EXHIBIT 10.12
LICENSE AND COLLABORATION AGREEMENT
     License and Collaboration Agreement (this “Agreement”) made as of June 2,
2005, by and between Acuity Pharmaceuticals, Inc., a Delaware corporation, with
its principal offices at 3701 Market Street, Philadelphia, PA, 19104 (“Acuity”)
and Intradigm Corporation with its principal offices at 12115 Parklawn Drive,
Suite K, Rockville, MD 20852 (“Intradigm”), (Acuity and Intradigm are sometimes
referred to herein individually as a “Party” and collectively as the “Parties”).
BACKGROUND
     WHEREAS, Intradigm is an RNAi delivery technology company, with proprietary
technology and expertise in drug delivery;
     WHEREAS, Intradigm has developed formulation and drug delivery technology
with commercial promise for formulation of oligonucleotides to enhance and aid
in delivery to desired target tissues that may be applicable to the development
of ophthalmic therapeutics that can be delivered less invasively than
intra-ocular injection, such as topical application.
     WHEREAS, Acuity has proprietary technology and expertise in the area of
ophthalmic pharmaceutical clinical development;
     WHEREAS, Acuity and Intradigm share a mutual interest in a collaboration
aimed at the further development and commercialization of a therapeutic
encompassing or employing a short interfering RNA (an “siRNA”) that is
deliverable to the posterior pole of the eye which may be administered by
topical application for pharmaceutical use in humans (the “Topical siRNA”); and
     WHEREAS, Acuity and Intradigm intend to utilize their capabilities,
capitalize on each other’s expertise, and put forth commercially reasonable
efforts to achieve the objectives of this collaboration.
     NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties hereinafter set forth, and intending
to be legally bound, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
     “Acuity Improvements” means any improvements to the Acuity Patent Rights
and Acuity Know-how, in each case owned by Acuity as of the date hereof, that
are conceived, created, developed, and/or otherwise invented by Acuity, by
Intradigm, or jointly by Acuity and Intradigm, under the Research and
Development Plan or pursuant to this Agreement.
     “Acuity Intellectual Property” means the Acuity Patent Rights, Acuity
Improvements, and the Acuity Know-how.

 

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     “Acuity Know-how” means Technical Information owned, developed, or
controlled by Acuity (other than as a result of this Agreement) as of the date
of this Agreement or during the Term of this Agreement.
     “Acuity Patent Rights” means any valid claim of any Patent issued based on
a patent application previously or hereafter filed by or on behalf of Acuity or
subsequently assigned, licensed, or granted to, or acquired by, Acuity (other
than pursuant to this Agreement), including without limitation Patents and
patent applications based on Acuity Improvements.
     “Affiliate” means any entity that directly or indirectly Owns, is Owned by,
or is under common Ownership with a Party to this Agreement. “Owns” or
“Ownership” means direct or indirect possession of more than fifty percent (50%)
of the votes of holders of a corporation’s voting securities or a comparable
equity interest in any other type of entity.
     “Agency” means the FDA or any governmental regulatory authority responsible
for granting approvals for the sale of the Topical siRNA in the United States or
any foreign country.
     “Agreement” means this Agreement, together with all exhibits and
attachments.
     “Clinical Trials” means all trials and studies of the application of the
Topical siRNA on humans or clinical studies performed by Acuity for any purpose
including without limitation for purposes of obtaining Regulatory Approval in
the United States or any foreign country and marketing of the Topical siRNA in
the United States or any foreign country.
     “Commercially Reasonable Efforts” means, with respect to the efforts to be
expended by a Party with respect to any objective, diligent, good faith efforts
to accomplish such objective as such Party would normally use to accomplish a
similar objective under similar circumstances, it being understood and agreed
that with respect to the development and commercialization of Topical siRNA,
such efforts shall be substantially equivalent to those efforts and resources
commonly used by a bio-pharmaceutical company for a similar pharmaceutical
product owned by it or to which it has rights, which product is at a similar
stage in its development or product life and is of similar market potential
taking into account efficacy, safety, approved labeling, the competitiveness of
alternative products in the marketplace, the patent and other proprietary
position of the product, the likelihood of regulatory approval given the
regulatory structure involved, the profitability of the product including the
royalties payable to Third Parties, alternative products and other relevant
factors. In evaluating profit potential or strategic value Acuity shall not
consider the payments required to be made to Intradigm under this Agreement.
     “Confidential Information” has the meaning set forth in Section 9.1.
     “Control” means, with respect to an item of information or intellectual
property right, the possession of the ability to grant a license or sublicense
as provided for herein under such item or right without violating the terms of
any agreement or other arrangement, express or implied, with any Third Party.
     “Critical Field of Use” means the treatment of ophthalmic diseases
characterized by excessive or unwanted neovasculature, angiogenesis or leakage
such as but not limited to Wet AMD, diabetic retinopathy, diabetic macular
edema, retinal vein occlusion, neovascular

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glaucoma, retinopathy of prematurity, Von Hippel Angioma, von-hippel landau,
Corneal Neovascularization, Rubeosis, Pterygium or Iris Neovascularization as
well as, dry AMD, drusen and uveitis.
     “Effective Date” means the day and year first indicated above.
     “Excluded Field of Use” means the treatment of ophthalmic diseases in the
Critical Field of Use or Non-Critical Field of Use (other than through the use
of the Topical siRNA) in which a drug is delivered through systemic
administration only (and not through, in whole or in part, topical application,
ocular injection or any other method).
     “Excluded Territory” means China, Hong Kong, Taiwan, Japan, Korea,
Singapore, Thailand, Indonesia, Malaysia, Australia and New Zealand.
     “FDA” means the United States Food and Drug Administration, or any
successor thereto.
     “Fiscal Quarter” means each period of three (3) months ending on March 31,
June 30, September 30, or December 31.
     “GAAP” means generally accepted accounting principles as in effect from
time to time in the United States.
     “IND” means an “investigational new drug application” as defined by the
United States Food, Drug, and Cosmetic Act, as amended (the “Act”), and
applicable FDA rules and regulations or a foreign equivalent.
     “Intradigm Improvements” means any improvements to the Intradigm Patent
Rights and Intradigm Know-how, in each case owned by Intradigm as of the date
hereof, that are conceived, created, developed, and/or otherwise invented by
Intradigm, by Acuity, or jointly by Intradigm and Acuity, under the Research and
Development Plan or pursuant to this Agreement.
     “Intradigm Intellectual Property” means the Intradigm Patent Rights,
Intradigm Improvements, and the Intradigm Know-how.
     “Intradigm Know-how” means Technical Information owned, developed, or
controlled by Intradigm as of the date of this Agreement or during the Term of
this Agreement.
     “Intradigm Novel siRNA Target” means a gene or mRNA that could be targeted
with siRNA identified in the Intradigm Patent Rights, where the gene or mRNA has
not previously been described in the literature or otherwise known to Acuity.
     “Intradigm Patent Rights” means any valid claim of any Patent issued based
on a patent application previously or hereafter filed by or on behalf of
Intradigm or subsequently assigned, licensed, or granted to, or acquired by,
Intradigm, including without limitation Patents and patent applications based on
Intradigm Improvements. Exhibit A lists all the patents and patent applications
giving rise to Intradigm Patent Rights as of the date of this Agreement.

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     “Intradigm Sublicensed Products” means Licensed Products (other than the
Topical siRNA) that are sold by a Third Party under a sublicense from Acuity for
which Acuity would be required to pay a royalty to Intradigm pursuant to
Section 7.4 of this Agreement, if such product were sold by Acuity or its
Affiliates.
     “Jointly-Owned Intellectual Property” means developments, discoveries,
inventions, ideas, processes, methods, compositions, formulae, techniques,
information and data, whether or not patentable, conceived, developed or reduced
to practice jointly by one or more employees of Acuity on the one hand and one
or more employees of Intradigm on the other hand in connection with the research
and development activities performed pursuant to this Agreement which are not
Intradigm Improvements or Acuity Improvements.
     “Launch” means the date of first commercial shipment of the Topical siRNA
by Acuity, its Affiliates, distributors, or sublicensees to Third Party
customers in the United States or any foreign country after receipt of
Regulatory Approval for the Topical siRNA from the FDA or other relevant Agency,
as may be necessary in such country.
     “Licensed Products” means products whose manufacture, use or sale would,
but for the existence of this Agreement, infringe a valid claim of the Intradigm
Patent Rights.
     “NDA” means a “new drug application,” as defined in the Act and applicable
FDA rules and regulations, including an application of the type described in
section 505(b)(2) of the Act.
     “Net Sales” means the total gross proceeds to Acuity on sales to Third
Parties representing sales actually collected by Acuity and its Affiliates, less
deductions for the following to the extent actually paid or allowed with respect
to the such sales:
          (a) sales and excise taxes and duties (including import duties) paid
or allowed by a selling party and any other governmental charges imposed upon
the manufacture or sale, after giving effect to any rebates or refunds relating
to such taxes or duties received by Acuity;
          (b) rebates and chargebacks (including rebates to social and welfare
systems) actually paid;
          (c) allowances, chargebacks, and credits to Third Parties on account
of rejected, damaged, outdated, returned, withdrawn, or recalled product or on
account of retroactive price reductions affecting such product; and
          (d) amounts paid to Third Parties on account of rebate payments,
including Medicaid rebates.
     Taxes, the legal incidence of which is on the purchaser and separately
shown on Acuity’s or its Affiliates’ invoices, and transportation, insurance and
postage charges, if prepaid by Acuity or its Affiliates and billed on Acuity’s
or its Affiliates’ invoices as a separate item, shall not be considered a
component of Net Sales. Components of Net Sales shall be determined in the
ordinary course of business in accordance with Acuity’s historical practice and
using the accrual method of accounting in accordance with GAAP.

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     The supply of a product as commercial samples or for use in clinical trials
or studies shall not be included within the computation of Net Sales.
     Where (i) a product is sold by Acuity or an Affiliate as one of a number of
items without a separate price; or (ii) the consideration for a product shall
include any non-cash element; or (iii) the product is transferred by Acuity or
an Affiliate in any manner other than an invoiced sale, the Net Sales price
applicable to any such transaction shall be deemed to be Acuity’s average Net
Sales price for the applicable quantity of a product to the relevant class of
customers at that time.
     “Net Sublicense Payments” means (a) cash payments made to Acuity in
consideration of the sublicense; and (b) the fair market value of any non-cash
consideration received by Acuity from a sublicense in consideration of the
sublicense other than; provided, however that the following shall not be
included in the calculation of Net Sublicense Payments (i) reasonable amounts
received in exchange for equity investments in Acuity by a sublicensee,
(ii) sponsored research funding paid to Acuity by a sublicensee in a bona fide
transaction for future research to be performed by Acuity; (iii) payments for
consulting services actually performed by Acuity in a bona fide transaction at
arms length rates; and (iv) intellectual property rights received by Acuity from
a sublicensee, including, but not limited to, licenses or sublicenses to
intellectual property rights, covenants not to compete against Acuity, or
agreements not to assert claims against Acuity.
     “Non-Critical Field of Use” means the treatment of any and all ophthalmic
disease, other than those included in the Critical Field of Use.
     “Patents” means all valid claims in all patent applications, and all
foreign patents and patent applications based thereon, including any
continuations, divisionals, continuations-in-part, extensions, reissues and
re-examinations of any of the foregoing and all patents issuing from any of the
foregoing applications.
     “Product Success Criteria” means, with respect to the Topical siRNA, those
criteria agreed between the Parties and to be set forth in the Research and
Development Plan.
     “Regulatory Approval” means the Topical siRNA license or marketing approval
necessary as a prerequisite for marketing the Topical siRNA in the United States
or any foreign country.
     “Research and Development Plan” means the development program for the
Topical siRNA as described in Section 4.1 hereof which shall be agreed upon by
the Parties within 30 days of the date of this Agreement.
     “Technical Information” means all techniques and data and other know-how
and technical information, including inventions (including patentable
inventions), practices, methods, concepts, know-how, trade secrets, documents,
computer data, source code, apparatus, clinical and regulatory strategies and
data, test data, analytical and quality control data, manufacturing data or
descriptions, development information, drawings, specifications, designs, plans,
proposals and technical data and manuals and all other proprietary information
concerning the development, manufacture, production, quality control, storage,
distribution and sale of Licensed Products or the Topical siRNA.

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     “Third Party” means any entity other than Intradigm or Acuity or their
Affiliates.
ARTICLE II
OWNERSHIP OF INTELLECTUAL PROPERTY; LICENSE GRANTS
     2.1. Ownership of Inventions.
               (a) Except as provided in this Article II, Intradigm shall own
all right, title, and interest in and to the Intradigm Intellectual Property and
Acuity shall assign any rights it may have in such Intradigm Improvements to
Intradigm. Acuity shall own all right, title, and interest in and to the Acuity
Intellectual Property and Intradigm shall assign any rights it may have in such
Acuity Improvements to Acuity.
               (b) Any Intradigm Improvements conceived or reduced to practice
during the Term shall become the property of Intradigm, whether conceived or
reduced to practice by or on behalf of Acuity and Acuity shall assign any rights
it may have in such Intradigm Improvements to Intradigm.
               (c) Any Acuity Improvements conceived or reduced to practice
during the Term shall become the property of Acuity, whether conceived or
reduced to practice by or on behalf of Intradigm and Intradigm shall assign any
rights it may have in such Acuity Improvements to Acuity.
               (d) Jointly-Owned Intellectual Property shall be owned jointly by
Acuity and Intradigm.
     2.2. License Grants to Acuity.
               (a) Intradigm hereby grants to Acuity, and Acuity hereby accepts
from Intradigm, a sole and exclusive (even as to Intradigm) irrevocable right
and license, including the right to sublicense, under and to Intradigm
Intellectual Property to make, have made, use, sell, offer for sale, import or
otherwise commercialize Licensed Products in the Critical Field of Use.
               (b) Intradigm hereby grants to Acuity, and Acuity hereby accepts
from Intradigm, a sole and exclusive (even as to Intradigm) irrevocable right
and license, including the right to sublicense, under and to Jointly-Owned
Intellectual Property to make, have made, use, sell, offer for sale, import or
otherwise commercialize Topical siRNA and Licensed Products in the Critical
Field of Use and the Non-Critical Field of Use.
     2.3. Revocable License Grant to Acuity.
               (a) Intradigm hereby grants to Acuity, and Acuity hereby accepts
from Intradigm, a sole and exclusive (even as to Intradigm), revocable in part
(pursuant only to Section 2.3(b) and (c)) right and license, including the right
to sublicense, under and to Intradigm Intellectual Property to make, have made,
use, sell, offer for sale, import or otherwise commercialize Licensed Products
in the Non-Critical Field of Use.

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               (b) After February 1, 2007, Intradigm may notify Acuity that
Intradigm intends (by itself or with a partner) to commercialize a therapeutic
in the Non-Critical Field of Use which is not then being pursued by Acuity (the
“Optioned Therapeutic”). Intradigm shall be required to include with such
notification sufficient documentation to demonstrate to Acuity (through means
reasonably acceptable to Acuity) that Intradigm is financially and
technologically capable of commercializing the Optioned Therapeutic.
                    (i) Upon receipt of such notification and upon Acuity’s
acknowledgment (which shall not be unreasonably withheld) that Intradigm is
capable of such commercialization, Acuity shall have 120 days from such
notification to provide Intradigm with a development plan demonstrating Acuity’s
financial and technical ability (including Acuity’s ownership of, or ability to
obtain a license to, intellectual property which is required to commercialize
the Optioned Therapeutic) and intent to commercialize the Optioned Therapeutic.
                    (ii) At this time, if Acuity desires to commercialize the
Optioned Therapeutic, Acuity will enter into a binding agreement with Intradigm
that requires Acuity to expend a mutually agreed upon amount of capital to
commercialize the Optioned Therapeutic over an agreed upon time period.
                    (iii) If Acuity (A) fails to notify Intradigm during this
120-day period of Acuity’s intent to, and reasonably demonstrates its financial
and technological ability to, commercialize the Optioned Therapeutic or
(B) Acuity materially breaches the agreement described in Section 2.3(b)(ii),
Intradigm shall be free to pursue commercialization of the Optioned Therapeutic
and the license granted by Intradigm to Acuity in Section 2.2(a) shall be
revoked to the extent and only to the extent necessary for Intradigm to
commercialize the Optioned Therapeutic.
     2.4. Revocable License Grant to Intradigm.
               (a) Acuity hereby grants to Intradigm, and Intradigm hereby
accepts from Acuity, a sole and exclusive (even as to Acuity), revocable
(pursuant only to Section 2.4(b)), royalty free, right and license, including
the right to sublicense, under and to Intradigm Intellectual Property to make,
have made, use, sell, offer for sale, import or otherwise commercialize Licensed
Products in the Excluded Field of Use in the Excluded Territory.
               (b) If Intradigm fails to enter into a binding agreement to
develop therapeutic products for the Excluded Field of Use in the Excluded
Territory by December 31, 2005, the license granted by Acuity to Intradigm in
Section 2.4(a) shall be terminated without any further action by Acuity or
Intradigm.
     2.5. Maintenance of Records. Each Party shall maintain full and accurate
records concerning their activities under this Agreement for the purpose of
documenting any intellectual property developed hereunder. Such records shall be
maintained for the later of either three (3) years after the end of the Term or
for the pendency of any patent application covering any Jointly-Owned
Intellectual Property.

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ARTICLE III
OVERVIEW OF COLLABORATION
     3.1. Scope of Collaboration. The Parties shall work together to research
and develop the Topical siRNA. All research and development work shall be
conducted in accordance with a Research and Development Plan to be agreed upon
by Acuity and Intradigm within thirty (30) days of the date of this Agreement
(the “Research and Development Plan”).
     3.2. Additional Collaboration. The Parties shall exercise good-faith
negotiations to enter into a separate collaboration aimed at the further
development and commercialization of one or more therapeutics encompassing or
employing an siRNA that is deliverable to the posterior pole of the eye which
may be administered by systemic application for pharmaceutical use in humans
(the “Systemic siRNA”). The financial terms of the Systemic siRNA collaboration
shall be consistent with and substantially similar to the provisions of
Sections 7.1, 7.3, 7.4, 7.5 and 7.6(a) of this Agreement, after taking into
account and considering the relevant market for the Systemic siRNA and its
expected commercial success.
     3.3. Recordkeeping. Each Party shall record, to the extent practical, all
Technical Information relating to its research and development activities under
the Research and Development Plan in written form, which writing shall be
consistent with standard practices of each Party and what is normal and
customary in the pharmaceutical industry in the United States or as may be
required by applicable law or regulation. All such written records of the
Parties shall be maintained in a form sufficient to satisfy all Agencies.
ARTICLE IV
RESEARCH AND DEVELOPMENT PROGRAM
     4.1. Research and Development Plan. The Research and Development Plan for
the Topical siRNA, including tasks, allocation of responsibilities, estimated
development timelines, and estimated development budgets, will be mutually
agreed upon by Acuity and Intradigm within thirty (30) days of the date of this
Agreement. The Research and Development Plan will also include the Product
Success Criteria which will govern Acuity’s obligation to commercialize the
Topical siRNA. The Parties may periodically modify the Research and Development
Plan, within the scope of and in a manner consistent with this Agreement,
further detail the responsibilities of each Party within the general scope of
responsibilities set forth herein, each in accordance with Section 4.4. In the
event that an estimated development timeline will not be met, the Party with
responsibility for meeting that timeline shall notify the other Party and the
Parties shall work together in good faith to bring the project back on schedule.
     4.2. Joint Development Committee.
               (b) The Development Program and all pre-clinical testing of the
Topical siRNA shall be conducted under the direction of a joint development
committee (the “JDC”). The JDC shall be composed of two (2) named
representatives of Acuity and two (2) named representatives of Intradigm. The
named representatives shall designate one member to serve as chairperson of the
JDC. Each Party will identify its representatives to the JDC within

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five (5) days after the date of this Agreement and each Party shall have the
right to replace its representatives at any time in its sole discretion after
giving notice to the other Party.
               (c) The purposes of the JDC shall be to review, direct, supervise
and coordinate all operational and scientific aspects of the development of the
Topical siRNA and all pre-clinical testing of the Topical siRNA (the
“Development Program”). As part of its responsibilities, the JDC shall
(i) within thirty (30) days of the Effective Date, finalize the terms of the
Research and Development Plan, (ii) review the development of Intradigm under
the Development Program, (iii) monitor the progress of the Development Program
and evaluate the work performed and the results obtained in relation to the
goals of the Development Program, (iv) approve any necessary or desirable
modifications to, the Development Program and the Research and Development Plan,
and (v) such other functions to which the Parties agree. The Party hosting each
meeting of the JDC promptly shall prepare and deliver to the other Party within
fifteen (15) business days after the date of such meeting, minutes of such
meeting setting forth all decisions of the JDC relating to the Development
Program in form and content reasonably acceptable to the other Party.
               (d) The JDC shall meet at least twice each quarter until the
Development Program is completed (the “Collaboration Term”), at such times and
places as agreed to by Intradigm and Acuity. The JDC and any of its members may
meet or attend meetings by telephone or video conference. The JDC will
communicate regularly by telephone, facsimile and video conference. Meetings and
telephone and video conferences of the JDC may be attended by such other
directors, officers, employees, consultants and other agents of Intradigm and
Acuity as the Parties from time to time reasonably agree. Intradigm and Acuity
will bear their own costs in attending such meetings.
               (e) The JDC will review the characteristics of the compounds
identified under the Development Program, and the JDC will select the final
compound or compounds which will be used for clinical testing.
               (f) All final decisions of the JDC shall be made by majority vote
of all of the members.
     4.3. Joint Obligations.
               (a) Each Party agrees to commit the qualified and experienced
personnel, facilities, equipment, expertise and other resources necessary to
perform its obligations under this Agreement and the Research and Development
Plan.
               (b) Except as set forth in Section 4.4, each Party will fund its
own costs and expenses in the performance of its research and development
obligations provided pursuant to this Agreement and the Research and Development
Plan.
               (b) The Parties shall keep each other fully informed of the
status of the development of the Topical siRNA including, without limitation,
providing written reports as requested throughout the performance of the
Research and Development Plan, stating in reasonable detail all efforts made and
in process, and all significant progress achieved.

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          (c) The Parties will each designate a primary project contact with
respect to the Topical siRNA throughout the performance of the Research and
Development Plan.
     4.4. Intradigm Obligations.
          (a) Intradigm shall use commercially reasonable efforts to diligently
perform its obligations under this Agreement, including, without limitation,
those to be set forth in the Research and Development Plan, all in accordance
with all applicable laws, ordinances, rules, regulations, orders, licenses and
other requirements now or hereafter in effect.
          (b) Intradigm shall be required to allocate one and one-half (1.5)
FTEs (and no more) during the term of the Collaboration for the areas of
activity set forth in the Research and Development Plan.
          (c) Intradigm shall make available to Acuity all Intradigm
Intellectual Property and Technical Information and assistance as may reasonably
be necessary for Acuity’s development, submission for applicable Regulatory
Approval, and commercialization of the Topical siRNA, including formulation and
process development, development of stability indicating methods (including
methods for dissolution, assay and stability), and achievement of stability
under accelerated stability conditions for two months or under ambient
conditions for six months, stability data, methods validation, formulation
trials, in-process and finished Products specifications, Product development
reports for the Topical siRNA, and identification and sourcing of any excipients
used in the formulation of the Topical siRNA, all as more particularly described
herein and in the Research and Development Plan.
          (d) Intradigm shall maintain records in sufficient detail and
otherwise in accordance with good laboratory practices or current good
manufacturing practices, as the case may be, and as are required to properly
reflect, and will document in a manner appropriate for purposes of supporting
any Agency filings, and pre-approval inspections, all work done and results
achieved by Intradigm in the performance of the Research and Development Plan
(including all data in a form required under any applicable governmental
regulations). Subject to the confidentiality provisions of Article X hereof,
Intradigm shall provide Acuity with copies of all such records relating to the
Topical siRNA.
     4.5. Acuity Obligations.
          (a) Acuity shall use Commercially Reasonable Efforts to diligently
perform its obligations under this Agreement, including, without limitation,
those set forth in the Research and Development Plan, all in accordance with all
applicable laws, ordinances, rules, regulations, orders, licenses and other
requirements now or hereafter in effect.
          (b) In consideration for Intradigm’s performance of its obligations
under this Agreement and the Research and Development Plan, Acuity shall pay
Intradigm $180,000 per year per FTE employed by Intradigm pursuant to
Section 4.6(b).
          (c) Acuity shall maintain records in sufficient detail and otherwise
in accordance with good laboratory practices, good clinical practices, or
current good

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manufacturing practices, as the case may be, and as are required to properly
reflect, and will document all work done and results achieved in the performance
of the Research and Development Plan including all records of any Clinical
Trials. Subject to the confidentiality provisions of Article IX hereof, Acuity
shall provide Intradigm with the right to inspect such records relating to the
Topical siRNA.
          (d) Acuity shall keep Intradigm fully informed as to the continuing
status of its Clinical Trials and development efforts for the Topical siRNA,
including the status of the preparation and filing of any Regulatory Approvals
with applicable Agencies as well as the anticipated Launch of the Topical siRNA
and the status of the conduct and completion of Clinical Trials. In connection
therewith, Acuity shall provide to Intradigm quarterly reports during the Term,
stating in reasonable detail all efforts made and in process, and significant
progress achieved. In addition, Acuity shall communicate to Intradigm any
material issues or problems. Acuity shall include in such reports information
concerning the status of the regulatory filings for the Topical siRNA and shall
notify Intradigm of the substance of all material written communications with
any Agencies relating to the Topical siRNA.
ARTICLE V
HEALTH REGISTRATION OBLIGATION
     5.1. Clinical Development; Regulatory Approvals. After the Topical siRNA
compound is selected and approved by the JDC, Acuity shall use its Commercially
Reasonable Efforts to prepare, file, and prosecute all Agency filings and
applications to obtain all Regulatory Approvals for the Topical siRNA in the
United States and any foreign country that Acuity chooses in its sole
discretion, at Acuity’s sole expense. Acuity shall own all right, title, and
interest in any FDA or other Regulatory Approvals which are obtained for the
Topical siRNA, including all data generated in the course of Clinical Trials and
all applications and data submitted to the FDA or other Agency.
     5.2. NDA. Acuity shall use Commercially Reasonable Efforts to file an NDA
to seek Regulatory Approval to use and sell the Topical siRNA in the United
States and any foreign country that Acuity chooses in its sole discretion, at
Acuity’s sole expense upon satisfaction of the Product Success Criteria.
     5.3. Maintenance of Regulatory Approvals. Acuity shall use Commercially
Reasonable Efforts to maintain the Regulatory Approvals for use, sale and
marketing of Topical siRNA in the United States and any foreign country that
Acuity chooses in its sole discretion, at Acuity’s sole expense.
     5.4. Intradigm Assistance. Intradigm shall provide such assistance to
Acuity in obtaining and maintaining Regulatory Approvals in the United States
and any foreign country as reasonably requested by Acuity.

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ARTICLE VI
MARKETING AND SALE OF THE PRODUCT
     6.1. Marketing and Sale of the Topical siRNA.
               (a) Upon the Launch of the Topical siRNA, Acuity, either itself
or through its Affiliates, or distributors, shall use its Commercially
Reasonable Efforts to market, distribute, and sell the Topical siRNA in the
United States and any foreign country that Acuity chooses in its sole discretion
and shall exercise such diligence in this regard as shall be reasonable in light
of the size of the market and potential market for the Topical siRNA and in a
manner consistent with which it markets other Acuity products of comparable
market size in the particular country.
               (b) Acuity shall control and make all decisions regarding the
strategy and tactics of marketing, selling, and otherwise commercializing the
Topical siRNA, including, without limitation, the method of sales and
distribution, organization and management of sales and marketing, packaging and
labeling, appointment of distributors pursuant to Section 6.2, and other terms
and conditions for such sales and marketing, and shall exercise Commercially
Reasonable Efforts in such regard to maximize the economic opportunity for the
Topical siRNA.
     6.2. Distributors; Sublicensees. Acuity may designate and appoint one or
more Third Parties to act as its agent(s) or sublicensees in connection with the
marketing, sale and distribution of the Topical siRNA.
     6.3. Regulatory Compliance. Acuity shall use Commercially Reasonable
Efforts to comply with applicable regulations regarding procedures for reporting
to appropriate Agencies, and to report, investigate, issue responses and execute
any corrective action plan to post-marketing Topical siRNA complaints/field
reports in a timely manner in accordance with applicable regulations.
     6.4. No Restrictions on Business. Intradigm agrees that Acuity is in the
business of developing, and selling pharmaceutical products and that, subject to
Acuity’s obligations in Articles IV, V and VI, nothing in this Agreement shall
be construed as restricting such business or imposing on Acuity the duty to
develop, register, market, and/or to sell the Topical siRNA hereunder to the
exclusion of or in preference to any other product or otherwise preclude Acuity
from developing or practicing any Acuity Intellectual Property or developing
other pharmaceutical products. Correspondingly, except as expressly set forth
herein, nothing herein shall be construed as restricting the business of
Intradigm.
ARTICLE VII
MILESTONES, FEES, AND ROYALTY PAYMENTS; ACCOUNTING
     7.1. Milestones.
               (a) In consideration of Intradigm’s commitment to provide its
research and development obligations as provided herein, including, without
limitation, under the Research and Development Plan, Acuity agrees to pay to
Intradigm, for the Topical siRNA developed hereunder, the following milestone
payments related to the development and

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commercialization of one or more Topical siRNA therapeutics. It is also expected
that substantially similar milestone payments will be paid in connection with
development of each of one ore more Systemic siRNA therapeutics pursuant to a
separate collaboration agreement to be negotiated in good faith by the Parties.

         
Notice of Opening of IND from FDA
  $ 100,000  
Enrollment of first patient in a Phase II Clinical Trial
  $ 500,000  
Enrollment of first patient Phase III Clinical Trial
  $ 500,000  
Phase III Clinical Trial completed successfully
  $ 1,000,000  
NDA Approval in the U.S.
  $ 3,000,000  

               (b) Notwithstanding anything to the contrary contained herein, in
the event Acuity exercises its right to terminate the continued development and
commercialization of the Topical siRNA pursuant to Sections 12.2 or 12.3 hereof
prior to the achievement of any or all of the applicable milestones provided in
Section 7.1 relating to the Topical siRNA, Acuity shall be required to make
payment to Intradigm only with respect to the milestones which were achieved
prior to the Termination Date and no further milestone payments relating to the
Topical siRNA shall accrue after the Termination Date.
     7.2. License Fee. In consideration for the license granted to Acuity under
Section 2.1 of this Agreement, Acuity agrees to pay to Intradigm, the following:
               (a) $300,000 within 10 days of the execution of this Agreement;
and
               (b) $150,000 on December 31, 2005.
     7.3. Royalty Payments on Topical siRNA. During the Term, Acuity will pay to
Intradigm a royalty on all Net Sales of the Topical siRNA sold by Acuity and its
Affiliates equal to four percent (4%) of Net Sales of Topical siRNA. The royalty
payments described in Section 7.4 shall not be applicable for sales of the
Topical siRNA.
     7.4. Royalty Payments on Licensed Products other than Topical siRNA. During
the Term, Acuity will pay to Intradigm a royalty equal to the percentage set
forth below on all Net Sales of the Licensed Products sold by Acuity and its
Affiliates (other than the Topical siRNA), as follows:
               (a) Acuity will pay to Intradigm a royalty on all Net Sales of
Licensed Products which incorporate a targeted nanoparticle covered by the
Intradigm Patent Rights sold by Acuity and its Affiliates equal to two percent
(2%) of Net Sales of such Licensed Products.
               (b) Acuity will pay to Intradigm a royalty on all Net Sales of
Licensed Products which incorporate a nucleic acid carrier covered by the
Intradigm Patent Rights sold by Acuity and its Affiliates equal to two percent
(2%) of Net Sales of such Licensed Products.

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               (c) Acuity will pay to Intradigm a royalty on all Net Sales of
Licensed Products which incorporate a ligand covered by the Intradigm Patent
Rights sold by Acuity and its Affiliates equal to two percent (2%) of Net Sales
of such Licensed Products.
               (d) Acuity will pay to Intradigm a royalty on all Net Sales of
Licensed Products which incorporate an Intradigm Novel siRNA Target covered by
the Intradigm Patent Rights sold by Acuity and its Affiliates equal to eight
percent (8%) of Net Sales of such Licensed Products.
               (e) More than one royalty payment described in this Section 7.4
may be required to be paid (e.g., for Licensed Products which incorporate a
ligand covered by the Intradigm Patent Rights and a targeted nanoparticle
covered by the Intradigm Patent Rights); provided however, that the maximum
royalty on any Licensed Product sold by Acuity during the term shall be ten
percent (10%) of Net Sales of such Licensed Product.
     7.5. Reduction of Royalties. If Acuity is required to pay royalties to
Intradigm and one or more Third Parties that, in the aggregate, exceed ten
percent (10%) of Net Sales (the “Total Royalty”) to commercialize a Licensed
Product or the Topical siRNA, the royalties due to Intradigm with respect to
such Licensed Product or Topical siRNA shall be reduced by one percent (1.0%)
for every one percent (1%) that the Total Royalty exceeds ten percent (10%). In
no event shall the royalties due to Intradigm be reduced below two percent (2%)
pursuant to this Section 7.5.
     7.6. Sublicense Fees.
               (a) During the Term, Acuity will pay to Intradigm a sublicense
fee equal to eight percent (8%) of the Net Sublicense Payments received by
Acuity from sublicensees who sell Topical siRNA pursuant to a sublicense
agreement with Acuity.
               (b) During the Term, Acuity will pay to Intradigm a sublicense
fee equal to thirty percent (30%) of the Net Sublicense Payments received by
Acuity from sublicensees who sell Intradigm Sublicensed Products (other than
Topical siRNA) pursuant to a sublicense agreement with Acuity.
     7.7. Withholding Taxes. Acuity shall be entitled to deduct from its
payments to Intradigm the amount of any withholding taxes, value-added taxes or
other taxes, levies or charges with respect to such amounts payable by Acuity,
or any taxes in each case required to be withheld by Acuity to the extent Acuity
pays the appropriate governmental authority on behalf of Intradigm such taxes,
levies or charges. Acuity shall deliver to Intradigm, upon reasonable request,
proof of payment of all such taxes, levies and other charges and appropriate
documentation which is necessary to obtain a tax credit, to the extent such tax
credit can be obtained.

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     7.8. Timing of Payments
               (a) The milestone payments payable under Section 7.1 will be paid
within thirty (30) days of achievement of the applicable milestone.
               (b) The Party having primary responsibility for the completion of
the applicable milestone shall provide written notice to the other Party not
later than fifteen (15) days following the satisfaction of such milestone
trigger.
               (c) Royalties payable under Section 7.3 or Section 7.4 will be
paid not later than sixty (60) days following the end of each Fiscal Quarter, or
not later than sixty (60) days from the date that is as soon thereafter as may
be practicable in order for Acuity to determine the royalty payable. All
payments shall be accompanied by a report in writing showing for the quarter for
which such royalty payment applies: (i) the Net Sales of Topical siRNA and
Licensed Products for which royalties are required pursuant to Section 7.4
(along with a reasonably detailed description of the calculation thereof);
(ii) the royalties payable pursuant to Section 7.3 in United States dollars; and
(iii) the withholding taxes, if any, required by law to be deducted with respect
to such royalties and the amounts paid to the appropriate governmental authority
with respect to such royalties.
     7.9. Stock Issuance.
               (a) Within thirty (30) days following the Effective Date, Acuity
will issue and register in the name of Intradigm a certificate for 250,000
shares of Common Stock of Acuity (the “Restricted Shares”).
               (b) The Restricted Shares shall be grated to Intradigm pursuant
to a stock grant agreement between Acuity and Intradigm, the form of which is
attached as Exhibit B (the “Stock Grant Agreement”).
               (c) The Restricted Shares will be subject to vesting pursuant to
the milestones and time periods described in the Stock Grant Agreement.
               (d) Intradigm shall make such written disclosures and
representations and warranties, and shall fully cooperate with, Acuity and its
counsel as may reasonably be requested by them concerning compliance with any
applicable securities laws, rules or regulations applicable to the issuance of
such Restricted Shares to Intradigm. The certificates for the Restricted Shares
to be issued to Intradigm will contain a legend on the face thereof which will
preclude Intradigm from selling or otherwise transferring such shares until the
date upon which there is an effective registration statement applicable to such
shares which will allow them to be publicly traded.
     7.10. No Other Payments. Intradigm acknowledges and agrees that other than
the payments provided in this Article VII, and all other payment, indemnity and
reimbursement obligations set forth in this Agreement, Intradigm shall not be
entitled to any amounts received by Acuity or its Affiliates and sublicensees
from the use, commercialization, license or sale of its rights under this
Agreement, regardless of the form or manner of payment (including milestones,
royalties or other amounts).

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     7.11. Audit. Acuity shall maintain and shall require its Affiliates and
sublicensees to maintain, at their respective offices accurate and complete
books and records of the Net Sales of the Topical siRNA, consistent with sound
business and accounting practices. Upon the written request Intradigm, but not
more than once in any calendar year, Acuity shall permit an independent
certified public accounting firm of nationally recognized standing, selected by
Intradigm and acceptable to Acuity, to have access during normal business hours
to such records of Acuity as shall be necessary to verify the accuracy of the
royalty reports provided hereunder for any year ending not more than thirty-six
(36) months prior to the date of such request. The accounting firm shall
disclose to Intradigm only whether the records are accurate or not and the
specific details concerning any discrepancies, and shall provide a copy of its
report to Acuity. No other information shall be shared. If the audit of
royalties shows an underpayment of royalty payments by Acuity of more than the
greater of (i) $25,000 or (ii) five percent (5%), then the expenses of the audit
of royalties shall be borne by Acuity; otherwise the expenses of the audit of
royalties shall be borne by Intradigm. If such accounting firm concludes that
additional royalties were owed or that royalties were overpaid during such
period, then Acuity shall pay the additional royalties or Intradigm shall credit
or pay Acuity such overpayment within thirty (30) days of the date that such
accounting firm’s written report is delivered to the parties.
     7.12. Confidential Financial Information. Each Party shall treat all
financial information of the other Party as Confidential Information of the
other Party, and shall retain and shall cause its employees and agents to
retain, all such financial information in confidence.
ARTICLE VIII
CERTAIN PROVISIONS REGARDING PATENTS
     8.1. Patent Filings, Prosecution and Maintenance of Intradigm Patent
Rights.
               (a) Intradigm shall have the first right, using in-house or
outside legal counsel selected at Intradigm’s sole discretion, to prepare, file,
prosecute, maintain and extend patent applications and patents concerning all
such Intradigm Patent Rights in the United States and any foreign country that
Intradigm chooses in its sole discretion, for which Intradigm shall bear the
costs relating to such activities. Intradigm shall solicit Acuity’s advice and
review of the nature and text of any such patent applications in reasonably
sufficient time prior to filing thereof, and Intradigm shall take into account
Acuity’s reasonable comments related thereto. Intradigm and Acuity shall treat
all information disclosed to it under this Section 8.1 as Confidential
Information (as herein defined).
               (b) If Intradigm elects not to file, prosecute or maintain any
Intradigm Patent Rights or any ensuing Patents or claims encompassed by any
Intradigm Patent Rights in the United States or any foreign country, Intradigm
shall give Acuity notice thereof within a reasonable period prior to allowing
such patent applications or Patents or such claims encompassed by such patent
applications or Patents to lapse or become abandoned or unenforceable, and
Acuity shall thereafter have the right, at its sole expense and in the name of
Intradigm, to prepare, file, prosecute and maintain patent applications and
patents or divisional applications related to such claims encompassed by such
patent applications or patents

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concerning all such inventions and discoveries in countries of its choice
throughout the world. In such case, Intradigm shall assign (or grant Acuity a
perpetual irrevocable royalty free license, if an assignment can not be made) to
Acuity all of its rights under such patent or patent application in any country
in which Acuity prosecutes and/or maintains such patent rights.
     8.2. Enforcement of Intradigm Patent Rights.
               (a) In the event that a Party learns that any Intradigm Patent
Rights necessary for the development, manufacture, use and/or sale of the
Topical siRNA are infringed or misappropriated by activities of a Third Party in
any country, or are subject to a declaratory judgment action arising from such
infringement in such country, such Party shall promptly notify the other Party
hereto.
               (b) Intradigm shall have the initial right (but not the
obligation) to enforce such Intradigm Patent Rights, or defend any declaratory
judgment action with respect thereto, at its expense.
               (c) In the event that Intradigm fails to initiate a suit to
enforce such Intradigm Patent Rights against such a Third Party in any
jurisdiction within sixty (60) days after notification of such infringement or
decides that does not desire to defend such declaratory judgment action, Acuity
may initiate such suit in the name of Intradigm with regard to the applicable
Intradigm Patent Rights against such infringement or assume the defense of the
declaratory judgment action, at the expense of Acuity. The Party involved in any
such claim, suit or proceeding (the “Enforcing Party”), shall keep the other
Party hereto reasonably informed of the progress of any such claim, suit or
proceeding and shall allow the other Party to participate in the action at the
other Party’s sole cost and expense. Intradigm and Acuity shall recover their
respective actual out-of-pocket expenses, or equitable proportions thereof,
associated with any litigation or settlement thereof from any recovery made by
any Party. Any remaining amounts shall be distributed between the Enforcing
Party, with the Enforcing Party receiving 75% of any such net recovery and the
other Party 25%.
     8.3. Patent Filings, Prosecution and Maintenance of Joint Technology Patent
Rights.
               (a) Acuity shall have the first right, using in-house or outside
legal counsel selected at Acuity at its sole discretion, to prepare, file,
prosecute, maintain and extend patent applications and patents concerning all
such Jointly Owned Intellectual Property in Rights in the United States and any
foreign country that Acuity chooses in its sole discretion, for which Acuity and
Intradigm shall equally share the costs relating to such activities. Acuity
shall solicit Intradigm’s advice and review of the nature and text of any such
patent applications in reasonably sufficient time prior to filing thereof, and
Acuity shall take into account Intradigm’s reasonable comments related thereto.
Intradigm and Acuity shall treat all information disclosed to it under this
Section 8.3 as Confidential Information (as herein defined).
               (b) If Acuity elects not to file, prosecute or maintain any
Jointly Owned Intellectual Property or any ensuing Patents or claims encompassed
by any Jointly Owned Intellectual Property in the United States or any foreign
country, Acuity shall give

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Intradigm notice thereof within a reasonable period prior to allowing such
patent applications or Patents or such claims encompassed by such patent
applications or Patents to lapse or become abandoned or unenforceable, and
Intradigm shall thereafter have the right, in the name of Acuity and Intradigm,
to prepare, file, prosecute and maintain patent applications and patents or
divisional applications related to such claims encompassed by such patent
applications or patents concerning all such inventions and discoveries in
countries of its choice throughout the world. In such case, Acuity shall either:
(i) continue to share equally in the costs of prosecuting or maintaining such
patent rights or (ii) assign (or grant to Intradigm a perpetual irrevocable
royalty free license, if an assignment can not be made) to Intradigm all of its
rights under such patent or patent application in any country in which Intradigm
prosecutes and/or maintains such patent rights.
     8.4. Injunction and/or Failure to Obtain Third Party License. Without
limiting any other remedy that may be available to Acuity under this Agreement,
Acuity shall have the right to terminate this Agreement in its entirety or only
as to the affected country, immediately upon written notice to Intradigm if at
any time during the term of this Agreement: (i) a permanent injunction is issued
by a court of competent jurisdiction enjoining Acuity’s sale of the Topical
siRNA in a country, or (ii) Acuity ceases the sale of the Topical siRNA in a
country as a result of a failure of either Party to obtain, upon commercially
reasonable terms, a license (or immunity from suit) from a Third Party alleging
infringement in such country.
ARTICLE IX
CONFIDENTIALITY
     9.1. Confidentiality and Non-Use Obligations. (a) During the Term of this
Agreement and for five (5) years thereafter without regard to the means of
termination, neither Acuity nor Intradigm shall use, for any purpose other than
the purposes of this Agreement, reveal or disclose to any Third Party
information and materials disclosed by the other Party (whether prior to or
during the Term of this Agreement), and marked as confidential or for which the
receiving Party knows or has reason to know are or contain trade secrets or
other proprietary information of the other Party (the “Confidential
Information”) without first obtaining the written consent of the other Party.
               (b) The Parties shall take all reasonable precautions to prevent
the use or disclosure of such Confidential Information without first obtaining
the written consent of the other Party, except (i) as may be required for
securing Regulatory Approval, including pricing approval in the United States
and any foreign country, or as may otherwise be required to be disclosed to an
Agency in the United States and any foreign country; or (ii) as required in
connection with any filings made by the Securities and Exchange Commission or
similar non-U.S. regulatory authorities or by the disclosure policies of a major
stock exchange. Each Party agrees that prior to the release or dissemination of
the other Party’s Confidential Information to any Affiliate or sublicensee, such
Party shall cause the person to whom such Confidential Information is to be
released to be bound by a confidentiality agreement providing for a level of
protection of such Confidential Information at least equivalent to the terms of
this Article X.
               (c) These restrictions upon disclosure and use of Confidential
Information shall not apply to any specific portion of Confidential Information
which:

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                    (i) is Confidential Information that can be demonstrated by
the written records of the recipient to have already been in the possession of
the recipient free of any restrictions as to its use or disclosure at the time
of disclosure by the other Party;
                    (ii) is or later becomes available to the public, as
evidenced by documents which were generally published, other than by the fault
of the recipient; or
                    (iii) is received from a Third Party having legitimate
possession thereof and the independent legal right to make such disclosure and
such Third Party does not place any restriction as to the use or disclosure on
the recipient.
               (d) Any patent applications and information therein filed or to
be filed by either Party shall be deemed (i) to be Confidential Information of
that Party subject to the provisions of this Article IX and (ii) to have been
disclosed in confidence to the other Party.
               (e) Notwithstanding the foregoing, the recipient may disclose any
Confidential Information to the extent required by an order of any court or
other governmental authority having competent jurisdiction, but only after the
other Party is (i) notified in writing and provided with a copy of such order;
and (ii) given an opportunity to prevent such disclosure or obtain reasonable
protection for such Confidential Information. In any such event, the recipient
shall cooperate fully with other Party in connection with obtaining any
protective order or other appropriate remedy to prevent disclosure of
Confidential Information.
     9.2. Press Releases and Public Announcements. Neither Party to this
Agreement shall issue any press release or other publicity materials, or make
any public presentation with respect to the terms or conditions of this
Agreement without the prior written consent of the other Party (such consent not
to be unreasonably withheld or delayed). The restrictions provided in this
Section 9.2 shall not apply to disclosures deemed by Acuity in its discretion to
be required by law or regulation, including as may be required in connection
with any filings made with the Securities and Exchange Commission or any similar
non-U.S. regulatory authority, or by the disclosure policies of the Nasdaq Stock
Market, Inc.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
     10.1. Legal and Governmental Compliance. Each Party shall comply with all
laws, rules and regulations applicable to the activities undertaken by such
Party hereunder.
     10.2. Intradigm Representations and Warranties. Intradigm represents and
warrants to Acuity that the following are true and correct as of the date
hereof:
               (a) Intradigm is a Delaware corporation duly organized, validly
existing, and in good standing under the laws of Delaware and has full corporate
power to own its properties and conduct the business presently being conducted
by it, and is duly qualified to do business in, and is in good standing under,
the laws of all jurisdictions in which its activities or assets require such
status, except in any case where the failure to be so qualified and in good
standing would not be material.

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               (b) Intradigm has full corporate right, power and authority to
perform its obligations pursuant to this Agreement, and this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Intradigm. This Agreement has been
duly and validly executed by Intradigm. Upon execution and delivery of this
Agreement, it will be the valid and binding obligation of Intradigm, enforceable
in accordance with its terms, subject to equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditor’s right and remedies generally.
               (c) The execution, delivery and performance of this Agreement
does not, and the consummation of the transactions herein contemplated will not
violate any law, rule, regulation, order, judgment or decree binding on
Intradigm, or result in a breach of any term of the certificate of incorporation
or by-laws of Intradigm or any contract, agreement or other instrument to which
Intradigm is a party, except in each case to an extent not material.
               (d) Intradigm is the sole owner of the entire right, title and
interest in and to the Intradigm Patent Rights and no other Person (including
any government) has any license, claim or other right or interest in or to the
Intradigm Patent Rights as of the Effective Date.
               (e) To Intradigm’s actual knowledge, the use of the Intradigm
Intellectual Property in the development, manufacture and sale of the License
Products or the Topical siRNA will not infringe, misappropriate or otherwise
conflict with any intellectual property or other rights of any Third Party as of
the Effective Date.
               (f) Intradigm is not aware of any infringement of the Intradigm
Patent Rights as of the Effective Date.
               (g) There are no judicial, arbitral, regulatory or administrative
proceedings or investigations, claims, actions or suits relating to the
Intradigm Patent Rights pending against or, to Intradigm’s knowledge, threatened
against Intradigm or its Affiliates in any court or by or before any
governmental body or agency in the United States or any foreign country.
     10.3. Representations and Warranties of Acuity. Acuity represents and
warrants to Intradigm that the following are true and correct as of the date
hereof:
               (a) Acuity is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full corporate
power to own its properties and conduct the business presently being conducted
by it, and is duly qualified to do business in, and is in good standing under,
the laws of all states in which its activities or assets require such status,
except in any case where the failure to be so qualified and in good standing
would not be material.
               (b) Acuity has full corporate right, power and authority to
perform its obligations pursuant to this Agreement, and this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Acuity. This Agreement has been duly
and validly executed by Acuity. Upon execution and

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delivery of this Agreement, it will be the valid and binding obligation of
Acuity enforceable in accordance with its terms, subject to equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditor’s rights and remedies generally.
               (c) The execution, delivery and performance of this Agreement
does not, and the consummation of the transactions therein contemplated will not
violate any law, rule, regulation, order, judgment or decree binding on Acuity
or result in a breach of any term of the certificate of incorporation or by-laws
of Acuity or any contract, agreement or other instrument to which Acuity is a
party, except in each case to an extent not material. No authorization is
required by Acuity for the execution, delivery, or performance of this Agreement
by Acuity, except in each case to an extent not material.
     10.4. Limitation on Warranties. Except as expressly provided in this
Agreement, neither Party makes any representation or warranty to the other,
whether express or implied, either in fact or by operation of law, by statute or
otherwise, and both Parties specifically disclaim any and all implied or
statutory warranties, including, without limitation, any warranty of
merchantability or warranty of fitness for a particular purpose. In addition,
each Party understands and agrees that neither Party warrants or commits that
the Topical siRNA will be successfully developed, be submitted for applicable
Regulatory Approval (except as expressly required under this Agreement), receive
applicable Regulatory Approval or be successfully marketed or commercialized.
Without limiting the indemnity obligations set forth in Article XII for the
items described therein, neither Party shall have liability or responsibility to
the other Party for any such failure in the research and development, Agency
approval, manufacturing, marketing or sales efforts, except to the extent such
failure results from the Party’s willful misconduct or gross negligence.
ARTICLE XI
INDEMNIFICATION; INSURANCE
     11.1. Indemnification.
               (a) Acuity Indemnification. Acuity agrees to indemnify and hold
forever harmless Intradigm and its Affiliates and each of their agents,
directors, officers and employees from and against any loss, damage, action,
proceeding, expense, liability, physical or emotional injury or death, or loss
of service or consortium, including reasonable attorney’s fees (“Loss”) arising
from or in connection with (i) the research, development, manufacture, use,
offer for sale, sale or importation by Acuity or its Affiliates of Licensed
Products or Topical siRNA, except for any Loss for which Intradigm has agreed to
indemnify Acuity pursuant to Section 11.1(b) below; (ii) the breach or
inaccuracy of any representations, warranties or covenants made by Acuity in
this Agreement; and (iii) the gross negligence or willful misconduct of Acuity
or its Affiliates or any of their agents, directors officers or employees.
               (b) Intradigm Indemnification. Intradigm agrees to indemnify and
hold forever harmless Acuity and its Affiliates and each of their agents,
directors, officers, and employees from and against any Loss arising from or in
connection with: (i) Intradigm’s or its Affiliates’ research and development
activities in connection with the Topical siRNA or the activities of any
Intradigm personnel in connection with the research, development, manufacture,

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use, sale, storage or handling of the Topical siRNA, except for any Loss for
which Acuity has agreed to indemnify Intradigm pursuant to Section 11.1(a)
above; (ii) the breach or inaccuracy of any representations, warranties or
covenants made by Intradigm in this Agreement, (iii) the gross negligence or
willful misconduct of Intradigm or its Affiliates or any of their agents,
directors, officers or employees; and (iv) the research, development,
manufacture, use, offer for sale, sale or importation of Licensed Products by
Intradigm or any of its Affiliates or any of their distributors, sublicensees or
agents.
     11.2. Procedure. A Party seeking indemnity hereunder (an “Indemnified
Party”) shall promptly notify the other Party (the “Indemnifying Party”) upon
being notified or otherwise made aware of a suit, action or claim; provided that
failure to provide such notice shall not affect the obligation of the
Indemnifying Party to indemnify except to the extent that the Indemnifying Party
is materially prejudiced thereby. The Indemnifying Party shall defend and
control any proceedings, and the Indemnified Party shall be permitted to
participate at its own expense, unless there shall be a conflict of interest
which would prevent representation by joint counsel, in which event the
Indemnifying Party shall pay for the Indemnified Party’s separate counsel
pursuant to Section 11.1 above. The Indemnifying Party may not settle the suit
or otherwise consent to any judgment in such suit without the written consent of
the Indemnified Party (such consent not to be unreasonably withheld or delayed).
The Parties shall cooperate in the defense of any Third Party claim.
     11.3. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR ANY CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OR EXPENSES, INCLUDING
DAMAGES FOR LOST PROFITS, LOSS OF OPPORTUNITY OR USE OF ANY KIND, SUFFERED BY
THE OTHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE.
     11.4. Insurance.
               (a) During the term of this Agreement and for a period of five
(5) years after its expiration or earlier termination, each Party shall obtain,
at its sole cost and expense, liability insurance applicable to its performance
under this Agreement that meets the following requirements:
               (b) the insurance shall insure such Party against all liability
related to its activities relating to the development, manufacture, use or sale
of Products (whether such Party’s liability arises from its own conduct or by
virtue of its participation in this Agreement), including liability for bodily
injury, property damage, wrongful death, and any contractual indemnity
obligations imposed by this Agreement; and
               (c) the insurance shall be in amounts that are reasonable and
customary in the United States in the pharmaceutical industry, but in no event
shall liability insurance relating to manufacture, use, sale or distribution of
a marketed Product maintained by such Party cover less than (a) two million
dollars ($2,000,000) per occurrence (or claim) and an annual aggregate of two
million dollars ($2,000,000) during clinical testing of Licensed Products and
Topical siRNA and (b) a commercially reasonable amount after completion of
clinical testing. All such policies shall include a contractual endorsement
naming the other Party to this

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Agreement as an additional insured and require the insurance carriers to provide
such other Party with no less than thirty (30) days written notice of any change
in the terms or coverage of the policies or their cancellation.
ARTICLE XII
TERM; TERMINATION
     12.1. Term. This Agreement shall take effect as of the date hereof and
shall continue in effect for twenty years unless earlier terminated in
accordance with the provisions of this Article XII (such date being referred to
as the “Termination Date”).
     12.2. Acuity Product Specific Termination.
               (a) Acuity may terminate its obligations under Article IV,
Article V, Section 7.1 and Section 7.3, in whole or in part on a country by
country basis, if Acuity shall have reasonably determined to terminate or
discontinue the clinical testing, regulatory approval or commercialization of
the Topical siRNA.
               (b) Upon such termination, the Parties’ rights and obligations
under this Agreement (exclusive of the confidentiality obligations of Article IX
and indemnity obligations of Article XI hereof, each of which shall survive the
termination) shall terminate as to the countries so terminated and be of no
further force or effect as to the countries so terminated.
     12.3. Notification of Termination by Acuity. Acuity shall exercise its
right of termination by the provision of written notice to Intradigm within
sixty (60) days of the occurrence of any of the events set forth in
Section 12.2, such notice to contain the details supporting such termination.
     12.4. Termination of Agreement by the Parties. This Agreement may be
terminated:
               (a) By mutual written consent of each of Intradigm and Acuity; or
               (b) Upon written notice by a Party if (i) the other Party shall
have been dissolved, ceased active business operations or liquidated, unless
such dissolution, cessation or liquidation results from reorganization,
acquisition, merger or similar event, or (ii) bankruptcy or insolvency
proceedings, including any proceeding under Title 11 of the U.S. Code, have been
brought by or against the other Party and, in the event such a proceeding has
been brought against the other Party, remains undismissed for a period of sixty
(60) days, or an assignment has been made for the benefit of such Party’s
creditors or a receiver of such Party’s assets has been appointed (a “Bankruptcy
Event”); or
               (c) By either Acuity or Intradigm, upon ninety (90) days prior
written notice, if the other Party is in material default, and fails to cure
such breach within ninety (90) days following receipt of written notice from the
non-breaching Party specifying the breach to be cured.

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     12.5. Consequences of Termination.
               (a) Upon termination of this Agreement in whole each Party shall
return to the other all relevant records and materials in its possession or
control containing confidential information of the other Party.
               (b) At the time of any termination of this Agreement under
Section 12.4 other than termination by Intradigm under 12.4(c), if the Topical
siRNA has been Launched in the affected country prior to such termination, then
Acuity shall have the option to maintain in effect the license granted hereunder
respecting the Topical siRNA, subject to Acuity’s obligation to pay royalties
under Section 7.3 above.
     12.6. Surviving Rights. Termination of this Agreement for any reason shall
be without prejudice to:
               (a) The rights and obligations of the parties provided in
Section 2.1, Articles IX and XI hereof, and the representations and warranties
provided in Article X, all of which shall survive such termination;
               (b) Any other rights, obligations or liabilities which shall have
accrued to the benefit of either Party prior to such termination (including
without limitation Acuity’s obligation to pay all milestone and royalty payments
which shall have accrued hereunder up to and including the effective date of
such termination), all of which shall survive such termination; and
               (c) Any other rights of remedies provided at law or in equity
which either party may otherwise have against the other.
ARTICLE XIII
MISCELLANEOUS
     13.1. Force Majeure. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or loss on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, fire, explosion, flood, strike, lockout, embargo, act of God, or
any other similar cause beyond the reasonable control of the defaulting Party,
provided that the Party claiming force majeure has exerted all reasonable
efforts to avoid or remedy such force majeure and given prompt notice to the
other Party.
     13.2. Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand, sent
via overnight courier, sent by facsimile, or mailed by first class certified or
registered mail, return receipt requested, postage prepaid:

                          If to Acuity: to       With a copy to:
 
      Acuity Pharmaceuticals, Inc.           Pepper Hamilton LLP
 
      3701 Market Street           3000 Two Logan Square
 
      Philadelphia, PA, 19104           Philadelphia, PA 19103
 
      Attn: Dale R. Pfost, Ph.D.           Attn: Ilan Katz

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                          If to Intradigm: to            
 
      Intradigm Corporation            
 
      12115 Parklawn Drive, Suite K            
 
      Rockville, MD 20852            
 
      Attn: John A. Spears, Ph.D.            

or to such other person or entity or at such other address as any party shall
designate by notice to the other in accordance herewith.
     Notices provided in accordance with this Section 13.2 shall be deemed
delivered (i) upon personal delivery with signature required, (ii) one Business
Day after they have been sent to the recipient by reputable overnight courier
service (charges prepaid and signature required) (iii) upon confirmation, answer
back received, of successful transmission of a facsimile message containing such
notice if sent between 9:00 a.m. and 5:00 p.m., local time of the recipient, on
any Business Day, and as of 9:00 a.m. local time of the recipient on the next
Business Day if sent at any other time, or (iv) three Business Days after
deposit in the mail. The term “Business Day” as used in this Section 13.2 shall
mean any day other than Saturday, Sunday or a day on which banking institutions
are not required to be open in the State of New Jersey.
13.3. Governing Law; Dispute Resolution.
               (a) This Agreement shall be governed by the laws of the State of
Delaware, as such laws are applied to contracts entered into and to be performed
within such state, as though made and to be fully performed therein without
regard to conflicts of law principles thereof. The Parties agree to submit to
the personal jurisdiction in any Federal or State court of competent
jurisdiction seated in the State of Delaware, and waive any objection as to
venue or inconvenience of forum.
               (b) The Parties shall initially attempt in good faith to resolve
any significant controversy, claim, allegation of a Default or dispute arising
out of or relating to this Agreement (hereinafter collectively referred to as a
“Dispute”) through negotiations between senior executives of Acuity and
Intradigm. If the Dispute is not resolved within thirty (30) days (or such other
period of time mutually agreed upon by the Parties) of notice of the Dispute,
then the Parties agree to submit the Dispute to non-binding mediation on terms
and procedures to be mutually agreed to for a period of ninety (90) days. Any
mediation proceedings shall be treated as settlement discussions and therefore
shall be confidential, and no mediator may testify for either Party in any later
proceeding relating to the dispute. No recording or transcript shall be made of
the mediation proceedings. Each Party shall bear its own costs and expenses of
mediation, and the Parties shall share equally the fees and expenses of the
mediator.
               (c) If the Dispute is not resolved through negotiations or
mediation as set forth above, then either Party may commence litigation;
provided, that this Section 13.3 shall not be construed to prevent a Party from
seeking injunctive relief without observing the requirements of Section 13.3(b).

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     13.4. Non-waiver of Rights. Except as specifically provided for herein, the
waiver from time to time by any of the Parties of any of their rights or their
failure to exercise any remedy shall not operate or be construed as a continuing
waiver of same or of any other of such Party’s rights or remedies provided in
this Agreement.
     13.5. No Agency. Neither Party shall by virtue of this Agreement have any
power to bind the other to any obligation nor shall this Agreement create any
relationship of agency, partnership or joint venture.
     13.6. Severability. If any term, covenant, or condition of this Agreement
or the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (i) subject to clause (ii) of this
Section 13.6 the remainder of this Agreement, or the application of such term,
covenant or condition other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant, or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law and (ii) the Parties hereto covenant and agree to renegotiate
any such term, covenant, or application thereof in good faith in order to
provide a reasonably acceptable alternative to the term, covenant, or condition
of this Agreement or the application thereof that is invalid or unenforceable.
     13.7. Entire Agreement. This Agreement, including the exhibits and
schedules hereto as in effect from time to time pursuant to the terms hereof,
sets forth all the covenants, promises, agreements, warranties, representations,
conditions, and understandings between the Parties hereto in the scope of the
collaboration, and supersedes and terminates all prior agreements and
understanding between the parties under this Agreement. No subsequent
alteration, amendment, change, or addition to this Agreement shall be binding
upon the Parties hereto unless reduced to writing and signed by the respective
authorized officers of the Parties.
     13.8. Assignment. No Party shall, without the prior written consent (not to
be unreasonably withheld or delayed) of the other Party having been obtained,
assign or transfer this Agreement to any Third Party, provided, however, that
any Party may assign or transfer this Agreement to any Affiliate, provided that
the assigning Party shall guarantee the performance of that Affiliate, or to any
successor by merger of such Party, or to the Purchaser of all or substantially
all of such assets of its business, without the prior written consent of the
other Party hereto. This Agreement shall be binding upon and shall inure to the
benefit of the Parties and their successors and permitted assigns.
     13.9. Facsimile Execution. This Agreement may be executed in facsimile
counterparts each of which is hereby agreed to have the legal binding effect of
an original signature. The Parties hereto agree to forward the original
signatures by overnight mail to the other Party upon execution.
     13.10. License Survival During Bankruptcy. All rights and licenses granted
under or pursuant to this Agreement to the Intradigm Intellectual Property are,
and shall otherwise be deemed to be, for purposes of Paragraph 365(n) of the
U.S. Bankruptcy Code, licenses of rights to “Intellectual Property” as defined
under Paragraph 101(35A) of the U.S. Bankruptcy Code. The parties agree that
Acuity, as a licensee of such rights under this Agreement, shall retain and may
fully exercise all of its rights and elections under the U.S.

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Bankruptcy Code, subject to performance by Acuity of its obligations under this
Agreement. The parties further agree that, in the event Intradigm elects to
terminate this Agreement because of a Bankruptcy Event and Acuity elects to
continue the licenses under this Agreement as contemplated by the preceding
sentence, then Acuity shall be entitled, upon reasonable request, to have
access, in confidence, to such of Intradigm Intellectual Property not already in
Acuity’s possession, as shall be reasonably necessary to make use of the license
rights under this Agreement without participation by Intradigm.
****

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first indicated
above.

                  ACUITY PHARMACEUTICALS, INC.    
 
           
 
  By:   /s/ Dale R. Pfost
 
   
 
      Name: Dale R. Pfost    
 
      Title: President and Chief Executive Officer    
 
                INTRADIGM CORPORATION    
 
           
 
  By:   /s/ John A. Spears
 
   
 
      Name: John A. Spears    
 
      Title: Chairman and Chief Executive Officer    

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