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WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK*), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT
LICENSE AGREEMENT
This Agreement is made and entered into this 1st day of October, 1999, (the
"Effective Date") by and between METABOLIX, Inc. a corporation duly organized
and existing under the laws of the State of Delaware and having its principal
office at 303 Third Street, Cambridge, Massachusetts 02142 (hereinafter referred
to as "METABOLIX"), and TEPHA, Inc., a corporation duly organized under the laws
of the State of Delaware and having its principal office at 303 Third Street,
Cambridge, Massachusetts 02142 (hereinafter referred to as "TEPHA").
WITNESSETH
WHEREAS, METABOLIX, is the owner of the METABOLIX PATENT RIGHTS (as later
defined herein), and related technology, and has the right to grant licenses
under said METABOLIX PATENT RIGHTS;
WHEREAS, METABOLIX is the licensee from the Massachusetts Institute of
Technology (hereinafter referred to as "MIT") of the MIT PATENT RIGHTS (as later
defined herein), and has the right to grant sublicenses under said MIT PATENT
RIGHTS;
WHEREAS, METABOLIX desires to have the PATENT RIGHTS commercialized in the
FIELD OF USE, and is willing to grant a license thereunder; and
WHEREAS, LICENSEE desires to obtain a license under the PATENT RIGHTS upon
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
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1. DEFINITIONS
For the purposes of this Agreement, the following words and phrases shall
have the following meanings:
1.1. "TEPHA" and "METABOLIX" shall include "AFFILIATES" defined as a
related company of TEPHA or METABOLIX, respectively, the voting stock
of which is directly or indirectly at least fifty percent (50%) owned
and controlled by TEPHA or METABOLIX, respectively, an organization
which directly or indirectly controls more than fifty percent (50%) of
the voting stock of TEPHA or METABOLIX, respectively, and an
organization the majority ownership of which is directly or indirectly
common to the ownership of TEPHA or METABOLIX, respectively.
1.2. "PATENT RIGHTS" shall mean all of the following METABOLIX and MIT
intellectual property, respectively, the "METABOLIX PATENT RIGHTS" and
the MIT PATENT RIGHTS":
1.2.1. the United States patents listed in Appendix A;
1.2.2. the United States patent applications listed in Appendix A and
United States patent applications filed after the EFFECTIVE
DATE on IMPROVEMENTS, and divisionals, continuations and claims
of continuation-in-part applications which shall be directed to
subject matter specifically described in such patent
applications, and the resulting patents;
1.2.3. any patents resulting from reissues or reexaminations of the
United States patents described in 1.2.1 and 1.2.2 above;
1.2.4. the Foreign patents listed in Appendix A;
1.2.5. the Foreign patent applications listed in Appendix A, and
divisionals, continuations and claims of continuation-in-part
applications which shall be directed to subject matter
specifically described in such Foreign patent applications, and
the resulting patents;
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1.2.6. Foreign patent applications filed after the EFFECTIVE DATE on
any patent application in 1.2.2 and divisionals, continuations
and claims of continuation-in-part applications which shall be
directed to subject matter specifically described in such
patent applications, and the resulting patents; and
1.2.7. any Foreign patents, resulting from equivalent Foreign
procedures to United States reissues and reexaminations, of the
Foreign patents described in 1.2.4, 1.2.5 and 1.2.6 above.
1.3. A "LICENSED PRODUCT" shall mean any product or part thereof which:
1.3.1. is covered in whole or in part by an issued, unexpired valid
claim or a pending claim contained in the PATENT RIGHTS in the
country in which any such product or part thereof is made, used
or sold; or
1.3.2. is manufactured by using a process or is employed to practice a
process which is covered in whole or in part by an issued,
unexpired valid claim or a pending claim contained in the
PATENT RIGHTS in the country in which a LICENSED PROCESS is
used or in which such product or part thereof is used or sold.
1.4. A "LICENSED PROCESS" shall mean any process which:
1.4.1. is covered in whole or in part by an issued, unexpired valid
claim or a pending claim contained in the PATENT RIGHTS in the
country in which such process is used or in which the LICENSED
PRODUCT made thereby is used or sold.
1.5. "NET SALES" shall mean TEPHA's and its sublicensees' billings for
LICENSED PRODUCTS and LICENSED PROCESSES produced hereunder less the
sum of the following:
1.5.1. discounts allowed in amounts customary in the trade;
1.5.2. sales, tariff duties and/or use taxes directly imposed and with
reference to particular sales;
1.5.3. outbound transportation prepaid or allowed; and
1.5.4. amounts allowed or credited on returns.
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No deduction shall be made for commissions paid to individuals whether they
be with independent sales agencies or regularly employed by TEPHA and on
its payroll, or for cost of collections. LICENSED PRODUCTS shall be
considered "sold" when invoiced. "NET SALES" shall not include LICENSED
PRODUCTS sold for clinical testing, research or development purposes. If a
LICENSED PRODUCT or LICENSED PROCESS shall be distributed or invoiced for a
discounted price substantially lower than customary in the trade or
distributed at no cost to AFFILIATES of TEPHA or otherwise, NET SALES shall
be based on the customary amount billed for such LICENSED PRODUCTS or
LICENSED PROCESSES.
Where the LICENSED PRODUCT is a combination product consisting of polymer
whose composition or manufacture is covered by the PATENT RIGHTS plus other
materials (such as a growth factor, but not, for example, filler materials)
that are not covered by the PATENT RIGHTS, then "NET SALES" shall mean the
NET SALES of the full product multiplied by the fully loaded manufacturing
cost of the polymer divided by the total fully loaded manufacturing cost of
the total combination material. When the LICENSED PRODUCT consists of a
combination product consisting of a component made from the polymer, plus
other components, then "NET SALES" shall mean NET SALES of the total
product multiplied by the fully loaded manufacturing cost of the polymer
component divided by the fully loaded manufacturing cost of the total
product. By "fully loaded" is meant the cost of goods sold plus overhead
allocated to production and sale thereof.
1.6. "FIELD OF USE" shall mean IN VIVO human and veterinary medical use of
polymers falling within the PATENT RIGHTS, including, without
limitation, tissue engineering, implantables, medical devices, drug
delivery and contrast agents, but excluding medical disposables,
surgical drapes and trays, nutritional and all other diagnostic uses.
and excluding transgenic plant crop production of polymers.
"IMPROVEMENT" shall mean an invention conceived and/or reduced to
practice during the two-year period after the EFFECTIVE DATE and
dominated by the claims of the PATENT RIGHTS listed on Appendix A and
owned or CONTROLLED by METABOLIX or TEPHA (excluding any preexisting
IMPROVEMENT owned or CONTROLLED by any entity as of the
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date it becomes a successor or permitted assignee of METABOLIX or
TEPHA under Article 11).
1.7. "KNOW-HOW" shall mean technical, manufacturing, regulatory and other
information, methods, specifications, samples, processes, procedures,
formulations, test data, protocols, and trade secrets owned or
CONTROLLED by METABOLIX or TEPHA during the two-year period after the
EFFECTIVE DATE and relating to the PATENT RIGHTS or to the
development, manufacture or use of any LICENSED PRODUCTS or LICENSED
PROCESSES (excluding any preexisting KNOW-HOW owned or CONTROLLED by
any entity as of the date it becomes a successor or permitted assignee
of METABOLIX or TEPHA under Article 11).
1.8. "CONTROL" shall mean with respect to any IMPROVEMENTS or KNOW-HOW, the
possession of the ability to grant a license or sublicense with
respect thereto as provided for herein.
1.9. "FDA" shall mean the United States Food and Drug Administration or any
successor agency thereof.
2. GRANT
2.1. Subject to the terms and conditions of this Agreement, METABOLIX
hereby grants to TEPHA the worldwide right and license in the FIELD OF
USE to make, have made, use, lease, sell, offer for sale and import
the LICENSED PRODUCTS and to practice the LICENSED PROCESSES until the
expiration of the last to expire of the PATENT RIGHTS, unless this
Agreement shall be sooner terminated according to the terms hereof.
2.2 Under the terms of its license with MIT, METABOLIX has agreed that any
sublicenses granted by it shall provide that the obligations to MIT of
articles 2, 5, 7, 8, 9, 10, 12, 13 and 15 of its license with MIT
shall be binding upon the sublicensee as if it were a party to that
license agreement. METABOLIX further has agreed to attach copies of
these articles to sublicense agreements, and a copy thereof is
attached hereto as Appendix C. To the extent of any conflict between
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the terms of this Agreement and Appendix C, as to the MIT PATENT
RIGHTS only, the terms of Appendix C shall prevail.
2.3 In order to establish a period of exclusivity for TEPHA, METABOLIX
hereby agrees that it shall not grant any other license to make, have
made, use, lease, sell, offer for sale or import LICENSED PRODUCTS or
to utilize LICENSED PROCESSES in the FIELD OF USE and shall not
practice under the PATENT RIGHTS for its own purposes in the FIELD OF
USE during the term of this Agreement; provided, however, MIT has
reserved the right to practice under the MIT PATENT RIGHTS for its own
noncommercial research purposes.
2.4 Within six (6) months after the EFFECTIVE DATE, METABOLIX shall
disclose to TEPHA in writing all METABOLIX-CONTROLLED KNOW-HOW not
previously disclosed. During the two-year period after the EFFECTIVE
DATE, each party shall also promptly disclose to the other in writing
on an ongoing basis all additional KNOW-HOW and IMPROVEMENTS. Subject
to Article 13 (Confidentiality), METABOLIX grants TEPHA the exclusive
right and license to use METABOLIX KNOW-HOW and METABOLIX IMPROVEMENTS
in connection with its license hereunder to the PATENT RIGHTS in the
FIELD OF USE until termination or expiration of this Agreement;
provided, however, after expiration of this Agreement, TEPHA shall
retain a perpetual, royalty-free, non-exclusive license to the
METABOLIX KNOW-HOW. Subject to Article 13 (Confidentiality) and
mutually agreed upon royalty and other terms, TEPHA grants METABOLIX
the exclusive right and license to use TEPHA KNOW-HOW and TEPHA
IMPROVEMENTS in connection with the PATENT RIGHTS outside the FIELD OF
USE until the last to expire of any patent rights covering the TEPHA
IMPROVEMENTS; provided, however, after expiration of this Agreement,
METABOLIX shall retain a perpetual, royalty-free, non-exclusive
license to the METABOLIX KNOW-HOW.
2.5 TEPHA shall have the right to enter into sublicensing agreements for
the rights, privileges and licenses granted hereunder. Upon any
termination of this
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Agreement, sublicensees' rights shall also terminate, subject to
Paragraph 14.6 hereof.
2.6 TEPHA agrees to incorporate terms and conditions substantively similar
to Articles 1, 2, 5, 7.1, 8, 9, 10, 11, 12, 13, 14.5, 14.6, and 16 of
this Agreement into its sublicense agreements, that are sufficient to
enable TEPHA to comply with this Agreement.
2.7 TEPHA agrees to forward to METABOLIX a copy of any and all sublicense
agreements promptly upon execution by the parties.
2.8 TEPHA shall not receive from sublicensees anything of value in lieu of
cash payments in consideration for any sublicense under this
Agreement, without the express prior written permission of METABOLIX.
2.9 Nothing in this Agreement shall be construed to confer any rights upon
TEPHA by implication, estoppel or otherwise as to any technology or
patent rights of METABOLIX, MIT or any other entity other than the
PATENT RIGHTS, regardless of whether such patent rights shall be
dominant or subordinate to any PATENT RIGHTS.
3. DUE DILIGENCE
3.1. TEPHA shall use diligent efforts to bring one or more LICENSED
PRODUCTS or LICENSED PROCESSES to market through a thorough, vigorous
and diligent program for exploitation of the PATENT RIGHTS and shall
continue active, diligent development and marketing efforts for one or
more LICENSED PRODUCTS or LICENSED PROCESSES throughout the term of
this Agreement.
3.2. In addition:
3.2.1. TEPHA shall raise in connection with the PATENT RIGHTS and
allocated for expenditure for efforts under Paragraphs 3.1 and
3.2, a cumulative total of investment capital and/or research
and development funds of: * from the Effective Date. Such
cumulative investment capital and/or research and development
funds shall include funds invested or
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expended by a joint venture in which TEPHA owns at least a
thirty-three percent (33%) interest provided that such funds
are used substantially for the development and marketing of
LICENSED PRODUCTS and LICENSED PROCESSES.
3.2.2. TEPHA shall use commercially reasonable efforts to promptly and
diligently generate data and perform tests and studies
sufficient to file, and shall file, an application for approval
by the FDA of a first LICENSED PRODUCT *.
3.2.3. TEPHA shall obtain FDA approval of such first LICENSED PRODUCT
*.
3.2.4. TEPHA shall keep METABOLIX informed of progress in its efforts
to develop and commercialize LICENSED PRODUCTS and PROCESSES.
METABOLIX shall have the right to contact a representative of
TEPHA periodically by telephone to discuss TEPHA's progress
with the development of LICENSED PRODUCTS and PROCESSES and
sales of such LICENSED PRODUCTS and PROCESSES once launched. In
addition, on or before March 1 of each year after the EFFECTIVE
DATE until the first commercial sale of a LICENSED PRODUCT,
TEPHA shall make a written annual summary report to METABOLIX
covering the preceding year ending December 31, regarding the
progress toward commercial use of LICENSED PRODUCTS and
PROCESSES. All information disclosed by TEPHA to METABOLOX
under this provision shall be deemed the Confidential
Information (as further discussed in Paragraph 13.1) of TEPHA.
3.3. TEPHA's failure to perform in accordance with Paragraphs 3.1 and 3.2
above shall be grounds for METABOLIX to terminate this Agreement
pursuant to Paragraph 14.3 hereof; provided, however, as to Paragraphs
3.2.2 and 3.2.3, if during the cure period provided in Paragraph 14.3,
TEPHA shall demonstrate to the reasonable satisfaction of METABOLIX
that TEPHA shall have expended good faith and diligent efforts using
reasonable resources to meet the milestone(s)
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and that circumstances beyond TEPHA'S control precluded TEPHA from
performing in accordance with Paragraph 3.2.2 or 3.2.3, then the time
for performance of such milestone(s) shall be extended for an
additional period of six (6) months, or such other period as may be
mutually agreed.
4. ROYALTIES
4.1. For the rights, privileges and license granted hereunder, TEPHA shall
pay royalties to METABOLIX in the manner hereinafter provided until
the expiration of the last to expire of the PATENT RIGHTS or until
this Agreement shall earlier be terminated:
4.1.1. A License Issue Fee of *, which said License Issue Fee shall be
deemed earned and due in three parts: * in investment capital
and/or research and development funds in connection with the
PATENT RIGHTS; * due upon the raising by TEPHA of *
(cumulatively) in investment capital and/or research and
development funds in connection with the PATENT RIGHTS; and *
due upon the raising by TEPHA of * (cumulatively) in investment
capital and/or research and development funds in connection
with the PATENT RIGHTS; provided, however, the full amount of
the License Issue Fee shall be due on the third anniversary of
the Effective Date, whether or not TEPHA shall have raised such
investment capital and/or research and development funds.
4.1.2. Milestone payments as follows: * due on filing for approval of
the first LICENSED PRODUCT; and * due on FDA approval of the
first LICENSED PRODUCT.
4.1.3. License Maintenance Fees of * per year payable on January 1,
2003 and on each subsequent January 1 during the term of this
Agreement; provided, however, License *.
4.1.4. Running Royalties of * of NET SALES of LICENSED PRODUCTS and
LICENSED PROCESSES by TEPHA and its sublicensees .
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4.1.5. A * share of gross sublicensing revenue (including sublicense
issue fees, milestone payments, license maintenance fees and
similar consideration but excluding sublicensing revenue from
NET SALES covered in Paragraph 4.1.4 above) received by
LICENSEE.
4.2. All payments due hereunder shall be paid in full, without deduction of
taxes or other fees which may be imposed by any government, except as
otherwise provided in Paragraph 1.5.2.
4.3. No multiple royalties shall be payable because any LICENSED PRODUCT,
its manufacture, use, lease or sale are or shall be covered by more
than one PATENT RIGHTS patent application or PATENT RIGHTS patent
licensed under this Agreement.
4.4. Royalty payments shall be paid in the United States dollars in
Cambridge, Massachusetts, or at such other place as METABOLIX may
reasonably designate consistent with the laws and regulations
controlling in any foreign country. If any current conversion shall be
required in connection with the payment of royalties hereunder, such
conversion shall be made by using the exchange rate prevailing at the
Chase Manhattan Bank (N.A.) on the last business day of the calendar
quarterly reporting period to which such royalty payments relate.
4.5. To the extent that TEPHA shall obtain subsequent to the EFFECTIVE DATE
licenses to third party patents or other intellectual property that
are necessary to manufacture or sell LICENSED PRODUCTS or LICENSED
PROCESSES in the FIELD OF USE, TEPHA may deduct from the Running
Royalty due to METABOLIX under Paragraph 4.1.4, * of the Running
Royalties due on such third party patents or intellectual property up
to an amount equal to * of the Running Royalties due hereunder.
5. REPORTS AND RECORDS
5.1. TEPHA shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of showing the
amounts payable
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to METABOLIX hereunder. Said books of account shall be kept at TEPHA's
principal place of business or the principal place of business of the
appropriate division of TEPHA to which this Agreement relates. Said
books and the supporting data shall be open at all reasonable times
for three (3) years following the end of the calendar year to which
they pertain, to the inspection of METABOLIX or its agents for the
purpose of verifying TEPHA's royalty statement or compliance in other
respect with this Agreement. Should such inspection lead to the
discovery of a greater than Ten Percent (10%) discrepancy in reporting
to METABOLIX' detriment, TEPHA agrees to pay the full cost of such
inspection.
5.2. TEPHA shall deliver to METABOLIX true and accurate reports, giving
such particulars of the business conducted by TEPHA and its
sublicensees under this Agreement as shall be pertinent to diligence
under Article 3 and royalty accounting hereunder: before the first
commercial sale of a LICENSED PRODUCT or LICENSED PROCESS, annually,
on January 31 of each year; and after the first commercial sale of a
LICENSED PRODUCT or LICENSED PROCESS, quarterly, within sixty (60)
days after March 31, June 30, September 30 and December 31, of each
year. These reports shall include at least the following:
5.2.1. number and total billings of LICENSED PRODUCTS falling solely
within the METABOLIX PATENT RIGHTS manufactured, used or sold
by TEPHA and its sublicensees;
5.2.2. number and total billings for LICENSED PRODUCTS falling solely
within the MIT PATENT RIGHTS manufactured, used or sold by
TEPHA and its sublicensees;
5.2.3. number and total billings for LICENSED PRODUCTS falling within
both the METABOLIX PATENT RIGHTS and the MIT PATENT RIGHTS
manufactured, used or sold by TEPHA and its sublicensees;
5.2.4. accounting for all LICENSED PROCESSES used or sold by TEPHA and
its sublicensees, along with a verification as to each LICENSED
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PROCESS stating whether it shall fall solely within the
METABOLIX PATENT RIGHTS, solely within the MIT PATENT RIGHTS or
both within the METABOLIX PATENT RIGHTS and the MIT PATENTS
RIGHTS.;
5.2.5. deductions applicable as provided in Paragraph 1.5;
5.2.6. Running Royalties due under Paragraph 4.1.4.;
5.2.7. royalties due on payments from sublicensees under paragraph
4.1.5.;
5.2.8. total royalties due; and
5.2.9. names and addresses of all sublicensees of TEPHA.
TEPHA shall endeavor to obtain similar information from its
sublicensees and shall provide such information which is obtained to
METABOLIX.
5.3. With each such report submitted, TEPHA shall pay to METABOLIX the
royalties due and payable under this Agreement. If no royalties shall
be due, TEPHA shall so report.
5.4. On or before the ninetieth (90th) day following the close of TEPHA's
fiscal year, TEPHA shall provide METABOLIX with TEPHA's certified
financial statements for the preceding fiscal year including, at a
minimum, a balance sheet and an operating statement.
5.5. The amounts due under Articles 4 and 6 shall, if overdue, bear
interest until payment a per annum rate * in effect at the Chase
Manhattan Bank (N.A.) on the due date. The payment of such interest
shall not foreclose METABOLIX from exercising any other rights it may
have as a consequence of the lateness of any payment.
6. PATENT PROSECUTION
6.1. Throughout the term of this Agreement, TEPHA, at its own expense,
shall file, prosecute and maintain those METABOLIX PATENT RIGHTS
listed on Appendix B in METABOLIX' name; provided, however, METABOLIX
shall be entitled to review and comment upon in a timely manner all
actions undertaken in
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the prosecution of all patents and applications. TEPHA agrees to seek
strong, broad claims in the best interest of METABOLIX and shall not
abandon the subject matter of any substantive claim without the prior
written permission of METABOLIX, such permission not to be
unreasonably withheld. If TEPHA shall elect not to file, prosecute, or
maintain any such METABOLIX PATENT RIGHT, TEPHA shall so notify
METABOLIX in writing with at least thirty (30) days notice prior to
any filing, action, payment or the like being due, in which event
METABOLIX shall have the right to file, prosecute, or maintain such
METABOLIX PATENT RIGHT, and TEPHA shall have no further license rights
as to such METABOLIX PATENT RIGHT application or patent under this
Agreement.
6.2. Payment of all out-of-pocket fees and costs relating to the filing,
prosecution, and maintenance of those METABOLIX PATENT RIGHTS listed
on Appendix B shall be the responsibility of TEPHA, whether such fees
and costs were incurred before or after the Effective Date of this
Agreement. Payment for out-of-pocket costs incurred by METABOLIX prior
to the Effective Date shall be made in three parts:
6.2.1. Twenty-Five Percent (25%) on or before a date six (6) months
from the Effective Date of this Agreement;
6.2.2. Twenty-Five Percent (25%) on or before a date nine (9) months
from the Effective Date of this Agreement;
6.2.3. The remaining Fifty Percent (50%) on or before a date fifteen
(15) months from the Effective Date of this Agreement.
7. INFRINGEMENT
7.1. Each party shall inform the other promptly in writing of any alleged
infringement of the PATENT RIGHTS by a third party and of any
available evidence thereof.
7.2. During the term of this Agreement, TEPHA shall have the right, but
shall not be obligated, to prosecute at its own expense all
infringements of the PATENT
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RIGHTS in the FIELD OF USE and, in furtherance of such right,
METABOLIX hereby agrees that TEPHA may join METABOLIX as a party
plaintiff in any such suit, without expense to METABOLIX. The total
cost of any such infringement action commenced solely by TEPHA shall
be borne by TEPHA. In the event that TEPHA shall have exercised its
right to bring an action, TEPHA shall be responsible for defending
against any counterclaims alleging invalidity or unenforceability of a
PATENT RIGHT and for prosecuting the action through to settlement or
other final disposition. In the event that TEPHA shall undertake the
enforcement of the PATENT RIGHTS in the FIELD OF USE by litigation,
TEPHA may withhold up to * of the Running Royalties otherwise
thereafter due to METABOLIX under Section 4.1.4 and apply the same
toward reimbursement of up to * of TEPHA'S expenses, including
reasonable attorneys' fees, in connection therewith.
7.3. If within six (6) months after having been notified of any alleged
infringement, TEPHA shall have been unsuccessful in persuading the
alleged infringer to desist and shall not have brought and shall not
be diligently prosecuting an infringement action, or if TEPHA shall
notify METABOLIX at any time prior thereto of its intention not to
bring suit against any alleged infringer, then, and in those events,
only, METABOLIX shall have the right, but shall not be obligated, to
prosecute at its own expense any infringement of the PATENTS RIGHTS in
the FIELD of USE. In furtherance of such right, TEPHA hereby agrees
that METABOLIX may include TEPHA as a party plaintiff in any such
suit, without expense to TEPHA. The total cost of any such
infringement action commenced or defended solely by METABOLIX shall be
borne by METABOLIX, and METABOLIX shall be responsible for defending
against any counterclaims alleging invalidity or unenforceability of a
PATENT RIGHT.
7.4. Any recovery of damages by the prosecuting party for any such suit
shall be applied first in satisfaction of any unreimbursed expenses
and legal fees of such party relating to the suit, and next toward
reimbursement of METABOLIX for any royalties past due or withheld and
applied pursuant to Paragraph 7.2, if applicable.
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The balance remaining from any such recovery shall be divided with *
to the non-prosecuting party and any remaining balance to the
prosecuting party.
7.5. In the event of the institution of any suit by a third party against
METABOLIX, TEPHA or its sublicensees for patent infringment involving
the PATENT RIGHTS in the FIELD OF USE, the party sued shall promptly
notify the other party in writing. TEPHA shall have the right, but not
the obligation, to defend such suit at its own expense. If TEPHA shall
elect not to defend, TEPHA shall promptly notify METABOLIX. METABOLIX
shall have the right, but not the obligation, to defend such suit at
its expense.
7.6. If TEPHA shall exercise its rights pursuant to Section 7.5 to defend
the PATENT RIGHTS, then * of TEPHA'S Running Royalty obligation in
Section 4.1.4 during the pendency of defense in the proceeding shall
be held in an interest-bearing escrow account by TEPHA until a final
decision shall be rendered by a court or administrative tribunal of
competent jurisdiction from which no appeal can be or is taken
provided that:
7.6.1. If the enforceability of all material claims in such PATENT
RIGHT claiming the LICENSED PRODUCT or PROCESS is upheld by a
court or other legal or administrative tribunal from which no
appeal is or can be taken, then the amount of Running Royalties
withheld during the period of escrow, plus all accrued
interest, shall be promptly paid to METABOLIX; or
7.6.2. If one or more claims in such PATENT RIGHT covering the
LICENSED PRODUCT or PROCESS shall be held to be invalid or
otherwise unenforceable by a court or other legal or
administrative tribunal in any country from which no appeal is
or can be taken or the scope thereof is modified and, as a
result such PATENT RIGHT no longer offers substantial
protection to a LICENSED PRODUCT or PROCESS in such country,
then the amount of Running Royalties withheld during the period
of escrow shall not be owed to METABOLIX; TEPHA shall be
entitled to all payments and accrued interest in the escrow
account; and the Running
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Royalties otherwise payable shall be abated in their entirety
with respect to NET SALES of LICENSED PRODUCTS covered only by
such PATENT RIGHT in the country in which such claims were so
held invalid or unenforceable or so modified.
7.7. In any suit as either party may institute to enforce or defend the
PATENT RIGHTS pursuant to this Agreement, the other party hereto
shall, at the request and expense of the party initiating such suit,
cooperate in all respects and, to the extent possible, have its
employees testify when requested and make available relevant records,
papers, information, samples, specimens and the like. The parties
shall keep one another informed of the status of and of their
respective activities regarding any litigation or settlement thereof
concerning the PATENT RIGHTS in the FIELD of USE or LICENSED PRODUCTS
or PROCESSES ; provided, however, that no settlement or consent
judgement or other voluntary final disposition of any suit defended or
action brought by a party pursuant to this Article 7 may be entered
into without the consent of the other party, such consent not to be
unreasonably withheld or delayed. As to the MIT PATENT RIGHTS, no
settlement, consent judgement or other voluntary final disposition of
the suit may be entered into without the consent of MIT which consent
shall not unreasonably be withheld. TEPHA shall indemnify MIT against
any order for costs that may be made against MIT in proceedings
commenced and defended solely by TEPHA.
7.8. TEPHA, during the period of this Agreement, shall have the sole right
in accordance with the terms and conditions herein to sublicense any
alleged infringer for future use of the PATENT RIGHTS in the FIELD OF
USE.
8. PRODUCT LIABILITY
8.1. TEPHA shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold METABOLIX and MIT, their
directors, trustees, officers, employees and affiliates, harmless
against all claims and expenses,
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arising out of the death of or injury to any person or persons or out
of any damage to property and against any other claim, proceeding,
demand, expense and liability of any kind whatsoever resulting from or
relating to the production, manufacture, sale, use, lease, consumption
or advertisement of the LICENSED PRODUCTS and/or LICENSED PROCESS(es)
*.
8.2. Prior to the first use of a LICENSED PRODUCT for humans, TEPHA shall
obtain and carry in full force and effect commercial, general
liability insurance, including product liability insurance, which
shall protect TEPHA, METABOLIX, and MIT with respect to events covered
by Paragraph 8.1 above. Such insurance shall be written by a reputable
insurance company authorized to do business in the Commonwealth of
Massachusetts, shall list METABOLIX and MIT as additional named
insureds thereunder, shall be endorsed to include product liability
coverage and shall require thirty (30) days written notice to be given
to METABOLIX and MIT prior to any cancellation or material change
thereof. The limits of such insurance shall not be less than * per
occurrence with an aggregate of * for personal injury including death;
and * per occurrence with an aggregate of * for property damage. TEPHA
shall provide METABOLIX with Certificates of Insurance evidencing the
same.
8.3. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY, NOR MIT, NOR THEIR RESPECTIVE DIRECTORS, TRUSTEES, OFFICERS,
EMPLOYEES, AND AFFILIATES MAKE ANY REPRESENTATIONS OR EXTEND ANY
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING, AND THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.
NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE
OR WARRANTY GIVEN BY EITHER PARTY OR BY MIT THAT THE PRACTICE OF THE
LICENSES GRANTED HEREUNDER SHALL NOT
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INFRINGE THE PATENT RIGHTS OR OTHER INTELLECTUAL OR PROPRIETARY RIGHTS
OF ANY THIRD PARTY. * TEPHA, MIT OR THEIR RESPECTIVE DIRECTORS,
TRUSTEES, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL
OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR
INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER SUCH PARTY
SHALL OR M.I.T. BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN
FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
9. EXPORT CONTROLS
9.1. TEPHA acknowledges that it is subject to United States laws and
regulations controlling the export of technical data, computer
software, laboratory prototypes and other commodities (including the
Arms Export Control Act, as amended and the United States Department
of Commerce Export Administration Regulations). The transfer of such
items may require a license from the cognizant agency of the United
States Government and/or written assurances by TEPHA that TEPHA shall
not export data or commodities to certain foreign countries without
prior approval of such agency. METABOLIX neither represents that a
license shall not be required nor that, if required, it shall be
issued.
10. NON-USE OF NAMES
10.1. Except as required by law or in raising funding, neither party shall
use the names or trademarks of the other, nor of MIT, nor any
adaptation thereof, nor the names of any of the other party's or
MIT's employees, in any advertising, promotional or sales literature
without prior written consent obtained from such party, or MIT, or
said employee, in each case, such consent not to be unreasonably
withheld, except that TEPHA may state that it is licensed by
METABOLIX, or MIT, as
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applicable, under one or more of the patents and/or applications
comprising the METABOLIX PATENT RIGHTS, or the MIT PATENT RIGHTS,
respectively. TEPHA may, however, use the name of any employee of
METABOLIX who is a consultant or member of an advisory board of TEPHA,
with their permission, and provided, also, that their affiliation with
METABOLIX is identified.
11. ASSIGNMENT
11.1. Except as expressly provided in Article 2, neither party shall
directly or indirectly sell, transfer, assign, or delegate in whole
or in part this Agreement, or any rights, duties, obligations or
liabilities under this Agreement (collectively "assign"), by
operation of law or otherwise without the prior written consent of
the other party, such consent not to be unreasonably withheld or
delayed; provided, however, so long as the assignee shall not be a
competitor of the other party, either party shall have the right to
assign all of its rights, duties, obligations and liabilities under
this Agreement to any AFFILIATE or in connection with any sale,
merger, consolidation, recapitalization or reorganization involving
in each case the sale of all or substantially all of the capital
stock of the party or the assets of such party to which this
Agreement relates. This Agreement shall inure to the benefit of and
be binding upon the permitted successors and assigns of METABOLIX and
TEPHA.
12. DISPUTE RESOLUTION
12.1. Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary
injunction or other equitable relief to preserve the status quo or to
prevent irreparable harm, and except for any dispute relating to
patent validity or infringement, any and all claims, disputes or
controversies arising under, out of or in connection with the
Agreement, shall be mediated in good faith. The party raising such
dispute shall promptly advise the other party of such claim, dispute
or controversy in a writing which describes in
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reasonable detail the nature of such dispute. If the parties by their
senior management representatives shall be unable to resolve the
dispute within thirty (30) days, then by no later than forty (40)
business days after the recipient has received such notice of
dispute, each party shall have selected for itself a representative
who shall have the authority to bind such party, and shall
additionally have advised the other party in writing of the name and
title of such representative. By no later than sixty (60) business
days after the date of such notice of dispute, such representatives
shall schedule a date for a mediation hearing with the Cambridge
Dispute Settlement Center or Endispute Inc. in Cambridge,
Massachusetts. The parties shall enter into good faith mediation and
shall share the costs equally. If the representatives of the parties
have not been able to resolve the dispute within thirty (30) business
days after such mediation hearing, the parties shall have the right
to pursue any other remedies legally available to resolve such
dispute in either the Courts of the Commonwealth of Massachusetts, or
in the United States District Court for the District of
Massachusetts, to whose jurisdiction for such purposes METABOLIX and
TEPHA each hereby irrevocably consents and submits.
12.2. Notwithstanding the foregoing, nothing in this Article shall be
construed to waive any rights or timely performance of any oblations
under this Agreement.
13. CONFIDENTIALTIY
13.1. Both METABOLIX and TEPHA agree that all information disclosed to the
other party shall be deemed "Confidential Information" of the
disclosing party. In particular, "Confidential Information" shall be
deemed to include, but not be limited to, KNOW-HOW, trade secrets,
information, ideas, inventions, materials, samples, processes,
procedures, methods, formulations, protocols, packaging designs and
materials, test data, future development plans, "Product" launch
date, technological know-how and engineering, manufacturing,
regulatory, marketing,
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servicing, sales, or financial matters relating to the disclosing
party and its business.
13.2. During the term of this Agreement and thereafter each party shall
maintain all Confidential Information in confidence and shall not
disclose any Confidential Information to any third party or use any
such information for any unauthorized purpose. Each party may use
such Confidential Information only to the extent required to
accomplish the purposes of this Agreement. Both parties shall take
precautions as each normally takes with its own confidential and
proprietary information to prevent disclosure to third parties, but
no less than reasonable precautions.
13.3. Both parties agree that, notwithstanding the above, the obligations
of confidentiality and nonuse shall not apply to:
13.3.1. Information that at the time of disclosure is, or thereafter
becomes, generally known or available to the public, through
no wrongful act or failure to act on the part of the receiving
party;
13.3.2. Information that was known by or in the possession of the
receiving party at the time of receiving such information from
the disclosing party, as evidenced by written records;
13.3.3. Information obtained by the receiving party from a third-party
source who is not breaching a commitment of confidentiality to
the disclosing party by revealing such information to the
receiving party;
13.3.4. Information that is developed independently by the receiving
party without use of confidential information of the other
party, as evidenced by written records;
13.3.5. Information that is the subject of a granted written
permission to disclose that is issued by the disclosing party
to the other party;
13.3.6. Information that is required to be disclosed pursuant to the
law, by request of the FDA or other government authority or
for medical or safety reasons, but only to the extent required
to be disclosed by the FDA or other government authority; or
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13.3.7. Information provided to consultants, subcontractors or agents
for purposes consistent with this Agreement pursuant to a
non-disclosure agreement with said parties.
13.4. Both Parties shall make diligent efforts to ensure that all
employees, consultants, agents and subcontractors who may have access
to Confidential Information of the other party, and any other third
parties who might have access to Confidential Information, shall sign
nondisclosure agreements consistent with the terms set forth in this
Section. No Confidential Information shall be disclosed to any
employees, subcontractors, agents, consultants or third parties who
do not have a need to receive such information for the purposes of
this Agreement.
14. TERMINATION
14.1. If TEPHA shall cease to carry on its business, this Agreement shall
terminate upon notice by METABOLIX, except as provided in Article 11
(Assignment).
14.2. Should TEPHA fail to make any payment whatsoever due and payable to
METABOLIX hereunder, METABOLIX shall have the right to terminate this
Agreement effective on sixty (60) days' notice, unless TEPHA shall
make all such payments to METABOLIX, within said sixty (60) day
period. Upon the expiration of the sixty (60) day period, if TEPHA
shall not have made all such payments to METABOLIX, the rights,
privileges and license granted hereunder shall automatically
terminate.
14.3. Upon any material breach or default of this Agreement by TEPHA, other
than those occurrences set out in Paragraphs 14.1 and 14.2
hereinabove, which shall always take precedence in that order over
any material breach or default referred to in this Paragraph 14.3,
METABOLIX shall have the right to terminate this Agreement and the
rights, privileges and license granted hereunder effective on one
hundred and twenty (120) days' notice to TEPHA. Such termination
shall become automatically effective unless TEPHA shall have cured
any such material breach or default prior to the expiration of the
one hundred and twenty (120) day
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period. Upon any material breach or default of this Agreement by
METABOLIX, TEPHA shall have the right to terminate this Agreement and
the rights, privileges and license granted hereunder effective on one
hundred and twenty (120) days' notice to METABOLIX. Such termination
shall become automatically effective unless METABOLIX shall have
cured any such material breach or default prior to the expiration of
the one hundred and twenty (120) day period.
14.4. TEPHA shall have the right to terminate this Agreement at any time on
six (6) months' notice to METABOLIX, and upon payment of all amounts
due METABOLIX through the effective date of the termination.
14.5. Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that
matured prior to the effective date of such termination; and Articles
1, 8, 9, 10, 12, 13, 14.5, 14.6, and 16 shall survive any such
termination. TEPHA and any sublicensee thereof may, however, after
the effective date of such termination, sell all LICENSED PRODUCTS in
inventory, and complete LICENSED PRODUCTS in the process of
manufacture at the time of such termination and sell the same,
provided that TEPHA shall pay to METABOLIX the Running Royalties
thereon as required by Article 4 of this Agreement and shall submit
the reports required by Article 5 hereof on the sales of LICENSED
PRODUCTS.
14.6. Upon termination of this Agreement for any reason, any sublicense not
then in default shall continue in full force and effect except that
METABOLIX shall be substituted in place of the TEPHA, and METABOLIX
shall have no obligations under such sublicense beyond their
obligations herein.
14.7. Upon termination of this AGREEMENT for any reason (except expiration
or termination by TEPHA for breach by METABOLIX under Paragraph
14.3), TEPHA shall, grant and hereby grants METABOLIX a nonexclusive
license, with the right to sublicense, to all information then in
TEPHA's possession relevant to the commercialization of LICENSED
PRODUCTS and/or LICENSED PROCESSES, including, but not limited to,
KNOW-HOW and
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IMPROVEMENTS owned or controlled by TEPHA as of the effective date of
termination (whether such know-how and improvements shall be owned or
CONTROLLED by TEPHA during the two-year period after the EFFECTIVE
DATE or at any time during the term of this Agreement), research
results, toxicology data, assays, preclinical data, prototypes,
manufacturing processes including cell lines and unused, unexpired
amounts of LICENSED PRODUCTS, clinical results, regulatory
submissions, suppliers and customer lists. In such event TEPHA shall
receive a royalty equal to * of the gross amount of consideration, if
any, subsequently received by METABOLIX with respect to the LICENSED
PRODUCTS and LICENSED PROCESSES].
15. PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
15.1. Any payment, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of mailing if sent to
such party by certified first class mail, postage prepaid, return
receipt requested addressed to it at its address below or as it shall
designate by written notice given to the other party:
In the case of METABOLIX:
President
METABOLIX, Inc.
303 Third Street
Cambridge, Massachusetts 02142
In the case of TEPHA:
President
TEPHA, Inc.
303 Third Street
Cambridge, Massachusetts 02142
16. MISCELLANEOUS PROVISIONS
16.1. This Agreement shall be construed, governed, interpreted and applied
in accordance with the laws of the Commonwealth of Massachusetts,
U.S.A., except
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that questions affecting the construction and effect of any patent
shall be determined by the law of the country in which the patent was
granted.
16.2. The parties hereto acknowledge that this Agreement sets forth the
entire Agreement and understanding of the parties hereto as to the
subject matter hereof, and shall not be subject to any change or
modification except by the execution of a written instrument
subscribed to by the parties hereto.
16.3. The provisions of this Agreement are severable, and in the event that
any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity
or unenforceability shall not in any way affect the validity or
enforceability of the remaining provisions hereof.
16.4. The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall
not constitute a waiver of that right or excuse a similar subsequent
failure to perform any such term or condition by the other party.
16.5. TEPHA agrees to mark the LICENSED PRODUCTS sold in the United States
with all applicable United States patent numbers. All LICENSED
PRODUCTS shipped to or sold in other countries shall be marked in
such a manner as to conform with the patent laws and practice of the
country of manufacture or sale.
IN WITNESS WHEREOF, the parties have duly executed this Agreement the day
and year set forth below.
METABOLIX, INC.
By: /s/ Edward M. Muller
------------------------------
Name: Edward M. Muller
Title: President
Date: 10/1/99
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TEPHA, INC.
By: /s/ Simon F. Williams
------------------------------
Name: Simon F. Williams
Title: President
Date: October 1, 1999
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