AGREEMENT
THIS AGREEMENT ("Agreement"), effective as of July 2, 1997 ("Effective
Date"), is made and entered into by and between PROGENITOR, INC., a corporation
organized under the laws of the State of Delaware, having its principal offices
at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, ("Progenitor") and INTERNEURON
PHARMACEUTICALS, INC., a corporation organized under the laws of the State of
Delaware, having its principal offices at One Ledgemont Center, 00 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Interneuron").
WHEREAS, Progenitor holds certain patent and other rights (the "Patent
Rights") relating to human therapeutic uses (the "Field") of the protein product
of the del-1 gene (the "Product");
WHEREAS, Interneuron desires to acquire certain rights in the form of an
option to obtain a license under the Patent Rights; and
WHEREAS, Progenitor is willing to grant, and Interneuron is willing to
accept, such certain rights under terms and conditions set forth below.
NOW, THEREFORE, in consideration of the following, Progenitor and Interneuron
agree as follows:
ARTICLE 1 - OPTION GRANT
1.1 Subject to the terms and conditions of this Agreement, Progenitor hereby
grants to Interneuron an option to acquire an exclusive, royalty-bearing
right and license under the Patent Rights to manufacture, use and sell the
Product in the Field (the "Option").
1.2 Interneuron may exercise the Option by providing written notice to
Progenitor during the Option Period declaring Interneuron's intention to
enter into a license agreement relating to the Product. The term "Option
Period" shall mean the period commencing upon the Effective Date and
continuing until the effective date of an agreement whereby Progenitor
grants a right and license under the Patent Rights to manufacture, use and
sell the Product in the Field.
1.3 In the event that Interneuron elects to exercise the Option in accordance
with Article 1.2, the parties agree to promptly commence negotiations in
good faith of a license agreement relating to the grant by Progenitor to
Interneuron of an exclusive, royalty-bearing right and license under the
Patent Rights to manufacture, use and sell the Product in the Field (the
"License Agreement").
1.4 Notwithstanding any provision in this Agreement to the contrary,
Progenitor, at any time prior to the effective date of the License
Agreement, in Progenitor's sole discretion, may initiate negotiations with
third parties for the purpose of granting a right and license to such a
third party under the Patent Rights to manufacture, use and sell the
Product in the Field.
Such right and license may be exclusive. In the event that Progenitor and
a third party agree upon terms and conditions of an agreement whereby
Progenitor would grant a right and license to such a third party under the
Patent Rights to manufacture, use and sell the Product in the Field,
Progenitor, prior to entering into such agreement with such third party,
will offer such terms and conditions of agreement to Interneuron as the
terms and conditions of the License Agreement. In the event that
Interneuron does not enter into the License Agreement under the terms and
conditions offered by Progenitor within thirty (30) days after receipt of
Progenitor's written offer, Progenitor may enter into an agreement with
such third party under such terms and conditions without further obligation
to Interneuron except as set forth in Article 2.2 below.
ARTICLE 2 - CONSIDERATION
2.1 In consideration of the grant of the option contained herein, Interneuron
shall pay to Progenitor One Dollar ($1), receipt of which is hereby
acknowledged by Progenitor, and, in addition, shall relinquish its right to
receive seven (7) quarterly returns on outstanding Series A Preferred Stock
of Progenitor (the "Preferred Stock"). The Preferred Stock calls for the
holder of Preferred Stock to receive a thirty-five percent (35%) return at
the time of the conversion of Preferred Stock to common stock. Such
conversion would occur upon completion of an initial public offering of
Progenitor stock (the "IPO"). In the event that Interneuron exercises the
option granted pursuant to Article 1.1, Interneuron and Progenitor shall
determine, in good faith, the extent to which the value of the returns
relinquished hereunder represents prepayment by Interneuron of payments
otherwise due and payable to Progenitor under the License Agreement.
Interneuron and Progenitor specifically agree that such value shall not be
considered to be prepayment for services to be performed by Progenitor for
the benefit of Interneuron. If Interneuron exercises the Option prior to
completion of the IPO, Interneuron and Progenitor shall determine, in good
faith, the value of the returns relinquished hereunder. If Interneuron
exercises the Option after completion of the IPO, the value of the returns
relinquished hereunder shall be calculated on the basis of the IPO.
2.2 In the event that Progenitor enters into an agreement with a third party
whereby Progenitor grants to such third party an exclusive right and
license under the Patent Rights to manufacture, use and sell the Product in
the Field, Progenitor shall pay to Interneuron:
(a) Twenty Percent (20%) of any fees, milestones and other consideration
received by Progenitor from such a third party licensee, other than
royalties on sales of the Product; and
(b) Fifty Percent (50%) of any royalties received by Progenitor from such
a third party licensee on sales of the Product by such third party
licensee in the Field; provided, however, that the maximum amount of
such payment in any calendar year shall not exceed three percent (3%)
of such third party licensee's net sales of the Product in the Field.
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Notwithstanding (a) above, payments received by Progenitor as advances to
be credited against future earned royalties, development funds, equity
investments, and payments for research and development activities relating
to development of the Product shall not be fees, milestones or other
consideration for purposes of this Article 2.2.
2.3 In the event that Progenitor sells the Product, Progenitor shall pay to
Interneuron three percent (3%) of Progenitor's net sales of the Product in
the Field. For purposes of this Article 2.3, the term "Progenitor's net
sales" shall mean all revenues recognized in accordance with generally
accepted accounting principles from the sale or other disposition of the
Product by Progenitor and affiliates of Progenitor to a third party, less
returns and allowances (actually paid or allowed, including, but not
limited to, prompt payment and volume discounts, chargebacks form
wholesalers and other allowances granted to customers or wholesalers of the
Product, whether in cash or trade), freight, shipping, packing, freight and
shipping insurance, rebates, and sales and other taxes based on sales
prices when included in gross sales, but not including taxes when assessed
on income derived from such sales.
ARTICLE 3 - TERM AND TERMINATION
3.1 This Agreement shall become effective on the Effective Date and shall
continue in full force and effect until expiration, revocation or
invalidation of the last patent within the Patent Rights, unless terminated
earlier pursuant to this Article 3.
3.2 In the event the License Agreement is entered into by and between
Progenitor and Interneuron, this Agreement shall be replaced thereby and,
thereafter, any and all provisions of this Agreement shall cease to be
effective.
ARTICLE 4 - MISCELLANEOUS
4.1 This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of California, without reference to
conflicts of laws principles.
4.2 All notices, payments and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been
received when personally delivered or when mailed through the United States
Postal Service, postage prepaid, return receipt requested, or when shipped
by private express carrier, shipment charges prepaid, to the party to whom
delivery shall be made at the respective addresses as set out above. A
party may change its address for the purpose of this Article 4.2 by written
notice to the other parties.
4.3 No modification to this Agreement, nor any waiver of any right hereunder,
shall be effective unless assented to in writing by the party to be charged
and the waiver of any breach or
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default shall not constitute a waiver of any other right hereunder or any
subsequent breach or default.
4.4 Progenitor and Interneuron each agree that their rights and obligations
under this Agreement may not be transferred or assigned to a third party
without the prior written consent of the other party hereto. Any purported
assignment in violation of the above shall be void. Any permitted assignee
shall agree in writing to assume all obligations of its assignor under this
Agreement. Notwithstanding the foregoing, Progenitor may transfer or
assign its rights and obligations under this Agreement to a successor to
all or substantially all of the business or assets of Progenitor relating
to this Agreement whether by sale, merger, operation of law or otherwise.
4.5 In the event a term or condition of this Agreement is found by a court of
competent jurisdiction to be invalid or unenforceable, the parties hereto
shall use their best efforts to preserve the intent of this Agreement by
substituting a reasonably comparable term or condition for the benefit of
the party to whose advantage the invalid or unenforceable condition
operated or was intended to operate.
4.6 This Agreement constitutes the entire and exclusive agreement between the
parties hereto with respect to the subject matter hereof, and supersedes
and cancels all previous understandings, representations, registrations,
agreements, commitments and writings in respect thereof.
4.7 All headings of articles are for convenience of reference only, do not form
a part of this Agreement, and shall not affect in any way the meaning or
interpretation of this Agreement.
4.8 This Agreement may be executed in counterparts, each of which shall be
deemed an original, but both of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement on behalf of Progenitor and Interneuron, as applicable.
PROGENITOR, INC. INTERNEURON PHARMACEUTICALS, INC.
("Progenitor") ("Interneuron")
By: /s/ Xxxx X.X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
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Print Name: Xxxx X.X. Xxxxxxx Print Name: Xxxxxx X. Xxxx
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Title: Vice President, Finance Title: Executive Vice President and
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and Chief Financial Officer Chief Financial Officer
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