LICENSE AGREEMENT
This Agreement is effective December 4, 1997 ("the EFFECTIVE
DATE") by and between Estate of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ("LICENSOR"), having an
address c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and Sparta Pharmaceuticals, Inc., a Delaware Corporation having
offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ("LICENSEE").
WHEREAS, LICENSEE desires to obtain an exclusive license in
and to certain patents and know-how owned by LICENSOR; and
WHEREAS, LICENSOR is willing to grant the exclusive license
desired by LICENSEE.
NOW THEREFORE in consideration of the mutual promises and
other good and valuable consideration, the parties agree as follows:
SECTION 1 Definitions.
The terms used in this Agreement have the following meaning:
1.1 The term "AFFILIATE" as applied to LICENSEE, shall mean any company
or other legal entity other than LICENSEE, in whatever country organized,
controlling or controlled by LICENSEE. The term "control" means possession, of
the power to direct or cause the direction of the management and policies
whether through the ownership of voting securities, by contract or otherwise.
1.2 The term "KNOW-HOW" shall mean any data, formulas, process
information or other information in the FIELD pertaining to claims set forth in
PATENT RIGHTS and known to LICENSOR on the EFFECTIVE DATE, including any
technical information, chemical, stability, pharmacological, toxicological,
clinical and manufacturing data.
1.3 The term "PATENT RIGHT(s)" shall mean the United States patents and
patent applications set forth in Appendix A, attached hereto and made a part
hereof, which are owned by LICENSOR including any division, continuation, or
continuation-in-part thereof and any foreign patent application or equivalent
corresponding thereto and any Letters Patent or the equivalent thereof issuing
thereon or reissue, re-examination or extension thereof.
1.4 The term "FIELD" shall mean prescription drug therapy for human
use.
1.5 The term "FIRST COMMERCIAL SALE" shall mean in each Country the
first sale of any PRODUCT by LICENSEE, its AFFILIATES or SUBLICENSEES, following
approval of its marketing by the appropriate governmental agency for the country
in which the sale is to be made and when governmental approval is not required,
the first sale in that country, provided, however, that FIRST COMMERCIAL SALE
shall not include the sale or transfer of non-commercial clinical trial or
research supplies of PRODUCT.
1.6 The term "TERRITORY" shall mean all countries of the world.
1.7 The term "NET SALES" means the [Information omitted and filed
separately with the Commission under Rule 24b-2.]
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[Information omitted and filed separately with the Commission under Rule 24b-2.]
1.8 The term "PRODUCT" shall mean any article, composition, apparatus,
substance, chemical, material, method, process or service in the FIELD which is
or which incorporates or utilizes KNOW-HOW or the manufacture, import, sale or
use of which is covered by PATENT RIGHTS.
1.9 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by LICENSEE to make, have made, import, use or sell any PRODUCT.
1.10 The term "VALID CLAIM" shall mean (i) a claim of a pending patent
application which has been pending for no more than five (5) years from the
filing date of the original subject matter covered by the claim or, (ii) a claim
of an issued patent which has not lapsed or become abandoned or been declared
invalid or unenforceable by a court of competent jurisdiction or an
administrative agency from which no appeal can be or is taken.
1.11 The use herein of the plural shall include the singular, and the
use of the masculine shall include the feminine.
SECTION 2 Grants.
2.1 (a) LICENSOR hereby grants to LICENSEE and LICENSEE hereby accepts
from LICENSOR a sole and exclusive royalty bearing right and license for the
TERRITORY under PATENT RlGHTS and KNOW-HOW to make, have made, use, import,
offer to sell and sell or have sold on its behalf PRODUCT, including the right
to sublicense third parties. LICENSEE shall have the right to extend such
license to its AFFILIATES.
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(b) Notwithstanding anything else to the contrary, LICENSEE may not
sublicense all rights licensed to LICENSEE hereunder without LICENSOR's written
consent, which consent shall not be unreasonably withheld.
2.2 Any permitted sublicenses shall provide that all applicable
sections of this Agreement shall be binding on the SUBLICENSEE as if it was a
party to this Agreement. LICENSOR shall be made a third party beneficiary under
the sublicense. In addition, LICENSEE agrees to remain responsible and liable
for the performance of a SUBLICENSEE under this Agreement and to forward to
LICENSOR a copy of any and all fully executed sublicense agreements. Any
sublicense shall provide that the SUBLICENSEE shall become a direct licensee of
LICENSOR upon termination of the license under this Agreement, pursuant to
Section 10.3(a) or (b), and that the SUBLICENSEE shall not grant a further
sublicense of all rights hereunder, except upon the written approval of
LICENSOR. However, such SUBLICENSEE may for marketing purposes grant sublicenses
on a country-by-country basis.
2.3 Notwithstanding anything else to the contrary, LICENSEE agrees that
KNOW-HOW and PATENT RIGHTS shall be used by LICENSEE only in and for PRODUCTS
and their development for sale in the TERRITORY, all in accordance with this
Agreement, and, except as set forth in Paragraph 10.1 of this Agreement, can
only be used by LICENSEE for so long as and to the extent that LICENSEE
maintains a license under this Agreement.
2.4 Notwithstanding anything else to the contrary, in the event that
LICENSEE'S rights and licenses under this Agreement are terminated, LICENSEE
agrees (a) not to use KNOW-HOW or VALID CLAIMS of PATENT RIGHTS or any
Confidential Information developed by LICENSEE which is derived from or based on
KNOW-HOW or PATENT RIGHTS for the
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research, development, making, using or selling of any PRODUCT and (b) not to do
any of the foregoing while this Agreement is in force for any PRODUCT except as
licensed under this Agreement.
2.5 The above licenses to sell any PRODUCT for which a royalty has been
paid under this Agreement includes the right of LICENSEE, its AFFILIATES and
SUBLICENSEES to grant to the purchaser thereof the right to use and/or resell
such purchased PRODUCT without payment of any further royalty hereunder.
2.6 All licenses pursuant to Paragraph 2.1 above to PATENT RIGHTS
conceived or first actually reduced to practice during the course of research
funded by a U.S. federal agency are subject to the rights, conditions and
limitations imposed by U.S. law. The words "sole and exclusive license" as used
herein shall mean sole and exclusive except for the royalty free non-exclusive
license granted to the U.S. government by LICENSOR pursuant to 35 USC Section
202 (c) (4) for any PATENT RIGHTS claiming any INVENTION subject to 35 USC
Section 201 and any other federal laws and applicable regulations.
2.7 (a) LICENSEE shall select and use reasonable efforts and diligence
under the circumstances to research, develop and then commercialize a selected
PRODUCT. The efforts of a SUBLICENSEE and/or an AFFILIATE shall be considered as
efforts of LICENSEE. At least once each year LICENSEE shall provide a report to
LICENSOR, in writing, summarizing in reasonable detail its efforts under this
paragraph.
(b) In the event that LICENSOR reasonably believes that LICENSEE is not
making reasonable efforts under the circumstances to develop and then
commercialize a selected PRODUCT by LICENSEE pursuant to Paragraph 2.7(a) then
LICENSOR shall provide written
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notice to LICENSEE which specifies LICENSOR's basis for such belief and what
additional efforts LICENSOR believes should be made by LICENSEE. Upon receipt of
such written notice, LICENSOR and LICENSEE shall enter into good faith
negotiations in order to reach mutual agreement as to what efforts by LICENSEE
shall satisfy the requirements of this Paragraph. If such mutual agreement is
not reached within thirty (30) days after receipt of such written notice, then,
in addition to any other remedies it may have outside the scope of arbitration,
LICENSOR may notify LICENSEE of its intention to terminate this Agreement and
the license hereunder which shall take effect thirty (30) days after written
notice to LICENSEE unless LICENSEE either (i) cures such failure prior to
expiration of such thirty (30) day period or (ii) invokes the arbitration
provisions of Paragraph 11.2 of this Agreement, which arbitration shall be
conducted on an expedited basis.
(c) As part of LICENSEE's obligation hereunder, LICENSEE shall meet the
following milestones:
(i) Initiate Phase III clinical trails with respect to a PRODUCT
pursuant to the rules of the U.S. Food & Drug Administration ("FDA") by
[Information omitted and filed separately with the Commission under Rule 24b-2.]
(ii) File a New Drug Application or Product License Application
(NDA/PLA) with respect to PRODUCT with the FDA by [Information omitted and filed
separately with the Commission under Rule 24b-2.] and
(iii) Obtain regulatory approval from the FDA to market and sell a
PRODUCT by [Information omitted and filed separately with the Commission under
Rule 24b-2.]
The fact that LICENSEE has met any or all of the foregoing milestones
shall not be conclusive evidence that LICENSEE has met is obligations under
Section 2.7(a). The parties recognize that pharmaceutical development is a
dynamic process and that unexpected delays may
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be encountered as a result of unanticipated scientific, medical and regulatory
issues and, accordingly, in the event of such a delay, beyond the control of
LICENSEE, LICENSOR agrees to consider in good faith a request for reasonable
adjustments to relevant milestone dates.
2.8 Subject to Section 2.7, LICENSEE shall have sole discretion for
making all decisions relating to the commercialization and marketing of PRODUCT.
SECTION 3 Confidentiality.
3.1 LICENSOR has already disclosed to LICENSEE confidential information
under a confidentiality agreement and during the term of this Agreement,
LICENSOR shall disclose to LICENSEE all additional proprietary and confidential
technology, inventions, technical information, biological materials and the like
which relate to PATENT RIGHTS, KNOW-HOW or PRODUCTS ("Confidential Information")
and are owned or controlled by LICENSOR. LICENSEE agrees to retain LICENSOR's
Confidential Information in confidence and not to disclose any such Confidential
Information to a third party without the prior written consent of LICENSOR and
to use LICENSOR's Confidential Information only for the purposes of this
Agreement, which obligation shall terminate five (5) years after the expiration
or termination of this Agreement. Confidential Information which is disclosed in
oral form shall be provided in written summary form with thirty (30) days after
disclosure.
3.2 The obligations of confidentiality and non-use will not apply to
Confidential Information which:
(i) was known to the LICENSEE or generally known to the public
prior to its disclosure hereunder; or
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(ii) subsequently becomes known to the public by some means other
than a breach of this Agreement;
(iii) is subsequently disclosed to the LICENSEE by a third party
having a lawful right to make such disclosure;
(iv) is required by law or bona fide legal process to be disclosed,
provided that the LICENSEE takes all reasonable steps to restrict and maintain
confidentiality of such disclosure and provides reasonable notice to the
LICENSOR; or
(v) is approved for release by the parties; or
(vi) is independently developed by the employees or agents of
LICENSEE without any knowledge of the Confidential Informatio provided by
LICENSOR.
3.3 Notwithstanding the foregoing, LICENSEE shall have the right to
disclose Confidential Information of LICENSOR to a third party who undertakes an
obligation of confidentiality and non-use with respect to such information, at
least as restrictive as LICENSEE'S obligation under this Section 3 (except for
the length of the confidentiality obligation, which shall not be less than five
(5) years from the time of the disclosure).
SECTION 4 Patents.
4.1 After the EFFECTIVE DATE of this Agreement, LICENSEE shall file,
where possible and in LICENSEE'S reasonable judgment, commercially practicable
and beneficial, prosecute and maintain patent applications and patents included
in PATENT RIGHTS in North
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America, the countries of the European Union and Japan, through patent counsel
selected by LICENSEE who shall consult with and keep LICENSOR advised with
respect thereto. In addition LICENSEE shall bear the cost and expense for the
filing, prosecution and maintenance of such PATENT RIGHTS in the TERRITORY.
4.2 With respect to any PATENT RIGHTS, each patent application, office
action, response to office action, request for terminal disclaimer, and request
for reissue or reexamination of any patent issuing from such application shall
be provided to LICENSOR sufficiently prior to the filing of such application,
response or request to allow for review and comment by LICENSOR. LICENSEE shall
not take any action that would materially adversely affect the scope, validity
or prosecution of the claims in any of said PATENT RIGHTS, including
substantially narrowing or canceling any claim, abandoning any patent or patent
application, failing to use reasonable commercial efforts to prosecute any
patent application or defend any patent in any interference or opposition
proceeding, or failing to file any patent application in any country, to the
extent such action or failure to act materially impairs PATENT RIGHTS of
commercially reasonable value, without providing LICENSOR with at least sixty
(60) days prior notice of LICENSEE's intent to take such proposed action in
inaction. LICENSOR shall thereupon have the rights set forth in paragraph 4.3 of
this Agreement.
4.3 If LICENSEE elects not to file a patent application or application
for a certificate of invention, not to maintain a patent or certificate of
invention or to abandon a pending patent application or application for
certificate of invention, included in the PATENT RIGHTS, it shall advise
LICENSOR and LICENSOR shall have the right but not the obligation to file such
application, maintain such patent or certificate of invention or continue to
attempt to maintain
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protection on the subject matter disclosed in the pending application. Costs for
these activities shall then become the responsibility of LICENSOR and LICENSEE
shall have no further rights thereunder with respect thereto.
SECTION 5 Royalties and Other Compensation.
5.1 (A) LICENSEE shall pay to LICENSOR:
(i) a royalty of [Information omitted and filed separately with the
Commission under Rule 24b-2.] of the NET SALES of PRODUCTS which are
manufactured or sold by LICENSEE or its AFFILIATES and licensed to LICENSEE
hereunder; or (ii) a royalty based on the royalties received by LICENSEE from
its SUBLICENSEES from the manufacture, use or sale of PRODUCTS as follows:
(a) [Information omitted and filed separately with the Commission
under Rule 24b-2.] of such royalties received by LICENSEE from a
SUBLICENSEE during the [Information omitted and filed separately
with the Commission under Rule 24b-2.] years of sales of PRODUCT by
such SUBLICENSEE;
(b) [Information omitted and filed separately with the Commission
under Rule 24b-2.] of such royalties received by LICENSEE from a
SUBLICENSEE during the next [Information omitted and filed
separately with the Commission under Rule 24b-2.] years of sales of
PRODUCT by such SUBLICENSEE;
(c) [Information omitted and filed separately with the Commission
under Rule 24b-2.] of such royalties received by LICENSEE from a
SUBLICENSEE from sales of PRODUCT by such SUBLICENSEE for each year
thereafter.
(B) LICENSEE shall also pay or provide to LICENSOR the following:
(i) A license fee of [Information omitted and filed separately with
the Commission under Rule 24b-2.] payable upon the EFFECTIVE DATE. This amount
shall not be refundable or creditable.
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(ii) [***] of all other revenues (in cash or in kind) received by
LICENSEE from a SUBLICENSEE in consideration of the granting of
sublicense rights to such SUBLICENSEE. Revenues for this purpose
shall not include either (a) research and development funding at
LICENSEE's cost, or (b) purchases of equity in LICENSEE, except to
the extent that such purchases are made in excess of fair market
value.
(iii) Nonrefundable and non-creditable milestones payable on
completion of the milestone as follows:
(a) [***]
(b) [***]
(c) [***]
(d) [***]
(C) Beginning on the earlier of [***] or [***], LICENSEE shall pay
LICENSOR minimum royalties of [***] per year, which payment shall be fully
creditable against future earned royalties at the rate of [***] per earned
royalty dollar. Such minimum royalties shall increase to [***] per year
effective the earlier of [***]
* [Information omitted and filed separately with the Commission under Rule
24b-2.]
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[Information omitted and filed separately with the Commission under Rule 24b-2.]
and shall also be fully creditable against earned royalties as above.
(D) LICENSEE shall, on the EFFECTIVE DATE, issue a warrant to purchase
300,000 shares of common stock of LICENSEE at the market price on the EFFECTIVE
DATE, exercisable on or after December 31, 1999 or such earlier date on which
LICENSEE initiates a Phase III clinical trial for a PRODUCT or the license
hereunder and this Agreement have been terminated other than by LICENSEE
pursuant to Paragraph 10.3 of this Agreement. The Warrant which shall be in the
form set forth in Appendix B hereto will survive termination of Agreement.
(E) In the event that a PRODUCT includes both component(s) covered by a
VALID CLAIM of a PATENT RIGHT ("Patented Component(s)") and a component which is
diagnostically useable or therapeutically active alone or in a combination which
does not require the Patented Component and such component is not covered by a
VALID CLAIM of a PATENT RIGHT ("Unpatented Component(s)") (such PRODUCT being a
"Combined Product"), then NET SALES shall be the amount which is normally
received by LICENSEE or its AFFILIATES from a sale of the Patented Component(s)
in an arm's length transaction with an unaffiliated third party. If the Patented
Component(s) are not sold separately, then NET SALES PRICE upon which a royalty
is paid shall be the NET SALES of the Combined Product multiplied by a fraction,
the numerator of which is the [Information omitted and filed separately with the
Commission under Rule 24b-2.]
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5.2 Royalties hereunder shall be payable hereunder for [Information
omitted and filed separately with the Commission under Rule 24b-2.] on a
country-by-country, PRODUCT-BY-PRODUCT basis and, if thereafter PRODUCT is
covered by a VALID CLAIM of a PATENT RIGHT in a country then royalties shall be
payable until the last to expire PATENT RIGHT in such country.
5.3 LICENSEE shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES to keep, full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to LICENSOR. Such books of account shall be kept at their principal
place of business and, with all necessary supporting data shall, for the five
(5) years next following the end of the calendar year to which each shall
pertain be open for inspection by an independent certified accountant reasonably
acceptable to LICENSEE upon reasonable notice during normal business hours at
LICENSOR's expense for the sole purpose of verifying royalty statements or
compliance with this Agreement, but in no event more than once in each calendar
year. All information and data offered shall be used only for the purpose of
verifying compensation and shall be treated as LICENSEE Confidential Information
subject to the obligations of this Agreement. In the event that such inspection
shall indicate that in any calendar year that the royalties which should have
been paid by LICENSEE are at least five percent (5 %) greater than those which
were actually paid by LICENSEE, then LICENSEE shall pay the cost of such
inspection.
5.4 With each quarterly payment, LICENSEE shall deliver to LICENSOR a
full and accurate accounting to include at least the following information:
(a) Quantity of each PRODUCT subject to royalty sold (by country) by
LICENSEE, and its AFFILIATES;
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(b) Total receipts, to LICENSEE and its AFFILIATES, for each PRODUCT
subject to royalty (by country);
(c) Total royalties payable to LICENSOR;
(d) Royalties and other revenues received from SUBLICENSEES relating to
PRODUCTS.
5.5 In each year the amount of royalty due shall be calculated
quarterly as of March 31, June 30, September 30 and December 31 (each as being
the last day of an "ACCOUNTING PERIOD") and shall be paid quarterly within the
sixty (60) days next following such date, every such payment shall be supported
by the accounting prescribed in Paragraph 5.4 and shall be made in United States
currency. Whenever for the purpose of calculating royalties conversion from any
foreign currency shall be required, such conversion shall be at the rate of
exchange thereafter published in the Wall Street Journal for the last business
day of the applicable ACCOUNTING PERIOD.
5.6 Only one royalty shall be due and payable for the manufacture, use
and sale of a PRODUCT irrespective of the number of patents or claims thereof
which cover the manufacture, use and sale of such PRODUCT.
SECTION 6 Infringement.
6.1 (a) If any of the PATENT RIGHTS under which LICENSEE is licensed
hereunder is infringed by a third party, LICENSEE shall have the right and
option but not the obligation to bring an action for infringement, at its sole
expense, against such third party in the name of LICENSOR and/or in the name of
LICENSEE, and to join LICENSOR as a party plaintiff if
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required. LICENSEE shall promptly notify LICENSOR of any such infringement and
shall keep LICENSOR informed as to the prosecution of any action for such
infringement. No settlement, consent judgment or other voluntary final
disposition of the suit which adversely affects PATENT RIGHTS may be entered
into without the consent of LICENSOR, which consent shall not unreasonably be
withheld.
(b) In the event that LICENSEE shall undertake the enforcement and/or
defense of the PATENT RIGHTS by litigation, any recovery of damages by LICENSEE
for any such suit shall be applied first in satisfaction of any unreimbursed
expenses and legal fees of LICENSEE relating to the suit. The balance remaining
from any such recovery shall be divided between LICENSEE and LICENSOR, as
follows (i) for that portion, if any, based on lost profits, LICENSOR shall
recover the royalty LICENSOR would have received under this Agreement if such
sales had been made by LICENSEE; and (ii) for any other recovery, LICENSOR shall
receive forty percent (40%) of the remaining amount.
6.2 In the event that LICENSEE elects not to pursue an action for
infringement, upon written notice to LICENSOR by LICENSEE that an unlicensed
third party is an infringer of a VALID CLAIM of PATENT RIGHTS licensed to
LICENSEE, LICENSOR shall have the right and option, but not the obligation at
its cost and expense to initiate infringement litigation and to retain any
recovered damages.
6.3 In any infringement suit either party may institute to enforce the
PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the
request of the party initiating such suit, cooperate in all respects and, to the
extent possible, have its employees testify when requested and make available
relevant records, papers, information, samples, specimens, and the
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like. All reasonable out-of-pocket costs incurred in connection with rendering
cooperation requested hereunder shall be paid by the party requesting
cooperation.
SECTION 7 Warranties.
7.1 Each of LICENSOR and LICENSEE warrants and represents to the other
that it has the full right and authority to enter into this Agreement, and that
it is not aware of any impediment which would inhibit its ability to perform the
terms and conditions imposed on it by this Agreement.
7.2 LICENSOR warrants and represents that it has not licensed or
assigned any right or interest in or to PATENT RIGHTS to any third party; it has
the right to grant the rights granted hereunder; that the granting of such
rights does not require the consent of a third party and; that there are and
will be no outstanding agreements, assignments or encumbrances inconsistent with
the provisions of this Agreement and that LICENSOR has no present knowledge of
any claims or threatened claims alleging that PATENT RIGHTS are invalid or that
the sale of PRODUCTS would infringe patent rights of third parties.
7.3 LICENSOR MAKES NO OTHER REPRESENTATIONS OR A WARRANTIES HEREUNDER,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, A WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR WITH RESPECT TO THE VALIDITY OF PATENT
RIGHTS.
SECTION 8 Indemnification.
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8.1 (a) LICENSEE agrees to indemnify and hold harmless LICENSOR, its
trustees, executors, beneficiaries, officers, employees, and agents, against any
and all actions, claims (specifically including, but not limited to, any damages
based on product liability Claims), suits, losses, demands, judgments, and other
liabilities (including attorney's fees until LICENSEE assumes the defense as
described below) asserted by third parties, government and non-government,
resulting from or arising out of the development, manufacturing, using,
labeling, advertising, marketing or selling of PRODUCTS by LICENSEE or its
AFFILIATES or SUBLICENSEES. If any such claims or actions are made, LICENSOR
shall be defended at LICENSEE's sole expense by counsel selected by LICENSEE and
reasonably acceptable to LICENSOR provided that LICENSOR may, at its own
expense, also be represented by counsel of its own choosing.
(b) LICENSEE's indemnification under (a) shall not apply to any
liability, damage, loss or expense to the extent that it is directly
attributable to the negligence or intentional misconduct of the Indemnitees.
(c) Each party shall notify the other promptly of any claim or
threatened claim under this Paragraph 8.1 and the indemnified party shall fully
cooperate with all reasonable requests of the indemnifying party LICENSEE with
respect thereto.
8.2 Upon the enrollment of the first patient in a clinical trial with a
PRODUCT, LICENSEE agrees to procure and maintain, comprehensive general
liability insurance against any claims or expenses for which it is obligated to
indemnify as provided above in amounts not less than $1,000,000 per incident and
$3,000,000 annual aggregate. The policies representing such insurance shall
specify LICENSOR as a named insured. LICENSEE shall provide LICENSOR
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with certificates of insurance from the insurance carriers maintaining such
insurance certifying that such coverage is in force, which certificates shall
also provide that LICENSOR shall receive at least forty-five (45) days advance
notice of any cancellation or expiration of said policy. The minimum amounts of
insurance coverage required herein shall not be construed to create a limit of
LICENSEE's liability with respect to its indemnification under this Agreement.
SECTION 9 Assignment; Successors.
9.1 This Agreement shall not be assignable by LICENSEE without the
prior written consent of LICENSOR (which consent shall not be unreasonably
withheld), except that LICENSEE without the consent of LICENSOR may assign this
Agreement to an AFFILIATE or to a successor in interest or transferee of all or
substantially all of the portion of the business to which this Agreement
relates.
9.2 Subject to the limitations on assignment herein, this Agreement
shall be binding upon and inure to the benefit of said successors in interest
and assigns of LICENSEE and LICENSOR. Any such successor or assignee of a
party's interest shall expressly assume in writing the performance of all the
terms and conditions of this Agreement to be performed by said party and such
Assignment shall not relieve the Assignor of any of its obligations under this
Agreement.
SECTION 10 Termination.
10.1 Except as otherwise specifically provided herein and unless sooner
terminated pursuant to Paragraph 10.2 or 10.3 of this Agreement, this Agreement
and the licenses and rights granted thereunder shall remain in full force and
effect until the expiration of the LICENSEE's obligations to pay royalties, at
which time LICENSEE shall have a fully paid-up, non-cancelable license.
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10.2 LICENSEE shall have the right to terminate this Agreement upon
ninety (90) days prior written notice upon completion of the First Phase II
clinical trial with a PRODUCT or at any time thereafter upon ninety (90) days
prior written notice. For purposes of this paragraph, "completion" shall be the
receipt by LICENSEE of the final analysis of the data from such trial, but in no
event more than six (6) months after the last patient has received PRODUCT
pursuant to the protocol for such trial.
10.3 (a) Upon material breach of any material provisions of this
Agreement by either party to this Agreement, in the event the breach is not
cured within sixty (60) days after written notice to the breaching party by the
other party, in addition to any other remedy it may have, the other party at its
sole option may terminate this Agreement, provided that such other party is not
then in breach of this Agreement.
(b) This Agreement may be terminated by LICENSOR in the event LICENSEE
files or institutes bankruptcy, reorganization, liquidation, receivership or
similar proceedings under debt relief laws or fails for more than sixty (60)
days to take steps to oppose the initiation of such action against it.
(c) Any dispute hereunder may be submitted to arbitration pursuant to
Section 11.2.
10.4 Upon any termination of this Agreement LICENSEE, at its option,
shall be entitled to finish any work-in-progress which is completed within three
(3) months of termination of this Agreement and to sell any completed inventory
of a PRODUCT covered by this Agreement which
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remains on hand as of the date of the termination, so long as LICENSEE pays to
LICENSOR the royalties applicable to said subsequent sales in accordance with
the same terms and conditions as set forth in this Agreement.
10.5 The obligations of Sections 3, 8 and 9 and of Paragraphs 10.4,
10.5, 10.6, 11.2 and 11.4 of this Agreement shall survive any termination of
this Agreement.
10.6 Upon 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 termination. In addition, upon termination
all rights and information transferred to LICENSEE hereunder shall revert to
LICENSOR and, except in the case of a termination by LICENSEE pursuant to
paragraph 10.3 of this Agreement, all data and information developed under this
Agreement by LICENSEE and necessary or useful to make, use or sell PRODUCT shall
be assigned and transferred or licensed by LICENSEE, royalty-free, to LICENSOR,
for use in connection with the research, development, manufacture, use or sale
of PRODUCTS.
SECTION 11 General Provisions.
11.1 The relationship between LICENSOR and LICENSEE is that of
independent contractors. LICENSOR and LICENSEE are not joint venturers,
partners, principal and agent, master and servant, employer or employee, and
have no relationship other than as independent contracting parties. LICENSOR
shall have no power to bind or obligate LICENSEE in any manner.
Likewise, LICENSEE shall have no power to bind or obligate LICENSOR in any
manner.
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11.2 Any matter or disagreement under this Agreement, except with
respect to patent validity, shall be submitted to a mutually selected single
arbitrator to so decide any such matter or disagreement. The arbitrator shall
conduct the arbitration in accordance with the Rules of the American Arbitration
Association, unless the parties agree otherwise. If the parties are unable to
mutually select an arbitrator, the arbitrator shall be selected in accordance
with the procedures of the American Arbitration Association. The decision and
award rendered by the arbitrator shall be final and binding. Judgment upon the
award may be entered in any court having jurisdiction thereof. Any arbitration
pursuant to this section shall be held in Philadelphia, PA, or such other place
as may be mutually agreed upon in writing by the parties.
11.3 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes all prior
agreements in this respect. There shall be no amendments or modifications to
this Agreement, except by a written document which is signed by both parties.
11.4 This Agreement shall be construed and enforced in accordance with
the laws of the Commonwealth of Pennsylvania without reference to its choice of
law principles.
11.5 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.
11.6 Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of a party's right to the future enforcement of its rights under this
Agreement, excepting only as to an expressed written and signed waiver as to a
particular matter for a particular period of time.
21
11.7 Notices. Any notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given and delivered upon the earlier of
(i) when received at the address set forth below, or (ii) three (3) business
days after mailed by certified or registered mail postage prepaid and properly
addressed, with return receipt requested, or (iii) on the day when sent by
facsimile as confirmed by certified or registered mail. Notices shall be
delivered to the respective parties as indicated:
To LICENSEE: Sparta Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: President & CEO
To LICENSOR: Estate of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Copy to: Carella, Byrne, Bain, Gilfillan, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax no.(▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
11.8 LICENSEE shall not use the name of the LICENSOR or of ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇. or any adaptation thereof in any advertising, promotional or sales
literature with respect to a PRODUCT without the prior written approval of
LICENSOR.
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
ESTATE OF ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. SPARTA PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------- -----------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executrix Title: President & CEO
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executor
23
APPENDIX A
PATENT RIGHTS
[Information omitted and filed separately with the Commission under Rule 24b-2.]
▇▇
▇▇▇▇▇▇▇▇ ▇
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO APPLICABLE STATE SECURITIES
LAWS.
SPARTA PHARMACEUTICALS, INC.
Warrant for the Purchase of Shares of
Common Stock, $.001 Par Value per Share
No. ▇▇▇▇▇-1 300,000 Shares
FOR VALUE RECEIVED, SPARTA PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), hereby certifies that the Estate of ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. ("▇▇▇▇▇"), or its permitted assigns, is entitled to purchase from the
Company, at any time or from time to time commencing on December 31, 1999,
(subject to earlier acceleration in accordance with the provisions of Section
1(a) below) and prior to 5:00 P.M., New York City time, on December 4, 2002,
(subject to the provisions of Section 1(a) below) (Three Hundred Thousand
(300,000) of fully paid and nonassessable shares of the Common Stock, $.001 par
value per share, of the Company, subject to adjustment as provided below, for an
aggregate purchase price of One Hundred Thirty One Thousand Two Hundred and
Fifty Dollars ($131,250) ($.4375per share). As used hereinafter, (a) the term
"Common Stock" includes (i) the Company's Common Stock, $.001 par value, (ii)
any other capital stock of any class or classes (however designated) of the
Company, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and (iii) any other securities into which or for
which any of the securities described in clauses (i) or (ii) above have been
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise; (b) the term "Other Securities" refers to
any stock (other than Common Stock) and other securities of the Company or any
other entity (corporate or otherwise) (i) which the holder of this Warrant at
any time shall be entitled to receive, or shall have received, on the exercise
of this Warrant, in lieu of or in addition to Common Stock, or (ii) which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities, in each case pursuant to
Section 3 hereof; (c) the shares of the Common Stock and Other Securities
purchasable hereunder or under any other Warrant (as hereinafter defined) are
referred to as the "Warrant Shares"; (d) the aggregate purchase price payable
for the Warrant Shares hereunder is referred to as the "Aggregate Warrant
Price"; (e) the price payable for each of the Warrant Shares hereunder is
referred to as the "Per Share Warrant Price," (f) this Warrant and all warrants
hereafter issued in exchange or substitution for this Warrant are referred to as
the "Warrants" and (g) the holder of this Warrant is referred to as the "Holder"
and the holder of this Warrant and all other Warrants or Warrant Shares issued
upon the exercise of any Warrant are referred to as the "Holders." The Aggregate
Warrant Price is not subject to adjustment. The Per Share Warrant Price is
subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Warrant Price by the Per Share Warrant Price in effect immediately
after such adjustment.
1. Exercise of Warrant.
(a) Upon the earlier of December 31, 1999, the enrollment of
the first patient in a Phase III clinical trial for a Product pursuant to
paragraph 2.7 of the License Agreement between Company and ▇▇▇▇▇ of even date
herewith (the "Enrollment Condition"), or the earlier termination of that
Agreement (except for termination by Company pursuant to paragraph 10.3 thereof,
in which event this Warrant shall also terminate upon the effective date of
termination of the License Agreement), this Warrant may be exercised in whole at
any one time or in part from time to time by the Holder prior to 5:00 P.M., New
York City time, on December 4, 2002 (with the subscription form at the end
hereof duly executed) at the address set forth in Section 15 hereof, together
with proper payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part, with payment for Warrant Shares
made by certified or official bank check payable to the order of the Company; or
(b) If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock, and the Holder is
entitled to receive a new Warrant covering the Warrant Shares which have not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon surrender of this Warrant, the
Company will (i) issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of the Common Stock to which the Holder
shall be entitled and, if this Warrant is exercised in whole, in lieu of any
fractional share of the Common Stock to which the Holder shall be entitled, pay
to the Holder cash in an amount equal to the fair value of such fractional share
(determined in such reasonable manner as the Board of Directors of the Company
shall determine), and (ii) deliver the other securities and properties
receivable upon the exercise of this Warrant, or the proportionate part thereof
if this Warrant is exercised in part, pursuant to the provisions of this
Warrant.
2. Reservation of Warrant Shares; Listing. The Company agrees
that, prior to the expiration of this Warrant, the Company will at all times (a)
have authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear of all restrictions on sale or
transfer and free and clear of all preemptive rights and rights of first
refusal; and (b) if the Company hereafter lists its Common Stock on any national
securities exchange, keep the shares of Common Stock receivable upon the
exercise of this Warrant authorized for listing on such exchange upon notice of
issuance.
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3. Adjustments of Per Share Warrant Price.
(a) In case the Company shall hereafter (i) pay a dividend or
make a distribution on its capital stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of shares
(by a stock split or otherwise), (iii) combine its outstanding shares of Common
Stock into a smaller number of shares (by a reverse stock split or otherwise) or
(iv) issue by reclassification of its Common Stock any shares of capital stock
of the Company, the Per Share Warrant Price shall be adjusted so that the holder
upon the exercise hereof shall be entitled to receive the number of shares of
Common Stock or other capital stock of the Company which it would have owned
immediately following such action had such Warrant been exercised immediately
prior thereto. An adjustment made pursuant to this Subsection 3(a) shall become
effective on the record date in the case of a dividend or distribution and shall
become effective on the effective date in the case of a subdivision, combination
or reclassification.
(b) In case of any capital reorganization or reclassification,
or any consolidation or merger to which the Company is a party other than a
merger or consolidation in which the Company is the continuing corporation, or
in case of any sale or conveyance to another entity of the property of the
Company as an entirety or substantially as a entirety, or in the case of any
statutory exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation into the
Company)(which consolidation, merger, sale, conveyance and statutory exchange is
referred to below as a "Sale"), the Holder of this Warrant shall have the right
thereafter to receive on the exercise of this Warrant the kind and amount of
securities, cash or other property which the Holder would have owned or have
been entitled to receive immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
had this Warrant been exercised immediately prior to the effective date of such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance and in any such case, if necessary, appropriate adjustment
shall be made in the application of the provisions set forth in this Section 3
with respect to the rights and interests thereafter of the Holder of this
Warrant to the end that the provisions set forth in this Section 3 shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant. The above provisions of this
Subsection 3(d) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, statutory exchanges, sales or
conveyances. The issuer of any shares of stock or other securities or property
thereafter deliverable on the exercise of this Warrant shall be responsible for
all of the agreements and obligations of the Company hereunder. Notice of any
such reorganization, reclassification, consolidation, merger, statutory
exchange, sale or conveyance and of said provisions so proposed to be made,
shall be mailed to the Holders of the Warrants not less than 30 days prior to
such event. A sale of all or substantially all of the assets of the Company for
a consideration consisting primarily of securities shall be deemed a
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consolidation or merger for the foregoing purposes. In the event of an
anticipated Sale, the Company or the entity assuming the obligations of the
Company hereunder may (i) upon written notice to the Holders of all outstanding
Warrants, provide that all Warrants must be exercised, to the extent then
exercisable (and for purposes hereof, the Enrollment Condition shall be deemed
to have been satisfied), within a specified number of days of the date of such
notice, at the end of which period the Warrants shall terminate (but if and only
if such Sale shall be consummated); or (ii) terminate all Warrants in exchange
for a cash payment equal to the excess of the current market price of the
Warrant Shares subject to such Warrants, to the extent then exercisable (and for
purposes hereof, the Enrollment Condition shall be deemed to have been
satisfied), over the Per Share Warrant Price thereof (but if and only if such
Sale shall be consummated).
(c) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock other than a
cash distribution out of earned surplus, the Company shall mail notice thereof
to the Holders of the Warrants not less than 15 days prior to the record date
fixed for determining stockholders entitled to participate in such dividend or
other distribution.
(d) If, as a result of an adjustment made pursuant to this
Section 3, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of any Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Warrant Price between
or among shares or such classes of capital stock or shares of Common Stock and
other capital stock.
(e) In case any Other Securities shall have been issued, or
shall then be subject to issue upon the conversion or exchange of any stock (or
Other Securities) of the Company (or any other issuer of Other Securities or any
other entity referred to in Section 3(b) hereof) or to subscription, purchase or
other acquisition pursuant to any rights or options granted by the Company (or
such other issuer or entity), the holder hereof shall be entitled to receive
upon exercise hereof such amount of Other Securities (in lieu of or in addition
to Common Stock) as is determined in accordance with the terms hereof, treating
all references to Common Stock herein as references to Other Securities to the
extent applicable, and the computations, adjustments and readjustments provided
for in this Section 3 with respect to the number of shares of Common Stock
issuable upon exercise of this Warrant shall be made as nearly as possible in
the manner so provided and applied to determine the amount of Other Securities
from time to time receivable on the exercise of the Warrant, so as to provide
the holder of the Warrant with the benefits intended by this Section 3 and the
other provisions of this Warrant.
4. Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Treasurer or Chief Financial Officer to compute such adjustment or readjustment
in accordance with the terms of the Warrants and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including, among other things, (a) the
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number of shares of Common Stock outstanding or deemed to be outstanding, and
(b) the Aggregate Purchase Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
issue or sale and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to each Holder, and
will, on the written request at any time of any Holder, furnish to such Holder a
like certificate setting forth the Per Share Warrant Purchase Price at the time
in effect and showing how it was calculated.
5. Fully Paid Stock; Taxes. The Company agrees that the shares
of the Common Stock represented by each and every certificate for Warrant Shares
delivered on the exercise of this Warrant shall, at the time of such delivery,
be validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights or rights of first refusal, and the Company will take all
such actions as may be necessary to assure that the par value or stated value,
if any, per share of the Common Stock is at all times equal to or less than the
then Per Share Warrant Price. The Company further covenants and agrees that it
will pay, when due and payable, any and all Federal and state stamp, original
issue, transfer or similar taxes which may be payable in respect of the issue of
any Warrant Share or any certificate thereof.
6. Registration Rights.
(a) If at any time the Company shall determine to register any
of its securities, either for its own account or the account of security
holders, other than a registration statement relating solely to employee benefit
plans or a registration on Form S-4 relating solely to an SEC Rule 145
transaction or an exchange offer, the Company will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws);
(ii) include in such registration ( and any related
qualification under blue sky laws or other compliance) and in any
underwriting involved therein, all of the Warrant Shares specified in a
written request or requests, made within 20 days after receipt of such
written notice from the Company, by any Holder or Holders, except as
set forth in Subsection 6(b) below.
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Subsection
6(a)(i). In such event the right of any Holder to registration pursuant to this
Section 6 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Warrant Shares in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall, together with the Company and
any other parties distributing their securities through such underwriting, enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any
other provision of this Section 6, if the underwriter determines that marketing
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factors require a limitation of the number of shares to be underwritten, the
underwriter may limit or eliminate the Warrant Shares to be included in the
registration and underwriting. The Holder's right to include the Warrant Shares
in a registered public offering will be subject to similar rights, if any,
previously granted by the Company to holders of its equity securities. The
registration rights granted to the Holder pursuant to this Section 6 shall
terminate at such time as the Holder is able to sell all of the Warrant Shares
in a transaction exempt from registration pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Securities Act").
(c) Indemnification by the Company. To the extent permitted by
law, the Company will indemnify each Holder joining in a registration and the
officers, directors and partners of each such Holder and each Person, if any,
who controls any thereof (within the meaning of the Securities Act) against any
and all claims, losses, damages and liabilities (or actions in respect thereof)
to which they may become subject under the Securities Act, Securities Exchange
Act of 1934, as amended (the "Exchange Act") or other federal or state law,
arising out of or based on any untrue statement (or alleged untrue statement) of
any material fact contained in any prospectus, offering circular or other
document incident to any registration, qualification or compliance ( or in any
related registration statement, notification or the like) or any omission (or
alleged omission) to state therein any material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to any action or inaction
required of the Company in connection with any such registration, qualification
or compliance (collectively a "Violation") and the Company will reimburse each
such Holder, officer, director, partner and controlling person of such Holder
for any legal and any other expenses reasonably incurred by them in connection
with investigating or defending any such claim, loss, damage, liability or
action; provided however that the Company will not be liable in any such case to
the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by such Holder, officer, director, partner or
controlling person and stated to be specifically for use in such prospectus,
offering circular or other document.
(d) To the extent permitted by law, each selling Holder shall
indemnify and hold harmless the Company, each of its directors and officers who
have signed the registration statement, each Person, if any, who controls the
Company within the meaning of the Securities Act, and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors or officers or any Person who controls such Holder within
the meaning of the Securities Act or the Exchange Act, against any and all
claims, losses, damages and liabilities to which the Company or any such
director, officer, controlling Person, or other such Holder, or a partner,
director, officer or controlling Person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Holder,
officer, director, partner or controlling person and stated to be specifically
for use in such registration, prospectus, offering circular or other document;
and each such Holder shall reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling Person, or
other Holder, partner, officer, director or controlling Person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action.
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(e) Indemnification Procedure. Each party entitled to
indemnification pursuant to this Section (the "indemnified party") shall give
notice to the party required to provide indemnification pursuant to this Section
(the "indemnifying party") promptly after such indemnified party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
indemnifying party (at its' expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the indemnifying party
who shall conduct the defense of such claim or litigation shall be acceptable to
the indemnified party, and the indemnified party may participate in such defense
at such party's expense, and provided further, that the failure by any
indemnified party to give notice as provided in this paragraph (e) shall not
relieve the indemnifying party of its obligations under this Section except to
the extent that the failure results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
the failure to give notice. No indemnifying party, in becoming aware of any such
claim or litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation. The reimbursement required by this Section shall be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses incurred.
(f) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they related to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement in question becomes effective or the amended prospectus is filed with
the Commission pursuant to Rule 424 (b) under the Securities Act (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
Person if a copy of the Final Prospectus was furnished to the party seeking
indemnity and was not furnished to the Person asserting the loss, liability,
claim or damage at or prior to the time such action is required by the
Securities Act.
7. Transferred Warrants. All warrants issued upon the transfer
or assignment of this Warrant will be dated the same date as this Warrant, and
all rights and obligations of the Holder thereof shall be identical to those of
the Holder.
8. Loss, etc., of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the Company, if lost,
stolen or destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new Warrant of
like date, tenor and denomination.
9. Dissolution. Except as otherwise provided herein, in the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and
other securities and property (including cash, where applicable) receivable by
the holders of the Warrants after the effective date of such dissolution
pursuant to this Section 9 to a bank or trust company, as trustee for the Holder
or Holders of the Warrants.
-7-
10. No Dilution or Impairment. The Company will not, by
amendment of its Charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant hereunder. Without limiting the generality of the foregoing, the Company
(i) will not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise,
(ii) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock on the exercise of this Warrant from time to time outstanding, (iii)
will not issue any capital stock of any class which is preferred as to dividends
or as to the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage of par value in respect of participation in
dividends and in any such distribution of assets and (iv) will not transfer all
or substantially all of its properties and assets to any other entity (corporate
or otherwise), or consolidate with or merge into any other entity or permit any
such entity to consolidate with or merge into the Company (if the Company is not
the surviving entity), unless such other entity shall expressly assume in
writing and will be bound by all the terms of this Warrant.
11. Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the Holders of the
Warrants pursuant to Section 9, such bank or trust company shall have all the
powers and duties of a warrant agent appointed pursuant to Section 12 and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
12. Warrant Agent. The Company may, by written notice to each
Holder, appoint an agent for the purpose of issuing Common Stock on the exercise
of the Warrants pursuant to Section 1 or any of the foregoing, and thereafter
any such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
13. Warrant Holder Not Shareholder. Except as otherwise
provided herein, this Warrant does not confer upon the Holder any right to vote
or to consent to or receive notice as a stockholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
14. Covenants of Warrant Holder. By acceptance of this
Warrant, the Holder is hereby deemed to covenant and agree with the Company that
it is acquiring this Warrant as an investment and not with a view to
distribution hereof. This Warrant may not be sold, transferred, assigned or
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hypothecated by the Holder except in compliance with the provisions of the
Securities Act (or any successor legislation), and the state securities laws,
and is so transferable only upon the books of the Company which it shall cause
to be maintained for such purpose. Each registered Holder of this Warrant
acknowledges that this Warrant has not been registered under the Securities Act
and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise
in the absence of (i) an effective registration statement as to this Warrant or
such Warrant Shares under the Securities Act, or (ii) an opinion of counsel
reasonably acceptable to the Company to the effect that such registration is
not, under the circumstances, required; provided, however, that no such opinion
under this Section 14 or similar provisions elsewhere herein shall be required
in the event the Estate of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. transfers this Warrant or portions
thereof to the legatees or distributees of such Estate subject to Section 7
hereof. In addition, in order for any transferee of this Warrant or any Warrant
Shares to receive any of the benefits of this Warrant or the Warrant Shares, as
the case may be, the Company must have received notice of such transfer, at the
address set forth in Section 16 below, in the form of assignment or partial
assignment attached hereto. Any transferee other than pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144
promulgated under the Securities Act must also covenant and agree that it is
acquiring this Warrant or such Warrant Shares as an investment and not with a
view to distribution hereof or thereof, except in accordance with the Securities
Act and applicable state securities law.
15. Negotiability, etc. Until this Warrant is transferred on
the books of the Company, the Company may treat the registered holder hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
16. Communication. All notices, requests, consents and demands
shall be made in writing and shall be mailed postage prepaid, or delivered by
hand, to the Company or to the Holder thereof at their respective addresses set
forth below or to such other address as may be furnished in writing to the other
party hereto:
If to the Holder: Estate of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
&
Estate of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
c/o Carella, Byrne, Bain, Gilfillan, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Company: Sparta Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Ph.D., President
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All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
17. Headings. The headings of this Warrant have been inserted
as a matter of convenience and shall not affect the construction hereof.
18. Applicable Law. This Warrant shall be governed by and
construed in accordance with the law of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
19. Pronouns. All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the person or persons referred to may require.
20. Amendment. The Company and the Holder may by supplemental
agreement make any changes or corrections in this Warrant to cure any ambiguity
or to correct any defective or inconsistent provision or manifest mistake or
error herein contained or that they deem necessary or desirable and which shall
not adversely affect the interests of the then Holder(s) of the Warrant;
provided, however, that this Warrant shall not be otherwise modified,
supplemented or altered in any respect except with the consent in writing of the
Holder(s) of Warrants representing not less than 50% of the Warrants then
outstanding other than such changes specifically prescribed by this Warrant as
originally executed or made in compliance with applicable law.
21. Expiration. The right to exercise this Warrant shall
expire on 5:00 P.M., Eastern Standard Time, on December 4, 2002.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its President and its corporate seal to be hereunto affixed and
attested by its Secretary this 4th day of December, 1997.
SPARTA PHARMACEUTICALS, INC.
By:______________________________
President
ATTEST:
____________________
Secretary
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[Corporate Seal]
SUBSCRIPTION
The undersigned, ___________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for and purchase
____________________ shares (the "Warrant Shares") of the common stock, par
value $.001 per share, of Sparta Pharmaceuticals, Inc. covered by said Warrant,
and makes payment therefor in full at the price per share provided by said
Warrant.
(a) The undersigned represents that the address of the undersigned
furnished below is (i) the undersigned's principal residence if he or she is an
individual or (ii) the undersigned's principal business address if it is a
corporation, partnership or other entity.
(b) The undersigned (i) was not formed for the purpose of investing in
the Company, (ii) is acquiring the Warrant Shares for its own account for
investment and not with a view to or for resale in connection with any
distribution or resale of the Warrant Shares except in accordance with the
Securities Act of 1933, as amended (or any successor statute) (the "Securities
Act") and applicable state securities laws, and (iii) has not offered or sold
any portion of the Warrant Shares and has no present intention of dividing the
Warrant Shares with others or of selling, distributing or otherwise disposing of
any portion of the Warrant Shares either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or non-occurrence of
any predetermined event or circumstance, except in accordance with the
Securities Act and applicable state securities laws.
(c) The undersigned understands that (i) the sale of the Warrant Shares
has not been registered under the Securities Act or any state securities law in
reliance upon an exemption therefrom for non-public or limited offerings, (ii)
the Warrant Shares must be held indefinitely unless the sale or other transfer
thereof is subsequently registered under the Act or an exemption from such
registration is available at the time, and (iii) the Company has no obligation
to register the Warrant Shares.
(d) The undersigned understands and agrees that the following
restrictions and limitations are applicable to its purchase and any resales,
pledges, hypothecations or other transfers of the Warrant Shares:
(i) The following legend (or a legend in substantially similar
form) will be placed on any certificate(s) or other document(s)
evidencing the Warrant Shares, and the undersigned for itself must
comply with the terms and conditions set forth in such legend prior to
any resales, pledges, hypothecations or other transfers of the Warrant
Shares:
"The securities represented by this certificate have not been
registered pursuant to the Securities Act of 1933, as amended
("Act"), or any state securities laws, and may not be sold,
pledged, hypothecated or otherwise transferred unless (A) the
stockholder wishing to transfer such securities provides an
opinion of counsel in form and substance satisfactory to
Sparta Pharmaceuticals, Inc. (the "Company") stating that the
proposed transfer of the Company's securities is exempt from
the registration provisions of all applicable federal and
state laws; or (B) said securities are registered pursuant to
the Act and all applicable state securities laws.
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(ii) Stop transfer instructions have been or will be placed on
any certificates or other documents evidencing the Shares so as to
restrict the resale, pledge, hypothecation or other transfer thereof in
accordance with the provisions hereof.
(e) The undersigned's representations and warranties made herein shall
survive the execution and delivery hereof and of the Warrant Shares.
Dated:_______________ Signature:__________________________________
Address:____________________________________
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ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby sells, assigns and
transfers unto ____________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_____________________, attorney, to transfer said Warrant on the books of Sparta
Pharmaceuticals, Inc.
Dated:_______________ Signature:__________________________________
Address:____________________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby assigns and
transfers unto ____________________ the right to purchase _______ shares of the
common stock, par value $.001 per share, of Sparta Pharmaceuticals, Inc. covered
by the foregoing Warrant, and a proportionate part of said Warrant and the
rights evidenced thereby, and does irrevocably constitute and appoint
____________________, attorney, to transfer that part of said Warrant on the
books of Sparta Pharmaceuticals, Inc.
Dated:_______________ Signature:__________________________________
Address:____________________________________