Ex-10.11
EXCLUSIVE LICENSE AGREEMENT
EXCLUSIVE LICENSE AGREEMENT
By and Among
XXXXXX X. XXXXXXX, M.D.,
ENDOLUMINAL THERAPEUTICS, INC.
and
PEGAS PHARMACEUTICALS, INC.
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS .................................................. 1
1.1 Affiliate ................................................. 1
1.2 Confidential Information .................................. 1
1.3 Consulting Agreement ...................................... 2
1.4 Contract Research Period .................................. 2
1.5 Field ..................................................... 2
1.6 Net Revenues .............................................. 2
1.7 Other Royalty Product ..................................... 2
1.8 Patented Product(s) ....................................... 3
1.9 Patent Rights ............................................. 3
1.10 Related Technology ........................................ 4
1.11 Research Agreement ........................................ 4
1.12 Stock Purchase Agreement .................................. 4
1.13 Valid Claim ............................................... 4
ARTICLE 2 - LICENSE AND ROYALTY .......................................... 4
2.1 Exclusive License ......................................... 4
2.2 Base Royalties ............................................ 5
2.3 Third Party Royalties ..................................... 5
2.4 Single Royalty; Non-Royalty Sales ......................... 6
2.5 Payment of Royalties ...................................... 7
2.6 Books and Records ......................................... 8
ARTICLE 3 - CONTRACT RESEARCH SERVICES ................................... 8
3.1 Research Funding .......................................... 8
3.2 Payments; Budgets ......................................... 8
3.3 Personnel ................................................. 9
3.4 Equipment ................................................. 9
3.5 Substitute Research Agreement ............................. 9
3.6 Termination of Research Agreement ......................... 10
ARTICLE 4 - DISCLOSURE AND PROTECTION OF PROPRIETARY
RIGHTS ............................................................ 10
4.1 Disclosure ................................................ 10
4.2 Filing, Prosecution and Maintenance by Pegas .............. 11
4.3 Filing, Prosecution and Maintenance by ETI ................ 12
4.4 Confidential Information .................................. 12
4.5 Other Technology .......................................... 13
4.6 Publications .............................................. 15
ARTICLE 5 - WARRANTIES; INFRINGEMENT ..................................... 16
5.1 Warranties ................................................ 16
5.2 Limitation ................................................ 17
5.3 Effect of Representations and Warranties .................. 17
5.4 Infringement by Third Parties ............................. 17
5.5 Infringement by Patented Product(s); Other
Royalty Products .......................................... 18
ARTICLE 6 - AGREEMENTS OF PEGAS .......................................... 18
6.1 Indemnification ........................................... 18
6.2 Patent Marking ............................................ 19
6.3 Insurance ................................................. 19
ARTICLE 7 - TERM AND TERMINATION ......................................... 20
7.1 Term ...................................................... 20
7.2 Default ................................................... 20
7.3 Termination by Pegas ...................................... 21
7.4 Bankruptcy ................................................ 21
7.5 Survival .................................................. 22
ARTICLE 8 - OTHER AGREEMENTS ............................................. 23
ARTICLE 9 - DUE DILIGENCE ................................................ 23
9.1 Obligation to Exploit ..................................... 23
9.2 Milestones ................................................ 23
9.3 Remedy .................................................... 24
9.4 Adjustment ................................................ 24
ARTICLE 10 - GENERAL ..................................................... 24
10.1 Notices ................................................... 24
10.2 Arbitration ............................................... 25
10.3 Relationship of the Parties ............................... 25
10.4 Force Majeure ............................................. 25
10.5 Governing Law ............................................. 26
10.6 Assignment ................................................ 26
10.7 Waiver .................................................... 26
10.8 Modifications ............................................. 26
10.9 Severability .............................................. 26
10.10 Complete Agreement ........................................ 26
10.11 No Implied Obligations .................................... 26
10.12 No Consequential Damages .................................. 26
10.13 Counterparts and Headings ................................. 27
10.14 Confidential Terms ........................................ 27
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EXCLUSIVE LICENSE AGREEMENT
THIS AGREEMENT, including the attached Exhibits, (the
"Agreement") is made and entered into effective as of the day of 7th day of
August, 1992 (the "Effective Date"), by and among XXXXXX X. XXXXXXX, M.D. ("Xx.
Xxxxxxx"), ENDOLUMINAL THERAPEUTICS, INC., a Delaware corporation, ("ETI") and
PEGAS PHARMACEUTICALS, INC., a Delaware corporation ("Pegas").
RECITALS
A. Xx. Xxxxxxx has developed technology related to that certain Field
defined below, certain of which technology is the subject of United States,
European and other patent applications.
B. Xx. Xxxxxxx is the sole shareholder and director, and an officer, of
ETI and has assigned to ETI all rights in and to such technology, including the
patent rights thereto.
C. Pegas desires to acquire, and ETI is willing to grant to Pegas, an
exclusive license to use such technology and an exclusive license under the
related patent rights, all under the terms set forth below.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the following defined terms will have
the respective meanings set forth in this Article 1:
1.1 Affiliate. The term "Affiliate" means any person or entity which,
directly or indirectly, owns or controls Pegas, or which is controlled by or
under common control with Pegas. For purposes of this definition, "control"
means the ownership, directly or indirectly, of twenty percent (20%) or more of
the outstanding equity securities of a corporation entitled to vote in the
election of directors or a twenty percent (20%) or greater interest in the net
assets or profits of an entity which is not a corporation.
1.2 Confidential Information. The term "Confidential Information" has the
meaning ascribed in Section 4.4 of this Agreement.
1.3 Consulting Agreement. The term "Consulting Agreement" means the
certain Agreement for Consulting Services dated August 7th, 1992 between Pegas
and Xx. Xxxxxxx in the form of Exhibit E attached hereto.
1.4 Contract Research Period. The term "Contract Research Period" means
the period commencing on the Effective Date and continuing until the end of the
period for which Pegas provides funding to ETI or Xx. Xxxxxxx'x employer under
Article 3 below, or the termination of the Consulting Agreement, whichever is
later.
1.5 Field. The term "Field" shall mean any products, methods or other
subject matter related to endoluminal, endomural, ectoluminal or other
polymer-based paving systems or devices, or other subject matter described on
Exhibit A hereto in each case for all human applications. Without limiting
the foregoing, it is understood that all inventions covered by Existing
Patent Rights (as defined in 1.9 below) shall be within the Field.
1.6 Net Revenues. The term "Net Revenues" means the gross receipts paid
to Pegas, its Affiliates or sublicensees for sales of Patented Product(s) or
Other Royalty Products (as the case may be) worldwide less (i) all trade,
quantity and cash discounts actually allowed and refunded, (ii) all credits and
allowances actually refunded on account of rejection, returns, billing errors or
retroactive price reductions, (iii) duties and tariffs paid by Pegas, (iv)
freight and transportation costs paid by Pegas, and (v) excise, sale and use
taxes and equivalent taxes paid by Pegas.
1.7 Other Royalty Product. The term "Other Royalty Product" shall mean
any product, component, device, method or process (each, an "Item"), other than
a Patented Product, whose sale or principal intended use:
(a) would infringe, contributorily infringe or induce the
infringement of a claim of a patent application within the Patent Rights
filed in the country in which such Item is sold; or
(b) would infringe, contributorily infringe or induce the
infringement of a claim of a patent application within the Patent Rights
filed in the United States, whether or not such application has also been
filed in the country of sale; or
(c) would not infringe, contributorily infringe or induce the
infringement of a claim of a patent application described in (a) or (b),
but that would be a Patented Product if concurrently sold in the United
States.
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However, an Item shall not be an "Other Royalty Product" by reason of a patent
application described in (a) or (b) above if such Item is sold more than eight
(8) years after the date from which such patent application takes priority for
filing purposes.
1.8 Patented Product(s). The term "Patented Product(s)" means any Item
whose sale or principal intended use would infringe, contributorily infringe or
induce the infringement of one or more Valid Claims in the country in which such
Item is sold.
1.9 Patent Rights. The term "Patent Rights" shall mean any and all patents
and patent applications (including utility model patents and
applications therefor) and all rights thereunder:
(a) that claim inventions within the Field conceived or developed by
Xx. Xxxxxxx, alone or jointly with others, prior to the Effective Date; or
(b) that claim inventions conceived or developed during the Contract
Research Period by Xx. Xxxxxxx, alone or jointly with others, which relate
to the Field or were conceived or developed in the course of performing
research in connection with Article 3 below; or
(c) that claim inventions conceived or developed during the Contract
Research Period by ETI employees or third parties acting on behalf of ETI,
which relate to the Field or were conceived or developed in the course of
performing research in connection with Article 3 below.
However, the Patent Rights shall not include any patents or applications, to
the extent that they are owned by the University of Arizona, the Veterans
Administration Medical Center, Tucson, Arizona, or any subsequent primary
employer (but not including consulting and other similar engagements) of Xx.
Xxxxxxx by reason of Xx. Xxxxxxx'x employment by such entity, or to the
extent such patents or applications are owned by Pegas under the Consulting
Agreement or otherwise. It is understood that the applications described in
(a) above include all applications listed in Exhibit C hereto any
continuations, continuations-in-part, divisions and substitutions of such
listed applications; and all patents which may issue upon any of the
foregoing, together with all renewals, reissues and extensions thereof
(together, the "Existing Patent Rights").
It is further understood that the Patent Rights shall not include any patents
or applications to the extent they include claims specifically directed to
subject matter described in Exhibit B hereto provided that the foregoing
shall not be deemed to imply that any subject matter claimed in the Existing
Patent Rights is not within the Patent Rights for all purposes of this
Agreement.
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1.10 Related Technology. The term "Related Technology" shall mean any
research and development information, inventions, copyrightable materials,
know-how, and all preclinical, clinical and other technical data in the
possession of Xx. Xxxxxxx or ETI prior to the Effective Date, or during the
Contract Research Period, in each case which relate directly to the Field or the
Patent Rights and which ETI or Xx. Xxxxxxx has the right to provide to Pegas.
1.11 Research Agreement. The term "Research Agreement" shall have the
meaning defined in section 3.1 of this Agreement.
1.12 Stock Purchase Agreement. The term "Stock Purchase Agreement" means
the certain Stock Purchase Agreement dated August 7th, 1992 between Pegas and
Xx. Xxxxxxx in the form of Exhibit F attached hereto.
1.13 Valid Claim. The term "Valid Claim" shall mean a claim of an issued
and unexpired patent included within the Patent Rights, which has not been held
unenforceable, unpatentable or invalid by a court or other governmental agency
of competent jurisdiction. In the event that such a holding of unenforceability,
unpatentability or invalidity is reversed on appeal by a higher court or agency
of competent jurisdiction, the subject claim shall be reinstated as a Valid
Claim hereunder.
ARTICLE 2
LICENSE AND ROYALTY
2.1 Exclusive License.
(a) ETI and Xx. Xxxxxxx hereby grant to Pegas the exclusive (except
to the extent provided in Section 4.5(b)(ii) herein), worldwide license,
under the Patent Rights and the Related Technology, to develop,
manufacture, use, sell, exploit and otherwise commercialize any products,
to practice any method, process or procedure, and to otherwise exploit the
Patent Rights and the Related Technology within the Field.
(b) The license granted under (a) above shall be exclusive even as
to ETI and Xx. Xxxxxxx, and shall include the right to grant and
authorize sublicenses within the Field under the Patent Rights and
Related Technology; provided, however, that such sublicenses shall in
each case include all applicable restrictions and limitations of this
Agreement. Pegas agrees to notify ETI if any sublicenses are granted by
Pegas under the Patent Rights.
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(c) Notwithstanding (a) above, Xx. Xxxxxxx and ETI reserve for
themselves the perpetual right and license to use the Related Technology
and any inventions disclosed and claimed in the Patent Rights for their
own academic research purposes and to perform their obligations under
Article 3 below.
2.2 Base Royalties. In consideration of the rights and licenses granted to
Pegas hereunder, and of the obligations of Xx. Xxxxxxx and ETI hereunder, Pegas
agrees to pay ETI as a "Royalty" or "Royalties" the following amounts:
(a) [*] of Net Revenues received by Pegas or its
Affiliates upon their respective sales of Patented Products;
(b) [*] of Net Revenues received by Pegas'
non-Affiliate sublicensees upon their sales of Patented Products; and
(c) [*] of the Net Revenues received by Pegas, its
Affiliates or sublicensees upon their respective sales of Other Royalty
Products.
As to each Patented Product or Other Royalty Product, royalties under this
Section 2.2 shall be payable until the later of either (i) the expiration of the
last-to-expire patent within the Patent Rights, or (ii) fifteen (15) years after
the first accrual of any royalty under this Section 2.2. If a product that has
been sold as a Patented Product in a country ceases to be a Patented Product in
such country prior to the end of the period in clause (ii) above, because all
claims within the Patent Rights that cover such product in such country have
expired, the product shall thereafter be deemed an "Other Royalty Product" in
such country until the end of such period.
2.3 Third Party Royalties. Notwithstanding 2.2 above, if Pegas becomes
obligated to pay to non-Affiliate third parties royalties with respect to a
Patented Product under either (i) license agreements for other technologies
which Pegas, in Pegas' reasonable judgment, determines are desirable to
incorporate in such Patented Product, or (ii) license agreements relating to
patent applications or patents within the Patent Rights that are jointly owned
by Xx. Xxxxxxx or ETI, and such third parties which Pegas, in Pegas' reasonable
judgment, determines are desirable with respect to such Patented Product, and
the total royalties to be paid by Pegas to ETI and such third parties would
exceed the amounts to be paid to ETI pursuant to Section 2.2, then the amounts
to be paid to ETI pursuant to Section 2.2 shall be reduced in accordance with
the following formulas:
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(a) Sales by Pegas and Affiliates. Royalties payable on Net Revenues
received by Pegas and/or its Affiliates from such Patented Product shall
equal [*] as royalties to ETI and such third parties (prior to the
adjustment hereunder and any similar adjustment in the amount to be paid
to such third parties); and
(b) Sales by Sublicensees. Royalties payable on Net Revenues
received by Pegas' non-Affiliate sublicensees from such Patented Product
shall equal [*] as royalties to ETI and such third parties (prior to
the adjustment hereunder and any similar adjustment in the amount to be
paid to such third parties).
Notwithstanding the foregoing, the reductions in (a) and (b) above shall not
reduce [*] the amounts otherwise payable under this Agreement to ETI with
respect to a Patented Product, unless [*] royalty is payable to Non-Affiliate
third parties with respect to such Patented Product; if [*] royalty is
payable to Non-Affiliate third parties with respect to a Patented Product,
the reductions in (a) and (b) may not reduce to [*] of the applicable Net
Revenues the royalties payable to ETI with respect to such Patented Product.
It is understood that the adjustment in this Section 2.3 shall not apply to
increase the amounts payable under Section 2.2 above; nor shall this Section
2.3 apply to royalties payable on Other Royalty Products.
2.4 Single Royalty; Non-Royalty Sales.
(a) It is understood that [*] royalty is payable with respect
to a Patented Product, regardless of how many claims or patents within the
Patent Rights cover such Patented Product, and that [*] royalty shall
be payable under this Article 2 with respect to any particular product
unit. Such royalty shall be the highest applicable royalty under either
(a), (b) or (c) of Section 2.2, subject to reduction in accordance with
Section 2.3. In addition, [*] royalty shall be payable under this
Agreement with respect to sales of Patented Products or Other Royalty
Products among Pegas, its Affiliates and/or sublicensees for resale, upon
the understanding that royalties will be due pursuant to the terms of this
Agreement upon such resale. Nor shall a royalty be payable under this
Article 2 with respect to sales of Patented Products or Other Royalty
Products for use in research and/or development, in clinical trials or as
samples; provided that such research and/or development materials,
clinical trial materials or samples are sold at a
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price of [*]. For purposes of this Section 2.4(a), "Cost" shall mean
the fully burdened cost of manufacturing a Patented Product or Other
Royalty Product, as applicable, including without limitation the direct
cost of labor, materials and allocable pharmaceutical manufacturing
overheads in accordance with generally accepted accounting principles
consistently applied.
(b) It is understood that certain claims of the Patent Rights are
directed to methods for treating patients. If Pegas, Pegas' Affiliates or
sublicensees receive a separate fee from a physician, hospital or similar
direct health care provider for the right to practice a method comprising
a Patented Product or Other Royalty Product, such fee shall be included as
gross receipts from a sale of a Patented Product or Other Royalty Product
(as the case may be) in determining Net Revenues. Otherwise, amounts
received by Pegas, Pegas' Affiliates or sublicensees for a sublicense to
practice such methods shall not be deemed "Net Revenues" and in no event
shall amounts received by a physician, hospital or other direct health
care provider for treatments using such methods be deemed "Net Revenues."
2.5 Payment of Royalties.
(a) Reports; Payments. All accrued Royalties pursuant to Section 2.2
above will be due and payable quarterly. Pegas will render payment to ETI
within ninety (90) days after the end of each calendar quarter for all
Royalties that are due and payable and which accrued during such calendar
quarter. Pegas will provide with each Royalty payment a written statement
in reasonable detail setting forth Patented Products and Other Royalty
Products sold and the computation of the total Net Revenues from
Royalty-bearing worldwide sales during the period covered by such
statement. If any payment is late, Pegas will pay interest at the rate of
one percent (1%) per month or the maximum rate permitted by law, whichever
is lower, on any overdue amount from the date such overdue amount was due
until such overdue amount is paid in full.
(b) Currency. If any currency conversion is required in connection
with the calculation of Royalties hereunder, such conversion shall be made
by using the exchange rates used by Pegas in calculating its own revenues
for financial reporting purposes.
(c) Withholding Taxes. Any withholding or other tax that Pegas or
any of its Affiliates or sublicensees are required by statute to withhold
and pay on behalf of ETI with respect to the Royalties payable to ETI
under this Agreement shall be deducted from said Royalties and promptly
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paid to the taxing authority; provided, however, that in regard to any tax
so deducted, Pegas shall furnish ETI with proper evidence of the taxes
paid on its behalf.
2.6 Books and Records. Pegas will maintain a separate record in detail
reasonably sufficient to enable the Net Revenues and Royalties to be
determined. Pegas will permit such records to be examined at ETI's expense,
upon at least ten (10) days written notice and no more than twice per
calendar year, by an auditor or accountant selected by ETI and to whom Pegas
has no reasonable objection. Such examination may be conducted during
business hours and shall be limited to the extent reasonably necessary to
verify the Net Revenues and Royalties. ETI and Xx. Xxxxxxx agree that all
information obtained in the course of such examination shall be deemed
Confidential Information of Pegas. In the event the examination of the
records reveals a shortfall of [*] or more of the total payments due ETI in
the period examined, Pegas will bear the entire cost of the examination of
the records, and will pay the overdue amount plus interest at the rate of one
percent (1%) per month, or the maximum permitted by law, whichever is lower,
from the date such overdue amount was due under Section 2.5(a).
ARTICLE 3
CONTRACT RESEARCH SERVICES
3.1 Research Funding. Pegas agrees to use its best commercial efforts
to enter into a Research Agreement with the University of Arizona and/or the
Veterans Administration Medical Center, Tucson, Arizona, (the "Research
Agreement") to fund research by Xx. Xxxxxxx in the amount of [*], plus
standard overhead charges of not more than [*] of such amounts, such funds to
be provided Over a period of [*]. In addition to such funds to be so
provided, Pegas shall provide to ETI an additional amount of [*] in accordance
with Section 3.2. It is understood that, if research is progressing in
accordance with the goals and objectives agreed upon between Pegas and Xx.
Xxxxxxx under the Research Agreement, the parties intend to extend the
Research Agreement for [*] at the rate of [*] per year, plus overhead charges
not exceeding [*] (including without limitation any amounts paid directly to
ETI).
3.2 Payments; Budgets. The amounts to be provided directly to ETI under
Section 3.1 above shall be paid in [*] quarterly payments of [*] each, to be
paid within ten (10) days after the beginning of each of the first [*]
calendar quarters commencing after the Effective Date. The parties agree that
such amounts shall be used for Dr.
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Xxxxxxx to attend at least [*] scientific meetings per year related to the
Field and for such other matters as the parties shall mutually agree.
3.3 Personnel. Pegas agrees to provide funds for support of a
post-doctoral research fellow and, in addition, a histology-laboratory
technician, each appointed for the purpose of conducting research under the
Research Agreement in Xx. Xxxxxxx'x laboratory. The amount of such funds for
the post-doctoral research fellow shall not exceed an annual salary equal to
[*] payable in equal monthly installments and less applicable withholding and
other payroll deductions, if any, plus a consulting fee equal to [*] payable
in equal monthly installments. The amount of such funds for the
histology-laboratory technician shall not exceed [*] of the usual and
customary annual salary for similar appointments for similar services in the
Tucson, Arizona area.
3.4 Equipment. For each of the first [*] periods after the Effective
Date, Pegas agrees to acquire and provide to The University of Arizona, or
the Veterans Administration Medical Center, Tucson, Arizona, for use in Xx.
Xxxxxxx'x laboratory under the Research Agreement (or to a substitute
employer under any substitute agreement entered into under Section 3.5
below), scientific equipment that would be useful in connection with the
activities contemplated under this Article 3. Such equipment shall have a
bona fide delivered and installed purchase price of not more than [*] for
each such period (i.e., a total of [*]). Xx. Xxxxxxx shall provide to Pegas a
list of the equipment to be provided, and subject to availability and the
dollar limits in this Section 3.4, Pegas shall promptly provide such
equipment. Upon request by Xx. Xxxxxxx after the term of the Research
Agreement or [*] months after the Effective Date, whichever is later, or at
such earlier time as Pegas ceases to conduct all material business or sells
all or substantially all of its assets, Pegas agrees promptly to convey (or
cause the conveyance of) title to such equipment to ETI, without any charge
to ETI. Xx. Xxxxxxx will continue to have access to such equipment until
title is so conveyed to ETI. It is understood that Pegas may lease such
equipment from third parties, so long as Pegas obtains the right to convey
title tic such equipment to ETI as required by this Section 3.4.
3.5 Substitute Research Agreement. In the event that Xx. Xxxxxxx ceases to
be a faculty member of the University of Arizona and/or a member of the staff of
the Veterans Administration Medical Center, Tucson, Arizona, as applicable to
the Research Agreement, during the term of the Research Agreement, Pegas agrees
to use its best commercial efforts to promptly terminate the Research Agreement
and use its best commercial efforts to enter into a comparable agreement with
any non-
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Affiliate nonprofit academic institution reasonably approved by Pegas and of
which Xx. Xxxxxxx becomes a full-time employee within nine (9) months after
ceasing to be a faculty member of the University of Arizona. It is understood
that Pegas' obligation to enter into such an agreement shall be subject to
agreement by the particular institution, and that Pegas shall not be required to
undertake any obligations that are more burdensome than those contained in the
Research Agreement. The total funding provided by Pegas under the Research
Agreement and any, substitute agreement entered into under this Section 3.5 for
purposes of funding research by Xx. Xxxxxxx shall not exceed the total amount
originally required under the Research Agreement. It is understood that, in the
event Pegas is obligated to enter into a substitute research agreement under
this Section 3.5, the Contract Research Period shall continue after termination
of the Research Agreement until the end of the term of any substitute research
agreement (and any extensions thereof), or the end of the period for which
Pegas provides funding to ETI under this Article 3, or the termination of the
Consulting Agreement, whichever is later.
3.6 Termination of Research Agreement. Pegas agrees not to terminate, or
cause the termination of, the Research Agreement to be entered into pursuant to
Section 3.1, or any substitute research agreement entered into pursuant to
Section 3.5, if applicable, prior to the second anniversary of the Effective
Date, except as provided in either (i) Section 3.5 above or (ii) as a result of
a material failure by The University of Arizona, or the Veterans Administration
Medical Center, Tucson, Arizona, or any non-Affiliate nonprofit academic
institution of which Xx. Xxxxxxx becomes a full-time employee, if applicable
pursuant to Section 3.5, or Xx. Xxxxxxx to comply with the provisions of the
Research Agreement or any substitute research agreement, if applicable, which
failure has not been cured within thirty (30) days after a written notice
thereof by Pegas. if Pegas terminates the Research Agreement by reason of Xx.
Xxxxxxx'x failure to comply, as provided in (ii) above, Pegas, obligations under
this Article 3 shall terminate as of the effective date of such termination. It
is understood, however, that Pegas' obligation under Section 3.4 above to make
available to Xx. Xxxxxxx the equipment described therein shall not terminate by
reason of a termination of the Research Agreement under Section 3.5 above.
ARTICLE 4
DISCLOSURE AND PROTECTION OF PROPRIETARY RIGHTS
4.1 Disclosure. ETI and Xx. Xxxxxxx will promptly disclose to Pegas all
aspects of the Related Technology and any inventions covered by the Patent
Rights as of the Effective Date and as may
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be conceived or developed from time to time throughout the term of this
Agreement, together with copies of all laboratory notebooks and other written
materials describing such Related Technology and/or inventions. In addition, ETI
agrees to provide to Pegas complete copies of all patent applications within the
Patent Rights, and all written materials pertaining thereto, including without
limitation files of any patent counsel involved in such applications. Upon
request by Pegas, Xx. Xxxxxxx and ETI agree to provide reasonable assistance to
Pegas and its representatives in understanding any or all such items. Pegas
agrees to pay reasonable out-of-pocket costs paid to non-employee third parties
by ETI and Xx. Xxxxxxx to provide materials or assistance requested by Pegas
under this Section 4.1, provided that ETI or Xx. Xxxxxxx obtained Pegas' prior
written approval of such expenditures.
4.2 Filing, Prosecution and Maintenance by Pegas.
(a) Pegas will have the right, in its discretion, to take
responsibility for, and control of, the filing for, prosecution and
maintenance of the Patent Rights in ETI's or Xxxxxxx'x name, with the
input and participation of ETI and Xx. Xxxxxxx. Xx. Xxxxxxx and ETI
shall cooperate with and assist Pegas in connection with the filing for,
prosecution and maintenance of the Patent Rights, and in evidencing and
perfecting the rights granted to Pegas under this Agreement, and Pegas
shall keep ETI fully informed as to the status of the Patent Rights.
(b) Pegas agrees to reimburse ETI for legal fees and expenses
incurred in connection with the prosecution of the Patent Rights and
negotiating this Agreement prior to the Effective Date, up to [*], as
follows: [*] of such amount shall be paid in [*] quarterly installments
of [*] each during the first [*] after the Effective Date. The remainder
shall be paid in [*] installments of [*] each, due on May 1 of each of
the years [*].
(c) Pegas shall have the right to deduct from Royalties payable to
ETI under Article 2 with respect to a Patented Product or Other Royalty
Product [*] of the out-of-pocket costs paid by Pegas to non-employee
third parties to file for, prosecute, and maintain the Patent Rights (not
including the past expenses of ETI and Xx. Xxxxxxx reimbursed by Pegas
under paragraph (b) above) relating to such Patented Product or Other
Royalty Product in any country; provided, however, that the amount
deducted from such Royalties in any given quarterly payment shall not
exceed [*] of the Royalty that would
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otherwise be due for such Patented Product or Other Royalty Product.
4.3 Filing, Prosecution and Maintenance by ETI. In the event Pegas elects
not to pursue a patent application within ninety (90) days after receipt of all
information and materials therefor from Xx. Xxxxxxx and ETI pursuant to Section
4.1, or elects not to maintain an issued patent, within the Patent Rights in any
particular country, ETI may pursue the same in such country at its own expense.
In such event Pegas will, at ETI's request, cooperate with ETI in obtaining
and/or maintaining such patents, including but not limited to providing ETI with
applicable documents and information in Pegas' possession, as reasonably
requested by ETI. Pegas agrees to inform ETI of its decision to abandon such a
patent or application in any country at least ninety (90) days prior to the date
such abandonment would be effective, to enable ETI to continue the prosecution
or maintenance of such application or patent. Notwithstanding the above, such
patent applications and patents shall remain within the Patent Rights. In the
event that Pegas exploits such patent applications and patents, Pegas shall
reimburse Xx. Xxxxxxx and ETI for legal fees and expenses incurred in connection
with the filing, prosecution and maintenance of such patent applications and
patents.
4.4 Confidential Information.
(a) General. The term "Confidential Information" as used in this
Agreement will include all proprietary information concerning the Patent
Rights or Related Technology. With respect to the obligations of ETI and
Xx. Xxxxxxx under this Section 4.4, "Confidential Information" shall also
include any information provided by Pegas to Xx. Xxxxxxx or ETI in a
tangible form marked "confidential" or with a similar designation or that
Pegas disclosed to ETI or Xx. Xxxxxxx orally and confirmed such
information in writing as confidential within a reasonable time after its
initial disclosure. Each party agrees to maintain the confidentiality of
the Confidential Information, not to disclose such Confidential
Information to third parties, and to take all reasonable efforts to make
the Confidential Information known only to those employees who need to
have access to the Confidential Information. Notwithstanding the
foregoing, Pegas may disclose information concerning the Patent Rights or
Related Technology to actual or prospective sublicensees, and to such
other persons and in such other manner as Pegas deems reasonably necessary
in connection with its business.
(b) Exceptions. However, neither ETI nor Xx. Xxxxxxx, on the one
hand, nor Pegas, on the other hand, will have any obligation of confidence
under this Agreement with respect to any information which:
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(i) was at the time of disclosure thereof, already known to
such party other than from the disclosing party; or
(ii) without breach of this Agreement, has been published or
is otherwise available to the public at any time whether before or
after the time of disclosure to such party; or
(iii) is at any time lawfully received by such party from a
third party who has no obligation of confidence to a party hereto in
respect thereof.
Any information which is within (i), (ii) or (iii) above shall not be
included within the definition of Confidential Information for purposes of
this Section 4.4. Notwithstanding the foregoing, it is understood that Xx.
Xxxxxxx and ETI shall not be relieved of their obligations under this
Section 4.4 not to disclose to third parties information concerning the
Patent Rights or Related Technology by reason of (i) or (iii) above.
4.5 Other Technology.
(a) For a period of five (5) years after the Effective Date, ETI and
Xx. Xxxxxxx (each, a "Licensor") hereby grant to Pegas a right of first
refusal with respect to the grant of any license or other rights by either
Licensor to any technology that either Licensor develops or owns during
such period and that is not licensed to Pegas under this Agreement. If
during such period, either Licensor proposes to grant such a license or
right, it shall notify Pegas in writing, with the terms and conditions on
which such Licensor proposes to grant such license or rights, together
with the name of the party to whom such license or rights would be
granted. Pegas shall have a period of ninety (90) days to elect to
acquire the license or rights on the terms and conditions specified in the
notice, and both Licensors agree to be available to Pegas during such
period and to provide all reasonable assistance to enable Pegas to
evaluate the subject technology. If Pegas does not notify the proposing
Licensor in writing that Pegas wishes to acquire such license or rights
during the ninety (90) day period, the Licensor may grant the license or
other rights to the party named in such initial notice; provided that such
license or other rights are granted on terms that are not materially, less
favorable to the Licensor (or materially more favorable to the third
party) than those offered to Pegas.
(b) If Xx. Xxxxxxx conceives and reduces to practice after the
Contract Research Period an invention within the
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Xxxxx, Xx. Xxxxxxx shall notify Pegas in writing. Following such notice:
(i) Pegas shall have an option to include within the Patent Rights
all worldwide patents and applications claiming such invention. To
exercise such option, Pegas must elect to undertake the prosecution of
applications for such patent rights in the United States and such other
countries as Pegas deems appropriate, which election shall be made by
Pegas so notifying Xx. Xxxxxxx in writing within ninety (90) days after
receiving Xx. Xxxxxxx'x notice describing the invention. During such
ninety (90) day period, Xx. Xxxxxxx and ETI shall cooperate with, and
reasonably assist Pegas, in evaluating the invention and patentability
thereof. Upon such election by Pegas, all worldwide patent rights claiming
the subject invention shall be within the Patent Rights for all purposes
of this Agreement, and Pegas shall use diligent efforts to file for,
prosecute and maintain such Patent Rights in all countries for which such
efforts are reasonably justified. In addition, following Pegas' election
to include an invention within the Patent Rights under this Section
4.5(b), Pegas shall use commercially reasonable efforts to develop and
bring to market one or more products based upon such Patent Rights.
(ii) If Pegas does not elect to include such invention within the
Patent Rights in accordance with subparagraph (b) (i) above, Xx. Xxxxxxx
or ETI shall be free to license and exploit such invention at his or its
discretion, without Pegas having any right of first refusal with respect
to such invention under paragraph (a) above, but subject to Pegas'
exclusive license under the Patent Rights and the Related Technology
hereunder. In addition, if Xx. Xxxxxxx or ETI ("Applicant") has filed a
United States patent application claiming the invention and reasonably
expects to obtain a patent on such application, and a license under the
Patent Rights is necessary to exploit such patent application or such
patent (a "Dominated Patent"), Applicant shall have the right to grant to
a licensee under the Dominated Patent a nonexclusive license to practice
the Patent Rights, subject to the terms and conditions of Exhibit D
hereto. Notwithstanding the foregoing, Applicant shall not have the right
to grant such a license to practice the Patent Rights in connection with
the manufacture, sale or use of a Competitive Product (as defined below),
or to the extent that Pegas has previously granted a sublicense to a third
party for use in the field of the Dominated
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Patent. At least twenty (20) days prior to granting such a license,
Applicant shall provide to Pegas a copy of the license agreement to be
entered into, which shall be regarded and treated as Confidential
Information as provided in Section 4.4(a) herein. As used herein, a
"Competitive Product" shall mean any product or other subject matter that
is related to the treatment or prevention of a cardiovascular or other
vascular disease or condition, or that is competitive with or
complementary to a product or technology that Pegas or its sublicensee is
then developing or reasonably expects to commence development of within
three (3) months after Applicant's request for such a license.
(c) Notwithstanding (a) and (b) above, this Section 4.5 shall not apply
with respect to any invention or technology that is assigned to the University
of Arizona, or the Veterans Administration Medical Center, Tucson, Arizona, or
other non-Affiliate entity to whom Xx. Xxxxxxx has an obligation to assign
ownership of the subject technology or invention pursuant to any agreement
entered into by Xx. Xxxxxxx either (i) prior to the Effective Date, or (ii)
required to be entered into as a condition of employment. Any notice to Pegas by
Xx. Xxxxxxx or ETI under Sections 4.5(a) or (b) above shall describe the subject
technology in reasonable detail, but on a nonconfidential basis; upon request by
Pegas, Xx. Xxxxxxx and ETI shall provide a complete written disclosure of the
technology and any related patent rights, which disclosure shall be subject to
the confidentiality provisions of 4.4 above.
4.6 Publications.
(a) Notwithstanding any provision of this Agreement to the contrary, Xx.
Xxxxxxx shall have the right to publish academic papers and make scientific
presentations regarding his research, even though such papers or presentations
may disclose Related Technology. However, the parties agree that prior to public
disclosure of any such paper or presentation by Xx. Xxxxxxx, Xx. Xxxxxxx shall
provide to Pegas a copy of such paper or presentation at the time such paper or
presentation is submitted for publication or presentation, but in any case at
least ninety (90) days prior to the date of the proposed public disclosure, in
order for Pegas to have sufficient time to file any patents that Pegas deems
appropriate.
(b) In the event that Pegas or its personnel propose to make a public
disclosure or publication that pertains to work performed in whole or in part by
Xx. Xxxxxxx and to which Pegas has exclusive rights under this Agreement, Pegas
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agrees to give appropriate credit to Xx. Xxxxxxx for his contributions.
ARTICLE 5
WARRANTIES; INFRINGEMENT
5.1 Warranties. ETI and Xx. Xxxxxxx each represents and warrants to Pegas
the following:
(a) Xx. Xxxxxxx and ETI together have the full right and authority
to enter into this Agreement and grant the rights and licenses granted
herein;
(b) As of the Effective Date, ETI owns all right, title and interest
in and to the Patent Rights;
(c) Neither Xx. Xxxxxxx nor ETI have previously granted, and neither
will grant during the term of this Agreement, any rights in the Patent
Rights, Related Technology or other inventions that are inconsistent with
the rights and licenses granted to Pegas herein;
(d) As of the Effective Date, to the knowledge of Xx. Xxxxxxx and
ETI, but without conducting an independent investigation beyond the
pending applications for Patent Rights: (i) no claim within the existing
Patent Rights is dominated by a claim of any patent or patent application
of a third party in any country; and (ii) the Related Technology does not
and will not infringe any patent rights, trade secret rights or other
proprietary rights of any third party;
(e) As of the Effective Date, to the knowledge of Xx. Xxxxxxx and
ETI, except for certain claims made by Cleveland Clinic described in that
certain letter dated July 31, 1992 from Xx. Xxxxxxx to Pegas and
incorporated herein by reference; (i) there have been no actions, suits or
claims made or threatened (including, without limitation, claims by former
employers or collaborators) against Xx. Xxxxxxx, ETI or, to their
knowledge, any third party, with respect to the Patent Rights, the Related
Technology or the right of Xx. Xxxxxxx or ETI to enter into and perform
their obligations under this Agreement and (ii) there has been no legal
action, suit or investigation made, brought or threatened by or against
ETI or Xx. Xxxxxxx with respect to any matter that is material to the
performance by Xx. Xxxxxxx and ETI of their obligations under this
Agreement in any respect;
(f) To the knowledge of Xx. Xxxxxxx and ETI, as of the Effective
Date, all scientific data provided by ETI or Dr.
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Xxxxxxx to Pegas in tangible form is accurate, and ETI or Xx. Xxxxxxx has
disclosed to Pegas all information known to them that would be material
in evaluating the safety or efficacy of products based upon the
inventions claimed in the Patent Rights existing as of the Effective
Date; and
(g) Exhibit C includes all patents and patent applications in which
Xx. Xxxxxxx or ETI have any legal or beneficial right, title or interest
as of the Effective Date; and Exhibit A hereto lists all inventions
conceived by Xx. Xxxxxxx prior to the Effective Date that are within
the Field.
5.2 Limitation. EXCEPT FOR THE WARRANTIES IN SECTION 5.1, NEITHER ETI NOR
XX. XXXXXXX MAKES ANY OTHER WARRANTY WITH RESPECT TO THE PATENT RIGHTS OR THE
RELATED TECHNOLOGY, THE OPERATION, PERFORMANCE OR RESULTS OF USING THE PATENT
RIGHTS OR THE RELATED TECHNOLOGY, THE USES TO WHICH THE PATENT RIGHTS OR THE
RELATED TECHNOLOGY MAY BE PUT OR THAT THE PATENTED PRODUCTS OR OTHER ROYALTY
PRODUCTS WILL NOT INFRINGE PATENT RIGHTS OR OTHER RIGHTS OF THIRD PERSONS. THE
WARRANTIES MADE BY XX. XXXXXXX AND ETI IN SECTION 5.1 ARE MADE IN LIEU OF ALL
OTHER EXPRESS OR IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. UNDER NO
CIRCUMSTANCES, DURING OR AFTER THE TERM OF THIS AGREEMENT, WILL ETI OR XX.
XXXXXXX BE RESPONSIBLE FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES INCURRED BY OR
IMPOSED ON PEGAS BY REASON OF THE USE OF THE PATENT RIGHTS OR THE RELATED
TECHNOLOGY OR ARISING OUT OF THE USE, OPERATION OR PERFORMANCE OF ANY OF THE
PATENTED PRODUCTS OR OTHER ROYALTY PRODUCTS MANUFACTURED, USED OR SOLD BY PEGAS,
EXCEPT AS PROVIDED BELOW IN SECTION 5.3.
5.3 Effect of Representations and Warranties. It is understood that if the
representations and warranties made by Xx. Xxxxxxx and ETI under Section 5.1 are
not true and accurate, and Pegas incurs damages, liabilities, costs or other
expenses as a result of such falsity, ETI and Xx. Xxxxxxx shall indemnify and
hold Pegas harmless from and against any such damages, liabilities, costs or
expenses incurred as a result of such falsity, provided that ETI and/or Xx.
Xxxxxxx receives prompt notice of any claim resulting from or related to such
falsity. However, the parties agree that ETI's and Xx. Xxxxxxx'x liability under
this Section 5.3 shall not exceed the amounts paid and payable to them,
collectively, by Pegas under this Agreement, and that such payments (together
with the right to terminate this Agreement under Section 7.2 below) shall be the
sole remedy available to Pegas in event of a breach of the representations and
warranties made under Section 5.1 above.
5.4 Infringement by Third Parties. If either party determines that a third
party is making, using or selling a product that may infringe the Patent Rights,
that party will notify the
* Confidential treatment has been requested for marked portion
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other party in writing. Pegas shall have the exclusive right (itself or
through others), at its sole option, to bring suit against such alleged
infringer. All recoveries in such suit (whether initiated by Pegas or its
sublicensee, or brought as a counterclaim in a suit commenced by a third
party) will inure to the benefit of Pegas or its designee, less a [*] royalty
payment to ETI; such royalty will equal [*] of the amount recovered net of
all legal expenses. ETI and Xx. Xxxxxxx will cooperate with, and assist Pegas
and its designees in, the pursuit of any suit, including without limitation
by joining as a nominal party and executing such documents as may be
reasonably required. Pegas will reimburse ETI and Xx. Xxxxxxx for reasonable
out-of-pocket expenses paid to non-employee third parties directly as a
result of assistance so requested by Pegas and shall reasonably compensate
Xx. Xxxxxxx'x time requested by Pegas for such assistance.
5.5 Infringement by Patented Product(s); Other Royalty Products. If
Pegas or a sublicensee, distributor or dealer is sued by a third party
charging infringement of patent rights that dominate a claim of the Patent
Rights or that cover other Related Technology with respect to the
manufacture, use, distribution or sale of a Patented Product or an Other
Royalty Product, Pegas will promptly notify ETI. As between the parties to
this Agreement, Pegas will be entitled to control the defense in any such
action(s) and withhold [*] of the Royalties related to such Patented Product
or Other Royalty Product (as the case may be) otherwise payable to ETI and
use the withheld Royalties to reimburse the legal defense costs, attorneys'
fees and liability incurred in such infringement suit(s). Notwithstanding,
Pegas agrees to withhold only that portion of such Royalties as may
reasonably be necessary to reimburse amounts in accordance with this Section
5.5. If Pegas is required to pay a royalty to a third party to make, use,
distribute and/or sell a Patented Product or an Other Royalty Product (as the
case may be) as a result of a final judgment or settlement, the royalties
payable to ETI in relation to such Patented Product or Other Royalty Product
will be reduced as provided in Section 2.3. In the event Pegas is successful
in defending against any such claims or actions, once Pegas is compensated
for [*] of its legal defense costs in defending such claims or actions, Pegas
will return any remaining withheld Royalties to ETI.
ARTICLE 6
AGREEMENTS OF PEGAS
6.1 Indemnification. Except for claims covered by Section 5.3 above, Pegas
will, at Pegas's cost and expense, defend, indemnify and hold harmless Xx.
Xxxxxxx and his personal representatives and assigns and ETI, its shareholders,
officers,
* Confidential treatment has been requested for marked portion
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directors, employees, agents, representatives, successors and assigns from and
against any and all liabilities, damages, and expenses, including but not
limited to attorneys' fees, paid by such parties to third parties during or
after the term of this Agreement, by reason of any charge, claim or legal action
by any third person, including but not limited to an employee, agent or
representative of Pegas, relating to or arising out of injuries, deaths,
illnesses or related damages sustained or incurred by such person or entity that
results from or in any way, directly or indirectly, is connected with the
manufacture, sale or use of any Patented Product, Other Royalty Product or
Related Technology by Pegas; provided, however, that Pegas will defend and have
sole control over the defense of any action against such parties, and ETI and
Xx. Xxxxxxx will promptly notify Pegas of any action related to the Patented
Products, Other Royalty Products or Related Technology of which they become
aware. Notwithstanding the foregoing, Pegas shall have no liability under this
Section 6.1 to the extent that any injury, death, illness or damages are
reasonably attributable to the failure of ETI or Xx. Xxxxxxx to disclose to
Pegas material information known to ETI or Xx. Xxxxxxx (and not known to Pegas)
regarding the safety of such products or technology.
6.2 Patent Marking. Pegas will xxxx all Patented Products and Other
Royalty Products sold by it with the number of any applicable patent within the
Patent Rights in such form as satisfies the marking provisions of the United
States, and any other applicable patent laws and regulations. Until such time as
an applied for patent is issued, Other Royalty Products will be marked to
disclose that a patent application is pending. Pegas will comply with, and this
Agreement will be subject to, all laws, rules and regulations of the United
States that may be applicable to the disclosure or export of the Patent Rights
and/or the Related Technology and the sale or export of the Patented Products
and Other Royalty Products.
6.3 Insurance. During the term of this Agreement and for ten (10) years
after the end of the term of this Agreement, Pegas will obtain and maintain at
its expense product liability insurance, in which ETI and Xx. Xxxxxxx shall be
named as additional insureds against all claims, demands or causes of action
arising out of alleged defects in or out of the use of Patented Products or
Other Royalty Products made by Pegas. The limits of liability of such insurance
applicable to ETI and Xx. Xxxxxxx will not be less than the limits of liability
from time to time generally applicable to Pegas for comparable products
manufactured and sold by Pegas, but in no event will such limits be less than a
combined single limit of [*] prior to the first commercial sale in the
United States of a Patented Product or Other Royalty Product, or less than a
combined single limit of [*] thereafter. Notwithstanding the foregoing,
Pegas shall not be obligated to maintain product liability insurance under this
* Confidential treatment has been requested for marked portion
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Section 6.3 until the commencement of human clinical trials for a Patented
Product or an Other Royalty Product, or to the extent that Pegas self-insures
such liability and has the financial resources reasonably necessary to do so.
Each insurance policy will provide that it may not be cancelled or
amended without giving at least thirty (30) days prior notice to ETI and Xx.
Xxxxxxx. Upon request by ETI or Xx. Xxxxxxx, Pegas will provide ETI with a
certificate or certificates of its insurance company or companies evidencing
that such insurance has been obtained and setting forth the limits of liability.
Upon request by ETI or Xx. Xxxxxxx, not less than thirty (30) days prior to the
expiration of any such insurance, Pegas will provide ETI with an insurance
certificate or certificates of its insurance company or companies evidencing
that such insurance has been extended or that the new insurance coverage has
been obtained by Pegas and setting forth the limits of liability. With each such
certificate by an insurance company or companies, an officer of Pegas will
certify that the limits of liability applicable to ETI and Xx. Xxxxxxx are not
less than the limits of liability generally applicable to Pegas for comparable
products manufactured and sold by it. The insurance coverage obtained by Pegas
for ETI and Xx. Xxxxxxx, pursuant to the provisions of this Section, will be
provided by the same insurance companies that provide comprehensive general
liability insurance, including product liability insurance, to Pegas for the
Patented Products. If the companies providing insurance for Pegas are changed,
the companies providing insurance for ETI and Xx. Xxxxxxx will be changed so
that the same companies are providing insurance for both Pegas and ETI and Xx.
Xxxxxxx.
ARTICLE 7
TERM AND TERMINATION
7.1 Term. This Agreement shall become effective as of the Effective Date
and, unless earlier terminated pursuant to the other provisions of this Article
7, shall continue in full force and effect until the later of (i) the expiration
of the last-to-expire patent within the Patent Rights; (ii) the abandonment of
the last patent application within the Patent Rights; or (iii) the date
royalties cease to accrue under Section 2.2 above. Upon the expiration of this
Agreement, Pegas' license under Section 2.1 with respect to Related Technology
shall survive, provided that such license shall thereafter be non-exclusive.
7.2 Default. If either party materially breaches this Agreement (including
a material breach of any warranty under Section 5.1 above, which breach has a
materially adverse effect on the other party), the other party may elect to give
such party written notice describing the alleged default. If the party in
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default has not cured such default within thirty (30) days after receipt of such
notice or, assuming the default can be cured, commenced to cure such default
within such thirty (30) days after receipt of notice and cured such default
within ninety (90) days after receipt of notice, the notifying party will be
entitled, in addition to any other rights it may have under this Agreement, to
terminate this Agreement by giving notice to take effect immediately. If either
party receives notification from the other of a default and if the party alleged
to be in default notifies the other party in writing within thirty (30) days of
receipt of such default notice that it disputes the asserted default, the matter
will be submitted to arbitration as provided in Section 10.2 of this Agreement.
In such event, the non-breaching party shall not have the right to terminate
this Agreement until it has been determined in such arbitration proceeding that
the other party materially breached this Agreement, and the breaching party
fails to cure such breach within ninety (90) days after the conclusion of such
arbitration proceeding.
7.3 Termination by Pegas. Pegas may terminate this Agreement, in its
entirety or as to any particular patent or patent application within the Patent
Rights, at any time by giving ETI at least thirty (30) days prior written
notice; provided, however, that Pegas shall not exercise its right to terminate
under this Section 7.3 prior to the later of either (i) the second anniversary
of the Effective Date, or (ii) the end of the period for with Pegas provides
funding to ETI or Xx. Xxxxxxx'x employer under Article 3 herein. From and after
the effective date of a termination under this Section 7.3 with respect to a
particular patent or patent application, such patent(s) and patent
application(s) shall cease to be within the Patent Rights for all purposes of
this Agreement, and all rights and obligations of Pegas with respect to such
patent(s), patent application(s) and products covered thereby shall terminate.
Upon a termination of this Agreement in its entirety under this Section 7.3, all
rights and obligations of the parties shall terminate, except as provided in 7.5
below, and Pegas shall return to ETI all written materials provided by ETI or
Xx. Xxxxxxx to Pegas containing Confidential Information of ETI or Xx. Xxxxxxx;
provided, however, that Pegas may retain one (1) copy of such Confidential
Information for archival purposes. Upon such a termination of this Agreement,
Pegas will consider granting to ETI a license to improvements made by Pegas with
respect to the products for which Pegas has terminated all of its activities, on
such terms as may be mutually agreed.
7.4 Bankruptcy. To the extent permitted by applicable law, in the event
that:
(a) Pegas (i) applies for or consents to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of
all or substantial all of its
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property, (ii) makes a general assignment for the benefit of its
creditors, (iii) commences a case under the United States Bankruptcy Code,
or files a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, or composition or readjustment, with respect to
substantially all of its debts, or (iv) adopts any resolution of its board
of directors or stockholders for the purpose of effecting any of the
foregoing; or
(b) a proceeding or case is commenced without the application or
consent of Pegas that seeks a remedy described in (a) above and such
proceeding or case continues undismissed, or an order, judgment or decree
approving or ordering any of such remedies shall be entered and continue
unstayed and in effect, for a period of sixty (60) days from and after the
date service of process is effected upon Pegas;
then in any such event, all rights under this Agreement will be deemed to have
automatically expired as of a date seven (7) days prior to that event, except
those obligations concerning confidentiality, which shall survive termination of
this Agreement for any reason.
7.5 Survival. The provisions of Articles 1, 5, 6 and 10, and of Sections
3.4, 4.2(b), 4.4 and 4.6, shall survive and continue in effect after the
expiration or any termination of this Agreement, except that:
(a) Upon a termination under Section 7.2 above (or 9.3 below) by
reason of a breach by Pegas, or a termination of this Agreement in its
entirety under Section 7.3 above, the provisions of Article 5 and Section
4.6(a) shall terminate and not so survive;
(b) Upon a termination of this Agreement under Section 7.2 above by
reason of a breach by ETI or Xx. Xxxxxxx, all provisions of this Agreement
shall survive, except that Section 4.2(b) and Articles 3 and 9 shall
terminate and not so survive;
(c) Upon any termination of this Agreement, other than under Section
7.3 above, any sublicense granted hereunder shall survive, provided that
upon request by ETI, the sub-licensee promptly agrees in writing to be
bound by the applicable provisions of this Agreement. It is understood
that survival of such sublicense shall not imply any continued license to
Pegas hereunder; and in no event shall ETI or Xx. Xxxxxxx be required to
assume any obligations of Pegas that extend beyond or that are in any way
more burdensome than the obligations of ETI or Xx. Xxxxxxx to Pegas
hereunder; and
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(d) ETI's right to receive royalties that accrued prior to any
expiration or termination of this Agreement shall also survive.
ARTICLE 8
OTHER AGREEMENTS
Concurrent with the execution of this Agreement, the parties will cause
the execution of the Consulting Agreement and Stock Purchase Agreement, in the
forms attached hereto as Exhibits E and F, respectively. It is understood that
this Agreement is independent of such Consulting Agreement and such Stock
Purchase Agreement.
ARTICLE 9
DUE DILIGENCE
9.1 Obligation to Exploit. Pegas shall use commercially reasonable
efforts to bring one or more Patented Products and/or Other Royalty Products to
market and to meet the market demand therefor.
9.2 Milestones. Pegas shall be deemed not to have satisfied its
obligations under Section 9.1 above by, directly or through its sublicensees, if
Pegas fails to:
(a) submit an investigational new drug application covering [*]
Patented Product or Other Royalty Product to the United States Food
and Drug Administration ("FDA") or an equivalent application with a
corresponding authority in another country (each, an "IND") within [*]
after the Effective Date; or
(b) submit a New Drug Application covering a Patented Product or
Other Royalty Product to the FDA or an equivalent application with a
corresponding authority in another country (each, an "NDA") within [*]
after submission of an IND for such Patented Product or Other Royalty
Product; or
(c) begin to market such Patented Product or Other Royalty Product
within [*] after receiving approval of such NDA from the FDA or
corresponding authority in another country.
Notwithstanding the foregoing, if Pegas fails to meet the milestones specified
in this Section 9.2, such failure shall not be deemed a breach of Section 9.1
above if prudent and reasonable
* Confidential treatment has been requested for marked portion
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business considerations, or any event or condition beyond Pegas' reasonable
control, justifies a delay in achieving such milestones. It is understood that
meeting the milestones set forth in this Section 9.2 shall not alone satisfy all
obligation of Pegas under 9.1 above. As used herein, "IND" and "NDA" include
comparable filings with respect to medical devices.
9.3 Remedy. Upon Pegas' failure to perform in accordance with Section 9.1
above (itself or through sublicensees), and Pegas's failure to comply with its
obligations thereunder within one hundred and eighty days (180) of a
determination by an arbitration in accordance with Section 10.2 below that Pegas
did not meet its obligations under Section 9.1, ETI shall have the right to
terminate this Agreement upon written notice to Pegas. Notwithstanding the
foregoing, after Pegas or a sublicensee of Pegas has begun Phase III clinical
trials for a Patented Product or an Other Royalty Product, ETI shall not have a
right to terminate this Agreement under this Section 9.3, but instead, under the
same conditions set forth in the preceding sentence for termination of this
Agreement by ETI under this Section 9.3, ETI shall have the right to convert the
license granted hereunder to a non-exclusive license. This Section 9.3 sets
forth ETI's sole remedy for a failure by Pegas to meet its obligations under
Section 9.1 above.
9.4 Adjustment. If Pegas' rights under this Agreement become non-exclusive
under Section 9.3 above, and ETI grants a license under the Patent Rights to a
third party at a lower royalty rate than that set forth in Article 2 above, ETI
shall so notify PEGAS and the royalty rate payable by PEGAS hereunder shall be
reduced to such lower royalty rate.
ARTICLE 10
GENERAL
10.1 Notices. Any notice required or permitted to be given under this
Agreement will be sufficient if in writing and delivered personally or by
registered or certified mail, postage prepaid and return receipt requested, as
follows (or to such other address as the parties will designate by notice to the
other in accordance with this Section 10.1) and will be deemed to have been
given as of the date of personal delivery, or as of the date on the receipt or
as of the date returned unclaimed if sent by registered or certified mail:
-24-
If to Pegas: Pegas Pharmaceuticals, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Vice President,
Corporate Development
If to Xx. Xxxxxxx
or ETI: Xxxxxx X. Xxxxxxx, M.D.
Endoluminal Therapeutics, Inc.
0000 X. Xxxxxxx xxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
10.2 Arbitration. Any dispute, controversy or claim of either party
arising out of, in relation to, or in connection with this Agreement will be
finally settled by binding arbitration under the Licensing Agreement Arbitration
Rules of the American Arbitration Association by one (1) arbitrator appointed in
accordance with such rules. The arbitrator shall apply the laws of the State of
California to the merits of any dispute, controversy or claim, without regard to
conflicts of law principles. Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The place of
arbitration will be Tucson, Arizona if the arbitration is initiated because of a
claim by Pegas of breach by ETI or Xx. Xxxxxxx, and shall be in Santa Xxxxx
County, California, if the arbitration is initiated because of a claim by ETI or
Xx. Xxxxxxx of breach by Pegas. The parties agree that the arbitrator may grant
injunctive relief. Notwithstanding the foregoing, before appointment of the
arbitrator and in exceptional circumstances even thereafter, either party to
this Agreement may apply to any court of competent jurisdiction for a temporary
restraining order, preliminary injunction, or other interim or conservatory
relief, as necessary, without breach of this Section 10.2 and without any
abridgment of the power of the arbitrator. The parties agree that, any provision
of applicable law notwithstanding, they will not request, and the arbitrator
shall have no authority to award, punitive or exemplary damages against any
party except as provided in Article 5 herein. The costs of any arbitration,
including without limitation administrative and arbitrator's fees, shall be
shared equally by the parties. Each party shall bear the cost of its own
attorneys' fees and expert witness fees, if any.
10.3 Relationship of the Parties. The relationship of the parties is that
of independent contractors, and nothing contained herein will constitute the
parties to be partners, joint venturers, or agents of the other, or to create
the relationship of employer and employee.
10.4 Force Majeure. Neither party will be responsible to the other party
for non-performance or delay in performance of
-25-
any terms or conditions of this Agreement due to acts of God, acts of
governments, wars, riots, strikes, accidents in transportation, or other causes
beyond its reasonable control even though not similar in nature to those
enumerated.
10.5 Governing Law. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of California, without regard
to conflicts of law principals.
10.6 Assignment. This Agreement shall not be assignable by a party hereto
without the written consent of Pegas and Xx. Xxxxxxx, which consent shall not be
withheld unreasonably. Notwithstanding the foregoing, upon written notice to Xx.
Xxxxxxx, Pegas may transfer and assign this Agreement, without such consent, to
an entity that succeeds to substantially all of its business or assets relating
to this Agreement; and upon prior written notice to Pegas, ETI may assign to any
third party its right to receive Royalty payments hereunder. This Agreement
shall inure to and be binding upon successors and assigns of a party hereto.
10.7 Waiver. No waiver of any breach of any provision of this Agreement
will constitute a waiver of any prior, concurrent, or subsequent breach of the
same or any other provisions hereof, and no waiver will be effective unless made
in writing.
10.8 Modifications. This Agreement can be modified or amended only by
written agreement duly signed by the parties.
10.9 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision will be fully severable; this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions of this
Agreement will remain in full force and effect.
10.10 Complete Agreement. This Agreement sets forth the entire agreement
and understanding of the parties in respect of the transactions contemplated
hereby and supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
10.11 No Implied Obligations. It is understood that nothing in this
Agreement shall be deemed to prevent Pegas from commercializing products similar
to or competitive with Patented Products or Other Royalty Products; provided
that the foregoing does not relieve Pegas of any of its obligations under this
Agreement.
10.12 No Consequential Damages. EXCEPT AS PROVIDED IN ARTICLE 5, IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL,
-26-
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY BREACH OF THIS AGREEMENT.
10.13 Counterparts and Headings. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and both together
shall be deemed to be one and the same agreement. All headings, the cover page
and the table of contents in this Agreement are inserted for convenience of
reference only and shall not affect its meaning or interpretation.
10.14 Confidential Terms. Each party agrees not to disclose any terms of
this Agreement to any third party without Pegas', ETI's and Xx. Xxxxxxx'x
written consent, except as required by securities or other applicable laws, to
prospective investors and to such party's accountants, attorneys and other
professional advisors.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
XXXXXX X. XXXXXXX, M.D. PEGAS PHARMACEUTICALS, INC.
("Xx. Xxxxxxx") ("Pegas")
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxx
-------------------------- ----------------------------
Xxxxxx X. Xxxxxxx, M.D. Xxxxxxx X. Xxxx
Vice President
Corporate Development
ENDOLUMINAL THERAPEUTICS, INC.
("ETI")
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Xxxxxx X. Xxxxxxx, M.D.
President
-27-
EXHIBIT A
ADDITIONAL MATTER WITHIN FIELD
The Field also includes subject matter within the categories described
in items 1, 2, 3, 4, 5, 7, 8 and 16 below. The more detailed descriptions
summarize existing inventions, but are not intended to limit those categories.
1. Endoluminal Paving - Solid: 1,2,4,5,6,7,8,9,10,11
Gel: 27,28,29,30
2. Endomural Drug Delivery Systems - 12,13,14,15,16,17,18
3. Ectoluminal Drug Delivery Systems - 24
4. Bloodless Angioplasty - 3
5. Combination Intervention and Paving Systems - 25
7. Stents (other than pure metallic) - 19,21,23
8. Zone Isolation Catheter Systems - 26
16. Anti-sense Therapy - 50
1. ENDOLUMINAL PAVING - SOLID
1. Paving (PEPS) [*]
2. Paving (PEPS)
4. Paving Catheters
[*]
5. Paving Catheters - [*]
[*]
6. Paving Catheters - [*]
* Confidential treatment has been requested for marked portion
7. Paving Catheters - [*]
The orginal, basic paving catheter
8. Paving Catheters - [*]
[*]
9. Paving Catheter - [*]
[*]
10. Endoluminal Coating Catheter Systems - [*]
[*]
11. Endoluminal Coating Catheter Systems - [*]
[*]
ENDOLUMINAL PAVING - GEL
27. Hydrogel endoluminal drug liner [*]
[*]
28. Elastomeric endoluminal drug liner [*]
[*]
* Confidential treatment has been requested for marked portion
2
29. Bioerodible Endoluminal Gel paving - [*]
[*]
30. Endoluminal gels with co-mixed particles - [*]
[*]
2. ENDOMURAL DRUG DELIVERY SYSTEMS
12. Endomural Catheter Drug Delivery System - [*]
[*]
13. Endomural Catheter Drug Delivery System - [*]
[*]
* Confidential treatment has been requested for marked portion
3
14. Endomural Catheter Drug Delivery System - [*]
[*]
15. Endomural Catheter Drug Delivery System - [*]
[*]
16. Endomural Catheter Drug Delivery System - [*]
[*]
17. Endomural Catheter Drug Delivery System - [*]
[*]
* Confidential treatment has been requested for marked portion
4
18. Endomural Catheter Drug Delivery System - [*]
[*]
3. ECTOLUMINAL DRUG DELIVERY SYSTEMS
24. Ectoluminal Polymeric Drug delivery system and method - [*]
[*]
4. BLOODLESS ANGIOPLASTY
3. Focal Endovascular Drug Tx (Dual Balloon, Bloodless PTCA) [*]
5. COMBINATION INTERVENTION AND PAVING SYSTEMS
25. Method and devices for Treating Obstructive Endoluminal Disease
"Pave and Shave" [*]
[*]
7. STENTS (OTHER THAN PURE METALLIC)
19. Temporary Stent - [*]
[*]
* Confidential treatment has been requested for marked portion
5
21. "Combo" Stent - [*]
23. Polymeric Biodegradable Stents - [*]
[*]
8. ZONE ISOLATION CATHETER SYSTEMS
26. Isolation Catheter/Guidewire system - [*]
[*]
16. ANTI-SENSE THERAPY
50. Method of Preventing and Treating Restenosis via use of anti-sense
RNA [*]
[*]
* Confidential treatment has been requested for marked portion
6
EXHIBIT B
EXCLUDED INVENTIONS
EXCLUDED INVENTIONS
6. Mechanical Temporary Luminal Support Systems - 20
9. Biological Drug Delivery Systems - 31, 32
10. Tubular Compliance Determination Method and Systems - 33
11. Atherectomy Devices - 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44
12. Lesion Passivation (Pre- and Post-) Therapy Systems - 45, 46
13. Novel Angioplasty Balloon Systems - 47
14. Ultrasound Imaging Catheter Systems - 48
15. Organ Regeneration - 49
17. Oil Spill Containment Systems - 51
EXHIBIT C
EXISTING PATENT RIGHTS
COUNTRY TITLE SERIAL NO. FILING DATE
------- ----- ---------- -----------
[*]
* Confidential treatment has been requested for marked portion
PCT METHOD AND PCT/US91/ [*]
(EPC, JAPAN) APPARATUS FOR 01242
TREATMENT OF FOCAL
DISEASE IN HOLLOW
TUBULAR ORGANS AND
OTHER TISSUE LUMENS
-2-
* Confidential treatment has been requested for marked portion
APPENDIX F
Form of Stock Purchase Agreement
see attatched
EXHIBIT D
License Terms
In the event that Xx. Xxxxxxx or ETI ("Grantor") exercises the right to
grant an additional license under the Patent Rights to a licensee of a Dominated
Patent, the license under the Patent Rights shall be subject to and limited by,
and Grantor shall be bound by, the provisions set forth below. All capitalized
terms used in this Exhibit D and not otherwise defined shall have the meanings
assigned to them in the Agreement to which this Exhibit D is attached.
1. The license(s) to be granted by Grantor under the Patent Rights shall
be subject to the following:
(a) the license shall be a nonexclusive license under the Patent Rights to
practice inventions claimed in the Dominated Patent, and shall be granted only
to a licensee of Grantor under the Dominated Patent (a "Permitted Licensee");
(b) the license may include the right to grant sublicenses, but only to
manufacture, sell and/or use products developed in substantial part by the
Permitted Licensee;
(c) the license (and any sublicense) shall not include the right to
practice the Patent Rights at any time during the term of the license in
connection with the manufacture, sale or use of a Competitive Product; and
(d) the license shall not be assignable, except to a party that succeeds
to substantially all of the business or assets of the Permitted Licensee.
2. In the event that Grantor grants a license as contemplated under 1
above, Grantor shall be bound by the following:
(a) Grantor shall pay to Pegas a royalty on sales of Patented Products and
Other Royalty Products by the Permitted Licensee, or any sublicensee of the
Permitted Licensee, as follows:
(i) [*] of Net Sales received by the Permitted Licensee or its
affiliates upon their respective sales of Patented Products;
(ii) [*] of Net Sales received by the Permitted Licensee's
non-affiliate sublicensees upon their sales of Patented Products; and
* Confidential treatment has been requested for marked portion
(iii) [*] of the Net Revenues received by the Permitted Licensee,
its affiliates and sublicensees upon their respective sales of Other
Royalty Products.
Royalties under this Exhibit D shall be payable until the later of (1) the
expiration of the last-to-expire patent within the Patent Rights, or (2) fifteen
(15) years after the first accrual of any royalty under this Exhibit D on sales
by the Permitted Licensee. If a product that has been sold as a Patented Product
in a country ceases to be a Patented Product in such country prior to the end of
the period in clause (2) above, because all claims within the Patent Rights that
cover such product in such country have expired, the product shall thereafter be
deemed an "Other Royalty Product" in such country until the end of such period.
(b) "Net Sales" shall mean the gross receipts paid to the Permitted
Licensee, its affiliates or sublicensees for sales of Patented Product(s) or
Other Royalty Products (as the case may be) worldwide less (i) all trade,
quantity and cash discounts actually allowed and refunded, (ii) all credits and
allowances actually refunded on account of rejection, returns, billing errors or
retroactive price reductions, (iii) duties and tariffs paid by the seller, (iv)
freight and transportation costs paid by the seller, and (v) excise, sale and
use taxes and equivalent taxes paid by the seller.
(c) Sections 2.4 through 2.6 of the Agreement shall apply to Grantor with
respect to the royalties described above, mutatis mutandis; provided that the
currency rate for conversion under 2.5(c) shall be the rate used by the
Permitted Licensee in its report to Grantor.
* Confidential treatment has been requested for marked portion
-2-
APPENDIX E
Form of Consulting Agreement
see attached
[LETTERHEAD]
August 22, 1997
Xxxxxx X. Xxxxxxx, M.D.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxxxx:
We are pleased to have you continue to participate as a consultant and
advisor to Focal, Inc. I hope that you will agree that our work together over
the past four years has been interesting and rewarding; I know that I personally
have been pleased with the valuable input that you have provided to the company.
As part of this consulting arrangement, you will continue as a consultant and
advisor to Focal in the field of interventional cardiology, restenosis therapy
and endoluminal paving.
As a consultant, we will pay you $20,000 annually, to be paid monthly to
the University of Arizona. Focal will pay the University a overhead charge not
to exceed 20% for their role in disbursing these fees to you. This letter is an
amendment to the May 5, 1997 Letter Ammendment to the Agreement for Consulting
Services first dated and executed on August 7, 1992 and serves to extend the
term of this agreement for one year.
As a consultant you shall:
1. Advise Focal on the direction for the scientific program for
restenosis therapy and be available for review of the company's
research plans and results;
2. Be available to consult to the company in the area of physician and
patient needs in the field of interventional cardiology;
3. Attend outside meetings and scientific conferences as requested by
the company to support the scientific, financial and regulatory
advancements of the company; and
4. Agree to avoid conflicts of interest, and notify Focal prior to
working with any other company in the areas of the interventional
cardiology, restenosis therapy or endoluminal paving.
To continue your consultancy, please sign below and return one of the
originals to me; the other is for your files. Your consultancy will have a
duration of one year, effective on August 1, 1997 and ending July 31, 1998,
unless either you or Focal terminates this consulting agreement. The term of the
agreement may be extended by written agreement, and the agreement may be
terminated by either party for any reason on 30 days notice.
X. Xxxxxxx, M.D.
August 22, 1997
Page 2
All of us at Focal are pleased to have you continue as a consultant.
Sincerely,
/s/ Xxxxxxxx X. Xxxx
-----------------------------------
Xxxxxxxx X. Xxxx
Director, Cardiovascular Programs
Accepted and Agreed to:
For Focal, Inc.
/s/ Xxxxxx X. Xxxxxxx /s/ [Illegible]
---------------------------- ----------------------------
Xxxxxx X. Xxxxxxx, M.D. Name
9/2/97 8/29/97
---------------------------- ----------------------------
Date Date
