SECURITIES AND EXCHANGE COMMISSION
Amendment No. 6
Form S-1
EpiCept Corporation
| Delaware | 2834 | 52-1841431 | ||
|
(State or other jurisdiction of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
270 Sylvan Avenue
John V. Talley
Copies to:
|
Alexander D. Lynch, Esq.
Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000 |
Danielle Carbone, Esq.
Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 (212) 848-4000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
The following table sets forth the costs and
expenses, other than the underwriting discounts, payable by the
Registrant in connection with the sale of the securities being
registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and The Nasdaq National
Market listing fee.
Section 145 of the Delaware General
Corporation Law (“Section 145”) permits
indemnification of officers and directors of the Company under
certain conditions and subject to certain limitations.
Section 145 also provides that a corporation has the power
to maintain insurance on behalf of its officers and directors
against any liability asserted against such person and incurred
by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the
power to indemnify him or her against such liability under the
provisions of Section 145.
Article 6, Section 1, of the
Registrant’s Amended and Restated Certificate of
Incorporation provides for mandatory indemnification of its
directors and officers and permissible indemnification of
employees and other agents to the maximum extent not prohibited
by the Delaware General Corporation Law. The rights to indemnity
thereunder continue as to a person who has ceased to be a
director, officer, employee or agent and inure to the benefit of
the heirs, executors and administrators of the person. In
addition, expenses incurred by a director or executive officer
in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact
that he or she is or was a director or officer of the Registrant
(or was serving at the Registrant’s request as a director
or officer of another corporation) shall be paid by the
Registrant in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it
shall ultimately be determined that he or she is not entitled to
be indemnified by the Registrant as authorized by the relevant
section of the Delaware General Corporation Law.
As permitted by Section 102(b)(7) of the
Delaware General Corporation Law, the Registrant’s
Certificate of Incorporation provides that, pursuant to Delaware
law, its directors shall not be personally liable for monetary
damages for breach of the directors’ fiduciary duty as
directors to the Registrant and its stockholders. This provision
in the Certificate of Incorporation does not eliminate the
directors’ fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of
non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability
for breach of the director’s duty of loyalty to the
Registrant for acts or omission not in good faith or involving
international misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director,
and for payment of dividends or approval of Stock repurchases or
redemptions that are unlawful under Section 174 of the
Delaware General Corporation Law. The provision
II-1
The Registrant intends to enter into
indemnification agreements with each of its directors and
executive officers and to purchase directors’ and
officers’ liability insurance. Generally, the
indemnification agreements attempt to provide the maximum
protection permitted by Delaware law as it may be amended from
time to time. Moreover, the indemnification agreements provide
for certain additional indemnification. Under such additional
indemnification provisions, an individual will receive
indemnification for expenses, judgments, fines and amounts paid
in settlement if he or she is found to have acted in good faith
and in a manner reasonably believed to be in, or not opposed to,
the best interests of the Registrant, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. Notwithstanding
anything to the contrary in the indemnification agreement, the
Registrant shall not indemnify any such director or executive
officer seeking indemnification in connection with any action,
suit, proceeding, claim or counterclaim, or part thereof,
initiated by such person unless the initiation thereof was
authorized in the specific case by the Board of Directors of the
Registrant. The indemnification agreements provide for the
Registrant to advance to the individual any and all expenses
(including attorneys’ fees) incurred in defending any
proceeding in advance of the final disposition thereof. In order
to receive an advance of expenses, the individual must submit to
the Registrant copies of invoices presented to him or her for
such expenses. Also, the individual must repay such advances
upon a final judicial decision that he or she is not entitled to
indemnification.
In addition to the foregoing, the Underwriting
Agreement contains certain provisions by which the Underwriters
have agreed to indemnify the Registrant, each person, if any,
who controls the Registrant within the meaning of
Section 15 of the Securities Act, each director of the
Registrant, each officer of the Registrant who signs the
Registration Statement, with respect to information furnished in
writing by or on behalf of the Underwriters for use in the
Registration Statement.
At present, there is no pending litigation or
proceeding involving a director, officer, employee or other
agent of the Registrant in which indemnification is being
sought, nor is the Registrant aware of any threatened litigation
that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
Since December 31, 2000, we have sold and
issued the following securities:
Preferred Stock and Debt Financings
(1) In 2002, we granted options to
Mr. John V. Talley, our President and Chief Executive
Officer, and Mr. Scott Kozak, our Vice President, Business
Development, and current directors Afting, Caspritz, Ponschab
and Spickshen along with former directors Mr. Mark Clement
and Mr. Erik Hornnaess, to purchase an aggregate of
141,666 shares of our common stock under our 1995 Stock
Option Plan at a weighted average exercise price of $1.20 per
share.
(2) In November 2002, we entered into a
convertible bridge loan arrangement in an aggregate amount of up
to $5,000,000. The lenders under that convertible bridge loan
arrangement included Mr. John V. Talley, our President
and Chief Executive Officer, and certain holders of our
preferred stock, including TVM IV GmbH &
Co. KG, Private Equity US Direct Finance (which thereafter
transferred its notes to Private Equity Direct Finance), The
Merlin Biosciences Fund L.P., The Merlin Biosciences Fund
GbR and Gold-Zack Partners I B.V (collectively, the
“2002 Bridge Investors”). At December 31, 2003,
we had received $4,850,000. The loan bears interest at
8% per annum and matures on October 30, 2006. The loan
is convertible into the next round of preferred stock, and also
has provisions for optional conversion preferred stock or common
stock. Such conversion shall occur at the lowest price per share
paid by any purchaser in the qualifying financing of the next
round of preferred stock, or at anti-dilutive conversion rates
for optional conversion preferred stock or common stock based
upon the results of certain milestones.
II-2
(3) In connection with the issuance of the
convertible bridge loan, in November 2002, we also issued
warrants to the 2002 Bridge Investors to purchase 6,062,500
shares of common stock entitling the 2002 Bridge Investors,
subject to adjustments as defined, to purchase a number of
shares equal to 50% of the greatest principal amount that has
been outstanding under such holder’s note divided by the
applicable exercise price as described in the agreement. The
warrants are convertible into the next round of preferred stock,
optional conversion preferred stock or common stock. The
warrants are exercisable at any time through November 2012 and
possess certain anti-dilutive rights as defined in the agreement.
(4) In 2003, we granted options to current
directors Afting, Caspritz, Docherty, Ponschab and Spickschen
and former director Hornnaess to purchase an aggregate of
11,250 shares of our common stock under our 1995 Stock
Option Plan at a weighted average exercise price of $2.00 per
share.
(5) In March 2005, we completed the private
placement of $4.0 million aggregate principal amount of our
senior notes due 2006. The purchasers of our senior notes
included Sanders Opportunity Fund, L.P. and Sanders Opportunity
Fund (Institutional), L.P. (collectively, the “Sanders
Investors”) and certain holders of our preferred stock,
including TVM Techno Venture Management (“TVM”),
Private Equity Direct Finance and Merlin General Partner II
Limited (collectively with the Sanders Investors, the “2005
Investors”). The Sanders Investors are “accredited
investors” as that term is defined in Regulation D of
the Securities Act. TVM is a “qualified institutional
buyer” within the meaning of Rule 144A under the
Securities Act. Both Private Equity Direct Finance and Merlin
General Partner II Limited are non-U.S. Persons within the
meaning of Regulation S under the Securities Act and sales
to them were made in accordance with Regulation S and the
rules thereunder. The notes bear interest at 8% per annum and
mature on October 30, 2006. In the event this initial
public offering is not completed, the notes are convertible at
the option of the holder into the next round of preferred stock.
Such conversion shall occur at the lowest price per share paid
by any purchaser in the qualifying financing of the next round
of preferred stock.
(6) In connection with the issuance of the
senior notes due 2006, in March 2005, we also issued warrants to
the 2005 Investors to purchase common stock or next round
preferred stock, entitling the 2005 Investors, subject to
adjustments as defined, to purchase a number of shares of common
stock equal to 35% of the original principal amount of the
senior notes divided by the applicable public offering price as
defined in the warrant. The warrants are convertible, under
certain specified circumstances, for common stock or the next
round of preferred stock. The warrants are exercisable at any
time through March 3, 2008 and possess certain
anti-dilutive rights as set forth in the warrant.
The sales of the above securities were deemed to
be exempt from registration in reliance on Section 4(2) of
the Securities Act or Regulation D or Regulation S
promulgated thereunder as transactions by an issuer not
involving any public offering. All recipients were either
accredited, sophisticated investors or non-U.S. persons, as
those terms are defined in the Securities Act and the
regulations promulgated thereunder. The recipients of securities
in each such transaction represented their intention to acquire
the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the share certificates and other
instruments issued in such transactions. All recipients either
received adequate information about us or had access, through
employment or other relationships, to such information.
Stock Options and Stock Purchase
Rights
(1) During 2002, we granted options to
employees to purchase an aggregate of 20,000 shares of our
common stock under our 1995 Stock Option Plan at a weighted
average exercise price of $1.56 per share. In 2002,
7,147 stock options were exercised.
The sales of the above securities were deemed to
be exempt from registration in reliance on Rule 701
promulgated under Section 3(b) under the Securities Act as
transactions pursuant to a compensatory benefit plan or a
written contract relating to compensation.
II-3
II-4
(b) Financial Statement Schedules
Schedules not listed above have been omitted
because the information required to be set forth therein is not
applicable or is shown in the financial statements or notes
thereto.
The undersigned registrant hereby undertakes to
provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate
II-5
The undersigned registrant hereby undertakes that:
II-6
Item 13.
Other Expenses of Issuance and
Distribution.
$
8,827.50
9,145.00
130,000.00
400,000.00
800,000.00
750,000.00
2,000.00
5,000.00
18,027.50
$
2,123,000.00
Item 14.
Indemnification of Directors and
Officers.
Item 15.
Recent Sales of Unregistered
Securities.
Item 16.
Exhibits and Financial Statement
Schedules
Exhibit
Number
Description
†1.1
Form of Underwriting Agreement.
†3.1
Amended and Restated Certificate of Incorporation
of the Registrant.
†3.2
Form of Certificate of Incorporation of the
Registrant to be in effect after the closing of the offering
made under this Registration Statement.
†3.3
Second Amended and Restated Bylaws of the
Registrant.
†3.4
Form of Bylaws of the Registrant to be in effect
after the closing of the offering made under this Registration
Statement.
†4.1
Specimen Common Stock Certificate.
†4.2
First Amendment to the Amended and Restated
Registration Rights Agreement, dated as of December 28,
2000, among the Series A Investors, the Series B
Investors, the Series C Investors, the Founders and the
Registrant.
†4.3
Form of Third Amended and Restated Convertible
Term Note.
†4.4
Form of Third Amended and Restated Stock Purchase
Warrant.
†4.5
Warrant for the purchase of Series C
Convertible Preferred Stock, dated November 30, 2000,
issued by EpiCept Corporation to Private Equity US Direct
Finance.
†4.6
Warrant for the purchase of Series B
Convertible Preferred Stock, dated August 14, 2000, issued
by EpiCept Corporation to Alpinvest International B.V.
†4.7
Warrant for the purchase of Series B
Convertible Preferred Stock, dated August 9, 2000, issued
by EpiCept Corporation to TVM Techno Ventures Enterprises
No. III Limited Partnership.
†5.1
Opinion of Weil, Gotshal & Manges LLP.
†10.1
Form of Indemnification Agreement between the
Registrant and each of its directors and executive officers.
†10.2
1995 Stock Option Plan.
†10.3
2005 Equity Incentive Plan.
†10.4
2005 Employee Stock Purchase Plan.
†10.5
Employment Agreement, dated as of
October 28, 2004, between the Registrant and John V. Talley.
†10.6
Employment Agreement, dated as of
October 28, 2004, between the Registrant and Robert Cook.
†10.7(
1)
License Agreement, dated as of July 23,
2003, between Adolor Corporation and the Registrant.
†10.8
Amendment No. 1 to License Agreement, dated
as of October 21, 2004, between Adolor Corporation and the
Registrant.
10.9(
1)
License Agreement, dated as of December 18,
2003, between Endo Pharmaceuticals Inc. and the Registrant.
10.10
(1)
Royalty Agreement, dated as of July 16,
2003, between the Registrant and R. Douglas Cassel, M.D.
10.11
(1)
Sublicense Agreement, dated as of August 27,
1999, between Epitome Pharmaceuticals Limited and American
Pharmed Labs, Inc.
†10.12
Lease Agreement between Connecticut General Life
Insurance Company, as Landlord, and American Pharmed Labs, Inc.,
as Tenant, dated July 31, 1997.
†10.13
Cooperation Agreement between APL American
Pharmed Labs, Inc. and Technologie-Beteiligungs-Gesellschaft
mbH, dated August 1997.
†10.14
Investment Agreement between Pharmed Labs GmbH
and Technologie-Beteiligungs-Gesellschaft mbH, dated August 1997.
†10.15
Investment Agreement among Pharmed Labs GmbH,
American Pharmed Labs, Inc. and
Technologie-Beteiligungs-Gesellschaft mbH, dated
February 17, 1998.
Exhibit
Number
Description
†10.16
Letter Agreement, dated March 31, 1998,
between Pharmed Labs GmbH and IKB Nachrangkapital GmbH.
†10.17
Limited Guaranty, dated April 27, 1998, by
American Pharmed Labs, Inc. for the benefit of IKB
Nachrangkaptial GmbH.
†10.18
Note Purchase Agreement (the “Note Purchase
Agreement”), dated as of March 3, 2005, by and among
EpiCept Corporation and the Purchasers named on the signature
pages thereto.
†10.19
Form of Note issued pursuant to the Note Purchase
Agreement.
†10.20
Form of Warrant issued pursuant to the Note
Purchase Agreement.
†10.21
Second Amended and Restated Registration Rights
Agreement, dated as of March 4, 2005, among the
Series A Investors, the Series B Investors, the
Series C Investors, the Founders, the New Warrant Holders
and the Registrant.
†10.22
First Exchange Option Agreement, dated as of
December 31, 1997, by and between American Pharmed Labs,
Inc. and tbg Technologie-Beteiligungs-Gesellschaft mbg der
Deutschen Ausgleichsbank.
†10.23
Second Exchange Option Agreement, dated as of
February 17, 1998, by and between American Pharmed Labs,
Inc. and tbg Technologie-Beteiligungs-Gesellschaft mbh der
Deutschen Ausgleichsbank.
†11.1
Statement Regarding Computation of Per Share
Earnings (incorporated by reference to the Notes to Consolidated
Financial Statements included in Part I of this Registration
Statement).
†16.1
Letter Regarding Change in Certifying Accountant.
†21.1
List of Subsidiaries.
†23.1
Consent of Deloitte & Touche LLP.
†23.2
Consent of Weil, Gotshal & Manges LLP
(included in Exhibit 5.1).
†24.1
Power of Attorney.
†
Previously filed.
(1)
Pursuant to a request for confidential treatment,
portions of the Exhibit have been redacted from the publicly
filed document and have been furnished separately to the SEC as
required by Rule 406 under the Securities Act.
Item 17.
Undertakings.
(1) For purposes of determining any
liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any
liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities
Act, the Registrant has duly caused this Amendment No. 6 to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Englewood Cliffs, state of New
Jersey, on May 3, 2005.
Pursuant to the requirements of the Securities
Act, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
II-7
EPICEPT CORPORATION
By:
*
John V. Talley
President and Chief Executive
Officer
Signature
Title
Date
*
John V. Talley
Director, President and Chief Executive Officer
(Principal Executive Officer)
May 3, 2005
/s/ ROBERT W. COOK
Robert W. Cook
Chief Financial Officer (Principal Financial and
Accounting Officer)
May 3, 2005
*
Robert G. Savage
Director
May 3, 2005
*
Gert Caspritz
Director
May 3, 2005
*
Ernst-Günter Afting
Director
May 3, 2005
*
Mark Docherty
Director
May 3, 2005
*
Reiner Ponschab
Director
May 3, 2005
*
Thorlef Spickschen
Director
May 3, 2005
*
Guy C. Jackson
Director
May 3, 2005
/s/ ROBERT W. COOK
Robert W. Cook
Attorney-in-Fact
May 3, 2005
EXHIBIT INDEX
Exhibit
Number
Description
†1.1
Form of Underwriting Agreement.
†3.1
Amended and Restated Certificate of Incorporation
of the Registrant.
†3.2
Form of Certificate of Incorporation of the
Registrant to be in effect after the closing of the offering
made under this Registration Statement.
†3.3
Second Amended and Restated Bylaws of the
Registrant.
†3.4
Form of Bylaws of the Registrant to be in effect
after the closing of the offering made under this Registration
Statement.
†4.1
Specimen Common Stock Certificate.
†4.2
First Amendment to the Amended and Restated
Registration Rights Agreement, dated as of December 28,
2000, among the Series A Investors, the Series B
Investors, the Series C Investors, the Founders and the
Registrant.
†4.3
Form of Third Amended and Restated Convertible
Term Note.
†4.4
Form of Third Amended and Restated Stock Purchase
Warrant.
†4.5
Warrant for the purchase of Series C
Convertible Preferred Stock, dated November 30, 2000,
issued by EpiCept Corporation to Private Equity US Direct
Finance.
†4.6
Warrant for the purchase of Series B
Convertible Preferred Stock, dated August 14, 2000, issued
by EpiCept Corporation to Alpinvest International B.V.
†4.7
Warrant for the purchase of Series B
Convertible Preferred Stock, dated August 9, 2000, issued
by EpiCept Corporation to TVM Techno Ventures Enterprises
No. III Limited Partnership.
†5.1
Opinion of Weil, Gotshal & Manges LLP.
†10.1
Form of Indemnification Agreement between
Registrant and each of its directors and executive officers.
†10.2
1995 Stock Option Plan.
†10.3
2005 Equity Incentive Plan.
†10.4
2005 Employee Stock Purchase Plan.
†10.5
Employment Agreement, dated as of
October 28, 2004, between the Registrant and John V. Talley.
†10.6
Employment Agreement, dated as of
October 28, 2004, between the Registrant and Robert Cook.
†10.7(
1)
License Agreement, dated as of July 23,
2003, between Adolor Corporation and the Registrant.
†10.8
Amendment No. 1 to License Agreement, dated
as of October 21, 2004, between Adolor Corporation and the
Registrant.
10.9(
1)
License Agreement, dated as of December 18,
2003, between Endo Pharmaceuticals Inc. and the Registrant.
10.10
(1)
Royalty Agreement, dated as of July 16,
2003, between the Registrant and R. Douglas Cassel, M.D.
10.11
(1)
Sublicense Agreement, dated as of August 27,
1999, between Epitome Pharmaceuticals Limited and American
Pharmed Labs, Inc.
†10.12
Lease Agreement between Connecticut General Life
Insurance Company, as Landlord, and American Pharmed Labs, Inc.,
as Tenant, dated July 31, 1997.
†10.13
Cooperation Agreement between APL American
Pharmed Labs, Inc. and Technologie-Beteiligungs-Gesellschaft
mbH, dated August 1997.
†10.14
Investment Agreement between Pharmed Labs GmbH
and Technologie-Beteiligungs-Gesellschaft mbH, dated August 1997.
†10.15
Investment Agreement among Pharmed Labs GmbH,
American Pharmed Labs, Inc. and
Technologie-Beteiligungs-Gesellschaft mbH, dated
February 17, 1998.
Exhibit
Number
Description
†10.16
Letter Agreement, dated March 31, 1998,
between Pharmed Labs GmbH and IKB Nachrangkapital GmbH.
†10.17
Limited Guaranty, dated April 27, 1998, by
American Pharmed Labs, Inc. for the benefit of IKB
Nachrangkaptial GmbH.
†10.18
Note Purchase Agreement (the “Note Purchase
Agreement”), dated as of March 3, 2005, by and among
EpiCept Corporation and the Purchasers named on the signature
pages thereto.
†10.19
Form of Note issued pursuant to the Note Purchase
Agreement.
†10.20
Form of Warrant issued pursuant to the Note
Purchase Agreement.
†10.21
Second Amended and Restated Registration Rights
Agreement, dated as of March 4, 2005, among the
Series A Investors, the Series B Investors, the
Series C Investors, the Founders, the New Warrant Holders
and the Registrant.
†10.22
First Exchange Option Agreement, dated as of
December 31, 1997, by and between American Pharmed Labs,
Inc. and tbg Technologie-Beteiligungs-Gesellschaft mbg der
Deutschen Ausgleichsbank.
†10.23
Second Exchange Option Agreement, dated as of
February 17, 1998, by and between American Pharmed Labs,
Inc. and tbg Technologie-Beteiligungs-Gesellschaft mbh der
Deutschen Ausgleichsbank.
†11.1
Statement Regarding Computation of Per Share
Earnings (incorporated by reference to the Notes to Consolidated
Financial Statements included in Part I of this Registration
Statement).
†16.1
Letter Regarding Change in Certifying Accountant.
†21.1
List of Subsidiaries.
†23.1
Consent of Deloitte & Touche LLP.
†23.2
Consent of Weil, Gotshal & Manges LLP
(included in Exhibit 5.1).
†24.1
Power of Attorney.
†
Previously filed.
(1)
Pursuant to a request for confidential treatment,
portions of the Exhibit have been redacted from the publicly
filed document and have been furnished separately to the SEC as
required by Rule 406 under the Securities Act.
Exhibit 10.9
LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement"), dated as of December 18, 2003 (the "Effective Date"), is made by and between Endo Pharmaceuticals Inc., a Delaware corporation having its principal office at 100 Painters Drive, Chadds Ford, Pennsylvania 19317 ("Endo"), and EpiCept Corporation, a Delaware corporation having its principal office at 270 Sylvan Avenue, Englewood Cliffs, New Jersey 07632 ("EpiCept"). Endo and EpiCept are each sometimes referred to individually as a "Party" and together as the "Parties."
RECITALS
WHEREAS, EpiCept is currently developing a topical lidocaine patch product currently known as LidoPAIN(R) BP for the treatment of acute low back pain and owns patents covering the use of a topical lidocaine patch product for the treatment of low back pain;
WHEREAS, Endo is engaged in the development and marketing of proprietary pharmaceutical products for the treatment of pain, including a topical lidocaine patch product; and
WHEREAS, Endo desires to obtain from EpiCept, and EpiCept desires to grant to Endo, the exclusive rights in the Territory to the Licensed Products under certain Patents and other Technology for the commercialization of Licensed Products (each as defined below).
NOW, THEREFORE, in consideration of the foregoing premises and the representations, covenants and agreements contained herein, Endo and EpiCept, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, whether in the singular or plural, each of the following capitalized terms shall have the meanings set forth in this Article 1.
1.1 "Action or Proceeding" shall mean any action, suit, proceeding, arbitration, Order, inquiry, hearing, assessment with respect to fines or penalties or litigation (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental or Regulatory Authority or other Person.
1.2 "Affiliate" means a Person that, directly or indirectly, through one or more intermediates, controls, is controlled by, or is under common control with, the Person specified, but only for so long as the relationship exists. For the purposes of this definition, control shall mean the direct or indirect ownership of (i) in the case of
corporate entities, securities authorized to cast at least fifty percent (50%) of the votes in any election for directors, (ii) in the case of non-corporate entities, at least fifty percent (50%) ownership interest with the power to direct the management and policies of such non-corporate entity, or (iii) such lesser percentage as may be the maximum percentage allowed to be owned by a foreign corporation under the applicable laws or regulations of a particular jurisdiction outside of the United States) of the equity having the power to vote in the election of directors or to direct the management and policies of another entity. Notwithstanding the foregoing, the term "Affiliate" shall not include subsidiaries in which a Person or its Affiliates owns a majority of the ordinary voting power to elect a majority of the board of directors, but is restricted from electing such majority by contract or otherwise, until such time as such restriction is no longer in effect.
1.3 "Applicable Laws" shall mean all laws (including common law), treaties, statutes, ordinances, rules, regulations, Orders, permits, directives, plans, codes, interpretations, notice and demand letters, prohibitions, obligations, schedules, timetables, standards, conditions and requirements of any Governmental or Regulatory Authority, as may be in effect from time to time, that relate to the Licensed Products or the Licensed Intellectual Property.
1.4 "Breach Notice" has the meaning set forth in Section 9.2.
1.5 "Breaching Party" has the meaning set forth in Section 9.2.
1.6 "Business Day" means any day except Saturday and Sunday, on which commercial banking institutions in New York are open for business. Any other reference in this Agreement to "day" whether or not capitalized shall refer to a calendar day, not a Business Day.
1.7 "Commercially Reasonable Efforts" means, with respect to a Party, the efforts and resources which would be used by that Party consistent with prevailing pharmaceutical industry standards for a company of similar size and scope to such Party with respect to a product or potential product at a similar stage in its development or product life and of similar market potential taking into account efficacy, safety, the anticipated Regulatory Authority approved labeling, the competitiveness of alternative products in the market place or under development, the patent and other proprietary position of the product, the likelihood of Regulatory Approval, the commercial value of the product and other relevant factors.
1.8 "Confidential Information" means all secret, confidential or proprietary information or data, whether provided in written, oral, graphic, video, computer or other form, provided by one Party (the "Disclosing Party") to the other Party (the "Receiving Party") pursuant to this Agreement or generated pursuant to this Agreement, including but not limited to, information relating to the Disclosing Party's existing or proposed research, development efforts, patent applications, business or products and any other materials that have not been made available by the Disclosing Party to the general public. The terms of this Agreement shall also be deemed Confidential Information hereunder,
except to the extent disclosed pursuant to Section 7.5 herein. Notwithstanding the foregoing sentences, Confidential Information shall not include any information or materials that:
(a) were already known to the Receiving Party (other than under an obligation of confidentiality known to the Receiving Party), at the time of disclosure by the Disclosing Party to the extent such Receiving Party has documentary evidence to that effect;
(b) were generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;
(c) became generally available to the public or otherwise part of the public domain after its disclosure or development, as the case may be, and other than through any act or omission of a Party in breach of such Party's confidentiality obligations under this Agreement;
(d) were subsequently lawfully disclosed to the Receiving Party by a Third Party who, to the Knowledge of the Receiving Party, had no obligation to the Disclosing Party not to disclose such information to others;
(e) were independently discovered or developed by or on behalf of the Receiving Party without the use of the Confidential Information belonging to the Disclosing Party and the Receiving Party has documentary evidence to that effect; or
(f) is approved for release by the Disclosing Party in writing.
1.9 "Control," "Controls," "Controller" or "Controlled" means with respect to Technology and/or patent rights, the ownership thereof, or the possession of the ability to grant licenses or sublicenses thereto without violating the terms of any agreement or other arrangement with, or the rights of, any Third Party existing as of the date on which such license or sublicense is granted.
1.10 "Disclosing Party" has the meaning set forth in Section 1.8.
1.11 "Endo Baseline Sales" ***
1.12 "Endo BP Product" means a non-sterile adhesive backed topical patch, for sale by prescription only, containing lidocaine as the only active ingredient, indicated, and approved by the FDA, for treating chronic low back pain (or a substantially similar indication), and which indication is covered by a Valid Claim of the EpiCept Licensed Patents.
1.13 "Endo Inventions" has the meaning set forth in Section 10.1(b).
1.14 "EpiCept Improvements" means any and all Patent rights or Technology Controlled by EpiCept arising after the Effective Date that claim an improvement, enhancement, invention or modification relating to a Licensed Product.
1.15 "EpiCept Intellectual Property" means the EpiCept Technology, EpiCept Trademarks, EpiCept Improvements and EpiCept Licensed Patents.
1.16 "EpiCept Licensed Patents" means the Patent rights Controlled by EpiCept as of the Effective Date necessary to make, have made, use, sell offer for sale or import Licensed Products recited in Schedule 1.16 and the foreign counterparts thereof, and any Patent rights included in the EpiCept Improvements.
1.17 "EpiCept Product Registration Data" means (i) all regulatory files relating thereto, including, but not limited to, any licenses (to the extent transferable), and minutes of meetings and telephone conferences with the FDA, validation data, preclinical and clinical studies and tests related to the Product including original data, case report forms, study files relating to the aforementioned studies and tests, and all audit reports of clinical studies, plus all investigational new drug applications and amendments, annual reports and safety reports associated therewith, drug master files, as well as any foreign equivalents of any of the foregoing, which are in EpiCept's or its Affiliates' possession or control, and all correspondence with the FDA regarding the marketing status of the Product; and (ii) all records maintained under current Good Manufacturing Practices ("GMPs") or other record keeping or reporting requirements of the FDA, the Environmental Protection Agency, the Occupational Safety and Health Administration or any other United States or foreign regulatory authorities, including, but not limited to, FDA warning letters, FDA Notices of Adverse Finding Letters, FDA audit reports (including any comments on such reports), all other correspondence and communications with regulatory agencies in connection with the Product (including any advertising and promotion documents and 2253 forms), adverse event files, complaint files, manufacturing records; as well as any foreign equivalents of any of the foregoing which are in EpiCept's or its Affiliates' possession or Control.
1.18 "EpiCept Technology" means any and all Technology Controlled by EpiCept as of the Effective Date and any Technology included in the EpiCept Improvements.
1.19 "EpiCept Third Party Consent(s)" has the meaning set forth in Section 6.2(c).
1.20 "EpiCept Trademarks" means the trademarks set forth on Schedule 1.20, including all applications, renewals, registrations and common law rights therefor, together with all documentation associated therewith, including any prior right agreements or consent letters pertaining thereto, and any distinctive trade dress, logos and service marks owned by Seller and used solely in connection with the Product, each as set forth on Schedule 1.20.
1.21 "FDA" means the United States Food and Drug Administration, or any successor agency thereof.
1.22 "Final Regulatory Approval" means Regulatory Approval that allows for the immediate marketing and sale of a Licensed Product.
1.23 "First Commercial Sale" means the first sale by Endo or its Affiliates or sublicensees of a Licensed Product to a Third Party for end use or consumption of such Licensed Product in the Territory after a Regulatory Authority in the Territory has granted Final Regulatory Approval of such Licensed Product.
1.24 "Force Majeure" means any occurrence beyond the reasonable control of a Party that prevents or substantially interferes with the performance by the Party of any of its obligations hereunder, if such occurs by reason of any act of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute, casualty or accident; or war, revolution, civil commotion, acts of public enemies, terrorist attack, blockage or embargo; or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government (to the extent such government has ruling authority over such Party) or of any subdivision, authority or representative of any such government; or other similar event, beyond the reasonable control of such Party, if and only if the Party affected shall have used reasonable efforts to avoid such occurrence.
1.25 "GAAP" means accounting principles generally acceptable in the United States.
1.26 "Governmental or Regulatory Authority" means (a) the United States of America, (b) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, cities, municipalities, provinces and parishes), (c) any foreign (as to the United States of America) sovereign entity and any political subdivision thereof, and (d) any court, tribunal, department, board, bureau, arbitrator, authority, quasi-governmental authority, agency, commission, official or other instrumentality of any of the foregoing.
1.27 "IND" means an Investigational New Drug Application, as defined in the U.S. Federal Food, Drug, and Cosmetic Act, pursuant to 21 C.F.R. Section 312.3 as amended, and the regulations promulgated thereunder, or the equivalent thereto as specified in any succeeding legislation, and all supplements and amendments that may be filed with respect to the foregoing.
1.28 "Indemnitee" has the meaning set forth in Section 8.3(a).
1.29 "Indemnitor" has the meaning set forth in Section 8.3(a).
1.30 "Independent Sublicensees" has the meaning set forth in Section 9.4.
1.31 "Infringement Notice" has the meaning set forth in Section 10.7(a).
1.32 "Knowledge" shall mean, with respect to any Party, that which the management personnel (or individuals performing similar functions) of such Party or other individuals with primary or supervisory responsibility for or daily involvement with the business of such Party knows or should reasonably be expected to know.
1.33 "Licensed Products" means, collectively, the Endo BP Product and the LidoPAIN(R) BP Product.
1.34 "LidoPAIN(R) BP Product" means a non-sterile adhesive backed topical patch, for sale by prescription only, containing lidocaine as the only active ingredient and indicated, and approved by the FDA, for the treatment of acute low back pain (or a substantially similar indication).
1.35 "Lien or Other Encumbrance" shall mean, with respect to any asset, any mortgage, lien, pledge, security interest, claim, charge, option, right of first refusal or other encumbrance, restriction or limitation of any kind in respect of such asset.
1.36 "Losses" has the meaning set forth in Section 8.1.
1.37 "Marketing Partner" means a Third Party with a reasonable marketing presence in any country outside the North American Territory, as applicable, that is competent and reputable in the industry of pharmaceutical sales and distribution in such country.
1.38 "Milestone Payments" has the meaning set forth in Section 4.2.
1.39 "NDA" means a New Drug Application pursuant to 21 U.S.C. Section 505(b)(1) or Section 505(b)(2), or supplement thereto, submitted to the FDA or any successor application or procedure required for Regulatory Approval to commence sale of a Licensed Product.
1.40 "NDA Acceptance" means the written notification by the FDA that the NDA has met all the criteria for filing acceptance pursuant to 21 C.F.R. Section 314.101.
1.41 "Net Sales" means the gross amounts invoiced by Endo, any of its Affiliates and/or any of its sublicensees on account of sales of Licensed Products to Third Parties (including without limitation Third Party distributors and wholesalers), less the total of the following deductions from such gross amounts which are actually incurred, allowed, accrued or specifically allocated:
(a) Trade, cash and/or quantity discounts actually allowed or accrued which are not already reflected in the amount invoiced;
(b) Excise, sales and other consumption taxes and custom duties to the extent included in the invoice price and to the extent such taxes are remitted to the applicable taxing authority;
(c) Freight, insurance and other transportation charges to the extent included in the invoice price and separately identified on the invoice or other documentation maintained in the ordinary course of business;
(d) Amounts repaid, credited or accrued by reason of returns, rejections, defects or recalls or because of chargebacks, retroactive price reductions, refunds or billing errors;
(e) ***
(f) Payments and rebates directly related to the sale of Licensed Products accrued, paid or deducted in a manner consistent with GAAP, pursuant to agreements (including, but not limited to, managed care agreements) with Third Parties or any Governmental or Regulatory Authority; and
(g) Any other similar and customary deductions taken in accordance with GAAP consistently applied.
No deductions shall be made for commissions paid to any Person who is regularly employed by the seller of a Licensed Product on its payroll. Use of Licensed Products for promotional, sampling or compassionate use purposes or for use in clinical trials contemplated under this Agreement shall not be considered in determining Net Sales. In the case of any sale of a Licensed Product between the Parties and their respective Affiliates or sublicensees for resale, Net Sales shall be calculated as above only on the first arm's length sale thereafter to a Third Party.
1.42 "Non-Breaching Party" has the meaning set forth in Section 9.2.
1.43 "North American Territory" means the United States, Canada and Mexico, and their respective territories, provinces and protectorates.
1.44 "Order" shall mean any writ, judgment, decree, injunction, ruling or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final).
1.45 "Patents" means patents and patent applications and any and all extensions, renewals, continuations, continuations-in-part, divisions, reissues, re-examination certificates or foreign counterparts of any of the foregoing.
1.46 "Person" or "person" means any individual, firm, corporation, partnership, limited liability company, trust, unincorporated organization or other entity or a government agency or political subdivision thereto, and shall include any successor (by merger or otherwise) of such Person.
1.47 "Prosecution" means the preparation, filing, prosecution, issuance and maintenance (including, without limitation, interference, opposition and similar third
party proceedings before the relevant patent office) of any patent applications and patents in EpiCept Licensed Patents.
1.48 "Receiving Party" has the meaning set forth in Section 1.8.
1.49 "Regulatory Approval" means the technical, medical and scientific licenses, registrations, authorizations and approvals (including, without limitation, approvals of NDAs, supplements and amendments, pre- and post- approvals, pricing and Third Party reimbursement approvals, and labeling approvals) of any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in the Territory, necessary for the development (including the conduct of clinical trials), manufacture, distribution, marketing, promotion, offer for sale, use, import, reimbursement, export or sale of a Licensed Product in a regulatory jurisdiction.
1.50 "Regulatory Authority" means any national (e.g., the FDA), supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity involved in the granting of Regulatory Approval in any country in the Territory.
1.51 "Royalties" has the meaning set forth in Section 5.1.
1.52 "Royalty Term" has the meaning set forth in Section 5.2.
1.53 "Serious Adverse Drug Experience" means any of an "adverse drug experience," a "life-threatening adverse drug experience," a "serious adverse drug experience," or an "unexpected adverse drug experience," as those terms are defined at either 21 C.F.R. Section 312.32 or 21 C.F.R. Section 314.80 or relevant foreign regulation within the Territory.
1.54 "Supply Agreement" means that certain supply agreement to be entered into by the Parties in the future (but in any event within *** after the date on which EpiCept has filed the NDA for the LidoPAIN(R) BP Product or such other date as may be mutually agreed upon by the Parties), which agreement provides for the supply of the LidoPAIN(R) BP Product by EpiCept to Endo on commercially reasonable terms and conditions, as further set forth in Section 3.9.
1.55 "Technology" means any and all information and materials, including but not limited to, any and all compounds, equipment, specifications, designs, formulae, methods, techniques, processes, procedures, inventions, know-how, data and information, documentation and other technology, whether or not patentable or protectible as a trade secret, that is necessary to use, market or sell a Licensed Product and develop the Endo BP Product.
1.56 "Term" has the meaning set forth in Section 9.1.
1.57 "Territory" means worldwide.
1.58 "Third Party(ies)" means any Person other than EpiCept, Endo and their respective Affiliates.
1.59 "Third Party Claim" has the meaning set forth in Section 8.1.
1.60 "Valid Claim" means a claim of an issued and unexpired patent, or a claim of a pending patent application or a supplementary protection certificate, which claim has not been held invalid or unenforceable by a court or other government agency of competent jurisdiction from which no appeal can be or has been taken and has not been held or admitted to be invalid or unenforceable through re-examination or disclaimer, opposition procedure, nullity suit or otherwise, which claim, but for the licenses granted herein, would be infringed by the sale of a Licensed Product; provided, however, that if a claim of a pending patent application shall not have issued within five (5) years after the filing date from which such claim takes priority such claim shall not constitute a Valid Claim for the purposes of this Agreement unless and until such claim shall issue.
1.61 "Withholding Taxes" has the meaning set forth in Section 5.4.
ARTICLE 2
LICENSES AND EXCLUSIVITY
2.1 License Grant. Subject to Section 2.5 herein, EpiCept hereby grants to Endo a royalty-bearing, exclusive (even as to EpiCept and its Affiliates) right and license, with the right to grant sublicenses (subject to Section 2.2) under the EpiCept Intellectual Property and EpiCept Product Registration Data to (i) develop, market, use, sell, offer for sale and import the LidoPAIN(R) BP Product within the Territory and (ii) develop, make, have made, manufacture, market, use, sell, offer for sale and import the Endo BP Product in the Territory. For the avoidance of doubt, this Agreement does not grant Endo any right to make or have made the LidoPAIN(R) BP Product nor grant EpiCept any rights whatsoever to any Endo product, including the Lidoderm(R) and the Endo BP Product.
2.2 Use of Affiliates, Sublicensees and Subcontractors. The licenses granted under Section 2.1 include the right of Endo to grant sublicenses to its Affiliates and other third parties, provided that Endo gives EpiCept advance written notice of any sublicenses and a reasonable opportunity to comment on the identity of such sublicensee and that Endo takes into consideration EpiCept's reasonable comments with respect thereto. Endo acknowledges that the grant of a sublicense shall not relieve Endo from its obligations under this Agreement, and each sublicensee shall be bound by all of the terms and conditions of this Agreement applicable to Endo. Endo shall be responsible for the compliance of its Affiliates and sublicensees with this Agreement. Endo shall provide EpiCept with a copy of each such sublicense agreement within thirty (30) days of its execution, provided that Endo may redact elements of same that do not relate to Endo's obligations to EpiCept hereunder, including, but not limited to, financial terms.
2.3 Exclusivity. During the Term, neither EpiCept nor its Affiliates shall, either itself or with a Third Party, (a) develop, attempt to develop, actively investigate, commercialize or sell a Licensed Product or any other prescription lidocaine-containing topical patch product for the treatment of pain in the Territory, or (b) submit or reopen an IND for the LidoPAIN(R) BP Product, except that EpiCept may do any of the foregoing in order to fulfill its obligations under this Agreement. Notwithstanding (a) above, EpiCept shall have the right to develop or commercialize, by itself or with Third Parties, any lidocaine-containing over-the-counter products, prescription lidocaine-containing sterile topical hydrogel patch products indicated for, but not limited to, the treatment of surgical, incisional pain and lidocaine-containing topical patch products for the treatment of tinnitus and vertigo.
2.4 No Implied Licenses. Only the licenses expressly granted herein shall be of legal force and effect. No license rights shall be created hereunder by implication, estoppel or otherwise. Furthermore, nothing herein shall be construed as granting any license whatsoever to EpiCept under any Intellectual Property owned or licensed by Endo.
2.5 Retained Rights. Subject to the restrictions set forth in Section 2.3 above, EpiCept retains the right to use and/or license others to use the EpiCept Intellectual Property for every purpose except for those uses specifically licensed to Endo in Section 2.1 above.
ARTICLE 3
DEVELOPMENT, COMMERCIALIZATION AND SUPPLY
3.1 Development of LidoPAIN(R) BP Product. EpiCept shall be responsible, at EpiCept's sole cost and expense, for continuing and completing the development, including, without limitation, the conduct of all clinical trials (and the supply of clinical product therefor) and the preparation and submission of the NDA in order to obtain Regulatory Approval for the LidoPAIN(R) BP Product.
3.2 Development of Endo BP Product. Endo shall be responsible, at Endo's sole cost and expense, for continuing and completing the development, including, without limitation, the conduct of all clinical trials (and the supply of clinical product therefor) and the preparation and submission of the NDA in order to obtain Regulatory Approval for the Endo BP Product.
3.3 Diligence.
(a) By EpiCept. Except as specifically provided herein or as otherwise mutually agreed upon by the Parties, EpiCept shall be responsible for conducting all clinical studies and development activities for the LidoPAIN(R) BP Product. EpiCept shall also be responsible for manufacturing and packaging all clinical supply of the LidoPAIN(R) BP Product for the clinical studies and development activities. EpiCept shall use Commercially Reasonable Efforts to develop and obtain Regulatory
Approval for the LidoPAIN(R) BP Product in the Territory. EpiCept shall be responsible for (a) the preparation of all documents submitted to Regulatory Authorities and the filing of all submissions relating to Regulatory Approval for the LidoPAIN(R) BP Product; and (b) all regulatory actions, communications and meetings with any Regulatory Authority with respect to the LidoPAIN(R) BP Product. Subject to the foregoing, the Parties shall mutually agree as to which countries EpiCept will file for Regulatory Approvals of the LidoPAIN(R) BP Product. In the event the Parties do not agree as to any particular country, Endo shall make the final determination as to whether Regulatory Approval of the LidoPAIN(R) BP Product shall be sought in such country and such determination shall be binding on the Parties; provided that if Endo elects not to seek Regulatory Approval in any country, the license granted to Endo with respect to the LidoPAIN(R) BP Product in such country shall revert back to EpiCept and Endo shall have no commercialization rights with respect to the LidoPAIN(R) BP Product in such country (other than those rights set forth in Section 3.4); it being understood by the Parties that in such event, Endo shall continue to have license rights in the EpiCept Intellectual Property in such country.
(b) By Endo. Except as specifically provided herein or as otherwise mutually agreed upon by the Parties, Endo shall be responsible for conducting all clinical studies, development and commercialization activities for the Endo BP Product in the North American Territory and all commercialization activities for the LidoPAIN(R) BP Product in the Territory. Endo shall use Commercially Reasonable Efforts to develop and commercialize the Endo BP Product in the North American Territory and to commercialize the LidoPAIN(R) BP Product in the Territory. Endo shall have sole discretion in determining in which countries it will file for Regulatory Approvals of the Endo BP Product and in which countries it will commercialize the Endo BP Product in the Territory. Subject to Section 3.4 herein, Endo shall commercialize the LidoPAIN(R) BP Product in the United States within six (6) months from the date on which LidoPAIN(R) BP Product receives Final Regulatory Approval in the United States so long as EpiCept shall have supplied Endo with quantities of the LidoPAIN(R) BP Product sufficient to commercially launch the Product as set forth in Endo's committed forecast delivered pursuant to the Supply Agreement. With respect to those countries outside the United States in which EpiCept has obtained Final Regulatory Approval of the LidoPAIN(R) BP Product. Endo shall, either through a Marketing Partner(s) or on its own, commercialize the LidoPAIN(R) BP Product in each such country within three (3) years from the date on which LidoPAIN(R) BP receives Final Regulatory Approval in the United States.
3.4 Reversion of Rights to EpiCept. LidoPAIN(R) BP. In the event that EpiCept has obtained Final Regulatory Approval of the LidoPAIN(R) BP Product in a particular country and Endo fails to commercialize the LidoPAIN(R) BP Product in such country within three (3) years from the date on which the LidoPAIN(R) BP Product receives Final Regulatory Approval in the United States (provided that such period shall be *** months with respect to countries in the North American Territory and so long as EpiCept shall have supplied Endo with quantities of the LidoPAIN(R) BP Product sufficient to commercially launch the Product as set forth in Endo's committed forecast
delivered pursuant to the Supply Agreement), then the license granted to Endo by EpiCept in Section 2.1 above shall terminate with respect to the LidoPAIN(R) BP Product in such country(ies), and EpiCept shall have the right to commercialize or license the commercialization rights to the LidoPAIN(R) BP Product in each such country; provided that EpiCept shall pay Endo a *** royalty on the net sales of the LidoPAIN(R) BP Product in such country.
3.5 Reports.
(a) By EpiCept. Every six (6) months following the Effective Date, EpiCept shall provide Endo a written report summarizing the efforts and accomplishments of EpiCept during the preceding six (6) month period in developing the LidoPAIN(R) BP Product and the development plans for same during the subsequent six (6) month period. Such reports shall include, without limitation, summaries of scientific and clinical data obtained in furtherance of EpiCept's attempts to develop the LidoPAIN(R) BP Product and a showing of compliance with EpiCept's obligations under Section 3.3(a) above. Endo shall have the right to provide EpiCept with comments regarding EpiCept's development plans for the subsequent six (6) month period contained in such reports, and EpiCept shall take such comments into consideration, provided that EpiCept shall retain final decision-making authority with respect to any and all such development plans.
(b) By Endo. Every six (6) months following the Effective Date, Endo shall provide EpiCept a written report summarizing the efforts and accomplishments of Endo, its Affiliates and its sublicensees during the preceding six (6) month period in developing and commercializing the Endo BP Product and, after Regulatory Approval has been received for the LidoPAIN(R) BP Product, in commercializing the LidoPAIN(R) BP Product and their development and commercialization plans, as applicable, for the subsequent six (6) month period. Such reports shall include, without limitation, summaries of scientific and clinical data obtained in furtherance of Endo's attempts to develop and commercialize Licensed Products as required hereunder and a showing of compliance with Endo's obligations under Section 3.3(b) above.
3.6 Regulatory Matters; EpiCept Assistance. All Regulatory Approvals with respect to the Endo BP Product in the Territory shall be in Endo's or Endo's designee's name. Endo shall have exclusive control over, and authority and responsibility for, the regulatory strategies relating to the development and commercialization of the Endo BP Product in the Territory, including, without limitation: (a) the preparation of all documents submitted to Regulatory Authorities and the filing of all submissions relating to Regulatory Approval for the Endo BP Product; and (b) all regulatory actions, communications and meetings with any Regulatory Authority with respect to the Endo BP Product. Upon the request of Endo, EpiCept shall provide to Endo on a timely basis such information in its possession relating to the LidoPAIN(R) BP Product as may be required for regulatory activities related to the commercialization of the LidoPAIN(R) BP Product, and otherwise provide reasonable assistance to Endo in complying with all regulatory obligations in the Territory, including without limitation, safety updates,
amendments, annual reports, pharmacovigilance filings, investigator notifications, manufacturing facility inspections and certifications and product approvals. Endo shall be responsible for interfacing, corresponding and meeting with all Regulatory Authorities in the Territory with respect to the Endo BP Product and, after Regulatory Approval has been obtained, the LidoPAIN(R) BP Product. EpiCept shall cooperate with Endo to provide all reasonable assistance and take all actions reasonably requested by Endo that are necessary to comply with any law applicable to any Licensed Product, including, but not limited to, reporting of adverse drug experience reports (and serious adverse drug experiences) to Regulatory Authorities in the Territory.
3.7 Adverse Event Reporting.
(a) Each Party shall, and shall require its respective Affiliates to:
(i) to the extent permissible under time constraints and reporting requirements, provide to the other Party in advance of initial or periodic submission to Regulatory Authorities any and all adverse event reports and Serious Adverse Drug Experience reports from clinical trials and commercial experiences with the LidoPAIN(R) BP Product;
(ii) provide such adverse event reports and Serious Adverse Drug Experience reports relating to the LidoPAIN(R) BP Product to the other Party contemporaneously with the provision of such reports to the applicable Regulatory Authority; and
(iii) adhere to all requirements of applicable laws, rules and regulations which relate to the reporting and investigation of adverse events and Serious Adverse Drug Experiences and keep the other Party informed of such events.
(b) EpiCept shall, and shall require its respective Affiliates to:
(i) to the extent permissible under time constraints and reporting requirements, provide to Endo in advance of initial or periodic submission to Regulatory Authorities any and all adverse event reports and Serious Adverse Drug Experience reports from clinical trials and commercial experiences with the Endo BP Product; and
(ii) provide such adverse event reports and Serious Adverse Drug Experience reports relating to the Endo BP Product to Endo contemporaneously with the provision of such reports to the applicable Regulatory Authority.
(c) If a Party contracts with a Third Party for research to be performed by such Third Party on any of the Licensed Products, that Party shall require such Third Party to report to the contracting Party the information set forth above.
3.8 EpiCept Right to Co-Promote. EpiCept, at its option, shall have the right to become Endo's co-promotion partner with respect to the LidoPAIN(R) BP Product as set forth in this Section 3.8. Within thirty (30) days after EpiCept's first filing of an NDA or the equivalent thereof in any country in the Territory for the LidoPAIN(R) BP Product, EpiCept shall notify Endo of such filing in writing (the "NDA Notice"). If such NDA Notice contains reasonably detailed terms and conditions upon which EpiCept offers to co-promote the LidoPAIN(R) BP Product in such country, then for a period of up to *** commencing on the date of the NDA Notice, Endo and EpiCept shall negotiate in good faith to reach agreement for the co-promotion of the LidoPAIN(R) BP Product in such country. Unless mutually agreed to by the Parties, no such co-promotion arrangement shall effect any change to the financial terms of this Agreement, and, in any such co-promotion arrangement, EpiCept shall be solely responsible for the costs and expenses of its sales representatives.
3.9 Commercial Supply of LidoPAIN(R) BP Product. EpiCept shall be responsible for the manufacture and supply, or to obtain supply, for Endo's requirements in the Territory of the LidoPAIN(R) BP Product pursuant to a Supply Agreement to be negotiated in good faith between the Parties after the Effective Date. The Supply Agreement shall permit EpiCept to engage Third Party subcontractors to carry out such manufacture and supply on EpiCept's behalf. Any such supply shall be at EpiCept' s commercially reasonable, fully loaded manufacturing costs, as documented by EpiCept, which costs shall include reasonable profit margins set forth in Supply Agreement.
ARTICLE 4
INITIAL PAYMENT AND MILESTONE PAYMENTS
4.1 Initial Payment. Within two (2) Business Days after the Effective Date, Endo shall pay EpiCept seven million five hundred thousand U.S. Dollars (US$7,500,000), by wire transfer, to the credit of such bank account as designated by EpiCept in Schedule 4.1.
4.2 Milestone Payments. Endo shall pay to EpiCept the following one-time milestone payments (the "Milestone Payments") within *** days following the specified events:
***
ARTICLE 5
ROYALTIES
5.1 Royalty Rate. Subject to the provisions of this Article 5, Endo shall pay EpiCept *** of the aggregate Net Sales of the LidoPAIN(R)BP Product in the Territory ("Royalties").
5.2 Royalty Term. The Royalties shall be payable on a country-by-country basis until the sooner of (a) the introduction of an AB rated generic equivalent to the
LidoPAIN(R) BP Product in such country or (b) the expiration of the last EpiCept Patent containing a Valid Claim covering the LidoPAIN(R) BP Product in such country (the "Royalty Term").
5.3 Reports and Payments.
(a) Cumulative Royalties. During the Royalty Term, the obligation to pay Royalties under this Article 5 shall be imposed only once (i) with respect to any sale of the same unit of the LidoPAIN(R) BP Product, and (ii) with respect to a single unit of the LidoPAIN(R) BP Product.
(b) Statements and Payment. During the Royalty Term Endo shall deliver
to EpiCept, within *** days after the end of each calendar quarter, a report
setting forth for such calendar quarter the following information for the
LidoPAIN(R) BP Product: (i) Net Sales of the LidoPAIN(R) BP Product on a
country-by-country basis; (ii) the basis for any adjustments to the Royalties
payable on account of sales of the LidoPAIN(R) BP Product in any country; (iii)
the Royalties due to EpiCept on account of sales of the LidoPAIN(R) BP Product;
(iv) the exchange rates used in calculating any of the foregoing; and (v) the
aggregate Net Sales of the Endo BP Product in the Territory. The total Royalties
due on account of sales of the LidoPAIN(R) BP Product during such calendar
quarter and any one-time bonus due EpiCept pursuant to Section 4.2(b)(3) above
shall be remitted at the time such report is made.
5.4 Taxes and Withholding. Any payments made by Endo to EpiCept under this Agreement shall be reduced by the amount required to be paid or withheld pursuant to any applicable law, including, but not limited to, United States federal, state or local tax law ("Withholding Taxes"). Any such Withholding Taxes required by law to be paid or withheld shall be an expense of, and borne solely by, EpiCept. Endo, as applicable, shall submit to EpiCept reasonable proof of payment of the Withholding Taxes, together with an accounting of the calculations of such taxes, within thirty (30) days after such Withholding Taxes are remitted to the proper authority. The Parties will cooperate reasonably in completing and filing documents required under the provisions of any applicable tax laws or under any other applicable law in connection with the making of any required tax payment or withholding payment, or in connection with any claim to a refund of or credit for any such payment.
5.5 Currency Exchange. With respect to Net Sales invoiced or expenses incurred in U.S. dollars, the Net Sales or expense amounts and the amounts due to EpiCept hereunder shall be expressed in U.S. dollars. With respect to Net Sales invoiced or expenses incurred in a currency other than U.S. dollars, the Net Sales or expense shall be expressed in the domestic currency of the entity making the sale or incurring the expense, together with the U.S. dollar equivalent, at the average rate of exchange listed in The Wall Street Journal on the first and last day of the applicable calendar quarter or a comparable newspaper if The Wall Street Journal shall cease publishing exchange rates for the U.S. Dollar. All payments shall be made by wire transfer in U.S. dollars to the
credit of such bank account as shall be designated at least five (5) Business Days in advance by EpiCept in writing to Endo.
5.6 Maintenance of Records; Audit.
(a) For a period of two (2) years, Endo shall maintain, and shall require its respective Affiliates and sublicensees to maintain, complete and accurate books and records in connection with the sale of Licensed Products hereunder, as necessary to allow the accurate calculation consistent with GAAP of the Royalties due to EpiCept and any one-time bonus that may be due to EpiCept pursuant to Section 4.2(b)(3) above, including any records required to calculate any royalty adjustments hereunder. Once per calendar year, EpiCept shall have the right, at its sole expense, to engage an independent accounting firm reasonably acceptable to Endo, which shall have the right to examine in confidence the relevant Endo records as may be reasonably necessary to determine and/or verify the amount of Royalty payments and/or one-time bonuses due hereunder. Such examination shall be conducted, and Endo shall make its records available, during normal business hours, after at least fifteen (15) days prior written notice to Endo, as applicable, and shall take place at the facility(ies) where such records are maintained. Each such examination shall be limited to pertinent books and records for any year ending not more than twelve (12) months prior to the date of request; provided that EpiCept shall not be permitted to audit the same period of time more than once. Before permitting such independent accounting firm to have access to such books and records, Endo may require such independent accounting firm and its personnel involved in such audit, to sign a confidentiality agreement (in form and substance reasonably acceptable to Endo) as to any confidential information which is to be provided to such accounting firm or to which such accounting firm will have access, while conducting the audit under this Section 5.5. The EpiCept independent accounting firm will prepare and provide to each Party a written report stating whether the Royalty and Net Sales reports submitted and the amounts paid by Endo to EpiCept are correct or incorrect and the details concerning any discrepancies. Such accounting firm may not reveal to EpiCept any information learned in the course of such audit other than the amount of any such discrepancies. EpiCept agrees to hold in strict confidence all information disclosed to it, except to the extent necessary for EpiCept to enforce its rights under this Agreement or if disclosure is required by law.
(b) In the event there was an underpayment by Endo hereunder, Endo shall promptly (but in no event later than thirty (30) days after Endo's receipt of the independent auditor's report so correctly concluding) either make payment to EpiCept of any shortfall or proceed to the dispute resolution mechanism set forth in Section 5.5(c). In the event that there was an overpayment by Endo hereunder, EpiCept shall promptly inform Endo of such fact and promptly (but in no event later than thirty (30) days after EpiCept's receipt of the independent auditor's report so correctly concluding) refund to Endo the excess amount or proceed to the dispute resolution mechanism set forth in Section 5.5(c).
(c) In the event that the Parties do not agree on the amount of any overpayment or underpayment, within ten (10) business days each Party shall select an independent public accounting firm which firms shall meet and discuss the amount in dispute and other related matters within ten (10) business days thereafter (each Party shall pay the costs of its own accounting firm). If such independent public accounting firms cannot agree on a resolution mutually agreeable to the Parties, such independent public accounting firms shall, within ten (10) business days after such conclusion, appoint a third independent public accounting firm which shall resolve the issue within ten (10) business days after its selection and the Parties shall equally share the costs of such accounting firm. The recommendation of the third independent public accounting firm shall be final and binding upon the Parties. A judgment on such firm's disposition may be entered in any court having jurisdiction over the Parties. In addition, if in the final disposition of such matter, the amount of underpayment by Endo is either (a) more than *** of the amount which should have been paid to EpiCept pursuant to this Agreement with respect to the period in question as a result of incorrect reporting or calculation by Endo or (b) due to Endo incorrectly reporting or calculating the Net Sales of the Endo BP Product above Endo Baseline Sales by more than ***, then, in either case, Endo shall also reimburse EpiCept for its documented reasonable out-of-pocket costs and expenses incurred in connection with resolving such matter through the retention of such accounting firms (including, without limitation, fees of attorneys, accountants and other professionals). Further, if in the final disposition of such matter, the amount of any overpayment by Endo is more than *** of the amount which should have been paid to EpiCept pursuant to this Agreement with respect to the period in question as a result of incorrect reporting or calculation by Endo, then EpiCept shall also reimburse Endo for its documented reasonable out-of-pocket costs and expenses incurred in connection with resolving such matter through the retention of such accounting firms (including, without limitation, fees of attorneys, accountants and other professionals).
5.7 Interest on Late Payments. Any failure by Endo to make a payment of any undisputed amount when due shall obligate Endo to pay interest to EpiCept at a rate equal to *** per month (or the maximum allowed by law, if less), the interest period commencing on the due date and ending on the payment date.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Mutual Representations and Warranties. Each Party hereby represents, warrants and covenants to the other Party that:
(a) such Party is a corporation or entity duly organized, validly existing and in good standing under the laws of its state of incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;
(b) such Party is duly authorized, by all requisite corporate action, to execute and deliver this Agreement and the execution, delivery and performance of this
Agreement by such Party is within such Party's corporate powers and does not require any shareholder action or approval, and the Person executing this Agreement on behalf of such Party is duly authorized to do so by all requisite corporate action;
(c) no consent, waiver, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental or Regulatory Authority is required on the part of such Party in connection with the valid execution, delivery and performance of this Agreement;
(d) this Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms except as enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights and (ii) judicial discretion in the availability of agreeable relief;
(e) the execution, delivery and performance by it of this Agreement and its compliance with the terms and provisions of this Agreement does not and will not (a) contravene or conflict with the provisions of its charter, operating documents or bylaws, (b) contravene or conflict with or constitute a violation of any Applicable Law, or (c) result (with or without the giving of notice or lapse of time or both) in the creation of any Lien or Other Encumbrance upon any of the Licensed Products or, in the case of EpiCept, the EpiCept Licensed Intellectual Property, or constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or any obligation by it or to a loss of any benefit relating to the Licensed Products or, in the case of EpiCept, the EpiCept Licensed Intellectual Property, under any provision of any contract binding upon it or by which any of the Licensed Products or, in the case of EpiCept, the EpiCept Licensed Intellectual Property, are or may be bound;
(f) it shall comply in all material respects with all laws, rules and regulations applicable to its performance under this Agreement; and
(g) no broker, finder or similar agent has been employed by or on behalf of such Party, and no Person with which such Party has had any dealings or communications of any kind is entitled to any brokerage commission, finder's fee or any similar compensation, in connection with this Agreement or the transactions contemplated hereby.
6.2 Additional EpiCept Representations, Warranties and Covenants. EpiCept additionally represents, warrants and covenants to Endo that:
(a) EpiCept has the full right, power and authority to grant, and is not prohibited by the terms of any agreement to which it is a party from granting, the licenses granted to Endo under Article 2 hereof.
(b) EpiCept has not previously granted and will not grant any rights inconsistent with the rights and licenses granted herein.
(c) EpiCept Third Party Consents. Schedule 6.2(c) sets forth each agreement binding upon EpiCept requiring a consent with respect to the execution, delivery and performance of this Agreement, or the performance of EpiCept's obligations hereunder (each such consent, a "EpiCept Third Party Consent" and together the "EpiCept Third Party Consents").
(d) EpiCept is the sole and exclusive legal and equitable owner of the EpiCept Intellectual Property and the LidoPAIN(R) BP Product and has good and marketable title to the EpiCept Intellectual Property and the LidoPAIN(R) BP Product free and clear of any Lien or Other Encumbrance.
(e) Licensed Assets. The EpiCept Intellectual Property includes all of the assets and properties that are owned or licensed by EpiCept with respect to the development, marketing and sale of the LidoPAIN(R) BP Product and that are reasonably required to develop, sell and ship the LidoPAIN(R) BP Product after the Effective Date, No Affiliate of EpiCept owns or licenses any assets or properties reasonably necessary for Endo to develop, produce or sell the Licensed Products as contemplated herein. EpiCept possesses or controls all material EpiCept Product Registration Data.
(f) Intellectual Property.
(i) The EpiCept Intellectual Property includes all the intellectual property and proprietary rights Controlled by EpiCept that relate to the development, marketing, use, distribution and sale of the LidoPAIN(R) BP Product;
(ii) No Action or Proceeding relating to the EpiCept Intellectual Property has been instituted and is pending, or to the Knowledge of EpiCept, threatened;
(iii) There are no royalty, commission or similar obligations on EpiCept applicable to the EpiCept Intellectual Property, or any material licenses, sublicenses or agreements with third parties relating to or involving the EpiCept Intellectual Property;
(iv) EpiCept has not agreed to indemnify any Person for or against any infringement by the EpiCept Intellectual Property or the LidoPAIN(R) BP Product;
(v) To the Knowledge of EpiCept, none of the EpiCept Intellectual Property or the LidoPAIN(R) BP Product infringes upon or otherwise violates the intellectual property rights of any Person;
(vi) To the Knowledge of EpiCept, the EpiCept Intellectual Property is valid and enforceable and has been properly registered or filed, as the case may be, and has been properly maintained under all Applicable Laws.
(vii) EpiCept owns all right, title and interest in and to all of the EpiCept Intellectual Property and owns such EpiCept Intellectual Property free and clear of all Liens or Other Encumbrances.
(viii) EpiCept has not received any written notice from any Third Party, nor does EpiCept have Knowledge that any Third Party has infringed or misappropriated or is infringing or misappropriating any of the EpiCept Intellectual Property.
(g) Regulatory Status.
(i) EpiCept is the lawful holder of the IND and all necessary regulatory documentation relating to the LidoPAIN(R) BP Product. The regulatory status of the LidoPAIN(R) BP Product is set forth in Schedule 6.2(g)(i).
(ii) The IND is in full force and effect and, to the Knowledge of EpiCept, the IND has been duly and validly issued. There is no Action or Proceeding by any Governmental or Regulatory Authority pending or, to the Knowledge of EpiCept, threatened seeking the revocation or suspension of any of the IND.
(h) EpiCept has no Knowledge of any facts which furnish any reasonable basis for any notice of adverse findings, warning or other regulatory letters or sanctions, Section 305 notices, or other similar communication. EpiCept has no Knowledge of any misstatements or material omissions relating to the LidoPAIN(R) BP Product in any regulatory submission or other document required to be maintained by Applicable Law and the accuracy of its regulatory submissions has not been contested by any Governmental or Regulatory Authority.
(i) Litigation. There are no Actions or Proceedings by or before any Governmental or Regulatory Authority currently pending, and EpiCept has not received any written notice from any Third Party of any Action or Proceeding, nor does EpiCept have Knowledge of any facts that would be reasonably likely to result in an Action or Proceeding, in any event, against EpiCept relating to, affecting or arising in connection with (a) the LidoPAIN(R) BP Product; (b) the EpiCept Licensed Intellectual Property, (c) this Agreement; or (d) the transactions contemplated by this Agreement. EpiCept is not subject to any Order relating to the LidoPAIN(R) BP Product or the EpiCept Licensed Intellectual Property.
6.3 Additional Endo Representations, Warranties and Covenants. Endo additionally represents, warrants and covenants to EpiCept that, as of the Effective Date, Endo has the financial capacity to perform its obligations under this Agreement.
6.4 Disclaimer of Warranties. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE SUCCESS OR POTENTIAL SUCCESS OF
THE
DEVELOPMENT, COMMERCIALIZATION, MARKETING OR SALE OF ANY LICENSED PRODUCT. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 7
CONFIDENTIALITY, PUBLICATION AND PUBLIC ANNOUNCEMENTS
7.1 Confidentiality. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, Endo and EpiCept agree that, until the fifth (5th) anniversary of the expiration or termination this Agreement, each of Endo and EpiCept, upon receiving or learning of any Confidential Information of the other Party, shall keep such Confidential Information confidential and otherwise shall not disclose or use such Confidential Information for any purpose other than as provided for in this Agreement. The Receiving Party may disclose Confidential Information to its employees, representatives or Affiliates who need to know such information for any purpose contemplated by this Agreement (and then only to the extent that such Persons need to know such information and are under an obligation at least as stringent as this Article 7 to maintain the confidentiality of the Confidential Information). The Receiving Party may disclose Confidential Information to its consultants so long as the Disclosing Party approves of such disclosure in writing prior thereto and such consultant is under an obligation at least as stringent as this Article 7 to maintain the confidentiality of the Confidential Information.
7.2 Authorized Disclosure. Notwithstanding the foregoing, each of Endo and EpiCept may disclose Confidential Information of the other Party to a Third Party to the extent such disclosure is reasonably necessary to exercise the rights granted to or retained by it under this Agreement in filing or prosecuting patent applications, prosecuting or defending litigation, complying with applicable governmental regulations, submitting information to tax or other governmental authorities (including Regulatory Authorities), or conducting clinical trials hereunder with respect to Licensed Products, provided that if a Party is required by law to make any such disclosure of the Disclosing Party's Confidential Information, to the extent it may legally do so, it will give reasonable advance notice to the Disclosing Party of such disclosure and, save to the extent inappropriate in the case of patent applications or otherwise, will use its reasonable efforts to secure confidential treatment of such Confidential Information prior to its disclosure (whether through protective orders or otherwise). If the Disclosing Party has not filed a patent application with respect to such Confidential Information, it may require the Receiving Party to delay the proposed disclosure (to the extent the disclosing party may legally do so), for up to ninety (90) days, to allow for the filing of such an application.
7.3 Return of Confidential Information. Upon termination of this Agreement except upon termination by expiration of the licenses granted hereunder, the Receiving
Party shall promptly return or, at the option of the Receiving Party, destroy, all of the Disclosing Party's Confidential Information, including all reproductions and copies thereof in any medium, except that the Receiving Party may retain one copy for its legal files; provided that any such destruction shall be confirmed in writing by the Receiving Party to the Disclosing Party.
7.4 Unauthorized Use. If either Party becomes aware or has Knowledge of any unauthorized use or disclosure of the other Party's Confidential Information, it shall promptly notify the disclosing Party of such unauthorized use or disclosure.
7.5 Public Announcements. Except as set forth in the press release agreed to by the Parties pursuant to this Section 7.5 and for filing a copy of this Agreement by Endo and/or EpiCept (in the event that EpiCept becomes, or files to become, a public company), with the Securities and Exchange Commission (provided that in any such filing, this Agreement shall be redacted as reasonably determined by the filing Party), to the extent Endo and/or EpiCept determines to make such a filing and for disclosure by EpiCept to its present and prospective investors, counselors and advisors and investment banks and other Persons in connection with its financing activities, neither Party shall make any public announcement regarding this Agreement, any EpiCept Intellectual Property or any Licensed Products, unless required by law, and then only after providing the other Party at least two (2) Business Days to review, comment on and approve such public announcement; provided, however, the Parties agree that a period of less than two (2) Business Days for review, comment and approval is permissible if such lesser period of time is necessitated in order to comply with law or by an emergency situation due to unexpected circumstances. The Parties agree to issue a press release announcing the execution of this Agreement. In addition, following the initial agreed upon press release announcing this Agreement, each Party shall be free to disclose, without the other Parties' prior written consent, the existence of this Agreement, the identity of the other Party and those terms of the Agreement which have already been publicly disclosed in accordance herewith. This Section 7.5 supersedes and replaces in its entirety any prior confidentiality agreements between EpiCept or its Affiliates and Endo or its Affiliates to the extent related to the transactions contemplated by this Agreement or the LidoPAIN(R) BP Product.
ARTICLE 8
INDEMNIFICATION
8.1 Endo. Endo shall defend EpiCept and its Affiliates at Endo's cost and expense, and will indemnify and hold EpiCept and its Affiliates and their respective directors, officers, employees and agents (collectively, the "EpiCept Indemnified Parties") harmless from and against any and all losses, costs, damages, fees or expenses (including reasonable attorneys' fees and expenses) ("Losses") incurred by any EpiCept Indemnified Party to the extent arising out of or resulting from (i) any material breach by Endo of any of its representations, warranties or obligations pursuant to this Agreement, (ii) any gross negligence or willful misconduct of Endo or its Affiliates or sublicensees, as applicable, in the exercise of any of their rights and/or the performance of any of their
obligations under this Agreement or any sublicense agreement, as applicable,
(iii) any liability or other claims arising from the manufacture, handling,
packaging, storage, sale or other disposition of the Endo BP Product by Endo or
any of its Affiliates or sublicensees, or (iv) any liability or other claims
arising from the marketing of the LidoPAIN(R) BP Product by Endo or any of its
Affiliates or sublicensees.
8.2 EpiCept. EpiCept agrees to defend Endo and its Affiliates at EpiCept's cost and expense, and will indemnify and hold Endo and its Affiliates and their respective directors, officers, employees and agents (collectively, the "Endo Indemnified Parties") harmless from and against any and all Losses incurred by any Endo Indemnified Party to the extent arising out of or resulting from (i) any material breach by EpiCept of any of its representations, warranties or obligations pursuant to this Agreement, (ii) any gross negligence or willful misconduct of EpiCept in the exercise of any of its rights or the performance of any of its obligations under this Agreement, or (iii) any product liability, clinical trial liability or other claims arising from the development, manufacture, handling, or packaging of the LidoPAIN(R) BP Product.
8.3 Indemnification Procedures.
(a) Any Party seeking indemnification pursuant to this Article 8 (the "Indemnitee") shall give the other party or parties from whom indemnification is sought (the "Indemnitor") prompt written notice (an "Indemnification Claim Notice") of any Loss or discovery of fact upon which such Indemnitee is seeking indemnification under this Article 8. Failure to give any such Indemnification Claim Notice shall not constitute a waiver of any right to indemnification or reduce in any way the indemnification available hereunder, except to the extent such failure to notify directly increases the amount to be indemnified hereunder. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Losses (to the extent that the nature and amount of such Loss is known at such time). The Indemnitee shall furnish promptly to the Indemnitor copies of all papers and official documents received in respect of any such Loss. All indemnification claims hereunder, whether in respect of Endo, EpiCept, their respective Affiliates or their respective directors, officers, employees and agents, shall be made solely by Endo or EpiCept, as applicable, as the Party to this Agreement.
(b) In the case of Losses arising from claims of any Third Party that are subject to indemnification provided in this Article 8 (a "Third Party Claim"), as to which the Indemnitor may be obligated to provide indemnification pursuant to this Agreement, the Indemnitee will notify the Indemnitor in writing of the Third Party Claim (and specifying in reasonable detail the factual basis for the Third Party Claim and to the extent known, the amount of the Third Party Claim) reasonably promptly after becoming aware of such Third Party Claim; provided, however, that failure to give such notification will not affect the indemnification provided hereunder except to the extent the Indemnitor shall have been actually prejudiced as a result of such failure.
(c) If a Third Party Claim is made against an Indemnitee and the
Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee
therefor, the Indemnitor will be entitled, within one hundred twenty (120) days
after receipt of written notice from the Indemnitee of the commencement or
assertion of any such Third Patty Claim, to assume the defense thereof (at the
expense of the Indemnitor) with counsel selected by the Indemnitor and
reasonably satisfactory to the Indemnitee, for so long as the Indemnitor is
conducting a good faith and diligent defense. Should the Indemnitor so elect to
assume the defense of a Third Party Claim, the Indemnitor will not be liable to
the Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof provided that if under
applicable standards of professional conduct a conflict of interest exists
between the Indemnitor and the Indemnitee in respect of such claim, such
Indemnitee shall have the right to employ separate counsel to represent such
Indemnitee with respect to the matters as to which a conflict of interest exists
and in that event the reasonable fees and expenses of such separate counsel
shall be paid by such Indemnitor; provided, further, that the Indemnitor shall
only be responsible for the reasonable fees and expenses of one separate counsel
for such Indemnitee; provided still further that the Indemnitor and its counsel
shall cooperate with the Indemnitee and its counsel, as may be reasonably
requested. If the Indemnitor assumes the defense of any Third Party Claim, and
no such conflict of interest exists, the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnitor. If the Indemnitor assumes
the defense of any Third Party Claim, the Indemnitor will promptly supply to the
Indemnitee copies of all correspondence and documents relating to or in
connection with such Third Party Claim and keep the Indemnitee informed of
developments relating to or in connection with such Third Party Claim, as may be
reasonably requested by the Indemnitee (including, without limitation, providing
to the Indemnitee on reasonable request updates and summaries as to the status
thereof). If the Indemnitor chooses to defend a Third Party Claim, all
Indemnitees shall reasonably cooperate with the Indemnitor in the defense
thereof (such cooperation to be at the expense, including reasonable legal fees
and expenses, of the Indemnitor). If the Indemnitor does not elect to assume
control of the defense of any Third Party Claim within the one hundred twenty
(120) day period set forth above, or if such good faith and diligent defense is
not being or ceases to be conducted by the Indemnitor, the Indemnitee shall have
the right, at the expense of the Indemnitor, after three (3) Business Days
notice to the indemnitor of its intent to do so, to undertake the defense of the
Third Party Claim for the account of the Indemnitor (with counsel selected by
the Indemnitee), and to compromise or settle such Third Party Claim, exercising
reasonable business judgment.
(d) If the Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitee will agree to any settlement, compromise or discharge of such Third Party Claim that the Indemnitor may recommend that by its terms obligates the Indemnitor to pay the full amount of Losses (whether through settlement or otherwise) in connection with such Third Party Claim and unconditionally and irrevocably releases the Indemnitee completely from all liability in connection with such Third Party Claim; provided, however, that, without the
Indemnitee's prior written consent, the Indemnitor shall not consent to any settlement, compromise or discharge (including the consent to entry of any judgment), and the Indemnitee may refuse in good faith to agree to any such settlement, compromise or discharge, that provides for injunctive or other nonmonetary relief affecting the Indemnitee. If the Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitee shall not (unless required by law) admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnitor's prior written consent (which consent shall not be unreasonably withheld).
8.4 Insurance Proceeds. Any indemnification hereunder shall be made net of any insurance proceeds recovered by the Indemnitee (it being understood that an Indemnitee may simultaneously pursue an insurance claim and a claim for indemnification hereunder); provided, however, that if, following the payment to the Indemnitee of any amount under this Article 8, such Indemnitee recovers any insurance proceeds in respect of the claim for which such indemnification payment was made, the Indemnitee shall promptly pay an amount equal to the amount of such proceeds (but not exceeding the amount of such indemnification payment) to the Indemnitor.
8.5 Insurance. Each Party agrees to obtain and maintain commercial general liability insurance, including clinical trials and products liability insurance, with reputable and financially secure insurance carriers, or to be self-insured, in either case, in such amounts and subject to such deductibles as are reasonable and customary in the pharmaceutical industry for companies of comparable size and activities. Each Party shall maintain such insurance for so long as Licensed Products in the Territory continue to be manufactured or sold and thereafter for so long as is necessary to cover any and all Third Party Claims which may arise from the development, manufacture or sale of a Licensed Product in the Territory. Upon reasonable request by a Party, the other Party shall produce evidence that such insurance policies are valid, kept up to date and in full force and effect.
ARTICLE 9
TERM AND TERMINATION
9.1 Term.
(a) Except as set forth in Section 11.13, unless earlier terminated by mutual agreement of the Parties in writing or pursuant to the provisions of this Article 9, this Agreement will continue in full force and effect until the later of (i) the conclusion of the Royalty Term on a country-by-country basis and (ii) the expiration of the last EpiCept Licensed Patent containing a Valid Claim covering the Endo BP Product on a country-by-country basis (the "Term").
(b) On a country-by-country basis, at the conclusion of the Royalty Term, the licenses granted hereunder with respect to the LidoPAIN(R) BP Product and the Endo BP Product, respectively, shall become fully paid up, royalty-free, perpetual and
irrevocable and the exclusivity restrictions pursuant to Section 2.3 with respect to each such country shall no longer be applicable.
9.2 Material Breach. Upon a material breach of this Agreement by Endo on the one hand, or EpiCept on the other hand (in such capacity, the "Breaching Party"), the other Party (in such capacity, the "Non-Breaching Party") may provide written notice (a "Breach Notice") to the Breaching Party specifying the material breach. If the Breaching Party fails to cure such material breach during the forty-five (45) day period (or, if applicable, such longer period, but not to exceed ninety (90) days, as would be reasonably necessary for a diligent party to cure such material breach, provided the Breaching Party has commenced and continues its diligent efforts to cure during the initial forty-five (45) day period following the date on which the Breach Notice is provided), then the Non-Breaching Party may terminate this Agreement on a Licensed Product-by-Licensed Product and country-by-country basis with respect to the Licensed Product and country to which the breach relates. If Endo is the Breaching Party and the material breach relates to the LidoPAIN(R) BP Product in a particular country within the Territory and EpiCept has elected to terminate this Agreement with respect to the LidoPAIN(R) BP Product in such country, the exclusivity restrictions pursuant to Section 2.3 with respect to such country shall no longer be applicable with respect to the LidoPAIN(R) BP Product. Notwithstanding the foregoing, the cure period for any failure by Endo to make Milestone Payments or Royalty payments due hereunder shall be forty-five (45) days; provided further, however, that the failure by Endo to make any such payment shall not be considered a breach to the extent that such payment is the subject of a good faith dispute by Endo. For the purposes of this Section 9.2, material breach shall mean a breach which materially adversely affects the rights under this Agreement of the other Party with respect to the applicable Licensed Product in the applicable country in the Territory.
9.3 Bankruptcy. Either Party may, subject to the provisions set forth herein, terminate this Agreement by giving the other Party sixty (60) days' written termination notice if, at any time, the other Party shall: (a) file in any court pursuant to any statute a petition for bankruptcy or insolvency, or for reorganization in bankruptcy, or for an arrangement or for the appointment of a receiver, trustee or administrator of such Party or of its assets; (b) be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof; (c) propose or be a party to any dissolution; or (d) make an assignment for the benefit of its creditors. Should EpiCept become a party to a bankruptcy proceeding and such proceeding is not dismissed within sixty (60) days then, to the extent permitted by law, this Agreement and the licenses granted by EpiCept hereunder shall be adopted by any bankruptcy trustee or relevant Third Party charged with the disposition of same, and shall not be rejected by same, it being the Parties' intent that, in such event, Endo and its Affiliates and sublicensees shall be entitled to retain the rights granted to them hereunder by EpiCept.
9.4 Continuing Rights of Sublicensees. Upon any termination of this Agreement, each sublicense previously granted by Endo, or any of its Affiliates, to any
Person that is not an Affiliate of Endo (each, an "Independent Sublicensee") shall, at EpiCept's option, remain in effect and shall become a direct license or sublicense, as the case may be, of such rights by EpiCept to such Independent Sublicensee, subject to the Independent Sublicensee agreeing in writing to assume Endo's terms, conditions and obligations to EpiCept under this Agreement as they pertain to the sublicensed rights.
9.5 Effect of Expiration or Termination. Expiration or termination of this Agreement pursuant to this Article 9 shall not (i) relieve a Party hereto of any obligation accruing to such Party prior to such termination, or (ii) result in the waiver of any right or remedy by a Party hereto accruing to such Party prior to such termination.
9.6 Limitation of Liabilities. NOTWITHSTANDING THE FOREGOING, EXCEPT AS MAY
BE THE CASE UNDER ARTICLE 8 ABOVE WITH RESPECT TO INDEMNIFICATION FOR THIRD
PARTY CLAIMS, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR PUNITIVE,
EXEMPLARY, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
WITHOUT LIMITATION LOST PROFITS, BUSINESS OR GOODWILL) ATTRIBUTABLE TO ANY
BREACH OR DEFAULT BY SUCH PARTY UNDER THIS AGREEMENT. THIS LIMITATION SHALL
SURVIVE ANY FAILURE OF THE ESSENTIAL PURPOSE OF A LIMITED OR EXCLUSIVE REMEDY
SET FORTH HEREIN.
ARTICLE 10
INTELLECTUAL PROPERTY
10.1 Ownership of Technology and Patent Rights.
(a) EpiCept shall own any Technology and EpiCept Improvements claiming such Technology, invented, developed or discovered solely by EpiCept or its Affiliate's employees or agents.
(b) Endo shall own any Technology, and any patent rights claiming such Technology, invented, developed or discovered solely by Endo's or its Affiliate's employees or agents.
10.2 Prosecution of EpiCept Licensed Patents. EpiCept shall have the obligation to diligently Prosecute the patent rights within the EpiCept Licensed Patents and EpiCept Improvements in the Territory, through patent counsel selected by EpiCept. EpiCept and Endo shall consult and cooperate with each other regarding the Prosecution of the EpiCept Licensed Patents. Endo shall reimburse EpiCept for *** of the Prosecution costs incurred by EpiCept after the Effective Date within thirty (30) days of Endo's receipt of an invoice therefor.
10.3 Right to Consult. During the Term of this Agreement, EpiCept shall copy Endo, or have Endo copied, on all substantive documents relating to EpiCept Licensed Patents and EpiCept Improvements received from or to be filed in any patent office in the
Territory, within fifteen (15) days of receipt from the patent office and at least fifteen (15) days prior to filing with the patent office, respectively, including without limitation copies of each patent application, official action, response to official action, declaration, information disclosure statement, request for terminal disclaimer, request for patent term extension, and request for reexamination. Endo shall have the right to comment on the Prosecution of the EpiCept Licensed Patents and EpiCept Improvements and provide such comments to EpiCept's patent counsel, and EpiCept shall require its patent counsel to consider in good faith such comments from Endo, and, to the extent not inconsistent with EpiCept's rights and/or commercial interests, EpiCept shall require its patent counsel to incorporate all such comments. In the event that Endo's comments are inconsistent with EpiCept's rights and/or commercial interests, EpiCept and Endo agree to negotiate in good faith a Prosecution strategy with respect to the relevant EpiCept Licensed Patents and/or EpiCept Improvements that would adequately cover Endo's interests, without adversely affecting EpiCept's rights and/or commercial interests. If Endo fails to provide its comments with respect to the Prosecution of a patent application and/or Patent within the EpiCept Licensed Patents and/or EpiCept Improvements at least five (5) days prior to the deadline for filing or otherwise responding to the relevant paper in the relevant patent office, EpiCept shall be free to act without consideration of Endo's comments.
10.4 Abandonment of Prosecution by EpiCept. EpiCept shall notify Endo in
the event it is unable for any reason to meet its obligations under Section
10.2. Such notification shall be given within a reasonable period (i.e., with
sufficient time for Endo to take whatever action may be necessary or desired)
prior to the date on which such patent application(s) or patent(s) will lapse or
go abandoned. Endo shall then have the option, exercisable upon written
notification to EpiCept, to assume full responsibility, at its discretion and
its sole cost and expense, for Prosecution of the affected patent application(s)
or maintenance of any of the affected Patent(s) in such country or countries in
the Territory; provided, however, Endo may offset any such costs and expenses
against any Milestone Payments or Royalties due to EpiCept.
10.5 Patent Term Extensions. Endo shall have the right to request that EpiCept file all applications and take actions necessary to obtain patent extension pursuant to 35 U.S.C. Section 156 or like foreign statutes for the EpiCept Licensed Patents in the Territory, which extensions shall be owned by EpiCept. If EpiCept declines to pursue such patent extensions, then Endo shall have the right (at Endo's cost and expense) on behalf of EpiCept to file all such applications and take all such actions necessary to obtain such patent extensions. EpiCept agrees to sign such further document and take such further actions (all at Endo's expense) as may be requested by Endo in this regard.
10.6 Patent Marking. Endo and its Affiliates and its sublicensees shall mark all Licensed Products made or sold under this Agreement with a notice in accordance with 35 U.S.C. Section 287 and similar marking provisions in foreign countries. The Parties agree that listing of the patent numbers in the package inserts or foreign equivalent shall be considered sufficient marking of Licensed Products as required by this Section 10.6.
10.7 Third Party Infringements.
(a) Suits for Infringement of the EpiCept Licensed Patents and EpiCept Improvements. If EpiCept or Endo becomes aware of infringement of any Patent included in the EpiCept Licensed Patents or EpiCept Improvements by a Third Party in the Territory, such Party shall promptly notify the other Party in writing to that effect and provide a summary of the relevant facts and circumstances known to such Party relating to such infringement ("Infringement Notice"). EpiCept shall have the right, at its sole discretion, on its own behalf, to institute, prosecute and control any action or proceeding to restrain infringement of any EpiCept Licensed Patents or EpiCept Improvements licensed to Endo hereunder. Endo agrees to be joined as a Party plaintiff if necessary to prosecute the action or proceeding and shall provide all reasonable cooperation, including any necessary use of its name, required to prosecute such litigation. EpiCept shall have sole control of any such suit and all negotiations for its settlement or compromise, provided that, EpiCept shall not settle or compromise any such suit or enter into any consent order for the settlement or compromise thereof without the prior written consent of Endo, which consent shall not be unreasonably withheld, conditioned or delayed.
(b) Step-in Right for Endo. If, prior to the expiration of three (3) months from said Infringement Notice, EpiCept has not obtained a discontinuance of an alleged infringement by a Third Party or brought an infringement action or proceeding or otherwise taken appropriate action to abate such infringement, or, in the event that a Third Party files a paragraph IV certification relating to any Patent pursuant to 21 U.S.C. Section 355(j)(2)(A)(vii)(IV) of the Hatch/Waxman Act (or any successor statute), if EpiCept does not institute an infringement proceeding against such Third Party within 20 days of receipt of notice of such paragraph IV certification, or if EpiCept shall notify Endo at any time prior thereto of its intention not to bring suit against an alleged infringer or EpiCept at any time ceases to actively prosecute any such ongoing infringement, and such infringement is relevant to a Licensed Product in the Territory, then, and in those events only, Endo shall have the right, but not be obligated, to institute, prosecute and control any action or proceeding to restrain such infringement. EpiCept agrees to be joined as a Party plaintiff if necessary to prosecute the action or proceeding and shall provide all reasonable cooperation, including any necessary use of its name, required to prosecute such litigation. Endo shall have sole control of any such suit and all negotiations for its settlement or compromise, provided that Endo shall not settle or compromise any such suit or enter into any consent order for the settlement or compromise thereof without the prior written consent of EpiCept, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) Costs and Recoveries from Infringement Action. Each Party shall
assume and pay all of its own out-of-pocket costs incurred in connection with
any litigation or proceedings described in this Section 10.7 including, without
limitation, the fees and expenses of that Party's counsel. Any recovery obtained
by any Party as a result of any proceeding described in this Section 10.7, by
settlement or otherwise, shall be applied in the following order of priority:
(i) first, to reimburse each Party for all
litigation costs in connection with such proceeding paid by that Party and not otherwise recovered (on a pro rata basis based on each Party's respective litigation costs, to the extent the recovery was less than all such litigation costs); and (ii) second, the remainder of the recovery shall be shared equally.
(d) Declaratory Actions & Counterclaims Against Endo or EpiCept. In the event that an action alleging invalidity or non-infringement of any of the EpiCept Licensed Patents or EpiCept Improvements shall be brought against EpiCept or Endo, EpiCept, at its sole discretion, shall have the right, within thirty (30) days after the commencement of such action, to take or regain control of the action at its own expense. If EpiCept shall determine not to exercise this right, Endo may take over or remain as lead counsel for the action at Endo's sole discretion. Any recovery obtained from such litigation, proceeding or settlement shall be shared in accordance with Section 10.7(c). Any amounts owed in such litigation, proceeding or settlement shall be paid by EpiCept.
10.8 Infringement of Third Party Rights.
(a) Infringement Claims. With respect to any and all claims instituted by Third Parties for patent infringement involving the manufacture, use, offer for sale or sale of a Licensed Product covered by the EpiCept Licensed Patents or EpiCept Improvements in the Territory during the Term, except for any such claims for which EpiCept is obligated to indemnify Endo under Section 8.2, Endo shall promptly notify EpiCept of such claim, and Endo shall have the right, at its sole discretion, to defend and control any action or proceeding with respect to such claim. EpiCept agrees to be joined as a party if necessary to defend the action or proceeding and shall provide all reasonable cooperation, including any necessary use of its name, required to defend such litigation. Endo shall have sole control of any such suit and all negotiations for its settlement or compromise, provided that, Endo shall not settle or compromise any such suit or enter into any consent order for the settlement or compromise thereof without the prior written consent of EpiCept, which consent shall not be unreasonably withheld, conditioned or delayed.
(b) Step-in Right for EpiCept. If, prior to the expiration of three
(3) months from said claim being brought, or such sooner period as may be
necessary to appropriately respond to said claim, Endo has not elected to defend
such action or proceeding, or, in the event that a Third Party files a paragraph
IV certification relating to any Patent pursuant to 21 U.S.C. Section
355(j)(2)(A)(vii)(lV) of the Hatch/Waxman Act (or any successor statute), if
EpiCept does not institute an infringement proceeding against such Third Party
within 20 days of receipt of notice of such paragraph IV certification, or if
Endo shall notify EpiCept at any time prior thereto of its intention not to
defend such action or proceeding, then, and in those events only, EpiCept shall
have the right, but not be obligated, to defend and control any action or
proceeding. Endo agrees to be joined as a party if necessary to defend the
action or proceeding and shall provide all reasonable cooperation, including any
necessary use of its name, required to defend such litigation. EpiCept shall
have sole control of any such suit and all negotiations for its settlement or
compromise, provided that EpiCept shall not settle or
compromise any such suit or enter into any consent order for the settlement or compromise thereof without the prior written consent of Endo, which consent shall not be unreasonably withheld, conditioned or delayed.
ARTICLE 11
MISCELLANEOUS
11.1 Assignment. This Agreement may not be assigned or otherwise transferred (in whole or in part, whether voluntarily, by operation of law or otherwise) by either Party without the prior written consent of the other Party (which consent shall not be unreasonably withheld); provided, however, that such consent shall not be required if (i) the assignment is to an Affiliate, or (ii) the assignment is in connection with the transfer or sale of all or substantially all of the transferor's business (whether by asset sale, merger, consolidation, or similar transaction). This Agreement shall be binding upon the permitted successors and assigns of the Parties.
11.2 Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.
11.3 Force Majeure. Neither Party shall be liable to the other Party for loss or damages, or shall have any right to terminate this Agreement for any default or delay directly attributable to any Force Majeure, provided that the Party affected gives prompt notice of any such cause to the other Party. The Party giving such notice shall thereupon be excused from such of its obligations hereunder for so long as it is thereby disabled from performing such obligations; provided, however, that such affected Party promptly commences and continues to use its Commercially Reasonable Efforts to cure such disablement as soon as practicable.
11.4 Notices. Notices to EpiCept shall be addressed to:
EpiCept Corporation
270 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Attention: Chief Executive Officer
Facsimile No.: (201) 837-0200
with a copy to:
Pennie & Edmonds LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Ann Gisolfi
Facsimile No: (212) 869-9741
Notices to Endo shall be addressed to:
Endo Pharmaceuticals Inc.
100 Painters Drive
Chadds Ford, Pennsylvania 19317
Attention: Chief Executive Officer
Facsimile No.: (610) 558-9682
with a copy to:
Endo Pharmaceuticals Inc.
100 Painters Drive
Chadds Ford, Pennsylvania 19317
Attention: General Counsel
Facsimile No: (610) 558-9684
Either Party may change the address to which notices shall be sent by giving
notice to the other Party in the manner herein provided. Any notice required or
provided for by the terms of this Agreement shall be in writing and shall be (i)
sent by registered or certified mail, return receipt requested, postage prepaid,
(ii) sent via a reputable overnight courier service, or (iii) sent by facsimile
transmission, in each case properly addressed in accordance with the paragraphs
above. The effective date of any notice shall be as of the date received, in the
case of personal delivery, (b) on the next business day following transmission
thereof by facsimile or deposit thereof with a nationally recognized overnight
courier service, or (c) on the fifth business day following the mailing thereof
by registered or certified mail.
11.5 Amendment. No amendment, modification or supplement of any provision of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.
11.6 Waiver. No provision of this Agreement shall be waived by any act, omission or Knowledge of a Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party.
11.7 Counterparts; Facsimile Signatures. This Agreement may be executed in
two (2) counterparts and such counterparts taken together shall constitute one
(1) and the same agreement. This Agreement may be executed by facsimile
signatures, which signatures shall have the same force and effect as original
signatures.
11.8 Descriptive Headings. The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.
11.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law provisions thereof. Each Party hereby submits itself for the
purpose of this Agreement and any controversy arising hereunder to the exclusive
jurisdiction of the state and federal courts located in the State of New York,
and any courts of appeal therefrom, and waives any objection on the grounds of
lack of jurisdiction (including, without limitation, venue) to the exercise of
such jurisdiction over it by any such courts. Prior to bringing a legal action
against the other Party, such dispute shall be separately negotiated by the
Parties hereto in good faith and all reasonable efforts undertaken to settle
amicably such matters before resorting to further legal recourse, as follows:
upon the occurrence of a dispute between the Parties, including, without
limitation, any breach of this Agreement or any obligation relating thereto, or
any dispute with respect to whether a product is a Licensed Product, the matter
shall be referred first to the officers of EpiCept and Endo having
responsibility for the subject matter of the dispute, or their designees. The
officers, or their designees, as the case may be, shall negotiate in good faith
to resolve such dispute in a mutually satisfactory manner for up to thirty (30)
days. If such efforts do not result in mutually satisfactory resolution of the
dispute, the matter shall be referred to the chief executive officers of EpiCept
and Endo, or their designees. The chief executive officers, or their designees,
as the case may be, shall negotiate in good faith to resolve such dispute in a
mutually satisfactory manner for up to thirty additional (30) days, or such
longer period of time to which the chief executive officers may agree.
11.10 Nature of Licenses. All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of 11 U.S.C. 365(n) of the Bankruptcy Laws, licenses of rights to "intellectual property" as defined under 11 U.S.C. 101(35A) of the Bankruptcy Laws. The Parties agree that Endo, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights, including any right to enforce any exclusivity provision of this Agreement, remedies, and elections under the Bankruptcy Laws. To the fullest extent permitted by law, the Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against EpiCept under the Bankruptcy Laws, Endo shall be entitled to all applicable rights under 11 U.S.C. 365(n) of the Bankruptcy Laws, including copies and access to, as appropriate, any such intellectual property and all embodiments of such intellectual property upon written request therefor by Endo, and such, if not already in its possession, shall be promptly delivered to Endo.
11.11 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal or unenforceable provisions which valid provisions in their economic effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalid, illegal or unenforceable provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid, illegal or unenforceable provisions are of such essential importance to this Agreement
that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal or unenforceable provisions.
11.12 Entire Agreement of the Parties. This Agreement, together with the exhibits and Schedules hereto, constitute and contain the complete, final and exclusive understanding and agreement of the Parties and cancels and supersedes any and all prior negotiations, correspondence, understandings and agreements whether oral or written, between the Parties respecting the subject matter hereof and thereof.
11.13 Independent Contractors. The relationship between the Parties created by this Agreement is one of independent contractors and neither Party shall have the power or authority to bind or obligate the other except as expressly set forth in this Agreement.
11.14 Accrued Rights; Surviving Obligations. Unless explicitly provided otherwise in this Agreement, termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights, which shall have accrued to the benefit to any Party prior to such termination, relinquishment or expiration, including damages arising from any breach hereunder. Such termination, relinquishment or expiration shall not relieve any Party from obligations which are expressly indicated to survive termination or expiration of the Agreement, including, without limitation, those obligations set forth in Sections 3.7 (relating to adverse event reporting), 5.6 (relating to maintenance of records; audit), 7.1 (relating to confidentiality), 7.3 (relating to confidentiality), 9.5 (relating to effect of expiration or termination), 10.1 (relating to ownership of technology and patent rights), 11.4 (relating to notices), 11.9 (relating to governing law), 11.10 (relating to nature of licenses), 11.16 (relating to expenses) and 11.17 (relating to third party beneficiaries) and Articles 6 (relating to representations and warranties) and 8 (relating to indemnification) hereof.
11.15 Compliance with Export Regulations. None of the Parties shall export any technology licensed to it by the other Party under this Agreement, except in compliance with United States export laws and regulations.
11.16 Expenses. Unless otherwise provided herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party which shall have incurred the same and the other Party shall have no liability relating thereto.
11.17 No Third Party Beneficiaries. No person or entity other than the Parties hereto and their respective Affiliates, successors and permitted assigns shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.
11.18 No Strict Construction. This Agreement has been prepared jointly and shall not be strictly construed against either Party.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
IN WITNESS WHEREOF, duly authorized representatives of the Parties have duly executed this Agreement as of the Effective Date.
EPICEPT CORPORATION
By: /s/ JOHN V. TALLEY
------------------------------------
Name: John V. Talley
Title: Chief Executive Officer
|
ENDO PHARMACEUTICALS INC.
By: /s/ CAROL A. AMMON
------------------------------------
Name: Carol A. Ammon
Title: Chairman and CEO
|
SIGNATURE PAGE TO LICENSE AGREEMENT
Schedule 1.16
EpiCept Licensed Patents
Application No./ Inventor(s)/
Patent Title Patent No. Country Filing Date Assignee
---------------------------- ---------------- -------------- ----------- --------------
Method and Composition for US 5,776,952 US Liedtke/
Topical Therapy of Back Pain EpiCept
and Muscle Tension EP 96 111 436.0 Europe:
EP 0 758 548 B1 Germany
France
Italy
Netherlands
Spain
Sweden
United Kingdom
Intradermal-Penetration US 9/24/02 Fischer et al/
Agents for Topical Local 09/523,652 US 3/10/00 EpiCept
Anesthetic Administration 6,455,066 US 3/6/01
PCT/US01/07060 PCT 3/9/01
P 01 01 01125 Argentina 3/6/01
Brazil 3/9/01
No. 536-2001 Chile 3/6/01
No. 01809238.1 China 3/6/01
PV 2002-3030 Czech Rep. 3/6/01
No. 01918363.1 European
Hungary
India
Israel 3/6/01
No. 13-566701 Japan 3/6/01
No. 2002-7011879 Korea 3/6/01
No. 2002/008828 Mexico
New Zealand 3/6/01
No. 20024309 Norway 3/8/01
No. 1-2001-00573 Philippines
Poland
Russia
Singapore
Slovak 3/9/01
No. 090105562 Taiwan 3/7/01
No. 064112 Thailand
No. 2001-000505 Venezuela
Intradermal Penetration No. 10/201,901 US 7/25/02 Fischer, Huber,
Agents for Topical Local (Continuation of Mason/ EpiCept
Anesthetic Administration 09/523,652)
|
Schedule 1.20
EpiCept Trademarks
1. LidoPAIN(R)
2. EpiCept(TM)
Schedule 4.1
EpiCept Wire Transfer Instruction
***
Schedule 6.2(f)
EpiCept Third Party Consents
There are no Third Party Consents required.
Schedule 6.2(g)(i)
Regulatory Status of LidoPAIN(R) BP Product
1. US IND #60,957
Exhibit 10.10
REVISED & RESTATED
ROYALTY AGREEMENT
This Royalty Agreement (this "Agreement"), dated as of July 16, 2003 (the "Effective Date"), is entered into by and between EpiCept Corporation, successor-in-interest of American Pharmed Labs, Inc., a corporation organized under the laws of Delaware and having its principal place of business at 270 Sylvan Avenue, Englewood Cliffs, NJ 07632 ("EpiCept") and R. Douglas Cassel, M.D., an individual with his principal place of business at 4401 Fargreen Road, Harrisburg, PA 17110 ("Cassel").
WHEREAS:
EpiCept owns the entire right, title and interest in, to and under the inventions described in U.S. patent application. Serial No. 09/425,925 (the "'925 application"), entitled, "Local Prevention or Amelioration of Pain from Surgically Closed Wounds," which issued as U.S. Patent No. 6,383,511 (the "'511 Patent") to Cassel, as the inventor.
For consideration as described herein, Cassel has assigned his entire right, title and interest in, to and under the inventions described in the '925 application to EpiCept (Exhibit A).
EpiCept and Cassel originally entered into that certain Royalty Agreement, dated October 6, 1999. EpiCept and Cassel intend and desire that this Agreement amends and restates the Original Agreement in its entirety and in particular the parties expressly acknowledge and agree that this Agreement contains a consulting arrangement with Cassel and, among others, modified and amended financial provisions and due diligence provisions.
IT IS HEREBY AGREED as follows:
1.0 Definitions
1.1 Affiliate: The term "Affiliate" means, with respect to any person, entity, or any other person or entity that it directly or indirectly controls, is under common control with, or is controlled by that person or entity. For purposes of this definition, "control" (including with correlative meaning, the terms "controlled by" and under "common control with"), as used with respect to any person, or entity, means the possession, directly or indirectly, of the power to direct or to cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities, by contract, or otherwise.
1.2 Cassel Technology: The term "Cassel Technology" means all copyrightable material, notes, records, inventions, improvements, developments, discoveries and trade secrets conceived, made by or discovered by Cassel outside of the performances of his services.
1.3 Effective Date: The term "Effective Date" means the date set forth in the preamble to this Agreement.
1.4 First Commercial Sale: The term "First Commercial Sale" means, after all necessary marketing approvals have been obtained in a relevant country, the initial transfer of a Product in such country to a third party customer not controlled by EpiCept in exchange for cash or some cash equivalent to which a value can be assigned for the purpose of determining "Net Sales."
1.5 Patent: The term "Patent" means the '511 Patent and any other patent issued by the U.S. Patent and Trademark Office or any comparable foreign authority that results from the '925 application, including, without limitation U.S. Patent application Serial No. 10/137,685, filed May 3, 2002..
1.6 Product: The term "Product" means any composition of matter, material, device, apparatus, or system developed by EpiCept for the treatment of pain from surgically closed wounds, which the making, using, offering for sale, sale or importation by an unlicensed third party, would infringe one or more issued claims of a Patent.
1.7 Net Sales: The term "Net Sales" means gross sales of the Products invoiced by EpiCept or any of its Affiliates to a third party, but not to an Affiliate, and accepted by the third party, less shipping costs, returns, allowances, and taxes.
1.8 Territory: The term "Territory" means a territory consisting of the entire world.
1.9 Royalty Year: The "Royalty Year" shall be a twelve-month calendar year ending on December 31, except that the first Royalty Year, if the First Commercial Sale of Product should occur during the year, may be less than twelve months.
2.0 Royalty
2.1 Monthly Payment: Within *** business days after the end of each calendar month, EpiCept shall pay to Cassel a payment of four thousand United States Dollars ($4,000) for a period of three (3) years from the Effective Date. Such monthly payments shall be fully creditable against future royalty payments to Cassel, provided that no more than *** of the total annual payments shall be credited to the royalties payable to Cassel in any one Royalty Year.
2.2 Amount of Royalty: EpiCept shall pay to Cassel, on a country-by-country, Product-by-Product basis, a royalty of *** of Net Sales of Product per Royalty Year.
2.3 No Multiple Royalties: No multiple royalties shall be payable in the event that any Product or the manufacture, use or sale thereof is covered by more than one patent included in the Patent.
2.4 Payment: EpiCept shall submit a payment to Cassel annually that is equal to the royalties due for that Royalty Year, less applicable withholding taxes and credits, except that EpiCept shall reserve and hold back *** of the royalty payment each Royalty Year to account for returns, allowances, and write-offs of customer accounts. The reserved royalty payment, adjusted for returns, allowances, and write-offs of customer accounts, will be paid
with the following Royalty Year's royalty payments. The royalty payments to Cassel shall be made within *** days of the end of each Royalty Year in which Net Sales occurred. With each royalty payment, EpiCept shall submit to Cassel an itemized statement setting forth the amount of Net Sales during the Royalty Year and the royalties accrued.
2.5 Records: The books and records of EpiCept which relate to the royalties under this Agreement shall be open for inspection by an independent accounting firm appointed by Cassel (subject to the consent of EpiCept, such consent not to be unreasonably withheld or delayed) for the sole purpose of verifying royalty payments during regular business hours at such place or places where such books and records are customarily kept and upon suitable written notice, but not more frequently than once each year. The relevant records shall be maintained by EpiCept for a period of three (3) years after the expiration or termination of this Agreement. The cost of any such inspection shall be paid by Cassel. Any books and/or records received from EpiCept during the course of any such inspection shall be kept confidential.
3.0 Term and Termination
3.1 Term: The Term of this Agreement shall begin on the Effective Date, and unless sooner terminated by the parties as herein provided, shall continue in full force and effect, on a country-by-country and Product-by-Product basis, until the date of expiration of expiration of the last to expire patent within the Patent.
3.2 Termination:
(a) At Will: Three (3) years after the Effective Date, EpiCept may terminate this Agreement and all of its obligations hereunder at any time upon thirty (30) days advance written notice to Cassel, if a patent within the Patent is determined to be invalid and/or unenforceable.
(b) By Mutual Agreement: EpiCept and Cassel may terminate this Agreement at any time by mutual written agreement.
(c) For Breach: Except as set forth in Section 5.6, if either party breaches this Agreement, the non-breaching party, at its option, may terminate this Agreement, provided that the non-breaching party has provided written notice to the breaching party of the breach and the non-breaching party's intention to terminate this Agreement, and the breaching party has failed to cure its breach within ninety (90) days following the date such notice was received by the breaching party.
4.0 Due Diligence
4.1 Due Diligence: EpiCept by itself, or through its Affiliates or licensees, throughout the Term, shall use commercially reasonable efforts to proceed with the development and commercialization of Product through a program for exploiting the Patent, consistent with reasonable business practices and judgments.
5.0 Consulting Arrangements
5.1 Services and Compensation:
(a) Cassel agrees to provide general scientific consulting services for EpiCept and in particular, EpiCept expects such services to involve the development and commercialization of Product ("Services") for a period of three (3) years from the Effective Date ("Consulting Term as defined herein below), with each twelvemonth (12) month period designated a Consulting Year. EpiCept agrees to give Cassel three (3) days advance notice of EpiCept's need for Cassel to perform the Services, and Cassel agrees to perform such Services upon EpiCept's request, unless Cassel has a valid excuse in which case the parties shall agree to a mutually acceptable date for Cassel to perform such Services.
(b) During the Consulting Term, EpiCept agrees to pay to Cassel *** per day (each day being eight (8) hours) for the performance of the Services. Such payment shall be made within *** business days after receipt of a detailed invoice by EpiCept. Such invoice shall include a description of the Services performed by Cassel and the number of hours of Service. In any Consulting Year that EpiCept does not use Cassel's Services for *** days, EpiCept shall, within *** days after the end of such year, pay to Cassel the difference between the amount paid to Cassel up to that date and the ***. For purposes of clarity, EpiCept. shall pay to Cassel a minimum of *** per Consulting Year for Services during the Consulting Term, regardless of whether or not EpiCept has utilized Cassel's Services during any Consulting Year.
5.2 Confidentiality:
(a) "Confidential Information" means any and all proprietary information, technical data, trade secrets or know-how provided by EpiCept to Cassel, as well as any information, data, trade secrets or know-how developed by Cassel in the course of providing the Services to EpiCept whether provided in written, oral, graphic, visual, video, computer or other form, including, but not limited to, research and product plans, products, services, customer lists and customers (including, but not limited to, customers of EpiCept on whom Cassel called or with whom Cassel became acquainted during the Consulting Term), markets, developments, inventions, processes, formulas, technology, marketing, finances or other business information.
(b) Cassel shall not, during or subsequent to the Consulting Term, use Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of EpiCept, or disclose Confidential Information to any third party. It is understood and agreed that
Confidential Information also includes such information received
during Cassel's initial consulting agreement with EpiCept. Cassel
agrees that Confidential Information shall remain the sole property of
EpiCept. Cassel further agrees to take all reasonable precautions to
prevent any unauthorized disclosure of Confidential Information.
Notwithstanding the above, Cassel's obligation under this Section 5.2
(b) relating to Confidential Information shall not apply to
information:
(i) which is already known to Cassel (other than under an obligation of confidentiality), at the time of disclosure by EpiCept to the extent that Cassel has documentary evidence to that effect;
(ii) which is generally available to the public or otherwise part of the public domain at the time of its disclosure to Cassel;
(iii) which becomes generally available to the public or otherwise part of the public domain after its disclosure or development, as the case may be, and other than through any act or omission of Cassel in breach of Cassel's confidentiality obligations under this Agreement;
(iv) which is subsequently lawfully disclosed to Cassel by a third party who had no obligation to EpiCept not to disclose such information to others;
(v) which is approved for release by EpiCept in writing.
(c) Cassel shall not, during the Consulting Term, improperly use or disclose any proprietary information or trade secrets of any former or current employer or other person or entity with which Cassel has an agreement or duty to keep in confidence information acquired by Cassel in confidence and that Cassel shall not bring onto the premises of EpiCept any unpublished document or proprietary information belonging to such employer, person or entity unless consented to in writing by such employer, person or entity.
(d) Cassel recognizes that EpiCept has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on EpiCept's part to maintain the confidentiality of such information and to use it only for certain limited purposes. Cassel agrees that Cassel owes EpiCept and such third parties, during the Consulting Term and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out the Services for EpiCept consistent with EpiCept's agreement with such third party.
(e) Upon the termination of the Consulting Term, or upon EpiCept's earlier request, Cassel shall deliver to EpiCept all of EpiCept's property relating
to, and all tangible embodiments of, Confidential Information in Cassel's possession or control.
(f) The obligations of Cassel under this Section 5.2 shall continue in full force and effect for three (3) years after termination of Cassel's performance of the Services.
5.3 Ownership:
(a) Cassel agrees that all copyrightable material, notes, records, inventions, improvements, developments, discoveries and trade secrets (collectively, "Inventions") conceived, made or discovered by Cassel in performing the Services, solely or in collaboration with others, during the Consulting Term relating to the business of EpiCept shall be the sole property of EpiCept. In addition, to the extent allowed by law, any Inventions which constitute copyrightable subject matter shall be considered "works made for hire", as that term is defined in the United States Copyright Act. Cassel further agrees to assign (or cause to be assigned) and does hereby assign fully to EpiCept all such Inventions and any copyrights, patents or other intellectual property rights relating thereto.
(b) Upon termination of the Consulting Term, or upon EpiCept's earlier request, Cassel shall deliver to EpiCept all of EpiCept's property relating to, and all tangible embodiments of, Inventions in Cassel's possession or control.
(c) Cassel agrees to assist EpiCept, or its designee, at EpiCept's expense, to obtain and from time to time enforce and defend EpiCept's rights in the Inventions and any copyrights, patents or other intellectual property rights relating thereto in any and all countries, and to execute all documents reasonably necessary for EpiCept to do so.
(d) Cassel agrees that if in the course of performing the Services, Cassel incorporates into any Inventions developed hereunder any invention, improvement, development, concept, discovery or other proprietary information owned by Cassel or in which Cassel has an interest ("Item"), EpiCept is hereby granted and shall have a non-exclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, reproduce, display. use and sell such Item as part or in connection with such inventions.
5.4 Option to Cassel Technology: Cassel hereby grants to EpiCept an exclusive option to obtain an exclusive, worldwide license to any Cassel Technology. Cassel shall provide to EpiCept a written notice of any such Cassel Technology and a summary detailing any such Cassel Technology. EpiCept shall have the right to exercise its option under this Section 5.4 within *** months of receipt of the written notification and summary by written notice to Cassel indicating that EpiCept is exercising its option, whereupon the parties shall
negotiate in good faith the terms and conditions for an agreement for a *** month negotiation period, extendible upon mutual agreement. If EpiCept does not exercise its option(s) within the *** month option period or enter into a definitive agreement with Cassel within the *** month negotiation period or any agreed upon extension period, Cassel shall have no further obligation to EpiCept regarding any such Cassel Technology, provided, however, that EpiCept's failure to exercise its option or enter a definitive agreement with respect a particular Cassel Technology shall not affect EpiCept' s exclusive option to obtain an exclusive license for any other Cassel Technology. Cassel shall not enter into any negotiations or agreement with a third party during the *** month option period or any particular negotiation period, whichever is longer.
5.5 Reports: Cassel agrees that Cassel will from time to time during the Consulting Term or any extension thereof (as mutually agreed upon by the parties in writing) keep EpiCept advised as to Cassel's progress in performing the Services hereunder and that Cassel shall, as requested by EpiCept, prepare written reports with respect thereto. It is understood that the time required in the preparation of such written reports shall be considered time devoted to the performance of the Services by Cassel. Reports prepared by Cassel shall be the sole property of Cassel.
5.6 Conflicting Obligations: Cassel certifies that Cassel has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement, or that would preclude Cassel from complying with the provisions hereof, and further certifies that Cassel shall not enter into any such conflicting agreement during the Consulting Term or any extension thereof.
5.7 Term and Termination for Consulting Arrangements:
(a) Cassel's obligation to perform the Services and EpiCept's obligation to compensate Cassel for the Services shall commence on the Effective Date and end three (3) years from the Effective Date ("Consulting Term"). For purposes of clarity, the Consulting Term shall commence on the Effective Date and end thirty-six (36) months after the Effective Date.
(b) Cassel may terminate the consulting arrangement between Cassel and EpiCept set forth in this Section 5 by giving thirty (30) days prior written notice thereof.
(c) EpiCept and Cassel may terminate the consulting arrangement between Cassel and EpiCept set forth in this Section 5 at anytime by mutual written agreement.
(d) EpiCept may terminate the consulting arrangement between Cassel and EpiCept set forth in this Section 5 immediately and without prior written notice or opportunity to cure if Cassel refuses or is unable to perform the Services or is in breach of any material provision of this Section 5.
(e) Upon termination of the consulting arrangement between Cassel and EpiCept set forth in this Section 5, all rights and duties of the parties hereunder shall cease except:
(i) in the event that the consulting arrangement between Cassel and EpiCept is terminated by EpiCept, EpiCept shall be obliged to pay, within sixty (60) days after receipt of Cassel's final statement, all undisputed amounts owing to Cassel for unpaid Services and related expenses, if any, in accordance with Section 5.1 hereof; and
(ii) Sections 5.2, 5.3 and 6.7 shall survive termination of this
Section 5 of this Agreement.
6.0 Miscellaneous
6.1 Sports Medicine and Rehabilitation: EpiCept acknowledges that Cassel is free to pursue with any interested third party sports medicine and/or rehabilitation.
6.2 No Implied Licenses: No license rights to the Patent or any Inventions shall be created hereunder by implication, estoppel or otherwise and nothing herein shall be construed to grant to Cassel any rights or licenses under the Patent or Inventions.
6.3 Notice: Any notices required or permitted to be given under this Agreement shall be deemed given if communicated in the English language and delivered to the party to be notified at its address shown below or at such other address as may be furnished from time to time by the party to be notified to the notifying party in writing either (a) by registered air mail, postage prepaid, which notice shall be effective five (5) days after the date of mailing or (b) in person, by telefax (with proof of transmission and confirmation by first-class mail postage paid), or overnight courier, which notice shall be effective on the business day immediately following the date of such delivery.
If to Cassel, addressed to: R. Douglas Cassel, M.D.
4401 Fargreen Road
Harrisburg, P0A 17110
With a copy to: Jered L. Hock
Metzger, Wickersham
3211 North Front Street
P.O. Box 5300
Harrisburg, PA 17110
If to EpiCept: EpiCept Corporation
270 Sylvan Avenue
Englewood Cliffs, NJ 07632
Attn.: Jack V. Talley,
Chief Executive Officer
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6.4 Entire Agreement: This Agreement and exhibit hereto set forth the entire agreement and understanding between the parties regarding the Patent, and supercedes and replaces any and all prior arrangements and understandings relating to such matters, including the Original Agreement. None of the terms of this Agreement may be modified except as set forth in writing and signed by Cassel and EpiCept.
6.5 Amendments: This Agreement may only be amended by a written agreement signed by both parties.
6.6 Waiver: A waiver by either party of any term or condition of this Agreement in any one instance shall not be deemed to be a waiver of such term or condition for any similar instance in the future or any subsequent breach thereof. No delay or failure by either party to exercise any right, power, or remedy hereunder shall constitute a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy preclude other or further exercise thereof or the exercise of any other right power, ore remedy.
6.7 Severability: The invalidity of any provision or part of this Agreement shall not affect the validity of this Agreement in its entirety nor any provision or part thereof. In the event any provisions of this Agreement are judged legally invalid, they shall automatically be severed herefrom and the remaining provisions shall continue in full force and effect, provided that should such invalidity substantially alter the rights of either Party, the Parties shall promptly renegotiate in good faith the severed provisions of this Agreement.
6.8 Assignment: This Agreement may not be assigned by Cassel. This Agreement may be assigned by EpiCept provided that such assignee agrees in writing to be bound by the terms and provisions of this Agreement or is so bound by operation of law. Any purported assignment in violation of the provisions of this paragraph shall be null and void.
6.9 No Agency, Partnership, or Joint Venture: Nothing in this Agreement shall be deemed to make the parties partners, joint venturers, or agents of one another. No party to this agreement shall have the power to bind or obligate the other. Cassel shall perform the Services hereunder as an independent contractor. Cassel acknowledges and agrees that Cassel is obligated to report as income all compensation received by Cassel pursuant to this Agreement, and Cassel agrees to indemnify EpiCept and hold it harmless to the extent of any obligation imposed on EpiCept (i) to pay withholding taxes or similar items or (ii) resulting from Cassel's being determined not to be an independent contractor.
6.10 Survival. Sections 5.2, 5.3 and 6.7 shall survive termination of this Agreement.
6.11 Governing Law: This Agreement shall be deemed to have been made in the State of New Jersey, and shall be governed and construed in accordance with the laws of New Jersey.
6.12 Counterparts. This Agreement may be executed in two (2) counterparts, whereby each party may execute a duplicate original thereof, and each counterpart shall have
the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS HEREOF, the parties have executed this Agreement as of the date first written above.
EpiCept Corporation R. Douglas Cassel, M.D.
By: /s/ JACK V. TALLEY By: /s/ R. DOUGLAS CASSEL
--------------------------------- ------------------------------------
Jack V. Talley R. Douglas Cassel, M.D.
Chief Executive Officer 7/22/03
7/18/03
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Exhibit 10.11
SUBLICENSE AGREEMENT
This Sublicense Agreement (this "Agreement"), dated as of August 27, 1999, is entered into by and between EPITOME PHARMACEUTICALS LIMITED, a corporation organized under the laws of Nova Scotia, Canada and having its principal place of business at 5162 Duke Street, Suite 501, Halifax, NS B3J 1N7 Canada ("Sublicensor") and AMERICAN PHARMED LABS, INC., a corporation organized under the laws of Delaware and having its principal place of business at 270 Sylvan Avenue, Englewood Cliffs, New Jersey 07632 ("Sublicensee").
RECITAL:
Sublicensor is the licensee of certain United States patent applications, and foreign counterparts of such patent applications, covering the topical use of tricyclic anti-depressants as topical analgesics for neuralgia and Sublicensor is willing to grant an exclusive sublicense in such technology to Sublicensee pursuant to terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth herein and such good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Affiliate. The term "Affiliate" means, with respect to any person or entity, any other person or entity that directly or indirectly controls, is under common control with or is controlled by that person or entity. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlled by" and "under common control with"), as used with respect to any person or entity, means the possession, directly or indirectly, of the power to direct or to cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities, by contract or otherwise.
1.2 Effective Date. The term "Effective Date" means the date set forth in the preamble to this Agreement.
1.3 Excluded Field of Use. ***
1.4 Field of Use. ***
1.5 First Commercial Sale. The term "First Commercial Sale" means the initial transfer by Sublicensee of a Licensed Product to a third party customer in exchange for cash or some cash equivalent to which value can be assigned for the purposes of determining Net Sales.
1.6 Frome Patent Application. The term "Frome Patent Application" means that certain United States patent application more particularly described as U.S. Patent Appl. No.
08/531,760 (abandoned), Dr. Bruce M. Frome, "The Preparation of Topical Regional Compositions for the Relief of Pain."
1.7 Licensed Product. The term "Licensed Product" means any composition of matter, material, device, apparatus or system within the Field of Use utilizing any Patent Rights.
1.8 Net Sales. The term "Net Sales" means gross sales of Licensed Products billed by Sublicensee (or any sublicensee in accordance with Section 2.1(b) hereof) and accepted by third party customers less shipping costs, returns, allowances and taxes. To determine Net Sales, the only sale that shall be measured is the first sale of a Licensed Product by Sublicensee or an Affiliate to an independent customer who is not an Affiliate of Sublicensee or any of its Affiliates.
1.9 Other Technology. The term "Other Technology" means any technology acquired by or licensed to Sublicensee or any of its Affiliates other than pursuant to this Agreement.
1.10 Patent Rights. The term "Patent Rights" means any rights to any of the patent applications listed on Exhibit A attached hereto, together with all patents issued pursuant to such applications.
1.11 PTO. The term "PTO" means the United States Patent and Trademark Office.
1.12 Territory. The term "Territory" means a territory consisting of the entire world.
ARTICLE II
GRANT OF SUBLICENSE
2.1 Exclusive, Worldwide Sublicense.
(a) Right and Sublicense. Sublicensor hereby grants to Sublicensee the exclusive right and sublicense under the Patent Rights to make, use, develop, sell, market and otherwise dispose of Licensed Products in the Field of Use during the term hereof throughout the Territory, subject to all of the terms and conditions of this Agreement.
(b) Sublicense. Sublicensor also grants to Sublicensee the right to grant sublicenses of any right and sublicense under Section 2.1(a) hereof to third parties (including Affiliates of Sublicensee) provided that (i) any such sublicense agreement is consistent with the terms and provisions of this Agreement; (ii) Sublicensee remains fully liable for the performance of its obligations hereunder; (iii) Sublicensee notifies Sublicensor of any grant of a sublicense and provides to Sublicensor upon Sublicensor's request a copy of any sublicense agreement; and (iv) Sublicensor consents to such sublicense, which consent Sublicensor will provide so long as it obtains the approval of Dalhousie University ("Dalhousie").
2.2 Improvements.
(a) Sublicensor's Improvements. All right, title and interest in and to any improvements of the Patent Rights invented solely by Sublicensor, Dalhousie and/or any of their respective Affiliates ("Sublicensor Parties") after the Effective Date (any such improvements, the
"Sublicensor Improvements") shall remain the exclusive property of the Sublicensor (or Dalhousie, as the case may be).
(b) Sublicensee's Improvements or Joint Improvements. All right, title and interest in and to any improvements of the Patent Rights in the Field of Use invented after the Effective Date (I) solely by (i) Sublicensee, (ii) any of Sublicensee's Affiliates or (iii) any permitted sublicensee hereunder ("Sublicensee Parties") or (II) jointly by any of the Sublicensor Parties and any of the Sublicensee Parties, shall be the joint property of Sublicensee and Sublicensor.
(c) Other Technology. In the event Sublicensee desires to use, sell, lease, or rent a product, information or material derived from a combination of Patent Rights and Other Technology, Sublicensor will (i) not unreasonably withhold its consent to a request by Sublicensee to reduce the royalty payable to Sublicensor by up to *** because of payments (the total of which are greater than or equal to the amount of royalty reduction requested) it would have to make to obtain rights to use Other Technology in combination with the Patent Rights and (ii) negotiate in good faith with Sublicensee if Sublicensee requests a reduction in the royalty payable to Sublicensor by more than *** because of payments (the total of which are greater than or equal to the amount of royalty reduction requested) it would have to make to obtain rights to use Other Technology in combination with the Patent Rights.
2.3 Excluded Field of Use. Notwithstanding anything herein to the contrary, Sublicensee acknowledges and agrees that Sublicensee has no right or sublicense under the Patents Rights in any Excluded Field of Use. Sublicensor grants to Sublicensee a right of first refusal to an exclusive sublicense of the Patent Rights in any Excluded Field of Use that the Sublicensor desires to sublicense to a third party, such right of first refusal to be exercised within 60 days of Sublicensee receiving written notice from Sublicensor of the terms and conditions of a proposed sublicense which it is willing to accept, by Sublicensee providing written notice within such period that it agrees to enter into a sublicense with Sublicensor on such terms and conditions.
2.4 Best Efforts. Sublicensee shall use its commercially reasonable best efforts to exploit the commercial potential of the Patent Rights. No less than every three month anniversary following the Effective Date, Sublicensee shall report in writing to Sublicensor on the progress made toward commercializing the Patent Rights. If no reasonable effort is being made by Sublicensee to commercialize the Patent Rights for a continuous period of six (6) months, then the Sublicensor may provide written notice of default for the cure of which Sublicensee shall have an additional sixty (60) days. If such default is not cured by Sublicensee, Sublicensor may thereafter terminate this Agreement upon written notice to Sublicensee.
ARTICLE III
PAYMENTS AND ROYALTIES
3.1 Initial Payment. Sublicensee shall make an initial payment to Sublicensor of $25,000 (U.S.) ("Initial Payment") on the Effective Date.
3.2 Additional Payments. ***
3.3 Royalties.
(a) Computation. In consideration of the sublicense granted by
Sublicensor to Sublicensee hereunder, Sublicensee shall pay to Sublicensor a
yearly royalty on an annual basis in an amount equal to *** of Sublicensee's Net
Sales to the extent such Net Sales in the aggregate are equal to or less than
***; to the extent such Net Sales in the aggregate are greater than ***, such
royalty shall thereafter be *** of Sublicensee's Net Sales. For purposes of this
Section 3.3, (i) the first year shall be measured by the period commencing on
the First Commercial Sale and ending on the day immediately preceding the first
anniversary of the First Commercial Sale and (ii) each subsequent year shall be
measured by the period commencing on the applicable anniversary of the First
Commercial Sale and ending on the day immediately preceding the next anniversary
of the First Commercial Sale (each such year, a "Royalty Year").
(b) Accounting; Audit, Records.
(i) Within sixty (60) days after the end of each Royalty Year, Sublicensee shall submit to Sublicensor an itemized statement setting forth the amount of Net Sales during such Royalty Year and the royalties accrued thereon. Acceptance by Sublicensor of such statement and the payment described in Section 3.3(c) hereof for any Royalty Year shall not, however, preclude Sublicensor from thereafter questioning the accuracy thereof. During the term hereof and for a period of three (3) years thereafter, Sublicensee will keep and maintain books of account and records of transactions which relate to this Agreement, which books and records, together with supporting documentation, shall, during such period, be open for inspection by Sublicensor or its representatives during regular business hours and upon reasonable notice, but not more frequently than once every six (6) months.
(ii) In the event that any audit undertaken by Sublicensor in accordance with its rights hereunder discloses that, with respect to any period of one (1) or more Royalty Years, Sublicensee paid to Sublicensor, pursuant to this Article III, royalties equal to only *** or less of the royalties which were actually due to Sublicensor in respect of any such period, Sublicensee shall reimburse Sublicensor for all reasonable out-of-pocket costs incurred by Sublicensor in connection with such audit and shall pay Sublicensor the amount of any such underpayment.
(c) Payment. Sublicensee shall submit, along with the statement described in Section 3.3(b) hereof, a payment to Sublicensor equal to the royalties due for such Royalty Year in accordance with such Section less *** ("Holdback Amount"). Within *** days after the end of such Royalty Year, Sublicensee shall submit to Sublicensor an itemized statement setting forth any recalculation of Net Sales (the "Net Sales Recalculation") for such Royalty Year and the amount of the Holdback Amount, if any, due Sublicensor as a result of such Net Sales Recalculation. In no event shall Sublicensor be liable for any Net Sales Recalculation for any given Royalty Year in excess of the Holdback Payment.
(d) Interest on Overdue or Unpaid Royalties. In the event that (i) Sublicensee fails to make any royalty payment within the applicable time period set forth in this Article III or (ii) Sublicensor's audit pursuant to Section 3.3(b)(ii) discloses an underpayment of royalties of more than *** in respect of any such time period, each such overdue or unpaid royalty payment shall earn interest at a rate of *** per annum, calculated from the date that such overdue or unpaid royalty payment should have been made by Sublicensee in accordance with this Article III.
(e) Minimum Royalties. With respect to the first Royalty Year, Sublicensee shall pay to Sublicensor as a guaranteed minimum royalty payment ("Guaranteed Royalty") the amount of ***. Each Royalty Year thereafter, the Guaranteed Royalty shall increase by *** to a maximum Guaranteed Royalty of ***. Each such payment shall be paid to Sublicensor in accordance with Section 3.3(c) hereof.
(f) Advance Royalty. Within thirty (30) days of the First Commercial Sale, as an advance on future royalties, Sublicensee shall pay Sublicensor *** ("Advance Royalty Payment"). All royalties owed by Sublicensee to Sublicensor in accordance with this Section 3.3 shall be credited against the Advance Royalty Payment until the total amount of all royalties owed exceeds such Advance Royalty Payment. In the event of the termination of this Agreement in accordance with Sections 12.1 or 12.2 hereof, Sublicensor shall remit to Sublicensee within thirty (30) days of the effective date of such termination any uncredited amount of the Advance Royalty Payment.
3.4 Termination of Agreement. Except for the Initial Payment, Sublicensee's payment obligations pursuant to this Article III are subject to termination of this Agreement in accordance with Sections 12.1 or 12.2 hereof.
3.5 Maintenance Payments. In the event that there has been no First Commercial Sale by the end of the fourth year following the Effective Date, Sublicensor may at its option terminate this Agreement unless Sublicensee agrees to pay a maintenance fee of $50,000; if there has been no First Commercial Sale by the end of the fifth year following the Effective Date, Sublicensor may at its option terminate this Agreement unless Licensee agrees to pay a maintenance fee of $100,000. At the end of each subsequent year where there has been no First Commercial Sale, Sublicensor's option to terminate shall arise and Sublicensee's ability to forestall termination on payment of a fee shall be twice that paid in the previous year (e.g., $100,000 in the fifth year, $200,000 in the sixth year, and so on).
ARTICLE IV
MILESTONES; PATENT COSTS; RESEARCH GRANT; ADDITIONAL FORMULATIONS
4.1 Milestones. Within *** days of each of the milestone events set forth on Exhibit B hereto, Sublicensee shall pay Sublicensor the milestone payment amount set forth on Exhibit B.
4.2 Patent Prosecution and Maintenance. Sublicensor acknowledges and agrees that Dalhousie shall prepare, file, prosecute and maintain all patent applications and patents relating to the Patent Rights in the United States, Canada, European Union ("EU"), Japan, Finland, Norway, Sweden, Denmark, China and Australia, and in any other foreign country designated by Sublicensee. Sublicensee shall reimburse Dalhousie for reasonable costs and expenses it shall have incurred after the Effective Date in so preparing, filing, prosecuting and maintaining such patents and patent applications, including attorneys' fees, the costs of any interference proceedings, reexaminations, or any other ex parte or inter partes administrative proceeding before patent offices, taxes, annuities, issue fees, working fees, maintenance fees and renewal charges; provided, however, that (i) Sublicensee shall not be responsible for any costs or expenses incurred by any person or entity (including Dalhousie) with respect to any Patent Rights sublicensed by Sublicensor in the Excluded Field of Use to a third party ("Third Party Excluded Use Sublicensee") and (ii) all payments received by Sublicensor from any Third Party Excluded
Use Sublicensee for prosecution or maintenance of the Patent Rights shall be deducted against the costs and expenses to be reimbursed by Sublicensee pursuant to this Section 4.2.
4.3 Research Grant. Sublicensee agrees to provide Sublicensor with the amount of *** with the understanding that Sublicensor will fund research to be conducted by Dr. J. Sawynok on improvements (the "Sawynok Improvements") to the Patents Rights. Such amount shall be payable to Sublicensor in semi-annual installments of ***, with the first installment due six months following the Effective Date. Notwithstanding Section 2.2 hereof, the term "Patents Rights" shall include the Sawynok Improvements.
4.4 Additional Formulations. ***
4.5 Termination of Agreement. Sublicensee's payment obligations pursuant to this Article IV are subject to termination of this Agreement in accordance with Sections 12.1 or 12.2 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Sublicensor's Representations. Sublicensor represents and warrants to the Sublicensee that (a) the Sublicensor is a valid licensee of all Patent Rights, (b) the Sublicensor has the legal right to grant to the Sublicensee each and every right and sublicense of the Patent Rights granted hereunder, (c) no approvals or consents of any third party (except Dalhousie, which consent has been obtained by Dalhousie and delivered to Sublicensee) or governmental entity are necessary with respect to the execution and performance by the Sublicensor of all transactions and actions contemplated by this Agreement, and (d) to the best of the Sublicensor's knowledge, the manufacture, marketing, use and sale of the Licensed Products commercially by the Sublicensor after the Effective Date and the use of the Patent Rights in the manufacture of Licensed Products will not infringe the patents or patent applications of third parties and no claim of any such infringement has been made by any third party.
5.2 Third Party License Agreements. Sublicensor represents and warrants to the Sublicensee that Sublicensee has received true, correct and complete copies of all license and sublicense agreements to which Sublicensor is a party relating in any way to the Patent Rights (collectively, the "Third Party License Agreements"). On and after the Effective Date, Sublicensor agrees to provide Sublicensee with any modifications, cancellations, terminations, amendments or other changes to any Third Party License Agreements within ten (10) days of such modification, cancellation, termination, amendment or other change.
5.3 Mutual Representations. The Sublicensor and the Sublicensee each represents and warrants to the other that it has the full power and authority to enter into this Agreement and carry out the transactions and activities contemplated hereby.
5.4 Sublicensee's Representations. The Sublicensee represents and warrants to the Sublicensor that no approvals or consents of any third party or governmental entity are necessary with respect to the execution and performance by the Sublicensee of this Agreement.
5.5 Maintenance of Representations. Each party hereby covenants and agrees to maintain at all times throughout the term of this Agreement the truth and accuracy, in every
material respect, of each representation and warranty made by such party in this Article V. In the event that at any time during the term of this Agreement, any representation or warranty set forth in this Article V shall be inaccurate in any material respect (as if such representation or warranty were made at such time), the party making such inaccurate representation or warranty (the "Representing Party") shall (i) give notice to the other party of such inaccuracy within ten (10) days thereof and (ii) remedy such inaccuracy within sixty (60) days from such notice, so that such inaccurate representation or warranty is again accurate in all material respects. In the event that such inaccuracy is not cured within such sixty (60) day period, the Representing Party shall be deemed to be a breaching party that has failed to cure its breach for purposes of Section 12.2(g) hereof.
ARTICLE VI
CONFIDENTIAL INFORMATION
6.1 Non-Disclosure of Confidential Information. Neither the Sublicensor nor the Sublicensee shall disclose to any third party or use except in furtherance of this Agreement any confidential information disclosed by the other party or its Affiliates in connection with the Agreement, except that either party may disclose such confidential information to the extent necessary to comply with an order of a court or a government agency provided that the disclosing party shall use its reasonable best efforts to notify the other party of the disclosing party's intention to make the disclosure, and shall provide the other party with a copy of the court or government agency's order, identify precisely the confidential information the disclosing party intends to disclose, and cooperate with the other party in devising reasonable measures to protect the confidentiality of such information including, but not limited to, obtaining a protective order from the court or government agency that issued the order to disclose.
6.2 Return of Confidential Information. Upon the termination of this Agreement for any reason prior to the expiration of its term, each party shall return to the other party all confidential information received pursuant to or in connection with this Agreement.
6.3 Non-Confidential Information. Neither party shall be under any obligation with respect to information of the other party, which the party receiving the information can demonstrate, preferably by reference to documents:
(a) through no act or failure on the part of the party receiving the information or the inspector, becomes known or available to the public;
(b) is known by the party receiving the information or by the inspector prior to its receiving such information from the other party; or
(c) is furnished to the party receiving the information or to the inspector by any person not legally precluded from making disclosure of the information without restriction.
ARTICLE VII
PATENT INFRINGEMENT
7.1 Patent Infringement. In the event of infringement of any of the Patent Rights which occurs in the field of the sublicense granted to the Sublicensee under this Agreement, the
Sublicensee shall provide notice to the Sublicensor within thirty (30) days after the Sublicensee becomes aware of such infringement or of facts suggesting that infringement is occurring. The Sublicensor shall have the right, which it may or may not exercise in its discretion, to institute litigation or take any other action in connection with a suspected infringement of the Patent Rights or otherwise with respect to the Licensed Products. The Sublicensee shall cooperate with all reasonable requests for assistance with such litigation or other action. Nothing in this Article VII shall be construed as preventing or restricting the Sublicensor from taking any action that it deems, in its sole discretion, to be necessary or appropriate to defend, assert, or protect the Patent Rights against the actions of any infringer.
7.2 Action By Sublicensee. If Sublicensor fails to bring or defend any action, claim or proceeding concerning the Patent Rights within twenty (20) days after receiving notice of such action, claim or proceeding, which would, in Sublicensee's reasonable opinion, prejudice Sublicensee's rights hereunder, Sublicensee may notify Sublicensor of its intention to commence or defend any such action, claim or proceeding. If Sublicensor, within ten (10) days after receiving such notice, delivers to Sublicensee a notice of its intention to bring or defend any such action, claim or proceeding, Sublicensee shall not bring or defend such action, claim or proceeding. If, however, Sublicensee does not receive such notice from Sublicensor within such ten (10) day period, Sublicensee shall thereafter have the ability, at its own cost and expense, to commence or defend such action, claim or proceeding in its name and/or in the name of Sublicensor. In such event, Sublicensee shall keep Sublicensor reasonably notified of the progress of such action, claim or proceeding and Sublicensor, at the request of Sublicensee, shall cooperate at its own cost and expense in all reasonable respects with Sublicensee in connection therewith.
7.3 Judgment; Settlement. The party that is bringing or defending any action, claim or proceeding in accordance with Sections 7.1 or 7.2 hereof shall have the right, with the consent of the other party (which consent shall not be unreasonably withheld), to (a) consent to entry of any judgment or (b) settle with any third party to such action, claim or proceeding.
7.4 Recovery. Any settlement or other recovery received in accordance with Sections 7.1 or 7.2 hereof (including, without limitation, pursuant to a judgment or court order) shall be applied as follows: (i) first, to the costs and expenses of the party prosecuting or defending such action; (ii) second, to the costs and expenses of the cooperating (non-litigating) party; and (iii) lastly, to the extent of any excess proceeds, such proceeds shall constitute Net Sales for purposes of Article III hereof. Notwithstanding the foregoing, any non-compensatory damages recovered, such as punitive or treble damages, shall be divided evenly between Sublicensor and Sublicensee when either Sublicensor or Dalhousie defends against the infringement; in the event that Sublicensee defends against the infringement pursuant to Section 7.2 hereof, any non-compensatory damages shall be allocated as follows: *** to Sublicensee and *** to Sublicensor; provided, however, that non-compensatory damages shall not constitute Net Sales, regardless of the party defending against the infringement. Sublicensor agrees to pay to Dalhousie any amounts due to Dalhousie for any such settlement or other recovery in accordance with the terms of the license agreement between Dalhousie and Sublicensor.
7.5 Indemnity for Claims of Infringement.
(a) Subject to and limited by the terms of Section 7.5(b) hereof, Sublicensor shall indemnify, defend and hold harmless the Sublicensee, its Affiliates, its successors and assigns, and their directors, officers, employees, agents and representatives from and against any
loss, damage, cost or expense of any kind or nature (including reasonable attorneys' and other professionals' fees and expenses) incurred as a result of or in responding to any demand, claim, action, proceeding or suit that is brought or threatened to be brought against any of them by any third party and that asserts a claim of patent infringement arising from such third party's assertion of the ownership or co-ownership of rights in or to or related to the Patent Rights or Licensed Products.
(b) In the event that Sublicensee or its assignee becomes the defendant in any court, arbitration or other proceeding or action alleging infringement of a third party's patent rights as a result of the exercise of Sublicensee's rights hereunder (except where such infringement is based solely on Other Technology) (a "Third Party Action"), then from such event going forward Sublicensee or its assignee may withhold in escrow *** of the royalty payments due Sublicensor under this Agreement until such proceeding or action has been finally adjudicated or resolved by an unappealable judgment or order (the "Escrowed Indemnification Amount"). If such judgment or order:
(i) discontinues or dismisses the Third Party Action, or if Sublicensee incurs no monetary liability as a result of such judgment or order, then Sublicensee or its assignee shall be indemnified the legal costs and expenses of its defense of such proceeding or action out of the Escrowed Indemnification Amount and, if the Escrowed Indemnification Amount is insufficient to indemnify it completely, Sublicensee or its assignee shall be entitled to withhold and apply *** of all subsequent royalty payments due Sublicensor hereunder until the indemnification is complete; or
(ii) awards monetary damages against Sublicensee, then Sublicensee or its assignee shall be indemnified all of its (x) monetary damages and (y) legal costs and expenses incurred in defense of such proceeding or action ((x) and (y) collectively, the "Defense Costs") out of the Escrowed Indemnification Amount and, if the Escrowed Indemnification Amount is insufficient to indemnify it completely, Sublicensor within ninety (90) days of such judgment or order shall reimburse Sublicensee *** of all royalties accrued (but only to the extent, if applicable, not yet received by Sublicensee pursuant to the Escrow Indemnification Amount) over the last three (3) Royalty Years prior to the entry of such judgment or order (the "Reimbursed Royalty Payments") to the extent necessary to indemnify Sublicensee or its assignee for all of the Defense Costs. If the Reimbursed Royalty Payments do not completely indemnify Sublicensee for all of the Defense Costs, Sublicensee or its assignee shall be entitled to withhold and apply *** of all subsequent royalty payments due Sublicensor hereunder until the indemnification is complete.
(c) Notwithstanding anything in Section 7.5(b) hereof to the contrary,
(i) any amount of the Escrowed Indemnification Amount in excess of the
indemnification entitled by Sublicensee or its assignee herein shall be paid to
Sublicensor within one hundred and twenty (120) days of such judgment or order
and (ii) in no event shall Sublicensee or its assignee withhold and/or apply to
any indemnification herein any royalty payment due Sublicensor with respect to
any Royalty Year commencing on or after six (6) years from the date of such
judgment or order.
7.6 Rights of Dalhousie. Sublicensor may transfer, by written notice to Sublicensee and Dalhousie, all of its rights (but not its obligations, including without limitation, under Section 7.5 hereof) under this Article VII to Dalhousie.
ARTICLE VIII
PROHIBITION AGAINST USE OF PARTIES' NAMES
Neither party will use the name, logo, insignia, or symbols of the other party, or any variation or combination thereof, or the name of any officer, director or employee of the other party, for any purpose whatsoever without the other party's prior written consent; provided, however, that either party shall be deemed to have granted its consent to any request by the other party to use such name, logo, insignia or symbol if such party fails to respond to such request within ten (10) business days of its receipt of such a request.
ARTICLE IX
ASSIGNMENTS AND TRANSFERS
9.1 Transfers Generally. Except as provided in this Article IX, the Sublicensee shall not be permitted to assign or transfer any of its rights, obligations or duties under this Agreement without the express written consent of the Sublicensor. The Sublicensor shall be permitted to assign or transfer any or all of its rights, obligations or duties under this Agreement, without any requirement of consent, provided that the net worth of such assignee or transferee is at least as great and its financial condition is at least as sound as the net worth and financial condition of Sublicensor as of the date hereof.
9.2 Exceptions. Notwithstanding anything to the contrary contained herein, the Sublicensee may assign its rights and obligations under this Agreement to any one or more of its Affiliates, and its or their successors and assigns, provided that the net worth of such assignee is at least as great, and its financial condition is at least as sound, as the net worth and financial condition of the assigning party. In addition, the Sublicensee (and any permitted assignee) may assign its rights and obligations under this Agreement to any successor by way of merger, consolidation or acquisition of substantially all of such party's assets associated with its Patent Rights or License Products business. Upon any permitted assignment, the Sublicensee's agreement to perform all of its obligations hereunder through the effective date of the assignment shall nevertheless continue until expressly released by the Sublicensor, which release shall not be unreasonably withheld.
ARTICLE X
MARKING
Prior to the issuance of patents, Sublicensee will mark Licensed Products made, sold, or otherwise disposed of by it under the sublicense granted in this Agreement with the words "Patent Pending," and following the issuance of one or more patents, with the numbers of such patents.
ARTICLE XI
EXPORT CONTROL LAWS
This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States of America which may be imposed from time to time by the government of the United States of America. Furthermore, each party hereto agrees
that it will not export, directly or indirectly, any technical information acquired from the other under this Agreement or any products using such technical information to any country for which the United States government or any agency thereof at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the Department of Commerce or other agency of the United States government when required by an applicable statute or regulation.
ARTICLE XII
TERM AND TERMINATION
12.1 Term. The term of this Agreement shall commence on the Effective Date, and unless sooner terminated as herein provided, shall end on the date on which the last to expire of the Patent Rights covering the Licensed Products expires.
12.2 Termination. This Agreement may be terminated prior to the expiration of its term:
(a) if mutually agreed by the parties in writing;
(b) by either party, within three (3) months of the Effective Date if toxicology or other issues cause or threaten to cause excessive expenses in the development of the Patent Rights;
(c) by either party, prior to the revival of the Frome Patent Application by the PTO;
(d) by either party, prior to submission to the FDA of a NDA with respect to any Patent Rights due to inefficacy or lack of commercial feasibility of such technology;
(e) by Sublicensee, in the event that the Frome Patent Application or any revival thereof is not an U.S. approved final patent within five (5) years of the Effective Date;
(f) by Sublicensee, at any time after payment to Sublicensor of a termination fee of ***; or
(g) in the event of the breach of this Agreement by either party, at the option of the non-breaching party, provided that the non-breaching party has provided written notice to the breaching party of the breach and the non-breaching party's intention to terminate the Agreement, and the breaching party has failed to cure its breach within sixty (60) days following the date such notice was sent to the breaching party. Notwithstanding anything in this Agreement to the contrary, in the event that Sublicensor is the breaching party that has failed to cure its breach, Sublicensee shall continue to hold and exercise the rights granted to it under this Agreement upon payment to Dalhousie of such monies as are owed to it by Sublicensor and upon performance to Dalhousie of the obligations, monetary and otherwise, previously owed to Sublicensor under this Agreement.
12.3 Disposition of Patent Rights. Upon the expiration or termination of this Agreement in accordance with Sections 12.1 or 12.2 (except 12.2(g) if Sublicensor is the
breaching party) hereof, all rights in and to the sublicense granted hereunder shall immediately revert to and become the property of the Sublicensor.
12.4 Survival. Except as otherwise provided herein, any provision of this Agreement with respect to the subject matter described in this Article XII shall continue in effect after the expiration of the term of, or termination of, this Agreement to the extent necessary to permit the complete fulfillment or discharge of any obligation that so continues:
(a) Any Sublicensee obligation to maintain records that relate to any period ending on or before the expiration or termination of this Agreement;
(b) Sublicensor's right to receive or recover, and the Sublicensee's obligation to pay, any amounts due the Sublicensor under this Agreement that had accrued and were earned at any time on or prior to its expiration or termination;
(c) Any agreement, including the provisions of Article VI hereof, in effect at the time of such expiration or termination with respect to confidential information of any party to this Agreement;
(d) Any cause of action or claim or remedy of the Sublicensor or the Sublicensee arising from any breach of or failure to perform any obligation under this Agreement that occurred on or prior to the date of termination;
(e) Sublicensor's indemnification obligations pursuant to Section 7.5 hereof;
(f) The representations and warranties of any party that are contained in Article V of this Agreement; and
(g) Any right, duty or obligation of either party hereto which is expressly stated elsewhere in this Agreement to survive the expiration or termination hereof.
12.5 Sales after Termination. Upon termination or expiration of this
Agreement for any reason, Sublicensee shall have the right for a period of ***
days to sell or otherwise dispose of any inventory of Licensed Products (i)
which it, its Affiliates or its permitted sublicensees has in its possession
(subject to the obligation to pay royalty on the Net Sales thereof pursuant to
Section 3.3 hereof) or (ii) for which it has acquired constituent materials that
cannot be returned without costs exceeding in the aggregate ***.
ARTICLE XIII
JOINT DEVELOPMENT AGREEMENT
The parties agree to negotiate, execute and deliver in good faith a joint development agreement with respect to the Licensed Products within three (3) months of the Effective Date. In the event that such joint development agreement is not fully executed and delivered within three (3) months of the Effective Date, either party may terminate this Agreement with no further obligations or liabilities to the other party hereunder.
ARTICLE XIV
MISCELLANEOUS
14.1 Notice. Any notice given pursuant to this Agreement shall be in writing and, except as otherwise expressly provided herein, shall be deemed to have been duly delivered when it actually is delivered in person or by facsimile transmission; seven days after it is mailed by certified or registered mail, postage and mailing expense prepaid; and one day after it is sent by overnight express mail or by overnight courier service (such as FedEx or DHL), postage or shipping expense prepaid and designated for next-day delivery; and, if given or rendered to:
Licensor, addressed to: Epitome Pharmaceuticals Limited
5162 Duke Street, Suite 501
Halifax, Nova Scotia
B3J lN7
Canada
Attention: President or Chief Operating Officer
Facsimile Number: (902) 492-0013
with a copy to: Slone & Munro
5162 Duke Street, Suite 501
Halifax, Nova Scotia
B3J lN7
Canada
Attention: Mr. Andrew J.M. Munro
Facsimile Number: (902) 492-0013
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or if given or rendered to Licensee, addressed to:
American Pharmed Labs, Inc.
270 Sylvan Avenue
Englewood Cliff, New Jersey 07632
Attention: President
Facsimile: (201) 837-0200
with a copy to: Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177-0077
Attention: Lowell S. Lifschultz, Esq.
or Mark A. Polemeni, Esq.
Facsimile: (212) 661-0989
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Either party may specify a different address by notice in writing in accordance with this Section 14.1.
14.2 Bankruptcy. Sublicensor acknowledges that this Agreement constitutes a license for "intellectual property" as that term is defined in Section 365(n) of the U.S. Bankruptcy Code and all provisions of that Section shall apply in the event of Sublicensor's bankruptcy.
14.3 Entire Agreement, Amendment. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and has priority over any and all agreements, documents, verbal consents or understandings previously made between the parties with respect to the subject matter hereof. None of the terms of this Agreement shall be amended or modified except as set forth in a writing signed by both the Sublicensor and the Sublicensee.
14.4 Waiver. A waiver by any party of any term or condition of this Agreement in any one instance shall not be deemed or construed to be a waiver of such term or condition for any similar instance in the future or of any subsequent breach thereof. No failure by a party to take action against default or breach of this Agreement shall constitute a waiver of such party's right to enforce any provision of this Agreement or to take action against such default or breach or against any subsequent default or breach. All rights, remedies, undertaking, obligations, and agreements contained in this Agreement shall be cumulative and none of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement of any party.
14.5 Severability. If, and solely to the extent that, any provision of this Agreement shall be invalid or unenforceable, or shall render this entire Agreement invalid or unenforceable, such offending provision shall be of no effect and shall not affect the validity of the remainder of this Agreement or of any of its other provisions.
14.6 No Agency, Partnership or Joint Venture. Nothing in this Agreement shall be deemed to appoint or authorize the Sublicensee to act as an agent of the Sublicensor or to assume or incur any liability or obligation in the name of or on behalf of the Sublicensor. Additionally, nothing in this Agreement shall be construed to constitute a partnership or joint venture between the parties.
14.7 Headings. Headings in this Agreement are included for ease of reference only and shall have no effect on the meaning or interpretation of this Agreement.
14.8 Singular/Plural. Whenever in the context it appears appropriate, each term stated either in the singular or the plural shall include both the singular and the plural.
14.9 Applicable Law/Jurisdiction. All disputes arising out of the validity, interpretation or application of this Agreement shall be submitted to the courts of competent jurisdiction sitting in the County and State of New York. This Agreement shall be interpreted and construed in accordance with the laws of Delaware, without reference to its conflicts of laws provisions.
14.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
14.11 No Third-Party Beneficiaries. The provisions of this Agreement are for the exclusive benefit of the parties hereto and, except as specifically set forth herein, no other person, firm, institution or other entity shall have any right or claim against any party to this Agreement by reason of such provisions or shall be entitled to enforce any such provision against any party.
14.12 Harmonization. Notwithstanding anything to the contrary in this Agreement, Sublicensee acknowledges that Sublicensor agrees and is bound to convey to Sublicensee only those rights available to it under its license agreement with Dalhousie, a copy of which is attached hereto as Exhibit C.
* * * * * * * * * * *
[remainder of page left intentionally blank]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
SUBLICENSOR:
EPITOME PHARMACEUTICALS LIMITED
By: /s/ ANDREW J.M. MUNRO
------------------------------------
Print Name: Andrew J.M. Munro
Title: Director
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SUBLICENSEE:
AMERICAN PHARMED LABS, INC.
By: /s/ PETER GOLIKOV
------------------------------------
Print Name: Peter Goikov
Title: President
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EXHIBIT A
PATENTS RIGHTS
U.S. Patent Appl. No. 08/531,760, Dr. Bruce M. Frome, titled "The Preparation of Topical Regional Compositions for the Relief of Pain," filed on September 22, 1995.
U.S. Patent Appl. No. 09/081,709, Drs. J. Sawynok, M.J. Esser and A.R. Reid, titled "Use of Antidepressants for Local Analgesia," filed on May 19, 1998.
All pending and issued reissues, revivals, re-examinations, divisions, continuations, continuations-in-part, renewals, extensions and additions thereto, and all foreign counterparts and applications for foreign counterparts of the foregoing; provided, however, that continuations-in-part are limited to improvements to the subject matter of the claims in the patent applications above that are developed or reduced to practice by Dr. Sawynok or her collaborators during the term of and for three months following the Research Grant described in Section 4.3 hereof and which Dalhousie has the right to grant to Epitome.
EXHIBIT B
MILESTONE PAYMENT SCHEDULE
***
EXHIBIT C
DALHOUSIE LICENSE AGREEMENT
***