EXHIBIT 10.18
SECOND AMENDMENT
This is a Second Amendment ("Amendment") dated July 21, 1999, to that
certain Agreement dated April 6, 1998, by and between Entropin, Inc.
("Entropin"), a Colorado corporation and Western Center for Clinical
Studies, Inc. ("WCCS"), a California corporation.
1. Article II of the Agreement entitled "TERM OF AGREEMENT" is
hereby amended as follows:
This Agreement shall be for a term commencing as of April 6, 1998
and through the completion of the NDA phase: provided, however, (1)
the parties negotiating in good faith, can agree on terms and payment
commensurate with the agreed upon scope of work for WCCS to supply
support for the NDA phase; and, (2) either party shall have the right
to terminate this Agreement prior to such date as set forth in Article
VII of this Agreement. This time period shall be known as the "Term".
2. Article III of the Agreement entitled "OBLIGATIONS OF WCCS AND
ENTROPIN" is hereby amended as follows:
3.4 TIME COMMITMENTS: Unless otherwise agreed to in writing by
Entropin, Xxxx Xxxxxx, Ph.D., Xxx X. Xxxxxxxx, Ph.D., and Xxxxxx
X. Xxxxxxxx, M.D. shall, during the Term, devote the effort
necessary and prudent to assure that their obligations under this
Agreement are completed within the Time Line and Budget. [THE
REMAINING SENTENCES CONTAINED IN PARAGRAPH 3.4 HAVE BEEN
ELIMINATED]
3.7 REPORTS: WCCS shall keep Entropin fully informed of all
activities undertaken by it for the benefit of Entropin and its
progress in completing its obligations under this Agreement. In
that regard, WCCS shall provide Entropin with progress reports
as follows: (i) in compliance with the reporting requirements to
be determined by the parties no later than August 15, 1999; and,
(ii) a variance report when its progress relative to the Scope of
Work, Time Line and Budget varies to a material degree. Entropin
shall keep WCCS fully informed regarding its efforts to raise
additional funds. WCCS shall not disclose to any third party any
non-public information relating to the financial condition of
Entropin or its efforts to raise additional funds and neither it
nor any of its assigns shall at any time buy or sell any shares
of stock of Entropin based on any such non-public financial
information.
3.8 ENTROPIN OBLIGATIONS:
b. Entropin will establish a formal review process satisfactory
to both parties, to ensure that all public relations materials,
news releases, presentations or other information disseminated to
the public which refer to the officers, employees or Scope of
Work of WCCS, or to matters relating to the FDA, DEA, OSHA, and
other related regulatory agencies, will be presented to WCCS for
review and approval prior to release.
3.9 CRO ACTIVITIES: The parties will negotiate in good faith a
separate agreement regarding the retention of WCCS to perform the
wrap around scope of work of CRO activities for Phase III A and
III B.
3. Article IV of the Agreement entitled "COMPENSATION TO WCCS" is
hereby amended as follows:
4.1 PAYMENTS: Subject to any subsequent modification of the
term and scope of this Agreement, Entropin shall make payment for
management fees to WCCS in
2
the aggregate amount of Eight Hundred Eighty Thousand Four
Hundred Dollars ($880,400.00), for the period from April 6, 1998,
through January 5, 2001, and Seventy-six Thousand Four Hundred
Dollars ($76,400.00) per quarter commencing January, 2001 and
continuing until NDA submission. The first such payment shall be
made concurrently with the execution of this Agreement by
authorized representatives of WCCS and Entropin and shall be in
the amount of Forty Thousand Dollars ($40,000). Thereafter,
payments shall be made to WCCS as set forth in Exhibit A.
Promptly upon execution of this Amendment, Entropin shall accrue
and escrow an amount equivalent to three (3) months of management
fees and Entropin agrees that such funds identified and dedicated
to WCCS for services under this Agreement may not nor will be
used for any purpose other than payment of such services without
prior written consent from WCCS. In the event the parties enter
an agreement concerning the NDA as set forth in Article II of the
Agreement, the management fees will be increased accordingly
4.2 STOCK OPTIONS:
b. OPTION TERM: The term of each option shall be for seven (7)
years from the date of its grant.
d. EXERCISE DATES: Subject to Article V of this Agreement,
WCCS or its assignees may exercise the options granted to it
under this Agreement according to the schedule listed below:
provided, however, in the case of any merger or consolidation of
Entropin with or into another corporation or any other type of
reorganization which results in a change of control whereby
Entropin's board of directors prior to
3
the reorganization represents less than a majority of Entropin's
board of directors after the reorganization, all remaining
options shall become immediately exercisable at the effective
date of such merger, consolidation or change of control:
Number of Options Date of Vesting
----------------- ---------------
75,000 Fully vested
100,000 Start of Phase III Clinical Trials
75,000 Completion of Phase III, Part A,
Clinical Trials and submission of
report to FDA
75,000 Completion of Phase III, Part B,
Clinical Trials and submission of
report to FDA
125,000 The earlier of NDA approval or
contract termination, except in
the event of a termination by WCCS
under paragraphs 7.3, 7.4 or 7.7
of this Agreement
h. REGISTRATION RIGHTS: Subject to the approval of Entropin's
investment banker, Entropin shall include the shares underlying
options granted to WCCS in this Agreement in a registration
statement filed with the Securities and Exchange Commission under
the Act as soon as practicable following the completion of
Entropin's proposed secondary public offering; provided, however,
the shares underlying such options shall be subject to any lock-up
or other restrictions imposed upon Entropin's directors,
officers and major shareholders. Entropin shall make all
reasonable efforts to keep such registration current. Entropin
shall give 30 days' prior written notice to WCCS of Entropin's
intention to file a registration statement under the Act. WCCS
will provide Entropin with such information relating to WCCS and
its plan of distribution as may be necessary for the completion
of the
4
registration statement, and will enter into appropriate
indemnification agreements, as well as any lock-up and other
restrictive agreements as entered into by principal shareholders,
officers or directors of Entropin, and make other customary
representations to Entropin related to the registration
statement.
4. Article V of the Agreement entitled "ADJUSTMENTS" is hereby
amended as follows:
5.1 INABILITY TO MEET CURRENT OBLIGATIONS: In the event
Entropin's financial forecasts project that Entropin is or will
become unable to meet its financial obligations accrued in the
normal course of business as they become due 60 days from the
forecast date, the parties will enter good faith negotiations to
modify this Agreement within thirty (30) days from written notice
to WCCS by Entropin of such forecast. If the parties are not
able to negotiate an acceptable modification of the Agreement,
either party may terminate the Agreement. Notwithstanding
paragraph 5.1(a), any negotiated reduction in WCCS' compensation
will be accrued and paid by Entropin as soon as practicable,
provided however, the parties reach an agreement on adjustments
in performance. Such termination shall release all parties of all
further obligations under the Agreement, except that Entropin
shall have the following obligations to WCCS: [PARAGRAPH 5.1(a)
REMAINS UNCHANGED AND PARAGRAPH 5.1(b) IS ELIMINATED.]
5. Article VI of the Agreement entitled "DIRECTORS AND OFFICERS
LIABILITY INSURANCE" is hereby amended to include the following provision:
5
6.3 INDEMNIFICATION: Entropin agrees to indemnify, defend, and
hold harmless WCCS, its employees, subcontractors or agents,
for any and all claims, demands and expenses, including
litigation costs, arising out of, or in any way resulting
from or connected with the services or work provided by
WCCS, its employees, subcontractors or agents, insofar as
such claim, liability or action arises out of, or is based
upon, the actions or inactions of Entropin.
5. Article VII of the Agreement entitled "TERMINATION" is hereby
amended to include the following provisions:
7.7 CONTINUATION OF THE AGREEMENT: In the event that the results
of the Phase III, Part A, Clinical Trials indicate that
Esterom(R) is ineffective, either party may terminate this
Agreement upon written notice to the other party.
7.8 OPTION TO TERMINATE: At any time after the completion of the
Phase III, Part A, Clinical Trials, if Entropin shall have
obtained a commitment with an alliance partner or an equivalent
business relationship, Entropin shall have the option to
terminate this Agreement effective upon sixty (60) days written
notice to terminate. At the termination date, all options
granted to WCCS or its assignees under this Agreement shall
become immediately exercisable.
6. Article XI of the Agreement entitled "ARBITRATION" is hereby
amended as follows:
Any dispute arising between WCCS and Entropin concerning this
agreement or its interpretation shall be resolved by submission to
arbitration in Denver, Colorado in accordance with the rules of the
American Arbitration Association then in effect. The
6
dispute will be heard by a panel of arbitrators familiar with
pharmaceutical manufacturing and/or pharmaceutical research and
development. Any award made by such arbitrators shall be binding and
conclusive for all purposes hereof, may include injunctive relief, and
may be entered as a final judgment in any court of competent
jurisdiction. The costs and expenses of such arbitration shall be
borne in accordance with the determination of the arbitrators.
7. Article XII of the Agreement entitled "MISCELLANEOUS" is hereby
amended as follows:
12.1 (a) if the WCCS: Xxxx Xxxxxx, Ph.D
Western Center for Clinical Studies, Inc.
00000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
8. The following Exhibits shall be amended as attached hereto as
Exhibits A and D, respectively:
Exhibit A: BUDGET
-----------------
Exhibit D: TIME LINE: Milestones, Tasks, and Sub Tasks
------------------------------------------------------
All other provisions of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the undersigned have entered into this AMENDMENT
effective July 21, 1999.
WESTERN CENTER FOR CLINICAL
STUDIES, INC. ENTROPIN, INC.
By: /s/ XXXX XXXXXX By: /s/ XXXXXX XXXXXX
----------------------------- -----------------------------
Xxxx Xxxxxx Xxxxxx Xxxxxx
President Chief Executive Officer
Date: 7/28/99 Date: 7/21/99
----------------- -----------------
7
