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EXHIBIT 10.17
**CONFIDENTIAL TREATMENT REQUESTED
COLLABORATION AND LICENSE AGREEMENT
BETWEEN
GENELABS TECHNOLOGIES, INC.
AND
▇▇▇▇▇▇ PHARMACEUTICALS, INC.
DATED: NOVEMBER 12, 2000
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ARTICLE I DEFINITIONS............................................................ 1
ARTICLE II LICENSE; OTHER RIGHTS.................................................. 5
Section 2.01 Technology License Grant........................................ 5
Section 2.02 Trademarks...................................................... 5
Section 2.03 Marketing Authorizations........................................ 5
Section 2.04 Improvements.................................................... 6
Section 2.05 Residual Rights................................................. 6
Section 2.06 Information..................................................... 6
Section 2.07 Co-Promotion.................................................... 6
Section 2.08 Supply.......................................................... 6
Section 2.09 Manufacturing Information....................................... 6
ARTICLE III PAYMENTS............................................................... 7
Section 3.01 License Fee..................................................... 7
Section 3.02 Royalty Payments................................................ 7
Section 3.03 Equity Purchases................................................ 10
Section 3.04 Third Party Licenses; ▇▇▇▇▇▇▇▇ Agreement........................ 9
ARTICLE IV PRODUCT DEVELOPMENT AND COMMERCIALIZATION.............................. 11
Section 4.01. Establishment of the JPC........................................ 11
Section 4.02. Purpose and Responsibilities of the JPC......................... 11
Section 4.03. JPC Meetings.................................................... 11
Section 4.04. Voting and Dispute Resolution................................... 11
Section 4.05. Specific Matters for JPC Determination; Allocation of Costs..... 12
Section 4.06. ▇▇▇▇▇▇'▇ Promotion and Marketing Obligations.................... 13
Section 4.07. Co-Promotion.................................................... 13
Section 4.08. Trademarks...................................................... 13
Section 4.09. Intellectual Property........................................... 13
ARTICLE V DEVELOPMENT, REGULATORY MATTERS........................................ 13
Section 5.01. Development..................................................... 13
Section 5.02. Assistance...................................................... 13
Section 5.03. Compliance...................................................... 13
Section 5.04. Adverse Drug Event Reporting and Phase IV Surveillance.......... 14
Section 5.05. Manufacturing Sites............................................. 14
Section 5.06. DHEA Supply..................................................... 14
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ARTICLE VI PATENTS AND TRADEMARKS................................................. 15
Section 6.01. Maintenance of Patents and Marks................................ 15
Section 6.02. Patent Ownership................................................ 15
Section 6.03. Prosecution and Maintenance of Joint Patent Rights.............. 15
Section 6.04. Prosecution of Infringement..................................... 16
Section 6.05. Maintenance of Marks............................................ 16
Section 6.06. Infringement Claimed By Third Parties........................... 16
ARTICLE VII CONFIDENTIALITY........................................................ 17
Section 7.01. Confidentiality................................................. 17
Section 7.02. Disclosure of Agreement......................................... 17
ARTICLE VIII REPRESENTATIONS AND WARRANTIES....................................... 18
Section 8.01. Corporate Power................................................. 18
Section 8.02. Due Authorization............................................... 18
Section 8.03. Binding Obligation.............................................. 18
Section 8.04. Ability to Carry Out Obligations................................ 18
Section 8.05. Compliance with Laws............................................ 18
Section 8.06. Genelabs Rights................................................. 18
Section 8.07. Adverse Properties.............................................. 20
Section 8.08. Limited Warranty................................................ 20
Section 8.09. Limitation of Liability......................................... 20
ARTICLE IX INDEMNIFICATION........................................................ 20
Section 9.01. ▇▇▇▇▇▇ Indemnified by Genelabs.................................. 20
Section 9.02. Genelabs Indemnified by ▇▇▇▇▇▇.................................. 21
Section 9.03. Indemnitor May Settle........................................... 21
ARTICLE X ADDITIONAL COVENANTS................................................... 22
Section 10.01. Right of First Negotiation for Competitive Product.............. 22
Section 10.02. Third Party Agreements.......................................... 22
Section 10.03. Covenant Not to ▇▇▇............................................. 22
ARTICLE XI PRODUCT RECALL......................................................... 23
Section 11.01. Product Recalls or Withdrawal................................... 23
Section 11.02. Recall Costs.................................................... 23
Section 11.03. Notification of Complaints...................................... 23
Section 11.04. Notification of Threatened Action............................... 24
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ARTICLE XII INSURANCE.............................................................. 24
Section 12.01. Insurance....................................................... 24
ARTICLE XIII TERM AND TERMINATION................................................... 24
Section 13.01. Term............................................................ 24
Section 13.02. Termination by Either Party for Cause........................... 24
Section 13.03. Effect of Termination........................................... 25
Section 13.04. Termination by ▇▇▇▇▇▇........................................... 26
Section 13.05. Return of Confidential Information upon Termination............. 26
ARTICLE XIV DISPUTE RESOLUTION................................................... 26
Section 14.01. Dispute Resolution.............................................. 26
ARTICLE XV MISCELLANEOUS.......................................................... 27
Section 15.01. Assignment...................................................... 27
Section 15.02. Force Majeure................................................... 27
Section 15.03. Governing Law................................................... 28
Section 15.04. Patent Marking.................................................. 28
Section 15.05. Waiver.......................................................... 28
Section 15.06. Severability.................................................... 28
Section 15.07. Notices......................................................... 28
Section 15.08. Independent Contractors......................................... 29
Section 15.09. Rules of Construction........................................... 29
Section 15.10. Entire Agreement; Amendment..................................... 29
Section 15.11. Headings........................................................ 29
Section 15.12. Publicity....................................................... 29
Section 15.13. Counterparts.................................................... 29
Section 15.14. Bankruptcy Matters.............................................. 29
Section 15.15. Further Assurances.............................................. 30
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Exhibit A Genelabs Marks......................................................... A-1
Exhibit B Licensed Patents....................................................... B-1
Exhibit C Form of Stock and Warrant Purchase Agreement........................... C-1
Exhibit D Form of Supply Agreement............................................... D-1
Exhibit E Third Party License Terms.............................................. E-1
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**CONFIDENTIAL TREATMENT REQUESTED
COLLABORATION AND LICENSE AGREEMENT
This Collaboration and License Agreement (the "Agreement") is made as of
November 12, 2000 (the "Effective Date") by and between Genelabs Technologies,
Inc., a California corporation ("Genelabs"), and ▇▇▇▇▇▇ Pharmaceuticals, Inc., a
Nevada corporation ("▇▇▇▇▇▇"). Genelabs and ▇▇▇▇▇▇ are sometimes referred to
collectively herein as the "Parties" or singly as a "Party."
RECITALS
WHEREAS, Genelabs has been engaged in substantial research, development
and regulatory efforts in connection with the Product (capitalized terms are
used as defined below);
WHEREAS, ▇▇▇▇▇▇ possesses substantial resources and expertise in the
commercialization and marketing of pharmaceutical products;
WHEREAS, ▇▇▇▇▇▇ and Genelabs desire to collaborate to promote and
exploit the Product in the Territory for use in the Field; and
WHEREAS, in connection with and in furtherance of such collaboration,
▇▇▇▇▇▇ desires to obtain from Genelabs, and Genelabs desires to grant to ▇▇▇▇▇▇,
a license to relevant patent rights, know-how and regulatory authorizations
pertaining to the Product in the Territory for use in the Field, and Genelabs
desires to obtain from ▇▇▇▇▇▇ in the future certain rights as described herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereto, intending
to be legally bound, do hereby agree as follows:
AGREEMENT
ARTICLE I
DEFINITIONS
The following terms as used in this Agreement shall, unless the context
clearly indicates to the contrary, have the meaning set forth below:
"ADE" has the meaning set forth in Section 5.04.
"Affiliate" means an individual, trust, business trust, joint venture,
partnership, corporation, association or any other entity which owns, is owned
by or is under common ownership with, a Party. For the purposes of this
definition, the term "owns" (including, with correlative meanings, the terms
"owned by" and "under common ownership with") as used with respect to any Party,
shall mean the possession (directly or indirectly) of more than 50% of the
outstanding voting securities of a corporation or comparable equity interest in
any other type of entity.
"Applicable Laws" means all applicable laws, rules, regulations and
guidelines within or without the Territory that may apply to the development,
marketing or sale of the Product in the
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**CONFIDENTIAL TREATMENT REQUESTED
Territory or the performance of either Party's obligations under this Agreement
including laws, regulations and guidelines governing the import, export,
development, marketing, distribution and sale of the Product in the Territory,
to the extent applicable and relevant, and including all current Good
Manufacturing Practices or current Good Clinical Practices standards or
guidelines promulgated by the FDA or the Competent Authorities and including
trade association guidelines, where applicable, as well as U.S. export control
laws and the U.S. Foreign Corrupt Practices Act.
"Competent Authorities" means collectively the entities in each country
responsible for the regulation of medicinal products intended for human use.
"Confidential Information" means any confidential information
(including, without limitation, information related to the Genelabs Technology)
of a Party relating to any use, process, method, compound, research project,
work in process, future development, scientific, engineering, manufacturing,
marketing, business plan, financial or personnel matter relating to the
disclosing Party, its present or future products, sales, suppliers, customers,
employees, investors or business, whether in oral, written, graphic or
electronic form. Confidential Information shall not include any information
which the receiving Party can prove by competent evidence:
(a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving Party, generally known or available;
(b) is known by the receiving Party at the time of receiving such
information;
(c) is hereafter furnished to the receiving Party by a Third
Party, as a matter of right and without restriction on disclosure;
(d) is independently developed by the receiving Party without the
aid, application or use of, the disclosing Party's Confidential Information; or
(e) is the subject of a written permission to disclose provided
by the disclosing Party.
"Effective Date" means the date first written above in the introductory
paragraph of this Agreement.
"FDA" means the United States Food and Drug Administration or successor
agency thereto.
"FDA Approval" means receipt by Genelabs of FDA approval of NDA #21-239.
"Field" means the treatment of diseases, disorders and conditions in
humans.
"First Commercial Sale" means (i) with respect to a country in the
Territory, the first sale for use, consumption or resale of the Product by
▇▇▇▇▇▇ in such country (excluding any sales for clinical trials or market
testing) and (ii) with respect to the Territory, the First Commercial Sale in
any country within the Territory. A sale to an Affiliate shall not constitute a
First Commercial Sale unless the Affiliate is the end user of the Product.
"Genelabs Know-How" means, with respect to the Product, all know-how,
trade secrets, inventions, data, processes, techniques, procedures,
compositions, devices, methods, formulas,
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**CONFIDENTIAL TREATMENT REQUESTED
protocols and information, whether or not patentable, including, without
limitation, all chemical, biochemical, toxicological, and scientific research
information owned, controlled or licensed by Genelabs or its Affiliates as of
the Effective Date and at any time during the Term of this Agreement, which is
not covered by the Genelabs Patent Rights, but is necessary or useful to
develop, manufacture and commercialize the Product in the Territory for use in
the Field, and shall include Improvements.
"Genelabs Marks" means "Aslera(TM)" or any additional trademarks
selected by Genelabs to describe the Product, alone or accompanied by any logo
(other than the Genelabs logo) or design and any foreign language equivalents in
sound or meaning, whether registered or not, as depicted on Exhibit A.
"Genelabs Patent Rights" means, with respect to the Product, all rights
owned, controlled or licensed by Genelabs or its Affiliates under patents and
patent applications and any and all patents issuing therefrom (including
utility, model and design patents and certificates of invention), together with
any and all substitutions, extensions (including supplemental protection
certificates), registrations, confirmations, reissues, divisionals,
continuations, continuations-in-part, re-examinations, renewals and foreign
counterparts of the foregoing, as of the Effective Date and at any time during
the Term of this Agreement, including all rights under the Third Party License
which are necessary or useful to develop, manufacture and commercialize the
Product in the Territory for use in the Field, and shall include Improvements
and Genelabs' interest in Joint Patents in the Territory. The Genelabs Patent
Rights as of the Effective Date are set forth on Exhibit B. Genelabs shall
promptly inform ▇▇▇▇▇▇ of any changes to Genelabs Patent Rights after the
Effective Date.
"Genelabs Technology" means the Genelabs Patent Rights and the Genelabs
Know-How.
"Improvements" means any and all developments, inventions or discoveries
in the Field relating to the Product or Genelabs Technology owned, controlled or
licensed by Genelabs, or its Affiliates, at any time during the Term hereof and
shall include, but not be limited to, developments intended to enhance the
safety and/or efficacy of the Product, or a combination product or new
formulation.
"IND" means an Investigational New Drug application required for
approvals or authorizations from the FDA to commence human clinical testing of a
drug, as defined by the FDA, or the equivalent application in another country.
"Joint Patents" means all patent applications claiming any invention
that is conceived or reduced to practice as a part of the collaboration pursuant
to this Agreement and invented jointly by ▇▇▇▇▇▇ employees or consultants on the
one hand, and Genelabs employees or consultants on the other hand, and any
continuations, continuations-in-part, renewals, divisionals, reissues,
re-examinations or extensions of any of the foregoing, any patents issuing from
any of the foregoing applications and any extended or restored term and any
confirmation patent, registration patent or patent of addition with respect to
any of the foregoing. Inventorship of said patents shall be determined according
to the laws of the United States. Joint Patents will be set forth on Exhibit B.
"Joint Product Committee" shall have the meaning set forth in Section
4.01.
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**CONFIDENTIAL TREATMENT REQUESTED
"Marketing Authorization" means all necessary and appropriate regulatory
approvals to manufacture, package, market and sell the Product in a particular
country in the Territory, including without limitation NDA #21-239, and all
supplements and amendments thereto.
"NDA" means a New Drug Application and all amendments and supplements
thereto, as defined by the FDA, or the equivalent application in another
country.
"Net Sales" means gross sales and certain deductions from gross sales,
determined using the accrual method of accounting in accordance with generally
accepted accounting principles, prior to the deductions of any royalties,
applied in a manner consistent with ▇▇▇▇▇▇'▇ financial reporting practices as
reported in its SEC filings. In the event ▇▇▇▇▇▇ transfers Product for
consideration, in whole or in part, other than cash, the Net Sales price for
such Products shall be deemed to be the standard invoice price then being
invoiced by ▇▇▇▇▇▇ or its Affiliate in arms length transaction with similar
customers. In no event shall Net Sales be deemed to occur in the case of the
provision of a reasonable number of samples or clinical research supplies or
similar provisions.
"Product" means any formulation of dehydroepiandrosterone ("DHEA").
"Stock and Warrant Purchase Agreement" means the Stock and Warrant
Purchase Agreement between the Parties of even date herewith, in the form
attached as Exhibit C.
"Supply Agreement" means the Supply Agreement between the Parties of
even date herewith, in the form attached as Exhibit D.
"Territory" means the United States, Canada, Mexico, all countries in
Central America, and their respective territories and possessions.
"Term" has the meaning set forth in Section 13.01.
"Third Party" means any entity other than Genelabs or ▇▇▇▇▇▇ or an
Affiliate of Genelabs or ▇▇▇▇▇▇.
"Third Party License" means the license from The Board of Trustees of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Junior University dated October 1, 1993, as amended August 8,
1998, and as amended pursuant to Section 10.02.
"Third Party Licensor" means The Board of Trustees of the ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Junior University.
"Third Party Suppliers" means Schering Corporation and [**].
"Third Party Supply Agreements" shall mean the agreements dated May 29,
2000, with [**] and March 31, 1997, with Schering Corporation.
"Valid Patent Claim" means, with respect to the Product, any claim of
any issued and unexpired patent included within the Genelabs Patent Rights which
has not been held revoked, unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not been admitted to be
invalid or unenforceable.
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ARTICLE II
LICENSE; OTHER RIGHTS
Section 2.01 TECHNOLOGY LICENSE GRANT. Subject to the terms and
conditions of this Agreement, including ▇▇▇▇▇▇'▇ obligation under Section
3.02(b), Genelabs hereby grants to ▇▇▇▇▇▇ an exclusive license, without the
right to sublicense, to all Genelabs Technology necessary or useful to develop,
make, have made, use, market (subject to Genelabs co-promotion rights under
Section 2.07 below), distribute, sell, import and export the Product in the
Territory for use in the Field. Nothing herein shall restrict ▇▇▇▇▇▇ from
distributing, marketing and selling Product through or with distributors or
sales representatives.
Section 2.02 TRADEMARKS.
(a) Subject to the terms and conditions of this Agreement,
Genelabs hereby grants to ▇▇▇▇▇▇ an exclusive royalty-free license in the Field
in the Territory and right to use the Genelabs Marks in connection with the
manufacture, use and sale (subject to Genelabs co-promotion rights under Section
2.07) of the Product in the Territory for use in the Field, without the right to
sublicense.
(b) ▇▇▇▇▇▇ acknowledges that the Genelabs Marks being licensed to
▇▇▇▇▇▇ pursuant to this Agreement belong to Genelabs and that ▇▇▇▇▇▇ shall have
no rights in such Genelabs Marks except pursuant to the license granted herein.
▇▇▇▇▇▇ shall use the Genelabs Marks as depicted on Exhibit A or otherwise in the
exact form used by Genelabs, including without limitation, the (R) symbol or
(TM) symbol, as applicable. Any other use of the Genelabs Marks shall be subject
to the prior written approval of Genelabs, which shall not be unreasonably
withheld or delayed. All content or other specific graphic elements provided by
Genelabs shall remain the property of Genelabs and shall be used only in the
manner set forth in this Agreement except as otherwise approved by Genelabs.
(c) ▇▇▇▇▇▇ shall not take any action inconsistent with Genelabs'
exclusive ownership of the Genelabs Marks. ▇▇▇▇▇▇ shall not publish, employ or
cooperate in the publication of, any misleading or deceptive advertising
material with regard to Genelabs or the Genelabs Marks.
Section 2.03 MARKETING AUTHORIZATIONS. Genelabs shall remain the owner
of NDA #21-239 and all other Marketing Authorizations related to the Product.
Pursuant to this Agreement, Genelabs hereby grants ▇▇▇▇▇▇ a royalty-free,
exclusive in the Territory, right (and shall so advise applicable regulatory
authorities if required) to reference Genelabs' or its Affiliates' and its Third
Party Suppliers, regulatory dossiers and registrations for the Product as
necessary for ▇▇▇▇▇▇ to exercise its rights hereunder with respect to
manufacturing, marketing, distributing and selling the Product in the Territory
including certain rights beyond the term of this Agreement pursuant to Section
13.03. If required by regulatory authorities to market and sell in a country
within the Territory, then at the request of ▇▇▇▇▇▇, Genelabs shall assign
necessary Marketing Authorizations relating to the Product outside of the United
States in the Territory to Watson and Genelabs further agrees to execute and
deliver such instruments and take such other actions as ▇▇▇▇▇▇ shall reasonably
request in order to carry out this provision, including but not limited to,
assignment of Marketing Authorizations. To the extent that an assignment of any
Marketing Authorization is made by Genelabs to ▇▇▇▇▇▇ pursuant to the preceding
sentence, ▇▇▇▇▇▇ shall reassign all such Marketing
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**CONFIDENTIAL TREATMENT REQUESTED
Authorizations to Genelabs promptly upon ▇▇▇▇▇▇'▇ loss of rights to manufacture,
market or sell Product.
Section 2.04 IMPROVEMENTS. Genelabs shall promptly notify ▇▇▇▇▇▇ of any
Improvements and of any efforts by Genelabs to patent Improvements in the
Territory including, but not limited to, designation of the countries in which
any patent application in respect thereof is to be filed. The ownership,
prosecution and maintenance with respect to any patent application in respect of
such Improvement and any patent issued therefrom shall be handled in accordance
with Article VI of this Agreement. Such patents and patent applications shall
become part of the Genelabs Patents licensed hereunder and Exhibit B shall be
modified to reflect the addition to such patents. If any Improvement is not
patented, it shall become part of the Genelabs Know-How licensed hereunder.
Joint Patents arising out of any such Improvements shall be jointly owned by
▇▇▇▇▇▇ and Genelabs and Exhibit B shall be modified to reflect the addition to
such patents.
Section 2.05 RESIDUAL RIGHTS. Upon expiration of this Agreement in any
country in the Territory pursuant to Section 13.01 below, ▇▇▇▇▇▇ shall have a
fully-paid, royalty-free, perpetual, freely assignable and transferable,
sublicensable, irrevocable license, with right to sublicense, to the Genelabs
Technology, the Genelabs Marks and the relevant Marketing Authorizations to
make, have made, use, market, distribute, sell, import and export the Product in
such country in the Territory.
Section 2.06 INFORMATION. In order for ▇▇▇▇▇▇ to exercise its rights
hereunder, each Party agrees to work together to insure that ▇▇▇▇▇▇ is provided,
copies of all documentation within Genelabs' control that are reasonably
necessary for ▇▇▇▇▇▇ to exploit its license rights hereunder. In the event of
any changes or additions to such documentation during the Term of this
Agreement, Genelabs shall promptly provide such revised documentation to ▇▇▇▇▇▇.
Section 2.07 CO-PROMOTION. Commencing on the third calendar year after
the First Commercial Sale in the United States (e.g., if First Commercial Sale
is May 1, 2001, then the rights described in this Section 2.07 shall begin
January 1, 2004), Genelabs shall have the right, but not the obligation, to
assist ▇▇▇▇▇▇ in marketing the Product in any country in the Territory on the
terms set forth below (the "Co-Promotion"). Genelabs shall exercise its
Co-Promotion right by providing ▇▇▇▇▇▇ ninety (90) days prior written notice.
The JPC shall coordinate Genelabs' marketing efforts of the Product to
complement the strategic marketing plan and the marketing efforts of ▇▇▇▇▇▇.
Genelabs shall be solely responsible for all of its own marketing and
promotional expenses related the Co-Promotion. Genelabs shall receive no
compensation for the Co-Promotion other than royalties on Net Sales of Product
as provided in Section 3.02 below. By way of clarification, ▇▇▇▇▇▇ shall be
solely responsible for booking all sales of the Product in the Territory.
Section 2.08 SUPPLY. Concurrently with the execution of this
Agreement, the Parties shall enter into a Supply Agreement in the form attached
as Exhibit D, which provides that Genelabs will supply all of ▇▇▇▇▇▇'▇
requirements of Products and DHEA from the Third Party Suppliers. Genelabs shall
have the continued right to obtain Product and DHEA from the Third Party
Suppliers to satisfy its obligations to customers outside the Territory, [**].
Section 2.09 MANUFACTURING INFORMATION. In order to assist ▇▇▇▇▇▇ in
exercising its rights and obligations to make and have made the Product under
this Article II, Genelabs will provide to ▇▇▇▇▇▇ copies of all documentation
within Genelabs' control that is reasonably necessary for ▇▇▇▇▇▇ to manufacture
(or have manufactured) Product, and shall cooperate with ▇▇▇▇▇▇ to
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establish alternative supply, including sources of materials. In the
event of any changes to such documentation during the Term of this Agreement,
Genelabs shall promptly provide such revised documentation to ▇▇▇▇▇▇.
ARTICLE III
PAYMENTS
Section 3.01 LICENSE FEE. In partial consideration for the
licenses granted under Article II, ▇▇▇▇▇▇ shall pay to Genelabs the following
amounts:
(a) Ten Million Dollars ($10,000,000) within ten (10) days of the
Effective Date of this Agreement;
(b) Within ten (10) days after the date ▇▇▇▇▇▇ receives notice
from Genelabs of the first FDA Approval for the Product, either (i) [**] if the
approval is for the treatment of systemic lupus erythematosus ("SLE"); (ii) [**]
if the first FDA Approval is for the reduction of steroid requirements in SLE
patients; or (iii) Forty-five Million Dollars ($45,000,000) if the first FDA
Approval is for both of the indications listed in this Section 3.01(b); and
(c) If the first FDA Approval was for only one of the indications
listed in Section 3.01(b), and within eighteen (18) months thereafter Genelabs
receives FDA Approval for the second indication, then within ten (10) days after
▇▇▇▇▇▇ receives notice thereof, either [**] if the second approval is for
treatment of SLE, or [**] if the second approval is for the reduction of steroid
requirements in SLE patients.
Section 3.02 ROYALTY PAYMENTS.
(a) Royalty Payments. In addition to the other consideration
provided for herein, ▇▇▇▇▇▇ shall pay to Genelabs a royalty on Net Sales of
Product as follows:
Royalty Rate Applicable To Net
Sales In Applicable Royalty Tier Royalty Rate Applicable To
From First Commercial Sale Until Net Sales In Applicable
the End of the Third Full Fiscal Royalty Tier for Remainder of
Calendar Year Net Sales Quarter Thereafter Term
----------------------- -------------------------------- -----------------------------
Less than $[**] [**] [**]
Equal to or greater than $[**] [**] [**]
and less than $[**]
$[**] or greater [**] [**]
[**].
In addition, notwithstanding the foregoing, with respect to Net Sales in
the United States, during such time as there are both no Valid Patent Claim
covering the Product in the United States and no exclusivity provided by "Orphan
Drug" or similar exclusivity under United States
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regulations, the royalty rate shall be [**] during any period of NDA
exclusivity, and [**] thereafter, until there is a Valid Patent Claim or Orphan
Drug or similar exclusivity is restored.
In addition, notwithstanding the foregoing, with respect to Net Sales
outside the United States, during such time as there are both no Valid Patent
Claim covering the Product and no other form of regulatory exclusivity, in a
country in the Territory, the royalty rate shall be [**] for Net Sales in such
country, provided, however, that for the [**].
(b) Minimum Net Sales. The commercialization efforts to be made
by ▇▇▇▇▇▇ pursuant to Section 4.01 shall be deemed to be satisfied if ▇▇▇▇▇▇
pays to Genelabs royalties on the annual minimum Net Sales set forth in the
table below. In the event ▇▇▇▇▇▇ has not met its minimum royalty obligations as
set forth herein, ▇▇▇▇▇▇'▇ exclusivity rights hereunder may be terminated by
Genelabs; provided, however, that if such amounts have not been paid by ▇▇▇▇▇▇
to Genelabs as royalties for any calendar year, ▇▇▇▇▇▇ may meet such minimum
royalty obligations for such calendar year by paying any shortfall to Genelabs
within sixty (60) days after the end of such calendar year. ▇▇▇▇▇▇ may make such
shortfall payment for any [**]. If ▇▇▇▇▇▇ has met such minimums by making a
shortfall payment for [**], and in the event ▇▇▇▇▇▇ fails to meet the annual
minimum again, then Genelabs shall have the right to terminate this Agreement
and all of ▇▇▇▇▇▇'▇ rights hereunder. Genelabs' right to make the license
non-exclusive or terminate the license shall be Genelabs' sole remedy for
failure of ▇▇▇▇▇▇ to achieve the minimum Net Sales.
[**]
[**]
Notwithstanding the foregoing:
(i) the annual minimum Net Sales requirement shall be [**];
(ii) the annual minimum Net Sales requirement shall be
reduced by [**];
(iii) if both the reductions set forth in clauses (i) and
(ii) are in effect, the aggregate reduction shall be [**].
(iv) the annual minimum Net Sales requirement shall not
apply in any year in which:
(A) there is no NDA approval of the Product
[**]; or
(B) ▇▇▇▇▇▇ is unable to obtain adequate supply
of Product (unless such inability is within ▇▇▇▇▇▇'▇ reasonable control); or
(C) a Competing Product is marketed in the
United States. For purposes hereof, Competing Product means [**]; or
(D) the license granted hereunder is
non-exclusive.
(c) Reports. [**]. All royalty payments due to Genelabs under
this Agreement shall be paid within sixty (60) days of the end of each calendar
quarter; unless otherwise specifically
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provided herein. Each payment of royalty payments shall be accompanied by a
report in sufficient detail to permit confirmation of the accuracy of the
royalty payment made, including, without limitation, Net Sales for each country
in the Territory, withholding taxes, if any, required by law to be deducted with
respect to such sales, the royalty payments payable in United States dollars,
the method used to calculate the royalty payment and the exchange rates used.
(d) Exchange Rate; Manner and Place of Payment. All payments
hereunder shall be payable by ▇▇▇▇▇▇ to Genelabs in United States dollars. With
respect to each quarter, for countries other than the United States, whenever
conversion of sales in any foreign currency shall be required, such conversion
shall be made at the rate of exchange reported in The Wall Street Journal on the
last business day of the applicable reporting period. All payments owed under
this Agreement shall be made by wire transfer from ▇▇▇▇▇▇'▇ United States
headquarters to a bank account designated by Genelabs, unless otherwise
specified in writing by Genelabs.
(e) Records and Audits. For a period of two (2) years after each
royalty report is received by Genelabs, ▇▇▇▇▇▇ shall keep complete and accurate
records in sufficient detail to permit Genelabs to confirm the accuracy of all
payments thereunder. Genelabs shall have the right to cause Genelabs'
independent, certified public accountant, to audit such records solely to
confirm royalty payments. Such audits may be exercised during normal business
hours no more than once in any twelve (12) month period upon at least thirty
(30) days prior written notice to ▇▇▇▇▇▇. Genelabs shall bear the full cost of
such audit unless such audit discloses an underpayment by more than [**] of the
amount due under this Agreement. In such case, ▇▇▇▇▇▇ shall bear the full cost
of such audit. Except in the case of a dispute, in which case the provisions of
Article XIV shall apply, to the extent such audit reflects an underpayment by
▇▇▇▇▇▇, ▇▇▇▇▇▇ shall promptly remit the shortfall to Genelabs, [**], and to the
extent such audit reflects an overpayment by ▇▇▇▇▇▇, ▇▇▇▇▇▇ shall credit the
excess against ▇▇▇▇▇▇'▇ next payment hereunder.
(f) Taxes. All taxes levied on account of the royalties and other
payments accruing to Genelabs under this Agreement shall be paid by Genelabs for
its own account, including taxes levied thereon as income to Genelabs. If
provision is made in law or regulation for withholding on payments due to
Genelabs, such tax shall be deducted from the royalty payment or other payment
made by ▇▇▇▇▇▇ to the proper taxing authority and a receipt of payment of the
tax secured and promptly delivered to Genelabs. Each Party agrees to assist the
other Party in claiming exemption from such deductions or withholdings under any
double taxation or similar agreement or treaty from time to time in force.
Section 3.03 EQUITY PURCHASES. Ten (10) days after the execution
of this Agreement, ▇▇▇▇▇▇ shall purchase Three Million (3,000,000) shares of
Genelabs Common Stock at a price per share equal to one hundred thirty percent
(130%) of the average closing price per share of Genelabs Common Stock as quoted
by the Nasdaq National Market over the ten (10) trading days preceding the
Effective Date, and a warrant to purchase Five hundred Thousand (500,000) shares
of Genelabs Common Stock at the same price per share, in accordance with the
Stock and Warrant Purchase Agreement in the form attached as Exhibit C.
Section 3.04 THIRD PARTY LICENSES; ▇▇▇▇▇▇▇▇ AGREEMENT.
(a) ▇▇▇▇▇▇ shall pay when due, all royalties resulting from sales
of the Product due to the Third Party Licensor under the Third Party License and
all amounts due as fees under that
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certain Agreement dated January 26, 1996, between Genelabs and ▇▇. ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ (as such agreements exist as of the date hereof) resulting from sales
of the Product by ▇▇▇▇▇▇ or its Affiliates. ▇▇▇▇▇▇ agrees to abide and be bound
by the terms and conditions of the Third Party License applicable to it. To the
extent ▇▇▇▇▇▇ must pay royalties or license fees to any other Third Party, for
rights to utilize Genelabs Technology or Genelabs Marks (and after the failure
of Genelabs to obtain such rights for the benefit of ▇▇▇▇▇▇ pursuant to Section
6.03 or otherwise), in addition to any other rights hereunder, ▇▇▇▇▇▇ may offset
any royalties, fees or other amounts paid to such Third Parties against any and
all royalties, fees or other amounts payable to Genelabs, provided however, no
such offset against royalties shall reduce the amount that would be payable for
such quarter by more than fifty percent (50%), and any amount not so offset
shall be carried forward for credit against future payments. Such offsets shall
be reported in the royalty report under Section 3.02(c).
(b) ▇▇▇▇▇▇ shall indemnify, defend and hold Genelabs harmless
from all losses, liabilities, damages and expenses (including reasonable
attorneys' fees and costs) that Genelabs may suffer as a result of any claims,
demands, actions or other proceedings made or instituted by any party against
Genelabs arising as a result of any failure by ▇▇▇▇▇▇ fulfill its obligations
under Section 3.04(a) above.
(c) Sections 7, 8 and 9 of the Third Party License are attached
hereto as Exhibit E and are incorporated herein by reference and ▇▇▇▇▇▇
expressly agrees to be bound by their terms.
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ARTICLE IV
PRODUCT DEVELOPMENT AND COMMERCIALIZATION
Section 4.01. ESTABLISHMENT OF THE JPC. Promptly after the Effective
Date, the Parties will form a Joint Product Committee ("JPC") to be comprised of
two (2) representatives of each of Genelabs and ▇▇▇▇▇▇. One member of the JPC
shall be selected to act as the chairperson of the JPC, and ▇▇▇▇▇▇ shall
designate the chairperson. Each Party shall have the right from time to time to
substitute individuals, on a permanent or temporary basis, for any of its
previously designated members of the JPC. The members appointed by each Party
shall be vested with appropriate decision-making authority and power by such
Party. Members of the JPC shall be employees of the Parties (or their
Affiliates), and shall not be outside consultants, independent contractors or
outside legal counsel. Each Party shall bear its own costs associated with its
participation in the JPC.
Section 4.02. PURPOSE AND RESPONSIBILITIES OF THE JPC. The purpose of
the JPC is to oversee, at a strategic level, the development, marketing and
promotion of the Product as contemplated by this Agreement by coordinating the
development, marketing and promotional efforts of the Parties in the Territory
and maximizing sales of the Product. Accordingly, in addition to the specific
matters addressed elsewhere in this Agreement, and subject to the other
provisions of this Agreement, the JPC shall oversee all Product related
activities in the Territory and shall (i) determine the specific goals for the
further development of the Product and the priorities thereof, (ii) monitor the
progress and results of the development process, (iii) allocate responsibilities
to the Parties for further development work, in accordance with this Agreement,
(iv) review the objectives and strategies of ▇▇▇▇▇▇'▇ marketing plans and other
marketing information provided by ▇▇▇▇▇▇; (v) monitor the progress of the
Parties toward those goals and objectives; and (vi) undertake and/or approve
such other matters as are provided for the JPC under this Agreement or as may be
mutually agreed by the Parties.
Section 4.03. JPC MEETINGS. During the term of this Agreement, the JPC
shall meet at least once each calendar quarter or at such other frequency as the
JPC agrees. The Parties shall meet on a date and time and at a location agreed
to by the JPC. Upon written notice by either Party to the other that a meeting
is required or requested, a meeting will be held within thirty (30) calendar
days of such notice on a date and time and at a location to be agreed upon by
the Parties, or sooner if warranted by the circumstances. Notice requesting such
a meeting shall include adequate information describing the activity to be
reviewed. Any meetings of the JPC may be held in person at a location to be
agreed to by the Parties, or by videoconference or teleconference. A reasonable
number of additional representatives of either Party (including outside
consultants and independent contractors, subject to the other Party's reasonable
consent) may attend meetings of the JPC in a non-voting capacity. At least one
week prior to any meeting of the JPC, each Party shall provide the other with a
proposed agenda of the matters to be discussed at such meeting. Within thirty
(30) days after each meeting, the JPC chairperson will provide the Parties with
a written report describing, in reasonable detail, the status of the Product, a
summary of the results and progress to date, the issues requiring resolution,
and the agreed resolution of previously reported issues.
Section 4.04. VOTING AND DISPUTE RESOLUTION. Each member of the JPC will
be entitled to one (1) vote and all decisions of the JPC shall be unanimous. Any
disagreement that cannot be resolved by the unanimous vote of the JPC shall be
resolved pursuant to the procedure set forth in Article XIV.
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Section 4.05. SPECIFIC MATTERS FOR JPC DETERMINATION; ALLOCATION OF
COSTS.
(a) Studies Relating to NDA #21-239. The JPC shall decide what
studies the Parties will conduct relating to NDA #21-239; provided that,
Genelabs shall be responsible for conducting studies required by the FDA to
obtain and thereafter maintain approval of NDA #21-239, and the costs associated
therewith (unless Genelabs determines such studies are not feasible). In the
event that Genelabs determines that such studies are not feasible, Genelabs
shall have twelve (12) months to negotiate with the FDA changes to the proposed
studies to make it feasible. If after such period Genelabs still deems such
studies to be not feasible, then ▇▇▇▇▇▇ may undertake such studies. If ▇▇▇▇▇▇
successfully completes such studies and the FDA Approval is issued, then
▇▇▇▇▇▇'▇ right to the Product solely in connection with the indication(s)
approved under the FDA Approval shall be fully paid-up and irrevocable. Genelabs
and ▇▇▇▇▇▇ shall jointly conduct any studies approved by the JPC relating to NDA
#21-239 not required by the FDA, and shall be jointly responsible for the costs
associated therewith.
(b) Marketing Studies. The JPC shall decide what marketing
studies the Parties will conduct in connection with the Product. The
responsibilities and costs associated with any such studies approved by the JPC
shall be divided as follows: ▇▇▇▇▇▇ shall be responsible for conducting any
marketing studies regarding the Product and the costs associated therewith,
except that Genelabs and ▇▇▇▇▇▇ shall jointly conduct well-controlled marketing
studies, publishable in peer-reviewed scientific or medical journals, and shall
be jointly responsible for the costs associated therewith.
(c) New Formulations. The JPC shall decide whether the Parties
will proceed with new formulations of Product other than the formulation used in
connection with NDA #21-239. The responsibilities and costs associated with any
such studies approved by the JPC shall be divided as follows: (i) [**]; (ii)
[**].
(d) New Indications. The JPC shall decide whether the Parties
will file INDs or NDAs in connection with any indication for the Product other
than SLE. Genelabs and ▇▇▇▇▇▇ shall jointly conduct all studies associated with
such INDs and NDAs designed to support the approval of such indication and shall
be jointly responsible for the costs associated therewith.
(e) Improvements. The JPC shall decide whether the parties shall
undertake any research and development work for Improvement to the Product, and
the allocation of effort and expenses. Unless approved by the JPC, neither Party
shall implement any such Improvements inside the Territory. If such additional
studies are required, the JPC shall decide whether to conduct such studies and
shall allocate the responsibilities and expenses thereof.
(f) Non-U.S. Marketing Authorization. The JPC shall decide
whether the Parties will obtain Marketing Authorization in countries in the
Territory other than the United States. However, Genelabs shall be responsible
for obtaining Marketing Authorization in Canada, at its expense, unless further
clinical or animal studies are required. If such additional studies are
required, the JPC shall decide whether to conduct such studies and shall
allocate the responsibilities and expenses thereof. Genelabs and ▇▇▇▇▇▇ shall,
as the JPC may decide, jointly be responsible for obtaining Marketing
Authorizations or other conditions and the costs associated therewith.
Section 4.06. ▇▇▇▇▇▇'▇ PROMOTION AND MARKETING OBLIGATIONS. ▇▇▇▇▇▇
agrees to use commercially reasonable efforts to promote the sale, marketing and
distribution of the Product in the
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Territory, consistent with accepted business practices devoting the same level
of efforts as it devotes to its own products of comparable market potential.
"Comparable market potential" shall be fairly determined by ▇▇▇▇▇▇ in good faith
and without limitation may be based upon market size, price, competition, patent
rights, product liability issues and general marketing parameters. ▇▇▇▇▇▇ shall
promptly advise Genelabs of any issues that materially and adversely affect
▇▇▇▇▇▇'▇ ability to market the Product in the Territory. In such event, the JPC
shall meet and in good faith discuss what actions should be taken in light of
such issues. ▇▇▇▇▇▇ agrees to ▇▇▇▇ all Product labeling and promotional
materials as being under license from Genelabs Technologies, Inc.
Section 4.07. CO-PROMOTION. Upon Genelabs' exercise of it right to
co-promote the Product in the Territory pursuant to Section 2.07, ▇▇▇▇▇▇ and
Genelabs shall have the co-exclusive responsibility for promoting the Product in
the Territory, subject to the terms and conditions of this Agreement. The JPC
shall oversee all commercialization activities in the Territory in connection
with the co-promotion of Product, based on the principle of maximizing profits
from sales of Products. In connection with such co-promotion, the JPC shall
coordinate Genelabs' marketing efforts in light of the overall market strategy.
Section 4.08. TRADEMARKS. Each Party shall promote the Product only
under the Genelabs Marks. Neither Party shall use any trademarks, other than
that Party's company name, in promoting the Product without the prior approval
of the JPC. If the JPC approves the promotion of the Product under a trademark
other than the Genelabs Marks, each Party shall be entitled to a fully-paid,
royalty-free license to use such trademark in connection the promotion of the
Product during the Term of this Agreement. The Parties shall be jointly
responsible for the costs of prosecuting, maintaining and enforcing any such
trademark.
Section 4.09. INTELLECTUAL PROPERTY. The ownership, prosecution and
maintenance with respect to any inventions relating to JPC action items and any
patent issued therefrom shall be handled in accordance with Article VI of this
Agreement.
ARTICLE V
DEVELOPMENT, REGULATORY MATTERS
Section 5.01. DEVELOPMENT. Subject to Section 4.05(a), Genelabs, at its
cost and expense, shall continue to prosecute NDA #21-239 to obtain NDA
approvals in the United States, for SLE and reduction of steroid use in SLE
patients.
Section 5.02. ASSISTANCE. Each Party shall provide reasonable assistance
to the other at the other's request, in connection with their obligations
pursuant to this Article V subject to reimbursement of all of its reasonable
out-of-pocket costs by the requesting Party.
Section 5.03. COMPLIANCE. ▇▇▇▇▇▇ and Genelabs shall comply with all
Applicable Laws within the Territory and shall provide the other Party all
information necessary for the other Party to comply with any applicable
reporting requirements. ▇▇▇▇▇▇ will provide all marketing, advertising and other
promotional materials regarding the Product to Genelabs for review and
submission to DDMAC or any similar agency in the Territory. Each Party shall
promptly notify the other Party of any comments, responses or notices received
from, or inspections by, the FDA, or other applicable Competent Authorities
inside or outside the Territory, which relate to or may impact the Product or
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the manufacture of the product, and shall promptly inform the other Party of any
responses to such comments, responses, notices or inspections and the resolution
of any issue raised by the FDA or other Competent Authorities.
Section 5.04. ADVERSE DRUG EVENT REPORTING AND PHASE IV SURVEILLANCE.
(a) Each Party shall advise the other Party, by telephone or
facsimile, within such time as is required to comply with Applicable Laws, after
it becomes aware of any potentially serious or unexpected adverse event
(including adverse drug experiences, as defined in 21 C.F.R. Section 314.80 or
other applicable regulations) (an "ADE") involving the Product. Such advising
Party shall provide the other Party with a written report delivered by confirmed
facsimile of any adverse reaction, stating the full facts known to such Party,
including but not limited to customer name, address, telephone number, batch,
lot and serial numbers, and other information as required by Applicable Laws.
Genelabs shall have responsibility, with reasonable assistance from ▇▇▇▇▇▇ for
(i) monitoring such adverse reactions; (ii) data collection activities that
occur between Genelabs and the patient and medical professional, or that are
provided to Genelabs by ▇▇▇▇▇▇, as appropriate, including any follow-up
inquiries which Genelabs deems necessary or appropriate; and (iii) making any
reports to the Competent Authorities in the Territory; provided, however, ▇▇▇▇▇▇
shall be responsible for countries in which Genelabs has assigned Marketing
Authorizations to ▇▇▇▇▇▇. Upon execution of the Agreement, the Parties will
develop standard operating procedures for adverse event reporting.
(b) In the event either Party requires information regarding
adverse drug events with respect to reports required to be filed by it in order
to comply with Applicable Laws, including obligations to report ADEs to the
Competent Authorities, each Party agrees to provide such information to the
other on a timely basis.
Section 5.05. MANUFACTURING SITES. In the event ▇▇▇▇▇▇ desires to
qualify one or more of its facilities, or Third Party facilities, to manufacture
the Product, Genelabs shall provide reasonable assistance at its expense and
shall file all necessary supplements or other filings with the Competent
Authorities to qualify such other facilities. ▇▇▇▇▇▇ shall be responsible for
all of its costs of such qualification.
Section 5.06. DHEA SUPPLY. In the event ▇▇▇▇▇▇ desires to qualify one or
more other sources of DHEA for the Product, Genelabs shall provide reasonable
assistance at its expense and shall file all necessary supplements or other
filings with the Competent Authorities to qualify such other sources. ▇▇▇▇▇▇
shall be responsible for all of its costs of such qualification.
ARTICLE VI
PATENTS AND TRADEMARKS
Section 6.01. MAINTENANCE OF PATENTS AND MARKS. Genelabs shall, at
Genelabs' expense, maintain and protect the Genelabs Patent Rights and the
Genelabs Marks in all countries in the Territory; provided however, that upon
written request by Genelabs, ▇▇▇▇▇▇ shall, at no cost or expense to ▇▇▇▇▇▇,
provide such assistance as may be reasonably necessary to enable Genelabs to
comply with the administrative formalities necessary to maintain any Genelabs
Patent Rights or the Genelabs Marks.
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Section 6.02. PATENT OWNERSHIP. Each Party shall remain the sole owner
or licensee, as applicable, of all technology, discoveries, patent applications,
patents, know-how and inventions owned or controlled by such Party on the
Effective Date and shall have no rights in or to technology, discoveries, patent
applications, patents, know-how and inventions owned by the other Party except
as specifically provided by this Agreement. The entire right and title in all
technology arising out of work performed by the Parties in the course of
conducting activities pursuant to this Agreement (i) conceived by employees or
others acting solely on behalf of Genelabs or its Affiliates shall be owned
solely by Genelabs (ii) conceived by employees or others acting solely on behalf
of ▇▇▇▇▇▇ or its Affiliates shall be owned solely by ▇▇▇▇▇▇, and (iii) conceived
by employees or others acting jointly on behalf of Genelabs and ▇▇▇▇▇▇, or their
respective Affiliates, shall be owned jointly by Genelabs and ▇▇▇▇▇▇.
Section 6.03. PROSECUTION AND MAINTENANCE OF JOINT PATENT RIGHTS.
(a) The JPC will jointly determine the Party responsible for
prosecuting patent applications relating to jointly owned technology. Each Party
will consult with and cooperate with the other Party and promptly file,
prosecute and maintain Joint Patent rights as determined by the JPC and shall
keep the other party apprised of the status of patent filings. The preparation,
filing and prosecution of patent application(s) relating to any jointly owned
technology, and the maintenance and prosecution of any patent(s) resulting
therefrom, shall be performed by counsel mutually acceptable to the Parties
(which may be inside counsel for either Party) and costs for such preparation,
filing, prosecution and maintenance shall be borne equally by the Parties. If
the prosecuting Party during prosecution and/or maintenance of any Joint Patent
rights hereunder intends to abandon or allow patent rights to lapse without
having first filed a substitute, the prosecuting Party shall notify the
non-prosecuting Party of such intention at least sixty (60) days prior to the
date upon which such Joint Patent rights shall lapse or become abandoned, the
non-prosecuting Party shall have the right, but not the obligation, to assume
responsibility for the prosecution, maintenance and defense thereof. Each Party
agrees that it will not bring a claim against the other Party relating to that
Party's handling of the preparation, filing and prosecution of any joint
technology patent application or the maintenance and prosecution of any
patent(s) resulting therefrom, provided that the Party handling such matters
acts reasonably, in good faith and in consultation with the non-prosecuting
Party, and provides the non-prosecuting Party with advance notice of all actions
and copies of documents received from or filed with patent offices.
(b) If the JPC does not designate responsibility with respect to
prosecution of a patent application relating to Joint Patents in the Territory,
either Party may do so, at its own expense. The non-prosecuting Party shall
fully cooperate with the prosecuting Party in connection with such prosecution
and provide the prosecuting Party with whatever documents may be needed in
connection therewith.
Section 6.04. PROSECUTION OF INFRINGEMENT.
(a) Genelabs Technology and Genelabs Marks. During the Term, each
Party shall give prompt notice to the other of any Third Party act which may
infringe either the Genelabs Technology or the Genelabs Marks and shall
cooperate with each other to terminate such infringement without litigation.
Genelabs may at its sole discretion and at its sole expense, prosecute the
judicial or administrative proceedings against such Third Party infringement.
▇▇▇▇▇▇ shall provide such assistance and cooperation to Genelabs as may be
reasonably requested to successfully
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prosecute any action against Third Party infringement and Genelabs agrees to
reimburse ▇▇▇▇▇▇ for all reasonable expenses incurred by ▇▇▇▇▇▇ as a result of
such assistance and cooperation. Any award in such action shall be allocated
between the Parties in proportion to their unreimbursed expenses, and then
shared equally between the Parties. In the event Genelabs fails to institute
proceedings and terminate such Third Party infringement, within ninety (90) days
of notice, ▇▇▇▇▇▇ may, in its sole discretion, take such action as it deems
appropriate, including without limitation, the filing of a lawsuit against such
Third Party. In such event Genelabs will provide such assistance and cooperation
to ▇▇▇▇▇▇ as may be reasonably requested and ▇▇▇▇▇▇ may deduct all costs and
expenses of such actions against any amounts payable to Genelabs under this
Agreement. ▇▇▇▇▇▇ shall retain all amounts awarded in such action.
(b) Joint Patents. In the event Genelabs or ▇▇▇▇▇▇ becomes aware
of any actual or threatened infringement in the Territory of any claim of a
Joint Patent, that Party shall promptly notify the other and the JPC shall
promptly discuss how to proceed in connection with such actual or threatened
infringement. In the event that only one Party wishes to participate in such
proceeding, it shall have the right to proceed alone, at its expense, and may
retain any recovery; provided, at the request and expense of the participating
Party, the other Party agrees to cooperate and join in any proceedings in the
event that a Third Party asserts that the co-owner of such Joint Patent is
necessary or indispensable to such proceedings.
Section 6.05. MAINTENANCE OF MARKS. Genelabs shall, at Genelabs'
expense, maintain and protect the Genelabs Marks in all countries in the
Territory; provided however, that upon written request by Genelabs, ▇▇▇▇▇▇ shall
provide such assistance as may be reasonably necessary to enable Genelabs to
comply with the administrative formalities necessary to maintain any Genelabs
Marks.
Section 6.06. INFRINGEMENT CLAIMED BY THIRD PARTIES. In the event a
Third Party claims, or the Parties hereto determine, that ▇▇▇▇▇▇ is or may be
infringing the intellectual property rights of a Third Party based on ▇▇▇▇▇▇'▇
exercise of its license grant from Genelabs [**], Genelabs shall obtain, at its
expense, such rights as are necessary for ▇▇▇▇▇▇ to exploit the licenses granted
hereunder free of any potential claim of such Third Party. In the event a Third
Party commences, or threatens to commence, a judicial or administrative
proceeding against a Party to this Agreement and such proceeding pertains to
Genelabs Technology or the Genelabs Marks, the Party against whom such
proceeding is threatened or commenced shall give prompt notice to the other
Party. Genelabs shall, at its sole expense, defend such claims or proceedings
and ▇▇▇▇▇▇ shall provide such assistance and cooperation to Genelabs as may be
necessary to successfully defend any such claim or proceeding at Genelabs'
expense and may deduct the expenses thereof from any amounts payable to Genelabs
under this Agreement. Genelabs may not settle any such claim without ▇▇▇▇▇▇'▇
prior approval. However, if such claim or proceeding relates to or arises from
the actions, activities or omissions of ▇▇▇▇▇▇ other than the use by ▇▇▇▇▇▇ of
the Genelabs Technology or the Genelabs Marks, ▇▇▇▇▇▇ shall defend such claims
or proceedings, at its sole expense, and ▇▇▇▇▇▇ shall indemnify Genelabs for any
liabilities, costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred with respect to such claim or proceeding.
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ARTICLE VII
CONFIDENTIALITY
Section 7.01. CONFIDENTIALITY. During the Term and for a period of five
(5) years thereafter, each Party shall maintain all Confidential Information of
the other Party as confidential and shall not disclose any such Confidential
Information to any Third Party or use any such Confidential Information for any
purpose, except (a) as expressly authorized by this Agreement, (b) as required
by law, rule, regulation or court order (provided that the disclosing Party
shall first notify the other Party and shall use commercially reasonable efforts
to obtain confidential treatment of any such information required to be
disclosed), or (c) to its Affiliates and its employees, agents, consultants and
other representatives ("Representatives") to accomplish the purposes of this
Agreement, so long as such persons are under an obligation of confidentiality no
less stringent than as set forth herein. Each Party may use such Confidential
Information only to the extent required to accomplish the purposes of this
Agreement. Each Party shall use at least the same standard of care as it uses to
protect its own Confidential Information to ensure that it and its Affiliates
and Representatives do not disclose or make any unauthorized use of the other
Party's Confidential Information. Each Party shall be responsible for any breach
of this Agreement by its Representatives. Each Party shall promptly notify the
other Party upon discovery of any unauthorized use or disclosure of the other
Party's Confidential Information.
Section 7.02. DISCLOSURE OF AGREEMENT. Neither Party shall release to
any Third Party or publish in any way any non-public information with respect to
the terms of this Agreement without the prior written consent of the other
Party, which consent shall not be unreasonably withheld, except for the
disclosure by a Party of the terms of this Agreement to lenders, investment
bankers and other financial institutions of its choice solely for purposes of
financing the business operations of such Party, provided such Party obtains a
signed confidentiality agreement with any such financial institution with
respect to such information on terms substantially similar to those contained in
this Article VII and except as provided in Article XV, either Party, in its sole
discretion, may disclose terms of this Agreement to potential assignees,
provided that they obtain a signed confidentiality agreement with respect to the
information disclosed on terms substantially similar to those contained in this
Article VII and except as provided in Article XV. Nothing contained in this
paragraph shall prohibit either Party from filing this Agreement as required by
the rules and regulations of the Securities and Exchange Commission, national
securities exchanges or the Nasdaq National Market, provided the disclosing
Party discloses only the minimum information required to be disclosed in order
to comply with such requirements, including requesting confidential treatment of
this Agreement (after reasonable consultation with the other Party) and filing
this Agreement in redacted form.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.01. CORPORATE POWER. Each Party hereby represents and warrants
that such Party is duly organized and validly existing under the laws of the
state of its incorporation and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof.
Section 8.02. DUE AUTHORIZATION. Each Party hereby represents and
warrants that such Party is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder.
Section 8.03. BINDING OBLIGATION. Each Party hereby represents and
warrants that this Agreement is a legal and valid obligation binding upon it and
is enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such Party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it.
Section 8.04. ABILITY TO CARRY OUT OBLIGATIONS. Each Party hereby
represents and warrants that there are no actions, suits or proceedings pending
or, to its knowledge, threatened against it or its Affiliates that affect its
ability to carry out its obligations under this Agreement.
Section 8.05. COMPLIANCE WITH LAWS. Each Party hereby represents and
warrants that its activities in connection with this Agreement will be carried
out in compliance with any applicable federal, state or local laws, regulations
or guidelines covering the relevant conduct.
Section 8.06. GENELABS RIGHTS. Genelabs represents and warrants that as
of the Effective Date:
(a) it is the sole owner of all right, title and interest in and
to the Genelabs Technology, the Genelabs Marks and (other than the Third Party
License) no such rights are licensed from a Third Party;
(b) it has not granted any license under the Genelabs Technology,
nor has it granted any license to use the Genelabs Marks, for the Product in the
Territory for use in the Field to any Third Party and is under no obligation to
grant any such license;
(c) it does not own or license any patents or patent applications
not included in the Genelabs Patents which would be infringed by the
manufacture, use or sale of any Product or the practice of any methods or
processes covered by the Genelabs Technology by ▇▇▇▇▇▇ or its Affiliates;
(d) all patents included in the Genelabs Patents are valid and in
full force and effect and it is unaware of any publications or activities,
including without limitation, patents, articles, and public uses or sales, by it
or others, which would or might invalidate any claim(s) of any patent or patent
application included in the Genelabs Patents.
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(e) it has not conducted, nor has it commissioned the conducting
of, any formal or informal infringement or validity studies regarding any
trademark, patent or patent application included in the Genelabs Marks or the
Genelabs Patents that it has not disclosed in writing to ▇▇▇▇▇▇;
(f) there are no outstanding liens, encumbrances, agreements or
understanding of any kind, either written, oral or implied, regarding Genelabs
Marks or the Genelabs Patent Rights which are inconsistent or in conflict with
this Agreement;
(g) no patent application within the Genelabs Patent Rights is
the subject of any pending interference, opposition, cancellation or other
protest proceeding;
(h) to the best of Genelabs' knowledge, the use of Genelabs
Technology and the Genelabs Marks, as contemplated herein, do not infringe the
intellectual property rights of any Third Party;
(i) the Third Party License is in full force and effect and all
amounts due to the Third Party Licensor to date have been paid and Genelabs is
not in default of the Third Party License, nor, to the best of Genelabs'
knowledge, is there any fact or circumstance that with the passage of time will
cause Genelabs to be in default of the Third Party License;
(j) the sublicense of the Third Party License included in the
license grant to ▇▇▇▇▇▇ under Article II herein effectively transfers the
necessary rights thereunder for ▇▇▇▇▇▇ to exercise its rights to make, have
made, use and sell the Product and otherwise practice to licenses and rights
granted to ▇▇▇▇▇▇ herein;
(k) the Third Party License is not terminable by the Third Party
during any period during which ▇▇▇▇▇▇ retains rights under this Agreement;
(l) except as set forth herein, ▇▇▇▇▇▇ has no obligation to the
Third Party Licensor;
(m) the Third Party Supply Agreements are in full force and
effect and all amounts due to the Third Party Suppliers to date have been paid
and Genelabs is not in default of the Third Party Supply Agreements, nor, to the
best of Genelabs' knowledge, is there any fact or circumstance that with the
passage of time will cause Genelabs to be in default of the Third Party Supply
Agreements;
(n) Genelabs is the sole owner of NDA #21-239, free and clear of
all liens, claims, encumbrances and restrictions;
(o) the NDA has been prepared, filed and maintained in accordance
with all Applicable Laws and regulations and does not contain any material
misstatement or omission, and to the best of its knowledge, Genelabs is in
compliance with all Applicable Laws governing the Product;
(p) to the best of Genelabs' knowledge, no outstanding notice,
citation, summons or order has been issued, no outstanding complaint has been
filed, no outstanding penalty has been assessed and no investigation or review
is pending or threatened by any government authority or
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**CONFIDENTIAL TREATMENT REQUESTED
other person with respect to any alleged violation by Genelabs related to the
Product or any law, ordinance, rule, regulation, code or order of any government
authority; and
(q) Genelabs has paid all user fees and all other fees and
payments due as of the date hereof necessary to obtain and maintain any
Marketing Authorizations.
Section 8.07. ADVERSE PROPERTIES. Genelabs represents and warrants that
it knows of no adverse effects or other properties that may raise material
objections from the FDA or other Competent Authorities or may materially affect
the use, effectiveness or merchantability of the Product.
Section 8.08. LIMITED WARRANTY. THE WARRANTIES HEREIN ARE IN LIEU OF ALL
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND EACH
PARTY EXPRESSLY DISCLAIMS ANY OTHER WARRANTY OBLIGATION NOT EXPRESSLY SET FORTH
HEREIN.
Section 8.09. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO
THE OTHER FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, INTERRUPTION OF BUSINESS,
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND SUFFERED BY SUCH OTHER
PARTY FOR BREACH HEREOF, WHETHER BASED ON CONTRACT OR TORT CLAIMS OR OTHERWISE,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
ARTICLE IX
INDEMNIFICATION
Section 9.01. ▇▇▇▇▇▇ INDEMNIFIED BY GENELABS. Genelabs shall indemnify
and hold ▇▇▇▇▇▇ harmless from and against any liabilities or obligations,
damages, losses, claims, encumbrances, costs or expenses (including reasonable
attorneys' fees) (any or all of the foregoing herein referred to as "Loss")
insofar as a Loss or actions in respect thereof, whether existing or occurring
prior to, on or subsequent to the Effective Date, arises out of or is based upon
(a) any misrepresentation (or alleged misrepresentation) or breach (or alleged
breach) of any of the warranties, covenants or agreements made by Genelabs in
this Agreement; or (b) any claims that the Product [**] (as a result of the use
of Genelabs Technology therein) or its manufacture, use or sale infringes a
patent, trademark or proprietary right of a Third Party; or (c) any claim
arising from the development of the Product; or (d) any claim arising from any
defect in the design of the Product. Genelabs hereby indemnifies ▇▇▇▇▇▇ from any
and all liabilities or obligations incurred by Genelabs or ▇▇▇▇▇▇ relating to
the Product that relate to any period of time prior to the execution of this
Agreement.
Section 9.02. GENELABS INDEMNIFIED BY ▇▇▇▇▇▇. ▇▇▇▇▇▇ shall indemnify and
hold harmless Genelabs from and against any Loss insofar as such Loss or actions
in respect thereof occurs subsequent to the Effective Date, whether existing or
occurring prior to, on or subsequent to the date hereof, arises out of or is
based upon (a) any misrepresentation (or alleged misrepresentation) or breach
(or alleged breach) of any of the warranties, covenants or agreements made by
▇▇▇▇▇▇ in this Agreement or (b) ▇▇▇▇▇▇'▇ manufacturing, marketing, sale,
distribution or
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**CONFIDENTIAL TREATMENT REQUESTED
promotion of the Product (except if such Loss arises as a result of matters
described in Section 9.01 or from any breach by Genelabs of the Supply
Agreement). ▇▇▇▇▇▇ shall not assume Genelabs' liabilities or obligations (fixed,
contingent, or otherwise) which relate to any period prior to the execution of
this Agreement.
Section 9.03. INDEMNITOR MAY SETTLE.The Indemnitor shall at its expense,
have the right to settle and defend, through counsel reasonably satisfactory to
the Indemnitee, any action which may be brought in connection with all matters
for which indemnification is available. In such event the Indemnitee of the Loss
in question and any successor thereto shall permit the Indemnitor full and free
access to its books and records and otherwise fully cooperate with the
Indemnitor in connection with such action, provided that this Indemnitee shall
have the right fully to participate in such defense at its own expense. The
defense by the Indemnitor of any such actions shall not be deemed a waiver by
the Indemnitor of its right to assert a claim with respect to the responsibility
of the Indemnitor with respect to the Loss in question. The Indemnitor shall
have the right to settle or compromise any claim against the Indemnitee without
the consent of the Indemnitee provided that the terms thereof: (a) provide for
the unconditional release of the Indemnitee; (b) require the payment of
compensatory monetary damages by Indemnitor only; and (c) expressly state that
neither the fact of settlement nor the settlement agreement shall constitute, or
be construed or interpreted as, an admission by the Indemnitee of any issue,
fact, allegation or any other aspect of the claim being settled. No Indemnitee
shall pay or voluntarily permit the determination of any liability which is
subject to any such action while the Indemnitor is negotiating the settlement
thereof or contesting the matter, except with the prior written consent of the
Indemnitor, which consent shall not be unreasonably withheld or delayed. If the
Indemnitor fails to give Indemnitee notice of its intention to defend any such
action as provided herein, the Indemnitee involved shall have the right to
assume the defense thereof with counsel of its choice, at the Indemnitor's
expense, and defend, settle or otherwise dispose of such action.
ARTICLE X
ADDITIONAL COVENANTS
Section 10.01. RIGHT OF FIRST NEGOTIATION FOR COMPETITIVE PRODUCT. In
the event Genelabs determines to market, directly or indirectly (including
through a licensee or otherwise) a product for use in the treatment of SLE, in
any country in the Territory, which does not contain DHEA, it shall notify
▇▇▇▇▇▇ and provide to ▇▇▇▇▇▇ reasonable information regarding such product and
the indications thereof. For a period of one hundred eighty (180) days following
the receipt of such notice ▇▇▇▇▇▇ shall have the first right to negotiate a
definitive license agreement for such product on terms substantially similar to
the terms hereof. In the event ▇▇▇▇▇▇ does not determine within such one hundred
eighty (180) day period to license such product, then Genelabs may enter into an
agreement with a Third Party, provided that the terms of the agreement are no
less favorable to Genelabs, in any material respect (individually or in the
aggregate), than those last proposed in writing by ▇▇▇▇▇▇.
Section 10.02. THIRD PARTY AGREEMENTS. Genelabs shall use its best
efforts to maintain the Third Party License and the Third Party Supply
Agreements in full force and effect and shall not amend or modify, or waive any
rights under, such agreements without the prior written consent of ▇▇▇▇▇▇.
All communications with the Third Party Licensor and the Third Party Suppliers
with respect to the rights granted hereunder, or which in any material way
involve ▇▇▇▇▇▇, shall be made
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**CONFIDENTIAL TREATMENT REQUESTED
jointly by Genelabs and ▇▇▇▇▇▇. Promptly after the Effective Date, [**]. Upon
FDA Approval, ▇▇▇▇▇▇ shall pay the milestone due the Third Party Licensor and
offset such amount against amounts payable to Genelabs hereunder. Promptly after
the Effective Date, [**]. [**].
Section 10.03. COVENANT NOT TO ▇▇▇. Subject to the conditions set forth
herein, ▇▇▇▇▇▇ hereby covenants not to ▇▇▇ Genelabs or any Genelabs' licensee of
the Genelabs Technology for use outside of the Territory of any improvement or
enhancement to the Product developed by ▇▇▇▇▇▇ after the Effective Date;
provided that, (i) such improvement or enhancement was developed by ▇▇▇▇▇▇ at
the direction and authorization of the JPC pursuant to Section 4.05 hereof
(whether or not deemed novel by the JPC) and has been incorporated in the
Product approved for sale in the United States, (ii) Genelabs jointly paid for
such improvement or enhancement to the extent provided under Section 4.05 hereof
and (iii) any use outside of the Territory of such improvement or enhancement is
solely limited to use with the Genelabs Technology and to only that indication
authorized by the JPC in connection with ▇▇▇▇▇▇'▇ development of such
improvement or enhancement. In the event that ▇▇▇▇▇▇ licenses such improvements
or enhancements to a Third Party, it shall include in such license a provision
that such licensee acknowledge this covenant not to ▇▇▇. In exchange therefore,
Genelabs shall pay ▇▇▇▇▇▇ [**] using such enhancement or improvement by Genelabs
or its licensee. Such royalties shall be payable quarterly in accordance with
the provisions of Section 3.02. For this covenant to be effective as to any
improvement or enhancement discussed herein, Genelabs shall provide ▇▇▇▇▇▇ with
written notice of its intent to use such improvement or enhancement and pay
royalties thereon. Except as expressly provided in this Section 10.03, Genelabs
has no rights in any intellectual property of ▇▇▇▇▇▇.
ARTICLE XI
PRODUCT RECALL
Section 11.01. PRODUCT RECALLS OR WITHDRAWAL. If at any time or from
time to time any Competent Authority of any country requests either Party to
recall the Product, or if a voluntary recall is contemplated (a "Recall"), the
Party to whom such request is made or the Party contemplating such Recall, as
the case may be, shall immediately notify the other Party, it being understood
and agreed that Genelabs shall have rights to initiate a recall if required by
law. Any Recall in the Territory shall be carried out by ▇▇▇▇▇▇ in as
expeditious a manner as reasonably possible to preserve the goodwill and
reputation of the Product and the goodwill and reputation of the Parties. Unless
otherwise required by law, ▇▇▇▇▇▇ shall in all events be responsible for
conducting any Recalls in the Territory, market withdrawals or corrections with
respect to the Product in consultation with Genelabs. ▇▇▇▇▇▇ shall maintain
records of all sales and distribution of Product, as applicable, and customers
sufficient to adequately administer a Recall, market withdrawal or correction
for a period of five (5) years after the date the record is created.
Section 11.02. RECALL COSTS. ▇▇▇▇▇▇ shall be responsible for conducting
any Recall in the Territory and the cost and expense of a Recall shall be
allocated as follows:
(a) if such Recall is a voluntary Recall or shall be due to
tampering or other cause, other than a manufacturer's defect, but not due to the
negligence or misconduct of the Parties, then the Parties shall share equally
the costs and expenses incurred by ▇▇▇▇▇▇ in connection with
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**CONFIDENTIAL TREATMENT REQUESTED
such Recall, including, without limitation, all product credits and returns,
freight and shipping costs and product disposal expenses;
(b) if such Recall shall be due to the negligence or misconduct
of Genelabs, all such costs and expenses shall be borne and paid solely by
Genelabs; and
(c) if such Recall is due to the negligence or misconduct of
▇▇▇▇▇▇, all such costs and expenses shall be borne and paid solely by ▇▇▇▇▇▇.
Section 11.03. NOTIFICATION OF COMPLAINTS. Each Party agrees that
throughout the duration of this Agreement, it will (i) notify the other Party
immediately of any information concerning any complaint involving the possible
failure of the Product to meet any requirement of Applicable Laws, and any
serious or unexpected side effect, injury, toxicity or sensitivity reaction or
any unexpected incidence associated with the distribution of the Product,
whether or not determined to be attributable to the Product or Professional
Samples and (ii) with respect to an ADE, comply with the provisions of Section
5.04.
Section 11.04. NOTIFICATION OF THREATENED ACTION. Throughout the
duration of this Agreement, each Party shall immediately notify the other Party
of any information it receives regarding any threatened or pending action,
inspection or communication by or from a concerned Competent Authority which may
affect the safety or efficacy claims of the Product or the continued marketing
of the Product. Upon receipt of such information, the Parties shall consult with
each other in an effort to arrive at a mutually acceptable procedure for taking
appropriate action.
ARTICLE XII
INSURANCE
Section 12.01. INSURANCE. Each Party shall, at its sole cost and
expense, obtain and keep in force comprehensive general liability insurance,
including any applicable self-insurance coverage, with bodily injury, death and
property damage limits of [**] per occurrence and [**] in the aggregate,
including contractual liability and product liability coverage. Upon execution
of this Agreement, each Party shall furnish the other with a certificate of
insurance signed by an authorized representative of such Party's insurance
underwriter evidencing the insurance coverage required by this Agreement.
ARTICLE XIII
TERM AND TERMINATION
Section 13.01. TERM. This Agreement shall commence as of the Effective
Date and shall expire on a country-by-country basis within the Territory on the
later of (i) the expiration of the last applicable Genelabs Patent Right in such
country or (ii) fifteen (15) years from the First Commercial Sale in such
country.
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Section 13.02. TERMINATION BY EITHER PARTY FOR CAUSE. In addition to
Genelabs' right to terminate under Section 3.02(b), either Party may terminate
this Agreement prior to the expiration of the Term upon the occurrence of any of
the following:
(a) If the other Party is declared bankrupt or insolvent, where
there is an assignment for the benefit of creditors, or if a receiver is
appointed or proceedings commenced (and not dismissed within sixty (60) days)
voluntarily or involuntarily, under any bankruptcy or similar law, or winding up
for the purposes or reconstruction or amalgamation); or
(b) Upon or after the breach of any material provision of this
Agreement by the other Party if the breaching Party has not cured such breach
within sixty (60) calendar days after written notice thereof by the
non-breaching Party.
Section 13.03. EFFECT OF TERMINATION.
(a) Subject to Section 13.03(b), upon termination of this
Agreement by Genelabs pursuant to Section 13.02, all licenses granted herein by
Genelabs to ▇▇▇▇▇▇ shall immediately end and ▇▇▇▇▇▇ shall have no right to
practice within the Genelabs Patent Rights or use any of the Genelabs Technology
or the Genelabs Marks.
(b) Upon termination by Genelabs under Sections 13.02 or by
▇▇▇▇▇▇ under Section 13.04, the following shall occur:
(i) All licenses granted to ▇▇▇▇▇▇ shall terminate
immediately, including the rights granted to ▇▇▇▇▇▇ pursuant to Sections 2.01
and 2.02, and ▇▇▇▇▇▇ shall have no further rights in the Product subject to
▇▇▇▇▇▇'▇ option to sell off existing inventory of Products for twelve (12)
months after the termination date under subsection (ii) hereof, and ▇▇▇▇▇▇ shall
not, either directly or indirectly, use or permit the use of the same or of the
documentation relating to the Product, except to sell off existing inventory
under subsection (ii) hereof;
(ii) ▇▇▇▇▇▇, at its option, may sell off any existing
inventory of Product during a period not to exceed twelve (12) months following
such termination. If ▇▇▇▇▇▇ chooses this option, ▇▇▇▇▇▇ shall:
(A) within thirty (30) days of issuance of a
notice of termination by Genelabs, notify Genelabs that it intends to sell off
existing inventory of Product;
(B) continue to comply with its payment
obligations under this Agreement;
(C) continue to sell off existing inventory of
Product for twelve (12) months after the notice of termination but at the
expiration of the twelve (12) months, at Genelabs' election, either (1) sell all
useable existing inventory of Product to Genelabs or (2) destroy all remaining
inventory of Product in accordance with Applicable Law, providing Genelabs with
proof of destruction in writing sufficient to comply with Applicable Laws;
provided that in the case of useable Product, Genelabs shall pay to ▇▇▇▇▇▇ the
actual cost paid by ▇▇▇▇▇▇ for such remaining useable inventory of Product. If
▇▇▇▇▇▇ sells any inventory of Product to Genelabs pursuant to this subsection,
it shall warrant that such inventory of Product has been stored in compliance
with all
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**CONFIDENTIAL TREATMENT REQUESTED
Applicable Laws, has not been adulterated and has otherwise been maintained
according to the requirements of Applicable Laws and Marketing Authorizations
(provided that Genelabs may not use any Marks or copyrighted material of
▇▇▇▇▇▇);
(D) if ▇▇▇▇▇▇ notifies Genelabs that ▇▇▇▇▇▇ does
not intend to sell off any existing inventory of Product, ▇▇▇▇▇▇ shall, at
▇▇▇▇▇▇'▇ election, either (1) sell all existing useable inventory of Product to
Genelabs or (2) destroy all remaining inventory of Product in accordance with
Applicable Laws, providing Genelabs with proof of destruction in writing
sufficient to comply with Applicable Laws; provided that in the case of useable
Product, Genelabs shall pay to ▇▇▇▇▇▇ the actual cost paid by ▇▇▇▇▇▇ for such
remaining useable inventory of Product. If ▇▇▇▇▇▇ sells any inventory of Product
to Genelabs pursuant to this subsection, it shall warrant that such inventory of
Product has been stored in compliance with all Applicable Laws, has not been
adulterated and has otherwise been maintained according to requirements of
Applicable Laws and Competent Authorities in the Territory; and
(E) any sales of Product made by ▇▇▇▇▇▇ to
Genelabs pursuant to this Section 13.03 shall be made by ▇▇▇▇▇▇ within thirty
(30) days of the end of the time period specified by Section 13.03(b)(ii)(A) and
shall be shipped to Genelabs appropriately packaged and stored. All
transportation costs in connection with such sale, including without limitation,
insurance, freight and duties, shall be paid by Genelabs. Amounts owed by
Genelabs to ▇▇▇▇▇▇ pursuant to this Section 13.03(b) for the Product shall be
paid by Genelabs within fifteen (15) days after receipt of an appropriately
detailed invoice; and
(c) Expiration or termination of this Agreement shall not relieve
the Parties of any obligation accruing prior to such expiration or termination.
Except as set forth below or elsewhere in this Agreement, the obligations and
rights of the Parties under Articles VII, VIII, IX, X, XI, XII, XIV, XV and this
Article XIII shall survive expiration or termination of this Agreement
Section 13.04. TERMINATION BY ▇▇▇▇▇▇. ▇▇▇▇▇▇, in its discretion, may
terminate this Agreement at any time, on a country by country basis, or in its
entirety, upon satisfaction of its payment obligations under Sections 3.01(a)
and (b) herein (provided the conditions for such payments have been met prior to
the date of ▇▇▇▇▇▇'▇ notice) and upon delivery by ▇▇▇▇▇▇ to Genelabs of not less
than ninety (90) days prior notice thereof.
Section 13.05. RETURN OF CONFIDENTIAL INFORMATION UPON TERMINATION.
Within thirty (30) days following the expiration or termination of this
Agreement, each Party shall return to the other Party, or destroy, upon the
written request of the other Party, any and all Confidential Information of the
other Party in its possession and upon a Party's request, such destruction (or
delivery) shall be confirmed in writing to such Party by a responsible officer
of the other Party provided however, that each Party may keep such Confidential
Information as necessary to comply with Applicable Law.
ARTICLE XIV
DISPUTE RESOLUTION
Section 14.01. DISPUTE RESOLUTION. The Parties recognize that disputes
as to certain matters may from time to time arise which relate to either Party's
rights and/or obligations hereunder. It is the objective of the Parties to
establish procedures to facilitate the resolution of such disputes in an
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expedient manner by mutual cooperation and without resort to litigation. To
accomplish this objective, the Parties agree to follow the procedures set forth
below if and when such a dispute arises between the Parties.
If any dispute arises between the Parties relating to the
interpretation, breach or performance of this Agreement or the grounds for the
termination thereof, and the Parties cannot resolve the dispute within thirty
(30) days of a written request by either Party to the other Party, the Parties
agree to hold a meeting, attended by the Chairman of the Board of Directors or
the Chief Executive Officer or President of each Party, or their executive level
designees, to attempt in good faith to negotiate a resolution of the dispute
prior to pursuing other available remedies. The relevant cure periods for breach
under this Agreement shall toll while either Party pursues resolution to a
dispute under this Article XIV. If, within sixty (60) days after such written
request, the Parties have not succeeded in negotiating a resolution of the
dispute, such dispute shall be submitted to final and binding arbitration under
the then current commercial rules and regulations of the American Arbitration
Association ("AAA") relating to voluntary arbitrations. The arbitration
proceedings shall be held in Orange County, California. One arbitrator shall be
selected by Genelabs, one arbitrator shall be selected by ▇▇▇▇▇▇, and the third
arbitrator shall be chosen by the first two arbitrators chosen. The arbitrators
shall be knowledgeable in the subject matter at issue in the dispute. The
arbitration shall be conducted in accordance with the following time schedule
unless otherwise mutually agreed to in writing by the Parties: (i) Parties to
the arbitration proceeding shall each appoint their respective arbitrator within
fifteen (15) business days after the date the dispute is submitted to
arbitration; (ii) within five (5) business days thereafter, such arbitrators
shall appoint the third arbitrator; (iii) within ten (10) business days after
the appointment of the third arbitrator, the Parties to the arbitration
proceeding shall provide all documents, records and supporting information
reasonably necessary to resolve the dispute; and (iv) within fifteen (15)
business days after the date the above records are due, the arbitrators shall
hold a hearing, and (v) within fifteen (15) days thereafter render their
decision. Each Party shall initially bear its own costs and legal fees
associated with such arbitration. The prevailing Party in any such arbitration
shall be entitled to recover from the other Party the reasonable attorney's
fees, costs and expenses incurred by such prevailing Party in connection with
such arbitration. The decision of the arbitrator shall be final and binding on
the parties. The arbitrator shall prepare and deliver to the parties a written,
reasoned opinion conferring its decision. Judgment on the award so rendered may
be entered in any court having competent jurisdiction thereof and shall be
enforceable under the Federal Arbitration Act.
ARTICLE XV
MISCELLANEOUS
Section 15.01. ASSIGNMENT. Except as expressly provided hereunder,
neither this Agreement nor any rights or obligations hereunder may be assigned
or otherwise transferred by either Party without the prior written consent of
the other Party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, either Party can sell, transfer or assign its
rights under the Agreement to any Third Party as part of a sale or transfer of
the business to which this Agreement relates. The rights and obligations of the
Parties under this Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.
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Section 15.02. FORCE MAJEURE. Neither Party shall be held liable or
responsible to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement (other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party,
including, but not limited to, fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by the other Party.
Section 15.03. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
except that no conflict of laws provision shall be applied to make the laws of
any other jurisdiction applicable to this Agreement.
Section 15.04. PATENT MARKING. ▇▇▇▇▇▇ agrees to ▇▇▇▇ all Product (or the
container or label as appropriate) it sells or distributes pursuant to this
Agreement in accordance with the applicable statute or regulations pertaining to
intellectual property in the country or countries of manufacture and sale
thereof.
Section 15.05. WAIVER. Except as specifically provided for herein, the
waiver from time to time by either of the parties of any of their rights or
their failure to exercise any remedy shall not operate or be construed as a
continuing waiver of same or of any other of such Party's rights or remedies
provided in this Agreement.
Section 15.06. SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 15.07. NOTICES. All notices and other communications provided
for hereunder shall be in writing and shall be mailed by first-class, registered
or certified mail, postage paid, or delivered personally, by overnight delivery
service or by facsimile, computer mail or other electronic means, with
confirmation of receipt, addressed as follows:
IF TO GENELABS: Genelabs Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
cc: Vice President, Legal Affairs
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO ▇▇▇▇▇▇: ▇▇▇▇▇▇ Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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**CONFIDENTIAL TREATMENT REQUESTED
COPIES TO: ▇▇▇▇▇▇ Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either Party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Notices sent by facsimile,
computer mail or other electronic means shall be effective upon confirmation of
receipt, notices sent by mail or overnight delivery service shall be effective
upon receipt, and notices given personally shall be effective when delivered.
Section 15.08. INDEPENDENT CONTRACTORS. It is expressly agreed that
Genelabs and ▇▇▇▇▇▇ shall be independent contractors and that the relationship
between the two Parties shall not constitute a partnership or agency of any
kind. Neither Genelabs nor ▇▇▇▇▇▇ shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other Party, without the prior written consent of
the other Party.
Section 15.09. RULES OF CONSTRUCTION. The Parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the Party drafting such agreement or
document.
Section 15.10. ENTIRE AGREEMENT; AMENDMENT. This Agreement (including
the Exhibits attached hereto) sets forth all of the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the parties hereto with respect to the subject matter hereof and supersedes and
terminates all prior agreements and understandings between the Parties. There
are no covenants, promises, agreements, warranties, representations conditions
or understandings, either oral or written, between the parties other than as set
forth herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.
Section 15.11. HEADINGS. The captions contained in this Agreement are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several articles hereof.
Section 15.12. PUBLICITY. ▇▇▇▇▇▇ and Genelabs shall consult with each
other before issuing any press release with respect to this Agreement or the
transactions contemplated hereby and neither shall issue any such press release
or make any such public statement without the prior consent of the other, which
consent shall not be unreasonably withheld; provided, however, (i) that a Party
may, without the prior consent of the other Party, issue such press release or
make such public statement as may upon the advice of counsel be required by law
or the rules and regulations of the Nasdaq or any stock exchange, if it has used
reasonable efforts to consult with the other Party prior thereto, and (ii) such
consent shall be deemed to have been given if the recipient of the press release
or public statement fails to respond to the other Party within forty-eight (48)
hours after the recipient's receipt
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**CONFIDENTIAL TREATMENT REQUESTED
of such press release or public statement. No such consent of the other Party
shall be required to release information which has previously been made public.
Section 15.13. COUNTERPARTS. This Agreement 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.
Section 15.14. BANKRUPTCY MATTERS. All licenses granted under this
Agreement are deemed to be, for purposes of Section 365(n) of the United States
Bankruptcy Code (the "Bankruptcy Code"), licenses of right to "intellectual
property" as defined in Section 101 of the Bankruptcy Code. The Parties agree
that ▇▇▇▇▇▇ may fully exercise all of its rights and elections under the
Bankruptcy Code. The Parties further agree that, in the event ▇▇▇▇▇▇ elects to
retain its rights as a licensee under the Bankruptcy Code, ▇▇▇▇▇▇ shall be
entitled to complete access to the Genelabs Technology and Marketing
Authorizations licensed to it hereunder and all embodiments of such Genelabs
Technology and Marketing Authorizations, but only as necessary for the purposes
of exploitation of the licenses granted under this Agreement. Such embodiments
of Genelabs Technology and Marketing Authorizations shall be delivered to ▇▇▇▇▇▇
upon written request of ▇▇▇▇▇▇.
Section 15.15. FURTHER ASSURANCES. Each Party agrees to execute,
acknowledge and deliver such further instructions, and to do all such other
acts, as may be necessary or appropriate in order to carry out the purposes and
intent of this Agreement.
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**CONFIDENTIAL TREATMENT REQUESTED
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized officers as of the Effective
Date.
GENELABS TECHNOLOGIES, INC. ▇▇▇▇▇▇ PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ A. D. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------- -------------------------
Name: ▇▇▇▇▇ A.D. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer Title: Senior Vice
President and
General Counsel
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**CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A
GENELABS MARKS
ASLERA(TM)
PRESTARA(TM)
A-1
37
**CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B
LICENSED PATENTS
GENELABS PATENTS AND APPLICATIONS
ISSUED PATENTS
Patent Number Title Countries
------------- ----- ---------
5,567,696 Treatment of Systemic Lupus Erythematosus with U.S.
Dehydroepiandrosterone
5,817,650 Treatment of Systemic Lupus Erythematosus with U.S.
Dehydroepiandrosterone
PENDING APPLICATIONS
Serial Number Title Countries
------------- ----- ---------
60/125,201 [**] U.S.
09/536,802 [**] U.S.
WO 00/54763 [**] PCT
60/165,108 [**] U.S.
[**] PCT [**]
60/165,089 [**] U.S.
[**] PCT [**]
B-1
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**CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C
STOCK AND WARRANT PURCHASE AGREEMENT
between
GENELABS TECHNOLOGIES, INC.
and
▇▇▇▇▇▇ PHARMACEUTICALS, INC.
dated as of November 12, 2000
C-1
39
STOCK AND WARRANT PURCHASE AGREEMENT
THIS STOCK AND WARRANT PURCHASE AGREEMENT dated as of November 12, 2000
(the "AGREEMENT") is made between GENELABS TECHNOLOGIES, INC., a California
corporation, ("Genelabs") and ▇▇▇▇▇▇ PHARMACEUTICALS, INC., a Nevada corporation
("▇▇▇▇▇▇").
R E C I T A L S
A. Genelabs is willing to enter into a collaboration and license agreement
with ▇▇▇▇▇▇ for the commercialization of products on the terms and conditions
set forth in the Collaboration and License Agreement of even date herewith
between Genelabs and ▇▇▇▇▇▇ (the "COLLABORATION AND LICENSE AGREEMENT").
B. In connection with the Collaboration and License Agreement, Genelabs
shall sell to ▇▇▇▇▇▇ Three Million (3,000,000) shares (the "PURCHASED SHARES")
of Genelabs common stock, no par value (the "COMMON STOCK") and a warrant in the
form attached as Exhibit A (the "WARRANT") to purchase Five Hundred Thousand
(500,000) shares of Common Stock (the "WARRANT SHARES"). The Purchased Shares
and the Warrant Shares are collectively referred to herein as the "SHARES." The
Purchased Shares and Warrant are referred to herein as the "PURCHASED
SECURITIES." The Shares and the Warrant are collectively referred to herein as
the "SECURITIES."
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
1. Authorization of Sale of the Shares and the Warrant. Subject to the
terms and conditions of this Agreement, Genelabs has authorized the sale
to ▇▇▇▇▇▇ of Three Million (3,000,000) shares of the Common Stock and the
Warrant to purchase Five Hundred Thousand (500,000) shares of Common Stock
and has reserved for issuance 500,000 shares of Common Stock to be issued
on exercise of the Warrant.
2. Closing. Concurrently with the execution and delivery of this Agreement
(the "Closing"), Genelabs shall sell to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ shall purchase
from Genelabs, upon the terms and conditions hereinafter set forth, (i)
the Purchased Shares and (ii) the Warrant, for an aggregate purchase price
of $20,550,000 (the "PURCHASE PRICE").
3. Deliveries at Closing.
3.1 Delivery of the Purchased Securities and Purchase Price at the
Closing. The Closing of the purchase and sale of Purchased Securities
shall occur at a place and time (the "CLOSING DATE") to be agreed upon by
Genelabs and ▇▇▇▇▇▇. At the Closing, ▇▇▇▇▇▇ shall pay to Genelabs the
Purchase Price for the Purchased Securities being purchased hereunder and
Genelabs shall deliver to ▇▇▇▇▇▇ one or more stock certificates registered
in the name of ▇▇▇▇▇▇ and a certificate representing the Warrant (the
"Warrant Certificate"). Genelabs' obligation to complete the purchase and
sale of the Purchased Securities and deliver such stock certificate(s) and
the Warrant Certificate to ▇▇▇▇▇▇ at the Closing shall be subject to the
following conditions, any one or more of which may be waived by Genelabs:
(a) receipt by Genelabs of a wire transfer in the full amount of the
Purchase Price for the Purchased
40
Securities and (b) the accuracy in all material respects of the
representations and warranties made by ▇▇▇▇▇▇ herein and the fulfillment
in all material respects of those undertakings of ▇▇▇▇▇▇ to be fulfilled
prior to the Closing. ▇▇▇▇▇▇'▇ obligation to accept delivery of such stock
certificate(s) and the Warrant Certificate and to pay for the Purchased
Securities thereby shall be subject to the accuracy in all material
respects of the representations and warranties made by Genelabs herein and
the fulfillment in all material respects of those undertakings of Genelabs
to be fulfilled prior to the Closing, any one or more of which conditions
may be waived by ▇▇▇▇▇▇.
3.2 Legal Opinion. At Closing, ▇▇▇▇▇▇ shall receive the opinion of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to Genelabs,
substantially in the form attached hereto as Exhibit B.
4. Representations, Warranties and Covenants of Genelabs. Genelabs hereby
represents and warrants to, and covenants with, ▇▇▇▇▇▇ as follows:
4.1 Organization and Qualification. Genelabs is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to
conduct its business as currently conducted. Genelabs holds all licenses
and permits required for the conduct of its business as now conducted,
which, if not obtained, would have a material adverse effect on the
business, financial condition or results of operations of Genelabs.
Genelabs is qualified as a foreign corporation and is in good standing in
all states where the conduct of its business or its ownership or leasing
of property requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the business,
financial condition or results of operations of Genelabs.
4.2 Authorized Capital Stock. As of the date hereof, the authorized
capital stock of Genelabs consists of (a) 75,000,000 shares of Common
Stock, of which on October 31, 2000, 46,164,761 shares were validly issued
and outstanding, fully paid and non-assessable and (b) 4,990,000 shares of
undesignated preferred stock, no par value per share, none of which are
issued and outstanding.
4.3 Due Execution, Delivery and Performance of the Agreement. Genelabs'
execution, delivery and performance of this Agreement (a) has been duly
authorized under California law by all requisite corporate action by
Genelabs, and (b) will not violate any law or the articles of
incorporation or bylaws of Genelabs or any subsidiary or any material
provision of any material indenture, mortgage, agreement, contract or
other material instrument to which Genelabs or any subsidiary is a party
or by which Genelabs or any of their respective properties or assets is
bound as of the date hereof, or result in a breach of or constitute upon
notice or lapse of time or both a default under any such indenture,
mortgage, agreement, contract or other material instrument that would have
a material adverse effect on the business, financial condition or results
of operations of Genelabs or result in the creation or imposition of any
lien, security interest, mortgage, pledge, charge or other encumbrance, of
any material nature whatsoever, upon any properties or assets of Genelabs
or any subsidiary. Upon its execution and delivery, and assuming the valid
execution hereof by ▇▇▇▇▇▇, this Agreement will constitute a valid and
binding obligation of Genelabs, enforceable against Genelabs in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
3
41
affecting creditors' and contracting parties' rights generally and except
as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
4.4 Issuance, Sale and Delivery of the Securities. When issued and paid
for, the Purchased Shares to be sold hereunder by Genelabs will be validly
issued and outstanding, fully paid and non-assessable. Upon its execution
and delivery, the Warrant will constitute a valid and binding obligation
of Genelabs, enforceable against Genelabs in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at law). Upon exercise of the Warrant in accordance with its terms, when
issued and paid for, the Warrant Shares will be validly issued and
outstanding, fully paid and non-assessable. All of the Purchased Shares
have been listed on the Nasdaq National Market.
4.5 SEC Filings. Genelabs represents and warrants that it has filed all
reports required to be filed by Genelabs with the Securities and Exchange
Commission (the "COMMISSION") since December 31, 1997, pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"). Such reports, including the financial statements
therein, complied in all material respects with the Commission's rules
and, when filed, did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.
4.6 No Material Changes. As of the date hereof, there has been no
material adverse change in the financial condition or results of
operations of Genelabs since the filing date of Genelabs' last report with
the Commission pursuant to the reporting requirements of the Exchange Act.
4.7 Covenant to Keep Public Information Available. Genelabs covenants
and agrees that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder as such may be amended from time to
time, and will take such further actions as ▇▇▇▇▇▇ may reasonably request,
all to the extent required from time to time to enable Watson to sell the
Shares at such times as are permitted by this Agreement without
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT") within the limitations of Rule 144 or any similar rule or regulation
hereafter adopted by the Commission. Upon the request of ▇▇▇▇▇▇, Genelabs
will supply ▇▇▇▇▇▇ with a certificate certifying compliance with this
provision.
4.8 Securities Law Compliance. Assuming the accuracy of the
representations and warranties of ▇▇▇▇▇▇ contained in Section 5, the
offer, issuance, sale and delivery of the Securities constitute an exempt
transaction under the Securities Act.
4.9 Registration Rights. Except as contemplated by this Agreement,
Genelabs is currently not under any obligation to register any of its
securities.
4
42
5. Representations, Warranties and Covenants of ▇▇▇▇▇▇.
5.1 Investment Considerations. ▇▇▇▇▇▇ represents and warrants to, and
covenants with, Genelabs that:
(a) ▇▇▇▇▇▇ is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
presenting an investment decision like that involved in the purchase of the
Securities, including investments in securities issued by companies comparable
to Genelabs, and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Securities;
(b) ▇▇▇▇▇▇ is acquiring the Securities for its own account for
investment only and with no present intention of distributing any of such shares
or any arrangement or understanding with any other persons regarding the
distribution of such Shares;
(c) ▇▇▇▇▇▇ understands that the Securities it is purchasing are
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from Genelabs in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act only in certain limited
circumstances. In this connection ▇▇▇▇▇▇ represents that it is familiar with
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act;
(d) ▇▇▇▇▇▇ qualifies as an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act; and
(e) It is understood that the certificates evidencing the Securities
shall bear the following legend:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Act"). They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in
effect with respect to the securities under such Act or, if requested by
Genelabs, an opinion of counsel reasonably satisfactory to Genelabs and
its counsel, that such registration is not required under such Act.
"These securities are subject to restrictions set forth in that certain
Stock and Warrant Purchase Agreement, dated as of November 12, 2000,
including restrictions on the voting and the acquisition of other
securities of Genelabs."
5.2 Due Execution, Delivery and Performance of the Agreement. ▇▇▇▇▇▇
further represents and warrants to, and covenants with, Genelabs that (a) ▇▇▇▇▇▇
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (b) upon the execution and delivery of this
Agreement, this Agreement shall constitute a valid and binding
5
43
obligation of ▇▇▇▇▇▇ enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
6. Registration Rights. Genelabs covenants and agrees that ▇▇▇▇▇▇ shall have the
following registration rights beginning either one-hundred eighty (180) days
after the date of this Agreement or the approval of the NDA #21-239, whichever
is sooner:
6.1 Piggyback Registration.
(a) At any time, if Genelabs shall determine to register any of its
securities under the Securities Act either for its own account or the account of
a security holder or holders, other than a registration relating solely to
employee benefit plans, or a registration relating solely to a Rule 145
transaction, or a registration on any registration form that does not permit
secondary sales, then Genelabs will:
(i) promptly give to ▇▇▇▇▇▇ a written notice thereof; and
(ii) use its best efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all of the Shares specified in a written request
made by ▇▇▇▇▇▇ and received by Genelabs within twenty (20) days after the
written notice from Genelabs described in clause (i) above is mailed or
delivered by Genelabs. Such written request may specify all or a part of the
Shares (and with respect to the Warrant Shares may be made prior to exercise of
the Warrant).
(b) If the registration of which Genelabs gives notice to ▇▇▇▇▇▇ is
for a registered public offering involving an underwriting, the Company shall so
advise ▇▇▇▇▇▇. In such event, the right of ▇▇▇▇▇▇ to registration pursuant to
Section 6.1(a) shall be conditioned upon ▇▇▇▇▇▇'▇ participation in such
underwriting and the inclusion of all or any part of the Shares specified in
▇▇▇▇▇▇'▇ notice in the underwriting to the extent provided herein. ▇▇▇▇▇▇ shall
(together with Genelabs and the other holders of securities of Genelabs with
registration rights to participate therein distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by Genelabs.
Notwithstanding any other provision of Sections 6.1(a) or (b), if the
representative of the underwriters advises Genelabs in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all of
the Shares from, or limit the number of Shares to be included in, the
registration and underwriting. Genelabs shall so advise ▇▇▇▇▇▇ and other holders
of securities requesting registration, and the number of shares that are
entitled to be included in the registration and underwriting shall be allocated
first to Genelabs for securities being sold for its own account and thereafter
the number of shares that are entitled to be included in the registration shall
be allocated among ▇▇▇▇▇▇ and other holders requesting inclusion of shares on a
pro rata basis. If ▇▇▇▇▇▇ or any other person does not agree to the terms of any
such underwriting, ▇▇▇▇▇▇ and any other such person shall be excluded therefrom
by written
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44
notice form Genelabs or the underwriter. Any Shares or other securities excluded
or withdrawn from such underwriting shall also be withdrawn from such
registration.
(c) Genelabs shall bear all expenses in connection with the procedures
set forth in paragraphs (a) and (b) of this Section 6.1 and the registration of
the Shares pursuant to the registration statement, other underwriting discounts
and commissions and broker selling commissions and expenses, if any, and fees
and expenses, if any, of counsel or other advisors to ▇▇▇▇▇▇.
6.2 Indemnification. For the purpose of this Section 6.2,
(a) the term "SELLING STOCKHOLDER" shall mean ▇▇▇▇▇▇ and any officer,
director, employee, agent, affiliate or person deemed to be in control of ▇▇▇▇▇▇
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act;
(b) the term "REGISTRATION STATEMENT" shall mean any final prospectus,
exhibit, supplement or amendment included in or relating to the registration
statement referred to in Section 6.1; and
(c) the term "UNTRUE STATEMENT" shall mean any untrue statement or
alleged untrue statement of, or any omission or alleged omission to state, in
the Registration Statement 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.
Genelabs agrees to indemnify and hold harmless each Selling Stockholder from and
against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement of a
material fact contained in the Registration Statement on the effective date
thereof, or arise out of any failure by Genelabs to fulfill any undertaking
included in the Registration Statement and Genelabs will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that Genelabs shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises out of, or is based
upon, an untrue statement made in such Registration Statement in reliance upon
and in conformity with written information furnished to Genelabs by or on behalf
of such Selling Stockholder specifically for use in preparation of the
Registration Statement, or any statement or omission in any Prospectus that is
corrected in any subsequent Prospectus that was delivered to ▇▇▇▇▇▇ prior to the
pertinent sale or sales by ▇▇▇▇▇▇; provided, further, that the obligations of
Genelabs hereunder shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of Genelabs (which consent will not
be unreasonably withheld).
▇▇▇▇▇▇ agrees to indemnify and hold harmless Genelabs (and each person, if any,
who controls Genelabs within the meaning of Section 15 of the Securities Act,
each officer of Genelabs who signs the Registration Statement and each director
of Genelabs) from and against any losses, claims, damages or liabilities to
which Genelabs (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise),
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45
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement of a material fact contained in the Registration Statement on the
effective date thereof if such untrue statement was made in reliance upon and in
conformity with information furnished by or on behalf of ▇▇▇▇▇▇ specifically for
use in preparation of the Registration Statement, and ▇▇▇▇▇▇ will reimburse
Genelabs (or such officer, director or controlling person, as the case may be),
for any reasonable legal or other expenses reasonably incurred in investigating,
defending, or preparing to defend any such action, proceeding or claim.
Promptly after receipt by any indemnified person of a notice of a claim or the
commencement of any action in respect of which indemnity is to be sought against
an indemnifying person pursuant to this Section 6.2, such indemnified person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified persons of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist
differing or conflicting interests that would make it inappropriate, in the
opinion of counsel to the indemnified person, for the same counsel to represent
both the indemnified person and such indemnifying person or any officer,
director, employee, agent, affiliate or person deemed to be in control of such
indemnifying person within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, the indemnified person shall be entitled
to retain its own counsel at the expense of such indemnifying person.
6.3 Transferability of Registration Rights. The rights conferred upon
▇▇▇▇▇▇ under this Section 6 may be assigned by ▇▇▇▇▇▇ to any transferee of all
or part of the Securities, provided that ▇▇▇▇▇▇ gives Genelabs written notice at
the time of or within a reasonable time after such assignment, stating the name
and address of the assignee and identifying the securities with respect to which
such registration rights are being assigned and provided further, that the
assignee of such rights assumes the obligations of ▇▇▇▇▇▇ as provided under this
Agreement.
7. Survival of Representations, Warranties and Agreements. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by Genelabs and ▇▇▇▇▇▇ herein shall survive
the execution of this Agreement, the delivery to ▇▇▇▇▇▇ of the Purchased
Securities being purchased and the payment therefor, except to the extent
otherwise provided herein.
8. Voting.
8.1 Quorum. For so long as ▇▇▇▇▇▇ and its affiliates hold the Securities
they shall vote all of the Shares in any and all meetings of the shareholders of
Genelabs.
8.2 Slate of Directors. For a period of two (2) years from the date
hereof, ▇▇▇▇▇▇, its affiliates and any transferees of the Securities (other than
through sales in the
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46
open market in the ordinary course through a registered broker-dealer) shall
vote all of the Shares in any and all election of directors of Genelabs for
slate of directors nominated for election by the Genelabs board of directors or
any nominating committee created by the Genelabs board of directors.
8.3 Transfer of Securities. No transfer, disposition or sale of the
Securities (other than sales in the open market in the ordinary course through a
registered broker-dealer) shall be effected without the prior written consent of
Genelabs unless the transferee agrees in writing to be bound by the provisions
of this Section 8 pursuant to an agreement acceptable to Genelabs.
9. Standstill.
9.1 Purchase of Voting Securities. For a period of two (2) years from the
date hereof, ▇▇▇▇▇▇, its affiliates, and any transferee of the Securities (other
than through sales in the open market in the ordinary course through a
registered broker-dealer) shall not, in the aggregate, purchase, acquire or
beneficially own, or offer or agree to purchase, acquire or beneficially own,
directly or indirectly, or alone or in concert with others, by purchase, gift or
otherwise, an aggregate of nineteen and nine-tenths percent (19.9%) or more of
any class of voting securities of Genelabs, or any successor to or affiliate of
Genelabs by merger, consolidation, sale of assets, combination or otherwise.
9.2 Sale of Securities. No transfer, disposition or sale of the Securities
(other than sales in the open market in the ordinary course through a registered
broker-dealer) shall be effected without the prior written consent of Genelabs
unless the transferee agrees in writing to be bound by the provisions of this
Section 9 pursuant to an agreement acceptable to Genelabs.
10. Miscellaneous.
10.1 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
IF TO GENELABS: Genelabs Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
Attn: Chief Executive Officer
cc: Vice President, Legal Affairs
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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IF TO ▇▇▇▇▇▇: ▇▇▇▇▇▇ Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.2 Entire Agreement. This Agreement, together with the Warrant, contains
the entire understanding of the parties with respect to the subject matter
hereof. All express or implied agreements and understandings, either oral or
written, heretofore made are expressly merged in and made a part of this
Agreement.
10.3 Amendments and Waivers. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by Genelabs and ▇▇▇▇▇▇. The
waiver by either party hereto of any right hereunder or the failure to perform
or of a breach by the other party shall not be deemed a waiver of any other
right hereunder or of any other breach or failure by said other party whether of
a similar nature or otherwise.
10.4 Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
10.5 Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
10.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California (without giving effect to
the choice of law provisions thereof) and the federal law of the United States
of America.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
10.8 Expenses. Except as otherwise specifically provided herein, each
party shall bear its own expenses in connection with this Agreement.
10.9 Publicity. Neither party hereto shall issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other
party, except as may be required by applicable law or regulation.
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48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
GENELABS TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ A. D. ▇▇▇▇▇
---------------------
▇▇▇▇▇ A. D. ▇▇▇▇▇
Its: President and Chief Executive Officer
▇▇▇▇▇▇ PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: SVP and General Counsel
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EXHIBIT A
THIS WARRANT AND THE SHARES ISSUABLE ON EXERCISE THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR, IF
REQUESTED BY GENELABS, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO GENELABS
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
November 27, 2000 Warrant to Purchase
500,000 Shares of
Common Stock
WARRANT TO PURCHASE COMMON STOCK OF
GENELABS TECHNOLOGIES, INC.
This is to certify that, for value received, ▇▇▇▇▇▇ PHARMACEUTICALS, INC.,
or proper assignees (in each case, the "HOLDER"), is entitled to purchase,
subject to the provisions of this Warrant, Five-Hundred Thousand (500,000)
shares (the "WARRANT SHARES") of the Common Stock (the "COMMON STOCK") of
GENELABS TECHNOLOGIES, INC., a California corporation (the "COMPANY"), having
its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
at any time during the period from the date hereof (the "COMMENCEMENT DATE")
until 5:00 p.m., Pacific time, on the earlier of (A) November 26, 2005 and (B)
sixty (60) calendar days following written notice (which notice may not be given
prior to November 27, 2001) from the Company to the Holder stating that the
average closing price of the Common Stock over any twenty (20) consecutive
trading days ending not more than five (5) days prior to the date of such notice
after the shares underlying the Warrant become freely tradeable was equal to or
greater than 150% of the Exercise Price (as hereinafter defined) (the earlier of
(A) and (B) being referred to herein as the "EXPIRATION DATE"), whereby this
Warrant shall expire and become void; provided, however that such shares shall
be freely tradeable pursuant to Rule 144 of the Securities Act or the Company
shall cause a registration statement covering the shares to remain effective for
a reasonable period after the Company provides such notice. This Warrant shall
be exercisable at the price per share equal to $6.85 (the "EXERCISE PRICE"). The
number of shares of Common Stock to be received upon exercise of this Warrant
and the Exercise Price shall be adjusted from time to time as set forth below.
This Warrant also is subject to the following terms and conditions:
1. Exercise and Payment; Exchange.
1.1 This Warrant may be exercised in whole or in part at any time from
and after the date hereof and before the Expiration Date, but if such date
is a day on which federal or state chartered banking institutions located
in the State of California are authorized to close, then on the next
succeeding day which shall not be such a day. Exercise shall be by
presentation and surrender to the Company at its principal office, or at
the office of any transfer agent designated by the Company, of (i) this
Warrant, (ii) the attached exercise form properly executed, and (iii)
cash, wire transfer or check for the Exercise Price for the number
50
of Warrant Shares specified in the exercise form. If this Warrant is
exercised in part only, the Company or its transfer agent shall, upon
surrender of the Warrant, execute and deliver a new Warrant evidencing the
rights of the Holder to purchase the remaining number of Warrant Shares
purchasable hereunder. Upon receipt by the Company of this Warrant in
proper form for exercise, accompanied by payment as aforesaid, the Holder
shall be deemed to be the holder of record of the Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such
Warrant Shares shall not then be actually delivered by the Holder.
1.2 In addition, the Holder shall have the right, upon its written
request delivered or transmitted to the Company together with this
Warrant, to exchange this Warrant, in whole or in part at any time or from
time to time on or prior to the Expiration Date, for the number of Warrant
Shares having an aggregate Fair Market Value (determined as set forth
below) on the date of such exchange equal to the difference between (i)
the aggregate Fair Market Value on the date of such exchange of a number
of Warrant Shares designated by the Holder and (ii) the aggregate exercise
price the Holder would have paid to the Company to purchase such
designated number of Warrant Shares upon exercise of this Warrant. Upon
any such exchange, the number of Warrant Shares purchasable upon exercise
of this Warrant shall be reduced by such designated number of shares, and,
if a balance of purchasable securities remains after such exchange, the
Company shall execute and deliver to the Holder a new Warrant evidencing
the right of the Holder to purchase such balance of securities. No payment
of any cash or other consideration shall be required. Such exchange shall
be effective upon the date of receipt by the Company of the original
Warrant surrendered for cancellation and a written request from the Holder
that the exchange pursuant to this Section be made, or at such later date
as may be specified in such request.
1.3 Fair market value of the Warrant Shares ("FAIR MARKET VALUE")
shall be determined as follows:
(a) If the Warrant Shares are listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange,
or are listed on the Nasdaq National Market or Small Cap Market, the
current Fair Market Value shall be the last reported sales price of the
Warrant Shares on such exchange or Nasdaq on the last business day prior
to the date of exercise of this Warrant or if no such sale is made on such
day, the mean of the closing bid and asked prices for such day on such
exchange or Nasdaq; or
(b) If the Warrant Shares are not so listed or admitted to
unlisted trading privileges or quoted on Nasdaq, the current Fair Market
Value shall be the mean of the last bid and asked prices reported on the
last business day prior to the date of the exercise of this Warrant (i) by
Nasdaq, or (ii) if reports are unavailable under clause (i) above, by the
National Quotation Bureau Incorporated; or
(c) If the Warrant Shares are not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported,
the current Fair Market Value shall be mutually determined in good faith
by the Company and the Holder.
2. Reservation of Shares. The Company shall, at all times until the
expiration of this Warrant, reserve for issuance and delivery upon
exercise of this Warrant the number of
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Warrant Shares which shall be required for issuance and delivery upon
exercise of this Warrant.
3. Fractional Interests. The Company shall not issue any fractional shares
or scrip representing fractional shares upon the exercise or exchange of
this Warrant. With respect to any fraction of a share resulting from the
exercise or exchange hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the current Fair Market Value
per share of Common Stock, determined as set forth above.
4. No Rights as Shareholders. This Warrant shall not entitle the Holder to
any rights as a shareholder of the Company, either at law or in equity.
The rights of the Holder are limited to those expressed in this Warrant
and the Stock and Warrant Purchase Agreement dated as of November 12, 2000
(the "PURCHASE AGREEMENT") and are not enforceable against the Company
except to the extent set forth herein.
5. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as
follows:
5.1 Subdivisions, Combinations and Other Issuances. If the Company
shall at any time after the date hereof but prior to the expiration of
this Warrant subdivide its outstanding securities as to which purchase
rights under this Warrant exist, by split-up, spin-off, or otherwise, or
combine its outstanding securities as to which purchase rights under this
Warrant exist, the number of Warrant Shares as to which this Warrant is
exercisable as of the date of such subdivision, split-up, spin-off or
combination shall forthwith be proportionately increased in the case of a
subdivision, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to Exercise Price, but the
aggregate purchase price payable for the total number of Warrant Shares
purchasable under this Warrant as of such date shall remain the same.
5.2 Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into or
exchangeable or exercisable for Common Stock ("COMMON STOCK EQUIVALENTS")
without payment of any consideration by holders of Common Stock for the
additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon exercise or
conversion thereof), then the number of shares of Common Stock for which
this Warrant may be exercised shall be increased as of the record date (or
the date of such dividend distribution if no record date is set) for
determining which holders of Common Stock shall be entitled to receive
such dividends, in proportion to the increase in the number of outstanding
shares (and shares of Common Stock issuable upon conversion of all such
securities convertible into Common Stock) of Common Stock as a result of
such dividend, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date (or on the date of
such distribution, if applicable) for such dividend shall equal the
aggregate amount so payable immediately before such record date (or on the
date of such distribution, if applicable).
5.3 Other Distributions. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of
its dissolution, liquidation or
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the winding up of its affairs, any shares of its capital stock, any
evidence of indebtedness or any of its assets (other than cash, Common
Stock or securities convertible into Common Stock), then the Company shall
decrease the per share Exercise Price of this Warrant by an appropriate
amount based upon the value distributed on each share of Common Stock as
determined in good faith by the Company's Board of Directors.
5.4 Merger, Reclassification, Etc. In the event of any
reorganization or reclassification of the outstanding shares of Common
Stock or in the event of any consolidation or merger of the Company with
another entity after which the Company is not the surviving entity, at any
time prior to the expiration of this Warrant, upon subsequent exercise of
this Warrant, the Holder shall have the right to receive the same kind and
number of shares of Common Stock and other securities, cash or other
property as would have been distributed to the Holder upon such
reorganization, reclassification, consolidation or merger had the Holder
exercised this Warrant immediately prior to such reorganization,
reclassification, consolidation or merger, appropriately adjusted for any
subsequent event described in this Section 5. The Holder shall pay upon
such exercise the Exercise Price that otherwise would have been payable
pursuant to the terms of this Warrant. If any such reorganization,
reclassification, consolidation or merger results in a cash distribution
in excess of the then applicable Exercise Price, the holder may, at the
Holder's option, exercise this Warrant without making payment of the
Exercise Price, and in such case the Company shall, upon distribution to
the Holder, consider the Exercise Price to have been paid in full, and in
making settlement to the Holder, shall deduct an amount equal to the
Exercise Price from the amount payable to the Holder. In the event of any
such reorganization, merger or consolidation, the corporation formed by
such consolidation or merger or the corporation which shall have acquired
the assets of the Company shall execute and deliver a supplement hereto to
the foregoing effect, which supplement shall also provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided in this Warrant.
5.5 Proportional Adjustment. The number of shares which may be
purchased hereunder shall be adjusted proportionately to any adjustment in
Exercise Price pursuant to this Section 5, so that after such adjustments
the aggregate Exercise Price payable hereunder for the adjusted number of
shares shall be the same as the aggregate Exercise Price in effect just
prior to such adjustments.
6. Notices to Holder. So long as this Warrant shall be outstanding (a) if
the Company shall pay any dividends or make any distribution upon the
Common Stock otherwise than in cash or (b) if the Company shall offer
generally to the holders of Common Stock the right to subscribe to or
purchase any shares of any class of Common Stock or securities convertible
into Common Stock or any similar rights or (c) if there shall be any
capital reorganization of the Company in which the Company is not the
surviving entity, recapitalization of the capital stock of the Company,
consolidation or merger of the Company with or into another corporation,
sale, lease or other transfer of all or substantially all of the property
and assets of the Company, or voluntary or involuntary dissolution,
liquidation or winding up of the Company, then in such event, the Company
shall cause to be mailed to the Holder, at least twenty (20) days prior to
the relevant date described below (or such shorter period as is reasonably
possible if twenty (20) days is not reasonably possible), a notice
containing a description of the proposed action and stating the date or
expected date on which a record of the Company's shareholders is to be
taken for the purpose of any such dividend, distribution
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of rights, or such reclassification, reorganization, consolidation,
merger, conveyance, lease or transfer, dissolution, liquidation or winding
up is to take place and the date or expected date, if any is to be fixed,
as of which the holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such event.
7. Transfer, Exercise, Exchange, Assignment or Loss of Warrant, Warrant
Shares or Other Securities.
7.1 This Warrant may be transferred, exercised, exchanged or
assigned ("TRANSFERRED"), in whole or in part, subject to the restrictions
set forth in the Purchase Agreement. This Warrant and the Warrant Shares
or Other Securities may also be subject to restrictions on transferability
under applicable state securities or blue sky laws.
7.2 Any transfer permitted hereunder shall be made by surrender of
this Warrant to the Company at its principal office or to its transfer
agent at its offices with a duly executed request to transfer the Warrant,
which shall provide adequate information to effect such transfer and shall
be accompanied by funds sufficient to pay any transfer taxes applicable.
Upon satisfaction of all transfer conditions, the Company or transfer
agent shall, without charge, execute and deliver a new Warrant in the name
of the transferee named in such transfer request, and this Warrant
promptly shall be cancelled.
7.3 Upon receipt by the Company of evidence satisfactory to it of
loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft, destruction or mutilation, of reasonable satisfactory
indemnification, and, in the case of mutilation, upon surrender of this
Warrant, the Company will execute and deliver, or instruct the transfer
agent to execute and deliver, a new Warrant of like tenor and date, any
such lost, stolen or destroyed Warrant thereupon shall become void.
8. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or otherwise, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times, in
good faith, take all such action as may be necessary or appropriate in
order to protect the rights of the Holder against impairment.
9. Registration Rights. The Holder has registration rights for the Warrant
Shares as set forth in Section 6 of the Purchase Agreement.
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
personal delivery or facsimile transmission to the party to be notified,
or one (1) day after deposit with a nationally recognized overnight
delivery service, all delivery charges paid, or three (3) days after
deposit with the United States mail, by registered or certified mail,
postage prepaid, in any such case addressed (a) if to Holder, at the
address of Holder appearing on the records of the Company, or at such
other address as Holder shall have furnished to the Company in writing in
accordance with this Section 10, or (b) if to the Company, at its
principal office set forth above, or any other address which the Company
shall have furnished to Holder in writing in accordance with this Section
10.
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11. Amendment. Any provision of this Warrant may be amended or the
observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Holder.
12. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the Company has executed this Warrant as of November
27, 2000.
GENELABS TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ A.D. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ A. D. ▇▇▇▇▇
President and Chief Executive Officer
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Annex A
[FORM OF EXERCISE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________ shares of Common
Stock and herewith tenders payment for such shares of Common Stock to the order
of __________________ the amount of $__________ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares of Common
Stock be registered in the name of ______________ whose address is
___________________________________. If said number of shares of Common Stock is
less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of the shares of Common Stock be registered in the name of
______________________ whose address is _____________________________ and that
such Warrant Certificate be delivered to ________________________, whose address
is _________________________________.
Dated:
Signature: _________________________
(Signature must conform in all
respects to name of holders as
specified on the face of the Warrant
Certificate.)
________________________________
(Insert Social Security or
Taxpayer Identification
Number of Holder.)
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EXHIBIT B
1. The Company is validly existing and in good standing under the laws of
the State of California.
2. The Company has all requisite corporate power and authority to own its
properties and to carry on its business as described in the Officer's
Certificate.
3. The Transaction Agreements have been duly authorized by all requisite
corporate action on the part of the Company and constitute valid and binding
obligation of the Company, enforceable against the Company in accordance with
their terms, except that (a) the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and (b) the enforceability of rights to
indemnification and contribution thereunder may be limited by federal or state
securities laws, rules or regulations or the policies underlying such laws,
rules or regulations, and (c) we express no view with respect to the voting
agreement or standstill provisions in the Purchase Agreement.
4. The Shares and the Warrant have been duly authorized for issuance by
the Company. The Shares when issued, delivered and paid for in accordance with
the terms of the Purchase Agreement, will be validly issued, fully paid and
nonassessable. The shares of Common Stock issuable upon exercise of the Warrant
have been reserved for issuance by all requisite corporate action on the part of
the Company and, when issued upon exercise of the Warrant in accordance with its
terms will be validly issued, fully paid and nonassessable.
5. The execution and delivery by the Company of each of the Transaction
Agreements and the performance by the Company of its obligations thereunder will
not (i) violate any provision of the Restated Certificate or the Bylaws, or (ii)
constitute a violation or default under the terms of any agreement or instrument
filed as an exhibit to the Company's Form 10-K, as amended, for the year ended
December 31, 1999.
6. No consent or approval of, or other action by or filing with, any
Governmental Authority under any Applicable Law is required to be obtained,
taken or made by the Company in connection with the execution, delivery and
performance by the Company of the transactions contemplated by the Purchase
Agreement, except where a failure to obtain, take or make such Governmental
Approval would not have a material adverse effect on the Company, subject to the
timely filing of a Form D pursuant to Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
7. No registration is required under the Securities Act in connection with
offer and sale of the Shares or the Warrant to you pursuant to the Purchase
Agreement, subject to the timely filing of a Form D pursuant to Regulation D
promulgated under the Securities Act.
8. Except as may be set forth in the Schedule of Exceptions to the
Purchase Agreement, to the best of our knowledge, there is no action, proceeding
or investigation pending or overtly threatened against the Company before any
court or administrative agency that questions the validity of any of the
Transaction Agreements or might result, either individually
57
or in the aggregate, in any material adverse change in assets, financial
condition or operations of the Company.
For purposes of the opinion expressed in paragraph 6 above: (i) the term
"Applicable Law" means those laws, rules and regulations of the State of
California and the United States of America (other than state securities or
"blue sky" laws, and the rules and regulations promulgated thereunder) which, in
our experience, are normally applicable to transactions of the type contemplated
by the Purchase Agreement, but without our having made any special investigation
concerning the applicability of any other law, rule or regulation; and (ii) the
term "Governmental Authority" means any federal, California state executive,
legislative, judicial, administrative or regulatory body having jurisdiction
over the Company under Applicable Laws.
For purposes of the opinion expressed in paragraph 7 above, we have
assumed that no form of general solicitation or general advertising was used by
the Company or any other person acting on behalf of the Company in connection
with the offer and sale of the Shares or the Warrant, and we have assumed that
neither the Company nor any other such person has, either directly or
indirectly, offered or sold any of the Shares or any other similar security of
the Company except pursuant to the Purchase Agreement.
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**CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D
ACTIVE PHARMACEUTICAL INGREDIENT AND FINISHED PRODUCT SUPPLY
AGREEMENT
BETWEEN
GENELABS TECHNOLOGIES, INC.
AND
▇▇▇▇▇▇ PHARMACEUTICALS, INC.
DATED: NOVEMBER 12, 2000
D-1
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**CONFIDENTIAL TREATMENT REQUESTED
ACTIVE PHARMACEUTICAL INGREDIENT AND FINISHED PRODUCT SUPPLY
AGREEMENT
This Active Pharmaceutical Ingredient and Finished Product Supply
Agreement (the "Agreement") is made as of November 12, 2000 ("Effective Date")
by and between Genelabs Technologies Inc., a California corporation ("Genelabs")
and ▇▇▇▇▇▇ Pharmaceuticals, Inc., a Nevada corporation ("▇▇▇▇▇▇"). Genelabs and
▇▇▇▇▇▇ are sometimes referred to collectively herein as the "Parties" or singly
as a "Party."
RECITALS
WHEREAS, ▇▇▇▇▇▇ and Genelabs have entered into a license agreement of
even date herewith (the "License Agreement") pursuant to which ▇▇▇▇▇▇ obtained
exclusive commercial rights in the Territory (as defined in the License
Agreement) to certain products of Genelabs containing DHEA, and requires an
assured source of supply of both the active pharmaceutical ingredient DHEA and
the finished dosage form;
WHEREAS, ▇▇▇▇▇▇ has expressed interest in obtaining DHEA through
Genelabs pursuant to that certain DHEA Supply Agreement by and between Genelabs
and [**], dated May 29, 2000 for the supply of DHEA, [**] (the "API Supply
Agreement");
WHEREAS, ▇▇▇▇▇▇ has also expressed interest in obtaining finished
products through Genelabs, [**], pursuant to that certain Third Party
Manufacturing Agreement by and between Genelabs and Schering Corporation
("Schering"), dated March 31, 1997 for the supply of finished products (the
"Finished Products Manufacturing Agreement");
WHEREAS, ▇▇▇▇▇▇ possesses substantial resources and expertise in the
commercialization and marketing of pharmaceutical products; and
WHEREAS, Genelabs wishes to grant to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ wishes to obtain
from Genelabs, an exclusive right to purchase ▇▇▇▇▇▇'▇ requirements for DHEA and
finished products in the Territory on the terms and subject to the conditions as
set forth in both the API Supply Agreement and the Finished Products
Manufacturing Agreement until such time as ▇▇▇▇▇▇ (i) [**], (ii) enters into a
separate supply agreement directly with [**] or Schering, or (iii) obtains
another FDA-approved source for either DHEA or finished products.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the Parties hereto, intending
to be legally bound, do hereby agree as follows:
AGREEMENT
ARTICLE I
Section 1.01. DEFINITIONS. Unless defined herein, all capitalized terms
shall have the same meaning as set forth in the API Supply Agreement or the
Finished Products Manufacturing Agreement.
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**CONFIDENTIAL TREATMENT REQUESTED
Section 1.02. GENELABS' COVENANTS. Genelabs agrees to cause the supply
of all API and finished product ordered by ▇▇▇▇▇▇ for sale in the Territory
through the API Supply Agreement and the Finished Products Manufacturing
Agreement. Genelabs shall provide to ▇▇▇▇▇▇ all rights under and warranties
provided by [**] and Schering, respectively.
Section 1.03. ▇▇▇▇▇▇'▇ COVENANTS. ▇▇▇▇▇▇ hereby agrees to comply with
the requirements of the API Supply Agreement and under the Finished Products
Manufacturing Agreement with respect to forecasting, ordering, acceptance and
payment, and other operational issues, for product in sufficient time to allow
Genelabs to comply with such agreements.
Section 1.04. FURTHER ASSURANCES. [**].
ARTICLE II
MISCELLANEOUS
Section 2.01. ASSIGNMENT. Except as expressly provided hereunder,
neither this Agreement nor any rights or obligations hereunder may be assigned
or otherwise transferred by either Party without the prior written consent of
the other Party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, either Party can sell, transfer or assign its
rights under the Agreement to any third party as part of a sale or transfer of
the business to which this Agreement relates. The rights and obligations of the
Parties under this Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.
Section 2.02. FORCE MAJEURE. Neither Party shall be held liable or
responsible to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement (other than non-payment) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party,
including, but not limited to, fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotion,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by the other Party.
Section 2.03. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
except that no conflict of laws provision shall be applied to make the laws of
any other jurisdiction applicable to this Agreement.
Section 2.04. WAIVER. Except as specifically provided for herein, the
waiver from time to time by either Party of any of its rights or its failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party's rights or remedies provided in this
Agreement.
Section 2.05. SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 2.06. NOTICES. All notices and other communications provided for
hereunder shall be in writing and shall be mailed by first-class, registered or
certified mail, postage paid, or delivered
2
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**CONFIDENTIAL TREATMENT REQUESTED
personally, by overnight delivery service or by facsimile, computer mail or
other electronic means, with confirmation of receipt, addressed as follows:
IF TO GENELABS: Genelabs Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
Attn: Chief Executive Officer
cc: Vice President, Legal Affairs
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO ▇▇▇▇▇▇: ▇▇▇▇▇▇ Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
COPIES TO: ▇▇▇▇▇▇ Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either Party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Notices sent by facsimile,
computer mail or other electronic means shall be effective upon confirmation of
receipt, notices sent by mail or overnight delivery service shall be effective
upon receipt, and notices given personally shall be effective when delivered.
Section 2.07. INDEPENDENT CONTRACTORS. It is expressly agreed that
Genelabs and ▇▇▇▇▇▇ shall be independent contractors and that the relationship
between the Parties shall not constitute a partnership or agency of any kind.
Neither Genelabs nor ▇▇▇▇▇▇ shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other Party, without the prior written consent of the other
Party.
Section 2.08. RULES OF CONSTRUCTION. The Parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the Party drafting such agreement or
document.
Section 2.09. ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Exhibits attached hereto) sets forth all of the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto with respect to the subject matter hereof and supersedes and terminates
all prior agreements and understandings between the Parties. There are no
covenants, promises, agreements, warranties, representations conditions or
understandings,
3
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**CONFIDENTIAL TREATMENT REQUESTED
either oral or written, between the Parties other than as set forth herein. No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties hereto unless reduced to writing and signed by the
respective authorized officers of the Parties.
Section 2.10. HEADINGS. The captions contained in this Agreement are not
a part of this Agreement, but are merely guides or labels to assist in locating
and reading the several articles hereof.
Section 2.11. COUNTERPARTS. This Agreement 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.
4
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**CONFIDENTIAL TREATMENT REQUESTED
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized officers as of the Effective
Date.
GENELABS TECHNOLOGIES, INC. ▇▇▇▇▇▇ PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ A. D. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------- -------------------------
Name: ▇▇▇▇▇ A. D. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer Title: SVP and General
Counsel
5
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**CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT E
THIRD PARTY LICENSE TERMS
Capitalized terms below are defined in the Agreement dated as of October 1, 1993
between the Board of Trustees of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Junior University and
Genelabs Technologies, Inc., as amended.
7. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 Quarterly Earned Royalty Payment and Report -- Beginning with the first
sale of a Licensed Product, LICENSEE shall make written reports (even if
there are no sales) and earned royalty payments to STANFORD within
thirty (30) days after the end of each calendar quarter. This report
shall state the number, description, and aggregate Net Sales of Licensed
Product(s) during such completed calendar quarter, and resulting
calculation pursuant to Paragraph 6.3 of earned royalty payment due
STANFORD for such completed calendar quarter. Concurrent with the making
of each such report, LICENSEE shall include payment due STANFORD of
royalties for the calendar quarter covered by such report.
7.2 Accounting -- LICENSEE agrees to keep and maintain records for a period
of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license
herein granted. Such records will include general ledger records showing
cash receipts and expenses, and records which include production
records, customers, serial numbers and related information in sufficient
detail to enable the royalties payable hereunder by LICENSEE to be
determined. LICENSEE further agrees to permit its books and records to
be examined by STANFORD from time to time to the extent necessary to
verify reports provided for in Paragraph 7.1. Such examination is to be
made by STANFORD or its designee (acceptable to LICENSEE), at the
expense of STANFORD, except in the event that the results of the audit
reveal an underreporting of royalties due STANFORD of five percent (5%)
or more, then the audit costs shall be paid by LICENSEE.
8. NEGATION OF WARRANTIES
8.1 Nothing in this Agreement is or shall be construed as:
(a) A warranty or representation by STANFORD as to the
validity or scope of any Licensed Patent(s);
(b) A warranty or representation that anything made, used,
sold, or otherwise disposed of under any license granted
in this Agreement is or will be free from infringement
of patents, copyrights, and other rights of third
parties;
(c) An obligation to bring or prosecute actions or suits
against third parties for infringement, except to the
extent and in the circumstances described in Article 12;
(d) Granting by implication, estoppel, or otherwise any
licenses or rights under patents or other rights of
STANFORD or other persons other than Licensed Patent(s),
regardless of whether such patents or other rights are
dominant or subordinate to any Licensed Patent(s); or
(e) An obligation to furnish any technology or technological
information other than the Technology.
8.2 Except as expressly set forth in this Agreement, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR
E-1
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**CONFIDENTIAL TREATMENT REQUESTED
THAT THE USE OF THE LICENSED PRODUCTS(S) WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OR ANY OTHER EXPRESS OR IMPLIED
WARRANTIES.
8.3 LICENSEE agrees that nothing in this Agreement grants LICENSEE any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing
Biologically Functional Molecular Chimeras," U.S. Patent
No. 4,468,464 and U.S. Patent No. 4,740,470, both
entitled, "Biologically Functional Molecular Chimeras"
(collectively known as the ▇▇▇▇▇/▇▇▇▇▇ patents) or
reissues thereof; or
(b) U.S. Patent 4,656,134 "Amplification of Eucaryotic
Genes" or any patent application corresponding thereto.
9 INDEMNITY
9.1 LICENSEE agrees to indemnify, hold harmless, and defend STANFORD and
Stanford University Hospital and their respective trustees, officers,
employees, students, and agents against any and all claims for death,
illness, personal injury, property damage, and improper business
practices arising out of the manufacture, use, sale, or other
disposition of Invention(s), Licensed Patents(s), Licensed Product(s),
or Technology by LICENSEE or sublicensee(s), or their customers.
9.2 STANFORD shall not be liable for any indirect, special, consequential,
or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD shall not
have any responsibilities or liabilities whatsoever with respect to
Licensed Product(s).
9.3 LICENSEE shall at all times comply, through insurance or self-insurance,
with all statutory workers' compensation and employers' liability
requirements covering any and all employees with respect to activities
performed under this Agreement.
9.4 In addition to the foregoing, LICENSEE shall maintain, during the term
of this Agreement, Comprehensive General Liability Insurance, including
Products Liability Insurance, with reputable and financially secure
insurance carrier(s) to cover the activities of LICENSEE and its
sublicensee(s). During Phase I through Phase III clinical trials such
insurance shall provide minimum limits of liability of [**], and during
marketing of Licensed Product(s) to the public such insurance shall
provide minimum limits of liability of [**] and shall include STANFORD,
Stanford University Hospital, their trustees, directors, officers,
employees, students, and agents as additional insureds. Such insurance
shall be written to cover claims incurred, discovered, manifested or
made during or after the expiration of this Agreement. At STANFORD'S
request, LICENSEE shall furnish a Certificate of Insurance evidencing
primary coverage and requiring thirty (30) days prior written notice of
cancellation or material change to STANFORD. LICENSEE shall advise
STANFORD, in writing, that it maintains excess liability coverage
(following form) over primary insurance for at least the minimum limits
set forth above. All such insurance of LICENSEE shall be primary
coverage; insurance of STANFORD or Stanford University Hospital shall be
excess and noncontributory.