EXHIBIT 10.19
LICENSE AND ROYALTY AGREEMENT
This LICENSE AND ROYALTY AGREEMENT is entered into as of June 1, 1996 (the
"Effective Date") by and between PFIZER INC, a Delaware corporation, having an
office at 235 East 42nd Street, New York, New York 10017 and its Affiliates
("Pfizer") and MEGABIOS CORP ("Megabios"), a California corporation, having an
office at 863A Mitten Road, Burlingame, CA 94010.
WHEREAS, Pfizer desires to obtain licenses to Megabios' right, title and
interest in the Patent Rights so that Pfizer can manufacture, use or sell the
Licensed Products; and
WHEREAS, Megabios is willing to grant such license;
Therefore, in consideration of the mutual covenants and promises set forth in
this Agreement, the parties agree as follows:
1. DEFINITIONS. The capitalized terms used in this Agreement and not defined
elsewhere in it shall have the meanings specified for such terms in this Section
1 and in the Research Agreement.
1.1 "RESEARCH AGREEMENT" means the Collaborative Research Agreement
between Pfizer and Megabios effective the Effective Date.
1.2 "NET SALES" means the gross amount invoiced by Pfizer or any
sublicensee of Pfizer for sales to a third party or parties of Licensed
Products, less normal and customary trade discounts actually allowed, rebates,
returns, credits, taxes the legal incidence of which is on the purchaser and
separately
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shown on Pfizer's or any sublicensee of Pfizer's invoices and transportation,
insurance and postage charges, if prepaid by Pfizer or any sublicensee of Pfizer
and billed on Pfizer's or any sublicensee of Pfizer's invoices as a separate
item.
1.3 "LICENSED PRODUCT" means any Product arising from the Research
Program, the manufacture, use or sale of which would infringe a Valid Claim
within Patent Rights in the absence of a license.
2. GRANT OF LICENSE, TERM, RIGHTS AND OBLIGATIONS.
2.1 LICENSES GRANTED TO PFIZER UNDER THE PATENT RIGHTS.
(a) Megabios grants to Pfizer a non-exclusive, worldwide license or sublicense,
as the case may be, including such right to grant sublicenses that Megabios may
have, to manufacture, use, offer for sale and import Licensed Products under all
Megabios' right, title and interest in the Patent Rights described in Section
1.16 (a) of the Research Agreement (the "1.16 (a) License").
(b) Megabios grants to Pfizer the exclusive, worldwide license, including the
right to grant sublicenses, to manufacture (subject to Section 8), use, sell,
offer for sale an import Licensed Products under all Megabios' right, title and
interest in the Patent Rights described in Section 1.16 (b) of the Research
Agreement (the "1.16 (b) License").
(c) Pfizer acknowledges and agrees that its rights granted under this Agreement
and the Research Agreement, with respect to such aspects of the Megabios
Technology and Patent Rights licensed from the University of California are
subject to the terms and conditions contained in the UC License Agreement
including provisions related to the reservation of certain rights in the
technology licensed under such UC License Agreement, disclaimers of liability,
indemnification of the licensor by sublicensees, and provisions regarding the
right to prosecute, maintain and defend patent rights in such technology;
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provided, however, that Megabios agrees and acknowledges that, to the extent any
royalty payments are owed, pursuant to the UC License Agreement, to the Regents
of the University of California ("The Regents") based upon sale of Licensed
Products by Pfizer for consideration other than cash, Megabios will be solely
liable for the payment of such royalties to The Regents, and Pfizer will be
under no obligation to pay to Megabios any royalty on Licensed Products sold by
Pfizer for consideration other than cash; and further provided that Megabios
further agrees and acknowledges that, in the event that currency restrictions
imposed by a foreign government prevent the prompt remittance of part or all of
any royalty payments owed, pursuant to the UC License Agreement, to The Regents
based upon the sale of Licensed Products by Pfizer with respect to any country
where a Licensed Product is sold or distributed, Megabios will be solely liable
for the timely payment of such royalties to The Regents, and Pfizer will not be
required to convert the amount owed into U.S. funds as is required under the UC
License.
2.2 TERM OF LICENSE GRANT AND PAYMENT OF ROYALTIES. Unless terminated
earlier as provided below, the License shall commence on the Effective Date and
shall terminate on the date of the last to expire of the Patent Rights.
2.3 PFIZER OBLIGATIONS.
2.3.1 Pfizer shall use reasonably diligent efforts to exploit Licensed
Products commercially, including conducting clinical trials and obtaining
regulatory approvals.
2.3.2 If Pfizer grants a sublicense pursuant to Section 2, Pfizer
shall guarantee that any sublicensee fulfills all of Pfizer's obligations under
this Agreement; provided, however, that Pfizer shall not be relieved of its
obligations pursuant to this Agreement.
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2.4 TECHNICAL ASSISTANCE. Megabios shall provide to Pfizer or any
sublicensee of Pfizer, at Pfizer's request and expense, any technical assistance
reasonably necessary to enable Pfizer or such sublicensee to manufacture, use or
sell each Licensed Product and to enjoy fully all the rights granted to Pfizer
pursuant to this Agreement; provided, however, that Megabios is reasonably
capable of providing that assistance.
2.5 REVERSION OF RIGHTS. If Pfizer discontinues the development of any
Licensed Product; and if such discontinuance results from circumstances other
than U.S. Food and Drug Administration, or other regulatory body action, or, in
Pfizer's sole and unfettered judgment, lack of efficacy or safety of such
Licensed Product; and if, at the time of discontinuance, Pfizer has not begun
development of another Licensed Product, the licenses granted to Pfizer pursuant
to this Agreement shall terminate with respect to the discontinued Licensed
Product. In such event, Megabios shall have the right to develop and
commercialize such Licensed Product alone or with third parties pursuant to the
terms of a license agreement to be negotiated in good faith by the parties.
Such agreement shall provide that Pfizer shall grant Megabios an exclusive,
worldwide, royalty-bearing license at the rate of [ * ] of Net
Sales, with the right to grant sublicenses, under Pfizer Technology and other
Patent rights necessary for the manufacture, use and sale of such Licensed
Product, and shall provide that Megabios shall have access to and the right to
use any regulatory filings made by Pfizer with respect to such Licensed Product.
3. ROYALTIES, PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS,
MILESTONE PAYMENTS.
3.1 PATENT RIGHTS. Pfizer shall pay Megabios a royalty based on the Net
Sales of each Licensed Product. Such royalty shall be paid with respect to each
country of the world from the date of the first commercial sale (the date of
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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the invoice of Pfizer or any sublicensee of Pfizer with respect to such sale) of
such Licensed Product in each such country until the expiration of the last
Patent Right to expire with respect to each such country and each such Licensed
Product.
3.2 ROYALTY RATES.
3.2.1 Pfizer shall pay Megabios a royalty for the sale of each
Licensed Product under Section 2.1 as set forth in Section 3.2.2.
3.2.2 The royalty paid by Pfizer to Megabios with respect to the
1.16(b) License shall be [ * ] of Net Sales; provided, however,
that, if, with respect to the 1.16(a) License or 1.16(b) License it becomes
necessary or desirable for Megabios or Pfizer to take a license from a third
party in any country, including the UC License Agreement license [ * ]
of any resulting royalty unless the royalty rate payable
to Megabios in any such country would be less than [ * ] of Net Sales.
In such event, [ * ] which would otherwise [ *
]
3.2.3 Section 3.2.2 to the contrary notwithstanding, if Pfizer's
manufacturing cost of goods including royalties, as determined by generally
acceptable accounting principles consistently applied, [ *
] of Net Sales for a particular Licensed Product, then Megabios' royalty
rate for that Licensed Product shall be adjusted downward to a royalty rate of
no less than [ * ] as follows:
MANUFACTURING COST OF GOODS ROYALTY RATE
- --------------------------- ------------
[ * ]
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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[ * ]
It is understood by the parties that the cumulative application of this Section
and Section 3.3.2 shall in no event operate to reduce the royalty rate payable
to Megabios to less than [ * ] Net Sales.
3.2.4 If both the manufacture and sale of a Product which employs
Joint Technology takes place in countries in which there are no Patent Rights,
Pfizer shall pay Megabios a royalty of [ * ] based on the Net Sales
of each Product in each such country beginning on the date of the first
commercial sale in each country and ending ten (10) years later.
3.3 PAYMENT DATES. Royalties shall be paid by Pfizer on Net Sales within
sixty (60) days after the end of each calendar quarter in which such Net Sales
are made. Such payments shall be accompanied by a statement showing the Net
Sales of each Licensed Product by Pfizer or any sublicensee of Pfizer in each
country, the applicable royalty rate for such Licensed Product, and a
calculation of the amount of royalty due.
3.4 ACCOUNTING. The Net Sales used for computing the royalties payable to
Megabios by Pfizer shall be computed and paid in U.S. dollars by check or other
mutually acceptable means. For purposes of determining the amount of royalties
due, the amount of Net Sales in any foreign currency shall be computed by (a)
converting such amount into dollars at the prevailing commercial rate of
exchange for purchasing dollars with such foreign currency as quoted by Citibank
in New York on the last business day of the calendar quarter for which the
relevant royalty payment is to be made by Pfizer and (b) deducting the amount of
any governmental tax, duty, charge, or other fee actually paid in respect of
such conversion into, and remittance of dollars.
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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3.5 RECORDS. Pfizer shall keep for three (3) years from the date of each
payment of royalties complete and accurate records of sales by Pfizer of each
Licensed Product in sufficient detail to allow the accruing royalties to be
determined accurately. Megabios 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 appoint at its expense an independent certified public accountant
reasonably acceptable to Pfizer to inspect the relevant records of Pfizer to
verify such report or statement. Pfizer 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 Megabios, 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.
Megabios 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 Megabios to reveal such
information in order to enforce its rights under this Agreement or if disclosure
is required by law. The failure of Megabios to request verification of any
report or statement during said three-year period shall be considered acceptance
of the accuracy of such report, and Pfizer shall have no obligation to maintain
records pertaining to such report or statement beyond said three-year period.
The results of each inspection, if any, shall be binding on both parties.
3.6 MILESTONE PAYMENTS. Pfizer shall pay Megabios, within thirty (30)
days of the completion of each respective event for the Licensed Product set
forth below ("Event"), the payment listed opposite that Event. Payments shall
be made in U.S. dollars by check or other mutually acceptable means. Pfizer
shall be obligated to make each payment only once with respect to the first
indication
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of a Licensed Product affected by an Event so that the occurrence of that same
Event with respect to additional indications described in each subsection will
not require Pfizer to make an additional payment with respect to that Event.
One hundred percent (100%) of all payments made by Pfizer pursuant to this
Section 3.8 shall be credited against all sums due to Megabios pursuant to
Section 3.2 of this Agreement; provided, however, that the sums due pursuant to
Section 3.2 in any calendar year shall not be reduced by virtue of this credit
by more than [ * ]
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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EVENT PAYMENT
- ----- -------
[ *
]
Notwithstanding anything to the contrary in this Section, if an additional
indication with respect to a Licensed Product which has received PLA/NDA
approval, receives PLA/NDA approval or its equivalent in a Major Market, Pfizer
will pay Megabios [ * ] within 30 days of such event. If
Phase III trials are not conducted, but Pfizer or its sublicensee nonetheless
pursues regulatory approval of the Licensed Product based upon the Phase II
trial results, the Phase III "Event" will be deemed to have occurred at the end
of such Phase II trials.
4. LEGAL ACTION.
4.1 ACTUAL OR THREATENED DISCLOSURE OR INFRINGEMENT. When information
comes to the attention of Pfizer to the effect that any Patent Rights relating
to a Licensed Product to which Pfizer has an exclusive license under Section
2.1 (b) have been or are threatened to be unlawfully infringed, Pfizer shall
have the right at its expense to take such action as it may deem necessary to
prosecute or prevent such unlawful infringement, including the right to bring or
defend any suit, action or proceeding involving any such infringement. Pfizer
shall notify Megabios promptly of the receipt of any such information and of the
commencement of any such suit, action or proceeding. If Pfizer determines that
it is necessary or desirable for Megabios to join any such suit, action or
proceeding, Megabios shall, at Pfizer's expense, execute all papers and perform
such other acts as may be reasonably required to permit Pfizer to act in
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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Megabios' name. If Pfizer brings a suit, it shall have the right first to
reimburse itself out of any sums recovered in such suit or in its settlement for
all costs and expenses, including attorney's fees, related to such suit or
settlement, and [ * ] of any funds that shall remain
from said recovery shall be paid to Megabios and the balance of such funds shall
be retained by Pfizer. If Pfizer does not, within one hundred twenty (120) days
after giving notice to Megabios of the above-described information, notify
Megabios of Pfizer's intent to bring suit against any infringer, Megabios shall
have the right to bring suit for such alleged infringement, but it shall not be
obligated to do so, and may join Pfizer as party plaintiff, if appropriate, in
which event Megabios shall hold Pfizer free, clear and harmless from any and all
costs and expenses of such litigation, including attorney's fees, and any sums
recovered in any such suit or in its settlement shall belong to Megabios.
However [ * ] of any such sums received by Megabios,
after deduction of all costs and expenses related to such suit or settlement,
including attorney's fees paid, shall be paid to Pfizer. Each party shall always
have the right to be represented by counsel of its own selection and at its own
expense in any suit instituted by the other for infringement under the terms of
this Section. If Pfizer lacks standing and Megabios has standing to bring any
such suit, action or proceeding, then Megabios shall do so at the request of
Pfizer and at Pfizer's expense.
4.2 DEFENSE OF INFRINGEMENT CLAIMS. Megabios will cooperate with Pfizer at
Pfizer's expense in the defense of any suit, action or proceeding against Pfizer
or any sublicensee of Pfizer alleging the infringement of the intellectual
property rights of a third party by reason of the use of Patent Rights in the
manufacture, use or sale of the Licensed Product. Pfizer shall give Megabios
prompt written notice of the commencement of any such suit, action or proceeding
or claim of infringement and will furnish Megabios a copy of each
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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communication relating to the alleged infringement. Megabios shall give to
Pfizer all authority (including the right to exclusive control of the defense of
any such suit, action or proceeding and the exclusive right after consultation
with Megabios, to compromise, litigate, settle or otherwise dispose of any such
suit, action or proceeding), information and assistance necessary to defend or
settle any such suit, action or proceeding; provided, however, Pfizer shall
obtain Megabios' prior consent to such part of any settlement which requires
payment or other action by Megabios or has a material adverse effect on
Megabios' business. If the parties agree that Megabios should institute or join
any suit, action or proceeding pursuant to this Section, Pfizer may, at Pfizer's
expense, join Megabios as a defendant if necessary or desirable, and Megabios
shall execute all documents and take all other actions, including giving
testimony, which may reasonably be required in connection with the prosecution
of such suit, action or proceeding.
4.3 HOLD HARMLESS. Megabios agrees to defend, protect, indemnify and hold
harmless Pfizer and any sublicensee of Pfizer, from and against any loss or
expense arising from any proved claim of a third party that it has been granted
rights by Megabios that Pfizer or any sublicensee of Pfizer in exercising their
rights granted to Pfizer by Megabios pursuant to this Agreement, has infringed
upon such rights granted to such third party by Megabios.
5. REPRESENTATION AND WARRANTY. Megabios represents and warrants to Pfizer
that it has the right to grant the License granted pursuant to this Agreement,
and that the License so granted does not conflict with or violate the terms of
any agreement between Megabios and any third party.
6. TREATMENT OF CONFIDENTIAL INFORMATION.
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6.1 CONFIDENTIALITY.
6.1.1 Pfizer and Megabios each recognize that the other's Confidential
Information constitutes highly valuable, confidential information. Subject to
Pfizer's rights and obligations pursuant to this Agreement, Pfizer and Megabios
each agree that during the term of the Research Agreement and for five (5) years
thereafter, it will keep confidential, and will cause its Affiliates to keep
confidential, all Megabios Confidential Information or Pfizer Confidential
Information, as the case may be, that is disclosed to it or to any of its
Affiliates pursuant to this Agreement.
6.1.2 Subject to Pfizer's rights and obligations pursuant to this
Agreement, Pfizer and Megabios each agree that any disclosure of the other's
Confidential Information to any officer, employee or agent of the other party or
of any of its Affiliates shall be made only if and to the extent necessary to
carry out its responsibilities under this Agreement and shall be limited to the
maximum extent possible consistent with such responsibilities. Subject to
Pfizer's rights and obligations pursuant to this Agreement, Pfizer and Megabios
each agree not to disclose the other's Confidential Information to any third
parties under any circumstance without written permission from the other party.
Each party shall take such action, and shall cause its Affiliates to take such
action, to preserve the confidentiality of each other's Confidential Information
as it would customarily take to preserve the confidentiality of its own
Confidential Information. Each party, upon the other's request, will return all
the Confidential Information disclosed to the other party pursuant to this
Agreement, including all copies and extracts of documents, within sixty (60)
days of the request upon the termination of this Agreement except for one (1)
copy which may be kept for the purpose of complying with continuing obligations
under this Agreement.
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6.2 PUBLICITY. Except as required by law, neither party may disclose the
terms of this Agreement without the written consent of the other party, which
consent shall not be unreasonably withheld.
6.3 DISCLOSURE OF INVENTIONS. Each party shall promptly inform the other
about all inventions in the Area that are conceived, made or developed in the
course of carrying out the Research Program by employees of, consultants to,
either of them solely, or jointly with employees of, or consultants to the
other.
7. PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF PATENT
RIGHTS. The following provisions relate to the filing, prosecution and
maintenance of Patent Rights during the term of this Agreement and after the
termination or expiration of the Research Agreement:
7.1 FILING, PROSECUTION AND MAINTENANCE BY MEGABIOS. Subject to Section
2.1 (c), with respect to Patent Rights in which Megabios employees or
consultants, alone or together with Pfizer employees, or consultants are named
as inventors, Megabios shall have the exclusive right and obligation:
(a) to file applications for letters patent on any patentable
invention included in Patent Rights; provided, however, that Megabios shall
consult with Pfizer regarding countries in which such patent applications should
be filed and shall file patent applications in those countries where Pfizer
requests that Megabios file such applications; and, further provided, that
Megabios, at its option and expense, may file in countries where Pfizer does not
request that Megabios file such applications;
(b) to prosecute all pending and new patent applications included
within Patent Rights;
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(c) to respond to oppositions, nullity actions, re-examinations,
revocation actions and similar proceedings filed by third parties against the
grant of letters patent for such applications; and
(d) to maintain in force any letters patent included in Patent Rights
by duly filing all necessary papers and paying any fees required by the patent
laws of the particular country in which such letters patent were granted.
Megabios shall notify Pfizer in a timely manner of any decision to abandon
a pending patent application or an issued patent included in Patent Rights.
Thereafter, Pfizer shall have the option, at its expense, of continuing to
prosecute any such pending patent application or of keeping the issued patent in
force.
7.1.1 COPIES OF DOCUMENTS. Megabios shall provide to Pfizer copies of all
patent applications that are part of Patent Rights prior to filing, for the
purpose of obtaining substantive comment of Pfizer patent counsel. Megabios
shall also provide to Pfizer copies of all documents relating to prosecution of
all such patent applications in a timely manner and shall provide to Pfizer
every six (6) months a report detailing their status. Pfizer shall provide to
Megabios every six (6) months a report detailing the status of all patent
applications that are a part of Patent Rights in which Pfizer employees or
consultants alone are named as inventors.
7.1.2 REIMBURSEMENT OF COSTS FOR FILING, PROSECUTING AND MAINTAINING PATENT
RIGHTS. Within thirty (30) days of receipt of invoices from Megabios, Pfizer
shall reimburse Megabios for all the costs of filing, prosecuting, responding to
opposition and maintaining patent applications and patents in countries where
Pfizer requests that patent applications be filed, prosecuted and maintained.
Such reimbursement shall be in addition to funding payments under the Research
Agreement. However, Pfizer may, upon sixty (60) days +/- notice, request that
Megabios discontinue filing or prosecution of patent
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applications in any country and discontinue reimbursing Megabios for the costs
of filing, prosecuting, responding to opposition or maintaining such patent
application or patent in any country. Megabios shall pay all costs in those
countries in which Pfizer does not request that Megabios file, prosecute or
maintain patent applications and patents, but in which Megabios, at its options,
elects to do so.
7.1.3 Pfizer shall have the right to file on behalf of Megabios all
applications and take all actions necessary to obtain patent extensions pursuant
to 35 USC Section 156 for Patent Rights described in this Section 7.1 licensed
to Pfizer. Megabios agrees to sign, at Pfizer's expense, such further documents
and take such further actions as may be requested by Pfizer in this regard.
7.2 FILING, PROSECUTION AND MAINTENANCE BY PFIZER. With respect to Patent
Rights in which Pfizer employees or consultants alone are named as inventors,
Pfizer shall have those rights and duties ascribed to Megabios in Section 7.1.
7.3 Neither party may disclaim a Valid Claim within Patent Right without
the consent of the other.
8. MANUFACTURING.
(a) Megabios will manufacture final dosage form of all Licensed Products
through the end of [ * ] with respect to each such Product at a negotiated
price [ * ] Pfizer understands and acknowledges that Megabios
does not, as of the Effective Date, have the capability to undertake
manufacturing of Licensed Products in accordance with GMP in excess of the
requirements of Licensed Products for the conduct of [ * ] clinical trials.
Accordingly, the obligation of Megabios to supply Licensed Product manufactured
in accordance with GMP for the conduct of [ * ]
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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clinical trials is subject to the limitations of its then current manufacturing
facility and Megabios will be under no obligation to construct a new facility,
buy additional manufacturing equipment or reserve third party manufacturing
capacity in order to supply such GMP materials, unless Pfizer has agreed in
advance to pay all costs, plus a negotiated profit margin, associated with
procuring or constructing such facilities and the production of such GMP
material, pursuant to a separate supply agreement.
(b) When Pfizer decides to take any Product to [ * ] it will so notify
Megabios. Upon receipt of such notice, Pfizer and Megabios will attempt to
negotiate a manufacturing agreement for supplies of Product for [ * ] and
commercial use. The parties acknowledge that Pfizer can probably manufacture the
requisite DNA more inexpensively than Megabios and that Pfizer shall have no
obligation to enter an agreement for any component of the Product which it can
obtain more inexpensively or reliably from itself or one or more third parties
or both. Any provision in this Agreement to the contrary notwithstanding, Pfizer
shall be free to obtain additional Product from one or more additional vendors
or to establish back-up facilities to assure itself of adequate supplies of each
Product throughout the world.
(c) Pfizer will, at reasonable times during normal working hours and with
reasonable notice, have the right, by itself or through third parties under
confidential obligation to Pfizer and Megabios, to conduct quality
assurance/quality control audits of Megabios facility and manufacturing
procedures with respect to Product. Failure to maintain adequate standards in
Pfizer's sole, unfettered judgment shall be treated as an Event of Termination
pursuant to Section 10.1(b), but only with respect to this Section 8. No other
provision of this Agreement will be affected by termination of this section.
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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9. OTHER AGREEMENTS. Concurrently with the execution of this Agreement,
Megabios and Pfizer shall enter into the Research Agreement and the Stock
Purchase Agreement. This Agreement, the Stock Purchase Agreement and the
Research Agreement are the sole agreements with respect to the subject matter
and supersede all other agreements and understandings between the parties with
respect to same. In addition, if Pfizer decides to continue the Research
Agreement beyond the initial two Commitment Years, within [ * ] of the
eighteenth-month anniversary of the effective Date, the parties will execute a
second stock purchase agreement whereby Pfizer purchases the lesser of an
additional $10,000,000.00 in Megabios securities or that number of additional
shares such that Pfizer's aggregate ownership of Megabios stock is 19.99%, on
substantially those terms set forth in the Stock Purchase Agreement. The
purchase price of such securities shall be 137.5% of the value of each share of
similar Megabios stock as determined by its most recent private offering or the
closing price on the exchange on which it is traded on the date (such date not
to be earlier than sixteen months following the Effective Date) on which Pfizer
decides to continue to Research Agreement, as the case may be (the "Base
Price"). Megabios stock must be traded at or above the premium price [
* ] following the date of the
second stock purchase by Pfizer (or, if not publicly traded, Megabios stock must
be traded at or above the premium price [ * ] following
an initial public offering of Megabios stock). If not, Megabios will issue
additional shares to Pfizer to cover the balance of the premium. Such share
adjustment will be equal to (a) the actual dollar amount of Pfizer's second
stock purchase divided by the greater of (i) the highest average [ *
] trading price (or, if Megabios stock is not publicly traded, the
highest [ * ] during the [ * ]
following the second stock
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separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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purchase by Pfizer or (ii) the Base Price, minus (b) the number of shares
purchased by Pfizer under this Section 9.
10. TERMINATION AND DISENGAGEMENT.
10.1 TERM; EVENTS OF TERMINATION. Unless earlier terminated as provided
in this Section 10, the term of this Agreement shall extend from the Effective
Date until the last to expire of the Patent Rights covering a Licensed Product
at which time Pfizer will have a fully paid up, perpetual license. The
following events shall constitute events of termination ("Events of
Termination"):
(a) Any material written representation or warranty by Megabios or
Pfizer, or any of its officers, made under or in connection with this Agreement
shall prove to have been incorrect in any material respect when made.
(b) Megabios or Pfizer shall fail in any material respect to perform
or observe any material term, covenant or understanding contained in this
Agreement or in any of the other documents or instruments delivered pursuant to,
or concurrently with, this Agreement, and any such failure shall remain
unremedied for ninety (90) after written notice to the failing party.
10.2 TERMINATION. Upon the occurrence of any Event of Termination, the
party not responsible may, by notice to the other party, terminate this
Agreement.
10.3 Termination of this Agreement by either party, with or without cause,
will not terminate the licenses granted pursuant to Section 5.2 of the Research
Agreement.
10.4 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in Sections 6
and 11;
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(b) Megabios' right to receive all royalty payments accrued
hereunder; or
(c) any other remedies which either party may otherwise have.
11. INDEMNIFICATION. Pfizer will indemnify Megabios for damages, settlements,
costs, legal fees and other expenses incurred in connection with a claim against
Megabios based on any action or omission of Pfizer whether such claim alleges
negligence, willful misconduct or strict liability, its agents or employees
related to the obligations of Pfizer under this Agreement; provided, however,
that the foregoing shall not apply (i) if the claim is found to be based upon
the negligence, recklessness or willful misconduct of Megabios, or (ii) if
Megabios fails to give Pfizer prompt notice of any claim it receives and such
failure materially prejudices Pfizer with respect to any claim or action to
which Pfizer's obligation pursuant to this Section applies. Pfizer, in its sole
discretion, shall choose legal counsel, shall control the defense of such claim
or action, and shall have the right to settle same on such terms and conditions
it deems advisable.
12. NOTICES. All notices shall be in writing mailed via certified mail, return
receipt requested, courier, or facsimile transmission addressed as follows, or
to such other address as may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth
at the beginning of this Agreement
Attention: President, Central Research
---------
with copy to: Office of the General Counsel
If to Megabios: Megabios at its address as set forth at the
beginning of this Agreement
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Attention: President
---------
Notices shall be deemed given as of the date received.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. MISCELLANEOUS.
14.1 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective legal representatives,
successors and permitted assigns.
14.2 HEADINGS. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
14.3 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original.
14.4 AMENDMENT, WAIVER. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
14.5 NO THIRD PARTY BENEFICIARIES. Subject to Section 2.1(c) an the
rights of third party licensors under the UC license Agreement, no third party
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including any employee of any party to this Agreement, shall have or acquire any
rights by reason of this Agreement. Nothing contained in this Agreement shall be
deemed to constitute the parties partners with each other or any third party.
14.6 ASSIGNMENT AND SUCCESSORS. This Agreement may not be assigned by
either party, except that each party may assign this Agreement and the rights
and interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations.
14.7 FORCE MAJEURE. Neither Pfizer nor Megabios shall be liable for failure
of or delay in performing obligation set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of Pfizer or
Megabios.
14.8 SEVERABILITY. If any provision of this Agreement is or becomes invalid
or is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the parties that the remainder of the
Agreement shall not be affected.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
PFIZER INC MEGABIOS CORP
By: /s/ George M. Milne, Jr. By:
--------------------------------- -----------------------------
Title: Vice President Title:
------------------------------ --------------------------
Date: 31 May 1996 Date:
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cc: Pfizer Inc, Legal Division, Groton, CT 06340
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
PFIZER INC MEGABIOS CORP
By: By: /s/ Benjamin F. McGraw
--------------------------------- -----------------------------
Title: Title: President and CEO
------------------------------ --------------------------
Date: Date: May 30, 1996
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