EXHIBIT 99.3
Second Amendment to License Agreement
* Represents language that is redacted and subject to confidential
treatment
This Second Amendment to License Agreement (this "Second Amendment"),
dated on October 22, 2003, is entered into by and between The Trustees of the
University of Pennsylvania ("University"), a Pennsylvania nonprofit corporation,
and Genta Inc. ("Licensee"), a Delaware corporation.
WHEREAS, Licensee and University are parties to that certain License
Agreement dated as of August 1, 1991, amended as of December 19, 2000 (as so
amended, the "License Agreement");
WHEREAS, Licensee and University have determined that it is desirable
to amend and restate certain provisions of the License Agreement as set forth
herein, and to incorporate additional provisions to the License Agreement as set
forth herein, to reflect further agreements between them;
NOW, THEREFORE, the parties hereto, intending to be legally bound, and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, hereby agree as follows:
1. Section 3.3(a) of the License Agreement is hereby amended and
restated in its entirety to read as follows:
(a)(i) In addition to the one million dollar ($1,000,000) payment Genta
provided to Penn under the License Agreement in or about May 2002, each of the
payments as listed below:
(A) a single payment of seven hundred fifty thousand dollars
($750,000) on November 5, 2003;
(B) a single payment of two hundred fifty thousand dollars
($250,000) on February 2, 2004;
(C) a single payment of one million five hundred thousand
dollars ($1,500,000) fifteen (15) business days after the
first regulatory authority approval of any indication in any
country for commercial sale of a Licensed Product (as
defined in the License Agreement) for use in humans; and
(D) a single payment of seven hundred fifty thousand dollars
($750,000) on the earlier of (1) December 30, 2004, or (2)
fifteen (15) business days after the second regulatory
authority approval of any indication in any country for
commercial sale of a Licensed Product (as defined in the
License Agreement) for use in humans, provided that, if the
payment under subparagraph (a)(i)(C) above becomes due on or
after December 30, 2004, then the payment under this
subparagraph (a)(i)(D) shall be due on the same date as the
payment required by subparagraph (a)(i)(C) above.
(E) University acknowledges that (1) the payment required by
subparagraph (a)(i)(C) is contingent upon the occurrence of
the event specified therein and that such event may not
occur, and (2) the payment required by subparagraph
(a)(i)(D) is contingent upon the date or condition specified
therein as well as upon the occurrence of the event
specified in subparagraph (a)(i)(C). For purposes of
determining the date payment is due under subparagraphs
(a)(i)(C) and (D), the date of "regulatory authority
approval" as used in those two subparagraphs shall mean (1)
with respect to any approval in the United States, the date
of the FDA approval letter for such approval; and (2) with
respect to any approval in a country other than the United
States, the date of that country's regulatory authority's
notice of approval that is analogous to an FDA approval
letter.
(a)(ii) * of all consideration received by Licensee from a sublicensee
in connection with any transaction in which Licensee grants a sublicense to the
sublicensee for any Licensed Product(s) (other than a sublicense granted by
Licensee to an Affiliate), provided, however, that the categories of
consideration listed below in subsections (a)(ii)(A) through (a)(ii)(F) are
excluded from this payment obligation:
(A) sponsored research funding received by Licensee for
performing future research after the date of the
transaction;
(B) royalty payments on Licensed Product(s) based on either
sales or net sales of Licensed Product(s), or payments for
the purchase of Licensed Product(s);
(C) The fair market value of any equity of Licensee issued in
connection with such transaction. The fair market value of
this equity (the "Equity") shall be determined pursuant to
License Agreement ss. 3.14;
(D) the purchase of debt of Licensee, or the provision of loans,
lines of credit, or other credit facilities or credit
support, provided that, if any part of Licensee's repayment
obligation is forgiven under the terms thereof or
subsequently, then the amount forgiven shall be included in
and not excluded from the payment obligation of this
subsection (a)(ii) upon such forgiveness;
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(E) any amounts received or to be received from Aventis
Pharmaceuticals Inc., Garliston Limited (a/k/a Aventis
Ireland), or their Affiliates, successors, or assigns under
those certain agreements made as of April 26, 2002, as may
be amended from time to time; and
(F) to the extent that, as part of the transaction, Licensee
also sells, leases, licenses, or otherwise transfers to such
sublicensee other real or personal property whether tangible
or intangible (e.g., a plant, equipment, or products other
than Licensed Product(s)), or enters into any contractual or
other arrangement, in addition to granting the sublicense
mentioned above, any of the consideration (the "Other
Consideration") received by Licensee that is fairly
attributable to this other real or personal property or
contractual or other arrangement and is not fairly
attributable to the sublicense of Licensed Products. (The
Other Consideration may include, but is not limited to, any
assets, rights, or benefits received by or to be received by
Licensee, including without limitation, benefits from
operating or other synergies, performance under a contract
or consulting, or other technical services.) This exclusion
(a)(ii)(F) shall not apply to consideration received by
Licensee from the sublicensee for any rights or licenses in
or to Licensed Products (e.g., Licensee's own patents or
third party patents for which licenses or sublicenses are
granted to the sublicensee for the manufacture, use, or sale
of Licensed Product(s)). The value of the Other
Consideration shall be determined pursuant to License
Agreement ss. 3.15.
2. The License Agreement is hereby amended and restated to add the
following Sections 3.14 and 3.15:
3.14 Valuation Procedure for Determining Fair Market Value as
Referenced in License Agreement ss. 3.3(a)(ii)(C). For purposes of License
Agreement ss. 3.3(a)(ii)(C), the fair market value of the Equity (x) shall be
determined taking into account all relevant considerations, including without
limitation, current and historical market prices and any applicable control
premiums, (y) shall be valued as of the date of the underlying contract pursuant
to which the Equity is issued if such value is determinable as of such time or
as of such later time as the value first becomes determinable, and (z) shall be
determined pursuant to the following procedures:
(a) Within thirty (30) days after Licensee enters into the transaction
referenced in License Agreement ss. 3.3(a)(ii), Licensee shall: (i) notify the
University of the transaction; (ii) provide the University with a copy of each
transaction document, unredacted as relating to: (A) any consideration exchanged
in the transaction, and (B) any formula, method, or other means relating to
valuing or determining the value of the Equity (this disclosure requirement
shall be in addition to and not in lieu of Licensee's obligations under License
Agreement ss. 2.2(a)); and (iii) provide the University with Licensee's
proposed determination of the fair market value of the
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Equity with an explanation as to how Licensee derived its proposed
determination, provided that, if the Licensee is unable at such time to provide
the University with the Licensee's proposed determination of the fair market
value of the Equity because such valuation is sufficiently undeterminable under
that transaction document, then the Licensee shall provide such determination as
soon as it is reasonably practicable to do so. If the University and Licensee
are unable to agree on Licensee's proposed fair market valuation or are
otherwise unable to agree as to the fair market value of the Equity, the
University and Licensee shall each submit to the other party their proposed fair
market valuation of the Equity. To the extent the greater of the two proposed
valuations is not more than one hundred ten percent (110%) of the lower of the
two proposed valuations, the fair market value of the Equity will be defined as
the average of the two proposed valuations. To the extent the greater of the two
proposed valuations is more than one hundred ten percent (110%) of the lower of
the two proposed valuations, the parties will attempt to agree upon the
selection of a disinterested, independent, and qualified person with valuation
expertise in the field of pharmaceutical or biotechnology licensing or
acquisition transactions ("Appraiser") to determine the fair market value of the
Equity. If the parties are able to agree upon an Appraiser, then such Appraiser
will be instructed to furnish a written determination within thirty (30) days
after its selection, choosing one of the two proposed valuations as the accepted
fair market valuation of the Equity. If the parties are unable to agree upon the
selection of an Appraiser within a fourteen (14) day period, then the University
and Licensee shall, within ten (10) days after the end of such fourteen (14) day
period, each select its own Appraiser, and the two party-selected Appraisers
shall then select a third Appraiser to determine the fair market value of the
Equity. This third Appraiser will be instructed to render within thirty (30)
days of its selection its determination, choosing one of the party proposed
valuations as the accepted valuation of the Equity.
(b) The Appraiser engaged to provide a fair market valuation of the
Equity pursuant to this ss. 3.14 will be instructed: (i) to take into account
all relevant considerations, including without limitation, current and
historical market prices and any applicable control premiums, and to value the
Equity as of the date of the underlying contract pursuant to which the Equity is
issued if such value is determinable as of such time or as of such later time as
the value first becomes determinable, and (ii) to include therein a statement of
the criteria applied and assumptions made in choosing one of the party proposed
valuations as the valuation of the Equity. The parties shall each bear the
expenses of their respective party-selected Appraiser, and the parties shall
share equally the expenses of any jointly selected Appraiser.
3.15 Valuation Procedure for Determining Value of Other Consideration.
To the extent Licensee enters into a transaction in which it grants a sublicense
for any Licensed Product(s) and such transaction also includes Licensee's
receipt of Other Consideration as defined in License Agreement ss.
3.3(a)(ii)(F), the fair valuation of such Other Consideration for purposes of
determining what value of consideration, if any, is to be excluded from the *
payment obligation under ss. 3.3(a)(ii)(F) shall be determined
pursuant to the following procedures:
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(a) Within thirty (30) days after Licensee enters into the
transaction, Licensee shall: (i) notify the University of the transaction; (ii)
provide the University with a copy of each transaction document, unredacted as
relating to any consideration exchanged in the transaction (this disclosure
requirement shall be in addition to and not in lieu of Licensee's obligations
under License Agreement ss. 2.2(a)); and (iii) provide the University with
Licensee's proposed valuation of the Other Consideration with an explanation as
to how Licensee derived its proposed valuation, provided that, if the Licensee
is unable at such time to provide the University with the Licensee's proposed
valuation of the Other Consideration because such valuation is sufficiently
undeterminable under that transaction document, then the Licensee shall provide
such determination as soon as it is reasonably practicable to do so. If the
University and Licensee are unable to agree on Licensee's proposed valuation or
are otherwise unable to agree as to the fair value of the Other Consideration,
the University and Licensee shall each submit to the other party their proposed
valuation of the Other Consideration. To the extent the greater of the two
proposed valuations is no more than one hundred ten percent (110%) of the lower
of the two proposed valuations, the Other Consideration will be defined as the
average of the two proposed valuations. To the extent the greater of the two
proposed valuations is more than one hundred ten percent (110%) of the lower of
the two proposed valuations, the parties will attempt to agree upon the
selection of an Appraiser to determine the value of the Other Consideration. If
the parties are able to agree upon an Appraiser, then such Appraiser will be
instructed to furnish a written determination within thirty (30) days after its
selection choosing one of the two party proposed valuations as the accepted
valuation of the Other Consideration. If the parties are unable to agree upon
the selection of an Appraiser within a fourteen (14) day period, then the
University and Licensee shall, within ten (10) days after the end of such
fourteen (14) day period, each select its own Appraiser and the two
party-selected Appraisers shall then select a third Appraiser to determine the
fair value of the Other Consideration. This third Appraiser will be instructed
to render within thirty (30) days of its selection its determination, choosing
one of the party proposed valuations as the accepted valuation of the Other
Consideration.
(b) The Appraiser engaged to provide a valuation of the Other
Consideration pursuant to this ss. 3.15 will be instructed to include therein a
statement of the criteria applied and assumptions made in choosing one of the
proposed valuations as the valuation of the Other Consideration. The parties
shall each bear the expenses of their respective party-selected Appraiser, and
the parties shall share equally the expenses of any jointly selected Appraiser.
3. Except as modified by this Second Amendment, all provisions of the
License Agreement remain in full force and effect.
4. This Second Amendment shall be governed by the laws of the State of
Delaware, without regard to conflict of law principles of any jurisdiction.
Except as provided herein, this Second Amendment supersedes all prior
understandings and agreements (written or oral) concerning the subject matter
hereof, with the exception of the Settlement Agreement and Release being
executed contemporaneously herewith. This Second Amendment may be amended only
by a written instrument executed by each of the parties.
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IN WITNESS WHEREOF, the parties have executed this Amendment on the
date first written above.
THE TRUSTEES OF THE GENTA INCORPORATED
UNIVERSITY OF PENNSYLVANIA
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------- ------------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director, Title: Chief Executive Officer
Center for Technology
Transfer
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