EXHIBIT 10.01
FIRST AMENDMENT TO LICENSE AGREEMENT
THIS AGREEMENT (hereinafter referred to as "this Agreement") by and
among LECTEC CORPORATION, a Minnesota corporation, having offices at 00000 Xxx
Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx, 00000 (hereinafter referred to as
"Company"), PHARMACO BEHAVIORAL ASSOCIATES, INC., a Minnesota corporation,
having offices at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000
(hereinafter referred to as "Pharmaco"), and THE REGENTS OF THE UNIVERSITY OF
MINNESOTA, a Minnesota constitutional corporation, having offices at Xxxxxxx
Xxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000 (hereinafter referred to as "the
University") is made as of December 31, 1998 ("Effective Date") and shall be
deemed effective retroactively to March 9, 1993 ("Original Agreement Date").
RECITALS
WHEREAS, Company, Pharmaco and the University entered into a License
Agreement dated March 9, 1993 ("Original Agreement"), which granted Company a
license to make, have made, use and sell certain products, subject to certain
payment obligations from Company to Pharmaco and the University, with certain
sublicense rights;
WHEREAS, Company, Pharmaco and the University now desire to amend the
Original Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises, covenants and
conditions herein contained, the parties agree as follows:
1.0 DEFINITIONS
"ARTICLE I - DEFINITIONS" of the Original Agreement shall be amended as
follows:
1.1 Paragraph A shall be deleted and replaced in its entirety by
the following:
A. "technology" shall mean any knowledge, information, knowhow
and devices, whether patentable or not, in the possession of Pharmaco relating
to:
(i) use of cotinine for body weight management, including but not
limited to US. Patent Application/Serial No. 07/964,277, filed
October 21, 1992, and issued as U.S. Patent No. 5,643,928, and
corresponding foreign patent applications or patents listed in
Appendix A;
(ii) therapeutic method to alleviate the craving associated with
cessation of tobacco with cotinine, including but not limited
to U.S. Patent Application/Serial No. 07/885,314, filed May
18, 1992, and issued as U.S. Patent No. 5,596,007, and
corresponding foreign patent applications or patents listed in
Appendix A;
(iii) use of cotinine to assist in the cessation of tobacco smoking,
including but not limited to U.S. Patent Application/Serial
No. 07/971,573, filed November 5, 1992, and corresponding
foreign patent applications listed in Appendix A;
(iv) use of cotinine to assist in the cessation of tobacco smoking,
including but not limited to U.S. Patent Application/Serial
No. 08/293,585, filed August 22, 1994, and issued as U.S.
Patent No. 5,612,357, and corresponding foreign patent
applications or patents listed in Appendix A; and
(v) use of cotinine to alleviate tobacco withdrawal syndrome,
including but not limited to U.S. Patent Application/Serial
No. 08/691,888, filed August 1, 1996, and issued as U.S.
Patent No. 5,747,512, and corresponding foreign patent
applications or patents listed in Appendix A.
1.2 Paragraph C shall be deleted in its entirety and replaced with
the following:
"Subject Patent Applications" shall mean any patent application that
has been filed or is filed in the United States or in a foreign country that
covers the Technology and/or Improvements made solely by Pharmaco, jointly by
Pharmaco and Company or solely by Company, including but not limited to those
patent applications listed in paragraph A above.
1.3 A new paragraph J shall be added as follows:
J. "Phase I Studies" shall mean pilot efficacy studies described
in Appendix B hereto ("Phase I Studies") to be conducted by Company.
1.4 A new paragraph K shall be added as follows:
K. "Phase I Funds" shall mean any funds obtained by Company
specifically to enable Company to conduct the Phase I Studies. Company may use
its own funds or funds from a Third Party Source (but not from any Sublicensee,
Affiliate, shareholder, officer or director of Company) as Phase I Funds. Phase
I Funds shall not be deemed Net Sales revenues, lump sum payments, milestone
payments or part of the Revenue Sharing Pool.
1.5 A new paragraph L shall be added as follows:
L. "Third Party Source" shall mean any third-party source of
Phase I Study Funds, including, without limitation, any venture capital firm,
partnership, limited liability company or non-profit medical or health research
foundation. A Sublicensee, Affiliate, shareholder, officer or director of
Company may not be a Third Party Source.
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2.0 LICENSE GRANT AND COMMERCIAL EFFORT
"ARTICLE IV - LICENSE GRANT AND COMMERCIAL EFFORT" of the Original
Agreement shall be amended as follows:
2.1 A new paragraph J shall be added as follows:
J. As an express condition to the continuation of the License to
Company from and after the Effective Date and as a measure of its "best efforts"
under paragraph E above, Company shall meet each of the following milestones:
(i) Company shall itself provide or obtain from a Third Party
Source the Phase I Study Funds within eighteen (18) months of
the Effective Date;
(ii) assuming the Phase I Study Funds have been provided by Company
or obtained from a Third Party Source, Company shall complete
the Phase I Studies within twenty (20) months of Company's
provision or receipt of such funds; and
(iii) assuming the Phase I Studies are conducted, within eighteen
(18) months after the completion of the Phase I Studies,
Company shall negotiate but not execute a bona fide,
arm's-length agreement ("Proposed Agreement") with a
marketing/development partner for the development and
commercialization of Licensed Product(s) (provided such
partner may not be an Affiliate) and deliver a complete copy
of such Proposed Agreement to Pharmaco for its written
approval, which approval shall not be unreasonably withheld or
delayed and which approval shall be granted as provided in
Article IV K below. Such a Proposed Agreement may be with a
Sublicensee.
Company shall give Pharmaco and the University ten (10) days' written notice of
its achievement or failure to achieve each of the foregoing milestones. At its
sole election, Company may extend any of the foregoing milestone deadlines one
or more times for up to a maximum of twelve (12) months by the payment to
Pharmaco of $25,000 per additional month, which payment shall be made in advance
of the additional extension period being purchased. If Company fails to achieve
any of the above milestones and has not purchased an extension as provided in
the preceding sentence, at Pharmaco's sole election and upon ten (10) days prior
written notice to Company and the University, Pharmaco may terminate the License
as its sole remedy for such failure.
2.2 A new paragraph K shall be added as follows:
K. Pharmaco may review any Proposed Agreement submitted to
Pharmaco under paragraph J(iii) above limited solely and exclusively to the
question of whether such Proposed Agreement constitutes a bona fide,
arm's-length transaction with a recognized healthcare products company aimed at
pursuit of the development and commercialization of Licensed
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Product(s). Within ten (10) days of its receipt of a Proposed Agreement,
Pharmaco shall deliver to Company its written approval thereof or its written
objections thereto within the foregoing limited scope of review. If no such
written objection is delivered to Company within such ten (10) day period,
Pharmaco's approval shall be conclusively deemed given to Company to enter into
the Proposed Agreement. Pharmaco's delay in granting its approval of a Proposed
Agreement or its written objection to a Proposed Agreement (or any arbitration
under paragraph L below) shall not be counted in whether Company has completed
the milestone deadline in paragraph J(iii) above in a timely manner, so long as
Company has completed its negotiations and delivered the Proposed Agreement to
Pharmaco prior to such deadline. Within ten (10) days of the earlier of (i)
Company's receipt of Pharmaco's written approval, (ii) expiration of the ten
(10) day review period if Pharmaco has not delivered its written objection or
(iii) receipt of an arbitral award in favor of Company under paragraph L below,
Company shall execute the Proposed Agreement and shall perform such Proposed
Agreement in accordance with its terms. If Company does not so execute the
Proposed Agreement within such ten (10) day period, Company shall be deemed to
have failed to meet the deadline in Article IV, paragraph J(iii) above.
2.3 A new paragraph L shall be added as follows:
L. If Pharmaco does deliver such written objections to the
Proposed Agreement on a timely basis and Company disagrees with such objections,
Company and Pharmaco shall immediately submit such dispute to expedited final
and binding arbitration in Minneapolis, Minnesota, by a single arbitrator
designated by the American Arbitration Association ("AAA"), with such
arbitration to be conducted under the AAA Commercial Arbitration Rules then in
effect. Any such arbitration shall be limited solely and exclusively to the
question of whether such Proposed Agreement constitutes a bona fide,
arm's-length transaction with a recognized healthcare products company and is
aimed at the pursuit of the development and commercialization of Licensed
Product(s). Each party in such an arbitration shall bear its legal costs and
attorneys' fees thereby incurred, and Company shall pay the costs of the
arbitration. The arbitral award may be enforced in any court of competent
jurisdiction. Company and Pharmaco shall give written notice of any such dispute
and arbitration to the University but shall not make the University a party
thereto or otherwise involve the University, provided, however, at the
University's election, the University or its legal counsel may observe any such
arbitration and receive copies of any materials submitted by either party to the
arbitrator.
3.0 ROYALTIES, REPORTS AND RECORDS
"ARTICLE V - ROYALTIES, REPORTS AND RECORDS" of the Original Agreement
shall be amended as follows:
3.1 Paragraph A shall be deleted in its entirety and replaced with
the following:
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A. From the Original Agreement Date, Company shall pay the
University as royalties an amount which represents one and one-half percent (1
1/2 %) of the Net Sales of Licensed Products. Net of the foregoing payments to
the University, Company shall pay or cause to be paid to Pharmaco a royalty of
fifty percent (50%) of the remaining Revenue Sharing Pool after accounting for
previous payments credited against royalty payments unless subparagraph (i) of
this paragraph A is applicable, in which event the Revenue Sharing Pool shall be
divided among Company, Pharmaco and any Third Party Source as provided therein.
In the event that no Subject Patent(s) issue, the royalty rates and term shall
be re-negotiated among the parties from the date that it is certain that no
Subject Patent(s) will issue.
(i) Company and Pharmaco acknowledge that, as of the Effective
Date, Company has insufficient cash to provide the Phase I
Study Funds. To attract a Third Party Source for the Phase I
Study Funds, at its sole election, Company may offer a
percentage of the Revenue Sharing Pool in exchange for such
Third Party Source's financing of the Phase I Studies. If
Company enters into an agreement with a Third Party Source to
provide the Phase I Study Funds, the percentages of the
Revenue Sharing Pool to be retained by the Company and to be
paid to Pharmaco shall be ***
(ii) If Company engages such a Third Party Source to provide the
Phase I Study Funds, Company shall give ten (10) days' written
notice thereof to Pharmaco and shall provide Pharmaco a copy
of the agreement with such Third Party Source.
3.2 The first sentence of paragraph B shall be deleted in its
entirety.
3.3 The second sentence of paragraph G shall be deleted in its
entirety and replaced with the following:
Company shall pay the University and Pharmaco within twenty (20) days
following Company's receipt of any lump sum payment or milestone payment from a
Sublicensee or any running royalty payments from a Sublicensee with respect to
such Sublicensee's Net Sales of Licensed Product. Company shall pay the
University and Pharmaco within sixty (60) days following each calendar quarter
with respect to Company's own Net Sales of Licensed Products.
3.4 Paragraph I shall be deleted in its entirety.
*** Confidential treatment requested pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
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4.0 TERM AND TERMINATION
"ARTICLE VII - TERM AND TERMINATION" shall be amended as follows:
Paragraph B(3) and the final sentence of paragraph B shall be deleted
and replaced with the following:
(3) if Company fails to meet any of the milestone deadlines in
paragraph J of Article IV and has not purchased any
extension(s) thereof from Pharmaco as provided therein.
If Company does not cure or take substantial measures to cure the
above-specified conditions within sixty (60) days of receipt of notice
of termination in the case of subparagraphs (1) or (2) or ten (10) days
of receipt of notice of termination in the case of subparagraph (3),
such termination shall become effective.
5.0 COUNTERPART EXECUTION; FACSIMILE TRANSMISSION
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. The parties acknowledge that each may rely upon the
other party's facsimile transmission of its executed counterpart hereof,
provided, each party shall exchange executed originals by mail or courier
service as soon as practicable thereafter.
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IN WITNESS WHEREOF, Pharmaco, the University and Company have caused
this Agreement to be executed by their duly authorized officers.
REGENTS OF THE UNIVERSITY LECTEC CORPORATION
OF MINNESOTA
By:/s/ Xxxxxxx X. Xxxxxxx By:/s/ Xxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Director CEO and President
PHARMACO BEHAVIORAL
ASSOCIATES, INC.
By:/s/ Xxxxxx X. Xxxxxx, M.D., Ph.D.
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Xxxxxx X. Xxxxxx, M.D., Ph.D.
Chief Executive Officer and Chairman
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