EXHIBIT 10.7
Settlement Agreement
between
NeoTherapeutics, Inc.
157 Technology Drive
Irvine; California 92618
- in the following called "NEOT"
and
Merck Eprova AG
Im Laternenacker 5
8200 Schaffhausen
Switzerland
- in the following called "EPRO" -
Whereas NEOT develops new drugs for e.g. neurological diseases;
Whereas EPRO changed recently its company name from Eprova AG into Merck Eprova
AG out of corporate identity reasons and manufactures intermediates of drug
substances or the drug substances itself (e.g. Neotrofin and AIT-034);
Whereas NEOT has asked EPRO to manufacture certain substances (SUBSTANCES) as
listed in attachment 1;
Whereas EPRO has fulfilled its obligations, NEOT has indicated that it has
presently no use for these SUBSTANCES and asks for a settlement of the payables
in a reasonable manner;
Whereas EPRO is willing to help NEOT to restore financial stability and to find
other possible uses for the SUBSTANCES;
Therefore the parties agree as follows:
1) EPRO will remain the owner of all SUBSTANCES as mentioned in the four
invoices as listed in attachment 2.
2) NEOT grants to EPRO the right of first refusal for the production of any
further needs of the SUBSTANCES as well as the related drug substances Neotrofin
and AIT-034 for a duration of five (5) years after execution of this agreement.
EPRO agrees to negotiate the terms of the production of the SUBSTANCES in good
faith.
3) EPRO will examine carefully all recommendations of NEOT to sell the
SUBSTANCES to third parties. EPRO will also try to find third parties interested
in the SUBSTANCES.
4) NEOT will pay CHF 485'470 within ten (10) days after the execution of this
agreement to the account of EPRO as stated in attachment 3 for full and final
payment of the invoices listed in attachment 2. The above-mentioned sum has been
combined from the following amounts:
INVOICE COMPOUND AMOUNT
1) D22094 Aminopropylpyrrolidinone CHF 102'700
- --------------------------------------------------------------------------------
2) D22095 ACA CHF 175'500
- --------------------------------------------------------------------------------
3) D22049 ACA CHF 66'625
- --------------------------------------------------------------------------------
4) D22162 Ala-benzonate CHF 140'645
- --------------------------------------------------------------------------------
5) EPRO will not charge costs for the storage and possible disposal of the
SUBSTANCES, V.A.T. as well as for not-realized interests.
6) a) After the last signature under this agreement, the patent application PCT
WO 02/00659 and all corresponding patent applications or patent rights based on
US Appl No. 09/602,048 (PATENTS), owned by NEOT will become the property of EPRO
according to the ten (10) provisions of attachment 4.
b) For the case, NEOT would be interested to get back the rights on these
PATENTS, EPRO herewith grants to NEOT an exclusive option to buy these PATENTS
within twelve (12) months after execution of this agreement for a purchase price
of CHF 527'676 plus all costs which has been incurred to maintain the PATENTS
during this time. During the term of the exclusive option, EPRO agrees to not
enter into any agreement related to the PATENTS in regard to Neotrofin and
AIT-034 without the prior consent of NEOT. EPRO also agrees it will use
commercially reasonable efforts to maintain the PATENTS.
c) In case, NEOT repurchases the PATENTS, EPRO will be granted a non-exclusive,
royalty-free, world-wide license to these PATENTS excluding the manufacturing of
Neotrofin and AIT-034. Any assignment of the PATENTS by NEOT to a third party
will be subject to the non-exclusive license to EPRO.
d) In case, NEOT desires to contract for the production of Neotrofin or AIT-034
after the time-frame of item 2 above and does not exercise its option to
repurchase the PATENTS under item 2, EPRO will grant NEOT a non-exclusive,
world-wide license with a license fee that will not exceed CHF 527'676 over the
life of the license. Moreover, in addition to the aforementioned license fee,
NEOT agrees to EPRO all
costs which will have been incurred by EPRO to maintain the PATENTS to date and
during the time of the licensing agreement.
7) In case NEOT is in default with the agreed payment, EPRO may claim interests
of 20% above LIBOR per year for the unpaid sum. In case NEOT indicates not to
pay any amount of the agreed sums, EPRO may claim to be paid according to
attachment 2 for the unpaid rest as well as an interest rate of 5% above LIBOR
per year since the date of the invoices and all costs and damages caused by the
non-payment and the storage and/or the disposal of the SUBSTANCES.
8) This agreement states the entire understanding of the parties. No change,
modification, alteration, or addition to any provision hereof shall be binding
unless in writing and signed by authorized representatives of both parties.
9) This agreement shall be governed by, and construed and enforced in accordance
with Swiss law.
10) Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable harm,
any and all claims, disputes or controversies arising under, out of, of in
connection with this agreement, which the parties shall be unable to resolve
within sixty (60) days shall be mediated in good faith. The party raising such
dispute shall promptly advise the other party of such claim, dispute or
controversy in a writing which describes in reasonable detail the nature of such
dispute. By not later than five (5) business days after the recipient has
received such notice of dispute, each party shall have selected for itself a
representative who shall have the authority to bind such party, and shall
additionally have advised the other party in writing of the name and title of
such representative. By not later than ten (10) business days after the date of
such notice of dispute, the party against whom the dispute shall be raised shall
select a mediation specialist in the area of the defendant and such
representatives shall schedule a date with such mediation hearing. The parties
shall enter into good faith mediation and shall share the costs equally. If the
representatives of the parties have not been able to resolve the dispute within
fifteen (15) business days after such mediation hearing, the parties shall have
the right to pursue this case by arbitration.
11) All disputes arising in connection with the present contract shall be then
finally settled under the rules of Conciliation and Arbitration of the
International Chamber of Commerce by three arbitrators appointed in accordance
with said rules. The language of correspondence and the language used by the
court in the settlement of disputes shall be English. The place of settlement of
disputes shall be in Schaffhausen. The costs of court of arbitration shall be
born equally by both parties, and each party shall be for its own part of all
other costs arising. Both parties agree to accept the decision of the Court of
Arbitration as final binding of them both to the exclusion of all remedies.
12) In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein.
IN WITNESS WHEREOF, each party has caused this Agreement to be signed by its
duly authorized representatives.
Irvine, Schaffhausen, 26 September 2002
NeoTherapeutics, Inc. Merck Eprova AG
/s/Rajesh C. Shrotriya, M.D. /s/M. Ulmann
- ------------------------------- -----------------------------------------
M. Ulmann
General Manager
/s/T. Suter
-----------------------------------------
T. Suter
Head Business Support
Attachment 1
Compound
- ------------------------------
Aminopropylpyrrolidinone
- ------------------------------
ACA
- ------------------------------
ACA
- ------------------------------
Ala-benzonate
- ------------------------------
Attachment 2
Invoice Compound Amount
- --------------------------------------------------------------------------------
1) D22094 Aminopropylpyrrolidinone CHF 102'700
- --------------------------------------------------------------------------------
2) D22095 ACA CHF 351'000
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3) D22049 ACA CHF 133'250
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4) D22162 Ala-benzonate CHF 426`196
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Attachment 3
Account of EPRO
No. 230-M0141740.0 at UBS AG, Zurich, Swift-Code UBSWCCHZZ
Attachment 4
(1) NEOT herewith transmits all rights to EPRO on the PCT WO 02/00659 (US Appl
No. 09/602,048) with all rights connected thereto.
(2) Therefore, after the last signature under this agreement, the PATENTS become
the property of EPRO. NEOT will agree to the recording of the assignment of the
PATENTS in the register of the US -- as well as the PCT Patent Office and NEOT
promises to provide the required documents and to make all necessary signatures.
(3) NEOT promises to submit to EPRO all written research documents, tabulations,
experimental reports, correspondences, which relate to the subject matter
invention. The transfer will be made at the latest thirty (30) days after the
execution of this agreement.
(4) NEOT will advise EPRO about the status of the PATENTS and their plans for a
optimal protection of the invention in the different countries.
(5) If required by EPRO, NEOT promises to provide its full assistance to EPRO
after the transfer of the documents and materials for an introduction of the
employees of EPRO.
(6) EPRO is aware of the technical features of the invention. NEOT is not liable
for the technical utility and completeness of the technical documents under this
agreement.
(7) NEOT declares that legal defects in the PATENTS and technical defects in the
invention are not known to him. A liability for freedom of defects, particularly
dependency of the invention is not undertaken. All rights of warranty or
rescission by EPRO are excluded.
(8) NEOT promises to keep knowledge relating to the patented invention
confidential after the complete signature of the agreement until it has bought
back the rights on the PATENTS as agreed in this agreement.
(9) NEOT promises not to attack the PATENTS and/or all derived patents and not
to assist third parties in attacks on the PATENTS and/or all derived patents.
(10) The costs and fees for the assignment and recording will be borne by EPRO.
EPRO will also pay all the fees and costs for maintenance of the PATENTS after
the execution of this agreement.