Exhibit 99.1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXCLUSIVE LICENSE AGREEMENT
This Exclusive License Agreement (this "Agreement"), dated as of
January 29, 2007 (the "Effective Date"), is made by and between Critical
Therapeutics, Inc., a Delaware corporation ("Licensor"), and Innovative
Metabolics, Inc., a Delaware corporation ("IMI"). Licensor and IMI are sometimes
hereinafter referred to each as a "Party" and collectively as the "Parties."
WHEREAS, Licensor has been engaged in the development of certain
technology to stimulate the vagus nerve, and owns and otherwise controls certain
patent rights and know-how with respect thereto;
WHEREAS, IMI desires to acquire exclusive rights under the Licensed
Patents and Licensed Know-How in the Field (each as defined below); and
WHEREAS, the Parties desire to enter into an agreement pursuant to
which Licensor will grant an exclusive license to IMI under the Licensed Patents
and Licensed Know-How for IMI to research, develop and commercialize Licensed
Products & Methods (as defined below).
NOW, THEREFORE, the Parties hereby agree as follows:
Section 1. Definitions.
For the purpose of this Agreement, the following words and phrases and
their correlatives shall have the meanings set forth below:
1.1 "Affiliate" of an entity means any other entity which (directly or
indirectly) is controlled by, controls or is under common control with such
entity. For the purposes of this definition, the term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
as used with respect to an entity means (i) in the case of a corporate entity,
direct or indirect ownership of voting securities entitled to cast at least
fifty percent (50%) of the votes in the election of directors or (ii) in the
case of a non-corporate entity, direct or indirect ownership of at least fifty
percent 50%) of the equity interests with the power to direct the management and
policies of such entity, provided that if local law restricts foreign ownership,
control shall be established by direct or indirect ownership of the maximum
ownership percentage that may, under such local law, be owned by foreign
interests.
1.2 "Confidential Information" shall have the meaning assigned in the
Confidential Disclosure Agreement dated as of the Effective Date by and between
CRTX and IMI (the "CDA").
1.3 "Controlled", when used in reference to Patent Rights or other
intellectual property rights or Technology or tangibles materials, means the
legal authority or right of a person or entity to grant a license or sublicense
or covenant not to sue of Patent Rights or other intellectual property rights to
another entity, or to disclose or provide Technology or tangible materials to
such other entity, in each case by ownership, license, sublicense, contract or
otherwise, without breaching the terms of any agreement with a Third Party as of
the time that such person or entity would be first required under this Agreement
to make such grant, disclosure or provision (subject in all events to the terms
of Section 2.3(b)).
For clarity and without limitation, it is understood and agreed that
because of Third Party agreements any of the foregoing may be partially and not
fully "Controlled" for purposes of the licenses and other rights granted herein,
such as, for example, Licensor only has a covenant not to sue or other
non-exclusive right or license to a Patent Right or Technology, or does not have
all the rights specified in the prosecution and enforcement provisions set forth
in Section 6 for any Patent Right, and in any such case then the applicable
Patent Right, other intellectual property rights, Technology or tangible
materials shall be made available to IMI hereunder to the extent and only to the
extent permitted by the applicable Third Party agreements.
1.4 "Excluded Field" means direct or indirect modulation by a
pharmacological agent of the activity of a cholinergic receptor (including the
nicotinic [alpha]7 cholinergic receptor). It is understood that a
EXCLUSIVE LICENSE AGREEMENT
change in a response to a pharmacological agent resulting solely from use of any
medical device (including any Licensed Product & Method as licensed hereunder)
is not in the Excluded Field.
1.5 "Field" means vagal nerve stimulation by any means, but does not
include the Excluded Field. Exemplary vagal nerve stimulation modalities within
the Field include mechanical (such as massage, needle, acoustic or other
vibrational), electrical, thermal, magnetic, and electromagnetic, or as produced
by any other energy source.
1.6 "First Financing" means one or more financing transactions whereby
IMI first receives aggregate gross proceeds in excess of five million dollars
(US$5,000,000).
1.7 "Licensed Know-How" means (i) the NS Licensed Know-How, and (ii)
all Technology (other than the NS Licensed Know-How) Controlled by Licensor or
any of its Affiliates as of the Effective Date or during the term of this
Agreement, that in each case (1) is reasonably necessary or useful to make, use,
sell, offer to sell, and/or import any Licensed Products & Methods and (2)
qualifies as "Confidential Information" under the CDA.
1.8 "Licensed Methods" means any method that, absent the licenses
granted hereunder, the practice of which would infringe one or more Valid Claims
of the Licensed Patents in the Field.
1.9 "Licensed Patents" means (i) the NS Licensed Patents, and (ii) all
Patent Rights (other than the NS Licensed Patents) Controlled by Licensor or any
of its Affiliates as of the Effective Date or during the term of this Agreement,
each of which Patent Rights under this clause (ii) is reasonably necessary or
useful to make, use, sell, offer to sell, and/or import any Licensed Products &
Methods. The Patent Rights under the foregoing clause (ii) that are in existence
as of the Effective Date are listed in Exhibit A. For clarity, all Patent Rights
that arise from, or otherwise claim priority (directly or indirectly) to, any of
the Patent Rights listed as of the Effective Date or thereafter on Exhibit A
shall be treated as "Licensed Patents" hereunder.
1.10 "Licensed Product" means any article or device that (i) absent the
licenses granted hereunder, would infringe one or more Valid Claims of the
Licensed Patents in the Field, (ii) is manufactured by using a Licensed Method,
or (iii) when used as directed, practices a Licensed Method.
1.11 "Licensed Products & Methods" means Licensed Products and Licensed
Methods. For clarity, "Licensed Products & Methods" and those two subsidiary
definitions include, without limitation, combination products discussed in the
last paragraph of the "Net Sales" definition, and those products and services
described in Section 2.1(b).
1.12 "Material Adverse Effect" means a material adverse effect on the
operations or proposed business of the other Party.
1.13 "Net Sales" means, with respect to any Licensed Product or
Licensed Method, the amount received by IMI and its Sublicensed Affiliates (but
no Sublicensed Third Parties) for bona fide sales of such Licensed Product to,
or bona fide performances of such Licensed Method for, a Third Party (other than
Sublicensees but including any Third Party distributors for resale), less:
(a) discounts (including cash, quantity and patient program
discounts), retroactive price reductions, charge-back payments and rebates
granted to managed health care organizations or to federal, state and local
governments, their agencies, or to distributors and other trade customers,
reimbursers and customers and purchasers to the extent actually given or
allowed and consistent with industry standard practices for products or
services similar to the applicable Licensed Product or Licensed Method;
(b) credits or allowances actually granted upon claims,
damaged goods, rejections or returns of such Licensed Product or Licensed
Method, including in connection with any recalls or withdrawals;
2
EXCLUSIVE LICENSE AGREEMENT
(c) freight out, postage, shipping and insurance charges
for delivery if and to the extent included in the amount invoiced to the
Third Party; and
(d) taxes or duties levied on, absorbed or otherwise
imposed on such sale or performance, including value-added taxes, or other
governmental charges otherwise imposed upon the billed amount, as adjusted
for rebates and refunds, to the extent not paid by the Third Party.
Net Sales shall not include any payments among IMI, its Affiliates and
Sublicensed Third Parties. Net Sales shall be determined in accordance with
generally accepted accounting principles, consistently applied. Net Sales shall
not include sales or performances of Licensed Products & Methods for clinical
studies (including post-approval studies), as donations to non-profit
institutions or government agencies, for promotional or demonstration purposes
(but not to exceed three percent (3%) of Net Sales in any calendar year for such
purposes), or for research or development by IMI or any Sublicensees.
In the event that a Licensed Product is sold, or a Licensed Method is
performed, in any country in the form of a combination product or service
containing or using, respectively, one or more articles, devices, components or
methods that are not Licensed Products & Methods hereunder (each, a "Non-Product
Component"), Net Sales of such combination product/service shall be adjusted as
follows:
(1) First, actual Net Sales of such combination product/
service in such country for the applicable calendar quarter calculated pursuant
to this Section 1.13 shall be multiplied by the fraction A/(A+B), where A is the
average price in such country for such calendar quarter of the Licensed Products
& Methods and B is the invoice price in such country for such calendar quarter
of all Non-Product Components in such combination product/service, provided that
all such Licensed Products & Methods and Non-Product Components are
sold/performed separately in such country in such calendar quarter.
(2) Second, if in a specific country over such calendar
quarter, such Non-Product Components in such combination product/service are not
sold/performed separately in such country in such calendar quarter, Net Sales
shall be calculated by multiplying actual Net Sales of such combination
product/service calculated pursuant to this Section 1.13 by the fraction A/C,
where A is the average price in such country for such calendar quarter of such
Licensed Products & Methods and C is the average price in such country for such
calendar quarter of such combination product/service.
(3) Third, if in a specific country over such calendar
quarter, such Licensed Products & Methods are not sold /performed separately,
Net Sales shall be calculated by multiplying actual Net Sales of such
combination product/service calculated pursuant to Section 1.13 by the fraction
(C-B)/C, where B is the average price in such country for such calendar quarter
of all such Non-Product Components in such combination product/service and C is
the average price in such country for such calendar quarter of such combination
product/service
(4) Fourth, if, in a specific country over such calendar
quarter, both such Licensed Products & Methods and such Non-Product Components
are not sold separately, a market price for such Licensed Products & Methods and
all such Non-Product Components shall be negotiated by the parties in good faith
based upon the costs, overhead and profit as are then incurred for such
combination product/service, the apportionment of Net Sales as provided in
clauses (1) to (3) above in other countries for such calendar quarter if
available, and all other products, articles, devices, components or methods then
being sold or performed by IMI and its Sublicensees and having an ascertainable
market price.
1.14 "NS" means the Feinstein Institute for Medical Research, formerly
known as North Shore Long Island Jewish Research Institute.
1.15 "NS License" means that certain Sponsored Research and License
Agreement, effective as of January 1, 2003, by and between Licensor and NS, as
amended by (i) that certain Amendment No. 1 dated June 1, 2006 and (ii) that
certain Amendment No. 2 dated January 8, 2007, and as may further be amended,
restated, waived or changed as contemplated by Section 2.3(d).
3
EXCLUSIVE LICENSE AGREEMENT
1.16 "NS Licensed Patents" means all Patent Rights licensed as of the
Effective Date or during the term of this Agreement to Licensor under the NS
License, defined as of the Effective Date as the "North Shore Patent Rights" in
the NS License, which Patent Rights in existence as of the Effective Date that
contain Valid Claims that apply to the Field (in whole or in part) are listed in
Exhibit B.
1.17 "NS Licensed Know-How" means all "North Shore Technology" as
defined in the NS License.
1.18 "Patent Rights" mean (i) any patents and patent applications, (ii)
any substitutions, divisionals, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates, term extensions (under patent or other
law), certificates of invention and the like, of any patents or patent
applications, and (iii) any foreign or international equivalents of any of the
foregoing.
1.19 "Technology" means know-how, trade secrets, materials,
formulations, information, documents, studies, results, data (including
pre-clinical, clinical and assay data), manufacturing processes and data,
specifications, sourcing information, assays, and quality control and testing
procedures, whether or not patented or patentable.
1.20 "Third Party" means any person or entity, other than IMI or
Licensor or any of their Affiliates.
1.21 "Valid Claim" means a claim of (i) an issued and unexpired patent,
which claim has not been revoked or held invalid or unenforceable by a court or
other government agency of competent jurisdiction from which no appeal can be or
has been taken and has not been held or admitted to be invalid or unenforceable
through re-examination or disclaimer, reissue, opposition procedure, nullity
suit or otherwise, or (ii) a pending patent application that was filed in good
faith and has not been cancelled, withdrawn or abandoned without the possibility
of appeal or refiling.
Section 2. License Grants by Licensor.
2.1 Exclusive License and Covenant Not to Sue. Licensor, for itself and
on behalf of its Affiliates, hereby grants to IMI a non-transferable (except in
accordance with Section 10.1), exclusive (even as to Licensor and its
Affiliates, unless otherwise provided hereunder), worldwide license or
sublicense (as the case may be), with the right to sublicense in accordance with
Section 2.2, under the Licensed Patents and Licensed Know-How, to practice and
otherwise exploit the same in the Field only, to make, have made, use, sell,
offer to sell, and/or import Licensed Products & Methods. In addition, Licensor,
for itself and on behalf of its Affiliates and licensees and sublicensees,
hereby covenants not to sue, or cause or support any other person or entity to
sue, IMI, any of its Affiliates or Sublicensees, or any of their manufacturers,
suppliers, distributors or customers, for using Licensed Know-How to develop and
commercialize products and services in the Field, which covenant not to sue
shall apply to all activities occurring while the license/sublicense granted in
the immediately previous sentence remains in force. For purposes of this
Agreement, references to the "licenses granted above", "licenses granted in
Section 2.1" and the like in this Agreement shall refer to both the
license/sublicense and covenant not to sue contained in this Section 2.1. For
clarity:
(a) with respect to the NS Licensed Patents and NS Licensed
Know-How, the licenses granted above shall grant all rights available to
Licensor under the NS License, again only in the Field, and IMI expressly
acknowledges that NS has retained rights under the NS License for itself and
the US government and such retention of rights limits IMI's rights under the
NS Licensed Patents and NS Licensed Know-How;
(b) the licenses granted above shall further cover Licensed
Products & Methods that act in the Field, as well as also cause other
therapeutic effect(s) by acting outside of the Field (for example, by
combining a pharmacological agent with a Licensed Product & Method), provided
that the
4
EXCLUSIVE LICENSE AGREEMENT
use or sale of the device, article, or pharmacological agent responsible for
such other therapeutic effects, when sold or used alone without the
applicable Licensed Product & Method, does not infringe any Valid Claims of
the Licensed Patents outside of the Field (e.g., the manufacture, use or sale
of such pharmacological agent alone does not infringe any such Valid Claims);
and
(c) in all events, the licenses granted above shall not
apply to any pharmacological agents acting in the Excluded Field that are
covered by any Valid Claims of the Licensed Patents or Licensed Know-How,
whether or not used in combination with any Licensed Product & Method,
provided that this exclusion in this clause (c) and the foregoing clause (b)
shall not be understood to allow Licensor or any of its Affiliates or
licensees or sublicensees to use any Licensed Product & Method in the Field
in combination with any pharmacological agent acting in the Excluded Field.
2.2 Sublicenses.
(a) The licenses granted in Section 2.1 include the right
to grant sublicenses (through multiple tiers) by IMI to its Affiliates and
Third Parties (each such sublicensed Affiliate, a "Sublicensed Affiliate",
each such Third Party sublicensee, a "Sublicensed Third Party", and together
collectively the "Sublicensees"), provided that (i) any such sublicense
agreement shall be subject to and subordinate to this Agreement, (ii) IMI
shall remain responsible for the performance of its Sublicensees hereunder,
and (iii) IMI shall have no right to sublicense unless and until the payments
to Licensor set forth in Section 5.1 have been made in full.
(b) IMI shall provide to each of Licensor and NS timely
notification of each substantive negotiation to sublicense rights hereunder
and shall thereafter keep each of Licensor and NS reasonably informed as to
the substantive progress of such negotiations by providing each of Licensor
and NS with significant drafts of term sheets, any final term sheets and
drafts of any contracts or sublicense agreements prior to execution thereof
so that each of Licensor and NS shall have any opportunity to review the
same. All such information, drafts, term sheets, contracts and agreements,
and the execution copies thereof referred to in Section 2.2(c), shall be
treated as IMI's Confidential Information under the CDA.
(c) IMI shall provide to each of Licensor and NS an
unredacted execution copy of the sublicense agreement for its Sublicensees
and any documents evidencing the consideration paid to IMI or its Affiliates
within [**] business days of execution.
(d) Each sublicense granted to any Sublicensee hereunder
shall terminate immediately upon the termination of the licenses granted in
Section 2.1, provided that any such sublicense shall not terminate, on a
Sublicensee-by-Sublicensee basis, if, as of the effective date of termination
of this Agreement pursuant to Section 9, (i) all outstanding amounts owed
Licensor by IMI hereunder as of such date are paid in full within [**] days
of such date (whether by IMI, its Affiliates or Sublicensees), (ii) a
Sublicensee is not in material default of its obligations to IMI under its
sublicense agreement, and (iii) within [**] days of such termination the
Sublicensee agrees in writing to be bound directly to Licensor under a
license agreement substantially similar to this Agreement with respect to the
rights sublicensed to such Sublicensee hereunder, substituting such
Sublicensee for IMI. Licensor and such Sublicensee shall promptly memorialize
such direct license.
2.3 NS License and Other In-Licenses.
(a) NS License. During the term of this Agreement, IMI
hereby agrees to be responsible for those obligations of Licensor under the
NS License that are set forth on Exhibit C attached hereto, and to comply
with and otherwise satisfy those obligations as required by the terms of the
NS License. Apart from those obligations, IMI and its Affiliates shall not
assume any other obligations of Licensor under the NS License, except and
only to the extent that IMI is a sublicensee of the rights licensed to
Licensor thereunder.
5
EXCLUSIVE LICENSE AGREEMENT
(b) Future Third Party Agreements.
(i) After the Effective Date, if (A) Licensor or any
of its Affiliates, in its sole discretion, determines to enter into any
agreement with one or more Third Parties whereby IMI gains rights in or
to any Patent Rights or Technology that would amount to Licensed
Patents or Licensed Know-How, respectively, hereunder, and (B) the
practice of such Patent Rights and Technology in the Field by IMI or
any of its Sublicensees would give rise to royalties payable by
Licensor or its applicable Affiliates, then such Patent Rights and
Technology shall only be treated as "Controlled" and thus Licensed
Patents and Licensed Know-How hereunder if and only if IMI agrees by
amendment to this Agreement to reimburse Licensor and such Affiliate
for the amount payable to such Third Party for activities by IMI and
its Sublicensees.
(ii) Licensor shall notify IMI of any such Third
Party agreements, shall provide an unredacted copy of same to IMI for
IMI to consider (subject to any applicable Third Party confidentiality
requirements), and shall enter into any such amendment upon IMI's
reasonable request.
(iii) For clarity, this Section 2.3(b) shall not
apply to the NS License or any NS Licensed Patents or NS Licensed
Know-How, and further shall not apply to any Patent Rights or
Technology owned in whole or in part by Licensor or any of its
Affiliates (except to the extent Licensor or any of its Affiliates are
required to account to any non-NS Third Party that jointly owns such
Patent Rights or Technology for revenues generated from the licensing
of such rights).
(c) Maintenance. Licensor shall take commercially
reasonable steps to maintain in full force and effect the NS License and all
other Third-Party agreements whereby IMI gains rights hereunder in or to any
of the Licensed Know-How or Licensed Patents, including subject to and as
provided in Section 2.3(b) (collectively, "Third Party In-Licenses").
Licensor shall provide IMI with prompt notice (and in any event substantially
before the end of any applicable cure period under the applicable Third Party
In-License) of any written claim of breach of any Third Party In-License.
Subject to any applicable Third Party confidentiality requirements (except
with respect to the NS License), Licensor shall provide IMI with copies of
all notices and other documents Licensor receives or sends pursuant to each
Third Party In-License that affects IMI's rights hereunder (including any
termination notice).
(d) Amendment. Licensor shall not amend, restate, waive or
otherwise change any of the terms and conditions of the NS License, nor shall
Licensor enter into any other agreement or understanding with NS, that in
either case would have a material adverse impact on IMI's rights under this
Agreement without the prior written consent of IMI.
(e) Bankruptcy. Licensor agrees that if any party to any
Third Party In-License seeks relief under any bankruptcy, reorganization,
insolvency or similar laws, Licensor shall act in good faith to take all
reasonably necessary action, at IMI's expense, to preserve the rights granted
to IMI (via Licensor) hereunder (including seeking to preserve Licensor's and
IMI's rights under any such laws, including under the US Bankruptcy Code,
Title 11 of the U.S. Code). Should any Third Party In-License terminate,
Licensor shall reasonably assist IMI, at IMI's expense, in obtaining all
rights granted to IMI hereunder under such terminated agreement, including by
having the licensor thereof treat IMI as a direct licensee thereunder.
(f) Payments. Licensor shall be solely responsible for all
amounts owed to any Third Party arising from the NS License and any other
Third Party In-License, except as provided in Section 2.3(a) for the NS
License and subject to compliance with Section 2.3(b) as applicable to any
such other Third Party In-License.
6
EXCLUSIVE LICENSE AGREEMENT
(g) Proposed Letter Agreement with NS. Without limiting the
foregoing contained in this Section 2.3, with respect to the NS License,
Licensor shall, at IMI's expense, assist IMI in its efforts to negotiate and
execute a letter agreement with NS, and shall execute such documents as IMI
may reasonably request amending the NS License, whereby, in the event of
termination of the NS License, NS shall grant a direct license to IMI in the
Field under the NS Licensed Know-How and NS Licensed Patents on the same
terms as this Agreement with NS in place of Licensor hereunder, provided that
IMI is then in good standing as a sublicensee under the NS License.
2.4 Other Restrictions. Licensor shall not enter into any agreement or
otherwise take any actions or omit to take any actions in conflict with the
licenses granted in Section 2.1 and the other rights granted to IMI hereunder.
2.5 License Limitations. No licenses or other rights are granted by
Licensor hereunder to use any trademark, trade name, trade dress or service mark
Controlled by Licensor or any of its Affiliates. All licenses and other rights
are or shall be granted only as expressly provided in this Agreement, and no
other licenses or other rights are or shall be created or granted hereunder by
implication, estoppel or otherwise.
Section 3. Transfer of Licensed Know-How.
Within [**] days of the Effective Date, upon IMI's written request
within [**] days of the Effective Date, Licensor shall provide to IMI, at IMI's
expense, one (1) copy (in electronic form, if available) of all documents in
Licensor's or its Affiliates' possession as of the Effective Date to the extent
that such documents describe or contain Licensed Know-How, other than NS
Licensed Know-How, which NS Licensed Know-How the Parties acknowledge and agree
may be disclosed and provided by Dr. Kevin J. Tracey directly to IMI and its
Sublicensed Affiliates instead of through Licensor, provided that such NS
Licensed Know-How shall be treated as Confidential Information of Licensor under
the CDA. Licensor shall provide and transfer to IMI all additional Licensed
Know-How that may from time to time become available to Licensor.
Section 4. Development and Commercialization.
4.1 Commercially Reasonable Efforts. IMI, or one of its Sublicensees,
as applicable, shall use Commercially Reasonable Efforts to develop and
commercialize at least one Licensed Product & Method prior to [**], wherein
"Commercially Reasonable Efforts" means, with respect to Licensed Products &
Methods, the carrying out of development and commercialization activities in a
sustained manner using good faith commercially reasonable and diligent efforts,
using the efforts and resources that a company within the medical device
industry and similarly situated to IMI would reasonably devote to a product of
similar market potential or profit potential resulting from its own research
efforts, based on conditions then prevailing and taking into account, without
limitation, issues of safety and efficacy, product profile, the proprietary
position, the then current competitive environment for such product and the
likely timing of such product's entry into the market, the regulatory
environment and status of such product, and other relevant scientific, technical
and commercial factors.
4.2 Responsibilities and Costs. As between the Parties:
(a) IMI and its Sublicensees shall have sole responsibility
for, and shall bear all their costs of conducting, all research, development
and commercialization of Licensed Products & Methods (including manufacturing
all materials required therefor);
(b) IMI and its Sublicensees shall own the results of all
such development and commercialization activities; and
(c) All regulatory filings and approvals for any Licensed
Products & Methods shall be obtained by, in the name of, and solely owned by
IMI and its Sublicensees.
7
EXCLUSIVE LICENSE AGREEMENT
Section 5. IMI Payments.
5.1 Initial License Fee.
(a) IMI shall pay to Licensor five hundred thousand US
dollars (US$500,000) in cash, which payment shall be due within fifteen (15)
days of IMI or any of its Affiliates completing the First Financing.
(b) In connection with the First Financing and at the same
time as shares of preferred stock of IMI are sold in the First Financing (the
"Series A Preferred"), IMI shall issue to Licensor that number of shares of a
series of preferred stock ("Junior Preferred") equal to the number of shares
of Series A Preferred that could be purchased for $500,000 in connection with
the First Financing, provided that prior to such issuance, upon Licensor's
written instruction to IMI, IMI shall issue a portion of such Junior
Preferred shares directly to NS. The Junior Preferred shares shall have the
following rights:
(i) Dividend. Non-cumulative dividends shall be paid
on the Junior Preferred shares in an amount equal to eight cents
(US$0.08) per share of Junior Preferred as, if and when declared by the
board of directors of IMI.
(ii) Conversion. The Junior Preferred shares shall be
convertible into common stock of IMI by the holder at any time at an
original conversion ratio of one share of such common stock per share
of Junior Preferred, subject to anti-dilution protection as provided
below.
(iii) Automatic Conversion. The Junior Preferred
shares shall automatically convert into common stock of IMI upon the
closing of a firm underwritten public offering of common stock with
proceeds of at least forty million US dollars (US$40,000,000) at a
price per share of at least three US dollars (US$3.00) or, upon the
conversion of all outstanding shares of Series A Preferred shares.
(iv) Anti-dilution Protection. If IMI issues
additional shares (except for customary carve-outs such as shares
issued under IMI equity plans and the like) at a purchase price less
than the applicable conversion prices of the Series A Preferred shares,
the Junior Preferred shares conversion prices shall be reduced, based
on a broad-based weighted average formula (i.e., the total number of
shares authorized for issuance under IMI equity plans are included in
the numerator and the denominator of the adjustment calculation), so
that in sum the Junior Preferred shall have essentially the same
anti-dilution protection as the Series A Preferred.
(v) Liquidation Preference. In the event of a
Liquidation of IMI, the Series A Preferred shares shall receive, in
preference to all other stockholders, an amount equal to the number of
shares times the conversion price plus any declared but unpaid
dividends. Next, the Junior Preferred shares shall receive in
preference to all common stockholders an amount equal to the number of
shares times the conversion price plus any declared but unpaid
dividends (the "Liquidation Amount"). "Liquidation" means a merger,
acquisition, consolidation, sale of the company, sale of significant
assets of the company, or similar transaction.
(vi) Registration Rights. The Junior Preferred shall
receive from IMI piggyback (i.e., supplemental and not demand)
registration rights equal to the piggyback rights held by holders of
the Series A Preferred.
Licensor shall further agree in connection with receiving those shares of Junior
Preferred (i) to have its shares of Junior Preferred treated for all voting
purposes the same as the Series A Preferred, and (ii) to become subject to the
following customary obligations contained in the applicable financing agreements
on the same basis as the purchasers of Series A Preferred as a whole: (1) voting
obligations related to the election of directors, (2) up to a 180 day lock-up in
connection with an initial public offering of IMI, and (3) a drag-along right.
8
EXCLUSIVE LICENSE AGREEMENT
5.2 Milestone Payment. IMI shall pay Licensor one million US dollars
(US$1,000,000) upon IMI or any its Sublicensees first achieving all regulatory
approvals from the United States Food and Drug Administration (or any successor
agency thereto) or any foreign counterpart governmental agency required for the
marketing and sale of any Licensed Product & Method in the applicable country.
Such milestone payment shall be payable to Licensor within thirty (30) days
after such achievement. Only one such milestone payment shall be due under this
Agreement.
5.3 Royalties.
(a) Royalties from Net Sales of IMI and its Sublicensed
Affiliates. Subject to the terms and conditions of this Agreement, IMI shall
pay to Licensor a flat royalty, of [**] percent ([**]%) based upon worldwide
annual Net Sales made by IMI and its Sublicensed Affiliates (but not
Sublicensed Third Parties) of any Licensed Products & Methods sold or
performed in the Field while covered in the country of actual or intended use
by a Valid Claim of the Licensed Patents.
(b) Sublicensed Third Party Payments. Subject to the terms
and conditions of this Agreement, IMI shall pay to Licensor [**] percent
([**]%) of all sublicensing royalties, fees and payments actually received by
IMI and its Affiliates from Sublicensed Third Parties in consideration of
sublicenses granted under Section 2.2, excluding (i) the fair market value of
any equity investments made in IMI and its Affiliates by Sublicensed Third
Parties and their Affiliates, which fair market value shall be determined
upon the written request of Licensor by a valuation firm selected by IMI and
reasonably acceptable to Licensor (the cost of which firm shall be shared
equally by IMI and Licensor, unless the valuation determined by such firm is
more than [**]%) greater than the valuation proposed by IMI before such firm
valuation, whereupon IMI shall pay such cost), with any premium paid for such
equity investments over such fair market value subject to IMI's [**]% payment
obligation above, (ii) payments by Sublicensed Third Parties and their
Affiliates to pay or reimburse for out-of-pocket patent prosecution,
maintenance, defense, enforcement and other related expenses of IMI and its
Affiliates, (iii) payments by Sublicensed Third Parties and their Affiliates
for full-time equivalents ("FTEs") of IMI and its Affiliates not to exceed
more than [**] FTEs at a rate of [**] per FTE during the first [**] years of
the applicable sublicense agreement, with any excess over such FTE limits
subject to IMI's [**]% payment obligation above, and (iv) payments by
Sublicensed Third Parties and their Affiliates for manufacturing payments.
(c) Royalty Limitations. Royalties on sales and
performances of Licensed Products & Methods shall be payable to or shared
with Licensor under Section 5.3(a) and Section 5.3(b) only for those Licensed
Products & Methods that infringe a Valid Claim of the Licensed Patents upon
sale or performance in the country of actual or intended use. Only one
royalty shall be due with respect to the sale or performance of the same unit
of Licensed Product & Method. Only one royalty shall be due hereunder on the
sale or performance of any Licensed Product & Method, even if the
manufacture, use, sale, offer for sale or importation of such Licensed
Product & Method infringes more than one Valid Claim of the Licensed Patents.
5.4 Minimum Royalties Payable.
(a) If and only if the amount payable by IMI to Licensor
for sales and performances of Licensed Products & Methods by IMI and its
Sublicensees under Sections 5.3(a) and 5.3(b) is for any calendar quarter
less than what Licensor owes to NS under the NS License Agreement for those
same sales and performances (but not any other activities of Licensor or any
other sublicensee under the NS License), IMI shall increase the royalty
payment required by Section 5.5(b) to equal such amount owed NS by Licensor.
Thereafter, in any subsequent royalty payment hereunder, IMI may deduct from
the amount owed Licensor the amount required for such increase. This Section
5.4(a) shall only apply while IMI has a sublicense to the NS Licensed Patents
and NS Licensed Know-How from Licensor under the NS License.
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EXCLUSIVE LICENSE AGREEMENT
(b) Once IMI or any of its Sublicensees first sells or
performs any Licensed Product & Method that gives rise to royalty payments
from Licensor to NS under the NS License Agreement, the Parties shall meet
and agree on an appropriate means of monitoring payments owed NS by Licensor
based on activities of IMI and its Sublicensees for each calendar quarter and
upon any audit under Section 5.5(c) so as to comply with Section 5.4(a).
(c) All other payments, if any, required of Licensor or any
of its Affiliates for any Third Party In-Licenses other than the NS License
shall be addressed by Section 2.3(b) and any amendment to this Agreement.
5.5 Payment Terms.
(a) Manner of Payment. All payments to be made by IMI
hereunder shall be made in US dollars by wire transfer to such bank account
as Licensor may designate.
(b) Reports and Royalty Payments.
(i) For as long as payments are due under Section
5.3(a) or 5.3(b), IMI shall furnish to Licensor a written report,
within thirty (30) days after the end of each calendar quarter, showing
the payments owed to Licensor for such calendar quarter. Payments for
each calendar quarter shall be due at the same time as such written
report for such calendar quarter.
(ii) The report shall include, at a minimum, the
following information for the applicable calendar quarter, each listed
by Licensed Product & Method and by country of sale: (i) the number of
units of Licensed Products & Methods sold and performed by IMI and its
Sublicensed Affiliates on which royalties are owed Licensor hereunder;
(ii) the gross amount received for such sales; (iii) deductions taken
from Net Sales as specified in the definition thereof; (iv) Net Sales;
(v) the gross amount of any payments received by IMI from Sublicensed
Third Parties subject to sharing with Licensor under Section 5.3(b);
(vi) the royalties owed to Licensor under Section 5.3(a); (vii) the
payments owed to Licensor under Section 5.3(b); (viii) the computations
for any applicable currency conversions pursuant to Section 5.5(d); and
(ix) any other information expressly required by the terms of this
Agreement. All such reports shall be treated as Confidential
Information of IMI.
(iii) IMI shall include terms in each sublicense
agreement it enters hereunder granting IMI permission from each
Sublicensee to share with each of Licensor and NS the information
listed in the numbered clauses of Section 5.5(b)(ii) as they relate to
net sales of Licensed Products & Methods sold or performed by such
Sublicensee.
(c) Records and Audits.
(i) IMI shall keep, and shall cause each of its
Sublicensees to keep, adequate books and records of accounting for the
purpose of calculating all amounts payable to Licensor hereunder. For
the [**] years next following the end of the calendar year to which
each shall pertain, such books and records of accounting (including
those of IMI's Sublicensees) shall be kept at each of their principal
place of business and shall be open for inspection at reasonable times
and upon reasonable notice by an independent certified accountant
selected by Licensor, and which is reasonably acceptable to IMI, for
the sole purpose of inspecting the amounts owed to Licensor under this
Agreement. In no event shall such inspections be conducted hereunder
more frequently than [**] every twelve (12) months. Such accountant
must have executed and delivered to IMI and its Sublicensees to be
audited a confidentiality agreement as reasonably requested by IMI,
which shall include provisions limiting such accountant's disclosure to
Licensor to only the results and basis for such results of such
inspection. The results of such inspection, if any, shall be binding on
both Parties.
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EXCLUSIVE LICENSE AGREEMENT
(ii) Any underpayments from any such inspection shall
be paid by IMI within thirty (30) days of notification of the results
of such inspection. Any overpayments from any such inspection shall be
fully creditable against amounts payable in subsequent payment periods.
Licensor shall pay for such inspections, except that in the event there
is any upward adjustment in aggregate royalties payable for any
calendar year shown by such inspection of more than the greater of (1)
[**] US dollars (US$[**]), or (2) five percent (5%) of the amount
already paid for the audited period in question, IMI shall reimburse
Licensor for any reasonable out-of-pocket costs for such inspection.
(d) Currency Exchange. With respect to Net Sales invoiced
in US dollars, the Net Sales and the amounts due to Licensor hereunder shall
be expressed in US dollars. With respect to Net Sales invoiced in a currency
other than US dollars, the Net Sales shall be expressed in the domestic
currency of the entity making the sale, together with the US dollar
equivalent, calculated using the official rate of exchange of such domestic
currency as quoted by The Wall Street Journal, Eastern United States Edition,
for the last business day of the calendar quarter for which the payment is
made.
(e) Tax Withholding. The withholding tax, duties, and other
levies (if any) applied by any government authority on payments made by IMI
to Licensor hereunder shall be borne by Licensor. IMI and its Sublicensed
Affiliates shall cooperate with Licensor to enable Licensor to claim
exemption therefrom under any double taxation or similar agreement in force
and shall use commercially reasonable efforts to provide to Licensor proper
evidence of payments of withholding tax and assist Licensor by obtaining or
providing in as far as possible the required documentation for the purpose of
Licensor's tax returns.
(f) Blocked Payments. In the event that, by reason of
applicable law in any country, it becomes impossible or illegal for IMI (or
any of its Affiliates) to transfer, or have transferred on its behalf,
payments owed Licensor hereunder, IMI shall promptly notify Licensor of the
conditions preventing such transfer and such payments shall be deposited in
local currency in the relevant country to the credit of Licensor in a
recognized banking institution designated by Licensor or, if none is
designated by Licensor within a period of thirty (30) days, in a recognized
banking institution selected by IMI or its Affiliate or Sublicensee, as the
case may be, and identified in a written notice given to Licensor.
(g) Interest. IMI shall pay Licensor, without being
requested, simple interest on any payments that are not paid on or before the
date such payments are due under this Agreement at a rate equal to the daily
prime rate, as published in The Wall Street Journal, Eastern United States
Edition, plus five percent (5%), or the maximum applicable legal rate, if
less, calculated on the total number of days payment is delinquent.
Section 6. Patent Prosecution and Enforcement.
The following provisions of this Section 6 are subject to any Third
Party In-License applicable to the Licensed Patents licensed to Licensor
thereunder.
6.1 Prosecution and Maintenance.
(a) By Licensor.
(i) On or before the Effective Date, Licensor shall
provide IMI with copies of complete prosecution files for all Licensed
Patents for which Licensor is responsible for preparation, prosecution
(including any interferences, oppositions, reissue proceedings and
re-examinations) and maintenance, and if not so responsible, all such
files to the extent in Licensor and its Affiliates' possession.
Licensor, or its Affiliates, shall be responsible for the preparation,
prosecution (including any interferences, oppositions, reissue
proceedings and re-examinations) and maintenance of the Licensed
Patents. To the extent the Valid Claims involved apply to the
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EXCLUSIVE LICENSE AGREEMENT
Field (in whole or part), Licensor shall keep IMI fully informed as to
the status of such patent matters, including by providing IMI the
opportunity, at IMI's expense, to review and comment on any documents
relating to the Patent Rights which shall be filed in any patent office
at least fifteen (15) days before such filing and promptly providing
IMI copies of any documents relating to the Patent Rights which
Licensor receives from such patent offices. Upon IMI's request,
Licensor shall update Exhibits A and B attached hereto.
(ii) Licensor shall not take any action with respect
to the preparation, prosecution or maintenance of any Licensed Patents
containing such Valid Claims applicable to the Field without prior
consultation with IMI, and Licensor shall attempt to incorporate all
reasonable comments of IMI with respect thereto to the extent related
to the Field.
(iii) Licensor shall be responsible for all its costs
incurred for such preparation, prosecution and maintenance, provided,
however, that IMI shall reimburse Licensor for [**] percent ([**]%) of
all out-of-pocket costs incurred by Licensor for such activities within
[**] days of Licensor providing to IMI reasonable documentation
supporting such costs and evidencing payment by Licensor of such costs,
provided that IMI's [**] percent ([**]%) share shall not first be
payable until [**] days after IMI completes a First Financing. In the
event that Licensor expects to incur out-of-pocket costs for a patent
family contained within the Licensed Patents in excess of [**] US
dollars (US$[**]) during any twelve (12)-month period, so that IMI's
[**] percent ([**]%) share would equal or exceed [**] US dollars
(US$[**]), Licensor shall first notify IMI in writing at least [**]
days before incurring any such costs, or otherwise IMI shall not be
responsible for its [**] percent ([**]%) share of any such costs in
excess of such $[**] incurred by Licensor before the [**] day after IMI
receives such written notice from Licensor.
(iv) At any time by providing [**] days prior written
notice to Licensor, IMI may elect not to pay its [**] percent ([**]%)
share for the prosecution and maintenance of any Licensed Patent in any
country, whereupon such Licensed Patent in such country shall no longer
be licensed to IMI and its Affiliates under Section 2.1, subject to the
following: if (1) the aggregate out-of-pocket patents costs to be paid
by IMI for the prosecution or maintenance of the Licensed Patents
hereunder has been or is reasonably expected to exceed [**] US dollars
(US$[**]) in any rolling 12-month period when IMI provides such written
notice for such Licensed Patent, and (2) if at the time of such
election such Licensed Patent does not contain any Valid Claim that
applies to the Field (in whole or part) but upon such Licensed Patent
issuing or otherwise going into force such Licensed Patent contains one
or more claims that apply to the Field (in whole or in part), then,
only if both clauses (1) and (2) are satisfied for such Licensed
Patent, IMI may reinstate the license grants under Section 2.1 to such
Licensed Patent (retroactive to the date of such written notice) by
paying to Licensor three (3) times IMI's [**]% share of patents costs
attributable to such Licensed Patent not previously paid by IMI under
Section 6.1(a)(iii).
(b) By IMI.
(i) Licensor shall not permit any of the Licensed
Patents to be abandoned in any country without IMI first being given an
opportunity to assume full responsibility for the continued prosecution
and maintenance of same. In the event that Licensor decides not to
continue the prosecution or maintenance of a patent application or
patent within Licensed Patents in any country, or to permit an allowed
patent application to issue without there being a pending patent
application with at least the same disclosure and specification
claiming priority (directly or indirectly) to such allowed patent
application, Licensor shall provide IMI with notice of this decision at
least thirty (30) days prior to any lapse, abandonment or issuance
thereof.
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EXCLUSIVE LICENSE AGREEMENT
(ii) In the event that IMI elects to assume
responsibility for such prosecution and maintenance within thirty (30)
days of Licensor's notice, or to file a patent application to maintain
pendency, Section 6.1(a)(i) shall thereafter apply to such Licensed
Patents (including any later filed Patent Rights claiming priority
(directly or indirectly) thereto), except that (1) the role of IMI and
Licensor shall be reversed thereunder, (2) IMI shall have no obligation
to prosecute or maintain Valid Claims that apply outside of the Field
(in whole or in part), and (3) IMI shall pay all its costs associated
therewith. Such Licensed Patents shall otherwise continue to be subject
to all of the terms and conditions of this Agreement in the same way as
the other Licensed Patents.
(c) New Filings.
(i) In addition to the foregoing provisions of this
Section 6.1(a), the Parties agree that, at IMI's reasonable request, on
a country-by-country basis, Licensor shall file a divisional,
continuation, continuation-in-part or other like patent application
claiming priority to any Licensed Patent for IMI to prosecute and
maintain Valid Claims that are licensed in full to IMI under Section
2.1 in the Field as provided in such license (all such patent
applications, including all later filed Patent Rights claiming priority
(directly or indirectly) thereto, collectively "Field Only Licensed
Patent Rights"). Notwithstanding any other provision of this Agreement,
IMI shall reimburse Licensor its reasonable costs incurred in
connection with any such filings within thirty (30) days of receipt of
such invoices.
(ii) Section 6.1(a)(i) shall apply to Field Only
Licensed Patent Rights, except that the role of IMI and Licensor shall
be reversed thereunder and further provided that IMI shall pay its
costs associated therewith. If any Field Only Licensed Patent Rights
contains Valid Claims that are not subject to such license, then
Licensor may by written notice to IMI elect to take over prosecution
and maintenance of the applicable Patent Right, which thereafter shall
be subject to Section 6.1(a). For clarity, Field Only Licensed Patent
Rights shall remain owned or otherwise Controlled by Licensor, shall
remain a "Licensed Patent" hereunder, and shall give rise to payments
under Sections 5.3(a) and 5.3(b) as applicable.
(d) General. Each Party shall provide to the other Party
copies of any papers relating to the filing, prosecution or maintenance of
Licensed Patents promptly upon receipt. Each Party shall cooperate with the
other in the foregoing activities.
6.2 Enforcement and Defense.
(a) Enforcement in the Field.
(i) In the event that Licensor or IMI becomes aware
of a suspected infringement of any Licensed Patent in the Field, such
Party shall notify the other Party promptly, and following such
notification, the Parties shall confer. IMI shall have the first right,
but shall not be obligated, to bring an infringement action with
respect to such infringement in the Field at its own expense, or to
defend any action alleging non-infringement of any Licensed Patent in
the Field, in its own name and under its own direction and control, or
settle any such action by sublicense. Licensor shall reasonably assist
IMI in any such action if so requested by IMI, and shall join such
action if reasonably requested by IMI or required by applicable law, or
shall require the owner of the involved Licensed Patent to do the same
if authorized by the applicable Third Party In-License. Licensor shall
have the right to participate in any such action with its own counsel
at its own expense and without reimbursement hereunder.
(ii) If IMI elects not to settle or bring any action
for infringement or defend any non-infringement action and so notifies
Licensor, then, Licensor may defend or bring such action at its own
expense, in its own name and under its own direction and control,
subject to the following: IMI shall reasonably assist Licensor in any
such action if so requested by Licensor,
13
EXCLUSIVE LICENSE AGREEMENT
and shall join such action if requested by Licensor or required by
applicable law. IMI shall have the right to participate in any such
action with its own counsel at its own expense and without
reimbursement hereunder.
(b) Non-Field Enforcement. If Licensor or any of its
Affiliates or their licensees or sublicensees enforce any Licensed Patents
against infringement outside of the Field, IMI shall have the right to
participate in the applicable action or proceeding at IMI's own expense. If
IMI elects to so participate, the enforcing entity shall provide IMI with an
opportunity to consult regarding same.
(c) Defense.
(i) Licensor shall have the first right, but shall
not be obligated, to defend against any action or proceeding alleging
invalidity or unenforceability of any Licensed Patents (other than with
respect to (i) any interferences, oppositions, reissue proceedings or
re-examinations with respect to any such Licensed Patents, which are
addressed in Section 6.1, and (ii) any such action or proceeding filed
by a Third Party in response to a suit brought or defended by IMI
pursuant to Section 6.2(a) concerning infringement of any such Licensed
Patents (which action or proceeding may be a counterclaim in such suit
or may be filed apart from such suit and possibly later consolidated
with such suit)), at Licensor's own expense, in its own name and under
its own direction and control, subject to the following: IMI shall
reasonably assist Licensor in any such action or proceeding if so
requested by Licensor, and shall join such action or proceeding if
requested by Licensor or required by applicable law. IMI shall have the
right to participate in any such action or proceeding with its own
counsel at its own expense and without reimbursement hereunder.
(ii) If Licensor elects not to defend any such action
or proceeding and so notifies IMI, then IMI may defend or bring such
action at its own expense, in its own name and under its own direction
and control, subject to the following: Licensor shall, at IMI's
expense, reasonably assist IMI in any such action or proceeding if so
requested by IMI, and shall join such action or proceeding if
reasonably requested by IMI or required by applicable law, or shall
require the owner of the involved Licensed Patent to do the same if
authorized by the applicable Third Party In-License. Licensor shall
have the right to participate in any such action or proceeding with its
own counsel at its own expense and without reimbursement hereunder.
(d) Settlement. No settlement of any action or proceeding
referred to in Section 6.2(a) or 6.2(c) that restricts the scope, or
adversely affects the validity or enforceability, of a Licensed Patent in the
Field may be entered into by Licensor without the prior written consent of
IMI. No settlement of any action referred to in Section 6.2(a) or 6.2(c) that
restricts the scope, or adversely affects the validity or enforceability, of
a Licensed Patent outside of the Field may be entered into by IMI without the
prior written consent of Licensor.
(e) Escrow in Certain Circumstances.
(i) On a country-by-country and Licensed Product &
Method-by-Licensed Product & Method basis, in any action or proceeding
in which a Third Party challenges the validity or enforceability of all
(and not less than all) of the Valid Claims under the Licensed Patents
in such country that cover such Licensed Product & Method or its
manufacture, sale or use (including by way of interference, opposition,
reissue proceeding or re-examination, or in response to enforcement
pursuant to Section 6.2), then upon filing of such action or proceeding
by a Third Party, [**] percent ([**]%) of all amounts which would
otherwise be paid to Licensor under Sections 5.3(a) and 5.3(b) with
respect to such Licensed Product & Method for such country affected by
such action or proceeding, shall be deposited in an interest bearing
escrow account, until such time as all such Valid Claims expire.
14
EXCLUSIVE LICENSE AGREEMENT
(ii) All monies in any such escrow account, together
with all accrued interest, shall be retained by IMI if all such Valid
Claims are found invalid or unenforceable by a court of proper
jurisdiction in a decision unappealable or unappealed within the time
allowed for appeal, and, if at least one such Valid Claim is found not
invalid and not unenforceable by a court of proper jurisdiction in such
a decision, all monies in such escrow account, together with all
accrued interest, shall be released to Licensor immediately.
(f) Withdrawal. If either Party brings an action or
proceeding under this Section 6.2 and subsequently ceases to pursue or
withdraws from such action or proceeding, it shall promptly notify the other
Party and the other Party may substitute itself for the withdrawing Party
under the terms of this Section 6.2.
(g) Damages.
(i) In the event that either Party exercises the
rights conferred in this Section 6.2 and recovers any damages or other
sums in such action or proceeding or in settlement thereof, such
damages or other sums recovered shall first be applied to all
out-of-pocket costs and expenses incurred by the Parties in connection
therewith (including attorneys fees), unless not reimbursable
hereunder. If such recovery is insufficient to cover all such costs and
expenses of both Parties, the controlling Party's costs shall be paid
in full first before any of the other Party's costs.
(ii) If after such reimbursement any funds shall
remain from such damages or other sums recovered, such funds shall be
retained by the Party that controlled the action or proceeding under
this Section 6.2; provided, however, that (i) if IMI is the Party that
controlled such action or proceeding, Licensor shall receive out of any
such remaining recovery received by IMI an amount equal to royalties
payable hereunder by treating such remaining recovery as "Net Sales"
hereunder, provided, however, that to the extent such recovery includes
lost profits of IMI and/or its Sublicensees, Licensor shall be entitled
to receive from such recovery an amount equal to the applicable royalty
rate provided in Section 5.3 based upon the sales of Licensed Product
used to derive such lost profits and (ii) if Licensor is the Party that
controlled such action or proceeding, the remaining recovery received
by Licensor shall be shared equally between IMI and Licensor.
Section 7. Confidential Information.
The Parties agree that confidential information shall be handled in
accordance with the terms and conditions of the CDA by and between the Parties.
Section 8. Warranties; Limitations of Liability; Indemnification
8.1 Licensor Representations and Warranties. Licensor covenants,
represents and warrants to IMI that as of the Effective Date except as where the
failure to do so could have a Material Adverse Effect on IMI:
(a) Licensor is a corporation duly organized, validly
existing and in good standing under the laws of state or jurisdiction in
which it is incorporated, and it has full right and authority to enter into
this Agreement and to grant the licenses and other rights to IMI as herein
described.
(b) This Agreement has been duly authorized by all
requisite corporate action, and when executed and delivered shall become a
valid and binding contract of Licensor enforceable against Licensor in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other law affecting creditors' rights
generally from time to time if effect, and to general principles of equity.
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EXCLUSIVE LICENSE AGREEMENT
(c) The execution, delivery and performance of this
Agreement does not conflict with any other agreement, contract, instrument or
understanding, oral or written, to which Licensor is a party, or by which it
is bound, nor shall it violate any law applicable to Licensor.
(d) All necessary consents, approvals and authorizations of
all regulatory and governmental authorities and other persons or entities
required to be obtained by Licensor in connection with the execution and
delivery of this Agreement and the performance of its obligations hereunder
have been obtained.
(e) There are no Patent Rights not listed on Exhibits A and
B in which Licensor or any of its Affiliates has any ownership, license,
sublicense, covenant not to sue, option or other interest (whether or not
such Patent Rights are Controlled hereunder or purposes of the licenses
granted in Section 2.1) and that contain disclosure or Valid Claims that
relate to the Field. To the knowledge of Licensor, the issued Valid Claims
included in the Licensed Patents are valid and enforceable, and no written
claim has been made (except by a patent examiner during prosecution of the
patent application(s) that resulted in any such issued patent claims), and no
action or proceeding has been commenced or threatened, alleging to the
contrary. To the knowledge of Licensor, no Licensed Patent has ever been the
subject of litigation, an interference, an opposition, a reissue proceeding,
a re-examination or other like action or proceeding. To Licensor's knowledge,
the conception and reduction to practice of the Licensed Patents have not
constituted or involved the misappropriation of trade secrets or other rights
or property of any Third Party. To Licensor's knowledge, there has been no
infringement by any Third Party of any Licensed Patents in the Field. There
are no NS Licensed Patents in existence as of the Effective Date that contain
Valid Claims that apply to the Field (in whole or in part) that are not
listed on Exhibit B.
(f) Licensor is the sole and exclusive owner of all right,
title and interest in and to the Licensed Patents, other than the NS Licensed
Patents. To Licensor's knowledge, none of the Licensed Patents or Licensed
Know-How is subject to any lien, security interest or other encumbrance. To
the knowledge of Licensor, there are no claims, judgments or settlements
against or amounts with respect thereto owed by Licensor or any of its
Affiliates relating to the Licensed Patents. The grant, use or practice of
the licenses granted in Section 2.1 shall not trigger any payment obligation
by Licensor or any of its Affiliates to any Third Party, other than to NS
under the NS License. The only agreement with a Third Party whereby Licensor
Controls Patent Rights and Technology licensed to IMI hereunder is the NS
License.
(g) Licensor has not received notice that it is in breach
of its obligations under the NS License. To the knowledge of Licensor, there
is no basis for a valid claim that it is in breach of its obligations under
the NS License. No term or provision of this Agreement constitutes or gives
rise to, or shall constitute or give rise to, a breach of the NS License. A
true, complete and correct copy of the NS License, as amended as of the
Effective Date, has been provided to IMI.
(h) There is no pending action or proceeding alleging, or,
to Licensor's knowledge, any written communication alleging, that the
manufacture, use, sale, offer for sale, importation, performance, research,
development, commercialization or other exploitation of any Licensed Product
& Method in the Field has or shall infringe or misappropriate any Patent
Rights or other intellectual property rights of any Third Party. Licensor has
notified IMI of all such rights of any Third Party of which Licensor is aware
that are related to the foregoing activities.
(i) Licensor has not previously granted to any Third Party
any licenses, sublicenses, covenants not to sue or any other rights under the
Licensed Patents or Licensed Know-How in the Field or otherwise with respect
to any Licensed Product & Method.
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EXCLUSIVE LICENSE AGREEMENT
8.2 IMI Representations and Warranties. IMI covenants, represents and
warrants to Licensor that as of the Effective Date except as where the failure
to do so could have a Material Adverse Effect on Licensor:
(a) IMI is a corporation duly organized, validly existing
and in good standing under the laws of state in which it is incorporated, and
it has full right and authority to enter into this Agreement and to accept
the rights and licenses granted as herein described.
(b) This Agreement has been duly authorized by all
requisite corporate action, and when executed and delivered shall become a
valid and binding contract of IMI enforceable against IMI in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally from time to
time if effect, and to general principles of equity.
(c) The execution, delivery and performance of this
Agreement does not conflict with any other agreement, contract, instrument or
understanding, oral or written, to which IMI is a party, or by which it is
bound, nor shall it violate any law applicable to IMI.
(d) All necessary consents, approvals and authorizations of
all regulatory and governmental authorities and other persons or entities
required to be obtained by IMI in connection with the execution and delivery
of this Agreement and the performance of its obligations hereunder have been
obtained.
8.3 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER Licensor
NOR IMI MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8.4 Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
OR OTHERWISE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR ANY THIRD PARTY WITH
RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES. Notwithstanding anything in this Agreement or otherwise,
neither Party shall have liability under Section 8.6 in excess of one hundred
thousand US dollars (US$100,000).
8.5 Performance by Affiliates. The Parties recognize that each Party
may perform some or all of its obligations under this Agreement through
Affiliates and Third Parties provided, however, that each Party shall remain
responsible and liable for the performance by its Affiliates and such Third
Parties and shall cause its Affiliates and such Third Parties to comply with the
provisions of this Agreement in connection therewith.
8.6 Indemnification.
(a) IMI Indemnity. Subject to Section 8.4, IMI hereby
agrees to indemnify and hold Licensor and its Affiliates, NS, and each of
their respective employees, directors, agents and contractors, and their
respective successors, heirs and assigns and representatives ("Licensor
Indemnitees") harmless from and against all claims, liability, threatened
claims, damages, expenses (including reasonable attorneys' fees), suits,
proceedings, losses or judgments, whether for money or equitable relief, of
any kind (including death, personal injury, illness, product liability or
property damage, the failure to comply with applicable law, or infringement
or misappropriation of Patent Rights or other intellectual property rights,
except as subject to indemnification by Licensor pursuant to Section 8.6(b))
(collectively, "Losses"), arising from any Third Party claim due to the
manufacture, use, sale, offer for sale, importation, performance, research,
development, commercialization or other exploitation of any Licensed Products
& Methods by or for IMI or any of its Affiliates, Sublicensees,
17
EXCLUSIVE LICENSE AGREEMENT
agents and contractors, except to the extent that such Losses arise from (i)
the negligence, recklessness or willful misconduct of any Licensor
Indemnitees, or (ii) any breach of this Agreement by Licensor.
(b) Licensor Indemnity. Subject to Section 8.4, Licensor
hereby agrees to indemnify and hold IMI, its Affiliates and Sublicensees, and
their respective employees, directors, agents and contractors, and their
respective successors, heirs and assigns and representatives ("IMI
Indemnitees") harmless from and against all Losses arising from any Third
Party claim due to the practice or use of any Licensed Patents or Licensed
Know-How in the Field after the Effective Date, except to the extent that
such Losses arise from (i) the negligence, recklessness or willful misconduct
of any IMI Indemnitees or (ii) any breach of this Agreement by IMI.
(c) Indemnification Procedure.
(i) A claim to which indemnification applies under
Section 8.6(a) or Section 8.6(b) shall be referred to herein as a
"Claim". If any person or entity (each, an "Indemnitee") intends to
claim indemnification under this Section 8.6, the Indemnitee shall
notify the other Party (the "Indemnitor") in writing promptly upon
becoming aware of any claim that may be a Claim (it being understood
and agreed, however, that the failure by an Indemnitee to give such
notice shall not relieve the Indemnitor of its indemnification
obligation under this Agreement except and only to the extent that the
Indemnitor is actually prejudiced as a result of such failure to give
notice). The Indemnitor shall have the right to assume and control the
defense of such Claim at its own expense with counsel selected by the
Indemnitor and reasonably acceptable to the Indemnitee; provided,
however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitee, if
representation of such Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by
such counsel in such proceedings. If the Indemnitor does not assume the
defense of such Claim as aforesaid, the Indemnitee may defend such
Claim but shall have no obligation to do so. The Indemnitee shall
reasonably cooperate with the Indemnitor at the Indemnitor's expense
and shall make available to the Indemnitor all pertinent information
under the control of the Indemnitee, which information shall be subject
to the terms of the CDA.
(ii) The Indemnitee shall not settle or compromise
any Claim without the prior written consent of the Indemnitor, and the
Indemnitor shall not settle or compromise any Claim in any manner which
would have an adverse effect on the Indemnitee's interests, without the
prior written consent of the Indemnitee, which consent, in each case,
shall not be unreasonably withheld.
8.7 Insurance. IMI shall procure and maintain insurance policies for
the following coverages with respect to personal injury, bodily injury and
property damage arising out of IMI's performance under this Agreement: (i) from
thirty (30) days after the First Financing and for the remainder of the term of
this Agreement, comprehensive general liability, including broad form and
contractual liability, in a minimum amount of $2,000,000 combined single limit
per occurrence and in the aggregate; (ii) before the commencement of clinical
trials involving any Licensed Products & Methods, clinical trials coverage in a
minimum amount of $3,000,000 combined single limit per occurrence and in the
aggregate; and (iii) prior to the first commercial sale of the first Licensed
Product & Method, product liability coverage, in a minimum amount of $5,000,000
combined single limit per occurrence and in the aggregate, with the coverage
provided for in clauses (ii) and (iii) to remain in force during the term of
this Agreement and for at least five (5) years thereafter.
Section 9. Term, Termination and Survival.
9.1 Term. This Agreement shall commence as of the Effective Date and,
unless sooner terminated in accordance with the terms hereof or by mutual
written consent, shall continue until there are
18
EXCLUSIVE LICENSE AGREEMENT
no more Valid Claims of the Licensed Patents. On a country-by-country and
Licensed Product & Method-by-Licensed Product & Method basis, at such time as no
more payments are due Licensor under Sections 5.3(a) and 5.3(b) for such
Licensed Product & Method in such country, the licenses granted in Section 2.1
shall become perpetual, irrevocable and fully paid up with respect to such
Licensed Product & Method in such country.
9.2 Termination for Material Default.
(a) Material Default. Subject to Section 9.2(b), either
Party shall have the right to terminate this Agreement upon delivery of
written notice to the other Party in the event of any default in the
performance by such other Party of any of such other Party's material
obligations under this Agreement, provided that such default has not been
cured within thirty (30) days after written notice thereof is given by the
non-defaulting Party to the defaulting Party specifying the nature of the
alleged default.
(b) Disputed Default. If the defaulting Party disputes in
good faith the existence or materiality of a default specified in a notice
provided by the non-defaulting Party pursuant to Section 9.2(a), and the
defaulting Party provides notice to the non-defaulting Party of such dispute
within the thirty (30)-day cure period, the non-defaulting Party shall not
have the right to terminate this Agreement unless and until the existence of
such material default or failure by the defaulting Party has been determined
in accordance with Section 10.6 and the defaulting Party fails to cure such
default within thirty (30) days following such determination. It is
understood and agreed that during the pendency of such a dispute, all of the
terms and conditions of this Agreement shall remain in effect and the Parties
shall continue to perform all of their respective obligations hereunder.
9.3 Termination for Convenience by IMI. IMI may terminate this
Agreement in full for any reason effective upon ninety (90) days prior written
notice to Licensor; provided, however, if the payments to Licensor set forth in
Section 5.1 have not been made by IMI prior to such termination, IMI shall pay
Licensor $50,000 in connection with delivery of such written notice of
termination.
9.4 Termination for No First Financing. Licensor may terminate this
Agreement in full, effective upon if IMI fails to sell or otherwise issue
securities of IMI in the First Financing on or before June 30, 2007.
9.5 Termination for Insolvency.
(a) In the event that either Party commits an act of
bankruptcy, is declared bankrupt, voluntarily files or has filed against it a
petition for bankruptcy or reorganization unless such petition is dismissed
within thirty (30) days of filing, enters into an arrangement for the benefit
of creditors, enters into a procedure of winding up to dissolution or should
a Trustee or Receiver be appointed for its business assets or operations, the
non-bankrupt Party shall have the right to terminate this Agreement in full
as provided in Section 9.2, with an opportunity to cure as provided in such
Section.
(b) All rights and licenses granted under or pursuant to
this Agreement by one Party to the other Party are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of Title 11, U.S. Code, licenses
of rights to "intellectual property" as defined in such Bankruptcy Code. Each
Party agrees that the other Party, to the extent that it is a licensee of
such rights under this Agreement, shall retain and may fully exercise all of
its rights and elections under such Bankruptcy Code.
9.6 Effects of Certain Terminations. Upon termination of this Agreement
by Licensor pursuant to Section 9.2, 9.4 or 9.5, or by IMI pursuant to Section
9.3:
(a) All rights and licenses granted to IMI hereunder shall
terminate, with all rights of IMI under the Licensed Patents and Licensed
Know-How reverting to Licensor, and Section 2.2(d) shall apply to all
Sublicensees.
19
EXCLUSIVE LICENSE AGREEMENT
(b) IMI shall grant to Licensor a non-exclusive,
royalty-free license (with the right to sublicense), under all Subject Patent
Rights (as defined below) owned or Controlled by IMI or any of its Affiliates
to the extent reasonably necessary for the importation, manufacture, having
manufactured, use, offer for sale and sale of Licensed Products that IMI
developed and/or commercialized prior to termination, for use in the Field
only. For purposes of this Agreement, "Subject Patent Rights" shall mean all
Valid Claims of Patent Rights claiming the therapeutic effects resulting from
vagal nerve stimulation in the Field without reference to any claim elements
requiring any article, device, or tangible component thereof (but not only a
pharmaceutical agent or a delivery agent therefor), provided that no Patent
Rights shall be treated as "Subject Patent Rights" hereunder if payments are
owed to any Third Party as a result of such non-exclusive license unless and
until Licensor agrees in writing to reimburse IMI for all such payments. The
foregoing non-exclusive license shall be subject to any exclusive licenses
retained by Sublicensees under Section 2.2(d).
(c) IMI shall grant to Licensor a non-exclusive,
royalty-free license and right of reference under all regulatory filings made
by IMI or any of its Affiliates for Licensed Products and all non-clinical,
clinical and other reports, records, data and other information developed or
generated by or for IMI or any of its Affiliates in respect of such Licensed
Products that are reasonably required for Licensor to use such regulatory
filings, and cooperate with Licensor, at IMI's expense, to effect an orderly
transfer of copies of such reports, records, data and other information as
promptly as practicable. The foregoing non-exclusive license and right of
reference shall be subject to any exclusive licenses retained by Sublicensees
under Section 2.2(d).
9.7 Right to Sell-Off Inventory. Upon termination of this Agreement for
any reason, should IMI or any of its Sublicensees have any inventory of any
Licensed Products & Methods, each of them shall have twelve (12) months
thereafter in which to dispose of such inventory (subject to the payment to
Licensor of any amounts due Licensor hereunder thereon).
9.8 Survival. In addition to the termination consequences set forth in
Section 9.6, the following provisions shall survive expiration or termination of
this Agreement for any reason, as well as any other provision which by its terms
or by the context thereof, is intended to survive such termination: Sections
2.2(d), 2.5, 5.5(c), 6.2 (to the extent that any action or proceeding was
instituted before any such termination or expiration), 8.3, 8.4, 8.5, 8.6 and
8.7, and Section 1, Section 7, Section 9 and Section 10. Expiration or
termination of this Agreement for any reason shall not relieve the Parties of
any liability or obligation which accrued hereunder prior to the effective date
of such termination or expiration, nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity, subject to
Section 10.6, with respect to any breach of this Agreement nor prejudice either
Party's right to obtain performance of any obligation.
Section 10. General Provisions.
10.1 Assignment. Except as expressly provided by Sections 2.1, 2.2 and
8.5, neither Party may assign this Agreement, delegate its obligations or
otherwise transfer licenses or other rights created by this Agreement, without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld; provided that each Party may assign this Agreement as a
whole without such consent to an Affiliate or in connection with the acquisition
(whether by merger, consolidation, sale or otherwise) of such Party or of that
part of such Party's business to which this Agreement relates, provided that
such Party provides written notice to the other Party of such assignment and the
assignee thereof agrees in writing to be bound as such Party hereunder. Any
assignment or transfer in violation of this Section 10.1 shall be void. This
Agreement shall inure to the benefit of, and be binding upon, the legal
representatives, successors and permitted assigns of the Parties. Each Party
agrees that, notwithstanding any provisions of this Agreement to the contrary,
in the event that this Agreement is assigned by either Party as provided in the
foregoing in this Section 10.1, such assignment shall not provide the other
Party with licenses, rights
20
EXCLUSIVE LICENSE AGREEMENT
or access to intellectual property rights of the acquirer of such Party, as of
such assignment or thereafter, which were not already Patent Rights or Know-How
Controlled by such Party prior to such assignment.
10.2 Force Majeure. Neither Party shall be held liable or responsible
to the other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement if, but only to the extent that, such failure or delay results from
causes beyond the reasonable control of the affected Party, potentially
including fire, floods, embargoes, terrorism, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, acts of God or acts, omissions or delays in acting by
any governmental authority or any other Party; provided that the Party affected
shall promptly notify the other of the force majeure condition and shall exert
reasonable efforts to eliminate, cure or overcome any such causes and to resume
performance of its obligations as soon as possible.
10.3 Severability. If any one or more of the provisions contained in
this Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affects the substantive rights of the
Parties. The Parties shall in such an instance use their reasonable best efforts
to replace the invalid, illegal or unenforceable provision(s) with valid, legal
and enforceable provision(s) which, insofar as practical, implement the purposes
of this Agreement.
10.4 Amendment; Waiver. This Agreement may not be modified, amended or
rescinded, in whole or part, except by a written instrument signed by the
Parties; provided that any unilateral undertaking or waiver made by one Party in
favor of the other shall be enforceable if undertaken in a writing signed by the
Party to be charged with the undertaking or waiver. No delay or omission by
either Party hereto in exercising any right or power occurring upon any
noncompliance or default by the other Party with respect to any of the terms of
this Agreement shall impair any such right or power or be construed to be a
waiver thereof. A waiver by either of the Parties of any of the covenants,
conditions or agreements to be performed by the other shall not be construed to
be a waiver of any succeeding breach thereof or of any other covenant, condition
or agreement herein contained.
10.5 Notices. Except as otherwise provided herein, all notices under
this Agreement shall be sent by certified mail or by overnight courier service,
postage prepaid, to the following addresses of the respective Parties:
If to IMI, to: Innovative Metabolics, Inc.
c/o Kevin J. Tracey, M.D.
17 Highview Avenue
Old Greenwich, CT 06870
With a required copy to: Goodwin Procter LLP
53 State Street
Boston, MA 02109
Attention: Kingsley L. Taft, Esq.
Facsimile: (617) 523-1231
If to Licensor, to: Critical Therapeutics, Inc.
60 Westview Street
Lexington, MA 02421
Attention: Chief Operating Officer
Facsimile: (781) 862-5691
21
EXCLUSIVE LICENSE AGREEMENT
With a required copy to: Critical Therapeutics, Inc.
60 Westview Street
Lexington, MA 02421
Attention: General Counsel
Facsimile: (781) 862-5691
or to such address(es) as each Party may hereafter designate by notice to the
other Party. A notice shall be deemed to have been given on the date it is
received by all required recipients for the noticed Party.
10.6 Dispute Resolution. Disputes arising under or in connection with
this Agreement shall be resolved pursuant to this Section 10.6; provided,
however, that in the event a dispute cannot be resolved without an adjudication
of the rights or obligations of a Third Party (other than a any Parties'
Affiliates or any Licensor Indemnitee or IMI Indemnitee identified in Sections
8.6(a) or 8.6(b), as applicable), the dispute procedures set forth in this
Section 10.6 shall be inapplicable as to such dispute.
(a) In the event of a dispute between the Parties, the
Parties shall first attempt in good faith to resolve such dispute by
negotiation and consultation between themselves. In the event that such
dispute is not resolved on an informal basis within forty-five (45) days, any
Party may, by written notice to the other, have such dispute referred to each
of the Parties' respective CEOs or his or her designee (who shall be a senior
executive), who shall attempt in good faith to resolve such dispute by
negotiation and consultation for a thirty (30) day period following receipt
of such written notice.
(b) In the event the Parties' CEOs (or designees) are not
able to resolve such dispute, either Party may at any time after such 30-day
period submit such dispute to be finally settled by arbitration administered
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") in effect at the time of submission. The
arbitration shall be heard and determined by three (3) arbitrators. IMI and
Licensor shall each appoint one arbitrator and the third arbitrator shall be
selected by the two Party-appointed arbitrators, or, failing agreement within
sixty (60) days following the date of receipt by the respondent of the claim,
by the AAA. Such arbitration shall take place in Boston, MA. The arbitration
award so given shall be a final and binding determination of the dispute,
shall be fully enforceable in any court of competent jurisdiction, and shall
not include any damages expressly prohibited by Section 8.4.
(c) Costs of arbitration are to be divided by the Parties
in the following manner: IMI shall pay for the arbitrator it chooses,
Licensor shall pay for the arbitrator it chooses, and the costs of the third
arbitrator shall be divided equally between the Parties. Except in a
proceeding to enforce the results of the arbitration or as otherwise required
by law, neither Party nor any arbitrator may disclose the existence, content
or results of any arbitration hereunder without the prior written consent of
both Parties or as provided in the CDA.
10.7 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of The Commonwealth of Massachusetts, without regard
to its conflicts of law provisions, provided that any dispute relating to the
scope, validity, enforceability or infringement of any Patent Rights or other
intellectual property rights shall be governed by, and construed and enforced in
accordance with, the substantive laws of the jurisdiction in which such Patent
Rights or other right applies.
10.8 Further Assurances. Each Party agrees to do and perform all such
further acts and things and shall execute and deliver such other agreements,
certificates, instruments and documents necessary or that the other Party may
deem advisable in order to carry out the intent and accomplish the purposes of
this Agreement and to evidence, perfect or otherwise confirm its rights
hereunder.
10.9 Relationship of the Parties. Each Party is an independent
contractor under this Agreement. Nothing contained herein is intended or is to
be construed so as to constitute Licensor and IMI as partners, agents or joint
venturers. Neither Party shall have any express or implied right or authority to
22
EXCLUSIVE LICENSE AGREEMENT
assume or create any obligations on behalf of or in the name of the other Party
or to bind the other Party to any contract, agreement or undertaking with any
Third Party. There are no express or implied third party beneficiaries hereunder
(except for IMI Indemnitees other than IMI and Licensor Indemnitees other than
Licensor for purposes of Section 8.6).
10.10 Entire Agreement. This Agreement (along with the Exhibits
attached hereto) contains the entire understanding of the Parties with respect
to the subject matter hereof and supersedes and replaces any and all previous
arrangements and understandings other than the CDA, whether oral or written,
between the Parties with respect to the subject matter hereof.
10.11 Headings. The captions to the several Sections hereof are not a
part of this Agreement, but are merely guides or labels to assist in locating
and reading the several Sections hereof.
10.12 Waiver of Rule of Construction. Each Party has had the
opportunity to consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction that any
ambiguity in this Agreement shall be construed against the drafting party shall
not apply.
10.13 Interpretation. Whenever any provision of this Agreement uses the
term "including" (or "includes"), such term shall be deemed to mean "including
without limitation" (or "includes without limitations"). "Herein," "hereby,"
"hereunder," "hereof" and other equivalent words refer to this Agreement as an
entirety and not solely to the particular portion of this Agreement in which any
such word is used. All definitions set forth herein shall be deemed applicable
whether the words defined are used herein in the singular or the plural. Unless
otherwise provided, all references to Sections and Exhibits in this Agreement
are to Sections and Exhibits of this Agreement. References to any Sections
include Sections and subsections that are part of the related Section (e.g., a
section numbered "Section 2.2" would be part of "Section 2", and references to
"Section 2.2" would also refer to material contained in the subsection described
as "Section 2.2(a)")
10.14 Counterparts; Facsimiles. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Facsimile execution and
delivery of this Agreement by either Party shall constitute a legal, valid and
binding execution and delivery of this Agreement by such Party.
10.15 Non-Competition Covenant. During the Term and, except upon
termination by IMI pursuant to Section 9.2, for a period of five (5) years after
the Term, IMI shall not, and shall procure that its Affiliates do not, either
directly or indirectly, market, sell, manufacture or distribute any product in
the Excluded Field, and further IMI shall procure that its Sublicensed Third
Parties do not use any Licensed Know-How or Licensed Patents in doing any of the
foregoing. The restriction in the immediately preceding sentence (i) shall not
apply to any programs or products of any Third Parties (and their Affiliates)
that acquires IMI pursuant to Section 10.1, provided that no Licensed Know-How
or Licensed Patents are used in or for such programs or products, and (ii) shall
expire at such time as the NS License expires or is terminated.
[Remainder of this Page Intentionally Left Blank]
23
EXCLUSIVE LICENSE AGREEMENT
IN WITNESS WHEREOF, the Parties have caused this Exclusive License
Agreement to be executed by their respective duly authorized officers as of the
Effective Date.
INNOVATIVE METABOLICS, INC.
By: /s/ Kevin J. Tracey, M.D.
----------------------------------
(Signature)
Name: Kevin J. Tracey, M.D.
Title: President
Date: January 29, 2007
CRITICAL THERAPEUTICS, INC.
By: /s/ Frank E. Thomas
----------------------------------
(Signature)
Name: Frank E. Thomas
Title: President
Date: January 29, 2007
EXCLUSIVE LICENSE AGREEMENT
EXHIBIT A
LICENSED PATENTS (OTHER THAN NS LICENSED PATENTS)
None as of the Effective Date
EXCLUSIVE LICENSE AGREEMENT
EXHIBIT B
NS LICENSED PATENTS
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TITLE APP. NO./ COUNTRY/ PARENT/ PATENT NO. (IF CRTX
FILING DATE FILE TYPE FILING DATE APPLICABLE) DOCKET NO.
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[**] [**] [**] [**] [**] [**]
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[**] [**] [**] [**] [**] [**]
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[**] [**] [**] [**] [**] [**]
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[**] [**] [**] [**] [**] [**]
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[**] [**] [**] [**] [**] [**]
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i
EXCLUSIVE LICENSE AGREEMENT
EXHIBIT C
OBLIGATIONS IDENTIFIED PURSUANT TO SECTION 2.3(a)
1. To the extent the Sponsored Research (as defined in the NS License) is
in the Field and the Parties to this Agreement mutually agree on the
terms of the Sponsored Research in advance,
a. IMI shall financially support the Sponsored Research in
accordance with the terms of Section 2.1 of the NS License.
b. IMI shall participate in the Sponsored Research in accordance
with the terms of Section 2.3 of the NS License.
2. As per Section 3.4 of the NS License but only to the extent such
diligence corresponds to the rights granted to IMI in the Field under
the NS License, IMI shall use its reasonable best efforts to develop
and commercialize Products (as defined in the NS License).
3. Subject to the terms of Section 4.1 of the NS License,
a. IMI shall reimburse Licensor for [**] percent ([**]%) of the
ten thousand US dollars (US$10,000) paid by Licensor to NS for
any new U.S. Patent Application that, after the Effective
Date, is included in the North Shore Patent Rights (as defined
in the NS License) and the Licensed Patents, unless such new
U.S. Patent Application is a Field Only Licensed Patent Right
in which case IMI shall reimburse Licensor all of such
ten thousand US dollars (US$10,000).
b. IMI shall reimburse Licensor for [**] percent ([**]%) of the
fifteen thousand US dollars (US$15,000) paid by Licensor to NS
for any new U.S. Patent that, after the Effective Date, is
included in the North Shore Patent Rights and the Licensed
Patents, unless such new U.S. Patent is a Field Only Licensed
Patent Right in which case IMI shall reimburse Licensor all of
such fifteen thousand US dollars (US$15,000).
4. IMI shall reimburse Licensor [**]% of the minimum royalties paid by
Licensor to NS under Section 4.2.1 of the NS License, provided,
however, that such payments are subject to the provisions of Sections
5.4 of this Agreement.
5. Licensor retains the responsibility to pay to NS the sublicense income
contemplated by Section 4.2.4 of the NS License; provided, however, if
IMI proposes to issue stock or other non-cash consideration to
Licensor, IMI shall upon Licensor's request, issue a portion of such
stock or other non-cash consideration directly to Licensor. Except as
set forth in this Agreement, Licensor shall not be entitled to
reimbursement or other additional payments from IMI under this
Agreement for such sublicense income.
Notwithstanding any other provision of this Agreement, including the Exhibits to
this Agreement, no payment contemplated by this Exhibit C shall be payable by
IMI until thirty (30) days after IMI completes a First Financing.
2