Exhibit 10.23
MUTUAL TERMINATION AND SETTLEMENT AGREEMENT
WHEREAS, The Xxxxx Xxxxxxx University, a Maryland corporation, acting
through its Applied Physics Laboratory having a place of business at 00000 Xxxxx
Xxxxxxx Xxxx, Xxxxxx, XX 00000-0000 (hereinafter "JHU/APL"), and Akorn, Inc.
(hereinafter "Akorn"), a Louisiana corporation, having a place of business at
0000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, entered into a license agreement
effective April 26, 2000, as amended by Amendment No. 1, effective July 15,
2001, (hereinafter collectively "License") as relates to the JHU/APL PATENT
RIGHTS, as defined therein; and
WHEREAS, JHU/APL is the sole owner of the entire right, title, and
interest in and to the JHU/APL PATENT RIGHTS, as defined in the License; and
WHEREAS, by letter dated January 16, 2002, JHU/APL provided notice of
breach/default of the License to Akorn; and
WHEREAS, Akorn filed suit on March 29, 2002 against The Xxxxx Xxxxxxx
University in the United States District Court for the Northern District of
Illinois ("the Court"), Civil Action Xx. 00X 0000 ("xxx Action"), seeking among
other relief a declaration from the Court that Akorn had not breached the
License; and
WHEREAS, JHU/APL and Akorn now mutually desire to terminate the License
and settle the Action;
Now, therefore, in consideration of the premise and the mutual covenants
and agreements herein contained, and for good and valuable consideration, the
sufficiency and receipt of which is hereby mutually acknowledged, and intending
to be legally bound hereby, the parties hereto do covenant and agree as follows:
(1) The License is by mutual agreement hereby terminated and of no
further effect, with each party having no recourse against the other as to the
License. Hereafter, Akorn shall have no right or license in the JHU/APL PATENT
RIGHTS, as defined in the License. Both JHU/APL and Akorn shall be free to
pursue business arrangements relating to technologies for the treatment of
age-related macular degeneration subject only to the terms of this Agreement and
applicable laws and regulations.
(2) Akorn shall be entitled to retain the $300,000 comprising the final
$300,000 installment of the license execution fee payment due under Section
4.2b) of the License.
(3) JHU/APL shall pay to Akorn fifteen percent (15%) of all cash
payments and twenty percent (20%) of all equity received by JHU/APL from any
licensee of the U.S. JHU/APL PATENT RIGHTS less any cash or equity returned
by JHU/APL to such licensee, the combined total of all such cash and equity
payments made by JHU/APL to Akorn not to exceed One Million Twenty-Five Thousand
Dollars ($1,025,000). JHU/APL agrees that it will accept only cash or equity as
consideration from any licensee for a license under the U.S. JHU/APL PATENT
RIGHTS. JHU/APL further agrees that it will instruct any licensee to issue any
equity due under this Agreement to Akorn directly to Akorn in Akorn's name, and
JHU/APL will include as a provision in any license agreement with such licensee
the requirement that the licensee issue such equity in that fashion to Akorn.
Akorn agrees to accept such equity from such licensee, and is not aware of any
facts, circumstances, or reasons why such licensee would not or could not issue
any such equity in that fashion to Akorn, PROVIDED, HOWEVER, that in the event
that such licensee does not issue any such equity to Akorn, JHU/APL will
promptly transfer the corresponding cash equivalent in lieu of equity to Akorn.
The first of such payments totaling One Hundred Twenty-Five Thousand Dollars
($125,000) in cash shall be made by JHU/APL to Akorn within thirty (30) days of
the effective date of this Agreement and JHU/APL shall make such first payment
regardless of whether any payments have been or will be received by JHU/APL from
any licensee of the U.S. JHU/APL PATENT RIGHTS. All remaining of such payments
shall be made by JHU/APL to Akorn only after receipt of cash payments or equity
from a licensee and then within thirty (30) days of the end of each calendar
quarter for cash payments and equity received from a licensee during that
quarter. Such payments made to Akorn shall be in kind, that is, 15% of any cash
received from a licensee shall be made in cash to Akorn and 20% of any equity
received from a licensee shall be made in equity to Akorn. Furthermore, the
first payment of $125,000 in cash made by JHU/APL to Akorn, as required above,
shall be considered an advance towards cash payments but not equity due Akorn
and, therefore, JHU/APL shall be entitled to a dollar for dollar credit against
such future cash payments due Akorn up to $125,000.
(4) JHU/APL shall make and retain, for a period of three (3) years
following each payment required by paragraph (3), true and accurate records,
files and books of account containing all the data reasonably required for the
full computation and verification of the payments required in paragraph (3).
Such books and records shall be in accordance with generally accepted accounting
principles consistently applied. JHU/APL shall forward to Akorn a copy of any
license agreement entered into by JHU/APL relating to the U.S. JHU/APL PATENT
RIGHTS within ten (10) days of entry into such an agreement. JHU/APL shall also
permit the inspection and copying of such records, files and books of account by
Akorn or its agents during regular business hours upon ten (10) business days'
written notice to JHU/APL. Such inspection shall not be made more than once each
calendar year. All costs of such inspection and copying shall be paid by Akorn,
provided that if any such inspection shall reveal that an error has been made in
the amount equal to five percent (5%) or more of such payment, such costs shall
be borne by JHU/APL.
2
(5) Except for the rights, duties, and obligations arising under this
Agreement and the JHU/APL PATENT RIGHTS, each party hereto hereby completely
releases, acquits, and forever discharges and covenants not to xxx the other
party hereto, including the other party's parents, subsidiaries, divisions, and
affiliates, and the other party's current and former directors, officers, and
employees, as well as the other party's representatives, distributors,
customers, dealers, attorneys, and agents, from all asserted and unasserted
claims (including claims for damages, costs, expenses, and/or attorneys fees)
arising from the actions of the parties occurring prior to the effective date of
this Agreement which each party hereto has now or may have in the future against
the other party hereto, including the other party's parents, subsidiaries,
divisions, and affiliates, and the other party's current and former directors,
officers, and employees, as well as the other party's representatives,
distributors, customers, dealers, attorneys, and agents including but not
limited to any and all claims relating to the License or otherwise relating to
or arising out of the facts and circumstances giving rise to the Action.
(6) Within seven (7) days of the execution of this Agreement, the
parties will dismiss the Action with prejudice by filing with the Court a fully
executed Stipulation and Order of Dismissal with Prejudice.
(7) As of the effective date of this Agreement and, thereafter, the
parties hereto, and their employees, agents, and attorneys, shall keep
confidential the terms of this Agreement, except that the parties and their
attorneys may make such disclosures as may be required by law, financial
reporting and disclosure requirements and generally accepted accounting
principles (including but not limited to reporting requirements for publicly
traded corporations and lender disclosure requirements), or by court order. Upon
inquiry, the parties and their attorneys may respond that the License and the
Action have been amicably terminated and settled, respectively. Additionally,
the parties agree that neither party shall provide negative commentary to any
third parties on the other party's technology related to the License including
the JHU/APL PATENT RIGHTS except that factual results of any research may be
released to third parties if not otherwise subject to an obligation of
confidentiality.
(8) This Agreement constitutes the complete, final, and entire
understanding of the parties with respect to the subject matter hereof, and the
parties shall not be bound by any terms, covenants, conditions, or
representations not expressly contained herein with respect to the subject
matter hereof. This Agreement may not be modified except by an agreement in
writing signed by all parties.
(9) A waiver of any term or condition contained in this Agreement shall
not be effective unless made and/or confirmed in the writing by all of the
parties; unless such writing expressly states otherwise, no such waiver shall be
construed as a waiver of a subsequent breach or failure of the term or condition
or a waiver of any other term or condition contained in this Agreement.
3
(10) The parties agree that this Agreement shall be construed, applied,
and interpreted in accordance with the laws of the State of Maryland, including
in relation to all matters of formation, interpretation, construction, validity,
performance, and enforcement, and without regard to conflict of law provisions.
In the event any dispute whatsoever arises which related to or concerns in any
way the terms and conditions of this Agreement and/or the performance by the
parties of their respective obligations hereunder, such dispute will be subject
to the jurisdiction and venue of the U.S. District Court for the District of
Maryland, Northern Division.
(11) No determination by any court, governmental or administrative body,
or otherwise that any provisions of this Agreement or any amendment hereof is
illegal, invalid, or unenforceable in any instance shall affect the validity or
enforceability of (i) such provision in any circumstance not controlled by such
determination or (ii) any other provision of the Agreement. Each provision shall
be valid and enforceable to the fullest extent allowed by, and shall be
construed whenever possible as being consistent with, applicable law. In the
event any provision of this Agreement is declared illegal, invalid, or
unenforceable, the remainder of the Agreement shall continue in full force and
effect.
(12) Each of the parties shall be responsible for its respective fees and
expenses, including court costs, legal fees, and expert fees that are related to
or arise out of the Action.
(13) There shall be no right to set-off any payment due under this
Agreement against any payment arising out of any other contract, agreement, or
controversy between JHU/APL, on the one hand, and Akorn, on the other hand.
(14) The terms of this Agreement are contractual, and the parties hereto
represent and warrant that they possess the full and complete authority to
covenant and agree as provided herein, and further represent and warrant that
they have full and complete authority to execute this Agreement. In addition,
the individuals executing this Agreement on behalf of the respective parties
warrant and represent that they have been duly authorized and empowered to
execute this Agreement on behalf of their respective parties.
(15) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective subsidiaries, affiliates,
divisions, parents, successors, permitted assigns, trustees, officers,
directors, employees, attorneys, and agents. Except as set forth in the
preceding sentence, nothing in this Agreement is intended to confer, expressly
or by implication, upon any person or entity other than the parties to this
Agreement, any right or remedies under or by reason of this Agreement. Neither
party hereto shall assign its rights and/or obligations under this Agreement
without the prior written consent of the other party hereto.
4
(16) This Agreement is intended to be and is a settlement and compromise
of disputed claims. The execution of this Agreement, and the exchange of
consideration, releases, and other actions provided herein, are not to be
construed as any admission or concession on the part of any party with respect
to any liability, claim, counterclaim, or defense.
(17) Each party and counsel for each party have reviewed and approved
this Agreement, and accordingly any presumption or other rule of construction
that any ambiguities be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
(18) The parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be
reasonably necessary or appropriate to give full force and effect to the terms
of this Agreement.
IN WITNESS WHEREOF the respective parties hereto have executed this
Agreement in duplicate originals by their duly authorized officers to be
effective as of the date of the last party to execute this Agreement.
AKORN, INC. THE XXXXX XXXXXXX UNIVERSITY
Applied Physics Laboratory
By By
--------------------------- ---------------------------------
Xxx Xxxxxxx Xxxx X. Xxxxx
Chief Financial Officer Assistant Director, Operations
Date Date
------------------------- -------------------------------
5
