EXHIBIT 99
CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTIONS OF THIS AGREEMENT HAVE BEEN REDACTED
AND FILED SEPARATELY WITH THE COMMISSION.
LICENSE AGREEMENT
between
VICAL INCORPORATED
and
CYTRX CORPORATION
LICENSE AGREEMENT
THIS AGREEMENT (this "Agreement") effective as of December 7, 2001, (the
"Effective Date") between Vical Incorporated, a corporation organized and
existing under the laws of Delaware ("Vical") and CytRx Corporation, a
corporation organized and existing under the laws of Delaware ("CytRx")
collectively referred to hereinafter as the Parties.
WITNESSETH:
WHEREAS, CytRx has developed CytRx Know-How (as hereinafter defined) and
has rights to Patent Rights (as hereinafter defined), collectively referred to
as CytRx Poloxamer Intellectual Property (as hereinafter defined); and
WHEREAS, CytRx has exclusively licensed to Merck & Co. ("Merck") CytRx
Poloxamer Intellectual Property in a certain field ("Merck License"), a copy of
which is attached hereto as Addendum 1.0; and
WHEREAS, Vical desires to obtain a license under the CytRx Poloxamer
Intellectual Property, upon the terms and conditions set forth herein and CytRx
desires to grant such a license;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
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Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings
set forth below:
1.1 The term "Affiliate" shall mean (i) any corporation or business entity of
which fifty percent (50%) or more of the securities or other ownership
interests representing the equity, the voting stock or general partnership
interest are owned, controlled or held, directly or indirectly, by Vical or
CytRx; or (ii) any corporation or business entity which, directly or
indirectly, owns, controls or holds fifty percent (50%) (or the maximum
ownership interest permitted by law) or more of the securities or other
ownership interests representing the equity, the voting stock or, if
applicable, the general partnership interest, of Vical or CytRx.
1.2 The term "Calendar Quarter" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.
1.3 The term "Calendar Year" shall mean each successive period of twelve (12)
consecutive calendar months commencing on January 1 and ending on December
31.
1.4 The term "CytRx Know-How" shall mean information and materials, including
but not limited to, discoveries, Improvements, processes, formulas, data,
know-how and trade secrets, patentable or otherwise, which during the term
of this Agreement (i) are in CytRx's possession or control, (ii) are not
generally known, (iii) are necessary or useful to Vical in connection with
the research, development, manufacture, marketing, use or sale of TranzFect
and/or Licensed Products in the Field in the Territory including regulatory
filings and/or any information necessary or useful for regulatory filings,
and (iv) CytRx has the right to provide to Vical.
1.5 The term "CytRx Poloxamer Intellectual Property" shall mean (i) Patent
Rights; and (ii) CytRx Know-How.
1.6 The term "Field" shall mean the use of CytRx Poloxamer Intellectual
Property in polynucleotide-based therapeutics and prophylactics (including
DNA, RNA, viral, and all other biologically active natural and synthetic
polynucleotides such as antisense (including antisense polynucleotides
containing phosphothioester moieties) and CpG materials) alone or in
combination with a protein or peptide antigen as part of a prime / boost
regime, for all human and animal health applications, except for the
following:
a) those fields of use currently licensed to Merck, as described in the
Merck License,
b) DNA vaccines and / or therapeutics based on PSMA (as defined in
Section 1.17 hereof),
c) sale of a non-regulated product for use as a non-clinical research
reagent to increase transfection in vitro or in laboratory animals.
For the avoidance of any doubt, CytRx shall be free to license the CytRx
Poloxamer Intellectual Property in therapeutics and prophylactics
(including prime-boost regimes) that do not include polynucleotides.
1.7 The term "First Commercial Sale" shall mean, with respect to any Licensed
Product, the first sale for end use or consumption of such Licensed Product
in a country after all required approvals, including marketing and pricing
approvals, have been granted by the governing health authority of such
country.
1.8 The term "Improvement" shall mean any enhancement by CytRx in the synthesis
or manufacture of TranzFect.
1.9 The term "Licensed Product(s)" shall mean preparations in final form
(including all components used as part of a prime - boost regime) for sale
by prescription, over-the-counter or any other method, for use in the
Field, and which contain TranzFect.
1.10 The term "Major Pharmaceutical Markets" shall mean any of the United
States, Canada, France, Germany, Italy, Spain, the United Kingdom or Japan.
1.11 The term "Net Sales" shall mean the gross invoice price of Licensed Product
sold by Vical, its Affiliates or sublicensees (which term does not include
distributors) to the first independent third party after deducting, if not
previously deducted, in the amount invoiced or received:
(a) trade and quantity discounts;
(b) returns, rebates and allowances;
(c) chargebacks and other amounts paid on sale or dispensing of Licensed
Product;
(d) retroactive price reductions that are actually allowed or granted;
(e) sales commissions paid to distributors and/or selling agents but not
the actual sales force;
(f) a fixed amount equal to five percent (5%) of the gross invoice price
to cover bad debt, sales or excise taxes, transportation and insurance
charges and additional special transportation, custom duties, and
other governmental charges;
(g) standard inventory cost of devices or delivery systems other than
syringes used for dispensing or administering Licensed Product which
accompany Licensed Product as it is sold.
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1.12 The term "Parties" shall mean CytRx, Vical, and all successors arising
from merger, consolidation, changes in control, reorganization, or
similar transaction.
1.13 The terms "Patent Rights" shall mean (i) all US and foreign patents and
patent applications owned by or licensed to CytRx during the term of
this Agreement which claim or cover polyoxypropylene/polyoxyethylene
copolymer compounds or compositions or preparations of such compounds
which may be added to a Substance to enhance the performance of such
Substance or the manufacture, purification, formulation and use of such
compounds and materials comprising such compounds; or (ii) divisions,
continuations, continuations-in-part, reissues, renewals, extensions,
supplementary protection certificates, utility models and the like of
any such patents and patent applications and foreign equivalents
thereof.
1.14 The term "Phase I Study", "Phase IIb Study", "Phase III Study", and
Biologics or Product License Application (also referred to as a PLA)
shall mean these terms as described in the laws and regulations of the
U.S. Food and Drug Administration of the Department of Health and Human
Services.
1.15 The term "PLA Approval" shall mean notification from a regulatory
authority in a country that all approvals for the marketing of Licensed
Product, including pricing approvals, have been granted.
1.16 The term "Proprietary Information" shall mean all Vical Know-How, CytRx
Know-How, and all other scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether communicated in
writing or orally or by sensory detection, which is provided by one
party to the other party in connection with this Agreement.
1.17 The term "PSMA" shall mean any polypeptide derived from the
prostate-specific membrane antigen which is a type II integral membrane
glycoprotein that is highly expressed in prostate cancer.
1.18 The term "Substance" shall mean any polynucleotide-based therapeutic or
prophylactic alone or in combination with a protein antigen as part of
a prime / boost regime for use in the Field, wherein the Substance
includes TranzFect.
1.19 The term "TranzFect" shall mean any polyoxypropylene/polyoxyethelene
copolymer compound or compositions or preparations of such compounds
claimed in or covered by CytRx Poloxamer Intellectual Property and/or
CytRx Know-How which may be added to Substance to enhance performance
of such Substance relative to use of the Substance without TranzFect.
1.20 The term "Territory" shall mean all of the countries in the world.
1.21 The term "Valid Patent Claim" shall mean a claim of an issued and
unexpired patent included within the CytRx Poloxamer Intellectual
Property, which has not been revoked or held unenforceable or invalid
by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for
appeal, and which has not been disclaimed, denied or admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise.
1.22 The term "Vical Know-How" shall mean any Vical information and
materials, including but not limited to, discoveries, improvements,
processes, formulas, data, inventions, know-how and trade secrets,
patentable or otherwise, which during the term of this Agreement are
not generally known.
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ARTICLE II
LICENSE; DEVELOPMENT AND COMMERCIALIZATION
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2.1 License Grant - CytRx Poloxamer Intellectual Property. CytRx hereby
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grants to Vical an exclusive license in the Territory with the right to
sublicense under CytRx Poloxamer Intellectual Property to research,
develop, make, have made, use, sell, offer to sell or import: (i)
TranzFect as it relates to use with Substance in the Field; and (ii)
Licensed Product(s).
2.2 [*****]
2.3 Exchange of Information
-----------------------
a. Initial Data Transfer. Within 10 days of the Effective Date, (the
-------------------------
"Data Transfer Period") CytRx agrees to transfer to Vical the CytRx
Know-How listed in Addendum 3.0 hereof. During the 10 day Data Transfer
Period, Vical, but not CytRx, shall have the option to terminate this
Agreement at its sole discretion. If Vical exercises this option to
terminate, Vical agrees to return to CytRx all copies of CytRx Know-How
and destroy all documents containing any part thereof, and
notwithstanding other terms in this Agreement, Vical further agrees to
maintain CytRx Know-How in confidence and to treat such CytRx Know-How
as proprietary information as described in Section 3.1 hereof. CytRx
agrees that it will not enter into any third party discussions
pertaining to the license of TranzFect in the Field during the Data
Transfer Period.
b. Additional Data Transfer. During the term of this Agreement and so
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long as Vical continues to have an obligation to pay royalties to
CytRx under this Agreement, CytRx shall promptly disclose to Vical in
English, and in writing on an ongoing basis all CytRx Know-How not
previously disclosed.
c. Reports. During the term of this Agreement, and upon written request
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from CytRx, but not more than once per Calendar Year, Vical agrees to
provide CytRx with a written report summarizing research and
development activities related to the use of TranzFect in the Field
over the previous Calendar Year.
d. Sublicense Agreements. Vical shall provide to CytRx a copy of all
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sublicense agreements pertaining to CytRx Intellectual Property within
30 days of execution, with the financial terms redacted.
2.4 Development and Commercialization Vical shall use reasonable efforts,
---------------------------------
at its own expense, to develop and commercialize a Licensed Product on
a commercially reasonable basis in such countries in the Territory
where in Vical's opinion it is commercially viable to do so.
2.5 Excused Performance. In addition to the provisions of Article VI
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hereof, the obligation of Vical with respect to any Licensed Product
under Section 2.4 are expressly conditioned upon the continuing absence
of any adverse condition or event relating to the safety or efficacy of
the Licensed Product, and the obligation
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
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of Vical to develop or market any such Licensed Product shall be delayed or
suspended so long as in Vical's opinion any such condition or event exists.
ARTICLE III
CONFIDENTIALITY AND PUBLICATION
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3.1 Nondisclosure Obligation. All Proprietary Information disclosed by one
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party to the other party hereunder shall be maintained in confidence by the
receiving party and shall not be disclosed to a non-party or used for any
purpose except as set forth herein without the prior written consent of the
other party, except to the extent that such Proprietary Information:
(a) is known by recipient at the time of its receipt, and not through a
prior disclosure by the disclosing party, as documented by business
records;
(b) is properly in the public domain;
(c) is subsequently disclosed to a receiving party by a third party who
may lawfully do so and is not under an obligation of confidentiality
to the disclosing party;
(d) is developed by the receiving party independently of Proprietary
Information received from the other party as documented by business
records;
(e) is disclosed to governmental or other regulatory agencies in order to
obtain patents or to gain approval to conduct clinical trials or to
market Licensed Product, but such disclosure may be only to the extent
reasonably necessary to obtain patents or authorizations;
(f) is deemed necessary or useful by Vical to be disclosed to
sublicensees, agents, consultants, Affiliates and/or other third
parties for the research and development, manufacturing and/or
marketing of TranzFect, Substance, or Licensed Product (or for such
parties to determine their interest in performing such activities) in
accordance with this Agreement on the condition that such third
parties agree to be bound by the confidentiality obligations contained
this Agreement, provided the term of confidentiality for such third
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parties shall be no less than ten (10) years; or
(g) is required to be disclosed by law or court order, provided that
notice is promptly delivered to the other party in order to provide an
opportunity to challenge or limit the disclosure obligations.
3.2 CytRx Know-How. CytRx agrees to keep all CytRx Know-How confidential
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subject to exception (b), (e) and (g) in Section 3.1 above. In addition,
CytRx may disclose CytRx Know-How to the extent such disclosure is deemed
necessary or useful by CytRx to be disclosed to prospective and actual
licensees, sublicensees, agents, consultants, Affiliates and/or other third
parties for the research and development, manufacturing and/or marketing of
[products other than] the Licensed Products.
ARTICLE IV
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PAYMENTS; ROYALTIES AND REPORTS
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4.1 Consideration for License. In consideration for the license granted herein
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under the CytRx Poloxamer Intellectual Property upon the terms and
conditions contained herein, Vical shall pay to CytRx the following:
Upon completion of the Initial Data Transfer as described in Section
2.2, Three million seven hundred fifty thousand dollars cash
($3,750,000) with such payment to be made by wire transfer to the
following:
[*****]
[*****] Confidential portions of this page have been redacted and have filed
separately with the Commission.
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If CytRx has not received confirmation of transfer of the full $3,750,000
by 5:00 PM E.S.T. on December 17, 2001, this license agreement will
automatically terminate.
4.2 Milestone Payments. Vical shall pay CytRx the following milestone payments
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on Licensed Products for human health applications only.
(a) [*****] upon commencement of the first Phase I Study for each of the
first and second Licensed Products
(b) [*****] upon commencement of the first Phase IIb Study or Phase III
Study for each of the first and second Licensed Products
(c) [*****] upon filing of the first Biologics or Product License
Application for each of the first and second Licensed Products
(d) [*****] upon approval of the first Biologics or Product License
Application for each of the first and second Licensed Products
4.3 [*****]
4.4 Royalties. Subject to the terms and conditions of this Agreement, Vical
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shall pay CytRx the following royalties for each of the first two Licensed
Products and / or bulk Substance (as set forth in Section 4.4.4) for human
health applications. In the event one or both of the first two Licensed
Products (or bulk Substance) are used in a prime - boost regime, and such
regime includes both polynucleotide and protein vaccines incorporating
TranzFect, royalties will be owed to CytRx on sales of the combined regime,
however, the complete prime - boost regime would be counted as one Licensed
Product (or bulk Substance) for the purposed of royalties owed to CytRx.
In the event one or both of the first two Licensed Products (or bulk
Substance) are used in a prime-boost regime, and TranzFect is not
incorporated into all pharmaceutically active components of the regime, (a
"Combination Product"), the Net Sales of the Licensed Product shall be
determined by multiplying the Net Sales of the Combination Product by the
fraction, A/A+B where A is the average sale price of the Licensed Product
when sold separately in finished form and B is the average sale price of
the other pharmaceutically active product(s) sold separately in finished
form. In the event that such average sale price cannot be determined for
both the Licensed Product and other pharmaceutically active product(s) in
combination, Net Sales for purposes of determining payments shall be
calculated by multiplying the Net Sales of the Combination Products by the
fraction C/C+D where C is Vical's cost of goods of the Licensed Product and
D is Vical's cost of goods of the other pharmaceutically active product(s)
determined
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
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in accordance with the method of accounting normally employed by Vical in
computing cost of goods.
4.4.1 Royalties Payable By Vical.
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(a) For Net Sales by Vical, its Affiliates or sublicensees of Licensed
Products which would, but for the license hereunder, infringe a
Valid Patent Claim, royalties based on the following annual Net
Sales aggregated separately for each Licensed Product:
(a) For that portion of annual Net Sales up to two hundred fifty
million dollars ($250,000,000) a royalty of [*****];
(b) For that portion of annual Net Sales exceeding two hundred
fifty million dollars ($250,000,000) but less than or equal
to five hundred million dollars ($500,000,000) a royalty of
[*****];
(c) For that portion of annual Net Sales exceeding five hundred
million dollars ($500,000,000) a royalty of [*****].
(b) For Net Sales of Licensed Products by Vical, its Affiliates or
sublicensees other than those covered in Subsection 4.4.1 (a) above,
a royalty calculated as set forth in Section 4.4.1 (a), but only for
a period of [*****] from First Commercial Sale of the respective
Licensed Product in each country of the Territory.
(c) Royalties on each Licensed Product at the rate set forth above shall
be effective as of the date of First Commercial Sale of a Licensed
Product in a country and shall continue until either the longer of
(i) the expiration of the last applicable patent on such Licensed
Product in such country in the case of sales under Subsection
4.4.1(a) above or (ii) until the [*****] anniversary of the First
Commercial Sale in such country in the case of sales of Licensed
Product under Subsection 4.4.1(b) above, subject to the following
conditions:
(x) that only one royalty shall be due with respect to the same unit
of Licensed Product;
(y) that no royalties shall be due upon the sale or other transfer
among Vical, its Affiliates or sublicensees, but in such cases
the royalty shall be due and calculated upon Vical's or its
Affiliate's or its sublicensee's Net Sales to the first
independent third party; and
(z) no royalties shall accrue on the disposition of Licensed Product
in reasonable quantities by Vical, its Affiliates or sublicenses
as samples (promotion or otherwise) or as donations (for
example, to non-profit institutions or government agencies for a
non-commercial purpose).
4.4.2 Royalty Payable Under Managed Pharmaceutical Contract. It is understood
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by the Parties that Vical may sell Licensed Product(s) to an independent
third party (such as a retailer or wholesaler) and may subsequently
perform services relating to Licensed Product(s) and other products under
a managed pharmaceutical benefits contract or other similar contract. In
such cases, it is agreed by the Parties that Net Sales shall be based on
the invoice price to an independent retailer or wholesaler, provided that
such invoice price represents a fair market price for such Licensed
Products, notwithstanding that Vical may receive compensation arising
from the performance of such services.
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
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4.4.3 Change in Sales Practices. The Parties acknowledge that during the term
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of this Agreement, Vical's sales practices for the marketing and
distribution of Licensed Product may change to the extent to which the
calculation of the payment for royalties on Net Sales may become
impractical or even impossible. In such event the Parties agree to meet
and discuss in good faith new ways of compensating CytRx to the extent
currently contemplated under Section 4.1
4.4.4. Royalties for Bulk Substance. In those cases where Vical sells bulk
----------------------------
Substance rather than Licensed Product in packaged form to an independent
third party, the royalty obligations of this Article IV shall be
applicable to the bulk Substance, provided that such independent third
party does not, directly or indirectly, sell such bulk Substance back to
Vical.
4.4.5 Royalty Reduction. [*****]
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4.4.6 Reports; Payment of Royalty. During the term of the Agreement following
---------------------------
the First Commercial Sale of a Licensed Product, Vical shall furnish to
CytRx a quarterly written report for the Calendar Quarter showing the
sales of all Licensed Products subject to royalty payments sold by Vical,
its Affiliates and its sublicensees in the Territory during the reporting
period and the royalties payable under this Agreement. Reports shall be
due on the sixtieth (60th) day following the close of each Calendar
Quarter. Royalties shown to have accrued by each royalty report shall be
due and payable on the date such royalty report is due. Vical shall keep
complete and accurate records in sufficient detail to enable the
royalties payable hereunder to be determined.
4.5 Audits.
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(a) Upon the written request of CytRx and not more than once in each
Calendar Year, Vical shall permit an independent certified public
accounting firm of nationally recognized standing selected by CytRx
and reasonably acceptable to Vical, at CytRx's expense, to have
access during normal business hours to such of the records of Vical
as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder for any year ending not more than
twenty-four (24) months prior to the date of such request. The
accounting firm shall disclose to CytRx only whether the royalty
reports are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be
provided to CytRx.
(b) If such accounting firm correctly concludes that additional
royalties were owed during such period, Vical shall pay the
additional royalties within thirty (30) days of the date CytRx
delivers to Vical such accounting firm's
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separately with the Commission.
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written report so correctly concluding. The fees charged by such
accounting firm shall be paid by CytRx. In the event the additional
royalties owed by Vical for the period audited exceed [*****]
of royalties due for said period and are at least one million
dollars (U.S. $ 1,000,000) Vical will reimburse CytRx for the
reasonable fees charged by the accounting firm.
(c) Vical shall include in each sublicense granted by it pursuant to this
Agreement a provision requiring the sublicensee to make reports to
Vical, to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by CytRx's independent
accountant to the same extent required of Vical under this Agreement.
Upon the expiration of twenty-four (24) months following the end of
any Calendar Year, the calculation of royalties payable with respect
to such year shall be binding and conclusive upon CytRx, and Vical and
its sublicensees shall be released from any liability or
accountability with respect to royalties for such Calendar Year.
(d) CytRx shall treat all financial information subject to review under
this Section 4.5 or under any sublicense agreement in accordance with
the confidentiality provisions of this Agreement, and shall cause its
accounting firm to enter into an acceptable confidentiality agreement
with Vical obligating it to retain all such financial information in
confidence pursuant to such confidentiality agreement.
4.6 Payment Exchange Rate. All payments to be made by Vical to CytRx under this
---------------------
Agreement shall be made in United States dollars and may be paid by check
made to the order of CytRx or bank wire transfer in immediately available
funds to such bank account in the United States designated in writing by
CytRx from time to time. In the case of sales outside the United States,
the rate of exchange to be used in computing the amount of currency
equivalent in United States dollars shall be made at the rate of exchange
for the country in which such sales occurred as published in the Wall
Street Journal on the last business day of the month in which such sales
are recorded by Vical.
4.7 Income Tax Withholding. If laws, rules or regulations require withholding
----------------------
of income taxes or other taxes imposed upon payments set forth in this
Article IV, Vical shall make such withholding payments as required and
subtract such withholding payments from the payments set forth in this
Article IV. Vical shall submit appropriate proof of payment of the
withholding taxes to CytRx within a reasonable period of time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
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5.1 Representation and Warranty. Except as disclosed to Vical prior to the date
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of this Agreement, CytRx represents and warrants to Vical that as of the
date of this Agreement:
(a) to the best of CytRx's knowledge, the CytRx Poloxamer Intellectual
Property is owned by or licensed to CytRx and is not invalid or
unenforceable, in whole or in part;
(b) it has the full right, power and authority to enter into this
Agreement, and to grant the licenses granted under Article II hereof;
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
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(c) it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in CytRx Poloxamer
Intellectual Property in the Field;
(d) to the best of CytRx's knowledge, it is the sole and exclusive owner
or licensee of CytRx Poloxamer Intellectual Property in the Field, all
of which is free and clear of any liens, charges and encumbrances, and
no other person, corporate or other private entity, or governmental
entity or subdivision thereof, has or shall have any claim of
ownership with respect to the CytRx Poloxamer Intellectual Property in
the Field, whatsoever;
(e) to the best of CytRx's knowledge, the licensed CytRx Poloxamer
Intellectual Property and the research, development, manufacture, use,
sale and/or import of TranzFect, do not interfere with or infringe any
intellectual property rights owned or possessed by any third party;
(f) there are no claims, judgments or settlements against or owed by CytRx
or pending or threatened claims or litigation relating to the CytRx
Poloxamer Intellectual Property; and
(g) CytRx has disclosed to Vical all reasonably relevant information
regarding the CytRx Poloxamer Intellectual Property licensed under
this Agreement, including all patent opinions obtained by CytRx
related thereto.
ARTICLE VI
PATENT PROVISIONS
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6.1 Filing, Prosecution and Maintenance of Patents. CytRx agrees to file,
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prosecute and maintain in the Major Pharmaceutical Markets, upon
appropriate consultation with Vical, the Patent Rights owned in whole or in
part by CytRx and licensed to Vical under this Agreement. In addition, and
to the extent legally available CytRx shall, at Vical's request, file,
prosecute and maintain such Patent Rights in other countries, which costs
shall be reimbursed by Vical within sixty (60) days of receipt of invoices
thereof and shall be creditable toward any future royalty payments owed by
Vical pursuant to Section 4.4 hereof. These terms shall include the
additional patent rights requested and agreed to by Vical as described in
the November 16, 2001 agreement between CytRx and Vical and shall be
included in this Agreement as Addendum 4.0. CytRx shall keep Vical advised
of the status of the actual and prospective patent filings and shall
provide advance copies of any papers related to the filing, prosecution and
maintenance of such patent filings. Vical shall have the right to review
and propose recommendations regarding any submission to be made by CytRx in
connection with the filing, prosecution, and maintenance of the Patent
Rights, wherein CytRx agrees to consider such recommendations and not
unreasonably decide not to implement same, and Vical agrees to bear any
additional expenses or fees resulting therefrom. With respect to all
filings hereunder in the Major Pharmaceutical Markets, CytRx shall be
responsible for payment for all costs and expenses related to such filings.
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6.2 Option of Vical to Prosecute and Maintain Patents. CytRx shall give notice
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to Vical of any desire by CytRx and to the extent applicable Merck to cease
prosecution and/or maintenance of Patent Rights and, in such case, shall
permit Vical, at its sole discretion, to continue prosecution or
maintenance at its own expense. If Vical elects to continue prosecution or
maintenance or file based on Company's election not to file pursuant to
Section 6.1 above, CytRx shall execute such documents and perform such acts
at CytRx's expense as may be reasonably necessary for Vical to perform such
prosecution or maintenance or filing. All of the expenses and costs
incurred by Vical to continue prosecution and maintenance of Patent Rights
shall be fully creditable against royalties due under Article IV of this
Agreement; provided however, no royalty payment when due, regardless of the
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number of such credits available to Vical in accordance with the terms of
this Agreement, shall be reduced by more than fifty percent (50%). Unused
credits may be carried over into subsequent royalty periods.
6.3. Interference, Opposition, Reexamination and Reissue.
----------------------------------------------------
(a) CytRx shall, within ten (10) days of learning of such event, inform
Vical of any request for, or filing or declaration of any
interference, opposition, or reexamination relating to Patent Rights.
Vical and CytRx and to the extent applicable Merck shall thereafter
consult and cooperate fully to determine a course of action with
respect to any such proceeding. To the extent applicable to the Field
and the rights licensed hereunder, Vical shall have the right to
review and approve any submission to be made in connection with such
proceeding.
(b) CytRx shall not institute any reexamination, or reissue proceeding
relating to Patent Rights without the prior written consent to Vical,
which consent shall not be unreasonably withheld.
(c) In connection with any interference, opposition, reissue, or
reexamination proceeding relating to Patent Rights, Vical and CytRx
will cooperate fully and will provide each other with any information
or assistance that either may reasonably request. CytRx shall keep
Vical informed of developments in any such action or proceeding,
including, to the extent permissible, the status of any settlement
negotiations and the terms of any offer related thereto.
(d) So long as Vical continues to have an obligation to pay royalties
under this Agreement, CytRx shall bear the expense of any
interference, opposition, reexamination, or reissue proceeding
relating to Patent Rights. Otherwise, such expenses shall be borne by
Vical.
6.4 Enforcement and Defense Rights. Subject to the Merck License and the rights
------------------------------
granted to Merck and the obligations of CytRx thereunder, CytRx agrees as
follows:
(a) CytRx shall give Vical notice of either (i) any infringement of Patent
Rights, or (ii) any misappropriation or misuse of CytRx Know-How, that
may come to CytRx's attention. Vical and CytRx shall thereafter
consult and cooperate fully to determine a course of action, including
but not limited to the commencement of legal action by either or any
combination of Vical, Merck, and CytRx, to terminate any infringement
of Patent Rights or any misappropriation or misuse of CytRx Know-How.
However, CytRx, and / or Merck upon notice by CytRx to Vical, shall
have the first right to initiate and prosecute such legal action at
CytRx's and / or Merck's own expense and in the name of CytRx and, if
necessary, Merck and / or Vical, or to control the
12
defense of any declaratory judgment action relating to Patent Rights
or CytRx Know-How. CytRx shall promptly inform Vical if both CytRx and
Merck elect not to exercise such first right and Vical shall
thereafter have the right to either initiate and prosecute such action
or to control the defense of such declaratory judgment action in the
name of Vical and, if necessary, CytRx.
(b) In the event that both CytRx and Merck elect not to initiate and
prosecute an action as provided in paragraph (a), and Vical elects to
do so, the costs of any course of action to terminate infringement of
Patent Rights or misappropriation or misuse of CytRx Know-How,
including the costs of any legal action commenced or the defense of
any declaratory judgment, shall be shared equally by CytRx and Vical.
(c) For any action to terminate any infringement of Patent Rights or any
misappropriation or misuse of CytRx Know-How, in the event that Vical
is unable to initiate or prosecute such action solely in its own name,
CytRx will join such action voluntarily and will execute and cause its
Affiliates to execute all documents necessary for Vical to initiate
litigation to prosecute and maintain such action. In connection with
any action, Vical and CytRx will cooperate fully and will provide each
other with any information or assistance that either may reasonably
request. Each party shall keep the other informed of developments in
any action or proceeding, including, to the extent permissible by law,
the status of any settlement negotiations and the terms of any offer
related thereto.
(d) Any recovery obtained by either or any combination of Vical, Merck,
and CytRx in connection with or as a result of any action contemplated
by this section, whether by settlement or otherwise, shall be shared
in order as follows:
i) the party which initiated and prosecuted the action shall recoup
all of its costs and expenses incurred in connection with the
action;
ii) the other party or parties shall then, to the extent possible,
recover its costs and expenses incurred in connection with the
action; and the amount of any recovery remaining shall then be
allocated between the parties on a pro rata basis under which
CytRx shall receive a proportion based on the royalties it lost
and Vical and to the extent applicable Merck shall receive any
remaining amounts.
(e) CytRx shall immediately give notice to Vical of any certification
regarding any Patent Rights it has received pursuant to the United
States "Drug Price Competition and Patent Term Restoration Act of
1984" under either 21 U.S.C. ss.ss.355(b)(2)(A)(iv) or
(j)(2)(A)(vii)(IV) or equivalent foreign provision and shall provide
Vical with a copy of such certification within (5) days of receipt.
CytRx's and Vical's rights with respect to the initiation and
prosecution of any legal action as a result of such certification or
any recovery obtained as a result of such legal action shall be
defined in paragraphs (a)-(d) hereof, provided, however, if both CytRx
and Merck decide not to bring infringement proceedings against the
entity making such a certification, CytRx shall give notice to Vical
of such decision not to bring suit within thirty (30) days after
receipt of notice of such certification. Vical may then, but is not
required to, bring suit against the party that filed the
certification. Any such suit by Vical, Merck, or CytRx shall either be
in the name of Vical, in the name of Merck, or in the name of CytRx,
or jointly by any combination of Vical, Merck and
13
CytRx. For this purpose, the party not bringing suit shall execute
such legal papers necessary for the prosecution of such suit as may be
reasonably requested by the party bringing suit.
6.5 Abandonment. CytRx shall promptly give notice to Vical of the grant, lapse,
-----------
revocation, surrender, invalidation or abandonment of any Patent Rights
licensed to Vical for which CytRx is responsible for the filing,
prosecution and maintenance.
6.6 Patent Term Restoration. The ability in this Agreement to obtain patent
-----------------------
term restoration or supplemental protection certificates is subject to the
Merck License, Merck's election and availability or eligibility for the
patent in question for patent term restoration or supplemental protection
certificates for the Licensed Product in question. The Parties hereto shall
cooperate with each other in obtaining patent term restoration or
supplemental protection certificates or their equivalents in any country in
the Territory where applicable to Patent Rights. Vical shall have the
opportunity to make any election with respect to obtaining such patent term
restoration to the extent possible and shall bear the cost thereof which
shall be fully creditable toward any future royalty payments owed by Vical
pursuant to Section 4.4 hereof.
6.7 Patent Marking. Vical agrees to xxxx the Licensed Products and Substances
--------------
sold in the United States with all applicable United States patent numbers.
All Licensed Products and Substances shipped to or sold in other countries
shall be marked in such a manner as to conform with the patent laws and
practice of the country of manufacture or sale.
6.8 [*****]
ARTICLE VII
TERM AND TERMINATION
--------------------
7.1 Term and Expiration. This Agreement shall be effective as of the Effective
-------------------
Date and unless terminated earlier pursuant to Sections 2.2, 4.1, 7.2 or
7.3 below, the term of this Agreement shall continue in effect until
expiration of all royalty obligations hereunder. Upon expiration of all
royalty obligations hereunder,
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
14
Vical's licenses pursuant to Article II shall become fully paid-up,
perpetual licenses and CytRx's obligation to provide Improvements
shall cease.
7.2 Termination by Vical. Notwithstanding anything contained herein to the
--------------------
contrary, Vical shall have the right to terminate this Agreement at
any time in its sole discretion by giving ninety (90) days advance
written notice to CytRx unless terminated pursuant to Section 2.2. In
the event of such termination under this Section 7.2, the rights and
obligations hereunder, including any licenses and any payment
obligations not due and owing as of the termination date shall
terminate.
7.3 Termination.
-----------
7.3.1 Termination for Cause. This Agreement may be terminated by notice by
---------------------
either party at any time during the term of this Agreement:
(a) if the other party is in breach of its material obligations hereunder
by causes and reasons within its control and has not cured such breach
within ninety (90) days after notice requesting cure of the breach
provided, however, in the event of a good faith dispute with respect
to the existence of a material breach, the ninety (90) day cure period
shall be tolled until such time as the dispute is resolved pursuant to
Section 8.6 hereof; or
(b) upon the filing or institution of bankruptcy, reorganization,
liquidation, or receivership proceedings, or upon a general assignment
of a substantial portion of all of its assets for the benefit of
creditors, by the other party; provided, however, in the case of any
-------- -------
involuntary bankruptcy proceeding such right to terminate shall only
become effective if the party consents to the involuntary bankruptcy
or such proceeding is not dismissed within ninety (90) days after the
filing thereof.
7.3.2 Effect of Termination for Cause on License.
-------------------------------------------
(a) In the event that Vical terminates this Agreement under Section
7.3.1(a), CytRx's obligation to provide Improvements shall cease
and Vical's license pursuant to Section 2.1 shall become paid-up,
perpetual license, except that Vical shall make [*****] of the
royalty payments set forth in Section 4.4 in such event. In the
event that CytRx terminates this Agreement under Section
7.3.1(a), or Vical terminates this Agreement under Section 7.2,
Vical's licenses pursuant to Section 2.1 shall terminate as of
such termination date.
(b) In the event this Agreement is terminated due to the rejection of
this Agreement by or on behalf of CytRx under Section 365 of the
United States Bankruptcy Code (the "Code"), all licenses and
rights to licenses granted under or pursuant to this Agreement by
CytRx to Vical are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the Code, licenses of rights to
"intellectual property" as defined under Section 101(35A) of the
Code. In such a case, the rights of the parties shall be
determined by the Code.
7.4 Effect of Termination. Expiration or termination of the Agreement
---------------------
shall not relieve the Parties of any obligation accruing prior to such
expiration or termination, and the provisions of Article III shall
survive the expiration of the Agreement and shall continue in effect
for five (5) years. Any expiration or early termination of this
Agreement shall be without prejudice to the rights of either party
against the other accrued or accruing under this Agreement prior to
termination, including the obligation to pay royalties for Licensed
Product(s) or Substance(s) sold prior to such termination.
Notwithstanding the foregoing, any remedies set forth under this
Article VII shall not limit any claim for damages
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
15
either party may have against the other arising from material breach of the
other party.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1. Force Majeure. Neither party shall be held liable or responsible to
-------------
the other party nor be deemed to have defaulted under or breached the
Agreement for failure or delay in fulfilling or performing any term of
the Agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected party including,
but not limited to, fire, floods, embargoes, war, acts of war (whether
war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or the
other party. The affected party shall notify the other party of such
force majeure circumstances as soon as reasonably practical.
8.2. Assignment. The Agreement may not be assigned or otherwise
----------
transferred, nor, except as expressly provided hereunder, may any
right or obligations hereunder be assigned or transferred, by either
party without the consent of the other party; provided, however, that
-------- -------
Vical may, without such consent, assign the Agreement and its rights
and obligations hereunder to an Affiliate or in connection with the
transfer or sale of all or substantially all of its assets related to
the Licensed Product or the business, or in the event of its merger or
consolidation or change in control or similar transaction. Any
permitted assignee shall assume all obligations of its assignor under
the Agreement. An assignment by Vical permitted by this Section 8.2
shall not relieve Vical of any of its obligations set forth in this
Agreement.
8.3. Severability. In the event any one or more of the provisions contained
------------
in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired thereby, unless the absence of the invalidated
provision(s) adversely affect the substantive rights of the Parties.
The Parties shall in such an instance use their best efforts to
replace the invalid, illegal or unenforceable provision(s) with valid,
legal and enforceable provision(s) which, insofar as practical,
implement the purposes of this Agreement.
8.4. Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered
personally, sent by telecopier (and promptly confirmed by personal
delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed
as follows:
if to CytRx, to: CytRx Corporation
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxx/Xxxxxxx
Xxxxxxxx, XX 00000
Attention:
President & CEO
Telecopier No. (000) 000-0000
if to Vical, to: Vical Incorporated
0000 Xxxxx Xxxxxx Xxxxx
00
Xxxxx 000
Xxx Xxxxx, XX 00000-0000
Attention:
President & CEO
Telecopier No. (000) 000-0000
or to such other address as the party to whom notice is to be given
may have furnished to the other party in writing in accordance
herewith. Any such communication shall be deemed to have been given
when delivered if personally delivered or sent by telecopier on a
business day, on the business day after dispatch if sent by
nationally-recognized overnight courier and on the third business day
following the date of mailing if sent by mail.
8.5 Applicable Law. The Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of California and the United
States of America without reference to any rules of conflict of laws.
8.6. Dispute Resolution. The Parties shall negotiate in good faith and use
------------------
reasonable efforts to settle any dispute, controversy or claim arising
from or related to this Agreement or the breach thereof. If the
Parties do not fully settle, and a party wishes to pursue the matter,
each such dispute, controversy or claim that is not an "Excluded
Claim" shall be finally resolved by binding arbitration in accordance
with the Commercial Arbitration Rules and Supplementary Procedures for
Large Complex Disputes of the American Arbitration Association
("AAA"), and judgment on the arbitration award may be entered in any
court having jurisdiction thereof. The arbitration shall be conducted
by a panel of three persons experienced in the pharmaceutical
business. Within 30 days after initiation of arbitration, each party
shall select one person to act as arbitrator and the two
party-selected arbitrators shall select a third arbitrator within 30
days of their appointment. If the arbitrators selected by the Parties
are unable or fail to agree upon the third arbitrator, the third
arbitrator shall be appointed by the AAA. The place of arbitration
shall be San Diego, California. Either party may apply to the
arbitrators for interim injunctive relief until the arbitration award
is rendered or the controversy is otherwise resolved. Either party
also may, without waiving any remedy under this Agreement, seek from
any court having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that party pending the
arbitration award. The arbitrators shall have no authority to award
punitive or any other type of damages not measured by a party's
compensatory damages. Each party shall bear its own costs and expenses
and attorneys' fees and an equal share of the arbitrators' and any
administrative fees of arbitration. Except to the extent necessary to
confirm an award or as may be required by law, neither a party nor an
arbitrator may disclose the existence, content, or results of an
arbitration without the prior written consent of both Parties. In no
event shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the dispute,
controversy or claim would be barred by the applicable California
statute of limitations. As used in this Section, the term "Excluded
Claim" shall mean a dispute, controversy or claim that concerns (a)
the validity or infringement of a patent, trademark or copyright; or
(b) any antitrust, anti-monopoly or competition law or regulation,
whether or not statutory.
17
8.7. Entire Agreement. The Agreement contains the entire understanding of
----------------
the Parties with respect to the subject matter hereof. All express or
implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of the
Agreement. The Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both Parties hereto.
8.8. Headings. The captions to the several Articles and Sections hereof are
--------
not a part of the Agreement, but are merely guides or labels to assist
in locating and reading the several Articles and Sections hereof.
8.9. Independent Contractors. It is expressly agreed that CytRx and Vical
-----------------------
shall be independent contractors and that the relationship between the
two Parties shall not constitute a partnership, joint venture or
agency. Neither CytRx nor Vical shall have the authority to make any
statements, representations or commitments of any kind, or to take any
action, which shall be binding on the other, without the prior consent
of the other party.
8.10. Waiver. The waiver by either party hereto of any right hereunder or
------
the failure to perform or of a breach by the other party shall not be
deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.
8.11. Counterparts. The Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.12. Waiver of Rule of Construction. Each party has had the opportunity to
------------------------------
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction
that any ambiguity in this Agreement shall be construed against the
drafting party shall not apply.
8.13. Anouncements; Public Disclosure. Except as otherwise provided herein
-------------------------------
or as required by law, neither party shall originate any publication,
news release or other public announcement, written or oral, whether in
the public press, or stockholders' reports (if applicable) or
otherwise, directly relating to the financial terms of this Agreement,
without the prior written approval of the other party, which approval
shall not be unreasonably withheld. In addition, there shall be no
public announcement of this agreement by either party until $3.75
million is received by CytRx. Each party shall issue an initial press
release each of which contain the text as presented in Addendum 5.0
and Addendum 6.0 hereof.
18
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.
Vical Incorporated CytRx Corporation
BY: /s/ Xxxxx X. Xxxxxx BY: /s/ Xxxx Xxxxxxx
--------------------- ---------------------
Xxxxx X. Xxxxxx Xxxx Xxxxxxx
TITLE: President and CEO TITLE: President and CEO
DATE: December 6, 2001 DATE: December 6, 2001
19
SCHEDULE 1.0.0
--------------
ROYALTY REDUCTION
-----------------
[*****]
[*****] Confidential portions of this page have been redacted and filed
separately with the Commission.
20
