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EXHIBIT 10.1
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended, and Rule 406 under the Securities Act of 1933, as amended.
These omitted portions have been marked with "*" and have been filed separately
with the Securities and Exchange Commission.
LICENSE AGREEMENT
BETWEEN
ABBOTT LABORATORIES
AND
ARONEX PHARMACEUTICALS, INC.
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TABLE OF CONTENTS
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 "Affiliate". . . . . . . . . . . . . . . . . . . .1
1.2 "Annual Net Sales" . . . . . . . . . . . . . . . .2
1.3 "API Intellectual Property Rights" . . . . . . . .2
1.4 "API Know-How" . . . . . . . . . . . . . . . . . .2
1.5 "API Patents". . . . . . . . . . . . . . . . . . .2
1.6 "API Patent Applications". . . . . . . . . . . . .2
1.7 "API Patent Rights". . . . . . . . . . . . . . . .3
1.8 "API Trademarks" . . . . . . . . . . . . . . . . .3
1.9 "Calendar Quarter" . . . . . . . . . . . . . . . .3
1.10 "Calendar Year". . . . . . . . . . . . . . . . . .3
1.11 "EMEA" . . . . . . . . . . . . . . . . . . . . . .3
1.12 "Empiric Claim". . . . . . . . . . . . . . . . . .3
1.13 "Factory Cost" . . . . . . . . . . . . . . . . . .3
1.14 "First Commercial Sale". . . . . . . . . . . . . .3
1.15 "Generic Competition". . . . . . . . . . . . . . .3
1.16 "LBU Countries". . . . . . . . . . . . . . . . . .4
1.17 "Major Subterritories" . . . . . . . . . . . . . .4
1.18 "Net Sales". . . . . . . . . . . . . . . . . . . .4
1.19 "Party" (and "Parties"). . . . . . . . . . . . . .5
1.20 "Product". . . . . . . . . . . . . . . . . . . . .5
1.21 "Regulatory Approval". . . . . . . . . . . . . . .5
1.22 "Term" . . . . . . . . . . . . . . . . . . . . . .5
1.23 "Territory". . . . . . . . . . . . . . . . . . . .5
1.24 "Unaffiliated Sublicensee" . . . . . . . . . . . .5
1.25 "U.S. FDA" . . . . . . . . . . . . . . . . . . . .5
1.26 "U.S. FD&C Act". . . . . . . . . . . . . . . . . .5
1.27 "U.S. NDA" . . . . . . . . . . . . . . . . . . . .5
1.28 "U.S. Product Development Plan". . . . . . . . . .6
1.29 "Valid Claim". . . . . . . . . . . . . . . . . . .6
2. GRANT AND SCOPE OF RIGHTS GRANTED. . . . . . . . . . . . . .6
2.1 Exclusive License. . . . . . . . . . . . . . . . .6
2.2 Sublicensing.. . . . . . . . . . . . . . . . . . .6
2.3 No Implied Licenses. . . . . . . . . . . . . . . .7
2.4 Extension of the Territory to Spain and Portugal..7
3. MILESTONE AND RESEARCH & DEVELOPMENT FUNDING PAYMENTS. . . .7
3.1 Milestone Payments.. . . . . . . . . . . . . . . .7
(a) Effective Date . . . . . . . . . . . . .7
(b) United States Regulatory Approval. . . .7
3.2 Research & Development Funding Payments. . . . . .7
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3.3 Non-Refundability. . . . . . . . . . . . . . . . 10
3.4 Reimbursement of Payment Reductions. . . . . . . 10
3.6 Equity Investment. . . . . . . . . . . . . . . . 11
4. ROYALTY RATES AND PAYMENTS. . . . . . . . . . . . . . . . 11
4.1 Royalty Rates. . . . . . . . . . . . . . . . . . . . 11
(a) * . . . . . . . . . . . . . . . . . . . . . 12
(b) * . . . . . . . . . . . . . . . . . . . . . 12
(c) * . . . . . . . . . . . . . . . . . . . . . 12
(d) * . . . . . . . . . . . . . . . . . . . . . 12
(e) * . . . . . . . . . . . . . . . . . . . . . 12
4.2 Lump Sum Royalty Payments. . . . . . . . . . . . . . 13
4.3 Royalty Reports and Payments.. . . . . . . . . . . . 14
4.4 Currency . . . . . . . . . . . . . . . . . . . . . . 14
4.5 No Royalties Payable Between Affiliates. . . . . . . 15
4.6 No Multiple Royalties. . . . . . . . . . . . . . . . 15
5. PAYMENT, RECORD KEEPING AND AUDIT RIGHTS. . . . . . . . . 15
5.1 Method of Payment. . . . . . . . . . . . . . . . . . 15
5.2 Record Keeping and Audit Rights. . . . . . . . . . . 15
6. PRODUCT DEVELOPMENT AND REGISTRATIONS . . . . . . . . . . 16
6.1 Development and Registration Activities. . . . . . . 16
(a) United States.. . . . . . . . . . . . . . . . 16
(b) European Union. . . . . . . . . . . . . . . . 16
(c) Japan.. . . . . . . . . . . . . . . . . . . . 17
(d) Other Countries.. . . . . . . . . . . . . . . 17
(e) Mutual Assistance.. . . . . . . . . . . . . . 18
6.2 Development Costs. . . . . . . . . . . . . . . . . . 18
6.3 Modifications. . . . . . . . . . . . . . . . . . . . 18
(a) Material Changes. . . . . . . . . . . . . . . 18
(b) Other Changes . . . . . . . . . . . . . . . . 18
6.4 Reciprocal Access to Documentation and Data. . . . . 18
7. ABBOTT PRODUCT MARKETING AND SALES ACTIVITIES . . . . . . 19
7.1 Commercially Reasonable Efforts. . . . . . . . . . . 19
7.2 Marketing Costs and Expenses.. . . . . . . . . . . . 19
8. API CO-PROMOTION ACTIVITIES . . . . . . . . . . . . . . . 19
8.1 Co-Promotion Territory.. . . . . . . . . . . . . . . 19
8.2 Allocation of Sales Representatives. . . . . . . . . 19
8.3 Co-Promotion Period. . . . . . . . . . . . . . . . . 19
8.4 Compensation to API. . . . . . . . . . . . . . . . . 20
8.5 Scope of Co-Promotion Collaboration. . . . . . . . . 20
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9. CONFIDENTIALITY AND PUBLICITY . . . . . . . . . . . . . . 20
9.1 Confidentiality Obligation.. . . . . . . . . . . . . 20
9.2 Permitted Disclosures. . . . . . . . . . . . . . . . 20
9.3 Confidential Information.. . . . . . . . . . . . . . 21
(a) Publicly Available Information. . . . . . . . 21
(b) Previously Known Information. . . . . . . . . 21
(c) Subsequently Received Information . . . . . . 21
(d) Independently Developed Information . . . . . 21
(e) Legally Required Disclosures of Information . 21
9.4 Duration of Confidentiality Obligation.. . . . . . . 22
9.5 Publicity and Announcements. . . . . . . . . . . . . 22
10. TRADEMARKS. . . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Assignment of API Trademarks.. . . . . . . . . . . . 22
10.2 Alternate Trademarks.. . . . . . . . . . . . . . . . 23
11. PATENT OWNERSHIP AND WARRANTIES . . . . . . . . . . . . . 23
11.1 Patent Ownership.. . . . . . . . . . . . . . . . . . 23
11.2 Joint Inventions.. . . . . . . . . . . . . . . . . . 23
11.3 API Patent Warranties. . . . . . . . . . . . . . . . 23
12. PATENT PROSECUTION AND INTELLECTUAL PROPERTY INFRINGEMENT 24
12.1 Patent Filing and Prosecution. . . . . . . . . . . . 24
12.2 Notification of Infringement.. . . . . . . . . . . . 24
12.3 Infringement of Third Party Rights.. . . . . . . . . 24
12.4 Infringement Indemnification.. . . . . . . . . . . . 25
12.5 Termination for Infringement.. . . . . . . . . . . . 26
12.6 Third Party Infringement of API
Intellectual Property Rights. . . . . . . . . . . . 26
(a) API Enforcement . . . . . . . . . . . . . . . 26
(b) Abbott Enforcement. . . . . . . . . . . . . . 26
12.7 Allocation of Recoveries.. . . . . . . . . . . . . . 27
12.8 Mutual Cooperation.. . . . . . . . . . . . . . . . . 27
12.9 Labeling.. . . . . . . . . . . . . . . . . . . . . . 27
12.10 Notification.. . . . . . . . . . . . . . . . . . . 28
13. INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . . 28
13.1 Reciprocal Indemnification Provisions. . . . . . . . 28
(a) API Indemnification . . . . . . . . . . . . . 28
(b) Abbott Indemnification. . . . . . . . . . . . 28
13.2 Conditions of Indemnification. . . . . . . . . . . . 28
13.3 Insurance. . . . . . . . . . . . . . . . . . . . . . 29
14. ADVERSE DRUG EXPERIENCES. . . . . . . . . . . . . . . . . 29
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15. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 30
(a) Corporate Status. . . . . . . . . . . . . . . 30
(b) Authority . . . . . . . . . . . . . . . . . . 31
(c) No Conflicts. . . . . . . . . . . . . . . . . 31
(d) No Approvals. . . . . . . . . . . . . . . . . 31
(e) Enforceability. . . . . . . . . . . . . . . . 31
(f) Compliance With Laws. . . . . . . . . . . . . 31
(g) Year 2000 Compliance. . . . . . . . . . . . . 31
16. TERM AND EARLY TERMINATION RIGHTS . . . . . . . . . . . . 32
16.1 Term.. . . . . . . . . . . . . . . . . . . . . . . . 32
16.2 Termination for Cause. . . . . . . . . . . . . . . . 32
(a) Bankruptcy. . . . . . . . . . . . . . . . . . 32
(b) Material Breach . . . . . . . . . . . . . . . 32
16.3 Termination by Mutual Agreement. . . . . . . . . . . 32
16.4 Termination by Abbott. . . . . . . . . . . . . . . . 32
(a) Safety or Efficacy. . . . . . . . . . . . . . 32
(b) Limited Commercial Viability. . . . . . . . . 33
17. CONSEQUENCES OF TERMINATION . . . . . . . . . . . . . . . 33
17.1 Effect of Termination. . . . . . . . . . . . . . . . 33
17.2 License Rights.. . . . . . . . . . . . . . . . . . . 33
17.3 Fully Paid-Up License. . . . . . . . . . . . . . . . 34
17.4 Mutual Agreement.. . . . . . . . . . . . . . . . . . 34
17.5 Regulatory Approvals.. . . . . . . . . . . . . . . . 34
18. GOVERNING LAW AND DISPUTE RESOLUTION. . . . . . . . . . . 34
18.1 Governing Law. . . . . . . . . . . . . . . . . . . . 34
18.2 Dispute Resolution.. . . . . . . . . . . . . . . . . 34
(a) Attempted Amicable Resolution . . . . . . . . 35
(b) ADR Procedure . . . . . . . . . . . . . . . . 35
(c) ADR Ruling. . . . . . . . . . . . . . . . . . 35
(d) Remedies. . . . . . . . . . . . . . . . . . . 36
(e) Dispute Resolution for Section 7.1. . . . . . 36
18.3 Effect of Commencing Dispute Resolution. . . . . . . 37
19. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.1 Manner of Giving Notices.. . . . . . . . . . . . . . 37
19.2 Addresses for Notices. . . . . . . . . . . . . . . . 38
20. INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . 39
21. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . 39
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22. LIMITATION OF DAMAGES . . . . . . . . . . . . . . . . . . 39
23. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . 40
24. RELATIONSHIP OF PARTIES . . . . . . . . . . . . . . . . . 40
25. SEVERABILITY OF CLAUSES . . . . . . . . . . . . . . . . . 41
26. NON-WAIVER. . . . . . . . . . . . . . . . . . . . . . . . 41
27. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . 41
28. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . 41
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LICENSE AGREEMENT
This License Agreement ("Agreement") is made and entered into as of the day
of November, 1998 ("Effective Date"), by and between ARONEX PHARMACEUTICALS,
INC., a Delaware corporation having its principal office at 8707 Technology
Forest Place, the Woodlands, Texas 77381-1191 ("API"), and ABBOTT LABORATORIES,
an Illinois corporation having its principal office at 100 Abbott Park Road,
Abbott Park, Illinois, 60064-3500 ("Abbott").
WHEREAS, API has developed a new, proprietary injectable formulation of the
compound nystatin presently being developed under the name Nyotran for treatment
of systemic fungal infections; and
WHEREAS, Abbott and API desire to enter into this Agreement under which
Abbott shall acquire the exclusive world-wide rights to manufacture, distribute,
market and sell the above-referenced product.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and intending to be legally bound, the parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall be defined as set
forth below. Additional terms used in specific Sections of this Agreement shall
be defined in such Sections.
1.1 "Affiliate" shall mean any business entity controlled by a Party (as
defined below), or which controls a Party, or which is under common control with
a Party. "Control" herein means the direct or indirect ownership of at least
fifty percent (50%) of the authorized issued voting shares in such entity, or
such other relationship
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as in fact legally results in effective control over the management, business
and affairs of such entity or Party, as the case may be. For purposes of this
Agreement, Abbott Affiliates shall also include Abbott Laboratories Nigeria
Limited.
1.2 "Annual Net Sales" shall mean Net Sales (as defined below) in any
Calendar Year.
1.3 "API Intellectual Property Rights" shall mean API Patents (as defined
below) and API Know-How (as defined below).
1.4 "API Know-How" shall mean all non-patented and unpublished
non-clinical, pre-clinical and clinical documentation, information, and data
relating to the Product owned or controlled by API and its Affiliates as of the
Effective Date or at any time during the Term (as defined below), including but
not limited to all registration materials for the Product (as defined below)
developed, acquired or compiled by API and its Affiliates as of the Effective
Date or at any time during the Term, and all documentation, information and data
relating to the formulation, manufacture and/or quality control of the Product
as API and its Affiliates have available as of the Effective Date or at any time
during the Term.
1.5 "API Patents" shall mean all issued patents owned by or licensed to API
and its Affiliates in the Territory as of the Effective Date and other patents
owned by or licensed to API and its Affiliates in the Territory issued at any
time during the Term which have claims covering the manufacture, sale or use of
the Product or its active ingredient (including any divisions, continuations,
continuations-in-part, reexaminations, reissues, additions, renewals and
extensions thereof). API Patents in existence as of the Effective Date are set
forth in Part I of Exhibit A and such Exhibit shall be amended by API from time
to time during the Term to include API Patents issued after the Effective Date.
1.6 "API Patent Applications" shall mean patent applications owned by or
licensed to API and its Affiliates in the Territory pending as of the Effective
Date and patent applications owned by or licensed to API and its Affiliates in
the Territory filed at any time during the Term which have claims covering the
manufacture, sale or use of the Product or its active ingredient (including any
divisions, continuations,
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continuations-in-part, reexaminations, reissues, additions, renewals and
extensions thereof). API Patent Applications in existence as of the Effective
Date are set forth in Part II of Exhibit A and such Exhibit shall be amended by
API from time to time during the Term to include API Patent Applications filed
after the Effective Date.
1.7 "API Patent Rights" shall mean API Patents and API Patent Applications.
1.8 "API Trademarks" shall mean Nyotran , NystatinLF and any other mutually
agreed upon trademark owned by API used with the Product.
1.9 "Calendar Quarter" shall mean each of the three (3) month periods
beginning on January 1, April 1, July 1 and October 1 of each Calendar Year (as
defined below) during the Term.
1.10 "Calendar Year" shall mean any consecutive twelve (12) month period
from January 1 to December 31 during the Term.
1.11 "EMEA" shall mean the European Medicines Evaluation Agency or any
successor agency thereto.
1.12 "Empiric Claim" shall mean Regulatory Approval (as defined below) for
the Product with an approved claim for empirical therapy for presumed fungal
infection in febrile, neutropenic patients.
1.13 "Factory Cost" shall mean Abbott's cost of manufacturing the Product
calculated in accordance with the attached Exhibit B.
1.14 "First Commercial Sale" shall mean the first sale of the Product by
Abbott, any Abbott Affiliate or Unaffiliated Sublicensee (as defined below) to
any end-user customer, excluding any sales or transfers of the Product to any
party in connection with clinical trials or regulatory or safety testing.
1.15 "Generic Competition" shall mean competition from another supplier of
nystatin liposome for injection in a country in the Territory in which no Valid
Claim exists such that Abbott or an Abbott Affiliate or Unaffiliated Sublicensee
is forced to lower the price of the Product by * ( * ) or more in such country,
where such discount is in addition to the reasonable and customary discounts
offered to customers in such country.
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1.16 "LBU Countries" shall mean the following countries in Europe,
individually or collectively, as applicable: France, Germany, the United
Kingdom, Italy and Spain.
1.17 "Major Subterritories" shall mean the following countries or areas of
the Territory, individually or collectively, as applicable: the United States,
the LBU Countries and Japan.
1.18 "Net Sales" shall mean the gross sales of the Product in the Territory
actually billed and collected by Abbott, its Affiliates, or Unaffiliated
Sublicensees from any national or local governments, hospitals, drug wholesalers
or brokers, and other third party customers which are not Abbott Affiliates or
Unaffiliated Sublicensees (such as surgicenters and other institutions, the
primary business of which is providing medical care), less reasonable and
customary: (a) credits and allowances or adjustments actually granted to such
customers on account of retroactive price reductions, governmental or other
rebates, and rejections, recalls or returns of the Product previously sold; (b)
any trade and cash discounts, rebates, charge-backs granted to customers in the
case of sales to drug wholesalers or brokers where there are no direct shipments
by Abbott, its Affiliates or Unaffiliated Sublicensees to such customers, and
management fees paid during the relevant time period to group purchasing
organizations and relating specifically to the Product (which discounts,
rebates, charge-backs and fees shall be in the same proportion of the invoice
price as that borne by other products sold by Abbott or an Abbott Affiliate or
Unaffiliated Sublicensee to customers such that the portion of such discounts,
rebates, chargebacks and fees allocated to the Product does not exceed the
portion allocated to any other such product as a percentage of the invoice price
of the Product and such other product), and (c) any sales or other taxes imposed
upon the sale of the Product to the extent included in the gross sales price, as
adjusted (as applicable) for any credits, allowances, rebates and chargebacks.
1.19 "Party" (and "Parties") shall mean either API or Abbott (or both), as
the context requires.
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1.20 "Product" shall mean API's proprietary formulation of the compound
nystatin, presently being developed under the name Nyotran(R).
1.21 "Regulatory Approval" shall mean all governmental approvals required
to market and sell the Product in any given country in the Territory (as defined
below), including but not limited to, product registrations, medical approvals,
price, reimbursement and marketing approvals.
1.22 "Term" shall mean the period commencing on the Effective Date and
continuing until the later of (a) ten (10) years after the date of Regulatory
Approval in the United States and (b) the date of expiration or invalidation of
the last to expire or be invalidated of the API Patents containing a Valid Claim
(as defined below), subject to earlier termination as provided herein.
1.23 "Territory" shall mean all countries and territories of the world;
provided that the Territory shall include Spain and Portugal only if, and to the
extent that, in accordance with Section 2.4, Abbott and/or API enter into one or
more agreements with Grupo Ferrer Internacional, S.A. ("Ferrer") modifying,
replacing or terminating that certain Supply and Distribution Agreement dated
May 2, 1997 between API and Ferrer (the "Ferrer Agreement") to permit the
inclusion of such countries within the Territory without any breach or violation
of the rights of Ferrer.
1.24 "Unaffiliated Sublicensee" shall mean any sublicensee of Abbott under
this Agreement other than an Abbott Affiliate.
1.25 "U.S. FDA" shall mean the United States Food and Drug Administration
and any successor regulatory agency.
1.26 "U.S. FD&C Act" shall mean the United States Food, Drug and Cosmetic
Act, including any amendments thereto and all regulations promulgated
thereunder.
1.27 "U.S. NDA" shall mean a New Drug Application filed with the U.S. FDA.
1.28 "U.S. Product Development Plan" shall mean the Plan attached hereto as
Exhibit C setting forth API's Product development and registration activities in
the United States, as the same may be amended from time to time during the Term
in accordance with Section 6.3.
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1.29 "Valid Claim" shall mean one (1) or more claim of an issued and
unexpired API Patent which neither has been held unenforceable, unpatentable or
invalid by a decision of a court or governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal, nor
has been admitted by the holder of the API Patent to be invalid or unenforceable
through reissue, disclaimer, abandonment or otherwise.
2. GRANT AND SCOPE OF RIGHTS GRANTED
2.1 Exclusive License. API hereby grants to Abbott an exclusive license (or
sublicense, as applicable) under API Intellectual Property Rights to make, have
made, use, import, offer for sale and sell the Product in the Territory, which
license shall be exclusive even as to API and its Affiliates, except as provided
in Section 6 and 8. The Parties acknowledge and agree that the foregoing license
shall apply to API Intellectual Property Rights developed or acquired (whether
by license, assignment or otherwise) by API after the Effective Date only to the
extent API has the right to grant such license to Abbott. Notwithstanding the
foregoing sentence, API, in developing or acquiring such API Intellectual
Property Rights, shall use its reasonable best efforts to ensure that Abbott's
rights under this Agreement extend thereto.
2.2 Sublicensing. Abbott shall have the right to sublicense its rights
under this Agreement in the Territory to any Abbott Affiliates, provided that
Abbott guarantees the performance of any Abbott Affiliates to which such rights
are sublicensed. Abbott shall also have the right to sublicense its rights under
this Agreement to Unaffiliated Sublicensees, provided that such sublicensing of
Abbott's rights shall not relieve Abbott of any obligations hereunder, and
provided further that Abbott has obtained API's prior written consent for any
sublicense of its rights in Japan, which consent shall not be unreasonably
withheld or delayed.
2.3 No Implied Licenses. Any rights not expressly granted by either Party
to the other Party in this Agreement are expressly reserved by the Party owning
or controlling such rights and, accordingly, no licenses other than those
specified herein shall be deemed granted by this Agreement by implication,
estoppel or otherwise.
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2.4 Extension of the Territory to Spain and Portugal. Abbott and API shall
use their respective reasonable best efforts to enter into one or more
agreements with Ferrer as soon as practical after the Effective Date (with
discussions with Ferrer to be initiated within ninety (90) days after the
Effective Date) modifying, replacing or terminating the Ferrer Agreement to
permit the inclusion of Spain and Portugal within the Territory without any
breach or violation of the rights of Ferrer.
3. MILESTONE AND RESEARCH & DEVELOPMENT FUNDING PAYMENTS
3.1 Milestone Payments. In consideration of API's entering into this
Agreement and the rights and licenses granted to Abbott hereunder, during the
Term Abbott shall pay API milestone payments according to the following payment
schedule:
(a) Effective Date - Within ten (10) business days after the Effective
Date, Abbott shall pay API * ( * );
(b) United States Regulatory Approval - Within twenty (20) business days
after * , Abbott shall pay API * ( * ).
3.2 Research & Development Funding Payments. In further consideration of
API's entering into this Agreement and performing continued research and
development activities for the Product, during the Term Abbott shall make
research and development funding payments to API in accordance with the
following schedule, contingent on completion of the research and development
tasks referenced below:
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R&D Funding Payment Payment Date
------------------- ------------
(a) * *
(b) * *
(c) * *
(d) * *
(e) * *
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R&D Funding Payment Payment Date
------------------- ------------
(f) * *
(g) * *
(h) * *
(i) * *
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3.3 Non-Refundability. All milestone payments and research and development
funding payments Abbott makes to API pursuant to Section 3.1 or 3.2 shall be
non-refundable once paid. However, if this Agreement is terminated for any
reason prior to a given milestone or research and development funding payment
becoming due or if the events specified for a given milestone or research and
development funding payment do not occur, then Abbott shall have no obligation
to make such milestone or research and development funding payment; provided,
however, that if API terminates this Agreement due to Abbott's Material Breach
pursuant to Section 16.2(b), the foregoing shall not relieve Abbott of liability
for damages, if any, that API may recover from Abbott in an ADR proceeding
pursuant to Section 18.2(b).
3.4 Reimbursement of Payment Reductions. The Parties acknowledge their
mutual goal to * on or before * . If Abbott * on or before * , Abbott shall pay
API * within * of * . Abbott acknowledges that * will also become due if *.
3.5 Notice of Achievement of Milestones; Payment. API shall deliver written
notice to Abbott of API's achievement of the milestone referenced in Section
3.1(b) and of API's satisfaction of the condition(s) to the research and
development funding payments referenced in Section 3.2. Abbott shall pay such
milestone payment and research and development payments within thirty (30)
calendar days of the delivery of the notice relating thereto.
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3.6 Equity Investment. The Parties further acknowledge that Abbott is
making an equity investment in API in the aggregate amount of up to Four Million
Five Hundred Thousand Dollars ($4,500,000) under a Stock Purchase Agreement
bearing even date herewith.
4. ROYALTY RATES AND PAYMENTS
4.1 Royalty Rates. In further consideration of the rights and licenses
granted to Abbott hereunder in API Intellectual Property Rights during the Term
Abbott shall pay API royalties on Abbott's, its Affiliates' and Unaffiliated
Sublicensees' Annual Net Sales at the following aggregate total royalty rates:
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(a) Up to * in Annual Net Sales - If Annual Net Sales are less than or
equal to * ( * ), the aggregate total royalty payable to API shall be * ( * ) of
all Annual Net Sales.
(b) Over * up to * in Annual Net Sales - If Annual Net Sales exceed * (* )
but are less than or equal to * ( * ), the aggregate total royalty payable to
API shall be * ( * ) of all Annual Net Sales.
(c) Over * up to * in Annual Net Sales - If Annual Net Sales exceed * ( * )
but are less than or equal to * ( * ), the aggregate total royalty payable to
API shall be * ( * ) of all Annual Net Sales.
(d) Over * up to * in Annual Net Sales - If Annual Net Sales exceed * ( * )
but are less than or equal to * ( * ), the aggregate total royalty payable to
API shall be * ( * ) of all Annual Net Sales.
(e) Over * in Annual Net Sales - If Annual Net Sales exceed * ( * ), the
aggregate total royalty payable to API shall be * ( * ) of all Annual Net Sales.
If Generic Competition exists in any country of the Territory in which no
Valid Claim exists, royalties payable by Abbott for Net Sales in such country
shall be reduced by * ( * ) during the period in which Generic Competition
exists.
The aggregate total royalty payable to API shall be determined by total
Annual Net Sales during each applicable Calendar Year. On or before December 1
of each Calendar Year during the Term, the Parties shall mutually agree on an
Annual Net Sales forecast ("Net Sales Forecast") for the following Calendar Year
and Abbott shall pay estimated royalties based on the Net Sales Forecasts. If
the Factory Cost for a Calendar Year exceeds * ( * ) of the Net Average Selling
Price (as defined below) of the Product for such Calendar Year, the portion of
the Factory Cost above * ( * ) shall be prorated to the Parties in an amount
equal to the proration of
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royalty payments to Net Sales. On or before December 1 of each Calendar Year
during the Term, the Parties shall mutually agree on a Net Average Selling Price
forecast ("ASP Forecast") and Factory Cost estimate ("Factory Cost Estimate")
for the following Calendar Year and, if applicable, adjust royalties based on
the ASP Forecast and Factory Cost Estimate. The Parties shall reconcile actual
royalties payable for each Calendar Year on or before April 1 of the following
Calendar Year. As used in this Section, "Net Average Selling Price" shall mean
Net Sales divided by Net Units and "Net Units" shall mean units of the Product
actually sold, less returns in accordance with Section 1.17.
The Annual Net Sales thresholds set forth in subsections (a) through (e) of
this Section 4.1 shall be proportionately reduced: (i) in the Calendar Year in
which the First Commercial Sale occurs, by multiplying such Annual Net Sales
thresholds by a fraction, (A) the numerator of which shall be the number of days
remaining in such Calendar Year as of the First Commercial Sale and (B) the
denominator of which shall be 365; and (ii) in the Calendar Year in which the
Term expires, by multiplying such Annual Net Sales thresholds by a fraction, (X)
the numerator of which shall be the number of days in such Calendar Year prior
to the expiration of the Term and (Y) the denominator of which shall be 365.
4.2 Lump Sum Royalty Payments. In addition to the royalty payments pursuant
to Section 4.1 and research and development funding payments pursuant to
Sections 3.1 and 3.2, Abbott shall make lump sum royalty payments to API if any
or all of the following Net Sales thresholds are attained during the time
periods referenced below:
Payment Net Sales Applicable Time Period
Amount Level ----------------------
- ------ -----
(a) * * *
(b) * * *
(c) * * *
(d) * * *
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Each lump sum royalty payment referenced above shall be payable only once
during the Term within ten (10) business days after the end of the applicable
time period and shall be payable only if the applicable Net Sales level is
attained during the applicable time period.
4.3 Royalty Reports and Payments. Commencing with the first Calendar
Quarter in which Abbott, its Affiliates or Unaffiliated Sublicensees make the
First Commercial Sale of the Product in the Territory, Abbott shall provide API
with a written report of Net Sales on a country-by-country basis within
forty-five (45) days after the last day of March, June, September and December
for royalties accruing on Net Sales in the United States during the three (3)
preceding calendar months and within seventy-five (75) days after the last day
of February, May, August and November for royalties accruing on Net Sales in the
Territory outside of the United States during the three (3) preceding calendar
months. Concurrently with the submission of each such written report, Abbott
shall pay or cause to be paid to API the total amount of royalties shown to be
due thereon.
4.4 Currency. Abbott shall make all royalty payments to API pursuant to
Section 4.2 in U.S. Dollars. Royalty payments earned shall be first determined
by Abbott in the currency of the country where the Net Sales were made and then
converted by Abbott directly to its equivalent in U.S. Dollars. The rates of
exchange for converting the currencies involved to U.S. Dollars as quoted by the
Wall Street Journal, Midwest Edition, as Foreign Exchange Rates quoted in New
York as market rate (bid) on the last business day of the quarterly period in
which the royalty payments were earned shall be used by Abbott to determine such
conversion rates.
4.5 No Royalties Payable Between Affiliates. No royalties shall be payable
to API on sales between Abbott, its Affiliates or Unaffiliated Sublicensees, or
between Abbott Affiliates and Unaffiliated Sublicensees.
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4.6 No Multiple Royalties. No multiple royalties shall be payable because
the Product, its manufacture, use or sale is or shall be covered by multiple API
Patents.
5. PAYMENT, RECORD KEEPING AND AUDIT RIGHTS
5.1 Method of Payment. All payments by either Party to the other Party
hereunder (including, but not limited to, Abbott's milestone and research and
development payments under Sections 3.1 and 3.2 and royalty payments under
Sections 4.1 and 4.2) shall be made without deduction of any withholdings for
any purposes other than taxes, if applicable, to the extent required by law. In
the event of any tax withholding, the paying Party will provide the receiving
Party with the best available evidence of the taxes withheld as well as any
relevant certificates or documents required for national, state or local tax
credit and reporting purposes. Payments hereunder shall not be creditable
against any other amounts payable by the other Party under this Agreement,
except as otherwise expressly stated herein. Payments may be made by check or
wire transfer to an account designated by the receiving Party.
5.2 Record Keeping and Audit Rights. Each Party shall keep or cause to be
kept accurate records relating to Net Sales, royalties, and any other costs and
expenses subject to payment or reimbursement by either Party to the other Party
in sufficient detail to enable the amounts payable hereunder to be determined.
Upon the written request of either Party (but not more frequently than once in
any calendar year), the requesting Party may retain an independent certified
public accountant, subject to approval by the other Party (which approval shall
not be unreasonably withheld), to review such records to verify the accuracy of
the payments made or payable hereunder. Such accountant shall be required to
execute a confidentiality agreement in a form reasonably acceptable to the
audited Party and shall report to the auditing Party only the amount of any
underpayment or overcharge. Within ten (10) business days after completion of
such review, the Parties shall reconcile any underpayment or overcharge. The
auditing Party shall pay the cost of any review of records conducted at its
request under this Section. However, if the review establishes underpayment or
overcharge by
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the audited Party of over five percent (5%) during the period of the review, the
audited Party shall promptly reimburse the auditing Party for the fees and
expenses of the accountant. Such audit rights may be exercised by the Parties
only with respect to records for the current calendar year and the preceding two
(2) calendar years.
6. PRODUCT DEVELOPMENT AND REGISTRATIONS
6.1 Development and Registration Activities.
(a) United States. In accordance with the U.S. Product Development Plan
attached hereto as Exhibit C, API shall undertake development and registration
activities for the Product in the United States, including but not limited to
conducting or sponsoring, and completing or having completed, all clinical
studies and other activities required for Regulatory Approval in the United
States. API shall use its commercially reasonable efforts to pursue such
development and registration activities under the U.S. Product Development Plan
with the objective of filing a U.S. NDA for the Product with an Empiric Claim
with the U.S. FDA on or before * . Unless otherwise agreed by the Parties, API
shall file the U.S. NDA for the Product and any other applications for
Regulatory Approval in the United States in its own name, and, promptly after
receipt of Regulatory Approval in the United States, API shall assign the U.S.
NDA for the Product and any other Regulatory Approvals in the United States to
Abbott.
(b) European Union. Abbott shall undertake development and registration
activities for the Product in European Union member countries, provided that API
shall provide Abbott with all such documentation, data, clinical trial data and
other scientific information developed by API in connection with the U.S. NDA
for the Product as may be necessary for completing the registration package for
submission to
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the EMEA or a reference European Union member state for a mutual recognition
procedure. Abbott shall use its commercially reasonable efforts to file the
registration package with the EMEA or a reference European Union member state
for a mutual recognition procedure or other appropriate regulatory authorities
within the European Union * . If additional clinical trials are required for
registration by the appropriate European Union regulatory authorities, then API
and Abbott will jointly agree to a revised registration filing schedule, taking
into account the time required for such clinical trials. API shall have the
right to consult with Abbott concerning Abbott's regulatory dossier prior to
submission to the EMEA or a reference EMEA member state. Upon API's request,
Abbott shall give API a reasonable opportunity to review and comment on the
documentation included within such regulatory dossier.
(c) Japan. * , Abbott will provide API with a plan for the development and
registration of the Product in Japan. Following submission of such a plan,
Abbott shall use its commercially reasonable efforts to undertake development
and registration activities for the Product in Japan in accordance with such
plan. If Abbott elects not to develop the Product in Japan, Abbott shall notify
API in writing within * , following which time the Territory shall exclude Japan
and rights to the Product in Japan will revert to API. If Abbott makes such
election and notifies API in accordance with the preceding sentence, Abbott
shall have no obligations or liabilities to API with respect to development and
registration activities in Japan.
(d) Other Countries. * , Abbott will provide API with a plan for the
development and registration of the Product in countries and territories outside
of the United States, Japan and European Union member countries. Following
submission of such a plan, Abbott shall use its commercially reasonable efforts
to undertake development and
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registration activities for the Product in such countries and territories in
accordance with the plan.
(e) Mutual Assistance. The Parties shall use their commercially reasonable
efforts to assist each other with their respective development and registration
activities under Sections 6.1(a), (b), (c) and (d).
6.2 Development Costs. Abbott shall fund API's research and development
activities for the Product during the Term in accordance with the payment
amounts and schedule set forth in Section 3.2, provided that the Parties shall
renegotiate the payment amounts and schedule of payments in good faith in the
event of any material changes to the U.S. Product Development Plan, as described
below. Abbott shall be responsible for its own research and development costs
for the Product during the Term.
6.3 Modifications.
(a) Material Changes - API may not make any material changes to the U.S.
Product Development Plan unless Abbott has given its written consent thereto,
which consent shall not be unreasonably withheld or delayed. As used in this
Section, "material changes" shall mean any changes having a material effect on
the U.S. Product Development Plan timetable for United States regulatory filings
or on the Product claims referenced in the U.S. Product Development Plan.
(b) Other Changes - API may make any changes to the U.S. Product
Development Plan other than material changes as API deems necessary or
appropriate, provided Abbott has been given a reasonable opportunity to review
and consult with API as to any such changes.
6.4 Reciprocal Access to Documentation and Data. During the Term each Party
shall provide the other Party, within a reasonable time, with reasonable access
to all clinical documentation, information and data resulting from the Party's
Product research and development activities which either Party may reasonably
request, including but not limited to, case report forms, monitoring documents,
patient informed consents, institutional review board approvals, medical and
statistical study reports for individual studies, clinical data summaries, and
expert reports. Upon either Party's
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request, the other Party shall provide the requesting Party with copies of such
documentation and data, provided that, upon the providing Party's request, the
requesting Party shall reimburse the providing Party for the cost of making such
copies.
7. ABBOTT PRODUCT MARKETING AND SALES ACTIVITIES
7.1 Commercially Reasonable Efforts. Abbott shall use commercially
reasonable efforts to promote and sell the Product throughout the Territory in
all countries in which (a) Regulatory Approval has been obtained and (b) a Valid
Claim exists.
7.2 Marketing Costs and Expenses. Except as otherwise provided herein or as
otherwise mutually agreed by the Parties, Abbott shall bear all costs and
expenses connected with its marketing and sales activities for the Product and
its performance under this Agreement.
8. API CO-PROMOTION ACTIVITIES
8.1 Co-Promotion Territory. API shall have the right to co-promote the
Product with Abbott and its Affiliates in the United States and Canada in
accordance with the terms of this Section 8.
8.2 Allocation of Sales Representatives. API shall have the right to
allocate up to * ( * ) API professional sales representatives to assist Abbott
and its Affiliates in detailing the Product to physicians, hospitals and others
in the United States and Canada as directed by Abbott in accordance with
Abbott's United States and Canada marketing plan(s) for the Product.
8.3 Co-Promotion Period. The initial period of API's co-promotion shall be
two (2) years commencing with the date of launch of the Product in the United
States and shall be renewed for consecutive one (1) year periods, unless
terminated by either Party upon no less than twelve (12) months prior written
notice to the other Party effective at the earliest upon the end of the initial
two (2) year period.
8.4 Compensation to API. During the period of co-promotion, Abbott will pay
to API, on a quarterly basis, an amount up to * ( * ) of API's fully-burdened
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cost of each API professional sales representative, which costs shall be
determined in accordance with the scope of co-promotion collaboration and API
normal accounting policies, both of which shall be consistent in all material
respects with industry custom and practice for retaining contract sales
resources. The aggregate amount payable by Abbott to API under this Section 8.4
shall not exceed * ( * ) per Calendar Year.
8.5 Scope of Co-Promotion Collaboration. The Parties shall agree upon
coordinated performance benchmarks for the API professional sales
representatives which shall be consistent/complimentary with those of the Abbott
sales force and the Abbott United States and Canada marketing plan(s) for the
Product. Abbott shall provide reasonable Product sales training for up to twenty
(20) API professional sales representatives and shall design and provide all
Product sales literature and materials. API shall have the right to provide
supplemental training and Product sales literature and materials to the API
professional sales representatives with Abbott's prior written consent, which
consent shall not be unreasonably withheld.
9. CONFIDENTIALITY AND PUBLICITY
9.1 Confidentiality Obligation. Each Party shall hold the other Party's
Confidential Information (as defined below) of which it becomes informed in
connection with this Agreement in strictest confidence and shall not disclose
such Confidential Information to third parties or otherwise use it, except to
the extent such use or disclosure is expressly permitted by the terms of this
Agreement or is reasonably necessary for the performance of this Agreement.
9.2 Permitted Disclosures. Permitted disclosures of Confidential
Information hereunder include, but are not limited to: (a) disclosures to
regulatory agencies to the extent required for Regulatory Approval, including
but not limited to, Product registrations and applications in the Territory, and
(b) disclosures to the Parties'
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Affiliates, employees, agents and independent contractors (including clinical
investigators, consultants and contract research organizations) who have a bona
fide "need to know", and Unaffiliated Sublicensees (in the case of Abbott),
provided that for disclosures to parties other than Affiliates under Section
9.2(b) the disclosing Party shall obligate the recipients to maintain the
confidentiality of Confidential Information under terms substantially similar to
those contained in this Section 9.
9.3 Confidential Information. "Confidential Information" includes, but is
not limited to, any information relating to the terms of this Agreement, the
Product, API Know-How, the U.S. Product Development Plan, clinical and
non-clinical studies involving the Product, and all sales and marketing plans
for the Product, as well as information concerning all other products and the
business affairs, manufacturing processes and other activities of the disclosing
Party. However, Confidential Information shall not include any information:
(a) Publicly Available Information - Which at the time of disclosure is or
later comes into public domain by publication or otherwise through no fault of
the receiving Party;
(b) Previously Known Information - Which can be demonstrated by
documentation or other competent proof to have been in the receiving Party's
possession prior to disclosure hereunder;
(c) Subsequently Received Information - Which is subsequently received by
the receiving Party from a third party who is not bound by any confidentiality
undertaking to the disclosing Party or to any of its Affiliates with respect to
said information;
(d) Independently Developed Information - Which is independently developed
by or for the receiving Party without reference to the disclosing Party's
Confidential Information; or
(e) Legally Required Disclosures of Information - Which is legally required
to be disclosed pursuant to any statute or regulation or any judicial or
administrative order, provided that the receiving Party promptly notifies the
disclosing
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Party of such required disclosure in order to provide an opportunity to seek a
protective order or other similar order with respect to such Confidential
Information and thereafter the receiving Party discloses to the requesting
entity only the minimum Confidential Information required to be disclosed in
order to comply with the request, whether or not a protective order or other
similar order is obtained by the disclosing Party.
9.4 Duration of Confidentiality Obligation. The confidentiality obligations
of the Parties hereunder shall remain in effect during the Term and for seven
(7) years thereafter.
9.5 Publicity and Announcements. Unless agreed upon in writing by the
Parties, neither Party shall originate any publicity, news release or other
public announcement, written or oral, whether to the public press, stockholders
or otherwise, relating to this Agreement, any amendment hereto, performance by
the Parties hereunder, or the Product, except for such announcement as in the
opinion of legal counsel to the Party making such announcement is legally
required, in which event such Party shall give the other Party a reasonable
opportunity to review the form and content of the announcement before such
legally required disclosure is made.
10. TRADEMARKS
10.1 Assignment of API Trademarks. API hereby assigns to Abbott all of
API's right, title and interest in and to the API Trademarks Nyotran and
NystatinLF , including the trademark applications and registrations set forth in
the attached Exhibit E. API shall execute such documents and take such further
actions as Abbott may reasonably request to effectuate such assignment,
including the execution of a Trademark Assignment document in the form of the
attached Exhibit F. Following such assignment, Abbott shall be responsible for
filing and maintaining the API Trademarks at Abbott's sole expense, provided
that API shall be responsible for any costs of filing and maintaining such API
Trademarks incurred prior to the effective date of the assignment.
10.2 Alternate Trademarks. If Abbott does not wish to use an API Trademark
for the Product in any country of the Territory or if Abbott is legally
prevented from using
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any API Trademark originally registered in any country in the Territory due to
trademark infringement litigation or otherwise, Abbott may use one or more
alternate trademarks selected by Abbott for use in such country ("Alternate
Trademarks"). Abbott shall own the Alternate Trademarks and shall be responsible
for filing and maintaining the Alternate Trademarks at Abbott's sole expense.
11. PATENT OWNERSHIP AND WARRANTIES
11.1 Patent Ownership. Subject to the license rights granted to Abbott
hereunder, API retains its ownership rights and/or licenses in all of all API
Patent Rights and shall be responsible for filing, prosecuting, maintaining and
defending API Patent Rights pursuant to Section 12.1.
11.2 Joint Inventions. For all inventions (if any), made jointly by the
Parties according to the named inventors therefor, the Parties shall apply for
patent protection therefor upon the written request of either Party. Patent
protection for such invention(s) shall be applied for jointly in the name of the
Parties as co-assignees and co-owners of such invention(s) and all patent
application preparation, filing, maintenance and prosecution responsibilities
and costs thereof in the Territory shall be shared equally by the Parties. If
one of the Parties does not wish to share equally in the patent application and
related costs and expenses in any country of the Territory, then the other Party
may seek, obtain and maintain such patent(s) solely in its own name and at its
sole expense and shall have sole and exclusive rights to use the inventions
covered by such patent(s) without payment of any royalties or compensation to
the non-paying Party.
11.3 API Patent Warranties. API warrants and represents that: (a) Exhibit A
sets forth all of the API Patent Rights as of the Effective Date; (b) API has
not granted any licenses or other rights to any third party inconsistent with
the licenses and other rights granted to Abbott hereunder; (c) with respect to
any API Patent Rights in existence as of the Effective Date that are being
sublicensed to Abbott hereunder, the terms of this Agreement are not in conflict
with or in violation of any agreements to which API is a party; and (d) to the
best of its knowledge as of the Effective Date based
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upon API's reasonably diligent investigation, the API Patent Rights are valid
and enforceable and there are no existing valid third party patents or other
proprietary rights in the Territory that might be infringed by the manufacture,
marketing, sale or use of the Product in the Territory by Abbott, its Affiliates
and Unaffiliated Sublicensees.
12. PATENT PROSECUTION AND INTELLECTUAL PROPERTY INFRINGEMENT
12.1 Patent Filing and Prosecution. During the Term, except as otherwise
provided in Section 12.6(b), API shall, at its sole expense, file, prosecute,
maintain, and defend API Patent Rights in the Territory and API shall control
all API Patent Rights filings and actions. API shall use commercially reasonable
efforts to obtain API Patent extensions in any countries in the Territory in
which such extensions are available.
12.2 Notification of Infringement. The Parties shall promptly inform each
other of any information that comes to their attention involving actual or
apparent infringements or misappropriations of API Intellectual Property Rights,
by any third party, or claims of alleged infringement made by any third party in
the Territory against API, API Affiliates, Abbott, Abbott Affiliates, or any
Unaffiliated Sublicensees resulting from the manufacture, sale, or use of the
Product.
12.3 Infringement of Third Party Rights. Abbott shall have the right to
direct or defend, in its own name and at its own expense, any legal or other
action or proceeding, including any settlement or negotiation, with respect to
any alleged infringement of a third party patent or other proprietary right as a
result of Abbott, its Affiliates or Unaffiliated Sublicensees making, having
made, using, importing, offering for sale or selling the Product in the
Territory. During the pendency of any such proceeding or any appeal thereof,
Abbott shall have a right to reduce royalties otherwise payable to API in an
amount equal to fifty percent (50%) of Abbott's out-of-pocket litigation
expenses in the quarter in which such royalties are payable; provided, however,
that in no event shall Abbott have a right to reduce royalty payments by more
than fifty percent (50%) in any quarter. In the event that fifty percent (50%)
of Abbott's out-of-pocket litigation expenses exceeds fifty percent (50%) of the
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royalties otherwise payable to API in such quarter, Abbott shall have the right
to offset such unpaid amounts against future royalties payable to API, but in no
event shall Abbott have a right to reduce royalty payments by more than fifty
percent (50%) in any quarter. In the event that a final judgment is entered
against Abbott pursuant to which Abbott is required to pay to a third party any
monetary damages and/or attorneys' fees, Abbott shall have a right to reduce
royalties otherwise payable to API in an amount equal to fifty percent (50%) of
such judgment in the quarter in which such royalties are payable; provided,
however, that in no event shall Abbott have a right to reduce royalty payments
by more than fifty percent (50%) in any quarter. In the event that fifty percent
(50%) of such judgment exceeds fifty percent (50%) of the royalties otherwise
payable to API in such quarter, Abbott shall have the right to offset such
unpaid amounts against future royalties payable to API, but in no event shall
Abbott have a right to reduce royalty payments by more than fifty percent (50%)
in any quarter. In the event that such final judgment entered against Abbott
includes an order that precludes Abbott from manufacturing, marketing, and/or
selling the Product in any country or countries in the Territory, API shall pay
to Abbott fifty percent (50%) of such final judgment within ninety (90) days
after entry of such judgment or upon completion of such appeal, whichever is
later.
12.4 Infringement Indemnification. In the event that it is necessary to
obtain a license under any third party proprietary right in order to continue
commercialization of the Product in any country in the Territory, Abbott and API
shall use commercially reasonable efforts to obtain such a license naming Abbott
as the licensee. Abbott shall have the right to reduce royalty payments to API
by fifty percent (50%) of all licensing fees and royalties payable by Abbott to
the third party licensor, such reductions to be taken in the quarter in which
such licensing fees and royalties are paid by Abbott to the third party;
provided, however, that in no event shall Abbott have a right to reduce royalty
payments by more than fifty percent (50%) in any quarter.
12.5 Termination for Infringement. Should Abbott be prevented by reason of
an adverse, non-appealable court or administrative proceeding, order or judgment
or arbitral award against it from making, using, or selling the Product in any
Major
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Subterritory, then, as to that part of the Territory so affected, Abbott may
terminate this Agreement upon written notice to API, and the Parties shall make
a final transition accounting and settlement in such Major Subterritory for
outstanding bona fide costs, payments, and expenses to which each Party is
entitled hereunder.
12.6 Third Party Infringement of API Intellectual Property Rights.
(a) API Enforcement - API shall have the right, but not the obligation, at
its own expense, to commence appropriate measures to enforce the API
Intellectual Property Rights against third party infringements within thirty
(30) days after the date API becomes aware of such infringement (including, but
not limited to, notifying the infringing third party of such infringement and
demanding that such third party cease and desist from such infringement) and, if
such infringement does not cease, commence a legal proceeding to enforce the API
Intellectual Property Rights against third party infringements within sixty (60)
days of the date API becomes aware of such infringement.
(b) Abbott Enforcement - If within sixty (60) days after the date API
becomes aware of any alleged third party infringement, either directly or by
notice from Abbott, API fails to commence a legal proceeding pursuant to Section
12.6(a), or if at any time API discontinues such proceeding, Abbott may, at its
sole option, commence, continue, or intervene, as the case may be, in such
proceeding. During the pendency of any such proceeding or any appeal thereof,
Abbott shall have the right to reduce royalties payable to API by the lesser of
(i) fifty percent (50%) of Abbott's out-of-pocket litigation expenses in such
legal proceeding or (ii) fifty percent (50%) of royalties payable in such
country.
12.7 Allocation of Recoveries. In any action brought by or against a third
party infringer by either Party, any monetary damages or judgments obtained by
either Party in connection with such action shall be allocated as follows: (a)
the Party prosecuting such action shall recover its unreimbursed, out-of-pocket
litigation expenses in such action; (b) to the extent that any monies remain,
API and Abbott shall divide such monies to compensate API for its lost royalties
and Abbott for its lost profits;
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and (c) to the extent that any monies remain, API and Abbott shall share equally
such remaining monies.
12.8 Mutual Cooperation. In the event of any patent infringement litigation
in the Territory involving the Product and any API Intellectual Property Rights,
the non-prosecuting or non-defending Party shall render such reasonable
assistance as may be requested by the prosecuting or defending Party in
connection with such infringement actions. If API requests Abbott's assistance
in connection with such infringement claims or actions, API shall reimburse
Abbott for such direct, documented out-of-pocket expenses as are reasonably
incurred by Abbott during the course of its providing such requested assistance.
Before incurring such expenses, the Parties shall in good faith agree in writing
on the nature and extent of assistance to be rendered, and an estimate of the
total expenses, which expenses shall be monitored periodically.
12.9 Labeling. Abbott shall be responsible for all labeling, inserts,
promotional materials and any other materials which accompany, are distributed,
used or referred to in any way by Abbott, its Affiliates or Unaffiliated
Sublicensees in connection with the Product. Such materials shall conform to all
legal requirements in each country of the Territory in which the Product is
sold. Subject to applicable legal requirements and space limitations, all
Product labeling, inserts and promotional materials shall indicate that the
Product is sold by Abbott under license from API. Upon API's request, Abbott
shall provide API with copies of representative samples of materials which
Abbott, its Affiliates and Unaffiliated Sublicensees intend to use in connection
with the marketing, promotion and sale of the Product prior to their first use
thereof. Abbott shall manufacture, register, promote, market and sell the
Product in the Territory only for the indications for which relevant Regulatory
Approvals have been obtained.
12.10 Notification. Abbott shall also be responsible for notifying,
reporting or registering this Agreement or the business relationship created
hereby with any government authorities in the Territory to the extent legally
required. API shall provide Abbott with such assistance as Abbott may reasonably
request in connection therewith.
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13. INDEMNIFICATION AND INSURANCE
13.1 Reciprocal Indemnification Provisions.
(a) API Indemnification - API shall defend, indemnify and hold Abbott, its
Affiliates, Unaffiliated Sublicensees, and the officers, directors, employees
and agents of each, harmless from and against any and all liabilities, damages,
claims, demands, costs, or expenses (including reasonable attorneys' fees)
claimed by any third party for any property or other economic loss or damage or
injury or death suffered by it to the extent the same is determined to have been
caused by API's negligence or wilful misconduct or any material breach of this
Agreement by API, subject to the conditions of indemnification set forth in
Section 13.2.
(b) Abbott Indemnification - Abbott shall defend, indemnify and hold API,
and its Affiliates, and the officers, directors and employees and agents of each
harmless from and against any and all liabilities, damages, claims, demands or
costs, or expenses (including reasonable attorneys' fees) claimed by any third
party for any property or other economic loss or damage, injury or death
suffered by it to the extent the same is determined to have been caused by
Abbott's negligence or wilful misconduct or any material breach of this
Agreement by Abbott, subject to the conditions of indemnification set forth in
Section 13.2.
13.2 Conditions of Indemnification. With respect to any indemnification
obligations of either Party to the other Party under this Agreement, including
but not limited to the indemnification obligations of the Parties under Sections
13.1(a) and 13.1(b) , the following conditions must be met for such
indemnification obligations to become applicable: (a) the indemnified Party
shall notify the indemnifying Party promptly in writing of any claim which may
give rise to an obligation on the part of the indemnifying Party hereunder; (b)
the indemnifying Party shall be allowed to timely undertake the sole control of
the defense of any such action and claim, including all negotiations for the
settlement, or compromise of such claim or action at its sole expense; and (c)
the indemnified Party shall render reasonable assistance, information,
co-operation and authority to permit the indemnifying Party to defend such
action, it being agreed that any out-of-pocket expenses or other expenses
incurred by the
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indemnified Party in rendering the same shall be borne or reimbursed promptly by
the indemnifying Party.
13.3 Insurance. API shall at all times during the Term and for a period of
five (5) years thereafter maintain product liability insurance covering the
Product with minimum annual limits of $1,000,000 per occurrence and $1,000,000
in the aggregate. Upon Abbott's request at any time during the Term or in the
five (5) year period thereafter, API shall deliver to Abbott a certificate of
insurance evidencing such insurance and stating that the policy will not be
canceled or modified without at least thirty (30) days prior written notice to
Abbott.
14. ADVERSE DRUG EXPERIENCES
During the relevant Reporting Period (as defined below), each Party shall
promptly inform the other Party of any information it obtains or develops
regarding the safety of the Product anywhere in the world and shall promptly
report to the other Party any information regarding serious adverse reactions or
side effects related to the use of the Product. To allow the Parties to comply
with the adverse drug experience reporting requirements for the Product to the
U.S. FDA and its counterpart regulatory agencies around the world, each Party
shall notify the other Party in writing of any "adverse drug experience" that is
considered "serious" as defined in U.S. FDA regulations (21 CFR 314.80) or the
comparable regulations of other regulatory agencies, regardless of source, so
that the other Party will receive such notice within three (3) business days of
a Party's first having "obtained or otherwise received" such "adverse drug
experience" from "any source", as those terms are defined in U.S. FDA
regulations (21 CFR 314.80). Such information shall be communicated by the
Parties to each other at the following addresses:
To Abbott: Abbott Laboratories
Hospital Products Division
Attn: Vice President, Medical and Regulatory Affairs
Dept. 970, Bldg. AP30
200 Abbott Park Road
Abbott Park, Illinois, U.S.A. 60064-3500
Telephone: (847) 937-8190
Facsimile: (847) 938-6590
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To API: API Pharmaceuticals, Inc.
Attn: Senior Vice President, Medical and Regulatory Affairs
8707 Technology Forest Place
The Woodlands, Texas 77381-1191
Phone: (281) 367-1666
Facsimile: (281) 367-1676
Each Party shall provide the other with copies of all adverse drug experience
reports on the Product filed with the U.S. FDA or other regulatory agencies in
the Territory. As used in this Section 14, the "Reporting Period" shall mean (a)
the Term with respect to API's reporting obligation to Abbott and (b) the period
from the Effective Date until the effective date of API's assignment of the U.S.
NDA for the Product to Abbott with respect to Abbott's reporting obligation to
API.
15. REPRESENTATIONS AND WARRANTIES
Each Party hereby represents and warrants to the other Party as follows:
(a) Corporate Status - It is a corporation duly organized and validly
existing under the laws of its state or other jurisdiction of incorporation or
formation;
(b) Authority - It has the power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder;
(c) No Conflicts - The execution, delivery and performance by it of this
Agreement and its compliance with the terms and provisions hereof does not and
will not conflict with or result in a breach of any of the terms and provisions
of or constitute a default under (i) any 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 by-laws; 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;
(d) No Approvals - Except for the regulatory filings and approvals for the
Product referenced herein, no authorization, consent or approval of any
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governmental authority or third party is required for the execution, delivery or
performance by it of this Agreement, and the execution, delivery or performance
of this Agreement will not violate any law, rule or regulation applicable to
such Party;
(e) Enforceability - This Agreement has been duly authorized, executed and
delivered and constitutes its 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
relating to or affecting creditors' rights and to the availability of particular
remedies under general equity principles;
(f) Compliance With Laws - It shall comply with all applicable laws and
regulations relating to its activities under this Agreement; and
(g) Year 2000 Compliance - All computer hardware and software used by
either Party in its business relationship with the other Party will have no
lesser functionality with respect to records containing dates before or after
January 1, 2000 than previously with respect to dates prior to January 1, 2000.
16. TERM AND EARLY TERMINATION RIGHTS
16.1 Term. The Term shall be as stated in Section 1.21.
16.2 Termination for Cause. Either Party shall have the right, without
prejudice to any other rights or remedies available to it, to terminate this
Agreement for cause by written notice to the other Party in any of the following
events:
(a) Bankruptcy - If the other Party becomes insolvent, is adjudged
bankrupt, applies for judicial or extra-judicial settlement with its creditors,
makes an assignment for the benefit of its creditors, voluntarily files for
bankruptcy or has a receiver or trustee (or the like) in bankruptcy appointed by
reason of its insolvency, or in the event an involuntary bankruptcy action is
filed against the other Party and not dismissed within ninety (90) days, or if
the other Party becomes the subject of liquidation or dissolution proceedings or
otherwise discontinues business.
(b) Material Breach - If the other Party commits a Material Breach of
this Agreement (as defined in Section 18.2(c)) and the Party alleged to be in
breach
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fails to (i) cure such breach or (ii) commence dispute resolution proceedings
under Section 18.2 contesting whether a breach has occurred and/or whether such
breach is a Material Breach within sixty (60) days after receipt of written
notice from the Party asserting the breach.
16.3 Termination by Mutual Agreement. This Agreement may be terminated at
any time by written agreement of the Parties.
16.4 Termination by Abbott.
(a) Safety or Efficacy - If at any time during the Term: (i) the Party with
responsibility for filing an application for Regulatory Approval hereunder
("Filing Party") decides not to file an application for Regulatory Approval in
any Major Subterritory or decides to withdraw such application due to documented
adverse reactions or other safety issues with the Product or the Product's lack
of efficacy or limited efficacy (collectively, "Safety or Efficacy Issues");
(ii) the Filing Party's application(s) for Regulatory Approval in any Major
Subterritory is rejected due to Safety or Efficacy Issues; (iii) the Filing
Party's application(s) for Regulatory Approval in any Major Subterritory is
subsequently withdrawn because of Safety or Efficacy Issues; (iv) the Product is
withdrawn or recalled from the market in any Major Subterritory because of
Safety or Efficacy Issues; or (v) at any time during the period from the
Effective Date to the effective date of API's assignment of the U.S. NDA for the
Product to Abbott, Abbott reasonably believes documented Safety or Efficacy
Issues exist and Abbott has so notified API in writing, then Abbott may, at its
option, terminate this Agreement upon thirty (30) days prior written notice to
API. Abbott may, at its option, exercise its right of termination under this
Section 16.4(a) on a country-by-country basis, and, if Abbott does so, Abbott's
termination notice shall specify the country or countries of the Territory
affected.
(b) Limited Commercial Viability - At any time during the Term after the
Filing Party has obtained Regulatory Approval in any country of the Territory,
Abbott shall have the right to terminate this Agreement upon one hundred eighty
(180) days prior written notice to API for reasons of the Product's limited
commercial viability
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and/or due to competition, limited customer acceptance, regulatory limitations
and/or market dynamics, as determined by Abbott.
17. CONSEQUENCES OF TERMINATION
17.1 Effect of Termination. Termination or expiration of this Agreement
through any means and for any reason shall not relieve the Parties of any
obligations accruing prior thereto and shall be without prejudice to the rights
and remedies of either Party with respect to any prior breach of any of the
provisions of this Agreement.
17.2 License Rights. If Abbott terminates this Agreement pursuant to
Section 16.2(a) or Section 16.4 or if API terminates this Agreement pursuant to
Section 16.2, then: (a) Abbott's license rights in API Intellectual Property
Rights hereunder shall terminate, (b) Abbott shall assign to API all of its
right, title and interest in and to the API Trademarks, with API assuming
responsibility for filing and maintaining the API Trademarks as of the effective
date of the assignment, including all recordal and future costs associated
therewith; and (c) upon API's request, the Parties shall negotiate in good faith
for the assignment of any Alternate Trademarks from Abbott to API.
17.3 Fully Paid-Up License. Upon expiration of the Term or earlier
termination of this Agreement for any reason other than by API pursuant to
Section 16.2 or by Abbott pursuant to Section 16.2(a) or Section 16.4 or by the
Parties jointly pursuant to Section 16.3, Abbott's license rights in API
Intellectual Property Rights hereunder shall become fully paid-up and
irrevocable.
17.4 Mutual Agreement. If the Parties terminate this Agreement by mutual
written agreement pursuant to Section 16.3, the Parties shall specify the
consequences of such termination in such written agreement.
17.5 Regulatory Approvals. Upon expiration of the Term, or upon earlier
termination of this Agreement other than by API pursuant to Section 16.2 or by
Abbott pursuant to Section 16.2(a) or Section 16.4, Abbott's right to
manufacture, market, and sell the Product in the United States pursuant to the
U.S. NDA for the Product shall become fully paid-up and irrevocable, and, if API
has not previously done so, API shall
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promptly assign such U.S. NDA to Abbott. Upon termination of this Agreement by
API pursuant to Section 16.2 or by Abbott pursuant to Section 16.2(a) or Section
16.4, Abbott shall grant to API a fully paid-up, irrevocable right to
manufacture, market, and sell the Product outside the United States pursuant to
Abbott's Regulatory Approvals for the Product, and Abbott shall promptly assign
such Regulatory Approvals to API.
18. GOVERNING LAW AND DISPUTE RESOLUTION
18.1 Governing Law. This Agreement, including the validity, construction,
interpretation and performance thereof, shall be governed entirely by the laws
of the State of Illinois, without regard to its conflict of laws provisions. It
is the specific intent and agreement of the Parties that the United Nations
Convention on the International Sale of Goods shall not apply to this Agreement.
18.2 Dispute Resolution. All disputes arising out of or in connection with
this Agreement (except those involving actions commenced by or involving third
parties and affecting or involving only one of the Parties) shall be resolved
with the following mechanism:
(a) Attempted Amicable Resolution - The Parties shall promptly give
each other written notice of any disputes requiring resolution hereunder, which
written notice shall specify the Section(s) of this Agreement the other Party is
alleged to have breached and shall briefly state the initiating Party's claims,
and the Parties shall use reasonable efforts to resolve any such disputes in an
amicable manner.
Any disputes arising in connection with this Agreement which cannot be
resolved in an amicable manner by representatives of the Parties shall be
referred, not later than thirty (30) days after initiation of dispute resolution
proceedings under this Section 18.2, to the following corporate officers of the
Parties for resolution:
For Abbott:
President, Hospital Products Division (or his or her designee)
For Aronex:
Chairman and CEO (or his or her designee)
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Such officers (or their designees) shall attempt to resolve the dispute
and shall communicate with each other by facsimile or telephone or in personal
meetings in an effort to resolve the dispute.
(b) ADR Procedure - Any disputes arising in connection with this
Agreement which cannot be resolved by the Parties within forty-five (45) days
after initiation of dispute resolution proceedings under Section 18.2(a) shall
be finally settled by binding Alternate Dispute Resolution ("ADR") in accordance
with the procedures set forth in the attached Exhibit D.
(c) ADR Ruling - The neutral in any ADR proceeding under Section
24.2(b) shall determine and advise the Parties in writing:
(i) Whether either Party has committed a breach of any of its
obligations under this Agreement; and
(ii) If either Party has committed a breach,
(A) Whether such breach is a Material Breach or a breach
other than a Material Breach, and
(B) The appropriate remedy for any such breach pursuant to
Section 18.2(d).
As used herein "Material Breach" shall mean either a failure by Abbott
to pay any milestone payments pursuant to Section 3.1, any research and
development funding payments pursuant to Section 3.2, or any royalty payments
pursuant to Sections 4.1 or 4.2 within sixty (60) days after written notice from
API ("Material Payment Breach"), provided that Abbott may in good faith contest
whether a given payment is due or the amount due and pay the amount the neutral
determines to be due without being deemed to have committed a Material Payment
Breach, or any other breach which involves willful disregard of the other
Party's rights under this Agreement or which materially and adversely affects
the rights of the other Party in at least one (1) Major Subterritory ("Other
Material Breach").
(d) Remedies - The neutral in any proceeding under Section 18.2(b)
shall have the authority to award the non-breaching Party the following relief
(except as otherwise provided in Section 18.2(e) and (f)):
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(i) For a Material Payment Breach, an order to pay the amount
due and termination of this Agreement;
(ii) For any Other Material Breach, an award of damages and/or
equitable relief and/or termination of this Agreement in whole or in part
(including the termination of any licenses granted to the breaching Party,
whether in whole or in part, on a worldwide or country-by-country basis); and
(iii) For a breach other than a Material Breach, an award of
damages and/or equitable relief.
(e) Dispute Resolution for Section 7.1 - API shall be entitled to
commence dispute resolution proceedings pursuant to Section 18.2 to challenge
Abbott's compliance with its commercially reasonable efforts obligations in the
Territory pursuant to Section 7.1 not more than once every twelve (12) months
for each respective country. The determination of whether Abbott has used its
commercially reasonable efforts in each respective country shall be based on the
totality of circumstances. If API successfully establishes that Abbott has
failed to use its commercially reasonable efforts, (i) for the first such
violation, the neutral shall have the authority to award damages or equitable
relief to API (but not termination of Abbott's license rights) and (ii) for any
subsequent violations in the same country, the neutral shall have the authority
to award damages, equitable relief or termination of Abbott's license rights in
the country where such breach occurs.
18.3 Effect of Commencing Dispute Resolution. If either Party in good faith
commences dispute resolution proceedings under Section 18.2, (a) any applicable
notice periods or cure periods hereunder (including but not limited to the
period referenced in Section 16.2(b)) shall be temporarily suspended pending the
outcome of such dispute resolution proceedings and (b) the non-breaching Party
may, at its option, pay any amounts payable to the other Party that are in
dispute into an interest-bearing escrow account pending the outcome of such
dispute resolution proceedings.
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19. NOTICES
19.1 Manner of Giving Notices. All notices required or permitted in
connection with this Agreement shall be writing and may be given by personal
delivery, prepaid registered or certified mail, or telecopier, addressed to the
Party to receive the same at its address set forth below, or to such other
address as it shall later designate by like notice to the other Party. Notice of
termination of this Agreement if given by telecopier shall be confirmed by
prepaid registered or certified mail dated and posted within twenty-four (24)
hours. The effective date of receipt of any notice if served by telecopier shall
be deemed the first business day in the city of destination following the
dispatch thereof and if given by letter only, it shall, unless earlier received,
be deemed effective not later than seven (7) days after the date of posting.
Notice by personal delivery shall be effective as of the date of such delivery.
19.2 Addresses for Notices.
Notices to API shall be sent to:
Aronex Pharmaceuticals, Inc.
Attn: Chief Executive Officer
8707 Technology Forest Place
The Woodlands, Texas 77381-1191
Facsimile: (281) 367-1676
With a copy to:
Andrews & Kurth, L.L.P.
Attn: Jeffrey L. Wade
2170 Buckthorne Place, Suite 150
The Woodlands, Texas 77380
Facsimile: (713) 238-7131
Notices to Abbott shall be sent to:
Abbott Laboratories
Hospital Products Division
Attn: President
Dept. 0960, Bldg. AP30
200 Abbott Park Road
Abbott Park, Illinois U.S.A. 60064-3500
Facsimile: (847) 937-0805
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and
Abbott Laboratories
Abbott International
Attn: President
Dept. 06WP, Bldg. AP30
200 Abbott Park Road
Abbott Park, Illinois U.S.A. 60064-3500
Facsimile: (847) 938-8325
With a copy to:
Abbott Laboratories
Attn: Div. V.P. - Domestic Legal Operations
Legal Division, Dept. 322, Bldg. AP6D
100 Abbott Park Road
Abbott Park, Illinois U.S.A. 60064-3500
Facsimile: (847) 938-1206
20. INTEGRATION
This Agreement represents the entire Agreement between the Parties relating
to the subject matter hereof and supersedes all prior arrangements,
understandings, correspondence, notes, minutes and agreements between the
Parties (or their predecessors in interest) whether written or oral. No
supplement, modification or amendment of this Agreement shall be binding unless
executed by the Parties in writing and signed by the duly authorized
representatives of both Parties.
21. ASSIGNMENT
Neither Party may assign this Agreement or any of its rights hereunder, nor
delegate any of its duties or obligations hereunder, to any third party without
the prior written consent of the other Party; subject to Abbott's right to grant
sublicenses of its rights under this Agreement to an Abbott Affiliate or
Unaffiliated Sublicensee in accordance with Section 2.2. Neither Party shall
unreasonably withhold its consent to such contemplated assignment if such
contemplated assignment is in connection with
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the sale by either Party of all or substantially all of its assets to a third
party which is not a direct competitor of the other Party in the hospital or
pharmaceutical products area.
22. LIMITATION OF DAMAGES
In no event shall either Party be liable to the other Party for any
indirect, incidental or consequential damages in connection with the performance
of this Agreement or any breach of this Agreement.
23. FORCE MAJEURE
Neither Party shall be held in breach of this Agreement for failure to
perform any of its obligations hereunder to the extent and for the time period
such performance is prevented in whole or in part by reason of any Force Majeure
event, including but not limited to industrial disputes, strikes, lockouts,
riots, mobs, fires, floods, and other natural disasters and Acts of God, wars
declared or undeclared, civil strife, embargo, delays in delivery or defects or
shortages of raw materials from suppliers, loss or breakdown of any production
equipment, losses or shortage of power, damage to or loss of goods in transit,
currency restrictions, or events caused by reason of laws, regulations or orders
by any government, governmental agency or instrumentality or by any other
supervening unforeseeable circumstances whatsoever beyond the control of the
Party so affected. The Party so affected shall (a) give prompt written notice to
the other Party of the nature and date of commencement of the Force Majeure
event and its expected duration and (b) use its commercially reasonable efforts
to avoid or remove the Force Majeure event as soon as possible to the extent it
is so able to do.
24. RELATIONSHIP OF PARTIES
The relationship of the Parties under this Agreement is that of independent
contractors. Nothing contained in this Agreement shall be construed so as to
constitute the Parties as partners, joint venturers or agents of the other.
Neither Party has any express or implied right or authority under this Agreement
to assume or create any obligations or make any warranties and representations
on behalf of or in the name of
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the other Party, or to bind the other Party to any contract, agreement or
undertaking with any third party, and no conduct of the Parties pursuant to the
terms of this Agreement shall be deemed to establish such right or authority.
Neither Party shall make any representation to third parties that the
relationship created hereby constitutes a partnership, joint venture or agency
relationship.
25. SEVERABILITY OF CLAUSES
In case one or more of the provisions contained in this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement, but this Agreement shall be construed by limiting such
invalid, illegal or unenforceable provision, if such is not possible, by
deleting such provision from this Agreement.
26. NON-WAIVER
The failure by either Party at any time to enforce any of the terms or
provisions or conditions of this Agreement or exercise any right hereunder shall
not constitute a waiver of the same or affect that Party's rights thereafter to
enforce or exercise the same. No waiver of any of the provisions of this
Agreement shall be deemed binding unless executed in writing by the Party to be
bound by it.
27. HEADINGS
The headings in this Agreement are for convenience of reference only and
shall not be used in the interpretation of any provisions hereof.
28. EXECUTION
This Agreement shall be executed by the Parties in two (2) original
counterparts, one (1) original counterpart being retained by each Party and
either of which shall be deemed sufficient to prove the existence and terms and
conditions hereof. This Agreement may be executed by the Parties by the exchange
of facsimile signature pages, with signed original counterparts of the Agreement
to be exchanged by the Parties promptly thereafter.
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IN WITNESS WHEREOF, the Parties' duly authorized representatives hereto
have executed this Agreement as of the Effective Date.
ARONEX PHARMACEUTICALS, INC. ABBOTT LABORATORIES
By: By:
------------------------------ --------------------------------
Title: Title:
---------------------------- ------------------------------
Date: Date:
---------------------------- -------------------------------
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LIST OF EXHIBITS
----------------
EXHIBIT A API PATENTS
EXHIBIT B FACTORY COST
EXHIBIT C U.S. PRODUCT DEVELOPMENT PLAN
EXHIBIT D ALTERNATIVE DISPUTE RESOLUTION
EXHIBIT E API TRADEMARK APPLICATIONS AND
REGISTRATIONS
EXHIBIT F FORM OF TRADEMARK ASSIGNMENT
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EXHIBIT A
API PATENT RIGHTS
Part I API Patents
1. US 4,812,312
Lopez-Berestein et al. "Liposome-Incorporated Nystatin"
Japan: 2703594 granted 10/3/97
EPO: 0348431 granted 8/5/92
Austria: E79028 "
Belgium: 0348431 "
Switzerland: 0348431 "
Germany: p3873528.8 "
France: 0348431 "
UK: 0348431 "
Italy: 0348431 "
Netherlands: 0348431 "
Sweden: 0348431 "
2. US 4,950,432
Reeta Mahte et al. "Polyene Microlide Pre-Liposomal Powders"
3. US 5,178,875
Lenk at al. "Liposomal-Polyene Preliposomal Powder and Method of Its
Preparation"
Australia: 663074 granted 2/6/96
EPO: 0567582 granted 5/17/95
Austria: E1 22559 "
Belgium: 0567582 "
Switzerland 0567582 "
Germany: 69202569 "
Denmark: 0567582 "
Spain: 0567582 "
France: 0567582 "
UK: 0567582 "
Greece: 0567582 "
Italy: 0567582 "
Luxembourg: 0567582 "
Monaco 0567582 "
Netherlands: 0567582 "
Sweden: 0348431 "
4. USSN: 08/535,885 (allowed, Issue Fee paid 7/31/98)
Lenk el al. "Liposomal-Polyene Preliposomal Powder and Method of Its
Preparation"
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PART II *
1. US 5,178,875
Lenk et al."Liposomal-Polyene Preliposomal Powder and the Method of
its Preparation"
Canada: appln 209971
Japan: appln 505310/92
2. USSN: 08/979,578 (pending)
Lenk et al. "Liposomal-Polyene Preliposomal Powder and the Method of
its Preparation"
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EXHIBIT B
FACTORY COST
------------
Direct material cost:
Direct material cost includes all raw material used in the manufacturing
process as contained in the bill of material to manufacture Product. Direct
material is identified by specific lot numbers. Items normally included are;
Raw drug.
Diluting material such as the alcohol.
Vial.
Vial stopper.
Vial seal
Inline solution filters and compounding filters.
Vial label
Single unit carton.
Shipper
Any other specialized packaging material.
Direct labor cost.
Includes the cost of employees directly involved in the manufacture of the
Product. Our direct labor employees are classified as Assistants, Operators,
Attendants, Technicians, Senior Production Operators, Productions Equipment
Specialists, and Group Leaders. The rate per hour includes the average base rate
for all direct employees plus a fringe rate that includes vacations, holidays,
insurance costs, pension, 401K, bonuses and legally mandated employer taxes.
Standard product cost uses an Industrial Engineering estimate of the hours to
perform each step of the production process. Additional procedures or employees
required to handle explosive material would be added as a direct labor
operation. Direct labor operations are normally considered to be:
Drug dispensing.
Drug mixing.
Preparation of the filling equipment.
Preparation of components such as washing vial stoppers.
Preparation of printed materials, primarily labels.
Filling of the vial.
Post filling light inspection.
Lyophilization
Labeling.
Packing.
Variable overhead cost.
Includes the costs of operating the plant which change as the volume of
production in the plant changes. The major components of variable overhead are
related to the production operator and include their overtime, time spent for
training and plant meetings, and their uniforms and gowns. Any specialized
employee safety equipment such as used in an explosion proof environment would
be included in this category. Cost included in this category are assigned to
standard product cost as a rate per hour applied to direct labor hours
identified above.
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Fixed overhead costs.
Includes the other costs associated with operating a manufacturing plant.
The key components are the cost of the quality assurance organization, material
planning, purchasing, receiving, and warehousing, plant maintenance, utilities
and engineering, the health and safety group, production supervision, and fixed
costs such as depreciation taxes, and insurance. Investment in explosive proof
equipment and changes to the facility required to handle explosive material
would be included in this category. These costs are assigned to standard product
cost based on fully utilized plant capacity.
The standard product cost development process occurs once per year in the
mid-summer time period. At that time, assumptions are made regarding inflation
rates for raw material and wages, productivity improvements, and plant
utilization levels.
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EXHIBIT C
U.S. PRODUCT DEVELOPMENT PLAN
API shall conduct all clinical studies required to obtain Regulatory
Approval in the United States, including but not limited to the studies
referenced below, with the objective of obtaining U.S. NDA approval for the
Product in injectable dosage form with an Empiric Claim on or before * .
STUDY NO. STUDY TITLE BRIEF DESCRIPTION
AR-90-01-002 Pharmacokinetics of NystatinLF,"*, I.V. in Phase 1, Single dose,
Patients with Acquired Immunodeficiency Syndrome dose-escalating up to 1 mg/kg
(AIDS)-Related Complex ARC
AR-91-35,606-004 A Phase I-ii Clinical Study of Nystatin , I.V. in Phase I-II, Multiple dose,
Patients with HIV Infection dose-escalating up to 7 mg/kg
AR-41,356-93-002 Phase I Study to Determine the Maximum Tolerated Phase I, Multiple dose,
Dose of Liposomal NystatinLF in Patients with dose-escalating up to 8 mg/kg
Presumed or Proven Fungal infection Due to
Aspergillus or Candida Species and Other
Opportunistic Fungi
AR-92-41,356-005 A Multicenter Study to Evaluate the Safety and Phase II, Multiple dose at 2
Efficacy of Various Doses of Nyotran in or 4 mg/kg, in patients with
Non-Neutropenic Patients with Candidemia systemic Candida infections
AR-94-41,356-006 A Prospectively Randomized, Double-Blind, Phase III, Multiple dose
Comparative Multicenter Study to Evaluate Efficacy blinded comparative study in
and Safety of Nyotran and Amphotericin B or patients with presumed fungal
Empiric Antifungal Treatment in Neutropenic infections, conducted in US
Patients
AR-95-41,356-009 A Prospectively Randomized, Double-Blind, Phase III, Multiple dose
Comparative Multicenter Study to Evaluate Efficacy blinded comparative study in
and Safety of Nyotran and Amphotericin B for patients with presumed fungal
Empiric Antifungal Treatment in Neutropenic infections, conducted in
Patients Europe
AR-94-41,356-007 An Open-Label, Non-Comparative, Multicenter Study Phase II, Multiple dose
to Evaluate the Clinical Efficacy and Safety of salvage therapy trial in
Nyotran (Liposomal Nystatin) in the Treatment of aspergillosis conducted
Patients with Proven or Probable Aspergillus primarily in Europe, South
Infection Who Are Failing Standard Parenteral Africa, and Australia
Antifungal Therapy Due to Lack of Response or
Intolerance to Amphotericin B or Liposomal
Amphotericin
54
STUDY NO. STUDY TITLE BRIEF DESCRIPTION
AR-96-41,356-008 An Open-Label, Non-Comparative, Multicenter Study Phase II, Multiple dose
to Evaluate the Clinical Efficacy and Safety of salvage therapy trial in
Nyotran (Liposomal Nystatin) in the Treatment of aspergillosis conducted
Patients with Proven or Probable Aspergillus primarily in the US
Infection Who Are Failing Standard Parenteral
Antifungal Therapy Due to Lack of Response or
Intolerance to Amphotericin B or Liposomal
Amphotericin
AR-97-41,356-013 A PhaseII/III Randomized, Multicenter Study to
Determine the Optimal Dose of Nyotran (Liposomal *
Nystatin) for the Treatment of Patients with
Cryptococcal Meningitis by Comparing the Safety
and Efficacy of the 2 mg/kg/day, 3 mg/kg/day and 4
mg/kg/day Doses of Nyotran and To Compare the
Safety and Efficacy of the Resulting Optimal Dose
of Nyotran versus Fungizone (Amphotericin B) in
Patients with Cryptococcal Meningitis
* *
55
EXHIBIT D
Alternative Dispute Resolution
The parties recognize that a bona fide dispute as to certain matters may
arise from time to time during the term of this Agreement which relates to
either party's rights and/or obligations. To have such a dispute resolved by
this Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective representatives of the affected
subsidiaries, divisions, or business units within twenty-eight (28) days after
such notice is received (all references to "days" in this ADR provision are to
calendar days).
If the matter has not been resolved within twenty-eight (28) days of he
notice of dispute, or if the parties fail to meet within such twenty-eight (28)
days, either party may initiate an ADR proceeding as provided herein. The
parties shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days after
its receipt of such notice, the other party may, by written notice to the party
initiating the ADR, add additional issues to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, the parties shall
request the President of the Center for Public Resources ("CPR"), 366 Madison
Avenue, New York, New York 10017 to select a neutral pursuant to the following
procedures:
(a) The CPR shall submit to the parties a list of not less than five
(5) candidates within fourteen (14) days after receipt of the request from the
parties, along with a Curriculum Vitae for each candidate. No candidate shall be
an employee, director, or shareholder of either party or any of their
subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each candidate
of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference (with
the number one (1) signifying the greatest preference) and shall deliver the
list to the CPR within seven (7) days following receipt of the list of
candidates. If a party believes a conflict of interest exists regarding any of
the candidates that party shall provide a written explanation of the conflict to
the CPR along with its list showing its order of preference for the candidates.
Any party failing to return a list of preferences on time shall be deemed to
have no order of preference.
(d) If the parties collectively have identified fewer than three (3)
candidates deemed to have conflicts, the CPR immediately shall designate as the
neutral the candidate for whom the parties collectively have indicated the
greatest preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have identified three
(3) or more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may either (i)
immediately designate as the neutral the candidate for whom the parties
collectively have indicated the
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56
greatest preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set for in subparagraphs 2(a) - 2(d)
above shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the issues
identified by the parties. The ADR proceeding shall take place at a location
agreed upon by the parties. If the parties cannot agree, the neutral shall
designate a location other than the principal place of business of either party
or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any
oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each issue. The proposed
rulings and remedies shall not contain any recitation of the facts or any legal
arguments and shall not exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and remedies,
provided that the brief shall not exceed twenty (20) pages. This page limitation
shall apply regardless of the number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d) above, no
discovery shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time to
present its case. The neutral shall determine whether each party has had the
five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues it has
raised but also any issues raised by the responding party. The responding party,
if it chooses to make an opening statement, also shall address all issues raised
in the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence.
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57
(d) Witnesses shall be excluded from the hearing until closing
arguments.
(e) Neither affidavits nor settlement negotiations shall be admissible
under any circumstances. As to all other matters, the neutral shall have sole
discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in support of
its proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the parties on each disputed issue but may
adopt one party's proposed rulings and remedies on some issues and the other
party's proposed rulings and remedies on other issues. The neutral shall not
issue any written opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the prevailing
party (including all expert witness fees and expenses), the fees and expenses of
a court reporter, and any expenses for a hearing room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues
in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues and the
other party on other issues, the neutral shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
parties. The neutral shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the party prevailing on
more issues, or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall
be binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 of this Exhibit D or as required by
law, the existence of the dispute, any settlement negotiations, the ADR hearing,
any submissions (including exhibits, testimony, proposed rulings, and briefs),
and the rulings shall be deemed Confidential Information. The neutral shall have
the authority to impose sanctions for unauthorized disclosure of Confidential
Information.
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58
EXHIBIT E
API TRADEMARK APPLICATIONS AND REGISTRATIONS
API Trademarks Registered
Case Number Mark Registration No. Next Renewal Date
- ----------- ---- ---------------- -----------------
ARG-106
United States LF 1,785,153 08/03/03
ARG-701
United States Nyotran 2,173,459 07/14/08
59
EXHIBIT F
FORM OF TRADEMARK ASSIGNMENT
ASSIGNMENT
WHEREAS, Aronex Pharmaceuticals, Inc., a corporation existing under the
laws of the State of Delaware, having its principal place of business at 8707
Technology Forest Place, The Woodlands, Texas 77381-1191 is the owner of the
United States Trademark Registrations as depicted on Schedule 1 attached hereto;
and
WHEREAS, Abbott Laboratories, a corporation existing under the laws of the
State of Illinois, having its principal place of business at Abbott Park,
Illinois 60064 is desirous of acquiring all right, title and interest in and to
said Trademark Registrations, and
WHEREAS, Aronex Pharmaceuticals, Inc. is willing to assign any and all of
its right to the said Trademark Registrations,
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Aronex Pharmaceuticals, Inc. does hereby sell, transfer,
convey and assign to Abbott Laboratories any and all of its right, title and
interest in and to the trademarks and the Trademark Registrations associated
therewith, including the goodwill of the business symbolized by the trademark.
Dated this ____ day of ____________ , 1998.
Aronex Pharmaceuticals, Inc. Abbott Laboratories
- ---------------------------- -----------------------------
By: By:
------------------------- --------------------------
Title: Title:
---------------------- -----------------------
60
Schedule I
Trademark Country Registration Number
LF United States 1,785,153
NYOTRAN United States 2,173,459
-i-