EXHIBIT 10(s)
SETTLEMENT AND LICENSE AGREEMENT
This Settlement and License Agreement (the "Agreement") is entered into
as of the Effective Date defined below in paragraph 1.2, by (i) ENZO LIFE
SCIENCES, INC. ("LIFE SCIENCES") and ENZO BIOCHEM, INC. ("BIOCHEM" and referred
to collectively herein, with LIFE SCIENCES, as "ENZO"), and (ii) DIGENE
CORPORATION ("DIGENE").
WHEREAS, LIFE SCIENCES is the owner of all rights in and to United
States Patent No. 6,221,581 (hereinafter the "`581 patent");
WHEREAS, LIFE SCIENCES is a wholly owned subsidiary corporation of
BIOCHEM;
WHEREAS, ENZO and DIGENE are currently engaged in litigation involving
the `581 patent in the United States District Court for the District of
Delaware, in a case entitled ENZO LIFE SCIENCES V. DIGENE CORP., Civil Action
No. 02-212-JJF (the "Litigation");
WHEREAS, LIFE SCIENCES filed a complaint in the Litigation alleging
that DIGENE has willfully infringed the `581 patent by making, selling and/or
using certain products, as identified in the complaint and the Litigation;
WHEREAS, DIGENE filed an answer and counterclaims in the Litigation
alleging that it does not infringe the `581 patent, and further, that the `581
patent is invalid and unenforceable;
WHEREAS, DIGENE filed counterclaims against BIOCHEM in the Litigation
alleging damages from various alleged business torts;
WHEREAS, BIOCHEM filed an answer to DIGENE's counterclaims in the
Litigation denying any liability for the business torts alleged by DIGENE;
WHEREAS, ENZO and DIGENE desire to fully and finally settle and resolve
the Litigation and all claims, counterclaims, and defenses asserted therein and
all issues involved therein, without resort to further litigation, and in
accordance with the provisions of this Agreement; and
WHEREAS, DIGENE desires to acquire from ENZO a license under the
Licensed Patents, as defined herein below, and clearance under ENZO's patent
portfolio, as set forth herein and subject to the limitations herein, to make,
have made, use, sell, offer to sell and import Licensed Products, as defined
hereinbelow;
NOW, THEREFORE, in consideration of the premises and promises contained
herein, ENZO and DIGENE (each a "Party" and collectively, the "Parties") agree
as follows:
ARTICLE I: DEFINITIONS
1.1 "Affiliate" of a Party means any corporation, company, firm, partnership or
other entity that directly or indirectly controls, is controlled by or is under
common control with the Party in question. For purposes of this definition,
"control" shall mean the ownership, directly or indirectly, of fifty percent
(50%) or more of the issued share capital or shares of stock entitled to vote
for the election of directors, in the case of a corporation, or fifty percent
(50%) or more of the equity interests in the case of any other entity, or the
legal power to direct or cause the direction of the general management and
policies of the entity in question.
1.2 "Effective Date" of this Agreement shall be as of September 30, 2004 and
upon receipt of the First Payment recited in paragraph 3.1 of this Agreement.
1.3 "Licensed Patents" means U.S. Patent No. 6,221,581 and any and all U.S.
patents that claim priority to any patent application to which the `581 patent
claims the benefit of priority, and any foreign (non-U.S.) counterparts of any
of the foregoing U.S. patents.
1.4 "Licensed Products" means all products, including test kits, as well as
systems, reagents, accessories, consumables, devices and instruments intended
for use with same, their methods or means of making, and their methods or means
of use embraced by at least one claim of the Licensed Patents. Licensed Products
include all products that absent the license granted herein would infringe (or
the use of which would infringe) any claim of the `581 patent. Explicitly
included as Licensed Products are the DIGENE Hybrid Capture 1, Hybrid Capture 2,
Hybrid Capture 3 and SHARP products identified in Exhibit 1 hereto. DIGENE
warrants that the trade name "HYBRID CAPTURE" is a registered trademark of
DIGENE, and the Parties agree that (a) the use of that trade name in conjunction
with the making, having made, using, selling, offering for sale and/or
importation of any product shall not be deemed an admission by DIGENE that such
products are Licensed Products and/or share any one or more of the attributes of
Licensed Products; and (b) the products listed on Exhibit 1 to this Agreement as
of the Effective Date are the only products offered for sale or sold by DIGENE
or its Affiliates as of the Effective Date that are required to be identified as
Licensed Products under this Agreement. The term "Licensed Products" shall
prospectively include any Future Licensed Products, as that term is used and
defined hereinunder.
1.5 "Licensed Territory" means the entire world.
1.6 "Net Sales" means the greater of (1) the gross amount invoiced by DIGENE and
its Affiliates for the sale, transfer, use or other disposition of test kits
referenced in paragraph 1.4 above or (2) ninety-three percent (93%) of the gross
amount invoiced by DIGENE and its Affiliates for the sale, transfer, use or
other disposition of all Licensed Products , less for both (1) or (2),
respectively: (a) usual and customary trade discounts actually taken for the
test kits or all Licensed Products, respectively; (b) forwarding expenses,
freight, taxes, fees, duties, postage and other similar items routinely actually
paid and invoiced by DIGENE or its Affiliates for the test kits or all Licensed
Products, respectively; and (c) credits actually given for the test kits or all
Licensed Products, respectively. Net Sales shall be calculated on the price from
DIGENE or its Affiliates to distributors, agents and customers, and not on sales
between or among DIGENE and
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its Affiliates.. The ninety-three percent (93%) calculation shall be made on an
annual basis and DIGENE shall make the necessary payments, if any, with the
fourth quarter Running Royalties payments as provided in paragraph 3.7.
1.7 "Bankruptcy Event" means the Party in question becomes insolvent, or
voluntarily or involuntary proceedings by or against such Party are instituted
in bankruptcy or under any insolvency law, or a receiver or custodian is
appointed for such Party, or proceedings are instituted by or against such Party
for corporate reorganization or the dissolution of such Party, which
proceedings, if involuntary, shall not have been dismissed within sixty (60)
days after the date of filing, or such Party makes an assignment for the benefit
of its creditors, or substantially all of the assets of such Party are seized or
attached and not released within sixty (60) days thereafter.
1.8 "Future Licensed Products" means any Licensed Product which, as of the
Effective Date of this Agreement, is not commercially made, used, sold, offered
for sale or imported by DIGENE.
1.9 "Joint Stipulation and Order of Dismissal with Prejudice" means the
stipulation of dismissal of the Litigation, with prejudice, including all
claims, counterclaims and defenses asserted therein as between BIOCHEM, LIFE
SCIENCES and DIGENE, attached hereto as Exhibit 2 and incorporated herein by
reference.
ARTICLE II: LICENSE GRANT
2.1 LICENSE GRANT: ENZO hereby grants DIGENE an irrevocable, non-exclusive,
royalty-bearing license under the Licensed Patents to make, have made, use,
sell, offer to sell or import Licensed Products in the Licensed Territory.
ARTICLE III: PAYMENTS, ROYALTIES AND DISMISSAL OF THE LITIGATION
3.1 FIRST PAYMENT. As consideration for the execution of this Agreement and the
Joint Stipulation and Order of Dismissal with Prejudice, on the date of
execution of this Agreement DIGENE shall pay LIFE SCIENCES, on behalf of ENZO
and in full satisfaction of the payment owed to ENZO under this paragraph 3.1, a
First Payment of U.S. $16,000,000.00 ( sixteen million U.S. dollars) by wire
transfer to the following bank account for LIFE SCIENCES: CITIBANK Account No.
020-047478 and ABA Routing No. 21000089. Of the foregoing amount, DIGENE may
credit U.S. $2,000,000.00 (two million U.S. dollars) against any payments due to
ENZO for either the Running Royalties or the first Additional Guaranteed Payment
under paragraph 3.3 of this Agreement until such credit is fully applied. Upon
filing of the Joint Stipulation and Order of Dismissal with Prejudice, this
First Payment by DIGENE to ENZO shall be irrevocable.
3.2 DISMISSAL OF THE LITIGATION. Upon execution of this Agreement, ENZO and
DIGENE shall cause their attorneys to file the Joint Stipulation and Order of
Dismissal with Prejudice, in identical form as Exhibit 2 attached hereto, and
incorporated herein by reference, which shall be
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executed and filed with the Court in the Litigation within three (3) days after
payment of the First Payment stated in paragraph 3.1 of this Agreement.
3.3 ADDITIONAL GUARANTEED PAYMENTS. As further consideration for the execution
of this Agreement and the Joint Stipulation and Order of Dismissal with
Prejudice, DIGENE shall pay LIFE SCIENCES, on behalf of ENZO, and in full
satisfaction of the payments owed to ENZO under this paragraph 3.3, five
Additional Guaranteed Payments, the first in the amount of U.S. $2,500,000 (two
million five hundred thousand U.S. dollars), and the remaining four each in the
amount of U.S. $3,500,000 (three million five hundred thousand U.S. dollars) for
the annual periods ending September 30, 2005, 2006, 2007, 2008 and 2009. DIGENE
shall pay these five Additional Guaranteed Payments as of September 30 of each
of 2005, 2006, 2007, 2008 and 2009 (with payment to be made by November 14 of
each such year), less a credit in the amount of Running Royalties due and
actually paid to LIFE SCIENCES pursuant to paragraph 3.4 of this Agreement for
the preceding one-year period (I.E., October 1, 2004 to September 30, 2005 for
the first annual period and, for each of the four subsequent annual periods,
October 1 of the preceding year to September 30, 2006, 2007, 2008 and 2009 )
with respect to which such Additional Guaranteed Payment is being made and,
solely in the case of the first Additional Guaranteed Payment due by September
30, 2005, also less the remaining credit, if any, of the U.S. $2,000,000 (two
million U.S. dollars) credit described in paragraph 3.1 of this Agreement. The
application of the foregoing credits (other than the credit specified in
paragraph 3.1 of this Agreement) and the actual payment of the Additional
Guaranteed Payments shall be carried out in accordance with the provisions of
paragraph 3.7 of this Agreement, i.e., the amount, if any, necessary to equal an
Additional Guaranteed Payment will be made with the payment of Running Royalties
for the fourth quarter of each of the five annual periods. The credit set forth
in paragraph 3.1 may be taken by DIGENE as a pre-payment of Running Royalties
over the course of the first annual period running from October 1, 2004 to
September 30, 2005, until such U.S. $2,000,000 credit has been fully taken, with
the understanding that any such pre-payment credits taken by DIGENE against
Running Royalties due in that first annual period shall reduce (by the same
amount as the credit so taken) the amount of credit that DIGENE may take against
the first Additional Guaranteed Payment due as of September 30, 2005. DIGENE
shall provide ENZO with a report indicating the portion of the credit taken with
each Running Royalties report provided in such first annual period pursuant to
paragraph 7.1 of this Agreement. The Additional Guaranteed Payments are each
guaranteed and irrevocable. In the event that DIGENE becomes subject to a
Bankruptcy Event, LIFE SCIENCES may declare the entire unpaid balance of the
Additional Guaranteed Payments immediately due and payable by providing DIGENE
with written notice of same. Moreover, DIGENE shall be obligated to pay the full
amount of all such unpaid Additional Guaranteed Payments under the schedule set
forth in this paragraph, notwithstanding any prior termination of this Agreement
for any reason, and DIGENE's obligation to pay same on that schedule shall
survive any such termination of the entire Agreement or any part thereof.
3.4 RUNNING ROYALTIES: In consideration for the license and rights granted it by
ENZO in Article II of this Agreement, DIGENE shall pay LIFE SCIENCES, on behalf
of ENZO and in full satisfaction of the payments owed to ENZO under this
paragraph 3.4, running royalties on Net Sales in the Licensed Territory (the
"Running Royalties") based on the following Net Sales
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levels at the stated rates for each annual period, with the first annual period
starting on October 1, 2004:
The first $100 million *
The next $50 million *
The next $100 million *
All in excess of $250 million *
* The information omitted is confidential and has been filed separately with the
Commission pursuant to Rule 24b-2.
In the event the provisions of paragraph 3.6 apply during the term of this
Agreement, the Running Royalties will be calculated based upon the Adjusted
Royalty Rate rather than the rates set forth above.
3.5 All Running Royalties paid by DIGENE for Licensed Products under this
Agreement, and DIGENE's obligation to pay them, shall be irrevocable, subject
only to the following sentences of this paragraph. DIGENE's obligation to pay
Running Royalties for Licensed Products shall extend through and until April 24,
2018, and shall only be relieved prior to that date if all of the claims of the
Licensed Patents are determined to be invalid or unenforceable in a final
judgment from which no appeal has been or can be taken, provided that neither
DIGENE nor any of its Affiliates was involved in any respect with any proceeding
that resulted in such an unenforceability of invalidity finding, except as
required by Court order or otherwise required by law. However, even if all of
the claims of the Licensed Patents are determined to be invalid and/or
unenforceable in a final judgment from which no appeal has been or can be taken,
DIGENE's obligations and duties to pay the First Payment and the Additional
Guaranteed Payments shall survive such a determination, and DIGENE's obligations
and duties to pay Running Royalties incurred up to the date of that
determination shall likewise survive that determination.
3.6 DIGENE shall be deemed a most favored licensee with respect to the Licensed
Patents, with its most favored treatment being limited to the following
provisions of this paragraph: if ENZO as of or after the Effective Date enters
into a license for one or more of the Licensed Patents with a third party other
than DIGENE, at an effective royalty rate (taking into account all consideration
received for the rights granted) that is less than the effective Running Royalty
rate paid and/or owed by DIGENE under this Agreement at such time, DIGENE shall
be entitled to a reduction in the effective rate of its Running Royalties to a
rate not to exceed any such other licenses (the "Adjusted Royalty Rate"). In
such instances, DIGENE shall be entitled to a credit against any future Running
Royalties in the amount of any such Running Royalties already paid by DIGENE on
sales occurring after the date ENZO entered into such license with a third party
other than DIGENE at the Running Royalty rates set forth in paragraph 3.4, less
the amount that would have been due ENZO in such periods for sales in accordance
with the Adjusted Royalty Rate; provided, however, that nothing in this
paragraph 3.6 or any other part of this Agreement shall impact in any way the
obligations and duties of DIGENE to pay the entire amounts of the First Payment
and the Additional Guaranteed Payments specified in paragraphs 3.1 and 3.3
above.
3.7 PAYMENT OF RUNNING ROYALTIES AND ADDITIONAL GUARANTEED PAYMENTS. DIGENE
shall pay the Running Royalties, at the rates set forth in paragraph 3.4 or at
the Adjusted Royalty Rate
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described in paragraph 3.6, as the case may be, on a quarterly basis in
accordance with the provisions of paragraph 7.1 of this Agreement. In each
twelve month period beginning October 1, 2004 and ending as of September 30,
2009 for which an Annual Guaranteed Payment is due, DIGENE shall credit the
Running Royalties paid for each of the four quarters in such annual period
against the Annual Guaranteed Payment due as of September 30 for such annual
period. DIGENE will make the payment, if any, necessary to make the amount of
such Running Royalties equal the Annual Guaranteed Payment for such annual
period on the date when the fourth quarter Running Royalties are paid for such
annual period, which date shall be within 45 days after the end of such fourth
quarter as described in paragraph 7.1. In the event that the Running Royalties
in any of the five, twelve month periods beginning on October 1, 2004 and ending
on September 30, 2009 exceeds the Additional Guaranteed Payment due on September
30 of any of the years falling within that time, the Parties agree that DIGENE
is not entitled to a refund of the difference between the Running Royalties for
that annual period and the Additional Guaranteed Payment for that annual period,
which difference shall instead by kept by LIFE SCIENCES.
3.8 In the event that DIGENE intends in the future to sell or offer for sale any
product that DIGENE contends is a Future Licensed Product, DIGENE shall, within
no less than thirty (30) days prior to the first such sale or offer for sale of
such Future Licensed Product, provide ENZO with notice in writing of such
intent. Such Future Licensed Product shall thereafter be included as a Licensed
Product under this Agreement, and shall thereafter be subject to all other
provisions and limitations of this Agreement, including, without limitation,
application of the Running Royalties at the applicable rates as set forth herein
to the sales of such Future Licensed Product. Any dispute over whether a given
product is a Future Licensed Product shall be resolved in accordance with the
provisions of paragraph 12.2 of this Agreement.
ARTICLE IV: WARRANTIES, COVENANTS AND LITIGATION RELEASES
4.1 (a) With regard to the Licensed Products listed on Exhibit 1 of this
Agreement, during the term of this Agreement: (1) ENZO covenants that it will
not assert any claims against or xxx DIGENE (or its Affiliates, contract
manufacturers, distributors or customers) with respect to any past matter (i.e.,
one occurring prior to the Effective Date of this Agreement) relating to those
Exhibit 1 Licensed Products, and (2) ENZO covenants that it will not assert any
claims against or xxx DIGENE (or its Affiliates, contract manufacturers,
distributors or customers) for infringement of any patent owned or controlled by
ENZO on account of the manufacture (by DIGENE, its Affiliates or its contract
manufacturers), use, sale, offer for sale, or importation of any such Licensed
Product listed on Exhibit 1; (b) With regard to any Licensed Product not listed
on Exhibit 1 of this Agreement (including any Future Licensed Product), during
the term of this Agreement, and solely with regard to the Licensed Patents
identified herein, ENZO covenants that it will not assert any claims against or
xxx DIGENE (or its Affiliates, contract manufacturers, distributors or
customers) for infringement of the Licensed Patents on account of the
manufacture (by DIGENE, its Affiliates or its contract manufacturers), use,
sale, offer for sale, or importation of any such Licensed Products that are not
listed on Exhibit 1; (c) During the term of this Agreement, solely with regard
to any Licensed Product not listed on Exhibit 1 of this Agreement that is
covered by one or more of the same claims, either literally or under the
doctrine of equivalents, in any existing (as of the Effective Date) ENZO patent
or existing (as of
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the Effective Date) patent application (or one or more of the same claims in any
ENZO patents or applications claiming priority from any such existing patents or
existing patent applications) that also cover Licensed Products listed on
Exhibit 1, ENZO covenants that it will not assert any claims against or xxx
DIGENE (or its Affiliates, contract manufacturers, distributors or customers)
for patent infringement solely with regard to the foregoing same claims in any
existing (as of the Effective Date) ENZO patent or existing (as of the Effective
Date) patent application issuing as a patent (or with regard to the foregoing
same claims in any ENZO patents claiming priority from any such existing patents
or existing patent applications), on account of the manufacture (by DIGENE, its
Affiliates or its contract manufacturers), use, sale, offer for sale, or
importation of any such Licensed Products not listed on Exhibit 1; (d) During
the term of this Agreement, DIGENE covenants that it will not, and its
Affiliates will not, initiate or conduct on its own, or assist or participate
(except as required by Court order or otherwise required by law) with any third
party in initiating, conducting or defending, any court or administrative
proceeding relating to the Licensed Patents. DIGENE shall not be obligated to
assist ENZO in any such actions taken against any third parties for infringement
of the Licensed Patents or taken by third parties against any of the Licensed
Patents; and (e) each of the foregoing convenants in this paragraph 4.1 shall
survive the expiration on April 24, 2018 or earlier termination of this
Agreement pursuant to paragraph 6.1 hereof.
4.2 Upon LIFE SCIENCES' receipt, on behalf of ENZO, of the First Payment
required by paragraph 3.1 of this Agreement, (i) ENZO (and its past, present and
future subsidiaries, parents, officers, directors, legal representatives,
shareholders, predecessors, successors, heirs, Affiliates, assigns, agents,
attorneys, representatives and employees) shall release DIGENE (and its contract
manufacturers, distributors and customers) and all of DIGENE's past, present and
future subsidiaries, parents, officers, directors, legal representatives,
shareholders, predecessors, successors, heirs, Affiliates, assigns, agents,
attorneys, representatives and employees from all past claims against such
released parties for all claims asserted or that could have been asserted with
respect to the Licensed Products listed on Exhibit 1, including all claims that
the Licensed Products listed on Exhibit 1 infringe the Licensed Patents or any
other patents owned or controlled by ENZO, and (ii) DIGENE shall release ENZO
and all of ENZO's past, present and future subsidiaries, parents, officers,
directors, legal representatives, shareholders, predecessors, successors, heirs,
Affiliates, assigns, agents, attorneys, representatives and employees from all
claims asserted or that could have been asserted in the Litigation, and from all
claims arising from the assertion of the `581 patent and any other patent owned
or controlled by ENZO against DIGENE with respect to Licensed Products listed on
Exhibit 1.
4.3 ENZO represents and warrants to DIGENE as follows:
(a) ENZO has the full and unencumbered right, power and authority to enter
into this Agreement, ENZO has the full and unencumbered right to grant
the license rights granted by ENZO to DIGENE hereunder, and otherwise
to carry out its obligations hereunder and that, upon execution, this
Agreement shall constitute a legal, valid and binding agreement of
ENZO, enforceable in accordance with its terms.
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(b) ENZO owns all right, title, and interest in and to the Licensed
Patents free of any claims of third parties. No third party has made
any claim of ownership of, or interest in, the Licensed Patents and no
basis for such a claim is known to ENZO.
(c) ENZO is the only person with the power to enforce the Licensed
Patents.
(d) ENZO has not licensed or granted to any third party, and shall not
license or grant to any third party during the term of this Agreement,
any rights in or to the Licensed Patents that are inconsistent with
any rights granted by ENZO to DIGENE hereunder. If ENZO licenses or
grants rights under the Licensed Patents to any other party, ENZO will
provide DIGENE with written notice identifying the name of the party
licensed. DIGENE shall be permitted to review any such license under
appropriate confidentiality terms, to enable it to ensure compliance
with the provisions of this Agreement, including but not limited to
the requirements of paragraph 3.6.
(e) ENZO has not received any written notice or claim, and is not
otherwise aware that any Licensed Product infringes or misappropriates
the proprietary rights of any third party.
(f) There is no action or proceeding pending or, in so far as ENZO knows,
threatened against ENZO before any court, administrative agency or
other tribunal which could impact upon ENZO's right, power and
authority to enter into this Agreement, to grant the license rights
granted by ENZO to DIGENE hereunder, or to otherwise carry out its
obligations hereunder.
(g) In the event that ENZO has knowledge or is informed by DIGENE or a
third party that any person is or may be infringing the Licensed
Patents, ENZO shall use its best efforts to cause such person to cease
and desist from any and all infringing activities, including without
limitation filing suit for patent infringement (including contributory
infringement or inducement to infringe) against such person at ENZO's
sole cost and expense. In the event that ENZO does not promptly take
such action, ENZO hereby assigns to DIGENE the right to take such
action at DIGENE's sole cost and expense, with DIGENE retaining any
and all recovery including but not limited to any and all monetary
damages, costs and attorneys' fees recovered. Nothing contained herein
shall obligate DIGENE to take such action.
4.4 DIGENE represents and warrants to ENZO as follows:
(a) DIGENE has the full and unencumbered right, power and authority to
enter into this Agreement and otherwise to carry out its obligations
hereunder and that, upon execution, this Agreement shall constitute a
legal, valid and binding agreement of DIGENE, enforceable in
accordance with its terms.
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(b) There is no action or proceeding pending or, in so far as DIGENE
knows, threatened against DIGENE before any court, administrative
agency or other tribunal which could impact upon DIGENE's right, power
and authority to enter into this Agreement or to otherwise carry out
its obligations hereunder.
(c) DIGENE shall not bind or purport to bind ENZO to any affirmation,
representation or warranty with respect to the Licensed Patents or the
Licensed Products to any third party.
4.6 EXCEPT FOR THE EXPRESS WARRANTIES CONTAINED IN THIS AGREEMENT, THE LICENSED
PATENTS ARE LICENSED TO DIGENE "AS IS." NEITHER ENZO NOR DIGENE MAKES ANY OTHER
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, IN FACT OR IN LAW, CONCERNING
THE LICENSED PATENTS OR ANY OTHER MATTER COVERED BY THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES ARISING BY STATUTE OR OTHERWISE AT LAW OR FROM A COURSE OF DEALING,
USAGE OR TRADE.
4.7 EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS OF DIGENE UNDER ARTICLE V,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY HERETO FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING LOST
PROFITS, LOST SAVINGS AND PRICE EROSION) SUFFERED OR INCURRED BY SUCH OTHER
PARTY IN CONNECTION WITH THE LICENSED PATENTS, THE LICENSED PRODUCTS, OR ANY
OTHER MATTER COVERED BY THIS AGREEMENT, EVEN IF SUCH OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
4.8 NO IMPLIED OR EXPRESS LICENSE IS BEING GRANTED TO DIGENE (or its Affiliates,
contract manufacturers, distributors or customers) UNDER THIS AGREEMENT UNDER
ANY ENZO PATENT OTHER THAN AS PROVIDED FOR IN THIS AGREEMENT, INCLUDING, BUT NOT
LIMITED TO, PARAGRAPHS 2.1 AND 4.1, SUBJECT TO ALL OF THE LIMITATIONS OF THIS
AGREEMENT, AND NO IMPLIED OR EXPRESS COVENANT NOT TO XXX IS BEING GRANTED TO
DIGENE (or its Affiliates, contract manufacturers, distributors or customers)
FOR ANY ENZO PATENT UNDER THIS AGREEMENT EXCEPT FOR THE EXPRESS CONVENANT NOT TO
XXX DIGENE (or its Affiliates, contract manufacturers, distributors or
customers) WITH RESPECT TO THE LICENSED PRODUCTS LISTED ON EXHIBIT 1 UNDER ANY
ENZO PATENT, INCLUDING THE LICENSED PATENTS, AND THE EXPRESS CONVENANT NOT TO
XXX DIGENE (or its Affiliates, contract manufacturers, distributors or
customers) WITH RESPECT TO ANY LICENSED PRODUCT (INCLUDING THOSE NOT LISTED ON
EXHIBIT 1) UNDER THE LICENSED PATENTS, BOTH SUBJECT TO ALL OF THE LIMITATIONS OF
THIS AGREEMENT.
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4.9 THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THE FOREGOING DISCLAIMERS AND
LIMITATIONS OF LIABILITY REPRESENT BARGAINED FOR ALLOCATIONS OF RISK, AND THAT
THE ECONOMICS, TERMS AND CONDITIONS OF THIS AGREEMENT REFLECT SUCH ALLOCATIONS.
ARTICLE V: INDEMNIFICATION
5.1 DIGENE hereby fully indemnifies ENZO and all of its past, present and future
Affiliates, subsidiaries, parents, officers, directors, legal representatives,
shareholders, predecessors, successors, heirs, assigns, agents, attorneys,
representatives and employees (collectively, "ENZO Indemnitees") from any past,
present or future action or claim for damages of any sort against any of them,
that stems from or relates in any way to DIGENE's or any of its Affiliates' sale
or other disposition of any Licensed Product. In the event that any such action
or claim is brought against any of the ENZO Indemnitees, DIGENE shall assume
control of such action or claim and agrees to fully defend any of them against
that action or claim, including, but not limited to, paying for all attorneys'
fees (of the attorneys of DIGENE's choosing, after consultation with ENZO) and
costs necessary to fully defend that action or claim and fully satisfying any
monetary award entered against any of them relating to that action or claim. No
ENZO Indemnitee shall be entitled to settle or defend any such action or claim.
DIGENE is not obligated to indemnify the ENZO Indemnitees except as expressly
provided for in this paragraph.
5.2 If any action, claim, suit, proceeding or investigation arises as to which a
right of indemnification provided in this Article V applies, the ENZO Indemnitee
in question shall promptly notify DIGENE thereof in writing, and allow DIGENE,
its insurers and any other entity that DIGENE reasonably deems necessary or
appropriate under the circumstances to assume direction and control of the
defense against such action, claim, suit, proceeding or investigation, at
DIGENE's sole expense, including the settlement thereof at the sole option of
DIGENE or its insurers. Failure by the ENZO Indemnitee to so notify DIGENE
within a reasonable period of time shall relieve DIGENE from the obligation to
indemnify the ENZO Indemnitee only to the extent that DIGENE suffers actual
prejudice as a result of such failure. Each ENZO Indemnitee shall fully
cooperate with DIGENE and its insurer in the disposition of any such action,
claim, suit, proceeding or investigation with regard to all reasonable requests
for such cooperation.
5.3 DIGENE and ENZO agree to negotiate in good faith a potential agreement to
add ENZO as an additional insured on DIGENE's product liability insurance
policy.
ARTICLE VI: TERM AND TERMINATION
6.1 The term of this Agreement shall begin as of the Effective Date and extend
through and until the earlier of April 24, 2018 or the date by which all of the
claims of the Licensed Patents are determined to be invalid or unenforceable in
a final judgment from which no appeal has been or can be taken, provided that
neither DIGENE nor any of its Affiliates was involved in any respect with any
proceeding that resulted in such an unenforceability of invalidity finding,
except as required by Court order or otherwise required by law. DIGENE shall be
obligated to pay the Additional Guaranteed Payments set forth in paragraph 3.3
of this Agreement, notwithstanding any prior termination of this Agreement.
10
6.2 This Agreement is irrevocable with respect to the duties, obligations and
rights of each Party as to the Licensed Products, with the express understanding
that (except as set forth in paragraph 4.1 of this Agreement) nothing in this
Agreement, including the irrevocability provisions of this paragraph, shall
preclude ENZO from asserting against DIGENE in the future a patent that is not a
Licensed Patent with regard to a Licensed Product that is not listed on Exhibit
1 of this Agreement.
ARTICLE VII: RECORD KEEPING, PAYMENT AND REPORTS
7.1 DIGENE shall within forty-five (45) days after the end of each calendar
quarter, time being of the essence, send to ENZO a written statement, certified
by DIGENE, showing for such calendar quarter the Net Sales and quantities of
Licensed Products sold during the quarter and the calculation of and amount of
Running Royalties due. Such statements shall be accompanied by a payment of the
total amount of Running Royalties due, subject to the provisions of Article III
of this Agreement. Payment shall be made by wire transfer to an account
designated by ENZO in advance of the payment. Any late payment shall accrue
interest at the lower of one and one-half percent (1.5%) per month or the
highest rate permitted by law. If no Running Royalties are due, DIGENE shall
nevertheless render a statement to reflect such fact, along with a detailed
written explanation of why it contends that no Running Royalties are due.
7.2 Receipt or acceptance by ENZO of any report furnished pursuant to this
Agreement or any sums paid hereunder, shall not preclude ENZO from questioning
the correctness thereof at a later date, subject to the time limitations set
forth below in paragraph 7.4.
7.3 DIGENE shall maintain, and cause to be maintained by its Affiliates,
complete and accurate books and records with respect to Net Sales and all
Running Royalties paid or payable by DIGENE under this Agreement, along with
such other reconciliation and other information as may be necessary or desirable
to calculate or verify all Net Sales and the consideration paid or payable by
DIGENE under this Agreement. DIGENE and such Affiliates shall maintain such
books and records in accordance with generally accepted accounting principles
consistently applied and for a period of three (3) years after the submission of
each report required to be submitted by DIGENE to ENZO under this Agreement;
provided, however, that if there is a good faith dispute between the Parties
continuing at the end of any such three (3) year period with respect to such
books or records, then the time period hereunder to maintain such books and
records under dispute shall be extended until such time as the dispute is
finally resolved.
7.4 ENZO shall have the right, through an independent accountant selected by it
and acceptable to and approved by DIGENE (which approval shall not be
unreasonably withheld or delayed), to have access to the relevant books and
records of DIGENE and its Affiliates during reasonable business hours, subject
to the records maintenance requirements set forth in paragraph 7.3, on thirty
(30) days prior written notice, for the purpose of verifying, inspecting or
auditing, at the sole expense of ENZO (except as provided for in paragraph 7.5
below), the Net Sales and the Running Royalties provided for pursuant to this
Agreement for any of the preceding two (2) years, but this right may not be
exercised more than once in any calendar year, and once exercised with respect
to any period, the books and records for such period cannot be
11
reviewed again except upon written request made by ENZO to DIGENE setting forth
a reasonable business basis for requiring such a subsequent review, as to which
request DIGENE shall not unreasonably withhold its consent. Said independent
representatives shall solicit or receive only information relating to or
necessary or desirable to verify or audit the accuracy of the information
reported and the payments made or due under this Agreement. DIGENE shall be
entitled to withhold approval of an accountant which ENZO nominates unless the
accountant agrees to sign a confidentiality agreement with DIGENE which shall
obligate such accountant to hold the information he or she receives from DIGENE
in confidence, except for disclosure to ENZO of information necessary to
establish the accuracy of the reports and amounts paid or payable to ENZO. Such
audit rights shall survive for three (3) years after the expiration or
termination of this Agreement.
7.5 Any underpayment determined pursuant to paragraph 7.4 above shall be paid
within thirty (30) days after the delivery of a detailed written accountants'
report to DIGENE and ENZO if neither DIGENE nor ENZO disputes the report. If the
Parties cannot agree with the accountants' report following a good faith attempt
to reach such agreement within thirty (30) days, then any such disputed matter
shall be submitted to and determined by an independent accounting firm
acceptable to the Parties, which determination shall be final and binding,
absent manifest error. The fees and expenses of any such independent accounting
firm incurred in resolving such disputed matter shall be shared equally by
DIGENE and ENZO. In the event of any such underpayment by seven percent (7%) or
more, DIGENE shall also at the same time reimburse ENZO for the out-of-pocket
costs of the verification, inspection or audit conducted, plus interest at the
lower of one and one-half percent (1.5%) per month or the highest rate permitted
by law. Any overpayment shall be credited to the next payment due from DIGENE.
If no further payments from DIGENE will be due then a refund of any such
overpayment will be made within thirty (30) days after the delivery of a
detailed written accountants' report to DIGENE and ENZO.
7.6 The provisions of this Article VII shall survive the expiration or sooner
termination of this Agreement.
ARTICLE VIII: NOTICES
8.1 All notices or other communications required or permitted hereunder shall be
in writing and shall be delivered personally, by facsimile, with delivery
confirmed electronically, or sent by certified, registered or express air mail,
postage prepaid, or by reputable overnight courier, and shall be deemed given
when so delivered personally, or by facsimile, or by overnight courier, or if
mailed, three days after the date of mailing, to the address of the Party set
forth below or to such other address as any Party hereto shall notify the other
Party hereto from time to time. However, the Parties further agree that each
Party shall provide the other Party with notice of execution of this Agreement
(along with a copy of the executed Agreement) by facsimile or same-day hand
delivery, with confirmation to follow by any of the other foregoing methods.
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Notice to ENZO: c/o Enzo Biochem, Inc.
Enzo Biochem, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xx. Xxxxxx Xxxxxxx
Fax: (000) 000-0000
Notice to DIGENE: Digene Corporation
0000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
ARTICLE IX: MISCELLANEOUS
9.1 This Agreement is made under and shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Delaware.
9.2 The paragraph headings contained herein are for reference only; such
headings are not a part of this Agreement, nor shall they in any way affect the
interpretation thereof.
9.3 The express or implied waiver by any Party of any right or breach of any
provision of this Agreement shall not constitute a continuing waiver of the same
or other provisions of this Agreement.
9.4 The Parties to this Agreement agree that it is the intention of none of them
to violate any public policy, statutes, or common laws. However, if any
sentence, paragraph, clause or combination of the same is held to be in
violation of any state or federal law or otherwise unenforceable by a court from
which no appeal is or can be taken, such sentences, paragraphs, clauses, or
combinations of the same shall be deleted and the remainder of this Agreement
shall remain binding. Promptly following the making of any such deletion, the
Parties shall meet and use their best efforts to mutually agree on acceptable
language to be added to this Agreement in replacement of the deleted language,
which replacement language shall be crafted to come as close as possible to
having the same economic effect as the deleted language which it replaces.
9.5 Subject to the terms and conditions herein provided, each of the Parties
hereto shall use its best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby. In the event that at any time after this
Agreement has become effective, any further action is necessary to carry out its
purposes, ENZO and DIGENE or the proper directors or officers of either, as the
case may be, shall take all such action without any further consideration
therefor.
9.6 This Agreement and the Joint Stipulation and Order of Dismissal with
Prejudice are the final and complete understanding of the Parties with respect
to the subject matter hereof, superseding all prior agreements, understandings
and discussions relating thereto. Any modifications or renewal of this Agreement
shall be in writing signed by the Parties hereto.
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9.7 The Parties to this Agreement may not assign this Agreement in whole or in
part without the other Party's prior written consent, except that without such
consent either Party may assign this Agreement to an entity under common control
with, controlled by or which comes into the control of either Party, or to a
third party which succeeds to all or substantially all of its business to which
this Agreement relates. Any and all other assignments or attempted assignments
by either party shall be null and void AB INITIO and shall be without any legal
effect.
9.8 This Agreement may be signed by the Parties in separate counterparts, each
of which (including a facsimile copy thereof) when so executed shall be deemed
an original, and all of which when taken together shall constitute the original
Agreement.
9.9 No Party shall originate any publicity, news release or other public
announcement, written or oral, relating to this Agreement (including, without
limitation, the terms hereof), without the prior written approval of the other
Party, which shall not be unreasonably withheld, except (after prior written
notice to the other Party) as otherwise required by law or regulation,
including, without limitation, the Securities Act of 1933, as amended ( the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Securities and Exchange
Commission (the "SEC") thereunder, but only to the extent necessary to meet the
Party's disclosure obligations thereunder. Neither Party shall object if the
other Party makes disclosures in its filings with the SEC regarding this
Agreement to satisfy such SEC disclosure obligations, pursuant to the disclosing
Party's good faith belief that it has an obligation to do so. Moreover, nothing
in this paragraph or any other part of the Agreement shall preclude either Party
from making a public statement (without obtaining prior written consent of the
other Party), including a press or news release, limited to the statement that
the Litigation has been settled and a license under the patent-in-suit was
granted by ENZO to DIGENE under that settlement or which otherwise becomes
publicly available as a consequence of the aforementioned required SEC filings.
After the initial publication of such publicity, news release or other public
announcement, each of the Parties shall be entitled to redisclose such approved
information in subsequent publicity, news releases, other public announcements
or filings made with the SEC under the Securities Act or the Exchange Act
without first obtaining the written approval of the other Party. Should any
dispute, controversy or disagreement arise concerning any content of any such
publicity, the disputed language shall not be included in any such publicity or
otherwise publicly disclosed in any manner unless otherwise required by law or
regulation.
9.10 This Agreement shall not constitute an agreement on the part of DIGENE to
permit ENZO or any of its Affiliates to use any trademarks, service marks, or
trade names of DIGENE. This Agreement shall not constitute an agreement on the
part of ENZO to permit DIGENE or any of its Affiliates to use any trademarks,
service marks, or trade names of ENZO, except as required to comply with Article
X hereof.
ARTICLE X: MARKING
10.1 DIGENE shall xxxx all Licensed Products in a manner sufficient to satisfy
the marking requirements of 35 U.S.C. ss. 287(a) or any other provisions of U.S.
or foreign law. The Parties
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will work in good faith to negotiate a reasonable period of time for DIGENE to
exhaust existing inventories and modify its Licensed Products' labeling, which
shall be no less than six months and only upon approval of the United States
Food and Drug Administration to the extent such approval is required.
ARTICLE XI: CONFIDENTIALITY
11.1 The Parties agree that each of them shall employ its best efforts to keep
the material terms of this Agreement, including, but not limited to, the Running
Royalty rates set forth in Article III of this Agreement confidential and not
disclose them to any third party, including by each seeking from the SEC
permission to maintain such royalty rates as confidential.
ARTICLE XII: DISPUTE RESOLUTION
12.1 Except as otherwise indicated in paragraph 7.4 and paragraph 12.2 hereof,
if any dispute, controversy or difference arises between the Parties out of, or
in connection with, this Agreement, or for the breach thereof, the Parties shall
promptly meet and attempt in good faith to resolve such dispute on a mutually
agreeable basis. If such dispute, controversy or difference is not resolved or
otherwise settled by the Parties within sixty (60) days after one Party has
given the other Party written notice of said dispute, controversy or difference,
it shall be resolved by litigation in the U.S. District Court for the District
of Delaware, which Court the Parties shall stipulate and seek to have retain
jurisdiction over the enforcement of this Agreement through provision in the
Joint Stipulation of and Order of Dismissal with Prejudice referenced in this
Agreement.
12.2 In the event that any dispute, controversy or difference arises between the
Parties out of, or in connection with, this Agreement with respect to whether a
product offered for sale by DIGENE as of the Effective Date, or not presently
offered for sale by DIGENE as of the Effective Date, but which DIGENE offers for
sale for the first time at any date subsequent to the Effective Date of this
Agreement, is subject to the terms of this Agreement, the Parties shall promptly
meet and attempt in good faith to resolve such dispute on a mutually agreeable
basis. If such dispute, controversy or difference is not resolved or otherwise
settled by the Parties within sixty (60) days after one Party has given the
other Party written notice of said dispute, controversy or difference, it shall
be resolved by binding arbitration before a panel of three independent
arbitrators in accordance with the procedures of the rules governing patent
disputes of the American Arbitration Association. The venue for any such
arbitration proceeding shall be Wilmington, Delaware. Within sixty (60) days
after the Effective Date, the Parties will mutually agree to procedures
governing any such arbitration proceeding and include such procedures as an
amendment to this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have caused this Settlement and
License Agreement to be executed on October 13, 2004.
ENZO LIFE SCIENCES, INC.
ENZO BIOCHEM, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxx
Title: CEO
DIGENE CORPORATION
By: /s/ Xxxx Xxxxx
-------------------------
Name: Xxxx Xxxxx
Title: CEO
16
