Exhibit 10.21
LICENSE AGREEMENT
by and between
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
and
INTERNEURON PHARMACEUTICALS, INC
dated
June 14, 2000
Article I DEFINITIONS....................................................................................1
Article II LICENSE; SUBLICENSES...........................................................................5
2.1. License Grant..................................................................................5
2.2. Improvements by Interneuron....................................................................5
2.3. Sublicenses....................................................................................5
Article III DEVELOPMENT AND COMMERCIALIZATION..............................................................5
3.1. Exchange of Information........................................................................5
3.2. Diligence; Development and Commercialization...................................................6
3.3. Regulatory Matters.............................................................................6
3.4. Trademark......................................................................................6
3.5. Manufacturing..................................................................................6
3.6. Adverse Events.................................................................................6
3.7. Third Party Agreements.........................................................................6
Article IV CONFIDENTIALITY AND PUBLICITY..................................................................6
4.1. Non-Disclosure and Non-Use Obligations.........................................................7
4.2. Permitted Disclosure of Proprietary Information................................................7
Article V PAYMENTS; ROYALTIES AND REPORTS................................................................8
5.1. License Fee....................................................................................8
5.2. Milestone Payments.............................................................................8
5.3. Royalties; Royalty Buy-Out Option..............................................................9
5.4. Royalty Buy-Out Option........................................................................11
5.5. Payments from Sublicensee.....................................................................12
5.6. Reports; Payment of Royalty...................................................................12
5.7. Audits........................................................................................13
5.8. Payment Exchange Rate.........................................................................14
5.9. Tax Withholding...............................................................................14
5.10. Interest on Late Payments.....................................................................14
5.11. Exchange Controls.............................................................................14
Article VI REPRESENTATIONS AND WARRANTIES................................................................15
6.1. HDCI Representations and Warranties...........................................................15
6.2. Warranty Disclaimer...........................................................................16
6.3. Investment Representations....................................................................16
6.4. Interneuron Representations and Warranties....................................................17
Article VII PATENT MATTERS................................................................................18
7.1. Filing, Prosecution and Maintenance of Patent Applications or Patents.........................18
7.2. Patent Office Proceedings.....................................................................18
7.3. Enforcement and Defense.......................................................................19
7.4. Patent Term Extensions and Supplemental Protection Certificates...............................20
Article VIII TERM AND TERMINATION..........................................................................20
8.1. Term and Expiration...........................................................................20
8.2. Termination by Notice.........................................................................20
8.3. Termination...................................................................................21
8.4. Effect of Expiration or Termination...........................................................22
Article IX MISCELLANEOUS.................................................................................23
9.1. Force Majeure.................................................................................23
9.2. Assignment....................................................................................23
9.3. Severability..................................................................................23
9.4. Notices.......................................................................................23
9.5. Applicable Law................................................................................24
9.6. Dispute Resolution............................................................................24
9.7. Entire Agreement..............................................................................24
9.8. Independent Contractors.......................................................................25
9.9. Waiver........................................................................................25
9.10. Headings......................................................................................25
9.11. Counterparts..................................................................................25
LICENSE AGREEMENT
THIS LICENSE AGREEMENT effective as of June 14, 2000 ("Effective
Date"), by and between ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC. (formerly Procept, Inc.), a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 1180 Avenue of the Americas, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("HDCI") and INTERNEURON PHARMACEUTICALS, INC., a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Interneuron").
W I T N E S S E T H:
WHEREAS, HDCI is the owner of the Patent Assets and HDCI Know-How, as
defined herein;
WHEREAS, Interneuron desires to obtain exclusive worldwide license
rights, with a right to grant sublicenses, under the Patent Assets and HDCI
Know-How, and HDCI desires to grant such license to Interneuron, upon the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless specifically set forth to the contrary herein, the following
terms, where used in the singular or plural, shall have the respective meanings
set forth below:
1.1. "1933 ACT" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, or any successor act, all as the same
shall be in effect at the time.
1.2. "AFFILIATE" shall mean (i) any corporation or business entity of which
more than fifty percent (50%) of the securities or other ownership
interests representing the equity, the voting stock or general
partnership interest are owned, controlled or held, directly or
indirectly, by a Party; (ii) any corporation or business entity which,
directly or indirectly, owns, controls or holds more than fifty percent
(50%) (or the maximum ownership interest permitted by law) of the
securities or other ownership interests representing the equity, voting
stock or general partnership interest, of a Party or (iii) any
corporation or business entity of which a Party has the right to acquire,
directly or indirectly, at least fifty percent (50%) of the securities or
other ownership interests representing the equity, voting stock or
general partnership interest thereof.
1.3. "BUSINESS DAY" means any day that is not a Saturday or a Sunday or a day
on which the New York Stock Exchange is closed.
1.4. "CALENDAR QUARTER" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.
1.5. "CALENDAR YEAR" shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
1.6. "COMPOUND" shall mean a condensation polymer of an aromatic sulfonic acid
and an aldehyde or a pharmaceutically acceptable salt or prodrug thereof
or a derivative, homolog, or analog thereof.
1.7. "COST OF GOODS SOLD" shall mean all direct and indirect manufacturing
costs incurred by Interneuron or its Affiliates specifically allowable to
and directly attributable to the production of Compound or Product
calculated in accordance with GAAP.
1.8. "EFFECTIVE DATE" shall mean the date first above written.
1.9. "FAIR MARKET VALUE" shall mean the average closing price for Interneuron
Stock, as quoted by Nasdaq, for the ten consecutive trading days
preceding the Election Date.
1.10. "FDA" shall mean the United States Food and Drug Administration and any
successor agency having substantially the same functions.
1.11. "FIRST COMMERCIAL SALE" shall mean, with respect to Product, the first
sale for end use or consumption of such Product in any country in the
Territory after all required approvals, including marketing and pricing
approvals, have been granted by the governing health authority of such
country or, where government approval is not required, the first sale in
that country in connection with the nationwide introduction of Product in
that country by Interneuron, its Affiliates or sublicensees.
1.12. "GAAP" means generally accepted accounting principles in the United
States.
1.13. "HDCI KNOW-HOW" shall mean any and all information and materials,
including but not limited to, discoveries, information, Improvements,
processes, formulas, data, inventions, know-how and trade secrets,
patentable or otherwise, (other than Patent Assets) which
(a) relate to Compound or Product; and
(b) which are in HDCI's possession or control and as to which
HDCI has the right to license or sublicense to third
parties, and are necessary or useful in connection with the
rights granted and activities contemplated under this
Agreement.
Such know-how shall include, without limitation, all chemical,
pharmaceutical, toxicological, preclinical, clinical, assay control,
manufacturing, regulatory, and any other information used or useful for
the development, manufacturing and/or regulatory approval of Compound or
Product, including any data included in or generated as a result of or
under an IND.
1.14. "IMPROVEMENT" shall mean any enhancement in the manufacture, formulation,
ingredients, preparation, presentation, means of delivery or
administration, dosage, indication, use or packaging of Compound or
Product.
1.15. "IND" shall mean an investigational new drug application and any
supplements and additions thereto relating to the use of Compound or
Product.
1.16. "INTERNEURON STOCK" shall mean common stock, $.001 par value, of
Interneuron.
1.17. "MRC" shall mean the British Medical Research Council or any successor
agency having substantially the same functions.
1.18. "MRC 1996 AGREEMENT" shall mean the Agreement between MRC and HDCI dated
October 7, 1996 and any amendments thereto.
1.19. "MRC 1999 AGREEMENT" shall mean the Agreement between MRC and HDCI dated
February 20, 1999 and any amendments thereto.
1.20. "NASDAQ" shall mean the Nasdaq National Market segment of the Nasdaq
Stock Market, or if the Interneuron Stock is not listed on the National
Market, than Nasdaq shall mean the Nasdaq SmallCap Market.
1.21. "NDA" shall mean a new drug application filed with the FDA for marketing
authorization of a Product in the United States.
1.22. "NET SALES" shall mean the actual gross amount invoiced for the sale of
Product (except as provided in Section 5.3.1(b)(iii)) commencing upon the
date of First Commercial Sale by Interneuron, its Affiliates or its
sublicensees to the first Third Party after deducting in accordance with
GAAP, if not previously deducted from the amount invoiced:
(a) trade, cash, promotional and quantity discounts;
(b) recalls, credits and allowances on account of returned or
rejected products including, but not limited to, allowance
for breakage and spoilage;
(c) rebates and chargebacks;
(d) retroactive price reductions;
(e) sales or excise taxes, VAT or other taxes, transportation
and insurance charges and additional special
transportation, custom duties, and other governmental
charges; and
(f) reserves for bad debts or allowances, credits or rebates
not covered by (a) through (e) above.
1.23. "NIH" shall mean the United States National Institutes of Health, or any
successor agency
having substantially the same functions.
1.24. "OPERATING PROFIT" shall mean the Net Sales received by Interneuron or
its Affiliates for Compound or Product, less Cost of Goods Sold, selling,
distribution and inventory management costs and other costs related to or
allocable to the achievement of Net Sales and determined in accordance
with GAAP.
1.25. "PARTY" shall mean HDCI or Interneuron.
1.26. "PATENT ASSETS" shall mean any and all issued United States and foreign
patents, patent applications and foreign counterparts thereof (which
shall be deemed to include certificates of invention and applications for
certificates of invention) which
(a) as of the Effective Date or at any time during the term of
this Agreement are owned by HDCI or which HDCI through
license or otherwise has or acquires rights (and is not
prohibited from sublicensing to third parties), and
(b) relate in any way to Compound, Product or any Improvement,
including but not limited to compositions of Compound
and/or Product, methods of their manufacture, or any uses
thereof, including all certificates of invention,
divisions, continuations, continuations-in-part, reissues,
renewals, extensions, supplementary protection certificates
or the like of any such patents, patent applications and
foreign counterparts thereof, including but not limited to
the patents, patent applications and foreign counterparts
thereof listed on Schedule 1.26 hereto, and including
domestic and foreign patents, patent applications and
foreign counterparts thereof covering any Improvements made
by HDCI.
1.27. "PRODUCT" shall mean any product in final form for commercial sale by
prescription, over-the-counter, or by any other method, which contains
Compound in any dosage form as an active ingredient.
1.28. "PROPRIETARY INFORMATION" shall mean any and all scientific, clinical,
regulatory, marketing, financial and commercial information or data,
whether communicated in writing, orally or by any other means, which is
provided by one Party to the other Party in connection with this
Agreement.
1.29. "ROYALTY YEAR" shall mean each successive twelve (12) month period
commencing with the first day of the first month in which occurs the
First Commercial Sale.
1.30. "SEC" means the United States Securities and Exchange Commission.
1.31. "TERRITORY" shall mean all of the countries in the world.
1.32. "THIRD PARTY(IES)" shall mean a person or entity who or which is neither
a Party nor an Affiliate
of a Party.
1.33. "VALID CLAIM" means a claim of an issued and unexpired patent included
within the Patent Assets, which has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or for which an appeal has
not been filed within the time allowed for appeal, and which has not been
disclaimed, denied or admitted to be invalid or unenforceable through
reissue or disclaimer or otherwise.
ARTICLE II
LICENSE; SUBLICENSES
2.1. LICENSE GRANT. HDCI hereby grants to Interneuron an exclusive (even as to
HDCI), license under the Patent Assets and HDCI Know-How, including the
right to grant sublicenses, to develop, make, have made, use, import,
offer for sale, market and sell and otherwise dispose of Compound and
Product, including any Improvements thereto, in the Territory.
2.2. IMPROVEMENTS BY INTERNEURON. Title to any general technology or
Improvement developed or discovered by Interneuron in connection with the
license granted under Section 2.1 above shall be vested solely in
Interneuron.
2.3. SUBLICENSES.
(a) Interneuron shall have the right to grant sublicenses to
Third Parties to develop, make, have made, use, import,
market, sell, have sold, offer to sell and import Compound
and Product in the Territory. Any sublicense by Interneuron
of the rights granted to Interneuron in this Article 2
shall not be inconsistent with the terms of this Agreement
and shall include an obligation for the sublicensee to
comply with the provisions of Article 4 of this Agreement.
Interneuron shall promptly provide HDCI with a fully
executed copy of any sublicense agreement.
(b) Upon termination of this Agreement by Interneuron, HDCI
shall accept assignment of sublicenses, provided that:
(i) the sublicensee is not in breach of its sublicense
agreement at the time of termination of this
Agreement; and
(ii) the sublicensee acquires no rights from or
obligations on the part of HDCI, other than those
that are specifically granted in this Agreement, and
the sublicensee assumes all obligations to HDCI
required of Interneuron by this Agreement.
ARTICLE III
DEVELOPMENT AND COMMERCIALIZATION
3.1. EXCHANGE OF INFORMATION. Upon execution of this Agreement, HDCI shall
disclose to Interneuron in writing all HDCI Know-How and Patent Assets
not previously disclosed to Interneuron. During the term of this
Agreement, HDCI shall also promptly disclose to Interneuron in writing on
an ongoing basis all HDCI Know-How and Patent Assets.
3.2. DILIGENCE; DEVELOPMENT AND COMMERCIALIZATION. Interneuron shall use
commercially reasonable efforts to develop and commercialize Product. As
used herein, "commercially reasonable efforts" shall mean efforts and
resources normally used by Interneuron for a product owned by it or to
which it has exclusive rights, which is of similar market potential at a
similar stage in its development or product life, taking into account
issues of safety and efficacy, product profile, the competitiveness of
the marketplace, the proprietary position of the compound or product, the
regulatory and reimbursement structure involved, the profitability of the
applicable products, and other relevant factors.
Interneuron will be responsible for all remaining preclinical
development, toxicology and clinical development, including regulatory
filings, which are required for commercialization of Product in the
Territory. Interneuron shall notify HDCI upon the receipt of regulatory
approvals and of the date of First Commercial Sale.
Except as specifically set forth in Schedule 3.7 hereof, Interneuron
shall be responsible for all costs attributable to the development and
commercialization of Compound and Product which are incurred after the
Effective Date; provided that with respect to agreements entered into by
HDCI relating to Compound or Product prior to the Effective Date,
Interneuron shall be responsible only for the costs under those
agreements referred to in Schedule 3.7 hereof.
3.3. REGULATORY MATTERS. Interneuron shall own, control and retain primary
legal responsibility for the preparation, filing and prosecution of all
filings and regulatory applications required to obtain authorization to
commercially develop, sell and use Product in each country in the
Territory. HDCI shall transfer to Interneuron as soon as practicable
after the Effective Date (but in no event later than 30 days) any IND or
other regulatory filings relating to Compound or Product owned by HDCI
and HDCI shall use its best efforts to allow Interneuron to cross
reference any other IND or Drug Master File relating to Compound or
Product to the extent HDCI is legally able to do so.
3.4. TRADEMARK. Interneuron shall select, own and maintain trademarks for
Product.
3.5. MANUFACTURING. Interneuron shall be responsible for manufacture of the
Compound and Product.
3.6. ADVERSE EVENTS. HDCI shall promptly furnish to Interneuron all
information concerning safety or utility of Compound or Product, such as
adverse or unexpected side effects, injury or other events associated
with uses, studies, investigations or tests of Compound or Product,
whether or not HDCI is required to report such information to any
regulatory authority and whether or not such event is determined to be
attributable to Compound or Product.
3.7. THIRD PARTY AGREEMENTS. Agreements entered into by HDCI with third
parties prior to the
Effective Date relating to the Compound or Product shall be handled in
accordance with Schedule 3.7.
ARTICLE IV
CONFIDENTIALITY AND PUBLICITY
4.1. NON-DISCLOSURE AND NON-USE OBLIGATIONS. All Proprietary Information
disclosed by one Party to the other Party hereunder shall be maintained
in confidence and shall not be disclosed to any Third Party or used for
any purpose except as expressly permitted herein without the prior
written consent of the Party that disclosed the Proprietary Information
to the other Party. The foregoing non-disclosure and non-use obligations
shall not apply to the extent that such Proprietary Information:
(a) is known by the receiving Party at the time of its receipt,
and not through a prior disclosure by the disclosing Party,
as documented by business records;
(b) is properly in the public domain;
(c) is subsequently disclosed to a receiving Party by a Third
Party who may lawfully do so and is not under an obligation
of confidentiality to the disclosing Party; or
(d) is developed by the receiving Party independently of
Proprietary Information received from the other Party, as
documented by research and development records.
4.2. PERMITTED DISCLOSURE OF PROPRIETARY INFORMATION. Notwithstanding Section
4.1, a Party receiving Proprietary Information of another Party may
disclose such Proprietary Information:
(a) to governmental or other regulatory agencies in order to
obtain patents subject to this Agreement, or to gain
approval to conduct clinical trials or to market Product,
but such disclosure may be only to the extent reasonably
necessary to obtain such patents or authorizations;
(b) by each of Interneuron or HDCI to its respective agents,
consultants, Affiliates, Interneuron's sublicensees and/or
other Third Parties for the research and development,
manufacturing and/or marketing of the Compound and/or
Product (or for such parties to determine their interests
in performing such activities) on the condition that such
Third Parties agree to be bound by the confidentiality
obligations contained in this Agreement; or
(c) if required to be disclosed by law or court order, provided
that notice is promptly delivered to the non-disclosing
Party in order to provide an opportunity to challenge or
limit the disclosure obligations; PROVIDED, HOWEVER,
without limiting any of the foregoing, it is understood
that either Party or its Affiliates may make disclosure of
this Agreement and the terms hereof in
any filings required by the SEC, may file this Agreement as
an exhibit to any filing with the SEC and may distribute
any such filing in the ordinary course of its business
provided that certain financial and other confidential
terms are redacted from such filings to the extent
possible, in consultation with the other Party.
(d) Neither Party shall use the name of the other Party in any
publicity or advertising without the prior written approval
of the other Party. Upon execution of this Agreement, the
Parties may issue a press release in the form attached as
Appendix 4.2(d).
ARTICLE V
PAYMENTS; ROYALTIES AND REPORTS
5.1. LICENSE FEE. Subject to the terms and conditions contained in this
Agreement, Interneuron shall pay HDCI a fee equal to $500,000 within ten
(10) days following the Effective Date.
5.2. MILESTONE PAYMENTS. Subject to the terms and conditions contained in this
Agreement, Interneuron shall pay HDCI the following milestone payments,
each milestone payment to be made no more than once with respect to the
achievement of each such milestone for Compound:
(a) $[*] upon initiation of any Phase 2 safety clinical trial
in populations at risk for HIV infection or other sexually
transmitted diseases by the MRC, NIH or other governmental
or non-commercial sponsor which (i) is useful for FDA
approval, and (ii) conforms with the guidelines set forth
in Appendix 5.2(a), and for which the MRC, NIH or other
governmental or non-commercial sponsor agrees to provide
funding to cover at least [*] percent ([*] %) of the costs
of the clinical trial (excluding the costs of the supply of
Compound and any costs for required regulatory filings),
provided that if the MRC, NIH or other governmental or
non-commercial sponsor agrees to provide less than [*]
percent ([*] %) of such costs, the payment to HDCI
hereunder shall be reduced by the amount of funding for
such study provided by Interneuron (excluding the costs of
the supply of Compound and any costs for required
regulatory filings); and
(b) $[*] upon initiation of any Phase 3 efficacy clinical trial
or the Phase 3 portion of any Phase 2/3 clinical trial in
populations at risk for HIV infection or other sexually
transmitted diseases by the MRC, NIH or other governmental
or non-commercial sponsor which (i) is useful for FDA
approval, and (ii) conforms with the guidelines set forth
in Appendix 5.2(b), and for which the MRC, NIH or other
governmental or non-commercial sponsor agrees to provide
funding to cover at least [*] percent ([*] %) of the costs
of the clinical trial (excluding the costs of the supply of
Compound and any costs for required regulatory filings),
provided that if the MRC, NIH or other governmental or
non-commercial sponsor agrees to provide less than [*]
percent ([* ]%) of such costs, the payment to HDCI
hereunder shall be reduced by the amount of funding for
such study provided by Interneuron (excluding the costs of
the supply of Compound and any costs for required
regulatory filings). Notwithstanding the foregoing, in the
event that (1) the MRC, NIH or other governmental or
non-commercial sponsor conducts a Phase 3 efficacy clinical
trial (or a Phase 3 portion of any Phase 2/3 clinical
trial) that does not conform with the guidelines set forth
in Appendix 5.2(b) and (2) the final results of such
clinical trial demonstrate efficacy and are sufficient to
obtain approval of the Product by the FDA, then Interneuron
shall provide to HDCI the payment under this Section 5.2(b)
upon the receipt of FDA approval.
For purposes of this Section 5.2, initiation of a clinical trial shall
mean the date of enrollment of the first participant in such trial.
Interneuron shall notify HDCI in writing within sixty (60) days after
the achievement of each milestone, and such notice shall be accompanied
by payment of the appropriate milestone payment.
5.3. ROYALTIES; ROYALTY BUY-OUT OPTION.
5.3.1 ROYALTIES PAYABLE BY INTERNEURON.
(a) (i) Subject to the terms and conditions of this Agreement,
Interneuron shall pay to HDCI royalties in an amount equal
to the following percentages of Net Sales in each Royalty
Year by Interneuron or its Affiliates in each country in
the Territory where the manufacture, use or sale of such
Product would, absent the license granted hereunder,
infringe one or more Valid Claims of the Patent Assets in
such country:
AMOUNT OF NET SALES ROYALTY RATE
------------------- ------------
Up to $[*] million [*] %
Over $[*] million and up to $[*] million [*] %
More than $[*] million [*] %
Royalties on Net Sales at the rates set forth above shall
accrue as of the date of First Commercial Sale of Product
in such country and shall continue and accrue on Net Sales
on a country-by-country basis until the expiration of the
last applicable patent included within the Patent Assets,
which patent includes a Valid Claim that covers the
manufacture, use or sale of such Product or Compound in
such country. Thereafter, Interneuron shall not be required
to make any payments of royalties set forth in this Section
5.3.
----------------------
* Confidential treatment requested.
(ii) Subject to the terms and conditions of this Agreement,
Interneuron shall pay to HDCI [*] percent ([* ] %) of
Operating Profit on sales of Compound or Product by
Interneuron or its Affiliates in each country in the
Territory where the manufacture, use or sale of such
Product does not or would not infringe one or more Valid
Claims of the Patent Assets in such country, provided that
and for so long as, the manufacture, use or sale of such
Product would, absent the license granted hereunder,
infringe one or more Valid Claims of the Patent Assets in
the U.S., United Kingdom, France, Germany, Italy or Spain.
The foregoing share of Operating Profit to HDCI shall
accrue as of the date of First Commercial Sale of Product
in a country where the manufacture, use or sale of such
Product does not infringe one or more Valid Claims of the
Patent Assets in such country but would, absent the license
granted hereunder, infringe one or more Valid Claims of the
Patent Assets in the U.S., United Kingdom, France, Germany,
Italy or Spain and shall continue and accrue on a
country-by-country basis until the expiration of the last
applicable patent included within the Patent Assets in the
U.S., United Kingdom, France, Germany, Italy or Spain.
Thereafter, Interneuron shall not be required to make any
payments of Operating Profits set forth in this Section
5.3.
(b) The payment of royalties and percentage of Operating Profit
set forth above shall be subject to the following
conditions:
(i) that only one payment shall be due with respect to
the same unit of Product;
(ii) that in the event that Interneuron enters into a
sublicense in the Territory to a Third Party or
Third Parties, in lieu of royalty and Operating
Profit payments set forth in Section 5.3.1(a),
Interneuron shall pay HDCI [*] percent ([* ] %) of
sublicensing royalties on net sales of Product (s)
received by Interneuron from such sublicense(s); and
(iii) no royalties or Operating Profit sharing shall
accrue on the disposition of Product by Interneuron,
Affiliates or sublicensees as samples (promotion or
otherwise) or as donations (for example, to
non-profit institutions or government agencies) or
to the extent Product is made available at cost or
at a substantial discount from the prevailing price
for Product in the U.S. pursuant to Section 2.3 of
the MRC 1996 Agreement or Section 2.2 of the MRC
1999 Agreement.
------------------------
* Confidential treatment requested.
* Confidential treatment requested.
(iv) HDCI shall remain responsible for payment of any
royalties due MRC or any other entity with whom HDCI
agreed to pay a royalty on Compound or Product prior
to the Effective Date.
5.3.2 ROYALTIES FOR BULK COMPOUND. In those cases where Interneuron sells bulk
Compound to be incorporated into Product, rather than a Product, to a
Third Party (excluding sales within or among Interneuron, its Affiliates
and/or its sublicensees), and is unable to determine Net Sales, royalties
set forth in this Article V shall be calculated as if the bulk Compound
is deemed to be Product.
5.3.3 COMPULSORY LICENSES. If a compulsory license is granted to a Third Party
with respect to Product in any country in the Territory with a royalty
rate lower than the royalty rate provided by Section 5.3.1, then the
royalty rate to be paid by Interneuron on Net Sales in that country under
Section 5.3.1 shall be reduced to the rate paid by the compulsory Third
Party licensee.
5.3.4 THIRD PARTY LICENSES. If one or more licenses from a Third Party or
Parties are obtained by Interneuron or its Affiliates to develop, make,
have made, use, sell or import Compound or Product in a particular
country within the Territory, [*] percent ([*] %) of any royalties or
other payments paid under such Third Party patent licenses by Interneuron
in such country for such Calendar Quarter shall be creditable against the
royalty or other payments to be paid to HDCI by Interneuron in such
country; provided, however, that the royalties payable to HDCI hereunder
shall not be reduced by more than [*] percent ([*] %) unless, absent the
said license(s), Interneuron or its Affiliates would be prevented from
practicing the Patent Assets licensed under Article 2 hereof, in which
case the royalties or other payments payable to HDCI hereunder may be
reduced by more than [*] percent ([*] %).
5.4. ROYALTY BUY-OUT OPTION.
5.4.1 OPTION. At any time prior to the date Interneuron is notified officially
by a representative of the study group in writing or verbally of the
preliminary statistical evaluation of the Pivotal Trial, Interneuron
shall have the option (the "Royalty Buy-Out Option"), to buy out the
royalty obligations set forth in Section 5.3 for $[*], whereupon this
license shall become a perpetual, royalty-free fully-paid up license. For
purposes of this Section 5.4.1 the Pivotal Trial shall mean the clinical
trial described in Section 5.2(b).
5.4.2 NOTICE PERIOD. In the event Interneuron determines to exercise the
Royalty Buy-Out Option, it shall notify HDCI in writing. The date of
Interneuron's notice to HDCI shall be the Election Date.
5.4.3 PAYMENTS IN INTERNEURON STOCK. In the event that Interneuron elects to
exercise the
Royalty Buy-out Option, [*] percent ([*] %) of the payment shall be due
in cash and [*] percent ([*] %) of the payment shall be due in shares of
Interneuron Stock. The number of shares of Interneuron Stock to be issued
as [* ] % of the payment to HDCI shall equal the number of shares of
Interneuron Stock, rounded to the nearest whole number, having a Fair
Market Value as of the Election Date equal to $[* ].
5.5. PAYMENTS FROM SUBLICENSEE. Interneuron will pay HDCI [*] percent ([*] %)
of (i) any lump sum, milestone or other cash payments (other than
royalties) or (ii) any securities of a sublicensee issued by such
sublicensee, in either case received by Interneuron from sublicensees of
Interneuron which payments or securities constitute advance royalties or
other consideration for a sublicense agreement relating to the Patent
Assets, excluding amounts received by Interneuron from Third Parties in
connection with the issuance of debt or equity securities in Interneuron
or to fund or reimburse research and development of Product; PROVIDED,
HOWEVER, that (i) any payments made to HDCI under this Section 5.5 that
arise as a result of payments from sublicensees that are refunded by
Interneuron shall be refunded by HDCI to Interneuron, or at Interneuron's
election, credited against the milestones payable to HDCI listed under
Section 5.2 (a) and (b) and (ii) only one payment hereunder shall be due
with respect to the same payment made to Interneuron by a sublicensee.
In the event Interneuron sublicenses the rights granted under Article 2
hereof and, in lieu of the consideration referred to in the immediately
preceding paragraph, Interneuron receives from the sublicensee for such
sublicense rights in the sublicensee's technology, products or compounds
(the "Technology"), then (a) if Interneuron sublicenses the Technology to
a subsequent Third Party, Interneuron shall pay to HDCI [*] percent ([*]
%) of any lump sum, milestone, royalty, other cash payments or securities
received by Interneuron from the subsequent Third Party sublicensee which
payments constitute consideration for a sublicense of the Technology to
the subsequent Third Party sublicensee or (b) if Interneuron or its
Affiliates commercializes the Technology internally, Interneuron shall
pay to HDCI [*] percent ([*] %) of the operating profit on sales of
product containing or utilizing the Technology. For purposes of this
Section 5.5, "operating profit" shall mean the net sales received by
Interneuron or its Affiliates for a product containing or utilizing the
Technology, less the direct and indirect manufacturing costs incurred by
Interneuron or its Affiliates specifically allowable to and directly
attributable to the product, selling, distribution and inventory
management costs and other
---------------------
* Confidential treatment requested.
* Confidential treatment requested.
costs related to or allocable to the achievement of net sales and
determined in accordance with GAAP.
5.6. REPORTS; PAYMENT OF ROYALTY. Following the First Commercial Sale of a
Product and during the term of the Agreement for so long as royalty or
Operating Profit payments are due, Interneuron shall furnish to HDCI a
quarterly written report for the Calendar Quarter showing the sales of
all Products subject to royalty or Operating Profit payments sold by
Interneuron, its Affiliates and its sublicensees in the Territory during
the reporting period and the royalties or Operating Profit payable under
this Agreement. Reports shall be due on the ninetieth (90th) day
following the close of each Calendar Quarter. Royalties and Operating
Profit shown to have accrued by each royalty report, if any, shall be due
and payable on the date such royalty report is due. Interneuron shall
keep complete and accurate records in sufficient detail to enable the
royalties and Operating Profit payable hereunder to be determined.
5.7. AUDITS.
(a) Upon the written request of HDCI and not more than once in
each Calendar Year, Interneuron shall permit an independent
certified public accounting firm of nationally recognized
standing selected by HDCI and reasonably acceptable to
Interneuron, to have access during normal business hours at
times mutually convenient to the Parties and upon
reasonable notice to Interneuron to such of the records of
Interneuron as may be reasonably necessary to verify the
accuracy of the royalty reports hereunder for any year
ending not more than twenty-four (24) months prior to the
date of such request. The accounting firm shall disclose
only to HDCI only whether the royalty reports are correct
or incorrect and the specific details concerning any
discrepancies.
(b) If such accounting firm concludes, and Interneuron agrees,
that additional royalties or Operating Profit were owed
during such period, Interneuron shall pay the additional
royalties or Operating Profit (plus accrued interest at the
rate announced by Fleet National Bank in Boston,
Massachusetts (or its successors or assigns) as its prime
rate in effect on the date that such payment was first due)
within sixty (60) days of the date HDCI delivers to
Interneuron such accounting firm's written report so
concluding; provided that, in the event that Interneuron
shall not be in agreement with the conclusion of such
report (a) Interneuron shall not be required to pay such
additional royalties or Operating Profit and (b) such
matter shall be resolved pursuant to the provisions of
Section 9.6 herein. In the event such accounting firm
concludes that amounts were overpaid by Interneuron during
such period, HDCI shall reimburse Interneuron the amount of
such overpayment within thirty (30) days of receipt of such
accounting firm's written report. The fees charged by such
accounting firm shall be paid by HDCI; PROVIDED, HOWEVER,
that if an error in favor of
HDCI in the payment of royalties or Operating Profit of
more than the greater of (i) $100,000 or (ii) ten percent
(10%) of the royalties or Operating Profit due hereunder
for the period being reviewed is discovered, then the fees
and expenses of the accounting firm shall be reimbursed by
Interneuron.
(c) Upon the expiration of twenty-four (24) months following
the end of any Royalty Year the calculation of royalties or
Operating Profit payable with respect to such year shall be
binding and conclusive upon HDCI, and Interneuron shall be
released from any liability or accountability with respect
to royalties and Operating Profit for such year.
(d) HDCI shall treat all financial information subject to
review under this Section 5.7 in accordance with the
confidentiality provisions of this Agreement.
5.8. PAYMENT EXCHANGE RATE. All payments to HDCI under this Agreement shall be
made in United States dollars. In the case of sales outside the United
States, the rate of exchange to be used in computing the amount of
currency equivalent in United States dollars due HDCI shall be calculated
monthly in accordance with GAAP and based on the average of the
conversion rates on the first and last Business Day of each month during
each Calendar Quarter published in the Wall Street Journal, Eastern
edition.
5.9. TAX WITHHOLDING. If laws, rules or regulations require withholding of
income taxes or other taxes imposed upon payments set forth in this
Article V, HDCI shall provide Interneuron, prior to any such payment,
annually or more frequently if required, with all forms or documentation
required by any applicable taxation laws, treaties or agreements to such
withholding or as necessary to claim a benefit thereunder (including, but
not limited to, Form 1001 and any successor form) and Interneuron shall
make such withholding payments as required and subtract such withholding
payments from the payments set forth in this Article V. Interneuron shall
submit appropriate proof to HDCI of payment of the withholding taxes
within a reasonable period of time. Interneuron will use commercially
reasonable efforts consistent with its usual business practices to ensure
that any withholding taxes imposed are reduced as far as possible under
the provisions of the current or any future taxation treaties or
agreements between foreign countries, and HDCI shall cooperate with such
efforts.
5.10. INTEREST ON LATE PAYMENTS. Except as otherwise set forth in this
Agreement, any payments by Interneuron that are not paid on or before the
date such payments are due under this Agreement shall bear interest, to
the extent permitted by applicable law, at the rate announced from time
to time by Fleet National Bank in Boston, Massachusetts (or its successor
or assigns) as its prime rate, calculated on the number of days payment
is delinquent; PROVIDED, that if such payment has been delayed because it
is related to a dispute raised by a Party in good faith that is
undergoing the dispute resolution procedures set forth in Section 9.6
hereof, interest shall be calculated on the number of days payment is
delinquent starting on the day after such dispute is finally resolved.
5.11. EXCHANGE CONTROLS. Notwithstanding any other provision of this Agreement,
if at any time legal restrictions prevent the prompt remittance of part
or all of the royalties with respect to Net Sales or Operating Profits in
any country, payment shall be made through such lawful means or methods
as Interneuron may determine. When in any country the law or regulations
prohibit both the transmittal and deposit of royalties on sales or
Operating Profits in such a country, royalty payments or Operating
Profits shall be suspended for as long as such prohibition is in effect
(and such suspended payments shall not accrue interest), and promptly
after such prohibition ceases to be in effect, all royalties that
Interneuron or its Affiliates or sublicensees would have been obligated
to transmit or deposit, but for the prohibition, shall be deposited or
transmitted, as the case may be, to the extent allowable (with any
interest earned on such suspended royalties which were placed in an
interest-bearing bank account in that country, less any transactional
costs). If the royalty rate specified in this Agreement should exceed the
permissible rate established in any country, the royalty rate for sales
in such country shall be adjusted to the highest legally permissible or
government-approved rate.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. HDCI REPRESENTATIONS AND WARRANTIES. HDCI represents and warrants to
Interneuron that as of the Effective Date:
(a) to the best of its knowledge, there is no reason that the
presumption of validity would not apply to the issued
patents included in the Patent Assets and no reason that a
court of competent jurisdiction would, upon investigation,
find such patents unenforceable;
(b) this Agreement has been duly executed and delivered by it
and constitutes legal, valid, and binding obligations of it
enforceable against it in accordance with its terms;
(c) no approval, authorization, consent, or other order or
action of or filing with any court, administrative agency
or other governmental authority is required for the
execution and delivery by it of this Agreement or the
consummation by it of the transactions contemplated hereby;
(d) it has the full right, power and authority to enter into
and deliver this Agreement, to perform and to grant the
licenses granted under Article II hereof and to consummate
the transactions contemplated hereby. All corporate acts
and other proceedings required to be taken to authorize
such execution, delivery, and consummation have been duly
and properly taken and obtained;
(e) it has not previously assigned, transferred, conveyed or
otherwise encumbered its right, title and interest in the
Patent Assets or HDCI Know-How or entered into any
agreement with any Third Party which is in conflict with
the
rights granted to Interneuron pursuant to this Agreement;
(f) it is the sole and exclusive owner under the Patent Assets
and HDCI Know-How, all of which are free and clear of any
liens, charges and encumbrances, and no other person,
corporate or other private entity, or governmental entity
or subdivision thereof, has any valid claim of ownership
with respect to the Patent Assets and HDCI Know-How,
whatsoever. HDCI shall notify the U.S. Patent & Trademark
Office and foreign patent offices that Procept, Inc.
changed its name to HDCI and take any other actions
necessary to effect this change;
(g) to the best of HDCI's knowledge, the Patent Assets and HDCI
Know-How practiced as contemplated herein and the
development, manufacture, use and sale of Compound and
Products do not and will not infringe any patent rights
owned or possessed by any Third Party;
(h) there are no claims, judgments or settlements against or
owed by HDCI or pending or, threatened claims or litigation
relating to the Patent Assets and HDCI Know-How;
(i) it has disclosed to Interneuron all relevant information
known by it regarding the Patent Assets and HDCI Know-How
reasonably related to the activities contemplated under
this Agreement; and
(j) to its knowledge, no contract research organization,
corporation, business entity or individual which have been
involved in any studies conducted for the purpose of
obtaining regulatory approvals have been debarred
individuals or entities within the meaning of 21 U.S.C.
section 335(a) or (b).
6.2. WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, HDCI MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PATENT ASSETS, HDCI KNOW-HOW OR OTHER SUBJECT MATTER OF THIS
AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF
THE FOREGOING.
6.3. INVESTMENT REPRESENTATIONS.
(a) ACQUISITION FOR INVESTMENT. In the event the Royalty
Buy-Out Option is exercised, HDCI hereby represents that it
is acquiring the Interneuron Stock as principal for its own
account for investment and not with a view to any sale or
distribution thereof within the meaning of the 1933 Act and
not for the benefit of any other person. HDCI understands
that the Interneuron Stock that may be acquired hereby will
not been registered under the 1933 Act, by reason of its
issuance by Interneuron in a transaction exempt from the
registration requirements of the 1933 Act, and
that any such unregistered shares must be held by HDCI
indefinitely unless a subsequent disposition thereof is
registered under the 1933 Act and any applicable state
securities or blue sky laws or unless an exemption from
registration is available.
(b) ACKNOWLEDGMENTS OF HDCI. HDCI acknowledges that:
(i) HDCI has obtained all the necessary information
concerning Interneuron that it requires and that it
does not require any additional information about
Interneuron or the Interneuron Stock;
(ii) an investment in the Interneuron Stock is highly
speculative and could result in a total loss of its
investment and that HDCI has a net worth sufficient
to permit HDCI to afford a total loss of its
investment without substantially affecting HDCI `s
present business affairs;
(iii) in completing the sale of the Interneuron Stock to
HDCI, Interneuron will rely on the representations
and warranties of HDCI contained in this Agreement;
(iv) Interneuron has not provided HDCI with investment,
legal or tax advice or acted as an adviser with
respect to this subscription and HDCI is relying
solely on its own professional advisers, if any, for
any necessary advice; and
(v) HDCI has had an opportunity to ask questions and
receive answers concerning Interneuron and its
proposed business, and that any request for such
information has been complied with to HDCI's
satisfaction.
(c) CERTIFICATES TO BEAR LEGENDS. The certificate or
certificates evidencing the Interneuron Stock shall bear
the following legend until such time as the legend may be
removed pursuant to Section 6.2(d) herein:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT."
(d) REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legends
endorsed on each certificate for the Interneuron Stock
pursuant to Section 6.2(c) shall be
removed and Interneuron shall issue a certificate without
such legends to HDCI if (x) such Securities are registered
under the 1933 Act and a prospectus meeting the
requirements of Section 10 of the 1933 Act is available and
the Interneuron Stock is sold thereunder, or (y) there is
available an exemption from registration under the 1933
Act, and Interneuron shall have received an opinion of
counsel to HDCI to such effect.
6.4. INTERNEURON REPRESENTATIONS AND WARRANTIES. Interneuron represents and
warrants to HDCI that as of the Effective Date:
(a) this Agreement has been duly executed and delivered by it
and constitutes legal, valid, and binding obligations of it
enforceable against it in accordance with its terms;
(b) it has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. All corporate acts and other
proceedings required to be taken to authorize such
execution, delivery, and consummation have been duly and
properly taken and obtained; and
(c) no approval, authorization, consent, or other order or
action of or filing with any court, administrative agency
or other governmental authority is required for the
execution and delivery by it of this Agreement or the
consummation by it of the transactions contemplated hereby.
ARTICLE VII
PATENT MATTERS
7.1. FILING, PROSECUTION AND MAINTENANCE OF PATENT APPLICATIONS OR PATENTS.
Interneuron shall file, prosecute and maintain the patent applications
and patents included in the Patent Assets, in HDCI's name using counsel
reasonably acceptable to HDCI (including counsel listed on Schedule 7.1
hereto), in such countries in the Territory as Interneuron shall
determine in its sole discretion. HDCI shall be responsible for the
payment of all patent costs incurred prior to the Effective Date and
Interneuron shall pay all patent costs incurred after the Effective Date.
If Interneuron elects not to file, prosecute or maintain a patent
application or patent included in the Patent Assets, and advises HDCI in
writing that it intends not to file, prosecute, or maintain such patent
application or patent, HDCI shall have the right, at its sole expense, to
file, prosecute, or maintain such patent application or patent, and
Interneuron shall cooperate in the filing, prosecution, or maintenance of
such patent application or patent. In each case, the filing Party shall
give the non-filing Party an opportunity to review the text of the
application before filing, shall consult with the non-filing Party with
respect thereto, and shall supply the non-filing Party with a copy of the
application as filed, together with notice of its filing date and serial
number. The filing Party shall keep the non-filing Party advised of the
status of the actual and prospective patent application filings and upon
the request of the non-filing Party,
provide advance copies of any papers related to the filing, prosecution,
or maintenance of such patent application filings. Interneuron shall give
notice to HDCI of the grant, lapse, revocation, surrender, invalidation
or abandonment of any patent licensed to Interneuron by HDCI. The Party
that is the filing Party under this Section shall be responsible for the
payment of all costs and expenses related to such filing and subsequent
prosecution and maintenance thereof.
7.2. PATENT OFFICE PROCEEDINGS. Each Party shall inform the other Party of any
request for, filing, or declaration of any proceeding before a patent
office seeking to protest, oppose, cancel, reexamine, declare an
interference proceeding, initiate a conflicts proceeding, or analogous
process involving a patent application or patent included in the Patent
Assets. HDCI thereafter shall cooperate fully with Interneuron with
respect to any such patent office proceeding that Interneuron chooses in
its sole discretion to defend. HDCI will provide Interneuron with any
information or assistance that Interneuron reasonably may request.
Interneuron shall bear the expense of defending any such patent office
proceeding that Interneuron chooses to defend.
7.3. ENFORCEMENT AND DEFENSE.
(a) Each Party shall promptly give the other Party notice of
any infringement in the Territory of any patent application
or patent included in the Patent Assets that comes to such
Party's attention. The Parties will thereafter consult and
cooperate fully to determine a course of action, including,
without limitation, the commencement of legal action by any
Party. However, Interneuron, upon notice to HDCI, shall
have the first right to initiate and prosecute such legal
action at its own expense and in the name of HDCI and
Interneuron, or to control the defense of any declaratory
judgment action relating to Patent Assets. Interneuron
shall promptly inform HDCI if Interneuron elects not to
exercise such first right, and HDCI thereafter shall have
the right either to initiate and prosecute such action or
to control the defense of such declaratory judgment action
in the name of HDCI and, if necessary, Interneuron. In no
event shall Interneuron enter into any settlement which
would adversely affect the Patent Assets in any material
respect without the prior written consent of HDCI, which
consent shall not be unreasonably withheld.
(b) If Interneuron elects not to initiate and prosecute an
infringement or defend a declaratory judgment action in any
country in the Territory as provided in Subsection 7.3(a),
and HDCI elects to do so, the cost of any agreed-upon
course of action, including the costs of any legal action
commenced or any declaratory judgment action defended,
shall be borne solely by HDCI.
(c) For any such legal action or defense, in the event that any
Party is unable to initiate, prosecute, or defend such
action solely in its own name, the other Party will join
such action voluntarily and will execute all documents
necessary for the Party to prosecute, defend and maintain
such action. In connection with any such action, the
Parties will cooperate fully and will provide each other
with any information or assistance that either reasonably
may request. Each Party shall keep the other informed of
developments in any such action or proceeding, including,
to the extent permissible by law, the status of any
settlement negotiations and the terms of any offer related
thereto.
(d) Any recovery obtained by Interneuron or HDCI shall be
shared as follows:
(i) the Party that initiated and prosecuted, or
maintained the defense of, the action shall recoup
all of its costs and expenses incurred in connection
with the action, whether by settlement or otherwise;
(ii) the other Party then shall, to the extent possible,
recover its costs and expenses incurred in
connection with the action;
(iii) if HDCI initiated and prosecuted, or maintained the
defense of, the action, the amount of any recovery
remaining then shall be retained by HDCI; and
(iv) if Interneuron initiated and prosecuted, or
maintained the defense of, the action, the amount of
any recovery remaining shall be retained by
Interneuron except that HDCI shall receive a portion
equivalent to the royalties they would have received
on such remaining amount if such amount were deemed
Net Sales and the Royalty Buy-Out Option has not
been exercised.
(e) HDCI shall inform Interneuron of any certification
regarding any Patent Assets it has received pursuant to
either 21 U.S.C. Sections 355(b)(2)(A)(iv) or
(j)(2)(A)(vii)(IV) or under Canada's Patented Medicines
(Notice of Compliance) Regulations Article 5 and shall
provide Interneuron with a copy of such certification
within five (5) days of receipt. HDCI `s and Interneuron's
rights with respect to the initiation and prosecution, or
defense, of any legal action as a result of such
certification or any recovery obtained as a result of such
legal action shall be allocated as defined in Subsections
7.3(a) through (d); PROVIDED, HOWEVER, that Interneuron
shall exercise the first right to initiate and prosecute,
or defend, any action and shall inform HDCI of such
decision within fifteen (15) days of receipt of the
certification, after which time, if Interneuron has not
advised HDCI of its intention to initiate and prosecute, or
defend, such action, HDCI shall have the right to initiate
and prosecute, or defend, such action.
7.4. PATENT TERM EXTENSIONS AND SUPPLEMENTAL PROTECTION CERTIFICATES. The
Parties shall cooperate in obtaining patent term extensions or
supplemental protection certificates or their equivalents in any country
in the Territory where applicable and where desired by
Interneuron. If elections with respect to obtaining such extension or
supplemental protection certificates are to be made, Interneuron shall
have the right to make the election and HDCI shall abide by such
election.
ARTICLE VIII
TERM AND TERMINATION
8.1. TERM AND EXPIRATION. This Agreement shall be effective as of the
Effective Date and unless terminated earlier pursuant to Section 8.2 and
8.3 below, the term of this Agreement shall continue in effect until
expiration of all royalty and Operating Profit payment obligations
hereunder. Upon expiration of the royalty and Operating Profit
obligations with respect to a Product hereunder, including upon exercise
of the Royalty Buy-Out Option, Interneuron's license hereunder pursuant
to Section 2.1 shall become a fully paid-up, perpetual license.
8.2. TERMINATION BY NOTICE. Notwithstanding anything contained herein to the
contrary, Interneuron shall have the right to terminate this Agreement at
any time by giving thirty (30) days advance written notice to HDCI.
Except as set forth in this Agreement, in the event of such termination,
(i) the rights and obligations hereunder, excluding any payment
obligation which has accrued as of the termination date, shall terminate
and (ii) Interneuron shall have no further rights with respect to the
Patent Assets or HDCI Know-How.
8.3. TERMINATION.
8.3.1 TERMINATION FOR CAUSE. Either Party may terminate this Agreement by
notice to the other Party at any time during the term of this Agreement
as follows:
(a) if the other Party is in breach of its material obligations
hereunder by causes and reasons within its control, or has
breached, in any material respect, any representations or
warranties set forth in Article VI, and if capable of being
cured, has not cured such breach within ninety (90) days
after notice requesting cure of the breach provided,
however, that if the breach is not capable of being cured
within ninety (90) days of such written notice, the
Agreement may not be terminated so long as the breaching
Party commences and is taking commercially reasonable
actions to cure such breach as promptly as practicable; or
(b) upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership proceedings, or
upon an assignment of a substantial portion of the assets
for the benefit of creditors by the other Party; PROVIDED,
HOWEVER, in the case of any involuntary bankruptcy,
reorganization, liquidation, receivership or assignment
proceeding such right to terminate shall only become
effective if the Party consents to the involuntary
proceeding or such proceeding is not dismissed within
ninety (90) days after the filing thereof.
8.3.2 LICENSEE RIGHTS NOT AFFECTED.
(a) In the event Interneuron terminates this Agreement under
Section 8.3.1(b), or this Agreement is otherwise terminated
under Section 8.3.1(b), or HDCI is a debtor in a bankruptcy
proceeding, whether voluntary or involuntary, all rights
and licenses granted pursuant to this Agreement are, and
shall otherwise be deemed to be, for purposes of Section
365(n) of 11 U.S.C. Section101 et seq. (the "Bankruptcy
Code"), licenses of rights to "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code. The
Parties agree that Interneuron, as a licensee of such
rights under this Agreement, shall retain and may fully
exercise all of its rights, remedies and elections under
the Bankruptcy Code. The Parties further agree that, in the
event of the commencement of a bankruptcy proceeding by or
against HDCI under the Bankruptcy Code, Interneuron shall
be entitled to all applicable rights under Section 365 of
the Bankruptcy Code, including but not limited to, entitled
to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all
embodiments of such intellectual property upon written
request therefor by Interneuron.
(b) In the event Interneuron is a debtor in a bankruptcy
proceeding, whether voluntary or involuntary, all rights
and licenses granted pursuant to this Agreement are, and
shall otherwise be deemed to be, for purposes of Section
365 of the Bankruptcy Code, executory contracts. The
Parties agree that applicable law does not excuse HDCI from
accepting performance by, or rendering performance under
this Agreement and all rights and licenses granted
hereunder to, a person or entity other than Interneuron.
Interneuron, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its
rights, remedies and elections under the Bankruptcy Code.
8.4. EFFECT OF EXPIRATION OR TERMINATION. Expiration or termination of this
Agreement shall not relieve the Parties of any obligation accruing prior
to such expiration or termination. In addition to any other provisions of
this Agreement which by their terms continue after the expiration of this
Agreement, the provisions of Article IV shall survive the expiration or
termination of this Agreement and shall continue in effect for five (5)
years from the date of expiration or termination. Any expiration or early
termination of this Agreement shall be without prejudice to the rights of
any Party against the other accrued or accruing under this Agreement
prior to termination, including the obligation to pay royalties for
Product (s) or Compound sold prior to such termination.
Except as otherwise provided in this Section 8, in the event of
termination by Interneuron pursuant to Section 8.2, Interneuron shall
promptly return any and all HDCI Know-How in its possession at the time
of termination. If requested by HDCI, Interneuron and HDCI shall
negotiate in good faith the commercially reasonable terms of an exclusive
license from Interneuron to HDCI of all information, materials,
Improvements, processes,
formulas, data, inventions, know-how, trademarks, patent applications,
patents, regulatory approvals and intellectual property rights which
relate to Compound or Product and which are in Interneuron's possession
or control and as to which Interneuron has the right to license or
sublicense to HDCI without compensation to any third party (unless HDCI
agrees to pay Interneuron any such compensation) and Interneuron shall
use reasonable efforts to have all relevant contracts with third parties
related to Compound or Product assigned to HDCI, provided HDCI assumes
related obligations under such contracts.
Except as otherwise provided in this Section 8, in the event of
termination by HDCI pursuant to Section 8.3.1(a), Interneuron shall
promptly return any and all HDCI Know-How in its possession at the time
of termination. If requested by HDCI, Interneuron and HDCI shall
negotiate in good faith the commercially reasonable terms of a
non-exclusive license from Interneuron to HDCI of all information,
materials, Improvements, processes, formulas, data, inventions, know-how,
trademarks, patent applications, patents, regulatory approvals and
intellectual property rights which relate to Compound or Product and
which are in Interneuron's possession or control and as to which
Interneuron has the right to license or sublicense to HDCI without
compensation to any third party (unless HDCI agrees to pay Interneuron
any such compensation) and Interneuron shall use reasonable efforts to
have all relevant contracts with third parties related to Compound or
Product assigned to HDCI, provided HDCI assumes related obligations under
such contracts.
ARTICLE IX
MISCELLANEOUS
9.1. FORCE MAJEURE. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached the
Agreement for failure or delay in fulfilling or performing any term of
the Agreement during the period of time 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, flood, embargo, war,
acts of war (whether war be declared or not), insurrection, riot, civil
commotion, strike, lockout or other labor disturbance, act of God or act,
omission or delay in acting by any governmental authority or the other
Party. The affected Party shall notify the other Party of such force
majeure circumstances as soon as reasonably practicable.
9.2. ASSIGNMENT. The Agreement may not be assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or obligations
hereunder be assigned or transferred by a Party; PROVIDED, HOWEVER, that
either Party may assign this Agreement and its rights and obligations
hereunder to an Affiliate or in connection with the transfer or sale of
all or substantially all of its assets related to Compound or Product or
its business or in the event of its merger or consolidation or change in
control or similar transaction. Except as otherwise set forth herein, any
permitted assignee shall assume all obligations of its assignor under
this Agreement.
9.3. SEVERABILITY. In the event that any of the provisions contained in this
Agreement are held 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, unless the absence of the
invalidated provision(s) adversely affect the substantive rights of the
Parties. In such event, the Parties shall replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable provision(s)
which, insofar as practical, implement the purposes of this Agreement.
9.4. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally, sent by facsimile (and promptly confirmed by personal
delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to Interneuron to:
Interneuron Pharmaceuticals, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. to:
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by facsimile on a Business Day, upon confirmed delivery by
nationally-recognized overnight courier if so delivered and on the third
Business Day following the date of mailing if sent by registered or certified
mail.
9.5. APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the United States of America and State of New
York and the United States without reference to any rules of conflict of
laws.
9.6. DISPUTE RESOLUTION. The Parties agree to attempt initially to solve all
claims, disputes, or controversies arising under, out of, or in
connection with this Agreement by conducting good faith negotiations. If
the Parties are unable to settle the matter between themselves within
forty-five (45) days, either Party may initiate mediation upon written
notice to the other Party. If the Parties have not reached a settlement
within forty-five (45) days of the initiation of the mediation, then
either Party may initiate binding arbitration proceedings. Whenever a
Party shall decide to institute arbitration proceedings, it shall give
written
notice to that effect to the other Party. The Party giving such notice
shall refrain from instituting the arbitration proceedings for a period
of sixty (60) days following such notice. During such period, the Parties
shall continue to make good faith efforts to amicably resolve the dispute
without arbitration. Any arbitration hereunder shall be conducted under
the rules of the American Arbitration Association ("AAA"). Each such
arbitration shall be conducted by a panel of three arbitrators: one
arbitrator shall be appointed by each of Interneuron and HDCI and the
third shall be appointed by the AAA. Any such arbitration shall be held
in New York, New York. The arbitrators shall have the authority to grant
specific performance. Judgment upon the award so rendered may be entered
in any court having jurisdiction or application may be made to such court
for judicial acceptance of any award and an order of enforcement, as the
case may be. In no event shall a demand for arbitration be made after the
date when institution of a legal or equitable proceeding based on such
claim, dispute or other matter in question would be barred by the
applicable statute of limitations. Each Party shall bear its own costs
and expenses incurred in connection with any arbitration proceeding and
the Parties shall equally share the cost of the arbitration levied by the
AAA
9.7. ENTIRE AGREEMENT. This Agreement 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. This Agreement
may be amended, or any term hereof modified, only by a written instrument
duly executed by all Parties hereto.
9.8. INDEPENDENT CONTRACTORS. It is expressly agreed that the Parties shall be
independent contractors and that the relationship between the Parties
shall not constitute a partnership, joint venture or agency. Neither
Party 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 consent of such other Party.
9.9. WAIVER. The waiver by a Party hereto of any right hereunder or the
failure to perform or of a breach by another 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.
9.10. HEADINGS. The captions to the several Articles and Sections hereof are
not a part of the Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
9.11. COUNTERPARTS. The 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.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
Name: ▇▇▇▇ ▇▇▇
Title: Vice Chairman
INTERNEURON PHARMACEUTICALS, INC.
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: President and Chief Executive Officer
SCHEDULE 1.26
PATENT ASSETS
---------------------------------------------------------------------------------------------------------------------
DOCKET SUMMARY OF CLAIMS CURRENT STATUS
(US FILING)
---------------------------------------------------------------------------------------------------------------------
PRO93-13 Use of aldehyde/aromatic sulfonic acid condensates to Abandoned in favor of
(11/23/93) inhibit gp120/CD4 binding and HIV infection of CD4+ PRO93-13A
cells in an individual and in blood preparations.
---------------------------------------------------------------------------------------------------------------------
PRO93-13A Use of aldehyde/aromatic sulfonic acid condensates to Issued as U. S. Patent 5,614,559
(5/19/94) inhibit or treat HIV infection in an individual, and to (3/25/97)
inhibit HIV infection in a blood preparation. Filed in PCT (11/17/94)
EPO Application contains composition claims. National/regional filings in
Canada, Japan, EPO (only)
(5/23/96)
---------------------------------------------------------------------------------------------------------------------
PRO93-13A2** Use of aldehyde/aromatic sulfonic acid condensates to Issued as U. S. Patent 5,677,343
(6/6/95) prevent or treat HIV infection in an individual, and to (10/14/97)
inhibit HIV infection in a blood preparation. No international filing
Composition claims abandoned.
---------------------------------------------------------------------------------------------------------------------
PRO93-13AB** Composition claims to narrow or monodispersed Issued as U. S. Patent 6,075,050
(6/6/95) condensation polymer of naphthalene sulfonic acid and (6/13/00)
aldehyde. Method claims abandoned. No international filing
---------------------------------------------------------------------------------------------------------------------
[*] [*] [*]
---------------------------------------------------------------------------------------------------------------------
PRO97-01 Method of preventing pregnancy. Issued as U.S. Patent 5,958,399
(5/1/97) (9/28/99)
Filed in PCT and South Africa
(4/30/98); Allowed in South
Africa (2/25/99)
National/regional filings in EPO,
Russian Fed., Canada, Mexico,
Brazil, China, Japan, S. Korea,
Australia and New Zealand
---------------------------------------------------------------------------------------------------------------------
-----------------------
* Confidential treatment requested.
** PRO93-13A2, AB, and AC filed as identical applications; AC abandoned
SCHEDULE 3.7
THIRD PARTY AGREEMENTS
1. MRC. Interneuron hereby assumes the obligations of HDCI under
Section 2.3 of the MRC 1996 Agreement and Section 2.2 of the MRC 1999 Agreement.
The Parties shall use commercially reasonable efforts to promptly execute an
agreement among MRC, HDCI and Interneuron which includes an obligation for MRC
to release HDCI from the obligations assumed by Interneuron hereunder and,
during the negotiation of such agreement, HDCI shall use commercially reasonable
efforts to assist in obtaining MRC's agreement to modify the terms of Section
2.3 of the MRC 1996 Agreement and Section 2.2 of the MRC 1999 Agreement as
acceptable to Interneuron.
HDCI shall remain responsible for and shall pay when due any royalties
required to be paid to MRC under the MRC 1996 Agreement.
HDCI shall pay any remaining study payments due to MRC under the MRC
1996 Agreement or the MRC 1999 Agreement to the extent incurred prior to the
Effective Date (including without limitation the payment of $[*] due upon
submission of the data summary and the payment of $[*] for additional studies as
outlined in the letter from MRC dated May 20, 1999). HDCI has received the final
data summary and shall use its best efforts to obtain all research results from
MRC under the MRC 1999 Agreement, and shall provide such data summary and
research results to Interneuron when received.
2. DAIDS. HDCI shall pay any remaining amounts due for the distribution
of Compound (anticipated to be less than $[*]) or any other payments to the
extent incurred prior to the Effective Date under the Clinical Trial Agreement
between the Division of AIDS, National Institute of Allergy and Infectious
Diseases ("DAIDS") and HDCI dated March 3, 1999 (the "NIH Agreement").
Notwithstanding the foregoing, Interneuron shall be responsible for any costs
associated with an optional ancillary study involving the analysis of plasma
under the NIH Agreement payable after the Effective Date (anticipated to be
approximately $[* ]) only if Interneuron notifies HDCI that Interneuron wants
such study performed. HDCI shall use its best efforts to obtain the research
results from DAIDS and shall provide such research results to Interneuron when
received. In the event HDCI is unable to obtain the research results from DAIDS,
HDCI hereby grants Interneuron permission to obtain the data directly from
DAIDS.
3. SCHWEIZERHALL. Promptly after the Effective Date, HDCI shall terminate
the Agreement between HDCI and Schweizerhall dated February 10, 2000 (the
"Schweizerhall Agreement"). HDCI shall be responsible for any costs associated
with the termination of the Schweizerhall Agreement.
----------------------
* Confidential treatment requested.
4. PHARM-ECO. HDCI shall use its best efforts to obtain the results of
Pharm-Eco's activities under the Research and Manufacturing Contract between
HDCI and Pharm-Eco Laboratories, Inc. ("Pharm-Eco") dated March 14, 1994 (the
"Pharm-Eco Agreement") from Pharm-Eco and shall provide such results to
Interneuron when received. HDCI shall pay any remaining amounts due to Pharm-Eco
to the extent incurred prior to the Effective Date including without limitation
the costs of the May, 2000 stability study pull, except that Interneuron shall
be responsible for the payment of any fees for the one (1) stability study pull
scheduled to be performed after the Effective Date of this Agreement (which are
anticipated to be approximately $[*]). As set forth in the letter from Pharm-Eco
to the FDA dated June 8, 2000, Interneuron may cross-reference or otherwise
refer to the drug master files for the Compound.
5. DOW. HDCI shall inform Dow Pharmaceutical Sciences ("Dow") that HDCI
grants its permission for Interneuron to continue the stability studies and
protocols that are being conducted at Dow. HDCI shall pay any remaining amounts
due to Dow to the extent incurred prior to the Effective Date (including without
limitation, the fee of approximately $[* ] for the stability study pull
authorized on April 19, 2000) and Interneuron shall be responsible for the
payment of any fees for any stability study pulls performed after the Effective
Date of this Agreement. HDCI shall use its best efforts to obtain the data
generated by Dow and shall provide such data to Interneuron when it is received.
----------------------
* Confidential treatment requested.
APPENDIX 4.2
FORM OF PRESS RELEASE
APPENDIX 5.2(A)
PHASE 2 STUDY GUIDELINES
Phase 2 clinical trials of vaginal microbicides are designed primarily
to evaluate safety in populations of women at risk for acquiring HIV infection
and/or other sexually transmitted diseases. It is envisioned that these studies
will be conducted in developing countries; [*] female participants will be asked
to apply the product for two or more weeks while engaging in sexual intercourse.
Detailed safety assessments will be performed on each participant.
A Phase 2 study protocol ("PREVENT") is being developed by the Medical
Research Council (MRC) Clinical Trials Unit (London, U.K.) in association with
investigators at Imperial College School of Medicine (London, U.K.), The
Institute for Tropical Medicine (Antwerp, Belgium), the MRC Programme on AIDS in
Uganda (Entebbe, Uganda), Nsambya Hospital (Kampala, Uganda) and the CENTRE DE
CONFIANCE (Abidjan, Cote d'Ivoire). The study is partially funded through a
grant awarded by the European Commission. Two populations will be involved: a
cohort of female commercial sex workers recruited in Abidjan, Cote d'Ivoire, and
a cohort of women recruited at family planning and infertility clinics in
Uganda. Currently, it is envisioned that [*] women will be randomized to receive
PRO 2000 Gel ([*]) or a matched placebo gel ([*]). These participants will be
asked to apply the gel prior to each act of sexual intercourse for four weeks.
Pelvic examinations (with colposcopy) will be conducted at [* ] intervals, and
the incidence of epithelial disruption determined. In addition, effects on the
vaginal microenvironment and laboratory safety parameters will be assessed.
Acceptability will be assessed using questionnaires.
--------------------
* Confidential treatment requested.
APPENDIX 5.2(B)
PHASE 3 STUDY GUIDELINES
Phase 3 clinical trials of vaginal microbicides are designed to gather
information on long-term safety and protective efficacy. Such studies will be
conducted in populations of women who are at risk for acquiring HIV infection
and/or other sexually transmitted diseases. The sample size will need to be
sufficiently large to assess the risks and benefits of the product; exact
numbers of participants will be determined by statisticians based on the level
of protection anticipated, the proposed dosing period, the incidence of
infection in the target population(s), and the expected loss to follow-up.
The HIV Prevention Trials Network (HPTN) of the National Institute of
Allergy and Infectious Diseases (NIAID) is developing a protocol for a Phase 3
trial. The HPTN Science Working Group currently envisions a multi-center,
randomized, double-blind, placebo-controlled design that will be sized to
detect, with statistical significance, an [*] % or [* ] reduction in HIV/STD
transmission rates. Women will be asked to use the product prior to each act of
intercourse for six months or more, and will be monitored periodically for
evidence of infection and safety problems. For ethical reasons, the use of male
condoms by the participant's sexual partners will be promoted, but it is
envisioned that enrollment will be limited to women who report difficulty in
adhering to a program of consistent condom use. The protocol may be divided into
Phase 2 safety and Phase 3 safety and efficacy stages.
---------------------
* Confidential treatment requested.
APPENDIX 7.1
Patent Counsel Reasonably Acceptable to HDCI
1. ▇▇▇▇▇▇▇▇ (Ybet) ▇▇▇▇▇▇▇▇▇▇