EXHIBIT 10.6
AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made as of January 1, 1998, between
ENTROPIN, INC. ("Entropin") and XX. XXXXX X. XXXX ("Xx. Xxxx").
RECITALS
A. Entropin is a California corporation with its principal place of
business at 00-000 Xxxxx Xxxxxx, Xxxxx, Xxxxxxxxxx. Entropin is
an ethical pharmaceutical company which is engaged in the trade
or business of developing, producing, and marketing drug
products. Entropin's primary drug, Esterom, is being
investigated under the IND (defined below).
B. Xx. Xxxx, in his capacity as Chairman of the Department of
Pharmaceutical Sciences and as Assistant Xxxx for Research,
Pharmaceutical Sciences at the Medical University, College of
Pharmacy of South Carolina was actively involved in providing
Entropin with research and development services under the
Development of New Products Agreement ("New Products Development
Agreement") made as of the 26th day of January, 1987 among
Entropin, the Pharmaceutical Development Center, Department of
Pharmaceutical Sciences, The Medical University of South Carolina
("PDC") and The Medical University of South Carolina ("MUSC").
Such services contributed to the development of Esterom and gave
rise to certain of Entropin's Licensed Patents (defined below)
and Entropin's Prior Technical Knowledge (defined below).
C. Xx. Xxxx will in association with others form DISTINGUISHED
MEDICAL RESEARCH, INC. ("DMR"), a Nevada corporation, to conduct
research and development activities concerning ethical
pharmaceuticals, including but not limited to those within the
class of pharmaceuticals to which Esterom belongs. Xx. Xxxx will
be the President and Chief Scientific Officer of DMR.
D. Because of Xx. Xxxx'x skill, expertise, knowledge and experience
in pharmaceuticals, and in working with Esterom under the New
Products Development Agreement and otherwise, Xx. Xxxx expects to
be able to develop innovations to Entropin's Licensed Patents.
The intent of the parties in entering into this Agreement is that
Xx. Xxxx be given access to Entropin's Licensed Patents and
Entropin's Prior Technical Knowledge not solely to take
Entropin's Prior Technical Knowledge and patent that information
without doing further tests, experiments, research and
development, but to utilize his skills to further develop the
Licensed Technologies (defined below) into Improved Product(s),
New Product(s), and Unrelated Product(s) ( all defined below).
E. Xx. Xxxx wants to perform testing, experimentation, research and
development work on Esterom building on the Licensed Technologies
to develop Improved Product(s) and New Product(s); Entropin is
willing to permit Xx. Xxxx to do so on the terms and conditions
below.
F. This Agreement is an interrelated part of an overall agreement
reached with Xx. Xxxx relating to his past assistance to Entropin
in connection with research and
development work on Esterom and medical uses (human and animal)
of cocaine, its salts, derivatives, analogs, homologs,
metabolites, isomers and reaction products. Other aspects of the
overall agreement relate to common stock in Entropin and debt
obligations of Entropin to Xx. Xxxx, the particulars of which are
set forth in other related documents.
In consideration of the mutual covenants and promises contained in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS: As used in this Agreement, the terms below will have
the meanings set forth in this Article:
1.1 "Affiliate" means (a) any corporation or business entity and any
officer, director, control shareholder or other person exercising
legal or de facto control (or any family member of any of the
foregoing) of such corporation or business entity, of which
either party, at the time in question, directly or indirectly
owns or controls fifty percent (50%) or more of the stock having
the right to vote for directors thereof or otherwise controls the
management of the corporation or entity or is controlled by or
under common control with that party by ownership or control of
its voting stock of at least fifty percent (50%), or (b) any
corporation, individual or entity which now or hereafter directly
or indirectly owns or controls fifty percent (50%) or more of the
stock of Entropin or of any corporation or entity to which this
Agreement is assigned by Xx. Xxxx.
1.2 "Confidential Information" is defined in Section 8.1 below.
1.3 "Entropin's Confidential Information" means Confidential
Information, including but not limited to Technical Information,
Entropin's Prior Technical Knowledge, data and materials, and
other information provided to Xx. Xxxx by Entropin from time to
time regarding Entropin's technology, products, business
information and objectives.
1.4 "Entropin's Licensed Patents" means U.S. Patent Numbers:
5,376,667; 5,559,123, 5,525,613; 4,469,700; 4,512,996; 5,556,663;
5,663,345 and any divisional, continuing, and continuation-in-part
patents therefrom that later issue as United States Patents.
1.5 "Entropin Prior Technical Knowledge" refers to knowledge derived
from services conducted at MUSC or the PDC conducted or
supervised directly or indirectly by Xx. Xxxx under the New
Products Development Agreement. Those services included but are
not limited to:
(a) Research leading to the stabilization of the
manufacturing process of Esterom.
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(b) Research leading to reproducing Esterom to establish
its formulation.
(c) Manufacturing Esterom for animal studies.
(d) Supervising Phase I Clinical Studies (toxicity) in
human beings using Esterom.
(e) Supervising the Phase II Clinical Studies of Esterom
(toxicity and efficacy) at MUSC.
(f) Completing preliminary research on Esterom.
(g) Developing an assay for benzoyl ecgonine and ecgonine
for the purposes of indicating the stability of Esterom
using a GC/MS analytical method as well as an HPLC
method for benzoylecgonine.
A list of the documentation arising from such services, which
documentation constitutes the tangible manifestation of the
"Entropin's Prior Technical Knowledge" transferred to Entropin
under the New Products Development Agreement, is attached hereto
as Exhibit A. The location of such documentation is at
Entropin's corporate headquarters in Indio, California or at the
offices of the law firm, Fish and Neave.
1.6 "Esterom" means the compounds of formulas and the pharmaceutical
compositions containing those compounds, or mixtures thereof,
identified and/or claimed under Entropin's Licensed Patents.
1.7 "FDA" means the United States Food and Drug Administration.
1.8 "Improved Product(s)," means products that are developed by Xx
Xxxx under this Agreement which are product(s) that contain the
same active ingredients as Esterom, but are formulated
differently (e.g., as a cream or lotion instead of the liquid
formulation of Esterom).
1.9 "IND" refers to Investigational New Drug application No. 37,301
filed for Esterom with the FDA.
1.10 "IP Rights" means all inventions and other intellectual property
rights which may or may not be the subject of patent, copyright
and other means of intellectual property right protections that
arise out of Xx. Xxxx'x use of the Licensed Technologies.
1.11 "Licensed Product(s)" refers to one or more products covered by
the claims contained in Entropin's Licensed Patents.
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1.12 "Licensed Technologies" refers to products, compositions,
methods, and processes claimed in and covered by Entropin's
Licensed Patents and Entropin's Confidential Information.
1.13 "New Indication" means any indication for Esterom other than the
indications tested in the clinical trials conducted pursuant to
the IND or claimed under Entropin's Licensed Patents.
1.14 "New Products Development Agreement" is defined in the Recitals
above.
1.15 "New Product(s)" means products that are developed by Xx Xxxx
under this Agreement which are either (i) any product relating to
medical uses (human or animal) which is neither a Licensed
Product(s) nor an Improved Product(s) but is derived from
cocaine, its salts, derivatives, analogs, homologs, metabolites,
isomers and reaction products or (ii) any product relating to
medical uses (human or animal) (including Esterom and Improved
Product(s) ), that is to be used for a New Indication
sufficiently novel, unobvious and enabled to be separately
patentable.
1.16 "Patent Costs" mean all reasonable actual out-of-pocket costs
incurred by Entropin for the preparation, filing, prosecution,
and maintenance of patent rights arising out of the IP Rights,
exclusive of any salaries or other indirect costs.
1.17 "Publication" means a disclosure by any means of communication or
transfer to one or more third parties, other than consultants
under an obligation of confidentiality.
1.18 "Technical Information" means technical data, know-how,
specifications, methods of manufacture, and other information or
assistance pertaining to Esterom, Improved Product(s), New
Product(s), and Unrelated Product(s), and the Licensed
Technologies provided by one party to the other from time to
time, including, but not limited to, formulas, patents,
compilations, programs, devices, methods, techniques, and
processes.
1.19 "Unrelated Product(s)" means any product relating to medical uses
(human or animal) which is neither an Improved Product(s) nor a
New Product(s).
2. GRANT CLAUSE. ENTROPIN TO XX. XXXX.
2.1 For the purposes of this Agreement set forth in Section 3 below,
Entropin grants to Xx. Xxxx the non-exclusive right to:
(a) Make, have made, import, and use Esterom under
Entropin's Licensed Patents.
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(b) Use Entropin's Confidential Information.
2.2 No license, either express or implied, is granted by Entropin to
Xx. Xxxx to use the Licensed Technologies (Entropin's Licensed
Patents and Entropin's Confidential Information) for any purpose
except as specifically stated in Section 3 below.
3. SCOPE OF WORK.
3.1 Xx. Xxxx shall have the right to use the Licensed Technologies
for the following purposes but no others, to:
(a) Develop new pharmaceutical compositions comprising
compounds derived from cocaine, its salts, derivatives,
analogs, homologs, metabolites, isomers and reaction
products and their appropriate formulations.
(b) Develop improved or new methods of formulating Esterom;
(c) Demonstrate new indications for Esterom;
(d) Develop new routes of administration for Esterom; and
(e) Identify and develop new chemical entities derived
from cocaine, its salts, derivatives, analogs,
homologs, metabolites, isomers and reaction products
and their appropriate formulations.
3.2 Xx. Xxxx'x right granted under this Agreement to use the
Licensed Technologies is specifically conditioned upon Xx.
Xxxx keeping Entropin's representative designated under
paragraph 4.4(a) of this Agreement fully informed in writing
on a quarterly basis with regard to the substance of Xx.
Xxxx'x activities including, but not limited to, a summary
of research results obtained using the Licensed
Technologies. Further, Xx. Xxxx shall not use the Licensed
Technologies to duplicate research which, to Xx. Xxxx'x
knowledge, has or will be undertaken in good faith by or
for Entropin, unless he has Entropin's prior written
consent. In that regard, Xx. Xxxx is hereby authorized on a
non-exclusive basis to develop Esterom for use in
dermatological indications and to develop Improved
Product(s).
3.3 Subject to the provisions of Article 8 below, all Technical
Information disclosed to Xx. Xxxx by Entropin under this
Agreement including, but not limited to, the technical data,
specifications, methods of manufacture, and other information
utilized, developed or conceived under the New Products
Development Agreement are and will remain the sole property of
Entropin. Entropin acknowledges the existence of Xxxxxxx O'Keke's
thesis "Studies on the Analysis of Ecgonine Derivatives in
Biological and Pharmaceutical Matrices".
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4. XX. XXXX'X OBLIGATIONS.
4.1 Subject to the provisions of Section 3.2 above, Xx. Xxxx shall
utilize his skills, expertise, knowledge, and experience as well
as other scientists to develop and produce Improved Product(s),
New Product(s), and Unrelated Product(s).
4.2 The parties wish to further research and develop the Licensed
Technologies and to share in the benefits of the manufacture and
distribution of the Improved Product(s), New Product(s), and
Unrelated Product(s), and associated follow-on products which
result and through the further research to develop and
commercialize apparently unique chemical entities involved in the
class of pharmaceuticals to which the Licensed Product(s) belong,
and improvements and modifications to the Licensed Technologies.
4.3 Each time that Xx. Xxxx reduces IP Rights, Improved Product(s) or
New Product(s) to writing, Xx. Xxxx shall give notice to
Entropin of such fact and shall concurrently forward to Entropin
all the documentation and execute all documents required to
permit Entropin to prepare and file a patent application or
applications with the United States Patent Office (and in all
foreign countries deemed appropriate by Entropin) as to such
product(s)or rights.
4.4 Xx. Xxxx shall provide Entropin with all documentation required
or, in the opinion of Entropin, reasonably necessary to enable
Entropin to fully exploit the IP Rights, Improved Product(s) or
New Product(s) (and Unrelated Product(s) if Entropin has
exercised its first right of refusal as provided under paragraph
6.3 of this Agreement) in accordance with the following
procedures:
(a) Entropin and Xx. Xxxx shall each select a representative who
shall act as its correspondent in transmitting documentation
relating to the IP Rights, Improved Product(s), New
Product(s), and Unrelated Product(s) and/or other assistance
necessary to fully exploit the IP Rights, Improved
Product(s), New Product(s), and Unrelated Product(s). Each
party shall indicate promptly to the other in writing the
name of its correspondent.
(b) Xx. Xxxx'x correspondent shall be responsible for answering
all reasonable technical inquiries received from Entropin's
correspondent relating to the IP Rights, Improved
Product(s), New Product(s), and Unrelated Product(s) and for
providing copies of pertinent documentation relating to the
IP Rights, Improved Product(s), New Product(s), and
Unrelated Product(s), including applicable test reports;
other technical reports; operation and maintenance manuals;
lists of ingredients and their proportions in compositions
of matter; quality control procedures; other information on
manufacturing processes and apparatus; and cooperate with
any requirements of the FDA or other applicable regulatory
agency.
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(c) Subject to any restrictions that may be imposed by the
United States Government, Xx. Xxxx, on written notice, shall
give Entropin's duly accredited representatives access to
the factories, laboratories, and other facilities used by
him in connection with his activities covered by this
Agreement, at reasonable times and under reasonable
conditions, for a total maximum period of no more than
twenty four (24) business hours per quarter, for the purpose
of acquiring information relating to the IP Rights, Improved
Product(s), New Product(s), and Unrelated Product(s).
(d) Each document transmitted by a correspondent shall contain
the following restricted rights legend:
"This document contains proprietary information of
[disclosing party]. Its receipt or possession does not
convey any rights to reproduce or disclose its contents
or to manufacture, use or sell anything it may
describe. Reproduction, disclosure or use without
specific written authorization of [disclosing party] is
strictly forbidden. This document must be kept only in
[recipient's] confidential files when not in use. The
recipient will take appropriate and necessary action to
prevent unauthorized access to, copying, or down
loading of all or part of this document stored
electronically on a networked computer system or
otherwise."
4.5 Should Entropin need for Xx. Xxxx or any other person working
with him to assist it in the patenting, regulatory process or
commercial exploitation, Xx. Xxxx shall provide access to those
individuals, but Entropin will be responsible for compensating
the individuals for all reasonable expenses associated with such
assistance.
5. OWNERSHIP & PATENTS.
5.1 The parties expect that Xx. Xxxx'x use of the Licensed
Technologies will result in IP Rights, Improved Product(s) and
New Product(s) which may or may not be the subject of patent,
copyright and other means of intellectual property right
protections. Any such patent, copyright and other intellectual
property rights shall be owned solely by Entropin.
5.2 Inventorship of inventions and other intellectual property rights
conceived and/or reduced to practice in connection with the
activities contemplated by this agreement shall be determined in
accordance with the laws of the United States of America.
5.3 Except as provided in paragraph 5.5 of this Agreement, Entropin
shall, at its expense, assume responsibility for the prosecution
and maintenance of patent rights arising from the activities set
forth in paragraph 4.3 of this agreement. Within six (6) months
after the first filing of a patent application or provisional
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patent application, Entropin shall provide Xx. Xxxx with a
country list where applications for such patent rights will be
filed by Entropin. If Xx. Xxxx wishes to file in additional
countries, he may do so at his own cost and expense, and for his
own benefit. Patent rights filed by Xx. Xxxx in such additional
countries shall be owned by Xx. Xxxx. Entropin shall not be
under any obligation to prosecute such patent rights in such
additional countries. If, at the request of Xx. Xxxx, Entropin
retains prosecution of such patent rights, its internal and
external costs shall be reimbursed by Xx. Xxxx within thirty (30)
days after receipt by Xx. Xxxx of the billing for such costs.
5.4 Entropin shall promptly provide Xx. Xxxx with serial numbers,
dates and copies of all New Product(s) and Improved Product(s)
patent applications and issued patents. Entropin shall provide
Xx. Xxxx with copies of all documents relating to New Product(s)
and Improved Product(s) intended to be filed with a patent office
at least twenty five (25) days before such filings for review and
comment by Xx. Xxxx.
5.5 In the event that Entropin anticipates the possibility of any
extraordinary expenditures arising from the preparation, filing,
prosecution, licensing or defense of any of such patent rights,
Entropin shall provide Xx. Xxxx with related information and
shall discuss with Xx. Xxxx and agree upon a mutually acceptable
course of action, including sharing of costs, prior to incurring
any such expenditures. Examples of such extraordinary
expenditures shall include but not be limited to expenses related
to interference or opposition proceedings, settlement of
inventorship disputes, litigation involving any of the patent
rights and disputes related to the rights of research sponsors.
5.6 Notwithstanding any other provision of this Agreement, Entropin
shall not abandon any New Product(s) and Improved Product(s)
patent rights or disclaim any issued claim within the patent
rights without sixty (60) days prior written notice to Xx. Xxxx.
Within sixty (60) days of receipt of notice of proposed
abandonment, Xx. Xxxx must, in writing, either (1) concur in the
abandonment or (2) elect to assume responsibility for the
prosecution and maintenance of some of or all of the patent
rights which Entropin proposes to abandon. Xx. Xxxx'x failure to
respond to such notice shall be interpreted as an approval for
abandonment. Xx. Xxxx shall assume responsibility for the
prosecution and maintenance of the patent rights he elects to
assume under (2) above at his own cost and for his own benefit.
Entropin shall assign to Xx. Xxxx all of its right, title and
interest in such patent rights free and clear of all liens,
encumbrances and other charges. If Entropin does not undertake in
good faith to commence the commercialization of any New
Product(s) and Improved Product(s) within one year after
receiving a patent and all required FDA and other regulatory
approval, pursued in a diligent manner, necessary to sell such
product, it shall, subject to paragraph 5.7, be deemed to have
abandoned any such product provided, however; abandonment shall
not be deemed where the
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failure to commence commercialization is due to a consequence of
unavoidable and/or reasonably unforeseeable circumstances.
5.7 Entropin shall not be deemed to have abandoned the New Product(s)
or Improved Product(s) if it decides in good faith not to market
it. When Entropin makes such decision, it will promptly notify
Xx. Xxxx and provide to him the basis for its decision.
(a) Upon notice to Xx. Xxxx of such decision, Xx. Xxxx shall
within sixty (60) days submit in writing to Entropin his
cost in researching and developing that product. Entropin
shall reimburse Xx. Xxxx for that cost and a surcharge of
twenty-five percent (25%). If Entropin disputes part of the
cost, then the parties will arbitrate the dispute.
(b) If Entropin decides in good faith not to market the New
Product(s) or Improved Product(s), Entropin agrees not to
independently obtain patent protection for a product with
substantial structural identity (excluding Esterom) or to
design around the Improved Product(s) or New Product(s),
whether in Entropin's name or from third parties.
6. ROYALTIES FOR IMPROVED PRODUCT(S), NEW PRODUCT(S), AND UNRELATED
PRODUCT(S).
6.1 Entropin shall pay to Xx. Xxxx 2% of Net Sales (defined in
paragraph 6.4 of this agreement) of Improved Product(s), where
but for the license such Net Sales would infringe valid claims of
patents contained in the IP Rights, until the last to expire of
such patent rights.
The obligation to make payments to Xx. Xxxx will be imposed only
once with respect to the same unit of product sold regardless of
the number of valid patent claims covering the Improved
Product(s).
6.2 Entropin and Xx. Xxxx shall negotiate in good faith the royalties
on Net Sales of New Product(s) on a product by product basis.
The obligation to make royalty payments to Xx. Xxxx will be
imposed only once with respect to the same unit of product sold
regardless of the number of valid patent claims covering the New
Product(s). In the event that the parties have been unable to
agree on such royalty rates by the date of the first commercial
sale of a New Product(s) each party shall submit its proposed
royalty arrangements for such New Product(s) to arbitration
before a single arbitrator with experience of the pharmaceutical
products market. If the parties cannot agree on an acceptable
arbitrator, the dispute will be heard by a panel of three
arbitrators with experience in the pharmaceutical products
market, one appointed by each of the parties and the third
appointed by the other two arbitrators. The arbitration shall be
administered by the Los Angeles, California office of the
American Arbitration Association in accordance with the then
current Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration
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proceedings shall be conducted in Los Angeles, California or such
other location as the parties may agree. The arbitrator(s) shall
be directed and shall have the right to determine which of the
two proposals more accurately reflects the then current market
value of the product and shall establish a fair and equitable
royalty rate. Such determination shall be conclusive and binding
upon both parties. It shall also be the responsibility of the
arbitrator to direct an equitable settlement of any disputes
between the parties concerning the language and content of a
definitive agreement for the implementation of the arbitrator's
determination. A judgment ordering the implementation of the
arbitrator's determination(s) may be entered in any court of
competent jurisdiction. The parties acknowledge and agree that
any arbitration award may be enforced against either or both of
them in a court of competent jurisdiction. The arbitrator's
award as to the payment of the costs of arbitration shall be
binding upon the parties.
6.3 In the event Xx. Xxxx'x use of the Licensed Technologies gives
rise to Unrelated Product(s), Xx. Xxxx shall give Entropin the
first right of refusal to each such Unrelated Product(s).
Whenever Xx. Xxxx receives a bona fide offer to purchase or
license the IP Rights to an Unrelated Product(s), he shall
provide Entropin with a copy of the terms and conditions of such
offer. Entropin shall then have sixty (60) days to notify Xx.
Xxxx that it will exercise its first right of refusal to purchase
or license such Unrelated Product(s) on the same money and
intellectual property rights terms and conditions as the bona
fide offer. In the event Entropin exercises its right of first
refusal, the parties shall close the purchase or license within
a further thirty (30) days. If Entropin does not do so, Xx. Xxxx
may accept the bona fide offer on the same terms and conditions
as offered to Entropin and close on such offer within ninety (90)
days after the expiration of Entropin's first right of refusal.
If Xx. Xxxx does not do so, he must repeat the procedures of this
Section with respect to each new or revised bona fide offer for
the Unrelated Product(s).
6.4 For the purposes of this Article the term "Net Sales" shall mean
the gross invoice price of the New Product(s) or Improved
Product(s) actually billed and collected by Entropin, an Entropin
Affiliate or a licensee to unrelated third party customers less
(i) any direct or indirect credits and allowances or adjustments
granted to such customers, including without limitation credits
and allowances on account of price adjustments or on account of
rejection or return of such New Product(s) or Improved Product(s)
previously sold, (ii) any trade and cash discounts, rebates,
agents commissions and distribution fees, (iii) any sales,
excise, turnover and similar taxes, (iv) all royalties paid to
non affiliate third parties for use of its covalently coupled
compounds, and any duties and other governmental charges imposed
upon the production, importation, use or sale of such New
Product(s) or Improved Product(s) or partly processed products,
and transportation, importation, insurance and other handling
charges not separately invoiced provided that such charges can be
reasonably allocated to such xxxxxxxx
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7. REPORTS.
Entropin shall submit to Xx. Xxxx an annual report no later than March
1 each year starting with 1999 setting forth the status of commercial
development and licensing activities of each of the Improved, New and
Unrelated Product(s) for the preceding calendar year. Each report
shall contain a detailed accounting of royalty payments due Xx. Xxxx
under this Agreement and be accompanied by a check for the royalties
due. If Xx. Xxxx disputes the amount of royalties owed, he shall
advise Entropin in writing of such fact within ninety (90) days after
receipt of payment. Failure to give such notice shall be deemed for
all purposed as acceptance by Xx. Xxxx of the royalty payment as
accurate and complete. Xx. Xxxx may, at his sole expense, audit such
books and records of Entropin as may reasonably be necessary to
determine whether Entropin complied with the royalty provisions of
this Agreement. If the audit establishes that Entropin has incorrectly
computed the royalties due, such deficiency shall be paid by Entropin
within thirty days after a final determination of the amount of such
deficiency together with interest on such deficiency at the rate of
eighteen percent (18%) per annum computed from the March 1 due date.
If the amount of the deficiency is determined to be in excess of ten
percent (10%) of the correct amount due or more than fifty Thousand
Dollars ($50,000.00), Entropin shall pay all costs of the audit. In
the event Entropin disputes the results of the audit, the parties
agree to submit the matter to arbitration before a single arbitrator.
If the parties cannot agree on an acceptable arbitrator, the dispute
will be heard by a panel of three arbitrators, one appointed by each
of the parties and the third appointed by the other two arbitrators.
The arbitration shall be administered by the Los Angeles, California
office of the American Arbitration Association in accordance with the
then current Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration proceedings shall be conducted in Los
Angeles, California or such other location as the parties may agree.
8. CONFIDENTIALITY
8.1 To the extent permitted by patent rights, information, data and
materials exchanged under this Agreement may be used by the
recipient for the purposes of this Agreement. Information and
data marked as "Confidential" shall neither be published nor
otherwise made available to a third party by the recipient during
the term of this Agreement or for five (5) years thereafter in
the absence of written consent from the supplier of the
information. Such information is "Confidential Information" for
the purposes of this Agreement. The restriction on public
disclosure shall not apply to information which:
(a) is in the public domain;
(b) comes into the public domain through no fault of the
recipient;
(c) is known to the recipient at the time of disclosure;
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(d) becomes known to the recipient subsequent to the
disclosure as a result of a non-confidential disclosure
by a third party with a right to disclose the
information.
Given Xx. Xxxx'x special relationship with Entropin and his work under
the New Products Development Agreement, his knowledge of Entropin's
Prior Technical Knowledge, whether or not transferred to Entropin
under the New Products Development Agreement, and of Entropin's
affairs shall not constitute prior knowledge of Xx. Xxxx for the
purposes of this Section. Xx. Xxxx may disclose Entropin's Prior
Technical Knowledge to his employees, consultants, and associates on
a need to know basis and only after the employee, consultant, or
associate has signed a confidentiality agreement on terms equivalent
to those contained in this Article.
8.2 The parties acknowledge and confirm that maintaining the
confidentiality and secrecy of the Confidential Information is of
the utmost importance to both parties and that any disclosure of
Confidential Information may diminish the value and strength of
the Confidential Information. Entropin and Xx. Xxxx shall each
take all steps (using the same degree of care, but no less than
a reasonable degree of care, as each party uses to protect
his/its own confidential information) that are reasonably
necessary to protect the secrecy of the Confidential Information
and prevent them from entering the public domain or falling into
the hands of others not bound by this Agreement or pledged to
their secrecy.
8.3 Each party may use or disclose the other party's Confidential
Information to the extent such use or disclosure is reasonably
necessary in complying with applicable law, legal process or
governmental regulations, or exercising its rights under this
Agreement, provided that if a party is required to make any such
disclosure of the other party's Confidential Information, other
than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the other party of such disclosure
and, will use its best efforts to secure confidential treatment
of the Confidential Information prior to its disclosure (whether
through protective orders or otherwise).
8.4 Notwithstanding the foregoing, the parties may use and disclose
a summary of the Confidential Information received from the other
in connection with (1) applying for and securing necessary
governmental authorizations for the import, manufacture and
marketing of Improved Product(s), New Product(s), and Unrelated
Product(s) (2) discussions with prospective investors, and (3)
discussions with prospective sublicensees, partners, joint
venturers, contract manufacturers and other collaborators with
respect to the development, manufacture, distribution, promotion,
sale and marketing of the Improved Product(s), New Product(s),
and Unrelated Product(s). The party making the disclosure shall,
prior to doing so, provide the other party with a copy of the
summary and the name of the party to whom the disclosure is being
made.
12
8.5 Xx. Xxxx shall not publish the results of his work carried out
under this Agreement without the prior written consent of
Entropin which consent will not be unreasonably withheld. Xx.
Xxxx shall provide Entropin with the opportunity to review all
proposed Publications at least sixty (60) days prior to
submission for publication or presentation to assure the absence
of Confidential Information, and to review for the effect of
publication on the patentability of inventions arising out of
such work. At Entropin's request, Xx. Xxxx shall delay proposed
Publications to permit Entropin to take adequate steps to file
patent applications for any patentable subject matter referred to
in the proposed Publications. Further Xx. Xxxx shall cause any
such Publications containing Confidential Information relating to
the IP Rights to be re-written to avoid disclosure of such
Confidential Information.
8.6 Due to the risky nature of investing in research and development
of an as yet unapproved pharmaceutical product with only a non-
exclusive license, Xx. Xxxx may seek capital for outside sources
to continue his research and development activities. In doing
so, Xx. Xxxx may form by himself or with DMR joint ventures,
limited partnerships, or other financing structures. Xx. Xxxx
may do so, provided that any such financing partners execute
appropriate agreements to maintain secrecy as required in Section
8.1 above.
9. WARRANTIES.
9.1 Entropin represents and warrants that:
(a) It is a corporation duly organized, validly existing and in
good standing under the laws of the state in which it is
incorporated and has all the necessary corporate powers to
own its properties, and carry on its business as now owned
and operated.
(b) The execution and delivery of this Agreement by Entropin has
been duly authorized, and no further corporate action or
authorization is necessary in connection therewith.
(c) The consummation of the transactions contemplated herein
will not result in or constitute any of the following: a
breach of any term or condition of this Agreement; a default
or an event that, with notice or lapse of time or both,
would constitute a default, breach or violation of the
Articles of Incorporation or Bylaws of Entropin or any
license, promissory note or other agreement, instrument or
arrangement by which Entropin is bound; or an event that
would permit any party to terminate or to accelerate the
maturity of any obligation of Entropin.
(d) THE PARTIES ACCEPT THE FOREGOING WARRANTIES IN LIEU OF ALL
OTHER WARRANTIES NOT EXPRESSLY SET FORTH IN THIS
13
ARTICLE, AND DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. NEITHER PARTY WARRANTS THAT THE RESEARCH AND
DEVELOPMENT ACTIVITIES CONTEMPLATED HEREUNDER WILL MEET THE
OTHER PARTY'S REQUIREMENTS FOR COMMERCIAL VIABILITY OR THE
REQUIREMENTS OF THEIR CUSTOMER'S OR LICENSEE'S, AS
APPROPRIATE, OR THOSE OF VARIOUS REGULATORY ENTITIES
INCLUDING BUT NOT LIMITED TO THE FDA. FURTHERMORE, NEITHER
PARTY WARRANTS NOR MAKES ANY REPRESENTATIONS AS TO
PHARMACEUTICALS DEVELOPED OR WHICH ARE OTHERWISE THE SUBJECT
OF THE RESEARCH AND DEVELOPMENT EFFORTS UNDER THIS AGREEMENT
IN TERMS OF MEDICAL EFFICACY, RISK FACTORS, AND THE LIKE.
NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY A PARTY OR
A PARTY'S AUTHORIZED REPRESENTATIVE SHALL CREATE A WARRANTY
OR IN ANY WAY INCREASE THE SCOPE OF THE WARRANTIES CONTAINED
IN THIS ARTICLE.
9.2 Entropin represents and warrants that it is to the best of its
knowledge the owner of all right, title and interest in and to
the Licensed Technologies, including but not limited to all
copyright, patent and other intellectual property rights in and
to the Licensed Product(s), as well as all powers and privileges
relating thereto.
9.3 Xx. Xxxx represents and warrants that to the best of his
knowledge and belief all inventions, discoveries and improvements
conceived or made under the New Products Development Agreement
have been disclosed and, if requested, assigned to Entropin as
required by the terms of the New Products Development Agreement.
In addition, Xx. Xxxx represent and warrants that if it is
determined that any inventions, discoveries or improvements made
or conceived under the New Products Development Agreement have
not been assigned to Entropin, he will use his best efforts and
cooperate in all respects to cause such inventions, discoveries
and improvements to be assigned to Entropin. Xx. Xxxx further
warrants and represents that his work under this Agreement does
not and will not violate the policies of any institution with
which he is or may become associated during the term of this
Agreement, including, but not limited to, policies regarding the
administration of grants and funded research.
10. LIMITATION OF WARRANTIES.
Xx. Xxxx shall provide Entropin with access to his Technical
Information, developed pursuant to this Agreement, but Xx. Xxxx does
not assume any responsibility for processes practiced or New
Product(s), Improved Product(s), or Unrelated Product(s) manufactured
in accordance with such Technical Information. Xx. Xxxx shall not be
14
deemed to make, or to have made, any warranties concerning such
Technical Information, processes practiced, or New Product(s),
Improved Product(s), or Unrelated Product(s) manufactured under this
Agreement, except as expressly stated in this Agreement.
11. TERM OF AGREEMENT.
11.1 This Agreement is effective as of January 1, 1998 and unless
terminated sooner will continue in force until December 31,
2003.
11.2 Either party may terminate this Agreement in the event the other
party shall have materially breached or defaulted in the
performance of any of its obligations hereunder, and such default
shall have continued for forty-five (45) days after the written
notice thereof was provided to the breaching party by the non-
breaching party specifying the particulars of the breach. Any
termination shall become effective at the end of such forty-five
(45) day period unless the breaching party (or any other party on
its behalf) has cured any such breach or default prior to the
expiration of the forty-five (45) day period.
11.3 Entropin may terminate this Agreement on notice to Xx. Xxxx in
the event that Xx. Xxxx terminates his active participation in
the scientific affairs of DMR or of any other corporation to
which he assigns his rights under this Agreement, and/or ceases
to direct and supervise DMR's or such other corporation's work
under this Agreement.
11.4 If voluntary or involuntary proceedings by or against a party are
instituted in bankruptcy under any insolvency law, or a receiver
or custodian is appointed by such party, or proceedings are
instituted by or against such party for corporate reorganization
or the dissolution of such party, which proceedings, if
involuntary, shall not have been dismissed within sixty (60) days
after the date of filing, or if such party makes an assignment
for the benefit of creditors, or substantially all of the assets
of such party are seized or attached and not released within
sixty (60) days thereafter, the other party may immediately
terminate this Agreement effective upon notice of such
termination.
11.5 Termination of this Agreement for any reason shall not release
either party from any liability which, at the time of such
termination, has already accrued to the other party or which is
attributable to a period prior to such termination nor preclude
either party from pursuing any rights and remedies it may have
hereunder or at law or in equity with respect to any breach of
this Agreement.
11.6 Upon any termination of this Agreement, each party shall promptly
return to the other party all Confidential Information received
from the other party (except each party may retain one copy
solely for archival purposes and verifying compliance with the
provisions of Article 7 above).
15
11.7 Articles 6, 7, 8, 9 and 12 of this Agreement shall survive the
expiration or termination of this Agreement for any reason.
12. ARBITRATION.
12.1 The parties shall submit all disputes relating to this Agreement
to binding arbitration by the American Arbitration Association.
Either party may enforce the award of the arbitrators. The
parties understand that they are waiving their rights to jury
trail.
12.2 The party demanding arbitration shall submit a written claim to
the other party, setting out the basis of the claim. The
responding party shall have ten (10) business days in which to
respond to such demand in a written answer.
12.3 Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration
administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgment on the award rendered
by the arbitrators may be entered in any court having
jurisdiction thereof. Three arbitrators will be appointed, each
with a familiarity with pharmaceutical manufacturing and/or
pharmaceutical research and development. Arbitrations will be
held at the offices of the American Arbitration Association in
Los Angeles, California unless the parties agree otherwise.
12.4 The provisions of this Article do not apply to the arbitration
provisions of paragraphs 6.2, 7, and 13.4 of this Agreement.
13. OPTION TO PURCHASE.
Xx. Xxxxx X. Xxxx and his assignee, DMR, do hereby grant to Entropin
three options to acquire DMR on the following terms and conditions:
13.1 The options to acquire DMR granted to Entropin under this
Agreement can be exercised by Entropin on the second, fourth, and
sixth anniversary date of this Agreement.
13.2 Entropin shall exercise its right to each option by giving
written notice to DMR of its election not less than thirty
(30) days prior to the applicable option date. Notice shall
be sent to DMR at ____________________, with a copy to Xx.
Xxxxx X. Xxxx at _____________________________. Included in
the notice to exercise the option will be Entropin's
proposed acquisition price.
13.3 When the second anniversary date is reached, Entropin shall be
entitled to acquire all of DMR including the royalties rights
owed by Entropin to DMR as set forth in Section 6 (DMR having
complied with Section 4.3) of the License Agreement. If Entropin
does not acquire DMR on the second anniversary, then
16
DMR will be free to assign, transfer, and convey those rights out
to individuals or entities. When the fourth anniversary date is
reached, only those royalty rights developed between the second
and fourth anniversaries are subject to acquisition by Entropin.
If it fails to acquire those royalty rights, then DMR will be
free to assign, transfer, and convey those rights out to
individuals or entities. On the sixth anniversary, Entropin
shall be entitled to acquire DMR and only those royalty rights
developed between the fourth and the sixth anniversary.
13.4 Entropin and DMR shall negotiate in good faith on the acquisition
price of DMR upon exercise of the option. In the event the
parties have been unable to agree on the acquisition price within
thirty (30) days of the exercise of the option by Entropin, each
party shall submit its proposed acquisition price to arbitration
before a single arbitrator with experience in determining the
value of a pharmaceutical company of the nature of DMR. If the
parties cannot agree on an acceptable arbitrator, the dispute
will be heard by a panel of three arbitrators with experience in
determining the value of a pharmaceutical company of the nature
of DMR, one appointed by each of the parties and the third
appointed by the other two arbitrators. The arbitration shall be
administered by the Las Vegas, Nevada office of the American
Arbitration Association in accordance with the then current
Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration proceedings shall be conducted in
Las Vegas, Nevada or such other location as the parties may
agree. The arbitrator(s) shall be directed and shall have the
right to determine the then current fair market value of DMR. In
arriving at a fair market value the arbitrators shall consider,
among other things, the value of the royalty stream owned by DMR
and the costs and expenses which would be imposed on Entropin to
honor all stock options and other benefits granted to employees
of DMR by DMR prior to the exercise by Entropin of its option
granted under this Agreement. Such determination shall be
conclusive and binding upon both parties. It shall also be the
responsibility of the arbitrator(s) to direct an equitable
settlement of any disputes between the parties concerning the
language and content of a definitive agreement for the
implementation of the arbitrator's determination. A judgment
ordering the implementation of the arbitrator's determination(s)
may be entered in any court of competent jurisdiction. The
parties acknowledge and agree that any arbitration award may be
enforced against either or both of them in a court of competent
jurisdiction. The arbitrator's award as to the payment of the
costs of arbitration shall be binding on the parties.
13.5 Entropin shall assume any employee stock options granted to
employees of DMR prior to the date Entropin exercises its option
granted by this Agreement. An agreement will be reached with the
individual employee stock option holders to either cash out their
stock options or exchange their stock options in DMR for stock
options in Entropin.
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14. NOTICES.
Any notice, report or statement required or permitted under this
Agreement will be considered to be given or transmitted when sent by
certified mail, postage prepaid, addressed to the party for whom it is
intended at its address of record; by facsimile, which notice will be
effective on computer confirmation of receipt; or by courier or
messenger service, which notice will be effective on receipt by
recipient as indicated on the carrier's receipt. The record addresses
of the parties are as follows:
Entropin: Entropin, Inc.
00-000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax #: (000) 000 0000
Attn:_______________
Xx. Xxxx: Xx. Xxxxx X. Xxxx
__________________
___________________
___________________
15. AMENDMENTS, ASSIGNABILITY, AND COUNTERPARTS.
15.1 This Agreement may be supplemented, amended, or modified only by
the parties' mutual agreement. No supplement, amendment, or
modification of this Agreement will be binding unless it is in
writing and signed by both parties.
15.2 Neither party shall, without the prior written consent of the
other party, sell, transfer, assign, delegate, or subcontract any
rights or obligations under this Agreement without the prior
written consent of the other party, which consent shall not be
unreasonably withheld. Any such transferee, assignee, delegate,
or subcontractor shall agree in writing to the same
confidentiality obligations no less stringent than those imposed
in this Agreement. Notwithstanding any such sale, transfer,
assignment, delegation or subcontract, the acting party shall not
be relieved of its duties and obligations set forth under this
Agreement.
15.3 Notwithstanding the provisions of Section 15.2 above, the parties
recognize that Xx. Xxxx intends to organized DMR for the purpose
of acquiring and developing his rights under this Agreement. Xx.
Xxxx may assign his rights under this Agreement to DMR or another
corporation provided that he continues actively supervise all of
the research and development of DMR as its Chief Scientific
Officer. The parties recognize that Xx. Xxxx is a full time
employee of MUSC and that he will be required by MUSC to comply
with the work regulations of MUSC. Notwithstanding his employee
status at MUSC, Xx. Xxxx shall, in his capacity as Chief
Scientific Officer of DMR, supervise the testing, experi-
18
mentation, research and development work under this Agreement and
he shall remain responsible for the discharge of his obligations
under this Agreement.
15.4 Entropin recognizes that Xx. Xxxx may subcontract with
universities, laboratories, and scientists in building upon the
Licensed Technologies to research and develop Improved
Product(s). Each organization and person that Xx. Xxxx contracts
with for the research shall be required to execute an agreement
to maintain the confidentiality and restrictions on use set forth
in this Agreement. Xx. Xxxx shall obtain Entropin's prior
written consent to the terms of any such subcontract that does
not permit Entropin to own the exclusive rights to resulting IP
Rights.
15.5 This Agreement shall became effective and binding upon the
parties when executed by both parties. This Agreement may be
executed in two counterparts, both of which for all purposes
shall constitute one agreement effective upon the latest date of
signatures of the counterparts, and shall be binding on the
parties notwithstanding that both parties have not signed the
same counterparts.
16. INDEPENDENT CONTRACTOR
It is expressly understood that the parties are contractors
independent of one another, and that neither has the authority to bind
the other to any third person or otherwise act in any way as the
representative of the other, unless the other has expressly delegated
such authority in a writing signed by both parties.
17. CONSTRUCTION.
Unless the context clearly requires otherwise, (i) the plural and
singular numbers are each deemed to include the other; (ii) the
masculine, feminine, and neuter genders are each deemed to include the
others; (iii) "shall", "will", and "agrees" are mandatory, and "may"
is permissive; (iv) "includes" and "including" are not limiting. All
time requirements shall be strictly construed as time is "of the
essence".
18. EXHIBITS
The following exhibits constitute a part of this Agreement and are
incorporated into this Agreement by this reference:
Exhibit A: List of documents comprising Entropin's Prior Technical
Knowledge
Exhibit B: Consent to representation of Xx. Xxxx by Xxxxx Xxxxxx
If any inconsistency exists or arises between a provision of this
Agreement and a provision of any exhibit, the provision of this
Agreement will prevail.
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19. NO WAIVER.
No waiver of a breach, failure of any condition, or any right or
remedy contained in or granted by this Agreement will be effective
unless it is in writing and signed by the party waiving the breach,
failure, right, or remedy. No waiver of any breach, failure, right,
or remedy, whether or not similar, nor will any written constitute a
continuing waiver unless the writing so specifies.
20. HEADINGS
The headings of the Articles in this Agreement are included for
convenience only and will effect neither the construction nor
interpretation of any provision in this Agreement nor any of the
rights or obligations of the parties to this Agreement. However, the
recitals to this Agreement are a part of this Agreement and reflect
the intentions of the parties.
21. GOVERNING LAW.
This Agreement, and any dispute arising from the relationship between
the parties will be governed and determined under California law,
excluding its conflicts of law rules.
22. ATTORNEY FEES.
In any arbitration, litigation or other proceeding by which one party
either seeks to enforce its rights under this Agreement (whether in
contract, tort, or both) or seeks a declaration of any rights or
obligations under this Agreement, the prevailing party shall be
awarded reasonable attorneys fees, together with costs and expenses,
to resolve the dispute and to enforce the final judgment.
23. SEVERABILITY
Any provision of this Agreement that in any way contravenes any
applicable law, to the extent the law is contravened, shall be
considered separable and inapplicable and will not affect any other
provision or provisions of this Agreement unless an essential purpose
of this Agreement would be defeated by the loss of the illegal,
unenforceable, or invalid provision.
24. BINDING EFFECT.
This Agreement will enure to the benefit of the successors and assigns
of the parties.
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IN WITNESS WHEREOF , Xx. Xxxx has and Entropin has caused its duly
authorized
officer to execute this Agreement on the respective dates set forth below.
ENTROPIN, INC.
By: /s/XXXXXXX X. XXXXXX /s/ XXXXX X. XXXX
--------------------------- ---------------------------
XX. XXXXX X. XXXX
Name:
------------------------
Title: President & CEO Date: 2/1/98
----------------------- ----------------------
Date: 1-24-98
-----------------------
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AGREEMENT
Exhibit A
List of documents incorporated in the Entropin Prior Technical Knowledge:
22
AGREEMENT
Exhibit B
Consent to Representation by Xxxxx Xxxxxx:
The undersigned on behalf of Entropin, Inc. ("Entropin"), to the
representation of Xx. Xxxxx X. Xxxx ("Xx. Xxxx") by Xxxxx Xxxxxx, Esq..
Prior to August, 1995, Xx. Xxxxxx represented Entropin in matters related
to intellectual property while employed by the law firm of Fish and Neave.
Xx. Xxxxxx now intends to represent Xx. Xxxx in connection with matters
relating to the business and operations of Xx. Xxxx, including (but not
necessarily limited to) contractual arrangements with Entropin and other
parties, and licensing and intellectual property on behalf of Xx. Xxxx.
although no conflict of interest is likely to arise and Xx. Xxxxxx'x
representation of Xx. Xxxx is not in the same or a substantially related
matter which is likely to be materially adverse to the interests of
Entropin, this consent is being sought to ensure that Entropin has been
informed of and agrees to Xx. Xxxxxx'x representation of Xx. Xxxx.
ENTROPIN, INC.
The undersigned Xxxxx Xxxxxx represents
and warrants that the above statements
are true and correct.
By:______________________________
Name:____________________________ _____________________________________
Xxxxx Xxxxxx, Esq.
Title:___________________________
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