EXHIBIT 10.73
--------------------------------------------------------------------------------
KINETEK PHARMACEUTICALS, INC.
AND
QLT INC.
--------------------------------------------------------------------------------
RESEARCH AND EARLY DEVELOPMENT
AGREEMENT
--------------------------------------------------------------------------------
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION. ...................................................................... 1
1.1 Definitions........................................................................... 1
1.2 Other Definitions..................................................................... 7
1.3 Best of Knowledge..................................................................... 7
1.4 Headings.............................................................................. 7
1.5 Exhibits.............................................................................. 7
ARTICLE 2 - RESEARCH PROGRAM.......................................................................... 8
2.1 Scope................................................................................. 8
2.2 Responsibility and Costs.............................................................. 8
2.3 [*]................................................................................... 8
2.4 Selection of Third Eligible Target.................................................... 8
2.5 [*]................................................................................... 8
2.6 [*]................................................................................... 8
2.7 Research Plan......................................................................... 8
ARTICLE 3 - DEVELOPMENT RIGHTS........................................................................ 9
3.1 Delivery of Prospective Lead Compounds................................................ 9
3.2 Development Election.................................................................. 9
3.3 Expiry of Development Election........................................................ 11
3.4 Acceleration of Development Election.................................................. 11
ARTICLE 4 - EARLY DEVELOPMENT......................................................................... 11
4.1 Research Program Timetable............................................................ 11
4.2 Selection of Additional Target........................................................ 11
4.3 Additional Compound Request........................................................... 11
4.4 [*]................................................................................... 11
4.5 Delivery of Additional Prospective Lead Compounds..................................... 12
4.6 Failure to Deliver (Additional) Prospective Lead Compounds............................ 12
ARTICLE 5 - EXCLUSIVITY............................................................................... 14
5.1 QLT Exclusivity ..................................................................... 14
5.2 Kinetek's Rights...................................................................... 14
5.3 Exceptions to Kinetek's Rights........................................................ 14
5.4 Cross-Over Use/Cross-Pricing Risk..................................................... 15
5.5 Grant of License...................................................................... 15
ARTICLE 6 - COMMITTEES................................................................................ 15
6.1 Joint Technical Committee............................................................. 15
6.2 Joint Management Committee............................................................ 16
6.3 Budget................................................................................ 17
ARTICLE 7 - COMMITMENTS OF KINETEK AND QLT............................................................ 18
7.1 Commitments of Kinetek................................................................ 18
7.2 Sub-contracting and Outsourcing....................................................... 18
7.3 Commitments of QLT.................................................................... 18
ARTICLE 8 - FINANCIAL MATTERS......................................................................... 19
8.1 Initial Investment by QLT............................................................. 19
8.2 Use of Proceeds....................................................................... 19
8.3 Investment for Additional Compounds................................................... 19
8.4 Convertible Loan Facility............................................................. 19
-ii-
ARTICLE 9 - CONFIDENTIALITY; PUBLICITY AND PUBLICATION................................................ 20
9.1 Obligation of Confidentiality......................................................... 20
9.2 Permitted Disclosures................................................................. 21
9.3 Return of Confidential Information.................................................... 21
9.4 Ownership of Confidential Information................................................. 21
9.5 Press Release......................................................................... 22
9.6 Publication........................................................................... 22
9.7 Survival.............................................................................. 23
ARTICLE 10 - INTELLECTUAL PROPERTY.................................................................... 23
10.1 Ownership of Background Intellectual Property......................................... 23
10.2 Disclosure of Inventions.............................................................. 23
10.3 Ownership of Inventions............................................................... 23
ARTICLE 11 - PATENTS; PROSECUTION AND LITIGATION...................................................... 24
11.1 Prosecution of Patents................................................................ 24
11.2 Patent Review......................................................................... 24
11.3 Patent Costs.......................................................................... 25
11.4 Right to Assume Prosecution........................................................... 25
11.5 Defense of Infringement Suits......................................................... 25
11.6 Infringement by Third Parties......................................................... 26
11.7 Interference Proceedings.............................................................. 27
11.8 Status of Proceedings................................................................. 28
ARTICLE 12 - SAFETY AND REGULATORY.................................................................... 28
12.1 Compliance with Laws.................................................................. 28
12.2 Safety................................................................................ 28
12.3 Regulatory Filings.................................................................... 28
ARTICLE 13 - REPRESENTATIONS, WARRANTIES AND COVENANTS................................................ 28
13.1 Representations and Warranties of Kinetek............................................. 28
13.2 Covenants of Kinetek.................................................................. 29
13.3 Representations and Warranties of QLT................................................. 30
13.4 Covenants of QLT...................................................................... 30
13.5 Kinetek Change of Control............................................................. 30
ARTICLE 14 - TERM AND TERMINATION..................................................................... 30
14.1 Termination........................................................................... 30
14.2 Term.................................................................................. 30
14.3 Termination by QLT.................................................................... 31
14.4 Termination for Breach................................................................ 31
14.5 Termination on Bankruptcy............................................................. 32
14.6 Termination on Scientific Grounds..................................................... 32
14.7 Survival.............................................................................. 33
ARTICLE 15 - INDEMNIFICATION.......................................................................... 33
15.1 Mutual Indemnification................................................................ 33
15.2 Intellectual Property Indemnity....................................................... 34
15.3 Indemnification Procedure............................................................. 34
ARTICLE 16 - MISCELLANEOUS............................................................................ 34
16.1 Assignment; Enurement................................................................. 34
16.2 Dispute Resolution.................................................................... 35
16.3 Entire Agreement...................................................................... 35
16.4 Force Majeure......................................................................... 36
16.5 Further Assurances.................................................................... 36
16.6 Governing Law and Attornment.......................................................... 36
-iii-
16.7 Insurance............................................................................. 36
16.8 Notices............................................................................... 36
16.9 Change of Address..................................................................... 37
16.10 Rights and Remedies................................................................... 37
16.11 Severability.......................................................................... 37
16.12 Counterparts; Facsimile............................................................... 37
16.13 Waiver................................................................................ 37
EXHIBIT A KINETEK PATENTS.......................................................................... 1
---------------
EXHIBIT B QLT PATENTS.............................................................................. 1
-----------
EXHIBIT C GENERAL GUIDELINES FOR RESEARCH PLAN..................................................... 1
------------------------------------
EXHIBIT D LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT..................................... 1
----------------------------------------------------
EXHIBIT E THIRD PARTY LICENSES..................................................................... 1
--------------------
EXHIBIT F KINETEK INSURANCE COVERAGE............................................................... 1
--------------------------
RESEARCH AND EARLY DEVELOPMENT AGREEMENT
THIS RESEARCH AND EARLY DEVELOPMENT AGREEMENT (this "AGREEMENT") is entered into
as June 7, 2001 (the "EFFECTIVE DATE") by and among KINETEK PHARMACEUTICALS,
INC. ("KINETEK"), a corporation organized and existing under the laws of Canada
and having an office at 850 - 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0 and QLT INC. ("QLT"), a corporation organized and existing
under the laws of Canada and having an office at 000 Xxxxx Xxxxxxxx Xxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
RECITALS
WHEREAS Kinetek has scientific expertise and proprietary technology in the field
of signal transduction and has undertaken a broad drug discovery program with
the objective of designing small-molecule inhibitors targeting protein kinases
and protein phosphatases;
WHEREAS QLT is interested in developing and commercializing drugs targeting
protein kinases and protein phosphatases for the diagnosis, prevention and/or
treatment of conditions and diseases in humans and has particular expertise in
developing, registering, manufacturing, marketing and selling pharmaceuticals
world-wide;
WHEREAS both parties desire to enter into a collaboration the objective of which
will be for Kinetek to research and develop lead compounds targeting selected
protein kinases and protein phosphatases which QLT shall exclusively license for
development and commercialization by QLT in potential co-development with
Kinetek;
NOW THEREFORE, for and in consideration of the mutual observance of the
covenants set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the parties
agree as follows:
ARTICLE 1- INTERPRETATION
1.1 DEFINITIONS
(a) "ADDITIONAL COMPOUND REQUEST" shall have the meaning set forth
in Section 4.3;
(b) "ADDITIONAL PROSPECTIVE LEAD COMPOUND" shall have the meaning
set forth in Section 4.3;
(c) "ADDITIONAL TARGET" shall mean a Target selected by QLT
pursuant to Section 4.2 from among the Kinetek Available
Targets;
(d) "AFFILIATE" shall mean, with respect to any Person, any Person
directly or indirectly controlled by, controlling or under
common control with such Person. For the purposes of this
definition, "control" shall mean:
(i) the possession, directly or indirectly, of the power
to direct the management or policies of any such
Person or to veto any material decision relating to
the management or policies of such Person, in each
case whether through ownership of voting securities,
by contract or otherwise; or
(ii) direct or indirect beneficial ownership of 40% or
more of the voting securities of, or a 40% or greater
interest in the income of, such Person, or such other
relationship as, in fact, constitutes actual control;
(e) "ANNUAL BUDGET" shall have the meaning set forth in
Section 6.3;
(f) "COMMON SHARES" shall mean the common shares in the capital
of Kinetek;
-2-
(g) "COMMENCEMENT DATE" shall mean the date on which the draft
Research Program budget prepared by JTC pursuant to Section
2.7 has been approved by the JMC pursuant to Section 6.2(b);
(h) "COMPOUND" shall mean any chemical compound, including salts
thereof, owned, controlled or licensed by Kinetek as at the
Effective Date and/or becomes owned, controlled or licensed by
Kinetek during the Term that is directed against a Kinase, a
Phosphatase or any other Target;
(i) "CONFIDENTIAL INFORMATION" shall mean all information, data
and records, whether written or oral, which is obtained by a
receiving party (Kinetek or QLT, as the case may be) from a
disclosing party (Kinetek or QLT, as the case may be).
Information shall not be considered "CONFIDENTIAL INFORMATION"
to the extent that when considered as a whole and in the
context disclosed, the information:
(i) is in the public domain at the time of disclosure,
(ii) after disclosure, subsequently becomes part of the
public domain other than as a consequence of a breach
of an obligation of confidentiality owed to the
disclosing party by the receiving party,
(iii) can be demonstrated by the receiving party by written
record to have been known or otherwise available to
the receiving party prior to the disclosure by the
disclosing party,
(iv) after disclosure, can be demonstrated by the
receiving party by written record to have been
subsequently provided to the receiving party by a
third party if the receiving party reasonably
believes such disclosure does not violate any
obligations of the third party to the disclosing
party,
(v) is subsequently and independently developed by
employees of the receiving party or Affiliates of the
receiving party who had no knowledge of the
Confidential Information disclosed, as demonstrated
by the receiving party by written record, or
(vi) is required to be disclosed by law or government
regulation(s), provided that the receiving party
gives the disclosing party prompt notice of the
required disclosure in order to allow the disclosing
party to seek protective treatment.
A combination of features will not be deemed within the
foregoing exceptions merely because individual features are in
the public domain or in the possession of the receiving party
unless the combination itself is in the public domain or in
the possession of the receiving party;
(j) "CONVERTIBLE LOAN FACILITY" shall mean the convertible
loan facility as provided for in Section 8.4 of this
Agreement;
(k) "CROSS-OVER USE" shall mean the use or sale of a Compound, or
any Related Compound, that is directed against the same
Target(s) as any Lead Compound and/or Licensed Product, by a
party or an Affiliate of such party or by a Third Party
appointed by a party or an Affiliate of such party that can
reasonably be seen as competing with the use or sale of any
Lead Compound and/or Licensed Product in the Territory;
(l) "CROSS-PRICING RISK" shall mean the existence of a Compound,
or any Related Compound, that has substantially the same
chemical structure, or similar performance characteristics to
any Lead Compound and/or Licensed Product, so that such
Compound could reasonably be considered to be substituted in
medical practice and subject to competitive pricing in
relation to such Lead Compound and/or Licensed Product;
(m) "CURRENT MARKET PRICE" of Common Shares on any date shall
mean the weighted average of the "daily trading prices" for
the 15 consecutive "Trading Days" immediately preceding
such date. The "daily trading price" for each Trading Day
shall be the weighted average trading price for sales of
common shares on The Toronto Stock Exchange (or, if the
Common Shares are not then listed and posted for
-3-
trading on The Toronto Stock Exchange, on such stock
exchange or similar quotation system on which such shares
are listed and posted for trading as may be selected for
such purpose by the directors of QLT acting in good faith)
provided that if the Common Shares are not listed on any
stock exchange, the "Current Market Price" shall be the
price at which Common Shares are issued to investors that
are not industry-related strategic investors or
collaborative research partners in the then most recent
bona fide private placement financing by Kinetek completed
within the 12 month period immediately preceding the date
of the applicable Additional Compound Request and having
gross proceeds of at least [*] (the "PRIVATE PLACEMENT").
Provided further that in the event Kinetek has not
completed such Private Placement, the parties agree to
negotiate the price per Common Share, and failing such
agreement within 30 days of the applicable Additional
Compound Request, either party may refer the matter for
resolution pursuant to Section 16.2 in accordance with
generally accepted valuation practices. A "TRADING DAY"
shall be any day on which The Toronto Stock Exchange (or
such other stock exchange or similar quotation system as
may be selected by the directors of QLT) is open for
business and on which Common Shares have been traded;
(n) "DESIGNATED TARGETS" shall mean:
(i) up to 2 Eligible Targets selected or designated by
QLT pursuant to Sections 3.2(b) and 3.2(f); and
(ii) an Additional Target, if selected by QLT pursuant to
Section 4.2 following the exercise by QLT of its
Development Election pursuant to Section 3.2 in
respect of the second Prospective Lead Compound;
(o) "DEVELOPMENT ELECTION" shall have the meaning set forth in
Section 3.2(a);
(p) "DEVELOPMENT INFORMATION" shall have the meaning set forth
in Section 3.1;
(q) "EFFECTIVE DATE" shall mean the effective date of this
Agreement as set forth on the first page hereof;
(r) "ELIGIBLE TARGETS" shall mean ILK, [*] and one of [*]
selected pursuant to Section 2.4;
(s) "FDA" shall mean the United States Food and Drug
Administration or any successor entity thereto;
(t) "FIELD" shall mean the diagnosis, prevention and/or treatment
of ocular, renal (excluding renal disease caused by
hypertension) and/or immune system conditions or diseases
(excluding asthma) in humans;
(u) "FTE COST" shall have the meaning set forth in Section 8.2;
(v) "GLP" shall mean the current Good Laboratory Practices
regulations promulgated by the FDA, published at 21 CFR
Section 58, as such regulations may be from time to time
amended, and such equivalent regulations or standards of
countries outside the United States as may be applicable
to activities conducted hereunder;
(w) "GMP" shall mean the current Good Manufacturing Practice
regulations promulgated by the FDA, published at 21 CFR
Section 210 et seq., as such regulations may from time to
time be amended, and such equivalent regulations or
standards of countries outside the United States as may
be applicable to activities conducted hereunder;
[*]
(y) "ILK" shall mean integrin linked kinase, an enzyme;
* Material has been omitted and filed separately with the commission.
-4-
(z) "IND" shall mean an Investigational New Drug Application
under 21 CFR Section.312.23 pursuant to the rules and
policies of the FDA;
(aa) "IND READY" shall mean that stage in the pre-clinical
development of a Research Candidate when Kinetek has performed
all pre-clinical work and prepared all documentation and
materials (including drug product and data) necessary to
support the filing of an IND as documented in 21 CFR Section
312.23 with the exception of the clinical trial protocol;
(bb) "INITIAL INVESTMENT" shall have the meaning set forth in
Section 8.1;
(cc) "INITIAL TARGETS" shall mean ILK, [*] ;
(dd) "INTELLECTUAL PROPERTY" shall mean any discoveries,
developments, improvements, Know-How, Patents, copyrights,
copyright applications, industrial designs, industrial design
applications, mask works, trademarks, trademark applications
and trade secrets;
(ee) "INTERIM BUDGET" shall have the meaning set forth in
Section 6.3;
(ff) "JOINT INVENTIONS" shall have the meaning set forth in
Section 10.3;
(gg) "JOINT MANAGEMENT COMMITTEE" or "JMC" shall mean the committee
appointed by the parties pursuant to in Section 6.2;
(hh) "JOINT TECHNICAL COMMITTEE" or "JTC" shall mean the committee
appointed by the parties pursuant to Section 6.1;
(ii) "KINASE" shall mean a human enzyme that catalyzes the addition
of a phosphate group to a protein and includes, without
limitation, ILK, [*] ;
(jj) "KINASE TECHNOLOGY" shall mean all Patents and Know-How that
are owned, controlled or licensed by either party or its
Affiliates as at the Effective Date and/or become owned,
controlled or licensed during the Term in connection with
performance by either party under the Research Program and
that relate to the research, development, utilization,
manufacture or use of:
(i) Compounds (including Research Candidates, Prospective
Lead Compounds, Additional Prospective Lead Compounds
and Lead Compounds) and Licensed Products that are
directed against the Targets ILK, [*] or any other
Kinase; and
(ii) the Targets against which the Compounds or Licensed
Products listed in clause (i) are directed;
(kk) "KINETEK AVAILABLE TARGETS" means any Targets that Kinetek has
identified or that are the subject of a research or
development program conducted by Kinetek provided that such
research and development program is not being undertaken in
conjunction with a Third Party pursuant to a license or other
agreement;
(ll) "KINETEK KNOW-HOW" shall mean all Know-How that is owned,
controlled or licensed by Kinetek as at the Effective Date
and/or becomes owned, controlled or licensed by Kinetek during
the Term, and that:
(i) arises in connection with the performance of the
Research Program, or
(ii) relates to:
(A) all or any part of the Technology,
* Material has been omitted and filed separately with the commission.
-5-
(B) any improvements to the Technology,
(mm) "KINETEK PATENT" shall mean any Patent that is owned,
controlled or licensed by Kinetek as at the Effective Date
and/or becomes owned, controlled or licensed by Kinetek during
the Term and that is included in the Technology, and those
Patents set out in EXHIBIT A, as updated from time to time
during the Term;
(nn) "KINETEK TECHNOLOGY" shall mean all Technology that is owned,
controlled or licensed by Kinetek as at the Effective Date
and/or becomes owned, controlled or licensed by Kinetek during
the Term;
(oo) "KNOW-HOW" shall mean any and all data, technical information,
instructions, processes, experience, inventions (not yet
patented), discoveries, formulae, trade secrets, compositions
of matter and methods, expert opinions and other information
(in written or other tangible form) including, without
limitation, any chemical, pharmacological, toxicological,
clinical, assay, control and manufacturing data, biological
materials, manufacturing or related technology, analytical
methodology, chemical and quality control procedures,
protocols, techniques, improvements and results of
experimentation and testing;
(pp) "[*] " shall mean the Compounds listed in documents
delivered to QLT concurrent with the execution of this
Agreement;
(qq) "LEAD COMPOUND" shall mean a Prospective Lead Compound or an
Additional Prospective Lead Compound that has been accepted by
QLT pursuant to Section 3.2 for development and
commercialization under the License Agreement;
(rr) "LICENSE AGREEMENT" shall mean the License, Development and
Commercialization Agreement in substantially the form set out
in EXHIBIT D to this Agreement, to be executed by Kinetek and
QLT with respect to all Lead Compounds;
(ss) "LICENSED PRODUCT" shall mean any finished product that
incorporates any Technology that is covered by Kinetek
Patents, Kinetek Know-How or Patents arising out of Joint
Inventions, and that is developed and commercialized pursuant
to the License Agreement;
(tt) "[*]" shall mean the Compounds selected by Kinetek under [*]
to be developed in the [*] Field;
(uu) "[*]" shall mean the treatment, diagnosis or prevention of
oncological conditions or diseases in humans;
(vv) "OTHER TARGET TECHNOLOGY" shall mean all Patents and Know-How
that are owned, controlled or licensed by either party or its
Affiliates as at the Effective Date and/or become owned,
controlled or licensed during the Term in connection with
performance by either party under the Research Program and
that relate to the research, development, utilization,
manufacture or use of:
(i) Compounds (including Research Candidates, Prospective
Lead Compounds, Additional Prospective Lead Compounds
and Lead Compounds) and Licensed Products that are
directed against Targets other than Kinases or
Phosphatases; and
(ii) the Targets against which the Compounds or Licensed
Products listed in clause (i) are directed;
(ww) "PATENT" shall mean:
(i) an issued patent or a patent application,
* Material has been omitted and filed separately with the commission.
-6-
(ii) all continuations and continuation(s)-in-part to the
issued patent or patent application set out in clause
(i) (solely to the extent such continuation(s)-in-
part contain(s) subject matter on which claims
issuing obtain the benefit of a priority date of any
patent or patent application set out in clause (i),
(iii) all divisions, patents of addition, reissues,
renewals and extensions of any of the patent, patent
application, continuations and continuation(s)-in-
part set out in clauses (i) and (ii), and
(iv) all foreign counterparts of any of the foregoing;
(xx) "PERSON" shall mean and include any individual, corporation,
partnership, firm, joint venture, syndicate, association,
trust, government body and any other form of entity or
organization;
(yy) "PHASE I" shall mean that portion of the FDA submission and
approval process which provides for the first introduction
into humans of a Lead Compound and/or Licensed Product for the
purpose of determining human toxicity, metabolism, absorption,
elimination and other pharmacological action as more fully
defined in 21 C.F.R. Section 312.21(a), and such equivalent
regulations or standards of countries outside the United
States as may be applicable to activities conducted hereunder;
(zz) "PHOSPHATASE" shall mean a human enzyme that catalyzes the
removal of a phosphate group from a protein and includes,
without limitation, [*] ;
(aaa) "PHOSPHATASE TECHNOLOGY" shall mean all Patents and Know-How
that are owned, controlled or licensed by either party or its
Affiliates as at the Effective Date and/or become owned,
controlled or licensed during the Term in connection with
performance by either party under the Research Program and
that relate to the research, development, utilization,
manufacture or use of:
(i) Compounds (including Research Candidates, Prospective
Lead Compounds, Additional Prospective Lead Compounds
and Lead Compounds) and Licensed Products that are
directed against the Targets [*], or any other
Phosphatase; and
(ii) the Targets against which the Compounds or Licensed
Products listed in clause (i) are directed;
[*]
(ccc) "PRIME RATE" shall mean the rate per year from time to time
announced by the Royal Bank of Canada as the reference rate to
determine interest payable on commercial loans to its most
creditworthy customers;
(ddd) "PROSPECTIVE LEAD COMPOUND" shall mean a Research Candidate
proposed by Kinetek to QLT for consideration as a Lead
Compound that has satisfied the general guidelines set out in
the Research Plan to make the Research Candidate IND Ready;
[*]
(fff) "QLT KNOW-HOW" shall mean all Know-How that becomes owned,
controlled or licensed by QLT during the Term, and that:
(i) arises in connection with the performance of the
Research Program, or
(ii) relates to:
(A) all or any part of the Technology, or
(B) any improvements to the Technology;
* Material has been omitted and filed separately with the commission.
-7-
(ggg) "QLT PATENT" shall mean any Patent that becomes owned,
controlled or licensed by QLT during the Term and that is
included in the Technology, including those Patents set out in
EXHIBIT B as updated from time to time during the Term;
(hhh) "QLT TECHNOLOGY" shall mean all Technology that becomes owned,
controlled or licensed by QLT during the Term;
(iii) "RESEARCH CANDIDATE" shall mean a Compound selected by the JTC
for which a Research Plan is prepared pursuant to Section
2.7(c);
(jjj) "RESEARCH PLAN" shall have the meaning set forth in Section
2.7(c);
(kkk) "RESEARCH PROGRAM" shall have the meaning set forth in
Section 2.1;
(lll) "SUBSCRIPTION AGREEMENT" shall mean the subscription agreement
entered into prior to the Effective Date between Kinetek and
QLT governing the Initial Investment by QLT in Kinetek's
Common Shares;
(mmm) "TARGET" shall mean any Kinase or Phosphatase or any other
human enzymes forming part of cellular communication pathways
that regulate various biological functions of cells;
[*]
(ooo) "TECHNOLOGY" shall mean the Kinase Technology, Phosphatase
Technology and Other Target Technology;
(ppp) "TERM" shall have the meaning set forth in Section 14.2;
(qqq) "TERRITORY" shall mean world-wide;
(rrr) "THIRD PARTY" shall mean any party other than a party to this
Agreement or an Affiliate of a party to this Agreement; and
(sss) "THIRD PARTY LICENSE" shall mean an agreement between Kinetek
and a Third Party for the licensing of Intellectual Property
required for the use, research and development of a Research
Candidate into a Prospective Lead Compound or Additional
Prospective Lead Compound that is IND Ready.
1.2 OTHER DEFINITIONS
Any words defined elsewhere in this Agreement shall have the particular meaning
assigned to the words thereto.
1.3 BEST OF KNOWLEDGE
Any reference in this Agreement to the "best of the knowledge" of a party shall
be deemed to mean the knowledge of the senior management of QLT or Kinetek, as
the case may be, as organized bodies corporate and the knowledge that senior
management knew or should have known in respect of the relevant subject matter.
1.4 HEADINGS
The headings in this Agreement are solely for convenience of reference and shall
not be used for purposes of interpreting or construing the provisions hereof.
1.5 EXHIBITS
The following Exhibits shall form an integral part of this Agreement:
* Material has been omitted and filed separately with the commission.
-8-
EXHIBIT DESCRIPTION
------- -----------------------------------------------------
A Kinetek Patents
B QLT Patents
C General Guidelines for Research Plan
D License, Development and Commercialization Agreement
E Third Party Licenses
F Kinetek Insurance Coverage
ARTICLE 2 - RESEARCH PROGRAM
2.1 SCOPE
Promptly following the Effective Date of this Agreement, the parties shall
initiate a research program for the purpose of identifying Research Candidates
that will be developed for use in the Field through pre-clinical development
into Prospective Lead Compounds that are IND Ready ("RESEARCH PROGRAM"). During
the Term, up to 5 Prospective Lead Compounds against up to 3 Designated Targets
may be selected and licensed by QLT as Lead Compounds which shall be developed
by QLT or co-developed by QLT and Kinetek for commercialization as Licensed
Products under the terms of the License Agreement.
2.2 RESPONSIBILITY AND COSTS
Kinetek shall have primary responsibility for the conduct of the Research
Program, including the costs thereof, under the direction of the JTC and the
JMC. QLT shall provide consultation and advice as may be deemed appropriate by
the JTC, and shall be responsible for the preparation and cost of filing an IND
in respect of any Lead Compound and the design, preparation and the cost of any
resulting clinical trial protocols.
2.3 [*]
2.4 SELECTION OF THIRD ELIGIBLE TARGET
On or before the date that is 4 months after the Effective Date, QLT shall
select, with notice to Kinetek, 1 of [*] from the Initial Targets as the third
Target to be included as an Eligible Target.
2.5 [*]
Kinetek shall have a period of 5 months after the Effective Date within which to
select, with notice to QLT, [*] that Kinetek may develop outside of the Research
Program within the Oncology Field. The [*] identified hereunder may not be
selected as a Research Candidate in the Research Program and shall not be
available to QLT for selection or development as a Lead Compound.
2.6 [*]
The [*] shall not be selected as a Research Candidate in the Research Program
and shall not be available for selection or development by QLT as a Lead
Compound, except that QLT may select any Compounds derived from the [*] which
have a distinct chemical structure from the [*] in the event [*] is selected by
QLT as an Eligible Target. Notwithstanding the exclusion of the right of QLT to
receive information concerning, or samples of, the [*] under Section 2.3,
Kinetek shall deliver to QLT, upon request by QLT, information concerning, and
samples of, the [*] for research purposes if [*] is being considered, or is
selected by QLT as an Eligible Target.
2.7 RESEARCH PLAN
(a) Promptly following the Effective Date, the JTC shall be
established in accordance with Article 6, and shall:
* Material has been omitted and filed separately with the commission.
-9-
(i) meet and prepare a draft budget for the Research
Program and submit such budget to the JMC for
approval; and
(ii) define a process for the selection of Research
Candidates.
(b) On an ongoing basis until Kinetek has delivered to QLT
Development Information in respect of the second Prospective
Lead Compound pursuant to Section 3.1, the JTC will select,
from among the Compounds directed against the Eligible
Targets, Research Candidates for the Research Program, with
the exception of the Oncology Compound selected by Kinetek
under Section 2.5 and the [*].
(c) As soon as practicable after the JTC has selected each
Research Candidate, it shall prepare a work plan that shall
outline the activities, documentation and materials required
for the development of the Research Candidate, for evaluating
the feasibility of selecting the Research Candidate as a Lead
Compound and for developing the Research Candidate into a
Prospective Lead Compound that is IND Ready (the "RESEARCH
PLAN"). The Research Plan shall take into account the general
guidelines attached as EXHIBIT C.
(d) Upon the request of either party, the JTC may modify a
Research Plan as appropriate to reflect material scientific or
commercial developments.
(e) If, during the course of the Research Program the JTC, acting
reasonably, determines that a Research Candidate directed
against an Eligible Target cannot be developed as a
Prospective Lead Compound due to unforeseen scientific
reasons, and the JTC recommends an alternative Research
Candidate from among the Compounds directed against the
Eligible Targets, and if the JTC's recommendation is
unanimously supported by the JMC, then the Research Plan in
respect of the Research Candidate that cannot be developed
as a Prospective Lead Compound shall be cancelled and a
Research Plan in respect of the alternate Research
Candidate shall be initiated.
ARTICLE 3 - DEVELOPMENT RIGHTS
3.1 DELIVERY OF PROSPECTIVE LEAD COMPOUNDS
When Kinetek has determined that a Research Candidate has satisfied the criteria
of the applicable Research Plan and is an IND Ready Prospective Lead Compound or
Additional Prospective Lead Compound, Kinetek shall promptly notify QLT thereof
and, to the extent the following has not previously been provided to QLT,
promptly forward to QLT, at no cost to QLT:
(a) all material information known to Kinetek about the
Prospective Lead Compound or Additional Prospective
Lead Compound;
(b) a sample of the Prospective Lead Compound or Additional
Prospective Lead Compound;
(c) all reagents (including antibodies directed against Targets)
that may reasonably be required by QLT in evaluating the
Prospective Lead Compound or Additional Prospective Lead
Compound, provided that QLT will reimburse Kinetek its actual
cost for producing or purchasing genetically engineered animal
models; and
(d) such other information as QLT may reasonably require in order
to make a Development Election in respect of Prospective Lead
Compound or Additional Prospective Lead Compound as a Lead
Compound pursuant to Section 3.2.
(collectively, the "DEVELOPMENT INFORMATION")
3.2 DEVELOPMENT ELECTION
(a) During the Term, QLT shall have the exclusive right, but not
the obligation, to select from among the Prospective Lead
Compounds and Additional Prospective Lead Compounds proposed
by Kinetek
* Material has been omitted and filed separately with the commission.
-10-
pursuant to Section 3.1 up to 5 Lead Compounds that
may be directed against up to 3 Designated Targets and to
license, develop and commercialize such Lead Compounds on an
exclusive basis under the terms and conditions set forth in
the License Agreement (the "DEVELOPMENT ELECTION").
(b) If QLT determines that a Research Candidate has met the
criteria set out in the Research Plan and is an IND Ready
Prospective Lead Compound or Additional Prospective Lead
Compound, QLT shall, within [*] after receipt of the
Development Information, deliver notice to Kinetek of the
exercise of its Development Election, specifying the
Prospective Lead Compound or Additional Prospective Lead
Compound and the Eligible Target(s) against which the
Prospective Lead Compound or Additional Prospective Lead
Compound is being directed as the Designated Target(s).
Upon delivery of such notice, the parties will be deemed to
have entered into a License Agreement in respect of that
Lead Compound and the parties shall execute the form of
License Agreement attached hereto as EXHIBIT D promptly
thereafter. As QLT delivers additional notices with
respect to subsequent Development Elections, the License
Agreement shall be deemed to be amended to include the Lead
Compounds specified in such Development Elections, and the
parties shall promptly execute an amended schedule to the
License Agreement to reflect those additions.
(c) Notwithstanding the delivery of a Research Candidate as a
Prospective Lead Compound or Additional Prospective Lead
Compound under Section 3.1, if QLT determines that a Research
Candidate has not met the criteria to become a Prospective
Lead Compound or Additional Prospective Lead Compound, then
QLT shall promptly notify Kinetek of QLT's determination and:
(i) Kinetek shall perform the necessary work to render
the Research Candidate IND Ready; or
(ii) the parties shall resolve the dispute pursuant to
Section 16.2.
(d) Notwithstanding the [*] period set out in Section 3.2(b), QLT
may propose to Kinetek by written notice delivered at least
[*] prior to the end of that period that the time within
which it must make the Development Election be extended for
good reason for a specified reasonable time to permit QLT,
at its expense, to conduct such additional studies of that
Prospective Lead Compound or Additional Prospective Lead
Compound as may be specified in the notice. Kinetek shall
discuss this request with QLT and the parties shall attempt
in good faith to reach mutual agreement with respect to the
requested extension and the conduct of additional studies.
(e) If:
(i) QLT has not exercised its Development Election within
[*] after receipt of the Development Information in
respect of a Prospective Lead Compound or Additional
Prospective Lead Compound and has not requested an
extension under Section 3.2(d) to make its
Development Election; or
(ii) there has been a dispute pursuant to Section 3.2(c)
and the Prospective Lead Compound or Additional
Prospective Lead Compound is rendered IND Ready by
Kinetek or has been determined to be IND Ready
pursuant to Section 16.2, and QLT does not exercise
its Development Election within [*] following notice
from Kinetek that the Prospective Lead Compound or
Additional Prospective Lead Compound is IND Ready or
within [*] of such determination pursuant to Section
16.2; then
Kinetek may, on written notice to QLT, elect to develop and
commercialize such Prospective Lead Compound or Additional
Prospective Lead Compound for its own use outside the Field.
(f) In the event that the [*] Prospective Lead Compounds selected
by QLT pursuant to its Development Election under Section
3.2(b) are directed against a single Eligible Target, QLT may
elect to designate a [*] Eligible Target as a Designated
Target at any time within [*] following selection by QLT of
the [*] Prospective Lead Compound.
* Material has been omitted and filed separately with the commission.
-11-
3.3 EXPIRY OF DEVELOPMENT ELECTION
QLT shall no longer have the right to select Lead Compounds under this Agreement
upon the first to occur of:
(a) delivery by Kinetek to QLT of the last Prospective Lead
Compound required to be delivered under this Agreement and
the expiry of the applicable [*] period in Section 3.2(b);
(b) early termination of the Research Program by QLT under
Section 14.3; or
(c) early termination of the Research Program by either party
under Sections 14.4 or 14.5.
3.4 ACCELERATION OF DEVELOPMENT ELECTION
Notwithstanding that a particular Research Candidate has not yet been determined
to be a Prospective Lead Compound by Kinetek pursuant to Section 3.1, QLT may,
by written notice to Kinetek and the JTC, exercise a Development Election with
respect to that Research Candidate as if the Research Plan in respect of it had
been successfully completed and as if the Research Candidate were a Prospective
Lead Compound. In such an event, the Development Election shall have the same
effect hereunder as if it had been exercised in respect of a Prospective Lead
Compound.
ARTICLE 4 - EARLY DEVELOPMENT
4.1 RESEARCH PROGRAM TIMETABLE
Within [*] after the Commencement Date, Kinetek shall identify, develop and
deliver to QLT from among the Research Candidates [*] Prospective Lead Compounds
directed against up to [*] Eligible Targets.
4.2 SELECTION OF ADDITIONAL TARGET
Within [*] following the exercise by QLT of its Development Election pursuant to
Section 3.2 in respect of the [*] Prospective Lead Compound, QLT shall have the
right, but not the obligation, to select one Additional Target to be included as
a Designated Target and against which Additional Prospective Lead Compounds may
be directed.
4.3 ADDITIONAL COMPOUND REQUEST
Subject to Section 4.4, on the earlier of the expiration of [*] following the
date that QLT and Kinetek are deemed to have entered into a License Agreement
pursuant to Section 3.2(b) in respect of the [*] Prospective Lead Compound
selected by QLT under this Agreement and the date that is [*] following the
Commencement Date, QLT may elect to receive up to 3 additional Prospective Lead
Compounds (each an "ADDITIONAL PROSPECTIVE LEAD COMPOUND") directed against the
Designated Targets by delivering to Kinetek one or more written notices of its
election (an "ADDITIONAL COMPOUND REQUEST"), together with an investment in
Kinetek of CDN $5,000,000 for each Additional Prospective Lead Compound elected
in such notice, as required pursuant to Section 8.3. Promptly following delivery
by QLT to Kinetek of an Additional Compound Request, the JTC shall meet and
prepare a draft Research Program budget for the Additional Prospective Lead
Compound for approval by the JMC under Section 6.2.
4.4 [*]
If QLT wishes to make an Additional Compound Request before QLT exercises its
Development Election pursuant to Section 3.2 in respect of the second
Prospective Lead Compound:
(a) QLT shall give Kinetek [*] notice prior to making its [*]
Additional Compound Request pursuant to Section 4.3, within
which period Kinetek may select, by notice to QLT, [*] that
Kinetek may develop outside the Research Program within the
Oncology Field. QLT may make its [*] Additional Compound
Request at any time following such [*] notice period.
(b) In the event Kinetek has not selected [*] within the [*]
notice period set out in Section 4.4(a), QLT shall give
Kinetek [*] notice prior to making its [*] Additional Compound
Request, within which period
* Material has been omitted and filed separately with the commission.
-12-
Kinetek may select, by notice to QLT, such [*]. QLT may make
its [*] Additional Compound Request at any time following such
[*] notice period.
(c) In the event Kinetek has not selected [*] within the [*]
notice period set out in Sections 4.4(a) or (b), QLT shall
give Kinetek [*] notice prior to making its [*] Additional
Compound Request, within which period Kinetek may select, by
notice to QLT, such additional Oncology Compound. QLT may make
its [*] Additional Compound Request at any time following such
[*] notice period, and Kinetek may select, by notice to QLT,
such [*] any time thereafter.
(d) Following exercise by QLT of its Development Election pursuant
to Section 3.2 in respect of the second Prospective Lead
Compound, Kinetek shall be free to select, by notice to QLT,
any number of additional Oncology Compounds that Kinetek may
develop outside the Research Program within the Oncology
Field, subject only to Sections 5.1, 5.3(c) and 5.4.
4.5 DELIVERY OF ADDITIONAL PROSPECTIVE LEAD COMPOUNDS
Within the later of [*] after the date Kinetek receives an Additional Compound
Request and [*] following the Commencement Date, Kinetek shall deliver to QLT
Development Information pursuant to Section 3.1 in respect of all Additional
Prospective Lead Compounds for which QLT may make a Development Election.
4.6 FAILURE TO DELIVER (ADDITIONAL) PROSPECTIVE LEAD COMPOUNDS
(a) [*] FROM COMMENCEMENT DATE In the event that:
(i) Kinetek fails to deliver to QLT the Development
Information in respect of[*] Prospective Lead
Compounds within [*] following the [*] of the
Commencement Date; or
(ii) Kinetek fails to deliver to QLT the Development
Information in respect of the number of Additional
Prospective Lead Compounds elected by QLT under
Section 4.3 within [*] following the later of [*]
following the Commencement Date and the [*] of the
date of the Additional Compound Request for such
Additional Prospective Lead Compounds;
and the parties subsequently enter into a License Agreement in
respect of any such Prospective Lead Compounds or Additional
Prospective Lead Compounds that Kinetek has failed to deliver
to QLT within the time periods set forth in clauses (i) and
(ii), [*]
(b) [*] FROM COMMENCEMENT DATE (PROSPECTIVE LEAD COMPOUNDS) In the
event that Kinetek fails to deliver to QLT the Development
Information in respect of [*] Prospective Lead Compounds
within [*] following the Commencement Date, QLT shall, on
written notice delivered to Kinetek:
(i) immediately terminate this Agreement in its entirety
pursuant to Section 14.4, provided that for the
purpose of termination pursuant to this Section
4.6(b), such termination shall be effective
immediately upon receipt of such notice by Kinetek;
or
(ii) either:
[*]
and in either case, Kinetek shall have no further
obligation to continue the Research Programs in
respect of the Prospective Lead Compounds that it has
not delivered provided, however, that Kinetek shall
remain obligated to deliver any Additional
Prospective Lead Compounds that have been requested
or may subsequently be requested by QLT pursuant to
Sections 4.3 or 4.6(e). Except for Kinetek no longer
having an obligation to deliver the Development
Information in respect of the [*] Prospective Lead
Compounds, this Agreement shall continue in full
force and effect, unless terminated by QLT in its
entirety in accordance with clause (i).
* Material has been omitted and filed separately with the commission.
-13-
(c) [*] FROM ADDITIONAL COMPOUND REQUEST (ADDITIONAL PROSPECTIVE
LEAD COMPOUNDS) In the event that Kinetek fails to deliver to
QLT the Development Information in respect of those Additional
Prospective Lead Compounds elected by QLT under Sections 4.3
or 4.6(e) within [*] following the date of the Additional
Compound Request for each such Additional Prospective Lead
Compound, QLT shall, on written notice delivered to Kinetek:
(i) terminate this Agreement in its entirety pursuant to
Section 14.4, provided that for the purpose of
termination pursuant to this Section 4.6(c), such
termination shall be effective immediately upon
receipt of such notice by Kinetek; or
(ii) either:
[*]
and in either case, Kinetek shall have no further
obligation to continue the Research Program in
respect of such Additional Prospective Lead Compound
provided, however, that Kinetek shall remain
obligated to deliver any other Additional Prospective
Lead Compounds requested by QLT pursuant to Sections
4.3 or 4.6(e). Except for Kinetek no longer having an
obligation to deliver the Development Information in
respect of the Additional Prospective Lead Compounds
that Kinetek has failed to deliver to QLT under this
Section 4.6(c), this Agreement shall continue in full
force and effect, unless terminated by QLT in its
entirety in accordance with clause (i).
(d) [*]
(i) [*]
(ii) [*].
(e) ADDITIONAL PROSPECTIVE LEAD COMPOUNDS Notwithstanding the
provisions set out in Section 4.3, the following shall apply
to Additional Compound Requests made by QLT after [*] under
Section 4.6(b)(ii):
(i) QLT may make an Additional Compound Request before
the earlier of:
(A) the expiration of [*] following the date
that QLT and Kinetek enter into a License
Agreement in respect of the [*] Prospective
Lead Compound developed by QLT under this
Agreement, or
(B) the expiration of [*] following the date
that [*],
(ii) QLT shall pay to Kinetek the sum of [*], payable in
accordance with Section 8.3, for the first Additional
Prospective Lead Compound QLT selects pursuant to
this Section 4.6(e),
(iii) QLT shall pay to Kinetek the sum of [*], payable in
accordance with Section 8.3, for each subsequent
Additional Prospective Lead Compound QLT selects
pursuant to this Section 4.6(e), and
(iv) in the event that the parties enter into a License
Agreement in respect of any Additional Prospective
Lead Compound selected by QLT under clause (i), [*].
Pursuant to Section 4.3, in no event shall QLT select more
than an aggregate total of 3 Additional Prospective Lead
Compounds.
* Material has been omitted and filed separately with the commission.
-14-
ARTICLE 5 - EXCLUSIVITY
5.1 QLT EXCLUSIVITY
During the Term:
(a) QLT shall have an exclusive right to exploit Compounds
directed against the Eligible Targets or Designated Targets,
as the case may be, in the Field; and
(b) Kinetek shall exploit the Eligible Targets or Designated
Targets, as the case may be, in the Field exclusively for the
benefit of QLT,
on the terms set forth in this Agreement. Upon execution of a License
Agreement in respect of a Lead Compound, the provisions regarding
exclusivity shall be as set forth therein and, in respect of that Lead
Compound, shall supersede the terms of this Article 5.
5.2 KINETEK'S RIGHTS
Subject to Section 5.4, Kinetek shall have the right:
(a) at any time during the Term, to pursue and commercially
exploit, alone or with others, all Targets, the Oncology
Compounds and the [*] directed against all Targets, solely for
the use in the Oncology Field; and
(b) at any time during the Term, and further subject to Section
5.3(a), to perform screening and/or profiling on behalf of
Third Parties of those Third Parties' Compounds directed
against Eligible Targets or Designated Targets outside the
Field and against all other Targets within or outside the
Field.
5.3 EXCEPTIONS TO KINETEK'S RIGHTS
Other than as permitted by Section 5.2, Kinetek shall not, without the prior
written consent of QLT, grant to any Third Party any rights (whether by license,
sale or assignment) in, or waive any rights which Kinetek may have under any
Third Party Licenses to:
(a) any of the Eligible Targets or Compounds directed against
those Eligible Targets, whether within or outside the Field,
from the Commencement Date until the earlier of the date on
which QLT has exercised its Development Election pursuant to
Section 3.2 in respect of the [*] Lead Compound and [*]
following the Commencement Date;
(b) any of the Designated Targets or Compounds directed against
those Designated Targets, within the Field, from:
(i) the earlier of the date on which QLT has exercised
its Development Election pursuant to Section 3.2 in
respect of the [*] Lead Compound and [*] following
the Commencement Date, until,
(ii) the expiry of the Term, and
(c) any Research Candidates, Prospective Lead Compounds and
Additional Prospective Lead Compounds that are part of the
Research Program, including any Research Candidates,
Prospective Lead Compounds and Additional Prospective Lead
Compounds for which [*] pursuant to Section 4.6, during the
Term.
5.4 CROSS-OVER USE/CROSS-PRICING RISK
Kinetek may grant to Third Parties any rights in or to any Compounds or Kinetek
Technology for use outside the Field provided that:
* Material has been omitted and filed separately with the commission.
-15-
(a) Kinetek shall use all commercially reasonable efforts to
protect QLT against Cross-Over Use or Cross-Pricing Risk in
relation to all Research Candidates, Prospective Lead
Compounds, Additional Prospective Lead Compounds, Lead
Compounds, or Eligible Targets or Designated Targets, as the
case may be; and
(b) Kinetek shall use all commercially reasonable efforts to
ensure that any future licenses granted by Kinetek for the
marketing, distribution or sale of any Compounds or
finished products incorporating any Compounds shall require
the licensee to use all commercially reasonable efforts to
protect QLT from Cross-Over Use and Cross-Pricing Risk in
relation to all Research Candidates, Prospective Lead
Compounds, Additional Prospective Lead Compounds, Lead
Compounds, or Eligible Targets or Designated Targets, as
the case may be, including, without limitation, requiring
the licensee to prohibit any off-label use thereof by its
distributors and advise its distributors that any off-label
use is not permitted under the licenses granted by Kinetek
to the licensee.
5.5 GRANT OF LICENSE
For the purposes of carrying out its obligations under this Agreement, Kinetek
hereby grants to QLT a non-exclusive royalty-free license to use the Kinetek
Technology for the purposes of pursuing, assisting with, or evaluating the
Research Program or any Compounds, Research Candidates, Prospective Lead
Compounds or and Additional Prospective Lead Compounds delivered to QLT under
this Agreement during the Term.
ARTICLE 6 - COMMITTEES
6.1 JOINT TECHNICAL COMMITTEE
(a) COMPOSITION Promptly following the Effective Date, Kinetek and
QLT shall establish a Joint Technical Committee to review and
co-ordinate the parties' efforts under the Research Program.
The JTC shall consist of an equal number of representatives
from each party (which number may be increased or decreased
upon recommendation of the JMC from time to time). Each of
Kinetek and QLT may change its representatives from time to
time by written notice to the other.
(b) FUNCTIONS The JTC shall have the following functions:
(i) to prepare the draft Research Program budget;
(ii) to prepare and recommend to the JMC the draft
Research Plan including project progression
criteria, and any proposed revisions thereto;
(iii) to select Research Candidates and the Fields or
indications in which they may be pursued;
(iv) to receive and review reports by Kinetek;
(v) to review Compounds and Targets identified by
Kinetek;
(vi) to regularly review the progress of the Research
Program in respect of each Research Candidate;
(vii) to maintain the quality of data and reports;
(viii) to supervise Patent prosecution and maintenance
by the parties;
(ix) to discuss matters relating to Patents as may be
presented to the JTC by Kinetek or QLT;
(x) to ensure proper transition of the research in
respect of a Lead Compound from Kinetek to QLT
following the exercise by QLT of the Development
Election in respect of that Lead Compound;
(xi) to make recommendations to the JMC on all aspects
of the Research Program; and
-16-
(xii) to undertake such other responsibilities and
functions as may be assigned to it by the JMC;
(c) CHAIR Unless the parties otherwise agree, Kinetek shall
appoint the first chair of the JTC from among the members of
the JTC. The Chair shall alternate at each meeting between the
appointee of Kinetek and QLT.
(d) MEETINGS The JTC shall meet a minimum of 8 times per year and
at least once per calendar quarter, or as otherwise determined
by the JTC, and shall establish its own rules for the conduct
of its meetings. All meetings shall be in person and in
Vancouver, the precise location to be mutually agreed by the
parties, or by teleconference. Quorum for meetings shall be an
equal number of each party's representatives.
(e) DECISION-MAKING
(i) All decisions of the JTC shall be carried by a simple
majority of the votes of representatives, provided
that at least 1 representative from each party shall
vote in favor of a particular decision. The objective
of the JTC shall be to reach agreement by consensus
on all matters within the scope of the Research
Program.
(ii) In the event of a deadlock on any matter (which shall
be deemed to have occurred if either party shall
request a vote of the JTC on a matter and that vote
shall either not be taken within 10 days of the
request or, if taken, results in a tie vote) such
matter shall be referred to the JMC for resolution.
(iii) Each party shall retain the rights, powers, and
discretion granted to it under this Agreement, and
the JTC shall not be delegated or vested with any
such rights, powers or discretion except as expressly
provided in this Agreement. Although the JTC shall
not have the power to amend or modify this Agreement,
which may only be amended or modified as provided in
Section 16.3, the JTC may recommend amendments to
this Agreement to reflect unforeseen scientific or
technical issues.
(f) MINUTES QLT shall be responsible for the recording of minutes
of the initial meeting of the JTC. Thereafter, responsibility
for recording minutes shall alternate between the parties. The
responsible party for each meeting shall deliver such minutes
to the other party within 14 days after the date of the
applicable meeting setting forth, inter alia, all decisions of
the JTC and, on a quarterly basis, including a report on the
progress of work performed by Kinetek.
6.2 JOINT MANAGEMENT COMMITTEE
(a) COMPOSITION Promptly following the Effective Date, Kinetek
and QLT shall establish a Joint Management Committee which shall
consist of 6 senior executives of the parties, 3 to be designated by
each party from time to time.
(b) FUNCTIONS The JMC shall have the following functions:
(i) general oversight of the entire collaboration between
Kinetek and QLT, including the Research Programs;
(ii) periodic review of the overall goals and strategy of
the Research Programs;
(iii) approval of the draft Research Plan and draft
Research Program budget prepared by the JTC;
(iv) to review progress against milestones and variance
from the Research Program budget; and
(v) resolution of any deadlocked issues submitted to
it by the JTC.
-17-
(c) CHAIR Unless the parties otherwise agree, QLT shall appoint
the first chair of the JMC from among the members of the JMC.
The Chair shall alternate at each meeting between the
appointee of Kinetek and QLT.
(d) MEETINGS The JMC shall meet at least once per calendar
quarter, or with such other frequency as may be established by
the Committee. All meetings shall be in person and in
Vancouver, the precise location to be mutually agreed by the
parties, or by teleconference. Quorum for meetings shall be an
equal number of each party's representatives.
(e) DECISION-MAKING
(i) All decisions of the JMC shall be carried by a simple
majority of the votes of representatives, provided
that at least 1 representative from each party shall
vote in favor of a particular decision. The objective
of the JMC shall be to reach agreement by consensus
on all matters within the scope of the Research
Program.
[*] In the event of a deadlock (which shall be deemed to
have occurred if either party shall request a vote of
the JMC on a matter and that vote shall either not be
taken within 10 days of the request or if taken,
results in a tie vote) only with respect to [*].
(f) MINUTES Kinetek shall be responsible for the recording of
minutes of the initial meeting of the JMC. Thereafter,
responsibility for recording minutes shall alternate between
the parties. The responsible party for each meeting shall
deliver such minutes to the other party within 14 days after
the date of the applicable meeting setting forth, inter alia,
all decisions of the JMC.
6.3 BUDGET
(a) The JTC shall prepare and provide to the JMC an annual budget
and operating plan ("ANNUAL BUDGET") and such other budget and
operating plan covering shorter periods or discrete projects
("INTERIM BUDGET") as the JMC may direct. The Annual Budget
shall be provided to the JMC not later than 60 days prior to
the beginning of the fiscal year of Kinetek to which it
relates and shall include the following:
(i) an estimate of proposed capital expenditures,
indicating the item or type of expenditure, the
necessity therefor and the time of such expenditure;
(ii) an estimate of the operating and other costs to be
incurred, and the basis on which such estimates
were prepared; and
(iii) an estimate of the amount and timing of all
dispositions of funds.
The JMC shall consider any Annual Budget or Interim Budget
received by it from the JTC and approve it or not approve it.
If the JMC does not approve the Annual Budget or Interim
Budget, it shall be re-submitted to the JTC for its
reconsideration, with recommendations from the JMC as it sees
fit.
(b) Kinetek shall furnish to the JTC as soon as practicable, but
not later than [*] after the end of each quarter, a summary of
the status of the Research Programs conducted during such
month, together with a statement of application of funds
showing actual expenditures to date against the applicable
Annual Budget or Interim Budget, and, if applicable, latest
estimates to the date of completion of a Prospective Lead
Compound or Additional Prospective Lead Compound, as well as
such other pertinent financial or other information as may
reasonably be requested from time to time by the JTC.
(c) Kinetek shall make a prompt report to the JTC of:
(i) any unexpected occurrence that will, or is likely to,
materially affect the delivery of a Prospective Lead
Compound or Additional Prospective Lead Compound;
* Material has been omitted and filed separately with the commission.
-18-
(ii) any actual aggregate expenditures during a period
that exceed the aggregate budgeted expenditures for
such period by [*] or more; and
(iii) any anticipated deviations from the estimates set
forth in the Annual Budget of the amounts and timing
of funds that will be required.
ARTICLE 7- COMMITMENTS OF KINETEK AND QLT
7.1 COMMITMENTS OF KINETEK
Kinetek shall:
(a) work diligently and utilize sound and reasonable business and
scientific practice and judgement to identify and develop
Prospective Lead Compounds that will be suitable Lead
Compounds for development and commercialization by QLT;
(b) deliver to QLT promptly following the exercise by QLT of its
Development Election in respect of a Prospective Lead Compound
sufficient quantities of that Prospective Lead Compound, as
specified by QLT acting reasonably, to support the conduct by
QLT of a Phase I study;
(c) prepare and submit reports to the JTC on a quarterly basis [*]
after the end of each calendar quarter (commencing with the
first full quarter following the Effective Date) summarizing
Kinetek's progress under the Research Plan during the
preceding quarter;
(d) periodically update EXHIBIT A in respect of all Kinetek
Patents; and
(e) subject to Kinetek's internal requirements and the
availability of its personnel, provide to QLT reasonable
technical and clinical assistance with respect to the exercise
of its Development Election, including advising QLT in
carrying out its evaluation of the Prospective Lead Compounds
and Additional Prospective Lead Compounds.
7.2 SUB-CONTRACTING AND OUTSOURCING
If Kinetek elects to sub-contract or otherwise outsource certain activities
under the Research Programs, and [*] has the necessary resources and expertise
at commercially reasonable rates, Kinetek agrees to utilize [*] as contractor of
first choice.
7.3 COMMITMENTS OF QLT
QLT will:
(a) work diligently and utilize sound and reasonable business and
scientific practice and judgement in evaluating Prospective
Lead Compounds and Additional Prospective Lead Compounds for
development and commercialization by QLT;
(b) use commercially reasonable efforts to complete concurrently
with the Research Program for a Prospective Lead Compound or
Additional Prospective Lead Compound any necessary work that
may facilitate the prompt filing of an IND in the event the
Prospective Lead Compound or Additional Prospective Lead
Compound is selected as a Lead Compound, to the extent the
work can be completed concurrently; and
(c) promptly provide to Kinetek copies of the results of any
internal evaluation and testing (excluding confidential
reports to QLT's management) conducted by QLT on any Compound,
Research Candidate, Prospective Lead Compound or Additional
Prospective Lead Compound.
* Material has been omitted and filed separately with the commission.
-19-
ARTICLE 8 - FINANCIAL MATTERS
8.1 INITIAL INVESTMENT BY QLT
QLT shall make an initial investment of CDN$11,000,000 ("INITIAL INVESTMENT") in
the Common Shares of Kinetek subject to, and in accordance with, the terms and
conditions of the Subscription Agreement in respect of the Initial Investment.
8.2 USE OF PROCEEDS
Subject to the acceleration by QLT of its Development Election pursuant to
Section 3.4, Kinetek shall use [*] of the Initial Investment of CDN $11,000,000
referred to in Section 8.1 for the performance of the Research Program in
respect of the [*] Prospective Lead Compounds. The parties agree that Kinetek's
expenditures in respect of such Research Program shall be calculated with
reference to a full-time equivalent employee with a deemed cost per year of [*]
(the "FTE Cost"), plus the actual amount paid to a Third Party in connection
with the performance of portions of the Research Program. The FTE Cost includes
all costs attributable to the FTE except additional expenses approved by the
JMC.
8.3 INVESTMENT FOR ADDITIONAL COMPOUNDS
For each Additional Compound Request made pursuant to Sections 4.3, 4.6(e)(ii)
or 4.6(e)(iii), QLT shall pay to or invest in Kinetek the required sum, at QLT's
option, either by way of:
(a) a purchase of Kinetek's Common Shares at the then Current
Market Price of such shares,
(b) a cash payment; or
(c) a combination of both (a) and (b).
The subscription for Kinetek's Common Shares shall be made in accordance with a
subscription agreement in substantially the same form as the Subscription
Agreement, except as to the number of Common Shares, the subscription price [*],
and except that the provisions of [*] of the Subscription Agreement shall only
apply until [*].
8.4 CONVERTIBLE LOAN FACILITY
During the Term, QLT shall create, reserve and maintain an internal convertible
loan facility of up to [*] ("CONVERTIBLE LOAN FACILITY") from which it shall
advance funds to Kinetek required by Kinetek to fulfill its obligations under
the Research Program, and from which Kinetek may draw funds from time to time in
accordance with the terms set out below:
(a) DRAWS In order to draw on the Convertible Loan Facility,
Kinetek shall submit a notice of funding to QLT, signed by its
Chief Financial Officer, specifying the amount requested
(which shall not be less than [*] per request), the Research
Candidate to which the advance relates, [*]. Advances shall be
made by QLT by cheque or wire transfer at Kinetek's direction
within 10 days after receipt of the notice of funding.
(b) AVAILABILITY AND REPAYMENT The Convertible Loan Facility
shall:
(i) be made available by QLT from [*] to a date that is
[*] following the Commencement Date;
(ii) bear an interest rate equal to [*] in effect on the
date such amounts not paid were due under the
Convertible Loan Facility, compounding quarterly; and
(iii) be repaid by Kinetek at any time without notice
within [*] of the date the principal was drawn down,
at Kinetek's option, either:
(A) in Kinetek's freely traceable Common
Shares [*]; or
* Material has been omitted and filed separately with the commission.
-20-
(B) in cash.
If Kinetek exercises the option to repay the loan in
cash under clause (B), Kinetek shall first notify QLT
to this effect, and QLT may require Kinetek to repay
the loan in freely traceable Common Shares under
clause (A).
(c) CONDITIONS The Convertible Loan Facility referred to in this
Section 8.4 shall be available to Kinetek if the following
conditions are met:
(i) there has been no expiration or early termination of
the Research Program in respect of which a notice of
funding has been delivered by Kinetek to QLT pursuant
to Section 8.4(a);
(ii) the costs of the Research Programs have exceeded[*];
(iii) Kinetek shall utilize 100% of the Convertible Loan
Facility proceeds on the Research Program identified
in the notice of funding delivered by Kinetek to QLT
pursuant to Section 8.4(a);
(iv) Kinetek has not experienced a material adverse event
in the reasonable opinion of QLT;
(v) Kinetek shall grant to QLT a security interest in the
Research Candidate or Research Candidates to which
the advance relates as security for the Convertible
Loan Facility pursuant to a specific security
agreement, the form of which shall be negotiated in
good faith by the parties and entered into prior to
any funding advance being made by QLT to Kinetek
under the Convertible Loan Facility.
(vi) Kinetek shall abide by all of the terms and
conditions of the Convertible Loan Facility.
Promptly following the execution of this Agreement, the
parties shall negotiate in good faith the form of the
agreement incorporating the terms set out above. In the event
the parties are unable to agree on the form of that agreement
or the specific security agreement, either party may refer the
dispute for resolution in accordance with Section 16.2.
ARTICLE 9 - CONFIDENTIALITY; PUBLICITY AND PUBLICATION
9.1 OBLIGATION OF CONFIDENTIALITY
It is understood by both QLT and Kinetek that misuse or improper disclosure of
Confidential Information may irreparably harm the business of the disclosing
party or that party's Affiliates. Accordingly, for good and valuable
consideration, receipt of which is hereby acknowledged, the parties agree that
at all times during the Term and for a period of 5 years thereafter, they shall:
(a) not use the Confidential Information of the other party for
any purpose other than to carry out its obligations under this
Agreement, without the prior written consent of the disclosing
party;
(b) maintain the Confidential Information in confidence and not
disclose any portion of the Confidential Information to any
Third Party, without the prior written consent of the
disclosing party, other than to its counsel, accountants,
employees and consultants who are bound by obligations of
confidentiality and non-use in connection therewith at least
as stringent as those set forth in this Agreement, provided
that each party shall remain responsible for the actions, uses
and disclosures of its counsel, accountants, employees and
consultants; and
(c) take reasonable measures to assure that no unauthorized use or
disclosure is made by others to whom access to Confidential
Information is granted.
Notwithstanding the foregoing, the parties acknowledge that if they enter into a
License Agreement, the confidentiality provisions of the License Agreement shall
supersede the provisions of this Section 9.1 with respect to the use of the
Confidential Information.
* Material has been omitted and filed separately with the commission.
-21-
9.2 PERMITTED DISCLOSURES
(a) Nothing herein shall be construed as preventing QLT from
disclosing any Confidential Information received from Kinetek
to any of QLT's Affiliates, sublicenses or distributors or
potential sublicensees or distributors, provided each
Affiliate, sublicensee and distributor has undertaken in
writing a similar obligation of confidentiality and non-use
with respect to the Confidential Information, with Kinetek
stated as a third-party beneficiary thereof.
(b) Nothing herein shall be construed as preventing Kinetek from
disclosing any Confidential Information received from QLT to
any of Kinetek's Affiliates, provided each Affiliate has
undertaken in writing a similar obligation of confidentiality
and non-use with respect to the Confidential Information, with
QLT stated as a third-party beneficiary thereof.
9.3 RETURN OF CONFIDENTIAL INFORMATION
Upon termination of this Agreement, except as set out below, each party shall
promptly return to the disclosing party or destroy, at the disclosing party's
request, all copies of the disclosing party's Confidential Information, and
return or destroy all summaries, abstracts, extracts or other documents which
contain any of the disclosing party's Confidential Information in any form. If
the disclosing party requests destruction of its Confidential Information, the
other party shall document the destruction of the Confidential Information and
shall provide a copy of this documentation to the disclosing party.
Notwithstanding the foregoing, the receiving party may retain 1 copy of any
documents in its possession containing the disclosing party's Confidential
Information for archival purposes only. For the purposes of this section, the
term "document" includes any information fixed in any tangible medium of
expression, in whatever form or format.
9.4 OWNERSHIP OF CONFIDENTIAL INFORMATION
(a) All Confidential Information disclosed by one party to the
other shall remain the property of the disclosing party.
(b) The parties agree that, except as otherwise specifically set
out in this Agreement, as between QLT and Kinetek, all right,
title and interest in and to all data and results created by a
party during performance of any Research Program, shall be the
exclusive property of the creating party and all data and
results arising from the Research Program shall be treated as
the creating party's Confidential Information under this
Agreement.
(c) In the event that a court or other legal or administrative
tribunal, directly or through an appointed master, trustee or
receiver, assumes partial or complete control over the assets
of a party to this Agreement based on the insolvency or
bankruptcy of the party, the bankrupt or insolvent party shall
promptly notify the court, other tribunal or appointee:
(i) that Confidential Information received from the other
party under this Agreement remains the property of
the other party; and
(ii) of the confidentiality obligations under this
Agreement.
In addition, the bankrupt or insolvent party shall, to the
extent permitted by law, take all steps necessary or desirable
to maintain the confidentiality of the other party's
Confidential Information and to ensure that the court, other
tribunal or appointee maintains the information in confidence
in accordance with the terms of this Agreement.
9.5 PRESS RELEASE
(a) The parties shall agree upon the timing and content of any
initial press release or any other public communications
relating to this Agreement and the transactions contemplated
herein.
(b) Except to the extent already disclosed in the initial press
release or other public communication made pursuant to clause
(a), no public announcement concerning the existence or the
terms of this Agreement
-22-
or concerning the transactions described herein shall be
made, either directly or indirectly, by Kinetek or QLT,
without first obtaining the approval of the other party and
agreement upon the nature, text, and timing of such
announcement, which approval and agreement shall not be
unreasonably withheld.
(c) Notwithstanding clauses (a) and (b), each party shall have the
right to issue, immediately and without prior consent of
the other, press releases that disclose any information
required by the rules and regulations of provincial
securities regulatory authorities in Canada, the Securities
and Exchange Commission in the United States or similar
foreign authorities, as determined in good faith by the
disclosing party, provided that, where reasonably possible,
each party shall use reasonable efforts to give prior
notice of the press release to the other party and an
opportunity for the other party to review and comment on
that press release.
(d) Notwithstanding the provisions of clauses (a) and (b), each
party agrees to use reasonable good faith efforts to notify
the other party when it releases any information relating to
this Agreement, including any previously approved information
and any information required to be disclosed by the rules and
regulations of provincial securities regulatory authorities in
Canada, the Securities and Exchange Commission in the United
States or similar foreign authorities, and will promptly
provide a copy of any such disclosure to the other party for
its review and comment.
(e) Each of Kinetek and QLT acknowledge that Kinetek may file a
preliminary and final prospectus with provincial securities
regulatory authorities in Canada in respect of its IPO and
QLT may file prospectuses in connection with future
securities offerings, and that the said prospectuses will
be required to include full, true and plain disclosure
regarding each party and its business, including this
Agreement and the form of License Agreement. Each of
Kinetek and QLT agree to promptly provide a copy of
portions of such prospectuses relating to this Agreement
and the License Agreement to the other party for its
approval and agreement, which approval and agreement shall
not be unreasonably withheld. The parties will consult
with one another regarding the provisions of this Agreement
to be redacted in any filing made by the parties with
securities regulatory authorities, or as otherwise required
by law.
9.6 PUBLICATION
Subject to the terms and conditions of any agreement between Kinetek and any
Third Party relating to the Technology, each of QLT and Kinetek reserves the
right to publish or publicly present the results (the "RESULTS") of any Research
Program, subject to compliance with the terms and conditions set out in this
Section 9.6. The party proposing to publish or publicly present the Results (the
"PUBLISHING PARTY") will submit a draft of any proposed manuscript or speech to
the other party (the "NON-PUBLISHING PARTY") for comments at least 60 days prior
to submission for publication or presentation. The Non-Publishing Party shall
notify the Publishing Party in writing within 30 days of receipt of such draft
whether such draft contains:
(a) information of the Non-Publishing Party which it considers to
be confidential under the provisions of Article 9;
(b) information that if published would have an adverse effect on
a patent application covering the subject matter of this
Agreement which the Non-Publishing Party intends to file; or
(c) information that the Non-Publishing Party reasonably believes
would be likely to have a material adverse impact on the
development or commercialization of a Lead Compound and/or
Licensed Product (as defined in the License Agreement). In any
such notification, the Non-Publishing Party shall provide
detailed suggestions regarding the manner and degree to which
the Publishing Party may disclose such information, if at all
permitted.
In the case of Section 9.6(a) above, no party may publish Confidential
Information of the other party without its consent in violation of Article 9 of
this Agreement. In the case of Section 9.6(b) above, the Non-Publishing Party
may request a delay and the Publishing Party shall delay such publication, for a
period not exceeding 90 days, to permit the timely preparation and filing of a
patent application or an application for a certificate of invention on the
information involved. In the case of Section 9.6(c) above, if the Publishing
Party disagrees with the Non-Publishing Party as to the impact of the
publication, then the issue shall be referred to the JMC for resolution. If the
JMC is unable to reach agreement on the
-23-
matter within 30 days after such referral, the matter shall be referred by the
JMC to the Chief Executive Officer QLT and the Chief Executive Officer of
Kinetek who shall attempt in good faith to reach a fair and equitable resolution
of this disagreement. If the disagreement is not resolved in this manner within
2 weeks of referral by the JMC as aforesaid, then the decision of the Publishing
Party as to publication of any information generated by it, subject always to
the confidentiality provisions of Article 9 shall be final, provided that such
decision shall be exercised with reasonable regard for the interests of the
Non-Publishing Party. The parties agree that authorship of any publication will
be determined based on the customary standards then being applied in the
relevant scientific journal. The parties will use their best efforts to gain
the right to review proposed publications relating to the subject matter of the
Research Program by consultants or contractors.
9.7 SURVIVAL
The provisions of this Article 9 shall survive the termination of this Agreement
and shall survive for a period of 5 years thereafter.
ARTICLE 10 - INTELLECTUAL PROPERTY
10.1 OWNERSHIP OF BACKGROUND INTELLECTUAL PROPERTY
As between QLT and Kinetek:
(a) title to and ownership of all rights in and to all
Intellectual Property owned by QLT or licensed to QLT by Third
Parties as of the Effective Date shall at all times remain
with QLT and, except as expressly granted under this
Agreement, no rights in or to any such Intellectual Property
shall vest in Kinetek; and
(b) title to and ownership of all rights in and to all
Intellectual Property owned by Kinetek or licensed to Kinetek
by Third Parties as of the Effective Date shall at all times
remain with Kinetek and, except as expressly granted under
this Agreement, no rights in or to any such Intellectual
Property shall vest in QLT.
10.2 DISCLOSURE OF INVENTIONS
During the Term:
(a) Kinetek shall promptly disclose and supply to QLT, in a timely
fashion, all information in respect of inventions developed by
Kinetek arising from the performance of the Research Program;
and
(b) QLT shall promptly disclose and supply to Kinetek, in a timely
fashion, all information in respect of inventions developed by
QLT arising from the performance of the Research Program.
10.3 OWNERSHIP OF INVENTIONS
Any new inventions and discoveries developed by either party or its Affiliates
(directly or through others acting on its behalf) related to the Research
Program prior to and during the Term shall be treated as follows:
(a) if made solely by an employee or contractor of Kinetek or its
Affiliate, such inventions and discoveries shall be the
property of [*];
(b) if made solely by an employee or contractor of QLT or its
Affiliate, such inventions and discoveries shall be the
property of [*];
(c) if jointly made by employees or contractors of Kinetek and
QLT, as determined in accordance with United States laws of
inventorship ("JOINT INVENTIONS"), such inventions and
discoveries shall [*].
*Material has been omitted and filed separately with the commission.
-24-
ARTICLE 11 - PATENTS; PROSECUTION AND LITIGATION
11.1 PROSECUTION OF PATENTS
(a) Kinetek shall have the right to prosecute and maintain all
Kinetek Patents, subject to the terms and conditions set out
in this Article 11, and shall do so in a timely manner under
the direction of the JTC.
(b) QLT shall have the right to prosecute and maintain all QLT
Patents subject to the terms and conditions set out in this
Article 11, and shall do so in a timely manner under the
direction of the JTC.
(c) [*] shall be responsible for the prosecution and maintenance
of Patents arising out of the Joint Inventions, subject to the
terms and conditions set out in this Article 11, and [*] shall
do so in a timely manner under the direction of the JTC.
11.2 PATENT REVIEW
(a) RECOMMENDATIONS QLT shall have the right to review, in respect
of all Kinetek Patents related to the Eligible Targets and
Compounds directed against the Eligible Targets, all draft
patent applications (prior to filing), pending patent
applications, patents, other proceedings, communications,
reports and observations with respect to all Kinetek
Patents, and make recommendations to Kinetek promptly, but
no more than 3 weeks after QLT's receipt of the aforesaid
information concerning such patents and patent applications
and their conduct, including, but not limited to, the
jurisdictions in which to seek patent protection, which
recommendations shall be incorporated by Kinetek as
determined by the JTC.
(b) DISCLOSURE Kinetek shall:
(i) promptly disclose to QLT and keep QLT fully informed
of, and/or
(ii) supply QLT in a timely fashion with;
the following:
(iii) the complete texts of, and all relevant patent
applications filed and/or controlled by Kinetek for,
Kinetek Patents, and
(iv) all information received concerning:
(A) the institution or possible institution of
any interference, opposition,
re-examination, reissue, revocation,
nullification or any official proceeding
involving any Kinetek Patents, and
(B) the course of substantive patent prosecution
or other substantive proceedings related to
any Kinetek Patents,
(C) including, without limitation, by providing
QLT with copies of substantive
communications, search reports and Third
Party observations submitted to or received
from Patent offices.
(c) CONFIDENTIALLY QLT shall hold all information disclosed to it
under this section as Confidential Information of Kinetek
under Article 9.
11.3 PATENT COSTS
(a) Kinetek shall be responsible for all costs and expenses
relating to the drafting, prosecution and maintenance of all
Kinetek Patents.
*Material has been omitted and filed separately with the commission.
-25-
(b) QLT shall be responsible for all costs and expenses relating
to the drafting, prosecution and maintenance of all QLT
Patents.
(c) All costs and expenses relating to the drafting, prosecution
and maintenance of all Patents arising out of Joint Inventions
shall be [*].
11.4 RIGHT TO ASSUME PROSECUTION
In the event that Kinetek intends to finally abandon in any country in the
Territory any Kinetek Patent related to the Eligible Targets and Compounds
directed against the Eligible Targets or methods of use thereof, in whole or in
part, Kinetek shall promptly notify QLT. All rights granted to QLT to any such
Kinetek Patent or part of such Kinetek Patent in such country shall continue in
force provided that QLT assumes, at its own expense, responsibility for the
prosecution and maintenance of any such Kinetek Patent or part of such Kinetek
Patent in such country, and provided that if there are Third Parties with legal
interests in any such Kinetek Patent outside the Field, the costs of the
prosecution and maintenance of such Kinetek Patent shall be shared by QLT and
Kinetek on a basis to be mutually agreed to by the parties taking into account
the rights in such Kinetek Patent granted to QLT and the Third Parties
respectively. If the parties cannot agree on an allocation of the costs of the
prosecution and maintenance of such Kinetek Patent, the dispute shall be
resolved in accordance with Section 16.2.
11.5 DEFENSE OF INFRINGEMENT SUITS
In the event of the initiation of any suit in the Territory by a Third Party
against Kinetek or QLT or any of their respective Affiliates for Intellectual
Property infringement arising from the use of the Technology (an "INFRINGEMENT
SUIT"), the party sued shall promptly notify the other party in writing, and the
following shall apply:
(a) KINETEK PATENTS
(i) In the event that the Infringement Suit is based on
Technology owned, controlled or licensed by Kinetek
which is not dependent on any Joint Inventions (an
"KINETEK INFRINGEMENT SUIT"), [*] shall have the
first right, but not the obligation, to defend the
Kinetek Infringement Suit and [*] shall assist and
co-operate with [*] in any such litigation.
(ii) If [*] fails to defend the Kinetek Infringement Suit
within a reasonable time after receiving notice of
the Kinetek Infringement Suit, then [*] shall have
the right, but not the obligation, to defend the
Kinetek Infringement Suit and [*] shall assist and
co-operate with [*] in any such litigation.
(iii) The party conducting the defense of a Kinetek
Infringement Suit shall have full control over its
conduct; provided neither party shall enter into any
settlement with respect to a Kinetek Infringement
Suit without the other's consent, which consent shall
not be unreasonably withheld, conditioned or delayed.
(iv) The cost and expense of the defense of any Kinetek
Infringement Suit under this Section 11.5(a), whether
conducted by either party, shall be borne by [*].
(b) QLT PATENTS
(i) In the event that the Infringement Suit is based on
QLT Technology that is not dependent on any Joint
Invention (a "QLT INFRINGEMENT SUIT"), [*] shall have
the right, but not the obligation, to defend QLT
Infringement Suit and [*] shall assist and co-operate
with [*] in any such litigation.
(ii) The cost and expense of the defense of any QLT
Infringement Suit under this
Section 11.5(b) shall be borne by [*].
(c) JOINT INVENTIONS
*Material has been omitted and filed separately with the commission.
-26-
(i) In the event that the Infringement Suit is based on
Technology arising solely out of a Joint Invention (a
"JOINT INFRINGEMENT SUIT"), [*] shall have the first
right, but not the obligation, to defend the Joint
Infringement Suit and [*] shall assist and co-operate
with [*] in any such litigation.
(ii) If [*] fails to defend the Joint Infringement Suit
within a reasonable time after receiving notice of
the Joint Infringement Suit, then [*] shall have the
right, but not the obligation, to defend the Joint
Infringement Suit and [*] shall assist and cooperate
with [*] in any such litigation.
(iii) The party conducting the defense of a Joint
Infringement Suit shall have full control over its
conduct; provided neither party shall enter into any
settlement with respect to a Joint Infringement Suit
without the other party's prior written consent,
which consent shall not be unreasonably withheld,
conditioned or delayed.
(iv) The cost and expense of the defense of any Joint
Impingement Suit under this Section 11.5(c)
shall be [*].
11.6 INFRINGEMENT BY THIRD PARTIES
(a) KINETEK PATENTS
(i) In the event that Kinetek or QLT becomes aware of
actual or threatened infringement by a Third Party of
a Kinetek Patent (a "KINETEK PATENT INFRINGEMENT"),
that party shall promptly notify the other party in
writing.
(ii) [*] shall have the first right, but not the
obligation, to bring an infringement action against
any alleged infringer in the event of a Kinetek
Patent Infringement and [*] shall assist and
co-operate with [*] in any such litigation.
(iii) If [*] fails to take action regarding a Kinetek
Patent Infringement within a reasonable time after
becoming aware of the Kinetek Patent Infringement,
then [*] shall have the right, but not the
obligation, to bring an infringement action against
the alleged infringer and [*] shall co-operate with
[*] in any such litigation.
(iv) The party conducting the litigation in respect of a
Kinetek Patent Infringement shall have full control
over its conduct; provided neither party shall enter
into any settlement with respect to such suit without
the other's consent, which consent shall not be
unreasonably withheld, conditioned or delayed.
(v) The cost and expense of any infringement action
against an alleged infringer under this
Section 11.6(a) shall be borne by [*].
(vi) Any damages or other monies awarded or recovered in
settlement of such action shall be used to reimburse
the parties' costs and expenses in conducting the
infringement action and any excess shall be retained
by [*].
(b) QLT PATENTS
(i) In the event that Kinetek or QLT becomes aware of
actual or threatened infringement by a Third Party of
a QLT Patent (a "QLT PATENT INFRINGEMENT"), that
party shall promptly notify the other party in
writing.
(ii) [*] shall have the right, but not the obligation, to
bring an infringement action against any alleged
infringer in the event of a QLT Patent Infringement
and [*] shall assist and cooperate with [*] in any
such litigation.
*Material has been omitted and filed separately with the commission.
-27-
(iii) Where [*] brings an action, [*] shall have full
control over the conduct of the litigation in respect
of a QLT Patent Infringement.
(iv) The cost and expense of any infringement action
brought by [*] against an alleged infringer under
this Section 11.6(b) shall be borne by [*].
(v) Any damages or other monies awarded or recovered in
settlement of such action shall be used to reimburse
the parties' costs and expenses in conducting the
infringement action and any excess shall be retained
by [*].
(c) JOINT INVENTIONS
(i) In the event that Kinetek or QLT becomes aware of
actual or threatened infringement by a Third Party of
a Patent arising out of a Joint Invention (a "JOINT
PATENT INFRINGEMENT"), that party shall promptly
notify the other party in writing.
(ii) [*] shall have the first right, but not the
obligation, to bring an infringement action against
any alleged infringer in the event of a Joint Patent
Infringement and [*] shall assist and co-operate
with[*] in any such litigation.
(iii) If [*] fails to take action regarding a Joint Patent
Infringement within a reasonable time after becoming
aware of the Joint Patent Infringement, then [*]
shall have the right, but not the obligation, to
bring an infringement action against the alleged
infringer and [*] shall cooperate with [*] in any
such litigation.
(iv) The party conducting the litigation in respect of a
Joint Patent Infringement shall have full control
over its conduct; provided neither party shall enter
into any settlement with respect to such suit without
the other party's prior written consent, which
consent shall not be unreasonably withheld,
conditioned or delayed.
(v) The cost and expense of any infringement action
brought by [*] against an alleged infringer under
this Section 11.6(c) shall be borne by [*].
(vi) Any damages or other monies awarded or recovered in
settlement of such action shall be used to reimburse
the parties' costs and expenses in conducting the
infringement action and any excess shall be shared
equally by both parties.
11.7 INTERFERENCE PROCEEDINGS
(a) In the event of the declaration of any interference proceeding
by any Patent authorities with respect to any Kinetek Patents,
Kinetek shall promptly notify QLT in writing. Kinetek shall
have the right to represent and manage Kinetek's and QLT's
interests in such proceeding. Kinetek and QLT shall assist one
another and co-operate in any such proceeding.
(b) In the event of the declaration of any interference proceeding
by any Patent authorities with respect to any QLT Patents or
Patents arising out of Joint Inventions, QLT shall promptly
notify Kinetek in writing. QLT shall have the right to
represent and manage QLT's and Kinetek's interests in such
proceeding. Kinetek and QLT shall assist one another and
co-operate in any such proceeding.
11.8 STATUS OF PROCEEDINGS
The parties shall keep one another informed of the status of their respective
activities regarding any litigation or settlement thereof concerning the
Technology or any Research Candidate, Prospective Lead Compound, Additional
Prospective Lead Compound or Lead Compound.
*Material has been omitted and filed separately with the commission.
-28-
ARTICLE 12 - SAFETY AND REGULATORY
12.1 COMPLIANCE WITH LAWS
(a) Kinetek shall, and if applicable, QLT shall, at all times in
manufacturing, handling, labelling, shipping and delivering
Compounds under this Agreement and in otherwise carrying out
their respective obligations under this Agreement:
(i) comply with all applicable laws, rules, regulations
or other requirements applicable to their respective
business and to the manufacturing, handling,
labelling, shipping and delivery of Compounds; and
(ii) obtain and maintain in full force and effect all
applicable licenses, permits, certificates,
authorizations or approvals from all governmental
authorities necessary to conduct their respective
business and to manufacture, handle, load, ship and
deliver Compounds.
(b) Kinetek and QLT shall at all times comply with all
environmental laws and obtain and maintain in full force and
effect all licenses, permits, certificates, authorizations or
approvals required by environmental laws in connection with
the activities then being undertaken by Kinetek or QLT, if
applicable, including those relating to the handling,
generation, transportation, treatment, storage and disposal or
other management of waste and regulated substances, including,
without limitation, hazardous and toxic substances.
12.2 SAFETY
During the Term, each party shall within a reasonable time inform the other
party of any information that it obtains or develops regarding the safety of any
Compounds, Research Candidates or Prospective Lead Compounds and shall promptly
report to the other party any confirmed information of serious or unexpected
reactions or serious or unexpected adverse events related to the utilization or
medical administration of such Compounds, Research Candidates or Prospective
Lead Compounds.
12.3 REGULATORY FILINGS
(a) Responsibility [*] shall be solely responsible for obtaining
and maintaining regulatory approvals in the Territory,
including the preparation and filing of the IND.
(b) [*] Ownership All regulatory approvals, including the IND,
shall be held by and in the name of [*], and [*] shall own all
submissions in connection therewith.
(c) Principal Interface [*] shall be the principal interface with
and will handle all interactions with regulatory agencies
concerning the regulatory approvals or otherwise in respect of
the Lead Compounds and/or Licensed Products and to the extent
legally possible, [*] shall be the sole contact with such
agencies in respect thereof.
ARTICLE 13 - REPRESENTATIONS, WARRANTIES AND COVENANTS
13.1 REPRESENTATIONS AND WARRANTIES OF KINETEK
Kinetek represents and warrants to QLT as follows:
(a) Kinetek has been duly organized and is validly subsisting and
in good standing in its jurisdiction of organization and has
the power to carry on the business as now being conducted by
it;
(b) Kinetek has the right to enter into this Agreement, and this
Agreement is a legal and valid obligation binding upon such
party and enforceable in accordance with its terms;
*Material has been omitted and filed separately with the commission.
-29-
(c) Kinetek has not made and will not make any commitments to
Third Parties inconsistent with or in derogation of Kinetek's
obligations under this Agreement and Kinetek is not subject to
any obligations that would prevent it from entering into or
carrying out its obligations under this Agreement;
(d) Kinetek owns or possesses adequate licenses or other rights to
use all Kinetek Technology relating to the Field and to grant
the licenses herein. The granting of the Development Election
to QLT hereunder will not violate any right known by Kinetek
to be held by any Third Party;
(e) as of the Effective Date, EXHIBIT A sets forth a complete list
of all Kinetek Patents, and Kinetek shall update this list
regularly during the Term in accordance with the terms of this
Agreement;
(f) as of the Effective Date, all issued Kinetek Patents in
existence as of the Effective Date are validly subsisting and
enforceable and do not, to the best of the knowledge of
Kinetek, after due inquiry, infringe any Patent rights of any
Third Parties;
(g) other than as contemplated in Section 2.5, Kinetek has not
granted to any Third Party any rights (whether by option,
license, sale or assignment) in, or waived any rights Kinetek
may have under any Third Party Licenses to, any Initial
Targets or Compounds directed against Initial Targets within
or outside the Field or to any Technology within the Field;
(h) except as disclosed in writing between the parties to this
Agreement or their respective agents, to the best of knowledge
of Kinetek, after due inquiry, there are no issued patents or
published pending patent applications that, if issued, would
be infringed by the development, manufacture, use or sale, as
the case may be, of a Research Candidate or Prospective Lead
Compound or the Technology pursuant to this Agreement;
(i) except as disclosed in writing between the parties to this
Agreement or their respective agents, there are no pending
actions, either actual or, to the best of the knowledge of
Kinetek, threatened, relating to the Kinetek Technology; and
(j) as of the Effective Date, EXHIBIT E sets forth a complete list
of all Third Party Licenses required for the conduct of the
Research Program and for the exercise by QLT of the license
granted under Section 5.5.
13.2 COVENANTS OF KINETEK
Kinetek hereby covenants to QLT as follows:
(a) all Compounds, Research Candidates and Prospective Lead
Compounds delivered to QLT under this Agreement will have been
manufactured in a competent, workmanlike fashion by qualified
personnel and in accordance with customary industry standards
and in accordance with all requirements under applicable laws
and regulations, including, when required for regulatory
submission, GLP and GMP standards;
(b) Kinetek has not made and will not make, in the performance of
this Agreement, any use of the Intellectual Property of any
Third Party, unless Kinetek has an express legal right to use
such Third Party Intellectual Property in the manner used by
it under this Agreement;
(c) Kinetek shall use all commercially reasonable efforts to
obtain all consents from Third Parties that may be necessary
in order for Kinetek to grant to QLT the sub-license(s) to the
Lead Compound(s) contemplated in the License Agreement on or
before the time that the JTC selects a Compound as a Research
Candidate; and
(d) To the extent sound and reasonable business practice and
judgment require, Kinetek shall utilize diligent efforts to
ensure that all Kinetek Patents issued after the Effective
Date shall be validly subsisting and enforceable when issued.
-00-
00.0 XXXXXXXXXXXXXXX XXX XXXXXXXXXX XX XXX
XXX represents and warrants to Kinetek as follows:
(a) QLT has been duly organized and is validly subsisting and in
good standing in its jurisdiction of organization and has the
power to carry on the business as now being conducted by it;
(b) QLT has the right to enter into this Agreement and this
Agreement is a legal and valid obligation binding upon QLT and
enforceable in accordance with its terms;
(c) QLT has not made and will not make any commitments to Third
Parties inconsistent with or in derogation of QLT's
obligations under this Agreement and QLT is not subject to any
obligations that would prevent it from entering into or
carrying out its obligations under this Agreement; and
(d) to the best of the knowledge of QLT, as of the Effective Date,
QLT does not own any Patent which includes claims directly
related to the use of one or more of the Initial Targets,
except for any claims in such Patents, if any, that relate to
the general effect that photodynamic therapy may have on one
or more of the Initial Targets.
13.4 COVENANTS OF QLT
To the extent sound and reasonable business practice and judgment requires, QLT
shall utilize diligent efforts to ensure that all QLT Patents issued after the
Effective Date will be validly subsisting and enforceable when issued.
13.5 KINETEK CHANGE OF CONTROL
Forthwith after the completion of a transaction involving Kinetek and another
Person which may result in a "Change of Control", as defined and provided for in
the License Agreement, Kinetek will provide to QLT sufficient information
regarding the transaction to permit QLT reasonably to conclude that the
transaction does or does not constitute a Change of Control (the "TRANSACTION
NOTICE"). Within 30 days after its receipt of the Transaction Notice QLT will
advise Kinetek in writing of its conclusions, including its reasons therefor, as
to whether the said transaction does or does not constitute a Change of Control.
If QLT does not so respond to Kinetek within the said 30 days, the transaction
will be deemed not to constitute a Change of Control.
ARTICLE 14 - TERM AND TERMINATION
14.1 TERMINATION
This Agreement may not be terminated by either party except in accordance with
this Article 14. Termination of this Agreement, in whole or in part, before the
expiration of the Term shall be without prejudice to the right of any party
accrued to the effective date of termination, without prejudice to the remedies
in respect of any previous breach of any of the representations, warranties and
covenants herein contained and without prejudice to any rights to
indemnification set forth herein and to any other provision referred to in
Section 14.7.
14.2 TERM
(a) The term of this Agreement (the "TERM") shall commence on the
Effective Date and, subject to Section 14.2(b), shall expire
on the date that is the earlier of:
(i) [*] after QLT enters into a License Agreement for the
[*] Lead Compound; and
(ii) [*] pursuant to Section 4.6(b)(ii).
(b) If, prior to the expiry of the period set out in Section
14.2(a), QLT requests one or more Additional Prospective Lead
Compounds pursuant to Sections 4.3 and 4.6(e), the Term shall
expire on the date that is the earlier of:
*Material has been omitted and filed separately with the commission.
-31-
(i) [*] after the date of delivery by Kinetek to QLT of
the Development Information in respect of the last
Additional Prospective Lead Compound; and
(ii) [*] in respect of the last Additional Prospective
Lead Compound requested by QLT.
(c) Unless earlier terminated, this Agreement shall terminate on
the date that is 8 years after the Commencement Date.
14.3 TERMINATION BY QLT
QLT may terminate this Agreement, in whole or in part at any time upon [*] prior
written notice of termination to Kinetek, in which case:
(a) in the event QLT terminates this Agreement in its entirety,
then without further action on the part of either party:
(i) all rights and licenses granted by Kinetek to QLT to
any Kinetek Technology pursuant to this Agreement
shall revert to Kinetek and QLT shall retain no
rights therein; and
(ii) [*] which specifically relate to [*], but excluding
[*] interest in any other [*], which [*];
(b) in the event QLT terminates this Agreement in respect of a
particular Research Candidate or Prospective Lead Compound,
then without further action on the part of either party:
(i) all rights and licenses granted by Kinetek to QLT to
any Kinetek Technology solely related to the
particular Research Candidate or Prospective Lead
Compound pursuant to this Agreement shall revert to
Kinetek and QLT shall retain no rights therein;
(ii) [*] all its right, title and interest in [*] to the
particular Research Candidate or Prospective Lead
Compound to [*]; and
(iii) forthwith after termination of all or part of this
Agreement, QLT shall deliver to Kinetek copies of all
material, documentation, analyses and other
information, if any and not previously made available
to Kinetek, held by QLT in respect of the portion of
the Research Program that was terminated.
14.4 TERMINATION FOR BREACH
(a) If either party materially breaches this Agreement and if the
breach is not cured within 60 days after receiving written
notice from the non-breaching party with respect to the
breach, except as otherwise set out in this Agreement, this
Agreement shall terminate in its entirety at the end of the
60-day period upon receipt of written notice from the
non-breaching party, without prejudice to any right accrued
to the effective date of termination, without prejudice to
the remedies in respect of any previous breach of any of
the representations, warranties and covenants herein
contained and without prejudice to any rights to
indemnification set forth herein and to any other
provisions hereof which by their terms call for performance
after such termination.
(b) If Kinetek terminates this Agreement for breach by QLT under
this Section 14.4, then without further action on the part of
either party:
(i) all rights and licenses granted by Kinetek to QLT to
any Kinetek Technology pursuant to this Agreement
shall revert to Kinetek and QLT shall retain no
rights therein; and
(ii) [*] all of [*] interest in any [*], but excluding [*]
interest in any other [*], which [*].
*Material has been omitted and filed separately with the commission.
-32-
14.5 TERMINATION ON BANKRUPTCY
Either party may immediately terminate this Agreement if at any time during the
Term the other party files in any court or agency pursuant to any statute or
regulation of Canada or of any individual state or foreign country:
(a) a petition in bankruptcy or insolvency;
(b) a petition for reorganization in connection with a
bankruptcy or insolvency;
(c) a petition for an arrangement in connection with a
bankruptcy or insolvency;
(d) a petition for the appointment of a receiver or trustee of the
party or of its assets;
(e) if the other party proposes a written agreement of composition
or extension of its debts;
(f) if the other party is served with an involuntary petition
against it, filed in any insolvency proceeding, and the
petition is not dismissed within 60 days after the filing
thereof;
(g) if the other party proposes or is a party to any dissolution
or liquidation; or
(h) if the other party makes an assignment for the benefit of
creditors.
Termination by a party under this Section 14.5 will be considered termination
for breach under Section 14.4, except that no notice and cure time for the
breach shall be required, and the consequences of termination and parties'
respective rights and remedies will be as set out in Section 14.4.
14.6 TERMINATION ON SCIENTIFIC GROUNDS
(a) If during the course of the Research Program the JTC, acting
reasonably, determines that Research Candidates directed
against Eligible Targets or Designated Targets cannot be
developed as Prospective Lead Compounds due to unforeseen
scientific reasons and, as a result, there is no reasonable
merit in pursuing the entire Research Program, and if the
JTC's conclusions are unanimously supported by the JMC, then
either Kinetek or QLT may, on 60 days notice to the other
party, terminate this Agreement.
(b) In the event of termination under this Section 14.6:
(i) Kinetek shall thereafter be relieved of its
obligations to perform the Research Program;
(ii) all rights and licenses granted by one party to the
other under this Agreement shall revert to the
granting party and the non-granting party shall
retain no interest therein; and
(iii) the parties shall retain rights to:
(A) their respective Technology; and
(B) [*]
to the exclusion of the other party.
14.7 SURVIVAL
Expiration or early termination of this Agreement shall not relieve either party
of its obligations incurred prior to such expiration or early termination, nor
shall it affect the terms of any License Agreement in effect. In addition, the
following provisions shall survive any expiration or early termination of this
Agreement:
(a) Section 1.1 (Definitions);
*Material has been omitted and filed separately with the commission.
-33-
(b) Section 4.6(a), (c) and (e) (Failure to Deliver)
(c) Article 8 (Financial Matters);
(d) Article 9 (Confidentiality; Publicity and Publication);
(e) Article 10 (Intellectual Property);
(f) Section 11.3 (Patent Costs) shall survive any expiration or
early termination of this Agreement solely with respect to the
payment and reimbursement of any Patent-related costs and
expenses that were incurred prior to such termination or
expiration;
(g) Section 11.7 (Interference Proceedings) to the extent such
interference proceedings are called prior to termination;
(h) Section 12.3(b) ([*] Regulatory Approvals);
(i) Article 13 (Representations, Warranties and Covenants);
(j) Article 14 (Term and Termination);
(k) Article 15 (Indemnification); and
(l) Sections 16.2 (Dispute Resolution), 16.3 (Entire Agreement),
16.6 (Governing Law and Attornment), 16.8 (Notices) and
16.11 (Severability).
ARTICLE 15 - INDEMNIFICATION
15.1 MUTUAL INDEMNIFICATION
From and after the Effective Date, except as otherwise specifically provided in
this Agreement, each of the parties (in this section, an "INDEMNIFYING PARTY")
agrees to defend, indemnify and hold harmless the other party and the other's
Affiliates, successors and assigns, and their respective officers, directors,
shareholders, partners and employees (in this section, an "INDEMNIFIED PARTY")
from and against all losses, damage, liability and expense, including legal fees
but excluding punitive damages (in this Section 15.1, collectively, "DAMAGES")
incurred, caused, arising out of or relating to:
(a) any breach or violation of, or failure to properly perform,
any covenant or agreement made in this Agreement by the
Indemnifying Party, unless waived in writing by the applicable
Indemnified Party;
(b) any breach of any of the representations or warranties made
in this Agreement by the Indemnifying Party; or
(c) the gross negligence or wilful misconduct of the
Indemnifying Party;
except to the extent the Damages are attributable to the gross negligence or
wilful misconduct of the Indemnified Party.
15.2 INTELLECTUAL PROPERTY INDEMNITY
Kinetek agrees to defend, indemnify and hold harmless QLT and QLT's Affiliates,
successors and assigns, their respective officers, directors, shareholders,
partners and employees, from and against any and all loss, other than loss of
profits suffered by any of the foregoing Persons, damage, expense or liability
including legal fees resulting from, arising out of or relating to any claims by
a Third Party that the rights licensed or sub-licensed by Kinetek to QLT under
this Agreement, or the exploitation thereof, infringes the lawful property
rights of a Third Party including any rights in any valid patent, copyright, or
trade secret.
*Material has been omitted and filed separately with the commission.
-34-
15.3 INDEMNIFICATION PROCEDURE
If either QLT or Kinetek any of their respective Affiliates (in this section, an
"INDEMNIFIED PARTY"), receives any written claim which it believes is the
subject of, or otherwise believes that circumstances exist giving rise to, an
indemnity under this Agreement by either Kinetek or QLT, as the case may be (in
this section, an "INDEMNIFYING PARTY"), the Indemnified Party shall, as soon as
reasonably practicable after forming such belief, give notice of the claim or
circumstances to the Indemnifying Party, including full particulars of the claim
or circumstances to the extent known to the Indemnified Party, provided,
however, that the failure to give timely notice to the Indemnifying Party as
contemplated hereby shall not release the indemnifying Party from any liability
to indemnify any persons indemnified under this Article 15, and, subject to
Article 11 in respect of infringement claims and infringement actions, the
following shall apply:
(a) the Indemnifying Party shall have the right, by prompt notice
to the Indemnified Party, to assume the defense of the claim
with counsel reasonably satisfactory to the Indemnified Party,
and at the cost of the Indemnifying Party;
(b) if the Indemnifying Party does not so assume the defense of
the claim, the Indemnified Party may assume the defense with
counsel of its choice at the sole expense of the Indemnifying
Party;
(c) if the Indemnifying Party assumes the defense of the claim,
the Indemnified Party may participate therein through counsel
of its choice, but the cost of such counsel shall be borne
solely by the Indemnified Party;
(d) any party not assuming the defense of a claim shall render all
reasonable assistance to the party assuming the defense, and
all out-of-pocket costs of this assistance shall be borne
solely by the Indemnifying Party; and
(e) no claim shall be settled other than by the party defending
the claim, and then only with the consent of the other party,
which shall not be unreasonably withheld, provided, however,
that the Indemnified Party shall have no obligation to consent
to any settlement of any claim which imposes on the
Indemnified Party any liability or obligation which cannot be
assumed and performed in full by the Indemnifying Party.
ARTICLE 16 - MISCELLANEOUS
16.1 ASSIGNMENT; ENUREMENT
Neither this Agreement nor any interest under this Agreement shall be assignable
by either party without the prior written consent of the other, provided,
however, that either party may assign this Agreement and any of its Patents
related to this Agreement without obtaining the consent of the other party to:
(a) any of its Affiliates;
(b) any Third Party with which it may merge or consolidate; and/or
(c) any Third Party to which it may transfer all or substantially
all of its assets.
Assignment in contravention of this Section 16.1 shall be considered a material
breach of this Agreement pursuant to Section 14.4. All rights and obligations
under this Agreement and the licenses granted in this Agreement shall be binding
upon and inure to the benefit of the successors in interest of the respective
parties. Any assignment in violation of the foregoing shall be null and void.
16.2 DISPUTE RESOLUTION
(a) In the event of any dispute, controversy or claim arising out
of or in relation to this Agreement or the breach,
termination or invalidity of this Agreement (each, a
"DISPUTE"), the parties shall, and either party may,
initially refer such dispute to the JMC, and failing
resolution of the controversy or claim within 30 days after
such referral, the matter shall be referred to the Chief
Executive Officer of Kinetek
-35-
and the Chief Executive Officer of QLT who shall, as soon
as practicable, attempt in good faith to resolve the
controversy or claim. If such controversy or claim is not
resolved within 60 days of the date of initial referral of
the matter to the JMC, either party shall resolve the
dispute pursuant to this Section 16.2.
(b) Except as otherwise set out in this Section 16.2, any Dispute
that cannot be settled amicably by agreement of the parties
pursuant to Section 16.2(a) shall be finally settled by an
arbitrator(s) appointed pursuant to the provisions of the
Commercial Arbitration Act of British Columbia, or any
successor legislation then in force, provided that the
appointed arbitrator(s) shall have appropriate experience in
the biopharmaceutical industry.
(c) The place of arbitration shall be Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx and the language to be used in the arbitration
proceedings shall be English.
(d) The award rendered in any arbitration shall be final and
binding upon both parties. The judgement rendered by the
arbitrator(s) shall include costs of arbitration, reasonable
legal fees and reasonable costs for any expert and other
witnesses.
(e) Nothing in this Agreement shall be deemed as preventing either
party from seeking injunctive relief (or any other provisional
remedy) from any court having jurisdiction over the parties
and the subject matter of the Dispute as necessary to protect
either party's name, Confidential Information or Intellectual
Property.
(f) Judgment upon the award may be entered in any court having
jurisdiction, or application may be made to such court for
judicial acceptance of the award and/or an order of
enforcement as the case may be.
(g) Notwithstanding the provisions of Sections 16.2(b) through
16.2(f), inclusive, either party shall be free to submit any
Dispute relating to Intellectual Property to any court having
jurisdiction over the parties and the subject matter of the
Dispute and to seek such relief and remedies as are available
in that court.
16.3 ENTIRE AGREEMENT
This Agreement and all Exhibits attached to this Agreement (which shall form an
integral part of this Agreement), entered into as of the date first written
above, constitute the entire agreement between the parties relating to the
subject matter hereof and supersede all previous writings and understandings. No
terms or provisions of this Agreement shall be varied or modified by any prior
or subsequent statement, conduct or act of either of the parties, except that
the parties may mutually amend this Agreement by written instruments
specifically referring to and executed in the same manner as this Agreement. In
the event of conflict between the terms and conditions of this Agreement and
those of any Exhibit attached to this Agreement or any other agreement executed
by the parties, the terms and conditions of this Agreement shall govern, unless
the parties expressly provide that the conflicting term or condition of such
Exhibit or agreement shall supersede the corresponding term or condition of this
Agreement.
16.4 FORCE MAJEURE
If the performance of any part of this Agreement by either party, or of any
obligation under this Agreement, is prevented, restricted, interfered with or
delayed by reason of any cause beyond the reasonable control of the party liable
to perform, including acts of God, governmental restrictions, wars,
insurrections, labor disturbances, destruction of facilities or materials by
fire, earthquake, storm or other casualty, judgment or injunction of any court,
epidemic or failure of public utilities, unless conclusive evidence to the
contrary is provided, the party so affected shall, upon giving written notice to
the other party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the affected party
shall use its reasonable commercial efforts to avoid or remove such causes of
non-performance and shall continue performance with the utmost dispatch whenever
the causes are removed. When such circumstances arise, the parties shall discuss
what, if any, modification of the terms of this Agreement may be required in
order to arrive at an equitable solution. The parties agree that this Section
16.4 is not intended to apply to delays caused by the risks inherent in the
process of scientific research and development.
-36-
16.5 FURTHER ASSURANCES
The parties shall both execute and deliver such further instruments and do such
further acts as may be required to implement the intent of this Agreement.
16.6 GOVERNING LAW AND ATTORNMENT
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia
and the laws of Canada applicable therein.
(b) Subject to the arbitration provisions of Section 16.2, the
parties agree that the courts of the Province of British
Columbia will have exclusive jurisdiction to determine all
disputes and claims arising between the parties.
16.7 INSURANCE
Kinetek currently maintains, and shall continue to maintain during the Term of
Agreement, the insurance coverage described in EXHIBIT F.
16.8 NOTICES
All notices in connection with this Agreement shall be in writing and shall be:
(a) delivered personally;
(b) sent by express courier service (receipt verified); or
(c) sent by facsimile transmission (with confirmation notice sent
as described above);
to the following addresses of the parties:
If to Kinetek: with a copy to:
Kinetek Pharmaceuticals, Inc. Blake, Xxxxxxx & Xxxxxxx LLP
850 - 1200 West 73rd Avenue, Vancouver, Xxxxx 0000, Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx, X0X 0X0 000 Xxxxxxx Xxxxxx
X.X. Xxx 00000
Attention: President and Chief Executive Vancouver BC, Canada
Officer
Attention: Xxxxx X. X'Xxxxxxxxx
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
If to QLT: with a copy to:
QLT Inc. Farris, Vaughan, Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxx, Xxxxxxxxx, British X.X. Xxx 00000, Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxx X0X-0X0 Toronto Dominion Bank Tower
000 Xxxx Xxxxxxx Xxxxxx, 00xx Floor
Attention: President and Chief Executive Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxxx X0X 0X0 XXXXXX
Facsimile: (000) 000-0000 Attention: R. Xxxxxx XxxXxx-Xxxx
Facsimile: (000) 000-0000
-37-
Any notice shall be deemed to have been received:
(d) on the date of delivery, if delivered personally or by
express courier; or
(e) on the next Business Day following the date of transmission
if sent by facsimile transmission.
16.9 CHANGE OF ADDRESS
Either party may, at any time, give notice of any change of address to the other
and the address specified in the notice shall be that party's address for the
purpose of receiving notices.
16.10 RIGHTS AND REMEDIES
The rights and remedies available under this Agreement shall be cumulative and
not alternative and shall be in addition to and not a limitation of any rights
and remedies otherwise available to the parties at law or in equity.
16.11 SEVERABILITY
In the event any portion of this Agreement is held illegal, void or ineffective,
the remaining portions of this Agreement shall remain in full force and effect.
If any of the terms or provisions of this Agreement are in conflict with any
applicable statute or rule of law, then such terms or provisions shall be deemed
inoperative to the extent that they may conflict therewith and shall be deemed
to be modified to conform with such statute or rule of law.
16.12 COUNTERPARTS; FACSIMILE
This Agreement may be executed in any number of counterparts (either originally
or by facsimile), each of which shall be deemed to be an original and all of
which taken together shall be deemed to constitute one and the same instrument.
16.13 WAIVER
A waiver of any default, breach of non-compliance under this Agreement is not
effective unless in writing and signed by the party to be bound by the waiver.
No waiver will be inferred from or implied by any failure to act or delay in
acting by a party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other party. The waiver by a party of
any default, breach or non-compliance under this Agreement will not operate as a
waiver of that party's rights under this Agreement in respect of any continuing
or subsequent default, breach or nonobservance (whether of the same or any other
nature).
-38-
IN WITNESS WHEREOF, each of the parties hereto has caused this Research and
Early Development Agreement to be executed by its duly authorized officer as of
the date first written above.
KINETEK PHARMACEUTICALS, INC. QLT INC.
by its authorized signatory: by its authorized signatory:
/s/ Xxxxx Xxxxxxxxxx /s/ Xxxxx Xxxx
_____________________________________ ______________________________________________
Xxxxx Xxxxxxxxxx Xxxxx Xxxx
President and Chief Executive Officer Senior Vice President, Corporate Development
/s/ Xxxxx Xxxxxxxxx
______________________________________________
Xxxxx Xxxxxxxxx
Vice President, Business Development and
Legal Affairs
EXHIBIT A
KINETEK PATENTS
[*]
*Material has been omitted and filed separately with the commission.
EXHIBIT B
QLT PATENTS
NIL
EXHIBIT C
GENERAL GUIDELINES FOR RESEARCH PLAN
PRECLINICAL
[*]
MANUFACTURING
[*]
*Material has been omitted and filed separately with the commission.
EXHIBIT D
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
[*]
*Material has been omitted and filed separately with the commission.
EXHIBIT E
THIRD PARTY LICENSES
[*]
*Material has been omitted and filed separately with the commission.
EXHIBIT F
KINETEK INSURANCE COVERAGE
[*]
*Material has been omitted and filed separately with the commission.
