EXHIBIT 10.1
[Portions herein identified by *** have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Commission
pursuant to Rule 24b-2 of the Secureities Exchange Act of 1934, as amended.]
LICENSE AND DEVELOPMENT AGREEMENT
THIS LICENSE AND DEVELOPMENT AGREEMENT (this "Agreement"),
effective as of April 4, 2003 (the "Effective Date"), is entered into by and
between NOVADEL PHARMA INC., a Delaware corporation ("NovaDel"), and MANHATTAN
PHARMACEUTICALS, INC., a Delaware corporation (the "Licensee"). NovaDel and
Licensee each may be referred to herein individually as a "Party," or
collectively as the "Parties."
WHEREAS, NovaDel has certain proprietary rights and
intellectual property (including to certain patents) with respect to lingual
sprays for the metered delivery of pharmaceutical products (the "Technology");
and
WHEREAS, Licensee desires to obtain from NovaDel, and NovaDel
desires to grant to Licensee, a license to develop and commercialize a
pharmaceutical product containing propofol as active ingredient that will be
administered using the Technology on the terms and conditions set forth herein;
and
WHEREAS, Licensee desires that NovaDel provide, and NovaDel
desires to provide, certain services in respect of the development of such
pharmaceutical product containing propofol as active ingredient on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual promises and covenants of the Parties contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto, intending to be legally bound, do hereby agree
as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the following words and
phrases shall have the following meanings, unless otherwise specifically
provided herein:
1.1 "AFFILIATE" shall mean, with respect to any Entity, any
other Entity that directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Entity. For
purposes of this Section 1.1 only, "control" and, with correlative meanings, the
terms "controlled by" and "under common control with" shall mean (a) the
possession, directly or indirectly, of the power to direct the management or
policies of an Entity, whether through the ownership of voting securities, by
contract or otherwise, or (b) the ownership, directly or indirectly, of at least
fifty percent (50%) of the voting securities or other ownership interest of an
Entity.
1.2 "APPLICABLE LAW" shall mean the applicable laws, rules,
regulations, guidelines and requirements of the Regulatory Authorities, in the
Territory.
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1.3 "COMBINATION PRODUCT" shall mean a combination
pharmaceutical product containing one or more therapeutically active ingredients
in addition to a Designated Compound.
1.4 "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect
to the development or commercialization of a Licensed Product, efforts and
resources commonly used in the research-based pharmaceutical industry for a
product of similar commercial potential at a similar stage in its lifecycle,
taking into consideration its safety and efficacy, its cost to develop, the
competitiveness of alternative products, its proprietary position, the
likelihood of regulatory approval, its profitability, and all other relevant
factors. Commercially Reasonable Efforts shall be determined on a
market-by-market basis for each Licensed Product without regard to the
particular circumstances of a Party, including any other product opportunities
of such Party.
1.5 "CONFIDENTIAL INFORMATION" shall have the meaning set
forth in Article 15.
1.6 "CONTROL" shall mean, with respect to any item of
Information and Inventions, Patents or other intellectual property right,
possession of the ability, whether directly or indirectly, and whether by
ownership, license or otherwise, to assign, or grant a license, sublicense or
other right to or under, such item, Patent or right as provided for herein
without violating the terms of any agreement or other arrangement with any Third
Party.
1.7 "DESIGNATED COMPOUND" shall mean initially, propofol.
1.8 "DEVELOPMENT ACTIVITIES" shall mean the activities
performed by the Parties under the Development Plan pursuant to Article 3.
1.9 "DEVELOPMENT BUDGET" shall have the meaning set forth in
Section 3.3.
1.10 "DEVELOPMENT COMMITTEE" shall have the meaning set forth
in Section 3.4.1.
1.11 "DEVELOPMENT PLAN" shall have the meaning set forth in
Section 3.3.
1.12 "EFFECTIVE DATE" shall have the meaning set forth in the
preamble.
1.13 "ENTITY" shall mean any individual, sole proprietorship,
corporation, limited liability company, association, joint venture, partnership,
limited partnership, limited liability partnership, trust, university, business,
government or political subdivision thereof, including an agency, or any other
organization that possesses independent legal standing.
1.14 "EXPLOIT" shall mean to make, have made, import, use,
sell, or offer for sale, including to research, develop, register, modify,
improve, manufacture, have manufactured, store, have used, export, transport,
distribute, promote, market or have sold or otherwise dispose of a licensed
product or process.
1.15 "EXPLOITATION" shall mean the making, having made,
importation, use, sale, offering for sale of a licensed product or process,
including the research, development,
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registration, modification, improvement, manufacture, storage, optimization,
import, export, transport, distribution, promotion, marketing, sale or other
disposition of a licensed product or process.
1.16 "FDA" shall mean the United States Food and Drug
Administration, or any successor agency responsible for the evaluation and
approval of pharmaceutical products.
1.17 "FIRST COMMERCIAL SALE" shall mean the first sale for use
or consumption by the general public of the Licensed Product in a country after
Regulatory Approval (including pricing and reimbursement approval where
applicable) for the marketing and sale of the Licensed Product has been obtained
in such country.
1.18 "IMPROVEMENT" shall mean any modification, variation or
revision to an apparatus, method, product or technology, or any discovery,
technology, device, process or formulation related to an apparatus, method,
product or technology, whether or not patented or patentable, including any
enhancement in the manufacture or steps or processes thereof, ingredients,
preparation, presentation, formulation, means of delivery, packaging or dosage
of an apparatus, method, product or technology, any discovery or development of
any new or expanded indications for an apparatus, method, product or technology,
or any discovery or development that improves the stability, safety or efficacy
of an apparatus, method, product or technology.
1.19 "IND" shall mean an investigational new drug application
filed with the FDA for approval to commence human clinical trials, and its
equivalent in other countries or regulatory jurisdictions in the Territory.
1.20 "INDEMNIFICATION CLAIM NOTICE" shall have the meaning set
forth in Section 10.3.1.
1.21 "INDEMNIFIED PARTY" shall have the meaning set forth in
Section 10.3.1.
1.22 "INFRINGEMENT SUIT" shall have the meaning set forth in
Section 6.8.2.
1.23 "INFORMATION AND INVENTIONS" shall mean all technical,
scientific and other know-how and information, trade secrets, knowledge,
technology, means, methods, processes, practices, formulas, instructions,
skills, techniques, procedures, experiences, ideas, technical assistance,
designs, drawings, assembly procedures, computer programs, apparatuses,
specifications, data, results and other material, including pre-clinical and
clinical trial results, manufacturing procedures and test procedures and
techniques, (whether or not confidential, proprietary, patented or patentable)
in written, electronic or any other form now known or hereafter developed, and
all Improvements, whether to the foregoing or otherwise, and other discoveries,
developments, inventions, and other intellectual property (whether or not
confidential, proprietary, patented or patentable).
1.24 "KNOWLEDGE" shall mean the good faith understanding of
the vice presidents, senior vice presidents, executive vice presidents,
president or chief executive officer of the respective party of the facts and
information then in their possession without any duty to conduct any
investigation with respect to such facts and information.
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1.25 "LICENSED PROCESS" shall mean the proprietary lingual
spray technology for the delivery of pharmaceutical compounds through the
mucosal membrane of the mouth using an aerosol or pump spray device that is
under the Control of NovaDel as of the Effective Date and any Improvements
thereto that are conceived and reduced to practice by NovaDel in the course of
performing the Development Activities.
1.26 "LICENSED PRODUCT(S)" shall mean any dosage of
pharmaceutical composition or preparation in finished form labeled and packaged
for sale by prescription, over-the-counter or any other method for human
applications that contains propofol delivered by means of the Licensed Process.
1.27 "LICENSED TECHNOLOGY" shall mean the NovaDel Patents, the
NovaDel Know-How and the Drug Master File, collectively, but only with respect
to the Exploitation of the Licensed Product.
1.28 "LICENSED TRADEMARK" shall mean those Trademarks set
forth on Exhibit A attached hereto and such other Trademarks as may be
designated by NovaDel in writing from time to time, and any registrations of the
foregoing and pending applications relating thereto.
1.29 "LICENSEE" shall mean Manhattan Pharmaceuticals, Inc., a
Delaware corporation.
1.30 "LOSSES" shall have the meaning set forth in Section
10.1.
1.31 "MAJOR MARKET COUNTRY" shall mean the United States of
America and the European Union.
1.32 "NDA" shall mean a New Drug Application filed pursuant to
the requirements of the FDA, as more fully defined in 21 C.F.R.ss.314.5 et seq.,
and any equivalent application required by any Regulatory Authority for the
marketing, sale or use of the Licensed Product in the Territory.
1.33 "NET PROFITS" shall mean for any period, the gross amount
invoiced by Licensee and its Affiliates for the sale of Licensed Product by
Licensee or any of its Affiliates to Third Parties, less deductions for: (a)
normal and customary trade, quantity and cash discounts and sales returns and
allowances, including (i) those granted on account of price adjustments, billing
errors, rejected goods, damaged goods, returns and rebates, (ii) administrative
and other fees and reimbursements and similar payments to wholesalers and other
distributors, buying groups, pharmacy benefit management organizations, health
care insurance carriers and other institutions, (iii) allowances, rebates and
fees paid to distributors and (iv) chargebacks; (b) freight, postage, shipping
and insurance expenses to the extent that such items are included in the gross
amount invoiced; (c) customs and excise duties and other duties related to the
sales to the extent that such items are included in the gross amount invoiced;
(d) rebates and similar payments made with respect to sales paid for by any
governmental or regulatory authority such as, by way of illustration and not in
limitation of the Parties' rights hereunder, Federal or state Medicaid, Medicare
or similar state program or equivalent foreign governmental program; (e) sales
and other taxes and duties directly related to the sale or delivery of the
Licensed Product (but not including taxes assessed against the income derived
from such sale); (f) distribution
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expenses to the extent that such items are included in the gross amount
invoiced; (g) any other similar and customary deductions that are consistent
with United States generally accepted accounting principles, or in the case of
non-United States sales, other applicable accounting standards; (h) insurance
costs; (i) employee salaries and other consultant and employee compensation; (j)
research and development costs; (k) manufacturing costs; (l) sales expenses
(including sales commissions); (m) storage of Licensed Product; and (n)
royalties payable to third parties. Any of the deductions listed above that
involves a payment by Licensee or its Affiliates shall be taken as a deduction
in the calendar quarter in which the payment is accrued by such eentity. For
purposes of determining Net Sales, a Licensed Product shall be deemed to be sold
when invoiced and a "sale" shall not include transfers, uses or dispositions for
charitable, promotional, pre-clinical, clinical, regulatory or governmental
purposes. For purposes of calculating Net Profits, sales between or among
Licensee or its Affiliates shall be excluded from the computation of Net
Profits, but sales by Licensee or its Affiliates to Third Parties shall be
included in the computation of Net Profits.
1.34 "NET SALES" shall mean, for any period, the gross amount
invoiced by Licensee and its Affiliates for the sale of Licensed Product by
Licensee or any of its Affiliates to Third Parties, less deductions for
chargebacks, billing errors, rejected goods, damaged goods and returns. Any of
the deductions listed above that involves a payment by Licensee or its
Affiliates shall be taken as a deduction in the calendar quarter in which the
payment is accrued by such entity. For purposes of determining Net Sales, a
Licensed Product shall be deemed to be sold when invoiced and a "sale" shall not
include transfers, uses or dispositions for promotional, pre-clinical, clinical,
regulatory or governmental purposes. For purposes of calculating Net Sales,
sales between or among Licensee or its Affiliates shall be excluded from the
computation of Net Sales, but sales by Licensee or its Affiliates to Third
Parties shall be included in the computation of Net Sales.
1.35 "NOVADEL" shall have the meaning set forth in the
preamble.
1.36 "NOVADEL KNOW-HOW" shall mean all Information and
Inventions Controlled by NovaDel or an Affiliate of NovaDel as of the Effective
Date or, from time to time, during the Term that (a) (i) are necessary for the
use of the Licensed Process to Exploit the Licensed Product or (ii) relate to
Improvements to the Licensed Product that are conceived and reduced to practice
in the course of performing the Development Activities, and (b) are not
generally known, but excluding any Information and Inventions to the extent
claimed by any NovaDel Patents.
1.37 "NOVADEL PATENTS" shall mean the Patents that NovaDel
Controls (a) as of the Effective Date that are listed on Exhibit A hereto and
(b) from time to time during the Term that claim (i) the Licensed Process, or
(b) any Improvements to the Licensed Product that are conceived and reduced to
practice in the course of performing the Development Activities.
1.38 "PATENTS" shall mean (a) all patents and patent
applications; (b) any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates and the like,
and any provisional applications, of any such patents or patent applications;
and (c) any international equivalent of any of the foregoing.
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1.39 "REGULATORY APPROVAL" shall mean any and all approvals
(including pricing and reimbursement approvals), licenses, registrations or
authorizations of any Regulatory Authority, necessary for the Exploitation of
the Licensed Product in a country in the Territory, including (a) any approval
of any Licensed Product (including any INDs, NDAs, and supplements or amendments
thereto); (b) pre- and post-approval marketing authorizations for a Licensed
Product (including any prerequisite manufacturing approval or authorization
related thereto); (c) labeling approval for a Licensed Product; and (d)
technical, medical and scientific licenses.
1.40 "REGULATORY AUTHORITY" shall mean any applicable
supra-national, federal, national, regional, state, provincial or local
regulatory agencies, departments, bureaus, commissions, councils or other
government entities regulating or otherwise exercising authority with respect to
the Licensed Technology or the Licensed Product in the Territory.
1.41 "REGULATORY DOCUMENTATION" shall mean all applications,
registrations, licenses, authorizations and approvals (including all Regulatory
Approvals), all correspondence submitted to or received from Regulatory
Authorities (including minutes and official contact reports relating to any
communications with any Regulatory Authority), all supporting documents and all
clinical studies and tests, relating to any Licensed Product, and all data
contained in any of the foregoing, including all regulatory drug lists,
advertising and promotion documents, adverse event files and complaint files.
1.42 "SECONDARY MARKET COUNTRIES" shall mean Japan, Canada,
Australia and South Africa.
1.43 "SUBLICENSEE" shall mean any Third Party to which
Licensee grants a sublicense pursuant to Section 2.5 under the licenses granted
to Licensee by NovaDel under Section 2.1.
1.44 "SUBLICENSING FEES" shall mean all non-royalty
consideration of any kind, including any fees, milestones or other payments
(whether cash or non-cash (which shall be valued at fair market value)),
received by Licensee or any of its Affiliates from any Sublicensee as a direct
or indirect result of the grant by Licensee or any of its Affiliates to any
Sublicensee of a license under, or the use by any such Sublicensee of, any of
the Licensed Technology or Licensed Trademarks, in excess of the payments to be
paid pursuant to sections 4.4 and 4.5.
1.45 "TECHNOLOGY" shall have the meaning set forth in the
preamble.
1.46 "TERM" shall have the meaning set forth in Section 7.1.
1.47 "TERRITORY" shall mean the entire world.
1.48 "THIRD PARTY" shall mean any Entity other than NovaDel,
Licensee and their respective Affiliates.
1.49 "THIRD PARTY CLAIM" shall have the meaning set forth in
Section 10.3.2.
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1.50 "TRADEMARK" shall include any word, name, symbol, color,
designation or device or any combination thereof, including any trademark, trade
dress, brand mark, trade name, brand name, logo or business symbol.
1.51 "VALID CLAIM" shall mean, with respect to a particular
country, a claim of a Patent in such country that (a) has not been revoked or
held unenforceable or invalid by a decision of a court or governmental agency of
competent jurisdiction from which no appeal can be taken or has been taken
within the time allowed for appeal, and (b) has not been abandoned, disclaimed,
denied or admitted to be invalid or unenforceable through reissue or disclaimer
or otherwise in such country.
ARTICLE 2
GRANT OF RIGHTS
2.1 LICENSE GRANTS TO LICENSEE.
2.1.1 Subject to Section 2.3 and the other terms and
conditions of this Agreement, NovaDel hereby grants to Licensee and Licensee
accepts, a non-transferable (except as provided in Article 12), sublicensable
(only as provided in Section 2.5), royalty-bearing, worldwide, exclusive right
and license under the Licensed Technology to Exploit the Licensed Product in the
Territory, to the full end of the Term for which the Licensed Technology is
licensed, unless sooner terminated as herein after provided.
2.1.2 Subject to Section 2.3 and the other terms and
conditions of this Agreement, NovaDel hereby grants to Licensee and Licensee
accepts, a non-transferable (except as provided in Article 13), sublicensable
(only as provided in Section 2.4), royalty-bearing, non-exclusive right and
license under the Licensed Trademarks for the sole purpose of using such
Licensed Trademarks to market, distribute and sell the Licensed Product licensed
under Section 2.1.1 in the Territory, to the full end of the Term for which the
Licensed Product are licensed, unless sooner terminated as hereinafter provided.
2.2 LICENSE GRANT TO NOVADEL. Licensee hereby grants to
NovaDel a limited, royalty-free, non-exclusive right and license in the
Territory in and to the Licensed Technology to the extent necessary to perform
its Development Activities under Article 3.
2.3 RETAINED RIGHTS. NovaDel retains all right, title and
interest, including the right to grant licenses to Third Parties, in and to the
Licensed Technology (other than for delivery of the Designated Compounds only as
expressly provided in Section 2.1.1) and the Licensed Trademarks (other than for
the Exploitation of Licensed Product only as expressly provided in Section
2.1.2). Licensee shall have no rights, express or implied, with respect to the
Licensed Technology or the Licensed Trademarks, except as expressly set forth in
Section 2.1, and Licensee covenants to NovaDel that none of Licensee, its
Affiliates or Sublicensees shall use the Licensed Technology, directly or
indirectly, for any purpose other than for administration of the Designated
Compounds in connection with the Exploitation of Licensed Product, or the
Licensed Trademarks, directly or indirectly, for any purpose other than the
marketing, distribution and sale of Licensed Product hereunder. Licensee shall
have no right to develop Combination Product under this Agreement.
Notwithstanding anything in this Agreement to the
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contrary, NovaDel does hereby retain the right to (a) enter into collaborations
or other agreements with, and to grant licenses and other rights under the
NovaDel Patents and NovaDel Know-How to Third Parties to Exploit products
containing compounds other than the Designated Compounds and to use the Licensed
Process in connection therewith, and (b) independently Exploit products
containing compounds other than the Designated Compounds and to use the Licensed
Process in connection therewith. Notwithstanding any other provision contained
in this Agreement, NovaDel retains an irrevocable, non-exclusive, royalty-free
right to use the Licensed Technology (including the Licensed Process) with
respect to the Designated Compounds, for its internal, non-commercial research
and development activities.
2.4 SUBLICENSES. Licensee shall have the right to grant
sublicenses under the grants in Section 2.1 to Third Parties pursuant to a
separate written agreement, subject to the following requirements and
conditions:
2.4.1 Licensee must obtain NovaDel's prior written
consent in respect of each such sublicense, such consent not to be unreasonably
withheld, and any sublicense agreement must be fully consistent with the terms
and conditions of this Agreement, including Articles 3.10, 5, 6, 10, 11, 13 and
16, and provide that Sublicensee will indemnify NovaDel and its Affiliates to
the extent provided in Article 10.
2.4.2 Within five (5) days after execution or receipt
thereof, as applicable, Licensee shall provide NovaDel with a full and complete
copy of each sublicense granted here
2.4.3 .under and shall deliver copies of all reports
(including relating to royalties and other payments) received by Licensee from
such Sublicensees.
2.4.4 Termination of this Agreement by NovaDel pursuant
to Section 8.3 with respect to Licensee shall not terminate any sublicense
granted by Licensee pursuant to this Section 2.5 with respect to a Sublicensee,
provided that (a) such Sublicensee is not in breach of any provision of this
Agreement or the applicable sublicense agreement, (b) such Sublicensee shall
perform all obligations of Licensee under this Agreement, (c) NovaDel shall have
all rights with respect to any and all Sublicensees as it had hereunder with
respect to Licensee prior to termination of this Agreement with respect to
Licensee, (d) Licensee shall include in any sublicense a provision in which said
Sublicensee acknowledges its obligations to NovaDel hereunder and the rights of
NovaDel to terminate this Agreement with respect to any Sublicensee for breaches
of this Agreement by such Sublicensee. The failure of Licensee to include in a
sublicense the provisions referenced in clause (d) shall render the affected
sublicense void ab initio.
ARTICLE 3
DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES
3.1 DEVELOPMENT AND COMMERCIALIZATION. Licensee shall have the
sole right and obligation to develop and commercialize the Licensed Product in
the Territory. NovaDel shall perform or cause to be performed, on behalf of
Licensee, certain Development Activities in accordance with this Article 3.
Except as set forth herein, Licensee shall be solely responsible
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for all costs and expenses in connection with all development and
commercialization activities, including the Development Activities performed by
NovaDel on behalf of Licensee.
3.2 DEVELOPMENT ACTIVITIES. NovaDel shall not be required to
commence any Development Activities until Licensee has paid at least twenty-five
percent (25%) of the non-refundable License Fee described in Section 4.4.
3.2.1 GENERAL. Under the direction and supervision of the
Development Committee, NovaDel and Licensee each shall perform, or cause to be
performed, its respective Development Activities in accordance with the
Development Plan and Development Budget. Notwithstanding the foregoing, the
Parties acknowledge and agree that there can be no assurances that the
objectives of the Development Activities can be achieved, or that they can be
achieved in the manner or in the time set forth in the Development Plan.
Although outcomes cannot be guaranteed, each Party shall use Commercially
Reasonable Efforts to perform or cause to be performed its respective
Development Activities in good scientific manner, and in material compliance
with Applicable Law.
3.2.2 REPORTS. Within thirty (30) days after the end of
each calendar quarter in which Development Activities are performed, each Party
shall provide to the Development Committee a written progress report, which
shall describe the Development Activities it has performed, or cause to be
performed, during such calendar quarter, evaluate the work performed in relation
to the goals of the Development Plan and in relation to the Development Budget,
and provide such other information as may be required by the Development Plan or
reasonably requested by the Development Committee with respect to the
Development Activities.
3.3 DEVELOPMENT PLAN AND BUDGET. The development plan (the
"Development Plan") and the development budget (the "Development Budget") for
the Development Activities relating to propofol are attached hereto as Exhibit B
and Exhibit C, respectively. The Development Committee shall review the
Development Plans and the Development Budgets at least monthly and shall have
the right to make such modifications or updates to the Development Plans or
Development Budgets that it deems appropriate. The Parties acknowledge and agree
that the amounts set forth in the Development Budgets are estimates and, given
the unpredictability of the Development Activities, there can be no assurances
that the Development Activities can be completed within the Development Budgets,
provided, however, that the Parties agree to use their Commercially Reasonable
Efforts to adhere to the Development Budgets.
3.4 DEVELOPMENT COMMITTEE.
3.4.1 FORMATION AND AUTHORITY OF DEVELOPMENT COMMITTEE.
NovaDel and Licensee shall establish a development committee (the "Development
Committee"), which shall oversee the Development Activities performed by the
Parties, review and approve the Development Budget and approve any changes to
the Development Plan and Development Budget. Each Party shall appoint an equal
number of representatives with the requisite experience and seniority to enable
them to make decisions on behalf of the Parties with
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respect to the Development Activities. From time to time, each Party may
substitute its representatives on written notice to the other Party.
3.4.2 PROCEDURAL RULES OF DEVELOPMENT COMMITTEE. The
Development Committee shall meet monthly, or as otherwise agreed to by the
Parties. The Development Committee shall adopt such standing rules as shall be
necessary for its work. A quorum of the Development Committee shall exist
whenever there is present at a meeting at least one representative appointed by
each Party. Members of the Development Committee may attend a meeting either in
person or by telephone, video conference or similar means in which each
participant can hear what is said by the other participants. Representation by
proxy shall not be allowed. The Development Committee shall take action by
unanimous consent of NovaDel and Licensee, with each such Party having a single
vote, irrespective of the number of representatives actually in attendance at a
meeting, or by a written resolution signed by the designated representatives of
each of NovaDel and Licensee.
3.4.3 DISPUTE RESOLUTION. If the Development Committee
cannot, or does not, reach agreement on an issue, then either Party shall have
the right to refer such issue to the Chief Executive Officers of the Parties who
shall confer on the resolution of the issue. Any final decision mutually agreed
to by the Chief Executive Officers of the Parties shall be in writing and shall
be conclusive and binding on the Parties. If such officers are not able to agree
on the resolution of an issue within twenty (20) days after such issue was first
referred to them, either Party shall have the right to refer such dispute to
arbitration pursuant to Article 9.
3.4.4 LIMITATIONS ON AUTHORITY OF DEVELOPMENT COMMITTEE.
Each Party to this Agreement shall retain the rights, powers, and discretion
granted to it under this Agreement, and no such rights, powers, or discretion
shall be delegated to or vested in the Development Committee unless such
delegation or vesting of rights is expressly provided for in this Agreement or
the Parties expressly so agree in writing. The Development Committee shall not
have the power to amend or modify this Agreement, which may only be amended or
modified as provided in Section 16.4.
3.5 REGULATORY APPROVALS. All INDs, NDAs and other filings,
applications or requests pursuant to or in connection with the Regulatory
Approvals required under the Development Plan shall be made in the name of
Licensee or its designee, unless Applicable Law requires that a Regulatory
Approval be solely or jointly in the name of NovaDel or its Affiliates, in which
case NovaDel hereby assigns and shall cause its Affiliates to assign, as
applicable, such Regulatory Approval to Licensee to the extent permitted by
Applicable Law; provided, however, that NovaDel shall have a perpetual,
irrevocable, worldwide right to use and reference the Regulatory Documentation
with respect to the Licensed Product and any data included or referenced therein
for all purposes. NovaDel, with prior notice to the Licensee, shall have the
right to communicate with the Regulatory Authorities with regard to the
Development Activities. Licensee agrees that the Drug Master File ("DMF") shall
be owned by NovaDel, provided that Licensee shall have unlimited access to the
DMF for purposes of any Regulatory Filings relating to each Licensed Product.
Licencee agrees to request that the DMF be treated as confidential. NovaDel
agrees to keep the Licensee reasonably informed as to the communications, if
any, between NovaDel and the Regulatory Authorities.
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3.6 REGULATORY RECORDS. NovaDel and Licensee each shall
maintain, or cause to be maintained, records of its respective Development
Activities in sufficient detail and in good scientific manner appropriate for
patent and regulatory purposes, which shall be complete and accurate and shall
fully and properly reflect all work done and results achieved in the performance
of its respective Development Activities, and which shall be retained by such
Party for at least five (5) years after the termination of this Agreement, or
for such longer period as may be required by Applicable Law. Each Party shall
have the right, during normal business hours and upon reasonable notice, to
inspect and copy any such records.
3.7 DEVELOPMENT EXPENSES.
3.7.1 LICENSEE'S OBLIGATION. In consideration of
NovaDel's performance of its Development Activities, Licensee shall reimburse
NovaDel for the reasonable and documented costs and expenses incurred by NovaDel
in performing such activities in accordance with the Development Budget (as may
be amended in accordance with Section 3.3). Licensee shall bear all costs and
expenses incurred by or on behalf of Licensee in connection with the performance
of its Development Activities.
3.7.2 INVOICES AND PAYMENTS. Within thirty (30) days
after the end of each month in which Development Activities are performed,
NovaDel shall invoice Licensee for any costs and expenses incurred by NovaDel or
its Affiliates in such month. Each invoice shall be payable to NovaDel within
thirty (30) days after receipt by Licensee of such invoice.
3.7.3 BOOKS AND RECORDS. Each party shall maintain
complete and accurate books, records and accounts that, in reasonable detail,
fairly reflect any reimbursable costs and expenses incurred by it or its
Affiliates in performance of the Development Activities in conformity with
Generally Accepted Accounting Principles ("GAAP"). Each party shall retain such
books, records and accounts until the later of (a) three (3) years after the end
of the period to which such books, records and accounts pertain, and (b) the
expiration of the applicable tax statute of limitations (or any extensions
thereof), or for such longer period as may be required by Applicable Law. Each
party shall have the right to have its certified public accountant, who shall be
reasonably acceptable to NovaDel, audit the books and financial records of the
other party and their respective Affiliates relating to its Development
Activities during one or more calendar quarters; provided, however, that
Licensee shall not have the right to audit a calendar quarter more than two (2)
years after the end of such quarter, to conduct more than one such audit in any
twelve-month period, or to audit any calendar quarter more than once; and
provided further that each party shall bear the cost of such audit unless the
audit reveals a variance of more than five percent (5%) from the reported
results, in which case audited party shall bear the cost of the audit. The
results of such accounting firm shall be final, absent manifest error.
3.8 COOPERATION. Each Party shall cooperate with any and all
reasonable requests for assistance from the other Party with respect to the
Development Activities, including by making its employees, consultants and other
scientific staff available upon reasonable notice during normal business hours
at their respective places of employment to consult with such other Party on
issues arising in connection with the performance of such Development
Activities.
Page 11
3.9 DEVELOPMENT AND USE OF TRADEMARKS. Licensee shall have the
sole right to determine the Trademarks to be used with respect to the
Exploitation of the Licensed Product on a worldwide basis, provided that the
product labeling and promotional materials disclose that the Licensed Product
are delivered using the Licensed Process and include the Licensed Trademarks.
3.10 DILIGENCE OBLIGATIONS. Licensee shall use Commercially
Reasonable Efforts to (a) develop and commercialize the Licensed Product in the
entire Territory in accordance with the terms and conditions of this Agreement;
(b) obtain Regulatory Approval(s) with respect to the Licensed Product in the
Territory; and (c) thereafter diligently and aggressively Exploit the Licensed
Product in the Territory to maximize sales. Licensee shall ensure that any
Sublicense be terminable at the option of the Licensee in the event that a
Sublicensee fails to maintain active, diligent marketing efforts for Licensed
Product.
3.11 MANUFACTURING.
3.11.1 Subject to section 3.11.4, NovaDel shall
manufacture and supply Licensee with Licensed Product on commercially reasonable
terms for clinical development of the Licensed Product pursuant to a
manufacturing agreement (the "Manufacturing Agreement") to be entered into
following execution of this Agreement.
3.11.2 Subject to section 3.11.4, following receipt of
Regulatory Approval, NovaDel shall manufacture and supply Licensee with Licensed
Product on commercially reasonable terms pursuant to the Manufacturing
Agreement.
3.11.3 NovaDel agrees that, at all times during the
performance of the Development Activities, it will act in accordance with GMP
and all applicable laws, rules and regulations.
3.11.4 The manufacturing agreement will provide among
other things that in the event that Licensee enters into a Sublicense for a
Licensed Product and such Sublicensee desires to obtain rights to manufacture
such Licensed Product, then NovaDel will not unreasonably withhold its consent
to transfer the manufacturing rights to such Sublicensee, provided that measures
are incorporated into the sublicensing agreement to continue to safeguard the
confidentiality of NovaDel Know-how and technology with respect to the Licensed
Product as set forth in section 3.11.5
3.11.5 It is the intent of the Parties that NovaDel be
the exclusive manufacturer of the Licensed Product pursuant to the terms of the
Manufacturing Agreement; provided, however, that in the event that NovaDel is
unable or unwilling to provide clinical or commercial supply of Licensed Product
within a reasonable period of time upon commercially reasonable terms, then
Licensee shall be entitled to seek alternate manufacturing source. In such
event, Licensee shall use commercially reasonable efforts to ensure that any
such alternate manufacturing source agree (a) to maintain in strictest
confidence all information relating to the manufacture of the
Licensed Product and the Licensed Technology, (b) not to file any intellectual
property protection relating to inventions that may arise from the manufacture
of the
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Licensed Product and Licensed Technology, and (c) that any intellectual
property that does arise out of the manufacture of the Licensed Product and
Licensed Technology belong to NovaDel.
ARTICLE 4
ROYALTIES AND OTHER CONSIDERATION
4.1 ROYALTIES. As partial consideration for the rights,
privileges and licenses granted hereunder and the Development Activities
performed by Licensor pursuant to Article 3, Licensee shall make the following
payments to NovaDel:
4.1.1 Licensee shall pay to NovaDel royalties in an
amount equal to the greater of (i) *** percent (***%) of worldwide aggregate Net
Sales by Licensee or any Affiliate of Licensee of each Licensed Product during
each calendar year and (ii) *** percent (***%) of worldwide aggregate Net Profit
by Licensee or any Affiliate of Licensee of each Licensed Product during each
calendar year.
4.1.2 Licensee shall pay to NovaDel (1) *** percent
(***%) of all royalties received by Licensee or its Affiliate from sales by any
Sublicensee of Licensed Product until such time as Licensee has recovered all of
its out-of-pocket costs incurred directly in connection with the development and
commercialization of the Licensed Product, and thereafter (2) *** percent (***%)
of all royalties received by Licensee or its Affiliate from sales by any
Sublicensee of Licensed Product;
4.1.3 Licensee shall pay to NovaDel (1) *** percent
(***%) of all Sublicensing Fees until such time as Licensee has recovered all of
its out-of-pocket costs incurred directly in connection with the development and
commercialization of the Licensed Product, and thereafter (2) *** percent (***%)
of all Sublicensing Fees.
4.2 ROYALTY TERM. Licensee's royalty obligations under Section
4.1 shall terminate, on a country-by-country basis, with respect to each
Licensed Product upon the expiration date in such country of the last to expire
of any issued NovaDel Patent that includes at least one Valid Claim covering the
sale of such Licensed Product in such country. Upon termination of the royalty
obligations under this Section 4.2 in a country, the license grants to Licensee
in Section 2.1 shall be reduced in accordance with terms in Section 4.6.
4.3 ROYALTY PAYMENTS. Royalties under Section 4.1.1 and Other
Income under 4.1.2(a) shall be payable to NovaDel on a quarterly basis, within
forty-five (45) days after the end of each calendar quarter; provided, however,
at the end of a calendar year Licensee shall determine the actual amounts owed
to NovaDel under Section 4.1.2 and any additional amounts owed to NovaDel for
the first three calendar quarters of such calendar year shall be paid with the
royalty payment for the last calendar quarter of such calendar year, and
provided further in the event that Licensee's payments for such calendar
quarters exceed the actual royalties owed for such calendar quarters, Licensee
shall have the right to offset such excess payments against the royalty payment
for the last calendar quarter of such calendar year. Only one royalty payment
will be due on Net Sales of the Licensed Product even though the manufacture,
sale or use of such Licensed Product may be covered by more than one
intellectual property right in a country.
Page 13
4.4 LICENSEE FEE. Licensee shall pay to NovaDel $500,000 as
an up-front licensing fee for the Designated Compound, payable in cash as
follows:
4.4.1 $250,000 within 10 Business Days of the first date
on which the Licensee has received an aggregate of $5,000,000 through an equity
financing or otherwise (including receipt of any milestone payments or other
revenues); and
4.4.2 $250,000 within 10 Business Days of the first date
on which the Licensee has received an aggregate of $10,000,000 through an equity
financing or otherwise (including receipt of any milestone payments or other
revenues).
4.5 MILESTONE PAYMENTS. Licensee shall also pay to NovaDel the
following Milestone Payments:
4.5.1 $1,000,000 within five (5) Business Days from the
date on which the Company's first filed NDA is accepted for review by the FDA
for a Licensed Product; and
4.5.2 $1,000,000 within five (5) Business Days from the
date on which the Company's first filed European Marketing Application for a
Licensed Product in any country within the European Union is accepted for review
by the appropriate Regulatory Authority; and
4.5.3 $2,000,000 within five (5) Business Days from the
date on which the Company's first filed NDA for a Licensed Product is approved
by the FDA; and
4.5.4 $2,000,000 within five (5) Business Days from the
date on which the Company's first filed European Marketing Application for a
Licensed Product in any country within the European Union is accepted for review
by the appropriate Regulatory Authority; and
4.5.5 $1,000,000 within five (5) Business Days from the
date on which the application for commercial approval for the Licensed Product
with the appropriate Regulatory Authority is approved in each Secondary Market
Country
4.5.6 $50,000 within five (5) Business Days from the date
on which the Company's application for regulatory approval of a Licensed Product
is approved by the appropriate Regulatory Authority in any country other than
Major Market Countries or Secondary Market Countries.
4.6 REDUCTION OF PAYMENTS. In the event that, or from and
after the date on which, (a) no Valid Claim of a NovaDel Patent covering a
Licensed Product exists in a country and (b) no regulatory exclusivity with
respect to such Licensed Product exists in such country (whether as a result of
expiration of the exclusivity period or otherwise), (i) the milestone payments
set forth in Section 4.5 with respect to such Licensed Product, if any, and (ii)
the royalty rate payable to NovaDel by Licensee under Section 4.1 with respect
to sales of such Licensed Product in such country, each shall be reduced by
seventy-five percent (75%).
4.7 MODE OF PAYMENT. All payments to NovaDel under this
Agreement shall be paid in United States Dollars to a bank account in the United
States as NovaDel may reasonably designate. Any withholding taxes which
Licensee, its Affiliates or any Sublicensee
Page 14
shall be required by applicable law to withhold on remittance of the payments
shall be deducted from such payment to NovaDel and remitted to the appropriate
Regulatory Authority. Licensee shall furnish NovaDel with the original copies of
all official receipts for such taxes. If any currency conversion shall be
required in connection with the payments hereunder, such conversion shall be
made by using the average of the exchange rates prevailing at Citibank, N.A. in
New York, New York on the first business day of each month in the reporting
period to which such payments relate.
4.8 NON-REFUNDABLE, NON-CREDITABLE. The amounts paid or
payable under this Article 4 shall be non-refundable and non-creditable against
any other amounts due NovaDel under this Agreement.
ARTICLE 5
REPORTS AND RECORDS
5.1 RECORD RETENTION. Licensee shall maintain (and shall
ensure that its Affiliates and Sublicensees shall maintain) complete and
accurate books, records and accounts that fairly reflect their respective Net
Sales, Other Income and any milestones payable with respect to Licensed Product
in sufficient detail to confirm the accuracy of any payments required hereunder
and in accordance with GAAP, which books, records and accounts shall be retained
by Licensee until the later of (a) three (3) years after the end of the period
to which such books, records and accounts pertain, and (b) the expiration of the
applicable tax statute of limitations (or any extensions thereof), or for such
longer period as may be required by Applicable Law.
5.2 AUDIT. NovaDel shall have the right to have an independent
certified public accounting firm of nationally recognized standing, reasonably
acceptable to Licensee, to have access during normal business hours, and upon
reasonable prior written notice, to such of the records of Licensee (and its
Affiliates and Sublicensees) as may be reasonably necessary to verify the
accuracy of such Net Sales, Milestone Payments or Sublicense Income for any
calendar quarter ending not more than thirty-six (36) months prior to the date
of such request; provided, however, that NovaDel shall not have the right to
conduct more than one such audit in any twelve (12)-month period. The accounting
firm shall disclose to each Party whether such Net Sales, Other Income or
milestone payments are correct or incorrect and the specific details concerning
any discrepancies. NovaDel shall bear the cost of such audit unless the audit
reveals an under-reporting or underpayment in excess of the greater of one
hundred thousand dollars ($100,000) or two percent (2%) of royalties, Milestone
Payments or Sublicense Income payable for such period, in which case Licensee
shall bear the cost of the audit, rectify such underpayment and pay NovaDel
applicable interest as required by Section 5.5. All payments required under this
Section 5.2 shall be due within thirty (30) days of the date NovaDel provides
Licensee notice of the payment due. The results of such accounting firm shall be
final, absent manifest error.
5.3 REPORTS. Within thirty (30) days of the end of each
quarter of each calendar year, Licensee shall deliver to NovaDel complete and
accurate reports, giving such particulars of the business conducted by Licensee
during the preceding quarter under this
Page 15
Agreement as shall be pertinent to an accounting for royalties, milestone
payments and Other Income hereunder. These shall include at least the following:
5.3.1 All Licensed Product used, leased or sold, by or
for Licensee or its Affiliates.
5.3.2 Total amounts invoiced for Licensed Product used,
leased or sold, by or for Licensee or its Affiliates.
5.3.3 Deductions applicable in computed "Net Sales" as
defined in Section 1.33.
5.3.4 Total milestone payments due based on achievement
of milestones.
5.3.5 Total Sublicensing Income owed by License from its
Sublicensees.
5.3.6 Total royalties due based on Net Sales by or for
Licensee or its Affiliates and Sublicensing Income owed by its Sublicensees,
including any adjustments pursuant to Section 4.3.
5.3.7 Names and addresses of all Sublicensees and
Affiliates of Licensee.
5.4 FINANCIAL STATEMENTS. Within one hundred twenty (120) days
of the end of each fiscal year of Licensee, Licensee shall provide NovaDel with
a copy of Licensee's audited financial statements for such year to NovaDel.
5.5 INTEREST. Amounts which are not paid when due and which
are not the subject of a bona fide dispute shall accrue interest from the due
date until paid, at a rate equal to the then prevailing prime rate of Citibank,
N.A., plus six percent (6%), but in no event exceeding the amount permitted by
applicable law.
5.6 CONFIDENTIALITY. Each report received by NovaDel shall be
treated by NovaDel as if it were "Confidential Information" subject to the terms
of Article 16.
ARTICLE 6
PATENT AND TRADEMARK
PROSECUTION AND MAINTENANCE
6.1 OWNERSHIP OF INFORMATION AND INVENTIONS. Subject to
Section 6.2 and the license grants under Article 2, as between the Parties, each
Party shall own and retain all right, title and interest in and to any and all:
(a) Information and Inventions that are conceived, discovered, developed or
otherwise made by or on behalf of such Party (or its Affiliates or its
Sublicensees (other than the other Party and its Affiliates)), whether or not
patented or patentable, and any and all Patent and other intellectual property
rights with respect thereto; and (b) other Information and Inventions, and
Patent and other intellectual property rights that are Controlled (other than
pursuant to the license grants set forth in Article 2) by such Party, its
Page 16
Affiliates or Sublicensees (other than the other Party and its Affiliates).
Subject to the license grants to Licensee under Article 2, as between the
Parties, NovaDel shall own and retain all right, title and interest in and to
all Licensed Technology.
6.2 OWNERSHIP OF THE LICENSED PROCESS. Subject to the license
grants to Licensee under Article 2, as between the Parties, NovaDel shall own
and retain all right, title and interest in and to the Licensed Process,
including any and all Information and Inventions with respect to the Licensed
Process (including any Improvements thereto) that are conceived, discovered,
developed or otherwise made, by or on behalf of Licensee, its Affiliates or
Sublicensees (other than NovaDel and its Affiliates), whether or not patented or
patentable, and any and all Patent and other intellectual property rights with
respect thereto. Licensee acknowledges and agrees that (a) the licenses granted
to it pursuant to Section 2.1 permit Licensee to use the Licensed Process solely
for the Exploitation of Licensed Product as provided in this Agreement, (b)
Licensee has no right to use the Licensed Process or to discover, develop or
otherwise make Improvements with respect to the Licensed Process under such
grants, and (c) neither it, nor any of its Affiliates or Sublicensees, will
engage, directly or indirectly, in activities designed to, or otherwise
undertake or attempt, either on behalf of itself or another, to discover,
develop or make any Information and Inventions that relate to the Licensed
Process. Accordingly, Licensee shall promptly disclose to NovaDel in writing,
the conception or reduction to practice, or the discovery, development or making
of any such Information and Inventions that relate to the Licensed Process and
shall, and does hereby, assign, and shall cause its Affiliates and Sublicensees
to so assign, to NovaDel, without additional compensation, all of their
respective rights, titles and interests in and to any such Information and
Inventions.
6.3 OWNERSHIP OF JOINT TECHNOLOGY. Subject to Section 6.2 and
the license grants under Article 2, the Parties shall each own an equal,
undivided interest in and to any and all (a) Information and Inventions,
conceived, discovered, developed or otherwise made, jointly by or on behalf of
NovaDel (or its Affiliates or its sublicensees), on the one hand, and Licensee
(or its Affiliates or Sublicensees), on the other hand, in connection with the
work conducted under or in connection with this Agreement, whether or not
patented or patentable; and (b) Patents (the "Joint Patents") and other
intellectual property rights with respect thereto (collectively, the "Joint
Technology"). Each Party shall promptly disclose to the other Party in writing,
and shall cause its Affiliates, licensees and sublicensees to so disclose, the
development, making, conception or reduction to practice of any Joint
Technology.
6.4 OWNERSHIP OF LICENSED TRADEMARKS. Subject to the license
grants under Article 2, as between the Parties, NovaDel shall own and retain all
right, title and interest in and to the Licensed Trademarks. Licensee hereby
acknowledges and affirms (a) that to the best of its knowledge, the Licensed
Trademarks and the registrations thereof are valid and (b) that NovaDel or its
Affiliates, as the case may be, are the owners of all right and title to and
interest in the Licensed Trademarks and the registrations thereof, including any
form or embodiment thereof, and the goodwill now and hereafter associated with
the Licensed Trademarks. Licensee (on its own behalf and on behalf of its
Affiliates) expressly disclaims any right or title to or interest in the
Licensed Trademarks and the registrations thereof, except for the license
granted in Section 2.1.2. Licensee hereby agrees and undertakes that it will
not, and it will cause its Affiliates not to, contest or dispute the validity
of, or the rights of NovaDel and its Affiliates, as the case may be, in and to,
the Licensed Trademarks, or any part thereof, or the registrations thereof, nor
Page 17
knowingly impair or endanger the validity of any of the foregoing. Licensee
acknowledges that all use of the Licensed Trademarks by or on behalf of Licensee
or its Affiliates shall inure to the benefit of NovaDel and its Affiliates. Upon
termination of the license granted in Section 2.1.2, Licensee and its Affiliates
shall not be entitled to any compensation for any increase in the value of the
Licensed Trademarks or for any goodwill associated therewith. If so requested,
Licensee shall, and shall cause its Affiliates to, assist NovaDel and its
Affiliates to safeguard their full right, title and interest in and to the
Licensed Trademarks and the registrations thereof.
6.5 UNITED STATES LAW. The determination of whether
Information and Inventions are conceived, discovered, developed or otherwise
made by a Party for the purpose of allocating proprietary rights (including
Patent, copyright or other intellectual property rights) therein, shall, for
purposes of this Agreement, be made in accordance with applicable United States
law.
6.6 PROSECUTION OF PATENTS AND TRADEMARKS.
6.6.1 PROSECUTION OF NOVADEL PATENTS AND TRADEMARKS. As
between the Parties, NovaDel shall have the sole right, at its cost and expense,
to obtain, prosecute and maintain throughout the world the NovaDel Patents and
Licensed Trademarks; provided, however, that Licensee shall reimburse NovaDel
for one hundred percent (100%) of the reasonable out-of-pocket costs incurred by
NovaDel for filing, prosecuting and maintaining such NovaDel Patents to the
extent that they claim or cover solely the Exploitation of the Licensed Product.
Licensee shall, and shall cause its Affiliates and Sublicensees, as applicable,
to, cooperate fully with NovaDel in the preparation, filing, prosecution, and
maintenance of NovaDel's Patents. Such cooperation includes (a) promptly
executing all papers and instruments and requiring employees to execute such
papers and instruments as reasonable and appropriate so as to enable NovaDel to
file, prosecute, and maintain its Patents in any country; and (b) promptly
informing NovaDel of matters that may affect the preparation, filing,
prosecution, or maintenance of any such Patents. NovaDel shall provide Licensee
with drafts of all patent applications and other material submissions to and
correspondence with any patent authorities to the extent such applications or
submissions relate to the Licensed Technology (other than the Licensed Process),
in sufficient time, but in any event not less than thirty (30) days prior to the
date a reply is required by the relevant patent authorities, to allow for review
and comment by Licensee. In addition, NovaDel shall provide Licensee with an
opportunity to consult with NovaDel regarding the filing and contents of any
such application, submission or correspondence. If Licensee provides to NovaDel
comments with respect to any such application, submission or correspondence, to
the extent such comments relate to any Licensed Technology (other than the
Licensed Process), NovaDel agrees to reasonably consider such comments, it being
understood that NovaDel retains the right to determine whether to comply with or
incorporate such comments, if at all. If (x) NovaDel elects not to pursue the
filing, prosecution or maintenance of a NovaDel Patent in a particular country,
or to take any other action with respect to a NovaDel Patent in a particular
country that is necessary or useful to establish or preserve rights with respect
to the Licensed Product, and (y) such Patent does not claim or cover the
Licensed Process, then NovaDel shall so notify Licensee promptly in writing and
in good time to enable Licensee to meet any deadlines by which an action must be
taken to establish or preserve any such rights in such NovaDel Patent in such
country. Upon receipt of any such notice by NovaDel or if, at any time, NovaDel
fails to initiate any such action within
Page 18
thirty (30) days after a request by Licensee that it do so (and thereafter
diligently pursue such action), Licensee shall have the right, but not the
obligation, to pursue the filing or registration, or support the continued
prosecution or maintenance, of such NovaDel Patent at its expense in such
country. If Licensee elects to pursue such filing or registration, as the case
may be, or continue such support, then Licensee shall notify NovaDel of such
election and NovaDel shall, and shall cause its Affiliates to, (x) reasonably
cooperate with Licensee in this regard, and (y) promptly grant to Licensee,
without additional consideration, an exclusive, perpetual, irrevocable,
royalty-free license in such country under such NovaDel Patent.
6.6.2 JOINT PATENTS. The Parties shall cooperate, and
shall cause their respective Affiliates and Sublicensees, as applicable, to
cooperate, with one another with respect to the filing, prosecution and
maintenance of all Joint Patents, including by selecting outside counsel,
reasonably acceptable to the Parties, to handle such filing, prosecution and
maintenance. The Parties shall share equally in the expenses associated with the
filing, prosecution (including any interferences, reissue proceedings and
reexaminations) and maintenance of all Joint Patents. If a Party elects not to
pursue the filing, prosecution or maintenance of a Joint Patent in a particular
country, or to take any other action with respect to Joint Technology in a
particular country that is necessary or reasonably useful to establish or
preserve rights thereto, then in each such case such Party shall so notify the
other Party promptly in writing and in good time to enable such other Party to
meet any deadlines by which an action must be taken to establish or preserve any
such rights in such Joint Technology in such country. Upon receipt of each such
notice by such other Party or if, at any time, such Party fails to initiate any
such action within thirty (30) days after a request by such other Party that it
do so (or thereafter diligently pursue such action), such other Party shall have
the right, but not the obligation, to pursue the filing or registration, or
support the continued prosecution or maintenance, of such Patent at its expense
in such country. If such other Party elects to pursue such filing or
registration, as the case may be, or continue such support, then such other
Party shall notify such Party of such election and such Party shall, and shall
cause its Affiliates, licensees and sublicensees, as applicable, to, (x)
reasonably cooperate with such other Party in this regard, and (y) promptly
release or assign to such other Party, without compensation, all right, title
and interest in and to such Patent in such country.
6.7 ENFORCEMENT OF PATENTS AND TRADEMARKS.
6.7.1 TECHNOLOGY AND TRADEMARKS OF NOVADEL. If either
Party determines that any Technology or Trademark of NovaDel or any Joint
Technology is being infringed by a Third Party's activities and that such
infringement could affect the exercise by the Parties of their respective rights
and obligations under this Agreement, it shall promptly notify such other Party
in writing and provide such other Party with any evidence of such infringement
that is reasonably available. Promptly after the receipt of such written notice,
the Parties shall meet and discuss in good faith the removal of such
infringement. NovaDel shall consider in good faith any comments from Licensee
and shall keep Licensee reasonably informed of any steps taken to remove such
infringement. NovaDel shall have the first right, but not the obligation, to
remove such infringement at its sole cost and expense; provided, however, that
Licensee shall reimburse NovaDel for one hundred percent (100%) of the
reasonable out-of-pocket costs incurred by NovaDel with respect to the removal
of any such infringement to the extent that such infringement adversely affects
the Exploitation of the Licensed Product. In the
Page 19
event that NovaDel fails within ninety (90) days following notice of such
infringement, or earlier notifies Licensee in writing of its intent not, to take
commercially appropriate steps to remove any infringement of any NovaDel Patent,
Joint Patent or Licensed Trademark that is likely to have a material adverse
effect on the sale of a Licensed Product, Licensee shall have the right to do so
at Licensee's expense; provided, however, that if NovaDel has commenced
negotiations with an alleged infringer for discontinuance of such infringement
within such ninety (90) day period, NovaDel shall have an additional ninety (90)
days to conclude its negotiations before Licensee may bring suit for such
infringement, and provided further that Licensee shall not enter into any
settlement or compromise with respect to any NovaDel Patent, Joint Patent or
Licensed Trademark without NovaDel's prior consent, which consent shall not be
unreasonably withheld. Each Party shall provide reasonable assistance to the
other Party, including providing access to relevant documents and other
evidence, making its employees available at reasonable business hours, and
joining the action to the extent necessary to allow the enforcing Party to
maintain the action. Any amounts recovered by a Party pursuant to this Section,
whether by settlement or judgment, shall be used to reimburse the Parties for
their reasonable costs and expenses in making such recovery (which amounts shall
be allocated pro rata if insufficient to cover the totality of such expenses),
with any remainder being retained by the Party that brought the enforcement
action; provided, however, that to the extent that any award is attributable to
the loss of sales of Licensed Product, such amount shall be paid to Licensee and
shall be treated as Net Sales on which royalties shall be due under Article 4.
6.8 POTENTIAL THIRD PARTY RIGHTS.
6.8.1 THIRD-PARTY LICENSES. If (a) in the opinion of
outside patent counsel to Licensee, Licensee, or any of its Affiliates or
Sublicensees, cannot Exploit a Licensed Product in a country in the Territory
without infringing one or more Patents that have issued to a Third Party in such
country, or (b) as a result of any claim made against a Party, or any of its
Affiliates or Sublicensees, alleging that the Exploitation of a Licensed Product
infringes or misappropriates any Patent or any other intellectual property right
of a Third Party in a country in the Territory, a judgment is entered by a court
of competent jurisdiction from which no appeal is taken within the time
permitted for appeal, such that Licensee cannot Exploit such Licensed Product in
such country without infringing the Patent or other proprietary rights of such
Third Party, then, in either case, Licensee shall have the first right, but not
the obligation to negotiate and to obtain a license from such Third Party as
necessary for the Exploitation of any Licensed Product hereunder in such
country; provided, however, that NovaDel shall have the sole right to seek any
such license with respect to the Licensed Process and shall use commercially
reasonable efforts to obtain such a license in its own name from such Third
Party in such country, under which NovaDel shall, to the extent permissible
under such license, grant a sublicense to Licensee as necessary for Licensee,
and any of its Affiliates and Sublicensees, to Exploit the Licensed Product as
provided hereunder in such country. Licensee shall be solely responsible for one
hundred percent (100%) of all royalty and other obligations with respect to the
Exploitation of the Licensed Product; provided, however, that Licensee shall
have the right to credit fifty percent (50%) any royalties paid by Licensee, its
Affiliates or Sublicensees under such license with respect to such country
against the royalty payments to be paid by Licensee to NovaDel with respect to
the sale of the Licensed Product(s) under Section 4.1; provided, however, that
no royalty payment when due, regardless of the amount or number of credits
available to Licensee in accordance with this Agreement, shall be reduced by
more than fifty
Page 20
percent (50%) of the amounts otherwise owed pursuant to Section 4.1 in any
calendar quarter. Credits not exhausted in any calendar quarter may be carried
into future calendar quarters.
6.8.2 THIRD PARTY LITIGATION. In the event that a Third
Party institutes a patent, trademark or other infringement suit (including any
suit alleging the invalidity or unenforceability of the Patents of a Party or
its Affiliates, or claiming confusion, deception or dilution of a Trademark)
against either Party or its respective Affiliates, licensees or Sublicensees
during the Term, alleging use of the Licensed Technology, Licensed Trademarks or
any other activities hereunder, infringes one or more patent, trademark or other
intellectual property rights held by such Third Party (an "Infringement Suit"),
the Parties shall cooperate with one another in defending such suit. NovaDel
shall have the first right to direct and control any Infringement Suit to the
extent that it relates to the use of the Licensed Technology, the Licensed
Trademarks or the Licensed Process; provided that Licensee shall bear one
hundred percent (100%) of the costs and expenses associated with any such
Infringement Suit to the extent that it relates to the Exploitation of the
Licensed Product.
6.8.3 RETAINED RIGHTS. Nothing in this Section 6.8 shall
prevent Licensee, at its own expense, from obtaining any license or other rights
from Third Parties it deems appropriate in order to permit the full and
unhindered exercise of its rights under this Agreement.
ARTICLE 7
TERM OF THE AGREEMENT
7.1 TERM. Unless otherwise terminated pursuant to Article 8,
this Agreement shall enter into effect on the Effective Date and shall remain in
full force and effect on a country-by-country basis until the later of (a) the
expiration date of the last to expire of any issued NovaDel Patent that includes
at least one Valid Claim and (b) the twentieth (20th) anniversary of the
Effective Date.
ARTICLE 8
TERMINATION
8.1 TERMINATION UPON INSOLVENCY. If Licensee shall become
bankrupt, or shall file a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee or of its assets, or if an involuntary petition for any of the foregoing
shall be filed with respect to Licensee and not dismissed within sixty (60)
days, or if the business of Licensee shall be placed in the hands of a receiver,
assignee or trustee for the benefit of creditors, whether by the voluntary act
of Licensee or otherwise, this Agreement shall automatically terminate.
8.2 TERMINATION FOR PAYMENT DEFAULT. Should Licensee fail to
make payment to NovaDel of royalties or other amounts due in accordance with the
terms of this Agreement, NovaDel shall have the right to terminate this
Agreement within ten (10) days after giving said notice of termination unless
Licensee shall pay to NovaDel, within the 10-day period, all such amounts due
and payable. Upon the expiration of the 10-day period, if Licensee shall
Page 21
not have paid all such amounts due and payable, the rights, privileges and
licenses granted hereunder shall, at the option of NovaDel, immediately
terminate. In the event a payment is the subject of a bona fide dispute between
NovaDel and Licensee that is being pursued by a Party pursuant to the dispute
resolution mechanism in Article 9, then Licensee shall make such payment, but
shall provide NovaDel with written notice that such payment is being made
subject to the outcome of such pending dispute resolution procedure and in the
event such dispute is finally and conclusively resolved in favor of Licensee,
NovaDel shall refund such payment to Licensee with interest calculated pursuant
to Section 5.5 from the date of such payment.
8.3 TERMINATION FOR MATERIAL BREACH. Upon any material breach
or default of this Agreement by either Party, other than as set forth in
Sections 8.1 or 8.2 above, and subject to Section 2.4.3, the other Party shall
have the right to terminate this Agreement and the rights, privileges and
licenses granted hereunder upon giving thirty (30) days notice to the breaching
Party. Such termination shall become effective upon the expiration of such
thirty (30)-day period unless the breaching Party shall have cured any such
breach or default prior to the expiration of such thirty (30) day period.
8.4 FAILURE TO OBTAIN FINANCING. Notwithstanding anything to
the contrary herein, should Licensee fail to obtain financing in the amount of
Five Million Dollars (US$5,000,000) (the "Minimum Financing") by March 31, 2004,
NovaDel shall have the right, which right shall continue until such time as
Licensee obtains the Minimum Financing, but not the obligation, to immediately
terminate this Agreement upon written notice to Licensee.
8.5 TERMINATION BY THE LICENSEE. The Licensee shall have the
right at any time to terminate this Agreement in whole or as to any Licensed
Product by giving 90 days notice thereof in writing to NovaDel.
8.6 SURVIVAL. Any expiration or termination of this Agreement
shall not affect the rights and obligations of the Parties accrued prior to such
expiration or termination. Without limiting the foregoing, Articles 4, 5, 6, 9,
10, 11, 14, 15 and 16 and Sections 8.6, 8.7, 8.8, 16.1, 16.7 and this 8.6 shall
survive the termination or expiration of this Agreement for any reason.
8.7 WORK-IN-PROGRESS. Licensee and/or any Sublicensee thereof
may, however, after the effective date of such termination and continuing for a
period not to exceed six (6) months thereafter, sell all completed Licensed
Product, and any Licensed Product in the process of manufacture at the time of
such termination, and sell the same, provided that Licensee shall pay or cause
to be paid to NovaDel the 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 Product.
8.8 RETURN OF INFORMATION; ASSIGNMENT AND LICENSE.
8.8.1 Upon termination of this Agreement, Licensee shall,
and shall cause its Affiliates and Sublicensees, as applicable, to return to
NovaDel any and all data, files, records and other materials in its possession
or control that relate to the Licensed Technology or contain or comprise
NovaDel's Information and Inventions or other Confidential Information (except
one copy of each that may be retained for archival purposes).
Page 22
8.8.2 Upon the termination of this Agreement, Licensee
(a) shall, and shall cause its Affiliates and, subject to Section 8.8.3,
Sublicensees to, promptly disclose to NovaDel, in whatever form NovaDel may
request, all Regulatory Documentation and all other Information and Inventions
in the possession or Control of Licensee, its Affiliates or Sublicensees that
relate to the Exploitation of such Licensed Product, (b) shall, and does hereby,
assign, and shall cause its Affiliates and, subject to Section 8.8.3,
Sublicensees to assign, to NovaDel, without additional compensation, all of
their respective rights, titles and interests in and to any and all (i) patent,
trademark, copyright or other intellectual property rights, (ii) Regulatory
Documentation and all data included or referenced therein, and (iii) other
Information and Inventions in the possession or Control of Licensee, its
Affiliates or Sublicensees, in each case that relate to the Exploitation of such
Licensed Product (the "Agreement-Related Assets") and are permitted to be
assigned, and (c) to the extent that the Agreement-Related Assets may not be
assigned, shall, and does hereby, grant, and shall cause its Affiliates and,
subject to Section 8.8.3, Sublicensees to grant, to NovaDel, without additional
compensation, a perpetual, irrevocable, royalty-free, exclusive, sublicenseable
through multiple tiers of sublicensees, right and license to Exploit such
Licensed Product in the Territory.
8.8.3 Notwithstanding anything contained in Section 8.8.1
or 8.8.2, in the event that any sublicense granted by Licensee survives pursuant
to Section 2.4.3, the Sublicensee may retain (a) the information and materials
identified in Section 8.8.1 that are rightfully in its possession and (b)
Agreement-Related Assets, in each case until the termination of such sublicense,
whereupon such Sublicensee shall return such materials to NovaDel,.
8.9 CUMULATIVE REMEDIES. The rights and remedies set forth in
this Article 8 are cumulative and in addition to any other rights that may be
available to the Parties.
8.10 NON-REFUNDABILITY OF MILESTONES AND DEVELOPMENT COSTS.
Any and all Milestone Payments made to NovaDel by Licensee under Article 4.5 of
this Agreement shall be non-refundable in the event of termination of this
Agreement by either party under any of the provisions of Article 8 other than
Article 8.5.
ARTICLE 9
ARBITRATION
9.1 PROCEDURES. Any dispute arising from or relating to this
Agreement shall be determined before a tribunal of three arbitrators in New
York, New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA"). One arbitrator shall be selected
by NovaDel, one arbitrator shall be selected by Licensee and the third
arbitrator shall be selected by mutual agreement of the first two arbitrators or
by the AAA, if the arbitrators appointed by the Parties are unable to select a
third arbitrator within thirty (30) days.
9.2 PATENT DISPUTES. Any claim, dispute, or controversy
concerning the validity, enforceability, or infringement of any patent contained
in the NovaDel Patents licensed hereunder shall be resolved in any court having
jurisdiction thereof. In the event that, in any arbitration proceeding, any
issue shall arise concerning the validity, enforceability, or infringement of
any patent contained in the NovaDel Patents licensed hereunder, the arbitrators
Page 23
shall, to the extent possible, resolve all issues other than validity,
enforceability, and infringement; in any event, the arbitrators shall not delay
the arbitration proceeding for the purpose of obtaining or permitting either
Party to obtain judicial resolution of such issues, unless an order staying the
arbitration proceeding shall be entered by a court of competent jurisdiction.
Neither Party shall raise any issue concerning the validity, enforceability, or
infringement of any patent contained in the NovaDel Patents licensed hereunder,
in any proceeding to enforce any arbitration award hereunder, or in any
proceeding otherwise arising out of any such arbitration award.
9.3 COSTS. The costs of such arbitration shall be borne
proportionate to the finding of fault as determined by the arbitration panel.
Judgment on the arbitration award may be entered by any court of competent
jurisdiction.
ARTICLE 10
INDEMNIFICATION AND INSURANCE
10.1 INDEMNIFICATION OF NOVADEL. Licensee shall defend,
indemnify and hold NovaDel, its Affiliates, and their respective directors,
officers, employees and agents harmless from and against all liability, demands,
damages, including expenses or losses including death, personal injury, illness
or property damage (collectively, "Losses") arising directly or indirectly out
of any: (a) breach of this Agreement by Licensee, its Affiliates, Sublicensees
or permitted assigns or transferees; (b) actual or asserted violations of
Applicable Law by Licensee, its Affiliates, Sublicensees or permitted assignees
or transferees; (c) use by Licensee, its Affiliates, Sublicensees or permitted
assignees or transferees of the Licensed Technology or (d) Exploitation of the
Licensed Product by Licensee, its Affiliates, Sublicensees or permitted
assignees or transferees, except for those Losses for which NovaDel has an
obligation to indemnify Licensee and its Affiliates pursuant to Section 10.2, as
to which Losses each Party shall indemnify the other to the extent of their
respective liability for the Losses and other than as a result of NovaDel's
gross negligence, recklessness or willful misconduct.
10.2 INDEMNIFICATION OF LICENSEE. NovaDel shall defend,
indemnify and hold Licensee, its Affiliates, and their respective directors,
officers, employees and agents harmless from and against all Losses arising
directly or indirectly out of any: (a) breach of this Agreement by NovaDel or
its Affiliates; or (b) actual or asserted violations of Applicable Law by
NovaDel or its Affiliates, except for those Losses for which Licensee has an
obligation to indemnify NovaDel and its Affiliates pursuant to Section 10.1, as
to which Losses each Party shall indemnify the other to the extent of their
respective liability for the Losses.
10.3 INDEMNIFICATION PROCEDURE.
10.3.1 NOTICE OF CLAIM. The indemnified Party shall give
the indemnifying Party prompt written notice (an "Indemnification Claim Notice")
of any Losses or discovery of fact upon which such indemnified Party intends to
base a request for indemnification under Section 10.1 or Section 10.2, but in no
event shall the indemnifying Party be liable for any Losses that result from any
delay in providing such notice. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount
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of such Loss (to the extent that the nature and amount of such Loss is known at
such time). The indemnified Party shall furnish promptly to the indemnifying
Party copies of all papers and official documents received in respect of any
Losses. All indemnification claims in respect of a Party, its Affiliates or
their respective directors, officers, employees and agents shall be made solely
by such Party to this Agreement (the "Indemnified Party").
10.3.2 THIRD PARTY CLAIMS. The obligations of an
indemnifying Party under this Article 10 with respect to Losses arising from
claims of any Third Party that are subject to indemnification as provided for in
Sections 10.1 or 10.2 (a "Third Party Claim") shall be governed by and be
contingent upon the following additional terms and conditions:
(A) CONTROL OF DEFENSE. At its option, the
indemnifying Party may assume the defense of any Third Party Claim by giving
written notice to the Indemnified Party within thirty (30) days after the
indemnifying Party's receipt of an Indemnification Claim Notice. The assumption
of the defense of a Third Party Claim by the indemnifying Party shall not be
construed as an acknowledgment that the indemnifying Party is liable to
indemnify any indemnified Party in respect of the Third Party Claim, nor shall
it constitute a waiver by the indemnifying Party of any defenses it may assert
against any indemnified Party's claim for indemnification. Upon assuming the
defense of a Third Party Claim, the indemnifying Party may appoint as lead
counsel in the defense of the Third Party Claim any legal counsel selected by
the indemnifying Party. In the event the indemnifying Party assumes the defense
of a Third Party Claim, the Indemnified Party shall immediately deliver to the
indemnifying Party all original notices and documents (including court papers)
received by any indemnified Party in connection with the Third Party Claim.
Should the indemnifying Party assume the defense of a Third Party Claim, the
indemnifying Party shall not be liable to the Indemnified Party or any other
indemnified Party for any legal expenses subsequently incurred by such
indemnified Party in connection with the analysis, defense or settlement of the
Third Party Claim. In the event that it is ultimately determined that the
indemnifying Party is not obligated to indemnify, defend or hold harmless an
Indemnified Party from and against the Third Party Claim, the Indemnified Party
shall reimburse the indemnifying Party for any and all costs and expenses
(including attorneys' fees and costs of suit) and any Losses incurred by the
indemnifying Party in its defense of the Third Party Claim with respect to such
Indemnified Party.
(B) RIGHT TO PARTICIPATE IN DEFENSE. Without
limiting Section 10.3.2(a), any Indemnified Party shall be entitled to
participate in, but not control, the defense of such Third Party Claim and to
employ counsel of its choice for such purpose; provided, however, that such
employment shall be at the Indemnified Party's own expense unless (i) the
employment thereof has been specifically authorized by the indemnifying Party in
writing or (ii) the indemnifying Party has failed to assume the defense and
employ counsel in accordance with Section 10.3.2(a) (in which case the
Indemnified Party shall control the defense).
(C) SETTLEMENT. With respect to any Losses relating
solely to the payment of money damages in connection with a Third Party Claim
and that will not result in the Indemnified Party's becoming subject to
injunctive or other relief or otherwise adversely affect the business of the
Indemnified Party in any manner, and as to which the indemnifying Party shall
have acknowledged in writing the obligation to indemnify the Indemnified Party
hereunder, the indemnifying Party shall have the sole right to consent to the
entry of any
Page 25
judgment, enter into any settlement or otherwise dispose of such Loss, on such
terms as the indemnifying Party, in its sole discretion, shall deem appropriate.
With respect to all other Losses in connection with Third Party Claims, where
the indemnifying Party has assumed the defense of the Third Party Claim in
accordance with Section 10.3.2(a), the indemnifying Party shall have authority
to consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Loss provided it obtains the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld or delayed).
The indemnifying Party shall not be liable for any settlement or other
disposition of a Loss by an indemnified Party that is reached without the
written consent of the indemnifying Party. Regardless of whether the
indemnifying Party chooses to defend or prosecute any Third Party Claim, no
indemnified Party shall admit any liability with respect to, or settle,
compromise or discharge, any Third Party Claim without the prior written consent
of the indemnifying Party.
(D) COOPERATION. Regardless of whether the
indemnifying Party chooses to defend or prosecute any Third Party Claim, the
Indemnified Party shall, and shall cause each other indemnified Party to,
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony, provide such witnesses and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested in connection therewith. Such cooperation shall include access during
normal business hours afforded to indemnifying Party to, and reasonable
retention by the Indemnified Party of, records and information that are
reasonably relevant to such Third Party Claim, and making indemnified Parties
and other employees and agents available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and the indemnifying Party shall reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith.
(E) EXPENSES. Except as provided above, the costs
and expenses, including fees and disbursements of counsel, incurred by the
Indemnified Party in connection with any claim shall be reimbursed on a calendar
quarter basis by the indemnifying Party, without prejudice to the indemnifying
Party's right to contest the Indemnified Party's right to indemnification and
subject to refund in the event the indemnifying Party is ultimately held not to
be obligated to indemnify the Indemnified Party.
10.4 INSURANCE.
10.4.1 Prior to entering human clinical trials, Licensee
shall have and maintain such type and amounts of liability insurance covering
the manufacture, supply, use and sale of the Licensed Product as is normal and
customary in the pharmaceutical industry generally for parties similarly
situated, and shall upon request provide NovaDel with a copy of its policies of
insurance in that regard, along with any amendments and revisions thereto.
10.4.2 At all times during the Development Activities,
NovaDel shall have and maintain such type and amounts of liability insurance
covering the manufacture, supply, use and sale of the Licensed Product as is
normal and customary in the pharmaceutical industry generally for parties
similarly situated, and shall upon request provide the Licensee with
Page 26
a copy of its policies of insurance in that regard, along with any amendments
and revisions thereto.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES;
LIMITATION OF LIABILITY
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Party
hereby represents and warrants to the other Party as of the Effective Date as
follows:
11.1.1 DULY ORGANIZED. Such Party is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated, and has full corporate power and authority and the
legal right to own and operate its property and assets and to carry on its
business as it is now being conducted and as is contemplated to be conducted by
this Agreement.
11.1.2 CORPORATE AUTHORITY. Such Party (a) has the power
and authority and the legal right to enter into this Agreement and perform its
obligations hereunder, and (b) has taken all necessary action on its part
required to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. The Agreement has been duly executed
and delivered on behalf of such Party and is enforceable against it in
accordance with its terms, subject to the effects of bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditor rights
and judicial principles affecting the availability of specific performance and
general principles of equity, whether enforceability is considered in a
proceeding at law or in equity.
11.1.3 LITIGATION. Such Party is not aware of any pending
or threatened litigation (and has not received any communication) that alleges
that such Party's activities related to this Agreement have violated, or that by
conducting the activities as contemplated herein such Party would violate, any
of the intellectual property rights of any other Person.
11.1.4 CONSENTS, APPROVALS, ETC. All necessary consents,
approvals and authorizations of all regulatory and governmental authorities and
other Persons required to be obtained by such Party in connection with the
execution and delivery of this Agreement and the performance of its obligations
hereunder have been obtained.
11.1.5 CONFLICTS. The execution and delivery of this
Agreement and the performance of such Party's obligations hereunder (a) do not
conflict with or violate any requirement of applicable law or regulation or any
provision of the articles of incorporation, bylaws, or any similar constitutive
document of such Party, as applicable, in any material way, and (b) do not
conflict with, violate, or breach or constitute a default or require any consent
under, any contractual obligation or court or administrative order by which such
Party is bound.
11.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NOVADEL.
11.2.1 NovaDel represents and warrants to Licensee that,
to its Knowledge, as of the Effective Date, NovaDel is the owner or
(sub)licensee (with the right to
Page 27
grant sublicenses to Licensee as contemplated under this Agreement) of the
NovaDel Patents, and has all right, title, and interest in and to the NovaDel
Patents, including exclusive, absolute, irrevocable right, title and interest
thereto, free and clear of all liens, charges, encumbrances or other
restrictions or limitations of any kind whatsoever and to the NovaDel's
knowledge and belief there are no licenses, options, restrictions, liens, rights
of third parties, disputes, royalty obligations, proceedings or claims relating
to, affecting, or limiting its rights or the rights of the Licensee under this
Agreement with respect to, or which may lead to a claim of infringement or
invalidity regarding, any part or all of the Licensed Technology and their use
as contemplated in the underlying patent applications as presently drafted. The
NovaDel Patents have not, as of the Effective Date, been held by a court of
competent jurisdiction to be invalid or unenforceable, in whole or in part.
11.2.2 To NovaDel's knowledge and belief there is no
claim, pending or threatened, of infringement, interference or invalidity
regarding, any part or all of the Licensed Technology and their use as
contemplated in the underlying patent applications as presently drafted.
11.3 ADDITIONAL COVENANTS OF LICENSEE. Licensee on behalf of
itself and its Affiliates agrees and covenants to the extent permitted by
applicable law, never, in any country, region or jurisdiction in the Territory,
to institute or prosecute any claim, action or suit at law or in equity seeking
to have any claim in a NovaDel Patent declared invalid or unenforceable;
provided, however, that nothing contained herein shall prohibit Licensee and its
Affiliates and Sublicensees from either (a) asserting any and all defenses
available to it, including assertions relating to the validity or enforceability
of the NovaDel Patents, in any suit or proceeding brought against them alleging
the infringement of any of the NovaDel Patents, or (b) asserting any and all
defenses, evidence and arguments, including lack of patentability of the subject
matter of a count or claim and lack of support for a count or claim, in any
interference involving a patent or patent application owned by Licensee or its
Affiliates or Sublicensees and a patent or patent application included within
the definition of the NovaDel Patents. In its agreements with each of its
Sublicensees, Licensee shall include provisions requiring a covenant, materially
identical to that Licensee is making in this Section 11.3, on the part of the
Sublicensee, and shall provide that NovaDel shall have march-in right to seek
termination of such agreement in the event the Sublicensee breaches the
covenant. NovaDel's right to seek termination of such agreement with the
Sublicensee shall be subject to notice, cure and dispute resolutions provisions
materially identical to the provision set forth in Section 7.2. Licensee and its
Affiliates will take all reasonable action (including signing required
documents) and offer full cooperation to allow NovaDel to exercise the march-in
rights provided herein, to the extent permitted by law.
11.4 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES
SET FORTH IN SECTIONS 11.1 AND 11.2, NOVADEL MAKES NO REPRESENTATIONS AND GRANTS
NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY
STATUTE OR OTHERWISE, UNDER THIS AGREEMENT, AND NOVADEL SPECIFICALLY DISCLAIMS
ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING
ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR
PURPOSE OR ANY WARRANTY AS TO
Page 28
THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES UNDER THIS AGREEMENT.
11.5 LIMITATION OF LIABILITY. NONE OF NOVADEL OR ANY OF ITS
AFFILIATES SHALL BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES (INCLUDING FOR LOST PROFITS), WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE,
TORT, STRICT LIABILITY OR OTHERWISE, ARISING OUT OF (A) THE USE OF THE LICENSED
TECHNOLOGY OR LICENSED TRADEMARKS OR (B) ANY BREACH OF OR FAILURE TO PERFORM ANY
OF THE PROVISIONS OF THIS AGREEMENT.
ARTICLE 12
ASSIGNMENT
This Agreement and the rights and duties appertaining hereto
may not be assigned by either party without first obtaining the written consent
of the other which consent shall not be unreasonably withheld. Any such
purported assignment, without the written consent of the other party, shall be
null and of no effect. Notwithstanding the foregoing, the Company may assign
this Agreement (i) to a purchaser, merging or consolidating corporation, or
acquiror of substantially all of the Company's assets or business and/or
pursuant to any reorganization qualifying under section 368 of the Internal
Revenue Code of 1986 as amended, as may be in effect at such time, or (ii) to an
Affiliate of the Company subject to the consent of the Licensors which consent
shall not be unreasonably withheld.
ARTICLE 13
USE OF NAMES AND PUBLICATION
13.1 USE OF NAME. Nothing contained in this Agreement shall be
construed as granting any right to Licensee, its Affiliates or Sublicensees to
use in advertising, publicity, or other promotional activities the name of
NovaDel or any of its units (including contraction, abbreviation or simulation
of any of the foregoing) without the prior, written consent of NovaDel;
provided, however, that NovaDel acknowledges and agrees that Licensee may use
the names of NovaDel in various documents used by Licensee for capital raising
and financing without such prior written consent to the limited extent that such
use may be required by law, and provided further that all such uses shall be
factually accurate and not misleading.
13.2 RELATIONSHIP OF THE PARTIES. Nothing herein shall be
deemed to establish a relationship of principal and agent between NovaDel and
Licensee, nor any of their agents or employees for any purpose whatsoever. This
Agreement shall not be construed as creating a partnership between NovaDel and
Licensee, or as creating any other form of legal association or arrangement
which would impose liability upon one Party for the act or failure to act of the
other Party.
13.3 PUBLICATIONS. In the event that either party desires to
publish or disclose, by written, oral or other presentation, Licensed Technology
or any material information related
Page 29
thereto, then such party shall notify the other in writing of its intention at
least sixty (60) days prior to any speech, lecture or other oral presentation
and at least sixty (60) days before any written or other publication or
disclosure, and shall include with such notice a description of any proposed
oral presentation or, with respect to any proposed written or other disclosure,
a current draft of such proposed disclosure or abstract. NovaDel may request
that Licensee, no later than thirty (30) days following the receipt of such
notice, delay such presentation, publication or disclosure in order to enable
NovaDel to file, or have filed on its behalf or jointly, as applicable, a patent
application, copyright or other appropriate form of intellectual property
protection related to the information to be disclosed or request that Licensee
do so. Upon receipt of such request to delay such presentation, publication or
disclosure, Licensee shall arrange for a delay of such presentation, publication
or disclosure until such time as Licensee or NovaDel has filed, or had filed on
its behalf, such patent application, copyright or other appropriate form of
intellectual property protection in form and in substance reasonably
satisfactory to NovaDel. If Licensee does not receive any such request from
NovaDel to delay such presentation, publication or disclosure, Licensee may
submit such material for presentation, publication or other form of disclosure.
Notwithstanding the foregoing, in no event shall Licensee have any right to
publish or disclose the Licensed Process or any information or data related
thereto without the prior written consent of NovaDel, which consent NovaDel may
withhold in its sole discretion.
ARTICLE 14
PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
All notices or other communications that are required or
permitted hereunder shall be in writing and delivered personally, sent by
telecopier (and promptly confirmed by personal delivery, registered or certified
mail or overnight courier as provided herein), sent by nationally-recognized
overnight courier or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to NovaDel to:
NovaDel Pharma Inc.
31 State Highway 12
NovaDel, NJ 08822
Attention: President
908.782.3431 (fax)
with a copy (not constituting notice) to:
Covington & Burling
1201 Pennsylvania Avenue, NW
Washington, DC 20004
Attention: John A. Hurvitz, Esq.
202.662.6291 (fax)
Page 30
If to Licensee to:
Manhattan Pharmaceuticals, Inc.
787 Seventh Avenue, 48th Floor
New York, NY 10019
Attention: President
212.554.4355 (fax)
with a copy (not constituting notice) to:
or to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith. Any such
communication shall be deemed to have been given (a) when delivered, if
personally delivered or sent by telecopier on a business day, (b) on the
business day after dispatch, if sent by nationally-recognized overnight courier,
and (c) on the third business day following the date of mailing, if sent by
mail. It is understood and agreed that this Article 16 is not intended to govern
the day-to-day business communications necessary between the Parties in
performing their duties, in due course, under the terms of this Agreement.
ARTICLE 15
CONFIDENTIALITY
15.1 DEFINITION. "Confidential Information" of a Party shall
mean all information and know-how and any tangible embodiments thereof provided
by or on behalf of such Party to the other Party either in connection with the
discussions and negotiations pertaining to, or in the course of performing, this
Agreement, including the terms of this Agreement; the Designated Compounds;
data; knowledge; practices; processes; ideas; research plans; engineering
designs and drawings; research data; manufacturing processes and techniques;
scientific, manufacturing, marketing and business plans; and financial and
personnel matters relating to the disclosing Party or to its present or future
products, sales, suppliers, customers, employees, investors or business. For
purposes of this Agreement, notwithstanding the Party that disclosed such
information or know-how, all NovaDel Know-How and all Information and Inventions
with respect to the Licensed Process shall be Confidential Information of
NovaDel.
15.2 EXCLUSIONS. Notwithstanding the foregoing, information or
know-how of a Party shall not be deemed Confidential Information with respect to
a receiving Party for purposes of this Agreement if such receiving party can
affirmatively demonstrate through the production of written documentation that
such information or know-how:
15.2.1 was already known to the receiving Party or its
Affiliates, other than under an obligation of confidentiality or non-use, at the
time of disclosure to such receiving Party;
15.2.2 was generally available or known to parties
reasonably skilled in the field to which such information or know-how pertains,
or was otherwise part of the public domain, at the time of its disclosure to
such receiving Party;
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15.2.3 became generally available or known to parties
reasonably skilled in the field to which such information or know-how pertains,
or otherwise became part of the public domain, after its disclosure to such
receiving Party through no fault of a Party other than the Party that Controls
such information and know-how;
15.2.4 was disclosed to such receiving Party or its
Affiliates, other than under an obligation of confidentiality or non-use, by a
Third Party who had no obligation to the Party that Controls such information
and know-how not to disclose such information or know-how to others; or
15.2.5 was independently discovered or developed by such
receiving Party or its Affiliates, as evidenced by their written records,
without the use of Confidential Information belonging to the Party that Controls
such information and know-how, except with respect to the NovaDel Know-How with
respect to the Licensed Process, which shall be and remain Confidential
Information of NovaDel.
Specific aspects or details of Confidential Information shall not be deemed to
be within the public domain or in the possession of a Party merely because the
Confidential Information is embraced by more general information in the public
domain or in the possession of such Party. Further, any combination of
Confidential Information shall not be considered in the public domain or in the
possession of a Party merely because individual elements of such Confidential
Information are in the public domain or in the possession of such Party unless
the combination and its principles are in the public domain or in the possession
of such Party.
15.3 DISCLOSURE AND USE RESTRICTION. Except as expressly
provided herein, the Parties agree that during the Term of this Agreement, and
for five (5) years thereafter, each Party and its Affiliates and sublicensees
shall keep completely confidential and shall not publish or otherwise disclose
and shall not use for any purpose except for the purposes contemplated by this
Agreement any Confidential Information of the other Party, its Affiliates or
Sublicensees.
15.4 AUTHORIZED DISCLOSURE. Each Party may disclose
Confidential Information of the other Party to the extent that such disclosure
is:
15.4.1 REQUIRED BY GOVERNMENTAL ORDER. Made in response
to a valid order of a court of competent jurisdiction or other supra-national,
federal, national, regional, state, provincial or local governmental or
regulatory body of competent jurisdiction; provided, however, that such Party
shall first have given notice to such other Party and given such other Party a
reasonable opportunity to quash such order and to obtain a protective order
requiring that the Confidential Information and documents that are the subject
of such order be held in confidence by such court or agency or, if disclosed, be
used only for the purposes for which the order was issued; and provided further
that if a disclosure order is not quashed or a protective order is not obtained,
the Confidential Information disclosed in response to such court or governmental
order shall be limited to that information which is legally required to be
disclosed in response to such court or governmental order;
15.4.2 REQUIRED BY LAW. Otherwise required by law;
provided, however, that the disclosing Party shall (a) provide the other Party
with reasonable advance
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notice of and an opportunity to comment on any such required disclosure, (b) if
requested by such other Party, seek confidential treatment with respect to any
such disclosure to the extent available, and (c) use good faith efforts to
incorporate the comments of such other Party in any such disclosure or request
for confidential treatment;
15.4.3 REQUIRED BY REGULATORY AUTHORITY. Made by such
Party to the Regulatory Authorities as required in connection with any filing,
application or request for Regulatory Approval; provided, however, that
reasonable measures shall be taken to assure confidential treatment of such
information; or
15.4.4 REQUIRED BY AGREEMENT. Made by such Party, in
connection with the performance of this Agreement, to Affiliates, Sublicensees,
research parties, employees, consultants, representatives or agents, each of
whom prior to disclosure must be bound by obligations of confidentiality and
non-use at least equivalent in scope to those set forth in this Article 16.
15.5 PRESS RELEASES. Press releases or other similar public
communication by either Party relating to this Agreement, shall be approved in
advance by the other Party, which approval shall not be unreasonably withheld or
delayed, except for those communications required by Applicable Law (which shall
be provided to the other Party as soon as practicable after the release or
communication thereof), disclosures of information for which consent has
previously been obtained, and information of a similar nature to that which has
been previously disclosed publicly with respect to this Agreement, each of which
shall not require advance approval.
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive law of
another jurisdiction.
16.2 REGISTRATION. If this Agreement or any associated
transaction is required by the law of any nation to be either approved or
registered with any governmental agency, Licensee shall assume all legal
obligations to do so and the costs in connection therewith.
16.3 TRADE REGULATIONS. Licensee shall observe all applicable
United States and foreign laws with respect to the transfer of Licensed Product
and related technical data to foreign countries, including the International
Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.
16.4 ENTIRE AGREEMENT. The Parties hereto acknowledge that
this Agreement, including the Appendices and documents incorporated by
reference, 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
of modification except by the execution of a written instrument subscribed to by
the Parties hereto. This Agreement shall supersede all previous
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communications, representations or understandings, either oral or written,
between the Parties relating to the subject matter hereof.
16.5 SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of either Party under this Agreement will not be
materially and adversely affected thereby, (a) such provision shall be fully
severable, (b) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and (d) in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and reasonably
acceptable to the Parties herein. To the fullest extent permitted by applicable
law, each Party hereby waives any provision of law that would render any
provision prohibited or unenforceable in any respect.
16.6 WAIVER. 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.
16.7 EQUITABLE RELIEF. Each Party acknowledges and agrees that
the restrictions set forth in Articles 6 and 16 of this Agreement are reasonable
and necessary to protect the legitimate interests of the other Party and that
such other Party would not have entered into this Agreement in the absence of
such restrictions, and that any violation or threatened violation of any
provision of Article 6 and 16 may result in irreparable injury to such other
Party. Each Party also acknowledges and agrees that in the event of a violation
or threatened violation of any provision of Article 6 and 16, the other Party
shall be entitled to seek preliminary and permanent injunctive relief, without
the necessity of having to post a bond, as well as to an equitable accounting of
all earnings, profits and other benefits arising from any such violation. The
rights provided in the immediately preceding sentence shall be cumulative and in
addition to any other rights or remedies that may be available to such other
Party. Nothing in this Section 16.7 is intended, or should be construed, to
limit such other Party's right to preliminary and permanent injunctive relief or
any other remedy for breach of any other provision of this Agreement.
16.8 FORCE MAJEURE. Neither Party shall be held liable or
responsible to the other Party or be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the non-performing Party, including fires, floods,
earthquakes, embargoes, shortages, epidemics, quarantines, war, acts of war
(whether war be declared or not), acts of terrorism, insurrections, riots, civil
commotion, strikes, lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority. The non-performing
Party shall notify the other Party of such force majeure within ten (10) days
after such occurrence by giving written notice to the other Party stating the
nature of the event, its anticipated duration, and any action being taken to
avoid or minimize its effect. The suspension of performance shall be of no
greater scope and no longer duration than is
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necessary and the non-performing Party shall use commercially reasonable efforts
to remedy its inability to perform; provided, however, that in the event the
suspension of performance continues for one-hundred and eighty (180) days after
the date of the occurrence, and such failure to perform would constitute a
material breach of this Agreement in the absence of such force majeure, the
non-performing Party may terminate this Agreement pursuant by written notice to
the other Party.
16.9 CONSTRUCTION. Except where the context otherwise
requires, wherever used, the singular shall include the plural, the plural the
singular, the use of any gender shall be applicable to all genders and the word
"or" is used in the inclusive sense (and/or). The captions of this Agreement are
for convenience of reference only and in no way define, describe, extend or
limit the scope or intent of this Agreement or the intent of any provision
contained in this Agreement. The term "including" as used herein shall mean
including, without limiting the generality of any description preceding such
term. The language of this Agreement shall be deemed to be the language mutually
chosen by the Parties and no rule of strict construction shall be applied
against either Party hereto.
16.10 FURTHER ASSURANCE. Each Party shall duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including the filing
of such assignments, agreements, documents and instruments, as may be necessary
or as the other Party may reasonably request in connection with this Agreement
or to carry out more effectively the provisions and purposes, or to better
assure and confirm unto such other Party its rights and remedies under this
Agreement.
16.11 EXPENSES. Each of Licensee and NovaDel shall be
responsible for their own expenses relating to the negotiation, execution and
performance of this Agreement.
16.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.13 BINDING. This Agreement shall not be binding upon the
Parties until it has been signed below on behalf of each Party, in which event,
it shall be effective as of the Effective Date.
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IN WITNESS WHEREOF, the duly authorized officers of the Parties have
executed this Agreement as of the dates set forth below their respective
signatures.
NOVADEL PHARMA INC. MANHATTAN PHARMACEUTICALS, INC.
By: /s/ Gary A. Shangold By: /s/ Leonard Firestone
----------------------------------------- -------------------------------------------
Name: Gary A. Shangold Name: Leonard Firestone
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
Date: April 8, 2003 Date: April 4, 2003
[Pursuant to Item 601(b)(2) of Regulation S-K, the exhibits and schedules
have been omitted from this agreement. The Registrant will furnish a copy
of any omitted schedule or exhibit to the Commission upon request.]
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