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EXHIBIT 10.1
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended, and Rule 406 of the Securities Act of 1933, as amended.
These omitted portions have been marked with "***" and have been filed
separately with the Securities and Exchange Commission.
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LICENSE AGREEMENT
BY AND BETWEEN
PHARMACIA & UPJOHN COMPANY
AND
NEOPHARM, INC.
DATED AS OF FEBRUARY 19, 1999
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LICENSE AGREEMENT
This License Agreement (the "Agreement") is entered into as of February 19,
1999, by and between PHARMACIA & UPJOHN COMPANY, a Delaware corporation ("PNU"),
and NEOPHARM, INC., a Delaware corporation ("NeoPharm"). Capitalized terms used
in this Agreement shall have the meanings ascribed to them in Article I.
In consideration of the mutual promises hereinafter made and the mutual benefits
to be derived from this Agreement, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 "AAA" means the American Arbitration Association.
1.2 "AFFILIATE" means, with respect to any party (a) any of its
respective direct or indirect ultimate parent companies as may exist from time
to time, and (b) any company, firm or other entity (i) more than fifty percent
(50%) of whose issued and voting capital or share participation is now or
hereafter owned or (ii) now or hereafter controlled, in the case of either of
the foregoing clauses (i) or (ii), directly or indirectly by such party or by
its parent company. For the purpose of this definition, "control" means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of an individual, corporation or other legal entity,
whether through the ownership of voting securities, by contract, or otherwise.
1.3 "AGREEMENT TERM" means the term of this Agreement which commences
on the date hereof and ends on the first date that all of PNU's obligations to
pay any royalty or profit participation to NeoPharm on account of sales of the
Product in any country in the Territory.
1.4 "APPLICABLE LAWS" means all applicable laws, statutes, rules,
regulations, ordinances, orders, decrees, writs, judicial or administrative
decisions and the like of any nation or government, any state or other political
subdivision thereof, any entity exercising executive, judicial, regulatory or
administrative functions of or pertaining to government (including, without
limitation, any governmental authority, agency, department, board, commission or
instrumentality of any governmental unit or any political subdivision thereof),
any tribunal or arbitrator of competent jurisdiction, and any self-regulatory
organization.
1.5 "CLAIMS" means any and all claims, suits, proceedings, liabilities,
losses, damages, penalties, fines, assessments, expenses and costs of any kind
or nature, primary or secondary, direct or indirect, absolute or contingent,
known or unknown, including without limitation costs of settlement, reasonable
attorneys' fees and related costs and expenses and any liabilities for claims of
personal injury or death, suffered or incurred by an indemnified party
hereunder.
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1.6 "CO-PROMOTION ELECTION" means NeoPharm's election to co-promote the
Products in the Territory in lieu of receiving royalties in accordance with
Article VII hereof.
1.7 "COMPOUND" means LED or LEP, as the case may be, and "Compounds"
shall mean LED and LEP.
1.8 "COMPULSORY LICENSE" means a compulsory license under the NeoPharm
Patents or NeoPharm Know-How obtained by a Third Party through the order,
decree, or grant of a competent governmental authority, authorizing such Third
Party to develop, manufacture, process or use a Compound, or finish, market,
distribute detail or sell Products, in either case, in the Territory or in any
portion thereof.
1.9 "CONFIDENTIAL INFORMATION" means any and all data and information
of a proprietary or confidential nature that are owned or controlled by any
party hereto or their respective Affiliates and are made available by one party
or its Affiliates to any other party or its Affiliates prior to, during or after
the Agreement Term and that are directly or indirectly related to the Compounds,
Products and/or Improvements or the manufacture, use or sale thereof, including,
but without limitation, clinical or non-clinical data, formulations, processing
information, technical reports and specifications, marketing and sales
information, customer lists, supplier lists and pricing information.
Confidential Information shall not include information which:
(a) was known or used by the receiving party or its Affiliates prior to
its date of disclosure to the receiving party, as evidenced by the prior written
records of the receiving party or its Affiliates;
(b) either before or after the date of the disclosure to the receiving
party, is lawfully disclosed without restriction on disclosure to the receiving
party or its Affiliates by an independent, unaffiliated third party whose
disclosure of such information does not violate any obligation to or right of
the party owning or controlling the Confidential Information;
(c) either before or after the date of the disclosure to the receiving
party, becomes published or generally known in the industry through no fault or
admission on the part of the receiving party or its Affiliates or their
employees or agents; or
(d) can be shown by written documents to have been independently
developed by the receiving party or its Affiliates without breach of any of the
provisions of this Agreement.
(e) is disclosed by the receiving party pursuant to oral questions,
interrogatories, requests for information or documents, subpoena, or a civil
investigative demand of a court or governmental agency; provided that the
receiving party notifies the other party immediately upon receipt thereof (and
provided that the disclosing party furnishes only that portion of the
information which it is advised by counsel is legally required and impose such
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obligations of secrecy as are possible in that regard); or
(f) is required to be disclosed by a party under any statutory,
regulatory or similar legislative requirement or any rule of any stock exchange
to which it or any Affiliate is subject; provided, that the disclosing party
uses reasonable efforts to obtain confidential treatment of the Confidential
Information.
1.10 "CONTROL" means, with respect to any Know-How or intellectual
property right, that the party controlling owns or has a license to use such
Know-How or right and has the ability to grant the other party access, a license
or a sublicense to use such Know-How or right without violating the rights of
any Third Party.
1.11 "CORPORATE OVERHEAD" means general, administrative and facilities
expenses that are not generally directly charged to a department or Product.
1.12 "COST OF GOODS SOLD" means the sum of the following costs to the
extent allocable to Products to be sold hereunder: the cost of direct materials,
direct labor, manufacturing overhead, other allocable fixed and semi-fixed
costs, excess capacity developed in anticipation of reasonable forecasts of
Product sales, royalties payable in lieu of cash to third parties for the supply
and/or purchase of materials. The Cost of Goods Sold shall exclude the
following: Corporate Overhead, excess capacity costs not allocable to Products,
startup costs and Product royalties payable to NeoPharm under this Agreement.
The Cost of Goods Sold shall be calculated in a manner consistent with Generally
Accepted Accounting Principles ("GAAP") consistently applied and as generally
used by PNU.
1.13 "COUNTRY TERM" means the term during which PNU has any obligations
to NeoPharm with respect to a country within the Territory, including, but not
limited to, PNU's obligation to pay NeoPharm any royalty or profit participation
in such country.
1.14 "DIRECT COSTS" shall have the meaning set forth in Section 8.1.
1.15 "EX-U.S. TERRITORY" means all countries of the world outside the
U.S. Territory.
1.16 "FIELD OF USE" means collectively, the LED Field of Use and the
LEP Field of Use; provided, however, that Field of Use means specifically LED
Field of Use with respect to NeoPharm Patents and NeoPharm Know-How which relate
to LED; and provided further, that Field of Use specifically means LEP Field of
Use with respect to NeoPharm Patents and NeoPharm Know-How which relate to LEP.
1.17 "FORCE MAJEURE" means acts of God; acts, regulations, orders,
decrees or laws of any government or agency thereof that are not due to or
caused by any action or inaction of the party claiming the benefit of force
majeure where such action or inaction is in violation of such party's
obligations under this Agreement or Applicable Laws; war; damage to or
destruction of facilities; labor disturbances (whether or not any such labor
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disturbance is within the power of the affected party to settle); epidemic;
civil commotion; and failure of suppliers, public utilities or common carriers.
1.18 "FDA" means the United States Food and Drug Administration, or any
successor to its responsibilities with respect to pharmaceutical products such
as the Products.
1.19 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.20 "IMPROVEMENT" means any and all modifications or refinements
related to any Compound or Product or their use or the manufacturing processes
thereof, whether patented or not patented, which may be made, developed or
acquired by any party hereto or their Affiliates or Sublicensees, which arise
after the date of this Agreement.
1.21 "IND" means an Investigational New Drug application or its
equivalent for initiating clinical trials in the United States or any
corresponding foreign application, registration, or certification.
1.22 "JOINT INVENTION" means each invention or discovery related to the
Compound or the Product acquired or developed jointly (as determined by U.S. law
of inventorship) by NeoPharm and PNU (together with its employees, consultants
and subcontractors).
1.23 "KNOW-HOW" means clinical, technical, scientific and medical
information, knowledge, know-how, methods, inventions, practices and trade
secrets including, but without limitation, manufacturing processes and
techniques, quality control information and procedures and pharmacological,
toxicological and clinical test data and results having application in the Field
of Use;
1.24 "LED" means liposomal encapsulated doxorubicin, as more fully
described on Exhibit A hereto.
1.25 "LED FIELD OF USE" means any use in or with animals or humans.
1.26 "LED PRODUCT INTRODUCTION" means, with respect to each country in
the Territory, the first commercial sale of an LED Product in such country.
1.27 "LED PRODUCTS" means any finished products containing LED as the
active ingredient, in any formulation or dosage.
1.28 "LEP" means liposomal encapsulated paclitaxel, as more fully
described on Exhibit B hereto.
1.29 "LEP FIELD OF USE" means any use in or with animals or humans.
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1.30 "LEP PRODUCTS" means any finished products containing LEP as the
active ingredient, in any formulation or dosage.
1.31 "LICENSE(S)" shall mean the license(s) granted by NeoPharm to PNU
pursuant to Article II hereof.
1.32 "LICENSE EFFECTIVE DATE" means the date of this Agreement.
1.33 "MAJOR MARKETS" shall have the meaning set forth in Section
13.3(b).
1.34 "NDA" means (a) the single application or set of applications for
approval and/or pre-market approval to make and sell commercially a
pharmaceutical or biological therapeutic products or delivery systems or device
filed with the FDA or any successor agency having the administrative authority
to regulate the approval for marketing of new human pharmaceutical or biological
therapeutic products, delivery systems and devices in the United States,
including all information included in drug master files related to such
application(s), and (b) any related registrations with or notifications to the
FDA.
1.35 "NEOPHARM" means NeoPharm, Inc., a Delaware Corporation.
1.36 "NEOPHARM INDEMNIFIED PARTY" shall have the meaning set forth in
Section 17.1 hereof.
1.37 "NEOPHARM KNOW-HOW" means Know-How which is owned or controlled by
NeoPharm or its Affiliates on the License Effective Date of the Agreement to the
extent that such Know-How (i) pertains or relates to the Compounds or Products,
or (ii) is necessary for, directly used in or directly related to the
development or use of the Compounds or the development, registration,
manufacturing, formulation, sale, use and commercialization of the Products.
NeoPharm Know How does not include any NeoPharm Patents.
1.38 "NEOPHARM PATENTS" means:
(a) the Patents set forth on Exhibit C hereto;
(b) any applications for Patents listed in Exhibit C hereto, and any
division, continuation, or continuation-in-part of any such application, and any
Patent which shall issue based on such application, division, continuation or
continuation-in-part;
(c) any Patent which is a reissue or extension of, or addition to, any
Patent defined in (a) or any application maturing into a Patent defined in (b)
above;
(d) any Patent application or Patent corresponding to any Patent
application or Patent identified in (a), (b) or (c) above which is hereafter
filed or issued in any country.
(e) All Patents and Patent applications filed by either NeoPharm or PNU
in
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accordance with the provision of Sections 9.2, 9.3 or 9.5 hereof.
1.39 "NET PROFITS" means Net Sales less (i) Cost of Goods Sold,
royalties payable to parties other than NeoPharm, external pre-marketing costs,
non-personal promotion (NPP) (e.g., all external advertising and promotional
expenses, including samples, and Phase IV costs and other external costs
associated with sustaining the sales of Products, including legal fees incurred
by PNU in legal proceedings the defense of the Compounds or Products) determined
using the accrual basis of accounting in accordance with GAAP applied in a
manner consistent with PNU's customary practices, excluding the impact of
unusual and nonrecurring items; provided, however, salaries and benefits
associated with marketing, medical affairs, clinical and regulatory personnel,
as well as salaries and benefits of sales personnel (including travel and
automobile expenses) shall not be deducted in determining Net Profits.
1.40 "NET SALES" shall mean the gross revenues from the first
commercial sale of a Product by PNU, its Affiliates and/or Sublicensees, to
Third Parties, other than for the purpose of clinical studies, less deductions
for:
(a) standard transportation charges, including insurance, consistent
with custom in the industry;
(b) import, export, sales, use, value added, consumption and excise
taxes, tariffs and duties paid or allowed by a selling party and any other
governmental charges imposed upon the production, importation, use or sale of a
Product;
(c) normal and customary quantity discounts (including volume or
formulary or other positioning discounts paid or credited to any wholesaler,
purchaser or Third Party payor or other contractee as a result of a contractual
arrangement specific to a Product), cash discounts (including discounts for
prompt payment), and customary trade promotional allowances and credits, in the
ordinary course of business;
(d) discounts (including retroactive price reductions or a statutorily
required reimbursement) mandated by or granted in response to state, provincial
or federal law or regulation; allowances or credits to customers on account of
recalls, rejections or returns (including for spoiled, damaged and outdated
goods) in the ordinary course of business;
(e) rebates paid or credited to any government or agency or any Third
Party payor, administrator or contractee;
(f) wholesaler charge-backs allowed and taken in amounts customary in
the trade;
(g) deductions for uncollectible accounts;
(h) broker's or agent's commissions; and
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(i) the cost of any delivery system used with the Product (which may or
may not be bundled with the Product), that is not consumed with the Product or
an integral part of the Product.
1.41 "OTHER INFORMATION" means (a) information relating to a
disapproval or cancellation of an NDA (or any similar approval, disapproval or
cancellation outside of the United States); (b) information on modifications
required to be made in the contents of an NDA (or any similar approval outside
the United States) in order to prevent, or to warn against risks of, death or
bodily harm; (iii) information on withdrawal of a Product from the marketplace;
(iv) information on important revisions of the precautions in the usage of a
Product as set forth in the labeling pursuant to an NDA (or any similar
revisions outside the United States); and (v) any information which could
adversely impact the marketing of a Product.
1.42 "PATENT(S)" means valid and enforceable letters patent, and all
related reexaminations, reissues, renewals, extensions, inventor's certificates
and all foreign counterparts thereof.
1.43 "PNU" means Pharmacia & Upjohn Company, a Delaware corporation.
1.44 "PNU INDEMNIFIED PARTY" shall have the meaning set forth in
Section 17.2 hereof.
1.45 "PRODUCT(S)" means LED Products and LEP Products.
1.46 "PRODUCT KNOW-HOW" means all Know-How related to the Compounds or
the Products, other than NeoPharm Know-How.
1.47 "PRODUCT PATENTS" means (a) all the Patents related to the
Compounds or the Products, and any Patent which is a reissue or extension of, or
a Patent of addition to, any such Patent and (b) any Patent application based on
any Know-How related to the Compound or the Products, and any division,
continuation or continuation-in-part of any such application; and any Patent
which shall issue based on such application, division, continuation or
continuation-in-part, but specifically excluding from (a) and (b), any NeoPharm
Patent.
1.48 "PRODUCT TRADEMARKS" means all trademarks relating to the
Compounds or the Products.
1.49 "REASONABLE EFFORTS" shall have the meaning set forth in Section
13.3(a).
1.50 "REGULATORY APPROVAL" means (a) in the United States, approval by
the FDA of an NDA and satisfaction of any related applicable FDA registration
and notification requirements (if any) and (b) in any country other the United
States, approval by regulatory
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authorities having jurisdiction over such country of a single application or set
of applications comparable to an NDA and satisfaction of any related applicable
regulatory and notification requirements, if any, together with any other
approval necessary to make and sell commercially in such country a
pharmaceutical or biological therapeutic product or delivery system or device,
including, where applicable, satisfactory labeling and pricing approval, and, if
necessary for commercialization of a pharmaceutical or biological therapeutic
product or delivery system or device, governmental or third party reimbursement
approval and/or inclusion on any governmental formularies effective in such
country.
1.51 "RULES" means the rules of the AAA.
1.52 "STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement,
dated as of the License Effective Date, by and among NeoPharm and PNU.
1.53 "SUBLICENSEE" means any Affiliate or Third Party which shall be
granted a sublicense in accordance with Section 2.2. hereof.
1.54 "TERRITORY" means the U.S. Territory and the Ex-U.S. Territory.
1.55 "THIRD PARTY" means any individual, estate, trust, partnership,
joint venture, association, firm, corporation, company or other entity, other
than the parties hereto and their respective Affiliates.
1.56 "U.S. TERRITORY" means the United States and its territories and
possessions.
ARTICLE II.
GRANT OF LICENSES
2.1 GRANT OF LICENSES. In consideration of the payment of the License
Fee and the payment of royalties, or the profit participation, and subject to
Sections 2.5 and 2.6 below:
(a) Subject to NeoPharm's retained rights required to enable NeoPharm
to exercise its rights under Sections 6.2, 6.4 and 6.5 hereof and solely for
such purpose, NeoPharm hereby grants to PNU an exclusive license, throughout the
Territory, in the Field of Use, under the NeoPharm Patents, Product Trademarks
and NeoPharm Future Sole Inventions to make, have made, develop, use, market,
promote, sell and have sold the Compounds and the Products anywhere in the
Territory during the Agreement Term.
(b) Subject to NeoPharm's retained rights required to enable NeoPharm
to exercise its rights under Sections 6.2, 6.4 and 6.5 hereof and solely for
such purpose, NeoPharm hereby grants to PNU a royalty free, exclusive license to
use any and all NeoPharm Know-How, Improvements, Joint Inventions, Confidential
Information in the
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Field of Use throughout the Territory during the Agreement Term to make, have
made, market, promote, sell and have sold the Compounds and the Products.
(c) NeoPharm hereby grants to PNU access to all currently available or
later acquired information relating to the Compounds and the Products possessed
by NeoPharm, including, without limitation, pre-clinical data, clinical data,
regulatory submissions, NDAs (or the substantially equivalent foreign
approvals), patents, product registrations and authorizations, trademarks and
tradedress regarding the Compounds and the Products anywhere in the world for
exclusive use by PNU in the Field of Use.
2.2 RIGHT TO SUBLICENSE. PNU may sublicense, totally or in part, the
license rights granted under this Article II; provided, that (i) PNU must notify
NeoPharm in writing of any such sublicense other than to an Affiliate at least
forty-five (45) days in advance; (ii) PNU remains responsible to NeoPharm for
all contractual obligations of the Sublicensee, including, but not limited to,
payment of royalties, keeping of records and reporting of sales, as if the
Sublicensee's sales were PNU's sales; (iii) the Sublicensee agrees to be bound
by the terms of this Agreement to the same extent as PNU to the extent
applicable to the Sublicensee, and (iv) PNU and the Sublicensee comply with the
provisions set forth in Section 19.9.
2.3 PAID-UP LICENSE. Provided that PNU has satisfied all of its
obligations hereunder, including, but not limited to, the obligation to pay
royalties hereunder with respect to a particular Product, PNU shall have a
paid-up, non-exclusive royalty-free license to make, have made, use, distribute,
market, sell and have sold the Compounds and such Product within the Field of
Use in each country after the normal expiration of the applicable Country Term.
2.4 RIGHT TO PROPOSE ADDITIONAL LICENSES. PNU shall have the right to
propose additional licenses to allow for collaboration between PNU and NeoPharm
to develop, use, manufacture, or have manufactured, distribute, market, sell, or
have sold any other oncologic compounds using NeoPharm's proprietary liposomal
technology as may be mutually agreed to by NeoPharm and PNU from time to time.
The terms and conditions for such rights will be negotiated in good faith by the
parties to reflect the value added to any products by use of NeoPharm's
proprietary liposomal technology.
2.5 RETAINED RIGHTS. Notwithstanding anything in this Agreement,
NeoPharm shall have the right to develop any other products, with or without
other collaborators, and without regard to whether such products utilize or
incorporate any NeoPharm proprietary liposomal technology licensed to PNU
hereunder with the exception of the Compounds, the Products and other Compounds
in the class known as taxanes and anthracyclines.
2.6 EARLY TERMINATION. Should the Country Term be terminated early in
any country, pursuant to Section 15.1, then PNU's licenses pursuant to this
Article II shall terminate as to that country.
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ARTICLE III.
LICENSE FEE
3.1 License Fee. Subject to the terms and conditions of this Agreement,
in consideration of the Licenses granted to PNU, PNU shall, within three
business days after the License Effective Date, pay to NeoPharm *** Dollars ***.
ARTICLE IV.
MILESTONE PAYMENTS
4.1 LED MILESTONE PAYMENTS. The following milestone payments shall be
paid by PNU to NeoPharm within ten (10) business days of the occurrence of each
of the following milestones:
(a) PNU shall pay NeoPharm *** Dollars upon ***.
(b) PNU shall pay NeoPharm *** Dollars upon ***.
(c) PNU shall pay NeoPharm *** Dollars upon ***.
(d) PNU shall pay NeoPharm *** Dollars upon ***.
(e) PNU shall pay NeoPharm *** Dollars upon ***.
4.2 LEP MILESTONE PAYMENTS. The following milestone payments shall be
paid by PNU to NeoPharm within ten (10) business days of the occurrence of each
of the following milestones:
(a) PNU shall pay NeoPharm *** Dollars upon ***.
(b) PNU shall pay NeoPharm *** Dollars upon ***.
(c) PNU shall pay NeoPharm *** Dollars upon ***.
(d) PNU shall pay NeoPharm *** Dollars upon ***.
(e) PNU shall pay NeoPharm *** Dollars upon ***.
(f) PNU shall pay NeoPharm *** Dollars upon ***.
(g) PNU shall pay NeoPharm *** Dollars upon ***.
4.3 MILESTONE PAYMENTS PAYABLE ONCE. The milestone payments described
above shall only be payable once, upon the occurrence of an event requiring such
payment, and shall not be payable upon subsequent occurrences of such event.
*** Confidential Treatment Requested
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ARTICLE V.
EQUITY INVESTMENT
5.1 EQUITY INVESTMENT. PNU shall make certain equity investments in
NeoPharm in the form of purchases of NeoPharm Common Stock according to the
terms and conditions of the Stock Purchase Agreement, which shall be in a form
substantially similar to Exhibit D hereto.
ARTICLE VI.
ROYALTIES; PROFIT SHARING
6.1 LED PRODUCT PAYMENTS IN THE U.S. TERRITORY. At least ninety (90)
days prior to its filing of an NDA for the first LED Product with the FDA, PNU
shall provide NeoPharm with written notice of the date on which it intends to
make such NDA filing the "LED NDA Notice"). Thereafter, at the written request
of NeoPharm, which request must be received by PNU not later than the date set
forth in the LED NDA Notice for the NDA filing, NeoPharm shall have the right,
in the U.S. Territory, to elect to receive royalties for licensing the NeoPharm
Patents, NeoPharm Know-How and other intellectual property to PNU hereunder in
the U.S. Territory, on the sale of any LED Products or to participate, pursuant
to Article VII, in the profits of the sale of such LED Products pursuant to a
co- promotion arrangement. If no election is made, NeoPharm shall be deemed to
have elected to receive royalties.
(a) In the event NeoPharm shall have elected, or shall have been deemed
to have elected, to receive royalties, for licensing the NeoPharm Patents,
NeoPharm Know-How and other intellectual property to PNU hereunder in the U.S.
Territory, then PNU shall pay such royalties at the rate of *** of Net Sales of
LED Products sold in the U.S. Territory, commencing on LED Product Introduction
in the U.S. Territory and continuing for ten (10) years thereafter.
(b) In the event NeoPharm shall have elected to co-promote the LED
Products pursuant to Section 7.1 hereof, the profit-sharing arrangement shall be
agreed upon between NeoPharm and PNU based upon the methodology set forth in the
Profit and Loss Schedule attached hereto as Schedule 7.1.
6.2 LED PRODUCT ROYALTIES IN THE EX-U.S. TERRITORY. PNU shall pay to
NeoPharm royalties, for licensing the NeoPharm Patents, NeoPharm Know-How and
other intellectual property to PNU hereunder in the Ex-U.S. Territory, on a
country by country basis (during each applicable Country Term) on Net Sales of
LED Products in the Ex-U.S. Territory at the rate of (a) *** percent commencing
with the LED Product Introduction in each country and continuing for seven (7)
years thereafter, and (b) *** percent, commencing the day immediately after the
seventh anniversary of the LED Product Introduction in each country and
continuing for three (3) years. Following the expiration of PNU's obligations to
pay royalties to NeoPharm in any country in the Ex-U.S. Territory, (i) provided
PNU has paid all royalties due, PNU shall have a paid-up, non-exclusive, royalty
free license under
*** Confidential Treatment Requested
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Section 2.3 hereof, and (ii) NeoPharm shall have the right to sell any LED
Products in such country and, in furtherance of such right, PNU will (i) license
to NeoPharm, on a royalty free, non-exclusive basis, with a right to sublicense,
any Patents held or licensed to PNU that are applicable to LED Products in such
country and (ii) provide, or cause to be provided, to NeoPharm, on commercially
reasonable terms, a supply of cardiolipin sufficient to allow NeoPharm to
exploit the rights hereunder granted to NeoPharm under this Section 6.2.
6.3 LEP PRODUCT PAYMENTS IN THE U.S. TERRITORY. At least ninety (90)
days prior to its filing of an NDA for the first LEP Product with the FDA, PNU
shall provide NeoPharm with written notice of the date on which it intends to
make such NDA filing (the "LEP NDA Notice"). Thereafter, at the written request
of NeoPharm, which request must be received by PNU not later than the date set
forth in the LEP NDA Notice for the NDA filing, NeoPharm shall have the right,
in the U.S. Territory, to elect to receive royalties for licensing the NeoPharm
Patents, NeoPharm Know-How and other intellectual property to PNU hereunder in
the U.S. Territory, on the sale of any LEP Products or to participate, pursuant
to Article VII, in the profits of the sale of such LEP Products pursuant to a
co- promotion arrangement. If no election is made, NeoPharm shall be deemed to
have elected to receive royalties.
(a) In the event NeoPharm shall have, or shall have been deemed to
receive royalties for licensing the NeoPharm Patents, NeoPharm Know-How and
other intellectual property to PNU hereunder in the U.S. Territory, then PNU
shall pay such royalties at the rate of *** percent of Net Sales of LEP Products
sold in the U.S. Territory for so long as PNU has exclusivity as a result of
selling an LEP Product that is covered by at least one claim set forth in any of
the NeoPharm Patents, which claim has not expired and has not been declared
invalid or unenforceable by a U.S. District Court in a judgment that is either
not appealed or is not appealable.
(b) In the event NeoPharm shall have elected to co-promote the LEP
Products pursuant to Section 7.1 hereof, the profit-sharing arrangement shall be
agreed upon between NeoPharm and PNU based upon the methodology set forth in the
Profit and Loss Schedule attached hereto as Schedule 7.1.
6.4 LEP PRODUCT ROYALTIES IN THE EX-U.S. TERRITORY. PNU shall pay to
NeoPharm royalties for licensing the NeoPharm Patents, NeoPharm Know-How and
other intellectual property to PNU hereunder in the Ex-U.S. Territory, on Net
Sales by PNU of LEP Products in the Ex-U.S. Territory at the rate of *** % for
the valid life of the enforceable NeoPharm Patents, after which PNU shall have a
fully paid-up license to LEP and the LEP Products, and NeoPharm shall not be
entitled to any further royalties. Following the expiration of PNU's obligations
to pay royalties to NeoPharm in any country in the Ex- U.S. Territory, NeoPharm
shall have the right to sell any LEP Products in such country.
*** Confidential Treatment Requested
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6.5 ROYALTY REDUCTION ON SALES OF PRODUCTS; RIGHT TO SUPPLY.
(a) PNU shall use all commercially reasonable efforts so that the Cost
of Goods Sold plus royalties does not exceed *** % of Net Sales of the LEP or
LED Products, respectively, in any year. NeoPharm agrees to reduce the royalties
for any LEP Product sold or for any LED Product sold so that, in either case,
the total of Cost of Goods Sold plus royalties shall not exceed *** % of Net
Sales of LEP Products or LED Products, as the case may be, in any year.
(b) NeoPharm shall have the right to supply LEP or LED to PNU, its
Affiliates or Sublicensees if NeoPharm can supply such Product of the same
quality and specification and at a lower cost than PNU or any Third Party
supplier.
6.6 COMPULSORY LICENSE. PNU shall use all commercially reasonable
efforts to prevent or avoid any Third Party from obtaining or being granted a
Compulsory License, and to the extent that a Third Party does obtain or is
granted a Compulsory License, PNU will use all commercially reasonable efforts
to limit or reduce the scope or applicability of such Compulsory License. If,
notwithstanding PNU's use of commercially reasonable efforts, any Third Party
obtains a Compulsory License in any country, then NeoPharm or PNU (whoever has
first notice) shall promptly notify the other party. If the royalty rate payable
by the grantee of the Compulsory License is less than the above royalty rates,
the above royalty rates shall be reduced to such lower rate in the subject
country for so long as sales are made pursuant to the Compulsory License.
6.7 COMBINATION SALES. In the event any of the Products are packaged or
combined with any other products for sale in any country, the royalties payable
with respect to sales of such Product shall be calculated on the price of the
Product as if such Product had continued to be sold alone.
6.8 PAYMENTS. Royalties or profit participation payable hereunder will
be paid to NeoPharm not later than forty-five (45) calendar days following the
end of each calendar quarter and each such payment shall be accompanied by a
report in writing showing the period to which such payment applies, the amount
billed to unaffiliated Third Parties for Products during such calendar quarter,
the deductions from the amount billed to arrive at Net Sales, the total Net
Sales for the period, the Cost of Goods Sold and the royalties due on such Net
Sales or the profit allocable to NeoPharm, as the case may be.
6.9 CURRENCY OF PAYMENT. All payments to be made by PNU to NeoPharm
hereunder shall be made in U.S. Dollars. Net Sales outside the U.S. shall be
first determined in the currency of the country in which they are earned and
shall be converted quarterly into an amount in U.S. Dollars based on PNU's
internal exchange rates used in preparing PNU's consolidated earnings statements
for such quarter.
*** Confidential Treatment Requested
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6.10 SINGLE ROYALTY. Any royalties payable under Article VI will be
payable only once with respect to a particular unit of Product and will be paid
only once regardless of there being more than one NeoPharm Patent applicable to
such unit of Product.
6.11 RECORDS. PNU shall keep for three (3) years from the date of each
payment of royalties complete and accurate records of Net Sales by PNU, its
Affiliates and sublicensees of each Product in sufficient detail to allow
royalties to be determined accurately. NeoPharm shall have the right for a
period of three (3) years after receiving any report or statement with respect
to royalties due and payable to obtain at its expense from the independent
certified public accountant used by PNU an audit of the relevant records of PNU
to verify such report or statement. PNU shall make its records available for
inspection by such independent certified public accountant during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from NeoPharm, to the extent reasonably necessary to
verify the accuracy of the reports and payments. Such inspection right shall not
be exercised more than once in any calendar year nor more than once with respect
to sales in any given period, unless a subsequent inspection reveals
discrepancies which may have also occurred during such period. Such independent
certified public accountant shall report to NeoPharm only as to the accuracy of
the Net Sales computation and royalty payments. If the audit shows that PNU has
underpaid any royalties by five percent (5%) or more, for any period covered by
the audit, PNU shall, in addition to immediately remitting to NeoPharm the
amount of underpayment, (i) pay for the cost of such audit and (ii) pay interest
to NeoPharm at a per annum rate equal to 2% above the Prime Rate as announced
from time to time by Citibank, N.A. (the "Late Payment Rate") on such
underpayment from the date such amounts were accrued until the date such amounts
are paid. In the event the audit shows that PNU has overpaid any royalties due
to NeoPharm hereunder, PNU shall be allowed to deduct the amount of such
overpayment (plus interest on such overpayment at the Late Payment Rate from the
date of such underpayment) from the next royalty payment due to NeoPharm. The
independent certified public accountant agrees to hold in strict confidence all
information concerning royalty payments and reports, and all information learned
in the course of any audit or inspection, except to the extent necessary for
such party to reveal such information in order to allow NeoPharm to enforce its
rights under this Agreement or disclosure is required by law. The failure of
NeoPharm to request verification of any report or statement during the three (3)
year period shall be considered acceptance of the accuracy of such report, and
PNU shall have no obligation to maintain records pertaining to such report or
statement beyond the three (3) year period. The results of the inspection shall
be binding on both parties.
6.12 WITHHOLDING TAXES. All amounts owing to NeoPharm on account of
royalties or profits as specified in this Agreement shall be paid net of all
applicable taxes, fees and other charges required to be withheld. PNU shall use
its commercially reasonable efforts to reduce the amount of any withholding
taxes and to promptly remit all refunds and rebates to NeoPharm.
6.13 OTHER FORMS OF REMUNERATION. If PNU receives non-cash compensation
from sales of Products in a manner other than one for which royalties based on
Net Sales
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would be the appropriate measure, such as compensation through a co-marketing or
joint venture arrangement, the parties will negotiate in good faith an
appropriate compensation arrangement by which NeoPharm will be equitably
remunerated.
ARTICLE VII.
CO-PROMOTION
7.1 CO-PROMOTION. NeoPharm shall have the right in accordance with
Article VI, to co-promote the Products in the U.S. Territory under an
arrangement to be agreed upon between NeoPharm and PNU based upon the
methodology set forth in the Profit and Loss Schedule attached hereto as
Schedule 7.1 and upon the following terms:
(a) NeoPharm's participation in the Net Profits shall be in proportion
to its monetary contribution to the promotion of each Product (which shall
include an allocation of sales representatives as needed) but in no event shall
NeoPharm's share of profits exceed *** % of the total Net Profits.
(b) NeoPharm shall pay to PNU within sixty (60) days of notifying PNU
of its election to co-promote a Product in the U.S. Territory an amount equal to
PNU's development costs for such Product (which costs shall not exceed ***
percent of PNU's Development Costs throughout the Territory as calculated in
accordance with PNU's standard internal policies and procedures) multiplied by
NeoPharm's Net Profit percentage determined under Section 7.1(a) and multiplied
by a premium determined in accordance with *** hereto to reflect the development
risk incurred by PNU.
(c) If NeoPharm exercises the Co-promotion Election, no royalty shall
become payable by PNU to NeoPharm with respect to sales of any Product subject
to such arrangement, in the U.S. Territory.
(d) The co-promotion rights set forth herein are not sublicensable,
assignable or transferable by NeoPharm and shall not be sublicensed, assigned or
transferred without PNU's prior written consent. Without limiting the foregoing,
and except as may otherwise be agreed by the parties, in the event of a merger
with or acquisition by any third party (i) with interests in oncology, including
companies involved in cytotoxic compounds or products or (ii) which is a clear
competitor of PNU in the oncology business, such consent will not be given, and,
PNU shall have the right to terminate the co-promotion arrangement.
(e) In the event PNU terminates the co-promotion arrangement pursuant
to Section 7.1(d), PNU shall thereafter pay NeoPharm a royalty of (i) ***
percent on all sales of LED Products in the U.S. Territory for the remainder of
the otherwise applicable ten (10) year term and (ii) *** % on all sales of LEP
Products in the U.S. Territory for the duration that PNU has exclusive rights in
the NeoPharm Patents covering LEP.
(f) If NeoPharm exercises the Co-Promotion Election, the parties will
negotiate in good faith to conclude a co-promotion agreement within ninety (90)
days of such election,
*** Confidential Treatment Requested
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specifying the rights and obligations of the parties. PNU shall have final
decision making authority in the event the parties are unable to agree except
with respect to NeoPharm's right to decide its monetary contribution and level
of profit participation as specified in Section 7.1(a).
ARTICLE VIII.
TECHNICAL ASSISTANCE; DEVELOPMENT EXPENSES; REPORTS
8.1 FURTHER ASSURANCE. Without otherwise limiting the representations
and warranties of NeoPharm, NeoPharm shall use reasonable commercial efforts to
assist and enable PNU or any Affiliate or Sublicensee thereof to obtain and
confirm in PNU the rights granted to PNU pursuant to this Agreement to develop,
use, make and have made the Compounds and to develop, use, make, have made,
distribute, market, sell and have sold the Products and shall take all such
other actions as PNU may reasonably request to obtain and confirm in PNU such
rights. If NeoPharm, in connection with its reasonable commercial efforts,
shall, upon prior written request from, and subsequent written approval by, PNU,
incur any reasonable out of pocket expenses or costs ("Direct Costs") in
obtaining or confirming in PNU or any Affiliate or Sublicensee such rights, such
Direct Costs shall be promptly reimbursed by PNU except as may be provided in
Section 10.5 or Section 17.
8.2 DEVELOPMENT COSTS AND TECHNICAL ASSISTANCE. All of the development
costs, clinical and pre-clinical, regulatory and manufacturing scale-up expenses
(including capital investments for equipment and any other manufacturing
facilities required) for the Products incurred after the date hereof, shall be
borne by PNU. To the extent PNU requests NeoPharm to provide personnel or
supplies or to take any other action in connection with the foregoing, PNU shall
reimburse NeoPharm for all reasonable out-of-pocket costs incurred therewith.
8.3 REPORTS. PNU shall deliver to NeoPharm reports, at least quarterly,
providing NeoPharm with sufficient information so as to allow NeoPharm to be
adequately informed as to the strategic development of the Compounds and the
Products. In connection therewith, NeoPharm may request a meeting to discuss the
contents of the report.
ARTICLE IX.
INTELLECTUAL PROPERTY
9.1 EXISTING NEOPHARM PATENT APPLICATIONS. With respect to Patent
applications relating to any NeoPharm Know-How existing as of the License
Effective Date (a) NeoPharm shall remain the owner of the Patent application,
(b) NeoPharm shall continue to bear the full costs of and responsibility for
preparing, filing and prosecuting the application and (c) the Patent application
and any Patents issuing thereon shall constitute NeoPharm Patents for purposes
of this Agreement. NeoPharm will keep PNU reasonably informed of the status of
existing Patent applications.
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9.2 FUTURE PATENT APPLICATIONS ON EXISTING NEOPHARM KNOW-HOW. The
following provisions shall apply to each Patent application covering any
NeoPharm Know- How existing as of the date hereof in the Field of Use which
could be filed in the future.
(a) NeoPharm shall remain the owner of such NeoPharm Know-How subject
to such Patent application and shall own any such patent applications and any
Patent issued thereon.
(b) NeoPharm shall have the initial option whether or not to file a
Patent application for such NeoPharm Know-How; provided, that if NeoPharm does
not elect to exercise such option, then PNU may file such Patent application in
NeoPharm's name.
(c) If, anywhere in the Territory, NeoPharm determines to file a Patent
application for the NeoPharm Know-How within the Field of Use, the following
provisions shall apply: (i) NeoPharm will prepare a first draft of the Patent
application and furnish a copy of the draft to PNU for comment at least 30 days
before filing the Patent application, (ii) NeoPharm will revise the Patent
application as requested by PNU and file the Patent application in each country
in which PNU elects to do so, (iii) NeoPharm will bear the full costs of
preparing, filing and prosecuting the application and NeoPharm will control the
prosecution of the Patent application, (iv) in any country in which the NeoPharm
elects not to file the Patent application, PNU may file the Patent application
in NeoPharm's name, but at its own cost, and control the prosecution thereof (in
which event it will keep NeoPharm reasonably informed of the Patent
application's progress), and (v) each Patent application and any Patent issuing
thereon filed by NeoPharm or by PNU in NeoPharm's name will constitute NeoPharm
Patents for purposes of this Agreement and shall be exclusively licensed to PNU
by NeoPharm without any additional royalty within the Field of Use.
(d) If NeoPharm elects not to file a Patent application covering any
such NeoPharm Know-How anywhere in the Territory, the following provisions shall
apply: (i) the NeoPharm Know-How will remain a trade secret of NeoPharm (unless
(ii) below becomes applicable), (iii) will be deemed to be Confidential
Information (unless (iii) below becomes applicable) and (iv) PNU shall have the
right to file such Patent applications for the NeoPharm Know-How, at PNU's sole
cost and expense, anywhere in the Territory, with all rights in such Patent
application and any resulting Patent being licensed by NeoPharm to PNU without
the payment of any consideration and thereafter being deemed a NeoPharm Patent.
9.3 FUTURE PATENTS RELATED TO THE COMPOUND OR THE PRODUCTS DEVELOPED BY
NEOPHARM.
(a) NeoPharm shall be deemed the sole owner of all Know-How related to
the use, manufacture, form or delivery of a Compound or Product, acquired,
developed or discovered by NeoPharm or its Affiliates, employees, consultants or
subcontractors ("NeoPharm Future Sole Inventions"), after the License Effective
Date and any Patent application filed or any Patent issued thereon and shall
grant PNU a royalty free, non-
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exclusive license to use such Know-How, Patent application or Patent within the
Field of Use throughout the Territory during the Agreement Term.
(b) NeoPharm shall have an initial option whether or not to file a
Patent application for the NeoPharm Future Sole Invention; provided that if
NeoPharm does not elect such option, then PNU may file such Patent application
in NeoPharm's name.
(c) If PNU elects to file a Patent application in NeoPharm's name for a
NeoPharm Future Sole Invention, then the following provisions shall apply: (i)
PNU will prepare a first draft of the Patent application and furnish a copy of
the draft to NeoPharm for comment at least thirty (30) days before filing the
Patent application, (ii) PNU will bear the full costs of preparing, filing and
prosecuting the Patent application and maintaining any Patents that are issued
on the Patent application and PNU will control the prosecution of such Patent
application, and (iii) each Patent application and any Patent issuing thereon
filed by PNU in NeoPharm's Name shall be owned by NeoPharm and shall be deemed
to be a NeoPharm Patent.
(d) If NeoPharm and PNU initially elect not to file any Patent
application for NeoPharm Future Sole Inventions, then the following provisions
shall apply: (i) the NeoPharm Future Sole Invention will remain a trade secret,
(ii) the NeoPharm Future Sole Invention shall be deemed to be Confidential
Information and (iii) PNU shall not have the right to file any Patent
applications for the NeoPharm Future Sole Invention anywhere in the world at a
later date without the written permission of NeoPharm.
9.4 FUTURE PATENTS RELATED TO THE COMPOUND OR THE PRODUCTS DEVELOPED BY
PNU.
(a) PNU shall be deemed the sole owner of all Know-How related to the
use, manufacture, form or delivery of a Compound or Product, acquired, developed
or discovered by PNU or its Sublicensees or Affiliates, or any of their
respective employees, consultants or subcontractors ("PNU Future Sole
Inventions"), after the License Effective Date, and any Patent application filed
or Patent issued thereon, and, subject to the rights granted under Sections 2.5,
2.6, 6.2, 6.4, 6.5 and 9.10, PNU shall grant to NeoPharm a royalty free,
non-exclusive license to use such Know-How, Patent application or Patent within
the Field of Use throughout the Territory after expiration of the Agreement
Term.
(b) PNU shall be solely responsible for electing, in its sole
discretion, whether or not to file a Patent application for PNU Future Sole
Inventions.
(c) If PNU elects to file a Patent application for a PNU Future Sole
Invention in at least one country in the Territory, then the following
provisions shall apply: (i) PNU will prepare a first draft of the Patent
application, (ii) PNU will furnish a copy of the draft Patent application to
NeoPharm for informational purposes only at least thirty (30) days before filing
the Patent application, (iii) PNU will bear the full costs of preparing, filing
and prosecuting the Patent application and maintaining any patents that issue on
the Patent
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application, and (iv) the applications and Patents referred to herein will
constitute Product Patents for purposes of this Agreement.
(d) If PNU elects not to file any Patent application for PNU Future
Sole Inventions anywhere in the Territory, then the following provisions shall
apply: (i) the PNU Sole Future Invention will remain a trade secret to the
extent PNU so desires, (ii) the PNU Future Sole Invention shall be deemed to be
Confidential Information and (iii) NeoPharm will not have the right to file any
Patent applications for the PNU Future Sole Invention anywhere in the world.
9.5 JOINT INVENTIONS. To the extent it is practical to do so, Patent
applications for Joint Inventions shall be handled as if they were PNU Future
Sole Inventions under Section 9.4.
9.6 COOPERATION. Each party will cooperate with the other and will
cause its employees, consultants and subcontractors to also cooperate, in
completing any Patent applications for Joint Inventions, and in executing and
delivering any instrument required to permit PNU to exercise its rights under
this Article IX, including where appropriate instruments assigning its joint
ownership interest in any Joint Inventions.
9.7 NEOPHARM PATENTS. NeoPharm shall take all commercially reasonable
steps necessary to maintain, for the full life thereof, all NeoPharm Patents.
9.8 PATENT EXTENSIONS.
(a) PNU shall have the right, upon consultation with NeoPharm and
election by NeoPharm not to take the actions described in (i) and (ii) below, to
file on behalf of and as agent for NeoPharm, all applications and to take all
actions necessary (i) to obtain the benefits of the Drug Price Competition and
Patent Term Restoration Act of 1984 and any amendments thereto to the extent
such benefits relate to Products and (ii) to extend the lives of the NeoPharm
Patents that claim Compounds or Products constituting drug products or otherwise
involve the protection of such Products to the extent permitted by any other law
or regulation by, among other things, applying for supplemental protection
certificates. NeoPharm agrees to execute and deliver such further authorizations
and instruments and to take such further actions as may be requested by PNU to
implement the foregoing.
(b) To the extent the NeoPharm Patents are subject to regulations or
statutes comparable to those referred to in Section 9.8(a), NeoPharm agrees to
exercise its rights under such regulations and statutes in a fair and equitable
manner that takes into account the legitimate commercial interests of PNU, upon
consultation with PNU.
9.9 PUBLIC DISCLOSURE. Each party agrees to delay any public disclosure
of the subject matter of any Patent application to which this Article IX applies
until the filing of all U.S. and intended foreign applications but in no event
more than one (1) year from the first filed (priority) application.
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9.10 OWNERSHIP OF THE DATA, DATABASE AND IND'S. PNU will be the sole
owner of (a) all the data generated by the non-clinical and clinical testing of
the Products, including Product Know How (b) the database for such data, and (c)
all IND's filed for clinical studies of the Products and any comparable
regulatory filings in the Ex-U.S. Territory. Except as, and to the extent,
necessary to enable NeoPharm to exercise its rights under Section 6.5, NeoPharm
shall not have access to the database without PNU's prior written consent which
consent shall not be unreasonably withheld after expiration of the Agreement
Term. Upon PNU's request, NeoPharm shall promptly assist PNU, and shall use
commercially reasonable efforts to encourage its vendors and subcontractors to
assist PNU, in preparing and obtaining favorable review of IND's relating to the
Products and the foreign equivalents of such IND's. If PNU so desires, NeoPharm
shall transfer to PNU any IND's relating to the Products owned or Controlled by
NeoPharm.
9.11 REGULATORY FILINGS. PNU or its Sublicensees shall be responsible
for the preparation of suitable applications for Regulatory Approval in any
country in the Territory and shall be the owner and party of record of all such
applications, including all NDAs. PNU shall solely determine those countries of
the Territory in which to file such applications. At PNU's request, NeoPharm
shall promptly assist PNU, and shall use commercially reasonable efforts to
encourage its vendors and subcontractors to assist PNU in the preparation of
such applications and the obtaining of Regulatory Approvals by, among other
things, (a) providing PNU with all needed Know-How, reports, authorizations,
certificates, methodologies, specifications and other documentation which
NeoPharm owns or Controls, (b) making NeoPharm's facilities reasonably available
for inspections by the FDA and other governmental authorities, and making
NeoPharm's personnel reasonably available to the FDA and other governmental
authorities and (c) use commercially reasonable efforts to encourage its vendors
and subcontractors to make their facilities available for inspections by the FDA
and other governmental authorities and to make their personnel available to the
FDA and other governmental authorities.
9.12 PACKAGING. PNU shall own all Product Trademarks. If NeoPharm so
requests, and to the extent allowable by law, PNU will identify, in packaging
and package inserts for Products, NeoPharm as the licensor of the Compounds.
Notwithstanding the foregoing, if PNU reasonably believes, based on objective
information, that identifying NeoPharm or using the NeoPharm mark will have an
adverse impact on the image or commercialization of the Products, due to adverse
publicity relating to NeoPharm or its personnel, products or business or some
other event or circumstance, PNU will discuss the situation with NeoPharm and
may, after such discussion, discontinue identifying NeoPharm or using the
NeoPharm mark.
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ARTICLE X.
INFRINGEMENT OF THIRD PARTY RIGHTS
10.1 NOTICES. During the Agreement Term, PNU and NeoPharm shall each
promptly, but in any event no later than fifteen (15) calendar days after such
party receives notice of or becomes aware of any of the following, notify the
other in writing of:
(a) Any Claim by a Third Party against NeoPharm or PNU, or any
Affiliate or Sublicensee of NeoPharm or PNU, alleging infringement of such Third
Party's intellectual property rights as a result of the use, development or
manufacture of the Compound or the development, use, manufacture, use, marketing
or sale of the Products anywhere in the Territory; or
(b) Any patent nullity actions, declaratory judgment actions or alleged
Patent invalidity or non-infringement of Patent or Patents pursuant to a
paragraph IV patent certification by a party filing an ANDA with respect to the
NeoPharm Patents or Product Patents in the Territory;
The parties agree that time is of the essence with respect to the giving of
notices hereunder.
10.2 CONTROL OF DEFENSE AGAINST NEOPHARM PATENT CLAIMS. NeoPharm shall
have the initial right to manage solely the defense of the parties against any
Third Party Claims alleging infringement of such Third Party's intellectual
property rights as a result of the use, development or manufacture of the
Compounds or the development, use, manufacture, use, marketing or sale of the
Products anywhere in the Territory, that primarily involve the NeoPharm Patents.
If NeoPharm elects to exercise such right as to such a claim, PNU shall
cooperate with NeoPharm at NeoPharm's request, and shall have the right to be
represented by counsel selected by PNU at PNU's cost. If NeoPharm elects not to
exercise such right as to such a claim, PNU shall have the right to manage
solely the defense of the parties against the Claim, and NeoPharm shall
cooperate with PNU at PNU's request and shall have the right to be represented
by counsel selected by NeoPharm. In the event PNU desires to settle any such
claim, PNU shall notify NeoPharm, and PNU shall not be authorized to settle any
such claim without NeoPharm's consent (which consent shall not be unreasonably
withheld).
10.3 CONTROL OF DEFENSE AGAINST PRODUCT PATENT CLAIMS. PNU shall have
the initial right to manage solely the defense of the parties against any Third
Party Claims alleging infringement of such Third Party's intellectual property
rights as a result of the use, development or manufacture of the Compounds or
the development, use, manufacture, use, marketing or sale of the Products
anywhere in the Territory, that primarily involve the Product Patents. If PNU
elects to exercise such right as to such a Claim, NeoPharm shall cooperate with
PNU at PNU's request, and shall have the right to be represented by counsel
selected by NeoPharm at NeoPharm's cost. If PNU elects not to exercise such
right as to such a claim, NeoPharm shall have the right to manage solely the
defense of the parties against the claim, but only if the subject of the claim
relates to a Compound, and PNU shall
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cooperate with NeoPharm at NeoPharm's request and shall have the right to be
represented by counsel selected by PNU. In the event PNU desires to settle any
such claim, PNU shall notify NeoPharm, and PNU shall not be authorized to settle
any such claim without NeoPharm's consent (which consent shall not be
unreasonably withheld).
10.4 PAYMENTS TO THIRD PARTIES. If PNU is required by a final court
order or a settlement agreement entered into with NeoPharm's consent (which
consent shall not be unreasonably withheld) to make royalty payments or other
payments to a Third Party in connection with the disposition of any Claim
alleging infringement of such Third Party's intellectual property rights as a
result of the use, development or manufacture of the Compounds or the
development, use, manufacture, marketing or sale of the Products anywhere in the
Territory NeoPharm shall make, or provide reimbursement to PNU for, all such
payments; provided that in no event shall NeoPharm make or reimburse PNU for any
such payments with respect to any Claims which have arisen out of or relate to
any future changes in dosage, administration or manufacture of the Compounds or
the Products from that set forth in the NeoPharm Patents or the NeoPharm
Know-How existing on the License Effective Date.
10.5 NEOPHARM ACQUISITION OR LICENSE OF THIRD PARTY RIGHTS. The parties
shall discuss and mutually develop a plan for any actions to be taken with
respect to the intellectual property rights of Third Parties. In the event it is
mutually agreed that NeoPharm should acquire or license any intellectual
property rights of a Third Party having the effect of reducing or eliminating
the amount of any actual or potential indemnification to be provided pursuant to
Section 17.2, such amount shall be paid by NeoPharm without any right to
reimbursement from PNU.
10.6 NO THIRD PART EFFECT. Neither this Article X, nor any exercise of
rights or fulfillment of obligations under this Article X, shall affect by
itself any indemnification or contribution rights of either party against any
other party.
ARTICLE XI.
INFRINGEMENT BY THIRD PARTIES
11.1 NOTICE. During the Agreement Term, PNU and NeoPharm shall each
promptly, but in any event no later than fifteen (15) calendar days after such
party receives notice of or becomes aware of any of the following, notify the
other in writing of:
(a) Any actual or threatened unlawful disclosure or infringement by any
Third Party of all or any part of the NeoPharm Patents, NeoPharm Know-How,
Product Patents or Product Know-How in the Territory; or
(b) Any information that may reasonably be considered material to the
validity or enforceability of the NeoPharm Patents or Product Patents.
The parties agree that time is of the essence with respect to the giving of
notices hereunder.
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11.2 PROSECUTION OF ACTIONS.
(a) NeoPharm shall have the primary right, but not the obligation, to
institute, prosecute and control any action or proceeding with respect to any
infringement of any of the NeoPharm Patents or NeoPharm Know-How by counsel of
its own choice. PNU shall cooperate with NeoPharm at NeoPharm's request in the
prosecution of such action or proceeding. If NeoPharm determines that PNU is an
indispensable party to the action, PNU hereby consents to be joined. In such
event, PNU shall have the right to be represented in that action by counsel of
its own choice and expense.
(b) If NeoPharm fails to bring an action or proceeding within a period
of thirty (30) days after receiving written notice from PNU or otherwise having
knowledge of that infringement, PNU shall have the right to bring and control
any such action by counsel of its own choice and expense. If PNU determines that
NeoPharm is an indispensable party to the action, NeoPharm hereby consents to be
joined. In such event, NeoPharm shall have the right to be represented in that
action by counsel of its own choice and expense.
11.3 NOTICE. Any notice under this Article XI shall set forth the facts
of such infringement in reasonable detail.
11.4 PROSECUTION OF ACTIONS.
(a) PNU shall have the primary right, but not the obligation, to
institute, prosecute and control any action or proceeding with respect to any
infringement of any of the Product Patents or Product Know-How by counsel of its
own choice. NeoPharm shall cooperate with PNU at PNU's request in the
prosecution of such action or proceeding. If PNU determines that NeoPharm is an
indispensable party to the action, NeoPharm hereby consents to be joined. In
such event, NeoPharm shall have the right to be represented in that action by
counsel of its own choice and expense.
(b) If PNU fails to bring an action or proceeding within a period of
thirty (30) days after receiving written notice from NeoPharm or otherwise
having knowledge of that infringement, NeoPharm shall have the right to bring
and control any such action by counsel of its own choice and expense. If
NeoPharm determines that PNU is an indispensable party to the action, PNU hereby
consents to be joined. In such event, PNU shall have the right to be represented
in that action by counsel of its own choice and expense.
11.5 DIVISION OF PROCEEDS. No settlement, consent judgment or other
voluntary final disposition of a suit under this Article XI may be entered into
without the joint consent of PNU and NeoPharm, which consent shall not be
withheld unreasonably. If NeoPharm brings an action, any damages or other
monetary awards recovered by NeoPharm shall be applied first to defray the costs
and expenses incurred in the action. If any balance remains, NeoPharm shall pay
PNU *** of such balance. If NeoPharm fails to bring action and PNU brings action
any damages or other monetary awards recovered by PNU shall be applied first to
defray the costs and expenses incurred in the action. If any balance remains,
PNU shall
*** Confidential Treatment Requested
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pay NeoPharm *** of such balance.
ARTICLE XII.
REPRESENTATIONS AND WARRANTIES
12.1 REPRESENTATIONS AND WARRANTIES OF THE PARTIES. NeoPharm and PNU
each represent and warrant to the other, as of the License Effective Date, as
follows:
(a) It is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority, corporate or otherwise, to conduct its business
as now being conducted, to own, lease and operate its properties and to execute,
deliver and perform this Agreement.
(b) Neither it, nor any of its employees or consultants who shall be
undertaking any activities related to this Agreement or the Products, has been
debarred or the subject of debarment proceedings by the FDA.
(c) Except with respect to the filing of a pre-merger notification
report under the HSR Act, if necessary, or pursuant to Section 19.17, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency is required to be obtained or made by or
with respect to such party in connection with its execution, delivery and
performance of this Agreement.
(d) The execution, delivery, consummation and performance by it of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action and will not (a) require any consent or approval
of its stockholders, (b) violate any Applicable Laws or (c) result in a breach
of or constitute a default under any material agreement, mortgage, lease,
license, permit or other instrument or obligation to which it is a party or by
which it or its properties may be bound or affected.
(e) This Agreement is a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
(f) It is not under any obligation to any Third Party, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.
12.2 REPRESENTATIONS AND WARRANTIES OF NEOPHARM. NeoPharm represents
and warrants to PNU, as of the License Effective Date, that:
(a) To the best of its knowledge, NeoPharm has not committed any act or
failed to take any action which would cause a material omission or permit any
acts or omissions to occur which would be in conflict with its obligations under
this Agreement or diminish
*** Confidential Treatment Requested
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in any material respect the potential scope of the grant of rights to PNU under
this Agreement.
(b) NeoPharm has no knowledge that the license rights granted to PNU
with respect to the Compounds or Products are subject to any material retained
rights of any state, federal or foreign government or governmental entity.
(c) NeoPharm has no knowledge that making, using or selling any
Compounds or Products within the Field of Use may infringe the patent rights of
any Third Party nor does it have any knowledge that any third party is
infringing the NeoPharm Patents licensed hereunder.
(d) NeoPharm has delivered to PNU copies of all NeoPharm Know-How,
together with any other information now owned or controlled by NeoPharm that is
reasonably necessary or useful to a complete understanding of the prospects for
the Compounds and the Products including without limitation complete reports on
all serious adverse experiences associated with the use of the Compounds with
any pharmaceutical product or other substance. To the best of its knowledge, all
of such information is materially correct and complete.
(e) Exhibit C contains an accurate, correct and complete list of all
Patent applications owned or Controlled by NeoPharm claiming inventions that may
be useful or necessary in the LED Field of Use, and all NeoPharm Patents owned
or Controlled by NeoPharm claiming inventions that may be useful or necessary in
the LEP Field of Use, and NeoPharm has disclosed to PNU all material information
known to NeoPharm relating to the prospects for issuance of NeoPharm Patents
from such Patent applications and the validity and enforceability of such
NeoPharm Patents.
(f) To the best of its knowledge, the conduct of its business as
currently conducted does not violate, and the conduct of its business as
proposed under this Agreement would not violate, any of the intellectual
property rights of any other person or entity relating to the use of the
Compounds or the Products.
(g) To the best of its knowledge, there has been no, and there
currently is no, material unauthorized use, infringement or misappropriation of
any NeoPharm Know-How or NeoPharm Patents.
(h) To the best of its knowledge, the execution and delivery of this
Agreement by NeoPharm and its performance of its obligations under this
Agreement will not violate any federal, state, municipal statute or regulation
or any order of any court or other governmental department, authority, agency or
instrumentality.
(i) NeoPharm has not, and during the Agreement Term will not, grant any
right to any Third Party relating to the NeoPharm Patents and NeoPharm Know-How
which would conflict with the rights granted to PNU hereunder.
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(j) Any data submitted to the FDA for the Compounds was complete and
accurate in all material respects when submitted and continues to be complete
and accurate. Neither NeoPharm nor, to the best of its knowledge, its Affiliates
has, with respect to the Compounds, made an untrue statement of a material fact
or fraudulent statement to the FDA, failed to disclose a material fact required
to be disclosed to the FDA or committed an act, made a statement or failed to
make a statement that could reasonably be expected to provide a basis for the
FDA to invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery and Illegal Gratuities" as set forth in 56 Fed. Reg. 46191 (September
10, 1991).
(k) No proceedings have been instituted or are pending which challenge
any rights of NeoPharm with respect to the NeoPharm Know-How, or the validity of
the NeoPharm Patents. Neither the Compounds nor NeoPharm's business relating to
the development, use or manufacture of the Compounds is the subject of: (i) any
outstanding judgment, order, writ, injunction or decree of, or settlement
agreement with, any person, corporation, business entity, court, arbitrator or
administrative or governmental authority or agency, limiting, restricting or
affecting the Products or such business in a way that would have an adverse
effect on PNU's manufacture, sale and marketing of the Products as contemplated
herein; and (ii) any pending or, to the knowledge of NeoPharm, threatened Claim,
suit, proceeding, charge, inquiry, investigation or action of any kind.
(l) NeoPharm has sufficient legal and/or beneficial right, title and
interest in, to and under the NeoPharm Patents, the NeoPharm Know-How and its
other intellectual property rights to conduct its business as now conducted
under this Agreement and to grant the Licenses contained herein.
(m) To the best of its knowledge, the Compounds and the Products used
in clinical studies have been manufactured in registered GMP complaint
facilities in accordance with applicable Good Manufacturing Principles
regulations.
(n) All material registrations and filings, including the payment of
maintenance and renewal fees, have been timely made for the NeoPharm Patents as
are necessary to preserve the rights of NeoPharm or to prosecute Patent
applications in the ordinary course of NeoPharm's management of its intellectual
property rights.
12.3 MUTUAL LIMITATIONS ON WARRANTIES AND DAMAGES. OTHER THAN THE
REPRESENTATIONS AND WARRANTIES MADE BY THE PARTIES PURSUANT TO SECTIONS 12.1 AND
12.2 OR ELSEWHERE HEREIN, THE PARTIES DISCLAIM ANY AND ALL OTHER WARRANTIES
WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY WARRANTY ARISING FROM
COURSE OF DEALING OR USAGE OF TRADE.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by NeoPharm and by PNU in this Agreement are made as of the
License
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Effective Date, and they shall only be valid and survive for a period ending on
the third year anniversary of the License Effective Date and shall thereafter be
of no force or effect, except to the extent required to enforce the parties'
accrued rights and obligations hereunder following the end of such period for
any Claims which have been properly notified by one party to any other party
prior to the expiration of such period.
ARTICLE XIII.
COVENANTS
13.1 COVENANTS OF THE PARTIES. Throughout the Agreement Term, NeoPharm
and PNU shall:
(a) Comply in all material respects with all Applicable Laws.
(b) Promptly notify the other if it becomes aware of any Other
Information.
(c) Execute and deliver any further or additional instruments or
documents and perform any acts which may be reasonably necessary in order to
effectuate and carry out the purposes of this Agreement.
13.2 COVENANT OF NEOPHARM. From and after the License Effective Date,
NeoPharm shall:
(a) work in good faith with PNU to assure satisfactory arrangements for
the long term supply of bulk paclitaxel and cardiolipin.
(b) not provide any rights to any Third Party with respect to the
Products, the Compounds and other compounds in the class known as taxanes and
anthracyclines within the Field of Use.
(c) provide written notice to PNU of any Patent applications owned or
Controlled by NeoPharm arising after the License Effective Date claiming
inventions that may be useful or necessary in the LED Field of Use or the LEP
Field of Use, and all material information known to NeoPharm relating to the
prospects for issuance of NeoPharm Patents from such Patent applications and the
validity and enforceability of such NeoPharm Patents.
13.3 COVENANTS OF PNU.
(a) PNU shall use Reasonable Efforts to timely achieve the milestones
referenced in Sections 4.1 or 4.2 hereof and to introduce, promote, market and
sell the Products in the Territory and such efforts shall be consistent with
providing NeoPharm with the benefit of the royalty payments and/or co-promotion
of the Products as contemplated herein. PNU shall maintain adequate facilities,
Product inventory and personnel to ensure prompt handling and servicing of
customer inquiries and orders and prompt shipping and servicing of the Products.
For purposes of this section 13.3, "Reasonable Efforts" shall mean efforts and
resources commonly used in the research-based pharmaceutical industry for a
product at a
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similar stage in its product life taking into account the establishment of the
product in the marketplace, the competitiveness of the marketplace, the
proprietary position of the product, the regulatory structure involved, the
profitability of the product and other relevant factors. Such resources and
efforts shall be determined for a particular Product on a case-by-case basis;
and it is anticipated that the level of effort will change over time reflecting
changes in the status of the Product and the marketplace.
(b)PNU CEASES TO MARKET OR SELL PRODUCT. Unless otherwise mutually
agreed to by the parties, should PNU or its Affiliates or Sublicensees:
(1)cease to market or sell a Product for more than one year other than
because of legal or administrative actions causing the cessation of
marketing, Force Majeure or bona fide business reasons (provided that
PNU shall use Reasonable Efforts to avoid or eliminate any such action,
condition or business reasons) in (i) the United States, (ii) the U.K.,
Spain, Italy, France and Germany ("European Markets") or (iii) Japan;
or
(2) fail to launch a particular Product within one year from
the occurrence of the latest to occur of the following events (if
applicable in such countries): (m) issuance of a Product's NDA approval
(or equivalent regulatory approval), (n) governmental price approval
and approval for reimbursement or, (o) joint resolution of any other
bona fide business reasons for delaying such launch, in (x) the U.S.,
(y) the European Markets, or (z) Japan,
then in either case, PNU shall have no further rights to the applicable
Product in the countries where such cessation or failure to launch has
occurred, and PNU shall have no further obligations for the applicable
Product in the countries where such cessation or failure to launch has
occurred, except such obligations which accrued prior to divestment
from PNU of rights to the applicable Product.
In the event rights to a Product are divested from PNU in (i) the U.S.,
(ii) the European Markets, or (iii) Japan pursuant to this Section
13.3(b) and upon NeoPharm's request, PNU shall immediately transfer the
NDA approval (or equivalent regulatory approval) in the applicable
countries to NeoPharm or to an appointee of NeoPharm, provide to
NeoPharm all data in PNU's possession or control relating to that
Product and take all such other actions as are necessary or useful to
permit NeoPharm to obtain Regulatory Approvals to market the Product in
the applicable countries. NeoPharm shall market the Product under its
own tradenames or brands and shall not use PNU's tradenames or brands
and NeoPharm shall pay to PNU a royalty on Net Sales of all such
Products in the applicable countries at the same rate as PNU would have
been required to pay NeoPharm.
Failure by PNU to launch a Product or cessation of marketing or sale of
a Product pursuant to this Section 13.3(b) shall not be considered a
breach of this Agreement within the meaning of Article 15.
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For the avoidance of doubt, it is understood between the parties hereto
that the provisions of this Section 13.3(b) shall not apply in the
event that PNU or its Affiliates or Sublicensees cease to sell a
Product for reasons related to the safety or efficacy of a Product.
13.4 MAINTENANCE OF LICENSES FROM THIRD PARTIES. So as not to adversely
affect PNU's right to NeoPharm Patents and NeoPharm Know-How under this
Agreement, NeoPharm agrees during the Agreement Term: (a) not to take any
actions to terminate or restrict its rights under any Third Party license
agreements or other agreements which give rise to such rights, (b) to discharge
all of NeoPharm's obligations and responsibilities under any such Third Party
license agreements or other agreements, including without limitation, making all
required payments thereunder, (c) to notify PNU promptly of NeoPharm's receipt
of any notices of breach under any such Third Party license agreements or other
agreements, and (d) during the Agreement Term, NeoPharm will not knowingly
infringe any valid Third Party intellectual property rights in its conduct of
any activity related to this Agreement.
13.5 MANUFACTURE AND SUPPLY OF COMPOUNDS. NeoPharm will deliver to PNU
such quantities of Compound as are required in order to meet the development
needs of PNU, at PNU's cost and expense.
ARTICLE XIV.
CONFIDENTIAL INFORMATION
14.1 OWNERSHIP. Without limiting the rights granted to and by the
parties under this Agreement, Confidential Information furnished hereunder by
either party to the other shall remain the sole property of the disclosing
party; provided, however, that upon NeoPharm terminating this Agreement pursuant
to Section 15.2 or PNU terminating this Agreement pursuant to Section 15.3, PNU
shall grant NeoPharm a non-exclusive license to the Confidential Information
that PNU furnished to NeoPharm hereunder. Data and inventions concerning the
Products developed or made during the Agreement Term shall be owned by the
developing or inventing party.
14.2 CONFIDENTIALITY. Each party agrees that during the Agreement Term
and at all times thereafter, it shall use all commercially reasonable efforts to
keep, and cause its Affiliates and/or Sublicensees to keep, confidential all
Confidential Information, and neither party nor any of its Affiliates and/or
Sublicensees shall use or disclose the Confidential Information except as
expressly permitted in this Agreement. Each party acknowledges that the
Confidential Information is highly valuable, proprietary and confidential and
that any disclosure to any officer, employee, or agent of such party or any of
its Affiliates shall be made only to the extent necessary to carry out its
responsibilities under this Agreement and only if such officer, employee or
agent shall be bound by an Agreement to maintain such information in confidence.
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14.3 PUBLIC ANNOUNCEMENTS AND STATEMENTS. Neither NeoPharm nor PNU, nor
any Affiliate thereof, shall issue or cause publication of any press release or
other public announcement or public communication with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed.
Neither party shall use the name of the other party in any public statement or
press release without the prior written approval of the other party, which
approval may not be unreasonably withheld or delayed; provided, however, that
both parties shall give the other party a minimum of five (5) business days to
review any such press release or other public statement. Notwithstanding the
foregoing, each party may make any disclosure which such party, in the opinion
of its counsel, is obligated to make pursuant to applicable law, in which case
such party shall still endeavor to give the other party an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
the opinion of its counsel, be made without time for review. The failure of a
party to draft such disclosure in a timely fashion shall not be deemed a reason
to avoid submitting such disclosure to the other party hereto.
14.4 PUBLICITY RELATED TO THE PROJECT. Subject to the other provisions
of this Agreement, PNU may disclose information generated by studies sponsored
by PNU, or disclose any conclusions based on such information, after giving
NeoPharm a reasonable opportunity to review and comment (but not approve) any
such disclosure. In addition, each Party may announce periodically whether Phase
I, II or III studies involving the Products are underway or to be initiated. Any
other disclosures of information arising from or related to this Agreement shall
be approved by each of the parties hereto, except to the extent such information
is publicly known through no fault of NeoPharm or PNU or either party is
required, on advice of counsel, to make public disclosure relating to the
Project pursuant to any law, rule or regulation of any governmental agency,
including without limitation the United States Securities and Exchange
Commission or any securities exchange on which securities of the disclosing
party are then listed, in which case a party shall be permitted to make such
required disclosure provided advance notice is first given to the other party.
14.5 INVESTIGATOR PUBLICATIONS. Notwithstanding anything set forth in
this Agreement to the contrary, NeoPharm and PNU agree to use their best efforts
to cause investigators who conduct clinical studies of the Products sponsored by
PNU or NeoPharm, respectively, to agree to submit the results of their studies
and a draft of publication to PNU or NeoPharm, respectively for review a
reasonable period of time before submission to the publisher. PNU and NeoPharm
will share with each other the results of these studies and these drafts of such
publication as soon as practicable. Both parties understand that neither party
will have the right to approve or disapprove the publication.
14.6 POST-APPROVAL USE. Notwithstanding anything set forth in this
Agreement to the contrary, following approval of the Products, PNU shall be
permitted to use and publicize information generated by the Project in
connection with the commercialization and promotion of the Products, together
with all of NeoPharm's clinical data and Non-clinical data related to the
Products, in accordance with applicable laws and regulations. Likewise, PNU is
free to use information generated by PNU outside the scope of the Project as it
sees fit.
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14.7 USE OF NAME AND TRADEMARKS. Unless specifically authorized by this
Agreement, neither Party shall use in any manner the names or trademarks of the
other Party without the express written consent of such Party.
ARTICLE XV.
TERM AND TERMINATION
15.1 AGREEMENT TERM; COUNTRY TERM(S). This Agreement may be terminated
early pursuant to Sections 15.2 and 15.3 hereof by terminating the Agreement
Term. This Agreement, as applicable in a specific country in the Territory, may
be terminated early in such country by terminating the applicable Country Term,
without affecting the Agreement Term or the other Country Terms.
15.2 TERMINATION BY NEOPHARM. NeoPharm may terminate the Agreement Term
upon written notice to PNU at any time in the event of: (i) a material breach by
PNU or its Affiliates or its Sublicensees of this Agreement where such breach is
continuing for sixty (60) days (or thirty (30) days with respect to nonpayment
of a material amount due unless such amount is subject to a bona fide dispute
between the parties) after PNU has received written notice from NeoPharm of such
breach, specifying in reasonable detail the particulars of the alleged breach,
and such breach has not been cured within such sixty (60) day period (or thirty
(30) days with respect to nonpayment of a material amount due unless such amount
is subject to a bona fide dispute between the parties). In the event that such a
breach (other than the nonpayment of a material amount due unless such amount is
subject to a bona fide dispute between the parties) may not be reasonably cured
in sixty (60) days, then such cure period shall be extended provided PNU shall
demonstrate to NeoPharm's reasonable satisfaction that it is using all
commercially reasonable efforts to cure such breach. If NeoPharm terminates the
Agreement Term pursuant to this Section 15.2, PNU shall transfer back to
NeoPharm all rights to the NeoPharm Patents and NeoPharm Know-How granted to PNU
plus grant to NeoPharm a non-exclusive license (requiring payment to PNU of a
reasonable royalty rate) to any and all Improvements, enhancements, Confidential
Information, Other Information, NDAs, or the substantially equivalent approvals
in the respective countries owned or controlled by PNU which relate to the
Compounds, which license shall only allow NeoPharm to use such Improvements,
enhancements, Confidential Information, Other Information, NDAs, or the
substantially equivalent approvals in the respective countries in connection
with the Compounds. For the avoidance of doubt, upon NeoPharm's termination of
the Agreement Term pursuant to this Section 15.2, PNU's rights included in the
relevant licenses granted by NeoPharm to PNU hereunder shall immediately and
automatically revert to NeoPharm; provided, however, that PNU, with the consent
of NeoPharm, shall be entitled to complete the manufacture of any Product then
in progress and to sell any such completed Product, along with any Product then
in inventory, subject to payment of royalties pursuant to Article VI. Without
limiting the generality of the foregoing, all relevant licenses and sublicenses
granted by NeoPharm to PNU hereunder shall terminate automatically and PNU shall
promptly transfer to NeoPharm all related documents, materials and records in
its possession without retaining any copies thereof.
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15.3 TERMINATION BY PNU. PNU may terminate the Agreement Term upon
written notice to NeoPharm at any time in the event of: (i) a material breach by
NeoPharm or its Affiliates of this Agreement where such breach is continuing for
sixty (60) days after NeoPharm has received written notice from PNU of such
breach, specifying in reasonable detail the particulars of the alleged breach,
and such breach has not been cured within such sixty (60) day period; and (ii)
at any time, without penalty, provided that PNU shall not be entitled to refund
of any payments made to NeoPharm prior to such termination date. In the event
that a breach set forth in subclause (i) may not be reasonably cured in sixty
(60) days, then such cure period shall be extended provided NeoPharm shall
demonstrate to PNU's reasonable satisfaction that it is using commercially
reasonable effects to cure such breach. If PNU terminates the Agreement Term
pursuant to this Section 15.3, it shall transfer back to NeoPharm all rights to
the NeoPharm Patents and NeoPharm Know How granted to it plus grant to NeoPharm
a non-exclusive license (requiring payment to PNU of a reasonable royalty rate)
to any and all Improvements or enhancements owned or controlled by PNU which
relate to the Compounds, which license shall only allow NeoPharm to use in
connection with the Compounds. For the avoidance of doubt, upon PNU's
termination of the Agreement Term pursuant to this Section 15.3, PNU's rights
included in the relevant licenses granted by NeoPharm to PNU hereunder shall
immediately and automatically revert to NeoPharm; provided, however, that PNU,
with the consent of NeoPharm, shall be entitled to complete the manufacture of
any Product then in progress and to sell any such completed Product, along with
any Product then in inventory, subject to payment of royalties pursuant to
Article VI; and provided, further, that upon (or in lieu of) termination
pursuant to Section 15.3(i); PNU shall be entitled to all available legal and
equitable remedies (including, but not limited to, monetary damages and specific
performance) as a result of NeoPharm's material breach of this Agreement.
ARTICLE XVI.
RIGHTS AND DUTIES UPON TERMINATION OR EXPIRATION; REMEDIES
16.1 MONIES PAID OR DUE.
(a) Upon the termination or expiration of this Agreement and subject to
Section 17.5, each party shall have the right to retain all payments already
received from the other party pursuant to this Agreement, and each party shall
pay to the other all sums accrued hereunder which are then due.
(b) The termination of this Agreement by PNU under Section 15.3(i) or
(ii) hereof shall terminate PNU's obligation to make any payments under this
Agreement that would accrue after, and are not due and payable at the time of,
the effective date of the termination.
16.2 SURVIVAL OF RIGHTS. The termination or expiration of this
Agreement shall not affect the accrued rights and obligations of NeoPharm or PNU
arising under or out of this Agreement or Claims arising during the Agreement
Term, and the obligations relating to such Claims. In addition, any provision
required to interpret and enforce the parties' rights
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and obligations under this Agreement shall survive to the extent
required for the full observation and performance of this Agreement by the
parties hereto. Notwithstanding any provision herein to the contrary, the rights
and obligations set forth in Sections 2.3, 6.2, 6.4, 6.11, 12.4 and 16.3 and
Articles XIV and XVII shall survive the expiration or termination of this
Agreement.
16.3 TRANSITION UPON TERMINATION. If this Agreement is terminated by
NeoPharm pursuant to Section 15.2 or by PNU pursuant to Section 15.3(ii), PNU
shall upon termination cooperate with NeoPharm and/or its Affiliates to transfer
back to NeoPharm all title and interest in and to the NeoPharm Patents and
NeoPharm Know-How and any Improvements developed by PNU or its Affiliates to use
solely with the Products.
16.4 REMEDIES. If either party shall fail to perform or observe or
otherwise breaches any of its material obligations under this Agreement, in
addition to any right to terminate this Agreement, the non-defaulting party may
elect to obtain other such equitable relief and remedies as shall be available
under applicable law.
ARTICLE XVII.
INDEMNIFICATION AND LIMITATION OF LIABILITY
17.1 INDEMNIFICATION BY PNU. In addition to any other rights NeoPharm
may have at law or in equity, PNU shall indemnify, defend and hold harmless
NeoPharm and its Affiliates, employees, agents, officers and directors, and
their successors and assigns (each, an "NeoPharm Indemnified Party"), from and
against any and all Claims which the NeoPharm Indemnified Party may incur,
suffer or be required to pay resulting from or arising out of: (i) the
marketing, distribution, promotion or sale of the Products by PNU, its
Affiliates or Sublicensees; (ii) the manufacture of the Products by PNU or its
Affiliates or Sublicensees or by a Third Party (other than an Affiliate of
NeoPharm) after the License Effective Date, except and unless in the case of
either (i) or (ii) any such claim arises out of the breach of any NeoPharm
representations, warranties or covenants hereunder or NeoPharm had knowledge as
of the License Effective Date that, based on facts in existence and
circumstances existing on the License Effective Date, the manufacture,
marketing, distribution, promotion or sale of the Products after the License
Effective Date would be likely to result in or create such Claims; and (iii) any
breach of any representation, warranty or covenant of PNU or its Affiliates or
Sublicensees in this Agreement or the Stock Purchase Agreement or any other
transaction documents.
17.2 INDEMNIFICATION BY NEOPHARM. In addition to any other rights PNU
may have at law or in equity, NeoPharm shall indemnify, defend and hold harmless
PNU and its Affiliates and Sublicensees and their respective employees, agents,
officers and directors, and their successors and assigns (each, a "PNU
Indemnified Party"), from and against any and all Claims which the PNU
Indemnified Party may incur, suffer or be required to pay resulting from or
arising out of: (i) the manufacture or use of the Compounds or the Products by
NeoPharm or their Affiliates; (ii) any liability arising prior to the License
Effective Date in any way relating to any Compound or the Products, regardless
of the date of first assertion
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of any Claim or action relating thereto; (iii) any material breach of any
representation, warranty or covenant by NeoPharm or any Affiliate in this
Agreement or the Stock Purchase Agreement or any other transaction documents; or
(iv) any infringement of the intellectual property rights of any third party
existing as of the date hereof as a result of the use and exploitation by PNU of
the NeoPharm Patents and the NeoPharm Know-How in connection with the
manufacture, use, marketing and sale of the Products in the Territory, except
that in no event shall NeoPharm be required to indemnify any PNU Indemnified
Party with respect to any Claims which have arisen out of or relate to any
future changes in dosage, administration or manufacture of the Compounds or the
Products from that set forth in the NeoPharm Patents or the NeoPharm Know-How
existing on the License Effective Date.
17.3 PROCESS OF INDEMNIFICATION. Promptly after an indemnified party
becomes aware of any potential Liability hereunder, such party shall deliver
written notice to the indemnifying party stating the nature of the potential
Liability; provided, however, that the failure to give such notification shall
not affect the indemnification provided hereunder except to the extent the
indemnifying party is actually prejudiced as a result of such failure. The
indemnified party shall give the indemnifying party such information with
respect to the potential Liability as the indemnifying party may from time to
time reasonably request. The indemnifying party shall have the right to conduct
the defense of any suit or Claim related to the Liability if it has assumed
responsibility for the suit, Claim or other proceeding in writing; provided,
however, that if in the reasonable judgment of the indemnified party such suit,
Claim or other proceeding involves an issue or matter which could have a
material adverse effect on the business, operations or assets of the indemnified
party, the indemnified party may elect, at its own expense, to conduct a
separate defense thereof, but in no event shall any such election be construed
as a waiver of any indemnification rights such indemnified party may have under
this Article XVII, at law or in equity, or otherwise. If the indemnifying party
defends the suit or Claim, the indemnified party may participate in (but not
control) the defense thereof at its sole cost and expense; provided, however,
that the indemnifying party shall pay the reasonable fees and costs of any
separate counsel required for the indemnified party to the extent such
representation is due to a conflict of interest between the parties.
17.4 SETTLEMENTS. Neither party may settle any Claim, action or
proceeding related to a Liability to a Third Party without the consent of the
other party, which consent shall not be unreasonably withheld or delayed, if
such settlement would impose any monetary obligation on the other party or
require the other party to submit to an injunction or otherwise limit the other
party's rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.
Notwithstanding the foregoing, the indemnifying party will be liable under this
Article XVII for any settlement effected without its consent if the indemnifying
party has refused to acknowledge liability for indemnification hereunder and/or
declines to defend the indemnified party in any such Claim, action or proceeding
and it is determined by arbitration pursuant to Article XVIII hereof that the
indemnifying party was liable to the indemnified party for indemnification
related to such settlement.
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17.5 RIGHT OF SET-OFF. In addition to any other remedies any party may
have for indemnification under this Agreement or at law or in equity, any party
may set off against any amount otherwise due and yet unpaid to the other party
hereunder any amount owed by such first party to the other party under any
provision of this Agreement or any instrument or Agreement delivered pursuant
hereto, or otherwise; provided, however, any amounts owed to a party pursuant to
Claims under Sections 10.4, 17.1 or 17.2, shall not be set off against amounts
owed by such party until all appeals or other actions relating to such Claims
have been exhausted which result in that Claim being fixed and certain.
ARTICLE XVIII.
ARBITRATION
18.1 RESOLUTION OF DISPUTES BY PARTIES' REPRESENTATIVES. The parties
recognize that a bona fide dispute as to certain matters may from time to time
arise during the term of this Agreement which relate to either party's rights or
obligations hereunder. In the event of the occurrence of such a dispute, either
party may, by written notice to the other, have such dispute referred to their
respective officer designated below or their successors, for attempted
resolution by good faith negotiations within thirty (30) days after such notice
is received.
Said designated officers are as follows:
For NeoPharm - President
For PNU - Senior Vice President for Global Business Management
In the event the designated officers are not able to resolve such
dispute within such thirty (30) day period, any party may invoke the
provisions in Section 18.2 below.
18.2 ARBITRATION. Except as expressly provided in Section 18.1, and
except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order to preserve the status quo or to
prevent irreparable harm pending the selection and confirmation of a panel of
arbitrators in accordance herewith, any and all disputes arising out of or in
connection with the performance of this Agreement shall be finally settled by
arbitration in accordance with the rules of the American Arbitration
Association, except that each party will be entitled to select one (1)
arbitrator and the two (2) arbitrators so selected shall select a third
arbitrator and if they cannot agree, then the third arbitrator will be selected
by the American Arbitration Association. The arbitration shall be held in New
York, New York. The award rendered shall be final and binding upon the parties.
Judgment on any award may be entered in any court having jurisdiction over the
parties or their assets. To the extent any claims relate to the validity,
construction, scope, enforceability or infringement of any Patent, such claim
shall not be required to be submitted to arbitration hereunder and shall be
resolved by a court of competent jurisdiction. The costs of arbitration shall be
shared equally by the parties.
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ARTICLE XIX.
MISCELLANEOUS
19.1 FORCE MAJEURE. If the performance by any party of any obligation
under this Agreement is prevented, restricted, interfered with or delayed by
reason of Force Majeure, the party so affected shall, upon giving written notice
to the other party, be excused from such performance and shall not be in breach
of this Agreement to the extent of such prevention, restriction, interference or
delay, provided that the affected party uses its reasonable efforts to avoid or
remove such causes of non-performance and continues performance with the utmost
dispatch whenever such causes are removed. In the event of Force Majeure lasting
more than six (6) months (or which the parties acknowledge will last more than
six (6) months), the parties agree to meet and discuss how this Agreement can be
justly and fairly implemented under the circumstances.
19.2 GOVERNING LAW. This Agreement shall be deemed to have been made in
the State of New York and its form, execution, validity, construction and effect
shall be determined in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of law thereof.
19.3 HEADINGS AND REFERENCES. All section headings contained in this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
19.4 SINGULAR/PLURAL AND MASCULINE/FEMININE. Unless the context clearly
indicates otherwise, the use herein of the singular shall include the plural,
and the use of the masculine shall include the feminine, and vice versa.
19.5 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, it shall be
modified to the minimum extent necessary to make it valid and enforceable.
19.6 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and the Stock Purchase Agreement constitute the entire
agreement between the parties and their Affiliates relating to the subject
matter hereof and supersede all previous writings and understandings, whether
oral or written, including without limitation the Letter of Intent, dated
January 13, 1999, by and between NeoPharm and PNU, relating to the subject
matter of this Agreement.
19.7 AMENDMENT. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both parties
that specifically refers to this Agreement.
19.8 NOTICES. Any notice required or permitted under this Agreement
shall be in writing and sent by reputable courier service, charges prepaid, or
by facsimile transmission with confirmation by reputable courier service, to the
address or facsimile number specified below. Such notices shall be deemed given
three (3) business days after such deposit in the
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mail or with a courier or one (1) business day after such facsimile
transmission.
If to NeoPharm
NeoPharm, Inc.
100 Corporate North, Suite 215
Bannockburn, Illinois 60015
Fax Number: (847) 295-8854
Attention: President and Chief Executive Officer
with copies to:
Burke, Warren, MacKay & Serritella, P.C.
330 N. Wabash, Suite 2200
Chicago, Illinois 60611
Attention: Christopher R. Manning
If to PNU
Pharmacia & Upjohn Company
95 Corporate Drive
Bridgewater, New Jersey
Attention: General Counsel
Fax Number: (908) 306-4416
19.9 ASSIGNMENT, SUBLICENSE AND BINDING EFFECT. Subject to Section
7.1(d) and 7.1(e), each party shall have the right to assign or sublicense its
rights in whole or in part under this Agreement to an Affiliate of such party
without the other party's consent or to a third party with the other party's
prior written consent, which consent shall not be unreasonably withheld,
provided that (i) in either case such party guarantees to the other party all of
such party's obligations hereunder; and (ii) in the case of any sublicense by
PNU hereunder, the sublicensee agrees in a written, executed agreement delivered
to NeoPharm and naming NeoPharm as an intended third party beneficiary therein
to observe and perform those obligations of PNU hereunder reasonably determined
by PNU to relate to such sublicense.
19.10 AGENCY. Neither Party is, nor shall be deemed to be, an employee,
agent, co-venturer or legal representative of the other Party for any purpose.
Neither Party shall be entitled to enter into any contracts in the name of, or
on behalf of the other Party, nor shall either Party be entitled to pledge the
credit of the other Party in any way or hold itself out as having the authority
to do so.
19.11 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a Party to export, re-export or otherwise transfer any Information
transferred hereunder or Products manufactured therefrom without compliance with
applicable laws.
19.12 SECTIONS AND ARTICLES. Unless specified otherwise, references to
Sections and Articles are to Sections and Articles of this Agreement.
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19.13 EUROPEAN UNION. The parties acknowledge that this Agreement may
need to be notified to the European Commission at some point during the
Agreement Term. Accordingly, upon reasonable request of either Party, the
Parties shall cooperate in notifying this Agreement and seeking a conclusion of
the notification process satisfactory to both Parties. If at any time the
European Commission determines that any provision of this Agreement is
unenforceable or otherwise not permitted under the laws, rules and regulations
of the European Union, the Parties agree to initiate good faith negotiations
aimed at modifying such provision in a manner that is acceptable to the European
Commission and the Parties.
19.14 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly
and shall not be strictly construed against either party.
19.15 WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a wavier of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver,
and no waiver shall be binding unless executed in writing by the party making
the waiver.
19.16 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original as against any party whose signature appears
thereon but all of which together shall constitute one and the same instrument.
19.17 THIRD PARTY APPROVAL. Georgetown University has approved
NeoPharm's agreeing to the terms and conditions of this Agreement.
19.18 INDEPENDENT PATENT COUNSEL OPINION. Prior to PNU's first
commercial sale or manufacture in the U.S. of any Compound or Product, NeoPharm
shall provide PNU with an opinion from independent patent counsel that in such
counsel's opinion, as of the License Effective Date, the manufacture, sale and
use of any Compound or Product, which is made in accordance with the NeoPharm
Patents and NeoPharm Know-How in existence as of the License Effective Date,
will not infringe any valid claims of U.S. Patent Nos. ***
and
IN WITNESS WHEREOF, the parties, through their authorized officers,
have duly executed this as of the date first written above.
NEOPHARM, INC PHARMACIA & UPJOHN COMPANY
By: /s/ James M. Hussey By: /s/ Fred Hassan
---------------------------- ---------------------------------
Name: James M. Hussey Name: Fred Hassan
Title: President Title: Chief Executive Officer
*** Confidential Treatment Requested
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EXHIBIT A
LED
LED is defined as liposome encapsulated doxorubicin.
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EXHIBIT B
LEP
LEP is defined as liposome encapsulated paclitaxel.
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EXHIBIT C
***
*** Confidential Treatment
44
EXHIBIT D
(Filed as Exhibit 10.2)
45
Schedule 7.1
***
*** Confidential Treatment Requested
46
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT