RESIDUAL LICENSE AGREEMENT dated as of February 21, 2008 between AZITHROMYCIN ROYALTY SUB LLC and INSITE VISION INCORPORATED
Exhibit
10.5
dated
as of February
21, 2008
between
AZITHROMYCIN
ROYALTY SUB LLC
and
INSITE
VISION INCORPORATED
This
Residual License Agreement (this “Residual
License Agreement”),
dated
as of February 21, 2008 (the “Execution
Date”),
is
between AZITHROMYCIN ROYALTY SUB LLC, a Delaware limited liability company
(the
“Issuer”),
and
INSITE VISION INCORPORATED, a Delaware corporation (the “Parent”).
W
I T N E S S E T H :
WHEREAS,
the Parent owns or controls certain intellectual property rights that have
been
exclusively and non-exclusively licensed to Inspire pursuant to the Counterparty
License Agreement for the development and commercialization of Subject Products
in the Field in the Territory;
WHEREAS,
upon a partial or entire termination of the Counterparty License Agreement,
such
rights will partially or entirely revert back to the Parent subject to the
terms
and conditions of the Counterparty License Agreement;
WHEREAS,
the Parent and the Issuer have entered into the Purchase and Sale Agreement,
pursuant to which the Parent has agreed to execute and deliver this Residual
License Agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual agreements set forth
herein and of other good and valuable consideration, the receipt and adequacy
of
which are hereby acknowledged, the parties hereto covenant and agree as
follows:
ARTICLE
I
RULES
OF CONSTRUCTION AND DEFINED TERMS
Section
1.1 Rules
of Construction and Defined Terms.
The
rules of construction set forth in Annex
A
shall
apply to this Residual License Agreement and are hereby incorporated by
reference into this Residual License Agreement as if set forth fully in this
Residual License Agreement. Capitalized
terms used but not otherwise defined in this Residual License Agreement shall
have the respective meanings given to such terms in Annex
A,
which
is hereby incorporated by reference into this Residual License Agreement as
if
set forth fully in this Residual License Agreement.
Section
1.2 Pfizer
Patent Rights.
Each of
the Parent and the Issuer acknowledges and agrees that the Residual License
does
not initially, and may not in the future, include any rights to the Pfizer
Patent Rights. After the Execution Date, the Parent shall use commercially
reasonable efforts to obtain Pfizer’s written consent pursuant to the Pfizer
License Agreement to grant the Issuer a sublicense described in Section
2.2(e).
The
Issuer understands and agrees that such consent may not be obtained despite
the
Parent’s commercially reasonable efforts. If the Parent is able to obtain such
consent and the License Effective Date occurs, then the Pfizer Patent Rights
shall be automatically sublicensed to the Issuer as of the License Effective
Date (or such other date as provided in such consent) under the terms and
conditions of Section 2.2(e) (or such other terms as provided in such consent);
provided,
that
(a) such sublicense will be of no greater scope than the rights and licenses
granted to the Parent under the Pfizer Patent Rights pursuant to the Pfizer
License Agreement, or as otherwise provided in such consent, and (b) such
sublicense shall be subject to the applicable terms and conditions of the Pfizer
License Agreement and such consent.
If the
Parent is not able to obtain such consent pursuant to this Section
1.2
and the
Issuer sublicenses the Residual License to any Person other than Parent without
such sublicense under the Pfizer Patent Rights, the Issuer shall indemnify,
and
cause such Person to indemnify, the Parent for any liability that the Parent
may
have to Pfizer for commercialization of the Subject Products.
1
ARTICLE
II
RESIDUAL
LICENSE MATTERS
Section
2.1 Effectiveness.
Each of
the Issuer and the Parent acknowledges and agrees that the Residual License
shall only become effective if and only if the Counterparty License Agreement
partially or entirely terminates under the terms thereof and the Reverted IP
reverts back to the Parent in respect of such partial or entire termination
for
the Terminated Territory prior to the earliest of the events described in the
definition of the Expiration Date. Subject to the foregoing, the Residual
License shall become automatically effective upon such termination for the
Terminated Territory with no further action by either the Parent or the Issuer
(the “License
Effective Date”).
The
Issuer understands and agrees that the Residual License shall be at all times
subject to any Surviving Rights. The Issuer understands and agrees that the
Parent may only grant rights under the Reverted IP after the reversion of such
rights back to the Parent under the terms and conditions of the Counterparty
License Agreement and that no rights of Inspire may be granted by the
Parent.
Section
2.2 Residual
License Grant.
Upon
the License Effective Date and subject to the terms and conditions of this
Residual License Agreement, the Parent automatically grants to the Issuer the
following licenses during the License Term (collectively, the “Residual
License”):
(a) an
exclusive license, under the AzaSite Patent Rights and the Licensed Know-How
(excluding any Formulation Know-How), with the right to grant sublicenses,
to
develop, have developed, make, have made, use, have used, market, have marketed,
commercialize, have commercialized, offer for sale, sell, have sold, import
and
have imported Subject Products in the Field in the Terminated
Territory;
(b) a
non-exclusive license, under the DuraSite Patent Rights, the Container Patent
Rights and the Formulation Know-How,
with
the right to grant sublicenses,
to
develop, have developed, make, have made, use, have used, market, have marketed,
commercialize, have commercialized, offer for sale, sell, have sold, import
and
have imported Subject Products in the Field in the Terminated
Territory;
(c) an
exclusive license, with the right to grant sublicenses, to use the AzaSite
Trademark and Licensed Domain Names in connection with the marketing,
commercialization and sale of Subject Products in the Field in the Terminated
Territory;
(d) a
non-exclusive license, with the right to grant sublicenses, to use the DuraSite
Trademark in connection with the marketing, commercialization and sale of
Subject Products in the Field in the Terminated Territory; and
2
(e) if
and
only if Pfizer grants its written consent under the terms and conditions of
Section 1.2 and only to the extent no greater in scope than the rights and
licenses granted to the Parent for the Pfizer Patent Rights pursuant to the
Pfizer License Agreement (or as otherwise provided in the consent from Pfizer
as
provided under Section 1.2), an exclusive sublicense, with the right to grant
sublicenses, to develop, have developed, make, have made, use, have used,
market, have marketed, commercialize, have commercialized, offer for sale,
sell,
have sold, import and have imported Subject Products in the Field in the
Terminated Territory.
Section
2.3 Interim
Sublicense to the Parent.
(a) Upon
the
License Effective Date and subject to the terms and conditions of this Residual
License Agreement, the Issuer grants the Parent, under the terms and conditions
of this Section
2.3,
all the
rights licensed to the Issuer under the Residual License without any retained
rights (“Interim
Sublicense”)
for a
three month period after the License Effective Date, or such longer period
as
requested by the Parent and consented to in writing by the Issuer and the
Trustee in accordance with Section
9.6
(“Interim
Period”);
provided
that the
terms of any such sub-sublicense shall not be inconsistent with the terms of
this Residual License Agreement.
(b) Except
as
the Issuer otherwise expressly agrees in writing, the Interim Sublicense shall
terminate, automatically and without further action by either the Parent or
the
Issuer if, at the end of the Interim Period or at any time thereafter, (a)
the
Parent is not actively engaged in commercially reasonable efforts to
commercialize in the Field any Subject Product being commercialized by Inspire
in the Terminated Territory immediately prior to the applicable Termination
Date
for such Terminated Territory or (b) the Parent is not a party to a definitive
sub-sublicense agreement with a third party designated by the Parent
(x) where the Parent used commercially reasonable efforts to procure
commercially reasonable royalties and other payments as consideration for such
sub-license and (y) that includes an obligation by such third party as
sub-sublicensee to use commercially reasonable efforts to commercialize in
the
Field any Subject Product being commercialized by Inspire in the Terminated
Territory immediately prior to the applicable Termination Date for such
Terminated Territory (the “Parent
Sublicense”).
The
Interim Sublicense will continue for the License Term for as long as the Parent
performs either of the foregoing; provided that the Parent is not obligated
to
perform either of the foregoing. The Issuer shall not exercise the Residual
License or grant any rights thereunder until the termination of the Interim
Sublicense as provided herein.
Section
2.4 Sublicenses
by the Issuer.
If the
Interim Sublicense terminates in accordance with Section
2.3,
the
Issuer may grant a sublicense under the Residual License during the License
Term
subject to this Section
2.4.
In any
such sublicense, the Issuer shall use commercially reasonable efforts to procure
commercially reasonable royalties and other payments for the commercialization
of the Subject Products under the Residual License and any such sublicense
shall
(i) be solely within the scope of the Residual License; (ii) be in writing
and
contain provisions that are not inconsistent with this Residual License
Agreement and (iii) contain other customary provisions as protective of the
Reverted IP as customary in the industry in an arm’s length transaction of this
nature, including appropriate indemnity and other risk allocation coverage
in
favor of the Parent. The Issuer shall furnish to the Parent a complete copy
(including any annexes, appendices, exhibits or schedules thereto) of any
sublicense granted by the Issuer to any Person under the Residual License (other
than the Interim Sublicense) within five Business Days of the effective date
of
such sublicense. Except as the parties otherwise expressly agree in writing,
any
sublicense granted by the Issuer under this Section
2.4
shall
(A) be subject and subordinate to the terms of this Residual License Agreement
and (B) provide that the sublicense will be assignable to the Parent at the
end
of the License Term under the same terms and the Parent shall accept such
assignment as a direct license between the Parent and the sublicensee (provided
that the Parent shall not be required to assume any liability incurred by the
Issuer under such sublicense prior to that time). Each such sublicense granted
by the Issuer under this Section
2.4
shall be
herein referred to as the “Issuer
Sublicense”.
3
Section
2.5 Reservation
of Rights.
Except
as the Parent otherwise expressly agrees in writing and subject to Article
VII,
the
Residual License shall terminate at the end of the License Term, and
all
rights to the Reverted IP shall then revert back to the Parent automatically
and
without further action by either the Parent or the Issuer.
The
Parent does not grant to the Issuer any technology or intellectual property
rights of the Parent other than as expressly granted under this Residual License
Agreement, whether by implication, estoppel or otherwise. Without limiting
the
foregoing, (a) the licenses and rights granted to the Issuer under this Residual
License Agreement shall not include a right to offer for sale, sell or have
sold
Subject Products, and the Issuer expressly covenants that it shall not sell
any
Subject Products, in the Terminated Territory in circumstances in which the
Issuer knows or reasonably should know such Subject Products will be distributed
or sold outside the Terminated Territory, (b) the Parent shall retain the rights
under the Reverted IP and the Pfizer Patent Rights (if granted under the terms
of Section
1.2)
to
develop, have developed, make, have made, use and have used Subject Products
in
the Field in the Territory solely for the purposes of distribution, sale or
other commercial pursuit of Subject Products outside the Territory, (c) the
Parent shall retain the exclusive rights to develop, have developed, make,
have
made, use, have used, market, have marketed, commercialize, have commercialized,
offer for sale, sell, have sold, import and have imported Subject Products
outside the Field and/or outside the Territory and (d) the Parent retains all
rights to pursue any of its reserved interests under the Counterparty License
Agreement.
ARTICLE
III
PAYMENTS
Section
3.1 Payment
of Royalties.
The
consideration for the Residual License consists of the amounts paid by the
Issuer to the Parent pursuant to the Purchase and Sale Agreement, and no further
royalty payments are due from the Issuer to the Parent for the Residual
License.
(a) Interim
Sublicense.
The
Issuer acknowledges and agrees that any
royalties and other payments described in (i)
and
(ii)
below
(“License
Royalties”)
will
be
considered Replacement Royalty Payments and shall be deposited in the Collection
Account when paid by the Parent to the Issuer as provided below.
(i) In
the
event that the Parent directly commercializes under the Interim Sublicense,
the
Parent will pay the Issuer only the royalties or any other payments received
by
the Parent in such commercialization efforts equal to the amount of royalties
and other payments that would have been payable by Inspire in each such
Terminated Territory, at the time such amounts would have been payable, net
of
all deductions and adjustments as if the Counterparty License Agreement (as
of
the Termination Date) were still in effect and such commercialization was
effected by Inspire as if the Subject Products were Inspire Licensed Products
(as defined in the Counterparty License Agreement).
4
(ii) In
any
sublicense under the Interim Sublicense, the Parent will use commercially
reasonable efforts to procure commercially reasonable royalties and other
payments for the commercialization of the Subject Products under such
sublicense, provided that the Issuer understands and agrees that such royalties
and other payments may not be equivalent to the royalties and other payments
due
from Inspire to the Parent under the Counterparty License Agreement had such
agreement not terminated in the Terminated Territory. The Parent will pay the
Issuer any and all royalties and any other payments received by the Parent
from
such sublicense under the terms of such sublicense.
(b) Other
than Interim Sublicense.
The
Issuer shall deposit, or shall cause to be deposited, in the Collection Account
any and all royalties and other payments arising from the exercise of the
Residual License after the termination of the Interim Sublicense, whether
received by the Issuer in its own direct commercialization efforts or received
by the Issuer from its sublicensees under the terms of the agreements with
such
sublicensees (“Issuer
Royalties”).
Section
3.2 Pfizer
and Other Royalties.
For as
long as the Issuer receives the License Royalties or the Issuer Royalties as
provided under this Residual License Agreement, regardless of the party
commercializing under the terms of this Residual License Agreement, the Issuer
shall pay, or cause to be paid, either to the Parent for the Parent to pay
the
applicable third party or directly to the applicable third party, any royalties
or other payments that may be due from the Parent to Pfizer and any other third
parties for any commercialization of the Subject Products within the timeframes
required by the Pfizer License Agreement and the agreements with such third
parties, but in no event shall such royalties exceed, in the aggregate, 3.5%
of
Net Sales (as defined in the Counterparty License Agreement) for the applicable
payment period.
ARTICLE
IV
BOOKS
AND RECORDS
Section
4.1 Reports.
For as
long as there are License Royalties, the Parent shall provide to the Issuer,
within 25 days after the end of each calendar quarter, a report setting forth
for such calendar quarter the following information for each Subject Product:
(a) net sales of such Subject Product by the Parent or its sublicensees on
a
country-by-country basis; (b) License Royalties due for such net sales; and
(c)
a description of how the License Royalties are calculated. For as long as there
are Issuer Royalties during the License Term, the Issuer shall provide to the
Parent, within 25 days after the end of each calendar quarter, a report setting
forth for such calendar quarter the following information for each Subject
Product: (a) net sales of such Subject Product by the Issuer or its sublicensees
on a country-by-country basis; (b) Issuer Royalties paid to the Issuer for
such
net sales; and (c) a description of how the Issuer Royalties are calculated.
5
Section
4.2 Books
and Records.
Each
party shall keep and maintain, or shall cause to be kept and maintained, and
shall require any sublicensee to keep and maintain, complete and accurate
records and books of account in sufficient detail and form so as to enable
determination and verification of any License Royalties or Issuer Royalties.
Such records and books of account shall be maintained for a period of no less
than two years following the calendar quarter to which they pertain. Each party
shall permit such records and books of account to be examined by the other
party
or the other party’s duly appointed agent to the extent necessary for the other
party to verify the amount of any License Royalties or Issuer Royalties payable
hereunder. Such examination shall be at the expense of the examining party,
during normal business hours, and upon ten days’ prior written notice to the
other party.
ARTICLE
V
REVERTED
IP
Section
5.1 Reverted
IP.
To the
extent owned or controlled by the Parent, any and all Reverted IP (including
any
inventions arising or resulting hereunder) shall remain the sole property of
the
Parent. Any Taxes, annuities, working fees, maintenance fees, renewal charges,
extension charges or other fees or payments that are due during the License
Term
with respect to the prosecution or maintenance of any patents or patent
applications (or reissues, extensions, substitutions, confirmations,
registrations, revalidations, additions, continuations, continuations-in-part
or
divisions thereof or thereto or any additional protection certificate granted
with respect thereto) in respect of any Reverted IP (other than due to their
use
or practice) shall be paid by the Parent. During the License Term, if a reissue,
reexamination, interference, opposition or other proceeding before any
Governmental Authority is initiated relating to any rights exclusively licensed
under the Residual License, the Parent shall provide to the Issuer, to the
extent it is able without any additional consent and without any adverse impact
on the Parent, for its reasonable review and comment prior to filing or other
submission, copies of all substantive legal documents (including any patent
applications) relating to such proceeding that are owned or controlled by the
Parent. The Issuer shall provide any comments within 30 days of receipt thereof
(or such shorter time as may be appropriate in the circumstances), but such
comments shall be advisory in nature and not binding on the Parent. Upon the
Issuer’s written request, the Parent shall provide to the Issuer copies of all
such documents as filed or otherwise submitted, to the extent it is able without
any additional consent and without any adverse impact on the
Parent.
ARTICLE
VI
INFRINGEMENT
AND LITIGATION
Section
6.1 Infringement
and Litigation.
During
the License Term, each party hereto shall promptly notify the other party hereto
in writing if such party hereto reasonably believes that a third party is
engaging in one or more activities that infringes one or more claims of the
Reverted IP in the Field in the applicable Terminated Territory. During the
License Term, the Parent at its own expense shall have the first right, but
not
the obligation, to bring and prosecute to conclusion (or otherwise settle)
any
legal action for infringement of the Reverted IP in the applicable Terminated
Territory or to defend any counterclaim of invalidity or action of a third
party
for declaratory judgment of non-infringement or interference (and the Issuer
shall have the right to do the foregoing with respect to any rights exclusively
owned by the Parent and exclusively licensed to the Issuer under the Residual
License at its own expense if the Parent has not taken commercially reasonable
steps to do so within 90 days of the notice referred to above). Any recovery
or
proceeds of settlement or judgment in any action brought or defended by the
Parent under this Section
6.1
shall be
equitably allocated between the Parent and the Issuer.
6
ARTICLE
VII
TERM
AND TERMINATION
Section
7.1 Term
and Termination.
This
Residual License Agreement shall be a legally binding agreement between the
parties hereto as of the Execution Date and shall terminate without further
notice on the Expiration Date, unless terminated earlier as provided in
Section
7.2.
Section
7.2 Material
Breach.
Upon a
material breach of this Residual License Agreement by either party hereto,
the
other party hereto may provide written notice to the breaching party specifying
the material breach. If the breaching party fails to cure such material breach
during the 90-day period following the date on which the breach notice is
provided, then this Residual License Agreement will terminate at the end of
such
90-day period without any further notice.
Section
7.3 Effect
of Termination.
(a) Upon
termination of this Residual License Agreement as provided above, the Residual
License shall immediately terminate and all rights granted hereunder shall
immediately revert back to the Parent; provided that the Parent will accept
the
assignment of any then outstanding Issuer Sublicense under the same terms as
a
direct license between the Parent and the sublicensee pursuant to Section
2.4
(provided that the Parent shall not be required to assume any liability incurred
by the Issuer under any Issuer Sublicense prior to that time).
(b) Termination
of this Residual License Agreement shall not affect any rights or obligations
accrued prior to the effective date of such termination. Upon termination of
this Residual License Agreement, all rights and obligations under this Residual
License Agreement shall terminate as of the effective date of termination and
be
of no further force and effect except as provided in this Section
7.3.
The
following provisions shall survive the termination in accordance with their
terms: Section
2.5;
Article
IV;
Section
8.1;
Section
8.2;
Section
9.1;
Section
9.4;
Section
9.10;
Section
9.11;
Section
9.12;
Section
9.13;
and
Section
9.14.
The
rights provided in this Article
VII
shall be
in addition and without prejudice to any other rights that the parties hereto
may have with respect to any breach or violation of the provisions of this
Residual License Agreement.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1 Indemnification
by the Parent.
Without
limiting any other rights that the Issuer may have hereunder or under Applicable
Law, the Parent hereby agrees to indemnify each Indemnified Party, forthwith
on
demand, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising out of or as a result of any third party claims
resulting from a material and uncured failure of the Parent to perform its
obligations under this Residual License Agreement; provided,
however,
that
the foregoing shall exclude any indemnification to any Indemnified Party (a)
resulting from gross negligence, willful misconduct, fraud or acts of bad faith
on the part of such Indemnified Party if the Indemnified Party was not an
Affiliate of the Parent at such time, (b) subject to Section
9.11,
for
normal and customary expenses incurred in the ordinary course of business in
the
administration of this Residual License Agreement and (c) for any special,
indirect, consequential or punitive damages.
7
Section
8.2 Indemnification
by the Issuer.
Without
limiting any other rights that the Parent may have hereunder or under Applicable
Law, the Issuer hereby agrees to indemnify the Parent, forthwith on demand,
from
and against any and all Indemnified Amounts awarded against or incurred by
the
Parent arising out of or as a result of (i) any material and uncured failure
of
the Issuer or its sublicensees to perform its obligations under this Residual
License Agreement, including any breach of the Residual License, or (ii) arising
out of claims of any nature asserted against the Parent relating to the Issuer’s
or its sublicensees’ exercise of the Residual License; provided,
however,
that
the foregoing shall exclude any indemnification to the Parent (a) resulting
from
gross negligence, willful misconduct, fraud or acts of bad faith on the part
of
the Parent, (b) subject to Section
9.11,
for
normal and customary expenses incurred in the ordinary course of business in
the
administration of this Residual License Agreement and (c) for any special,
indirect, consequential or punitive damages.
Section
8.3 Insurance.
During
the License Term after the termination of the Interim Sublicense as provided
in
Section
2.3,
the
Issuer agrees to obtain and maintain, or cause its sublicensee to obtain or
maintain, commercial general liability insurance, including clinical trials
and
products liability insurance, with reputable and financially secure insurance
carriers, in such amounts and subject to such deductibles as are reasonable
and
customary in the pharmaceutical industry for companies or comparable size and
activities. The Issuer shall maintain, or cause to be maintained, such insurance
for so long as Subject Products in Terminated Territory continue to be
developed, manufactured or sold and thereafter for so long as is necessary
to
cover any and all third party claims that may arise from the development,
manufacture or sale of Subject Products in the Terminated Territory. Upon
reasonable request by the Parent, the Issuer shall produce evidence that such
insurance policies are valid, kept up to date and are in full force and effect.
The Parent understands and agrees that it is not a breach of this provision
if
premiums for such insurance are missed due to the lack of funds.
ARTICLE
IX
MISCELLANEOUS
Section
9.1 Confidentiality.
Any
Confidential Information exchanged by the parties hereunder shall be protected
under the confidentiality provisions in the Transaction Documents.
Section
9.2 Specific
Performance.
Any
party hereto may enforce specific performance of this Residual License
Agreement.
Section
9.3 Notices.
All
Notices shall be in writing and shall be effective (a) upon receipt when sent
through the mails, registered or certified mail, return receipt requested,
postage prepaid, with such receipt to be effective the date of delivery
indicated on the return receipt, (b) upon receipt when sent by an overnight
courier, (c) on the date personally delivered to an authorized officer of the
party to which sent, (d) on the date transmitted by legible telecopier
transmission with a confirmation of receipt or (e) in the case of any report
that is of a routine nature, on the date sent by first class mail or overnight
courier or transmitted by legible telecopier transmission, in all cases, with
a
copy emailed to the recipient at the applicable address, addressed to the
recipient in accordance with Section 12.5 of the Indenture. A copy of each
Notice given hereunder to any party hereto shall also be given to the other
party hereto. Each party hereto may, by notice given in accordance herewith
to
the other party hereto, designate any further or different address to which
subsequent Notices shall be sent.
8
Section
9.4 Choice
of Law.
THIS
RESIDUAL LICENSE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH
THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
THE
RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section
9.5 Counterparts.
This
Residual License Agreement may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same
instrument.
Section
9.6 Amendment.
(a) The
provisions of this Residual License Agreement may from time to time be amended,
modified, supplemented, restated or waived by the Parent or the Issuer, if
such
amendment, modification, supplement, restatement or waiver is in writing and
consented to by each of the parties hereto and the Trustee pursuant to Section
9.1 or Section 9.2 of the Indenture, as applicable.
(b) No
failure or delay on the part of the Issuer, the Parent or any Person specified
in Section 9.9 in exercising any power or right hereunder shall operate as
a
waiver thereof, nor shall any single or partial exercise of any such power
or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on the Issuer or the Parent in
any
case shall entitle it to any notice or demand in similar or other circumstances.
No waiver or approval by the Issuer under this Residual License Agreement shall,
except as may otherwise be stated in such waiver or approval, be applicable
to
subsequent transactions. No waiver or approval under this Residual License
Agreement shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
(c) The
Transaction Documents contain a final and complete integration of all prior
expressions by the parties hereto and thereto with respect to the subject matter
hereof and thereof and shall constitute the entire agreement among the parties
hereto and thereto with respect to the subject matter hereof and thereof,
superseding all prior oral or written understandings.
Section
9.7 Severability
of Provisions.
If any
one or more of the covenants, agreements, provisions or terms of this Residual
License Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Residual License
Agreement and shall in no way affect the validity or enforceability of the
other
covenants, agreements, provisions or terms of this Residual License
Agreement.
9
Section
9.8 Binding
Effect; Assignability; Survival.
This
Residual License Agreement shall be binding upon and inure to the benefit of
the
Issuer, the Parent, the Trustee and their respective successors and permitted
assigns. Neither the Parent nor the Issuer may assign any of its rights
hereunder or any interest herein without the prior written consent of the other
party hereto and, in the case of the Parent, so long as the Notes are
outstanding, the Trustee pursuant to Section 9.1 or Section 9.2 of the
Indenture, as applicable, except as otherwise herein specifically provided;
provided,
however,
that a
Change of Control shall not be deemed an assignment for purposes of this
Section
9.8.
This
Residual License Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect during the License Term, subject to Article
VII.
Section
9.9 Acknowledgement
and Agreement.
The
Parent expressly acknowledges and agrees that all of the Issuer’s right, title
and interest in, to and under this Residual License Agreement shall be pledged
and assigned to the Trustee as collateral by the Issuer pursuant to the
Indenture, and the Parent consents to such pledge and assignment. Each of the
parties hereto acknowledges and agrees that the Trustee, acting on behalf of
the
Noteholders, is a third party beneficiary of all of the rights of the Issuer
arising hereunder and shall be entitled to exercise any rights of the Issuer
to
give consents hereunder, in each case at the direction of Noteholders holding
a
majority in Outstanding Principal Balance of the Senior Class of Notes. Each
of
the parties hereto further acknowledges and agrees that the rights of the Issuer
arising hereunder that have been assigned and pledged to the Trustee under
the
Indenture may be enforced by the Trustee only so long as an Event of Default
has
occurred and is continuing and the Trustee is exercising remedies under the
Indenture, in each case at the direction of Noteholders holding a majority
in
Outstanding Principal Balance of the Senior Class of Notes. In all other cases,
the Issuer shall have the right to give and withhold consents and exercise or
refrain from exercising rights and remedies hereunder.
Section
9.10 Cumulative
Remedies.
The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law. Without limiting the foregoing, the Parent hereby authorizes
the Issuer at any time and from time to time, to the fullest extent permitted
by
law, to offset any amounts payable by the Issuer to, or for the account of,
the
Parent against any obligations of the Parent to the Issuer arising in connection
with the Transaction Documents (including amounts payable pursuant to Section
8.1) that are then due and payable.
Section
9.11 Costs,
Expenses and Taxes.
In
addition to the obligations of the parties under Article VIII, each party hereto
agrees:
(a) to
pay to
the other party hereto on demand all reasonable costs and expenses incurred
by
the other party hereto in connection with the enforcement of this Residual
License Agreement;
(b) to
indemnify the other party hereto on an after-tax basis for any stamp and other
Taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Residual License Agreement,
and to indemnify the other party hereto on an after-tax basis in respect of
any
liabilities with respect to such Taxes and fees; and
10
(c) to
indemnify the other party hereto on an after-tax basis for any U.S. federal,
state or local or any foreign income, franchise or other Taxes imposed on income
or assets (including any interest, penalties or accountant or counsel fees
incurred in connection with such Taxes) asserted against, withheld from or
required to be withheld by the Issuer at any time that the Notes are
outstanding.
Section
9.12 No
Proceedings.
The
Parent hereby agrees that it will not institute against the Issuer, or join
any
Person in instituting against the Issuer, any insolvency or similar proceeding
(namely, any Voluntary Bankruptcy or Involuntary Bankruptcy) until one year
and
one day after the date on which the Notes have been paid in full.
Section
9.13 Consent
to Jurisdiction.
(a) Any
legal
action or proceeding with respect to this Residual License Agreement may be
brought in the courts of the State of New York located in the Borough of
Manhattan, The City of New York or of the United States federal court sitting
in
the Borough of Manhattan, The City of New York, and, by execution and delivery
of this Residual License Agreement, each party hereto consents, for itself
and
in respect of its property, to the non-exclusive jurisdiction of those courts.
Each party hereto irrevocably consents to service of process in the manner
provided for notices in Section
9.3.
Nothing
in this Residual License Agreement shall affect the right of any party hereto
to
serve process in any other manner permitted by law. Each party hereto
irrevocably waives, to the maximum extent permitted by law, any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, that it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Residual License Agreement
or any document related hereto. Each party hereto waives personal service of
any
summons, complaint or other process, which may be made by any other means
permitted by New York law.
(b) If,
for
the purpose of obtaining a judgment or order in any court, it is necessary
to
convert a sum due hereunder to any Noteholder from U.S. dollars into another
currency, each of the Issuer and the Parent has agreed that the rate of exchange
used shall be that at which, in accordance with normal banking procedures,
such
Noteholder could purchase U.S. dollars with such other currency in the Borough
of Manhattan, The City of New York on the Business Day preceding the day on
which final judgment is given.
(c) The
obligation of each of the Issuer and the Parent in respect of any sum payable
by
it to a Noteholder shall, notwithstanding any judgment or order in a Judgment
Currency, be discharged only to the extent that, on the Business Day following
receipt by such Noteholder of such security of any sum adjudged to be so due
in
the Judgment Currency, such Noteholder may in accordance with normal banking
procedures purchase U.S. dollars with the Judgment Currency. If the amount
of
U.S. dollars so purchased is less than the sum originally due to such Noteholder
in the Judgment Currency (determined in the manner set forth in Section
9.11(b)), each of the Issuer and the Parent agrees, as a separate obligation
and
notwithstanding any such judgment, to indemnify such Noteholder against such
loss, and, if the amount of the U.S. dollars so purchased exceeds the sum
originally due to such Noteholder, such Noteholder agrees to remit to the Issuer
or the Parent, as the case may be, such excess, provided that such Noteholder
shall have no obligation to remit any such excess as long as the Issuer or
the
Parent, as the case may be, shall have failed to pay such Noteholder any
obligations due and payable under the Notes of such Noteholder, in which case
such excess may be applied to such obligations of the Issuer or the Parent,
as
the case may be, under such Notes in accordance with the terms thereof. The
foregoing indemnity shall constitute a separate and independent obligation
of
the Issuer and the Parent and shall continue in full force and effect
notwithstanding any such judgment or order as aforesaid.
11
Section
9.14 Limited
Recourse.
The
Parent accepts that the enforceability against the Issuer of any obligations
of
the Issuer hereunder shall be limited to the assets of the Issuer, whether
tangible or intangible, real or personal (including the Collateral) and the
proceeds thereof. Once all such assets have been realized upon and such assets
(and proceeds thereof) have been applied in accordance with Article III of
the
Indenture, any outstanding obligations of the Issuer shall be extinguished.
The
Parent further agrees that it shall take no action against any employee,
director, officer or administrator of the Issuer in relation to this Residual
License Agreement except in the exercise of its rights to proceed against any
employee, director, officer or administrator of the Issuer (a) for intentional
and willful fraud or intentional and willful misrepresentations on the part
of
or by such employee, director, officer or administrator or (b) for the receipt
of any distributions or payments to which the Parent or any successor in
interest is entitled, other than distributions expressly permitted pursuant
to
the other Transaction Documents.
Section
9.15 Table
of Contents and Headings.
The
Table of Contents and headings of the Articles and Sections of this Residual
License Agreement have been inserted for convenience of reference only, are
not
to be considered a part hereof and shall in no way modify or restrict any of
the
terms or provisions hereof.
Section
9.16 Bankruptcy
Matters.
All
rights and licenses granted under or pursuant to this Residual License Agreement
by the Parent or the Issuer are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to
“intellectual property” as defined under Section 101 of the Bankruptcy Code. The
parties hereto agree that each party hereto that is a licensee of such rights
under this Residual License Agreement shall retain and fully exercise all of
its
rights and elections under the Bankruptcy Code. The parties hereto further
agree
that, in the event of the commencement of a bankruptcy proceeding by or against
either party hereto under the Bankruptcy Code, the party hereto that is not
a
party to such proceeding shall be entitled to a complete duplicate of (or
complete access to, as appropriate) any intellectual property (and all
embodiments thereof) of the other party hereto, and the foregoing, if not
already in such party’s possession, shall be promptly delivered to such party
(a) upon any commencement of such a bankruptcy proceeding upon such party’s
written request therefor, unless such other party hereto (or a trustee on behalf
of such other party hereto) elects to continue to perform all of its obligations
under this Residual License Agreement or (b) if not delivered under clause
(a)
above, upon the rejection of this Residual License Agreement by or on behalf
of
such other party hereto upon written request therefor by such party
hereto.
[SIGNATURE
PAGE FOLLOWS]
12
IN
WITNESS WHEREOF, the parties hereto have executed this Residual License
Agreement as of the Execution Date.
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AZITHROMYCIN
ROYALTY SUB LLC
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By:
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InSite
Vision Incorporated, its Manager
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By:
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Name:
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Title:
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INSITE
VISION INCORPORATED
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By:
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Name:
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Title:
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13
ANNEX
A
RULES
OF CONSTRUCTION AND DEFINED TERMS
Unless
the context otherwise requires, in this Annex
A
and the
Residual License Agreement to which this Annex
A
is
attached:
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(a)
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Each
capitalized term has the meaning assigned to it herein. Capitalized
terms
used but not otherwise defined in this Annex
A
shall have the respective meanings given to such terms in Annex
A
to
the Purchase and Sale Agreement, which terms are hereby incorporated
by
reference into this Annex
A
as
if set forth fully in this Annex
A.
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(b)
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An
accounting term not otherwise defined has the meaning assigned to
it in
accordance with GAAP.
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(c)
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Unless
otherwise defined, all terms used herein or therein that are defined
in
the UCC shall have the meanings stated in the
UCC.
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(d)
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Words
of the masculine, feminine or neuter gender shall mean and include
the
correlative words of other genders, and words in the singular shall
include the plural, and vice versa.
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(d)
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The
terms “include”, “including” and similar terms shall be construed as if
followed by the phrase “without
limitation”.
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(e)
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References
to an agreement or other document include references to such agreement
or
document as amended, restated, reformed, supplemented or otherwise
modified in accordance with the terms thereof and include any Annexes,
Exhibits and Schedules attached thereto, and the provisions thereof
apply
to successive events and
transactions.
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(f)
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References
to any statute or other legislative provision shall include any statutory
or legislative modification or re-enactment thereof, or any substitution
therefor.
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(g)
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References
to any Person shall be construed to include such Person’s successors and
permitted assigns.
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(h)
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The
word “will” shall be construed to have the same meaning and effect as the
word “shall”.
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(i)
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The
words “hereof”, “herein”, “hereunder”
and similar terms when used in this Annex
A
shall refer to this Annex
A
as
a whole and not to any particular provision hereof, and Article,
Section,
Annex, Schedule and Exhibit references herein are references to Articles
and Sections of, and Annexes, Schedules and Exhibits to, the Residual
License Agreement unless otherwise
specified.
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(j)
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In
the computation of a period of time from a specified date to a later
specified date, the word “from”
means “from
and including”
and each of the words “to”
and “until”
means “to
but excluding”.
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1
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(k)
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References
to a class of Notes shall be to the Original Class A Notes, to the
Class B
Notes or to a class of Refinancing Notes, as
applicable.
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(l)
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References
to the Notes include the terms and conditions in the relevant Transaction
Document (or other document) applicable to the Notes, and any reference
to
any amount of money due or payable by reference to the Notes shall
include
any sum covenanted to be paid by the Issuer under the relevant Transaction
Document (or other document) in respect of the
Notes.
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(m)
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References
to any action, remedy or method of judicial proceeding for the enforcement
of the rights of creditors or of security shall be deemed to include,
in
respect of any jurisdiction other than the State of New York, references
to such action, remedy or method of judicial proceeding for the
enforcement of the rights of creditors or of security available or
appropriate in such jurisdiction as shall most nearly approximate
such
action, remedy or method of judicial proceeding described or referred
to
in the relevant Transaction Document (or other
document).
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(n)
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Where
any payment is to be made, any funds are to be applied or any calculation
is to be made under any Transaction Document (or other document)
on a day
that is not a Business Day, unless any Transaction Document (or other
document) otherwise provides, such payment shall be made, such funds
shall
be applied and such calculation shall be made on the next succeeding
Business Day, and payments shall be adjusted accordingly, including
interest unless otherwise specified; provided,
however,
that no interest shall accrue in respect of any payments made on
Fixed
Rate Notes on that next succeeding Business
Day.
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2
“AzaSite
Patent Rights”
means
the following patents and patent applications, as may be amended under the
Counterparty License Agreement and as reverted back to the Parent as of the
Termination Date in the Terminated Territory under the terms of the Counterparty
License Agreement, subject to any Surviving Rights:
U.S.
Patent Nos. 6,239,113; 6,569,443; 7,056,893
U.S.
Application Nos. 10/407,425; 10/898,170
Canadian
Application Number 2368637
“AzaSite
Trademark”
means
the trademark AzaSite™, as may be amended under the Counterparty License
Agreement and as reverted back to the Parent as of the Termination Date in
the
Terminated Territory under the terms of the Counterparty License Agreement,
subject to any Surviving Rights.
“Container
Patent Rights”
means
the following patents and patent applications, as may be amended under the
Counterparty License Agreement and as reverted back to the Parent as of the
Termination Date in the Terminated Territory under the terms of the Counterparty
License Agreement, subject to any Surviving Rights:
Filed
4/3/2006 entitled: CAP; Application No. 29/257,375
Filed
4/3/2006 entitled: DROP DISPENSER; Application No. 29/257,372
Filed
4/3/2006 entitled: DROP DISPENSER FOR THE DELIVERY OF UNIFORM DROPLETS OF
VISCOUS LIQUIDS; Application No. 11/397,047
Canadian
Patent Application Numbers
117644
(CAP) and 117642 (TIP)
“Counterparty
License Agreement”
means,
collectively, the Inspire License Agreement and the Inspire Trademark License
Agreement.
“DuraSite
Patent Rights”
means
the following patents and patent applications, as
may be
amended under the Counterparty License Agreement and as reverted
back to the Parent as of the Termination Date in the Terminated Territory under
the terms of the Counterparty License Agreement, subject to any Surviving
Rights:
U.S.
Patent No. 5,192,535
Canadian
Patent No. CA2086120
“DuraSite
Trademark”
means
the trademark DuraSite®, as may be amended under the Counterparty License
Agreement and as reverted back to the Parent as of the Termination Date in
the
Terminated Territory under the terms of the Counterparty License Agreement,
subject to any Surviving Rights.
“Execution
Date”
has
the
meaning set forth in the preamble to the Residual License
Agreement.
“Expiration
Date”
means
the earliest of (a) the date as of which all Secured Obligations to Noteholders
are satisfied or (b) the cancellation or termination of the Indenture for any
other reason under the terms thereof.
3
“Formulation
Know-How”
means
the formulation of polycarbophil, sodium chloride EDTA, disodium and sterile
water for irrigation, and any know-how specifically related thereto that was
licensed to Inspire under the terms of the Counterparty License Agreement,
as
such formulation or know-how may be amended under the Counterparty License
Agreement and as reverted back to the Parent as of the Termination Date in
the
Terminated Territory under the terms of the Counterparty License Agreement,
subject to any Surviving Rights.
“Interim
Period”
has
the
meaning set forth in Section
2.3
of the
Residual License Agreement.
“Interim
Sublicense”
has
the
meaning set forth in Section
2.3
of the
Residual License Agreement.
“Issuer”
has
the
meaning set forth in the preamble to the Residual License
Agreement.
“Issuer
Royalties”
has
the
meaning set forth in Section
3.1(b)
of this
Residual License Agreement.
“Issuer
Sublicense”
has
the
meaning set forth in Section
2.4
of this
Residual License Agreement
“License
Effective Date”
has
the
meaning set forth in Section 2.1 of this Residual License
Agreement.
“License
Royalties”
has
the
meaning set forth in Section
3.1(a)
in this
Residual License Agreement.
“License
Term”
means
the period starting from the License Effective Date and ending on the Expiration
Date. The License Term for the Licensed Patents will end at the earlier of
the
Expiration Date or the last to expire of any valid claim in the Licensed
Patents.
“Licensed
Domain Names”
means
the internet domain name xxx.XxxXxxx.xxx, as may be amended under the
Counterparty License Agreement and as reverted back to the Parent as of the
Termination Date in the Terminated Territory under the terms of the Counterparty
License Agreement, subject to any Surviving Rights.
“Licensed
Know-How”
means
all know-how, regulatory materials or documentation related to any Subject
Product that was licensed or provided to Inspire under the terms of the
Counterparty License Agreement, as such know-how, regulatory materials or
documentation may be amended or supplemented under the Counterparty License
Agreement and as reverted back to the Parent as of the Termination Date in
the
Terminated Territory under the terms of the Counterparty License Agreement,
subject to any Surviving Rights.
“Licensed
Patents”
means,
collectively, the DuraSite Patent Rights, the AzaSite Patent Rights and the
Container Patent Rights. Licensed Patents will include the Pfizer Patent Rights
only if such rights are granted under the terms and conditions of Section
1.2
of the
Residual License Agreement.
4
“Licensed
Trademarks”
means
the AzaSite Trademark, the Licensed Domain Names and the DuraSite
Trademark.
“Parent”
has
the
meaning set forth in the preamble to the Residual License
Agreement.
“Parent
Sublicense”
has
the
meaning set forth in Section
2.3(b)
of this
Residual License Agreement.
“Pfizer
Patent Rights”
means
all patent rights licensed to the Parent under the Pfizer License
Agreement.
“Purchase
and Sale Agreement”
means
that certain purchase and sale agreement dated as of February 21, 2008 between
the Parent and the Issuer.
“Residual
License”
has
the
meaning set forth in Section 2.2 of the Residual License Agreement.
“Residual
License Agreement”
has
the
meaning set forth in the preamble to the agreement to which this Annex
A
is
attached and made part of.
“Reverted
IP”
means
the Licensed Patents, the Licensed Trademarks and the Licensed Know-How. For
the
avoidance of doubt, the term “Reverted
IP”
shall
not include any technology or intellectual property right of the Parent not
expressly licensed or sublicensed to Inspire (including any reserved rights
of
the Parent) under the terms and conditions of the Counterparty License
Agreement, whether existing prior to or developed or acquired after the
effective date of the Counterparty License Agreement.
“Surviving
Rights”
means
any residual or surviving rights of Inspire or its then existing sublicensees
(including any affiliates or subcontractors of Inspire) under the terms and
conditions of the Counterparty License Agreement after partial or entire
termination of the Counterparty License Agreement, including any wind-down
rights provided thereunder.
“Terminated
Territory”
means
any portion of the Territory as to which the Counterparty License Agreement
has
been terminated under the terms thereof.
“Termination
Date”
means
any date on which the Counterparty License Agreement has been terminated in
respect of one or more portions of the Territory under the terms
thereof.
5
