AGREEMENT
BETWEEN
ACCESS PHARMACEUTICALS, INC.
AND
BLOCK DRUG COMPANY, INC
ARTICLE 1 DEFINITIONS 1
1.1 Access 1
1.2 Access Know-How 2
1.3 Access Net Sales 2
1.4 Affiliate 3
1.5 Amlexanox 3
1.6 Block 3
1.7 Block-Chemex Agreement 3
1.8 Block Know-How 4
1.9 Block Net Sales 4
1.10 Dermatological Use 5
1.11 Effective Date 5
1.12 First Sale 5
1.13 Formulation 5
1.14 Improvement 5
1.15 Improvement Patent 5
1.16 Licensed Patents 5
1.17 Notice 6
1.18 Product 6
1.19 Revenue 6
1.20 Sublicense Net Sales 8
1.21 Takeda 8
1.22 Takeda License Agreement 8
1.23 Takeda Sublicensed Patents 8
1.24 Takeda Supply Agreement 9
1.25 Term 9
1.26 Territory 9
ARTICLE 2 GRANT 9
2.1 Grant 9
ARTICLE 3 ACCESS ROYALTIES 10
3.1 Royalty Rate for Direct Sales by Access 10
3.2 Royalty Rate in all Other Instances 10
3.3 No Offset on Other Royalties 10
ARTICLE 4 ADDITIONAL OBLIGATIONS OF THE PARTIES 11
4.1 Access to Pay Registration Fees and Costs 11
4.2 Access to Pay Takeda Royalties to Block 11
4.3 Advance Notice of Studies 11
4.4 Access to Provide Data 11
ARTICLE 5 ACCESS PAYMENT TERMS 12
5.1 Quarterly payments 12
5.2 Set-Off for Registration Fees 12
i
ARTICLE 6 IMPROVEMENTS 13
6.1 Improvements by Access 13
6.2 Advance Notice of Studies 13
6.3 Access to Provide Data 13
6.4 Access to Pay Registration Fees and Costs 13
6.5 Access to Pay Takeda Royalties to Block 14
ARTICLE 7 ACCESS IMPROVEMENT ROYALTIES 14
7.1 Royalties from Access to Block 14
7.2 Royalties in Other Instances 14
7.3 Royalty Reduction 14
ARTICLE 8 BLOCK IMPROVEMENT RIGHTS AND OBLIGATIONS 15
8.1 Grant of Rights to Block 15
8.2 Royalties from Block to Access 15
8.3 Set-Off for Advance or Other Royalties 15
8.4 Block Royalty Reports 15
ARTICLE 9 TERM AND TERMINATION 16
9.1 Term 16
9.2 Termination for Breach 17
9.3 Rights to Survive 17
9.4 Reversion and Termination for Failure to Pay
Takeda License Fees 18
9.5 Termination by Takeda 18
ARTICLE 10 WARRANTIES 18
10.1 Exploitation of Licensed Rights 18
10.2 Access Indemnity 19
10.3 Block Indemnity 19
10.4 Obligations Regarding Patent Infringement 20
10.5 Claims by Third Parties 22
10.6 No Restrictions on Product 22
10.7 Power to Enter Into Agreement 22
10.8 No Other Warranties or Representations 23
ARTICLE 11 MISCELLANEOUS 23
11.1 New Jersey Law Applies 23
11.2 Alternative Dispute Resolution 23
11.3 No Agency or Employment 26
11.4 Notice 26
11.5 Severability 28
11.6 Entire Agreement/Merger 28
11.7 Amendment 28
11.8 Counterparts 29
11.9 No Waiver of Rights 29
ii
11.10 Force Majeure 29
11.11 Further Assurances 29
11.12 Audit Rights 29
11.13 Binding Effect 30
11.14 No Strict Construction 30
11.15 Consent Not Unreasonably Withheld or Delayed 30
11.16 Bankruptcy 31
11.17 Assignment 31
11.18 Taxes 31
11.19 Cooperation on Publicity 31
11.20 Costs of Agreement 32
11.21 Headings for Convenience Only 32
11.22 Independent Contractor 32
11.23 No Finder's Fee 33
11.24 Notification of Infringement 33
11.25 References 33
11.26 Singular and Plural 33
11.27 Successors and Assigns 33
11.28 Validity and Severability 34
11.29 Waiver 34
11.30 Takeda Agreement Controlling 34
ARTICLE 12 TAKEDA CONSENT 35
12.1 Takeda Approval 35
iii
This Agreement, dated this 5th day of March, 1998, is by and between
Block Drug Company, Inc., 257 Cornelison Avenue, Jersey City, New Jersey
07302 ("Block") and Access Pharmaceuticals, Inc., 2600 Stemmons Freeway,
Suite 176, Dallas, Texas 75207 ("Access").
WHEREAS Block has certain rights in and to a topical product for
treating aphthous ulcers containing amlexanox;
WHEREAS Access wishes to develop such product itself in various
countries and to seek partners in various countries to develop such product;
NOW THEREFORE, in consideration of the following mutual
promises and obligations and intending to be legally bound, the parties agree
as follows:
ARTICLE 1 DEFINITIONS
1.1 Access: means Access Pharmaceuticals, Inc. The term
"Access" shall, as required by the circumstances, also mean and include any
company or business entity that controls or is controlled by, either directly or
indirectly, Access Pharmaceuticals, Inc., its officers, agents and employees or
any partnership or joint venture in which Access Pharmaceuticals, Inc. is a
participant or any company or business entity that is under common control
with Access Pharmaceuticals, Inc. The term "control" means the power to
direct the affairs of such entity by
1
reason of ownership of at least fifty percent (50%) of such entity by voting
stock, equity interest, contract or otherwise.
1.2 Access Know-How: means (a) any and all information in the
possession of Access at any time during the Term of this Agreement which
Access has the right to license or sublicense relating to the physical and
chemical analysis and stability of the Product, its clinical effects and
indications for use, and (b) any and all information in the possession of Access
as of the date of execution of this Agreement which Access the right to license
or sublicense relating to the method of use, packaging, formulation, or method
of administration of the Product that, at the time it is communicated to Block,
was not rightfully in Block's possession and was not common general
knowledge. Information relating to Takeda's process of manufacture of
amlexanox shall be excluded from the scope of Access Know-How.
1.3 Access Net Sales: For purposes of determining compensation
to Block for direct sales of Access under Paragraph 3.1 and Paragraph 7.1 of
this Agreement, "Access Net Sales" means gross revenues received by Access
on the sale of any Product less (a) trade discounts actually allowed; and (b)
when borne by Access in connection with the sale, transportation and handling
charges; sales, use and excise taxes; import duties, tariffs or other
governmental charges; and credits for claim or allowances, retroactive price
reductions, refunds, returns, and recalls. There shall not be any imputed gross
revenue for samples, free goods or other marketing programs whereby the
Product is given away to induce sales thereof. For purposes of determining
Net Sales, a sale shall be deemed to have occurred when the sale is invoiced
or
2
when the Product is delivered, whichever occurs first. In the case of the
transfer or sale of Product by Access to an Affiliate or distributor of Access
for sales by such Affiliate or distributor, Net Sales shall be based upon the
greater of the total invoice price charged by Access to such Affiliate or
distributor or the total invoice price charged by such Affiliate or distributor
to its customers. Net Sales for countries outside the U.S. shall be calculated
by converting to U.S. currency using the exchange rate in effect on the last
business day of each month as published in the Wall Street Journal.
1.4 Affiliate: means any corporation or business entity controlled by,
controlling, or under common control with Access or Block, respectively. For
this purpose, "control" shall mean the direct or indirect beneficial ownership
of at least fifty percent (50%) of the voting stock, or at least a fifty percent
(50%) interest in the income of such corporation or other business entity, or
such other relationship as, in fact, constitutes actual control.
1.5 Amlexanox: means 2 - amino - 7 - isopropyl - 5 - oxo - 5H - [1]
benzopyrano - [2,3 - b] - pyridine - 3 - carboxylic acid (Takeda Code No.
AA-673).
1.6 Block: means Block Drug Company, Inc.
1.7 Block-Chemex Agreement: means that asset purchase and royalty
agreement between Block Drug Company, Inc. and Chemex Pharmaceuticals,
Inc., dated as of June 7, 1995.
3
1.8 Block Know-How: means (a) any and all information in the
possession of Block at any time during the Term of this Agreement which
Block has the right to license or sublicense relating to the physical and
chemical analysis and stability of the Product, its clinical effects and
indications for use, and (b) any and all information in the possession of Block
as of the date of execution of this Agreement which Block the right to license
or sublicense relating to the method of use, packaging, formulation, or method
of administration of the Product that, at the time it is communicated to Access,
was not rightfully in the possession of Access and was not common general
knowledge. Information relating to Takeda's process of manufacture of
Amlexanox shall be excluded from the scope of Block Know-How.
1.9 Block Net Sales: means gross revenues received by Block on the
sale of any Product less (a) trade discounts actually allowed; and (b) when
borne by Block in connection with the sale, transportation and handling
charges; sales, use and excise taxes; import duties, tariffs or other
governmental charges; and credits for claim or allowances, retroactive price
reductions, refunds, returns, and recalls. There shall not be any imputed gross
revenue for samples, free goods or other marketing programs whereby the
Product is given away to induce sales thereof. For purposes of determining
Net Sales, a sale shall be deemed to have occurred when the sale is invoiced
or when the Product if delivered, whichever occurs first. In the base of the
transfer or sale of Product by Block to an Affiliate or distributor of Block for
sales by such Affiliate or distributor, Net Sales shall be based upon the
greater of the total invoice price charged by
4
Block to such Affiliate or distributor or the total invoice price charged by
such Affiliate or distributor to its customers.
1.10 Dermatological Use: means all uses for the treatment of diseases
and disorders of the integument including, but not limited to, therapeutic,
prophylactic and immunological uses. For the purposes of this definition,
integument is skin and its appendages, including hair, hair follicles, sebaceous
glands, sweat glands, nails, and component and migratory cells of the skin.
1.11 Effective Date: means the date first set forth above.
1.12 First Sale: means the date on the first invoice to any customer
purchasing a Product or an Improvement on a country by country basis after
the Effective Date of this Agreement.
1.13 Formulation: means the topical formulation containing
Amlexanox attached hereto as Exhibit A.
1.14 Improvement: means all inventions, developments or
improvements, whether or not patentable, originated or acquired by either
party hereto that relate to the Product.
1.15 Improvement Patent: means any patent or patent application
covering any Improvement.
5
1.16 Licensed Patents: means all patents and applications set forth in
Exhibit B to this Agreement and all Takeda Sublicensed Patents.
1.17 Notice: shall have the meaning set forth in Paragraph 11.4
hereof. "Notify" shall mean to provide Notice in accordance with Paragraph
11.4 hereof.
1.18 Product: means the Formulation and any topical formulation
containing Amlexanox for Dermatological Use, excluding any formulation for
treatment of the cause or symptoms of oral mucositis, covered by any claim
or any Licensed Patent in any country, whether or not granted.
1.19 Revenue: for purposes of determine compensation to Block for
sales to or by a sublicensee or other party of Access under Paragraph 3.2 and
Paragraph 7.2 of this Agreement, "Revenue" means the net profits received
by Access for the sale of the Products by Access or by any third party. As
used herein, "net profits" shall mean:
(a) the full amount of any nonrecurring or nonperiodic payments made
to Access by any third party as full or partial payment for any rights granted
to such third party relating to any Product or Improvement including, but not
limited to, milestone payments and reimbursement for fees expended to obtain
permission from any governmental authority to make, use or sell a Product or
Improvement (unless such fees have not been deducted under Paragraph 5.2
or 7.3 of this Agreement;
6
(b) the full amount of any royalties, including advance royalties, or
other periodic or recurring payments, paid to Access by any third party as full
or partial payment for any rights granted to such third party relating to any
Product or Improvement;
(c ) the full fair market value of any non-monetary consideration paid
to Access by any third party as full or partial payment for any rights granted
to such third party relating to any Product or Improvement; and
(d) the net consideration received by Access for sales of any Product
or Improvement to any third party for resale. As used herein, "net
consideration" means the gross consideration received by Access for sales of
any Product or Improvement less either: (1) if Access manufactures such
Product or Improvement, Access' direct and indirect manufacturing costs
incurred in making such Product or Improvement, recorded on Access' books
in accordance with generally accepted principles; or (2) if Access has such
Product or Improvement made by a third party, Access' out-of-pocket
payments to such third party for such Product or Improvement. All
manufacturing costs and out-of-pocket payments are subject to audit by Block.
This audit right is in addition to and separate from Block's audit right
pursuant to Paragraph 11.12. Any royalties paid by Access to Block under this
Agreement or any other agreement and royalties paid be Access to any other
party for sales hereunder may also be deducted from gross consideration;
7
(e) net profits shall not include any royalties or other payments made
by Block to Access under any provision of this Agreement, or any other
agreement.
1.20 Sublicensee Net Sales: means gross revenues received by the
sublicensee on the sale of any Product less (a) trade discounts actually
allowed; and (b) when borne by the sublicensee in connection with the sale,
transportation and handling charges; sales, use and excise taxes; import duties,
tariffs or other governmental charges; and credits for claim or allowances,
retroactive price reductions, refunds, returns, and recalls. There shall not be
any imputed gross revenue for samples, free goods or other marketing
programs whereby the Product is given away to induce sales thereof. For
purposes of determining Net Sales, a sale shall be deemed to have occurred
when the sale is invoiced or when the Product is delivered, whichever occurs
first. In the case of the transfer or sale of Product by the sublicensee to an
Affiliate or distributor of the sublicensee for sales by such Affiliate or
distributor, Net Sales shall be based upon the greater of the total invoice
price charged by the sublicensee to such Affiliate or distributor or the total
invoice price charged by such Affiliate or distributor to its customers.
1.21 Takeda: means Takeda Chemical Industries, Ltd., a Japanese
corporation and all parents, subsidiaries and affiliates thereof.
8
1.22 Takeda License Agreement: means that agreement between
Chemex and Takeda dated November 12, 1987 regarding licensing of patent
rights from Takeda to Chemex. A copy of that agreement is set forth in
Exhibit C to this Agreement.
1.23 Takeda Sublicensed Patents: means any and all patent
applications and patents now or hereafter owned or controlled by Takeda in the
Territory relating to the Product, including any and all patents issuing or
maturing from such patent applications, or any reissue application, divisions
extensions, Improvements, and continuations-in-part thereof. Such current
Takeda Patents and patent applications in the Territory are listed in Exhibit D
to this Agreement.
1.24 Takeda Supply Agreement: means that agreement between
Chemex and Takeda dated November 12, 1987 regarding supply of material
from Takeda to Chemex. A copy of that agreement is set forth in Exhibit E
to this Agreement.
1.25 Term: means the term of this Agreement, as set forth in Article
9 hereof.
1.26 Territory: means all countries in the world in which Block has
been granted rights by Takeda except the United States of America and Israel.
Block has not been granted rights in Japan and other countries.
9
ARTICLE 2 GRANT
2.1 Grant: Block hereby grants Access the exclusive right under the
Licensed Patents and the Block Know-How to make, use, have made and sell
or have sold any Product within the Territory during the Term, including the
right to make or have made outside the Territory for sale in the Territory.
The rights granted hereunder, however, are subject to the rights granted to
Block by Takeda as set forth in the Takeda License Agreement and the Takeda
Supply Agreement. Access agrees to be bound by the royalty provisions in
such agreements, as amended from time to time. Access shall have the right
to sublicense the rights granted hereunder within the Territory at its sole
discretion subject to approval by Takeda.
ARTICLE 3 ACCESS ROYALTIES
3.1 Royalty Rate for Direct Sales by Access: On a country by country
basis, if Access sells a Product directly to retail pharmacies or other
dispensaries, then Access shall pay to Block a royalty of * of Access
Net Sales of such Product in such country.
3.2 Royalty Rate in all Other Instances: For any consideration
received by Access for sales to or by a sublicensee or other party other than
as set forth in Paragraph 3.1, Access shall pay Block * of any
Revenue received by Access on any Product.
* - Confidential portions have been omitted and are on file separately with the
Commission
10
3.3 No Offset on Other Royalties: No payment received by Block
from Access in accordance with Paragraphs 3.1 or 3.2 shall reduce or offset
any amounts paid as an advance royalty in the Block-Chemex Agreement. No
Access Net Sales of any Product or any sales by any party resulting in any
Revenue under Paragraph 3.2 shall be considered as any form of sale covered
by the Block-Chemex Agreement.
ARTICLE 4 ADDITIONAL OBLIGATIONS OF THE PARTIES
4.1 Access to Pay Registration Fees and Costs: Access or its
sublicensees shall pay all registration fees, clinical evaluation costs and any
other costs associated with obtaining approval to market any Product within
any country in the Territory.
4.2 Access to Pay Takeda Royalties to Block: Access shall pay all
royalties due to Takeda for sales of Products within the Territory directly to
Block, and Block shall be solely responsible for remitting all such payments
due to Takeda for sales of Product within the Territory under the terms of the
Takeda License Agreement.
4.3 Advance Notice of Studies: Access shall provide Block with no
less than sixty (60) days' advance written Notice of the commencement of any
study or other sponsored research relating to any Product. Access shall not
proceed with any study or other sponsored research without the written
approval of Block, which shall not be unreasonably withheld or delayed.
11
4.4 Access to Provide Data: Access shall supply Block, without
compensation, with all clinical and other technical and scientific data that it
develops relating to any Product. Block may use this data at its discretion for
any purpose, including, but not limited to, filing of such data with regulatory
authorities outside the Territory for any purpose. Information pertaining to
side effects resulting from any use of Amlexanox in any type of application
will be exchanged by both parties hereto on an emergent basis, whenever such
information is obtained.
ARTICLE 5 ACCESS PAYMENT TERMS
5.1 Quarterly payments: Within thirty (30) days of the end of each
calendar quarter, commencing with the first full calendar quarter following the
Effective Date, Access shall submit to Block a written report setting forth the
Access Net Sales for such quarter and the calculation of the royalty payment
due Block for such quarter, provided however that the first such quarterly
report shall include Net Sales from the Effective Date to the end of the first
full calendar quarter. Access shall, with said written quarterly reports, pay
to Block the royalty amount due as indicated in said reports. In the event that
Access sublicenses a third party hereunder, the written report and payment to
Block shall be due within thirty (30) days of receipt of such third party
royalty report, which third party royalty report shall be due not later than
thirty (30) days after the end of each calendar quarter. The report from
Access to Block shall contain a copy of any such sublicensee royalty report.
12
5.2 Set-Off for Registration Fees: On a country basis, Access shall
be entitled to reduce the amounts paid to Block in any quarterly payment by
up to * for all out-of-pocket expenses incurred under Paragraph 4.1,
up to an aggregate total off-set for all quarterly payments on Access Net Sales
of any Product or Revenue for any Product of * . Any reduction made
in any quarterly payment as a result of this Paragraph 5.2 shall be
accompanied by a written report setting forth the basis for such reduction.
ARTICLE 6 IMPROVEMENTS
6.1 Improvements by Access: Access may develop and register any
Improvement in the Territory. Access may not develop or register any
Improvement for the treatment of the cause or symptoms of oral mucositis
under the terms of this Agreement.
6.2 Advance Notice of Studies: Access shall provide Block with no
less than sixty (60) days' advance written Notice of the commencement of any
study or other sponsored research relating to any Improvement. Access shall
not proceed with any such study or other sponsored research without the
written approval of Block, which shall not be unreasonably withheld or
delayed.
6.3 Access to Provide Data: Access shall supply Block, without
compensation, with all clinical and other technical and scientific data that it
develops relating to any Improvement.
* - Confidential portions have been omitted and are on file separately with the
Commission
13
Block may use this data at its discretion for any purpose, including filing such
data with regulatory authorities outside the Territory for any purpose.
6.4 Access to Pay Registration Fees and Costs: Access shall pay for
all registration fees, clinical evaluation costs and any other costs associated
with obtaining approval for it to market any Improvement within any country
within the Territory.
6.5 Access to Pay Takeda Royalties to Block: Access shall pay all
royalties due to Takeda for sales of Improvements within the Territory directly
to Block, and Block shall be solely responsible for remitting all such payments
due to Takeda for sales of any Improvement within the Territory under the
terms of the Takeda License Agreement.
ARTICLE 7 ACCESS IMPROVEMENT ROYALTIES
7.1 Royalties from Access to Block: On a country by country basis,
if Access sells any Improvement directly to retail pharmacies or other
dispensaries, then Access shall pay to Block a royalty of * of Access
Net Sales on such Improvement in such country. Payment shall be made in
accordance with the procedures set out in Paragraph 5.1.
7.2 Royalties in Other Instances: For any consideration received by
Access for sales to or by a sublicensee or other party other than as set forth
in Paragraph 7.1, Access shall pay
* - Confidential portions have been omitted and are on file separately with the
Commission
14
Block * of any Revenue received by Access on any Improvement.
Payment shall be made in accordance with the procedures set out in Paragraph
5.1.
7.3 Royalty Reduction: On a country by country basis, Access shall
be entitled to reduce the amounts paid to Block in any quarterly payment by
up to * for the * out-of-pocket expenses incurred under
Paragraph 6.4 to develop and register the Improvement in such country up to
an aggregate total off-set of * of all such costs in such country. Any
reduction made in any quarterly payment as a result of this Paragraph shall be
accompanied by a written report setting forth the basis for such reduction.
ARTICLE 8 BLOCK IMPROVEMENT RIGHTS AND OBLIGATIONS
8.1 Grant of Rights to Block: Access hereby grants Block the
exclusive right under any Improvement Patent, if any, and Access Know-How,
if any, now existing or subsequently developed, to make, use, have made and
sell any Improvement outside the Territory during the Term, including, but not
limited to, the right to make or have made the Improvement, or any part
thereof, within the Territory for sale outside the Territory. Block shall have
the right to sublicense the rights granted hereunder outside the Territory at
its sole discretion.
8.2 Royalties from Block to Access: On a country by country basis,
Block shall pay Access a royalty of * of Block Net Sales or any
Sublicensee Net Sales (of any Block sublicensee) of any Improvement outside
the Territory.
* - Confidential portions have been omitted and are on file separately with the
Commission
15
8.3 Set-Off for Advance or Other Royalties: Block shall be entitled
to offset any royalties otherwise due under Paragraph 8.2 by * . In no
event shall Block be required to pay royalties to Access under both the Block-
Chemex Agreement and Paragraph 8.2 of this Agreement for Block Net Sales
hereunder.
8.4 Block Royalty Reports: Within thirty (30) days of the end of each
calendar quarter, commencing with the first full calendar quarter following the
First Sale of any Improvement by Block or a Block sublicensee outside the
Territory, Block shall submit to Access a written report setting forth the Block
Net Sales for such quarter and the calculation of the royalty payment due
Access for such quarter including any setoff under Paragraph 8.2, provided
however, that the first such quarterly report shall include Block Net Sales from
the date of First Sale to the end of the first full calendar quarter. Block
shall, with said written quarterly report, pay to Access the royalty amount due
as indicated in said report. In the event that Block sublicenses a third party
hereunder, the written report and payment to Access shall be due within thirty
(30) days of receipt of such third party royalty report, which third party
royalty report shall be due no later than thirty (30) days after the end of each
calendar quarter. The report from Block to Access shall contain a copy of any
such sublicensee royalty report.
* - Confidential portions have been omitted and are on file separately with the
Commission
16
ARTICLE 9 TERM AND TERMINATION
9.1 Term: The Term of this Agreement for any Product commences
on the Effective Date hereof and ends, on a country by country basis upon the
later of * years from the date of First Sale of a Product in such
country or the expiration, lapse, termination or unappealed or unappealable
determination of invalidity, unenforceability or nonallowability of the last
Licensed Patent in each country, if any. The Term for Improvements shall
commence on the Effective Date and shall end, on a country-by-country basis,
upon the later of ten (10) years from the date of First Sale of an Improvement
in such country or the expiration, lapse, termination or unappealed or
unappealable determination of invalidity, unenforceability or nonallowability
of the last Licensed Patent, if any, or Improvement Patent, if any, in each
country. In no event, however, shall the duty to pay royalties under this
Agreement for either party extend beyond * after the Effective Date.
Royalties payable to Takeda under the Takeda License Agreement shall not be
affected by any provision of this Paragraph.
At the conclusion of the Term, each party shall have a fully paid-up
worldwide nonexclusive license with respect to any Licensed Patent,
Improvement Patent, Block Know-How and Access Know-How, and no further
payments shall be made or required under this Agreement.
9.2 Termination for Breach: Either party may terminate this
Agreement on sixty (60) days' written Notice to the other if the other is in
default or breach of any material provision,
* - Confidential portions have been omitted and are on file separately with the
Commission
17
provided, however, that if the party receiving such Notice cures or diligently
commences to cure the breach or default within such sixty (60) day period,
this Agreement shall continue in full force and effect. If such default or
breach of a material provision is a failure to pay any amount due and owing
hereunder, the terminating party may terminate this Agreement on thirty (30)
days' written Notice. If, however, the party receiving such Notice cures such
default or breach within such thirty-(30) day period, this Agreement shall
continue in full force and effect. Failure to terminate this Agreement for any
default or breach shall not constitute a waiver by the aggrieved party of its
right to terminate the Agreement for any other default or breach.
9.3 Rights to Survive: Termination shall not affect the rights of the
parties accruing up to the effective date of termination and thereafter as to
provisions which expressly survive termination.
9.4 Reversion and Termination for Failure to Pay Takeda License
Fees: If Access fails to make any payment to Block under Paragraph 4.2 or
Paragraph 6.5, then all rights granted to Access in this Agreement shall revert
to Block thirty (30) days after Notice to Access from Block of such failure to
pay. If Access makes all payments to Block required under Paragraphs 4.2
and 6.5 and any other required payments hereunder as set forth in such Notice
within the thirty (30) days, then such rights shall not revert to Block.
18
9.5 Termination by Takeda: If the Takeda License Agreement or the
Takeda Supply Agreement is terminated or canceled by Takeda or by operation
of the Takeda License Agreement or the Takeda Supply Agreement for any
reason, this Agreement shall also terminate, effective as of the date of
termination of such agreement. Provide, however, Block shall give Access
Notice at least thirty (30) days prior to any such termination, and Access shall
have the right to cure any breach that is the cause of any termination. Block
shall use its reasonable commercial efforts to keep the Takeda License
Agreement and the Takeda Supply Agreement in effect during the Term of this
Agreement.
ARTICLE 10 WARRANTIES
10.1 Exploitation of Licensed Rights: Block makes no warranty or
representation that the use of any products, the practice of the Licensed
Patents, or the use of any trademark will result in the successful promotion,
marketing or sale of the Products. Access makes no warranty or
representation that the use of any Improvements, the practice of the
Improvements, or the use of any trademark will result in the successful
promotion, marketing or sale of the Improvements.
10.2 Access Indemnity: Access shall indemnify and hold Block
harmless against any and all liability, damage, loss, cost or expense (including
attorney's fees and expenses), hereinafter "Damages," resulting from any third
party claim made or suit brought against Block to the extent that such claim
or suit (i) is caused by Access' negligence or willful misconduct;
19
(ii) is caused by Access' breach of any of the representations or warranties set
forth herein; or (iii) is caused by Access' breach of this Agreement. As the
parties intend fully indemnification, all costs, expenses and fees, including
attorney's fees and disbursements, incurred in enforcing this Paragraph 10.2
shall also be reimbursed. Upon filing of any such claim or suit, Block shall
immediately Notify Access thereof and shall permit Access at its cost to handle
and control such claim or suit. Block shall have the right to participate in
the defense of such claim or suit at its own expense.
10.3 Block Indemnity: Block shall indemnify and hold Access
harmless against any and all liability, damage, loss, cost or expense (including
attorneys' fees and expenses), hereinafter "Damages," resulting from any third
party claim made or suit brought against Access to the extent that such claim
or suit (i) is caused by Block's negligence or willful misconduct; (ii) is
caused by Block's breach of any of the representations and warranties set
forth herein; or (iii) is caused by Block's breach of this Agreement. As the
parties intend full indemnification, all costs, expenses and fees, including
attorneys' fees and disbursements, incurred in enforcing this Paragraph 10.3
shall also be reimbursed. Upon filing of any such claim or suit, Access shall
immediately Notify Block thereof and shall permit Block at its cost to handle
and control such claim or suit. Access shall have the right to participate in
the defense of such claim or suit at its own expense.
10.4 Obligations Regarding Patent Infringement: In the event of
alleged infringement of one or more patents licensed hereunder by a third
party:
20
(a) each party shall Notify the other of any perceived or threatened
infringement of the Takeda patents by any third party as such party becomes
aware of such perceived or threatened infringement. Block shall Notify
Takeda of any such perceived or threatened infringement, and all actions with
respect to the Takeda Sublicensed Patents will be governed by Paragraph 12.1
of the Takeda Agreement;
(b) In the event of infringement of any patent owned or licensed by
Block and licensed under this Agreement, the party discovering the
infringement shall Notify the other party of such infringement. Block shall
have sixty (60) days from the date of such Notice to Notify Access of its
decision to enforce or not to enforce the patent. If Block elects not to
enforce such patent within such sixty (60) day period, then Access may, at its
option, enforce such patent. In the event of any legal action seeking to
enforce any patent owned by Block, both Access and Block may be named as party
plaintiff. No settlement, consent judgement or other voluntary final
disposition of such suit may be entered into by Block without the consent of
Access, which consent shall not be unreasonably withheld or delayed.
(d) In the event of infringement of any patent owned by Access and
licensed under this Agreement, the party discovering the infringement shall
Notify the other party of such infringement. Access shall have sixty (60) days
from the date of such Notice to Notify Block of its decision to enforce or not
to enforce the patent. If Access elects not to enforce such patent within such
sixty (60) day period, then Block may, at its option, enforce such patent. In
21
the event of any legal action seeking to enforce any patent owned by Access,
both Access and Block may be named as party plaintiff. No settlement,
consent judgment or other voluntary final disposition of such suit may be
entered into by Block without the consent of Access, which consent shall not
be unreasonably withheld or delayed.
(e) In the event of any lawsuit against a third party hereunder, the
parties agree to cooperate with each other in all respects relating to the
lawsuit. Damages or any amount received in settlement of claims of
infringement, shall be apportioned as follows: (1) the party that actively
asserted the patent or patents found to be infringed or were covered by any
settlement of claims shall first be reimbursed for * of its out-of-pocket
expenses, including attorneys' fees, expended in actively asserting such patent
or patents; (2) out of the remainder, the party that did not actively assert
such patent or patents shall be reimbursed for * of its out-of-pocket
expenses, including attorneys' fees, expended in such lawsuit; and (3) the
party that actively asserted such patent or patents shall then receive any
remaining funds from such damage award or settlement. If both parties
actively asserted such patent or patents, then the parties will divide funds
from such damage award or settlement as follows: each party shall receive *
of its out-of-pocket expenses, including attorneys' fees, expended in such
lawsuit and the parties shall share any remaining funds equally. If the funds
from such damage award or settlement are not sufficient to compensate both
parties for * of their expenses, then the funds
* - Confidential portions have been omitted and are on file separately with the
Commission
22
shall be divided in a ratio equal to the ratio of the out-of-pocket expenses,
including attorneys' fees, of each party.
10.5 Claims by Third Parties: In the event a party to this Agreement
is sued or threatened with suit by a third party and such action pertains to the
Products, the party being threatened shall give prompt Notice to the other
party. The parties agree to confer together in such event and consult with one
another with respect to the action to be taken.
10.6 No Restrictions on Product: Each party represents to the other
that it has no knowledge of violations of any law or regulation or restrictions
on the ability to make, use or sell the Product, other than ordinary
restrictions imposed in countries in which governmental approval is required,
but has not yet been obtained, to market in such countries and other than
restrictions imposed by the Takeda License Agreement and the Takeda Supply
Agreement.
10.7 Power to Enter Into Agreement: Each party represents that it has
no knowledge of any impediment to it entering into this Agreement except for
the required consent by Takeda to the Agreement.
10.8 No Other Warranties or Representations: Nothing in this
Agreement shall be construed as (a) a warranty or representation by Block or
Access as to the validity or scope of any patent; (b) a warranty or
representation that anything made, used, sold, or otherwise disposed of under
any license granted in this agreement is or will be free from infringement of
23
patents of third parties; (c) an obligation to bring or prosecute actions or
suits against third parties for infringement; or (d) conferring a right to use
in advertising, publicity or otherwise any trademark or tradename of Block.
Neither party makes any representation, extends any warranties of any
kind, either express or implied, or assumes any responsibilities whatever with
respect to use, sale, or other disposition by and party of any Product or
Improvement.
ARTICLE 11 MISCELLANSOUS
11.1 New Jersey Law Applies: This Agreement shall be interpreted
and construed in accordance with the laws of the State of New Jersey.
11.2 Alternative Dispute Resolution: All disputes relating to or
arising out of this Agreement or its subject matter shall be resolved by the
parties as set forth in this Paragraph 11.2 (a) In the event of a dispute,
Notice of a demand for a meeting of the parties to discuss and settle
a dispute ("Notice of meeting") may be given by either Party. Such
Notice shall be in writing and shall set a date no more than (10)
business days from the date of the Notice of Meeting on which the
parties shall meet during normal business hours at a mutually acceptable
place. If within five (5) days after the date of the meeting the parties
have not resolved their dispute(s), then the parties shall proceed as
provided below. Notwithstanding anything in this
24
Paragraph 11.2 to the contrary, either party may seek equitable and injunctive
relief in any state or federal court in which jurisdiction and venue are proper.
(b) Any dispute not resolved within five (5) days after the meeting
shall be resolved by means of alternative dispute resolution, as provided in the
New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A.
2A:23A-1 et seq. (the "Act"). Other than as set forth herein to the contrary,
the parties expressly waive the right to resolve all claims, disputes and issues
arising out of or relating to this Agreement by means of traditional litigation,
including the right to appeal, except as provided in the Act. Except as
otherwise provided in this Agreement, the Act shall govern the procedures and
methods for any ADR Proceeding. No punitive damages may be awarded in
any litigation or ADR proceeding.
(c) Notice of a demand for resolution of a dispute under the Act (a
"Notice of Dispute") given by either party shall be in writing specifying the
issue or issues in dispute.
(d) Within fifteen (15) days after a Notice of Dispute is given, each
party shall select two (2) prospective umpires from among (i) any retired judge
of the federal courts or state appellate courts of New Jersey or New York; (ii)
any retired managing partner of a law firm with no less than twenty-five (25)
partners; or (iii) such other person with such qualifications upon which the
parties agree. The umpires shall be free from bias and conflict of interest
with respect to either party and shall be in a position to immediately hear the
dispute and render a prompt resolution, but in no event later than six (6)
months from the date of the Notice of
25
Dispute. Within fifteen (15) days after each party has selected its prospective
umpires, the parties shall agree to one (1) umpire from among the four (4)
prospective umpires to hear the dispute. In the event that the parties do not
agree on an umpire, the prospective umpires shall name the umpire.
The proceeding for the alternative resolution of a dispute (the "ADR
Proceeding") shall be held at a location with the State of New Jersey or New
York as selected by the umpire and shall commence no later than forty (40)
days after the Notice of Dispute is given.
The fees payable to the umpire shall be the usual hourly rate of such
umpire for consulting or dispute resolution services. All fees and expenses
associated with the ADR Proceeding incurred by the parties, including the
umpire fees, attorneys' fees and disbursements, shall be paid by the party
against whom the decision is rendered.
11.3 No Agency or Employment: Neither Block nor Access is to be
considered the agent or employee of the other for any purpose, and neither
party has the right or authority to enter into any contracts or assume
obligations for the other or to give any warranty or make any representation
on behalf of the other party except where and to the extent specifically
authorized in writing to do so.
11.4 Notice: Every notice or other communication required or
contemplated by this Agreement by either party shall be in writing.
26
(a) Every notice or other communication required or contemplated by
this Agreement by either party shall be delivered to the other party by either:
personal delivery; or facsimile; or certified or registered mail, postage
prepaid, addressed to the party for whom such notice was intended; or by
overnight courier.
(b) Notice delivered in person shall be deemed to have been delivered
upon receipt by the party to whom such notice was sent.
(c ) Notice delivered by facsimile shall be deemed to have been
delivered at noon on the first business day after the date on which the
facsimile was sent.
(d) Notice by certified mail shall be deemed to have been delivered
on the date it is officially recorded as delivered to the intended recipient by
return receipt or equivalent, and in the absence of such record of delivery, the
effective date shall be presumed to have been the fifth (5th) business day after
it was deposited in the mail.
(e) Notice delivered by overnight courier shall be deemed to have
been delivered upon receipt by the party to whom such notice was sent.
(f) Unless Access receives notice to the contrary, all notices
directed to Block shall be sent to the attention of:
27
John E. Peters, Esq.
Senior Vice President and
General Counsel
Block Drug Corporation
257 Cornelison Avenue
Jersey City, New Jersey 07302
Fax (201) 333-3585
(g) Unless Block receives notice to the contrary, all notices directed
to Access shall be sent to the attention of:
Kerry P. Gray
President and Chief Executive Officer
Access Pharmaceuticals, Inc.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
Fax: (214) 905-5101
11.5 Severability: Whenever possible, each section, subsection,
provision or condition of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any section,
subsection, provision or condition of this Agreement should be prohibited or
invalid under applicable law, such section, subsection, provision or condition
shall be considered separate and severable from this Agreement to the extent
of such prohibition or invalidity without invalidating the remaining sections,
subsections, provisions and conditions of this Agreement.
11.6 Entire Agreement/Merger: This Agreement sets forth the entire
agreement between the parties hereto pertaining to the subject matter hereof
and supersedes all negotiations,
28
preliminary agreements, memoranda or letters of proposal or intent,
discussions and understandings of the parties hereto in connection with the
subject matter hereof. All discussions between the parties have been merged
into this Agreement, and neither party shall be bound by any definition,
condition, understanding, representation, warranty, covenant or provision other
than as expressly stated in or contemplated by this Agreement or as
subsequently shall be set forth in writing and executed by a duly authorized
representative of the party to be bound thereby.
11.7 Amendment: No amendment, change or modification of any of
the terms, provisions or conditions of this Agreement shall be effective unless
made in writing and signed on behalf of the parties hereto by their duly
authorized representatives.
11.8 Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original document, but
all such separate counterparts shall constitute only one and the same
instrument.
11.9 No Waiver of Rights: No waiver of any term, provision, or
condition of this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such term, provision, or condition of this Agreement.
29
11.10 Force Majeure: Neither party shall be liable hereunder to the
other party nor shall be in breach for failure to deliver, provided failure to
deliver is no greater than the delay in time caused by circumstances beyond
control for either party, including but not limited to acts of God, fires,
floods, riots, wars, civil disturbances, sabotage, accidents, labor disputes,
shortages, government actions (including but not limited to priorities,
requisitions, allocations and price adjustment restrictions) and inability to
obtain material, equipment, labor or transportation.
11.11 Further Assurances: The parties hereto shall each perform such
acts, execute and deliver such instruments and documents and do all such other
things as may be reasonably necessary to accomplish the transactions
contemplated in this Agreement.
11.12 Audit Rights: Each party shall keep books and records in
sufficient detail to permit the other to verify items including, but not limited
to, Access Revenue, Access Net Sales or Block Net Sales. Each party shall
have the right, upon reasonable Notice and during normal business hours, but
in no event more frequently than once during any twelve (12) month period or
more than two (2) years after the close of any party's fiscal year, to audit, or
have audited by a Certified Public Accountant, the relevant books and accounts
to verify the accuracy of the reported Net Sales and Access Revenue. In the
event such audit reveals that the audited party has mis-reported information by
more than * , that party, in addition to paying or reimbursing any
additional amounts due, shall pay the reasonable costs associated with such
audit. The parties shall maintain the results of any such audit in
* - Confidential portions have been omitted and are on file separately with the
Commission
30
confidence. All records pertaining to any payment shall be maintained for not
less than five (5) years after the year of payment hereunder.
11.13 Binding Effect: This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
11.14 No Strict Construction: This Agreement has been prepared
jointly and shall not be strictly construed against either party.
11.15 Consent Not Unreasonably Withheld or Delayed: Whenever
provision is made in this Agreement for either party to secure the consent or
approval of the other, such consent or approval shall not unreasonably be
withheld or delayed, and whenever in this Agreement provisions made for one
party to object to or disapprove a matter, such objection or disapproval shall
not unreasonably be exercised.
11.16 Bankruptcy: At least thirty (30) days prior to filing a petition
in bankruptcy, each party must inform the other of its intention to file the
petition or of a third party's written Notice of its intention to file a
voluntary or an involuntary petition in bankruptcy.
11.17 Assignment: Block may assign this Agreement to any parent,
affiliate, subsidiary or entity in common control without the consent of
Access. Block may also assign this agreement to a third party, either alone
or as part of an agreement to dispose of all or a
31
substantial part of its assets or business. In the event of an assignment, the
assignee shall have the identical rights granted to Block hereunder. Block may
assign this agreement to a third party as part of an agreement to dispose of a
substantial part of its business without the consent of Access. If Block wishes
to assign this agreement alone to a third party, however, such assignment shall
not take place without Access' written consent. If Access wishes to assign this
agreement, such assignment shall not take place without the written consent of
Block and Takeda.
11.18 Taxes: All taxes levied on account of royalties accruing under
this Agreement shall be paid by the receiving party. If laws or regulations
require withholding of taxes, the taxes will be deducted by the paying party
from remittable royalty payments and will be paid by the paying party to the
proper taxing authority. Proof of payment shall be sent to the receiving party
within sixty (60) days following payment.
11.19 Cooperation on Publicity: Access and Block shall not, except
as required by law and in interviews between professional sales representatives
and a potential prescribers of a Product or Improvement, use each other's
name in any manner, or issue any public statement disclosing the existence of,
or relating to, this Agreement or any of the activities conducted hereunder,
without the other party's prior written permission. To the extent this
Agreement triggers, in the opinion of counsel, an obligation for a party to file
a report with the SEC on Form 8-K, such party shall either (1) not file a copy
of this Agreement or (2) request SEC approval for the deletion of certain
confidential information identified jointly by parties and
32
then file a redacted version of this Agreement. Access shall not publish, or
allow to be published, any manuscript, article, report or other form of oral or
written presentation regarding Amlexanox without the express written approval
of Block.
11.20 Costs of Agreement: The parties hereto shall each bear their
own costs and expenses (including attorneys' fees) incurred in connection with
the negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby.
11.21 Headings For Convenience Only: The titles, headings or
captions and paragraphs in this Agreement do not define, limit, extend, explain
or describe the scope or extent of this Agreement or any of its terms or
conditions and therefore shall not be considered in the interpretation,
construction or application of this Agreement.
11.22 Independent Contractor: Each party is an independent
contractor with respect to the other, and is not an agent, partner, joint
venture, or employer of the other. Neither party shall have any responsibility
for the hiring, termination, compensation or benefits of the other party's
employees. No employees or representatives of either party shall have any
authority to bind or obligate the other party for any sum or in any manner
whatsoever, or to create or impose any contractual or other liability on the
other party without said party's authorized written approval.
33
11.23 No Finder's Fee: The parties acknowledge that no "finder" has
been involved in bringing the parties together and that no compensation is due
to any third party(s) as a result of the execution of this Agreement.
11.24 Notification of Infringement: Each party shall promptly Notify
the other party of any infringement or misappropriation based upon or arising
from any of the intellectual property that is the subject of this agreement.
11.25 References: All references herein to articles, sections,
paragraphs and attachments shall be to articles, sections, paragraphs and
attachments of this Agreement.
11.26 Singular and Plural: The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form as in each case the context may require.
11.27 Successors and Assigns: This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns permitted under this Agreement.
11.28 Validity and Severability: Whenever possible, each clause,
subclause, provision or condition of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
clause, subclause, provision or condition of this Agreement
34
should be prohibited or invalid under applicable law, such clause, subclause,
provision or condition shall be considered separate and severable from this
Agreement to the extent of such prohibition or invalidity without invalidating
the remaining clauses, subclauses, provisions and conditions of this
Agreement.
11.29 Waiver: No waiver of any term, provision, or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any
such term, provision, or condition of this Agreement.
11.30 Takeda Agreement Controlling: This Agreement is subject to
the Takeda License Agreement and the Takeda Supply Agreement. To the
extent that any term of this Agreement is inconsistent with either the Takeda
License Agreement or the Takeda Supply Agreement, such term shall be
controlled by and subject to the terms of the Takeda License Agreement and
the Takeda Supply Agreement.
ARTICLE 12 TAKEDA CONSENT
12.1 Takeda Approval: This Agreement shall be binding on the
parties but not become effective until receipt by Block of written approval
from Takeda for Block to enter into this Agreement. If Takeda disapproves
this Agreement or fails to approve the Agreement within six (6) months of the
Effective Date, then this Agreement shall be void in its entirety.
35
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duty executed as of the day and year first above written.
ACCESS PHARMACEUTICALS, INC. BLOCK DRUG COMPANY, INC.
By: /s/ Kerry P. Gray By: /s/ Arthur J. Looney
--------------------------- -----------------------------
Kerry P. Gray Arthur J. Looney
Name Printed Name Printed
President and CEO Vice-President / General Manager
------------------- --------------------------------
Title Title
May 7, 1998 May 12, 1998
------------ -------------
Date Date
36