AGREEMENT
THIS AGREEMENT ("Agreement"), effective as of July 2, 1997 ("Effective
Date"), is made and entered into by and between PROGENITOR, INC., a corporation
organized under the laws of the State of Delaware, having its principal offices
at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, ("Progenitor") and INTERNEURON
PHARMACEUTICALS, INC., a corporation organized under the laws of the State of
Delaware, having its principal offices at One Ledgemont Center, 00 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Interneuron").
WHEREAS, Progenitor holds certain patent and other rights including rights
under a License Agreement (the "Vanderbilt License") between Vanderbilt
University and Progenitor dated July 1995 (the "Patent Rights") relating to
human therapeutic uses (the "Field") of the protein product of the del-1 gene
(the "Product");
WHEREAS, Interneuron desires to acquire certain rights in the form of an
option to obtain a license under the Patent Rights; and
WHEREAS, Progenitor is willing to grant, and Interneuron is willing to
accept, such certain rights under terms and conditions set forth below.
NOW, THEREFORE, in consideration of the following, Progenitor and Interneuron
agree as follows:
ARTICLE 1 - OPTION GRANT
1.1 Subject to the terms and conditions of this Agreement, Progenitor hereby
grants to Interneuron an option to acquire an exclusive, worldwide,
royalty-bearing right and license under the Patent Rights to manufacture,
use and sell the Product in the Field (the "Option").
1.2 Interneuron may exercise the Option by providing written notice to
Progenitor during the Option Period declaring Interneuron's intention to
enter into a license agreement relating to the Product. The term "Option
Period" shall mean the period commencing upon the Effective Date and
continuing until the effective date of an agreement whereby Progenitor
grants a right and license under the Patent Rights to manufacture, use and
sell the Product in the Field.
1.3 In the event that Interneuron elects to exercise the Option in accordance
with Article 1.2, the parties agree to promptly commence negotiations in
good faith of a license agreement relating to the grant by Progenitor to
Interneuron of an exclusive, royalty-bearing right and license under
the Patent Rights to manufacture, use and sell the Product in the Field
(the "License Agreement").
1.4 Notwithstanding any provision in this Agreement to the contrary,
Progenitor, at any time prior to the effective date of the License
Agreement, in Progenitor's sole discretion, may initiate negotiations with
third parties for the purpose of granting a right and license to such a
third party under the Patent Rights to manufacture, use and sell the
Product in the Field. Such right and license may be exclusive. In the
event that Progenitor and a third party agree upon terms and conditions of
an agreement whereby Progenitor would grant a right and license to such a
third party under the Patent Rights to manufacture, use and sell the
Product in the Field, Progenitor, prior to entering into such agreement
with such third party, will offer such terms and conditions of agreement to
Interneuron as the terms and conditions of the License Agreement. In the
event that Interneuron does not enter into the License Agreement under the
terms and conditions offered by Progenitor within thirty (30) days after
receipt of Progenitor's written offer, Progenitor may enter into an
agreement with such third party under such terms and conditions without
further obligation to Interneuron except as set forth in Articles 2.2 and
2.3 below; provided that Progenitor enters into such agreement, on terms
not materially different than those offered to Interneuron, with such third
party within one hundred twenty (120) days after expiration of such thirty
(30) day period. If Progenitor does not enter into such agreement within
this time period, Interneuron's rights hereunder shall be reinstated and
the failure of Interneuron to enter into the License Agreement on any one
occasion shall not affect its right to do so on any subsequent occasion.
ARTICLE 2 - CONSIDERATION
2.1 In consideration of the grant of the option and other rights contained
herein, Interneuron shall pay to Progenitor one dollar ($1), receipt of
which is hereby acknowledged by Progenitor, and, in addition, shall
relinquish its right to receive Minimum Return Adjustments (as defined in
the Certificate of Designation establishing Series A Preferred Stock of
Progenitor (the "Certificate of Designation")) to the Conversion Price of
the outstanding Series A Preferred Stock held by Interneuron (the "Series A
Preferred Stock") for the period commencing on the Final Closing Date (as
defined in the Certificate of Designation ) through the quarter which ended
April 7, 1997. In the event that Interneuron exercises the option granted
pursuant to Article 1.1, Interneuron and Progenitor shall determine, in
good faith, the extent to which the value of the returns relinquished
hereunder represents prepayment by Interneuron of payments, including
royalties, otherwise due and payable to Progenitor under the License
Agreement. Interneuron and Progenitor specifically agree that such
consideration shall not be considered to be prepayment for services to be
performed by Progenitor for the benefit of Interneuron.
2.2 In the event that Progenitor enters into an agreement with a third party
whereby Progenitor grants to such third party an exclusive right and
license under the Patent Rights to manufacture, use and sell the Product in
the Field in any country, Progenitor shall pay to Interneuron:
(a) Twenty percent (20%) of any fees, milestones and other consideration
received by Progenitor from such a third party licensee, including any
amount by which consideration for equity investments in Progenitor
exceeds the market value of such equity as defined in the relevant
agreement, but not including royalties on sales of the Product; and
(b) Fifty percent (50%) of any royalties, including advance royalties,
received by Progenitor from such a third party licensee on sales of
the Product by such third party licensee in the Field; provided,
however, that the maximum amount of such payment in any calendar year
shall not exceed three percent (3%) of such third party licensee's net
sales of the Product in the Field.
Notwithstanding (a) above, payments received by Progenitor as equity
investments at market, and payments specifically allocated for research and
development activities conducted during the term of the relevant agreement
and relating to development of the Product shall not be fees, milestones or
other consideration for purposes of this Article 2.2.
2.3 In the event that Progenitor sells the Product, Progenitor shall pay to
Interneuron three percent (3%) of Progenitor's net sales of the Product in
the Field. For purposes of this Article 2.3, the term "Progenitor's net
sales" shall mean all revenues recognized in accordance with generally
accepted accounting principles from the sale or other disposition of the
Product by Progenitor and affiliates of Progenitor to a third party, less
returns and allowances (actually paid or allowed, including, but not
limited to, prompt payment and volume discounts, chargebacks from
wholesalers and other allowances granted to customers or wholesalers of the
Product, whether in cash or trade), freight, shipping, packing, freight and
shipping insurance, rebates, and sales and other taxes based on sales
prices when included in gross sales, but not including taxes when assessed
on income derived from such sales.
ARTICLE 3 - TERM AND TERMINATION
3.1 This Agreement shall become effective on the Effective Date and shall
continue in full force and effect until expiration, revocation or
invalidation of the last patent within the Patent Rights, unless terminated
earlier pursuant to this Article 3.
3.2 In the event the License Agreement is entered into by and between
Progenitor and Interneuron, this Agreement shall be replaced thereby and,
thereafter, any and all provisions of this Agreement shall cease to be
effective.
ARTICLE 4 - MISCELLANEOUS
4.1 Progenitor shall use best efforts consist with reasonable and prudent
business judgment to (i) file and prosecute all patent applications within
the Patent Rights and to maintain all patents which may issue therefrom and
(ii) comply with the due diligence provisions of the Vanderbilt license.
4.2 This Agreement shall he governed by, and construed and interpreted in
accordance with, the laws of the State of Delaware, without reference to
conflicts of laws principles.
4.3 All notices, payments and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been
received when personally delivered or when mailed through the United States
Postal Service, postage prepaid, return receipt requested, or when shipped
by private express carrier, shipment charges prepaid, to the party to whom
delivery shall be made at the respective addresses as set out above. A
party may change its address for the purpose of this Article 4.2 by written
notice to the other parties.
4.4 No modification to this Agreement, nor any waiver of any right hereunder,
shall be effective unless assented to in writing by the party to be charged
and the waiver of any breach or default shall not constitute a waiver of
any other right hereunder or any subsequent breach or default.
4.5 Progenitor and Interneuron each agree that their rights and obligations
under this Agreement may not be transferred or assigned to a third party
without the prior written consent of the other party hereto. Any purported
assignment in violation of the above shall be void. Any permitted assignee
shall agree in writing to assume all obligations of its assignor under this
Agreement. Notwithstanding the foregoing, a party to this Agreement may
transfer or assign its rights and obligations under this Agreement to a
successor to all or substantially all of the business or assets of such
party relating to this Agreement whether by sale, merger, operation of law
or otherwise; provided that such successor agrees in writing to assume the
obligations of such party under this Agreement.
4.6 In the event a term or condition of this Agreement is found by a court of
competent jurisdiction to be invalid or unenforceable, the parties hereto
shall use their best efforts to preserve the intent of this Agreement by
substituting a reasonably comparable term or condition for the benefit of
the party to whose advantage the invalid or unenforceable condition
operated or was intended to operate.
4.7 This Agreement constitutes the entire and exclusive agreement between the
parties hereto with respect to the subject matter hereof, and supersedes
and cancels all previous understandings, representations, registrations,
agreements, commitments and writings in respect thereof.
4.8 All headings of articles are for convenience of reference only, do not form
a part of this Agreement, and shall not affect in any way the meaning or
interpretation of this Agreement.
4.9 This Agreement may be executed in counterparts, each of which shall be
deemed an original, but both of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement on behalf of Progenitor and Interneuron, as applicable.
PROGENITOR, INC. INTERNEURON PHARMACEUTICALS, INC.
("Progenitor") ("Interneuron")
By: /s/ Xxxx X.X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
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Print Name: Xxxx X.X. Xxxxxxx Print Name: Xxxxxx X. Xxxx
Title: Vice President & Chief Title: Executive Vice President
Financial Officer and Chief Financial Officer
