Exhibit 10.1
WAIVER, CONSENT AND AMENDMENT
TO AGREEMENT AND PLAN OF MERGER
THIS WAIVER, CONSENT AND AMENDMENT
TO AGREEMENT AND PLAN OF MERGER (this “ Amendment
”) is made and entered into as of February 1, 2007, by
and among VALENTIS, INC., a Delaware corporation (“
Parent ”), VALENTIS HOLDINGS, INC., a Delaware
corporation and direct wholly-owned subsidiary of Parent (“
Merger Sub ”), and URIGEN N.A., INC., a Delaware
corporation (“ Urigen ”).
Reference is hereby made to that
certain Agreement and Plan of Merger, dated as of October 5,
2006, by and among Parent, Merger Sub, and Urigen (the “
Merger Agreement ”). Capitalized terms used and
not otherwise defined herein shall have the respective meaning
ascribed to such terms in the Merger Agreement.
WHEREAS, Parent has recently entered
into agreements with Genetronics, Inc., Biolitec, Inc., Juvaris
Biotherapeutics, Inc., Vical Incorporated, Althea Technologies,
Inc. and Medarex, Inc., copies of which have been filed with the
Securities and Exchange Commission (the “ Commission
”) as exhibits to Current Reports on Form 8-K and are
incorporated herein by reference, for the sale or licensing by
Parent of certain capital assets, including, but not limited to, a
number of patents, patent applications and related intellectual
property and intellectual property rights, the aggregate market
value of the capital assets sold or licensed exceeding $20,000 in
each of these transactions (the “ Capital Asset
Transactions ”), and may enter into future transactions
for the sale or licensing of certain of its capital assets with an
aggregate market value per transaction in excess of
$20,000;
WHEREAS, pursuant to
Sections 6.4 and 6.5 of the Merger Agreement,
Parent is required to obtain Urigen’s consent to enter into
the Capital Asset Transactions or any future transactions for the
sale or licensing of its capital assets with an aggregate market
value per transaction in excess of $20,000;
WHEREAS, Parent previously notified
Urigen of, and obtained Urigen’s oral acknowledgement of and
consent to, the Capital Asset Transactions, and desires a written
record of such acknowledgement and consent;
WHEREAS, Urigen has recently entered
into agreements for the issuance of shares of Urigen Series B
Preferred Stock, par value $0.00001 per share (the “
Urigen Series B Preferred Stock ”), and for the
issuance of certain debt in excess of $20,000, and desires to issue
additional debt in excess of $20,000 and additional shares of
Urigen Series B Preferred Stock in future
transactions;
WHEREAS, pursuant to
Sections 2.5 , 5.3 , 5.4 , and 5.5
of the Merger Agreement, Urigen is required to obtain
Parent’s written consent to the issuance of shares of
Urigen’s capital stock, to the issuance of debt in excess of
$20,000, and to the transfer of any shares of the capital stock of
Urigen;
WHEREAS, Urigen desires to obtain
Parent’s waiver and consent to the recent and future
issuances of shares of Urigen Series B Preferred Stock, and to
the recent and future issuances of certain debt in excess of
$20,000 in accordance with the terms of Merger Agreement;
and
WHEREAS, the parties hereto wish to
amend the terms of the Merger Agreement as more fully set forth
under Section III of this Amendment.
NOW, THEREFORE, in consideration of
the agreements, provisions and consents contained herein, and other
good and valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge, the parties hereto agree as
follows:
I.
Waiver and
Consent
A.
Urigen herby
consents to, and waives any consent, approval or other rights to
additional satisfaction it may have under the Merger Agreement
(including, without limitation, under Sections 6.4 and
6.5 thereof) with respect to Parent’s entry into and
consummation of the transactions contemplated by the
following:
(1)
the Capital Asset
Transactions; and
(2)
any future
transactions for the sale or licensing of Parent’s capital
assets with an aggregate market value per transaction in excess of
$20,000.
B.
Parent hereby
consents to, and waives any consent, approval or other rights to
additional satisfaction it may have under the Merger Agreement
(including without limitation under Sections 2.5 ,
5.3 , 5.4 and 5.5 thereof) with respect to
Urigen’s entry into and consummation of the transactions
contemplated by the following:
(1)
the promissory
note issued by Urigen to C. Lowell Parsons, dated as of
November 17, 2006, attached hereto as Exhibit A , and the issuance of 1,000
shares of Urigen Series B Preferred Stock to C. Lowell
Parsons pursuant to the terms thereof;
(2)
the Exchange
Agreement dated November 16, 2006, by and between Urigen and
Jeffrey Bacha, attached hereto as Exhibit B , pursuant to which Urigen
issued 1,000 shares of Urigen Series B Preferred Stock to
Jeffrey Bacha pursuant to the terms thereof;
(3)
The Investor
Relations Group Inc. Letter of Agreement dated September 20, 2006,
by and between Urigen and The Investor Relations Group, Inc.
(“ IRG ”), attached hereto as
Exhibit C
, pursuant to
which Urigen has agreed to pay IRG a maintenance fee in the form of
4,000 shares of Urigen Series B Preferred Stock per month
commencing on November 1, 2006, pursuant to the terms
thereof;
(4)
the issuance of
shares of Urigen Series B Preferred Stock in lieu of payroll
to the persons and in the amounts as provided for on
Exhibit D
hereto, such
shares reflecting the amount of compensation payable through the
date or dates reflected thereon excluding applicable tax
withholdings;
(5)
the issuance of
shares of Urigen Series B Preferred Stock to the persons and
for the consideration provided for on Exhibit E hereto;
(6)
the Consulting
Agreement dated December 11, 2006, by and between Urigen and
Dennis Giesing, attached hereto as Exhibit F , pursuant to which Urigen
has issued 19,200 shares of Urigen Series B Preferred Stock to
Dennis Giesing pursuant to the terms thereof, and the Stock
Restriction Agreement, dated as of December 11, 2006, attached
hereto as Exhibit G , pursuant to which the
shares issued to Dennis Giesing are subject to the repurchase right
of Urigen as to unvested shares pursuant to the terms
therof;
(7)
the promissory
note issued by Urigen to KTEC Holdings, Inc. (“ KTEC
”), dated as of January 5, 2007, attached hereto
as Exhibit H , and the issuance of 500
shares of Urigen Series B Preferred Stock to KTEC pursuant to
the terms thereof;
(8)
Urigen’s
issuance of 500 shares of Urigen Series B Preferred Stock to
Dian Griesel;
(9)
the Executive
Employment Agreement, dated as of May 1, 2006, attached hereto
as Exhibit I , pursuant to which Urigen
has agreed to pay Terry Nida compensation in the form of 10,000
shares of Urigen Series B Preferred Stock commencing on
October 31, 2006, pursuant to the terms thereof;
(10)
the future
issuance of Urigen Series B Preferred Stock to
“accredited investors” as defined in Regulation D
promulgated under the Securities Act of 1933, as amended (the
“ Accredited Investors ”), for an aggregate
consideration of up to $15.0 million;
(11)
in addition to
the issuances provided for in (10) above, the future issuance of
additional equity securities to Accredited Investors for an
aggregate consideration of up to $15.0 million on such terms and
conditions as Urigen and such investor(s) may agree;
and
(12)
the future
transfer of certain shares of Urigen common stock, par value
$0.00001 per share (the “ Urigen Common Stock
”), standing in the name of C. Lowell Parsons, to the
persons and in the amounts provided for on Exhibit J ;
Notwithstanding anything in this
Amendment to the contrary, Parent and Urigen agree that the
aforementioned issuances of debt, equity or convertible or other
derivative securities by Urigen shall not increase the aggregate
Merger Consideration to be received by the Urigen Stockholders
assuming that such transactions had not occurred. Additionally,
Urigen agrees that the aforementioned issuances of debt, equity or
convertible or other derivative securities by Urigen shall be
subject to, among other things, compliance with Sections 7.10
and 7.13 of the Merger Agreement.
II.
Acknowledgements
A.
Parent hereby
acknowledges and agrees that the Phase II clinical study results
for U101 in Chronic Pelvic Pain of bladder origin expressly set
forth in the Form 425 filed with the Commission on
October 31, 2006 (file no. 0-22987) do not constitute
grounds to terminate the Merger Agreement, whether under
Section 5.7 of the Merger Agreement or under any other
provision thereof.
B.
Parent hereby acknowledges that
Urigen has engaged an investment banking firm to assist it in
raising additional capital, but there is no guarantee that the
investment banking firm will be able to raise any additional
capital. Parent agrees that the engagement of an investment
banking firm by Urigen upon the terms previously disclosed to
Parent shall not constitute grounds to terminate the Merger
Agreement, whether under Sections 5.3, 5.4 or 5.5 or under
any other provision thereof.
C.
Urigen hereby
acknowledges that Parent has used its commercially reasonable
efforts to maintain the listing of Parent Stock on the Nasdaq
Capital Market and has otherwise complied with all other provisions
in the Merger Agreement relating to the Nasdaq Capital
Market.
Additionally,
Urigen acknowledges that Parent is not in full compliance with the
listing maintenance requirements of the Nasdaq Capital Market and
that the Parent Stock may be delisted from the Nasdaq Capital
Market. Urigen agrees that any failure to maintain a listing
of the Parent Stock on the Nasdaq Capital Market or any other
exchange or quotation service shall not constitute grounds to
terminate the Merger Agreement under any provision
thereof.
III.
Amendments to Merger
Agreement
A.
Section 1.2
of the Merger
Agreement is hereby amended by deleting clause (e) in its
entirety and replacing such clause with the following:
(e)
each share of the Fully Diluted
Urigen Stock issued and outstanding immediately prior to the
Effective Time (other than any shares held by dissenting
stockholders referred to in Section 2.11 below who have
not waived in writing or failed to perfect or effectively withdrawn
or lost their rights to appraisal under Section 262 of the
DGCL), shall by virtue of the Merger and subject to the proviso at
the end of this clause (e) become and be converted into the
right to receive from Parent a number of shares of the common
stock, par value $0.001 per share, of Parent (“ Parent
Stock ”) equal to the Conversion Number (the value of all
shares of Parent Stock so issued to Urigen Stockholders (as defined
below) are collectively referred to as the “ Merger
Consideration ”), subject to the adjustments set forth in
Section 2.13 and Section 2.14 below;
provided that, for purposes of determining the number of shares of
Parent Stock to be issued to the holders of the Urigen
Series B Preferred Stock by operation of this clause (e),
each share of Urigen Series B Preferred Stock shall be deemed
to be the equivalent of five shares of Urigen Common Stock meaning
that each share of Urigen Series B Preferred Stock will by
operation of this clause (e) be converted into the right to
receive a number of shares of Parent Stock equal to five (5) times
the Conversion Number;
B.
Section 2.10
of the Merger
Agreement is hereby amended by deleting such Section in its
entirety and replacing such Section with the following:
2.10
Exercise of Options, Warrants and
Conversion of Notes and Preferred Stock . On or before the Effective Time, all
outstanding stock options, warrants and other rights to purchase or
acquire capital stock of Urigen shall be exercised or exchanged as
provided in Section 7.8 hereof and all outstanding
securities exchangeable for or convertible into Urigen Common
Stock, including, without limitation, the Urigen Preferred Stock
(with the exception of the Urigen Series B Preferred Stock)
shall be exchanged and/or converted into Urigen Common Stock.
Immediately prior to the Effective Time, the outstanding capital
stock of Urigen shall consist only of Urigen Common Stock and
Urigen Series B Preferred Stock. For all purposes of
this Agreement, the shares of Urigen Common Stock issued upon
exercise or in exchange for such outstanding stock options,
warrants and other rights or upon conversion of any other
securities exchangeable for or convertible into the capital stock
of Urigen shall be deemed Urigen Common Stock and the recipients
thereof shall be deemed to be Urigen Stockholders.
C.
Section
2.11 of the Merger Agreement is
hereby amended by deleting such Section in its entirety and
replacing such Section with the following:
2.11
Dissenting Shares
. Notwithstanding Section
1.2(e) and Article 2 hereof, and except for the shares
of Urigen Series B Preferred Stock, the shares of Urigen Stock that
are issued and outstanding immediately prior to the Effective Time
and that are held by Urigen Stockholders who did not vote in favor
of the Merger and who comply with all of the relevant provisions of
Section 262 of DGCL (the “ Dissenting Shares ”)
shall not be converted into Parent Stock, unless and until such
Urigen Stockholders shall have waived in writing or failed to
perfect or shall have effectively withdrawn or lost their rights to
appraisal under Section 262 of DGCL; and any such Urigen
Stockholder shall have only such rights in respect of the
Dissenting Shares owned by them as are provided by DGCL. If
any such Urigen Stockholder shall have waived in writing or failed
to perfect or shall have effectively withdrawn or lost such right,
such Urigen Stockholder’s Dissenting Shares shall thereupon
be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for Parent Stock without
any interest thereon, pursuant to the terms of Section 1.2(e)
and Article 2 . Urigen will promptly comply with
its obligations under Section 262 of the DGCL and will give Parent
prompt notice of any demands and withdrawals of such demands
received by Urigen for appraisals of Dissenting Shares.
D.
Section 3.4
of the Merger
Agreement is hereby amended by deleting such Section in its
entirety and replacing such Section with the following:
3.4
Capitalization
. The authorized capital of
Urigen consists of (i) 20,000,000 shares of common stock, par
value $0.00001 per share, of which 15,506,490 shares are issued and
outstanding, and (ii) 6,000,000 shares of preferred stock, par
value $0.00001 per share, of which 5,000,000 shares has been
designated as Urigen Series A Preferred Stock, of which
4,358,938 shares are issued and outstanding on the date hereof, and
of which 1,000,000 shares has been designated as Urigen
Series B Preferred Stock, of which 223,700 shares are issued
and outstanding on the date hereof. All such outstanding
shares of Urigen Stock are owned of record by Urigen Stockholders
as set forth on Schedule 3.4 hereto and are validly issued,
fully paid and non-assessable and were issued in material
compliance with the Securities Act. Except as set forth in
Schedule 3.4, each holder of shares of capital stock or
securities that are or may become convertible into or exercisable
or exchangeable for shares of capital stock of Urigen qualifies as
an “accredited investor” as defined in Regulation D
promulgated under the Securities Act. Except as set forth in
Schedule 3.4, Urigen is neither a party to nor is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for Urigen to issue, deliver or
sell, or cause to be issued, delivered or sold any shares of Urigen
Stock or any other equity security of Urigen or any securities
convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any shares of Urigen
Stock or any other equity security of Urigen or obligating Urigen
to grant, extend or enter into any such subscriptions, options,
warrants, calls, commitments or agreements. As of the date
hereof there are no outstanding contractual obligations of Urigen
to repurchase, redeem or otherwise acquire any shares of capital
stock of Urigen. As of the date hereof, there are no
outstanding agreements with respect to the voting of Urigen Stock
or any rights of first refusal, preemptive rights or registration
rights.
E.
Section 3.26
of the Merger
Agreement is hereby amended by deleting such Section in its
entirety and replacing such Section with the following:
3.26
Stockholder Vote
Required . The only
vote of the holders of any class or shares of capital stock of
Urigen necessary to approve the Merger and the transactions
contemplated by this Agreement is the affirmative vote of holders
of a majority of the outstanding Urigen Common Stock, Urigen
Series A Preferred Stock and Urigen Series B Preferred
Stock voting together as a single class. The only vote of the
holders of any class or shares of capital stock of Urigen necessary
to approve the automatic conversion of the Urigen Series A
Preferred Stock into Urigen Common Stock immediately prior to the
Effective Time is the affirmative vote of the holders of 66 2/3% of
the outstanding Urigen Series A Preferred Stock. No
stockholder or other vote is required to approve the automatic
conversion of the Urigen Series B Preferred Stock into Parent Stock
upon the Effective Time.
F.
Section
4.4 of
the Merger Agreement is hereby amended by deleting such Section in
its entirety and replacing such Section with the
following:
4.4
Listing . As of February 1, 2007, the Parent Stock
is listed for quotation on the Nasdaq Capital Market under the
symbol “VLTS”. Parent has received notices that
(i) Parent is not in full compliance with the listing
maintenance requirements of the Nasdaq Capital Market, and
(ii) that Parent Stock may be delisted from the Nasdaq Capital
Market.
G.
Section
6.15 of the Merger Agreement is
hereby amended by deleting such Section in its entirety and
replacing such Section with the following:
6.15
Maintenance of Listing
. Parent
will use its commercially reasonable efforts to keep current its
filings with the Commission as required under Section 13 of the
Exchange Act, and shall immediately notify Urigen of, and provide
Urigen a copy of, any notice or correspondence from the
Commission. Parent shall immediately notify Urigen of, and
provide Urigen a copy of, any notice or correspondence from the
Nasdaq Capital Market.
H.
Section 7.8
of the Merger
Agreement is hereby amended by deleting such Section in its
entirety and replacing such Section with the following:
7.8
Exercise of Stock Options;
Conversion of Convertible Securities; Release of Claims
. Each outstanding stock
option, warrant, and other right to purchase or acquire the capital
stock of Urigen (with the exception of the Urigen Series B
Preferred Stock) shall have been exercised, waived or released
and/or Urigen shall have entered into an agreement, satisfactory in
form and substance to Parent and its counsel, with each Person
holding outstanding stock options, warrants, and other rights to
purchase shares of the capital stock of Urigen (including
convertible debt) or shall be exchangeable for shares of Parent
Stock to be issued by Parent taking into account the Conversion
Number. Additionally, all outstanding securities exchangeable
for or convertible into capital stock of Urigen, including, without
limitation, the Urigen Preferred Stock (with the exception of the
Urigen Series B Preferred Stock) shall be exchanged and/or
converted into Urigen Common Stock prior to the Merger. The
Urigen Series B Preferred Stock shall automatically convert into
shares of Parent Stock upon the Effective Time without any action
by Urigen or any Urigen Stockholder.
I.
Section 16.1
of the Merger
Agreement is hereby amended by adding the following paragraph
containing the definition of Certificate of Designation to such
Section:
“ Certificate of
Designation ” shall mean the Certificate of Designation
of Preferences, Rights, and Limitations of Series B Preferred
Stock of Urigen filed with the Delaware Secretary of State on
November 13, 2006.
J.
Section 16.1
of the Merger
Agreement is hereby amended by deleting the paragraph containing
the definition of Conversion Number in its entirety and replacing
such paragraph with the following:
“ Conversion Number
” shall mean the number that equals to 2 times the quotient
obtained when the number of the Fully Diluted Parent Shares issued
and outstanding immediately prior to the Effective Time is divided
by the number of shares of Fully Diluted Urigen Shares issued and
outstanding, or deemed to have been issued and outstanding (by
operation of the definition of the term “Fully Diluted Urigen
Stock”) in the case of the Urigen Series B Preferred
Stock, immediately prior to the Effective Time, subject to a cash
payment in lieu of the issuance of fractional shares as provided in
Section 2.9 hereof. By way of illustration, if
the Fully Diluted Parent Shares outstanding immediately prior to
the Effective Time were 1,000,000 and the total number shares of
Fully Diluted Urigen Shares outstanding immediately prior to the
Effective Time were 100,000, the Conversion Number would be 20
(1,000,000 ÷ 100,000 x 2), such that for each one share of
Urigen Common Stock the holder thereof would receive 20 shares of
Parent Stock.
K.
Section 16.1
of the Merger
Agreement is hereby amended by deleting the paragraph containing
the definition of Fully Diluted Urigen Stock in its entirety and
replacing such paragraph with the following:
“ Fully Diluted Urigen
Stock ” shall be determined as if (a) all shares of
Urigen Preferred Stock as are, or are required to be, issued and
outstanding have been converted into Urigen Common Stock at the
applicable rate(s) of conversion and, for the purposes of this
calculation, each share of Urigen Series B Preferred Stock
shall be deemed to have been converted into shares of Urigen Common
Stock as provided in Section 4(a)(ii) of the Certificate of
Designation, whether or not this shall actually have occurred,
(b) all warrants, stock options and other contractual rights
(including without limitation any “anti-dilution”
rights) to acquire or receive Urigen Common Stock have been
exercised or otherwise fulfilled, and (c) all other securities
convertible or exchangeable, whether directly or indirectly, into
shares of Urigen Common Stock have been converted or exchanged,
including without limitation convertible debt and any shares of
Urigen Common Stock.
L.
Section 16.1
of the Merger
Agreement is hereby amended by deleting the paragraph containing
the definition of Urigen Preferred Stock in its entirety and
replacing such paragraph with the following:
“ Urigen Preferred
Stock ” shall mean the Urigen Series A Preferred
Stock and Urigen Series B Preferred Stock
collectively.
M.
Section 16.1
of the Merger
Agreement is hereby amended by adding the following paragraph
containing the definition of Urigen Series A Preferred Stock
to such Section:
“ Urigen Series A
Preferred Stock ” shall mean the preferred stock of
Urigen, designated Series A, par value $0.00001 per
share.
N.
Section 16.1
of the Merger
Agreement is hereby amended by adding the following paragraph
containing the definition of Urigen Series B Preferred Stock
to such Section:
“ Urigen Series B
Preferred Stock ” shall mean the preferred stock of
Urigen, designated Series B, par value $0.00001 per
share.
O.
Section 16.2
of the Merger
Agreement is hereby amended by inserting the following references
to such Section in alphabetical order:
Certificate of Designation
16.1
Urigen Series A Preferred
Stock
16.1
Urigen Series B Preferred
Stock
16.1
IV.
Miscellaneous
Provisions
A.
Remaining
Terms Unaffected . Except for the
amendments to the Merger Agreement set forth herein, all other
provisions of the Merger Agreement shall remain in full force and
effect and are incorporated herein as if fully set forth
herein.
B.
Governing
Law . This Amendment shall
be governed by and construed and interpreted in accordance with the
laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof, except to the extent that
Section 2709 of the Delaware Code would require or permit
application of the laws of the State of Delaware.
C.
Counterparts
and Facsimile Signature . This Amendment may be
executed in two or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the
same instrument. This Amendment may be executed by facsimile
signature.
[ Signatures appear on the
following page ]
IN WITNESS WHEREOF, the parties
hereto have executed this Amendment as of the date first above
written.
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VALENTIS, INC.
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By
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/s/ Benjamin F. McGraw, III
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Benjamin F. McGraw, III
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President
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VALENTIS HOLDINGS, INC.
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By:
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/s/ Benjamin F. McGraw, III
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Benjamin F. McGraw, III
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President
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URIGEN N.A., INC.
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By:
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/s/ Martin E. Shmagin
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Martin E. Shmagin
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Chief Financial Officer
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Exhibit A: Parsons Promissory
Note
THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS (A) REGISTERED UNDER THE ACT OR (B) AN
EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
UNSECURED PROMISSORY
NOTE
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Burlingame, CA
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$200,000.00
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November 17, 2006
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FOR VALUE RECEIVED
,the undersigned, Urigen N.A., Inc.,
a corporation organized under the laws of Delaware (“
Maker ”), for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, promises
to pay to the order of C. LOWELL PARSONS, an individual and
resident of the State of Nevada (“ Payee ”), in
lawful money of the United States of America, at the office of
Payee in Burlingame, California, the principal sum of TWO HUNDRED
THOUSAND AND NO/100 UNITED STATES DOLLARS (US$200,000.00), and to
pay interest thereon at a rate per annum (computed on the basis of
a 360-day year of twelve (12) 30-day months) at all times equal to
12% simple interest. The foregoing amount is due and payable by
Maker on the earlier of (i) forty-five (45) days after consummation
of the Merger (as defined in the Agreement and Plan of Merger,
dated as of October 5, 2006, by and among Valentis, Inc., Valentis
Holdings, Inc., and Urigen N.A., Inc., hereinafter, the “
Merger Agreement ”), or (ii) two (2) calendar years
from the date hereof (in either case, the “ Due Date
”).
Subject to the approval of the board
of directors of Maker, Maker shall in connection herewith issue to
Payee 1,000 shares of Series B Preferred Stock, par value $.00001
per share, of Maker.
Maker may, in its discretion, pay
this Note in whole or in part at any time, without premium or
penalty.
Payee may not sell, assign,
transfer, pledge, give or otherwise dispose of all or any part of
its respective rights or obligations under this Note.
All capitalized terms used herein
and not specifically defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
This Note shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Delaware (to the exclusion of the conflicts of laws provisions
thereof), and is intended to take effect as an instrument under
seal.
IN WITNESS WHEREOF, the undersigned
has caused this promissory note to be duly executed as a sealed
instrument as of November 17, 2006.
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URIGEN N.A., INC.
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By:
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/s/ Martin Shmagin
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Name:
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Martin Shmagin
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Title:
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CFO
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A-1
Exhibit B: Exchange
Agreement
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this
“ Agreement ”) is made as of this 16th day of
November 2006, by and between URIGEN N.A., INC. (the “
Company ”) and Jeffrey Bacha an individual resident in
Vancouver British Columbia (the “ Holder
”).
WHEREAS, pursuant to that certain
letter agreement, dated August 29, 2006 by and between the Company
and Holder (the “ Letter Agreement ”), the
Company (then operating as “Urigen Holdings Inc.”,
which had been its former name prior to its continuance and
domestication out of British Columbia and into the State of
Delaware) had agreed to issue to Holder an option to purchase
10,000 shares of its common shares at a price of CDN $10.00 per
share (the “ Option ”);
WHEREAS, the Company has entered
into that certain Agreement and Plan of Merger, dated as of October
5, 2006, by and among the Company, Valentis Inc., and Valentis
Holdings, Inc. (the “ Merger Agreement ”),
pursuant to which all outstanding stock options, warrants and other
rights to purchase the stock of the Company are required to be
exercised, waived or released prior to the consummation of the
“Merger” (as such term is defined in the Merger
Agreement); and
WHEREAS, the Company and Holder wish
for the Company to be in compliance with its obligations under the
Merger Agreement and thus the Company desires to issue to Holder
1,000 shares (the “ Shares ”) of the Series B
Preferred Stock of the Company, par value $.00001 per share (the
“ Series B Preferred Stock ”), in exchange for
and consideration of the termination of the Letter Agreement and
any rights of the Holder to exercise the Option as may arise
thereunder (the “ Exchange ”).
NOW THEREFORE, for and in
consideration of the promises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Holder hereby agree as
follows.
ARTICLE I
THE EXCHANGE
1.1
Exchange of
Securities . Holder
hereby irrevocably agrees to terminate the Letter Agreement and any
rights of the Holder to exercise the Option as may arise
thereunder, and, in consideration thereof, the Company hereby
agrees to issue 1,000 shares of the Series B Preferred Stock (the
“ Shares ”) to Holder, on the terms and
conditions set forth in this Agreement.
1.2
Closing of
Exchange . The
Exchange shall be consummated concurrently with the execution of
this Agreement (the “ Closing ”).
1.3
Delivery of
Certificates . At the
Closing the Company shall deliver to the Holder certificate(s)
representing the Shares.
1.4
Termination of Letter
Agreement . Upon
execution of this Exchange Agreement, the Letter Agreement and all
rights of the Holder arising under such Letter Agreement, including
but not limited to the Holder’s right to the Options, shall
terminate.
B-1
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY
The Company represents and warrants
to Holder that the following are true and correct as of the date of
this Exchange Agreement and shall be true and correct as of the
Closing.
2.1
Power; Due Execution;
Enforceability . The
Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware with the full
corporate power and authority to execute, deliver and perform this
Agreement and to carry out the transactions contemplated hereby.
The Company has taken all necessary corporate and other actions to
authorize the execution and delivery of this Agreement. This
Agreement has been duly executed and delivered, and the Shares when
delivered hereunder will have been duly authorized and issued by
the Company, and duly and validly delivered by the Company. This
Agreement is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except to the extent that the enforceability thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in
effect relating to or affecting creditor’s rights generally
and to general equitable principles.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDER
Holder hereby represents and
warrants to the Company that the following are true and correct as
of the date of this Agreement and shall be true and correct as of
the Closing Date.
3.1
Nature of Holder
Power . Holder is a
resident of Vancouver, British Columbia with full legal capacity to
manage his affairs. Holder is over the age of majority and has full
power, legal right and authority to enter into, execute and deliver
this Agreement and to carry out the transactions contemplated
hereby.
3.2
Due Execution and Delivery;
Enforceability . This
Agreement has been duly executed and delivered by Holder. This
Agreement is the legal, valid and binding obligation of Holder,
enforceable against Holder in accordance with its terms, except to
the extent that the enforceability thereof may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
or affecting creditors rights generally and to general equitable
principles.
3.3
No Liens
. Holder is the sole owner of the
Option, free and clear of any and all charges, liens and
encumbrances whatsoever. Holder has not assigned or sought to
assign the Letter Agreement or the rights represented
thereby.
3.4
Restrictions on Transfer
Legends . Holder
understands that the transfer of the Shares is restricted by
applicable state and Federal securities laws’ and that the
certificates representing the Shares will be imprinted with legends
restricting transfer except in compliance therewith. Holder
acknowledges that the Shares must be held indefinitely unless
subsequently registered under the Securities Act of 1993 (the
“ Securities Act ”) or unless an exception from
such registration is available. Holder further acknowledges that
Holder is aware of the provisions and limitations of Rule 144
promulgated under the Securities Act.
3.5
Consents
. No authorization of, by or with
any governmental authority or any other person having a contractual
or similar relationship with Holder, the Company or their property,
on the
B-2
part of Holder is, or prior to the
Closing will be required in connection with the valid execution,
delivery and performance of this Agreement, the purchase of the
Shares, and the consummation of any other transaction contemplated
hereby.
3.6
Litigation
. There is no litigation affecting
this Agreement, the Letter Agreement, the Option or Holder pending
or, to the knowledge of Holder, threatened in by or before any
governmental authority that purports to adversely affect the
legality, validity or enforceability of any aspect of
Holder’s obligations under this Agreement, or the
consummation of any of the transactions contemplated
hereby.
3.7
Disclosure
. Holder has been afforded the
opportunity: (a) to ask such questions as Holder has deemed
necessary of, and to receive answers from the Company concerning
the terms and conditions of the Exchange and the merits and risks
of investing in the Shares and the Company, and (b) to obtain such
additional information as the Company possesses or can acquire
without unreasonable effort or expense that is necessary to verify
the accuracy and completeness of the information furnished to such
Holder by the Company.
3.8
Investment Intent; Accredited
Investor Status; Blue Sky . Holder is acquiring and will acquire the
Shares for investment for his own account, not as a nominee or
agent, and not with the view to, or for resale in connection with,
any distribution thereof. Holder understands that the sale of the
Shares has not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of
Holder’s investment intent and the accuracy of Holder’s
representations as expressed herein.
ARTICLE IV
MISCELLANEOUS
4.1
Governing Law
. This Agreement shall be governed
in all respect by the internal laws of the State of Delaware
without regard to conflict of laws provisions that would cause the
laws of any other jurisdiction to govern.
4.2
Successors and
Assigns . Neither
this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent
of the other party of parties. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding
upon the successors permitted assigns, heirs, executors and
administrators of the parties hereto.
4.3
Entire Agreement;
Amendment . This
Agreement constitutes the full and entire understanding and
agreement among the parties with regard to the subjects hereof, and
no party shall be liable or bound to any other person in any manner
by any warranties, representations or covenants except as
specifically set forth herein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed
by the party against whom enforcement of any such amendment,
waiver, discharge of termination is sought.
4.4
Counterparts
. This Agreement may be executed in
any number of counterparts each of which shall be an original and
all of which together shall constitute one instrument. Delivery of
an executed counterpart of a signature page to this Agreement by
facsimile transmission or by electronic mail in a PDF file shall be
effective as delivery of a manually executed counterpart of this
Agreement.
B-3
4.5
Severability
. If any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in
full force and effect without said provision, which shall be
replaced with an enforceable provision closest in intent and
economic effect as the severed provision; provided that no
such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.
[ Remainder of Page Intentionally
Left Blank ]
B-4
The foregoing Agreement is hereby
executed effective as of the date first above written.
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“ COMPANY ”
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“ HOLDER ”
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URIGEN N.A., INC.
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JEFFREY BACHA
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By:
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/s/ Martin Shmagin
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/s/ Jeffrey Bacha
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Name:
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MARTIN SHMAGIN
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(PLEASE
PRINT)
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Title:
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CFO
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B-5
Exhibit C: IRG
Agreement
THE INVESTOR RELATIONS GROUP
INC.
LETTER OF AGREEMENT
Date: September 20, 2006
Section 1. Services to be
Rendered. The purpose of this letter is to set forth the terms
and conditions on which The Investor Relations Group, Inc. (IRO)
agrees to provide Urigen Holdings Inc. (the “Company”)
investor relations and public relations services. These services
may include, but are not limited to: overall management of the
corporate communications program; designing a corporate fact sheet
that can readily be mass produce for distribution to brokers,
analysts, and other industry personnel; securing one-on-one and
group appointment with industry professionals for presentations by,
for, and about Company management; targeted mailings assistance
with compiling promotional materials; writing and editing news
releases and other corporate materials; advice on packaging the
Company story; writing pitch letters to and solicitation of the
appropriate media and press; syndicated stories; and, daily update
reports.
Section 2. Fees. The Company
shall pay to IRG for its services hereunder including investor
relations and public relations services a maintenance fee of ten
thousand shares per month for a renewable term of 6 months
beginning October 1, 2006. The shares shall be issued in the name
of Dian Griesel.
Fees are payable on or before the
1st day after the beginning of each month which occurs during the
Engagement Period. Unless other arrangements have been made and
agreed upon in writing, lack of payment for services rendered by
the 5 th of the month will be considered default of
this agreement, and IRG shall be entitled to cease all services on
behalf of the Company until such time as payment in full of amounts
due is made.
Section 3. Expenses. In
addition to all other fees payable to IRG hereunder, the Company
hereby agrees to reimburse IRG for all reasonable out-of-pocket
expenses incurred in connection with the performance of services
hereunder. These out-of-pocket expenses shall include, but are not
limited to: telephone, photocopying, postage, messenger service,
clipping service, maintaining mailing lists, information retrieval
service, wire services, monitoring advisory service, all production
costs for press releases including paper, envelopes, folding,
insertion and delivery to the post office, all reasonable travel
expenses, and all reasonable meeting expenses including rental of
audio/visual equipment. No individual expenses over $500 will be
expended without first notifying the Company. The Company agrees to
remit upon the signing of this agreement a check for $2,500 to be
placed on deposit with IRG and credited to the Company against
expenses incurred, on a permanent basis, throughout the program.
From time to time, the Company will replenish the expense account
as necessary to maintain a balance of $2,500. The balance of said
deposit is fully refundable should the program terminate. A running
invoice will be maintained of all expenses incurred and will be
submitted to the Company each month.
Section 4. Indemnification.
The Company and IRG agree to defend, indemnify and hold each other,
their affiliates, stockholders, directors officers, agents,
employees, successors and assigns (each an “Indemnified
Person”) harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses and disbursements of any kind whatsoever
(including, without limitation, reasonable attorneys’ fees)
arising solely from the Company’s or IRG’s breach of
their obligations, warranties and representations under this
Agreement. It is further agreed that the foregoing indemnity shall
be in addition to any rights that either party may have at common
law or otherwise, including, but not limited to, any right to
contribution.
Section 5. Term of Agreement and
Guarantee of Satisfaction. (a) The engagement of IRG under the
provisions of this agreement shall continue until notice of
termination is received. (b) The Company may terminate IRGs
engagement hereunder, with or without cause, immediately at any
time during this agreement. Any fees accrued to IRG prior to
cancellation will be payable immediately. (c) IRG may terminate its
engagement
C-1
hereunder, with or without cause, at
any time during this agreement. The obligations of the Company
under Sections 4 and 6 shall survive termination or breach of this
agreement, with or without cause, by either party.
Section 6. Solicitation of
Employees. For a period commencing two years after the
termination of this Agreement, the Company shall not, directly or
indirectly; (i) Influence or attempt to influence any employee of
IRG to leave its employ; (ii) agree to aid any competitor or
customer of IRG in any attempt to hire any person who was employed
by IRG within the two year period preceding termination of this
Agreement; or (iii) solicit or induce any person who was employed
by IRG within the two year period preceding the termination of this
Agreement to become employed by the Company. The Company
acknowledges that the restrictions in this section are reasonable
and necessary for the protection of IRG’s
business.
Section 7. Severability . In
case any provision of this letter agreement shall be invalid,
illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected or
impaired thereby.
Section 8. Consent to
Jurisdiction . This Agreement shall be governed and construed
in accordance with the laws of the State of New York, and the
parties hereby consent to the exclusive jurisdiction of the State
and Federal Courts, located within the City, County and State of
New York to resolve any disputes arising under this
Agreement.
Section 9. Other Services .
If the Company desires additional services not included in this
agreement, any such additional services shall be covered by a
separate agreement between the parties hereto.
Please evidence your acceptance of
the provisions of this letter by signing the copy of this letter
enclosed herewith and returning it to The Investor Relations Group
Inc., 11 Stone Street, 3 rd Floor, New York, NY 10004. Attention: Dian
Griesel, Ph.D., Chairman & CEO.
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Very truly yours,
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/s/ Dian Griesel
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Dian Griesel
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Founder & Chairman
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The Investor Relations Group, Inc.
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ACCEPTED AND AGREED
AS OF THE DATE FIRST ABOVE WRITTEN:
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Urigen Holdings Inc.
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/s/ Martin Shmagin
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CFO
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Martin Shmagin
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C-2
Exhibit D: Stock in Lieu of
Payroll Payments
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Shares of Series B Preferred Stock
Issued Per Month
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Name
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October
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November
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December
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January
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February
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March
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Total
|
|
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Martin Shmagin
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[60,065
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]
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William J. Garner
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[59,402
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]
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Amie Franklin
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[7,539
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]
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Terry Nida
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[66,164
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]
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Total
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[ ·
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]
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[193,170
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]
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D-1
Exhibit E: Existing Equity
Investors
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Shareholder
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Number of Shares
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Consideration Paid
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Date of Issuance
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Jane A. White
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20,000
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$
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50,000
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11/17/2006
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Joel H. Owens
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20,000
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$
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50,000
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11/17/2006
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Tri Murr, LLC
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20,000
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$
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50,000
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11/17/2006
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Port Royal Investment LLC
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20,000
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$
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50,000
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11/17/2006
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James R. and Paula Massey
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20,000
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$
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50,000
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11/17/2006
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Robert Perrey
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20,000
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$
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50,000
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10/19/2006
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|
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Gregg Palmer
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10,000
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$
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25,000
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10/19/2006
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|
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Joan Zacher
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10,000
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$
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25,000
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|
10/19/2006
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|
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Alan Sherman
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6,000
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|
$
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15,000
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|
10/19/2006
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E-1
Exhibit F: Consulting
Agreement
CONSULTING
AGREEMENT
URIGEN N.A., INC., a Delaware
corporation with offices located at 875 Mahler Road, Suite 235,
Burlingame, CA 94010 (the “ Company ”) and
DENNIS CLESING , an individual domiciled at 4421 SW Guil
Point Drive, Lee’s Summitt, MO 64082 (“
Consultant ”) enter into this Consulting Agreement
(the “ Agreement ”) as of December 11, 2006 (the
“ Effective Date ”).
The Company and Consultant,
intending to be legally hound, hereby agree as follows:
Section 1.
SERVICES. Consultant agrees to perform such services as
the “Director of Product Development” for one full day
per calendar week during the term of this Agreement as may be
requested by the Company relating to the design, structuring,
monitoring, and conduct of certain clinical trials by the Company.
Consultant shall report to (i) the Chief Executive Officer of the
Company, and (ii) the Chief Financial Officer of the Company,
and/or (iii) one or more of their designees. The Company
acknowledges that Consultant is a resident of the State of Missouri
and will perform his services from his home unless his presence
elsewhere is requested by the Company upon reasonable notice or is
otherwise necessary.
The Company shall have sole
discretion to determine the need for such services. Consultant
shall not perform services without receiving prior approval from
the Company.
Section 2.
COMPENSATION.
During the term hereof, the Company
shall compensate Consultant as follows:
(a)
A fee of $4,000 per month (pro rated
for any partial month) payable as set forth in clause (c), below,
and issuance of 19,200 shares (the “ Compensation
Shares ”) of the Series B Preferred Stock, per value
$0.00001 per share, of the Company to Consultant on or before
January 31, 2007, subject to the repurchase right of the Company as
to invested shares provided for in the Stock Restriction Agreement
by and between the Consultant and the Company of even date
herewith, a copy of which is appended hereto as Exhibit B
.
(b)
Reimbursement of reasonable and
necessary expenses incurred by Consultant, approved by the Company,
and directly related to Consultant’s performance of
Consultant’s duties hereunder including consultant’s
reasonable travel, lodging and meals in connection with
Consultant’s travel to the Company’s headquarters and
any other trips reasonably requested by the Company. Reimbursement
requests for such expenses shall be submitted in accordance with
the Company’s standard expense reimbursement policies and
procedures.
(c)
Payment by Company of fees and
expenses shall be made following receipt by the Company of
Consultant’s monthly invoice for the monthly fee setting
forth a description of all approved expenses incurred and paid by
Consultant. Consultant’s invoice shall be supported by
appropriate receipts for expenses. Payment of such fees and
expenses shall be due in accordance with the Company’s
policies and procedures in effect, from time to time, with respect
to payments of compensation and reimbursement of expenses to
employees of the Company.
Section 3.
DURATION AND
TERMINATION. This
Agreement shall become effective as of the Effective Date, shall
have an initial term of one year (1), and shall automatically renew
on each anniversary of the Effective Date of this Agreement unless
either party gives notice of its intention and to renew this
Agreement at least thirty (30) days prior to the expiration of the
initial form or any renewal term. In addition, the Company may
terminate this Agreement at any time for “Cause” in the
event Consultant has breached any obligation hereof and such breach
is not cured within thirty (30) days of Consultant’s receipt
of notice thereof. The Company shall be obligated to continue to
pay Consultant’s fees and to reimburse Consultant’s
expenses for all periods up to the
F-1
date of any termination. In the
event the Company terminates this Agreement without
“Cause” (other than due to Consultant’s death or
disability) then Consultant shall be entitled to the remaining
compensation payable during the term of this Agreement, payable as
provided in Section 2(a) .
The obligations of Consultant under
Sections 4, 5, 14, 15, 16, 17, and 18 below shall survive any
expiration or termination of this Agreement. Upon termination,
Consultant shall return to the Company all written information,
drawings, models and other materials or files supplied to
Consultant or created by Consultant at the expense of the
Company.
Section 4.
INVENTIONS AND COPYRIGHTABLE
WORKS.
(a)
Consultant agrees promptly to
communicate and disclose to the Company, or to its nominees, all
documentation and other copyrightable works (hereinafter called
“ Works ”) and all discoveries, improvements and
inventions (hereinafter called “ Inventions ”)
authorized, conceived, reduced to practice or made by Consultant,
whether solely or jointly with others, during the term of this
Agreement (i) along the lines of the Company’s products or
applicable thereto or useful therewith, or (ii) relating to the
Company’s inventions (whether or note patented or patentable)
useful in connection therewith, or (iii) relating to the
Company’s business at the time of the Invention, or (iv)
resulting from or related to any work that Consultant may do on
behalf of the company or at its request. All such Inventions and
Works that Consultant is obligated to disclose shall be and remain
entirely the property of the Company or its nominees, successors or
assigns. Consultant agrees to assign and hereby assigns to the
Company any rights it may have in such Works and
Inventions.
(b)
Consultant will assist the Company
and its nominees, successors or assigns, upon request, during and
following the term of this Agreement, at the expense of the
Company, to obtain and maintain for its own benefit, patents,
trademarks and copyright registrations for any such Inventions
and/or Works in any and all countries. Such assistance shall
include, but not be limited to, the execution and delivery of
specific assignments of any such Invention or Work and all domestic
and foreign patent rights and copyrights therein, and all other
papers and documents which relate to the securing and maintenance
of such rights, and the performance of all other lawful acts, as
may be deemed necessary or advisable to the Company or its
nominees, successors or assigns.
Section 5.
ADDITIONAL REPRESENTATIONS AND
WARRANTIES. Consultant
represents and warrants that Consultant has the right to perform
the services required herein without violation of obligations to
others, and that Consultant has the right to disclose to the
Company all information transmitted to the Company in the
performance of services under this Agreement. Consultant agrees
that any information submitted to the Company, whether patentable
or not, may be utilized fully and freely by the Company.
Section 6.
INDEPENDENT
CONTRACTOR. The status of
Consultant shall be that of an independent contractor and not of an
agent or employee of the Company and, as such, Consultant shall not
have the right or power to enter into any contracts or commitments
on behalf of the Company.
Section 7.
DEALINGS WITH THIRD
PARTIES. Consultant shall
not at any time in Consultant’s dealings with third parties
represent that Consultant is, or permit such third parties to deal
with Consultant or the assumption that Consultant is, an authorized
agent, or an officer, director or employee of the Company, unless
the Company expressly authorizes in writing such representation as
an authorized agent.
Section 8.
ASSIGNMENT.
The rights of Consultant under this
Agreement are personal to Consultant and may not be assigned or
transferred without the prior written consent of the
Company.
F-2
Section 9.
NOTICES. Any notices required or contemplated hereunder
or in connection herewith shall be deemed sufficiently given on the
date of mailing, if sent by certified mail, with sufficient postage
prepaid, and if addressed to Consultant at the following
address:
Dennis Giesing
4421 SW Gull Point Drive
Lee’s Summit, MO 64082
and if addressed to the Company
at:
Urigen N.A., Inc.
875 Mahler Road, Suite 235
Burlingame, CA 94010
Attention: President
Section 10.
APPLICABLE LAW.
This Agreement shall be construed
and enforced in accordance with the laws of the State of
California.
Section 11.
RESTRICTIVE
CONVENANTS.
(a)
Confidentiality
. Consultant acknowledges that the Company is
engaged in the Business as more fully defined and set forth on
Exhibit A . Consultant further acknowledges that in
order to conduct its business, the Company owns and uses
Confidential Information (as hereinafter defined) as well as trade
secrets. Consultant agrees that, both during and after termination
of this Agreement for any reason, Consultant with hold in a
fiduciary capacity for the benefit of the Company, and shall not,
without the prior written consent of the Company, directly or
indirectly use (for his own benefit or for the benefit of any other
person or entity) or disclose, except as authorized by the Company
in connection with the performance of Consultant’s duties,
any Confidential Information, as defined hereinafter, that
Consultant may have or acquire (whether or not developed or
compiled by Consultant and whether or not Consultant has been
authorized to have access to such Confidential Information) during
the term of, or in connection with, his engagement under this
Agreement.
(b)
With respect to Confidential
Information, during the term of this Agreement and for two years
thereafter (but indefinitely, in the case of the Company’s
trade secrets in Consultant’s possession), Consultant also
shall;
(i)
use the Confidential Information
only as necessary for the purpose of performing the services
described in this Agreement;
(ii)
hold the Confidential Information in
confidence and protect it in accordance with not less than the same
degree of care with which Consultant protects Consultant’s
own Confidential Information of like importance which he does not
wish to disclose, but in no event with less than reasonable
care;
(iii)
refrain from making a copy or
duplicate of the Confidential Information or from allowing anyone
else to copy or otherwise duplicate any of the Confidential
Information then under his control;
(iv)
promptly notify the Company in the
event that Consultant receives notice that any third party seeks to
legally compel Consultant to a judicial, administrative or
governmental
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proceeding to disclose any of the
Confidential Information, so that the Company may elect whether, at
its expense, to seek a protective order or other appropriate
remedy;
(v)
refrain from performing any testing
or analysis upon the Company’s Confidential Information for
the purpose of gaining a competitive advantage, or conferring a
competitive advantage upon a competitor of the Company;
and
(vi)
obtain the prior written consent of
a senior corporate officer of the Company to any use or disclosure
of any Confidential Information that is at variance with the terms
of this Section 11 .
(c)
Consultant shall not disclose or
permit access to or use of the Confidential Information by his
employees, or to his subcontractors, consultants, counsel or
agents, without the prior written consent of the
Company.
(d)
The obligations of this Section
11 shall become effective on the date of first disclosure of
Confidential Information.
(e)
Consultant expressly acknowledges
and agrees that the terms of this Agreement, including but not
limited to this Section 11, are reasonable and necessary for
the protection of the legitimate business interests of the Company.
Consultant further acknowledges that a violation of a provision of
this Agreement would cause serious, immediate and irreparable harm
to the Company, and therefore agrees that the Company shall be
entitled to injunctive relief without the necessity of proving such
harm. However, in the event that this Agreement or any part hereof
is found to be unenforceable by a court of law, then the parties
agree that such unenforceable portion shall be severed and the
remainder of this Agreement shall be enforced in accordance with
its terms, to the fullest extent of the law.
(f)
The term “ Confidential
Information ” as used in this Agreement shall mean and
include any information, date and know-how relating to the business
of the Company that is disclosed to Consultant by the Company or
known by him as a result of his relationship with the Company and
which is not generally within the public domain (whether
constituting a trade secret or not), including without limitation,
the following information:
(i)
financial information, such as
Company’s earnings, assets, debts, prices, fee structures,
volumes of purchases or sales or other financial data, whether
relating to Company generally, or to particular products, services,
geographic areas, or time periods;
(ii)
Supply and service information, such
as information concerning the goods and services utilized or
purchased by the Company, the names or addresses of suppliers,
terms of supply or service contracts, or of particular transaction,
or related information about potential suppliers, to the extent
that such information is not generally known to the public, and to
the extent that the combination of suppliers or use of a particular
supplier, though generally known or available, yields advantages to
Company, the details of which are not generally known;
(iii)
marketing information, such as
details about ongoing or proposed marketing programs or agreements
by or on behalf of Company, marketing forecasts or results of
marketing efforts or information about impending transactions
(including, without limitation, business plans, marketing
strategies, advertising plans, game launch schedules, cost
estimates, surveys, studies, research results, ticket designs,
working papers, computer programs, technical drawings, reports,
charts, graphs, and business, technical, and product development
plans and strategies);
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(iv)
personnel information, such as
employees’ personal or medical histories, compensation or
other terms of employment, actual or proposed promotions, hirings,
resignations, disciplinary actions, terminations or reasons
therefore, training methods, performance, or other employee
information;
(v)
customer information, such as any
compilation of past, existing or prospective customers, customer
proposals or agreements between customers and the Company, status
of customer accounts or credit, or related information about actual
or prospective customers; and
(vi)
information provided to the Company
by a third party under an obligation of confidentiality.
The term “Confidential
Information” does not include information that has
become generally available to the public by the act of one who has
the right to disclose such information without violating any right
of the Company or the customer to which such information pertains;
or information already known to Consultant at the time of such
disclosure to him and under circumstances where Consultant had no
other duty of confidentiality to the Company or third parties with
respect to the disclosed information, if such pre-existing
knowledge is documented by a written, dated record in
Consultant’s possession before the date of the disclosure of
Confidential Information to Consultant; or subsequently received by
Consultant in good faith from a third party having the prior right
to make such disclosure and authorize its public
disclosure.
(g)
The covenants contained in this
Section 11 shall survive the termination of this Agreement
for any reason for a period of two (2) years; provided ,
that with respect to those items of Confidential Information which
constitute a trade secret under applicable law, the
Consultant’s obligations of confidentiality and
non-disclosure as set forth in this Section 11 shall
continue to survive after said two (2) year period to the greatest
extent permitted by applicable law. These rights of the Company are
in addition to those rights the Company has under the common law or
applicable statutes for the protection of trade secrets.
(h)
Non-Solicitation; Employees or
Sales Representatives . During the term of this Agreement and for two
(2) calendar years immediately following cessation of
Consultant’s employment with the Company for any reason.
Consultant will not solicit or in any manner encourage employees of
the Company to leave the employ of the Company. The foregoing
prohibition applies only to employees with whom Consultant had
Material Contact pursuant to Consultant’s duties during the
twelve (12) month period immediately preceeding cessation of
Consultant’s employment with the Company. “ Material
Contact ” under this subsection means interaction between
the Consultant and another employee of the Company with whom
Consultant actually dealt.
(i)
Non-Solicitation;
Customers . During the term of this Agreement and for two
(2) years immediately following termination of this Agreement, for
any reason, Consultant shall not, on Consultant’s own behalf
or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise (except
the Company), solicit any customer of the Company, or any
representative of any customer of the Company with a view to
selling or providing any product, equipment or service competitive
with any product, equipment or service sold or provided by the
Company in the Company’s Business during the twelve (12)
month period immediately preceding termination of this Agreement;
provided , that the restrictions set forth in this
section shall apply only to customers of the Company, or
representatives of customers of the Company with whom Consultant
had Material Contact during such twelve (12) month period. “
Material Contact ” under this subsection exists
between Consultant and each of the Company’s existing
customers: (i) with whom Consultant actually dealt for a business
purpose while engaged by the Company or to further a business
relationship between the customer and the Company; (ii) whose
dealings with the Company were handled, coordinated or supervised
by Consultant; or (iii) about whom Consultant obtains or has
obtained Confidential Information in the ordinary course of
business as a result of Consultant’s association with the
Company; or (iv) as to any customer which receives or
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has received products or services
from the Company, the sale or provision of which results, or has
resulted, in earnings or income being included in the calculation
of any performance based compensation of Consultant.
(j)
Non-Compete
. Consultant shall comply with the non-compete
covenant set forth in Exhibit A hereto.
(k)
Survival: Tolling of Period of
Restraint . Notwithstanding the termination of this
Agreement, Consultant hereby expressly agrees that (i) the
provisions contained in this Section 11 shall survive for
the periods necessary to give effect to the provisions thereof, and
(ii) any purported violation of the restraints set forth in this
Section 11 shall automatically toll and suspend the period
of the restraint and extend the term of this Agreement for the
amount of time from the date Consultant or Company commences
litigation with respect to the enforceability of such provisions
and/or such purported violation until a final, non-appeasable
decision is rendered or the parties otherwise resolve the purported
violation; provided that the applicable period of
restraint shall not be extended unless there shall have been a
violation of the restraints set forth in the applicable section at
issue during such period of time.
(l)
Acknowledgements . Consultant hereby acknowledges and agrees that
the restrictions continued in Section 11 are fair and
reasonable and necessary for the protection of legitimate business
interests of the Company. Consultant acknowledges that in the event
the Consultant’s engagement with the Company terminates for
any reason, the Consultant will be able to earn a livelihood
without violating the restrictions contained in Section 11
and that the Consultant’s ability to earn a livelihood
without violating such restrictions is a material conditions to the
Consultant’s engagement and continued engagement with the
Company.
Section 12.
NON-DISPARAGEMENT.
Consultant covenants and agrees that
during the course of Consultant’s engagement by the Company
or at any time thereafter during which Consultant is receiving
payments of any kind from the Company, Consultant shall not,
directly or indirectly, in public or private, deprecate, impugn,
disparage, or make any remarks that would tend to or be construed
to tend to define the Company or any of its employee, members of
its board of directors or agents, nor shall Consultant assist any
other person or entity in so doing. The provisions of this Section
shall not constitute grounds for termination for
“Cause” except in the case either of Consultant’s
willful violation of the provisions of this Section or
Consultant’s repeated violation of the provisions of this
Section after notice by the Company to the Consultant that his
conduct violates the provisions of this Section.
Section 13.
CONFLICT OF
INTEREST.
Consultant may not use his position,
influence, knowledge of confidential information or the Company
assets for personal gain. A direct or indirect financial interest,
including joint ventures in or with a supplier, vendor, customer or
prospective customer without disclosure and written approval from
the Board is strictly prohibited and constitutes Cause for
terminations of this Agreement.
Section 14.
ENFORCEMENT OF
COVENANTS.
(a)
Termination of Employment and
Forfeiture of Compensation . Consultant agrees that in the event that the
Company determines that consultant has breached any of the
covenants set forth in Section 11 above during the term of
this Agreement, the Company shall have the right to terminate this
Agreement for “Cause”.
(b )
Injunctive
Relief . Consultant understands, acknowledges and agrees
that
