EXHIBIT 10.10
LICENSE AGREEMENT
This License Agreement (the "Agreement") is entered into as of August 28,
2001 (the "Effective Date") among XXXXX X. XXXXXXXX, M.D., XXXXXXX X. XXXXX,
M.S. and XXXXX XXXXXXXXXX, M.D. (collectively hereafter, the "Inventors"), and
ALGORX PHARMACEUTICALS, INC., a Delaware corporation ("AlgoRx").
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. When used in this Agreement, the following terms will
have the following meanings:
1.1.1 "Affiliate" means, as to any person, another person controlled
by, under common control with, or controlling such person. For these purposes,
"control" means (a) the possession, directly or indirectly, of the power to
direct the management or policies of a person or entity, whether through the
ownership of voting securities, by contract, or otherwise, or (b) the ownership,
directly or indirectly, of at least fifty percent (50%) of the outstanding
voting securities or other ownership interest of a person or entity, or such
lesser percentage as is the maximum allowed to be owned by a foreign corporation
in a particular jurisdiction.
1.1.2 "Field of Use" means any human or non-human diagnostic,
prophylactic or therapeutic use of the Licensed Patents and Licensed Technology.
1.1.3 "Improvements" means all patentable and non-patentable
inventions, discoveries, technology and information of any type whatsoever,
including without limitation compounds, methods, processes, clinical
information, knowledge, experience and know-how which utilize, incorporate,
derive from, or are based on the Licensed Technology or which could not be
conceived, developed or reduced to practice but for the use of the Licensed
Technology.
1.1.4 "Licensed Patents" means U.S. Patent Application No. 09/041294
(U.S. Patent No. 5,962,532) together with all applications and patents, U.S. and
foreign, claiming priority or benefit directly or indirectly therefrom,
including the applications and patents set out in Exhibit 1.1.4, and any
applications or patents relating to Improvements developed by the Inventors,
including those added to Exhibit 1.1.4 pursuant to Section 2.5.
1.1.5 "Licensed Product(s)" means any product(s) developed,
manufactured or sold by AlgoRx or its sublicensees which make use of the
Licensed Technology.
1.1.6 "Licensed Services" means any services performed by AlgoRx or
its sublicensees which make use of the Licensed Technology.
1.1.7 "Licensed Technology" means all know-how, proprietary
knowledge, information and expertise possessed or developed by the Inventors or
to which the Inventors have acquired or will acquire rights, embodied in or
relating to the Licensed Patents and the use of capsaicin and its analogues for
any therapeutic indication except the topical application of capsaicin and its
analogues to the skin, and includes the Licensed Patents, any Improvements to
which any of the Inventors have rights at the Effective Date and any
Improvements developed by
AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
the Inventors, or to which any of the Inventors acquire rights during the term
of this Agreement, but does not include U.S. Patent No. 6,248,788, certain
rights to which are licensed to AlgoRx from Xx. Xxxxx Xxxxxxxxxx under a
separate License Agreement of even date herewith between Xx. Xxxxxxxxxx and
AlgoRx.
1.1.8 "Losses" means claims, losses, liabilities, damages, fines,
penalties, costs and expenses (including, without limitation, interest which may
be imposed in connection therewith), expenses of investigation, reasonable fees
and disbursements of counsel and of other experts with respect to any action,
proceeding, investigation or claim.
1.1.9 "Net Sales" means revenue from sales of any Licensed Products
or provision of any Licensed Services, net of the following deductions when
applicable and separately invoiced: cash, trade, or quantity discounts; sales,
use, or other excise taxes (but not income or franchise taxes of AlgoRx or its
sublicensees) or tariffs or import/export duties imposed upon particular sales
or services; transportation charges; and rebates, allowances or credits to
customers because of rejections, recalls or returns.
1.1.10 "Product Covered by a Valid Claim" means any Licensed Product
the manufacture, use or sale of which, but for the license granted hereunder,
would infringe any Valid Claim. For purposes of this Agreement, Products Covered
by Valid Claims will be interpreted on a country or other political
jurisdiction-by-country or other political jurisdiction basis and on a
day-by-day basis within each country or other political jurisdiction.
1.1.11 "Service Covered by a Valid Claim" means any Licensed Service
the performance of which, but for the license granted hereunder, would infringe
any Valid Claim. For purposes of this Agreement, Services Covered by Valid
Claims will be interpreted on a country or other political
jurisdiction-by-country or other political jurisdiction basis and on a
day-by-day basis within each country or other political jurisdiction.
1.1.12 "Valid Claim" means a claim of a Licensed Patent which has
not expired nor been held invalid or unenforceable by final decision of a court
or other governmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, and which is not admitted by the
Inventors to be invalid or unenforceable through reissue, disclaimer or
otherwise.
1.2 Interpretation. Unless the context otherwise requires, the following
rules of interpretation will apply:
1.2.1 Certain Words. The words "herein," "hereof," "therein,"
"thereof" and words of similar import refer to the document as a whole and not
to the particular phrase, clause, sentence, paragraph, section or division of
the document in which such word is used.
1.2.2 Singular, Plural, Etc. Words in the singular include the
plural and words in the plural include the singular, and words expressed in one
gender (whether masculine, feminine or neuter) include all other genders.
1.2.3 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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ARTICLE 2
LICENSE
2.1 Grant Of License. Subject to the license (the "JHU License") granted
by the Inventors to The Xxxxx Xxxxxxx University ("JHU") dated March 29, 1998
for non-profit purposes, a full and complete copy of which JHU License, as if
effect at the Effective Date, the Inventors have provided to AlgoRx, the
Inventors hereby grant, jointly and severally, to AlgoRx an exclusive (subject
to the last clause of this Section 2.1), worldwide and perpetual license to use,
license or otherwise exploit the Licensed Technology in the Field of Use, to
develop, have developed, make, have made, use, import and sell, have sold and
offer for sale Licensed Products and perform Licensed Services, with the right
(subject to compliance with Section 2.4) to sublicense with respect to any or
all of such recited purposes, provided that such rights as to know-how,
proprietary knowledge, information and expertise contained within the Licensed
Technology that does not relate solely to the Licensed Patents is licensed
hereunder on a nonexclusive basis.
2.2 Sublicense To The Inventors, Certain Limitations. AlgoRx hereby grants
to the Inventors, jointly and severally, a paid-up, non-exclusive license, which
will terminate when this Agreement terminates, to use the Licensed Technology in
the United States, solely for the purposes of research and development, without
the right to commercialize, and subject to the obligations of the Inventors
under this Agreement. With reference to Section 5.3, AlgoRx acknowledges that
Xx. Xxxxxxxx and Xx. Xxxxx are at the Effective Date conducting at JHU, and may
after the Effective Date in the course of their duties at JHU may conduct at
JHU, and Xx. Xxxxxxxxxx is at the Effective Date conducting, and may after the
Effective Date in the course of his duties at New York University ("NYU")
conduct, certain basic academic research with respect to the use of capsaicin
and its analogues for pain relief. Subject to Section 5.3, each Inventor will
exercise his rights under such license, and conduct such research and
development, only under and pursuant to a Scientific Advisory Board Agreement
with AlgoRx, or a Consulting Agreement with AlgoRx, or otherwise only in such a
manner that will not give rise to rights of third parties, such as universities,
institutions, or any governmental agency (except to the extent that, as to Xx.
Xxxxxxxx and Xx. Xxxxx, JHU may have any such rights pursuant to Section 5.3,
and as to Xx. Xxxxxxxxxx, NYU may have any such rights under the relevant
intellectual property policies of NYU pursuant to Section 5.3), in any
Improvements resulting from such research and development activities by such
Inventor, and specifically will use his best efforts to not make use of
resources belonging to institution, organization or entity other than JHU, in
the case of Xx. Xxxxxxxx and Xx. Xxxxx, and NYU, in the case of Xx. Xxxxxxxxxx,
in the course of such Inventor's work towards Improvements and other development
of the Licensed Technology.
2.3 General Obligations Of AlgoRx. As consideration for the license
granted to it pursuant to Section 2.1. AlgoRx will use its commercially
reasonable efforts, based on the good faith judgment of AlgoRx's Board of
Directors, exercised consistently with AlgoRx's overall business needs and goals
as determined by its Board of Directors, to develop and commercialize the
Licensed Technology.
2.4 Sublicensing. Any sublicense granted by AlgoRx under this Agreement
will provide that such sublicense will terminate automatically upon termination
of this Agreement, will be consistent with the terms of this Agreement, and will
provide the Inventors with the rights to require records and to perform audits.
In each sublicense, the Inventors will be expressly identified as an intended
third party beneficiary. AlgoRx will notify the Inventors in
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writing promptly after any sublicense is granted hereunder by AlgoRx and will
provide each Inventor with a complete copy of any such sublicense. AlgoRx will
be responsible for collection from AlgoRx's sublicensees of all royalty amounts
that are due from AlgoRx to the Inventors by AlgoRx in respect of such
sublicenses, and for remitting to the Inventors such royalty payment amounts
together with a report setting out Net Sales and royalty calculations relating
to each relevant sublicense within the same time periods as specified in Article
3. AlgoRx will use its commercially reasonable diligent efforts to collect
royalties from its sublicensees and will not be deemed to be in breach of this
Agreement for any failure of any of its non-Affiliate sublicensees to pay
royalties due from such sublicensee to AlgoRx for so long as AlgoRx is using its
commercially reasonable diligent efforts to collect such royalties and reports
on the status of such collection efforts in the reports provided pursuant to
Section 3.5.3.
2.5 General Obligations Of The Inventors. The Inventors will (a) promptly
inform AlgoRx in writing of any Improvements in the Licensed Technology by any
or all of them, whether patentable or not and (b) cooperate in periodically
revising Exhibit 1.1.4 hereto to include in the list of Licensed Patents any new
patents and/or applications prosecuted by the Inventors individually or
collectively in accordance with Section 5.8 with respect to the Licensed
Technology, such revision to occur at least once a year during the term hereof.
The Inventors will provide commercially reasonable assistance to transfer the
data and know-how necessary for AlgoRx to begin development of the Licensed
Technology. None of the Inventors will have any obligation to make, or to
attempt to make, any Improvements in the Licensed Technology, and no payments
will be made to any of them, by AlgoRx pursuant to this Agreement as
consideration for any efforts by them to make such Improvements, and all amounts
paid and all Options, as hereinafter defined, provided to them by AlgoRx
pursuant to this Agreement will be solely in consideration for the license
granted to AlgoRx pursuant to Section 2.1.
ARTICLE 3
ROYALTY PAYMENTS AND REPORTS
3.1 Payments. All amounts required to be paid by AlgoRx to the Inventors
under this Agreement are aggregate amounts to be paid to the Inventors
collectively and do not represent amounts to be paid to each Inventor
individually. The Inventors may, by written notice signed by each Inventor,
designate an agent authorized to receive payment on their behalf, or require
AlgoRx to make such other commercially reasonable payment arrangements as may be
agreeable to the Inventors and acceptable to AlgoRx, acting reasonably, as the
parties will agree in writing in order to be effective. In the absence of such
written instructions, AlgoRx will make all royalty and other payments pursuant
to this Agreement to Xx. Xxxxx X. Xxxxxxxx as agent for the Inventors, and any
payment so made to Xx. Xxxxxxxx will discharge AlgoRx's obligation to make such
payment to the Inventors. Xx. Xxxxxxxx will remit to the other Inventors such
amounts, from the amounts Xx. Xxxxxxxx receives from AlgoRx hereunder, as the
Inventors agree in writing among themselves; a copy of any such written
agreement will be delivered to AlgoRx promptly after it becomes effective, and
will be considered as Confidential Information of the relevant Inventor(s) under
Article 8 Until changed by the Inventors by such unanimous written agreement
among them, the amounts received by Xx. Xxxxxxxx from AlgoRx under this Article
3 will be divided among the Inventors one-third (1/3) to each Inventor, with Xx.
Xxxxxxxx having the authority to determine rounding down amounts to afford as
even a distribution among the Inventors as possible. If, absent written
agreement among the Inventors otherwise, at any time during the term hereof Xx.
Xxxxxxxx is unable to serve in such agent capacity for the other Inventors by
reason of his death or disability, or declines so to serve at any
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time by a written resignation from such responsibility delivered to the other
Inventors and to AlgoRx, then Xx. Xxxxxxxxxx will thereupon automatically
replace Xx. Xxxxxxxx in such role, and if Xx. Xxxxxxxxxx becomes unable to
serve, the Xx. Xxxxx will replace him in such role, and in the event of either
such replacement all references in this Section 3.1 to "Xx. Xxxxxxxx"
automatically will be deemed to refer to such relevant replacement.
3.2 Milestone Royalty Payment. The following milestone royalty payments
will be paid by AlgoRx to the Inventors:
Amount of Milestone
Milestone Royalty Payment
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Execution and delivery of this Agreement
by all parties hereto: $ 50,000.00
Grant of European patent EP 0998288A: $ 25,000.00
Grant of a Japanese patent on the Licensed
Technology: $ 25,000.00
First administration to a subject of a drug,
using Licensed Technology, in an
FDA-approved Phase I clinical trial: $ 125,000.00
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase III
clinical trial or other FDA-approved clinical trial
than can, under FDA regulations, result in FDA approval
for commercial use, application or marketing of
the first Licensed Product in the Field of Use: $ 200,000.00
FDA approval for commercial use,
application or marketing of the first Licensed
Product in the Field of Use: $ 350,000.00
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Total Milestone Royalties $ 775,000.00
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Milestone royalty payments will be paid, in accordance with Section 3.1,
within thirty (30) days after the date upon which the relevant milestone has
been achieved.
3.3 Running Royalties. In addition to the milestone royalty payments
provided for in Section 3.2, AlgoRx will pay a running royalty to the Inventors
of one and one-half percent (1.5%) of Net Sales by AlgoRx and its sublicensees
in the United States and in each other country or other political jurisdiction
in which the Licensed Products are Products Covered by a Valid Claim or the
Licensed Services are Services Covered by a Valid Claim, as to each such country
or other political jurisdiction only during such periods of time as such
Licensed Products are, within such relevant country or other political
jurisdiction, Products Covered by a Valid Claim and/or such Licensed Services
are Services Covered by a Valid Claim. Such running royalty payments will be
paid quarterly in arrears, within sixty (60) days after the end of each
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calendar quarter during the term hereof in which such Net Sales occurred. Each
such payment will be accompanied by the reports provided for in Section 3.5.3.
The obligation to pay royalties to the Inventors pursuant to this Article 3 is
imposed only once with respect to the same unit of Licensed Product or the same
Licensed Services regardless of the number of Licensed Patents pertaining
thereto, and will be payable only with respect to the final sale of the Licensed
Products or rendering of Licensed Services to the end user, and will not be
payable on intermediate transactions, such as sales by AlgoRx of Licensed
Products to its Affiliates or to distributors.
3.4 Manner Of Payment. AlgoRx will make all payments required under this
Agreement in the United States in United States dollars. Amounts due on the sale
of Licensed Products outside the United States will be converted into United
States dollars using the average rate of exchange for the applicable currency
quoted in The Wall Street Journal for the last business day of the relevant
quarter.
3.5 Reports. AlgoRx will deliver to the Inventors the following reports
during the term of this Agreement, each of which reports, and documentary
support supplied therewith as provided in Sections 3.5.2 and 3.5.3, will be
considered as Confidential Information of AlgoRx under Article 8:.
3.5.1 Semi-Annual Reports And Plan. Upon the Effective Date and
upon each December 15 and June 15 thereafter during the term of this Agreement,
AlgoRx will deliver to the Inventors a written report describing the progress of
development and commercialization efforts by AlgoRx under this Agreement during
the six (6) months preceding the date of delivery of such report, and including
therein a description, in commercially reasonable detail, of AlgoRx's general
plan for research, development, and commercialization with respect to Licensed
Products and/or Licensed Services, as relevant, and, in particular, such plans
for the six (6) month period following (i.e., for the period December 15 through
June 15, for the report delivered on December 15); after FDA approval of any
Licensed Product and/or Licensed Service for commercial use, such plan also will
review AlgoRx's plans for the marketing and commercialization of such Licensed
Product and/or Licensed Service; and
3.5.2 Milestone Royalty Payment Reports. With the payment by AlgoRx
of any milestone royalties as specified in Section 3.2, a written report, in
commercially reasonable detail, of the occurrence of such milestone event,
including therewith commercially reasonable documentary support for the
occurrence of such milestone event;
3.5.3 Running Royalty Reports. With the running royalty payments as
specified in Section 3.3, a written report setting forth, in commercially
reasonable detail, Net Sales by AlgoRx and Net Sales by sublicensees of AlgoRx,
showing in each case the royalty calculation in respect of such sublicenses, and
including therewith commercially reasonable documentary support for the
calculation of such running royalty payments for AlgoRx and such sublicensees.
3.6 Records Retention. For a period of thirty-six (36) months after the
year in which such Net Sales were received, AlgoRx and its sublicensees will
keep complete and accurate records, in sufficient detail to permit the Inventors
to confirm the accuracy of royalty calculations pursuant to this Agreement,
pertaining to the sale of Licensed Products and provision of Licensed Services
and covering all transactions during such year from which such Net Sales were
derived.
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3.7 Audit. At the request and expense of the Inventors, AlgoRx and its
sublicensees will permit an independent, certified public accountant appointed
by the Inventors and acceptable to AlgoRx in writing, at reasonable times and
upon reasonable prior written notice, to examine those records of AlgoRx and its
sublicensees as may be necessary to (a) determine the correctness of any payment
or report dealing with payments made by AlgoRx under this Agreement; or (b)
obtain information as to the royalties payable by AlgoRx for any quarter in the
case of AlgoRx's failure to report or pay royalties in accordance with this
Agreement. Such accountant will not disclose to the Inventors any information
other than information relating to the relevant quarterly reports, royalties and
payments, and will disclose such information in a format agreed upon in writing
by the parties that will ensure that no confidential information of AlgoRx is
disclosed. Results of any such examination will be available to all parties
hereto. The Inventors will bear the expense of the audit, unless such audit
discloses a variance resulting in underpayment by AlgoRx of more than five
percent (5%) of the actual amount due, and in case of such variance of more than
five percent (5%), AlgoRx will promptly pay to the Inventors, as provided in
Section 3.1, the full amount of such underpayment and will pay the expense of
the audit. If AlgoRx is determined by the relevant examination to have
underpaid, more than three (3) times within the five (5) year period commencing
with the Effective Date, more than five percent (5%) of the actual amount due,
then, as to such underpayment third occurrence and as to each underpayment
occurrence, if any, thereafter, AlgoRx will pay to the Inventors, in addition to
the amount of such underpayment and the expenses of such relevant audit, an
amount, as a penalty, equal to fifty percent (50%) of the amount of such
underpayment.
3.8 Taxes. If AlgoRx is required to withhold and remit any tax to the
revenue authorities in any state or country or other political jurisdiction,
pursuant to the laws of such state or country or other political jurisdiction,
regarding any payment to the Inventors made by AlgoRx under this Agreement, such
amount will be withheld and remitted by AlgoRx and AlgoRx will notify the
Inventors in writing thereof and will promptly furnish the Inventors with copies
of any tax certificate or other documentation evidencing such withholding. All
taxes levied on the income of any Inventor arising from this Agreement will be
borne by such Inventor. The parties will take steps, consistent with
then-current commercial practices, to (a) avoid or minimize any such
withholding, and (b) take advantage of such double taxation avoidance agreements
as may be available.
ARTICLE 4
LICENSE FEE
4.1 License Fee. As the payment by AlgoRx to the Inventors of a license
fee of Forty-Two Thousand Four Hundred Forty-Four Dollars and Forty-Three Cents
($42,444.43) for the license granted under this Agreement, AlgoRx has, on the
Effective Date, (a) issued to the Inventors certain stock options (individually
an "Option," and collectively, the "Options") as provided in Section 4.2, the
aggregate fair market value of which Options, as opposed to the fair market
value of the shares purchasable upon exercise of the Options, is agreed among
the parties hereto to be Two Hundred Sixteen Dollars and Sixty-Six Cents
($216.66), and will be so reported by the parties for federal and state income
tax purposes, and (b) reimbursed the Inventors for a total of Forty-Two Thousand
Two Hundred and Twenty-Seven Dollars and Seventy-Seven Cents ($42,227.77) in
certain expenses incurred by the Inventors through the Effective Date, as
provided in Section 4.3.
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4.2 Issuance Of Options As Part Of License Fee. Upon the Effective Date,
AlgoRx has issued the Options to the Inventors, which Options are exercisable in
the aggregate, for a total of two hundred sixteen thousand six hundred sixty-six
(216,666) shares of Common Stock of AlgoRx, (a) in the form of Exhibit 4.1-A,
for Xx. Xxxxx X. Xxxxxxxx for a total of seventy- two thousand two hundred
twenty-two (72,222) shares of Common Stock, and (b) in the form of Exhibit 4.1-B
for Xxxxxxx X. Xxxxx for a total of seventy-two thousand two hundred twenty-two
(72,222) shares of Common Stock, and (c) in the form of Exhibit 4.1-C for Xx.
Xxxxx Xxxxxxxxxx for a total of seventy-two thousand two hundred twenty-two
(72,222) shares of Common Stock.
4.3 Reimbursement Of Certain Expenses As Part Of License Fee. Upon the
Effective Date, AlgoRx also has reimbursed the Inventors by check, (a) a total,
among all of the Inventors so reimbursed, of up to Forty-Five Thousand Dollars
($45,000.00) of documented legal fees, filing fees, and costs incurred up to the
Effective Date by the Inventors, together, related to the filing, prosecution,
and maintenance of U.S. Patent No. 5,962,932 and foreign counterparts thereof,
which reimbursed total amount is comprised of such documented fees and costs,
together, incurred by the Inventors, collectively, prior to June 20, 2001 (the
"Term Sheet Date"), which was the effective date of that certain Term Sheet by
and among the parties hereto with respect to the subject matter hereof (which
Term Sheet is superseded in its entirety by this Agreement pursuant to Section
10.9 of this Agreement), and (b) a total, among all of the Inventors so
reimbursed, of up to Five Thousand Dollars ($5,000.00) for such documented fees
and costs incurred from and after the Term Sheet Date through and including the
Effective Date. Within thirty (30) days after the Effective Date, the Inventors
will provide AlgoRx with commercially reasonable documentation to permit AlgoRx
to verify the amount of fees and expenses for which the Inventors seek such
reimbursement under this Section 4.3.
ARTICLE 5
INTELLECTUAL PROPERTY
5.1 Ownership Of Improvements Developed By The Inventors. The Inventors
will own any Improvements developed by them provided that the work to develop
such Improvements was not performed pursuant to a contract requiring such work
between an individual Inventor, or the Inventors collectively, and AlgoRx, and
provided that no resources or Confidential Information of AlgoRx were used for
such work. Such Improvements are included in the Licensed Technology under this
Agreement and AlgoRx may use such Improvements under this Agreement without any
payment by AlgoRx beyond amounts it is obligated to pay under this Agreement.
5.2 Third Party Rights In Improvements. As provided in Section 2.2, but
subject to Section 2.2 with respect to certain work of the Inventors with, as
applicable, JHU or NYU, as applicable, the Inventors, individually and
collectively, will use their best efforts to (a) carry out any work towards
Improvements so as not to give rise to rights of third parties to such
Improvements, (b) not use resources or confidential information of any third
party towards such work, and (c) not grant any third parties any rights to such
Improvements. To the extent that third parties may have rights in Improvements,
either pursuant to binding agreements already in place as of the Effective Date
or under applicable law with respect to government rights, the Inventors will
notify AlgoRx in writing, in commercially reasonable detail, of the existence of
such third party rights in Improvements, and will use their reasonable best
efforts to obtain,
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either by a direct license or other grant of rights to AlgoRx by the relevant
third party or parties, or by a license or other grant of rights from the third
party or parties to AlgoRx or through the Inventors, permitting AlgoRx to use
such Improvements under this Agreement without any payment by AlgoRx beyond
amounts it is obligated to pay under this Agreement. Each Inventor severally
represents that such Inventor is not a party to, nor is such Inventor aware that
any of the other Inventors is a party to, any agreement existing as of the
Effective Date pursuant to which third parties are supporting, funding, or
contributing to any research designed to lead to any Improvements and/or
granting rights in any Improvements, except for any basic academic research
being conducted by such Inventors with respect to the use of capsaicin and its
analogues for pain relief at, as applicable, JHU or NYU.
5.3 Certain University Intellectual Property Policy. AlgoRx acknowledges
that if any of the Inventors makes use of resources belonging to JHU in the
course of work towards Improvements and other development of the Licensed
Technology, The Xxxxx Xxxxxxx University Intellectual Property Policy will apply
to such Improvements and other developments, and that the intellectual property
policies of NYU will govern the conduct by Xx. Xxxxxxxxxx of any work by him at
NYU towards Improvements and other development of the Licensed Technology. At
any time or from time to time during the term of this Agreement, in addition to
or in the stead of their current academic affiliations with JHU (for Xx. Xxxxx
and Xx. Xxxxxxxx) and NYU (for Xx. Xxxxxxxxxx), an Inventor may be affiliated as
an academic (which includes without limitation a professor, researcher or
clinician) with not more than one additional university, other academic
institution or medical facility without the consent of AlgoRx and Sections 2.2,
5.2 and this Section 5.3 dealing with the effects of academic affiliation will
apply to such additional affiliations. Any affiliations in addition to those
permitted pursuant to this paragraph and involving research with respect to the
use of capsaicin and its analogues for pain relief will be subject to AlgoRx's
consent, not to be unreasonably withheld. Sections 2.2, 5.2 and 5,3 will also
apply to such additional affiliations. Nothing in this Section 5.3 will restrict
any Inventor's affiliation with any additional university or institution so long
as such Inventor does not conduct any research with respect to the use of
capsaicin and its analogues for pain relief at such additional university or
institution.
5.4 Ownership Of Improvements Developed By AlgoRx. Any technology or
Improvements conceived or developed by AlgoRx whether on its own or by third
parties, pursuant to work carried out under contract for AlgoRx, or otherwise
involving the use of resources belonging to AlgoRx, whether facilities,
materials or AlgoRx Confidential Information, will be the property of AlgoRx.
5.5 Publications. The Inventors individually and collectively acknowledge
that publication or oral disclosure of any work carried out in connection with
the Licensed Technology, including Improvements, or of the results of such work,
prior to the date of filing for patent, copyright or other applicable statutory
protection, could result in the loss of commercial value of any such work or
results. Each Inventor will therefore provide AlgoRx with sufficient disclosure
in writing regarding any matter related to work and work results or other
intellectual property related to the Licensed Technology, including
Improvements, at least ninety (90) days prior to publication of any kind with
respect thereto by anyone other than AlgoRx, to allow AlgoRx to evaluate such
proposed disclosure as it may affect AlgoRx's interests. Each Inventor will
cooperate with AlgoRx to file patent, mask work, trademark, copyright, domain
name and/or other applications for the protection of intellectual property prior
to any such disclosure or publication, or to modify such proposed publication if
such disclosure
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regarding work, work results or intellectual property relating to the Licensed
Technology would, in AlgoRx's good faith view, as communicated to the Inventor
or Inventors in a writing signed by the President or Chief Executive Officer of
AlgoRx, materially adversely affect the business of AlgoRx.
5.6 Infringement Of Licensed Patents.
5.6.1 Notice. Each party will promptly report to the other parties
promptly in writing as to any known or suspected infringement of any of the
patent rights within the Licensed Patents, and will provide the other parties
with all information available to such notifying party with respect to such
infringement or suspected infringement.
5.6.2 Action by AlgoRx. If AlgoRx believes that any patent rights
within the Licensed Patents have been infringed by any third party, AlgoRx will
have the right at its discretion to negotiate to obtain an agreement to end such
infringement or use without authorization. If such negotiation is unsuccessful,
AlgoRx will have the right, in its commercially reasonable judgment, to
institute an infringement action or other appropriate legal action against such
third party, and, in its commercially reasonable judgment, to settle any such
action or dispute, provided that AlgoRx will not compromise or settle any such
action without the prior written consent of the Inventors, which consent (a)
will not be unreasonably or untimely withheld, and (b) may be given by Xx. Xxxxx
X. Xxxxxxxx, or Xx. Xxxxx Xxxxxxxxxx, or Xx. Xxxxxxx X. Xxxxx on behalf of, and
binding, all of the Inventors if so stated in the consent as delivered by such
relevant individual. AlgoRx will have the sole and exclusive right to select
counsel and will pay all expenses of any such action, including without
limitation attorneys' fees and court costs, provided that (1) if there is a
determination, by the court or authorized body resolving such action, of gross
negligence, misrepresentation or fraud by any or all of the Inventors, then
those Inventors found to have been negligent, or to have misrepresented or to
have engaged in fraud, will, upon the written request of AlgoRx to such relevant
Inventors and subject to clause (2) immediately following, promptly pay, or
promptly reimburse AlgoRx for, the expenses of such action as such reimbursement
or payment amount will be set forth in AlgoRx's written request therefor, and
(2) the liability of any such relevant Inventor for such expenses will not
exceed one-third (1/3) of the total amount of such expenses unless the relevant
Inventor has been determined to have committed fraud, in which case there will
be no limit as to liability for such Inventor. Any damages, royalties,
settlement fees or other consideration paid by the third party infringer as a
result of legal action or settlement negotiations in connection with such
infringement will be paid to and will be the property of AlgoRx. The amount of
such damages, royalties, settlement fees, or other consideration actually
received by AlgoRx, net of the expenses incurred by AlgoRx in such legal action,
will be treated as Net Sales pursuant to Article 3 and a royalty of one and
one-half percent (1.5%) on such net amount will be payable by AlgoRx to the
Inventors in respect of such amount, as part of the royalty provided in Article
3, provided that the value of any non-cash consideration so received by AlgoRx
will be determined in good faith by the Board of Directors of AlgoRx and all
royalty amounts thereon will, as calculated upon such determined fair market
value, be paid to the Inventors in cash and not in kind. If deemed necessary by
AlgoRx, the Inventors will bring suit against third party infringers or join as
a party to the action, at AlgoRx's option and expense. To the extent that AlgoRx
has paid for the expenses of such action, any damages, royalties, settlement
fees or other consideration paid by the third party infringer as a result of
such legal action in connection with
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such infringement will be held by the Inventors as agents for AlgoRx and will be
remitted by them to AlgoRx promptly after their receipt thereof.
5.6.3 Action By The Inventors. If AlgoRx declines to act pursuant to
Section 5.6.1, AlgoRx will, promptly after such decision not to act, give
written notice to the Inventors of such decision. If any of the Inventors
believes, after delivery of such notice by AlgoRx, that any patent rights within
the Licensed Patents have been infringed by any third party, any or all of the
Inventors may at their expense take any action they see fit with respect to such
infringement, including initiating legal proceedings. If any of the Inventors
commences any such action, such Inventor will promptly notify the other
Inventors (unless they are joined in the action) and AlgoRx, in writing in
commercially reasonable detail, of such commencement. In exercising their rights
pursuant to this Section 5.6.3, the Inventors will have the sole and exclusive
right to select counsel and will, except as provided below, pay all expenses of
the action, including without limitation attorneys' fees and costs, and will
have the right, in the relevant Inventor(s) commercially reasonable judgment, to
settle any such action or dispute, provided that none of the Inventors will
compromise or settle any such action without the prior written consent of
AlgoRx, which consent will not be unreasonably or untimely withheld. AlgoRx, in
its sole discretion, and subject to the limitations stated in the last sentence
of this Section 5.6.3, may elect in writing to the Inventors, within sixty (60)
days after the commencement of such litigation, to contribute to the costs
incurred by the Inventors in connection with such litigation. Any damage,
royalties, settlement fees or other consideration received by any of the
Inventors as a result of such litigation will be shared by the Inventors and
AlgoRx pro rata based on the parties' respective sharing of the costs of such
litigation. If deemed necessary by any or all of the Inventors, or by AlgoRx, by
written notice by the requesting party to the other parties, AlgoRx will join as
a party to the action but will be under no obligation to participate except to
the extent that such participation is required as a result of being a named
party to the action. At the written request of any or all of the Inventors
participating in such action, AlgoRx will offer reasonable assistance in
connection therewith at no charge to the Inventors provided that for purposes of
this Section 5.6.3, all out-of-pocket expenses incurred by AlgoRx in rendering
such assistance will be treated as amounts contributed by AlgoRx to the costs of
such litigation. AlgoRx will have the right to participate in and be represented
in any such action by its own counsel at its own expense.
5.7 Infringement Actions By Third Parties.
5.7.1 Notice; Defense By AlgoRx. In the event of the institution of
any action by a third party against AlgoRx or any or all of the inventors for
patent infringement involving the manufacture, use, distribution, marketing or
sale of any Licensed Product or performance of any Licensed Service, the
defendant party or parties hereto will promptly notify the other parties hereto
in writing of such action if such action includes claims with respect to the
Licensed Patents. AlgoRx will have the right to defend such action at its own
expense, and the Inventors will assist and cooperate with AlgoRx, at AlgoRx's
expense, to the extent necessary in the defense of such action. During the
pendency of such action, AlgoRx will pay any royalties for Licensed Products or
Licensed Services for which such infringement is claimed, with respect to the
country or countries or other political jurisdiction(s) in which such
infringement is claimed, into an escrow account to be implemented by AlgoRx at
such bank as the Board of Directors of AlgoRx, acting in good faith, determines,
and with the fees and cost of implementing and operating such escrow account to
be paid by AlgoRx, provided that AlgoRx will during such pendency continue to
pay royalties, as otherwise provided in this Agreement, with respect to all
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other Licensed Products or Licensed Services, and other countries or other
political jurisdictions, with respect to which, in each case, no allegation of
infringement has been made.
5.7.2 AlgoRx As Prevailing Party. If AlgoRx finally prevails because
it is held not to be infringing any patents belonging to such third party or
because such third party's patent is held invalid, AlgoRx will remit to the
Inventors the royalties kept in escrow pursuant to Section 5.7.1, to the extent
the Licensed Products or Licensed Services made the subject of the action are
determined to have been, and to be, Products or Services Covered by a Valid
Claim, and will continue to pay the royalties as set forth in Article 3,
provided that AlgoRx will be entitled to a credit against payments due under
this Agreement of an amount equal to one-half (1/2) of the commercially
reasonable costs actually incurred by AlgoRx in such action, and further
provided that in no event will such credit be more than fifty percent (50%) of
such payments due hereunder for Licensed Products or Licensed Services in such
country or other political jurisdiction which is the subject of such action. Any
such credit not deducted for a calendar quarter as a result of the immediately
preceding sentence may be carried forward and deducted by AlgoRx in subsequent
calendar quarters.
5.7.3 AlgoRx Not As Prevailing Party. If AlgoRx finally is not the
prevailing party in such action, whether by judgment, award, decree or
settlement, and is required to pay a royalty to such third party, AlgoRx will
keep the royalties kept in escrow pursuant to Section 5.7.1 as a reimbursement
of such royalties payable to a third party and, if the escrowed amount is
insufficient to reimburse AlgoRx for such royalties payable to a third party,
will continue to pay to the Inventors the royalties for such Licensed Products
or Licensed Services in such country or other political jurisdiction which is
the subject of such action, if such Licensed Products or Licensed Services are,
therein, Products or Services Covered by a Valid Claim, but AlgoRx will be
entitled to a credit against any payments due under this Agreement of an amount
equal to the royalty paid to such third party, provided that in no event will
such credit be more than fifty percent (50%) of the payment due hereunder for
Licensed Products or Licensed Services in such country or other political
jurisdiction which is the subject of such action. In addition, if AlgoRx incurs
litigation expenses or is required to pay damages to such third party, AlgoRx
will be entitled to a credit against payments due under this Agreement of the
reasonable costs actually incurred in such action plus the damages payable to
the third party, until such costs and damages are recovered in full by AlgoRx.
The credit for expenses and damages (taken with the foregoing credit for
royalties to third parties) will, together, not be more than fifty percent (50%)
of the payment due hereunder by AlgoRx for Licensed Products or Licensed
Services, in such country or countries and such other political jurisdiction(s),
which are the subject of such action for the relevant period, but such credit
for expenses and damages will be extended for successive periods until the
entire amount of such expenses and damages incurred by AlgoRx has been
recovered; no credit will be afforded hereunder to AlgoRx if AlgoRx is found by
a court or other body of competent jurisdiction to have intentionally infringed
a third party's patent, or to have been unintentional but grossly negligent in
infringing a third party's patent.
5.7.4 Defense By The Inventors. If AlgoRx declines to defend such
action by a third party against the Inventors for patent infringement involving
the manufacture, use, distribution, marketing or sale of any Licensed Product or
performance of any Licensed Services, then any or all of the Inventors may
defend such action at their own expense and such defending Inventors will be
entitled to require assistance from AlgoRx at the Inventors' expense.
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5.7.5 Consents To Settlement And Compromise. If AlgoRx defends an
action pursuant to Section 5.7.1, AlgoRx will not compromise or settle any such
action without the prior written consent of the Inventors, which will not be
unreasonably or untimely withheld, provided that such consent may be given by
Xx. Xxxxx X. Xxxxxxxx, or Xx. Xxxxx Xxxxxxxxxx, or Xx. Xxxxxxx X. Xxxxx on
behalf of, and binding, all of the Inventors if so stated in the consent as
delivered by such relevant individual. If any or all of the Inventors defends an
action pursuant to Section 5.7.4, none of the Inventors will compromise or
settle any such action without the prior written consent of AlgoRx, which will
not be unreasonably or untimely withheld.
5.8 Patent Prosecution And Maintenance. AlgoRx will take over the
prosecution and maintenance of the Licensed Patents, including filing new
applications in foreign countries corresponding to U.S. Patent 5,962,532, or
filing in the United States and foreign countries for patents relating to
Improvements made by the Inventors. AlgoRx will decide whether to file an
application for patenting, or otherwise pursue prosecution of, elements of the
Licensed Technology in a particular jurisdiction. If AlgoRx declines to pursue
patent protection for an element of the Licensed Technology in a particular
jurisdiction, (a) AlgoRx will promptly after such decision not to act, give
written notice to the Inventors of such decision, and (b) after delivery of such
notice, any or all of the Inventors may at their expense take any action they
see fit with respect to such filing or other prosecution. Any applications for
patents (or patents resulting from such applications) so prosecuted by the
Inventors will be included in the Licensed Technology, and the Inventors will
comply with the obligations set out in Section 2.5 with respect to such
applications and patents. If the Inventors choose to seek such protection,
AlgoRx hereby grants the relevant Inventors the right, subject to the provisions
of Article 8, to use information relating to the Licensed Technology solely for
the purposes of filing and prosecuting such application. If the Inventors
decline to pursue patent protection for an element of the Licensed Technology
for which AlgoRx has also declined to pursue patent protection, (a) the
Inventors will, promptly after such decision not to act, give written notice to
AlgoRx of such decision, and (b) after delivery of such notice, AlgoRx will have
a period of ninety (90) days to file an application for patenting, or otherwise
pursue protection of, such elements of the Licensed Technology.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations Of The Inventors. Each Inventor severally, but not
jointly, warrants to AlgoRx and to each other Inventor that: (a) such
representing Inventor is one of the sole inventors, and to such representing
Inventor's knowledge the Inventors collectively are the sole inventors, who
contributed to the invention and development of the Licensed Technology as of
the Effective Date (the "Present Technology"), and (b) such representing
Inventor is one of the lawful owners, and to such representing Inventor's
knowledge the Inventors collectively are the sole lawful owners, of the patents,
patent applications and related technology comprised in the Present Technology,
and (c) such representing Inventor has listed, and to such representing
Inventor's knowledge the Inventors collectively have listed, in Exhibit 1.1.4
hereto, all patents and applications related to the Licensed Technology and in
which any or all of the Inventors have an inventorship or ownership interest,
and to the extent any patents or patent applications related to the Licensed
Technology exist but are not listed in Exhibit 1.1.4, such patents or patent
applications are acknowledged by the Inventors severally as to themselves, and
to their knowledge as to each other Inventor, to be included in the Licensed
Technology, with the sole exception of U.S. Patent 6,248,788, and (d) no third
party has been granted by such representing
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Inventor, nor to such representing Inventor's knowledge by any of the other the
Inventors, nor does any third party otherwise have, to such representing
Inventor's knowledge, any rights to such Licensed Technology, other than
pursuant to the JHU License, and (e) such representing Inventor has, and to such
representing Inventor's knowledge the other Inventors have, the lawful right to
grant the license and rights granted to AlgoRx pursuant to this Agreement, and
(f) to the knowledge of such representing Inventor (but without any
investigation, study, or inquiry), (i) no infringement of the Licensed Patent by
third parties has occurred as of the Effective Date, and (ii) the Licensed
Technology does not infringe the rights of any third parties, and (f) subsequent
to the November 14, 1997 and May 28, 1998 invention waivers from JHU, such
representing Inventor has not, and to such representing Inventor's knowledge
none of the other Inventors has, conducted any work at JHU or used JHU resources
in further research and development of the invention mentioned in such waiver
and such representing Inventor has not, and to such representing Inventor's
knowledge none of the other Inventors has, at JHU, reduced such invention to
practice, which includes using such invention for any patients of JHU or its
teaching hospitals, and (g) this Agreement is a valid and binding obligation of
such Inventor, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and (h)
neither AlgoRx nor AlgoRx's attorneys or other advisors or representatives of
AlgoRx have made any representations or warranties to such Inventor, nor to such
Inventor's knowledge to any of the other Inventors, with respect to the income
tax or other tax consequences of any of the transactions contemplated by this
Agreement, including without limitation with respect to the Option issued to
such Inventor or to any of the other Inventors, and such Inventor is in no
manner relying on AlgoRx or AlgoRx's attorneys or other advisors or
representatives of AlgoRx with respect to any such tax consequences or for any
other advice with respect to any such matters, or as to any other matters with
respect to this Agreement.
6.2 Representations Of AlgoRx. AlgoRx represents and warrants to the
Inventors severally that (a) AlgoRx has the power and authority to execute,
deliver and perform this Agreement, (b) this Agreement is a valid and binding
obligation of AlgoRx, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally, and (c)
it intends and plans to actively devote commercially reasonable resources to
development and commercialization of the Licensed Technology.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification By The Inventors. The Inventors will defend, indemnify
and hold harmless AlgoRx and AlgoRx's sublicensees and their respective
officers, Directors, employees, agents and representatives and any person
claiming by or through any of them from and against any and all Losses arising
out of or resulting from (a) any breach of any of the material representations
or warranties made by Inventors in this Agreement, and (b) any failure by
Inventors to perform any of their material obligations contained in this
Agreement. The Inventors will be severally, not jointly, liable with respect to
their indemnification obligations under this Section 7.1.
7.2 Indemnification By AlgoRx. AlgoRx will defend, indemnify and hold
harmless each Inventor, severally, from and against any and all Losses arising
out of or resulting from (a) any breach of any of the material representations
or warranties made by AlgoRx in this
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Agreement, (b) any failure by AlgoRx to perform any of its material obligations
contained in this Agreement, and (c) any claim arising out of or in connection
with the manufacture, commercialization, marketing, sale, or use of any Licensed
Product that is manufactured by AlgoRx or the performance of any Licensed
Service performed by AlgoRx, provided that the amount of any such
indemnification will be decreased by any amounts disbursed by AlgoRx pursuant to
Section 5.7 because the Licensed Technology is held to infringe any third party
rights, and not otherwise recouped by AlgoRx by a decrease in royalty payments
hereunder as provided herein.
ARTICLE 8
CONFIDENTIALITY
8.1 Confidential Information. It is contemplated that in the course of the
performance of this Agreement each party will, from time to time, disclose
proprietary and confidential information to the other. For purposes of this
Agreement, "Confidential Information" means all confidential and proprietary
information of one party hereto disclosed by such party to the other party
during the term of this Agreement, including information contained in all
tangible materials, such as but not limited to samples of chemical substances
and drugs, instruments, and Other materials remitted to a party, and which the
disclosing party identifies as confidential to the receiving party in writing
("writing" to include, for purposes of this Agreement, electronic communication
such as email, and to include without limitation a stamping or legend denoting
the confidential and/or proprietary nature of such information placed on the
first page and/or on subsequent pages of printed or electronic forms of such
information) either before, or at the time of, such disclosure, if such
disclosure is initially in written form, or, if initially orally disclosed, then
as so identified in writing by the disclosing party to the receiving party
within thirty (30) days after such initial oral disclosure.
8.2 Confidentiality Exceptions. Except to the extent expressly authorized
by this Agreement or otherwise agreed in writing by the parties, the receiving
party will keep confidential, and will take such reasonable measures to maintain
such Confidential Information of the disclosing party as confidential as it
takes to protect its own proprietary Confidential Information, and will not
publish or otherwise disclose and will not use for any purpose any Confidential
Information furnished to it by the other party pursuant to this Agreement,
except to the extent that it can be established by the receiving party by
competent proof that such Confidential Information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of the
public domain, other than through any act or omission of the receiving party in
breach of this Agreement, at the time of its disclosure to the receiving party;
(c) after its disclosure to the receiving party became generally
available to the public or otherwise part of the public domain other than
through any act or omission of the receiving party in breach of this Agreement;
(d) was disclosed to the receiving party by a third party who had no
obligation to the disclosing party not to disclose such Confidential Information
to others; or
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(e) was independently developed by the receiving party by persons
who did not have access to the Confidential Information, and other than through
any act or omission of the receiving party in breach of this Agreement.
8.3 Permitted Uses. Each party may disclose the other's Confidential
Information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation or
complying with applicable governmental regulations, provided that if a party is
required to make any such disclosure of the other party's Confidential
Information it will give reasonable advance written notice to the other party of
such disclosure requirement, describing such requirement in commercially
reasonable detail, and, except to the extent commercially inappropriate in the
case of pending patent applications, will use its best efforts to secure
confidential treatment of such Confidential Information so required to be
disclosed. AlgoRx may disclose any Confidential Information of the Inventors to
any sublicensee of AlgoRx so long as such disclosure is limited to Confidential
Information the sublicensee needs to know, in the commercially reasonable and
good faith judgment of AlgoRx, in order for such sublicensee to fulfill its
obligations under its sublicense from AlgoRx and provided that such sublicensee
is required in writing by AlgoRx to preserve the confidentiality of such
Confidential Information under obligations at least as stringent as those
imposed upon AlgoRx under this Agreement.
ARTICLE 9
TERM AND TERMINATION
9.1 Term. Unless terminated in accordance with other provisions of this
Article 9, or as provided in clause (a) below of this Section 9.1, the license
granted pursuant to this Agreement by the Inventors to AlgoRx under Section 2.1,
and the sublicense granted by AlgoRx to the Inventors under Section 2.4, are
perpetual, provided that (a) with respect to individual Licensed Patents only,
such licenses will terminate on the date of expiration or invalidation of such
Licensed Patent, and (b) such licenses will remain in full force and effect for
all elements of the Licensed Technology which are not expired or invalidated
Licensed Patents.
9.2 Termination By AlgoRx. AlgoRx can terminate this Agreement:
(a) upon at least thirty (30) days prior written notice to the
Inventors, which notice will be effective no earlier than the first anniversary
of the Effective Date;
(b) upon at least thirty (30) days prior written notice to the
Inventors, if during the term of this Agreement (i) the relevant applicable
policies of the university or other institution with which the relevant Inventor
is affiliated, whether as an employee or consultant or otherwise at the relevant
time changes, or (ii) applicable law changes, in either case in the good faith
judgment of AlgoRx after consultation with its outside legal counsel, such that
AlgoRx no longer has the same access and rights to Improvements and/or to the
Licensed Technology hereunder as was in effect at the Effective Date, and in
either case if the Inventors are unable by law or, if lawful, by exercise of
their commercially reasonable diligent efforts, to secure the right for AlgoRx
to use and sublicense such Improvements and/or the Licensed Technology, as
relevant, in accordance with this Agreement;
(c) upon at least ten (10) days prior written notice to the
Inventors if the any or all of the Inventors fail to fulfill any material
obligation of the Inventors hereunder, other than
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the Inventors' obligation to procure for AlgoRx the right to use Improvements or
the Licensed Technology, and if such relevant failure is not cured within ninety
(90) days after receipt by Inventors of a written notice of such failure.
9.3 Termination By The Inventors. The Inventors can terminate this
Agreement:
(a) upon at least ten (10) days prior written notice to AlgoRx, if
AlgoRx fails to make a payment or provide a report it is required to provide
pursuant to Article 3, if such failure is not cured within one hundred and
eighty (180) days after receipt by AlgoRx from any of the Inventors of a written
notice of such failure;
(b) upon at least ten (10) days prior written notice to AlgoRx, if
AlgoRx fails to fulfill any material obligation of AlgoRx other than the payment
and report obligations contained in Article 3, if such failure is not cured
within one hundred and eighty (180) days after receipt by AlgoRx from any of the
Inventors of a written notice of such failure.
9.4 Effects Of Termination. Upon any termination of this Agreement:
(a) AlgoRx will cease to have any rights to use the Licensed
Technology pursuant to this Agreement, and will cease to grant any sublicenses
pursuant to this Agreement;
(b) AlgoRx will be allowed a grace period of one hundred and eighty
(180) days after the effective date of termination to dispose of any existing
inventory of Licensed Products already manufactured and to continue to perform
any Licensed Services already contracted for, unless the relevant performance
cannot, by commercially reasonable diligence, be completed within such one
hundred and eighty (180) day grace period, in which case AlgoRx will use its
commercially reasonable diligent efforts to terminate the agreement(s) relating
to such Licensed Services. At the end of such one hundred and eighty (180) day
grace period, all remaining Licensed Products not disposed of by AlgoRx will
either be destroyed by AlgoRx, or purchased by the Inventors, at the Inventors'
election as communicated in writing to AlgoRx at least forty-five (45) days
prior to the end of such grace period, with only one decision as to destruction
or purchase being made by all of the Inventors, together. AlgoRx will have a
further thirty (30) days after the end of such grace period to prepare the final
report and pay the royalties applicable to Net Sales during such one hundred and
eighty (180) day grace period;
(c) AlgoRx will remit to the Inventors all documentation and
materials relating to prosecution and maintenance of Licensed Patents, as well
as all Confidential Information relating to the Licensed Technology, in each
case that is in possession of AlgoRx.
9.5 Surviving Obligations. The parties' obligations pursuant to Articles
3, 4, 5, 6, 7, 8, 9 and 10 will survive termination of this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 Relationship Of The Parties. Nothing in this Agreement is intended to
create, or creates, a partnership, trust, joint venture or employment
relationship between the parties. The relationship of the parties hereunder is
that of licensors and licensee, and no party hereto has any authority to bind
any other party hereto with respect to the subject matter of this Agreement.
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10.2 Assignment, Successors And Assigns. The Inventors may not assign the
Licensed Technology or this Agreement, in whole or in part, without the prior
written consent of AlgoRx, which consent will not be unreasonably withheld or
delayed, provided that the Inventors may individually or collectively assign any
or all of their rights and obligations under this Agreement to an entity
controlled by the assigning Inventors, provided further that each such assigning
Inventors will after such assignment remain fully liable and responsible for
such Inventor's representations and warranties hereunder, as well as for the
performance and observance of all of such Inventor's duties and obligations
hereunder. AlgoRx may assign this Agreement in whole or in part, upon at least
thirty (30) days' prior written notice to the Inventors of such assignment, to
any entity which the Board of Directors of AlgoRx believes, in good faith and
after commercially reasonable inquiry, has the resources and interest to develop
and commercialize the Licensed Technology. This Agreement will inure to the
benefit of and be binding upon the parties' respective successors and assigns,
and each Inventor's heirs, executors and administrators.
10.3 Notices. Any report, payment, notice, or other communication required
or permitted under this Agreement will be in writing, will be delivered
personally, including delivery by courier such as FedEx or DHL, or by certified
mail, return receipt requested, postage prepaid, or by facsimile, or by
electronic mail ("email") and will be deemed given and received upon actual
delivery or, if mailed by certified mail, three (3) days after deposit in the
mail, or upon transmission by facsimile with confirmed answerback or upon
transmission by email upon confirmed delivery to the intended recipient,
addressed as follows; any notice to be given to the Inventors will be given to
all of the Inventors at the same time, and any notice to be given to AlgoRx will
be signed by each of the Inventors, in counterparts if they wish, unless
otherwise specifically provided herein:
If to AlgoRx, to:
AlgoRx Pharmaceuticals, Inc.
Attn: Chief Executive Officer
00X Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Facsimile: 000-000-0000
Email: xxxxxxx@xxxxxx.xxx
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
Attn: Xxxxx X. Xxxxxx
000 Xxxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Email: xxxxxxx@xxxx.xxx
If to the Inventors, to:
Xxxxx X. Xxxxxxxx, M.D.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Email: xxxxxxxxx@xxxx.xxx
- 18 -
AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
Xxxxxxx X. Xxxxx, M.S.
00000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Email: xxxxxx@xxxx.xxx
Xxxxx Xxxxxxxxxx, M.D.
000 Xxxx 00xx Xxxxxx, Xxx. X00X
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Email: xxxxx.xxxxxxxxxx@xxx.xxx.xxx
with a copy to:
Xxxxxxx Xxxx & Guinot
Attn: Xxxxxxx X. Xxxxxxx
00 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: 410-539-7611
Email: xxx@xxxxxxxxxxx.xxx
Each party will notify all other parties hereto of changes of address of
the notifying party in the manner provided for in this Section 10.3.
Notwithstanding anything in the foregoing to the contrary, notices of default,
notices of termination, demands for payment, and demands for defense and/or
indemnification will not be considered to have been delivered hereunder if sent
only by electronic mail.
10.4 Amendments And Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Inventors and AlgoRx.
10.5 Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement to the extent so held unenforceable, and the balance of such
provision, and the balance of this Agreement, will be interpreted as if such
provision or portion thereof were so excluded, and will be enforceable in
accordance with its terms.
10.6 Force Majeure. No party will be deemed to be in default of this
Agreement to the extent the performance of such party's obligations or attempts
to cure any breach are delayed or prevented by reason of any act of God, war,
fire, natural disaster, accident, act of government, or any other cause beyond
the reasonable control of such party, if the party affected gives prompt written
notice of any such event to the other party or parties. In the event of a force
majeure event, the time for performance or cure will be extended for the period
equal to the duration of such force majeure event but not in excess of six (6)
months.
10.7 Dispute Resolution; Governing Law. The parties will attempt amicable
resolution among or between themselves of any dispute arising under this
Agreement before any judicial action is taken. The party or parties who wish to
submit a dispute for amicable resolution will send to the other parties to this
Agreement a written notice containing the particulars of such
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AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
dispute and state in such notice such party's or parties' request for such
amicable resolution. The Chief Executive Officer of AlgoRx, on behalf of AlgoRx,
and Xx. Xxxxx X. Xxxxxxxx as the representative authorized and appointed under
this Agreement by the other Inventors hereby to act on their behalf as well as
his own behalf (or, in the event of Xx. Xxxxxxxx'x death or incapacity to act,
then Xxxxxxx X. Xxxxx, and in the event of Xx. Xxxxx'x death or incapacity, then
Xx. Xxxxx Xxxxxxxxxx, in such capacity), will then have ninety (90) days after
the date of receipt by the recipient of the notice of such dispute, to negotiate
in good faith to attempt to resolve such dispute. If, after such ninety (90) day
period, such dispute is not resolved to the satisfaction of the parties, acting
in good faith, any or all of the parties to this Agreement may seek judicial
resolution of such dispute. This Agreement will be governed by the laws of the
State of New York, without reference to its conflict of laws provisions.
10.8 Counterparts. This Agreement may be executed in counterparts, each of
which will be an original, but all of which together will constitute one and the
same instrument.
10.9 Entire Agreement; References. This Agreement, including each Exhibit
attached hereto, each of which Exhibits is incorporated herein by reference, is
the entire agreement of the parties with respect to the specific subject matter
hereof, and supercedes in their entirety any previous agreements, discussions or
understandings, whether written or oral, with respect to the specific subject
matter hereof, between or among them. References herein to "Sections" are to
Sections hereof and to "Articles" are to Article hereof, and to "Exhibits" are
to Exhibits attached hereto, each of which Exhibits is incorporated herein by
reference, in each case unless specifically stated otherwise herein.
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AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
10.10 Assistance. The parties will provide to each other all commercially
reasonable information and assistance required by the relevant requesting party
or by such party's authorized attorneys, agents or representatives, in
connection with the requesting party's exercise of such party's rights and
discharge of such party's obligations under this Agreement, including the
prosecution and maintenance of the Licensed Patents, the prosecution of third
party infringers of the Licensed Patents and the defense of any actions for
infringement of third party rights which involve Licensed Patent claims.
ALGORX PHARMACEUTICALS, INC. INVENTORS:
/s/ Xxxxx X. Xxxxxxxx
-------------------------------
By: /s/ Xxxxxx Xxxx XXXXX X. XXXXXXXX, M.D.
------------------------------ Date signed: August___, 2001
Name:_____________________________
Title:____________________________ /s/ Xxxxxxx X. Xxxxx
Date signed: August 28, 2001 ------------------------------
XXXXXXX X. XXXXX, M.S.
Date signed: August___, 2001
/s/ Xxxxx Xxxxxxxxxx
------------------------------
XXXXX XXXXXXXXXX, M.D.
Date signed: August___, 2001
[SIGNATURE PAGE FOR ALGORX CAPSAICIN LICENSE - CAMPBELL, MEYER, PAPPAGALLO]
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AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
EXHIBIT 1.1.4
LICENSED PATENTS
COUNTRY OR OTHER
POLITICAL
JURISDICTION NUMBER STATUS DATE
---------------- ---------- ------------------------- --------------------
USA 5,962,532 Issued - 4th year Oct. 5, 1999
maintenance fee due
Apr. 5, 2003
Australia 720859 Issued - Next renewal due Sept. 28, 2000
Mar. 12, 2003
Europe 98911614.0 Pending - awaiting 2nd Filing date - Mar. 12, 1998
office action Nat'l phase entered Oct.
13, 0000
Xxxxx 10-539822 Pending - Request for Filing date - Mar. 12, 1998
examination due no Nat'l phase entered Sept.
later than Mar. 8, 2005 9, 1999
Hong Kong 00107078.0 Pending - awaiting grant Filing date - Oct. 30, 2000
of European patent
Canada 2,285,203 Pending - awaiting 1st Filing date - Mar. 12, 1998
office action Nat'l phase entered Sept.
9, 1999
- 22 -
AlgoRx Pharmaceuticals, Inc. - Capsaicin license - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
EXHIBIT 4.1-C
OPTION FOR XXXXX XXXXXXXXXX, M.D.
- 25 -
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. DELAWARE TIME ON AUGUST 28, 2011
OPTION TO PURCHASE SHARES OF COMMON STOCK
OF
ALGORX PHARMACEUTICALS, INC.
DATE OF ISSUANCE: August 28, 2001
THIS CERTIFIES THAT XX. XXXXX XXXXXXXXXX, as the original holder hereof,
and any person to whom the interest in this stock option (the "Option") is
lawfully transferred as provided herein (the original holder hereof and such
permitted transferees referred to hereinafter as the "Holder"), is entitled to
purchase up to the number of shares set forth in Section 2(a) hereof, in
accordance with the exercisability schedule set out in Section 2(c) hereof, as
such number may be adjusted pursuant to Section 3 hereof, of fully paid and
nonassessable shares (the "Shares") of the Common Stock (the "Common Stock") of
ALGORX PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), having an
Exercise Price and an Aggregate Exercise Price determined as set forth in
Section 2(b) hereof (as such Exercise Price may be adjusted pursuant to Section
3 hereof), and subject to the terms and conditions set forth herein.
1.Issuance Of This Option As Part Of License Fee. This Option is issued in
payment to the original Holder hereof as a portion of the license fee paid by
the Company to the original Holder hereof on the date of issuance of this Option
under, and as specified in, that certain License Agreement dated as of the date
of issuance of this Option by and among the Company, the original Holder hereof,
and the other licensors thereunder (the "License Agreement"). This Option is not
a nonqualified stock option, or any other type of employee stock option, and it
is not issued and will not become exercisable, in whole or in part, in
connection with or by reason of the performance of any services by the Holder.
The original Holder and the Company hereby agree, by their mutual signatures on
this Option, that this Option has a fair market value itself, as of the date of
issuance of this Option, and as opposed to the purchase price for, or the fair
market value of, Shares purchasable upon exercise of this Option, of Seventy-Two
Dollars and Twenty-Two Cents ($72.22).
2. Exercise of Option.
(a) Number Of Shares. Subject to adjustment pursuant to Section 3
hereof, this Option will entitle the Holder to purchase up to seventy-two
thousand two hundred twenty two (72,222) shares of the Common Stock of the
Company in accordance with the exercisability schedule set out in Section 2(c)
hereof.
AlgoRx Capsaicin License Fee Stock Option
(b) Exercise Price; Aggregate Exercise Price. The exercise price at
which this Option may be exercised (the "Exercise Price") will be One Dollar
($1.00) per share, as such Exercise Price may be adjusted from time to time
pursuant to Section 3 hereof. The parties hereto acknowledge and agree that such
One Dollar ($1.00) per share Exercise Price is substantially above the current
fair market value of the Company's Common Stock and is an Exercise Price
negotiated by the parties for purposes of this Option. The "Aggregate Exercise
Price" of this Option upon exercise will be the amount resulting from
multiplying the Exercise Price times the number of Shares purchased upon
exercise hereof.
(c) Exercisability Schedule.
(i) General Exercisability Schedule. Subject to the provisions
of Section 2(c)(ii) and Section 5 hereof, this Option will become exercisable as
follows, upon the achievement by the Company of the following milestones (each,
a "Milestone"): to the extent that a given Milestone is not achieved by the
tenth (10th) anniversary of the date of issuance of this Option (i.e., by August
28,2011), and provided that exercisability of this Option has not been
accelerated pursuant to Section 2(c)(ii) hereof, then at such tenth (10th)
anniversary this Option will expire and will no longer be exercisable as to such
number of Shares related to such given Milestone:
Number of Shares For Which This
Milestone Option Is Exercisable
--------- ---------------------
Execution and delivery of this Agreement
by all parties hereto: 10,000 shares
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase I
clinical trial: 20,740 shares
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase III
clinical trial or other FDA-approved clinical trial than
can, under FDA regulations, result in FDA approval for
commercial use, application or marketing of the first
Licensed Product in the Field of Use: 20,740 shares
FDA approval for commercial use, application or
marketing of the first Licensed Product in the Field of
Use, where "Field of Use" has the meaning assigned to
it in Section 1.1.2 of the License Agreement: 20,742 shares
-------------
Total number of shares: 72,222 shares
=============
(ii) Acceleration of Exercisability Upon Certain Events. Upon
the happening of any of the following events, this Option will, to the extent
not then exercisable, become immediately exercisable:
(A) The effective date of an assignment or transfer of
the License Agreement by the Company to a person or entity which is not an
affiliate of the Company (with "affiliate" defined for purposes of this Section
2(c)(ii)(A) to mean means, as to any person, another person controlled by, under
common control with, or controlling such person.; for these purposes, "control"
means (1) the possession, directly or indirectly, of the power to direct the
management or
- 2 -
AlgoRx Capsaicin License Fee Stock Option
policies of a person or entity, whether through the ownership of voting
securities, by contract, or otherwise, or (2) the ownership, directly or
indirectly, of at least fifty percent (50%) of the outstanding voting securities
or other ownership interest of a person or entity, or such lesser percentage as
is the maximum allowed to be owned by a foreign corporation in a particular
jurisdiction.; or
(B) The effective date of a change of control of the
Company. For the purposes of this Section 2(c)(ii)(B), "change of control" means
either of the following events:
(1) A merger or consolidation in which the Company
is not the surviving entity (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction and other than any other transaction in which there is no material
change in the identity of the shareholders of the Company or their relative
shareholdings in the Company and in each such case such options are assumed,
converted, or replaced by the successor or acquiring corporation); or
(2) A merger in which the Company is the surviving
entity but after which the shareholders of the Company immediately prior to such
merger (excluding any entity shareholder of the Company which merges with the
Company in such merger, or which owns or controls another corporation or other
entity which merges with the Company in such merger) do not own, immediately
after such merger, voting control of the surviving entity.
(d) Exercise Period.
(i) General Exercise Period. Subject to the provisions of
Section 2(d)(ii) and Section 5 hereof, the Holder will have until 5:00 p.m.
Delaware time on August 28, 2011 to exercise this Option to the extent it has by
its terms then become exercisable. This Option will expire, to the extent
unexercised., at such time and on such date.
(ii) Accelerated Exercise Period. If this Option is
accelerated pursuant to Section 2(c)(ii) hereof, the Holder will have ninety
(90) days after the date of such acceleration to exercise this Option, and this
Option will expire, to the extent unexercised, at the end of such 90-day period.
(e) Method of Exercise; Payment. The purchase right represented by
this Option may be exercised by the Holder, in whole or in part, for up to the
total number of shares remaining available to exercise by the surrender of this
Option (with the Notice of Exercise in the form attached hereto as Annex I (the
"Exercise Notice"), incorporated herein by reference, duly executed, at the
principal office of the Company and by the payment to the Company of an amount
in each case equal to the then applicable Exercise Price per share multiplied by
the number of Shares then being purchased, by: (i) check made payable to the
Company drawn on a United States bank and for United States funds, and/or (ii)
delivery to the Company of evidence of cancellation of indebtedness of the
Company to such Holder, and/or (iii) any combination thereof; provided that the
par value per share of Shares purchased by exercise of this Option must be paid
in cash to the extent then required by applicable law.
(f) Net Issue Election. In lieu of exercising this Option pursuant
to Section (e) hereof, the Holder may elect to receive, without the payment by
the Holder of any additional consideration, shares equal to the value of this
Option or any portion hereof by the surrender of this Option or such portion
hereof to the Company (the "Net Exercise") at the principal office of the
Company together with a completed Exercise Notice with the net exercise election
therein properly initiated, provided that the par value per share of Shares
purchased by exercise of this Option pursuant
- 3 -
AlgoRx Capsaicin License Fee Stock Option
to this Section 2(f) must be paid in cash to the extent then required by
applicable law. Thereupon, the Company will issue to the Holder such number of
fully paid and nonassessable shares of Common Stock of the Company as is
computed using the following formula:
X = Y (D-E)
-------
D
where:
X = The number of Shares to be issued to the Holder pursuant to this
Section 2(f).
Y = The number of Shares covered by this Option in respect of which
the Net Exercise election is made pursuant to this Section 2(f).
D = The fair market value of one share of Common Stock, as determined in
good faith by the Board of Directors of the Company (the "Board"),
as of the date the net issue election is made pursuant to this
Section 2(f).
E = The Exercise Price in effect under this Option at the time the Net
Exercise election is made pursuant to this Section 2(f).
The Board will promptly respond in writing to an inquiry by the Holder as
to the fair market value of one share of Common Stock. To the extent legally
required, the Holder will pay in cash the par value of any shares purchased by
such Net Exercise.
(g) Issuance Of New Option. In the event of any exercise of the
purchase right represented by this Option, certificates for the Shares so
purchased will be delivered to the Holder within ten (10) days after receipt of
such payment and, unless this Option has been fully exercised or has expired, a
new Option representing the portion of the Shares, if any, with respect to which
this Option will not then have been exercised will also be issued to the Holder
within such ten (10) day period.
3. Adjustments To Option. The number and kind of securities purchasable
upon the exercise of this Option, and the Exercise Price, will be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Reorganization, Consolidation Or Merger. In
case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of the Company with or into another corporation (other
than a merger or reorganization with respect to which the Company is the
continuing corporation and which does not result in any reclassification of the
Common Stock), the Company, or such successor corporation, as the case may be,
will execute and deliver to Holder a new warrant in substitution for this Option
which will provide that the Holder will have the right to exercise such new
warrant and upon such exercise to receive, in lieu of each share of Common Stock
previously issuable upon exercise of this Option, the number and kind of
securities, money and property receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of Common Stock of
the Company, for each share of Common Stock otherwise issuable hereunder. Such
new Option will provide for adjustments which will be as nearly equivalent as
practicable to the adjustments provided for in this Section 3 including, without
limitation, adjustments to the Exercise Price and to the number of shares
issuable upon exercise of this Option. The provisions of this Section 3(a) will
similarly apply to successive reclassifications, reorganizations, consolidations
or mergers.
- 4 -
AlgoRx Capsaicin License Fee Stock Option
(b) Split, Subdivision Or Combination Of Shares. If the Company at
any time while this Option remains outstanding and unexpired splits, subdivides
or combines the Common Stock, the Exercise Price will be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination. Any adjustment under this Section 3(b) will become
effective when the split, subdivision or combination becomes effective.
(c) Stock Dividends. If the Company at any time while this Option
remains outstanding and unexpired pays a dividend with respect to the Company's
Common Stock, payable in shares of its Common Stock, securities convertible into
or exchangeable for its Common Stock, as applicable ("Convertible Securities"),
or options to purchase its Common Stock or Convertible Securities, as applicable
("Options"), the Exercise Price will be adjusted from and after the date of
determination of the stockholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which will be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which will be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including shares of
Common Stock issuable upon exercise, conversion or exchange of any Options or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distributions by their
terms provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Company, or any increase in the number of shares
issuable upon exercise, conversion or exchange thereof (by change of rate or
otherwise), the Exercise Price will, upon any such decrease or increase becoming
effective, be reduced or increased to reflect such decrease or increase as if
such decrease or increase became effective immediately prior to the issuance of
the Options or Convertible Securities as the dividend or distribution. Any
adjustment under this Section 3(c) will become effective on the record date or,
if there is no record date, on the date of issuance.
(d) Adjustment Of Number Of Shares. Upon each adjustment of the
Exercise Price pursuant to this Section 3, the number of shares issuable upon
exercise of this Option will be adjusted to the number obtained by dividing the
then outstanding Aggregate Exercise Price by the Exercise Price immediately
after such adjustment.
4. Compliance With Securities Law; Transferability Of Option.
(a) Legends. Any certificate for shares issued upon exercise hereof
will be imprinted with a legend in substantially the form set forth in the
Exercise Notice.
(b) Transferability Of Option. This Option may not be transferred or
assigned in whole or in part in any manner unless (i) approved in writing by the
Company prior to such proposed transfer being effected (which approval will not
be unreasonably withheld) or (ii) upon death or by laws of descent or by bequest
through a will or trust instrument. Subject to the provisions of this Section
4(b), title to this Option may be transferred in the same manner as a negotiable
instrument transferable by endorsement and delivery, by execution and delivery
of a completed Assignment Form attached hereto as Annex II, incorporated herein
by reference.
5. Termination Of License Agreement. Upon termination of License Agreement
by the Company, this Option will survive such termination, but will thereafter
be exercisable only with respect to and for that portion of this Option which is
exercisable at the date of such termination of the License Agreement by the
Company, and will not thereafter be exercisable for any portion hereof which is
not then so exercisable.
- 5 -
AlgoRx Capsaicin License Fee Stock Option
6. Miscellaneous. No fractional shares will be issued in connection with
any exercise hereunder, but in lieu of such fractional shares the Company will
make a cash payment therefor upon the basis of the Exercise Price then in
effect. The terms and provisions of this Option will inure to the benefit of,
and be binding upon, the Company and the Holder and their respective successors
and assigns, and the heirs, administrators and executors of the Holder, if at
the relevant time such Holder is an individual. This Option will be governed by
and construed under the laws of the State of Delaware, without regard to that
body of law pertaining to conflict of laws or choice of law. The titles of the
sections and subsections of this Option are for convenience only and are not to
be considered in construing this Option.
ALGORX PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxx
--------------------------------------------
Name: Xxxxxx Xxxx
Title:
OPTION ACCEPTED AND AGREED:
/s/ Xxxxx Xxxxxxxxxx
-----------------------------------------
(Signature of initial Option Holder)
Date signed: August_______, 2001
- 6 -
ANNEX I
NOTICE OF EXERCISE
DATE:______________,______
AlgoRx Pharmaceuticals, Inc..
_____________________________
_____________________________
Re: Common Stock Option Notice of Exercise
Ladies/Gentleman:
On this date, the undersigned___________________________________, as the
Holder of, and as defined in, that certain Option (the "Option") dated as of
August 28,2001 from the Company to the original holder of such Option, hereby
acquires from AlgoRx Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), an aggregate of____________shares (the "Restricted Securities") of
the Common Stock of the Company by exercise of the Option hereby for such number
of shares.
1. Investment Intent. The undersigned represents and warrants that:
(a) The Restricted Securities have been acquired by the undersigned
for investment and not with a view to the sale or other distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and the undersigned has no present intention of selling or otherwise
disposing of all or any portion of the Restricted Securities.
(b) The undersigned has acquired the Restricted Securities for the
undersigned's own account and no one else has any beneficial ownership in the
Restricted Securities.
2. Restrictions On Transfer. The undersigned understands that:
(a) In reliance upon the representations and warranties set forth
herein, the Restricted Securities have not been registered with the Securities
and Exchange Commission (the "SEC"), and accordingly may not be offered, sold or
otherwise transferred except in compliance with the Securities Act (including
any exemptions from registration thereunder);
(b) The undersigned must bear the economic risk of the undersigned's
investment in the Restricted Securities indefinitely unless the Restricted
Securities are registered pursuant to the Securities Act or, in the opinion of
counsel in form and substance satisfactory to the Company, an exemption from the
registration requirement is available;
(c) The undersigned cannot be assured that any exemption from the
registration requirement will be available should the undersigned desire to
transfer the Restricted Securities, and therefore, the undersigned may not be
able to dispose of or otherwise transfer the Restricted Securities, under the
circumstances, in the amounts, or at the time proposed by the undersigned;
(d) Rule 144 promulgated under the Securities Act, which provides
for certain limited, routine sales of unregistered securities, is not presently
available with respect to the Restricted Securities, and the Company is under no
obligation to furnish the information that might be necessary to enable the
undersigned to sell any of the Restricted Securities under Rule 144; and
(e) Only the Company may file a registration statement with the SEC,
and except as may be provided in any written agreement between the Company the
Holder: (i) the Company is under no obligation to do so with respect to the
Restricted Securities; nor (ii) does the Company have any obligation to file any
other disclosure statement with the SEC with respect thereto.
3. Legend And Stop-Transfer Orders. The undersigned understands that, if
required by applicable federal securities laws at the date of issuance of the
Restricted Securities, certificates or other instruments representing any of the
Restricted Securities acquired by the undersigned will bear a legend
substantially similar to the following, in addition to any other legends
required by federal or state laws, or by any contractual agreement binding upon
the undersigned with respect to the Restricted Securities:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
The undersigned agrees that, to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in the foregoing
legend, or elsewhere herein, the Company may issue appropriate "stop transfer"
instructions to its transfer agent, if any, with respect to any certificate or
other instrument representing Restricted Securities, or if the Company transfers
its own securities, that it may make appropriate notation to the same effect in
the Company's records.
4. Representations And Warranties. The undersigned represents and warrants
that:
(a) The undersigned has had access to all information regarding the
Company, its present and prospective business, assets, liabilities and financial
condition that the undersigned considers important to making the decision to
invest in the Restricted Securities. The undersigned has had ample opportunity
to ask questions of and receive answers from the Company's representatives
concerning this investment and to obtain any and all documents requested in
order to supplement or verify any of the information supplied.
(b) The undersigned recognizes that the investment in the Restricted
Securities involves special and substantial risks. The undersigned recognizes
(i) the highly speculative nature of the investment, (ii) the financial hazards
involved, (iii) the lack of liquidity of the Restricted Securities and the
restrictions upon transferability thereof, (iv) the qualifications and
backgrounds of the principals of the Company, and (v) the tax consequences of
investment in Restricted Securities, among other matters.
(c) The undersigned is capable of evaluating the merits and risks of
an investment in the Restricted Securities and is financially capable of bearing
a total loss of this investment.
- 2 -
(d) The undersigned either (i) has a preexisting personal or
business relationship with the Company or its principals or (ii) by reason of
the undersigned's business or financial experience, has the capacity to protect
the undersigned's own interests in connection with this transaction.
(e) The offer and sale of the Restricted Securities was not
accomplished by the publication of any advertisement.
(f) Neither the Company nor its attorneys or other advisors or
representatives have made any representations or warranties to the undersigned
with respect to the income or other tax consequences of an investment in the
Restricted Securities, and the undersigned is in no manner relying on the
Company or its attorneys or other advisors or representatives for an assessment
of such tax consequences.
(g) The undersigned's address is:___________________________________
___________________________________
___________________________________
(h) NET EXERCISE ELECTION: If applicable, the undersigned elects to
purchase the Restricted Securities by Net Exercise (as defined in the Option),
by initialing in the following space (please initial only if Net Exercise
chosen): _____________________________.
PRINTED NAME IF INDIVIDUAL : PRINTED NAME IF CORPORATION.
PARTNERSHIP OR TRUST:
____________________________________
________________________________________
____________________________________
(Signature) By:_____________________________________
Date signed: _______________________ Name:___________________________________
Address:____________________________ Title:__________________________________
____________________________ Date signed:____________________________
____________________________ Address:________________________________
Social Security Number:_____________ _________________________________
Taxpayer Identification Number:
________________________________________
- 3 -
ANNEX II
ASSIGNMENT FORM
ALGORX PHARMACEUTICALS, INC.
COMMON STOCK OPTION
ISSUED AS OF AUGUST 28,2001
(To assign the foregoing Option, execute this form and supply the required
information)(Do not use this form to exercise the Option to purchase
shares.)
FOR VALUE RECEIVED, the Option for Common Stock of ALGORX PHARMACEUTICALS, INC.
initially issued as of August 28,2001 (the "Option") and all rights evidenced
thereby are hereby assigned by the Assigning Holder as shown below, to the
Assignee as shown below:
Printed Name Of Assigning Holder: ___________________________________________
Assigning Holder's Signature*: ___________________________________________
Title (as appropriate):____________________
Assigning Holder's Address: ___________________________________________
___________________________________________
Printed Name of Assignee: ___________________________________________
Assignee's Signature*: ___________________________________________
Title (as appropriate):____________________
Assignee's Address: ___________________________________________
___________________________________________
Date of Assignment: ___________________________________________
CONSENT TO ASSIGNMENT
(MUST BE COMPLETED AND SIGNED IN ORDER FOR ASSIGNMENT TO BE VALID:
ALGORX PHARMACEUTICALS, INC.
By:________________________________________
Name:______________________________________
Title:_____________________________________
Date signed:_______________________________
--------------------------------------------------------------------------------
* The signature to this Assignment for the Assigning Holder must correspond with
the name of such then-current Assigning Holder as it appears on the face of the
assigned Option at the time of such proposed transfer, without any change.
Officers of corporations and those acting in a fiduciary or other representative
capacity for the Assigning Holder must file with AlgoRx, with this Assignment,
proper evidence of authority to assign the Option.
AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
EXHIBIT 4.1-B
OPTION FOR XXXXXXX X. XXXXX, M.S.
- 24 -
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. DELAWARE TIME ON AUGUST 28, 2011
OPTION TO PURCHASE SHARES OF COMMON STOCK
OF
ALGORX PHARMACEUTICALS, INC.
DATE OF ISSUANCE: August 28, 2001
THIS CERTIFIES THAT XXXXXXX X. XXXXX, as the original holder hereof, and
any person to whom the interest in this stock option (the "Option") is lawfully
transferred as provided herein (the original holder hereof and such permitted
transferees referred to hereinafter as the "Holder"), is entitled to purchase up
to the number of shares set forth in Section 2(a) hereof, in accordance with the
exercisability schedule set out in Section 2(c) hereof, as such number may be
adjusted pursuant to Section 3 hereof, of fully paid and nonassessable shares
(the "Shares") of the Common Stock (the "Common Stock") of ALGORX
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), having an
Exercise Price and an Aggregate Exercise Price determined as set forth in
Section 2(b) hereof (as such Exercise Price may be adjusted pursuant to Section
3 hereof), and subject to the terms and conditions set forth herein.
1. Issuance Of This Option As Part Of License Fee. This Option is issued
in payment to the original Holder hereof as a portion of the license fee paid by
the Company to the original Holder hereof on the date of issuance of this Option
under, and as specified in, that certain License Agreement dated as of the date
of issuance of this Option by and among the Company, the original Holder hereof,
and the other licensors thereunder (the "License Agreement"). This Option is not
a nonqualified stock option, or any other type of employee stock option, and it
is not issued and will not become exercisable, in whole or in part, in
connection with or by reason of the performance of any services by the Holder.
The original Holder and the Company hereby agree, by their mutual signatures on
this Option, that this Option has a fair market value itself, as of the date of
issuance of this Option, and as opposed to the purchase price for, or the fair
market value of, Shares purchasable upon exercise of this Option, of Seventy-Two
Dollars and Twenty-Two Cents ($72.22).
2. Exercise of Option.
(a) Number Of Shares. Subject to adjustment pursuant to Section 3
hereof, this Option will entitle the Holder to purchase up to seventy-two
thousand two hundred twenty two (72,222) shares of the Common Stock of the
Company in accordance with the exercisability schedule set out in Section 2(c)
hereof.
AlgoRx Capsaicin License Fee Stock Option
(b) Exercise Price; Aggregate Exercise Price. The exercise price at
which this Option may be exercised (the "Exercise Price") will be One Dollar
($1.00) per share, as such Exercise Price may be adjusted from time to time
pursuant to Section 3 hereof. The parties hereto acknowledge and agree that such
One Dollar ($1.00) per share Exercise Price is substantially above the current
fair market value of the Company's Common Stock and is an Exercise Price
negotiated by the parties for purposes of this Option. The "Aggregate Exercise
Price" of this Option upon exercise will be the amount resulting from
multiplying the Exercise Price times the number of Shares purchased upon
exercise hereof.
(c) Exercisability Schedule.
(i) General Exercisability Schedule. Subject to the provisions
of Section 2(c)(ii) and Section 5 hereof, this Option will become exercisable as
follows, upon the achievement by the Company of the following milestones (each,
a "Milestone"); to the extent that a given Milestone is not achieved by the
tenth (10th) anniversary of the date of issuance of this Option (i.e., by August
28,2011), and provided that exercisability of this Option has not been
accelerated pursuant to Section 2(c)(ii) hereof, then at such tenth (10th)
anniversary this Option will expire and will no longer be exercisable as to such
number of Shares related to such given Milestone:
Number of Shares For Which This
Milestone Option Is Exercisable
--------- ---------------------
Execution and delivery of this Agreement
by all parties hereto: 10,000 shares
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase I
clinical trial: 20,740 shares
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase III
clinical trial or other FDA-approved clinical trial than
can, under FDA regulations, result in FDA approval for
commercial use, application or marketing of the first
Licensed Product in the Field of Use: 20,740 shares
FDA approval for commercial use, application or
marketing of the first Licensed Product in the Field of
Use, where "Field of Use" has the meaning assigned to
it in Section 1.1.2 of the License Agreement: 20,742 shares
-------------
Total number of shares: 72,222 shares
=============
(ii) Acceleration of Exercisability Upon Certain Events. Upon
the happening of any of the following events, this Option will, to the extent
not then exercisable, become immediately exercisable:
(A) The effective date of an assignment or transfer of
the License Agreement by the Company to a person or entity which is not an
affiliate of the Company (with "affiliate" defined for purposes of this Section
2(c)(ii)(A) to mean means, as to any person, another person controlled by, under
common control with, or controlling such person.; for these purposes, "control"
means (1) the possession, directly or indirectly, of the power to direct the
management or
- 2 -
AlgoRx Capsaicin License Fee Stock Option
policies of a person or entity, whether through the ownership of voting
securities, by contract, or otherwise, or (2) the ownership, directly or
indirectly, of at least fifty percent (50%) of the outstanding voting securities
or other ownership interest of a person or entity, or such lesser percentage as
is the maximum allowed to be owned by a foreign corporation in a particular
jurisdiction.; or
(B) The effective date of a change of control of the
Company. For the purposes of this Section 2(c)(ii)(B), "change of control" means
either of the following events:
(1) A merger or consolidation in which the Company
is not the surviving entity (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction and other than any other transaction in which there is no material
change in the identity of the shareholders of the Company or their relative
shareholdings in the Company and in each such case such options are assumed,
converted, or replaced by the successor or acquiring corporation); or
(2) A merger in which the Company is the surviving
entity but after which the shareholders of the Company immediately prior to such
merger (excluding any entity shareholder of the Company which merges with the
Company in such merger, or which owns or controls another corporation or other
entity which merges with the Company in such merger) do not own, immediately
after such merger, voting control of the surviving entity.
(d) Exercise Period.
(i) General Exercise Period. Subject to the provisions of
Section 2(d)(ii) and Section 5 hereof, the Holder will have until 5:00 p.m.
Delaware time on August 28, 2011 to exercise this Option to the extent it has by
its terms then become exercisable. This Option will expire, to the extent
unexercised., at such time and on such date.
(ii) Accelerated Exercise Period. If this Option is
accelerated pursuant to Section 2(c)(ii) hereof, the Holder will have ninety
(90) days after the date of such acceleration to exercise this Option, and this
Option will expire, to the extent unexercised, at the end of such 90-day period.
(e) Method of Exercise; Payment. The purchase right represented by
this Option may be exercised by the Holder, in whole or in part, for up to the
total number of shares remaining available to exercise by the surrender of this
Option (with the Notice of Exercise in the form attached hereto as Annex I (the
"Exercise Notice"), incorporated herein by reference, duly executed, at the
principal office of the Company and by the payment to the Company of an amount
in each case equal to the then applicable Exercise Price per share multiplied by
the number of Shares then being purchased, by: (i) check made payable to the
Company drawn on a United States bank and for United States funds, and/or (ii)
delivery to the Company of evidence of cancellation of indebtedness of the
Company to such Holder, and/or (iii) any combination thereof; provided that the
par value per share of Shares purchased by exercise of this Option must be paid
in cash to the extent then required by applicable law.
(f) Net Issue Election. In lieu of exercising this Option pursuant
to Section (e) hereof, the Holder may elect to receive, without the payment by
the Holder of any additional consideration, shares equal to the value of this
Option or any portion hereof by the surrender of this Option or such portion
hereof to the Company (the "Net Exercise") at the principal office of the
Company together with a completed Exercise Notice with the net exercise election
therein properly initialed, provided that the par value per share of Shares
purchased by exercise of this Option pursuant
- 3 -
AlgoRx Capsaicin License Fee Stock Option
to this Section 2(f) must be paid in cash to the extent then required by
applicable law. Thereupon, the Company will issue to the Holder such number of
fully paid and nonassessable shares of Common Stock of the Company as is
computed using the following formula:
X = Y (D-E)
-------
D
where:
X = The number of Shares to be issued to the Holder pursuant to
this Section 2(f).
Y = The number of Shares covered by this Option in respect of
which the Net Exercise election is made pursuant to this
Section 2(f).
D = The fair market value of one share of Common Stock, as
determined in good faith by the Board of Directors of the
Company (the "Board"), as of the date the net issue election
is made pursuant to this Section 2(f).
E = The Exercise Price in effect under this Option at the time
the Net Exercise election is made pursuant to this Section
2(f).
The Board will promptly respond in writing to an inquiry by the Holder as
to the fair market value of one share of Common Stock. To the extent legally
required, the Holder will pay in cash the par value of any shares purchased by
such Net Exercise.
(g) Issuance Of New Option. In the event of any exercise of the
purchase right represented by this Option, certificates for the Shares so
purchased will be delivered to the Holder within ten (10) days after receipt of
such payment and, unless this Option has been fully exercised or has expired, a
new Option representing the portion of the Shares, if any, with respect to which
this Option will not then have been exercised will also be issued to the Holder
within such ten (10) day period.
3. Adjustments To Option. The number and kind of securities purchasable
upon the exercise of this Option, and the Exercise Price, will be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Reorganization, Consolidation Or Merger. In
case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of the Company with or into another corporation (other
than a merger or reorganization with respect to which the Company is the
continuing corporation and which does not result in any reclassification of the
Common Stock), the Company, or such successor corporation, as the case may be,
will execute and deliver to Holder a new warrant in substitution for this Option
which will provide that the Holder will have the right to exercise such new
warrant and upon such exercise to receive, in lieu of each share of Common Stock
previously issuable upon exercise of this Option, the number and kind of
securities, money and property receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of Common Stock of
the Company, for each share of Common Stock otherwise issuable hereunder. Such
new Option will provide for adjustments which will be as nearly equivalent as
practicable to the adjustments provided for in this Section 3 including, without
limitation, adjustments to the Exercise Price and to the number of shares
issuable upon exercise of this Option. The provisions of this Section 3(a) will
similarly apply to successive reclassifications, reorganizations, consolidations
or mergers.
- 4 -
AlgoRx Capsaicin License Fee Stock Option
(b) Split, Subdivision Or Combination Of Shares. If the Company at
any time while this Option remains outstanding and unexpired splits, subdivides
or combines the Common Stock, the Exercise Price will be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination. Any adjustment under this Section 3(b) will become
effective when the split, subdivision or combination becomes effective.
(c) Stock Dividends. If the Company at any time while this Option
remains outstanding and unexpired pays a dividend with respect to the Company's
Common Stock, payable in shares of its Common Stock, securities convertible into
or exchangeable for its Common Stock, as applicable ("Convertible Securities"),
or options to purchase its Common Stock or Convertible Securities, as applicable
("Options"), the Exercise Price will be adjusted from and after the date of
determination of the stockholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which will be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which will be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including shares of
Common Stock issuable upon exercise, conversion or exchange of any Options or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distributions by their
terms provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Company, or any increase in the number of shares
issuable upon exercise, conversion or exchange thereof (by change of rate or
otherwise), the Exercise Price will, upon any such decrease or increase becoming
effective, be reduced or increased to reflect such decrease or increase as if
such decrease or increase became effective immediately prior to the issuance of
the Options or Convertible Securities as the dividend or distribution. Any
Adjustment under this Section 3(c) will become effective on the record date or,
if there is no record date, on the date of issuance.
(d) Adjustment Of Number Of Shares. Upon each adjustment of the
Exercise Price pursuant to this Section 3, the number of shares issuable upon
exercise of this Option will be adjusted to the number obtained by dividing the
then outstanding Aggregate Exercise Price by the Exercise Price immediately
after such adjustment.
4. Compliance With Securities Law; Transferability Of Option.
(a) Legends. Any certificate for shares issued upon exercise hereof
will be imprinted with a legend in substantially the form set forth in the
Exercise Notice.
(b) Transferability Of Option. This Option may not be transferred or
assigned in whole or in part in any manner unless (i) approved in writing by the
Company prior to such proposed transfer being effected (which approval will not
be unreasonably withheld) or (ii) upon death or by laws of descent or by bequest
through a will or trust instrument. Subject to the provisions of this Section
4(b), title to this Option may be transferred in the same manner as a negotiable
instrument transferable by endorsement and delivery, by execution and delivery
of a completed Assignment Form attached hereto as Annex II, incorporated herein
by reference.
5. Termination Of License Agreement. Upon termination of License Agreement
by the Company, this Option will survive such termination, but will thereafter
be exercisable only with respect to and for that portion of this Option which is
exercisable at the date of such termination of the License Agreement by the
Company, and will not thereafter be exercisable for any portion hereof which is
not then so exercisable.
- 5 -
AlgoRx Capsaicin License Fee Stock Option
6. Miscellaneous. No fractional shares will be issued in connection with
any exercise hereunder, but in lieu of such fractional shares the Company will
make a cash payment therefor upon the basis of the Exercise Price then in
effect. The terms and provisions of this Option will inure to the benefit of,
and be binding upon, the Company and the Holder and their respective successors
and assigns, and the heirs, administrators and executors of the Holder, if at
the relevant time such Holder is an individual. This Option will be governed by
and construed under the laws of the State of Delaware, without regard to that
body of law pertaining to conflict of laws or choice of law. The titles of the
sections and subsections of this Option are for convenience only and are not to
be considered in construing this Option.
ALGORX PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxx
-----------------------------------------
Name: XXXXXX XXXX
Title:
OPTION ACCEPTED AND AGREED:
/s/ Xxxxxxx X. Xxxxx
-------------------------------------
(Signature of initial Option Holder)
Date signed: August 30, 2001
- 6 -
ANNEX I
NOTICE OF EXERCISE
DATE: _____________,______
AlgoRx Pharmaceuticals, Inc..
______________________
______________________
Re: Common Stock Option Notice of Exercise
Ladies/Gentleman:
On this date, the undersigned__________________________________________,
as the Holder of, and as defined in, that certain Option (the "Option") dated as
of August 28, 2001 from the Company to the original holder of such Option,
hereby acquires from AlgoRx Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), an aggregate of____________shares (the "Restricted Securities") of
the Common Stock of the Company by exercise of the Option hereby for such number
of shares.
1. Investment Intent. The undersigned represents and warrants that:
(a) The Restricted Securities have been acquired by the undersigned
for investment and not with a view to the sale or other distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and the undersigned has no present intention of selling or otherwise
disposing of all or any portion of the Restricted Securities.
(b) The undersigned has acquired the Restricted Securities for the
undersigned's own account and no one else has any beneficial ownership in the
Restricted Securities.
2. Restrictions On Transfer. The undersigned understands that:
(a) In reliance upon the representations and warranties set forth
herein, the Restricted Securities have not been registered with the Securities
and Exchange Commission (the "SEC"), and accordingly may not be offered, sold or
otherwise transferred except in compliance with the Securities Act (including
any exemptions from registration thereunder);
(b) The undersigned must bear the economic risk of the undersigned's
investment in the Restricted Securities indefinitely unless the Restricted
Securities are registered pursuant to the Securities Act or, in the opinion of
counsel in form and substance satisfactory to the Company, an exemption from the
registration requirement is available;
(c) The undersigned cannot be assured that any exemption from the
registration requirement will be available should the undersigned desire to
transfer the Restricted Securities, and therefore, the undersigned may not be
able to dispose of or otherwise transfer the Restricted Securities, under the
circumstances, in the amounts, or at the time proposed by the undersigned;
(d) Rule 144 promulgated under the Securities Act, which provides
for certain limited, routine sales of unregistered securities, is not presently
available with respect to the Restricted Securities, and the Company is under no
obligation to furnish the information that might be necessary to enable the
undersigned to sell any of the Restricted Securities under Rule 144; and
(e) Only the Company may file a registration statement with the SEC,
and except as may be provided in any written agreement between the Company the
Holder: (i) the Company is under no obligation to do so with respect to the
Restricted Securities; nor (ii) does the Company have any obligation to file any
other disclosure statement with the SEC with respect thereto.
3. Legend And Stop-Transfer Orders. The undersigned understands that, if
required by applicable federal securities laws at the date of issuance of the
Restricted Securities, certificates or other instruments representing any of the
Restricted Securities acquired by the undersigned will bear a legend
substantially similar to the following, in addition to any other legends
required by federal or state laws, or by any contractual agreement binding upon
the undersigned with respect to the Restricted Securities:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
The undersigned agrees that, to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in the foregoing
legend, or elsewhere herein, the Company may issue appropriate "stop transfer"
instructions to its transfer agent, if any, with respect to any certificate or
other instrument representing Restricted Securities, or if the Company transfers
its own securities, that it may make appropriate notation to the same effect in
the Company's records.
4. Representations And Warranties. The undersigned represents and warrants
that:
(a) The undersigned has had access to all information regarding the
Company, its present and prospective business, assets, liabilities and financial
condition that the undersigned considers important to making the decision to
invest in the Restricted Securities. The undersigned has had ample opportunity
to ask questions of and receive answers from the Company's representatives
concerning this investment and to obtain any and all documents requested in
order to supplement or verify any of the information supplied.
(b) The undersigned recognizes that the investment in the Restricted
Securities involves special and substantial risks. The undersigned recognizes
(i) the highly speculative nature of the investment, (ii) the financial hazards
involved, (iii) the lack of liquidity of the Restricted Securities and the
restrictions upon transferability thereof, (iv) the qualifications and
backgrounds of the principals of the Company, and (v) the tax consequences of
investment in Restricted Securities, among other matters.
(c) The undersigned is capable of evaluating the merits and risks of
an investment in the Restricted Securities and is financially capable of bearing
a total loss of this investment.
- 2 -
(d) The undersigned either (i) has a preexisting personal or
business relationship with the Company or its principals or (ii) by reason of
the undersigned's business or financial experience, has the capacity to protect
the undersigned's own interests in connection with this transaction.
(e) The offer and sale of the Restricted Securities was not
accomplished by the publication of any advertisement.
(f) Neither the Company nor its attorneys or other advisors or
representatives have made any representations or warranties to the undersigned
with respect to the income or other tax consequences of an investment in the
Restricted Securities, and the undersigned is in no manner relying on the
Company or its attorneys or other advisors or representatives for an assessment
of such tax consequences.
(g) The undersigned's address is:___________________________________
___________________________________
___________________________________
(h) NET EXERCISE ELECTION: If applicable, the undersigned elects to
purchase the Restricted Securities by Net Exercise (as defined in the Option),
by initialing in the following space (please initial only if Net Exercise
chosen): ____________________________.
PRINTED NAME IF INDIVIDUAL: PRINTED NAME IF CORPORATION.
PARTNERSHIP OR TRUST:
_____________________________________
________________________________________
_____________________________________
(Signature) By:_____________________________________
Date signed: ________________________ Name:___________________________________
Address:_____________________________ Title:__________________________________
_____________________________ Date signed:____________________________
_____________________________ Address:________________________________
Social Security Number:______________ ________________________________
________________________________
Taxpayer Identification Number:
________________________________________
- 3 -
ANNEX II
ASSIGNMENT FORM
ALGORX PHARMACEUTICALS, INC.
COMMON STOCK OPTION
ISSUED AS OF AUGUST 28, 2001
(To assign the foregoing Option, execute this form and supply
the required information)
(Do not use this form to exercise the Option to purchase shares.)
FOR VALUE RECEIVED, the Option for Common Stock of ALGORX PHARMACEUTICALS, INC.
initially issued as of August 28, 2001 (the "Option") and all rights evidenced
thereby are hereby assigned by the Assigning Holder as shown below, to the
Assignee as shown below:
Printed Name Of Assigning Holder: ___________________________________________
Assigning Holder's Signature*: ___________________________________________
Title (as appropriate):____________________
Assigning Holder's Address: ___________________________________________
Printed Name of Assignee: ___________________________________________
Assignee's Signature*: ___________________________________________
Title (as appropriate):____________________
Assignee's Address: ___________________________________________
Date of Assignment: ___________________________________________
CONSENT TO ASSIGNMENT
(MUST BE COMPLETED AND SIGNED IN ORDER FOR ASSIGNMENT TO BE VALID:
ALGORX PHARMACEUTICALS, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
Date signed:_________________________
--------------------------------------------------------------------------------
* The signature to this Assignment for the Assigning Holder must correspond with
the name of such then-current Assigning Holder as it appears on the face of the
assigned Option at the time of such proposed transfer, without any change.
Officers of corporations and those acting in a fiduciary or other representative
capacity for the Assigning Holder must file with AlgoRx, with this Assignment,
proper evidence of authority to assign the Option.
AlgoRx Pharmaceuticals, Inc. - Capsaicin License - Xxxxxxxx/Xxxxx/Xxxxxxxxxx
EXHIBIT 4.1-A
OPTION FOR XXXXX X. XXXXXXXX, M.D.
- 23 -
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. DELAWARE TIME ON AUGUST 28, 2011
OPTION TO PURCHASE SHARES OF COMMON STOCK
OF
ALGORX PHARMACEUTICALS, INC.
DATE OF ISSUANCE: August 28, 2001
THIS CERTIFIES THAT XX. XXXXX X. XXXXXXXX, as the original holder hereof,
and any person to whom the interest in this stock option (the "Option") is
lawfully transferred as provided herein (the original holder hereof and such
permitted transferees referred to hereinafter as the "Holder"), is entitled to
purchase up to the number of shares set forth in Section 2(a) hereof, in
accordance with the exercisability schedule set out in Section 2(c) hereof, as
such number may be adjusted pursuant to Section 3 hereof, of fully paid and
nonassessable shares (the "Shares") of the Common Stock (the "Common Stock") of
ALGORX PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), having an
Exercise Price and an Aggregate Exercise Price determined as set forth in
Section 2(b) hereof (as such Exercise Price may be adjusted pursuant to Section
3 hereof), and subject to the terms and conditions set forth herein.
1. Issuance Of This Option As Part Of License Fee. This Option is issued
in payment to the original Holder hereof as a portion of the license fee paid by
the Company to the original Holder hereof on the date of issuance of this Option
under, and as specified in, that certain License Agreement dated as of the date
of issuance of this Option by and among the Company, the original Holder hereof,
and the other licensors thereunder (the "License Agreement"). This Option is not
a nonqualified stock option, or any other type of employee stock option, and it
is not issued and will not become exercisable, in whole or in part, in
connection with or by reason of the performance of any services by the Holder.
The original Holder and the Company hereby agree, by their mutual signatures on
this Option, that this Option has a fair market value itself, as of the date of
issuance of this Option, and as opposed to the purchase price for, or the fair
market value of, Shares purchasable upon exercise of this Option, of Seventy-Two
Dollars and Twenty-Two Cents ($72.22).
2. Exercise of Option.
(a) Number Of Shares. Subject to adjustment pursuant to Section 3
hereof, this Option will entitle the Holder to purchase up to seventy-two
thousand two hundred twenty two (72,222) shares of the Common Stock of the
Company in accordance with the exercisability schedule set out in Section 2(c)
hereof.
AlgoRx Capsaicin License Fee Stock Option
(b) Exercise Price; Aggregate Exercise Price. The exercise price at
which this Option may be exercised (the "Exercise Price") will be One Dollar
($1.00) per share, as such Exercise Price may be adjusted from time to time
pursuant to Section 3 hereof. The parties hereto acknowledge and agree that such
One Dollar ($1.00) per share Exercise Price is substantially above the current
fair market value of the Company's Common Stock and is an Exercise Price
negotiated by the parties for purposes of this Option. The "Aggregate Exercise
Price" of this Option upon exercise will be the amount resulting from
multiplying the Exercise Price times the number of Shares purchased upon
exercise hereof.
(c) Exercisability Schedule.
(i) General Exercisability Schedule. Subject to the provisions
of Section 2(c)(ii) and Section 5 hereof, this Option will become exercisable as
follows, upon the achievement by the Company of the following milestones (each,
a "Milestone"); to the extent that a given Milestone is not achieved by the
tenth (10th) anniversary of the date of issuance of this Option (i.e., by August
28, 2011), and provided that exercisability of this Option has not been
accelerated pursuant to Section 2(c)(ii) hereof, then at such tenth (10th)
anniversary this Option will expire and will no longer be exercisable as to such
number of Shares related to such given Milestone:
Number of Shares For Which This
Milestone Option Is Exercisable
--------- ---------------------
Execution and delivery of this Agreement
by all parties hereto: 10,000 shares
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase I
clinical trial: 20,740 shares
First administration to a subject of a drug, using
Licensed Technology, in an FDA-approved Phase III
clinical trial or other FDA-approved clinical trial than
can, under FDA regulations, result in FDA approval for
commercial use, application or marketing of the first
Licensed Product in the Field of Use: 20,740 shares
FDA approval for commercial use, application or
marketing of the first Licensed Product in the Field of
Use, where "Field of Use" has the meaning assigned to
it in Section 1.1.2 of the License Agreement: 20,742 shares
-------------
Total number of shares: 72,222 shares
=============
(ii) Acceleration of Exercisability Upon Certain Events. Upon
the happening of any of the following events, this Option will, to the extent
not then exercisable, become immediately exercisable:
(A) The effective date of an assignment or transfer of
the License Agreement by the Company to a person or entity which is not an
affiliate of the Company (with "affiliate" defined for purposes of this Section
2(c)(ii)(A) to mean means, as to any person, another person controlled by, under
common control with, or controlling such person.; for these purposes, "control"
means (1) the possession, directly or indirectly, of the power to direct the
management or
- 2 -
AlgoRx Capsaicin License Fee Stock Option
policies of a person or entity, whether through the ownership of voting
securities, by contract, or otherwise, or (2) the ownership, directly or
indirectly, of at least fifty percent (50%) of the outstanding voting securities
or other ownership interest of a person or entity, or such lesser percentage as
is the maximum allowed to be owned by a foreign corporation in a particular
jurisdiction.; or
(B) The effective date of a change of control of the
Company. For the purposes of this Section 2(c)(ii)(B), "change of control" means
either of the following events:
(1) A merger or consolidation in which the Company
is not the surviving entity (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction and other than any other transaction in which there is no material
change in the identity of the shareholders of the Company or their relative
shareholdings in the Company and in each such case such options are assumed,
converted, or replaced by the successor or acquiring corporation); or
(2) A merger in which the Company is the surviving
entity but after which the shareholders of the Company immediately prior to such
merger (excluding any entity shareholder of the Company which merges with the
Company in such merger, or which owns or controls another corporation or other
entity which merges with the Company in such merger) do not own, immediately
after such merger, voting control of the surviving entity.
(d) Exercise Period.
(i) General Exercise Period. Subject to the provisions of
Section 2(d)(ii) and Section 5 hereof, the Holder will have until 5:00 p.m.
Delaware time on August 28, 2011 to exercise this Option to the extent it has by
its terms then become exercisable. This Option will expire, to the extent
unexercised., at such time and on such date.
(ii) Accelerated Exercise Period. If this Option is
accelerated pursuant to Section 2(c)(ii) hereof, the Holder will have ninety
(90) days after the date of such acceleration to exercise this Option, and this
Option will expire, to the extent unexercised, at the end of such 90-day period.
(e) Method of Exercise; Payment. The purchase right represented by
this Option may be exercised by the Holder, in whole or in part, for up to the
total number of shares remaining available to exercise by the surrender of this
Option (with the Notice of Exercise in the form attached hereto as Annex I (the
"Exercise Notice"), incorporated herein by reference, duly executed, at the
principal office of the Company and by the payment to the Company of an amount
in each case equal to the then applicable Exercise Price per share multiplied by
the number of Shares then being purchased, by: (i) check made payable to the
Company drawn on a United States bank and for United States funds, and/or (ii)
delivery to the Company of evidence of cancellation of indebtedness of the
Company to such Holder, and/or (iii) any combination thereof; provided that the
par value per share of Shares purchased by exercise of this Option must be paid
in cash to the extent then required by applicable law.
(f) Net Issue Election. In lieu of exercising this Option pursuant
to Section (e) hereof, the Holder may elect to receive, without the payment by
the Holder of any additional consideration, shares equal to the value of this
Option or any portion hereof by the surrender of this Option or such portion
hereof to the Company (the "Net Exercise") at the principal office of the
Company together with a completed Exercise Notice with the net exercise election
therein properly initialed, provided that the par value per share of Shares
purchased by exercise of this Option pursuant
- 3 -
AlgoRx Capsaicin License Fee Stock Option
to this Section 2(f) must be paid in cash to the extent then required by
applicable law. Thereupon, the Company will issue to the Holder such number of
fully paid and nonassessable shares of Common Stock of the Company as is
computed using the following formula:
X = Y(D-E) / D
where:
X = The number of Shares to be issued to the Holder pursuant to
this Section 2(f).
Y = The number of Shares covered by this Option in respect of
which the Net Exercise election is made pursuant to this
Section 2(f).
D = The fair market value of one share of Common Stock, as
determined in good faith by the Board of Directors of the
Company (the "Board"), as of the date the net issue election
is made pursuant to this Section 2(f).
E = The Exercise Price in effect under this Option at the time
the Net Exercise election is made pursuant to this Section
2(f).
The Board will promptly respond in writing to an inquiry by the Holder as
to the fair market value of one share of Common Stock. To the extent legally
required, the Holder will pay in cash the par value of any shares purchased by
such Net Exercise.
(g) Issuance Of New Option. In the event of any exercise of the
purchase right represented by this Option, certificates for the Shares so
purchased will be delivered to the Holder within ten (10) days after receipt of
such payment and, unless this Option has been fully exercised or has expired, a
new Option representing the portion of the Shares, if any, with respect to which
this Option will not then have been exercised will also be issued to the Holder
within such ten (10) day period.
3. Adjustments To Option, The number and kind of securities purchasable
upon the exercise of this Option, and the Exercise Price, will be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Reorganization, Consolidation Or Merger. In
case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of the Company with or into another corporation (other
than a merger or reorganization with respect to which the Company is the
continuing corporation and which does not result in any reclassification of the
Common Stock), the Company, or such successor corporation, as the case may be,
will execute and deliver to Holder a new warrant in substitution for this Option
which will provide that the Holder will have the right to exercise such new
warrant and upon such exercise to receive, in lieu of each share of Common Stock
previously issuable upon exercise of this Option, the number and kind of
securities, money and property receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of Common Stock of
the Company, for each share of Common Stock otherwise issuable hereunder. Such
new Option will provide for adjustments which will be as nearly equivalent as
practicable to the adjustments provided for in this Section 3 including, without
limitation, adjustments to the Exercise Price and to the number of shares
issuable upon exercise of this Option. The provisions of this Section 3(a) will
similarly apply to successive reclassifications, reorganizations, consolidations
or mergers.
- 4 -
AlgoRx Capsaicin License Fee Stock Option
(b) Split, Subdivision Or Combination Of Shares. If the Company at
any time while this Option remains outstanding and unexpired splits, subdivides
or combines the Common Stock, the Exercise Price will be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination. Any adjustment under this Section 3(b) will become
effective when the split, subdivision or combination becomes effective.
(c) Stock Dividends. If the Company at any time while this Option
remains outstanding and unexpired pays a dividend with respect to the Company's
Common Stock, payable in shares of its Common Stock, securities convertible into
or exchangeable for its Common Stock, as applicable ("Convertible Securities"),
or options to purchase its Common Stock or Convertible Securities, as applicable
("Options"), the Exercise Price will be adjusted from and after the date of
determination of the stockholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which will be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which will be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including shares of
Common Stock issuable upon exercise, conversion or exchange of any Options or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distributions by their
terms provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Company, or any increase in the number of shares
issuable upon exercise, conversion or exchange thereof (by change of rate or
otherwise), the Exercise Price will, upon any such decrease or increase becoming
effective, be reduced or increased to reflect such decrease or increase as if
such decrease or increase became effective immediately prior to the issuance of
the Options or Convertible Securities as the dividend or distribution. Any
adjustment under this Section 3(c) will become effective on the record date or,
if there is no record date, on the date of issuance.
(d) Adjustment Of Number Of Shares. Upon each adjustment of the
Exercise Price pursuant to this Section 3, the number of shares issuable upon
exercise of this Option will be adjusted to the number obtained by dividing the
then outstanding Aggregate Exercise Price by the Exercise Price immediately
after such adjustment.
4. Compliance With Securities Law; Transferability Of Option.
(a) Legends. Any certificate for shares issued upon exercise hereof
will be imprinted with a legend in substantially the form set forth in the
Exercise Notice.
(b) Transferability Of Option. This Option may not be transferred or
assigned in whole or in part in any manner unless (i) approved in writing by the
Company prior to such proposed transfer being effected (which approval will not
be unreasonably withheld) or (ii) upon death or by laws of descent or by bequest
through a will or trust instrument. Subject to the provisions of this Section
4(b), title to this Option may be transferred in the same manner as a negotiable
instrument transferable by endorsement and delivery, by execution and delivery
of a completed Assignment Form attached hereto as Annex II, incorporated herein
by reference.
5. Termination Of License Agreement. Upon termination of License Agreement
by the Company, this Option will survive such termination, but will thereafter
be exercisable only with respect to and for that portion of this Option which is
exercisable at the date of such termination of the License Agreement by the
Company, and will not thereafter be exercisable for any portion hereof which is
not then so exercisable.
- 5 -
AlgoRx Capsaicin License Fee Stock Option
6. Miscellaneous. No fractional shares will be issued in connection with
any exercise hereunder, but in lieu of such fractional shares the Company will
make a cash payment therefor upon the basis of the Exercise Price then in
effect. The terms and provisions of this Option will inure to the benefit of,
and be binding upon, the Company and the Holder and their respective successors
and assigns, and the heirs, administrators and executors of the Holder, if at
the relevant time such Holder is an individual. This Option will be governed by
and construed under the laws of the State of Delaware, without regard to that
body of law pertaining to conflict of laws or choice of law. The titles of the
sections and subsections of this Option are for convenience only and are not to
be considered in construing this Option.
ALGORX PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxx
-----------------------------------------
Name: Xxxxxx Xxxx
Title:_____________________________________
OPTION ACCEPTED AND AGREED:
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
(Signature of initial Option Holder)
Date signed: August 29, 2001
6
ANNEX I
NOTICE OF EXERCISE
DATE: ____________, ______
AlgoRx Pharmaceuticals, Inc..
_______________________
_______________________
Re: Common Stock Option Notice of Exercise
Ladies/Gentleman:
On this date, the undersigned ____________________________, as the Holder
of, and as defined in, that certain Option (the "Option") dated as of August 28,
2001 from the Company to the original holder of such Option, hereby acquires
from AlgoRx Pharmaceuticals, Inc., a Delaware corporation (the "Company"), an
aggregate of _____________ shares (the "Restricted Securities") of the Common
Stock of the Company by exercise of the Option hereby for such number of shares.
1. Investment Intent. The undersigned represents and warrants that:
(a) The Restricted Securities have been acquired by the undersigned
for investment and not with a view to the sale or other distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and the undersigned has no present intention of selling or otherwise
disposing of all or any portion of the Restricted Securities.
(b) The undersigned has acquired the Restricted Securities for the
undersigned's own account and no one else has any beneficial ownership in the
Restricted Securities.
2. Restrictions On Transfer. The undersigned understands that:
(a) In reliance upon the representations and warranties set forth
herein, the Restricted Securities have not been registered with the Securities
and Exchange Commission (the "SEC"), and accordingly may not be offered, sold or
otherwise transferred except in compliance with the Securities Act (including
any exemptions from registration thereunder);
(b) The undersigned must bear the economic risk of the undersigned's
investment in the Restricted Securities indefinitely unless the Restricted
Securities are registered pursuant to the Securities Act or, in the opinion of
counsel in form and substance satisfactory to the Company, an exemption from the
registration requirement is available;
(c) The undersigned cannot be assured that any exemption from the
registration requirement will be available should the undersigned desire to
transfer the Restricted Securities, and therefore, the undersigned may not be
able to dispose of or otherwise transfer the Restricted Securities, under the
circumstances, in the amounts, or at the time proposed by the undersigned;
(d) Rule 144 promulgated under the Securities Act, which provides
for certain limited, routine sales of unregistered securities, is not presently
available with respect to the Restricted Securities, and the Company is under no
obligation to furnish the information that might be necessary to enable the
undersigned to sell any of the Restricted Securities under Rule 144; and
(e) Only the Company may file a registration statement with the SEC,
and except as may be provided in any written agreement between the Company the
Holder: (i) the Company is under no obligation to do so with respect to the
Restricted Securities; nor (ii) does the Company have any obligation to file any
other disclosure statement with the SEC with respect thereto.
3. Legend And Stop-Transfer Orders. The undersigned understands that, if
required by applicable federal securities laws at the date of issuance of the
Restricted Securities, certificates or other instruments representing any of the
Restricted Securities acquired by the undersigned will bear a legend
substantially similar to the following, in addition to any other legends
required by federal or state laws, or by any contractual agreement binding upon
the undersigned with respect to the Restricted Securities:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
The undersigned agrees that, to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in the foregoing
legend, or elsewhere herein, the Company may issue appropriate "stop transfer"
instructions to its transfer agent, if any, with respect to any certificate or
other instrument representing Restricted Securities, or if the Company transfers
its own securities, that it may make appropriate notation to the same effect in
the Company's records.
4. Representations And Warranties. The undersigned represents and warrants
that:
(a) The undersigned has had access to all information regarding the
Company, its present and prospective business, assets, liabilities and financial
condition that the undersigned considers important to making the decision to
invest in the Restricted Securities. The undersigned has had ample opportunity
to ask questions of and receive answers from the Company's representatives
concerning this investment and to obtain any and all documents requested in
order to supplement or verify any of the information supplied.
(b) The undersigned recognizes that the investment in the Restricted
Securities involves special and substantial risks. The undersigned recognizes
(i) the highly speculative nature of the investment, (ii) the financial hazards
involved, (iii) the lack of liquidity of the Restricted Securities and the
restrictions upon transferability thereof, (iv) the qualifications and
backgrounds of the principals of the Company, and (v) the tax consequences of
investment in Restricted Securities, among other matters.
(c) The undersigned is capable of evaluating the merits and risks of
an investment in the Restricted Securities and is financially capable of bearing
a total loss of this investment.
-2-
(d) The undersigned either (i) has a preexisting personal or
business relationship with the Company or its principals or (ii) by reason of
the undersigned's business or financial experience, has the capacity to protect
the undersigned's own interests in connection with this transaction.
(e) The offer and sale of the Restricted Securities was not
accomplished by the publication of any advertisement.
(f) Neither the Company nor its attorneys or other advisors or
representatives have made any representations or warranties to the undersigned
with respect to the income or other tax consequences of an investment in the
Restricted Securities, and the undersigned is in no manner relying on the
Company or its attorneys or other advisors or representatives for an assessment
of such tax consequences.
(g) The undersigned's address is: __________________________________
__________________________________
__________________________________
(h) NET EXERCISE ELECTION: If applicable, the undersigned elects to
purchase the Restricted Securities by Net Exercise (as defined in the Option),
by initialing in the following space (please initial only if Net Exercise
chosen): _____________________________. _________________________________.
PRINTED NAME IF INDIVIDUAL : PRINTED NAME IF CORPORATION,
PARTNERSHIP OR TRUST:
______________________________________ ____________________________________
______________________________________
(Signature) By: ____________________________________
Date signed: _________________________ Name: __________________________________
Address: _____________________________ Title: _________________________________
_____________________________ Date signed: ___________________________
_____________________________ Address: _______________________________
Social Security Number: ______________ _______________________________
_______________________________
Taxpayer Identification Number:
________________________________________
-3-
ANNEX II
ASSIGNMENT FORM
ALGORX PHARMACEUTICALS, INC.
COMMON STOCK OPTION
ISSUED AS OF AUGUST 28, 2001
(To assign the foregoing Option, execute this form and supply the required
information)
(Do not use this form to exercise the Option to purchase shares.)
FOR VALUE RECEIVED, the Option for Common Stock of ALGORX PHARMACEUTICALS, INC.
initially issued as of August 28, 2001 (the "Option") and all rights evidenced
thereby are hereby assigned by the Assigning Holder as shown below, to the
Assignee as shown below:
Printed Name Of Assigning Holder: __________________________________________
Assigning Holder's Signature*: __________________________________________
Title (as appropriate): __________________
Assigning Holder's Address: __________________________________________
__________________________________________
Printed Name of Assignee: __________________________________________
Assignee's Signature*: __________________________________________
Title (as appropriate): __________________
Assignee's Address: __________________________________________
__________________________________________
Date of Assignment: __________________________________________
CONSENT TO ASSIGNMENT
(MUST BE COMPLETED AND SIGNED IN ORDER FOR ASSIGNMENT TO BE VALID:
ALGORX PHARMACEUTICALS, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
Date signed: _________________________
________________________________________________________________________________
* The signature to this Assignment for the Assigning Holder must correspond with
the name of such then-current Assigning Holder as it appears on the face of the
assigned Option at the time of such proposed transfer, without any change.
Officers of corporations and those acting in a fiduciary or other representative
capacity for the Assigning Holder must file with AlgoRx, with this Assignment,
proper evidence of authority to assign the Option.
TERM SHEET
This Term Sheet, executed by the parties effective as of June________,
2001 (the "Effective Date"), summarizes the terms proposed for a license to
AlgoRx Pharmaceuticals, Inc. ("AlgoRx") from Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxx
and Xxxxx Xxxxxxxxxx (together, the "Inventors") with respect to certain
intellectual property rights of the Inventors as described generally in this
Term Sheet.
1. License. The Inventors will license to AlgoRx under a binding License
Agreement (the "License Agreement"), to be negotiated by the parties in good
faith as quickly as possible after the Effective Date, generally having
commercially customary terms for a license and as described below in this Term
Sheet, on an exclusive, worldwide and perpetual basis in the Field of Use, as
defined below, the right to make, have made, use, import, sell, and offer for
sale, with the right to sublicense, licensed products and services practicing
the art of U.S. Patent Application No. 09/041294 (U.S. Patent No. 5,962,532)
together with all applications and patents, U.S. and foreign, claiming priority
or benefit directly or indirectly there from, and any and all rights in related
know-how and improvements as may now or hereafter be owned by the Inventors.
Customary terms include, but are not limited to, insurance and indemnification,
prosecution of infringers, defense of patent and confidentiality. In the License
Agreement, the Inventors will undertake to (a) conduct any work they may perform
after the date of the License Agreement towards the development of improvements
concerning the technology to which rights were licensed to AlgoRx under the
License Agreement, at their own expense or at AlgoRx's expense, so as to not
give rise to any rights of third parties to, and the Inventors will not
individually or collectively, after the Effective Date, grant rights to third
parties to, such improvements, and (b) to the extent that any third party
obtains any rights to such improvements, under binding agreements between such
relevant third party with the relevant Inventor(s) in effect as of the Effective
Date, or under applicable law as to any government rights, the Inventors will
use their reasonable best efforts to obtain a license or other rights, either
directly from such third party to AlgoRx, or through the Inventors, to permit
AlgoRx to use such improvements under the License Agreement. AlgoRx recognizes
the applicability of the Xxxxx Xxxxxxx University Invention Policy if the
Inventors were to make use of Xxxxx Xxxxxxx University resources for research
towards improvements to the technology licensed to AlgoRx pursuant to the
License Agreement. Under the License Agreement, AlgoRx will agree to use its
commercially reasonable efforts, based on the good faith judgment of AlgoRx's
Board of Directors as being consistent with AlgoRx's overall business needs and
goals, to develop and commercialize the technology to which rights were licensed
to AlgoRx under the License Agreement, to provide regular reports to the
Inventors in commercially reasonable detail with respect to such efforts, and to
take action with respect to patents as set forth below under "Patent Support".
Failure to do so will result in AlgoRx being in breach of the License Agreement.
Page 1
2. Field Of Use. Any human or non-human diagnostic, prophylactic or
therapeutic use of the technology to which rights were licensed to AlgoRx under
the License Agreement.
3. Milestone Royalty Payments from AlgoRx to Inventors. Under the License
Agreement, AlgoRx will pay the Inventors the following amounts in cash as a
royalty; all payments to the Inventors are shown below in aggregate amount and
do not represent individual payment amounts, and the amounts to be paid to each
Inventor will be as determined by them and will be set forth in the License
Agreement.
- Upon execution and delivery by AlgoRx and the Inventors of the
License Agreement: $50,000.00
- Upon issuance of European patent EP 0998288A: $25,000.00
- Upon issuance of Japanese patent: $25,000.00
- Upon first administration to a subject, using technology under the
License Agreement, in an FDA-approved clinical trial: $125,000.00
- First subject administered drug, using technology under the License
Agreement, in a Phase III trial: $200,000.00
- Upon FDA approval for commercial use of the first product in the
Field of Use using technology under the License Agreement:
$350,000.00
TOTAL CASH PAYMENTS: $775,000.00
Additionally, upon execution and delivery by AlgoRx and the Inventors of
the License Agreement, AlgoRx will reimburse the Inventors, in such individual
amounts as the Inventors agree in writing among themselves as will be set forth
in the License Agreement, (i) for actual costs incurred between the Effective
Date and the execution of the License Agreement, and (ii) up to a maximum, for
all such amounts in the aggregate, among all of the Inventors so reimbursed, of
$45,000.00, for documented legal fees, filing fees, and costs incurred up to the
Effective Date by the Inventors, related to the filing, prosecution, and
maintenance of U.S. Patent No. 5,962,932 and foreign counterparts thereof.
4. Running Royalties. The License Agreement will provide that, in
addition to the royalty payments set forth in Section 3 above, AlgoRx will pay
the Inventors, as an aggregate among all of the Inventors, in such individual
amounts as the Inventors will agree among themselves and as will be set forth in
the License Agreement, on a quarterly basis in arrears, an amount, as a royalty,
equal to 1.5% of net sales, by AlgoRx and its sublicensees, in the U.S. and in
each country where the product/treatment sold by AlgoRx and/or its sublicensees
is covered by a valid claim of a patent licensed to AlgoRx under the License
Agreement. For purposes of the License
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Agreement, "net sales" will mean revenue from sales of any licensed product(s),
net of the following deductions when applicable and separately invoiced: cash,
trade, or quantity discounts; sales, use, tariff, import/export duties or other
excise taxes (but not income or franchise taxes) imposed upon particular sales;
transportation charges; and rebates, allowances or credits to customers because
of rejections, recalls or returns.
5. Equity Grants. In consideration of the execution and delivery by the
Inventors of the License Agreement, AlgoRx will grant to the inventors upon the
execution and delivery by the parties of the License Agreement, non-qualified
stock options to purchase up to a total, among all the Inventors, of 216,666
shares of Common Stock of AlgoRx; the number of shares for which such options
are granted as to each Inventor will be as determined by the Inventors and will
be set forth in the License Agreement. Such options will vest (become
exercisable) upon achievement of milestones as specified below; the share
numbers shown below are aggregate numbers as to all Inventors together:
- Upon execution and delivery by AlgoRx and the Inventors of the
License Agreement 30,000 shares.
- Upon first administration to a subject, using technology under the
License Agreement, in an FDA-approved clinical trial: 72,222 shares.
- First subject-administered drug, using technology under the License
Agreement, in a Phase III trial: 72,222 shares.
- Upon FDA approval for commercial use of the first product in the
Field of Use using technology under the License Agreement: 72,222
shares.
TOTAL SHARES OF COMMON STOCK UNDER SUCH OPTIONS: 216,666 SHARES
The exercise price for the shares purchasable under each such option will
be $1.00, payable in cash. Such options will not terminate upon cessation of
service upon Scientific Advisory Board, or cessation of any other relationship
with AlgoRx other than the License Agreement, of the relevant Inventor, and such
options will after any such cessation continue to be exercisable according to
the achievement by AlgoRx of such relevant milestones. The options will
accelerate and become fully exercisable upon (a) a change of control (as defined
below) of AlgoRx or (b) an assignment or transfer of the License Agreement by
AlgoRx to a person or entity which is not an affiliate of AlgoRx. Once the
options become so fully exercisable, the Inventors will have 90 days to exercise
their options.
For purposes of such option acceleration, "change of control" will mean
either (a) a merger or consolidation in which AlgoRx is not the surviving entity
(other than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of AlgoRx in a different jurisdiction, and other than any other
transaction in which there is no material change in the identity of the
shareholders of AlgoRx or their relative shareholdings in
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AlgoRx and in each such case such options are assumed, converted or replaced by
the successor or acquiring corporation), or (b) a merger in which AlgoRx is the
surviving entity but after which the shareholders of AlgoRx immediately prior to
such merger (excluding any entity shareholder of AlgoRx which merges with AlgoRx
in such merger, or which owns or controls another corporation or other entity
which merges with AlgoRx in such merger) do not own, immediately after such
merger, voting control of the surviving entity.
6. Patent Support. Under, and following execution and delivery of, the
License Agreement, AlgoRx will assume responsibility for, and will pay all
expense for, the filing and prosecution, including without limitation
maintenance and filing fees, of all patents licensed to AlgoRx under the License
Agreement, and to prosecute alleged infringers of, and defend, such patents.
Under the License Agreement, the Inventors will agree to assist AlgoRx in such
patent activities.
7. Termination of License Agreement. Under the License Agreement, AlgoRx
will at its election be entitled to terminate the License Agreement upon at
least 30 days' written notice to the Inventors, which notice will be effective
no earlier than the first anniversary of the effective date of the License
Agreement. The License Agreement will provide that upon any such termination
AlgoRx will cease to have any rights to the technology licensed to AlgoRx under
the License Agreement. Options granted by AlgoRx to the Inventors as described
above in this Term Sheet that are vested at the time of any such termination
will survive such termination, but will terminate and cease to be exercisable
thereafter as to any options that are not exercisable at the time of such
termination.
8. Standstill. In consideration of the time and effort expected to be
expended by AlgoRx in connection with due diligence and negotiation of the
matters described in this Term Sheet, for a period of seventy-five (75) days
(the "Standstill Period") after and commencing with the Effective Date of this
Term Sheet, as shown at the end of this Term Sheet, provided that negotiations
are then proceeding in good faith, the Inventors will not, individually or
collectively, initiate or pursue negotiations with any other party with respect
to the assignment or licensing of any rights to the technology described in this
Term Sheet that would be subject to the proposed License Agreement.
9. Access to Documents, Confidentiality. During the Standstill Period, the
Inventors will allow AlgoRx access to all documentation necessary for AlgoRx to
complete its due diligence investigation of the intellectual property of the
Inventors that would be subject to the License Agreement. AlgoRx will use such
due diligence information solely for purposes of evaluating the technology
proposed to be licensed to AlgoRx under the License Agreement and with respect
to the terms of the License Agreement, and to communicate such information only
to those of AlgoRx's employees and advisers who need to know such information to
assist in such review; subject to the foregoing, AlgoRx will hold all
information obtained from such due diligence examination in confidence, and will
execute such mutual nondisclosure agreement, in commercially
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customary form and with such commercially customary terms, as is requested in
good faith by the Inventors.
10. Non-Binding Nature Of Certain Provisions Of This Term Sheet; Final
Agreements. Except for the provisions of Section 8 and Section 9 hereof, which
are binding upon the parties, this Term Sheet is not binding in any way on
either party or any third party, and is intended only as a summary of the
parties' discussions to date to enable them to continue their negotiations with
the intent of executing and delivering final binding written agreements as to
the matters described in this Term Sheet. The parties further acknowledge that
this Term Sheet does not contain all matters upon which agreement must be
reached in order for the definitive agreements to be signed, and undertake to
pursue negotiations in good faith towards the execution of definitive
agreements. Execution of the final agreements will be subject to approval
thereof by AlgoRx's Board of Directors, and to AlgoRx's satisfaction with the
results of its due diligence inquiry into the Inventors' technology and
intellectual property rights proposed to be licensed to AlgoRx under the License
Agreement, including any rights of any third parties in such technology and
intellectual property.
11. General. This Term Sheet may not be amended except by a writing signed
by all parties hereto, will be governed by the laws of the State of California,
and may not be assigned without the prior written consent of all parties hereto.
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ALGORX INVENTORS
PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxx /s/ Xxxxx X. Xxxxxxxx
---------------------------------- ---------------------------------
Name: Xxxxxx Xxxx Xxxxx X. Xxxxxxxx
Title: Chief Business Officer Date signed: 6-20, 2001
Date signed: June 18, 2001
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
Date signed: June 20, 2001
/s/ Xxxxx Xxxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxxx
Date signed: June 19, 2001
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