Text Marked By [* * *] Has Been Omitted Pursuant To A Request For Confidential Treatment And Was Filed Separately With The Securities And Exchange Commission. NON-EXCLUSIVE LICENSE AGREEMENT
Exhibit 10.4
Text Marked By [* * *] Has Been Omitted Pursuant To A Request For Confidential Treatment And Was
Filed Separately With The Securities And Exchange Commission.
Filed Separately With The Securities And Exchange Commission.
This Agreement, effective as of April 15, 2003 (the “Effective Date”), is between the
University of Massachusetts Medical School (“Medical School”), a public institution of
higher education of the Commonwealth of Massachusetts having an address of 00 Xxxx Xxxxxx Xxxxx,
Xxxxxxxxx, XX 00000 and CytRx Corporation (“Company”), a Delaware corporation having an
address of 00000 Xxx Xxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, XX 00000.
R E C I T A L S
WHEREAS, Medical School is owner by assignment of the invention claimed in the United States
Patent Application listed in Exhibit A pertaining to the Medical School’s invention
disclosure number UMMC 01-36 entitled RNA Sequence-Specific Mediators of RNA Interference;
WHEREAS, Company desires to obtain a non-exclusive license in the field of therapeutics
limited to the narrowed fields of other Medical School license agreements; specifically, using RNAi
to inhibit HCMV Immediate Early (IE) gene expression in Retinitis applications, using RNAi to
inhibit mutant SOD1 gene expression in Amytrophic Lateral Sclerosis (ALS) applications, and using
RNAi to inhibit gene targets implicated in Type II Diabetes and Obesity under the rights of Medical
School in any patent rights claiming those inventions; and
WHEREAS, Medical School is willing to grant Company a non-exclusive license on the terms set
forth in this Agreement.
NOW, THEREFORE, Medical School and Company hereby agree as follows:
1. Definitions.
1.1. “Affiliate” means any legal entity (such as a corporation, partnership, or limited
liability company) that is controlled by Company. For the purposes of this definition, the term
“control” means (a) beneficial ownership of at least fifty percent (50%) of the voting securities
of a corporation or other business organization with voting securities or (b) a fifty percent (50%)
or greater interest in the net assets or profits of a partnership or other business organization
without voting securities.
1.2. “Biological Materials” means the tangible biological materials described on
Exhibit A, as well as tangible materials that are routinely produced through use of the
original materials, including, for example, any progeny derived from a cell
line, monoclonal antibodies produced by hybridoma cells, DNA or RNA replicated from isolated
DNA or RNA, recombinant proteins produced through use of isolated DNA or RNA, and substances
routinely purified from a source material included in the original materials (such as recombinant
proteins isolated from a cell extract or supernatant by non-proprietary affinity purification
methods). These Biological
Materials shall be listed on Exhibit A, which will be
periodically amended to include any additional Biological Materials that Medical School may furnish
to Company.
1.3. “Combination Product” means a product that contains a Licensed Product component
and at least one other essential functional component.
1.4. “Confidential Information” means any confidential or proprietary information
furnished by one party (the “Disclosing Party”) to the other party (the “Receiving
Party”) in connection with this Agreement, provided that such information is specifically
designated as confidential. Such Confidential Information shall include, without limitation, any
diligence reports furnished to Medical School under Section 3.1 and royalty reports furnished to
Medical School under Section 5.2.
1.5. “Field” means therapeutics, prophylactics, and diagnostics arising from the limited
use of RNAi to inhibit HCMV Immediate Early (IE) gene expression in Retinitis applications, using
RNAi to inhibit mutant SOD1 gene expression in Amyotrophic Lateral Sclerosis (ALS) applications,
and using RNAi to inhibit gene targets implicated in Type II Diabetes and Obesity.
1.6. “Licensed Product” means any product that cannot be developed, manufactured, used,
or sold without (a) infringing one or more claims under the Patent Rights or (b) using or
incorporating some portion of one or more Biological Materials.
1.7. “Net Sales” means the gross amount billed or invoiced on sales by Company and its
Affiliates and Sublicensees of Licensed Products, less the following: (a) customary trade,
quantity, or cash discounts and commissions to non-affiliated brokers or agents to the extent
actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to
the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or
other governmental charges levied on the production, sale, transportation, delivery, or use of a
Licensed Product which is paid by or on behalf of Company; (d) outbound transportation costs
prepaid or allowed and costs of insurance in transit; and (e) allowance for bad debt that is
customary and reasonable for the industry and in accordance with generally accepted accounting
principles. Notwithstanding anything to the contrary in this Section 1.7, Net Sales does not
include sales of Licensed Products at or below the fully burdened cost of manufacturing solely for
research or clinical testing or for indigent or similar public support or compassionate use
programs.
In any transfers of Licensed Products between Company and an Affiliate or Sublicensee, Net
Sales shall be calculated based on the final sale of the Licensed Product to an independent third
party. In the event that Company or an Affiliate or Sublicensee receives
non-monetary consideration for any Licensed Products, Net Sales shall be calculated based on
the fair market value of such consideration.
In the case of Combination Products, Net Sales means the gross amount billed or invoiced on
sales of the Combination Product less the deductions set forth above, multiplied by a proration
factor that is determined as follows:
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(i) If all components of the Combination Product were sold separately during the same or
immediately preceding Royalty Period, the proration factor shall be determined by the formula [A /
(A+B)], where A is the aggregate gross sales price of all Licensed Product components during such
period when sold separately from the other essential functional components, and B is the aggregate
gross sales price of the other essential functional components during such period when sold
separately from the Licensed Product Components; or
(ii) If all components of the Combination Product were not sold separately during the same or
immediately preceding Royalty Period, the proration factor shall be determined by the formula [C /
(C+D)], where C is the aggregate fully absorbed cost of the Licensed Product components during the
prior Royalty Period and D is the aggregate fully absorbed cost of the other essential functional
components during the prior Royalty Period, with such costs being determined in accordance with
generally accepted accounting principles.
1.8. “Patent Rights” means the U.S. patent applications listed on Exhibit A, and
any divisional, continuation, or continuation-in-part of such patent applications to the extent the
claims are directed to subject matter specifically described therein, as well as any patent issued
thereon and any reissue or reexamination of such patent, and any foreign counterparts to such
patents and patent applications. Exhibit A shall be periodically amended to include any
additional Patent Rights that may arise. “Medical School Patent Rights” means Patent
Rights assigned to the Medical School and the joint owners Massachusetts Institute of Technology,
the Xxxxxxxxx Institute for Biomedical Research, and Max-Xxxxxx-Gesellschaft Zur Foerderung Der
Wissenschaften E.V.
1.9. “Royalty Period” means the partial calendar quarter commencing on the date on which
the first Licensed Product is sold or used every complete or partial calendar quarter thereafter
during which either (a) this Agreement remains in effect or (b) Company has the right to complete
and sell work-in-progress and inventory of Licensed Products pursuant to Section 6.5.
1.10. “Sublicensee” means any permitted sublicensee of the rights granted Company under
this Agreement, as further described in Section 2.2.
1.11. “Sublicense Income” means any payments that Company receives from a Sublicensee in
consideration of the sublicense of the rights granted Company under Section 2.1, including without
limitation license fees, royalties, milestone payments,
and license maintenance fees, but excluding the following payments: (a) payments made in
consideration for the issuance of equity or debt securities of Company at fair market value, and
(b) payments specifically committed to the development of Licensed Products.
2. Grant of Rights.
2.1. Subject to the terms of this Agreement, Medical School hereby grants to Company and its
Affiliates a non-exclusive, worldwide, royalty-bearing license (with the right to sublicense) under
its commercial rights in the Patent Rights and Biological Materials to develop, make, have made,
use, and sell Licensed Products in the Field.
3
2.2. Sublicenses. Company shall have the right to grant sublicenses of its rights under Section
2.1 with the consent of Medical School, which consent shall not be unreasonably withheld or
delayed. All sublicense agreements executed by Company pursuant to this Article 2 shall expressly
bind the Sublicensee to the terms of this. Company shall promptly furnish Medical School with a
fully executed copy of any such sublicense agreement.
3. Company Obligations Relating to Commercialization.
3.1. Diligence Requirements. Company shall use diligent efforts or shall cause its Affiliates
or Sublicensees to use diligent efforts to develop Licensed Products and to introduce Licensed
Products into the commercial market; thereafter, Company or its Affiliates or Sublicensees shall
make Licensed Products reasonably available to the public. Specifically, Company or its Affiliates
or Sublicensees shall fulfill the following obligations:
(a) Within ninety (90) days after the Effective Date, Company shall furnish Medical School
with a written research and development plan under which Company intends to develop Licensed
Products.
(b) Within sixty (60) days after each anniversary of the Effective Date, Company shall
furnish Medical School with a written report on the progress of its efforts during the prior year
to develop and commercialize Licensed Products, including without limitation research and
development efforts, efforts to obtain regulatory approval, marketing efforts, and sales figures.
The report shall also contain a discussion of intended efforts and sales projections for the
current year.
(c) Company shall endeavor to obtain all necessary governmental approvals for the
manufacture, use and sale of Combination Product and Licensed Product. Specifically, Company
shall:
(i) Within eight (8) years after the Effective Date, file an Investigational New Drug
Application (“IND”) or its equivalent covering at least one Combination Product or Licensed
Product with the U.S. Food and Drug Administration (“FDA”);
(ii) Within thirteen (13) years after the Effective Date, file a New Drug Application
(“NDA”) with the FDA covering at least one Combination Product or Licensed Product;
(iii) Within eighteen (18) months after receiving FDA approval of the NDA for a Combination
Product or Licensed Product, market at least one Combination Product or Licensed Product in the
U.S.; and
(iv) reasonably fill the market demand for any Combination Product or Licensed Product
following commencement of marketing of such product at any time during the exclusive period of this
Agreement.
4
(d) Within eighteen (18) months after the Effective Date, Company shall successfully
undertake a public or private offering of raising ten million dollars ($10,000,000).
(e) In addition to the obligations set forth above, Company or its Affiliates or Sublicensees
shall spend (either directly or through sponsored research by Company or its Affiliates or
Sublicensees at the Medical School) an aggregate of not less than [* * *] per calendar
year for the development of Combination Product and/or Licensed Product commencing with the year
2004.
Company shall have the responsibility to finance its obligations in this Section 3.1, and the
Medical School shall provide reasonable cooperation to Company in this regard. In the event that
Medical School determines that Company (or an Affiliate or Sublicensee) has not fulfilled its
obligations under this Section 3.1, Medical School shall furnish Company with written notice of
such determination. Within sixty (60) days after receipt of such notice, Company shall either (i)
fulfill the relevant obligation or (ii) negotiate with Medical School a mutually acceptable
schedule of revised diligence obligations, failing which Medical School shall have the right,
immediately upon written notice to Company, to terminate this Agreement.
3.2. Indemnification.
(a) Indemnity. Company shall indemnify, defend, and hold harmless Medical School and
its trustees, officers, faculty, students, employees, and agents and their respective successors,
heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense
(including reasonable attorneys fees and expenses of litigation) incurred by or imposed upon any of
the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of
any theory of liability (including without limitation actions in the form of tort, warranty, or
strict liability and regardless of whether such action has any factual basis) concerning any
product, process, or service that is made, used, or sold pursuant to any right or license granted
under this Agreement; provided, however, that such indemnification shall not apply to any
liability, damage, loss, or expense to the extent directly
attributable to (i) the negligent activities or intentional misconduct of the Indemnitees or
(ii) the settlement of a claim, suit, action, or demand by Indemnitees without the prior written
approval of Company.
(b) Procedures. The Indemnitees agree to provide Company with prompt written notice
of any claim, suit, action, demand, or judgment for which indemnification is sought under this
Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to
Medical School to defend against any such claim. The Indemnitees shall cooperate fully with
Company in such defense and will permit Company to conduct and control such defense and the
disposition of such claim, suit, or action (including all decisions relative to litigation, appeal,
and settlement); provided, however, that any Indemnitee shall have the right to retain its own
counsel, at the expense of Company, if representation of such Indemnitee by the counsel retained by
Company would be inappropriate because of actual or potential differences in the interests of such
Indemnitee and any other party represented by such counsel. Company agrees to keep Medical School
informed of the progress in the defense and disposition of such claim and to consult with Medical
School with regard to any proposed settlement.
5
(c) Insurance. Company shall maintain insurance or self-insurance that is
reasonably adequate to fulfill any potential obligation to the Indemnitees, but in any event not
less than one million dollars ($1,000,000) for injuries to any one person arising out of a single
occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a
single occurrence. Company shall provide Medical School, upon request, with written evidence of
such insurance or self-insurance. Company shall continue to maintain such insurance or
self-insurance after the expiration or termination of this Agreement during any period in which
Company or any Affiliate or Sublicensee continues to make, use, or sell a product that was a
Licensed Product under this Agreement and thereafter for a period of two (2) years.
3.3. Use of Medical School Name. In accordance with Section 6.3, Company and its
Affiliates and Sublicensees shall not use the name “University of Massachusetts Medical
School” or any variation of that name in connection with the marketing or sale of any Licensed
Products.
3.4. Marking of Licensed Products. To the extent commercially feasible and consistent
with prevailing business practices, Company shall xxxx, and shall cause its Affiliates and
Sublicensees to xxxx, all Licensed Products that are manufactured or sold under this Agreement with
the number of each issued patent under the Patent Rights that applies to such Licensed Product.
3.5. Compliance with Law. Company shall comply with, and shall ensure that its
Affiliates and Sublicensees comply with, all local, state, federal, and international laws and
regulations relating to the development, manufacture, use, and sale of Licensed Products. Company
expressly agrees to comply with the following:
(a) Company or its Affiliates and Sublicensees shall obtain all necessary approvals from the
United States Food & Drug Administration and any similar governmental authorities of any foreign
jurisdiction in which Company or an Affiliate or Sublicensee intends to make, use, or sell Licensed
Products.
(b) Company and its Affiliates and Sublicensees shall comply with all United States laws and
regulations controlling the export of certain commodities and technical data, including without
limitation all Export Administration Regulations of the United States Department of Commerce.
Among other things, these laws and regulations prohibit, or require a license for, the export of
certain types of commodities and technical data to specified countries. Company hereby gives
written assurance that it will comply with, and will cause its Affiliates and Sublicensees to
comply with, all United States export control laws and regulations, that it bears sole
responsibility for any violation of such laws and regulations by itself or its Affiliates and
Sublicensees, and that it will indemnify, defend, and hold Medical School harmless (in accordance
with Section 3.1) for the consequences of any such violation.
4. Consideration for Grant of Rights.
4.1. License Fee. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School, within thirty (30) days after the Effective Date,
(a) a license fee of [* * *], and (b) a payment in the amount of [* * *] to
reimburse Medical
6
School for its actual expenses incurred as of January 31, 2003 in connection with
obtaining the Patent Rights. These license fee payments are nonrefundable and are not creditable
against any other payments due to Medical School under this Agreement.
4.2. Equity. In partial consideration of the license granted to Company under this
Agreement, on or about April 18, 2003, Company shall issue to Medical School a total number of
shares of Common Stock of Company, ($.01 par value per share) equal to [* * *] of the
outstanding shares of Company. Company shall register the shares that are issued to the Medical
School within ninety (90) days after their issuance and those shares will then be unrestricted.
4.3. License Maintenance Fee. Beginning on the anniversary of the Effective Date, and
in each calendar year during the term of the Agreement, Company shall pay to Medical School [*
* *]. This annual license maintenance fee is nonrefundable and is not creditable against any
other payments due to Medical School under this Agreement.
4.4. Royalties. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School a royalty of [* * *] of Net Sales of
Licensed Products by Company and its Affiliates.
(a) If there is a competing product in the marketplace, no royalties are due for a Licensed
Product that is within the definition of “Licensed Product” because it uses or incorporates
only Biological Materials.
(b) If during the Royalty Period, patents under the Patent Rights have expired or have been
abandoned in a particular country, (i) no royalty is payable by Company, if there is a competing
product in that country, and (ii) if Company reduces its prices for Licensed Products in that
country, even if there is no competing product in that country, Company and Medical School shall
negotiate in good faith a reduction in the royalty rate to reflect the reduction in Company’s gross
margins caused by the price reduction.
(c) Company shall pay Medical School [* * *] of Net Sales of commercial clinical
laboratory services by Company and its Affiliates.
4.5. Minimum Royalty. At the beginning of each calendar year during the term of this
Agreement, beginning January 1, 2016, Company shall pay to Medical School a minimum royalty of
[* * *]. If the actual royalty payments to Medical School in any calendar year are less
than the minimum royalty payment required for that year, Company shall have the right to pay
Medical School the difference between the actual royalty payment and the minimum royalty payment in
full satisfaction of its obligations under this Section, provided such minimum payment is made to
Medical School within sixty (60) days after the conclusion of the calendar year. Waiver of any
minimum royalty payment by Medical School shall not be construed as a waiver of any subsequent
minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day
period, such failure shall constitute a material breach of its obligations under this Agreement,
and Medical School shall have the right to terminate this Agreement in accordance with Section 7.3.
4.6. Third-Party Royalties. If Company is legally required to make royalty payments to
Medical School under any agreement other than this Agreement (the “Other
7
Medical School
Licenses”), or to one or more third parties in the same Royalty Period for which royalties are
due under Section 4.5 or 4.7 in order for Company to make, use or sell Licensed Products or have
its sublicense make, use, or sell Licensed Products:
(a) in the case of any payments to Medical School under Other Medical School Licenses with
respect to Licensed Products under this Agreement, the royalty payment made by Company to Medical
School under this Agreement for the applicable Royalty Payment shall be reduced by fifty percent
(50%) of the aggregate amounts payable for the same Royalty Period under the Other Medical School
Licenses (before making any similar reduction in those payments pursuant to a corresponding
reduction clause in those agreements), with a minimum floor of [* * *] of Net Sales of
Licensed Products or [* * *] of the Sublicense Income to be paid under this Agreement;
and
(b) in the case of payments to one or more third parties, an offset of fifty percent (50%) of
the amount paid to third parties may be taken by Company against any royalties payable by Company
to the Medical School under this Agreement with a minimum floor of [* * *] of Net Sales
of Licensed Products or [* * *] of all Sublicense Income, provided that in no event shall
the
royalty payments under Section 4.5 and 4.7, when aggregated with any other offsets and credits
allowed under this Agreement, be reduced by more than fifty percent (50%); in the case of payments
to one or more third parties, Medical School shall receive [* * *] of the Sublicense
Income net of the foregoing third party payments; and
(c) in the case of both payments under Other Medical School Licenses and to third parties in
the same Royalty Period, the reduction described in (i) above shall first be made, and then the
offset described in (ii) above shall be taken, provided that only a pro rata amount of the offset
pursuant to (ii) above shall be taken against the royalties payable under this Agreement (with the
pro-ration calculated based on the relative royalty rates under this Agreement and the Other
Medical School Licenses), with a minimum floor under this Agreement of [* * *] of Net
Sales of Licensed Products and [* * *] of Sublicense Income.
By way of illustration, assume a royalty of [* * *] under the Other Medical School
Licenses of Net Sales of Licensed Products and a payment of [* * *] of Net Sales of
Licensed Products to a third party. The reduction and offsets calculation would be as follows:
(i) The [* * *] of Net Sales of Licensed Products would be reduced to [* * *]
of Net Sales of Licensed Products (i.e., a reduction of 50% of the [* * *] of Net
Sales of Licensed Products under Other Medical School Licenses); and
(ii) The remaining [* * *] of Net Sales of Licensed Products would be offset by an
amount equal to [* * *] of Net Sales of Licensed Products, for a net royalty to the
Medical School under this Agreement of [* * *] of Net Sales of Licensed Products (i.e.,
the offset of 50% of the [* * *] of Net Sales of Licensed Products payable to the third
party is allocated pro rata against Medical School under this Agreement, with 33 1/3% of this net
offset of [* * *] of Net Sales of Licensed Products being allocated to the royalties
under this Agreement (the [* * *] royalty rate under this Agreement divided by the
[* * *] royalty rate under this Agreement plus the [* * *] royalty rate under
the Other Medical School Licenses)).
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5. Royalty Reports; Payments; Records.
5.1. First Sale. Company shall report to Medical School the date of first commercial
sale of each Licensed Product within thirty (30) days of occurrence in each country.
5.2. Reports and Payments. Within sixty (60) days after the conclusion of each Royalty
Period, Company shall deliver to Medical School a report containing the following information:
(a) the number of Licensed Products sold to independent third parties in each country, and the
number of Licensed Products used by Company and its Affiliates in the provision services in each
country;
(b) the gross sales price for each Licensed Product by Company and its Affiliates or
Sublicensees during the applicable Royalty Period in each country;
(c) calculation of Net Sales for the applicable Royalty Period in each country, including a
listing of applicable deductions; and
(d) total royalty payable on Net Sales in U.S. dollars, together with the exchange rates used
for conversion.
If no royalties are due to Medical School for any Royalty Period, the report shall so state.
Concurrent with this report, Company shall remit to Medical School any payment due for the
applicable Royalty Period. Medical School shall instruct Company as to the method of payment.
The contents of all such reports shall be the confidential and proprietary information of
Company. To the extent permitted by applicable law, Medical School shall use reasonable efforts to
maintain the confidentiality of such reports.
5.3. Payments in U.S. Dollars. All payments due under this Agreement shall be payable
in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the
conversion rate existing in the United States (as reported in the Wall Street Journal) on
the last working day of the calendar quarter preceding the applicable Royalty Period. Such
payments shall be without deduction of exchange, collection, or other charges.
5.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds of a convertible
currency to the United States is restricted or forbidden, Company shall give Medical School prompt
written notice of such restriction, which notice shall satisfy the sixty-day payment deadline
described in Section 5.2. Company shall pay any amounts due Medical School through whatever lawful
methods Medical School reasonably designates; provided, however, that if Medical School fails to
designate such payment method within thirty (30) days after Medical School is notified of the
restriction, Company may deposit such payment in local currency to the credit of Medical School in
a recognized banking institution selected by Company and identified by written notice to Medical
School, and such deposit shall fulfill all obligations of Company to Medical School with respect to
such payment.
9
5.5. Records. Company shall maintain, and shall cause its Affiliates to maintain,
complete and accurate records of Licensed Products that are made, used, sold, or performed under
this Agreement and any amounts payable to Medical School in relation to such Licensed Products,
which records shall contain sufficient information to permit Medical School to confirm the accuracy
of any reports delivered to Medical School under Section 5.2. The relevant party shall retain such
records relating to a given Royalty Period for at least three (3) years after the conclusion of
that Royalty Period, during which time Medical School shall have the
right, at its expense, to cause its internal accountants or an independent, certified public
accountant to inspect such records during normal business hours for the sole purpose of verifying
any reports and payments delivered under this Agreement. Such accountant shall not disclose to
Medical School any information other than information relating to accuracy of reports and payments
delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within
thirty (30) days after the accountant delivers the results of the audit. In the event that any
audit performed under this Section reveals an underpayment in excess of the greater of (a) five
thousand dollars ($5,000) or (b) ten percent (10%) in any Royalty Period, Company shall bear the
full cost of such audit. Medical School may exercise its rights under this Section only once every
year and only with reasonable prior notice to Company.
5.6. Late Payments. Any payments by Company that are not paid on or before the date
such payments are due under this Agreement shall bear interest, to the extent permitted by law, at
two percentage points above the Prime Rate of interest as reported in the Wall Street
Journal on the date payment is due, with interest calculated based on the number of days that
payment is delinquent.
5.7. Method of Payment. All payments under this Agreement should be made in the name of
the “Medical School of Massachusetts” and sent to the address identified below. Each
payment should reference this Agreement and identify the obligation under this Agreement that the
payment satisfies.
5.8. Withholding and Similar Taxes. Royalty payments and other payments due to Medical
School under this Agreement shall be reduced by reason of any withholding or similar taxes
applicable to such payments to Medical School, which shall be paid by Company as required by
applicable law and reported by Company to the Medical School.
6. Confidential Information; Publications; Publicity.
6.1. Confidential Information.
(a) Designation. Confidential Information that is disclosed in writing shall be
marked with a legend indicating its confidential status (such as “Confidential” or
“Proprietary”). Confidential Information that is disclosed orally or visually shall be
documented in a written notice prepared by the Disclosing Party and delivered to the Receiving
Party within thirty (30) days of the date of disclosure; such notice shall summarize the
Confidential Information disclosed to the Receiving Party and reference the time and place of
disclosure.
(b) Obligations. For a period of five (5) years after disclosure of any portion of
Confidential
Information, the Receiving Party shall (i) maintain such Confidential
10
Information in
strict confidence, except that the Receiving Party may disclose or permit the disclosure of any
Confidential
Information to its directors, officers, employees, consultants, and advisors who are
obligated to maintain the confidential nature of such Confidential Information and who need to
know such Confidential Information for the purposes of this Agreement; (ii) use such Confidential
Information solely for the purposes of this Agreement; and (iii) allow its trustees or directors,
officers, employees, consultants, and advisors to reproduce the Confidential Information only to
the extent necessary for the purposes of this Agreement, with all such reproductions being
considered Confidential Information.
(c) Exceptions. The obligations of the Receiving Party under Subsection 6.1.(b)
above shall not apply to the extent that the Receiving Party can demonstrate that certain
Confidential Information (i) was in the public domain prior to the time of its disclosure under
this Agreement; (ii) entered the public domain after the time of its disclosure under this
Agreement through means other than an unauthorized disclosure resulting from an act or omission by
the Receiving Party; (iii) was independently developed or discovered by the Receiving Party without
use of the Confidential Information; (iv) is or was disclosed to the Receiving Party at any time,
whether prior to or after the time of its disclosure under this Agreement, by a third party having
no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality
with respect to such Confidential Information; or (v) is required to be disclosed to comply with
applicable laws or regulations, or with a court or administrative order, provided that the
Disclosing Party receives reasonable prior written notice of such disclosure.
(d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party
(or any third party entrusting its own information to the Disclosing Party) claims ownership of its
Confidential Information in the possession of the Receiving Party. Upon the expiration or
termination of this Agreement, and at the request of the Disclosing Party, the Receiving Party
shall return to the Disclosing Party all originals, copies, and summaries of documents, materials,
and other tangible manifestations of Confidential Information in the possession or control of the
Receiving Party, except that the Receiving Party may retain one copy of the Confidential
Information in the possession of its legal counsel solely for the purpose of monitoring its
obligations under this Agreement.
6.2. Publications. Medical School and its employees will be free to publicly disclose
(through journals, lectures, or otherwise) the results of any research in the Field or relating to
the subject matter of the Patent Rights, except as otherwise provided by written agreement between
Medical School and Company (e.g., a sponsored research agreement).
6.3. Publicity Restrictions. Company shall not use the name of Medical School or any of
its trustees, officers, faculty, students, employees, or agents, or any adaptation of such names,
or any terms of this Agreement in any promotional material or other public announcement or
disclosure without the prior written consent of Medical School. The foregoing notwithstanding,
Company shall have the right to disclose such information without the consent of Medical School in
any prospectus, offering memorandum, or other document or filing required by applicable securities
laws or other applicable law or regulation, provided that Company shall have given Medical School
at least ten (10) days (or such prior shorter period in order to enable Company to make a
timely announcement, while affording the Medical School
11
the
maximum feasible time to review
the announcement) prior written notice of the proposed text for the purpose of giving Medical
School the opportunity to comment on such text.
7. Term and Termination.
7.1. Term. This Agreement shall commence on the Effective Date and shall remain in
effect until (a) the expiration of all issued patents within the Patent Rights or (b) for a period
of ten (10) years after the Effective Date if no such patents have issued within that ten-year
period, unless earlier terminated in accordance with the provisions of this Agreement.
7.2. Termination for Default. In the event that either party commits a material breach
of its obligations under this Agreement and fails to cure that breach within sixty (60) days after
receiving written notice thereof, the other party may terminate this Agreement immediately upon
written notice to the party in breach.
7.3. Force Majeure. Neither party will be responsible for delays resulting from causes
beyond the reasonable control of such party, including without limitation fire, explosion, flood,
war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to
avoid or remove such causes of nonperformance and continues performance under this Agreement with
reasonable dispatch whenever such causes are removed.
7.4. Effect of Termination. The following provisions shall survive the expiration or
termination of this Agreement: Articles 1 and 8; Sections 3.2, 3.5., 5.2. (obligation to provide
final report and payment), 6.1., 7.5., and 9.9. Upon the early termination of this Agreement,
Company and its Affiliates or Sublicensees may complete and sell any work-in-progress and inventory
of Licensed Products that exist as of the effective date of termination, provided that (a) Company
is current in payment of all amounts due Medical School under this Agreement, (b) Company pays
Medical School the applicable royalty on such sales of Licensed Products in accordance with the
terms and conditions of this Agreement, and (c) Company and its Affiliates or Sublicensees shall
complete and sell all work-in-progress and inventory of Licensed Products within six (6) months
after the effective date of termination.
8. Dispute Resolution.
8.1. Procedures Mandatory. The parties agree that any dispute arising out of or
relating to this Agreement shall be resolved solely by means of the procedures set forth in this
Article, and that such procedures constitute legally binding obligations that are an essential
provision of this Agreement; provided, however, that all procedures and deadlines specified in this
Article may be modified by written agreement of the parties. If either party fails to observe the
procedures of this Article, as modified by their written agreement, the other party may bring an
action for specific performance in any court of competent jurisdiction.
8.2. Dispute Resolution Procedures.
(a) Negotiation. In the event of any dispute arising out of or relating to this
Agreement, the affected party shall notify the other party, and the parties shall attempt in good
faith to resolve the matter within ten (10) days after the date of such notice (the “Notice
Date”). Any disputes not resolved by good faith discussions shall be referred to senior
12
executives of each party, who shall meet at a mutually acceptable time and location within thirty
(30) days after the Notice Date and attempt to negotiate a settlement.
(b) Mediation. If the matter remains unresolved within sixty (60) days after the
Notice Date, or if the senior executives fail to meet within thirty (30) days after the Notice
Date, either party may initiate mediation upon written notice to the other party, whereupon both
parties shall be obligated to engage in a mediation proceeding under the then current Center for
Public Resources (“CPR”) Model Procedure for Mediation of Business Disputes, except that
specific provisions of this Section shall override inconsistent provisions of the CPR Model
Procedure. The mediator will be selected from the CPR Panels of Neutrals. If the parties cannot
agree upon the selection of a mediator within ninety (90) days after the Notice Date, then upon the
request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve
the dispute through mediation until one of the following occurs: (i) the parties reach a written
settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse;
(iii) the parties agree in writing that they have reached an impasse; or (iv) the parties have not
reached a settlement within one hundred and twenty (120) days after the Notice Date.
(c) Trial Without Jury. If the parties fail to resolve the dispute through
mediation, or if neither party elects to initiate mediation, each party shall have the right to
pursue any other remedies legally available to resolve the dispute, provided, however, that the
parties expressly waive any right to a jury trial in any legal proceeding under this Section.
8.3. Preservation of Rights Pending Resolution.
(a) Performance to Continue. Each party shall continue to perform its obligations
under this Agreement pending final resolution of any dispute arising out or relating to this
Agreement; provided, however, that a party may suspend performance of its obligations during any
period in which the other party fails or refuses to perform its obligations.
(b) Provisional Remedies. Although the procedures specified in this Article are the
sole and exclusive procedures for the resolution of disputes arising out of relating to this
Agreement, either party may seek a preliminary injunction or other provisional equitable relief if,
in its reasonable judgment, such action is necessary to avoid irreparable harm to itself or to
preserve its rights under this Agreement.
(c) Statute of Limitations. The parties agree that all applicable statutes of
limitation and time-based defenses (such as estoppel and laches) shall be tolled while the
procedures set forth in Subsections 8.2.(a) and 8.2(b) are pending. The parties shall take any
actions necessary to effectuate this result.
9. Miscellaneous.
9.1. Representations and Warranties. Representations and Warranties. Medical School
represents and warrants that its employees have assigned to Medical School their entire right,
title, and interest in the Patent Rights, that it has authority to grant the rights and licenses
set forth in this Agreement, and that, to its best knowledge, Medical School does not hold any
other intellectual property rights that would be infringed by the exploitation of the Patent
Rights. MEDICAL SCHOOL MAKES NO OTHER WARRANTIES CONCERNING
13
THE PATENT RIGHTS AND BIOLOGICAL
MATERIALS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. Specifically, Medical School makes no warranty or representation
(a) that the exploitation of any Licensed Product will not infringe any patents or other
intellectual property rights of a third party, (b) regarding the validity or scope of the Patent
Rights, and (c) that any third party is not currently infringing or will not infringe the Patent
Rights.
9.2. Compliance with Law and Policies. Company agrees to comply with applicable law and
the policies of Medical School in the area of technology transfer and shall promptly notify Medical
School of any violation that Company knows or has reason to believe has occurred or is likely to
occur. The Medical School policies currently in effect at 000 Xxxxxxxxxx Xxxxxx, Xxx. 000,
Xxxxxxxxx XX, 00000 campus are available online at xxx.xxxxxxxx.xxx/xxxxxxxx/xxxxxxxx.
9.3. Tax-Exempt Status. Company acknowledges that Medical School, as a public
institution of the Commonwealth of Massachusetts, holds the status of an exempt organization under
the United States Internal Revenue Code. Company also acknowledges that certain facilities in
which the licensed inventions were developed may have been financed through offerings of tax-exempt
bonds. If the Internal Revenue Service determines, or if counsel to Medical School reasonably
determines, that any term of this Agreement jeopardizes the tax-exempt status of Medical School or
the bonds used to finance Medical School facilities, the relevant term shall be deemed an invalid
provision and modified in accordance with Section 10.11.
9.4. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to be one and the same
instrument.
9.5. Headings. All headings are for convenience only and shall not affect the meaning
of any provision of this Agreement.
9.6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and assigns.
9.7. Assignment. This Agreement may not be assigned by either party without the prior
written consent of the other party, except that Company may assign this Agreement to an Affiliate
or to a successor in connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business to which this Agreement relates.
9.8. Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise
modified only by means of a written instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance shall relate only to such instance and shall not be construed
as an agreement to waive any rights or fail to act in any other instance, whether or not similar.
14
9.9. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles.
9.10. Notice. Any notices required or permitted under this Agreement shall be in
writing, shall specifically refer to this Agreement, and shall be sent by hand, recognized national
overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or
certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile
numbers of the parties:
If to Medical School:
Office of Technology Management
Medical School of Massachusetts
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx F.X. XxXxxxx
Executive Director
Tel: (000) 000-0000
Fax: (000) 000-0000
Office of Technology Management
Medical School of Massachusetts
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx F.X. XxXxxxx
Executive Director
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Company:
CytRx Corporation
00000 Xxx Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
00000 Xxx Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices under this Agreement shall be deemed effective upon receipt. A party may change
its contact information immediately upon written notice to the other party in the manner provided
in this Section.
9.11. Severability. In the event that any provision of this Agreement shall be held
invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect any
other provision of this Agreement, and the parties shall negotiate in good faith to modify the
Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach
a modified agreement within sixty (60) days after the relevant provision is held invalid or
unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in
Article 7. While the dispute is pending resolution, this Agreement shall be construed as if such
provision were deleted by agreement of the parties.
9.12. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to its subject matter and supersedes all prior agreements or understandings
between the parties relating to its subject matter.
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.
| MEDICAL SCHOOL OF MASSACHUSETTS | CYTRX CORPORATION | |||||
By:
|
/s/ Xxxxxx F.X. XxXxxxx | By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
| Xxxxxx F.X. XxXxxxx | Xxxxxx X. Xxxxxxxxx | |||||
| Executive Director, CVIP | Chief Executive Officer | |||||
16
Exhibit A
List of Patent Rights
List of Patent Rights
UMMC 01-36 “RNA Sequence-Specific Mediators of RNA Interference” Inventors: Xxxxx X.
Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, and Xxxxxx X. Xxxxxx
I. United States Patents and Application
| USSN 60/265232 entitled “RNA Sequence-Specific Mediators of RNA Interference”, by Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, and Xxxxxx X. Xxxxxx |
| USSN 09/821832 entitled “RNA Sequence-Specific Mediators of RNA Interference”, by Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, and Xxxxxx X. Xxxxxx |
XX. International (non-U.S.) Patents and Applications
| PCT/US01/10188 entitle “RNA Sequence-Specific Mediators of RNA Interference”, by Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, and Xxxxxx X. Xxxxxx |
A - 1
This Amendment No. 1, dated as of February 1, 2004 (the “Amendment”) is being made to
the Non-Exclusive License Agreement relating to UMMC 01-36 (the “License Agreement”),
effective as of April 15, 2003, by and between the University of Massachusetts Medical School
(“Medical School”), a public institution of higher education of the Commonwealth of
Massachusetts having an address of 00 Xxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000, and CytRx Corporation
(“Company”), a Delaware corporation having an address of 00000 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx
000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
R E C I T A L S
WHEREAS, Section 4.6 of the License Agreement provided for the calculation of payments payable
to Medical School under Section 4.4 of the License Agreement in the event Company was required to
make certain other payments to Medical School or third parties; and
WHEREAS, Medical School and Company wish to clarify the manner in which Section 4.6 of the
License Agreement shall operate;
NOW, THEREFORE, Medical School and Company hereby agree as follows:
1. Amendment to Section 4.6.
Section 4.6 of the License Agreement is hereby amended to read in full as follows:
“4.6 Third-Party and Other Payments. If Company is legally required to make royalty
or sublicense income payments to Medical School under any other license agreement, as well as this
Agreement, or to one or more third parties, as well as this Agreement, in the same Royalty Period
for which payments are due under Section 4.4 in order for Company to make, use or sell Licensed
Products or have its Sublicensee make, use, or sell Licensed Products:
(a) Other Medical School Payments. In the case of payments to Medical School under
Section 4.4 with respect to any Licensed Product, Company shall pay only the highest rate among
this Agreement and any other Medical School licenses, and that one payment shall be deemed to
satisfy the payment requirements for the applicable period under not only this Agreement but each
of the other Medical School licenses.
(b) Third Party Payments. In the case of payments to one or more third parties with
respect to any Licensed Product under this Agreement, Company may reduce its payment to Medical
School under Section 4.4 of this Agreement for the applicable Royalty Period by fifty percent (50%)
of the amount actually paid to third parties. However, in no event will the reductions made
pursuant to this Section 4.6(b) result in more than a fifty percent (50%) reduction in the payments
that would otherwise be payable to Medical School under Section 4.4 (after taking into account
Section 4.6(b)).
-1-
(c) Example: Royalty Reductions. By way of illustration for Section 4.4 royalty
payment reductions, for a particular Licensed Product, assume a royalty of [* * *] of Net
Sales under another Medical School license and a payment of [* * *] of Net Sales to a
third party. The reduction calculation would be as follows: The total [* * *] royalty
rate in this Agreement would apply, and Company would reduce that rate by 50% due to the [* *
*] due to the third party (with a 50% cap on the rate reduction pursuant to Section 4.6),
resulting in a [* * *] royalty to Medical School under this Agreement, and no royalties
payable to the Medical School under the other Medical School license.
2. Continuation of All Other Terms of Agreement.
Except for the amendment of Section 4.6 of the License Agreement provided for in Section 1 of
this Amendment, all of the terms and conditions of the License Agreement shall continue in full
force and effect.
3. Miscellaneous.
3.1 Dispute Resolution. The parties agree that any dispute arising out of or relating
to this Amendment shall be resolved solely by means of the procedures set forth in Article 8 of the
Agreement.
3.2 Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to be one and the same
instrument.
3.3 Headings. All headings are for convenience only and shall not affect the meaning
of any provision of this Amendment.
3.4 Binding Effect. This Amendment shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and assigns.
3.5 Amendment. This Amendment may be amended, supplemented, or otherwise modified
only by means of a written instrument signed by all of the parties.
3.6 Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles.
-2-
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly
authorized representatives as of the date first above written.
| MEDICAL SCHOOL OF MASSACHUSETTS | CYTRX CORPORATION | |||||
By:
|
/s/ Xxxxxxx X. Xxxxxx | By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
| Acting Executive Director | Xxxxxx X. Xxxxxxxxx | |||||
| Office of Technology Management | Chief Executive Officer | |||||
-3-
