Document:

Exhibit 10.15

 

Confidential Materials omitted and filed separately with the

Securities and Exchang Commission. Asterisks denote omissions.

 

PUBLIC HEALTH SERVICE

 

PATENT LICENSE AGREEMENT — NONEXCLUSIVE

 

COVER PAGE

 

For PHS internal use only:

 

License Number:

 

License Application Number: [**]

 

Serial Number(s) of Licensed Patent(s) or Patent Application(s):

 

See. Appendix A

 

Licensee:

 

Merrimack Pharmaceuticals

 

Cooperative Research and Development Agreement (CRADA) Number (if a subject invention):

 

NONE

 

Additional Remarks:

 

NONE

 

Public Benefit(s):

 

See, Paragraphs 5.1, 10.3 and 10.4

 

This Patent License Agreement, hereinafter referred to as the “Agreement”, consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A (List of Patent(s) or Patent Application(s)), Appendix B (Fields of Use and Territory), Appendix C (Royalties), Appendix D ((Benchmarks and Performance), Appendix E (Commercial Development Plan), Appendix F (Example Royalty Report), and Appendix G (Royalty Payment Options). The Parties to this Agreement are:

 

1)             The National Institutes of Health (“NIH”) or the Food and Drug Administration (“FDA”), hereinafter singly or collectively referred to as “PHS”, agencies of the United States Public Health Service within the Department of Health and Human Services (“HHS”); and

 

2)             Merrimack Pharmaceuticals, Inc., a Massachusetts corporation, having offices at One Kendall Square, Building 700, Second Floor, Cambridge, Massachusetts 02139, and its Subsidiaries, as defined in Paragraph 2.16, hereinafter referred to as “Licensee.”

 

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PHS PATENT LICENSE AGREEMENT—NONEXCLUSIVE

 

PHS and Licensee agree as follows:

 

1.             BACKGROUND

 

1.1           In the course of conducting biomedical and behavioral research, PHS investigators made inventions that may have commercial applicability.

 

1.2           By assignment of rights from PHS employees and other inventors, HHS, on behalf of the Government, owns intellectual property rights claimed in any United States or foreign patent applications or patents corresponding to the assigned inventions. HHS also owns any tangible embodiments of these inventions actually reduced to practice by PHS.

 

1.3           The Secretary of HHS has the authority to enter into this Agreement for the licensing of rights to these inventions under 35 U.S.C. §§200-212, the Federal Technology Transfer Act of 1986, 15 U.S.C. §3710(a), and the regulations governing the licensing of Government-owned inventions, 37 CFR Part 404. The Secretary of HHS has delegated to PHS the authority to enter into this Agreement.

 

1.4           PHS desires to transfer these inventions to the private sector through commercialization licenses to facilitate the commercial development of products and processes for public use and benefit.

 

1.5           Licensee desires to acquire commercialization rights to certain of these inventions in order to develop processes, methods, or marketable products for public use and benefit.

 

2.             DEFINITIONS

 

2.1           “Benchmarks” mean the performance milestones that are set forth in Appendix D.

 

2.2           “Collaborator” means a third party to whom Licensee grants a sublicense, as provided for in Paragraph 4.1, for furthering research and development of the Licensed Products and Licensed Processes and where such sublicense does not include the right to (a) sell Licensed Products, (b) import or export Licensed Products for sale, (c) sell products produced using Licensed Processes, or (d) import or export products produced using Licensed Processes for sale.

 

2.3           “Commercial Development Plan” means the written commercialization plan detailed in Appendix E.

 

2.4           “First Commercial Sale” means the initial transfer by or on behalf of Licensee of Licensed Products or the initial practice of a Licensed Process by or on behalf of Licensee, or its Sublicensees, in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales.

 

2.5           “Government” means the Government of the United States of America.

 

2.6           “Licensed Fields of Use” means the fields of use identified in Appendix B, Section I.

 

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2.7           “Licensed Patent Rights” shall mean:

 

(a)           Patent applications and PCT patent applications or patents listed in Appendix A, all divisions and continuations of these applications, all patents issuing from these applications, divisions, and continuations, and any reissues, reexaminations, and extensions of all these patents;

 

(b)           to the extent that the following contain one or more claims directed to the invention or inventions disclosed in 2.7(a):

 

(i)            continuations-in-part of 2.7(a);

 

(ii)           all divisions and continuations of these continuations-in-part;

 

(iii)          all patents issuing from these continuations-in-part, divisions, and continuations;

 

(iv)          priority patent application(s) of 2.7(a); and

 

(v)           any reissues, reexaminations, and extensions of all these patents; and

 

(c)           to the extent that the following contain one or more claims directed to the invention or inventions disclosed in 2.7(a): all counterpart foreign and U.S. patent applications and patents to 2.7(a) and 2.7(b), including those listed in Appendix A; and

 

(d)           Subject to the proviso that if the claims in any continuation-in-part as set forth in 2.7(b) or 2.7(c) are subject to a terminal disclaimer they would be considered part of the Licensed Patent Rights, Licensed Patent Rights shall not include 2.7(b) or 2.7(c) to the extent that they contain one or more claims directed to new matter which is not the subject matter disclosed in 2.7(a).

 

2.8           “Licensed Processes” means processes, which in the course of being practiced, would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction. Notwithstanding the foregoing, for purposes of calculating Net Sales only Licensed Processes shall not include processes which are the subject of a patent application within the Licensed Patent Rights which patent application has been pending in excess of [**] years from the date it was actually filed and not its effective filing date.

 

2.9           “Licensed Products” means tangible materials, which in the course of manufacture, use, sale, or importation, would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction. Notwithstanding the foregoing, for purposes of calculating Net Sales only Licensed Products shall not include processes which are the subject of a patent application within the Licensed Patent Rights which patent application has been pending in excess of [**] years from the date it was actually filed and not its effective filing date.

 

2.10         “Licensed Territory” means the geographical area identified in Appendix B, Section II.

 

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2.11         “Most Favored Licensee” means that Licensee will not, with respect to any royalty payment to which said status is accorded, be subject to terms and conditions which are less favorable to Licensee than any other third party paying the same royalty payment with respect to a Licensed Product or Licensed Process within the Licensed Field of Use.

 

2.12         “Net Sales” means the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee or its Sublicensees, and from leasing, renting, or otherwise making Licensed Products available to others without sale or other dispositions, whether invoiced or not, less returns and allowances, discounts and charge-backs, rebates and refunds, retroactive price adjustments, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted. For avoidance of doubt, payment made to PHS shall only be due once for sales of Licensed Products or practice of Licensed Processes whereby such payments are made either by Licensee or its Sublicensees, not both. No deductions shall be made for commissions paid to individuals, whether they are with independent sales agencies or regularly employed by Licensee or its Sublicensees, and on its payroll, or for the cost of collections.

 

2.13         “Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case, under these conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

 

2.14         “Pro Rata Share” is used in reference to the amount of patent expenses to be reimbursed by Licensee in accordance with Paragraph 6.7 of this Agreement, and is calculated to be equal to one (1) divided by the total number of agreements including the Licensed Patent Rights that include the Licensed Fields of Use and is measured (a) for Future Patent Prosecution Expenses as set forth in Appendix C, Section VII(B) at the time when a request for payment thereof is made or (b) with respect to the calculation of the amount of any credit due to Licensee at the time of First Commercial Sale by Licensee.

 

2.15         “Sublicensee(s)” means a third party to whom Licensee grants a sublicense of the rights hereunder as described in Article 4.

 

2.16         “Subsidiary” of a party means any corporation, company, or other entity more than fifty percent (50%) of whose outstanding securities representing the right, other than as affected by events of default, to vote for the election of directors or other governing authorities are now or hereafter owned or controlled, directly or indirectly by such party, and where such party has the legal right to bind such Subsidiary to the terms of this Agreement, but such corporation, company or other entity shall be deemed to be a Subsidiary only so long as such control exists.

 

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3.             GRANT OF RIGHTS

 

3.1           PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement, (a) a nonexclusive license under the Licensed Patent Rights in the Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import any Licensed Products in the Licensed Fields of Use set forth in Appendix B, Section I, Paragraphs (a) and (b) and to practice and have practiced any Licensed Processes in the Licensed Fields of Use set forth in Appendix B, Section I, Paragraphs (a) and (b) and (b) a nonexclusive license under the Licensed Patent Rights and in the Licensed Territory to make and have made, to use and have used, but not to sell and have sold or to offer to sell and to import and Licensed Products in the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (c) and to practice and have practiced any Licensed Processes in the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (c).

 

3.2           This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of PHS other than the Licensed Patent Rights regardless of whether these patents are dominant or subordinate to the Licensed Patent Rights.

 

3.3           Upon the Effective Date of this Agreement, the prior license, [**] effective August 30, 2005 by and between PHS and Licensee will be terminated.

 

4.             SUBLICENSING

 

4.1           Upon written approval, which shall include prior review of any sublicense agreement by PHS and which shall not be unreasonably withheld and subject to the provisions regarding sublicenses granted to a Collaborator as set forth in this paragraph, Licensee may enter into sublicensing agreements in the Licensed Fields of Use and in the Licensed Territory for the Licensed Patent Rights only when Licensee is sublicensing additional intellectual property rights that belong to Licensee in conjunction with the Licensed Patent Rights to the Sublicensee. In the event that Licensee is granting the sublicense to a Collaborator for purposes of engaging in collaborative research efforts involving the Licensed Patent Rights such a sublicense is not required to include additional intellectual property that belongs to Licensee.

 

4.2           Licensee agrees that any sublicenses granted by it shall provide that the obligations to PHS of Paragraphs 8.1, 10.1, 10.2, 12.5, and 13.7-13.9 of this Agreement shall be binding upon the Sublicensee as if it were a party to this Agreement. Licensee further agrees to attach copies of these Paragraphs to all sublicense agreements.

 

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

 

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

 

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5.             STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

 

5.1           Prior to the First Commercial Sale, Licensee agrees to provide PHS, upon PHS request and subject to availability, with reasonable quantities of Licensed Products or materials made through the Licensed Processes for PHS  in vitro research use.

 

5.2           Licensee agrees that products used or sold in the United States embodying Licensed Products or produced through use of Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from PHS.

 

6.             ROYALTIES AND REIMBURSEMENT

 

6.1           Licensee agrees to pay PHS a noncreditable, nonrefundable license issue royalty (“Execution Fee”) as set forth in Appendix C, Section I.

 

6.2           Licensee agrees to pay PHS a nonrefundable Annual Royalty as set forth in Appendix C, Section II.

 

6.3           Licensee agrees to pay PHS earned royalties as set forth in Appendix C, Section III.

 

6.4           Licensee agrees to pay PHS benchmark royalties (“Development Milestone Payments”) as set forth in Appendix C, Section IV.

 

6.5           In addition to any earned royalties due to PHS on behalf of Sublicensees as provided for in Paragraph 6.3 of this Agreement, Licensee agrees to pay to PHS an additional royalty as a milestone payment tied to the sublicensing of the Licensed Patent Rights (“Sublicensing Milestone Payment”). The specific terms and conditions associated with this Sublicensing Milestone Payment are set forth in Appendix C, Section V.

 

6.6           In addition to any royalty payments described in Paragraphs 6.1 through 6.5 of this Agreement, in the event that Licensee assigns this Agreement to any third party other than a Sublicensee, Licensee shall pay PHS, as an additional royalty, the “Assignment Consideration” as set forth in Appendix C, Section VI.

 

6.7           With regard to expenses incurred by PHS and associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights, Licensee shall reimburse PHS, as an additional royalty, in the manner set forth in Appendix C, Section VII.

 

6.8           A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that:

 

(a)           the application has been abandoned and not continued;

 

(b)           the patent expires or irrevocably lapses; or

 

(c)           all of the claims have been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.

 

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6.9           When calculating Net Sales for purposes of determining the Earned Royalty due pursuant to Paragraph 6.3, no multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Licensed Patent Rights.

 

6.10         On sales of Licensed Products by Licensee to Sublicensees or on sales made in other than an arms-length transaction, the value of the Net Sales attributed under this Article 6 to this transaction shall be that which would have been received in an arms-length transaction, based on sales of like quantity and quality products on or about the time of this transaction

 

6.11         Under exceptional circumstances, for example if Licensee comes to be the only party with rights under and of the particular Licensed Patent Rights, Licensee may be given the right to assume responsibility for the preparation, filing, prosecution, or maintenance of any patent application or patent included with the Licensed Patent Rights. In that event, Licensee shall directly pay the attorneys or agents engaged to prepare, file, prosecute, or maintain these patent applications or patents and shall provide PHS with copies of each invoice associated with these services as well as documentation that these invoices have been paid.

 

6.12         PHS agrees, upon written request, to provide Licensee with summaries of patent prosecution invoices for which PHS has requested payment from the Licensee under Paragraph 6.7.

 

6.13         Licensee may elect to surrender its rights in any country of the Licensed Territory under any of the Licensed Patent Rights upon sixty (60) days written notice to PHS and owe no payment obligation under Paragraph 6.7 for patent-related expenses incurred in that country after the effective date of the written notice.

 

7.             PATENT FILING, PROSECUTION, AND MAINTENANCE

 

7.1           Except in exceptional circumstances, as provided for in Paragraph 6.11 above, PHS agrees to take responsibility for the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights. PHS agrees to keep Licensee fully informed as to the status of the preparation, filing, prosecution, and maintenance of all patent applications and patents included in the Licensed Patent Rights. PHS will take any comments received from Licensee with respect to the preparation, filing, prosecution, and maintenance of all patent applications and patents included in the Licensed Patent Rights into good faith consideration. In the event that PHS decides to abandon the preparation, filing, prosecution, and maintenance of any of the patent applications and patents included in the Licensed Patent Rights, it will provide notice of such decision to Licensee and will allow Licensee to assume responsibility for such activities in any such Licensed Patent Rights to Licensee.

 

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8.             RECORD KEEPING

 

8.1           Licensee agrees to keep accurate and correct records of Licensed Products made, used, sold, or imported and Licensed Processes practiced under this Agreement appropriate to determine the amount of royalties due PHS. These records shall be retained for at least [**] years following a given reporting period and shall be available during normal business hours for inspection, at the expense of PHS, by an independent accountant or other designated auditor selected by PHS for the sole purpose of verifying reports and royalty payments hereunder. The accountant or auditor shall only disclose to PHS information relating to the accuracy of reports and royalty payments made under this Agreement. If an inspection shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then Licensee shall reimburse PHS for the cost of the inspection at the time Licensee pays the unreported royalties, including any additional royalties as required by Paragraph 9.8. All royalty payments required under this Paragraph shall be due within [**] days of the date PHS provides Licensee notice of the payment due.

 

9.             REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

 

9.1           Prior to signing this Agreement, Licensee has provided PHS with the Commercial Development Plan referred to in more detail in Appendix E, and under which Licensee intends to bring the subject matter of the Licensed Patent Rights to the point of Practical Application. This Commercial Development Plan is hereby incorporated by reference into this Agreement. Based on this plan, performance Benchmarks are determined as specified in Appendix D.

 

9.2           Licensee shall provide written reports on its product development progress or efforts to commercialize under the Commercial Development Plan for each of the Licensed Fields of Use. These written reports are due within [**] days after [**] of each calendar year beginning on [**]. The first written report will detail the progress made from the Effective Date of this Agreement through [**]. These progress reports shall include, but not be limited to: progress on research and development, status of applications for regulatory approvals, manufacturing, marketing, importing, and sales during the preceding calendar year, as well as, plans for the present calendar year. PHS also encourages these reports to include information on any of Licensee’s public service activities that relate to the Licensed Patent Rights. If reported progress differs from that projected in the Commercial Development Plan and Benchmarks, Licensee shall explain the reasons for such differences. In any annual report, Licensee may propose amendments to the Commercial Development Plan, acceptance of which by PHS may not be denied unreasonably. Licensee agrees to provide any additional information reasonably required by PHS to evaluate Licensee’s performance under this Agreement. Licensee may amend the Benchmarks at any time upon written approval by PHS. PHS shall not unreasonably withhold approval of any request of Licensee to extend the time periods of this schedule if the request is supported by a reasonable showing by Licensee of diligence in its performance under the Commercial Development Plan and toward bringing the Licensed Products to the point of Practical Application.

 

9.3           Licensee shall report to PHS the dates for achieving Benchmarks specified in Appendix D and the First Commercial Sale in each country in the Licensed Territory within [**] days of such occurrences.

 

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9.4           Commencing with First Commercial Sale, Licensee shall submit to PHS, within [**] days after each [**] ending [**], a royalty report, as described in the example in Appendix F, setting forth for the preceding [**] period the amount of the Licensed Products sold or Licensed Processes practiced by or on behalf of Licensee in each country within the Licensed Territory, the Net Sales, and the amount of royalty accordingly due. With each royalty report, Licensee shall submit payment of earned royalties due. If no earned royalties are due to PHS for any reporting period, the written report shall so state. The royalty report shall be certified as correct by an authorized officer of Licensee and shall include a detailed listing of all deductions made under Paragraph 2.10 to determine Net Sales made under Article 6 to determine royalties due.

 

9.5           Licensee agrees to forward to PHS, on a [**] basis, a copy of reports received by Licensee from its sublicensees during the preceding [**] period as shall be pertinent to a royalty accounting to PHS by Licensee for activities under the sublicense.

 

9.6           Royalties due under Article 6 shall be paid in U.S. dollars and payment options are listed in Appendix G. For conversion of foreign currency to U.S. dollars, the conversion rate shall be the New York foreign exchange rate quoted in The Wall Street Journal on the day that the payment is due, and any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to U.S. dollars shall be paid entirely by Licensee. The royalty report required by Paragraph 9.4 shall be mailed to PHS at its address for Agreement Notices indicated on the Signature Page.

 

9.7           Licensee shall be solely responsible for determining if any tax on royalty income is owed outside the United States and shall pay this tax and be responsible for all filings with appropriate agencies of foreign governments.

 

9.8           Additional royalties may be assessed by PHS on any payment that is more than [**] days overdue at the rate of [**] percent ([**]%) per month. This [**] percent ([**]%) per month rate may be applied retroactively from the original due date until the date of receipt by PHS of the overdue payment and additional royalties. The payment of any additional royalties shall not prevent PHS from exercising any other rights it may have as a consequence of the lateness of any payment.

 

9.9           All plans and reports required by this Article 9 and marked “confidential” by Licensee shall, to the extent permitted by law, be treated by PHS as commercial and financial information obtained from a person and as privileged and confidential, and any proposed disclosure of these records by the PHS under the Freedom of Information Act (FOIA), 5 U.S.C. §552 shall be subject to the predisclosure notification requirements of 45 CFR §5.65(d).

 

10.           PERFORMANCE

 

10.1         Licensee shall use its reasonable commercial efforts to bring the Licensed Products and Licensed Processes to Practical Application. “Reasonable commercial efforts” for the purposes of this provision shall include adherence to the Commercial Development Plan in Appendix E and performance of the Benchmarks in Appendix D as may be amended from time to time in accordance with the provisions of Paragraphs 9.2 and 14.4. The efforts of the Sublicensee will be considered the efforts of the Licensee.

 

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10.2         Upon the First Commercial Sale, until the expiration or termination of this Agreement, Licensee shall use its reasonable commercial efforts to make Licensed Products and Licensed Processes reasonably accessible to the United States public.

 

10.3         Licensee agrees, after its First Commercial Sale, to make reasonable quantities of Licensed Products or materials produced through the use of Licensed Processes available on a compassionate use basis to patients, either through the patient’s physician(s) or the medical center treating the patient.

 

10.4         Licensee agrees, after its First Commercial Sale and as part of its marketing and product promotion, to develop educational materials (e.g., brochures, website, etc.) directed to patients and physicians detailing the Licensed Products or medical aspects of the prophylactic and therapeutic uses of the Licensed Products.

 

10.5         Licensee agrees to supply, to the Mailing Address for Agreement Notices indicated on the Signature Page, the Office of Technology Transfer, NIH with inert samples of the Licensed Products or Licensed Processes or their packaging for educational and display purposes only.

 

11.           INFRINGEMENT AND PATENT ENFORCEMENT

 

11.1         PHS and Licensee agree to notify each other promptly of each infringement or possible infringement of the Licensed Patent Rights, as well as, any facts which may affect the validity, scope, or enforceability of the Licensed Patent Rights of which either Party becomes aware.

 

11.2         In the event that a declaratory judgment action alleging invalidity of any of the Licensed Patent Rights shall be brought against PHS, PHS agrees to notify Licensee that an action alleging invalidity has been brought. PHS does not represent that it shall commence legal action to defend against a declaratory action alleging invalidity. Licensee shall take no action to compel the Government either to initiate or to join in any declaratory judgment action. Should the Government be made a party to any suit by motion or any other action of Licensee, Licensee shall reimburse the Government for any costs, expenses, or fees, which the Government incurs as a result of the motion or other action. Upon Licensee’s payment of all costs incurred by the Government as a result of Licensee’s joinder motion or other action, these actions by Licensee shall not be considered a default in the performance of any material obligation under this Agreement.

 

12.           NEGATION OF WARRANTIES AND INDEMNIFICATION

 

12.1         PHS offers no warranties other than those specified in Article 1.

 

12.2         PHS does not warrant the validity of the Licensed Patent Rights and makes no representations whatsoever with regard to the scope of the Licensed Patent Rights, or that the Licensed Patent Rights may be exploited without infringing other patents or other intellectual property rights of third parties.

 

12.3         PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

 

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12.4         PHS does not represent that it shall commence legal actions against third parties infringing the Licensed Patent Rights.

 

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

 

(a)           the use by or on behalf of Licensee, its directors, employees, its Sublicensees, or third parties of any Licensed Patent Rights; or

 

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

 

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

 

13.           TERM, TERMINATION, AND MODIFICATION OF RIGHTS

 

13.1         This Agreement is effective when signed by all parties “Effective Date”, unless the provisions of Paragraph 14.15 are not fulfilled, and shall extend to the expiration of the last to expire of the Licensed Patent Rights unless sooner terminated as provided in this Article 13.

 

13.2         In the event that Licensee is in default in the performance of any material obligations under this Agreement, including but not limited to the obligations listed in Paragraph 13.5, and if the default has not been remedied within [**] days after the date of notice in writing of the default, PHS may terminate this Agreement by written notice and pursue outstanding royalties owed through procedures provided by the Federal Debt Collection Act.

 

13.3         In the event that Licensee becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a third party’s intention to file an involuntary petition in bankruptcy, Licensee shall immediately notify PHS in writing. Furthermore, PHS shall have the right to terminate this Agreement immediately upon Licensee’s receipt of written notice.

 

13.4         Licensee shall have a unilateral right to terminate this Agreement in any country or territory by giving PHS sixty (60) days written notice to that effect.

 

13.5         PHS shall specifically have the right to terminate or modify, at its option, this Agreement, if PHS determines that the Licensee:

 

(a)           is not executing the Commercial Development Plan, as may be amended from time to time in accordance with the provisions of Paragraphs 9.2 and 14.4, submitted with its request for a license and the Licensee cannot otherwise demonstrate to PHS’ satisfaction that the Licensee has taken, or can be expected to take within a reasonable time, effective steps to achieve Practical Application of the Licensed Products or Licensed Processes;

 

(b)           has not achieved the Benchmarks, as may be amended from time to time in accordance with the provisions of Paragraphs 9.2 and 14.4, as may be modified under Paragraph 9.2;

 

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(c)           has willfully made a false statement of, or willfully omitted, a material fact in the license application or in any report required by this Agreement;

 

(d)           has committed a material breach of a covenant or agreement contained in this Agreement;

 

(e)           is not keeping Licensed Products or Licensed Processes reasonably available to the public after commercial use commences;

 

(f)            cannot reasonably satisfy unmet health and safety needs; or

 

(g)           cannot reasonably justify a failure to comply with the domestic production requirement of Paragraph 5.2, unless waived.

 

13.6         In making the determination referenced in Paragraph 13.5, PHS shall take into account the normal course of such commercial development programs conducted with sound and reasonable business practices and judgment and the annual reports submitted by Licensee under Paragraph 9.2. Prior to invoking termination or modification of this Agreement under Paragraph 13.5, PHS shall give written notice to Licensee providing Licensee specific notice of, and a [**] day opportunity to respond to, PHS’ concerns as to the items referenced in 13.5(a)-13.5(g). If Licensee fails to alleviate PHS’ concerns as to the items referenced in 13.5(a)-13.5(g) or fails to initiate corrective action to PHS’ satisfaction, PHS may terminate this Agreement.

 

13.7         PHS reserves the right according to 35 U.S.C. §209(d)(3) to terminate or modify this Agreement if it is determined that the action is necessary to meet the requirements for public use specified by federal regulations issued after the date of the license and these requirements are not reasonably satisfied by Licensee.

 

13.8         Within [**] days of receipt of written notice of PHS’ unilateral decision to modify or terminate this Agreement, Licensee may, consistent with the provisions of 37 CFR §404.11, appeal the decision by written submission to the designated PHS official.  The decision of the designated PHS official shall be the final agency decision. Licensee may thereafter exercise any and all administrative or judicial remedies that may be available.

 

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

 

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14.           GENERAL PROVISIONS

 

14.1         Neither party may waive or release any of its rights or interests in this Agreement except in writing. The failure of the Government to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right by the Government or excuse a similar subsequent failure to perform any of these terms or conditions by Licensee.

 

14.2         This Agreement constitutes the entire agreement between the Parties relating to the subject matter of the Licensed Patent Rights, Licensed Products and Licensed Processes, and all prior negotiations, representations, agreements, and understandings are merged into, extinguished by, and completely expressed by this Agreement.

 

14.3         The provisions of this Agreement are severable, and in the event that any provision of this Agreement shall be determined to be invalid or unenforceable under any controlling body of law, this determination shall not in any way affect the validity or enforceability of the remaining provisions of this Agreement.

 

14.4         If either party desires a modification to this Agreement, the parties shall, upon reasonable notice of the proposed modification by the party desiring the change, confer in good faith to determine the desirability of the modification. No modification shall be effective until a written amendment is signed by the signatories to this Agreement or their designees.

 

14.5         The construction, validity, performance, and effect of this Agreement shall be governed by Federal law as applied by the Federal courts in the District of Columbia.

 

14.6         All Agreement Notices required or permitted by this Agreement shall be given by prepaid, first class, registered or certified mail or by an express/overnight delivery service provided by a commercial carrier, properly addressed to the other party at the address designated on the Signature Page, or to any other address as may be designated in writing by such other party. Agreement Notices shall be considered timely if such notices are received on or before the established deadline date or sent on or before the deadline date as verifiable by U.S. Postal Service postmark or dated receipt from a commercial carrier. Parties should request a legibly dated U.S. Postal Service postmark or obtain a dated receipt from a commercial carrier or the U.S. Postal Service. Private metered postmarks shall not be acceptable as proof of timely mailing.

 

14.7         This Agreement shall not be assigned by Licensee except:

 

(a)           with the prior written consent of PHS, this consent shall not to be withheld unreasonably; or

 

(b)           as part of a sale or transfer of substantially the entire business of Licensee relating to operations which concern this Agreement; and

 

(c)           Licensee shall notify PHS within [**] days of any assignment of this Agreement by Licensee.

 

13

 

14.8         Licensee agrees in its use of any PHS-supplied materials to comply with all applicable statutes, regulations, and guidelines, including PHS and HHS regulations and guidelines. Licensee agrees not to use the materials for research involving human subjects or clinical trials in the United States without complying with 21 CFR Part 50 and 45 CFR Part 46. Licensee agrees not to use the materials for research involving human subjects or clinical trials outside of the United States without notifying PHS, in writing, of the research or trials and complying with the applicable regulations of the appropriate national control authorities. Written notification to PHS of research involving human subjects or clinical trials outside of the United States shall be given no later than [**] days prior to commencement of the research or trials.

 

14.9         Licensee acknowledges that it is subject to and agrees to abide by the United States laws and regulations (including the Export Administration Act of 1979 and Arms Export Control Act) controlling the export of technical data, computer software, laboratory prototypes, biological materials, and other commodities. The transfer of these items may require a license from the appropriate agency of the Government or written assurances by Licensee that it shall not export these items to certain foreign countries without prior approval of the agency. PHS neither represents that a license is or is not required or that, if required, it shall be issued.

 

14.10       Licensee agrees to mark the Licensed Products or their packaging sold in the United States with all applicable U.S. patent numbers and similarly to indicate “Patent Pending” status. All Licensed Products manufactured in, shipped to, or sold in other countries shall be marked in a manner to preserve PHS patent rights in those countries.

 

14.11       By entering into this Agreement, PHS does not directly or indirectly endorse any product or service provided, or to be provided, by Licensee whether directly or indirectly related to this Agreement. Licensee shall not state or imply that this Agreement is an endorsement by the Government, PHS, any other Government organizational unit, or any Government employee. Additionally, Licensee shall not use the names of NIH, PHS, FDA or HHS or the Government or their employees in any advertising, promotional, or sales literature without the prior written approval of PHS.

 

14.12       The Parties agree to attempt to settle amicably any controversy or claim arising under this Agreement or a breach of this Agreement, except for appeals of modifications or termination decisions provided for in Article 13. Licensee agrees first to appeal any unsettled claims or controversies to the designated PHS official, or designee, whose decision shall be considered the final agency decision. Thereafter, Licensee may exercise any administrative or judicial remedies that may be available.

 

14.13       Nothing relating to the grant of a license, nor the grant itself, shall be construed to confer upon any person any immunity from or defenses under the antitrust laws or from a charge of patent misuse, and the acquisition and use of rights pursuant to 37 CFR Part 404 shall not be immunized from the operation of state or Federal law by reason of the source of the grant.

 

14.14       Paragraphs 4.3, 6.4, 8.1, 9.5-9.9, 12.1-12.5, 13.8, 13.9, 14.12 and 14.14 of this Agreement shall survive termination of this Agreement.

 

14

 

14.15       The terms and conditions of this Agreement shall, at PHS’ sole option, be considered by PHS to be withdrawn  from Licensee’s consideration and the terms and conditions of this Agreement,  and the Agreement itself to be null and void,  unless this Agreement is executed  by the Licensee and a fully executed original is received by PHS within sixty (60) days from the date of PHS signature found at the Signature Page.

 

SIGNATURES BEGIN ON NEXT PAGE

 

15

 

PHS PATENT LICENSE AGREEMENT — NONEXCLUSIVE

 

SIGNATURE PAGE

 

	
For   PHS:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Steven M. Ferguson
    	
 
    	
2/8/08
    
	
Steven   M. Ferguson
    	
 
    	
Date
    
	
Director,   Division of Technology Development and Transfer
    	
 
    	
 
    
	
Office   of Technology Transfer
    	
 
    	
 
    
	
National   Institutes of Health
    	
 
    	
 
    

 

Mailing Address for Agreement notices:

 

Chief, Monitoring & Enforcement Branch

Office of Technology Transfer

National Institutes of Health

6011 Executive Boulevard, Suite 325

Rockville, Maryland  20852-3804 U.S.A.

 

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

 

	
by:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Edward J. Stewart
    	
 
    	
2/20/08
    
	
Signature   of Authorized Official
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
Edward   J. Stewart
    	
 
    	
Lisa A. Evren
    
	
Printed   Name
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vice   President, Business Development
    	
 
    	
2/20/08 SVP and CFO
    
	
Title
    	
 
    	
 
    

 

I.      Official and Mailing Address for Agreement notices:

 

Edward J. Stewart

 

Vice President, Business Development

 

Merrimack Pharmaceuticals

 

One Kendall Square

 

Building 700; 2nd Floor

 

Cambridge, MA  02139

 

16

 

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

 

	
Edward J. Stewart
    	
 
    	
 
    
	
Name
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vice   President, Business Development
    	
 
    	
 
    
	
Title
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Mailing   Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merrimack   Pharmaceuticals
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
One   Kendall Square
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Building   700; 2nd Floor
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Cambridge,   MA  02139
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Email   Address:
    	
tstewart@merrimackpharma.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Phone:
    	
617.441.1000
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Fax:
    	
617.491.1386
    	
 
    	
 
    

 

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

 

17

 

APPENDIX A — PATENT(S) OR PATENT APPLICATION(S)

 

Patent(s) or Patent Application(s):

 

I.  U.S. Patents and Patent Applications

 

[**]

 

II.  PCT Application and Foreign Patents and Patent Applications

 

[**]

 

18

 

APPENDIX B — LICENSED FIELDS OF USE AND TERRITORY

 

I.              Licensed Fields of Use:

 

As provided for in Paragraph 2.5 the Licensed Fields of Use are set forth below:

 

(a)           Therapeutics:

 

Research, development and commercialization of Licensed Products or Licensed Processes for the treatment of erbB-3 related diseases using the Licensed Patent Rights.

 

(b)           Diagnostics;

 

Research, development and commercialization of diagnostic products for the identification, detection and management of disease related to the activity or levels of expression of erbB-3 (“erbB-3 related disease”) using the Licensed Patent Rights. For purposes of this Agreement Diagnostics includes prognostic or predictive assays as well as assays used to monitor or select patients for treatment with the Licensed Products or Licensed Processes.

 

(c)           Internal Research:

 

Research and development efforts which require the Licensed Patent Rights including drug screening programs where the Licensed Products and Licensed Processes would not be within the Licensed Fields of Use set forth in Paragraphs (a) and (b) above.

 

II.            Licensed Territory:

 

(a)           As provided for in Paragraph 2.10 the Licensed Territory is worldwide.

 

19

 

APPENDIX C — ROYALTIES

 

Royalties:

 

I.                                         EXECUTION FEE

 

As provided for in Paragraph 6.1 of this Agreement, Licensee agrees to pay to PHS a noncreditable, nonrefundable Execution Fee, in the amount of [**] Dollars ($[**]). The Execution Fee accrues as of the Effective Date of the Agreement and is payable to PHS in two installments as follows:

 

(a)                                  A first installment in the amount of [**] Dollars ($[**]) is payable within [**] days from the Effective Date of this Agreement; and

 

(b)                                 A second installment in the amount of [**] Dollars ($[**]) is payable to PHS on the [**] anniversary of the Effective Date of this Agreement.

 

II.                                     ANNUAL ROYALTY

 

As provided for in Paragraph 6.2 of this Agreement, Licensee agrees to pay to PHS a nonrefundable Annual Royalty, The Annual Royalty is apportioned as follows:

 

(a)                                  For the period up to and including the year of [**] the amount of the Annual Royalty due and payable to PHS is [**] Dollars ($[**]). The first Annual Royalty payment, will be due [**] and is payable to PHS within [**] days thereof. For each subsequent year of the Agreement the Annual Royalty is due on [**] and is payable to PHS within [**] days thereof. The Annual Royalty payments for the time period up to [**] are [**] against any other royalty payments as set forth in Paragraphs 6.1through 6.6 of this Agreement.; and

 

(b)                                 Beginning with the [**] following [**] and on each subsequent [**] thereafter until the expiration or termination of this Agreement, the Annual Royalty will be considered a minimum annual royalty payment (“MAR”). The MAR will be in the amount of [**] Dollars ($[**]). The MAR is creditable only against [**]payments as provided for by Paragraph 6.3 and will only be creditable against [**]payments due for that [**] (e.g. The MAR is paid [**] it will be creditable against earned royalties for the calendar year [**] only). The MAR will be due on [**] of each calendar year and is payable to PHS within [**] days thereof.

 

20

 

III.                                 EARNED ROYALTY PAYMENTS

 

As provided for in Paragraph 6.3 of this Agreement and subject to the Most Favored Licensee definition of Paragraph 2.11, Licensee agrees to pay PHS earned royalties as set forth below:

 

(a)                                  For sales within the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (a) (Therapeutics), Licensee agrees to pay to PHS, a nonrefundable earned royalty on Net Sales in an amount equal to [**] percent ([**]%) divided by the [**] of the value of Net Sales by or on behalf of Licensee or its Sublicensees. The earned royalty as set forth herein is to be paid in accordance with the reporting provisions of Paragraph 9.4 of this Agreement and calculated in accordance with the conditions set forth in Paragraph 9.5 of this Agreement. Notwithstanding the forgoing the total number of Licensed Products which may be used to reduce the royalty rate from the initial rate of [**] percent ([**]%) is [**].

 

(b)                                 For sales within the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (b) (Diagnostics), Licensee agrees to pay to PHS, a nonrefundable earned royalty on Net Sales in an amount equal to [**] percent ([**]%) divided by the [**] of the value of Net Sales by or on behalf of Licensee or its Sublicensees. The earned royalty as set forth herein is to be paid in accordance with the reporting provisions of Paragraph 9.4 of this Agreement and calculated in accordance with the conditions set forth in Paragraph 9.5 of this Agreement. Notwithstanding the forgoing the total number of Licensed Products which may be used to reduce the royalty rate from the initial rate of [**] percent ([**]%) is [**].

 

IV.                                 DEVELOPMENTAL MILESTONE PAYMENTS

 

As provided for in Paragraph 6.4 of this Agreement and subject to the Most Favored Licensee definition of Paragraph 2.11, Licensee agrees to pay PHS a nonrefundable developmental milestone payments associated with specific Licensed Fields of Use as set forth below:

 

(a)                                  For the development of Therapeutics (Appendix B(I)(a))

 

(1)                                  A Validation Milestone Payment, as additional consideration indicative of the value of the Licensed Patent Rights, in the amount of [**] Dollars ($[**]). The Validation Milestone Payment is due upon each occurrence of the [**], and where [**] (a) is for a Licensed Product or (b) for a product produced by a Licensed Process, or (c) contains descriptions of materials or methods within the scope of the Licensed Patent Rights. Notwithstanding the foregoing, the total amount of any benchmark payments under this Paragraph (a)(1) shall not exceed [**] Dollars ($[**]). Each payment is due upon achieving the milestone and is payable within [**] days thereof. The obligation to pay the Validation Milestone Payment survives any termination or expiration of this Agreement.

 

(2)                                  A Clinical Milestone Payment upon achieving the first [**] in the amount of [**] Dollars ($[**]).  The Clinical Milestone Payment is due upon achieving the milestone and is payable to PHS within [**] days thereof.  The obligation to pay the Clinical Milestone Payment survives any termination or expiration of this Agreement

 

21

 

(3)                                  A Regulatory Approval Milestone Payment, upon achieving the first occurrence of, [**], for example [**], for a Licensed Product, a Licensed Process, or a product made by a Licensed Process or from a Licensed Product, from the [**], in the amount of [**] Dollars ($[**]). The Regulatory Approval Milestone Payment is due upon achieving the milestone and is payable to PHS within [**] days thereof. The obligation to pay the Regulatory Milestone Payment survives any termination or expiration of this Agreement.

 

(b)                                 For the development of Diagnostics (Appendix B(I)(b))

 

(1)                                  A Regulatory Milestone Payment, in the amount of [**] Dollars ($[**]), upon the first occurrence of the [**], where such [**] is for a diagnostic and/or prognostic product that [**]. For purposes of this Paragraph activity includes but is not limited to [**]. This milestone payment is due upon achieving the milestone and is payable to PHS within [**] days thereof. The obligation to pay the Regulatory Milestone Payment survives any termination or expiration of this Agreement.

 

Upon the Effective Date of this Agreement the obligation to pay the Milestone Payments set forth in Appendix C, Section C of the prior license between PHS and Licensee having PHS reference number [**] and effective August 30, 2005 is extinguished and replaced by the obligation to make certain milestone payments as set forth in this, Section IV, Paragraphs (a)(1) and (b)(1).

 

V.                                     SUBLICENSING MILESTONE

 

As provided for by Paragraph 6.5, Licensee agrees to pay PHS, upon sublicensing any or all of the Licensed Patent Rights to a third party, an additional Milestone Payment in the amount of [**] Percent ([**]%) of the value of the [**] consideration due to Licensee as of the effective date of the sublicense excluding those amounts (a) received by Licensee as [**] of this Agreement and (b) those amounts received by Licensee as [**] for the Licensed Products and Licensed Processes [**] by Licensee after the Effective Date of the prior license, [**] effective August 30, 2005 by and between PHS and Licensee. The Sublicensing Milestone Payment accrues as of the effective date of the sublicense and is payable to PHS within [**] days thereof. Notwithstanding the foregoing, in the event the sublicense is one granted to a Collaborator, Licensee shall owe no sublicensing royalty under Paragraph 6.5.

 

VI.                                 ASSIGNMENT CONSIDERATION

 

As provided for by Paragraph 6.6, and subject to the Most Favored Licensee definition of Paragraph 2.11 Licensee agrees to pay PHS, as consideration for receiving PHS consent to the assignment of the Agreement as required by Paragraph 14.7, a royalty in the amount of:

 

(a)                                  [**] Dollars ($[**]), in the event that the assignment of the Agreement is required because Licensee is selling substantially all of their assets as part of a merger or acquisition.  In addition to the aforementioned Assignment Consideration outlined within this paragraph, the Assigned Licensee shall provide to PHS an updated Development Plan and Benchmarks within [**] days of the Assignment ; or

 

22

 

(b)                                 [**] Percent ([**]%) of the value of the cash consideration due to the Licensee as of the effective date of the assignment, excluding (1) [**] of this Agreement and (2) those [**] by and between PHS and Licensee, in the event that the assignment of this Agreement is required because Licensee is selling only the assets associated with the commercialization of a product requiring access to this Agreement.  In addition to the aforementioned Assignment Consideration outlined within this paragraph, the Assigned Licensee shall provide to PHS an updated Development Plan and Benchmarks within [**] days of the Assignment

 

VII.                             REIMBURSEMENT OF PATENT PROSECUTION COSTS

 

As provided for in Paragraph 6.7 of this Agreement, Licensee agrees to pay to PHS, as an additional, nonrefundable royalty representing reimbursement to PHS for the expenses incurred by or on behalf of PHS in the prosecution and maintenance of the Licensed Patent Rights. Unless specifically provided for this royalty is not creditable against any other payment obligations set forth in this Agreement. The specific terms and conditions associated with the reimbursement of PHS’ patent expenses are as follows:

 

(a)                                  For patent expenses incurred through [**] and not previously reimbursed to PHS by a third party(prior patent expenses), Licensee agrees to pay PHS [**]. This amount is equal to [**] percent ([**]%) of the expenses incurred by PHS through [**] (CY [**]) for each issued patent and PCT application as set forth in Appendix A. This payment is due as of the Effective Date of the Agreement and is payable to PHS within [**] days thereof.

 

(b)                                 For patent expenses incurred beginning [**] and not previously reimbursed to PHS by a third party (Future Patent Expenses), Licensee agrees to reimburse PHS as follows:

 

(1)                                  For any pending application within the Licensed Patent Rights, with the exception of one that is involved in any administrative proceeding as noted in Paragraphs (b)(3) and (b)(4) below, as long as the application is pending and no patent has issued, Licensee shall not be responsible for reimbursing PHS’ Future Patent Expenses. At the time of issuance of a patent for any pending application within the Licensed Patent Rights, Licensee shall pay to PHS an amount equal to (a) [**] Percent ([**]%) or (b) a [**], whichever is less, of the expenses incurred by PHS, until issuance of the patent. After issuance of the patent Future Patent Expenses are subject to the provisions of Paragraph (b)(2).

 

(2)                                  For each issued patent within the Licensed Patent Rights, with the exception of a patent that is involved in any administrative proceeding as noted in Paragraphs (b)(3) and (b)(4) below, Licensee, shall pay to PHS, an amount equal to [**] Percent ([**]%), or a [**]

 

(3)                                  In the event of an interference, reexamination, reissue, opposition proceeding or other administrative proceeding of similar nature conducted before a National Patent Office and initiated by Licensee or at Licensee’s request, by PHS on behalf of Licensee, Licensee will pay to PHS an amount equal to [**] Percent ([**]%) of PHS’ Future Patent Prosecution Expenses related to the administrative proceedings; and

 

23

 

(4)                                  In the event of an interference, reexamination, reissue, opposition proceeding or other administrative procedure of a similar nature conducted before a National Patent Office initiated by a third party, Licensee will pay to PHS an amount equal to [**] Percent ([**]%) or a [**], whichever is less, of PHS’ Future patent Expenses related to the administrative proceedings.

 

For any Future Patent Expenses payment described in Paragraphs (b)(1) through (b)(4) above, the amount of the Future Patent Expenses is based on PHS’ Future Patent Expenses incurred with respect to the Licensed Patent Rights for any given calendar year, and may be billed to Licensee on an annual basis, although the interval for billing such expenses may be greater. Any Future Patent Prosecution Expenses to be reimbursed by Licensee are due as of the date which PHS incurs such expenses but are not payable by Licensee until a period not to exceed [**] calendar days after PHS’ request for reimbursement thereof.

 

With respect to any Future Patent Expenses due or paid to PHS under Paragraph (b)(3) above and in such cases where Licensee initiates the administrative proceeding or where PHS has initiated the administrative proceeding on behalf of Licensee, at the time of First Commercial Sale,  Licensee will be entitled to a [**] as provided for in Paragraph 6.3 of this Agreement. The amount of the [**] available will be equal to the amount of [**] at the time of Licensee’s First Commercial Sale. Notwithstanding the foregoing, any credit due in accordance with this Paragraph shall not reduce the amount of the earned royalty due for any given calendar year below the minimum annual royalty and may, if necessary, be carried forward until the amount of the credit is exhausted.

 

24

 

APPENDIX D — BENCHMARKS AND PERFORMANCE

 

Licensee will use commercially reasonable efforts to achieve the following Benchmarks for its performance under this Agreement and, within [**] days of achieving a Benchmark, shall notify PHS that the Benchmark has been achieved.

 

I.                                         For the Licensed Field of Use set forth in Appendix B, Section I(a)

 

(a)                                  Development of antibody therapy for cancers

 

	
Benchmark
    	
 
    	
Projected Time to
   Achieve Benchmark
    
	
1.  Generation of monoclonal hybridoma cell   lines, antibody gene sequencing and antibody production.
    	
 
    	
Completed
    
	
2.  Preclinical xenograft studies in an animal   model to evaluate two human cancer indications 
    	
 
    	
December   2007
    
	
3.  GMP production of antibody to supply human   clinical trials
    	
 
    	
June   2008
    
	
4.  File an Investigational New Drug   Application (IND) with the United States Food and Drug Administration (FDA)   or an equivalent request with an equivalent regulatory body outside of the   United States
    	
 
    	
December   2008
    
	
5.  Initiate phase I clinical study dosing in   cancer patients to test safety and toxicity.    A wide variety of cancer indications may be included in these studies,   for example, breast cancer, melanoma, colon cancer, pancreatic cancer and   prostate cancer.
    	
 
    	
June   2009
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

(b)                                 Development of second therapeutic

 

	
Benchmark
    	
 
    	
Expected Date
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

II.                                     For the Licensed Field of Use as set forth in Appendix B, Section I(b)

 

	
Benchmark
    	
 
    	
Expected Date
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

25

 

APPENDIX E — COMMERCIAL DEVELOPMENT PLAN

 

In accordance with the provisions of 37 CFR Part 404 and Paragraph 9.1 of this Agreement, Licensee is providing a detailed Commercial Development Plan for the period January 1, 2007 through December 31, 2008. This detailed Commercial Development Plan will be updated on an annual basis by Licensee through the submission of the annual progress reports required by Paragraph 9.2 of this Agreement. In addition to this detailed Commercial Development Plan, for the next and following calendar years, Licensee has previously outlined their general plans for commercialization over the life of the license in the license application submitted November 2, 2006 and which has been given NIH Reference Number [**]. The Licensee’s general plans for commercial development have been reduced to the specific Benchmarks as set forth in Appendix D.

 

I.                                         Research and Development

 

[**]

 

II.                                     Regulatory Activities

 

[**]

 

III.                                 Manufacturing

 

[**]

 

IV.                                 Sublicensing

 

[**]

 

V.                                     Marketing, Importing and Sales

 

[**]

 

26

 

APPENDIX F — EXAMPLE ROYALTY REPORT

 

Required royalty report information includes:

 

·                  OTT license reference number (L-XXX-200X/0)

·                  Reporting period

·                  Catalog number and units sold of each Licensed Product (domestic and foreign)

·                  Gross Sales per catalog number per country

·                  Total Gross Sales

·                  Itemized deductions from Gross Sales

·                  Total Net Sales

·                  Earned Royalty Rate and associated calculations

·                  Gross Earned Royalty

·                  Adjustments for Minimum Annual Royalty (MAR) and other creditable payments made

·                  Net Earned Royalty due

 

Example

 

	
Catalog Number
    	
 
    	
Product Name
    	
 
    	
Country
    	
 
    	
Units Sold
    	
 
    	
Gross Sales
   (US$)
    
	
1
    	
 
    	
A
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    
	
1
    	
 
    	
A
    	
 
    	
UK
    	
 
    	
[**]
    	
 
    	
[**]
    
	
1
    	
 
    	
A
    	
 
    	
France
    	
 
    	
[**]
    	
 
    	
[**]
    
	
2
    	
 
    	
B
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    
	
3
    	
 
    	
C
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    
	
4
    	
 
    	
D
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
 
    	
Total   Gross Sales
    	
 
    	
[**]
    
	
 
    	
Less   Deductions:
    	
 
    	
 
    
	
 
    	
Freight
    	
 
    	
[**]
    
	
 
    	
Returns
    	
 
    	
[**]
    
	
 
    	
Total   Net Sales
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Royalty Rate
    	
 
    	
[**]
    
	
 
    	
Royalty Due
    	
 
    	
[**]
    
	
 
    	
Less   Creditable Payments
    	
 
    	
[**]
    
	
 
    	
Net Royalty Due
    	
 
    	
[**]
    

 

27

 

APPENDIX G — ROYALTY PAYMENT OPTIONS

 

NIH/PHS License Agreements

 

*In order to process payment via Electronic Funds Transfer sender MUST supply the following information:

 

Procedure for Transfer of Electronic Funds to NIH for Royalty Payments

 

Bank Name: [**]

 

ABA# [**]

TREAS NYC

BNF=/[**]

OBI=Licensee Name and OTT Reference Number

Dollar Amount Wired=$$

 

NOTE:  Only U.S. banks can wire directly to the Federal Reserve Bank. Foreign banks cannot wire directly to the Federal Reserve Bank, but must go through an intermediary U.S. bank. Foreign banks may send the wire transfer to the U.S. bank of their choice, who, in turn forwards the wire transfer to the Federal Reserve Bank.

 

Checks drawn on a U.S. bank account should be sent to the following address:

 

National Institutes of Health (NIH)

P.O. Box 979071

St. Louis, MO 63197-9000 USA

 

Overnight or courier deliveries should be sent to the following address:

 

US Bank

Government Lockbox SL-MO-C2GL

1005 Convention Plaza

St. Louis, MO 63101

Phone: 314-418-4087

 

Checks drawn on a foreign bank account should be sent directly to the following address:

 

National Institutes of Health (NIH)
 Office of Technology Transfer
 Royalties Administration Unit
 6011 Executive Boulevard
 Suite 325, MSC 7660
 Rockville, MD 20852
 Phone: 301-496-7057

 

All checks should be made payable to: NIH/Patent Licensing

 

The OTT Reference Number MUST appear on checks, reports and correspondence

 

28Exhibit 10.16

 

	
Final   Version
    	
22   September 2005
    	
Confidential
    

 

 

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.

 

 

LICENSE AGREEMENT

 

 

Between

 

 

Hermes Biosciences, Inc.

 

 

And

 

 

PharmaEngine, Inc.

 

 

Dated As of September 26, 2005

 

i

 

Table of Contents

 

	
ARTICLE 1   -    DEFINITION
    	
1
    
	
1.1
    	
Adverse Event
    	
1
    
	
1.2
    	
Affiliate
    	
1
    
	
1.3
    	
Business Day
    	
1
    
	
1.4
    	
CMC
    	
1
    
	
1.5
    	
Commercial Launch
    	
1
    
	
1.6
    	
Commercially Reasonable Efforts
    	
1
    
	
1.7
    	
Development Plan
    	
1
    
	
1.8
    	
Effective Date
    	
1
    
	
1.9
    	
HERMES Intellectual Property
    	
2
    
	
1.10
    	
ICH
    	
2
    
	
1.11
    	
IND
    	
2
    
	
1.12
    	
Intellectual Property
    	
2
    
	
1.13
    	
JDC
    	
2
    
	
1.14
    	
JDC Meeting
    	
2
    
	
1.15
    	
Joint Project Team
    	
2
    
	
1.16
    	
Know-How
    	
2
    
	
1.17
    	
Launch Date
    	
3
    
	
1.18
    	
Licensed Product
    	
3
    
	
1.19
    	
Marketing Plan
    	
3
    
	
1.20
    	
NDA
    	
3
    
	
1.21
    	
Net Sales
    	
3
    
	
1.22
    	
Parties
    	
3
    
	
1.23
    	
Patent Rights
    	
3
    
	
1.24
    	
PHARMAENGINE Intellectual Property
    	
4
    
	
1.25
    	
Plans
    	
4
    
	
1.26
    	
Product
    	
4
    
	
1.27
    	
Quarter
    	
4
    
	
1.28
    	
Regulatory Authorities
    	
4
    
	
1.29
    	
Retained Territory
    	
4
    
	
1.30
    	
Royalties
    	
4
    
	
1.31
    	
Serious Adverse Event
    	
4
    
	
1.32
    	
Sub-licensee
    	
4
    
	
1.33
    	
Subsequent Intellectual Property
    	
4
    
	
1.34
    	
Territory
    	
5
    
	
1.35
    	
Year
    	
5
    
	
1.36
    	
Valid Claim
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE 2   -    MANAGEMENT
    	
6
    
	
2.1
    	
Formation & Membership Of Jdc
    	
6
    
	
2.2
    	
Meeting
    	
6
    
	
2.3
    	
Responsibilities
    	
6
    
	
2.4
    	
Decision Making
    	
7
    
	
2.5
    	
Joint Project Team
    	
7
    

 

ii

 

	
ARTICLE 3   -    DEVELOPMENT & COMERCIALIZATION
    	
9
    
	
3.1
    	
Development Activities
    	
9
    
	
3.2
    	
Development Plan
    	
9
    
	
3.3
    	
Marketing Plan
    	
10
    
	
3.4
    	
Status Reporting
    	
10
    
	
3.5
    	
Determination Of Diligence
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 4   -    REGULATORY
    	
12
    
	
4.1
    	
Regulatory Approval
    	
12
    
	
4.2
    	
Adverse Event Report
    	
12
    
	
4.3
    	
Communication
    	
12
    
	
4.4
    	
Recalls
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE 5   -    LICENSES & RIGHTS OF FIRST REFUSAL
    	
14
    
	
5.1
    	
Licenses Of Hermes Intellectual Property
    	
14
    
	
5.2
    	
Licenses Of Pharmaengine Intellectual Property
    	
14
    
	
5.3
    	
Rights of First Refusal
    	
14
    
	
5.4
    	
Sub-License
    	
14
    
	
5.5
    	
Free Choice Of Marketing And Sales Partner
    	
14
    
	
5.6
    	
Free Choice Of Contract Manufacturer And Contract Research   Organization
    	
15
    
	
5.7
    	
Irinotecan
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE 6   -    INFORMATION TRANSFER
    	
16
    
	
6.1
    	
Information Transfer
    	
16
    
	
6.2
    	
Permission Of Hermes
    	
16
    
	
6.3
    	
Permission Of Pharmaengine
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 7   -    MANUFACTURE & SUPPLY
    	
17
    
	
7.1
    	
Clinical Supply
    	
17
    
	
7.2
    	
Commercial Supply
    	
17
    
	
7.3
    	
Quality
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE 8   -    PAYMENTS, TAXES & RECORDS
    	
18
    
	
8.1
    	
Consideration
    	
18
    
	
8.2
    	
Upfront And Milestone Payments
    	
18
    
	
8.3
    	
Royalties
    	
18
    
	
8.4
    	
Records
    	
18
    
	
8.5
    	
Auditing
    	
18
    
	
8.6
    	
Late Payment
    	
18
    
	
8.7
    	
Taxes
    	
19
    
	
8.8
    	
Authorization
    	
19
    
	
8.9
    	
Currency
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE 9   -    INTELLECTUAL PROPERTY
    	
20
    
	
9.1
    	
Ownership Of Inventions
    	
20
    
	
9.2
    	
Prosecution Of Patents
    	
20
    
	
9.3
    	
Infringement
    	
21
    

 

iii

 

	
9.4
    	
Claimed Infringement
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE 10   -    WARRANTY AND INDEMNIFICATION
    	
24
    
	
10.1
    	
Mutual Representations And Warranties
    	
24
    
	
10.2
    	
Authority And Binding Agreement
    	
24
    
	
10.3
    	
Absence Of Litigation
    	
24
    
	
10.4
    	
No Conflict
    	
24
    
	
10.5
    	
Disclaimer Of Warranties
    	
24
    
	
10.6
    	
No Prior Art & Sufficiency
    	
25
    
	
10.7
    	
Infringement Of Patent By Third Parties
    	
25
    
	
10.8
    	
Limitations Of Liability
    	
25
    
	
10.9
    	
Indemnification By Pharmaengine
    	
25
    
	
10.10
    	
Indemnification By Hermes
    	
26
    
	
10.11
    	
Insurance
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE 11   -    CONFIDENTIALITY
    	
28
    
	
11.1
    	
Confidentiality
    	
28
    
	
11.2
    	
Permitted Disclosures
    	
29
    
	
11.3
    	
Publications
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE 12   -    TERM & TERMINATION
    	
30
    
	
12.1
    	
Term
    	
30
    
	
12.2
    	
Termination For Cause
    	
30
    
	
12.3
    	
Termination By Hermes
    	
30
    
	
12.4
    	
Termination By Pharmaengine
    	
30
    
	
12.5
    	
Consequences Of Termination
    	
30
    
	
 
    	
 
    	
 
    
	
ARTICLE 13   -    MISCELLANEOUS
    	
31
    
	
13.1
    	
Entire Agreement
    	
31
    
	
13.2
    	
Severability
    	
31
    
	
13.3
    	
No Implied Waivers
    	
31
    
	
13.4
    	
Publicity
    	
31
    
	
13.5
    	
Dispute Resolution
    	
31
    
	
13.6
    	
Force Majeure
    	
31
    
	
13.7
    	
Assignment
    	
32
    
	
13.8
    	
Notice
    	
32
    
	
13.9
    	
Independent Contractors
    	
33
    
	
13.10
    	
Governing Law And Jurisdiction
    	
33
    
	
13.11
    	
Counterparts
    	
33
    
	
13.12
    	
Construction Of Agreement
    	
33
    
	
13.13
    	
Language
    	
34
    
	
13.14
    	
Surviving Provisions
    	
34
    
	
 
    	
 
    	
 
    
	
EXHIBIT A
    	
 
    
	
 
    	
 
    	
 
    
	
I.
    	
HERMES Patent Rights
    	
36
    

 

iv

 

LICENSE AGREEMENT

 

This agreement (“Agreement”) is entered into as of this 26th day of September, 2005 by and between Hermes Biosciences, Inc., a corporation organized under the laws of California, United States of America with its principal place of business at 61 Airport Boulevard, Suite D, South San Francisco, CA 94080, United States of America (hereinafter referred to as “HERMES”) and PharmaEngine, Inc., a corporation organized under the laws of the Republic of China with its principal place of business at 16F, 237, Sung-Chiang Road, Taipei, Taiwan 104, Republic of China (hereinafter referred to as “PHARMAENGINE”).  The parties hereto may be referred to collectively as the “Parties” and individually as the “Party”, as the case may be.

 

RECITALS

 

WHEREAS, HERMES is a biotechnology company engaged in developing drug delivery technologies for therapeutic and other biomedical applications, and has developed certain HERMES owned patents, patent applications and know-how relating to liposomal irinotecan;

 

WHEREAS, PHARMAENGINE is a biopharmaceutical company focusing on development and commercialization of novel drugs, and is interested in developing camptothecin derivatives based liposomal drugs;

 

WHEREAS, PHARMAENGINE is currently conducting phase 1 clinical trial for liposomal irinotecan which is based on the technologies that HERMES originally licensed to TTY Biopharm Company Ltd., a corporation organized under the laws of the Republic of China with its principal place of business at 4F, 170, Section 3, Min-Chuan East Road, Taipei, Taiwan 104, Republic of China (hereinafter referred to as “TTY”) under the Research and Development Agreement between HERMES and TTY dated April 1, 2001, (the “TTY Research and Development Agreement”) and TTY subsequently assigned all its licensed rights and obligations under the TTY Research and Development Agreement to PHARMAENGINE without conditions on June 10, 2003 with the consent of HERMES;

 

WHEREAS, PHARMAENGINE has paid NT$14,285,714 to TTY and US$50,000 to HERMES as the assignment fee for such assignment;

 

WHEREAS, based on the existing licensing relationship between PHARMAENGINE and HERMES under the TTY Research and Development Agreement in which HERMES grants the exclusive right to PHARMAENGINE in certain countries in the area of Asia, PHARMAENGINE now desires to further acquire the exclusive right in all countries in Europe to develop and commercialize the irinotecan based liposomal drug product(s);

 

WHEREAS, HERMES agrees to grant such rights to PHARMAENGINE, and both Parties desire to revise the terms of the existing TTY Research and Development Agreement and further expand their relationship to a licensing and co-development relationship regarding the liposomal irinotecan based drugs as set forth under this Agreement; and

 

WHEREAS, this Agreement is to replace and supersede the TTY Research and Development Agreement;

 

v

 

NOW THEREFORE, based in the foregoing premises and the mutual covenants and obligations set forth below, the Parties agree as follows:

 

vi

 

ARTICLE 1 - DEFINITION

 

GENERAL.  As used in this Agreement, unless context dictates otherwise, the following terms shall have the meanings set forth in this Article 1 and words denoting the singular shall include the plural and vice versa.

 

1.1           “Adverse Event” shall mean any unfavourable and unintended sign (including an abnormal laboratory finding), symptom or disease associated with the administration of a medicinal product whether or not considered related to the Licensed Product;

 

1.2           “Affiliate” shall mean in relation to either Party any person or entity who directly or indirectly controls, is controlled by or is under common control with that Party.  A person or entity shall be regarded as in control of another person if it owns directly or indirectly more than 40% (forty percent) of the voting stock or other ownership or income interest of another person or entity or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of another person or entity by any means whatsoever;

 

1.3           “Business Day” shall mean a day other than a Saturday, Sunday, Bank Holiday or other public or national holiday in the Territory or Retained Territory;

 

1.4           “CMC” shall mean chemistry, manufacture and controls;

 

1.5           “Commercial Launch” shall mean the first shipment by PHARMAENGINE, its Affiliate or Sub-Licensee of the Licensed Product to its wholesalers in any country of the Territory after all necessary marketing authorizations in said country have been obtained by PHARMAENIGINE in such commercial quantities of the Licensed Product as may reasonably be appropriate to establish the Licensed Product throughout the Territory (in the case of PHARMAENGINE), or the first shipment by HERMES, its Affiliate or Sub-Licensee of the Licensed Product to its wholesalers in the Retained Territory after all necessary marketing authorizations in said country have been obtained by PHARMAENIGINE in such commercial quantities of the Licensed Product as may reasonably be appropriate to establish the Licensed Product throughout the Retained Territory;

 

1.6           “Commercially Reasonable Efforts” shall mean exerting such effort and employing such resources as would normally be exerted or employed by a reasonable third party pharmaceutical company for a product of similar market potential at a similar stage of its product life, when utilizing sound and reasonable scientific, business and medical practice and judgment in order to develop the product in a timely manner and maximize the economic return to the Parties from its commercialization;

 

1.7           “Development Plan” shall mean a plan for the undertaking of all appropriate activities for the development of Licensed Product in the Territory (in the case of PHARMAENGINE) and in the Retained Territory (in the case of HERMES), to be prepared in accordance with Article 3.2;

 

1.8           “Effective Date” shall mean 26th September 2005;

 

1

 

1.9           “HERMES Intellectual Property” shall mean Intellectual Property solely owned or controlled by HERMES as listed in the Exhibit A and includes the following technologies:

 

(a)           Patent Rights and Know-How existing as of the Effective Date and listed in the Exhibit A hereto;

 

(b)           all divisions, substitutions, continuations, continuations-in-part (to the extent supported by the parent application), reissues, reexaminations, or extensions to the Patent Rights in Article 1.9(a);

 

(c)           all foreign and domestic pending patent applications and all priority rights claiming priority of, or derived from the Patent Rights in Articles 1.9(a) and 1.9(b), in all jurisdictions, including any patents issuing from any of the foregoing; and

 

(d)           any Patent Right which is issued subsequent to the Effective Date and is an improvement, modification or species invention of the Patent Rights set forth in Articles 1.9(a), 1.9(b) and 1.9(c); provided, however, that the utilization of such improvement, modification or species invention into the Licensed Product does not cause a separate application for the regulatory approval which is not merely filed due to the differences in the indication, dosage or administration route, provided such improvement or modification or species invention does not add a new functionality.  Such improvement, modification or species invention shall include, without limitations, the invention(s) regarding the loading and the stability of Licensed Product.

 

1.10         “ICH” shall mean International Conference of Harmonization;

 

1.11         “IND” shall mean an investigational new drug application or any equivalent of it issued by any of the Regulatory Authorities;

 

1.12         “Intellectual Property” shall mean Patent Rights and Know-How;

 

1.13         “JDC” shall mean a Joint Development Committee to be formed in accordance with Article 2.1;

 

1.14         “JDC Meeting” shall mean the meeting(s) of JDC held by the representatives of the Parties as defined in Article 2.2;

 

1.15         “Joint Project Team” shall mean the task force to be formed by the Parties pursuant to Article 2.5;

 

1.16         “Know-How” shall mean all information relating to the Product not in the public domain of whatsoever nature, including without limitations any information regarding the manufacturing process, any non-clinical and clinical data;

 

2

 

1.17         “Launch Date” shall mean the date of first Commercial Launch by PHARMAENIGINE of the Licensed Product in a country within the Territory;

 

1.18         “Licensed Product” shall mean any Product which is covered, in whole or in part, by a Valid Claim or Know How; made by a process covered, in whole or in part, by a Valid Claim or Know-How; or whose use is covered, in whole or in part, by a Valid Claim or Know-How.

 

1.19         “Marketing Plan” shall mean a plan for the undertaking of all appropriate activities for commercialization of Licensed Product in the Territory, including pre-Commercial Launch and post-Commercial Launch marketing activities, to be prepared in accordance with Articles 3.3;

 

1.20         “NDA” shall mean a new drug application or any equivalent of it issued by any of the Regulatory Authorities;

 

1.21         “Net Sales” shall mean all purchase price amounts invoiced to the ultimate purchaser by PHARMAENGINE or its Affiliates, or any Sub-Licensees, or their respective agents or distributors, in respect of the sale of the Licensed Product less the following items to the extent that they are actually paid or allowed and specified on any documents related to such sale:

 

(a)           normal discounts actually granted;

 

(b)           packaging, transportation and prepaid insurance charges on shipments or deliveries to customers;

 

(c)           cost of samples for regulatory testing, promotional and hospital listing purposes as set out in the Marketing Plan from time to time; and

 

(d)           sales or value added taxes actually incurred and paid by PharmaEngine, its Affiliates or any Sub-licensees in connection with the sale or delivery of the Licensed Products to customers.

 

Provided that the total, aggregate amount of deductions under paragraphs (a), (b), (c) and (d) above with respect to any unit of Licensed Product shall not exceed [**]% of the selling price;

 

1.22         “Parties” shall mean HERMES and PHARMAENGINE, and “Party” shall mean either of them;

 

1.23         “Patent Rights” shall mean all issued patents (including without limitations all reissues, extensions, substitutions, confirmations, re-registrations, re-examinations, invalidations, supplementary protection certificates and patents of addition) and all pending patent applications (including without limitation all provisional applications, continuations, continuations-in-part and divisions) which relate to the Product and the identification, characterization, synthesis, use or production of the Product and which are reasonably

 

3

 

useful or necessary or are required for developing, using, formulating, manufacturing, filling and finishing, registering, distributing and/or selling of the Product;

 

1.24         “PHARMAENGINE Intellectual Property” shall mean Intellectual Property solely owned or controlled by PHARMAENGINE;

 

1.25         “Plans” shall mean the Development Plan and the Marketing Plan;

 

1.26         “Product” shall mean any pharmaceutical composition comprising liposomally encapsulated Irinotecan [**], including salts thereof;

 

1.27         “Quarter” shall mean each three calendar-month period in any year during the term of this Agreement ending on 31st March, 30th June, 30th September and 31st December in each year and “Quarterly” has a corresponding meaning;

 

1.28         “Regulatory Authorities” shall mean the body with responsibility for reviewing and granting the clinical development and marketing authorizations of the Licensed Product in each country of the Territory or outside the Territory;

 

1.29         “Retained Territory” shall mean all countries outside the Territory;

 

1.30         “Royalties” shall mean the royalties payable to HERMES in accordance with Article 8.3;

 

1.31         “Serious Adverse Event” shall mean an Adverse Event that:

 

(a)           results in death;

 

(b)           is life threatening;

 

(c)           requires prolongation of existing hospitalization;

 

(d)           results in persistent or significant disability or incapacity; or

 

(e)           results in congenital anomaly or birth defect;

 

and/or other medically significant events that may jeopardise the patient or may require intervention to prevent one of the outcomes listed in the previous paragraphs of this definition;

 

1.32         “Sub-licensee” shall mean any sub-licensee set forth in Article 5;

 

1.33         “Subsequent Intellectual Property” shall mean any Know-How or Patent Rights owned or controlled by either Party with respect to the Licensed Product which is issued subsequent to the Effective Date and is not included in HERMES Intellectual Property.  Subsequent Intellectual Property includes without limitations improvements or modifications or species invention which adds a new functionality to the Licensed Product;

 

4

 

1.34         “Territory” shall mean Democratic People’s Republic of Korea, Indonesia, Japan, Malaysia, People’s Republic of China, Republic of the Philippines, Republic of Korea, Singapore, Taiwan, Thailand, Vietnam and all countries in Europe: including Albania, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, , Latvia, Lithuania, Macedonia, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, and Untied Kingdom;

 

1.35         “Year” shall mean a calendar year commencing from 1st January and ending on 31st December; and

 

1.36         “Valid Claim” shall mean:

 

(a)           any claim in any of the Patent Rights issued to HERMES, or to PHARMAENGINE in the future, relating to, derived from or useful for the use, making, or sale of the Product, which has not been held invalid or unenforceable by decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which is not admitted to be invalid through disclaimer or otherwise not admitted by such Party who is the patentee to be invalid; and

 

(b)           any pending claim of any Patents filed by HERMES or by PHARMAENGINE relating to, derived from or useful for the use, making, or sale of the Product; provided that examination has been timely requested for such pending claims and they are otherwise being diligently prosecuted in an effort to have them allowed and granted in an issued patent.

 

5

 

ARTICLE 2 - MANAGEMENT

 

GENERAL.  The Parties shall establish a Joint Development Committee (JDC) and a Joint Project Team.  The purposes of JDC shall be to serve as a decision-making body to undertake the responsibilities set forth in Article 2.3, and preventing or amicably resolving disputes between the Parties regarding the development of Licensed Product in both the Territory and the Retained Territory.  JDC shall have the responsibilities and authority set forth in this Article 2 and in other provisions of this Agreement.

 

2.1           FORMATION & MEMBERSHIP OF JDC.

 

(a)           Within [**] days after the Effective Date, both Parties shall establish JDC by designating its representatives by each Party to serve on JDC (“JDC Members”) and by notifying the other Party of its dates of availability for the first JDC Meeting.

 

(b)           JDC shall consist of [**] JDC Members, [**] from each of the Parties, and HERMES and PHARMAENGINE shall designate [**] representatives with appropriate expertise to serve as JDC Members.  Such representatives shall at all times include each such Party’s [**] of each such Party.  Each of the Parties may replace any or all of its representatives of JDC at any time upon written notice to the other Party in accordance with Article 13.8 of this Agreement specifying the prior representative(s) to be replaced and the replacement(s) therefor.

 

2.2           MEETING.

 

(a)           JDC shall meet at least [**] during each Year or more frequently as the Parties deem necessary, and each such meeting of JDC (JDC Meeting) of each such Year shall be held prior to [**].  JDC Meetings shall be held on such dates and times and at such places as are mutually agreed and may be held in person or by teleconference or videoconference as the Parties agree; however, at least [**] face-to-face JDC Meeting shall be held per Year.  JDC Members may also communicate, discuss, or make majority voting consensus decisions in compliance with Article 2.4 from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate.  Each party shall be responsible for all its expenses of participating in JDC Meeting.

 

(b)           If a representative of a Party is unable to attend a JDC Meeting, such Party may designate an alternate to attend such meeting.  In addition, each Party may, at its discretion, invite a reasonable number of other employees, consultants or scientific advisors to attend JDC Meeting, provided that such invitees are bound by appropriate confidential obligations.

 

2.3           RESPONSIBILITIES.  During the term of this Agreement, JDC shall:

 

(a)           discuss, review and coordinate the Development Plan of each Party;

 

6

 

(b)           facilitate the license of Patent Rights and the transfer of Know-How and other information deemed necessary for the non-clinical and clinical development, regulatory activities, commercialization of the Licensed Product or its activities under this Agreement;

 

(c)           seek the potential opportunities to plan global clinical trials for the Licensed Product and further facilitate the conduct of such global clinical trials;

 

(d)           discuss and resolve any disputes or problems under this Agreement brought by any Party;

 

(e)           cooperate to cope with any infringement as mentioned in Articles 9.3 and 9.4; and

 

(f)            perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties.

 

2.4           DECISION MAKING.

 

(a)           JDC Meetings shall be effective only if at least [**] representatives of each Party are present or participating.  All matters brought to JDC shall be determined by consensus if possible.  However, except as otherwise provided by JDC, where a  decision cannot be arrived at by consensus in JDC, the matter at issue shall be decided by majority of votes made by all JDC Members present or participating in JDC Meeting.  Each representative of each Party on JDC shall have one vote.

 

(b)           If a majority vote can not be reached, each Party shall refer such matter to the Chief Executive Officer (or other nominated officers(s)) of each Party to discuss and seek to settle the matter in dispute.

 

(c)           Notwithstanding the foregoing, PHARMAENGINE will have final decision making authorities with respect to Territory; and HERMES will have final decision making authorities with respect to Retained Territories; excepting in the event of a breach of performance by a Party under its obligations under this Agreement, in which event a dispute as to the breach shall be resolved pursuant to the Articles 13.5 and 13.10.

 

2.5           JOINT PROJECT TEAM.

 

(a)           The Parties shall establish a Joint Project Team which shall meet at least [**] times per Year [**], or more frequently as the Parties deem necessary, to ensure the technical and regulatory development of the Licensed Product under this Agreement will be timely and cooperatively executed.  Such meetings of Joint Project Team shall be held at times and dates and on the locations as are mutually agreed.  Each Party shall have the responsibility to supply or assign appropriate personnel and all relevant data and other information needed to implement and accomplish the obligations set forth below in Article 2.5(b).

 

(b)           The Joint Project Team shall have its principal obligations specifically to:

 

7

 

(1)           discuss and update the development project(s) in the Development Plan under this Agreement;

 

(2)           facilitate the coordination of the non-clinical development and clinical trials conducted by respective Parties in either the Territory or the Retained Territory;

 

(3)           exchange and share any useful or necessary information regarding the development activities under this Agreement; and

 

(4)           manage and oversee the development activities conducted by a Party under this Agreement pursuant to the terms of this Agreement.

 

8

 

ARTICLE 3 - DEVELOPMENT & COMERCIALIZATION

 

3.1           DEVELOPMENT ACTIVITIES.

 

(a)           The Parties agree that, during the term of this Agreement, PHARMAENGINE shall be responsible for funding and managing all clinical supply manufacture, non-clinical, clinical development and regulatory activities in respect of the Licensed Product in the Territory in accordance with the Development Plan of PHARMAENGINE.  Such activities shall include without limitation:

 

(1)           CMC studies regarding process research, scale up and manufacture of the Licensed Product;

 

(2)           non-clinical studies of systemic treatment in solid tumors regarding the Licensed Product;

 

(3)           clinical trials regarding the Licensed Product;

 

(4)           regulatory filings regarding the Licensed Product in the Territory;

 

(5)           establishment of strategic alliance to develop the Licensed Product in the Territory, where applicable; and

 

(6)           appointment of Sub-licenses pursuant to Article 5.4, 5.5 and 5.6, where applicable.

 

(b)           The Parties agree that, during the term of this Agreement, HERMES shall be responsible for funding and managing all non-clinical and clinical development activities in respect of the Licensed Product in the Retained Territory in accordance with the Development Plan of HERMES.  Such activities shall include without limitation:

 

(1)           CMC studies regarding formulation research of the Licensed Product;

 

(2)           non-clinical studies of the local treatment for brain tumors regarding the Licensed Product;

 

(3)           clinical trials regarding the Licensed Product; and

 

(4)           regulatory filings regarding the Licensed Product.

 

3.2           DEVELOPMENT PLAN.

 

(a)           The Development Plan shall include the scientific, experimental, process development, non-clinical, clinical and regulatory activities, goals and timelines for the development of the Licensed Product for the coming Year in the Territory (in the case of PHARMAENGINE) and the Retained Territory (in the case of HERMES).  The Development Plan shall be updated annually and be finalized

 

9

 

only after review by JDC.  The Development Plan in all other provisions under this Agreement shall mean the finalized Development Plan reviewed by JDC.  The annual Development Plan of each of the Parties shall be submitted to JDC for discussion and review prior to [**] in each Year (the deadline for submitting the initial Development Plan may be determined by JDC if necessary).

 

(b)           Under the auspices of each of the Parties, the Parties shall have the following responsibilities:

 

(1)           Each of the Parties shall be responsible for the preparation of all protocols and the conduct of all activities for which such Party is designated as the Party responsible for such activities in the Development Plan or the determination of JDC;

 

(2)           PHARMAENGINE shall be responsible for preparing all necessary applications for regulatory approval of the Licensed Products in the countries in the Territory for which PHARMAENGINE is designated as the Party responsible for such preparation in the Development Plan or the determination of JDC, and PHARMAENGINE shall also be responsible to conduct all communications with the regulatory authorities in the Territory during the registration process.  HERMES shall be responsible for preparing all necessary applications for regulatory approval of the Licensed Products in the Retained Territory for which HERMES is designated as the Party responsible for such preparation in the Development Plan or the determination of JDC, and HERMES shall also be responsible to conduct all communications with the Regulatory Authorities in the Retained Territory during the registration process; and

 

(3)           Each of the Parties shall provide all technical data and support necessary to assist the responsible Party to prepare such applications.

 

(c)           PHARMAENGINE shall use its best efforts to implement the development of the Licensed Product in the Territory in accordance with the timeline(s) approved by JDC or set forth in the Development Plan and in accordance with the terms of this Agreement.  PHARMAENGINE shall further require its Sub-licensee in the Territory to use its best efforts to develop the Licensed Product in the Territory.

 

3.3           MARKETING PLAN.  The Marketing Plan shall include the detailed projected pre-Commercial Launch and post-Commercial Launch activities, goals and timelines for the commercialization of the Licensed Product for the coming Year in the Territory.  Not less than [**] months subsequent to the first regulatory approval date, PHARMAENGINE shall prepare and provide to HERMES an initial Marketing Plan and the annual Marketing Plan of each subsequent Year shall be provided to HERMES prior to [**] in each such Year.

 

3.4           STATUS REPORTING.  Each Party shall prepare a [**] Development Report  regarding each  [**]-month period, which shall show the status and progress of the development in

 

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respect of the Licensed Product that this Party has made during such [**]-month period against the activities and timelines listed in the Development Plan or decided in writing by JDC.  Except as may be otherwise agreed upon in writing by the other party, such [**] Development Report shall be submitted to the other party within [**] days past each [**]-month period [**] and at least [**] days prior to JDC Meeting set for in Article 2.  The [**] Development Report due on [**] of the year [**] shall be the [**], which details the progress that the Party has made against the activities and timelines listed in the Development Plan or decided in writing by JDC during the [**].

 

3.5           DETERMINATION OF DILIGENCE.  If HERMES believes that PHARMAENGINE does not meet its diligence obligations pursuant to this Article 3 with respect to the Licensed Product, HERMES shall notify PHARMAENGINE with a written notice, stating the fact(s) and reason(s) held by HERMES.  PHARMAENGINE shall respond in writing to this notice within [**] days on receipt of this notice from HERMES.  If the Parties still can not resolve this dispute, it shall be brought to and decided by JDC as set forth in Article 2 and if necessary resolved pursuant to Articles 13.5 and 13.10.

 

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ARTICLE 4 - REGULATORY

 

4.1           REGULATORY APPROVAL.  In connection with the obligations set forth in Article 3.2, PHARMAENGINE shall use all of its best endeavors to obtain regulatory approval for the Licensed Product in accordance with the Development Plan in the Territory during the term of this Agreement.  Each Party, subject to Articles 6.2 and 6.3 hereunder, shall have the right to access and cross-reference the IND(s) and NDA(s) held by the other Parties or any regulatory filing made under this Agreement to the extent necessary or useful, in the case of PHARMAENGINE, to exercise the licenses and rights granted under this agreements, and in the case of HERMES, to exercise any retained right in respect of Licensed Product.

 

4.2           ADVERSE EVENT REPORT.  During the term of this Agreement, each Party shall report any actual or suspected Serious Adverse Event and non-Serious Adverse Event in respect of the Licensed Product or any information relevant to such Serious Adverse Event to:

 

(a)           the Regulatory Authorities in compliance with the applicable laws or regulations with respect to the adverse drug reaction reports in the Territory (in case of PHARMAENGINE) and in the Retained Territory (in the case of HERMES);

 

(b)           the primary liaison person (as set forth in Article 4.3) of the other Party any Serious Adverse Event information obtained by such Party concerning drug reactions that are life-threatening or cause death by telephone or in writing within [**] Business Days [**] days after initial determination by such Party that the Adverse Event is serious;

 

(c)           the primary liaison person (as set forth in Article 4.3) of the other Party any Serious Adverse Event information obtained by such Party and not falling within this Article 4.2 (b) by telephone or in writing within [**] Business Days after initial determination by such Party that the Adverse Event is serious; and

 

(d)           the primary liaison person (as set forth in Article 4.3) of the other Party any non-Serious Adverse Event information obtained by such Party in writing within [**] days after the end of the [**].

 

4.3           COMMUNICATION.  Within [**] days of the Effective Date, each Party shall appoint a primary liaison person to communicate with each other with regard to information to be exchanged pursuant to this Article 4.2.

 

4.4           RECALLS.  HERMES may at its discretion and shall, if requested to do so by PHARMAENGINE, recall any Licensed Product provided by PHARMAENGINE under Article 7.1 in the Retained Territory.  The costs and expenses incurred by HERMES in connection with such recall shall be borne by HERMES, unless such recall is both:

 

(a)           requested by PHARMAENGINE or the Regulatory Authorities in the Retained Territory by reason of safety consideration caused from the manufacturing process of PHARMAENGINE; and

 

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(b)           does not arise from any material breach of this Agreement by HERMES or negligence or intentional misconduct on the part of HERMES.

 

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ARTICLE 5 - LICENSES & [**]

 

5.1           LICENSES OF HERMES INTELLECTUAL PROPERTY.  HERMES hereby grants to PHARMAENGINE an exclusive right and license under HERMES Intellectual Property applicable to the Licensed Product to develop, manufacture, market, sell, use, offer for sale and import the Licensed Product in the Territory during the term of this Agreement.

 

5.2           LICENSES OF PHARMAENGINE INTELLECTUAL PROPERTY.  PHARMAENGINE hereby grant to HERMES an exclusive right and license under PHARMAENGINE Intellectual Property applicable to the Licensed Product to develop, manufacture, market, sell, use, offer for sale and import the Licensed Product in the Retained Territory during the term of this Agreement.

 

5.3           RIGHTS OF FIRST REFUSAL.  During the term of this Agreement, if HERMES proposes to grant license rights to a third party to develop and commercialize Subsequent Intellectual Property, then HERMES shall first give to PHARMAENGINE a right of first refusal to acquire rights to use said Subsequent Intellectual Property for the purpose to develop, manufacture, market, sell, use, offer for sale and import Licensed Product based on said Subsequent Intellectual Property in the Territory.  Once HERMES identifies and describes in writing a particular Subsequent Intellectual Property, together with the proposed terms offered by a third party and deemed acceptable by HERMES for rights to develop and commercialize the Subsequent Intellectual Property in conjunction with the Licensed Product in the Territory (the “Third Party Proposal”), and delivers to PHARMAENGINE the Third Party Proposal, then PHARMAENGINE shall have ninety (90) days thereafter to give to HERMES a written notice of PHARMAENGINE’s agreement to obtain license rights to use said Subsequent Intellectual Property on the same financial terms and other terms for such license rights as are set forth in the Third Party Proposal.  If PHARMAENGINE does not elect to agree to the terms of the Third Party Proposal, then HERMES shall be free to commercialize said Subsequent Intellectual Property rights through a license to a third party, so long as HERMES does not, during the term of this Agreement, grant license rights to a third party on terms more favorable to the third party than were the terms in the Third Party Proposal.  In order to preserve the confidentiality of the third party which makes the Third Party Proposal, the identity of the third party will not be disclosed to PHARMAENGINE (unless the third party expressly authorizes such disclosure), but a general description of the nature of the third party will be furnished to PHARMAENGINE (e.g., approximate size, and general nature of business).

 

5.4           SUB-LICENSE.

 

(a)           HERMES agrees PHARMAENGINE may, with HERMES’ prior written consent, grant sub-licenses under the license granted in Article 5.1 to develop and commercialize the Licensed Product in the Territory so long as such Sub-licensee(s) honors all the terms of this Agreement for the benefit of HERMES.

 

(b)           In the case of HERMES as a licensee pursuant to Article 5.2, PHARMAENGINE agrees HERMES may grant sub-licenses under such granted license in Article 5.2 to develop or commercialize the Licensed Product in the Retained Territory so long as such Sub-licensee(s) honors all the terms of this Agreement for the benefit of PHARMAENGINE.

 

5.5           FREE CHOICE OF MARKETING AND SALES PARTNER.  Notwithstanding the foregoing in this Article 5, PHARMAENGINE may at its sole discretion, without the limitations set forth in Article 5.4, to select and grant the right to any third parties to market, sell and distribute the Licensed Product in the Territory; provided, however, that such third parties shall agree to be bound by the obligations of confidentiality at least as stringent as those set forth in Article 11 prior to the disclosure of any confidential or proprietary information obtained from HERMES.

 

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5.6           FREE CHOICE OF CONTRACT MANUFACTURER AND CONTRACT RESEARCH ORGANIZATION.  Notwithstanding the foregoing in this Article 5, PHARMAENGINE may at its sole discretion, without the limitations set forth in Article 5.4, to select and have any third-party contract manufacturer to manufacture on behalf of PHARMAENGINE the Licensed Product in the Territory, or to select and have any third-party contract research organization use the Licensed Product in the Territory to perform studies on behalf of PHARMAENGINE; provided, however, that such third parties shall agree to be bound by the obligations of confidentiality at least as stringent as those set forth in Article 11 prior to the disclosure of any confidential or proprietary information obtained from HERMES.

 

5.7           IRINOTECAN.  PHARMAENGINE acknowledges that it is aware of the fact that a third party [**] holds patent rights in some countries for the composition of matter for the irinotecan compound, which is marketed by [**] under the product name of [**]; and which patent rights are expected to expire in the year [**].

 

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ARTICLE 6 - INFORMATION TRANSFER

 

6.1           INFORMATION TRANSFER.

 

(a)           During the term of this Agreement, each Party shall provide to the other Party any material, data or other information to the extent necessary or useful for developing, making regulatory filings, or marketing the Licensed Product, including without limitations any such information relating to Patent Rights and Know-How, from time to time as such data and information is developed or acquired by such Party.  HERMES agrees to make available to PHARMAENGINE, including without limitations:

 

(1)           its Know-How and experiences in respect of the Licensed Product and the process research in liposomal formulations and scale up, and their relevant biological data; and

 

(2)           the data of the preclinical pharmacology studies, toxicology studies and clinical trials in respect of the Licensed Product for local cancer treatment.

 

PHARMAENGINE agrees to make available to HERMES, including without limitations, its Know-How and experiences in respect of the Licensed Product and scale-up procedures and all data of the preclinical pharmacology studies, toxicology studies and clinical trials.

 

(b)           All such data and information exchanged or required to be exchanged by any Party pursuant to this Article 6 or other provisions under this Agreement shall be owned by such transferring Party.

 

6.2           PERMISSION OF HERMES.  HERMES hereby grants PHARMAENGINE the right of access, the right of reference and the right to use and incorporate all information provided to PHARMAENGINE pursuant to this Article 6 or other provisions under this Agreement in obtaining the regulatory approval of the Licensed Product within the Territory and in performing the development, commercialization and all PHARMAENGINE’s obligations in respect of the Licensed Product under this Agreement.

 

6.3           PERMISSION OF PHARMAENGINE.  PHARMAENGINE hereby grants HERMES the right of access, the right of reference and the right to use and incorporate all information provided to PHARMAENGINE pursuant to this Article 6 or other provisions under this Agreement in regulatory approval of Licensed Product within the Retained Territory and in performing the development, commercialization and all HERMES’ obligations in respect of the Licensed Product under this Agreement.

 

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ARTICLE 7 - MANUFACTURE & SUPPLY

 

GENERAL.  PHARMAENGINE shall be responsible for the manufacture, supply and the export permit of the Licensed Product to HERMES at the supplier’s premises.  HERMES shall be responsible for obtaining the import permit from the FDA, or other Regulatory Authority in the Retained Territory as the case may be, and paying any costs associated with the delivery, including the costs of shipping, shipment insurance and any import or export duty, and for labeling and packaging the Licensed Product.

 

7.1           CLINICAL SUPPLY.  During the term of this Agreement, HERMES shall have the option to obtain Licensed Product from PHARMAENGINE under the terms and conditions stipulated herein.  PHARMAENGINE shall supply HERMES the Licensed Product for use by HERMES in the conduct of non-clinical or clinical trials and other activities regarding the development of the Licensed Product under this Agreement in the Retained Territory, and:

 

(a)           any Licensed Product which is supplied by PHARMAENGINE pursuant to this Article 7.1 and is used in the first phase I clinical trial conducted by HERMES in the Retained Territory shall be provided [**]; and

 

(b)           any Licensed Product which is supplied by PHARMAENGINE pursuant to this Article 7.1 and is used in the development activities, except as set forth in (a) of this Article 7.1, shall be supplied at PHARMAENGINE’s [**] including such [**].

 

7.2           COMMERCIAL SUPPLY.  The Parties, at their option, agree to negotiate in good faith on commercial terms and enter into a supply agreement regarding the commercial supply in the future.

 

7.3           QUALITY.  PHARMAENGINE agrees that any Licensed Product to be manufactured by or on behalf of PHARMAENGINE for the conduct of Plans or any purposes contemplated by this Agreement shall be manufactured in compliance with ICH guidelines and any applicable laws, guidelines and regulations, and to the best of PHARMAENGINE’s knowledge and ability shall be compliant with the requirements of the United States laws, guidelines, and regulations, including the U.S. Food and Drug Administration regulations on the manufacture of pharmaceutical products for human use.

 

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ARTICLE 8 - PAYMENTS, TAXES & RECORDS

 

8.1           CONSIDERATION.  In consideration of the rights and licenses granted hereunder to PHARMAENGINE in respect of the Licensed Product, PHARMAENGINE shall pay HERMES the amounts described in this Article 8.

 

8.2           UPFRONT AND MILESTONE PAYMENTS.  PHARMAENGINE shall pay to HERMES:

 

(a)           the upfront payment of one million United States Dollars (US $1,000,000) within [**] days after the Effective Date of this Agreement;

 

(b)           the milestone payment of [**] United States Dollars (US $[**]) within [**] days after the initiation of the [**];

 

(c)           the milestone payment of [**] United States Dollars (US $[**]) within [**] days after the initiation of the [**]; and

 

(d)           the milestone payment of [**] United States Dollars (US $[**]) within [**] days after the approval of the [**].

 

8.3           ROYALTIES.  PHARMAENGINE shall pay to HERMES the Royalties equals to the sum of [**] percent ([**]%) of the Net Sales of the Licensed Product in Europe plus [**] percent ([**]%) of the Net Sales of the Licensed Product in the Territory in Asia.  PHARMAENGINE shall prepare a statement in respect of each Quarter, which shall show for the Quarter the aggregate Net Sales.  Such statement shall be submitted to HERMES within [**] days of the end of the Quarter to which it relates together with remittance for the Royalties in respect of such Quarter.

 

8.4           RECORDS.  PHARMAENGINE shall during the term of this Agreement following the first Launch Date keep accurate records of all Net Sales and books of account containing all the data necessary for the calculation of the Royalties for [**] prior years.

 

8.5           AUDITING.  The records and books of account referred to in Article 8.4 shall, on a reasonable prior written notice not less than [**] Business Days having been given by HERMES, be open during normal working hours on any Business Day for inspection by a public accounting firm of HERMES’ own selection, except the one to which PHARMAENGINE or PHARMAENGINE’S Sub-licensee may have reasonable objection, not more often than [**] each Year, for not more than [**] prior years.  HERMES may exercise such right until the end of [**] after termination or expiration of this Agreement.  The cost of such inspection shall be borne by HERMES, provided, however, if an audit discloses an underpayment of more than five percent (5%) of the amount due for the records so audited, then the costs for such audit shall be paid by PHARMAENGINE.

 

8.6           LATE PAYMENT.  If any payment under this Article 8 is overdue, PHARMAENGINE shall pay interest thereon at an annual rate of the prime rate quoted by the Bank of America, such interest to run from the date upon which payment of such sum became due 

 

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until payment thereof in full together with such interest by PHARMAENGINE (whether before or after any judgment).

 

8.7           TAXES.  All sums due to HERMES shall be paid in full without deduction of withholding taxes, charges and other duties except insofar as HERMES shall be capable of obtaining a full credit therefore.  The Parties agree to cooperate in all respects necessary to take advantage of such double taxation agreements as may be available.  In the event that PHARMAENGINE is prohibited by law from making such payments unless such deductions are made or withheld therefrom, then PHARMAENGINE shall pay such additional amounts as necessary in order that the net amount(s) received by HERMES, after such deduction or withholding prepaid by PHARMAENGINE, equal to the amount(s) which would have been received if such deduction or withholding had not occurred; provided, however, that any approved rebate of such tax subject to Article 8.8 shall be returned to and owned by PHARMAENGINE.

 

8.8           AUTHORIZATION.  HERMES agrees to authorize and provide adequate assistances to PHARMAENGINE to file and prosecute on HERMES’ behalf all applications for and only for the tax rebate and/or exemption or reduction in accordance with Article 4 and/or Article 25 of Taiwan’s applicable Income Tax Act regarding the income of HERMES paid by PHARMAENGINE and/or the technical services rendered by HERMES to PHARMAENGINE under this Agreement.

 

8.9           CURRENCY.  Unless otherwise agreed by the Parties, all payments required to be made under this Agreement shall be made in United States Dollars via wire transfer to an account designated in advance by the receiving Party.  Where any Royalties or other sums falling due are calculated in a currency other than United States Dollars, they shall be converted into United States Dollars by reference to the exchange rate when the monies are actually converted into United States Dollars if this occurs during the payment term set forth in Articles 8.2, 8.3 and 8.6; or in the event the monies are not actually converted into United States Dollars, spot rate of currency exchange published in The Wall Street Journal, Eastern Edition for the last day of the payment term of such Quarter.

 

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ARTICLE 9 - INTELLECTUAL PROPERTY

 

9.1           OWNERSHIP OF INVENTIONS.  HERMES shall own the entire right, title and interest in and to all Patent Rights and Know-How made solely by employees or consultants of HERMES or acquired solely by HERMES.  PHARMAENGINE shall own the entire right, title and interest in and to all Patent Rights and Know-How made solely by employees or consultants of PHARMAENGINE or acquired solely by PHARMAENGINE.  The Parties shall jointly own all right, title and interest in and to all Patent Rights and Know-How made jointly by employees or consultants of both HERMES and PHARMAENGINE during the term of this Agreement; and said joint ownership rights shall be pursuant to the U.S. patent laws, that is, each joint owner is entitled to use the jointly owned rights without consent from or accounting to the other joint owner.

 

9.2           PROSECUTION OF PATENTS.

 

(a)           HERMES shall have the sole right (and not the obligation) to prosecute and maintain patent protection in the Territory for HERMES Intellectual Property solely owned by HERMES.  PHARMAENGINE shall reimburse HERMES on a [**] basis for the expenses incurred for the prosecution and maintenance of patent protection for HERMES Intellectual Property in the Territory (“Expenses”).  In the event that such patent protection licensed to PHARMAENGINE is licensed to one or more HERMES’ licensees in any country of the Territory at the time when HERMES invoices PHARMAENGINE for the aforesaid reimbursement, in said country PHARMAENGINE shall only bear the amount equal to [**].  HERMES shall bear the expense of prosecution and maintenance of HERMES Intellectual Property that HERMES elects to prosecute or maintain outside the Territory.

 

(b)           PHARMAENGINE shall have the sole right (and not the obligation) to prosecute and maintain patent protection in the Territory for PHARMAENGINE Intellectual Property solely owned by PHARMAENGINE.  In the event that such PHARMAENGINE Intellectual Property is licensed to HERMES pursuant to Article 5.2, HERMES shall reimburse or subsidize PHARMAENGINE on a Quarterly basis for the expenses incurred for the prosecution and maintenance of patent protection for such PHARMAENGINE Intellectual Property in the Retained Territory; provided, however, that in the event that such patent protection licensed to HERMES is licensed to one or more PHARMAENGINE’s licensees in any country of the Retained Territory at the time when PHARMAENGINE invoices HERMES for the aforesaid reimbursement, in said country HERMES shall only bear the amount equal to [**].  PHARMAENGINE shall bear the expense of prosecution and maintenance of PHARMAENGINE Intellectual Properly that PHARMAENGINE elects to prosecute or maintain outside the Retained Territory.

 

(c)           Except as otherwise decided in writing by JDC, HERMES shall have the right (and not the obligation) to prosecute and maintain patent protection in the Territory for any Patent Rights jointly made by HERMES and 

 

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PHARMAENGINE during the term of this Agreement in the name of both HERMES and PHARMAENGINE.  PHARMAENGINE shall make available to HERMES or its authorized attorneys, agents, or representatives, such of its employees whom HERMES in its reasonable judgment deems necessary, in order to assist it in obtaining patent protection for such jointly made patent right.  Each Party shall [**] for prosecution and maintenance for any jointly made Patent Rights under this Article 9.2(c) in the Territory and the Retained Territory.

 

(d)           In the event that a Party elects not to seek or continue to seek, or maintain, patent or secrecy protection of all or part of its Intellectual Property with respect to the Licensed Product under this Agreement (whether jointly owned by the Parties or solely owned by a Party) (the “Elected Intellectual Property”), such Party shall promptly notify the other Party in writing of such election, and the other Party shall have the right to seek or continue to seek or maintain patent or secrecy protection of said Elected Intellectual Property in its respective territory (in the Territory, if PHARMAENGINE, or in Retained Territory, if HERMES) at its own risk and expense.  In any such case, the Party that has, under this Agreement, control over seeking, continuing to seek, or maintaining protection of such Elected Intellectual Property shall, based on good faith, and upon written request from the other Party, assign its rights in and to such Elected Intellectual Property to that other Party in the other Party’s respective territory, and shall continually prosecute and maintain such Elected Intellectual Property until the completion of this assignment.

 

9.3           INFRINGEMENT.

 

(a)           Each Party shall report in writing to the other Party during the term of this Agreement any known or suspected infringement of any Patent Rights owned by a Party, or unauthorized use or misappropriation of any Know-How owned by a Party, and will provide the other Party with all available evidence supporting such infringement or unauthorized use or misappropriation.

 

(b)           PHARMAENGINE shall have the right to initiate an infringement or other appropriate suit anywhere in the Territory against any third party who at any time has infringed, or is suspected of infringing, any of HERMES Patent Rights or jointly made Patent Right in this Article 9 during the term of this Agreement applicable to the Licensed Products in the Territory, or has used without proper authorization all or any portion of the Know-How of HERMES applicable to the Licensed Products in the Territory.  HERMES shall cooperate fully with and provide all necessary assistance to PHARMAENGINE in the proceeding of such claim, at the expense of PHARMAENGINE.  HERMES may initiate such claim at its sole discretion only if PHARMAENGINE fails to initiate such claim within [**] days after receipt of a written request from HERMES which stating the infringer (or suspected infringer) and the relevant fact.

 

(c)           HERMES shall have the right to initiate an infringement or other appropriate suit anywhere in the Retained Territory against any third party who at any time has 

 

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infringed, or is suspected of infringing, any of PHARMAENGINE Patent Rights or jointly made Patent Right in this Article 9 during the term of this Agreement applicable to the Licensed Products in the Retained Territory, or has used without proper authorization all or any portion of the Know-How of PHARMAENGINE applicable to the Licensed Products in the Retained Territory.  PHARMAENGINE shall cooperate fully with and provide all necessary assistance to HERMES in the proceeding of such claim, at the expense of HERMES.  PHARMAENGINE may initiate such claim at its sole discretion only if HERMES fails to initiate such claim within [**] days after receipt of a written request from PHARMAENGINE which stating the infringer (or suspected infringer) and the relevant fact.

 

(d)           Neither Party shall settle any claims or suits involving Patent Rights of the other Party without obtaining the prior written consent of the other Party, which consent shall not be unreasonably held.

 

(e)           Any recovery realized from pursuing an infringement claim against a third party shall be distributed and allocated (i) first to reimburse [**] percents ([**]%) of the [**] costs incurred to pursue the infringement action, and (ii) the remainder shall be distributed and allocated between the Parties [**] to the damages caused to each Party by the infringement.

 

9.4           CLAIMED INFRINGEMENT.

 

(a)           In the event that a third party at any time provides a written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or Sub-licensee, claiming infringement of its patent rights or unauthorized use or misappropriation of its know-how, based upon an assertion or claim arising out of the development, use, manufacture, distribution, importation or sale of Licensed Product under this Agreement (“Third Party Claim”), such Party shall promptly notify the other Party of such Third Party Claim or the commencement of the action, suit or proceeding thereof, enclosing a copy of such Third Party Claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such Third Party Claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

 

(b)           Except as otherwise decided by JDC, the Party against which such Third Party Claim is brought shall defend against such Third Party Claim at its sole expense and the other Party shall have the option to participate in any such suit at its own expense.  Such other Party shall reasonably cooperate with the Party conducting the defense against such Third Party Claim.

 

(c)           If, in any country in the Territory, PHARMAENGINE is required (either by final judgment from a court of competent jurisdiction or pursuant to the terms of any settlement that complies with the provisions of Article 9.4) to pay a third party a royalty or make any payment of any kind for the right to practice HERMES 

 

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Intellectual Property in said country (Payment to Third Party), except as otherwise negotiated with good faith and determined by both Parties in JDC, an amount:

 

(1)           equal to the [**] percent ([**] %) of Payment to Third Party shall be deducted on a [**] basis from the Royalties payable in said country under Article 8 to the extent that such deduction shall be not more than [**] percents ([**] %) of the Royalties payable in said country under Article 8, in the event that the infringed patent right of such third party is a prior art of the technology at issue, or that the claim(s) of HERMES Patent Rights at issue is invalid or may be invalidated by such third party; and

 

(2)           equal to the Royalty to Third Party shall be deducted on a [**] basis from the Royalties payable in said country under Article 8 to the extent that such deduction shall be not more than [**] percents ([**] %) of the Royalties payable in said country under Article 8, in the event that PHARMAENGINE is necessary to acquire the license(s) from such third party while practicing the technology in accordance with HERMES Intellectual Property;

 

However, in no case shall the Royalties payable in said country after said deductions be less than [**] percent ([**] %) of Net Sales in said country.

 

(d)           Neither Party shall settle any Third Party Claim involving rights of the other Party without obtaining the prior written consent of the other Party, which consent shall not be unreasonably withheld.

 

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ARTICLE 10 - WARRANTY AND INDEMNIFICATION

 

10.1         MUTUAL REPRESENTATIONS AND WARRANTIES.  As of the Effective Date, each Party represents and warrants to the other that it is a corporation duly organized, validly existing and in good standing under the laws of the state in which it is incorporated, and has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and is contemplated in this Agreement, including, without limitation, the right to grant the licenses granted hereunder.

 

10.2         AUTHORITY AND BINDING AGREEMENT.  As of the Effective Date, each Party represents and warrants to the other that

 

(a)           it has the corporate power and authority and the legal-right to enter into this Agreement and perform its obligations hereunder;

 

(b)           it has taken all necessary corporate action on its part required to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder; and

 

(c)           the Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms.

 

10.3         ABSENCE OF LITIGATION.  As of the Effective Date, HERMES represents and warrants to PHARMAENGINE that it is not aware of any pending or threatened litigation (and has not received any communication relating thereto) which alleges that HERMES’ activities, with respect to the Licensed Product or related to this Agreement, have infringed or misappropriated any of the intellectual property rights of any other person or entity.  To the best of HERMES’ knowledge, there is no material unauthorized use, infringement or misappropriation of any of its intellectual property rights licensed hereunder.

 

10.4         NO CONFLICT.  Each Party represents and warrants to the other that it has not entered, and will not enter, into any agreement with any third party that is in conflict with rights granted to the other Party under this Agreement, and has not taken and will not take any action that would in any way prevent it from granting the rights granted to the other Party under this Agreement, or that would compete by way of commercialization of a product which is substantially similar to Licensed Product under this Agreement or otherwise materially conflict with or adversely affect the rights granted to the other Party under this Agreement.  Its performance and execution of this Agreement will not result in a breach of any other contract to which it is a party.

 

10.5         DISCLAIMER OF WARRANTIES.  EXCEPT AS SET FORTH IN THIS AGREEMENT, THIS LICENSE AND THE ASSOCIATED PATENT RIGHTS ARE PROVIDED WITHOUT ANY IMPLIED REPRESENTATIONS OR WARRANTIES, SUCH AS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

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10.6         NO PRIOR ART & SUFFICIENCY.  Except as set forth in this Agreement or as HERMES has otherwise advised PHARMAENGINE in writing prior to the Effective Date, HERMES represents and warrants to PHARMAENGINE that as of the Effective Date,

 

(a)           to the best of its knowledge, there is no prior art that would prevent at least one Valid Claim of the HERMES Patent Rights from issuance as set forth in Exhibit A(I) under any subsection of 35 U.S.C. Section 102;

 

(b)           to the best of its knowledge, it has no knowledge of any public knowledge or use anywhere, by anyone, of the subject matter claimed in at least one Valid Claim in the HERMES Patent Rights as set forth in Exhibit A(I) before the invention date thereof;

 

(c)           to the best of its knowledge, it has no knowledge of the subject matter claimed in at least one Valid Claim in the HERMES Patent Rights as set forth in Exhibit A(I) having been patented or described anywhere in a printed publication by anyone before the invention date thereof;

 

(d)           to the best of its knowledge, it has sufficient legal and/or beneficial title and ownership under its Intellectual Property rights necessary for it to fulfill its obligations under this Agreement; and

 

(e)           it has granted PHARMAENGINE a license to all Patent Rights under Hermes Intellectual Property which HERMES owns or controls in connection with the Licensed Product as of the Effective Date.

 

10.7         INFRINGEMENT OF PATENT BY THIRD PARTIES.  HERMES represents and warrants to PHARMAENGINE that as of the Effective Date, to the best of its knowledge, there is no material unauthorized use, infringement or misappropriation of any of HERMES Intellectual Property rights by third parties relevant to the licensed Product under this Agreement.

 

10.8         LIMITATIONS OF LIABILITY.  IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THIS AGREEMENT OR MANUFACTURE, SALE, OR USE OF THE LICENSED PRODUCT.

 

10.9         INDEMNIFICATION BY PHARMAENGINE.  PHARMAENGINE will indemnify and hold harmless HERMES, its trustees, officers, agents and employees, from and against any and all liability, loss, damage, action, claim or expense suffered or incurred by any such indemnified party (including reasonable attorney’s fees) (each, a “Liability”) which results from or arises out of the gross negligence or willful conduct of PHARMAENGINE with respect to the development, use, manufacture, promotions, sale, distribution or other disposition of any Licensed Product by PHARMAENGINE, its Affiliates or Sub-licensee.  However, in each case, such indemnification in this Article 10.8 shall not apply to the extent that:

 

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(a)           such Liability is attributable to the nature or unexpected properties of the Licensed Product; or

 

(b)           such Liability is a result of the gross negligence or willful misconduct of HERMES, or of a breach by HERMES of its representations or warranties hereunder, or of any matter for which HERMES is required to indemnify PHARMAENGINE under Article 10.9; or

 

(c)           such Liability is due to the fact that HERMES has not observed all reasonable instructions given by PHARMAENGINE in respect of the Licensed Product, including instructions as to warning to be given with respect to the potential or actual adverse effects of the Licensed Product, instructions to cease the administration or the sale of the Licensed Product or instructions to provide certain medical care of the patient in clinical trials under this Agreement; or

 

(d)           such Liability is derived from the production or implementation process of the Licensed Product that HERMES has performed and fails to meet the instructions or documentation provided by PHARMAENGINE.

 

10.10       INDEMNIFICATION BY HERMES.  HERMES will indemnify and hold harmless PHARMAENGINE, its trustees, officers, agents and employees from and against any Liability which results from or arises out of the gross negligence or willful conduct with respect to the development, use, manufacture, promotions, sale, distribution or other disposition of any Licensed Product by HERMES, its Affiliates or licensee.  However, in each case, such indemnification in this Article 10.9 shall not apply to the extent that:

 

(a)           such Liability is attributable to the nature or unexpected properties of the Licensed Product; or

 

(b)           such Liability is a result of the gross negligence or willful misconduct of PHARMAENGINE, its Affiliates or Sub-licensee, or respective employees, agents, directors, officers or consultants, or of a breach by PHARMAENGINE of its representation or warranties hereunder, or of any matter for which PHARMAENGINE is required to indemnify HERMES under Article 10.8; or

 

(c)           such Liability is due to the fact that PHARMAENGINE has not observed all reasonable instructions given by HERMES in respect of the Licensed Product, including instructions as to warning to be given with respect to the potential or actual adverse effects of the Licensed Product, instructions to cease the administration or the sale of the Licensed Product, or instructions to provide certain medical care of the patient in clinical trials under this Agreement; or

 

(d)           such Liability is derived from the production or implementation process of the Licensed Product that PHARMAENGINE has performed and fails to meet the instructions or documentation provided by HERMES.

 

10.11       INSURANCE.  Either Party shall, at its own expense, insure the Licensed Product against all liability claims to be in compliance with the laws and regulations in each country of

 

26

 

the Territory (in the case of PHARMAENGINE) and in the Retained Territory (in the case of HERMES), including both clinical trials insurance and product liability insurance, arising in respect of the Licensed Product.

 

27

 

ARTICLE 11 - CONFIDENTIALITY

 

11.1         CONFIDENTIALITY.  Each of the Parties agrees that any confidential or proprietary information obtained from the other Party:

 

(a)           shall not be used by the receiving Party except in connection with the activities contemplated by this Agreement or in order to further the purpose of this Agreement;

 

(b)           shall be maintained in confidence by the receiving Party; and

 

(c)           shall not be disclosed by the receiving Party to any third party who is not a consultant of, or an advisor to, the receiving Party or an Affiliates or Sub-licensee of the receiving Party without prior written permission of the disclosing Party.  Notwithstanding the foregoing, the receiving Party shall be entitled to use and disclose any confidential or proprietary information obtained from the disclosing Party which:

 

(1)           was known or used by the receiving Party or its Affiliates prior to its date of disclosure to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates; or

 

(2)           either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party rightfully in possession of the confidential or proprietary information obtained from the disclosing Party; or

 

(3)           either before or after the date of the disclosure to the receiving Party becomes published or otherwise part of the public domain through no fault or omission of the receiving Party or its Affiliates; or

 

(4)           is independently developed by or for the receiving Party or its Affiliates without reference to or in reliance upon the confidential or proprietary information obtained from the disclosing Party as demonstrated by competent written records; or

 

(5)           is reasonably necessary to conduct clinical trials or to obtain regulatory approval of Licensed Product or for the prosecution and maintenance of Patent Right; or

 

(6)           is reasonably necessary required in order for a Party obtain financing or conduct discussions with potential development or commercialization partner so long as third party recipients are bound by an obligation of confidentiality; or

 

(7)           is required to be disclosed by the receiving Party to comply with applicable laws or regulations or legal process, provided that the receiving Party provides prior written notice of such disclosure to the disclosing

 

28

 

Party and takes reasonable and lawful actions to avoid or minimize the degree of such disclosure.

 

11.2         PERMITTED DISCLOSURES.  Each Party agrees that it will provide the confidential or proprietary information obtained from the disclosing Party solely to its employees, consultants and advisors, and the employees, consultants and advisors of its Affiliates or Sub-licensee, who have a need to know and an obligation to maintain in confidence the confidential or proprietary information obtained from the disclosing Party.  Either Party shall be liable for any breach of the non-disclosure obligation of its consultants, advisors, Affiliates and Sub-licensee(s).

 

11.3         PUBLICATIONS.  Each Party shall have the right to publish the results of any studies under this Agreement conducted solely by such Party, consistent with the protection of the confidentiality as set forth in this Article 11, and after providing a copy of the material intended for publication or presentation to the other Party for review and comment at least [**] days prior to the date of publication or presentation.  Any publication shall appropriately acknowledge the support of the other Party.  Any results of global clinical trials or the studies conducted jointly by the Parties shall be published in accordance with a joint publication strategy.  Such joint publication strategy shall be discussed and determined by JDC when appropriate.

 

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ARTICLE 12 - TERM & TERMINATION

 

12.1         TERM.  This Agreement shall be effective on the Effective Date and shall remain effective for the longer of: (i) fifteen (15) years after the Effective Date, or (ii) the last to expire of the Patent Rights under HERMES Intellectual Property unless earlier terminated pursuant to this Article 12.

 

12.2         TERMINATION FOR CAUSE.  Each party shall have the right to terminate this Agreement, upon written notice to the other Party, in the event the other Party materially breaches its obligations under this Agreement, and does not remedy such breach within [**] days after receipt of written notice from the non-breaching Party specifically stating that such Party intends to terminate the Agreement if the breaching Party fails to remedy the breach within a [**]-day ([**]-day) time period.

 

12.3         TERMINATION BY HERMES.  Without prejudice to any other right or remedy that it may have, HERMES may terminate this Agreement forthwith by notice in writing to PHARMAENGINE given at any time, if PHARMAENGINE fails to pursue Commercially Reasonable Effort as required for the Licensed Product, and such failure is not cured within a reasonable time decided by JDC, but not later than [**] months after written notice of failure is given to PHARMAENGINE.

 

12.4         TERMINATION BY PHARMAENGINE.  PHARMAENGINE may:

 

(a)           terminate the license(s), in one or more countries in the Territory, under this Agreement by service of six (6) months’ written notice to HERMES at any time during the term of this Agreement; and

 

(b)           terminate the license(s) under this Agreement, in one or more countries in the Territory, forthright upon written notice to HERMES at any time during the term of this Agreement, in the event that the Patent Rights of HERMES Intellectual Property is invalid, disclaimed, unenforceable, abandoned, or finally rejected.

 

12.5         CONSEQUENCES OF TERMINATION.  In the event that this Agreement is terminated by HERMES under Articles 12.2 and 12.3, all licenses and right granted by HERMES to PHARMAENGINE under this Agreement shall terminate; provided, however, that to the extent such license and right are required in respect of clinical trials that are ongoing and cannot reasonably be terminated promptly due to “health or safety reasons or the requirements of the applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated; and all improvements, studies, approvals, data, patent rights applicable to the Licensed Product shall revert and assigned to HERMES.  Payments made to HERMES under this Agreement prior to the date of termination are not recoverable by PHARMAENGINE, and any payments due HERMES under Article 8 of this Agreement shall be payable to HERMES as of the date of termination.

 

30

 

ARTICLE 13 - MISCELLANEOUS

 

13.1         ENTIRE AGREEMENT.  This Agreement constitute the entire agreement pertaining to the subject matter hereof and supersede any and all prior understandings, negotiations, commitments, discussions, writings, including the TTY Research and Development Agreement, whether oral or written, of the parties with respect to the same subject matter.  This Agreement shall not be waived, released, discharged, changed or modified in any manner, in whole or in part, except by an instrument signed by the duly authorized representative of both parties hereto, which document shall make specific reference to this Agreement and shall express the plan or intention to modify the same.

 

13.2         SEVERABILITY.  If any term, clause, sentence or paragraph of this Agreement is declared or becomes unenforceable, invalid, or illegal in any respect under the law of any relevant jurisdiction, such term or provision or part thereof shall be deemed to have been severed from the remaining terms of this Agreement and the terms and conditions hereof shall remain in full force and effect as if this Agreement had been executed without the offending provision appearing herein.

 

13.3         NO IMPLIED WAIVERS, Any party’s failure to enforce any provision of this Agreement shall not be construed as a waiver of such party’s right to enforce such provision, and any waiver of a provision shall not in any way affect such party’s right to enforce such provision at a later time.

 

13.4         PUBLICITY.  Any public announcement with respect of the execution of this Agreement, the conduct of activities under the Plans or significant developments thereunder will be reviewed by the Parties in advance of such announcement.

 

13.5         DISPUTE RESOLUTION.  In the event of any dispute, controversy or claim arising out of or relating to this Agreement and not expressly provided for elsewhere herein, the Parties shall try to settle such dispute, controversy or claim amicably in JDC meeting or by referring such dispute, controversy or claims to the Chief Executive Officer or other officer(s) designated by the Chief Executive Officer.  In the event that after [**] days JDC or the Chief Executive officers of both Parties fail to resolve the matter, the Parties agree to finally settle such matter by arbitration set forth in Article 13.10.

 

13.6         FORCE MAJEURE.  Either Party shall be excused from performing its obligations as required by this Agreement to the extent such performance is delayed or prevented by any events beyond such party’s reasonable control, including but not limited to acts of God, acts of war or hostilities, acts or omissions of any civil or government agency or officer, invasion, revolution, civil commotion, fire, flood, severe earthquake, typhoon or cyclone, lightning, plague or other epidemic, or circumstances which are beyond reasonable control of the Party affected and which such Party could not reasonably be expected to have avoided or overcome it or its consequences by exercise of reasonable care and diligence, provided that such performance shall be excused only to the extent of and during such disability.  Any time specified for completion of performance in this Agreement failing due to, during, or subsequent to the occurrence of any of such events shall be automatically extended for a period of time equal to the period of such disability.

 

31

 

13.7         ASSIGNMENT.  Neither Party shall assign, charge or transfer this Agreement to a third party without the written consent of the other, which consent shall not unreasonably be withheld or delayed provided always that:

 

(a)           either Party may assign and transfer its right and obligations under this Agreement (in whole but not in part) to any Affiliate without obtaining the prior consent of the other Party provided that the performance by its Affiliate of its obligations hereunder is guaranteed by the assignor and the assignor gives prior written notice to the other of such assignment; and

 

(b)           HERMES may  assign and transfer its rights and obligations under this Agreement (in whole but not in part) to any person or entity to whom it transfer all or substantially all of its assets or business relating the Licensed Product.

 

13.8         NOTICE.

 

(a)           Any notice required to be given under this Agreement shall be in writing and delivered by hand and/or sent by an international courier (“Courier”) or facsimile (in the case of facsimile to be confirmed in writing and delivered by hand and/or sent by Courier within four Business Days if being sent by facsimile) to the address as described below:

 

	
For   HERMES:
    	
Hermes   Biosciences, Inc.
   61 Airport Boulevard, Suite D
   South San Francisco, CA 94080
   U.S.A.
   Attn: Raymond S. Poon, Ph.D.

                Vice President, Business   Development
   Fax: 650-873-2501
   cc:           John W. Park,   M.D.
                    President &   Chief Executive Officer
    
	
 
    	
 
    
	
For   PHARMAENGINE:
    	
PharmaEngine, Inc.
   16F, 237, Sung-Chiang Road
    Taipei, Taiwan 104
    R.O.C.
   Attn: Cherry Chen
                    Senior   Director, Business Development
   Fax: 886-2-2515-7558
   cc:           C. Grace Yeh,   Ph. D.
                    President &   Chief Executive Officer
    

 

(b)           A notice shall be deemed to have been served as follows:

 

(1)           if delivered by hand, at the time of delivery;

 

32

 

(2)           if delivered by mail, the expiration of four (4) Business Days after the envelope containing the same was delivered into the custody of the Courier service; and

 

(3)           if sent by facsimile, at the expiration of twelve (12) hours after the same was despatched,

 

except that if a notice or other communication would be deemed to be served under the above provisions on a day that is not a Business Day in the country of receipt or after 5:00 pm in that country, then it shall be deemed instead to have been delivered at 9:00 am on the next Business Day in that country.

 

13.9         INDEPENDENT CONTRACTORS.  Each of the Parties is an independent contractor and not a partner, general agent or employee of the other Party.  Nothing contained in the Agreement shall be construed to establish any partnership, joint venture or agency relationship between Parties.  Except as may be expressly authorized in writing, neither Party shall, at any time, enter into or incur, or hold itself out to third parties as having authority to enter into or incur on behalf of the other party, any obligations, commitments, expenses or liabilities whatsoever.

 

13.10       GOVERNING LAW AND JURISDICTION, Any controversy or claim of whatsoever nature arising out of or relating in any manner whatsoever to this Agreement or any breach of any terms of this Agreement shall be governed by and construed in all respects in accordance with the laws of the State of California in the United States of America.  Any dispute arising out of or in connection with this Agreement, including any dispute regarding its existing, validity or termination, shall be submitted to final and binding arbitration under the then current rules of the American Arbitration Association.  (“AAA”), with a panel of three arbitrators.  Such arbitration shall be held in San Francisco, California, USA.  Such arbitrators shall be selected by the mutual agreement of the parties or, failing such agreement, shall be selected according to the aforementioned AAA rules.  The parties shall bear the costs of the arbitration equally unless the arbitrators, pursuant to their right, but not their obligation, require the non-prevailing party to bear [**].  The arbitrators shall make their decision in accordance with applicable law and the factual evidence presented.  The decision of the arbitrators shall be final and may be enforced by the party in whose favor it runs in any court of competent jurisdiction at the option of the successful party.  The rights and obligations of the parties to arbitrate any dispute relating to the interpretation or performance of this Agreement or the grounds for the termination thereof shall survive the expiration or termination of this Agreement for any reason.  The language of the arbitration shall be English.

 

13.11       COUNTERPARTS.  This Agreement shall be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and same instrument.

 

13.12       CONSTRUCTION OF AGREEMENT.  This Agreement has been prepared jointly and shall not be strictly construed against either Party.

 

33

 

13.13       LANGUAGE.  All communications between the Parties regarding this Agreement and activities contemplated hereunder shall be in the English language.

 

13.14       SURVIVING PROVISIONS.  Any termination of this Agreement will not affect the rights and obligations set forth in the following Articles and Paragraphs:

 

Article 1                                 Definitions

 

Paragraph 8.4                        Records

 

Paragraph 9.1                        Ownership of Patents

 

Paragraph 9.2(c)                   Prosecution of Patents for Jointly Owned Patent Rights

 

Article 10                               Warranty and Indemnification

 

Article 11                               Confidentiality

 

Paragraph 12.5                      Consequences of Termination

 

Article 13                               Miscellaneous

 

34

 

IN WITNESS WHEREOF, the Parties hereto have set their hand and seal as of the date first above written.

 

 

	
Hermes   Biosciences, Inc.
    	
 
    	
PharmaEngine, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ John W. Park
    	
 
    	
By:
    	
/s/   C. Grace Yeh
    
	
 
    	
 
    	
 
    
	
Name:   John W. Park, M.D.
    	
 
    	
Name:   C. Grace Yeh, Ph.D.
    
	
 
    	
 
    	
 
    
	
Title:   President & Chief Executive Officer
    	
 
    	
Title:   President & Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
Date:   9/28/05
    	
 
    	
Date:   Sept. 22, 2005
    

 

35

 

Exhibit A

 

I.              HERMES Patent Rights

 

[**],

 

including all divisions, substitutions, continuations, continuations-in-part (to the extent supported by the parent application), reissues, reexaminations, or extensions thereto, foreign and domestic pending patent applications and all priority rights claiming priority thereof, or derived therefrom, in all jurisdictions, including any patents issuing from any of the foregoing.

 

II.            All HERMES’ rights or interests in any data, know-how, technology, designs, plans, specifications, prototype devices, improvements, manufacturing know-how, clinical data, research results, and any other intellectual property rights useful in making, using, or selling the Licensed Product, including, but not limited, to the Report from Hermes Biosciences, Inc. to[**].

 

III.           All HERMES’ registered and unregistered trade names, trademarks, service marks, trademark registrations, copyrights, copyright registrations and copyright registration applications related to, or used in connection with, any of the foregoing.

 

36

 

AMENDMENT TO LICENSE AGREEMENT

 

This Amendment (this “Amendment”) to the Agreement (as defined below) is made as of this 30th day of June, 2011 (the “Execution Date”) with effect from and after May 5, 2011 (the “Amendment Effective Date”) by and between Merrimack Pharmaceuticals, Inc., a Delaware corporation (“Merrimack Parent”), and Merrimack Pharmaceuticals (Bermuda) Ltd., a company organized and existing under the laws of Bermuda (“Merrimack Bermuda”).

 

WHEREAS, PharmaEngine, Inc. (“PEI”) and Hermes BioSciences, Inc. (“Hermes”), a California corporation that was later acquired by and merged with and into  Merrimack Parent, entered into a License Agreement, dated as of September 26, 2005 (the “Agreement”), pursuant to which PEI received a license under certain intellectual property rights of Hermes to develop and commercialize the Licensed Product (as defined in the Agreement) in the Territory (as defined in the Agreement);

 

WHEREAS, on May 5, 2011, Merrimack Bermuda entered into an Assignment, Sublicense and Collaboration Agreement (“Assignment Agreement”) with PEI, pursuant to which (a) PEI assigned all of its rights, interests and obligations under the Agreement to Merrimack Bermuda, and Merrimack Bermuda assumed all of PEI’s obligations under the Agreement, (b) Merrimack Bermuda granted a sublicense back to PEI under certain technology to develop and commercialize the Licensed Product in the Republic of China (Taiwan) and (c) PEI and Merrimack Bermuda agreed to collaborate in the development of the Licensed Product; and

 

WHEREAS, Merrimack Parent and Merrimack Bermuda desire to amend the Agreement to transfer back to Merrimack Parent the right to develop and commercialize the Licensed Product in certain countries in Asia and in consideration therefor Merrimack Parent will make certain payments to Merrimack Bermuda as provided herein.

 

NOW, THEREFORE, in consideration of the mutual provisions and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, Merrimack Parent and Merrimack Bermuda hereby agree as follows:

 

1.             Amendment of the Definition of Territory.  Section 1.34 of the Agreement is hereby amended to add the words that are in bold and underlined and delete the words that appear in strikethrough text as follows:

 

1.34                           “Territory” shall mean Democratic People’s Republic of Korea, Indonesia, Japan, Malaysia, People’s Republic of China, Republic of the Philippines, Republic of Korea, Singapore, Taiwan, Thailand, Vietnam  and all countries in  the Europe Territory: including Albania, Austria, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Macedonia, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, and Untied Kingdom.

 

 

2.             Addition of Definitions.  Article 1 of the Agreement is hereby amended to add the following definitions:

 

1.37                           “Asia Territory” shall mean Democratic People’s Republic of Korea, Indonesia, Japan, Malaysia, People’s Republic of China, Republic of the Philippines, Republic of Korea, Singapore, Thailand and Vietnam.

 

1.38                           “Europe Territory” shall mean all countries in Europe, including Albania, Austria, Belarus, Belgium, Bosnia, Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine and the United Kingdom.

 

3.             Deletion of Right of First Refusal.  Section 5.3 of the Agreement is hereby deleted in its entirety.

 

4.             Amendment of Royalty Provision.  Section 8.3 of the Agreement is hereby amended to add the words that are in bold and underlined and delete the words that appear in strikethrough text as follows:

 

8.3                                 ROYALTIES.  PHARMAENGINE shall pay to HERMES the Royalties equals to the sum of [**] percent ([**]%) of the Net Sales of the Licensed Product in the Europe Territory plus [**] percent ([**]%) of the Net Sales of the Licensed Product in the Territory in Asia.  No Royalties shall be due hereunder with respect to Net Sales of the Licensed Product in Taiwan.  PHARMAENGINE shall prepare a statement in respect of each Quarter, which shall show for the Quarter the aggregate Net Sales for which Royalties are due hereunder.  Such statement shall be submitted to HERMES within [**] days of the end of the Quarter to which it relates together with remittance for the Royalties in respect of such Quarter.

 

5.             Payments from Merrimack Parent to Merrimack Bermuda.

 

5.1           Merrimack Parent acknowledges that pursuant to the Assignment Agreement, Merrimack Bermuda agreed to pay PEI (a) an upfront amount of Ten Million dollars ($10,000,000), (b) certain development and regulatory milestone payments related to the development of the Licensed Product in the Europe Territory and the Asia Territory, (c) sales milestone payments based on Annual Net Sales (as defined in the Assignment Agreement) of the Licensed Product in the Europe Territory and the Asia Territory, (d) tiered royalty payments based on Annual Net Sales of the Licensed Product in the Europe Territory and the Asia Territory and (e) a percentage of Sublicense Revenue (as defined in the Assignment Agreement) based on the licensing or sublicensing of rights to develop and/or commercialize the Licensed Product in the Europe Territory and the Asia Territory.

 

2

 

5.2           In consideration for the transfer by Merrimack Bermuda to Merrimack Parent of rights with respect to the Licensed Product in the Asia Territory as provided herein, Merrimack Parent agrees to make the following payments to Merrimack Bermuda in connection with amounts paid or payable to PEI under the Assignment Agreement that are allocable to the Licensed Product in the Asia Territory:

 

(a)           Upfront Payment.  [**] dollars ($[**]) due within [**] days after the Execution Date.

 

(b)           Development and Regulatory Milestones.  Merrimack Parent shall pay Merrimack Bermuda the amounts set forth below for achievement of the corresponding event milestones with respect to the Licensed Compound (as defined in the Assignment Agreement) or the Licensed Product:

 

 

	
Development and Regulatory Milestone Events for the
   Licensed Compound or the Licensed Product
    	
 
    	
Dollars
    	
 
    
	
(i)
    	
[**]
    	
 
    	
[**]
    	
 
    
	
(ii)
    	
[**]
    	
 
    	
[**]
    	
 
    
	
(iii)
    	
[**]
    	
 
    	
[**]
    	
 
    
	
(iv)
    	
[**]
    	
 
    	
[**]
    	
 
    

 

 

If the relevant milestone events noted above are first achieved by Merrimack Parent or its licensees or sublicensees (in each case, other than Merrimack Bermuda), Merrimack Parent shall provide notice to Merrimack Bermuda within [**] days after such achievement.  If the milestone event noted in 5.2(b)(i) is first achieved by Merrimack Bermuda or its licensees or sublicensees (in each case, other than Merrimack Parent), Merrimack Bermuda shall provide notice to Merrimack Parent within [**] days after such achievement.  Merrimack Parent shall make the corresponding payment within [**] days after achievement.

 

(c)           Sales Milestones.  Merrimack Parent shall pay Merrimack Bermuda the amounts set forth below upon the first achievement of the corresponding sales milestone by the Licensed Product in the Europe Territory and the Asia Territory:

 

 

	
Sales Milestone Events for the Licensed Product
    	
 
    	
Dollars
    	
 
    
	
Annual Net Sales in the Europe Territory and the Asia Territory for the   Licensed Product exceed $[**]
    	
 
    	
[**]
    	
 
    
	
Annual Net Sales in the Europe Territory and the Asia Territory for the   Licensed Product exceed $[**]
    	
 
    	
[**]
    	
 
    
	
Annual Net Sales in the Europe Territory and the Asia Territory for the   Licensed Product exceed $[**]  
    	
 
    	
[**]
    	
 
    

 

3

 

For purposes of this Section 5.2(c), Asian Sales Milestone Percentage means the percentage equal to the portion of Annual Net Sales of the Licensed Product in the Asia Territory in the year in which the applicable milestone is achieved, divided by Annual Net Sales of the Licensed Product in both the Europe Territory and the Asia Territory in the year in which the applicable milestone is achieved.

 

(d)           Royalties.  As to Annual Net Sales of the Licensed Product, subject to adjustment as set forth below, Merrimack Parent shall pay Merrimack Bermuda royalties during the Royalty Term (as defined in the Assignment Agreement) at the incremental royalty rates set forth below:

 

	
Annual Net Sales (in US Dollars) of the Licensed Product
   in the Europe Territory and the Asia Territory
    	
 
    	
Incremental Royalty
   Rates as a Percentage
   of Annual Net Sales
    	
 
    
	
Portion of Annual Net Sales for the Licensed   Product in the   Europe Territory and the Asia Territory up to and including $[**]
    	
 
    	
[**]
    	
 
    
	
Portion of Annual Net Sales for the Licensed   Product in the   Europe Territory and the Asia Territory that is equal to or   exceeds $[**], up to and   including $[**]
    	
 
    	
[**]
    	
 
    
	
Portion of Annual Net Sales for the Licensed   Product in the   Europe Territory and the Asia Territory that is equal to or exceeds $[**], up to and including $[**]
    	
 
    	
[**]
    	
 
    
	
Portion of Annual Net Sales for the Licensed   Product in the   Europe Territory and the Asia Territory that is equal to or exceeds $[**]
    	
 
    	
[**]
    	
 
    

 

The calculation of the Asian Royalty Rate Percentage shall be conducted on a Quarter-by-Quarter basis.  For purposes of this Section 5.2(d), Asian Royalty Rate Percentage means the percentage equal to the portion of Annual Net Sales of the Licensed Product in the Asia Territory in the Quarter for which the applicable royalty payment is due, divided by Annual Net Sales of the Licensed Product in both the Europe Territory and the Asia Territory in the Quarter for which the applicable royalty payment is due.

 

In the event that the royalty rate applicable to Annual Net Sales of the Licensed Product in a country in the Asia Territory is adjusted in accordance with Section 9.4(c) or 9.4(d) of the Assignment Agreement, Merrimack Bermuda shall provide Merrimack Parent notice of such reduction and such reduced royalty rate shall apply to the percentages specified above in 

 

4

 

this Section 5.2(d) before applying the Asian Royalty Rate Percentage (i.e., [**]  %) to the same extent as such reduction applies in the Assignment Agreement.

 

(e)           Sublicense Revenue.  Merrimack Parent shall pay to Merrimack Bermuda a portion of all Sublicense Revenue with respect to the Asia Territory as follows:

 

	
Sublicense Timeframe
    	
 
    	
Portion of Sublicense
   Revenue to be paid to
   PEI
    	
 
    
	
Sublicense agreement executed prior to [**].
    	
 
    	
[**]
    	
 
    
	
Sublicense agreement executed on or after [**].
    	
 
    	
[**]
    	
 
    
	
Sublicense agreement executed on or after [**].
    	
 
    	
[**]
    	
 
    

 

(f)            Reports and Payments.  Within (i) [**] days after Merrimack Parent receives the royalty statement from Merrimack Bermuda pursuant to Section 8.3 of the Agreement, or (ii) if there are no Net Sales in the Europe Territory during a Quarter, within [**] days after the end of each Quarter during which there are Net Sales or Sublicense Revenue in the Asia Territory giving rise to a payment obligation under Section 5.2(c), (d) or (e), Merrimack Parent shall deliver to Merrimack Bermuda reasonably detailed written accountings of Net Sales of the Licensed Product in the Asia Territory and royalties, sales milestone payments and Sublicense Revenue, if any, due to Merrimack Bermuda for such Quarter.  Such quarterly reports shall indicate the Asian Sales Milestone Percentage, Asian Royalty Rate Percentage, gross sales on a country-by-country basis, deductions from gross sales used in calculating Net Sales and the resulting calculation of royalties and sales milestone payments.  When Merrimack Parent delivers such accountings to Merrimack Bermuda, Merrimack Parent shall also deliver all royalty, sales milestone and Sublicense Revenue payments due hereunder to Merrimack Bermuda for the Quarter.

 

6.             Payments from Merrimack Bermuda to Merrimack Parent.  Within [**] days after the Execution Date, Merrimack Bermuda shall pay to Merrimack Parent [**] dollars ($[**]).  Effective upon Merrimack Parent’s receipt of such payment, the license grant from Merrimack Parent to Merrimack Bermuda with respect to the Licensed Product in Taiwan shall be deemed a fully paid-up, royalty free license, and Merrimack Bermuda shall have no further obligation to deliver statements under Section 8.3 of the Agreement with respect to Net Sales of the Licensed Product in Taiwan.

 

7.             Miscellaneous.  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Agreement, as amended by this Amendment.  Except as amended by this Amendment, the Agreement shall be and remain in full force and effect.  If there is any conflict or inconsistency between this Amendment and the Agreement, this Amendment shall prevail.  The Agreement, as modified by this Amendment, contains the entire agreement between Merrimack Parent and Merrimack Bermuda with respect to the subject matter 

 

5

 

contemplated herein and shall not be modified or amended except by a written instrument signed by both parties hereto.

 

8.             Counterparts.  This Amendment may be executed in two counterparts, each of which shall be effective as of the Amendment Effective Date, and which shall constitute one and the same instrument.  This Amendment shall be deemed executed by the Parties when any one or more counterparts hereof, individually or taken together, bears the signatures of each of Merrimack Parent and Merrimack Bermuda.

 

[Remainder of Page Intentionally Left Blank]

 

6

 

IN WITNESS WHEREOF, Merrimack Parent and Merrimack Bermuda have caused this Amendment to be executed by their respective authorized representatives as of the Execution Date.

 

	
 
    	
MERRIMACK PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William A. Sullivan
    
	
 
    	
 
    	
William A. Sullivan
    
	
 
    	
 
    	
Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MERRIMACK PHARMACEUTICALS (BERMUDA) LTD.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffrey A. Munsie
    
	
 
    	
 
    	
Jeffrey A. Munsie
    
	
 
    	
 
    	
Vice President
    

 

7

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