EXHIBIT 10.1
Royalty Agreement between Parallel Solutions,
Inc. and Phase III Medical, Inc.
Exhibit 10.1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks. Denote such omissions.
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT (this "Agreement") is made as of the 5th day of December,
2003 (the "Effective Date") by and between Parallel Solutions, Inc., a Delaware
corporation with offices at 763D Concord Avenue, Cambridge MA 02138 ("PSI"), and
Phase III Medical, Inc., a Delaware corporation with offices at 330 South
Service Road, Suite 120, Melville, New York 11747 ("Phase III") (PSI and Phase
III are referred to individually as a "Party" and collectively as the
"Parties").
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, the parties agree as follows:
Definitions.
"Affiliate".
Affiliate shall mean, with respect to any person, any other person controlling,
controlled by or under common control with such person. For purposes of this
Section, "control" shall mean (a) in the case of corporate entities, direct or
indirect ownership of at least fifty percent (50%) of the stock or shares having
the right to vote for the election of directors, and (b) in the case of
non-corporate entities, direct or indirect ownership of at least fifty percent
(50%) of the equity interest with the power to direct the management and
policies of such non-corporate entities.
"Field". Field shall mean therapeutic protein drugs and/or small molecule drugs
that have been [**] characteristics, including, without limitation, (i) [**] of
the pharmaceutical substance, (ii) [**], (iii) [**], and/or (iv) [**]. The Field
shall not include any other molecules, or applications of [**], including, but
not limited to, [**]. For purposes of clarity, if a [**], so as to confer [**]
characteristics as set forth above, subject to the terms, conditions and
exceptions set forth above, such Product shall be included in the Field.
"Intellectual Property". Intellectual Property shall have the meaning set forth
in Section 8(b). "Net Sales". Net Sales shall mean, with respect to a Product,
the gross amount invoiced by PSI and/or its Affiliates (but not its or their
licensees) on sales of Products for use in the Field by PSI and/or its
Affiliates to unaffiliated third parties, less the following deductions: Trade,
cash and/or quantity discounts actually allowed and taken directly with respect
to such sales, as reflected in the amount invoiced;
Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid
directly by PSI and/or its Affiliates with respect to the production, sale or
use of the Product (excluding national, state or local taxes based on income),
as reflected in the amount invoiced; Amounts paid to third parties to license
patents covering such third party's technology if, in the absence of such
license, the sale by PSI or its Affiliates of a Product would or is likely to,
in the reasonable judgment of PSI, infringe such patents;
Amounts repaid or credited by reason of rejections, defects, recalls or returns
or because of chargebacks, refunds, rebates or retroactive price reductions; and
Freight, insurance and other transportation charges incurred in shipping a
Product, as reflected in the amount invoiced.
"Product". Product shall mean any product in the Field comprised in part of a
[**] molecule.
"Program Patent Rights" shall mean all United States and/or foreign patents and
patent applications, and all substitutions, divisions, continuations,
continuations-in-part, reissues, reexaminations and extensions thereof that
during the term of this Agreement are owned or otherwise controlled by PSI that
relate exclusively to the Field.
"POC Study". POC Study shall have the meaning set forth in Section 3(a).
"Proof of Concept Guidelines". Proof of Concept Guidelines shall mean the
guidelines applicable to the POC Study and set forth in Exhibit A.
"Term". Term shall have the meaning set forth in Section 7(a).
"Valid Claim". Valid Claim means a claim (i) of any issued, unexpired United
States or foreign patent that shall not have been donated to the public,
disclaimed, nor held invalid or unenforceable against the other Party by a court
of competent jurisdiction in an unappealed or unappealable decision, or (ii) of
any United States or foreign patent application that shall not have been
cancelled, withdrawn, abandoned nor been pending for more than seven (7) years.
Development Funding.
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In consideration for rights received by Phase III under this Agreement and the
obligations assumed by PSI hereunder with respect to the conduct of the POC
Study, Phase III hereby agrees to pay PSI:
an aggregate sum of [**] Dollars (US$[**]), payable to PSI, for synthetic and in
vitro work carried out by PSI ("PSI Research", which term is further defined in
Exhibit A hereto), [**] Dollars (US $[**]) starting upon the Effective Date and
then every thirty (30) days thereafter (collectively, the "PSI Funding" to be
paid to PSI over such nine month period, hereinafter referred to as the "PSI
Funding Period"); and
amounts reasonably required in order for PSI to complete the in vitro and in
vivo evaluation of target molecules contemplated by the POC Study and the Proof
of Concept Guidelines which are to be carried out by third party subcontractors
engaged by PSI in reasonable consultation with Phase III ("Evaluation Study"),
(collectively, the "Evaluation Funding", and together with the PSI Funding, the
"Development Funding"). Phase III shall pay to each such third party
subcontractor amounts constituting Evaluation Funding within fifteen (15) days
after its receipt from time to time from PSI of a written funding request
specifying the subcontractor, the purpose of the study, and amounts required to
be paid to the subcontractor. So long as Phase III provides as and when required
under this paragraph at least $[**] of Evaluation Funding in addition to all PSI
Funding as required in Section 2.2(a)(i), any right of Phase III under Section
4(a) or Section 4(b) only that is conditioned on it providing Development
Funding or Evaluation Funding shall be deemed fully satisfied. If the POC Study
is successful (as defined in Exhibit A), the Parties acknowledge that funding
will be necessary beyond the Development Funding in order for PSI to develop a
marketable product. At PSI's request, the Parties shall negotiate in good faith
the terms and conditions of an agreement or amendment hereto under which Phase
III provides to PSI such additional development funding; provided that, neither
Party shall be obligated to enter into any such agreement.
The Parties also acknowledge that PSI may enter into a license with a third
party pharmaceutical company that relates exclusively to the Field prior to
Phase III making all contemplated Development Funding payments. In such event,
upon consummation of such a license, and if PSI expressly waives in a signed
writing to Phase III PSI's right to further Development Funding, Phase III shall
have no further obligations to make such payments hereunder, but shall
nevertheless still be entitled to receive its full [**] percent ([**]%) payment
as set forth in Section 4 received by PSI from such third party or otherwise. In
addition to the Development Funding, Phase III shall pay [**] percent ([**]%) of
all legal and regulatory costs incurred by PSI for the prosecution of patent
applications and maintenance of patents related exclusively to the Field and
such other patents related to the Field which Phase III shall determine in
consultation with PSI.
Development Program.
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POC Study. (i) Subject to the terms and conditions of this Agreement (including
the payment in full of the Development Funding), PSI shall use commercially
reasonable efforts to perform the activities described in the proof of concept
validation study for development of the [**] therapeutic protein delivery
program as set forth as Exhibit A hereto (the "POC Study") for no longer than
the PSI Funding Period plus the period required to do the Evaluation Studies;
provided that, PSI may elect at its discretion for the three (3) month period
immediately following the PSI Funding Period to continue to conduct the POC
Study. Notwithstanding the foregoing, Evaluation Studies may, subject to payment
in full of Development Funding, continue until complete or otherwise mutually
agreed, regardless of the period of time required to complete such studies. The
POC Study shall conform to the Proof of Concept Guidelines set forth in Exhibit
A. Not later than the date two (2) weeks after execution of this Agreement, PSI
shall deliver to Phase III a more detailed POC Study plan with detailed monthly
benchmarks or activity goals, and PSI shall thereafter use commercially
reasonable efforts to meet the goals and benchmarks in such timetable. In no
event shall PSI have any obligation to conduct any activity outside the scope of
the Required Research (as defined in Exhibit A hereto) of the POC Study, and, in
the event that Phase III fails to pay Development Funding as and when required
in Section 2(a) above, PSI shall have no further obligation to conduct the POC
Study as set forth herein.
(ii) Within thirty (30) days following the conclusion of the
POC Study and receipt by PSI of all relevant subcontractor reports, PSI shall
deliver to Phase III a written report including all subcontractor reports
summarizing the results of the POC Study.
Notice of Transfer. If PSI determines to sell, assign or otherwise transfer
ownership of or title to (a "Transfer") the Program Patent Rights and/or
non-patented intellectual property owned by PSI that relates exclusively to the
Field (collectively, the "Program Rights"), and PSI enters into substantive
negotiations regarding the material terms and conditions of such potential
Transfer with a third party, then PSI shall, on a one-time basis for each such
potential Transfer, provide Phase III with reasonable advance written notice of
the material terms and conditions of such Transfer and reasonable updates
thereto. Such information shall be deemed to be the Confidential Information of
PSI.
Reports. PSI shall provide written progress reports at the completion of each
phase of the POC Study (e.g. [**]). Phase III shall have reasonable access to
the facilities of PSI during normal working hours to review the POC Study upon
reasonable prior notice to PSI.
Researcher. [**], or another capable immunologist or scientist appropriately
skilled in the execution of the listed animal studies and approved by Phase III,
shall be hired or contracted as a consultant by PSI during the three (3) month
evaluation phase of the POC Study to oversee the external in vitro and in vivo
research of the POC Study. PSI shall pay all compensation for such immunologist
or scientist during such period, at no additional cost to Phase III beyond the
amounts described in Section 2 of this Agreement.
Revenue Sharing.
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Licensing Income. Subject to Phase III's payment in full (to the extent then
due) of the PSI Funding and, to the extent required pursuant to Section
2(a)(ii), the Evaluation Funding, PSI shall pay to Phase III an amount equal to
[**] percent ([**]%) of "Licensing Income" (in each case, as defined below). The
term "Licensing Income" shall mean (A) amounts received by PSI and/or its
Affiliates from unaffiliated third parties in consideration for the grant of an
express license to manufacture, use, sell or otherwise exploit a Product for use
in the Field, or otherwise to use in the Field the Program Rights, including,
without limitation, all up-front fees, milestone payments, royalties, and other
license fees, but specifically excluding (i) any payments for research and
development activities or for the performance of any manufacturing or other
services, to the extent reasonably related to the fair value of those services,
(ii) proceeds from the purchase of any assets or equity securities of PSI and/or
its Affiliates acquired by a licensee or acquiror, whether by purchase, merger,
consolidation or otherwise, provided that if there is both a license and an
acquisition of assets or securities, only to the extent that the proceeds from
the sale of such assets or securities are reasonably related to the value of
such assets or securities; and (iii) proceeds from any loan or debt transaction
with a licensee, less (B) amounts paid by PSI to third parties to license
patents covering such third party's technology if, in the absence of such
license, the license by PSI or its Affiliates to manufacture, use, sell or
otherwise exploit a Product would or is likely to, in the reasonable judgment of
the Parties, infringe such patents.
Sales Income. Subject to Phase III's payment in full (to the extent then due) of
the PSI Funding and, to the extent required pursuant to Section 2(a)(ii), the
Evaluation Funding, PSI shall pay to Phase III an amount equal to the [**]
percent ([**]%) of the "Benchmark Percentage" (as defined below) of Net Sales.
As used above, the term "Benchmark Percentage" shall mean a mutually agreed
percentage equal to the average percentage royalty charged by companies similar
to PSI for [**] drugs similar to the Products at the time of sale of such
Products; provided, however, if the Parties are unable to reach an agreement on
such percentage within sixty (60) days after either Party requested in writing
that the Parties negotiate concerning such percentage, then either Party may
submit this dispute to a single arbitrator with relevant industry experience
appointed jointly by the Parties, or failing agreement on a joint appointment,
appointed by the President of the American Arbitration Association ("AAA"), and
such arbitrator shall then determine the Benchmark Percentage through an
arbitration conducted in Cambridge, Massachusetts in accordance with the
commercial arbitration rules of the AAA.
Payment Period. The payment obligations described in Section 4(a) and 4(b) above
shall commence on the date hereof and shall continue so long as PSI is receiving
any Licensing Income or Net Sales.
Actions by PSI. In the event that (i) any of the Program Patent Rights is
infringed by a third party, (ii) PSI elects, at its sole discretion, to bring an
action for infringement against such third party, and (iii) Phase III pays to
PSI, from time to time as incurred by PSI, [**] percent ([**]%) of the
out-of-pocket expenses and attorneys' fees of PSI relating to such action, then,
any recovery of damages, including settlement proceeds and royalties, by PSI
from any such action, shall be applied first in satisfaction of any unreimbursed
out-of-pocket expenses and attorneys' fees of the Parties relating to such
action, and then the remaining amounts from any such recovery shall be
considered Licensing Income hereunder subject to Section 4(a) above.
Payments; Reporting
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Payment. All payments hereunder (whether pursuant to Section 2 or 4) shall be
made by check or wire transfer to such bank and account as the recipient may
from time to time designate in writing. All payments due hereunder are expressed
in and shall be paid in United States Dollars.
Foreign Exchange. If any amounts due to Phase III under Section 4 hereunder are
initially stated in a currency other than United States Dollars, then, for the
purpose of calculating the amount due, such amounts shall be converted into
United States Dollars at the exchange rate between those two currencies most
recently quoted in the Wall Street Journal in New York as of the last business
day of the calendar quarter for which such amounts are being paid.
Reports and Payments. (i) Monthly. Not later than thirty (30) days after the end
of each month, PSI shall deliver to Phase III a monthly statement, setting forth
the amounts due under Section 4(a) during the preceding month. Together with
such report, PSI will pay Phase III payments accruing during such preceding
month. (ii) Quarterly. Not later than 30 days after the end of each calendar
quarter, PSI shall deliver to Phase III a quarterly statement, setting forth the
amounts due under Section 4(b) during the preceding calendar quarter. Together
with such report, PSI will pay Phase III payments accruing during such preceding
calendar quarter. (iii) All reports and payments of amounts under this Section
5(c) not disputed as to correctness by Phase III within three (3) years after
receipt thereof shall thereafter conclusively be deemed correct for all
purposes.
Responsibility for Taxes. Sales, use or similar taxes now or hereafter imposed
with respect to the transactions contemplated hereunder (but not income taxes or
other taxes imposed upon PSI and measured by the gross or net income of PSI)
shall be the responsibility of Phase III, and if paid or required to be paid by
PSI, the amount thereof shall be added to and become a part of the amounts
payable by Phase III hereunder.
Payable Only Once. The amounts payable under this Agreement shall be imposed
only once with respect to the same unit of a Product.
Audits by Phase III of Licensing Income and Sales Income. PSI shall keep and
shall require its Affiliates to keep within their control, complete and accurate
records of the latest three (3) years of sales or licenses pursuant to which
payments are due to Phase III under Sections 4(a) and (b) above. For the sole
purpose of verifying amounts payable to Phase III, Phase III shall have the
right annually at Phase III's expense to retain an independent certified public
accountant selected by Phase III and reasonably acceptable to PSI, to review
such records in the location(s) where such records are maintained by PSI or its
Affiliates upon thirty (30) days written notice and during regular business
hours. Any information made available during an audit shall be treated as the
confidential information of PSI. Such review by Phase III shall be limited to
one review per calendar year. If the review reflects an underpayment to Phase
III, such underpayment shall be remitted to Phase III within thirty (30) days of
written notice. If the underpayment is equal to or greater than seven percent
(7%) of the amount that was otherwise due, PSI shall pay all of Phase III's
reasonable costs of such review. If the review reflects an overpayment to Phase
III, the amount of such overpayment shall be remitted to PSI within thirty (30)
days of receipt of written notice thereof.
Cooperation.
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Consulting Services. Phase III shall provide to PSI, without charge, consulting
services in connection with and during the course of the POC Study, to be
determined by the mutual consultation of the parties. During the POC Study and
Post-Study Period, Phase III will be provided with reasonable access to PSI's
chief scientist working on the POC Study.
Licensing. PSI and Phase III shall cooperate to identify potential licensing
partners and to secure licensing or royalty agreements with third parties. PSI
shall use reasonable efforts to consult with Phase III prior to making a
licensing decision, and to consider Phase III's advice in good faith. PSI shall
provide Phase III with reasonable notice prior to PSI entering into a license or
other agreement with respect to a Product with any third party.
Board Observer Rights. During the POC Study and for a period of nine (9) months
after its conclusion (but in no event after the expiration or earlier
termination of the Term), Phase III shall have the right to attend the portions
of convened PSI Board of Directors meetings relating to the POC Study or to
other matters related exclusively to the Field as a non-voting observer, subject
to execution of an appropriate confidentiality agreement. Notwithstanding the
foregoing, in no event shall Phase III have any right to observe or be present
at the portion of any such meetings (i) during which PSI receives or discusses
legal advice of any kind if its presence would impair or compromise
attorney-client privilege or confidentiality, (ii) during discussions relating
to any dispute under this Agreement, or (iii) during discussions regarding any
other matter that PSI deems in the good faith exercise of its reasonable
discretion to be in conflict of interest with Phase III.
Publications. To the extent permitted under publication guidelines and
standards, Phase III shall be identified, either as a co-investigator or as
having funded the study, as appropriate, with PSI in any publication of the
results of the POC Study in peer reviewed scientific journals selected by PSI.
PSI will use reasonable efforts to submit the results of the in vitro and in
vivo studies for publication in a peer-reviewed journal within a reasonable
period after the completion of the POC Study, subject to such delay as is deemed
reasonably necessary by PSI to ensure appropriate patent filings to protect
PSI's intellectual property and competitive position. PSI in good faith will
attempt to have its studies published in journals identified by Phase III.
Publicity. Phase III and PSI must approve all public announcements of the
relationship contemplated by this Agreement jointly, provided that neither
Party's consent shall be required with respect to such announcements or
disclosures that such other Party reasonably determines are necessary to comply
with the federal securities laws, rules and regulations and any other legal
requirements.
Term; Termination.
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Term. Unless sooner terminated pursuant to this Section 7, this Agreement will
be effective as of the Effective Date and will remain in effect until the
last-to-expire payment obligation of the Parties hereunder (such period of time
referred to as the "Term").
Termination. In the event that either Party commits a material breach of its
obligations under this Agreement (including, without limitation, an obligation
to make a payment when due), and such Party fails to cure such breach within
thirty (30) days after written notice from the other Party (or in the case of a
breach of a payment obligation with respect to PSI Funding, within fifteen (15)
days), the notifying Party shall have the right to terminate this Agreement at
any time thereafter upon further notice to the breaching Party.
Survival. Sections 8, 19 and 20 shall survive any expiration or earlier
termination of this Agreement.
Insolvency. Each Party acknowledges and agrees that it intends that its
obligations under this Agreement shall survive the insolvency of such Party.
Further, to the extent applicable, all rights and licenses granted under or
pursuant to any section of this Agreement are, and shall otherwise be deemed to
be, for purposes of Section 365(n) of the Bankruptcy Code licenses of rights to
"intellectual property" as defined under Section 101(35A) of the Bankruptcy
Code. The Parties shall retain and may fully exercise all of their respective
rights and elections under the Bankruptcy Code.
Confidential Information.
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Phase III and PSI each agree that all information received by one from the other
pursuant to this Agreement (1) shall be received in strict confidence, (2) shall
be used only for the purposes of this Agreement, and (3) shall not be disclosed
by the recipient Party, its agents or employees without the prior written
consent of the disclosing Party, except to the extent that the recipient Party
can establish competent written proof that such information:
was in the public domain at the time of disclosure;
later became part of the public domain through no act or omission of the
recipient Party, its employees, agents, successors or assigns;
was lawfully disclosed to the recipient Party by a third party having the right
to disclose it without such third party violating its confidentiality
obligations to the disclosing Party; was already known by the recipient Party at
the time of disclosure;
was independently developed by the recipient Party;
is required by law or regulation to be disclosed, provided however, that (a) the
disclosing Party shall first give the other Party written notice and adequate
opportunity to object to such order for disclosure or to request confidential
treatment; and (b) information disclosed pursuant to this Section 8(a)(vi) shall
otherwise remain Confidential Information for the purposes of this Agreement; or
is disclosed to potential investors or lenders on a need-to-know basis and
pursuant to confidentiality agreements no less protective of such information
than the terms and conditions of this Section 8.
PSI understands that Phase III is a publicly held corporation and that trading
in its securities while in possession of material, non-public information
related to Phase III may violate federal and state securities laws.
Intellectual Property. Each Party shall retain all rights to all inventions,
patents, copyrights, trade secrets and other intellectual property
("Intellectual Property") conceived or reduced to practice by such Party prior
to or during the course of this Agreement. The Parties expressly agree that all
Intellectual Property conceived, reduced to practice or otherwise arising from
the POC Study shall be owned exclusively by PSI. Phase III shall have no right
or license implied or otherwise in or to any intellectual property or data owned
or controlled or utilized by PSI, including, without limitation, any
intellectual property conceived in the course of the POC Study. All inventions
and results of the POC Study shall be the Confidential Information of PSI, but
subject to disclosure by Phase III pursuant to 8(a) above.
Representations and Warranties.
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Representations of Authority. PSI and Phase III each represents and warrants to
the other that as of the Effective Date it has full right, power and authority
to enter into this Agreement and to perform its respective obligations under
this Agreement.
Consents. PSI and Phase III each represents and warrants that
all necessary consents, approvals and authorizations of all government
authorities and other persons required to be obtained by such Party in
connection with execution, delivery and performance of this Agreement have been
and shall be obtained.
No Conflict. PSI and Phase III each represents and warrants that the execution
and delivery of this Agreement, the performance of such Party's obligations
hereunder (i) do not conflict with or violate any requirement of applicable laws
or regulations and (ii) do not and will not conflict with, violate or breach or
constitute a default or require any consent under, any contractual obligations
of such Party.
Intellectual Property. PSI represents and warrants to Phase III as of the
Effective Date that: To PSI's actual knowledge, PSI has the full power and right
to grant to Phase III the rights set forth in this Agreement, free of any liens,
claims, fees, commissions or other encumbrances, other than pursuant to licenses
and any research, development and consulting agreements that have been provided
to Phase III.
To PSI's actual knowledge, without having made an investigation, the operations
of PSI in the Field do not infringe upon or conflict with the Intellectual
Property of any other person in the Field. [**].
To PSI's actual knowledge, all such Intellectual Property owned or licensed by
PSI, has not been challenged in any judicial or administrative proceeding, and
no written claim has been received by PSI, and to its actual knowledge, no claim
is pending or threatened against PSI, to the effect that any such Intellectual
Property owned or licensed by PSI is invalid or unenforceable by PSI.
With respect to the Field, to PSI's actual knowledge, no person nor such
person's business or products has infringed or misappropriated the Intellectual
Property owned or licensed by PSI or currently is infringing or misappropriating
such Intellectual Property owned, purported to be owned or licensed by PSI.
Each present or past employee or officer has executed a written agreement with
PSI that (a) conveys any and all right, title and interest in and to all
Intellectual Property developed by such person in connection with such person's
employment or contract to PSI, (b) requires such person, during and after the
term of employment or contract, to cooperate with PSI in the prosecution of any
patent applications filed in connection with such Intellectual Property, (c)
establishes that to the extent such Person is an author of a copyrighted work
created in connection with such person's employment or contract, such work is
assigned to PSI, (d) includes a representation and covenant by such person that
no process, technique, innovation or other work product provided to PSI is or
will be derived from or otherwise constitute the proprietary information of a
prior employer or contractor, in contravention of any prior confidentiality
agreement, and (e) obligates the employee or contractor to keep any confidential
information, including trade secrets, of PSI confidential both during and after
the term of employment or contract.
To PSI's actual knowledge, it is not necessary for the business of PSI in the
Field to use any Intellectual Property owned by any present or past director,
officer, or employee of PSI. Covenant. PSI shall notify Phase III of patentable
inventions for which PSI files a Program Patent Right. PSI shall use
commercially reasonable efforts during the POC Study and Post-Study Period (i)
to evaluate potentially patentable inventions in the Field, and (ii) to
determine whether to file patent applications covering such inventions, taking
into account relevant factors, including, without limitation, PSI's past
practices, intellectual property strategy, and PSI's financial constraints.
Assignment. Either Party may in its sole discretion assign this Agreement or any
of its rights, interests or obligations hereunder with or without the prior
written approval of the other Party; provided that, the assignee assumes all
obligations of such Party under this Agreement; and, provided further, that if
such assignment is made by PSI in connection with the transfer or sale of all or
substantially all of the business of PSI to which this Agreement relates,
whether by merger, sale of stock, sale of assets (including a transfer of the
Program Rights), or otherwise, it is understood and agreed that (i) the products
of such Acquiring Party conceived, reduced to practice, developed or
independently acquired prior to such acquisition or after such acquisition
without use of the technology acquired from PSI shall not be deemed Products
hereunder, (ii) the intellectual property, technology and other rights of the
Acquiring Party conceived, reduced to practice, developed or independently
acquired prior to such acquisition or after such acquisition without use of the
technology acquired from PSI shall not be deemed to be Program Patent Rights or
otherwise subject to the terms or conditions of this Agreement, and (iii)
following such acquisition, PSI's (or the Acquiring Party's or its successor's)
obligation to pay amounts due under Section 4 hereof shall be assumed and
continue, subject to the terms of this Agreement, so long as PSI or such
Acquiring Party (or its successor) is receiving any Licensing Income or Net
Sales (as provided in paragraph 4(c). This Agreement shall inure to the benefit
of the Parties hereto and be binding on their respective successors and
permitted assigns. It is understood and agreed by the Parties that, upon the
sale or assignment by PSI and/or any of its Affiliates of the Program Rights to
any unaffiliated person or entity (the "Acquiring Party") (whether on a
stand-alone basis or pursuant to a transaction involving the transfer or sale of
all or substantially of the business of PSI to which this Agreement relates,
whether by merger, sale of stock, sale of assets or otherwise), PSI shall assign
this Agreement to the Acquiring Party and the Acquiring Party shall assume the
rights and obligations of PSI under this Agreement.
Severability. If any provision of this Agreement is held to be invalid, illegal,
or unenforceable, in whole or part, such invalidity will not affect any
otherwise valid provision, and all other valid provisions will remain in full
force and effect.
Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the Parties and delivered to the
other Party, it being understood that all Parties need not sign the same
counterpart.
Titles. The titles and headings preceding the text of the paragraphs of this
Agreement have been inserted solely for convenience of reference and do not
constitute a part of this Agreement or affect its meaning, interpretation or
effect.
Waiver. The failure of any Party to insist in any one or more instances upon
performance of any terms or conditions of this Agreement will not be construed
as a waiver of future performance of any such term, covenant, or condition and
the obligations of any Party with respect to such term, covenant or condition
will continue in full force and effect.
Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, sent by facsimile, mailed by
registered or certified mail (return receipt requested) or sent by overnight
courier to the Parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to PSI, to
Parallel Solutions, Inc.
763D Concord Avenue
Cambridge MA 02138
Attention: Dermot Liddy, CEO
Telephone: 617-876-2178
Facsimile: 617-876-0728
If to Phase III, to
330 South Service Road, Suite 120
Melville, NY 11747
Attention: Mark Weinreb, President and CEO
Telephone: 631.574.4955
Facsimile: 631.574.4956
Any of the above addresses may be changed at any time by notice given as
provided above; provided, that any such notice of change of address shall be
effective only upon receipt. All notices, requests or instructions given in
accordance herewith shall be deemed given (i) on the date of delivery, if hand
delivered, (ii) on the date of receipt, if sent by facsimile, (iii) three
business days after the date of mailing, if mailed by registered or certified
mail, return receipt requested, and (iv) one business day after the date of
sending, if sent by Federal Express or other recognized overnight courier.
Entire Agreement. This Agreement (which term shall be deemed to include the
Exhibits hereto and the other certificates, documents and instruments delivered
hereunder) constitutes the entire agreement of the Parties hereto with respect
to the subject matter hereof and supersedes all prior agreements, letters of
intent and understandings, both written and oral, among the Parties with respect
to the subject matter hereof. There are no representations or warranties,
agreements, or covenants other than those expressly set forth in this Agreement.
Modification. Except as otherwise provided herein, this Agreement cannot be
amended or modified except by subsequent written agreement among Phase III and
PSI. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts. Each
PSI and Phase III submits to the exclusive jurisdiction of the state and federal
courts located in the Commonwealth of Massachusetts.
No Consequential Damages. NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT
DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER,
OR FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT WHETHER BASED UPON WARRANTY, CONTRACT,
TORT, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.
Warranty Disclaimer. Except as expressly set forth in Section 9, THE PARTIES
MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND UNDER THIS
AGREEMENT, EITHER EXPRESS OR IMPLIED, AND PARTICULARLY THAT PRODUCTS WILL BE
SUCCESSFULLY DEVELOPED HEREUNDER, AND IF PRODUCTS ARE DEVELOPED, WITH RESPECT TO
SUCH PRODUCTS, AND THE PARTIES DISCLAIM ALL IMPLIED WARRANTIES OF
NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date and
year first above written.
PARALLEL SOLUTIONS, INC.
By: /s/Dermot Liddy
----------------------
Name: Dermot Liddy
---------------------
Title: CEO.
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PHASE III MEDICAL, INC.
By: /s/Mark Weinreb
----------------------
Name: Mark Weinreb
--------------------
Title: President & CEO
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EXHIBIT A
PROOF OF CONCEPT GUIDELINES
For the sake of clarity, both Parties agree that the POC Study shall
consist of Required Research only (as defined below) and that the duration
of this POC Study is no longer than nine (9) months (plus, at PSI's
discretion, an additional three (3) months), absent further mutual
agreement between the Parties. Both Parties also agree that potential
additional research, as further described below, may be added to the POC
Study by mutual agreement of both Parties. The Parties agree that both the
Required Research and any such additional research shall be at the expense
of Phase III Medical to the extent described herein and that such
additional research may involve extending the duration of the POC Study.
The compound that will be tested during the Required Research shall be
[**]. [**]The definition of a successful Required Research study shall be
as follows: The POC Study shall be deemed successful if the results
indicate that [**] than the [**], as determined from [**] with respect to
[**]; and (b) is likely to be [**]. The Parties understand and agree that
there is no requirement or assurance that the Required Research will be
successful.
"Required Research" shall mean PSI Research and Evaluation Study, as those terms
are defined below.
PSI Research
Up to [**] during the duration of the POC Study. The Parties recognize the
possibility that [**]. Both Parties agree that they will [**].
A number of lead compounds may be [**] performed by PSI. Such candidates [**].
These lead compounds will [**]. [**]
(b) Evaluation Study
[**] testing of a lead candidate or candidates as outlined above will [**]. Such
testing shall be [**] to the extent described herein.
[**] testing of the lead candidates in the [**]. Such testing shall be [**] to
the extent described herein.
[**] testing will also include [**]. Such testing shall be [**] to the extent
described herein
[**] testing will include [**]. In this regard, [**]. Such review shall [**] to
the extent described herein.
Potential Additional Research
At Phase III's request and as agreed by PSI, PSI shall [**] the lead candidate
or candidates. The expense for such studies shall be as determined hereafter by
the Parties.
At Phase III's request and as agreed by PSI, PSI shall [**].
Such testing shall [**] as determined hereafter by the Parties.
At Phase III's request, and as agreed by PSI, [**] shall be [**]. The expense
for such studies shall be as determined hereafter by the Parties.