FOURTH AMENDMENT TO LICENSE AGREEMENT
Exhibit
10.13
FOURTH
AMENDMENT
TO
THIS FOURTH AMENDMENT TO THE LICENSE
AGREEMENT (the “Amendment”), is entered into as of the 20th day of June
2008 and made effective as of the Signing Date (for purposes of this Amendment,
such term shall have the meaning set forth in that certain Master Termination
Agreement of even date herewith among the parties hereto (the “Master
Termination Agreement”), by and between The Trustees of Columbia University in
the City of New York, a New York corporation (“Columbia”), and Omnimmune Corp.,
a Texas corporation (the “Company”) (together, Columbia and Company shall be
referred to as the “Parties”). For purposes of this Amendment, the
phrase “License Agreement” shall mean that certain License Agreement entered
into by and between the Columbia and Company as of the 1st day of
February 2005, as amended March 29, 2005; June 10, 2005 and January 31, 2007;
and unless otherwise defined herein, capitalized terms and phrases shall have
the meaning ascribed thereto in the License Agreement.
WHEREAS, the Company has
requested, and Columbia has agreed, to amend the License Agreement upon the
terms and conditions set forth in this Amendment;
NOW THEREFORE, for good and
valuable consideration, including, without limitation, the promises and the
mutual covenants contained herein, the Parties agree as follows:
Section
1. Amendments. Effective upon the Signing Date, the
License Agreement is hereby amended as follows:
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(a)
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Section
1, entitled “Definitions,” shall be amended by deleting in its entirety
Subsection 1a., thereof entitled “Affiliate,” and in lieu thereof, the
following new section shall be
added:
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a. “Affiliate”
means, with respect to any person or entity, a person or entity that directly or
indirectly controls, is controlled by or is under common control with such
person or entity. For purposes of this definition, “control” shall
mean beneficial ownership (direct or indirect) of more than 50% of the
outstanding voting stock or other voting rights entitled to elect directors (or
in the case of an entity that is not a corporation the election or appointment
of the management thereof).
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(b)
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Section
3, entitled “Royalties and Payments,” shall be amended as
follows:
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a. In
consideration of the license granted under Section 2.a of this Agreement, the
Company shall pay to Columbia:
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(i)
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a
reimbursement in the amount of $25,000 for past patent expenses, upon the
initial $1,000,000 of sales of Licensed Products by Company, its
successors or Sublicensees or any of their respective Affiliates (or any
combination thereof);
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(ii)
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a
running royalty, to be determined on a Territory (as defined below) by
Territory basis, equal to the greater of either 1% or the Pass-Thru
Multiple (as defined below) of Net Sales of all Licensed Products that
involve use of Licensed Material or Licensed Information but are not
covered by a Claim of a Licensed Patent (the “Non-Patented Products”) for
a term of ten (10) years from the date of the First Sale of each
Non-Patented Product; provided, however, that
in no event shall the running royalty under this Subsection (ii) exceed
2%; and
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(iii)
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a
running royalty, to be determined on a Territory by Territory basis, equal
to the greatest of (1) 2%, (2) the Pass-Thru Multiple, if applicable, or
(3) the Transaction Multiple (as defined below), if applicable, of Net
Sales of all Licensed Products covered by a Claim of a Licensed Patent
licensed hereunder to the Company (the “Patented Products”), for a period
of ten (10) years from the date of First Sale of each new Patented Product
in a Territory or the last to expire Licensed Patent in such Territory,
whichever is longer; provided, however, that
in no event shall the running royalty under this Subsection (iii) exceed
4%.
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(a)
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Definitions. For
purposes of this Section 3.a, the following term and phrases shall have
the meaning ascribed thereto:
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(1)
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“Acquisition”
shall mean the initial consummation of any of the following, effected,
directly or indirectly, in one or more transactions: (x) any
sale, lease, license or other transfer or disposition of all or a majority
of the business or assets of the Company, including, without limitation,
by means of any revenue sharing, participation or other arrangement that
confers all or a majority of the benefits and economic indicia of
ownership of such business or assets; or (y) any merger, consolidation,
conversion, other business combination, share exchange, sale or other
transfer or disposition of shares, spin-off, spin-out, contractual
transfer of control or voting power, reorganization, recapitalization or
other transaction or transactions involving the Company, if after giving
effect to any such transaction or transactions described in this clause
(y) the holders of record or beneficial owners of the voting shares of, or
other voting interests in, the Company prior to the first such transaction
no longer hold or own beneficially (in substantially the same percentages)
a majority of the voting shares of, or other voting interests in, the
Company (a “Control Shift”); provided that neither issuances by the
Company of its capital stock (whether as an original issuance or from
treasury shares) to investors, solely for bona fide equity financing
purposes nor any Control Shift that may occur solely by means of (aa) the
private placement of up to 3,200,000 Units (as such term is defined in the
PAA (as defined below) conducted pursuant to that certain
Placement Agency Agreement, dated June 20, 2008, between the
Company and New Castle Financial Services, LLC, as such agreement is in
effect on the date hereof, and/or (bb) the merger of the Company into a
wholly-owned subsidiary Roughneck Supplies, Inc. (the “Merger Sub”),
pursuant to a Merger Agreement between the Company and Roughneck Supplies,
Inc. (or any successor thereof) and the Merger Sub., substantially upon
the terms disclosed in the draft Confidential Private Placement Memorandum
with respect to the sale of up to $8 million of units, furnished to
Columbia on the date hereof, shall, in and of themselves, be deemed to be
an Acquisition. Without limitation as to Section 20, the term “Company,”
as used in this definition, shall include any Successor
Issuer.
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(2)
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“Acquisition
Pass-Thru Multiple” shall mean the Pass- Thru Multiple required to be paid
by Company in respect of Net Sales under any sublicense between Company
and any person or entity that is or becomes an Acquiring Sublicensee (as
defined below), whether or not such sublicense remains in effect following
an Acquisition.
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(3)
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“Acquiring
Sublicensee” shall mean, any Sublicensee (including any Affiliate of any
Sublicensee) that has entered into any Acquisition
transaction.
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(4)
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“Pass-Thru
Multiple” shall mean the product of the Pass-Thru Percentage (as defined
below) multiplied by the royalty rate required to be paid by any
Sublicensee to Company on account of Net Sales of, in the case of Section
3.a(ii) above, Non-Patented Licensed Products or, in the case of Section
3.a(iii) above, Patented Products, as the case may be;
and
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(5)
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“Pass-Thru
Percentage” shall mean that percentage rate as may be applicable under
Section 3.b below, for either sublicensed therapeutics or sublicensed
diagnostics and in effect from time to time
thereunder.
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Example: if
prior to the first animal efficacy study Company were to sublicense a Patented
Product to a pharmaceutical company in exchange for a $1,000,000 upfront license
fee and a 15% sublicense royalty on Net Sales, then, in the absence of an
Acquisition, Company would owe Columbia the following amounts
A
sublicense fee on Sublicense Revenue equal to 22.5% of $1,000,000
A
running royalty of the greater of 2% of Net Sales or 3.375% (22.5% x 15%) of Net
Sales.
The foregoing example is provided
solely for illustration purposes.
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(6)
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“Successor
Issuer” shall mean any issuer of securities issued to holders of the
voting shares of, or other voting interests in, the Company directly or
indirectly in consideration for such shares of, or interests in, the
Company.
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(7)
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“Territory”
shall mean any defined area under the jurisdiction or considered to be the
possession of a recognized government (e.g., the area
described as the United States of
America).
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(8)
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“Transaction
Multiple” shall mean the greater of
either:
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a.
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the
Acquisition Pass-Thru Multiple; or
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b.
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in
the case of an Acquisition other than by an Acquiring Sublicensee, three
percent (3%) of Net Sales of Patented Products sold for therapeutic
purposes (whether or not such products are also sold for diagnostic
purposes); provided, however, that
in the case where the Acquisition occurs at a point in time where the
Pass-Thru Percentage of 12.5% is applicable, then in such case, three
percent (3%) shall be reduced to two and one-half percent
(2.5%)).
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(b)
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If
more than one Licensed Patent covers a Licensed Product, no additional
royalties will be paid by Company than if the Licensed Product is covered
by one Licensed Patent.
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(c)
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If,
after review at any stage of prosecution, Company and Columbia amend this
Agreement in writing that all claims issued or pending either do not cover
a Licensed Product, or are deemed unpatentable, then the royalty to
Columbia under Section 3a(ii) hereof shall be reduced to one percent (1%)
of Net Sales on such Licensed Product. Notwithstanding the
foregoing, if a patent subsequently issues from such applications, then
the royalty due to Columbia shall return to the original two percent (2%)
of Net Sales on such Licensed Product, beginning on the date of such
issue.
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b. For
the avoidance of doubt with respect to the royalties to be paid by Licensee
under Sections 3a(ii) and (iii) of this Agreement, if Licensee
owes running royalties under either such Section with respect to Net
Sales by a Sublicensee and Net Sales by Licensee itself, Licensee owes the
royalties at the same “greatest of” running royalty rate on all such sales
(prior to giving effect to Section 3c), notwithstanding that the definitions of
“Pass-Through Multiple” and “Transaction Multiple” (and any underlying
definitions) are defined on the basis of Sublicensee or Licensee
transactions. In addition, on all other gross revenues to the extent
included in Sublicense Revenue as defined above in Section 1q (other than
royalties on Net Sales), fees, payments and consideration, or any part thereof,
received by Company from Sublicensee as full or partial consideration for the
grant of any sublicense by Company pursuant to Section 2.b, the Company shall
pay to Columbia a percentage of Sublicense Revenue received by the Company
and/or its Affiliates from its Sublicensees according to the following
schedule:
From sublicensed
therapeutics:
22.5%
with respect to a sublicense entered into before the first animal efficacy study
of the Licensed Products;
17.5%
with respect to a sublicense entered into after first animal efficacy study of
the Licensed Products; or
12.5%
with respect to a sublicense entered into after first human clinical trial of
the Licensed Products;
From sublicensed
diagnostics:
17.5%
with respect to a sublicense entered into before diagnostic clinical
trial of the Licensed Products; or
12.5%
with respect to a sublicense entered into after diagnostic clinical trial of the
Licensed Products.
For the
avoidance of doubt, in the event any Sublicense Revenue derives from a Licensed
Product sold for both diagnostic and therapeutic purposes, then such product
shall be deemed to be both a sublicensed therapeutic and a sublicensed
diagnostic, and the Company shall pay Columbia with respect to all Sublicense
Revenue derived from such Licensed Product the greater of the two otherwise
applicable percentages in this Section 3.b with respect to diagnostics and
therapeutics.
c. Notwithstanding
any provision of this Agreement to the contrary, the amount of any running
royalties in excess of 1% payable by Company under Section 3.a(ii)
in respect of Net Sales of any Licensed Product shall be reduced by
fifty percent (50%) of any running royalty payments made by the Company to third
parties in respect of know how or other proprietary rights or information
involved in the use of such Licensed Product, and the amount of any running
royalties in excess of 2% payable by Company under Section 3.a(iii) in respect
of Net Sales of any Licensed Product shall be reduced, in any Territory, by
fifty percent (50%) of any running royalty payments made by Company to third
parties in respect of Claims covering such Licensed Product in such Territory,
but only if and to the extent that such know how or other proprietary rights or
information or patent rights, as applicable, are licensed after the Signing Date
from such third parties by Company and are necessary to make, use, offer for
sale, sell or import such Licensed Product (but excluding, without limitation,
any third-party licenses related to packaging or similar uses).
d. Minimum
Annual Royalties - Company shall pay to Columbia minimum royalties
for sales of Licensed Products according to the following schedule,
all of which payments shall be credited towards and offset against royalties and
payments due with respect to Sublicense Revenue before any such
payments are due to Columbia:
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(i)
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$37,500
on each anniversary after the First Sale of the first Licensed Product
based on diagnostic purpose; and
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(ii)
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$112,500,000
on each anniversary after the First Sale of the first Licensed Product
based on therapeutic purpose.
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(iii)
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For
the avoidance of doubt, in the event a product is sold for both diagnostic
purposes and therapeutic purposes, then both the payments under Sections
3.d(i) and 3.d(ii) are due.
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e. Licensed
Product(s) Derived From More Than One Licensed Patent - If a Licensed Product is
derived from more than one Licensed Patent and/or uses more than one Licensed
Material, Company is obligated to pay only one royalty to Columbia, the highest
royalty applicable.
f. License
Maintenance Fees - Company shall pay annual license maintenance fees according
to the schedule below:
$52,500 on or before May 1,
2009;
$75,000
on or before May 1, 2010; and
$60,000
each first of May thereafter.
The
foregoing maintenance fees shall be due and payable until Company pays Columbia
the minimum royalties under Section 3.d(i) and 3.d(ii) hereof on an annual
basis.
g. Milestone
Payment. Upon and coincident with the date on which a New Drug
Application (“NDA”) for a Licensed Product is granted by the FDA (as such
process is contemplated in Section 505 of the Federal Food, Drug & Cosmetic
Act) or a similar approval is granted for a Licensed Product in any Territory in
which a Licensed Product is covered by a Claim of a Licensed Patent, Company
shall pay Columbia the amount of $500,000.
(b) Section
6, entitled “Best Efforts,” shall be amended as follows:
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(1)
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Subsection
6(a)(i) shall be amended by deleting the date “February 1, 2008,” and in
lieu thereof adding the date “September 1,
2009”;
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(2)
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Subsection
6(a)(ii) shall be amended by deleting the date “February 1, 2007,” and in
lieu thereof adding the date “September 1,
2009”;
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(3)
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Subsection
6(a)(iii) shall be amended by deleting the date “February 1, 2010,” and in
lieu thereof adding the date “August 1,
2010”;
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(4)
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Subsection
6(a)(iv)(a) shall be amended by deleting the date “February 1, 2008,” and
in lieu thereof adding the date “September 1,
2009”;
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(5)
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Subsection
6(a)(iv)(b) shall be amended by deleting the date “February 1, 2010,” and
in lieu thereof adding the date “February 1,
2011”;
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(6)
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Subsection
6(a)(iv)(c) shall be amended by deleting the date “February 1, 2011,” and
in lieu thereof adding the date “February 1,
2012”;
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(7)
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Subsection
6(a)(v)(a) shall be amended by deleting the dates “February 1, 2008” and
“February 1, 2010,” and in lieu thereof adding the dates “February 1,
2011” and February 1, 2012,”
respectively;
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(8)
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Subsection
6(a)(v)(b) shall be amended by deleting the date “February 1, 2010,” and
in lieu thereof adding the date “February 1,
2012”;
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(9)
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Subsection
6(a)(v)(c) shall be amended by deleting the date “February 1, 2011,” and
in lieu thereof adding the date “February 1, 2014”;
and
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(10)
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Subsection
6(a)(v)(d) shall be amended by deleting the date “February 1, 2013,” and
in lieu thereof adding the date “February 1, 2016”;
and
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(d)
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Section
16, entitled “Breach and Cure” shall be amended to delete therefrom in its
entirety Subsection 16(a)(iii).
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(e)
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Section
17, entitled “Term of Agreement,” shall be amended to delete therefrom in
its entirety Subsection 17(a) and, in lieu thereof, the following new
Subsection 17(a) shall be added:
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This
Agreement shall be effective as of the date first recited above and shall
continue in full force and effect until its expiration or termination in
accordance with this Section 17.
Section
2. This
Amendment shall not be effective until the Signing Date, and shall be of no
force and effect unless the Signing Date occurs on or prior to August 1,
2008. Each of the Parties to this Amendment acknowledge and agree
that, except as modified hereby, all of the terms and provisions of the License
Agreement shall remain in full force and effect.
Section
3. This
Amendment and the License Agreement shall constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior or contemporaneous agreements and understandings among the parties with
respect thereto. The foregoing is without limitation as to the effect
of the Fourth Amendment and the Termination Agreement (Stockholders
Agreement). No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
Section
4. This
Amendment may be executed in any number of counterparts, each of which shall be
deemed to be an original as against any party whose signature appears thereon,
and all of which shall together constitute one and the same
instrument. Delivery of an executed counterpart of a signature page
to this Amendment by facsimile or by electronic mail shall be effective as
delivery of a manually executed counterpart hereof. If any portion of
this Amendment or application thereof is held invalid, the invalidity shall not
affect other provisions of this Amendment that can be given effect without the
invalid provision or application and, to this end, the provisions of this
Amendment are declared to be severable.
Section
5. This
Amendment shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and assigns in accordance with Section 20
of the License.
Section
6. Should
a conflict arise or otherwise exist between the terms and conditions of the
License Agreement and this Amendment or any interpretation thereof, each of the
Parties agree that the terms and conditions of this Amendment shall
prevail.
[Remainder
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IN WITNESS WHEREOF, the
Parties have executed this Amendment as of the date first above
written.
Columbia
The
Trustees of Columbia University in the City of New York, a New York
corporation
By: /s/ Xxxx
Xxxxxxxxxx
Name: Xxxx
Xxxxxxxxxx
Title: Executive Director, Science
and Technology Ventures
COMPANY
Omnimmune
Corp., a Texas corporation
By:/s/ Xxxxxx X.
Xxxxxxxxxxxx
Name: Xxxxxx X.
Xxxxxxxxxxxx
Title: President and
CEO
