholding tax, Social Security and all other employee taxes and payroll
deductions. The base salary shall be subject to review and adjustment on an
annual basis.
4. TERM
4.1 COMMENCEMENT The employment relationship pursuant to this
Agreement shall commence November 13, 1995.
4.2 TERMINATION AT WILL Although Employer and Employee anticipate a
long and mutually rewarding employment relationship, either party may terminate
this Agreement, without cause, upon fourteen (14) days' prior written notice
delivered to the other. It is expressly understood and agreed that the
employment relationship is "at will", and with no agreement for employment for
any specified term, and with no agreement for employment for so long as Employee
performs satisfactorily. Provided, however, before Employer exercises this
right of termination at will, Employer shall first either (i) discuss with
Employee the needs of Employer and why Employee no longer meets those needs, or
(ii) discuss with Employee any concerns or dissatisfactions which
Employer has with Employee's performance, and give to Employee a reasonable
opportunity to remedy those concerns or dissatisfactions, to the reasonable
satisfaction of Employer. Should, for some reason, Employee's involuntary
termination without cause be necessary, severance compensation equal to four (4)
months' salary will be paid, along with compensation for any accumulated
vacation time.
4.3 TERMINATION FOR CAUSE Either party may terminate this employment
relationship immediately upon notice to the other party in the event of any good
cause, such as a default, dishonesty, neglect of duties, failure to perform by
the other party, or death or disability of Employee.
4.4 PAYMENT OF COMPENSATION UPON TERMINATION Upon termination for
cause, Employee shall be entitled to the compensation set forth as "base salary"
herein, prorated to the effective date of such termination as full compensation
for any and all claims of Employee under this Agreement.
5. FRINGE BENEFITS
5.1 CUSTOMARY FRINGE BENEFITS Employee shall be entitled to such
fringe benefits as Employer customarily makes available to employees of Employer
engaged in the same or similar position as Employee ("Fringe Benefits"). Such
Fringe Benefits may include vacation leave, sick leave, and health insurance
coverage. Employer reserves the right to change the Fringe Benefits on a
prospective basis, at any time, effective upon delivery of written notice to
Employee.
5.2 ACCUMULATION Employee shall not earn and accumulate unused
vacation in excess of Fifteen (15) days. Employee shall not earn and accumulate
sick leave or other Fringe Benefits in excess of an unused amount equal to twice
the amount earned for one year. Further, Employee shall not be entitled to
receive payments in lieu of said Fringe Benefits, other than for unused vacation
leave earned and accumulated at the time the employment relationship terminates.
6. INVENTIONS, TRADE SECRETS AND CONFIDENTIALITY
6.1 DEFINITIONS
6.1.1 Invention Defined. As used herein "Invention" means
inventions, discoveries, concepts, and ideas, whether patentable or
copyrightable or not, including but not limited to processes, methods, formulas,
techniques, materials, devices, designs, programs (including computer programs),
computer graphics, apparatus, products, as well as improvements thereof or know-
how related thereto, relating to any present or anticipated business or
activities of Employer.
6.1.2 Trade Secret Defined. As used herein "Trade Secret" means,
without limitation, any document or information relating to Employer's
products, processes or services, including documents and information relating to
Inventions, and to the research, development, engineering or manufacture of
Inventions, and to Employer's purchasing, customer or supplier lists, which
documents or information have been disclosed to Employee or known to Employee as
a consequence of or through Employee's employment by Employer (including
documents, information or Inventions conceived, originated, discovered or
developed by Employee), which is not generally known in the relevant trade or
industry.
6.2 INVENTIONS
6.2.1 Disclosure. Employee shall disclose promptly to Employer
each Invention, whether or not reduced to practice, which is conceived or
learned by Employee (either alone or jointly with others) during the term of his
employment with Employer. Employee shall disclose in confidence to Employer all
patent applications filed by or on behalf of Employee during the term of his
employment and for a period of three (3) years thereafter. Any disclosure of an
Invention, or any patent application, made within one (1) year after termination
of employment shall be presumed to relate to an Invention made during Employee's
term of Employment with Employer, unless Employee clearly proves otherwise .
6.2.2 Employer Property; Assignment. Employee acknowledges and
agrees that all Inventions which are discovered, conceived, developed, made,
produced or prepared by Employee (alone or in conjunction with others) during
the duration of Employee's employment with Employer shall be the sole property
of Employer. Said property rights of Employer include without limitation all
domestic and foreign patent rights, rights of registration or other protection
under the patent and copyright laws, and all other rights pertaining to the
Inventions. Employee further agrees that all services, products and Inventions
that directly or indirectly result from engagement with Company shall be deemed
"works for hire" as that term is defined in Title 17 of the United States Codes,
and accordingly all rights associated therewith shall vest in the Company.
Notwithstanding the foregoing, Employee hereby assigns to Employer all of
Employee's right, title and interest in any such services, products and
Inventions, in the event any such services, products and Inventions shall be
determined not to constitute "works for hire."
6.2.3 Exclusion Notice. The Assignment by Employee of Inventions
under this Agreement does not apply to any Inventions which are owned or
controlled by Employee prior to the commencement of employment of Employee by
Employer (all of which are set forth on Exhibit "A" hereto). Additionally,
Employee is not required to assign an idea or invention where the invention or
idea meets all of the following criteria; namely if the invention or idea: (i)
was created or conceived without the use of any of Employer's equipment,
supplies, facilities, or trade secret information, and (ii) was developed
entirely on Employee's own time, and (iii) does not relate to the business of
Employer, and (iv) does not relate to Employer's actual or demonstrably
anticipated research or development, and (v) does not result from any work
performed by Employee for Employer.
6.2.4 Patents and Copyrights; Attorney-in-Fact. Both before and
after termination of this Agreement (and with reasonable compensation paid by
Employer to Employee after termination), Employee agrees to assist the Employer
to apply for, obtain and enforce patents on, and to apply for, obtain and
enforce copyright protection and registration of, the Inventions described in
Section 6.2.2 in any and all countries. To that end, Employee shall (at
Employer's request) without limitation, testify in any proceeding, and execute
any documents and assignments determined to be necessary or convenient for use
in applying for, obtaining, registering and enforcing patent or copyright
protection involving any of the Inventions. Employee hereby irrevocably appoints
Employer, and its duly authorized officers and agents, as Employee's agent and
attorney-in-fact, to act for and in behalf of Employee in filing all patent
applications, applications for copyright protection and registration,
amendments, renewals, and all other appropriate documents in any way related to
the Inventions described in Section 6.2.2.
6.3 TRADE SECRETS
6.3.1 Acknowledgment of Proprietary Interest. Employee
recognizes the proprietary interest of Employer in any Trade Secrets of
Employer. Employee acknowledges and agrees that any and all Trade Secrets of
Employer, whether developed by Employee alone or in conjunction with others or
otherwise, shall be and are the property of Employer.
6.3.2 Covenant Not to Divulge Trade Secrets. Employee
acknowledges and agrees that Employer is entitled to prevent the disclosure of
Trade Secrets of Employer. As a portion of the consideration for the employment
of Employee and for the compensation being paid to Employee by Employer,
Employee agrees at all times during the term of the employment by Employer and
thereafter to hold in strictest confidence, and not to use, disclose or allow to
be disclosed to any person, firm, or corporation, Trade Secrets of Employer,
including Trade Secrets developed by Employee, other than disclosures to persons
engaged by Employer to further the business of Employer, and other than use in
the pursuit of the business of Employer.
6.3.3 Confidential Information of Others. Employee represents
and warrants that if Employee has any confidential information belonging to
others, Employee will not use or disclose to Employer any such information or
documents. Employee represents that his employment with Employer will not
require him to violate any obligation to or confidence with any other party.
6.4 NO ADVERSE USE Employee will not at any time use Employer's Trade
Secrets or Inventions in any manner which may directly or indirectly have an
adverse effect upon Employer's business, nor will Employee perform any acts
which would tend to reduce Employer's proprietary value in Employer's Trade
Secrets or Inventions.
6.5 RETURN OF MATERIALS AT TERMINATION In the event of any
termination of Employee's employment, Employee will promptly deliver to Employer
all materials, property, documents, data, and other information belonging to
Employer or pertaining to Trade Secrets or Inventions. Employee shall not take
any materials, property, documents or other information, or any reproduction or
excerpt thereof, belonging to Employer or containing or pertaining to any Trade
Secrets or Inventions.
6.6 REMEDIES UPON BREACH In the event of any breach by Employee of
the provision in this Section 6, Employer shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enjoin Employee from violating any of the terms
of this Section 6, to enforce the specific performance by Employee of any of the
terms of this Section 6, and to obtain damages for any of them, but nothing
herein contained shall be construed to prevent such remedy or combination of
remedies as Employer may elect to invoke. The failure of Employer to promptly
institute legal action upon any breach of this Section 6 shall not constitute a
waiver of that or any other breach hereof.
7. COVENANT NOT TO COMPETE Employee agrees that, during Employee's
employment, Employee will not directly or indirectly compete with Employer in
any way, and that Employee will not act as an officer, director, employee,
consultant, shareholder, lender or agent of any other entity which is engaged in
any business of the same nature as, or in competition with, the business in
which Employer is now engaged, or in which Employer becomes engaged during the
term of Employee's employment, or which is involved in science or technology
which is similar to Employer's science or technology.
8. GENERAL PROVISIONS
8.1 ATTORNEYS' FEES In the event of any dispute or breach arising
with respect to this Agreement, the party prevailing in any negotiations or
proceedings for the resolution or enforcement thereof shall be entitled to
recover from the losing party reasonable expenses, attorneys' fees and costs
incurred therein.
8.2 AMENDMENTS No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by both
parties hereto. There shall be no implied-in-fact contracts modifying the terms
of this Agreement.
8.3 ENTIRE AGREEMENT This Agreement constitutes the entire
agreement between the parties with respect to the employment of Employee. This
Agreement supersedes all prior agreements, understandings, negotiations and
representation with respect to the employment relationship.
8.4 SUCCESSORS AND ASSIGNS The Rights and obligations of Employer
under this Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of Employer. Employee shall not be
entitled to assign any of Employee's rights or obligations under this Agreement.
8.5 WAIVER Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
8.6 SEVERABLE PROVISIONS The provisions of this Agreement are
severable, and if any or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
9. EMPLOYEE'S REPRESENTATIONS Employee represents and warrants that
Employee (i) is free to enter into this Agreement and to perform each of the
terms and covenants contained herein, (ii) is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Agreement,
and (iii) will not be in violation or breach of any other agreement by reason of
Employee's execution and performance of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
EMPLOYER:
Aastrom Biosciences, Inc.
By: /s/ R. DOUGLAS ARMSTRONG
---------------------------
R. Douglas Armstrong, Ph.D.
President and CEO
EMPLOYEE:
/s/ ALAN K. SMITH 10/26/95
- -----------------------------
Alan K. Smith
Address: 6964 Corte Antonio
Pleasanton, CA 94566
Exhibit A
List of Prior Inventions
(Section 6.2.3)
None, other than the following:
See Attached list.
- --------------------------------------------------------------------------------
In addition, have two potential applications pending:
- --------------------------------------------------------------------------------
(1) Implantation of microcarrier bound packaging cell lines capable of
- --------------------------------------------------------------------------------
performing in situ gene therapy.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(2) Identification and use of a specific T-cell subset to facilitate allogeneic
- --------------------------------------------------------------------------------
bone marrow transplantation.
- --------------------------------------------------------------------------------
PATENTS:
- --------
Kabori, Deans, Al-Abdaly, Smith, Guillermo, Angal, "Methods for Identification
of Peptides for Release of Selected Cells" (patent pending, submitted 1994)
AL-Abdaly, Guillermo and Smith, "Positive Selection of Human CD34+ Cells Using
Cell Specific Antibody-Desthiobiotin Conjugate/Anti-biotin Antibody Coated
Paramagnetic Beads" (patent pending, submitted 1993)
Y. A. Chang, A. Gee, A. Smith, W. Lake, "Activation of Hydroxyl Groups of
Polymeric Carriers Using 4-Fluorobenzenesulfonyl Chloride", European Patent
#91915059.9- (Issued 1992).
A. K. Smith, "Iron supplementation of Calf Serum" U. S. Patent (Issued 1987)
Jarrett, McCain, Vickers and Smith, "Development of a Biocompatible Polymer
Using Methyl Acrylamidoglycolate Methyl Ether"
Hardwick, Smith, Lake and Chenoweth, U. S. Patent for "Method and Useful
Apparatus for Preparing Pharmaceutical Compositions" (Issued 1991)
EXHIBIT 10.24
PROMISSORY NOTE
Ann Arbor, Michigan
$120,000 November 18, 1993
11/96
1. As repayment for a cash loan made by Aastrom Biosciences, Inc., a
Michigan Corporation ("AASTROM"), to R. Douglas Armstrong ("Maker"), Maker
hereby promises to pay to the order of AASTROM, at Ann Arbor, Michigan, or at
such other place as AASTROM may direct in writing, the principal amount of
$120,000, together with interest on the outstanding principal balance owing from
time to time at the rate of four percent (4%) per annum.
2. Accrued interest shall be payable on each anniversary date of this
Note.
3. The principal and all unpaid accrued interest owing on this Note shall
mature and be fully due and payable on the third anniversary of the date of this
-----------------
Note. Maker may prepay any or all of the principal and interest owing on this
Note at any time without penalty or premium.
4. If any installment of interest owing on this Note is not paid within
ten (10) days after Maker receives a written notice of default, then Aastrom may
accelerate the maturity date and declare all sums of principal and accrued
interest immediately due and payable.
5. If this Note is not paid when due, Maker promises to pay all costs
incurred by Aastrom in collecting amounts due on this Note, including reasonable
attorney's fees.
6. Payments owing on this note shall be payable (i) in lawful money of
the United States of America or, (ii) at the option of Maker, by Maker's
surrender of common stock of Aastrom owned by Maker, with said common stock
being valued at the public trading price for Aastrom's common stock on the date
the stock is surrendered, if Aastrom's common stock is publicly traded; or if
Aastrom's common stock is not publicly traded, then the value of the stock shall
be the fair market value of the common stock as determined by the Board of
Directors of Aastrom, or (iii) at the option of Maker, by Maker's surrender of
vested stock options to purchase common stock of Aastrom, with said stock
options valued at the "spread" between the then current fair market value of the
stock (as determined above) and the option exercise price.
7. This Note has been executed and delivered by Maker in the State of
Michigan, and shall be governed by and construed in accordance with the laws of
the State of Michigan.
8. Maker acknowledges that Maker has personal liability on this Note, and
that this Note is a "full recourse" note.
MAKER:
/s/ R. DOUGLAS ARMSTRONG
- ---------------------------
R. Douglas Armstrong, Ph.D.
FIRST AMENDMENT TO PROMISSORY NOTE
This Amendment (the "Amendment") to the Promissory Note (the "Note") dated
November 18, 1993, payable to Aastrom Biosciences, Inc., a Michigan corporation
(the "Company"), executed by R. Douglas Armstrong ("Maker"), is dated as of
October 30, 1996.
WHEREAS, Section 3 of the Note provides that all principal and accrued but
unpaid interest is due and payable on the third anniversary of the date of the
Note (i.e. November 18, 1996).
WHEREAS, the Company desires to amend the Note to provide that all
principal and accrued but unpaid interest shall be due and payable on June 30,
1997.
NOW, THEREFORE, the Company hereby amends the Note as follows:
1. Section 3 of the Note is hereby amended to read in its
entirety as follows:
"The principal and all unpaid accrued interest owing on this Note
shall mature and be fully due and payable on June 30, 1997.
Maker may prepay any or all of the principal and interest owing
on this Note at any time without penalty or premium."
2. All other provisions of the Note shall remain in full force
and effect.
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed by its duly authorized officer as of the date set forth above.
AASTROM BIOSCIENCES, INC.
By: /s/ Todd E. Simpson
-------------------------------------
Todd E. Simpson, Vice President, Finance and
Administration
EXHIBIT 10.25
PROMISSORY NOTE
Ann Arbor, Michigan
$47,303 Date: 10/20/93
----------
1. As payment for the purchase of common stock in Aastrom Biosciences, Inc., a
Michigan corporation ("Aastrom"), the undersigned, Stephen G. Emerson
("Maker"), hereby promises to pay to the order of Aastrom, at Ann Arbor,
Michigan, or at such other place as Aastrom may direct in writing, the
principal amount of Forty Seven Thousand Three Hundred Three dollars
($47,303), together with interest on the outstanding principal balance
owing from time to time at the rate of six percent (6%) per annum.
2. Accrued interest shall be payable on each anniversary date of this Note.
3. The principal and all unpaid accrued interest owing on this Note shall
mature and be fully due and payable on the third anniversary of the date of
-----------------
this Note. Maker may prepay any or all of the principal and interest owing
on this Note at any time, without penalty or premium.
4. If any installment of interest owing on this Note is not paid within ten
(10) days after Maker receives a written notice of default, then Aastrom
may accelerate the maturity date and declare all sums of principal and
accrued interest immediately due and payable.
5. If this Note is not paid when due, Maker promises to pay all costs incurred
by Aastrom in collecting amounts due on this Note, including reasonable
attorney's fees.
6. Payments owing on this Note shall be payable in lawful money of the United
States of America. This Note has been executed and delivered by Maker in
the State of Michigan, and shall be governed by and construed in accordance
with the laws of the State of Michigan.
7. As collateral security for the performance of maker's obligation to pay
this Note, Maker hereby grants to Aastrom a security interest in the shares
of common stock in Aastrom which Maker is purchasing with this Note, namely
388,031 shares of common stock (the "Shares"). As the secured party having
a security interest in the Shares, Aastrom shall have all rights of a
secured party pursuant to the Michigan Uniform Commercial Code. To perfect
Aastrom's security interest in the Shares, Maker hereby authorizes Aastrom
to retain physical possession of the Certificate evidencing the Shares, and
Maker hereby delivers to Aastrom a "Stock Assignment Separate from
Certificate" signed by Maker, and Aastrom is authorized to utilize said
Assignment if, and only if, there is a default on this Note and Aastrom
pursues its remedies to foreclosure upon its security interest in the
Shares in accordance with applicable law. In the event Maker desires to
sell some of the Shares prior to Maker's paying off this Note, Maker must
use all of the proceeds of such a sale (up to the outstanding balance owing
on this Note) to make payments on this Note; and Maker shall be entitled to
a partial release of Aastrom's security interest in the Shares to permit
such a sale.
8. Full Recourse Note. Maker acknowledges that Maker has personal liability
------------------
on this Note, that this Note is a "full recourse" note, and that Maker's
liability on this Note is not limited to the value of the Shares.
MAKER:
/s/ STEPHEN G. EMERSON
- ----------------------
Stephen G. Emerson
FIRST AMENDMENT TO PROMISSORY NOTE
This Amendment (the "Amendment") to the Promissory Note (the "Note") dated
October 20, 1993, payable to Aastrom Biosciences, Inc., a Michigan corporation
(the "Company"), executed by Stephen G. Emerson ("Maker"), is dated as of
October 30, 1996.
WHEREAS, Section 3 of the Note provides that all principal and accrued but
unpaid interest is due and payable on the third anniversary of the date of the
Note (i.e. October 20, 1996).
WHEREAS, the Company desires to amend the Note to provide that all
principal and accrued but unpaid interest shall be due and payable on June 30,
1997.
NOW, THEREFORE, the Company hereby amends the Note as follows:
1. Section 3 of the Note is hereby amended to read in its
entirety as follows:
"The principal and all unpaid accrued interest owing on this Note
shall mature and be fully due and payable on June 30, 1997.
Maker may prepay any or all of the principal and interest owing
on this Note at any time without penalty or premium."
2. All other provisions of the Note shall remain in full force
and effect.
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed by its duly authorized officer as of the date set forth above.
AASTROM BIOSCIENCES, INC.
By: /s/ R. Douglas Armstrong
----------------------------------
R. Douglas Armstrong,
President and CEO
EXHIBIT 10.26
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into as of July 1,
1995, by and between AASTROM BIOSCIENCES, INC., a Michigan corporation
("Company") and STEPHEN G. EMERSON, M.D., Ph.D. ("Consultant"), with respect to
the following facts:
RECITALS
A. Consultant is an employee of the University of Pennsylvania
("Employer").
B. Company desires to obtain the consulting services of Consultant, and
Consultant desires to provide such consulting services, as set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. ENGAGEMENT. Company hereby appoints Consultant, and Consultant
hereby accepts such appointment, upon the terms and conditions
set forth herein.
2. ASSIGNMENT. Consultant is engaged as a consultant for the
following described assignments:
2.1 Assist Company in the planning, design, direction,
supervision and implementation of Company's research
programs and clinical trials.
2.2 Assist Company with investor relations, financing and other
needed presentations.
2.3 Assist Company in such other matters and areas as may be
mutually approved by Consultant and Company.
Consultant shall perform such consulting services at times and
places which are mutually convenient to Company and Consultant,
with Consultant making himself available for at least
approximately eight (8) hours per month at Company's facility.
3. RESTRICTIONS. Consultant shall not perform any consulting or
other services for any other commercial party which is engaged in
research, development, technology, or products which are similar
to or competing with that of Company.
4. COMPENSATION. As compensation for Consultant performing the
consulting services pursuant to this Agreement, Company shall pay
to Consultant a consulting fee of $3,125 (Three Thousand One
Hundred Twenty Five Dollars) per calendar quarter, payable
quarterly in arrears, as of the last day of the months of
September, December, March and June. Consultant shall be
entitled to reimbursement for necessary out-of-pocket
expenditures incurred in the performance of his consulting
services, but subject to Consultant's obtaining the preapproval
of Company prior to Consultant incurring said expenditures.
5. TERM. The term of this Agreement shall commence on July 1, 1995,
and shall continue until June 30, 1996, unless sooner terminated
in accordance with the provisions hereof.
6. TERMINATION.
6.1 Termination Without Cause. Either party may terminate this
Agreement without cause upon not less than thirty (30) days'
prior written notice delivered to the other. The death of
Consultant shall automatically terminate this Agreement.
6.2 Termination for Cause. The non-defaulting party shall have
the right to terminate this Agreement upon the occurrence of
any of the following events, and the expiration of any
applicable period of cure: (a) the failure of Company to
make any payment within ten (10) days after the date of
receipt of a written notice from Consultant stating that a
payment is past due; (b) the failure of Consultant to
perform the assignment to the reasonable satisfaction of
Company; (c) the failure of a party to comply with any other
term or condition of this Agreement, and the expiration of
ten (10) days after written notice thereof, specifying the
nature of such default, without cure; and (d) any attempt by
Consultant to assign or otherwise transfer Consultant's
rights hereunder.
7. INDEPENDENT CONTRACTOR. The parties expressly intend and agree
that Consultant is acting as an independent contractor and not as
---
an employee of Company. Consultant retains sole and absolute
discretion, control, and judgment in the manner and means of
carrying out the assignment, except as to the policies and
procedures set forth herein. Consultant understands and agrees
that Consultant shall not be entitled to any of the rights and
privileges established for Company's employees (if any),
including but not limited to
the following: retirement benefits, medical insurance coverage,
life insurance coverage, disability insurance coverage, severance
pay benefits, paid vacation and sick pay, overtime pay, or any of
them. Consultant understands and agrees that Company will not pay
or withhold from the compensation paid to Consultant pursuant to
this Agreement any sums customarily paid or withheld for or on
behalf of employees for income tax, unemployment insurance,
social security, workers' compensation or any other withholding
tax, insurance, or payment pursuant to any law or governmental
requirement, and all such payments as may be required by law are
the sole responsibility of Consultant. Consultant agrees to hold
Company harmless against and indemnify Company for any of such
payments of liabilities for which Company may become liable with
respect to such matters. This Agreement shall not be construed as
a partnership agreement. Company shall have no responsibility for
any of Consultant 's debts, liabilities or other obligations or
for the intentional, reckless or negligent acts or omissions of
Consultant or Consultant's employees or agents.
8. CONFIDENTIALITY.
8.1 Acknowledgment of Proprietary Interest. Consultant
recognizes the proprietary interest of Company in any Trade
Secrets of Company. As used herein, the term "Trade
Secrets" includes all of Company's confidential or
proprietary information, including without limitation any
confidential information of Company encompassed in any
reports, investigations, experiments, research or
developmental work, inventions, technology, experimental
work, work in progress, drawings, designs, plans, proposals,
codes, marketing and sales programs, financial projections,
cost summaries, pricing formula, and all concepts or ideas,
materials or information related to the business, products
or sales of the Company or the Company's customers which has
not previously been released to the public at large by duly
authorized representatives of the Company, whether or not
such information would be enforceable as a trade secret or
the copying of which would be enjoined or restrained by a
court as constituting unfair competition. Consultant
acknowledges and agrees that any and all Trade Secrets of
Company, learned by Consultant during the course of the
engagement by Company or otherwise, whether developed by
Consultant alone or in conjunction with others or otherwise,
shall be and is the property of Company.
8.2 Ownership of Work. All inventions, patents, discoveries,
reports and ideas arising from Consultant's services to
Company hereunder shall be the sole property of Company and
shall be Company's Trade Secrets. Consultant agrees to
assign and hereby assigns to Company, its successors or
assigns, all Consultant's right, title and interest in and
to said Trade Secrets, inventions or discoveries and any
patent application or letters parent thereon. Consultant
agrees to reasonably cooperate with Company, at no expense
to Consultant, to effect such ownership rights. Consultant
hereby irrevocably appoints Company and its officers as his
agent and attorney-in-fact to execute and file any patent
applications and related documents pertaining to said Trade
Secrets if he is deemed to be an "inventor" of an invention
which is part of Company's Trade Secrets.
8.3 Publication. Any publications and reports by Consultant
concerning Consultant's scientific work may be released in
accordance with Employer's customary practices, policies and
agreements. Provided, however, Consultant shall not publish
any manuscript or other document, solely or in co-authorship
with others, pertaining to Company's Trade Secrets or
Company's other information attributable to any project
undertaken by Company, without Company's prior written
consent.
8.4 Covenant Not to Divulge Trade Secrets. Consultant
acknowledges and agrees that Company is entitled to prevent
the disclosure of Trade Secrets of Company. As a portion of
the consideration for the appointment of Consultant and for
the compensation being paid to Consultant by company,
Consultant agrees at all times during the term of the
engagement with Company and thereafter to hold in strictest
confidence, and not to disclose or allow to be disclosed to
any person, firm or corporation, other than to persons
engaged by Company to further the business of Company, and
not to use except in the pursuit of the business of Company,
Trade Secrets of Company, without the prior written consent
of Company, including Trade Secrets developed by Consultant.
8.5 Return of Materials at Termination. In the event of any
termination of Consultant's appointment, with or without
cause, Consultant will promptly deliver to Company all
materials, property, documents or other information, or any
reproduction or excerpt thereof, belonging to Company or
containing or pertaining to any Trade Secrets.
8.6 Remedies Upon Breach. In the event of any breach of this
Agreement by Consultant, Company shall be entitled, if it so
elects, to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to
enjoin Consultant from violating any of the terms of this
Agreement, to enforce the specific performance by Consultant
of any of the terms of this Agreement, and to obtain
damages, or any of them, but nothing herein contained shall
be construed to prevent such remedy or combination of
remedies as Company may elect to invoke. The failure of
Company to promptly institute legal action upon any breach
of this Agreement shall not constitute a waiver of that or
any other breach hereof.
9. MISCELLANEOUS.
9.1 Governing Law. This Agreement shall be interpreted,
construed, governed and enforced according to the laws of
the State of Michigan.
9.2 Attorneys' Fees. In the event of any litigation concerning
any controversy, claim or dispute between the parties
hereto, arising out of or relating to this Agreement or the
breach hereof, or the interpretation hereof, the prevailing
party shall be entitled to recover from the losing party
reasonable expenses, attorneys' fees, and costs incurred
therein or in the enforcement or collection of any judgment
or award rendered therein.
9.3 Amendments. No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in
writing and signed by the parties hereto.
9.4 Successors and Assigns. The rights and obligations of
Company under this Agreement shall inure to the benefit of
and shall be binding upon the successors and assigns of
Company. Consultant shall not be
entitled to assign any of Consultant's rights or obligations
under this Agreement.
9.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the
appointment of Consultant.
9.6 Employer Policies. Consultant represents, warrants and
covenants that Consultant's performance of the obligations
under this Agreement does not and will not violate the terms
of any of Consultant's agreements with Employer or any other
party.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
COMPANY: CONSULTANT:
AASTROM BIOSCIENCES, INC.
By: /s/ R. DOUGLAS ARMSTRONG /s/ STEPHEN G. EMERSON
--------------------------- -------------------------------
R. Douglas Armstrong, Ph.D. Stephen G. Emerson, M.D., Ph.D.
President and CEO
EXHIBIT 10.27
CLINICAL TRIAL AGREEMENT
------------------------
This Clinical Trial Agreement ("Agreement") is entered into as of the 28 day
of August, 1996 (the "Effective Date"), by and among Aastrom Biosciences, Inc.
("Aastrom"), located at 24 Frank Lloyd Wright Dr., Lobby L, Ann Arbor, MI
48105, and Loyola University Medical Center Cancer Center (the "Institution"),
located at 2160 South First Avenue, Maywood, IL 60153. Definitions shall have
the meaning as set forth in Exhibit A.
RECITALS
WHEREAS, Aastrom is the developer, manufacturer and/or licensee of medical
devices and materials, such as a Cell Production System ("CPS") device and
related materials and device, which have potential medical application for use
in subjects care and research;
WHEREAS, Aastrom desires to conduct a human clinical trial ("Study") of the
CPS in subjects in accordance with a protocol entitled "A Pilot Trial of
Autologous Transplantation For Patients With Advanced Breast Cancer Using Marrow
Cells Expanded Ex Vivo" ("Protocol") which is incorporated herein by reference
as Exhibit B attached hereto;
WHEREAS, the Institution has research, clinical and medical facilities,
technical capabilities and expertise in order to conduct the Study in accordance
with the Protocol;
WHEREAS, the Study contemplated by this Agreement is of mutual interest and
benefit to the Institution and to Aastrom such that the parties hereto desire to
have the Institution conduct the Study under the qualified direction of Patrick
J. Stiff, M.D. (the "Principal Investigator"); and
WHEREAS, Aastrom and the Institution agree to conduct the Study in
accordance with the terms and conditions hereinafter set forth.
AGREEMENT
I. CLINICAL TRIAL DESCRIPTION
The Institution agrees to undertake and complete the Study described in the
Protocol (Exhibit B) in compliance with all applicable laws, rules and
regulations relating to the Study, including without limitation, all laws,
rules and regulations concerning or promulgated by the Food and Drug
Administration ("FDA").
Aastrom agrees to provide the Institution the laboratory and clinical
equipment listed in the Schedule of Laboratory and Clinical Equipment on
Exhibit C which are reasonably necessary for the Institution to conduct the
Study. Aastrom shall retain title to all such equipment which shall
promptly be returned to Aastrom upon request by Aastrom.
II. FUNDING
Aastrom shall provide payments to the Institution in accordance with the
terms contained in the Clinical Trial Budget (Exhibit D) and the Schedule
of Clinical Trial Milestone Payments (Exhibit D) incorporated herein.
III. CONDUCT OF STUDY
A. Facilities
----------
The Study shall be conducted only at the following locations: Loyola
University Medical Center Cancer Center, 2160 South First Avenue,
Maywood, IL 60153. The CPS and other Study materials may not be
transferred to any other location or to any third party without the
prior written consent of Aastrom.
B. Investigator
------------
The Institution agrees that the Study will be conducted under the
direction of the Principal Investigator in accordance with the
Protocol and the Investigator Agreement (see Section 13.0 of the
Clinical Protocol) and incorporated herein by reference. The
Principal Investigator may, subject to the prior written consent of
Aastrom, designate a clinical coordinator and one or more
subinvestigators to assist in conducting the Study. The Institution
acknowledges that the Principal Investigator and subinvestigators have
each executed an Investigator Agreement, copies of which are included
in Exhibit E. In the event that additional subinvestigators are added
to the Study, such subinvestigators must execute and deliver an
Investigator Agreement which shall be deemed incorporated by reference
into this Agreement. In the event the Principal Investigator can no
longer function in such capacity, then Aastrom and the Institution
shall attempt to agree on a replacement. If a mutually acceptable
replacement cannot be agreed upon, this Agreement and the Study at the
Institution shall terminate. The Institution agrees that it will use
its best efforts to recruit qualified subjects for enrollment in the
Study consistent with the guidelines contained in the Protocol and the
best interest of the subject; however, no subjects shall be enrolled
in the Study if they are currently enrolled in another investigational
study without the prior written consent of Aastrom.
C. Compliance with Protocol
------------------------
Any changes to the Protocol may only be made with the prior written
agreement of Aastrom; provided that during the Study, if the Principal
Investigator feels that it is necessary to deviate from the Protocol
in order to protect the life or physical well-being of a Study subject
before written approval can be obtained, he/she may do so in
accordance with the procedures detailed in the Protocol.
D. Institutional Review Board Approval and Informed Consent
--------------------------------------------------------
The Institution will obtain: (i) the approval of the governing
Institutional Review Board ("IRB") prior to initiating the Study and
thereafter as required by applicable laws, rules and regulations; and
(ii) prior written informed consent of all subjects and/or their legal
guardians in a form that is substantially the same as provided in the
Protocol and satisfactory to both the governing IRB and Aastrom and in
compliance with applicable laws, rules and regulations.
E. Adverse Events
--------------
The Institution shall immediately notify Aastrom (Thomas E. Muller,
Ph.D., Vice President Regulatory Affairs at 313/930-5555 and/or by fax
at 313/930-5520) of any unanticipated adverse effect, whether ascribed
to the investigational device or not, in accordance with the
instructions provided in the Protocol.
2
IV. STUDY MONITORING AND ACCESS TO FACILITIES
Aastrom's designated representatives and/or authorized representatives of
regulatory agencies may, at all reasonable times, visit the Institution in
order to: (i) determine the adequacy of the facilities, (ii) validate case
reports against original data in the subject medical records and the files
of the Principal Investigator, and (iii) monitor the conduct of the Study
to determine whether the Study is being conducted in compliance with the
Protocol and all applicable laws, rules and regulations. The Institution
agrees to obtain any required subject release(s) to allow Aastrom's
designated representatives, and/or authorized representatives of regulatory
agencies, to conduct such review prior to enrolling each subject in the
Study.
V. REPORTS
The Institution agrees to have the Principal Investigator submit reports to
Aastrom and the reviewing IRB in accordance with the Protocol and all
applicable laws, rule and regulations.
VI. PROPRIETARY RIGHTS
A. Data and Materials
------------------
The Institution understands and agrees that the underlying rights to
the CPS and other intellectual property and materials which are the
subject of the Protocol belong to Aastrom. The parties agree that the
Institution shall retain control over the CPS and Study materials, and
further agree not to allow access to, disclose the existence or nature
of, or transfer the CPS or Study materials to third parties without
advance written approval of Aastrom. Aastrom reserves the right to
distribute the CPS and Study materials to others and to use them for
its own purposes. Title to the CPS and Study materials shall remain
with Aastrom. Further, the Institution agrees that data and materials
derived as a direct result of the Study described in the Protocol
(hereinafter referred to as "Clinical Trial Information") whether
generated by the Institution, the Principal Investigator, and/or their
agents or employees, either solely or jointly with others, is the
property of Aastrom; provided that the Institution and the Principal
Investigator may utilize the Clinical Trial Information in furtherance
of academic publications authorized by this Agreement and for subject
care purposes.
B. Patent Ownership and Related Matters
------------------------------------
The Institution agrees that the Study results and any inventions or
discoveries by the Institution, the Principal Investigator or their
agents or employees during the Study that are modifications,
improvements or new uses applicable to the CPS or that are a direct
result of the performance of the Study in accordance with the detailed
testing Protocol provided by Aastrom to Institution and which are
dependent on, or relate to, the Study, the claims of Aastrom's
patentable inventions, the use of the cells processed through the CPS
or Aastrom's Confidential Information shall be the property of
Aastrom. Any invention arising out of the work performed under this
Study solely by the Institution and not covered in the previous
sentence shall be the exclusive property of the Institution (the
"Institution Invention") and shall not be considered a part of
Aastrom's Confidential Information. The Institution shall promptly
disclose each such Institution Invention and the terms under which the
Institution would be prepared to license it. Aastrom shall have a
right of first refusal to exclusively develop, license and
commercialize such Institution Invention. Aastrom shall have sixty
(60) days after receipt of such disclosure to exercise its right of
first refusal, and if so exercised, the parties shall thereafter
negotiate a mutually acceptable licensing agreement in good faith. If
the Institution at any time
3
offers such Institution Invention on terms different than those
disclosed to Aastrom, the Institution shall offer such Institution
Invention to Aastrom on such different terms in accordance with the
first right refusal herein. The Institution and Principal Investigator
shall not obtain, or attempt to obtain, patent coverage on the CPS or
its use without the express written consent of Aastrom. The
Institution and the Principal Investigator shall assist Aastrom in
prosecuting any Aastrom patent applications and shall execute and
deliver any and all instruments necessary to make, file and prosecute
all such applications, divisions, continuations, continuations-in-part
or reissues thereof.
VII. WARRANTIES AND REPRESENTATIONS
A. No Warranties
-------------
It is understood that the CPS is experimental in nature, has not been
approved for commercial distribution and is provided hereunder for
investigational purposes only. NEITHER THE INSTITUTION NOR AASTROM
MAKES ANY REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
ANY REPRESENTATION WITH RESPECT TO SAFETY, EFFICACY, MERCHANTABILITY,
FITNESS FOR ANY PURPOSE OR NON-INFRINGEMENT OF ANY INTELLECTUAL
PROPERTY RIGHTS, WITH RESPECT TO THE PRODUCT OR INFORMATION PROVIDED
TO THE OTHER HEREUNDER.
B. Representations of the Parties
------------------------------
Each party hereto represents that it has right to enter into and
perform its respective obligations under this Agreement.
C. Representations by the Institution and the Principal Investigator
-----------------------------------------------------------------
The Institution represents that: (i) it has adequate facilities and
staff to conduct the Study in accordance with the Protocol; (ii) the
governing IRB is qualified to review and approve the Study; and (iii)
the Principal Investigator is qualified by education and training to
conduct the Study and has not been disqualified, or otherwise limited,
as a clinical investigator by the FDA or any other regulatory or
administrative body. The Institution represents that the Principal
Investigator and all other investigators and personnel that may
perform services hereunder are its employees and shall abide by the
terms and conditions of this Agreement as if each were a party hereto.
VIII. LIMITATIONS OF LIABILITY
In no event shall any party be liable to the other party hereto for any
incidental, special or consequential damages.
IX. INDEMNIFICATION
A. Indemnification of Aastrom
--------------------------
Aastrom agrees to indemnify, defend and hold harmless the Institution,
the Loyola University System, and their Regents, officers, agents and
employees from and against any and all claims, suits, and liabilities
(collectively "Liabilities") arising out of or resulting from the
activities to be carried out pursuant to the obligations of this
4
Agreement, including but not limited to the use by Aastrom of the
results of the Study; provided that such Liabilities do not arise
from:
i. a failure to adhere to the Protocol or written instructions
relative to use of the CPS of other materials utilized in the
Study;
ii. a failure to comply with any applicable law, rule or regulation
relating to the Study, including without limitation, all FDA
regulations or other governmental requirements; or
iii. the negligence or willful misconduct by the regents, officers,
agents or employees of the Institution or the Loyola University
System.
B. Indemnification by the Institution
----------------------------------
The Institution agrees, to the extent allowed by the Constitution and
the laws of the State of Illinois, to indemnify, defend and hold
harmless Aastrom and its directors, officers, agents and employees
from and against any and all Liabilities they may suffer in connection
with the Study which arise out of the negligent acts or omissions of
the Institution, its employees or agents pertaining to the activities
to be carried out pursuant to the obligations of this Agreement;
provided, however, that Institution shall not hold Aastrom harmless
from claims arising out of the negligence or willful malfeasance of
Aastrom, its directors, officers, agents or employees, or any person
or entity not subject to Institution supervision or control.
C. Notification
------------
The Institution and Aastrom each agree to notify the other in writing
as soon as they become aware of a claim or action and to, subject to
the statutory duties of the Illinois Attorney General, cooperate with
the management and defense of such claim or action. The indemnifying
party agrees, at its own expense, subject to the statutory duties of
the Illinois Attorney General, to provide attorneys of its own
selection to defend against any actions brought or filed against the
indemnified party with respect to the subject of indemnity contained
herein. The indemnifying party shall, subject to the statutory duties
of the Illinois Attorney General, control the defense of any action;
however the indemnified party may, at its own expense, participate by
providing attorneys of its own selection. No indemnified party shall
compromise or settle any claim of action without the prior written
approval of the indemnifying party.
X. RESTRICTIONS ON USE; COMPLIANCE WITH LAWS
The Institution and the Principal Investigator agree that the CPS will be
used for clinical research purposes only in connection with the Study by
the Principal Investigator and his/her subinvestigators at the
facility(ies) described in Section III.A. under suitable containment
conditions. Neither the Institution nor the Principal Investigator shall
use the CPS for any commercial purposes, including screening, production or
sale. The CPS will not be used in the treatment or diagnosis of human or
animals except for the purpose of conducting the Study as described in the
Protocol. The Institution agrees to comply with all laws, rules and
regulations applicable to the Study and the handling, use and disposal of
any Study materials. The CPS is to be used with caution and prudence since
all of its characteristics are not known.
5
XI. CONFIDENTIALITY
A. Treatment of Confidential Information
-------------------------------------
The Institution agrees that it will not disclose or use Confidential
Information for any purpose other than the purpose of conducting the
Study, obtaining any required review of the Protocol or its conduct,
or ensuring proper medical treatment of any subject or subjects. The
Institution agrees to limit distribution of Aastrom's Confidential
Information to Institution personnel on a need-to-know basis. The
Institution agrees to ensure that its personnel abide by the
confidentiality obligations as set forth herein in accordance with
Section VII.C. The obligations set forth in this Section XI.A. shall
survive for a period of five (5) years following the termination or
expiration of this Agreement.
The term "Confidential Information" shall mean any and all oral,
written or tangible proprietary or confidential ideas, inventions,
information, data, plans, materials and know-how or the like owned,
controlled or developed by Aastrom or developed under the Agreement
and disclosed to Institution. Aastrom shall attempt to identify the
confidential status of Confidential Information disclosed hereunder,
but the failure to so mark or identify shall not destroy the
confidential nature of such Confidential Information. Without
limiting the generality of the foregoing, Confidential Information
shall include, without limitation, all clinical trial plans,
protocols, information, data analyses, proprietary equipment, and
materials related to the Confidential Information. Confidential
Information shall not include any information which the Institution
can demonstrate:
i. Was known to the Institution prior to receipt from Aastrom,
provided that the Institution promptly notifies Aastrom in
writing of the same promptly after disclosure by Aastrom;
ii. Is or becomes part of the public domain through no act by or on
behalf of the Institution;
iii. Was lawfully received by the Institution or the Principal
Investigator from a third party who had a legal right to disclose
the same; or
iv. Is required by law or regulation to be disclosed.
In the event that Confidential Information is required to be disclosed
pursuant to subsection iv., the Institution will notify Aastrom to
allow Aastrom to assert whatever exclusions or exemptions may be
available to it under such law or regulation.
B. Publicity
---------
No publicity, new releases, or other public announcement, written or
oral, relating to the Agreement, to any amendment hereto or to
performance hereunder or to the existence of an arrangement between
the parties, shall be originated by either party without the prior
written approval, such approval not to be unreasonably withheld, of
the other party except as shall be required by law.
6
C. Use of Name
-----------
No Party shall use or publicly disclose the name of another party
hereto without the prior written consent, such consent not to be
unreasonably withheld, of such other party except that the name of a
party may be disclosed to regulatory bodies such as the FDA,
Securities and Exchange Commission or as required by law.
XII. PUBLICATION RIGHTS
At least thirty (30) days prior to submission for publication, the
Institution agrees to provide Aastrom a final draft of any manuscript
describing the results obtained by the Institution from the Study. Aastrom
shall be permitted to advise as to the implications of such manuscripts
upon patentability of any inventions or the potential effects on
commercialization. The Institution shall, upon Aastrom's request, delete
any of Aastrom's Confidential Information and shall consider all
reasonable editorial suggestions based on sound scientific and clinical
judgment, Aastrom acknowledges that Institution shall have the final
authority to determine the scope and content of any publication, provided
that such authority shall be exercised with reasonable regard for the
commercial interests of Aastrom. Subject to Aastrom's right to delete such
Confidential Information and to propose mutually agreeable modification of
such manuscripts, the Institution shall have the right to submit the
manuscript for publication. However, if Aastrom determines that any
invention disclosed therein is patentable and that a patent application
should be filed on such invention, Aastrom shall notify the Institution in
writing and the Institution shall postpone publication for a period not to
exceed sixty (60) days from said notice (unless otherwise mutually agreed
in writing) to provide time for patent applications to be filed.
XIII. TERM AND TERMINATION
A. Term
----
Except as otherwise provided in this section, this Agreement shall
commence on the Effective Date hereof and continue for the period
necessary to satisfy the requirements of the Protocol.
B. Termination
-----------
Aastrom and the Institution shall have the right to terminate this
Agreement at any time without cause upon thirty (30) days prior
written notice. Any party may terminate the Study at any time if, in
its opinion, it is in the best interest of the Study subjects.
C. Termination Obligations
-----------------------
Any termination of this Agreement shall not relieve any party hereto
of any obligation or liability accrued hereunder prior to such
termination, or rescind or give rise to any right to rescind anything
done hereunder prior to the time such termination becomes effective;
nor shall such termination relieve any party from any obligation
which, by its nature, survives termination including the obligations
set forth in Articles IV through IX and X.D.
The parties further agree that all Study data and used and unused
Study equipment, materials and supplies, including the CPS, provided
to the Institution by Aastrom for the purpose of this Study will be
returned to Aastrom promptly upon request by Aastrom.
7
XIV. MISCELLANEOUS
A. Independent Contractor
----------------------
The Institution recognizes and agrees that it is operating as an
independent contractor and not as an agent of Aastrom. The Agreement
shall not constitute a partnership or joint venture, and no party may
be bound by the other to any contract, or make any representations or
warranties, express or implied, on behalf of another party, or
otherwise create any liability against another party in any way for
any purpose.
B. Assignment
----------
The rights and obligations of the parties under this Agreement shall
bind and inure to the benefit of the successors, assigns and
transferees of the parties; provided, however, this Agreement shall
not be assignable by either party without the prior written consent of
the other party.
C. Governing Law
-------------
This Agreement shall be construed and interpreted in accordance with
and governed by the laws of the State of Illinois.
D. Alternative Dispute Resolution
------------------------------
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof, including, without limitation, disputes
relating to patent validity or infringement arising under this
Agreement, shall be settled through use of an appropriate method of
Alternative Dispute Resolution, including, without limitations, by
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon an award rendered may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing, the
parties shall be entitled to petition any court of competent
jurisdiction in the event of any alleged breach of Article XI.
E. Entire Agreement: Modification
-------------------------------
This Agreement contains the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings
between them relating to the subject matter hereof.
F. Headings
--------
The headings of this Agreement are to facilitate reference only, do
not form a party of this Agreement and shall not effect the
interpretation thereof.
G. Severability
------------
If any provision of this Agreement or portion of this Agreement is
construed or declared to be invalid, such provision or portion shall
be deemed reformed to become valid in a manner consistent with the
parties' intentions under this Agreement, and the validity of the
remaining portions and provisions of this Agreement shall not be
affected thereby and shall remain in full force and effect.
H. No Waiver
---------
No waiver of a breach by a party of any provision of this Agreement
shall be construed to be a waiver of any other breach of the same of
any other provision.
8
I. No Implied License
------------------
No right or license to the CPS or to its use is granted by Aastrom or
implied as a result of the transmission of the CPS to the Institution
under the supervision of the Principal Investigator, except to the
limited extent necessary to conduct the Study. The transfer of the
CPS provided for herein does not constitute a public disclosure.
J. Necessary Acts
--------------
At the request of Aastrom, the Institution and the Principal
Investigator shall execute any documents and take any actions which
may be necessary, in the opinion of Aastrom, or its legal counsel, to
evidence or perfect any rights of Aastrom hereunder.
K. Counterparts
------------
This Agreement may be executed in counterparts all of which together
shall constitute one and the same instrument.
L. Notices
-------
All notices and other communications permitted or required under this
Agreement shall be in writing and shall be deemed to have been given
when received at the addresses set forth on the signature page hereof,
or at such other address as may be specified by one party in writing
to the other. Said written notice may be given by mail, telecopy,
rush delivery service, telegram, telex, personal delivery or any other
means to the parties at the addresses as follow:
If to the Institution:
Lori Burlew ph: (708) 327-3307
Administrator, Division of Hematology/Oncology fx: (708) 327-3319
Loyola University Medical Cancer
2160 South First Avenue
Maywood, IL 60153
If to the Principal Investigator:
Patrick J. Stiff, M.D.
Associate Professor of Medicine
Loyola University Medical Center
2160 South First Avenue
Cancer Center - Room 240
Maywood, IL 60153
ph: 708-327-3148
fx: 708-327-3220
If to Aastrom:
Thomas E. Muller, Ph.D.
Vice President Regulatory Affairs
24 Frank Lloyd Wright Drive, Lobby L
Ann Arbor, MI 48105
ph: 313-930-5573
fx: 313-930-5520
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
INSTITUTION: AASTROM:
LOYOLA UNIVERSITY AASTROM BIOSCIENCES, INC.
MEDICAL CENTER
By: /s/ By: /s/ R. DOUGLAS ARMSTRONG, PH.D.
--------------------- --------------------------------------------
Name: R. Douglas Armstrong, Ph.D.
Title: President and Chief Executive Officer
Date:9/19/96 Date: 9/3/96
------------------- ----------------------------------------
I have read this agreement and
understand my obligations hereunder:
By: /s/ PATRICK J. STIFF, M.D.
---------------------------
Patrick J. Stiff, M.D.
Principal Investigator
Associate Professor of Medicine
Director, Bone Marrow Transplantation Program
10
EXHIBIT A
DEFINITIONS
1. Aastrom. Aastrom shall have the meaning as set forth in the first
--------
paragraph of this Agreement.
2. Clinical Trial Information. Clinical Trial Information shall have the
---------------------------
meaning as set forth in Section VI.A. of this Agreement.
3. Confidential Information. Confidential Information shall have the meaning
-------------------------
as set forth in Section XI.A.
4. CPS. The CPS means the Cell Production System developed by Aastrom for the
----
ex vivo growth and expansion of human stem and hematopoietic progenitor
cells. The CPS consists of: (a) a single use Cell Cassette in which the
growth and expansion of cells takes place; (b) dedicated laboratory
instruments to facilitate the cell culture process and associated cell
inoculation and harvest procedures; (c) single use growth medium required
for the cell culture to which specified growth factors and glutamine are
added; and (d) single use harvest reagents which facilitate the removal of
the expanded cells from the Cell Cassette.
5. Effective Date. The Effective Date shall have the meaning as set forth
---------------
in the first paragraph of this Agreement.
6. FDA. FDA shall have the meaning as set forth in Article 1 of this
----
Agreement.
7. Institution. Institution shall have the meaning set forth in the first
------------
paragraph of this Agreement.
8. Institution Invention. Institution Invention shall have the meaning set
----------------------
forth in paragraph VI.B. of this Agreement.
9. Principal Investigator. Principal Investigator shall have the meaning
-----------------------
set forth in the Recitals on page 1 of this Agreement.
10. Protocol. Protocol shall have the meaning as set forth in the Recitals on
---------
page 1 of this Agreement.
11. Study. Study shall have the meaning as set forth in the Recitals on
------
Page 1 of this Agreement.
1
EXHIBIT B
LOYOLA UNIVERSITY MEDICAL CENTER
BONE MARROW TRANSPLANT PROGRAM
A PILOT TRIAL OF AUTOLOGOUS TRANSPLANTATION FOR PATIENTS WITH ADVANCED
BREAST CANCER USING MARROW CELLS EXPANDED EX VIVO.
Principal Investigator
Patrick J. Stiff, M.D.
Director, BMT Program
Loyola University Medical Center
2160 South First Avenue
Maywood, Illinois 60153
Ph: 708-327-3148
Fax: 708-327-3220
Co-Investigators
BMT Ex Vivo Expansion Team: Robert Bayer, M.D., David Peace, M.D., Deepak
Malhotra, M.D., Bahao Chen, M.D., David Oldenberg
June 21, 1996
REVISED AUGUST 5, 1996
1.0 OBJECTIVES
1.1 To assess the safety of the mixture of early-, mid-, and late-stage
bone marrow-derived mononuclear cells produced in the Aastrom Cell
Production System (CPS) when infused into patients with breast
cancer.
1.2 To determine the biological effect in terms of hematopoietic recovery
after infusion of ex vivo-produced hematopoietic cells following high
dose chemotherapy as treatment of patients with breast cancer.
1.3 To record the clinical disease related outcome in these patients with
advanced breast cancer- clinical tumor response, duration of
responses, and disease free duration post-high dose chemotherapy.
2.0 BACKGROUND
2.1 Ex Vivo Expansion: Current Status June 1996
Autologous bone marrow transplantation has been increasingly employed
as supportive therapy for subjects undergoing high dose chemotherapy
or chemoradiotherapy for malignant diseases, including lymphoma,
leukemia, and breast cancer. Breast cancer is now the most frequent
indication for autologous bone marrow or blood progenitor cell
transplantation.
Despite the use of cytokines such as granulocyte-macrophage colony-
stimulating factor (GM-CSF) and granulocyte colony-stimulating factor
(G-CSF) following bone marrow reinfusion, there is an obligate period
of profound pancytopenia lasting 1-3 weeks, and delayed engraftment
can occur, resulting in morbidity or mortality.
The safety, comfort, and cost of stem- and progenitor cell harvest are
also concerns. The standard techniques employed to harvest bone marrow
involves obtaining 500-1500 mL of bone marrow from the marrow donor,
usually under general anesthesia. In addition to the discomfort caused
by the hundreds of marrow aspirates performed, donors are subject to
the risks of general anesthesia. Finally, the bone marrow harvest
procedure is expensive. Alternatively, stem- and progenitor cells can
be collected from peripheral blood by apheresis, but this requires
chemotherapy and/or growth factors for mobilization and multiple
collections are generally necessary, which are costly.
Recently, novel technology has been developed to produce stem- and
progenitor cell populations in vitro, commonly referred to as ex vivo
expansion. Hematopoietic cell expansions achieved with this technology
are based upon the principles of continuous perfusion culture, a
bioengineered metabolic environment, augmented by hematopoietic growth
factors. Through this technology, a small bone marrow or peripheral
blood mononuclear cell population can be perfused ex vivo so that
total cell numbers, colony forming units (CFU-S) and long term culture
initiating cells (LTC-ICs) increase up to 20 fold (1-17). In a
preliminary study, Brugger et al recently reported that
expanded cells alone can reconstitute hematopoiesis after high dose chemotherapy
(18).
Important differences exist among approaches, systems and devices used for ex
vivo expansion. This study utilizes the Aastrom CPS, which includes a cell
culture device and a biological environment designed to allow the establishment
of a stromal adherent layer, using constant perfusion with medium, and
relatively low concentrations of hematopoietic growth factors. Preliminary
studies at MD Anderson Cancer Center (DM94-127), using transplantation of ex
vivo-produced cells prepared with this system, in combination with a standard
autologous marrow transplant, indicate that ex vivo expansion can be performed
reliably and reproducibly, and that no toxicity occurs with intravenous infusion
(19). Ten patients, age 18-60 years with breast carcinoma, were entered into a
study transplanting bone marrow plus ex vivo-produced cells. Bone marrow was
harvested, collecting greater than 2 x 10/8/ nucleated cells/kg and greater than
0.5 x 10/6/ CD34+ cells/kg. Twelve days prior to the planned bone marrow
transplant, 2.25 x 10/8/ mononuclear cells were inoculated into a cell culture
device, part of the CPS, and continuously perfused with medium containing
PIXY321 (5 ng/mi), Epo (0.1 U/ml) and hydrocortisone (5 x 10-6 M). The expansion
reproducibly increased total nucleated cells, CFU-GM, and long term culture
initiating cells (LTC-IC). Patients received Cyclophosphamide 2.0 g/m2/d:
Thiotepa 240 mg/mi/d: BCNU 150 Mg/M2/d. Days -7, -6, -5, with reinfusion of the
cryopreserved bone marrow on Day 0 plus the ex vivo-produced cells four hours
later. No toxicity was observed from the expanded cell infusion. Nadir WBC was
less than 0.1/ul. All patients engrafted within narrow time ranges, with median
recovery of WBC greater than 200/ul on Day 8 (range 7-8) granulocytes greater
than 500/ul on Day 11 (range 10-13) and platelets greater than 25,000/ul on Day
16 (range 13-21) and greater than 50,000 on Day 20 (range 18-27). A median of 4
(range 1-9) platelet and 4 (range 2-9) RBC transfusions were administered. No
grade greater than 2 toxicity occurred from the chemotherapy or bone marrow
infusions. Four patients had infections unrelated to the infusion of the cells
produced in the CPS. These data compare favorably with 29 historical controls
receiving the same chemotherapy and autoBMT without cell expansion, in which
granulocytes recovered to greater than 500 on Day 11 (range 7-29) and platelets
to greater than 25,000 and greater than 50,000 on Days 24 (range 9-78) and 28
(range 9-147), respectively.
A potential advantage of collecting a relatively small marrow inoculum is that
the number of contaminating malignant cells is reduced: additionally, growth of
breast cancer cells is not stimulated under these expansion conditions (Brugger
et al).
Application of this technology to autologous bone marrow and peripheral stem
cells transplant offers a potentially attractive means to increase the efficacy
and safety of autologous transplantation, while reducing its complexity and
cost. In particular, this technology could eliminate the need for operative bone
marrow
harvests, produce more rapid recovery of hematopoiesis post-
transplant, reduce the length of post-transplant hospitalization, and
could increase the purity of the stem- and progenitor cells
transfused. In addition, the inclusion of cytokine-primed progenitors
could result in accelerated hematopoietic recoveries.
2.2 Previous Pre-Clinical Research
During hematopoietic expansion culture, total cell numbers increase 8
to 11-fold over 12 days. This includes nonadherent, loosely adherent,
and tightly adherent cells. Over 80% of the nucleated cells are
viable, as shown by exclusion of propidium iodine stain (4) or Trypan
blue dye. These cells have the morphological distribution of normal
bone marrow cells, including blast cells and maturing granulocyte
precursors, maturing erythroid cells, monocytes and macrophages.
These expanded cells also show typical immunophenotype characteristics
of normal granulocyte, erythroid, monocyte/macrophage megakaryocytic,
and blast cells (5). Cell surface antigens identified using this
technique include CD3, CD11b, CD15, CD20, CD33, CD71, and glycophorin
A. While there are minor variations in staining patterns from sample
to sample, the expanded cells are typically less than 3% CD3-.20-50%
CD11b-, less than 1% CD19-, and 40-70% CD71-. The frequency of mature
T and B lymphocytes in the expanded cell population is significantly
reduced.
As shown in the experiments summarized in the Table below, it was
shown by Aastrom that varying the standard growth factor combination
(IL-3-GM-CSF or PIXY321, Epo, SCF and flt3L) had a direct effect on
the productivity of cells in the CPS, but the relative cell mixture
composition remained substantially similar. These data were obtained
in 36-well plate studies. This finding provided the original
justification for selecting the growth factor combination (Epo -
PIXY321 - flt3L) for this study to yield the desired relative
composition and mixture of early-, mid- and late-stage cells produced
in the pre-clinical experiments.
Product/cm/2/
Growth Factors CeilsX10/6/ CFU-GM LTC-IC n
None 0.58 404 yes/3/ 7
Epo, GM-CSF, IL-3, SCF 2.35 4,790 48 23
Epo, GM-CSF, IL-3 1.13 21,060 yes/3/ 3
Epo, PIXY, SCF 1.72 69,960 yes/3/ 4
Epo, PIXY 1.31 3,140 94 3
Epo, PXY, fit3L 1.57 10,580 11 14
/2/LTC-IC were not evaluated, but in these conditions, 24 week CFU-GM producing
cultures were obtained, representing an LTC-IC proxy.
Aastrom has projected, based on this pre-clinical research, that clinical-size
CPSs are expected to yield a mean of 3.0 x 10/9/ cells, 17.7 x 10/6/ CFU-GM and
6.4 x 10/5/ LTC-IC per patient in this proposed clinical feasibility trial, and
set the expected minimum per-patient cell yield from the CPS at 1.6 x 10/9/
total nucleated cells and 7.0 x 10/10/ CFU-GM. In an average 70 kg patient,
this translates to a dose of 2 x 10/5/ CFU-GM/kg. The clinically standard ABMT
engraving dose is reported to be 1 x 10/5/ CFU-GM/kg. Therefore, using the cell
dose and the CFU-GM content in the cells produced in the CPS as a key progenitor
marker, along with the reliable presence of early stage cells (e.g., LTC-IC,
CD34-lin-), there is an expectation that the CPS-produced cells should provide a
minimum full engraving dose for these subjects, with a greater number expected
for most patients. Should the minimum cell number, 1.6 x 10/9/, not be
attained, the cryopreserved back-up cells will be reconstituted and administered
to a subject on Day 0.
It is anticipated that infusion of ex vivo-produced progenitors generated with
the CPS will enhance engraftment and shorten time to recovery of granulocytes
and platelets and, in so doing, reduce the incidence of infections, febrile
episodes and the need for blood- and platelet transfusions.
Amended August 5, 1996: In several in vitro studies using tumor cells that are
easy to detect in small quantities (neuroblastoma and B-cell CLL), the expansion
process appeared to passively purge tumor cells of slightly less than one log to
greater than three logs. When combined with the smaller inoculum of marrow
needed to initiate the bioreactors as compared to a normal marrow harvest, the
depletions appear to be as high as four to five logs. It is anticipated that
since the marrows must be histologically normal for patients to enter this
trial, i.e., undetectable amount of breast cancer cells, that expansion of tumor
cells will not be important clinically. This is especially true since there is
additional in vitro data to show that the cytokines used do not stimulate the
growth of tumor cells when used whether in vitro or in vivo when used in closely
monitored clinical trials.
The washing of the expanded cell products eliminates the amount of the cytokines
to undetectable levels using a sensitive ELISA method. Only GMP (Good
manufacturing process) cytokines are used for the expansion process, making it
unlikely that any adverse clinical event will occur.
Microbial contamination has not been a problem in the patients treated to date
and in preliminary studies done preclinically. This is likely because of the
closed system setup, growth and collection of the expanded cells, the
use of antibiotics in the growth media, and the assays done 48 hours
prior to the collection of the expanded cells (day 10). In addition,
all patients will be on prophylactic antibiotics at the time of the
cell infusions as per routine BMTU protocols.
2.3 High Dose Chemotherapy and Autologous Bone Marrow Transplant Breast
Cancer
Breast cancer is responsive to initial combination chemotherapy for
metastatic disease with a 50-800,10 response rate and a 10-20%
complete response rate, but few patients are cured and median duration
of response is generally less than one year (20-24). Once patients
relapse, the response to second-line therapy is 20-40% with very few
complete responses (CR) and a median duration of response of 2-3
months and a median survival of 12 months.
When patients with metastatic breast cancer receive high-dose
chemotherapy, there is substantially higher complete response rate
than that can be achieved with conventional treatment (25-38).
Peters et al (39) used a regimen of Cyclophosphamide, Cisplatin,
and BCNU or Melphalan in 22 ER-negative patients without prior
induction chemotherapy, and reported a 54% CR rate and an overall
response rate of 73% and a median duration of response of 7 months
from the time of transplant. Antman et al recently reported similar
results with a combination of high-dose Carboplatin. Cyclophosphamide
and Thiotepa (26); each study reported approximately 20% 5-year
disease-free survival. A recently published study that compared in
a randomized fashion chemotherapy at conventional doses versus high
dose therapy with stem cell rescue verified that this high dose
approach is superior to conventional chemotherapy as measured both by
progression-free as well as overall survival. Application of the
same therapy to patients with Stage II breast cancer with greater than
10 positive nodes or Stage III disease has resulted in approximately
70% 5-year disease-free survival, substantially higher than that
reported with standard adjuvant therapy in such patients.
3.0 BACKGROUND DRUG AND DEVICE INFORMATION
3.1 Description of the CPS
The single-use, sealed, sterile cell culture device in the Aastrom
CPS consists of three rigid plastic parts separated by a gas-
permeable, water-impermeable membrane. The lower cell culture
chamber is continuously perfused by growth medium. The cells
expand in culture on the plastic surface of the cell culture bed.
The upper cell culture chamber is provided with a constant flow of
gas, such that oxygenation of the cell culture bed is accomplished
by diffusion across the membrane and through the culture medium.
Carbon dioxide is removed by the same mechanism. The medium used to
perfuse the cultured
cells is stored in a closed vessel in an adjacent refrigerator at 4 degrees C
whose only external connection is by medical grade tubing. A "Y" connector,
attached to the effluent line, allows sampling of the cell product prior to
harvest, to test for bacterial and fungal contaminants. A detailed device
description is provided in the Operators Manual provided by Aastrom. The system
to be used will include dedicated Aastrom instruments, the Processor and
incubators which replace standard laboratory equipment and perform all of the
steps in the cell production automatically and more importantly sterily, and
in a close system manner, after the initial inoculation of the cells into the
CPS. The incubator contains a cold compartment for media storage for perfusion
during the 12 day culture (perfusion begins on Day 3), and a 37 degrees C
compartment in which the Cell Cassette is placed for the duration of the
culture.
3.1.1 Cell Culture Conditions
The hematopoietic cells are suspended in tissue culture medium composed
of Iscove's Modified Dulbecco's Media supplemented with 10% fetal bovine
serum, 10% horse serum, hydrocortisone (5x10/-6/ M), PIXY321 (5 ng/mi),
glutamine (4 mM), Erythropoietin (Epo 0.1 U/ml), flt3L (5 ng/mi),
gentamicin sulfate (5 Fg/ml), vancomycin (20 Fg/ml), sterile water for
injection, and are inoculated into the CPS, starting after Day 3. The
cells are cultured in the CPS for 12 days at 37 degrees C with the tissue
culture medium continuously replaced with fresh medium. Sampling of the
culture medium is carried out 48 hours prior to harvest, to allow testing
for bacterial and fungal contaminants.
The cell harvest is performed automatically, by a programmed schedule
with the Processor. In this process, the non-adherent fraction is removed
from the cell culture device by draining the growth medium from the cell
culture device into the harvest bag. The chamber is then rinsed with 50
ml of Hank's Balanced Salt solution (HBSS). This is followed by agitation
of the cell culture device and collection of the rinse into the harvest
bag. The adherent layer is detached from the cell culture bed surface by
injection of 50 ml of Trypsin-EDTA solution. This is also followed by
agitation of the cell production device and collection of the rinse into
the harvest bag. The chamber is then given a final rinse by injecting 50
ml of HBSS. This is followed by agitation of the cell production device
and collection of the rinse into the harvest bag. Again this is done
automatically, sterily in a closed system fashion.
Following collection, the cells are washed free of culture medium as
detailed in the Operator's Manual. The final product is suspended in
appropriate media for immediate infusion.
3.1.2 Cell Culture Media Information
Studies by Aastrom and the University of Michigan have shown that, after
the cell washing regimen, the added growth factors and other reagents are
below detectable limits, using a very sensitive ELISA assay (R&D Systems,
Minneapolis, MN, and Immunex Research Corporation, Seattle, WA). These
levels are well below the level of biological activity. The horse and
fetal calf sera are tested preclinically for contamination for bacteria,
fungi, mycoplasma, endotoxin, and viruses. The expanded cell product is
washed (See Operators Manual) prior to transfusion. Nonetheless, the
human toxicities and contraindications identified for these drugs are
included below:
3.1.2.1 Recombinant Human Epo
Recombinant Human Erythropoietin: Epoetin Alfa, Procrit, NOC
0062-7402-01 Amgen, Thousand Oaks, CA.
Human Toxicity: Toxicities have included hypertension, headache,
fever, seizures, and skin rash. The majority of these subjects
had chronic renal failure, and these adverse events are frequent
sequelae of chronic renal failure and were not necessarily
attributable to Epo.
Contraindications: Epo is contraindicated in subjects with:
uncontrolled hypertension, known hypersensitivity to mammalian-
derived products, and known sensitivity to human albumin.
3.1.2.2 PIXY321
PIXY321 is a fusion protein of granulocyte-macrophage
colony-stimulating factor (GM-CSF) and interleukin 3 (IL-3).
3.1.2.3 Recombinant GM-CSF
Human Toxicity: Specific Toxicities include peripheral edema,
pleural and/or pericardial effusions, fluid retention,
sequestration of granulocytes in the lung, supraventricular
arrhythmia, elevation of serum creatinine, and elevation of
hepatic enzymes.
Contraindications: GM-CSF is contraindicated in subjects with
excessive leukemic blasts in the bone marrow or peripheral blood
(greater than 10%), or with known hypersensitivity to GM-CSF,
yeast-derived products, or any component of the product.
3.1.2.4 Flt3 Ligand (flt3L)
The manufacturer of flt3L, Immunex Research and
Development Corporation, Seattle, WA, has advised that
a biologic Master File is in preparation for clinical,
in vivo grade flt3L, and that the Master File will be
submitted to the FDA in 1996, and will be available as
reference for the purposes of this clinical feasibility
trial (Letter, Immunex to Aastrom, December 11, 1995).
Immunex has also advised that flt3L appeared to be well
tolerated when administered to mice and monkeys for 14
days, at doses up to 400@g/kg/day. Based on the safety
profile established by Immunex, including the animal
data generated to-date, flt3L has no apparent toxicities,
and does not stimulate the proliferation and detrimental
activation of mast cells.
As indicated above, the cells produced in the CPS are
washed four times, resulting in a 5-log reduction in the
presence of media components, to levels below detectable
limits. An ELISA, supplied by Immunex, is used to
determine residual flt3L levels subsequent to cell
washing.
3.1.2.5 Horse Serum
Contraindications: Known hypersensitivity to horse serum.
3.1.2.6 Fetal Calf Serum
Contraindications: Known hypersensitivity to bovine serum.
3.2 CHEMOTHERAPY AGENTS AND CYTOKINES
rhG-CSF (Filgrastim: NSC-614629)
3.2.1 Chemistry: rhG-CSF is a protein produced in E. Coli into which the
gene synthesized for high expression in E Coli has been inserted.
The 175 amino acid protein has a molecular weight of about 18,800
daltons. rhG-CSF differs from the natural protein (M.W. 19,600
daltons) in that the N-terminal amino acid is a methionine and is
not 0-glycosylated.
3.2.2 Mechanism of Action: rhG-CSF is a hematopoietic regulator which has
the ability to modulate the growth and maturation of myeloid cells,
and in particular the proliferation and differentiation of
granulocytes both in vitro and in vivo.
3.2.3 Human toxicity: Specific toxicities include medullary bone pain.
musculoskeletal symptoms (muscle cramps, back and or leg pain);
exacerbation of preexisting inflammatory conditions (psoriasis,
arthritis, vasculitis); splenomegaly and hair thinning with
prolonged administration. Elevated leukocyte alkaline phosphatase,
uric acid, and lactate dehydrogenase. Progression of patients with
myelodysplasia to acute myeloid leukemia occurred rarely during
treatment with this agent.
3.2.4 Pharmaceutical Data: rhG-CSF is supplied in colorless, glass, single
use vials containing 1.6 ml of buffered solation at a concentration
of 0.3 mg/ml. It is formulated as a sterile, colorless liquid in a
10 mM sodium acetate buffer at pH 4.0.
Administration: rhG-CSF will be administered in this study
subcutaneously. It will be undiluted and be drawn into 3 cc
syringes. To reduce the possibility of bacterial contamination in
this product which contains no preservatives, the syringes should be
stored at 2-8 degrees C and used within 24 hours of preparation,
rhG-CSF should not be frozen and vials or syringes that have been
frozen should not be used.
3.2.5 Supplier: This agent will be supplied through AMGEN for the trial
free of charge to the patients.
3.3 Carboplatin (NSC-241240) (CBCDA)
3.3.1 Human Toxicity: Side effects of Carboplatin (CBDCA) include
myelosuppression, nausea, vomiting, loss of appetite. Rare
toxicities include gross hematuria, hyponatremia, ageusia, allergic
reaction, peripheral neuropathy, veno-occlusive disease, loss of
hair, liver damage, kidney damage, hearing loss, dizziness and
blurred vision. Two cases of optic neuritis have been reported in
patients receiving carboplatin which were thought to be possible
drug-related events. A single case of severe pulmonary toxicity has
been reported.
3.3.2 Pharmaceutical Data: Formulation: CBDCA is supplied as a sterile
lyophilized powder available in single-dose vials containing 50 mg,
150 mg and 450 mg of Carboplatin for administration by intravenous
injection. Each vial contains equal parts by weight of Carboplatin
and mannitol. Immediately before use, the content of each vial must
be reconstituted with either Sterile Water for Injection. USP, 5%
Dextrose in Water, or 0.9% Sodium Chloride Injection, USP, according
to the insert.
Diluent Volume
50 mg 5 mL
150 mg 15 mL
450 mg 45 mL
These dilutions all produce a Carboplatin concentration of 10 mg/ml.
CBDCA can be further diluted to concentrations as low as 0.5 mg/ml
with 5% Dextrose in Water or 0.9% Sodium Chloride Injection, USP
(NS).
3.3.3 Storage & Stability: Unopened vials of CBDCA for injection are
stable for the life indicated on the package when stored at
controlled room temperature 150 - 300 C. and protected from light.
When prepared as directed, CBDCA solutions are stable for 8 hours
at room temperature. Since no anti-bacterial preservative is
contained in the formulation, it is recommended that CBDCA solutions
be discarded 8 hours after dilution. Parenteral drug products should
be inspected visually for particulate matter and discoloration prior
to administration.
3.3.4 Administration: Intravenous.
3.3.5 Supplier: CBDCA is commercially available and will be purchased
through third party payers.
3.4 Cyclophosphamide (NSC-26271)
3.4.1 Mechanism of Action: Cyclophosphamide is a very weak alkylating
agent, but enzymatic oxidation and a series of undefined subsequent
reactions produce one or more molecules with alkylating activity.
In experimental animals, the first step of activation occurs more
extensively in the liver than in the neoplasm or other tissues of
the host.
3.4.2 Toxicities: Human toxicity includes alopecia, nausea and vomiting,
stomatitis, leukopenia, anemia, thrombocytopenia, sterility or
decreased gonadal function, hemorrhagic cystitis and fibrosis of
the bladder.
3.4.3 Pharmaceutical Data: Formulation: Cyclophosphamide is supplied in
100, 200, and 500 mg ampules containing white powder. The drug can
be reconstituted in normal saline or 5% dextrose and water.
3.4.4 Stability: Store at room temperature. Do not store at temperatures
above 90 degrees F.
3.4.5 Supplier: This drug is commercially available for purchase by the
third party.
3.5 Thiotepa (Triethylene-thiophosphoramide) (NSC-6369)
3.5.1 Mechanism of Action: Thiotepa is a cytotoxic agent of the
polyfunctional alkylating type related chemically and
pharmacologically to nitrogen mustard. On the basis of tissue
concentration studies, it is reported that Thiotepa has no
differential affinity for neoplasms. Most of the drug appears
to be excreted unchanged in the urine.
3.5.2 Human Toxicology: The major side effects of Thiotepa are pain
at the site of injection, nausea and vomiting, anorexia,
dizziness, headache, amenorrhea and interference with
spermatogenesis. Febrile reaction and weeping from a
subcutaneous lesion may occur as the result of a breakdown of
tumor tissue. Allergic reactions are rare, but hives and skin
rash have been noted occasionally. The serious complication of
excessive Thiotepa therapy, or sensitivity to the effects of
this agent, is bone marrow depression. If proper precautions
are not observed, it may cause leukopenia, thrombocytopenia and
anemia. The most reliable guide to Thiotepa toxicity is the
white blood count.
3.5.3 Pharmaceutical Data: Formulation: Thiotepa is available in a
powder form in 15 mg vials. The powder should be reconstituted
in sterile water for injection.
3.5.4 Storage and Stability: Reconstituted solutions may be kept for
five days in a refrigerator without a substantial loss of
potency. Vials containing Thiotepa should be stored at 2-8
degrees C (35-46 degrees F).
3.5.5 Administration: The amount of diluent most often used is 1.5 ml
resulting in a drug concentration of 5 mg in each 0.5 ml of
solution. Thiotepa may be given by rapid intravenous
administration or via continuous intravenous infusion.
3.5.6 Supplier: This drug is commercially available for purchase by
the third party.
3.6 Intended Use
The intended use of the CPS is to produce human stem- and
hematopoietic progenitor cells to support subjects with compromised
hematopoietic systems. A per-patient cell production procedure,
beginning with 2.25 x 10/8/ nucleated bone marrow cells per device,
will yield at least 1.6 x 10/9/ cells. The cells will not be infused
if the cell yield is below this level; the back-up cells will be
infused in such a case.
4.0 PATIENT ELIGIBILITY
4.1 Patients with histologically confirmed breast cancer with advanced
disease as defined as high risk Stage II (greater than 10 LN), Stage III or
stage IV (inflammatory, fixed to chest wall, or fixed axillary lymph nodes)
or recurrent or metastatic disease.
4.2 Patients with measurable disease must have disease which is responsive to
standard dose systemic chemotherapy administered prior to enrollment on
study. Patients may have a maximum of two prior chemotherapy regimens for
their disease. Patients with metastatic disease (beyond draining lymph
nodes) with no evaluable or measurable disease following surgical
resection, radiotherapy, or chemotherapy are still eligible.
4.3 Patients must have a Performance status of 0-1 by SWOG criteria (see
appendix). As patient weight is used to calculate the minimum safe dose
of CFU-GM to accomplish a transplant, and given the production capabilities
of the CPS, patients in this initial trial must be less than 90 kg of
actual body weight.
4.4 Patients must have received a cumulative adriamycin dose of less than
350 mg/m2 with no prior nitrosoureas, platinum or mitomycin C.
4.5 Patients must have recovered from prior therapy with at least 4 weeks since
the last chemotherapy, 4 weeks since last radiotherapy, and 3 weeks since
major surgery.
4.6 Patients must have adequate cardiac function as defined by a MUGA with an
ejection fraction greater than or equal to 45%. Patients may not have
active coronary disease as defined by angina or history of a myocardial
infarction. In addition, patients must have no clinically apparent
uncorrectable pulmonary disease such as corpulmonale or severe COPD, or
be requiring oxygen therapy for any reason.
4.7 Patients with a history of or any evidence for brain metastases are
ineligible. Head CT or MRI scans are not required if patients are
asymptomatic.
4.8 Patients must have adequate organ function as defined by the following:
Serum creatinine less than or equal to 1.5 mg/dl or calculated Cr-CI or
greater than or equal to 60 ml/min: Hepatic function as defined by
Bilirubin less than or equal to 2.0 mg/dl and AST/ALT less than or equal to
2 x institutional normal values: hematologic functional as defined by WBC
greater than or equal to 3400/ul. Hgb greater than or equal to 9.0 gm/dl.
platelet count greater than or equal to 140,000/ul.
4.9 Exclusion Criteria include: History of hypersensitivity to horse serum
or fetal calf serum: Concurrent involvement in any other clinical trial
that affects engraftment (e.g. other hematopoietic growth factors);
treatment with any growth factors within two weeks; Previous pelvic
radiotherapy rendering the marrow hypocellular, any co-morbid condition
which, in the view of the Principal Investigator, renders the patient at
high risk from treatment complications.
4.10 Patients must undergo a BM biopsy and BM must be either free of
disease by standard histologic exam, and a cellularity on biopsy of
at least 35%.
4.11 Patients must be less than 65 years of age.
4.12 Patients must be HIV negative.
4.13 Pregnant or lactating women may not participate.
4.14 Patients with prior hemorrhagic cystitis are ineligible.
4.15 Patients must be free of active systemic infection at the time of
initiating therapy. Patients must have had no episodes of systemic
mycotic infections, nor have required Amphotericin B therapy in the
previous 12 months.
4.16 Patients must be free of active CNS diseases (seizures, etc.)
4.17 Patients must have signed an IRB approved consent form prior to trial
enrollment.
4.18 Patients may not have an active second malignancy within the previous
2 years except localized non-melanoma skin cancer or uterine cervical
cancer in situ.
5.0 TREATMENT PLAN
5.1 Registration
All patients must be registered with the Data Management office at
708-327-3230 for entry on study. A total of 6-10 patients will be
treated in this pilot study.
5.2 Bone Marrow Harvest
Patients will undergo back-up bone marrow harvest at any time prior
to initiation of the ablative chemotherapy, with cryopreservation,
using standard techniques. Patients must have greater than 2 x 10/8/
nucleated cells per kg harvested, including greater than 0.5 x 10/6/
CD34- cells/kg.
The bone marrow harvest will be performed by standard technique in an
operating suite under general or epidural anesthesia. In a standard
harvest, approximately 500-1500 ml of marrow is withdrawn. Patients
will have the back-up bone marrow collected simultaneously with the
cells for ex vivo production. If a sufficient number of cells are
collected, the bone marrow collected will be processed and a small
fraction utilized for the ex vivo culture described below, and the
remainder of the cells will be cryopreserved per
standard technique and held as a back-up for use if the prescribed number
of cells is not produced or if graft failure occurs. The cells for the
expansion will be collected from the posterior iliac crest or from the
sternum at the initiation of the harvest procedure. No more than 5 cc of
marrow for the expansion will be aspirated from each bone puncture.
Approximately 40 ml of marrow will be aspirated in this fashion.
5.3 Ex Vivo Cell Production
As mentioned in other parts of the Protocol, at the time of bone marrow
harvest, all harvested marrow will be delivered to the bone marrow
laboratory for processing. A portion of the harvested marrow will be used
for cell production in the CPS and balance of the harvested marrow will be
cryopreserved. Twelve days prior to the scheduled bone marrow transplant,
2.25 x 10/8/ mononuclear cells from freshly collected marrow will be placed
into each CPS in the presence of PIXY321 (5 ng/mi), hydrocortisone (final
concentration 5 x 10/-6/M), glutamine (4 mM), gentamicin sulfate (5 Fg/mi),
vancomycin (20 Ff/mi), Epo (0.1 U/ml/day) and fit3L (5 ng/ml). The tissue
culture medium will be supplemented with 1.0% fetal calf serum and 1.0%
horse serum. All processing will be done using the dedicated CPS
instrumentation. No standard laboratory equipment will be used for the
expansion or processing of the cells. A sample of the harvested marrow will
be sent for bacterial and fungal culture.
The cell production will be performed in the Aastrom CPS, which is operated
as a stand alone, dedicated piece of validated laboratory equipment
(incubator, refrigerator, gas pumps) which provide for constant temperature
(37C), pH (7.2-7.4), and delivery of sterile air (5% C02) to the
hematopoietic cells.
Two days prior to the completion of cell production, the cell culture
effluent will be sampled to allow for bacterial and fungal testing
including gram stain, endotoxin testing and mycoplasma. At the completion
of the cell expansion process (12 days), the non-adherent fraction will be
removed from the cell culture devices by draining the growth medium from
the cell culture devices into the harvest bag. The devices will then be
rinsed by using a syringe to inject 50 ml of an HBSS solution into an
access port. This is followed by agitation of the cell culture device and
collection of the rinse into the harvest bag. The adherent layer will be
detached from the cell culture device surface by injection of 50 ml of
Trypsin-EDTA solution via an access port. This is again followed by
agitation of the cell culture device and collection of the rinse into the
harvest bag. The chamber will be then given a final rinse with 50 ml of
HBSS, again by injection via an access port. This is followed by agitation
of the cell culture device and collection of the rinse into the harvest
bag.
The expanded cells will be washed according to the procedure outlined in
the Operators Manual.
All subjects will receive freshly harvested expanded cells. The expanded
cells must be greater than 80% viable, as determined by Trypan blue dye,
and the minimum total cell number, as
determined by an automated cell counter, will be 1.6 x 10/9/ cells.
As part of the standard laboratory in this Study, the total cell
count, CFU-GM and LTC-IC will be determined for the starting and
final cell number. The pre and post expansion sample will be sent
for cytology and immunocytochemistry for breast cancer cells.
Pre-transplant Evaluation of the cultured Cells: 48 hours prior to the
collection of the expanded cells, the effluent from the CPS will be
tested for bacterial and fungal contamination, as described above. If
the bone marrow cultures are either visibly contaminated or are
positively cultured for bacterial or fungal contamination, or if the
cultures die, the expanded cells will not be returned to the subject,
who will then simply receive her cryopreserved bone marrow.
Flow Cytometry: Aliquots of the ex vivo produced cells (approximately
10 x 1 Or) will be removed at 12 days, placed in a tube containing
sterile buffered medium, and shipped by overnight mail carrier to
Aastrom Biosciences, Inc., Domino's Farms, 24 Frank Lloyd Wright
Drive, Lobby L., Ann Arbor, MI, 48105. These cells will be analyzed
for the presence of several cell surface markers (CD34, CD1 lb, CD15,
CD33, CD3, CD4, CD8, CD19, CD71 and glycophorin A and other
appropriate markers) in the laboratory at Aastrom as potential
correlates for the cell production process. The Aastrom Laboratory
operates under GLP (Good Laboratory Practices) guidelines.
Release Criteria: Cells produced in the Aastrom CPS will be
considered eligible for release and reinfusion if greater than 1.6 x
10' nucleated cells/kg are recovered after the expansion period and
cell washing, and if greater than 80% of the nucleated cells are
viable as judged by exclusion of Trypan blue dye. Microbial
contamination studies collected from the expansion on Day 10 must
be negative.
If the expansion is not deemed sufficient, a patient will receive her
backup marrow instead, without infusion of the expanded cells.
5.5 Transplant Regimen
5.4.1 High Dose Chemotherapy (STAMP V Regimen)
Chemotherapy will begin a minimum of 48 hours following the
last pheresis. Prior to the administration of chemotherapy,
patients will receive anti-emetics including ondansetron and
dexamethasone. Chemotherapy will consist of the following:
Cylophosphamide 1500 mg/m2 Q day by continuous infusion (CI)
for 4 days (d-7 through d-4) (96 hours) Total dose 6000 mg/m2
Thiotepa 125 mg/m2 Q day by CI for 4 days (d-7 through d-4) (96
hours) Total dose 500 mg/m2.
Carboplatin 200 mg/m2 Q day CI for 4 days (d-7 through d-4) (96 hours)
Total Dose 800 mg/m2.
Supportive Issues:
All patients will receive therapy through three separate lumens. The
agents can not be mixed. Vigorous hydration will be included with a
minimum of 200 cc/hour of IV fluids with diuretics as needed, while the
chemotherapy is infusing and continuing till stem cell infusion. Patients
will receive aggressive anti-emetic therapy with ondansetron, lorazepam,
dexamethasone, etc.
5.4.2 Post-Transplant Growth Factor Support
G-CSF (10 mcg/k/d) will be administered SQ until granulocytes greater
than 2.0 x 1 O/9//l or greater than 1.0 x 1 O/9//l for 3 days. If
granulocytes fall to less than 1.0 x 10/9//l, hematopoietic growth factor
treatment can be resumed as indicated to maintain an absolute granulocyte
count greater than 1.0 x 10/9//l. GM-CSF 250 mg/m2/d may be used in
patients intolerant to G-CSF.
Patients who require the administration of any myelosuppressive therapy
in the first 7 days post transplant such as full dose Amphotericin B
therapy will be required to receive the infusion of their back up marrow
cells on that date.
5.4.3 Neutrophil Engraftment and Stopping Rules
Neutrophil engraftment is defined as recovery as granulocytes to 0.5 x
10/9//l. Back-up autologous bone marrow will be infused intravenously per
the following stopping rules:
a. Back-up cells will always be administered to subjects on Day -21 if ANC
is less than 0.5 x 10/9//l; if back-up cells are administered to a
subject on Day-21, it is reasonable to assume that an ANC level of 0.5 x
10/9/ can only be reached between Day -21 and Day -25 if the cells
produced in the CPS alone contribute to a subject's recovery, because the
administration of back-up cells would not be expected to impact
engraftment so rapidly, between Days -21 and-25. It is relevant to point
out that ANC recovery in the Day -18-25 time frame is often experienced
in standard bone marrow transplantation.
b. If the ANC is greater than 500 on Day -28 but the platelet count is less
than 20,000, the marrow cells will be infused on that date.
c. If the patient is experiencing a severe infection or uncontrolled
bleeding
at any point during the period of pancytopenia, the back-up
cells may be administered at the discretion of the investigator.
5.4.3.1 Stopping Rules
With the above as background, stopping rules will be
as follows: the trial will be stopped and reevaluated
if two subjects fail to reach ANC 0.5 x 10/9/v/1 by Day
+25, even with the administration of back-up cells on
Day +21;
The trial will also be stopped and reevaluated if
four of the first five subjects, or if any five of
the ten total subjects, required the administration
of back-up cells because they failed to reach ANC
0.5 x 1 01/1 on or before Day +21.
6.0 PRETREATMENT EVALUATION
6.1 Complete history and physical examination, including SWOG performance
status (Appendix C)
6.2 CBC, diff, and platelet count
6.3 SMA 12 and electrolytes
6.4 PT, PTT
6.5 Cardiac ejection fraction
6.6 Pulmonary function - DLCO
6.7 HIV, hepatitis, HTLV-1 (1764 panel)
6.8 Pregnancy test (in fertile women)
6.9 Tumor staging as indicated including bone scan with X ray of hot
spots. Chest X-Ray, CT scan abdomen, tumor markers, such as CEA
will be assessed.
6.10 Bilateral bone marrow aspirate and biopsy
7.0 STUDY PROCEDURES AND EVALUATIONS
7.1 Interim history, physical examination and toxicity assessment
daily while in hospital and at least weekly until WBC greater than
3000 and platelets greater than 100,000. Toxicity assessment will be
made pre-infusion and 2 and 24 hours post-infusion of both the
expanded and unexpanded bone marrow cells.
7.2 CBC, diff, platelet counts daily while hospitalized and at least twice
per week as an outpatient until WBC greater than 3000/ul and platelets
greater than 100,000/ul.
7.3 SMA twice per week while hospitalized. Electrolytes as indicated.
7.4 Tumor restaging as indicated including bone scan with X ray of hot
spots, CXR, CT scan of abdomen, and CEA, at day 60. Subsequent follow
up is as indicated for patients with this malignancy.
7.5 Criteria for discharge: A study subject will be eligible for discharge
from the hospital when she meets the following criteria:
afebrile for 2 or more consecutive days, ANC greater than 500 for 3
consecutive days and SWOG status of 0, 1 or 2.
All study subjects will receive follow-up care and treatment (as
appropriate) by their physician. The subjects' medical records will be
available to medical study monitors should additional information be
required.
8.0 DATA COLLECTION
8.1 General Information
Data will be recorded using a standard 'Theredex' reporting system at
the time of each evaluation. Data must be recorded for all subjects
from whom an Informed Consent is obtained.
8.2 Contents
Data to be collected at each of the study time period is as follows:
Pre-treatment Evaluation
------------------------
Eligibility criteria
Demographic data
Medical history
Physical examination
Laboratory profile
Bone marrow biopsy
toxicity status
Baseline (Day 0)
----------------
Laboratory profile
Bone marrow/cultured cell profile
Transfusion record
Toxicity assessment
Vital signs
Concomitant medication(s)
Infection reporting and adverse effects greater than grade 3 -
report immediately to sponsor as event occurs.
Daily Evaluations (Post-transplant)
-----------------------------------
Laboratory profile
Transfusion record
Toxicity assessment (note preinfusion, 2 hour and 24 post infusion
toxicity assessment above)
Vital signs
Concomitant medications
Infection reporting and grade greater than 2 adverse effects - report
immediately to sponsor as event occurs.
Hospital Discharge (study completion)
-------------------------------------
Laboratory profile
Vital signs
Toxicity assessment
Concomitant medications
Infection reporting and Adverse Effects grade greater than 3 - Report
immediately to sponsor as event occurs.
Early termination or D60
------------------------
Laboratory profile
Assessment of late toxicity
Transfusion record
Vital signs
Concomitant medications
Study completion questionnaire
8.3 Quality System
Quality system procedures are designed to ensure that complete, timely, and
accurate data are submitted, that protocol requirements are followed, and
that complications and/or adverse reactions are immediately identified.
The study monitors will promptly review all incoming data to identify
inconsistent or missing data and adverse effects. Data problems will be
addressed in telephone calls and correspondence to the investigational site
and during site visits. Clinical monitoring procedures are described in
Section 12 of this protocol. The Medical Monitor will receive immediate
notification of adverse reactions Grade greater than 3. Both the site and
--------------
Aastrom will maintain secure hard copy Case Record Forms and data files.
9.0 ADVERSE EFFECTS
All adverse effects, whether or not considered anticipated, must be
recorded on the data sheets. Unanticipated effects, as defined below, must
be reported promptly to the sponsor for further evaluation and adequate
required reporting to IRBs and investigators.
9.1 Anticipated Adverse Effects
The preliminary clinical experience has not identified any serious
adverse effects on health or safety caused by or associated with the
CPS and no adverse effects related to the ex vivo use fit3 ligand are
anticipated. Patients undergoing high dose chemotherapy are
anticipated to experience anorexia, nausea, vomiting, mucositis,
pancytopenia and associated infections while neutropenia. Some
patients may develop organ toxicities from high dose therapy. The
anticipated events are therefore those associated with bone marrow
transplantation and/or chemotherapy.
9.2 Unanticipated Adverse Effects
An unanticipated adverse effect is:
Any serious effect on health or safety or any life-threatening
problem, or death caused by, or associated with, a device, if that
effect, problem, or death was not previously identified in nature,
severity, or degree of incidence in the investigational plan, or any
other unanticipated serious problem that relates to the rights, safety
or welfare of subjects. [21 CFR 812.3 (s)]. In particular, any
unexpected grade III or IV toxicities or any other serious event that
might be attributable to the infusion of the expanded hematopoietic
cells.
Reporting requirements:
Unanticipated adverse effects should be reported to the Aastrom
Study Director, Thomas E. Muller, Ph.D., Vice President Regulatory
Affairs, immediately by the Investigator and subsequently to BRI.
Aastrom requires an immediate telephone report followed by a written
report within 5 days.
An investigator shall submit to Aastrom and the reviewing IRB a
report of any unanticipated adverse device effect occurring as soon
as possible, but no later than 10 working days after the
investigator learns of the effect [21 CFR 812.150 (a) (1)]. Aastrom
shall immediately conduct an evaluation and report the results of
the evaluation to FDA and to reviewing IRB's and participating
investigator(s) within 10 working days after the sponsor first
receives the notice of the effect [21 CFR 812.150 (b) (1)]. If
Aastrom determines that an unanticipated adverse effect presents an
unreasonable risk to subjects, all investigations or parts of
investigations presenting that risk shall be terminated as soon as
possible [21 CFR 812.46 (b)].
9.3 DEPARTURE FROM PROTOCOL
When a situation occurs which requires a departure from the protocol,
the Principal Investigator or other physician in attendance will
contact the Medical Monitor by telephone:
Thomas E. Muller, Ph.D.
Vice President Regulatory Affairs
Aastrom Biosciences, Inc.
24 Frank Lloyd Wright, Lobby L
Ann Arbor, MI 48105
Telephone: 313-930-5555
Fax: 313-665-0485
Contact with the Medical Monitor will be made as soon as possible in
order to discuss the situation and agree on an appropriate course of
action. The patient's medical records and source documents will
describe the departure from the protocol and the circumstance
requiring it.
10.0 STATISTICAL CONSIDERATIONS AND DATA ANALYSIS
10.1 Evaluation of the Data
All subjects will be evaluated. Descriptive statistics will be
presented for demographic variables and baseline characteristics
such as age, sex, medical history, physical examination results,
cost information (especially as this relates to morbidity).
The primary endpoint is the safety of the cells produced in the CPS.
To assess the hematopoietic recovery post-infusion with ex vivo-
produced cells, the day of engraftment is defined by the first day
on which granulocytes less than 0.5 x 10/9//I are observed. Other
secondary endpoints include nadir WBC and platelet count, febrile
days, treatment related complications, antitumor response, and
survival.
Secondary Endpoints:
a. The day of platelet transfusion independence with platelet count
less than 20,000/MM3, 50,000/MM3 and 100,000/MM3 as defined by
first of two consecutive time points on which platelet counts
meet these endpoints not related to transfusion.
b. Packed red blood cell transfusion and platelet transfusion
requirements.
c. Number of documented infections.
d. Number of bleeding episodes.
e. Number of days of hospitalization.
Tumor response and response duration
a. Patient survival at 90 days post transplant.
10.2 Safety variables
Safety variables summarized will include incidence of adverse
effects (including duration, severity, and outcome). Other safety
variables reported will include the incidence and types of
laboratory abnormalities. When the frequencies are sufficiently
large, a Fishers exact test or Chi-square test may be used to
compare enrolled subjects and historical controls including
approximately 65 patients receiving autologous bone marrow
transplants without expansion using the same preparative regimen.
10.3 Biological Effect Variables
The following biological effects will be summarized:
Incidence of febrile neutropenia
Time to platelet transfusion independence Antibiotic usage:
Number of days on antibiotics
Number of total antibiotic days (# antibiotics x days)
Number of days on antifungals
Number of days on antivirals
Number of documented infections
Time to neutrophil engraftment
Length of initial hospitalization
11.0 CLINICAL SUPPLIES
A complete CPS description is provided in the Operators Manual. 1
11.1 Materials and Supplies
11.1.1 CPS
Aastrom will supply the CPS, which includes the cell culture
device. This device consists of three rigid plastic parts
(top, cell bed, and base), and a gas-permeable, water-
impermeable membrane. Additional components include the
means to facilitate air removal, seals to maintain leak-
proof integrity, and mechanical fasteners.
11.1.2 Growth Medium
The culture medium is prepared at the clinical site by
supplementing a custom medium, produced to Aastrom
specifications in a FDA-registered facility in compliance
with GMPs (21 CFR 820), with glutamine and growth factors in
accordance with a standard operating procedure. Medium
components are shipped to or procured by the clinical
trial site according to instructions, specifications and
acceptance criteria defined by Aastrom.
11.1.3 Supporting Tubing and Materials
Aastrom will supply the supporting tubing, harvest
container, and waste container. These components will be
supplied in sterile packages (for single use only).
11.2 Packaging and Labeling
The package labeling includes the statement "Caution.
Investigational Device-Limited by United States Law to
Investigational Use," Lot Number, "Sterile unless unit package is
opened or damaged," and "Manufactured for Aastrom Biosciences, Inc."
11.3 Assembly
Components of the CPS will be received at the clinical test sites
in sterile packages. The elements of the system will be connected
under a laminar flow hood using aseptic technique provided in the
Instructions for Use. The instructions for use will be provided
by Aastrom.
11.4 Storage Requirements
The devices may be stored indefinitely under typical laboratory
conditions (50 degrees to 90 degrees F) and may be transported
at temperatures up to 125 degrees F.
11.5 Retrieval and/or Disposal of Investigational Materials
At the completion of the cell production process and harvest,
the devices will be considered biohazardous waste and disposed
of in accordance with standard procedures at the test site.
Record will be made of the date of disposal and initials of the
individual responsible for their disposition.
12.0 STUDY MONITORING
12.1 Medical Monitor
The Medical Monitor will review the investigational plan, review
adverse - reactions and/or unanticipated device effects as
reported by the Investigator and interpret clinical results.
The Medical Monitor for this study is:
Thomas E. Muller, Ph.D.
Vice President Regulatory Affairs
Aastrom Biosciences, Inc.
Domino's Farms
24 Frank Lloyd Wright Dr., Lobby L
Ann Arbor, MI 48105
Telephone: 313-930-5555
Fax: 313-665-0485
12.2 Clinical Monitor
Aastrom has designated BRI International, Inc., as Clinical Monitor
for this study. The Clinical Monitor is qualified by training and
experience to oversee the conduct of the study. The Clinical
Monitor's responsibilities include maintaining regular contact with
the investigational site, through telephone contact, correspondence
and on-site visits, to ensure that the investigational plan and FDA
regulations are followed, that complete, timely and accurate data
are addressed, and that the site facilities continue to be
adequate. Any questions regarding
these matters should be addressed to:
Diane Goleb, Senior Project Director
BRI International, Inc.
15825 Shady Grove Road
Rockville, MD 20850
Telephone: 301-548-0500
Fax: 301-548-0519
12.3 Monitoring Procedures
12.3.1 Preinvestigational Site Visit
The Preinvestigational Site Visit, conducted by the Clinical
Monitor, will involve review of relevant FDA regulations and
inspection procedures, the investigational plan, requirements for
IRB review and approval, completion and submission of forms,
record keeping requirements, and administrative reports.
The adequacy of the facilities, the availability of the
investigators, the potential number of study participants, and the
provisions for staff support will also be assessed during the
Preinvestigational Site Visit.
12.3.2 Routine Monitoring Visits
Regular clinical monitoring visits to the investigational site
will be conducted by Aastrom and BRI.
To ensure that the Principal Investigator and his staff understand
and accept their defined responsibilities, the Clinical Monitor
will maintain regular correspondence and perform periodic site
visits during the course of the study to verify the continued
acceptability of the facilities, compliance with the
investigational plan and relevant FDA regulations, and the
maintenance of complete records. Clinical monitoring will include
review and resolution of missing or inconsistent results and
source document checks (i.e., comparison of submitted study
results to original reports) to assure the accuracy of the
reported data.
The Clinical Monitor will evaluate and summarize the results of
each site visit in written reports, identifying any repeated data
problems with any investigator and specifying recommendations for
resolution of noted deficiencies.
12.3.3 Termination/Close-out Procedures
The Clinical Monitor, BRI, will notify the investigator in
writing of study completion/termination. The letter will
include the reason for termination, document unresolved
study discrepancies, and remind the investigator of her
obligation to retain records according to FDA regulations.
BRI will be responsible for meeting the FDA regulations with
regards to record keeping and records retention.
BRI will conduct a standard closure monitoring site visit.
The objectives of the closing visit are:
verify compliance with protocol and FDA regulations; ensure
accuracy and completeness of subject and administrative
files; resolve any outstanding questions/problems; verify
accountability for the test devices; ensure the proper
disposition of test devices and completed case report forms;
confirm the investigator's understanding of his/her
regulatory obligations, including record retention
requirements.
13.0 INVESTIGATOR OBLIGATIONS
13.1 Principal Investigator Responsibilities
13.1.1 Compliance
The Principal Investigator is responsible for ensuring that
the study is conducted according to the signed Investigator
Agreement, the investigational plan, and applicable FDA
regulations for protecting the rights, safety and welfare of
subjects under the Investigators care. The Principal
Investigator must follow the Investigator Agreement, the
investigational plan, and all conditions of FDA and IRB
approval.
13.1.2 Awaiting Approval
Written confirmation of IRB approval must be provided to
Aastrom prior to the start of the study. The Principal
Investigator may determine whether potential subjects would
be interested in participating in a study but may not
request signature of the Informed Consent or allow any
subject to participate until FDA and the reviewing IRB have
approved the study.
13.1.3 Supervising Device Use
The Principal Investigator must supervise all use of the CPS
involving human subjects and may not supply the device to any
person not specifically authorized to receive it according to
the investigational plan and applicable regulations.
13.1.4 Informed Consent
The Principal Investigator shall make known to each subject the
nature, expected duration, and purpose of the study; the
administration and hazards of treatment; and available
alternative therapy. Signed, written Informed Consent must be
obtained prior to treatment. The original will be kept by the
Principal Investigator and will be subject to review by Aastrom.
Subjects will be informed that their medical records will be
subject to review by Aastrom and the FDA. Subjects shall be
informed that they are free to refuse participation in this
clinical investigation; and if they participate, that they may
withdraw from the study at any time without prejudicing future
care.
13.1.5 Device Disposal
Upon completion or termination of the study of the Principal
Investigators participation in the study, or at Aastrom's
request, the Principal Investigator must return to Aastrom the
device(s) or otherwise dispose of the device(s) as Aastrom
directs.
13.1.6 Reporting Requirements
Any life-threatening and/or unexpected serious (grade 3 or 4)
toxicities will be reported immediately to the Study Chairman
who, in turn, will notify the IRB (Surveillance Committee) and
the study sponsor.
13.1.7 Inspections and Records
In accordance with the Investigator Agreement, the Principal
Investigator shall permit authorized FDA employees to enter and
inspect any site where the device or records pertaining to the
device are held, and to inspect and copy all records relating
to an investigation, including subject records.
13.1.8 Investigator Records
The Principal Investigator will maintain complete, accurate and
current study records, including the following materials:
Correspondence with FDA, Aastrom, BRI, and the IRB; Record of
receipt of the device:
Instructions for device use;
Subject Records, including Informed Consent, copies of
Case Report Forms and supporting documents (laboratory
reports, medical records, etc.); Log Book;
Current study protocol and a log of any significant
protocol deviations (e.g., lack of informed consent or
treatment of ineligible subjects);
Adverse event reports;
Certification that the investigational plan has been
approved by all of the necessary approving authorities;
The approved blank informed consent form and blank
subject report forms. Signed Investigator's Agreement
with CV's of the Principal Investigator and all
participating sub-investigators attached.
These records shall be maintained for a period of 2
years after the latter of the following two dates: the
date on which the investigation is terminated or
completed, or the date that the records are no longer
required for purposes of supporting a premarket
approval application or notice of completion of a
product development protocol.
13.1.9 Investigator Reports
The Principal Investigator will be responsible for the
following reports:
13.1.9.1 Unanticipated Adverse Effects
The Investigator will report any serious
adverse effect, death or life-threatening
problems that may reasonably be regarded as
caused by the CPS to Aastrom and the
reviewing IRB as soon as possible but no
later than 10 working days after the event.
All anticipated serious adverse effects
should be documented with an explanation of
any medical treatment administered.
An unanticipated serious adverse effect is
defined as any serious adverse effect on
health or safety, or any life-threatening
problem or death caused by, or associated
with this device, if that effect, problem,
or death was not previously identified in
nature, severity, or degree of incidence in
this investigational plan.
13.1.9.2 Withdrawal of IRB Approval
The Principal Investigator will immediately
notify to Aastrom (within 5 working days)
if, for any reason, the IRB withdraws
approval to conduct the investigation.
The report will include a complete
description of the
reason(s) for which approval was withdrawn.
13.1.9.3 Departure from Protocol
The Principal Investigator shall notify Aastrom
and the IRB of any deviation from the
investigational plan made to protect the life
or physical well-being of a subject in an
emergency. A full report should be made as soon
as possible and in no case later than 5 working
days after the emergency. NOTE: Except in such
an emergency, prior approval by Aastrom is
required for changes in, or deviations from,
the investigational plan. If such changes or
deviations may affect the scientific soundness
of the plan or the rights, safety or welfare of
subjects, FDA and IRB approval are also
required.
13-1.9.4 Progress Reports
The Principal Investigator is required to
submit progress and administrative reports to
Aastrom, and to the reviewing IRB. Reports will
include the number of study subjects, a summary
of all adverse reactions, and a general
description of the study's progress.
13.1.9.5 Final Report
The Principal Investigator will submit a final
report to Aastrom within four weeks following
termination of the study or that site's
participation in the study, and within three
months to the IRB.
13.1.9.6 Other Reports
Upon request, the Principal Investigator will
provide accurate, complete, and current
information to Aastrom Biosciences, Inc., the
FDA, and to the reviewing IRB.
13.1.9.7 Investigator Materials Accountability
All devices received and used by the Principal
Investigator will be inventoried and accounted
for throughout the study. The devices will be
stored in a secured area. Upon study
completion, all unused devices will be returned
to Aastrom. A final inventory will then be
performed.
13.1.9.8 Laboratory Normal Values
The investigational site must maintain a current copy of
normal values used by that site's clinical laboratory. The
Principal Investigator must assess the clinical significance
of all abnormal laboratory values. All clinically significant
abnormalities must be characterized by the Principal
Investigator as treatment-related, not treatment-related, or
of uncertain etiology; all abnormalities judged treatment-
related or of uncertain etiology must be repeated. Any
abnormal values that persist should be followed at the
Principal Investigators discretion. In some cases, significant
changes within the normal range will require similar judgment.
13.1.9.9 Disclosure of Data
All information concerning this clinical study are considered
confidential. The Principal Investigator agrees to use this
information only to accomplish this study and will not use it
for other purposes without Aastrom's written consent.
It is understood by the Principal Investigator that the
information developed in the clinical study may be disclosed
as required to the United States Food and Drug Administration.
In order to allow for the use of the information derived from
the clinical studies, it is understood that there is an
obligation to provide Aastrom with complete test results and
all data developed in the study.
Aastrom has no objection to the publication of the results of
this study by the investigator. However, a pre-publication
manuscript must be provided to Aastrom at least 30 days before
the manuscript is submitted to a publisher.
Aastrom agrees that before it publishes any results of the
study, a pre-publication manuscript will be provided to the
investigator for review at least 30 days prior to the submission
to a publisher.
13.1.10 Records Retention and Access
FDA regulations require that, following completion of a
clinical trial, a copy of all subject and administrative
records pertaining to that study be maintained by the
Investigator for 2 years after FDA approval of the
investigational device, or, if no application for approval is
filed or intended to be filed, for 2 years after all
investigations have been completed, terminated, or discontinued,
whichever time period is longer.
Completed data records must be made available for review by
Aastrom, the Clinical Monitor, and FDA. To ensure the accuracy of
data submitted, it is mandatory that representatives of Aastrom
and of the FDA have access to source documents (i.e., subject
medical records, charts, laboratory reports, etc.). Subject
confidentiality will be protected at all times.
Aastrom reserves the right to terminate the study for refusal of
the Principal Investigator to supply source documentation of work
performed in this study.
14.0 REFERENCES
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expansion potential of cord blood and bone marrow hematopoietic progenitor cells
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2. Sandstrom CE, Bender JG, Papoutsakis ET, Miller WM. Effects of CD34- cell
selection and perfusion on ex vivo expansion of peripheral blood mononuclear
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3. Moore MAS. Expansion of myeloid stem cells in culture. Seminars in
Hematology. 1995;32:183-200.
4. Verfaillie CM. Direct contact between human primitive hematopoietic
progenitors and bone marrow stroma is not required for long-term in vitro
hematopoiesis. Blood. 1992;79:2821-6.
5. Koller MR. Paisson MA, Manchel I. Palsson BO. Long-term culture-initiating
cell
expansion is dependent on frequent medium exchange combined with stromal and
other accessory cell effects. Blood. 1995;86:1784-93.
6. Koller MR, Bender JG, Papoutsakis ET, Miller WM. Effects of synergistic
cytokine combinations, low oxygen, and irradiated stroma on the expansion of
human cord blood progenitors. Blood. 1992;80:403-1 1.
7. Haylock DN, To LB, Dowse TL, Juttner CA, Simmons PJ. Ex vivo expansion and
maturation of peripheral blood CD34+ cells into the myeloid lineage. Blood.
1992;80: I 405-12.
8. Rafii S, Shapiro F, Pettengell R, et al. Human bone marrow microvascular
endothelial cells support long-term proliferation and differentiation of myeloid
and megakaryocytic progenitors. Blood. 1995;86:3353-63.
9. McKenna HJ, De Vries P, Brasel K, Lyman SD, Williams DE. Effect of flt3
ligand on the ex vivo expansion of human CD34+ hematopoietic progenitor cells.
Blood. 1995;86:3413-20.
10. Srour EF, Brandt JE, Bdddell RA, Grigsby S, Leemhuis T, Hoffman R. Long-term
generation and expansion of human primitive hematopoietic progenitor cells in
vitro. Blood. 1993;81:661-9.
11. Koller MR, Bender JG, Miller WM, Papoutsakis ET. Expansion of primitive
human hematopoietic progenitors in a perfusion bioreactor system with IL-3,
IL-6, and stem cell factor. Sio Technology. 1993;1 1:358-63.
12. Brandt JE, Briddel RA, Srour EF, Leemhuis TS, Hoffman R. Role of c-kit
ligand in the expansion of human hematopoietic progenitor cells. Blood.
1992;79:634.
13. Brugger W. Macklin W. Heimfeld S. Berenson RJ. Merteismann R. Kanz L. Ex
vivo expansion of enriched peripheral blood CD34+ progenitor ce(Is by stem cell
factor, interleukin-l b (IL-1 b), IL-6, IL-3, interferon-gamma, and
erythropoietin. Blood. 1993;81:2579-84.
14. Killer MR, Emerson SG, Paisson BO. Large-scale expansion of human stem and
progenitor cells from bone marrow mononuclear cells in continuous perfusion
cultures. Blood. 1993;82:378-84.
15. Verfaillie CM, Catanzarro PM, Li W. Macrophage inflammatory protein la,
interleukin 3 and diffusible marrow stromal factors maintain human hematopoietic
stem cells for at least eight weeks in vitro. J Exp Med. 1994; 1 79:643-9.
16. Coutinho LH, Will A, Radford J, Schiro R, Testa NG, Dexter TM. Effects of
recombinant human granulocyte colony-stimulating factor (CSF), human granulocyte
macrophage-CSF, and Gibbon interleukin-3 on hematopoiesis in human long-term
bone marrow culture. Blood. 1990;75:2118-29.
17. Shapiro F, Yao T-J, Raptis G, Reich L, Norton L, Moore MAS. Optimization of
conditions for ex vivo expansion of CD34- cells from patients with stage IV
breast cancer. Blood. 1994;84:3567-74.
18. Brugger W. Heimfeld S, Berenson RJ, Merteismann R, Kanz L. Reconstitution
of hematopoiesis after high-dose chemotherapy by autologous progenitor cells
generated ex vivo. NEJM. 1995;333:283-7.
19. Champlin RE, Mehra R, Gajewski J. et al. Ex vivo expanded progenitor cell
transplantation in patients with breast cancer. Blood. 1995;(in press):(abs)
20. Hortobagyi GN, Bodey GP, Buzdar AU, et al. Evaluation of high dose versus
standard FAC chemotherapy for advanced breast cancer in protected environment
unit: a prospective randomized study. J Clin Oncol. 1987;5:354-64.
21. Hortobagyi GN. Multidisciplinary management of advanced primary and
metastatic breast cancer. Cancer. 1994:74 Suppi.416-23.
22. Aisner J, Cirrincione C, Perloff M, et al. Combination chemotherapy for
metastatic or recurrent carcinoma of the breast - A randomized phase III trial
comparing CAF versus VATH versus VATH alternating with CMFVP: Cancer and
Leukemia Group B Study 8281. J Clin Oncol. 1995; 13:1443-52.
23. Hayes DF, Henderson IC, Shapiro CL. Treatment of metastatic breast
cancer: Present and future prospects. Semin Oncol. 1995; 22 Suppl. 5:5-21.
24. Henderson IC. Chemotherapy for advanced disease. In: Harris JR, Hellman
S, Henderson IC, Kinne DW, eds. Breast Diseases. Philadelphia: JB Lippincott;
1987:428-79.
25. Cheson BD. Bone marrow transplant trials for breast cancer. Oncology.
1991; 5:55-62.
26. Antman K, Ayash L. Elias A, et al. A phase 11 study of high-dose
cyclophosphamide, thiotepa, and carboplatin with autologous marrow support in
women with measurable advanced breast cancer responding to standard-dose
therapy. J Clin Oncol. 1992:10:102-10.
27. Eddy DM. High-dose chemotherapy with autologous bone marrow
transplantation for the treatment of metastatic breast cancer. J. Clin Oncol.
1992: 10:657-70.
28. Broun ER, Sridhara R. Sledge GW, et al. Tandem autotransplantation for the
treatment of metastatic breast cancer. Journal of Clinical Oncology. 1995:
13:2050-5.
29. Antman K, Corringhman R, De Vries E., et al. Dose intensive therapy in
breast cancer. Bone Marrow Transplant. 1.092;10 Suppl. 1:67-73.
30. Bezwoda WR, Seymour L, Dansey RD. High-dose chemotherapy with
hematopoietic
rescue as primary treatment for metastatic breast cancer: A randomized trial.
Journal of Clinical Oncology. 1995;13:2483-9.
31. Rosti G, Lasset C, Albertazzi L, et al. The EBMT data on high-dose
chemotherapy in breast cancer. Bone Marrow Transplant. 1992;10 Suppi. 2:37.
32. Hryniuk WM, Bush H. The importance of dose intensity in chemotherapy of
metastatic breast cancer. J Clin Oncol. 1984;2:1281-7.
33. Peters WP, Ross M. Vredenburgh JJ, et al. High-dose chemotherapy and
autologous bone marrow support as consolidation after standard-dose adjuvant for
high-risk primary breast cancer. J Clin Oncol. 1993;1 1:1 132-43.
34. Vaughan WP. Autologous bone marrow transplantation in the treatment of
breast cancer: Clinical and technologic strategies. Semin Oncol. 1993;20 Suppi.
6:55-8.
35. Ayash LJ, Elias A. Wheeler C, et al. Double dose-intensive chemotherapy
with autologous marrow and pedpheral-blood progenitor-cell support for
metastatic breast cancer: A feasibility study. J Clin Oncol. 1994;12:37-44.
36. Crown J. Vahdat L. - Fennelly D, et al. High-intensity chemotherapy with
hematopoietic support in breast cancer. Ann NY Acad Sci. 1993;698:378-88.
37. Dunphy FR, Spitzer G, Buzdar AU, et al. Treatment of estrogen
receptor-negative or hormonally refractory breast cancer with double high-dose
chemotherapy intensification and bone marrow support. J Clin Oncol.
1990;8:1207-16.
38. Hortobagyi GN, Dunphy F. Buzdar AU, Spitzer G. Dose intensity studies in
breast cancer-Autologous bone marrow transplantation. Prog Clin Biol Res.
1990;354B:1 95-209.
39. Peters WP, Shpall EJ, Jones RB, et al. High dose combination alkylating
agents with bone marrow support as initial treatment for metastatic breast
cancer. J Clin Oncol. 1998;6:1368-76.
40. Teicher S, Cucchi C, Lee J, et al. Alkylating agents. In vitro studies of
cross-resistence patterns in human tumor cell lines. Cancer Res. 1986;46:
4379-83.
41. Williams SF, Bitran JD, Kaminer 1, et al. A phase 1-11 study of bialkylator
chemotherapy high-dose thioptepa and cyclophosphamide with autologous bone
marrow reinfusion in patients with advanced cancer. J Clin Oncol. 1987;5:260-5.
42. Eder JP, Antman K, Elias A, et al. Cyclophosphamide and thiotepa with
autologous bone marrow transplantation in patients with solid tumors. JNCI.
1988;80:1221-6.
LOYOLA UNIVERSITY MEDICAL CENTER EXHIBIT C
Schedule of Laboratory and Clinical Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
Item Supplier Cat. No. UNIT QTY: UNIT/PKG: PKG: COST/PKG: Total Cost:
- ------------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT:
- ------------------------------------------------------------------------------------------------------------------------------------
18 degrees C to 50 degrees C thermometer SP 2 1 2 $36.00 $72.00
- ------------------------------------------------------------------------------------------------------------------------------------
neg 5 degrees C to 20 degrees C thermometer SP 2 1 2 $21.91 $43.82
- ------------------------------------------------------------------------------------------------------------------------------------
P-1000 Pipetman Gilson 1 1 1 $219.50 $219.50
- ------------------------------------------------------------------------------------------------------------------------------------
P-200 Pipetman Gilson 1 1 1 $219.50 $219.50
- ------------------------------------------------------------------------------------------------------------------------------------
P-20 Pipetman Gilson 1 1 1 $219.50 $219.50
- ------------------------------------------------------------------------------------------------------------------------------------
Repeater Pipet Eppendorf 1 1 1 $350.00 $350.00
- ------------------------------------------------------------------------------------------------------------------------------------
CPS Processor Aastrom 1 1 1 $26,940.00 $26,940.00
- ------------------------------------------------------------------------------------------------------------------------------------
CPS Incubator Aastrom 5 1 5 $15,518.00 $77,590.00
- ------------------------------------------------------------------------------------------------------------------------------------
Interim Monitor Aastrom 1 1 1 $3,000.00 $3,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
Gas Regulator Assembly Aastrom 3 1 3 $360.00 $1,080.00
- ------------------------------------------------------------------------------------------------------------------------------------
Tubing Heat Sealer Sebra 1 1 1 $3,298.00 $3,298.00
- ------------------------------------------------------------------------------------------------------------------------------------
Incubator Rack Metro 2 1 2 $346.00 $692.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
$113,724.32
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT D
SCHEDULE OF CLINICAL TRIAL BUDGET
Item Cost per patient
- ---- ----------------
Supplies $ 190.00
Reagents 167.52
Bone Marrow Transplant Laboratory 630.00
Other 128.00
Labor and fringes 2,454.45
---------
Subtotal 3,569.97
Indirect 680.03
---------
Total $4,250.00
=========
Institution shall invoice Aastrom on a monthly basis as patient marrows are
harvested and expansion is initiated.
1
EXHIBIT D
SCHEDULE OF MILESTONE PAYMENTS
COMPENSATION AMOUNT AND SCHEDULE
- --------------------------------
1. COMPENSATION AMOUNT
-------------------
Aastrom agrees to provide, according to the terms and conditions set
forth herein, and contingent upon the conducting of the Study as specified
by the Protocol, a total compensation of Forty Two Thousand Five Hundred US
Dollars ($42,500), or Four Thousand Two Hundred Fifty US Dollars ($4,250)
per subject according to the compensation schedule set forth below in
Section 2 of this Exhibit D. The $4,250 per subject compensation
represents any and all compensations associated with the Study. The total
compensation amount is based upon the actual number of subjects to be
completed and may be adjusted based upon the actual number of subjects
actually completed. If a subject is removed from the Study for any reason,
payment for that subject will be prorated.
2. COMPENSATION SCHEDULE
---------------------
The payee identified in Section 3 of this Exhibit D below will be
remunerated according to the following schedule:
Percentage Amount
----------- ------------
(US DOLLARS)
Initial Payment 25% $10,625.00
50% Subjects Completed 25% $10,625.00
All Subjects Completed 25% $10,625.00
100% Subjects Case Report Forms
Completed and Submitted 15% $ 6,375.00
Final Report 10% $ 4,250.00
3. NAME AND ADDRESS OF PAYEE
-------------------------
Payment made to: Loyola University Medical Center
Dr. Patrick Stiff
Division of Hematology/Oncology
2160 South First Avenue
Cancer Center - Room 240
Maywood, IL 60153
4. TERMINATED STUDY - PAYMENT OBLIGATIONS
--------------------------------------
If either the Institution of Aastrom terminates the Study prior to its
originally planned termination date, Aastrom shall compensate the
Institution based upon the portion of the Study completed at the date of
termination. This partial payment will be prorated according to the number
of satisfactorily completed subject visits.
2
STOCK PURCHASE COMMITMENT AGREEMENT
(Series F Preferred Stock)
between
AASTROM BIOSCIENCES, INC.
and
COBE LABORATORIES, INC.
October 29, 1996
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions.............................................................. 1
2. Commitment to Purchase Shares............................................ 3
3. Closing.................................................................. 3
4. Representations and Warranties of the Purchaser.......................... 4
5. Representations and Warranties of the Company............................ 6
5.1. Organization, Qualifications and Corporate Power................. 6
5.2. Authorization of Agreement....................................... 7
5.3. Validity......................................................... 7
5.4. Authorized Capital Stock......................................... 8
5.5. Litigation....................................................... 8
5.6. Financial Statements............................................. 9
5.7. No Convictions................................................... 9
5.8. Brokers.......................................................... 9
5.9. Subsidiaries..................................................... 9
5.10. Directors and Officers........................................... 9
5.11. No Material Adverse Change....................................... 10
5.12. Taxes............................................................ 10
5.13. Employee Benefit Plans........................................... 10
5.14. Title to Properties.............................................. 11
5.15. Leasehold Interests.............................................. 11
5.16. Insurance........................................................ 11
5.17. Other Agreements................................................. 11
5.18. Patents, Trademarks, Etc......................................... 12
5.19. Proprietary Information of Third Parties......................... 12
5.20. Compliance With Law.............................................. 13
5.21. Loans and Advances............................................... 14
5.22. Assumptions, Guaranties, Etc. of Indebtedness of Other Persons... 14
5.23. Governmental Approvals........................................... 14
5.24. Disclosure....................................................... 14
5.25. Offering of Shares............................................... 15
5.26. Transactions With Affiliates..................................... 15
6. Covenants of the Company................................................. 15
6.1. Ordinary Course of Business...................................... 15
i
6.2. Updated Information............................................ 15
6.3. Board of Directors Seat........................................ 15
7. Stock Registration Rights.............................................. 15
9. Information Rights..................................................... 16
10. Company's Put Right.................................................... 16
11. Purchaser's Preemptive Rights.......................................... 16
13. General Provisions..................................................... 16
13.1. Irrevocability; Binding Effect................................. 16
13.2. Modification................................................... 17
13.3. Notices........................................................ 17
13.4. Assignability.................................................. 17
13.5. Applicable Law................................................. 17
13.6. Confidentiality................................................ 17
13.7. Entirety....................................................... 17
13.8. Survival....................................................... 18
13.9. Expenses....................................................... 18
13.10. Construction................................................... 18
13.11. Severability................................................... 18
13.12. Counterparts................................................... 19
EXHIBITS:
A Amended and Restated Articles of Incorporation
B Opinion of Legal Counsel to the Company
SCHEDULES:
5.5 Litigation
6.4 Stock Schedule
ii
STOCK PURCHASE COMMITMENT AGREEMENT
(Series F Preferred Stock)
This Agreement is entered into as of October 29, 1996, by and between
Aastrom Biosciences, Inc., a Michigan corporation (the "Company"), and Cobe
Laboratories, Inc., a Colorado corporation (the "Purchaser"), with respect to
the factual recitals set forth below.
Certain terms used in this Agreement are defined in Section 1 of this
Agreement.
RECITALS
A. The Company and the Purchaser previously entered into that certain
Stock Purchase Agreement dated as of October 22, 1993 (the "1993 Stock Purchase
Agreement"), pursuant to which the Purchaser purchased 10,000 shares of the
Company's Series C preferred stock. Pursuant to Section 5.05 of the 1993 Stock
Purchase Agreement, the Company has a "put right" which obligates the Purchaser
to purchase up to $5 million of additional capital stock in the Company, under
the terms and provisions set forth therein (the "Company's Put Right").
Pursuant to Section 5.04 of the 1993 Stock Purchase Agreement, the Company
granted to the Purchaser certain preemptive rights to purchase additional shares
of the Company's capital stock when the Company has its initial public offering
("IPO") of stock registered with the Securities and Exchange Commission or
another equity financing (the "Purchaser's Preemptive Rights").
B. The Company has prepared Amended and Restated Articles of
Incorporation, a copy of which is attached hereto as Exhibit A (the "Amended
Articles"), which create 833,333 shares of Series F preferred stock (the
"Shares") having rights, privileges and preferences as set forth in the Amended
Articles.
WHEREFORE, the parties hereto mutually agree as follows:
1. Definitions.
"1993 Stock Purchase Agreement" is defined in Recital A hereof.
"Advisors" is defined in Section 4.4 hereof.
"Amended Articles" is defined in Recital B hereof.
1
"Closing" is defined in Sections 3.1 and 3.2 hereof.
"Common Stock" is defined in Section 4.1 hereof.
"Company's Put Right" is defined in Recital A hereof.
"Conversion Shares" is defined in Section 4.1 hereof.
"Disclosure Statement" is defined in Section 4.3 hereof.
"Financial Statements" is defined in Section 4.3 hereof.
"Investors' Rights Agreement is defined in Section 7 hereof.
"IPO" is defined in Recital A hereof.
"Most Recent Financial Statements" is defined in Section 4.3 hereof.
"Notice to Purchase" is defined in Section 2.3 hereof.
"Prospectus" is defined in Section 4.3 hereof.
"Purchaser's Preemptive Right" is defined in Recital A hereof.
"Qualifying Financing" means any one of the following:
a. the Company entering into (or completing) a term sheet
agreement (or other agreement) with investors or an underwriter by December 1,
1997, which provides for: (i) a scheduled closing by February 1, 1998, (ii) a
public sale (i.e., an IPO) or private sale of equity securities of the Company,
the gross proceeds from which equity sale is to aggregate to at least $10
million, (iii) the proceeds of the sale are not designated by the investor for
specified limited purposes, (iv) the price per share for the sale is set by
mutual agreement between the Company and investors who invest at least $1
million, and (v) the sale of equity securities actually is consummated by
February 1, 1998; or
b. the Company entering into (or completing) a term sheet
agreement (or other agreement) by December 1, 1997 for the merger or sale of the
Company at a value of at least $85 million, with (i) a scheduled closing for the
merger or sale to be by February 1, 1998, and (ii) the merger or sale actually
being consummated by February 1, 1998; or
c. the Company's Board of Directors adopting an Operational Plan
for the Company to continue its operations in the ordinary course of business
2
through December 31, 1998, funded by the Company's own cash flow and other
resources, without requiring outside equity or debt investment in the Company,
and with said Operational Plan being consistent with the intent of the annual
Product Development Plan ("PDP") that is part of the Distribution Agreement
between the Company and the Purchaser.
"Securities Act" is defined in Section 4.1 hereof.
"Shares" is defined in Recital B hereof.
2. Commitment to Purchase Shares.
2.1. The Purchaser hereby commits to purchase from the Company up
to 833,333 shares of Series F preferred stock, at $6.00 per share, for an
aggregate of up to $5 million cash purchase price, in accordance with the
Company's Notice to Purchase and the terms of this Agreement.
2.2. If the Company elects to sell any shares of Series F
preferred stock to the Purchaser, in accordance with the terms of this
Agreement, the Company shall give to the Purchaser a written notice (the "Notice
to Purchase") which specifies the number of shares of Series F preferred stock
which the Company is calling upon the Purchaser to purchase, and the scheduled
date for the closing of said purchase. The Notice to Purchase may be given any
time up through September 1, 1997, and shall specify a Closing date for
consummating the purchase to be not less than 90 days after the Notice to
Purchase is delivered to the Purchaser.
2.3. The Company may give to the Purchaser not more than two
Notices to Purchase, such that the Purchaser is required to purchase the Shares
in not more than two increments. Each increment shall be for not less than $1
million worth of the Shares, and the first increment may be for as much as $5
million worth of the Shares.
2.4. Upon the Company completing an IPO, the Purchaser's
obligation to purchase additional shares of Series F preferred stock will
terminate.
3. Closing.
3.1. At each closing (the "Closing") for the purchase and sale of
an increment of the Shares pursuant to this Agreement, the parties shall execute
and deliver all necessary documents to consummate the Closing as specified by
this Agreement, and the Purchaser shall pay the full purchase price for the
Shares specified in the Notice to Purchase, with payment by wire transfer to the
Company's offices in Ann Arbor, Michigan.
3
3.2. At the Closing, to be held at the Company's offices in Ann
Arbor, Michigan, the Company shall deliver to the Purchaser (a) a stock
certificate representing the Shares purchased, (b) a copy of the Amended
Articles, evidencing filing with the Corporations and Securities Bureau of the
Department of Commerce of the State of Michigan, (c) a certificate signed by the
Secretary of the Company evidencing that the necessary actions by the Company's
Board of Directors and shareholders have been taken to approve the
authorization, issuance and sale of the Shares pursuant to this Agreement, (d)
an opinion of legal counsel to the Company substantially in the form attached
hereto as Exhibit B, which opinion shall be addressed to the Purchaser and dated
the date of the Closing, and (e) a certificate signed by the President of the
Company confirming that the representations and warranties of the Company
contained in this Agreement remain true and correct in all material respects at
and as of the Closing, and that all of the covenants and agreements of the
Company contained in this Agreement and required to be performed on or prior to
the Closing shall have been performed in all material respects.
4. Representations and Warranties of the Purchaser. In order to
induce the Company to sell the Shares to the Purchaser, the Purchaser hereby
acknowledges, represents, warrants and agrees as follows:
4.1. None of the Shares of Series F Stock are (and the shares of
common stock, no par value ("Common Stock") issuable upon conversion thereof
("Conversion Shares") will not be) registered under the Securities Act of 1933
(as amended, the "Securities Act") or any state securities laws. The Purchaser
understands that the sale of the Shares is intended to be exempt from
registration under Section 4(2) of the Securities Act and/or the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements contained in this Agreement.
4.2. Neither the Securities and Exchange Commission nor any state
securities commission has approved any of the Shares or passed upon or endorsed
the merits of this transaction.
4.3. Prior to its execution of this Agreement, the Purchaser has
received from the Company (i) the draft Registration Statement on Form S-1 for
the Company dated August, 1996, together with a supplemental update thereto
dated October 3, 1996 (collectively called the "Disclosure Statement"), (ii) a
copy of the Amended Articles, for the purpose of creating the Series F Stock,
and (iii) the audited financial statements of the Company for the year ended
June 30, 1996, and the unaudited financial statements of the Company for the
month ended September 30, 1996 (the "Most Recent Financial Statements")
(collectively, the "Financial Statements").
4
4.4. The Purchaser acknowledges that all documents, records and
books pertaining to the investment in the Shares, including the Disclosure
Statement, have been made available for inspection by the Purchaser, or by its
attorney, accountant, purchaser representative and/or tax advisor (collectively,
the "Advisors") and that the Purchaser and/or its Advisors have completed such
review as they deem to be necessary to make the decision to purchase the Shares.
4.5. The Purchaser has reviewed the merits and risks of an
investment in the Shares. The Purchaser and the Advisors have had a reasonable
opportunity to ask questions of and receive answers from members of management
of the Company concerning the offer and sale of the Shares and all such
questions have been answered to the full satisfaction of the Purchaser.
4.6. In evaluating the suitability of an investment in the
Shares, the Purchaser has not relied upon any representation or other
information (oral or written) other than as contained in documents or answers to
questions so furnished to the Purchaser or its Advisors by the Company.
4.7. No oral or written representations have been made or oral or
written information furnished to the Purchaser or its Advisors in connection
with this Agreement which were in any way inconsistent with the information
provided to the Purchaser or its Advisors, including the Disclosure Statement.
4.8. The Purchaser, together with the Advisors, have such
knowledge and experience in financial, tax and business matters so as to enable
each of them to utilize the information made available to each of them in
connection with the purchase of the Shares to evaluate the merits and risks of
an investment in the Shares and to make an informed investment decision with
respect thereto.
4.9. The Purchaser is not relying on the Company with respect to
the tax and other economic considerations of an investment in the Shares, and
the Purchaser has relied on the advice, or has consulted with, only its own
Advisors concerning tax matters.
4.10. The Purchaser is acquiring the Shares solely for its own
account, for investment, and not with a view to or for subdivision, resale or
distribution, in whole or in part, and no other person has or will have a direct
or indirect beneficial interest in the Shares, other than for any partner or
shareholder owners of the Purchaser, if any.
5
4.11. The Purchaser must bear the economic risk of the investment
indefinitely because none of the Shares of Series F Stock (or Conversion Shares)
may be sold, hypothecated or otherwise disposed of unless (i) subsequently
registered under the Securities Act and applicable state securities laws, or
(ii) an exemption from registration is available at that time. Legends shall be
placed on the Shares (and the Conversion Shares) to the effect that they have
not been registered under the Securities Act or applicable state securities laws
and appropriate notations thereon will be made in the Company's stock books.
4.12. The Purchaser has adequate means of providing for the
Purchaser's current financial needs and foreseeable contingencies and the
Purchaser accepts the fact that an investment in the Shares will not be liquid.
4.13. The Purchaser is aware that an investment in the Shares
involves a number of very significant risks and, in particular, acknowledges
that the Company is in the development stage. The Purchaser understands that the
risks associated with an investment in the Shares could result in, and the
Purchaser can sustain, a complete loss of its investment.
4.14. The Purchaser is an "accredited investor" as such term is
defined in the regulations promulgated under the Securities Act.
4.15. The Purchaser represents that it has full power and
authority to execute and deliver this Agreement and all other related agreements
and certificates and to carry out the provisions hereof and thereof and to
purchase and hold the Shares, and this Agreement is a legal, valid and binding
obligation of the Purchaser. The execution and delivery of this Agreement will
not violate or be in conflict with any order, judgment, injunction, agreement or
controlling document to which the Purchaser is a party or by which it is bound.
4.16. The Purchaser represents to the Company that the
information contained herein may be relied upon by the Company in determining
the availability of an exemption from registration under federal and state
securities laws. The Purchaser further represents and warrants that it will
notify the Company immediately upon the occurrence of any material change to the
information contained herein occurring prior to the Company's issuance of the
Shares.
4.17. The Purchaser is unaware of, and in no way relying on, any
form of general solicitation or general advertising in connection with the offer
and sale of the Shares.
4.18. The Purchaser agrees that the Shares may not be sold,
mortgaged, pledged, hypothecated or otherwise transferred unless the Shares are
6
registered under the Securities Act and applicable state securities laws or are
exempt from registration thereunder; and that the certificate evidencing the
Shares will contain a customary Securities Act legend with respect to the
foregoing transfer restriction.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that:
5.1. Organization, Qualifications and Corporate Power. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Michigan and is duly licensed or
qualified to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which the nature of the business transacted by it
or the character of the properties owned or leased by it requires such licensing
or qualification. The Company has the corporate power and authority to own and
hold its properties and to carry on its business as now conducted and as
proposed to be conducted, to execute, deliver and perform this Agreement, to
issue, sell and deliver the Series F Stock, and to issue and deliver the
Conversion Shares as provided in the Amended Articles.
5.2. Authorization of Agreement.
a. The execution and delivery by the Company of this
Agreement, the performance by the Company of its obligations hereunder, the
issuance, sale and delivery of the Series F Stock and the issuance and delivery
of the Conversion Shares have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Amended Articles or the Bylaws of the Company
(the "Bylaws"), or any provision of any indenture, agreement or other instrument
to which the Company or any of its properties or assets is bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
b. The Series F Stock has been duly authorized and, when
issued in accordance with this Agreement, will be validly issued, fully paid and
nonassessable shares of the Company with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company except
as set forth herein. The Conversion Shares have been duly reserved for issuance
upon conversion of the Series F Stock and, when so issued, will be duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
with no personal liability attaching to the ownership thereof and, so long as
the Series F
7
Stock tendered for conversion is free and clear of liens or encumbrances, will
be free and clear of all liens, charges, restrictions, claims and encumbrances
imposed by or through the Company except as set forth herein. Neither the
issuance, sale or delivery of the Series F Stock nor the issuance or delivery of
the Conversion Shares is subject to any preemptive right of stockholders of the
Company or to any right of first refusal or other right in favor of any person
which right has not been waived.
5.3. Validity. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms.
5.4. Authorized Capital Stock. The authorized capital stock of
the Company consists of 12,200,000 shares of Preferred Stock, and 21,500,000
shares of Common Stock. Immediately prior to the Closing, 2,829,735 shares of
Common Stock and 9,451,766 shares of Preferred Stock will be validly issued and
outstanding, fully paid and nonassessable with no personal liability attaching
to the ownership thereof. The stockholders of record and holders of
subscriptions, warrants, options, convertible securities, and other rights
(contingent or other), if any, to purchase or otherwise acquire equity
securities of the Company prior to the Closing Date and the number of shares of
Common Stock and the number of such subscriptions, warrants, options,
convertible securities, and other such rights, if any, held by each, are as set
forth in the Disclosure Statement and/or in Schedule 6.4 attached hereto. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class of authorized capital stock of the Company
are as set forth in the Amended Articles, a copy of which has previously been
delivered to the Purchaser, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable laws. Except as set forth in
the attached Schedule 6.4 or in the Disclosure Statement, (a) no person owns of
record or is known to the Company to own beneficially any share of Common Stock,
(b) no subscription, warrant, option, convertible security, or other right
(contingent or other) to purchase or otherwise acquire equity securities of the
Company is authorized or outstanding and (c) there is no commitment by the
Company to issue shares, subscriptions, warrants, options, convertible
securities, or other such rights or to distribute to holders of any of its
equity securities any evidence of indebtedness or asset. Except as provided for
in the Amended Articles or as set forth herein, the Company has no obligation
(contingent or other) to purchase, redeem or otherwise acquire any of its equity
securities or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth herein or in the Disclosure
Statement, there are no voting trusts or agreements, stockholders agreements,
pledge agreements, buy-sell agreements, rights of first refusal, preemptive
rights or proxies relating to any securities of the Company (whether or
8
not the Company is a party thereto). All of the outstanding securities of the
Company were issued in compliance with all applicable Federal and state
securities laws.
5.5. Litigation.
Except as disclosed in Schedule 5.5 delivered to the
Purchaser, there is no (a) action, suit, claim, proceeding or investigation
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or its directors, officers, or management, at law or in
equity, or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (b) arbitration proceeding relating to the Company pending under
collective bargaining agreements or otherwise or (c) governmental inquiry
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company (including without limitation any inquiry as to the
qualification of the Company to hold or receive any license or permit), and, to
the best knowledge of the Company, there is no basis for any of the foregoing.
Without waiving any applicable attorney-client privilege, the Company has not
received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to its business, prospects, financial
condition, operations, property or affairs. To the best knowledge of the
Company, the Company is not in default with respect to any order, writ,
injunction or decree known to or served upon the Company of any court or of any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
5.6. Financial Statements. The Company has furnished to the
Purchaser the Financial Statements. The Financial Statements are true and
correct in all material respects and have been prepared in accordance with
generally accepted accounting principles. The balance sheets included in the
respective Financial Statements accurately reflect the financial condition and
all assets and liabilities of the Company at the times referred to therein. The
statements of income and cash flows accurately reflect the operations of the
Company for the periods referred to therein. There are no undisclosed
liabilities in the Financial Statements.
5.7. No Convictions. To the best of the knowledge of the Company,
during the past ten (10) years, none of the directors, officers, or management
of the Company have been arrested or convicted of any material crime, including
any felony (whether material or not), have been indicted, have been bankrupt nor
have any of them been restricted in any way from bidding on contracts with the
government of the United States.
9
5.8. Brokers. The Company has no knowledge of any brokerage or
finders fee due in conjunction with the transactions contemplated by this
Agreement.
5.9. Subsidiaries. The Company has no subsidiaries. The Company
does not (a) own of record or beneficially, directly or indirectly: (1) any
shares of capital stock or securities convertible into capital stock of any
corporation; or (2) any participating interest in any partnership, joint venture
or other non-corporate business enterprise; or (b) control, directly or
indirectly, any other entity.
5.10. Directors and Officers. The Disclosure Statement sets forth
the names of the directors and officers of the Company, together with the title
of each such person.
5.11. No Material Adverse Change. Since the date of the Most
Recent Financial Statements, (a) there has been no material adverse change in
the assets, liabilities or financial condition of the Company from that
reflected in the Most Recent Financial Statements, except for changes in the
ordinary course of business, and (b) none of the business, prospects,
operations, property or affairs of the Company has been materially adversely
affected by any occurrence or development, individually or in the aggregate,
whether or not insured against.
5.12. Taxes. The Company has filed all tax returns, Federal,
state, county and local, required to be filed by it, and the Company has paid
all taxes shown to be due by such returns as well as all other taxes,
assessments and governmental charges which have become due or payable, including
without limitation all taxes which the Company is obligated to withhold from
amounts owing to employees, creditors and third parties. All such taxes with
respect to which the Company has become obligated pursuant to elections made by
the Company in accordance with generally accepted practice have been paid and
adequate reserves have been established for all taxes accrued but not yet
payable. The Federal income tax returns of the Company have never been audited
by the Internal Revenue Service. No deficiency assessment with respect to or
proposed adjustment of the Company's Federal, state, county or local taxes is
pending or, to the best of the Company's knowledge, threatened. There is no tax
lien, whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of the Company. Neither
the Company nor, to the Company's knowledge, any of its stockholders, has ever
filed consent pursuant to Section 341(f) of the Code, relating to collapsible
corporations.
5.13. Employee Benefit Plans. To the knowledge of the Company,
each of the Company's employee benefit plans (and each related trust or
insurance contract) complies in form and in operation in all respects with the
10
applicable requirements of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986, as amended. To the knowledge of the
Company, all required reports and descriptions have been filed or distributed
appropriately with respect to each employee benefit plan. There have been no
prohibited transactions with respect to any employee benefit plan. No fiduciary
has any liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
employee benefit plans. No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the administration or the
investment of the assets of any employee benefit plan (other than routine claims
for benefits) is pending or, to the Company's knowledge, threatened. The Company
and its directors and officers (and employees with responsibility for employee
benefits matters) have no knowledge of any basis for any such charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand.
5.14. Title to Properties. The Company has good and marketable
title to its properties and assets reflected in the Financial Statements or
acquired by it since the date of the Financial Statements (other than for
equipment leased pursuant to financing leases, and other than properties and
assets disposed of in the ordinary course of business since the date of the
Financial Statements), and all such properties and assets are free and clear of
mortgages, pledges, security interests, liens, charges, claims, restrictions and
other encumbrances, except for equipment financing leases, and for liens to
secure payment of obligations reflected in the Financial Statements and for
current taxes not yet due and payable, and minor imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations or
proposed operations of the Company.
5.15. Leasehold Interests. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal
is a valid and enforceable agreement without any material default of the Company
thereunder and, to the best of the Company's knowledge, without any default by
the Company of any material term thereunder; the Company has not been notified
of any default and has no reason to believe that it is in default of any term
thereunder. To the best of the Company's knowledge, no other party to any such
lease or agreement is in default of a material term thereunder. No event has
occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by the Company under any such
lease or agreement or, to the best of the Company's knowledge, by any other
party thereto. The Company's possession of such property has not been disturbed
and, to the best of the Company's knowledge, no claim has been asserted against
the Company adverse to its rights in such leasehold interests.
11
5.16. Insurance. The Company maintains as to its properties and
business, with financially sound and reputable insurers, insurance against such
casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated.
5.17. Other Agreements. With respect to each material contract to
which the Company is a party, the Company and, to the best of the Company's
knowledge, each other party thereto, have in all material respects performed all
the obligations required to be performed by them to date, have received no
notice of default and are not in default (with due notice or lapse of time or
both) under any material lease, agreement or contract now in effect to which the
Company is a party or by which it or its property may be bound. The Company has
no present expectation or intention of not fully performing all its obligations
under each such material lease, contract or other agreement and the Company has
no knowledge of any breach or anticipated breach by the other party to any
contract or commitment to which the Company is a party.
5.18. Patents, Trademarks, Etc.
a. The Disclosure Statement describes all material
patents, patent rights, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade names and copyrights, and all
material applications for such which are in the process of being prepared, owned
by or registered in the name of the Company, or of which the Company is a
licensor or licensee or in which the Company has any right, and in each case a
brief description of the nature of such right. The Disclosure Statement contains
an accurate and complete description of all material licenses. The Company is in
compliance in all material respects with each of such licenses. The Company owns
or possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets and know how (collectively, "Intellectual Property") necessary to the
conduct of its business as conducted, and no claim is pending or, to the best of
the Company's knowledge, threatened to the effect that the operations of the
Company infringe upon or conflict with the asserted rights of any other person
under any Intellectual Property, and, to the best knowledge of the Company,
there is no basis for any such claim (whether or not pending or threatened). No
claim is pending or threatened to the effect that any such Intellectual Property
owned or licensed by the Company, or which the Company otherwise has the right
to use, is invalid or unenforceable by the Company, or that the Company is not
in compliance with any term or condition of a license, and there is no basis for
any such claim (whether or not pending or threatened). The Company has not
granted or assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the products or proposed products or to provide
12
the services or proposed services of the Company except as set forth in the
Disclosure Statement.
b. The Company has taken reasonable security measures to
protect the secrecy, confidentiality, and value of the Company's trade secrets;
any of their employees and any other persons who, either alone or in concert
with others, developed, invented, discovered, derived, programmed, or designed
these secrets, or who have knowledge of or access to information relating to
them, have entered into agreements protecting the confidentiality thereof.
5.19. Proprietary Information of Third Parties. To the best of
the Company's knowledge, no third party has claimed or has reason to claim that
any person employed by or affiliated with the Company has (a) violated or may be
violating any of the terms or conditions of his employment, non-competition or
nondisclosure agreement with such third party, (b) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party or (c) interfered or may be
interfering in the employment relationship between such third party and any of
its present or former employees. No third party has requested information from
the Company which suggests that such a claim might be contemplated. To the best
of the Company's knowledge, no person employed by or affiliated with the Company
has employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and to the best of the
Company's knowledge, no person employed by or affiliated with the Company has
violated any confidential relationship which such person may have had with any
third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the best of the Company's
knowledge, none of the execution or delivery of this Agreement, or the carrying
on of the business of the Company as officers, employees or agents by any
officer, director or key employee of the Company, or the conduct or proposed
conduct of the business of the Company, will conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument under which any such person is obligated.
5.20. Compliance With Law. To the best of the Company's
knowledge, the Company has complied with all laws, rules, regulations and orders
applicable to its business, operations, properties, assets, products and
services, the violation of which would have a material adverse effect upon the
Company, and the Company has all necessary permits, licenses and other
authorizations required to conduct its business as it is now conducted. To the
best of the Company's knowledge, there is no existing law, rule, regulation or
order, and the
13
Company after due inquiry is not aware of any proposed law, rule, regulation or
order, whether Federal or state, which would prohibit or restrict the Company
from, or otherwise materially adversely affect the Company in, conducting its
business, in which it is now conducting business or in which it proposes to
conduct business, other than the customary governmental approvals required for
medical products. Without limiting the foregoing in any manner, to the best of
the Company's knowledge, the Company has complied in all material respects with
all applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, with the Employee Retirement Income
Security Act of 1974, as amended, with the Occupational Health and Safety Act,
and with the Americans With Disabilities Act. To the best of the Company's
knowledge, the Company is in full compliance with the Immigration Reform and
Control Act of 1986, as amended, and all key employees who are not United States
citizens are currently authorized under United States immigration laws to hold
United States employment and will continue to have such employment authorization
throughout the term of the Series F Stock investment, and are otherwise in
compliance with United States immigration laws.
5.21. Loans and Advances. The Company does not have any
outstanding loans or advances to any person and is not obligated to make any
such loans or advances, except as reflected on the Financial Statements, and
except, in each case, for advances to employees of the Company in respect of
reimbursable business expenses anticipated to be incurred by them in connection
with their performance of services for the Company. In the near future, the
Company expects to borrow funds from the State Treasurer of the State of
Michigan pursuant to a pending convertible loan commitment, as described in
Section 12 hereof.
5.22. Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons. Except as disclosed in the Financial Statements, the Company has not
assumed, guaranteed, endorsed or otherwise become directly or contingently
liable on any indebtedness of any other person (including, without limitation,
liability by way of agreement, contingent or otherwise, to purchase, to provide
funds for payment, to supply funds to or otherwise invest in the debtor, or
otherwise to assure the creditor against loss), except for guaranties by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.
14
5.23. Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Section 4, no
registration or filing with, or consent or approval of or other action by, any
Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement, the issuance, sale and delivery of the Series F Stock or, upon
conversion of the Series F Stock, the issuance and delivery of the Conversion
Shares, other than (a) filings pursuant to state securities laws (all of which
filings have been or will be made by the Company) in connection with the sale of
the Series F Stock and (b) with respect to the Registration Rights as set forth
in Section 7 hereof, the registration of the shares covered thereby with the
Commission and filings pursuant to state securities laws.
5.24. Disclosure. The Company's Disclosure Statement, contains
only true and accurate facts and representations, and does not contain any
untrue information and does not omit any material fact necessary to make the
statements contained therein not misleading. Neither this Agreement, nor any
Schedule or Exhibit to this Agreement, contains an untrue statement of a
material fact or omits a material fact necessary to make the statements
contained herein or therein not misleading. None of the statements, documents,
certificates or other items prepared or supplied by the Company with respect to
the transactions contemplated hereby contains an untrue statement of a material
fact or omits a material fact necessary to make the statements contained therein
not misleading. As of the date hereof, no facts have come to the attention of
the Company which would, in its opinion, require the Company to revise or
amplify the Disclosure Statement.
5.25. Offering of Shares. This Agreement is being made by the
Company pursuant to an exemption from the registration requirements of the
Securities Act.
5.26. Transactions With Affiliates. Except as set forth in the
Disclosure Statement, no director, officer, employee or stockholder of the
Company, or member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or any member of
the family of any such person, has a substantial interest in or is an officer,
director, trustee, partner or holder of more than 5% of the outstanding capital
stock thereof, is a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
15
6. Covenants of the Company.
6.1. Ordinary Course of Business. From the date hereof through
the last Closing under this Agreement, the Company shall continue to operate the
Company's business in the ordinary course, expecting only for any extraordinary
activity as may be approved by the Company's Board of Directors.
6.2. Updated Information. From the date hereof through the last
Closing under this Agreement, the Company shall promptly inform the Purchaser of
any new facts or circumstances which come to the attention of the Company and
which are likely to have any material adverse effect on the Company or which
constitute any material adverse variation from the representations made by the
Company herein.
6.3. Board of Directors Seat. From the date hereof and continuing
so long as the Purchaser owns at least 15% of the issued and outstanding common
stock of the Company (calculated on the basis of all preferred stock being
converted into common stock pursuant to the conversion formula set forth in the
Company's Restated Articles of Incorporation), the Company will use reasonable
and good faith efforts to cause to be elected as a member of the Company's Board
of Directors one person nominated by the Purchaser; provided that the Board of
Directors determines in the exercise of its fiduciary duties that the
Purchaser's nominee is qualified to serve on the Board. If the Board so
determines that the nominee is not qualified, then the Purchaser may make
further nominations until the Board determines that the nominee is qualified.
7. Stock Registration Rights. The Shares shall be entitled to the
benefits and subject to the terms of the stock registration rights provisions as
set forth in Sections 2.4 through 2.14, inclusive, of the Company's Amended and
Restated Investors' Rights Agreement dated as of April 7, 1992, as amended (the
"Investors' Rights Agreement"), a copy of which has been furnished to the
Purchaser.
8. Market Stand-off Restriction. The Purchaser (and any other holders
of the Shares) shall abide by the 180-day "market stand-off" restriction on the
sale of the Shares following the Company's public stock offering, as applicable
to all other holders of the Company's preferred stock, and/or as required by the
Investors' Rights Agreement.
9. Information Rights. The holder(s) of the Shares shall be entitled
to receive the Company's information and financial statements as specified in
Sections 3.1 through 3.7, inclusive, of the Investors' Rights Agreement.
16
10. Company's Put Right. To the extent that the Purchaser purchases
shares of Series F preferred stock pursuant to this Agreement, the Purchaser's
obligations under the Company's Put Right (as specified in Section 5.05 of the
1993 Stock Purchase Agreement) shall be reduced on a dollar for dollar basis.
For example, if the Purchaser purchases $1 million of Series F preferred stock
pursuant to the terms of this Agreement, then the Purchaser's obligation under
the Company's Put Right shall be reduced from $5 million to $4 million.
11. Purchaser's Preemptive Rights. To the extent that the Purchaser
purchases shares of Series F preferred stock pursuant to this Agreement, the
shares of Series F Preferred Stock purchased by the Purchaser will be excluded
from the determination of the Purchaser's percentage ownership of the Company
for purposes of calculating the Purchaser's Preemptive Rights (as granted
pursuant to Section 5.04 of the 1993 Stock Purchase Agreement).
12. Condition. The Purchaser's obligations under this Agreement are
conditional upon the Company also entering into a Convertible Loan Commitment
Agreement with the State Treasurer of the State of Michigan for $5,000,000, in
substantially the same form and substance as was approved by the Company's Board
of Directors in September 1996.
13. General Provisions.
13.1. Irrevocability; Binding Effect. The Purchaser hereby
acknowledges and agrees that the commitment hereunder is irrevocable by the
Purchaser, except as required by applicable law, and that this Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors, legal representatives, and permitted assigns.
13.2. Modification. This Agreement shall not be modified or
waived except by an instrument in writing signed by the party against whom any
such modification or waiver is sought.
13.3. Notices. A notice or other communication required or
permitted to be given hereunder shall be in writing and shall be given by any
means, including without limitation, mail, express delivery service, or
facsimile. Any notice or other communication shall be deemed given at the time
it is received at the party's address set forth on the signature page of this
Agreement, or at such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 13.3.
13.4. Assignability. This Agreement and the rights, interests
and obligations hereunder are not transferable or assignable by the Purchaser,
17
except to an affiliate of the Purchaser who qualifies as an "accredited
investor," and the Purchaser further agrees that the transfer or assignment of
the Shares shall be made only in accordance with all applicable laws.
13.5. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of Michigan without
regard to its conflicts of laws principles.
13.6. Confidentiality. The Purchaser acknowledges and agrees
that any information or data it has acquired from or about the Company,
including the information contained in the Disclosure Statement and the
Financial Statements, but excluding any information which was in the public
domain, was received in confidence. The Purchaser agrees not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Agreement, or use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any confidential information
of the Company, including any scientific, technical, trade or business secrets
of the Company and any scientific, technical, trade or business materials that
are treated by the Company as confidential or proprietary, including, but not
limited to, ideas, discoveries, inventions, developments and improvements
belonging to the Company and confidential information obtained by or given to
the Company about or belonging to third parties.
13.7. Entirety. This Agreement, together with the Exhibits,
Schedules and other documents referenced herein, constitutes the entire
agreement between the Purchaser and the Company with respect to the purchase and
sale of the Series F Shares, and supersedes all prior oral or written agreements
and understandings, if any, relating thereto. The terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
a written document executed by the party entitled to the benefits of such terms
or provisions.
13.8. Survival. The Purchaser's representations and warranties
made in this Agreement shall survive the execution and delivery hereof and of
the Shares.
13.9. Expenses. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
13.10. Construction. All pronouns and any variations thereof
used herein shall be deemed to be to the masculine, feminine, neuter, singular
or
18
plural as the identity of the person or persons referred to may require.
Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.
13.11. Severability. Each provision of this Agreement shall be
considered separable and if for any reason any provision or provisions hereof
are determined to be invalid or contrary to applicable law, such invalidity
shall not impair the operation of or affect the remaining portions of this
Agreement, so long as the material economic benefits remain enforceable.
19
13.12. Counterparts. This Agreement may be executed in one or
more counterparts each of which shall be deemed an original, but all of which
shall together constitute one and the same instrument. Signatures may be
transmitted by facsimile.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date set forth on the first page of this Agreement.
COMPANY:
Aastrom Biosciences, Inc.,
a Michigan corporation
Domino's Farms, Lobby L
24 Frank Lloyd Wright Drive
Ann Arbor, MI 48105
Fax: 313/930-5546
By: /s/ R. Douglas Armstrong
---------------------------
R. Douglas Armstrong, Ph.D.,
President
PURCHASER:
Cobe Laboratories, Inc.,
a Colorado corporation
1185 Oak Street
Lakewood, CO 80215
Fax: 303/230-4195
By: /s/ Edward C. Wood
----------------------
20
SCHEDULE 5.5
Litigation
1. R. M. Schwartz. The Company has written letters to a former employee,
Richard M. Schwartz, Ph.D. and Dr. Schwartz's new employer, SyStemix, (i)
reminding them of Dr. Schwartz's duty to maintain strict confidentiality as to
the Company's trade secrets; and (ii) asking if there has been any breach of
this confidentiality obligation; and (iii) commenting that a new invention by
Systemix's appears to be derived from the Company's trade secrets. Systemix and
Dr. Schwartz have denied any use of the Company's trade secrets. The Company
has reserved its rights in this matter, but does not presently contemplate
pursuing this potential claim in the near future.
2. Sundberg-Ferar. The Company has commenced an arbitration proceeding
against Sundberg-Ferar ("S-F") for what the Company asserts to be a breach by S-
F of the contractual obligations of S-F to not solicit away from the Company's
employment its employees. This arbitration is for the Company to seek damages
recovery from S-F, although if the Company is not successful in this
arbitration, then S-F may seek to recover its attorney's fees incurred in
defending the arbitration proceedings.
21
SCHEDULE 6.4
Stock Schedule
Shares Issued and Outstanding Shares Authorized
Preferred Stock
Series A 2,500,000 2,500,000
Series B 3,030,000 3,030,000
Series C 10,000 10,000
Series D 2,500,001 3,000,000
Series E 1,617,647 1,617,647
Series F *833,333 833,333
Undesignated --- 1,209,020
Subtotals: 10,490,981 12,200,000
Common Stock 2,829,735 21,500,000
* Shares to be sold to Cobe Laboratories, Inc., pursuant to this Agreement.
22
EXHIBIT 10.29
CONVERTIBLE LOAN COMMITMENT AGREEMENT
This Agreement is entered into as of October 15, 1996, by and between
Aastrom Biosciences, Inc., a Michigan corporation (the "Company"), and The State
Treasurer of the State of Michigan, Custodian of the Michigan Public School
Employees' Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System, and Michigan Judges Retirement System(the "State"), as
follows:
1. Definitions.
-----------
"Funding Request" is defined in Section 2.3 hereof.
"IPO" shall mean an initial public offering of stock by the Company
which is registered with the United States Securities and Exchange Commission,
resulting in the sale of securities aggregating to at least $10 million.
"Loan" or "Loans" are described in Section 2 hereof.
"Maturity Date" is defined in Section 2.5 hereof.
"Qualifying Financing" shall mean any one of the following:
i. the Company entering into (or completing) a term sheet
agreement (or other agreement) with investors or an underwriter by the Maturity
Date, which provides for: (a) a scheduled closing by February 1, 1998, (b) a
public sale (i.e., an IPO) or private sale of equity securities of the Company,
the gross proceeds from which equity sale is to aggregate to at least $10
million, (c) the proceeds of the sale are not designated by the investor for
specified limited purposes, (d) the price per share for the sale is set by
mutual agreement between the Company and new investors who invest at least $1
million, and (e) the sale of equity securities actually is consummated by
February 1, 1998; or
ii. the Company entering into (or completing) a term sheet
agreement (or other agreement) by the Maturity Date for the merger or sale of
the Company at a value of at least $85 million, with (a) a scheduled closing for
the merger or sale to be by February 1, 1998, and (b) the merger or sale
actually is consummated by February 1, 1998; or
iii. the Company's Board of Directors adopting an Operational
Plan for the Company to continue its operations in the ordinary course of
business through December 31, 1998, funded by the Company's own cash flow and
other resources, without requiring outside equity or debt investment in the
Company.
1
2. Loan Commitment.
---------------
2.1. In accordance with and subject to the terms of this Agreement,
the State agrees to make Loans to the Company, in accordance with Funding
Requests, up to an aggregate principal balance owing on the Loans not to exceed
$5 million.
2.2. Each Loan shall be for an amount not less than $1 million
principal.
2.3. Each Funding Request shall be in writing and shall be submitted
by the Company to the State requesting a Loan to be made from the State to the
Company in 45 days from the date of the Funding Request (or such longer period
as may be specified by the Company). The Company may not submit a Funding
Request prior to October 15, 1996, nor after September 1, 1997. The Company may
not submit more than three (3) Funding Requests.
2.4. As a precondition to the Company's first Funding Request, the
Company must first have requested and obtained (or be in the process of
obtaining) all of the $5 million equity investment from Cobe Laboratories, Inc.
("Cobe") for purchasing Series F preferred stock.
2.5. Each Loan shall be evidenced by a promissory note signed and
delivered by the Company to the State, specifying the principal amount of the
Loan as specified in the Funding Request, in the form of the promissory note
attached hereto as Exhibit A. As specified in more detail in said promissory
note, (a) simple interest shall accrue at 10% per annum and be payable with
principal at maturity, (b) the Company shall have an option to prepay any or all
of the principal and/or accrued interest at any time, without penalty, (c) in
lieu of the Company repaying the promissory note in cash, the Company shall have
the option to satisfy the promissory note by converting any unpaid principal and
accrued interest owing on the promissory note into equity stock of the Company,
in accordance with the provisions set forth in the promissory note, (d) if the
Company does not elect to convert the promissory note into equity, then all
principal and accrued interest owing on the promissory note shall mature and be
fully due and payable on the Maturity Date, which shall be the earlier of (i) 60
days following consummation of the Company's IPO or Qualifying Financing or (ii)
12 months following the date when the State makes the first Loan to the Company,
and all promissory notes shall have this same Maturity Date, (e) the Company's
obligations on the promissory notes shall be senior to or in parity with all
other unsecured debt owed by the Company, and (f) within 15 days following
completion of an IPO or Qualifying Financing, the Company shall give written
notice to the State specifying whether the Company will (i) repay the promissory
note at the Maturity Date, or (ii) convert the promissory note into equity stock
of the Company.
2
2.6. The parties acknowledge that the Company is obligated, pursuant
to previously existing agreements, to offer to many of the Company's existing
shareholders the right to participate and invest in the same convertible debt
commitment as is set forth in this Agreement. In the event any of the Company's
other shareholders elect to so participate, then the $5 million level of the
State's commitment shall be reduced on a dollar for dollar basis by each dollar
committed by another shareholder for this convertible debt investment. The
number of Commitment Stock Warrants (hereinafter described) grant to the State
shall also be reduced on a prorata basis to the extent the Company's other
shareholders elect to so participate. For example, if the other shareholders
commit in the aggregate to $1 million convertible debt on the same terms as set
forth in this Agreement, then the State's commitment level pursuant to this
Agreement shall be reduced from $5 million to $4 million, and the Commitment
Stock Warrant shall be reduced from 104,167 warrant shares to 83,334 warrant
shares (i.e., a one-fifth reduction).
2.7. Once the Company has submitted a Funding Request to the State in
accordance with the foregoing, and met the conditions as specified in Section 3
hereof, the State shall make the requested loan to the Company by wiring funds
to the Company's bank account, pursuant to wire transfer instructions furnished
to the State by the Company.
2.8. Upon the Company completing an IPO, the State's obligation to
make further loan advances will terminate.
3. Conditions for Each Loan. As a condition to the State's
------------------------
obligation to make each Loan in accordance with the Company's Funding Request,
the Company shall submit to the State the following:
a. the promissory note for said Loan, duly signed by the Company,
with authority for the State to insert the date on said promissory note when the
State advances the Loan proceeds to the Company;
b. a certificate signed by the President and the Chief Financial
Officer of the Company certifying that, (i) the Company is not in material
default under any of the Company's material obligations, and (ii) to the best of
their knowledge and belief, all items of the information furnished to the State
(via Joseph Taylor or such other representative as may be designed by the
State), including without limitation, financial statements, minutes of Board
meetings, draft Registration Statement on Form S-1 for the Company, dated August
1996, as supplemented by an update dated as of October 3, 1996 (collectively
called the "Disclosure Statement"), and all other written materials and oral
information, remain true and correct, and, when read together, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading, and
(iii) the Company's
3
Board of Directors has authorized the officers of the Company to execute and
deliver the promissory note, and (iv) the Company has previously requested and
obtained (or is in the process of obtaining) $5 million of equity funding from
Cobe pursuant to that certain Stock Purchase Commitment Agreement between Cobe
and the Company.
4. Equity Conversion. In lieu of the Company repaying the promissory
-----------------
notes in cash, the Company shall have the option to convert any unpaid principal
and interest owing on the promissory notes into equity stock of the Company, in
accordance with the following provisions:
a. if, by the Maturity Date, the Company has an IPO or another
Qualifying Financing, then the Company has the option to convert the principal
and interest owing on the promissory notes into the Company's capital stock,
consisting of common stock issued pursuant to the IPO or the preferred stock or
other equity issued by the Company pursuant to the Qualifying Financing, at a
conversion price equal to 90% of the price paid by the other investors in the
IPO or Qualifying Financing (without deduction for underwriter's commissions and
discounts).
b. if, by the Maturity Date, the Company has not yet had an IPO
or another Qualifying Financing, and if the Company does not repay the
promissory notes in cash by the Maturity Date, then the principal and accrued
interest owing on the promissory notes shall be converted into a new series of
the Company's preferred stock (to be designated as Series G preferred stock), at
$4.65 per share, which preferred stock shall have a liquidation preference and
conversion price of $4.65 per share, with a liquidation preference senior to all
other preferred stock existing at the time of issuance of the Series G preferred
stock, and with other rights, preferences and privileges comparable to the
Company's Series E preferred stock. Said Series G preferred stock will include a
customary weighted average anti-dilution protection provision applicable to the
Company's next following sale of preferred stock of at least $1 million to new
investors.
c. In the event the "Qualifying Financing" is an "Operational
Plan" as described in subparagraph (iii) of the definition of a Qualifying
Financing, , then the equity securities into which the principal and interest
owing on the promissory notes shall be converted pursuant to Section 4 hereof
shall be a new series of the Company's preferred stock (Series G) having rights,
preferences and privileges comparable to those of the Company's Series E
preferred stock, but with a conversion price and liquidation preference being
equal to 90% of the then current fair market value of the Company's then most
recently issued preferred stock sold to cash investors (excluding stock sold to
RPR), and with a liquidation preference senior to all other preferred stock
existing at the time of issuance of the Series G preferred stock. Said fair
market value of said preferred stock shall be determined by mutual agreement
between the Company and the State, but if no
4
mutual agreement can be reached, then said fair market value shall be determined
by a nationally recognized investment banking firm which is mutually selected by
the Company and the State, with the fees for obtaining said valuation
determination to be borne equally by the Company and the State. Said Series G
preferred stock will include a customary weighted average anti-dilution
protection provision applicable to the Company's next following sale of
preferred stock of at least $1 million to new investors.
5. Stock Warrants.
--------------
5.1. As consideration for the State entering into this Agreement for
a $5 million commitment, the Company shall issue to the State a stock warrant
(the "Commitment Stock Warrant") entitling the State to purchase up to 104,167
shares of the Company's common stock (subject to reduction as specified in
Section 2.6 hereof), on the following terms:
i. the exercise price shall be the lesser of:
(a) $6.00 share, increasing by $2.00 per share on each
anniversary of the date the Company completes its IPO; or
(b) 85% of the fair market value of the Company's stock at
the time the stock warrant is exercised, which value shall be determined as
follows:
(1) if the Company's common stock is traded in the
public stock market at the time the stock warrant is exercised, then said fair
market value shall be the public trading price, calculated using the average of
the last trading price of the day for the 20 trading days preceding the date of
exercise.
(2) if the exercise of the stock warrant is made prior
to the Company completing an IPO, then said fair market value shall be the fair
market value of the Company's then most recently issued preferred stock sold to
cash investors (excluding stock sold to RPR), determined by mutual agreement
between the Company and the State. If no such mutual agreement is reached, then
the fair market value of said preferred stock shall be determined by a
nationally recognized investment banking firm which is mutually selected by the
Company and the State, with the fees for such determination to be borne equally
between the Company and the State.
ii. The warrant shall become exercisable any time after the
earlier of (a) 90 days after the Company completes its IPO or a Qualifying
Financing, or (b) October 15, 1999 (provided that this date is not within 90
days
5
after the IPO is completed, in which event the warrant shall be exercisable at
the end of said 90 days).
iii. The warrant shall expire on October 15, 2000, to the
extent it has not been exercised prior thereto.
5.2. In addition to the Commitment Stock Warrant, the Company shall
also issue to the State a "Funding Stock Warrant" applicable to each increment
of Loan funding advanced by the State to the Company pursuant to Section 2
above, based upon a 7.5% coverage formula, namely: 12,500 warrant shares for
each $1 million of principal Loan funds advanced, or an aggregate of 62,500
warrant shares if all $5 million of Loan funds are advanced. The terms of said
Funding Stock Warrants shall be the same as the terms of the above-described
Commitment Stock Warrant.
5.3. The form of the Commitment Stock Warrant and the Funding Stock
Warrant shall be as set forth on Exhibit B attached hereto.
6. Piggyback Stock Registration Rights. The shares to be issued by
-----------------------------------
the Company to the State pursuant to the conversion of the Loan into equity
(Section 4 above), and upon exercise of the stock warrants (Section 5 above),
shall have piggyback stock registration rights comparable to those given by the
Company to the holders of the Company's Series E preferred stock.
7. General Provisions.
------------------
7.1. Irrevocability; Binding Effect. The State hereby acknowledges
------------------------------
and agrees that the commitment hereunder is irrevocable by the State, except as
required by applicable law, and that this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, legal
representatives, and permitted assigns.
7.2. Modification. This Agreement shall not be modified or waived
------------
except by an instrument in writing signed by the party against whom any such
modification or waiver is sought.
7.3. Notices. A notice or other communication required or permitted
-------
to be given hereunder shall be in writing and shall be given by any means,
including without limitation, mail, express delivery service, or facsimile. Any
notice or other communication shall be deemed given at the time it is received
at the party's address set forth on the signature page of this Agreement, or at
such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 7.3.
6
7.4. Assignability. This Agreement and the rights, interests and
-------------
obligations hereunder are not transferable or assignable by the State, except to
an affiliate of the State who qualifies as an "accredited investor". However,
the promissory notes, stock warrants and stock issued by the Company to the
State may be assigned by the State in accordance with their terms and in
accordance with all applicable laws.
7.5. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of Michigan, without
regard to its conflicts of laws principles.
7.6. Confidentiality. The State acknowledges and agrees that any
---------------
information or data it has acquired from or about the Company, not otherwise
properly in the public domain, was received in confidence. The State agrees not
to divulge, communicate or disclose, except as may be required by law or for the
performance of this Agreement, or use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any confidential
information of the Company, including any scientific, technical, trade or
business secrets of the Company and any scientific, technical, trade or business
materials that are treated by the Company as confidential or proprietary,
including, but not limited to, ideas, discoveries, inventions, developments and
improvements belonging to the Company and confidential information obtained by
or given to the Company about or belonging to third parties.
7.7. Entirety. This Agreement, together with the Exhibits and other
--------
documents referenced herein, constitutes the entire agreement between the State
and the Company with respect to the transactions described herein, and
supersedes all prior oral or written agreements and understandings, if any,
relating thereto. The terms and provisions of this Agreement may be waived, or
consent for the departure therefrom granted, only by a written document executed
by the party entitled to the benefits of such terms or provisions.
7.8. Construction. All pronouns and any variations thereof used
------------
herein shall be deemed to be to the masculine, feminine, neuter, singular or
plural as the identity of the person or persons referred to may require.
Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.
7.9. Severability. Each provision of this Agreement shall be
------------
considered separable and if for any reason any provision or provisions hereof
are determined to be invalid or contrary to applicable law, such invalidity
shall not impair the operation of or affect the remaining portions of this
Agreement, so long as the material economic benefits remain enforceable.
7
7.10. Counterparts. This Agreement may be executed in one or more
------------
counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument. Signatures may be transmitted
by facsimile.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date set forth above.
COMPANY: STATE:
AASTROM BIOSCIENCES, INC., THE STATE TREASURER OF THE STATE OF MICHIGAN,
a Michigan corporation Custodian of the Michigan Public School
Domino's Farms, Lobby L Employees' Retirement System, State Employees'
24 Frank Lloyd Wright Drive Retirement System, Michigan State Police
Ann Arbor, MI 48105 Retirement System, and Michigan Judges
Fax: 313/930-5546 Retirement System
430 W. Allegan St.
Lansing, MI 48922
Fax: 517/335-3668
By: /s/ R. Douglas Armstrong By: /s/ Paul E. Rice
------------------------- ------------------------------
8
EXHIBIT A
Promissory Note
9
PROMISSORY NOTE
$_______________ Ann Arbor, Michigan
____________, 199_
1. Obligation. Aastrom Biosciences, Inc., a Michigan corporation
----------
("Maker"), for value received, hereby promises to pay to the order of The State
Treasurer of the State of Michigan, Custodian of the Michigan Public School
Employees' Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System, and Michigan Judges Retirement System ("Lender"), at
Ann Arbor, Michigan, or at such other place as the holder hereof may in writing
direct, the loan advances made from Lender to Maker, in the principal sum of
_____________________________________ ($__________), together with interest
thereon, at the rate, and due and payable, as set forth below. Maker's
obligations on this Promissory Note shall be senior to or in parity with all
other unsecured debt owed by Maker.
2. Series of Promissory Notes. This Promissory Note is one of a series
--------------------------
of promissory notes of Maker being issued to Lender in pursuant to the
Convertible Loan Commitment Agreement dated ___________, 1996, by and between
Lender and Maker (the "Loan Agreement"). Capitalized terms not otherwise
defined in this Promissory Note shall have the meanings given to such terms in
the Loan Agreement.
3. Interest. The outstanding principal balance shall bear interest from
--------
the date of disbursement to Maker at the rate of ten (10%) per annum, simple
interest, until repaid in full. Accrued interest under this Promissory Note
shall be payable at the Maturity Date, as specified herein. If interest is not
be paid when due, it shall thereafter bear interest at the same rate as
principal bears interest.
4. Maturity Date. The entire unpaid principal balance and all unpaid
-------------
accrued interest shall be due and payable on the "Maturity Date", which shall be
the earlier to occur of (i) sixty (60) days following consummation of Maker's
IPO or Qualifying Financing; or (ii) ________________, 199__.
5. Prepayment. Maker shall have the option to prepay any or all of the
----------
principal and/or accrued interest owing on this Promissory Note at any time,
without penalty or premium.
6. Conversion to Equity.
--------------------
a. Within 15 days following completion of an IPO or a Qualifying
Financing, Maker shall give written notice to Lender specifying whether Maker
will (1) repay this Promissory Note at the Maturity Date, or (2) convert this
Promissory Note into equity stock pursuant to Section 6b hereof.
10
b. In lieu of Maker repaying this Promissory Note in cash, Maker
shall have the option to convert any unpaid principal and interest owing on this
Promissory Note into equity stock of Maker, in accordance with the following
provisions:
(i) if, by the Maturity Date, Maker has an IPO or a Qualifying
Financing (as defined below), then Maker has the option to convert the principal
and interest owing on this Promissory Note into Maker's capital stock,
consisting of common stock issued pursuant to the IPO or the preferred stock or
other equity issued by Maker pursuant to the Qualifying Financing, at a
conversion price equal to 90% of the price paid by the other investors in the
IPO or Qualifying Financing (without deduction for underwriter's commissions and
discounts).
(ii) if, by the Maturity Date, Maker has not yet had an IPO or a
Qualifying Financing, and if Maker does not repay this Promissory Note in cash
by the Maturity Date, then the principal and accrued interest owing on this
Promissory Note shall be converted into a new series of Maker's preferred stock
(to be designated as Series G preferred stock), at $4.65 per share, which
preferred stock shall have a liquidation preference and conversion price of
$4.65 per share, with a liquidation preference senior to all other preferred
stock of Maker, and with other rights, preferences and privileges comparable to
Maker's Series E preferred stock. Said Series G preferred stock will include a
customary weighted average anti-dilution protection provision applicable to
Maker's next following sale of preferred stock of at least $1 million to new
investors.
c. As used in this Promissory Note, the term "Qualifying Financing"
means any one of the following:
(i) Maker entering into (or completing) a term sheet agreement
(or other agreement) with investors or an underwriter by the Maturity Date,
which provides for: (1) a scheduled closing by February 1, 1998, (2) a public or
private sale of equity securities of Maker, the gross proceeds from which equity
sale is to aggregate to at least $10 million, (3) the proceeds of the sale are
not designated by the investor for specified limited purposes, (4) the price per
share for the sale is set by mutual agreement between Maker and new investors
who invest at least $1 million, and (5) the sale of equity securities actually
is consummated by February 1, 1998; or
(ii) Maker entering into (or completing) a term sheet agreement
(or other agreement) by the Maturity Date for the merger or sale of Maker at a
value of at least $85 million, with (a) a scheduled closing for the merger or
sale to be by February 1, 1998, and (b) the merger or sale actually is
consummated by February 1, 1998; or
(iii) Maker's Board of Directors adopting an Operational Plan for
Maker to continue its operations in the ordinary course of business through
December 31, 1998, funded by Maker's own cash flow and other resources, without
requiring outside equity or debt investment in Maker. In the event the
"Qualifying Financing" is such "Operational Plan", then the equity securities
into which the principal and interest owing on this Promissory Note shall be
converted pursuant to Section 6bi above shall be a new series of Maker's
preferred stock
11
(Series G) having rights, preferences and privileges comparable to those of
Maker's Series E preferred stock, but with a conversion price and liquidation
preference being equal to 90% of the then current fair market value of Maker's
then most recently issued preferred stock sold to cash investors (excluding
stock sold to RPR), and with a liquidation preference senior to all other
preferred stock. Said fair market value of said preferred stock shall be
determined by mutual agreement between Maker and Lender, but if no mutual
agreement is reached, then said fair market value shall be determined by a
nationally recognized investment banking firm which is mutually selected by
Maker and Lender, with the fees for obtaining said valuation determination to be
borne equally by Maker and Lender. Said Series G preferred stock will include a
customary weighted average anti-dilution protection provision applicable to
Maker's next following sale of preferred stock of at least $1 million to new
investors.
7. Default. Upon a default by Maker, as specified below, Lender may
-------
declare the entire unpaid balance of principal and accrued interest immediately
due and owing. Each of the following events shall constitute a default:
a. Default in the payment of principal or interest due hereunder, and
such default continues for a period of thirty (30) days after the due date
thereof.
b. The making of an assignment for the benefit of creditors by Maker,
or the appointment of a receiver for all or substantially all of Maker's
property, or the filing by Maker of a petition in bankruptcy or other similar
proceeding under law for the relief of debtors; or
c. The filing against Maker of a petition in bankruptcy or other
similar proceeding under law for relief of debtors, and such petition is not
vacated or discharged within sixty (60) days after the filing thereof
8. Costs of Collection. If this Promissory Note is not paid when due,
-------------------
whether at maturity or by acceleration, Maker promises to pay all costs incurred
by Lender in collecting the amounts due hereunder, including reasonable
attorneys' fees and expenses incurred by Lender in connection with any
insolvency, bankruptcy, reorganization, arrangement or other similar proceedings
involving Maker which in any way affects the exercise by Lender of its rights
and remedies under this Promissory Note.
9. Waiver. Presentment, demand, protest, notices of protest, dishonor
------
and non-payment of this Promissory Note and all notices of every kind are hereby
waived. No single or partial exercise of, or forbearance from exercising, any
power hereunder or under any other agreement or instrument pertaining to this
Promissory Note shall preclude other or further exercises thereof or the
exercise of any other power. No delay or omission on the part of Lender in
exercising any right hereunder shall operate as a waiver of such right or of any
other right under this Promissory Note.
10. Governing Law. Principal and interest are payable in lawful money of
-------------
the United States. This Promissory Note has been executed and delivered by
Maker in the State of Michigan and shall be governed by and construed in
accordance with the laws of the State of
12
Michigan. In any action brought under or arising out of this Promissory Note,
Maker hereby consents to the jurisdiction of any competent court within the
State of Michigan and consents to service of process by any means authorized by
Michigan law.
11. Authority. The undersigned individual signing this Promissory Note
---------
represents and warrants that the undersigned individual is duly authorized and
empowered to execute and deliver this Promissory Note on behalf of Maker.
MAKER:
AASTROM Biosciences, Inc.
By:
----------------------------------
13
EXHIBIT B
Stock Warrant
14
STOCK WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED,
UNLESS AN EXEMPTION FROM THE REQUIREMENT OF SUCH REGISTRATION IS AVAILABLE UNDER
THE CIRCUMSTANCES AT THE TIME OBTAINING AND DEMONSTRATED BY AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY.
Void after 5:00 p.m., Michigan Time, on October 15, 2000
Warrant to Purchase
up to _______ Shares of
Common Stock
AASTROM BIOSCIENCES, INC.
------------------------------------------------
Common Stock Purchase Warrant
1. Grant of Warrant to Purchase Shares. This is to certify that, for
-----------------------------------
value received,
The State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement System,
State Employees' Retirement System, Michigan State Police Retirement System,
and Michigan Judges Retirement System
or assigns (the "Holder"), is entitled, subject to the provisions of this
Warrant, to purchase from Aastrom Biosciences, Inc., a Michigan corporation (the
"Company"), at any time within the Exercise Period (hereinafter defined), up to
_______ fully paid and non-assessable shares (the "Shares") of Common Stock of
the Company ("Stock"), at a purchase price per share (the "Exercise Price") as
defined below. The Shares deliverable upon exercise of this Warrant, as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock" and the exercise price to purchase a share of Warrant Stock is
hereinafter sometimes referred to as the "Exercise Price."
2. Definitions.
-----------
The "Exercise Period" shall commence on the earlier of (a) 90
days after the Company completing its IPO (as defined below), (b) the Company
completing a Qualifying Financing, or (c) October 15, 1999 (provided that this
date is not within 90 days after the IPO is completed, in which event the option
shall be exercisable at the end of said 90 days); and the Exercise Period shall
end on October 15, 2000.
The "Exercise Price" shall be the lesser of:
(1) $6.00 share, increasing by $2.00 per share on each
anniversary of the date the Company completes its IPO; or
15
(2) 85% of the fair market value of the Company's stock,
which value shall be determined as follows:
(a) if the Company's common stock is traded in the
public stock market at the time the stock warrant is exercised, then said fair
market value shall be the public trading price, calculated using the average of
the last trading price of the day for the 20 trading days preceding the date of
exercise.
(b) if the exercise of the stock warrant is made prior
to the Company completing an IPO, then said fair market value shall be the fair
market value of the Company's then most recently issued preferred stock sold to
cash investors (excluding stock sold to RPR), determined by mutual agreement
between the Company and the State. If no such mutual agreement is reached, then
the fair market value of said preferred stock shall be determined by a
nationally recognized investment banking firm which is mutually selected by the
Company and the State, with the fees for such determination to be borne equally
between the Company and the State.
The term "IPO" means an initial public offering of the Company's
Common Stock which is registered with the United States Securities and Exchange
Commission.
The term "Qualifying Financing" means any one of the following:
a. the Company entering into (or completing) a term sheet
agreement (or other agreement) with investors or an underwriter by the Maturity
Date, which provides for: (1) a scheduled closing by February 1, 1998, (2) a
public or private sale of equity securities of the Company, the gross proceeds
from which equity sale is to aggregate to at least $10 million, (3) the proceeds
of the sale are not designated by the investor for specified limited purposes,
(4) the price per share for the sale is set by mutual agreement between the
Company and new investors who invest at least $1 million, and (5) the sale of
equity securities actually is consummated by February 1, 1998; or
b. the Company entering into (or completing) a term sheet
agreement (or other agreement) by the Maturity Date for the merger or sale of
the Company at a value of at least $85 million, with (1) a scheduled closing for
the merger or sale to be by February 1, 1998, and (2) the merger or sale
actually is consummated by February 1, 1998; or
c. the Company's Board of Directors adopting an Operational
Plan for the Company to continue its operations in the ordinary course of
business through December 31, 1998, funded by the Company's own cash flow and
other resources, without requiring outside equity or debt investment in the
Company.
3. Number of Shares Issuable Upon Exercise. This Warrant may be
---------------------------------------
exercised from time to time to purchase up to an aggregate maximum of __________
Shares.
4. Method of Exercise. During the Exercise Period, this Warrant may
------------------
be exercised by the Holder, in whole or in part, by surrender of this Warrant,
together with an Exercise Agreement in the form attached hereto as Exhibit A,
duly executed by the Holder, to
16
the Company or at the office of its stock transfer agent, if any, accompanied by
the cash payment of the Exercise Price for the number of Shares specified in
such Exercise Agreement. Upon payment of the Exercise Price as provided in this
Section 4, the Holder shall thereupon be entitled to receive the number of
Shares of Warrant Stock determined as provided hereunder. If this Warrant should
be exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right of the
Holder to purchase the balance of the Shares purchasable hereunder. Upon receipt
by the Company of this Warrant in proper form for exercise and accompanied by
payment, the Holder shall be deemed to be the holder of record of the Shares of
Warrant Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Warrant Stock shall not then be actually delivered
to the Holder.
5. Expiration Date. This Warrant shall expire October 15, 2000, or
---------------
such earlier date as the Company may complete a merger or sale of the Company,
so long as the Holder is given at least 60 days' prior written notice of the
proposed merger or sale, and an opportunity to exercise this Warrant, as
contemplated by Section 12 hereof.
6. Reservation of Shares. The Company hereby agrees that it will at
---------------------
all times reserve and keep available for issuance and delivery upon exercise of
this Warrant such number of shares of Stock as shall be issuable from time to
time upon exercise of this Warrant.
7. Fractional Shares. No fractional Shares or scrip representing
-----------------
fractional Shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a Share called for upon any exercise hereof, the
Company will pay to the Holder cash in an amount equal to such fraction
multiplied by the then current market value of such fractional Share, determined
in such reasonable manner as may be determined by the Board of Directors of the
Company, such determination to be final and binding on the Holder.
8. Exchange, Assignment or Loss of Warrant. This Warrant is
---------------------------------------
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender to the Company or at the office of its stock transfer agent, if
any, for other Warrants of different denominations entitling the Holder to
purchase in the aggregate the same number of Shares of Warrant Stock purchasable
hereunder. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice signed by the Holder specifying the denominations in which new Warrants
are to be issued. The term "Warrant" as used herein includes any Warrants
issued in substitution for or replacement of this Warrant, or into which this
Warrant may be divided or exchanged. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, as the case may be, the Company shall issue to the
Holder a new Warrant of like tenor and date.
9. Rights of Holder. The Holder shall not, by virtue hereof, be
----------------
entitled to any rights of a shareholder of the Company, either at law or equity,
and the rights of the Holder are
17
limited to those expressed in this Warrant and are not enforceable against the
Company except to the extent set forth herein.
10. Adjustment Provisions.
---------------------
10.1 Adjustment of Exercise Price for Stock Splits, Stock
----------------------------------------------------
Dividends Etc. In case the Company shall at any time or from time to time
- -------------
issue stock by way of dividend or other distribution on any capital stock of the
Company, or subdivide or combine the outstanding shares of Stock, the Exercise
Price shall be proportionately decreased in the case of such issuance (on the
day following the date fixed for determining shareholders entitled to receive
such dividend or other distribution) or decreased in the case of such
subdivision or increased in the case of such combination (in either case, on the
date that such subdivision or combination shall become effective).
10.2 No Adjustment for Small Amounts. Anything in this Section
-------------------------------
10 to the contrary notwithstanding, the Company shall not be required to give
effect to any adjustment in the Exercise Price unless and until the net effect
of one or more adjustments pursuant to this Section 10 shall cause a change of
the Exercise Price by at least one cent, but when the cumulative net effect of
more than one adjustment so determined shall be to change the Exercise Price by
at least one cent, such change in the Exercise Price shall then be given effect.
10.3 Number of Shares Adjusted. Upon any adjustment of the
-------------------------
Exercise Price pursuant to this Section 10, the Holder shall thereafter (until
another such adjustment) be entitled to purchase, at the adjusted Exercise
Price, the number of Shares of Warrant Stock, calculated to the nearest full
share, obtained by multiplying the number of Shares of Warrant Stock issuable
upon exercise of this Warrant prior to such adjustment by the Exercise Price in
effect prior to such adjustment and dividing the product so obtained by the new
Exercise Price.
11. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted pursuant to Section 10, the Company shall promptly create and file in
the custody of its Secretary or an Assistant Secretary at its principal office,
and with its stock transfer agent, if any, and mail to the Holder at his or her
address as listed on the books and records of the Company, an officer's
certificate showing the adjusted Exercise Price determined as herein provided
and setting forth in reasonable detail the facts requiring such adjustment. The
original of each such officer's certificate shall be available for inspection
during office hours at the Company's principal place of business. Such
certificate shall be conclusive as to the correctness of such adjustment.
12. Reclassification, Reorganization or Merger. In case of any
------------------------------------------
reclassification, capital reorganization or other change of outstanding shares
of Stock of the Company (other than a change in par value, or as a result of an
issuance of Stock by way of dividend or other distribution or of a subdivision
or combination), or in case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety, the
Company shall cause effective provision to be made so that the Holder shall have
the right thereafter, by exercising this Warrant, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation, sale or
conveyance as the Holder would have received had this
18
Warrant been exercised immediately prior to such event. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section 12 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Stock. In
the event of a merger (where the Company is not the surviving entity),
consolidation or other sale or conveyance (in all such cases where the
consideration to be received by the holders of the Stock of the Company consists
solely of cash or securities registered under the Securities Act of 1933, as
amended, the "Act") and if requested by the Company, the Holder shall agree to
exercise this Warrant immediately prior to such event, or otherwise the
expiration date shall be accelerated to the day preceding the effective date of
the merger, consolidation or other sale or conveyance.
13. Stock Registration. Upon exercise of this Warrant, and with
------------------
respect to the Warrant Stock acquired by said exercise, the Holder shall become
a "Purchaser" under, and be entitled to all of the rights set forth in, the
Stock Registration Rights Agreement, dated as of April 2, 1992, as amended (the
"Registration Agreement"), a copy of which has been given previously to the
Holder, and the Holder agrees to be bound by the terms and conditions of the
Registration Agreement, as applicable. Except as set forth in the Registration
Agreement, the Company has no obligation to register any of the Shares of
Warrant Stock issuable upon the exercise of this Warrant. Unless and until the
shares of Warrant Stock are registered under the Act, the resale of the Warrant
Stock by the Holder is restricted, and the Shares will be subject to the
limitations and restrictions of Rule 144 after the Company has a public stock
offering, and the Shares may be sold by the Holder only pursuant to exemptions
from the registration requirements of the Act, if any are then available. In
connection with an underwritten initial public offering by the Company of its
equity securities pursuant to a registration statement filed under the Act, the
Holder shall not sell, pledge, dispose or transfer any interest in (or otherwise
agree to engage in any of the foregoing transactions with respect to) any of the
Warrant Stock or any interest herein without the prior written consent of the
Company or its underwriters for a period of up to 180 days following the
effectiveness of the registration statement, and the Holder agrees to enter into
a "lockup letter" so restricting such transfers; provided, that the Holder's
obligations to refrain from transferring Warrant Stock and to enter into a
lockup letter shall be effective only if the executive officers and directors of
the Company also enter into similar lockup letters. In order to enforce the
limitations of this Section 13, the Company may impose stop-transfer
instructions with respect to the Warrant Stock until the end of the applicable
lockup period.
14. Transfers. Subject to the terms and conditions contained in
---------
Section 13 hereof, this Warrant and all rights hereunder are transferable in
whole or in part by the Holder and any successor transferee; provided, however,
that in no event shall the total number of transfers of any of the rights and
interests in all of the Warrant exceed five (5) transferees. The transfer shall
be recorded on the books of the Company upon receipt by the Company of a notice
of transfer in the form attached hereto as Exhibit B (the "Transfer Notice"), at
its principal offices, and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer. The Transfer Notice shall
also be accompanied with an opinion of counsel reasonably satisfactory in
substance to the Company that the transfer will not (i) violate any provision of
the Act and any applicable state securities laws or (ii) cause the Company to
19
lose the exemption from registration under applicable federal and state
securities laws used for the original issuance of this Warrant.
15. Legend. Each certificate representing Warrant Stock or any other
------
security issued or issuable upon exercise of this Warrant shall bear the
following legend, unless counsel for the Company is of the opinion as to any
such certificate that such legend is unnecessary:
The securities represented by this certificate may not be offered for
sale, sold or otherwise transferred except pursuant to an effective
registration statement made under the Securities Act of 1933 (the
"Act"), or pursuant to an exemption from registration under the Act.
16. Applicable Law. This Warrant shall be governed by, and construed
--------------
in accordance with, the laws of the State of Michigan.
Date: _________________, 199__ AASTROM Biosciences, Inc.
By:____________________________
20
ACCEPTANCE OF WARRANT AGREEMENT
The undersigned hereby accepts this Warrant and agrees to abide by all the
terms and conditions hereof. The undersigned further represents and agrees that
it is an "accredited investor" as defined by Rule 501 promulgated by the
Securities and Exchange Commission and that it is accepting this Warrant for its
own account for investment purposes and not with a view to or for sale in
connection with a distribution of the Warrant or the Warrant Stock.
Dated: __________________________, 199__
WARRANT HOLDER:
The State Treasurer of the State of Michigan,
Custodian of the Michigan Public School
Employees' Retirement System, State Employees'
Retirement System, Michigan State Police
Retirement System, and Michigan Judges
Retirement System
By: ______________________________________
21
EXHIBIT A
EXERCISE AGREEMENT
------------------
To: ______________________________
Dated: _________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to subscribe for and purchase ______ shares of the
Warrant Stock covered by such Warrant and makes payment herewith in the sum of
$__________ as full payment for such Warrant Stock, at the price per share of
$__________, as provided by such Warrant.
Signature:
-----------------------------------
Print Name:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
Federal Tax
Identification
Number:
-----------------------------------
22
EXHIBIT B
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant, execute this form and
supply the information and materials required by Section 14 of the
Warrant. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby transferred and assigned to
- --------------------------------------------------------------------------------
(Please Print)
whose address is
---------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated
------------------------
Holder's Signature
-----------------------------------------
Print Holder's Name
----------------------------------------
Holder's Address
-------------------------------------------
-------------------------------------------
Signature Guaranteed:
---------------------------------------
NOTE: The signature to this Transfer Notice must correspond with the name as
it appears on the face of the Warrant, without alteration or
enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing Warrant.
23
EXHIBIT 11.1
AASTROM BIOSCIENCES, INC.
STATEMENT RE COMPUTATION OF PRO FORMA NET LOSS PER SHARE
Year ended June 30. Three months ended September 30,
---------------------------------------- --------------------------------
1994 1995 1996 1995 1996
------------ ------------- ------------ --------------- -------------
Weighted average number of common shares outstanding 1,294,000 1,724,000 1,749,000 1,740,000 1,752,000
Issuance of Common Stock(1) 135,000 135,000 135,000 135,000 136,000
Assumed exercise of stock options to purchase
Common Stock(1) 121,000 121,000 121,000 121,000 121,000
Series E Preferred Stock issued in January 1996 1,078,000 1,078,000 1,078,000 1,078,000 1,078,000
Weighted average number of common shares representing
assumed conversion of Series A, Series B, Series C
and Series D
Convertible Preferred Stock from the date of issuance 4,833,000 5,586,000 7,020,000 7,020,000 7,020,000
------------ ------------ ------------ ------------- -------------
Pro forma weighted average number of common and common
equivalent shares outstanding 7,461,000 8,644,000 10,103,000 10,094,000 10,107,000
============ ============ ============ ============= =============
Net loss $ (6,140,000) $ (5,717,000) $ (9,917,000) $ (1,299,000) $ (3,273,000)
============ ============ ============ ============= =============
Pro forma net loss per share $ (.82) $ (.66) $ (.98) $ (.13) $ (.32)
============ ============ ============ ============= =============
- ------------------------
(1) Represents shares of common stock or common stock equivalents issued
subsequent to October 1995 at a price per share less than the offering
price of $8.00. Such shares are considered to be cheap stock and,
accordingly, reflected as outstanding since inception.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of our
report dated October 31, 1996, on our audits of the financial statements of
Aastrom Biosciences, Inc. We also consent to the reference to our firm under the
caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Detroit, Michigan
October 31, 1996
5
YEAR
JUN-30-1996
JUL-01-1995
JUN-30-1996
10,967,000
0
0
0
0
11,485,000
2,339,000
1,151,000
12,673,000
1,634,000
0
0
34,218,000
324,000
(23,692,000)
12,673,000
0
1,609,000
0
12,142,000
0
0
62,000
(9,917,000)
0
(9,917,000)
0
0
0
(9,917,000)
(.98)
0
5
YEAR
JUN-30-1995
JUL-01-1994
JUN-30-1995
2,680,000
8,388,000
0
0
0
11,272,000
1,925,000
646,000
12,551,000
953,000
0
0
28,253,000
241,000
(17,308,000)
12,551,000
0
517,000
0
6,447,000
0
0
66,000
(5,717,000)
0
(5,717,000)
0
0
0
(5,717,000)
(.66)
0
5
YEAR
JUN-30-1994
JUL-01-1993
JUN-30-1994
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
872,000
0
7,192,000
0
0
65,000
(6,140,000)
0
(6,140,000)
0
0
0
(6,140,000)
(.82)
0
5
3-MOS
SEP-30-1996
JUL-01-1996
SEP-30-1996
5,908,000
1,200,000
0
0
0
7,706,000
2,512,000
1,287,000
8,931,000
1,166,000
0
0
37,718,000
365,000
(30,465,000)
8,931,000
0
224,000
0
3,612,000
0
0
11,000
(3,273,000)
0
(3,273,000)
0
0
0
(3,273,000)
(.32)
0
5
3-MOS
SEP-30-1995
JUL-01-1995
SEP-30-1995
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
211,000
0
1,641,000
0
0
18,000
(1,299,000)
0
(1,299,000)
0
0
0
(1,299,000)
(.13)
0
5
OTHER
JUN-30-1996
JUN-30-1996
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3,782,000
0
32,164,000
0
0
219,000
(27,025,000)
0
(27,025,000)
0
0
0
(27,025,000)
0
0
INCEPTION-TO-DATE
5
OTHER
JUN-30-1997
SEP-30-1996
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4,006,000
0
35,776,000
0
0
230,000
(30,298,000)
0
(30,298,000)
0
0
0
(30,298,000)
0
0
INCEPTION-TO-DATE
