EXHIBIT 10.1
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
between
LABORATORIOS BAGO SA
and
GENAERA CORPORATION
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Agreement is made and entered into as of August __, 2001 ( the
"Effective Date") between Laboratorios Bago SA, a _________ corporation, having
offices at ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (hereinafter
"Bago"), and Genaera Corporation, a Delaware corporation, having offices at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (hereinafter
"Genaera").
WHEREAS, Bago is currently manufacturing, marketing and selling the Product
for use as an anti-inflammatory;
WHEREAS, Genaera is currently researching and has obtained certain
information regarding the use of the Product (as defined herein) as a
Mucoregulator (as defined herein); and
WHEREAS, Bago and Genaera desire to exchange their respective information
regarding the Product and to collaborate with, and grant certain licenses to
each other regarding the Product upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following definitions shall be applicable:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other Person
that directly or indirectly, by itself or through one or more
intermediaries, controls, or is controlled by, or is under direct or
indirect common control with, such Person. The term "control" means
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of securities, by contract or otherwise. Control
will be presumed if one Person owns, either of record or beneficially,
more than 50% of the voting stock of any other Person.
1.2 "BAGO KNOW-HOW" shall mean all Know-How controlled by Bago and its
Affiliates.
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1.3 "BAGO ROYALTY PERIOD" shall mean, with respect to Product in each
country in the Genaera Territory, and subject to the provisions of
Article V of this Agreement, the longer of (a) if the manufacture,
use, offer for sale, sale or import of such Product in such country at
the time of the First Commercial Sale is covered by a Valid Patent
Claim, the royalty period continues for as long as such Valid Patent
Claim remains in effect and is infringed thereby but for the license
granted by this Agreement, or (b) ten (10) years from the date of the
First Commercial Sale of such Product by Genaera, its Affiliates, or
sublicensees. "Bago Royalty Period" shall mean, with respect to
Reformulated Product, in each country in the Genaera Territory, and
subject to the provisions of Article V of this Agreement, ten (10)
years from the date of the First Commercial Sale of such Reformulated
Product by Genaera, its Affiliates, or sublicensees; provided,
however, that Reformulated Product shall refer only to Reformulated
Product developed by Genaera.
1.4 "BAGO PATENTS" shall mean all Patents controlled by Bago and its
Affiliates. A list of Bago Patents is appended hereto as SCHEDULE 1.4
and will be updated periodically to reflect additions thereto during
the course of this Agreement.
1.5 "BAGO TECHNOLOGY" shall mean all Bago Patents and all Bago Know-How.
1.6 "BAGO TERRITORY" shall mean all the countries of South America,
Central America, Mexico and Korea.
1.7 "BASELINE AMOUNT" shall mean the aggregate Net Sales of Product in the
Bago Territory for the twelve (12) month period prior to the
commencement of the Genaera Royalty Period.
1.8 "CONTROLLED" shall mean the legal authority or right of a party hereto
to grant a license or sublicense of intellectual property rights to
another party hereto, or to otherwise disclose proprietary or trade
secret information to such other party, without breaching the terms of
any agreement with a Third Party, infringing upon the intellectual
property rights of a Third Party, or misappropriating the proprietary
or trade secret information of a Third Party.
1.9 "EFFECTIVE DATE" shall mean the date specified in the first paragraph
of this Agreement.
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1.10 "FIRST COMMERCIAL SALE" shall mean, in the case of Genaera, the first
sale of Product or Reformulated Product to a Third Party by Genaera or
an Affiliate or sublicensee of Genaera in a country in the Genaera
Territory following applicable Regulatory Approval of the Product or
Reformulated Product in such country. In the case of Bago, First
Commercial Sale shall mean the first sale of Product or Reformulated
Product to a Third Party by Bago or an Affiliate or sublicensee of
Bago in a country in the Bago Territory following applicable
Regulatory Approval of the Product or Reformulated Product in such
country.
1.11 "GMP" shall mean the current Good Manufacturing Practice regulations
promulgated by the FDA, published at 21 CFR Part 210 et seq., as such
regulations may be amended, and such equivalent foreign regulations or
standards as may be applicable with respect to Talniflumate or Product
manufactured or sold outside the United States.
1.12 "GENAERA KNOW-HOW" shall mean all Know-How controlled by Genaera and
its Affiliates.
1.13 "GENAERA PATENTS" shall mean all Patents controlled by Genaera and its
Affiliates. A list of Genaera Patents is appended hereto as SCHEDULE
1.13 and will be updated periodically to reflect additions thereto
during the course of this Agreement.
1.14 "GENAERA ROYALTY PERIOD" shall mean, with respect to Product in each
country in the Bago Territory and subject to the provisions of Article
V of this Agreement, the longer of (a) if the manufacture, use, offer
for sale, sale or import of such Product in such country at the time
of the First Commercial Sale of Product as a Mucoregulator infringes a
Valid Patent Claim but for the license granted by Genaera by this
Agreement, the royalty period continues for as long as such Valid
Patent Claim remains in effect and is infringed thereby but for the
license granted by this Agreement, or (b) ten (10) years from the date
Bago begins marketing the Product as a Mucoregulator in such country.
"Genaera Royalty Period" shall mean, with respect to Reformulated
Product, in each country in the Bago Territory and subject to Article
V of this Agreement, ten (10) years from the date of the First
Commercial Sale of such Reformulated Product by Bago, its Affiliates,
or sublicensees; provided, however, that Reformulated Product shall
only refer to Reformulated Product developed by Bago.
1.15 "GENAERA TECHNOLOGY" shall mean all Genaera Patents and all Genaera
Know-How.
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1.16 "GENAERA TERRITORY" shall mean all the countries of the world except
the countries of the Bago Territory.
1.17 "KNOW-HOW" shall mean all proprietary material and information
including data, compositions of matter and methods, whether currently
existing or developed or obtained during the course of this Agreement
and whether or not patentable or confidential, and that relate to the
development, utilization, or use of Talniflumate, Product or
Reformulated Product, including but not limited to processes,
techniques, methods, products, materials and compositions.
1.18 "MUCOREGULATOR" shall mean a substance that regulates or inhibits the
synthesis or secretion of glycoproteins derived from any of the mucin
genes from cells in the lung or other organs in the body of mammals
including man.
1.19 "NET SALES" shall mean, with respect to the Product or Reformulated
Product, the gross amount invoiced on account of sales by Bago or
Genaera, as the case may be, or any of their respective Affiliates or
sublicensees to Third Parties less the following to the extent not
already reflected in the invoice price (a) actual credits, allowances,
discounts, rebates to, and chargebacks from the account of, such Third
Parties (including without limitation Third Party distributors and
wholesalers) for spoiled, damaged, out-dated, rejected or returned
Product and actual Federal, State or local government rebates for
Product or Reformulated Product; (b) actual freight and insurance
costs incurred in transporting such Product or Reformulated Product to
such Third Parties; (c) actual cash, quantity and trade discounts; and
(d) actual sales, use and value-added taxes and taxes or governmental
charges incurred in connection with the exportation or importation of
such Product or Reformulated Product. For purposes of determining Net
Sales, a sale shall have occurred when an invoice therefore shall be
generated or, if earlier, the Product or Reformulated Product is
shipped for delivery. Sales of Product or Reformulated Product by Bago
or Genaera to any of their respective Affiliates that is a reseller
thereof shall be excluded, and only the subsequent sale of such
Product or Reformulated Product to a Third Party by Bago or Genaera or
any of their respective Affiliates or sublicensees shall be deemed Net
Sales hereunder. In the case of any other sale or disposal or other
arrangement with a Third Party with respect to Product, Net Sales will
be calculated to include the value of the consideration received.
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1.20 "PATENTS" shall mean all existing patents and patent applications and
all patent applications hereafter filed, including any continuations,
continuations-in-part, divisions, provisionals or any substitute
applications, any patent issued with respect to any such patent
applications, any reissue, reexamination, renewal or extension
(including any supplemental patent certificate) of any such patent,
and any confirmation patent or registration patent or patent of
addition based on any such patent, and all foreign counterparts of any
of the foregoing that relate to Talniflumate, Product or Reformulated
Product.
1.21 "PERSON" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization
or government or political subdivision thereof.
1.22 "PRODUCT" shall mean the substance for pharmaceutical use containing
Talniflumate currently commercialized by Bago in the tablet and
suspension forms currently used by Bago and specifically described on
SCHEDULE 1.22.
1.23 "REFORMULATED PRODUCT" shall mean any product containing Talniflumate
developed by either Bago or Genaera other than Product.
1.24 "REGULATORY APPROVAL" shall mean, with respect to a country in the
Bago Territory or the Genaera Territory, all authorizations by the
appropriate governmental entity or entities necessary for commercial
sale of the Product or Reformulated Product in that country including,
without limitation and where applicable, approval of labeling, price,
reimbursement and manufacturing. "Regulatory Approval" in the United
States shall mean final approval of a new drug application pursuant to
21 C.F.R. ss. 314, permitting marketing of the Product or Reformulated
Product in interstate commerce in the United States.
1.25 "TALNIFLUMATE" shall mean phthalidyl
2-(3'trifluoromethyl-anilino)-pyridine-3-carbolylate and its salts.
1.26 "TECHNOLOGY" shall mean Genaera Technology and Bago Technology.
1.27 "THIRD PARTY" shall mean any unincorporated body, person, corporation
or other entity other than Genaera, Bago or their respective
Affiliates or sublicensees of rights conveyed under this Agreement.
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1.28 "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and
unexpired patent included within the Genaera Patents or Bago Patents
that has not been disclaimed or abandoned or withdrawn and has not
been held unenforceable or invalid or permanently revoked by a
decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for
appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise; (b) a claim of a pending
patent application included within the foregoing, which claim was
filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of such application and
the subject matter of which has not been pending for more than five
(5) years, including the pendency of any prior application; or (c) a
claim that has been pending for more than five (5) years, including
the pendency of any prior application that subsequently is issued and
satisfies the criteria of subsection (a) above.
ARTICLE II
MUTUAL TRANSFER OF KNOW-HOW
2.1 TRANSFER OF KNOW-HOW
2.1.1 Within thirty (30) days of the Effective Date, each of Bago and
Genaera shall take substantial steps to identify Bago Know-How and
Genaera Know-How, and shall promptly commence the transfer to the
other of such Bago Know-How and Genaera Know-How as may be requested;
provided, however, that the Know-How intended by this Section 2.1
shall not include Know-How related to Reformulated Product.
2.1.2 Promptly after the end of each calendar quarter during the term of
this Agreement, each of Bago and Genaera shall similarly identify and
transfer to the other party, the relevant Bago Know-How and Genaera
Know-How; provided however, in the event that the dissemination of
Know-How would be prohibited by law, agreement with a Third Party, or
otherwise, the fact of such prohibition shall be disclosed to the
other party but not the Know-How.
2.1.3 During the term of this Agreement, Bago shall provide Genaera and
Genaera shall provide Bago with such technical advice as reasonably
requested by the other with respect to the use of the Bago Technology
and Genaera Technology.
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2.1.4 Upon not less than two weeks prior written notice to the other party,
Bago and Genaera shall have the right to visit the premises where
Know-How is being developed, marketed or sold and shall make
scientists and other relevant experts reasonably available to discuss
the progress of the Bago Know-How or Genaera Know-How in accordance
with the terms of this Agreement.
2.1.5 The foregoing transfer of Know-How shall be for the purposes
permitted under this Agreement only and in accordance with the rights
granted under the licenses hereunder. Neither party shall gain any
right to use or otherwise exploit the Know- How of the other, except
as expressly stated herein.
2.2 JOINT PROJECT TEAM
2.2.1 The parties hereto agree to establish a joint project team (the
"JC"), which shall consist of no fewer that four (4) permanent
members, two (2) permanent members from each party. Such
representatives shall include individuals within or designated by the
senior management of each party, and those representatives of each
party shall, individually or collectively, have expertise and/or
responsibility to perform under this Agreement. Any member of the JC
may designate a substitute to attend and perform the functions of that
member at any meeting of the JC and each member of the JC may invite
such other non-members as deemed necessary to help explore the issues
before the JC.
2.2.2 The purpose of the JC shall be to ensure open communication, through
telephone conferences, meetings and otherwise, and provide for the
exchange of information between the parties with respect to Know-How.
The parties shall provide each other with an update on Know-How on a
timely basis, which shall in no event be less than quarterly. Each
party shall be responsible for all travel and related costs and
expenses for its members.
ARTICLE III
LICENSE GRANT
3.1 GRANT TO GENAERA
Subject to the other provisions of this Agreement, Bago hereby
grants to Genaera a sole
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and exclusive license or (as appropriate) sublicense under
Bago Technology to the extent necessary to permit Genaera to
carry out its rights and obligations set forth in this
Agreement and to research, develop, manufacture, have
manufactured, import, export, market, use, sell or have sold
Product in the Genaera Territory, with the right to
sublicense. Notwithstanding the foregoing grant, Bago
reserves the right to use all Bago Technology
necessary to discharge its obligations and exercise its
rights under this Agreement. Bago retains all rights to Bago
Technology except to the extent explicitly granted to Genaera
hereunder. Genaera shall not permit any subcontractors or
sublicensees to use Bago Technology without provisions
safeguarding confidentiality equivalent to those provided in
this Agreement. Any such provisions will allow Bago the
right to directly enforce the obligations of confidentiality
with respect to Bago Know-How and other confidential
information in the possession of the Third Party.
Notwithstanding the foregoing, Genaera understands and agrees
that the license granted to it pursuant to this Section 3.1
does not include a license or sublicense under Bago Technology
that relates to Reformulated Product.
3.2 GRANT TO BAGO
Subject to the other provisions of this Agreement, Genaera
hereby grants to Bago a sole and exclusive license or
(as appropriate) sublicense in the Bago Territory under
Genaera Technology to the extent necessary to allow Bago to
carry out its rights and obligations set forth in this
Agreement and to research, develop, manufacture, have
manufactured, import, export, market, use, sell and have sold
Product in the Bago Territory, with the right to sublicense.
Notwithstanding the foregoing grant, Genaera reserves the
right to use all Genaera Technology necessary to discharge its
obligations and exercise its rights under this Agreement.
Genaera retains all rights to Genaera Technology except to the
extent explicitly granted to Bago hereunder. Bago shall not
permit any subcontractors or sublicensees to use Genaera
Technology without provisions safeguarding confidentiality
equivalent to those provided in this Agreement. Any such
provisions will allow Genaera the right to directly enforce
the obligations of confidentiality with respect to Genaera
Know-How and other confidential information in the possession
of the Third Party. Notwithstanding the foregoing, Bago
understands and agrees that the license granted to it pursuant
to this Section 3.2 does not include a license or sublicense
under Genaera Technology which relates to Reformulated
Product,
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3.3 REFORMULATED PRODUCT
In the event that one party develops a Reformulated Product:
3.3.1 The developing party shall give the non-developing party an option to
negotiate for an exclusive license to develop, make and sell such
Reformulated Product in the non-developing party's territory. The
license shall be upon terms to be mutually negotiated by both parties
during a 180 day period beginning upon the non-developing party's
receipt of notice of the development of such Reformulated Product and
sufficient information to enable the non-developing party to evaluate
and determine whether to exercise its option. Both parties shall use
commercially reasonable efforts to conclude such license. In the event
that no agreement is reached, the developing party shall not market
such Reformulated Product in the territory of the non-developing party
without the non-developing party's written consent, except as set
forth in Section 11.3 of the Agreement, and
3.3.2 Notwithstanding that no license to the developing party's
Reformulated Product is granted to the non-developing party, the
developing party shall pay royalties to the non-developing party for
sales of Reformulated Product in the developing party's territory as
set forth in Article V.
ARTICLE IV
SUPPLY AND REGULATORY MATTERS
4.1 MANUFACTURE OF TALNIFLUMATE AND PRODUCT
Bago will be responsible for manufacturing and supply of all
Talniflumate and Product to the extent requested by Genaera and
without cost to Genaera as necessary for the conduct of
preclinical testing, including without limitation toxicology and
pharmacology testing, and clinical trials to be conducted by
Genaera. In the event that Genaera requires an aggregate of 100
kg or more of Talniflumate or Product for preclinical and clinical
trials, Genaera shall pay to Bago, an amount equal to the direct
manufacturing cost of such excess plus reasonable overhead
applied to such excess plus an amount equal to 20% of such total
cost (the
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"Genaera Price"). At the time the agreement is signed by both
parties, the estimated selling price of Talniflumate by Bago to
Genaera is one hundred fifty dollars (USD (150,=) per kilo. The
parties understand that material manufactured by Bago as of the
date of this Agreement is not in accordance with United States
Food and Drug Administration GMP. Bago may, at its option, request
to become a non-exclusive commercial supplier of Talniflumate and
Product for Genaera on a country-by-country basis, assuming
compliance by Bago of all necessary regulatory manufacturing
requirements. In such event and solely at Genaera's request, Bago
shall supply Genaera with Talniflumate and Product for Genaera's
commercial use at the Genaera Price plus shipping, such shipping
to be CIF Air USA; provided however, that allocation of supply
shall be determined in a manner that does not unreasonably
interfere with Bago's need for Product in the Bago Territory.
4.2 REGULATORY FILINGS
Each party shall have the sole right in its territory to obtain
Regulatory Approvals, which shall be held by and in its name and
such party shall own all submissions in connection therewith,
provided that each party shall have a right of reference to all or
any part of the submissions of the other party. Notwithstanding
the foregoing, it is understood and agreed by the parties that
each party may conduct clinical trials in any country of the
world, at its own cost, and that the results of all clinical
trials shall be available to both parties for their respective
regulatory and marketing applications in their respective
territories.
ARTICLE V
ROYALTIES
5.1 ROYALTIES TO BAGO
Genaera will pay royalties to Bago at the following annual rates,
on Net Sales of all Products sold in the Genaera Territory, and
Reformulated Product developed by Genaera and sold in the Genaera
Territory, on a country by country basis, as follows:
5.1.1 For the first two (2) years of the Bago Royalty Period,
Genaera shall pay to Bago [**] of the aggregate of Net
Sales of Product or Reformulated Product.
5.1.2 Thereafter, for the remainder of the Bago Royalty
Period, [**] of the aggregate of Net Sales of Product
or Reformulated Product; provided however, that in
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no event shall the aggregate royalties paid or payable to Bago
by Genaera exceed [**] US Dollars.
5.2 TAX WITHHOLDING
Any income or other taxes which Genaera is required by law to pay
or withhold on behalf of Bago with respect to royalties, and any
interest thereon, payable to Bago under this Agreement shall be
deducted from the amount of such royalties and interest due and
paid or withheld, as appropriate, by Genaera on behalf of Bago.
Any such tax required to be paid or withheld shall be an expense
of, and borne solely by, Bago. Genaera shall furnish Bago with
reasonable evidence of such withholding payment, in electronic or
written form, as soon as practicable after such payment is made.
The parties hereto will reasonably cooperate in completing and
filing documents required under the provisions of any applicable
tax laws or under any other applicable law in connection with the
making of any required withholding payment, or any claim to a
refund of any such payment.
5.3 ROYALTIES TO GENAERA
Bago will pay royalties to Genaera at the following annual rates,
on Net Sales of all Products sold in the Bago Territory, and
Reformulated Product developed by Bago and sold in the Bago
Territory, on a country by country basis, as follows:
5.3.1 The Genaera Royalty Period shall not commence until
such time as Bago begins marketing the Product or
Reformulated Product as a Mucoregulator. Bago hereby
agrees that it shall promptly inform Genaera when it
begins marketing the Product or Reformulated Product
as a Mucoregulator and understands that failure to
comply with this provision shall be deemed a material
breach of this Agreement.
5.3.2 For the first two (2) years of the Genaera Royalty
Period, Bago shall pay to Genaera [**] of the
aggregate of Net Sales of Product or Reformulated
Product in excess of the Baseline Amount.
5.3.3 Thereafter, for the remainder of the Genaera Royalty
Period, Bago shall pay to Genaera [**] of the
aggregate of Net Sales of Product or
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Reformulated Product in excess of the Baseline
Amount; provided however, that in no event shall the
aggregate royalties paid or payable to Genaera by
Bago exceed [**] US Dollars.
5.4 TAX WITHHOLDING
Any income or other taxes which Bago is required by law to pay or
withhold on behalf of Genaera with respect to royalties, and any
interest thereon, payable to Genaera under this Agreement shall be
deducted from the amount of such royalties and interest due and
paid or withheld, as appropriate, by Bago on behalf of Genaera.
Any such tax required to be paid or withheld shall be an expense
of, and borne solely by Genaera. Bago shall furnish Genaera with
reasonable evidence of such withholding payment, in electronic or
written form, as soon as practicable after such payment is made.
The parties hereto will reasonably cooperate in completing and
filing documents required under the provisions of any applicable
tax laws or under any other applicable law in connection with the
making of any required withholding payment, or any claim to a
refund of any such payment.
5.5 SALES REPORTS
5.5.1 SUBSTANCE OF QUARTERLY REPORTS
During the term of this Agreement and after the First
Commercial Sale of the Product or Reformulated Product,
Genaera for the Genaera Territory and Bago for the Bago
Territory shall furnish or cause to be furnished to the other
on a quarterly basis a written report or reports covering each
quarter (each such quarter being sometimes referred to herein
as a "reporting period") showing: the Net Sales of the Product
and Reformulated Product in each country in the relevant
territory during the reporting period by such party; the
royalties, payable in United States Dollars ("Dollars"), which
shall have accrued under this Agreement in respect of such
sales and the basis of calculating those royalties; the
exchange rates used in converting into Dollars, from the
currencies in which sales were made, any payments due which
are based on Net Sales; and dispositions of Product and
Reformulated Product other than pursuant to sale for cash.
5.5.2 TIMING
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Final reports shall be due on the sixtieth (60th) day
following the close of each reporting period. In addition, at
least ten (10) days prior to the end of the calendar quarter,
each party shall provide the other with a draft report for the
quarter, based on such party's then-current forecast for that
quarter.
5.5.3 RECORDS
Each party shall keep accurate records in sufficient detail to
enable the amounts due hereunder to be determined and to be
verified by the other party.
5.5.4 CURRENCY EXCHANGE
With respect to sales of Product or Reformulated Product
invoiced in Dollars, the Net Sales amounts and the amounts due
hereunder shall be expressed in Dollars. With respect to sales
of Product or Reformulated Product invoiced in a currency
other than Dollars, the Net Sales and amounts due hereunder
shall be expressed in the domestic currency of the party
making the sale, together with the Dollar equivalent of the
amount payable, calculated using the arithmetic average of the
spot rates on the last business day of each month of the
calendar quarter in which the Net Sales were made. The
"Closing mid-point rates" found in the "Dollar spot forward
against the Dollar" table published by The Financial Times or
any other publication as agreed to by the parties shall be
used as the source of spot rates to calculate the average as
defined in the preceding sentence. All payments shall be made
in Dollars.
5.5.5 ROYALTY PAYMENT DUE DATE; ACCRUAL
Royalties which have accrued during any month and are required
to be shown on a final quarterly sales report provided for
under this Agreement shall be due and payable on the date such
final quarterly sales report is due.
5.5.6 AUDIT
Upon the written request of the receiving party, at its
expense and not more than once in or in respect of any
calendar year, the paying party shall permit an independent
public accountant of national prominence selected by the
receiving party to have access during normal business hours
to those records of the paying party as may be reasonably
necessary to verify the accuracy of the Net Sales report and
royalty calculation conducted by the paying party pursuant to
this Agreement, in respect of any calendar year ending
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not more than thirty-six (36) months prior to the date of such
notice. The report prepared by such independent public
accountant, a copy of which shall be sent or otherwise
provided to the paying party by such independent public
accountant at the same time it is sent or otherwise provided
to the receiving party, shall contain the conclusions of such
independent public accountant regarding the audit and will
specify that the amounts paid to the receiving party pursuant
thereto were correct or, if incorrect, the amount of any
underpayment or overpayment. If such independent public
accountant's report shows any underpayment, the paying party
shall remit or shall cause its sublicensees or marketing
partners to remit to the receiving party within thirty (30)
days after receipt of such report, (i) the amount of such
underpayment and (ii) if such underpayment exceeds five
percent (5%) of the total amount owed for the calendar year
then being audited, the reasonable and necessary fees and
expenses of such independent public accountant performing the
audit, subject to reasonable substantiation thereof. Any
overpayments shall be fully creditable against amounts payable
in subsequent payment periods. Each party agrees that all such
information is confidential and shall be retained by its
accountant in confidence.
5.5.7 INTEREST DUE
In case of any delay in payment but not occasioned by Force
Majeure, interest on the overdue payment shall accrue at an
annual interest rate, compounded monthly, equal to the LIBOR
rate as reported in The Financial Times, plus four percentage
points (4%), as determined for each month on the last business
day of that month, assessed from the day payment was initially
due. The foregoing interest shall be due without any special
notice.
ARTICLE VI
INTELLECTUAL PROPERTY
6.1 PATENTABLE INVENTIONS AND KNOW-HOW.
6.1.1 Each party shall have and retain sole and exclusive title to
all inventions, discoveries, Know-How which are made,
conceived, reduced to practice or generated by its employees,
agents or other persons acting under its authority in the
course of or as a result of this Agreement. In the event that
the employees, agents or other persons acting under the
authority of both parties jointly make, conceive, reduce to
practice or generate any inventions, discoveries, Know-How,
then (I)if such invention, discovery, Know-
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14
How relates primarily to Genaera Technology then it shall be
owned by Genaera, and (ii) if such invention, discovery or
Know-How relates primarily to Bago Technology then it shall be
owned by Bago. The parties agree that if the invention,
discovery or Know-How relates to a Product, it shall be
subject to the license granted in Section 3.1 or 3.2 of this
Agreement; if the invention, discovery or Know-How relates to
Reformulated Product, it shall be subject to the provisions of
Section 3.3 of this Agreement.
6.1.2 During the term of this Agreement, Bago shall be responsible
for the preparation, filing, prosecution, maintenance and
related expenses of all Bago Patents and Genaera Patents
approved anywhere in the Bago Territory; provided, however,
that Bago shall not be responsible for the preparation,
filing, prosecution, maintenance and related expenses of any
Genaera Patents which relate to Reformulated Product in the
Bago Territory unless such an agreement is reached pursuant to
Section 3.3 herein. Genaera shall be responsible for the
preparation, filing, prosecution, maintenance and related
expenses of all Genaera Patents and Bago Patents approved
anywhere in the Genaera Territory; provided, however, that
Genaera shall not be responsible for the preparation, filing,
prosecution, maintenance and related expenses of any Bago
Patents which relate to Reformulated Product to be
commercialized in the Genaera Territory unless such an
agreement is reached pursuant to Section 3.3 herein.
6.1.3 During the term of this Agreement, neither Bago nor Genaera
shall allow any Bago Patents or Genaera Patents, respectively,
to lapse (other than expiration of the patent term) or be
surrendered, or abandoned (other than those that are abandoned
in the ordinary course of prosecution in connection with the
filing of a continuation or continuation in part application
therefore and/or as a result of the expiration of the patent
term and/or as a result of a patent being determined to be
invalid by a court or administrative agency of competent
jurisdiction) without written notice of such intention to the
other party. Genaera shall have the right to assume
responsibility for any Bago Patent approved anywhere within
the Genaera Territory or any part thereof which Bago intends
to abandon or otherwise cause or allow to be forfeited, and
Bago shall have the right to assume responsibility for any
Genaera Patent approved anywhere in the Bago Territory or any
part thereof which Genaera intends to abandon or otherwise
cause or allow to be forfeited
6.2 PATENT PROSECUTION.
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6.2.1 In the event of the institution of any suit by a Third Party
against either party, their Affiliates or sublicensees for
patent infringement involving the manufacture, use, sale,
distribution or marketing of Product or Reformulated Product
anywhere in the Bago Territory or Genaera Territory, the party
sued shall promptly notify the other party in writing. The
party in whose territory the suit was instituted (the
"Defending Party") shall have the right but not the obligation
to defend such suit at its own expense, provided that in the
case where the patent is not held by the Defending Party, the
Defending Party notifies and consults with the non-defending
party on its defense. Bago and Genaera shall assist one
another and cooperate in any such litigation at the other's
request without expense to the requesting party.
6.2.2 In the event that either party becomes aware of actual or
threatened infringement of a Patent anywhere in the Bago
Territory or the Genaera Territory, that party shall promptly
notify the other party in writing. The party in whose
territory the infringement is threatened or has occurred (the
"Infringed Party") shall have the first right, but not the
obligation to bring, at its own expense, an infringement
action against the Third Party. In the event that the patent
is not held by the Infringed Party and the Infringed Party
does not commence an infringement action within ninety (90)
days of receipt of notice of infringement, the non-infringed
party, after notifying the Infringed Party in writing, shall
be entitled to bring such infringement action at its own
expense. The party conducting such action shall have full
control over its conduct, including settlement thereof. In
any event, Bago and Genaera shall assist one another and
cooperate in any such litigation at the other's request
without expense to the requesting party.
6.2.3 In any action brought pursuant to Section 6.2.2, the party
bringing the action shall indemnify the other party, its
officers, directors, shareholders, employees, agents,
successors and assigns from any loss, damage or liability,
including attorneys' fees and costs, which may result from
claims, counterclaims or cross-claims asserted by a defendant,
except to the extent that such losses, damages or liabilities
result from the negligence or willful misconduct of the other
party.
6.2.4 Bago and Genaera shall recover their respective actual
out-of-pocket expenses, or equitable proportions thereof,
associated with any litigation or settlement thereof from any
recovery made by either party. Any excess recovery shall be
retained by the party bringing the action.
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6.2.5 The parties shall keep one another informed of the status of
and of their respective activities regarding any litigation or
settlement thereof concerning Product or Reformulated Product,
provided, however, that no settlement or consent judgment or
other voluntary final disposition of any suit defended or
action brought by a party pursuant to this Article VI may be
entered into without the consent of the other party if such
settlement would require the other party to be subject to an
injunction or to make a monetary payment or would adversely
affect the other party's rights under this Agreement.
ARTICLE VII
NOTICE OF PHARMACEUTICAL SIDE-EFFECTS
7.1 7.1.1. INFORMATION
Genaera and Bago will provide to each other the information
necessary to monitor the safety of Product and Reformulated
Product and to meet in a timely manner, for all countries in
such party's territory, all regulatory requirements for
reporting adverse reactions or adverse events. Each party
shall forward to the other on a regular basis information on
adverse reactions and any material difficulties associated
with clinical use, studies, investigations, tests and
prescriptions of Product and Reformulated Product. Each party
shall provide each other with any appropriate information
which enables the other party to meet its regulatory
obligations in the countries in which it is commercializing or
developing Product or Reformulated Product.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BAGO
8.1 Bago represents and warrants to Genaera as follows:
8.1.1 AUTHORIZATION.
This Agreement has been duly executed and delivered by Bago
and constitutes the valid and binding obligation of Bago
enforceable against Bago in accordance with its terms except
as enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors'
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confidential treatment that has been filed with the Commission. The omitted
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rights generally and by general equitable principles. The
execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of
Bago, its officers and directors.
8.1.2 NO THIRD PARTY RIGHTS.
To the best of its knowledge, as of the Effective Date, Bago
owns or possesses adequate licenses or other rights to use all
Bago Technology, and to grant the licenses herein; and to the
best of its knowledge as of the Effective Date, the granting
of the licenses to Genaera hereunder does not violate any
right known to Bago of any Third Party.
8.1.3 NO THIRD PARTY PATENTS.
As of the Effective Date, to Bago's actual knowledge and based
on its current understanding of the Product and its use, in
the development, manufacture, use or sale of any Product
pursuant to this Agreement will not infringe or conflict with
any Third Party right or Patent, and as of the Effective Date
Bago is not aware of any pending patent application that, if
issued, would be infringed by the development, manufacture,
use or sale of any Product pursuant to this Agreement.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF GENAERA
9.1 Genaera represents and warrants to Bago as follows:
9.1.1 AUTHORIZATION
This Agreement has been duly executed and delivered by Genaera
and constitutes the valid and binding obligation of Genaera,
enforceable against Genaera in accordance with its terms
except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium
and other laws relating to creditors' rights generally and by
general equitable principles. The execution, delivery and
performance of this Agreement have been duly authorized by all
necessary action on the part of Genaera, its officers and
directors.
9.1.2 NO THIRD PARTY RIGHTS.
To the best of its knowledge, as of the Effective Date Genaera
owns or possesses adequate licenses or other rights to use all
Genaera Technology, and to grant the licenses
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confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
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herein; and to the best of its knowledge as of the Effective
Date, the granting of the licenses to Bago hereunder does not
violate any right known to Genaera of any Third Party.
9.1.3 NO THIRD PARTY PATENTS.
As of the Effective Date, to Genaera's actual knowledge and
based on its current understanding of the Product, and its
use, in the manufacture, use or sale of any Product pursuant
to this Agreement will not infringe or conflict with any Third
Party right or Patent, and as of the Effective Date Genaera is
not aware of any pending patent application that, if issued,
would be infringed by the development, manufacture, use or
sale of any Product pursuant to this Agreement.
ARTICLE X
CONFIDENTIALITY
10.1 Subject to Sections 10.7 and 10.8, during the term of this
Agreement, each party agrees not to provide or disclose to a
Third Party the Bago Technology or Genaera Technology.
10.2 Subject to Sections 10.7 and 10.8, during the term of the
Agreement, it is contemplated that each party will disclose to
the other party confidential information and materials which
is owned or controlled by the party providing such information
and materials or which party is obligated to maintain in
confidence and which is designated by the party providing such
information and materials as confidential (such materials and
information is individually and collectively "Confidential
Information"). Each party shall have the right to refuse to
accept the other party's Confidential Information. Subject to
Section s 10.7 and 10.8, each party agrees to retain the other
party's Confidential Information in confidence, and to limit
disclosure of any such Confidential Information to its
officers, director, employees and permitted assigns on a need
to know basis. Each party agrees to use the other party's
Confidential Information only as permitted by this Agreement,
and subject to Sections 10.7 and 10.8, not to disclose any
such Confidential Information to any other person or entity
without the prior written consent of the party providing the
Confidential Information. For the avoidance of doubt, Bago
Technology and Genaera Technology will be Confidential
Information.
10.3 The obligations of confidentiality and non-use of Sections
10.1 and 10.2 will not apply to:
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(a) Confidential Information generally known to the public
prior to its disclosure hereunder; or
(b) Confidential Information that subsequently becomes
known to the public by some means other than a breach
of this Agreement: or
(c) Confidential Information that is subsequently disclosed
by the receiving party by a Third Party having a lawful
right to make such disclosure and who is not under an
obligation of confidentiality to the party that
disclosed the Confidential Information to the receiving
party; or
(d) Confidential Information that is approved for release
by the parties
10.4 Neither party shall disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the
other party; provided, however, that a party may disclose the
terms or conditions of this Agreement, (a) on a need to know
basis to its legal and financial advisors to the extent such
disclosure is reasonably necessary in connection with such
party's activities expressly permitted by this Agreement and
ordinary and customary operations, and (b) to a Third Party in
connection with (i) an equity investment in such party, (ii)
a merger, consolidation, change in control or similar
transaction by such party, (iii) the transfer or sale of all
or substantially all of the assets of such party, or (iv) in
connection with the granting of a sublicense under this
Agreement. Prior to the execution of this Agreement, the
parties have agreed upon the substance of information that may
be used to describe the terms and conditions of this
transaction, and each party may disclosed such information, as
modified by mutual written agreement of the parties, without
the consent of the other party.
10.5 The obligations of this Article X shall not apply to the extent
a party is required to disclose information by applicable law,
regulation or bona fide legal process, provided that the party
required to make the disclosure takes reasonable steps to
restrict and maintain confidentiality of such disclosure and
provides reasonable prior notice to the other party.
10.6 The parties' obligations under this Article X shall terminate
five (5) years after the expiration or termination of this
Agreement.
10.7 Genaera may provide or disclose Genaera Patents, and Genaera
Know-How for use in a manner that is not inconsistent with the
exclusive license granted to Bago, provided that the Third
Party agrees to confidentiality provisions similar to those of
this Agreement and agrees not to use the Genaera Patents and
Genaera Know-How in a manner inconsistent with the exclusive
license granted to Bago under this Agreement.
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10.8 Bago may provide or disclose Bago Patents and Bago Know-How for
use in a manner that is not inconsistent with the exclusive
license granted to Genaera, provided that the Third Party
agrees to confidentiality provisions similar to those of this
Agreement and agrees not to use the Bago Patents and Bago
Know-How in a manner inconsistent with the exclusive license
granted to Genaera under this Agreement.
ARTICLE XI
TERM AND TERMINATION
11.1 TERM
Except as otherwise specifically provided herein and unless
sooner terminated pursuant to Section 11.2 of this Agreement,
this Agreement and the licenses and rights granted thereunder
shall remain in full force and effect until the later of ten
(10) years from the Effective Date or until no royalties shall
be payable to either party pursuant to Section V of this
Agreement; provided, that upon the expiration of the Bago
Royalty Period, Genaera shall have a fully paid up, non-
cancelable, non-exclusive license under the Bago Know-How to
research, develop, manufacture, have manufactured, market, sell
and have sold, Product in the Genaera Territory, and upon the
expiration of the Genaera Royalty Period, Bago shall have a
fully paid-up, non-cancelable, non-exclusive license under the
Genaera Know-How to research, develop, manufacture, have
manufactured, market, sell and have sold, Product in the Bago
Territory.
11.2 TERMINATION FOR CAUSE
Either party may terminate this Agreement upon thirty (30) days
prior written notice to the other party upon the material
breach by such other party of any of its obligations under this
Agreement; provided, however, that such termination shall
become effective only if such other party shall fail to cure
the breach within such thirty (30) day period.
11.3 REFORMULATED PRODUCT
In the event that an agreement is not concluded with respect to
Reformulated Product, as provided in Section 3.3 of the
Agreement, the developing party shall not market such
Reformulated Product in the territory of the non-developing
party without the non-developing party's written consent for a
period ending ten (10) years after the First Commercial Sale
of Reformulated
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Product to a Third Party by the developing party or an
Affiliate or sublicensee of such developing party in any
country in the developing party's territory following
applicable Regulatory Approval of such Reformulated Product in
such country.
11.4 EFFECTS OF TERMINATION.
11.4.1 In the event this Agreement is terminated at any time
after the Effective Date of this Agreement, and a sublicense
has been granted under this Agreement, then this Agreement
shall become an agreement between Bago and Genaera's
sublicensee, or Genaera and Bago's sublicensee, as the case may
be, subject to the sublicensee agreeing to be bound under the
terms and conditions of this Agreement. At the request of the
sublicensing party, the non-sublicensing party will acknowledge
to the sublicensee, the non-sublicensing party's obligations to
the sublicensee under this Agreement
11.4.2 Upon any termination of this Agreement, each party
shall promptly return to the other party any Know-How of such
other party, except that a sublicensee shall have the right to
retain the foregoing in the case where and to the extent that
the sublicensee retains rights under this Agreement pursuant to
Section 11.4.1.
11.4.3 The provisions of Article X, and Sections 11.1, 11.3,
11.4.1, 11.4.2, 11.4.3, 11.4.4, 12.1 and 13.1 shall survive any
expiration or termination of this Agreement.
11.4.4 Upon expiration or termination of this Agreement for
any reason, nothing herein shall be construed to release either
party from any obligation that matured prior to the effective
date of such expiration or termination.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 GOVERNING LAW; JURISDICTION.
If the parties are unable to reach agreement on any matter under this
Agreement, then such unresolved matter shall be referred to a Legal
Representative appointed by the Chief Executive Officer of each party
for resolution by negotiation in good faith as soon as is practicable
but no event later than 90 days after referral. If such Legal
Representatives are unable reach agreement on any such matter, then both
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parties shall try to make their best efforts to reach to an agreement in
good faith as soon as practicable but in no event later than 60 days
after referral. If the parties are unable to reach agreement on any
such matter, either party may initiate a non-binding mediation procedure
administered by the American Arbitration Association in accordance with
its commercial mediation rules. The parties agree that they shall share
equally the cost of the mediator and all filing and hearing fees, but
each party shall bear its own expenses. The mediation proceedings shall
be conducted at a location chosen by the party not originally requesting
the resolution of the dispute. If any unresolved matter is not resolved
by non-binding mediation pursuant to this section, then either party may
seek any available remedy in a proceeding in the courts of France under
French law. This Agreement shall be construed according to the laws of
France, except matters of patents law which shall be determined in
accordance with the patent laws relevant to the patents in question.
12.2 WAIVER.
The failure on the part of Genaera or Bago to exercise or
enforce any rights conferred upon it hereunder shall not be
deemed to be a waiver of any such rights nor operate to bar the
exercise or enforcement thereof at any time or times
thereafter. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to
enforce such term, but any such waiver shall be effective only
if in writing signed by the party against whom such waiver is
to be asserted.
123 FORCE MAJEURE.
Neither party shall be held liable or responsible to the other
party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any
term of this Agreement, other than an obligation to make a
payment, when such failure or delay is caused by or results
from fire, floods, embargoes, government regulations,
prohibitions or interventions, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotion,
strikes, lockouts, acts of God, or any other cause beyond the
reasonable control of the affected party.
12.4 SEVERABILITY.
It is the intention of the parties to comply with all
applicable laws domestic or foreign in connection with the
performance of its obligations hereunder. In the event that
any provision of this Agreement, or any part hereof, is found
invalid or unenforceable, the remainder of this Agreement will
be binding on the parties hereto, and will be construed as if
the invalid or unenforceable provision or part thereof had been
deleted, and the Agreement shall be deemed
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modified to the extent necessary to render the surviving
provisions enforceable to the fullest extent permitted by law.
12.5 ASSIGNMENT.
This Agreement may not be assigned or otherwise transferred by
either party without the prior written consent of the other
party; provided, however, that either party may assign this
Agreement, without the consent of the other party, (i) to any
of its Affiliates, if the assigning party guarantees the full
performance of its Affiliates' obligations hereunder, or (ii)
in connection with the transfer or sale of all or substantially
all of its assets or business or in the event of its merger or
consolidation with another company. In all cases the assigning
party shall provide the other party with prompt notice of any
such assignment. Any purported assignment in contravention of
this Section shall, at the option of the non-assigning party,
be null and void and of no effect. No assignment shall release
either party from responsibility for the performance of any
accrued obligation of such party hereunder.
12.6 COUNTERPARTS.
This Agreement may be executed in duplicate, both of which
shall be deemed to be originals, and both of which shall
constitute one and the same Agreement.
12.7 NO AGENCY.
Nothing herein contained shall be deemed to create an agency,
joint venture, `amalgamation, partnership or similar
relationship between Bago and Genaera.
12.8 NOTICE.
All communications between the parties with respect to any of
the provisions of this Agreement will be sent to the addresses
set out below, or to other addresses as designated by one party
to the other by notice pursuant hereto, by internationally
recognized courier or by prepaid certified, air mail (which
shall be deemed received by the other party on the tenth
business day following deposit in the mails), or by facsimile
transmission or other electronic means of communication (which
shall be deemed received when transmitted), with confirmation
by letter given by the close of business on or before the next
following business day:
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if to Genaera, at:
Genaera Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
Attention: President
if to Bago, at:
Laboratorios Bago, S.A.
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. Los
R & D Director
13.9 HEADINGS.
The paragraph headings are for convenience only and will not be
deemed to affect in any way the language of the provisions to
which they refer.
13.10 ENTIRE AGREEMENT.
This Agreement, including the Schedules appended hereto,
contains the entire understanding of the parties relating to
the matters referred to herein, and may only be amended by a
written document, duly executed on behalf of the respective
parties.
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confidential treatment that has been filed with the Commission. The omitted
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
LABORATORIOS BAGO SA
By: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Title: Director and Legal Representative
Date: September 7, 2001
GENAERA CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
------------------------------------
Title:
Date: September 14, 2001
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portions have been filed separately with the Commission.
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