Exhibit 10.12
[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
EXCLUSIVE LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made and entered into this 1st day of
September, 1998 (the "Effective Date" between THE UNIVERSITY of NORTH CAROLINA
AT CHAPEL HILL, having an address at 000 Xxxxx Xxxx, Xxxxxx Xxxx, X.X.
(hereinafter referred to as "University") and Inspire Pharmaceuticals, Inc., a
corporation organized and existing under the laws of Delaware and having an
address at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, XX 00000 (hereinafter
referred to as "Licensee").
WITNESSETH
WHEREAS, University owns and controls the inventions described in and
encompassed by University invention disclosure number OTD 95-24 and U.S. Patent
No. 5,635,160, corresponding foreign applications entering national phase from
PCT/US96/09190 and U.S. Continuation-In-Part application 08/853,056, all
entitled "Dinucleotides Useful for the Treatment of Cystic Fibrosis and for
Hydrating Mucus Secretions", disclosure number OTD 96-83 and U.S. patent
application No. 08/624,914 entitled "Method of Treating Bronchitis with Uridine
Triphosphates and Related Compounds", and disclosure number OTD 99-13 and U.S.
patent application No. 08/744,267 entitled "Method of Treating Ciliary
Dyskinesia with Uridine Triphosphates and Related Compounds" (collectively,
"Inventions");
WHEREAS, the Inventions were developed by Drs. X. Xxxxxxx Xxxxxx and
Xxxxxxx X. Xxxxxxx, Xxxxxxx X Xxxxxxxxxx and Xxxx X. Xxxxx (collectively, the
"Inventors"), of the University; and
WHEREAS, Licensee is desirous of producing, using and selling products
which include the use of the Inventions and is willing to expend best efforts to
do so if it can obtain a license to use the Inventions under the terms and
conditions set forth herein; and
WHEREAS, University desires to facilitate a timely transfer of its
information and technology concerning the Inventions for the ultimate benefit of
the public and this transfer is best accomplished by the grant of this license;
and
WHEREAS, in the opinion of the University, this transfer can best be
accomplished consistent with its mission by affiliation with Licensee;
NOW, THEREFORE, for and in consideration of the covenants, conditions,
and undertakings hereinafter set forth, it is agreed by and between the parties
as follows:
1. Definitions
1.1. "University Technology" means any unpublished research
and development information, unpatented inventions, clinical data, and technical
data developed by the Inventors while employees of the University and in the
possession of the University prior to the Effective Date of this Agreement,
which relates to and is necessary for the practice of the Inventions and which
University has the right to provide to Licensee.
1.2. "Licensed Products" means any method, procedure, product, or
component part thereof whose manufacture, sale, or use includes any use of
University Technology that is covered by any Valid Claim included in the Patent
Rights.
1.3. "Patent Rights" means any unexpired U.S. patents and/or
pending patent applications covering the Inventions owned or controlled by
University prior to or during the term of this Agreement and which University
has the right to provide to Licensee, as well as any continuations,
continuations in part, divisions, substitutions, continued patent applications,
patents issued thereon, or reissues thereof, and any foreign counterpart of any
of the foregoing. University's current U.S. and foreign patents and patent
applications which are included in Patent Rights and which exist on the
Effective Date of this Agreement are set forth on Exhibit A. Upon either party's
request, the parties shall cooperate in reviewing and updating Exhibit A from
time to time (but not more frequently than once during any twelve (12) month
period).
1.4. "Net Sales" means the gross amount invoiced for all Licensed
Products sold by or for Licensee and/or its sublicensees in arm's length sales
to unrelated third parties (excluding sales by Licensee to its sublicensees for
their resale) less deductions for (i) trade, quantity and cash discounts or
rebates actually allowed, (ii) credits or allowances actually given for
rejections or returns or because of rebates or retroactive reductions, (iii)
sales, use and value added taxes, and (iv) freight, shipping or other costs of
transportation charged to a customer. Such amounts shall be determined from the
books and records of Licensee or its sublicensees, maintained in accordance with
the accounting principles used by such entity, consistently applied. Licensed
Products will be considered sold when billed out, or when delivered or paid for
before delivery, whichever first occurs.
1.5. "Licensed Territory" means the entire world.
1.6. "Valid Claim" means a claim of an issued patent which has not
lapsed or become abandoned or been declared invalid or unenforceable by a
court of competent jurisdiction or an administrative agency for which there is
no right of appeal or for which the right of appeal is waived.
2. Grant of License and Term
2.1. University grants to Licensee to the extent of the Licensed
Territory, an exclusive license (with the right to grant sublicenses pursuant to
Article 5) under the Patent Rights to make, have made, use and sell, and have
sold Licensed Products, upon the terms and conditions set forth herein.
2.2 University grants to Licensee to the extent of the Licensed
Territory a nonexclusive license with the right to grant non-exclusive
sublicenses pursuant to Article 5) to use University Technology, subject to all
the terms and conditions of this Agreement.
2.3. Any license granted herein is exclusive for a term beginning on
the Effective Date of this Agreement and, unless terminated sooner as herein
provided, ending at the expiration of the last to expire Valid Claim of any
patent included in the Patent Rights.
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2.4. Licensee shall not disclose any unpublished University
Technology furnished by University pursuant to Article 2.2 above, nor shall
University disclose any of Licensee's confidential information received under
Articles 4.3, 5.2 or 18.1 below, to third parties during the term of this
Agreement or any time thereafter, provided, however, that disclosure may be made
by the receiving party of any such information it has received from the
disclosing party at any time: (1) with the prior written consent of the
disclosing party, (2) after the same shall have become public through no fault
of the disclosing party, (3) as demonstrated by documentary evidence, if the
same was independently developed or discovered by the disclosing party prior to
the time of its disclosure, (4) the same is or was disclosed to the disclosing
party at any time, whether prior to or after the time of its disclosure under
this Agreement, by a third party having no fiduciary relationship with the
disclosing party and having no obligation of confidentiality with respect to
such University Technology, (5) the same is required to be disclosed to comply
with applicable laws or governmental regulations, including disclosures made in
connection with securities regulation filings, provided the disclosing party
receives prior written notice of such disclosure and that Licensee takes all
reasonable and lawful actions to minimize the extent of such disclosure and, if
possible, to avoid such disclosure, or (6) where the same is provided by the
receiving party to third parties under substantially the same terms and
conditions, including confidentiality provisions to those in this Agreement, for
consulting, process and formulation development, manufacturing, external testing
and marketing trials; provided, further, that disclosure may be made when it is
necessary to disclose information in order to conduct clinical trials as in the
case of investigators' brochures, clinical protocols, other regulatory filings
or documents and due diligence processes.
2.5. Notwithstanding the foregoing, any and all licenses granted
hereunder are subject to the rights of the United States Government which arise
out of its sponsorship of the research which led to the Inventions.
3. License Fee, Milestone Payments and Royalties
3.1 Licensee shall pay to University the following fees:
(a) Upon execution of this Agreement, a license issue fee of
[CONFIDENTIAL TREATMENT REQUESTED] for Inventions
described in U.S. Patent No. 5,635,160, entitled
"Dinucleotides Useful for the Treatment of Cystic
Fibrosis and for Hydrating Mucus Secretions", University
file OTD 95-24, U.S. patent applications No. 08/624,914
entitled "Method of Treating Bronchitis with Uridine
Triphosphates and Related Compounds", University File
OTD 96-83, and U.S. patent application No. 08/744,267
entitled "Method of Treating Ciliary Dyskinesia with
Uridine Triphosphates and Related Compounds", University
File OTD 99-13;
(b) Licensee will continue to reimburse the University
for properly documented costs (including attorney's
fees) arising out of the patenting of the Inventions
pursuant to Article 10 of this Agreement;
(c) Licensee shall pay to University the following
milestone payments within sixty (60) days after each
milestone is achieved:
3
Payment Milestone
[CONFIDENTIAL TREATMENT REQUESTED]
(d) In partial consideration of the license granted under
Article 2.1 of this Agreement, Licensee shall issue
to the University a total of Fifty Thousand (50,000)
shares of Common Stock of the Company upon execution
of this Agreement;
(e) All fees and the reimbursement of patenting costs
shall be non-refundable and shall not be a credit
against any other amounts due hereunder except as may
be provided for elsewhere in this Agreement;
(f) Milestone payments are payable only one time
hereunder and for all milestones accomplished in
connection with this Agreement the aggregate cash
payments shall not exceed [CONFIDENTIAL TREATMENT
REQUESTED].
[CONFIDENTIAL TREATMENT REQUESTED]
3.2. Beginning on the Effective Date of this Agreement and
continuing for the term of this Agreement, Licensee will pay University a
running royalty of [CONFIDENTIAL TREATMENT REQUESTED] of all Net Sales of the
Licensed Products(s). The obligation to pay royalties to University under this
Article 3.2 is imposed only once with respect to the same unit of Licensed
Product regardless of the number of Patent Rights pertaining thereto.
3.3. After the first commercial sale of a Licensed Product,
Licensee agrees to make quarterly written reports to University within sixty
(60) days after the first days of each January, April, July, and October during
the term of this Agreement and as of such dates, stating in each such report the
amount, description, and aggregate Net Sales of Licensed Products sold or
otherwise disposed of during the preceding three calendar months and upon which
royalty is payable as provided in Article 3.2 hereof. The first such report
shall include all such Licensed Products so sold or otherwise disposed of prior
to the date of such report.
3.4. Concurrently with the making of each such report,
Licensee shall pay to the University royalties at the rate specified in Article
3.2 of this Agreement on the Licensed Products included therein.
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3.5
(a) [CONFIDENTIAL TREATMENT REQUESTED]
(b) [CONFIDENTIAL TREATMENT REQUESTED]
3.6. University may, by sixty (60) days advance written
notice to Licensee, terminate this Agreement during any April subsequent to the
second anniversary of the first commercial sale of a Licensed Product if
Licensee, together with its sublicensees, have not practiced the Invention
during each calendar year which precedes each such April to the extent of
generating earned payments to University under Articles 3.2 of this Agreement in
an amount no less than [CONFIDENTIAL TREATMENT REQUESTED] provided, however, any
such termination shall not be effective if Licensee can demonstrate reasonable
efforts by Licensee or Licensee's sublicensee(s) toward first commercial sale of
Licensed Product during each such calendar year. Should there be a dispute as to
whether Licensee has, during such sixty (60) day period, demonstrated such
reasonable efforts, the parties shall conduct good faith discussions directed
toward resolution of the dispute. If, following such sixty (60) day period,
there is a dispute as to whether Licensee has demonstrated such reasonable
efforts, then such sixty (60) day period automatically shall be extended for
thirty (30) days, during which time the parties shall hold good faith
discussions in order to resolve such dispute. If, following such thirty (30) day
extension, such dispute has not been resolved, the original sixty (60) day
period shall be extended for an additional thirty (30) days, during which time
the Director of the Office of Technology Development at University and the Vice
President and Chief Operating Officer of Licensee shall use good faith,
reasonable efforts to resolve such dispute.
3.7. Should this Agreement become effective or terminate or
expire during a calendar year, the minimum annual royalty or maintenance fee
(whichever applicable) for such portion of a year shall be determined by
multiplying the minimum annual royalty or maintenance fee (whichever applicable)
set forth for the year in which this Agreement becomes effective, terminates or
expires, by a fraction, the numerator of which shall be the number of days
during such calendar year for which this Agreement shall be in effect and the
denominator of which shall be 365.
3.8. In the event of default in payment of any payment owing
to University under the terms of this Agreement, and if it becomes necessary for
University to undertake legal action to collect said payment, Licensee shall pay
all legal fees and costs incurred by University in connection therewith.
5
3.9. In the event that Licensee is legally required to pay
royalties to one or more third parties for the license of technology other than
the Patent Rights or University Technology in order to make, use or sell a
Licensed Product, then Licensee shall be entitled to pay University a pro-rata
share of total royalties due on Net Sales of that Licensed Product, where the
reduction in royalties due to University under Article 3.2 above is
[CONFIDENTIAL TREATMENT REQUESTED]. By example, and for purpose of clarity, if a
Licensed Product requires Licensee to pay royalties of [CONFIDENTIAL TREATMENT
REQUESTED] of Net Sales to third parties under license of technologies other
than the Patent Rights or University Technology, the royalties payable to
University by Licensee would be calculated as follows:
royalties due University = [CONFIDENTIAL TREATMENT REQUESTED]
where: r\i\ = the royalty rate payable by Licnsee
for the ith third party license
N = total number of third party licenses
(N less than or equal to 4)
[CONFIDENTIAL TREATMENT REQUESTED]
3.10. Licensee shall make all royalty payments required under
this Agreement in the United States in United States Dollars. The royalty
payments due shall be translated at the rate of exchange at which United States
Dollars are listed in The Wall Street Journal for the currency of the country in
which the royalty is accrued on the last business day of the calendar quarter in
which such sales were made, or with respect to the sublicensees of the Licensee,
at the rate of exchange used by such sublicensees.
3.11. Licensee shall pay interest on any payment under this
Agreement that is not made by the date due hereunder at a rate equal to the
prime rate plus 2% obtained from The Wall Street Journal, Eastern U.S. edition,
on the business day next preceding the date such payment was due, from such date
until payment in full has been made.
4. Diligence Requirements
4.1. Licensee shall use its best efforts to proceed diligently
with the manufacture and sale of Licensed Products and shall earnestly and
diligently offer and continue to offer for sale such Licensed Products, both
under reasonable conditions and including the ability of the Licensee to
exercise its discretion with respect to commercial, financial and regulatory
variables affecting the commercialization of Licensed Products during the term
of this Agreement. Licensee shall be deemed to have used its best efforts in a
given country(ies) with respect to the foregoing
6
obligations if Licensee grants a sublicense to a pharmaceutical company with a
market cap in excess of [CONFIDENTIAL TREATMENT REQUESTED] (a "Major
Pharmaceutical Company") who has agreed to use reasonable commercial efforts to
develop, market and sell Licensed Products in such country(ies), provided that
any such sublicense contains, for each sublicensed Licensed Product, performance
milestones analogous to those in Article 4.2 below.
4.2. In particular, Licensee shall use diligent efforts to
meet the performance milestones set forth below:
Date Milestone
[CONFIDENTIAL TREATMENT REQUESTED]
The parties acknowledge that the first milestone relating to the submission of
the IND has been accomplished by Licensee.
4.3. On each anniversary date of the Effective Date of this
Agreement, and until the time of first commercial sale of a Licensed Product,
Licensee shall provide University with a report describing progress toward
developmental milestones listed in Article 4.2 unless and until Licensee and/or
its sublicensee are no longer developing additional Licensed Products.
4.4.
(a) Following the first commercial sale of the first Licensed
Product pursuant to this Agreement, each party shall notify the other within
thirty (30) days after such party receives a Bona Fide Inquiry from a
prospective sublicensee that wishes to obtain a sublicense in a Field in which
Licensee is not developing or selling any Licensed Products at the time such
Bona Fide Inquiry is made. For purposes of this Article 4.4, "Bona Fide Inquiry"
shall mean an inquiry to obtain such sublicense on terms that are
scientifically, technologically and commercially reasonable, that is made by a
third party having or having reasonable access to reasonably sufficient
scientific knowledge, technology, drug development experience, personnel,
facilities and capital to support the development, commercialization and launch
of a product in such Field.
(b) Except as provided in Article 4.4(c), within ninety (90)
days after sending or receiving such a notice, as the case may be, Licensee
shall:
(i) Commence good faith negotiations with such
prospective sublicensee;
(ii) Agree, via a notice sent to University, to grant
back to University the right to license the University's rights in the Patent
Rights in such Field in connection with and simultaneously with University's
execution of a license agreement with such prospective sublicensee. In such
case, University shall have no further obligation to Licensee with respect to
any revenue resulting from such a license. In the event a prospective
sublicensee wishes to acquire
7
an exclusive license under this Article 4.4(b)(ii) to any Patent Rights that are
jointly owned by University and Licensee, Licensee agrees, via a notice sent to
University, to grant back to University the right to license both Licensee's and
University's rights in the Patient Rights in such Field in connection with and
simultaneously with University's execution of a license agreement with such
prospective sublicensee. In such case, University agrees to pay Licensee
[CONFIDENTIAL TREATMENT REQUESTED] of all revenue generated from such license
agreement, after deducting [CONFIDENTIAL TREATMENT REQUESTED] from any such
revenue to cover University's costs associated with establishing and maintaining
each such license;
(iii) Provide University with a reasonable written
development plan that Licensee has initiated, or intends to initiate, to develop
a Licensed Product in such Field; or
(iv) [CONFIDENTIAL TREATMENT REQUESTED].
(c) Article 4.4(b) shall not apply with respect to any Bona
Fide Inquiry if, at the time such Bona Fide Inquiry is made or Licensee receives
notice thereof from University, as the case may be: (i) Licensee is undertaking
any actions under Articles 4.4(b), (iii) or (iv) with respect to any other Bona
Fide Inquiry in the same field; (ii) Licensee, either alone or in conjunction
with its collaborative partner(s), is already developing or selling a Licensed
Product having a formulation and/or delivery method substantially similar to the
product sought to be developed by such prospective sublicensee; or (iii)
Licensee, either alone or in conjunction with its collaborative partner(s), is
already developing an additional Licensed Product in any Field (i.e., until
development of such additional Licensed Product is abandoned or commercially
launched.
5. Sublicenses
5.1. Subject to this Article, Licensee may grant sublicenses
under its rights under Article 2.1 above and in connection therewith, Licensee
may grant non-exclusive sublicenses under its rights under Article 2.2 above,
provided that each sublicense (other than an sublicense to a Major
Pharmaceutical Company as defined in Article 4.1) contains a provision that such
sublicense and the rights thereby granted are personal to the sublicensee
thereunder and such sublicense cannot be further sublicensed.
5.2. Any sublicense granted pursuant to this Article shall be
in accordance with the terms and conditions of this Agreement. Licensee will
provide to University a copy of each sublicense agreement within thirty (30)
days of execution of the sublicense agreement. Each sublicense agreement
provided by Licensee to University shall be treated as confidential by
University in accordance with Article 2.4 herein. It is understood that Licensee
will not provide to University the financial terms of any sublicense agreement.
6. Cancellation
6.1. It is expressly agreed that, notwithstanding the
provisions of any other paragraph of this contract, if Licensee should fail to
deliver to University any royalty at the time or
8
times that the same should be due to University or if either party should in any
material respect violate or fail to keep or perform any covenant, condition, or
undertaking of this Agreement on its part to be kept or performed hereunder,
then and in such event the affected party shall have the right to cancel and
terminate this Agreement, and the license herein provided for, by written notice
to the other party if such party has failed to cure any such breach within 30
days of receipt of written notice from the affected party describing such
breach. Notwithstanding the foregoing, a party shall be afforded an opportunity
to cure a material breach of an obligation to pay money under this Agreement
only twice within any period of eighteen (18) consecutive months. In the event a
party materially breaches an obligation to pay money more than twice during any
eighteen (18) month period, the non-breaching party shall have the right to
terminate this Agreement upon thirty (30) days written notice. For purposes of
this Article 6.1, a breach of an obligation to pay money under this Agreement
shall be material if such payment, as calculated under the terms of this
Agreement, is not made in full within sixty (60) days after such payment is due
hereunder.
6.2. In the event that, for any reason whatsoever, Licensee
does not achieve any part of the performance milestones set forth in Article
4.2, Licensee will provide to University a revised development plan with a
proposed extension date within thirty (30) days following the missed milestone
date. Within thirty (30) days of receipt of the second revised development plan,
University shall notify Licensee whether University approves an extension of the
milestone date as requested in the said plan; such approval shall not be
unreasonably withheld. If Licensee fails to meet the same performance milestone
a second time, Licensee will provide to University a revised development plan
with a proposed extension date and an extension fee of [CONFIDENTIAL TREATMENT
REQUESTED] within thirty (30) days following the missed milestone date. Payment
made by Licensee under this Article 6.2 shall not be creditable against payments
otherwise due under the Agreement. Within thirty (30) days of receipt of the
second revised development plan, University shall notify Licensee whether
University approves a second extension of the milestone date as requested in the
said plan; such approval shall not be unreasonably withheld. If, after securing
two such extensions, Licensee fails to meet the performance milestone by the
extended due date, University shall be free to terminate this Agreement
according to the terms of Article 6.1 of this Agreement upon thirty (30) days
written notice to Licensee. For the avoidance of doubt, University shall be free
to terminate this Agreement according to the terms of Article 6.1 of this
Agreement and upon thirty (30) days written notice to Licensee, if Licensee
fails to provide either an acceptable revised development plan or the extension
fee (if applicable) within thirty (30) days following the missed milestone date.
6.3. If Licensee should be adjudged bankrupt or enter into a
composition with or assignment to its creditors, then, subject to applicable
bankruptcy laws, in such event University shall have the right to cancel and
terminate this Agreement, and the license herein provided for, by written notice
to Licensee.
6.4. Licensee shall have the right to terminate this
Agreement, in whole or as to any Licensed Product in any country in the
Territory, at any time, and from time to time, by giving notice in writing to
University. Such termination shall be effective ninety (90) days from the date
such notice is given, and all Licensee's rights associated therewith shall cease
as of that date.
9
6.5. Any termination or cancellation under any provision of
this Agreement shall not relieve Licensee of its obligation to pay any royalty
or other fees (including attorney's fees pursuant to Article 3.1 hereof) due or
owing at the time of such cancellation or termination.
6.6. Upon termination of this Agreement for any reason, all
sublicenses granted by Licensee under this Agreement shall be assigned to
University.
7. Disposition of Licensed Products on Hand Upon Cancellation or
Termination
7.1. Upon cancellation of this Agreement or upon termination
in whole or in part, Licensee shall provide University with a written inventory
of all Licensed Products in process of manufacture, in use or in stock. Except
with respect to termination by University for nonpayment of royalties pursuant
to Article 6.1, Licensee shall have the privilege of disposing of the inventory
of such Licensed Products within a period of one hundred and eighty (180) days
of such termination and royalties shall be paid to University with respect to
such Licensed Product as though this Agreement had not terminated. Licensee will
also have the right to complete performance of all contracts executed by
Licensee prior to cancellation or termination by University and requiring use of
the University Technology, Patent Rights (except in the case of termination by
University for nonpayment of royalties pursuant to Article 6.1) or Licensed
Products within and beyond said 180-day period provided that the remaining term
of any such contract does not exceed one year.
8. Use of University's Name
8.1. The use of the name of University, or any contraction
thereof, in any manner in connection with the exercise of this Agreement is
expressly prohibited except with prior written consent of University. The
foregoing notwithstanding Licensee shall have the right to identify the
University and to disclose the terms of this Agreement in any prospectus,
offering memorandum, or other document or filing required by applicable
securities laws or other applicable law or regulation, or where the use of the
name of the University is in the ordinary course of business and used for
identification purposes and not for marketing or promotional purposes.
9. University Use
9.1. It is expressly agreed that, notwithstanding any
provisions herein, University is free to make noncommercial use of University
Technology, Patent Rights and Licensed Products for its own research, public
service, clinical, teaching and educational purposes without payment of
royalties. Furthermore, University shall be free to publish University
Technology, as it sees fit, except that Licensee shall have the right to review
any proposed disclosure of University Technology at least sixty (60) days prior
to such disclosure to determine whether filing of a patent application covering
such disclosure is warranted. If it is determined by Licensee that a patent
application should be filed, University shall delay its publication or
disclosure for a period not to exceed thirty (30) days thereafter to allow time
for the filing of such patent application covering patentable subject matter.
All expenses associated with any such patent application are to be borne by
Licensee in accordance with Article 10 herein. Such delay, however, shall not be
imposed on the filing of any student thesis or dissertation. In addition, if it
is determined in good faith by Licensee that confidential or proprietary
information is being disclosed, the parties will
10
consult in good faith to arrive at an agreement on mutually acceptable
modifications to the proposed disclosure to avoid such disclosure; provided that
University shall not be required to make any modification that are not
reasonably acceptable to University.
10. Patents and Infringements
10.1. Licensee shall continue to reimburse University for any
properly documented costs incurred in relation to patenting the Inventions. As
of the Effective Date of this Agreement, Licensee shall bear the cost of filing
and prosecuting U.S. Patent applications and maintenance of issued patents
included within the Patent Rights. Such filings and prosecution shall be by
counsel of University's choosing but shall be reasonably acceptable to Licensee.
University shall keep Licensee advised as to the prosecution of such
applications by forwarding to Licensee copies of all official correspondence,
(including, but not limited to, Applications, Office Actions, responses, etc.)
relating thereto. Licensee shall have the right to advise University as to such
prosecution, and further, shall have the right to make reasonable requests as to
the conduct of such prosecution.
10.2. As regards filing of foreign patent applications and
maintenance of issued patents corresponding to the U.S. application described in
Article 10.1 above, Licensee shall designate that country or those countries, if
any, in which Licensee desires such corresponding patent application(s) to be
filed. Licensee shall pay all costs and legal fees associated with the
preparation and filing of such designated foreign patent applications and
maintenance of issued patents, and such applications shall be in the
University's name and by counsel of the University's choosing and reasonably
acceptable to Licensee. University may elect to file corresponding patent
applications in countries other than those designated by Licensee, but in that
event University shall be responsible for all costs associated with such
non-designated filings. In such event, Licensee shall forfeit its rights under
this Agreement in the country or countries where University exercises its option
to file such corresponding patent applications and remains responsible for the
costs relating thereto. In those countries where Licensee pays the costs and
legal fees associated with foreign patent applications, University shall keep
Licensee advised as to the prosecution of such applications by forwarding to
Licensee copies of all official correspondence, (including, but not limited to,
Applications, Office Actions, responses, etc.) relating thereto. Licensee shall
have the right to advise University as to such prosecution, and further, shall
have the right to make reasonable requests as to the conduct of such
prosecution.
10.3. If the production, sale or use of Licensed Products
under this Agreement by Licensee results in any claim for patent infringement
against Licensee or its sublicensees, Licensee shall promptly notify the
University thereof in writing, setting forth the facts of such claim in
reasonable detail. As between the parties to this Agreement, Licensee shall have
the first and primary right and responsibility at its own expense to defend and
control the defense of any such claim against Licensee, by counsel of its own
choice. Licensee may settle any such claim in its sole discretion provided that
such settlement does not impose any obligation on University or adversely affect
University's rights in or to any Patent Rights or University Technology. It is
understood that any other settlement of such actions must be approved by
University. Such approval shall not be unreasonably withheld. University agrees
to cooperate with Licensee in any reasonable manner deemed by Licensee to be
necessary in defending any such action. Licensee shall reimburse University for
any out of pocket expenses incurred in providing such assistance.
11
10.4. In the event that any Patent Rights licensed to Licensee
are infringed by a third party, Licensee shall have the primary right, but not
the obligation, to institute, prosecute and control any action or proceeding
with respect to such infringement, by counsel of its choice, including any
declaratory judgment action arising from such infringement. University agrees to
cooperate with Licensee in any reasonable manner deemed by Licensee to be
necessary in defending any such action, including joining such action if the
University is an indispensable party, provided that Licensee shall reimburse
University for its out-of-pocket expenses incurred in providing such assistance.
-Any recovery or reimbursement received by Licensee from such action shall be
allocated first to reimburse Licensee for all costs and expenses incurred in
connection with any such action. Any remainder shall be allocated between the
parties as follows: [CONFIDENTIAL TREATMENT REQUESTED]
10.5. If an action is brought against Licensee as described in
Article 10.3, Licensee may offset the royalty paid to the University in each
quarterly royalty period by [CONFIDENTIAL TREATMENT REQUESTED] of the amount of
the expenses incurred in that royalty period as a result of such action, said
expenses to include costs, attorney's fees, judgments, and all other expenses
incident to the infringement action, to a maximum of [CONFIDENTIAL TREATMENT
REQUESTED] of the amount otherwise payable University in that royalty period.
Expenses in excess of the amounts due in any royalty period may be carried over
into subsequent royalty periods and deducted or offset in accordance with the
terms of this Agreement; provided, however if by settlement or court order
Licensee receives from the other side amount to cover some or all of its legal
defense costs, attorneys' fees or liability incurred in such infringement
suit(s), Licensee shall promptly remit to University its pro-rata share of such
amounts.
10.6. Notwithstanding the foregoing, and in University's sole
discretion, University shall be entitled to participate through counsel of its
own choosing in any legal action involving the Inventions. Nothing in the
foregoing sections shall be construed in any way which would limit the authority
of the Attorney General of North Carolina.
10.7 If University brings an action against its patent counsel
for malpractice or other breach of fiduciary duty as a result of the loss or
abandonment of any of Patent Rights caused by the negligent or intentional
actions or failure to act of the University's patent counsel, University shall
divide equally any recovery or reimbursement from such action with Licensee,
after deduction of University's expenses associated with bringing and
prosecuting the action.
12
11. Waiver
11.1. It is agreed that no waiver by either party hereto of
any breach or default of any of the covenants or agreements herein set forth
shall be deemed a waiver as to any subsequent and/or similar breach or default.
12. License Restrictions
12.1. It is agreed that the rights and privileges granted to
Licensee are each and all expressly conditions upon the faithful performance on
the part of the Licensee of every requirement herein contained, and that each of
such conditions and requirements may be and the same are specific license
restrictions.
13. Assignments
13.1. This Agreement is binding upon and shall inure to the
benefit of the University, its successors and assigns. This Agreement shall not
be assignable or otherwise transferable by either party without the prior
written consent of the other, which consent shall not be unreasonably withheld,
except that Licensee may assign or otherwise transfer its rights under this
Agreement to the following parties without obtaining consent: (1) a successor to
Licensee's business, or a successor to that portion of Licensee's business that
pertains to the subject matter of the Patent Rights or any University
Technology, and (2) any entities controlled by, controlling, or under common
control with Licensee.
14. Indemnity
14.1. Licensee agrees to indemnify, hold harmless and defend
University, its officers, employees, and agents, against any and all claims,
suits, losses, damage, costs, fees, and expenses asserted by third parties, both
government and private, resulting from or arising out of the exercise of this
Agreement.
15. Insurance
15.1. Licensee is required to maintain in force at its sole
cost and expense, with reputable insurance companies, general liability
insurance and products liability insurance coverage in an amount reasonably
sufficient to protect against liability under Article 14.1, above. The
University shall have the right to ascertain from time to time that such
coverage exists, such right to be exercised in a reasonable manner.
16. Independent Contractor Status
16.1. Neither party hereto is an agent of the other for any
purpose.
17. Representations and Warranties
17.1. University represents that as of the Effective Date the
entire right, title, and interest in the patent application comprising the
Patent Rights have been assigned to it and
13
that University has the authority to issue licenses under said Patent Rights.
University also represents that it has received no notification that the Patent
Rights are invalid nor that the exercise by Licensee of the rights granted
hereunder will infringe on any patent or other proprietary right of any third
party. University makes no warranties that any patent will issue on University
Technology or Inventions. University further makes no warranties, express or
implied as to any matter whatsoever, including, without limitation, the
condition of any invention(s) or product(s), that are the subject of this
Agreement; or the merchantability or fitness for a particular purpose of any
such invention or product. University shall not be liable for any direct,
consequential, or other damages suffered by Licensee or any others resulting
from the use of the Inventions of Licensed Products.
17.2. The transfer of Common Stock pursuant to Article 3.1(d)
of this Agreement is made with the University in reliance upon the University's
representation to the Licensee, which the University hereby confirms by
execution of this Agreement, except to the extent the University distributes
part of its Common Stock to the Inventors pursuant to University policy (which
does not require the Inventors to pay any consideration to University for such
Common Stock) that the Common Stock to be received by the University (the
"Securities") will be acquired for investment for University's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that the University has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the University further represents that it does not have any
contract, undertaking, agreement, or arrangement with any person to sell,
transfer, or grant participation to such person or to any third person, with
respect to any of the Securities.
17.3. The University has received all the information that it
considers necessary or appropriate for deciding whether to acquire the
Securities. The University further represents that it has had sufficient
opportunity to ask questions and receive answers from the Licensee regarding the
terms and conditions of the offering of the Securities.
17.4. The University acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities.
17.5. The University understands that the Securities are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from Licensee in a transaction not involving
a public offering and that under such laws and applicable regulations such
Securities may be resold without registration under the Securities Act of 1933,
as amended (the "Act"), only in certain limited circumstances. Further,
University understands that Licensee is under no obligation to register the
securities, in whole or in part, under the Act. In this regard, the University
represents that it is familiar with SEC Rule 144, as currently in effect, and
understands the resale limitations imposed thereby and by the Act. In addition,
prior to the distribution of Securities to any Inventor, as contemplated by
Article 17.1, University shall cause such Inventor to execute an acknowledgment
substantially in the form attached as Exhibit B.
14
18. Accounting and Records
18.1. Licensee will keep complete, true and accurate books of
account and records for the purpose of showing the derivation of all amounts
payable to University under this Agreement. Such books and records will be kept
at Licensee's principal place of business for at least three (3) years following
the end of the calendar quarter to which they pertain, and will be open at all
reasonable times for inspection by a representative of University for the
purpose of verifying Licensee's royalty statements, or Licensee's compliance in
other respects with this Agreement. The representative and the University will
be obliged to treat as confidential all relevant matters except information
relating to the accuracy of such reports and payments or except as required by
law. Results of any such examination shall be made available to Licensee.
18.2. Such inspections shall be at the expense of University,
unless a variation or error in excess of five percent (5%) is discovered in the
course of any such inspection, whereupon all costs relating thereto shall be
paid by Licensee.
18.3. Licensee will pay to University within thirty (30) days
of receiving notice from University the full amount of any underpayment,
together with interest pursuant to Article 3.12.
19. Compliance with Laws
19.1. In exercising its rights under this Agreement, Licensee
shall fully comply with the requirements of any and all applicable laws,
regulations, rules and orders of any governmental body having jurisdiction over
the exercise of rights under this Agreement. Licensee further agrees to
indemnify and hold University harmless from and against any costs, expenses,
attorney's fees, citation, fine, penalty and liability of every kind and nature
which might be imposed by reason of any asserted or established violation of any
such laws, order, rules and/or regulations.
20. U.S. Manufacture
20.1. It is agreed that any Licensed Products sold in the
United States shall be substantially manufactured in the United States unless
Licensee has received a waiver from the United States Government, whose
sponsorship of the research led to the Invention. University shall use
reasonable efforts to support Licensee's effort to obtain such a waiver.
Licensee shall promptly inform University in the event it receives such a
waiver.
21. Notices
21.1. Any notice required or permitted to be given to the
parties hereto shall be deemed to have been properly given when received by
means of confirmed facsimile transmission, recognized national overnight
courier, or first-class certified mail to the other party at the appropriate
address or facsimile number as set forth below or to such other addresses or
facsimile numbers as may be designated in writing by the parties from time to
time during the term of this Agreement.
15
UNIVERSITY LICENSEE
Xx. Xxxxxxx X. Xxxxx Xx. Xxxxxxx Xxxxxxx
Director, Office of Technology Development Vice President & COO
CB #4105, 000 Xxxxx Xxxx Inspire Pharmaceuticals, Inc.
University of North Carolina at Chapel Hill 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxx Xxxx, XX 00000-0000 Xxxxxx, XX 00000
Ph: (000) 000 0000 Ph: (000) 000 0000
Fax: (000) 000 0000 Fax: (000) 000 0000
22. Governing Laws
22.1. This Agreement shall be interpreted and construed in
accordance with the laws of the State of North Carolina.
23. Complete Agreement
23.1. It is understood and agreed between University and
Licensee that this Agreement constitutes the entire Agreement, both written and
oral, between the parties, and that all prior agreements respecting Patent
Rights and University Technology as defined herein, either written or oral,
expressed or implied, shall be abrogated, canceled, and are null and void and of
no effect.
24. Force Majeure
24.1. Neither party will be responsible for delays resulting
from acts beyond the control of such party, provided that the non-performing
party uses reasonable commercial efforts to avoid or remove such causes of
nonperformance and continues performance hereunder with reasonable dispatch
whenever such causes are removed.
25. Amendment
25.1. No amendment, modification or supplement of any
provision of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each party.
26. Descriptive Headings
26.1. The descriptive headings of this Agreement are for
convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
27. Counterparts
27.1. This Agreement may be executed simultaneously in any
number of counterparts, any of which need not contain the signature of more than
one party but all such counterparts taken together shall constitute one and the
same agreement.
16
28. Survival of Terms
28. The provisions of Articles 6.6, 7, 8, 9,10, 14, 15, 18,
19, 21, 22 and 28 shall survive the expiration or termination of this Agreement.
IN WITNESS WHEREOF, both University and Licensee have executed
this Agreement, in duplicate originals, by their respective officers hereunto
duly authorized, the day and year first above written. The Inventors have
likewise indicated their acceptance of the terms hereof by signing below.
UNIVERSITY OF NORTH CAROLINA AT INSPIRE PHARMACEUTICALS, INC.
CHAPEL HILL
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxx Xxxxxxx
---------------------------------- ----------------------------------
Xxxxxxx X. Xxxxx Xxxxxxx Xxxxxxx
Director, Office of Technology Development Vice President & Development & COO
Date: Sept. 1, 1998 Date: August 12, 1998
------------- ---------------
Read and accepted:
INVENTORS:
/s/ X. Xxxxxxx Xxxxxx
-------------------------
X. Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxx
/s/ Xxxx X. Xxxxx
-------------------------
Xxxx X. Xxxxx
17
EXHIBIT A
LIST OF PATENT RIGHTS
1. U.S. Application No. 08/486,988 (now issued U.S. Patent No. 5,
635,160) "Dinucleotides Useful for the Treatment of Cystic Fibrosis
and for Hydrating Mucus Secretions", X.X. Xxxxxx, III, X.X. Xxxxxxx,
Xx., X.X. Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of
North Carolina at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X. Issued June 3, 1997.
2. U.S. Application No. 08/744,367, "Method of Treating Bronchitis with
Uridine Triphosphates and Related Compounds", X.X. Xxxxxxx, X.X.
Xxxxxxx, Xx., X.X. Xxxxxxx , and X.X. Xxxxxxx. Assignee: Inspire
Pharmaceuticals, Inc., 0000 Xxxxxxx Xxxx., Xxxxxx, X.X. and The
University of North Carolina at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X. Filing
Date Nov. 7, 1996. PCT Filing Date Oct. 21, 1997.
3. U.S. Application No. 08/624,914, "Method of Treating Ciliary
Dyskinesia with Uridine Triphosphates and Related Compounds", X.X.
Xxxxxxx, B.R. Xxxxx, X. Xxxxxxxxxx, X.X. Xxxxxxx, Xx., X.X. Xxxxxxx,
X.X. Xxxxx, X.X. Xxxxx, X.X. Xxxxxx, III, C.A. Xxxxx, and X.X.
Xxxxxxxxxx. Assignee: Inspire Pharmaceuticals, Inc., 0000 Xxxxxxx
Xxxx., Xxxxxx, X.X. and The University of North Carolina at Xxxxxx
Xxxx, Xxxxxx Xxxx, X.X. U.S. Filing Date March 27, 1996. PCT Filing
Date March 27, 1997.
4. U.S. Application No. 08/853,056 (CIP of U.S. Application No
08/486,988), "Dinucleotides Useful for the Treatment of Lung Disease",
X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X. Xxxxxxxxxx, and C.A. Xxxxx.
Assignee: The University of North Carolina at Xxxxxx Xxxx, Xxxxxx
Xxxx, X.X. Filing Date May 8, 1997
5. PCT/US96/09190 (international filing of U.S. Application No
08/486,988) "Dinucleotides Useful For The Treatment of Lung Disease",
X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X. Xxxxxxxxxx, and C.A. Xxxxx.
Assignee: The University of North Carolina at Xxxxxx Xxxx, Xxxxxx
Xxxx, X.X. PCT Filing Date June 6, 1996
6. New Zealand Patent Application No. 310713, "Dinucleotides Useful For
The Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx.,
X.X. Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North
Carolina at Chapel Hill, Chapel Hill, N.C.
7. Mexico Patent Application No. 979637, "Dinucleotides Useful For The
Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X.
Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North Carolina
at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X.
8. Japan Patent Application No. 501572/97, "Dinucleotides Useful For The
Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X.
Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North Carolina
at Chapel Hill, Chapel Hill, N.C.
9. Korea Patent Application No. 708775/97, "Dinucleotides Useful For The
Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X.
Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North Carolina
at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X.
10. European Patent Application No. 96919139.4, "Dinucleotides Useful For
The Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx.,
X.X. Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North
Carolina at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X. (designating Austria,
Belgium, Switzerland, Germany, Denmark, Spain, Finland, France, United
Kingdom, Greece, Ireland, Italy, Luxembourg, Monaco, Netherlands,
Portugal and Sweden)
11. Norway Patent Application No. 96919139.4, "Dinucleotides Useful For
The Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx.,
X.X. Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North
Carolina at Chapel Hill, Chapel Hill, N.C.
12. Australia Patent Application No. 61764/96, "Dinucleotides Useful For
The Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx.,
X.X. Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North
Carolina at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X.
13. China Patent Application No. 96195028.5, "Dinucleotides Useful For The
Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X.
Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North Carolina
at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X.
14. Canada Patent Application No. 2,223,894, "Dinucleotides Useful For The
Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx., X.X.
Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North Carolina
at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X.
15. Brazil Patent Application No. PI9609063.4, "Dinucleotides Useful For
the Treatment of Lung Disease", X.X. Xxxxxx, III, X.X. Xxxxxxx, Xx.,
X.X. Xxxxxxxxxx, and C.A. Xxxxx. Assignee: The University of North
Carolina at Xxxxxx Xxxx, Xxxxxx Xxxx, X.X.
EXHIBIT B
ACKNOWLEDGMENT BY INVENTOR
In connection with the transfer of certain shares of Common Stock (the "Shares")
of Inspire Pharmaceuticals, Inc. ("Inspire") from The University of North
Carolina at Chapel Hill (the "University") to the undersigned pursuant to
University policy, the undersigned hereby acknowledges that the undersigned
understands that such Shares are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from Inspire in
a transaction not involving a public offering and that under such laws and
applicable regulations such Shares may be resold without registration under the
Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances.. In this regard, the undersigned represents that the undersigned
is familiar with SEC Rule 144, as currently in effect, and understands the
resale limitations imposed thereby and by the Act.
Date:
------------------ -------------------------------
(Print Name)
-------------------------------
(signature)
