1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Xxxx"). This Exhibit has been filed separately with the
Secretary of the Commission without the Xxxx pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.5
TERMINATION, SETTLEMENT
AND INVESTMENT AGREEMENT
THIS TERMINATION, SETTLEMENT AND INVESTMENT AGREEMENT (hereinafter
"Agreement"), made as of July 16, 1996, by and between Anthra Pharmaceuticals,
Inc., a corporation organized under the laws of the State of Delaware, U.S.A.,
having its principal business office at 00 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx
00000, X.X.X. ("Anthra"), and Schering AG, a corporation organized under the
laws of the Federal Republic of Germany, having its principal business office at
00000 Xxxxxx, Xxxxxxx ("Schering"),
WITNESSETH:
WHEREAS, Anthra has developed certain proprietary know-how and data
with respect to N-Trifluoroacetyladriamycin-14 valerate, a doxorubicin
derivative ("AD 32"); and
WHEREAS, Anthra and Schering entered into a Development and License
Agreement, dated as of September 20, 1995, relating to AD 32 ("D&L Agreement");
and
WHEREAS, Anthra and Schering have agreed to terminate the D&L
Agreement and render the D&L Agreement null
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and void except as restated herein; and
WHEREAS, it is the intention of Anthra and Schering that all issues
in connection with the D&L Agreement be forever settled, that this Agreement be
substituted in place of the D&L Agreement, and that neither of the parties, upon
the signing of this Agreement, be further obligated under the D&L Agreement;
NOW, THEREFORE, in consideration of the recitals above made, and the
payments, covenants and obligations set forth herein, and intending to be
legally bound, the parties agree as follows:
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ARTICLE I
DEFINITIONS
1.1 "AD 32" shall have the meaning set forth in the preamble hereto.
1.2 "Affiliate" of a person shall mean any corporation, partnership
or other entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such person.
"Control" and, with correlative meanings, the terms "controlled by" and "under
the common control with" shall mean the power to direct or cause the direction
of the management or policies of a person, whether through the ownership of
voting securities, by contract, resolution, regulation, or otherwise.
1.3 "Anthra" shall mean Anthra Pharmaceuticals, Inc. and its
Affiliates.
1.4 "Audit Disagreement" shall have the meaning set forth in Section
5.7.
1.5 "Contract Quarter" shall mean each period of three consecutive
calendar months during the term of this Agreement, commencing on the first day
of January, April, July or October, as the case may be, and any partial such
period ending on the date of expiration or earlier termination of this
Agreement.
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1.6 "D&L Agreement" shall mean the Development and Licensing
Agreement entered into between Anthra and Schering, as of September 20, 1995.
1.7 "Disclosing Party" shall have the meaning set forth in Section
6.3.
1.8 "Licensee" shall mean any third party to which Anthra grants a
license to market, sell and distribute the Product.
1.9 ***
1.10 "Notice" shall have the meaning set forth in Section 8.1.
1.11 "Product" shall mean AD 32, in finished dosage form, including
all forms of application and administration, whether or not in combination with
any other pharmacologically active ingredient.
1.12 "Purchaser" shall mean any third party which purchases or
otherwise acquires Anthra's rights in or to AD32 and/or the Product.
1.13 "Receiving Party" shall have the meaning set forth in Section
6.3.
1.14 "Schering" shall mean Schering AG and its Affiliates.
1.15 "Shares" shall have the meaning set forth in Section 4.1.
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ARTICLE II
RELEASES
2.1 Mutual Releases. In consideration of the promises, covenants,
and payments under this Agreement, Anthra, for the first part, and Schering, for
the second part, and their respective successors, administrators, legal
representatives, assigns, employees, parent and subsidiary corporations,
partners, their respective stockholders, officers, directors, representatives,
principals, agents, successors, and assigns, and each of their associated
entities and Affiliates, do hereby release, acquit, satisfy, fully release and
forever discharge one another and one another's successors, administrators,
legal representatives, assigns, employees, parent and subsidiary corporations,
partners, their respective stockholders, officers, directors, representatives,
principals, agents, successors, and assigns, and each of their associated
entities and Affiliates, of and from all, and all manner of actions, causes of
actions, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, claims and demands
whatsoever, in law or in equity, which either party ever had, now has, or which
either party's successors, heirs, executors or administrators, hereafter can,
shall or
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may have, in any manner arising from, related to, or in connection with the D&L
Agreement.
ARTICLE III
PAYMENTS TO ANTHRA
3.1 Settlement Payment. In partial consideration of the execution
and delivery by Anthra of this Agreement and the issuance and delivery of the
Shares, Schering shall pay Anthra the sum of Three Million Five Hundred Thousand
(U.S.) Dollars (US $3,500,000), which proceeds shall be used in research
relating to AD32. Schering expressly acknowledges that, as between Anthra and
Schering, Anthra will own all rights, title and interest in and to any such
research, and any data, know-how, intellectual property, or other property of
any kind whatsoever, tangible or intangible, resulting from any such research.
3.2 Manner of Payment. Payment to Anthra by Schering under this
Article III shall be made within *** of the execution and delivery of this
Agreement, in U.S. Dollars, by wire transfer of immediately available funds to
the following account: ***.
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ARTICLE IV
ISSUANCE OF SHARES TO SCHERING
4.1 Issuance of Stock. In partial consideration of the execution
and delivery by Schering of this Agreement, Anthra shall issue and deliver to
Schering 200,000 shares of its Series D Convertible Preferred Stock, $0.01 par
value (the "Shares"), free and clear of all restrictions upon transfer, liens,
pledges, charges, and encumbrances of any kind, nature or restriction.
4.2 Representations and Warranties of Anthra. In connection with the
issuance of the Shares to Schering, Anthra hereby makes the following
representations and warranties:
A. Organization and Qualification of Anthra. Anthra is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with full power and
authority to own or lease its properties and to conduct the business
heretofore conducted by it in the manner and in the places where such
properties are owned or leased or such business is conducted by it.
B. Authority of Anthra. Anthra has full power and authority to
issue and deliver the Shares in accordance with the terms of this
Agreement. When issued in accordance with this Agreement, the Shares will
be validly issued, fully paid and nonassessable. All necessary action,
corporate or otherwise, has been taken by Anthra to
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authorize the issuance and delivery of the Shares.
C. No Conflicts. The issuance and delivery of the Shares in
accordance with the terms of this Agreement by Anthra will not constitute
a default or event of default under, or violate, conflict with, or result
in any breach of the terms, conditions, or provisions of: (i) the
corporate charter or By-laws of Anthra; (ii) the laws or regulations of
any jurisdiction or any other governmental requirements; or (iii) any
material mortgage, lien, lease, agreement, contract, instrument, order,
arbitration award, injunction, judgment or decision to which Anthra is a
party or by which it or its property is bound or materially affected.
4.3 Representations and Warranties of Schering. In connection with
the issuance of the Shares to Schering, Schering hereby makes the following
representations and warranties:
A. Accredited Investor. Schering is an "accredited investor"
within the definition set forth in Rule 501(a) promulgated under the
Securities Act of 1933. Schering understands that Anthra is relying on
such representation.
B. Securities Not Registered. Schering understands (i) that
the Shares have not been registered for sale under United States federal
or state securities laws
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and that the Shares are being offered and sold to Schering pursuant to one
or more exemptions from the registration requirements of such securities
laws; (ii) that in order to satisfy such requirements Schering must be
acquiring the Shares for its own account for investment and not with a
view to distribution thereof except in accordance with applicable
securities laws and that the representations and warranties contained in
this Section 4.3 are given with the intention that Anthra may rely thereon
for purposes of claiming such exemption; and (iii) that the Shares cannot
be sold by Schering unless subsequently registered under such laws or
unless an exemption from such registration is available.
C. Shares Acquired for Investment; Limitations on Disposition.
Schering agrees that the Shares will not be sold or otherwise transferred
unless (i) a registration statement with respect thereto has become
effective under the U.S. Securities Act of 1933; or (ii) there is
presented to Anthra an opinion of counsel reasonably satisfactory to
Anthra that registration under federal and state securities laws is not
required; or (iii) pursuant to the provisions of Rule 144 promulgated
under the U.S. Securities Act of 1933.
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ARTICLE V
ROYALTY PAYMENTS TO SCHERING
5.1 Royalties. In partial consideration of the execution and
delivery by Schering of this Agreement, Anthra shall pay Schering, ***. Anthra
agrees to require any Purchaser to assume the royalty obligations of Anthra set
forth in this Article V.
5.2 Payment of Royalties. Royalty payments to Schering with respect
to *** shall be made to Schering ***, in U.S. dollars by wire transfer of
immediately available funds to an account at a commercial bank designated by
Schering, within *** of the end of the Contract Quarter in which such sales of
the Product occurred. Schering shall designate a commercial bank to receive
funds pursuant to this Section, at least five business days before payment is
due. Where payments are based on *** in countries other than the United States,
the amount of *** expressed in the currency of each country shall be converted
into U.S. dollars at the average exchange rate for the applicable Contract
Quarter. In determining the average exchange rate for the Contract Quarter, the
standard shall be fifty percent (50%) of the sum of (i) the rate quoted by
Reuters in New York at 1:00 p.m. on the last business day of the Contract
Quarter; plus (ii) the rate quoted by Reuters in New York at 1:00 p.m. on the
last
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business day of the immediately preceding Contract Quarter.
5.3 Statement of Royalties. Each royalty payment made pursuant to
this Article V shall be accompanied by a statement showing the amounts *** and,
if applicable, its Licensees, on a country-by-country basis, during such ***,
and the amount of royalties due on such ***.
5.4 Withholding Taxes. Anthra shall pay any and all withholding
taxes or similar charges imposed by any government on any amounts due to
Schering from Anthra pursuant to this Article V (whether in respect of sales by
Anthra or its Licensees) to the proper taxing authority, and proof of payment of
such taxes or charges will be secured and sent to Schering as evidence of such
payment. All amounts paid by Anthra pursuant to this Section 5.4 shall be paid
for the account of Schering and credited against royalties due from Anthra to
Schering pursuant to Section 5.1. For the avoidance of doubt, it is hereby
agreed that until such time as an appropriate certificate of exemption is
obtained from the tax authorities, Anthra shall be entitled to deduct from any
payments due to Schering all applicable withholding taxes or similar charges
imposed by any government.
5.5 Record Keeping. Anthra shall, and shall cause its Licensees to,
keep complete and accurate books and records pertaining to the sale of the
Product in sufficient detail to
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permit an independent, certified public accountant appointed by Schering to
audit and confirm the accuracy of calculations of payments due to Schering
hereunder. Such books and records shall be retained by the party in question for
at least five (5) years after the expiration or termination of this Agreement,
or for such longer period if and as required by law.
5.6 Audit of Records. At the request of Schering, Anthra shall, and
shall cause its Licensees to, permit an independent, certified public accountant
appointed by Schering and reasonably acceptable to Anthra at reasonable times
and upon reasonable notice, to examine such books and records as may be
necessary to: (i) determine, with respect to any Contract Quarter, the
correctness of any report or payment made under this Agreement; or (ii) obtain
information as to the amount payable for any such Contract Quarter in the case
of failure on the part of Anthra to report or pay pursuant to this Agreement.
The audit of records conducted pursuant to this Section 5.6 shall not occur more
frequently than once per year for Anthra, each of its Licensees and its
Affiliates and shall not go back beyond the last audit unless irregularities are
found. The results of any such audit shall be promptly made available to Anthra.
5.7 Audit Disagreement. If there is a dispute
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between the parties following any audit performed pursuant to Section 5.6,
either party may refer the issue (the "Audit Disagreement") to an independent,
certified public accountant for resolution pursuant to Section 5.8.
5.8 Independent Expert Review. In the event an Audit Disagreement is
submitted for resolution by either party pursuant to this Article, the parties
shall comply with the following procedures:
(a) The party submitting the Audit Disagreement for resolution
shall provide written Notice to the other party that it is invoking the
procedures of this Section.
(b) Within fifteen business days of the giving of such Notice,
the parties shall select a recognized international accounting firm to act as an
independent expert to resolve the Audit Disagreement.
(c) The Audit Disagreement submitted for resolution shall be
described by the parties to the independent expert, which description may be in
written or oral form, within twenty business days of the selection of such
independent expert.
(d) The independent expert shall render a decision on the
matter as soon as practicable.
(e) The decision of the independent expert
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shall be final and shall not be subject to arbitration under Section 8.5. The
parties hereto shall comply with such decision in all respects.
(f) All fees and expenses of the independent expert, including
any third party support staff or other costs incurred with respect to carrying
out the procedure specified above at the direction of the independent expert,
shall be borne by the losing party, unless the decision of the independent
expert allocates such fees and expenses differently.
ARTICLE VI
CONFIDENTIALITY
6.1 Confidential Information Relating to D&L Agreement. For a period
of five (5) years from the date hereof, Schering shall keep completely
confidential and shall not publish or otherwise disclose and shall not use
directly or indirectly for any purpose any information furnished to Schering by
Anthra pursuant to the D&L Agreement or otherwise relating to any transaction in
connection with the D&L Agreement, except to the extent that Schering can
establish by competent proof that such information falls within the terms of
Section 6.3 (a)-(d) hereof.
6.2 Transfer of Information in Connection with D&L
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Agreement. Schering shall (i) transfer to Anthra, within thirty (30) days of the
date hereof, all data, files and other materials in the possession or under the
control of Schering relating to the Product or (ii) provide to Anthra, within
thirty (30) days of the date hereof, a certificate signed by an officer of
Schering stating that all such materials have been destroyed.
6.3 Confidential Information. Except to the extent permitted by this
Agreement or as otherwise agreed by the parties in writing, the parties agree
that, at all times during the term of this Agreement and for a five (5) year
period following termination or expiration hereof, the party receiving
information (the "Receiving Party") shall keep completely confidential, shall
not publish or otherwise disclose and shall not use directly or indirectly for
any purpose any information furnished to it by the other party (the "Disclosing
Party") pursuant to this Agreement or otherwise relating to any transaction
contemplated hereby, except to the extent that the Receiving Party can establish
by competent proof that such information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
(b) was part of the public domain at the time
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of its disclosure by the Disclosing Party;
(c) became part of the public domain after its disclosure by
the Disclosing Party, other than through any act or omission of the Receiving
Party in breach of this Agreement; or
(d) was disclosed to the Receiving Party by a third party who
had no obligation not to disclose such information to others.
ARTICLE VII
TERM AND TERMINATION
7.1 Term. The term of this Agreement shall commence as of the date
on which Anthra shall receive the payment set forth in Article III hereof, and
shall expire at the end of the Second Royalty Period.
7.2 Termination for Material Breach. This Agreement shall be subject
to early termination by either party in the event of a material breach hereof by
the other party with respect to its obligations under this Agreement, which
breach is not cured within sixty (60) days (or, in the case of a payment
default, ten (10) business days) following written Notice thereof by the
non-breaching party; provided, however, that Anthra shall be required to pay
Schering all royalties that may accrue pursuant to Section 5.1 hereof through
the date of expiration or the earlier termination of the Agreement.
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7.3 Termination for Other Events. Schering may terminate this
Agreement if, at any time, Anthra shall file in any court or agency pursuant to
any statute or regulation of any state or country, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the appointment of
a receiver or trustee of Anthra or of its assets, or if Anthra proposes a
written agreement of composition or extension of its debts, or if Anthra shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if Anthra shall propose or be a party to any
dissolution or liquidation, or if Anthra shall make an assignment for the
benefit of its creditors.
7.4 Effect of Expiration or Termination. The expiration of the term
hereof, or any early termination of this Agreement, shall be without prejudice
to any rights or obligations of the parties that may have accrued prior to such
expiration or termination. Termination of this Agreement in accordance with the
provisions hereof shall not limit remedies which may otherwise be available in
law or equity. The rights and obligations of the parties under Article II hereof
and this Article VII shall survive expiration or termination of this Agreement.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Notice. All notices, requests, reports, statements and other
communications to either party (each a "Notice") shall be in writing, in the
English language, shall refer specifically to this Agreement and shall be hand
delivered or sent by express courier service, carriage costs prepaid, or by
facsimile to the respective addresses specified below (or to such other address
as may be specified by Notice to the other party):
If to Anthra:
Anthra Pharmaceuticals, Inc.
00 Xxxxxx Xxxx
Xxxxxxxxx, X.X. 00000 XXX
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
If to Schering:
Xxxxxxxx XX
00000 Xxxxxx
Xxxxxxx
Fax: 00-00-000-0000
Attention: Head, Legal Department
Any Notice delivered by facsimile or similar means shall be
confirmed by a hard copy delivered as soon as practicable. The effective date of
any Notice shall be: (a) the date of the addressee's receipt, if delivered by
hand or express courier; (b) the date of receipt if received by
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5:00 p.m. local time on a business day or, if not, the first business day after
receipt, if sent by facsimile.
8.2 Further Assurances. Each party shall duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such assignments, agreements, documents and instruments, as may be
necessary or as the other party may reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes hereof,
or to better assure and confirm unto such other party its rights and remedies
under, this Agreement.
8.3 Successors and Assigns. The terms and provisions hereof shall
inure to the benefit of, and be binding upon, Anthra, Schering and their
respective successors and permitted assigns; provided, however, that, except as
expressly provided herein, neither party may, without the prior written consent
of the other party, assign or otherwise transfer any of its rights and
interests, or delegate any of its obligations, hereunder. Any attempt to assign
or delegate any portion of this Agreement in violation of this Section 8.3 shall
be null and void.
8.4 Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the
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laws of the State of Delaware, U.S.A., without regard to principles of conflicts
of law.
8.5 Arbitration. Except as set forth in Section 5.8 hereof, any
disputes arising under this Agreement shall be resolved by arbitration in
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce to be held in New York, New York. All proceedings are to be
conducted in the English language. The parties shall appoint an arbitrator by
mutual agreement. If the parties cannot agree on the appointment of an
arbitrator within thirty (30) days after receipt of a demand for arbitration,
each party shall appoint one arbitrator, and the two arbitrators shall appoint a
third arbitrator. If the party-appointed arbitrators cannot agree on the third
arbitrator, the third arbitrator shall be appointed by the President of the
International Chamber of Commerce. Any fees and expenses payable with respect to
the arbitration shall be borne by the party losing the case. All arbitration
rulings and awards shall be final and binding on the parties and shall be
enforceable in accordance with the Convention on the Recognition and Enforcement
of Foreign Arbitral Awards.
8.6 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by
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applicable law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties as nearly as may be possible, (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction, and (c) the parties
agree to use their best efforts to negotiate a provision, in replacement of the
provision held invalid, illegal or unenforceable, that is consistent with
applicable law and accomplishes, as nearly as possible, the original intention
of the parties with respect thereto. To the fullest extent permitted by
applicable law, each party hereby waives any provision of law that would render
any provision hereof prohibited or unenforceable in any respect.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which,
taken together, shall constitute one and the same instrument.
8.8 Captions. The captions of this Agreement are for convenience of
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement.
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8.9 Entire Agreement. This Agreement constitutes, on and as of the
date hereof, the entire agreement of the parties with respect to the subject
matter hereof, and all prior or contemporaneous understandings or agreements,
whether written or oral, between the parties with respect to such subject
matter, including without limitation the D&L Agreement, are hereby superseded in
their entireties. This Agreement shall not be amended in any respect whatsoever
except by a further agreement, in writing, fully executed by each of the
parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
ANTHRA PHARMACEUTICALS, INC. SCHERING AG
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xx. Xxxxx
-------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xx. Xxxxx
Title: President Title: Member of the Board
of Executive Directors
By: /s/ Xx. X-X Xxxx
--------------------------------
Name: Dr. X-X. Xxxx
Title: Head of Strategic
Business Unit Therapeutics
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