Exhibit 10.7

 

EXECUTION COPY

EXHIBIT F

 

FORTRESS RESTRICTIVE COVENANT AGREEMENT

 

THIS FORTRESS RESTRICTIVE COVENANT AGREEMENT (as may be amended or modified from
time to time, this “Agreement”) is made and entered into as of November 12,
2018, by and between InvaGen Pharmaceuticals Inc., a New York corporation
(“Buyer”), and Fortress Biotech, Inc., a Delaware corporation (“Fortress”).

 

WHEREAS, Avenue Therapeutics, Inc., a Delaware corporation (the “Company”),
Madison Pharmaceuticals Inc., and Buyer have entered into that certain Stock
Purchase and Merger Agreement, dated as of the date hereof (the “SPMA”); and

 

WHEREAS, Fortress is receiving a substantial economic benefit from the
transactions contemplated by the SPMA, and Buyer would not have entered into the
SPMA without the execution and delivery by Fortress of this Agreement.

 

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:

 

1.          Definitions. Capitalized terms used but not defined in this
Agreement shall have the respective meanings ascribed to them in the SPMA.

 

2.           Restrictive Covenants.

 

(a)          For a period commencing on the date hereof and ending on the
earlier of (i) (x) the termination of the SPMA in accordance with its terms if
at the time of such termination the First Stage Closing has not occurred or (y)
the date that is five years after the termination of the SPMA in accordance with
its terms if at the time of such termination the First Stage Closing has
occurred and (ii) five years after the Second Stage Closing Date (such period,
the “Term”), Fortress shall (1) not (and Fortress shall cause its Affiliates,
other than the Designated Affiliates, not to), on its own or through any other
Person, engage or participate in, or render services to (whether as owner,
operator, member, stockholder, manager, consultant, strategic partner, employee
or otherwise) any Person engaged in, the business of hospital administered pain
management anywhere in the world other than Canada, Central America or South
America, including licensing, acquiring or seeking to develop Intellectual
Property relating in any manner to hospital administered pain management,
including by means of a collaboration agreement, partnership, joint venture, or
other investment, or through sponsorship, management, research or development
arrangements and (2) be deemed to be in breach of this Agreement if either of
the Designated Affiliates, on its own or through any other Person, engages or
participates in, or renders services to (whether as owner, operator, member,
stockholder, manager, consultant, strategic partner, employee or otherwise) any
Person engaged in, a business involving an FDA AP-rated 505(b)(2) NDA relating
to the Product or an ANDA relating to the Product anywhere in the world other
than Canada, Central America or South America, including licensing, acquiring or
seeking to develop Intellectual Property relating in any manner to an FDA
AP-rated 505(b)(2) NDA relating to the Product or an ANDA relating to the
Product, including by means of a collaboration agreement, partnership, joint
venture, or other investment, or through sponsorship, management, research or
development arrangements. During the Term, Fortress shall not (and Fortress
shall cause its Affiliates not to), directly or indirectly, use or transfer to
another Person, or facilitate the use or transfer by or to another Person, of
any Investigational New Drug, NDA, “regulatory documents”, “essential documents”
or any amendments thereto, any data or information contained in the files
submitted to the FDA, or any other information or data, in each case, related to
the Product or improvements thereon.

 

 

 

 

(b)         During the Term, Fortress shall not (and Fortress shall cause its
Affiliates, other than the Designated Affiliates, not to) directly or
indirectly, (i) solicit for employment, recruit or hire, either as an employee
or a consultant, any employee, consultant or independent contractor of the
Company (other than as described in Schedule 1 hereto), Buyer, Cipla Limited
(“Cipla”) or any of their respective Affiliates who was an employee, consultant
or independent contractor of the Company, Buyer, Cipla or any of their
respective Affiliates as of the date of this Agreement or at any time thereafter
and prior to the expiration of the Term to become an employee or consultant of,
or otherwise provide services to, Fortress or any of its Affiliates, (ii)
interfere or attempt to interfere with any transaction, agreement, prospective
agreement, business opportunity or business relationship relating to the Product
in which the Company, Buyer, Cipla or any of their respective Affiliates is
involved in as of the date of this Agreement or at any time thereafter and prior
to the expiration of the Term or (iii) otherwise engage or participate in any
effort or act to induce any Person to discontinue a relationship with the
Company, Buyer or Cipla or any of their respective Affiliates. During the Term,
Fortress shall be deemed to be in breach of this Agreement if either of the
Designated Affiliates directly or indirectly, interferes or attempts to
interfere with any transaction, agreement, prospective agreement, business
opportunity or business relationship relating to the Product in which the
Company, Buyer, Cipla or any of their respective Affiliates is involved in as of
the date of this Agreement or at any time thereafter and prior to the expiration
of the Term.

 

(c)          Fortress shall (and Fortress shall cause its Affiliates and
Representatives to) keep confidential and not disclose to any other Person or
use any information, technology, know-how, trade secrets, product formulas,
industrial designs, franchises, inventions or other industrial and intellectual
property in Fortress’ possession or control regarding the Company or its
businesses (unless and to the extent compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other Legal
Requirements). The obligations of Fortress under this Section 2(c) shall not
apply to information that (i) is obtained from public information, (ii) is
received from a third party after the date hereof not, to the actual knowledge
of Fortress after reasonable investigation, subject to any obligation of
confidentiality with respect to such information, or (iii) is or becomes known
to the public, other than through a breach of this Agreement.

 

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(d)          For purposes of this Agreement, “Designated Affiliate” shall mean
each of Mustang Bio, Inc., a Delaware corporation (“Mustang”), and Checkpoint
Therapeutics, Inc., a Delaware corporation (“Checkpoint”), only if (i) none of
Fortress or its Affiliates (other than Mustang or Checkpoint) or Representatives
have, directly or indirectly, provided guidance or encouragement to, or
suggested, requested or directed to, take any action which would constitute a
failure to comply with this Agreement if taken by Fortress and (ii) any designee
of Fortress or any of its Affiliates on the board of directors (or similar
governing body) of Mustang or Checkpoint, as applicable, shall have recused
himself or herself from participating in discussions or voting with respect to
the action which, but for the exception for Designated Affiliates in Section 2,
would constitute a failure to comply with this Agreement.

 

(d)          Fortress hereby acknowledges and agrees that the provisions of this
Agreement shall supersede the provisions of Section 1.3.2 of the MSA (as defined
in the Waiver Agreement).

 

3.           Representations and Warranties. Fortress represents and warrants to
Buyer as follows:

 

(a)         (i) It is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, (ii) it is duly licensed and qualified to
conduct its business in each jurisdiction where the nature of the properties
owned, leased or operated by it and the business transacted by it requires such
licensing or qualification, except where any such failures to be so qualified or
licensed have not had, or are not reasonably likely to have, a material adverse
effect on the ability of Fortress to perform its obligations under or to
consummate the transactions contemplated by this Agreement, and (iii) it holds
all necessary corporate power and authority to own, license and operate its
assets and properties, to conduct its business, to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.

 

(b)          The execution and delivery of this Agreement by Fortress and the
performance by Fortress of its obligations hereunder have been duly authorized
by all requisite action on the part of Fortress, and no other actions or
proceedings on the part of Fortress are necessary to authorize the execution and
delivery of this Agreement.

 

(c)          This Agreement has been duly executed and delivered by Fortress and
constitutes the valid and binding agreement of Fortress, enforceable against
Fortress in accordance with its terms.

 

(c)          The execution or delivery by Fortress of this Agreement or the
performance by Fortress of its obligations under this Agreement will not (i)
result in any breach of any provision of Fortress’ certificate of incorporation
or bylaws, as amended, (ii) result in any breach of, require (with or without
notice or lapse of time or both) any payment, consent or notice or constitute a
default (or give rise to any right of purchase, termination, amendment,
acceleration or cancellation) under any Contract or order or judgment to which
Fortress is a party or by which it or its assets are bound, (iii) result in the
creation of an Encumbrance, or (iv) violate any applicable Legal Requirement,
other than, in the case of clauses (ii) through (iv), such breaches, defaults or
violations that have not had, or are not reasonably likely to have, a material
adverse effect on the ability of Fortress to perform its obligations under or to
consummate the transactions contemplated by this Agreement.

 

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4.           Remedies. Buyer and Fortress acknowledge and agree that the
remedies at law for any breach by Fortress of any of the covenants or provisions
of this Agreement are inadequate, and that Buyer shall be entitled to an
injunction, specific performance or other equitable relief against Fortress in
the event of any breach, Fortress agrees to reimburse Buyer any and all fees,
costs and expenses (including reasonable attorneys’ fees) incurred for purposes
of enforcing this Agreement in the event such enforcement is either consented to
by Fortress or ordered by a court of competent jurisdiction. Without limiting
the foregoing, in the event of a breach or threatened breach by Fortress of the
terms of this Agreement, Buyer shall be entitled, if it so elects, to: (a) have
the provisions of this Agreement specifically enforced by any court having
equity jurisdiction or to enjoin Fortress from any further violation of this
Agreement; (b) require Fortress to account for and pay over to Buyer all
compensation, profits, monies, accruals, increments or other benefits derived or
received by Fortress as the result of any transactions constituting a breach of
this Agreement, and Fortress hereby agrees to promptly account for and pay over
such benefits to Buyer; and (c) institute legal proceedings to obtain other
monetary damages for any such breach. Without limiting the foregoing, Buyer
shall be entitled to set-off any amount owed by Fortress under this Agreement as
a result of its breach hereof against any amount owed to Fortress or any of its
Affiliates under the SPMA or any Ancillary Agreement. Each of the rights and
remedies enumerated above shall be independent of the others, and shall be
severally enforceable, and all of such rights and remedies shall be in addition
to, and not in lieu of, any other rights and remedies available to Buyer at law
or in equity.

 

5.           Severability. In the event that any of the covenants or provisions
of Section 2 hereof may be determined to be invalid, illegal or unenforceable by
a court of competent jurisdiction in a final non-appealable judgment or order as
a result of any time or scope (geographic or otherwise) limitations provided
therein, Buyer and Fortress expressly agree that such covenants and provisions
shall be effective nevertheless for the greatest period of time and within the
greatest scope (geographic or otherwise) that would not render them invalid,
illegal or unenforceable, and in such event Fortress hereby consents that such
provisions may be judicially modified accordingly in any proceeding brought to
enforce the provisions of Section 2 hereof. Any other covenant or provision of
this Agreement that may be determined to be invalid, illegal or unenforceable
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability without invalidating or rendering unenforceable any remaining
provisions of this Agreement.

 

6.           Tolling Period. The obligations contained in Section 2 hereof shall
be extended by any length of time during which Fortress is or was in breach of
any such obligations.

 

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7.           Acknowledgments. Fortress hereby acknowledges and agrees that (a)
this Agreement (including the time, scope (geographic or otherwise) or any other
limitations provided in Section 2 hereof) is reasonable and necessary for the
protection of the immediate interests of Buyer, and that any violation of this
Agreement would cause substantial injury to Buyer and that Buyer would not have
entered into the SPMA, this Agreement and the other Ancillary Agreements without
receiving the additional consideration offered by Fortress in binding itself to
this Agreement; (b) the scope of this Agreement, in terms of duration,
geographic area, activities restricted and otherwise, is reasonable; and (c)
counsel for Fortress has reviewed this Agreement.

 

8.           Miscellaneous.

 

a.Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter of this Agreement and
supersedes any and all prior agreements, negotiations, correspondence,
undertakings, understandings and communications of the parties hereto with
respect to the subject matter of this Agreement.

 

b.Transaction Costs. Except as otherwise provided herein, the parties to this
Agreement will pay their own costs and expenses (including legal, accounting and
other fees) relating to this Agreement.

 

c.Modifications. Any amendment or modification to this Agreement, including this
undertaking itself, shall only be valid if effected by an instrument or
instruments in writing and shall be effective against each of the parties hereto
that has signed such instrument or instruments. The parties agree that they
jointly negotiated and prepared this Agreement and that this Agreement will not
be construed against any party on the grounds that such party prepared or
drafted the same.

 

d.Notices. Notices will be deemed to have been received (a) upon receipt of a
registered letter, (b) three Business Days following proper deposit with an
internationally recognized express overnight delivery service, or (c) in the
case of transmission by email, as of the date so transmitted (or if so
transmitted after normal business hours at the place of the recipient, on the
Business Day following such transmission):

 

If to Fortress:

 

Fortress Biotech, Inc.

2 Gansevoort Street, 9th Floor

New York, NY 10014

Attn: Dr. Lindsay Rosenwald, M.D.

Email: lrosenwald@fortressbiotech.com

 

With a copy (which shall not constitute notice) to:

 

Fortress Biotech, Inc.

2 Gansevoort Street, 9th Floor

New York, NY 10014

Attn: Samuel W. Berry, Esq.

Email: sberry@fortressbiotech.com

 

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If to Buyer:

 

InvaGen Pharmaceuticals Inc.

Site B, 7 Oser Ave.

Hauppauge, NY 11788

c/o

A.S. Kumar, Esq.

Global General Counsel

Cipla Ltd.

Cipla House, Peninsula Business Park,

Ganapatrao Kadam Marg, Lower Parel West,

Mumbai, Maharashtra 400013, India

Email: as.kumar@cipla.com and cosecretary@cipla.com

 

With a copy (which shall not constitute notice) to:

 

InvaGen Pharmaceuticals Inc.

Site B, 7 Oser Ave.

Hauppauge, NY 11788

c/o

Nishant Saxena

Global Chief Strategy Officer

Cipla Ltd.

Cipla House, Peninsula Business Park,

Ganapatrao Kadam Marg, Lower Parel West,

Mumbai, Maharashtra 400013, India

Email: nishant.saxena@cipla.com

 

With a copy (which shall not constitute notice) to:

 

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, NY 10004-1482

Attn: Kenneth A. Lefkowitz

Email: ken.lefkowitz@hugheshubbard.com

 

or to such other address as may be hereafter communicated in writing by the
parties in a notice given in accordance with this Section 8(d), which address
shall then apply to the respective notice provisions of the SPMA and all other
Ancillary Agreements.

 

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e.Public Announcements. Except as required by Legal Requirements or by the
requirements of any stock exchange on which the securities of a party hereto or
any of its Affiliates are listed, no party to this Agreement will make, or cause
to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media with respect to the foregoing without prior notification to the
other parties, and the parties to this Agreement will consult with each other
and cooperate as to the form, timing and contents of any such press release,
public announcement or disclosure.

 

f.Severability. Each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable Legal Requirements, but if
any provision of this Agreement is found to be unenforceable or invalid under
applicable Legal Requirements, such provision will be ineffective only to the
extent of such unenforceability or invalidity, and the parties will negotiate in
good faith to modify this Agreement so that the unenforceable or invalid
provision is replaced by such valid and enforceable provision which the parties
consider, in good faith, to match as closely as possible the invalid or
unenforceable provision and to achieve the same or a similar economic effect and
to give effect to the parties’ original intent. The remaining provisions of this
Agreement will continue to be binding and in full force and effect.

 

g.Assignment. No party hereto may assign, in whole or in part, or delegate all
or any part of its rights, interests or obligations under this Agreement without
the prior written consent of the other party. Any assignment or delegation made
without such consent will be void. Notwithstanding the foregoing, Buyer shall be
entitled to (a) assign its rights under this Agreement to any one of its
Affiliates, and (b) assign any or all of its rights and obligations under this
Agreement (in whole or in part) as collateral security in a financing
transaction.

 

h.Governing Law. This Agreement and any claims or causes of action pursuant to
it will be governed by and construed in accordance with the laws of the State of
Delaware, without regard for its principles of conflict of laws.

 

i.Specific Performance. Each party acknowledges and agrees that the other party
would be irreparably damaged if the provisions of this Agreement are not
performed in accordance with their terms and that any breach of this Agreement
and the non-consummation of the transactions contemplated hereby by either party
could not be adequately compensated in all cases by monetary damages alone.
Accordingly, in addition to any remedy to which such other party may be entitled
under Section 8(j), provisional measures and injunctive relief necessary to
protect the possibility of each party to seek specific performance from the
other from the tribunal referred to in Section 8(j) can be sought from any court
of competent jurisdiction. Each of the parties hereto (i) agrees that it shall
not oppose the granting of any such relief and (ii) hereby irrevocably waives
any requirement for the security or posting of any bond in connection with any
such relief (it is understood that clause (i) of this sentence is not intended
to, and shall not, preclude any party hereto from litigating on the merits the
substantive claim to which such remedy relates).

 

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j.Submission to Jurisdiction. Each of the parties hereto irrevocably agrees that
any Proceeding with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect
of this Agreement and the rights and obligations arising hereunder brought by
any other party hereto or its successors or assigns, shall be brought and
determined exclusively in the Court of Chancery of the State of Delaware, or in
the event (but only in the event) that such court does not have subject matter
jurisdiction over such action or proceeding, in the federal courts sitting in
the State of Delaware. Each of the parties hereto agrees that mailing of process
or other papers in connection with any such action or proceeding in the manner
provided in Section 8(d), or in such other manner as may be permitted by
applicable Legal Requirements, will be valid and sufficient service thereof.
Each of the parties hereto hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court or tribunal other than
the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim, or
otherwise, in any action or proceeding with respect to this Agreement and the
rights and obligations arising hereunder, or for recognition and enforcement of
any judgment in respect of this Agreement and the rights and obligations arising
hereunder: (a) any claim that it is not personally subject to the jurisdiction
of the above named courts for any reason other than the failure to serve process
in accordance with this Section 8(j); (b) any claim that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise); and (c) to the fullest extent permitted by the applicable Legal
Requirements, any claim that (i) the suit, action or proceeding in such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper, or (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts.

 

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k.Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION
ARISING OUT OF OR RELATING TO THIS AGREEMENT or the transactions contemplated
hereby. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF
A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER;
(C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8(k).

 

l.Waiver. Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition, and no waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty, covenant or agreement hereunder or affect in any way any
rights arising by virtue of any such prior or subsequent occurrence. No failure
or delay of any party in exercising any right or remedy hereunder shall operate
as a waiver thereof, and no waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.

 

m.Counterparts; Facsimile Signature. This Agreement may be executed in one (1)
or more counterparts, by original or facsimile (or other such electronically
transmitted) signature, each of which will be deemed an original, but all of
which will constitute one and the same instrument. Any party executing this
Agreement by facsimile (or other such electronically transmitted) signature
shall, upon request from another party hereto, promptly deliver to the
requesting party an original counterpart of such signature.

 

n.Rights Cumulative. All rights and remedies of each of the parties under this
Agreement will be cumulative, and the exercise of one or more rights or remedies
will not preclude the exercise of any other right or remedy available under this
Agreement or applicable Legal Requirements.

 

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o.Interpretation. (a) The words “hereof”, “herein”, and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; (b) the words “date
hereof,” when used in this Agreement, shall refer to the date set forth in the
Preamble; (c) the terms defined in the singular have a comparable meaning when
used in the plural, and vice versa; (d) the terms defined in the present tense
have a comparable meaning when used in the past tense, and vice versa; (e) any
references herein to a specific Section or Article shall refer, respectively, to
Sections or Articles of this Agreement; (f) wherever the word “include”,
“includes”, or “including” is used in this Agreement, it shall be deemed to be
followed by the words “without limitation”; (g) references herein to any gender
includes each other gender; (h) the word “or” shall not be exclusive; (i) the
headings herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof; (j) any references herein to any Governmental Authority shall
be deemed to also be a reference to any successor Governmental Authority
thereto; and (k) the parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event that an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.

 

p.Survival. This Section 8 shall survive any termination of this Agreement.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.

 

Fortress Biotech, Inc.         By: /s/ Lindsay A. Rosenwald   Name:    Lindsay
A. Rosenwald   Title: President and CEO         InvaGen Pharmaceuticals Inc.    
    By: /s/ Deepak Agarwal   Name:    Deepak Agarwal   Title: CFO  

 

[Signature Page to Fortress Restrictive Covenant Agreement]

 

 

 

 

Schedule 1

 

Robert Criscola – may leave the Company and transition to an Affiliate of
Fortress after the filing of the NDA by the Company.

 

Amy Wheeler – may leave the Company and transition to an Affiliate of Fortress
after the Company completes its abdominoplasty study.

 

[Signature Page to Fortress Restrictive Covenant Agreement]