EXHIBIT 10.21
EXECUTION COPY
ROYALTY AGREEMENT
THIS ROYALTY AGREEMENT is made and entered into as of October 16, 2002
(the "Effective Date"), by and between ENZON, INC., a Delaware corporation
("Enzon"), and VIVO HEALTHCARE CORPORATION, a Delaware corporation ("Vivo").
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Assignment Agreement, dated as of October 16, 2002, by
and among Enzon, Vivo, and the Vivo shareholders listed on Schedule A thereto
(the "Assignment Agreement").
WHEREAS, pursuant to the terms of the Assignment Agreement, Vivo has
agreed to sell and assign, and Enzon has agreed to purchase and assume, the
Assigned Assets; and
WHEREAS, pursuant to Paragraph 2(b) of the Assignment Agreement, Vivo and
Enzon have agreed to enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Enzon and Vivo agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Royalty Agreement, the following terms and variations
thereof have the meanings specified or referred to in this Article I:
"Affiliates" - any person or entity which directly or indirectly controls,
is controlled by, or is under common control with a party hereto. For purposes
of this Royalty Agreement, "control" means the legal, beneficial or equitable
ownership directly or indirectly of more than 50% of the aggregate of all voting
equity interests rights in such entity.
"Net Sales Amount" - shall mean the invoiced amount of sales of Products
by Enzon or any of its Affiliates or licensees to customers less (1) actual
allowances for returns, damages or otherwise, and discounts, rebates and
allowances to customers, including cash, credit or free goods allowances; and
(2) freight or other transportation charges, including insurance, actually
allowed or paid on account of the delivery of Products to purchasers thereof;
and (3) taxes (except income taxes) or duties paid, absorbed or otherwise
imposed on the sale, including, without limitation, value added taxes.
"Patents" - any and all domestic or foreign patents subsequently issued to
Enzon relating to the p-MPA Technology being transferred from Vivo to Enzon
pursuant to the Assignment Agreement, including any continuations-in-part,
continuations, divisions, substitutes, reissues, reexaminations or extensions
thereof.
"Products" - any products which embody any of the p-MPA Technology, any
Patents or are covered by any claim of the Patents.
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ARTICLE II.
ROYALTY OBLIGATIONS
Section 2.1 Amount of Payment. Enzon shall pay a royalty (the
"Royalty") to Vivo during the Term as set forth below:
(a) Enzon shall pay a Royalty to Vivo based upon the following
percentages (the "Royalty Percentage") of:
(i) the aggregate Net Sales Amount of any Products sold by
Enzon or any of its Affiliates on a country by country
basis, for the longer of (A) ten years from the date
hereof or (B) such time as any of the Patents with
respect to such country remain valid, enforceable, and
in effect:
(A) three percent (3%) up to the first $25 million of
aggregate Net Sales Amount;
(B) two percent (2%) for the next $25 million of
aggregate Net Sales Amount;
(C) one percent (1%) for the next $50 million of
aggregate Net Sales; and
(D) one-half of one percent (0.5%) thereafter; and
(ii) the aggregate royalties received by Enzon or any of its
Affiliates on Net Sales Amount of any Products sold by
licensees of Enzon or any of its Affiliates on a country
by country basis, for the longer of (A) ten years from
the date hereof or (B) such time as any of the Patents
with respect to such country remain valid, enforceable,
and in effect:
(A) three percent (3%) of the aggregate royalties
received by Enzon or any of its Affiliates on such
Net Sales Amount up to the first $25 million of
aggregate Net Sales Amount;
(B) two percent (2%) of the aggregate royalties
received by Enzon or any of its Affiliates on such
Net Sales Amount for the next $25 million of
aggregate Net Sales Amount;
(C) one percent (1%) of the aggregate royalties
received by Enzon or any of its Affiliates on such
Net Sales Amount for the next $50 million of
aggregate Net Sales;
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(D) and one-half of one percent (0.5%) of the
aggregate royalties received by Enzon or any of
its Affiliates on such Net Sales Amount
thereafter.
(b) Upon expiration of the longer of (i) ten years from the
date hereof or (ii) such time as any of the Patents with respect to
such applicable country remain valid, enforceable and in effect,
Enzon shall have no further obligation to pay the Royalty in any
applicable country.
Section 2.2 Payment of Royalty. Enzon shall pay the Royalty
quarterly. Within forty-five (45) days after the end of each calendar quarter,
Enzon shall (i) pay Vivo the amount of the Royalty owed by Enzon for such
calendar quarter, and (ii) provide Vivo with a written report setting forth the
Net Sales Amount with respect to the Products sold by Enzon or its Affiliates or
royalties received by Enzon or its Affiliates on the Net Sales Amount sold by
licensees for the applicable quarter, and the computation of the Royalty with
respect thereto for the applicable quarter. The Royalty shall be payable in
currency of the United States of America regardless of the country where earned
and shall be paid or deposited as designated in writing by Vivo. The exchange
rate used to calculate the Royalty shall be the same rate specified under
Financial Accounting Standards Board Statement 52, or its successor, used to
translate the financial results of Enzon or its Affiliates for public reporting.
Section 2.3 Records and Reports; Audits. Enzon shall keep true and
accurate records and books of account containing information necessary for the
determination of the Royalty payable hereunder. Vivo shall be entitled to
conduct an audit, once quarterly upon thirty (30) days' prior written notice to
Enzon, of such books and records. Vivo may engage an independent third party
auditor to conduct such audits. Enzon shall be entitled to receive a copy of any
audit reports produced by or on behalf of Vivo hereunder. In the event any such
audit reveals a greater than ten percent (10%) discrepancy between the correct
amount of the Royalty which should have been paid by Enzon pursuant to the terms
herein during the period covered by such audit and the actual amount of the
Royalty paid by Enzon during such period, Enzon shall reimburse Vivo for the
costs of such audit.
Section 2.4 No Obligation to Exploit. Notwithstanding anything to
the contrary contained in this Royalty Agreement and subject to Paragraph 4 of
the Assignment Agreement, Enzon shall have no obligation to develop,
commercialize or otherwise exploit the p-MPA Technology or any Product. Without
limiting the foregoing, Enzon shall have no obligation to file any Patent
applications or to maintain any Patents, if and when issued.
ARTICLE III.
TERM; TERMINATION
Section 3.1 Term. This Royalty Agreement commences upon the
Effective Date and terminates at such time when Enzon has no further obligation
to pay any Royalties pursuant to Section 2.1 or at such earlier date as provided
in this Article III (the "Term").
Section 3.2 Termination Upon Breach. Upon thirty (30) days' prior
written notice to Vivo, Enzon may terminate this Royalty Agreement if Vivo
breaches any of its material obligations hereunder or in the Assignment
Agreement and fails to cure such breach by the end
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of such thirty (30) day period, or, if the parties agree that the breach is not
capable of being cured or remedied within thirty (30) days, then within a time
frame mutually agreed upon by the parties.
Section 3.3 Termination For Non-Development. Notwithstanding any
other provision hereof, this Royalty Agreement shall terminate in the event Vivo
causes a reassignment of the Assigned Assets pursuant to Section 4 of the
Assignment Agreement.
Section 3.4 Remedies upon Termination. Termination of this Royalty
Agreement shall not limit either party from pursuing any other remedies
otherwise available to it, including, without limitation, injunctive relief.
Section 3.5 Effect of Termination. In the event of notice of
termination, each party shall continue to perform its obligations hereunder up
to the date of termination. Upon termination, except as otherwise provided
herein, the obligations of the parties hereunder shall cease and Enzon shall pay
Vivo any amounts then owing hereunder; provided, however, that in the event of
termination due to a breach by Vivo, Enzon shall have the right to offset any
payment due to Vivo under Section 2.1.
ARTICLE IV.
CONFIDENTIALITY
Vivo acknowledges that any information concerning Enzon received in
connection with this Royalty Agreement shall be deemed "Confidential and
Proprietary Information." Vivo agrees that it shall not permit the duplication,
use or disclosure of any such Confidential and Proprietary Information to any
person or entity. Confidential and Proprietary Information does not include any
information which, at the time of disclosure, is generally known by the public
through no breach of the disclosing party. The provisions of this Article IV
shall survive the expiration or termination of this Royalty Agreement.
ARTICLE V.
INTELLECTUAL PROPERTY
Section 5.1 Right to Defend. At the election and expense of Enzon,
Enzon shall have the sole right (but not the obligation), to protect all
intellectual property rights related to the p-MPA Technology or the Products, by
obtaining and maintaining appropriate patent, trademark, trade secret or other
rights. Vivo agrees to cooperate, at the expense of Enzon, in the filing and
prosecution of patent applications in the United States and in foreign countries
in connection with all such intellectual property rights, and to promptly notify
Enzon of any conflicting uses of, or any applications or registrations to use,
any xxxx, name, symbol, device or word that becomes known to Vivo that Enzon
believes may constitute an act of infringement with respect to the intellectual
property rights related to p-MPA Technology or the Products.
Section 5.2 Ownership of Intellectual Property. Vivo acknowledges
that neither this Royalty Agreement nor the performance of its obligations
hereunder shall affect the ownership by Enzon of any of the goodwill or
intellectual property rights related to p-MPA Technology or the Products, and
such goodwill or other rights shall be and remain in the name of Enzon. Vivo
warrants that it shall not at any time (a) do or cause to be done any act or
thing
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contesting or in any way impairing or tending to impair any part of such
ownership and/or rights, or (b) represent that it has any ownership in p-MPA
Technology or the Products or any intellectual property rights in connection
therewith.
ARTICLE VI.
MISCELLANEOUS
Section 6.1 No Joint Venture. Nothing herein shall create any
association, partnership, joint venture or agency relationship between the
parties hereto or any third party.
Section 6.2 Further Assurances. The parties shall cooperate
reasonably with each other in connection with any steps required to be taken as
part of their respective obligations under this Royalty Agreement, and the
parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Royalty Agreement.
Section 6.3 Notices. All notices, consents, waivers, and other
communications under this Royalty Agreement must be in writing and are deemed to
have been duly given when (a) delivered by hand with written confirmation of
receipt, (b) sent by facsimile with confirmation of transmission by the
transmitting equipment, (c) five (5) days after delivery, if sent by certified
mail, return receipt requested, or (d) one (1) day after delivery, if sent by a
nationally recognized overnight delivery service, return receipt requested, in
each case to the appropriate addresses, or facsimile numbers set forth below (or
to such other addresses, facsimile numbers or as a party may designate by notice
to the other parties):
Enzon: Enzon, Inc.
000 Xxxxx 000/000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
with a copy to: Enzon, Inc.
000 Xxxxx 000/000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President General Counsel
Fax: (000) 000-0000
Vivo: Vivo Healthcare Corporation
000 Xxxxxxx Xxxxxx, Xxxx 0-0
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx
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with a copy to: Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Section 6.4 Waiver . The rights and remedies of the parties to this
Royalty Agreement are cumulative and not alternative. Neither the failure nor
any delay by any party in exercising any right under this Royalty Agreement
operates as a waiver of such right, and no single or partial exercise of any
such right precludes any other or further exercise of such right or the exercise
of any other right. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Royalty Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party is applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party is deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Royalty Agreement.
Section 6.5 Entire Agreement and Modification. This Royalty
Agreement and the Assignment Agreement constitute the entire agreement between
the parties with respect to the subject matter of this Royalty Agreement and
supersede all prior written and oral agreements and understandings between the
parties with respect to the subject matter of this Royalty Agreement. This
Royalty Agreement may not be amended except by a written agreement signed on
behalf of each of the parties hereto.
Section 6.6 Assignment. Except as set forth below, no party to this
Royalty Agreement may assign, transfer, or otherwise dispose of any of its
rights, duties, or obligations hereunder without the prior written consent of
the other party hereto; provided, however (i) upon prior written notice to Vivo,
Enzon may assign, transfer, or otherwise dispose of any of its rights, duties or
obligations hereunder to any of its Affiliates or in connection with the sale or
other transfer of all or a portion of the business, assets, or properties or
stock of Enzon or any of its Affiliates without the consent of Vivo (in which
case Enzon shall continue to be liable for its obligations hereunder) and (ii)
upon prior written notice to Enzon, Vivo may assign all of its rights, duties
and obligations under the Agreement to the Shareholders without the prior
written consent of Enzon, provided the assignee Shareholders agree to be bound
by the terms and conditions of this Royalty Agreement and no such assignment
shall relieve Vivo from any of its obligations hereunder. Subject to the
foregoing, this Royalty Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their permitted successors and assigns.
Section 6.7 Severability. If any provision of this Royalty Agreement
is held invalid or unenforceable by any court of competent jurisdiction, the
other provisions of this Royalty Agreement remain in full force and effect. The
parties further agree that if any provision contained herein is, to any extent,
held invalid or unenforceable in any respect under the laws governing this
Royalty Agreement, they shall take any actions necessary to render the remaining
provisions of this Royalty Agreement valid and enforceable to the fullest extent
permitted by law and, to the extent necessary, shall amend or otherwise modify
this Royalty
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Agreement to replace any provision contained herein that is held invalid or
unenforceable with a valid and enforceable provision giving effect to the intent
of the parties.
Section 6.8 No Third Party Beneficiary. No provision of this Royalty
Agreement shall create, or be deemed to create, any legal or equitable right in
any person not a party to this Royalty Agreement or give any such person any
claim against any party to this Royalty Agreement that such party would not have
but for this Royalty Agreement.
Section 6.9 Section Headings; Construction. The headings of Articles
and Sections in this Royalty Agreement are provided for convenience only and
will not affect its construction or interpretation. All words used in this
Royalty Agreement will be construed to be of such gender or number as the
context requires. The language used in the Royalty Agreement shall be construed,
in all cases, according to its fair meaning, and not for or against any party
hereto. The parties acknowledge that each party has reviewed this Royalty
Agreement and that rules of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be available in the
interpretation of this Royalty Agreement.
Section 6.10 Governing Law; Jurisdiction. This Royalty Agreement is
to be governed by and construed under the laws of the State of New York without
regard to conflicts of laws principles that would require the application of any
other law. The parties agree that the state and federal courts located in New
York County, New York shall be the sole venue and shall have sole jurisdiction
for the resolution of all disputes arising hereunder.
Section 6.11 Execution of Agreement, Counterparts. This Royalty
Agreement may be executed in one or more counterparts, each of which is deemed
to be an original copy of this Royalty Agreement and all of which, when taken
together, are deemed to constitute one and the same agreement. The exchange of
copies of this Royalty Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Royalty
Agreement as to the parties and may be used in lieu of the original Royalty
Agreement for all purposes. Signatures of the parties transmitted by facsimile
are deemed to be their original signatures for any purpose whatsoever.
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[signature page to Royalty Agreement]
IN WITNESS WHEREOF, the parties have executed this Royalty Agreement as
of the date first written above.
ENZON, INC.
By:
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Name:
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Its:
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VIVO HEALTHCARE CORPORATION
By:
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Name:
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Its:
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