Exhibit 10.16
RESTATED TRANSFER AGREEMENT
(hereinafter referred to as the "Agreement")
Made this 26th day of May 2005 (the "Effective Date")
By and between
HORMOS MEDICAL CORP. ("Hormos")
PharmaCity, Itainen ▇▇▇▇▇▇▇▇▇ ▇ ▇, ▇▇▇-▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇
and
TESS DIAGNOSTICS AND PHARMACEUTICALS INC. ("Tess")
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
1. RECITALS
1.1 Tess and Hormos are parties to that certain Agreement on Transfer of
Agreement and Assignment of Contractual Rights and Obligations of the
Patent License and Technical Assistance Agreement dated December 12, 2002
(the "Transfer Agreement") whereby Hormos and Tess agreed on certain
royalty and other payments payable by Hormos to Tess in exchange for an
assignment of all of Tess' rights in and to certain patents.
1.2 According to the Transfer Agreement, if any third party with the intention
to commercialize ospemifene should by means of acquisition or merger
acquire Hormos, Tess and Hormos shall negotiate for fair compensation
before such transaction is consummated.
1.3 QuatRx Pharmaceuticals Company ("QuatRx") is acquiring a controlling
interest in Hormos. Tess and Hormos desire to restate the Transfer
Agreement as set forth herein.
2. DEFINITIONS
"Affiliate" shall mean each and every business entity controlling, controlled by
or under common control with a party. For purposes of this definition, "control"
shall mean ownership, directly or indirectly, of more than fifty percent (50%)
of the voting or income interest of the applicable business entity.
"Assigned Patents" shall have the meaning set forth in Section 3.1.
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"Change in Control of QuatRx" shall mean that (a) by means of acquisition,
merger or comparable corporate arrangement, more than 50% of the outstanding
shares of stock of QuatRx are acquired by a third party not currently a
shareholder of QuatRx or (b) QuatRx is merged with a third party that is not
currently an Affiliate of QuatRx such that more than 50% of the outstanding
shares of stock of the surviving entity are controlled by a third party not
currently a shareholder of QuatRx AND such third party is an industrial partner
larger than QuatRx active in pharmaceutical industry.
"License Payment" shall mean a down-payment or milestone payment received by
Hormos or any of its Affiliates from a third party licensee in consideration of
Hormos granting an exclusive license under all the Ospemifene Patents to such
third party licensee to develop and commercialize Products.
"Net Sales" shall mean the gross receipts of Hormos, any of its Affiliates or
licensees from sales of Products in any country less custom charges, duties and
taxes (including but not limited to "VAT" and other turnover taxes) less
delivery, shipping and transportation costs, less credits or allowance on
account of rejections or returns of Product(s) previously sold and less trade
discounts. However, except where the licensee or Affiliate is the final consumer
of the Product, any sale to a licensee or Affiliate shall be excluded from the
computation of Net Sales, but any subsequent sale by the licensee or Affiliate
to a third party other than another licensee or Affiliate shall be included in
the computation of Net Sales.
"Net Value" shall mean the gross value of License Payments, less the following
amounts (the "Net Value Deductions"), to the extent incurred prior to receipt of
the foregoing down payments and milestones:
i) The amount of all milestones paid to Orion Corporation pursuant to
that certain License Agreement between Hormos and Orion dated December
5, 2002,
ii) The amount of all success fees paid by Hormos to Innomedica Ltd,
iii) The amount of all taxes other than income taxes paid or payable by
Hormos and any of its Affiliates directly related to the payments
described in (i) and (ii) above;
iv) The amount of all necessary and reasonable research and development
costs for obtaining regulatory approval for the commercialization of
ospemifene for any indication, including, without limitation, all of
the following: a) costs accrued after December 12, 2002 but prior to
the effective date of this Agreement, whose definitive value is
3,065,112 EUR; b) costs that are paid by Hormos or any of its
affiliates after the Effective Date, but before executing any
licensing agreement with any licensee of the Ospemifene Patents, and
c) costs that Hormos or any of its Affiliates may be responsible for
according to any licensing agreement relating to the Ospemifene
Patents.
"Ospemifene" shall mean the chemical substance commonly referred to as
"ospemifene" as its generic name.
"Ospemifene Patents" shall mean the issued patents and patent applications set
forth on Exhibit A, which is attached hereto and incorporated herein by
reference, and all corresponding patents and patent applications and any foreign
counterparts thereof, and any continuations, continuations-in-part,
substitutions, re-validations, divisions, re-issues, additions, renewals and
extensions thereof, and any patents issuing therefrom.
"Product(s)" shall mean any pharmaceutical product for any indication having
ospemifene as one of its active ingredients, whose development,
commercialization and/or marketing would
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infringe the Ospemifene Patents in the absence of ownership or license to the
Ospemifene Patents.
"Summary Development Plan" shall mean a summary of the current development plan
for ospemifene which is attached hereto as Exhibit A. The Summary Development
Plan, including any and all studies described therein, may be modified in
Hormos' sole discretion, at any time. It is further understood that the
timelines in the Summary Development Plan are not binding.
3. EARLIER ASSIGNMENTS AND CONSIDERATION
3.1 Tess acknowledges and agrees that it has assigned to Hormos all of its
right, title and interest in and to the following patents (the "Assigned
Patents") and that Tess does not own or control, and has not granted rights to
any third party in, any other patents or patent applications or other rights in
or to ospemifene. Tess further represents and warrants that immediately prior to
this Agreement, Tess owned all right, title and interest in and to the Assigned
Patents and that ********************** has executed assignments whereby he has
assigned to Tess all of his respective rights, title and interests in and to the
Assigned Patents:
i) "Method for the treatment of **************************
*************************************************** (or: ******
**************************************************************
*********************)" US Patent ********* and all corresponding
patents and patent applications and any foreign counterparts
thereof, and any continuations, continuations-in-part,
substitutions, re-validations, divisions, re-issues, additions,
renewals and extensions thereof, and any patents issuing
therefrom, and
ii) "********************************" US Patent ********* and all
other corresponding patents/patent applications and any foreign
counterparts thereof, and any continuations,
continuations-in-part, substitutions, re-validations, divisions,
re-issues, additions, renewals and extensions thereof, and any
patents issuing therefrom.
3.2 Hormos and Tess acknowledge that as partial, but not full compensation
for the assignment set forth in Section 3.1, Hormos has paid to Tess a transfer
fee of seven hundred thousand ($700,000) US dollars in accordance with the terms
of the Transfer Agreement.
4. CONSIDERATION AND TERMS OF PAYMENT
4.1 As additional compensation for the assignment set forth in Section 3.1,
Hormos shall pay to Tess the following:
(a) Royalty. Hormos shall pay to Tess ******************* per cent
(****%) of Net Sales of each Product on a country by country
basis for a period of time beginning on the first commercial sale
of any Product and ending upon the last to expire of an issued
Ospemifene Patent claiming such Product.
(b) License Payment Fees. With respect to License Payments, Hormos
shall pay to Tess the following:
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- ******************** per cent (**** %) of the first *****
(****) million euro of Net Value.
- **** per cent (**** %) of the Net Value in excess of ****
(****) million euro.
For the avoidance of doubt, each time that Hormos is required to
make a payment to Tess under this Section 4.1(b) as a result of
receipt of a License Payment, it shall deduct from such License
Payment the total accumulated Net Value Deductions existing as of
the due date of the payment due to Tess hereunder (less any such
Net Value Deductions that have been used to calculate the Net
Value owed to Tess based on prior License Payments). The amount
of any fees payable under this subsection 4.1(b) shall be reduced
by the amount of milestones already paid to Tess pursuant to
subsection 4.1(c).
(c) Change in Control Payments. If after a Change in Control of
QuatRx, Hormos and its Affiliates (or the surviving entity after
such Change of Control of QuatRx if Hormos is not in then in
existence) determine to develop and commercialize Products
without exclusively licensing to a third party all of Hormos'
rights in the Ospemifene Patents, then Hormos shall pay to Tess
the following milestone payments:
- $********* within 30 days of the *********************
**************************************************
*****************************************************
*************************************************
***************************************************
*****.
- $********* upon acceptance for filing by the FDA of the
first NDA for the first Product.
- $********* upon FDA approval of the first NDA for the
first product for any indication other than
************.
- $********* upon FDA approval of the first NDA for the
first product for the treatment of **********.
If after a Change in Control of QuatRx, Hormos makes any of the
foregoing milestone payments under this subsection 4.1(c) and then
Hormos receives License Payments, then Hormos shall no longer be
obligated to make any payments under this subsection 4.1(c), and
instead, Hormos shall be obligated to make the payments required under
subsection 4.1(b).
4.2 All the payments to Tess shall be made in US dollars. If Hormos
received Net Sales in currency other than United States Dollars, the royalty
payments due to Tess on account of such Net Sales shall be converted into United
States dollars at the conversion rate for the foreign currency as published in
The Wall Street Journal, Eastern Edition 7 days before the payment shall be due.
4.3 All payments due under Section 4.1 shall be made within 60 days after
the end of each calendar quarter in which the payment obligation accrues.
5. ASSIGNMENT OF RIGHTS TO OSPEMIFENE OR CHANGES IN THE CORPORATE STRUCTURE
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5.1. Hormos may transfer or assign its rights in the Ospemifene Patents to
any third party only upon undertaking by the third party to be bound by the
terms of this Agreement.
6. ENTRY INTO FORCE AND TERMINATION
6.1 This Agreement shall become effective at the closing of that certain
Share Exchange Agreement between QuatRx and Hormos. If the closing has not taken
place by June 30, 2005, this Agreement shall be deemed terminated.
6.2 It is hereby agreed that the Transfer Agreement is hereby amended and
restated by this Agreement.
6.3 If Hormos decides to permanently discontinue the development and
commercialisation activities of Ospemifene, then Hormos shall have the right, in
its sole discretion, to terminate this Agreement upon written notice to Tess.
After any such termination, Hormos shall no longer be obligated to make any
payments to Tess hereunder and at Tess' request, Hormos shall reassign to Tess
the rights in the Assigned Patents that Tess originally assigned to Hormos
pursuant to the Agreement, all at Tess' cost.
7. REPORTING
Hormos shall provide a report to Tess summarizing the status of the development
of ospemifene, which report shall be due each June 1 and December 1 during the
term of this Agreement until the first Product is approved for sale in any
country or Hormos determines to cease all development activities with regard to
ospemifene. Hormos shall not be obligated to include any confidential,
proprietary information in any such report unless and until Hormos and Tess
execute a confidential disclosure agreement covering such reports.
8. MISCELLANEOUS
8.1 Dispute Resolution.
8.1.1. Informal Resolution Procedure. The Parties recognize that
disputes as to certain matters may from time to time arise during the term of
this Agreement which relate to either Party's rights and/or obligations. It is
the objective of the Parties to establish procedures to facilitate the
resolution of disputes arising under this Agreement in an expedient manner by
mutual cooperation and without resort to litigation, if possible. To accomplish
this objective, the Parties agree to follow the procedures set in this Section
8.1 if and when an issue or dispute arises under this Agreement.
8.1.2. Chief Executive Discussion. In the event of any claim,
controversy, issue or dispute arising out of, or related to, this Agreement
which the parties are unable or unwilling to resolve on an informal basis
(collectively referred to hereafter as "Claim"), the aggrieved Party shall
submit written notice thereof to the other Party. If representatives of both
Parties, other than their respective chief executive officers, are unable to
resolve any such Claim arising within their authority within thirty (30) days
after receipt of written notice of same, either Party may, by written notice to
the other (the "Executive Referral Notice"), require that such Claim be referred
to the Parties' respective chief executive officers for attempted resolution by
good faith negotiations. Within thirty (30) days of the date of the Executive
Referral Notice, such chief executive officers shall meet at a mutually
agreeable time and place and shall use good faith efforts to attempt to resolve
such dispute or issue.
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8.1.3 Mediation. If such chief executive officers fail to resolve such
Claim within thirty (30) days of the date of the Executive Referral Notice, then
the matter shall be submitted to a mandatory one-day non-binding mediation
between the Parties in Chicago, Illinois before a mediator mutually-agreed to by
the Parties, which mediation shall take place within sixty (60) days of the date
of the Executive Referral Notice. If the Parties are unable to agree on the
identity of the mediator, the specific location or time of mediation, then the
Claim shall be deemed unresolved and the terms of Section 8.1.4 shall apply.
8.1.4 Binding Arbitration. If the Claim is still not resolved sixty
(60) days after the date of the Executive Referral Notice, the Claim shall be
decided by arbitration before the American Arbitration Association in accordance
with the Commercial Arbitration Rules ("Rules") of the American Arbitration
Association, unless the Parties agree otherwise. This agreement to arbitrate
shall be specifically enforceable under the Federal Arbitration Act. Within
ninety (90) days of the date of the Executive Referral Notice, each Party shall
select an arbitrator and give written notice to the other Party of the identity
of such arbitrator. Within one hundred twenty (120) days of the date of the
Executive Referral Notice, the arbitrators shall select a neutral arbitrator.
The arbitration shall be conducted by such panel of three arbitrators selected
in accordance with this Agreement. In the event the two Party-selected
arbitrators are unable to agree on the identity of the third arbitrator, such
third arbitrator shall be a neutral arbitrator selected in accordance with the
Rules. The award rendered by the arbitrators shall be a "reasoned award",
including findings of fact and conclusions of law. Such award shall be final and
binding on all Parties, and judgment may be entered thereon in any court having
jurisdiction thereof, except that either Party shall be entitled to de novo
review of said award, including the findings of fact and conclusions of law, in
a court of competent jurisdiction in New York, New York. The arbitration shall
be held in New York, New York.
8.2. Assignment.
8.2.1. Affiliates. Either Party may assign any of its rights or
obligations under this Agreement in any country to any of its affiliates;
provided, however, that such assignment shall not relieve the assigning Party of
its responsibilities for performance of its obligations under this Agreement,
and further provided that if a proposed assignment would have an adverse
financial impact upon the non-assigning Party (e.g., by reason of changed tax
treatment of payments due under this Agreement), such assignment shall be
subject to the other Party's prior written consent.
8.2.2. Merger, Acquisition Or Sale Of Assets. Subject to the terms
hereof, either Party may assign its rights or obligations under this Agreement
to a non-affiliate only in connection with a merger or similar reorganization or
the sale of all or substantially all of its assets relating to ospemifene
without the prior written consent of the other Party. This Agreement shall
survive any such merger or reorganization of either Party with or into, or such
sale of assets to, another party and shall be fully enforceable against the
surviving, consolidated or reorganized entity of such merger, consolidation or
re-organization and no consent for such merger, reorganization or sale shall be
required hereunder; provided, that in the event of such merger, reorganization
or sale, no intellectual property rights of the acquiring corporation shall be
included in the technology licensed hereunder.
8.2.3. Binding Upon Successors And Assigns. 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
and the rights and obligations shall remain in the Party that attempted the void
assignment.
8.3. Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, 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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8.4. No Trademark Rights. Except as otherwise provided herein, no right,
express or implied, is granted by this Agreement to use in any manner any trade
name or trademark of either Party or its affiliates in connection with the
performance of this Agreement.
8.5. Notices. All notices hereunder shall be in writing and shall be deemed
given if delivered personally or by facsimile transmission (receipt verified),
telexed, mailed by registered or certified mail (return receipt requested),
postage prepaid, or sent by express courier service, to the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice; provided, that notices of a change of address shall be effective
only upon receipt thereof).
If to Hormos, addressed to:
PharmaCity, Itainen ▇▇▇▇▇▇▇▇▇ ▇ ▇
▇▇▇-▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: CEO
Telephone: ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Telecopy: ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇
With a copy to:
Quatrx Pharmaceuticals Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to Tess, addressed to:
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attention: CEO
Telephone: ________________
Telecopy: _________________
8.7. Limitation Of Liability. IN NO EVENT SHALL EITHER PARTY OR ITS
RESPECTIVE AFFILIATES AND PERMITTED SUBLICENSEES BE LIABLE FOR SPECIAL,
EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY,
TORT, STRICT LIABILITY OR OTHERWISE, except to the extent such Party may be
required to indemnify the other Party from such damages claimed by third parties
under Article 8.
8.8. 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.
8.9. Severability. If any term, covenant or condition of this Agreement or
the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (i) the remainder of this Agreement,
or the application of such term, covenant or condition to
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the Parties or under circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term, covenant
or condition of this Agreement shall be valid and be enforced to the fullest
extent permitted by law; and (ii) the Parties hereto covenant and agree to
renegotiate any such term, covenant or application thereof in good faith in
order to provide a reasonably acceptable alternative to the term, covenant or
condition of this Agreement or the application thereof that is invalid or
unenforceable, it being the intent of the Parties that the basic purposes of
this Agreement are to be effectuated.
8.10. Ambiguities. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
8.11. Governing Law. This Agreement is made pursuant to and shall be
governed by and construed in accordance with the laws of the State of New York,
United States, without reference to conflicts of laws' rules or principles.
8.12. Bankruptcy Provision. All rights and licenses granted by Tess to
Hormos under or pursuant to this Agreement are, and shall otherwise be deemed to
be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
rights to "intellectual property" as defined in Section 101 of the Bankruptcy
Code. The Parties agree that Hormos, as exclusive licensee of such rights under
this Agreement, shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code. The Parties further agree that, in the
event of the commencement of a bankruptcy proceeding by or against Tess under
the Bankruptcy Code, Hormos shall be entitled to a complete duplicate of (or
complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and same, if not already in its
possession, shall be promptly delivered to Hormos (i) upon such commencement of
a bankruptcy proceeding, unless Tess elects to continue to perform all of its
obligations under this Agreement; or (ii) if not delivered under (i) above, upon
rejection of this Agreement by or on behalf of Tess.
8.13. Headings. The Section headings contained herein are for the purposes
of convenience only and are not intended to define or limit the contents of said
Sections.
8.14. 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.
8.15. Entire Agreement. This Agreement and all exhibits attached hereto,
and all documents delivered concurrently herewith, set forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties hereto with respect to the subject matter hereof and
supersede and terminate all prior agreements and understanding between the
Parties as to such subject matter. There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or
written, between the Parties with respect to such subject matter other than as
set forth herein and therein. 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.
8.16. Independent Contractors. Each Party acknowledges that neither it nor
any of its employees are employees of the other Party and that neither it nor
any of its employees are eligible to participate in any employee benefit plans
of the other Party. Each Party further acknowledges that neither it nor any of
its employees are eligible to participate in any such benefit plans even if it
is later determined that its or any of its employees' status during the period
of this Agreement was that of an employee of the other Party. In addition, each
Party hereby waives any claim that it may have under the terms of any such
benefit plans or under any law for participation in or benefits under any of the
other Party's benefit plans.
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8.17 Force Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, earthquake, explosion, flood, strike, lockout, embargo, act
of God, or any other similar or dissimilar cause beyond the control of the
defaulting Party, provided that the Party claiming force majeure has exerted all
reasonable efforts to avoid or remedy such force majeure. In the event, the
force majeure event persists for more than six (6) months, either Party shall
have the right to terminate this Agreement.
IN WITNESS WHEREOF, the parties' duly authorized representative(s) have executed
this Restated Transfer Agreement.
TESS DIAGNOSTICS AND PHARMACEUTICALS, INC.
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
title CEO
HORMOS MEDICAL CORP.
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
title Chief Executive Officer
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ACKNOWLEDGEMENT
THE UNDERSIGNED hereby acknowledge and agree that the undersigned has assigned,
and hereby do assign to Tess Diagnostics and Pharmaceuticals, Inc., without
restriction, all of their respective rights, title and interests in and to the
following patents (the "Assigned Patents") and he does not own or control, and
he has not granted to any third party, any other rights to inventions, patents
or patent applications or other rights in or to or relating to the chemical
compound known as ospemifene:
i) "Method for the treatment of ***********************************************
***************************** (or: ***************************************
************************************************)" US Patent ********* and all
corresponding patents and patent applications and any foreign counterparts
thereof, and any continuations, continuations-in-part, divisions, re-issues,
additions, renewals and extensions thereof, and any patents issuing therefrom,
and
ii) "********************************" US Patent ********* and all other
corresponding patents/patent applications and any foreign counterparts thereof,
and any continuations, continuations-in-part, divisions, re-issues, additions,
renewals and extensions thereof, and any patents issuing therefrom.
[NOTARY] /s/ ******************
----------------------------------------
******************
Date: May 11, 2005
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EXHIBIT A
Ospemifene Patents for the purposes of the Agreement this Exhibit is attached
means the following US patents and US patent applications an any and all foreign
counterparts thereof, and any continuations, continuations-in-part, divisions,
re-issues, additions, renewals extensions, substitutions and revalidations
thereof, and any patents issuing thereof:
1. Invention: Ospemifene osteoporosis (and composition of matter)
Title:
****************************************************************************
**********************************
US Patents No. *******************
2. Invention: Ospemifene Atrophy
Title: ***********************************************************************
*********************************
US Patent application No. US *********
3. Invention: Ospemifene cholesterol
Title: ********************************
US Patent No. *******
4. Invention: Ospemifene climacteric disorders
Title: ********************************************************************
***************************************************************************
***********************************************
US Patent No: *******
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