Document:

exv10w14

 

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Exhibit 10.14

	 	 	 	 	 
	

	 	***Text Omitted and Filed Separately

	

	 	Confidential Treatment Requested

	

	 	Under 17 C.F.R. §§ 200.80(b)(4) and

	

	 	230.406	 	 

LICENSE AGREEMENT

          THIS AGREEMENT, effective as of October 6, 2000, (“EFFECTIVE DATE”) between THE GENERAL
HOSPITAL CORPORATION, a not-for-profit corporation doing business as Massachusetts General
Hospital, having a place of business at Fruit Street, Boston, Massachusetts 02114 (“GENERAL”) and
PRESTWICK SCIENTIFIC CAPITAL, INC., a company having offices at 1825 K Street, N.W., Washington,
D.C. 20006 (“COMPANY”).

          WHEREAS, under research programs funded by GENERAL and the U.S. Government, GENERAL through
research conducted by [...***...] has developed an invention pertaining to the treatment of
neuropsychiatric disorders.

          WHEREAS, [...***...] have filed a U.S. Patent Application covering said invention and all [...***...]
rights, title and interest in said application have been assigned to GENERAL.

          WHEREAS, GENERAL represents to the best of its knowledge and belief that it is the owner of
all rights, title and interest in said patent application and has the right and ability to grant
the license hereinafter described.

          WHEREAS, as a center for research and education, GENERAL is interested in licensing PATENT
RIGHTS and thus benefiting the public and GENERAL by facilitating the dissemination of the results
of its research in the form of useful products, but is without the capacity to commercially
develop, manufacture, and distribute any such product; and

          WHEREAS, COMPANY desires to commercially develop, manufacture, use and distribute such
products throughout the world,

          NOW THEREFORE, in consideration of the premises and of the faithful performance of the
covenants herein contained, the parties hereto agree as follows:

1. DEFINITIONS

     1.1. The term “ACCOUNTING PERIOD” shall mean each six-month period ending June 30 and December
31.

     1.2. The term “AFFILIATE with respect to COMPANY shall mean any corporation or other legal
entity other than COMPANY in whatever country organized, controlling, controlled by
or under common control with COMPANY. The term “control” means possession, direct or
indirect, of the powers to direct or cause the direction of the management and policies of an
entity, whether through the ownership of voting securities, by contract or otherwise. The term
“AFFILIATE with respect to GENERAL shall mean any corporation or other legal entity other than
GENERAL controlling, controlled by, or under common control, directly or indirectly, with GENERAL.

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     1.3. The term “FIRST COMMERCIAL SALE” shall mean in each country the first sale of any PRODUCT
by COMPANY, its AFFILIATES or SUBLICENSEES, but not including transfers or dispositions of PRODUCT
for charitable, promotional, pre-clinical, clinical, regulatory or governmental purposes for which
COMPANY receives no payment.

     1.4. The term “LICENSE FIELD” shall mean any and all human, veterinary, agricultural and other
applications now known or hereafter discovered.

     1.5. The term “NET SALES PRICE” shall mean the GROSS SALES PRICE as defined in (b) below
received by COMPANY or any of its AFFILIATES or SUBLICENSEES (“SELLERS”) for the sale of any
PRODUCT to a third party that is not an AFFILIATE or SUBLICENSEE of COMPANY (“CUSTOMER”), less (to
the extent appropriately documented) the following amounts actually paid out by COMPANY, its
AFFILIATE or SUBLICENSEE or credited against the amounts received by them from the sale or
distribution of PRODUCT:

          (a) (i) trade, quantity and cash discounts and sales returns and allowances, including (A)
those granted on account of price adjustments, billing errors, rejected goods, damaged goods,
returns and rebates, (B) administrative and other fees and reimbursements and similar payments to
wholesalers and other distributors, buying groups, pharmacy benefit management organizations,
health care insurance carriers and other institutions, (C) allowances, rebates and fees paid to
distributors and (D) chargebacks for unsold PRODUCT, where in each case such amounts are agreed to
in the reasonable judgment of SELLERS taking into consideration, among other things, the usual and
customary practices of the pharmaceutical distribution market, the stage of the life cycle of the
PRODUCT and the market share objectives for the PRODUCT;

               (ii) amounts for transportation, insurance, handling or shipping charges to purchasers;

               (iii) taxes, duties and other governmental charges levied on or measured by the sale of
PRODUCTS, whether absorbed by COMPANY or paid by the purchaser so long as COMPANY’s price is
reduced thereby, but not franchise or income taxes of any kind whatsoever;

               (iv) rebates and similar payments made with respect to sales paid for by any governmental or
regulatory authority such as, by way of illustration and not in limitation of the parties’ rights
hereunder, Federal or state Medicaid, Medicare or similar state program or equivalent foreign
governmental program;

               (v) any other similar and customary deductions that are consistent with United States
generally accepted accounting principles, or in the case of non-United States sales, other
applicable accounting standards; and

               (vi) for any sale in which the United States government on the basis of its royalty-free
license pursuant to 35 U.S.C. Sec. 202(c) to any PATENT RIGHT requires that the GROSS SALES PRICE
of any PRODUCT subject to such PATENT RIGHT, be reduced by the amount of such royalty owed GENERAL
pursuant to paragraph 5.1, the amount of such royalty, which amount COMPANY shall not be required
to pay to GENERAL under paragraph 5.1.

 

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          (b) For any bona fide sale to a bona fide CUSTOMER by COMPANY or any of its AFFILIATES or
SUBLICENSEES, the GROSS SALES PRICE shall be the gross invoice price of the PRODUCT.

          (c) For purposes of determining NET SALES PRICE, a “sale” shall not include transfers or
dispositions for charitable, promotional purposes, or for pre-clinical, clinical, regulatory or
governmental testing purposes for which COMPANY receives no payment.

          (d) If COMPANY or any of its AFFILIATES or SUBLICENSEES sell any PRODUCT in a bona fide sale
as a component of a combination of active functional elements, the GROSS SALES PRICE of the PRODUCT
shall be determined by multiplying the GROSS SALES PRICE of the combination by the fraction A over
A + B, in which “A” is the GROSS SALES PRICE of the PRODUCT portion of the combination when sold
separately during the ACCOUNTING PERIOD in the country in which the sale of such combination
product was made, and “B” is the GROSS SALES PRICE of the other active elements of the combination
sold separately during said ACCOUNTING PERIOD in said country. In the event that no separate sale
of either such PRODUCT or active elements of the combination is made during said ACCOUNTING PERIOD
in said country, the GROSS SALES PRICE of the PRODUCT shall be determined by multiplying the GROSS
SALES PRICE of such combination by the fraction C over C + D, in which “C” is the standard
fully-absorbed cost of the PRODUCT portion of such combination, and “D” is the sum of the standard
fully-absorbed costs of the other active elements component(s), such costs being arrived at using
the standard accounting procedures of COMPANY which will be in accord with generally accepted
accounting practices.

          (e) If a SELLER commercially uses or disposes of any PRODUCT by itself (as opposed to a use or
disposition of the PRODUCT as a component of a combination of active functional elements) other
than in a bona fide sale to a bona fide CUSTOMER, the GROSS SALES PRICE hereunder shall be the
price which would be then payable in an arm’s length transaction with such a CUSTOMER. If a SELLER
commercially uses or disposes of any PRODUCT as a component of a combination of active functional
elements other than in a bona fide sale to a bona fide customer, the GROSS SALES PRICE of the
PRODUCT shall be determined in accordance with paragraph (d) above, using as the GROSS SALES PRICE
of the combination that price which would be then payable in an arm’s length transaction.

          (f) Transfer of a PRODUCT within COMPANY or between or among COMPANY and its AFFILIATE and
SUBLICENSEES for sale by the transferee shall not be considered a sale, commercial use or
disposition for the purpose of the foregoing paragraphs; in the case of such transfer the GROSS
SALES PRICE shall be the GROSS SALES PRICE of the PRODUCT when sold to a third party by the
transferee.

     1.6. The term “Orphan Drug” shall mean any drug designated by the U.S. Food and Drug
Administration as an approved orphan drug under the Orphan Drug Act (Pub. L. 97-414).

     1.7. The term “PATENT RIGHT” shall mean (a) the U.S. Patent Application No.
[...***...] , entitled, [...***...] or the equivalent
of such application, (b) any substitution, division,

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continuation thereof or Letters Patent or
supplementary protection certificates or the equivalent thereof issuing thereon as well as any
reissue, reexamination or extension thereof, and (c) any foreign or international equivalent of any
of the foregoing.

     1.8. The term “PRODUCT shall mean any article, device, composition, method or service, the
manufacture, use, or sale of which:

          (a) absent the licenses granted herein, would infringe a VALID CLAIM of any PATENT RIGHT, or

          (b) does not infringe a VALID CLAIM of any PATENT RIGHT licensed to COMPANY hereunder but the
discovery, development, manufacture or use of which is substantially derived from or otherwise
substantially employs TECHNOLOGICAL INFORMATION.

     1.9. The term “SUBLICENSEE” shall mean any non-AFFILIATE third party licensed by COMPANY or by
an AFFILIATE thereof to make, have made, use, sell, offer for sale, or have sold any PRODUCT. As
used in this Agreement, “SUBLICENSEE” shall include, without limitation, any non-AFFILIATE third
party to whom COMPANY has granted, directly or indirectly, the right to distribute a PRODUCT,
provided that such third party has the responsibility in whole or in part for marketing and/or
promotion of the PRODUCT within the territory for which such distribution rights are granted.

     1.10. The term “TECHNOLOGICAL INFORMATION” shall mean any research data, designs, formulas,
process information, clinical data and other information pertaining to any invention claimed in
PATENT RIGHT which is known to [...***...] , or
any person employed by GENERAL who worked in the laboratories of [...***...] as scientists or
technicians under their supervision on matters relating to the PATENT RIGHT, and that is not
generally known or available to persons reasonably skilled in the field to which such information
pertains, in each case on the EFFECTIVE DATE, other than information which is independently
developed by COMPANY or its agents, as evidenced by written records, that pertains to any invention
claimed in PATENT RIGHT.

     1.11. The term “VALID CLAIM” shall mean any claim of any PATENT RIGHT that has not been (i)
finally rejected or (ii) declared invalid by a patent office or court of competent jurisdiction in
any unappealed and unappealable decision or (iii) abandoned, disclaimed, denied or admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise.

2. LICENSE

2.1. GENERAL hereby grants COMPANY,

          (a) an exclusive, worldwide, royalty-bearing license in the LICENSE FIELD under the PATENT
RIGHTS to make, have made, use, sell, offer for sale and import PRODUCTS throughout the world, and

	* Confidential Treatment Requested

 

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          (b) the right to sublicense PATENT RIGHTS exclusively licensed to COMPANY; and

          (c) a non-exclusive, worldwide, royalty-bearing license in the LICENSE FIELD to use the
TECHNOLOGICAL INFORMATION to make, use, sell, offer for sale and import PRODUCTS throughout the
world.

     2.2. It is understood that the granting of any license hereunder is subject to GENERAL’s and
GENERAL’s AFFILIATES’ right to make and to use the subject matter described and claimed in the
PATENT RIGHT for research, clinical and educational purposes but for no other purpose, and not for
Commercial Purposes, and that if federal funding supported the PATENT RIGHT, COMPANY’s license will
be subject to the rights, conditions and limitations imposed by U.S. law (see 35 U.S.C. § 202
et seq and regulations pertaining thereto). For the purpose of this paragraph
“Commercial Purposes” shall mean use of the subject matter described and claimed in PATENT RIGHT in
any product or for the purpose of producing a product which is sold or otherwise commercially
distributed.

     2.3. Within two (2) months of the EFFECTIVE DATE, GENERAL shall disclose to COMPANY
TECHNOLOGICAL INFORMATION, which COMPANY will be entitled to use to the extent such use does not
infringe any patent not licensed to COMPANY hereunder.

     2.4. It is understood that nothing herein shall be construed to grant COMPANY a license
express or implied under any patent owned solely or jointly by GENERAL other than the PATENT RIGHTS
expressly licensed hereunder. GENERAL represents that, to the best of its knowledge as of the
EFFECTIVE DATE, it does not own or control any patent, other than the PATENT RIGHTS, the claims of
which would necessarily be infringed by the practice of the inventions claimed in the PATENT
RIGHTS.

     2.5. COMPANY agrees that, during the term of this Agreement, if GENERAL provides COMPANY with
evidence that a compound claimed within the PATENT RIGHTS but not being developed by COMPANY
(“second compound”) has potentially greater benefits for treating an indication than a compound
then being developed by COMPANY as contemplated hereunder, then COMPANY shall in good faith
evaluate the merits of pursuing the development of such second compound, and in the event that as a
result of such evaluation, COMPANY desires to pursue the development of such second compound, then
COMPANY and GENERAL shall in good faith seek to mutually agree upon a series of milestones and
associated chronology for the development of such second compound, but if COMPANY determines not to
pursue the development of such second compound, then COMPANY will in good faith endeavor to
negotiate with GENERAL the terms and conditions of a sublicense from COMPANY to GENERAL of such
PATENT RIGHTS to such second compound. It is understood that any sublicense from COMPANY to
GENERAL hereunder shall not require any upfront payments by GENERAL to COMPANY, and that nothing
in this paragraph 2.5 shall be interpreted to restrict in any way the rights reserved by
GENERAL and its AFFILIATES under paragraph 2.2.

 

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3. DUE DILIGENCE OBLIGATIONS

     3.1. COMPANY shall itself, or through its AFFILIATES or SUBLICENSEES, use commercially
reasonable efforts to develop and make commercially available one or more PRODUCTS for commercial
sales and distribution in the United States, Europe and Japan in the LICENSE FIELD. Such efforts
shall be satisfied by achievement of the following objectives within the time period designated
below:

          (a) within [...***...] following the
EFFECTIVE DATE, [...***...];

          (b) within [...***...] of [...***...], initiate [...***...];

          (c) within [...***...] of COMPANY’s receipt (e.g., from an outside contractor) of [...***...] for the
[...***...], initiate [...***...] of [...***...] for [...***...];

          (d) within [...***...] of availability of [...***...] for [...***...], which shall include [...***...];

          (e) within [...***...] of [...***...] of the [...***...], initiate and diligently pursue a [...***...] of a
[...***...], and provide [...***...] of [...***...] to [...***...] at a [...***...], for [...***...];

          (f) within [...***...] of completion of a [...***...] with a [...***...] and [...***...] with a [...***...] of
[...***...], initiate [...***...], unless [...***...], following said [...***...] to [...***...] or [...***...] for a
PRODUCT, the [...***...] to meet this [...***...], in which case COMPANY shall initiate [...***...] within
[...***...] of completion of [...***...], or within [...***...];

          (g) within [...***...] of completing [...***...] for [...***...], determine whether or not [...***...], inform
[...***...] of such [...***...], and hold a [...***...] with [...***...];

          (h) within [...***...] of [...***...] with [...***...];

          (i) within [...***...] of [...***...] in the [...***...] in [...***...]; and

          (j) within [...***...] of [...***...] of [...***...] in [...***...] and [...***...] in [...***...] in [...***...] and in
[...***...];

provided, however, that GENERAL shall not unreasonably withhold its consent to any
revision in such time periods whenever requested in writing by COMPANY and supported by evidence of
technical difficulties or delays in clinical studies or regulatory processes that the parties could
not have reasonably avoided. Subject to paragraph 10.5, if COMPANY is unable to achieve one or
more of the above objectives within the above stated time periods or within any extension granted
by GENERAL, the parties shall meet to discuss in good faith how to proceed, it being understood
that GENERAL shall at all times retain the right, in its sole discretion, to decide to cancel any

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exclusive license granted hereunder or convert any exclusive license to a nonexclusive license if
COMPANY has failed to meet any such objective and has failed to cure such failure within a
reasonable cure period not to exceed [...***...]; further provided, however, in the event that prior to
the expiration of any such [...***...] period,
COMPANY has in good faith commenced to use commercially reasonable efforts to remedy such breach
and the completion of such remedy, due to reasons beyond the control of COMPANY, requires more than
[...***...] to complete, then such [...***...] period shall be extended for so long as COMPANY is
continuing in good faith to use commercially reasonable efforts to remedy such breach.

     3.2. At intervals no longer than every twelve (12) months, COMPANY shall report in writing to
GENERAL on progress made toward the foregoing objectives.

4. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHT

     4.1. GENERAL shall be responsible for the preparation, filing, prosecution and maintenance of
all patent applications and patents included in PATENT RIGHTS using outside patent counsel
reasonably acceptable to COMPANY, and subject to COMPANY’s rights to participate therein in
accordance with this Article 4.. COMPANY shall reimburse GENERAL for all reasonable costs
(“Costs”) incurred by GENERAL for the preparation, filing, prosecution and maintenance of all
PATENT RIGHTS as follows:

          (a) Subject to paragraph 4.2, for all Costs incurred by GENERAL from and after the EFFECTIVE
DATE, COMPANY shall reimburse GENERAL or its outside patent counsel upon receipt of invoices from
GENERAL and any documentation in support thereof reasonably requested by COMPANY.

          (b) For all Costs incurred by GENERAL prior to the EFFECTIVE DATE, COMPANY shall reimburse
GENERAL upon execution of this Agreement set forth on Schedule 4.1 hereto.

     4.2. With respect to any PATENT RIGHT, each document or a draft thereof pertaining to the
filing, prosecution, or maintenance of such PATENT RIGHT, including but not limited to each patent
application, office action, response to office action, request for terminal disclaimer and request
for reissue or reexamination of any patent issuing from such application shall be provided by
GENERAL to COMPANY as follows (it being understood that GENERAL’s obligations under this paragraph
may be carried out by its outside patent counsel). Documents received from any patent office or
counsel’s analysis thereof shall be provided promptly after receipt. In addition to such
documents, GENERAL (or its counsel) shall provide COMPANY with a copy of all other official
prosecution items contained in the file maintained by or for GENERAL (i.e., equivalent to those
items maintained in the official files of the applicable patent office) in respect of any patent
application or patent comprising any PATENT RIGHT, and GENERAL shall provide COMPANY with a draft
of any document to be filed in any patent office in reasonable time prior to its filing to
allow for review and comment by COMPANY. GENERAL shall make all changes to such drafts
reasonably requested by COMPANY, unless such changes would, in GENERAL’s opinion, result in
excessive or unwarranted narrowing or weakening of the scope, validity or enforceability of such

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PATENT RIGHT. If as a result of the review of any such document, COMPANY shall elect not to pay or
continue to pay the Costs for such PATENT RIGHT, COMPANY shall so notify GENERAL within thirty (30)
days of COMPANY’s receipt of such document and COMPANY shall thereafter be relieved of the
obligation to pay any additional Costs regarding such PATENT RIGHT incurred after the receipt of
such notice by GENERAL. Such U.S., foreign or international patent application or patent shall
thereupon cease to be a PATENT RIGHT hereunder and GENERAL shall be free to license its rights to
that particular U.S. patent application or patent to any other party on any terms.

5. ROYALTIES

     5.1. Beginning with the FIRST COMMERCIAL SALE in any country, on all sales of PRODUCTS
anywhere in the world by COMPANY, its AFFILIATES or SUBLICENSEES, COMPANY shall pay GENERAL
royalties in accordance with the following schedule for each PRODUCT sold by COMPANY or its
AFFILIATES and SUBLICENSEES:

          (a) So long as the manufacture, use or sale of such PRODUCT would infringe in the country
where such manufacture, use or sale of such PRODUCT occurs a VALID CLAIM of any PATENT RIGHT in the
absence of the license granted by Section 2.1, then in respect of the cumulative NET SALES PRICE of
such PRODUCT in any calendar year, which such cumulative amount will be reset to zero at the
beginning of each such year,

               (i) [...***...] of the first [...***...] of
such cumulative NET SALES PRICE;

               (ii) [...***...] of that portion of such cumulative NET SALES PRICE exceeding [...***...] but not
exceeding [...***...], and

               (iii) [...***...] of that portion of such cumulative NET SALES PRICE exceeding [...***...].

          (b) During each of the ten (10) years next following the FIRST COMMERCIAL SALE of any PRODUCT
anywhere in the world by COMPANY, its AFFILIATES or SUBLICENSEES, [...***...] of the NET SALES PRICE of
a PRODUCT, on which no royalty is payable under paragraph 5.l(a) above.

     5.2. Only one royalty under paragraph 5.1 shall be due and payable to GENERAL by COMPANY for
any PRODUCT regardless of the number of PATENT RIGHTS covering such PRODUCT.

     5.3. In addition to the royalties provided for above, COMPANY and its AFFILIATES shall pay
GENERAL [...***...] of any and all non-royalty income, including without limitation license fees and
milestone payments, received from its SUBLICENSEES in consideration for the
sublicensing of any right or license granted to COMPANY hereunder, but excluding payments for
equity or for investments in research and development actually performed.

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     5.4. In addition to the payments provided for in paragraphs 5.1 and 5.3, COMPANY shall pay
GENERAL the following amounts upon the occurrence of the following events:

          (a) $20,000 within thirty (30) days of execution of this Agreement.

               (b) [...***...] upon completion of the
first [...***...] for a [...***...] with a [...***...] and [...***...] with a [...***...] in the United States, or upon
COMPANY’s decision to [...***...] the first [...***...] of such PRODUCT following any [...***...] (which such
[...***...] amount shall be [...***...] if such Product has been designated as an Orphan Drug).

               (c) [...***...] upon commencement of the first [...***...] for a PRODUCT for a [...***...] (which such
[...***...] amount shall be [...***...] if such Product has been designated as an Orphan Drug).

          (d) [...***...] upon the first [...***...] of a PRODUCT for a [...***...] for [...***...] (which such [...***...]
amount shall be [...***...] if such Product has been designated as an Orphan Drug).

     5.5. (a) In the event that COMPANY is required to pay royalties to any third parties with
respect to the development or commercialization of a PRODUCT, COMPANY will have the right to offset
[...***...] such royalties against any payments owed to GENERAL pursuant to Section 5.1, provided that
no such offset shall result in a reduction of the royalties owed to GENERAL pursuant to Section 5.1
of more than [...***...].

            (b) For any PRODUCT sold by any SUBLICENSEE, where the [...***...] owed by such SUBLICENSEE to
COMPANY or its AFFILIATES and any third parties [...***...] for such PRODUCT, the [...***...] shall be
[...***...] such that the [...***...] payable on such PRODUCT does not [...***...] thereof, provided,
however, that the [...***...] payable to all other [...***...] and that in no event shall the
[...***...] by more than [...***...] as a result of this Section 5.5(b).

            (c) Notwithstanding paragraphs 5.5(a) and 5.5(b), in the event that the royalty paid to
GENERAL is a significant factor in the return realized by COMPANY so as to diminish COMPANY’s
capability to respond to competitive pressures in the market, GENERAL agrees to consider a
reasonable reduction in the royalty paid to GENERAL as to each such PRODUCT for the period during
which such market condition exists. Factors determining the size of the reduction will include
profit margin on PRODUCT and on analogous products, prices of competitive products, total prior
sales by COMPANY, and COMPANY’s expenditures in PRODUCT development.

     5.6. The payments due under this Agreement shall, if overdue, bear interest until payment at a
per annum rate equal to one percent (1%) above the prime rate in effect at Fleet Bank on the due
date, not to exceed the maximum permitted by law. The payment of such interest shall
not preclude GENERAL from exercising any other rights it may have as a consequence of the
lateness of any payment.

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6. REPORTS AND PAYMENTS

     6.1. COMPANY shall keep, and shall cause each of its AFFILIATES and SUBLICENSEES, if any, to
keep full and accurate books of accounts containing all particulars that may be necessary for the
purpose of calculating all royalties payable to GENERAL. Such books of account shall be kept at
their principal place of business and, with all necessary supporting data shall, during all
reasonable times for the three (3) years next following the end of the calendar year to which each
shall pertain, be open for inspection at reasonable times by GENERAL or its designee at GENERAL’s
expense for the purpose of verifying royalty statements or compliance with this Agreement. In the
event that any audit performed under this paragraph 6.1 reveals an underpayment in excess of ten
percent (10%) of the total amount determined by the auditor to be due GENERAL, COMPANY shall bear
the full cost of such audit and shall remit any amounts due to GENERAL within ninety (90) days of
receiving notice thereof from GENERAL.

     6.2. In each year the amount of royalty due shall be calculated semiannually as of the end of
each ACCOUNTING PERIOD and shall be paid semiannually within the sixty (60) days next following
such date, every such payment to be supported by the accounting prescribed in paragraph 6.3 and to
be made in United States currency. Whenever conversion from any foreign currency shall be
required, such conversion shall be at the rate of exchange thereafter published in the Wall Street
Journal for the business day closest to the end of the applicable ACCOUNTING PERIOD.

     6.3. With each semiannual payment, COMPANY shall deliver to GENERAL a full and accurate
accounting to include at least the following information:

          (a) Quantity of each PRODUCT sold (by country) by COMPANY, and its AFFILIATES or SUBLICENSEES.

          (b) GROSS SALES PRICE billed and NET SALES PRICE received by COMPANY or any of its AFFILIATES
or SUBLICENSEES (“SELLERS”) for the sale of each PRODUCT (by country);

          (c) Quantities of each PRODUCT used by COMPANY and its AFFILIATES or SUBLICENSEES;

          (d) Names and addresses of all SUBLICENSEES of COMPANY; and

          (e) Total royalties payable to GENERAL.

7. INFRINGEMENT

     7.1. GENERAL and COMPANY will protect GENERAL’s PATENT RIGHTS from infringement and prosecute
infringers when such action may be reasonably necessary, proper and justified.

     7.2. If either party shall have supplied the other party with written evidence demonstrating
prima facie infringement of a claim of a PATENT RIGHT in the LICENSE FIELD by a third party,
COMPANY shall have the right to take steps to protect the PATENT RIGHT,

 

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either upon notice from
GENERAL requesting such action, or on its own initiative. COMPANY shall notify GENERAL within
three (3) months of one party’s providing the other with evidence of infringement whether COMPANY
intends to prosecute the alleged infringement. If COMPANY notifies GENERAL that it intends to so
prosecute, COMPANY shall, within three (3) months of its notice to GENERAL either (i) cause
infringement to terminate or (ii) initiate [and diligently prosecute] legal proceedings against the
infringer in GENERAL’s name if so required by law. In the event COMPANY notifies GENERAL that
COMPANY does not intend to prosecute said infringement, GENERAL may, upon notice to COMPANY,
initiate legal proceedings against the infringer at GENERAL’s expense. No settlement, consent
judgment or other voluntary final disposition of the suit which invalidates or restricts the claims
of such PATENT RIGHTS may be entered into without the consent of the other party, which consent
shall not be unreasonably withheld, but provided that, in the event one party (“the Objecting
Party”) withholds consent for a proposed settlement, the party proposing the settlement may decline
to support further costs of such suit or settlement discussions, and the Objecting Party shall be
required to continue such suit or settlement discussions at its own expense. COMPANY shall
indemnify GENERAL against any order for payment that may be made against GENERAL in such
proceedings. GENERAL shall indemnify COMPANY against any damages that may be made against COMPANY
to the extent arising out of any proceedings which GENERAL brings at its own expense pursuant to
this paragraph 7.2 following COMPANY’s decision not to prosecute any alleged infringement.

     7.3. In the event one party shall initiate or carry on legal proceedings to enforce any PATENT
RIGHT against any alleged infringer, the other party shall fully cooperate with and supply all
assistance reasonably requested by the party initiating or carrying on such proceedings. The party
which institutes any suit to protect or enforce a PATENT RIGHT shall have sole control of that suit
and shall bear the reasonable expenses (excluding legal fees) incurred by said other party in
providing such assistance and cooperation as is requested pursuant to this paragraph. The party
initiating or carrying on such legal proceedings shall keep the other party informed of the
progress of such proceedings and said other party shall be entitled to counsel in such proceedings
but at its own expense. Any award paid by third parties as the result of such proceedings (whether
by way of settlement or otherwise) shall first be applied to reimbursement of the unreimbursed
legal fees and expenses incurred by either party and then the remainder shall be divided between
the parties as follows:

          (a) (i) If the amount is based on lost profits, COMPANY shall receive an amount equal to the
damages the court determines COMPANY has suffered as a result of the infringement less the amount
of any royalties that would have been due GENERAL on sales of PRODUCT lost by COMPANY as a result
of the infringement had COMPANY made such sales, and

               (ii) GENERAL shall receive an amount equal to the royalties it would have received if such
sales had been made by COMPANY, and

          (b) As to awards other than those based on lost profits, [...***...] to [...***...] and [...***...] to [...***...].

 

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     7.4. In the event that the making, selling or using of a PRODUCT in the LICENSE FIELD
infringes the intellectual property rights of others, COMPANY will have the first right to control
any negotiation or litigation with respect thereto.

     7.5. For the purpose of the proceedings referred to in this Article 7, GENERAL and COMPANY
shall permit the use of their names and shall execute such documents and carry out such other acts
as may be necessary. The party initiating or carrying on such legal proceedings shall keep the
other party informed of the progress of such proceedings and said other party shall be entitled to
counsel in such proceedings but at its own expense, said expenses to be offset against any damages
received by the party bringing any infringement suit against a third party in accordance with
paragraph 7.3.

8. INDEMNIFICATION AND WARRANTIES

     8.1. (a) COMPANY shall indemnify, defend and hold harmless GENERAL and its trustees, officers,
medical and professional staff, employees, and agents and their respective successors, heirs and
assigns (the “Indemnitees”), against any liability, damage, loss or expense (including reasonable
attorney’s fees and expenses of litigation) (collectively, “Losses”) incurred by or imposed upon
the Indemnitees or any one of them in connection with any claims, suits, actions, demands or
judgments arising out of any theory of product liability (including, but not limited to, actions in
the form of tort, warranty, or strict liability) concerning any PRODUCT made, used or sold pursuant
to any right or license granted under this Agreement.

             (b) COMPANY’s indemnification under (a) above shall not apply to any Loss to the extent that
it is attributable to the negligent activities, reckless misconduct or intentional misconduct of
the Indemnitees.

             (c) GENERAL shall give COMPANY prompt written notice of any Losses or discovery of fact upon
which GENERAL intends to base a request for indemnification by an Indemnitee under paragraph
8.1(a), provided, however, that COMPANY’s obligations to GENERAL under this Article 8 shall not be
rendered inapplicable as a result of the failure by any Indemnitee to notify the Indemnitor as
required under this Section 8.1(c), unless such failure materially adversely affects the
Indemnitor’s ability to take action with respect to any such Loss.

             (d) COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to GENERAL
to defend against any actions brought or filed against any party indemnified hereunder with respect
to the subject of indemnity contained herein, whether or not such actions are rightfully brought.
GENERAL shall be entitled to participate in, but not control, the defense of such action and to
employ counsel of its own choice for such purpose; provided, however, that such
employment shall be at GENERAL’s own expense.

             (e) COMPANY shall have the sole right to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of any Loss, on such terms as COMPANY, in its sole discretion,
shall deem appropriate.

             (f) This paragraph 8.1 shall survive expiration or termination of this Agreement.

 

- 13 -

     8.2. (a) Beginning at such time as any PRODUCT is being commercially distributed or sold
(other than for the purpose of obtaining regulatory approvals) by COMPANY or by a licensee,
affiliate or agent of COMPANY, COMPANY shall, at its sole cost and expense, procure and maintain
commercial general liability insurance in amounts not less than [...***...]. Such commercial general liability insurance shall provide
(i) product liability coverage and (ii) broad form contractual liability coverage for COMPANY’s
indemnification under paragraph 8.1 of this Agreement. If COMPANY elects to self-insure all or
part of the limits described above (including deductibles or retentions which are in excess of
[...***...]) such self-insurance program must be acceptable to the GENERAL and the Risk Management
Foundation. The minimum amounts of insurance coverage required under this paragraph 8.2 shall not
be construed to create a limit of COMPANY’s liability with respect to its indemnification under
paragraph 8.1 of this Agreement.

             (b) COMPANY shall provide GENERAL with written evidence of such insurance upon request of
GENERAL. COMPANY shall provide GENERAL with written notice at least fifteen (15) days prior to the
cancellation, non-renewal or material change in such insurance. If COMPANY does not obtain
replacement insurance providing comparable coverage prior to the expiration of such fifteen (15)
day period, GENERAL shall have the right to terminate this Agreement effective at the end of such
fifteen (15) day period without notice or any additional waiting periods.

             (c) COMPANY shall maintain such commercial general liability insurance beyond the expiration
or termination of this Agreement during (i) the period that any PRODUCT is being commercially
distributed or sold (other than for the purpose of obtaining regulatory approvals) by COMPANY or by
a licensee, affiliate or agent of COMPANY and (ii) a reasonable period after the period referred to
in (c) (i) above which in no event shall be less than five (5) years.

             (d) This paragraph 8.2 shall survive expiration or termination of this Agreement.

     8.3. GENERAL represents to COMPANY that:

          (a) To the best of GENERAL’s knowledge, neither [...***...] nor any person working in either of
their laboratories, is aware of anything that could adversely affect the acceptance, or the
subsequent approval, by any regulatory authority of any filing, application or request (including
pricing and reimbursement approval) with respect to the development or commercialization of any
PRODUCTS existing on the EFFECTIVE DATE.

          (b) Based on the assignments of [...***...], GENERAL represents that is the sole and exclusive
owner of all right, title and interest in and to the PATENT RIGHTS and, to the best of GENERAL’s
knowledge, except as provided in Section 2.2, such rights are not subject to any encumbrance, lien
or claim of ownership by any third party. GENERAL has obtained all
necessary assignments and made all appropriate filings with respect thereto in order to secure
its sole and exclusive ownership rights in and to the PATENT RIGHTS. During the term of this
Agreement, GENERAL shall not knowingly take any action that would encumber the rights granted to
COMPANY hereunder; however, this clause shall not be construed to prevent GENERAL from filing any
patent application or taking any other action to secure or preserve

	* Confidential Treatment Requested

 

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rights in any invention or
other intellectual property which might be made by any of its employees, staff members or
consultants after the EFFECTIVE DATE. GENERAL agrees to use reasonable efforts to provide COMPANY
written notice promptly upon its Office of Corporate Sponsored Research and Licensing’s becoming
aware that any such action or proposed action might encumber the rights granted to COMPANY
hereunder.

          (c) Except for the grants in Section 2.1 and the rights referenced in Section 2.2, GENERAL has
not, directly or indirectly, expressly or by implication, by action or omission or otherwise (i)
assigned, transferred, or conveyed any right, title or interest in or to the PATENT RIGHTS, (ii)
granted any license or other right, title or interest in or to the PATENT RIGHTS, or (iii) agreed
to or is otherwise bound by any covenant not to sue for any infringement, misuse or otherwise-with
respect to the PATENT RIGHTS.

          (d) To the best of GENERAL’s knowledge, there is no actual or threatened infringement by a
third party of the PATENT RIGHTS, it being acknowledged that GENERAL has made no investigation of
the same.

     8.4. OTHER THAN WARRANTIES SET FORTH HEREIN, GENERAL MAKES NO WARRANTY, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET,
TANGIBLE RESEARCH PROPERTY, INFORMATION OR DATA LICENSED OR OTHERWISE PROVIDED TO COMPANY HEREUNDER
AND HEREBY DISCLAIMS THE SAME.

9. TERMINATION

     9.1. Unless otherwise terminated as provided for in this Agreement, the license to PATENT
RIGHTS granted hereunder will continue on a country by country basis:

          (a) for [...***...] after the date COMPANY, its AFFILIATES, or SUBLICENSEES shall last sell
any PRODUCT in such country, it being understood that GENERAL shall have the right to terminate
such license upon written notice in any country in the event that after the FIRST COMMERCIAL SALE
of PRODUCT in such country there is a continuous [...***...] period in which no PRODUCT is sold in
such country, provided such sale is not prevented by force majeure, government regulation or
intervention, institution of a lawsuit by any third party or any other factor outside the
reasonable control of COMPANY, its AFFILIATES or SUBLICENSEES, or

          (b) until the last to expire of any PATENT RIGHT, the claims of which but for this Agreement
would be infringed by the manufacture, use or sale of any PRODUCT in
the applicable country,

whichever shall first occur. Upon expiration of the royalty obligations hereunder for a PRODUCT in
a country, other than as a result of the early termination of any license granted hereunder,
COMPANY will have a fully-paid-up, royalty-free license with respect to such compound in such
country.

 

- 15 -

     9.2. If either party shall fail to faithfully perform any of its obligations under this
Agreement except the due diligence milestones specified in Article 3 herein, the nondefaulting
party may give written notice of the default to the defaulting party. Unless such default is
corrected within [...***...] after such notice,
the notifying party may terminate this Agreement upon [...***...], provided, however, in the event that
prior to the expiration of any such [...***...] period, such breaching party has in good faith
commenced to use commercially reasonable efforts to remedy such breach and the completion of such
remedy, due to reasons beyond the control of such breaching party, requires more than [...***...] to
complete, then such [...***...] period shall be extended for so long as such breaching party is
continuing in good faith to use commercially reasonable efforts to remedy such breach. If COMPANY
shall default on any specific provision of this Agreement [...***...], COMPANY shall not be entitled to
a [...***...] grace period for such second default, and in such instance, GENERAL’s notice of default
of said provision shall constitute termination.

     9.3. In the event that any license granted to COMPANY under this Agreement is terminated, any
sublicense under such license granted prior to termination of said license shall remain in full
force and effect, provided that

          (a) the SUBLICENSEE is not then in breach of its sublicense agreement;

          (b) the SUBLICENSEE agrees to be bound to GENERAL as the licensor under the terms and
conditions of this sublicense agreement, as modified by the provisions of this paragraph 9.3;

          (c) the SUBLICENSEE, at GENERAL’s written request, assumes in a signed writing the same
obligations to GENERAL as those assumed by COMPANY under Articles 8 and 10 hereof;

          (d) GENERAL shall have the right to receive any payments payable to COMPANY under such
sublicense agreement to the extent they are reasonably and equitably attributable to such
SUBLICENSEE’s right under such sublicense to use and exploit PATENT RIGHTS and/or TECHNOLOGICAL
INFORMATION;

          (e) the SUBLICENSEE agrees to be bound by the due diligence obligations of COMPANY pursuant to
paragraph 3.1 hereof (whether set by the parties or by arbitration) in the field and territory of
the sublicense;

          (f) GENERAL has the right to terminate such sublicense upon fifteen (15) days prior written
notice to COMPANY and such SUBLICENSEE in the event of any material breach of the obligation to
make the payments described in clause (d) of this paragraph 9.3, unless such breach is cured prior
to the expiration of such fifteen (15) day period, and shall further have the
right to terminate such sublicense in the event of SUBLICENSEE’s failure to meet its due
diligence obligations pursuant to clause (e) hereof; and

          (g) GENERAL shall not assume, and shall not be responsible to such SUBLICENSEE for, any
representations, warranties or obligations of COMPANY to such

	* Confidential Treatment Requested

 

- 16 -

SUBLICENSEE, other than to permit
such SUBLICENSEE to exercise any rights to PATENT RIGHTS and TECHNOLOGICAL INFORMATION that are
granted under such sublicense agreement consistent with the terms of this Agreement.

     9.4. Upon termination of any license granted hereunder, COMPANY shall pay GENERAL all
royalties due or accrued on (i) the sale of PRODUCT up to and including the date of termination and
(ii) for [...***...] following the date of
termination, the sale of PRODUCT manufactured prior to the termination date.

10. MISCELLANEOUS

     10.1. This Agreement constitutes the entire understanding between the parties with respect to
the subject matter hereof.

     10.2. In order to facilitate implementation of this Agreement, GENERAL and COMPANY are
designating the following individuals to act on their behalf with
respect to this - Agreement for
the matter indicated below:

          (a) with respect to all royalty payments, any correspondence pertaining to any PATENT RIGHT,
or any notice of the use of GENERAL’s name, for GENERAL, the Director, Office of Technology
Affairs, and for COMPANY, Alana R. Davidson, provided that correspondence relating to the billing
of patent costs shall be copied to, for GENERAL, the Business Manager, Office of Technology
Affairs.

          (b) any amendment of or waiver under this Agreement, any written notice including progress
reports or other communication pertaining to the Agreement: for GENERAL, the Director, Office of
Technology Affairs, and for COMPANY, Alana R. Davidson.

          (c) the above designations may be superseded from time to time by alternative designations
made by: for GENERAL, the President or the Senior Vice President for Research and Technology
Affairs, and for COMPANY, Dr. Kathleen Clarence-Smith.

     10.3. This Agreement may be amended and any of its terms or conditions may be waived only by a
written instrument executed by the parties or, in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect its rights at a later time to enforce the same. No
waiver by either party of any condition shall be deemed as a further or continuing waiver of such
condition or term or of any other condition or term.

     10.4. This Agreement shall be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted assigns.

     10.5. Any delays in or failures of performance by either party under this Agreement shall not
be considered a breach of this Agreement if and to the extent caused by occurrences beyond the
reasonable control of the party affected, including but not limited to: Acts of God, acts,
regulations or laws of any government, strikes or their concerted acts of worker, fires, floods,
explosions, riots,

	* Confidential Treatment Requested

 

- 17 -

wars, rebellion, and sabotage. Any time for performance hereunder shall be
extended by the actual time of delay caused by such occurrence.

     10.6. Neither party shall use the name of the other party or of any staff member, officer,
employee or student of the other party or any adaptation thereof in any advertising, promotional or
sales literature, publicity or in any document employed to obtain funds or financing without the
prior written approval of the party or individual whose name is to be used. For GENERAL, such
approval shall be obtained from the Director of Public Affairs, and for COMPANY, Alana R.
Davidson.

     10.7. This Agreement shall be governed by and construed and interpreted in accordance with the
laws of the Commonwealth of Massachusetts, without regard to its choice of law principles.

     10.8. This Agreement shall not be assignable by GENERAL without COMPANY’s written consent
except for the right to receive royalties or other payments payable herein. COMPANY may at its
own discretion and without approval by GENERAL transfer its interest or any part thereof under this
Agreement to a wholly-owned subsidiary or any assignee or purchaser of the portion of its business

associated with the manufacture and sale of PRODUCT. In the event of any such transfer, the
transferee shall assume and be bound by the provisions of this Agreement. Otherwise this Agreement
shall be assignable by COMPANY only with the consent in writing of GENERAL, not to be unreasonably
withheld, provided that the proposed assignee has sufficient resources and capabilities to operate
a business in the LICENSE FIELD.

     10.9. For any and all claims, disputes, or controversies arising under, out of, or in
connection with this Agreement, except issues relating to the validity, construction or effect of
any PATENT RIGHT, which the parties shall be unable to resolve within [...***...] , the party raising such dispute shall promptly advise the
other party of such claim, dispute, or controversy in a writing which describes in reasonable
detail the nature of such dispute. By not later than [...***...] after the recipient has received such
notice of dispute, each party shall have selected for itself a representative who shall have the
authority to bind such party and shall additionally have advised the other party in writing of the
name and title of such representative. By not later than [...***...] after the date of such notice of
dispute, such representatives shall agree upon a third party, which is in the business of providing
Alternative Dispute Resolution (ADR) services (hereinafter, “ADR Provider”) and shall schedule a
date with such ADR Provider to engage in ADR. Thereafter, the representatives of the parties shall
engage in good faith in an ADR process under the auspices of the selected ADR Provider. If within
the aforesaid [...***...] after the date of the notice of dispute the representatives of the parties
have not been able to agree upon an ADR Provider and schedule a date to engage in ADR, or if they
have not been able to resolve the dispute within [...***...] after the termination of ADR, the parties
shall have the right to pursue any other remedies legally available to resolve such dispute in
either the state or federal courts of New York,
to whose jurisdiction for such purposes each of GENERAL and COMPANY hereby irrevocably
consents and submits. Notwithstanding the foregoing, nothing in this Paragraph 10.9 shall be
construed to waive any rights or timely performance of any obligations existing under this
Agreement.

	* Confidential Treatment Requested

 

- 18 -

     10.10. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any
court of competent jurisdiction or are deemed unenforceable under then current applicable law from
time to time in effect during the term hereof, it is the intention of the parties that the
remainder of this Agreement shall not be effected thereby. It is further the intention of the
parties that in lieu of each such provision which is invalid, illegal or unenforceable, there be
substituted or added as part of this Agreement a provision which shall be as similar as possible in
economic and business objectives as intended by the parties to such invalid, illegal or enforceable
provision, but shall be valid, legal and enforceable.

     10.11. It is expressly agreed that GENERAL, on the one hand, and COMPANY, on the other hand,
shall be independent contractors and that the relationship between the two parties shall not
constitute a partnership, joint venture or agency. Neither GENERAL, on the one hand, nor COMPANY,
on the other hand, shall have the authority to make any statements, representations or commitments
of any kind, or to take any action, which shall be binding on the other, without the prior written
consent of the other party to do so. All persons employed by a party shall be employees of such
party and not of the other party and all costs and obligations incurred by reason of any such
employment shall be for the account and expense of such party.

     10.12. The following paragraphs of this Section 10 shall survive the expiration or termination
of this Agreement: paragraphs 10.6, 10.7 and 10.9.

          THE PARTIES have duly executed this Agreement as of the date first shown above written.

	 	 	 	 	 	 	 	 	 
	PRESTWICK SCIENTIFIC CAPITAL, INC.	 	 	 	THE GENERAL HOSPITAL CORPORATION
	 
	 	 	 	 	 	 	 	 
	BY:

	 	Kathleen Clarence-Smith /s/	 	 	 	BY:	 	David Glass /s/
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	TITLE:

	 	 	 	 	 	TITLE:	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DATE;

	 	 	 	 	 	DATE:exv10w15

 

Exhibit 10.15

August 19, 2004

Personal And Confidential

Melvin D. Booth

8318 Woodlea Mill Road

McLean, VA 22102

Dear Mel:

     Prestwick Pharmaceuticals, Inc. (the “Company”) is pleased to engage you to assist with the
management of the Company as set forth in this letter agreement.

     1. Duties. During the Term (as defined below) of your part-time employment with the Company,
you will have the title “Executive Chairman.” You will be expected to (a) consult with, and
assist, the Company’s management, including Kathleen Clarence-Smith, David Cory, Chris O’Brien and
other officers who may be identified from time to time by the Board of Directors (the “Board”), on
all aspects of the Company’s operations, and (b) confer regularly with the Board and the Executive
Committee of the Board. Between regular Board meetings, Dr. Clarence-Smith will report directly to
you. You agree to devote a minimum of four business days per month to carry out the duties set
forth above and your service as a member of the Board or the Executive Committee will not be taken
into account in determining the satisfaction of such minimum time commitment. Additionally, should
the Company elect to pursue an initial public offering during the Term, you agree to serve as the
Company’s primary point of contact during this initial public offering process and to participate
in and attend all major road show presentations in connection with such process provided that you
remain employed by the Company.

     2. Effective Date. If you accept the terms of this letter agreement, your part-time
employment with the Company will be effective August 19, 2004 (the “Effective Date”). Subject to
the terms of Section 7 below, the term of your part-time employment with the Company will be one
(1) year (the “Term”), commencing on the Effective Date. Your part-time employment arrangements as
provided in this letter agreement may be renewed for successive one year terms as mutually agreed
upon by the Company and you in writing.

     3. Payment. For so long as you are employed by the Company as set forth in this letter
agreement, you shall be compensated at a rate of $250,000 per year, to be paid semi-monthly in
accordance with the Company’s typical payroll schedule. Additionally, upon the final closing of a
Qualified Financing (as defined below), if it occurs before January 31, 2005, or thereafter, if you
are still employed by the Company, you will receive an additional one-time cash payment of $50,000.
For purposes of this letter agreement, a “Qualified Financing” shall mean (a) an equity or debt
financing or related equity and/or debt financings or (b) a sale of all or a portion of the
Company’s assets, resulting in either case set forth in clauses (a) and (b) in at least $20,000,000
in proceeds to the Company. You agree that the Company will treat you as a part time employee for
purposes of all tax laws (local, state and federal) and file forms consistent

 

 

Melvin D. Booth

Page 2, 8/19/04

with that status. Accordingly, the Company will withhold appropriate local, state, and
federal income, social security and unemployment taxes.

     4. Stock Option. As of the Effective Date, you will be granted a stock option to purchase
1,200,000 shares of Common Stock of the Company (the “Option”) pursuant to the Company’s 2003
Equity Incentive Plan (the “Plan”). The exercise price for the Option will be equal to $.273 per
share, the fair market value of the Company’s Common Stock as of the Effective Date. The Option
will vest over a four-year period, with 1/48 of the Common Stock subject to the Option vesting
monthly following the Effective Date. Additionally, (a) upon the final closing of a Qualified
Financing, the vesting of 100,000 shares of Common Stock subject to the Option shall be
accelerated, (b) upon the closing of an initial public offering of the Company’s common stock, the
vesting of 50,000 shares of Common Stock subject to the Option shall be accelerated, and (c) upon
the Company receiving notice that the United States Food and Drug Administration has approved the
NDA for the drug candidate known as “tetrabenazine,” the vesting of 50,000 shares of Common Stock
subject to the Option shall be accelerated; provided, however that you shall not be entitled to any
acceleration set forth in this sentence unless you are then-employed with the Company at the time
of the applicable event or the applicable event occurs on or before the 90th day after the
effective date of your termination, provided your termination was without Cause (as defined in
Section 8) or due to the expiration of the Term. Otherwise, the Option will be governed by the
terms of the Plan and the Company’s standard form of stock option agreements, which you will be
required to execute as a condition of grant. The stock option agreement and option grant notice
will contain the same acceleration provisions upon a change of control as contained in your current
stock option agreement and option grant notice.

     5. Other Rights. You shall be entitled to reimbursement by the Company for such customary,
ordinary, necessary and documented business expenses as are incurred by you in the performance of
your duties under the terms of this letter agreement. Further, the Company agrees to reimburse you
for the reasonable legal fees of your personal attorney and your tax advisor in connection with the
review of this letter agreement, not to exceed $10,000. You agree that you will not be entitled to
any benefits offered to full-time employees of the Company, including any benefit plans or programs
provided by the Company and unemployment or workers’ compensation benefits.

     6. Proprietary Rights and Confidentiality. You agree to hold in strictest confidence and will
not disclose, use, lecture upon or publish any of the Company’s confidential information, except
(a) as such disclosure, use or publication may be required in connection with your work for the
Company, (b) when such use is expressly authorized in writing by an officer of the Company; (c) as
may be required to be disclosed by subpoena or judicial order, but only to the extent required by
such order; and (d) to your counsel as may be needed to obtain personal legal advice with respect
to any allowed disclosure. In your work for the Company, you will be expected not to use or
disclose any confidential information, including trade secrets, of any former employer or other
person to whom you have an obligation of confidentiality. Rather, you will be expected to use only
that information which is generally known and used by persons with training and experience
comparable to your own, which is common knowledge in the industry or otherwise legally in the
public domain, or which is otherwise provided or developed by the

 

 

Melvin D. Booth

Page 3, 8/19/04

Company. You also agree that you will not bring onto Company premises any unpublished
documents or property belonging to any former employer or other person to whom you have an
obligation of confidentiality. You hereby acknowledge that the terms of this letter agreement, and
your performance hereunder, are not inconsistent with and will not breach any of your contractual
obligations, expressed or implied, to any third party. You agree that during the period of your
employment by the Company, you will not, without the Company’s express written consent, engage in
any business activity, other than for the Company, which is competitive with, or would otherwise
conflict with, your employment by the Company.

     7. Termination. Your part-time employment with the Company, as evidenced by this letter
agreement, may be terminated by you or the Company at any time for any reason, with or without
advance notice. Subject to Section 8 below, in the event that your employment with the Company is
terminated by the Company or you for any reason, you will be entitled to receive any accrued and
unpaid payments due pursuant to Section 3 and any unreimbursed expenses otherwise payable pursuant
to Section 5. Upon such termination, no portion of the Option will be accelerated, unless
otherwise provided by Section 8 below, the terms of the Plan and your stock option agreement and
you will not be entitled to receive any further rights, unless otherwise expressly provided by the
terms of this letter agreement.

     8. Severance. Notwithstanding the foregoing, in the event that your employment with the
Company is terminated by the Company without Cause (as defined below) during the Term, subject to
your compliance with the terms of this letter agreement, and upon your execution of a release, the
material provisions of which are attached to this letter agreement as Exhibit A, you will be
entitled to receive severance in the form of payments at your then current base salary for the
balance of the Term. Any severance payment paid to you under this Section 8 will be subject to
applicable tax withholding and can be paid, at the Company’s option, periodically in accordance
with the Company’s normal payroll. The severance payment you receive under this paragraph will be
in lieu of any further payments to you. Being terminated for “Cause” shall specifically mean, (a)
conviction of a felony or any crime involving moral turpitude or dishonesty; (b) participation in a
fraud or act of dishonesty against the Company; (c) willful breach of your duties to the Company or
failure to follow lawful directions of the Board of Directors, in either case if such breach or
failure has not been cured within sixty (60) days after written notice from the Company’s Board of
Directors of such event; (d) intentional and material damage to the Company’s property; or (e)
material breach of the Proprietary Rights and Confidentiality provisions set forth in Section 6
above. The severance provided in this Section 8 will not be provided to you in the event of your
termination of employment with the Company for any other reason, including your voluntary decision
to terminate employment or your death or permanent disability.

     Your stock option agreement and option grant notice will also provide that in the event you
are terminated without Cause during the Term, then the vesting of your Option will partially
accelerate through the end of the initial one year Term (in addition to acceleration upon a change
of control as contained in your current stock option agreement).

     Notwithstanding the foregoing, in the event this letter agreement is renewed pursuant to the
terms of Section 2, you shall no longer be entitled to any severance payment or option acceleration
(other than as set forth in your current stock option agreement or as set forth in

 

 

Melvin D. Booth

Page 4, 8/19/04

Section 4) in the event of your termination for any reason and the terms of this Section 8
shall be of no further force and effect. This paragraph shall not be construed as impacting any
amendments, deletions or additions to this agreement that may be agreed upon by you and the Company
as part of any such renewal.

     9. Disputes. In the event any dispute arises between you and the Company, then, to the extent
permitted by law, it shall be settled exclusively by binding arbitration before a single arbitrator
in accordance with the rules of the American Arbitration Association. The arbitrator shall be
appointed by both parties to this letter agreement, and shall be a person independent of the
parties. If the parties are unable to agree on the arbitrator within a reasonable period of time,
then they shall apply to the local chapter of American Arbitration Association, who will make such
appointment according to their rules and the requirements of this letter agreement. The
arbitrator’s decision shall be final and binding upon the parties, and may be entered and enforced
in any court of competent jurisdiction by either of the parties. The arbitrator shall have the
power to grant temporary, preliminary and permanent relief, including without limitation,
injunctive relief and specific performance. The Company will pay the direct costs and expenses of
the arbitration. You and the Company are responsible for your respective attorneys’ fees incurred
in connection with enforcing this letter agreement; however, you and the Company agree that, except
as may be prohibited by law, the arbitrator may, in his or her discretion, award reasonable
attorneys’ fees to the prevailing party.

     This letter agreement contains the entire agreement between you and the Company regarding the
terms of your employment with the Company and supersedes all prior and contemporaneous agreements
or understandings with respect thereto (excluding the previous option agreements entered into
between you and the Company which are unaffected by this letter agreement). If you wish to accept
this part-time employment with the Company under the terms set forth herein, please sign in the
space provided below. By so signing, you acknowledge that you have received no inducements or
representations other than those set forth in this letter agreement, which caused you to accept
this employment with the Company.

PRESTWICK PHARMACEUTICALS, INC.

	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	 	 	 	 
	

	 	Name:
	 	Robert J. Flanagan	 	 
	

	 	Title:
	 	Secretary	 	 

I have read this letter agreement and I understand and accept its terms:

	 	 	 
	Melvin D. Booth

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]