Document:

Q2 2003 Exhibit 10.5

Exhibit 10.5

STANDSTILL AND REGISTRATION RIGHTS AGREEMENT

 

Dated as of July 23, 2003

Among

Cell Genesys, Inc.,

Novartis AG

and

Genetic Therapy, Inc.

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS
1.1 Certain Definitions*

ARTICLE 2 STANDSTILL AND RELATED COVENANTS
2.1 Standstill Provisions*

2.2 Significant Event*

ARTICLE 3 RESTRICTIONS ON TRANSFER OF  SECURITIES; COMPLIANCE
WITH SECURITIES LAWS
3.1 Restrictions on Transfer.*

3.2 Restrictive Legends*

3.3 Procedures for Certain Transfers*

3.4 Covenant Regarding Exchange Act Filings*

ARTICLE 4 REGISTRATION RIGHTS
4.1 Demand Registration*

4.2 Registration Procedures, Rights and Obligations*

4.3 Expenses*

4.4 Indemnification*

4.5 Information by the Holders*

4.6 Assignment of Registration Rights*

4.7 Termination*

4.8 Market Stand-Off Agreement*

ARTICLE 5 MISCELLANEOUS
5.1 Notices*

5.2 Governing Law*

5.3 Consent to Jurisdiction*

5.4 Language*

5.5 Entire Agreement*

5.6 Amendment*

5.7 Waiver*

5.8 Successors and Assigns*

5.9 Severability*

5.10 Headings*

5.11 Counterparts*

5.12 No Third Party Beneficiaries*

5.13 Specific Performance*

SCHEDULES

Schedule 4.3(a)Fees and Expenses

ARTICLE 1

DEFINITIONS

1.1Certain
Definitions.
  As used in this
Agreement:

(a)"Affiliate" means, with
respect to any Person, any other Person which directly or indirectly, by itself
or through one or more intermediaries, controls, or is controlled by, or is
under direct or indirect common control with, such Person.  For purposes of this
Agreement, neither Novartis nor any of its Affiliates shall be deemed an
Affiliate of the Company, and neither the Company nor any of its Affiliates
shall be deemed an Affiliate of Novartis.  

(b)"Assignment and License Agreement" means the
Patent Assignment and License Agreement between Novartis, GTI and the Company
dated as of the date hereof, relating to the assignment and transfer to the
Company of certain patents, patent applications, technology and know-how owned
by Novartis and GTI.

(c)"Beneficial ownership" or "beneficial
owner" has the meaning provided in Rule 13d-3 promulgated under
the Exchange Act. 

(d)"Business Day" means any day that is not a
Saturday, a Sunday or other day on which the NASDAQ Stock Market (or, if
different, the principal exchange on which the Shares are traded) is not open
for trading.  

(e)"Company Securities" means all shares of capital
stock of the Company, and all direct or indirect options, warrants, convertible
securities or other rights to acquire any shares of capital stock of the Company
or securities or instruments exchangeable or exercisable for, or convertible
into, shares of capital stock of the Company.

(f)"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, personal
representative 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, personal representative 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.

(g)"Demand Registration Statement" shall have the
meaning set forth in Section 4.1(a) hereof.

(h)"Exchange Act" means the Securities
Exchange Act of 1934, as amended.

(i)"Form S-3" means such form under the Securities
Act as in effect on the date hereof or any similar registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.

(j)"Group" or "group" shall have
the meaning provided in Section 13(d)(3) of the Exchange Act and the rules
and regulations promulgated thereunder.

(k)"Holder" or "Holders" means
Novartis, GTI or a Permitted Holder.

(l)"Novartis Subsidiary" means any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by Novartis.  

(m)"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 Exchange Act.  

(n)"Permitted Holder" means any Person to whom
Novartis or GTI has (i) assigned any of its rights under this Agreement in
accordance with Section 5.8 of this Agreement (subject to Section 4.6 of this
Agreement), or (ii) Transferred any of its Shares in accordance with Article 3
of this Agreement (subject to Section 4.6 of this Agreement).

(o)"Product Development and Option Agreement" means
the Product Development and Option Agreement between Novartis and the Company,
relating to the development of certain oncolytic virus therapies products, dated
as of the date hereof.

(p)"Option Agreements" means the Product Development
and Option Agreement, the Development License and Commercialization Agreement,
to be entered into as of a future date in accordance with the terms of the
Product Development and Option Agreement, and the Manufacturing and Supply
Agreement, to be entered into as of a future date in accordance with the terms
of the Product Development and Option Agreement.

(q)"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.

(r)"Registrable Securities" means (i) the
Shares and (ii) any shares of capital stock of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of the Shares.  Notwithstanding the foregoing, Registrable
Securities shall exclude any Registrable Securities sold by a Person in a
transaction in which rights under Article 4 hereof are not assigned in
accordance with this Agreement or any Registrable Securities sold to a Person
who receives such securities free of all transfer restrictions under applicable
federal and state securities laws, whether sold pursuant to Rule 144
promulgated under the Securities Act, in a registered public offering, or
otherwise.

(s)"Representative" means, as to any Person, its
directors, officers, employees, agents and advisors (including, without
limitation, financial advisors, attorneys and accountants).

(t)"Rights Plan" means the Amended and Restated
Preferred Shares Rights Agreement, dated as of July 26, 2000, between the
Company and Fleet National Bank, as amended.

(u)"Rule 144" means Rule 144 promulgated under the Securities
Act.

(v)"SEC" means the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.

(w)"Securities Act" means the Securities Act of
1933, as amended.

(x)"Significant Event" means, with respect to the
Company, (i) the announcement or commencement by any Person or Group of a tender
or exchange offer to acquire Voting Securities which, if successful, would
result in such Person or Group owning, when combined with any other Voting
Securities owned by such Person or Group, 25% or more of the then outstanding
Voting Securities of the Company; (ii) the resolution by the Board of Directors
of the Company to cause the Company to execute a definitive agreement to effect
a merger, business combination or other extraordinary change of control
transaction involving the Company, that would result in the Voting Securities of
the Company outstanding as of immediately prior to such transaction ceasing to
represent at least 50% of the combined voting power of the surviving entity
immediately following such transaction; (iii) the consummation of any
transaction that constitutes a Triggering Event or a Section 13 Event (each as
defined in the Rights Plan) under the Rights Plan of the Company in effect at
the time of the consummation of such transaction; (iv) the removal and the
replacement at any annual or special meeting of stockholders of a majority of
the current directors of the Company; or (v) the sale or transfer of all or
substantially all of the assets of the Company.  References to
"Person" or "Group" within the definition of Significant
Event excludes, in each instance, Novartis and any of its Affiliates.

(y)"Transaction Agreements" means, collectively, the
Option Agreements and the Assignment and License Agreement.

(z)"Voting Securities" means the Company Securities
entitled, in the ordinary course, to vote in the election of directors of the
Company generally.  Voting Securities shall not include stockholder rights or
other comparable securities having Voting Power only upon the happening of a
trigger event or comparable contingency and which can only be transferred
together with the Voting Securities to which they attach or the right to vote
for a class director only.  References herein to meetings of holders of Voting
Securities shall include meetings of any class or type thereof.

ARTICLE 2

STANDSTILL AND RELATED
COVENANTS

2.1Standstill Provisions.
  During the
period commencing on the date hereof and ending at 11:59 p.m. (California time)
on the second anniversary of the date hereof, Novartis shall not, without the
prior written consent of the Company, directly or indirectly, alone or in
concert with any other Affiliate, Group or Person:

(a)other than the Shares (and any securities of
the Company issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of the Shares), acquire, offer or propose to
acquire or agree to acquire, directly or indirectly, whether through market
purchases, tender or exchange offer, acquisition of control (including by way of
merger or consolidation) or otherwise, record or beneficial ownership of, or the
right to vote, any Company Securities, except for the purchase of Company
Securities solely in the ordinary course of business effected by Novartis'
passive investment trusts;

(b)propose or seek to effect a merger, consolidation,
recapitalization, reorganization, restructuring, sale, lease, exchange or other
disposition of all or substantially all of the assets of or other business
combination involving, or a tender or exchange offer for securities of, the
Company or any of its subsidiaries or any material portion of the Company's or
such subsidiary's business or assets or any other type of transaction that would
result in a change in control of the Company;

(c)except as may be specifically contemplated by the Transaction
Agreements, seek to exercise any control or influence over the management of the
Company or its Board of Directors or any of the businesses, operations or
policies of the Company;

(d)solicit proxies (or written consents) or assist or participate in
any other way, directly or indirectly, in any solicitation of proxies (or
written consents), or otherwise become a "participant" in a
"solicitation," or assist any "participant" in a
"solicitation" (as such terms are defined under the Exchange Act) in
opposition to the recommendation or proposal of the Board of Directors of the
Company;

(e)form, join in or in any other way (including by deposit of any
Company Securities) participate in a Group with unaffiliated Persons, or in a
partnership, syndicate or voting trust, with respect to any of the Company
Securities, or enter into any agreement or arrangement or otherwise act in
concert with any other unaffiliated Person, for the purpose of acquiring,
holding, voting or disposing of any of the Company Securities;

(f)take any action that could reasonably be expected to require the
Company to make a public announcement regarding the possibility of any of the
events described in clauses (a) through (e) above; or

(g)request the Company or any of its Representatives, directly or
indirectly, to amend or waive any provision of this Article 2.

2.2Significant Event

.  The Standstill
restrictions set forth in Section 2.1 above shall not apply in the event
of, and with respect to, a Significant Event, but shall remain in effect at all
times prior to, and after the withdrawal, abandonment or termination of, a
Significant Event.  Notwithstanding anything to the contrary contained herein,
if Novartis announces or commences any transaction that is permitted by this
Section 2.2 and the Significant Event is withdrawn, abandoned or terminated,
Novartis shall nevertheless be permitted to pursue its transaction.

ARTICLE 3

RESTRICTIONS ON TRANSFER OF 

SECURITIES; COMPLIANCE WITH SECURITIES LAWS

3.1Restrictions on
Transfer.

(a)Novartis agrees that, prior to the first
anniversary of the date hereof, it shall not, and shall not cause or permit any
Affiliate of Novartis to, directly or indirectly, offer to sell, contract to
sell, make any short sale of, or otherwise sell, dispose of, loan, gift, pledge
or grant any options or rights with respect to, the Shares (including any
securities of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of the Shares) (each, a
"Transfer") except that Novartis or GTI may Transfer the
Shares:

(i)to the Company, or any Person or Group approved in writing in
advance by the Board of Directors of the Company;

(ii)to any Affiliate of Novartis, so long as such Affiliate
agrees in writing to hold such Shares subject to all the provisions of this
Agreement;

(iii)pursuant to a public offering of the Shares registered under
the Securities Act; and

(iv)pursuant to any tender offer, exchange offer, merger or
business combination which is recommended by the Board of Directors of the
Company.

(b)After the first anniversary of the date hereof, there shall be no
restrictions on the Transfer of the Shares other than those required by law.

3.2Restrictive Legends.

  Each of Novartis
and GTI agree that the certificate or certificates representing (i) the
Shares, and (ii) any securities of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of the
Shares (collectively, the "Restricted Securities") shall be
stamped or otherwise imprinted with the following legends:

(a)"THESE SHARES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THESE SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THESE SHARES UNDER SAID ACT OR IN THE ABSENCE OF AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT."

(b)"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS (INCLUDING TRANSFERABILITY RESTRICTIONS) SET FORTH
IN THAT CERTAIN STANDSTILL AND REGISTRATION RIGHTS AGREEMENT BETWEEN THE ISSUER,
NOVARTIS AND GTI, A COPY OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER
AT THE ISSUER'S PRINCIPAL EXECUTIVE OFFICES."

(c)Each certificate evidencing the Shares shall bear the legend set
forth in Section 3.2(a) hereof, except that such certificate shall not bear such
legend if: (i) the Shares are Transferred by a Holder pursuant to Rule 144 (as
permitted hereunder) and, prior to such Transfer, such Holder has delivered or
caused to be delivered to the Company or counsel for the Company (w) a customary
Rule 144 seller's representation letter, (x) a customary Rule 144 broker's
representation letter, (y) a copy of the certificate evidencing the Shares to be
Transferred, and (z) a copy of Form 144, if required (collectively, the
"Transfer Documents"), and such Holder has delivered or caused to be
delivered the original certificate evidencing the Shares to be Transferred to
the Company's transfer agent; or (ii) the Shares have been Transferred pursuant
to a Demand Registration Statement.  Upon receipt of the Transfer Documents, the
Company shall use best efforts to promptly, but in any event not later than five
(5) Business Days from the later of (A) the date the Company receives the
Transfer Documents and (B) the date of Transfer of the Shares, instruct and
cause its transfer agent to remove the legend specified in Section 3.2(a) hereof
in connection with any Transfer of the Shares in compliance with clause (i).
With respect to a Transfer of the Shares in compliance with clause (ii) above,
the Company shall instruct and cause its transfer agent (by delivery of a
customary blanket legend removal instruction letter) to remove the legend
specified in Section 3.2(a) hereof in connection with such Transfer of such
Shares promptly after the Demand Registration Statement is declared effective by
the SEC.  Notwithstanding anything herein to the contrary, after the second
anniversary of the date hereof, in the event Holder delivers to the Company a
customary Rule 144(k) representation letter with respect to such Holder and the
Shares, promptly following its receipt, the Company shall instruct and cause its
transfer agent to remove the legend specified in Section 3.2(a) hereof as
permitted by Rule 144(k).

(d)With respect to the legend set forth in Section 3.2(b) hereof,
after the first anniversary of the date hereof, upon the request of any Holder,
the Company shall promptly instruct and cause its transfer agent to (i) remove
such legend and (ii) issue new certificates to such Holder.

(e)In addition to and not in limitation of the foregoing, the
respective obligations and restrictions of the Company and each of Novartis and
GTI set forth in this Section 3.2 shall survive the Transfer of the Shares
pursuant to any private sale of the Shares not registered under the Securities
Act.  The provisions of this Section 3.2 shall be binding upon and inure to the
benefit of any transferee (and its respective successors and permitted assigns)
who receives the Shares via a private sale of the Shares not registered under
the Securities Act.

3.3Procedures for Certain Transfers.

  At any time prior to
the second anniversary of the date hereof, immediately prior to any proposed
private sale (or series of related sales) of more than 50% of the Registrable
Securities, Novartis or GTI, as applicable, shall give oral notice to the
Company of its intention to effect such sale.

3.4Covenant Regarding Exchange Act
Filings.

  With a view to
making available to Novartis and its Affiliates the benefits of Rule 144
promulgated under the Securities Act, and any other rules or regulations of the
SEC which may at any time permit Novartis or its Affiliates to sell any
Restricted Securities without registration, until the date of termination of
this Agreement, the Company agrees to use its commercially reasonable efforts to
file with the SEC in a timely manner all reports and other documents required to
be filed under the Exchange Act.

ARTICLE 4

REGISTRATION RIGHTS

4.1Demand
Registration.

(a)Subject to Section 4.2(a), if, at any
time after the date which is eleven (11) months from the date hereof, the
Company shall receive from a Holder or Holders beneficially owning in the
aggregate more than 50% of the Registrable Securities a written request (a
"Demand Request") that the Company register under the
Securities Act the Registrable Securities, then the Company shall use its
commercially reasonable efforts to cause all Registrable Securities specified in
such Demand Request to be registered as soon as reasonably practicable so as to
permit the offering and sale thereof and, in connection therewith, shall, as
expeditiously as possible, but in any event not later than thirty (30) days
(excluding any days which occur during the period of a permitted Suspension
Condition under Section 4.2 below) after receipt of a Demand Request,
prepare and file with the SEC, a registration statement, which may, at the
option of such Holder(s), be a shelf registration statement on Form S-3 (if such
Form S-3 is available for use by the Company to effect the registration and
distribution of the Registrable Securities) pursuant to Rule 415(a)(1)(i) under
the Securities Act (a "Demand Registration Statement") and use
its commercially reasonable efforts to cause such Demand Registration Statement
to be declared effective; provided, however, that such Demand Request shall:
(i) specify the number of Registrable Securities intended to be offered and
sold by the Holder(s) pursuant thereto; (ii) express the present intention
of the Holder(s) to offer or cause the offering of such Registrable Securities
pursuant to such Demand Registration Statement; (iii) describe the nature
or method of distribution of such Registrable Securities pursuant to such Demand
Registration Statement, including by means of an underwritten offering; and
(iv) contain the undertaking of the Holder(s) to provide all such
information and materials and take all such actions as may be required in order
to permit the Company to comply with all applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
thereunder, and to obtain any desired acceleration of the effective date of such
Demand Registration Statement.  

(b)Notwithstanding anything herein to the contrary, if a Form S-3 is
available for use by the Company to effect the registration and distribution of
the Registrable Securities, the Demand Registration Statement shall be on Form
S-3, and no Holder shall make a Demand Request that the Company register any
Registrable Securities on Form S-1 or other form of registration under the
Securities Act.

(c)The procedures to be followed by the Company and the Holders, and
the respective rights and obligations of the Company and the Holders, with
respect to the preparation, filing and effectiveness of the Demand Registration
Statement and the distribution of Registrable Securities pursuant to the Demand
Registration Statement under this Section 4.1 are set forth in
Section 4.2 hereof.  

4.2Registration Procedures, Rights and Obligations.

  The procedures
to be followed by the Company and the Holders, and the respective rights and
obligations of the Company and the Holders, with respect to the preparation,
filing and effectiveness of the Demand Registration Statement and the
distribution of Registrable Securities pursuant thereto, are as follows:

(a)The Holders shall be entitled to make one
Demand Request hereunder which shall result in actual registration of the
Registrable Securities; provided, however, that no such Demand Request may be
made (i) prior to the date which is eleven (11) months from the date
hereof, or (ii) that requests to register less than fifty percent (50%) of
the Registrable Securities (as adjusted for any stock splits, stock dividend,
stock combination or other reclassification).

(b)In the event of a Demand Request that: (i) does not result in the
corresponding Demand Registration Statement being declared effective by the SEC;
(ii) does not result in the corresponding Demand Registration Statement
remaining effective for the applicable period set forth in Section 4.2(c);
(iii) is withdrawn by the Holder(s) following the imposition of a stop
order, injunction or other order or requirement of the SEC with respect to the
corresponding Demand Registration Statement; or (iv) is withdrawn by the
Holder(s) as a result of the exercise by the Company of its suspension rights
pursuant to Sections 4.2(e) or (f) hereof; the Demand Request shall not be
counted against the one (1) Demand Request to which the Holders are entitled.
Any Demand Request that is withdrawn by the Holder(s) for any reason other than
as set forth in the previous sentence shall count for purposes of determining
the Demand Request to which such Holder(s) is entitled.  

(c)The Company shall use its commercially reasonable efforts to cause
the Demand Registration Statement to be declared effective promptly and to keep
such Demand Registration Statement continuously effective until the earlier to
occur of: (i) the sale or other disposition of the Registrable Securities
so registered; (ii) twelve (12) months after the effective date of such
Demand Registration Statement; and (iii) the termination of the registration
rights of the Holders pursuant to Section 4.7 hereof.  The Company shall
prepare and file with the SEC such amendments and supplements to the Demand
Registration Statement and prospectus used in connection therewith as may be
necessary to make and to keep such Demand Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Securities proposed to be distributed
pursuant thereto until the earlier to occur of: (i) the sale or other
disposition of the Registrable Securities so registered; (ii) twelve (12)
months after the effective date of such Demand Registration Statement; and
(iii) the termination of the Holders' registration rights pursuant to
Section 4.7 hereof. The Company shall, to the extent practicable, at least
five (5) Business Days prior to filing any registration statement or prospectus
or any amendments or supplements thereto, furnish to the Holder(s) and its
counsel copies of all such documents proposed to be filed and the Holder(s)
shall have the opportunity to comment on any information pertaining solely to it
and its plan of distribution that is contained therein and the Company shall
make the corrections reasonably requested by the Holder(s) with respect to such
information prior to filing the Demand Registration Statement or amendment or
supplement thereto.

(d)The Holder(s) shall not be entitled to offer or sell any
securities pursuant to a Demand Registration Statement unless and until the
Company has made all required filings with the SEC with respect to the
distribution of the Registrable Securities, such filings have become effective,
and the Company has notified the Holder(s) of the foregoing and that no
Suspension Condition then exists.  

(e)Notwithstanding any other provision of this Agreement, in the
event that the Company receives the Demand Request, at a time when the Company
(i) shall have filed, or has a bona fide intention to file, a registration
statement with respect to a proposed public offering of equity or equity-linked
securities or (ii) has commenced, or has a bona fide intention to commence,
a public offering of equity or equity-linked securities pursuant to an existing
effective shelf or other registration statement, then the Company shall be
entitled to defer the filing of any Demand Registration Statement in accordance
with Section 4.2(g) hereof.

(f)Notwithstanding any other provision of this Agreement, in the
event that the Company's Board of Directors determines that: (x) (i) non-
public material information regarding the Company exists, the immediate
disclosure of which would be significantly disadvantageous to the Company;
(ii) the prospectus constituting a part of any Demand Registration
Statement covering the distribution of any Registrable Securities contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; or
(iii) an offering of Registrable Securities would materially and adversely
affect or interfere with any proposed material acquisition, disposition or other
similar corporate transaction or event involving the Company (each of the events
or conditions referred to in clauses (i), (ii) and (iii) of this sentence is
hereinafter referred to as a "Suspension Condition") and (y)
the Company furnishes to the Holder(s) a certificate signed by the Chief
Executive Officer or the Chief Financial Officer of the Company stating that the
Company's Board of Directors has determined that a Suspension Condition exists
and providing an approximation of the anticipated delay (and Holder(s)
acknowledge(s) that any such information shall be deemed to be Confidential
Information of the Company), then the Company shall have the right to suspend
the filing or effectiveness of the Demand Registration Statement or to suspend
any distribution of Registrable Securities pursuant thereto for so long as such
Suspension Condition exists.  The Company will as promptly as practicable
provide written notice to the Holder(s) when a Suspension Condition arises and
when it ceases to exist.  Upon receipt of notice from the Company of the
existence of any Suspension Condition, the Holder(s) shall forthwith discontinue
efforts to: (i) file or cause the Demand Registration Statement to be
declared effective by the SEC (in the event that such Demand Registration
Statement has not been filed, or has been filed but not declared effective, at
the time the Holder(s) receive(s) notice that a Suspension Condition has
arisen); or (ii) offer or sell Registrable Securities (in the event that
such Demand Registration Statement has been declared effective at the time the
Holder(s) receive(s) notice that a Suspension Condition has arisen).  In the
event that the Holder(s) had previously commenced or was about to commence the
distribution of Registrable Securities pursuant to a prospectus under an
effective Demand Registration Statement then the Company shall, as promptly as
practicable after the Suspension Condition ceases to exist, make available to
the Holder(s) an amendment or supplement to such prospectus.  If so directed by
the Company, the Holder(s) shall deliver to the Company all copies, other than
permanent file copies then in the Holders' possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice.

(g)Notwithstanding any other provision of this Agreement, the Company
shall not be permitted to postpone (i) the filing or effectiveness of the
Demand Registration Statement or (ii) the distribution of the Registrable
Securities pursuant to the effective Demand Registration Statement pursuant to
Sections 4.2(e) or (f) hereof, for an aggregate period of more than sixty (60)
days in any three hundred and sixty-five day (365) day period; provided,
however, that no single such postponement period shall last for more than thirty
(30) consecutive days.

(h)The Company shall promptly notify the Holder(s) of any stop order,
injunction or other order or requirement of the SEC issued or, to the Company's
knowledge, threatened to be issued by the SEC with respect to any Demand
Registration Statement and will use its commercially reasonable efforts to
prevent the entry of such stop order, injunction or other order or requirement
of the SEC or to remove it if entered at the earliest possible date.

(i)The Company shall furnish to the Holder(s) such number of copies
of any prospectus, including any preliminary prospectus and any amended or
supplemented prospectus (including in each case all exhibits, but subject to any
applicable confidential treatment thereof), in conformity with the requirements
of the Securities Act, as the Holder(s) shall reasonably request in order to
effect the offering and sale of any Registrable Securities to be offered and
sold.  The Company shall use its commercially reasonable efforts to provide to
the Holder(s) or any underwriter participating in any disposition pursuant to
the Demand Registration Statement (and any attorney, accountant or other agent
retained by such Representative or any such underwriter for the purpose of
effecting the Demand Registration Statement) relevant financial and other
corporate records of the Company reasonably necessary for the Holder(s) to
effect the registration of the Registrable Securities pursuant to the Demand
Registration Statement.

(j)The Company shall use its commercially reasonable efforts to
register or qualify the Registrable Securities covered by the Demand
Registration Statement under the state securities or "blue sky" laws
of such jurisdictions as the Holder(s) shall reasonably request, to maintain any
such registration or qualification in effect for so long as such Demand
Registration Statement remains in effect, and to take any other action which may
be reasonably necessary to enable the Holder(s) to consummate the disposition in
such jurisdiction of the Registrable Securities owned by the Holder(s) until the
earlier to occur of: (i) the sale or other disposition of the Registrable
Securities so registered; (ii) twelve (12) months after the effective date
of such Demand Registration Statement; and (iii) the termination of the
registration rights of the Holder(s) pursuant to Section 4.7 hereof;
provided, however, that the Company shall not be required to take any action
that would subject it to the general jurisdiction of the courts of any
jurisdiction in which it is not so subject or to qualify as a foreign
corporation in any jurisdiction where the Company is not so qualified.

(k)The Company shall use its commercially reasonable efforts to
furnish, at the Holders' request, if the method of distribution is by means of
an underwritten offering, on the date that the shares of Registrable Securities
are delivered to the underwriters for sale pursuant to such registration, or if
such Registrable Securities are not being sold through underwriters, on the date
that the Demand Registration Statement with respect to such shares of
Registrable Securities becomes effective, (1) a signed opinion (in customary
form for a transaction of such nature and size), dated such date, of the
independent legal counsel representing the Company, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holder(s); and (2) letters dated such date and
the date the offering is priced, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and if such
Registrable Securities are not being sold through underwriters, then to the
Holder(s) and, if such accountants refuse to deliver such letters to such
Holder(s), then to the Company stating that they are independent certified
public accountants within the meaning of the Securities Act and covering such
financial matters as would be customary in such a transaction.

(l)The Company shall use its commercially reasonable efforts to enter
into customary agreements (including if the method of distribution is by means
of an underwritten offering, an underwriting agreement in customary form) and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities as contemplated
herein.

(m)The Company shall use its commercially reasonable efforts to cause
the Registrable Securities covered by the Demand Registration Statement to be
listed on each securities exchange or quotation system on which similar
securities issued by the Company are listed or traded.

(n)The Company shall use its commercially reasonable efforts to
prevent the issuance or obtain the withdrawal of any order suspending the
effectiveness of such Demand Registration Statement.

(o)The Company shall, in connection with any underwritten offering of
the Registrable Securities, use its commercially reasonable efforts to make
appropriate officers of the Company available to the Holder(s) for meetings with
prospective purchasers of the Registrable Securities and prepare and present to
potential investors customary "road show" material in each case in
accordance with the recommendations of the underwriters and in all respects in a
manner consistent with the resale of securities in an offering of a similar size
to such offering of the Registrable Securities.

(p)The Company shall use its commercially reasonable efforts to
procure the cooperation of the Company's transfer agent in settling any offering
or sale of Registrable Securities, including with respect to the transfer of
physical stock certificates into book-entry form in accordance with any
procedures reasonably requested by the Holder(s) or the underwriters.

(q)In the event a Holder has notified the Company that the method of
distribution pursuant to the Demand Request is by means of an underwritten
offering, the underwriter or underwriters shall be selected by the Company and
shall be approved by the Holder(s), which approval shall not be unreasonably
withheld or delayed, provided, (i) that all of the representations and
warranties by the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of the Holder(s), (ii) that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of the
Holder(s), and (iii) that the Holder(s) shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements (x) that are
customary for a transaction of such nature, (y) regarding the Holder(s), the
Registrable Securities and the Holders' intended method of distribution, and (z)
any other representations required by law.  Subject to the foregoing, the
Holder(s) shall enter into an underwriting agreement in customary form with the
underwriter or underwriters.  If the Holder(s) disapprove(s) of the terms of the
underwriting, the Holder(s) may elect to withdraw all its Registrable Securities
by written notice to the Company and the managing underwriter.  The securities
so withdrawn shall also be withdrawn from registration.

(r)The Company shall not hereafter enter into any agreement with
respect to its securities, which conflicts with the rights granted to the
Holders in this Agreement.

4.3Expenses.

 (a)All documented fees and expenses incurred in connection with the
Demand Registration Statement, including without limitation all registration,
filing and qualification fees, printers' and accounting fees (including the
expenses of and special audits or "cold comfort" letters required by
or incident to such performance and compliance), fees of the National
Association of Securities Dealers, Inc. or listing fees, all fees and expenses
of complying with state securities or "blue sky" laws, and the fees
and disbursements of counsel for the Company, shall be paid in accordance with
Schedule 4.3(a) attached hereto.

(b)The Holders shall bear and pay the (i) underwriting commissions
and discounts applicable to securities offered for its account in connection
with any registrations, filings and qualifications made pursuant to this
Agreement and (ii) any fees and expenses incurred in respect of counsel or other
advisors to the Holders.

4.4Indemnification.

(a)In the case of any offering registered
pursuant to this Article 4, to the extent permitted by law, the Company
will indemnify and agree to hold harmless each Holder, its respective directors,
officers, employees and agents, each Person who participates in the offering of
such Registrable Securities, including underwriters (as defined in the
Securities Act), and each Person, if any, who controls such Holder within the
meaning of Section 15 of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which any such Persons may become
subject, under the Securities Act or otherwise, and to reimburse any of such
Persons for any legal or other expenses reasonably incurred by them in
connection with investigating any claims or defending against any actions
(including any amounts paid pursuant to or in settlement of claims made under
the indemnification or contribution provisions of any underwriting or similar
agreement entered into by the Holders in connection with any offering or sale of
securities covered by this Agreement), insofar as such losses, claims, damages
or liabilities arise out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement under which such Registrable Securities were registered under the
Securities Act pursuant to this Article 4, the prospectus contained therein
(during the period that the Company is required to keep such prospectus
current), or any amendment or supplement thereto, or the omission or alleged
omission to state therein, if so used, a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading or (b) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
federal or state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any federal or state securities law in
connection with the offering covered by such registration statement, except
insofar as such losses, claims, damages or liabilities arise out of or are (i)
based upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon information furnished to the Company in writing
by the Holders specifically for use therein or (ii) made in any preliminary
prospectus, and the prospectus contained in the registration statement as
declared effective or in the form filed by the Company with the SEC pursuant to
Rule 424 under the Securities Act shall have corrected such statement or
omission and a copy of such prospectus shall not have been sent or otherwise
delivered to such Person at or prior to the confirmation of such sale to such
Person.

(b)The Holders hereby agree, if Registrable Securities held by such
Holders are included in the securities as to which such registration is being
effected, and each underwriter shall agree, in substantially the same manner and
to substantially the same extent as set forth in the preceding paragraph, to the
extent permitted by law, to indemnify and to hold harmless the Company its
directors, officers, employees and agents and each Person, if any, who controls
the Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which any of such Persons may be
subject under the Securities Act or otherwise, and to reimburse any of such
Persons for any legal or other expenses incurred in connection with
investigating or defending against any such losses, claims, damages or
liabilities, but only to the extent it arises out of or is based upon (a) an
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact in any registration statement under which the Registrable
Securities were registered under the Securities Act pursuant to this
Article 4, any prospectus contained therein, or any amendment or supplement
thereto, which was based upon and made in conformity with information furnished
to the Company in writing by such Holders expressly for use therein or (b) any
violation or alleged violation by such Holders of the Securities Act, the
Exchange Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement.

(c)Each party entitled to indemnification under this Section 4.4
(the "Indemnified Party") shall give notice in writing to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge 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 be unreasonably withheld or delayed), and the
Indemnified Party may participate in such defense at its own expense, provided,
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 4.4 unless such failure is materially prejudicial to the
Indemnifying Party's ability to defend such claim.  No Indemnifying Party,
(i) in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, which consent shall not be unreasonably
withheld or delayed, 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, or (ii) shall be liable
for amounts paid in any settlement if such settlement is effected without the
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed.

(d)In order to provide for just and equitable contribution to joint
liability under the Securities Act or the Exchange Act in any case in which
either (i) any Person exercising rights under this Agreement, or any
controlling Person of any such Person, makes a claim for indemnification
pursuant to this Section 4.4 but it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 4.4 provides for indemnification in such case, or
(ii) contribution under the Securities Act or the Exchange Act may be
required on the part of any such selling Person or any such controlling Person
in circumstances for which indemnification is provided under this
Section 4.4; then, and in each such case, the Company and such Person will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
Person is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by and sold under
the registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Persons are responsible for the remaining portion; provided, however,
that, in any such case: (A) no such Person will be required to contribute any
amount in excess of the foregoing public offering price of all such Registrable
Securities offered and sold by such Person pursuant to such registration
statement; and (B) no Person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be
entitled to contribution from any Person or entity who was not guilty of such
fraudulent misrepresentation.

(e)The agreements contained in this Section 4.4 shall survive the
transfer of the Registered Securities by the Holders and sale of all the
Registrable Securities pursuant to any registration statement and shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Holders or such director, officer or participating or controlling
Person.

4.5Information by the Holders.

  The Holders
shall furnish to the Company such information regarding it in the distribution
of Registrable Securities proposed by such Holders as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Article 4.  

4.6Assignment of Registration Rights.

  The registration
rights set forth in this Agreement are not transferable or assignable by
Novartis or GTI to any transferee or assignee of Registrable Securities from
Novartis or GTI, other than an Affiliate of Novartis that agrees in writing to
be bound by and subject to the terms and conditions of this Agreement or a
Novartis Subsidiary pursuant to Section 5.8 hereof; provided that GTI or any
Novartis Subsidiary may transfer or assign its registration rights set forth in
this Agreement to Novartis.

4.7Termination.

  The provisions of
this Article 4 (other than Sections 4.3 and 4.4) shall terminate upon the
earlier to occur of:  (i) such time as the Holders are capable of selling all of
their Registrable Securities under Rule 144(k) of the Securities Act, and (ii)
such time as Novartis, GTI or their respective permitted assignees no longer
hold any Registrable Securities.  

4.8Market Stand-Off
Agreement.

In addition to any other provision set forth in this Agreement,
prior to the second anniversary of the date hereof, in connection with the
public underwritten offering by the Company of any Company Securities, each
Holder agrees that, in the event Novartis beneficially owns greater than 5% of the then outstanding
Company Securities, upon the request of the underwriters managing any such
public underwritten offering of the Company Securities, such Holder shall agree
in writing (the "Public Offering Lock-Up") that it will not effect any
disposition of any Registrable Securities (other than those included in such
registration statement, if any), without the prior written consent of such
underwriters for such period of time (not to exceed ninety (90) days from the
closing of such public underwritten offering) as may be requested by such
underwriters; provided, however, that any such Holder shall not be bound by such
Public Offering Lock-Up more than once during the period commencing on the date
hereof and ending on the second anniversary of the date hereof.  

ARTICLE 5

MISCELLANEOUS

5.1Notices.

  All notices and other communications hereunder shall be in
writing and shall be deemed duly given (i) on the date of delivery if
delivered personally, (ii) on the date of confirmation of receipt (or, the
first Business Day following such receipt if the date is not a Business Day) of
transmission by fax or (iii) on the date of confirmation of receipt (or,
the first Business Day following such receipt if the date is not a Business Day)
if delivered by a nationally recognized courier service.  All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice:

(a)if to Novartis, to it at:

Novartis AG

   Lichtstrasse 35 

   4056 Basel

   Switzerland

   Attention:  General Counsel

   Facsimile:  +41 61 324 80 01 

(b)
if to GTI, to it at:

Genetic Therapy, Inc.

   c/o Novartis Finance Corporation

   608 Fifth Avenue

   New York, NY 10020

   Attention:  General Counsel

   Facsimile:  (212) 957-8367

(c)if to the Company, to it at:

Cell Genesys, Inc.

500 Forbes Boulevard

South San Francisco, CA 94080

Attention:  Stephen A. Sherwin, M.D.

Chairman and Chief Executive Officer

Facsimile: (650) 266-3010 

5.2Governing
Law.

  This Agreement
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York.

5.3Consent to Jurisdiction.

  The parties hereto
irrevocably consent to the exclusive jurisdiction and venue of any federal court
within the County of New York, in connection with any matter based upon or
arising out of this Agreement or the matters contemplated herein, agree that
process may be served upon them in any manner authorized by the laws of the
State of New York for such Persons and waive and covenant not to assert or plead
any objection which they might otherwise have to such jurisdiction, venue and
such process.

5.4Language.

  This Agreement is in
the English language only, which language shall be controlling in all respects,
and all versions hereof in any other language shall not be binding on the
parties hereto.  All communications and notices to be made or given pursuant to
this Agreement, and any dispute resolution with respect to this Agreement
(including all evidence relevant to such dispute resolution), shall be in the
English language.

5.5Entire Agreement.

  This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and supersedes all prior negotiations,
representations, agreements and understandings, written or oral, that the
parties may have reached with respect to the subject matter hereof.

5.6Amendment.

  This Agreement may
not be amended, modified or supplemented except (a) by an instrument in
writing signed by, or on behalf of, the Company, Novartis and GTI or (b) by
a waiver in accordance with Section 5.7.  

5.7Waiver.

  No provision of
this Agreement may be waived except as set forth in an instrument in writing
signed by the party to be bound thereby.  Any waiver of any term or condition
shall not be construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other term or
condition, of this Agreement.  The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any such rights.  

5.8Successors and Assigns.

  Novartis or GTI
may not assign this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the Company; provided that no
such approval shall be required in the event Novartis or GTI assigns this
Agreement or any of its rights hereunder to a Novartis Subsidiary or GTI or any
Novartis Subsidiary assigns this Agreement or any of its rights hereunder to
Novartis; provided further that no such approval shall be required in the event
either Novartis or GTI assigns this Agreement or any of its rights hereunder to
an Affiliate of Novartis who agrees to execute a counterpart hereof and
expressly agrees to be bound by all obligations hereunder.  Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.  

5.9Severability.

  In the event
that any provision of this Agreement or the application thereof, becomes or is
declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and
effect and the application of such provision to other Persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to the
greatest extent possible, the economic, business and other purposes of such void
or unenforceable provision.

5.10Headings.

  Headings included
herein are for convenience only, do not form a part of this Agreement and shall
not be used in any way to construe or interpret this Agreement.

5.11Counterparts.

  This Agreement
may be executed in counterparts, each of which shall be deemed an original, but
both of which together shall constitute one and the same instrument.

5.12No Third Party Beneficiaries.

  This Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person (other than as contemplated by Sections 3.2
and 4.4 hereof), any legal or equitable right, benefit or remedy of any nature
whatsoever.  

5.13Specific Performance.

  The parties hereto
agree that irreparable damage would occur in the event any provision of this
Agreement was not 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, without the necessity of
demonstrating the inadequacy of money damages.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date set forth
above.

CELL GENESYS, INC.

By: ____________________

Name:

Title:

 

NOVARTIS AG

By: ____________________

Name:

Title:

By: ____________________

Name:

Title:

 

GENETIC THERAPY, INC.

By: ____________________

Name:

Title:

 

Schedule 4.3(a)

Fees and Expenses

Novartis shall be responsible for, and shall pay, any and all documented fees
and expenses related to a Demand Request, as specified in Section 4.3 of the
Agreement.First Amendment to Joint Venture Agreement ex4_30b

FIRST AMENDMENT TO JOINT VENTURE AGREEMENT

THIS FIRST AMENDMENT TO JOINT VENTURE AGREEMENT (“Amendment”) is entered into this 31st day of October, 2000, to be effective for all purposes as of June 17, 1999, by and between RY-8, INC., a Hawaii corporation
(being a wholly-owned subsidiary of Roy’s Holdings, Inc., a Hawaii corporation) (“Roy’s”) and OS PACIFIC, INC., a Florida corporation (being a wholly-owned subsidiary of Outback Steakhouse, Inc., a Florida corporation)
(“Outback”).

WHEREAS, Roy’s and Outback entered into that certain Joint Venture Agreement dated June 17, 1999 (the “Agreement”), pursuant to which a Florida joint venture was formed under the name Roy’s/Outback
Joint Venture (the “Joint Venture”); and

WHEREAS, the parties desire to modify the Agreement to more accurately reflect the parties’ intent at the time of forming the Joint Venture and to reflect amendments agreed to in consideration for Outback and its parent
corporation, Outback Steakhouse, Inc. (“OSI”), guaranteeing a $12,000,000 Revolving Line of Credit issued to Roy’s by Wachovia Bank (the “Line of Credit”);

NOW THEREFORE, in consideration of the foregoing and the respective covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows:

Recitals.  The parties agree that the foregoing recitals are true and correct and incorporated herein by reference.

Modifications.  The parties agree that the following modifications shall be made to the Agreement:

Guarantees of Debt by Outback.  The second full paragraph of Section 4.1 of the Agreement beginning with the phrase “In addition to the foregoing, Outback agrees...” shall be deleted in its entirety and replaced with the
following:

Until such time as either (i) Roy’s, using commercially reasonable efforts, can obtain financing secured by its interest in the Joint Venture from a third party financial institution on commercially reasonable terms in
amounts sufficient to fund its share of additional capital contributions to the Joint Venture, or (ii) the Joint Venture can obtain such financing   secured by the Joint Venturers’ interests in the Joint Venture or the Joint Venture’s assets,
Outback shall cause its parent company Outback Steakhouse, Inc. (“OSI”) to provide a guarantee of loans to Roy’s from third party financial institutions in amounts sufficient to fund Roy’s share of additional capital contributions to the Joint
Venture (“Guaranteed Loans”) and to refinance Guaranteed Loans to the extent either Roy’s or the Joint Venture, using commercially reasonable efforts, cannot refinance the Guaranteed Loans without OSI’s loan guarantee.  The proceeds of
all Guaranteed Loans shall be used solely to fund Roy’s share of capital contributions to the Joint Venture and making the minimum required debt service payments to the lender of the Guaranteed Loans. Neither Outback nor OSI shall charge Roy’s any fee or
other assessment for such guarantees.  As a condition to such guarantees, Roy’s shall and hereby does agree to indemnify and hold Outback and OSI harmless from any liability or loss either of them may incur from payments on such guarantees or otherwise
arising from or as a result of such guarantees.  Roy’s shall also cause its parent company, Roy’s Holdings, Inc. (“RHI”) to indemnify and hold harmless Outback and OSI from any liability or loss either of them may incur from payments on
such guarantees or otherwise arising from or as a result of such guarantees. Roy’s shall secure its indemnity of Outback and OSI by granting to Outback and OSI a first priority security interest in Roy’s entire interest in the Joint Venture.  For so
long as any guarantee by Outback or OSI is outstanding, Roy’s shall not grant any other security interest in, or in any other manner otherwise pledge or encumber, its interest in the Joint Venture.

   

As part of the foregoing, promptly upon the execution of this Amendment, Outback agrees to cause its parent company, Outback Steakhouse, Inc. (“OSI”) to arrange for a loan to Roy’s for up to $12 million on
commercially reasonable terms (taking into consideration OSI’s loan guarantee) with Wachovia Bank, N.A. and to guarantee said loan as an accommodation guarantor.  Roy’s use of said loan proceeds will be limited to funding its capital contributions to
the Joint Venture and making the minimum required debt service payments to Wachovia Bank.  Further, Outback agrees that OSI will not charge Roy’s any fee or other assessment for its accommodation guaranty of said loan. 

2.2       Subsequent Capital Contributions. Section 4.4 of the Agreement shall be deleted in its entirety and replaced with the following:

                                    Each Joint Venturer
shall be obligated to contribute to the Joint Venture such percentage as is equal to such Joint Venturer’s Percentage Interest (initially 50%) of any additional capital contributions called for by majority vote of the Executive Committee. Such contributions
shall be made within ten (10) business days of the call therefore by the Executive Committee. A Joint Venturer’s failure to contribute its required share of additional capital contributions shall constitute a default under and breach of this Agreement. 
Notwithstanding the foregoing, Roy’s shall only be obligated to contribute additional capital from, and to the extent of, financing provided pursuant to Section 4.1 hereof.

 

2.3       Liability for Certain Obligations. Section 4.6.1 of the Agreement shall be deleted in its entirety and replaced with the following paragraph:

The parties acknowledge that the Joint Venture will incur certain material long term obligations, including, but not limited to, obligations as lessee under leases for Restaurant premises; provided however, the Joint Venture
shall borrow no money and incur no liabilities for any loans other than loans from Outback or its affiliates for equipment for the Restaurants. Roy’s and Outback agree that as to any obligation of the Joint Venture, including but not limited to liability under
any lease, Roy’s and Outback shall each be proportionately liable to any third party for only up to such percentage of any amounts outstanding of such obligation as is equal to the Joint Venturer’s Percentage Interest.  Roy’s and Outback shall
not be jointly and severally liable for any obligation.

Documentation. The phrase “proportionately fifty percent (50%) of any amounts outstanding under such obligations” in Section 4.6.2 shall be deleted and replaced with “such percentage of any amounts outstanding under such obligations
as is equal to the Joint Venturer’s Percentage Interest.”

Indemnification. Section 4.6.3 shall be deleted in its entirety and replaced with the following:

In the event any Joint Venturer is liable to any third party for any material long term obligation in excess of such Joint Venturer’s proportionate share based on its Percentage Interest, the other Joint Venturer will
indemnify and hold it harmless from and against any liability, claim, damage, action or obligation relating to said third party’s claim for such excess amounts.

2.6       Interest in Property.  Section 5.2 of the Agreement shall be deleted in its entirety and replaced with the following:

                                               
Each Joint Venturer’s ownership and voting interest in the Joint Venture (hereafter “Percentage Interest”) and in the Joint Venture’s assets, income, profits, losses and distributions shall be equal to a percentage, such percentage being the
same percentage as such Joint Venturer’s Net Capital Contributions to the Joint Venture bears to the total Net Capital Contributions to the Joint Venture.  For purposes of this Agreement, the term “Net Capital Contributions” shall mean the
initial capital contributions of cash made by a Joint Venturer to the Joint Venture, increased by: (i) any additional capital contributions by such Joint Venturer; (ii) such Joint Venturer’s distributive share of Joint Venture profits and any
items in the nature of income or gain which are specially allocated to such Joint Venturer; and (iii) the amount of any Joint Venture liabilities assumed by such Joint Venturer or which are secured by any Joint Venture property distributed to such Joint Venturer; and
reduced by: (a) the amount of cash and the value of any Joint Venture property distributed to such Joint Venturer; (b) such Joint Venturer’s distributive share of Joint Venture losses and any items in the nature of expenses or losses which are
specially allocated to such Joint Venturer; and (c) the amount of any liabilities of such Joint Venturer assumed by the Joint Venture or which are secured by any property contributed by such Joint Venturer to the Joint Venture.

                                               
The foregoing provisions are intended to comply with Treasury Regulation §1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulation.

2.7       Division or Share of Profits. Section 7.1 shall be deleted in its entirety and replaced with the following:

Any profits of the Joint Venture shall be allocated between the Joint Venturers in accordance with their respective Percentage Interests.

The amount and timing of distributions shall be determined by the Executive Committee in its sole discretion.  Distributions shall be made to the Joint Venturers in accordance with the respective Percentage Interests;
provided however, upon request of either Joint Venturer, the Executive Committee may approve, in its sole discretion, distributions to only one of the Joint Venturers. Any distribution made to only one of the Joint Venturers shall reduce the receiving Joint
Venturer’s Net Capital Contributions, capital account, and Percentage Interest accordingly.

2.8            Effect of Termination.  The following shall be added to the end of Section 10.2:

In the event the Joint Venture is terminated due to one party’s acquisition, through purchase or otherwise of the entire Joint Venture interest of the other party, the acquiring party shall be entitled to the
royalty-free master license described in Section 4.1 and the license to use the recipes described in Section 5.3, for so long as any Restaurant remains in operation.  In the event the Joint Venture is terminated due to one party’s bankruptcy,
insolvency or breach of the terms of this Agreement, the other party shall be entitled to the royalty-free master license described in Section 4.1 and the license to use the recipes described in Section 5.3, for so long as any Restaurant remains in
operation.

2.9       Put Options/Maximization of Value. In the first sentence of Section 11.1, after “Joint Venture” add “(being 12.5% of the entire Joint
Venture)”.

           

2.10            Pay Down of Line of Credit. The following paragraph shall be added after Section 11.2.4 as Section 11.2.5:

                        11.2.5 Pay Down of Line of Credit

In the event Roy’s exercises its put options and as a result, Outback purchases a portion of Roy’s interest in the Joint Venture, Roy’s shall pay off a percentage of any amounts then outstanding under any and
all Guaranteed Loans,   as is equal to the percentage of Roy’s interest in the Joint Venture that is being purchased by Outback.

2.12     Assignment.  The second sentence of Article XII shall be deleted in its entirety and replaced with the sentence “Further, no Joint Venturer may assign or pledge as
collateral its interest in profit distributions or its put options; except for a pledge by Roy’s to First Hawaiian Bank securing a loan in the amount of $1,000,000, a pledge by Roy’s to the financial institution providing financing guaranteed by Outback
or OSI pursuant to Section 4.1 hereof, and a pledge by Roy’s to Outback to secure obligations to Outback under indemnification agreements relating to Outback’s guarantee of financing pursuant to Section 4.1 hereof.”

                       
                       
                       
                       
                       
                                   
            2.13             Condition Subsequent.  Article XVII shall be deleted in its entirety.

3.            Ratification. The parties agree that the Joint Venture Agreement, as modified hereby, is in full force and effect, and all other terms are hereby
ratified and confirmed.

            IN WITNESS WHEREOF, the parties have executed this Amendment as of the first date written above.

RY-8, INC.                            
                                   
            OS PACIFIC, INC.,

a Hawaii corporation                              
                                    a Florida corporation

By: /s/Terrence M. Lee            
                                    By: /s/Robert D. Basham

Name: Terrence M. Lee                 
                                    Name: Robert D. Basham

Title: Vice President and Secretary         
                                    Title: President

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