EXHIBIT 99
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION
LICENSE AGREEMENT
between
MERCK & CO., INC.
and
CYTRX CORPORATION
LICENSE AGREEMENT
THIS AGREEMENT (this "Agreement") effective as of November 1, 2000, (the
"Effective Date") between Merck & Co., Inc., a corporation organized and
existing under the laws of New Jersey ("Merck") and CytRx Corporation, a
corporation organized and existing under the laws of Delaware ("CytRx").
WITNESSETH:
WHEREAS, CytRx. has developed CytRx Know-How (as hereinafter defined) and
has rights to Patent Rights (as hereinafter defined); and
WHEREAS, Merck desires to obtain a license under the Patent Rights and
CytRx Know-How, upon the terms and conditions set forth herein and CytRx desires
to grant such a license;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
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Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 The term "Adjuvant" shall mean (i) any polyoxypropylene/polyoxyethelene
copolymer compounds or compositions claimed in or covered by Patent Rights,
including any Improvements thereto, which may be added to a [*****] to
enhance immunogenicity.
1.2 The term "Affiliate" shall mean (i) any corporation or business entity of
which fifty percent (50%) or more of the securities or other ownership
interests representing the equity, the voting stock or general partnership
interest are owned, controlled or held, directly or indirectly, by Merck or
CytRx; or (ii) any corporation or business entity which, directly or
indirectly, owns, controls or holds fifty percent (50%) (or the maximum
ownership interest permitted by law) or more of the securities or other
ownership interests representing the equity, the voting stock or, if
applicable, the general partnership interest, of Merck or CytRx.
1.3 The term "Calendar Quarter" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.
1.4 The term "Calendar Year" shall mean each successive period of twelve (12)
consecutive calendar months commencing on January I and ending on December
31.
1.5 The term "Combination Product" shall mean a Licensed Product containing
Substance for use in the Target Field in combination with Substance for use
in the HIV Field.
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1.6 The term "Competitive Product" shall mean a product with safety and
efficacy equivalent or materially similar to a Licensed Product which has
attained a unit market share of fifteen percent (15%) or more in a country
of sale as measured by prescriptions or other similar information in such
country of sale.
1.7 The term "CytRx Know-How" shall mean all information and materials,
including but not limited to, discoveries, Improvements, processes,
formulas, data, inventions, know-how and trade secrets, patentable or
otherwise, which during the term of this Agreement (i) are in CytRx's
possession or control, (ii) are not generally known and (iii) are necessary
or useful to Merck in connection with the research, development,
manufacture, marketing, use or sale of Adjuvants, Substances or Licensed
Product in the Field including but not limited to any information in
regulatory filings for the manufacture and/or registration of Adjuvants.
1.8 The term "Field" shall mean the HIV Field and the Target Field.
1.9 The term "First Commercial Sale" shall mean, with respect to any Licensed
Product, the first sale for end use or consumption of such Licensed Product
in a country after all required approvals, including marketing and pricing
approvals, have been granted by the governing health authority of such
country.
1.10 The term "HIV Field" shall mean the prevention and/or treatment of
infection by Human Immunodeficiency Virus (HIV).
1.11 The term "Improvement" shall mean any enhancement by CytRx in the
synthesis or manufacture of Adjuvants, including but not limited to any
Adjuvants produced thereby.
1.12 The term "Licensed Product(s)" shall mean preparations in final form for
sale by prescription, over-the counter or any other method for use in
humans which contain Substance(s), specifically Licensed Target Products
and Licensed HIV Products.
1.13 The term "Licensed HIV Product" shall mean a Licensed Product for the HIV
Field.
1.14 The term "Licensed Target Product" shall mean a Licensed Product for the
Target Field.
1.15 The term "Major Pharmaceutical Market" shall mean any of the United
States, Canada, France, Germany, Italy, Spain, the United Kingdom or Japan.
1.16 The term "Merck Know-How" shall mean any Merck information and materials,
including but not limited to, discoveries, improvements, processes,
formulas, data, inventions, know-how and trade secrets, patentable or
otherwise, which during the term of this Agreement are not generally known.
1.17 The term "Net Sales" shall mean the gross invoice price of Licensed
Product sold by Merck, its Affiliates or sublicensees (which term does not
include distributors) to the first independent third party after deducting,
if not previously deducted, in the amount invoiced or received:
(a) trade and quantity discounts;
(b) returns, rebates and allowances;
(c) chargebacks and other amounts paid on sale or dispensing of Licensed
Product;
(d) retroactive price reductions that are actually allowed or granted;
(e) sales commissions paid to third party distributors and/or selling
agents;
(f) a fixed amount equal to five percent (5%) of the gross invoiced price
to cover bad debt, sales or excise taxes, transportation and insurance
charges and additional special transportation, custom duties, and
other governmental charges; and
(g) the standard inventory cost of devices or delivery systems other than
syringes used for dispensing or administering Licensed Product which
accompany Licensed Product as it is sold.
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1.18 The term " Target Field" shall mean the prevention of, and/or treatment of
infection by, [*****]
1.19 The terms "Patent Rights" shall mean (i) the patents and patent
applications listed on Schedule 1. 19 and (ii) patents owned by or
licensed to CytRx during the term of this Agreement which claim or cover
polyoxypropylene/polyoxyethylene copolymer compounds or compositions which
may be added to a Substance to enhance the immunogenicity of such
Substance; or (iii) are divisions, continuations, continuations- in-part,
reissues, renewals, extensions, supplementary protection certificates,
utility models and the like of any such patents and patent applications
and foreign equivalents thereof.
1.20 The term "Phase I Study", "Phase Ilb Study"(formal dose ranging study) and
"Phase III Study" shall mean these terms as described in the laws and
regulations of the U.S. Food and Drug Administration of the Department of
Health and Human Services.
1.21 The term "PLA Approval" shall mean notification from a regulatory
authority in a country that all approvals for the marketing of Licensed
Product, including pricing approvals, have been granted.
1.22 [*****]
1.23 The term "Proprietary Information" shall mean all Merck Know-How, CytRx
Know-How, and all other scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether communicated in
writing or orally or by sensory detection, which is provided by one party
to the other party in connection with this Agreement.
1.24 The term "Product License Application" shall mean a product license
application or biologics license application as described in the laws and
regulations of the U.S. Public Health Service Act, 42 U.S.C. Section 262,
et. seq.
1.24 The term "Substance" shall mean [*****] for use in the Field which
contains one or more Adjuvants.
1.25 The term "Target" shall mean [*****]
1.26 The term "Territory" shall mean all of the countries in the world.
1.27 The term "Valid Patent Claim" shall mean a claim of an issued and
unexpired patent included within the Patent Rights, which has not been
revoked or held unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not been disclaimed,
denied or admitted to be invalid or unenforceable through reissue or
disclaimer or otherwise.
ARTICLE 11
LICENSE; DEVELOPMENT AND COMMERCIALIZATION
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2.1 License Grant.
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(a) CytRx hereby grants to Merck an exclusive license in the Field in the
Territory with the right to sublicense under Patent Rights to
research, develop, make, have made, use, and/or import Adjuvant, to
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research, develop, make, have made, use, sell, offer to sell and/or
import Substance and/or Licensed Product(s).
(b) CytRx hereby grants to Merck an exclusive license in the Field and in
the Territory with the right to sublicense under CytRx Know-How to
research, develop, make, have made, use, and/or import Adjuvant,to
research, develop, make, have made, use, sell, offer to sell and/or
import Substance and/or Licensed Product(s) and (ii) otherwise carry
out the activities contemplated under this Agreement.
2.2 Exchange of Information. During the term of this Agreement, CytRx shall
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promptly disclose to Merck in English and in writing on an ongoing basis
all CytRx Know-How not previously disclosed. To the extent Merck, in its
sole discretion, provides CytRx with any information regarding Adjuvants,
it is understood that such information will be considered to be Proprietary
Information of Merck subject to Article III.
2.3 Development and Commercialization. Merck shall use reasonable efforts,
---------------------------------
consistent with the usual practice followed by Merck in pursuing the
commercialization and marketing of its other similar pharmaceutical
products, at its own expense, to develop and commercialize a Licensed
Product on a commercially reasonable basis in such countries in the
Territory where in Merck's opinion it is commercially viable to do so.
2.4 Excused Performance. In addition to the provisions of Article VI hereof,
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the obligation of Merck with respect to any Licensed Product under Section
2.3 are expressly conditioned upon the continuing absence of any adverse
condition or event relating to the safety or efficacy of the Licensed
Product, and the obligation of Merck to develop or market any such Licensed
Product shall be delayed or suspended so long as in Merck's opinion any
such condition or event exists.
ARTICLE III
CONFIDENTIALITY AND PUBLICATION
3.1 Nondisclosure Obligation. All Proprietary Information disclosed by one
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party to the other party hereunder shall be maintained in confidence by the
receiving party and shall not be disclosed to a non-party or used for any
purpose except as set forth herein without the prior written consent of the
other party, except to the extent that such Proprietary Information:
(a) is known by recipient at the time of its receipt, and not through a
prior disclosure by the disclosing party, as documented by business
records;
(b) is properly in the public domain;
(c) is subsequently disclosed to a receiving party by a third party who
may lawfully do so and is not under an obligation of confidentiality
to the disclosing party;
(d) is developed by the receiving party independently of Proprietary
Information received from the other party;
(e) is disclosed to governmental or other regulatory agencies in order to
obtain patents or to gain approval to conduct clinical trials or to
market Licensed Product, but such disclosure may be only to the extent
reasonably necessary to obtain patents or authorizations;
(f) is deemed necessary or useful by Merck to be disclosed to
sublicensees, agents, consultants, Affiliates and/or other third
parties for the research and development, manufacturing and/or
marketing of the Adjuvant, Substances or Licensed Product (or for such
parties to determine their interest in performing such activities) in
accordance with this Agreement on the condition that such third
parties agree to be bound by the confidentiality obligations contained
this Agreement, provided the term of confidentiality for such third
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parties shall be no less than ten (10) years; or
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(g) is required to be disclosed by law or court order, provided that
notice is promptly delivered to the other party in order to provide an
opportunity to challenge or limit the disclosure obligations.
3.2 CytRx Know-How. CytRx agrees to keep all CytRx Know-How confidential
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subject to exception (b), (e) and (g) in Section 3.1 above. It is
understood that CytRx may disclose CytRx Know-How under confidentiality to
prospective licensees, sublicensees, agents, consultants, Affiliates and/or
other third parties for the research, development, manufacturing and/or
marketing of products.
ARTICLE IV
PAYMENTS; ROYALTIES AND REPORTS
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4.1 Consideration for License. In partial consideration for the licenses
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granted herein under the Patent Rights, upon the terms and conditions
contained herein, Merck shall pay to CytRx the following amounts:
(a) due within thirty (30) days of the Effective Date, a signature
payment of two million dollars ($2,000,000);
(b) due within thirty (30) days of commencement of the first Phase I
Study for the first Licensed HIV Product, a payment of one million
dollars ($1,000,000);
(c) due within thirty (30) days of commencement of the earlier of the
first Phase II(b) Study or Phase III for the first Licensed HIV
Product, a payment of one million dollars ($1,000,000);
(d) due within thirty (30) days of the filing of the first Product
License Application for the first Licensed HIV Product in a Major
Pharmaceutical Market, a payment of one million dollars ($1,000,000);
(e) due within thirty (30) days of the first PLA Approval in a Major
Pharmaceutical Market for the first Licensed HIV Product, a payment
of one million dollars ($1,000,000).
Merck shall notify CytRx in writing within thirty (30) days upon the
achievement of each milestone, such notice to be accompanied by payment of
the appropriate milestone payment. The milestone payment shall be payable
only upon the initial achievement of such milestone and no amounts shall
be due hereunder for subsequent or repeated achievement of such milestone.
4.2 Target Maintenance Payments. Merck will pay CytRx the following payments
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until the First PLA Approval for the first Licensed Target Product, due
within thirty days of the Effective Date and thereafter within thirty (30)
days of each anniversary of the Effective Date:
(a) Fifty thousand dollars ($50,000) for the first year of the Agreement;
(b) Seventy five thousand dollars ($75,000) for the second year of the
Agreement;
(c) One hundred thousand dollars ($100,000) for the third and any
additional years of the Agreement until the First PLA Approval for
the first Licensed Target Product.
4.2.1 All payments made under this Article 4.2 shall be creditable by Merck
against any royalty payments made under Article 4.4, provided, however
that no royalties may be reduced as a result of any such credit by more
than fifty percent (50%). Unused credits may be carried over into
subsequent royalty periods.
4.3 Milestone Payments. Subject to the terms and conditions in this Agreement,
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Merck shall pay to CytRx the following milestone payments for the first
Licensed Target Product for each Target:
(a) One hundred thousand dollars ($100,000) for the commencement of the
first Phase I Study;
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(b) Two hundred fifty thousand dollars ($250,000) for the commencement of
the earlier of the first Phase IIb Study or the first Phase III
Study;
(c) Five hundred thousand dollars ($500,000) upon the first Product
License Application filing in a Major Pharmaceutical Market;
(d) Two million dollars ($2,000,000) upon the first PLA Approval in a
Major Pharmaceutical Market.
Merck shall notify CytRx in writing within thirty (30) days upon the
achievement of each milestone, such notice to be accompanied by payment of
the appropriate milestone payment. The milestone payment shall be payable
only upon the initial achievement of such milestone and no amounts shall
be due hereunder for subsequent or repeated achievement of such milestone.
4.4 Royalties.
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4.4.1 Royalties Payable By Merck. Subject to the terms and conditions of this
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Agreement, Merck shall pay to CytRx royalties for Licensed Target
Product(s) for each Target on a country-by-country basis in an amount
equal to:
(a) For Net Sales by Merck, its Affiliates or sublicensees of Licensed
Target Products which would, but for the license hereunder, infringe
a Valid Patent Claim in the country of manufacture or sale, royalties
based on the following annual Net Sales aggregated separately for
each Licensed Target Product:
(a) For annual Net Sales up to two hundred fifty million dollars
($250,000,000) a royalty of two percent (2%);
(b) For that portion of annual Net Sales exceeding two hundred fifty
million dollars ($250,000,000) but less than or equal to five
hundred million dollars ($500,000,000) a royalty of three
percent (3%);
(c) For that portion of annual Net Sales exceeding five hundred
million dollars ($500,000,000) a royalty of four percent (4%).
(b) For Net Sales of Licensed Target Products by Merck, its Affiliates or
sublicensees other than those covered in Subsection 4.4.1(a) above, a
royalty calculated as set forth in Article 4.4.1(a), for a period of
five (5) years from First Commercial Sale in each country of the
Territory.
(c) In addition to the patent royalty payments set forth in Article
4.4.1, Merck shall pay a one percent (1%) royalty on Net Sales by
Merck, its Affiliates or sublicensees on any Licensed Product which
would, but for the license hereunder, infringe a Valid Patent Claim
in the country of manufacture or sale in the event (i) no other
patents owned by or licensed to Merck, its Affiliates or sublicensees
are infringed by such sale, including but not limited to any
composition of matter patent and (ii) there is no Competitive Product
in the country of sale.
(d) Royalties on each Licensed Product at the rate set forth above shall
be effective as of the date of First Commercial Sale of a Licensed
Product in a country and shall continue until either (i) the
expiration of the last applicable patent on such Licensed Product in
such country in the case of sales under Subsection 4.4.1(a) and
4.4.1(c) (if applicable) above or (ii) until the fifth (5th)
anniversary of the First Commercial Sale in such country in the case
of sales of Licensed Product under Subsection 4.4.1(b) above, subject
to the following conditions:
(x) that only one royalty shall be due with respect to the same unit
of Licensed Product;
(y) that no royalties shall be due upon the sale or other transfer
among Merck, its Affiliates or sublicensees, but in such cases
the royalty shall be due and calculated upon Merck's or its
Affiliate's or its sublicensee's Net Sales to the first
independent third party; and
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(z) no royalties shall accrue on the disposition of Licensed Product
in reasonable quantities by Merck, its Affiliates or sublicenses
as samples (promotion or otherwise) or as donations (for example,
to non-profit institutions or government agencies for a non-
commercial purpose).
4.4.2 Royalty Payable Under Managed Pharmaceutical Contract. It is understood
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by the parties that Merck may sell Licensed Product(s) to an independent
third party (such as a retailer or wholesaler) and may subsequently
perform services relating to Licensed Product(s) and other products under
a managed pharmaceutical benefits contract or other similar contract. In
such cases, it is agreed by the parties that Net Sales shall be based on
the invoice price (negotiated at arms length and not influenced by the
provision of such services) to an independent retailer or wholesaler, as
set forth in Section 1.17, notwithstanding that Merck may receive
compensation arising from the performance of such services.
4.4.3 Change in Sales Practices. The parties acknowledge that during the term
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of this Agreement, Merck's sales practices for the marketing and
distribution of Licensed Product may change to the extent to which the
calculation of the payment for royalties on Net Sales may become
impractical or even impossible. In such event the parties agree to meet
and discuss in good faith new ways of compensating CytRx to the extent
currently contemplated under Section 4.4.1.
4.4.4 Royalties for Bulk Compound. In those cases where Merck sells bulk
----------------------------
Substance rather than Licensed Product in packaged form to an independent
third party, the royalty obligations of this Article IV shall be
applicable to the bulk Substance, except in the event the third party,
directly or indirectly, sells such Substance back to Merck.
4.4.5 Royalty Reduction. If in any country Merck's or its Affiliates' or
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Sublicensees' total royalty payments on Licensed Product (including
royalties payable to CytRx) exceed [*****], the royalty obligation to
CytRx for such country shall be reduced by the formula set forth in
Schedule 4.4.5, provided that in no event shall the royalty payable to
CytRx be reduced by more than [*****] on a country-by-country basis. It
is understood that royalty reductions are intended to be equitably
applied to Merck's licensors of technology related to Licensed Products.
If Merck concludes that a royalty reduction formula is applicable, Merck
shall inform CytRx of the total amount of its royalty burden on Licensed
Product. Merck represents and warrants that, as of the Effective Date, it
has no reason to know that total royalty payments of Licensed Products
exceed [*****].
4.4.6 Reports; Payment of Royalty. During the term of the Agreement following
----------------------------
the First Commercial Sale of a Licensed Product, Merck shall furnish to
CytRx a quarterly written report for the Calendar Quarter showing the
sales of all Licensed Products subject to royalty payments sold by Merck,
its Affiliates and its sublicensees in the Territory during the reporting
period and the royalties payable under this Agreement. Reports shall be
due on the sixtieth (60th) day following the close of each Calendar
Quarter. Royalties shown to have accrued by each royalty report shall be
due and payable on the date such royalty report is due. Merck shall keep
complete and accurate records in sufficient detail to enable the
royalties payable hereunder to be determined.
4.7 Audits.
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(a) Upon the written request of CytRx and not more than once in each
Calendar Year, Merck shall permit an independent certified public
accounting firm of nationally recognized standing selected by CytRx
and reasonably acceptable to Merck, at the CytRx's expense, to have
access during normal business hours to such of the records of Merck
as may be reasonably necessary to verify the accuracy of the royalty
reports hereunder for any year ending not more than twenty-four (24)
months prior to the date of such request. The accounting firm shall
disclose to CytRx only whether the royalty reports are correct or
incorrect and the specific details concerning any discrepancies. No
other information shall be provided to CytRx.
(b) If such accounting firm correctly concludes that additional
royalties were owed during such period, Merck shall pay the
additional royalties within thirty (30) days of the date CytRx
delivers to Merck such accounting firm's written report so correctly
concluding. The fees charged by such accounting firm shall be paid
by CytRx. In the event the additional royalties owed by Merck for
the period audited exceed ten percent (10%) of royalties due for
said period and are at least one
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million dollars (U.S. $1,000,000) Merck will reimburse CytRx for the
reasonable fees charged by the accounting firm.
(c) Merck shall include in each sublicense granted by it pursuant to this
Agreement a provision requiring the sublicensee to make reports to
Merck, to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by CytRx's independent
accountant to the same extent required of Merck under this Agreement.
Upon the expiration of twenty-four (24) months following the end of
any year, the calculation of royalties payable with respect to such
year shall be binding and conclusive upon CytRx, and Merck and its
sublicensees shall be released from any liability or accountability
with respect to royalties for such year.
(d) CytRx. shall treat all financial information subject to review under
this Section 4.6 or under any sublicense agreement in accordance with
the confidentiality provisions of this Agreement, and shall cause its
accounting firm to enter into an acceptable confidentiality agreement
with Merck obligating it to retain all such financial information in
confidence pursuant to such confidentiality agreement.
4.8 Payment Exchange Rate. All payments to be made by Merck to CytRx under this
---------------------
Agreement shall be made in United States dollars and may be paid by check
made to the order of CytRx. or bank wire transfer in immediately available
funds to such bank account in the United States designated in writing by
CytRx from time to time. In the case of sales outside the United States,
the rate of exchange to be used in computing the amount of currency
equivalent in United States dollars shall be made at the monthly rate of
exchange utilized by Merck in its worldwide accounting system, prevailing
on the third to the last business day of the month preceding the month in
which such sales are recorded by Merck.
4.9 Income Tax Withholding. If laws, rules or regulations require withholding
----------------------
of income taxes or other taxes imposed upon payments set forth in this
Article IV, Merck shall make such withholding payments as required and
subtract such withholding payments from the payments set forth in this
Article IV. Merck shall submit appropriate proof of payment of the
withholding taxes to CytRx within a reasonable period of time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
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5.1 Representation and Warranty. CytRx. represents and warrants to Merck that
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as of the date of this Agreement:
(a) to the best of CytRx's knowledge, the Patent Rights and CytRx Know-How
are subsisting and are not invalid or unenforceable, in whole or in
part;
(b) it has the full right, power and authority to enter into this
Agreement, and to grant the licenses granted under Article Il hereof,
(c) it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in Patent Rights or CytRx
Know-How in the Field;
(d) to the best of CytRx's knowledge, it is the sole and exclusive owner
or licensee of the Patent Rights and CytRx Know-How, all of which is
free and clear of any liens, charges and encumbrances, and no other
person, corporate or other private entity, or governmental entity or
subdivision thereof, has or shall have any claim of ownership with
respect to the Patent Rights and CytRx. Know-How, whatsoever; that
CytRX shall use its best efforts to maintain any license related to
Patent Rights or CytRx Know-How in effect;
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(e) to the best of CytRx's knowledge, the licensed Patent Rights and CytRx
Know-How and the research, development, manufacture, use, sale and/or
import of Adjuvants, Substances and Licensed Products do not interfere with
or infringe any intellectual property rights owned or possessed by any
third party; and
(f) there are no claims, judgments or settlements against or owed by the CytRx
or pending or threatened claims or litigation relating to the Patent Rights
and CytRx. Know-How.
(g) CytRx has disclosed to Merck all reasonably relevant information regarding
the Patent Rights and CytRx Know-How licensed under this Agreement,
including all patent opinions obtained by CytRx related thereto.
ARTICLE VI
PATENT PROVISIONS
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6.1 Filing, Prosecution and Maintenance of Patents. CytRx agrees to file,
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prosecute and maintain in the Major Markets, upon appropriate consultation
with Merck, the Patent Rights owned in whole or in part by CytRx and
licensed to Merck under this Agreement. In addition, CytRx shall, at
Merck's request, file, prosecute and maintain such Patent Rights in other
countries, which costs shall be reimbursed by Merck within sixty (60) days
of receipt of invoices therefor. CytRx shall keep Merck advised of the
status of the actual and prospective patent filings and upon the request of
Merck, shall provide advance copies of any papers related to the filing,
prosecution and maintenance of such patent filings. With respect to all
filings hereunder in Major Pharmaceutical Markets CytRx shall be
responsible for payment for all costs and expenses related to such filings
6.2 Option of Merck to Prosecute and Maintain Patents. CytRx shall give notice
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to Merck of any desire to cease prosecution and/or maintenance of Patent
Rights and, in such case, shall permit Merck, at its sole discretion, to
continue prosecution or maintenance at its own expense. If Merck elects to
continue prosecution or maintenance or file based on CytRx's election not
to file pursuant to Section 6.1 above, CytRx shall execute such documents
and perform such acts at CytRx's expense as may be reasonably necessary for
Merck to perform such prosecution or maintenance or filing. All of the
expenses and costs incurred by Merck to continue prosecution and
maintenance of Patent Rights shall be fully creditable against royalties
due under Article IV of this Agreement; provided however, no royalty
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payment when due, regardless of the number of such credits available to
Merck in accordance with the terms of this Agreement, shall be reduced by
more than fifty percent (50%). Unused credits may be carried over into
subsequent royalty periods.
6.3. Interference, Opposition, Reexamination and Reissue.
----------------------------------------------------
(a) CytRx shall, within ten (10) days of learning of such event, inform
Merck of any request for, or filing or declaration of any interference,
opposition, or reexamination relating to Patent Rights, Merck and CytRx
shall thereafter consult and cooperate fully to determine a course of
action with respect to any such proceeding. Merck shall have the right
to review and approve any submission to be made in connection with such
proceeding.
(b) CytRx shall not institute any reexamination, or reissue proceeding
relating to Patent Rights without the prior written consent to Merck,
which consent shall not be unreasonably withheld.
(c) In connection with any interference, opposition, reissue, or
reexamination proceeding relating to Patent Rights, Merck and CytRx
will cooperate fully and will provide each other with any information
or assistance that either may reasonably request. CytRx shall keep
Merck informed of developments in any such action or proceeding,
including, to the extent permissible, the status of any settlement
negotiations and the tenris of any offer related thereto.
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(d) CytRx shall bear the expense of any interference, opposition,
reexamination, or reissue proceeding relating to Patent Rights.
6.4 Enforcement and Defense Rights.
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(a) CytRx shall give Merck notice of either (i) any infringement of Patent
Rights, or (ii) any misappropriation or misuse of CytRx Know-How, that
may come to CytRx's attention. Merck and CytRx shall thereafter consult
and cooperate fully to determine a course of action, including but not
limited to the commencement of legal action by either or both Merck and
CytRx, to terminate any infringement of Patent Rights or any
misappropriation or misuse of CytRx Know-How. However, CytRx, upon
notice to Merck, shall have the first right to initiate and prosecute
such legal action at its own expense and in the name of CytRx and
Merck, or to control the defense of any declaratory judgment action
relating to Patent Rights or CytRx Know-How. CytRx shall promptly
inform Merck if it elects not to exercise such first right and Merck
shall thereafter have the right to either initiate and prosecute such
action or to control the defense of such declaratory judgment action in
the name of Merck and, if necessary, CytRx.
(b) In the event that CytRx elects not to initiate and prosecute an action
as provided in paragraph (a), and Merck elects to do so, the costs of
any course of action to terminate infringement of Patent Rights or
misappropriation or misuse of CytRx Know-How, including the costs of
any legal action commenced or the defense of any declaratory judgment,
shall be shared equally by CytRx and Merck.
(c) For any action to terminate any infringement of Patent Rights or any
misappropriation or misuse of CytRx Know-How, in the event that Merck
is unable to initiate or prosecute such action solely in its own name,
CytRx will join such action voluntarily and will execute and cause its
Affiliates to execute all documents necessary for Merck to initiate
litigation to prosecute and maintain such action. In connection with
any action, Merck and CytRx will cooperate fully and will provide each
other with any information or assistance that either may reasonably
request. Each party shall keep the other informed of developments in
any action or proceeding, including, to the extent permissible by law,
the status of any settlement negotiations and the terms of any offer
related thereto.
(d) Any recovery obtained by either or both Merck and CytRx in connection
with or as a result of any action contemplated by this section, whether
by settlement or otherwise, shall be shared in order as follows:
(i) the party which initiated and prosecuted the action shall recoup
all of its costs and expenses incurred in connection with the
action;
(ii) the other party shall then, to the extent possible, recover its
costs and expenses incurred in connection with the action; and
(iii) the amount of any recovery remaining shall then be allocated
between the parties on a pro rata basis under which CytRx shall
--- ----
receive a proportion based on the royalties it lost and Merck
shall receive a proportion based on its lost profits.
6.5 Certification under Drug Price Competition and Patent Restoration Act.
---------------------------------------------------------------------
CytRx shall immediately give notice to Merck of any certification of which
it becomes aware filed under the United States "Drug Price Competition and
Patent Term Restoration Act of 1984" claiming that Patent Rights covering
Substance(s) or Licensed Product(s) are invalid or that infringement will
not arise from the manufacture, use or sale of Substance(s) or Licensed
Product(s) by a third party. If CytRx decides not to bring infringement
proceedings against the entity making such a certification, it shall give
notice to Merck of its decision not to bring suit within twenty-one (21)
days after receipt of notice of such certification. Merck may then, but is
not required to, bring suit against the party that filed the certification.
Any such suit by Merck or CytRx shall either be in the name of Merck or in
the name of CytRx, or jointly by Merck and CytRx. For this purpose, the
party not bringing suit shall execute such legal papers necessary for the
prosecution of such suit as may be reasonably requested by the party
bringing suit.
10
6.6 Abandonment. CytRx shall promptly give notice to Merck of the grant,
-----------
lapse, revocation, surrender, invalidation or abandonment of any Patent
Rights licensed to Merck for which CytRx is responsible for the filing,
prosecution and maintenance.
6.7 Patent Term Restoration. The parties hereto shall cooperate with each
-----------------------
other in obtaining patent term restoration or supplemental protection
certificates or their equivalents in any country in the Territory where
applicable to Patent Rights. In the event that elections with respect to
obtaining such patent term restoration are to be made, Merck shall have
the right to make the election and CytRx agrees to abide by such
election; provided it is understood that Merck shall be responsible for
the costs required for any such elections
ARTICLE VII
TERM AND TERMINATION
7.1 Term and Expiration. This Agreement shall be effective as of the
-------------------
Effective Date and unless terminated earlier pursuant to Sections 7.2 or
7.3 below, the term of this Agreement shall continue in effect until
expiration of all royalty obligations hereunder. Upon expiration of all
royalty obligations hereunder, Merck's licenses pursuant to Article 2
shall become fully paid-up, perpetual licenses.
7.2 Termination by Merck. Notwithstanding anything contained herein to the
--------------------
contrary, Merck shall have the right to terminate this Agreement at any
time in its sole discretion by giving ninety (90) days advance written
notice to CytRx. In the event of such termination, the rights and
obligations hereunder, including any licenses and any payment obligations
not due and owing as of the termination date shall terminate. It is
understood that Merck may terminate the Agreement for one or more Targets
or HIV while maintaining the Agreement in effect for any Target not
terminated (or HIV if not terminated).
7.3 Termination.
-----------
7.3.1 Termination for Cause. This Agreement may be terminated by notice by
---------------------
either party at any time during the term of this Agreement:
(a) if the other party is in breach of its material obligations
hereunder by causes and reasons within its control and has not cured
such breach within ninety (90) days after notice requesting cure of
the breach provided, however, in the event of a good faith dispute
with respect to the existence of a material breach, the ninety (90)
day cure period shall be followed until such time as the dispute is
resolved pursuant to Section 8.6 hereof, it is understood, however,
that any amounts not in dispute between the parties will be paid
during such tolled period; or
(b) upon the filing or institution of bankruptcy, reorganization,
liquidation or receivership proceedings, or upon a general
assignment of a substantial portion of its assets for the benefit of
creditors by the other party; provided, however, in the case of any
-------- -------
involuntary bankruptcy proceeding such right to terminate shall only
become effective if the party consents to the involuntary bankruptcy
or such proceeding is not dismissed within ninety (90) days after
the filing thereof.
7.3.2 Effect of Termination for Cause on License.
-------------------------------------------
(a) In the event Merck terminates this Agreement under Section
7.3.1(a), Merck's license pursuant to Article 2.1 shall become paid-
up, perpetual license, except that Merck shall make fifty percent
(50%) of the royalty payments set forth in Article 4 in such event.
In the event that CytRx terminates this Agreement under Section
7.3.1(a) or Merck terminates this Agreement under Article 7.2,
Merck's licenses pursuant to Section 2.1 shall terminate as of such
termination date.
11
(b) In the event this Agreement is terminated due to the rejection of
this Agreement by or on behalf of CytRx under Section 365 of the
United States Bankruptcy Code (the "Code"), all licenses and rights
to licenses granted under or pursuant to this Agreement by CytRx to
Merck are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the Code, licenses of rights to "intellectual
property" as defined under Section 101(35A) of the Code. In such
case, Merck's rights will be determined by the Code.
7.4 Effect of Termination. Expiration or termination of the Agreement shall
---------------------
not relieve the parties of any ligation accruing prior to such expiration
or termination, and the provisions of Article III shall survive the
expiration of the Agreement and shall continue in effect for five (5)
years. Any expiration or early termination of this Agreement shall be
without prejudice to the rights of either party against the other accrued
or accruing under this Agreement prior to termination, including the
obligation to pay royalties for Licensed Product(s) or(Substance) sold
prior to such termination. Notwithstanding the foregoing, any remedies
set forth under this Article 7 shall not limit any claim for damages
either party may have against the other arising from material breach of
the other party.
ARTICLE VIII
MISCELLANEOUS
8.1. Force Majeure. Neither party shall be held liable or responsible to the
-------------
other party nor be deemed to have defaulted under or breached the
Agreement for failure or delay in fulfilling or performing any term of
the agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected party including, but
not limited to, fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party. The
affected party shall notify the other party of such force majeure
circumstances as soon as reasonably practical.
8.2. Assignment. The Agreement may not be assigned or otherwise transferred,
-----------
nor, except as expressly provided hereunder, may any right or obligations
hereunder be assigned or transferred, by either party without the consent
of the other party; provided, however, that Merck may, without such
-------- -------
consent, assign the Agreement and its rights and obligations hereunder to
an Affiliate or in connection with the transfer or sale of all or
substantially all of its assets related to the Licensed Product or the
business, or in the event of its merger or consolidation or change in
control or similar transaction. Any permitted assignee shall assume all
obligations of its assignor under the Agreement. Any permitted assignment
hereunder shall not relieve the Assignor of any obligations arising prior
to the assignment.
8.3. Severability. In the event any one or more of the provisions contained in
--------------
this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby, unless the absence of the invalidated provision(s) adversely
affect the substantive rights of the parties. The parties shall in such
an instance use their best efforts to replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable provision(s)
which, insofar as practical, implement the purposes of this Agreement.
8.4. Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered
personally, sent by telecopier (and promptly confirmed by personal
delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
12
if to CytRx, to: CytRx Corporation
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxx/Xxxxxxx
Xxxxxxxx, XX 00000
Attention: President and CEO
Telecopier No. (000) 000-0000
with a copy to: Attention: Office of Counsel
if to Merck, to: Merck & Co., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Vice President, Corporate
Licensing
Telecopier No.: (000) 000-0000
with a copy to: Attention: Office of Counsel
Telecopier No.: (000) 000-0000
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any
such communication shall be deemed to have been given when delivered if
personally delivered or sent by telecopier on a business day, on the
business day after dispatch if sent by nationally- recognized overnight
courier and on the third business day following the date of mailing if sent
by mail.
8.5 Applicable Law. The Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of New Jersey and the United States
without reference to any rules of conflict of laws or renvoi.
8.6. Dispute Resolution. The parties shall negotiate in good faith and use
-------------------
reasonable efforts to settle any dispute, controversy or claim arising from
or related to this Agreement or the breach thereof. If the parties do not
fully settle, and a party wishes to pursue the matter, each such dispute,
controversy or claim that is not an "Excluded Claim" shall be finally
resolved by binding arbitration in accordance with the Commercial
Arbitration Rules and Supplementary Procedures for Large Complex Disputes
of the American Arbitration Association ("AAA"), and judgment on the
arbitration award may be entered in any court having jurisdiction thereof.
The arbitration shall be conducted by a panel of three persons experienced
in the pharmaceutical business. Within 30 days after initiation of
arbitration, each party shall select one person to act as arbitrator and
the two party-selected arbitrators shall select a third arbitrator within
30 days of their appointment. If the arbitrators selected by the parties
are unable or fail to agree upon the third arbitrator, the third arbitrator
shall be appointed by the AAA. The place of arbitration shall be New York,
New York. Either party may apply to the arbitrators for interim injunctive
relief until the arbitration award is rendered or the controversy is other-
wise resolved. Either party also may, without waiving any remedy under this
Agreement, seek from any court having jurisdiction any injunctive or
provisional relief necessary to protect the rights or property of that
party pending the arbitration award. The arbitrators shall have no
authority to award punitive or any other type of damages not measured by a
party's compensatory damages. Each party shall bear its own costs and
expenses and attorneys' fees and an equal share of the arbitrators' and any
administrative fees of arbitration. Except to the extent necessary to
confirm an award or as may be required by law, neither a party nor an
arbitrator may disclose the existence, content, or results of an
arbitration without the prior written consent of both parties. In no event
shall an arbitration be initiated after the date when commencement of a
legal or equitable proceeding based on the dispute, controversy or claim
would be barred by the applicable New Jersey statute of limitations. As
used in this Section, the term "Excluded Claim" shall mean a dispute,
controversy or claim that concerns (a) the validity or infringement of a
patent, trademark or copyright; or (b) any antitrust, anti monopoly or
competition law or regulation, whether or not statutory.
13
8.7. Entire Agreement. The Agreement contains the entire understanding of the
-----------------
parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of the Agreement. The Agreement may be
amended, or any term hereof modified, only by a written instrument duly
executed by both parties hereto. It is understood that the Evaluation
Agreement between the parties dated January 18, 2000 and the Fee for
Service Agreement between the parties dated August 10, 2000, as they
relate to the delivery of GMP material, will continue to remain in effect.
8.8. Headings. The captions to the several Articles and Sections hereof are not
---------
a part of the Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
8.9. Independent Contractors. It is expressly agreed that CytRx and Merck shall
----------------------
be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency.
Neither CytRx nor Merck shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which
shall be binding on the other, without the prior consent of the other
party.
8.10. Waiver. The waiver by either party hereto of any right hereunder or the
------
failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by
said other party whether of a similar nature or otherwise.
8.11. Counterparts. The Agreement may be executed in two or more counterparts,
-------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.12. Waiver of Rule of Construction. Each party has had the opportunity to
-------------------------------
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction that
any ambiguity in this Agreement shall be construed against the drafting
party shall not apply.
8.13 Announcements; Public Disclosure. Neither party may disclose the existence
---------------------------------
of or terms and conditions of this Agreement to any third party, or in the
public domain, without the prior written approval of the other party,
except as may be required by law. In that case, the required party shall
give the other party an opportunity to comment on the disclosure and shall
limit disclosure to required information.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
Merck & CO., INC. CytRx Corporation
BY: /s/ Xxxxxxx X. Xxxxxxxxx BY: /s/ Xxxx X. Xxxxxxx
------------------------ -------------------
Xxxxxxx X. Xxxxxxxxx Xxxx X. Xxxxxxx
TITLE: Chairman, President & TITLE: President and CEO
Chief Executive Officer
DATE: November 1, 2000 DATE: October 30, 2000
---------------- ----------------
14
SCHEDULE 1.19
-------------
PATENTS
-------
U.S. Patent
-----------
5,554,372 (subject to U.S. government regulations)
5,990,241
6,086,899
RE 36,665
5,567,859
5,696,298
5,824,322
Pending application 90/104,088
Foreign
-------
W096/04932
6,086,899
15
SCHEDULE 4.4.5
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ROYALTY REDUCTION
[*****]
[****] CONFIDENTIAL PORTIONS OF THIS PAGE HAVE BEEN REDACTED AND FILED
SEPARATELY WITH THE COMMISSION
16
