* The confidential material marked by brackets contained herein has been
omitted and has been separately filed with the Commission pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
LICENSE AGREEMENT (U.S.)
THIS Agreement is made this 6th day of October, 1997 by and between
PharmaPrint Inc., a corporation organized and existing under the laws of the
State of Delaware having its principal place of business at 0 Xxxx Xxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000 and its subsidiaries, including
PharmaPrint B.V. ("PharmaPrint"), and American Home Products Corporation,
acting through its Whitehall-Robins Healthcare division, a corporation
organized and existing under the laws of the State of Delaware, having its
principal place of business at 0 Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000
("AHP").
A. PharmaPrint has developed a method for the identification,
characterization of and regulation of the amounts of bioactive components in
herbal products and is seeking to commercialize certain of the herbal
products identified, characterized and regulated thereby.
B. PharmaPrint has developed technological know-how, obtained patents
and filed patent applications relating to and/or covering the subjects of
Paragraph A above.
C. AHP desires to obtain an exclusive license and right under the
above technology, patent and patent applications to market and sell such
herbal products.
2
D. AHP desires to obtain the aforementioned rights so that it can
purchase, pursuant to a separate, contemporaneous agreement, its supply of
licensed herbal products from PharmaPrint so that AHP can market, distribute
and sell same (as hereinafter provided) throughout the Territory free of
charges of or suits for infringement of PharmaPrint's present or future
Patent Rights and Technology.
ARTICLE I
DEFINITIONS
Terms defined in this Article I shall for all purposes of this Agreement,
as the same may be amended or supplemented from time to time, have the meaning
herein specified.
1.1 The term "Act" shall mean the Federal Food, Drug and Cosmetic Act, as
amended from time to time.
1.2 The term "Additional Product(s)" shall have the meaning set forth in
Paragraph 5.1.
1.3 (a) The term "AHP Affiliate" shall mean any company which directly or
indirectly through stock ownership or through other contractual arrangement
either controls, or is controlled by, or is under common control with AHP.
3
(b) The term "PharmaPrint Affiliate" shall mean any company which
directly or indirectly through stock ownership or through other contractual
arrangement either controls, or is controlled by, or is under common control
with PharmaPrint.
1.4 The term "Branded Product(s)" shall mean a product manufactured,
marketed or sold under a regional or national brand label, whether or not a
registered trademark.
1.5 The term "Combination Product(s)" shall mean a composition containing
at least one (1) Herbal Product in admixture with at least one (1) mineral,
vitamin and/or other nutrient other than an Herbal Product. For the avoidance
of doubt, Combination Products do not include Dual Products.
1.6 The term "Commercially Reasonable Efforts" shall mean efforts and
resources normally used by a party for a non-prescription pharmaceutical product
of its own discovery of similar market potential at a similar stage in its
product life, taking into account the competitiveness of the marketplace, the
proprietary position of the product and its dosage form, the regulatory
structure involved, the profitability of the product, and other relevant
factors. It is anticipated by the parties that the level of effort will change
over time reflecting changes in the status of the relevant product and the
marketplace.
4
1.7 The term "Dual Product(s)" shall mean a composition wherein its
components (excluding inactive ingredients, excipients and coating compositions)
consist solely of Licensed Products.
1.8 The term "Effective Date" shall mean the date first written
hereinabove.
1.9 The term "FDA" shall mean the Federal Food and Drug Administration of
the United States Department of Health and Human Services, or any successor
agency thereto.
1.10 The term "Foreign Agreement" means the counterpart of this Agreement
granting certain rights to AHP in countries outside the Territory, as executed
by the parties concurrently with this Agreement.
1.11 The term "Government Approvals" shall mean any approvals, licenses,
registrations or authorizations, howsoever called, of any United States
federal, state or local regulatory agency, department, bureau or other
government entity, including the FDA, necessary for the manufacture, use,
storage, transport or sale, both interstate and intrastate, in the Territory
of Product. The term "Government Approvals" further means compliance with
the requirements of the United States Dietary Supplement Health and Education
Act of 1994.
5
1.12 The term "Improvements" shall mean any and all new and useful
processes, manufactures, devices, compositions of matter (except as limited
below) or methods of use first conceived, reduced to practice or developed
after the Effective Date and during the term of this Agreement by
PharmaPrint, or a PharmaPrint Affiliate or any employees, consultants or
other persons under their direction or control which increase the
performance, efficacy or safety of a Licensed Product, reduce the cost of
manufacture, harmful side-effects or adverse reactions to Licensed Product,
or otherwise relate to the manufacture or use of Licensed Product or the
practice of the method claimed in any of the patents and/or patent
applications within the Patent Rights. For the avoidance of doubt, the
defined term "Improvement" does not include Licensed Products per se.
1.13 The term "Initial Product(s)" shall mean those herbal products set
forth in Schedule A.
1.14 The term "National Launch Date" as applied to a Licensed Product
shall mean the date when commercial quantities of such Licensed Product are
first shipped to the trade by AHP for sale in the OTC Market.
1.15 The term "NDA" shall mean New Drug Application as defined in
regulations promulgated by the FDA under the Act filed with or
6
intended to be filed with the FDA for approval for marketing the Licensed
Product in the Territory.
1.16 The term "NDA Product" shall mean a herbal Licensed Product which
(i) it or its method of manufacture or use is claimed in one or more claims
of a patent or patent application within the Patent Rights in the country of
its manufacture, use or sale, (ii) is the subject of an NDA program proposed
by PharmaPrint or an approved NDA based on an application filed by
PharmaPrint in the Territory.
1.17 The term "Net Sales" as applied to a Licensed Product shall mean
gross sales of such Licensed Product as packaged for sale to an end-user,
less transportation charges, returns and allowances (actually paid or allowed
by AHP) , customary discounts (actually paid or allowed, whether in cash or
trade), and sales and other taxes based on sales when included in gross
sales, but not including taxes assessed on income derived from such sales.
Net Sales shall not include Free Goods as defined in the Supply Agreement.
1.18 The term "OTC Market" shall mean sales to the general public other
than those requiring a physician's prescription.
1.19 The term "Patent Rights" shall mean any and all issued patents in
the Territory and any and all patent applications for
7
letters patent pending in the Territory (until such time as such applications
or any of them are denied, abandoned, or issue into patents) listed in
Schedule B attached hereto, any patents issuing from such applications, all
divisions, continuations, continuations-in-part and all patents granted
thereon, as well as all other patents in the Territory, including any
re-issues, renewals, or extensions thereof, which are owned by PharmaPrint, a
PharmaPrint Affiliate or under which PharmaPrint or a PharmaPrint Affiliate
shall have the right to grant rights, and which claim a Product or
Improvement, or the manufacture or use of a Product or Improvement, which
claim has not lapsed, become abandoned or been declared invalid or
unenforceable by a final non-appealed or unappealable decision or judgment of
a court or tribunal of competent jurisdiction.
1.20 The term "Patent(s)" shall mean any and all issued patents within
the Patent Rights, including the Process Patent.
1.21 The term "Process Patent" shall mean U.S. Patent Application No.
08/838,199, filed April 15, 1997, a continuation-in-part application of U.S.
Patent Application No. 08/632,273, filed April 15, 1996 or a patent issued on
a divisional, continuation or continuation-in-part application on one or more
of the patent applications for the Process Patent.
8
1.22 The term "Licensed Product(s)" shall mean any Initial Product as
well as any Additional Product and/or NDA Product which have been added
through the operation of Article V.
1.23 The term "Supply Agreement" means the agreement for the sale and
supply of Licensed Products by PharmaPrint to AHP, as executed by the parties
concurrently with this Agreement.
1.24 The term "Territory" shall mean the United States, its territories
and possessions as well as the Commonwealth of Puerto Rico.
1.25 The term "Trademark" shall mean the trademark "PHARMAPRINT" which
is applied for, owned by and/or registered in the name of PharmaPrint.
1.26 The term "Herbal Product" shall mean a dietary supplement derived
from botanical herbal extracts.
ARTICLE II
GRANT OF LICENSE
2.1 (a) PharmaPrint hereby grants to AHP, and AHP accepts, the sole
and exclusive right, without the right to grant sublicenses except to AHP
Affiliate(s), under the Patent Rights to market and sell Herbal Products,
including the Licensed Products, in the OTC Market in the Territory.
9
(b) PharmaPrint hereby grants to AHP, and AHP accepts, a
non-exclusive right, without the right to grant sublicenses except to AHP
Affiliate(s), under the Patent Rights to use the Herbal Products, including
the Licensed Products, in the OTC Market in the Territory.
2.2 AHP may unilaterally decide not to commercialize, or to cease
commercialization, of any Licensed Product and shall do so in accordance with
the termination provisions set forth herein in Article XII. The termination
of this Agreement with respect to any Licensed Product shall result in its
deletion from the defined term Licensed Product.
2.3 During the term of this Agreement, PharmaPrint further grants to AHP a
royalty-free non-exclusive license, without the right to grant sublicenses
except to AHP Affiliate(s), under the Trademark for use in conjunction with the
marketing and/or sale of the Licensed Products in the OTC Market in the
Territory, provided any such use of the Trademark shall be consistent with and
recognize PharmaPrint's ownership thereof and reasonably comply with the
standards of quality used and/or established by PharmaPrint.
2.4 PharmaPrint further grants AHP the rights to Additional Products as
set forth in Article V hereof.
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ARTICLE III
CLINICAL DEVELOPMENT
AND REGULATORY REGISTRATION
3.1 PharmaPrint shall expend Commercially Reasonable Efforts to conduct
all research and development necessary to produce the Licensed Product and
fulfill its obligations hereunder. PharmaPrint shall further conduct all
stability testing and clinical trials necessary for the marketing of Licensed
Product in the OTC Market in the Territory.
3.2 (a) All regulatory filings to obtain Government Approvals and all
Government Approvals in the Territory shall be filed in the name of and owned
by PharmaPrint. PharmaPrint agrees, to the extent practical, to provide AHP
with a sufficient opportunity to review and comment on all regulatory filings
and material correspondence to regulatory agencies prior to submission, and
with material correspondence from regulatory agencies prior to submission of
a response.
(b) PharmaPrint agrees to expend Commercially Reasonable Efforts
in the filing, securing and maintenance of all Government Approvals,
including those necessary due to changes in the applicable statutes, rules
and related regulations. All such costs shall be borne by PharmaPrint.
11
(c) In the event of extraordinary requirements related to the
obtaining or maintenance of such Government Approvals, the parties shall discuss
the apportionment of expenses related thereto. In the event that an agreement
cannot be reached at AHP's sole discretion, AHP may terminate its rights to the
affected Licensed Product in accordance with the provisions of Paragraph 12.3 or
12.4.
ARTICLE IV
PAYMENTS
4.1 In consideration of and support of the research and development
efforts undertaken and to be undertaken by PharmaPrint, AHP shall pay
PharmaPrint a fee of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000.00)
within thirty (30) days following the Effective Date.
4.2 In recognition of the continuing research and development efforts
necessary by PharmaPrint, AHP shall further pay to PharmaPrint the following
payments:
(a) FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) upon the issuance of
the Process Patent having a claim at least as broad as the model claim shown on
Schedule D attached hereto; and
12
(b) FIVE HUNDRED THOUSAND DOLLARS ($500, 000. 00) upon (i) the
issuance to PharmaPrint of all Government Approvals directed to the Initial
Products, (ii) acceptance of the Initial Products by AHP for commercial release
and (iii) the receipt by AHP of supplies of such Initial Products from
PharmaPrint under the Supply Agreement in sufficient time and quantities such
that the National Launch Dates of each of such Initial Products may occur on or
before [*].
4.3 With the exception of the running royalty set forth in Paragraph 4.4
and possible additional financial commitments incurred pursuant to Paragraph
3.2(c), after making the payments set forth in Paragraph 4.1 and 4.2, no further
fees shall be owed to PharmaPrint by AHP regardless of whether PharmaPrint
receives any additional or other Government Approvals for any Initial Products
anywhere within the Territory.
4.4 During the term of this Agreement, as royalty for the licenses granted
under Paragraph 2.1, AHP shall pay to PharmaPrint a running royalty as set forth
below on the total Net Sales of Licensed Products sold by AHP and AHP Affiliates
in the Territory ("Earned Royalties").
Royalty Year Cumulative Net Sales
of Product under this Agreement ROYALTY RATE
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I. For the period commencing on the National
Launch Date and ending one year thereafter.
a. For Licensed Products covered by a 4%
Patent which contains a process or
product claim at least as broad as
one of those recited in Schedule D.
II. Subsequent to one year after the National
Launch Date through expiration or termination
of this Agreement.
a. For Licensed Products covered by a 6%
Patent which contains a process or product
claim at least as broad one of those recited
in Schedule D.
For the avoidance of doubt, no running royalty shall be due PharmaPrint
from AHP for Licensed Products not meeting the patent coverage requirements set
forth in this Paragraph 4.4.
4.5 Earned Royalties as provided in Paragraph 4.4 accrued shall be paid by
AHP to PharmaPrint within thirty (30) days after the end of each quarter of each
Royalty Year. Each payment shall be accompanied by a report in writing showing
the period for which such payment is made, the Net Sales of Licensed Product
during such period, and the amount of Earned Royalty thereon and any credit
pursuant to Paragraph 4.10. The first Royalty Year shall consist of the period
commencing on the day of the first National Launch Date, and ending on the last
day of the fourth calendar quarter thereafter. Each subsequent Royalty Year
shall consist of the
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twelve (12) month period commencing the first day after the
last day of the previous Royalty Year.
4.6 In the event that the parties disagree whether Earned Royalties should
accrue with respect to patent issues on a specific product and are unable to
successfully resolve the issue after good faith negotiation, the matter shall be
referred to an independent patent attorney agreed to by both parties. The
ultimate determination of such independent patent attorney shall be final and
binding upon the parties. All fees incurred in connection with resolution of
this dispute shall be borne by the party which determined incorrectly that
Earned Royalties were or were not due.
4.7 During the period commencing on the first National Launch Date and
ending two (2) years thereafter, AHP shall annually expend as a minimum for
Marketing Support (defined immediately below) for the Licensed Products [*].
As used herein, Marketing Support shall mean detailing; expenditures on media
(including the cost of purchasing mass advertising media to include TV and
radio time, press space, cinema and outdoor display, and the costs of
production of advertising material and advertising agency remuneration);
market research; promotions (including promotional trade discounts, point
15
of sale display, couponing and associated costs, mailings, consumer and
professional sampling, and professional conventions and conferences); and
other roll-out activities for the Licensed Products.
4.8 In the event that AHP fails to meet the requirements of Paragraph 4.7,
then PharmaPrint shall have the right to convert AHP's rights under Paragraphs
2.1 and 2.3 of this Agreement and under the Foreign Agreement from exclusive to
semi-exclusive such that PharmaPrint may offer such rights to one third party
other than AHP for the sale of Branded Products only. In such event, AHP shall
not have any further obligation to expend minimum Marketing Support levels for
such Licensed Products. PharmaPrint's right to convert AHP's rights from
exclusive to semi-exclusive shall be the sole remedy of PharmaPrint for failure
of AHP to meet the requirements of Paragraph 4.7.
4.9 During the term of this Agreement, AHP shall expend Commercially
Reasonable Efforts in the marketing of the Licensed Products.
4.10 No royalties as set forth in this Article IV shall be payable on
intercompany sales transactions as between or among AHP and AHP Affiliates, the
final sale by AHP or AHP Affiliate to a third party, alone, being used for the
purposes of determining the
16
royalty payments due hereunder. A Licensed Product subject to royalty
payment shall be deemed sold when invoiced or, if not invoiced, when the same
shall be delivered to the third party.
4.11 Whenever, because of price adjustment, including allowances or
returned goods sold during any period, or for any other reason, AHP shall have
overpaid or underpaid the royalty amount due for such period, AHP shall, upon
determining the amount of overpayment or underpayment, deduct or add the same
from or to the payment payable for the period during which the amount of the
overpayment or the underpayment is determined; and if after such deduction and
addition there remains an overpayment, such overpayment shall be deducted from
the payment payable for the immediately following period or, if there is no
following payment period, such overpayment shall be refunded to AHP.
4.12 AHP shall keep, and shall cause its AHP Affiliates to keep, complete
and accurate records of all sales of Licensed Product for a minimum of three (3)
years after the sales period to which they pertain. Said records shall be open
during reasonable business hours to a certified public accountant selected by
PharmaPrint and acceptable to AHP, who shall, at PharmaPrint's expense, have
access to all records deemed by such accountant as reasonably necessary in
verifying for PharmaPrint, not more often
17
than once each calendar year, the royalties accrued, payments made or to be
made, and the accuracy of the reports to be made, as herein provided.
However, said accountant shall agree in writing to treat as confidential and
not to disclose to PharmaPrint any information other than information
relating solely to the royalties accrued and the accuracy of the reports and
payments required to be made under this Agreement, and that in no event will
the quantities or prices to individual customers be disclosed to PharmaPrint
by said accountant.
4.13 In the event that AHP is prevented from selling or using any Licensed
Product, as a result of any regulatory action by a governmental agency or
authority of competent jurisdiction in the Territory, then for the period AHP is
prevented from selling or using such Licensed Product the Marketing Support
requirement of Paragraph 4.7 shall be suspended.
ARTICLE V
RIGHTS TO ADDITIONAL PRODUCTS
5.1 Promptly after the Effective Date, and from time to time thereafter,
the parties shall meet to discuss the development of herbal products other than
the Initial Products ("Additional Product") and their possible inclusion as
Licensed Products.
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5.2 (a) AHP may annually propose to PharmaPrint the development of up to
[*] Additional Products other than NDA Products. PharmaPrint shall exercise
Commercially Reasonable Efforts to develop such Additional Products.
(b) PharmaPrint shall conduct all development work, including
stability, necessary for the marketing of such Additional Product other than NDA
Products. Upon the successful completion of the development of each such
Additional Product and its acceptance by AHP, as reasonably determined by AHP,
AHP shall reimburse PharmaPrint in the amount of THREE HUNDRED AND EIGHTY FIVE
THOUSAND DOLLARS ($385,000.00) for the research and development associated with
each such Additional Product other than NDA Products. Such Additional Product
shall be included within the Licensed Products and subject to the accrual of
royalties pursuant to Paragraph 4.4 thereon.
(c) Should AHP not accept such Additional Product other than an NDA
Product, PharmaPrint shall not license to a third party or market, distribute or
sell such Additional Product other than an NDA Product to any third party under
the Trademark.
5.3 (a) Beginning one (1) year following the initial National Launch
Date, PharmaPrint may annually propose to AHP the
19
development of one (1) Additional Product other than NDA Products. If such
development is approved by AHP in writing, PharmaPrint shall exercise
Commercially Reasonable Efforts to develop such Additional Product.
(b) PharmaPrint shall conduct all development work, including
stability testing, necessary for the marketing of such Additional Product other
than an NDA Product. Upon the successful completion of the development of each
such Additional Product and its acceptance by AHP, as reasonably determined
solely by AHP, AHP shall reimburse PharmaPrint in the amount of THREE HUNDRED
AND EIGHTY FIVE THOUSAND DOLLARS ($385,000.00) for the research and development
associated with each such Additional Product other than an NDA Product. Such
Additional Product other than an NDA Product shall be included within the
Licensed Products and subject to the accrual of royalties pursuant to Paragraph
4.4 thereon.
(c) Should AHP not accept such Additional Product other than an
NDA Product, PharmaPrint shall not license to a third party or market,
distribute or sell such Additional Product other than an NDA Product under the
Trademark.
5.4 (a) During the term hereof, PharmaPrint shall have the right and
obligation to annually propose up to [*] Additional
20
Products and/or Initial Products which are NDA Products to AHP. PharmaPrint
grants AHP an exclusive option to acquire such Additional and Initial
Products as Licensed Products during an Option Period (as defined below) AHP,
at its sole option, may accept or reject such Initial and/or Additional
Product as a Licensed Product to be developed, marketed and sold under this
Agreement. During the Option Period, all Initial and Additional Products
which are NDA Products proposed by PharmaPrint shall be submitted to AHP for
its consideration hereunder.
(b) PharmaPrint shall give written notice to AHP of each
proposed Initial and Additional Product which are NDA Products. Included in
said notice shall be a statement of anticipated development work and Government
Approvals necessary for marketing of such Initial and Additional Product within
the Territory.
(c) AHP shall either accept or reject each proposal submitted
under subparagraph (b) hereof from PharmaPrint within ninety (90) days of
receipt of such proposal (hereinafter the "Option Period"). If rejected by AHP,
PharmaPrint shall be free to license such product to a third party and AHP shall
relinquish all rights to such Product as an NDA Product under this Agreement.
(d) If such Additional Product is accepted pursuant to
subparagraph (c) above, the Option Period shall be extended by a
21
period of three (3) months during which AHP may conduct market, scientific or
other studies directed to such Additional Product. At the conclusion of such
three (3) month period, AHP shall notify PharmaPrint in writing of its
decision to finally accept or reject such Additional Product. If rejected by
AHP, PharmaPrint shall be free to license such product to a third party and
AHP shall relinquish all rights to such Product as an NDA Product under this
Agreement.
(e) If such Additional Product is accepted pursuant to
subparagraph (d) above, the Option Period shall be extended by a further one (1)
month during which time the parties shall engage in good faith negotiations
regarding such Additional Product. Such negotiations shall include discussions
concerning Marketing Support, necessary development and clinical trials and
AHP's contribution thereon and any royalty due on such Additional Product.
(f) If the parties fail to successfully conclude negotiations
pursuant to subparagraph (e) , then PharmaPrint shall be free to offer third
parties terms to develop, manufacture purchase, license, distribute, co-market,
or co-promote such Additional Product which, when taken as a whole, are no less
favorable to PharmaPrint than the principal terms of the proposal
22
offered by PharmaPrint to AHP. Prior to entering into such an agreement with
a third party, PharmaPrint shall promptly notify AHP, in writing and in
confidence, of the principal terms of such agreement. If AHP notifies
PharmaPrint within ten (10) business days of such notice, that such terms
offered to a third party, when taken as a whole, are less favorable to
PharmaPrint than those offered by AHP, then PharmaPrint and AHP shall have an
additional ten (10) business days to discuss why such terms are or are not
less favorable. If the parties do not agree within such ten (10) business
day period that such terms are not less favorable, then such issue shall be
immediately referred to an independent certified public accounting firm
acceptable to both parties which shall resolve such disagreement within
forty-five (45) days of the referral to said firm. If the parties agree, or
it is determined by the independent certified public accounting firm that the
terms, when taken as a whole, are less favorable to PharmaPrint than AHP's
proposal to PharmaPrint, then PharmaPrint, at its option, shall either
re-negotiate with such third party such that the terms are not less favorable
to PharmaPrint, or accept the initial AHP proposal to PharmaPrint which AHP
shall have five (5) days to finally accept or reject. If accepted by AHP,
the parties shall negotiate a final agreement pursuant to Paragraph 5.3(e)
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ARTICLE VI
PATENTS AND TRADEMARKS
6.1 PharmaPrint shall be responsible, at its cost and expense, for
prosecuting to issuance all patent applications, for filing and prosecuting all
patent reissues and re-examinations, for applying for and obtaining any patent
term extensions, and for paying all maintenance fees, on a large-entity basis,
on all patents, as PharmaPrint determines to be commercially reasonable, which
applications and patents constitute the Patent Rights under this Agreement.
6.2 Within thirty (30) days of execution and delivery of this
Agreement by both parties and to the extent not already provided, PharmaPrint
shall provide AHP with a copy of the prosecution file wrapper histories of each
patent and application constituting Patent Rights under this Agreement.
PharmaPrint agrees to transmit promptly to AHP each action and correspondence as
soon as reasonably possible after it is received from the United States Patent
and Trademark Office, to submit to AHP for consideration and advice all
responses to and correspondence with the United States Patent and Trademark
Office before filing same, and to give due consideration to the advice of AHP in
this regard. PharmaPrint, however, shall have ultimate authority and
responsibility for all
24
responses to and correspondence with the United States Patent and Trademark
Office.
6.3 In the event PharmaPrint should elect not to continue the
prosecution of any patent application, patent reissue or patent re-examination,
to apply for a patent extension, or to pay a patent maintenance fee, PharmaPrint
shall notify AHP of such decision at least thirty (30) days in advance of the
due date for such action or payment, and AHP shall have the right, but not the
obligation, to assume PharmaPrint's responsibility therefor.
6.4 (a) AHP shall have the right to use and market the Licensed
Product under any AHP-owned trademarks, tradenames and/or tradedress it may
choose. Except as provided in subparagraph (b), AHP agrees to promote the
Licensed Products in association with AHP's CENTRUM-Registered Trademark-
trademark. AHP further agrees that the packaging of the License Products shall
bear a reference to PharmaPrint's ownership of the Trademark.
(b) AHP is not obligated to promote any Herbal Products under
the Centrum-Registered Trademark- trademark if those Herbal Products are covered
under Paragraph 13.1(c).
6.5 Other than the Trademark, PharmaPrint shall have no right, title
or interest in or to any trademarks, tradenames or tradedress which AHP may use
on or in connection with Product, or
25
the packaging, advertising, promotion, labeling, marketing or selling
thereof. So long as AHP or any AHP Affiliate shall have any interest in or
to any such trademarks, tradenames or tradedress, whether as proprietor,
owner, licensee or licensor, in any state or country of the world,
PharmaPrint shall not adopt, use, apply for registration, register, own or
acquire such trademarks, tradenames or tradedress, or any xxxx, name or
tradedress confusingly similar thereto, in any state or country of the world.
6.6 Except as provided herein, AHP shall have no right, title or
interest in or to the Trademark so long as PharmaPrint shall have any
interest in or to the Trademark, whether as proprietor, owner, licensee or
licensor, in any state or country of the world, AHP shall not adopt, use,
apply for registration, register, own or acquire such Trademark, or any xxxx
confusingly similar thereto, in any state or country of the world.
ARTICLE VII
IMPROVEMENTS
7.1 PharmaPrint hereby agrees to disclose to AHP any Improvement,
whether believed to be patentable or unpatentable,
26
made or discovered during the term of this Agreement within sixty (60) days
after the Improvement is first reduced in writing.
7.2 PharmaPrint shall have sole right, title and interest in and to
any patentable Improvement invented solely by its employees or consultants or
those of a PharmaPrint Affiliate, and shall be solely responsible, at its cost
and expense, for obtaining and maintaining patent protection therefor. Both
parties shall have joint rights, title and interests in and to any patentable
Improvement invented jointly by employees or consultants of each party, and both
parties shall share equally in the costs and expenses of obtaining and
maintaining patent protection therefor, with independent patent counsel,
acceptable to both parties, being appointed to obtain such patent protection.
In the event that either party should elect not to share in such costs and
expenses, the other party may elect to pay all such costs and expenses and shall
be the sole owner of all right, title and interest in all patent applications
and patents obtained.
7.3 (a) PharmaPrint hereby grants to AHP, and AHP accepts, the sole
and exclusive right, without the right to grant sublicensees except to AHP
Affiliates, in and to the Improvements which relate to the sale and distribution
of the Licensed Products for the life of this Agreement.
27
(b) PharmaPrint further grants to AHP, and AHP accepts, a non-
exclusive right, without the right to sublicenses except to AHP Affiliates,
under the Improvements to use the Licensed Products in the OTC Market in the
Territory.
(c) PharmaPrint hereby agrees that such Improvements shall be
added to the escrowed Manufacturing Know-how as defined in Paragraph 3.2 of the
Supply Agreement.
ARTICLE VIII
INFRINGEMENTS
8.1 If during the term of this Agreement, any third party should
sell, or make known its intent to sell, in the Territory a herbal product and
PharmaPrint should have a patent within the Patent Rights to lawfully preclude
such third-party sales, then PharmaPrint shall, take action expeditiously and
effectively to preclude the third-party sales, at its own cost and expense. AHP
shall have the right, at its sole option, to appear as a party in the action and
participate, at its cost and expense, in the prosecution of any suit. Any
amount of damages or settlement received shall be apportioned between the
parties equitably to compensate the parties for their direct costs and expenses
(including reasonable attorneys' fees) and thereafter to compensate
28
AHP for lost sales and profits and PharmaPrint for lost royalties and profits.
8.2 In the event PharmaPrint does not act as provided hereabove in
Paragraph 8.1 within ninety (90) days of its first having knowledge of third-
party sales, or intent to sell, to preclude such sales, AHP shall have the
right, but not the obligation, to act to preclude the third-party sales,
including the right to file a patent infringement claim or counterclaim in any
court of competent jurisdiction naming PharmaPrint as party plaintiff if
necessary or desirable.
If AHP shall initiate such an action, all costs and expenses
(including reasonable attorneys' fees) incurred by AHP in attempting to
eliminate such unlicensed competition shall be deducted in full from the Earned
Royalties and Marketing Support owed to PharmaPrint. Any amount of damages or
settlement received shall belong to AHP. PharmaPrint shall cooperate fully with
AHP regarding any action undertaken by AHP based upon the infringement by a
third party of a PharmaPrint patent.
Should AHP elect not to initiate such an action as set forth above,
the Earned Royalties due PharmaPrint and the Marketing Support from AHP shall be
halved.
29
ARTICLE IX
MOST FAVORED LICENSEE
In the event that AHP's exclusive rights under this Agreement become
semi-exclusive and should PharmaPrint grant any third party a license to use or
sell a specific Licensed Product on terms more favorable than those herein,
including the royalty rate, PharmaPrint will within thirty (30) days thereafter
provide AHP with a summary of the terms of said third-party license and offer
AHP the benefit of such more favorable terms provided AHP also accepts the less
favorable terms, if any, of such third-party license.
ARTICLE X
WARRANTIES AND COVENANTS
10.1 PharmaPrint represents and warrants that it has the sole,
exclusive and unencumbered right to grant the licenses and rights herein granted
to AHP, and that it has not granted any option, license, right or interest in or
to the Patent Rights, Licensed Product, or any method of manufacture or use of a
Licensed Product to any third party which would conflict with the rights granted
by this Agreement. PharmaPrint agrees to hold AHP harmless from any and all
costs, expenses and damages (including reasonable
30
attorneys' fees) incurred or sustained by AHP as the result of any third
party's challenge to PharmaPrint's right to grant the rights and licenses
herein granted to AHP.
10.2 (a) PharmaPrint represents and warrants that to the best of its
present knowledge, all, and only, the true inventors of the subject matter
claimed are named in the Patents Rights and all such inventors have irrevocably
assigned all their rights and interests therein (i) to PharmaPrint and/or (ii)
to the University of Southern California and PharmaPrint has acquired an
exclusive license thereto, with rights to sublicense AHP thereunder
(b) PharmaPrint covenants that subsequent to the Effective Date
all, and only, the true inventors of the subject matter claimed shall be named
in the Patents Rights and all such inventors shall have irrevocably assigned all
their rights and interests therein to (i) PharmaPrint and/or (ii) to the
University of Southern California and PharmaPrint has an exclusive license
thereto, with rights to sublicense AHP thereunder.
10.3 PharmaPrint represents and warrants that as of the Effective Date
it is not aware of any information material to the examination of the Patent
Rights listed in Schedule B, within the meaning of 37 C.F.R. 1.56, that was not
disclosed in writing to the United States Patent Office.
31
10.4 PharmaPrint represents and warrants that it is not presently
aware of any asserted or unasserted claim or demand of any right in or to any of
the Patent Rights, including but not limited to claim or demand of a shopright,
joint ownership, inventorship, or misappropriation, or which would or could in
any way impede or interfere with the licenses and rights herein granted to AHP.
10.5 PharmaPrint represents and warrants that the execution of this
Agreement and the full performance and enjoyment of the rights of PharmaPrint
and AHP under this Agreement will not breach or in any way be inconsistent with
the terms and conditions of any license, contract, understanding or agreement,
whether express, implied, written or oral between PharmaPrint and any third
party.
10.6 PharmaPrint represents and warrants that to the best of its
knowledge no patents or patent applications if issued would be infringed by the
manufacture, use or sale of a Licensed Product.
10.7 (a) PharmaPrint represents and warrants that with respect to all
regulatory filings to obtain Government Approvals, the data and information in
PharmaPrint's submissions to date have been free from fraud or material falsity,
that the Government Approvals have not been obtained either through bribery or
the payment of illegal gratuities, that the data and information in
32
PharmaPrint's submissions are accurate and reliable for purposes of supporting
approval of the submissions, and that the Government Approvals were obtained
without illegal or unethical behavior of any kind.
(b) PharmaPrint covenants that with respect to all regulatory
filings to obtain Government Approvals, the data and information in
PharmaPrint's submissions shall be free from fraud or material falsity, that the
Government Approvals shall not be obtained either through bribery or the payment
of illegal gratuities, that the data and information in PharmaPrint's
submissions shall be accurate and reliable for purposes of supporting approval
of the submissions, and that the Government Approvals shall be obtained without
illegal or unethical behavior of any kind.
10.8 PharmaPrint shall indemnify, defend and hold harmless AHP from
all actions, losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys' fees) except as arise solely from events listed herebelow
in paragraph 10.9, to which AHP is or may become subject insofar as they arise
out of or are alleged or claimed to arise out of (i) any breach by PharmaPrint
of any of the warranties of PharmaPrint, or (ii) any grossly negligent or
willful act or omission by PharmaPrint or its employees.
33
10.9 AHP shall indemnify, defend and hold harmless PharmaPrint from
all actions, losses, claims, demands, costs and liabilities (including
reasonable attorneys' fees) to which PharmaPrint is or may become subject
insofar as they arise out of or are alleged or claimed to arise out of (i) any
breach by AHP of any of its warranties under this Agreement, or (ii) any grossly
negligent or willful act or omission by AHP or its Affiliates, or their
employees.
10.10 A party entitled to indemnification hereunder agrees to
give prompt written notice (in no event later than five (5) business days) to
the indemnifying party after the receipt by such party of any written notice
of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such party will claim
indemnification pursuant to this Agreement. Unless, in the reasonable
judgment of the indemnified party, a conflict of interest may exist between
the indemnified party and the indemnifying party with respect to a claim, the
indemnifying party may assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a claim, it will
not be obligated to pay the fees and expenses of more than one counsel with
respect to such claim. The
34
indemnifying party will not be subject to any liability for any settlement
made without its consent, which shall not be unreasonably withheld.
10.11 The provisions and obligations of this Article X shall
survive any termination of this Agreement.
ARTICLE XI
THIRD-PARTY LICENSES
11.1 In the event AHP reasonably concludes, at any time prior to
the first commercial sale of a Licensed Product, that a license(s) under any
third-party patent is necessary in order to make, use or sell Licensed
Product in the Territory, and neither PharmaPrint nor AHP are able to obtain
such license(s) on terms reasonably acceptable to both, then PharmaPrint and
AHP shall negotiate in good faith to reach an agreement on the return to AHP
of all or a portion of the payments made pursuant to Article IV, in the case
where AHP reasonably concludes after good faith discussions and negotiations
between the parties that AHP is precluded from selling Licensed Products in
the Territory.
11.2 In the event AHP and PharmaPrint agree, at any time during the
term of this Agreement, that a license(s) under any third-party patent is
necessary or advisable in order to make, use
35
or sell Licensed Product sold by PharmaPrint as of the Effective Date in the
Territory, any and all payments and royalties paid by AHP for such license(s)
shall be deducted in full from payments and royalties (including Minimum
Royalty payments) due to PharmaPrint under this Agreement.
11.3 In the event that PharmaPrint and AHP cannot agree on any
matters requiring agreement under Paragraph 11.2 above, and a license(s)
under the third-party patent is otherwise available to AHP, PharmaPrint shall
indemnify, defend and hold harmless AHP from all actions, losses, claims,
demands, damages, costs and liability (including reasonable attorney's fees)
to which AHP is or may become insofar as they arise out of or are alleged or
claimed to arise out of any infringement of the third-party patent.
ARTICLE XII
DURATION AND TERMINATION
12.1 This Agreement shall continue in full force and effect, unless
earlier terminated by either party pursuant to the provisions set forth in this
Article XII, or until expiration of the last to expire patent within the Patent
Rights in the Territory. Following expiration of the Agreement, the licenses
36
granted hereunder to AHP with respect to the Patent Rights shall be fully
paid-up and irrevocable.
12.2 Prior to the initial National Launch Date, AHP may terminate
this Agreement in its sole discretion, at any time upon thirty (30) days
written notice to PharmaPrint.
12.3 After the initial National Launch Date, AHP may terminate this
Agreement on a per Licensed Product basis in its sole discretion, upon ninety
(90) days written notice to PharmaPrint.
12.4 After the initial National Launch Date, AHP may terminate this
Agreement in its entirety in its sole discretion, upon one (1) year's written
notice to PharmaPrint.
12.5 Either party hereto shall be entitled to terminate this
Agreement upon thirty (30) days written notice to the other party (i) if the
other party shall commit a breach of any material provision hereof and shall
not within sixty (60) days from receipt of notice of such breach by the
complaining party remedy the same (if capable of remedy), or offer full
compensation therefor, or (ii) upon termination of the Supply Agreement.
12.6 Insofar as is lawful and legally permissible, this Agreement
may be terminated with immediate effect by a party upon giving written notice
to the other if the other is insolvent or has
37
committed any act of bankruptcy or an order is made or resolution passed for
the winding up of the other party.
12.7 Failure on the part of either party to exercise or enforce any
right conferred upon it hereunder shall neither be deemed to be a waiver of
any such right nor operate to bar the exercise or enforcement thereof at any
time thereafter.
12.8 Upon termination of this Agreement for any reason, other than
under the provisions of Paragraph 12.1 of Article XII, (a) AHP and AHP
Affiliates shall have the right to advertise, promote, market and sell all
Licensed Product then in inventory, provided AHP makes the appropriate
royalty payments to PharmaPrint upon the sale of such Licensed Product; (b)
the Marketing Support requirements of Paragraph 4.7 shall apply pro-rata for
the portion of the Royalty Year ending as of the date all Product in
inventory are sold; and no payments under Article V are due to PharmaPrint
from AHP except those which had accrued prior to the effective date of such
termination.
ARTICLE XIII
NON-COMPETITION
13.1 During the term of this Agreement, neither AHP nor an AHP
Affiliate shall market or sell any Herbal Product in the Territory
38
in association with the Centrum-Registered Trademark- trademark except as
permitted by this Agreement; provided, however, nothing in this provision
shall prevent AHP or an AHP Affiliate from (a) performing its obligations
under this Agreement, the Foreign Agreement or the Supply Agreement, (b)
developing, manufacturing, promoting and/or selling Combination Products; (c)
manufacturing, developing, promoting and/or selling any branded Herbal
Product acquired after the Effective Date provided that AHP continues to
promote and sell such product under the acquired brand name or store/private
label brand, or (d) PharmaPrint cannot or fails to deliver any Licensed
Product(s) within nine (9) months.
13.2 Except as provided immediately below, in the event of an
acquisition or merger pursuant to Paragraphs 13.1(c) or failure to deliver
Licensed Product pursuant to Paragraph 13. 1 (d) , AHP agrees not to utilize the
Trademark in association with any herbal products acquired thereby. However,
AHP may utilize the Trademark in any association with an Herbal Product acquired
pursuant to Paragraph 13.1(c) so long as it contains Licensed Product.
Should AHP utilize the Trademark in association with a product acquired under
Paragraph 13.1(c), the Trademark shall be conspicuously displayed and clearly
refer to PharmaPrint's ownership of the Trademark.
39
ARTICLE XIV
MISCELLANEOUS
14.1 Any notice required or permitted under this Agreement shall be in
writing and deemed to have been sufficiently provided and effectively made as of
the delivery date if hand-delivered with written acknowledgment, or as of the
date received if mailed by registered or certified mail, postage-prepaid, and
addressed to the receiving party at its respective address as follows:
AMERICAN HOME PRODUCTS CORPORATION
Five Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Senior Vice President and General Counsel
PHARMAPRINT INCORPORATED
0 Xxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attn: President
or such other address which the receiving party has given notice pursuant to
the provisions of this Paragraph 14.1.
14.2 The relationship of the parties under this Agreement is that
of independent contractors and not as agents of each other or partners or
joint venturers, and neither party shall have the power to bind the other in
any way with respect to any obligation to any third party unless a specific
power of attorney is provided for
40
such purpose. Each party shall be solely and exclusively responsible for its
own employees and operations.
14.3 In the event that the performance of this Agreement or of any
obligation hereunder, other than payment of money as herein provided by
either party hereto is prevented, restricted or interfered with by reason of
any cause not within the control of the respective party, and which could not
by reasonable diligence have been avoided by such party, the party so
affected, upon giving prompt notice to the other party, as to the nature and
probable duration of such event shall be excused from such performance to the
extent and for the duration of such prevention, restriction or interference,
provided that the party so affected shall use its reasonable efforts to avoid
or remove such cause of non-performance and shall fulfill and continue
performance hereunder with the utmost dispatch whenever and to the extent
such cause or causes are removed.
For the purpose of the preceding paragraph but without limiting the
generality thereof, the following shall be considered as not within the
control of the respective party: acts of God, acts or omissions of a
governmental agency, compliance with requests, recommendations, rules,
regulations or orders of any governmental authority or any officer,
department, agency or
41
instrument thereof, flood, storm, earthquake, fire, war, riots, insurrection,
accidents, acts of the public enemy, invasion, quarantine restrictions,
strike, lockout, differences with workmen, embargoes, delays or failure in
transportation and acts of a similar nature.
14.4 Should one of the provisions of this Agreement become or prove
to be null and void, such will be without effect on the validity of this
Agreement as a whole. Both parties will, however, endeavor to replace the
void provision by a valid one which in its economic effect is most consistent
with the void provision.
14.5 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to
principles of conflicts of laws.
14.6 This Agreement and the rights and obligations hereunder shall
not be assignable by either of the parties without the previous written
consent of the other party, such consent not to be unreasonably withheld,
except that AHP may assign this Agreement (i) in connection with the transfer
of all or substantially all of the business to which it relates without any
such consent, and (ii) in whole or in part to a AHP Affiliate without any
such consent.
14.7 This Agreement, the Foreign Agreement and the Supply Agreement
constitute the entire understanding between the parties
41
regarding the subject matter hereof in the Territory and no party has relied
on any representation not expressly set forth or referred to in this
Agreement. No amendment, variation, waiver or modification of any of the
terms or provisions of this Agreement shall be effected unless set forth in
writing, specifically referencing this Agreement, and duly signed on behalf
of the parties hereto.
14.8 No press release or other public announcement concerning this
Agreement shall be made by either party without the prior written approval of
the other party hereto, such approval not to be unreasonably withheld, except
as otherwise required by law. Press releases or other public announcements
reasonably required by law shall be reviewed with the other party and their
comments given due consideration. Approval will be deemed granted if no
response is received by the proposing party within fifteen (15) days of its
written request for approval to the other party.
14.9 PharmaPrint represents and warrants that PharmaPrint and any
ultimate parent entity of PharmaPrint are not persons with total assets or
annual net sales of $10 million or more within the meaning of Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, 15 U.S.C. Section 18a,
and the rules and regulations promulgated thereunder, 16 C.F.R. 801.1 ET
SEQ., and that a pre-
43
merger notification is not required pursuant to such statute and rules.
IN WITNESS WHEREOF, the duly authorized representatives of the
parties hereto have caused this Agreement to be executed.
AMERICAN HOME PRODUCTS
CORPORATION PHARMAPRINT INC.
By: By:
-------------------------- --------------------------
Title: Title:
----------------------- -----------------------
Date: Date:
------------------------ ------------------------
PHARMAPRINT B.V.
By:
--------------------------
Title:
-----------------------
Date:
------------------------
44
SCHEDULE A
SPECIFICATIONS FOR INITIAL PRODUCTS
------------------------------------------------------------------------------
DOS\AGE/MG.
PRODUCT CONTENT ENCAPSULATION DOSING FREQUENCY
------- ----------- ------------- ----------------
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
[*] [*] [*] [*]
------------------------------------------------------------------------------
All products to conform with the Supply Agreement, providing for but not
limited to, GMP Manufacturing requirements, 24-month dating, and
PharmaPrint's manufacturing specifications.
45
SCHEDULE B
PATENT RIGHTS
46
SCHEDULE C
SPECIFICATIONS
47
SCHEDULE D
MODEL CLAIMS
A method for making a pharmaceutical grade botanical drug, selected from
the group consisting of [*], [*], [*], [*],
[*], [*] and [*], the method comprising the steps of:
providing the botanical material which has a given biological activity
indicative of use for treating or ameliorating a disorder selected from the
group consisting of [name of disorders e.g. benign prostatic hypertrophy,
etc.), said botanical material comprising a plurality of components;
separating a representative aliquot of the botanical material into a
plurality of marker fractions comprising at least one active component;
determining the degree of the given biological activity for each marker
fractions to provide a bioactivity fingerprint of at least one active
component of the representative aliquot;
determining the amount of the active components in at least one of the
marker fractions to provide a quantitative compositional fingerprint of the
representative aliquot;
determining a total bioactivity of the representative aliquot of the
botanical material; and
(1) comparing the bioactivity fingerprint of the representative aliquot
to a bioactivity fingerprint standard which has been established for at least
one active component of a pharmaceutical grade botanical drug, (2) comparing
the quantitative compositional fingerprint of the representative aliquot to a
quantitative compositional fingerprint standard which has been established
for a given pharmaceutical grade biological drug, and (3) comparing the total
bioactivity of the representative aliquot with that of a total bioactivity of
the standard to determine whether the botanical material containing at least
one active component constitutes a pharmaceutical grade botanical drug.
