License Amendment

L-024-2006/1

WHEREAS, the National Institutes of Health (“NIH”), on behalf of the Public
Health Service (“PHS”) and the Department of Health and Human Services (“DHHS”),
and NeoPharm, Inc. (“Licensee”) entered into license agreement (L-024-2006/0;
the “Agreement”) effective May 30, 2006 under which HHS Ref. E-173-1992/0
corresponding to US. Patent 5,720,720; entitled “Convection-Enhanced Drug
Delivery,” was licensed nonexclusively to be used for the administration of
therapeutics to the central nervous system, including IL-13PE:38QQR compounds
and compositions.

WHEREAS, Licensee desires to broaden the nonexclusive field of use granted in
order for the Agreement to be in parity with Licensee’s other executed or
pending agreements with PHS that are not limited by indication.

WHEREAS, Licensee desires to obtain the rights to sublicense the Licensed Patent
Rights in conjunction with the sublicensing of a therapeutic for administration
using the Licensed Process.

WHEREAS, Licensee desires to extend their benchmarks to better conform to
commercialization expectations.

NOW THEREFORE, in consideration of the foregoing, PHS and Licensee hereby agree
to the following provisions and to amend the Agreement as follows:

All bolded items defined in Agreement remain in effect under this License
Amendment.

Paragraph 1.02 is replaced in its entirety with the following:

1.02

 

By assignment of rights from PHS employees and other inventors, DHHS, on behalf
of the United States Government, owns intellectual property rights claimed in
any United States and/or foreign patent applications or patents corresponding to
the assigned inventions.  All rights, titles and interests in the Licensed
Patent Rights are owned by DHHS by assignment of rights from the inventors of
the Licensed Patent Rights.  DHHS also owns any tangible embodiments of these
inventions actually reduced to practice by PHS.

 

 

 

Paragraph 2.08 is replaced in its entirety with the following:

 

2.08

 

“Drug” means any pharmaceutical or pharmaceutical composition developed or
licensed by Licensee for treating Cancer.

 

 

 

Paragraph 2.10 is replaced in its entirety with the following:

 

 

 

2.10

 

“Net Sales” means the total gross receipt for sales of Drug administered or
recommended for administration using the Licensed Process for the treatment of
cancer by or on behalf of Licensee and from making available to others without
sale orother dispositions, whether invoiced or not, less returns and allowances,
packing costs, insurance costs,

 

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freight out, taxes or excise duties imposed on the transaction (if separately
invoiced), and wholesaler and cash discounts in amounts customarily in the trade
to the extent actually granted.  No deductions shall be made for commissions
paid to individuals, whether they are with independent sales agencies or
regularly employed by Licensee, or sublicensees, and on its payroll, or for the
cost of collections.

 

 

 

Article 4 — Sublicensing is replaced in its entirety with the following:

 

 

 

4.01

 

Upon written approval by PHS, which approval shall not be unreasonably withheld,
Licensee may enter into sublicensing agreements under the Licensed Patent Rights
provided that said sublicense is also in conjunction with the sublicense of
Drug.

 

 

 

4.02

 

Licensee agrees to pay PHS additional sublicensing royalties of One and One-half
percent (1.5%) but not to exceed Two-Hundred Thousand US. Dollars (USD$200,000),
on the fair market value of any up-front consideration received for granting
each sublicense within sixty (60) days of the execution of each sublicense.

 

 

 

4.03

 

Licensee agrees that any sublicenses granted by it shall provide that the
obligations to PHS under Paragraphs 5.01, 8.01, 10.01-10.02, 12.05 and
13.07-13.08 of this Agreement shall be binding on the sublicensee as if it were
a party to this Agreement. Licensee further agrees to attach copies of these
Paragraphs to all sublicense agreements.

 

 

 

4.04

 

Any sublicenses granted by Licensee shall provide for the termination of the
sublicense, or the conversion to a license directly between such sublicensees
and PHS, at the option of the sublicensee, upon termination of this Agreement
under Article 13. Such conversion is subject to PHS approval and contingent upon
acceptance by the sublicensee of the remaining provisions of this Agreement.

 

 

 

4.05

 

Licensee agrees to forward to PHS a copy of each fully executed sublicense
agreement postmarked within thirty (30) days of the execution of such agreement.
To the extent permitted by law, PHS agrees to maintain each such sublicense
agreement in confidence.

 

 

 

4.06

 

Licensee agrees to forward semi-annually to PHS a copy of progress reports
pursuant under Article 9 received by Licensee from its sublicensees during the
preceding half-year period as shall be pertinent to a royalty accounting to PHS
by Licensee for activities under the sublicense.

 

 

 

Paragraph 6.07 is replaced in its entirety with the following:

 

6.07

 

On sales of Drug administered or recommended for administration using a Licensed
Process by Licensee or its sublicensees made in other than an arm’s-length
transaction, the value of the Net Sales attributed under this Article 6 to such
a transaction shall be that which would have been received in all arm’s-length
transaction, based on sales of like quantity and quality products on or about
the time of such transaction.  This provision applies only to commercial sales
and excludes all charitable distributions of Drug.

 

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Paragraph 9.02 is replaced in its entirety with the following:

 

9.02

 

Licensee shall provide written annual reports on its product development
progress or efforts to commercialize under the Commercial Development Plan for
each of the Licensed Fields of Usewithin sixty (60) days after December 31 or
each calendar year.  These progress reports shall include, but not be limited
to: progress on research and development, status of applications for regulatory
approvals, manufacturing, sublicensing, marketing, importing, and sales during
the preceding calendar year, as well as, plans for the present calendar year. 
PHS also encourages these reports to include information on any of Licensee’s
public service activities that relate to the Licensed Patent Rights.  If
reported progress differs from that projected in the Commercial Development Plan
and Benchmarks, Licensee shall explain the reasons for these differences.  In
the annual report, Licensee may propose amendments to the Commercial Development
Plan, acceptance of which by PHS may not be denied unreasonably.  Licensee
agrees to provide any additional information reasonably required by PHS to
evaluate Licensee’s performance under this Agreement.  Licensee may amend the
Benchmarks at any time upon written approval by PHS. PHS shall not unreasonably
withhold approval of any request of Licensee to extend the time periods of this
schedule if the request is supported by a reasonable showing by Licensee of
diligence in its performance under the Commercial Development Plan and toward
bringing the Licensed Products to the point of Practical Application as defined
in 37 CFR §404.3(d).  Licensee shall amend the Commercial Development Plan and
Benchmarks at the request of PHS to address any Licensed Fields of Use not
specifically addressed in the plan originally submitted.

 

 

 

Paragraphs 12.05 and 12.06 are replaced in its entirety with the following:

 

 

 

12.05

 

Licensee shall indemnify and hold PHS, its employees, students, fellows, agents,
and consultants harmless from and against all liability, demands, damages,
expenses, and losses, including but not limited to death, personal injury,
illness, or property damage in connection with or arising out of:

 

 

 

 

(a)

the use by or on behalf of Licensee, its sublicensees, directors, employees, or
third parties of any Licensed Patent Rights; or

 

(b)

the design, manufacture, distribution, or use of any Licensed Products, Licensed
Processes or materials by Licensee, or other products or processes developed in
connection with or arising out of the Licensed Patent Rights.

 

 

 

12.06

 

Licensee agrees to maintain a liability insurance program consistent with sound
business practice.

 

 

 

Paragraph.13. 08 is replaced in its entirety with the following:

 

 

 

13.08

 

Within ninety (90) days of expiration or termination of this Agreement under
this Article 13, a final report shall be submitted by Licensee. Any royalty
payments, including those incurred but not yet paid (such as the full minimum
annual royalty), and those related to patent expense, due to PHS shall become
immediately due and payable upon termination or expiration.  If terminated under
this Article 13, sublicensees may elect to convert their sublicenses to direct
licenses with PHS pursuant to Paragraph 4.3.  Unless otherwise specifically
provided for under this Agreement, upon termination or expiration of this
Agreement, Licensee shall return all Licensed Products or other materials
included within the Licensed Patent Rights to PHS or provide PHS with
certification of the destruction thereof.

 

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Appendix B — “Licensed Fields of Use and Territory” is replaced in its entirety
with the following:

Licensed Fields of Use: Nonexclusive for using the licensed Process to
administer Drug to treat cancer.

Licensed Territory: The United States of America including its Territories,
Commonwealths and Possessions.

Appendix E — “Benchmarks and Performance” is replaced in its entirety with the
following:

Licensee agrees to the following Benchmarks for its performance under this
Agreement and within thirty (30) days of achieving a Benchmark, agrees to notify
PHS that the Benchmark has been achieved. Pursuant to these Benchmarks, the
efforts of a sublicensee shall be considered the efforts of Licensee .

·                   By September 30, 2007, Licensee will submit an application
for approval by the U.S. Food and Drug Administration of the use of convection
enhanced delivery for administering Drug in the treatment of cancer.

·                   By April 30, 2008, Licensee will achieve a First Commercial
Sale of Drug administered by or recommended for administration by convection
enhanced delivery.

In all other respects, the Agreement effective May 30, 2006 remains in full
force and effect.

The effective date of this License Amendment shall be the date when the last
party hereto signs.

SIGNATURES BEGIN ON NEXT PAGE

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SIGNATURE PAGE

For PHS:

/s/ Steven M. Ferguson

 

08/11/06

 

Steven M. Ferguson

Date

Director, Division of TechnologyDevelopment and Transfer

Office of Technology Transfer

 

National Institutes of Health

 

 

Mailing Address for Agreement and License Amendment notices:

Chief, Monitoring & Enforcement Branch, DTDT

Office of Technology Transfer

National Institutes of Health

6011 Executive Boulevard, Suite 325

Rockville, Maryland 20852-3804 U.S.A

For Licensee (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of Licensee made or referred to
in this document are truthful and accurate.):

By:

/s/ Guillermo Herrera

 

08/21/06

 

Signature of Authorized Official

Date

 

Guillermo Herrera

 

 

Printed Name

 

 

 

CEO, President

 

 

Title

 

 

I.              Official and Mailing Address for Agreement and License Amendment
notices:

NeoPharm

1850 Lakeside Drive

Waukegan, IL  60085

II.                                     Official and Mailing Address for
Financial notices (Licensee’s contact person for royalty payments)

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Timothy P. Walbert

 

 

 

 

Name

 

 

 

Executive Vice President

 

 

 

Title

 

 

 

 

 

 

 

 

 

 

Email Address:

twalbert@neopharm.com

Phone:

(847)406-1710

Fax:

(847) 406-1734

 

Any false or misleading statements made, presented, or submitted to the
Government, including any relevant omissions, under this License Amendment and
during the course of negotiations of this License Amendment are subject to all
applicable civil and criminal statutes including Federal statutes 31 U.S.C.
§§3801-3812 (civil liability) and 18 U.S.C. §1001 (criminal liability including
fine(s) or imprisonment).

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