LICENSE AGREEMENT
Executed this 28TH day of February, 1996, by and between ALLIANCE
PHARMACEUTICAL CORP., a New York corporation (hereinafter referred to as
"ALLIANCE") having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., a Delaware corporation
having its principal office at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (hereinafter referred to as "HMRI"). The effective date of this
Agreement shall be the date of the Closing as such term is defined in the Stock
Purchase Agreement of even date herewith between HMRI and ALLIANCE (hereinafter
referred to as the "Effective Date").
WITNESSETH THAT:
WHEREAS, ALLIANCE is developing through its research and development
activities certain technology for use in respiratory medicine, and has the
right to grant rights and licenses and/or sublicenses under the Patents
(hereinafter defined) and Know-How (hereinafter defined);
WHEREAS, HMRI has had the opportunity to evaluate said Patents and Know-
How under a confidentiality agreement dated March 14, 1995 between ALLIANCE and
HMRI;
WHEREAS, HMRI has, based on its evaluation, expressed to ALLIANCE its
interest in obtaining from ALLIANCE certain rights and licenses to the Patents
and Know-How; and
WHEREAS, ALLIANCE is willing to grant such rights and licenses to HMRI
under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreement hereinafter set forth, both parties to this Agreement (hereinafter
defined) mutually agree as follows:
ARTICLE 1 - DEFINITIONS
The following terms as used in this Agreement shall, unless the context
clearly indicates to the contrary, have the meanings set forth in this Article:
1.1 "AFFILIATE" shall mean any entity which directly or indirectly controls,
or is controlled by, or is under common control with another entity. For
purposes of this Agreement, an entity is deemed to be in control of another
entity if the former owns directly or indirectly more than fifty percent (50%)
of the outstanding voting equity or owns directly or indirectly an interest in
more than fifty percent (50%) of the assets of the latter.
1.2 "AGREEMENT" shall mean this License Agreement.
1.3 "BRONCHOALVEOLAR LAVAGE" shall mean the installation and active removal of
Products in the lungs for diagnostic or therapeutic purposes.
** INDICATES CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
1.4 "CLINICAL WORK" shall mean any work related to human trials to assess the
dosing, safety and efficacy of a Product and to assess a dose and treatment
plan employing such Product(s).
1.5 "DIRECTLY COMPETITIVE PRODUCT" shall mean **
1.6 "FDA" shall mean the United States Food & Drug Administration and, when
appropriate, shall also mean any corresponding regulatory agency in any country
in the Territory.
1.7 "FIELD OF USE" shall mean the intratracheal administration of liquids
including in nebulized or aerosol form, either used with other drugs or
administered alone, which (a) perform Bronchoalveolar Lavage or Liquid
Ventilation, or (b) provide Therapeutic Effects. The Field of Use shall not
include proprietary formulations of ALLIANCE such as reverse emulsions, micro-
suspensions, molecular solutions and the like.
1.8 "FTE" shall mean the equivalent of one (1) full-time employee for one (1)
year.
1.9 "GLOBAL SALES DATE" shall mean **
1.10 "IND" shall mean an Investigational New Drug Application filed pursuant to
the requirements of the FDA as more fully defined in 21 C.F.R. Section 312 as
well as equivalent submissions to the appropriate health authorities in other
countries in the Territory.
1.11 "KNOW-HOW" shall mean any and all information, processes, techniques,
data, methods, materials, compositions, and trade secrets with respect to or
relating to the Patents in the Field of Use and/or the manufacture or use of
Products, including but not limited to the toxicological, pharmacological,
clinical and chemical data, specifications, regulatory submissions, medical
uses, adverse reactions, formulations and quality control methods which are in
the possession of ALLIANCE or HMRI and its Affiliates or are acquired or
developed by ALLIANCE or HMRI and its Affiliates during the term of this
Agreement.
1.12 "LIQUID VENTILATION" shall mean the administration in the pulmonary
airways of liquids (e.g., perfluorochemicals) which exchange physiological
gases (O2 and CO2) in therapeutically effective amounts (i) in conjunction with
a mechanical gas ventilator, wherein gas exchange takes place in the lungs,
(ii) in conjunction with a Liquid Ventilator, or (iii) without a mechanical gas
ventilator or Liquid Ventilator.
1.13 "LIQUID VENTILATOR" shall mean a device which pumps liquid into and
removes liquid from the lungs and performs and controls exchange of
physiological gases in a liquid medium EX-VIVO.
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1.14 "MAJOR EUROPEAN COUNTRY" shall mean each of France, Germany, Italy and the
United Kingdom.
1.15 "NDA" shall mean a New Drug Application and all supplements filed pursuant
to the requirements of the FDA, including all documents, data and other
information concerning a Product which are necessary for or included in, FDA
approval to market a Product, as more fully defined in 21 C.F.R.
Section Section 314.3 et seq. as well as equivalent submissions to the
appropriate authorities in other countries in the Territory.
1.16 "NET SALES" shall mean the gross invoice price of Product sold by HMRI and
its Affiliates or where applicable, their sublicensees and distributors, to
Third Party customers (other than sublicensees or distributors) in arms length
transactions, less the following reasonable and customary deductions to the
extent applicable to such invoiced amounts: (i) quantity or cash discounts;
(ii) customs duties and taxes (excluding income taxes) if any related to the
sale; (iii) amounts repaid or credited by reason of rejections; (iv) returned
goods; (v) retroactive price reductions specifically related to Product; (vi)
Third Party rebates and chargebacks; (vii) governmental mandated rebate
programs; (viii) packaging, handling fees, and prepaid freight; and (ix) any
other specifically identifiable amounts included in Products gross sales that
will ultimately be credited and are substantially similar to those listed
above. Net Sales will be accounted for in accordance with generally accepted
accounting principles consistently applied.
1.17 "PATENTS" shall mean:
a) any patent listed in Appendix A or added thereto by written agreement
of the parties hereto during the term of this Agreement;
b) any patent application listed in Appendix A or added thereto by
written agreement of the parties during the term of this Agreement, and any
division, continuation, or continuation-in-part of any such application; and
any patent which shall issue based on such application, division, continuation
or continuation-in-part;
c) any patent which is a reissue or extension of any patent described in
(a) or (b) above;
d) any foreign counterpart patent application or patent corresponding to
any patent application or patent identified in (a), (b), or (c), above which is
filed or issued in any country in the Territory; and
e) any patent or patent application related to or based on any Know-How
related to Products or the manufacture thereof developed or acquired by
ALLIANCE prior to or during the term of this Agreement and which is necessary
for the use, development, manufacture, market, sale or distribution of any
marketed Products and any division, continuation or continuation-in-part of any
such patent or patent application; and any patent which shall issue based on
such application, division, continuation or continuation-in-part; and any
patent which is a reissue or extension of any such patent.
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It shall be understood that the term "Patents" shall also include any
Supplementary Certificate of Protection of a Member State of the European
Community and other similar protective rights in any other country of the
Territory.
1.18 "PLAN COSTS" shall mean all out-of-pocket, direct and allocated expenses
ordinary and necessary to the execution of a PMT-approved R&D Work Plan,
Preclinical Work Plan, Clinical Work Plan, Production Work Plan or Regulatory
Work Plan as more fully set forth in Section 4.4.
1.19 "PLANS" shall mean R&D Work Plan, Preclinical Work Plan, Clinical Work
Plan, Production Work Plan and Regulatory Work Plan.
1.20 "PMT" shall mean the Project Management Team.
1.21 "PRECLINICAL WORK" shall mean any nonclinical IN VIVO and IN VITRO
biological work to assess the safety and efficacy of a Product.
1.22 "PRODUCTION WORK" shall mean any work to investigate methods to
manufacture on a commercial scale a Product, to validate reproducibility,
safety, cost effectiveness, and potential for scale-up of a method to
manufacture on a commercial scale a Product, or to transfer Know-How related to
manufacturing to HMRI.
1.23 "PRODUCTS" shall mean drug compounds, drug compositions and medical
devices and systems which, in the absence of this Agreement, the use,
development, manufacture, marketing, sale or distribution of which would result
in the infringement of one or more claims in a Patent, or which utilize the
Know-How of ALLIANCE.
1.24 "R&D WORK" shall mean any work to identify and develop liquids (e.g.,
perfluorochemicals) or medical devices or systems for administration or control
of Liquid Ventilation or Bronchoalveolar Lavage or recovery or re-use of
liquids, to characterize and qualify the properties or parameters of a
Product, to investigate methods to use a Product, or to modify or improve an
existing Product.
1.25 "REGULATORY WORK" shall mean any work related to obtaining regulatory
approval, including post regulatory approval work, in any country of the
Territory for the sale of a Product.
1.26 "STEERING COMMITTEE" shall mean the committee described hereinafter in
Article 3.
1.27 "SUPPLY AGREEMENT" shall mean the Supply and Technology Transfer Agreement
of even date herewith between ALLIANCE and HMRI.
1.28 "TERRITORY" shall mean all countries of the world.
1.29 "THERAPEUTIC EFFECTS" shall mean a biological response resulting from the
administration of a liquid in the lungs either used with other drugs or alone.
1.30 "THIRD PARTY" shall mean any person, corporation or unincorporated body
other than HMRI and ALLIANCE and their Affiliates.
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ARTICLE 2 - LICENSE GRANT
2.1 ALLIANCE grants to HMRI on a worldwide exclusive basis the rights and
licenses under the Patents and ALLIANCE's Know-How solely to use, develop,
manufacture, have manufactured, market, sell, and distribute Products in the
Territory for the Field of Use.
2.2 The rights and licenses granted hereunder may be sublicensed by HMRI to a
Third Party in any country in the Territory. HMRI may sell Products through
its Affiliates in any country in the Territory or grant sublicenses to its
Affiliates in any country of the Territory. At the request of HMRI, ALLIANCE
will extend the rights and licenses granted herein to an Affiliate of HMRI on a
direct basis in any country of the Territory. Notwithstanding the granting of
a sublicense to a Third Party or an Affiliate or a direct license to an
Affiliate, HMRI shall remain responsible to ALLIANCE for all obligations of
HMRI, its Affiliates and any sublicensee Third Party. Nothing herein shall
preclude HMRI and/or its Affiliates from utilizing a distributor to promote and
distribute the Products in any country of the Territory.
2.3 For ** receipt of which is hereby acknowledged, ALLIANCE hereby
grants to HMRI for the term of this Agreement, an option to obtain an
assignment of ALLIANCE's right, title, and interest in and to the NDA for
IMAGENT-Registered Trademark- GI, an oral contrast agent for use in magnetic
resonance imaging. Such option may be exercised upon the payment of **
to ALLIANCE. Such assignment will be valid for the term of this Agreement.
2.4 Neither ALLIANCE, HMRI nor any of their Affiliates shall use, develop,
manufacture, have manufactured, market, sell, or distribute any Directly
Competitive Product in the United States, Japan or a Major European Country. If
HMRI or any of its Affiliates makes, uses or sells a Directly Competitive
Product and, after written notice of breach from ALLIANCE, HMRI or any of its
Affiliates fails to cease such making, using or selling, HMRI's rights under
this Agreement for such country shall, at ALLIANCE's election, become non-
exclusive. If ALLIANCE or any of its Affiliates makes, uses, or sells a
Directly Competitive Product, and after written notice of breach from HMRI,
ALLIANCE or its Affiliates fails to cease such making, using, or selling, HMRI
shall not be obligated to pay royalties on the sale of such Product in such
country. At such time as the royalty obligations of Article 5 expire on a
country-by-country basis, this Section 2.4 shall have no further effect in such
country.
2.5 HMRI agrees to use its reasonable best efforts to develop and
commercialize the Products in each of the United States, Japan and each Major
European Country and will abide by and be subject to the terms of the
agreements listed on Schedule 2.5 attached hereto between ALLIANCE or its
Affiliates and Third Parties pertaining to the Patents and the Know-How;
provided that ALLIANCE shall remain responsible for complying with any monetary
obligations to such Third Parties.
ARTICLE 3 - PROJECT MANAGEMENT
3.1 ALLIANCE and HMRI shall create, within sixty (60) days after the Effective
Date of this Agreement, a four member Steering Committee. The activities of
the parties under this
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Agreement shall be supervised by the Steering Committee only to the extent set
forth herein. The Steering Committee shall perform the following functions:
a) coordinate and direct the R&D Work, Preclinical Work, Clinical Work,
Production Work and Regulatory Work as well as related activities of the
parties to develop Products hereunder;
b) establish a subordinate governance structure to carry out the
provisions of this Agreement including establishing and organizing the PMT and
appointing a chairperson therefor or other subordinate committees or structures
to implement this Agreement, with the proviso that if the PMT is not
constituted or continued, any reference to such committee in this Agreement
shall be deemed to be a reference to the Steering Committee or to such other
committees or structures to which the Steering Committee may delegate
responsibility;
c) settle disputes or disagreements that are unresolved by the PMT or
other committees established by the Steering Committee unless otherwise
indicated in this Agreement;
d) review and approve the Plans submitted to it by the PMT and approve
funding of the Plans by HMRI or ALLIANCE; and
e) perform such other functions as appropriate to further the purposes
of this Agreement as agreed to by the parties.
3.2 The Steering Committee:
a) shall hold general meetings at such times as shall be determined by
the unanimous consent of the Steering Committee but in no event shall such
meetings be held less frequently than once every six (6) months (unless
otherwise agreed); notice of any such meeting shall be provided to each member
of the Steering Committee no later than thirty (30) days prior to the scheduled
date of such meeting (unless such notice is waived), which notice shall contain
the date, time and place of such meeting and describe the proposed agenda of
items to be discussed at such meeting. Responsibility for arranging meetings
will alternate between the parties on a semi-annual basis, with ALLIANCE having
responsibility for the six (6) month period commencing in January of each year
and HMRI having responsibility for meetings during the six (6) month period
beginning in July of each year;
b) shall hold special meetings on ten (10) days prior notice by either
party (unless such notice is waived), which notice shall contain the date,
time, and place of such meeting and describe the proposed agenda, to resolve
issues that have not been resolved by the PMT within a reasonable time period;
c) may conduct meetings in person or by telephone conference, provided
that any material decision made during a meeting is evidenced by a conformed
writing signed by at least one of the members of such committee from each of
the parties;
d) shall keep minutes reflecting actions taken at meetings;
6
e) may act without a meeting if prior to such action a written consent
thereto is signed by all members of the Steering Committee; and
f) may amend or expand upon the foregoing procedures for its internal
operation by unanimous written consent.
Either party may include such other representatives as they reasonably
deem appropriate at any meetings.
3.3 Two members of the Steering Committee shall be selected by ALLIANCE from
ALLIANCE and two members of the Steering Committee shall be selected by HMRI
from HMRI or its Affiliates. Members of the Steering Committee shall be senior
officers and/or directors of their respective companies or Affiliates. Members
of the Steering Committee shall serve in such capacity, on such terms and
conditions, and for such duration as shall be determined by the party selecting
such person for membership on the Steering Committee. An alternate member
designated by a party may serve temporarily in the absence of a permanent
member designated by such party.
3.4 Actions to be taken by the Steering Committee pursuant to the terms of
this Agreement shall be taken following the unanimous vote of the members of
the Steering Committee (HMRI and ALLIANCE each having one (1) vote). If the
Steering Committee fails to reach unanimous agreement, then HMRI shall have the
final decision subject to its obligations described in Section 2.5; provided
that prior to implementation of such decision the Chief Executive Officer of
ALLIANCE shall be entitled to meet and consult with the head of the Hoechst
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Pharmaceutical Group of Hoechst AG in a timely manner.
3.5 ALLIANCE and HMRI shall provide the Steering Committee, its members and
its authorized representatives with reasonable access during regular business
hours to all records and documents relating to this Agreement which it may
reasonably require in order to perform its obligations hereunder; provided that
if such documents are under a bona fide obligation of confidentiality to a
Third Party, ALLIANCE or HMRI, as the case may be, may withhold access thereto
to the extent necessary to satisfy such obligation (such as ALLIANCE's
confidentiality obligations with Ortho Biotech, Inc. arising out of the license
agreement dated August 16, 1994).
3.6 For each committee subordinate to the Steering Committee constituted in
this Agreement, including the PMT, each of ALLIANCE and HMRI shall appoint and
replace its own representatives on the committee. Each committee, including
the PMT, shall be comprised of representatives of each party, with the size of
each committee to be agreed upon from time to time. Any party may designate an
alternate member for each committee to participate in the event one of the
party's regular committee members is unable to be present at a meeting.
Meetings of any committee may be called by either party with not less than ten
(10) working days notice to the other unless such notice is waived, and
meetings shall be held at the office of the party not calling the meeting,
unless otherwise agreed. Any meeting may be conducted in person or by telephone
conference, provided that any material decision made during a meeting shall be
evidenced by a conformed writing signed by at least one of the members of such
committee from each of the parties. Each party will disclose to the other
proposed agenda items reasonably in advance of
7
each meeting of the applicable committee. Each committee shall also be free to
consider any matters related to this Agreement which are within the scope of
its responsibilities. Either party may include such other representatives as
they reasonably deem appropriate at any meetings.
3.7 Each party shall designate a single project coordinator whose primary
duties (until such time as the Steering Committee decides otherwise) will be to
oversee matters arising under the provisions of this Agreement. Such project
coordinator will be responsible for the day-to-day worldwide coordination of
R&D Work, Preclinical Work, Clinical Work, Production Work and Regulatory Work
conducted under this Agreement and will serve to facilitate communication
between the parties relating to such work.
3.8 HMRI shall have the right to use an independent certified public
accountant reasonably acceptable to and approved by ALLIANCE, or HMRI's own
internal accountants, who shall have access to ALLIANCE's records during
reasonable business hours for the purpose of auditing R&D Work, Preclinical
Work, Clinical Work, Production Work and Regulatory Work expenditures under
this Agreement. The audit under this Section may extend up to the three (3)
preceding years but this right may not be exercised more than once in any
calendar year and once a calendar year is audited it may not be reaudited. The
results of the audit shall be disclosed to both parties, provided that the
independent accountant shall disclose to HMRI only information relating solely
to the accuracy and nature of expenditures made according to this Agreement.
For any overpayments greater than two (2) percent by HMRI found under this
Section, ALLIANCE shall pay HMRI the amount of overpayment, interest from the
time the amount was due at the then current prime rate as quoted in the Eastern
edition of THE WALL STREET JOURNAL, and HMRI's out-of-pocket expenses. For
any overpayments less than two (2) percent by HMRI found under this Section,
ALLIANCE shall pay HMRI the amount of overpayment. The parties agree that no
costs or interest shall be awarded for any correction resulting from excess
estimated payments made from time to time by HMRI to ALLIANCE.
3.9 Subject to Section 4.4 herein, ALLIANCE shall remain responsible to Third
Parties for all financial payments payable for R&D Work, Preclinical Work,
Clinical Work, Production Work and Regulatory Work before April 1, 1996. Any
such work contracted before the Effective Date but unpaid as of April 1, 1996
falls within the scope of this Agreement so long as such work was previously
disclosed in writing to HMRI per the notice provisions of this Agreement and
labeled as such.
ARTICLE 4 - PRODUCT DEVELOPMENT
4.1 The PMT shall be responsible for managing R&D Work, Preclinical Work,
Clinical Work, Production Work and Regulatory Work as well as related
activities performed under the provisions of this Agreement. The chairperson
of the PMT shall be chosen by HMRI. Beginning within sixty (60) days after the
Effective Date of this Agreement and continuing through the term of this
Agreement, the PMT will, unless otherwise agreed by the parties:
a) assume responsibility for the Plans as established in Section 4.3;
8
b) establish, update yearly and seek approval from the Steering
Committee for the Plans so long as appropriate which will specify a reasonable
level of detail by which ALLIANCE and HMRI will conduct R&D Work, Preclinical
Work, Clinical Work, Production Work and Regulatory Work;
c) meet and review progress of R&D Work, Preclinical Work, Clinical
Work, Production Work and Regulatory Work at least quarterly unless ALLIANCE
and HMRI otherwise agree, and direct changes or modifications to the Plans as
well as budgets therefor;
d) establish a budget for each of the Plans and determine projected
additional costs or savings associated with any changes or modifications
thereto;
e) present a report with a reasonable level of detail at least every six
(6) months to the Steering Committee on all activities of the PMT, including a
budget update, progress by the parties under the current Plans and progress by
the PMT on developing Plans for the next year and associated budgets;
f) approve any material agreements with any Third Party to be made by
either or both parties hereto related to the performance of their obligations
under this Agreement, except where the selection of such a Third Party is the
unilateral right of either party hereunder; and
g) determine when the regulatory submissions for the United States and
Canada are to be transferred to HMRI from ALLIANCE.
4.2 Actions taken by the PMT pursuant to this Agreement as specified in
Section 4.1 shall be taken only following unanimous agreement of the parties
(HMRI and ALLIANCE each having one (1) vote) or at the direction of the
Steering Committee.
4.3 Subject to the provisions of this Agreement and approval by the Steering
Committee, ALLIANCE agrees to use its reasonable best efforts to execute and
complete the Plans as assigned, described and budgeted as set forth in Appendix
B and any future Plans authorized pursuant to this Agreement. Subject to the
provisions of this Agreement, HMRI agrees to use its reasonable best efforts to
execute and complete the Plans as assigned, described and budgeted as set forth
in Appendix C and any future Plans authorized pursuant to this Agreement. The
PMT and the Steering Committee will exercise the same oversight and control of
the Plans of Appendix B and Appendix C as if these Plans had been approved by
the Steering Committee hereunder, and said oversight and control will
specifically include directing changes and modifications to the Plans. Subject
to Section 13.1, HMRI agrees to provide funding to ALLIANCE through June 30,
1997 of at least the amount set forth on Appendix B to develop the Products in
the United States and Canada and to make the estimated quarterly payments to
ALLIANCE set forth therein, which amounts will be solely applied to Plan Costs
and are not refundable. ALLIANCE agrees to utilize the funds for the
development of Products in the United States and Canada, and, in the event
notice of termination of this Agreement is not given prior to June 30, 1997,
any amount of such quarterly payments not previously applied to Plan Costs
shall be applied to ALLIANCE's worldwide Plan Costs incurred after June 30,
1997. The parties agree that the Plans may change from time to time but the
HMRI financial commitment reflected in Appendix B shall not decrease.
9
If there are any proposed changes of whatever nature to Appendix B (other than
the level of financial commitment), and the PMT, or the Steering Committee fail
to reach unanimous agreement on said changes in accordance with the procedures
set forth herein, then HMRI will have the final decision with respect to said
changes.
Either party may deliver to the PMT a list of proposed R&D Work,
Preclinical Work, Clinical Work, Production Work and Regulatory Work Plans for
the following calendar years, a description of each project and an estimated
budget for each project. The proposed project description shall include a
detailed plan, an itemized estimate of costs and time required, the name of the
project leader, where the project will be carried out and the expected benefit.
The PMT will review the list of proposed Plans, revise the proposed projects as
it sees fit, and devise a R&D Work Plan, Preclinical Work Plan, Clinical Work
Plan, Production Work Plan and Regulatory Work Plan from the proposed projects
or from projects proposed by the PMT itself. The PMT will establish a budget
for each of the Plans. Such Plans and budgets therefor shall be submitted by
the PMT to the Steering Committee for approval.
4.4 HMRI shall pay all Plan Costs, and shall reimburse ALLIANCE for all of its
Plan Costs incurred after March 31, 1996. Plan Costs include all out-of-
pocket, direct, and indirect expenses ordinary and necessary to the execution
of an approved Plan. Out-of-pocket costs, which include payments to third
parties for supplies, materials, clinical travel, contracted outside services,
etc., shall be documented by records reasonably acceptable to HMRI. Direct and
indirect expenses of research and/or development personnel (including, without
limitation, scientists, lab technicians, regulatory personnel, clinical support
personnel, and the like) shall be expressed in terms of the full-time
equivalent ("FTE") rate then in effect for ALLIANCE during the relevant time
period. The FTE rate shall be calculated by determining the payroll cost for
ALLIANCE's scientific and technical personnel who allocate time among various
projects in ALLIANCE's ordinary course of business (including costs for fringe
benefits and payroll taxes) and an overhead rate, which includes all costs
other than out-of-pocket expenses for ALLIANCE's projects, including
LIQUIVENT-Registered Trademark-. During the term of this Agreement, ALLIANCE
shall use its standard project costing and accounting system then in effect
in computing and tracking its direct and indirect costs. The objective of
reimbursing costs in the manner set forth herein is to reimburse Alliance
for its actual expenses in carrying out the Plan.
a) **
b) By October 1 of each year, the PMT will establish an overall project
budget for the upcoming calendar year broken down by major work areas/teams and
establish FTE labor and
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overhead rates to be used as benchmarks to measure performance and
accountability. At 6-month intervals, the PMT will add an additional 6-month
budget, thus maintaining a rolling 12-month budget.
4.5 Any sums due to ALLIANCE by HMRI pursuant to Articles 4, 8 or 9 shall be
billed by ALLIANCE each calendar quarter, substantiated by ALLIANCE with
suitable invoices and other reasonable documentation, including documentation
based on the actual FTE spending rates for labor and overhead, and paid by HMRI
within forty-five (45) days of receipt of such invoices.
4.6 The parties agree to promptly provide each other with copies of records,
reports, and regulatory filings showing a reasonable level of detail related to
their respective work in the United States, Japan, and each Major European
Country conducted under the terms of this Agreement, subject to the
confidentiality obligations described in Section 3.5.
4.7 **
ARTICLE 5 - PAYMENTS AND ROYALTIES
5.1 In consideration of the rights and licenses granted to HMRI under Article
2 of this Agreement, HMRI shall pay to ALLIANCE the following payments:
a) the sum of **________________________payable upon the Effective Date;
b) the sum of **_______________________________ payable on June 30,
1997, **______________________________________________________________;
c) the sum of **_______________________________upon filing of a United
States NDA, **_____________________________________________________________;
d) the sum of **_______________________________payable within thirty (30)
days following the approval of an NDA permitting marketing of a Product in the
United States **______________________________________________________________;
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_____________________________________________________________________
__________________________________;
e) the sum of **______________________________________________payable
within thirty (30) days following the first commercial sale of a Product in
a Major European Country;
f) the sum of **______________________________________________payable
within thirty (30) days following the first commercial sale of a Product in
a second Major European Country; and
g) the sum of **_______________________________payable within thirty
(30) days following the first commercial sale of a Product in Japan.
h) the sum of **_____________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________.
5.2 The payments specified under Section 5.1 (a) through (g) shall be
allocated among the Patents as the parties reasonably agree as soon as
reasonably possible, and such payments shall not be creditable against
royalties or refundable.
5.3 In further consideration of the rights and licenses granted to HMRI under
Article 2 of this Agreement, HMRI shall pay to ALLIANCE the following royalties
based on the Net Sales of Products in the Territory:
a)**
b)**
c)**
**
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Upon the expiration of the royalty obligations of this Section 5.3 other
than as a result of termination of the Agreement **
on a country-by-country basis, HMRI shall have a fully paid,
worldwide nonexclusive license solely to use, develop, manufacture, have
manufactured, market, sell, and distribute Products for the Field of Use and a
fully paid worldwide exclusive license to the trademark "LIQUIVENT".
5.4 Subject to the rights of ALLIANCE pursuant to this Agreement, including
but not limited to Sections 2.5 and 5.5, HMRI shall have the final decision
with respect to all aspects of commercialization or non-commercialization of
Products in any country in the Territory including but not limited to sales,
pre-marketing, marketing and distribution.
5.5 HMRI agrees that, during the term of this Agreement, it shall use its
reasonable best efforts to market Products throughout the Territory.
Reasonable best efforts shall mean that on a country-by-country basis HMRI
shall expend at least a similar level of corporate resources, including
employee time and money, as it would on an internally developed HMRI product,
taking into account the market potential of such products, the competitiveness
of the marketplace, the proprietary position of the Product and other relevant
factors.
5.6 In the event that a combination product is sold in a form containing a
Product and another product (which is not a Product) of HMRI, its Affiliates,
sublicensees or distributors, the Net Sales shall be calculated by multiplying
the sales price of the combination product by the fraction A/(A+B), where A is
the invoice price or, if none, then the fair market value of the Product, and B
is the invoice price or, if none, then the fair market value of the other
product. For example, if the sales price of the combination product is $100
and the invoice prices (or fair market values, if applicable) of the Product
and the other product are $90 and $30, respectively, the Net Sales shall be $75
($100 x [$90/$120]). Fair market value means the cash consideration which HMRI
or its Affiliates, sublicensees or distributors would realize from an
unaffiliated, unrelated buyer in an arm's length sale of an identical item sold
in the same quantity and at the same time and place of the transaction. The
parties further agree to negotiate in good faith for an equitable determination
of Net Sales of Products in the event that HMRI sells Products in such a manner
that the Net Sales of same are not readily identifiable.
ARTICLE 6 - REPORTS AND RECORDS
6.1 HMRI shall keep and shall cause its Affiliates, sublicensees and
distributors to keep true and accurate records of sales of Products and Net
Sales and the royalties payable to ALLIANCE under Article 5 hereof and shall
deliver to ALLIANCE a written statement thereof on or before the sixtieth (60)
day following the end of each HMRI accounting quarter (or any part thereof in
the first or last calendar quarter of this Agreement) for such HMRI accounting
quarter. Said
13
written statements shall set forth Net Sales and the calculation thereof on a
country by country basis for each Product and the royalties due thereon.
6.2 All royalty payments by HMRI to ALLIANCE with respect to Net Sales in any
currency other than U.S. Dollars shall be converted into U.S. Dollars at the
rate of exchange of such currency for U.S. Dollars for the calendar quarter for
which royalty payments are being remitted according to HMRI's normal procedures
for calculating same and, at or no later than the time the written statement
with respect to such royalty payment or is required to be given to ALLIANCE
pursuant to Section 6.1, shall be made by wire transfer to the ALLIANCE account
designated below, or such other account as ALLIANCE may designate from time to
time. If the transfer or the conversion into U.S. Dollars in any such instance
is not lawful or possible, the payment of such part of the royalties due as is
necessary, shall be made by the deposit thereof, in such currency, to the
credit and account of ALLIANCE in any commercial bank or trust company of
ALLIANCE's choice located in that country. Prompt notice of said deposit shall
be given by HMRI to ALLIANCE.
6.3 Any income or other taxes which HMRI or any of its Affiliates is required
to pay or withhold on behalf of ALLIANCE with respect to royalties and any
other monies payable to ALLIANCE under this Agreement shall be deducted from
the amount of such royalties and monies due. HMRI or its Affiliate shall
furnish ALLIANCE with proof of such payments. Any such tax required to be paid
or withheld shall be an expense of and borne solely by ALLIANCE.
6.4 ALLIANCE shall have the right to use an independent certified public
accountant reasonably acceptable to and approved by HMRI or its own internal
accountants who shall have access to HMRI and its Affiliates' and sublicensees
and distributors records during reasonable business hours for the purpose of
verifying the royalties payable as provided in this Agreement for the three (3)
preceding years, but this right may not be exercised more than once in any
calendar year, and once a calendar year is audited it may not be reaudited, and
said accountant shall disclose to ALLIANCE and HMRI only information relating
solely to the accuracy and nature of the royalty report and the royalty
payments made according to this Agreement. For any underpayments greater than
two (2) percent by HMRI found under this Section, HMRI shall pay ALLIANCE the
amount of underpayment, interest from the time the amount was due at the then
current prime rate as quoted in the Eastern edition of THE WALL STREET
JOURNAL, and ALLIANCE's out-of-pocket expenses. For any underpayments less
than two (2) percent by HMRI found under this Section, HMRI shall pay ALLIANCE
the amount of underpayment. Any overpayments by HMRI will be refunded to HMRI
or credited to future royalties, at HMRI's election.
6.5 All payments due hereunder shall be made to the designated bank account of
ALLIANCE as follows:
**
14
ARTICLE 7 - CONFIDENTIALITY
7.1 All confidential information transmitted by either party to the other
including all confidential information developed pursuant to this Agreement,
shall be identified as confidential and the receiving party shall, while this
Agreement is in effect and for five (5) years after termination thereof, make
no use of this information other than in furtherance of this Agreement and
shall use the same efforts to keep secret and prevent the disclosure of such
information to parties other than its Affiliates, sublicensees, agents,
officers, employees and representatives authorized to receive such information
as it would for its own confidential information except for such confidential
information that,
a) was known to the receiving party or its Affiliates or sublicensees at
the time of its disclosure and not previously subject to any obligation of
confidentiality at the time of its disclosure;
b) was generally available to the public or was otherwise part of the
public domain at the time of its disclosure;
c) became generally available to the public or became otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party or its Affiliates or sublicensees in breach of
this Agreement, or
d) became known to the receiving party or its Affiliates or sublicensees
after its disclosure (a) from a source other than the disclosing party
(including from independent development by the receiving party), (b) other than
from a Third Party who had an obligation to the disclosing party not to
disclose such information to others, and (c) other than under an obligation of
confidentiality, or
e) is disclosed by the receiving party pursuant to oral questions,
interrogatories, requests for information or documents, subpoena, or civil
investigative demand issued by a court or governmental agency; provided that
the receiving party notifies the other party immediately on receipt thereof and
that the disclosing party furnishes only that portion of the confidential
information that counsel advises is legally required.
7.2 Each receiving party or its Affiliates or sublicensees may disclose any of
the Know-How and confidential information to the extent such disclosure is
necessary to comply with applicable laws or regulations, or to make and use a
Product in accordance with the terms of this Agreement.
7.3 Each party recognizes the mutual interest in obtaining valid patent
protection. Consequently, either party and its employees or consultants or any
other Third Party wishing to make a publication (including any oral disclosure
made without obligation of confidentiality) relating to work performed by such
party as part of the work performed under this Agreement (the "Publishing
Party") shall transmit to the other party (the "Reviewing Party") a copy of the
proposed written publication at least forty-five (45) days prior to submission
for publication, or an abstract of such oral disclosure at least fifteen (15)
days prior to submission of the abstract of the
15
oral disclosure, whichever is earlier. The Reviewing Party shall have the
right (a) to propose modifications to the publication for patent reasons, (b)
to request a delay in publication of presentation in order to protect
patentable information, or (c) to request that the information be maintained as
a trade secret and, in such case, the Publishing Party shall not make such
publication. Each party shall designate an individual to whom proposed
publications shall be directed and such individual shall be responsible for
obtaining the necessary internal approvals of the Reviewing Party.
7.4 If the Reviewing Party requests a delay as described in subsection 7.3(b)
the Publishing Party shall delay submission or presentation of the publication
for a period of up to ninety (90) days to enable patent applications protecting
each party's rights in such information to be filed.
7.5 Upon the receipt of written approval of the Reviewing Party or the
expiration of the applicable waiting period without comment, the Publishing
Party may proceed with the written publication or the oral presentation.
7.6 The parties hereto understand and agree that remedies at law may be
inadequate to protect against any breach of any of the provisions of this
Article 7 by either party or their employees, agents, officers or directors or
any other person acting in concert with it or on its behalf. Accordingly, each
party shall be entitle to the granting of injunctive relief by a court of
competent jurisdiction against any action that constitutes any such breach of
this Article 7. It is understood that such injunctive relief is intended
solely as provisional relief pending the dispute resolution procedures
described in Article 18 hereof.
7.7 Notwithstanding the foregoing, the right of any party to withhold or delay
consent to publish or delay publication shall be subject to any contractual
publication rights of Third Parties involved in research or clinical trials for
the Products. The parties will use reasonable efforts to obtain the voluntary
consent of any Third Party with publication rights agreed to prior to the
Effective Date, to comply with the notice and timing requests in this Article 7
and will promptly review any publications delivered for review.
ARTICLE 8 - INVENTIONS AND PATENT PROSECUTION
8.1 All right, title and interest in all writings, inventions, discoveries,
improvements and other technology, whether or not patentable or copyrightable,
and any patent applications, patents or copyrights based thereon (collectively,
the "Inventions") that are discovered, made or conceived during and as a
result of the work performed under this Agreement solely by employees of
ALLIANCE or others acting on behalf of ALLIANCE ("Alliance Inventions") shall
be owned by ALLIANCE. All rights, title and interest in all Inventions that are
discovered, made or conceived during and as a result of the work performed
under this Agreement solely by employees of HMRI or others acting on behalf of
HMRI ("HMRI Inventions") shall be owned by HMRI. All right, ▇▇▇▇▇▇ and
interest in all Inventions that are discovered, made or conceived during and as
a result of the work performed under this Agreement jointly by employees of
ALLIANCE and HMRI or others acting on their behalf (the "Joint Inventions")
shall be jointly owned by HMRI and ALLIANCE. Each party shall promptly
disclose to the other party the making, conception or reduction to practice of
Inventions by employees or others acting on behalf of such party.
16
The parties acknowledge that the ownership rights set forth above are subject
to the license grants set forth in Article 2 and that any patent applications
or patents related to ALLIANCE Inventions or Joint Inventions shall become
Patents.
8.2 Each party represents and agrees that its employees and consultants shall
be obligated under a binding written agreement to assign to such party, or as
such party shall direct, all Inventions made or conceived during and as a
result of work performed under this Agreement by such employee or consultant.
In the case of non-employees working for other companies or institutions on
behalf of ALLIANCE or HMRI, ALLIANCE and HMRI, as applicable, shall use
reasonable efforts to obtain the right to license all Inventions made by such
non-employees on behalf of ALLIANCE or HMRI, as applicable, in accordance with
the policies of the company or institution employing such non-employee.
ALLIANCE and HMRI agree to undertake to enforce such agreements with employees
or others or such rights pertaining to non-employees (including, where
appropriate, by legal action) considering, among other things, the commercial
value of such Inventions.
8.3 ALLIANCE shall be responsible for the filing, prosecution (including
oppositions) and maintenance of the Patents. For so long as any of the license
grants set forth in Article 2 remain in effect, ALLIANCE agrees to file and
prosecute and maintain the Patents in the countries in the Territory as listed
in Schedule 8.3; provided that the foregoing is subject to ALLIANCE's
reasonable business judgment. ALLIANCE shall consult with HMRI and keep HMRI
fully informed of important issues relating to the preparation, filing,
prosecution and maintenance of such patent applications and patents, including
patent strategy with respect to both existing and future patent applications,
patents and patent extensions, and shall furnish to HMRI copies of documents
relevant to such preparation, filing, prosecution and maintenance sufficiently
prior to filing such document or making any payment due thereunder to allow for
review and comment by HMRI, and ALLIANCE shall seriously consider all such
comments. ALLIANCE and HMRI shall mutually determine procedures for carrying
out the filing, prosecution (including oppositions) and maintenance, as
applicable, of patent applications and patents for all Joint Inventions and
shall each bear half of the cost thereof, and both parties shall be kept fully
informed of and consult and cooperate with respect to all actions taken with
respect thereto; provided that, if either party elects to not bear half the
cost of such activity with respect to a particular Joint Invention in a
particular country, then the other party may, at its sole expense and
discretion, undertake the filing, prosecution (including oppositions) and
maintenance of such patent or patent application in such country, and the party
not participating in such expenses shall assign its interest in such patent or
patent application in such country to the other party, including the rights to
receive and collect from third parties any royalties and damages for future or
past infringement, but reserving a perpetual royalty-free non-exclusive license
in such country (without the right to sublicense and subject to any limitations
imposed by this Agreement) to use such Joint Invention to make, have made, use,
distribute for sale and sell any products covered by such patent covering such
Joint Invention. The non-participating party will cooperate with the other
party, at the other party's expense, as necessary to enable the other party to
establish and protect its rights under this Section 8.3.
If ALLIANCE elects not to continue to seek or maintain patent protection
on any Patent in any country in the Territory, HMRI shall have the right, at
its option, but in the name of
17
ALLIANCE and at HMRI's expense, to file, prosecute (including oppositions) and
maintain such patent applications and patents as ALLIANCE shall have previously
filed in at least one country, provided, however, that the rights of the
parties with respect to any such Patent shall in all other respects be as
described in this Agreement. ALLIANCE will advise HMRI of all decisions taken
with respect to any such election in a timely manner in order to allow HMRI to
protect its rights under this Section 8.3.
8.4 Each party shall make available to the other party (or to the other
party's authorized attorneys, agents or representatives), its employees,
agents, subcontractors or consultants to the extent reasonably necessary or
appropriate to enable the appropriate party to file, prosecute and maintain
patent applications and resulting patents with respect to Inventions owned by a
party and for periods of time reasonably sufficient for such party to obtain
the assistance it needs from such personnel. Where appropriate, each party
shall sign or cause to have signed all documents relating to said patent
applications or patents at no charge to the other party.
8.5 ALLIANCE shall notify HMRI of (i) the issuance of each Patent giving the
date of issue and patent number for each such patent, and (ii) each notice
pertaining to any Patent which it receives as patent owner pursuant to the Drug
Price Competition and Patent Term Restoration Act of 1984 (hereinafter called
the "Act"), or other similar laws now or hereafter in effect, or pursuant to
comparable laws or regulations in other countries in the Territory. The
parties shall cooperate with each other in applying for patent term extensions
(including Supplementary Protection Certificate in European Community
Countries) where applicable in any country of the Territory. ALLIANCE shall
also notify HMRI of each application filed for patent term extension, any
allegations of failure to show due diligence and all awards of patent term
extensions with respect to the Patents. Such notices shall be given promptly,
but in any event within twenty (20) business day after receipt of each such
notice pursuant to the Act (or comparable laws or regulations in other
countries in the Territory). ALLIANCE shall notify HMRI of each filing for
patent term restoration under the Act (or comparable laws or regulations in
other countries in the Territory), any allegations of failure to show due
diligence and all awards of patent term restoration (extensions) with respect
to the Patents.
8.6 Except as otherwise expressly provided in this Agreement, under no
circumstances shall a party hereto, as a result of this Agreement obtain any
ownership interest in or other right to any technology, know-how, patents,
pending patent applications, products, or biological material of the other
party, including items owned, controlled or developed by the other party, or
transferred by the other party to said party, at any time pursuant to this
Agreement. It is understood and agreed that this Agreement does not grant HMRI
any license or other right in the Patents licensed for use, other than the use,
development, manufacture, marketing, sale and distribution of Products in the
Field of Use covered by the Patents.
ARTICLE 9 - INFRINGEMENT
9.1 ALLIANCE and HMRI shall each promptly, but in any event no later than ten
(10) business days after receipt of notice of such action, notify the other in
writing of any patent nullity actions, any declaratory judgment actions or any
alleged or threatened infringement of patents or patent applications or
misappropriation of intellectual property comprising the Patents or if either
18
party, or any of their respective Affiliates, shall be individually named as a
defendant in a legal proceeding by a Third Party alleging infringement of a
patent or other intellectual property right as a result of the manufacture,
production, use, development, manufacturing, marketing, selling or distribution
of Products, or of any other information or notification regarding the Patents.
9.2 HMRI shall have the first right to respond to, defend or prosecute any
actions, challenges, infringements, misappropriations or proceeding by a Third
Party alleging infringement described in Section 9.1. In the event HMRI elects
to do so, ALLIANCE will cooperate with HMRI and its legal counsel, join in such
suits as may be brought by HMRI, and be available at HMRI's reasonable request
to be an expert witness or otherwise to assist in such proceedings. HMRI will
cooperate with ALLIANCE and its legal counsel and keep ALLIANCE and its counsel
reasonable informed at all times as to the status of HMRI's response or
defense.
9.3 HMRI will not settle any suit or claim involving the Patents in a manner
that would compromise any rights of ALLIANCE without obtaining the prior
written consent of ALLIANCE.
9.4 In the event that HMRI elects to respond to, defend or prosecute any
actions, challenges, infringements, misappropriations or proceeding by a Third
Party alleging infringement described in Section 9.1, then: (i) legal fees and
other costs and expenses of HMRI associated with such response or defense shall
be paid by HMRI; (ii) legal fees and other costs and expenses associated with
such response or defense incurred by ALLIANCE at HMRI's request, shall be paid
by ALLIANCE; (iii) costs of acquiring Third Party patents or licenses and any
settlement, court award, judgment or other damages will be **__________________;
and (iv) amounts recovered from Third Parties in connection with such
response or defense shall first be applied, **__________________________________
________________________________________________________________________________
_______________________________________________________________________________.
HMRI shall advance all costs required to be paid by ALLIANCE pursuant to
clauses (ii) and (iii) of this subsection 9.4 and shall recover such advanced
costs through credits against up to ** of the royalties otherwise payable by
HMRI to ALLIANCE hereunder, until the amount so advanced by HMRI is fully
recovered. ALLIANCE shall have no obligation to repay HMRI any amounts
previously paid by HMRI to ALLIANCE hereunder to cover such costs. **______
____________________________________________________________________________
____________________________________________________________________________
9.5 In the event that HMRI elects not to respond to, defend or prosecute any
actions, challenges, infringements, misappropriations or proceeding by a Third
Party alleging infringement described in Section 9.1 within sixty (60) days of
becoming aware of or being notified of such actions, challenges, infringements,
misappropriations or proceedings or abandons such response, then, in such
event, ALLIANCE shall have the option to do so at ALLIANCE's sole cost,
provided that HMRI shall cooperate with and provide assistance to ALLIANCE at
HMRI's expense. All amounts so recovered from any Third Party shall be
retained by ALLIANCE,
19
subject to reimbursement of both parties for expenses and ALLIANCE shall have
no further obligations to HMRI with respect to the response or defense thereof;
provided further that the royalty rate payable by HMRI shall not be adjusted
downward due to an adverse judgment.
9.6 In the event that ALLIANCE and HMRI determine that it is necessary or
desirable for HMRI to acquire any Third Party patent or license in connection
with the development or manufacture of Products covered by the Patents in the
Territory, **_______________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
ARTICLE 10 - TRADEMARKS
10.1 All trademarks to be utilized by HMRI and/or its Affiliates on Products
under this Agreement shall be chosen by HMRI and/or its Affiliates and, except
for trademarks owned by ALLIANCE, shall be owned by HMRI and/or its Affiliates.
ALLIANCE hereby grants to HMRI a worldwide exclusive royalty-free license to
the "LIQUIVENT" trademark in connection with the sale of Products in the
Territory for the term of this Agreement, and thereafter unless this Agreement
is terminated in its entirety pursuant to Article 13. Schedule 10.1 sets forth
the countries in which trademark applications were filed and the status of such
applications as of the Effective Date.
ARTICLE 11 - MANUFACTURE AND SUPPLY
The parties agree that ALLIANCE will manufacture and supply bulk labeled
Product in finished packaged form to HMR for all Clinical Work and initial
Product marketing on a worldwide basis to the extent available from ALLIANCE's
existing facility in Otisville, New York as provided in the Supply Agreement.
ARTICLE 12 - DURATION
12.1 This Agreement shall become effective from the Effective Date and shall,
unless sooner terminated pursuant to any other provision of this Agreement
continue in full force for as long as HMRI or its Affiliates is obligated to
pay royalties hereunder.
12.2 Notwithstanding the expiration of this Agreement pursuant to Section 12.1
or the early termination of this Agreement pursuant to Article 13, the
financial obligations incurred prior to such expiration or termination and the
obligations of 7.1, 8.2, 10.1, 13.4, 13.6, 14.1, 14.2, and 18.1 shall remain in
full force and effect.
ARTICLE 13 - TERMINATION
13.1 Notwithstanding any other provision herein, HMRI can, prior to NDA
approval, terminate this Agreement on a country by country basis in its
entirety upon one (1) month written notice to ALLIANCE. After NDA approval of
a Product and prior to first marketing of said Product, HMRI can terminate this
Agreement on a country by country basis upon two (2) months written
20
notice to ALLIANCE. After the sale of a Product, HMRI can terminate this
Agreement on a country by country basis upon three (3) months written notice to
ALLIANCE.
13.2 Failure by HMRI or ALLIANCE to comply with any of the respective material
obligations and conditions contained in this Agreement shall entitle the other
party to give the party in default notice requiring it to cure such default.
If such default is not cured within ninety (90) days (thirty (30) days in case
of a monetary payment default) after receipt of such notice, the notifying
party shall be entitled (without prejudice to any of its other rights conferred
on it by this Agreement) to terminate this Agreement or in the event of an
uncured material breach by ALLIANCE, effect the rights of HMRI set forth in
Section 13.5 by giving a notice to take effect immediately. Notwithstanding
the foregoing, in the event of a non-monetary default, if the default is not
reasonably capable of being cured within the ninety (90) day cure period by the
defaulting party and such defaulting party is making a good faith effort to
cure such default, the notifying party may not terminate this Agreement,
provided however, that the notifying party may terminate this Agreement if such
default is not cured within one hundred eighty (180) days of such original
notice of default. The right of either party to terminate this Agreement as
hereinabove provided shall not be affected in any way by its waiver of, or
failure to take action with respect to any previous default.
13.3 In the event that one of the parties hereto shall go into liquidation, a
receiver or a trustee be appointed for the property or estate of that party and
said receiver or trustee is not removed within sixty (60) days, or the party
makes an assignment for the benefit of creditors (collectively, a "Bankruptcy
Event"), and whether any of the aforesaid Bankruptcy Events be the outcome of
the voluntary act of that party, or otherwise, the other party shall be
entitled to terminate this Agreement (or in the event ALLIANCE suffers such a
Bankruptcy Event, HMRI may effect its rights described in Section 13.5
forthwith by giving a written notice to the first party.
13.4 In the event that this Agreement is terminated in its entirety HMRI will:
a) deliver to ALLIANCE the Know-How and assign to ALLIANCE its rights in
said Know-How or Patents, if any, and any rights to ALLIANCE's trademarks,
excluding any Know-How or patents related to the manufacture of raw materials,
including, but not limited to, perfluorochemicals;
b) not use the Know-How as long as it has to be kept confidential
pursuant to Article 7 hereof, excluding any Know-How related to the manufacture
of raw materials, including, but not limited to, perfluorochemicals;
c) not infringe any of the Patents, excluding patents related to the
manufacture of raw materials, including, but not limited to,
perfluorochemicals;
d) grant to ALLIANCE a non-exclusive worldwide royalty free license to
any patents or Know-How owned or controlled by HMRI or its Affiliates which is
necessary to make, use, develop, manufacture, have manufactured, sell or
distribute Products intended for the Field of Use, excluding any Know-How or
patents related to the manufacture of raw materials, including, but not limited
to, perfluorochemicals;
21
e) make all payments accrued under this Agreement prior to the effective
termination date;
f) transfer all regulatory filings and approvals related to Products to
ALLIANCE upon ALLIANCE's written request for same; and
g) transfer to ALLIANCE responsibility for and control of ongoing work
of HMRI, Affiliates and Third Parties in an expeditious and orderly manner with
the costs for such work assumed by ALLIANCE as of the date of notice.
13.5 In the event of a Bankruptcy Event or a material default described in
Section 13.2 by ALLIANCE (which default is not cured as provided therein), HMRI
may elect in lieu of terminating this Agreement to declare the license granted
pursuant to this Agreement to be irrevocable. From the date of receipt of
notice of such election, ALLIANCE shall have no further rights or obligations
under this Agreement, except that ALLIANCE may enforce any financial
obligations of HMRI, including those arising under Articles 4 and 5 herein
before or after such election; provided that if such election occurs prior to
commercial sales of Products, any additional reasonable costs incurred by HMRI
to commercialize the Products as a result of such election, shall be credited
against amounts payable by HMRI to ALLIANCE.
13.6 Upon termination of this Agreement in its entirety, ALLIANCE shall have
ninety (90) days to exercise an option to purchase all or any portion of the
inventory of Products owned by HMRI or its Affiliates upon such termination at
a price equal to HMRI's or its Affiliates' costs for such inventory. Such
option shall be exercised by ALLIANCE in writing. Within thirty (30) days of
such exercise, HMRI shall ship at ALLIANCE's cost and direction such inventory
to ALLIANCE. ALLIANCE shall have forty-five (45) days to determine whether the
inventory complies with the Specifications (as defined in the Supply
Agreement). If the inventory complies with the Specifications, ALLIANCE shall
pay for such inventory within forty-five (45) days of approval. If such
inventory does not comply with the Specifications, it shall be returned to HMRI
at its expense. Procedures for handling and determining whether Product
complies with the Specifications shall be as set forth in the Supply Agreement.
13.7 In the event that this Agreement is terminated by HMRI in one or more
countries (but not terminated in its entirety), HMRI will with respect to such
country:
a) deliver to ALLIANCE the Know-How and assign to ALLIANCE its rights in
said Know-How or Patents if any, excluding any Know-How or patents related to
the manufacture of raw materials, including, but not limited to,
perfluorochemicals;
b) not use the Know-How as long as it has to be kept confidential
pursuant to Article 7 hereof in such country, excluding any Know-How related to
the manufacture of raw materials, including, but not limited to,
perfluorochemicals;
c) not infringe any of the Patents in such country, excluding patents
related to the manufacture of raw materials, including but not limited to,
perfluorochemicals;
22
d) grant to ALLIANCE a non-exclusive, royalty free license to any
patents or Know-How owned or controlled by HMRI or its Affiliates which is
necessary to make, use, develop, manufacture, have manufactured, sell or
distribute Products intended for the Field of Use, excluding any Know-How or
patents related to the manufacture of raw materials, including, but not limited
to, perfluorochemicals;
e) make all payments accrued under this Agreement with respect to such
country prior to the effective termination date;
f) transfer all regulatory filings and approvals related to Products in
such country to ALLIANCE upon ALLIANCE's written request for same;
g) transfer to ALLIANCE responsibility for and control of ongoing work
of HMRI, Affiliates and Third Parties in an expeditious and orderly manner with
the cost of such work assumed by ALLIANCE as of the date of notice; and
h) sell to ALLIANCE, at any time within ninety (90) days of such
termination, at ALLIANCE's election, all or any portion of the inventory of
Products owned by HMRI or its Affiliates which are intended for sale in such
country at a price equal to HMRI's or its Affiliate's cost for such inventory.
Such election shall be made by ALLIANCE in writing and within thirty (30) days
of such election, HMRI shall ship at ALLIANCE's cost and direction such
inventory to ALLIANCE. ALLIANCE shall have forty-five (45) days to determine
whether the inventory complies with the Specifications. If the inventory
complies with the Specifications, ALLIANCE shall pay for such inventory within
forty-five (45) days of approval. If such inventory does not comply with the
Specifications, it shall be returned to HMRI at its expense.
ARTICLE 14 INDEMNITY
14.1 HMRI agrees to defend, indemnify and hold harmless ALLIANCE and its
officers, directors, agents and employees (collectively, the "Indemnified
Parties"), from and against any and all liability, loss, damage, action, claim
or expense suffered or incurred by the Indemnified Parties (including
reasonable attorney's fees, whether incurred by reason of actions or claims
between the parties or by Third Parties) which results from or arises out of
the development, use, manufacture, promotion, sale or other disposition of
Products and all technology licensed under this Agreement, including without
limitation, any product liability claim.
14.2 HMRI's indemnification under Section 14.1 shall not apply to any
liability, loss, damage, action, claim or expense to the extent that it is
directly attributable to the negligent activities, reckless misconduct or
intentional misconduct of ALLIANCE.
ARTICLE 15 - INTERPRETATION
15.1 The construction, validity and performance of this Agreement shall be
governed in all respects by the laws of the State of New York, without giving
effect to principles of conflict of laws.
23
ARTICLE 16 - EXPORTS
16.1 The parties acknowledge that the export of technical data, materials, or
products is subject to the exporting party receiving any necessary export
licenses and that the parties cannot be responsible for any delays attributable
to export controls which are beyond the reasonable control of the exporting
party. ALLIANCE and HMRI agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples, or equipment received or generated under this Agreement in violation
of any statutes or governmental regulations which may be applicable, including,
but not limited to, the Export Administration Act of 1979, as amended, its
rules and regulations, including, but not limited to, Part 779 of the United
States Export Control Regulations, published by the United States Department of
Commerce, and other applicable export laws. ALLIANCE and HMRI agree to use
reasonable efforts to obtain similar covenants from their licensees,
sublicensees, and contractors with respect to the subject matter of this
article.
ARTICLE 17 - FORCE MAJEURE
17.1 No failure or omission by the parties hereto in the performance of any
obligation of this Agreement shall be deemed a breach of this Agreement or
create any liability if the same shall arise from any cause or causes beyond
the reasonable control of the parties, including but not limited to the
following which, for the purposes of this Agreement, shall be regarded as
beyond the control of the party in question: acts of God, acts or omissions of
any government or any rules, regulations or orders of any governmental
authority or any officer, department, agency or instrument thereof; fire,
storm, flood, earthquake, accident, acts of the public enemy, war, rebellion,
insurrection, riot, invasion, strikes, or lockouts.
ARTICLE 18 - ARBITRATION
18.1 In case any dispute arises out of this Agreement, the parties will
endeavor to settle such dispute amicably between themselves. In the event that
the parties fail to agree, any such dispute shall be finally settled by
arbitration administered by and according to the Rules of Commercial
Arbitration of the American Arbitration Association. The arbitration shall
take place in New York, New York. The arbitration panel shall consist of one
(1) arbitrator chosen by mutual consent of the parties and the decision shall
be final and binding on the parties and their legal successors. Should the
parties fail to agree on the selection on an arbitrator, each party shall
appoint one (1) arbitrator and the two arbitrators shall agree upon a neutral
third arbitrator to serve as the sole arbitrator. The arbitrator may, at his
discretion, provide for discovery by the parties during a period not to exceed
four (4) months from the date of filing of the notice of arbitration and the
arbitrator shall render his decision within thirty (30) days of the completion
of the hearing and may, at his discretion award costs and expenses. The
arbitrated award shall be final and binding on the parties. Judgment on the
award may be entered in any court of competent jurisdiction.
It is not intended by the parties that disputes arising out of issues
before the Steering Committee or PMT shall be subject to arbitration. The time
period for cure recited in Section 13.2 shall be suspended upon institution of
arbitration until completion of such arbitration.
24
ARTICLE 19 - NOTICES
19.1 Any notice required or permitted to be given under this Agreement shall be
mailed by registered or certified air mail, return receipt requested, postage
prepaid, addressed to the party to be notified at its address stated below, or
at such other address as may hereafter be furnished in writing to the notifying
party or by telefax (with the telefax followed by sending the same by
registered or certified mail) to the numbers set forth below or to such changed
telefax numbers as may thereafter be furnished.
If to ALLIANCE:
President
Alliance Pharmaceutical Corp.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telefax No.: (6l9) 558-5161
with a copy to:
Stroock & Stroock & ▇▇▇▇▇
Seven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to HMRI:
Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telefax No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Patent Counsel
Telefax No: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be deemed to have been received when it has been
delivered or received by telefax (with the telefax followed by sending the same
by registered or certified mail).
25
ARTICLE 20 - WAIVER
20.1 The failure on the part of ALLIANCE or HMRI 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.
ARTICLE 21 - LEGALITY
21.1 In the event that any term of this Agreement shall contravene the laws
and/or regulations in any country of the Territory, the parties shall
immediately meet in order to agree on any necessary amendments, provided that
any clauses thereby rendered unenforceable shall in no way affect the validity
of this Agreement.
ARTICLE 22 - ASSIGNMENT
22.1 This Agreement, and all rights and obligations hereunder, are personal as
between the parties and shall not be assigned in whole or in part by any of the
parties to any other person or company without the prior written consent of the
other party, except with respect to either party, in the event of a merger,
acquisition or transfer of substantially all of its assets.
ARTICLE 23 - TITLES
23.1 It is agreed that the headings appearing at the beginning of the numbered
Articles hereof have been inserted for convenience only and do not constitute
any part of this Agreement.
ARTICLE 24 - PUBLICITY
24.1 Neither party shall originate any publicity, news release or public
announcements, written or oral, whether to the public or press, stockholders or
otherwise, relating to this Agreement, including its existence, the subject
matter to which it relates, performance under it or any of its terms, to any
amendment hereto or performances hereunder without the prior written consent of
the other party, provided however, that this Section 24.1 shall not be
applicable where either party hereto is legally required to make public a
summary or details of this Agreement, in any country. If a party believes that
it has a legal requirement to make public the existence of or any details of or
any events related in any way to this Agreement, it shall provide a copy of any
such announcement to the other party for review and approval at least three (3)
business days prior to making said announcement.
ARTICLE 25 - UNENFORCEABLE PROVISIONS
25.1 Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
26
ARTICLE 26 - OTHERS
26.1 As used in this Agreement, singular includes the plural and plural
includes the singular, wherever so required by fact or context.
ARTICLE 27 - EXECUTION
27.1 This Agreement may be executed in counterparts each of which shall for all
purposes be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers or representatives as of
the day and year first above written.
ALLIANCE PHARMACEUTICAL CORP.
WITNESS_________________________ By:___________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
Date: FEBRUARY 28, 1996
_________________________
HOECHST ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
WITNESS_________________________ By:___________________________
Title:________________________
Date:_________________________
27
APPENDIX A
TO
LICENSE AGREEMENT
Issued Patents
--------------
**
Pending Applications
--------------------
**
Appendix B
to
License Agreement
Plan for Development in the United States and Canada
**
Appendix C
to
License Agreement
Plan for Development in the Territory,
except for the United States and Canada
**
SCHEDULE 2.5
TO
LICENSE AGREEMENT
**
SCHEDULE 8.3
TO
LICENSE AGREEMENT
**
SCHEDULE 10.1
TO
LICENSE AGREEMENT
LiquiVent Trademarks
--------------------
**