CONFIDENTIAL
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is entered
into as of June 12, 1998 (the "Effective Date") between Aphton Corporation, a
company organized under the laws of Delaware with its principal executive
offices at the World Trade Center, ▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇, (hereinafter "Aphton"), and SmithKline ▇▇▇▇▇▇▇ PLC, having a place of
business at New Horizons Court, Great ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter "SB").
WHEREAS:
1. Aphton is currently developing an anti-gonadotropin releasing
hormone (GnRH) immunogen product for the treatment and prevention of
gonadotropin and gonadal steroid hormone associated diseases and cancers in
humans and owns and/or has rights under certain patents. patent applications and
proprietary information relating thereto. Aphton has developed an immunogenic
GnRH conjugate in animal models.
2. SB has substantial expertise and has access within the SB group to
established facilities for the development, manufacture, marketing and
distribution of vaccines and desires to enter into this Agreement to develop and
market Aphton's GnRH immunogen product for human use on a worldwide exclusive
basis under Aphton's patent, patent applications and proprietary information
relating thereto.
3. Aphton and SB desire to collaborate in developing the GnRIH
immmunogen product and Aphton is willing to grant a worldwide exclusive license
under Aphton's patents, patent applications and proprietary information relating
hereto and subject to the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise defined, capitalized terms used in this Agreement
shall have the meanings set forth below:
1.1 "Affiliate" shall mean, with respect to any party to this
Agreement, any other Person, which directly or indirectly controls, is
controlled by, or is under common control with, such party. A Person shall be
regarded as in control of another Person if it owns, or directly or indirectly
controls, at least fifty percent (50%) of the voting stock or other ownership
interest of the other Person, or if it directly or indirectly possesses the
power to direct or cause the direction of the management and policies of the
other Person by any means whatsoever.
1.2 "Aphton Immunogen" shall mean Immunogens for use in the Field
owned and/or controlled and/or discovered and/or developed by Aphton at any time
during the term of this Agreement including but not limited to Immunogens
discovered and/or developed by Aphton during the Development Program Term.
1.3 "Aphton Know-How" means any present and future biological
materials, research and development information, inventions, know-how,
pre-clinical, clinical and other technical data relating to the Product for use
in the Field which are Secret and Substantial, and vhich are owned, licensed to
or otherwise held by Aphton and/or its Affiliates with the rights to license or
sublicense the same to SB and which are necessary or useful for the development,
use, production or commercialization of the Product within the Field as provided
in this Agreement. Aphton Know-How shall include without limitation, all
chemical, pharmacological, toxicological, clinical, assay, control and
manufacturing data and any other information relating thereto and any materials,
reagents and media.
1.4 "Aphton Patents" shall mean all patents and patent applications
(including those arising from the Development Program) which are or become owned
and/or controlled, in whole or in part, by Aphton and/or any Affiliates of
Aphton and/or licensed, in whole or in part to Aphton and/or any Affiliates of
Aphton and under which Aphton has now or in the future the right to grant
licenses and which generically or specifically claim Product and/or the use of
Product and/or a process for manufacturing Product, and/or intermediates used in
such process, and which in each case are necessary or useful for the
development, use, production or commercialization of the Product within the
Field. Included within the definition of Patents are any continuations,
continuations in part, divisions, patents of additions, reissues, renewals or
extensions (other than SPC) thereof. Also included within the definition of
Patents are any patents or patent applications which generically or specifically
claim or have claims covering any improvements of Product or intermediates or
manufacturing processes required or useful for the production of Product which
are developed by Aphton and/or under which Aphton otherwise has the right to
grant licenses or sublicences, now or in the future during the term of this
Agreement. The list of patent applications and patents encompassed within
Patents on the Effective Date is set forth in Schedule A attached hereto.
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1.5 "Aphton Royalties" shall have the meaning set forth in Section
6.2.2.
1.6 "Blocking Patents" shall mean any patents owned and/or controlled
by Third Persons having claims which would be infringed by SB making, having
made, using, having used, selling, offering for sale or having sold, importing
or having imported all or part of Product and which would prevent SB from using
the Technology.
1.7 "Co-Exclusive License" shall mean that on a Regulatory
Jurisdiction per Regulatory Jurisdiction basis a license to Technology hereunder
for use in the Field may not be granted to more than two (2) Persons, including
SB or rather than granting such a license to a Third Person in addition to SB,
Aphton may use Technology hereunder.
1.8 "Commercial Failure" shall mean the circumstances under which the
quarterly Net Sales of Product decline by [Redacted]* on a Regulatory
Jurisdiction per Regulatory Jurisdiction basis; provided, however that such
decline is not caused by (i) a significant change in market conditions
(including, without limitation, governmentally-mandated price reductions or
launch by a Third Person of a Competing Product or other product targeting any
gonadotropin, gonadotropin receptor or gonadal steroid associated disease or
condition), (ii) change of existing laws or regulations, or adoption of new laws
or regulations, (iii) Force Majeure Events, (iv) safety and efficacy reasons as
reasonably determined by SB after discussion with the appropriate regulatory
authority, (v) change of marketing strategy (including without limitation a
reduction of price) and/or (vi) availability of Product.
1.9 "Commercial Launch" shall mean the first commercial sale of the
Product in Finished Form in any Regulatory Jurisdiction in the Territory.
1.10 "Company Information" shall mean the information or materials
provided by either Aphton or SB to the other party, whether furnished before or
after the Effective Date, including, without limitation, the information on
materials, substances, formulations, techniques, technology, equipment, data,
reports, know-how, sources for supply, patent position and business plans.
1.11 "Competing Product" shall mean any Immunogen targeting GnRH or
GnRH receptors, any GnRH analog, any GnRH antagonist product which is designed,
licensed for use and put to use for the treatment or prevention of any
gonadotropin or gonadal steroid hormone associated disease or condition.
1.12 "Development Program" shall have the meaning set forth in Section
3.1.
1.13 "Development Program Term" shall mean the period specified in
Schedule B during which the Development Program will be executed up to and
including the filing of the Product dossier in USA, EU and Japan..
1.14 "Field" shall mean the diagnosis, treatment and prevention of
gonadotropin, gonadal steroid hormone(s) or GnRH receptor(s) associated diseases
and cancers in humans including but not limited to endometriosis, polycystic
ovaries, uterine fibroids, contraception, infertility, precocious puberty,
prostate cancer, breast cancer, ovarian cancer and endometrial cancer.
------------------------
* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
-3-
1.15 "Finished Form" shall mean a finished pharmaceutical dosage form,
packaged and labeled for sale or distribution.
1.16 "Force Majeure Events" shall have the meaning set forth in
Section 12 hereof.
1.17 "GnRH" shall mean gonadotropin releasing hormone, a peptide of
human or animal origin with variable amino acid sequence, including but not
limited to what is commonly known as GnRH I, GnRH II, GnRH III and LHRH.
1.18 "Immunogen" shall mean (i) any construct including GnRH or GnRH
analog or portion of GnRH and/or (ii) antigens and/or (iii) proteins and/or (iv)
other physical forms based on such Immunogen, such as peptides (monoclonal,
bispecific, anti idiotypic antibodies) and/or nucleic acids (DNA, RNA) delivered
in any form including recombinant vectors.
1.19 "Major Markets" shall mean USA, France, Germany, UK, Japan and
Italy.
1.20 "Marketing Plan" shall mean the marketing plan prepared by SB as
set forth in Section 5.1 (ii) which contains a.o. forecasted sales and Product
Costs and Expenses, broken down per Major Markets.
1.21 "Multivalent Product" shall mean a Product which contains other
than Aphton Immunogen also one or more therapeutically and/or prophylactically
active Immunogens which are not included in Product.
1.22 "Net Sales" shall mean the gross receipts from sales of Product
in the Territory by SB and/or its Affiliates and/or its sublicensees and/or its
distributors to Third Persons less the fol1owing deductions:
(i) transportation charges, including insurances; and
(ii) sales and excise taxes and duties paid or allowed by a selling
party and any other governmental charges imposed upon the production,
importation, use or sale of Product, including without limitation, contributions
and payments required by any governmental authorities as liability provisions
and/or made pursuant to injury compensation schemes and/or as product liability
insurance premiums such as the National Vaccine Compensation Act in the US; and
(iii) trade, quantity and cash discounts, commissions and other price
reduction programs customary to the trade or required by law; and
(iv) allowances or credits to customers or charges back from customers
on account of rejection or return of Product subject to royalty under this
Agreement or on account of retroactive price reductions affecting such Product;
and
(v) royalties payable and/or paid by SB to Third Persons on the
manufacture, use and/or sale of Product not otherwise deducted or shared between
both parties hereunder.
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Sales between or among SB and its Affiliates or sublicensees or
distributors shall be excluded from the computation of Net Sales except where
such Affiliates or sublicensees are end users, but Net Sales shall include the
subsequent final sales to Third Persons by such Affiliates of sublicensees or
distributors.
If a Product is sold as Multivalent Product, Net Sales of Multivalent
Product shall be multiplied by the fraction A/A+B where A is the unit invoice
price of a separately sold Product which contains as specific immunogenic
material Aphton Immunogen and B is the unit invoice price of a separately sold
vaccine which contains as specific immunogenic material only Immunogen(s) other
than Aphton Immunogen contained in Multivalent Product.
1.23 "Person" shall mean an individual, corporation, partnership,
trust, business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.24 "Product" shall mean any product comprising an anti-GnRH or an
anti-GnRH receptor Immunogen construct being owned or controlled and/or
developed by Aphton hereunder, for use in the Field, to the extent such product
is encompassed in Technology.
1.25 "Product Cost and Expenses" shall mean on a Regulatory
Jurisdiction per Regulatory Jurisdiction basis and pro-rated per month for each
year during the five year period after Commercial Launch, with the exception of
paragraphs (ii) and (iii) below which shall only be considered for the
calculation of Excess (as defined in Section 6.2.5) in the first 12 months after
Commercial Launch in a Regulatory Jurisdiction:
(i) SB's fully absorbed standard cost of goods, formulation, bulk
manufacturing, filling, packaging and storing of the Products; and
(ii) Costs related to regulatory approvals to the following extent:
(a) from the moment of Commercial Launch in Major Markets and 12 months
thereafter, all costs incurred by SB during the year preceding Commercial Launch
(including a reasonable overhead) related to regulatory approvals up to and
including PLA/ELA in such Major Market; (b) for the purpose of determining said
costs under paragraph (ii)(a) above in Regulatory Jurisdictions other than Major
Markets, the average weighted cost per unit of Product as this results from
paragraph (ii)(a) for Major Markets, shall apply to number of doses sold in the
Regulatory Jurisdiction other than Major Markets in the 12 months period after
Commercial Launch in such Regulatory Jurisdiction; and
(iii) Prelaunch cost: as from Commercial Launch in a Regulatory
Jurisdiction and 12 months thereafter, all prelaunch costs (including a
reasonable overhead) incurred by SB during the year preceding Commercial Launch
in such Regulatory Jurisdiction necessary for the marketing, distribution and
selling of the Product in such Regulatory Jurisdiction; and
(iv) Costs relating to marketing distributing and selling the Product
in Major Markets as such costs result from the forecasted costs given under the
Marketing Plan for such Major Market in such year. For the purpose of
determining such costs under this paragraph (iv)
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for Regulatory Jurisdictions other than Major Markets, the average weighted
percentage of such costs on Net Sales in Major Markets shall apply for said
Regulatory Jurisdictions.
1.26 "Product Trademark" shall mean all trademarks, trademark
applications or registered marks for the Product in any Regulatory Jurisdiction.
1.27 "Regulatory Jurisdiction" shall mean any country, kingdom,
territory, principality, or other jurisdiction in which regulatory or other
governmental approval for manufacturing, promoting, marketing, distributing and
selling the Product is required. For the avoidance of doubt the European Union
shall not be considered as a separate Regulatory Jurisdiction.
1.28 "SB Adjuvant Technology" shall mean technology pertaining to
adjuvants (including but not limited to SB Know-How and/or patents), owned
and/or controlled by SB and/or its Affiliates at any time during the term of
this Agreement.
1.29 "SB Know-How" shall mean all present and future technical
information, materials and know-how which are now and/or at any time during the
term of this Agreement developed, owned, proprietary to and/or controlled by SB
and/or its Affiliates. SB Know-How shall include, without limitation, all
chemical, pharmacological, toxicological, clinical, assay, control and
manufacturing data and any other information relating thereto and any materials,
seeds, strains, reagents and media.
1.30 "Secret" shall mean that the Aphton Know-How as a body or in the
precise configuration and assembly of its components is not generally known or
easily accessible and has been treated as trade secret by Aphton, so that part
of its value consists in the lead-time SB gains when it is communicated to it.
1.31 "Substantial" shall mean that the Aphton Know-How includes useful
information which is of importance for the whole or significant part of (i) the
manufacturing process or (ii) the Product or (iii) the development thereof and
excludes information which is trivial.
1.32 "SPC" shall mean supplementary Protection Certificates for
medicinal products and their equivalents provided under Council Regulation (EEC)
No 1768/92 of June 18, 1992.
1.33 "Technology" shall mean Aphton Know-How and Aphton Patents.
1.34 "Territory" shall mean worldwide.
1.35 "Third Person" shall mean any Person other than Aphton or SB or
their respective Affiliates.
1.36 "Work Report" shall mean the report prepared by each party on a
quarterly basis or on some other timely basis as decided by the Steering
Committee (as defined in Section 4.2.(c) hereunder) and submitted to the
Steering Committee setting forth the work performed by each party during the
Development Program Term in the previous quarter in furtherance of the
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goals of the Agreement and setting out a proposed plan for future work to be
performed by that party as requested by the Steering Committee.
"Interpretative Rules". For the purpose of this Agreement, except as
otherwise provided in this Agreement or unless the context otherwise requires:
(a) defined terms include the plural as well as the singular and the use of any
gender shall be deemed to include the other gender; (b) references to
"Articles", "Sections" and other subdivisions and to "Schedules" and "Exhibits"
without reference to a document, are to designated Articles, Sections and other
subdivisions of, and to Schedules and Exhibits to, this Agreement; (c) the use
of the term "including" means "including but not limited to"; and (d) the words
"herein", "hereof', "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provisions.
ARTICLE 2
LICENSE GRANT
2.1 License Grant. Aphton hereby grants to SB and its Affiliates as
from the Effective Date an exclusive right and license with the right to grant
sublicenses in the Territory to develop, make, have made, use, have used,
register, promote, market, distribute, sell, and have sold Product for use in
the Field under the Technology and SPC.
2.2 Co-Exclusive License. Aphton shall have the right to turn the
exclusive right and license granted to SB hereunder into a Co-Exclusive License
on a Regulatory Jurisdiction per Regulatory Jurisdiction basis and to co-promote
in that Regulatory Jurisdiction on sixty (60) days notice to SB if in a given
Regulatory Jurisdiction: (a) within one hundred and twenty (120) days after the
receipt of all necessary regulatory approvals including price approvals for the
Commercial Launch of the Product within said Regulatory Jurisdiction, SB does
not use commercially reasonable diligence to begin promoting and marketing the
Product in that Regulatory Jurisdiction, (b) SB ceases any significant efforts
to continue marketing the Product in such Regulatory Jurisdiction for a period
of 180 days, (c) a Commercial Failure of the Product in such Regulatory
Jurisdiction occurs, or (d) a Competing Product is introduced by SB in a
Regulatory Jurisdiction which causes a material reduction of sales of more than
[Redacted]*% of Product per calendar year in such Regulatory Jurisdiction. SB
will take all steps as may be necessary or useful to reasonably permit a Third
Person or Aphton to co-promote the Product as set forth under this Section 2.2.
In such event parties shall discuss in good faith all necessary arrangements
including supply by SB of Product at arm's length conditions, the use of SBs
trademarks and the terms and conditions of licensing under SB Adjuvant
Technology and/or SB Know-How.
2.3 Additional Technology. During the Development Program Term, if SB
or Aphton believe that technology related to the subject matter of the
Development Program that is controlled by a Third Person, which may include new
lmmunogens, adjuvants and/or Blocking Patents ("Additional Technology") would be
valuable or necessary to the Development Program in the Field hereunder Aphton
or SB as appropriate shall present such Additional Technology to the Steering
Committee along with a written report. The Steering Committee shall then
determine, except for Blocking Patents which shall be at SB's sole discretion
subject to other provisions contained herein, whether licenses to, and/or
acquisitions of, such Additional
------------------------
* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
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Technology should be made, and SB shall approach and negotiate the terms of any
agreement(s) with any Third Person including, without limitation payments for
sponsored research. No such Third Person license and/or acquisition shall be
effective with respect to SB unless and until SB has specifically agreed in
writing to abide by the applicable terms and conditions of any such license
and/or acquisition.
ARTICLE 3
DEVELOPMENT PROGRAM
3.1 Responsibilities.
(i) During the Development Program Term parties will cooperate in the
development of Products. The initial program of activities to be conducted under
the Development Program during the Development Program Term is set forth in
Schedule B, which can be amended and/or complemented from time to time by the
Steering Committee.
(ii) The Development Program shall be conducted under the direction of
the Steering Committee who shall have overall responsibilities for such
Development Program, including but not limited to fixing the budget and updating
quarterly the Development Program. The responsibilities and operation of the
Steering Committee are set forth in Section 4.
(iii) The objective of the Development Program will be the development
of Products for use in the Field.
(iv) During the Development Program Term and any extensions thereof
Aphton undertakes to (i) use best efforts to materially perform all those
additional or residual activities not performed by SB hereunder and set forth in
the Development Program; (ii) use all reasonable efforts to achieve the
Development Program's objective and (iii) use best efforts to achieve the
milestones within the Development Program Term.
(v) During the term of this Agreement Aphton shall not enter into a
collaboration agreement with a Third Person to develop a Competing Product for
use in the Field without the prior written consent of SB.
(vi) During the Development Program Term, Aphton shall submit to SB
quarterly progress reports detailing the development work accomplished in the
previous quarter.
(vii) If the Steering Committee (as defined in Section 4.2(a))
determines that during the Development Program SB Know-How and/or SB Adjuvant
Technology is required for the development of the Product, SB will make
available such technology. In case Aphton would exercise its right to co-promote
Product in accordance with Section 2.2, parties will negotiate in good faith the
terms and conditions of such licensing as set forth in Section 2.2.
3.2 SB's Responsibility. SB will be responsible for (a) funding all
costs associated with the development of the Product by Aphton during the
Development Program Term in accordance with the budget approved by the Steering
Committee, including all costs associated with manufacturing and developing
clinical trial batches of the Product including. but not limited to, the cost of
active substance for clinical trials and the assistance of clinical trial
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support personnel, (b) paying all out-of-pocket expenses incurred by Aphton at
SB's request during the Development Program Term, and (c) funding those costs
associated with obtaining regulatory approval to market the Product in SB's name
in each Regulatory Jurisdiction in the Territory including, but not limited to,
the cost of clinical trials.
In the event that SB's funding obligation under this Section 3.2
exceeds [Redacted]* per indication within the Field during the term of this
Agreement, such portion exceeding [Redacted]* shall be fully creditable against
Aphton Royalties as set forth in Section 6.2.2 and/or the royalties payable
under Section 6.5. For the avoidance of doubt, prostate cancer shall be
considered as one (1) indication, regardless its stage of development.
ARTICLE 4
OPERATION OF THE STEERING COMMITTEE
4.1 Cooperation of the Parties. The parties shall cooperate in good
faith under this Agreement. For the purpose thereof, each party shall, subject
to the conditions set forth in Article 10 hereof, provide any Company
Information to the other party as determined by the Steering Committee to
effectively develop Product. Each party shall prepare its Work Report on a
quarterly basis during the Development Program Term which will be reviewed by
the Steering Committee.
4.2 Steering Committee.
(a) A steering committee (the "Steering Committee") shall be
established to supervise the performance of the parties during the Development
Program Term. The Steering Committee shall have an equal number of members
appointed by each party and shall be initially comprised of a total of six (6)
members. The total number of Steering Committee members may be changed by the
Steering Committee from time to time as appropriate, but in all cases it will be
comprised of an equal number of members from each party. Each party may
substitute its representatives from time to time and the substitution is
effective upon notice to the other party.
(b) The Steering Committee shall meet as often as required to ensure
the effective operation of the Development Program but in no event less than
quarterly on such date and at such place as to be agreed upon between the
parties. The meetings of the Steering Committee may be held in person or in any
other reasonable manner, including, without limitation, by telephone, video
conference or E-mail. Each of the Steering Committee members shall have one vote
and all the decisions of the Committee must be made by a majority vote. A
representative of SB shall chair each meeting. Members of the Steering Committee
will be permitted to attend such meetings by electronic means (telephone,
E-mail, video conference, etc.). It is contemplated that additional
representatives of the parties may attend and participate in the Steering
Committee meetings, however, such additional representatives will not be
entitled to participate in the voting process. As a first order of business, the
Steering Committee will draft procedures which will govern the operation of the
Steering Committee and its decision making process and the specific criteria to
be used in the determinations set forth in Section 4.2(c) below. However in case
of deadlock, the Steering Committee shall document the opinions of both parties
and the opinion of SB's representatives shall prevail, provided, however, that
if such decision would have a significant impact on the time to market Product
or on Aphton Royalties,
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* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
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the Steering Committee shall escalate the issue to the General Manager Senior
Vice President of SB and C.E.O. of Aphton who shall try to resolve the issue
within thirty (30) days. Failing to agree on such issue, the decision of the
General Manager Senior Vice President of SB shall prevail.
(c) The Steering Committee shall be responsible for (i) determining
the profile of Product, (ii) overall management of the Development Plan and
related activities. (iii) planning and reviewing clinical trial and regulatory
strategies, (iv) review of manufacturing arrangements to ensure consistency of
supply and Product compliance with regulatory requirements and Good
Manufacturing Practice during the Development Program Term, (v) reviewing the
quarterly Work Reports submitted by each party, and (vi) approving the annual
budget.
Notwithstanding the foregoing, during the period in which SB's rights
are no longer exclusive in a Regulatory Jurisdiction pursuant to Aphton's
exercise of its rights under Section 2.2 hereof, the Steering Committee will no
longer be responsible for the items described in the foregoing clauses (iii),
(iv) and (v) with respect to such Regulatory Jurisdiction.
ARTICLE 5
DEVELOPMENT, MANUFACTURING, MARKETING
5.1 (i) SB will in accordance with SB's reasonable business and
scientific judgment and the Development Program, exercise its reasonable efforts
and diligence in developing and commercializing Product and in undertaking
investigations and actions required to obtain appropriate governmental approvals
to market Product. All such activity shall be undertaken at SB's expense. At
SB's request, Aphton shall supply to SB reasonable technical assistance in
undertaking such investigations and actions.
(ii) SB shall further be responsible for and shall use
commercially reasonable efforts to (a) prepare the Marketing Plan and provide
Aphton with a copy prior to release; SB shall take hereto any reasonable comment
of Aphton into consideration and representatives of both parties shall discuss
every quarter about its contents; (b) market and commercialize the Product in
the Territory; (c) formulate and develop marketing strategies for the Product on
a Regulatory Jurisdiction per Regulatory Jurisdiction basis; (d) perform all
Product distribution and sales functions, including but not limited to order
taking and processing, (e) deliver and process the sales of the Product and (f)
cooperate with Aphton to maintain the effectiveness of any licenses, permits,
approvals or registrations obtained in connection with the performance of this
Agreement.
5.2 Aphton shall supply any Aphton Know-How which SB may require and
shall provide to SB, at SB's request, technical assistance within its area of
expertise concerning development, production and commercialization of Product.
Provision of such technical assistance shall include, but not be limited to,
visits by Aphton personnel to SB at Aphton's expense, and visits by SB personnel
to Aphton, at SB's expense, at times and for periods of time upon which the
parties will agree. Aphton will provide reasonable quantities of preclinical
test material for SB as required through the course of the Development Program.
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5.3 SB shall be responsible for scaling up Product and manufacturing
Product at its facilities.
ARTICLE 6
COMPENSATION TERMS
6.1 Simultaneously with the execution and delivery of this Agreement,
Aphton and SB have entered into a Subscription Agreement, dated the Effective
Date, in the form attached hereto as Exhibit C, pursuant to which (i) Aphton has
agreed to sell and SB has agreed to purchase the number of shares of common
stock, par value $.001 per share, of Aphton set forth in the Subscription
Agreement for a purchase price of US $5,000,000, (ii) Aphton shall be entitled
to a Put Option (as defined in the Subscription Agreement) and (iii) SB shall be
entitled to a Call Option (as defined in the Subscription Agreement), all as
subject to the terms and conditions set forth therein.
6.2 Royalties.
6.2.1 As sole consideration of SB hereunder, other than its obligation
to fund the development costs up to a maximum amount of [Redacted]* US Dollars
in accordance with Section 3.2 above and taking into account (i) the advanced
stage of the preclinical development of product, (ii) Aphton's contribution in
the development cost for the portion exceeding [Redacted]* US Dollars and
Aphton's contribution in the Product Cost and Expenses for the five years after
Commercial Launch, (iii) the expected probability of a launch date as set forth
in Development Program, (iv) no third party royalties for Additional Technology
(as this term is defined in Section 2.3) are expected to be payable during the
term of this Agreement, and (v) in absence of any license fee, technology access
fee, milestone payments. SB shall pay the following royalties to Aphton in
consideration of all rights and licenses granted hereunder: Aphton Royalties as
set forth in Section 6.2.2 and royalties under Aphton Know-How as set forth in
Section 6.5.
6.2.2 Aphton Royalties. Subject to Section 6.4 and commencing in the
year in which Commercial Launch occurs in Regulatory Jurisdictions set forth in
Section 6.4(i). SB shall make payments to Aphton ("Aphton Royalties") based upon
Net Sales (as determined by Section 6.4). The amount of Aphton Royalties shall
be determined in accordance with the following principles:
The applicable royalty rate in a given calendar year will be based on
the ratios set forth below (attributable to the relevant portions of Net Sales
as determined by Section 6.4) and Aphton Royalties will be determined as
follows:
------------------------
* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
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------------------------- -------------------------
Net Sales levels
(in million US Dollars) Royalties %
------------------------- -------------------------
------------------------- -------------------------
$[Redacted]* [Redacted]*%
------------------------- -------------------------
------------------------- -------------------------
$[Redacted]* [Redacted]*%
------------------------- -------------------------
------------------------- -------------------------
$[Redacted]* [Redacted]*%
------------------------- -------------------------
------------------------- -------------------------
$[Redacted]* [Redacted]*%
------------------------- -------------------------
------------------------- -------------------------
$[Redacted]* [Redacted]*%
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6.2.3 The foregoing Net Sales levels are incremental, and the payments
of Aphton Royalties (if any) will change in relation to the level of Net Sales
achieved in a calendar year (e.g., if Net Sales of the Product are $[Redacted]*,
Aphton Royalties due would be the sum of: (i) [Redacted]*% of the Net Sales
attributable to the first $[Redacted]* of Net Sales; and (ii) [Redacted]*% of
the Net Sales attributable to the next $[Redacted]* of Net Sales. Net Sales
levels set forth in the table above (1st column) will be indexed for inflation
or deflation in accordance with the U.S. Department of Commerce, Consumer Price
Index or its successor index, beginning in the first full calendar year
following one year after the first Commercial Launch of the Product or the year
2002, whichever is earlier.
6.2.4 If the average sales price per dose in a Regulatory Jurisdiction
and in a given calendar year drops below [Redacted]* per dose as indexed for
inflation or deflation in accordance with the local consumer price index or
equivalent index beginning the first full calendar year following one year after
the first Commercial Launch of the Product in such Regulatory Jurisdiction, the
above mentioned percentages which determine Aphton Royalties will be reduced and
parties will negotiate in good faith an amendment to this Agreement in order to
reflect such reduction.
6.2.5 In the event on a Regulatory Jurisdiction per Regulatory
Jurisdiction basis, Cost and Expenses of SB pertaining to Product (as
forecasted) during any year of the [Redacted]* years period after Commercial
Launch in such Regulatory Jurisdiction exceeds [Redacted]*% of the Net Sales
("Target Cost and Expenses") over such year, SB shall be entitled to:
(A) apply a fixed royalty of [Redacted]*% on Net Sales to determine
Aphton Royalties regardless the portion of Net Sales achieved in the Territory
in such year; and
(B) credit the difference ("Excess") between the Cost and Expenses and
the Target Cost and Expenses of such period in such Regulatory Jurisdiction
against Aphton Royalties and royalties payable under Section 6.5 payable in the
same year to the following extent:
In each such year of the [Redacted]* years after Commercial Launch in
such Regulatory Jurisdiction, SB shall be entitled to credit
[Redacted]*% of such Excess deducted pro rata from the monthly
payments set forth in Section 7.2. However, in no event shall
[Redacted]*% of such Excess exceed [Redacted]% of Aphton Royalty which
would have been payable in such Regulatory Jurisdiction and such year
pursuant to Section 6.2.5.B above assuming Excess equals [Redacted]*,
i.e., [Redacted]*% of Net Sales in such year and in such Regulatory
Jurisdiction.
------------------------
* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
-12-
In no event shall such credit cause total Aphton Royalties and
royalties payable under Section 6.5 in such year and in the Territory to be
reduced by more than [Redacted]*. Any portion remaining uncredited shall be
carried forward to any subsequent year, until such credit is exhausted.
Parties shall adjust the Excess and the amount creditable pursuant to
Section 6.2.5.B above once the actual costs incurred by SB and defined in
Section 1.25 are available on a six month basis but in no event later than 90
days after the end of the relevant 6 month period and shall credit the
difference on account of SB or Aphton as the case may be.
For the avoidance of doubt, in case Costs and Expenses do not exceed
[Redacted]*% of Net Sales, Aphton Royalties shall be determined in accordance
with Section 6.2.2 through 6.2.4.
SB shall at all times use its reasonable efforts to diligently promote
sales of Product in accordance with the provisions of Section 5 herein
regardless the royalty percentage earned by Aphton.
6.3 In the event of a Blocking Patent covering Product licensed
hereunder, all financial obligations to Third Persons will be [Redacted]* and SB
shall deduct Aphton's share herein from Aphton Royalties hereunder. Any unused
credit shall be carried forward to any subsequent calendar year.
6.4 Aphton Royalties as determined by Section 6.2.2 above is subject
to the following conditions:
(i) Net Sales shall apply to sales generated in Regulatory
Jurisdictions in which Aphton has a granted unencumbered, unrevoked Aphton
Patent covering Product and until in each Regulatory Jurisdiction within the
Territory expiration, lapse or invalidation of the last remaining Patent
covering Product in such Regulatory Jurisdiction.
(ii) no Aphton Royalties shall be payable and only Know-How Royalties
shall apply as set forth in Section 6.5, in those Regulatory Jurisdictions
wherein Aphton has exercised its co-promotion rights pursuant to Section 2.2
above.
(iii) the royalty percentage of Aphton Royalties for each Net Sales
levels as set forth in Section 6.2.2 shall be reduced by [Redacted]*% in case SB
Immunogens or SB Adjuvant Technology or SB Know-How is needed for the Product to
have the safety, immunogenicity or efficacy profile as determined by the
Steering Committee and pursuant to a request or recommendation by the regulatory
authorities.
6.5 Know-How Royalties. As a consideration for the use of Aphton
Know-How granted to SB under this Agreement, SB shall pay to Aphton for a period
of [Redacted]* years from the first bona fide commercial sale of Product
anywhere in the Territory the following royalty: [Redacted]*% of annual Net
Sales from sales of Product in those Regulatory Jurisdictions where Aphton has
no granted, unencumbered and unrevoked Aphton Patent covering Product. After
this [Redacted]* year period and until termination or expiration of this
Agreement, said royalty rate shall be reduced to [Redacted]*% for such
Regulatory Jurisdictions.
------------------------
* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
-13-
6.6 Payment Method and Timing of Payment; Withholding Taxes. (a) (i)
SB shall pay Aphton Royalties as this results from Section 6.2.2 and/or
royalties set forth in Section 6.5 in accordance with the provision of Section
7.2. For the purpose of determining the monthly payments of Aphton Royalties and
the portions of Net Sales set forth in Section 6.2.2, Net Sales of Product made
in Regulatory Jurisdictions specified in Section 6.4(i) shall be accumulated per
calendar year on a rolling monthly basis and SB shall apply the appropriate
percentage of royalty until a portion of Net Sales set forth in Section 6.2.2
has been exhausted. Once a certain portion of Net Sales has been exceeded in a
given calendar year, SB shall apply the next applicable royalty percentage as
set forth in Section 6.2.2 for Net Sales made in said Regulatory Jurisdictions.
(ii) Any payment made by SB to Aphton hereunder shall be made by wire transfer
in U.S. Dollars to the account designated by Aphton. Payment by SB shall be
deemed to have been made as of the day on which such payment is received at the
account designated by Aphton. All payments under this Agreement other than the
payments set forth in Section 7.2 will be due no later than the first business
day after the fifteenth (15th) day of the month or if SB fails to make a timely
payment due under this Agreement, interest at a per diem rate equal to the
then-current U.S. prime rate shall accrue on the amount of payment for each day
such payment is overdue, provided that such interest shall in no event exceed
the maximum rate permitted by applicable law. (b) Any withholding or other taxes
that SB or any of its Affiliates are required by law to withhold or pay on
behalf of Aphton with respect to the payments to Aphton under this Agreement
shall be deducted from such payments to Aphton and paid contemporaneously with
the remittance to Aphton; provided, however, that in regard to any tax so
deducted SB shall furnish Aphton with proper evidence of the taxes paid on its
behalf. Aphton will furnish SB with appropriate documents to secure application
of the most favorable rate of withholding tax under applicable tax treaties.
6.7 Monetary Conversion from the currency of a foreign country in
which Product is sold into US Dollars shall be made at the exchange rate in
force on the last business day of the period for which Aphton Royalties and/or
royalties set forth in Section 6.5 are being payable, as certified by Barclay's
Bank, London.
ARTICLE 7
BOOKS, RECORDS AND INSPECTION RIGHTS
7.1 Books, Records and Inspection Rights. SB shall maintain complete
and accurate books and records in connection with its promotion, marketing,
distribution and selling of the Product and, in the case of Aphton, its research
and development costs. Upon a reasonable written request of one party, the other
party shall permit the first party to inspect or to use an independent
accounting firm to audit, in each case at the first party's own expense, the
internal accounts of the second party provided such examination shall not take
place more often than once a year and shall not cover such records for more than
two (2) years.
7.2 Within sixty (60) days after the close of each calendar month on a
rolling monthly basis as from Commercial Launch, SB shall deliver to Aphton a
true accounting of Products sold by SB, its Affiliates, sublicensees and
distributors during such period and shall at the same time pay all Aphton
Royalties and/or royalties due pursuant to Section 6.5 for such calendar month.
Such accounting shall show sales on a Regulatory Jurisdiction per Regulatory
Jurisdiction basis.
-14-
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 Due Organization, Valid Existence and Due Authorization. Each of
Aphton and SB hereby represents and warrants to the other party that on the date
hereof (a) such party is duly incorporated and validly existing and/or
registered as applicable under the laws of the relevant jurisdiction and (b) has
the full power and authority (i) to own and operate its properties and to
conduct its business as described in its articles of association and (ii) to
execute, deliver and perform this Agreement.
8.2 Approvals, Binding Obligations and No Violations. Each of Aphton
and SB hereby represents and warrants to the other party that on the date hereof
such party has taken all requisite actions and obtained all consents, approvals,
authorizations and permits necessary for the execution, delivery and performance
of this Agreement. This Agreement constitutes the legal, valid and binding
obligation of each of Aphton and SB enforceable against such party in accordance
with its terms. The execution, delivery and performance of this Agreement will
not violate (a) such party's articles of incorporation, (b) any other agreements
or obligations of such party or (c) any currently effective laws, regulations or
decrees of the United States or any other relevant jurisdiction.
8.3 Patents and Patent Applications. Aphton warrants and represents to
SB that (a) it owns and/or controls all the patents and has proprietary rights
to all the patent applications listed in Schedule A attached hereto, (b) the
list in Schedule A contains all patents and/or patent applications relating to
Product that are owned and/or controlled by Aphton on the Effective Date, and
(c) to its best knowledge, there are no actual or threatened claims by a Third
Person against Aphton's ownership of, or proprietary rights to, such patents or
patent applications.
8.4 Aphton acknowledges that in entering into this Agreement SB has
relied or will rely upon information supplied by Aphton pursuant to a
Confidentiality Agreement signed by SB on April 16, 1996 and by Aphton on March
4, 1996 and Aphton warrants and represents that such product information is
accurate and complete in all material aspects. Aphton further warrants and
represents that to the best of its knowledge it has and will supply information
concerning Technology and Product.
8.5 Aphton warrants and represents that its directors, and/or
scientists and have no present knowledge of existence of any pre-clinical or
clinical data or information covering Product which suggest that there may be
toxicity, safety and/or efficacy concerns which may materially impair the
utility and/or safety of Product.
8.6 Aphton warrants that the agreement dated August 4, 1994 between
Aphton and [Redacted]* and [Redacted]* on the subject matter of the exclusive
license of GnRH is still in full force and effect and Aphton is not aware of any
circumstance justifying termination of this Agreement for breach.
8.7 Sales and Marketing Capabilities. SB hereby represents that it has
sufficient sales and marketing capabilities including adequate personnel trained
in detailing vaccines to adequately support its obligations under this Agreement
in the Major Markets within the Territory.
------------------------
* The redacted portions of this document have been omitted pursuant to a
request for confidential treatment and such redacted portions have been
filed separately with the Securities and Exchange Commission.
-15-
8.8 Disclaimer. Except as expressly set forth herein, neither party
makes any express or implied warranties, statutory or otherwise, concerning the
value, adequacy, freedom from fault of, other quality, efficiency, stability,
characteristics or usefulness of, or merchantability of fitness for a particular
purpose of, the Product; provided however, nothing contained in this Section 8.8
shall be deemed a waiver of, or be deemed to limit, the obligations of each
party hereunder.
ARTICLE 9
INTELLECTUAL PROPERTIES
9.1 Product Trademarks. SB shall be responsible for the selection of
Product Trademarks. SB shall be responsible for registration and maintenance of
such Product Trademarks and SB shall own and/or control any such Product
Trademarks.
9.2 Intellectual Property Developed During the Term of this Agreement.
9.2.1 Any invention or discovery in the Field made solely by Aphton
during the course of the Development Program Term shall be owned solely by
Aphton. Any invention or discovery in the Field made solely by SB during the
course of the Development Program Term shall be owned solely by SB. Any
invention or discovery in the Field made jointly by Aphton and SB during the
course of the Development Program Term shall be jointly owned by SB and Aphton.
9.2.2 Any patent and/or patent application arising out of an invention
or discovery in the Field made solely by an employee or agent of SB shall be
filed by and in the name of SB. Any patents and/or patent application arising
out of an invention or discovery in the Field made solely by an employee or
agent of Aphton shall be filed by and in the name of Aphton and such Patents
shall be automatically and exclusively licensed to SB hereunder for use of
Products within the Field in accordance with Section 2.1. In doing so, Aphton
shall take into account any reasonable recommendation of SB including but not
limited to in which Regulatory Jurisdiction Patents will be filed. Any patents
and/or patent applications arising out of an invention or discovery pertaining
to Products for use in the Field made jointly by SB and Aphton shall be filed in
the joint names of SB Bio and Aphton ("Joint Patents"). Neither party shall
license its rights under a Joint Patents to a Third Person without the prior
written agreement of the other party.
9.3 Aphton Intellectual Property; Infringement.
(a) Aphton shall be responsible for the filing, prosecution and
maintenance of Aphton Patent at its own expense. Aphton shall disclose to SB the
complete texts of all patents and patent applications filed and/or controlled by
Aphton which relate to Product as well as all information received concerning
the institution or possible institution of any interference, opposition,
re-examination, reissue, revocation, nullification or any official proceeding
involving a Aphton Patent anywhere in the Territory. SB shall have the right to
review all such pending applications and other proceedings and make
recommendations to Aphton concerning them and their conduct and Aphton shall
take any such SB comment and recommendation into consideration. Aphton agrees to
keep SB promptly and fully informed of the course of patent prosecution or other
proceedings including the provision to SB of copies of substantive
communications, search reports and Third Person observations submitted to or
received from patent offices throughout the Territory. Aphton shall provide such
patent consultation to SB at no cost to SB. SB shall hold all information
disclosed to it under this section as confidential subject to the provisions of
Section 10.
-16-
SB shall have the right but not the obligation to assume
responsibility for any Aphton Patent or any part of an Aphton Patent which
Aphton desires, after consultation with SB, to abandon or otherwise cause or
allow to be forfeited.
(b) In the event that either party becomes aware of an infringement of
any of the Aphton Patents or of any action by a Third Person for a declaration
that any of the Aphton Patents are invalid or unenforceable or any infringement
of SB's rights hereunder, it shall promptly notify the other party in writing.
SB shall have the first right but not the obligation to [Redacted]*. Prior to
starting such infringement action, SB shall consult with Aphton on the strategy
to be followed and take any reasonable recommendation of Aphton into account. If
SB has not commenced a particular infringement action within ninety (90) days of
notification of any such infringement Aphton after notifying SB shall be
entitled to bring such infringement action at its own expense. The parties shall
cooperate with each other and provide all necessary and reasonable assistance in
any of such actions.
(c) Either party shall select its outside counsel to represent its
interests, unless specified otherwise herein.
(d) Aphton and SB shall [Redacted]*.
(e) The parties shall keep one another informed of the status of and
of their respective activities regarding any patent litigation or settlement
thereof concerning Product.
(f) Aphton shall authorize SB to act as Aphton's agent for the purpose
of making any application for any extensions of the term of Patents and shall
provide reasonable assistance therefor to SB, at Aphton's expense (In the United
States of America as permitted under Title 35 of the United States Code).
(g) Aphton, on behalf of itself, its officers, agents and successors
hereby waives any and all actions and causes of action, claims and demands
whatsoever in law or equity of any kind against SB and its Affiliates based upon
the exercise by SB of its rights under this Section 9.3 except in the case of
gross negligence and/or willful misconduct by SB.
9.4 Third Party Claims of Infringement. In the event that a claim of patent
infringement is made against Aphton or SB in connection with the Product or the
rights of SB licensed hereunder during the term of this Agreement, either
individually or collectively, the party sued shall promptly notify the other
party in writing. Each party sued shall have the obligation to defend such suit
at its own expense and the other party shall cooperate and provide all necessary
and reasonable assistance in any such action.
9.5 Ownership of Regulatory Permits, Approvals. The parties hereby
agree that where permissible by law any and all licenses, permits, approvals or
registrations obtained of Product, including without limitation any U.S. FDA New
Drug Application, (NDA) (the "Product Registrations") shall be co-owned by
Aphton and SB during the term of this Agreement. To the extent co-ownership is
not permitted in a particular Regulatory Jurisdiction, SB shall be named sole
owner. SB shall take all reasonable measures to enable Aphton to sell Product
under SB's Product Registration in such Regulatory Jurisdiction in case the
license hereunder would become co-exclusive in accordance with Section 2.2.
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9.6 S.P.C. If SB request Aphton to do so, Aphton shall diligently
apply for patent extension and SPC where possible and SB shall provide all
necessary assistance, including marketing authorisation certificates where
needed.
ARTICLE 10
EXCHANGE OF INFORMATION AND CONFIDENTIALITY
10.1 (a) During the term of this Agreement, SB shall have full access
to all matters encompassed within Technology and Aphton shall upon the request
of SB promptly disclose and/or supply SB with all Technology.
(b) During the term of this Agreement, SB shall have full access to
(and Aphton will promptly disclose upon request of SB) all technology,
information, inventions, data, process technology and any other information
related to Product, whether patentable or not, which Aphton may develop, acquire
or otherwise have or obtain rights or access to.
(c) During the term of this Agreement, each party shall promptly
disclose to the other party any information that it obtains or develops
regarding the efficacy and safety of Product and shall promptly report to the
other party any confirmed information of serious or unexpected reactions or side
effects related to the utilization or medical administration of Product.
10.2 Company Information.
(a) Each of Aphton and SB acknowledges that all the Company
Information provided by the other party is confidential and proprietary to the
other party and further that the information developed by either or both parties
during the term of this Agreement which relates to the research, development,
marketing or sales of the Product shall be treated as Confidential Information
and agrees to (a) maintain such information in confidence during the term of
this Agreement and for a period of 5 years thereafter and (b) use such
information solely for the purpose of performing its respective obligations
hereunder. Each of Aphton and SB covenants that it shall not disclose any such
information to a Third Person except to its employees, agents or any other
person under its authorization, on a need to know basis, provided such
employees, agents or person under its authorization are subject in writing to
the same confidentiality obligations as either Aphton or SB, as the case may be.
(b) Notwithstanding anything provided above, the restrictions provided
in this section shall not apply to the information that is (i) already in the
public domain as of the Effective Date, (ii) received by either Aphton or SB on
an unrestricted basis whereby the receiving party has no duty of confidentiality
to the party providing such information, (iii) is required to be disclosed to a
governmental or other regulatory authority to the extent that such is required
by applicable laws, regulations or court orders of the applicable jurisdiction,
in which case the disclosing party shall promptly notify the other party of such
disclosure, (iv) is subsequently and independently developed by employees of the
receiving party or its Affiliates who had no knowledge of the confidential
information disclosed, and (v) known by either Aphton or SB at the time of
disclosure and such prior knowledge is established by documentary evidence.
-18-
10.3 Injunctive Relief. Each party acknowledges that damages resulting
from disclosure of the Company Information would be an inadequate remedy and
that in the event of any such disclosure, the other party shall be entitled to
seek injunctive relief or other equitable relief in addition to any and all
remedies available at law or in equity, including the recovery of damages and
reasonable attorneys' fees.
10.4 Nothing herein shall be construed as preventing either party from
disclosing any information received from the other party to an Affiliate or
sublicensee or distributor, provided such Affiliate or sublicensee or
distributor has undertaken a similar obligation of confidentiality with respect
to the confidential information.
10.5 All confidential information disclosed by one party to the other
shall remain the intellectual property of the disclosing party. In the event
that a court or other legal or administrative tribunal, directly or through an
appointed master, trustee or receiver, assumes partial or complete control over
the assets of a party to this Agreement based on the insolvency or bankruptcy of
such party, the bankrupt or insolvent party shall promptly notify the court or
other tribunal (i) that confidential information received from the other party
under this Agreement remains the property of the other party and (ii) of the
confidentiality obligations under this Agreement. In addition, the bankrupt or
insolvent party shall, to the extent permitted by law, take all steps necessary
or desirable to maintain the confidentiality of the other party's confidential
information and to insure that the court, other tribunal or appointee maintains
such information in confidence in accordance with the terms of this Agreement.
ARTICLE 11
INDEMNITY
11.1 Each party shall indemnify and hold the other party or its
Affiliates harmless, and hereby forever releases and discharges the other party
or its Affiliates, from and against all claims, demands, liabilities, damages
and expenses, including attorney's fees and costs (collectively, "Damages") but
excluding punitive or consequential damages (such as lost profits), arising out
of (i) the gross negligence, recklessness, wrongful acts of the indemnifying
party or its Affiliates, (ii) any breach or violation of, or failure to properly
perform any covenant or agreements made by such indemnifying party in this
Agreement and (iii) any breach of any of the representations or warranties made
by such indemnifying party in this Agreement.
11.2 If either SB or Aphton, or any Affiliate of SB or Aphton (in each
case an "Indemnified Party"), receives any written claim which it believes is
the subject of indemnity hereunder by either SB or Aphton, as the case may be
(in each case an "Indemnifying Party"), the Indemnified Party shall, as soon as
reasonably practicable after forming such belief, give notice thereof to the
Indemnifying Party, including full particulars of such claim to the extent known
to the Indemnified Party; provided, however, that the failure to give timely
notice to the Indemnifying Party as contemplated hereby shall not release the
Indemnifying Party from any liability to the Indemnified Party. The Indemnifying
Party shall have the right, by prompt notice to the Indemnified Party, to assume
the defense of such claim with counsel reasonably satisfactory to the
Indemnified Party, and at the cost of the Indemnifying Party. If the
Indemnifying Party does not assume the defense of such claim, the Indemnified
Party may assume such defense with counsel of its choice at the sole expense of
the Indemnifying Party. If
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the Indemnifying Party so assumes such defense, the Indemnified Party may
participate therein through counsel of its choice, but the cost of such counsel
shall be borne solely by the Indemnified Party.
11.3 The party not assuming the defense of any such claim shall render
all reasonable assistance to the party assuming such defense, and all
out-of-pocket costs of such assistance shall be borne solely by the Indemnifying
Party.
11.4 No such claim shall be settled other than by the party defending
the same, and then only with the consent of the other party, which shall not be
unreasonably withheld; provided, however, that the Indemnified Party shall have
no obligation to consent to any settlement of any such claim which imposes on
the Indemnified Party any liability or obligation which cannot be assumed and
performed in full by the Indemnifying Party.
ARTICLE 12
FORCE MAJEURE
Neither party shall be held liable or responsible to the other party
or be deemed to have breached or defaulted under this Agreement for failure or
delay in performing its obligations hereunder to the extent, and as long as,
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected party, including, without limitation, fire, floods,
embargoes, war, insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, acts of God, omissions or delays in acting by any
governmental authority ("Force Majeure Events"). In the event of occurrence of
the foregoing, either party must use reasonable efforts to mitigate the adverse
consequence of such force majeure.
ARTICLE 13
TERM AND TERMINATION
13.1 Term of this Agreement. The term of this Agreement shall expire
upon the expiration, lapse or invalidation of the last remaining Aphton Patent
in the Territory or twenty (20) years from Effective Date whichever comes later.
Expiration of the Agreement under this Section 13.1 shall not preclude SB from
continuing to exercise the rights and licenses granted to it hereunder without
any further royalty or other obligation.
13.2 Termination by Either Party. Upon occurrence of any of the
following, either party may terminate this Agreement, in whole or in part, with
respect to the Product: (a) mutual agreement, (b) material breach of this
Agreement provided that the non-breaching party notifies the breaching party in
writing of such breach and the breaching party does not cure the breach within
60 days after receiving the notice and (c) liquidation, dissolution, winding-up,
insolvency, bankruptcy, or filing any petition therefor, appointment of a
receiver, custodian or trustee, or any other similar proceeding, by or of any
party.
13.3 Termination by SB. SB shall have the right to terminate this
Agreement (i) prior to receipt of regulatory approval, upon sixty (60) days
prior notice to Aphton, or (ii) after regulatory approval, upon one hundred
eighty (180) days prior notice to Aphton, in the event that SB determines at its
sole discretion that for safety, efficacy or economical reasons it does not wish
to promote, market or sell the Product. In such event, SB shall have no further
obligation to
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Aphton, except as provided in Section 13.4 hereof and Aphton shall have no
further obligation to SB.
13.4 Effect of Termination.
13.4.1 Upon the expiration or termination of this Agreement by Aphton
pursuant to Section 13.2.b or l3.2.c, (a) SB shall cease to have the right to
use, promote, market, distribute, sell or otherwise to commercialize the
Products in any manner, (b) the Product Registrations and any and all requisite
approvals, permits, licenses, filings, registration, or any application thereof,
or any other regulatory records obtained pursuant to this Agreement or in
connection with the Product, shall be delivered, transferred and assigned to and
exclusively owned by Aphton, provided, that any permits or registrations which
cannot be so assigned shall be terminated by SB, and (c) all right, title and
interest in and to the Product, Technology, and any goodwill pertaining thereto
(including, without limitation, all documentation embodying Product Intellectual
Property, relating to suppliers, customer lists, manuals, specifications and
formulas), will be fully assigned and transferred to Aphton and SB shall
immediately cease to use, either directly or indirectly, the Product Trademarks,
brand names, trade names, labels, markings, patents, know-how related to the
Products and (d) SB shall cease to use the Company Information. The obligations
of Article 10, Article 11 and Article 12 hereof, however, will survive any
termination of the Agreement.
13.4.2 Upon termination of this Agreement by SB pursuant to Section
13.2.b or in case of Section l3.2.c other than bankruptcy of Aphton, SB shall
have a royalty free exclusive license under Technology to develop, use, make and
sell the Product in Territory.
13.4.3. Termination of this Agreement shall terminate all outstanding
obligations and liabilities between the parties arising from this Agreement
except those described in Sections 7.1, 9.1, 9.2, 9.3(f), 9.3(g), 9.4, 13.4,
14.2.
13.4.4 Upon termination of this Agreement and subject to the
provisions contained in Section 2; Aphton shall have the right to retain any
sums already paid by SB hereunder, and SB shall pay all sums accrued hereunder
which are due.
ARTICLE 14
MISCELLANEOUS
14.1 Effectiveness of this Agreement. This Agreement shall be
effective as of the Effective Date first given above.
14.2 Governing Law. This Agreement shall be governed by and construed
in accordance with laws of the State of New York without giving effect to the
principles of conflict of law thereunder (other than Section 5-1401 of the
General Obligations Law). Any dispute, controversy or claim arising out of or in
relation to this Agreement or the breach, termination or invalidity thereof,
that cannot be settled amicably by agreement of the parties hereto, shall be
finally settled by the Courts of New York.
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14.3 Notices. Any notice or other communication that is required or
that may be delivered hereunder shall be in writing and shall be delivered
personally (including by courier) and by facsimile to the other party hereto at
the address set forth below:
(a) if to Aphton: Aphton Corporation
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman, President and Chief
Executive Officer
Aphton Corporation
▇▇ ▇.▇.▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ (office)
▇▇▇-▇▇▇-▇▇▇▇ (facsimile)
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ (office)
▇▇▇-▇▇▇-▇▇▇▇ (facsimile)
(b) if to SB: SmithKline ▇▇▇▇▇▇▇ PLC
New Horizons Court
Great ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: General Counsel
with a copy to:
SmithKline ▇▇▇▇▇▇▇ Biologicals S.A.
▇▇ ▇▇▇ ▇▇ ▇'▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attn: Jean Stephenne
Senior Vice President - General Manager
Tel: ▇▇ ▇ ▇▇▇.▇▇.▇▇
Fax: ▇▇.▇.▇▇▇.▇▇.▇▇
and:
Director Business Development
Tel: ▇▇-▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇-▇▇▇-▇▇▇▇
14.4 No Third Party Beneficiary. Nothing herein expressed or implied
is intended to or shall be construed to confer upon or give to any person or
entity other than the parties hereto and their successors and permitted assigns
any rights or remedies under or by reason of this Agreement.
-22-
14.5 Integration. This Agreement constitutes the entire agreement of
the parties hereto regarding the subject matter hereof and supersedes all prior
agreements with respect thereto.
14.6 Amendments. No provision in this Agreement shall be supplemented,
deleted or amended except in a writing executed by Aphton and SB.
14.7 No Assignment and Binding Effect. Except for the right of the
Parties to assign to an Affiliate, neither Aphton nor SB may assign this
Agreement or any of its rights, interests, duties or obligations hereunder
without the prior written consent of the other party, which consent will not be
unreasonably withheld. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of Aphton or SB.
14.8 Headings. The headings in this Agreement are for convenience of
reference and shall not affect the meaning or interpretation of the provisions
hereof.
14.9 Severability and No Waiver. If any provision herein shall be held
invalid or unenforceable by a court of competent jurisdiction or other
authority, the remainder of the provisions herein shall remain in full force and
effect and shall not be affected thereby. Nothing contained in this Agreement
shall cause the failure of either party hereto to insist upon strict compliance
with any other provision hereof by the other party to operate as a waiver with
respect to such provision, unless such waiver is in writing and delivered to the
other party hereto in accordance with Section 14.3 hereof.
14.10 Originals. Aphton and SB shall execute two originals of this
Agreement. Each party hereto shall retain one original. Each original shall be
equally valid.
14.11 Bankruptcy Acknowledgment. Each of the parties hereto
acknowledges and agrees that this Agreement (i) constitutes a license of
Intellectual Property (as such term is defined in the United States Bankruptcy
Code, as amended (the "Code")), and (ii) is an executory contract, with
significant obligations to be performed by each party hereto. The parties agree
that each may fully exercise all of its rights and elections under the Code
following any event of bankruptcy affecting the other, including, without
limitation, those set forth in Section 365(n) of the Code.
14.12 Quality Assurance. Aphton and SB shall retain batch data records
and quality control certificates for each batch of the Product and, if requested
by the other party will provide such information to that party. Such records
shall be retained for the longest period required by any Regulatory Jurisdiction
in the Territory.
14.13 Product Recalls. Aphton and SB shall observe at all times all
legal requirements in order to maintain an effective system for the recall from
the market of the Product. Notwithstanding anything herein to the contrary, if
SB or ▇▇▇▇▇▇ ▇▇▇▇▇ it necessary to effect a recall of the Product, it shall
notify the other party using reasonable notice under the circumstances of such
intended recall and SB shall decide on such recall.
-23-
IN WITNESS WHEREOF, Aphton and SB have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the day and
year first above written.
APHTON CORPORATION SMITHKLINE ▇▇▇▇▇▇▇ PLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ Jean Stephenne
------------------------------- ----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: Jean Stephenne
Title: Chairman, President Title: Senior Vice President - General
and Chief Executive Officer Manager
SCHEDULE A
----------
PATENTS ASSIGNED TO APHTON CORPORATION
SERIAL NO./ PATENT NO./ PUBLICATION
COUNTRY FILING DATE GRANT DATE NO. AND DATE STATUS
-------------- --------------- ---------------- ----------------- --------------
Australia 17371/95 Pending
26-Jan-1995
EP 95909395.6 0741744 Published
26-Jan-1995
Japan 520233/1995 508,391/1997 Published
26-Jan-1995 08/26/97
PCT US95/01225 WO95/20600 Published
26-Jan-1995 08/03/95
US 08/478,546 Pending
07-Jun-1995
US 08/188,223 5,688,506 Granted
27-Jan-1994 18-Nov-1997
US 08/968,466 Pending
17-Nov-1997
PATENTS LICENSED TO APHTON CORPORATION
COUNTRY SERIAL NO./ PATENT NO./ PUBLICATION STATUS
FILING DATE GRANT DATE NO. AND DATE
-------------------------------------------------------------------------------
US 07/73,570 4,767,842 Granted
15-July-1987 30-Aug-1988
US 07/73,748 5,006,334 Granted
15-July-1987 09-Apr-1991
US 07/73,769 4,762,913 Granted
15-July-1987 09-Aug-1988
SCHEDULE B
----------
CLINICAL DEVELOPMENT PLAN
1. PhaseI/II
-------------
() Nottingham Hospital(s), Hammersmith Hospital as key Phase I/II centers
() If needed 1-2 additional centers
() Submission DDX 06/19/1998
() Approval DDX 07/29/1998
() Submission CTX 10/21/1998
() Approval CTX 11/26/1998
() Data Summary Analysis 03/18/1999
() Report Submission 03/25/1999
() Phase III application 03/29/1999
() Phase III approval 05/03/1999
2. In Parallel with PhaseI/II
------------------------------
() Adjuvant comparison in between montanide and SB AS3
() Animal Study performed at Aphton
() Phase I clinical study
3. Milestones for Phase III initiation
---------------------------------------
() Final product selection
() Consistency batch producttion (3 batches)
() Clarification of Carrier/DT's origin and related issues
() 100% patients successfully immunized over a 6 months period in best Phase
I/II schedule, taking into account efficacy/tolerance ratio
4. Phase III-Surrogate Markers
-------------------------------
() Need for FDS and EMEA approvals of a single surrogate marker trial
() Serum testosterone levels, PSA monitoring as candidates for surrogate
markers
() Start at the earliest 05/06/1999, subject to points 1, 2 and 3
() 500 patients, 2 arms design, comparison study
() 25 centers, 100 patients/month
() Recruitment time: 5 months (Finish: 10/07/1999)
() Finish trial assuming 6 months observation: 04/07/2000
() Patients stage for eligibility criteria to be approved by Steering Committee
5. Phase III - Survival Trial
------------------------------
() Implemented if at least one regulatory agency desires a survival trial
() Survival as end points
() Design as above
() Observation period: 2.5 years (+ or - 6 months)
() Finish trial: March 2002 (+ or - 6 months)
6. Registration
-----------------
The parties will register Product immediately after successful completion of the
trials in USA, EU and Japan.
7. Phase IIIb Trials
---------------------
() For medical research, pharmacoeconomic or marketing considerations
() To be reviewed by Steering Committee
8. Quarterly Coordination Meetings
-----------------------------------
() To be scheduled
SCHEDULE C
Subscription Agreement
THIS AGREEMENT is made as of this 12th day of June, 1998, between
APHTON CORPORATION (the "Company"), a Delaware corporation with its principal
executive offices at the World Trade Center, ▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇, and SMITHKLINE ▇▇▇▇▇▇▇ plc (the "Purchaser"), a company
organized under the laws of England with its registered office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser desires to subscribe for, and the Company
desires to issue, the number of shares set forth in Section 1 of this Agreement
(the "Initial Shares") of Common Stock, par value $.001 per share, of the
Company (the "Common Stock") on the terms and subject to the conditions set
forth herein; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Company and the Purchaser have entered into a Collaboration and
License Agreement (the "Collaboration and License Agreement");
NOW, THEREFORE, IT IS AGREED:
Section 1. Agreement to Sell and Purchase the Shares. Subject to the
terms and conditions set forth in this Agreement, the Company agrees to sell to
the Purchaser, and the Purchaser agrees to purchase from the Company the number
of Initial Shares equal to the quotient of 5,000,000 divided by the Share Price.
For purposes of this Section 1, the "Share Price" shall mean the average of the
closing prices of the Common Stock as reported on The Nasdaq Stock Market
("Nasdaq") for the five consecutive trading days immediately prior to the
Closing Date (as hereinafter defined), multiplied by 1.6. Any resulting
fractional shares shall be rounded to the nearest whole number.
Section 2. Delivery of the Shares at the Closing.
2.1 Initial Closing. The completion of the purchase and sale of the
Initial Shares under Section 1 (the "Initial Closing") shall occur
simultaneously with the execution and delivery of this Agreement and the
Collaboration and License Agreement (the "Initial Closing Date"). The Purchaser
shall make payment of the full purchase price in the amount of US$5,000,000 (the
"Purchase Price") of the Initial Shares pursuant to such wire transfer or other
payment instructions as shall have been specified by the Company at least two
business days prior to the date hereof. Simultaneously with the execution and
delivery hereof, the Company shall deliver to the Purchaser, in exchange for
such payment, one or more stock certificates registered in the name of the
Purchaser, or in such name or names as may be designated by the Purchaser,
representing the number of Initial Shares as determined pursuant to Section 1.
2.2 Legend. The certificate or certificates representing the Initial
Shares and any Put Option Shares and any Call Option Shares, each as defined
below (collectively, the "Shares") shall contain a legend restricting transfer
under the Securities Act of 1933, as amended (the "Securities Act"), such legend
to be substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT WHICH IS
CONFIRMED IN A LEGAL OPINION SATISFACTORY TO THE COMPANY."
The certificate shall also include any legends required by any
applicable state securities laws.
Section 3. Further Agreements of the Company and the Purchaser.
3.1 Put Option. The Purchaser hereby grants to the Company an
irrevocable option (the "Put Option"), exercisable at anytime during the period
commencing on the first anniversary of the Closing Date and ending on the third
anniversary of the Closing Date. Such Put Option shall entitle the Company to
sell to the Purchaser for a purchase price of US$5,000,000 (the "Put Option
Price") the number of shares of Common Stock (the "Put Option Shares")
determined pursuant to this Section 3.1. The completion of the purchase and sale
of the Put Option Shares shall occur no later than 15 days after the receipt by
the Purchaser of a notice (the "Put Option Notice") from the Company, which
notice shall set forth the number of Put Option Shares to be sold. The number of
Put Option Shares to be sold shall be equal to the quotient of 5,000,000 divided
by the average of the closing prices of the Common Stock as reported on Nasdaq
for the five consecutive trading days immediately prior to the date of the Put
Option Notice. Any resulting fractional shares shall be rounded to the nearest
whole number.
The Purchaser shall pay the Put Option Price in immediately available
funds by wire transfer to the account of the Company specified in the Put Option
Notice. Simultaneously with such payment, the Company shall deliver to the
Purchaser, in exchange for such payment, one or more stock certificates
registered in the name of the Purchaser, or in such name or names as may be
designated by the Purchaser, representing the number of Put Option Shares so
purchased.
3.2 Call Option. If and when the Company exercises the Put Option, the
Purchaser shall have the option, exercisable once within 90 days of the date of
the Put Option Notice, to purchase from the Company for a purchase price of
US$5,000,000 (the "Call Option Price") an amount of additional shares of Common
Stock (in excess of the Put Option Shares) (the "Call Option Shares") equal to
the number of Put Option Shares. The completion of the purchase and sale of the
Call Option Shares shall occur no later than 15 days after the receipt by the
Company of a notice (the "Call Option Notice") from the Purchaser stating that
it desires to purchase the Call Option Shares. Any resulting fractional shares
shall be rounded to the nearest whole number.
-2-
The Purchaser shall make payment of the Call Option Price in
immediately available funds by wire transfer to the account of the Company
specified in the Put Option Notice. Simultaneously with such payment, the
Company shall deliver to the Purchaser, in exchange for such payment, one or two
more stock certificates registered in the name of the Purchaser, or in such name
or names as may be designated by the Purchaser, representing the number of Call
Option Shares so purchased.
Section 4. Representations, Warranties And Covenants Of The Company.
The Company hereby represents and warrants to, and covenants with, the Purchaser
that:
4.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and as proposed to be conducted.
The Company is qualified as a foreign corporation to do business in each
jurisdiction in the United States in which the ownership of its property or the
conduct of its business requires such qualification, except where failure so to
qualify would not have a material adverse effect on the Company.
4.2 Authority. The Company has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby. Upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' and contracting parties' rights generally and except
as enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.3 Validity of Shares. The sale of the Shares is not subject to any
preemptive rights or rights of first refusal that have not been waived and, when
issued, sold and delivered in compliance with the provisions of this Agreement,
the Shares will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances created by the Company; provided, however,
that the Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed.
4.4 Accuracy of Reports and Information. The Company's Common Stock is
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All reports (the "SEC Reports") required to be
filed by the Company during the period January 1, 1998 through the date of this
Agreement pursuant to Section 13(a) or 15(d) of the Exchange Act, have been duly
filed and were in compliance with the requirements of their respective forms as
of the dates at which the information was furnished. Copies of all SEC Reports
filed by the Company during such period are available to the Purchaser upon
request. The Company will continue to file all reports required to be filed
under the Exchange Act. At the time they were filed, the SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. As of the date of this Agreement,
-3-
certain of the Company's SEC Reports are under review by the SEC and are subject
to further revision based on future comments of the SEC staff.
4.5 No Conflict; No Violation. The execution, delivery and performance
of this Agreement and consummation of the transactions contemplated hereby will
not conflict with any provisions of the Certificate of Incorporation or By-laws
of the Company or result in any material violation or default of, or permit the
acceleration of any obligation under (in each case, upon the giving of notice,
the passage of time, or both), any material mortgage, indenture, lease,
agreement or other instrument, permit, franchise, license, judgment, order,
decree, law, ordinance, rule or regulation applicable to the Company or its
properties, the effect of which would have a material adverse effect on the
Company.
4.6 Consents and Approvals. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
in connection with the valid execution and delivery of this Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby have been obtained, or will be effective at the
Initial Closing or the date of the closings, if any, for the Put Option Shares
or the Call Option Shares, as applicable, except for notices required or
permitted to be filed with certain state and federal securities commissions
after such closing dates, as the case may be, which notices will be filed on a
timely basis.
4.7 Absence of Certain Developments. With respect to the Initial
Closing, since April 30, l998 (and, with respect to the closings for the Put
Option Shares or the Call Option Shares, since the end of the last fiscal
quarter prior to the date of the Put Option Notice for which the Company's
filing on Form 10-Q is publicly available), there has been no material adverse
change in the financial condition or results of operations of the Company.
4.8 Ex-Distribution Dates. The Company shall not deliver the Put
Option Notice at any time when any of the closing prices used to compute the Put
Option Price are for dates prior to the ex-dividend ▇▇▇▇ for any distribution
with respect to the Shares unless the Purchaser receives such distribution with
respect to the Put Option Shares and any Call Option Shares. The Purchaser shall
not be entitled to any rights as a holder of the Put Option Shares or any Call
Option Shares until completion of the closings at which it actually acquires
such Shares.
4.9 HSR Act Filings. Subject to terms and conditions hereof, the
Company agrees to use commercially reasonable efforts to make promptly any
necessary filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act (the
"HSR Act") at such time as such filings may be required.
4.10 Rule 14-4 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Shares to the public without registration, the Company agrees to use
its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act; and
-4-
(b) Use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities
Act and the Exchange Act.
Section 5. Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents and warrants to, and covenants with, the Company that:
5.1 Accredited Investor. The Purchaser is an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act, and has such
knowledge, sophistication and experience in business and financial matters that
it is capable of evaluating the merits and risks of the transactions
contemplated by this Agreement.
5.2 Investment Presentations. The Purchaser is aware that the Shares
have not been registered under the Securities Act or any applicable state
securities laws, and agrees that the Shares will not be offered or sold in the
absence of registration under the Securities Act and any applicable state
securities laws or an exemption from the registration requirements of the
Securities Act and any applicable state securities laws.
The Purchaser understands that the offering and sale of the Shares is
intended to be exempt from registration under the Securities Act, by virtue of
Section 4(2) and/or Section 4(6) of the Securities Act and the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements contained in this Agreement and the Company may rely
on such representations, warranties and agreements in connection therewith. The
Purchaser will not transfer the Shares in violation of the provisions of any
applicable Federal or state securities laws.
The Purchaser is acquiring the Shares for its own account and for
investment, and not with a view to the resale or distribution thereof; it has no
present intention of selling, negotiating, or otherwise disposing of the Shares.
The Purchaser's financial condition and investments are such that it is in a
financial position to hold the Shares for an indefinite period of time and to
bear the economic risk of, and withstand a complete loss of, such Shares. In
addition, by virtue of its expertise, the advice available to it, and its
previous investment experience, the Purchaser has extensive knowledge and
experience in financial and business matters, investments, securities, and
private placements and the capability to evaluate the merits and risks of the
transactions contemplated by this Agreement.
5.3 Authority. The Purchaser further represents and warrants to, and
covenants with, the Company that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and (ii) upon the execution and delivery of
this Agreement, this Agreement shall constitute a valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
-5-
5.4 Purchaser Review. The Purchaser hereby represents and warrants
that the Purchaser has carefully examined the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1998, and all reports (the "SEC
Reports") required to be filed by the Company during the period from January
1,1997 through the date of this Agreement pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 as amended (the "Exchange Act") and the
financial statements contained therein. The Purchaser acknowledges that the
Company has made available to the Purchaser all documents and information that
it has requested relating to the Company and has provided answers to all of its
questions concerning the Company and the Shares. The Purchaser further
acknowledges that, as of the date of this Agreement, certain of the Company's
SEC Reports are under review by the SEC and are subject to further revision
based on future comments of the SEC staff. In evaluating the suitability of the
acquisition of the Shares hereunder, the Purchaser has not relied upon any
representations or other information (whether oral or written) other than as set
forth in the SEC Reports, the License Agreement or as contained herein or in
documents and information made available to it by the Company and answers to
questions so furnished to it by the Company.
5.5 HSR Act Filings. Subject to the terms and conditions hereof, the
Purchaser agrees to use its commercially reasonable efforts to make promptly any
necessary filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act (the
"HSR Act") at such time as such filings may by required. The Purchaser shall pay
the HSR Act filing fee.
Section 6. Conditions To Initial Closing.
6.1 Conditions to Obligation of the Purchaser. The Purchaser's
obligation to purchase the Initial Shares at the Initial Closing Date is subject
to the fulfillment, at or prior to the Initial Closing, of all of the following
conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 4 hereof
shall be true and correct in all material respects on the date of the
Initial Closing with the same force and effect as if they had been made on
and as of said date, and the Company shall have performed all obligations
and conditions herein required to be performed by it on or prior to the
Initial Closing.
(b) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Initial Closing hereby
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser and its
counsel, and the Purchaser and its counsel shall have received all such
counterpart originals or certified or other copies of such documents as
they may reasonably request.
(c) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any government authority or regulatory body of the
United States or of any state that are required in connection with the
lawful sale and issuance of the Initial Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as the Initial
Closing. No stop order or other order enjoining the sale of the Initial
Shares shall have been issued and no proceedings for such purpose shall be
pending or, to
-6-
the knowledge of the Company, threatened by the SEC or any commissioner of
corporations or similar officer of any state having jurisdiction over this
transaction. At the time of the Initial Closing, the sale and issuance of
the Initial Shares shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject.
6.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Initial Shares at the Initial Closing is subject to the
fulfillment to the Company's satisfaction, on or prior to the Initial Closing,
of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and
correct at the date of the Initial Closing, with the same force and effect
as if they bad been made on and as of said date.
(b) Performance of Obligations. The Purchaser shall have performed and
complied with all agreements and conditions herein required to be performed
or complied with by it on or before the Initial Closing,
(c) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any government authority or regulatory body of the
United States or of any state that are required in connection with the
lawful sale and issuance of the Initial Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the
Initial Closing. No stop order or other order enjoining the sale of the
Initial Shares shall have been issued and no proceedings for such purpose
shall be pending or, to the knowledge of the Company, threatened by the SEC
or any commissioner of corporations or similar officer of any state having
jurisdiction over this transaction. At the time of the Initial Closing, the
sale and issuance of the Initial Shares shall be legally permitted by all
laws and regulations to which the Purchaser and the Company are subject.
Section 7. Conditions To Put Option And Call Option Closings.
7.1 Conditions to Obligations of the Purchaser. The Purchaser's
obligations to purchase any Call Option Shares or Put Option Shares is subject
to the fulfillment, at or prior to the respective closings, of all of the
following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 4 hereof
shall be true and correct in all material respects on the date of such
closing with the same force and effect as if they had been made on and as
of said date; and the Company shall have performed all obligations and
conditions herein required to be performed by it on or prior to such
closing.
(b) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the relevant closing
hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Purchaser and
its counsel, and the Purchaser and its counsel
-7-
shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
(c) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful sale and issuance of any Put Option Shares or Call Option Shares
pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of such closing. No stop order or other order enjoining
the sale of the Shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened by
the SEC or any commissioner of corporations or similar officer of any other
state having jurisdiction over this transaction. At the time of such
closing, the sale and issuance of the Shares shall be legally permitted by
all laws and regulations to which the Purchaser and the Company are
subject.
(d) No Termination of Development Agreement; No Breach. No termination
of the Collaboration and License Agreement dated as of the date of this
Agreement between the Company and the Purchaser shall have become
effective. In addition, the Company shall not have committed a material
breach of said Collaboration and License Agreement as to which the
Purchaser has provided the Company with written notice, unless such breach
has been cured by the Company or waived by the Purchaser.
(e) Bankruptcy. The Company shall not have (i) filed in any court or
agency pursuant to any statute or regulation of any state or country, a
petition in bankruptcy or insolvency or for reorganization or for an
arrangement or for the appointment of a receiver or trustee of the party or
of its assets, or (ii) been served with an involuntary petition against it,
filed in any insolvency proceeding, which petition has not been dismissed
as of the closing date with respect to either the Put Option Shares or the
Call Option Shares.
(f) HSR Act Clearance. The waiting period, if any, applicable to the
consummation of the purchase and sale of the Shares under the HSR Act shall
have expired or been terminated.
7.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell any Put Option Shares or Call Option Shares at the relevant
closing is subject to the fulfillment to the Company's satisfaction, on or prior
to the respective closings, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Purchaser in Section 6
hereof shall be true and correct in all material respects on the date of
such closing with the same force and effect as if they had been made on and
as of said date; and the Purchaser shall have performed all obligations and
conditions herein required to be performed by it on or prior to such
closing.
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(b) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful sale and issuance of any Put Option Shares or Call Option Shares
pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of such closing. No stop order or other order enjoining
the sale of the Shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened by
the SEC or any commissioner of corporations or similar officer of any other
state having jurisdiction over this transaction. At the time of such
closing, the sale and issuance of the Shares shall be legally permitted by
all laws and regulations to which the Purchaser and the Company are
subject.
(c) HSR Act Clearance. The waiting period, if any, applicable to the
consummation of the purchase and sale of the Shares under the HSR Act shall
have expired or been terminated.
Section 8. Broker's Fee. The parties hereto hereby represent that
there are no brokers or finders entitled to compensation in connection with the
transactions contemplated hereby.
Section 9. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first class
registered or certified mail, postage prepaid, and shall be deemed given when so
mailed;
(a) if to the Company, to Aphton Corporation, ▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer,
with a copy (which shall not constitute notice) to White & Case LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Esq., or to such other person at such other place as the Company
shall designate to the Purchaser in writing; and
(b) if to the Purchaser, to SmithKline ▇▇▇▇▇▇▇ plc, One New Horizons
Court (1/NHC/3), Brentford, Middlesex TW8 9EP, England, Attention: General
Counsel, with a copy (which shall not constitute notice) to SmithKline
▇▇▇▇▇▇▇ Biologicals Manufacturing S.A., ▇▇ ▇▇▇ ▇▇ ▇'▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, Attention: Jean Stephenne, Senior Vice President and
General Manager or to such other person at such other place as the Company
shall designate to the Purchaser in writing.
Section 10. Entire Agreement. This Agreement together with the
Collaboration and License Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof and thereof. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in this
Agreement shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.
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Section 11. Amendments. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and by the
Purchaser.
Section 12. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 13. Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
Section 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the United
States of America.
Section 15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other party.
Section 16. Expenses. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.
Section 17. Publicity. Neither party shall issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other
party, except as may be required by applicable law or regulation as long as the
disclosing party has used good faith efforts under the circumstances to consult
with the other party as provided in this Section 17.
Section 18. Confidentiality. The Purchaser acknowledges and agrees
that any information or data it has acquired from the Company, not otherwise
properly in the public domain, was received in confidence. The Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company unless such information becomes
available to the public generally or it is required by a governmental body to
disclose such information.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives the day and year first
above written.
APHTON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman., President and Chief
Executive Officer
SMLTHKLINE ▇▇▇▇▇▇▇ plc
By: /s/ Jean Stephenne
------------------------------------------
Name: Jean Stephenne
Title: Attorney-in-Fact
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