AMENDED AND RESTATED LICENSE AGREEMENT
This
Amended and Restated License Agreement (the “Agreement”) is entered into and
made effective as of this 6th
day of
September 2006, (the “Effective Date”) by and between CORNERSTONE BIOPHARMA,
INC., a Nevada corporation (“Cornerstone”), and AURIGA
LABORATORIES,
INC., a Delaware corporation (“Auriga”) collectively the “Parties.”
BACKGROUND
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1.
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WHEREAS,
Xxxxxxx and Company Pharmaceuticals (“Xxxxxxx”) is the owner of all right,
title and interest in and to certain trademark rights and other rights
in
technology relating to the pharmaceutical product EXTENDRYL™ (as further
defined below, the “Products”);
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2.
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WHEREAS,
Xxxxxxx and Champion Pharmaceutical, Inc. (“Champion”) previously
entered into a License Agreement, dated August 27, 2004 (the
“Xxxxxxxx-Xxxxxxx Agreement”), whereby Champion obtained certain rights
and licenses from Xxxxxxx relating to the above-mentioned trademark
and
other rights;
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3.
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WHEREAS,
Pursuant to the terms of the Xxxxxxxx-Xxxxxxx Agreement, Champion
sublicensed its rights in the Xxxxxxxx-Xxxxxxx Agreement to Xxxxx
in a
License Agreement dated October 1, 2004 (the “Xxxxxxxx-Xxxxx Agreement”),
whereby Xxxxxxx was entitled to the same consideration from Xxxxx
as it
was entitled to under the Xxxxxxxx-Xxxxxxx
Agreement;
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4.
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WHEREAS,
Pursuant to a December 15, 2004 agreement, Xxxxxxx sublicensed its
rights
in the above-mentioned trademark and other rights directly to Xxxxx
(the
“Xxxxx-Xxxxxxx Agreement”), in consideration for which Xxxxx will pay a
fee to Champion, thereby terminating the Xxxxxxxx- Xxxxxxx
Agreemen;
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5.
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WHEREAS,
Pursuant to a January 1, 2005 agreement, Xxxxx sublicensed its rights
in
the above-mentioned trademark and other rights to an affiliate of
Cornerstone in exchange for a royalty payable to Xxxxx, Champion
and
Xxxxxxx;
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6.
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WHEREAS,
Xxxxx, Auriga, and Champion entered into a reorganization transaction
on
April 15, 2005;
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7.
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WHEREAS,
Pursuant to a May 24, 2005 agreement (as amended), Cornerstone’s affiliate
exclusively sublicensed its rights in the above-mentioned trademark
and
other rights to Auriga in exchange for a royalty payable to such
Cornerstone affiliate;
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8.
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WHEREAS,
by letter dated March 23, 2006, Auriga, Cornerstone and Cornerstone’s
affiliate confirmed their intent that Cornerstone, rather that
Cornerstone’s affiliate, be party to the relevant agreements;
and
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9.
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WHEREAS,
Auriga and Cornerstone wish to amend the terms of their
relationship.
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Now,
in
consideration of the above, Cornerstone and Auriga desire to memorialize the
terms of their arrangement.
TERMS
AND CONDITIONS
NOW
THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth, the Parties agree as follows:
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Definitions.
For purposes of this Agreement, the following terms will have the
following meanings:
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1.1 “Affiliates”
means any corporation, partnership, or other entity controlling, by, or under
common control with (directly or indirectly) a party to this :; “control”
(including, with correlative meaning, the terms “control,” “controlled by” and
“under common control with”) means the possession, directly or indirectly, of
the power to direct or cause the direction of management, whether through the
ownership of voting securities or by contract or otherwise.
1.2 [omitted].
1.3 “FDA”
means the United States Food and Drug Administration.
1.4 “Licensed
Rights” means trademark rights in EXTENDRYL™ and any proprietary information
relating to formulations, the testing of formulations, sales and marketing
information, historical financial data and regulatory information that relate
directly to Xxxxxxx’x products sold under the Extendryl xxxx.
1.5 “Products”
means any product marketed and sold under the Extendryl™ xxxx or that is
substantially similar in formulation to any of the Extendryl™ products sold by
Auriga, Xxxxxxx or Cornerstone, including any product line extensions or generic
versions.
1.6 “Net
Sales” means with respect to any Products, the gross amount invoiced by Auriga
(or its Affiliates or sublicensees) for the Products sold, less (i) quantity
and/or cash discounts from the gross invoice price which are actually taken;
(ii) freight, postage and insurance included in the invoice price;
(iii) amounts repaid or credited by reasons of rejections or return of
goods, (iv) third-party rebates and chargebacks actually repaid or
credited, and (v) invoiced customer duties and sales taxes (excluding income,
value-added and similar taxes), if any, actually paid.
1.7 “NDA”
means a
new drug application (whether original, supplementary or abbreviated) to the
applicable regulatory authority, for approval by such regulatory authority,
necessary for the commercial sale of product. An NDA, together with all
supplemental filings referencing the initial NDA filing, shall be deemed one
and
the same NDA for all purposes of this Agreement..
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2
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License
Grant
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Effective
as of August 1, 2005 (the “Effective Date of the License”), Auriga will be
granted an exclusive, world-wide, perpetual license, including the right to
grant sublicenses, subject to section 4 below, to use the Licensed Rights,
and
the goodwill associated therewith, in connection with the sale, marketing,
and
promotion of Products, subject to the terms and conditions contained herein.
Auriga shall use diligent commercial efforts to sell Products.
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Consideration
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3.1 Closing
Payment.
Within
five (5) business days of the Effective Date, Auriga shall issue and deliver
to
Cornerstone 200,000 shares of Auriga’s common stock (the “Closing Payment”).
3.2 Royalty.
In
consideration of the licenses granted herein, Auriga shall pay to Cornerstone
a
percentage of Net Sales as a royalty (“Royalty”) in accordance with the
following:
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Period
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Royalty
Percentage
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Net
Sales in Q3, 2006
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30%
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Net
Sales in Q4, 2006
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10%
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Net
Sales in Q1, 2007
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10%
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Net
Sales in Q2, 3, 4, 2007
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8%
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Net
Sales in 2008
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7%
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Net
Sales in 2009 and thereafter
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5%
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No
later
than thirty (30) days from the end of each calendar quarter during the term
of
this Agreement, Auriga shall provide to Cornerstone a written report setting
forth the Net Sales of Products during the previous quarter together with
payment of all amounts shown to be due in such report. In the event of a good
faith dispute, undisputed amounts shall be paid in accordance with this Section
3.2 and the parties shall work in good faith to resolve any such dispute,
following which any additional amounts, if any, shall be paid promptly.
Royalties payable for the period July 1, 2006 through September 30, 2006 shall
be payable only on sales of products that bore a royalty under the May 24,
2005
agreement (as amended) referenced in the recitals above.
3.3 Assumption
of Royalty Responsibility.
Auriga,
on behalf of itself and its Affiliates, will pay directly to Xxxxxxx, any
royalties due Xxxxxxx under the Xxxxx-Xxxxxxx Agreement on behalf of any party
for sales occurring after October 1, 2005.
3.4 Payment
from Xxxxx to Champion.
After
July 1, 2005, Champion’s right to receive royalties will terminate.
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4
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Sublicenses.
Auriga shall have the right to sublicense the Licensed Rights subject
to
the terms of this Agreement.
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5
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Generic
Substitutes.
Each party hereto agrees that it will not manufacture, cause to
manufacture, sell or cause to be sold generic versions of the other
party’s products. The obligation of a party not to manufacture, cause to
manufacture, sell or cause to be sold generic versions of the other
party’s products shall apply only to the products that are marketed by
the
other party immediately prior to the first to occur of (a) an assignment
of this Agreement by either party or (b) a merger, share exchange
or other
transaction that results in a change in beneficial ownership of at
least
50% of the voting shares of either party.
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6
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Cornerstone
Obligations.
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6.1 Cornerstone
may, at any time, submit a new drug application (“NDA”) for a product or
products containing the active ingredient methscopolamine. Cornerstone shall
bear all responsibility, and all costs, associated with such NDA and obtaining
and maintaining FDA approval for such product. Auriga agrees that it shall
not,
during the term of this Agreement, submit an NDA for a product or products
containing the active ingredient methscopolamine and Auriga shall cause any
sublicensees of rights related to Product not to file such an application.
6.2 Upon
request of Auriga, Cornerstone will provide Auriga with information relating
to
Extendryl™ product formulation, manufacture, and testing, customer lists,
physician lists, and supplier lists, provided, however, that Cornerstone makes
no representations or warranties with respect to the accuracy or completeness
of
such information or its fitness for any particular purpose, and provided further
that Cornerstone shall have no obligations to manufacture any Extendryl™
products after the Effective Date of the License.
7 Right
of Manufacture. Cornerstone
agrees that, in the event it obtains approval from the FDA under Section
505(b)(2) of the Food, Drug and Cosmetic Act (“FD&C Act”) to manufacture or
sell a product containing the active ingredient methscopolamine, Auriga shall
automatically be granted a license to manufacture and sell any of Extendryl
HC,
Extendryl PSE, Extendryl DM, Extendryl Seniors, Extendryl Juniors, Extendryl
Chewables and Extendryl Syrup, in each case, as formulated with methscopolamine
on the date of this Agreement, in accordance with the approval granted under
Section 505(b)(2) of the FD&C Act and all applicable laws. The foregoing
licenses shall bear a royalty as provided in Section 3.2 and shall be
irrevocable, except that Cornerstone may revoke the license if (a) Auriga
engages in conduct that materially jeopardizes the continuing validity of the
approval and fails promptly to cure any such violation or (b) Auriga fails
to
pay required royalties. The foregoing license is expressly limited to rights
under the applicable approval and shall not constitute an express or implied
license to any patent, trademark or other intellectual property right of the
licensor.
8
Warranties
and Representations of Cornerstone.
Cornerstone warrants and represents as follows:
8.1 Cornerstone
has all right, title and interest in and to the Licensed Rights, necessary
and
sufficient to grant the rights contemplated by this Agreement, such ownership,
right, title and interest, free and clear of all encumbrances, liens and rights
of third parties.
8.2 To
the
best of Cornerstone’s knowledge, there is no third party using or infringing the
Licensed Rights;
8.3 Cornerstone
has not granted, conveyed, licensed or assigned any rights in the Licensed
Rights to any third party.
8.4 To
the
best of Cornerstone’s knowledge there are no legal, governmental or regulatory
proceedings pending against or otherwise involving Cornerstone relating to
any
Licensed Rights.
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9
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Confidential
Information
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9.1 Nondisclosure.
The
parties agree to maintain the confidentiality of confidential information
provided under this Agreement pursuant to the terms of the Confidential
Information Non-Disclosure Agreement executed between the parties (the
“XXXXX”).
9.2 Survival.
The
confidentiality provisions of this Section 9 and the XXXXX will survive the
termination of this Agreement and remain in full force and effect for a period
of 5 years thereafter.
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10
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Term
and Termination
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10.1 Term.
This
Agreement shall extend indefinitely and until terminated for any of the
following reasons:
10.1.1 Termination
for Material Breach.
Either
party may terminate this Agreement upon a material breach of this Agreement
by
the other party; provided however, that the terminating party must first give
the other party written notice, which notice must state the nature of the breach
in reasonable detail and that the terminating party views such alleged Material
Breach as a basis for terminating this Agreement under this Section and such
other party must have failed to cure that alleged breach within 30 days after
receipt of such notice.
10.1.2 Termination
for Insolvency.
This
Agreement may be terminated by either party, with termination effective
immediately upon written notice to the opposite party if the opposite party
makes an assignment for the benefit of its creditors, files a voluntary petition
under federal or state bankruptcy or insolvency laws, a receiver or custodian
is
appointed for that party’s business, or proceedings are instituted against that
party under federal or state bankruptcy or insolvency laws that have not been
stayed or dismissed within sixty (60) days. All rights and licenses granted
under or pursuant to this Agreement are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights
to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code.
10.1.3 Effect
of Termination.
In the
event that either party exercises the termination provisions of Section 10.1,
the license granted to Auriga under Section 2 of this Agreement shall be
terminated and rights will revert to those set forth in the January 1, 2005
agreement referenced in the recitals above, provided that Cornerstone, rather
than its affiliate, shall be the sublicensee of Xxxxx.
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11
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Indemnifications
and Insurance
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11.1 Indemnification
of Cornerstone.
Auriga
and/or its Affiliates shall indemnify and hold Cornerstone and its officers,
directors, shareholders, agents and employees harmless against any and all
liability, damage, loss, cost or expense, including reasonable attorneys’ fees,
resulting from any third party claim made or suit brought against Auriga or
such
persons to the extent such claim is caused by or arises out of (i) Auriga’s or
its Affiliates negligence or willful misconduct, (ii) Auriga’s material breach
of any terms of this Agreement, or (iii) the manufacturing, marketing,
distribution, sale or use of the Products by Auriga or any third party,
including any Product manufactured by Cornerstone but sold by Auriga or its
Affiliate after the Effective Date of the License. Upon the filing of any such
claim or suit, Cornerstone shall immediately notify Auriga thereof and shall
permit Auriga at its cost to handle and control such claim or suit. Cornerstone
shall have the right to participate in the defense of such claim or suit at
its
own expense. Notwithstanding anything else in this paragraph, Auriga shall
have
no indemnification obligation to the extent any claim arises out of the gross
negligence or willful misconduct of Cornerstone.
11.2 Indemnification
of Auriga.
Cornerstone shall indemnify and hold Auriga and its officers, directors,
shareholders, agents and employees harmless against any and all liability,
damage, loss, cost or expense, including reasonable attorneys’ fees, resulting
from any third party claim made or suit brought against Auriga or such persons
to the extent such claim is caused by or arises out of (i) Cornerstone’s
negligence or willful misconduct, (ii) Cornerstone’s material breach of any
terms of this Agreement, or (iii) Cornerstone’s manufacturing, marketing,
distribution, sale or use of any Extendryl product(s), except for products
manufactured by Auriga and sold by Auriga or its Affiliate after the Effective
Date of the License. Upon the filing of any such claim or suit, Auriga shall
immediately notify Cornerstone thereof and shall permit Cornerstone at its
cost
to handle and control such claim or suit. Auriga shall have the right to
participate in the defense of such claim or suit at its own expense.
Notwithstanding anything else in this paragraph, Cornerstone shall have no
indemnification obligation to the extent any claim arises out of the gross
negligence or willful misconduct of Auriga.
11.3 Insurance.
Auriga
shall maintain general commercial liability, including products liability,
insurance with a limit of no less than 5 million dollars in the aggregate.
During the term of this Agreement, Cornerstone shall be named as an additional
insured on Auriga’s policy for any and all claims arising from the Products or
this Agreement. A certificate of insurance, a copy of which shall be forwarded
to Cornerstone, shall evidence such insurance. The policy will not be cancelled
or altered so as to reduce coverage unless and until Cornerstone shall have
received thirty (30) days written notice.
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12
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General
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12.1
Relationship
of the Parties.
The
parties agree that each is acting as an independent contractor with respect
to
the other and nothing contained in this Agreement is intended, or is to be
construed, to constitute a partnership or joint venture or agency relationship.
Neither party hereto shall have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of the other party
or to bind the other party to any contract, agreement or
undertaking.
12.2 Notices.
Any
notice or other communication hereunder shall be in writing and shall be deemed
given when so delivered in person, by overnight courier (with receipt
confirmed), by facsimile transmission (with receipt confirmed by telephone
or by
automatic transmission report) or upon receipt if sent by certified mail, return
receipt requested, as follows (or to such other persons and/or addresses as
may
be specified in writing to the other party hereto):
| If to AURIGA | Auriga Laboratories, Inc.
0000
Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxx
Fax
(000) 000-0000
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| If to CORNERSTONE: | Cornerstone BioPharma, Ltd.
0000
Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxxx
Fax:
(000) 000-0000
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12.3 Successors
and Assigns.
The
term and provisions of this Agreement are assignable by and shall inure to
the
benefit of, and be binding upon each party and their respective successors,
assigns, heirs and personal representatives.
12.4 Amendment.
No
amendment or modification of this Agreement will be binding unless it is in
a
writing, which states that it is an amendment to this Agreement, and is signed
by both parties to this Agreement.
12.5 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without regard to the choice of law principles of any
jurisdiction.
12.6 Waiver
of Breach.
The
waiver or failure of either party to enforce the terms of this Agreement in
one
instance will not constitute a waiver of that party’s rights under this
Agreement with respect to other violations. No waiver of any of the terms of
this Agreement will be binding unless it is in writing and signed by the party
granting the waiver.
12.7 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 law, 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 intentions of the parties
hereto as nearly as may be possible; provided, however, that nothing herein
shall be construed so as to defeat the overall intention of the
parties.
12.8 Survival.
The
provisions of Sections 3, 7, 8, 9, 11, and 12, and any other provision which
by
its terms is intended to survive the termination of this Agreement will survive
the termination of this Agreement and remain in full force and effect
thereafter.
12.9 Execution
in Counterparts.
This
Agreement may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original,
and all of which counterparts, taken together, shall constitute one and the
same
instrument.
12.10
Entire
Agreement and Cancellation of Previous Agreements.
This
Agreement, together with all documents referred to herein (including the XXXXX)
and all exhibits and schedules attached hereto or thereto, contains the entire
agreement and understanding of the parties, and supersedes any prior agreements
or understandings between the parties with respect to the subject matter of
this
Agreement.
12.11 Remedies.
The
parties agree, that in addition to any other relief afforded under the terms
of
this Agreement or by law, each party has the right to enforce this Agreement
by
injunction issued against the other party, it being understood that both damages
and an injunction will be proper modes of relief and are not to be considered
as
alternative remedies.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of
the
date
first above written.
| CORNERSTONE BIOPHARMA, INC. | |||
| By: | /s/ XXXXX XXXXXXX | /s/ XXXXXX X. XXXXX | |
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XXXXX XXXXXXX
PRESIDENT AND CEO
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XXXXXX X. XXXXX
CHAIRMAN AND CEO
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