EXHIBIT 10.22
[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]
LICENSE AGREEMENT
BETWEEN
VASCULAR GENETICS INC.
AND
VICAL INCORPORATED
FEBRUARY 24, 2000
TABLE OF CONTENTS
1. BACKGROUND.........................................................................................1
2. DEFINITIONS........................................................................................2
3. LICENSE GRANT......................................................................................6
4. PAYMENTS AND ROYALTIES.............................................................................7
5. TECHNOLOGY TRANSFER................................................................................8
6. PRODUCT DEVELOPMENT................................................................................9
7. CONFIDENTIALITY...................................................................................10
8. PATENT PROSECUTION AND LITIGATION.................................................................12
9. STATEMENTS AND REMITTANCES........................................................................13
10. TERM AND TERMINATION..............................................................................15
11. WARRANTIES AND REPRESENTATIONS....................................................................16
12. INDEMNIFICATION...................................................................................17
13. ***.................................................................................................
14. FORCE MAJEURE.....................................................................................19
15. DISPUTE RESOLUTION................................................................................20
16. ENTIRE AGREEMENT..................................................................................21
17. NOTICES...........................................................................................21
18. ASSIGNMENT AND CHANGE OF CONTROL..................................................................22
19. COUNTERPARTS......................................................................................22
20. WAIVER............................................................................................23
21. INDEPENDENT RELATIONSHIP..........................................................................23
22. FURTHER ACTIONS...................................................................................23
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LICENSE AGREEMENT
This Agreement ("Agreement") dated as of the 24th day of February 2000
("Effective Date") is entered into by Vascular Genetics Inc. ("VGI"), a Delaware
corporation, having a place of business at Suite 201, 4364 S. Alston Avenue,
Durham, North Carolina 27713, and Vical Incorporated, a Delaware corporation,
having a place of business at 9373 Towne Center Drive, San Diego, California
92121 ("VICAL").
1. BACKGROUND.
1.1 VGI has an exclusive license from Human Genome Sciences, Inc. ("HGS")
for the use of the gene Vascular Endothelial Growth Factor-2 ("VEGF-2")
in the gene therapy treatment of vascular diseases.
1.2 VICAL is in possession of certain gene therapy delivery methods, and is
willing to grant a license to VGI for the use of those methods in
conjunction with VEGF-2.
1.3 Therefore to facilitate this transaction, VGI, VICAL and HGS have
agreed in an Investment Agreement dated of same date herewith (the
"Investment Agreement") to undertake a series of transactions in which
(1) VGI will receive a license from VICAL for the use of VICAL's
current and future gene therapy delivery methods in conjunction with
VEGF-2; (2) HGS will receive a license from VICAL for the use of
VICAL's technology with certain genes; (3) VICAL will receive a license
from HGS for the use of certain genes as gene therapy products; (4)
VICAL will receive an equity interest in VGI, which VGI will have
certain rights to redeem as set forth in the Investment Agreement; and
(5) HGS will receive additional equity in VGI and will have returned to
it by VGI rights to certain genes licensed to VGI by HGS.
1.4 To effect this series of transactions pursuant to the terms and
conditions of the Investment Agreement, this Agreement is being
simultaneously executed with (1) a license agreement between VICAL and
HGS; and (2) a second amendment to the license agreement between HGS
and VGI; and (3) certain other agreements, all as set forth in the
Investment Agreement.
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2. DEFINITIONS.
2.1 "AFFILIATE" shall mean any individual or entity directly or indirectly
controlling, controlled by or under common control with, the specified
individual or entity. For purposes of this Agreement, the direct or
indirect ownership of fifty percent (50%) or more of the outstanding
voting securities of an entity, or the right to receive fifty (50%) or
more of the profits or earnings of an entity shall be deemed to
constitute control. Such other relationship as in fact gives such
individual or entity the power or ability to control the management,
business and affairs of an entity shall also constitute control.
2.2 "CONFIDENTIAL INFORMATION" shall mean, with respect to a party, all
information (and all tangible and intangible embodiments thereof),
which is owned or controlled by such party, is disclosed by such party
to the other party pursuant to this Agreement, and (if disclosed in
writing or other tangible medium) is marked or identified as
confidential at the time of disclosure to the receiving party or (if
otherwise disclosed) is identified as confidential at the time of
disclosure to the receiving party and described as such in writing
within thirty (30) days after such disclosure. The Financial Details
(as hereinafter defined) shall be deemed to be marked as confidential
without further action on the part of either party. Notwithstanding the
foregoing, CONFIDENTIAL INFORMATION of a party shall not include
information which, and only to the extent, the receiving party can
establish by written documentation (a) has been publicly known prior to
disclosure of such information by the disclosing party to the receiving
party, (b) has become publicly known, without fault on the part of the
receiving party, subsequent to disclosure of such information by the
disclosing party to the receiving party, (c) has been received by the
receiving party at any time from a source, other than the disclosing
party, rightfully having possession of and the right to disclose such
information free of confidentiality obligations, (d) has been otherwise
known by the receiving party free of confidentiality obligations prior
to disclosure of such information by the disclosing party to the
receiving party, or (e) has been independently developed by employees
or others on behalf of the receiving party without access to or use of
such information disclosed by the disclosing party to the receiving
party.
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2.3 "CYTOFECTIN DELIVERY TECHNOLOGY" shall mean all patentable or
unpatentable inventions, discoveries, technology and information of any
type whatsoever, including without limitation compositions, methods,
processes, confidential information, technical information, knowledge,
experience and know-how, regarding the use of cytofectins in the
delivery of genes into a patient for the treatment or prevention of one
or more diseases or conditions; in each case which is owned by or
licensed to VICAL on the Effective Date or during the term of this
Agreement, all to the extent and only to the extent that VICAL now has
or hereafter will have the right to grant licenses, immunities or other
rights thereunder.
2.4 "DIRECT INJECTION TECHNOLOGY" shall mean all patentable or unpatentable
inventions, discoveries, technology and information of any type
whatsoever, including without limitation compositions, methods,
processes, confidential information, technical information, knowledge,
experience and know-how, regarding the direct injection of genes
(including plasmid DNA-based delivery technology) into a patient to
cause the IN VIVO expression of a desired protein, thereby effecting
delivery of such protein to a patient for the treatment or prevention
of one or more diseases or conditions; in each case which is owned by
or licensed to VICAL on the Effective Date or during the term of this
Agreement, all to the extent and only to the extent that VICAL now has
or will have during the term of this Agreement the right to grant
licenses, immunities or other rights thereunder.
2.5 "DNA PROCESS TECHNOLOGY" shall mean all patentable or unpatentable
inventions, discoveries, technology and information of any type
whatsoever, including without limitation compositions, methods,
processes, confidential information, technical information, knowledge,
experience and know-how regarding technologies related to the
manufacture and processing of plasmid DNA for human use; in each case,
which is owned by or licensed to VICAL on the Effective Date or during
the term of this Agreement, all to the extent and only to the extent
that VICAL now has or will have during the term of this Agreement the
right to grant licenses, immunities or other rights thereunder.
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2.6 "FIELD" shall mean the intervention, treatment and/or prevention of a
disease or disorder in humans by GENE THERAPY.
2.7 "GENE THERAPY" shall mean the treatment or prevention of a disease, or
remedying a gene deficiency of humans by genetic modification of
somatic cells (IN VIVO or EX VIVO) with DNA whereby an active
transcription process results in the expression of a protein or
oligo(poly)nucleotide encoded by said DNA in a human.
2.8 "IND" shall mean an Investigational New Drug application filed with the
Food and Drug Administration in the United States, or any similar
filing with any foreign regulatory authority, to commence human
clinical testing of a PRODUCT in any country.
2.9 "LICENSED INTELLECTUAL PROPERTY" shall mean VICAL's rights in the VICAL
PATENTS and VICAL KNOW-HOW.
2.10 "LICENSED PRODUCT(S)" means a PRODUCT for use in the FIELD, one of
whose active components is the gene, a portion of the gene, or a
derivative of the gene, Vascular Endothelial Growth Factor-2
("VEGF-2"), as described and disclosed in U.S. Patent Nos. 5,935,820
and 5,932,540.
2.11 "NET SALES" shall mean, with respect to a LICENSED PRODUCT, the gross
sales price invoiced by the seller (calculated on a LICENSED PRODUCT by
LICENSED PRODUCT basis) to THIRD PARTIES that are not (sub)licensees
(except as set forth below), less normal and customary deductions
actually paid or accrued by the seller for (i) normal and customary
trade, cash and quality credits, discounts, refunds or government
rebates; (ii) credits for claims, allowances or returns; retroactive
price reductions; chargebacks or the like; and (iii) sales taxes,
duties and other governmental charges (including value added tax), but
excluding what is commonly known as income taxes. NET SALES shall not
include sales among the seller, its (sub)licensees and their respective
AFFILIATES for resale, provided that NET SALES shall include the
amounts invoiced by the seller and its AFFILIATES to THIRD PARTIES on
the resale of such LICENSED PRODUCT. Sales between or among a party,
its (sub)licensees and their
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respective AFFILIATES shall be included within NET SALES only if such
purchaser is an end-user of such LICENSED PRODUCT.
2.12 "PRODUCT" shall mean any product or part thereof, the manufacture, use
or sale of which is covered in whole or in part by a VALID CLAIM.
2.13 "SPC" shall mean a right based upon an underlying patent such as a
Supplementary Protection Certificate.
2.14 "THIRD PARTY" shall mean any party other than VICAL or VGI or an
AFFILIATE of VICAL or VGI.
2.15 "VALID CLAIM" shall mean either (a) a claim of an issued and unexpired
patent included within the VICAL PATENTS, which has not been held
unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise, or
(b) a claim in a hypothetical issued patent corresponding to a pending
claim in a patent application within the VICAL PATENTS, provided that
if such pending claim has not issued as a claim of an issued patent
within the VICAL PATENTS, within six (6) years after the filing date
from which such patent application takes priority, such pending claim
shall not be a VALID CLAIM for purposes of this Agreement. In the event
that a claim of an issued patent within the VICAL PATENTS is held by a
court or other governmental agency of competent jurisdiction to be
unenforceable, unpatentable or invalid, and such holding is reversed on
appeal by a higher court or agency of competition jurisdiction, such
claim shall be reinstated as a VALID CLAIM hereunder.
2.16 "VICAL IMPROVEMENTS" shall mean all patentable or unpatentable
inventions, discoveries or other technology regarding VICAL TECHNOLOGY,
but expressly excluding a formulation or combination of the VEGF-2 gene
and the delivery vehicle therefor, made or conceived by VGI solely or
jointly with others during the term of this Agreement, and which
resulted from the use of VICAL TECHNOLOGY.
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2.17 "VICAL KNOW-HOW" shall mean collectively, all inventions, discoveries,
data, information, methods, techniques, technology and other results
regarding VICAL TECHNOLOGY, whether or not patentable, which during the
term of this Agreement are owned by VICAL or to which VICAL otherwise
has the right to grant licenses, and which are not generally known. All
VICAL KNOW-HOW shall be CONFIDENTIAL INFORMATION of VICAL.
2.18 "VICAL LICENSED INTELLECTUAL PROPERTY" shall mean VICAL's rights in the
VICAL PATENTS and VICAL KNOW-HOW.
2.19 "VICAL PATENT(S)" shall mean, collectively, (a) all patent applications
filed in any country before or after the Effective Date; (b) all
patents that have issued or in the future issue from any of the
foregoing patent applications, including without limitation, utility
and design patents and certificates of invention, further including but
not limited to those patents listed in Appendix A; and (c) all
continuations, continuations-in-part, divisional, additions, reissues,
renewals, re-examinations or extensions, or SPCs to any such patents
and patent applications; in each case which during the term of this
Agreement are or become owned by VICAL or to which VICAL otherwise has,
now or in the future, the right to grant licenses and which claim in
whole or in part VICAL TECHNOLOGY or the use thereof in the FIELD.
2.20 "VICAL TECHNOLOGY" shall mean CYTOFECTIN DELIVERY TECHNOLOGY, DIRECT
INJECTION TECHNOLOGY and DNA PROCESS TECHNOLOGY.
3. LICENSE GRANT.
3.1 Subject to the terms and conditions of this Agreement, VICAL grants to
VGI an exclusive worldwide license (with the right to grant
sublicenses) under VICAL LICENSED INTELLECTUAL PROPERTY to research,
develop, make, have made, use, import, export, offer to sell and sell
LICENSED PRODUCTS in the FIELD.
3.2 Notwithstanding anything to the contrary herein, VICAL shall own all
right, title and interest in and to the VICAL IMPROVEMENTS and all
intellectual property rights
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therein and thereto. VGI hereby irrevocably assigns, transfers and
conveys to VICAL all right, title and interest in and to the VICAL
IMPROVEMENTS and all intellectual property rights therein and thereto.
VGI shall take, and shall cause its AFFILIATES to take any and all
actions and execute and deliver (or cause to be executed or delivered)
any and all documents reasonably requested by VICAL, at VICAL's
expense, in order to effect the foregoing assignment.
3.3 VICAL hereby grants VGI a non-exclusive, royalty-free, perpetual,
worldwide, sublicensable license to VICAL IMPROVEMENTS and the claims
of any VICAL PATENT covering such VICAL IMPROVEMENTS, but only to the
extent that such claims cover VICAL IMPROVEMENTS.
3.4 No rights, other than those expressly set forth in this Agreement, are
granted to VGI hereunder, and no additional rights shall be granted to
VGI by implication, estoppel or otherwise.
4. PAYMENTS AND ROYALTIES.
4.1 On the Effective Date, VGI will issue to VICAL shares of VGI's Series B
Preferred Stock in such amount, and subject to the terms, as described
in the Investment Agreement.
4.2 Subject to Section 4.3, for each LICENSED PRODUCT, VGI shall pay to
VICAL a royalty of *** of NET SALES of the LICENSED PRODUCT sold by
VGI, its (sub)licensees and their respective AFFILIATES.
4.3 VGI acknowledges that the LICENSED INTELLECTUAL PROPERTY hereunder is a
mix of various types of intellectual property, including patent rights
and know-how. Accordingly, even in the event one or more VICAL PATENTS
or other LICENSED INTELLECTUAL PROPERTY is declared void or not
enforceable, or otherwise expires
____________
*** Confidential material redacted and separately filed with the Commission.
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VGI shall continue to have royalty obligations under the terms of this
Agreement; provided, however, in such case, and except as otherwise set
forth below in this Section 4.3, such royalty obligations will cease in
the event all information transferred hereunder is finally determined
by a court of competent jurisdiction after exhaustion of all appeals to
be dedicated to the public domain. Notwithstanding the foregoing
provisions, however, all royalty obligations under Section 4.2, with
respect to a LICENSED PRODUCT, shall terminate on a country-by-country
basis and on a LICENSED PRODUCT by LICENSED PRODUCT basis on the later
of (i) *** after first country-wide launch of such LICENSED PRODUCT in
such country or (ii) expiration of the last to expire VICAL PATENT
licensed to VGI under this Agreement which covers the making, having
made, importing, exporting, offering to sell or using or selling of
such LICENSED PRODUCT in such country.
4.4 The manner in which statements and remittances of royalty and other
payments are handled is as set forth in Article 9 hereof.
4.5 All payments to be made hereunder shall be by wire transfer of
immediately available funds to an account designated by VICAL.
5. TECHNOLOGY TRANSFER
5.1 To assist VGI in the utilization of VICAL TECHNOLOGY, VICAL scientists
will meet with VGI scientists to discuss the application of VICAL
TECHNOLOGY to VEGF-2 and will provide to VGI any know-how or
proprietary materials necessary for VGI to use the VICAL TECHNOLOGY
with respect to VEGF-2 in accordance with the license granted under
Section 3.1.
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*** Confidential material redacted and separately filed with the Commission.
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6. PRODUCT DEVELOPMENT
6.1 VGI shall use its commercially reasonable efforts to actively research,
develop, obtain regulatory approvals and commercialize in at least one
major market (U.S., Japan or the European Community) at least one
LICENSED PRODUCT for at least one indication.
6.2 If the diligence requirements set forth in Paragraph 6.1 are not met,
Vical shall have the right to terminate this Agreement pursuant to
Paragraph 10.2. Notwithstanding the foregoing if VGI is pursuing
development and commercialization of a product (a "NON-VICAL PRODUCT")
for use in the FIELD, one of whose active components is VEGF-2, a
portion of VEGF-2, or a derivative of VEGF-2 and which was not derived
from VICAL TECHNOLOGY, VGI shall have the option, exercisable by
written notice to VICAL within thirty (30) days after the date of such
termination by VICAL, at its sole discretion to retain the relevant
VICAL licenses under this Agreement for any or all indications where
the NON-VICAL PRODUCT is applied, provided that VGI pays to VICAL the
royalties set forth in Paragraph 4.2 on the NET SALES of such NON-VICAL
PRODUCT for the indication or indications intended to be retained by
VGI and delivers all reports described in this Agreement, regarding
such NON-VICAL PRODUCT in the desired indication to the same extent it
would if such NON-VICAL PRODUCT were a LICENSED PRODUCT.
6.3 During the term of this Agreement and for a period of five (5) years
thereafter, VGI shall keep complete and accurate records of its
activities conducted under this Agreement regarding the development and
commercialization of LICENSED PRODUCTS and the results thereof. Within
twenty (20) days after the end of each May and September during the
term of this Agreement, VGI shall prepare and provide VICAL with a
reasonably detailed written report of such activities and results,
through such date.
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7. CONFIDENTIALITY
7.1 During the term of this Agreement and for a period of *** following the
expiration or earlier termination hereof, each party shall maintain in
confidence the CONFIDENTIAL INFORMATION of the other party, and shall
not disclose, use or grant the use of the CONFIDENTIAL INFORMATION of
the other party except on a need-to-know basis to such party's
AFFILIATES, directors, officers, employees, agents, independent
contractors and such party's THIRD PARTY licensors of intellectual
property rights (sub)licensed hereunder, and such party's consultants,
to the extent such disclosure is reasonably necessary in connection
with such party's activities as expressly authorized by this Agreement
or the Investment Agreement. To the extent that disclosure to any
person is authorized by this Agreement, prior to disclosure, a party
shall obtain written agreement of such person to hold in confidence and
not disclose, use or grant the use of the CONFIDENTIAL INFORMATION of
the other party except as expressly permitted under this Agreement.
Each party shall notify the other party promptly upon discovery of any
unauthorized use or disclosure of the other party's CONFIDENTIAL
INFORMATION. Upon the expiration or earlier termination of this
Agreement, each party shall return to the other party all tangible
items regarding the CONFIDENTIAL INFORMATION of the other party and all
copies thereof; PROVIDED, HOWEVER, that each party shall have the right
to retain one (1) copy for its legal files for the sole purpose of
determining its obligations hereunder.
7.2 No public announcement or public disclosure concerning (i) the
existence or terms of this Agreement or the Investment Agreement,
including without limitation, the number of shares of Series B
Preferred Shares or Common Stock which is issuable upon conversion
thereof, the number of Additional Common Shares or the percentage any
of such represent of the outstanding equity of VGI or the terms of the
royalties set forth in this Agreement (collectively, the "Financial
Details") or (ii) exercise by one party of rights
____________
*** Confidential material redacted and separately filed with the Commission.
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and options granted under this Agreement or the Investment Agreement,
shall be made, either directly or indirectly, by any party to this
Agreement without prior written notice and, except as may be legally
required, or as may be legally required for a public offering of
securities, or as may be required for recording purposes, without first
obtaining the approval of the other party and agreement upon the nature
and text of such announcement, such agreement and/or approval not to be
unreasonably withheld. In complying with any legal requirement for
public announcement or public disclosure, the party having the
obligation to so announce or disclose shall use reasonable efforts to
summarize or redact information containing the Financial Details as
reasonably requested by the other party. Except as otherwise required
by law, the party desiring to make any such public announcement or
public disclosure shall inform the other party of the proposed
announcement or disclosure at least five (5) business days prior to
public release, and shall provide the other party with a written copy
thereof, in order to allow such other party to comment upon such
announcement or disclosure. This Section 7.2 shall not apply to any
information in a public announcement or public disclosure that is
information essentially identical to that contained in a previous
public announcement or public disclosure agreed to pursuant to this
Section 7.2.
7.3 The confidentiality obligations under Section 7.1 shall not apply to
the extent that a party is required to disclose information by
applicable law, regulation or order of a governmental agency or a court
of competent jurisdiction; PROVIDED, HOWEVER, that (a) to the extent
commercially practicable, such party shall provide written notice
thereof to the other party and consult with the other party prior to
such disclosure with respect thereto, (b) shall provide the other party
sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof, and provide reasonable assistance as
requested in connection therewith and (c) in the event that the
disclosure is a public disclosure or public announcement, the
disclosing party shall also comply with Section 7.2.
7.4 Each party hereto acknowledges that the remedy at law for breach by any
party of its obligations under this Section 7 is inadequate and that
each party shall be entitled to equitable remedies, including
injunctive relief, in the event of a breach by the other party.
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7.5 The provisions of this Section 7 are in addition to and do not
supercede and are not superceded by similar provisions in any other
agreements.
8. PATENT PROSECUTION AND LITIGATION.
8.1 All right, title and interest to the VICAL TECHNOLOGY and all patent
rights and other intellectual property rights therein shall belong
solely to VICAL. VICAL shall have the sole right and responsibility for
the filing, prosecution and maintenance of patents and patent
applications directed thereto.
8.2 In the event that VGI or VICAL becomes aware of actual or threatened
infringement of a VICAL PATENT that claims a LICENSED PRODUCT or the
use thereof, that party shall promptly notify the other party in
writing. VICAL shall have the first right but not the obligation to
bring, at its own expense, an infringement action against any THIRD
PARTY and to use VGI's name in connection therewith. If VICAL does not
commence a particular infringement action within ninety (90) days, VGI,
after notifying VICAL in writing, shall be entitled to bring such
infringement action, in its own name and/or in the name of VICAL, at
its own expense to the extent that such party is licensed thereunder.
The foregoing notwithstanding, in the event that an alleged infringer
certifies pursuant to 21 U.S.C. Section 355(b)(2)(A)(iv) against an
issued VICAL PATENT covering a LICENSED PRODUCT, as between VICAL AND
VGI, the party receiving notice of such certification shall immediately
notify the other party of such certification, and if fourteen (14) days
prior to expiration of the forty five (45) day period set forth in 21
U.S.C. Section 355(c)(3)(C), VICAL fails to commence an infringement
action, the party receiving notice, in its sole discretion, at its own
expense and to the extent that it is licensed under the patent, shall
be entitled to bring such infringement action in its own name and/or in
the name of the patent owner. The party conducting an action under this
Section 8.2 shall have full control over its conduct, including
settlement thereof provided such settlement shall not be made without
the prior written consent of the other party if it would adversely
affect the patent rights of such party licensed hereunder. VICAL and
VGI shall reasonably assist one another and cooperate in any such
litigation at the other's request.
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The party conducting the litigation shall reimburse the other party
for its reasonable and actual out-of-pocket expenses incurred at the
request of the party conducting the litigation for assisting in the
litigation, which reimbursement shall be made within thirty (30)
days of receipt by the party conducting the litigation of itemized
invoices from the assisting party documenting such expenses.
8.3 Any recovery made by a party as the result of an action for patent
infringement it has conducted under Section 8.2 shall be distributed as
follows:
(a) The party conducting the action shall recover its actual out
-of-pocket expenses, and then shall reimburse the other party
for any unreimbursed actual and out-of-pocket expenses.
(b) To the extent that the recovery exceeds the total of item (a),
the excess shall be kept by the party conducting the action,
provided, however, that to the extent that the recovery is
based on an award of lost sales/profits, VICAL shall receive a
proportion of the excess recovery corresponding to the royalty
percentage it would have otherwise been due on those lost
sales/profits and VGI shall receive the proportion of the
excess recovery corresponding to the lost sales/profits.
8.4 The parties shall periodically keep one another reasonably informed of
the status of their respective activities regarding any such litigation
or settlement thereof.
9. STATEMENTS AND REMITTANCES.
9.1 VGI shall keep and require its AFFILIATES and (sub)licensees to keep
complete and accurate records of all sales and calculations for NET
SALES of LICENSED PRODUCTS. Each party shall have the right, at its
expense, through an independent certified public accounting firm of
nationally recognized standing reasonably acceptable to the other
party, to examine pertinent financial records during regular business
hours
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upon advance written notice during the life of this Agreement and for
*** after its termination for the purpose of verifying and reporting to
VICAL as to the computation of the payments made hereunder during the
preceding *** prior to the date of such examination; provided, however,
that such examination shall not take place more often than once a year;
provided further that such accountant shall report only as to the
accuracy of the royalty statements and payments, including the
magnitude and source of any discrepancy. VGI, its AFFILIATES and
(sub)licensees shall be required to maintain such sales and royalty
calculation records for ***. The accountant shall execute customary
confidentiality agreements prior to any examination, reasonably
satisfactory in form and substance to both parties, to maintain in
confidence all information obtained during the course of any such
examination, except for disclosure to the parties, as necessary for the
above purpose.
9.2 Within sixty (60) days after the close of each calendar quarter, VGI
shall deliver to VICAL a true accounting of amounts owing hereunder
sold by it and its licensees and distributors during such calendar
quarter and shall at the same time pay all amounts due.
9.3 All royalties and other payments due under this Agreement shall be
payable in U.S. dollars.
9.4 Royalties payable on sales in countries other than the United States
shall be calculated by multiplying the appropriate royalty rate times
the sales in each currency in which they are made and converting the
resulting amount into United States dollars, at the rates of exchange
as reported in THE WALL STREET JOURNAL as published under the caption
"Currency Trading"), on the last business day in New York, New York of
each royalty period. If THE WALL STREET JOURNAL ceases to be published,
then the rate of exchange to be used shall be that reported in such
other business publication of national circulation in the United States
as all parties reasonably agree. Such payments shall be without
deduction of exchange, collection, or other charges. If, due to
restrictions or prohibitions imposed
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*** Confidential material redacted and separately filed with the Commission.
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by a national or international authority, payments cannot be made as
aforesaid, the parties shall consult with a view to finding a prompt
and acceptable solution, and the parties will deal with such monies as
the other party may lawfully direct at no additional out-of-pocket
expense to the party owed the royalty. Notwithstanding the foregoing,
if royalties cannot be remitted for any reason within six (6) months
after the end of the calendar quarter during which they are earned,
then the party owing the royalty shall be obligated to deposit the
royalties in a bank account in the country of sale in the name of the
other party. Each party shall deduct any taxes which the party is
obligated to pay and/or withhold in a country based on royalties due to
the other based on sales in such country from royalty payments due for
such country under this Agreement and pay them to the proper
authorities as required by applicable laws. Each party shall maintain
official receipts of payment of any such taxes and forward these
receipts to the other within sixty (60) days.
10. TERM AND TERMINATION.
10.1 This Agreement shall come into effect as of the Effective Date, and
unless earlier terminated as provided in this Article 10, shall remain
in full force and effect in a country-by-country basis until the
expiration of VGI's royalty obligations for such LICENSED PRODUCT in
such country.
10.2 A party shall have the right to terminate this Agreement in its
entirety (a) upon the breach by the other party of such other party's
obligations to pay any amounts owing hereunder, if such breach is not
cured within thirty (30) days after receipt of written notice from such
party thereof, or (b) upon the breach by the other party of such other
party's obligations (other than to pay any amounts owing) hereunder, if
such breach is not cured within sixty (60) days after receipt of
written notice from such party thereof.
10.3 Notwithstanding termination of this Agreement, the rights and
obligations of the parties under Sections 3.2 and 3.3 and Articles 7,
9, 10, 11, 12 and 15 shall survive such
15
termination, as well as any provision not specified in this
paragraph which is clearly meant to survive termination of this
Agreement.
10.4 Termination of the Agreement in accordance with the provisions hereof
shall not limit remedies that may be otherwise available in law or
equity.
11. WARRANTIES AND REPRESENTATIONS.
11.1 Each of VGI and VICAL hereby represents, warrants and covenants to the
other, as of the date of this Agreement, as follows:
(a) it is a corporation duly organized and validity existing under
the laws of the state of its incorporation;
(b) the execution, delivery and performance of this Agreement by
such party has been duly authorized by all requisite corporate
action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, including,
without limitation, in the case of VICAL, the right, power and
authority to grant the licenses under Article 3;
(d) the execution, delivery and performance by such party of this
Agreement and its compliance with the terms and provisions
hereof to such party's best knowledge does not conflict with
or result in a breach of any of the terms and provisions of or
constitute a default under (i) a loan agreement, guaranty,
financing agreement, agreement affecting a product or other
agreement or instrument binding or affecting it or its
property; (ii) the provisions of its charter documents or
bylaws; or (iii) any order, writ, injunction or decree of any
court or governmental authority entered against it or by which
any of its property is bound; and
(e) this Agreement constitutes such party's legal, valid and
binding obligation enforceable against it in accordance with
its terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability
16
relating to or affecting creditors' rights and to the
availability of particular remedies under general equity
principles.
11.2 NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY THAT VICAL
PATENTS ARE VALID OR ENFORCEABLE OR THAT THEIR EXERCISE OR THE EXERCISE
OF VICAL TECHNOLOGY DOES NOT INFRINGE ANY PATENT RIGHTS OF THIRD
PARTIES. A HOLDING OF INVALIDITY OR UNENFORCEABILITY OF ANY SUCH
PATENT, FROM WHICH NO FURTHER APPEAL IS OR CAN BE TAKEN, SHALL NOT
AFFECT ANY OBLIGATION HEREUNDER, BUT SHALL ONLY ELIMINATE ROYALTIES
OTHERWISE DUE UNDER SUCH PATENT FROM THE DATE SUCH HOLDING BECOMES
FINAL.
11.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN VGI AND VICAL MAKE NO
REPRESENTATIONS OR EXTEND ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.
11.4 Each party shall use any materials provided by the other party under
this Agreement in compliance with all applicable laws and regulations.
12. INDEMNIFICATION
12.1 VGI shall defend, indemnify and hold harmless VICAL, its AFFILIATES
licensors of VICAL and each of their respective directors, officers,
shareholders, agents and employees, from and against any and all
liability, loss, damages and expenses (including reasonable attorneys'
fees) as the result of claims, demands, actions or proceedings by any
THIRD PARTY which are made or instituted against any of them arising
out of the development, manufacture, possession, distribution, use,
testing, sale or other disposition of LICENSED PRODUCT by or through
VGI, its AFFILIATES or any THIRD PARTY granted rights by VGI under this
Agreement. VGI's obligation to defend, indemnify and hold harmless
shall include claims, demands, actions or proceedings, whether for
money
17
damages or equitable relief by reason of alleged personal injury
(including death) to any person or alleged property damage, provided,
however, the indemnity shall not extend to any claims against an
indemnified party which result from the gross negligence or willful
misconduct of an indemnified party. VGI shall have the exclusive right
to control the defense of any action which is to be indemnified in
whole by VGI hereunder, including the right to select counsel
reasonably acceptable to VICAL to defend VICAL and the indemnified
parties hereunder and to settle any claim, demand, action or
proceeding, provided that, without the prior written consent of VICAL
(which shall not be unreasonably withheld or delayed), VGI shall not
agree to settle any claim, demand, action or proceeding against VICAL
to the extent such claim has a material adverse effect on VICAL. The
provisions of this paragraph shall survive and remain in full force and
effect after any termination, expiration or cancellation of this
Agreement and VGI's obligation hereunder shall apply whether or not
such claims are rightfully brought. VGI shall require each
(sub)licensee hereunder to agree to indemnify VICAL in a manner
consistent with this Section 12.1.
12.2 If VICAL intends to claim indemnification under this Article 12, VICAL
shall promptly notify VGI of any claim, demand, action or proceeding
for which VICAL intends to claim such indemnification, and VGI, after
it determines that indemnification is required of it, shall assume the
defense thereof with counsel selected by VGI and reasonably acceptable
to the other party; provided, however, that VICAL shall have the right
to retain its own counsel, with the fees and expenses to be paid by VGI
if VGI does not assume the defense; or, if representation of VICAL by
the counsel retained by VGI would be inappropriate due to actual or
potential conflicts of interest between VICAL and any other party
represented by such counsel in such proceedings. The indemnity
agreement in this Article 12 shall not apply to amounts paid in
settlement of any claim, demand, action or proceeding if such
settlement is effected without the consent of VGI, which consent shall
not be unreasonably withheld or delayed. The failure to deliver notice
to VGI within a reasonable time after the commencement of any such
action, if prejudicial to its ability to defend such action, shall
relieve VGI of any liability to VICAL under this Article 12, but
failure to deliver notice to VGI will not relieve it of any liability
that it may have to VICAL otherwise than under this Article 12. VICAL
under this
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Article 12, its employees and agents, shall reasonably cooperate
with VGI and its legal representatives in the investigations of any
claim, demand, action or proceeding covered by this indemnification.
In the event that each party claims indemnity from the other and one
party is finally held liable to indemnify the other, VGI shall
additionally be liable to pay the reasonable legal costs and
attorneys' fees incurred by VICAL in establishing its claim for
indemnity.
13. ***
13.1 ***
14. FORCE MAJEURE
14.1 If the performance by a party of any obligation under this Agreement
(other than an obligation for a payment of money), is prevented,
restricted, interfered with or delayed by reason of any reasonable
unforeseeable cause beyond the reasonable control of the party liable
to perform, the party so affected shall, upon giving written notice to
the other party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the
affected party shall use its commercially reasonable efforts to avoid
or remove such causes of non-performance and shall continue performance
with the utmost dispatch whenever such causes are removed. When such
circumstances arise, the parties shall discuss what, if any,
modification of the terms of this Agreement may be required in order to
arrive at an equitable solution.
____________
*** Confidential material redacted and separately filed with the Commission.
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15. DISPUTE RESOLUTION
15.1 This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware (without reference to the conflicts of
law principles thereof).
15.2 In the event of any controversy, dispute or claim arising out of or
relating to any provision of this Agreement or the breach thereof, the
parties shall use good faith efforts to settle such controversy,
dispute or claim amicably between themselves.
15.3 Should the parties fail to reach mutually acceptable settlement of any
controversy, dispute or claim which may arise out of or in connection
with this Agreement, or the breach, termination or validity thereof
(other than with respect to patent validity) shall be settled by final
and binding arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association ("AAA") as herein provided.
(a) The Arbitration Tribunal shall consist of three arbitrators.
Each party shall nominate in the request for arbitration and
the answer thereto one arbitrator and the two arbitrators so
named will then jointly appoint the third arbitrator as
chairman of the Arbitration Tribunal. If one party fails to
nominate its arbitrator or, if the parties' arbitrators cannot
agree on the person to be named as chairman within sixty (60)
days, the necessary appointments shall be made under the rules
of the AAA.
(b) The place of arbitration shall be in Chicago, Illinois and the
arbitration proceedings shall be held in English. The
procedural law of the State of Illinois shall apply where the
AAA Rules are silent.
(c) The award of the Arbitration Tribunal shall be final and
judgment upon such an award may be entered in any competent
court or application may be made to any competent court for
judicial acceptance of such an award and order of enforcement.
Notwithstanding the foregoing, nothing contained herein shall
prevent either party from seeking interim relief from a court
of competent jurisdiction pending the establishment of or a
decision by a panel of arbitrators.
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16. ENTIRE AGREEMENT.
16.1 This Agreement, and the Appendices hereto, entered into as of the date
written above together with the Investment Agreement and each of the
documents referenced in such Investment Agreement, constitute the
entire agreement between the parties relating to the subject matter
hereof and supersedes all previous writings and understandings. No
terms or provisions of this Agreement shall be varied or modified by
any prior or subsequent statement, conduct or act of either of the
parties, except that the parties may amend this Agreement by written
instruments specifically referring to and executed in the same manner
as this Agreement.
17. NOTICES.
17.1 Any notice required or permitted under this Agreement shall be
hand-delivered or sent by express delivery service or certified or
registered mail, postage prepaid, or by fax with written confirmation
by mail, to the following addresses of the parties:
VASCULAR GENETICS INC.
Suite 201
4364 S. Alston Avenue
Durham, North Carolina 27713
Attn: John W. Cumming
Fax: (843) 342-3701
copy to:
Long Aldridge & Norman LLP
One Peachtree Center, Suite 5300
303 Peachtree Street, N.W.
Atlanta, GA 30308
Attn: Mark S. Lange, Esq.
Fax: (404) 527-3808
VICAL INCORPORATED
9373 Towne Center Drive
San Diego, California 92121
Attn: President
Fax: (858) 646-1150
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copy to:
Pillsbury Madison & Sutro LLP
50 Fremont Street
San Francisco, California 94105
Attn: Thomas E. Sparks, Jr., Esq.
Fax: (415) 983-1200
17.2 Any notice required or permitted to be given concerning this Agreement
shall be effective upon receipt by the party to whom it is addressed.
18. ASSIGNMENT AND CHANGE OF CONTROL.
18.1 This Agreement and the licenses herein granted shall be binding upon
and inure to the benefit of the parties and their respective permitted
assignees and successors in interest. Neither this Agreement nor any
interest hereunder shall be assignable by a party without the prior
written consent of the other party and any attempted assignment
contrary to this Section 18.1 shall be void and without force and
effect. Notwithstanding the foregoing; a party may assign this
Agreement and all of its rights and obligations hereunder to any
AFFILIATE or to any THIRD PARTY in connection with the transfer or sale
of all or substantially all of its business or all or substantially all
of its assets to which this Agreement relates, or in the event of its
merger, consolidation, change in control or similar transaction,
without obtaining the consent of the other party, provided that the
assigning party remains liable under this Agreement and that the THIRD
PARTY assignee or surviving entity assumes in writing all of its
obligations under this Agreement.
19. COUNTERPARTS.
19.1 This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
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20. WAIVER.
20.1 Any delay or failure in enforcing a party's rights under this Agreement
or any waiver as to a particular default or other matter shall not
constitute a waiver of such party's rights to the future enforcement of
its rights under this Agreement, nor operate to bar the exercise or
enforcement thereof at any time or times thereafter, excepting only as
to an express written and signed waiver as to a particular matter for a
particular period of time.
20.2 Notwithstanding the foregoing, in the event VGI challenges whether any
payments contemplated hereunder (including, without limitation
royalties or milestones) are due, it shall have the right, but not the
obligation, to make such payments under protest (reserving all rights
hereunder) pending resolution of such dispute.
21. INDEPENDENT RELATIONSHIP.
21.1 Nothing herein contained shall be deemed to create an employment,
agency, joint venture or partnership relationship between the parties
hereto or any of their agents or employees, or any other legal
arrangement that would impose liability upon one party for the act or
failure to act of the other party. No party shall have any power to
enter into any contracts or commitments or to incur any liabilities in
the name of, or on behalf of, the other party, or to bind the other
party in any respect whatsoever.
22. FURTHER ACTIONS.
22.1 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.
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IN WITNESS WHEREOF, the parties, through their authorized officers,
have executed this Agreement as of the Effective Date.
VICAL INCORPORATED
By: /s/ Alain B. Shreiber, M.D.
-----------------------------
Alain B. Schreiber, M.D.
President and Chief Executive Officer
VASCULAR GENETICS INC.
By: /s/ John W. Cumming
-----------------------------
John W. Cumming
President
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APPENDIX A ***
____________
*** Confidential material redacted and separately filed with the Commission.
1