UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
FOR ANNUAL AND TRANSITIONAL REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-19635
GENTA INCORPORATED
(Exact name of Registrant as specified in its certificate of incorporation)
Delaware 33-0326866
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3550 General Atomics Court
San Diego, California 92121
(Address of principal executive offices) (Zip Code)
(619) 455-2700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to
Section 12(g) of the Act: Common Stock, $.001 par value
Preferred Stock Purchase Rights,
Par Value $.001
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant was $16.7 million as of March 1, 1997. For
purposes of determining this number, 1.8 million shares of common stock held by
affiliates are excluded.
As of March 1, 1997, the registrant had 39,991,626 shares of Common Stock
outstanding.
Documents Incorporated by Reference
Designated portions of Registrant's Definitive Proxy Statement to be furnished
for the Annual Meeting of the Stockholders to be held on April 4, 1997 are
incorporated by reference in Part III of this Form 10-K/A.
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Part I
Item 1. Business
Overview
Genta Incorporated ("Genta" or the "Company"), incorporated under the
laws of the State of Delaware on February 4, 1988, is an emerging
biopharmaceutical company engaged in the development of a pipeline of
pharmaceutical products. Genta's multi-faceted approach incorporates a product
development portfolio with balanced technical risk, a novel drug delivery
technology and a United States/European business base. The near to mid-term
segment of the product pipeline consists of oral controlled-release drugs being
developed by the Company's 50%-owned drug delivery joint venture with Jagotec AG
("Jagotec"), Genta Jago Technologies B.V. ("Genta Jago"). Using Jagotec's
patented GEOMATRIX(R) drug delivery technology ("GEOMATRIX"), Genta Jago is
employing a two-pronged commercialization strategy: the development of generic
versions of successful brand-name controlled-release drugs and the development
of controlled-release formulations of drugs currently marketed in only immediate
release form. The Company's longer-term research efforts are focused on the
development of proprietary Anticode(TM) oligonucleotide ("Anticode")
pharmaceuticals intended to block or regulate the production of disease-related
proteins at the genetic level. The Company's Anticode programs are focused
primarily in the area of cancer. In late 1995, a phase I/IIa clinical trial was
initiated in the United Kingdom using Genta's Anticode drug ("G3139") in
non-Hodgkin's lymphoma patients for whom prior therapies have failed. The
clinical trial is being conducted in collaboration with the Royal Marsden NHS
Trust and the Institute for Cancer Research. In late 1996, an Investigational
New Drug application ("IND") for the G3139 clinical program was filed in the
United States and allowed to proceed by the United States Food and Drug
Administration ("FDA"). The Company also manufactures and markets specialty
biochemicals and intermediate products to the in vitro diagnostic and
pharmaceutical industries through its manufacturing subsidiary, JBL Scientific,
Inc. ("JBL"), a California corporation acquired by the Company in February,
1991.
The statements contained in this Annual Report on Form 10-K that are
not historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding the
expectations, beliefs, intentions or strategies regarding the future. The
Company intends that all forward-looking statements be subject to the safeharbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Company's views as of the date they are
made with respect to future events and financial performance, but are subject to
many risks and uncertainties, which could cause the actual results of the
Company to differ materially from any future results expressed or implied by
such forward-looking statements. Examples of such risks and uncertainties
include, but are not limited to: the obtaining of sufficient financing to
maintain the Company's planned operations; the timely development, receipt of
necessary regulatory approvals and acceptance of new products; the successful
application of the Company's technology to produce new products; the obtaining
of proprietary protection for any such technology and products; the impact of
competitive products and pricing and reimbursement policies; the changing of
market conditions and the other risks detailed in the Risk Factors section of
this Annual Report on Form 10-K and elsewhere herein. The Company does not
undertake to update any forward-looking statements.
See "Risk Factors" for a discussion of certain risks and uncertainties
applicable to the Company and its stockholders, including the Company's need for
additional funds to sustain its operations in 1997 and thereafter, as well as
the threat of a delisting of the Company's common stock from the Nasdaq SmallCap
Market.
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Oral Controlled-Release Drugs
Formulations of drugs using the GEOMATRIX technology are designed to
swell and gel when exposed to gastrointestinal fluids. This swelling and gelling
is designed to allow the active drug component to diffuse from the tablet into
the gastrointestinal fluids, gradually over a period of up to 24 hours. The
Company believes that the GEOMATRIX technology may have other benefits which,
collectively, may distinguish it from competing controlled-release technologies.
The Company believes GEOMATRIX formulations can control drug release and
potentially modulate pharmacokinetic profiles to produce a variety of desired
clinical effects. For example, the GEOMATRIX technology may be used to formulate
tablets with a rapid or a delayed therapeutic effect by varying the release
characteristics of the drug from the tablet. The GEOMATRIX technology may also
be used to formulate tablets that release two drugs at the same or different
rates, or tablets that release a drug in several pulses after administration.
Genta Jago is using the GEOMATRIX drug delivery technology to develop
oral controlled-release formulations for a broad range of presently marketed
drugs which have lost, or will in the near to mid-term lose, patent protection
and/or marketing exclusivity. Certain of these presently marketed drugs are
already available in a controlled-release format, while others are only
available in an immediate release format that requires dosing several times
daily. In the case of drugs already available in a controlled-release format,
Genta Jago is seeking to develop bioequivalent products which would be
therapeutic substitutes for the branded products. In the case of currently
marketed products that are only available in immediate release form requiring
multiple daily dosing, Genta Jago is seeking to develop once or twice-daily
controlled-release formulations. The potential benefits of Genta Jago's oral
controlled-release formulations may include improved compliance, greater
efficacy and reduced side effects as a result of a more constant drug plasma
concentration than that associated with immediate release drugs administered
several times daily.
Genta Jago's strategy is to commercialize its GEOMATRIX
controlled-release products worldwide primarily by forming alliances with major
pharmaceutical companies. Genta Jago has established three such collaborations.
See "Business -- Collaborative and Licensing Agreements" below.
Genta Jago currently has eight products in various stages of
development that are intended to be bioequivalent generic versions of
brand-name, controlled-release drugs currently marketed by others. Four of these
products, nifedipine (Procardia XL(R)), ketoprofen (Oruvail(R)),
carbidopa/levodopa (Sinemet(R)CR), and naproxen (Naprelan(R)) are currently
undergoing manufacturing scale-up after completion of formulations development
and pilot human pharmacokinetic studies. During the manufacturing scale-up phase
of development, Genta Jago and its collaborators are seeking to proceed from the
production of small-scale research quantities to the production of larger-scale
quantities necessary for commercial scale manufacturing. The scale-up has not
yet been successfully completed for these products. Assuming successful
completion of manufacturing scale-up, pivotal bioequivalency studies are
scheduled to begin for these products in 1997. Genta Jago believes that if such
bioequivalency studies are successfully completed, Abbreviated New Drug
Applications (each an "ANDA") may be filed with the FDA for two of its products
in 1997. In addition, potentially bioequivalent versions of two other
products--Voltaren-XR(R) (diclofenac) and Covera-HS(R) (verapamil)--have
completed formulations development and pilot pharmacokinetic studies. Genta Jago
intends to proceed with manufacturing scale-up on these two products during
1997.
Genta Jago has also completed initial formulations development and
pilot human pharmacokinetic studies for GEOMATRIX controlled-release
formulations of cefaclor (Ceclor CD(R)) and metoprolol tartrate and formulations
development is ongoing for additional products including acyclovir (Zovirax(R)).
Genta Jago continues to seek collaborative agreements for these products in
order to finance the manufacturing scale-up and required bioequivalency or
clinical studies. In addition to these products currently in development, Genta
Jago maintains the rights to apply the GEOMATRIX technology to the development
of up to approximately 50 additional drugs. There can be no assurance that any
product will be successfully developed or receive the necessary regulatory
approvals.
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Anticode Programs
Anticode oligonucleotides represent a modern approach to drug
development based upon genetic control of disease. Many human diseases have a
genetic origins that involve either the expression of a harmful foreign gene or
the aberrant expression of a normal or mutated human gene. Anticode
oligonucleotides are short strands of synthetic nucleic acids designed to bind
to ("hybridize" with) specific sequences of disease-related RNA or DNA, thereby
blocking or controlling production of disease-related proteins. The Company
believes that, because of their selective binding properties, Anticode
oligonucleotides will not interfere with the function of normal cells, and
therefore, will elicit significantly fewer side effects than traditional drugs.
Anticode drugs may attack a disease at one of two levels. One approach is to
prevent the synthesis of essential disease-related proteins. In this approach,
certain oligonucleotides are used to interrupt the processing of, or selectively
to destroy, individual messenger RNA (mRNA) sequences, which leads to the
down-regulation (lowering of levels) of specific proteins and thereby
effectively eliminates the disease. This is referred to as the "antisense"
mechanism of action. A second therapeutic opportunity is to prevent
transcription of disease-causing DNA into the mRNA copy of the gene. This is
referred to as the "triple-strand to DNA" mechanism of activity.
Genta has focused its Anticode research on oligonucleotides with
methylphosphonate and phosphorothioate backbones. The Company has exclusively
licensed patents from Dr. Paul O. P. Ts'o, Dr. Paul Miller and Johns Hopkins
University ("Johns Hopkins") covering methylphosphonate technology. Genta also
has obtained certain rights to phosphorothioate oligonucleotide constructions.
Genta's scientists have improved these technologies by introducing
chirally-enriched or chirally-pure oligonucleotides. In preclinical studies,
these improved oligonucleotides effectively turn off the action of targeted mRNA
sequences inside cells. Intravenous administration of these oligonucleotides to
certain animals demonstrates that these compounds remain stable in the
circulatory system and are eventually excreted intact in the urine. New
proprietary delivery systems have also been developed to increase intracellular
concentration of oligonucleotides and to lower the drug dosage for potential
therapeutics. Management believes that the Company has the ability to acquire or
produce quantities of oligonucleotides sufficient to support its present needs
for research and its projected needs for initial clinical development programs.
The Company's Anticode research and development efforts are currently
focused primarily on its cancer, program as described below. Extensive
additional development will be required, and there can be no assurance that any
product will be successfully developed or will receive the necessary regulatory
approvals.
BCL2 Gene Target
The BCL2 gene is a proto-oncogene and a major inhibitor of apoptosis
(programmed cell death) of cancerous cells. The protein produced by this gene
has two known critical functions in the progression of cancer: it makes cancer
cells immortal, creating a survival advantage of malignant over normal cells;
and confers resistance to radiation and chemotherapy, rendering those treatments
ineffective in the late stages of many types of cancer. Genta's lead anti-BCL2
molecule, G3139, is designed to inactivate the RNA that produces the BCL2
protein product, thereby preventing cellular production of the protein. High
levels of BCL2 are associated with a poor clinical prognosis in many solid tumor
and hematological malignancies such as lymphoma, leukemia, melanoma, multiple
myeloma and prostate and breast cancers. The Company believes that its Anticode
strategy against the BCL2 gene has the potential to represent a significant
therapeutic opportunity in many of these cancers.
In preclinical studies conducted by Dr. Finbarr Cotter, at the
Institute for Child Health in London, an anti- BCL2 oligonucleotide was shown to
cure lymphoma-like disease induced by the injection of human B-cell lymphoma
cells in immunodeficient mice. In addition, in a variety of other animal
studies, anti-BCL2 Anticode oligonucleotides were found to inhibit the growth of
human melanoma, colon and human breast cancer tumors in immunodeficient mice.
G3139 has demonstrated efficacy when administered as a single agent.
In July 1996, the National Cancer Institute ("NCI") agreed to fund and
conduct preclinical studies of G3139. Pending the outcome of these ongoing
preclinical studies, NCI intends to sponsor Phase I human trials evaluating
G3139 against a number of solid tumor malignancies. The Company will collaborate
with NCI on the design of such clinical studies and the selection of tumor
targets. The primary goal of the trials will be to determine
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the maximum tolerated dose of G3139, although any preliminary antitumor activity
will also be assessed. Tumors under consideration for clinical study include
malignant melanoma, breast, prostate and colorectal cancers. NCI would cover the
costs of running both preclinical and clinical studies. Genta would be
responsible for supplying NCI with necessary quantities of G3139 to carry out
this work.
In late 1995, a Phase I/IIa clinical trial was initiated in the United
Kingdom using Genta's anti-BCL2 Anticode oligonucleotides, G3139, in
non-Hodgkin's lymphoma patients for whom prior therapies have failed. The
clinical trial is being conducted in collaboration with the Royal Marsden NHS
Trust and the Institute for Cancer Research under the direction of Dr. David
Cunningham. The principal aim of this Phase I/IIa study is to define the maximum
tolerated dose of G3139. Secondary objectives include measurement of clinical
and biochemical disease parameters. To date, G3139 has been administered to 14
patients with relapsed and poor prognosis disease. Other than usually mild
topical skin irritation in most of the patients, no serious, clearly
drug-attributable or dose-limiting adverse effects have been seen, so far. The
doses have been escalated six times, and escalations continue. Some of the
patients have demonstrated encouraging signs of potential drug activity. The
responses included one patient in whom cancer mass was reduced and one who
developed a complete radiological tumor response for over 38 weeks in duration.
These results have been considered very encouraging by several prominent
oncologists and accepted for journal publications and presentation at peer
meetings, including that of the American Society of Clinical Oncologists.
Late in 1996, Genta's IND was filed in the United States and the FDA
has allowed the program to proceed. Genta is working with several prominent
United States and European clinical experts to devise the appropriate clinical
strategy for subsequent trials. Planning includes continuation of Phase I/IIa
clinical trials in non-Hodgkin's lymphoma, initiation of studies in different
BCL2 positive solid tumors, including those in the prostate, reported to express
BCL2 in the vast majority of patients. These studies will also examine both
subcutaneous and intravenous administration. Extensive additional clinical
studies are required, and there can be no assurance that the Company will secure
the funding necessary to conduct this development or that any product will be
successfully developed or receive the necessary regulatory approvals.
In September 1996, the Company received a notice of an allowance from
the United States Patent and Trademark Office for patent claims covering
antisense compounds targeted against BCL2. Those claims covering compositions of
matter give Genta exclusive rights to target sequences of the BCL2 gene. The
patent claims cover the Company's proprietary Anticode molecules which target
BCL2, including its lead clinical candidate, G3139. Other related patents and
claims in the United States and Europe are still pending.
Focal Adhesion Kinase (FAK) Gene Target
FAK protein is involved in the regulation of adhesion-dependent growth
and motility of cells. In a variety of cancers - human epithelial and
mesenchymal tumors, such as those implicated in melanoma, lymphoma and multiple
myeloma - the manufacture of FAK protein ("FAK expression") is highly active.
Moreover, increased FAK expression correlates with increased invasiveness and
increased ability of cancer to metastasize (spread of cancer through body). In
collaborative preclinical experiments with Dr. William G. Cance, at the
University of North Carolina, Genta's Anticode oligonucleotides against FAK were
shown to inhibit the growth of a primary (the site at which the cancer is
believed to have begun) tumor and to virtually eliminate metastases in human
melanoma/immunocompromised mice xenograft models. Combined with the observation
that anti-FAK oligonucleotides appear to show few adverse effects against normal
tissues, such results indicate that the FAK target may represent a promising
therapeutic opportunity for both the treatment of primary disease and the
prevention of metastatic disease.
In an effort to focus its research and development efforts on areas
which provide the most significant commercial opportunities, the Company
continually evaluates its ongoing programs in light of the latest market
information and conditions, availability of third party funding, technological
advances, and other factors. As a result of such evaluation, the Company's
product development plans have changed from time to time, and the Company
anticipates that they will continue to do so in the future. The Company recorded
research and development expenses of $5.8 million, $11.3 million and $13.5
million during 1996, 1995, and 1994, respectively, of which zero,
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approximately $1.1 million and $3.1 million, respectively, were funded pursuant
to collaborative research and development agreements.
In 1996, the Company terminated those employees conducting
pre-clinical research on the Company's antisense projects.
Topical Dermatology Products
During 1996, the Company sold its rights relating to research and
development activities regarding two licensed topical dermatology products for
approximately $373,000. The Company does not presently intend to conduct further
activities in this area.
Manufacturing
In 1996, Genta continued to advance its technology for large-scale
production of its Anticode oligonucleotides and has also developed a high degree
of self-sufficiency for large-scale production of synthon raw materials for its
Anticode oligonucleotides. The Company also filed a series of key patent
applications in 1996 covering the improved synthesis of dimers essential to the
manufacture of its Anticode molecules.
Genta obtained its manufacturing capabilities in early 1991 through the
acquisition of JBL. JBL is a manufacturer of high-quality specialty biochemicals
and intermediate products for the pharmaceutical and in vitro diagnostic
industries. A number of Fortune 500 companies utilize JBL products as raw
material in the production of a final product. The manufacturing facilities at
JBL have not been formally inspected by the FDA for compliance with requirements
for Good Manufacturing Practices ("GMP"). The Company is continuing to develop
procedures, documentation and facilities for the production of Anticode
oligonucleotides which it believes will adequately comply with the necessary GMP
requirements. Failure to establish compliance with GMP to the satisfaction of
the FDA can result in delays in, or prohibition from, initiating clinical trials
or commercial marketing of a product.
The manufacture of all of the Company's and Genta Jago's products will
be subject to GMP requirements prescribed by the FDA or other standards
prescribed by the appropriate regulatory agency in the country of use. There can
be no assurance that the Company or Genta Jago will be able to manufacture
products or have products manufactured for either of them in a timely fashion at
acceptable quality and prices, that they or third party manufacturers can comply
with GMP, or that they or third party manufacturers will be able to manufacture
an adequate supply of product.
Genta Europe
Genta Europe has received $1.1 million of funding from a French
governmental agency, L'Agence National de Valorisation de la Recherche
("ANVAR"), towards research and development activities. Genta Europe is
currently in default under the agreement with ANVAR, and ANVAR has the right to
demand repayment of such funds. However, management believes that this matter
will be resolved in a mutually satisfactory manner.
Sales and Marketing
Genta Jago has secured collaborative agreements with three entities for
the development and commercialization of selected controlled-release
pharmaceuticals. Genta Jago's collaborative agreements generally provide the
collaborative partner exclusive rights to market and distribute the products in
exchange for royalty payments to Genta Jago on product sales. Genta Jago's goal
is to form additional collaborations to develop and market a number of its
GEOMATRIX controlled-release products, while potentially selecting certain
products to develop and commercialize on its own. Genta Jago would consider
several options for commercializing these potential products in the United
States including building a small sales force or contracting for the services of
an existing sales force. To market these potential products outside of the
United States, Genta Jago believes it would best utilize its resources through
licensing arrangements. There can be no assurance that any such potential
product will be successfully developed or that any prospective collaborations or
licensing arrangements will be entered into.
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JBL manufactures and markets specialty biochemicals and intermediate
products to over 100 purchasers in the pharmaceutical and diagnostic industries,
with the top 10 customers representing more than 80% of JBL's total sales.
Collaborative and Licensing Agreements
Genta Jago
In December 1992, the Company and Jagotec formed Genta Jago, a
Netherlands corporation, to develop and commercialize therapeutic products on a
worldwide basis. The Company and Jagotec each own 50% of Genta Jago. Under the
arrangement, Jagotec granted Genta Jago an exclusive license to its GEOMATRIX
oral controlledrelease technology for the development and commercialization of
approximately 25 specified products (the "Initial Products"). In May 1995, the
parties entered into an agreement to expand Genta Jago by adding the rights to
develop and commercialize an additional 35 products (the "Additional Products").
With these Additional Products, Genta Jago now maintains the rights to develop
controlled-release formulations of approximately 60 products using Jagotec's
GEOMATRIX technology. Under the agreement, Genta Jago also acquired certain
manufacturing rights with respect to such products. In connection with the
expansion of Genta Jago, the parties elected to focus Genta Jago's activities
exclusively on GEOMATRIX oral-controlled release products. As a result, Genta
Jago returned to Genta, in May 1995, the right to develop six Anticode products
licensed from Genta in connection with the formation of Genta Jago in 1992.
In connection with the formation of Genta Jago, the Company made an
initial capital contribution of $4 million to Genta Jago and issued an aggregate
of 1.2 million unregistered shares of Genta's common stock to Jagotec and an
affiliate. To obtain the rights to the Additional Products and the manufacturing
rights in May 1995, Genta applied $5 million in option and related fees paid to
Jagotec and its affiliates, of which $3.85 million was paid during 1994
(including $1.85 million of non-refundable fees charged to expense during 1994)
and $1.15 million was paid in the first quarter of 1995. The Company also issued
an additional 1.24 million unregistered shares of Genta's common stock to an
affiliate of Jagotec in May 1995. Genta Jago is required to pay certain
additional fees to Jagotec upon Genta Jago's receipt of revenues from third
parties, and to pay manufacturing royalties to Jagotec.
The Company is also required to provide loans to Genta Jago pursuant to
a working capital agreement which expires in October 1998. The loans are
advanced up to a mutually agreed upon maximum commitment amount which is
established by the parties on a periodic basis. The Company anticipates
contributing working capital loans of up to approximately $300,000 to Genta Jago
during 1997. In connection with Genta Jago's return of the Anticode license
rights to Genta in May 1995, the working capital loan payable by Genta Jago to
Genta was credited with a principal reduction of approximately $4.4 million. As
of December 31, 1996, the Company had advanced working capital loans of
approximately $15.3 million to Genta Jago, net of principal repayments and the
aforementioned credit, which amount fully satisfied the loan commitment
established by the parties through December 31, 1996. Such loans bear interest
and are payable in full in October 1998, or earlier in the event certain
revenues are received by Genta Jago from third parties. There can be no
assurance, however, that Genta Jago will obtain sufficient financial resources
to repay such loans to Genta. Genta Jago repaid Genta $1 million of its working
capital loans, in November 1996, from license fee revenues.
Genta has the option to purchase Jagotec's interest in Genta Jago
during the period beginning in December 1998 through the year 2000. The exercise
price with respect to the Initial Products is the lesser of the fair market
value at the time of exercise of the 50% interest in the Initial Products owned
by Jagotec, or $100 million, in each case reduced by the market value at the
time of exercise of the purchase option of the 1.2 million shares of Genta
common stock issued to Jagotec and an affiliate in 1992. The exercise price with
respect to the Additional Products is the fair market value at the time of
exercise of the 50% interest in the Additional Products owned by Jagotec. The
Company also has an exclusive worldwide license to use Jagotec's GEOMATRIX
technology in Genta's Anticode development programs. Genta Jago has contracted
with Genta and Jagotec to conduct research and development and provide certain
other services.
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Genta Jago/Gensia/Brightstone
In January 1993, Genta Jago entered into a collaboration agreement with
Gensia, Inc. ("Gensia") for the development and commercialization of a
potentially bioequivalent nifedipine product, an oral controlled-release
pharmaceutical product for treatment of cardiovascular disease. Under the
agreement, Gensia was to provide funding for formulation and preclinical
development to be conducted by Genta Jago and to be responsible for clinical
development, regulatory submissions and marketing. Terms of the agreement
provided Gensia exclusive rights to market and distribute the products in North
America, Europe and certain other countries. Genta Jago received $2.2 million,
$1.9 million and $4.9 million of research and development funding in 1996, 1995
and 1994, respectively, pursuant to the agreement. Collaborative revenues of
$2.8 million, $3 million and $4.2 million were recognized under the agreement
during the years ended December 31, 1996, 1995 and 1994, respectively.
Effective October 1996, Gensia and SkyePharma PLC ("SkyePharma")
reached an agreement whereby a SkyePharma subsidiary, Brightstone Pharma, Inc.
("Brightstone"), was assigned Gensia's rights to develop and copromote the
potentially bioequivalent nifedipine product under the collaboration agreement
with Genta Jago. The assignment was accepted by Genta Jago and has no impact on
the terms of the original agreement. Genta Jago is still entitled to receive
additional milestone payments from Brightstone triggered upon regulatory
submissions and approvals, as well as royalties or profit sharing ranging from
10% to 21% of product sales, if any.
Genta's Chairman and Chief Executive Officer is a member of Gensia's
Scientific Advisory Board.
Genta Jago/Apothecon
In March 1996, Genta Jago entered into a collaborative licensing and
development agreement with Apothecon, Inc. ("Apothecon"), the multisource
subsidiary of Bristol-Myers Squibb Co. Under the terms of the agreement,
Apothecon provides funding to Genta Jago up to a specified maximum amount for
the formulation, development and clinical testing of a GEOMATRIX formulation of
OD-CR ketoprofen, subject to certain early termination rights. The agreement
also provides for Genta Jago to receive potential milestone payments and
royalties on product sales, if any. Terms of the agreement provide Apothecon
exclusive rights to market and distribute the products on a worldwide basis.
During 1996, Genta Jago received $1.1 million in funding under the arrangement
and recognized $1.3 million of collaborative revenue from the arrangement.
Genta Jago/Krypton
In October 1996, Genta Jago entered into five collaborative licensing
and development agreements with Krypton, Ltd. ("Krypton"), a subsidiary of
SkyePharma. Under the terms of the agreements, Genta Jago is to sublicense to
Krypton rights to develop and commercialize potentially bioequivalent GEOMATRIX
versions of five currently marketed products. Genta Jago also granted Krypton an
option to sublicense rights to develop and commercialize an improved version of
a sixth product. During 1996, Genta Jago received funding of $1 million under
the collaborative agreements and recognized $1 million of collaborative revenue
from the agreements.
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Chugai/Gen-Probe
In February 1989, the Company entered into a development, license and
supply agreement with Gen-Probe Incorporated ("Gen-Probe"). Gen-Probe was
subsequently acquired by Chugai Pharmaceutical Company, Ltd. ("Chugai"), a
Japanese corporation. Chugai has the option to acquire an exclusive worldwide
license to any product consisting of, including, derived from or based on
oligonucleotides for the treatment or prevention of Epstein-Barr virus,
cytomegalovirus, HIV, human T-cell leukemia virus-1 and all leukemias and
lymphomas. Genta is obligated to pursue the development of a therapeutic
compound for the treatment of one of these indications as its first therapeutic
development program. If Chugai exercises its option to acquire rights to a
product in any such indication, the Company will grant Chugai certain rights to
sell such product and Chugai must fund Genta's development of any such product,
subject to certain limitations and early termination rights. If Chugai fully
funds the development of such product, profits on sales of such product will be
shared between the parties. Through the agreement, the Company also has obtained
certain rights to phosphorothioate oligonucleotide constructions and other
technology. In return, the Company has agreed to pay Chugai a royalty on sales
of products derived from such technology. Gen-Probe is a stockholder in the
Company.
Ts'o/Miller/Hopkins
In February 1989, the Company entered into a license agreement with
Drs. Paul Ts'o and Paul Miller (the "Ts'o/Miller Agreement") pursuant to which
Drs. Ts'o and Miller granted an exclusive license to the Company to certain
issued patents, patent applications and related technology regarding the use of
nucleic acids and oligonucleotides, including methylphosphonates, as
pharmaceutical agents. Dr. Ts'o is a Professor of Biophysics, Department of
Biochemistry, and Dr. Miller a Professor of Biochemistry, both at the School of
Public Health and Hygiene, Johns Hopkins University. In May 1990, the Company
entered into a license agreement with Johns Hopkins (the "Johns Hopkins
Agreement," and collectively with the Ts'o/Miller Agreement, referred to herein
as the "Ts'o/Miller/Hopkins Agreements") pursuant to which Johns Hopkins granted
Genta an exclusive license to its rights in certain issued patents, patent
applications and related technology developed as a result of research conducted
at Johns Hopkins by Drs. Ts'o and Miller and related to the use of nucleic acids
and oligonucleotides as pharmaceutical agents. In addition, Johns Hopkins has
granted Genta certain rights of first negotiation to inventions made by Drs.
Ts'o and Miller in their laboratories in the area of oligonucleotides and to
inventions made by investigators at Johns Hopkins in the course of research
funded by Genta, which inventions are not otherwise included in the
Ts'o/Miller/Hopkins Agreements. Genta has agreed to pay Dr. Ts'o, Dr. Miller and
Johns Hopkins royalties on net sales of products covered by the issued patents
and patent applications, but not the related technology, licensed to the Company
under the Ts'o/Miller/Hopkins Agreements. The Company has also agreed to pay
certain minimum royalties prior to commencement of commercial sales of such
products, which royalties may be credited under certain conditions against
royalties payable on subsequent sales. Subject to certain rights of early
termination, the Ts'o/Miller/Hopkins Agreements remain in effect for the life of
the last-to-expire patent licensed under the respective agreements or until
abandonment of the last-pending patent application licensed under the respective
agreements.
As of December 31, 1996, the Company owed Johns Hopkins $627,271, of
which $200,000 consists of royalty payments for 1995 and 1996 and the balance
consisted of the Company's obligations to provide funds to support a
post-doctoral research program of Johns Hopkins. In February 1997, the Company
paid Johns Hopkins $100,000 toward the post-doctoral support program. The
Company is in negotiations with Johns Hopkins as to payment of the remaining
balance in cash and securities. On February 14, 1997, the Company received
notice from Johns Hopkins that the Company was in material breach of the Johns
Hopkins Agreement. The Johns Hopkins Agreement provides that, if a material
payment default is not cured within 90 days of receipt of notice of such breach,
Johns Hopkins may terminate the Johns Hopkins Agreement. A termination of the
Johns Hopkins agreement could have a material adverse effect on the Company.
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Other Anticode Agreements
The Company entered into agreements with Baxter Healthcare Corporation
and Johnson & Johnson Consumer Products, Inc. in late 1995, which provide
limited funding for preliminary feasibility studies using Genta's Anticode
compounds. Under the terms of these agreements, if the collaborative partner
elects to pursue the commercial development of an Anticode compound upon
completion of the feasibility studies, the parties would enter into mutually
acceptable development, license and supply agreements.
Patents and Proprietary Technology
The Company's policy is to protect its technology by, among other
things, filing patent applications with respect to technology considered
important to the development of its business. The Company also relies upon trade
secrets, unpatented know-how, continuing technological innovation and the
pursuit of licensing opportunities to develop and maintain its competitive
position.
Genta has a portfolio of intellectual property rights to aspects of
Anticode technology which includes rights in novel compositions of matter,
methods of large-scale synthesis and methods of controlling gene expression.
This portfolio includes issued United States and Canadian patents and patent
applications, which were licensed by Genta under the Ts'o/Miller/Hopkins
Agreements as described above, and patent applications filed by the Company. In
addition, foreign counterparts of certain applications have been filed or will
be filed at the appropriate time. These issued patents will expire, absent
regulatory extension, in the years 2001 through 2005. Additional allowed patents
under this agreement generally would not expire until 17 years after the date of
allowance or, in other cases, 20 years from the date of application. Generally,
it is the Company's strategy to apply for patent protection in the United
States, Canada, Western Europe, Israel, Taiwan, Japan, Australia and New
Zealand. The Company seeks to coordinate its patent protection policy with those
of its licensors; however, of the six issued patents licensed by Genta under the
Ts'o/Miller/Hopkins Agreements, five were filed only in the United States and
one was filed in both the United States and Canada. Genta also has rights of
first refusal for future antisense work performed by Drs. Ts'o and Miller. See
"Collaborative and Licensing Agreements -- Ts'o/Miller/Hopkins."
Since its incorporation, Genta has separately filed an aggregate of
over 100 United States and foreign patent applications covering new compositions
and improved methods to use, synthesize and purify Anticode oligonucleotides and
linker-arm technology.
Under the agreement with Gen-Probe, Genta gained non-exclusive access
to all technology developed by Gen-Probe related to the use of DNA probes for
therapeutic applications as of February 1989. This technology is related to
nucleic acid probes for quantitation of organisms and viruses, methods for their
production, including nonnucleotide linking reagents, labeling, and
purification, and methods for their use including hybridization and enhanced
hybridization. This includes rights to 14 issued patents and several pending
United States patent applications and corresponding issued and pending
applications in foreign countries. See "Collaborative and Licensing Agreements
- - - -- Chugai/Gen-Probe".
Genta also gained access to certain rights from the National Institutes
of Health ("NIH") covering phosphorothioate oligonucleotides. This includes
rights to three United States issued patents, one granted European patent and
other corresponding foreign applications which are still pending. In addition,
under an agreement with the University of Pennsylvania, Genta has acquired
exclusive rights for the use of BCL2 as a target for antisense and gene
therapy-based treatments for cancer.
In September 1996, the Company received a notice of an allowance from
the United States Patent and Trademark Office for patent claims covering
antisense compounds targeted against BCL2 based on the technology acquired from
the University of Pennsylvania. Those claims covering compositions of matter
give Genta exclusive rights to target sequences of the BCL2 gene. The patent
claims cover the Company's proprietary Anticode molecules which target BCL2,
including its lead clinical candidate, G3139. Other related patents and claims
in the United States and Europe are still pending.
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Jagotec's GEOMATRIX technology is the subject of issued patents and
pending applications. Jagotec currently holds four issued United States patents,
five granted foreign patents, and other corresponding foreign patent
applications still pending that cover the GEOMATRIX technology. Certain rights
to GEOMATRIX technology have been licensed to Genta Jago. See "Collaborative and
Licensing Agreements -- Genta Jago".
The patent positions of biopharmaceutical and biotechnology firms,
including Genta, can be uncertain and involve complex legal and factual
questions. Consequently, even though Genta is currently prosecuting its patent
applications with the United States and foreign patent offices, the Company does
not know whether any of its applications will result in the issuance of any
patents or, if any issued patents will provide significant proprietary
protection or will be circumvented or invalidated. Since patent applications in
the United States are maintained in secrecy until patents issue, and since
publication of discoveries in the scientific or patent literature tend to lag
behind actual discoveries by several months, Genta cannot be certain that others
have not filed patent applications directed to inventions covered by its pending
patent applications or that it was the first to file patent applications for
such inventions.
Competitors or potential competitors may have filed applications for,
or have received patents and may obtain additional patents and proprietary
rights relating to, compounds or processes competitive with those of the
Company. See "Competition." Accordingly, there can be no assurance that the
Company's patent applications will result in issued patents or that, if issued,
the patents will afford protection against competitors with similar technology;
nor can there be any assurance that any patents issued to Genta will not be
infringed or circumvented by others; nor can there be any assurance that others
will not obtain patents that the Company would need to license or design around.
There can be no assurance that the Company will be able successfully to obtain a
license to technology that it may require or that, if obtainable, such a license
would be available on reasonable terms.
There can be no assurance that the Company's patents, if issued, would
be held valid by a court of competent jurisdiction. Moreover, the Company may
become involved in interference proceedings declared by the United States Patent
and Trademark Office in connection with one or more of its patents or patent
applications to determine priority of invention, which could result in
substantial cost to the Company, as well as a possible adverse decision as to
priority of invention of the patent or patent application involved.
The Company also relies upon unpatented trade secrets and no assurance
can be given that third parties will not independently develop substantially
equivalent proprietary information and techniques or gain access to the
Company's trade secrets or disclose such technology to the public, or that the
Company can meaningfully maintain and protect unpatented trade secrets.
Genta requires its employees, consultants, outside scientific
collaborators and sponsored researchers and other advisors to execute a
confidentiality agreement upon the commencement of employment or consulting
relationship with the Company. The agreement generally provides that all
confidential information developed or made known to the individual during the
course of the individual's relationship with Genta shall be kept confidential
and shall not be disclosed to third parties except in specific circumstances. In
the case of employees, the agreement generally provides that all inventions
conceived by the individual shall be assigned to, and made the exclusive
property of, the Company. There can be no assurance, however, that these
agreements will provide meaningful protection for the Company's trade secrets or
adequate remedies in the event of unauthorized use or disclosure of such
information, or in the event of an employee's refusal to assign any patents to
the Company in spite of such contractual obligation.
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Government Regulation
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the manufacture and marketing of the
Company's proposed products and in its ongoing research and product development
activities. All of the Company's therapeutic products will require regulatory
approval by governmental agencies prior to commercialization. In particular,
human therapeutic products are subject to rigorous preclinical and clinical
testing and premarket approval procedures by the FDA and similar authorities in
foreign countries. Various federal, and in some cases state, statutes and
regulations also govern or influence the manufacturing, safety, labeling,
storage, record keeping and marketing of such products. The lengthy process of
seeking these approvals, and the subsequent compliance with applicable federal
and in some cases state, statutes and regulations, require the expenditure of
substantial resources. Any failure by the Company, its collaborators or its
licensees to obtain, or any delay in obtaining, regulatory approvals could
adversely affect the marketing of any products developed by the Company and its
ability to receive product or royalty revenue.
The activities required before a new pharmaceutical agent may be
marketed in the United States begin with preclinical testing. Preclinical tests
include laboratory evaluation of product chemistry and animal studies to assess
the potential safety and efficacy of the product and its formulations. The
results of these studies must be submitted to the FDA as part of an IND, which
must be reviewed and approved by the FDA before proposed clinical testing can
begin. An IND becomes effective within 30 days of filing with the FDA unless the
FDA imposes a clinical hold on the IND. In addition, the FDA may, at any time,
impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical
hold, clinical trials cannot commence or recommence, as the case may be, without
prior FDA authorization and then only under terms authorized by the FDA.
Typically, clinical testing involves a three-phase process. In Phase I, clinical
trials are conducted with a small number of subjects to determine the early
safety profile and the pattern of drug distribution and metabolism. In Phase II,
clinical trials are conducted with groups of patients afflicted with a specific
disease in order to determine preliminary efficacy, optimal dosages and expanded
evidence of safety. In Phase III, large-scale, multi-center, comparative
clinical trials are conducted with patients afflicted with a target disease in
order to provide enough data for the statistical proof of efficacy and safety
required by the FDA and others. In the case of products for life-threatening
diseases, the initial human testing is generally done in patients rather than in
healthy volunteers. Since these patients are already afflicted with the target
disease, it is possible that such studies may provide results traditionally
obtained in Phase II trials. These trials are frequently referred to as "Phase
I/II" trials.
The results of the preclinical and clinical testing, together with
chemistry, manufacturing and control information, are then submitted to the FDA
for a pharmaceutical product in the form of a New Drug Application ("NDA"), for
a biological product in the form of a Product License Application ("PLA") or for
medical devices in the form of a Premarket Approval Application ("PMA") for
approval to commence commercial sales. In responding to an NDA, PLA or PMA, the
FDA may grant marketing approval, request additional information or deny the
application if it determines that the application does not satisfy its
regulatory approval criteria. There can be no assurance that approvals will be
granted on a timely basis, if at all, or if granted will cover all the clinical
indications for which the Company is seeking approval or will not contain
significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
In circumstances where a company intends to develop and introduce a
novel formulation of an active drug ingredient already approved by the FDA,
clinical and preclinical testing requirements may not be as extensive. Limited
additional data about the safety and/or effectiveness of the proposed new drug
formulation, along with chemistry and manufacturing information and public
information about the active ingredient, may be satisfactory for product
approval. Consequently, the new product formulation may receive marketing
approval more rapidly than a traditional full NDA, although no assurance can be
given that a product will be granted such treatment by the FDA.
For clinical investigation and marketing outside the United States, the
Company is or may be subject to foreign regulatory requirements governing human
clinical trials and marketing approval for drugs. The requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary
widely from country to country. The Company's approach is to design its European
clinical trials studies to meet FDA, European Economic Community ("EEC") and
other European countries' standards. At present, the marketing authorizations
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are applied for at a national level, although certain EEC procedures are
available to companies wishing to market a product in more than one EEC member
state. If the competent authority is satisfied that adequate evidence of safety,
quality and efficacy has been presented, a market authorization will be granted.
The registration system proposed for medicines in the EEC after 1992 is a dual
one in which products, such as biotechnology and high technology products and
those containing new active substances, will have access to a central regulatory
system that provides registration throughout the entire EEC. Other products will
be registered by national authorities under the local laws of each EEC member
state. Provided regulatory harmonization is finalized in the EEC, the Company's
clinical trials will be designed to develop a regulatory package sufficient for
multi-country approval in the Company's European target markets without the need
to duplicate studies for individual country approvals. This approach also takes
advantage of regulatory requirements in some countries, such as in the United
Kingdom, which allow Phase I studies to commence after appropriate toxicology
and preclinical pharmacology studies, prior to formal regulatory approval.
Prior to the enactment of the Drug Price Competition and Patent Term
Restoration Act of 1984 (the "Waxman/Hatch Act"), the FDA, by regulation,
permitted certain pre-1962 drugs to be approved under an abbreviated procedure
which waived submission of the extensive animal and human studies of safety and
effectiveness normally required to be in a NDA. Instead, the manufacturer only
needed to provide an ANDA containing labeling, information on chemistry and
manufacturing procedures and data establishing that the original "pioneer"
product and the proposed "generic" product are bioequivalent when administered
to humans.
Originally, the FDA's regulations permitted this abbreviated procedure
only for copies of a drug that was approved by the FDA as safe before 1962 and
which was subsequently determined by the FDA to be effective for its intended
use. In 1984, the Waxman/Hatch Act extended permission to use the abbreviated
procedure established by the FDA to copies of post-1962 drugs subject to the
submission of the required data and information, including data establishing
bioequivalence. However, effective approval of such ANDAs were dependent upon
there being no outstanding patent or non-patent exclusivities.
Additionally, the FDA allows, under section 505(b)(2) of the Food Drug
and Cosmetic Act, for the submission and approval of a hybrid application for
certain changes in drugs which, but for the changes, would be eligible for an
effective ANDA approval. Under these procedures the applicant is required to
submit the clinical efficacy and/or safety data necessary to support the changes
from the ANDA eligible drug (without submitting the basic underlying safety and
efficacy data for the chemical entity involved) plus manufacturing and chemistry
data and information. Effective approval of a 505(b)(2) application is dependent
upon the ANDA eligible drug upon which the applicant relies for the basic safety
and efficacy data being subject to no outstanding patent or non-patent
exclusivities. As compared to a NDA, an ANDA or a 505(b)(2) application
typically involves reduced research and development costs. However, there can be
no assurance that any such applications will be approved. Furthermore, the
supply of raw materials must also be approved by the FDA.
The Company is also subject to various foreign, federal, state and
local laws, regulations and recommendations relating to safe working conditions,
laboratory and manufacturing practices, the experimental use of animals and the
use, manufacture, storage, handling and disposal of hazardous or potentially
hazardous substances, including radioactive compounds and infectious disease
agents, used in connection with the Company's research and development work and
manufacturing processes. Although the Company believes it is in compliance with
these laws and regulations in all material respects (except as disclosed under
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Liquidity and Capital Resources"), there can be no assurance that
the Company will not be required to incur significant costs to comply with such
regulations in the future.
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Competition
For many of their applications, the Company's, and Genta Jago's,
products under development will be competing with existing therapies for market
share. In addition, a number of companies are pursuing the development of
antisense and triple-strand technology and controlled-release formulation
technology and the development of pharmaceuticals utilizing antisense and
triple-strand technology and controlled-release formulation technology. The
Company competes with fully integrated pharmaceutical companies, many of which
have more substantial experience, financial and other resources and superior
expertise in research and development, manufacturing, testing, obtaining
regulatory approvals, marketing and distribution. Smaller companies may also
prove to be significant competitors, particularly through their collaborative
arrangements with large pharmaceutical companies or academic institutions.
Furthermore, academic institutions, governmental agencies and other public and
private research organizations have conducted and will continue to conduct
research, seek patent protection and establish arrangements for commercializing
products. Such products may compete directly with any products which may be
offered by the Company.
The Company's products under development are expected to address an
array of markets. The Company's competition will be determined in part by the
potential indications for which the Company's products are developed and
ultimately approved by regulatory authorities. For certain of the Company's
potential products, an important factor in competition may be the timing of
market introduction of the Company's or competitor's products. Accordingly, the
relative speed with which Genta and Genta Jago can develop products, complete
the clinical trials and approval processes and supply commercial quantities of
the products to the market are expected to be important competitive factors. The
Company expects that competition among products approved for sale will be based,
among other things, on product efficacy, safety, reliability, availability,
price, patent position and sales, marketing and distribution capabilities. The
development by others of new treatment methods could render the Company's and
Genta Jago's products under development non-competitive or obsolete. The
Company's competitive position also depends upon its ability to attract and
retain qualified personnel, obtain patent protection or otherwise develop
proprietary products or processes and secure sufficient capital resources for
the often substantial period between technological conception and commercial
sales.
JBL's products address several markets, including clinical chemistry,
diagnostics, molecular biology and pharmaceutical development. While many
customers have specified JBL products in their manufacturing protocols,
competition from several international competitors could undermine JBL's
competitive position, many of whom have more substantial experience, financial
and other resources and superior expertise in research and development,
manufacturing, testing, obtaining regulatory approvals, marketing and
distribution. Competition has come primarily on price for some key JBL products
for pharmaceutical development, and from competing technologies in diagnostics
and molecular biology.
Human Resources
As of December 31, 1996, Genta, JBL and Genta Europe had 22, 41 and 2
employees, respectively, 13 of whom held doctoral degrees. Twenty employees were
engaged in research and development activities, 21 were engaged in manufacturing
and 24 were in administration, sales and marketing positions. A significant
number of the Company's management and professional employees have had prior
experience and positions with pharmaceutical and biotechnology companies. Genta
believes it maintains satisfactory relations with its employees.
In October 1996, the Company terminated its nine employees conducting
pre-clinical research on the Company's "antisense" projects and Genta Europe
terminated seven employees. The Company's overall staff was reduced by an
additional net reduction of ten employees in 1996, due to attrition.
Risk Factors
In addition to the other information contained in this Annual Report on
Form 10-K, the following factors should be considered carefully.
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Need for Additional Funds; Risk of Insolvency. Genta's operations to
date have consumed substantial amounts of cash. The Company anticipates that its
existing cash funds, including $3 million in additional financing obtained in
February 1997, will enable the Company to maintain its presently planned
operations until July, 1997. The Company's auditors have included an emphasis
paragraph in their opinion with respect to the Company's ability to continue as
a going concern. Management believes that a minimum of approximately $6.4
million of additional financing will be necessary to sustain operations through
the end of 1997 and to satisfy the Company's obligations under its Senior
Secured Convertible Bridge Notes (the "Convertible Notes") and 4% Convertible
Debentures (the "Convertible Debentures"). Substantial additional sources of
financing will be required in order for the Company to continue its planned
operations thereafter, as well. Furthermore, The Nasdaq Stock Market, Inc.
("Nasdaq") has informed the Company that its common stock will be delisted from
the Nasdaq SmallCap Market unless the Company makes a public filing with the
Securities and Exchange Commission and Nasdaq by April 7, 1997 evidencing
minimum capital and surplus of at least $6 million. See "Risk Factors -- Threat
of Nasdaq Delisting" below. The Company is negotiating with pharmaceutical
companies regarding collaborative agreements and other financing arrangements
and is actively seeking additional equity or debt financing. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources." However, there can be no assurance that any
such collaborative agreements or other sources of funding will be available on
favorable terms, if at all. If such funding is unavailable, the Company will be
required to license or sell certain of its assets and technology, further scale
back or eliminate some or all of its development programs, further reduce its
work force and spending, and take other measures in order to continue its
operations. If such measures are not successfully completed, the Company may be
required to discontinue its operations. The Company will need to raise
substantial additional funds to conduct the costly and time-consuming research,
pre-clinical development and clinical trials necessary to bring its and Genta
Jago's products to market and to establish production and marketing
capabilities. The Company will also need substantial additional funds to provide
working capital loans to Genta Jago. The Company intends to seek additional
funding through public or private financings, including equity financings, and
through collaborative arrangements. Adequate funds for these purposes, whether
obtained through financial markets or collaborative or other arrangements with
corporate partners or from other sources, may not be available when needed or on
terms acceptable to the Company. Insufficient funds may require the Company to
delay, scale back or eliminate some or all of its research and product
development programs or to license third parties to commercialize products or
technologies that the Company would otherwise seek to develop itself. The
Company's future cash requirements will be affected by results of research and
development, results of preclinical studies and bioequivalence and clinical
trials, relationships with corporate collaborators, changes in the focus and
direction of the Company's research and development programs, competitive and
technological advances, resources devoted to Genta Jago, the FDA and foreign
regulatory process, potential litigation by companies seeking to prevent or
delay marketing approval of Genta Jago's products and other factors.
Threat of Nasdaq Delisting. Since October 22, 1996 the Company's common
stock has been trading at less than $1.00 per share. Effective February 7, 1997
the Company's common stock was removed from the Nasdaq National Market and began
trading on the Nasdaq SmallCap Market under a conditional exception from the bid
price and capital surplus requirements of the Nasdaq SmallCap Market. Nasdaq has
indicated that, unless the Company's common stock achieves a minimum bid price
of at least $1.50 per share by April 7, 1997, and maintains a minimum bid price
of at least $1.50 per share for a period of ten consecutive days thereafter, the
Company's common stock will be delisted from the Nasdaq SmallCap Market. The
Board of Directors of the Company has approved an amendment to the Company's
Restated Certificate of Incorporation effecting a one-for-ten reverse stock
split of the Company's common stock (the "Reverse Split Amendment") and has
recommended that stockholders approve the Reverse Split Amendment at the Annual
Meeting of Stockholders to be held on April 4, 1997. The Company believes that,
if the Reverse Split Amendment is approved, it can meet Nasdaq's terms; however,
there can be no assurance that, even with the reverse stock split, the Company
will be able to maintain its listing on the Nasdaq SmallCap Market. To maintain
such listing, the Company will also be required to make a public filing with the
SEC and Nasdaq evidencing minimum capital and surplus of $6 million on or before
April 7, 1997. While the Company believes that it can meet this capital and
surplus level by such date, there can be no assurance that the Company will
succeed in timely achieving this requirement or that, even if successful, the
Company's common stock would not be delisted from the Nasdaq SmallCap Market.
There can be no assurances that approval of the Reverse Split Amendment will
succeed in raising the bid price of the Company's common stock above $1.50 per
share, that such minimum price if achieved would be maintained for the requisite
period, or that even if Nasdaq's minimum bid price requirement were satisfied,
the Company's common stock would not be delisted from the Nasdaq
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SmallCap Market for other reasons. A delisting of the Company's common stock
could adversely affect the ability of the Company to attract new investors.
Subordination of Common Stock to Series A and Series C Preferred Stocks
and Redemption of Series A Preferred Stock; Risk of Dilution. The common stock
is expressly subordinate to the approximately $30 million preference of the
528,100 outstanding shares of Series A Preferred Stock and the approximately
$1.5 million preference of the 1,424 shares of Series C Preferred Stock in the
event of the liquidation, dissolution or winding up of the Company. Further, no
dividends may be paid on the common stock unless full cumulative dividends on
the Series A and Series C Preferred Stocks have been paid or funds set aside for
such preferred dividends by the Company. In addition, the conversion ratio of
the Series A Preferred Stock and the exercise price of warrants issued in
connection with the Series A Preferred Stock (the "Series A Warrants") is
subject to adjustment, among other things, upon certain issuances of common
stock or securities convertible into common stock at $6.75 per share or less.
Each share of Series A preferred stock is presently convertible into 21.31
shares of common stock and the exercise price of the Series A Warrants is $2.60
per share.
The Series A Preferred Stock was subject to a mandatory redemption
(the "Mandatory Redemption") by the Company on September 23, 1996 (the
"Redemption Date"). Under the terms of the Mandatory Redemption, as set forth in
the Company's Restated Certificate of Incorporation, the Redemption Price of $50
per share plus accrued dividends was to be paid, subject to certain conditions,
in common stock valued at an average trading price for ten trading days before
August 20, 1996. The Company elected to effect the Mandatory Redemption through
the use of common stock, and then was required to use its best efforts to
arrange with an investment bank acceptable to the holders of Series A preferred
stock for a firm commitment underwriting relating to such shares. The Company
was unable to arrange for such a firm commitment offering and is now required to
use its reasonable efforts to arrange for a firm commitment underwriting as
promptly as practicable and to redeem any remaining outstanding shares of Series
A preferred stock upon arranging for such firm commitment underwriting. Even if
the Company is successful in satisfying its Mandatory Redemption obligations
with its shares of common stock, holders of common stock will experience
substantial dilution at the time of such redemption. Terms of the Company's
Series A preferred stock provide for the payment of dividends annually in
amounts ranging from $3.00 per share per annum for the first year to $5.00 per
share per annum in the third and fourth years. Dividends may be paid in cash or
common stock or a combination thereof, at the Company's option. Dividends on the
preferred stock accrue on a daily basis (whether or not declared) and shall
accumulate to the extent not paid on the annual dividend payment date following
the dividend period for which they accrue. Each share of Series C Preferred
Stock is convertible, subject to certain conditions, at the option of the
holder, into that number of shares of common stock determined by dividing the
sum of $1,000, plus all accrued dividends on each share of Series C Preferred
Stock (approximately $40 per share), by the conversion price of the Series C
Preferred Stock. The conversion price of the Series C Preferred Stock is equal
to 75% of the average of the closing bid prices of the Company's common stock on
the Nasdaq Stock Market for a specified period. Terms of the Company's Series C
convertible preferred stock also provide for dividends payable in shares of the
Company's common stock. The Company has paid and, to the extent permitted by
law, intends to continue paying the dividends in shares of the Company's common
stock.
Subordination of Common Stock to Senior Secured Convertible Bridge
Notes and 4% Convertible Debentures; Risk of Dilution. In the event of a
liquidation, dissolution or winding up of the Company, the common stock is also
expressly subordinate to $3 million principal amount of Convertible Notes and to
$350,000 principal amount of Convertible Debentures; both issues are payable in
August, 1997. Further, no dividends may be paid on the common stock unless
cumulative dividends on such convertible notes and debentures have been paid or
funds have been set aside for such payment. The Convertible Notes are initially
convertible into 600,000 shares of Series D preferred stock, which are in turn
convertible into 20 million shares of common stock, subject to antidilution
adjustments. The Convertible Debentures are convertible into a maximum of
122,101 shares of common stock.
Early Stage of Development; Technological Uncertainty. Genta is at an
early stage of development. All of the Company's potential therapeutic products
are in research or development, and no revenues have been generated from
therapeutic product sales. The Company is pursuing research and development,
through Genta Jago, of a range of oral controlled-release formulations of
currently available pharmaceuticals. Many of the products to be developed
through Genta Jago have not yet been successfully formulated using GEOMATRIX
technology. In
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addition, none of the products being developed through Genta Jago has had its
manufacturing process successfully scaled-up for commercial production or has
started pivotal bioequivalence trials. To date, a major portion of the Company's
resources have been dedicated to applying molecular biology and medicinal
chemistry to the research and development of potential pharmaceutical products
based upon Anticode technology. While the Company has demonstrated the activity
of Anticode technology in model systems in vitro and the activity of antisense
technology in animals and has identified a number of compounds which the Company
believes are worthy of additional testing, only one of these potential Anticode
products has begun to be tested in humans, with such testing in its early
stages. There can be no assurance that the novel approach of Anticode technology
to develop therapeutic products will result in products which receive necessary
regulatory approvals or that will be successful commercially. Further, results
obtained in preclinical studies or pilot bioequivalence trials are not
necessarily indicative of results that will be obtained in human clinical
testing or pivotal bioequivalence trials, respectively. The Company is also
developing products for certain diseases where no animal models exist. There can
be no assurance that any of the Company's or Genta Jago's potential products can
be successfully developed. Furthermore, the Company's products in research or
development may prove to have undesirable and unintended side effects or other
characteristics that may prevent or limit their commercial use. There can be no
assurance that the Company will be permitted to undertake human clinical testing
of its potential Anticode products or any other of the Company's products
currently in preclinical development, or, if permitted, that such products will
be demonstrated to be safe and efficacious. In addition, there can be no
assurance that any of the Company's or Genta Jago's products will obtain FDA or
foreign regulatory approval for any indication or that an approved compound
would be capable of being produced in commercial quantities at reasonable costs
and successfully marketed. Products, if any, resulting from Genta's or Genta
Jago's research and development programs are not expected to be commercially
available for a number of years.
Loss History; Uncertainty of Future Profitability. Genta has been
unprofitable to date, incurring substantial operating losses associated with
ongoing research and development activities, preclinical testing, clinical
trials, manufacturing activities and development activities undertaken by Genta
Jago. From the period since its inception to December 31, 1996, the Company has
incurred a cumulative net loss of $108.4 million. The Company has experienced
significant quarterly fluctuations in operating results and expects that these
fluctuations in revenues, expenses and losses will continue. The Company has
historically experienced significant quarterly fluctuations in its level of
product sales, generally reflecting the timing and degree of customer demand for
various products.
Dividends. The Company has never paid cash dividends on its common
stock and does not anticipate paying any such dividends in the foreseeable
future. In addition, the Company is restricted from paying cash dividends on its
common stock until such time as all cumulative dividends have been paid on
outstanding shares of its Series A and Series C convertible preferred stock. The
Company currently intends to retain its earnings, if any, after payment of
dividends on outstanding shares of Series A and Series C convertible preferred
stock, for the development of its business. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
Operations After Restructuring. As a result of the Company's
restructuring to reduce operating expenses, the Company has focused its research
and development programs on its near-term drug delivery (GEOMATRIX) technology
and its Anticode cancer program. The Company's Anticode programs directed at
other areas have largely been curtailed and any future progress with these
programs is dependent upon the Company obtaining a collaborative partner to fund
further research. There can be no assurance that the Company will be successful
in obtaining additional funding for these programs. The Company no longer
anticipates devoting any of its resources to further development of its topical
dermatology product candidates. The Company's agreement with its collaborative
partner, the Procter & Gamble Company ("Procter & Gamble"), for its Anticode
program in infectious diseases, ended in September 1995. The Company will have
to obtain additional corporate partners in order to continue its Anticode
programs. There can be no assurance that the Company will be able to negotiate
such collaborative arrangements on favorable terms, if at all.
Genta Jago's strategy is to form alliances with major pharmaceutical
companies to commercialize its GEOMATRIX oral controlled-release products
worldwide. Genta Jago has established collaborations with Gensia (and, through
Gensia, with Boehringer Mannheim), Apothecon and Krypton. Gensia has since
entered into an Assignment and Release Agreement with SkyePharma for its United
States subsidiary, Brightstone, to assume
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<PAGE>
Gensia's position in the collaboration with Genta Jago with no modification to
the terms of the original agreement between Genta Jago and Gensia. Brightstone
also replaces Gensia in its relationship with Boehringer Mannheim.
No Assurance of Regulatory Approval; Government Regulation. The FDA and
comparable agencies in foreign countries impose substantial premarket approval
requirements upon the introduction of pharmaceutical products through lengthy
and detailed preclinical and clinical testing procedures and other costly and
time-consuming procedures. Satisfaction of these requirements, which includes
demonstrating to the satisfaction of the FDA and foreign regulatory agencies
that the product is both safe and effective, typically takes several years or
more depending upon the type, complexity and novelty of the product. There can
be no assurance that such testing will show any product to be safe or
efficacious or, in the case of certain of Genta Jago's products, to be
bioequivalent to a currently marketed pharmaceutical. Government regulation also
affects the manufacture and marketing of pharmaceutical products. The effect of
government regulation may be to delay marketing of any new products for a
considerable or indefinite period of time, to impose costly procedures upon the
Company's or Genta Jago's activities and to diminish any competitive advantage
that the Company or Genta Jago may attain. It may take years before marketing
approvals are obtained for the Company's or Genta Jago's products, if at all.
There can be no assurance that FDA or other regulatory approval for any products
developed by the Company or Genta Jago will be granted on a timely basis, if at
all, or, if granted, that such approval will cover all the clinical indications
for which the Company or Genta Jago is seeking approval or will not sustain
significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use. Further, with respect to
the reformulated versions of currently available pharmaceuticals being developed
through Genta Jago, there is a substantial risk that the manufacturers or
marketers of such currently available pharmaceuticals will seek to delay or
block regulatory approval of any reformulated versions of such pharmaceuticals
through litigation or other means. Any significant delay in obtaining, or
failure to obtain, such approvals would materially adversely affect the Company
and Genta Jago's revenue. Moreover, additional government regulation from future
legislation or administrative action may be established which could prevent or
delay regulatory approval of the Company's or Genta Jago's products or further
regulate the prices at which the Company's or Genta Jago's proposed products may
be sold.
The Company is also subject to various foreign, federal, state and
local laws, regulations and recommendations relating to safe working conditions,
laboratory and manufacturing practices, the experimental use of animals and the
use, manufacture, storage, handling and disposal of hazardous or potentially
hazardous substances, including radioactive compounds and infectious disease
agents, used in connection with the Company's research and development work and
manufacturing processes. Although the Company believes it is in compliance with
these laws and regulations in all material respects (except as disclosed under
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Liquidity and Capital Resources"), there can be no assurance that
the Company will not be required to incur significant costs to comply with such
regulations in the future.
Uncertainty Regarding Patents and Proprietary Technology. The Company's
and Genta Jago's success will depend, in part, on their respective abilities to
obtain patents, maintain trade secrets and operate without infringing the
proprietary rights of others. No assurance can be given that patents issued to
or licensed by the Company or Genta Jago will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company or Genta Jago. There can be no assurance that the
Company's or Genta Jago's patent applications will be approved, that the Company
or Genta Jago will develop additional products that are patentable, that any
issued patent will provide the Company or Genta Jago with any competitive
advantage or adequate protection for its inventions or will not be challenged by
others, or that the patents of others will not have an adverse effect on the
ability of the Company or Genta Jago to do business. Competitors may have filed
applications, may have been issued patents or may obtain additional patents and
proprietary rights relating to products or processes competitive with those of
the Company or Genta Jago. Furthermore, there can be no assurance that others
will not independently develop similar products, duplicate any of the Company's
or Genta Jago's products or design around any patented products developed by the
Company or Genta Jago. The Company and Genta Jago rely on secrecy to protect
technology in addition to patent protection, especially where patent protection
is not believed to be appropriate or obtainable. No assurance can be given that
others will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to
18
<PAGE>
the Company's or Genta Jago's trade secrets, or that the Company or Genta Jago
can effectively protect is rights to its unpatented trade secrets.
Genta and Genta Jago have obtained licenses or other rights to patents
and other proprietary rights of third parties, and may be required to obtain
licenses to additional patents or other proprietary rights of third parties. No
assurance can be given that any existing licenses and other rights will remain
in effect or that any licenses required under any such additional patents or
proprietary rights would be made available on terms acceptable to the Company or
Genta Jago, if at all. If Genta's or Genta Jago's licenses and other rights are
terminated or if Genta or Genta Jago cannot obtain such additional licenses,
Genta or Genta Jago could encounter delays in product market introductions while
it attempts to design around such patents or could find that the development,
manufacture or sale of products requiring such licenses could be foreclosed. In
addition, the Company or Genta Jago could incur substantial costs, including
costs caused by delays in obtaining regulatory approval and bringing products to
market, in defending itself in any suits brought against the Company or Genta
Jago claiming infringement of the patent rights of third parties or in asserting
the Company's or Genta Jago's patent rights, including those granted by third
parties, in a suit against another party. The Company or Genta Jago may also
become involved in interference proceedings declared by the United States Patent
Office in connection with one or more of its patents or patent applications,
which could result in substantial cost to the Company or Genta Jago, as well as
an adverse decision as to priority of invention of the patent or patent
application involved. There can be no assurance that the Company or Genta Jago
will have sufficient funds to obtain, maintain or enforce patents on their
respective products or technology, to obtain or maintain licenses that may be
required in order to develop and commercialize their respective products, to
contest patents obtained by third parties, or to defend against suits brought by
third parties.
Dependence on Others. The Company's strategy for the research,
development and commercialization of certain of its or Genta Jago's products
requires negotiating, entering into and maintaining various arrangements with
corporate collaborators, licensors, licensees and others, and is dependent upon
the subsequent success of these outside parties in performing their
responsibilities. The Company's agreement with Procter & Gamble represented the
Company's primary source of collaborative revenues during 1995 and such
agreement ended in September 1995. Genta Jago is seeking additional
collaborative arrangements to develop and commercialize certain of their
respective products. However, there can be no assurance that Genta Jago will be
able to negotiate collaborative arrangements on acceptable terms, if at all.
Technology Licensed From Third Parties. The Company has entered into
certain agreements with, and licensed certain technology and compounds from,
third parties. The Company has relied on scientific, technical, clinical,
commercial and other data supplied and disclosed by others in entering into
these agreements, including the Genta Jago agreements, and will rely on such
data in support of development of certain products. Although the Company has no
reason to believe that this information contains errors of omission or fact,
there can be no assurance that there are no errors of omission or fact that
would materially affect the future approvability or commercial viability of
these products.
Competition. The Company and Genta Jago have numerous competitors in
the United States and other countries for their respective technologies and
products under development, including among others, major pharmaceutical and
chemical companies, specialized biotechnology firms, universities and other
research institutions. There can be no assurance that the Company's or Genta
Jago's competitors will not succeed in developing products or other novel
technologies that are more effective than any which have been or are being
developed by the Company or Genta Jago or which would render the Company's or
Genta Jago's technology and products non-competitive. Many of the Company's and
Genta Jago's competitors have substantially greater financial, technical,
marketing and human resources than the Company or Genta Jago. In addition, many
of those competitors have significantly greater experience than the Company or
Genta Jago in undertaking preclinical testing and human clinical trials of new
pharmaceutical products and obtaining FDA and other regulatory approvals of
products for use in healthcare. Accordingly, the Company's or Genta Jago's
competitors may succeed in obtaining regulatory approval for products more
rapidly than the Company or Genta Jago and such competitors may succeed in
delaying or blocking regulatory approvals of the Company's or Genta Jago's
products. Furthermore, if the Company or Genta Jago is permitted to commence
commercial sales of products, it will also be competing with respect to
marketing capabilities, an area in which it has limited or no experience, and
manufacturing efficiency. There are many public and private companies that are
conducting research and development activities based on drug delivery
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<PAGE>
and antisense technologies. The Company believes that the industry-wide interest
in such technologies will accelerate and competition will intensify as the
techniques which permit drug design and development based on such technologies
are more widely understood.
Difficult Manufacturing Requirements. The manufacture of Anticode
oligonucleotides is a time-consuming and complex process. Management believes
that the Company has the ability to acquire or produce quantities of
oligonucleotides sufficient to support its present needs for research and its
projected needs for its initial clinical development programs. However, Genta
believes that improvements in its manufacturing technology will be required to
enable the Company to meet the volume and cost requirements needed for certain
commercial applications of Anticode products. Products based on chemically
modified oligonucleotides have never been manufactured on a commercial scale.
The manufacture of all of the Company's and Genta Jago's products will be
subject to current GMP requirements prescribed by the FDA or other standards
prescribed by the appropriate regulatory agency in the country of use. There can
be no assurance that the Company or Genta Jago will be able to manufacture
products, or have products manufactured for it, in a timely fashion at
acceptable quality and prices, that they or third party manufacturers can comply
with GMP or that they or third party manufacturers will be able to manufacture
an adequate supply of product.
Limited Sales, Marketing and Distribution Experience. The Company and
Genta Jago have very limited experience in pharmaceutical sales, marketing and
distribution. In order to market and sell certain products directly, The Company
or Genta Jago would have to develop or subcontract a sales force and a marketing
group with technical expertise. There can be no assurance that any direct sales
or marketing efforts would be successful.
Uncertainty of Product Pricing, Reimbursement and Related Matters. The
Company's and Genta Jago's business may be materially adversely affected by the
continuing efforts of governmental and third party payers to contain or reduce
the costs of healthcare through various means. For example, in certain foreign
markets the pricing or profitability of healthcare products is subject to
government control. In the United States, there have been, and the Company
expects that there will continue to be, a number of federal and state proposals
to implement similar governmental control. While the Company cannot predict
whether any such legislative or regulatory proposals or reforms will be adopted,
the adoption of any such proposal or reform could adversely affect the
commercial viability of the Company's and Genta Jago's potential products. In
addition, in both the United States and elsewhere, sales of healthcare products
are dependent in part on the availability of reimbursement to the consumer from
third party payers, such as government and private insurance plans. Third party
payers are increasingly challenging the prices charged for medical products and
services and therefore, significant uncertainty exists as to the reimbursement
of existing and newly approved healthcare products. If the Company or Genta Jago
succeeds in bringing one or more products to the market, there can be no
assurance that these products will be considered cost effective and that
reimbursement to the consumer will be available or will be sufficient to allow
the Company or Genta Jago to sell its products on a competitive basis.
Dependence on Qualified Personnel. The Company's success is highly
dependent on the retention of principal members of its management and scientific
staff and the recruitment of additional key personnel. As the Company has
already fallen below critical mass, the loss of additional key personnel or the
failure to recruit necessary additional personnel does and will further impede
the achievement of development objectives. There is intense competition for
qualified personnel in the areas of the Company's activities, and there can be
no assurance that Genta will be able to continue to attract and retain the
qualified personnel necessary for the development of its business.
Product Liability Exposure; Limited Insurance Coverage. The Company's,
JBL's and Genta Jago's businesses expose them to potential product liability
risks which are inherent in the testing, manufacturing, marketing and sale of
human therapeutic products. If available, product liability insurance for the
pharmaceutical industry generally is expensive. The Company has obtained a level
of liability insurance coverage which it deems appropriate for its current stage
of development. However, there can be no assurance that the Company's present
insurance coverage is adequate. Such existing coverage may not be adequate as
the Company further develops products, and no assurance can be given that in the
future adequate insurance coverage will be available in sufficient
20
<PAGE>
amounts or at a reasonable cost, or that a product liability claim would not
have a material adverse effect on the business or financial condition of the
Company.
Hazardous Materials; Environmental Matters. The Company's research and
development and manufacturing processes involve the controlled storage, use and
disposal of hazardous materials, biological hazardous materials and radioactive
compounds. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and certain waste products. Although the Company believes that
its safety procedures for handling and disposing of such materials comply with
the standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company may be held liable for any damages
that result, and any such liability could exceed the resources of the Company.
There can be no assurance that the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the
future, nor that the operations, business or assets of the Company will not be
materially adversely affected by current or future environmental laws of
regulations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operation -- Liquidity and Capital Resources."
Volatility of Stock Price. The market price of the Company's common
stock, like that of the common stock of many other biopharmaceutical companies,
has been highly volatile. Factors such as the results of preclinical studies and
clinical trials by Genta, Genta Jago or their competitors, other evidence of the
safety or efficacy of products of Genta, Genta Jago or their competitors,
announcements of technological innovations or new therapeutic products by the
Company, Genta Jago or their competitors, governmental regulation, developments
in patent or other proprietary rights of the Company or its competitors,
including litigation, fluctuations in the Company's operating results, and
market conditions for biopharmaceutical stocks in general could have a
significant impact on the future price of the common stock. On March 2, 1997,
the Company had 39,991,626 shares of common stock outstanding. Future sales of
shares of common stock by existing stockholders and option holders also could
adversely affect the market price of the common stock.
Concentration of Ownership. The Company's directors, executive officers
and principal stockholders and certain of their affiliates have the ability to
influence the election of the Company's directors and most other stockholder
actions.
Possible Nonpayment of Dividends on Series A and Series C Preferred
Stock; Deficiency in Fixed Charges and Preferred Stock Dividend Coverage.
Dividends will be payable on the Series A and Series C Preferred Stock only
when, as and if declared by the Company's Board of Directors, out of funds
legally available therefor. The Company has incurred losses and, thus, has had a
deficiency in fixed charges and preferred stock dividend coverage since
inception. For the fiscal years ended December 31, 1991, 1992, 1993, 1994, 1995
and 1996 the coverage deficiency was approximately $9,486,000, $16,703,000,
$16,189,000, $25,998,000, $27,917,000 and $13,950,000 respectively. While the
Company intends to pay dividends on the Series A and Series C Preferred Stock,
it is anticipated that the Company will continue to incur losses and thus will
continue to have a deficiency in fixed charges and preferred stock dividend
coverage. Dividends on the Series A and Series C Preferred Stock may be paid
only out of capital surplus (within the meaning of the Delaware General
Corporation Law) or net profits of the Company for the fiscal year in which the
dividend is declared and the preceding fiscal year.
Effect of Certain Anti-Takeover Provisions. The Company's Restated
Certificate of Incorporation and Bylaws include provisions that could discourage
potential takeover attempts and make attempts by stockholders to change
management more difficult. The approval of 66-2/3% of the Company's voting stock
is required to approve certain transactions and to take certain stockholder
actions, including the calling of a special meeting of stockholders and the
amendment of any of the anti-takeover provisions contained in the Company's
Restated Certificate of Incorporation. Further, pursuant to the terms of its
stockholder rights plan adopted in December 1993, the Company has distributed a
dividend of one right for each outstanding share of common stock. These rights
will cause a substantial dilution to a person or group that attempts to acquire
the Company on terms not approved by the Board of Directors and may have the
effect of deterring hostile takeover attempts. The stockholder rights plan was
amended to permit the consummation of the transactions with the Aries Funds
described under Item 5(d) of this Annual Report on Form 10-K.
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Item 2. Properties
Genta's principal administrative offices and research laboratories are
located in San Diego, California where the Company occupies approximately 15,000
square feet. The Company's lease for these premises expired in November, 1996,
and the Company is currently renting on a month-to-month basis at the same rate
of $30,076 per month. The Company believes this space will be adequate for its
activities through 1997.
JBL, the Company's manufacturing subsidiary, leases and occupies
approximately 30,000 square feet of office, laboratory and manufacturing space
in San Luis Obispo, California. This lease expires in 2000. The lease calls for
rent of approximately $306,000 in 1997, with amounts generally increasing
annually thereafter to reflect cost of living related increases. The Company
currently uses substantially all of the manufacturing capacity of this facility.
The Company believes that such space will be adequate for its planned operations
through 1997. The Company also has an option to purchase property adjacent to
this facility, for expansion, if necessary. A director and officer and another
officer of the Company, Drs. Klem and Brown, respectively, are affiliated with
the owners of the leased and adjacent properties.
Genta Pharmaceuticals Europe, S.A., the Company's European subsidiary,
leases approximately 10,000 square feet of office, laboratory and manufacturing
space in Marseilles, France. The lease is cancelable in 2003 and expires in
2005. The lease calls for rent of approximately $99,000 in 1997, with amounts
generally increasing annually thereafter to reflect cost of living related
increases.
Item 3. Legal Proceedings
(a) On February 5, 1997, Equity-Linked Investors, L.P. and
Equity-Linked Investors-II (collectively, the "Plaintiffs") who, as a
group, may be deemd to beneficially own more than five percent of the
outstanding shares of the Common Stock of the Company as Series A
preferred stockholders, filed suit (the "Suit") in the Delaware Court
of Chancery (the "Court") against the Company, each of the Company's
directors and the Aries Funds (as hereinafter defined in Item 5).
Through the Suit, the Plaintiffs are seeking to enjoin the transactions
contemplated by The Note and Warrant Purchase Agreement (the
"Transactions"), rescission of the Transactions, damages, attorney
fees, and such other and further relief as the Court may deem just and
proper. The Suit alleges that the Board of Directors of the Company
breached fiduciary duties by failing to consider financing alternatives
to the Transactions and further alleges that the Transactions were not
in the best interests of the stockholders. Additionally, the Suit
alleges that the Aries Funds aided and abetted such breach of fiduciary
duty through their participation in the Transactions. On March 4 and 5,
1997, a trial was held before the Court. The Court has established a
briefing schedule and set a hearing for post-trial arguments on April
1, 1997. The Company believes that the lawsuit is without merit.
(b) No material legal proceedings were terminated in the quarter ending
December 31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders in the quarter
ended December 31, 1996.
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Executive Officers of the Registrant
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Thomas H. Adams, Ph.D........................... 54 Chairman of the Board, Chief Executive Officer
and Director
Lauren R. Brown, Ph.D........................... 54 Vice President, President of JBL
Zofia E. Dziewanowska, Ph.D., M.D............... 57 Senior Vice President, Global Clinical Affairs
Robert E. Klem, Ph.D............................ 52 Vice President, Director, and Chairman of the
Board of JBL
Guy Van de Winckel.............................. 55 Vice President, European Operations
Robert Wang, Ph.D............................... 49 Vice President, Pharmaceutical Operations
</TABLE>
Dr. Adams was the founder of Genta and has been Chairman of the Board
and Chief Executive Officer of Genta since February 1989. He previously served
as Chairman of the Board and Chief Executive Officer of GenProbe, which he
co-founded in 1984. Prior to joining Gen-Probe, he held the positions of Senior
Vice President of Research & Development and Chief Technical Officer at
Hybritech Incorporated ("Hybritech"), a leading monoclonal antibody products
company which was acquired by Eli Lilly and Company in 1986. He had previously
held senior scientific management positions with Technicon Instruments Corp.,
the Hyland Laboratories Division of Baxter Travenol, and DuPont. Dr. Adams is a
director of Life Technologies, Inc., and three private biotechnology firms. He
received his Ph.D. in Biochemistry from the University of California at
Riverside.
Dr. Brown has been Vice President of the Company since October 1991. He
co-founded JBL in 1973 and, since then, has been President of JBL the subsidiary
that Genta acquired in February 1991. He has had significant experience in the
scale-up of a wide variety of processes, including many custom syntheses for
outside companies under GMP standards. In the past, he has also shared
responsibilities for the research program at JBL, and he developed the syntheses
for many of JBL's products. Dr. Brown received his Ph.D. in Organic Chemistry
from the University of California at Riverside.
Dr. Dziewanowska joined the Company as Senior Vice President, Global
Clinical Affairs in May 1994. Prior to joining Genta, Dr. Dziewanowska spent 17
years at Hoffmann-La Roche Inc. in various research and development positions
including, most recently, Vice President and Director of International
Therapeutic Research and Medical Affairs Advisor. Dr. Dziewanowska is currently
holding a faculty appointment at the Cornell University Medical School. She also
has held various positions in the Pharmaceutical Research and Manufacturers
Association of America, the most recent being a Vice-Chairman of the Medical
Section Steering Committee, American Association of Pharmaceutical Physicians
and the International Federation of Pharmaceutical Medicine. Before joining
Hoffmann-La Roche, Dr. Dziewanowska worked four years as associate director of
international clinical pharmacology at Merck, Sharp & Dohme Laboratories and as
a visiting associate physician in the Department of Pharmacology at Rockefeller
University in New York. She received an M.D. degree from the University of
Warsaw Medical School and a Ph.D. in physiology from the Institute of Immunology
and Experimental Therapeutics, Polish Academy of Science. Her medical degree was
recertified in England and the United States She has been invited to speak on a
variety of United States and International Conferences pertaining to clinical
drug research and development, and she is listed in "Who's Who."
Dr. Klem has been a director of the Company since February 1991 and a
Vice President of the Company since October 1991. Dr. Klem co-founded JBL in
1973 and, since then, has been Chairman of the Board and Chief
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<PAGE>
Technical Officer of JBL with responsibility for research, development and
marketing activities. Previously, Dr. Klem was the Plant Manager for E.I. DuPont
in Victoria, Texas from 1970 to 1974. Dr. Klem received his Ph.D. in Organic
Chemistry from the University of California at Riverside.
Mr. Van de Winckel has been President of Genta Pharmaceuticals Europe,
S.A. since its incorporation in November 1993 and has been Vice President,
European Operations of the Company since December 1992. From 1987 until December
1992, Mr. Van de Winckel was an independent consultant for healthcare companies
in Europe and the United States, specializing in marketing and financial
strategies. From 1981 until 1986, Mr. Van de Winckel was Vice President
International and Co-President of Hybritech Europe. He previously held various
management positions with Baxter Travenol, including Vice President of Marketing
with the Hyland Laboratories Division and Director of Marketing International.
Mr. Van de Winckel received a degree in international business from the
University of Louvain, Belgium.
Dr. Wang has been Vice President, Pharmaceutical Operations of the
Company since July 1995. From September 1993 through June 1995, Dr. Wang was
Vice President, Corporate Operations of the Company. From the time Dr. Wang
joined Genta in February 1989 to September 1993, Dr. Wang was Vice President,
Process Development of the Company. From 1986 to 1988, Dr. Wang was Vice
President of Development at Gen-Probe where he had technical responsibility for
developing and implementing a novel nonisotopic DNA probe assay system. Prior to
joining Gen-Probe, Dr. Wang was Senior Director of Process Development and
Manufacturing at Hybritech, where he had overall responsibility for
manufacturing, process development and clinical support for all manufacturing.
Dr. Wang also held senior scientific positions at Calbiochem-Behring Diagnostics
and International Diagnostic Technology. He received his Ph.D. in Biochemistry
from the University of California at Riverside and was a post-doctoral fellow at
Scripps Clinic and Research Foundation.
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<PAGE>
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) Market Information
Throughout 1995 and 1996, the Company's common stock was traded on the
Nasdaq National Market under the symbol "GNTA". However, as of February
7, 1997 the Company's common stock trades in the over-the-counter
market on the Nasdaq SmallCap Market under the symbol "GNTAC" (see
"Risk Factors - Threat of Nasdaq Delisting"). The following table sets
forth, for the periods indicated, the high and low sales prices for the
common stock as reported by Nasdaq.
High Low
1995
First Quarter................................ $ 6 1/2 3 3/4
Second Quarter............................... 3 1/2 1 3/4
Third Quarter................................ 3 1/2 1 3/8
Fourth Quarter............................... 2 7/8 1 1/2
1996
First Quarter................................ 2 15/16 1 7/8
Second Quarter............................... 2 7/8 1 7/16
Third Quarter................................ 2 7/16
Fourth Quarter............................... 1 1/2 9/32
(b) Holders
There were 424 holders of record of the Company's common stock as of
March 1, 1997.
(c) Dividends
The Company has never paid cash dividends on its common stock and does
not anticipate paying any such dividends in the foreseeable future. In
addition, the Company is restricted from paying cash dividends on its
common stock until such time as all cumulative dividends have been paid
on outstanding shares of its Series A and Series C convertible
preferred stocks. The Company currently intends to retain its earnings,
if any, after payment of dividends on outstanding shares of Series A
and Series C convertible preferred stock, for the development of its
business. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources".
(d) Recent Sale of Unregistered Securities
In February, 1997, the Company raised gross proceeds of $3 million in a
private placement, to the Aries Fund and the Aries Domestic Fund, L.P.
(collectively the "Aries Funds"), of Convertible Notes and warrants to
purchase 20 million shares of common stock ("Bridge Warrants"). The
Convertible Notes are initially convertible into 600,000 shares of
Series D preferred stock, which in turn are convertible into 20 million
shares of common stock. Bridge Warrants on 7.8 million shares of common
stock have an exercise price of $.001 per share. Bridge Warrants on
12.2 million shares of common stock have an exercise price of $.55 per
share. Further, upon the occurrence of certain events of default, if
elected by the holders, up to $300,000 principal amount of the
Convertible Notes is convertible into common stock at a conversion
price of $.001 per share. Each Bridge Warrant is convertible, at the
option of the holder, into a new
25
<PAGE>
Warrant entitling such holder to purchase one share of common stock at
an exercise price of $0.15 per share or, under certain circumstances,
if lower than $0.15 per share, 50% of the market price of the common
stock. Pursuant to the Note and Warrant Purchase Agreement dated as of
January 28, 1997 between the Company and the Aries Funds (the "Note and
Warrant Purchase Agreement"), the Aries Funds have the right to appoint
a majority of the members of the Board of Directors of the Company;
provided, however, that in the event the Company does not obtain Future
Financings (as defined in the Note and Warrant Purchase Agreement) in
excess of $3.5 million on or before the date which is six months after
the Bridge Closing Date referred to in such agreement, then the Aries
Funds shall have the contractual right to appoint only two directors or
observers and, if at such time, more than two directors have been
appointed by the Aries Funds, the additional directors shall be
required to resign. As of March 14, 1997, the Aries Funds had not
exercised their right to appoint any directors or observers.
26
<PAGE>
Item 6. Selected Consolidated Financial Data
The following table sets forth certain consolidated financial data with
respect to the Company. The selected consolidated financial data should be read
in conjunction with the consolidated financial statements and related
notes thereto.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
CONSOLIDATED STATEMENTS OF OPERATIONS DATA: (In thousands, except per share amounts)
Revenues:
<S> <C> <C> <C> <C> <C>
Product sales $4,925 $3,782 $3,574 $3,263 $2,272
Gain on sale of technology 373 - - - -
Collaborative research and development - 1,125 3,141 4,733 3,546
------------- ------------- ------------ ------------- -------------
5,298 4,907 6,715 7,996 5,818
------------- ------------- ------------ ------------- -------------
Costs and expenses:
Cost of products sold 2,479 1,899 1,710 1,593 1,502
Research and development 5,834 11,277 13,533 12,117 10,743
Charge for acquired in-process research and
development - 4,762 1,850 - 7,200
Selling, general and administrative 5,639 5,439 6,376 5,140 4,221
------------- ------------- ------------ ------------- -------------
13,952 23,377 23,469 18,850 23,666
------------- ------------- ------------ ------------- -------------
Loss from operations (8,654) (18,470) (16,754) (10,854) (17,848)
Equity in net loss of joint venture (2,712) (6,913) (7,425) (5,310) -
Other income, net (59) 17 731 646 1,145
------------- ------------- ------------ ------------- -------------
Net loss $(11,425) $(25,366) $(23,448) $(15,518) $(16,703)
Dividends on preferred stock (2,525) (2,551) (2,550) (671) -
------------- ------------- ------------ ------------- -------------
Net loss applicable to common shares $(13,950) $(27,917) $(25,998) $(16,189) $(16,703)
============= ============= ============ ============= =============
Net loss per common share(1) $(0.47) $(1.43) $(1.90) $(1.19) $(1.34)
============= ============= ============ ============= =============
Shares used in the calculation of net loss per
common share 29,834 19,519 13,710 13,621 12,450
============= ============= ============ ============= =============
Deficiency of earnings to meet combined fixed
charges and preferred stock dividends(2) $(13,950) $(27,917) $(25,998) $(16,189) $(16,703)
============= ============= ============ ============= =============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
CONSOLIDATED BALANCE SHEETS DATA: (In thousands)
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and short-term
investments $532 $272 $11,103 $34,594 $26,356
Working capital (deficit) (1,954) (1,580) 5,597 30,524 21,530
Total assets 11,169 15,631 23,908 45,486 34,618
Notes payable and capital lease obligations,
less current portion 1,160 2,334 1,871 1,651 1,409
Total stockholders' equity 4,074 6,972 14,076 38,064 26,664
</TABLE>
(1) Computed on the basis of net loss per common share described in Note 1 of
Notes to Consolidated Financial Statements.
(2) The Company has incurred losses and, thus, has had a deficiency in fixed
charges and preferred stock dividend coverage since inception.
27
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Since its inception in February 1988, Genta has devoted its principal
efforts toward drug discovery, research and development. Genta has been
unprofitable to date and, even if it obtains financing to continue its
operations, expects to incur substantial operating losses for the next several
years due to continued requirements for ongoing research and development
activities, preclinical testing and clinical trials, manufacturing activities,
regulatory activities, establishment of a sales and marketing organization, and
development activities undertaken by Genta Jago, the Company's joint venture
with Jagotec. From the period since its inception to December 31, 1996, the
Company has incurred a cumulative net loss of $108.4 million. The Company has
experienced significant quarterly fluctuations in operating results and it
expects that these fluctuations in revenues, expenses and losses will continue.
See "Risk Factors."
The statements contained in this Annual Report on Form 10-K that are
not historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding the
expectations, beliefs, intentions or strategies regarding the future. The
Company intends that all forward-looking statements be subject to the safeharbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Company's views as of the date they are
made with respect to future events and financial performance, but are subject to
many risks and uncertainties, which could cause the actual results of the
Company to differ materially from any future results expressed or implied by
such forward-looking statements. Examples of such risks and uncertainties
include, but are not limited to, obtaining sufficient financing to maintain the
Company's planned operations, the timely development, receipt of necessary
regulatory approvals and acceptance of new products, the successful application
of the Company's technology to produce new products, the obtaining of
proprietary protection for any such technology and products, the impact of
competitive products and pricing and reimbursement policies, changing market
conditions and the other risks detailed in the Risk Factors section of this
Annual Report on Form 10-K and elsewhere herein. The Company does not undertake
to update any forward-looking statements.
Results of Operations
Operating revenues totaled $5.3 million in 1996 compared to $4.9
million in 1995 and $6.7 million in 1994. Sales of specialty chemical and
pharmaceutical intermediate products increased to $4.9 million in 1996 from $3.8
million in 1995 and $3.6 million in 1994. Collaborative research and development
revenues were zero, $1.1 million and $3.1 million in 1996, 1995 and 1994,
respectively. Collaborative research and development revenues recorded in 1995
represented revenues earned pursuant to the Company's collaboration with The
Procter & Gamble Company which ended in late 1995.
Sales of specialty chemical and pharmaceutical intermediate products
increased each year primarily due to increased market penetration of existing
products and, to a lesser degree, the introduction of new products. One
customer, a European distributor, accounted for approximately 27%, 21% and 19%
of product sales during the years ended December 31, 1996, 1995 and 1994,
respectively. One other customer accounted for approximately 16% and 12% of
product sales during the years ended December 31, 1995 and 1994, respectively,
while another customer comprised 18% of 1994 product sales. No other customer
accounted for more than 8% of product sales in 1996. Management does not believe
the loss of any one customer would have a material adverse affect on the
Company's business as a whole. The Company has historically experienced
significant quarterly fluctuations in its level of product sales, generally
reflecting the timing and degree of customer demand for certain products, and
the Company anticipates that these sales fluctuations will continue in future
periods.
Costs and expenses totaled $14 million in 1996 compared to $23.4
million in 1995 and $23.5 million in 1994. Included in costs and expenses during
1995 and 1994 were charges for acquired in-process research and development
totaling $4.8 million and $1.9 million, respectively, associated with the
expansion of Genta Jago to obtain rights to develop additional GEOMATRIX-based
products. Exclusive of these charges, the Company's costs and expenses decreased
by approximately $4.7 million in 1996 relative to 1995 primarily due to lower
research and development expenses largely attributable to the Company's
restructuring and related workforce reductions
28
<PAGE>
implemented in 1995 and 1996. These savings in operating expenses were partially
offset by an aggregate of approximately $850,000 in non-recurring charges
recorded during 1996 primarily related to the Company's restructuring and work
force reductions. As a result of the aforementioned restructuring and other cost
savings measures implemented during 1995 and 1996, the Company anticipates
further reductions in the level of its operating expenses during 1997 relative
to 1996. However, the Company anticipates that, if sufficient collaborative
revenues and other funding is available, research and development expenses may
increase in future years due to requirements for preclinical studies, clinical
trials and increased regulatory costs. The Company also anticipates that costs
associated with Anticode marketing activities, if such products are successfully
developed and approved for marketing, would be the responsibility of corporate
partners.
The Company's equity in net loss of joint venture totaled $2.7 million
in 1996 compared to $6.9 million in 1995 and $7.4 million in 1994. The decrease
in the Company's share of Genta Jago's net loss during 1996 relative to 1995 is
largely attributable to the fact that development efforts are now focused
exclusively on GEOMATRIX-based products and a greater portion of development
activities were funded pursuant to Genta Jago's collaborative agreements with
third parties.
Interest income has fluctuated significantly each year and is
anticipated to continue to fluctuate primarily due to changes in the levels of
cash, investments and interest rates each period.
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily from
private and public offerings of its equity securities. Cash provided from these
offerings totaled approximately $95.4 million through December 31, 1996,
including net proceeds of $8.4 million raised during 1996. At December 31, 1996,
the Company had cash, cash equivalents and short-term investments totaling
$532,000 compared to $272,000 at December 31, 1995. The increase in cash and
cash equivalents during 1996 is largely attributable to proceeds from the
Company's private placements, as described in footnote 8 to the Company's
consolidated financial statements.
The Company anticipates that its existing capital resources, including
$3 million in financing obtained from the issuance of the Convertible Notes in
February 1997, will enable the Company to maintain its presently planned
operations until July, 1997. Management believes that a minimum of approximately
$6.4 million of additional financing will be required to sustain the Company's
presently-planned operations through the end of 1997 and to satisfy the
Company's obligations under the Convertible Notes and the Convertible
Debentures. The Company has been informed, however, that its common stock will
be delisted from the Nasdaq SmallCap Market unless the Company makes a public
filing with the Securities and Exchange Commission and Nasdaq by April 7, 1997
evidencing minimum capital and surplus of at least $6 million. While the Company
believes that it can meet this capital and surplus level by such date, there can
be no assurance that the Company will succeed in timely achieving this
requirement. Such delisting may have an adverse effect on the ability of the
Company to attract new investors. The Company is actively seeking additional
sources of financing and is negotiating with pharmaceutical companies regarding
collaborative agreements and other financial arrangements. There can be no
assurance, however, that any such collaborative agreements or other sources of
funding will be available on favorable terms, if at all. The Company has entered
into a letter of intent with an investment banking firm pursuant to which such
firm confirmed its interest in acting as placement agent, on a "best efforts"
basis, of a private placement of preferred stock, convertible notes and warrants
for proceeds of up to $7.5 million (plus an over-allotment option), subject to
certain conditions. In the Letter of Intent, this firm agreed that, to the
extent alternative financings were available at better timing, pricing and
terms, the firm would waive its right to conduct the offering. If the Company is
unsuccessful in raising the required funds, the Company will be required to
license or sell additional assets and technology, further scale back or
eliminate some or all of its development programs, further reduce its work force
and spending, and take other measures in order to continue its operations. If
such measures are not successfully completed, the Company may be required to
discontinue its operations. See "Risk Factors -- Need for Additional Funds; Risk
of Insolvency" and "Risk Factors -- Threat of Nasdaq Delisting."
As described under Item 5(d) of this Annual Report on Form 10-K, the
Aries Funds, who provided $3 million in financing to the Company in February,
1997, have the right to appoint a majority of the members of the
29
<PAGE>
Board of Directors of the Company. As of March 14, 1997, the Aries Funds had not
exercised this right. However, should they determine to do so, their designees
may decide to alter the business strategy, operations and/or management of the
Company in a manner not contemplated in this Annual Report on Form 10-K.
In connection with the Genta Jago joint venture formed in late 1992 and
expanded in May 1995, the Company entered into a working capital agreement with
Genta Jago which expires in October 1998. Pursuant to this agreement, the
Company is required to make loans to Genta Jago up to a mutually agreed upon
maximum commitment amount, which amount is established by the parties on a
periodic basis. The Company anticipates its working capital contribution to
Genta Jago for 1997 will be $300,000, as compared to $846,784 in 1996 and $7.7
million in 1995, as a result of Genta Jago's success in entering into
collaborative agreements with third parties. As of December 31, 1996, the
Company had advanced working capital loans of approximately $15.3 million to
Genta Jago, net of principal repayments. Such loans bear interest and are
payable in full in October 1998, or earlier in the event certain revenues are
received by Genta Jago from third parties. There can be no assurance, however,
that Genta Jago will obtain sufficient financial resources to repay such loans
to Genta. Genta Jago repaid Genta $1 million of its working capital loans in
November 1996 from license fee revenues. The amount of future loans by Genta to
Genta Jago will depend upon several factors including the amount of funding
obtained by Genta Jago through collaborative arrangements, Genta's ability to
provide loans, and the timing and cost of Genta Jago's preclinical studies,
clinical trials and regulatory activities.
Through December 31, 1996, the Company acquired $10.1 million in
property and equipment of which $5.5 million was financed through capital leases
and other equipment financing arrangements, $3.3 million was funded in cash and
the remainder was acquired through the Company's acquisition of JBL. In November
1996, the Company bought out certain of its capital leases for approximately
$1.2 million, primarily covering equipment used in research and development
activities at Genta and JBL, using Company funds which the leasing company had
on deposit. This equipment had an original cost of $4.5 million and a net book
value at buyout of approximately $850,000. The Company capitalized $1.2 million
as fixed assets at the time of the buyout. In 1996, the Company also sold
certain of its fixed assets. This resulted in a decrease of gross fixed assets
from $9.6 million in 1995 to $6 million in 1996. The Company has commitments
associated with its notes payable, capital leases and operating leases as
discussed further in Note 7 of the Notes to Consolidated Financial Statements.
In particular, the Company's equipment financing agreement contains certain
financial covenants, the most significant of which required the Company to
provide certain deposits in the event that the Company's cash and investment
balances fell below specified levels. As of December 31, 1996 the Company had
$251,000 in security deposits with an equipment financing company pursuant to
the terms of the agreement.
In October 1996, JBL retained a chemical consulting firm to advise it
with respect to environmental compliance regarding an incident of soil and
groundwater contamination (the "Spill") by small quantities of certain
chemicals. The Company believes, based upon information known to date, that the
Spill is relatively minor and will not have a material adverse effect on the
business of the Company, although there can be no assurance thereof.
Terms of the Company's Series A Preferred Stock require the payment of
dividends annually in amounts ranging from $3 per share per annum for the first
year to $5 per share per annum in the third and fourth years. Dividends may be
paid in cash or common stock or a combination thereof, at the Company's option.
Dividends on the Series A Preferred Stock accrue on a daily basis (whether or
not declared) and shall accumulate to the extent not paid on the annual dividend
payment date following the dividend period for which they accrue. The Company
may redeem the Series A Preferred Stock under certain circumstances, and was
required to redeem the Series A Preferred Stock, subject to certain conditions,
in September 1996 at a redemption price of $50 per share, plus accrued and
unpaid dividends (the "Redemption Price"). The Company elected to pay the
Redemption Price in common stock. In September 1996, holders of 55,900 shares of
Series A Preferred Stock converted such shares and related accrued dividends
into 2,423,500 shares of the Company's common stock. The Company is obligated to
use its reasonable efforts to arrange for a firm commitment underwriting in
order to redeem the Series A Preferred Stock. The Company is restricted from
paying cash dividends on common stock until such time as all cumulative
dividends on outstanding shares of Series A and Series C Preferred Stock have
been paid. The Company currently intends to retain its earnings, if any, after
payment of dividends on outstanding shares of Series A and Series C Preferred
Stock, for the development of its business. The Company has been unsuccessful to
date in its efforts to renegotiate certain terms of its agreement with the
holders of the Series A Preferred Stock.
30
<PAGE>
If the Company successfully secures sufficient levels of collaborative
revenues and other sources of financing, it expects to incur substantial
additional costs, including costs related to ongoing research and development
activities, preclinical testing and clinical trials, manufacturing activities,
costs associated with the market introduction of potential products, expansion
of its administrative activities, and development activities undertaken by Genta
Jago. The Company will need substantial additional funds before it can expect to
realize significant product revenue. The Company anticipates that significant
additional sources of financing, including equity financings, will be required
in order for the Company to continue its planned principal operations. The
Company's working capital and additional funding requirements will depend upon
numerous factors, including: (i) the availability of funding; (ii) the progress
of the Company's research and development programs; (iii) the timing and results
of preclinical testing and clinical trials; (iv) the timing and costs of
obtaining regulatory approvals; (v) the level of resources devoted to Genta
Jago; (vi) the level of resources that the Company devotes to sales and
marketing capabilities; (vii) technological advances; (viii) the activities of
competitors; and (ix) the ability of the Company to establish and maintain
collaborative arrangements with others to fund certain research and development,
to conduct clinical trials, to obtain regulatory approvals and, if such
approvals are obtained, to manufacture and market products.
In the Company's Quarterly Report on Form 10-Q for the period ending
September 30, 1996, the Company announced that it intended to sell, and was in
negotiations with a potential buyer for, its JBL subsidiary. However, such
negotiations did not produce an agreement, and the Company is no longer pursuing
its discussions with the potential buyer or any other potential purchasers at
this time.
31
<PAGE>
Item 8. Financial Statements and Supplemental Data
INDEX TO FINANCIAL STATEMENTS COVERED
BY REPORTS OF INDEPENDENT AUDITORS
<TABLE>
<CAPTION>
Page
Genta Incorporated
<S> <C>
Report of Ernst & Young LLP, Independent Auditors............................................................33
Consolidated Balance Sheets at December 31, 1996 and 1995....................................................34
Consolidated Statements of Operations for each of the three years
in the period ended December 31, 1996.....................................................................35
Consolidated Statements of Stockholders' Equity for each of the
three years in the period ended December 31, 1996.........................................................36
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1996...............................................................37
Notes to Consolidated Financial Statements...................................................................38
Genta Jago Technologies B.V. (A Development Stage Company)
Report of Ernst & Young LLP, Independent Auditors............................................................50
Balance Sheets at December 31, 1996 and 1995.................................................................51
Statements of Operations for the years ended December 31, 1996, 1995 and 1994, and
the period from inception (December 15, 1992) through December 31, 1996...................................52
Statement of Stockholders' Equity (Net Capital Deficiency) for the period
from inception (December 15, 1992) through December 31, 1996..............................................53
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994,
and the period from inception (December 15, 1992) through December 31, 1996...............................54
Notes to Financial Statements................................................................................55
</TABLE>
32
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Genta Incorporated
We have audited the accompanying consolidated balance sheets of Genta
Incorporated as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Genta
Incorporated at December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company has
incurred substantial and continued operating losses since inception and requires
substantial additional sources of financing to fund its operations through 1997.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans as to this matter are also described in
Note 1. The 1996 financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
ERNST & YOUNG LLP
San Diego, California
February 28, 1997
33
<PAGE>
GENTA INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
ASSETS 1996 1995
------------------ -------------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $532,013 $271,755
Receivable from sale of preferred stock - 2,785,800
Trade accounts receivable 602,696 471,296
Notes receivable from officers and employees 62,000 362,000
Inventories 992,243 702,644
Other current assets 185,164 151,923
------------------ -------------------
Total current assets 2,374,116 4,745,418
------------------ -------------------
Property and equipment, net 3,634,281 4,656,955
Investment in and advances to joint venture - 258,896
Intangibles, net 4,022,242 3,577,654
Other assets, net 1,138,745 2,392,220
------------------ -------------------
$11,169,384 $15,631,143
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,481,521 $2,260,495
Accrued payroll and related expenses 782,280 628,750
Other accrued expenses 1,229,845 1,407,748
Deferred revenue 193,121 148,532
Short-term notes payable 350,000 760,000
Current portion of notes payable and
capital lease obligations 291,842 1,120,013
------------------ -------------------
Total current liabilities 4,328,609 6,325,538
------------------ -------------------
Capital lease obligations, less current portion 30,652 896,465
Notes payable, less current portion 1,129,388 1,437,481
Deficit in Joint Venture 1,606,503 -
Commitments and contingencies - -
Stockholders' equity:
Preferred stock; 5,000,000 shares authorized, convertible preferred shares
outstanding:
Series A preferred stock, $.001 par value; 528,100 and 600,000 shares
issued and outstanding at December 31, 1996 and 1995,
respectively, liquidation value is $29,786,307 at December 31, 1996 528 600
Series B preferred stock, $.001 par value; no shares and 3,000 shares
issued and outstanding at December 31, 1996 and 1995,
respectively. - 3
Series C convertible preferred stock, $.001 par value; 1,424 and no
shares issued and outstanding at December 31, 1996 and
1995, respectively, liquidation value is $1,468,822 at
December 31, 1996. 1 -
Common stock, $.001 par value; 150,000,000 shares authorized, 39,991,626
shares and 23,963,534 shares issued and
outstanding at December 31, 1996 and 1995, respectively 39,992 23,964
Additional paid-in capital 108,787,562 102,374,105
Accumulated deficit (108,375,407) (96,949,625)
Accrued dividends payable 3,671,532 1,572,588
Notes receivable from stockholders (49,976) (49,976)
------------------ -------------------
Total stockholders' equity 4,074,232 6,971,659
------------------ -------------------
$11,169,384 $15,631,143
================== ===================
</TABLE>
See Acompanying Notes
34
<PAGE>
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994
----------------- ----------------- ------------------
Revenues:
<S> <C> <C> <C>
Product sales $4,924,694 $3,781,983 $3,573,701
Gain on sale of technology 373,261 - -
Collaborative research
and development - 1,125,000 3,141,688
----------------- ----------------- ------------------
5,297,955 4,906,983 6,715,389
----------------- ----------------- ------------------
Cost and expenses:
Cost of products sold 2,479,337 1,899,216 1,709,762
Research and development 5,833,697 11,277,238 13,533,600
Charge for acquired in-process
research and development - 4,762,000 1,850,000
Selling, general and administrative 5,638,750 5,438,307 6,376,390
----------------- ----------------- ------------------
13,951,784 23,376,761 23,469,752
----------------- ----------------- ------------------
Loss from operations (8,653,829) (18,469,778) (16,754,363)
Equity in net loss of joint venture (2,712,183) (6,913,180) (7,424,828)
Other income (expense):
Interest income 159,165 348,470 1,014,213
Interest expense (218,935) (331,226) (283,530)
----------------- ----------------- ------------------
Net loss $(11,425,782) $(25,365,714) $(23,448,508)
Dividends on preferred stock (2,524,701) (2,551,726) (2,550,000)
----------------- ----------------- ------------------
Net loss applicable to common shares $(13,950,483) $(27,917,440) $(25,998,508)
================= ================= ==================
Net loss per common share $(.47) $(1.43) $(1.90)
================= ================= ==================
Shares used in computing net
loss per common share 29,834,491 19,518,616 13,709,611
================= ================= ==================
</TABLE>
See Acompanying Notes
35
<PAGE>
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED
STOCK COMMON STOCK ADDITIONAL
------------------------ ----------------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
------------ -------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 600,000 600 13,648,972 13,649 86,525,495
Issuance of common stock on exercise
of options - - 3,306 3 9,847
Issuance of common stock as dividend
on preferred stock - - 222,986 223 1,799,274
Dividends accrued on preferred stock - - - - (2,550,000)
Amortization of deferred compensation - - - - -
Net loss - - - - -
------------ -------- -------------- ------------ ---------------
BALANCE AT DECEMBER 31, 1994 600,000 600 13,875,264 13,875 85,784,616
Issuance of common stock - - 5,734,409 5,735 9,159,542
Issuance of common stock upon
conversion of promissory notes - - 1,777,903 1,778 3,020,660
Issuance of common stock for acquired in-process
research and development - - 1,240,000 1,240 1,610,760
Issuance of Series B convertible preferred
stock 3,000 3 - - 2,774,897
Issuance of warrants to purchase common stock - - - - 173,118
Issuance of common stock on exercise
of options - - 7,324 7 3,655
Issuance of common stock as dividend
on preferred stock - - 1,328,634 1,329 2,398,583
Dividends accrued on preferred stock - - - - (2,551,726)
Repayment of notes receivable from
stockholders - - - - -
Amortization of deferred compensation - - - - -
Net loss - - - - -
------------ -------- -------------- ------------ ---------------
BALANCE AT DECEMBER 31, 1995 603,000 603 23,963,534 23,964 102,374,105
Issuance of Series C convertible preferred
stock 6,000 6 - - 5,492,633
Issuance of Series C convertible preferred
stock on conversion of promissory notes 1,044 1 - - 1,044,000
Issuance of common stock upon conversion
of Series A convertible preferred stock (71,900) (72) 2,554,458 2,555 324,538
Issuance of common stock upon conversion
of Series B convertible preferred stock (3,000) (3) 2,269,425 2,269 31,741
Issuance of common stock upon conversion
of Series C convertible preferred stock (5,620) (6) 5,247,489 5,247 59,488
Issuance of common stock upon
conversion of convertible debentures - - 5,877,899 5,878 1,592,721
Issuance of warrants to purchase common stock - - - - 221,543
for patent legal services
Issuance of common stock on exercise
of options - - 78,821 79 171,494
Dividends accrued on preferred stock - - - - (2,524,701)
Net loss - - - - -
============ ======== ============== ============ ===============
BALANCE AT DECEMBER 31, 1996 529,524 $529 39,991,626 $39,992 $108,787,562
============ ======== ============== ============ ===============
<PAGE>
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
<CAPTION>
ACCRUED NOTES
ACCUMULATED DIVIDENDS ON RECEIVABLE FROM DEFERRED
DEFICIT PREFERRED STOCK STOCKHOLDERS COMPENSATION
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 (48,135,403) 670,862 (74,726) (265,730)
Issuance of common stock on exercise
of options - - - -
Issuance of common stock as dividend - -
on preferred stock - (1,800,000) - -
Dividends accrued on preferred stock - 2,550,000 - -
Amortization of deferred compensation - - - 200,894
Net loss (23,448,508) - - -
--------------- ---------------- --------------- -------------
BALANCE AT DECEMBER 31, 1994 (71,583,911) 1,420,862 (74,726) (64,836)
Issuance of common stock - - - -
Issuance of common stock upon
conversion of promissory notes - - - -
Issuance of common stock for acquired in-process
research and development - - - -
Issuance of Series B convertible preferred
stock - - - -
Issuance of warrants to purchase common stock - - - -
Issuance of common stock on exercise
of options - - - -
Issuance of common stock as dividend
on preferred stock - (2,400,000) - -
Dividends accrued on preferred stock - 2,551,726 - -
Repayment of notes receivable from
stockholders - - 24,750 -
Amortization of deferred compensation - - - 64,836
Net loss (25,365,714) - - -
--------------- ---------------- ---------------- ----------------
BALANCE AT DECEMBER 31, 1995 (96,949,625) 1,572,588 (49,976) -
Issuance of Series C convertible preferred
stock - - - -
Issuance of Series C convertible preferred
stock on conversion of promissory notes - - - -
Issuance of common stock upon conversion
of Series A convertible preferred stock - (327,021) - -
Issuance of common stock upon conversion
of Series B convertible preferred stock - (34,007) - -
Issuance of common stock upon conversion
of Series C convertible preferred stock - (64,729) - -
Issuance of common stock upon
conversion of convertible debentures - - - -
Issuance of warrants to purchase common stock - - - -
for patent legal services
Issuance of common stock on exercise
of options - - - -
Dividends accrued on preferred stock - 2,524,701 - -
Net loss (11,425,782) - - -
=============== ================ ================ ================
BALANCE AT DECEMBER 31, 1996 $(108,375,407) $3,671,532 $(49,976) $ -
=============== ================ ================ ================
<PAGE>
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
---------------
<S> <C>
BALANCE AT DECEMBER 31, 1993 38,734,747
Issuance of common stock on exercise
of options 9,850
Issuance of common stock as dividend
on preferred stock (503)
Dividends accrued on preferred stock -
Amortization of deferred compensation 200,894
Net loss (23,448,508)
---------------
BALANCE AT DECEMBER 31, 1994 15,496,480
Issuance of common stock 9,165,277
Issuance of common stock upon
conversion of promissory notes 3,022,438
Issuance of common stock for acquired in-process
research and development 1,612,000
Issuance of Series B convertible preferred
stock 2,774,900
Issuance of warrants to purchase common stock 173,118
Issuance of common stock on exercise
of options 3,662
Issuance of common stock as dividend
on preferred stock (88)
Dividends accrued on preferred stock -
Repayment of notes receivable from
stockholders 24,750
Amortization of deferred compensation 64,836
Net loss (25,365,714)
---------------
BALANCE AT DECEMBER 31, 1995 6,971,659
Issuance of Series C convertible preferred
stock 5,492,639
Issuance of Series C convertible preferred
stock on conversion of promissory notes 1,044,001
Issuance of common stock upon conversion
of Series A convertible preferred stock -
Issuance of common stock upon conversion
of Series B convertible preferred stock -
Issuance of common stock upon conversion
of Series C convertible preferred stock -
Issuance of common stock upon
conversion of convertible debentures 1,598,599
Issuance of warrants to purchase common stock 221,543
for patent legal services
Issuance of common stock on exercise
of options 171,573
Dividends accrued on preferred stock -
Net loss (11,425,782)
===============
BALANCE AT DECEMBER 31, 1996 $4,074,232
===============
</TABLE>
See Accompanying Notes
36
<PAGE>
Genta Incorporated
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994
------------------ ------------------ -----------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $(11,425,782) $(25,365,714) $(23,448,508)
Items reflected in net loss not requiring cash:
Depreciation and amortization 1,518,142 1,761,530 1,704,281
Equity in net loss of joint venture 2,712,183 6,913,180 7,424,828
Charge for acquired in-process
research and development and other - 3,807,556 -
Changes in operating assets and liabilities:
Accounts and notes receivable 168,600 294,012 (307,444)
Inventories (289,599) 106,909 36,564
Other current assets (33,241) 366,790 (83,360)
Accounts payable, accrued expenses and other (803,347) 467,738 931,835
Deferred revenue 44,589 (976,468) (141,688)
------------------ ------------------ -----------------
Net cash used in operating activities (8,108,455) (12,624,467) (13,883,492)
INVESTING ACTIVITIES
Purchase of short-term investments (1,497,775) - (10,935,406)
Maturities of short-term investments 1,497,775 3,843,685 24,739,731
Purchase of property and equipment (115,922) (778,964) (1,264,168)
Investment in and advances to joint venture (846,784) (7,722,255) (6,749,298)
Deposits and other 642,654 (2,021,908) (1,291,977)
------------------ ------------------ -----------------
Net cash provided by (used in) investing activities (320,052) (6,679,442) 4,498,882
FINANCING ACTIVITIES
Proceeds from notes payable 2,176,500 4,877,471 757,456
Repayments of notes payable and capital leases (1,948,438) (1,743,728) (1,069,289)
Proceeds from issuance of preferred stock, net 8,267,539 - -
Proceeds from issuance of common stock, net 171,573 9,168,939 9,850
Other 21,591 13,762 (503)
------------------ ------------------ -----------------
Net cash provided by (used in) financing activities 8,688,765 12,316,444 (302,486)
------------------ ------------------ -----------------
Increase (decrease) in cash and cash equivalents 260,258 (6,987,465) (9,687,096)
Cash and cash equivalents at beginning of year 271,755 7,259,220 16,946,316
------------------ ------------------ -----------------
Cash and cash equivalents at end of year $532,013 $271,755 $7,259,220
================== ================== =================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $225,186 $298,432 $283,530
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations
entered into for equipment - 622,746 1,182,015
Preferred stock dividends accrued 2,524,701 2,551,726 2,550,000
Common stock issued in payment of dividends
on preferred stock 425,757 2,399,912 1,799,497
Common stock issued upon conversion of notes
payable and accrued interest 1,044,001 3,022,438 -
Preferred stock issued for receivable - 2,774,900 -
Common Stock issued upon conversion of
convertible debentures 1,598,599 - -
Exercise of buyout option for equipment under
capital lease obligation in exchange for deposits 1,200,000 - -
</TABLE>
See Accompanying Notes
37
<PAGE>
Genta Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization and Business
Genta Incorporated ("Genta" or the "Company") is an emerging
biopharmaceutical company engaged in the development of a pipeline of
pharmaceutical products. The near to mid-term segment of this product pipeline
consists of oral controlled-release drugs being developed by the Company's drug
delivery joint venture with Jagotec AG ("Jagotec"), Genta Jago Technologies B.V.
("Genta Jago"). The Company's longer-term research efforts are focused on the
development of proprietary Anticode(TM) oligonucleotide ("Anticode")
pharmaceuticals intended to block or regulate the production of disease-related
proteins by acting at the genetic level. The Company also manufactures and
markets specialty biochemical and pharmaceutical intermediate products through
its manufacturing subsidiary, JBL Scientific, Inc. ("JBL").
Basis of Presentation
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company is actively seeking
collaborative agreements, additional equity financing and other financing
arrangements with potential corporate partners and other sources. However, there
can be no assurance that any such collaborative agreements or other sources of
funding will be available on favorable terms, if at all. The Company is also
considering the licensing or sale of certain of its assets and technology,
delaying or curtailing of certain of its development programs, further
reductions in workforce and spending or other measures in order to continue its
operations. The 1996 financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, JBL and Genta Pharmaceuticals Europe,
S.A., the Company's European subsidiary based in Marseilles, France. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Investment in Joint Venture
The Company has a 50% ownership interest in a joint venture, Genta
Jago, a Netherlands corporation. The investment in joint venture is accounted
for under the equity method (Note 5).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
disclosures made in the accompanying notes to the financial statements. Actual
results could differ from those estimates.
Revenue Recognition and Major Customers
Revenue from product sales is recognized upon shipment. One customer, a
European distributor, accounted for approximately 27%, 21% and 19% of product
sales during the years ended December 31, 1996, 1995 and 1994, respectively. One
other customer accounted for approximately 16% and 12% of product sales during
the years ended December 31, 1995 and 1994, respectively, while another customer
comprised 18% of 1994 product sales. No other customer accounted for more than
8% of product sales in 1996. Collaborative research and development revenues are
recorded as earned, generally ratably, as research and development activities
are performed under the terms of
38
<PAGE>
the contracts. Payments received in excess of amounts earned are deferred. See
Note 9 for major collaborative research and development arrangements.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, money market funds, and
other highly liquid investments with maturities of three months or less when
purchased. The carrying value of these instruments approximates fair value.
Concentration of Credit Risk
The Company generally invests its excess cash in high credit quality
debt instruments of corporations and financial institutions, and in United
States government securities. Such investments are made in accordance with the
Company's investment policy, which establishes guidelines relative to
diversification and maturities designed to maintain safety and liquidity. These
guidelines are periodically reviewed and modified to take advantage of trends in
yields and interest rates. The Company has not experienced any losses on its
cash equivalents or short-term investments.
The Company markets its specialty biochemical and intermediate products
to the pharmaceutical and diagnostic industries. Generally, collateral is not
required on the Company's sales. Credit losses have been insignificant and
within management's expectations.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market.
Property and Equipment
Property and equipment is stated at cost and depreciated over the
estimated useful lives of the assets using the straight-line method. Leasehold
improvements are stated at cost and amortized over the shorter of the estimated
useful lives of the assets or the lease term. Amortization of equipment under
capital leases is reported with depreciation of property and equipment.
Intangible Assets
Intangible assets, consisting primarily of capitalized patent costs and
purchased proprietary technology, are amortized using the straight line basis
over a term of 5-17 years for issued patents, 14 years for purchased proprietary
technology and 5-7 years for organizational and other amortizable costs.
Asset Impairment
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amounts. Statement No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. There was no affect on the financial
statements from the adoption of Statement No. 121.
Employee Stock Options
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, the
alternative fair value accounting provided for under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
123), requires use of option valuation models that were not developed for use in
valuing employee stock options. Under SFAS No. 123, deferred compensation is
recorded for
39
<PAGE>
the excess of the fair value of the stock on the date of the option grant, over
the exercise price of the option. The deferred compensation is amortized over
the vesting period of the option.
Net Loss Per Common Share
Net loss per common share is computed using the weighted average number
of common shares outstanding during each period. Shares issuable upon the
exercise of outstanding stock options and warrants and upon the conversion of
convertible preferred stock are not reflected as their effect is anti-dilutive.
2. Inventories
<TABLE>
<CAPTION>
Inventories are comprised of the following:
December 31,
-----------------------
1996 1995
------ ----
<S> <C> <C>
Raw materials and supplies................................. $ 342,875 $ 280,621
Work-in-process............................................ 272,259 162,097
Finished goods............................................. 377,109 259,926
----------- -----------
$ 992,243 $ 702,644
=========== ===========
3. Property and Equipment
Property and equipment is comprised of the following:
December 31,
-----------------------
1996 1995
------ ----
Equipment.................................................. $ 4,093,563 $ 7,719,863
Leasehold improvements..................................... 1,128,520 1,385,041
Furniture and fixtures..................................... 105,318 116,161
Construction in progress................................... 624,167 359,273
------------- ------------
5,951,568 9,580,338
Less accumulated depreciation and amortization............. (2,317,287) (4,923,383)
------------- ------------
$ 3,634,281 $ 4,656,955
============= ============
</TABLE>
Included in property and equipment at December 31, 1996 and 1995, is
equipment under capital leases aggregating $200,000 and $4.7 million,
respectively, all of which is pledged as security pursuant to the Company's
capital lease agreements. Accumulated amortization with respect to the equipment
under capital leases totaled $80,000 and $3 million at December 31, 1996 and
1995, respectively.
4. Notes Receivable from Officers and Employees
Notes receivable consist of loans made to officers and employees to
facilitate their relocation. Such loans are generally secured by each
individual's residence.
5. Genta Jago Joint Venture
In December 1992, the Company and Jagotec, a subsidiary of Jago Holding
AG which was acquired by SkyePharma in May 1996, formed Genta Jago, a 50/50
joint venture to develop and commercialize products in six major therapeutic
areas. Under the arrangement, Jagotec granted Genta Jago an exclusive license to
its GEOMATRIX oral controlled-release technology for the development and
commercialization of approximately 25 specified products. In May 1995, the
parties entered into an agreement to expand Genta Jago by adding the rights to
develop and commercialize an additional 35 products. With these additional
products, Genta Jago now maintains the rights to develop controlled-release
formulations of approximately 60 products using Jagotec's GEOMATRIX technology.
Under the agreement, Genta Jago also acquired certain manufacturing rights with
respect to such products. In connection with the expansion of Genta Jago, the
parties elected to focus Genta Jago's activities
40
<PAGE>
exclusively on GEOMATRIX-based products and, as a result, Genta Jago returned to
Genta in May 1995 the right to develop six Anticode products licensed from Genta
in 1992.
In connection with the formation of Genta Jago, the Company made an
initial capital contribution of $4 million to Genta Jago and issued 1,200,000
unregistered shares of Genta's common stock to Jagotec and an affiliate. To
obtain the additional product and manufacturing rights during 1995, Genta
applied $5 million in option and related fees paid to Jagotec and its
affiliates, of which $3.85 million was paid during 1994 (including $1.85 million
of non-refundable fees charged to expense during 1994) and $1.15 million was
paid during the first quarter of 1995. The Company also issued an additional
1.24 million unregistered shares of Genta's common stock to an affiliate of
Jagotec in May 1995. The Company recorded a charge for acquired in-process
research and development of $4.8 million during 1995 consisting of the fair
value of the 1.24 million shares of common stock issued ($1.6 million), $2
million of refundable option fees paid during 1994, and the $1.15 million in
fees paid during the first quarter of 1995. Genta Jago is required to pay
certain additional fees to Jagotec upon Genta Jago's receipt of revenues from
third parties, and pay manufacturing royalties to Jagotec.
The Company is also required to provide loans to Genta Jago pursuant to
a working capital agreement which expires in October 1998. The loans are
advanced up to a mutually agreed upon maximum commitment amount, which amount is
established by the parties on a periodic basis. In connection with Genta Jago's
return of the Anticode license rights to Genta in May 1995, the working capital
loan payable by Genta Jago to Genta was credited with a principal reduction of
approximately $4.4 million. As of December 31, 1996, the Company had advanced
working capital loans of approximately $15.3 million to Genta Jago, net of
principal repayments and the aforementioned credit, which amount fully satisfied
the loan commitment established by the parties through December 31, 1996. Such
loans bear interest and are payable in full in October 1998, or earlier in the
event certain revenues are received by Genta Jago from third parties. There can
be no assurance, however, that Genta Jago will obtain the necessary financial
resources to repay such loans to Genta. The Company has recorded substantially
all of the net losses incurred by Genta Jago (excluding certain intercompany
transactions) as a reduction of the Company's investment in joint venture.
Under terms of the joint venture, Genta Jago has contracted with the
Company to conduct research and development and provide certain other services.
Revenues associated with providing such services, totaling $1.6 million in 1996,
$2.7 million in 1995, and $2.9 million in 1994, are recorded by the Company as a
reduction of the related research and development and general and administrative
expenses. Terms of the arrangement also grant the Company an option to purchase
Jagotec's interest in Genta Jago exercisable from December 1998 through 2000.
Genta Jago entered into collaborative development agreements with
Gensia, Inc., Apothecon, Inc., a subsidiary of Bristol-Myers Squibb Co., and
Krypton, Ltd., a subsidiary of SkyePharma, during January 1993, March 1996 and
October 1996, respectively. In October 1996, SkyePharma signed a letter of
intent with Gensia, Inc. and Boehringer Mannheim Corp. whereby Brightstone,
SkyePharma's United States subsidiary, will assume rights to develop Procardia
XL(R) in collaboration with Boehringer Mannheim. Such agreements provide funding
to Genta Jago for the development and clinical testing of selected
controlled-release pharmaceuticals in addition to potential milestone payments
and royalties on future product sales.
41
<PAGE>
Condensed financial information for Genta Jago Technologies B.V. is set forth
below.
<TABLE>
<CAPTION>
December 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Balance Sheets Data:
Advance contract payments to related parties...................... $ - $ 1,539,000
Receivables under collaboration agreements........................ 904,000 -
Other current assets.............................................. 142,000 245,000
------------- --------------
Total current assets.............................................. 1,046,000 1,784,000
Other assets...................................................... 11,000 12,000
------------- --------------
$ 1,057,000 $ 1,796,000
============= ==============
Current liabilities............................................... $ 3,053,000 $ 1,360,000
Notes payable to Genta Incorporated............................... 15,287,000 13,787,000
Net capital deficiency............................................ (17,283,000) (13,351,000)
------------- --------------
$ 1,057,000 $ 1,796,000
============= ==============
</TABLE>
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statements of Operations Data:
Collaborative research and development revenues................... $ 5,477,000 $ 2,968,000 $ 5,285,000
Costs and expenses................................................ 8,453,000 10,336,000 13,338,000
------------ ------------ -------------
Loss from operations.............................................. (2,976,000) (7,368,000) (8,053,000)
Gain on waiver of debt in exchange for return of
license rights to related party................................ - 4,703,000 -
Interest expense.................................................. (956,000) (746,000) (298,000)
-------------- -------------- --------------
Net loss.......................................................... $ (3,932,000) $ (3,411,000) $ (8,351,000)
============== ============== ==============
</TABLE>
6. Intangibles
Intangibles consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
----- ----
<S> <C> <C>
Purchased proprietary technology.................................. $ 1,747,082 $ 1,747,082
Patent and patent applications.................................... 2,964,193 2,356,556
Organizational and other amortizable costs........................ 414,521 428,773
------------- --------------
5,125,796 4,532,411
Less accumulated amortization..................................... (1,103,554) (954,757)
------------- --------------
Net intangible assets............................................. $ 4,022,242 $ 3,577,654
============= ==============
</TABLE>
42
<PAGE>
7. Notes Payable and Leases
Notes payable consist of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1995
----- ----
<S> <C> <C>
Note payable with interest at 12.63%, due in monthly installments of
$22,407, secured by equipment with a net book value of approximately
$703,000 and security deposit of $251,000.............................. $ 328,367 $ 540,955
Research financing obligation payable to a French governmental
agency, non-interest bearing, maturing through 2003.................... 1,040,462 1,101,103
Other.................................................................... 7,435 16,584
------------- -------------
1,376,264 1,658,642
Less current portion..................................................... (246,876) (221,161)
------------- -------------
$ 1,129,388 $ 1,437,481
============= =============
</TABLE>
During 1995, the Company obtained $1,100,000 in financing aid from a
French governmental agency to be used to fund certain of its development
programs. The aggregate principal maturities of notes payable for the years 1997
through 2001 are $247,000, $185,000, $154,000, $193,000, and $385,000,
respectively and $212,000 thereafter.
The Company leases its facilities under operating leases that generally
provide for annual cost of living related increases. The JBL facilities are
leased from its prior owners, who include a director, an executive officer and
other stockholders of the Company. Certain equipment is leased under operating
and capital leases. The Company's equipment financing agreements contain certain
financial covenants, the most significant of which required the Company to
provide certain deposits in the event that the Company's cash and investment
balances fell below specified levels. Included in other assets at December 31,
1996 and 1995 was $251,000 and $1.6 million in cash deposits primarily
associated with the Company's equipment financing agreements. Minimum future
obligations under both operating and capital leases at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Operating leases
-------------------------
Related Capital
parties Others leases
---------- -------- ---------
<S> <C> <C> <C>
1997............................................. $ 389,000 $ 447,000 $ 48,000
1998............................................. 408,000 99,000 31,000
1999............................................. 429,000 99,000 1,000
2000............................................. 188,000 99,000 ---
2001............................................. --- 99,000 ---
Thereafter....................................... --- 198,000 ---
------------ ------------- -----------
Total future minimum lease payments.............. $ 1,414,000 $ 1,041,000 80,000
============ =============
Less amount representing interest................ (4,000)
------------
Present value of future minimum lease payments... 76,000
Less current portion............................. (45,000)
------------
Long-term portion................................ $ 31,000
============
</TABLE>
Total rent expense under operating leases for the years ended December
31, 1996, 1995 and 1994 was $1,043,000, $1,117,000, and $1,090,000,
respectively.
43
<PAGE>
8. Stockholders' Equity
Subsequent Event
In February 1997, the company raised gross proceeds of $3 million in a
private placement of Senior Secured Convertible Bridge Notes (the "Convertible
Notes") that bear interest at 12% per annum and mature on the earlier of June
30, 1997 or five business days following the completion of any equity offering
or series of equity offerings with gross proceeds in excess of $2.5 million.
Warrants to purchase 7.8 million and 12.2 million shares of common stock at
exercise prices of $.001 and $.55, respectively, are attached to the Convertible
Notes. The Convertible Notes are convertible, at the option of the holder, into
600,000 shares of Series D Preferred Stock, subject to antidilution adjustments.
In the event of default, the holders of the Convertible Notes have the right to
convert the lesser of (i) the then outstanding principal amount of the
Convertible Notes or (ii) 10% of the original principal amounts of the
Convertible Notes into common shares at a conversion rate of $.001 per share,
subject to antidilution adjustments. The holders of the Convertible Notes also
have the right to appoint a majority of members of the Board of Directors of the
Company; provided however, that in the event the Company does not obtain future
financings in excess of $3.5 million on or before June 30, 1997, the holders
shall have the contractual right to appoint only two directors or observers and,
if additional directors have been appointed, such additional directors shall be
required to resign.
Preferred Stock
In September 1996, the Company raised gross proceeds of $2 million
(approximately $1.9 million net of offering fees and costs) through the sale of
Convertible Debentures to investors in a private placement outside the United
States. The Convertible Debentures bear interest at the rate of 4% per annum
with principal and interest due and payable August 1, 1997. The Convertible
Debentures were convertible, at the option of the holders, beginning in October
1996, into shares of common stock at a conversion price equal to 75 percent of
the average Nasdaq closing bid prices of Genta common stock for a specified
period prior to the date of conversion. Terms of the Convertible Debentures also
provide for interest payable in shares of the Company's common stock. In
November 1996, $1.65 million of the Convertible Debentures and the related
accrued interest was converted into approximately 5.9 million shares of common
stock.
In March 1996, the Company raised gross proceeds of $6 million
(approximately $5.5 million net of offering fees and costs) in a private
placement of Series C Convertible preferred stock (the "Series C Preferred
Stock") sold to institutional investors. In 1996, 5,620 shares of the Series C
Preferred Stock and accrued dividends was converted at the option of the holders
into approximately 5.2 million shares of Genta's common stock. The conversion
price is based upon 75% of the average Nasdaq closing bid prices of Genta's
common stock for a specified period. Terms of the Series C Preferred Stock also
provide for dividends payable in shares of the Company's common stock. The
Company has agreed to file a registration statement with the Securities and
Exchange Commission covering the resale of the common stock issuable upon the
payment of the remaining dividends and the conversion of the Series C Preferred
Stock.
On December 29, 1995, the Company completed the sale of 3,000 shares of
Series B Convertible preferred stock (the "Series B preferred stock") at a price
of $1,000 per share to institutional investors outside of the United States.
Proceeds from the offering totaling approximately $2.8 million were reflected as
a receivable from sale of preferred stock at December 31, 1995 and were received
by the Company on January 2, 1996. The Series B preferred stock was converted
into approximately 2.3 million shares of the Company's common stock in late
February 1996 pursuant to terms of the Series B stock purchase agreements.
In October 1993, the Company completed the sale of 600,000 shares of
Series A convertible preferred stock ("the Series A Preferred Stock") in a
private placement of units consisting of one share of Series A Preferred Stock
and a warrant to acquire one share of common stock, sold at an aggregate price
of $50 per unit. Each share of Series A Preferred Stock is convertible, at any
time prior to redemption, into 21.31 shares of the Company's common stock,
subject to antidilution adjustments. Dividends on the Series A Preferred Stock
are cumulative from the date of issuance, and are payable annually in amounts
ranging from $3 per share per annum for the first year to $5 per share per annum
in the third and fourth years. Dividends may be paid in cash or common stock or
a combination thereof at the Company's option. Dividends are accrued using the
straight-line method over the four year period. The
44
<PAGE>
Company may redeem the Series A Preferred Stock under certain circumstances, and
was required to redeem the Series A Preferred Stock, at the option of the
holder, in September 1996 at a redemption price of $50 per share, plus accrued
and unpaid dividends (the "Redemption Price"). The Company elected to pay the
Redemption Price in common stock. In September 1996, 55,900 shares of Series A
Preferred Stock converted such shares and related accrued dividends into
approximately 2.4 million shares of the Company's common stock. The Company is
obligated to use its reasonable efforts to arrange for a firm commitment
underwriting in order to redeem the Series A Preferred Stock. The company is
restricted from paying cash dividends on common stock until such time as all
cumulative dividends on outstanding shares of Series A and Series C Preferred
Stock have been paid.
In December 1993, the Board of Directors of the Company adopted a
Stockholder Rights Plan which provides for the distribution of a preferred stock
purchase right ("Right") as a dividend for each share of the Company's common
stock held of record at the close of business on January 21, 1994. Under certain
circumstances involving an acquisition of 15% or more of the Company's common
stock or a specified business combination, the Rights would permit the holder
(other than the 15% holder) to purchase shares of the Company's common stock or,
if applicable, common stock of an acquirer at a 50% discount upon payment of an
exercise price of $50 per Right. The Rights expire in December 2003 and may be
redeemed by the Company prior to a 15% acquisition at a price of $.01 per Right.
Warrants
The Company issued five-year warrants to purchase 600,000 shares of
common stock at an exercise price of $2.60 per share, subject to antidilution
adjustments, in connection with the Company's private placement of units in
October 1993. The Company issued a five-year warrant to purchase 235,250 shares
of common stock at an exercise price of $1.70 per share in connection with a
private placement of common stock in May 1995. In addition, five-year warrants
to purchase an aggregate of 247,312 shares of common stock at exercise prices
ranging from $1.94 to $2.13 per share were issued to two equipment financing
companies during 1995. In October 1996, the Company issued a five year warrant
to purchase 375,123 shares of common stock at an exercise price of $1.32 per
share to a patent law firm, in exchange for legal services. In October 1996, the
Company also issued a five year warrant to purchase 100,000 shares of common
stock at an exercise price of $1.50 per share in connection with the Convertible
Debentures issued in September 1996. Warrants to purchase 7.8 million and 12.2
million shares of common stock at exercise prices of $.001 and $.55 per share,
respectively, were also issued in connection with the Convertible Notes.
45
<PAGE>
Stock Benefit Plans
The Company's 1991 Stock Plan (the "Plan") provides for the sale of
stock and the grant of stock options to employees, directors, consultants and
advisors of the Company. Options may be designated as incentive stock options or
non-statutory stock options; however, incentive stock options may be granted
only to employees of the Company. Options under the Plan have a term of up to
ten years and must be granted at not less than the fair market value (85% of
fair market value for non-statutory options) on the date of grant. Common stock
sold and options granted pursuant to the Plan generally vest over a period of
four to five years. Information with respect to the Company's 1991 Stock Plan is
as follows:
<TABLE>
<CAPTION>
Shares under
option Price
------------ -------
<S> <C> <C>
Balance at December 31, 1993............................................... 1,367,116 $ .50-15.75
Granted............................................................... 417,950 4.88-8.75
Exercised............................................................. (3,306) .50-7.25
Cancelled............................................................. (34,537) .50-12.00
------------ -----------
Balance at December 31, 1994............................................... 1,747,223 .50-15.75
Granted............................................................... 1,988,035 1.75-6.25
Exercised............................................................. (7,324) .50
Cancelled............................................................. (1,839,092) .50-9.88
------------ ----------
Balance at December 31, 1995............................................... 1,888,842 .50-15.75
Granted............................................................... 136,773 .41-2.63
Exercised............................................................. (78,821) .50-2.25
Cancelled............................................................. (297,492) .50-15.75
------------ -----------
Balance at December 31, 1996............................................... 1,649,302 $ .41-7.44
============ ===========
</TABLE>
In April 1995, the Stock Plan Committee of the Board of Directors
approved a program whereby employees (including executive officers) of the
Company and certain other option holders could exchange their unexercised
options ("Old Options") on a one-for-one basis for new options ("New Options")
priced at the market value on April 20, 1995. The New Options have the same
vesting schedule and contractual terms as the Old Options. However, the New
Options held by employees (excluding executive officers) and certain other
holders were not exercisable until April 20, 1996 and the New Options held by
executive officers of the Company are not exercisable until April 20, 1997
unless the holder is involuntarily terminated without cause prior to such date.
An aggregate of 1,581,330 options with an average exercise price of
approximately $7.84 per share were exchanged for New Options with an exercise
price of $2.25 per share on April 20, 1995. All of the replacement options are
included in options granted and canceled in the above summary of stock option
activity.
At December 31, 1996, options to purchase approximately 1,248,000
shares of common stock were exercisable at a weighted average price of
approximately $2.81 per share and approximately 669,000 shares of common stock
were available for grant or sale under the Plan. An aggregate of approximately
18,259,930 shares of common stock were reserved for the conversion of preferred
stock and the exercise of outstanding options and warrants at December 31, 1996.
Adjusted pro forma information regarding net loss is required by SFAS
123, and has been determined as if the Company had accounted for its employee
stock options under the fair value method of that Statement. The fair value for
these options was estimated at the date of grant using the "Black Scholes"
method for option pricing with the following weighted-average assumptions for
both 1995 and 1996: volatility factors of the expected market value of the
Company's common stock of .7 and .8, respectively; risk-free interest rates of
6%; dividend yields of 0%; and a weighted-average expected life of the option of
five years.
46
<PAGE>
For purposes of adjusted pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options' vesting period.
The Company's adjusted pro forma information follows:
Year ended Year ended
December 31, December 31,
1996 1995
------ -----
Adjusted pro forma net loss.................. $ (14,280,253) $ (28,027,475)
Adjusted pro forma loss per share .......... $ (.48) $ (1.44)
The results above are not likely to be representative of the effects of
applying FAS123 on reported net income or loss for future years as these amounts
reflect the expense for only one or two years vesting.
The weighted-average exercise price of options granted, exercised and
cancelled during the year were $1.77, $2.14, and $2.23, respectively. The
weighted-average grant-date fair value of the options granted during the year
was $0.85. Following is a further breakdown of the options outstanding as of
December 31, 1996.
<TABLE>
<CAPTION>
Weighted
Average
Weighted Weighted exercise
Average Average price of
Range Options remaining Exercise Options options
of Prices Outstanding life in years Price exercisable exercisable
--------- ----------- ------------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$0.41 - $1.69 54,878 6.37 $ 0.61 26,978 $ 0.50
$1.75 - $2.63 1,525,674 7.39 2.21 1,158,883 2.22
$3.00 - $7.44 68,750 6.58 7.34 62,472 7.41
---------------------------------------------------------------------------------------------------------------
1,649,302 7.30 $ 2.33 1,248,133 $ 2.45
===============================================================================================================
</TABLE>
9. Research, Development and Licensing Arrangements
The Company entered into collaborative research and development
agreements with The Procter & Gamble Company ("P&G") and the Wyeth-Ayerst
Laboratories Division of American Home Products Corporation ("WyethAyerst")
during 1991 and 1992, respectively. The agreements generally provided for the
Company to receive research funding for the discovery and development of
specified Anticode products. The Wyeth-Ayerst collaboration ended in August 1994
and the P&G collaboration, as extended and modified, ended in September 1995.
The Company received research payments of $3 million during 1994, pursuant to
the P&G and Wyeth-Ayerst agreements. Collaborative revenues of $1.1 million and
$3.1 million were recognized under these contracts during 1995 and 1994,
respectively, which amounts approximate costs incurred on the programs.
In addition to the aforementioned arrangements, the Company has entered
into various license, royalty and sponsored research agreements which provide
the Company with rights to develop and market products covered under the
agreements. In connection with certain license agreements entered into with a
director of the Company and two other stockholders, the Company incurred royalty
expense of $100,000, $100,000, and $75,000 in 1996, 1995, and 1994,
respectively, and is committed to pay minimum royalties of $100,000 annually
until expiration of the related patents.
47
<PAGE>
10. Income Taxes
Significant components of the Company's deferred tax assets as of
December 31, 1996 and 1995 are shown below. A valuation allowance of $32,508,000
has been recognized to offset the net deferred tax assets as realization of such
assets is uncertain.
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
------ ----
<S> <C> <C>
Deferred tax assets:
Capitalized research expenses........................ $ 2,663,000 $ 2,231,000
Net operating loss carryforwards..................... 22,177,000 19,490,000
Research and development credits..................... 3,248,000 2,920,000
Purchased technology and license fees................ 4,523,000 4,519,000
Other, net........................................... 1,108,000 116,000
-------------- -------------
Total deferred tax assets............................ 33,719,000 29,276,000
Valuation allowance for deferred tax assets.......... (32,508,000) (28,305,000)
-------------- -------------
1,211,000 971,000
Deferred tax liabilities:
Patent expenses...................................... (1,211,000) (971,000)
-------------- -------------
Net deferred tax assets.............................. $ --- $ ---
============== =============
</TABLE>
At December 31, 1996, the Company has federal and California net
operating loss carryforwards of approximately $61,731,000 and $9,525,000,
respectively. The difference between the federal and California tax loss
carryforwards is primarily attributable to the capitalization of research and
development expenses for California tax purposes and the fifty percent
limitation on California loss carryforwards. The federal tax loss carryforwards
will begin expiring in 2003, unless previously utilized. The California tax loss
carryforwards began expiring in 1996 and will continue to expire unless
previously utilized. (Approximately $277,000 of the California tax loss expired
in 1996.) The Company also has federal and California research and development
tax credit carryforwards of $2,585,000 and $1,019,000, respectively, which will
begin expiring in 2003 unless previously utilized.
Federal and California tax laws limit the utilization of income tax net
operating loss and credit carryforwards that arise prior to certain cumulative
changes in a corporation's ownership resulting in change of control of the
Company. The future annual use of net operating loss carryforwards and research
and development tax credits will be limited due to the ownership changes that
occurred during 1990, 1991, 1993 and 1996. Because of the decrease in value of
the Company's stock, the ownership change which occurred in 1996 will have a
material impact on the utilization of these carryforwards.
11. Employee Savings Plan
The Company began a 401(k) program in 1994 which allows participating
employees to contribute up to 15% of their salary, subject to annual limits. The
Board of Directors may, at its sole discretion, approve Company contributions.
No such contributions have been approved or made.
12. Gain on Sale of Technology
In December 1996, the Company sold the rights to two development-stage
dermatological products for cash of $373,261.
13. Contingencies
On February 5, 1997, Equity-Linked Investors, L.P. and Equity-Linked
Investors-II (collectively, the "Plaintiffs") who, as a group, beneficially own
more than five percent of the outstanding shares of the Common Stock of the
Company as Series A preferred stockholders, filed Suit (the "Suit") in the
Delaware Court of Chancery (the "Court") against the Company, each of the
Company's directors and the Aries Funds. Through the Suit, the Plaintiffs
48
<PAGE>
are seeking to enjoin the transactions described in footnote 8 under the caption
"Subsequent Event" (the "Transactions"), damages, attorney fees, and such other
and further relief as the Court may deem just and proper. The Suit alleges that
the Board of Directors of the Company breached fiduciary duties by failing to
consider financing alternatives to the Transactions and further alleges that the
Transactions were not in the best interests of the stockholders. Additionally,
the Suit alleges that the Aries Funds aided and abetted such breach of fiduciary
duty through their participation in the Transactions. On March 4 and 5, 1997, a
trial was held before the Court. The Court has established a briefing schedule
and set a hearing for post-trial arguments on April 1, 1997.
In October 1996, JBL retained a chemical consulting firm to advise it
with respect to environmental compliance regarding an incident of soil and
groundwater contamination (the "Spill") by small quantities of certain
chemicals. The Company believes, based upon information known to date, that the
Spill is relatively minor and will not have a material adverse effect on the
business of the Company, although there can be no assurance thereof.
49
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Genta Jago Technologies B.V.
We have audited the accompanying balance sheets of Genta Jago
Technologies B.V. (a development stage company) as of December 31, 1996 and
1995, and the related statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996 and for
the period December 15, 1992 (inception) through December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Genta Jago
Technologies B.V. (a development stage company) at December 31, 1996 and 1995,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996 and for the period December 15, 1992
(inception) through December 31, 1996 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, the Company has
incurred operating losses since inception and requires substantial sources of
financing to fund its operations through 1997. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plan as to this matter are also described in Note 1. The 1996
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
ERNST & YOUNG LLP
San Diego, California
February 28, 1997
50
<PAGE>
GENTA JAGO TECHNOLOGIES B.V.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
ASSETS 1996 1995
------------------- ------------------
Current assets:
<S> <C> <C>
Cash and cash equivalents................................. $36,092 $245,172
Receivables under collaboration agreements................ 903,838 -
Advance contract payments to related parties.............. - 1,538,594
Other current assets...................................... 105,934 -
------------------- ------------------
Total current assets......................................... 1,045,864 1,783,766
Property and equipment, net.................................. 4,900 7,500
Other assets................................................. 6,651 4,492
=================== ==================
$1,057,415 $1,795,758
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable and accrued expenses .................... $571,539 $247,354
Payable to related parties................................ 2,481,452 794,838
Deferred contract revenue................................. - 317,555
------------------- ------------------
Total current liabilities.................................... 3,052,991 1,359,747
Notes payable to related party............................... 15,287,099 13,787,099
Stockholders' equity (net capital deficiency):
Common Stock, 14,700 shares authorized, 10,000 shares issued
and outstanding at stated value........................ 512,000 512,000
Additional paid-in capital................................ 3,741,950 3,741,950
Deficit accumulated during the development stage.......... (21,536,625) (17,605,038)
------------------- ------------------
Net capital deficiency....................................... (17,282,675) (13,351,088)
=================== ==================
$1,057,415 $1,795,758
=================== ==================
</TABLE>
See accompanying notes
51
<PAGE>
Genta Jago Technologies B.V.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative from
Years ended December 31. inception
----------------------------------------------- (December 15, 1992)
1996 1995 1994 to December 31, 1996
------------- ---------------- --------------- ----------------------
<S> <C> <C> <C> <C>
Revenues:
Collaborative research
and development............................ $5,477,059 $2,968,463 $5,284,602 $15,406,378
Cost and expenses:
Research and development,
including contractual amounts to
related parties of $7,040,438, $9,318,460,
and $12,456,985, and $35,629,158 in 1996,
1995, 1994 and the period from inception
(December 15, 1992) to December 31, 1996,
respectively............................... 8,091,465 9,866,038 13,046,365 38,263,584
General and and administrative................ 361,920 470,081 291,782 1,385,383
--------------- ---------------- --------------- ---------------
8,453,385 10,336,119 13,338,147 39,648,967
-------------- ---------------- --------------- --------------
Loss from operations............................ (2,976,326) (7,367,656) (8,053,545) (24,242,589)
Other income (expense):
Gain on waiver of debt in exchange for return
of license rights to related party - 4,703,352 - 4,703,352
Interest income................................. 5,814 2,620 8,215 19,546
Interest expense................................ (961,075) (749,808) (306,051) (2,016,934)
---------------- ---------------- --------------- --------------
(955,261) 3,956,164 (297,836) 2,705,964
---------------- ---------------- --------------- --------------
Net loss........................................ $(3,931,587) $(3,411,492) $(8,351,381) $(21,536,625)
================ ================ =============== ==============
</TABLE>
See accompanying notes
52
<PAGE>
GENTA JAGO TECHNOLOGIES B.V.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
PERIOD FROM INCEPTION (DECEMBER 15, 1992) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
COMMON DEFICIT STOCKHOLDERS'
STOCK ADDITIONAL ACCUMULATED EQUITY
-------------------- PAID-IN DURING THE (NET CAPITAL
SHARES AMOUNT CAPITAL DEVELOPMENT STAGE DEFICIENCY)
---------- --------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock at
$51.20 per share for cash .... 2,940 $150,528 $ -- $ -- $150,528
Capital contributions in excess
of stated value .............. -- -- 12,882 -- 12,882
------- -------- ---------- ------------ ------------
Balance at December 31, 1992 .. 2,940 150,528 12,882 -- 163,410
Issuance of common stock at
$51.20 per share for cash ..... 7,060 361,472 -- -- 361,472
Capital contributions in excess
of stated value ............... -- -- 3,729,068 -- 3,729,068
Net loss ...................... -- -- -- (5,842,165) (5,842,165)
------ -------- ---------- ------------ ------------
Balance at December 31, 1993 .. 10,000 512,000 3,741,950 (5,842,165) (1,588,215)
Net loss ...................... -- -- -- (8,351,381) (8,351,381)
------ -------- ---------- ------------ ------------
Balance at December 31, 1994 .. 10,000 512,000 3,741,950 (14,193,546) (9,939,596)
Net loss ...................... -- -- -- (3,411,492) (3,411,492)
------ -------- ---------- ------------ ------------
Balance at December 31, 1995 .. 10,000 512,000 3,741,950 (17,605,038) (13,351,088)
Net loss ...................... -- -- -- (3,931,587) (3,931,587)
------ -------- ---------- ------------ ------------
Balance at December 31, 1996 .. 10,000 $512,000 $3,741,950 $(21,536,625) $(17,282,675)
====== ======== ========== ============ ============
</TABLE>
See accompanying notes.
53
<PAGE>
GENTA JAGO TECHNOLOGIES B.V.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
CUMULATIVE FROM
INCEPTION
YEARS ENDED DECEMBER 31, (DECEMBER 15, 1992)
------------------------------------- --------------------
1996 1995 1994 TO DECEMBER 31, 1996
--------------- ------------------- ----------------- ----------------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss $(3,931,587) $(3,411,492) $(8,351,381) $(21,536,625)
Items reflected in net loss not
requiring cash:
Depreciation and amortization 2,600 2,600 3,451 13,168
Technology license fee 192,580
- - -
Gain on waiver of debt in exchange
for return of license rights to
related party - (4,703,352) - (4,703,352)
Changes in operating assets and liabilities:
Advance contract payments
to related parties 1,538,594 435,276 1,016,053
-
Receivables under collaboration
agreements (903,838) - - (903,838)
Other current assets (105,934) 68,440 (56,770) (105,934)
Accounts payable and accrued expenses 324,185 112,227 20,112 571,539
Payable to related parties 1,686,614 277,479 267,085 2,481,452
Deferred contract revenue (317,555) (1,071,863) 1,065,672
--------------- ------------------- ----------------- ----------------------
Net cash used in operating activities (1,706,921) (8,290,685) (6,035,778) (23,991,010)
INVESTING ACTIVITIES
Purchase of property and equipment and
other (2,159) (4,492) - (24,719)
--------------- ------------------- ----------------- ----------------------
Net cash used in investing activities (2,159) (4,492) - (24,719)
FINANCING ACTIVITIES
Proceeds from issuance of common stock
and capital contributions - - -
Proceeds from notes payable to related 1,500,000 8,415,407 6,688,756 20,590,643
party
Repayment of notes payable to related
party - - (600,192) (600,192)
--------------- ------------------- ----------------- ----------------------
Net cash provided by financing activities 1,500,000 8,415,407 6,088,564 24,051,821
--------------- ------------------- ----------------- ----------------------
Increase (decrease) in cash and
cash equivalents (209,080) 120,230 52,786 36,092
Cash and cash equivalents at
beginning of period 245,172 124,942 72,156 -
--------------- ------------------- ----------------- ----------------------
Cash and cash equivalents at end
of period $36,092 $245,172 $124,942 $36,092
=============== =================== ================= ======================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $ - $ - $299,808 $299,808
=============== =================== ================= ======================
</TABLE>
See accompanying notes.
54
<PAGE>
Genta Jago Technologies B.V.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization and Business
Genta Jago Technologies B.V. ("Genta Jago") was incorporated in
December 1992 under the laws of the Netherlands. Genta Jago is a joint venture
owned and controlled 50% by Genta Incorporated ("Genta") and 50% by Jagotec AG
("Jagotec"), a subsidiary of Jago Holding AG which was acquired by SkyePharma in
May 1996. Genta Jago was formed to develop and commercialize pharmaceuticals in
six major therapeutic areas, and commenced research and development activities
in January 1993. Genta Jago is managed under the direction of a Board of
Managing Directors consisting of two members appointed from each of Genta and
Jagotec and one outside member.
Pursuant to terms of the joint venture arrangement, Jagotec granted
Genta Jago an exclusive license to its GEOMATRIX oral controlled-release
technology for the development and commercialization of approximately 25
specified products. In May 1995, Genta and Jagotec entered into an agreement to
expand Genta Jago by adding the rights to develop and commercialize an
additional 35 products (see "Expansion of Genta Jago"). With these additional
products, Genta Jago now maintains the rights to develop controlled-release
formulations of approximately 60 products using Jagotec's GEOMATRIX technology.
Genta Jago is dependent on future funding from Genta (see Note 2,
"Capital Contributions and Working Capital Agreement") and corporate partners
and is considered a Development Stage Company. Genta has incurred significant
operating losses since its inception and requires substantial additional sources
of financing to fund its operations through 1997, conditions which raise
substantial doubt about Genta's ability to continue as a going concern. In the
event funding sources prove to be unavailable or inadequate to Genta, Genta's
ability to provide further funding to Genta Jago could be significantly limited.
In this event, Genta Jago would be dependent on collaborative funding and may
have to consider the delay or curtailment of certain of its development
programs.
Revenue Recognition
Collaborative research and development revenues are recorded as earned
as research and development activities are performed under the terms of the
contracts, with such revenues generally approximating costs incurred on the
programs. Payments received in excess of amounts earned are deferred.
Research and Development Expenses
Research and development costs are expensed as incurred.
Depreciation
The costs of furniture and equipment are depreciated over the estimated
useful lives of the assets using the straight-line method.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
55
<PAGE>
2. Related Party Transactions
License Agreements
Genta Jago entered into license agreements with Jagotec and Genta in
connection with the planned development and commercialization of GEOMATRIX oral
controlled-release products and Anticode products, respectively. The license
with Genta was terminated in 1995 in connection with Genta Jago's return of the
right to develop six Anticode products to Genta. Pursuant to such agreements,
Genta Jago recorded license fee expense of $620,000, $85,000, and $170,000
during the years ended December 31, 1996, 1995 and 1994, respectively, and is
obligated to make future annual license fee payments of $85,000 to Jagotec
through 1997.
Research and Development and Service Agreements
Genta Jago has contracted with Genta and Jagotec to conduct research
and development and provide certain other services. Under terms of such
agreements, Genta Jago generally is required to reimburse the parties for their
respective costs incurred plus a specified mark-up. Payments for research and
development services are generally made in advance and are refundable if the
services are not performed. For the years ended December 31, 1996, 1995 and
1994, Genta Jago incurred expenditures of $7 million, $9.2 million, and $12.3
million, respectively, pursuant to such research and development and service
agreements.
Capital Contributions and Working Capital Agreement
In connection with the formation of the joint venture, Genta was
required to make an initial capital contribution of $4 million to Genta Jago. In
addition, Genta Jago entered into a working capital agreement with Genta which
expires in October 1998. Pursuant to this agreement, Genta is required to make
working capital loans to Genta Jago up to a mutually agreed upon maximum
principal amount, which amount is established by the parties on a periodic
basis. As of December 31, 1996, Genta had advanced working capital loans of
approximately $15.3 million to Genta Jago, net of principal repayments and the
loan credit discussed below. Such loans bear interest at rates per annum ranging
from 5.81% to 7.5%, and are payable in full on October 20, 1998, or earlier in
the event certain revenues are received by Genta Jago and specified cash
balances are maintained by Genta Jago.
Expansion of Genta Jago
In May 1995, Genta and Jagotec entered into an agreement to expand
Genta Jago by adding the rights to develop and commercialize an additional 35
products (the "Additional Products"). With these Additional Products, Genta Jago
now maintains the rights to develop controlled-release formulations of
approximately 60 products using Jagotec's GEOMATRIX technology. Under the
agreement, Genta Jago also acquired certain manufacturing rights with respect to
such products. In connection with the expansion of Genta Jago, the parties
elected to focus Genta Jago's activities exclusively on GEOMATRIX
oral-controlled release products. As a result, Genta Jago returned to Genta the
right to develop six Anticode products licensed from Genta in connection with
the formation of Genta Jago in 1992. In connection with the return of the
Anticode license rights to Genta in May 1995, Genta Jago's note payable to Genta
was credited with a principal reduction of approximately $4.4 million and
accrued interest payable to Genta was reduced by approximately $300,000. Genta
Jago recorded the loan credit and related accrued interest as a gain on waiver
of debt in exchange for return of license rights to related party.
To obtain the rights to the Additional Products and the manufacturing
rights in May 1995, Genta applied $5 million in option and related fees paid to
Jagotec and its affiliates, of which $3.85 million was paid during 1994 and
$1.15 million was paid in the first quarter of 1995. Genta also issued an
additional 1.24 million unregistered shares of Genta's common stock to an
affiliate of Jagotec in May 1995. Genta Jago is required to pay certain
additional fees to Jagotec upon Genta Jago's receipt of revenues from third
parties, and pay manufacturing royalties to Jagotec.
56
<PAGE>
3. Collaborative Research and Development Agreements
In January 1993, Genta Jago entered into a collaboration agreement with
Gensia for the development and commercialization of certain oral
controlled-release pharmaceutical products for treatment of cardiovascular
disease. Under the agreement, Gensia provides funding for formulation and
preclinical development to be conducted by Genta Jago and is responsible for
clinical development, regulatory submissions and marketing. Genta Jago received
$2.2 million, $1.9 million, and $4.9 million of funding in 1996, 1995 and 1994,
respectively, pursuant to the agreement. Collaborative revenues of $2.8 million,
$3 million, and $4.2 million were recognized under the agreement during the
years ended December 31, 1996, 1995 and 1994, respectively. Effective October
1996, Gensia and SkyePharma reached an agreement whereby Brightstone was
assigned Gensia's rights (and those of Gensia's partner, Boehringer Mannheim) to
develop and co-promote the potentially bioequivalent nifedipine product under
the collaboration agreement with Genta Jago. The assignment was accepted by
Genta Jago and has no impact on the terms of the original agreement. Genta Jago
is still entitled to receive additional milestone payments from Brightstone
triggered upon regulatory submissions and approvals, as well as royalties or
profit sharing ranging from 10% to 21% of product sales, if any.
In March 1996, Genta Jago entered into a collaborative licensing and
development agreement with Apothecon. Under the terms of the agreement,
Apothecon will provide funding to Genta Jago up to a specified maximum amount
for the formulation, development and clinical testing of a GEOMATRIX
controlled-release formulation of Q-CR ketoprofen (Oruvail(R)), subject to
certain early termination rights. The agreement also provides for Genta Jago to
receive potential milestone payments and royalties on product sales. Terms of
the agreement provide Apothecon exclusive rights to market and distribute the
products on a worldwide basis. During 1996, Genta Jago recorded revenue and
received $1.1 million in funding under the arrangement and recognized $1.3
million of collaborative revenue.
In October 1996, Genta Jago entered into five collaborative licensing
and development agreements with Krypton, whereby Genta Jago would sublicense to
Krypton, rights to develop and commercialize potentially bioequivalent
GEOMATRIX(R) versions of five currently marketed products, as well as another
agreement granting Krypton an option to sublicense rights to develop and
commercialize an improved version of a sixth product. During 1996, Genta Jago
received funding of $1 million under the collaborative agreements and recognized
$1 million of collaborative revenue.
4. Income Taxes
Significant components of Genta Jago's deferred tax assets as of
December 31, 1996 are shown below. A valuation allowance of $2,154,000 has been
recognized to offset the deferred tax assets as realization of such assets is
uncertain.
<TABLE>
<CAPTION>
December 31,
------------
Deferred tax assets: 1996 1995
---- ----
<S> <C> <C>
Net operating loss carryforwards $ 2,154,000 $1,761,000
Valuation allowance for deferred tax assets (2,154,000) (1,761,000)
------------- ------------
Net deferred tax assets $ --- $ ---
============== ==============
</TABLE>
At December 31, 1996, Genta Jago has foreign net operating loss
carryforwards of approximately $21,537,000. The foreign tax loss carryforwards
will begin expiring in 2000, unless previously utilized.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
57
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant
(a) The sections labeled "Proposal Two -- Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" appearing in the
Company's Proxy Statement are incorporated herein by reference.
(b) Information concerning the Company's Executive Officers is set
forth in Part I of this Form 10-K.
Item 11. Executive Compensation
The section labeled "Compensation of Executive Officers and Directors"
appearing in the Company's Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The section labeled "Stock Ownership of Management and Certain
Beneficial Owners" appearing in the Company's Proxy Statement is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
The section labeled "Certain Relationships and Related Transactions"
appearing in the Company's Proxy Statement is incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial statements
Reference is made to the Index to Financial Statements under Item 8 of this
report on Form 10-K.
(2) All schedules are omitted because they are not required, are not
applicable, or the required information is included in the
consolidated financial statements or notes thereto.
(3) Reference is made to Paragraph (c) below for Exhibits required by
Item 601 of Regulation S-K, including management contracts and
compensatory plans and arrangements.
(b) Reports on Form 8-K. During the fourth quarter of 1996, the Company
filed the following report on Form 8-K: On October 8, 1996, the Company
filed a report on Form 8-K to disclose the resignation of James C.
Blair, Ph.D. as a Director and as Vice Chairman of the Board of
Directors of the Company.
(c) Exhibits required by Item 601 of Regulation S-K with each management
contract, compensatory plan or arrangement required to be filed
identified.
58
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
3(i).1(1) Restated Certificate of Incorporation as amended by the
Certificate of the Powers, Designations, Preferences and Rights
of the Series B Convertible Preferred Stock as amended by the
Certificate of the Powers, Designations, Preferences and Rights
of the Series C Convertible Preferred Stock.
3(i).2(18) Certificate of Designations of Series D Convertible Preferred
Stock of the Company.
3(ii).1(2) By-laws of the Company.
4.1(5) Specimen Common Stock Certificate.
4.2(4) Specimen Series A Convertible Preferred Stock Certificate.
4.3(4) Specimen Warrant.
4.4(4) Form of Unit Purchase Agreement dated as of September 23, 1993
by and between the Company and the Purchasers of the Series A
Convertible Preferred Stock and Warrants.
4.5(11) Form of Rights Agreement dated as of December 16, 1993 between
Genta Incorporated and First Interstate Bank of California,
which includes as Exhibit A the form of Certificate of
Designations, Rights and Preferences of Series F Participating
Preferred Stock.
4.6(8) Form of Regulation S Subscription Agreement entered into between
the Company and certain purchasers of the Series B Convertible
Preferred Stock.
4.7(1) Form of Securities Subscription Agreement entered into between
the Company and certain purchasers of the Series C Convertible
Preferred Stock.
4.8(1) Common Stock Purchase Warrant dated December 14, 1995 between
the Company and Lease Management Services, Inc.
4.9(17) Warrant for the Purchase of 213,415 Shares of Common Stock
issued to Lyon & Lyon in October 1996.
4.10(17) Warrant for the Purchase of 100,000 Shares of Common Stock
issued to Michael Arnouse in October 1996.
10.1(3)(6)(6) Amended and Restated 1991 Stock Plan of Genta Incorporated.
10.2(5) Master Lease Agreement No. 10300 dated as of May 4, 1989 between
the Company and Lease Management Services, Inc. and Master Lease
Agreement No. 10428 dated as of August 15, 1991 between the
Company and Lease Management Services, Inc.
10.3(5) Standard Industrial Lease dated October 24, 1988, as amended,
between the Company and General Atomics.
10.4(5) Revised and Restated Lease dated as of March 1, 1990 between JBL
Scientific, Inc. and Granada Associates.
59
<PAGE>
10.5(5)(6) Employment Agreement dated February 20, 1991 between the Company
and Dr. Robert E. Klem.
10.6(5)(6) Employment Agreement dated February 20, 1991 between the Company
and Dr. Lauren R. Brown.
10.7(5)(6) Form of Indemnification Agreement entered into between the
Company and its directors and officers.
10.8(5) Preferred Stock Purchase Agreement dated September 30, 1991 and
Amendment Agreement dated October 2, 1991.
10.9(5)(6) Consulting Agreement dated February 2, 1989 between the Company
and Dr. Paul O.P. Ts'o.
10.10(5)(7) Development, License and Supply Agreement dated February 2, 1989
between the Company and Gen-Probe Incorporated.
10.12(5)(7) License Agreement dated February 2, 1989 among the Company, Dr.
Ts'o, Dr. Miller and Mr. Finch.
10.13(5)(7) License Agreement dated May 15, 1990 between the Company and The
Johns Hopkins University.
10.19(6)(1) Promissory Note dated March 7, 1996 between the Company and Dr.
Donald Picker.
10.21(7)(9) Common Stock Transfer Agreement dated as of December 15, 1992,
between the Company and Dr. Jacques Gonella.
10.32(9) Consulting Agreement dated as of December 15, 1992, between the
Company and Dr. Jacques Gonella.
10.36(7)(9) Common Stock Transfer Agreement dated as of December 15, 1992,
between the Company and Jagotec AG.
10.37(7)(9) Collaboration Agreement dated as of January 22, 1993, between
Jobewol Investments B.V. (now known as Genta Jago Technologies
B.V.) and Gensia, Inc.
10.46(10) Form of Purchase Agreement between the Company and certain
purchasers of Common Stock.
10.47(10) Common Stock Purchase Warrant dated May 8, 1995 between the
Company and Index Securities S.A.
10.48(7)(12) Restated Joint Venture and Shareholders Agreement dated as of
May 12, 1995 between the Company, Jagotec AG, Jago Holding AG,
Jago Pharma AG and Genta Jago Technologies B.V.
10.50(7)(12) Limited Liability Company Agreement of Genta Jago Delaware LLC
dated as of May 12, 1995 between GPM Generic Pharmaceuticals
Manufacturing Inc. and the Company.
10.51(7)(12) Restated Transfer Restriction Agreement dated as of May 12, 1995
between the Company and Jagotec AG.
10.52(7)(12) Transfer Restriction Agreement dated as of May 12, 1995 between
the Company, GPM Generic Pharmaceuticals Manufacturing Inc. and
Jago Holding AG.
60
<PAGE>
10.53(7)(12) Common Stock Transfer Agreement dated as of May 30, 1995 between
the Company and Jago Finance Limited.
10.54(7)(12) Stockholders' Agreement dated as of May 30, 1995 between the
Company, Jagotec AG, Dr. Jacques Gonella and Jago Finance
Limited.
10.55(7)(12) Restated Geomatrix Research and Development Agreement dated as
of May 12, 1995 between Jago Pharma AG, the Company, Genta Jago
Delaware, L.L.C. and Genta Jago Technologies B.V.
10.56(7)(12) Restated Services Agreement dated as of May 12, 1995 between
Jago Pharma AG, the Company, Genta Jago Delaware, L.L.C. and
Genta Jago Technologies B.V.
10.57(7)(12) Restated Working Capital Agreement dated as of May 12, 1995 and
Amendment No. 1 to Restated Working Capital Agreement dated as
of July 11, 1995 between the Company and Genta Jago Technologies
B.V.
10.58(7)(12) Restated Promissory Note dated as of January 1, 1994 between
Genta Jago Technologies B.V. and the Company.
10.59(7)(12) Restated License Agreement dated as of May 12, 1995 between
Jagotec AG and the Company.
10.61(7)(12) Restated Geomatrix License Agreement dated as of May 12, 1995
between Jagotec AG and Genta Jago Technologies B.V.
10.62(7)(12) Geomatrix Manufacturing License Agreement dated as of May 12,
1995 between Jagotec AG and Genta Jago Technologies B.V.
10.63(7)(12) Restated Geomatrix Supply Agreement dated as of May 12, 1995
between Jago Pharma AG and Genta Jago Technologies B.V.
10.65(13) Form of Regulation S Subscription Agreement entered into between
the Company and certain purchasers of the Series B Convertible
Preferred Stock.
10.66(1) Promissory Note dated November 8, 1995 between the Company and
Domain Partners, L.P.
10.67(1) Promissory Note dated November 8, 1995 between the Company and
Domain Partners II, L.P.
10.68(1) Promissory Note dated November 8, 1995 between the Company and
Institutional Venture Partners, IV.
10.69(14) Amendment to Promissory Note effective March 22, 1996 between
the Company and Institutional Venture Partners, IV.
10.70(14) Amendment to Promissory Note effective March 22, 1996 between
the Company and Domain Partners, L.P.
10.71(14) Amendment to Promissory Note effective March 22, 1996 between
the Company and Domain Partners II, L.P.
10.72(15) Amendments to the Series C Securities Subscription Agreement
dated April 23, 1996.
61
<PAGE>
10.73(16) Form of Regulation S Securities Subscription Agreement entered
into between the Company and certain purchasers of the 4%
Convertible Debentures, Due August 1, 1997.
10.74(16) Form of 4% Convertible Debenture Due August 1, 1997.
10.75(19) Note and Warrant Purchase Agreement dated as of January 28,
1997, by and among the Company, The Aries Fund, A Cayman Island
Trust (the "Trust") and The Aries Domestic Fund, L.P. (the
"Partnership").
10.76(19) Letter dated January 28, 1997 from Genta Incorporated.
10.77(19) Senior Secured Convertible Bridge Note of the Company dated
January 28, 1997 for $1,050,000.
10.78(19) Senior Secured Convertible Bridge Note of the Company dated
January 28, 1997 for $1,950,000.
10.79(19) Class A Bridge Warrant of the Company for the purchase of
2,730,000 shares of Common Stock.
10.80(19) Class A Bridge Warrant of the Company for the purchase of
5,070,000 shares of Common Stock.
10.81(19) Class B Bridge Warrant of the Company for the purchase of
4,270,000 shares of Common Stock.
10.82(19) Class B Bridge Warrant of the Company for the purchase of
7,930,000 shares of Common Stock.
10.83(19) Security Agreement dated as of January 28, 1997 between the
Company and Paramount Capital, Inc.
10.84(19) Letter Agreement dated January 28, 1997 among the Company,
Paramount Capital, Inc., the Partnership and the Trust.
10.85(19) Amendment No. 1 dated as of January 28, 1997 to Rights
Agreement, dated as of December 16, 1997, between the Company
and ChaseMellon Shareholder Services L.L.C.
10.86(20)(6) Executive Compensation Agreement dated as of January 1, 1996
between the Company and Howard Sampson.
10.87(20) Collaboration Agreement dated December 26, 1995 between the
Company and Johnson & Johnson Consumer Products, Inc.
10.88(20) Assignment Agreement (of Gensia Inc.'s rights in the
Collaboration Agreement between Genta Jago and Gensia, Inc.,
dated January 23, 1993) to Brightstone Pharma, Inc., dated
October 1, 1996 among Gensia, Inc., Genta Jago Technologies
B.V., Brightstone Pharma, Inc., and SkyePharma PLC.
10.89(20)(21) Development and Marketing Agreement effective February 28, 1996
between Genta Jago Technologies B.V., a Dutch company, and
Apothecon, Inc., a Delaware corporation.
62
<PAGE>
10.90(20)(21) License Agreement effective February 28, 1996 between Genta Jago
Technologies B.V., a Dutch company, and Apothecon, Inc., a
Delaware corporation.
10.91(20)(21) Option, Development & Sub-License Agreement/(The Company has
requested confidential treatment for the name of this element)
dated as of October 31, 1996 between Genta Jago Technologies
B.V., a Dutch company, and Krypton Ltd., a Gibraltar limited
company.
10.92(20)(21) Development and Sub-License Agreement/(The Company has requested
confidential treatment for the name of this element) dated as of
October 31, 1996 between Genta Jago Technologies B.V., a Dutch
company, and Krypton Ltd., a Gibraltar limited company.
10.93(20)(21) Development and Sub-License Agreement/(The Company has requested
confidential treatment for the name of this element) dated as of
October 31, 1996 between Genta Jago Technologies B.V., a Dutch
company, and Krypton Ltd., a Gibraltar limited company.
10.94(20)(21) Development and Sub-License Agreement/Diclofenac dated as of
October 31, 1996 between Genta Jago Technologies B.V., a Dutch
company, and Krypton Ltd., a Gibraltar limited company.
10.95(20)(21) Development and Sub-License Agreement/Naproxen dated as of
October 31, 1996 between Genta Jago Technologies B.V., a Dutch
company, and Krypton Ltd., a Gibraltar limited company.
10.96(20)(21) Development and Sub-License Agreement/Verapamil dated as of
October 31, 1996 between Genta Jago Technologies B.V., a Dutch
company, and Krypton Ltd., a Gibraltar limited company.
10.97(20)(21) License Termination Agreement dated December 2, 1996 between the
Company and Wilton Licensing AG.
10.98(20) Contract for Regional Aid for Innovation, effective July 1,
1993, between L'Agence Nationale de Valorisation de la
Recherche, Genta Pharmaceuticals Europe SA and the Company.
22.1(20) Subsidiaries of the Registrant.
23.1(20) Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney. (See page 66)
63
<PAGE>
(1) Incorporated herein by reference to the exhibits of the same number to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995, Commission File No. 0-19635.
(2) Exhibit 3(ii).1 is incorporated herein by reference to the Exhibit of
the same number contained in Post- Effective Amendment No. 1 to the
Company's Registration Statement on Form S-3, Registration No.
33-72130.
(3) Exhibit 10.1 is incorporated herein by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-8, Registration No.
33-85887.
(4) Exhibits 4.2, 4.3, and 4.4 are incorporated by reference to Exhibits of
the same number to the Company's Report on Form 8-K dated as of
September 24, 1993, Commission File No. 0-19635.
(5) Incorporated herein by reference to the exhibit of the same number to
the Company's Registration Statement on Form S-1, Registration No.
33-43642.
(6) Indicates management contract, compensatory plan or arrangement.
(7) The Company has been granted confidential treatment of certain portions
of this exhibit.
(8) Exhibit 4.6 is incorporated by reference to Exhibit 10.65 to the
Company's Report on Form 8-K dated as of December 29, 1995, Commission
File No. 0-19635.
(9) Incorporated by reference to the exhibits of the same number to the
Company's Registration Statement on Form S-3, Registration No.
33-58362.
(10) Incorporated by reference to the exhibits of the same number to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995, Commission File No. 0-19635.
(11) Incorporated by reference to Exhibit 5.1 to the Company's Report on
Form 8-K dated as of December 16, 1993, Commission File No. 0-19635.
(12) Incorporated by reference to the exhibits of the same number to the
Company's Quarterly Report on Form 10-Q/A for the quarter ended June
30, 1995, Commission File No. 0-19635.
(13) Incorporated herein by reference to the exhibit of the same number to
the Company's Report on Form 8-K dated as of December 29, 1995.
(14) Incorporated herein by reference to exhibits 10.1, 10.2 and 10.3,
respectively, to the Company's Registration Statement on Form S-3
(Registration No. 333-3846)
(15) Incorporated herein by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996,
Commission File No. 0-19635.
(16) Exhibits 10.73 and 10.74 are incorporated herein by reference to
Exhibits 10.1 and 10.2 to the Company's Report on Form 8-K dated as of
September 17, 1996, Commission File No. 0-19635.
(17) Exhibits 4.9 and 4.10 are incorporated herein by reference to Exhibits
4.1 and 4.2 respectively to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, Commission File No. 0-19635.
(18) Exhibit 3(i).2 is incorporated by reference to Exhibit 3(i) to the
Company's Report on Form 8-K dated as of January 28, 1997, Commission
File No. 0-19635.
64
<PAGE>
(19) Exhibits 10.75, 10.76, 10.77, 10.78, 10.79, 10.80, 10.81, 10.82, 10.83,
10.84 and 10.85 are incorporated herein by reference to Exhibits 10.1,
10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10 and 10.11
respectively to the Company's Report on Form 8-K dated as of January
28, 1997, Commission File No. 0-19635.
(20) Filed herewith.
(21) The Company has requested confidential treatment for certain portions
of this Exhibit.
(d) See (a)(2) above.
65
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 27th day of
March, 1997.
Genta Incorporated
By /s/Thomas H. Adams
------------------
Thomas H. Adams, Ph.D.
Chairman, Chief Executive Officer,
and Acting Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas H. Adams, his true and lawful
attorney-in-fact and agent, each with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this report, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas H. Adams Chairman and Chief Executive Officer March 27, 1997
- - - ------------------------------------------ (Principal Executive Officer), Acting Chief
Thomas H. Adams Financial Officer and Director
/s/ Robert E. Klem Director March 27, 1997
- - - ------------------------------------------
Robert E. Klem
/s/ Paul O.P. Ts'o Director March 27, 1997
- - - ------------------------------------------
Paul O.P. Ts'o
/s/ Sharon B. Webster Director March 27, 1997
- - - ------------------------------------------
Sharon B. Webster
</TABLE>
66
EXHIBIT 10.86
EXECUTIVE COMPENSATION AGREEMENT
THIS AGREEMENT is entered into as of January 1, 1996, by and between
Howard Sampson (the "Employee") and Genta Incorporated, a Delaware corporation
(the "Company"). This Agreement supersedes any prior agreements previously
entered into between Employee and Company.
1. Term of Employment.
(a) Basic Rule. The Company agrees to continue the Employee's
employment, and the Employee agrees to remain in employment with the Company,
from the date hereof until the date when the Employee's employment terminates
pursuant to Subsection (b), (c) or (d) below.
(b) Early Termination. Subject to Sections 6 and 7, the Company may
terminate the Employee's employment by giving the Employee 30 days' advance
notice in writing. The Employee may terminate his employment by giving the
Company 1 day's advance notice in writing. The Employee's employment shall
terminate automatically in the event of his death. Any waiver of notice shall be
valid only if it is made in writing and expressly refers to the applicable
notice requirement of this Section 1.
(c) Cause. The Company may at any time terminate the Employee's
employment for Cause by giving the Employee notice in writing. For all purposes
under this Agreement, "Cause" shall mean:
(i) A willful act by the Employee which constitutes gross
misconduct (as determined by an independent tribunal) or fraud and
which is injurious to the Company; or
(ii) Conviction of, or a plead of "guilty" or no contest" to, a
felony.
No act, or failure to act, by the Employee shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Company's best interest.
(d) Disability. The Company may terminate the Employee's active
employment due to Disability by giving the Employee 30 days' advance notice in
writing. For all purposes under this Agreement, "Disability" shall mean that the
Employee, at the time notice is given, has become eligible to receive immediate
long-term disability benefits under the Company's long-term disability insurance
plan or, if there is no such plan, under the federal Social Security program. In
the event that the Employee resumes the performance of substantially all of his
duties hereunder before the termination of his active employment under this
<PAGE>
Subsection (d) becomes effective, the notice of termination shall automatically
be deemed to have been revoked.
(e) Rights Upon Termination. Except as expressly provided in Sections 6
and 7, upon the termination of the Employee's employment pursuant to this
Section 1, the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 3, 4 and 5 for the period preceding the
effective date of the termination. The payments under this Agreement shall fully
discharge all responsibilities of the Company to the Employee upon the
termination of his employment.
(f) Termination of Agreement. This Agreement shall terminate when all
obligations of the parties hereunder have been satisfied.
2. Duties and Scope of Employment.
(a) Position. The Company agrees to employ the Employee as its Chief
Financial Officer for the term of his employment under this Agreement. The
Employee shall report to the Company's President.
(b) Obligations. During the term of his employment under this
Agreement, the Employee shall devote his full business efforts and time to the
Company and its subsidiaries. The Employee shall not render services to any
other for-profit corporation or entity without the prior written consent of the
Company's Board of Directors (the "Board"). This Subsection (b) shall not
preclude the Employee from engaging in appropriate professional, educational,
civic, charitable or religious activities or from devoting a reasonable amount
of time to private investments that do not interfere or conflict with his
responsibilities to the Company.
3. Base Compensation and Incentive Compensation.
(a) Base Compensation. During the term of his employment under this
Agreement, the Company agrees to pay the Employee as compensation for his
services a base salary at the annual rate of $175,000 or at such higher rate as
the Company may determine from time to time. Any difference between the Base
Compensation payable on a bi-monthly basis and that actually paid between
January 1, 1996, and the date this Agreement is executed shall be paid to
Employee in one lump sum upon execution of this Agreement. Such salary shall be
payable in accordance with the Company's standard payroll procedures. (The
annual compensation specified in this Section 3, together with any increases in
such compensation that the Company may grant from time to time, is referred to
in this Agreement as "Base Compensation.")
(b) Incentive Compensation. In addition, Employee shall be eligible for
participation in an annual incentive compensation
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program, if any, to be determined in the sole discretion of the Company.
(c) Stock Compensation. In addition to such options and Company stock
compensation available to Employee as of the execution of this Agreement, upon
execution of this Agreement Employee shall receive 75,000 shares of Company
stock at no cost to Participant. Such shares shall be fully vested when granted
and shall not be subject to any right of repurchase by the Company. As a
condition of this grant, Employee agrees to satisfy such requirements as Company
deems necessary to satisfy its federal and state tax withholding requirements.
4. Employee Benefits.
During the term of his employment under this Agreement, the Employee
shall be eligible for the employee benefit plans and executive compensation
programs maintained by the Company for other senior executives, subject in each
case to the generally applicable terms and conditions of the plan or program in
question and to the determinations of any person or committee administering such
plan or program.
5. Business Expenses.
During the term of his employment under this Agreement, the Employee
shall be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
shall reimburse the Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company's generally applicable policies.
6. SkyePharma Transaction.
(a) General. As of September 25, 1996, the Company is contemplating a
transaction with SkyePharma. If the transaction is contemplated by June 30,
1997, Employee shall be paid a lump sum cash bonus of $50,000 upon closing of
the transaction. Closing means execution of a definitive agreement with
shareholder approval, if necessary. Such bonus shall not be paid to Employee if
he is not employed by the Company on the date of closing unless Employee is
either involuntarily terminated without cause or terminates with Good Reason.
(b) Good Reason. For all purposes under this Agreement, "Good Reason"
shall mean that the Employee:
(i) Has incurred a material reduction in his authority or
responsibility except for reason of demonstrated lack of performance;
(ii) Has incurred one or more reductions in his Base
Compensation; or
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(iii) Has been notified that the Company's headquarters will be
relocated by a distance of 50 miles or more.
7. Termination for Any Reason Without Cause.
(a) Continuation Period. Except as otherwise specifically provided for
this Agreement, in the event that during the term of this Agreement, the Company
terminates the Employee's employment for any reason other than Cause or Employee
voluntarily terminates under circumstances where an involuntary termination for
Cause is not otherwise warranted, then the Employee shall be entitled to receive
all of the payments and benefit coverage described in this Section 7. Such
payments and benefit coverage shall continue for the period (the "Continuation
Period") commencing on the date when the employment termination is effective and
ending on the date twelve months after such date.
(b) Compensation. During the Continuation Period, the Company shall pay
the Employee compensation at an annual rate equal to his Base Compensation at
the rate in effect on the date of the employment termination. Such amount shall
be paid at periodic intervals in accordance with the Company's standard payroll
procedures.
(c) Insurance Coverage. During the Continuation Period, the Employee
(and, where applicable, his dependents) shall be entitled to continue
participation in the group insurance plans maintained by the Company, including
life, disability and health insurance programs, as if he were still an employee
of the Company. Where applicable, the Employee's salary for purposes of such
plans shall be deemed to be equal to his Base Compensation. To the extent that
the Company finds it impossible to cover the Employee under its group insurance
policies during the Continuation Period, the Company shall provide the Employee
with individual policies which offer at least the same level of coverage and
which impose not more than the same costs on him. The foregoing notwithstanding,
in the event that the Employee becomes eligible for comparable group insurance
coverage in connection with new employment, the coverage provided by the Company
under this Subsection (c) shall terminate immediately. Any group health
continuation coverage that the Company is required to offer under COBRA shall
commence when coverage under this Subsection (c) terminates.
(d) Incentive Programs. The Continuation Period shall be counted as
employment with the Company for purposes of vesting under all stock option,
stock appreciation rights, restricted stock, phantom stock or similar plans
maintained by the Company (any contrary provisions of such plans
notwithstanding). The preceding sentence shall not be construed to require the
Company to grant any new awards to the Employee during the Continuation Period.
The Continuation Period shall also be counted as employment with the Company for
purposes of determining the
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expiration date of any stock option granted by the Company and held by the
Employee when his employment terminates. Any other provision of this Agreement
notwithstanding, the Continuation Period for purposes of this Subsection (d)
shall not exceed three months in the event that the Company terminates the
Employee's employment for performance-related reasons (considering only
performance after the date this Agreement is executed), as determined by the
Board. (There is no Continuation Period for any purpose in the event that the
termination is for Cause.)
(e) No Mitigation. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Section 7 (whether by seeking new
employment or in any other manner). Except as expressly provided in Subsection
(c) above, no such payment shall be reduced by earnings that the Employee may
receive from any other source.
8. Covenant Not to Compete. As a condition to Employee's rights to
receive payments under Section 6 or 7 of this Agreement, the parties agree to
the following:
(a) Competition. Employee hereby agrees, so long as Company is not in
material default (subject to notice and a 30- day cure period) of any of its
material obligations under this Agreement, that Employee will not, except as
specifically provided for in this Covenant, at any time during the Covenant Term
(as defined in Section 8(b) below), directly or indirectly, whether or not for
compensation, engage in any business activity, or have any interest in or
relationship with any person, firm, corporation or business (whether as an
employee, shareholder, proprietor, officer, director, agent, security holder,
trustee, partner, consultant or otherwise), which is competitive with, the
antisense and geomatrix drug delivery business of Company or its subsidiaries
now being conducted in the Covered Area; provided, however, that Employee may
own shares of companies whose securities do not constitute more than five
percent (5%) of the outstanding securities of any such company. Employee further
agrees that as long as the Covenant remains in effect, Employee will not, in any
way which materially adversely affects the Company's business or financial
position divert or attempt to divert, directly or indirectly, any business of
Company or any of its subsidiaries, or any customers of their business, to any
competitor in the Covered Area or induce or attempt to induce, directly or
indirectly, any person to leave his or her employment with Company or any of its
subsidiaries.
(b) Covenant Term. The Term of this Covenant ("Covenant Term") is
defined to be the period commencing on the effective date of this Agreement, and
ending upon the last payment made to Employee pursuant of Section 6 or 7.
(c) Covered Area. The Covered Area shall be the area in which the
Company or any of its wholly-owned subsidiaries is
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operating at the time of the alleged violation of the covenants of this
paragraph.
9. Limitation on Payments.
(a) Basic Rule. Any other provision of this Agreement notwithstanding,
the Company shall not be required to make any payment or property transfer to,
or for the benefit of, the Employee (under this Agreement or otherwise) that
would be non-deductible by the Company by reason of section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or that would subject the
Employee to the excise tax described in section 49999 of the Code. All
calculations required by this Section 9 shall be performed by the independent
auditors retained by the Company most recently prior to the Change in Control
(the "Auditors"), based on information supplied by the Company and the Employee,
and shall be binding on the Company and the Employee. All fees and expenses of
the Auditors shall be paid by the Company.
(b) Reductions. If the amount of the aggregate payments or property
transfers to the Employee must be reduced under this Section 9, then the
Employee shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be made
without the Company's consent. As a result of uncertainty in the application of
sections 280G and 4999 of the Code at the time of an initial determination by
the Auditors hereunder, it is possible that a payment will have been made by the
Company that should not have been made (an "Overpayment") or that an additional
payment that will not have been made by the Company could have been made (an
"Underpayment"). In the event that the Auditors, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the Employee
that the Auditors believe has a high probability of success, determine that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a loan to the Employee that he shall repay to the Company, together with
interest at the applicable federal rate specified in section 7872(f)(2) of the
Code; provided, however, that no amount shall be payable by the Employee to the
Company if and to the extent that such payment would not reduce the amount that
is nondeductible under section 280G of the Code or is subject to the excise tax
under section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to, or for the benefit of, the Employee, together
with interest at the applicable federal rate specified in section 7872(f)(2) of
the Code.
10. Successors.
(a) Company's Successors. The Company shall require any successor
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or
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substantially all of the Company's business and/or assets, by an agreement in
substance and form satisfactory to the Employee, to assume this Agreement and to
agree expressly to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform it in the absence of a
succession. The Company's failure to obtain such agreement prior to the
effectiveness of a succession shall be a breach of this Agreement and shall
entitle the Employee to all of the compensation and benefits to which he would
have been entitled hereunder if the Company had involuntarily terminated his
employment, without Cause immediately after such succession becomes effective.
For all purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes and delivers
the assumption agreement described in this Subsection (a) or which becomes bound
by this Agreement by operation of law.
(b) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
11. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
(b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and an authorized officer of the Company (other than
the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(d) No Setoff; Withholding Taxes. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against payments to
the Employee under this
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Agreement. All payments made under this Agreement shall be subject to reduction
to reflect taxes required to be withheld by law.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(f) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(g) Arbitration. Except as otherwise provided in Section 9, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in San Diego in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Discovery
shall be permitted to the same extent as in a proceeding under the Federal Rules
of Civil Procedure, including (without limitation) such discovery as is
specifically authorized by section 1283.05 of the California Code of Civil
Procedure, without need of prior leave of the arbitrator under section
1283.05(e) of such Code. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. All fees and expenses of the
arbitrator and such Association shall be paid as determined by the arbitrator.
Any attorney fees paid to enforce this Agreement shall be paid by the
non-prevailing party.
(h) No Assignment. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this Subsection (h) shall be void.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
/s/ Howard Sampson
-------------------------------
Howard Sampson
GENTA INCORPORATED
By /s/ Thomas H. Adams
Title __________________________
8
EXHIBIT 10.87
[Johnson & Johnson Letterhead]
AGREEMENT
This Agreement, made and entered into this 26th day of December, 1995,
by and between
GENTA INCORPORATED, having offices at 3550 General Atomics Court, San
Diego, California 92121 (hereinafter "GENTA"), and
JOHNSON & JOHNSON CONSUMER PRODUCTS, INC., having offices at Grandview
Avenue, Skillman, New Jersey 08550 (hereinafter "CPI").
W I T N E S S E T H
WHEREAS, GENTA is a research-based company which focuses on the
discovery of biopharmaceuticals;
WHEREAS, CPI develops, manufactures and sells skin and hair care
products; and
WHEREAS, GENTA and CPI desire to cooperate in the development of new
skin care agents and active ingredients.
NOW THEREFORE, in consideration of the covenants and conditions set
forth herein, and other good valuable consideration, the sufficiency of which is
hereby acknowledged by each of the parties hereto, it is agreed as follows:
1. General Purpose
It is the general purpose of this Agreement to provide for GENTA and
CPI to cooperate in a feasibility study for the potential joint development of
new and improved skin and hair care products and active ingredients with the
objective of GENTA manufacturing and supplying such ingredients to CPI. In order
to accomplish this purpose, CPI will evaluate the use of one or more of GENTA's
compounds that are selective for the mRNA of the human androgen receptor
(hereinafter, "the Compound") as a prophylactic and/or therapeutic agent for
androgen receptor mediated conditions (such as control of hair growth, sebaceous
gland activity, etc.). These will be evaluated in a study that is designed to
quantify the reduction in sebum production resulting from topical application of
the Compound to the forehead of selected patients (hereinafter, "the Study").
The Compound and the Formulation (as defined below) provided by GENTA
to CPI under this Agreement (a) shall remain the sole property of GENTA, (b)
shall be used by and under the control of CPI solely in order to carry out its
obligations under this Agreement, (c) shall not be used by or delivered to or
for the benefit of any third party without the prior express written consent of
GENTA.
<PAGE>
GENTA and CPI each shall comply in all material respects with all laws
and governmental rules, regulations and guidelines which are applicable to the
Compound, the Formulation or the use thereof, including biosafety procedures,
and with any safety precautions described in a writing which accompanies the
Compound or the Formulation.
CPI shall return to GENTA all unused quantities of the Compound and the
Formulation after the completion, or earlier termination, of the Study.
THE COMPOUND AND THE FORMULATION ARE PROVIDED "AS IS" AND WITHOUT ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR
ANY WARRANTY THAT THE USE OF THE COMPOUND OR THE FORMULATION WILL NOT INFRINGE
OR VIOLATE ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.
It is understood by the parties that "CPI", unless expressly stated
otherwise, shall mean Johnson & Johnson Consumer Products, Inc., the corporation
of New Jersey as above described, together with its Affiliates. "Affiliate" of,
or an entity "Affiliated" with, a specified entity, means an entity that
controls (in other words, owns directly or indirectly or otherwise has the power
to vote more than fifty percent (50%) of the voting stock), is controlled by, or
is under common control with, the entity specified.
2. Responsibility of the Parties
GENTA will provide the Compound and an appropriate delivery vehicle
(hereinafter, "the Formulation"). GENTA will supply the Formulation free of
charge to CPI in quantities sufficient to complete CPI's evaluation. CPI will
(1) provide technical resources to develop an acceptable topical formulation for
use in the Study, (2) conduct appropriate toxicological tests, (3) design,
conduct and evaluate the results of the Study and (4) provide GENTA with a
written summary of all tests conducted in progress reports on the status of the
Study and copies of all results. The Study will take place outside of the United
States. CPI will be responsible for fulfilling regulatory requirements for
shipping the Formulation outside the United States.
The Results shall be jointly owned by GENTA and CPI, and shall
constitute Confidential Information of GENTA and CPI for purposes of Section 4
below.
3. Expenses
Each party will bear its own expenses in the initial preparation and
evaluation of compounds under this Agreement, with the following exception: CPI
shall within fifteen (15) days of signing this Agreement, pay GENTA a
non-refundable commitment fee of Fifty Thousand Dollars ($50,000.00) which will
not be creditable toward any further purchases or license fees.
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4. Confidentiality
In order to accomplish the objectives of this Agreement, it may be
necessary for the parties to exchange materials and information which are
considered to be confidential and proprietary to the disclosing party. Each
party agrees to limit its disclosure of Confidential Information to the other
party to that reasonably necessary to achieve the objectives of this Agreement.
All information disclosed hereunder which is considered by the
disclosing party to be confidential and proprietary shall be in writing and
marked "Confidential", or if initially disclosed orally or visually, designated
as being confidential at the time of disclosure and confirmed in writing within
thirty (30) days (hereinafter "Confidential Information"). All written documents
containing Confidential Information and other confidential material in tangible
form received by either party under this Agreement shall remain the property of
the originating party, and all and any such other materials shall be promptly
returned to the originating party upon request; provided, however, that the
receiving party shall have the right to retain one copy of any and all such
materials solely in its Law Department files.
Each party agrees that all Confidential Information received from the
other party under this Agreement shall be maintained in confidence and not
disclosed to a third party during the term of this Agreement and for a period of
five (5) years thereafter, and the receiving party agrees not to use such
Confidential Information for any purpose other than to further the objectives of
this Agreement without the prior written consent of the other party. Each party
shall use the same standard of care to protect the confidentiality of
information received from the other party as it uses to protect its own
confidential information, and shall limit disclosure of such information to
those of its personnel and consultants who have an actual need to know and have
a written obligation to protect the confidentiality thereof.
Notwithstanding the preceding provisions, obligations regarding
confidentiality and use of Confidential Information disclosed hereunder shall
not include:
a) information which, at the time of disclosure, was published, known
publicly, or otherwise in the public domain;
b) information which, after disclosure, is published, becomes known
publicly, or otherwise becomes part of the public domain through no fault of the
receiving party;
c) information which, prior to the time of disclosure, is known to the
receiving party without any obligation of confidentiality as evidenced by its
written records;
d) information which, after disclosure, is made available to the
receiving party in good faith by a third party who is under no obligation of
confidentiality or secrecy to the disclosing party; and
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e) information which is independently developed by employees or others
on behalf of the receiving party, without access to or use of the Confidential
Information of the disclosing party.
Notwithstanding the preceding provisions, obligations regarding
confidentiality and use of Confidential Information disclosed hereunder shall
not apply to the extent that the receiving party is required to disclose
information by law, order or regulation of a governmental agency or a court of
competent jurisdiction, provided that the receiving party shall provide written
notice thereof to the disclosing party and sufficient opportunity for the
disclosing party to object to any such disclosure or to request confidential
treatment thereof.
The disclosure of Confidential Information hereunder by either party
shall not result in any right or license under any patent or know-how being
granted to the other party, nor shall it be construed to impose on the other
party any restriction, duty or obligation other than that of confidentiality and
non-use as expressly provided herein.
5. Designated Representatives
The following representatives are designated by the parties to disclose
and receive Confidential Information under this Agreement:
For CPI: Stanley Shapiro, Ph.D.
Worldwide Director
Dermatology Research and Drug Discovery
For GENTA: Dr. Donald Picker
Senior Vice President
Research & Development
6. Competitive Activity
GENTA acknowledges that CPI and its affiliates are in the business of
manufacturing and selling cosmetic and pharmaceutical products for the purposes
of caring for the skin and hair and has an ongoing research and development
effort relating to such products. In addition, CPI may consult with, supply, and
jointly develop with third parties skin and hair care compositions and products.
Nothing contained herein shall be construed to prevent CPI from continuing such
activities provided only that CPI does not reveal to such third parties, or use
for any purpose (other than as permitted by this Agreement), the Compound, the
Formulation or any Confidential Information of GENTA covered by this Agreement.
7. Inventions
Any invention, discovery, or improvement made or technology developed,
whether patentable or not (an "Invention") as a result of work performed
pursuant to this Agreement shall be owned by the party making the Invention if
such Invention is made independently of the other party.
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Inventions made jointly by representatives of both GENTA and CPI shall
be jointly owned by CPI and GENTA. GENTA and CPI shall promptly disclose to the
other party all such solely or jointly owned Inventions. Both parties shall
cooperate in the filing and prosecution of patent applications related to joint
inventions and shall share equally the costs associated with such filings and
prosecution. With respect to such joint inventions, the parties will grant each
other a non-assignable, sole license to make, have made, use and sell such
inventions without the right to sublicense without the mutual agreement of the
parties. With respect to joint inventions and inventions made by GENTA pursuant
to this Agreement, CPI shall have the right of first refusal for an exclusive
license to make, have made, use and sell the inventions in the field of skin and
hair care.
Nothing in this Agreement shall be construed to grant to a party a
license or other rights under any intellectual property rights of the other
party, unless expressly provided in this Agreement.
8. Future Rights
Simultaneous with the performance of the Study, CPI and GENTA will
negotiate the terms of a mutually acceptable full development, supply and
product license agreement (hereinafter, "the License Agreement"). Under the
License Agreement, CPI shall have the exclusive worldwide rights to have made,
use and sell GENTA's antisense compounds which are selective to the mRNA of the
human androgen receptor for the field of skin and hair care. The License
Agreement shall be complete prior to the completion of the Study. The
negotiations to develop the License Agreement between CPI and GENTA shall begin
no later than two (2) months after the execution of this Agreement.
At the completion of the Study, CPI shall notify GENTA that the Study
has been completed. Within sixty (60) days after CPI notifies GENTA that the
Study has been completed, CPI shall notify GENTA whether it intends to pursue
the development of the Compound commercially. Upon notification that CPI intends
to pursue the development of the Compound commercially, the parties shall
execute the License Agreement and CPI shall pay GENTA One Hundred and Fifty
Thousand Dollars ($150,000.00). The License Agreement will include at least the
following provisions: (i) GENTA will supply the Compound exclusively to CPI for
use in its skin and hair care products, (ii) CPI will purchase its requirements
of such compounds from GENTA, if GENTA is capable, at a negotiated fair market
price which shall be at least as favorable as GENTA's price to other customers
for similar compounds, and (iii) CPI will pay GENTA mutually acceptable
royalties on Net Sales of products and milestone payments.
9. Exclusivity
During the duration of the Study, GENTA shall not engage any third
party to study the androgen receptor mediated dermatological effects of the
Compound or discuss with or negotiate with any third party regarding the right
to make, have made, use or sell the Compound.
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10. Term and Termination
The term of this Agreement shall be one (1) year from the date written
above. This Agreement may be terminated by CPI upon thirty (30) days prior
written notice to GENTA, provided, however, that the obligations of each party
under Paragraph 4 hereof shall survive such termination of this Agreement.
11. Miscellaneous
This Agreement may not be superseded, amended, or modified except by
written agreement signed on behalf of both parties hereto.
Notices given by either party hereto shall be in writing and shall be
effective upon receipt and shall be sent by registered or certified mail or
overnight courier to the other party at the address set forth above.
Each party's rights and obligations under this Agreement shall enure to
the benefit of, and shall be binding upon, its successors.
This Agreement shall in no way constitute a commitment by CPI to
purchase any goods from GENTA or by GENTA to produce and sell any goods to CPI.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives on the day and
year first above written.
GENTA INCORPORATED JOHNSON & JOHNSON
CONSUMER PRODUCTS, INC.
By: /s/Thomas H. Adams By: /s/
------------------ ---------------------
Thomas H. Adams
Title: Vice President,
Title:__________________ Licensing & Acquisition
6
EXHIBIT 10.88
ASSIGNMENT AGREEMENT
(OF COLLABORATION AGREEMENT BETWEEN GENTA JAGO AND GENSIA)
This ASSIGNMENT AGREEMENT effective as of October 1, 1996 (this "AGREEMENT") is
entered into among GENSIA, INC., a Delaware corporation having a place of
business at 9360 Towne Center Drive, San Diego, California 92121, U.S.A.
(hereinafter referred to as "GENSIA"), and GENTA JAGO TECHNOLOGIES B.V., a Dutch
company, having a place of business at Grundstrasse 12, CH-6343 Rotkreuz,
Switzerland (hereinafter referred to as "GENTA JAGO"), and BRIGHTSTONE PHARMA,
INC., a Delaware corporation having a place of business at 109 MacKenan Drive,
Cary, North Carolina 27511, U.S.A. (hereinafter referred to as "BRIGHTSTONE")
and SKYEPHARMA PLC, an English public company, having a place of business at 105
Piccadilly, London (hereinafter referred to as "SKYEPHARMA").
WITNESSTH:
WHEREAS, GENSIA and GENTA JAGO have entered into a certain
Collaboration Agreement dated as of January 22, 1993 (as amended as of October
7, 1994, and thereafter, hereinafter the "GJT Collaboration Agreement")
regarding the development of - inter alia - a GEOMATRIX(R) formulation of
Nifedipine (hereinafter the "Nifedipine Product"); and
WHEREAS, GENSIA and Jagotec AG, a Swiss corporation (hereinafter
"JAGOTEC") have entered into a certain License Agreement dated as of January 22,
1993 (as amended as of October 7, 1994 and thereafter; hereinafter the "License
Agreement") regarding manufacturing rights for - inter alia - the Nifedipine
Product; and
WHEREAS, GENSIA and JAGO Pharma AG, a Swiss corporation (hereinafter
"JAGO PHARMA") have entered into a certain Supply Agreement dated as of January
22, 1993 (as amended as of October 7, 1994 and thereafter; hereinafter the
"Supply Agreement") regarding the manufacturing and supply of - inter alia - the
Nifedipine Product; and
WHEREAS, GENSIA and Boehringer Mannheim Pharmaceuticals Corporation, a
Maryland corporation (hereinafter "BMPC") have entered into a certain License
and Collaboration Agreement dated as of October 10, 1994 (hereinafter the "BMCT
License and Collaboration Agreement") regarding the development and marketing of
the Nifedipine Product; and
WHEREAS, as the result of an internal corporate restructuring,
Boehringer Mannheim Corporation, Therapeutics Division ("BMCT"), succeeded to
the rights and obligations of BMPC under the BMCT License and Collaboration
Agreement;
WHEREAS, BRIGHTSTONE desires to assume, and GENSIA desires to assign to
BRIGHTSTONE, all of GENSIA's rights and obligations under the GJT Collaboration
Agreement as of the Effective Date (as defined below) and under the terms and
subject to the conditions of this Agreement; and
WHEREAS, GENTA JAGO is willing to consent to GENSIA's assignment and
BRIGHTSTONE's assumption of GENSIA's rights and obligations under the GJT
Collaboration Agreement, under the terms and subject to the conditions of this
Agreement; and
- 1 -
<PAGE>
WHEREAS, the GENTA JAGO and BRIGHTSTONE desire to amend certain
provisions of the GJT Collaboration Agreement as of the Effective Date as set
forth below.
NOW, THEREFORE, for and in consideration of the premises, mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE 1
ASSIGNMENT, SUBSTITUTION AND RELEASE
As of the Effective Date and subject to the terms and conditions of
this Agreement,
1.1 GENSIA does assign and transfer to BRIGHTSTONE all of GENSIA's right,
title and interest in and to, and all of GENSIA's liabilities, duties
and obligations arising or becoming due on or after the Effective Date
under the GJT Collaboration Agreement;
1.2 BRIGHTSTONE does assume such right, title, interest, liabilities,
duties and obligations of GENSIA and does agree that it shall be
substituted for GENSIA under the GJT Collaboration Agreement and that
it will perform the obligations, liabilities and duties of GENSIA
arising or becoming due on or after the Effective Date thereunder in
accordance with the terms hereof and thereof;
1.3 SKYEPHARMA agrees to guarantee the performance of BRIGHTSTONE under the
GJT Collaboration Agreement as it will be amended concurrently
herewith; and
1.4 GENTA JAGO does consent to such assignment and substitution.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Of Each Party to the Others. Each party hereby represents and warrants
to the other parties as follows:
(a) Corporate Existence. Such party is a corporation duly organized,
validly existing and in good standing under the laws of the state or
other jurisdiction in which it is incorporated.
(b) Authorization and Enforcement of Obligations. Such party has the
corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder and has taken all
necessary corporate action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations
hereunder. This Agreement has been duly executed and delivered on
behalf of such party and constitutes a legal, valid and binding
obligation, enforceable against such party in accordance with its
terms.
(c) Consents. All necessary consents, approvals and authorizations of
all governmental authorities and other persons required to be obtained
by such party in connection with this Agreement have been obtained.
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<PAGE>
(d) No Conflict. The execution and delivery of this Agreement and the
performance of such party's obligations hereunder do not conflict with
or violate any requirement of applicable laws or regulations and do not
conflict with, or constitute a default under, any contractual
obligation of such party, except such conflicts that do not,
individually or in the aggregate, have a material adverse effect on
such party or do not materially adversely affect such party's ability
to perform its obligations under this Agreement.
2.2 Of GENSIA and GENTA JAGO to Each Other, SKYEPHARMA and BRIGHTSTONE.
Each of GENSIA and GENTA JAGO hereby represents and warrants to each
other, SKYEPHARMA and BRIGHTSTONE that, immediately prior to the
Effective Date, (a) the GJT Collaboration Agreement is in full force
and effect; (b) the GJT Collaboration Agreement has not been amended,
modified or altered (by amendment, side agreement or otherwise) other
than as described in the recitals to this Agreement, (c) all amounts
owing as of such date by GENSIA to GJT under the GJT Collaboration
Agreement have been paid in full; (d) it has not received any notice of
uncured past default under the GJT Collaboration Agreement, (e) there
exists no uncured default or event which (with only the passage of
time, the giving of notice or both) would constitute an uncured default
of a material obligation under the GJT Collaboration Agreement, other
than any default under the GJT Collaboration Agreement which directly
or indirectly derives from or relates to the same or a related
occurrence (or series of occurrences) which BMCT alleges (or may
allege) constitutes a default under the BMCT License and Collaboration
Agreement or the BMCT Amended License and Collaboration Agreement and
(f) to the best of its knowledge, there exists no pending litigation,
arbitration or similar proceeding to which it is a party, and it has
not received written notice of any threatened litigation, arbitration
or similar proceeding, relating to the GJT Collaboration Agreement or
the activities contemplated by the GJT Collaboration Agreement.
ARTICLE 3
RELEASES
3.1 Release of GENSIA. GENTA JAGO, BRIGHTSTONE and SKYEPHARMA do hereby
release, remise and forever discharge GENSIA and its officers,
directors, shareholders, employees and agents from (i) liabilities of
GENSIA resulting from acts of GENTA JAGO on or after the Effective Date
arising from the GJT Collaboration Agreement; and (ii) those
liabilities of GENSIA to GENTA JAGO, BRIGHTSTONE or SKYEPHARMA arising
from the GJT Collaboration Agreement which have accrued prior to the
Effective Date and are actually known by GENTA JAGO, BRIGHTSTONE or
SKYEPHARMA. In no event shall the foregoing release apply to
obligations and liabilities of GENSIA owing to third parties.
3.2 Release of GENTA JAGO, BRIGHTSTONE and SKYEPHARMA. GENSIA does hereby
release, remise and forever discharge each of GENTA JAGO, BRIGHTSTONE
and SKYEPHARMA and its officers, directors, shareholders, employees and
agents from any and all liabilities and obligations arising out of or
related to the GJT Collaboration Agreement which have accrued prior to
the Effective Date and are actually known by GENSIA. In no event shall
the foregoing release apply to obligations and liabilities of GENTA
JAGO, BRIGHTSTONE or SKYEPHARMA owing to third parties.
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ARTICLE 4
INDEMNIFICATION
4.1 Indemnification Provision. Each of SKYEPHARMA, BRIGHTSTONE AND GENTA
JAGO severally agree to indemnify GENSIA and hold GENSIA harmless from
and against all losses, liabilities, damages and expenses, including
reasonable attorneys' fees and costs, incurred as a result of any
claim, demand, action or other proceeding arising from the acts or
omissions of SKYEPHARMA, BRIGHTSTONE AND GENTA JAGO, respectively,
under the GJT Collaboration Agreement accruing on and after the
Effective Date. GENTA JAGO further agrees to indemnify GENSIA and hold
GENSIA harmless from and against all losses, liabilities, damages and
expenses, including reasonable attorneys' fees and costs, arising from
liabilities and obligations of GENSIA to GENTA JAGO arising out of or
related to the GJT Collaboration Agreement which liabilities and
obligations have accrued prior to the Effective Date and are actually
known by GENTA JAGO; provided, however, that in no event shall
SKYEPHARMA, BRIGHTSTONE OR GENTA JAGO indemnify GENSIA in respect of
obligations and liabilities of GENSIA owing to third parties. GENSIA
agrees to indemnify GENTA JAGO and hold GENTA JAGO harmless from and
against all losses, liabilities, damages and expenses, including
reasonable attorneys' fees and costs, arising from liabilities and
obligations of GENTA JAGO to GENSIA arising out of or related to the
GJT Collaboration Agreement which liabilities and obligations have
accrued prior to the Effective Date and are actually known by GENSIA;
provided, however, that in no event shall GENSIA indemnify GENTA JAGO
in respect of obligations and liabilities of GENTA JAGO owing to third
parties. GENSIA agrees to indemnify SKYEPHARMA, BRIGHTSTONE or GENTA
JAGO and hold each of them harmless from and against all losses,
liabilities, damages and expenses, including reasonable attorneys' fees
and costs, arising from liabilities and obligations of GENSIA owing to
third parties related to the GJT Collaboration Agreement, provided,
however, that the foregoing indemnification shall not apply to losses,
liabilities, damages and expenses of the indemnified parties incurred
as a result of the operation of the first sentence of this Section 4.1.
The foregoing notwithstanding, in no event will any party hereto be
required to indemnify another party hereunder for any loss, liability,
damage or expense to the extent it is caused by acts of such
indemnified party constituting gross negligence or willful misconduct
or constituting a breach of this Agreement.
4.2 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Section 4 shall promptly notify the
indemnifying party (the "Indemnitor") of any claim, demand, action or
other proceeding in respect of which the Indemnitee intends to claim
such indemnification, and the Indemnitor shall have the right to
participate in, and, to the extent the Indemnitor so desires, jointly
with any other Indemnitor similarly noticed, to assume the defense
thereof with counsel selected by the Indemnitor, provided, however,
that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitee. The indemnity
obligations under this Section 4 shall not apply to amounts paid in
settlement of any claim, demand, action or other proceeding if such
settlement is effected without the consent of the Indemnitor, which
consent shall not be unreasonably withheld. The failure to deliver
notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to
the Indemnitee under this Section 4, but the omission so to deliver
notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Section 4. The
Indemnitor may not settle the action or otherwise consent to an adverse
judgment in such action that diminishes the rights or interests of the
Indemnitee without the express written consent of the Indemnitee, which
consent shall not be unreasonably withheld. The Indemnitee, its
employees
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<PAGE>
and agents shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability
covered by this indemnification.
ARTICLE 5
AMENDMENTS TO THE GJT COLLABORATION AGREEMENT
The GJT Collaboration Agreement is hereby amended as follows:
5.1 The reference to GENTA JAGO in the ingress of the GJT Collaboration
Agreement:
JOBEWOL INVESTMENTS BV (proposed to be renamed GENTA JAGO
TECHNOLOGIES BV), a Dutch corporation ("Technologies"), having
a place of business located at Vijzelstraat 32, NL-1017
Amsterdam, Netherlands,
shall be deleted and replaced by the following:
GENTA JAGO TECHNOLOGIES BV, A DUTCH COMPANY ("TECHNOLOGIES"),
HAVING A PLACE OF BUSINESS AT GRUNDSTRASSE 12, CH-6343
ROTKREUZ, SWITZERLAND,
5.2 In Section 1.2, the qualifying threshold of voting stock or other
ownership interest shall be increased from at least forty percent (40%)
to MORE THAN FIFTY PERCENT (50%).
5.3 Section 1.11 shall be deleted in its entirety and replaced by the
following new Section:
1.11 "GEOMATRIX(R) TECHNOLOGY" SHALL MEAN THE ORAL CONTROLLED-RELEASE
DRUG DELIVERY AND RELATED TECHNOLOGY LICENSED TO TECHNOLOGIES BY
JAGOTEC AG WHICH UTILIZES A HYDROPHILIC DRUG-CONTAINING MATRIX TABLET
WHICH CONTROLS THE RELEASE OF THE DRUG THROUGH THE USE OF ONE OR MORE
BARRIER LAYERS, TOGETHER WITH ALL IMPROVEMENTS THEREON AND THERETO.
5.4 Section 2.5 shall be deleted in its entirety and replaced by the
following new Section:
2.5 RIGHTS TO GEOMATRIX(R) TECHNOLOGY. TECHNOLOGIES REPRESENTS AND
WARRANTS THAT IT HAS THE EXCLUSIVE RIGHT AND LICENSE FOR SALE AND USE
IN THE FIELD UNDER THE PATENT RIGHTS, THE GEOMATRIX(R) TECHNOLOGY AND
THE KNOW-HOW NECESSARY AND REQUIRED TO GRANT THE LICENSES UNDER ARTICLE
6.1 BELOW, AND THAT IT HAS THE RIGHT TO GRANT THE LICENSES HEREUNDER.
5.5 Section 14.4 shall be amended by the following new sub-section
14.4 TERMINATION OF THE LICENSE AGREEMENTS.
14.4.1 IN THE EVENT THAT THE LICENSE AGREEMENT IS TERMINATED PRIOR TO
THE EXPIRATION OF THE LAST TO EXPIRE OF THE PATENTS LICENSED TO
TECHNOLOGIES IN THE TERRITORY, THEN JAGOTEC SHALL GRANT A DIRECT
LICENSE TO BRIGHTSTONE WHEREUNDER THE SAME LICENSE RIGHTS AS ARE
GRANTED UNDER THE LICENSE AGREEMENT TO TECHNOLOGIES ARE DIRECTLY
GRANTED TO BRIGHTSTONE. IN THIS EVENT JAGOTEC SHALL ASSUME ALL RIGHTS
AND OBLIGATIONS OF TECHNOLOGIES UNDER THIS AGREEMENT AND SHALL PROMPTLY
CURE ALL DEFAULTS OF TECHNOLOGIES UNDER THIS AGREEMENT, IF ANY.
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<PAGE>
14.4.2 NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION 14.4, NO
ACTION TAKEN BY JAGOTEC AND/OR BRIGHTSTONE TO CONTINUE OR NOT TO
CONTINUE THE LICENSE SHALL RELIEVE TECHNOLOGIES FROM ANY LIABILITY FOR
ANY UNCURED DEFAULTS UNDER THIS AGREEMENT OR THE LICENSE AGREEMENTS,
AND SUCH ACTION BY JAGOTEC AND/OR BRIGHTSTONE SHALL BE WITHOUT
PREJUDICE TO ANY OTHER RIGHTS OR REMEDIES JAGOTEC AND/OR BRIGHTSTONE
MAY HAVE IN LAW OR EQUITY.
5.6 In Section 20.1, the notice addresses to BRIGHTSTONE and Technologies
are amended as follows:
If to BRIGHTSTONE: BRIGHTSTONE PHARMA INC.
109 MacKenan Drive
Cary, NC 27511, U.S.A.
att: Joseph F. Bozman, Jr.
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<PAGE>
with copies to: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
att: Company Secretary
and: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
att: Dr. Thomas M. Rinderknecht
If to TECHNOLOGIES: GENTA JAGO TECHNOLOGIES BV
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz
att: Management Committee
with copies to: remains unchanged
5.7 Section 20.6 (Non-Competition) shall be deleted in its entirety.
ARTICLE 6
CONFIDENTIALITY
6.1 For a period of ten years from the Effective Date, GENSIA shall
maintain in confidence and shall not use in any way information and
data resulting from or related to the development of the Products under
the GJT Collaboration Agreement and, to the extent not included in the
foregoing, information supplied by GENTA JAGO and marked "Confidential"
(collectively the "Information").
6.2 The obligation not to disclose or use Information shall not apply to
any part of such Information that (a) is or becomes patented, published
or otherwise part of the public domain other than by acts of GENSIA or
its Affiliates or sublicensees in contravention of this Agreement, (b)
is disclosed to GENSIA or its Affiliates or sublicensees by a Third
Party, provided that such Information was not obtained by such Third
Party directly or indirectly on a confidential basis, (c) prior to
disclosure to GENSIA was already in possession of GENSIA or its
Affiliates or sublicensees, provided such Information was not obtained
directly or indirectly from GENTA JAGO under the GJT Collaboration
Agreement, or (d) is disclosed in a press release agreed to by all
parties hereto. GENSIA agrees that it shall not, directly or
indirectly, perform research and development on, promote, sell or
distribute another sustained release formulation of Nifedipine in the
Territory, provided, however, that the foregoing non-competition
obligation shall not apply to GENSIA in the event of a change of
control (as defined in Section 13.2.4 of the License and Collaboration
Agreement between GENSIA and BMCT).
6.3 Furthermore, GENSIA shall not disclose to any third party any of the
terms or conditions of the GJT Collaboration Agreement or this
Agreement without the prior written consent of the other parties
hereto, except where and to the extent required by applicable law.
Notwithstanding the foregoing, prior to the Effective Date, the parties
hereto shall agree on the substance of
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<PAGE>
information to describe the terms of this transaction, which
information may be disclosed by GENSIA without the consent of the other
parties hereto.
ARTICLE 7
CLOSING, CONDITION PRECEDENT AND EFFECTIVE DATE
7.1 The closing of the transaction contemplated hereby ("Closing") shall
take place at the offices of Bryan Cave LLP, counsel for BMCT, 700
Thirteenth Street, N.W., Washington, D.C., or at such other place as
the parties may agree at 1:00 p.m. EST on February 24, 1997, provided
that the following conditions precedent have been fulfilled:
(a) GENSIA, JAGOTEC, BRIGHTSTONE and SKYE PHARMA shall have agreed
upon and duly executed an assignment agreement (hereinafter
the "JAGOTEC Assignment") providing for the assignment of all
of GENSIA's rights and obligations under the License Agreement
to, and the assumption thereof by, BRIGHTSTONE under terms and
conditions reasonably acceptable to all parties thereto; and
(b) GENSIA, JAGO PHARMA, BRIGHTSTONE and SKYE PHARMA shall have
agreed upon and duly executed an assignment agreement
(hereinafter the "JAGO PHARMA Assignment") providing for the
assignment of all of GENSIA's rights and obligations under the
Supply Agreement to, and the assumption thereof by,
BRIGHTSTONE under terms and conditions reasonably acceptable
to all parties thereto; and
(c) GENSIA, BMCT, BRIGHTSTONE and SKYE PHARMA shall have agreed
upon and duly executed an assignment agreement (hereinafter
the "BMPC Assignment") providing for the assignment of all of
GENSIA's rights and obligations under the BMPC Agreement to,
and the assumption thereof by, BRIGHTSTONE under terms and
conditions reasonably acceptable to all parties thereto.
7.2 Provided that the Closing shall take place as provided hereinbefore,
the "Effective Date" of this transaction shall be October 1, 1996.
ARTICLE 8
MISCELLANEOUS
8.1 This Agreement embodies the entire understanding among the parties
hereto and supersedes any prior representations, agreements,
arrangements or understandings among them regarding the subject matter
hereof, including but not limited to the letter of intent dated October
17, 1996. There are no representations, agreements, arrangements or
understandings, oral or written, among the parties hereto regarding the
subject matter hereof which are not fully expressed herein.
8.2 No change, modification, extension, termination or waiver of this
Agreement, or any provision herein contained, shall be valid unless
made in writing and duly signed by authorized representatives of the
parties hereto.
8.3 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date first written above.
GENSIA, INC.
/s/David F. Hale
- - - ---------------------------------
By: David F. Hale
Its: Chairman, President and CEO
GENTA JAGO Technologies B.V.
/s/ /s/Thomas H. Adams
- - - --------------------------------- ---------------------------------
By: By: Thomas H. Adams, Ph.D.
Its: Managing Director Its: Managing Director
BRIGHTSTONE PHARMA INC.
/s/
- - - ---------------------------------
By:
Its: President
SKYE PHARMA PLC
/s/
- - - ---------------------------------
By:
Its: Chairman
EXHIBIT 10.89
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT AND MARKETING AGREEMENT
THIS AGREEMENT, is made as of the Effective Date (as defined below), by
and between APOTHECON, INC., a Delaware corporation, with offices at 777
Scudders Mill Road, Plainsboro, New Jersey 08536, USA, (hereinafter referred to
as "APOTHECON") and GENTA JAGO TECHNOLOGIES BV, a Dutch company, having offices
at Grundstrasse 12, 6343 Rotkreuz, Switzerland (hereinafter referred to as
"GJT").
RECITALS
WHEREAS, GJT has the expertise and skill needed to develop
pharmaceutical preparations in * formulation of * (hereinafter, as more fully
defined below, referred to as the "Product"); and
WHEREAS, GJT (i) is the exclusive licensee of Jagotec AG, a Swiss
corporation, of certain patent rights covering the GEOMATRIX formulation of the
Product and (ii) is in possession of certain know-how and technology regarding
the development, production and analytical methods of the Product (hereinafter,
as more fully defined below, referred to as "Know-how"); and
WHEREAS, APOTHECON is interested in developing, manufacturing, and
marketing the Product throughout the world and receiving an exclusive license
under the relevant GEOMATRIX patent rights and Know- how for such purpose, and
GJT is willing to grant such exclusive license to APOTHECON; and
WHEREAS, all licenses and rights to make, have made, use and sell the
Product have been granted pursuant to a license agreement of even date herewith
between GJT and APOTHECON (said license agreement, as the same may be extended,
supplemented or changed hereafter, referred to hereinafter as the "* License
Agreement"); and
WHEREAS, the parties desire to provide herein for the development of
the Product, all upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the above premises and the mutual
promises and covenants set forth herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set forth in this Article 1:
* that (i) where marketed within the United States, is classified by
FDA as an * under the Federal Food, Drug and Cosmetic Act, as amended, and (ii)
where marketed outside the United States, is classified, marketed and/or
designated as a *.
"Adverse Drug Reaction (ADR)" shall have the meaning ascribed to such
term under applicable law, but in any event shall include any reaction, side
effect or other undesirable event (such as side effects, injuries, toxicity or
sensitivity reaction, or any unexpected incidence and the severity thereof) that
is associated with the use of the Product in humans, whether or not the event is
considered drug related, including, but not limited to, the following: an
adverse event occurring in the course of the use of the Product in professional
practice, including use in clinical studies; drug overdose, whether accidental
or intentional; an adverse event occurring from drug abuse; an adverse event
occurring from drug withdrawal; any significant failure of expected
pharmacological or biological actions;
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
and any adverse event associated with the clinical use, study, investigation,
testing and marketing of the Product or any other product (to the extent such
adverse event pertains to the use or incorporation of the GEOMATRIX Technology
in such product). In addition, when an ADR is herein referred to as "serious",
it shall have the meaning ascribed to such term under applicable law, but in any
event shall include one or more of the following: death; admission to a hospital
or prolongation of a hospital stay; permanent or substantially disabling
condition; life- threatening condition; overdose; congenital anomaly; or cancer.
Also, when an ADR is herein referred to as "unexpected", it shall have the
meaning ascribed to such term under applicable law, but in any event shall
include (x) for a non-marketed product, an experience that is not identified in
nature, severity or frequency in the current clinical investigator's
confidential information brochure, and (y) for a marketed product, an experience
which is not listed in the current labeling for such product, and includes an
event that may be symptomatically and pathophysiologically related to an event
listed in the labeling but differs from the event because of increased frequency
or greater severity or specificity.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of another Person if
it/he/she owns, or directly or indirectly controls, fifty percent (50%) or more
of the voting stock or other ownership interest of the other Person, or if
it/he/she directly or indirectly possesses the power to direct or cause the
direction of the management and policies of the other Person by any means
whatsoever. For example, Jagotec and Jago Pharma AG are Affiliates of GJT.
"Developmental Program" shall mean a development program in which the
different activities to be performed by GJT and APOTHECON shall be listed
(together with a respective time schedule for the development of the Product to
be carried out by GJT and/or APOTHECON), as the case may be, according to such
"Project Addendum" (and as amended or supplemented by mutual written agreement
from time to time hereafter), with the initial Project Addendum attached as
Exhibit 1.1(i) hereto.
"Effective Date" means the date when this Agreement is executed and
delivered by the parties hereto, and (i) APOTHECON shall have received duly
executed originals of all Waivers and Consents required under Section 3.6
hereof, (ii) all opinions of counsel contemplated by section 3.7 hereof have
been received by APOTHECON, and (iii) Jagotec and Jago Pharma shall have duly
executed the acknowledgment on the signature page of this Agreement.
"...exclusive...." means, with respect to the grant of a license or
sublicense, or to the appointment of a distributor, a license, sublicense, or
appointment whereby the licensee's, sublicensee's or appointee's rights are sole
and entire, and operate to exclude all others, including the licensor,
sublicensor and appointor, as the case may be, and may be exercised by the
licensee or sublicensee itself or through one or more of its Affiliates. An
exclusive licensee (and permitted sublicensees) may sell and distribute Products
through agents and distributors under exclusive or nonexclusive arrangements in
any country in the Territory. ". . . semi-exclusive. . . .", with respect to the
grant of a license or sublicense, or to the appointment of a distributor, shall
be interpreted in the same manner as the preceding sentence, except that the
licensor, sublicensor or appointor, as the case may be, may also use the
licensed, sublicensed or appointed rights itself or through one or more of its
Affiliates.
"FDA" shall mean the United States Food and Drug Administration, or any
successor agency having regulatory jurisdiction over the manufacture,
distribution and sale of drugs in the United States.
"First Commercial Sale" shall mean, with respect to any Product, the
first sale for use or consumption by the general public of such Product in a
particular country in the Territory after the required marketing approval and
pricing approval, if any, has been granted by the governing health authority of
such country.
"GEOMATRIX Agreements" means the GEOMATRIX License Agreement, the
GEOMATRIX License Agreement, the GEOMATRIX Supply Agreement, and the GEOMATRIX
Research and Development Agreement (each, individually, a "GEOMATRIX
Agreement").
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<PAGE>
"GEOMATRIX License Agreement" shall mean the Restated GEOMATRIX License
Agreement dated as of May 12, 1995 between GJT and Jagotec.
"GEOMATRIX Manufacturing License Agreement" shall mean the Restated
GEOMATRIX Manufacturing License Agreement dated as of May 12, 1995 between GJT
and Jagotec.
"GEOMATRIX Research and Development Agreement" means the Restated
GEOMATRIX Research and Development Agreement dated as of May 12, 1995 by and
among GJT, Jago Pharma AG, as Swiss corporation, Genta Incorporated, a Delaware
corporation, and Genta Jago Delaware, L.L.C., a Delaware limited liability
company.
"GEOMATRIX Supply Agreement" means the Restated GEOMATRIX Supply
Agreement dated as of May 12, 1995 by and among GJT and Jago Pharma AG, as Swiss
corporation.
"GEOMATRIX Technology" means all oral controlled-release drug delivery
and related technology which utilizes a hydrophilic drug-containing matrix *
which controls the release of the drug through the use of one or more barrier
layers, together with all improvements thereon and thereto, all to the extent
and only to the extent that GJT now has or hereafter will have the right to
grant licenses, immunities or other rights thereunder.
"Gross Margin" shall have the meaning ascribed to such term in Section
7.2.2 of the * License Agreement.
"Jagotec" means Jagotec AG, a Swiss corporation, having a place of
business at Seestrasse 47, CH-6052 Hergiswil, Switzerland.
"Jago Pharma" means Jago Pharma AG, a Swiss corporation, having a place
of business at Eptingerstrasse 51, CH-4132 Muttenz, Switzerland.
"* License Agreement" means the agreement referred to in the recitals
above.
"Know-how" means all information and data, which is not generally
known, including, but not limited to, formulae, procedures, protocols,
techniques, preclinical and clinical developmental and technical data, and
results of experimentation and testing, which (a)(i) relate to the GEOMATRIX
Technology or the Product, or the manufacture or use of same, or (ii) are
necessary or useful to develop, make, use, sell or seek regulatory approval in a
country in the Territory to make, use or sell the Product, and (b) are developed
or acquired by or are under the control of a party to this Agreement.
"Manufacturing Cost" shall mean the cost to APOTHECON and its
Affiliates of * by APOTHECON or such Affiliates in the manufacture of all
products produced in the facility or facilities in which the Product is
manufactured. If the Product is manufactured in whole or in part by an
unAffiliated Third Party, the costs to be taken into account shall be the amount
paid to such Third Party plus any of the aforementioned costs that are incurred
in completing the manufacture and delivery of the Product.
"Net Sales" shall mean the applicable quantity of Product times "Net
Sales Price." It shall be determined at the point of sale from APOTHECON (or
from such of its Affiliates to whom APOTHECON may sell such Product) to a Person
not Affiliated with APOTHECON.
"Net Sales Price" of Product shall mean the invoiced sales price of the
Product billed to independent customers of APOTHECON who are not its Affiliates,
less (to the extent incurred and absorbed by APOTHECON or its Affiliates): (a)
credits, allowances, discounts and rebates to, and chargebacks from the account
of, such
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
independent customers for spoiled, damaged, out-dated, rejected or returned
Product; (b) actual freight and insurance costs in transporting the Product in
final form to such customers; (c) cash, quantity and trade discounts, rebates,
and other price adjustments or price reduction programs; (d) sales, use,
value-added and other direct taxes, or any other governmental charge imposed
upon the production, importation, use or sale of the Product; (e) customs
duties, surcharges and other governmental charges in connection with the
exportation or importation of the Product in final form; and (f) invoiced
amounts with respect to the Product which are first outstanding and unpaid for *
days or more during the applicable reporting period, less such invoiced amounts
outstanding and unpaid for * days or more which are received or recovered during
such reporting period; provided that such amounts under (f) shall not exceed *
of APOTHECON during the term hereof. Notwithstanding the foregoing, if any
Product is sold under * arrangements, then, prior to the First Commercial Sale
of such Product and thereafter promptly following the end of each calendar year,
APOTHECON and GJT shall * the "Net Sales Price" for sales of such Product under
such * arrangements. Such formula shall be based on such factors as the parties
* and shall appropriately and equitably allocate a sales price to Product sold
under such * arrangements.
"Patent Rights" shall mean(a) all patent applications heretofore or
hereafter filed or having legal force in any country in the Territory owned by
or licensed to GJT or its Affiliates or to which GJT or its Affiliates otherwise
acquires rights, which claim the GEOMATRIX Technology or the Product, or the
process of manufacture or use of the GEOMATRIX Technology or the Product,
together with any and all patents that have issued or in the future issue
therefrom, including utility, model and design patents and certificates of
invention, including but not limited to those patent applications and patents
listed on Exhibit 1.1 (ii) hereto, and (b) all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions, substitutions,
confirmations or additions to any such patents and patent applications; all to
the extent and only to the extent that GJI now has or hereafter will have the
right to grant licenses, immunities or other rights thereunder.
"Person" shall mean an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority, or any other form of entity not specifically listed herein.
"Product" shall mean a pharmaceutical composition containing *
(including all commonly used and known salts and acids thereof) which is *, and
which incorporates, is based on and is derived by use of the GEOMATRIX
Technology.
"Region I" shall mean all countries located *, and their respective
territories and possessions.
"Region II' shall mean all countries *, and their respective
territories and possessions.
"Region III" shall mean *, and their respective territories and
possessions.
"Region IV" shall mean all other countries of the world other than
those located in Regions I-III, and their respective territories and
possessions.
"Registration" shall mean any form and type of registration,
application, permit, license, authorization, approval, presentation or
notification being requested by any competent authorities, government or body in
a given country for the manufacturing, production, marketing, advertising,
distribution, sale, trade, import, export or use of the Products of such
authority, government or body, and shall include all acts, steps, applications,
presentations, statements or other things which are necessary or useful to
obtain the foregoing.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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"Research and Development Costs" shall mean (a) the following costs
reasonably incurred by GJT relating to its development and Registration
responsibilities hereunder for the Product: raw materials, energy, direct labor
(salary and benefits) and reasonable allocable direct (but not indirect)
overhead charges relating to the development and Registration of the Product,
plus (b) reasonable out-of-pocket or other expenses paid or accrued by GJT to
any Subcontractee performing any portion of such development and Registration,
provided that expenses paid to an Affiliate Subcontractee under this clause (b)
shall not exceed the amounts required to be paid under the GEOMATRIX Research
and Development Agreement. All such costs shall be determined and allocated in
accordance with generally accepted accounting principles, consistently applied.
"Royalty Term" shall mean, with respect to each Product in a given
country in the Territory in which the Product is sold by or through APOTHECON,
the term for which a Valid Patent Claim remains in effect, and which would be
infringed by the manufacture, use or sale of the Product in such country but for
the license rights granted to APOTHECON under this Agreement.
"Scale-Up" shall mean, with respect to the Product and a designated
Manufacturing facility, the process of developing a reliable and practical
method of manufacturing the Product in such designated manufacturing facility to
effectuate the orderly transition from laboratory production of the Product to
routine full-scale production of the Product in such designated facility in
quantities necessary for commercial sale. Without limitation, Scale-Up includes
(a) installation, evaluation and validation of the necessary equipment, (b)
establishment, evaluation, validation and finalization of the necessary
production and process controls, (c) demonstration of the ability to produce a
batch size of * of the proposed commercial production
batch for the Product at such facility, (d) demonstration of compliance with all
other applicable laws, regulations and good manufacturing practices, (e)
production of GMP bio-batches for pivotal clinical trials, and (f) transposition
to routine full scale production.
"Specifications" of the Product shall have the meaning set forth in
Section 4.2 hereof.
"Subcontractee" shall have the meaning ascribed to such term in Article
14 hereof.
"Territory" shall mean *.
"Third Party" means any Person other than GJT or APOTHECON, except as
otherwise specifically indicated.
"Valid Patent Claim" shall mean a claim of an issued and unexpired
patent included within the Patent Rights (or a claim under a patent application
within the Patent Rights that is being diligently prosecuted by GJT or its
Affiliates), which has not been held permanently revoked, or declared
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappeased within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise (other than as required by applicable
law to initiate the reissue of a patent).
"Validated Manufacturing Scale-Up" shall mean, with respect to the
Product and a designated Manufacturing facility, a reliable and practical method
of manufacturing the Product in such designated manufacturing facility for
routine full-scale production of the Product in such designated facility in
quantities necessary for commercial sale. Without limitation, Validated
Manufacturing Scale-Up includes (a) installation, evaluation and validation of
the necessary equipment, (b) establishment, evaluation, validation and
finalization of the necessary production and process controls, (c) successful
demonstration and validation of the ability to produce GMP batch sizes equal to
one hundred percent (100%) of the proposed commercial production batch for the
Product at such facility, (d) demonstration of compliance with all other
applicable laws, regulations and good manufacturing practices, and (e)
transposition to routine full scale production.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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ARTICLE 2
OWNERSHIP OF RIGHTS
2.1 Ownership of Rights. [Intentionally omitted.]
2.2 No Taking Subject To. Except as may be expressly set forth in this
Agreement, any sublicense or other rights granted APOTHECON hereunder are not
subject to the terms and conditions of the GEOMATRIX License Agreement, the
GEOMATRIX Manufacturing License Agreement, the GEOMATRIX Supply Agreement or the
GEOMATRIX Research and Development Agreement, and APOTHECON shall not be bound
by any obligations or undertakings of GJT under any of the aforesaid agreements.
2.3 Enforcement of GEOMATRIX Agreements. GJT covenants and agrees to
comply with its duties and obligations under the GEOMATRIX License Agreement,
the GEOMATRIX Manufacturing License Agreement, the GEOMATRIX Supply Agreement,
and the GEOMATRIX Research and Development Agreement (collectively, the
"GEOMATRIX Agreements"), and to use best efforts to enforce its rights and
privileges under each such GEOMATRIX Agreement so as not to diminish or
adversely affect in any material respect the rights and privileges available to
APOTHECON under this Agreement. GJT agrees not to terminate any such GEOMATRIX
Agreement or waive in any material respect any rights or privileges available to
it under any such GEOMATRIX Agreement which would have the effect of diminishing
or adversely affecting in any material respect the rights and privileges
available to APOTHECON hereunder or which would have the effect of diminishing
or adversely affecting in any material respect GJT's agreements or obligations
hereunder, without the prior written consent of APOTHECON.
ARTICLE 3
GRANT OF LICENSE; BACK-UP SUPPLY; CONSENT AND WAIVER
3.1 Grant of License. [Intentionally omitted].
3.2 Manufacture and Supply of Product.
3.2.1 Subject to the terms of this Agreement, and where referenced the
* License Agreement, APOTHECON will arrange, through itself and/or its
Affiliate(s) and/or a Third Party, to manufacture and supply the
Product needed for GJT to conduct all testing and other activities
contemplated by or through it under the Development Program (and
section 4.6 hereof) or needed to register the Product in a given
country. APOTHECON will also be responsible for arranging and
coordinating, either through itself or its Affiliates or through a
Third Party, for the supply of the Product as will be used for all
other commercial purposes, and for procuring and supplying the raw
material to make the Product (other than raw material previously
purchased by GJT for the Development Program).
3.2.2.1 GJT shall remain solely responsible to APOTHECON (whether or
not delegated by GJT) for all matters relating to GJT's
responsibilities hereunder, including without limitation the
following matters: bioequivalence and clinical testing;
transfer and training in the use of the GEOMATRIX Technology
by APOTHECON, its Affiliates, and any contract or back-up
supply manufacturer selected by APOTHECON; and prompt and
complete training and consulting assistance in the use of the
GEOMATRIX Technology so that APOTHECON may, through itself
and/or its Affiliates or a Third Party, initiate and complete
Scale-Up (including Validated Manufacturing Scale-Up) on a
timely basis.
3.2.2.2 As soon as reasonably practicable after the date of the
Agreement, and from time to time thereafter during the term
hereof as additional information becomes available, GJT shall
provide, and/or shall cause its Affiliates to provide, to
APOTHECON (and any contract and/or back-up supply
manufacturer(s) designated by APOTHECON in accordance with
this Agreement and, where referenced, the * License Agreement)
with all Know-How, information regarding the Patent Rights,
technical assistance and such other
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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cooperation as may be reasonably requested by APOTHECON and
is available from GJT from time to time hereunder to enable
APOTHECON (and any such contract and/or back-up supply
manufacturer(s) designated by APOTHECON) to obtain all
regulatory approvals required (i) to effect Scale-Up
(including Validated Manufacturing Scale-Up), (ii) to
qualify, file and obtain registration as a manufacturer and
supplier (or back-up supplier, as the case may be) of the
Product, and (iii) to make and/or have made Products in
accordance with the terms of this Agreement and applicable
regulatory filings therefor. Additionally, GJT shall make its
and/or its Affiliates' employees and consultants available
for consultation, at such time and place as APOTHECON (and
any such contract and/or back-up supply manufacturer(s)
designated by APOTHECON) reasonably requests, regarding the
scale-up and manufacture of Products. Technical assistance
supplied by GJT and/or its Affiliates for such purposes shall
be without additional charge for such services to APOTHECON
(and any such contract and/or back-up supply manufacturer
designated by APOTHECON), except to the extent reimbursement
for such charge is already included within the budgets
pursuant to section 4.6 hereof, and provided that APOTHECON
will reimburse GJT and/or its Affiliates for any reasonable *
incurred by GJT or its Affiliates in connection therewith not
covered by such budgets and for any other reasonable *
(including *) needed to train an entity (other than APOTHECON
and one unAffiliated Third Party selected by APOTHECON as a
contract or back-up supplier) in the use of the GEOMATRIX
technology.
3.3 Other Suppliers. [Intentionally omitted.]
3.4 Initiation of Back-up Supply. [Intentionally omitted.]
3.5 Sublicenses to Certain Third Parties. [Intentionally omitted].
3.6 Consent and Waiver Agreements. As a material inducement to
APOTHECON's willingness to enter into this Agreement, GJT will cause,
contemporaneously with the execution and delivery of this Agreement, each of the
Consent and Waiver Agreements in the form attached as Exhibits 3.6(i)-(iv)
hereto to be executed and delivered to APOTHECON.
3.7 Opinions of Counsel. Contemporaneously with the execution and
delivery of this Agreement, GJT will deliver opinions of counsel to itself,
Jagotec and Jago Pharma AG, and an opinion of counsel to Genta Incorporated, in
form and substance satisfactory to APOTHECON.
ARTICLE 4
PRODUCT DEVELOPMENT
4.1 Information Exchange. Promptly following the Effective Date and
thereafter as it becomes available during the term of this Agreement, each party
agrees, subject to conflicting third party rights, to promptly furnish the other
in writing all technical information and pre-clinical and clinical data
developed or acquired relating to the Product that comes into the control or
possession of a party, including all information in the nature of improvements
or modifications to the aforesaid and all toxicological, analytical, chemical
data, and the like, provided, that the foregoing shall not be construed as
covering, or requiring APOTHECON to disclose, any manufacturing know-how or
trade secrets (including but not limited to procedures, techniques, and
processes) of APOTHECON, its Affiliates or its contract suppliers. All such
information exchanged shall be treated as Confidential Information of the
disclosing party.
4.2 Product Specifications. The parties agree to target, and
acknowledge that the costs of Product development set forth in section 4.6 below
contemplate, the development of the Product *. The parties may in their
discretion determine hereafter to pursue different or additional strengths for
the Product, in which event the parties will negotiate mutually acceptable terms
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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and conditions for the development and marketing of same, with such terms to be
similar, where practicable, to the terms and conditions contained herein, it
being further understood that APOTHECON will fund the costs to develop and
register any such additional strengths.
The dosage strength, formulation, quality and other specifications
("Specifications") of the furnished Product shall depend in relevant part on the
following items:
i) Conformity to current USP monograph(s) for all pertinent
inactive and active ingredients;
ii) election of dosage strength and formulation (the parties
agreeing initially to target *, and to determine hereafter
(based upon estimates of the cost of development thereof)
whether also to pursue development of *); and
iii) GMP-related specifications resulting from GJT's Product
validation.
The parties shall jointly agree upon and memorialize in writing the
Specifications for the Product at the earliest practicable time; the initial
Specifications are attached as Exhibit 4.2 hereto. Hereafter, changes or
supplements to the Specifications may be made only by mutual written agreement.
4.3 APOTHECON Product Development Duties. Subject to section 6.2 of the
* License Agreement, APOTHECON will, at its expense, use commercially reasonable
efforts to prepare or have prepared (by itself or through an Affiliate) the
necessary documentation, and shall take or have taken all necessary actions, to
obtain and maintain all Registrations (e.g., the ANDA in the United States) in
its name for the marketing of the Product during the term of this Agreement in
those countries in the Territory in which, and for so long as, APOTHECON in its
discretion considers it commercially feasible to do so. APOTHECON shall use
commercially reasonable efforts to complete such Registrations in its own name
(or in the name of an Affiliate, if APOTHECON believes that such Registration
would be better effected by an Affiliate in such country) as quickly as
commercially feasible. GJT will have the right to review and comment on all such
regulatory applications and other submissions prior to filing, and APOTHECON (or
such Affiliate) will give due consideration to any reasonable requests of GJT.
APOTHECON shall inform GJT promptly in writing on any unforseen material
problems, delays or requirements in connection with such Registrations.
APOTHECON (or such Affiliate) shall maintain such Registrations for the Product
in each country in the Territory in which the Product is sold during the term of
this Agreement, or such portion thereof as APOTHECON (or an Affiliate) is
selling the Product in such country, and thereafter for such period as required
by applicable law or regulation. APOTHECON (or such Affiliate) will be
responsible for all costs incurred by it in connection with filing and
maintaining such Registrations.
GJT shall, or shall cause its Affiliates, Subcontractees and licensors
of the GEOMATRIX Technology to, provide such advice and technical assistance as
APOTHECON (or its Affiliates) may reasonably request in order to prepare, obtain
and maintain such Registrations. APOTHECON (and any pertinent Affiliate) will
have the right to review, copy, access, cross-reference and use all development,
manufacturing and testing information obtained or developed by any of them as
APOTHECON (or such Affiliate) reasonably considers necessary to obtain such
Registrations. All material provided by GJT toward that end will be held in
confidence (subject to regulatory and filing requirements) under Article 10
hereof.
APOTHECON shall be responsible for all costs incurred by it in
connection with such Registrations. GJT shall be responsible for any costs
incurred by it in connection with assisting APOTHECON to obtain and maintain
same, to the extent not subsumed within the payments contemplated by section 4.6
hereof.
4.4 GJT Product Development Duties. Subject to Article 4.7:
4.4.1 GJT will use commercially reasonable efforts to conduct or have
conducted such research, formulation, development, testing, and
preclinical and human clinical trials and bioequivalence testing as are
necessary or desirable to obtain all required Registrations for the
Product in those countries in the Territory selected for
commercialization by APOTHECON, in accordance with the terms of this
Agreement
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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and the Development Program. GJT shall conduct or have conducted such
activities in a diligent and efficient manner and in compliance in all
material respects with all applicable governmental and legal
requirements, all applicable good laboratory and clinical practices,
and all applicable standards of practice established by applicable
regulatory authorities. GJT shall allocate all necessary resources,
including without limitation facilities, equipment, time and use of
personnel with sufficient skills and experience, to perform and
accomplish its development obligations hereunder.
4.4.2 GJT will use commercially reasonable efforts to complete all
bioequivalence testing and all pivotal clinical studies, and to assist
APOTHECON in completing and demonstrating Validated Manufacturing
Scale-Up, for the Product by *.
4.5 Development and Registration Reports. In addition to such other
informal reports and meetings as the parties may mutually agree to conduct, each
party shall inform the other of all material activities and results regarding
its development and Registration of the Product, as follows:
4.5.1 Within * during the term of the Agreement (or more frequently as
APOTHECON may request), GJT shall prepare and deliver to APOTHECON a
written summary report which shall describe, with respect to each
Product, the status of such research, development, and clinical trials
and such Registrations. Not less than * to the commencement of any
human clinical trials of the Product, GJT shall provide APOTHECON with
a reasonably detailed written report summarizing such proposed human
clinical trials.
4.5.2 Not less than * to the filing or submission by APOTHECON of any
regulatory filing or submission to an applicable regulatory authority
regarding Registration to market the Product, APOTHECON shall provide
GJT with a reasonably detailed written report summarizing such proposed
regulatory filing or submission.
4.5.3 Each party shall provide the other with prompt notice of all
regulatory filings and submissions to, and all responses and approvals
obtained from, regulatory authorities regarding any Registration sought
by a Party for the Product. Upon written request by the other party, a
copy of any filing and submission made by a party to a regulatory
authority, as well as the regulatory authority's written response
thereto, shall be provided to the requesting party.
4.6 Development Cost Funding. Subject to section 4.7:
4.6.1 * shall be responsible for * incurred by *, after July 1, 1995,
in the formulation, development and testing of the Product in the
Territory, * as provided below. GJT will be responsible for all
research and development costs in excess of such amounts that may be
incurred by it or its Subcontractees in connection therewith, other
than * associated with the conduct of pivotal clinical trials for which
* shall be responsible. GJT has estimated, based upon currently
available information and in recognition of incomplete regulatory
guidance available at this time, that its external costs associated
with the conduct of such pivotal clinical studies will be in the range
of *, it being further understood that if actual costs are different
(including materially different) from such estimate, GJT shall not be
considered to have breached this Agreement by reason of such
difference, unless GJT's estimate was made in bad faith.
GJT's reasonable and actual Research and Development Costs will be
reimbursed by APOTHECON subject to section 4.6.2 and pursuant to the
following budget and milestones, as follows:
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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GJT will provide * to APOTHECON of actual Research and Development
Costs expended by GJT under the budget for each milestone established
below. When an advance against the full budget for a milestone has been
fully expended, APOTHECON will thereafter reimburse GJT for its
reasonable and actual Research and Development Costs incurred under
such milestone, up to the total amount budgeted for such milestone,
pursuant to such * submitted by GJT; provided, however,
that any individual charges * can be submitted for reimbursement by GJT
separately from the *, APOTHECON will pay same, to the
extent not contested by it in good faith, within thirty (30) days
thereafter.
Upon conclusion of each milestone, GJT will submit a detailed
reconciliation of actual Research and Development Costs incurred by it
under such milestone against budget. Any * by APOTHECON will be *
payments to be made under the succeeding milestone (and against outside
clinical expenses * by it); any excess actual Research and Development
Costs reasonably incurred by * may be * by it against any favorable
budget variance arising under a succeeding milestone or will be
reimbursed by APOTHECON following conclusion of the work under all
milestones against an * reserved by * for same. Should the payments
made by APOTHECON in the aggregate following conclusion of the work
under all milestones exceed the actual direct costs reasonably incurred
by GJT, the difference will be repaid to APOTHECON within 30 days
following ANDA approval.
The budget and payment milestones are as follows:
4.6.1.1 Contract signing/Feasibility Studies. (This includes
formulation development, analytical methods development, and * product
*). The budget for this milestone is * which will be paid upon contract
signing.
4.6.1.2 Initiation of Scale-Up Activities. (This includes raw materials
previously purchased by *, * Scale-Up activities, and analytical
methods validation). The budget for this milestone is * of which will
be paid upon initiation of work for scaling up the manufacturing
processes and analytical methods validation for production of the
bio-batch, and the balance to be paid as provided above in this section
4.6.1.
4.6.1.3 Bio-batch manufacturing. (This includes transfer of methods and
GEOMATRIX technology. Actual manufacturing and raw materials purchase
will be handled directly by *, other than raw materials purchase for *
which have previously been purchased by * and will paid for separately
by * pursuant to section 4.6.1.2). The budget for this milestone is *
of which will be paid upon initiation of work for manufacture of the
bio-batch, and the balance to be paid as provided above in this section
4.6.1.
4.6.1.4 Clinical studies and laboratory trials. (This includes
preparation, initiation and completion of all clinical trials,
compilation of data for * section, and stability testing). The budget
for this milestone * exclusive of GJT's external costs to Third Parties
associated with the conduct of such pivotal clinical studies. * will be
paid upon initiation of work for the commencement and completion of the
pivotal clinical trials, and the balance to be paid as provided above
in this section 4.6.1.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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4.6.1.4.1 External Clinical Development Costs. GJT will
structure and present for APOTHECON's approval (not to be
unreasonably withheld) the clinical program (including
protocols and selection of Third Parties serving as CROs or
otherwise providing clinical services) required for Product
testing and approval, as well as the budget therefor
(including all amounts to be paid to such Third Parties for
the clinical work conducted by such Third Parties). GJT will
enter into appropriate agreements with such Third Parties
pursuant to Section 4.7, and APOTHECON will either reimburse
GJT for (or will pay directly to such Third Party) all amounts
actually paid (or owed) by GJT to such Third Parties for the
performance of such services in accordance with such budget(s)
and time lines therefor (and as the same may be changed,
supplemented or extended by mutual written agreement
thereafter), or, if not so budgeted, within 30 days after
presentation of an invoice and substantiating documentation by
GJT (to the extent not contested in good faith). GJT will
endeavor to structure such clinical program in a reasonably
cost-effective manner consistent with the time lines set forth
herein.
4.6.1.5 ANDA preparation. (This includes compilation of ANDA
and related assistance). The budget for this milestone * of
which will be paid upon initiation of this milestone, and the
balance to be paid as provided above in this section 4.6.1.
4.6.2 GJT will present the overall development budget for review,
comment and approval by APOTHECON. The parties will jointly determine
specific benchmarks to monitor the process of development. APOTHECON
will have the right to review and comment on all significant
development and testing activities prior to the start of these
activities and GJT will give due consideration to all reasonable
comments and requests made by APOTHECON. GJT will give APOTHECON a
reasonable period in which to conduct such review, and APOTHECON will
conduct its review and provide its comments within such reasonable
period, so as not to cause any undue delay in the commencement of such
activities. Upon conclusion of each of the milestones under 4.6.1.1,
4.6.1.2, 4.6.1.3, and 4.6.1.4 (and any other specific
benchmarks/milestones to which the parties may mutually agree) and
before proceeding to the next milestone, GJT must first receive
APOTHECON's written approval (not to be unreasonably withheld).
4.6.3 GJT will provide APOTHECON, at its request, with a *
reconciliation of actual Research and Development Costs of development
hereunder incurred against budget where the duration of, or costs
incurred against, a milestone is a period longer than *.
4.7 Consent and Waiver - Conforming Changes.
4.7.1 Notwithstanding any provision in this Agreement or in the
GEOMATRIX Research and Development Agreement to the contrary, and
subject to Article 11 hereof:
4.7.1.1 All applications filed by GJT or any other party to
the GEOMATRIX Research and Development Agreement
pursuant to its obligations under the GEOMATRIX
Research and Development Agreement as are necessary
or useful for the Registration of the Product shall
be filed in the name of, and be owned by, APOTHECON.
4.7.1.2 All data and results pertaining to the Product
generated by any party to the Research and
Development Agreement shall be owned solely by
APOTHECON. Concurrently with the execution and
delivery of this Agreement, GJT will turn over to
APOTHECON all data and results heretofore developed
by or for it pertaining to the Product. GJT will
thereafter report to APOTHECON in writing such data
and results developed by or for it not less
frequently than quarterly (monthly, if requested by
APOTHECON) and will transmit all such data to
APOTHECON by magnetic media or such other method as
APOTHECON may request.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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4.7.1.3 In the event that the GEOMATRIX Research and
Development Agreement should terminate, for whatever
reason and however effected, APOTHECON shall be
entitled, but shall not be obligated, to enter into
an agreement with any of the parties to said
GEOMATRIX Research and Development Agreement for the
development and registration of the Product on terms
and conditions acceptable to APOTHECON (and with
APOTHECON having the rights that GJT otherwise would
have had under such GEOMATRIX Research and
Development Agreement and with APOTHECON assuming
GJT's obligations under such GEOMATRIX Research and
Development Agreement to the extent such obligations
do not conflict with or are in addition to the
obligations that APOTHECON has under this Agreement).
4.7.2 GJT shall submit to APOTHECON a copy of (i) all reports,
statements, invoices, Product workplans, and budgets submitted to it by
any party to the GEOMATRIX Research and Development Agreement relating
to the Product, (ii) a copy of all reports relating to the Product
submitted to GJT under section 5.4 of the GEOMATRIX Research and
Development Agreement, and (iii) a copy of all submissions to, and all
responses and approvals obtained from, a regulatory authority relating
to the Product. If GJT should default in its obligations under the
GEOMATRIX Research and Development Agreement, APOTHECON shall have the
right, but shall not be under any obligation of any nature whatsoever,
expressly or impliedly, to (i) cure any such default, and/or (ii) pay
each party to the GEOMATRIX Research and Development Agreement (other
than GJT) directly thereafter for all services performed by it under
the GEOMATRIX Research and Development Agreement that pertain to the
Product and deduct and offset same from any monies owed by APOTHECON to
GJT under section 4.6 hereof (or, to the extent no such sums remain
owing by APOTHECON under said section 4.6, then against such amounts as
may be owed by APOTHECON under section 7.1 of the * License Agreement).
4.7.3 APOTHECON shall have the right to exercise the same audit rights
as GJT may exercise under section 4.6 of the GEOMATRIX Research and
Development Agreement, to the extent relating to the Product.
4.7.4 GJT shall defend, indemnify and hold APOTHECON harmless from and
against any and all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) that APOTHECON suffers
as a result of any claim, demand, action or other proceeding by any
Third Party arising from or relating to the * *, its directors,
officers, employees, consultants or agents in performing its
obligations under the GEOMATRIX Research and Development Agreement,
except to the extent such losses, liabilities, damages and expenses
arise from the * or its directors, officers, general partners,
employees, consultants, or agents. APOTHECON, as an Indemnitee, agrees
to adhere to and be bound by the terms of section 9.5 of the GEOMATRIX
Research and Development Agreement, as though such terms were fully set
forth herein (and with "Article 9" replaced by "Article 4 hereof").
ARTICLE 5
MANUFACTURE AND SUPPLY OF PRODUCT
5.1 Manufacture. APOTHECON shall manufacture or have manufactured
Products for all clinical and commercial purposes in accordance with prevailing
industry standards and in compliance in all material respects with all
applicable laws, regulations and other governmental requirements, all applicable
good manufacturing practices and all applicable standards of practice
established by applicable regulatory authorities. Without limiting the
generality of the foregoing, Product manufactured in the United States shall be
manufactured in accordance with CGMPs promulgated by the FDA and pursuant to all
necessary DMFs filed with FDA. APOTHECON shall be responsible for all costs of
any nature incurred by or on behalf of it in connection with the manufacture of
the Product.
5.2 Product Registrations.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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5.2.1 APOTHECON shall prepare or have prepared, on behalf of itself, an
Affiliate and/or a Third Party contract or back-up manufacturer, the
necessary documentation, and shall take or have taken all necessary
actions, to obtain and maintain Registrations for the manufacture of
Products needed to meet APOTHECON's reasonably foreseeable requirements
for same. APOTHECON shall use commercially reasonable efforts to
complete such Registrations as quickly as commercially feasible.
APOTHECON shall inform GJT promptly in writing on any unforseen
material problems, delays or requirements in connection with such
Registrations. APOTHECON and/or such other contractor back-up
manufacturer shall maintain such Registrations for the Product in each
country in which the Product is manufactured during the term of the
Agreement, or such portion thereof as the Product is manufactured in
such country, and thereafter for such period as required by applicable
law or regulation. APOTHECON shall be responsible for all costs
incurred by it or on its behalf in connection with such Registrations.
Without limiting the generality of the foregoing, APOTHECON will use
commercially reasonable efforts:
to pursue all necessary DMF approvals required in the
United States (and corresponding approvals, where applicable,
in other countries in the Territory) for all pertinent bulk
and/or finished material components of the Product and will
cooperate with and comply with all reasonable requests of
applicable governmental authorities in pursuit of same; and
to secure necessary approvals from applicable
governmental authorities for the manufacturing facilities from
which finished dosage form Product will be supplied and shall
cooperate with such applicable governmental authorities and
comply with their reasonable requests for site inspections and
other information and analyses in pursuit of the approved ANDA
and any other Registrations.
5.3 Manufacturing and Registration Reports. APOTHECON shall inform GJT
of the following activities regarding the manufacture of the Product, as
follows:
5.3.1 Within * days following the end of each * until ANDA approval,
APOTHECON shall prepare and deliver to GJT a written summary report
which shall describe, with respect to the Product, material information
pertaining to its manufacturing status; provided, that any proprietary
or confidential information of APOTHECON and its Affiliates, such as
manufacturing know-how or trade secrets, shall not be required to be
disclosed and may be redacted.
5.3.2 APOTHECON shall provide GJT with prompt notice of all regulatory
filings and submissions to, and all responses and approvals obtained
from, regulatory authorities regarding such Registration to manufacture
of the Product.
5.3.3 Each party shall promptly advise the other of any safety or
toxicity problem of which either party becomes aware regarding the
Product, intermediates or other ingredients or processes used in the
manufacture of the Product.
5.3.4 APOTHECON shall be responsible for ongoing stability testing with
respect to Product.
5.4 Product Purchase.
5.4.1 Subject to Article 11 hereof and to Section 3.2 hereof, the
parties agree to cooperate to ensure an orderly and timely supply of
Product to GJT and its clinical investigators of all Product required
by GJT to conduct pivotal clinical studies and bioequivalence testing
and to establish a reasonable procedure for ensuring that APOTHECON
receives adequate advance notice of GJT's requirements for same. All
Product supplied by APOTHECON shall be sold F.O.B. GJT's (or its
clinical investigator's) facility (as the case may be), and title to,
and risk of loss, of the Product shall pass upon delivery to such
facility.
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5.4.2 No terms and conditions contained in any purchase order,
acknowledgment, invoice, bill of lading, acceptance or other preprinted
form issued by either party shall be effective to the extent they are
inconsistent with or modify the terms and conditions contained herein.
Each purchase order shall contain the requested delivery date(s),
quantity purchased, routing instructions and destination.
5.5 Acceptance; Rejection of Product in Case of Non-Conformity.
5.5.1 GJT may reject the shipment to it or its investigators of
Product, in whole or in part, if adulterated or otherwise not
conforming in any respect with the Specifications. In order to reject a
shipment, GJT must give written notice to APOTHECON within * after
receipt of the shipment, together with a reasonably detailed statement
of its reasons for rejection, and a report of its analysis of the
allegedly nonconforming Product, together with the methods and
procedures used. If no such notice is received, then GJT shall be
deemed to have accepted the shipment of the Product, unless such
nonconformity or grounds for rejection could not reasonably have been
discovered by GJT (pursuant to the procedures set forth in the
Specifications) within such * period, in which event the commencement
of said * period shall be tolled until such nonconformity or grounds
are discovered by GJT. APOTHECON shall notify GJT as promptly as
reasonably possible, but in any event within * after receipt of such
notice of rejection, whether it accepts GJT's assertions of
nonconformity.
5.5.2 Whether or not APOTHECON accepts GJT's assertion of
nonconformity, promptly on receipt of a notice of rejection, APOTHECON
shall use its best efforts provide replacement of the same Product as
in the original shipment. If the original shipment ultimately is found
to be nonconforming, APOTHECON shall bear its own expenses of such
replacement; if the original shipment is ultimately found to be
conforming, GJT shall bear the cost of such replacement and shall
reimburse APOTHECON, within * following demand for same, for all
reasonable expenses and costs incurred by APOTHECON in connection with
the manufacture and shipment of such replacement Product.
5.5.3 If APOTHECON disagrees with any alleged nonconformity to the
Specifications, then the parties will use their best efforts to resolve
the disagreement promptly as follows: an independent GMP laboratory (or
other consultant), acceptable to both GJT and APOTHECON, shall analyze
an aliquot sample or such other portions of the shipment, furnished by
GJT from the shipment received by GJT, as may be necessary to
substantiate whether the Product rejected by GJT conformed (or not) to
the pertinent Specifications. The laboratory shall use such procedures
and tests as the laboratory may consider necessary to reach a
conclusion; however, if, by using the same tests set forth in the
Specifications as were used by GJT, such laboratory confirms GJT's
findings, further tests shall not be required. Both parties agree to
cooperate with the independent laboratory's reasonable requests for
assistance in connection with its analysis hereunder. Both parties
shall be bound by the laboratory's results of analysis. The costs
incurred by the laboratory shall be borne by the losing party.
5.5.4 If APOTHECON or the independent laboratory confirms the
nonconformity, then, in addition to any other remedies set forth
herein, at law or in equity, APOTHECON shall replace (if it has not
already done so) the nonconforming Product with conforming Product as
promptly as possible. Replacement shipments shall also be subject to
the procedures contained in this Section 5.5. If the independent
laboratory confirms (or GJT subsequently agrees) that no nonconformity
existed, then, in addition to any other remedies set forth herein or
available at law or in equity, GJT shall pay for the cost of the
replacement shipment.
5.5.5 Unless APOTHECON requests the return to it of any nonconforming
Product, GJT shall lawfully destroy such Product promptly and provide
APOTHECON with written certification of such destruction. GJT shall,
upon receipt of APOTHECON's request for return, promptly dispatch said
Product to APOTHECON, at APOTHECON's expense.
5.6 Process Changes. [Intentionally omitted.]
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5.7 Warranties.
5.7.1 APOTHECON represents and warrants to GJT that Product delivered
by or through APOTHECON to GJT shall, at time of delivery to GJT (or to
a clinical or laboratory site, as the case may be), conform with
Product Specifications and be in compliance in all material respects
with applicable laws, regulations and other governmental requirements
and with all applicable Regulatory requirements and approvals,
including without limitation that such Product shall not be adulterated
within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, or within the meaning of any applicable state or municipal law
in which the definition of adulteration is substantially the same as
that contained in the Federal Food, Drug and Cosmetic Act, as such Act
and such laws are constituted and effective at the time of delivery.
5.7.2 APOTHECON further represents and warrants that such samples and
batches intended for clinical or bioequivalence testing will be
manufactured in accordance with the regulations of the appropriate
regulatory authority of the country (e.g., CGMP in the United States)
in which the Product is manufactured.
5.7.3 APOTHECON represents and warrants that the quality control
procedures and in-plant quality control checks on the manufacture of
Product shall be applied in the same manner as those procedures and
checks are applied to other products manufactured for sale by APOTHECON
or its contract manufacturer.
5.7.4 NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, OTHER THAN THOSE EXPRESSLY MADE IN THIS AGREEMENT OR THE *
LICENSE AGREEMENT. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE (AND INCLUDING ANY EXPRESS OR IMPLIED
WARRANTY THAT THE MANUFACTURE, USE OR SALE OF THE PRODUCT INFRINGES OR
WILL INFRINGE ANY PATENT RIGHTS OR TRADEMARK RIGHTS OWNED OR CONTROLLED
BY ANY PERSON OTHER THAN A PARTY OR ITS AFFILIATES) ARE HEREBY
DISCLAIMED BY EACH PARTY.
5.8 Inspection. [Intentionally omitted].
5.9 [Intentionally omitted.]
5.10 Payment Terms. APOTHECON will provide Product reasonably required
by GJT for bioequivalence and clinical testing in accordance with the procedures
set forth in Section 4.6 hereof without charge, and will pay for any shipping,
packaging and insurance costs, as well as any customs and import charges
incurred by GJT or its clinical investigators, associated with such shipments of
Product.
ARTICLE 6
MARKETING
6.1 Packaging and Labeling. APOTHECON shall be responsible at its
expense for arranging for the labeling and packaging into bottles (or otherwise)
the finished * form of the Product. GJT shall have the right to review and
comment on all labels and labeling prior to any final Regulatory approval
required of same.
6.2 Commercialization. Intentionally omitted].
6.3 Covenant Not to License a Competitor. So long as APOTHECON retains
the exclusive rights under section 3.1.2 of the * License Agreement to use,
distribute, market and sell the Product in a country, GJT and its Affiliates may
not (and GJT will cause its Affiliates not to), without the prior written
consent of APOTHECON, use, distribute, develop, market, or sell, or license or
permit any Third Party to use, distribute,
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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develop, market, or sell, any other pharmaceutical composition containing *
(including all commonly used and known salts and acids thereof) as
(i) an * in any country, or
(ii) a * in the United States,
and which incorporates, is based on and is derived by use of the GEOMATRIX
Technology, irrespective of whether the dosage, formulation, strength,
specifications or other qualities of such other Product are the same or
different from that being developed, used, distributed, marketed or sold by
APOTHECON.
6.4 Adverse Drug Reactions. The following provisions shall apply to the
reporting of Adverse Drug Reactions:
6.4.1 It will be APOTHECON's responsibility to report ADRs to the FDA;
however, it will be solely GJT's responsibility to report ADRs required
to be reported that arise during clinical testing and which are
otherwise required of GJT in accordance with applicable law.
6.4.2 Each party agrees to furnish party, as hereinafter provided, with
information pertaining to any ADR known to such party from any source
whatsoever (other than from the other party). For such purposes, each
party shall be charged with knowledge of an ADR if (and only if) such
ADR has in fact been brought to the attention of the party. Each party
will exercise due diligence and exert reasonable efforts to collect ADR
information from its affiliates and other related parties worldwide. In
the case of a serious ADR, the party in question shall report to the
other party, in English, within 48 hours of knowledge of the ADR. All
other ADRs shall be reported by the party in question from time to
time, but not less frequently than monthly, in the same manner.
6.4.3 Each party shall maintain, in accordance with its own customary
practice, appropriate detailed records of all ADR reports which have
been submitted to the other party. Further, in the event that either
party shall be requested for more detailed investigation by the U.S.
Food and Drug Administration or other regulatory body on any ADR, such
other party shall cooperate and assist the party in question with
respect to such investigation.
6.4.4 Each party further shall immediately notify the other of any
information received regarding any threatened or pending action by a
regulatory agency which may affect the safety and efficacy claims of
the Product. Upon receipt of any such information, the parties shall
consult with each other in an effort to arrive at a mutually acceptable
procedure for taking appropriate action; provided, however, that
nothing contained herein shall be construed as restricting either
party's right to make a timely report of such matter to any regulatory
agency or take other action that it deems to be appropriate or
required, by applicable law or regulation.
6.4.5 The obligations under this Section 6.4 shall survive for the
period of time that such reporting obligations exist under applicable
law.
6.5 Product Recall
6.5.1 In the event (a) any government authority of a country in the
Territory in which APOTHECON or any of its Affiliates markets or
marketed the Product should issue a request, directive or order that
Product be recalled, or (b) a court of competent jurisdiction orders
such a recall, or (c) the parties reasonably determine after
consultation with each other that Product should be recalled
("Recall"), the parties shall take all appropriate corrective action.
6.5.2 APOTHECON shall be responsible for the expense of a Recall,
except to the extent that a Recall and any related expenses are
attributable to a cause or event or instruction by GJT or its
Affiliates, in
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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which case GJT shall be responsible for same. For purposes of this
Agreement, Recall expenses shall include, but not be limited to, the
expenses of notification and destruction or return of the recalled
Product, as the case may be, and APOTHECON's and GJT's costs for the
recalled Product, as the case may be; provided, however, the expense or
service fee associated with representatives' time of a party hereto (or
of its Affiliates) shall be borne by such party.
6.5.3 In the event a Recall resulting from any cause or event arising
from a cause or event or instruction attributable to GJT, APOTHECON
shall have the right at any time within of such Recall to terminate
this Agreement.
ARTICLE 7
MILESTONE AND ROYALTY PAYMENTS
[Intentionally omitted].
ARTICLE 8
PATENT RIGHTS
8.1 Patent Prosecution and Maintenance. GJT shall be responsible for
and shall control, at its sole cost, the preparation, filing, prosecution and
maintenance of all patent applications and patents of the Patent Rights. In so
doing, GJT shall endeavor to obtain the strongest commercially reasonable patent
protection (under the circumstances) regarding the GEOMATRIX Technology with
respect to the Product and shall consider in good faith the interests of
APOTHECON. With respect to Patent Rights pertaining to the Product in those
countries in which APOTHECON has the right hereunder to market the Product: GJT
(a) shall supply APOTHECON with a copy of each such patent application as filed,
together with notice of its filing date and serial number; (b) shall consult
with APOTHECON regarding the prosecution and maintenance of such Patent Rights
relating to the Product, and shall implement all reasonable requests of
APOTHECON with respect thereto; (c) shall inform APOTHECON promptly of any
substantive action or proposed action with respect to the Patent Rights relating
to the Product, shall provide APOTHECON with advance copies of all proposed
responses thereto, and shall implement all reasonable requests of APOTHECON with
respect thereto; (d) shall not abandon or materially narrow the substantive
claims of the Patent Rights without the prior express written consent of
APOTHECON; (e) shall provide APOTHECON with copies of all filings, submissions,
together with all correspondence, with the applicable patent authorities
regarding the Patent Rights; (f) shall inform APOTHECON promptly of the
allowance and issuance of each patent included in the Patent Rights, together
with the date and patent number thereof, and shall provide APOTHECON with a copy
of such patent as issued; and (g) shall prosecute all reexaminations and
reissues as reasonably requested by APOTHECON. APOTHECON shall cooperate with
GJT, execute all lawful papers and instruments and make all rightful oaths and
declarations as may be necessary in the preparation, prosecution and maintenance
of all such patents and patent applications.
8.2 Notification of Infringement. Each party shall notify the other
party of any infringement of the Patent Rights with respect to Products that
comes to the attention of the management of such party and shall provide the
other party with the available evidence, if any, of such infringement.
8.3 Enforcement of Patent Rights. With respect to Patent Rights
pertaining to those countries in which APOTHECON has the exclusive right
hereunder to market the Product, APOTHECON, at its sole expense, shall have the
right, but not the obligation, (a) to determine the appropriate course of action
to enforce, or otherwise abate the infringement of, the Patent Rights with
respect to Products, (b) to take, or refrain from taking, appropriate action to
enforce the Patent Rights with respect to Products, (c) to control any
litigation or other enforcement action regarding Patent Rights with respect to
Products, and (d) to enter into, or permit, the settlement of any such
litigation or other enforcement action regarding Patent Rights with respect to
Products. APOTHECON shall consult with GJT and Jagotec prior to and during the
course of taking any of the foregoing actions, shall consider, in good faith,
the interests of GJT and Jagotec in taking any of the foregoing actions, and, if
GJT or Jagotec reasonably
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concludes that taking any specific action(s) likely would have a material
adverse effect on GJT's or Jagotec's interests in the Patent Rights (other than
with respect to the Products), and timely gives APOTHECON prior express written
notice thereof, then APOTHECON shall not take such specific action(s) without
the prior express written consent (not to be unreasonably withheld or delayed)
of GJT or Jagotec, as the case may be. If (x) within * after receipt by
APOTHECON of notice by a Third Party pursuant to 21 U.S.C. ss.355(b)(3)(A) or
(j)(4)(B)(iii) with respect to any Product, APOTHECON has not initiated an
action for patent infringement against the Third Party that forwarded such
notice, then GJT and/or Jagotec shall have the right to initiate and control
such action, and (y) within * days after receipt of notice from GJT or Jagotec
of such an infringement, APOTHECON has not taken action to abate the
infringement or filed suit to enforce the Patent Rights with respect to Products
against at least one infringing party, GJT or Jagotec shall have the right to
take whatever action it deems appropriate to enforce the Patent Rights against
such parties in such countries as APOTHECON may have elected not to take action
to abate, or file suit to prevent, such infringement; provided, however, that
GJT or Jagotec, as the case may be, shall have given prompt written notice to
APOTHECON of its intent to file a suit or commence any other enforcement action
in connection therewith. If GJT or Jagotec elects to file such suit or commence
such action, then GJT or Jagotec (as the case may be) shall consult with
APOTHECON prior to and during the course of taking any of the foregoing actions,
and shall consider, in good faith, the interests of APOTHECON in taking any of
the foregoing actions. Within * after receipt of such notice from GJT or Jagotec
(as the case may be), APOTHECON shall have the right to jointly prosecute such
suit or other action and *. The party controlling any such suit or other action
shall not settle the suit or action or otherwise consent to an adverse judgment
in such suit or action that diminishes the rights of the non-controlling party
without the prior express written consent of the noncontrolling party. All
monies recovered upon the final judgment or settlement of any such suit or other
action shall be shared, after reimbursement of expenses of the controlling
party(ies), as follows:
i) Where APOTHECON has solely controlled the litigation, * shall
be entitled to retain all monies recovered and awarded upon
the final judgment or settlement of any such suit or other
proceeding, and shall pay to * such amount as equals the *
that * would otherwise have received under the * License
Agreement on * as were taken into account in determining the
monies recovered.
ii) Where control of the litigation has operated other than
pursuant to (i), the parties shall and awarded upon the final
judgment or settlement of any such suit or other proceeding in
proportion to their respective contributions to the cost
thereof.
Notwithstanding the foregoing, APOTHECON, Jagotec, and GJT shall
reasonably cooperate with each other in the planning and execution of
any suit or other action to enforce the Patent Rights with respect to
Products.
8.4 Third Party Infringement Actions.
8.4.1 If GJT or APOTHECON, or their respective Affiliates or
sublicensees, shall be sued by a Third Party for infringement of a
patent because of the manufacture, use or sale of any pharmaceutical
composition which incorporates, is based on, uses or is derived by use
of the GEOMATRIX Technology, the party which (or whose Affiliate) has
been sued shall promptly notify the other party in writing of the
institution of such suit, and with respect to suits which are the
subject of Section 8.4.2 below, shall provide the other party with
copies of all pleadings, exhibits and all other relevant information
available to such other party regarding such pleadings.
8.4.2 If the suit alleges the infringement of a patent because of the
use or sale of the Product (or an intermediate in the manufacture
thereof) and the alleged infringing process, method or composition is
claimed under the Patent Rights, APOTHECON shall have the right, in its
sole discretion, to control the defense of such suit with counsel of
its own selection and at its own expense; provided, however, that GJT
or, if GJT elects not to exercise its option, Jagotec shall have the
option, within * after receipt of notice of any such suit, to
co-control the defense of such suit. If GJT or Jagotec timely exercises
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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its option to co-control the defense of such suit, (a) APOTHECON and
GJT (or Jagotec, as the case maybe) shall select mutually-acceptable
counsel, if possible, and GJT or Jagotec, as the case may be, shall be
solely responsible for paying the fees and costs of its own advisory
counsel of its own selection and the fees and costs of any party hereto
in taking any action in such suit at the request of GJT or Jagotec (as
the case may be) or any action to defend the rights or interests of GJT
or Jagotec, but not the interests APOTHECON, or (b) if APOTHECON and
GJT (or Jagotec, as the case may be) are unable to select
mutually-acceptable counsel, APOTHECON and GJT (or Jagotec, as the case
may be) each shall be represented in the defense of such suit by
counsel of its own selection at its own expense. If GJT (or Jagotec, as
the case may be) fails to timely exercise its option to co-control the
defense of such suit, GJT and Jagotec shall have the right to be
represented by advisory counsel of their own selection and at their own
expense, shall cooperate fully in the defense of such suit and shall
furnish to APOTHECON all evidence and assistance in its control. If
APOTHECON does not elect, within * after receipt of notice of any such
suit, to control the defense of such suit, GJT or Jagotec may undertake
such control of the defense of such suit with counsel of its own
selection and at its own expense. In such case, APOTHECON shall have
the right to be represented by advisory counsel of its own selection
and at its own expense, shall cooperate fully in the defense of such
suit and shall furnish to GJT or Jagotec (as the case may be) all
evidence and assistance in its control.
8.4.3 If the suit alleges the infringement of a patent because of the
use or sale of a pharmaceutical composition which incorporates, is
based on, uses or is derived by use of the GEOMATRIX Technology, which
is not the Product (or an intermediate in the manufacture thereof), and
the alleged infringing process, method or composition is claimed under
the Patent Rights, GJT or, if GJT declines to exercise same, Jagotec,
shall have the right, in its sole discretion, to control the defense of
such suit with counsel of its own selection and at its own expense. In
such case, GJT (or Jagotec, as the case may be) shall inform APOTHECON
from time to time, and upon the reasonable request of APOTHECON, of the
status of the defense or settlement of any such action.
8.4.4 The party controlling such suit shall consult with the
non-controlling party prior to and during the course of such suit, and
shall consider, in good faith, the interests of the non-controlling
party in connection therewith. The party controlling such suit shall
not settle the suit or otherwise consent to an adverse judgment in such
suit that diminishes the rights or interests of the non-controlling
party without the express written consent of the non-controlling party
( not to be unreasonably withheld or delayed). All judgments,
settlements or damages payable with respect to any suit covered by this
Section 8.4 shall be paid by the party which controls the litigation,
or if co-controlled, then by both parties. In the event that APOTHECON
controls or co-controls any such claim, it will be entitled to offset
up to of the reasonable costs and expenses (including professional
fees) incurred by it in connection with any such defense against *
under the * License Agreement, up to a * it would otherwise owe to GJT
during any *.
8.4.5 If as a result of a settlement or other outcome under the suit or
other proceedings conducted against a Third Party pursuant to this
section 8.4, or if GJT and APOTHECON jointly agree to seek a license
from a Third Party in order to avoid infringing such Third Party's
patent rights with respect to the manufacture, use or sale of a Product
in a country in the Territory, ongoing royalties or other payments must
be paid by APOTHECON to such Third Party, APOTHECON shall be entitled
to * by it to such Third Party * to * under the * License Agreement
with respect to such country, up to a * to * during any * with respect
to such country.
8.5 Prosecution and Defense of Non-Patent Actions. APOTHECON, with
counsel of its own selection and at its sole expense, shall have the right, but
not the obligation, (a) to control the prosecution of any litigation or other
action with respect to the manufacture, use or sale of Products which is not
described in Section 8.3 above, (b) subject to the provisions of Article 12
below, to control the defense of any litigation or other action with respect to
the use or sale of Products which is not described in Section 8.4 above, and (c)
to enter into, or permit, the settlement of any such litigation or other action
described in clause (a) or (b) above. APOTHECON shall consult
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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with GJT and Jagotec prior to and during the course of taking any of the
foregoing actions, and shall consider, in good faith, the interests of GJT and
Jagotec in taking any of the foregoing actions. APOTHECON shall not settle any
such litigation or other action or otherwise consent to an adverse judgment in
such litigation or other action that diminishes the rights or interests of GJT
and Jagotec without the prior express written consent of GJT (not to be
unreasonably withheld or delayed). Notwithstanding the foregoing, GJT and
Jagotec shall fully cooperate with APOTHECON at its request in the planning and
prosecution or defense of any such litigation or other action. After
reimbursement of any reasonable expenses of GJT and Jagotec incurred at the
request of APOTHECON in the planning and prosecution or defense of any such
litigation or other action, * shall be entitled to retain all monies recovered
upon the final judgment or settlement of any such litigation or other action.
APOTHECON shall be responsible for all judgments, settlements or damages payable
with respect to any such litigation or other action covered by this Section 8.5.
8.6 Notification of Patent Term Restoration. GJT shall notify
APOTHECON, and any sublicensee which APOTHECON requests in writing, promptly of
each notice pertaining to any patent included within the Patent Rights which it
(or Jagotec) receives as patent owner pursuant to the Drug Price Competition and
Patent Term Restoration Act of 1984 (the "Act"), including notices pursuant to
21 U.S.C. ss.355(b)(3)(A) or (j)(4)(B)(iii) from persons who have filed an
Abbreviated New Drug Application. GJT shall give all such notices promptly, but
in any event within five (5) calendar days of receipt of each such notice
pursuant to the Act, whichever is applicable. GJT promptly shall notify
APOTHECON of each filing for patent term restoration under the Act, any
allegations of failure to show due diligence and all awards of patent term
restoration (extensions) with respect to the Patent Rights. Likewise, GJT
promptly shall inform APOTHECON of patent extensions and periods of data
exclusivity in the rest of the world regarding any Product.
8.7 Indemnification. Subject to Article 8.4 hereof, GJT shall indemnify
and hold harmless APOTHECON, its Affiliates and its and their directors,
officers, employees and agents from and against any all liabilities, losses,
damages, costs and expenses (including reasonable attorneys' fees and costs of
litigation or arbitration, regardless of outcome) to the extent arising out of
or in connection with any claims or causes of action:
8.7.1 * in a country in the Territory because of the manufacture, use
or sale of the Product (or of an intermediate in the manufacture
thereof) in such country and the alleged infringing process, method or
composition is claimed under the Patent Rights, and/or
8.7.2 asserted by a Third Party to the extent based on the *, or breach
of a * owed to such * or their respective Affiliates.
8.8 Condition Precedent. The exercise of any rights and benefits
afforded to Jagotec under sections 8.3-8.5 hereof are conditioned on the receipt
by APOTHECON and GJT of a letter (or acknowledgment in the form contained on the
signature page of this Agreement) from Jagotec signed by a duly authorized
official of Jagotec stating that Jagotec agrees to be bound by the duties and
obligations imposed on Jagotec under such sections and by sections 6.3, 11.2.4.2
and Article 16 hereof, as well as section 11.2.4.2 of the * License Agreement,
and for which an opinion, reasonably satisfactory to APOTHECON, of counsel to
Jagotec is provided as to the enforceability and validity thereof.
ARTICLE 9
TRADEMARKS
[Intentionally omitted]
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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ARTICLE 10
CONFIDENTIALITY
10.1 Confidential Information. Each party shall use reasonable efforts
(including not less than the same efforts it uses to protect its own
confidential information) to maintain in confidence all information, records and
data of the other party (including samples) disclosed by the other party in
connection with the performance of this Agreement and/or the * License
Agreement, and which is identified as, or acknowledged to be, confidential (the
"Confidential Information"), and shall not use, disclose or grant the use of the
Confidential Information except to its and its Affiliates' directors, officers,
employees, agents, consultants, clinical investigators or other permitted
contractors, to the extent such disclosure is reasonably necessary in connection
with such party's activities as expressly authorized by the Agreement or the *
License Agreement. To the extent that disclosure is so authorized, prior to
disclosure, each party hereto shall assure that each such Person is bound to
hold such Confidential Information in confidence in a manner that is similar to
that set forth herein for such party and not make use of the Confidential
Information for any purpose other than those authorized by this Agreement and/or
the * License Agreement.
10.2 Permitted Disclosures. The obligations of confidentiality and
non-use in Section 10.1 above shall not apply to the extent that (a) the
receiving party (the "Recipient") (i) is required to disclose information by
law, regulation or order of a governmental agency or a court of competent
jurisdiction, or (ii) is required to disclose information to any governmental
agency for purposes of obtaining approval to test or market the Product,
provided in each case that the Recipient shall give the disclosing party written
notice thereof and sufficient opportunity to object to any disclosure or to
request confidential treatment thereof; or (b) the Recipient can demonstrate
that (i) the disclosed information was public knowledge at the time of such
disclosure to the Recipient, or thereafter became public knowledge, other than
as a result of actions of the Recipient, its directors, officers and employees
in violation hereof; (ii) the disclosed information was rightfully known by the
Recipient (as shown by its written records) prior to the date of disclosure to
the Recipient by the disclosing party hereunder; (iii) the disclosed information
was disclosed to the Recipient on an unrestricted basis from a source unrelated
to any party to the Agreement and not under a duty of confidentiality to the
disclosing party; or (iv) the disclosed information was independently developed
by the Recipient without the use of Confidential Information disclosed by the
other party hereto. Notwithstanding any other provision of this Agreement or the
* License Agreement, APOTHECON may disclose Confidential Information of GJT
relating to information developed pursuant to either Agreement to any Third
Party with whom APOTHECON has, or is proposing to enter into, a business
relationship (such as a sublicense hereunder; a merger, consolidation or other
reorganization; an acquisition of a business by APOTHECON or a sale of its
business; or a distribution, agency or sales representative arrangement), as
long as such Third Party has entered into a confidentiality agreement with
APOTHECON and the nature and extent of the disclosure bears a reasonable
relationship to the proposed business relationship.
10.3 Terms of the Agreement. Except as otherwise provided in Section
10.2 above, neither party shall disclose any terms or conditions of this
Agreement or the * License Agreement to any Third Party without the prior
consent of the other party. Notwithstanding the foregoing, prior to the
execution of this Agreement and the * License Agreement, the parties shall agree
upon the substance of information that can be used to describe the terms of this
transaction, and the parties may disclose such information without the other
party's consent.
10.4 Term of Confidentiality. The confidentiality obligations under
this Article 10 shall be effective during the term of this Agreement and for a
period of * after the expiration or earlier termination hereof.
ARTICLE 11
TERM AND TERMINATION
11.1 Terms. This Agreement shall commence effective upon the Effective
Date. The Agreement shall continue until terminated upon the earlier to occur of
the following: (i) pursuant to Section 11.2 below, (ii) by
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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mutual written agreement, or (iii) on a country-by-country basis in the
Territory upon the expiration of the Royalty Term in such country.
Upon termination of this Agreement, in whole or in part, pursuant to
section 11.1 (ii), the parties will determine the disposition of rights
hereunder as part of such mutual termination. Upon expiration of this Agreement
as to any country in the Territory under Section 11.1(iii) above, APOTHECON
shall have an irrevocable, perpetual, fully paid-up and royalty-free,
non-exclusive right and license to use the Knowhow in order to develop, make,
have made, use and sell Products in such country.
11.2 Termination. This Agreement may be terminated in accordance with
any of the following (all of which may be exercised independently of the other):
11.2.1 Termination Without Cause. APOTHECON may elect at any time, for
any reason and without cause, to terminate this Agreement, in whole or
in part as to one or more countries, upon sixty (60) days written
notice to GJT:
11.2.1.1 If * elects to so terminate under this section 11.2.1
prior to filing of the ANDA in the United States, then: (i)
such termination shall be *; (ii) all rights and licenses
granted by * hereunder * with respect to such country(ies) so
terminated, provided, further, that if * so elects to
terminate under this section 11.2.1 in the United States, it
shall be deemed a termination as to the *; (iii) * of any *
that are scheduled or may be made in the future under sections
4.6 hereof and 7.1 of the * License Agreement (and the
subsections thereunder), provided that such termination is
exercised with respect to United States; (iv) all
Registrations pertaining to the Product shall be * as to the
affected country(ies) and the * under this Agreement shall be
provided to and thereafter may be * to develop, manufacture
and market the Product; (v) the * License Agreement shall *
with respect to the right to sell the Product in such
country(ies); and (vi) * shall thereafter be entitled exercise
such rights as they may have under the GEOMATRIX Agreements to
make, have made, use or sell the Product in the country(ies)
so terminated without compensation or obligation to *;
provided, that the foregoing rights under (iv) and (vi) shall
not create or imply any right or license under any patent
rights, copyright rights, trademarks or trade names, know-how,
or other intellectual property rights owned or controlled by *
or its Affiliates.
11.2.1.2 If * elects to so terminate this Agreement under this
section 11.2.1 subsequent to the * in the United States, then:
(i) such termination shall be * to *; (ii) all rights and
licenses granted by * hereunder shall * with respect to such
country(ies) so terminated; (iii) * shall be relieved of any
payments that are scheduled or may be made in the future under
sections 4.6 hereof and 7.1 of the * License Agreement (and
the subsections thereunder), provided that such termination is
exercised with respect to United States; (iv) * shall
thereafter be entitled to * as they may have under the
GEOMATRIX Agreements to make, have made, use or sell the
Product in the country(ies) so terminated (and, provided, that
the foregoing shall not create or imply any right or license
under any patent rights, copyright rights, trademarks or trade
names, know-how, or other intellectual property rights owned
or controlled by * or its Affiliates); (v) the * License
Agreement shall terminate with respect to the right to sell
the Product in such country(ies); (vi) all Registrations
pertaining to the Product shall be * as to the affected
country(ies) and the data generated under this Agreement shall
be provided to and thereafter may be * to develop, manufacture
and market the Product; and (vii) * shall pay to * the same *,
which shall be paid in the same manner and subject to the same
terms and conditions as would otherwise have applied to *, as
* would otherwise have paid (absent such termination) under
the * License
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Agreement to * (or on the * of such *, as the case may be) of
the Product in the country(ies) to which such termination
applies (with such * to be paid by * and its Affiliates in
each such country until expiration of the Royalty Term in each
such country), until such time as the * paid to * equal the
aggregate amount that had been paid by * to GJT prior to such
termination under the aforesaid sections 4.6 and 7.1 (and the
subsections thereunder), at which time the *.
11.2.2 Termination for Default. Except as otherwise provided in Article
13 below, upon or after the breach of any material provision of the
Agreement by a party (unless such failure results from, or is caused
by, adherence required by a party to applicable laws or governmental
regulations), if the breaching party has not cured such breach within
sixty (60) days after notice thereof by the other party, the
nonbreaching party may terminate this Agreement; provided, however, if
any default is not capable of being cured within such 60-day period and
the breaching party has diligently undertaken to cure such default
within such 60- day period and continues to take diligent steps to cure
same as soon as commercially feasible thereafter under the
circumstances, the nonbreaching party shall have no right to terminate
the Agreement.
In cases where the breach involves an act or omission by a party
specifically and directly relating to a country or countries,
termination shall be limited to the country or countries affected by
such breach, as opposed to termination of the entire Agreement, and the
remedies listed in section 11.2.2.1-11.2.2.4 below shall be limited to
such country or countries. For example, the termination remedy shall be
limited to the country or countries affected by (i) a breach by GJT or
its Affiliates of section 6.3, or (ii) APOTHECON's failure to pay
royalties in accordance with the * License Agreement for such country
or countries.
11.2.2.1 If GJT breaches this Agreement prior to the date that
initial commercial launch occurs in the United States and in a
manner that entities * to terminate this Agreement pursuant to
this section 11.2.2, then, if * elects to terminate this
Agreement: (i) all rights granted to * under this Agreement *;
(ii) no further payments shall be due from * with respect to
any of the milestones not yet paid that are set forth in
Section 4.6 hereof and section 7.1 of the * License Agreement
(and the subsections thereunder); (iii) the * License
Agreement shall terminate with respect to the right to sell
the Product in such country(ies); (iv) all Registrations
pertaining to the Product shall be * as to the affected
country(ies) and the * under this Agreement shall be provided
to and thereafter may be * to develop, manufacture and market
the Product (provided, that the foregoing shall not create or
imply any right or license under any patent rights, copyright
rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by * or its
Affiliates); (v) * shall pay to * the same *, which shall be
paid in the same manner and subject to the same terms and
conditions as would otherwise have applied to *, as * would
otherwise have paid (absent such termination) under the *
License Agreement to * (or on the * of such *, as the case may
be) of the Product in the country(ies) to which such
termination applies (with such * to be paid by * and its
Affiliates until expiration of the Royalty Term in each such
country), until such time as the * paid to * equal the
aggregate amount that had been paid by * to * prior to such
termination under sections 4.6 and 7.1 hereof (and the
subsections thereunder), at which time * of the rate then
applicable from time to time thereafter; and (vi) such
termination shall be without prejudice to any other rights or
remedies available to * arising from such breach.
11.2.2.2 If GJT breaches this Agreement subsequent to the date
that initial commercial launch occurs in the United States and
in a manner that entitles APOTHECON to terminate this
Agreement pursuant to this section 11.2.1, then, if APOTHECON
elects to terminate this
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Agreement, then the provisions of subsections 11.2.2.1(i)-(vi)
apply as though fully set forth herein.
11.2.2.3 If APOTHECON breaches this Agreement prior to the
date that initial commercial launch occurs in the United
States and in manner that entitles GJT to terminate this
Agreement pursuant to this section 11.2.2, then GJT may elect
either:
(A) to pursue all claims and causes of action
available to it at law or in equity for such breach,
or
(B) to terminate this Agreement, in which event: (i)
* shall be deemed to waive and release all claims and
causes of action available to it at law or in equity
for such breach, and such termination shall be
without penalty or liability to *; (ii) all rights
granted by * hereunder shall * with respect to such
country(ies) so terminated; (iii) * will be relieved
of any * that are scheduled or may be made in the
future under section 4.6 hereof and section 7.1 of
the * License Agreement (and the subsections
thereunder); (iv) all Registrations pertaining to the
Product shall be * as to the affected country(ies)
and the * under this Agreement shall be provided to
and thereafter may be * to develop, manufacture and
market the Product; (v) the * License Agreement shall
terminate with respect to the right to sell the
Product in such country(ies); and (vi) * and its
Affiliates shall thereafter be entitled * as they may
have under the GEOMATRIX Agreements to make, have
made, use or sell the Product in the country(ies) so
terminated without compensation or obligation to *;
provided, that the foregoing rights under (iv) and
(vi) shall not create or imply any right or license
under any patent rights, copyright rights, trademarks
or trade names, or other intellectual property rights
owned or controlled by * or its Affiliates.
11.2.2.4 If APOTHECON breaches this Agreement subsequent to
the date that initial commercial launch quantities occurs in
the United States and in manner that entitles GJT to terminate
this Agreement pursuant to this section 11.2.2, then GJT may
elect either:
(A) to pursue all claims and causes of action
available to it at law or in equity for such breach,
or
(B) to terminate this Agreement, in which event: (i)
* shall be deemed to waive and released all claims
and causes of action available to it at law or in
equity for such breach, and such termination shall be
without penalty or liability to *; (ii) all rights
and licenses granted by GJT hereunder shall * with
respect to such country(ies) so *; (iii) * shall be
relieved of any * that are scheduled or may be made
in the future under sections 4.6 hereof and 7.1 of
the * License Agreement (and the subsections
thereunder), provided that such termination is
exercised with respect to United States; (iv) * and
its Affiliates shall thereafter be entitled to
exercise such rights as they may have under the
GEOMATRIX Agreements to make, have made, use or sell
the Product in the country(ies) so terminated (and,
provided, that the foregoing shall not create or
imply any right or license under any patent rights,
copyright rights, trademarks or trade names,
know-how, or other intellectual property rights owned
or controlled by * or its Affiliates); (v) the *
License Agreement shall terminate with respect to the
right to sell the Product in such country(ies); (vi)
all Registrations pertaining to the Product shall be
* as to the affected country(ies) and the * under
this Agreement shall be provided to and thereafter
may be * to develop, manufacture and market the
Product; and (vii) * shall pay to *
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the same *, which shall be paid in the same manner
and subject to the same terms and conditions as would
otherwise have applied to *, as * would otherwise
have paid (absent such termination) under the *
License Agreement to * (or on the * of such *, as the
case may be) of the Product in the country(ies) to
which such termination applies (with such royalty to
be paid by * and its Affiliates in each such country
until expiration of the Royalty Term in each such
country), until such time as the * paid to * equal
the aggregate amount that had been paid by * to *
prior to such termination under the aforesaid
sections 4.6 and 7.1 (and the subsections
thereunder), at which time the royalty rate then
prevailing on * (or on the * of such *, as the case
may be) in the United States shall be *).
11.2.3 Termination for Failure to Meet Milestones.
11.2.3.1 If all bioequivalence testing, all pivotal clinical
and bioequivalence studies shall not have been completed, and
Validated Manufacturing Scale-Up capabilities (biobatches) for
the Product shall not have been completed and demonstrated to
APOTHECON's reasonable satisfaction, by * so as to enable
manufacture and marketing of the Product in the United States
and other major markets designated by APOTHECON, and
irrespective of whether APOTHECON is otherwise entitled to
terminate this Agreement pursuant to any other provision of
this Article 11:
a) APOTHECON will have the right to immediately
terminate this Agreement at any time
thereafter until *, or
b) allow additional time for the completion and
demonstration of same until *.
If APOTHECON elects to terminate this Agreement with respect
to one or more countries pursuant to option (a) above, then
the provisions of section 11.2.1.2(i)-(vii), inclusive, shall
apply.
If APOTHECON elects not to terminate this Agreement in
accordance with (a) above, then all payments due after * under
section 7.1 of the * License Agreement shall be * and all
royalty rates applicable to all * in the Territory at any time
thereafter under the * License Agreement shall be * provided,
* shall not apply if (A) the failure to so demonstrate and
complete the foregoing was due to * failure to use all
reasonable efforts to Scale-up and to manufacture adequate
quantities of conforming Product on a timely basis (and *
shall have given reasonable advance notice of its
requirements) and/or failure to comply in all material
respects with the Specifications and written instructions
provided * with respect to the use of the GEOMATRIX Technology
in connection with the manufacture of the Product, and (B) *
shall have fulfilled its obligations hereunder in all material
respects with respect to the transfer and training in the use
of the GEOMATRIX Technology.
11.2.3.2 If, notwithstanding APOTHECON's election under
section 11.2.3.1(b) above, all bioequivalence testing, all
pivotal clinical and bioequivalence studies shall not have
been completed, and Validated Manufacturing Scale-Up
capabilities (bio-batches) for the Product shall not have been
completed and demonstrated to APOTHECON's reasonable
satisfaction, by * so as to enable manufacture and marketing
of the Product in the United States and other major markets
designated by APOTHECON, and APOTHECON is not otherwise
entitled to terminate this Agreement pursuant to any other
provision of this Article 11, then APOTHECON shall be entitled
to elect, at any time within * thereafter, to terminate this
Agreement, in which event the provisions of section
11.2.1.2(i)-(vii), inclusive, shall apply.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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If APOTHECON elects not to terminate this Agreement in
accordance with this section 11.2.3.2, then all payments due
after * under section 7.1 of the * License Agreement shall be
eliminated and waived, and all royalty rates applicable to all
* in the Territory under the * License Agreement at any time
thereafter shall be * provided, that such reductions shall not
apply if (A) the failure to so demonstrate and complete the
foregoing was due to * failure to use all reasonable efforts
to Scale-up and to manufacture adequate quantities of
conforming Product on a timely basis (and * shall have given
reasonable advance notice of its requirements) and/or failure
to comply in all material respects with the Specifications and
written instructions provided * with respect to the use of the
GEOMATRIX Technology in connection with the manufacture of the
Product, and (B) shall have fulfilled its obligations
hereunder in all material respects with respect to the
transfer and training in the use of the GEOMATRIX Technology.
11.2.4 Other Termination.
11.2.4.1 Termination for Misrepresentation. In the event that
a representation or warranty of GJT hereunder is untrue in any
material respect, APOTHECON shall be entitled to terminate
this Agreement upon thirty (30) days' written notice to GJT.
If APOTHECON elects to so terminate, the rights and actions
indicated in sections 11.2.2.1 (i) - (vi), inclusive, shall
apply as though set forth herein.
11.2.4.2 Termination for Failure to Repay Working Capital
Agreement. If GJT fails to make a payment when due under its
Restated Working Capital Agreement dated as of May 12, 1995
(as amended by a First Amendment thereto dated as of July 11,
1995, and as the same may be amended from time to time
hereafter, and including any successor agreement thereto)
between GJT and Genta, Incorporated, a Delaware corporation
("Genta"), GJT shall promptly inform APOTHECON of same, and
APOTHECON may elect (by delivering a writing to GJT, Jagotec
and Jago Pharma of APOTHECON's intent to exercise such option)
at any time thereafter to terminate this Agreement and to
require each of Jagotec and Jago Pharma to, and Jagotec and
Jago Pharma agree that each of them will, promptly enter into
a new, separate agreement with APOTHECON under which (i) Jago
Pharma and Jagotec will, to the extent each has the right to
do so, ensure that any licenses, sublicenses and other rights
and privileges granted by GJT under this Agreement shall
continue without change, (ii) Jago Pharma will assume all
rights and obligations of GJT under articles 3, 4, 5, 6,
11.4.5, 12, 14, 15.1, and 15.2 hereof and will promptly cure
any defaults of GJT under said articles, any payments to be
made thereafter by APOTHECON under said articles shall
thereafter be paid to Jago Pharma, and APOTHECON shall
continue to enjoy all rights and privileges granted under said
articles, and (iii) Jagotec will assume all rights and
obligations of GJT under article 8 hereof, any payments to be
made thereafter by APOTHECON under said article shall
thereafter be paid to Jagotec, and APOTHECON shall continue to
enjoy all rights and privileges granted under said article.
11.2.5 No Effect on Remedies. Where APOTHECON elects not to terminate
the Agreement pursuant to section 11.2.2.1, 11.2.2.2, or 11.2.4, such
decision shall be without prejudice to any other rights or remedies
available to APOTHECON arising from such breach or untrue statement.
11.2.6 Injunctive Relief. If:
i) GJT or its Affiliates breach section 3.1 of the * License
Agreement or section 6.3 hereof, or
ii) APOTHECON or its Affiliates breach section 3.1 of the *
License Agreement,
then the parties acknowledge and agree that such breach will cause
irreparable injury to the nonbreaching party or its Affiliates, for
which monetary damages, even if available, will be inadequate and
difficult, if
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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not impossible, to accurately ascertain. Accordingly, the parties agree
that the nonbreaching party or its Affiliates may seek and obtain
injunctive relief against the breach or threatened breach of the
undertakings set forth in this section 11.2.6 (i) and (ii), in addition
to any other rights or remedies which may be available to the
nonbreaching party or to its Affiliates at law or in equity.
11.3 Effect on Continuing Business. In the event of a termination of
this Agreement in which the rights to market the Product revert to GJT
hereunder, GJT shall not be under any obligation, express or implied, to use the
Registrations and data transferred to it or to continue to commercialize the
Product, and APOTHECON shall not be under any obligation, express or implied, to
continue to transfer any inventory of Product to GJT or to manufacture Product
for GJT following such termination.
Effect of Bankruptcy. If a party becomes insolvent or admits
in writing its inability to pay its debts as they mature or
applies for or consents to the appointment of a receiver or
trustee for any of its properties; or a receiver or trustee is
appointed for such party or a substantial portion of its
properties and is not discharged within ninety (90) days; or
any bankruptcy, reorganization, debt arrangement, dissolution,
liquidation or other proceeding under any bankruptcy or
insolvency law is instituted by or against such party and, if
instituted against such party, it is consented to by such
party or remains undismissed for ninety (90) days, then
11.3.1 Notwithstanding any such event, such party shall remain
obligated to fulfill its obligations and covenants hereunder, and any
failure to do so or other breach hereunder shall entitle the other
party to terminate this Agreement in accordance with section 11.2
hereof; and
11.3.2 It is the parties desire that, if any such receiver, trustee,
judge, arbitrator or other adjudicator conducting or controlling such
proceedings on behalf of a party should hold that any obligations,
covenants or duties of such party hereunder should be suspended or
declared unenforceable, in whole or in part, then the rights and
benefits granted to the other party hereunder shall remain in full
force and effect, and that any such obligations, covenants or duties
shall be reformed by such receiver, trustee, judge, arbitrator or other
adjudicator so as to be enforceable to the maximum extent permitted by
applicable law and to permit any suspension to be lifted at the
earliest practicable time.
11.4 Other Effects.
11.4.1 Effect of Reversion. Where a termination of this Agreement, as
provided for in this Article 11.2, results in a reversion of rights to
GJT that had been granted to APOTHECON under Articles 3 and 9 of the *
License Agreement, APOTHECON shall not thereafter make any use of the
Patent Rights and Trademarks, and, except to the extent the same shall
have entered the public domain, the Know-how, with respect to the
country(ies) affected by such termination.
11.4.2 Survival. The provisions of
(i) Articles 2.2 and 2.3 shall survive any expiration of
this Agreement under section 1.1(iii), and
(ii) Articles 5.7, 6.4, 6.5, 8.3-8.5, 8.7, 10, 11.2.4.2,
11.2.5, 11.2.7, 11.4-11.6, 12, 14, 16.2, 16.3 and
16.4 shall survive any expiration or termination of
the Agreement, in whole or in part,
as well as such other terms, obligations and rights which, by their
intent or meaning, are intended to so survive. The expiration or
termination of the Agreement shall not relieve either party of payment
of any amounts that may be owed to the other based upon events
occurring or rights accruing prior to the date of termination, and
shall be without prejudice, except as provided in sections 11.2.2.3,
and 11.2.2.4, to any rights and obligations of either party accruing
prior to, or that may be based on acts or omissions of the other party
occurring prior to, the effective date of termination.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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11.4.3 Undeveloped Products. The Products licensed hereunder shall not
be treated as "Undeveloped Products" under sections 11.2.3 of the
GEOMATRIX License Agreement and GEOMATRIX Manufacturing License
Agreement.
11.4.4 No Waiver. The right of either party to terminate this
Agreement, as hereinabove provided, or to pursue rights and remedies
available to it at law or in equity, shall not be affected in any way
by its waiver of, or failure to take action with respect to, any
previous defaults or breaches hereunder.
11.4.5 Use of Data Following Termination. Notwithstanding any provision
of this Agreement that may state or imply to the contrary, in the event
that this Agreement terminates for any reason, it is understood and
agreed that all data generated pursuant to activities funded by
APOTHECON pursuant to section 4.6 of this Agreement and transferred or
made available to GJT or its Affiliates under this Agreement (including
without limitation pursuant to 11.2.1.1(iv), 11.2.1.2(vi),
11.2.2.1(iv), 11.2.2.3(iv), or 11.2.2.4(vi) of this Agreement) may not
thereafter be used by, and may not thereafter be made available to or
disclosed to any Third Party by, GJT or any of its Affiliates
(including any Jagotec and Genta Incorporated, a Delaware corporation,
and their respective Affiliates) in the development, or registration or
filing for regulatory approval, of any product other than the Product
(including without limitation not using and not making such data
available for developing or filing of an NDA in the United States for a
* product based on, incorporating, or derived from the use of, the
GEOMATRIX Technology), without the prior written consent of APOTHECON
(which consent may be given or withheld in its sole and absolute
discretion).
11.5 Survival of Rights and Sublicenses.
11.5.1 In the event of an event that the GEOMATRIX License Agreement
and/or the GEOMATRIX Manufacturing License Agreement is or are
terminated, for whatever reason and whether by action taken by Jagotec,
GJT or both, this Agreement, and any licenses, sublicenses and other
rights and privileges granted or extended to APOTHECON hereunder shall
continue and remain in full force and effect in accordance with their
terms, without further action or election on the part of APOTHECON, and
notwithstanding any provision (including without limitation section
11.4) to the contrary in the GEOMATRIX License Agreement and the
GEOMATRIX Manufacturing Agreement.
11.5.2 If GJT breaches this Agreement in a manner that entitles
APOTHECON to terminate same pursuant to section 11.2.2.1 or 11.2.2.2,
or makes an untrue statement that entitles APOTHECON to terminate same
pursuant to section 11.2.4.1, or in the event that GJT commences
proceedings to dissolve, liquidate or wind up its affairs, then, in
addition to any other remedies available to it hereunder or at law or
in equity, APOTHECON may (A) elect any remedies available to it under
any applicable Waiver and Consent and/or (B) elect (by delivering a
writing to GJT, Jagotec and Jago Pharma of APOTHECON's intent to
exercise its rights under this section 11.5.2) to terminate this
Agreement with GJT, and: (i) any licenses, sublicenses and other rights
and privileges granted by GJT under this Agreement shall continue
without further action or election on the part of APOTHECON, with
APOTHECON continuing to have the same rights and obligations as are set
forth in this Agreement, notwithstanding any provision to the contrary
contained in section 11.4 of the GEOMATRIX License Agreement (as the
same may be thereafter amended, supplemented or extended) or in section
11.4 of the GEOMATRIX Manufacturing License Agreement (as the same may
be thereafter amended, supplemented or extended), (ii) Jago Pharma and
Jagotec will, to the extent each has the right to do so, ensure that
all licenses, sublicenses and other rights and privileges granted by
GJT under this Agreement shall continue without change, (iii) enter
into an agreement with Jago Pharma under which Jago Pharma will assume
all rights and obligations of GJT under articles 3, 4, 5, 6, 11.4.5,
12, 14, 15.1, and 15.2 hereof, will promptly cure any defaults of GJT
under said articles, any payments to be made thereafter by APOTHECON
under said articles shall thereafter be paid to Jago Pharma, and
APOTHECON shall continue to enjoy all rights and privileges granted
under said articles, and (iv) enter into an agreement with Jagotec
under which Jagotec will assume all rights and obligations of GJT under
article 8 hereof, any payments to be made thereafter by APOTHECON under
said article shall thereafter be paid to Jagotec, and APOTHECON shall
continue to enjoy all rights and privileges
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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granted under said article. Upon request, Jagotec and Jago Pharma AG
will deliver to APOTHECON satisfactory confirming written documentation
of same.
11.5.3 In no event shall APOTHECON be required, as a condition to the
continuance or continuing validity of any license, sublicense or other
rights granted by GJT under this Agreement, to give written notice to
Jagotec of any election to continue such rights, to assume all rights
and obligations of GJT, and/or to promptly cure all defaults of GJT, as
otherwise required under section 11.4 of each of the GEOMATRIX License
Agreement and GEOMATRIX Manufacturing License Agreement.
11.6 Transfer of Registrations and Rights. In the event this Agreement
terminates, and GJT is entitled hereunder (and notifies APOTHECON in writing
that it desires) to continue the development and marketing of the Product in the
country(ies) affected by such termination, the parties agree to reasonably
cooperate to ensure an orderly transition for a reasonable period (not to exceed
*) following such termination, and the parties will effectuate an orderly
transfer of any Registrations owned or controlled by APOTHECON with respect to
the Product in such country(ies) to GJT; provided, however, that in no event
shall the foregoing create or imply any right to use or license under any patent
rights, copyright rights, trademarks or trade names (including those for the
Product), know-how or other intellectual property rights owned or controlled by
APOTHECON or its Affiliates). Such transfer(s) in such country(ies) shall be *;
provided that * shall bear all * into its name in such country(ies) and shall
reimburse * for any out-of-pocket costs incurred by it in connection with the
foregoing. * shall be entitled to retain, subject to the * as provided for in
section 7.2 of the * License Agreement, the amount received by it on * during
such transition period and shall use reasonable efforts to comply with the terms
of this Agreement. For any other termination of this Agreement, such termination
shall not result in any transfer of any Registrations owned or controlled by
APOTHECON to GJT or Jagotec, and regardless of any provision (such as sections
11.5 of the GEOMATRIX License Agreement and of the GEOMATRIX Manufacturing
License Agreement) to the contrary in any agreement between GJT and any one or
more of its Affiliates.
ARTICLE 12
INDEMNITY
12.1 Indemnity.
12.1.1 Indemnity by APOTHECON. APOTHECON shall defend, indemnify and
hold Jagotec, GJT, their respective Affiliates and their respective
directors, officers, employees, consultants, contractors,
Subcontractees, and agents (each a "GJT Indemnitee") harmless from and
against * (including reasonable attorneys' fees and costs of
litigation, *) as a result of any claim, demand, action or other
proceeding by a Third Party based upon any death, bodily injury or
physical property damage arising from or relating to the manufacture
(including without limitation failure to manufacture Product in
accordance with the Specifications or adulteration of Product)
distribution, use, handling, packaging, labeling, promotion,
marketing, storage, or sale of Products by or on behalf of *, its
Affiliates and its and their, licensors, licensees, sublicensees,
contractors and subcontractors, except:
12.1.1.1 to the extent such damages or other amounts payable
arise from or are attributable to:
(i) the negligence, fault or willful misconduct
of any *, or
(ii) * of the terms of the * License Agreement and/or of
this Agreement (or adulteration of the Product while
under the control of * or any of its contractees), or
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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(iii) reliance upon any written instructions or
written information pertaining to the
manufacture and storage conditions of the
Product and/or the use of the GEOMATRIX
technology in connection therewith provided by
*, any of its Affiliates, or its or their
licensors, contractors and Subcontractees.
12.1.2 Indemnity by GJT. GJT shall defend, indemnify and hold
APOTHECON, its respective Affiliates, and its and their respective
directors, officers, employees, consultants, contractors,
subcontractors and agents (each an "APOTHECON Indemnitee") harmless
from and against * (including reasonable attorneys' fees and costs of
litigation, *) as a result of any claim, demand, action or other
proceeding by a Third Party based upon death, bodily injury or
physical property damage arising from or relating to the development
of the Product, the Specifications provided, and/or any written
instructions or written information provided by GJT or its Affiliates
pertaining to the use of the GEOMATRIX technology in connection with
the manufacture or storage of the Product, except:
12.1.2.1 to the extent such damages or other amounts payable
arise from or are attributable to:
(i) *, or
(ii) *.
12.2 Procedure. It is a condition precedent to a party's obligations
under Section 12.1 above that:
12.2.1 A party (the "Indemnitee") that intends to claim indemnification
under this Article 12 promptly shall notify the other (the
"Indemnifying Party") of any claim, demand, action or other proceeding
with respect to which the Indemnitee intends to claim such
indemnification. The failure of an Indemnitee to deliver notice to the
Indemnifying Party within a reasonable time after the commencement of
any such action or other proceeding, if prejudicial to the Indemnifying
Party's ability to defend such action or other proceeding, shall
relieve the Indemnifying Party of any obligation or liability it may
have under Section 12.1, provided that the failure to deliver such
notice shall not relieve the Indemnifying Party of any liability it may
have otherwise than under Article 12.1; and
12.2.2 The Indemnifying Party shall have the right to participate in
and, to the extent it so desires, to assume sole control of the defense
thereof (including all decisions relative to settlement, litigation and
appeal) with counsel selected by the Indemnifying Party; provided,
however, that the Indemnitee shall have the right to retain its own
counsel with the fees and expenses to be paid by the Indemnitee if
representation of the Indemnitee by the counsel retained by
Indemnifying Party would be inappropriate due to actual or potential
conflicting interests between the Indemnitee and any other party
represented by such counsel in such proceedings. The indemnity
obligations under this Article 12 shall not apply to amounts paid in
settlement of any claim, demand, action or other proceeding if such
settlement is effected without the prior written consent of the
Indemnifying Party; and
12.2.3 Each lndemnitee shall cooperate fully (to the extent such
cooperation would not be inappropriate due to actual or potential
conflicting interests) with the Indemnifying Party and its legal
representatives in the investigation and defense of any claim, demand,
action or other proceeding covered by this Article 12; provided, that
the failure of an Indemnitee to provide such cooperation shall not
affect the Indemnifying Party's obligations under Section 12.1 to any
other Indemnitee not capable of exercising control over such
noncooperative Indemnitee.
12.3 Insurance. Each Indemnifying Party shall *, with
respect to its indemnification obligations under this Agreement in such *
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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* under-taking activities with products of a similar nature to the Products
being manufactured and sold hereunder. After the commencement of human clinical
trials or the commercial sale of the Product or other product, each party, as
applicable, .
ARTICLE 13
FORCE MAJEURE
Neither party hereto shall be held liable or responsible to the other
party nor be deemed to have defaulted under or breached the Agreement for
failure or delay in fulfilling or performing any term of the Agreement, and the
time required for performance shall be extended by the period occasioned by such
cause, when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party including but not limited to fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party hereto, but not failure or delay
caused by subcontractors of a party who breach their obligations hereunder. The
party so affected shall give prompt notice to the other party of such cause, and
shall use its best efforts to minimize the delay in performance and adverse
effects occasioned by such cause.
ARTICLE 14
SUBCONTRACTEES
APOTHECON understands that GJT intends to contract with one or more
Affiliates and other Persons ("Subcontractees") to perform certain of its duties
hereunder, including without limitation, subcontracting with one or more
contract research organizations to perform necessary clinical studies. All such
Subcontractees must be reasonably acceptable to APOTHECON. All such arrangements
shall be evidenced by written agreement(s) between GJT and such Subcontractee(s)
which are consistent with the terms of this Agreement and which accord APOTHECON
the same rights, benefits and options under such agreements as APOTHECON has
hereunder with GJT, including without limitation, the right of APOTHECON, upon
reasonable notice and at reasonable times, to examine a Subcontractee's
facilities, to make copies of relevant records and monitor the work performed
thereunder pertaining to the Product, and to determine the adequacy of the
facilities and whether the pertinent duties are being performed in compliance
with this Agreement and relevant governmental requirements. Any such subcontract
shall be subject to the terms and conditions of the Agreement, and any
Subcontractee shall be bound by all obligations and undertakings of GJT
hereunder (as they relate to the obligations and rights so assigned or
delegated). All such agreements shall be submitted by GJT to APOTHECON for
review, which GJT shall use commercially reasonable efforts to effect in advance
of execution to allow APOTHECON reasonable opportunity to comment thereon. A
copy of each such executed Subcontractee agreement, and any amendments or
supplements thereto, shall be promptly provided by GJT to APOTHECON following
execution of same.
All compensation, reimbursement of costs and other payments to be made
for any such Subcontractee's services is solely a matter between GJT and such
Subcontractee(s), and GJT shall indemnify and hold APOTHECON harmless from and
against any claims of compensation, cost reimbursement or other payments claimed
by any such Subcontractee(s) in connection with the performance of this
Agreement.
GJT will ensure (with respect to any Affiliate Subcontractee), and will
use commercially reasonable efforts to ensure (in the case of any other
Subcontractee), that APOTHECON is expressly designated as a third party
beneficiary of a Subcontractee's obligations to GJT pertaining to this Agreement
and of GJT's rights under such Subcontractee's written agreement with GJT. GJT
will be responsible and liable to APOTHECON for any breach by any such
Subcontractee of its obligations under such agreements and for the failure by
such Subcontractee to perform any duties hereunder assigned or delegated to such
Subcontractee.
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ARTICLE 15
ASSIGNMENT; SEVERABILITY: REPRESENTATIONS AND WARRANTIES
15.1 Assignment. Except to the extent specifically set forth in this
Agreement, this Agreement may not be assigned or nor may the performance of any
duties hereunder be delegated or transferred, nor may any right or obligation
hereunder be assigned or transferred, by either party, without the prior written
consent of the other party (which consent shall not be unreasonably withheld);
provided, however, that either party may, without such consent, assign the right
to receive payments to an Affiliate, and may assign the Agreement and its rights
and obligations hereunder in connection with the transfer or sale of all or
substantially all of its business assets to which this Agreement relates, or in
the event of merger, consolidation, or similar reorganization (or change in
control or similar transaction); and provided, further, that in the case of an
assignment, the assigning party shall remain liable as a continuing guarantor
under any such assignment of all obligations and duties assumed by such
Affiliate, and the other party shall have entered into a separate counterpart
agreement with any such Affiliate. Such counterpart agreement shall be in the
same form as this Agreement, except for necessary changes to reflect the extent
of the assignment, the substitution of the Affiliate's name and the effective
date of the assignment.
15.2 Severability. Each party hereby acknowledges that it does not
intend to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries. Should one or
more provisions of the Agreement be or become invalid, the parties hereto shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the parties would have
entered into the Agreement with such provisions. In case such provisions cannot
be agreed upon, the invalidity of one or several provisions of the Agreement
shall not affect the validity of the Agreement as a whole, unless the invalid
provisions are of such essential importance to the Agreement that it is to be
reasonably assumed that the parties would not have entered into the Agreement
without the invalid provisions.
15.3 General Representations and Warranties. Each party represents and
warrants to the other the following:
15.3.1 Existence and Power. It (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized; (b) has the requisite power and authority and the legal
right to own and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its business as it
is now being conducted; and (c) is in compliance with all requirements
of applicable law, except to the extent that any noncompliance would
not have a material adverse effect on the properties, business,
financial or other condition of it and would not materially adversely
affect its ability to perform its obligations under the Agreement.
15.3.2 Authorization and Enforcement of Obligations. It (a) has the
requisite power and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder; and (b) has taken
all necessary action on its part to authorize the execution and
delivery of the Agreement and the performance of its obligations
hereunder. The Agreement has been duly executed and delivered on its
behalf, and constitutes a legal, valid, binding obligation, enforceable
against it in accordance with its terms.
15.3.3 No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons
required to be obtained by it in connection with the Agreement have
been obtained.
15.3.4 No Conflict. The execution and delivery of the Agreement on its
behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations, and (b) do not conflict with, or constitute a default
under, any contractual obligation of it.
15.3.5 DISCLAIMER OF WARRANTIES. NOTHING IN THE AGREEMENT SHALL BE
CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY GJT THAT ANY
RESEARCH AND DEVELOPMENT PERFORMED BY IT UNDER THIS AGREEMENT WILL BE
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SUCCESSFUL, IN WHOLE OR IN PART, OR THAT ANY PRODUCTS WHICH MAY BE
DEVELOPED WILL BE SUCCESSFUL IN THE COMMERCIAL MARKETPLACE. APOTHECON
ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE SET FORTH HEREIN OR AS MAY BE
SET FORTH IN A WRITING SIGNED BY GJT, GJT MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCTS WHICH MAY
BE DEVELOPED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
15.4 GJT Representations and Warranties. GJT represents and warrants to
APOTHECON as of the Effective Date the following:
15.4.1 The Patent Rights listed on Exhibit 1.l(ii) and the Trademarks
listed on Exhibit 9.1 list all Patent Rights and GEOMATRIX Trademarks
owned or controlled by GJT in the Territory or to which GJT has the
right to grant the license rights, sublicense rights and other rights
granted hereunder, and which may be useful to the manufacture,
development, use or sale of Product, and such Exhibits specify the
jurisdiction(s) by or in which such right has been issued or registered
or in which an application for such issuance or registration has been
filed, including respective registration or application numbers. To the
best knowledge of the current officers and directors of GJT, the issued
Patent Rights are valid and in full force and effect.
15.4.2 Except as disclosed on Exhibit 1. l(ii), to the best knowledge
of GJT's current officers and directors, (i) the use of such Know-how
and any Patent Rights in the manufacture, use and sale of the Product
does not infringe upon any patent rights, copyrights or other
proprietary rights of any Affiliate of GJT or any non-Affiliated Third
Party in the Territory; (ii) GJT has no knowledge of any infringement
by any Third Party of any of the Patent Rights in the Territory; and
(iii) GJT and each its Affiliates are not subject to any outstanding
order, judgment or decree of any court or administrative agency, and
each has not entered into any stipulation or agreement, restricting its
use of the Patent Rights in connection with the manufacture,
development, use or sale of Products in the Territory.
15.4.3 There is no action, suit or proceeding pending or, to the
knowledge of its current officers and directors, that has been
threatened in writing by any Third Party against GJT or its Affiliates
which, if adversely determined, would have a material adverse effect
upon the ability of APOTHECON to use the Patent Rights or Know-how in
the manufacture, use and/or sale of any Product in the Territory.
15.4.4 The Know-how and Patent Rights licensed and/or sublicensed by
GJT to APOTHECON pursuant to this Agreement were not been obtained by
GJT or its Affiliates in violation of any contractual or fiduciary
obligation to which GJT or any of its Affiliates, any
predecessor-in-interest or any of its or their employees or contractors
is or was a party or by misappropriation of the trade secrets of any
Third Party, and the manufacture, use or sale by or through GJT,
APOTHECON and their respective Affiliates of any Product using such
Know-how and Patent Rights does not and will not violate any such
contractual or fiduciary obligation owed to any such Third Party or
render APOTHECON liable for the payment of any royalty attributable to
or arising out of any such contractual or fiduciary obligation or any
such misappropriation.
15.4.5 During the term of this Agreement, GJT or its Affiliates will
not disclose to APOTHECON and its Affiliates any proprietary
information, such as trade secrets, which is confidential to any
non-Affiliated Third Party or institution and which GJT is not entitled
to disclose in accordance with the terms of this Agreement.
15.4.6 Except as otherwise provided in this Agreement, the rights under
the Know-how or any Patent Rights that have been or will be licensed to
APOTHECON under this Agreement are not and will not be licensed to any
other party to make, have made, use or sell Products in the Territory.
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15.4.7 There are no licenses under any patent rights, and, to the best
knowledge of the current officers and directors of GJT, under any other
intellectual property or other proprietary rights owned or controlled
by any GJT Affiliate or Third Party which are used by GJT in connection
with the manufacture, development, use or sale of Product in the
Territory, other than those listed on Exhibits 1.1 (ii) and 9. 1.
ARTICLE 16
MISCELLANEOUS
16.1 Notices. Any consent, notice or report required or permitted to be
given or made under the Agreement by one party to the other party shall be in
English and in writing, delivered personally or by registered mail, return
receipt requested, addressed to the other party at its address indicated below
or to such other address as the addressee shall have last furnished in writing
to the addressor and except as otherwise provided in the Agreement shall be
effective upon receipt by the addressee.
If to GJT: Genta Jago Technologies BV
Swiss Branch
Grundstrasse 12
6343 Rotkreuz, Switzerland
Attention: Executive Management Committee
with copies to: Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121, U.S.A.
Attention: Thomas H. Adams, Ph.D.
and: Pillsbury Madison & Sutro
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
Attention: Thomas E. Sparks, Jr., Esq.
and: Jagotec AG
c/o Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz, Switzerland
Attention: Dr. Jacques Gonella
and: Rinderknecht Glaus & Stadelhofer
beethovenstrasse 7
Postfach 4451
CH-8002 Zurich, Switzerland
Attention: Dr. Thomas M. Rinderknecht
If to APOTHECON: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: President
with a copy to: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: Corporate Legal Counsel
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<PAGE>
16.2 Applicable Law. The Agreement shall be governed by and construed
in accordance with the laws of Switzerland, without reference to the conflicts
of law principles thereof, and shall not be governed by the United Nations
Convention on Contracts for the International Sale of Goods.
16.3 Arbitration. Any dispute, claim or controversy between the parties
relating to, arising out of or in any way connected with the Agreement or any
term or condition hereof, or the performance by either party of its obligations
hereunder, whether before or after termination of the Agreement, shall be
finally resolved by binding arbitration. Whenever a party shall decide to
institute arbitration proceedings, it shall give written notice to that effect
to the other party. Any arbitration hereunder shall be conducted under the Rules
of Conciliation and Arbitration of the International Chamber of Commerce. Any
such arbitration shall be conducted in the English language by a panel of three
(3) arbitrators appointed in accordance with such rules, and shall be held in
Paris, France. The arbitrators shall have the authority to grant specific
performance, and to allocate between the parties the cost of arbitration in such
equitable manner as they determine. Judgment upon the award so rendered may be
entered in any court having jurisdiction or application may be made to such
court for judicial acceptance of any award so rendered and an order of
enforcement, as the case may be. Whether a claim, dispute or other matter in
question would be barred by the applicable statute of limitations, which also
shall apply to any arbitration under this Section 16.3, shall be determined by
binding arbitration pursuant to this Section 16.3.
16.4 Excise Taxes. If the recipient of any payment hereunder, received
in consideration for providing any goods or services or granting any rights
hereunder, shall have the obligation under any applicable law, regulations or
governance to add, include or pay to the applicable governmental authority, any
value added taxes, turnover taxes, excise taxes, sales taxes or similar taxes or
levies (collectively, "Excise Taxes") on the amount of such payment received
hereunder, then the recipient shall be entitled to receive the amount of any
Excise Taxes on the amount of such payment hereunder as evidenced by an invoice
from the recipient to the payor of such payment hereunder. The payor of such
payment hereunder shall pay the amount of any such Excise Taxes thereon prior to
the date on which the recipient is required to pay or account for such Excise
Taxes to the applicable governmental authority. The recipient of any such
payment hereunder shall use reasonable efforts to minimize any Excise Taxes on
any such payments hereunder, and promptly shall take all such actions and
execute all such instruments as the payor of such payment hereunder reasonably
requests to enable the payor to apply for and, if possible, to receive prompt
refund or credit of the amount of such Excise Taxes on such payments hereunder.
16.5 Headings. The titles and headings used in the Agreement are
intended for convenience only and shall not in any way affect the meaning or
construction of any provision of the Agreement. A reference to a an Article (or
section) shall be deemed to include reference to all sections and subsections
thereunder.
16.6 Independent Contractors. It is expressly agreed that the parties
shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
party 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 party, without the prior consent of the other party to do so.
16.7 Waiver. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
16.8 Amendments. The provisions of the Agreement may not be waived,
altered, amended or repealed in whole or in part except by the written consent
of both of the parties to the Agreement.
16.9 Entire Agreement. The terms, covenants, conditions and provisions
contained in the Agreement, including the exhibits hereto and any other
agreement (including the * License Agreement) to the extent herein referenced,
together with all of the documents referred to herein as having been provided by
one party to another and the letter agreement of even date herewith between
Jagotec, GJT and APOTHECON (pertaining in part to the Territory in which
APOTHECON may exercise its manufacturing rights hereunder), constitute the total
and complete agreement of the parties and supersede all prior understandings and
agreements hereto made, and there are no other representations, understandings
or agreements relating to the subject matter hereof.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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16.10 Counterparts. The Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.11 Publicity. Neither party to this Agreement shall employ or use
the name of the other party or any Affiliate of such party in any publication or
promotional materials or in any form for public distribution, except as required
by law, without prior written consent of said other party in each instance
(which consent shall not be unreasonably withheld).
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IN WITNESS WHEREOF, the parties hereto have duly executed the Agreement
as of the date first set forth above.
APOTHECON, INC.
By: /s/
-----------------------
Title: VP/GM
GENTA JAGO TECHNOLOGIES BV
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
--------------------
Dr. Jacques Gonella
Managing Director
JAGOTEC AG hereby agrees to be bound by the provisions of sections 2.2, 6.3,
8.3, 8.4, 8.5, 11.2.4.2, 11.4.3, 11.4.5, and 11.5 and article 16 of the above
Agreement and sections 11.2.4.2 and 11.5 of the * License Agreement, agrees that
all notices to be given to it shall be given to such address as is set forth in
section 16.1 hereof unless and until it otherwise instructs APOTHECON in
writing:
JAGOTEC AG
By: /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
President
JAGO PHARMA AG hereby agrees to be bound by the provisions of sections 2.2, 6.3,
11.2.4.2, 11.4.3, 11.4.5, and 11.5 and article 16 of the above Agreement and
sections 11.2.4.2 and 11.5 of the * License Agreement, agrees that all notices
to be given to it shall be given to such address as is set forth in section 16.1
hereof unless and until it otherwise instructs APOTHECON in writing:
JAGO PHARMA AG
By: /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
President
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-37-
<PAGE>
EXHIBITS
Exhibit 1.1(i) Initial Project Addendum for the Development Program
Exhibit 1.1(ii) List of Patent Rights
Exhibit 3.6(i)-(iv) Waiver and Consent Agreements
Exhibit 4.2 Initial Product Specifications
Exhibit 9.1 List of GEOMATRIX Trademarks
-38-
<PAGE>
EXHIBIT 1.1(i)
INITIAL PROJECT ADDENDUM FOR THE
DEVELOPMENT PROGRAM
- - - --------------------------------------------------------------------------------
*
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
EXHIBIT 1.1(ii)
PATENT RIGHTS
- - - --------------------------------------------------------------------------------
PACO. 1
Subject: System for the controlled-rate release of active substances
Inventors: Colombo, La Manna, Conte
Assignee: JAGOTEC AG
Priority: Italy, No. 23321 A/85, Dec 20th 1985
Approved: January 7th 1988, No. 1188212
Valid Until: December 19th 2005
Countries: USA
Approved: June 13th 1989, No. 4.839.177
Valid Until: June 12th 2006
Europe
Approved: November 22nd 1990, No. 0226884
Valid Until: December lst 2006
Australia
Approved: July 10th 1990, No. 594992
Valid Until: December 18th 2006
Canada
Approved: April 7th 1992, No. 1.298.479
Valid Until: April 6th 2009
New Zealand
Approved: December llth 1990 No. 218.596
Valid Until: December 10th 2002
Japan
Pending
*
PACO. 6
Subject: Tablets with controlled-rate release of active substances
Inventors: Conte, La Manna, Colombo
Assignee: JAGOTEC AG
Priority: Italy, No. 2269489, December 14th 1989
Approved, No. 1237904, June 18th 1993
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-1-
<PAGE>
PACO. 6 (cont.)
Countries: USA
Approved: June 6th 1995, No. 5,422,123
Valid Until: June 5th 2012
Europe
Pending
*
Canada
Pending
*
Japan
Pending
*
PACO. 7
Subject: Process for preparing pharmaceutical compositions having an
increased active substance dissolution rate, and the compositions
obtained
Inventors: Conte, La Manna, Giunchedi
Assignee: JAGOTEC AG
Priority: Italy, No. 21091, July 27th 1990
Approved: November 16th 1994, No. 1.246.188
Valid Until: July 26th 2010
Countries: USA
lst Application No. 07/733457, Filed July 22nd 1991
Pending: Continuation No. 08/524.739, Filed October 11th 1994
Continuation No. 08/321,123, Filed October 11th 1994
Approved: December 19th 1995, No. 5.476.654
Valid Until: October 10th 2014
Europe
Pending
*
Canada
Pending
*
Japan
Pending
*
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
PACO. 8
Subject: Pharmaceutical tablets releasing the active substance after a
definite period of time
Inventors: Conte, La Manna, Maggi
Assignee: JAGOTEC AG
Priority: Italy, MI 92 A 001174, Filed May 15th 1992
Countries: USA
Approved: November 7th 1995, No. 5,464,633
Valid Until: May 23rd 2014
Canada
Pending
*
PACO. 9
Subject: Pharmaceutical tablet capable of liberating one or more drugs at
different release rates
Inventors: Conte, La Manna, Maggi
Assignee: JAGOTEC AG
Priority: Italy, MI 92 A 002192, Filed September 24th 1992
Countries: PCT Application, No. PCT/EP93/02556,
Filed September 21st 1993
Designated Territories: Australia
Canada
Japan
USA
New Zealand
European Patent Territory
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
EXHIBIT 3.6(I)
GENTA JAGO DELAWARE, L.L.C.
SAN DIEGO, CA 92121 USA
February 28, 1996
Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey
USA
ATTN: President
Genta Jago Technologies B.V., Swiss Branch
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
ATTN: Executive Management Committee
Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz
SWITZERLAND
ATTN: President
Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc.
a Delaware corporation, and Genta Jago Technologies BV ("GJT"), a
Dutch company, regarding the development of * , using certain
proprietary sustained release technology licensed to GJT by
Jagotec AG (said agreement, as it may be supplemented, changed or
extended from time to time hereafter, is referred to as the "*
Development Agreement"). Each of you acknowledges receipt of a
copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and
Genta Jago Technologies BV ("GJT"), a Dutch company, regarding the
grant of certain license rights to Apothecon to make, have made,
use and sell * under certain Patent Rights and Know- How licensed
to GJT pertaining to certain proprietary sustained release
technology licensed to GJT by Jagotec AG (said agreement, as it
may be supplemented, changed or extended from time to time
hereafter, is referred to as
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
the "* License Agreement"). Each of you acknowledges receipt of a
copy of said agreement. The * License Agreement and the *
Development Agreement are referred to herein as the "*
Agreements."; and
iii) The Restated GEOMATRIX Research and Development Agreement dated as
of May 12, 1995 by and among GJT, Jago Pharma AG, as Swiss
corporation, Genta Incorporated ("Genta"), a Delaware corporation,
and Genta Jago Delaware, L.L.C. ("Genta Jago LLC), a Delaware
limited liability company (the "GEOMATRIX Research and Development
Agreement".
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Genta Jago LLC Waiver and Consent Agreement") have the meaning
ascribed to such term in the * License Agreement.
Jagotec AG and Genta are each 50% owners of the equity and income
interests of GJT. Jagotec and Jago Pharma AG are Affiliates of one another, of
GJT, and of Jago Holding AG, a Swiss corporation. Genta and GPM Generic
Pharmaceuticals Manufacturing, Inc. (the latter entity being an Affiliate
Jagotec AG) are each a 50% owner of the equity and income interests of Genta
Jago LLC. Genta Jago LLC acknowledges, and each of the parties signing below
hereby acknowledges, that it expects to derive, directly or indirectly,
substantial economic benefit as a result of the execution, delivery and
performance of the * License Agreement, the * Development Agreement, and of the
GEOMATRIX Agreements. Therefore, in order to induce Apothecon to execute,
deliver and perform the * Agreements, to make the payments required of Apothecon
thereunder, and to accept GJT's promises to discharge its obligations thereunder
and otherwise, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party signing below, Genta
Jago Delaware L.L.C. hereby represents, warrants, agrees, and covenants to and
with Apothecon, and each other party signing below hereby represents, warrants,
agrees and concurs, as follows:
1. Notwithstanding any provision in the GEOMATRIX Research and Development
Agreement to the contrary:
a. All applications filed by Genta Jago LLC pursuant to its obligations
under the GEOMATRIX Research and Development Agreement as are necessary
or useful for the Registration of the Product shall be filed in the name
of, and be owned by, Apothecon, and not GJT.
b. All data and results pertaining to the Product generated by Genta Jago
LLC under the Research and Development Agreement shall be owned solely by
Apothecon. Concurrently with the execution and delivery of this Genta
Jago LLC Waiver and Consent Agreement, Genta Jago LLC will turn over to
Apothecon all data and results heretofore developed by or for it
pertaining to the Product. Genta Jago LLC will thereafter report in
writing such data and results developed by or for it not less frequently
than quarterly to Apothecon and GJT (and monthly if requested by either
party), and will immediately transmit all such data to Apothecon by
magnetic media or such other method as Apothecon shall request.
c. In the event that the GEOMATRIX Research and Development Agreement
should terminate, for whatever reason and however effected, and/or in the
event that GJT commences proceedings to dissolve, liquidate or wind up its
affairs, then, in addition to any remedies available to APOTHECON under the
* Development and Marketing Agreement at law or in equity, Genta Jago LLC
shall, at Apothecon's request, enter into an agreement with Apothecon for
the development and registration of the Product on terms and conditions
that, to the maximum practicable extent, require Genta Jago LLC to perform
the same obligations and observe the same terms and conditions as apply to
it under the GEOMATRIX Research and Development Agreement (without regard
to Genta and Jago Pharma's duties or responsibilities thereunder), and with
Apothecon having the rights that GJT otherwise had under such GEOMATRIX
Research and Development Agreement and with APOTHECON assuming GJT's
obligations under such GEOMATRIX Research and Development Agreement to the
extent such obligations do not conflict with or are in addition to the
obligations that Apothecon has under the * Development and Marketing
Agreement. In such event Apothecon shall be entitled to grant to Genta Jago
LLC a * under the Patent Rights and Knowhow solely to conduct the Research
and Development (as such term is defined in the GEOMATRIX
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
Research and Development Agreement) that Genta Jago LLC is obligated to
conduct under the GEOMATRIX Research and Development Agreement, and any
payments for services performed thereafter by Genta Jago LLC with respect
to the development of the Product shall be made directly by APOTHECON to
Genta Jago LLC.
2. Genta Jago LLC shall submit to Apothecon, concurrently with its
submission to GJT, a copy of (i) all reports, statements, invoices, Product
Workplans, and budgets submitted by Genta Jago LLC to GJT or to the Steering
Committee relating to the Product, (ii) a copy of all reports relating to the
Product submitted to GJT under section 5.4 of the GEOMATRIX Research and
Development Agreement, and (iii) a copy of all submissions to, and all responses
and approvals obtained from, a regulatory authority relating to the Product.
Genta Jago LLC shall promptly inform Apothecon of any default by GJT under the
GEOMATRIX Research and Development Agreement. Following any such default,
Apothecon shall have the right, but shall not be under any obligation of any
nature whatsoever, expressly or impliedly, to (i) cure any such default, and/or
(ii) pay Genta Jago LLC directly thereafter for all services performed by it
under the GEOMATRIX Research and Development Agreement that pertain to the
Product and deduct and offset same from any monies payable thereafter by
Apothecon to GJT.
3. Apothecon shall have the right to exercise the same audit rights as
GJT may exercise under section 4.6 of the GEOMATRIX Research and Development
Agreement, to the extent relating to the Product only.
4. Genta Jago LLC shall defend, indemnify and hold Apothecon, Inc. harmless
from and against any and all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) that Apothecon suffers as a
result of any claim, demand, action or other proceeding by any Third Party
arising from or relating to the *, its directors, officers, employees,
consultants or agents in performing its obligations under the GEOMATRIX Research
and Development Agreement, except to the extent such losses, liabilities,
damages and expenses arise from the *, or their respective directors, officers,
general partners, employees, consultants, or agents (other than ). Apothecon, as
an Indemnitee, agrees to adhere to and be bound by the terms of section 9.5 of
the GEOMATRIX Research and Development Agreement, as though such terms were
fully set forth herein (and with "Article 9" replaced by "Article 4 hereof").
5. To the extent any provisions of the * Agreements or of any of the
GEOMATRIX Agreements conflict in any way with the terms of this Genta Jago LLC
Waiver and Consent Agreement, the terms of this Agreement shall control.
6. This Genta Jago LLC Waiver and Consent Agreement shall be effective
immediately and shall continue in full force and effect until such time as
Apothecon may elect to terminate it by a writing delivered to GJT and to Genta
Jago LLC by a duly authorized officer of Apothecon, or until the termination of
the * Marketing and Development Agreement, whichever occurs first.
7. Any consent, notice or report required or permitted to be given or
made hereunder by one party to the other party shall be in English and in
writing, delivered personally or by registered mail, return receipt requested,
addressed to the other party at its address indicated below or to such other
address as the addressee shall have last furnished in writing to the addressor
(with a copy addressed as well to the attention of its "Legal Counsel") and
shall be effective upon receipt by the addressee.
8. Each party represents and warrants to the other parties hereto the
following:
a) Existence and Power. It (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which
it is organized; (ii) has the requisite power and authority and
the legal right to own and operate its property and assets, to
lease the property and assets it operates under lease, and to
carry on its business as it is now being conducted; and (iii) is
in compliance with all requirements of applicable law, except to
the extent that any noncompliance would not have a material
adverse effect on the properties, business, financial or other
condition of it and would not materially adversely affect its
ability to perform its obligations under this Agreement.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter into
the Agreement and to perform its obligations hereunder; and (ii)
has taken all necessary action on its part to authorize the
execution and delivery of this Agreement and the performance of
its obligations hereunder. This Agreement has been duly executed
and delivered on its behalf, and constitutes a legal, valid,
binding obligation, enforceable against it in accordance with its
terms.
c) No Consents. All necessary consents, approvals and authorizations
of all governmental authorities and other Persons required to be
obtained by it in connection with the execution and performance of
this Agreement have been obtained.
d) No Conflict. The execution and delivery of this Agreement on its
behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations applicable to it, and (b) do not conflict or are
inconsistent with, or constitute a default under, any contractual
or fiduciary obligation or covenant of it.
9. This Genta Jago LLC Waiver and Consent Agreement shall inure to the
benefit of, and be binding upon each party hereto, and its respective
successors, permitted assigns and legal representatives. Any party may also
assign its rights and obligations under this Agreement without the consent of
the other parties in connection with a merger, consolidation, or the sale of all
or substantially all of its assets to an Affiliate agreeing to be bound by same,
or may otherwise assign its rights or obligations under this Agreement only with
the prior written consent of the other parties hereto. This Agreement shall
survive any merger, consolidation or similar reorganization of either party with
or into another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
10. This Genta Jago LLC Waiver and Consent Agreement, together with all
other documents referred to herein, constitute the total and complete agreement
of the parties and supersede all prior understandings and agreements hereto
made, and there are no other representations, understandings or agreements
relating to the subject matter hereof that are not set forth herein on which a
party has relied. All terms and conditions of the GEOMATRIX Research and
Development Agreement, to the extent not changed or supplemented by this Genta
Jago LLC Waiver and Consent Agreement, remain in full force and effect.
11. This Genta Jago LLC Waiver and Consent Agreement shall be governed by
and construed in accordance with the laws of Switzerland, without reference to
the conflicts of law principles thereof.
12. No provision of this Genta Jago LLC Waiver and Consent Agreement, or
the benefit thereof may be waived, altered, amended or repealed in whole or in
part except by the written consent of all of the parties hereto, and no such
waiver or changed shall extend beyond the circumstances for which it is granted.
Except as specifically provided for herein, the waiver from time to time by a
party of any of its rights or its failure to exercise any remedy shall not
operate or be construed as a continuing waiver of same or of any other of such
party's rights or remedies hereunder.
13. If any term, covenant or condition of this Genta Jago LLC Waiver and
Consent Agreement or the application thereof to any party or circumstance shall,
to any extent, be held to be invalid or unenforceable, then (1) the remainder of
this Agreement, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law; and (2) the parties hereto covenant and agree to renegotiate
any such term, covenant or application thereof in good faith in order to provide
a reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the parties that the basic purposes of this Agreement are to be
effectuated.
14. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Genta Jago LLC Waiver and
Consent Agreement or any term or condition hereof, or the performance by
-4-
<PAGE>
a party of its obligations hereunder, whether before or after termination of
this Agreement, shall be finally resolved by binding arbitration. Whenever a
party shall decide to institute arbitration proceedings, it shall give written
notice to that effect to the other parties. Any arbitration hereunder shall be
conducted under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Any such arbitration shall be conducted in the English
language by a panel of three (3) arbitrators appointed in accordance with such
rules, and shall be held in Paris, France. The arbitrators shall have the
authority to grant specific performance, and to allocate between the parties the
cost of arbitration in such equitable manner as they determine. Judgment upon
the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award so
rendered and an order of enforcement, as the case may be. Whether a claim,
dispute or other matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this Section 14,
shall be determined by binding arbitration pursuant to this Section 14.
15. It is expressly agreed that the parties are independent contractors
with each other under this Agreement and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. No party
shall have the authority to make any statements, representations or commitments
of any kind, or to take any action which shall be binding on any other party,
without the prior consent of the other party to do so.
16. This Genta Jago LLC Waiver and Consent Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
It shall not be strictly construed against any party hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Genta Jago
LLC Waiver and Consent Agreement through their respective duly authorized
representatives as of the date first set forth above.
GENTA JAGO DELAWARE, L.L.C.
By: /s/ Thomas H. Adams
--------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
--------------------
Dr. Jacques Gonella
Managing Director
We accept and agree to the foregoing, and acknowledge same by executing this
Genta Jago LLC Waiver and Consent Agreement through our duly authorized
representatives:
GENTA JAGO TECHNOLOGIES BV JAGO PHARMA AG
By /s/ Thomas H. Adams By: /s/ Jacques Gonella
------------------- -------------------
Thomas H. Adams, Ph.D. Dr. Jacques Gonella
Managing Director President
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
GENTA INCORPORATED APOTHECON, INC.
By /s/ Thomas H. Adams By: /s/ Lee Burg
------------------- ------------
Thomas H. Adams, Ph.D. Lee Burg
Chairman and Chief Executive Officer President
-6-
<PAGE>
EXHIBIT 3.6(II)
GENTA INCORPORATED
3550 GENERAL ATOMICS COURT
SAN DIEGO, CA 92121 USA
February 28, 1996
Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey
USA
ATTN: President
Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz
SWITZERLAND
ATTN: President
Genta Jago Technologies B.V.
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
ATTN: Executive Committee
Genta Jago Delaware, L.L.C.
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc.,
a Delaware corporation, and Genta Jago Technologies BV ("GJT"), a
Dutch company, regarding the development of *, using certain
proprietary sustained release technology licensed to GJT by
Jagotec AG (said agreement, as it may be supplemented, changed or
extended from time to time hereafter, is referred to as the "*
Development Agreement"). Each of you acknowledges receipt of a
copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and
Genta Jago Technologies BV ("GJT'), a Dutch company, regarding the
grant of certain license rights to Apothecon to make, have made,
use and sell * under certain Patent Rights and Know- How licensed
to GJT pertaining to certain proprietary sustained release
technology licensed to GJT by Jagotec AG (said agreement, as it
may be
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-1-
<PAGE>
supplemented, changed or extended from time to time hereafter, is
referred to as the "* License Agreement"). Each of you
acknowledges receipt of a copy of said agreement. The * License
Agreement and the * Development Agreement are referred to herein
as the "* Agreements."; and
iii) The Restated GEOMATRIX Research and Development Agreement dated as
of May 12, 1995 by and among GJT, Jago Pharma AG, as Swiss
corporation, Genta Incorporated ("Genta"), a Delaware corporation,
and Genta Jago Delaware, L.L.C. ("Genta Jago LLC"), a Delaware
limited liability company (the "GEOMATRIX Research and Development
Agreement".
iv) The GEOMATRIX License Agreement;
v) The GEOMATRIX Manufacturing License Agreement; and
vi) The GEOMATRIX Supply Agreement.
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Genta Waiver and Consent Agreement") have the meaning ascribed
to such term in the * License Agreement.
Jagotec AG and Genta are each 50% owners of the equity and income
interests of GJT. Jagotec and Jago Pharma AG are Affiliates of one another, of
GJT, and of Jago Holding AG, a Swiss corporation. Genta and GPM Generic
Pharmaceuticals Manufacturing, Inc. (the latter entity being an affiliate of
Jagotec AG) are each a 50% owner of the equity and income interests of Genta
Jago LLC. Genta acknowledges, and each of the parties signing below hereby
acknowledges, that it expects to derive, directly or indirectly, substantial
economic benefit as a result of the execution, delivery and performance of the *
License Agreement, the * Development Agreement, and of the GEOMATRIX Agreements.
Therefore, in order to induce Apothecon to execute, deliver and perform the *
Agreements, to make the payments required of Apothecon thereunder, and to accept
GJT's promises to discharge its obligations thereunder and otherwise, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Genta Incorporated hereby represents, warrants, agrees, and
covenants to and with Apothecon, and each other party signing below hereby
represents, warrants, agrees and concurs, as follows:
1. Notwithstanding any provision in the GEOMATRIX Research and Development
Agreement to the contrary:
a. All applications filed by Genta pursuant to its obligations
under the GEOMATRIX Research and Development Agreement as are necessary
or useful for the Registration of the Product shall be filed in the name
of, and be owned by, Apothecon, and not GJT.
b. All data and results pertaining to the Product generated by
Genta under the Research and Development Agreement shall be owned solely
by Apothecon. Concurrently with the execution and delivery of this Genta
Waiver and Consent Agreement, Genta will turn over to Apothecon all data
and results developed heretofore by or for it pertaining to the Product.
Genta will thereafter report in writing such data and results developed
by or for it not less frequently than quarterly to Apothecon and GJT (and
monthly if requested by either party), and will immediately transmit all
such data to Apothecon by magnetic media or such other method as
Apothecon shall request.
c. In the event that the GEOMATRIX Research and Development
Agreement should terminate, for whatever reason and however effected,
and/or in the event that GJT commences proceedings to dissolve, liquidate
or wind up its affairs, then, in addition to any remedies available to
Apothecon under the * Development and Marketing Agreement at law or in
equity, Genta shall, at Apothecon's request, enter into an agreement with
Apothecon for the development and registration of the Product on terms
and conditions that, to the maximum practicable extent, require Genta to
perform the same obligations and observe the same terms and conditions as
apply to it under the GEOMATRIX Research and Development Agreement
(without regard to Jago Phanna's and Genta Jago LLC's duties or
responsibilities thereunder), and with Apothecon having the
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
rights that GJT otherwise had under such GEOMATRIX Research and
Development Agreement and with APOTHECON assuming GJT's obligations
under such GEOMATRIX Research and Development Agreement to the extent
such obligations do not conflict with or are in addition to the
obligations that Apothecon has under the * Development and Marketing
Agreement. In such event Apothecon shall be entitled to grant to Genta
a * under the Patent Rights and Knowhow solely to conduct the Research
and Development (as such term is defined in the GEOMATRIX Research and
Development Agreement) that Genta is obligated to conduct under the
GEOMATRIX Research and Development Agreement, and any payments for
services performed thereafter by Genta with respect to the development
of the Product shall be made directly by APOTHECON to Genta.
2. Genta shall submit to Apothecon, concurrently with its submission to
GJT, a copy of (i) all reports, statements, invoices, Product Workplans, and
budgets submitted by Genta to GJT or to the Steering Committee relating to the
Product, (ii) a copy of all reports relating to the Product submitted to GJT
under section 5.4 of the GEOMATRIX Research and Development Agreement, and (iii)
a copy of all submissions to, and all responses and approvals obtained from, a
regulatory authority relating to the Product. Genta shall promptly inform
Apothecon of any default by GJT under the GEOMATRIX Research and Development
Agreement. Following any such default, Apothecon shall have the right, but shall
not be under any obligation of any nature whatsoever, expressly or impliedly, to
(i) cure any such default, and/or (ii) pay Genta directly thereafter for all
services performed by it under the GEOMATRIX Research and Development Agreement
that pertain to the Product and deduct and offset same from any monies payable
thereafter by Apothecon to GJT.
3. Apothecon shall have the right to exercise the same audit rights as
GJT may exercise under section 4.6 of the GEOMATRIX Research and Development
Agreement, to the extent relating to the Product only.
4. Genta shall defend, indemnify and hold Apothecon, Inc. harmless from and
against any and all losses, liabilities, damages and expenses (including
reasonable attorneys' fees and costs) that Apothecon suffers as a result of any
claim, demand, action or other proceeding by any Third Party arising from or
relating to the *, its directors, officers, employees, consultants or agents in
performing its obligations under the GEOMATRIX Research and Development
Agreement, except to the extent such losses, liabilities, damages and expenses
arise from the *, or their respective directors, officers, general partners,
employees, consultants, or agents (other than *). Apothecon, as an Indemnitee,
agrees to adhere to and be bound by the terms of section 9.5 of the GEOMATRIX
Research and Development Agreement, as though such terms were fully set forth
herein (and with "Article 9" replaced by "Article 4 hereof").
5. To the extent any provisions of the * Agreements or of any of the
GEOMATRIX Agreements conflict in any way with the terms of this Genta Waiver and
Consent Agreement, the terms of this agreement shall control.
6. This Waiver and Consent shall be effective immediately and shall
continue in full force and effect until such time as Apothecon may elect to
terminate it by a writing delivered to GJT and to Genta by a duly authorized
officer of Apothecon, or until the termination of the * Marketing and
Development Agreement, whichever occurs first.
7. Any consent, notice or report required or permitted to be given or
made hereunder by one party to the other party shall be in English and in
writing, delivered personally or by registered mail, return receipt requested,
addressed to the other party at its address indicated below or to such other
address as the addressee shall have last furnished in writing to the addressor
(with a copy addressed as well to the attention of its "Legal Counsel") and
shall be effective upon receipt by the addressee.
8. Each party represents and warrants to the other parties hereto the
following:
a) Existence and Power. It (i) is duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is organized; (ii) has the
requisite power and authority and the legal right to own
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its
business as it is now being conducted; and (iii) is in
compliance with all requirements of applicable law, except
to the extent that any noncompliance would not have a
material adverse effect on the properties, business,
financial or other condition of it and would not materially
adversely affect its ability to perform its obligations
under this Agreement.
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter
into the Agreement and to perform its obligations hereunder;
and (ii) has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and
the performance of its obligations hereunder. This Agreement
has been duly executed and delivered on its behalf, and
constitutes a legal, valid, binding obligation, enforceable
against it in accordance with its terms.
c) No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other
Persons required to be obtained by it in connection with
the execution and performance of this Agreement have been
obtained.
d) No Conflict. The execution and delivery of this Agreement on
its behalf and the performance of its obligations hereunder
(a) do not conflict with or violate any requirement of
applicable laws or regulations applicable to it, and (b) do
not conflict or are inconsistent with, or constitute a
default under, any contractual or fiduciary obligation or
covenant of it.
9. This Genta Waiver and Consent Agreement shall inure to the benefit of,
and be binding upon each party hereto, and its respective successors, permitted
assigns and legal representatives. Any party may also assign its rights and
obligations under this Agreement without the consent of the other parties in
connection with a merger, consolidation or the sale of all or substantially all
of its assets to an Affiliate agreeing to be bound by same, or may otherwise
assign its rights or obligations under this Agreement only with the prior
written consent of the other parties hereto. This Agreement shall survive any
merger, consolidation or similar reorganization of either party with or into
another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
10. This Genta Waiver and Consent Agreement, together with all of the
documents referred to herein, constitute the total and complete agreement of the
parties and supersede all prior understandings and agreements hereto made, and
there are no other representations, understandings or agreements relating to the
subject matter hereof that are not set forth herein on which a party has relied.
All other terms and conditions of the GEOMATRIX Research and Development
Agreement, to the extent not changed or supplemented by this Genta Waiver and
Consent Agreement, remain in full force and effect.
11. This Genta Waiver and Consent Agreement shall be governed by and
construed in accordance with the laws of Switzerland, without reference to the
conflicts of law principles thereof.
12. No provision of this Genta Waiver and Consent Agreement, or the
benefit thereof may be waived, altered, amended or repealed in whole or in part
except by the written consent of all of the parties hereto, and no such waiver
or changed shall extend beyond the circumstances for which it is granted. Except
as specifically provided for herein, the waiver from time to time by a party of
any of its rights or its failure to exercise any remedy shall not operate or be
construed as a continuing waiver of same or of any other of such party's rights
or remedies hereunder.
13. If any term, covenant or condition of this Genta Waiver and Consent
Agreement or the application thereof to any party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (1) the remainder of this
Agreement, or the application of such term, covenant or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (2) the parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application
-4-
<PAGE>
thereof that is invalid or unenforceable, it being the intent of the parties
that the basic purposes of this Agreement are to be effectuated.
14. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Genta Waiver and Consent
Agreement or any term or condition hereof, or the performance by a party of its
obligations hereunder, whether before or after termination of this Agreement,
shall be finally resolved by binding arbitration. Whenever a party shall decide
to institute arbitration proceedings, it shall give written notice to that
effect to the other parties. Any arbitration hereunder shall be conducted under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce. Any such arbitration shall be conducted in the English language by a
panel of three (3) arbitrators appointed in accordance with such rules, and
shall be held in Paris, France. The arbitrators shall have the authority to
grant specific performance, and to allocate between the parties the cost of
arbitration in such equitable manner as they determine. Judgment upon the award
so rendered may be entered in any court having jurisdiction or application may
be made to such court for judicial acceptance of any award so rendered and an
order of enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of limitations,
which also shall apply to any arbitration under this Section 14, shall be
determined by binding arbitration pursuant to this Section 14.
15. It is expressly agreed that the parties are independent contractors
with one another under this Agreement and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. No party
shall have the authority to make any statements, representations or commitments
of any kind, or to take any action which shall be binding on any other party,
without the prior consent of the other party to do so.
16. This Genta Waiver and Consent Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be strictly
construed against any party hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Genta Waiver
and Consent Agreement through their respective duly authorized representatives
as of the date first set forth above.
GENTA INCORPORATED
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Chairman and Chief Executive Officer
We accept and agree to the foregoing, and acknowledge same by executing this
Genta Waiver and Consent Agreement through our duly authorized representatives:
GENTA JAGO TECHNOLOGIES BV JAGO PHARMA AG
By /s/ Thomas H. Adams By: /s/ Jacques Gonella
------------------- -------------------
Thomas H. Adams, Ph.D. Dr. Jacques Gonella
Managing Director President
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
GENTA JAGO DELAWARE, L.L.C.
By /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
APOTHECON, INC.
By /s/ Lee Burg
------------
Lee Burg
President
-6-
<PAGE>
EXHIBIT 3.6(III)
JAGO PHARMA AG
EPTINGERSTRASSE 51
CH-4132 MUFFENZ
SWITZERLAND
February 28, 1996
Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey
USA
ATTN: President
Genta Jago Technologies B.V., Swiss Branch
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
ATTN: Executive Management Committee
Genta Jago Delaware, L. L - C
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc.,
a Delaware corporation, and Genta Jago Technologies BV ("GJT"), a
Dutch company, regarding the development of *, using certain
proprietary sustained release technology licensed to GJT by
Jagotec AG (said agreement, as it may be supplemented, changed or
extended from time to time hereafter, is referred to as the "*
Development Agreement"). Each of you acknowledges receipt of a
copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and
Genta Jago Technologies BV ("GJT"), a Dutch company, regarding the
grant of certain license rights to Apothecon to make, have made,
use and sell * under certain Patent Rights and Know- How licensed
to GJT pertaining to certain proprietary sustained release
technology licensed to GJT by Jagotec AG (said agreement, as it
may be
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
supplemented, changed or extended from time to time hereafter, is
referred to as the "* License Agreement"). Each of you
acknowledges receipt of a copy of said agreement. The * License
Agreement and the * Development Agreement are referred to herein
as the "* Agreements"; and
iii) The Restated GEOMATRIX Research and Development Agreement dated as
of May 12, 1995 by and among GJT, Jago Pharma AG, as Swiss
corporation, Genta Incorporated ("Genta"), a Delaware corporation,
and Genta Jago Delaware, L.L.C. ("Genta Jago LLC), a Delaware
limited liability company (the "GEOMATRIX Research and Development
Agreement".
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Jago Pharma Waiver and Consent Agreement") have the meaning
ascribed to such term in the * License Agreement.
Jagotec AG and Genta are each 50% owners of the equity and income interests
of GJT. Jagotec and Jago Pharma AG are Affiliates of one another, of GJT, and of
Jago Holding AG, a Swiss corporation. Genta and GPM Generic Pharmaceuticals
Manufacturing Inc. (the latter entity being an Affiliate of Jagotec AG) are each
a 50% owner of the equity and income interests of Genta Jago LLC. Jago Pharma AG
acknowledges, and each of the parties signing below hereby acknowledges, that it
expects to derive substantial economic benefit, directly or indirectly, as a
result of the execution, delivery and performance of the * License Agreement,
the * Development Agreement, and of the GEOMATRIX Agreements. Therefore, in
order to induce Apothecon to execute, deliver and perform the * Agreements, to
make the payments required of Apothecon thereunder, and to accept GJT's promises
to discharge its obligations thereunder and otherwise, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Jago Pharma AG hereby represents, warrants, agrees, and covenants
to and with Apothecon, and each other party signing below hereby represents,
warrants, agrees and concurs, as follows:
1. (a) Notwithstanding any provision in the GEOMATRIX Research and
Development Agreement to the contrary:
i. All applications filed by Jago Pharma AG pursuant to its obligations
under the GEOMATRIX Research and Development Agreement as are necessary
or useful for the Registration of the Product shall be filed in the name
of, and be owned by, Apothecon, and not GJT.
ii. All data and results pertaining to the Product generated by Jago
Pharma AG under the Research and Development Agreement shall be owned
solely by Apothecon. Concurrently with the execution and delivery of this
Jago Pharma Waiver and Consent Agreement, Jago Pharma will turn over to
Apothecon all data and results heretofore developed by or for it
pertaining to the Product. Jago Pharrna AG will thereafter report in
writing such data and results developed by or for it not less frequently
than quarterly to Apothecon and GJT (and monthly if requested by either
party), and will immediately transmit all such data to Apothecon by
magnetic media or such other method as Apothecon shall request.
iii. In the event that the GEOMATRIX Research and Development
Agreement should terminate, for whatever reason and however effected,
then, in addition to any remedies available to APOTHECON under the *
Development and Marketing Agreement at law or in equity, Jago Pharma
AG shall, at Apothecon's election and request, enter into an agreement
with Apothecon for the development and registration of the Product on
terms and conditions that, to the maximum practicable extent, require
Jago Pharma AG to perform the same obligations and observe the same
terms and conditions as apply to it under the GEOMATRIX Research and
Development Agreement (without regard to Genta and Genta Jago LLC's
duties or responsibilities thereunder), and with Apothecon having the
rights that GJT otherwise had under such GEOMATRIX Research and
Development Agreement and with APOTHECON assuming GJT's obligations
under such GEOMATRIX Research and Development Agreement to the extent
such obligations do not conflict with or are in addition to the
obligations that Apothecon has under the * Development and Marketing
Agreement. In such event Apothecon shall be entitled to grant to Jago
Pharma AG a * under the Patent Rights and Knowhow solely to conduct
the Research and Development (as such term is defined in the GEOMATRIX
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
Research and Development Agreement) that Jago Pharma AG is obligated to
conduct under the GEOMATRIX Research and Development Agreement, and any
payments for services performed thereafter by Jago Pharma AG with respect
to the development of the Product shall be made directly by APOTHECON to
Jago Pharma AG.
(b) If GJT breaches the * Development and Marketing Agreement with
respect to the development of the Product in a manner that entitles
APOTHECON to terminate same pursuant to section 11.2.2.1 or 11. 2.2.2
thereof, or makes an untrue statement that entitles APOTHECON to
terminate same pursuant to section 11.2.4.1 thereof, and/or in the event
that GJT commences proceedings to dissolve, liquidate or wind up its
affairs, then, in addition to any remedies available to it under said *
Development and Marketing Agreement or available to it at law or in
equity, APOTHECON may elect (by delivering a writing to GJT and Jago
Pharma AG of APOTHECON's intent to exercise its option), for Jago Pharma
AG to, and Jago Pharma AG agrees that it will, promptly enter into an
agreement with APOTHECON under which: (i) Jago Pharma will, to the extent
it has the right to do so, ensure that all licenses, sublicenses and
other rights and privileges granted by GJT under the * Development and
Marketing Agreement shall continue without change, and (ii) Jago Pharma
will assume all rights and obligations of GJT under articles 3, 4, 5, 6,
11.4.5, 12, 14, 15.1, and 15.2 of the Development and Marketing Agreement
and will promptly cure any defaults of GJT under said articles, any
payments to be made thereafter by APOTHECON under said articles shall
thereafter be paid to Jago Phanna, and APOTHECON shall continue to enjoy
all rights and privileges granted under said articles.
2. Jago Pharma shall submit to Apothecon, concurrently with its submission
to GJT, a copy of (i) all reports, statements, invoices, Product Workplans, and
budgets submitted by Jago Pharma AG to GJT or to the Steering Committee relating
to the Product, (ii) a copy of all reports relating to the Product submitted to
GJT under section 5.4 of the GEOMATRIX Research and Development Agreement, and
(iii) a copy of all submissions to, and all responses and approvals obtained
from, a regulatory authority relating to the Product. Jago Pharma AG shall
promptly inform Apothecon of any default by GJT under the GEOMATRIX Research and
Development Agreement. Following any such default, Apothecon shall have the
right, but shall not be under any obligation of any nature whatsoever, expressly
or impliedly, to (i) cure any such default, and/or (ii) pay Jago Pharma AG
directly thereafter for all services performed by it under the GEOMATRIX
Research and Development Agreement that pertain to the Product and deduct and
offset same from any monies payable thereafter by Apothecon to GJT.
3. Apothecon shall have the right to exercise the same audit rights as GJT
may exercise under section 4.6 of the GEOMATRIX Research and Development
Agreement, to the extent relating to the Product only.
4. Jago Pharma AG shall defend, indemnify and hold Apothecon, Inc. harmless
from and against any and all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) that Apothecon suffers as a
result of any claim, demand, action or other proceeding by any Third Party
arising from or relating to the *, its directors, officers, employees,
consultants or agents in performing its obligations under the GEOMATRIX Research
and Development Agreement, except to the extent such losses, liabilities,
damages and expenses arise from the *, or their respective directors, officers,
general partners, employees, consultants, or agents (other than *). Apothecon,
as an Indemnitee, agrees to adhere to and be bound by the terms of section 9.5
of the GEOMATRIX Research and Development Agreement, as though such terms were
fully set forth herein (and with "Article 9" replaced by "Article 4 hereof").
5. To the extent any provisions of the * Agreements or of any of the
GEOMATRIX Agreements conflict in any way with the terms of this Jago Pharma
Waiver and Consent Agreement, the terms of this Agreement shall control.
6. This Waiver and Consent shall be effective immediately and shall continue
in full force and effect until such time as Apothecon may elect to terminate it
by a writing delivered to GJT and to Jago Pharma by a duly authorized officer of
Apothecon, or until the termination of the * Marketing and Development
Agreement, whichever occurs first.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
7. Any consent, notice or report required or permitted to be given or made
hereunder by one party to the other party shall be in English and in writing,
delivered personally or by registered mail, return receipt requested, addressed
to the other party at its address indicated below or to such other address as
the addressee shall have last furnished in writing to the addressor (with a copy
addressed as well to the attention of its "Legal Counsel") and shall be
effective upon receipt by the addressee.
8. Each party represents and warrants to the other parties hereto the following:
a) Existence and Power. It (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized; (ii) has the requisite power and authority and the legal right
to own and operate its property and assets, to lease the property and
assets it operates under lease, and to carry on its business as it is now
being conducted; and (iii) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not
have a material adverse effect on the properties, business, financial or
other condition of it and would not materially adversely affect its
ability to perform its obligations under this Agreement.
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder; and (ii) has taken
all necessary action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on its behalf, and
constitutes a legal, valid, binding obligation, enforceable against it in
accordance with its terms.
c) No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required
to be obtained by it in connection with the execution and performance of
this Agreement have been obtained.
d) No Conflict. The execution and delivery of this Agreement on
its behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations applicable to it, and (b) do not conflict or are inconsistent
with, or constitute a default under, any contractual or fiduciary
obligation or covenant of it.
9. This Jago Pharma Waiver and Consent Agreement shall inure to the benefit
of, and be binding upon each party hereto, and its respective successors,
permitted assigns and legal representatives. Any party may also assign its
rights and obligations under this Agreement without the consent of the other
parties in connection with a merger, consolidation, or the sale of all or
substantially all of its assets to an Affiliate agreeing to be bound by same, or
may otherwise assign its rights or obligations under this Agreement only with
the prior written consent of the other parties hereto. This Agreement shall
survive any merger, consolidation or similar reorganization of either party with
or into another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
10. This Jago Pharma Waiver and Consent Agreement, together with all other
documents to the extent referred to herein, constitute the total and complete
agreement of the parties and supersede all prior understandings and agreements
hereto made, and there are no other representations, understandings or
agreements relating to the subject matter hereof that are not set forth herein
on which a party has relied. All terms and conditions of the GEOMATRIX Research
and Development Agreement, to the extent not changed or supplemented by this
Jago Pharma Waiver and Consent Agreement, remain in full force and effect.
11. This Jago Pharma Waiver and Consent Agreement shall be governed by and
construed in accordance with the laws of Switzerland, without reference to the
conflicts of law principles thereof.
12. No provision of this Jago Pharma Waiver and Consent Agreement, or the
benefit thereof may be waived, altered, amended or repealed in whole or in part
except by the written consent of all of the parties hereto, and no such waiver
or changed shall extend beyond the circumstances for which it is granted. Except
as specifically provided for herein, the waiver from time to time by a party of
any of its rights or its failure to exercise any remedy
-4-
<PAGE>
shall not operate or be construed as a continuing waiver of same or of any other
of such party's rights or remedies hereunder.
13. If any term, covenant or condition of this Jago Pharma Waiver and
Consent Agreement or the application thereof to any party or circumstance shall,
to any extent, be held to be invalid or unenforceable, then (1) the remainder of
this Agreement, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law; and (2) the parties hereto covenant and agree to renegotiate
any such term, covenant or application thereof in good faith in order to provide
a reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the parties that the basic purposes of this Agreement are to be
effectuated.
14. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Jago Pharma Waiver and Consent
Agreement or any term or condition hereof, or the performance by a party of its
obligations hereunder, whether before or after termination of this Agreement,
shall be finally resolved by binding arbitration. Whenever a party shall decide
to institute arbitration proceedings, it shall give written notice to that
effect to the other parties. Any arbitration hereunder shall be conducted under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce. Any such arbitration shall be conducted in the English language by a
panel of three (3) arbitrators appointed in accordance with such rules, and
shall be held in Paris, France. The arbitrators shall have the authority to
grant specific performance, and to allocate between the parties the cost of
arbitration in such equitable manner as they determine. Judgment upon the award
so rendered may be entered in any court having jurisdiction or application may
be made to such court for judicial acceptance of any award so rendered and an
order of enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of limitations,
which also shall apply to any arbitration under this Section 14, shall be
deter-mined by binding arbitration pursuant to this Section 14.
15. It is expressly agreed that the parties are independent contractors with
each other under this Agreement and that the relationship between the parties
shall not constitute a partnership, joint venture or agency. No party shall have
the authority to make any statements, representations or commitments of any
kind, or to take any action which shall be binding on any other party, without
the prior consent of the other party to do so.
16. This Jago Pharma Waiver and Consent Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be strictly
construed against any party hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Jago Pharma
Waiver and Consent Agreement through their respective duly authorized
representatives as of the date first set forth above.
JAGO PHARMA AG
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
President
We accept and agree to the foregoing, and acknowledge same by executing this
Jago Pharma Waiver and Consent Agreement through our duly authorized
representatives:
GENTA JAGO TECHNOLOGIES BV
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
GENTA INCORPORATED
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Chairman and Chief Executive Officer
GENTA JAGO DELAWARE, L.L.C.
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
APOTHECON, INC.
By: /s/ Lee Burg
------------
Lee Burg
President
-6-
<PAGE>
EXHIBIT 3.6(IV)
JAGOTEC AG
SEESTRASSE 47
CH-6052 HERGISWIL, SWITZERLAND
February 28, 1996
Apothecon, Inc.
777 Scudder Mills Road
Princeton, New Jersey 08536
USA
Attn.: President
Genta Jago Technologies BV
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc., a
Delaware corporation, and Genta Jago Technologies BV ("GJT"), a Dutch company,
regarding the development and marketing of *, using certain proprietary
sustained release technology licensed to GJT by Jagotec AG (said agreement, as
it may be supplemented, changed or extended from time to time hereafter, is
referred to as the "* Development and Marketing Agreement"). You acknowledge
receipt of a copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and Genta
Jago Technologies BV ("GJT"), a Dutch company, regarding the grant of certain
license rights to Apothecon to make, have made, use and sell * under certain
Patent Rights and Know- How licensed to GJT pertaining to certain proprietary
sustained release technology licensed to GJT by Jagotec AG (said agreement, as
it may be supplemented, changed or extended from time to time hereafter, is
referred to as the "* License Agreement"). You acknowledge receipt of a copy of
said agreement. The * License Agreement and the * Development and Marketing
Agreement are referred to herein as the "* Agreements.";
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Jagotec Waiver and Consent Agreement") have the meaning
ascribed to such term in the * License Agreement.
Jagotec AG ("Jagotec"), a Swiss corporation, is party to a Restated
GEOMATRIX License Agreement between Jagotec and GJT dated May 12, 1995 (said
agreement, as it may be supplemented, changed or extended from time to time, is
referred to herein as the "License Agreement") and to a Restated GEOMATRIX
Manufacturing License Agreement between Jagotec and GJT dated May 12, 1995 (said
agreement, as it may be supplemented, changed or extended from time to time, is
referred to herein as the "Manufacturing License Agreement").
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
Jagotec is a 50% owner of the equity and income interests of GJT. Jagotec
is an Affiliate of GJT and of Jago Holding AG, a Swiss corporation. Accordingly,
the undersigned expects to derive, directly or indirectly, substantial economic
benefit as a result of the execution, delivery and performance of the *
Agreements. Therefore, in order to induce Apothecon to execute, deliver and
perform the * Agreements, to make the payments required of Apothecon thereunder,
and to accept GJT's promises to discharge its obligations thereunder and
otherwise, Jagotec hereby represents, warrants, agrees, and covenants to and
with GJT and Apothecon as follows:
1. Jagotec agrees that any license rights, sublicense rights and other
rights granted or extended by GJT to Apothecon under the * Agreements are not
subject to the terms and conditions of the License Agreement and the
Manufacturing License Agreement and waives any rights Jagotec may have with
respect to the enforcement of same against Apothecon. Jagotec further agrees
that Apothecon, to the extent it is a subcontractee or sublicensee of GJT's
rights and obligations under the License Agreement and the Manufacturing
Agreement, shall not be bound by any and all obligations and undertakings of GJT
under either of said Agreements, and waives any rights Jagotec may have with
respect to the enforcement of same against Apothecon.
2. (a) Jagotec agrees that, in the event of an event that the License
Agreement and/or the Manufacturing License Agreement is or are terminated, for
whatever reason and whether by action taken by Jagotec, GJT or both, and
notwithstanding any provision (including without limitation section 11.4) to the
contrary in the License Agreement and in the Manufacturing Agreement, all
licenses, sublicenses and other rights and privileges granted or extended to
Apothecon under the * Agreements shall continue and remain in full force and
effect in accordance with their terms, without further action or election on the
part of Apothecon, and Jagotec shall be deemed simultaneously to have assumed
the rights and obligations of GJT under the * Agreements and will promptly cure
all defaults of GJT thereunder.
(b) If GJT breaches the * License Agreement in a manner that
entitles APOTHECON to terminate same pursuant to section 11.2.2.1 or 11.2.2.2
thereof, or makes an untrue statement that entitles APOTHECON to terminate same
pursuant to section 11.2.4.1 thereof, and/or in the event that GJT commences
proceedings to dissolve, liquidate or wind up its affairs, then, in addition to
any remedies available to it under said Agreement or at law or in equity,
APOTHECON may elect (by delivering a writing to GJT and Jagotec of APOTHECON's
intent to exercise such option) for Jagotec to, and Jagotec agrees that it will,
promptly enter into a new, separate agreement with APOTHECON under which (i) all
licenses, sublicenses and other rights and privileges granted by GJT under the *
License Agreement shall continue without further action or election on the part
of APOTHECON, (ii) Jagotec will assume all rights and obligations of GJT and
promptly cure all defaults of GJT thereunder, and (iii) all payments that would
otherwise have been made thereafter by APOTHECON under the * License Agreement
shall thereafter be paid to Jagotec.
(c) If GJT fails to make a payment when due under its Restated
Working Capital Agreement dated as of May 12, 1995 (as amended by a First
Amendment thereto dated as of July 11, 1995 and as the same may be amended from
time to time hereafter, and including any successor agreement thereto), between
GJT and Genta, Incorporated, a Delaware corporation ("Genta"), GJT and/or
Jagotec shall promptly inform APOTHECON of same, and APOTHECON may elect (by
delivering a writing to GJT and Jagotec of APOTHECON's intent to exercise such
option) at any time thereafter to terminate the * License Agreement and for
Jagotec to, and Jagotec agrees that it will, promptly enter into a new, separate
agreement with APOTHECON under which (i) all licenses, sublicenses and other
rights and privileges granted by GJT under the * License Agreement shall
continue without further action or election on the part of APOTHECON, and (ii)
Jagotec will assume all rights and obligations of GJT and promptly cure all
defaults of GJT thereunder; provided, however, that all payments that would
otherwise have been made thereafter by APOTHECON under the * License Agreement
and otherwise under such new, separate agreement shall thereafter continue to be
paid to GJT by APOTHECON, until APOTHECON is duly instructed otherwise in
writing by GJT and Jagotec AG.
3. To the extent any provisions of the * Agreements supplement or conflict
with the terms of the GEOMATRIX Agreements, the terms of the * Agreements shall
control.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
4. This Jagotec Waiver and Consent Agreement shall inure to the benefit of
Apothecon, its successors, assigns and legal representatives, as well as GJT,
its successors, assigns and legal representatives, and shall bind the Jagotec
and its successors and assigns. This Jagotec Waiver and Consent Agreement sets
forth the entire understanding of the GJT, Jagotec and Apothecon with respect to
the subject matter hereof, and there are no other promises, representations or
understandings, written or oral, not set forth herein.
5. Each party represents and warrants to the other parties hereto the
following:
a) Existence and Power. It (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized; (ii) has the requisite power and authority and the legal right
to own and operate its property and assets, to lease the property and
assets it operates under lease, and to carry on its business as it is now
being conducted; and (iii) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not
have a material adverse effect on the properties, business, financial or
other condition of it and would not materially adversely affect its
ability to perform its obligations under this Agreement.
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder; and (ii) has taken
all necessary action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on its behalf, and
constitutes a legal, valid, binding obligation, enforceable against it in
accordance with its terms.
c) No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required
to be obtained by it in connection with the execution and performance of
this Agreement have been obtained.
d) No Conflict. The execution and delivery of this Agreement on
its behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations applicable to it, and (b) do not conflict or are inconsistent
with, or constitute a default under, any contractual or fiduciary
obligation or covenant of it.
6. This Jagotec Waiver and Consent Agreement shall be effective
immediately and shall continue in full force and effect until such time as
Apothecon may elect to terminate it by a writing delivered to GJT and to Jagotec
by a duly authorized officer of Apothecon, or until the termination of the *
Agreements, whichever occurs first.
7. Any consent, notice or report required or permitted to be given or made
hereunder by one party to the other party shall be in English and in writing,
delivered personally or by registered mail, return receipt requested, addressed
to the other party at its address indicated below or to such other address as
the addressee shall have last furnished in writing to the addressor and shall be
effective upon receipt by the addressee.
If to Jagotec: Jagotec AG
c/o Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz, Switzerland
Attention: Dr. Jacques Gonella
with a copy to: Rinderknecht Glaus & Stadelhofer
Beethovenstrasse 7
Postfach 4451
CH-8002 Zurich, Switzerland
Attention: Dr. Thomas M. Rinderknecht
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
If to GJT: Genta Jago Technologies BV
Swiss Branch
Grundstrasse 12
6343 Rotkreuz, Switzerland
Attention: Executive Management Committee
with copies to: Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121, U.S.A.
Attention: Thomas H. Adams, Ph.D.
and: Pillsbury Madison & Sutro
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
Attention: Thomas E. Sparks, Jr., Esq.
If to
APOTHECON: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: President
with a copy to: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: Corporate Legal Counsel
8. This Jagotec Waiver and Consent Agreement shall be governed by and
construed in accordance with the laws of Switzerland, without reference to the
conflicts of law principles thereof.
9. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Jagotec Waiver and Consent
Agreement or any term or condition hereof, or the performance by either party of
its obligations hereunder, whether before or after termination of this Jagotec
Waiver and Consent Agreement, shall be finally resolved by binding arbitration.
Whenever a party shall decide to institute arbitration proceedings, it shall
give written notice to that effect to the other party. Any arbitration hereunder
shall be conducted under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce. Any such arbitration shall be conducted in
the English language by a panel of three (3) arbitrators appointed in accordance
with such rules, and shall be held in Paris, France. The arbitrators shall have
the authority to grant specific performance, and to allocate between the parties
the cost of arbitration in such equitable manner as they determine. Judgment
upon the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award so
rendered and an order of enforcement, as the case may be. Whether a claim,
dispute or other matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this Section 9,
shall be determined by binding arbitration pursuant to this Section 9.
10. It is expressly agreed that the parties are each independent
contractors with one another under this Agreement and that the relationship
between the two parties shall not constitute a partnership, joint venture or
agency. Neither party 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 party, without the prior consent of the other party to do
so.
11. The provisions of this Jagotec Waiver and Consent Agreement may not
be waived, altered, amended or repealed in whole or in part except by the
written consent of all of the parties hereto.
-4-
<PAGE>
12. The terms, covenants, conditions and provisions contained herein,
together with all other documetts to the extent referred to herein, constitute
the total and complete agreement of the parties and supersede all prior
understandings and agreements hereto made, and there are no other
representations, understandings or agreements relating to the subject matter
hereof.
13. This Jagotec Waiver and Consent Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be strictly
construed against any party hereto.
14. This Jagotec Waiver and Consent Agreement shall inure to the benefit
of, and be binding upon each party hereto, and its respective successors,
permitted assigns and legal representatives. Any party may also assign its
rights and obligations under this Agreement without the consent of the other
parties in connection with a merger, consolidation, or the sale of all or
substantially all of its assets to an Affiliate agreeing to be bound by same, or
may otherwise assign its rights or obligations under this Agreement only with
the prior written consent of the other parties hereto. This Agreement shall
survive any merger, consolidation or similar reorganization of either party with
or into another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
15. No provision of this Jagotec Waiver and Consent Agreement, or the
benefit thereof may be waived, altered, amended or repealed in whole or in part
except by the written consent of all of the parties hereto, and no such waiver
or changed shall extend beyond the circumstances for which it is granted. Except
as specifically provided for herein, the waiver from time to time by a party of
any of its rights or its failure to exercise any remedy shall not operate or be
construed as a continuing waiver of same or of any other of such party's rights
or remedies hereunder.
16. If any term, covenant or condition of this Jagotec Waiver and Consent
Agreement or the application thereof to any party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (1) the remainder of this
Agreement, or the application of such term, covenant or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (2) the parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the parties that the basic purposes of this Agreement are to be effectuated.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Jagotec
Waiver and Consent Agreement through their respective duly authorized
representatives as of the date first set forth above.
JAGOTEC AG
By: /s/ Jacquest Gonella
--------------------
Dr. Jacques Gonella
President
We accept and agree to the foregoing, and acknowledge same by executing this
Jagotec Waiver and Consent Agreement through our duly authorized
representatives:
GENTA JAGO TECHNOLOGIES BV
By: /s/ Jacques Gonella
-------------------
Dr.Jacques Gonella
Managing Director
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
managing Director
APOTHECON, INC.
By: /s/ Lee Burg
------------
Title: VP/GM
Date:
-6-
<PAGE>
EXHIBIT 4.2
INITIAL PRODUCT SPECIFICATIONS
- - - --------------------------------------------------------------------------------
*
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
EXHIBIT 9.1
LIST OF GEOMATRIX TRADEMARKS
- - - -------------------------------------------------------------------------------
Country TM-No. Issue Date
- - - ------------------------------- ------------ --------
International 522 445 April 8, 1988
Registration (25 countries)
Canada 369 959 May 29, 1990
Switzerland 360 353 November 11, 1987
United Kingdom (class 1) 1415 927 March 24, 1990
United Kingdom (class 5) 1353 226 August 2, 1995 *)
Greece 90 337 August 25, 1955
Japan 2578 899 September 30, 1993
New Zealand 185 989 July 28, 1995
Portugal **) 303 292 September 12, 1994
Sweden 223 455 May 10, 1991
United States 1562 880 October 31, 1989
*) renewal date
**) registration not yet granted
EXHIBIT 10.90
-------------
CONFIDENTIAL TREATMENT REQUESTED
LICENSE AGREEMENT
THIS AGREEMENT, is made as of the Effective Date (as defined below), by
and between APOTHECON, INC., a Delaware corporation with offices at 777 Scudders
Mill Road, Plainsboro, New Jersey 08536, USA (hereinafter referred to as
"APOTHECON"), and GENTA JAGO TECHNOLOGIES BV, a Dutch company, having offices at
Grundstrasse 12, 6343 Rotkreuz, Switzerland (hereinafter referred to as "GJT").
RECITALS
WHEREAS, GJT has the expertise and skill needed to develop
pharmaceutical preparations in * formulation of * (hereinafter, as more fully
defined below, referred to as the "Product"); and
WHEREAS, GJT (i) is the exclusive licensee of Jagotec AG, a Swiss
corporation, of certain patent rights covering the GEOMATRIX formulation of the
Product and (ii) is in possession of certain know-how and technology regarding
the development, production and analytical methods of the Product (hereinafter,
as more fully defined below, referred to as "Know-how");
WHEREAS, APOTHECON is interested in developing and marketing the
Product throughout the world and receiving an exclusive license under the
relevant GEOMATRIX patent rights and Know-how for such purpose, and GJT is
willing to grant such exclusive license to APOTHECON, all upon the terms and
conditions set forth below.
WHEREAS, the terms and conditions governing the research, development,
manufacture, and marketing of the Product are set forth in a separate agreement
of even date herewith between GJT and APOTHECON (said agreement, as the same may
be extended, supplemented or changed hereafter, referred to hereinafter as the "
Development and Marketing Agreement").
NOW, THEREFORE, in consideration of the above premises and the mutual
promises and covenants set forth herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set forth in this Article 1:
* that (i) where marketed within the United States, is classified by
FDA as an * under the Federal Food, Drug and Cosmetic Act, as amended, and (ii)
where marketed outside the United States, is classified, marketed and/or
designated as a *.
"Adverse Drug Reaction (ADR)" shall have the meaning ascribed to such
term under applicable law, but in any event shall include any reaction, side
effect or other undesirable event (such as side effects, injuries, toxicity or
sensitivity reaction, or any unexpected incidence and the severity thereof) that
is associated with the use of the Product in humans, whether or not the event is
considered drug related, including, but not limited to, the following: an
adverse event occurring in the course of the use of the Product in professional
practice, including use in clinical studies; drug overdose, whether accidental
or intentional; an adverse event occurring from drug abuse; an adverse event
occurring from drug withdrawal; any significant failure of expected
pharmacological or biological actions; and any adverse event associated with the
clinical use, study, investigation, testing and marketing of the Product or any
other product (to the extent such adverse event pertains to the use or
incorporation of the GEOMATRIX Technology in such product). In addition, when an
ADR is herein referred to as "serious", it shall have the
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
meaning ascribed to such term under applicable law, but in any event shall
include one or more of the following: death; admission to a hospital or
prolongation of a hospital stay; permanent or substantially disabling condition;
life- threatening condition; overdose; congenital anomaly; or cancer. Also, when
an ADR is herein referred to as "unexpected", it shall have the meaning ascribed
to such term under applicable law, but in any event shall include (x) for a
non-marketed product, an experience that is not identified in nature, severity
or frequency in the current clinical investigator's confidential information
brochure, and (y) for a marketed product, an experience which is not listed in
the current labeling for such product, and includes an event that may be
symptomatically and pathophysiologically related to an event listed in the
labeling but differs from the event because of increased frequency or greater
severity or specificity.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of another Person if
it/he/she owns, or directly or indirectly controls, fifty percent (50%) or more
of the voting stock or other ownership interest of the other Person, or if
it/he/she directly or indirectly possesses the power to direct or cause the
direction of the management and policies of the other Person by any means
whatsoever. For example, Jagotec and Jago Pharma AG are Affiliates of GJT.
"Developmental Program" shall mean a development program in which the
different activities to be performed by GJT and APOTHECON shall be listed
(together with a respective time schedule for the development of the Product to
be carried out by GJT and/or APOTHECON), as the case may be, according to such
"Project Addendum" (and as amended or supplemented by mutual written agreement
from time to time hereafter), with the initial Project Addendum attached as
Exhibit 1.1(i) to the * Development and Marketing Agreement.
"Effective Date" means the date when this Agreement is executed and
delivered by both parties hereto, and (i) APOTHECON shall have received duly
executed originals of all Waivers and Consents required under Section 3.6
hereof, (ii) all opinions of counsel contemplated by section 3.7 hereof have
been received by APOTHECON, and (iii) Jagotec and Jago Pharma shall have duly
executed the acknowledgment on the signature page of this Agreement.
"...exclusive....."means, with respect to the grant of a license or
sublicense, or to the appointment of a distributor, a license, sublicense, or
appointment whereby the licensee's, sublicensee's or appointee's rights are sole
and entire, and operate to exclude all others, including the licensor,
sublicensor and appointor, as the case may be, and may be exercised by the
licensee or sublicensee itself or through one or more of its Affiliates. An
exclusive licensee (and permitted sublicensees) may sell and distribute Products
through agents and distributors under exclusive or nonexclusive arrangements in
any country in the Territory. "...semi-exclusive....," with respect to the grant
of a license or sublicense, or to the appointment of a distributor, shall be
interpreted in the same manner as the preceding sentence, except that the
licensor, sublicensor or appointor, as the case may be, may also use the
licensed, sublicensed or appointed rights itself or through one or more of its
Affiliates.
"FDA" shall mean the United States Food and Drug Administration, or any
successor agency having regulatory jurisdiction over the manufacture,
distribution and sale of drugs in the United States.
"First Commercial Sale" shall mean, with respect to any Product, the
first sale for use or consumption by the general public of such Product in a
particular country in the Territory after the required marketing approval and
pricing approval, if any, has been granted by the governing health authority of
such country.
"GEOMATRIX Agreements" means the GEOMATRIX License Agreement, the
GEOMATRIX Manufacturing License Agreement, the GEOMATRIX Supply Agreement, and
the GEOMATRIX Research and Development Agreement (each, individually, a
"GEOMATRIX Agreement").
"GEOMATRIX License Agreement" shall mean the Restated GEOMATRIX License
Agreement dated as of May 12, 1995 between GJT and Jagotec.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 2 -
<PAGE>
"GEOMATRIX Manufacturing License Agreement" shall mean the Restated
GEOMATRIX Manufacturing License Agreement dated as of May 12, 1995 between GJT
and Jagotec.
"GEOMATRIX Research and Development Agreement" means the Restated
GEOMATRIX Research and Development Agreement dated as of May 12, 1995 by and
among GJT, Jago Pharma AG, a Swiss corporation, Genta Incorporated, a Delaware
corporation, and Genta Jago Delaware, L.L.C., a Delaware limited liability
company.
"GEOMATRIX Supply Agreement" means the Restated GEOMATRIX Supply
Agreement dated as of May 12, 1995 by and among GJT and Jago Pharma AG, a Swiss
corporation.
"GEOMATRIX Technology" means all oral controlled-release drug delivery
and related technology which utilizes a hydrophilic drug-containing matrix *
which controls the release of the drug through the use of one or more barrier
layers, together with all improvements thereon and thereto, all to the extent
and only to the extent that GJT now has or hereafter will have the right to
grant licenses, immunities or other rights thereunder.
"Gross Margin" shall have the meaning ascribed to such term in Section
7.2.2 hereof.
"Jagotec" means Jagotec AG, a Swiss corporation, having a place of
business at Seestrasse 47, CH6052 Hergiswil, Switzerland.
"Jago Pharma" means Jago Pharma AG, a Swiss corporation, having a place
of business at Eptingerstrasse 51, CH-4132 Muttenz, Switzerland.
"* Development and Marketing Agreement" has the meaning ascribed to
such term in the recitals above.
"Know-how" means all information and data, which is not generally
known, including, but not limited to, formulae, procedures, protocols,
techniques, preclinical and clinical developmental and technical data, and
results of experimentation and testing, which (a)(i) relate to the GEOMATRIX
Technology or the Product, or the manufacture or use of same, or (ii) are
necessary or useful to develop, make, use, sell or seek regulatory approval in a
country in the Territory to make, use or sell the Product, and (b) are developed
or acquired by or are under the control of a party to this Agreement.
"Manufacturing Cost" shall mean the cost to APOTHECON and its
Affiliates of * by APOTHECON or such Affiliates in the manufacture of all
products produced in the facility or facilities in which the Product is
manufactured. If the Product is manufactured in whole or in part by an
unaffiliated Third Party, the costs to be taken into account shall be the amount
paid to such Third Party plus any of the aforementioned costs that are incurred
in completing the manufacture and delivery of the Product.
"Net Sales" shall mean the applicable quantity of Product times "Net
Sales Price." It shall be determined at the point of sale from APOTHECON (or
from such of its Affiliates to whom APOTHECON may sell such Product) to a Person
not Affiliated with APOTHECON.
"Net Sales Price" of Product shall mean the invoiced sales price of the
Product billed to independent customers of APOTHECON who are not its Affiliates,
less (to the extent incurred and absorbed by APOTHECON or its Affiliates): (a)
credits, allowances, discounts and rebates to, and chargebacks from the account
of, such independent customers for spoiled, damaged, out-dated, rejected or
returned Product; (b) actual freight and insurance costs in transporting the
Product in final form to such customers; (c) cash, quantity and trade discounts,
rebates, and other price adjustments or price reduction programs; (d) sales,
use, value-added and other direct taxes,
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 3 -
<PAGE>
or any other governmental charge imposed upon the production, importation, use
or sale of the Product; (e) customs duties, surcharges and other governmental
charges in connection with the exportation or importation of the Product in
final form; and (f) invoiced amounts with respect to the Product which are first
outstanding and unpaid for * or more during the applicable reporting period,
less such invoiced amounts outstanding and unpaid for * or more which are
received or recovered during such reporting period; provided that such amounts
under (f) shall not exceed * of APOTHECON during the term hereof.
Notwithstanding the foregoing, if any Product is sold under * arrangements,
then, prior to the First Commercial Sale of such Product and thereafter promptly
following the end of each calendar year, APOTHECON and GJT shall * the "Net
Sales Price' for sales of such Product under such * arrangements. Such formula
shall be based on such factors as the parties * and shall appropriately and
equitably allocate a sales price to Product sold under such * arrangements.
"Patent Rights" shall mean (a) all patent applications heretofore or
hereafter filed or having legal force in any country in the Territory owned by
or licensed to GJT or its Affiliates or to which GJT or its Affiliates otherwise
acquires rights, which claim the GEOMATRIX Technology or the Product, or the
process of manufacture or use of the GEOMATRIX Technology or the Product,
together with any and all patents that have issued or in the future issue
therefrom, including utility, model and design patents and certificates of
invention, including but not limited to those patent applications and patents
listed on Exhibit 1.1(ii) hereto, and (b) all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions, substitutions,
confirmations or additions to any such patents and patent applications; all to
the extent and only to the extent that GJT now has or hereafter will have the
right to grant licenses, immunities or other rights thereunder.
" Person" shall mean an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority, or any other form of entity not specifically listed herein.
"Product" shall mean a pharmaceutical composition containing *
(including all commonly used and known salts and acids thereof) which is an *,
and which incorporates, is based on and is derived by use of the GEOMATRIX
Technology.
"Region I" shall mean all *, and their respective territories and
possessions.
"Region II" shall mean all countries *, and their respective
territories and possessions.
"Region III" shall mean *, and their respective territories and
possessions.
"Region IV" shall mean all other countries of the world other than
those located in Regions I-III, and their respective territories and
possessions.
"Registration" shall mean any form and type of registration,
application, permit, license, authorization, approval, presentation or
notification being requested by any competent authorities, government or body in
a given country for the manufacturing, production, marketing, advertising,
distribution, sale, trade, import, export or use of the Products of such
authority, government or body, and shall include all acts, steps, applications,
presentations, statements or other things which are necessary or useful to
obtain the foregoing.
"Research and Development Costs" shall mean (a) the following costs
reasonably incurred by GJT relating to its development and Registration
responsibilities hereunder for the Product: raw materials, energy, direct labor
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 4 -
<PAGE>
(salary and benefits) and reasonable allocable direct (but not indirect)
overhead charges relating to the development and Registration of the Product,
plus (b) reasonable out-of-pocket or other expenses paid or accrued by GJT to
any Subcontractee performing any portion of such development and Registration,
provided that expenses paid to an Affiliate Subcontractee under this clause (b)
shall not exceed the amounts required to be paid under the GEOMATRIX Research
and Development Agreement. All such costs shall be determined and allocated in
accordance with generally accepted accounting principles, consistently applied.
"Royalty Term" shall mean, with respect to each Product in a given
country in the Territory in which the Product is sold by or through APOTHECON,
the term for which a Valid Patent Claim remains in effect, and which would be
infringed by the manufacture, use or sale of the Product in such country but for
the license rights granted to APOTHECON under this Agreement.
"Scale-Up" shall mean, with respect to the Product and a designated
Manufacturing facility, the process of developing a reliable and practical
method of manufacturing the Product in such designated manufacturing facility to
effectuate the orderly transition from laboratory production of the Product to
routine full-scale production of the Product in such designated facility in
quantities necessary for commercial sale. Without limitation, Scale-Up includes
(a) installation, evaluation and validation of the necessary equipment, (b)
establishment, evaluation, validation and finalization of the necessary
production and process controls, (c) demonstration of the ability to produce a
batch size of at least * of the proposed commercial production batch for the
Product at such facility, (d) demonstration of compliance with all other
applicable laws, regulations and good manufacturing practices, (e) production of
GMP bio-batches for pivotal clinical trials, and (f) transposition to routine
full scale production.
"Specifications" of the Product shall have the meaning set forth in
Section 4.2 of the * Development and Marketing Agreement.
"Subcontractee" shall have the meaning ascribed to such term in Article
14 of the * Development and Marketing Agreement.
"Territory" shall mean *.
"Third Party" means any Person other than GJT or APOTHECON, and
includes their respective Affiliates and sublicensees except as otherwise
specifically indicated.
"Valid Patent Claim" shall mean a claim of an issued and unexpired
patent included within the Patent Rights (or a claim under a patent application
within the Patent Rights that is being diligently prosecuted by GJT or its
Affiliates), which has not been held permanently revoked, or declared
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, .unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise (other than as required by applicable
law to initiate the reissue of a patent).
"Validated Manufacturing Scale-Up" shall mean, with respect to the
Product and a designated Manufacturing facility, a reliable and practical method
of manufacturing the Product in such designated manufacturing facility for
routine full-scale production of the Product in such designated facility in
quantities necessary for commercial sale. Without limitation, Validated
Manufacturing Scale-Up includes (a) installation, evaluation and validation of
the necessary equipment, (b) establishment, evaluation, validation and
finalization of the necessary production and process controls, (c) successful
demonstration and validation of the ability to produce GMP batch sizes equal to
one hundred percent (100%) of the proposed commercial production batch for the
Product at such facility, (d) demonstration of compliance with all other
applicable laws, regulations and good manufacturing practices, and (e)
transposition to routine full scale production.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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ARTICLE 2
OWNERSHIP OF RIGHTS
2.1 Ownership of Rights. GJT represents and warrants that:
2.1.1 (a) it has the exclusive license under all rights of any
nature regarding the Patent Rights which are the subject of
the license granted under Article 3 below, and
(b) it has the right to use, and to grant the licenses
hereunder to use, the Know-how which is the subject
of the license granted under Article 3 below,
in each case, whether protected or not by any valid registrations,
approvals or by any law or contract, and
2.1.2 it has not assigned, conveyed or otherwise encumbered by
any agreement, either oral or written, any right, title or interest in
and to the Patent Rights or Know-how which would be inconsistent with
the rights granted APOTHECON hereunder.
2.2 No Taking Subject To. Except as may be expressly set forth in this
Agreement, any sublicense or other rights granted APOTHECON hereunder are not
subject to the terms and conditions of the GEOMATRIX License Agreement, the
GEOMATRIX Manufacturing License Agreement, the GEOMATRIX Supply Agreement or the
GEOMATRIX Research and Development Agreement, and APOTHECON shall not be bound
by any obligations or undertakings of GJT under any of the aforesaid Agreements.
2.3 Enforcement of GEOMATRIX Agreements. [Intentionally omitted].
ARTICLE 3
GRANT OF LICENSE; BACK-UP SUPPLY; CONSENT AND WAIVER
3.1 Grant of License. GJT hereby grants to APOTHECON and APOTHECON
accepts, upon the terms hereinafter set forth:
3.1.1 a * license, with the right to grant sublicenses, under the
Patent Rights and Know-how, to research and develop Products for use in
the Territory in accordance with the * Development and Marketing
Agreement and this Agreement; and
3.1.2 an exclusive license, with the right to grant sublicenses,
under the Patent Rights and Know-how, to use, distribute, market and sell
Products in the Territory; and
3.1.3 subject to section 3.5 hereof, 8 license, with the right to
grant sublicenses, under the Patent Rights and Know-how to make and have
made the Product in the United States (or in its possessions or Puerto
Rico) for use or sale in the Territory.
Such rights shall continue until terminated in accordance with the terms of this
Agreement.
3.2 Supply of Product. [Intentionally omitted.]
3.3 Other Suppliers. [Intentionally omitted].
3.4 Initiation of Back-up Supply. [Intentionally omitted.]
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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3.5 Sublicenses to Certain Third Parties. Notwithstanding anything to
the contrary in this Agreement, APOTHECON shall not sublicense any right and
license granted hereunder to any unaffiliated Third Party in order to make
Product whose research and development programs are primarily based on
controlled release-formulation technology, without the prior written consent of
GJT (not to be unreasonably withheld). APOTHECON shall deliver to GJT a copy of
each sublicense under the Agreement within ten (10) business days after
execution thereof (except that financial and marketing provisions and
information may be redacted), which GJT shall maintain in confidence pursuant to
Article 10 below. Any sublicense shall be subject to the terms and conditions of
the Agreement, and any sublicensee shall be bound by all obligations and
undertakings of APOTHECON hereunder (as they relate to the sublicensed rights).
3.6 Consent and Waiver Agreements. As a material inducement to
APOTHECON's willingness to enter into this Agreement, GJT will cause,
contemporaneously with the execution and delivery of this Agreement, each of the
Consent and Waiver Agreements in the form attached as Exhibits 3.6 (i)-(iv)
hereto to be executed and delivered to APOTHECON.
3.7 Opinions of Counsel. Contemporaneously with the execution and
delivery of this Agreement,GJT will deliver opinions of counsel to itself,
Jagotec and Jago Pharma AG, and an opinion of counsel to Genta Incorporated, in
form and substance satisfactory to APOTHECON.
ARTICLE 4
PRODUCT DEVELOPMENT
4.1 Information Exchange. Promptly following the Effective Date, each
party agrees, subject to conflicting third party rights, to promptly furnish the
other in writing all technical information and preclinical and clinical data
developed or acquired relating to the Product in the control or possession of a
party, including all information in the nature of improvements or modifications
to the aforesaid and all toxicological, analytical, chemical data, and the like.
All such information exchanged shall be treated as Confidential Information of
the disclosing party in accordance with the * Development and Marketing
Agreement.
4.2 Product Specifications. [Intentionally omitted].
4.3 APOTHECON Product Development Duties. [Intentionally omitted.]
4.4 GJT Product Development Duties. [Intentionally omitted.]
4.5 Development and Registration Reports. [Intentionally omitted].
4.6 Development Cost Funding. [Intentionally omitted].
ARTICLE 5
MANUFACTURE AND SUPPLY OF PRODUCT
5.1 Manufacture. [Intentionally omitted].
5.2 Product Registrations. [Intentionally omitted]
5.3 Manufacturing and Registration Reports. [Intentionally
omitted]
5.4 Product Purchase. [Intentionally omitted].
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
5.5 Acceptance; Rejection of Initial Launch Quantity of Product in
Case of Non-Conformity. [Intentionally omitted.]
5.6 Process Changes. [Intentionally omitted].
5.7 Warranties. [Intentionally omitted.
5.8 Inspection. [Intentionally omitted].
5.9 [Intentionally omitted]
5.10 Payment Terms. [Intentionally omitted.]
ARTICLE 6
MARKETING
6.1 Packaging and Labeling. Intentionally omitted].
6.2 Commercialization.
6.2.1 Subject to Sections 6.2.4 and 6.2.5 below, in the event
that APOTHECON in the exercise of its sole discretion does not, either
through itself or an Affiliate, within * of the Product *, register or
file for regulatory approval to market the Product
i) *,
ii) *, and
iii) *
APOTHECON's * where APOTHECON failed to so register or file for such
regulatory approval, unless APOTHECON demonstrates why such filings
were not commercially feasible.
6.2.2 Subject to Sections 6.2.4 and 6.2.5, APOTHECON exclusive
rights under section 3.1.2 shall, at GJT's option, be converted to *
with respect to all countries located in a particular Region within
Regions I, II, III or IV where, having made the filings or
registrations required to be made under section 6.2.1 to maintain such
exclusivity in any such Region, APOTHECON thereafter fails to
diligently prosecute and pursue such regulatory approval for the
marketing of the Product for the number of (or specifically designated)
countries indicated in 6.2.1(i)-(iii) above (and with respect to Region
I, in the United States), unless APOTHECON demonstrates why continuing
such prosecution was not commercially feasible.
6.2.3 Upon obtaining all applicable Registrations to market
the Product for the number of (or specifically designated) countries
indicated in 6.2.1(i)-(iii) above for a given Region (and with respect
to Region I, in the United States), APOTHECON shall use its
commercially reasonable efforts to market, or to cause the marketing
and sales of, the Product for the number of (or specifically
designated) countries indicated in 6.2.1(i)-(iii) above for a given
Region (and with respect to Region I, in the United States), for so
long a period of time as APOTHECON considers it commercially feasible
to do so for such country(ies) in such Region. APOTHECON may, but shall
not be required, to consult with GJT regarding marketing and sales
strategies developed and applied by APOTHECON. APOTHECON shall be
responsible for all
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
costs of marketing and sales of Products incurred by it. Subject to
Section 6.2.4, if APOTHECON ceases to use its commercially reasonable
efforts to market, or cause the marketing and sales of, the Product for
the number of (or specifically designated) countries indicated in 6.2.1
(i)-(iii) above for a given Region (and with respect to Region I, in
the United States), and if substantial steps are not taken by APOTHECON
to reverse same (should such efforts, in fact, have ceased) within
sixty (60) days following receipt by APOTHECON of written notice from
GJT stating that it believes such efforts to have ceased, then,
provided, that APOTHECON ceased such efforts and that it intends to
pursue conversion of APOTHECON's exclusive rights under section 3.1.2
to * with respect to such Region, such rights shall, at GJT's option,
be so converted.
6.2.4 Prior to any conversion of APOTHECON's rights from
exclusive to *, as provided for in each of Sections 6.2.1-6.2.3, GJT
shall give APOTHECON written notice of its intention Dto do so and a
detailed statement of the reasons therefor. APOTHECON shall have sixty
(60) days thereafter to reply in writing as to whether it will go along
with or disagrees with the proposed conversion. If APOTHECON disagrees,
it will provide a detailed statement of its reasons therefor. The
parties will meet and confer within 30 days thereafter to determine if
the difference can be resolved. If not so resolved, the matter will be
referred for resolution pursuant to the arbitration procedures set
forth herein.
6.2.5 An election by GJT to convert APOTHECON's exclusive
rights to * under any of sections 6.2.1-6.2.3 shall be GJT's sole and
exclusive remedy, and GJT shall be deemed to have released and waived
any claims or other causes of action, for and with respect to any and
all damages of any type or nature whatsoever arising out of or in
connection with the acts or omissions of APOTHECON or its Affiliates
entitling GJT to so convert.
6.3 Covenant Not to License a Competitor. [Intentionally omitted]
6.4 Adverse Drug Reactions. [Intentionally omitted]
6.5 Product Recall. [Intentionally omitted].
ARTICLE 7
MILESTONE AND ROYALTY PAYMENTS
7.1 Additional Payments. Subject to Article 11 hereof:
7.1.1 If the Product is the * with the Product), then
APOTHECON shall pay to GJT an *.
7.1.2 Upon demonstration of * to GJT; provided, that * at the
date of such demonstration.
7.2 Royalties. Subject to Article 11 hereof and to sections 4.7.2
and 8.4 of the * Development and Marketing Agreement,
Apothecon will pay GJT royalties of * during the Royalty Term,
subject to the following:
7.2.1 * on Product samples distributed by APOTHECON, it being
understood that such samples will be limited to use primarily in
situations involving promotional photograph
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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and account demonstrations necessary to secure sales contracts, and will not, in
any event, exceed *.
7.2.2 If * in such country in the Territory, less the sum of
(i) packaging (in final form) and labeling costs for
the dosage form of the Product (with such costs, for purposes
of *, * plus
(ii) actual net distribution costs for the Product in
such country, with such * has been approved for marketing in
such country). Actual net distribution costs are defined as
* distribution costs for the Product in such country *, plus
(iii) APOTHECON's actual Manufacturing Costs for the
Product sold in such country, other than the costs already
taken into account under subsections 7.2.2(i) and (ii) above;
provided, however, that for purposes of only, APOTHECON agrees
that its actual Manufacturing Costs for the Product will *
following First Commercial Sale in the United States, by an
amount equal to the percentage change from the immediately
preceding January 1 in the Consumer Price Index for All Urban
Consumers, All Items (1986 = 100) (the "Index"), as published
by the U.S. Department of Labor (or successor index or
department).
7.2.3 All royalties shall cease for a given country in the
Territory upon the first to occur of the following: (i) the expiration
of the Royalty Term in such country; (ii) when the Product is no longer
being marketed by or through APOTHECON in such country; or (iii) upon
termination of this Agreement with respect to such country.
7.2.4 If the royalty rate specified in the Agreement should
exceed the permissible rate established in any country in the
Territory, the royalty rate for Net Sales in such country shall be
adjusted to the highest legally permissible or government-approved
rate.
7.3 Payment: Records; Audits
7.3.1 Payment; Reports. All royalty payments due under this
Agreement shall be paid in U.S. dollars within 60 days of the end of
each calendar quarter, unless otherwise specifically provided herein.
Each payment of royalties shall be accompanied by a report of Net Sales
of Products in sufficient detail to permit confirmation of the accuracy
of the royalty payment made.
7.3.1.1 Exchange Rate; Manner and Place of Payment.
Royalty payments and reports due pursuant to this Agreement
shall be calculated and reported for each calendar quarter.
Exchange conversion of foreign payments into U.S. Dollars
shall be made as necessary at the rate of exchange reported in
The Wall Street Journal as of the end of the fourth banking
day preceding the end of the applicable royalty period or, for
payments other than royalty payments, the fourth banking day
preceding the date of payment. All payments owed under this
Agreement shall be made by wire transfer, unless otherwise
specified by the receiving party.
7.3.1.2 Late Payments. In the event that any payment,
including royalty, milestone and research payments, due
hereunder is not made when due, the payment shall accrue
interest from
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
* ; provided that in no event shall such rate exceed the
maximum legal annual interest rate. The payment of such
interest shall not limit any party from exercising any other
rights it may have as a consequence of the lateness of any
payment.
7.3.2 Records and Audit. During the term of this Agreement and
for a period of two years thereafter, the parties shall each keep
complete and accurate records pertaining to the development of Products
and sale or other disposition of Products in sufficient detail to
permit the other party to confirm the accuracy of all payments and cost
reimbursements due hereunder. Each party shall have the right to have a
representative (including an independent, certified public accountant
if so designated by a party) to audit such books and records to confirm
(i) in the case of APOTHECON, its books and records pertaining to Gross
Sales, Net Sales and royalty and other payments due for the then
current year and the two preceding years, and (ii) in the case of GJT,
its books and records pertaining to any costs or other charges for
which it seeks payment or reimbursement hereunder. Such audits may be
exercised during normal business hours not more frequently than once a
year upon notice to such other party. The party requesting the audit
shall bear the full cost of such audit unless such audit discloses a
variance of * due under this Agreement. In such case, the audited party
shall bear the full cost of such audit. The terms of this Section shall
survive any termination or expiration of this Agreement for a period of
*.
7.3.3 Taxes. All turnover, income and other taxes levied on
account of the royalties and other payments accruing to each party
under this Agreement shall be paid by the party receiving such royalty
or other payment for its own account, including taxes levied thereon as
income to the receiving party.
7.4 Exchange Control. If at any time legal restrictions prevent the
prompt remittance of part or all royalties, purchase price for Product, or other
payments due hereunder, APOTHECON shall have the right, in its sole discretion,
to make such payments by depositing the amount thereof in local currency to
GJT's account in a bank or other depository institution in such country imposing
such restrictions.
7.5 Withholding Taxes. If provision is made in law or regulation for
withholding of taxes of any type, levies or other charges with respect to any
royalty or other amounts payable under this Agreement to any party or other
Person, the party making such payment shall be entitled to deduct such tax, levy
or charge from the royalty or other payment to be made by the party making same
and pay such tax, levy or charge to the proper taxing authority. A receipt of
payment of the tax, levy or charge secured shall be promptly delivered to the
party entitled to the royalty or other payment, together with copies of all
pertinent communications from or with such governmental authorities with respect
thereto. Each party agrees to assist the other party in claiming exemption from
such deductions or withholdings under any double taxation or similar agreement
or treaty from time to time in force and in minimizing the amount required to be
so withheld or deducted.
ARTICLE 8
PATENT RIGHTS
[Intentionally omitted]
ARTICLE 9
TRADEMARKS
9.1 GEOMATRIX Trademark. The GEOMATRIX trademark, as licensed to GJT by
Jagotec as of the date hereof, shall remain the sole and exclusive property of
GJT or Jagotec, as the case may be. APOTHECON shall not, directly or indirectly
through its officers, directors, employees, agents, Affiliates, customers or
other Persons, acquire any proprietary interest or other right to such GEOMATRIX
trademark, other than as provided in the Agreement. Notwithstanding the
foregoing, GJT grants to APOTHECON a non-exclusive, royalty-free
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
license (including the right to grant sublicenses in the same manner as provided
herein for the GEOMATRIX patent rights) to use such GEOMATRIX trademark in
connection with, and for the development, use and sale of, the Products under
the Agreement. GJT shall control, at its sole expense, the prosecution of any
litigation or other action to abate the unauthorized use of such GEOMATRIX
trademark, and the defense of any claim in any litigation or other action
alleging that the use of such GEOMATRIX trademark infringes the rights of any
Third Party. A list of such GEOMATRIX Trademarks for the Territory covered by
this Agreement are set forth on Exhibit 9.1 hereto.
9.2 Registration of Other Trademarks. APOTHECON shall have the right,
in its sole discretion and expense, to register and maintain other trademarks of
its choice to be used in connection with the Products. Such other trademarks
shall be held in the name of APOTHECON.
9.3 Use of GEOMATRIX Trademark. APOTHECON shall be entitled to use, as
it considers appropriate in the exercise of its sole and absolute discretion and
without being obligated in any way, expressly or impliedly to do so, the
GEOMATRIX trademark on the label for the Product. APOTHECON agrees to use the
GEOMATRIX trademark in an appropriate manner in print advertising for the
Product and in the package insert for the Product, it being understood that the
APOTHECON name and marks and the Bristol-Myers Squibb names and marks shall have
preeminence. APOTHECON may also use such other trademarks as it deems
appropriate in connection with the development, use, distribution, marketing and
sale of the Products. Except as otherwise set forth in the Agreement or as
otherwise agreed to in writing by GJT, APOTHECON shall not use such GEOMATRIX
trademark and such other trademarks in any manner whatsoever which infringe the
trademarks or other rights owned by GJT or its Affiliates.
ARTICLE 10
CONFIDENTIALITY
[Intentionally omitted]
ARTICLE 11
TERM AND TERMINATION
11.1 Term. This Agreement shall commence effective upon the Effective
Date. The Agreement shall continue until terminated upon the earlier to occur of
the following: (i) pursuant to Section 11.2 below, (ii) by mutual written
agreement, or (iii) on a country-by-country basis in the Territory upon the
expiration of the Royalty Term in such country.
Upon termination of this Agreement, in whole or in part, pursuant to
section 11.1(ii), the parties will determine the disposition of rights hereunder
as part of such mutual termination. Upon expiration of this Agreement as to any
country in the Territory under Section 11.1(iii) above, APOTHECON shall have an
irrevocable, perpetual, fully paid-up and royalty-free, non-exclusive right and
license to use the Know-how in order to develop, make, have made, use and sell
Products in such country.
11.2 Termination. This Agreement may be terminated in accordance with
any of the following (all of which may be exercised independently of the other):
11.2.1 Termination Without Cause. APOTHECON may elect at any
time, for any reason and without cause, to terminate this Agreement, in
whole or in part as to one or more countries, upon sixty (60) days
written notice to GJT:
11.2.1.1 If * elects to so terminate under this
section 11.2.1 prior to filing of the ANDA in the United
States, then: (i) such termination shall be *
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to *; (ii) all rights and licenses granted by GJT hereunder
shall * with respect to such country(ies) so terminated,
provided, further, that if * so elects to terminate under this
section 11.2.1 in the United States, it shall be deemed a
termination as to the *; (iii) * of any * that are scheduled
or may be made in the future under sections 4.6 of the *
Development and Marketing Agreement and 7.1 hereof (and the
subsections thereunder), provided that such termination is
exercised with respect to the United States; (iv) all
Registrations pertaining to the marketing of the Product shall
be * as to the affected country(ies) and the * under the *
Development and Marketing Agreement shall be provided to and
thereafter may be * to develop, manufacture and market the
Product; (v) the * Development and Marketing Agreement shall *
with respect to the development and marketing of the Product
in such country(ies); and (vi) * and its Affiliates shall
thereafter be entitled to exercise such rights as they may
have under the GEOMATRIX Agreements to make, have made, use or
sell the Product in the country(ies) so terminated without
compensation or obligation to *; provided, that the foregoing
rights under (iv) and (vi) shall not create or imply any right
or license under any patent rights, copyright rights,
trademarks or trade names, know-how, or other intellectual
property rights owned or controlled by * or its Affiliates.
11.2.1.2 If * elects to so terminate this Agreement under this
section 11.2.1 subsequent to the * in the United States, then:
(i) such termination shall be to *; (ii) all rights and
licenses granted by * hereunder shall * with respect to such
country(ies) so terminated; (iii) * shall be relieved of any
payments that are scheduled or may be made in the future under
section 7.1 hereof and section 4.6 of the * Development and
Marketing Agreement (and the subsections thereunder), provided
that such termination is exercised with respect to the United
States; (iv) * and its Affiliates shall thereafter be entitled
to make, have made, use or sell the Product in the
country(ies) so terminated (and, provided, that the foregoing
shall not create or imply any right or license under any
patent rights, copyright rights, trademarks or trade names,
know-how, or other intellectual property rights owned or
controlled by * or its Affiliates); (v) the * Development and
Marketing Agreement shall terminate with respect to the
development and marketing of the Product in such country(ies);
(vi) all Registrations pertaining to the Product shall be * as
to the affected country(ies) and the * under the * Development
and Marketing Agreement shall be provided to and thereafter
may be * to develop, manufacture and market the Product; and
(vii) * shall pay to * the same *, which shall be paid in the
same manner and subject to the same terms and conditions as
would otherwise have applied to *, as * would otherwise have
paid (absent such termination) hereunder to * (or on the * of
such *, as the case may be) of the Product in the country(ies)
to which such termination applies (with such * to be paid by
GJT and its Affiliates in each such country until expiration
of the Royalty Term in each such country), until such time as
the * paid to * equal the aggregate amount that had been paid
by * to * prior to such termination under the aforesaid
sections 4.6 and 7.1 (and the subsections thereunder), at
which time the *.
11.2.2 Termination for Default. Except as otherwise provided
in Article 13 below, upon or after the breach of any material
provision of the Agreement by a party (unless such failure
results from, or is caused by, adherence required by a party
to applicable laws or governmental regulations), if the
breaching party has not cured such breach within sixty (60)
days after notice thereof by the other party, the nonbreaching
party may terminate this Agreement; provided, however, if any
default is not capable of being cured within such 60-day
period and the breaching party has diligently undertaken to
cure such default within such 60-day period and continues to
take diligent steps to cure same as soon as commercially
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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feasible thereafter under the circumstances, the nonbreaching party
shall have no right to terminate the Agreement.
In cases where the breach involves an act or omission by a party
specifically and directly relating to a country or countries,
termination shall be limited to the country or countries affected by
such breach, as opposed to termination of the entire Agreement, and the
remedies listed in section 11.2.2.1-11.2.2.4 below shall be limited to
such country or countries.
11.2.2.1 If GJT breaches this Agreement prior to the date that
initial commercial launch occurs in the United States and in a
manner that entitles * to terminate this Agreement pursuant to
this section 11.2.2, then, if * elects to terminate this
Agreement: (i) all rights and licenses granted to * under this
Agreement shall revert to GJT; (ii) no further payments shall
be due from * with respect to any of the milestones not yet
paid that are set forth in Section 4.6 of the * Development
and Marketing Agreement and section 7.1 hereof (and the
subsections thereunder); (iii) the * Development and Marketing
Agreement shall terminate with respect to the development and
marketing of the Product in such country(ies); (iv) all
Registrations pertaining to the Product shall be * as to the
affected country(ies) and the * under the * Development and
Marketing Agreement shall be provided to and thereafter may be
* to develop, manufacture and market the Product (provided,
that the foregoing shall not create or imply any right or
license under any patent rights, copyright rights, trademarks
or trade names, know-how, or other intellectual property
rights owned or controlled by * or its Affiliates); (v) *
shall pay to * the same *, which shall be paid in the same
manner and subject to the same terms and conditions as would
otherwise have applied to *, as * would otherwise have paid
(absent such termination) hereunder to * (or on the * of such
*, as the case may be) of the Product in the country(ies) to
which such termination applies (with such * to be paid by *
and its Affiliates until expiration of the Royalty Term in
each such country), until such time as the * paid to * equal
the aggregate amount that had been paid by * to GJT prior to
such termination under said sections 4.6 and 7.1 (and the
subsections thereunder), at which time the * from time to time
thereafter; and (vi) such termination shall be without
prejudice to any other rights or remedies available to *
arising from such breach.
11.2.2.2 If GJT breaches this Agreement subsequent to
the date that initial commercial launch occurs in the United
States and in a manner that entitles APOTHECON to terminate
this Agreement pursuant to this section 11.2.2, then, if
APOTHECON elects to terminate this Agreement, then the
provisions of subsections 11.2.2.1 (i)-(vi) apply as though
fully set forth herein.
11.2.2.3 If APOTHECON breaches this Agreement prior
to the date that initial commercial launch occurs in the
United States and in manner that entitles GJT to terminate
this Agreement pursuant to this section 11.2.2, then GJT may
elect either:
(A) to pursue all claims and causes of
action available to it at law or in equity
for such breach, or
(B) to terminate this Agreement, in which
event: (i) * shall be deemed to waive and
release all claims and causes of action
available to it at law or in equity for such
breach, and such termination shall be
without penalty or liability to *; (ii) all
rights granted by * hereunder (including
without limitation under Articles 3 and 9
hereof) shall * with respect to such
country(ies) so terminated; (iii) *
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
will be relieved of any * that are scheduled
or may be made in the future under section
4.6 of the * Development and Marketing
Agreement and section 7.1 hereof (and the
subsections thereunder); (iv) all
Registrations pertaining to the marketing of
the Product shall be as to the affected
country(ies) and the * under the *
Development and Marketing Agreement shall be
provided to and thereafter may be * * to
develop, manufacture and market the Product;
(v) the * Development and Marketing
Agreement shall terminate with respect to
the development and marketing of the Product
in such country(ies); and (vi) * and its
Affiliates shall thereafter be entitled to *
as they may have under the GEOMATRIX
Agreements to make, have made, use or sell
the Product in the country(ies) so
terminated without compensation or
obligation to *; provided, that the
foregoing rights under (iv) and (vi) shall
not create or imply any right or license
under any patent rights, copyright rights,
trademarks or trade names, or other
intellectual property rights owned or
controlled by * or its Affiliates.
11.2.2.4 If APOTHECON breaches this Agreement
subsequent to the date that initial commercial launch occurs
in the United States and in manner that entitles GJT to
terminate this Agreement pursuant to this section 11.2.2, then
GJT may elect either:
(A) to pursue all claims and causes of
action available to it at law or in equity
for such breach, or
(B) to terminate this Agreement, in which
event: (i) * shall be deemed to waive and
release all claims and causes of action
available to it at law or in equity for such
breach, and such termination shall be
without penalty or liability to *; (ii) all
rights and licenses granted by GJT hereunder
shall * with respect to such country(ies) so
terminated; (iii) * shall be relieved of any
* that are scheduled or may be made in the
future under section 7.1 hereof and section
4.6 of the * Development and Marketing
Agreement (and the subsections thereunder),
provided that such termination is exercised
with respect to the United States; (iv) *
and its Affiliates shall thereafter be
entitled to make, have made, use or sell the
Product in the country(ies) so terminated
(and, provided, that the foregoing shall not
create or imply any right or license under
any patent rights, copyright rights,
trademarks or trade names, know-how, or
other intellectual property rights owned or
controlled by * or its Affiliates); (v) the
* Development and Marketing Agreement shall
terminate with respect to the development
and marketing of the Product in such
country(ies); (vi) all Registrations
pertaining to the Product shall be * as to
the affected country(ies) and the * under
the * Development and Marketing Agreement
shall be provided to and thereafter may be *
to develop, manufacture and market the
Product; and (vii) * shall pay to * the same
*, which shall be paid in the same manner
and subject to the same terms and conditions
as would otherwise have applied to *, as *
would otherwise have paid (absent such
termination) hereunder to * (or on the * of
such *, as the case may be) of the Product
in the country(ies) to which such
termination applies (with such * to be paid
by * and its Affiliates in each such country
until expiration of the Royalty Term in each
such country), until such time as the * paid
to
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
* equal the aggregate amount that had been
paid by * to * prior to such termination
under the aforesaid sections 4.6 and 7.1
(and the subsections thereunder), at which
time the *.
11.2.3 Termination for Failure to Meet Milestones.
11.2.3.1 If all bioequivalence testing, all pivotal
clinical and bioequivalence studies shall not have been
completed, and Validated Manufacturing Scale-Up capabilities
(bio-batches) for the Product shall not have been completed
and demonstrated to APOTHECON's reasonable satisfaction, * so
as to enable manufacture and marketing of the Product in the
United States and other major markets designated by APOTHECON,
and APOTHECON is not otherwise entitled to terminate this
Agreement pursuant to any other provision of this Article 11:
a) APOTHECON will have the right to
immediately terminate this Agreement at any
time thereafter until *, or
b) allow additional time for the completion
and demonstration of same until *.
If APOTHECON elects to terminate this Agreement with respect
to one or more countries pursuant to option (a) above, then
the provisions of section 11.2.1.2(i)-(vii), inclusive, shall
apply.
If APOTHECON elects not to terminate this Agreement in
accordance with (a) above, then all payments due after under
section 7.1 hereof shall be * shall not apply if (A) the
failure to so demonstrate and complete the foregoing was due
to * failure to use all reasonable efforts to Scale-up and to
manufacture adequate quantities of conforming Product on a
timely basis (and * shall have given reasonable advance notice
of its requirements) and/or failure to comply in all material
respects with the Specifications and written instructions
provided * with respect to the use of the GEOMATRIX Technology
in connection with the manufacture of the Product, and (B) *
shall have fulfilled its obligations hereunder in all material
respects with respect to the transfer and training in the use
of the GEOMATRIX Technology.
11.2.3.2 If, notwithstanding APOTHECON's election
under section 11.2.3.1(b) above, all bioequivalence testing,
all pivotal clinical and bioequivalence studies shall not have
been completed, and Validated Manufacturing Scale-Up
capabilities (bio-batches) for the Product shall not have been
completed and demonstrated to APOTHECON's reasonable
satisfaction, by * so as to enable manufacture and marketing
of the Product in the United States and other major markets
designated by APOTHECON, and APOTHECON is not otherwise
entitled to terminate this Agreement pursuant to any other
provision of this Article 11, then APOTHECON shall be entitled
to elect, at any time within thereafter, to terminate this
Agreement, in which event the provisions of section
11.2.1.2(i)-(vii), inclusive, shall apply.
If APOTHECON elects not to terminate this Agreement in
accordance with this section 11.2.3.2, then * shall not apply
if (A) the failure to so demonstrate and complete the
foregoing was due to * failure to use all reasonable efforts
to Scale-up and to manufacture adequate quantities of
conforming Product on a timely basis (and * shall have given
reasonable advance notice of its requirements) and/or
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
failure to comply in all material respects with the
Specifications and written instructions provided * with
respect to the use of the GEOMATRIX Technology in connection
with the manufacture of the Product, and (B) * shall have
fulfilled its obligations hereunder in all material respects
with respect to the transfer and training in the use of the
GEOMATRIX Technology.
11.2.4 Other Termination.
11.2.4.1 Termination for Misrepresentation. In the
event that a representation or warranty of GJT hereunder is
untrue in any material respect, APOTHECON shall be entitled to
terminate this Agreement upon thirty (30) days' written notice
to GJT. If APOTHECON elects to so terminate, the rights and
actions indicated in sections 11.2.2.1 (i)-(vi), inclusive,
shall apply as though set forth herein.
11.2.4.2 Termination for Failure to Repay Working
Capital Agreement. If GJT fails to make a payment when due
under its Restated Working Capital Agreement dated as of May
12, 1995 (as amended by a First Amendment thereto dated as of
July 11, 1995, and as the same may be amended from time to
time hereafter, and including any successor agreement thereto)
between GJT and Genta, Incorporated, a Delaware corporation
("Genta"), GJT shall promptly inform APOTHECON of same, and
APOTHECON may elect (by delivering a writing to GJT, Jagotec
and Jago Pharma of APOTHECON's intent to exercise such option)
at any time thereafter to terminate this Agreement and to
require each of Jagotec and Jago Pharma to, and Jagotec and
Jago Pharma agree that each of them will, promptly enter into
a new, separate agreement with APOTHECON under which (i) Jago
Pharma and Jagotec will, to the extent each has the right to
do so, ensure that all licenses, sublicenses and other rights
and privileges granted by GJT under this Agreement shall
continue without change, (ii) Jago Pharma will assume all
rights and obligations of GJT under articles 3, 4, 5, 6,
11.4.5, 12, 14, 15. 1, and 15.2 of the * Development and
Marketing Agreement and will promptly cure any defaults of GJT
under said articles, any payments to be made thereafter by
APOTHECON under said articles shall thereafter be paid to Jago
Pharma, and APOTHECON shall continue to enjoy all rights and
privileges granted under said articles, and (iii) Jagotec will
assume all rights and obligations of GJT under article 8 of
the * Development and Marketing Agreement and under articles
3.1, 6, 7 and 9 hereof, any payments to be made thereafter by
APOTHECON under said articles shall thereafter be paid to
Jagotec, and APOTHECON shall continue to enjoy all rights and
privileges granted under said articles; provided, however,
that such new agreement with Jagotec shall provide that all
payments that would otherwise have been made thereafter by
APOTHECON under article 7 hereof shall continue thereafter to
be paid to GJT by APOTHECON, until APOTHECON is duly
instructed otherwise in writing by GJT and Jagotec.
11.2.5 No Effect on Remedies. Where APOTHECON elects not to
terminate the Agreement pursuant to section 11.2.2.1, 11.2.2.2, or
11.2.4, such decision shall be without prejudice to any other rights or
remedies available to APOTHECON arising from such breach or untrue
statement.
11.2.6 Injunctive Relief. If:
i) GJT or its Affiliates breach section 3.1
hereof or section 6.3 of the * Development
and Marketing Agreement, or
ii) APOTHECON or its Affiliates breach section
3.1 hereof,
then the parties acknowledge and agree that such breach will cause
irreparable injury to the nonbreaching party or its Affiliates, for
which monetary damages, even if available, will be inadequate and
difficult, if not impossible, to accurately ascertain. Accordingly, the
parties agree that the nonbreaching party or its Affiliates may seek
and obtain injunctive relief against the breach or threatened breach of
the undertakings
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 17 -
<PAGE>
set forth in this section 11.2.6(i) and (ii), in addition to any other
rights or remedies which may be available to the nonbreaching party or
to its Affiliates at law or in equity.
11.2.7 Effect on Continuing Business. In the event of a
termination of this Agreement in which the rights to market the Product
revert to GJT hereunder, GJT shall not be under any obligation, express
or implied, to use the Registrations and data transferred to it or to
continue to commercialize the Product, and APOTHECON shall not be under
any obligation, express or implied, to continue to transfer any
inventory of Product to GJT or to manufacture Product for GJT following
such termination.
11.3 Effect of Bankruptcy. If a party becomes insolvent or admits in
writing its inability to pay its debts as they mature or applies for or consents
to the appointment of a receiver or trustee for any of its properties; or a
receiver or trustee is appointed for such party or a substantial portion of its
properties and is not discharged within ninety (90) days; or any bankruptcy,
reorganization, debt arrangement, dissolution, liquidation or other proceeding
under any bankruptcy or insolvency law is instituted by or against such party
and, if instituted against such party, it is consented to by such party or
remains undismissed for ninety (90) days, then
11.3.1 Notwithstanding any such event, such party shall remain
obligated to fulfill its obligations and covenants hereunder, and any
failure to do so or other breach hereunder shall entitle the other
party to terminate this Agreement in accordance with section 11.2
hereof; and
11.3.2 It is the parties' desire that, if any such receiver,
trustee, judge, arbitrator or other adjudicator conducting or
controlling such proceedings on behalf of a party should hold that any
obligations, covenants or duties of such party hereunder should be
suspended or declared unenforceable, in whole or in part, then the
rights and benefits granted to the other party hereunder shall remain
in full force and effect, and that any such obligations, covenants or
duties shall be reformed by such receiver, trustee, judge, arbitrator
or other adjudicator so as to be enforceable to the maximum extent
permitted by applicable law and to permit any suspension to be lifted
at the earliest practicable time.
11.4 Other Effects.
11.4.1 Effect of Reversion. Where a termination of this
Agreement, as provided for in this Article 11.2, results in a reversion
of rights to GJT that had been granted to APOTHECON under Articles 3
and 9 hereof, APOTHECON shall not thereafter make any use of the Patent
Rights and Trademarks, and, except to the extent the same shall have
entered the public domain, the Know-how, with respect to the
country(ies) affected by such termination.
11.4.2 Survival. The provisions of
(i) Articles 2.2 and 9 shall survive any
expiration of this Agreement under section
11.1 (iii), and
(ii) Articles 7.3-7.5, 11.2.4.1, 11.2.5, 11.2.7,
11.4-11.6, 16.2, 16.3 and 16.4 shall survive
any expiration or termination of the
Agreement, in whole or in part,
as well as such other terms, obligations and rights which, by their
intent or meaning, are intended to so survive. The expiration or
termination of the Agreement shall not relieve either party of payment
of any amounts that may be owed to the other based upon events
occurring or rights accruing prior to the date of termination, and
shall be without prejudice, except as provided in sections 11.2.2.3,
and 11.2.2.4, to any rights and obligations of either party accruing
prior to, or that may be based on acts or omissions of the other party
occurring prior to, the effective date of termination.
11.4.3 Undeveloped Products. The Products licensed hereunder
shall not be treated as "Undeveloped Products" under sections 11.2.3 of
the GEOMATRIX License Agreement and GEOMATRIX Manufacturing License
Agreement.
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<PAGE>
11.4.4 No Waiver. The right of either party to terminate this
Agreement, as hereinabove provided, or to pursue rights and remedies
available to it at law or in equity, shall not be affected in any way
by its waiver of, or failure to take action with respect to, any
previous defaults or breaches hereunder.
11.4.5 Use of Data Following Termination. Notwithstanding any
provision of this Agreement that may state or imply to the contrary, in
the event that this Agreement terminates for any reason, it is
understood and agreed that all data generated pursuant to activities
funded by APOTHECON pursuant to section 4.6 of the * Development and
Marketing Agreement and transferred or made available to GJT or its
Affiliates under this Agreement (including without limitation pursuant
to 11.2.1.1(iv), 11.2.1.2(vi), 11.2.2.1(iv), 11.2.2.3(iv), or
11.2.2.4(vi) of this Agreement) may not thereafter be used by, and may
not thereafter be made available to or disclosed to any Third Party by,
GJT or any of its Affiliates (including any Jagotec and Genta
Incorporated, a Delaware corporation, and their respective Affiliates)
in the development, or registration or filing for regulatory approval,
of any product other than the Product (including without limitation not
using and not making such data available for developing or filing of an
NDA in the United States for a * product based on, incorporating, or
derived from the use of, the GEOMATRIX Technology), without the prior
written consent of APOTHECON (which consent may be given or withheld in
its sole and absolute discretion).
11.5 Survival of Rights and Sublicenses.
11.5.1 In the event of an event that the GEOMATRIX License
Agreement and/or the GEOMATRIX Manufacturing License Agreement is or
are terminated, for whatever reason and whether by action taken by
Jagotec, GJT or both, this Agreement, and all licenses, sublicenses and
other rights and privileges granted or extended to APOTHECON hereunder,
shall continue and remain in full force and effect in accordance with
their terms, without further action or election on the part of
APOTHECON, and notwithstanding any provision (including without
limitation section 11.4) to the contrary in the GEOMATRIX License
Agreement and the GEOMATRIX Manufacturing Agreement.
11.5.2 If GJT breaches this Agreement in a manner that
entitles APOTHECON to terminate same pursuant to section 11.2.2.1 or
11.2.2.2, or makes an untrue statement that entitles APOTHECON to
terminate same pursuant to section 11. 2.4.1, or in the event that GJT
commences proceedings to dissolve, liquidate or wind up its affairs,
then, in addition to any other remedies available to it hereunder or at
law or in equity, APOTHECON may (A) elect any remedies available to it
under any applicable Waiver and Consent and/or (B) elect (by delivering
a writing to GJT, Jagotec and Jago Pharma of APOTHECON's intent to
exercise its rights under this section 11.5.2) to terminate this
Agreement with GJT, and: (i) any licenses, sublicenses and other rights
and privileges granted by GJT under this Agreement shall continue
without further action or election on the part of APOTHECON, with
APOTHECON continuing to have the same rights and obligations as are set
forth in this Agreement, notwithstanding any provision to the contrary
contained in section 11.4 of the GEOMATRIX License Agreement (as the
same may be thereafter amended, supplemented or extended) or in section
11.4 of the GEOMATRIX Manufacturing License Agreement (as the same may
be thereafter amended, supplemented or extended), (ii) Jago Pharma and
Jagotec will, to the extent each has the right to do so, ensure that
all licenses, sublicenses and other rights and privileges granted by
GJT under this Agreement shall continue without change, (iii) Jago
Pharma will enter into an agreement with APOTHECON under which Jago
Pharina will assume all rights and obligations of GJT under articles 3,
4, 5, 6, 11.4.5, 12, 14, 15.1, and 15.2 of the * Development and
Marketing Agreement, will promptly cure any defaults of GJT under said
articles, any payments to be made thereafter by APOT'HECON under said
articles shall thereafter be paid to Jago Pharma, and APOTHECON shall
continue to enjoy all rights and privileges granted under said
articles, and (iv) Jagotec will enter into an agreement with APOTHECON
under which Jagotec will assume all rights and obligations of GIT under
article 8 of the * Development and Marketing Agreement and under
articles 3.1, 6, 7 and 9 hereof, any payments to be made thereafter by
APOTHECON under shall thereafter be paid to Jagotec, and APOTHECON
shall continue to enjoy all rights and privileges granted under said
articles. Upon request, Jagotec and Jago Pharma AG will deliver to
APOTHECON satisfactory confirming written documentation of same.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
11.5.3 In no event shall APOTHECON be required, as a condition
to the continuance or continuing validity of any license, sublicense or
other rights granted by GJT under this Agreement, to give written
notice to Jagotec of any election to continue such rights, to assume
all rights and obligations of GJT, and/or to promptly cure all defaults
of GJT, as otherwise required under section 11.4 of each of the
GEOMATRIX License Agreement and GEOMATRIX Manufacturing License
Agreement.
11.6 Transfer of Registrations and Rights. In the event this Agreement
terminates, and GJT is entitled hereunder (and notifies APOTHECON in writing
that it desires) to continue the development and marketing of the Product in the
country(ies) affected by such termination, the parties agree to reasonably
cooperate to ensure an orderly transition for a reasonable period (not to exceed
*) following such termination, and the parties will effectuate an orderly
transfer of any Registrations owned or controlled by APOTHECON with respect to
the Product in such country(ies) to GJT; provided, however, that in no event
shall the foregoing create or imply any right to use or license under any patent
rights, copyright rights, trademarks or trade names (including those for the
Product), know-how, or other intellectual property rights owned or controlled by
APOTHECON or its Affiliates. Such transfer(s) in such country(ies) shall be *;
provided that * shall bear all * into its name in such country(ies) and shall
reimburse for any out-of-pocket costs incurred by it in connection with the
foregoing. * shall be entitled to retain, subject to the * as provided for in
section 7.2, the amount received by it on * during such transition period and
shall use reasonable efforts to comply with the terms of this Agreement. For any
other termination of this Agreement, such termination shall not result in any
transfer of any Registrations owned or controlled by APOTHECON to GJT or
Jagotec, and regardless of any provision (such as sections 11.5 of the GEOMATRIX
License Agreement and of the GEOMATRIX Manufacturing License Agreement) to the
contrary in any agreement between GJT and any one or more of its Affiliates.
ARTICLE 12
INDEMNITY
[Intentionally omitted]
ARTICLE 13
FORCE MAJEURE
Neither party hereto shall be held liable or responsible to the other
party nor be deemed to have defaulted under or breached the Agreement for
failure or delay in fulfilling or performing any term of the Agreement, and the
time required for performance shall be extended by the period occasioned by such
cause, when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party including but not limited to fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party hereto, but not failure or delay
caused by subcontractors of a party who breach their obligations hereunder. The
party so affected shall give prompt notice to the other party of such cause, and
shall use its best efforts to minimize the delay in performance and adverse
effects occasioned by such cause.
ARTICLE 14
SUBCONTRACTEES
[Intentionally omitted]
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<PAGE>
ARTICLE 15
ASSIGNMENT; SEVERABILITY; REPRESENTATIONS AND WARRANTIES
15.1 Assignment. Except to the extent specifically set forth in this
Agreement, this Agreement may not be assigned or nor may the performance of any
duties hereunder be delegated or transferred, nor may any right or obligation
hereunder be assigned or transferred, by either party, without the prior written
consent of the other party (which consent shall not be unreasonably withheld);
provided, however, that either party may, without such consent, assign the right
to receive payments to an Affiliate, and may assign the Agreement and its rights
and obligations hereunder in connection with the transfer or sale of all or
substantially all of its business assets to which this Agreement relates, or in
the event of merger, consolidation, or similar reorganization (or change in
control or similar transaction); and provided, further, that in the case of an
assignment, the assigning party shall remain liable as a continuing guarantor
under any such assignment of all obligations and duties assumed by such
Affiliate, and the other party shall have entered into a separate counterpart
agreement with any such Affiliate. Such counterpart agreement shall be in the
same form as this Agreement, except for necessary changes to reflect the extent
of the assignment, the substitution of the Affiliate's name and the effective
date of the assignment.
15.2 Severability. Each party hereby acknowledges that it does not
intend to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries. Should one or
more provisions of the Agreement be or become invalid, the parties hereto shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the parties would have
entered into the Agreement with such provisions. In case such provisions cannot
be agreed upon, the invalidity of one or several provisions of the Agreement
shall not affect the validity of the Agreement as a whole, unless the invalid
provisions are of such essential importance to the Agreement that it is to be
reasonably assumed that the parties would not have entered into the Agreement
without the invalid provisions.
15.3 General Representations and Warranties. Each party represents and
warrants to the other the following:
15.3.1 Existence and Power. It (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in
which it is organized; (b) has the requisite power and authority and
the legal right to own and operate its property and assets, to lease
the property and assets it operates under lease, and to carry on its
business as it is now being conducted; and (c) is in compliance with
all requirements of applicable law, except to the extent that any
noncompliance would not have a material adverse effect on the
properties, business, financial or other condition of it and would not
materially adversely affect its ability to perform its obligations
under the Agreement.
15.3.2 Authorization and Enforcement of Obligations. It (a)
has the requisite power and authority and the legal right to enter into
the Agreement and to perform its obligations hereunder; and (b) has
taken all necessary action on its part to authorize the execution and
delivery of the Agreement and the performance of its obligations
hereunder. The Agreement has been duly executed and delivered on its
behalf, and constitutes a legal, valid, binding obligation, enforceable
against it in accordance with its terms.
15.3.3 No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons
required to be obtained by it in connection with the Agreement have
been obtained.
15.3.4 No Conflict. The execution and delivery of the
Agreement on its behalf and the performance of its obligations
hereunder (a) do not conflict with or violate any requirement of
applicable laws or regulations, and (b) do not conflict with, or
constitute a default under, any contractual obligation of it.
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<PAGE>
15.3.5 DISCLAIMER OF WARRANTIES. NOTHING IN THE AGREEMENT
SHALL BE CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY GJT
THAT ANY RESEARCH AND DEVELOPMENT PERFORMED BY IT UNDER THIS AGREEMENT
WILL BE SUCCESSFUL, IN WHOLE OR IN PART, OR THAT ANY PRODUCTS WHICH MAY
BE DEVELOPED WILL BE SUCCESSFUL IN THE COMMERCIAL MARKETPLACE.
APOTHECON ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE SET FORTH HEREIN OR AS
MAY BE SET FORTH IN A WRITING SIGNED BY GJT, GJT MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
PRODUCTS WHICH MAY BE DEVELOPED, INCLUDING WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
15.4 GJT Representations and Warranties. GJT represents and warrants to
APOTHECON as of the Effective Date the following:
15.4.1 The Patent Rights listed on Exhibit 1.1(ii) and the
Trademarks listed on Exhibit 9.1 list all Patent Rights and GEOMATRIX
Trademarks owned or controlled by GJT in the Territory or to which GJT
has the right to grant the license rights, sublicense rights and other
rights granted hereunder, and which may be useful to the manufacture,
development, use or sale of Product, and such Exhibits specify the
jurisdiction(s) by or in which such right has been issued or registered
or in which an application for such issuance or registration has been
filed, including respective registration or application numbers. To the
best knowledge of the current officers and directors of GJT, the issued
Patent Rights are valid and in full force and effect.
15.4.2 Except as disclosed on Exhibit 1.1(ii), to the best
knowledge of GJT's current officers and directors, (i) the use of such
Know-how and any Patent Rights in the manufacture, use and sale of the
Product does not infringe upon any patent rights, copyrights or other
proprietary rights of any Affiliate of GJT or any non-Affiliated,Third
Party in the Territory; (ii) GJT has no knowledge of any infringement
by any Third Party of any of the Patent Rights in the Territory; and
(iii) GJT and each its Affiliates are not subject to any outstanding
order, judgment or decree of any court or administrative agency, and
each has not entered into any stipulation or agreement, restricting its
use of the Patent Rights in connection with the manufacture,
development, use or sale of Products in the Territory.
15.4.3 There is no action, suit or proceeding pending or, to
the knowledge of its current officers and directors, that has been
threatened in writing by any Third Party against GJT or its Affiliates
which, if adversely determined, would have a material adverse effect
upon the ability of APOTHECON to use the Patent Rights or Know-how in
the manufacture, use and/or sale of any Product in the Territory.
15.4.4 The Know-how and Patent Rights licensed and/or
sublicensed by GJT to APOTHECON pursuant to this Agreement were not
been obtained by GJT or its Affiliates in violation of any contractual
or fiduciary obligation to which GJT or any of its Affiliates, any
predecessor-in-interest or any of its or their employees or contractors
is or was a party or by misappropriation of the trade secrets of any
Third Party, and the manufacture, use or sale by or through GJT,
APOTHECON and their respective Affiliates of any Product using such
Know-how and Patent Rights does not and will not violate any such
contractual or fiduciary obligation owed to any such Third Party or
render APOTHECON liable for the payment of any royalty attributable to
or arising out of any such contractual or fiduciary obligation or any
such misappropriation.
15.4.5 During the term of this Agreement, GJT or its
Affiliates will not disclose to APOTHECON and its Affiliates any
proprietary information, such as trade secrets, which is confidential
to any non-Affiliated Third Party or institution and which GJT is not
entitled to disclose in accordance with the terms of this Agreement.
- 22 -
<PAGE>
15.4.6 Except as otherwise provided in this Agreement, the
rights under the Know-how or any Patent Rights that have been or will
be licensed to APOTHECON under this Agreement are not and will not be
licensed to any other party to make, have made, use or sell Products in
the Territory.
15.4.7 There are no licenses under any patent rights, and, to
the best knowledge of the current officers and directors of GJT, under
any other intellectual property or other proprietary rights owned or
controlled by any GJT Affiliate or Third Party which are used by GJT in
connection with the manufacture, development, use or sale of Product in
the Territory, other than those listed on Exhibits 1.1(ii) and 9.1.
ARTICLE 16
MISCELLANEOUS
16.1 Notices. Any consent, notice or report required or permitted to be
given or made under the Agreement by one party to the other party shall be in
English and in writing, delivered personally or by registered mail, return
receipt requested, addressed to the other party at its address indicated below
or to such other address as the addressee shall have last furnished in writing
to the addressor and except as otherwise provided in the Agreement shall be
effective upon receipt by the addressee.
If to GJT: Genta Jago Technologies BV
Swiss Branch
Grundstrasse 12
6343 Rotkreuz, Switzerland
Attention: Executive Management Committee
with copies to: Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121, U.S.A.
Attention: Thomas H. Adams, Ph.D.
and: Pillsbury Madison & Sutro
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
Attention: Thomas E. Sparks, Jr., Esq.
and: Jagotec AG
c/o Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz, Switzerland
Attention: Dr. Jacques Gonella
and: Rinderknecht Glaus & Stadelhofer
Beethovenstrasse 7
Postfach 4451
CH-8002 Zurich, Switzerland
Attention: Dr. Thomas M. Rinderknecht
If to
APOTHECON: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: President
- 23 -
<PAGE>
with a copy to: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: Corporate Legal Counsel
16.2 Applicable Law. The Agreement shall be governed by and construed
in accordance with the laws of Switzerland, without reference to the conflicts
of law principles thereof, and shall not be governed by the United Nations
Convention on Contracts for the International Sale of Goods.
16.3 Arbitration. Any dispute, claim or controversy between the parties
relating to, arising out of or in any way connected with the Agreement or any
term or condition hereof, or the performance by either party of its obligations
hereunder, whether before or after termination of the Agreement, shall be
finally resolved by binding arbitration. Whenever a party shall decide to
institute arbitration proceedings, it shall give written notice to that effect
to the other party. Any arbitration hereunder shall be conducted under the Rules
of Conciliation and Arbitration of the International Chamber of Commerce. Any
such arbitration shall be conducted in the English language by a panel of three
(3) arbitrators appointed in accordance with such rules, and shall be held in
Paris, France. The arbitrators shall have the authority to grant specific
performance, and to allocate between the parties the cost of arbitration in such
equitable manner as they determine. Judgment upon the award so rendered may be
entered in any court having jurisdiction or application may be made to such
court for judicial acceptance of any award so rendered and an order of
enforcement, as the case may be. Whether a claim, dispute or other matter in
question would be barred by the applicable statute of limitations, which also
shall apply to any arbitration under this Section 16.3, shall be determined by
binding arbitration pursuant to this Section 16.3.
16.4 Excise Taxes. If the recipient of any payment hereunder, received
in consideration for providing any goods or services or granting any rights
hereunder, shall have the obligation under any applicable law, regulations or
governance to add, include or pay to the applicable governmental authority, any
value added taxes, turn-over taxes, excise taxes, sales taxes or similar taxes
or levies (collectively, "Excise Taxes') on the amount of such payment received
hereunder, then the recipient shall be entitled to receive the amount of any
Excise Taxes on the amount of such payment hereunder as evidenced by an invoice
from the recipient to the payor of such payment hereunder. The payor of such
payment hereunder shall pay the amount of any such Excise Taxes thereon prior to
the date on which the recipient is required to pay or account for such Excise
Taxes to the applicable governmental authority. The recipient of any such
payment hereunder shall use reasonable efforts to minimize any Excise Taxes on
any such payments hereunder, and promptly shall take all such actions and
execute all such instruments as the payor of such payment hereunder reasonably
requests to enable the payor to apply for and, if possible, to receive prompt
refund or credit of the amount of such Excise Taxes on such payments hereunder.
16.5 Headings. The titles and headings used in the Agreement are
intended for convenience only and shall not in any way affect the meaning or
construction of any provision of the Agreement. A reference to an Article (or
section) shall be deemed to include reference to all sections and subsections
thereunder.
No terms and conditions contained in any purchase order,
acknowledgment, invoice, bill of lading, acceptance or other preprinted form
issued by either party shall be effective to the extent they are inconsistent
with or modify the terms and conditions contained herein. Each purchase order
shall contain the requested delivery date(s), quantity purchased, routing
instructions and destination.
16.6 Independent Contractors. It is expressly agreed that the parties
shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
party 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 party, without the prior consent of the other party to do so.
16.7 Waiver. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
- 24 -
<PAGE>
16.8 Amendments. The provisions of the Agreement may not be waived,
altered, amended or repealed in whole or in part except by the written consent
of both of the parties to the Agreement.
16.9 Entire Agreement. The terms, covenants, conditions and provisions
contained in the Agreement, including the exhibits hereto and any other
agreement (including the * Development and Marketing Agreement) to the extent
herein referenced, together with all of the documents referred to herein as
having been provided by one party to another (pertaining in part to the
Territory in which APOTHECON may exercise its manufacturing rights hereunder),
constitute the total and complete agreement of the parties and supersede all
prior understandings and agreements hereto made, and there are no other
representations, understandings or agreements relating to the subject matter
hereof.
16.10 Counterparts. The Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.11 Publicity. Neither party to this Agreement shall employ or use
the name of the other party or any Affiliate of such party in any publication or
promotional materials or in any form for public distribution, except as required
by law, without prior written consent of said other party in each instance
(which consent shall not be unreasonably withheld).
IN WITNESS WHEREOF, the parties hereto have duly executed the Agreement
as of the date first set forth above.
APOTHECON, INC.
By: /s/Lee Burg
----------------------------------
Title: Vice President/General Manager
GENTA JAGO TECHNOLOGIES BV
By: /s/ Thomas H. Adams
----------------------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
----------------------------------
Dr. Jacques Gonella
Managing Director
JAGOTEC AG hereby agrees to be bound by the provisions of sections 2.2, 6.3,
8.3, 8.4, 8.5, 11.2.4.2, 11.4.3, 11.4.5, and 11.5 and article 16 of the *
Development and Marketing Agreement and sections 11.2.4.2 and 11.5 of the above
Agreement, that all notices to be given to it shall be given to such address as
is set forth in section 16.1 hereof unless and until it otherwise instructs
APOTHECON in writing.
JAGOTEC AG
By: /s/ Jacques Gonella
---------------------
Dr. Jacques Gonella
President
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 25 -
<PAGE>
JAGO PHARMA AG hereby agrees to be bound by the provisions of sections 2.2, 6.3,
11.2.4.2, 11.4.3, 11.4.5, and 11.5 and article 16 of the * Development and
Marketing Agreement and sections 11.2.4.2 and 11.5 of the above Agreement,
agrees that all notices to be given to it shall be given to such address as is
set forth in section 16.1 hereof unless and until it otherwise instructs
APOTHECON in writing:
JAGO PHARMA AG
By: /s/ Jacques Gonella
---------------------
Dr. Jacques Gonella
President
- 26 -
<PAGE>
EXHIBITS
Exhibit 1. l(ii) - List of Patent Rights
Exhibit 3.6(i)-(iv) - Waiver and Consent Agreements
Exhibit 9.1 - List of GEOMATRIX Trademarks
- 27 -
<PAGE>
EXHIBIT 1.1(ii)
PATENT RIGHTS
- - - --------------------------------------------------------------------------------
PACO. 1
Subject: System for the controlled-rate release of active substances
Inventors: Colombo, La Manna, Conte
Assignee: JAGOTEC AG
Priority: Italy, No. 23321 A/85, Dec 20th 1985
Approved: January 7th 1988, No. 1188212
Valid Until: December 19th 2005
Countries: USA
Approved: June 13th 1989, No. 4.839.177
Valid Until: June 12th 2006
Europe
Approved: November 22nd 1990, No. 0226884
Valid Until: December lst 2006
Australia
Approved: July 10th 1990, No. 594992
Valid Until: December 18th 2006
Canada
Approved: April 7th 1992, No. 1.298.479
Valid Until: April 6th 2009
New Zealand
Approved: December llth 1990 No. 218.596
Valid Until: December 10th 2002
Japan
Pending
*
PACO. 6
Subject: Tablets with controlled-rate release of active substances
Inventors: Conte, La Manna, Colombo
Assignee: JAGOTEC AG
Priority: Italy, No. 2269489, December 14th 1989
Approved, No. 1237904, June 18th 1993
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-1-
<PAGE>
PACO. 6 (cont.)
Countries: USA
Approved: June 6th 1995, No. 5,422,123
Valid Until: June 5th 2012
Europe
Pending
*
Canada
Pending
*
Japan
Pending
*
PACO. 7
Subject: Process for preparing pharmaceutical compositions having an
increased active substance dissolution rate, and the compositions
obtained
Inventors: Conte, La Manna, Giunchedi
Assignee: JAGOTEC AG
Priority: Italy, No. 21091, July 27th 1990
Approved: November 16th 1994, No. 1.246.188
Valid Until: July 26th 2010
Countries: USA
lst Application No. 07/733457, Filed July 22nd 1991
Pending: Continuation No. 08/524.739, Filed October 11th 1994
Continuation No. 08/321,123, Filed October 11th 1994
Approved: December 19th 1995, No. 5.476.654
Valid Until: October 10th 2014
Europe
Pending
*
Canada
Pending
*
Japan
Pending
*
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
PACO. 8
Subject: Pharmaceutical tablets releasing the active substance after a
definite period of time
Inventors: Conte, La Manna, Maggi
Assignee: JAGOTEC AG
Priority: Italy, MI 92 A 001174, Filed May 15th 1992
Countries: USA
Approved: November 7th 1995, No. 5,464,633
Valid Until: May 23rd 2014
Canada
Pending
*
PACO. 9
Subject: Pharmaceutical tablet capable of liberating one or more drugs at
different release rates
Inventors: Conte, La Manna, Maggi
Assignee: JAGOTEC AG
Priority: Italy, MI 92 A 002192, Filed September 24th 1992
Countries: PCT Application, No. PCT/EP93/02556,
Filed September 21st 1993
Designated Territories: Australia
Canada
Japan
USA
New Zealand
European Patent Territory
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
EXHIBIT 3.6(I)
GENTA JAGO DELAWARE, L.L.C.
SAN DIEGO, CA 92121 USA
February 28, 1996
Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey
USA
ATTN: President
Genta Jago Technologies B.V., Swiss Branch
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
ATTN: Executive Management Committee
Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz
SWITZERLAND
ATTN: President
Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc.
a Delaware corporation, and Genta Jago Technologies BV ("GJT"), a
Dutch company, regarding the development of * , using certain
proprietary sustained release technology licensed to GJT by
Jagotec AG (said agreement, as it may be supplemented, changed or
extended from time to time hereafter, is referred to as the "*
Development Agreement"). Each of you acknowledges receipt of a
copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and
Genta Jago Technologies BV ("GJT"), a Dutch company, regarding the
grant of certain license rights to Apothecon to make, have made,
use and sell * under certain Patent Rights and Know- How licensed
to GJT pertaining to certain proprietary sustained release
technology licensed to GJT by Jagotec AG (said agreement, as it
may be supplemented, changed or extended from time to time
hereafter, is referred to as
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
the "* License Agreement"). Each of you acknowledges receipt of a
copy of said agreement. The * License Agreement and the *
Development Agreement are referred to herein as the "*
Agreements."; and
iii) The Restated GEOMATRIX Research and Development Agreement dated as
of May 12, 1995 by and among GJT, Jago Pharma AG, as Swiss
corporation, Genta Incorporated ("Genta"), a Delaware corporation,
and Genta Jago Delaware, L.L.C. ("Genta Jago LLC), a Delaware
limited liability company (the "GEOMATRIX Research and Development
Agreement".
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Genta Jago LLC Waiver and Consent Agreement") have the meaning
ascribed to such term in the * License Agreement.
Jagotec AG and Genta are each 50% owners of the equity and income
interests of GJT. Jagotec and Jago Pharma AG are Affiliates of one another, of
GJT, and of Jago Holding AG, a Swiss corporation. Genta and GPM Generic
Pharmaceuticals Manufacturing, Inc. (the latter entity being an Affiliate
Jagotec AG) are each a 50% owner of the equity and income interests of Genta
Jago LLC. Genta Jago LLC acknowledges, and each of the parties signing below
hereby acknowledges, that it expects to derive, directly or indirectly,
substantial economic benefit as a result of the execution, delivery and
performance of the * License Agreement, the * Development Agreement, and of the
GEOMATRIX Agreements. Therefore, in order to induce Apothecon to execute,
deliver and perform the * Agreements, to make the payments required of Apothecon
thereunder, and to accept GJT's promises to discharge its obligations thereunder
and otherwise, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party signing below, Genta
Jago Delaware L.L.C. hereby represents, warrants, agrees, and covenants to and
with Apothecon, and each other party signing below hereby represents, warrants,
agrees and concurs, as follows:
1. Notwithstanding any provision in the GEOMATRIX Research and Development
Agreement to the contrary:
a. All applications filed by Genta Jago LLC pursuant to its obligations
under the GEOMATRIX Research and Development Agreement as are necessary
or useful for the Registration of the Product shall be filed in the name
of, and be owned by, Apothecon, and not GJT.
b. All data and results pertaining to the Product generated by Genta Jago
LLC under the Research and Development Agreement shall be owned solely by
Apothecon. Concurrently with the execution and delivery of this Genta
Jago LLC Waiver and Consent Agreement, Genta Jago LLC will turn over to
Apothecon all data and results heretofore developed by or for it
pertaining to the Product. Genta Jago LLC will thereafter report in
writing such data and results developed by or for it not less frequently
than quarterly to Apothecon and GJT (and monthly if requested by either
party), and will immediately transmit all such data to Apothecon by
magnetic media or such other method as Apothecon shall request.
c. In the event that the GEOMATRIX Research and Development Agreement
should terminate, for whatever reason and however effected, and/or in the
event that GJT commences proceedings to dissolve, liquidate or wind up
its affairs, then, in addition to any remedies available to APOTHECON
under the * Development and Marketing Agreement at law or in equity,
Genta Jago LLC shall, at Apothecon's request, enter into an agreement
with Apothecon for the development and registration of the Product on
terms and conditions that, to the maximum practicable extent, require
Genta Jago LLC to perform the same obligations and observe the same terms
and conditions as apply to it under the GEOMATRIX Research and
Development Agreement (without regard to Genta and Jago Pharma's duties
or responsibilities thereunder), and with Apothecon having the rights
that GJT otherwise had under such GEOMATRIX Research and Development
Agreement and with APOTHECON assuming GJT's obligations under such
GEOMATRIX Research and Development Agreement to the extent such
obligations do not conflict with or are in addition to the obligations
that Apothecon has under the * Development and Marketing Agreement. In
such event Apothecon shall be entitled to grant to Genta Jago LLC a under
the Patent Rights and Knowhow solely to conduct the Research and
Development (as such term is defined in the GEOMATRIX
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
Research and Development Agreement) that Genta Jago LLC is obligated to
conduct under the GEOMATRIX Research and Development Agreement, and any
payments for services performed thereafter by Genta Jago LLC with respect
to the development of the Product shall be made directly by APOTHECON to
Genta Jago LLC.
2. Genta Jago LLC shall submit to Apothecon, concurrently with its
submission to GJT, a copy of (i) all reports, statements, invoices, Product
Workplans, and budgets submitted by Genta Jago LLC to GJT or to the Steering
Committee relating to the Product, (ii) a copy of all reports relating to the
Product submitted to GJT under section 5.4 of the GEOMATRIX Research and
Development Agreement, and (iii) a copy of all submissions to, and all responses
and approvals obtained from, a regulatory authority relating to the Product.
Genta Jago LLC shall promptly inform Apothecon of any default by GJT under the
GEOMATRIX Research and Development Agreement. Following any such default,
Apothecon shall have the right, but shall not be under any obligation of any
nature whatsoever, expressly or impliedly, to (i) cure any such default, and/or
(ii) pay Genta Jago LLC directly thereafter for all services performed by it
under the GEOMATRIX Research and Development Agreement that pertain to the
Product and deduct and offset same from any monies payable thereafter by
Apothecon to GJT.
3. Apothecon shall have the right to exercise the same audit rights as
GJT may exercise under section 4.6 of the GEOMATRIX Research and Development
Agreement, to the extent relating to the Product only.
4. Genta Jago LLC shall defend, indemnify and hold Apothecon, Inc.
harmless from and against any and all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) that Apothecon suffers as a
result of any claim, demand, action or other proceeding by any Third Party
arising from or relating to the * *, its directors, officers, employees,
consultants or agents in performing its obligations under the GEOMATRIX Research
and Development Agreement, except to the extent such losses, liabilities,
damages and expenses arise from the * or their respective directors, officers,
general partners, employees, consultants, or agents (other than *). Apothecon,
as an Indemnitee, agrees to adhere to and be bound by the terms of section 9.5
of the GEOMATRIX Research and Development Agreement, as though such terms were
fully set forth herein (and with "Article 9" replaced by "Article 4 hereof").
5. To the extent any provisions of the * Agreements or of any of the
GEOMATRIX Agreements conflict in any way with the terms of this Genta Jago LLC
Waiver and Consent Agreement, the terms of this Agreement shall control.
6. This Genta Jago LLC Waiver and Consent Agreement shall be effective
immediately and shall continue in full force and effect until such time as
Apothecon may elect to terminate it by a writing delivered to GJT and to Genta
Jago LLC by a duly authorized officer of Apothecon, or until the termination of
the * Marketing and Development Agreement, whichever occurs first.
7. Any consent, notice or report required or permitted to be given or
made hereunder by one party to the other party shall be in English and in
writing, delivered personally or by registered mail, return receipt requested,
addressed to the other party at its address indicated below or to such other
address as the addressee shall have last furnished in writing to the addressor
(with a copy addressed as well to the attention of its "Legal Counsel") and
shall be effective upon receipt by the addressee.
8. Each party represents and warrants to the other parties hereto the
following:
a) Existence and Power. It (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which
it is organized; (ii) has the requisite power and authority and
the legal right to own and operate its property and assets, to
lease the property and assets it operates under lease, and to
carry on its business as it is now being conducted; and (iii) is
in compliance with all requirements of applicable law, except to
the extent that any noncompliance would not have a material
adverse effect on the properties, business, financial or other
condition of it and would not materially adversely affect its
ability to perform its obligations under this Agreement.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter into
the Agreement and to perform its obligations hereunder; and (ii)
has taken all necessary action on its part to authorize the
execution and delivery of this Agreement and the performance of
its obligations hereunder. This Agreement has been duly executed
and delivered on its behalf, and constitutes a legal, valid,
binding obligation, enforceable against it in accordance with its
terms.
c) No Consents. All necessary consents, approvals and authorizations
of all governmental authorities and other Persons required to be
obtained by it in connection with the execution and performance of
this Agreement have been obtained.
d) No Conflict. The execution and delivery of this Agreement on its
behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations applicable to it, and (b) do not conflict or are
inconsistent with, or constitute a default under, any contractual
or fiduciary obligation or covenant of it.
9. This Genta Jago LLC Waiver and Consent Agreement shall inure to the
benefit of, and be binding upon each party hereto, and its respective
successors, permitted assigns and legal representatives. Any party may also
assign its rights and obligations under this Agreement without the consent of
the other parties in connection with a merger, consolidation, or the sale of all
or substantially all of its assets to an Affiliate agreeing to be bound by same,
or may otherwise assign its rights or obligations under this Agreement only with
the prior written consent of the other parties hereto. This Agreement shall
survive any merger, consolidation or similar reorganization of either party with
or into another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
10. This Genta Jago LLC Waiver and Consent Agreement, together with all
other documents referred to herein, constitute the total and complete agreement
of the parties and supersede all prior understandings and agreements hereto
made, and there are no other representations, understandings or agreements
relating to the subject matter hereof that are not set forth herein on which a
party has relied. All terms and conditions of the GEOMATRIX Research and
Development Agreement, to the extent not changed or supplemented by this Genta
Jago LLC Waiver and Consent Agreement, remain in full force and effect.
11. This Genta Jago LLC Waiver and Consent Agreement shall be governed by
and construed in accordance with the laws of Switzerland, without reference to
the conflicts of law principles thereof.
12. No provision of this Genta Jago LLC Waiver and Consent Agreement, or
the benefit thereof may be waived, altered, amended or repealed in whole or in
part except by the written consent of all of the parties hereto, and no such
waiver or changed shall extend beyond the circumstances for which it is granted.
Except as specifically provided for herein, the waiver from time to time by a
party of any of its rights or its failure to exercise any remedy shall not
operate or be construed as a continuing waiver of same or of any other of such
party's rights or remedies hereunder.
13. If any term, covenant or condition of this Genta Jago LLC Waiver and
Consent Agreement or the application thereof to any party or circumstance shall,
to any extent, be held to be invalid or unenforceable, then (1) the remainder of
this Agreement, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law; and (2) the parties hereto covenant and agree to renegotiate
any such term, covenant or application thereof in good faith in order to provide
a reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the parties that the basic purposes of this Agreement are to be
effectuated.
14. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Genta Jago LLC Waiver and
Consent Agreement or any term or condition hereof, or the performance by
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<PAGE>
a party of its obligations hereunder, whether before or after termination of
this Agreement, shall be finally resolved by binding arbitration. Whenever a
party shall decide to institute arbitration proceedings, it shall give written
notice to that effect to the other parties. Any arbitration hereunder shall be
conducted under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Any such arbitration shall be conducted in the English
language by a panel of three (3) arbitrators appointed in accordance with such
rules, and shall be held in Paris, France. The arbitrators shall have the
authority to grant specific performance, and to allocate between the parties the
cost of arbitration in such equitable manner as they determine. Judgment upon
the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award so
rendered and an order of enforcement, as the case may be. Whether a claim,
dispute or other matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this Section 14,
shall be determined by binding arbitration pursuant to this Section 14.
15. It is expressly agreed that the parties are independent contractors
with each other under this Agreement and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. No party
shall have the authority to make any statements, representations or commitments
of any kind, or to take any action which shall be binding on any other party,
without the prior consent of the other party to do so.
16. This Genta Jago LLC Waiver and Consent Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
It shall not be strictly construed against any party hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Genta Jago
LLC Waiver and Consent Agreement through their respective duly authorized
representatives as of the date first set forth above.
GENTA JAGO DELAWARE, L.L.C.
By: /s/ Thomas H. Adams
--------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
--------------------
Dr. Jacques Gonella
Managing Director
We accept and agree to the foregoing, and acknowledge same by executing this
Genta Jago LLC Waiver and Consent Agreement through our duly authorized
representatives:
GENTA JAGO TECHNOLOGIES BV JAGO PHARMA AG
By /s/ Thomas H. Adams By: /s/ Jacques Gonella
------------------- -------------------
Thomas H. Adams, Ph.D. Dr. Jacques Gonella
Managing Director President
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
GENTA INCORPORATED APOTHECON, INC.
By /s/ Thomas H. Adams By: /s/ Lee Burg
------------------- ------------
Thomas H. Adams, Ph.D. Lee Burg
Chairman and Chief Executive Officer President
-6-
<PAGE>
EXHIBIT 3.6(II)
GENTA INCORPORATED
3550 GENERAL ATOMICS COURT
SAN DIEGO, CA 92121 USA
February 28, 1996
Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey
USA
ATTN: President
Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz
SWITZERLAND
ATTN: President
Genta Jago Technologies B.V.
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
ATTN: Executive Committee
Genta Jago Delaware, L.L.C.
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc.,
a Delaware corporation, and Genta Jago Technologies BV ("GJT"), a
Dutch company, regarding the development of *, using certain
proprietary sustained release technology licensed to GJT by
Jagotec AG (said agreement, as it may be supplemented, changed or
extended from time to time hereafter, is referred to as the "*
Development Agreement"). Each of you acknowledges receipt of a
copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and
Genta Jago Technologies BV ("GJT'), a Dutch company, regarding the
grant of certain license rights to Apothecon to make, have made,
use and sell * under certain Patent Rights and Know-How licensed
to GJT pertaining to certain proprietary sustained release
technology licensed to GJT by Jagotec AG (said agreement, as it
may be
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-1-
<PAGE>
supplemented, changed or extended from time to time hereafter, is
referred to as the "* License Agreement"). Each of you
acknowledges receipt of a copy of said agreement. The * License
Agreement and the * Development Agreement are referred to herein
as the "* Agreements."; and
iii) The Restated GEOMATRIX Research and Development Agreement dated as
of May 12, 1995 by and among GJT, Jago Pharma AG, as Swiss
corporation, Genta Incorporated ("Genta"), a Delaware corporation,
and Genta Jago Delaware, L.L.C. ("Genta Jago LLC"), a Delaware
limited liability company (the "GEOMATRIX Research and Development
Agreement".
iv) The GEOMATRIX License Agreement;
v) The GEOMATRIX Manufacturing License Agreement; and
vi) The GEOMATRIX Supply Agreement.
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Genta Waiver and Consent Agreement") have the meaning ascribed
to such term in the * License Agreement.
Jagotec AG and Genta are each 50% owners of the equity and income
interests of GJT. Jagotec and Jago Pharma AG are Affiliates of one another, of
GJT, and of Jago Holding AG, a Swiss corporation. Genta and GPM Generic
Pharmaceuticals Manufacturing, Inc. (the latter entity being an affiliate of
Jagotec AG) are each a 50% owner of the equity and income interests of Genta
Jago LLC. Genta acknowledges, and each of the parties signing below hereby
acknowledges, that it expects to derive, directly or indirectly, substantial
economic benefit as a result of the execution, delivery and performance of the *
License Agreement, the * Development Agreement, and of the GEOMATRIX Agreements.
Therefore, in order to induce Apothecon to execute, deliver and perform the *
Agreements, to make the payments required of Apothecon thereunder, and to accept
GJT's promises to discharge its obligations thereunder and otherwise, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Genta Incorporated hereby represents, warrants, agrees, and
covenants to and with Apothecon, and each other party signing below hereby
represents, warrants, agrees and concurs, as follows:
1. Notwithstanding any provision in the GEOMATRIX Research and Development
Agreement to the contrary:
a. All applications filed by Genta pursuant to its obligations
under the GEOMATRIX Research and Development Agreement as are necessary
or useful for the Registration of the Product shall be filed in the name
of, and be owned by, Apothecon, and not GJT.
b. All data and results pertaining to the Product generated by
Genta under the Research and Development Agreement shall be owned solely
by Apothecon. Concurrently with the execution and delivery of this Genta
Waiver and Consent Agreement, Genta will turn over to Apothecon all data
and results developed heretofore by or for it pertaining to the Product.
Genta will thereafter report in writing such data and results developed
by or for it not less frequently than quarterly to Apothecon and GJT (and
monthly if requested by either party), and will immediately transmit all
such data to Apothecon by magnetic media or such other method as
Apothecon shall request.
c. In the event that the GEOMATRIX Research and Development
Agreement should terminate, for whatever reason and however effected,
and/or in the event that GJT commences proceedings to dissolve, liquidate
or wind up its affairs, then, in addition to any remedies available to
Apothecon under the * Development and Marketing Agreement at law or in
equity, Genta shall, at Apothecon's request, enter into an agreement with
Apothecon for the development and registration of the Product on terms
and conditions that, to the maximum practicable extent, require Genta to
perform the same obligations and observe the same terms and conditions as
apply to it under the GEOMATRIX Research and Development Agreement
(without regard to Jago Phanna's and Genta Jago LLC's duties or
responsibilities thereunder), and with Apothecon having the
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
rights that GJT otherwise had under such GEOMATRIX Research and
Development Agreement and with APOTHECON assuming GJT's obligations under
such GEOMATRIX Research and Development Agreement to the extent such
obligations do not conflict with or are in addition to the obligations
that Apothecon has under the * Development and Marketing Agreement. In
such event Apothecon shall be entitled to grant to Genta a * under the
Patent Rights and Knowhow solely to conduct the Research and Development
(as such term is defined in the GEOMATRIX Research and Development
Agreement) that Genta is obligated to conduct under the GEOMATRIX
Research and Development Agreement, and any payments for services
performed thereafter by Genta with respect to the development of the
Product shall be made directly by APOTHECON to Genta.
2. Genta shall submit to Apothecon, concurrently with its submission to
GJT, a copy of (i) all reports, statements, invoices, Product Workplans, and
budgets submitted by Genta to GJT or to the Steering Committee relating to the
Product, (ii) a copy of all reports relating to the Product submitted to GJT
under section 5.4 of the GEOMATRIX Research and Development Agreement, and (iii)
a copy of all submissions to, and all responses and approvals obtained from, a
regulatory authority relating to the Product. Genta shall promptly inform
Apothecon of any default by GJT under the GEOMATRIX Research and Development
Agreement. Following any such default, Apothecon shall have the right, but shall
not be under any obligation of any nature whatsoever, expressly or impliedly, to
(i) cure any such default, and/or (ii) pay Genta directly thereafter for all
services performed by it under the GEOMATRIX Research and Development Agreement
that pertain to the Product and deduct and offset same from any monies payable
thereafter by Apothecon to GJT.
3. Apothecon shall have the right to exercise the same audit rights as
GJT may exercise under section 4.6 of the GEOMATRIX Research and Development
Agreement, to the extent relating to the Product only.
4. Genta shall defend, indemnify and hold Apothecon, Inc. harmless from
and against any and all losses, liabilities, damages and expenses (including
reasonable attorneys' fees and costs) that Apothecon suffers as a result of any
claim, demand, action or other proceeding by any Third Party arising from or
relating to the *, its directors, officers, employees, consultants or agents in
performing its obligations under the GEOMATRIX Research and Development
Agreement, except to the extent such losses, liabilities, damages and expenses
arise from the *, or their respective directors, officers, general partners,
employees, consultants, or agents (other than *). Apothecon, as an Indemnitee,
agrees to adhere to and be bound by the terms of section 9.5 of the GEOMATRIX
Research and Development Agreement, as though such terms were fully set forth
herein (and with "Article 9" replaced by "Article 4 hereof").
5. To the extent any provisions of the * Agreements or of any of the
GEOMATRIX Agreements conflict in any way with the terms of this Genta Waiver and
Consent Agreement, the terms of this agreement shall control.
6. This Waiver and Consent shall be effective immediately and shall
continue in full force and effect until such time as Apothecon may elect to
terminate it by a writing delivered to GJT and to Genta by a duly authorized
officer of Apothecon, or until the termination of the * Marketing and
Development Agreement, whichever occurs first.
7. Any consent, notice or report required or permitted to be given or
made hereunder by one party to the other party shall be in English and in
writing, delivered personally or by registered mail, return receipt requested,
addressed to the other party at its address indicated below or to such other
address as the addressee shall have last furnished in writing to the addressor
(with a copy addressed as well to the attention of its "Legal Counsel") and
shall be effective upon receipt by the addressee.
8. Each party represents and warrants to the other parties hereto the
following:
a) Existence and Power. It (i) is duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is organized; (ii) has the
requisite power and authority and the legal right to own
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its
business as it is now being conducted; and (iii) is in
compliance with all requirements of applicable law, except
to the extent that any noncompliance would not have a
material adverse effect on the properties, business,
financial or other condition of it and would not materially
adversely affect its ability to perform its obligations
under this Agreement.
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter
into the Agreement and to perform its obligations hereunder;
and (ii) has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and
the performance of its obligations hereunder. This Agreement
has been duly executed and delivered on its behalf, and
constitutes a legal, valid, binding obligation, enforceable
against it in accordance with its terms.
c) No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other
Persons required to be obtained by it in connection with
the execution and performance of this Agreement have been
obtained.
d) No Conflict. The execution and delivery of this Agreement on
its behalf and the performance of its obligations hereunder
(a) do not conflict with or violate any requirement of
applicable laws or regulations applicable to it, and (b) do
not conflict or are inconsistent with, or constitute a
default under, any contractual or fiduciary obligation or
covenant of it.
9. This Genta Waiver and Consent Agreement shall inure to the benefit of,
and be binding upon each party hereto, and its respective successors, permitted
assigns and legal representatives. Any party may also assign its rights and
obligations under this Agreement without the consent of the other parties in
connection with a merger, consolidation or the sale of all or substantially all
of its assets to an Affiliate agreeing to be bound by same, or may otherwise
assign its rights or obligations under this Agreement only with the prior
written consent of the other parties hereto. This Agreement shall survive any
merger, consolidation or similar reorganization of either party with or into
another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
10. This Genta Waiver and Consent Agreement, together with all of the
documents referred to herein, constitute the total and complete agreement of the
parties and supersede all prior understandings and agreements hereto made, and
there are no other representations, understandings or agreements relating to the
subject matter hereof that are not set forth herein on which a party has relied.
All other terms and conditions of the GEOMATRIX Research and Development
Agreement, to the extent not changed or supplemented by this Genta Waiver and
Consent Agreement, remain in full force and effect.
11. This Genta Waiver and Consent Agreement shall be governed by and
construed in accordance with the laws of Switzerland, without reference to the
conflicts of law principles thereof.
12. No provision of this Genta Waiver and Consent Agreement, or the
benefit thereof may be waived, altered, amended or repealed in whole or in part
except by the written consent of all of the parties hereto, and no such waiver
or changed shall extend beyond the circumstances for which it is granted. Except
as specifically provided for herein, the waiver from time to time by a party of
any of its rights or its failure to exercise any remedy shall not operate or be
construed as a continuing waiver of same or of any other of such party's rights
or remedies hereunder.
13. If any term, covenant or condition of this Genta Waiver and Consent
Agreement or the application thereof to any party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (1) the remainder of this
Agreement, or the application of such term, covenant or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (2) the parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application
-4-
<PAGE>
thereof that is invalid or unenforceable, it being the intent of the parties
that the basic purposes of this Agreement are to be effectuated.
14. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Genta Waiver and Consent
Agreement or any term or condition hereof, or the performance by a party of its
obligations hereunder, whether before or after termination of this Agreement,
shall be finally resolved by binding arbitration. Whenever a party shall decide
to institute arbitration proceedings, it shall give written notice to that
effect to the other parties. Any arbitration hereunder shall be conducted under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce. Any such arbitration shall be conducted in the English language by a
panel of three (3) arbitrators appointed in accordance with such rules, and
shall be held in Paris, France. The arbitrators shall have the authority to
grant specific performance, and to allocate between the parties the cost of
arbitration in such equitable manner as they determine. Judgment upon the award
so rendered may be entered in any court having jurisdiction or application may
be made to such court for judicial acceptance of any award so rendered and an
order of enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of limitations,
which also shall apply to any arbitration under this Section 14, shall be
determined by binding arbitration pursuant to this Section 14.
15. It is expressly agreed that the parties are independent contractors
with one another under this Agreement and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. No party
shall have the authority to make any statements, representations or commitments
of any kind, or to take any action which shall be binding on any other party,
without the prior consent of the other party to do so.
16. This Genta Waiver and Consent Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be strictly
construed against any party hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Genta Waiver
and Consent Agreement through their respective duly authorized representatives
as of the date first set forth above.
GENTA INCORPORATED
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Chairman and Chief Executive Officer
We accept and agree to the foregoing, and acknowledge same by executing this
Genta Waiver and Consent Agreement through our duly authorized representatives:
GENTA JAGO TECHNOLOGIES BV JAGO PHARMA AG
By /s/ Thomas H. Adams By: /s/ Jacques Gonella
------------------- -------------------
Thomas H. Adams, Ph.D. Dr. Jacques Gonella
Managing Director President
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
GENTA JAGO DELAWARE, L.L.C.
By /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
APOTHECON, INC.
By /s/ Lee Burg
------------
Lee Burg
President
-6-
<PAGE>
EXHIBIT 3.6(III)
JAGO PHARMA AG
EPTINGERSTRASSE 51
CH-4132 MUFFENZ
SWITZERLAND
February 28, 1996
Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey
USA
ATTN: President
Genta Jago Technologies B.V., Swiss Branch
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
ATTN: Executive Management Committee
Genta Jago Delaware, L. L - C
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121
USA
ATTN: President
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc.,
a Delaware corporation, and Genta Jago Technologies BV ("GJT"), a
Dutch company, regarding the development of *, using certain
proprietary sustained release technology licensed to GJT by
Jagotec AG (said agreement, as it may be supplemented, changed or
extended from time to time hereafter, is referred to as the "*
Development Agreement"). Each of you acknowledges receipt of a
copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and
Genta Jago Technologies BV ("GJT"), a Dutch company, regarding the
grant of certain license rights to Apothecon to make, have made,
use and sell * under certain Patent Rights and Know-How licensed
to GJT pertaining to certain proprietary sustained release
technology licensed to GJT by Jagotec AG (said agreement, as it
may be
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
supplemented, changed or extended from time to time hereafter, is
referred to as the "* License Agreement"). Each of you
acknowledges receipt of a copy of said agreement. The * License
Agreement and the * Development Agreement are referred to herein
as the "* Agreements"; and
iii) The Restated GEOMATRIX Research and Development Agreement dated as
of May 12, 1995 by and among GJT, Jago Pharma AG, as Swiss
corporation, Genta Incorporated ("Genta"), a Delaware corporation,
and Genta Jago Delaware, L.L.C. ("Genta Jago LLC), a Delaware
limited liability company (the "GEOMATRIX Research and Development
Agreement".
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Jago Pharma Waiver and Consent Agreement") have the meaning
ascribed to such term in the * License Agreement.
Jagotec AG and Genta are each 50% owners of the equity and income interests
of GJT. Jagotec and Jago Pharma AG are Affiliates of one another, of GJT, and of
Jago Holding AG, a Swiss corporation. Genta and GPM Generic Pharmaceuticals
Manufacturing Inc. (the latter entity being an Affiliate of Jagotec AG) are each
a 50% owner of the equity and income interests of Genta Jago LLC. Jago Pharma AG
acknowledges, and each of the parties signing below hereby acknowledges, that it
expects to derive substantial economic benefit, directly or indirectly, as a
result of the execution, delivery and performance of the * License Agreement,
the * Development Agreement, and of the GEOMATRIX Agreements. Therefore, in
order to induce Apothecon to execute, deliver and perform the * Agreements, to
make the payments required of Apothecon thereunder, and to accept GJT's promises
to discharge its obligations thereunder and otherwise, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Jago Pharma AG hereby represents, warrants, agrees, and covenants
to and with Apothecon, and each other party signing below hereby represents,
warrants, agrees and concurs, as follows:
1. (a) Notwithstanding any provision in the GEOMATRIX Research and
Development Agreement to the contrary:
i. All applications filed by Jago Pharma AG pursuant to its obligations
under the GEOMATRIX Research and Development Agreement as are necessary
or useful for the Registration of the Product shall be filed in the name
of, and be owned by, Apothecon, and not GJT.
ii. All data and results pertaining to the Product generated by Jago
Pharma AG under the Research and Development Agreement shall be owned
solely by Apothecon. Concurrently with the execution and delivery of this
Jago Pharma Waiver and Consent Agreement, Jago Pharma will turn over to
Apothecon all data and results heretofore developed by or for it
pertaining to the Product. Jago Pharrna AG will thereafter report in
writing such data and results developed by or for it not less frequently
than quarterly to Apothecon and GJT (and monthly if requested by either
party), and will immediately transmit all such data to Apothecon by
magnetic media or such other method as Apothecon shall request.
iii. In the event that the GEOMATRIX Research and Development Agreement
should terminate, for whatever reason and however effected, then, in
addition to any remedies available to APOTHECON under the * Development
and Marketing Agreement at law or in equity, Jago Pharma AG shall, at
Apothecon's election and request, enter into an agreement with Apothecon
for the development and registration of the Product on terms and
conditions that, to the maximum practicable extent, require Jago Pharma
AG to perform the same obligations and observe the same terms and
conditions as apply to it under the GEOMATRIX Research and Development
Agreement (without regard to Genta and Genta Jago LLC's duties or
responsibilities thereunder), and with Apothecon having the rights that
GJT otherwise had under such GEOMATRIX Research and Development Agreement
and with APOTHECON assuming GJT's obligations under such GEOMATRIX
Research and Development Agreement to the extent such obligations do not
conflict with or are in addition to the obligations that Apothecon has
under the * Development and Marketing Agreement. In such event Apothecon
shall be entitled to grant to Jago Pharma AG a * under the Patent Rights
and Knowhow solely to conduct the Research and Development (as such term
is defined in the GEOMATRIX
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
Research and Development Agreement) that Jago Pharma AG is obligated to
conduct under the GEOMATRIX Research and Development Agreement, and any
payments for services performed thereafter by Jago Pharma AG with respect
to the development of the Product shall be made directly by APOTHECON to
Jago Pharma AG.
(b) If GJT breaches the * Development and Marketing Agreement with
respect to the development of the Product in a manner that entitles
APOTHECON to terminate same pursuant to section 11.2.2.1 or 11. 2.2.2
thereof, or makes an untrue statement that entitles APOTHECON to
terminate same pursuant to section 11.2.4.1 thereof, and/or in the event
that GJT commences proceedings to dissolve, liquidate or wind up its
affairs, then, in addition to any remedies available to it under said *
Development and Marketing Agreement or available to it at law or in
equity, APOTHECON may elect (by delivering a writing to GJT and Jago
Pharma AG of APOTHECON's intent to exercise its option), for Jago Pharma
AG to, and Jago Pharma AG agrees that it will, promptly enter into an
agreement with APOTHECON under which: (i) Jago Pharma will, to the extent
it has the right to do so, ensure that all licenses, sublicenses and
other rights and privileges granted by GJT under the * Development and
Marketing Agreement shall continue without change, and (ii) Jago Pharma
will assume all rights and obligations of GJT under articles 3, 4, 5, 6,
11.4.5, 12, 14, 15.1, and 15.2 of the Development and Marketing Agreement
and will promptly cure any defaults of GJT under said articles, any
payments to be made thereafter by APOTHECON under said articles shall
thereafter be paid to Jago Phanna, and APOTHECON shall continue to enjoy
all rights and privileges granted under said articles.
2. Jago Pharma shall submit to Apothecon, concurrently with its submission
to GJT, a copy of (i) all reports, statements, invoices, Product Workplans, and
budgets submitted by Jago Pharma AG to GJT or to the Steering Committee relating
to the Product, (ii) a copy of all reports relating to the Product submitted to
GJT under section 5.4 of the GEOMATRIX Research and Development Agreement, and
(iii) a copy of all submissions to, and all responses and approvals obtained
from, a regulatory authority relating to the Product. Jago Pharma AG shall
promptly inform Apothecon of any default by GJT under the GEOMATRIX Research and
Development Agreement. Following any such default, Apothecon shall have the
right, but shall not be under any obligation of any nature whatsoever, expressly
or impliedly, to (i) cure any such default, and/or (ii) pay Jago Pharma AG
directly thereafter for all services performed by it under the GEOMATRIX
Research and Development Agreement that pertain to the Product and deduct and
offset same from any monies payable thereafter by Apothecon to GJT.
3. Apothecon shall have the right to exercise the same audit rights as GJT
may exercise under section 4.6 of the GEOMATRIX Research and Development
Agreement, to the extent relating to the Product only.
4. Jago Pharma AG shall defend, indemnify and hold Apothecon, Inc. harmless
from and against any and all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) that Apothecon suffers as a
result of any claim, demand, action or other proceeding by any Third Party
arising from or relating to the *, its directors, officers, employees,
consultants or agents in performing its obligations under the GEOMATRIX Research
and Development Agreement, except to the extent such losses, liabilities,
damages and expenses arise from the *, or their respective directors, officers,
general partners, employees, consultants, or agents (other than *). Apothecon,
as an Indemnitee, agrees to adhere to and be bound by the terms of section 9.5
of the GEOMATRIX Research and Development Agreement, as though such terms were
fully set forth herein (and with "Article 9" replaced by "Article 4 hereof").
5. To the extent any provisions of the * Agreements or of any of the
GEOMATRIX Agreements conflict in any way with the terms of this Jago Pharma
Waiver and Consent Agreement, the terms of this Agreement shall control.
6. This Waiver and Consent shall be effective immediately and shall continue
in full force and effect until such time as Apothecon may elect to terminate it
by a writing delivered to GJT and to Jago Pharma by a duly authorized officer of
Apothecon, or until the termination of the * Marketing and Development
Agreement, whichever occurs first.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
7. Any consent, notice or report required or permitted to be given or made
hereunder by one party to the other party shall be in English and in writing,
delivered personally or by registered mail, return receipt requested, addressed
to the other party at its address indicated below or to such other address as
the addressee shall have last furnished in writing to the addressor (with a copy
addressed as well to the attention of its "Legal Counsel") and shall be
effective upon receipt by the addressee.
8. Each party represents and warrants to the other parties hereto the following:
a) Existence and Power. It (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized; (ii) has the requisite power and authority and the legal right
to own and operate its property and assets, to lease the property and
assets it operates under lease, and to carry on its business as it is now
being conducted; and (iii) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not
have a material adverse effect on the properties, business, financial or
other condition of it and would not materially adversely affect its
ability to perform its obligations under this Agreement.
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder; and (ii) has taken
all necessary action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on its behalf, and
constitutes a legal, valid, binding obligation, enforceable against it in
accordance with its terms.
c) No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required
to be obtained by it in connection with the execution and performance of
this Agreement have been obtained.
d) No Conflict. The execution and delivery of this Agreement on
its behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations applicable to it, and (b) do not conflict or are inconsistent
with, or constitute a default under, any contractual or fiduciary
obligation or covenant of it.
9. This Jago Pharma Waiver and Consent Agreement shall inure to the benefit
of, and be binding upon each party hereto, and its respective successors,
permitted assigns and legal representatives. Any party may also assign its
rights and obligations under this Agreement without the consent of the other
parties in connection with a merger, consolidation, or the sale of all or
substantially all of its assets to an Affiliate agreeing to be bound by same, or
may otherwise assign its rights or obligations under this Agreement only with
the prior written consent of the other parties hereto. This Agreement shall
survive any merger, consolidation or similar reorganization of either party with
or into another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
10. This Jago Pharma Waiver and Consent Agreement, together with all other
documents to the extent referred to herein, constitute the total and complete
agreement of the parties and supersede all prior understandings and agreements
hereto made, and there are no other representations, understandings or
agreements relating to the subject matter hereof that are not set forth herein
on which a party has relied. All terms and conditions of the GEOMATRIX Research
and Development Agreement, to the extent not changed or supplemented by this
Jago Pharma Waiver and Consent Agreement, remain in full force and effect.
11. This Jago Pharma Waiver and Consent Agreement shall be governed by and
construed in accordance with the laws of Switzerland, without reference to the
conflicts of law principles thereof.
12. No provision of this Jago Pharma Waiver and Consent Agreement, or the
benefit thereof may be waived, altered, amended or repealed in whole or in part
except by the written consent of all of the parties hereto, and no such waiver
or changed shall extend beyond the circumstances for which it is granted. Except
as specifically provided for herein, the waiver from time to time by a party of
any of its rights or its failure to exercise any remedy
-4-
<PAGE>
shall not operate or be construed as a continuing waiver of same or of any other
of such party's rights or remedies hereunder.
13. If any term, covenant or condition of this Jago Pharma Waiver and
Consent Agreement or the application thereof to any party or circumstance shall,
to any extent, be held to be invalid or unenforceable, then (1) the remainder of
this Agreement, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law; and (2) the parties hereto covenant and agree to renegotiate
any such term, covenant or application thereof in good faith in order to provide
a reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the parties that the basic purposes of this Agreement are to be
effectuated.
14. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Jago Pharma Waiver and Consent
Agreement or any term or condition hereof, or the performance by a party of its
obligations hereunder, whether before or after termination of this Agreement,
shall be finally resolved by binding arbitration. Whenever a party shall decide
to institute arbitration proceedings, it shall give written notice to that
effect to the other parties. Any arbitration hereunder shall be conducted under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce. Any such arbitration shall be conducted in the English language by a
panel of three (3) arbitrators appointed in accordance with such rules, and
shall be held in Paris, France. The arbitrators shall have the authority to
grant specific performance, and to allocate between the parties the cost of
arbitration in such equitable manner as they determine. Judgment upon the award
so rendered may be entered in any court having jurisdiction or application may
be made to such court for judicial acceptance of any award so rendered and an
order of enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of limitations,
which also shall apply to any arbitration under this Section 14, shall be
deter-mined by binding arbitration pursuant to this Section 14.
15. It is expressly agreed that the parties are independent contractors with
each other under this Agreement and that the relationship between the parties
shall not constitute a partnership, joint venture or agency. No party shall have
the authority to make any statements, representations or commitments of any
kind, or to take any action which shall be binding on any other party, without
the prior consent of the other party to do so.
16. This Jago Pharma Waiver and Consent Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be strictly
construed against any party hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Jago Pharma
Waiver and Consent Agreement through their respective duly authorized
representatives as of the date first set forth above.
JAGO PHARMA AG
By /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
President
We accept and agree to the foregoing, and acknowledge same by executing this
Jago Pharma Waiver and Consent Agreement through our duly authorized
representatives:
GENTA JAGO TECHNOLOGIES BV
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
GENTA INCORPORATED
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Chairman and Chief Executive Officer
GENTA JAGO DELAWARE, L.L.C.
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
Managing Director
By: /s/ Jacques Gonella
-------------------
Dr. Jacques Gonella
Managing Director
APOTHECON, INC.
By: /s/ Lee Burg
------------
Lee Burg
President
-6-
<PAGE>
EXHIBIT 3.6(IV)
JAGOTEC AG
SEESTRASSE 47
CH-6052 HERGISWIL, SWITZERLAND
February 28, 1996
Apothecon, Inc.
777 Scudder Mills Road
Princeton, New Jersey 08536
USA
Attn.: President
Genta Jago Technologies BV
Grundstrasse 12
6343 Rotkreuz
SWITZERLAND
Re: WAIVER AND CONSENT
Gentlemen:
Reference is hereby made to:
i) An Agreement dated the date hereof by and between Apothecon, Inc., a
Delaware corporation, and Genta Jago Technologies BV ("GJT"), a Dutch company,
regarding the development and marketing of *, using certain proprietary
sustained release technology licensed to GJT by Jagotec AG (said agreement, as
it may be supplemented, changed or extended from time to time hereafter, is
referred to as the "* Development and Marketing Agreement"). You acknowledge
receipt of a copy of said agreement; and
ii) An Agreement dated the date hereof by and between Apothecon and Genta
Jago Technologies BV ("GJT"), a Dutch company, regarding the grant of certain
license rights to Apothecon to make, have made, use and sell * under certain
Patent Rights and Know-How licensed to GJT pertaining to certain proprietary
sustained release technology licensed to GJT by Jagotec AG (said agreement, as
it may be supplemented, changed or extended from time to time hereafter, is
referred to as the "* License Agreement"). You acknowledge receipt of a copy of
said agreement. The * License Agreement and the * Development and Marketing
Agreement are referred to herein as the "* Agreements.";
All capitalized terms not expressly defined in this Waiver and Consent
agreement ("the "Jagotec Waiver and Consent Agreement") have the meaning
ascribed to such term in the * License Agreement.
Jagotec AG ("Jagotec"), a Swiss corporation, is party to a Restated
GEOMATRIX License Agreement between Jagotec and GJT dated May 12, 1995 (said
agreement, as it may be supplemented, changed or extended from time to time, is
referred to herein as the "License Agreement") and to a Restated GEOMATRIX
Manufacturing License Agreement between Jagotec and GJT dated May 12, 1995 (said
agreement, as it may be supplemented, changed or extended from time to time, is
referred to herein as the "Manufacturing License Agreement").
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
Jagotec is a 50% owner of the equity and income interests of GJT. Jagotec
is an Affiliate of GJT and of Jago Holding AG, a Swiss corporation. Accordingly,
the undersigned expects to derive, directly or indirectly, substantial economic
benefit as a result of the execution, delivery and performance of the *
Agreements. Therefore, in order to induce Apothecon to execute, deliver and
perform the * Agreements, to make the payments required of Apothecon thereunder,
and to accept GJT's promises to discharge its obligations thereunder and
otherwise, Jagotec hereby represents, warrants, agrees, and covenants to and
with GJT and Apothecon as follows:
1. Jagotec agrees that any license rights, sublicense rights and other
rights granted or extended by GJT to Apothecon under the * Agreements are not
subject to the terms and conditions of the License Agreement and the
Manufacturing License Agreement and waives any rights Jagotec may have with
respect to the enforcement of same against Apothecon. Jagotec further agrees
that Apothecon, to the extent it is a subcontractee or sublicensee of GJT's
rights and obligations under the License Agreement and the Manufacturing
Agreement, shall not be bound by any and all obligations and undertakings of GJT
under either of said Agreements, and waives any rights Jagotec may have with
respect to the enforcement of same against Apothecon.
2. (a) Jagotec agrees that, in the event of an event that the License
Agreement and/or the Manufacturing License Agreement is or are terminated, for
whatever reason and whether by action taken by Jagotec, GJT or both, and
notwithstanding any provision (including without limitation section 11.4) to the
contrary in the License Agreement and in the Manufacturing Agreement, all
licenses, sublicenses and other rights and privileges granted or extended to
Apothecon under the * Agreements shall continue and remain in full force and
effect in accordance with their terms, without further action or election on the
part of Apothecon, and Jagotec shall be deemed simultaneously to have assumed
the rights and obligations of GJT under the * Agreements and will promptly cure
all defaults of GJT thereunder.
(b) If GJT breaches the * License Agreement in a manner that
entitles APOTHECON to terminate same pursuant to section 11.2.2.1 or 11.2.2.2
thereof, or makes an untrue statement that entitles APOTHECON to terminate same
pursuant to section 11.2.4.1 thereof, and/or in the event that GJT commences
proceedings to dissolve, liquidate or wind up its affairs, then, in addition to
any remedies available to it under said Agreement or at law or in equity,
APOTHECON may elect (by delivering a writing to GJT and Jagotec of APOTHECON's
intent to exercise such option) for Jagotec to, and Jagotec agrees that it will,
promptly enter into a new, separate agreement with APOTHECON under which (i) all
licenses, sublicenses and other rights and privileges granted by GJT under the *
License Agreement shall continue without further action or election on the part
of APOTHECON, (ii) Jagotec will assume all rights and obligations of GJT and
promptly cure all defaults of GJT thereunder, and (iii) all payments that would
otherwise have been made thereafter by APOTHECON under the * License Agreement
shall thereafter be paid to Jagotec.
(c) If GJT fails to make a payment when due under its Restated
Working Capital Agreement dated as of May 12, 1995 (as amended by a First
Amendment thereto dated as of July 11, 1995 and as the same may be amended from
time to time hereafter, and including any successor agreement thereto), between
GJT and Genta, Incorporated, a Delaware corporation ("Genta"), GJT and/or
Jagotec shall promptly inform APOTHECON of same, and APOTHECON may elect (by
delivering a writing to GJT and Jagotec of APOTHECON's intent to exercise such
option) at any time thereafter to terminate the * License Agreement and for
Jagotec to, and Jagotec agrees that it will, promptly enter into a new, separate
agreement with APOTHECON under which (i) all licenses, sublicenses and other
rights and privileges granted by GJT under the * License Agreement shall
continue without further action or election on the part of APOTHECON, and (ii)
Jagotec will assume all rights and obligations of GJT and promptly cure all
defaults of GJT thereunder; provided, however, that all payments that would
otherwise have been made thereafter by APOTHECON under the * License Agreement
and otherwise under such new, separate agreement shall thereafter continue to be
paid to GJT by APOTHECON, until APOTHECON is duly instructed otherwise in
writing by GJT and Jagotec AG.
3. To the extent any provisions of the * Agreements supplement or conflict
with the terms of the GEOMATRIX Agreements, the terms of the * Agreements shall
control.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
4. This Jagotec Waiver and Consent Agreement shall inure to the benefit of
Apothecon, its successors, assigns and legal representatives, as well as GJT,
its successors, assigns and legal representatives, and shall bind the Jagotec
and its successors and assigns. This Jagotec Waiver and Consent Agreement sets
forth the entire understanding of the GJT, Jagotec and Apothecon with respect to
the subject matter hereof, and there are no other promises, representations or
understandings, written or oral, not set forth herein.
5. Each party represents and warrants to the other parties hereto the
following:
a) Existence and Power. It (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized; (ii) has the requisite power and authority and the legal right
to own and operate its property and assets, to lease the property and
assets it operates under lease, and to carry on its business as it is now
being conducted; and (iii) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not
have a material adverse effect on the properties, business, financial or
other condition of it and would not materially adversely affect its
ability to perform its obligations under this Agreement.
b) Authorization and Enforcement of Obligations. It (i) has the
requisite power and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder; and (ii) has taken
all necessary action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on its behalf, and
constitutes a legal, valid, binding obligation, enforceable against it in
accordance with its terms.
c) No Consents. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required
to be obtained by it in connection with the execution and performance of
this Agreement have been obtained.
d) No Conflict. The execution and delivery of this Agreement on
its behalf and the performance of its obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations applicable to it, and (b) do not conflict or are inconsistent
with, or constitute a default under, any contractual or fiduciary
obligation or covenant of it.
6. This Jagotec Waiver and Consent Agreement shall be effective
immediately and shall continue in full force and effect until such time as
Apothecon may elect to terminate it by a writing delivered to GJT and to Jagotec
by a duly authorized officer of Apothecon, or until the termination of the *
Agreements, whichever occurs first.
7. Any consent, notice or report required or permitted to be given or made
hereunder by one party to the other party shall be in English and in writing,
delivered personally or by registered mail, return receipt requested, addressed
to the other party at its address indicated below or to such other address as
the addressee shall have last furnished in writing to the addressor and shall be
effective upon receipt by the addressee.
If to Jagotec: Jagotec AG
c/o Jago Pharma AG
Eptingerstrasse 51
CH-4132 Muttenz, Switzerland
Attention: Dr. Jacques Gonella
with a copy to: Rinderknecht Glaus & Stadelhofer
Beethovenstrasse 7
Postfach 4451
CH-8002 Zurich, Switzerland
Attention: Dr. Thomas M. Rinderknecht
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-3-
<PAGE>
If to GJT: Genta Jago Technologies BV
Swiss Branch
Grundstrasse 12
6343 Rotkreuz, Switzerland
Attention: Executive Management Committee
with copies to: Genta Incorporated
3550 General Atomics Court
San Diego, CA 92121, U.S.A.
Attention: Thomas H. Adams, Ph.D.
and: Pillsbury Madison & Sutro
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
Attention: Thomas E. Sparks, Jr., Esq.
If to
APOTHECON: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: President
with a copy to: Apothecon, Inc.
777 Scudders Mill Road
Plainsboro, New Jersey 08536 USA
Attention: Corporate Legal Counsel
8. This Jagotec Waiver and Consent Agreement shall be governed by and
construed in accordance with the laws of Switzerland, without reference to the
conflicts of law principles thereof.
9. Any dispute, claim or controversy between the parties relating to,
arising out of or in any way connected with this Jagotec Waiver and Consent
Agreement or any term or condition hereof, or the performance by either party of
its obligations hereunder, whether before or after termination of this Jagotec
Waiver and Consent Agreement, shall be finally resolved by binding arbitration.
Whenever a party shall decide to institute arbitration proceedings, it shall
give written notice to that effect to the other party. Any arbitration hereunder
shall be conducted under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce. Any such arbitration shall be conducted in
the English language by a panel of three (3) arbitrators appointed in accordance
with such rules, and shall be held in Paris, France. The arbitrators shall have
the authority to grant specific performance, and to allocate between the parties
the cost of arbitration in such equitable manner as they determine. Judgment
upon the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award so
rendered and an order of enforcement, as the case may be. Whether a claim,
dispute or other matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this Section 9,
shall be determined by binding arbitration pursuant to this Section 9.
10. It is expressly agreed that the parties are each independent
contractors with one another under this Agreement and that the relationship
between the two parties shall not constitute a partnership, joint venture or
agency. Neither party 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 party, without the prior consent of the other party to do
so.
11. The provisions of this Jagotec Waiver and Consent Agreement may not
be waived, altered, amended or repealed in whole or in part except by the
written consent of all of the parties hereto.
-4-
<PAGE>
12. The terms, covenants, conditions and provisions contained herein,
together with all other documetts to the extent referred to herein, constitute
the total and complete agreement of the parties and supersede all prior
understandings and agreements hereto made, and there are no other
representations, understandings or agreements relating to the subject matter
hereof.
13. This Jagotec Waiver and Consent Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be strictly
construed against any party hereto.
14. This Jagotec Waiver and Consent Agreement shall inure to the benefit
of, and be binding upon each party hereto, and its respective successors,
permitted assigns and legal representatives. Any party may also assign its
rights and obligations under this Agreement without the consent of the other
parties in connection with a merger, consolidation, or the sale of all or
substantially all of its assets to an Affiliate agreeing to be bound by same, or
may otherwise assign its rights or obligations under this Agreement only with
the prior written consent of the other parties hereto. This Agreement shall
survive any merger, consolidation or similar reorganization of either party with
or into another party and no consent for a merger, consolidation or similar
reorganization shall be required hereunder. Any assignment not in accordance
with this Agreement shall be void.
15. No provision of this Jagotec Waiver and Consent Agreement, or the
benefit thereof may be waived, altered, amended or repealed in whole or in part
except by the written consent of all of the parties hereto, and no such waiver
or changed shall extend beyond the circumstances for which it is granted. Except
as specifically provided for herein, the waiver from time to time by a party of
any of its rights or its failure to exercise any remedy shall not operate or be
construed as a continuing waiver of same or of any other of such party's rights
or remedies hereunder.
16. If any term, covenant or condition of this Jagotec Waiver and Consent
Agreement or the application thereof to any party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (1) the remainder of this
Agreement, or the application of such term, covenant or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (2) the parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or unenforceable, it being the intent of
the parties that the basic purposes of this Agreement are to be effectuated.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties below have duly executed this Jagotec
Waiver and Consent Agreement through their respective duly authorized
representatives as of the date first set forth above.
JAGOTEC AG
By: /s/ Jacquest Gonella
--------------------
Dr. Jacques Gonella
President
We accept and agree to the foregoing, and acknowledge same by executing this
Jagotec Waiver and Consent Agreement through our duly authorized
representatives:
GENTA JAGO TECHNOLOGIES BV
By: /s/ Jacques Gonella
-------------------
Dr.Jacques Gonella
Managing Director
By: /s/ Thomas H. Adams
-------------------
Thomas H. Adams, Ph.D.
managing Director
APOTHECON, INC.
By: /s/ Lee Burg
------------
Title: VP/GM
Date:
-6-
<PAGE>
EXHIBIT 9.1
LIST OF GEOMATRIX TRADEMARKS
- - - --------------------------------------------------------------------------------
Country TM-No. Issue Date
- - - ------------------------------- ------------ --------
International 522 445 April 8, 1988
Registration (25 countries)
Canada 369 959 May 29, 1990
Switzerland 360 353 November 11, 1987
United Kingdom (class 1) 1415 927 March 24, 1990
United Kingdom (class 5) 1353 226 August 2, 1995 *)
Greece 90 337 August 25, 1955
Japan 2578 899 September 30, 1993
New Zealand 185 989 July 28, 1995
Portugal **) 303 292 September 12, 1994
Sweden 223 455 May 10, 1991
United States 1562 880 October 31, 1989
*) renewal date
**) registration not yet granted
EXHIBIT 10.91
CONFIDENTIAL TREATMENT REQUESTED
OPTION , DEVELOPMENT & SUB-LICENSE AGREEMENT
*
This OPTION, DEVELOPMENT AND SUB-LICENSE AGREEMENT (this "AGREEMENT"), effective
from the date last written hereunder, is entered into between GENTA JAGO
TECHNOLOGIES B.V., a Dutch company, having a place of business at Grundstrasse
12, 6343 Rotkreuz, Switzerland (hereinafter referred to as "GENTA JAGO"), and
KRYPTON LTD., a Gibraltar limited company, having a place of business at East
Wing, Second Level, Hadfield House, Library Street, Gibraltar (hereinafter
referred to as "KRYPTON")
WITNESSTH:
WHEREAS, GENTA JAGO has expertise in the development of controlled-release
formulations for pharmaceutical agents and in particular has exclusive rights to
proprietary know-how and technology generally known and commercialized under the
registered trademark GEOMATRIX(R) and as described and embodied in the Patents
(as defined below) with respect to product(s) containing * as the sole active
ingredient; and
WHEREAS, KRYPTON is a company which markets pharmaceutical products and is
interested in developing Prototype Formulations (as defined below) for the Final
Products (as defined below) and in seeking the approval of Regulatory
Authorities (as defined below) to manufacture, or have manufactured and market
the Final Products in the Territory (as defined below); and
WHEREAS, GENTA JAGO is prepared to conduct or have conducted certain studies and
the development of the Prototype Formulations and Final Products; and
WHEREAS, GENTA JAGO is prepared to grant to KRYPTON under the terms and
conditions set forth hereafter an option to sub-license under the Patents,
GEOMATRIX(R) Technology and Know-How (as defined below) to conduct studies
relating to the Prototype Formulations and, upon receipt of approval by the
Regulatory Authority (as defined below), to manufacture or have manufactured,
market and sell the Final Products in the Territory.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
Parties hereby agree as follows:
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the following meanings:
1.1 "Active Ingredient" shall mean *.
1.2 "Affiliate" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct or
indirect beneficial ownership of more than 50% of the voting power of, or
more than 50% of ownership interest in, such corporation, partnership or
other entity.
1.3 "FDA" shall mean the U.S. Federal Food and Drug Administration and any
successor agency thereof.
1.4 "Final Products" shall mean the pharmaceutical orally-administered
controlled-release formulation containing the Active Ingredient, presented
as a compressed tablet developed pursuant to this Agreement, based on the
GEOMATRIX(R) Technology and meeting the Specifications.
1.5 "GEOMATRIX(R) Technology" shall mean the oral controlled-release drug
delivery and related technology licensed to GENTA JAGO by the Licensor
which utilizes a hydrophilic drug-containing matrix tablet which controls
the release of the drug through the use of one or more barrier layers.
1.6 "Know-How" shall mean all information and data, which are not generally
known -------- including, but not limited to, patent claims and related
information not yet disclosed to the public, formulae, procedures,
protocols, techniques and results of experimentation and testing, which (a)
relate to the GEOMATRIX(R)Technology, any Prototype Formulation or any
Final Product, or (b) are necessary or useful to develop, make or use any
Prototype Formulation, or (c) are necessary or useful to develop, seek
regulatory approval, make, use or sell any Final Product, all to the extent
presently or during the term of this Agreement licensed or otherwise
available to and at the free disposition of GENTA JAGO.
1.7 "Leading Dose Strength" shall mean the dose strength of Active Ingredient
to be used in the first to be developed Prototype Formulations, as mutually
agreed upon by the Parties, together with the respective Specifications.
1.8 "License Agreements" shall mean the license agreements entered into by and
between GENTA JAGO and the Licensor, under which the Licensor granted GENTA
JAGO the rights in the Patents, the Know-How and the GEOMATRIX(R)
Technology, which are the subject matter of the sub-license referred to in
Article 11. below.
- - - ------------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-2-
<PAGE>
1.9 "Licensor" shall mean Jagotec AG, a Swiss corporation, having its place of
business at Seestrasse 91, CH-6052 Hergiswil, Switzerland.
1.10 "NDA" shall mean any New Drug Application filed with the FDA, by or for
KRYPTON requesting authorization to manufacture, have manufactured or sell
any Final Product in the United States of America, or any equivalent
application to a Regulatory Authority in any other country of the
Territory.
1.11 "Net Sales" shall mean, with respect to any Final Product(s), the invoiced
sales price of --------- such Final Product(s) in finished package form
invoiced by KRYPTON and/or its Affiliates to any independent customer other
than KRYPTON's Affiliates, less (a) credits, allowances, discounts and
rebates to, and chargebacks from the account of, such independent customers
for spoiled, damaged, out-dated, rejected or returned Final Product(s); (b)
actual freight and insurance costs incurred and paid by KRYPTON and/or its
Affiliates in transporting such Final Product(s) in final form to such
customers; (c) customary cash, quantity and trade discounts and other price
reduction programs; (d) sales, use, value-added and other direct taxes (but
excluding any income tax) actually incurred and paid by KRYPTON and/or its
Affiliates; and (e) customs duties, surcharges and other governmental
charges incurred by KRYPTON and/or its Affiliates in connection with the
exportation or importation of such Final Product(s) in final form.
1.12 "Patents" shall mean all patents and patent applications heretofore or
hereafter filed or ------- having presently or in the future legal force in
any country of the Territory, licensed by the Licensor to GENTA JAGO which
claim the GEOMATRIX(R)Technology or the process to manufacture Prototype
Formulations and/or Final Products by use of, or the use of, the
GEOMATRIX(R)Technology, including but not limited to the patents and patent
applications listed in APPENDIX A hereto, together with all patents that in
the future issue therefrom in any country of the Territory, including
utility, model and design patents and certificates of invention, and all
divisionals, continuations, continuations-in-part, reissues, renewals,
extensions, substitutions, confirmations or additions to any such patents
and patent applications, all to the extent presently or during the term of
this Agreement licensed or otherwise available to and at the free
disposition of GENTA JAGO.
1.13 "Prototype Formulations" shall mean the oral delivery system for both, the
Leading Dose Strength and the Subsequent Dose Strength, of Active
Ingredient based on the GEOMATRIX(R) Technology that reasonably meet the
Specifications.
1.14 "Reference Products" shall mean the products containing Active Ingredient
listed in APPENDIX B.
1.15 "Regulatory Authority" shall mean the FDA and any equivalent competent
regulatory authority in the other countries of the Territory.
1.16 "Specifications" shall mean the Product specifications to be mutually
decided and agreed upon by the Parties for the Leading Dose Strength and
the Subsequent Dose Strength and as set forth from time to time in
Appendixes to this Agreement.
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1.17 "Subsequent Dose Strength" shall mean the dose strength of Active
Ingredient to be used in Prototype Formulations to be developed hereunder
subsequent to the Prototype Formulations for the Leading Dose Strength, as
mutually agreed upon by the Parties, together with the respective
Specifications, at the appropriate time.
1.18 "Territory" shall mean *.
ARTICLE 2
GRANT OF OPTION AND DEVELOPMENT PREAMBLE
2.1 GENTA JAGO hereby grants to KRYPTON an exclusive option to develop and to
acquire a sub-licensese (hereinafter referred to as the "License") to use,
manufacture, have manufactured, sell and market the Final Products in the
Territory and to use the Patents, GEOMATRIX(R) Technology and Know How as
further set forth hereinafter. This option may be exercised by KRYPTON in
writing at any time on or before the earlier of (i)* or (ii) within *. Upon
timely exercise of this option the terms and provisions set forth
hereinafter for the development, registration and sub-license for the Final
Products shall come into full force and effect. Should KRYPTON not timely
exercise its option granted hereunder or inform GENTA JAGO in writing that
KRYPTON does not wish to exercise the option, then GENTA JAGO shall be free
to develop, sub-license and market the Final Products for its own purposes
or for and to any other third party.
2.2 The Parties agree that upon KRYPTON's exercise of the option granted in
Section 2.1. above GENTA JAGO shall commence the development of Prototype
Formulations for the Leading Dose Strength pursuant to this Agreement.
During the term of this Agreement, KRYPTON shall have a further option of
whether or not and when to commence development of Prototype Formulations
for the Subsequent Dose Strength by giving written notice to that effect to
GENTA JAGO. If and when KRYPTON so elects and GENTA JAGO so agrees, than
the terms and conditions for the development as set forth hereinafter shall
apply accordingly to the Prototype Formulations for the Subsequent Dose
Strength, except where explicitly stated otherwise below.
2.3 At the date of execution of this Agreement, GENTA JAGO has performed
certain preliminary development efforts for the Prototype Formulations.
This development is hereby incorporated in this Agreement.
2.4 GENTA JAGO undertakes to conduct the development of the Prototype
Formulation(s)
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and the Final Product(s) in an efficient and professional manner. KRYPTON
shall actively support GENTA JAGO regarding the development and studies to
be executed by GENTA JAGO as may be reasonably required by GENTA JAGO from
time to time. In particular, KRYPTON shall provide information reasonably
requested by GENTA JAGO relating to the Active Ingredient for the purposes
of carrying out this development, including, but not limited to,
physico-chemical characteristics, safe-handling instructions, in-vitro
analytical methods, degradation products and standards and analytical
methods therefore. Additionally, KRYPTON shall provide to GENTA JAGO
requested data and adequate quantities of samples of Reference Products for
the purposes of conducting the Feasibility Study. KRYPTON, however, shall
not be required to provide information regarding the Reference Products
which is not in the public domain, unless KRYPTON is duly authorized to
possess and disclose such non-public information. Any costs and expenses
incurred by KRYPTON in connection with such support shall be borne by
KRYPTON.
2.5 Due to the nature and complexity of the development and the respective
studies as set forth in this Agreement, the Parties recognize and
acknowledge that problems and delays may occur which render the time limits
set in this Agreement and/or the time-frame of the development mutually
agreed upon difficult or impossible to accomplish. The Parties agree that
they shall immediately inform each other in writing in the event that
significant problems or delays are encountered or envisaged during the
course of the development and shall discuss such problems and delays in
order to agree on a mutually acceptable revision of the time limits set in
this Agreement and/or the time-frames mutually agreed upon.
2.6 Together with the notice from KRYPTON to GENTA JAGO referred to in Section
3.1 below, KRYPTON, or its designated supplier, shall supply GENTA JAGO on
a free-of- charge basis with sufficient quantities of Active Ingredient to
perform the development program intended hereunder. Such supplies shall be
accompanied with respective certificates of analysis and conformity. GENTA
JAGO shall use all Active Ingredient supplied to it by KRYPTON hereunder
solely and exclusively in connection with the development program mutually
agreed upon.
Alternatively, KRYPTON may request that GENTA JAGO obtain a supply of
Active Ingredient from a reputable source having the necessary regulatory
clearances in place to allow future marketing of the Final Product in the
Territory. Should KRYPTON so require and GENTA JAGO so agree, the chosen
supplier's facilities, processes and procedures shall be audited by GENTA
JAGO, or a third party mutually acceptable to KRYPTON and GENTA JAGO, in
order to ensure compliance with the appropriate regulatory requirements.
KRYPTON shall reimburse all direct costs of GENTA JAGO incurred in carrying
out, or having carried out such audit. GENTA JAGO shall provide KRYPTON
with a copy of the audit report within thirty (30) days as of the
completion of the audit.
2.7 In the event that GENTA JAGO becomes responsible for the supply of Active
Ingredient, KRYPTON shall * related thereto and shall further reimburse
GENTA JAGO any and all shipping and transportation costs, import duties,
taxes or other
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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costs incurred by GENTA JAGO in connection with such supply of Active
Ingredient promptly upon receipt of GENTA JAGO's respective invoices.
ARTICLE 3
FEASIBILITY STUDY
3.1 By the notice of exercise of the option granted in Section 2.1 above from
KRYPTON the development program contemplated hereunder shall be initiated.
Not later than two (2) months as of the receipt of (i) such notice, (ii) a
* and (iii) the Active Ingredient, GENTA JAGO shall commence the
feasibility study under this Article 3. and shall use its commercially
reasonable efforts to develop the Prototype Formulations. Up to three (3)
of the developed Prototype Formulations shall be chosen by mutual agreement
by the Parties for further study and development.
The Parties recognize that the Specifications mutually agreed upon
eventually will need to be updated with more detailed specifications for
the Final Product in the course of the development, and in such case the
Parties agree to mutually agree on any reasonable amendment of the
Specifications.
3.2 The development of the Prototype Formulations shall include, but not
necessarily be limited to, the following elements:
(a) Development and establishment of analytical methodology specific to
the characterization of such Prototype Formulations;
(b) Qualitative and quantitative characterization of such Prototype
Formulation;
(c) In-vitro release profile characterization of such Prototype
Formulations and the Originator by using appropriate methodology
mutually agreed to by the Parties;
(d) Elaboration of pre-scale up procedures and the production of samples
(2000 units +/- 10%) of the chosen Prototype Formulations for
evaluation by KRYPTON, and for use in the Pilot Pharmacokinetic Study
under Article 4. below; and
(e) Accelerated stability testing of Prototype Formulations to provide *.
3.3 GENTA JAGO will ensure the use of generally accepted standards of Good
Laboratory and Manufacturing Practices during the performance of the
feasibility study.
3.4 Within thirty (30) days of the completion of the feasibility study, GENTA
JAGO shall supply KRYPTON with a report (the "Feasibility Study Report")
reasonably detailing the development of the Prototype Formulation(s) and
containing one (1) month accelerated stability data only. A supplement to
the Feasibility Study Report containing the * accelerated stability data
will be forwarded sixty (60) days later.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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3.5 Prior to the commencement of the Feasibility Study GENTA JAGO shall submit
to KRYPTON a * for the entire Feasibility Study which * shall be reasonably
acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's *, reasonably
incurred by GENTA JAGO during the Feasibility Study, including but not
limited to costs, expenses and fees paid to Jago Pharma and third party
contractors, by the payment of non-refundable development fees. Such
development costs shall be refunded by KRYPTON to GENTA JAGO * upon receipt
by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
3.6 In the event that the results of the feasibility study conclusively
demonstrate that no Prototype Formulation has been developed which
reasonably meets the Specifications to the good faith mutual satisfaction
of KRYPTON and GENTA JAGO, the Parties agree to enter into good faith
negotiations in order to determine an appropriate course of action,
including, but not limited to, that the Parties may mutually agree to
abandon the development program under this Agreement, and terminate this
Agreement with immediate effect.
ARTICLE 4
PILOT PHARMACOKINETIC STUDY
4.1 Included as part of the feasibility study described in Article 3. above,
KRYPTON shall, at its own responsibility and its own cost, sub-contract
under confidentiality commitments comparable in all material respects to
the provisions set forth herein between GENTA JAGO and KRYPTON to an
external qualified clinical research organization (hereinafter "CRO") to
perform a pilot pharmacokinetic study pursuant to this Article 4.
4.2 The Pilot Pharmacokinetic Study shall consist of commercially reasonable
and appropriately designed * of the Prototype Formulations and the
Originator. KRYPTON shall reasonably consult with GENTA JAGO in the design
of the Pilot Pharmacokinetic Study and shall review the final protocol with
GENTA JAGO prior to initiating work with the selected sub-contractor. The
Pilot Pharmacokinetic Study shall be conducted in accordance with generally
accepted standards of Good Clinical Practice and in compliance with Ethical
Committee requirements or equivalent requirements, where applicable.
4.3 Prior to the commencement of the Pilot Pharmacokinetic Study GENTA JAGO
shall submit to KRYPTON a * for the entire Pilot Pharmacokinetic Study
which * shall be reasonably acceptable to KRYPTON. KRYPTON shall reimburse
GENTA JAGO's *, reasonably incurred by GENTA JAGO during the Pilot
Pharmacokinetic Study, including but not limited to costs, expenses and
fees paid to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such development costs shall be refunded
by KRYPTON to GENTA JAGO *
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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upon receipt by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
4.4 KRYPTON shall provide GENTA JAGO with a copy of the report (hereinafter
referred to as the "Pilot Pharmacokinetic Study Report") reasonably
detailing the results of the Pilot Pharmacokinetic Study within six (6)
weeks as of the study's completion and presentation of the preliminary data
for GENTA JAGO's file.
4.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Pilot Pharmacokinetic Study, including without limitation
the availability or quality of the results and data from such Pilot
Pharmacokinetic Study to be carried out by KRYPTON and the CRO.
4.6 In the event that the results of the Pilot Pharmacokinetic Study
conclusively demonstrate that it is not fully demonstrated to the good
faith mutual satisfaction of KRYPTON and GENTA JAGO that at least one of
the Prototype Formulations reasonably meet the respective Specifications,
the Parties may mutually agree to abandon the development program and
terminate this Agreement with respect to such Prototype Formulation.
ARTICLE 5
PRE-SCALE-UP ACTIVITIES
5.1 Upon completion of the Pilot Pharmacokinetic Study, KRYPTON may, at its
option, request and charge GENTA JAGO to carry out the pre-scale-up
activities as described in this Article 5. (hereinafter referred to as the
"Pre-Scale-Up Activities"). KRYPTON shall, within thirty (30) days as from
the date of the Pilot Pharmacokinetic Study Report notify in writing GENTA
JAGO of its decision whether to proceed with and to have GENTA JAGO perform
the Pre-Scale-Up Activities.
5.2 Prior to the commencement of the Pre-Scale-Up Activities GENTA JAGO shall
submit to KRYPTON a * for the entire Pre-Scale-Up Activities which * shall
be reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's
*, reasonably incurred by GENTA JAGO during the Pre-Scale Up activity,
including but not limited to costs, expenses and fees paid to Jago Pharma
and third party contractors, by the payment of non-refundable development
fees. Such pre scale up costs shall be refunded by KRYPTON to GENTA JAGO *
upon receipt by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
5.3 The Pre-Scale-Up Activities to be performed by GENTA JAGO shall comprise
all reasonable activities necessary to allow the technology transfer to,
and subsequent scale-up at, the mutually established manufacturing site,
including, but not limited to, final optimization of the Prototype
Formulation (where necessary), development and validation of the scale-up
manufacturing procedure and analytical validation. Such Pre-Scale-Up
Activities shall be completed within the time period mutually agreed upon
by the Parties
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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in Appendix D hereto, calculated as from the date of receipt of the
KRYPTON's notice by GENTA JAGO pursuant to Section 5.1 above.
5.4 In the event that additional clinical testing, including without
limitation, confirming pharmacokinetic studies, is reasonably required or
deemed necessary beyond the program envisaged in this Agreement in order to
satisfy the FDA requirements for an NDA or ANDA approval of the Product,
KRYPTON and GENTA JAGO shall meet to discuss in good faith the appropriate
course of action to be followed and agree upon any such additional testing
to be performed, provided that any such additional testing shall in any
event be funded solely by KRYPTON.
5.5 Not later than upon the initiation of the Pre-Scale-Up Activities, the
Parties shall establish and mutually agree upon a manufacturing site, where
the Bio-Batches referred to in Section 7.2 below required for the pivotal
clinical studies will be produced and where the Final Product shall be
manufactured for commercial use after FDA approval(s) for the Final Product
have been granted.
ARTICLE 6
PRE-PIVOTAL PHARMACOKINETIC STUDY
6.1 Included as part of the Pre-Scale-Up Activities, KRYPTON shall at its own
responsibility and its own cost, perform or have performed with a CRO
selected by KRYPTON, a pre- pivotal pharmacokinetic study pursuant to this
Article 6. (hereinafter referred to as "Pre- Pivotal Study"). Such
Pre-Pivotal Study shall consist of *, to select the best of the Prototype
Formulations for each dose strength to be used in the further development
under this Agreement.
6.2 The Pre-Pivotal Study shall be performed in the United States of America.
KRYPTON shall consult, review and mutually agree with GENTA JAGO on the
design and final protocol of such Pre-Pivotal Study prior to initiating
work with the selected CRO.
6.3 KRYPTON shall reimburse to GENTA JAGO the * incurred by GENTA JAGO to cover
its workload for preparation and consulting of such Pre-Pivotal Study. Such
development costs shall be paid by KRYPTON * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
6.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailling the
results of the Pre-Pivotal Study within ten (10) days of its completion for
GENTA JAGO's file. GENTA JAGO shall have no liability or responsibility
whatsoever with resupect to such Pre-Pivotal Study, including without
limitation, the performance or conduct of such Pre- Pivotal Study or the
availability or quality of the results and data from such Pre-Pivotal Study
to be carried out by KRYPTON and the CRO.
6.5 Upon completion of the Pre-Pivotal Study and availability of the results of
such Pre- Pivotal Study, the Parties shall consult with each other on such
results and mutually agree
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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in writing upon the Prototype Formulation to be selected for further
development under this Agreement. In the event that the results of the
Pre-Pivotal Study are unsatisfactory in that it is not fully demonstrated
to the good faith mutual satisfaction of the Parties that at least one of
the Prototype Formulations meet the respective Specifications, KRYPTON may
elect to abandon the development program and terminate this Agreement with
respect to such Prototype Formulation by giving written notice to that
effect to GENTA JAGO.
ARTICLE 7
FURTHER ACTIVITIES
7.1 Technology Transfer
Upon mutual agreement of the Prototype Formulation to be used for
development as referred to in Section 6.5 above, GENTA JAGO shall be
responsible for and initiate the technology transfer to, and perform the
scale-up at, the manufacturing site mutually established and agreed upon by
the Parties. GENTA JAGO agrees that such technology transfer, and in
particular the aspects of scale-up and validation of the manufacturing
process shall be carried out by GENTA JAGO on such equipment as shall
eventually be used by KRYPTON or a third party to manufacture the Final
Product. Upon completion of such scale-up, GENTA JAGO shall notify KRYPTON
thereof in writing.
7.2 Production of Industrial Scale Batches
Upon receipt by KRYPTON of GENTA JAGO's notice referred to in Section 7.1
above, the Parties shall initiate the production of three (3) industrial
scale batches (hereinafter "Bio-Batches") on such equipment as shall
eventually be used KRYPTON or a third party to commercially manufacture the
Final Product, based on the Prototype Formulation (the size of each
Bio-Batch to be not less than the greater of (i) 10% (ten percent) of the
anticipated initial commercial batch size, or (ii) 100,000 tablets),
according to Current Good Manufacturing Practices, such Bio-Batches to be
subsequently used for stability testing and pivotal clinical studies;
provided however, that GENTA JAGO shall have the ultimate responsibility
with respect of any and all technical aspects of such production of batches
related to the technology transfer and the implementation of such
technology in the manufacturing site.
7.3 Funding of Further Activities
(a) Prior to the commencement of any activities under Sections 7.1 and 7.2
above GENTA JAGO shall submit to KRYPTON a * for such further
activities which * shall be reasonably acceptable to KRYPTON. KRYPTON
shall refund GENTA JAGO's * reasonably incurred by GENTA JAGO under
Sections 7.1 and 7.2 above, including but not limited to costs,
expenses and fees paid to Jago Pharma and third party contractors, by
the payment of non-refundable development fees. Such further
development costs shall be refunded by KRYPTON *
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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upon receipt by KRYPTON of an invoice from GENTA JAGO or Jago Pharma
AG.
(b) Furthermore, KRYPTON shall be responsible, at its own cost, for the
supply of all raw material including, but not limited to, the Active
Ingredients required or necessary for, and all additional costs and
expenses whatsoever arising out of or in connection with, the
production of the Bio-Batches described in Section 7.2 above and all
other costs associated with the use of facilities, technology
transfer, equipment and analytical services.
7.4 Stability Testing
(a) KRYPTON shall be responsible for and perform or have performed at its
own cost, the stability testing of the Final Product according to the
then current requirements of the FDA in bulk packaging and in the
final packaging materials. GENTA JAGO shall have no liability or
responsibility whatsoever with respect to such stability testing,
including without limitation, the performance or conduct of such
stability testing or the availability or quality of the results and
data from such stability testing to be carried out or requested by
KRYPTON.
(b) KRYPTON shall provide to GENTA JAGO with a copy of all stability
testing data within thirty (30) days after the completion of each
stability testing period (hereinafter referred to as the "Final
Stability Testing Report") for GENTA JAGO's file.
(c) GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON in connection
with the stability testing of the Final Product. KRYPTON shall pay to
GENTA JAGO for such services provided by GENTA JAGO's or Jago Pharma's
personnel an amount of USD * or part thereof spent, and furthermore,
KRYPTON shall reimburse GENTA JAGO for all reasonable and documented
travel related expenses of GENTA JAGO personnel who travel at
KRYPTON's request to locations remote from such personnel's usual
working location.
7.5 Further Provisions
In the event that KRYPTON and GENTA JAGO shall reasonably deem the results
or data from any of the activities to be performed by either Party under
this Article 7. with respect to any dose strength be unsatisfactory for any
reason, the Parties may mutually agree to abandon the development program
and terminate this Agreement with immediate effect.
ARTICLE 8
PIVOTAL CLINICAL STUDY
8.1 Promptly upon completion of the further activities referred to in Article
7. above, KRYPTON shall, at its own responsibility and its own cost,
sub-contract under
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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confidentiality commitments comparable to the provisions set forth herein
between GENTA JAGO and KRYPTON to an external qualified CRO of its choice,
reasonably acceptable to GENTA JAGO, to perform and manage a series of
pivotal clinical studies (hereinafter "Clinical Studies") in man required
and/or necessary for any subsequent NDA or ANDA for the Final Product in
accordance with the then current requirements of the FDA.
8.2 KRYPTON shall consult, review and agree with GENTA JAGO on the design and
the final protocol of such Clinical Studies prior to initiating work with
the selected subcontractor.
8.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to cover its
workload for preparation and consulting of such Clinical Studies. Such
development costs shall be paid by KRYPTON * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
8.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing the
results of the Clinical Studies within ten (10) days of its completion for
GENTA JAGO's file.
8.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Clinical Studies, including without limitation, the
performance or conduct of such Clinical Studies or the availability or
quality of the results and data from such Clinical Studies to be carried
out or requested by KRYPTON.
8.6 In the event that the results of the Pivotal Clinical Studies are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of KRYPTON and GENTA JAGO that the Prototype
Formulation reasonably meets the respective Specifications, the Parties may
mutually agree to abandon the development program and terminate this
Agreement with respect to such dose strength.
ARTICLE 9
THE REGULATORY (NDA OR ANDA) SUBMISSION
9.1 Upon completion of the Clinical Studies, KRYPTON may, at its option, elect
to prepare and submit to the FDA an NDA or ANDA. KRYPTON shall notify GENTA
JAGO of its election to exercise or not to exercise this option by giving
written notice thereof to GENTA JAGO within thirty (30) days as of the
availability of the results of the Clinical Studies.
9.2 In the event that KRYPTON elects pursuant to Section 9.1 above to make NDA
or ANDA submission(s) to any Regulatory Authority with respect to a Final
Product, KRYPTON shall have sole liability and responsibility for the
prosecution, conduct and results of such NDA or ANDA and shall bear all
costs in connection therewith. KRYPTON, at KRYPTON's option, may elect by
written notice to GENTA JAGO prior to
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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commencement of the technology transfer referred to in Section 7.1 above to
have the NDA or ANDA dossier prepared on its behalf by a qualified third
party acceptable to GENTA JAGO. KRYPTON shall be liable and responsible for
any and all costs associated with such sub-contracting.
9.3 KRYPTON or its chosen sub-contractor shall consult with GENTA JAGO, and
GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON or the chosen
sub-contractor, in connection with the preparation and prosecution of any
NDA or ANDA or with the preparation of the dossier to be submitted to the
FDA. KRYPTON shall pay to GENTA JAGO for such services and consultation
provided by GENTA JAGO's personnel an amount of USD * or any part thereof
spent. Furthermore, KRYPTON shall reimburse GENTA JAGO for reasonable and
documented travel-related expenses of GENTA JAGO personnel who travel at
KRYPTON's request to the elected manufacturing facility(ies) or other
locations remote from such personnel's usual working location.
ARTICLE 10
PROPRIETARY RIGHTS AND PATENTS
10.1 Patents and Proprietary Rights of GENTA JAGO
(a) The Licensor and GENTA JAGO, respectively, shall retain title to and
ownership of Patents, Know-How and GEOMATRIX(R) Technology licensed to
GENTA JAGO, including, but not limited to, any and all developments
and inventions relating to Patents, Know-How and GEOMATRIX(R)
Technology (hereinafter collectively referred to as "GENTA JAGO IPR").
(b) KRYPTON shall not, directly or indirectly through its officers,
directors, employees, agents, customers or other controlled or
associated third parties, acquire any proprietary interest in or other
right to GENTA JAGO IPR, other than provided in this Agreement.
(c) GENTA JAGO shall use all commercially reasonable efforts, at its own
cost, to cause the Licensor to prepare, prosecute and maintain all
patent applications and patents constituting Patents, and shall keep
KRYPTON fully and promptly informed on any developments or changes
relating thereto. If the Licensor decides not to further prosecute any
patent application constituting Patents, GENTA JAGO shall promptly
inform KRYPTON of such decision in writing, and the Parties shall,
upon KRYPTON's reasonable written request, meet with the Licensor to
discuss any reasonable appropriate action. During the term of this
Agreement, GENTA JAGO shall, at its sole cost, use all commercially
reasonable efforts to cause the Licensor to take all steps necessary
to maintain Patents to the extent GENTA JAGO deems commercially
reasonable. If the Licensor decides not to maintain any patent
constituting Patents, GENTA JAGO shall promptly inform KRYPTON of such
decision in writing, and the Parties shall, upon KRYPTON's reasonable
written
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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request, meet with the Licensor to discuss any reasonable appropriate
action. Notwithstanding the foregoing, KRYPTON acknowledges to GENTA
JAGO that Licensor has the final authority regarding such preparation,
prosecution and maintenance of all patent applications and patents.
10.2 Patents and Proprietary Rights for Final Products
(a) KRYPTON shall retain title to and ownership of all developments,
whether patentable or not, relating specifically and exclusively to
the Final Products, provided that such developments are entirely
independent of any and all GENTA JAGO IPR (hereinafter collectively
referred to "Final Product IPR").
(b) KRYPTON shall be responsible for and shall control, at its own cost,
the preparation, prosecution and maintenance of all Final Product IPR
and shall keep GENTA JAGO fully and promptly informed on any
developments or changes relating thereto. During the term of this
Agreement, KRYPTON shall, at its sole cost, take all steps necessary
to prosecute and/or maintain all Final Product IPR to the extent
KRYPTON deems commercially reasonable. If KRYPTON intends not to
further prosecute and/or maintain any of the Final Product IPR,
KRYPTON shall promptly inform GENTA JAGO of such intention in writing,
and GENTA JAGO shall have the right and option, but not the
obligation, to have transferred to it sole title to and ownership in
such Final Product IPR free of any charge by giving respective written
notice thereof to KRYPTON within thirty (30) days after GENTA JAGO's
receipt of KRYPTON's notice referred to above.
(c) In the event GENTA JAGO has and exercises its right and option
referred to Section 10.2 (b) above to have transferred to it any such
Final Product IPR, KRYPTON shall promptly undertake any and all steps
required and/or necessary to transfer title to and ownership of such
Final Product IPR to GENTA JAGO. In the event that GENTA JAGO
exercises its option to have transferred such Final Product IPR from
KRYPTON to GENTA JAGO, GENTA JAGO shall maintain such Final Product
IPR during the term of this Agreement to the extent GENTA JAGO deems
commercially reasonable and shall bear all cost associated therewith
incurred after the date of GENTA JAGO's notice to KRYPTON exercising
its option referred to in Section 10.2 (b) above. In such case, the
Parties shall negotiate in good faith the terms and condition, under
which such Final Product IPR transferred to GENTA JAGO shall be
included in the License pursuant to Article 11. below.
10.3 Notification of Infringement
(a) If KRYPTON becomes aware of (i) any product or activity of any kind
that involves or may involve an infringement or violation of GENTA
JAGO IPR or Final Product IPR or (ii) any third-party action, claim or
dispute (including, but not limited to, actions for declaratory
judgment alleging the invalidity or non-infringement) based upon or
arising out of GENTA JAGO IPR or Final Product IPR, then KRYPTON shall
promptly notify GENTA JAGO in writing of any such infringement,
violation,
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action, claim or dispute.
(b) If GENTA JAGO becomes aware of (i) any product or activity of any kind
that involves or may involve an infringement or violation of GENTA
JAGO IPR with respect to Final Products or of Final Product IPR; or
(ii) any third-party action, claim or dispute (including, but not
limited to, actions for declaratory judgment alleging the invalidity
or non-infringement) based upon or arising out of GENTA JAGO IPR with
respect to Final Products or of Final Product IPR, then GENTA JAGO
shall promptly notify KRYPTON in writing of any such infringement,
violation, action, claim or dispute.
10.4 Enforcement of GENTA JAGO IPR
(a) GENTA JAGO, at its sole expense, shall have the right, but not the
obligation, (i) to determine the appropriate course of action to
enforce, or otherwise abate the infringement of, or defend third-party
actions regarding, GENTA JAGO IPR, (ii) to take, or refrain from
taking, appropriate action to enforce, or defend third-party actions
regarding, GENTA JAGO IPR, (iii) to control any litigation or other
enforcement action regarding GENTA JAGO IPR, and (iv) to enter into,
or permit, the settlement of any such litigation or other enforcement
action regarding GENTA JAGO IPR. GENTA JAGO shall keep KRYPTON
informed on a regular basis on its taking or refraining from taking,
and the development of, any of the foregoing actions, and shall
consider, in good faith, the interests of KRYPTON under this Agreement
when taking any of the foregoing actions, to the extent that any such
action or such infringement may have an adverse effect on Final
Product. KRYPTON shall, at its own cost, fully cooperate with GENTA
JAGO in the planing and execution of any suit or other action to
enforce, or defend third-party actions regar- ding, GENTA JAGO IPR as
reasonably required or requested by GENTA JAGO.
(b) If GENTA JAGO does not within one-hundred-twenty (120) days, or any
shorter delay imposed by any applicable law or regulation or court or
authority having jurisdiction, after receiving notice of any
infringement or violation of GENTA JAGO IPR which may adversely affect
Final Products, or of any third-party action, claim or dispute based
upon or arising out of GENTA JAGO IPR which may adversely affect Final
Products, commence or take an action to enforce, or otherwise abate
such infringement, or defend against such third-party action, then the
Parties shall, upon KRYPTON's written request, promptly meet to
discuss any reasonable appropriate action with regard to such
enforcement of GENTA JAGO IPR which may adversely affect Final
Products, provided however, that KRYPTON is aware and acknowledges
that in such case the Licensor will have the right to enforce any and
all GENTA JAGO IPR pursuant to the License Agreements.
(c) Subject to the right of the Licensor to control any suit or other
action with regard to GENTA JAGO IPR as outlined in the preceding
section, KRYPTON, upon its written request and at its sole expense,
shall be made an additional, but not controlling party, in any such
suit or other action where necessary to obtain complete relief
regarding
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the subject infringement or violation.
10.5 Enforcement of Final Product IPR
(a) KRYPTON, at its sole expense, shall have the right, but not the
obligation, (i) to determine the appropriate course of action to
enforce, or otherwise abate the infringement of, or defend third-party
actions regarding, Final Product IPR, (ii) to take, or refrain from
taking, appropriate action to enforce, or defend third-party actions
regarding, Final Product IPR, (iii) to control any litigation or other
enforcement action regarding Final Product IPR, and (iv) to enter
into, or permit, the settlement of any such litigation or other
enforcement action regarding Final Product IPR. Notwithstanding
anything contained in the preceding sentence, KRYPTON shall not settle
any suit or action or otherwise consent to an adverse judgment in such
suit or action without the prior written consent of GENTA JAGO, which
consent shall not be withheld unreasonably. KRYPTON shall keep GENTA
JAGO informed on a regular basis on its taking or refraining from
taking, and the development of, any of the foregoing actions, and
shall consider, in good faith, the interests of GENTA JAGO under this
Agreement and in GENTA JAGO IPR, when taking any of the foregoing
actions.
(b) If KRYPTON does not, within one-hundred-and-twenty (120) days, or any
shorter delay imposed by any applicable law or regulation or court or
authority having jurisdiction, after receiving notice of any
infringement or violation of Final Product IPR, or of any third-party
action, claim or dispute based upon or arising out of Final Product
IPR, commence or take an action to enforce, or otherwise abate such
infringement, or defend against such third-party action, then GENTA
JAGO shall have the right, but not the obligation, at its sole
expense, to take and control such action as it deems appropriate to
enforce, or abate the infringement of, or defend against such
third-party action, regarding Final Product IPR. GENTA JAGO shall keep
KRYPTON informed on a regular basis of any such action and consider,
in good faith, the interests of KRYPTON under this Agreement when
taking any of the foregoing actions. KRYPTON, upon its written request
and at its sole expense, shall be made an additional, but not
controlling party, in any such suit or other action controlled by
GENTA JAGO where necessary to obtain complete relief regarding the
subject infringement or violation.
10.6 Application of Monies Recovered
Subject always to the right of the Licensor to control any suit or other
action with regard to GENTA JAGO IPR as outlined in Section 10.4(c) and any
right to receive any monies recovered therefrom as provided for in the
License Agreements, all monies recovered upon the final judgment or
settlement of any suit or other action under this Sections 10.4 or 10.5
shall be applied as follows:
(i) to cover any and all costs and expenses (including attorney's fees)
incurred by the
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Party controlling such suit or other action;
(ii) to cover any and all costs and expenses (including attorney's fees)
reasonably, or upon request of the controlling Party, incurred by the
other Party in connection with such suit or other action, if any;
(iii) the remainder, if any, to the Party controlling any such suit or
other action.
ARTICLE 11
SUB-LICENSE AGREEMENT
11.1 GENTA JAGO hereby grants to KRYPTON the exclusive and sublicenseable right
and sub-license (hereinafter referred to as the "License") to use,
manufacture, have manufactured, sell and market the Final Products in the
Territory and to use the Patents, GEOMATRIX(R) Technology and Know How
exclusively for that purpose subject to the payment of the * and the
Royalties pursuant to Articles 13. and 14. below.
11.2 The rights of KRYPTON to grant any sub-license in any part of the Territory
shall be subject to the requirement that KRYPTON shall obtain the written
approval of GENTA JAGO prior to executing any such sub-license agreement,
which approval shall not unreasonably be withheld, provided however, that
no such approval by GENTA JAGO shall be required for any sub-license to an
Affiliate of KRYPTON .
11.3 In any event KRYPTON shall be responsible for any and all acts, deeds and
undertakings of its permitted sub-licensee(s) and KRYPTON and its permitted
sub-licensee(s) shall continue to be bound by all terms and provisions
under this Agreement throughout its term. In case that KRYPTON sub-licenses
rights and/or the License to any sub-licensee(s) approved by GENTA JAGO,
such sub-licensee(s) shall agree in writing to any and all of KRYPTON's
obligations and undertakings under this Agreement, including but not
limited to its confidentiality obligations set forth hereinafter.
Furthermore, KRYPTON undertakes that any and all sub-license agreements
shall provide for inspection and audit provisions identical to the
provisions set forth below in order to enable GENTA JAGO to control and
audit and receive any and all fees and Royalties due as provided in this
Agreement. KRYPTON shall provide GENTA JAGO promptly with reasonable
appropriate information on its sub-licensee(s) and copies of all agreements
with such sub-licensee(s) (with only the commercial terms may be redacted).
ARTICLE 12
MANUFACTURING AND PRODUCT LIABILITY
12.1 In the event that KRYPTON, subject to Section 5.5 above, elects GENTA JAGO,
and GENTA JAGO expressly agrees to such manufacture, or any of its
Affiliates shall manufacture Final Products, then the Parties agree to
enter into good faith negotiations on and to use commercially reasonable
efforts to execute in due time a respective
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Manufacturing and Supply Agreement, according to which GENTA JAGO or its
Affiliates shall undertake to manufacture and supply Final Products in
sufficient quantities to meet KRYPTON's requirements, at a sale price for
such Final Products manufactured equal to GENTA JAGO's * In the event and
for such period of time, that GENTA JAGO or its Affiliate manufactures and
supplies Final Product under such Manufacturing and Supply Agreement, the
Royalty Rate referred to in Section 14.1 below shall be *
12.2 In the event that KRYPTON or any of its Affiliates or any third party is
elected pursuant to Section 5.5 above to manufacture Final Product, then
KRYPTON undertakes and agrees that at all times the Specifications and to
any and all laws, rules and regulations imposed by any competent authority
on the manufacturing, marketing, distribution and sale of Final Products
are strictly adhered to by the manufacturer, and KRYPTON shall during the
entire term of this Agreement be solely and fully liable and responsible
for the compliance with all such laws, rules and regulations when
manufacturing, having manufactured, marketing, distributing and selling
Final Products itself and/or through Affiliates or sub- licensee(s).
12.3 KRYPTON shall indemnify, defend and hold GENTA JAGO, its Affiliates and the
Licensor harmless from and against any losses, claims, liabilities, costs
and expenses (including reasonable attorney's fees) that may be imposed
upon or asserted against GENTA JAGO and/or its Affiliates and/or the
Licensor as a result of the marketing, distributing, manufacture, use or
sale of Final Products by or on behalf of KRYPTON, its Affiliates, agents
or sub-licensee(s), except for those claims, liabilities, costs and
expenses arising from gross negligence or intentional misconduct on the
part of GENTA JAGO, its Affiliates or the Licensor.
ARTICLE 13
* PAYMENTS AND OTHER CONSIDERATION
13.1 As consideration for GENTA JAGO granting the option hereinbefore set forth
KRYPTON undertakes to pay to GENTA JAGO an *, payable upon execution of
this Agreement.
13.2 Provided that KRYPTON shall exercise the option granted hereunder, as
consideration for the License granted by GENTA JAGO to KRYPTON under this
Agreement and in consideration of certain major development steps achieved
hereunder, KRYPTON undertakes to pay to GENTA JAGO a *
13.3 The * shall be payable *:
(a) * KRYPTON's receipt of
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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GENTA JAGO's notice referred to in Section 7.1 above; and
(b) *; and
(c) * for the Final Product; and
(d) * for Final Product.
13.4 The Parties agree that * as set forth in Section 14.4 below.
13.5 Unless otherwise agreed by the Parties in writing, all payments under this
Article 13. shall be made in United States Dollars and to such place or
account as GENTA JAGO reasonably requests from time to time in writing.
ARTICLE 14
ROYALTIES
14.1 During a period commencing upon the first commercial sale of Final Product
in each country of the Territory and ending upon the earlier of (i) the
fifteenth (15th) anniversary of the first commercial sale of Final Product
in such country of the Territory, and (ii) the expiration of the last of
the Patents covering Final Product in such country of the Territory
(hereinafter referred to as the"Royalty Term"), and in further
consideration of the License granted to KRYPTON by GENTA JAGO, KRYPTON
shall pay to GENTA JAGO a royalty (hereinafter referred to as the"Royalty")
of an amount equal to * of the Final Products in the Territory.
14.2 Royalties shall be payable on a quarterly basis. KRYPTON shall remit to
GENTA JAGO within six (6) weeks after the end of each calendar quarter the
amount of Royalty due with respect to Net Sales achieved in the preceding
quarter, beginning with the calendar quarter in which the first commercial
sale of the Final Product is made in any country of the Territory. KRYPTON
shall deliver to GENTA JAGO, along with such remittance of Royalty
payments, * of the Final Product on a country-by-country and
product-by-product basis to which the Royalty payment relates.
14.3 All Royalty Reports shall be prepared in accordance with generally accepted
accounting principles consistently applied from applicable period to period
and shall be certified by an officer of KRYPTON as being so prepared, true,
accurate and correct.
14.4 In recognition of the * payable by KRYPTON to GENTA JAGO prior to the
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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commercial sale of the Final Products, the amount of Royalty payments due
to GENTA JAGO under Article 14.2 above with respect to each calendar
quarter shall be * until such time as the aggregate amount of all *
14.5 Unless otherwise agreed by the Parties in writing, payments of Royalties
shall be made in United States Dollars and to such place or account as
GENTA JAGO reasonably requests from time to time in writing. Any
conversions into United States Dollars from the currency in which the
corresponding Net Sales for such Royalties were made, are to be calculated
as using the average closing buying rate for such currency quoted in the
continental terms method of quoting exchange rates (local currency per USD
1) published in the Wall Street Journal on the last business day of the
applicable reporting period covered by such Royalty Report.
ARTICLE 15
INSPECTION AND AUDIT
15.1 During the term of this Agreement and during a period of twelve (12) months
after its expiration or termination for any reason, upon the written
request of GENTA JAGO and not more than once each calendar year, KRYPTON
shall permit an independent certified public accountant of internationally
recognized standing selected by GENTA JAGO, at GENTA JAGO's expense, to
have access during regular business hours to such of the records of KRYPTON
and its Affiliates as may be reasonably necessary to verify the accuracy of
the Royalty Reports for any year ending not more than thirty-six (36)
months prior to the date of such request. The accounting firm shall
disclose to GENTA JAGO only whether the Royalty Reports and records of
KRYPTON and its Affiliates and the amount of Royalties actually paid are
correct or not and the specific details concerning any discrepancies; no
other information shall be shared. The Parties agree to accept such written
audit report as final and binding upon them.
15.2 If such independent accounting firm correctly concludes that additional
Royalties were owed during any such period audited, KRYPTON shall pay such
additional Royalties within ten (10) days of the date GENTA JAGO delivers
to KRYPTON such accounting firm's written report so concluding. The fees
and expenses charged by such accounting firm with respect to such audit
shall be paid by GENTA JAGO; provided however, if any such audit correctly
discloses that Royalties payable by KRYPTON for the audited period are more
*, then KRYPTON shall pay all reasonable fees and expenses charged by such
accounting firm with respect to such audit.
15.3 GENTA JAGO shall treat all financial information subject to review under
this Article 15. as confidential and subject to the confidentiality
obligations in Article 16. below.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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ARTICLE 16
CONFIDENTIALITY
16.1 Confidential Information
KRYPTON shall maintain in confidence all Know-How and other information of
GENTA JAGO (including samples) disclosed by GENTA JAGO and identified as,
or acknowledged to be, confidential (the "Confidential Information"), and
shall not use, disclose or grant the use of the Confidential Information
except on a need-to-know basis to its directors, officers, employees,
agents, consultants, clinical investigators or other permitted contractors,
to the extent such disclosure is reasonably necessary in connection with
KRYPTON's activities as expressly authorized by this Agreement. To the
extent that disclosure is authorized by this Agreement, prior to
disclosure, KRYPTON hereto shall obtain agreement in writing of any such
person to hold in confidence and not make use of the Confidential
Information for any purpose other than those authorized by this Agreement.
KRYPTON shall notify GENTA JAGO promptly upon the discovery of the
unauthorized use or disclosure of the Confidential Information.
16.2 Permitted Disclosures
The obligations of confidentiality and non-use contained in Section 16.1
above shall not apply to the extent that (a) KRYPTON (i) is required to
disclose information by law, regulation or order of a governmental agency
or a court of competent jurisdiction, or (ii) is required to disclose
information to any governmental agency for purposes of obtaining approval
to test or market Final Products, provided in each case that KRYPTON shall
give GENTA JAGO written notice thereof and sufficient opportunity to object
to any disclosure or to request confidential treatment thereof, or (b)
KRYPTON can demonstrate that (i) the disclosed information was public
knowledge at the time of such disclosure to it, or thereafter became public
knowledge, other than as a result of actions of KRYPTON, its directors,
officers and employees in violation hereof; (ii) the disclosed information
was rightfully known by KRYPTON (as shown by its written records) prior to
the date of disclosure to it by GENTA JAGO hereunder; (iii) the disclosed
information was disclosed to KRYPTON on an unrestricted basis from a source
unrelated to any party to this Agreement and not under a duty of
confidentiality to GENTA JAGO or the Licensor; or (iv) the disclosed
information was independently developed by KRYPTON without the use of
Confidential Information disclosed by GENTA JAGO.
16.3 Terms of this Agreement
Except as otherwise provided in Section 16.2 above, neither Party shall
disclose any terms or conditions of this Agreement to any third party
(other than the Licensor) without the prior consent of the other Party. The
Parties further agree that no public announcements or press releases shall
be made prior to the exercise of the option granted hereinbefore.
16.4 Term of Confidentiality
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The confidentiality obligations under this Article 16 shall be effective
during the term of this Agreement and for a period of ten (10) years after
the expiration or earlier termination hereof.
16.5 Injunctive Remedies
GENTA JAGO shall be entitled to injunctive remedies and relief against
KRYPTON and any third parties for any breach or threatened breach of the
confidentiality obligations under this Article 16.
16.6 Damages
In the event of a breach of the confidentiality provisions under this
Article 16 by KRYPTON or its directors, officers, employees or any other
person who were given access to the Confidential Information by KRYPTON,
GENTA JAGO shall be entitled to receive from KRYPTON any and all actual
costs and damages caused by such breach.
ARTICLE 17
TERM AND TERMINATION
17.1 Term and Expiration
(a) This Agreement shall expire on a country-by-country and
product-by-product basis upon the expiration of the Royalty Term.
(b) Upon the expiration of this Agreement in each country of the Territory
pursuant to Section 17.1 (a) above and payment of all fees, including
but not limited to the *, and all Royalties and other payments by
KRYPTON due GENTA JAGO under this Agreement, the License shall be
deemed to be a perpetual, fully paid-up and royalty-free license for
such Final Product and each such country of the Territory.
17.2 Termination Prior to Registration
During the development, test, study and registration phases as specified in
Articles 3. through 8. above, and until the first successful registration
approval of any Final Product by any Regulatory Authority, this Agreement
may be terminated by KRYPTON for any reason and without cause, in
accordance with the provisions set forth in Sections 3.6, 4.6, 6.5, 7.5 and
8.6 above.
17.3 Termination for Cause
During the entire term of this Agreement either Party may terminate this
Agreement by giving to the other Party written notice to that effect, if
any of the following events occur:
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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(a) the other Party is in default or in breach of a term or provision
hereof and such default or breach continues and is not remedied within
thirty (30) days upon the other Party's written request to remedy such
default or breach; or
(b) the other Party shall commit a breach of any of the confidentiality
provisions of Article 16. above; or
(c) the other Party goes into liquidation, voluntarily or otherwise, other
than for the sole purpose of reorganization, or goes into bankruptcy
or makes an assignment for the benefit of creditors, or in the event
of a receiver being appointed of the other Party's property or parts
thereof.
17.4 Effect of Termination
(a) If KRYPTON elects to so terminate the Agreement under Section 17.2
above prior to filing of the ANDA in the United States, then: (i) such
termination shall be without penalty or liability to KRYPTON; (ii) all
rights and licenses granted by GENTA JAGO hereunder shall revert to
GENTA JAGO with respect to such country(ies) so terminated, (iii)
KRYPTON be relieved of any payments that are scheduled or may be made
in the future under this Agreement, (iv) KRYPTON shall return to GENTA
JAGO all materials, documentation, information, data and other things
furnished by GENTA JAGO in connection with this Agreement, including
without limitation any and all Confidential Information, together with
all copies thereof in KRYPTON's possession or under its control, (v)
all Registrations pertaining to the marketing of the Product shall be
transferred to and be owned by GENTA JAGO as to the affected
country(ies) and the data generated under this Agreement shall be
provided to and thereafter may be freely used by GENTA JAGO to
develop, manufacture and market the Product; and (vi) GENTA JAGO and
its Affiliates shall thereafter be entitled to exercise such rights as
they may have under their own license agreements to make, have made,
use or sell the Product in the country(ies) so terminated without
compensation or obligation to KRYPTON; provided, that the foregoing
rights under (iv) and (vi) shall not create or imply any right or
license under any patent rights, copyright rights, trademarks or trade
names, know-how, or other intellectual property rights owned or
controlled by KRYPTON or its Affiliates.
If KRYPTON elects to so terminate this Agreement subsequent to the filing
of the ANDA in the United States, then: (i) such termination shall be
without penalty or liability to KRYPTON; (ii) all rights and licenses
granted by GENTA JAGO hereunder shall revert to GENTA JAGO with respect to
such country(ies) so terminated; (iii) KRYPTON shall be relieved of any
payments that are scheduled or may be made in the future under this
Agreement, (iv) KRYPTON shall return to GENTA JAGO all materials,
documentation, information, data and other things furnished by GENTA JAGO
in connection with this Agreement, including without limitation any and all
Confidential Information, together with all copies thereof in KRYPTON's
possession or under its control, (v) GENTA JAGO and its Affiliates shall
thereafter be entitled to make, have made, use or sell the Product in the
country(ies) so terminated (and, provided, that the foregoing shall not
create or
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imply any right or license under any patent rights, copyright rights,
trademarks or trade names, know-how, or other intellectual property rights
owned or controlled by KRYPTON or its Affiliates); (vi) all Registrations
pertaining to the Product shall be transferred to and be owned by GENTA
JAGO as to the affected country(ies) and the data generated hereunder shall
be provided to and thereafter may be freely used by GENTA JAGO to develop,
manufacture and market the Product; and (vii) GENTA JAGO shall pay to
KRYPTON the same royalty, which shall be paid in the same manner and
subject to the same terms and conditions as would otherwise have applied to
KRYPTON, as KRYPTON would otherwise have paid (absent such termination)
hereunder to GENTA JAGO on Net Sales (or on the Gross Margin of such Net
Sales, as the case may be) of the Product in the country(ies) to which such
termination applies (with such royalty to be paid by GENTA JAGO and its
Affiliates in each such country until expiration of the Royalty Term in
each such country), until such time as the royalties paid to KRYPTON equal
the aggregate amount that had been paid by KRYPTON to GENTA JAGO prior to
such termination under the Sections 3.5, 4.3, 5.2, 6.3, 7.3,8.3, 9.2 and
13., at which time the royalty rate then prevailing on Net Sales (or on the
Gross Margin of such Net Sales, as the case may be) in the United States
shall be reduced by two percent (2 %) (but shall not be reduced for sales
outside the United States).
(c) Otherwise the termination of this Agreement shall be without prejudice
to any rights and obligations of either Party accrued prior to the
effective date of termination. KRYPTON shall forthwith make all
payments due and outstanding to GENTA JAGO at the date of termination.
Except as explicitly otherwise stated in this Agreement, GENTA JAGO
shall not be obligated to refund upon termination of this Agreement to
KRYPTON any payments, including without limitation the *, made by
KRYPTON to GENTA JAGO prior to such termination pursuant to the
provisions of this Agreement.
(d) The termination of this Agreement pursuant to Section 17.3 above by
either Party shall not limit remedies which may be otherwise available
in law or equity to either Party.
17.5 Early Termination of the License Agreements
(a) In the event that the License Agreements are terminated prior to the
expiration of the last to expire of the Patents licensed to GENTA JAGO
in the Territory, then the License granted hereunder to KRYPTON shall
also terminate upon KRYPTON's receipt of the respective termination
notice from the Licensor. KRYPTON may give written notice to the
Licensor of KRYPTON's desire to continue the License granted under
this Agreement within sixty (60) days as of KRYPTON's receipt of the
Licensor's notice referred to above.
(b) In the event that KRYPTON timely notifies the Licensor of its desire
to continue the License granted under this Agreement, the Licensor
shall have the right, at its sole
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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discretion, to elect to assume in writing within sixty (60) days upon
the Licensor's receipt of KRYPTON's notice any and all rights of GENTA
JAGO under this Agreement and to promptly cure all defaults of GENTA
JAGO under this Agreement, if any.
(c) In the event that the Licensor does not timely gives notice to KRYPTON
and cures all of GENTA JAGO's defaults hereunder pursuant to Section
17.5(b) above, then KRYPTON shall promptly assume in writing any and
all rights and obligations of GENTA JAGO under the License Agreements
with the Licensor, but with regard to the rights encompassed by the
License granted hereunder only, and promptly cure all defaults of
GENTA JAGO under the License Agreements with regard to the rights
encompassed by the License granted hereunder only, if any.
(d) Notwithstanding anything contained in this Section 17.5, no action
taken by the Licensor and/or KRYPTON to continue or not to continue
the License shall relieve GENTA JAGO from any liability for any
uncured defaults under this Agreement or the License Agreements, and
such action by the Licensor and/or KRYPTON shall be without prejudice
to any other rights or remedies the Licensor and/or KRYPTON may have
in law or equity.
ARTICLE 18
WARRANTIES
18.1 GENTA JAGO shall carry out and undertake the studies and tests specified in
this Agreement in a careful and diligent manner. GENTA JAGO agrees to
carefully choose, instruct and supervise any employees, officers,
Affiliates or third parties to be chosen by GENTA JAGO pursuant to this
Agreement, who are involved with the tests and studies. Nothing in this
Agreement shall be construed as a representation made, or warranty given,
by GENTA JAGO that any development performed by or for GENTA JAGO under
this Agreement will be successful in whole or in part, or that any product,
including Final Product, which may be developed, will be successful in the
commercial marketplace. Furthermore, GENTA JAGO makes no representation or
warranty, express or implied, with respect to GEOMATRIX(R)Technology and/or
Know-How, including without limitation, any warranty of completeness,
accuracy, merchantability or fitness for a particular purpose thereof.
18.2 GENTA JAGO represents and warrants that it has all rights regarding
Patents, GEOMATRIX(R)Technology and Know-How necessary to grant the License
hereunder. Notwithstanding the preceding sentence, GENTA JAGO does not
assume any responsibility and makes no warranty that the performance of
this Agreement and any product developed hereunder, including Prototype
Formulation(s) and Final Products, do not infringe any third party's
patents, patent applications or other intellectual property rights.
Notwithstanding the preceding sentence, GENTA JAGO represents and warrants
that, as of the effective date of this Agreement, it is not aware and has
not knowledge of any such infringement of any third party rights. If,
however, during the course of this
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Agreement either Party discovers that the Prototype Formulation(s) and/or
the Final Products infringe or may infringe any third party's intellectual
property rights, it shall promptly inform the other Party thereof and the
Parties shall meet to discuss the course of action to be taken with regard
thereto.
18.3 Nothing in this Agreement shall be construed as a representation made, or
warranty given by GENTA JAGO that any patent will issue based upon any
pending patent application encompassed by the term Patents, and that any
patent encompassed by the term Patents which issues will be valid or
enforceable.
18.4 GENTA JAGO assumes no liability or responsibility for any damages caused to
KRYPTON, third parties, animals and/or the environment by the
manufacturing, marketing or use of the Prototype Formulations or Final
Products or the active ingredient contained therein, except to the extent
that any of the above are attributable to the gross negligence or willful
misconduct of GENTA JAGO in performing its obligations hereunder.
18.5 Subject to the specific representations and warranties given and specific
disclaimers of representations and warranties included in this Article 18,
and further subject to anything to the contrary contained in this
Agreement, either Party shall, as to third parties, be indemnified and held
harmless by the other Party from and against any and all losses,
liabilities and damages arising from any claim, action or other proceeding
by any third party relating to any acts or omissions of the other Party,
its directors, officers, employees or agents, or the gross negligence or
willful misconduct of such other Party, its directors, officers, employees
or agents in performing any of its obligations under this Agreement.
18.6 Any liability, warranty and undertaking contained herein shall be limited
to the payment by either Party for direct damages to the other Party and in
any event, neither Party shall be liable to the other Party for any
special, indirect, punitive or consequential damages and/or loss of profits
or anticipated profits, respectively.
18.7 KRYPTON shall, at its own expense, purchase from an insurance company of
its choice and shall maintain during the entire term of this Agreement an
appropriate and customary policy of general liability and product liability
insurance covering its responsibilities regarding Prototype Formulation(s)
and Final Products developed, manufactured, marketed and sold under this
Agreement and the Active Ingredient contained therein and the use thereof.
Upon request, KRYPTON shall provide GENTA JAGO with evidence that such
insurances are existing and are maintained.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Agreement: The terms, covenants, conditions and provisions contained
in this Agreement, including its Appendices referred to herein, constitute
the total and complete agreement of the Parties and supersede all prior
understandings and agreements hereto
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<PAGE>
made, and there are no other representations, understandings or agreements
relating to the subject matter hereof. The provisions of this Agreement may
not be waived, altered, amended or repealed in whole or in part except by
the written consent of both of the Parties to this Agreement.
19.2 Assignment: This Agreement may not be assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or obligation
hereunder be assigned or transferred by either Party, other than to an
Affiliate of such Party, without the consent of the other Party; provided
however, that either Party may, without such consent, assign this Agreement
and its rights and obligations hereunder in connection with the transfer or
sale of all or substantially all of its business, or in the event of its
merger, consolidation, change in control or similar transaction; and
provided further that GENTA JAGO may without the consent of KRYPTON assign
any and all of its rights and obligations hereunder to the Licensor and/or
any of the Licensor's Affiliates. Any permitted assignee shall assume all
obligations of its assignor under this Agreement or under the respective
rights or obligations actually assigned.
19.3 Successors: This Agreement and all rights hereunder shall ensure to the
benefit of all successors and assigns of both Parties.
19.4 Notices: Any consent, notice or report required or permitted to be given or
made under this Agreement by one Party to the other shall be in English and
in writing, delivered personally or by courier service or by facsimile
(promptly confirmed by personal delivery or courier service) addressed to
the other Party at its address indicated below, or to such other address as
shall have been notified in writing to the sending Party by the receiving
party from time to time, and shall take effect upon receipt by the
addressee.
IF TO KRYPTON: KRYPTON Ltd.
East Wing, Second Level
Hadfield House
Library Street
Gibraltar
attn.: PRESIDENT
WITH COPIES TO: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
attn.: COMPANY SECRETARY
AND: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
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<PAGE>
IF TO GENTA JAGO: GENTA JAGO Technologies B.V.
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz, Switzerland
attn.: MANAGEMENT COMMITTEE
WITH COPIES TO: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
8002 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
AND: PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
attn.: THOMAS E. SPARKS, JR., ESQ.
19.5 Independent Contractors: It is expressly agreed that the Parties shall be
independent contractors and that the relationship between the Parties shall
not constitute a partnership, joint venture or agency. Neither Party 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
Party, without the prior written consent of the other Party to do so.
19.6 Severability: Each Party hereby acknowledges that it does not intend to
violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of
any country or community or association of countries. Should one or more
provisions of this Agreement be or become invalid, the Parties hereto shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to
the invalid provisions that it can be reasonably assumed that the parties
would have entered into this Agreement with such provisions. In case such
provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this
Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
Parties would not have entered into this Agreement without the invalid
provisions.
19.7 Force Majeure: Neither Party hereto shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes
beyond the reasonable control of the affected Party including but not
limited to fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts
or other labor disturbances, acts of God or acts, omissions or delays in
acting by any governmental authority or the other Party hereto.
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<PAGE>
19.8 Interest: In the event any amount due and payable under this Agreement is
not paid by the due date, then the Party owing such amount shall pay to
the creditor, without being requested by the other Party, interest on the
total outstanding amount at the rate equal to the London Interbank Offered
Rate ("LIBOR"), as published in the Wall Street Journal (Europe) on the
date that such payment falls due, increased by three percent (3%), in
United States Dollars and adjusted on the first day of every calendar
quarter.
19.9 Headings: The titles and headings used in this Agreement are intended for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
19.10 Waiver: The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by
said other Party whether of a similar nature or otherwise.
19.11 Counterparts: This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
ARTICLE 20
DISPUTE RESOLUTION AND ARBITRATION
20.1 In the event of any dispute arising between the Parties concerning this
Agreement, GENTA JAGO and KRYPTON agree that in the first place they shall
meet for good faith discussions in an attempt to negotiate an amicable
solution.
20.2 Any dispute arising between the Parties out of or in connection with this
Agreement, or the interpretation, breach or enforcement thereof, which
cannot be amicably resolved pursuant to Section 20.1 above within two (2)
months as from the first appearance of such dispute, shall be finally
resolved by binding arbitration. Whenever a Party shall decide to
institute arbitration proceedings, it shall give written notice to that
effect to all of the other Parties. Any arbitration hereunder shall be
conducted under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce. Any such arbitration shall be conducted
in the English language by a panel of three (3) arbitrators appointed in
accordance with such rules, and shall be held in PARIS, FRANCE. The
arbitrators shall have the authority to grant specific performance, and to
allocate among the parties the costs of arbitration in such equitable
manner as they determine. Judgment upon the award so rendered may be
entered in any court having jurisdiction or application may be made to
such court for judicial acceptance of any award so rendered and an order
of enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this section,
shall be determined by binding arbitration pursuant to this section.
20.3 Notwithstanding anything contained in this Article 20, either Party may
seek preliminary
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or injunctive measures or relief in any competent court having
jurisdiction.
ARTICLE 21
APPLICABLE LAW
The Parties hereto agree that this Agreement, all transactions executed
hereunder and all relationships between the Parties in connection
therewith shall be construed under and be governed by the laws of
Switzerland without reference to the conflict of law principals thereof,
and shall not be governed by the United Nations Convention on Contracts
for the International Sale of Goods.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 31st day
of October 1996.
GENTA JAGO TECHNOLOGIES B.V.
/s/ Thomas H. Adams /s/ Jacques Gonella
- - - ------------------- -------------------
by: Dr. Thomas H. Adams by: Dr. Jacques Gonella
its: Managing Director its: Managing Director
KRYPTON LTD.
/s/
- - - -------------------
by:
its:
The Licensor, Jagotec AG, hereby agrees to be bound by the obligations contained
in Section 17.5 of this Agreement.
JAGOTEC AG
/s/ Jacques Gonella
- - - -------------------
by: by:
its: its:
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EXHIBIT 10.92
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT & SUB-LICENSE AGREEMENT
*
This DEVELOPMENT AND SUB-LICENSE AGREEMENT (this "Agreement"), effective from
the date last written hereunder, is entered into between GENTA JAGO TECHNOLOGIES
B.V., a Dutch company, having a place of business at Grundstrasse 12, 6343
Rotkreuz, Switzerland (hereinafter referred to as "GENTA JAGO"), and KRYPTON
LTD., a Gibraltar limited company, having a place of business at East Wing,
Second Level, Hadfield House, Library Street, Gibraltar (hereinafter referred to
as "KRYPTON")
WITNESSETH:
WHEREAS, GENTA JAGO has expertise in the development of controlled-release
formulations for pharmaceutical agents and in particular has exclusive rights to
proprietary know-how and technology generally known and commercialized under the
registered trademark GEOMATRIX(R) and as described and embodied in the Patents
(as defined below) with respect to a Bioequivalent Product (as defined below) to
* _; and
WHEREAS, KRYPTON is a company which markets pharmaceutical products and is
interested in developing Prototype Formulations (as defined below) for the Final
Product (as defined below) and in seeking the approval of Regulatory Authorities
(as defined below) to manufacture, or have manufactured and market the Final
Product in the Territory (as defined below); and
WHEREAS, GENTA JAGO is prepared to conduct or have conducted certain studies and
the development of the Prototype Formulations and Final Product; and
WHEREAS, GENTA JAGO is prepared to grant to KRYPTON under the terms and
conditions set forth hereafter a sub-license under the Patents, GEOMATRIX(R)
Technology and Know-How (as defined below) to conduct studies relating to the
Prototype Formulations and, upon receipt of approval by the Regulatory Authority
(as defined below), to manufacture or have manufactured, market and sell the
Final Product in the Territory.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
Parties hereby agree as follows:
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
<PAGE>
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the following meanings:
1.1 "Active Ingredient" shall mean *.
1.2 "Affiliate" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct or
indirect beneficial ownership of more than 50% of the voting power of,
or more than 50% of ownership interest in, such corporation,
partnership or other entity.
1.3 "ANDA" shall mean any Abbreviated New Drug Application filed with the
FDA, by or for KRYPTON requesting authorization to manufacture, have
manufactured or sell the Final Product in the United States of America,
or any equivalent application to a Regulatory Authority in any other
country of the Territory.
1.4 "Bioequivalent Product" shall mean a drug product meeting the
bioequivalence requirements imposed by the FDA for in vitro and/or in
vivo testing as set forth in the regulations of the FDA at 21 C.F.R.
ss.320 ("AB Equivalent Rating"), as they may be amended from time to
time.
1.5 "Competitive Product" shall mean any product other than the Final
Product or the Originator which is a Bioequivalent Product of the
Originator and is marketed and sold in the Territory on a
country-to-country basis.
1.6 "FDA" shall mean the U.S. Federal Food and Drug Administration and any
successor agency thereof.
1.7 "Final Product" shall mean the pharmaceutical orally-administered
controlled-release formulation(s) containing the Active Ingredient,
presented as a compressed tablet developed pursuant to this Agreement,
based on the GEOMATRIX(R) Technology and being a Bioequivalent Product
of the Originator, of a Competitive Product or of any other product
containing the Active Ingredient.
1.8 "GEOMATRIX(R) Technology" shall mean the oral controlled-release drug
delivery and related technology licensed to GENTA JAGO by the Licensor
which utilizes a hydrophilic drug-containing matrix tablet which
controls the release of the drug through the use of one or more barrier
layers.
1.9 "Gross Margin" shall mean, with respect to any Final Product, Net Sales
less only the direct cost of such Final Product sold, i.e. (a) raw
material cost, (b) direct labor cost, (c) reasonably directly
allocatable overhead cost (e.g. energy cost), (d) packaging and
labeling
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
cost, and (e) other costs directly associated with the manufacturing of
such Final Product (e.g. quality control). No other deductions from Net
Sales are permissible for the calculation of Gross Margin, including
without limitation, sales, marketing and distribution costs.
Alternatively, in the event that KRYPTON sub-contracts the
manufacturing of any Final Product to a third party, then "Gross
Margin" with respect to such Final Product shall mean Net Sales less
only the manufacturing costs as invoiced by such manufacturing third
party sub-contractor and actually paid by KRYPTON.
1.10 "Know-How" shall mean all information and data, which are not generally
known including, but not limited to, patent claims and related
information not yet disclosed to the public, formulae, procedures,
protocols, techniques and results of experimentation and testing, which
(a) relate to the GEOMATRIX(R)Technology, any Prototype Formulation or
any Final Product, or (b) are necessary or useful to develop, make or
use any Prototype Formulation, or (c) are necessary or useful to
develop, seek regulatory approval, make, use or sell any Final Product,
all to the extent presently or during the term of this Agreement
licensed or otherwise available to and at the free disposition of GENTA
JAGO.
1.11 "License Agreements" shall mean the license agreements entered into by
and between GENTA JAGO and the Licensor, under which the Licensor
granted GENTA JAGO the rights in the Patents, the Know-How and the
GEOMATRIX(R) Technology, which are the subject matter of the
sub-license referred to in Article 11. below.
1.12 "Licensor" shall mean Jagotec AG, a Swiss corporation, having its place
of business at Seestrasse 91, CH-6052 Hergiswil, Switzerland.
1.13 "Net Sales" shall mean, with respect to any Final Product, the invoiced
sales price of such Final Product in finished package form invoiced by
KRYPTON and/or its Affiliates to any independent customer other than
KRYPTON's Affiliates, less (a) credits, allowances, discounts and
rebates to, and chargebacks from the account of, such independent
customers for spoiled, damaged, out-dated, rejected or returned Final
Product; (b) actual freight and insurance costs incurred and paid by
KRYPTON and/or its Affiliates in transporting such Final Product in
final form to such customers; (c) customary cash, quantity and trade
discounts and other price reduction programs; (d) sales, use, value-
added and other direct taxes (but excluding any income tax) actually
incurred and paid by KRYPTON and/or its Affiliates; and (e) customs
duties, surcharges and other governmental charges incurred by KRYPTON
and/or its Affiliates in connection with the exportation or importation
of such Final Product in final form.
1.14 "Originator" shall mean * actually marketed in the United States by *
or any other pharmaceutical products containing the Active Ingredient
and being marketed in the Territory
1.15 "Patents" shall mean all patents and patent applications heretofore or
hereafter filed or having presently or in the future legal force in any
country of the Territory, licensed by the Licensor to GENTA JAGO which
claim the GEOMATRIX(R) Technology or the
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
process to manufacture Prototype Formulations and/or Final Product by
use of, or the use of, the GEOMATRIX(R) Technology, including but not
limited to the patents and patent applications listed in APPENDIX A
hereto, together with all patents that in the future issue therefrom in
any country of the Territory, including utility, model and design
patents and certificates of invention, and all divisionals,
continuations, continuations-in-part, reissues, renewals, extensions,
substitutions, confirmations or additions to any such patents and
patent applications, all to the extent presently or during the term of
this Agreement licensed or otherwise available to and at the free
disposition of GENTA JAGO.
1.16 "Prototype Formulations" shall mean the oral delivery system for the
Active Ingredient based on the GEOMATRIX(R) Technology that reasonably
meet the Specifications.
1.17 "Regulatory Authority" shall mean the FDA or any equivalent competent
regulatory authority in any other countries of the Territory.
1.18 "Specifications" shall mean the Products specifications set forth in
Appendix B attached hereto.
1.19 "Territory" shall mean *.
ARTICLE 2
DEVELOPMENT PREAMBLE
2.1 At the date of execution of this Agreement, GENTA JAGO has performed
certain preliminary development efforts for the Prototype Formulation.
This development is hereby incorporated in this Agreement.
2.2 GENTA JAGO undertakes to conduct the development of the Prototype
Formulation(s) and the Final Product in an efficient and professional
manner. KRYPTON shall actively support GENTA JAGO regarding the
development and studies to be executed by GENTA JAGO as may be
reasonably required by GENTA JAGO from time to time. In particular,
KRYPTON shall provide information reasonably requested by GENTA JAGO
relating to the Originator and to the Active Ingredient for the
purposes of carrying out this development, including, but not limited
to, physico-chemical characteristics, safe-handling instructions,
in-vitro analytical methods, degradation products and standards and
analytical methods therefore. Additionally, KRYPTON shall provide to
GENTA JAGO requested data and adequate quantities of samples of the
Originator for the purposes of conducting the Feasibility Study.
KRYPTON, however, shall not be required to provide information
regarding the Originator which is not in the public domain, unless
KRYPTON is duly authorized to possess and disclose such non-public
information. Any costs and expenses incurred by KRYPTON in connection
with such support shall be borne by KRYPTON.
2.3 Due to the nature and complexity of the development and the respective
studies as set forth in this Agreement, the Parties recognize and
acknowledge that problems and delays
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
may occur which render the time limits set forth in this Agreement
and/or the time-frame of the development as mutually agreed upon
difficult or impossible to accomplish. The Parties agree that they
shall immediately inform each other in writing in the event that
significant problems or delays are encountered or envisaged during the
course of the development and shall discuss such problems and delays in
order to agree on a mutually acceptable revision of the time limits set
in this Agreement and/or the time-frame as previously mutually agreed
upon.
2.4 Together with the notice from KRYPTON referred to in Section 3.1 below,
KRYPTON, or its designated supplier, shall supply GENTA JAGO on a
free-of-charge basis with sufficient quantities of Active Ingredient to
perform the development program intended hereunder. Such supplies shall
be accompanied with respective certificates of analysis and conformity.
GENTA JAGO shall use all Active Ingredient supplied to it by KRYPTON
hereunder solely and exclusively in connection with the development
program as mutually agreed upon.
Alternatively, KRYPTON may request that GENTA JAGO obtain a supply of
Active Ingredient from a reputable source having the necessary
regulatory clearances in place to allow future marketing of the Final
Product in the Territory. Should KRYPTON so require and GENTA JAGO so
agree, the chosen supplier's facilities, processes and procedures shall
be audited by GENTA JAGO, or a third party mutually acceptable to
KRYPTON and GENTA JAGO, in order to ensure compliance with the
appropriate regulatory requirements. KRYPTON shall * of GENTA JAGO
incurred in carrying out, or having carried out such audit. GENTA JAGO
shall provide KRYPTON with a copy of the audit report within thirty
(30) days as of the completion of the audit.
2.5 In the event that the Parties mutually agree that GENTA JAGO becomes
responsible for the supply of Active Ingredient, KRYPTON shall * GENTA
JAGO for any and all shipping and transportation costs, import duties,
taxes or other costs incurred by GENTA JAGO in connection with such
supply of Active Ingredient upon receipt of GENTA JAGO's respective
invoices.
ARTICLE 3
FEASIBILITY STUDY
3.1 KRYPTON shall initiate the development program contemplated hereunder
as soon as technically feasible and within the time limits set forth in
the mutually accepted development program by giving written notice to
that effect to GENTA JAGO. Not later than two (2) months after receipt
of (i) such notice, (ii) a * and (iii) the Active Ingredient, GENTA
JAGO shall commence the feasibility study under this Article 3. and
shall use its commercially reasonable efforts to develop the Prototype
Formulations. Up to three (3) of the developed Prototype Formulations
shall be chosen by mutual agreement by the Parties for further study
and development.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
The Parties recognize that the Specifications mutually agreed upon
eventually will need to be updated with more detailed specifications
for the Final Product in the course of the development, and in such
case the Parties agree to mutually agree on any reasonable amendment of
the Specifications.
3.2 The development of the Prototype Formulations shall include, but not
necessarily be limited to, the following elements:
(a) Development and establishment of analytical methodology
specific to the characterization of such Prototype
Formulations;
(b) Qualitative and quantitative characterization of such
Prototype Formulation;
(c) In-vitro release profile characterization of such Prototype
Formulations and the Originator by using appropriate methodology
mutually agreed to by the Parties;
(d) Elaboration of pre-scale up procedures and the production of
samples (2000 units +/- 10%) of the chosen Prototype
Formulations for evaluation by KRYPTON, and for use in the
Pilot Pharmacokinetic Study under Article 4. below; and
(e) Accelerated stability testing of Prototype Formulations to
provide *.
3.3 GENTA JAGO will ensure the use of generally accepted standards of Good
Laboratory and Manufacturing Practices during the performance of the
feasibility study.
3.4 Within thirty (30) days of the completion of the feasibility study,
GENTA JAGO shall supply KRYPTON with a report (the "Feasibility Study
Report") reasonably detailing the development of the Prototype
Formulation(s) and containing one (1) month accelerated stability data
only. A supplement to the Feasibility Study Report containing the *
accelerated stability data will be forwarded sixty (60) days later.
3.5 Prior to the commencement of the Feasibility Study GENTA JAGO shall
submit to KRYPTON * for the entire Feasibility Study which * shall be
reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's
*, reasonably incurred by GENTA JAGO during the Feasibility Study,
including but not limited to costs, expenses and fees paid to Jago
Pharma and third party contractors, by the payment of non-refundable
development fees. Such development costs shall be refunded by KRYPTON
to GENTA JAGO * upon receipt by KRYPTON of an invoice from GENTA JAGO
or Jago Pharma AG.
3.6 In the event that the results of the feasibility study conclusively
demonstrate that no Prototype Formulation has been developed which
reasonably meets the Specifications to
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
the good faith mutual satisfaction of KRYPTON and GENTA JAGO, the
Parties agree to enter into good faith negotiations in order to
determine an appropriate course of action, including, but not limited
to, that the Parties may mutually agree to abandon the development
program under this Agreement, and terminate this Agreement with
immediate effect.
ARTICLE 4
PILOT PHARMACOKINETIC STUDY
4.1 Included as part of the feasibility study described in Article 3.
above, KRYPTON shall, at its own responsibility and its own cost,
sub-contract under confidentiality commitments comparable in all
material respects to the provisions set forth herein between GENTA JAGO
and KRYPTON to an external qualified clinical research organization
(hereinafter "CRO") to perform a pilot pharmacokinetic study pursuant
to this Article 4.
4.2 The Pilot Pharmacokinetic Study shall consist of commercially
reasonable and appropriately designed * of the Prototype Formulations
and the Originator. KRYPTON shall reasonably consult with GENTA JAGO in
the design of the Pilot Pharmacokinetic Study and shall review the
final protocol with GENTA JAGO prior to initiating work with the
selected sub-contractor. The Pilot Pharmacokinetic Study shall be
conducted in accordance with generally accepted standards of Good
Clinical Practice and in compliance with Ethical Committee requirements
or equivalent requirements, where applicable.
4.3 Prior to the commencement of the Pilot Pharmacokinetic Study GENTA JAGO
shall submit to KRYPTON * for the entire Pilot Pharmacokinetic Study
which * shall be reasonably acceptable to KRYPTON. KRYPTON shall
reimburse GENTA JAGO's *, reasonably incurred by GENTA JAGO during the
Pilot Pharmacokinetic Study, including but not limited to costs,
expenses and fees paid to Jago Pharma and third party contractors, by
the payment of non-refundable development fees. Such development costs
shall be refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of
an invoice from GENTA JAGO or Jago Pharma AG.
4.4 KRYPTON shall provide GENTA JAGO with a copy of the report (hereinafter
referred to as the "Pilot Pharmacokinetic Study Report") reasonably
detailing the results of the Pilot Pharmacokinetic Study within six (6)
weeks as of the study's completion and presentation of the preliminary
data for GENTA JAGO's file.
4.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Pilot Pharmacokinetic Study, including without
limitation the availability or quality of the results and data from
such Pilot Pharmacokinetic Study to be carried out by KRYPTON and the
CRO.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
4.6 In the event that the results of the Pilot Pharmacokinetic Study
conclusively demonstrate that it is not fully demonstrated to the good
faith mutual satisfaction of KRYPTON and GENTA JAGO that at least one
of the Prototype Formulations reasonably meet the respective
Specifications, the Parties may mutually agree to abandon the
development program and terminate this Agreement with respect to such
Prototype Formulation.
ARTICLE 5
PRE-SCALE-UP ACTIVITIES
5.1 Upon completion of the Pilot Pharmacokinetic Study, KRYPTON may, at its
option, request and charge GENTA JAGO to carry out the pre-scale-up
activities as described in this Article 5. (hereinafter referred to as
the "Pre-Scale-Up Activities"). KRYPTON shall, within thirty (30) days
as from the date of the Pilot Pharmacokinetic Study Report notify in
writing GENTA JAGO of its decision whether to proceed with and to have
GENTA JAGO perform the Pre-Scale-Up Activities.
5.2 Prior to the commencement of the Pre-Scale-Up Activities GENTA JAGO
shall submit to KRYPTON * for the entire Pre-Scale-Up Activities which
* shall be reasonably acceptable to KRYPTON. KRYPTON shall reimburse
GENTA JAGO's *, reasonably incurred by GENTA JAGO during the Pre-Scale
Up activity, including but not limited to costs, expenses and fees paid
to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such pre scale up costs shall be
refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
5.3 The Pre-Scale-Up Activities to be performed by GENTA JAGO shall
comprise all reasonable activities necessary to allow the technology
transfer to, and subsequent scale-up at, the mutually established
manufacturing site, including, but not limited to, final optimization
of the Prototype Formulation (where necessary), development and
validation of the scale-up manufacturing procedure and analytical
validation. Such Pre-Scale-Up Activities shall be completed within the
time period mutually agreed upon by the Parties in Appendix D hereto,
calculated as from the date of receipt of the KRYPTON's notice by GENTA
JAGO pursuant to Section 5.1 above.
5.4 In the event that additional clinical testing, including without
limitation, confirming pharmacokinetic studies, is reasonably required
or deemed necessary beyond the program envisaged in this Agreement in
order to satisfy the FDA requirements for an NDA or ANDA approval of
the Product, KRYPTON and GENTA JAGO shall meet to discuss in good faith
the appropriate course of action to be followed and agree upon any such
additional testing to be performed, provided that any such additional
testing shall in any event be funded solely by KRYPTON.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
5.5 Not later than upon the initiation of the Pre-Scale-Up Activities, the
Parties shall establish and mutually agree upon a manufacturing site,
where the Bio-Batches referred to in Section 7.2 below required for the
pivotal clinical studies will be produced and where the Final Product
shall be manufactured for commercial use after FDA approval(s) for the
Final Product have been granted.
ARTICLE 6
PRE-PIVOTAL PHARMACOKINETIC STUDY
6.1 Included as part of the Pre-Scale-Up Activities, KRYPTON shall at its
own responsibility and its own cost, perform or have performed with a
CRO selected by KRYPTON, a pre- pivotal pharmacokinetic study pursuant
to this Article 6. (hereinafter referred to as "Pre- Pivotal Study").
Such Pre-Pivotal Study shall consist of *, to select the best of the
Prototype Formulations for each dose strength to be used in the further
development under this Agreement.
6.2 The Pre-Pivotal Study shall be performed in the United States of
America. KRYPTON shall consult, review and mutually agree with GENTA
JAGO on the design and final protocol of such Pre-Pivotal Study prior
to initiating work with the selected CRO.
6.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to cover
its workload for preparation and consulting of such Pre-Pivotal Study.
Such development costs shall be paid by KRYPTON * upon receipt by
KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
6.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing
the results of the Pre-Pivotal Study within ten (10) days of its
completion for GENTA JAGO's file. GENTA JAGO shall have no liability or
responsibility whatsoever with respect to such Pre-Pivotal Study,
including without limitation, the performance or conduct of such Pre-
Pivotal Study or the availability or quality of the results and data
from such Pre-Pivotal Study to be carried out by KRYPTON and the CRO.
6.5 Upon completion of the Pre-Pivotal Study and availability of the
results of such Pre- Pivotal Study, the Parties shall consult with each
other on such results and mutually agree in writing upon the Prototype
Formulation to be selected for further development under this
Agreement. In the event that the results of the Pre-Pivotal Study are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of the Parties that at least one of the Prototype
Formulations meet the respective Specifications, KRYPTON may elect to
abandon the development program and terminate this Agreement with
respect to such Prototype Formulation by giving written notice to that
effect to GENTA JAGO.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
ARTICLE 7
FURTHER ACTIVITIES
7.1 Technology Transfer
Upon mutual agreement of the Prototype Formulation to be used for
development as referred to in Section 6.5 above, GENTA JAGO shall be
responsible for and initiate the technology transfer to, and perform
the scale-up at, the manufacturing site mutually established and agreed
upon by the Parties. GENTA JAGO agrees that such technology transfer,
and in particular the aspects of scale-up and validation of the
manufacturing process shall be carried out by GENTA JAGO on such
equipment as shall eventually be used by KRYPTON or a third party to
manufacture the Final Product. Upon completion of such scale-up, GENTA
JAGO shall notify KRYPTON thereof in writing.
7.2 Production of Industrial Scale Batches
Upon receipt by KRYPTON of GENTA JAGO's notice referred to in Section
7.1 above, the Parties shall initiate the production of three (3)
industrial scale batches (hereinafter "Bio-Batches") on such equipment
as shall eventually be used KRYPTON or a third party to commercially
manufacture the Final Product, based on the Prototype Formulation (the
size of each Bio-Batch to be not less than the greater of (i) 10% (ten
percent) of the anticipated initial commercial batch size, or (ii)
100,000 tablets), according to Current Good Manufacturing Practices,
such Bio-Batches to be subsequently used for stability testing and
pivotal clinical studies; provided however, that GENTA JAGO shall have
the ultimate responsibility with respect of any and all technical
aspects of such production of batches related to the technology
transfer and the implementation of such technology in the manufacturing
site.
7.3 Funding of Further Activities
(a) Prior to the commencement of any activities under Sections 7.1
and 7.2 above GENTA JAGO shall submit to KRYPTON * for such
further activities which * shall be reasonably acceptable to
KRYPTON. KRYPTON shall refund GENTA JAGO's * reasonably
incurred by GENTA JAGO under Sections 7.1 and 7.2 above,
including but not limited to costs, expenses and fees paid to
Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such further development
costs shall be refunded by KRYPTON * upon receipt by KRYPTON
of an invoice from GENTA JAGO or Jago Pharma AG.
(b) Furthermore, KRYPTON shall be responsible, at its own cost,
for the supply of all raw material including, but not limited
to, the Active Ingredients required or necessary for, and all
additional costs and expenses whatsoever arising out of or in
connection with, the production of the Bio-Batches described
in Section 7.2 above and all other costs associated with the
use of facilities, technology transfer, equipment and
analytical services.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
7.4 Stability Testing
(a) KRYPTON shall be responsible for and perform or have performed
at its own cost, the stability testing of the Final Product
according to the then current requirements of the FDA in bulk
packaging and in the final packaging materials. GENTA JAGO
shall have no liability or responsibility whatsoever with
respect to such stability testing, including without
limitation, the performance or conduct of such stability
testing or the availability or quality of the results and data
from such stability testing to be carried out or requested by
KRYPTON.
(b) KRYPTON shall provide to GENTA JAGO with a copy of all
stability testing data within thirty (30) days after the
completion of each stability testing period (hereinafter
referred to as the "Final Stability Testing Report") for GENTA
JAGO's file.
(c) GENTA JAGO agrees to provide additional technical assistance
and consultation as may be reasonably requested by KRYPTON in
connection with the stability testing of the Final Product.
KRYPTON shall pay to GENTA JAGO for such services provided by
GENTA JAGO's or Jago Pharma's personnel an amount of USD * or
part thereof spent, and furthermore, KRYPTON shall reimburse
GENTA JAGO for all reasonable and documented travel related
expenses of GENTA JAGO personnel who travel at KRYPTON's
request to locations remote from such personnel's usual
working location.
7.5 Further Provisions
In the event that KRYPTON and GENTA JAGO shall reasonably deem the
results or data from any of the activities to be performed by either
Party under this Article 7. with respect to any dose strength be
unsatisfactory for any reason, the Parties may mutually agree to
abandon the development program and terminate this Agreement with
immediate effect.
ARTICLE 8
PIVOTAL CLINICAL STUDY
8.1 Promptly upon completion of the further activities referred to in
Article 7. above, KRYPTON shall, at its own responsibility and its own
cost, sub-contract under confidentiality commitments comparable to the
provisions set forth herein between GENTA JAGO and KRYPTON to an
external qualified CRO of its choice, reasonably acceptable to GENTA
JAGO, to perform and manage a series of pivotal clinical studies
(hereinafter "Clinical Studies") in man required and/or necessary for
any subsequent NDA or ANDA for the Final Product in accordance with the
then current requirements of the FDA.
8.2 KRYPTON shall consult, review and agree with GENTA JAGO on the design
and the final protocol of such Clinical Studies prior to initiating
work with the selected sub-contractor.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
8.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to cover
its workload for preparation and consulting of such Clinical Studies.
Such development costs shall be paid by KRYPTON * upon receipt by
KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
8.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing
the results of the Clinical Studies within ten (10) days of its
completion for GENTA JAGO's file.
8.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Clinical Studies, including without limitation, the
performance or conduct of such Clinical Studies or the availability or
quality of the results and data from such Clinical Studies to be
carried out or requested by KRYPTON.
8.6 In the event that the results of the Pivotal Clinical Studies are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of KRYPTON and GENTA JAGO that the Prototype
Formulation reasonably meets the respective Specifications, the Parties
may mutually agree to abandon the development program and terminate
this Agreement with respect to such dose strength.
ARTICLE 9
THE REGULATORY (NDA OR ANDA) SUBMISSION
9.1 Upon completion of the Clinical Studies, KRYPTON may, at its option,
elect to prepare and submit to the FDA an NDA or ANDA. KRYPTON shall
notify GENTA JAGO of its election to exercise or not to exercise this
option by giving written notice thereof to GENTA JAGO within thirty
(30) days as of the availability of the results of the Clinical
Studies.
9.2 In the event that KRYPTON elects pursuant to Section 9.1 above to make
NDA or ANDA submission(s) to any Regulatory Authority with respect to a
Final Product, KRYPTON shall have sole liability and responsibility for
the prosecution, conduct and results of such NDA or ANDA and shall bear
all costs in connection therewith. KRYPTON, at KRYPTON's option, may
elect by written notice to GENTA JAGO prior to commencement of the
technology transfer referred to in Section 7.1 above to have the NDA or
ANDA dossier prepared on its behalf by a qualified third party
acceptable to GENTA JAGO. KRYPTON shall be liable and responsible for
any and all costs associated with such sub-contracting.
9.3 KRYPTON or its chosen sub-contractor shall consult with GENTA JAGO, and
GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON or the chosen
sub-contractor, in connection with the preparation and prosecution of
any NDA or ANDA or with the preparation of the dossier
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
to be submitted to the FDA. KRYPTON shall pay to GENTA JAGO for such
services and consultation provided by GENTA JAGO's personnel an amount
of USD * or any part thereof spent. Furthermore, KRYPTON shall
reimburse GENTA JAGO for reasonable and documented travel-related
expenses of GENTA JAGO personnel who travel at KRYPTON's request to the
elected manufacturing facility(ies) or other locations remote from such
personnel's usual working location.
ARTICLE 10
PROPRIETARY RIGHTS AND PATENTS
10.1 Patents and Proprietary Rights of GENTA JAGO
(a) The Licensor and GENTA JAGO, respectively, shall retain title
to and ownership of Patents, Know-How and GEOMATRIX(R)
Technology licensed to GENTA JAGO, including, but not limited
to, any and all developments and inventions relating to
Patents, Know-How and GEOMATRIX(R) Technology (hereinafter
collectively referred to as "GENTA JAGO IPR").
(b) KRYPTON shall not, directly or indirectly through its
officers, directors, employees, agents, customers or other
controlled or associated third parties, acquire any
proprietary interest in or other right to GENTA JAGO IPR,
other than provided in this Agreement.
(c) GENTA JAGO shall use all commercially reasonable efforts, at
its own cost, to cause the Licensor to prepare, prosecute and
maintain all patent applications and patents constituting
Patents, and shall keep KRYPTON fully and promptly informed on
any developments or changes relating thereto. If the Licensor
decides not to further prosecute any patent application
constituting Patents, GENTA JAGO shall promptly inform KRYPTON
of such decision in writing, and the Parties shall, upon
KRYPTON's reasonable written request, meet with the Licensor
to discuss any reasonable appropriate action. During the term
of this Agreement, GENTA JAGO shall, at its sole cost, use all
commercially reasonable efforts to cause the Licensor to take
all steps necessary to maintain Patents to the extent GENTA
JAGO deems commercially reasonable. If the Licensor decides
not to maintain any patent constituting Patents, GENTA JAGO
shall promptly inform KRYPTON of such decision in writing, and
the Parties shall, upon KRYPTON's reasonable written request,
meet with the Licensor to discuss any reasonable appropriate
action. Notwithstanding the foregoing, KRYPTON acknowledges to
GENTA JAGO that Licensor has the final authority regarding
such preparation, prosecution and maintenance of all patent
applications and patents.
10.2 Patents and Proprietary Rights for Final Products
(a) KRYPTON shall retain title to and ownership of all
developments, whether patentable or not, relating specifically
and exclusively to the Final Products, provided
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<PAGE>
that such developments are entirely independent of any and all
GENTA JAGO IPR (hereinafter collectively referred to "Final
Product IPR").
(b) KRYPTON shall be responsible for and shall control, at its own
cost, the preparation, prosecution and maintenance of all
Final Product IPR and shall keep GENTA JAGO fully and promptly
informed on any developments or changes relating thereto.
During the term of this Agreement, KRYPTON shall, at its sole
cost, take all steps necessary to prosecute and/or maintain
all Final Product IPR to the extent KRYPTON deems commercially
reasonable. If KRYPTON intends not to further prosecute and/or
maintain any of the Final Product IPR, KRYPTON shall promptly
inform GENTA JAGO of such intention in writing, and GENTA JAGO
shall have the right and option, but not the obligation, to
have transferred to it sole title to and ownership in such
Final Product IPR free of any charge by giving respective
written notice thereof to KRYPTON within thirty (30) days
after GENTA JAGO's receipt of KRYPTON's notice referred to
above.
(c) In the event GENTA JAGO has and exercises its right and option
referred to Section 10.2 (b) above to have transferred to it
any such Final Product IPR, KRYPTON shall promptly undertake
any and all steps required and/or necessary to transfer title
to and ownership of such Final Product IPR to GENTA JAGO. In
the event that GENTA JAGO exercises its option to have
transferred such Final Product IPR from KRYPTON to GENTA JAGO,
GENTA JAGO shall maintain such Final Product IPR during the
term of this Agreement to the extent GENTA JAGO deems
commercially reasonable and shall bear all cost associated
therewith incurred after the date of GENTA JAGO's notice to
KRYPTON exercising its option referred to in Section 10.2 (b)
above. In such case, the Parties shall negotiate in good faith
the terms and condition, under which such Final Product IPR
transferred to GENTA JAGO shall be included in the License
pursuant to Article 11. below.
10.3 Notification of Infringement
(a) If KRYPTON becomes aware of (i) any product or activity of any
kind that involves or may involve an infringement or violation
of GENTA JAGO IPR or Final Product IPR or (ii) any third-party
action, claim or dispute (including, but not limited to,
actions for declaratory judgment alleging the invalidity or
non-infringement) based upon or arising out of GENTA JAGO IPR
or Final Product IPR, then KRYPTON shall promptly notify GENTA
JAGO in writing of any such infringement, violation, action,
claim or dispute.
(b) If GENTA JAGO becomes aware of (i) any product or activity of
any kind that involves or may involve an infringement or
violation of GENTA JAGO IPR with respect to Final Products or
of Final Product IPR; or (ii) any third-party action, claim or
dispute (including, but not limited to, actions for
declaratory judgment alleging the invalidity or
non-infringement) based upon or arising out of GENTA JAGO IPR
with respect to Final Products or of Final Product IPR, then
GENTA JAGO shall promptly notify KRYPTON in writing of any
such infringement, violation, action, claim or dispute.
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<PAGE>
10.4 Enforcement of GENTA JAGO IPR
(a) GENTA JAGO, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of
action to enforce, or otherwise abate the infringement of, or
defend third-party actions regarding, GENTA JAGO IPR, (ii) to
take, or refrain from taking, appropriate action to enforce,
or defend third-party actions regarding, GENTA JAGO IPR, (iii)
to control any litigation or other enforcement action
regarding GENTA JAGO IPR, and (iv) to enter into, or permit,
the settlement of any such litigation or other enforcement
action regarding GENTA JAGO IPR. GENTA JAGO shall keep KRYPTON
informed on a regular basis on its taking or refraining from
taking, and the development of, any of the foregoing actions,
and shall consider, in good faith, the interests of KRYPTON
under this Agreement when taking any of the foregoing actions,
to the extent that any such action or such infringement may
have an adverse effect on Final Product. KRYPTON shall, at its
own cost, fully cooperate with GENTA JAGO in the planing and
execution of any suit or other action to enforce, or defend
third-party actions regar- ding, GENTA JAGO IPR as reasonably
required or requested by GENTA JAGO.
(b) If GENTA JAGO does not within one-hundred-twenty (120) days,
or any shorter delay imposed by any applicable law or
regulation or court or authority having jurisdiction, after
receiving notice of any infringement or violation of GENTA
JAGO IPR which may adversely affect Final Products, or of any
third-party action, claim or dispute based upon or arising out
of GENTA JAGO IPR which may adversely affect Final Products,
commence or take an action to enforce, or otherwise abate such
infringement, or defend against such third-party action, then
the Parties shall, upon KRYPTON's written request, promptly
meet to discuss any reasonable appropriate action with regard
to such enforcement of GENTA JAGO IPR which may adversely
affect Final Products, provided however, that KRYPTON is aware
and acknowledges that in such case the Licensor will have the
right to enforce any and all GENTA JAGO IPR pursuant to the
License Agreements.
(c) Subject to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in the
preceding section, KRYPTON, upon its written request and at
its sole expense, shall be made an additional, but not
controlling party, in any such suit or other action where
necessary to obtain complete relief regarding the subject
infringement or violation.
10.5 Enforcement of Final Product IPR
(a) KRYPTON, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of
action to enforce, or otherwise abate the infringement of, or
defend third-party actions regarding, Final Product IPR, (ii)
to take, or refrain from taking, appropriate action to
enforce, or defend third-party actions regarding, Final
Product IPR, (iii) to control any litigation or other
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<PAGE>
enforcement action regarding Final Product IPR, and (iv) to
enter into, or permit, the settlement of any such litigation
or other enforcement action regarding Final Product IPR.
Notwithstanding anything contained in the preceding sentence,
KRYPTON shall not settle any suit or action or otherwise
consent to an adverse judgment in such suit or action without
the prior written consent of GENTA JAGO, which consent shall
not be withheld unreasonably. KRYPTON shall keep GENTA JAGO
informed on a regular basis on its taking or refraining from
taking, and the development of, any of the foregoing actions,
and shall consider, in good faith, the interests of GENTA JAGO
under this Agreement and in GENTA JAGO IPR, when taking any of
the foregoing actions.
(b) If KRYPTON does not, within one-hundred-and-twenty (120) days,
or any shorter delay imposed by any applicable law or
regulation or court or authority having jurisdiction, after
receiving notice of any infringement or violation of Final
Product IPR, or of any third-party action, claim or dispute
based upon or arising out of Final Product IPR, commence or
take an action to enforce, or otherwise abate such
infringement, or defend against such third-party action, then
GENTA JAGO shall have the right, but not the obligation, at
its sole expense, to take and control such action as it deems
appropriate to enforce, or abate the infringement of, or
defend against such third-party action, regarding Final
Product IPR. GENTA JAGO shall keep KRYPTON informed on a
regular basis of any such action and consider, in good faith,
the interests of KRYPTON under this Agreement when taking any
of the foregoing actions. KRYPTON, upon its written request
and at its sole expense, shall be made an additional, but not
controlling party, in any such suit or other action controlled
by GENTA JAGO where necessary to obtain complete relief
regarding the subject infringement or violation.
10.6 Application of Monies Recovered
Subject always to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in Section
10.4(c) and any right to receive any monies recovered therefrom as
provided for in the License Agreements, all monies recovered upon the
final judgment or settlement of any suit or other action under this
Sections 10.4 or 10.5 shall be applied as follows:
(i) to cover any and all costs and expenses (including attorney's
fees) incurred by the Party controlling such suit or other
action;
(ii) to cover any and all costs and expenses (including attorney's
fees) reasonably, or upon request of the controlling Party,
incurred by the other Party in connection with such suit or
other action, if any;
(iii) the remainder, if any, to the Party controlling any such suit
or other action.
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<PAGE>
ARTICLE 11
SUB-LICENSE AGREEMENT
11.1 GENTA JAGO hereby grants to KRYPTON the exclusive and sublicenseable
right and sub-license (hereinafter referred to as the "License") to
use, manufacture, have manufactured, sell and market the Final Products
in the Territory and to use the Patents, GEOMATRIX(R) Technology and
Know How exclusively for that purpose subject to the payment of the *
and the Royalties pursuant to Articles 13. and 14. below.
11.2 The rights of KRYPTON to grant any sub-license in any part of the
Territory shall be subject to the requirement that KRYPTON shall obtain
the written approval of GENTA JAGO prior to executing any such
sub-license agreement, which approval shall not unreasonably be
withheld, provided however, that no such approval by GENTA JAGO shall
be required for any sub-license to an Affiliate of KRYPTON .
11.3 In any event KRYPTON shall be responsible for any and all acts, deeds
and undertakings of its permitted sub-licensee(s) and KRYPTON and its
permitted sub-licensee(s) shall continue to be bound by all terms and
provisions under this Agreement throughout its term. In case that
KRYPTON sub-licenses rights and/or the License to any sub-licensee(s)
approved by GENTA JAGO, such sub-licensee(s) shall agree in writing to
any and all of KRYPTON's obligations and undertakings under this
Agreement, including but not limited to its confidentiality obligations
set forth hereinafter. Furthermore, KRYPTON undertakes that any and all
sub-license agreements shall provide for inspection and audit
provisions identical to the provisions set forth below in order to
enable GENTA JAGO to control and audit and receive any and all fees and
Royalties due as provided in this Agreement. KRYPTON shall provide
GENTA JAGO promptly with reasonable appropriate information on its
sub-licensee(s) and copies of all agreements with such sub-licensee(s)
(with only the commercial terms may be redacted).
ARTICLE 12
MANUFACTURING AND PRODUCT LIABILITY
12.1 In the event that KRYPTON, subject to Section 5.5 above, elects GENTA
JAGO, and GENTA JAGO expressly agrees to such manufacture, or any of
its Affiliates shall manufacture Final Products, then the Parties agree
to enter into good faith negotiations on and to use commercially
reasonable efforts to execute in due time a respective Manufacturing
and Supply Agreement, according to which GENTA JAGO or its Affiliates
shall undertake to manufacture and supply Final Products in sufficient
quantities to meet KRYPTON's requirements, at a sale price for such
Final Products manufactured equal to GENTA JAGO's * In the event and
for such period of time, that GENTA JAGO or its Affiliate manufactures
and supplies Final Product under such Manufacturing and Supply
Agreement, the Royalty Rate referred to in Section 14.1 below shall be
*
12.2 In the event that KRYPTON or any of its Affiliates or any third party
is elected pursuant
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
to Section 5.5 above to manufacture Final Product, then KRYPTON
undertakes and agrees that at all times the Specifications and to any
and all laws, rules and regulations imposed by any competent authority
on the manufacturing, marketing, distribution and sale of Final
Products are strictly adhered to by the manufacturer, and KRYPTON shall
during the entire term of this Agreement be solely and fully liable and
responsible for the compliance with all such laws, rules and
regulations when manufacturing, having manufactured, marketing,
distributing and selling Final Products itself and/or through
Affiliates or sub- licensee(s).
12.3 KRYPTON shall indemnify, defend and hold GENTA JAGO, its Affiliates and
the Licensor harmless from and against any losses, claims, liabilities,
costs and expenses (including reasonable attorney's fees) that may be
imposed upon or asserted against GENTA JAGO and/or its Affiliates
and/or the Licensor as a result of the marketing, distributing,
manufacture, use or sale of Final Products by or on behalf of KRYPTON,
its Affiliates, agents or sub-licensee(s), except for those claims,
liabilities, costs and expenses arising from gross negligence or
intentional misconduct on the part of GENTA JAGO, its Affiliates or the
Licensor.
ARTICLE 13
* PAYMENTS AND OTHER CONSIDERATION
13.1 As consideration for GENTA JAGO's preliminary development efforts for
the Prototype Formulation performed prior to the execution of this
Agreement as referred to in Section 2.1 above, KRYPTON undertakes to
pay to GENTA JAGO an initial *, payable upon execution of this
Agreement.
13.2 As consideration for the License granted by GENTA JAGO to KRYPTON under
this Agreement and in consideration of certain major development steps
achieved hereunder, KRYPTON undertakes to pay to GENTA JAGO *:
(a) * KRYPTON's receipt of GENTA JAGO's notice referred to in
Section 7.1 above; and
(b) *; and
(c) * for the Final Product; and
(d) * for the Final Product.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
13.3 The Parties agree that an * as set forth in Section 14.4 below.
13.4 Unless otherwise agreed by the Parties in writing, all payments under
this Article 13. shall be made in United States Dollars and to such
place or account as GENTA JAGO reasonably requests from time to time in
writing.
ARTICLE 14
ROYALTIES
14.1 During a period commencing upon the first commercial sale of Final
Product in each country of the Territory and ending upon the earlier of
(i) the fifteenth (15th) anniversary of the first commercial sale of
Final Product in such country of the Territory, and (ii) the expiration
of the last of the Patents covering Final Product in such country of
the Territory (hereinafter referred to as the "Royalty Term"), and in
further consideration of the License granted to KRYPTON by GENTA JAGO,
KRYPTON shall pay to GENTA JAGO a royalty (hereinafter referred to as
the "Royalty") of an amount equal to * of the Final Product in the
Territory.
14.2 The Parties agree that * shall be applicable for the first time on
sales of such Final Product in such country of the Territory after the
beginning of the calendar quarter immediately following the first
commercial sale of such Competitive Product.
14.3 Royalties shall be payable on a quarterly basis. KRYPTON shall remit to
GENTA JAGO within six (6) weeks after the end of each calendar quarter
the amount of Royalty due with respect to Net Sales and/or Gross
Margin, as the case may be, achieved in the preceding quarter,
beginning with the calendar quarter in which the first commercial sale
of the Final Product is made in any country of the Territory. KRYPTON
shall deliver to GENTA JAGO, along with such remittance of Royalty
payments, a detailed statement (hereinafter referred to as the "Royalty
Report") of the Net Sales and/or Gross Margin, as the case may be, of
the Final Product on a country-by-country basis to which the Royalty
payment relates.
14.4 All Royalty Reports shall be prepared in accordance with generally
accepted accounting principles consistently applied from applicable
period to period and shall be certified by an officer of KRYPTON as
being so prepared, true, accurate and correct.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
14.5 In recognition of the * by KRYPTON to GENTA JAGO prior to the
commercial sale of the Final Products, the amount of Royalty payments
due to GENTA JAGO under Article 14.2 above with respect to each
calendar quarter shall be * until such time as the aggregate amount of
all *
14.6 Unless otherwise agreed by the Parties in writing, payments of
Royalties shall be made in United States Dollars and to such place or
account as GENTA JAGO reasonably requests from time to time in writing.
Any conversions into United States Dollars from the currency in which
the corresponding Net Sales and/or Gross Margin for such Royalties were
made, are to be calculated as using the average closing buying rate for
such currency quoted in the continental terms method of quoting
exchange rates (local currency per USD 1) published in the Wall Street
Journal on the last business day of the applicable reporting period
covered by such Royalty Report.
ARTICLE 15
INSPECTION AND AUDIT
15.1 During the term of this Agreement and during a period of twelve (12)
months after its expiration or termination for any reason, upon the
written request of GENTA JAGO and not more than once each calendar
year, KRYPTON shall permit an independent certified public accountant
of internationally recognized standing selected by GENTA JAGO, at GENTA
JAGO's expense, to have access during regular business hours to such of
the records of KRYPTON and its Affiliates as may be reasonably
necessary to verify the accuracy of the Royalty Reports for any year
ending not more than thirty-six (36) months prior to the date of such
request. The accounting firm shall disclose to GENTA JAGO only whether
the Royalty Reports and records of KRYPTON and its Affiliates and the
amount of Royalties actually paid are correct or not and the specific
details concerning any discrepancies; no other information shall be
shared. The Parties agree to accept such written audit report as final
and binding upon them.
15.2 If such independent accounting firm correctly concludes that additional
Royalties were owed during any such period audited, KRYPTON shall pay
such additional Royalties within ten (10) days of the date GENTA JAGO
delivers to KRYPTON such accounting firm's written report so
concluding. The fees and expenses charged by such accounting firm with
respect to such audit shall be paid by GENTA JAGO; provided however, if
any such audit correctly discloses that Royalties payable by KRYPTON
for the audited period are more *, then KRYPTON shall pay all
reasonable fees and expenses charged by such accounting firm with
respect to such audit.
15.3 GENTA JAGO shall treat all financial information subject to review
under this Article 15. as confidential and subject to the
confidentiality obligations in Article 16. below.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
ARTICLE 16
CONFIDENTIALITY
16.1 Confidential Information. KRYPTON shall maintain in confidence all
Know-How and other information of GENTA JAGO (including samples)
disclosed by GENTA JAGO and identified as, or acknowledged to be,
confidential (the "Confidential Information"), and shall not use,
disclose or grant the use of the Confidential Information except on a
need- to-know basis to its directors, officers, employees, agents,
consultants, clinical investigators or other permitted contractors, to
the extent such disclosure is reasonably necessary in connection with
KRYPTON's activities as expressly authorized by this Agreement. To the
extent that disclosure is authorized by this Agreement, prior to
disclosure, KRYPTON hereto shall obtain agreement in writing of any
such person to hold in confidence and not make use of the Confidential
Information for any purpose other than those authorized by this
Agreement. KRYPTON shall notify GENTA JAGO promptly upon the discovery
of the unauthorized use or disclosure of the Confidential Information.
16.2 Permitted Disclosures. The obligations of confidentiality and non-use
contained in Section 16.1 above shall not apply to the extent that (a)
KRYPTON (i) is required to disclose information by law, regulation or
order of a governmental agency or a court of competent jurisdiction, or
(ii) is required to disclose information to any governmental agency for
purposes of obtaining approval to test or market Final Product,
provided in each case that KRYPTON shall give GENTA JAGO written notice
thereof and sufficient opportunity to object to any disclosure or to
request confidential treatment thereof, or (b) KRYPTON can demonstrate
that (i) the disclosed information was public knowledge at the time of
such disclosure to it, or thereafter became public knowledge, other
than as a result of actions of KRYPTON, its directors, officers and
employees in violation hereof; (ii) the disclosed information was
rightfully known by KRYPTON (as shown by its written records) prior to
the date of disclosure to it by GENTA JAGO hereunder; (iii) the
disclosed information was disclosed to KRYPTON on an unrestricted basis
from a source unrelated to any party to this Agreement and not under a
duty of confidentiality to GENTA JAGO or the Licensor; or (iv) the
disclosed information was independently developed by KRYPTON without
the use of Confidential Information disclosed by GENTA JAGO.
16.3 Terms of this Agreement. Except as otherwise provided in Section 16.2
above, neither Party shall disclose any terms or conditions of this
Agreement to any third party (other than the Licensor) without the
prior consent of the other Party. Notwithstanding the foregoing, prior
to the execution of this Agreement, the Parties shall agree upon the
substance of information that can be used to describe the terms of this
transaction, and the Parties may disclose such information only without
the other Party's consent. Notwithstanding the foregoing, prior to the
execution of the Agreement, the Parties shall agree upon the substance
of information that can be used to describe the terms of this
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<PAGE>
transaction, and the Parties may disclose such information without the
other Party's consent.
16.4 Term of Confidentiality. The confidentiality obligations under this
Article 16 shall be effective during the term of this Agreement and for
a period of ten (10) years after the expiration or earlier termination
hereof.
16.5 Injunctive Remedies. GENTA JAGO shall be entitled to injunctive
remedies and relief against KRYPTON and its Affiliates and any third
parties for any breach or threatened breach of the confidentiality
obligations under this Article 16.
16.6 Damages. In the event of a breach of the confidentiality provisions
under this Article 16 by KRYPTON, its Affiliates or its directors,
officers, employees or any other person who were given access to the
Confidential Information by KRYPTON, GENTA JAGO shall be entitled to
receive from KRYPTON any and all actual costs and damages caused by
such breach.
16.7 Public Announcements. Neither Party shall make any press releases or
other public announcements or disclosures regarding the execution and
the existence of this Agreement or any activities conducted hereunder,
including development results, filings and registrations, without the
prior written consent of the other Party, except for such public
disclosure as may be necessary in the opinion of any party's legal
advisor in order not to be in violation of or default under any
applicable law, regulation or governmental order, in such later event
the party having an obligation to disclose shall submit to the other
party a draft of the required announcement and shall give the other
party the opportunity to request reasonable amendments and
modifications of such required announcement.
ARTICLE 17
TERM AND TERMINATION
17.1 Term and Expiration
(a) This Agreement shall expire on a country-by-country basis upon
the expiration of the Royalty Term.
(b) Upon the expiration of this Agreement in each country of the
Territory pursuant to Section 17.1 (a) above and payment of all
fees, including but not limited to the *, and all Royalties and
other payments by KRYPTON due GENTA JAGO under this Agreement,
the License shall be deemed to be a perpetual, fully paid-up and
royalty-free license for such Final Product and each such country
of the Territory.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
17.2 Termination Prior to Registration
During the development, test, study and registration phases as
specified in Articles 3. through 8. above, and until the first
successful registration approval of any Final Product by any Regulatory
Authority, this Agreement may be terminated in accordance with the
provisions set forth in Sections 3.6, 4.6, 6.5, 7.5 and 8.6 above.
17.3 Termination for Cause
During the entire term of this Agreement either Party may terminate
this Agreement by giving to the other Party written notice to that
effect, if any of the following events occur:
(a) the other Party is in default or in breach of a term or provision
hereof and such default or breach continues and is not remedied
within thirty (30) days upon the other Party's written request to
remedy such default or breach; or
(b) the other Party shall commit a breach of any of the
confidentiality provisions of Article 16. above; or
(c) the other Party goes into liquidation, voluntarily or otherwise,
other than for the sole purpose of reorganization, or goes into
bankruptcy or makes an assignment for the benefit of creditors,
or in the event of a receiver being appointed of the other
Party's property or parts thereof.
17.4 Effect of Termination
(a) If KRYPTON elects to so terminate the Agreement under Section
17.2 above prior to filing of the ANDA in the United States,
then: (i) such termination shall be without penalty or liability
to KRYPTON; (ii) all rights and licenses granted by GENTA JAGO
hereunder shall revert to GENTA JAGO with respect to such
country(ies) so terminated, (iii) KRYPTON be relieved of any
payments that are scheduled or may be made in the future under
this Agreement, (iv) KRYPTON shall return to GENTA JAGO all
materials, documentation, information, data and other things
furnished by GENTA JAGO in connection with this Agreement,
including without limitation any and all Confidential
Information, together with all copies thereof in KRYPTON's
possession or under its control, (v) all Registrations pertaining
to the marketing of the Product shall be transferred to and be
owned by GENTA JAGO as to the affected country(ies) and the data
generated under this Agreement shall be provided to and
thereafter may be freely used by GENTA JAGO to develop,
manufacture and market the Product; and (vi) GENTA JAGO and its
Affiliates shall thereafter be entitled to exercise such rights
as they may have under their own license agreements to make, have
made, use or sell the Product in the country(ies) so terminated
without compensation or obligation to KRYPTON; provided, that the
foregoing rights under (iv) and (vi) shall not create or imply
any right or license under any patent rights, copyright rights,
trademarks or trade names, know-how, or other intellectual
property rights owned or controlled by KRYPTON or its Affiliates.
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<PAGE>
(b) If KRYPTON elects to so terminate this Agreement subsequent to
the filing of the ANDA in the United States, then: (i) such
termination shall be without penalty or liability to KRYPTON;
(ii) all rights and licenses granted by GENTA JAGO hereunder
shall revert to GENTA JAGO with respect to such country(ies) so
terminated; (iii) KRYPTON shall be relieved of any payments that
are scheduled or may be made in the future under this Agreement,
(iv) KRYPTON shall return to GENTA JAGO all materials,
documentation, information, data and other things furnished by
GENTA JAGO in connection with this Agreement, including without
limitation any and all Confidential Information, together with
all copies thereof in KRYPTON's possession or under its control,
(v) GENTA JAGO and its Affiliates shall thereafter be entitled to
make, have made, use or sell the Product in the country(ies) so
terminated (and, provided, that the foregoing shall not create or
imply any right or license under any patent rights, copyright
rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by KRYPTON or
its Affiliates); (vi) all Registrations pertaining to the Product
shall be transferred to and be owned by GENTA JAGO as to the
affected country(ies) and the data generated hereunder shall be
provided to and thereafter may be freely used by GENTA JAGO to
develop, manufacture and market the Product; and (vii) GENTA JAGO
shall pay to KRYPTON the same royalty, which shall be paid in the
same manner and subject to the same terms and conditions as would
otherwise have applied to KRYPTON, as KRYPTON would otherwise
have paid (absent such termination) hereunder to GENTA JAGO on
Net Sales (or on the Gross Margin of such Net Sales, as the case
may be) of the Product in the country(ies) to which such
termination applies (with such royalty to be paid by GENTA JAGO
and its Affiliates in each such country until expiration of the
Royalty Term in each such country), until such time as the
royalties paid to KRYPTON equal the aggregate amount that had
been paid by KRYPTON to GENTA JAGO prior to such termination
under the Sections 3.5, 4.3, 5.2, 6.3, 7.3,8.3, 9.2 and 13., at
which time the royalty rate then prevailing on Net Sales (or on
the Gross Margin of such Net Sales, as the case may be) in the
United States shall be reduced by two percent (2 %) (but shall
not be reduced for sales outside the United States).
(c) Otherwise the termination of this Agreement shall be without
prejudice to any rights and obligations of either Party accrued
prior to the effective date of termination. KRYPTON shall
forthwith make all payments due and outstanding to GENTA JAGO at
the date of termination. Except as explicitly otherwise stated in
this Agreement, GENTA JAGO shall not be obligated to refund upon
termination of this Agreement to KRYPTON any payments, including
without limitation the *, made by KRYPTON to GENTA JAGO prior to
such termination pursuant to the provisions of this Agreement.
(d) The termination of this Agreement pursuant to Section 17.3 above
by either Party shall not limit remedies which may be otherwise
available in law or equity to either Party.
- - - -----------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
17.5 Early Termination of the License Agreements
(a) In the event that the License Agreements are terminated prior to
the expiration of the last to expire of the Patents licensed to
GENTA JAGO in the Territory, then the License granted hereunder
to KRYPTON shall also terminate upon KRYPTON's receipt of the
respective termination notice from the Licensor. KRYPTON may give
written notice to the Licensor of KRYPTON's desire to continue
the License granted under this Agreement within sixty (60) days
as of KRYPTON's receipt of the Licensor's notice referred to
above.
(b) In the event that KRYPTON timely notifies the Licensor of its
desire to continue the License granted under this Agreement, the
Licensor shall have the right, at its sole discretion, to elect
to assume in writing within sixty (60) days upon the Licensor's
receipt of KRYPTON's notice any and all rights of GENTA JAGO
under this Agreement and to promptly cure all defaults of GENTA
JAGO under this Agreement, if any.
(c) In the event that the Licensor does not timely gives notice to
KRYPTON and cures all of GENTA JAGO's defaults hereunder pursuant
to Section 17.5(b) above, then KRYPTON shall promptly assume in
writing any and all rights and obligations of GENTA JAGO under
the License Agreements with the Licensor, but with regard to the
rights encompassed by the License granted hereunder only, and
promptly cure all defaults of GENTA JAGO under the License
Agreements with regard to the rights encompassed by the License
granted hereunder only, if any.
(d) Notwithstanding anything contained in this Section 17.5, no
action taken by the Licensor and/or KRYPTON to continue or not to
continue the License shall relieve GENTA JAGO from any liability
for any uncured defaults under this Agreement or the License
Agreements, and such action by the Licensor and/or KRYPTON shall
be without prejudice to any other rights or remedies the Licensor
and/or KRYPTON may have in law or equity.
ARTICLE 18
WARRANTIES
18.1 GENTA JAGO shall carry out and undertake the studies and tests specified in
this Agreement in a careful and diligent manner. GENTA JAGO agrees to
carefully choose, instruct and supervise any employees, officers,
Affiliates or third parties to be chosen by GENTA JAGO pursuant to this
Agreement, who are involved with the tests and studies. Nothing in this
Agreement shall be construed as a representation made, or warranty given,
by GENTA JAGO that any development performed by or for GENTA JAGO under
this Agreement will be successful in whole or in part, or that any product,
including Final Product, which may be developed, will be successful in the
commercial marketplace. Furthermore, GENTA JAGO makes no representation or
warranty, express or implied, with respect to GEOMATRIX(R)Technology and/or
Know-How, including without limitation, any warranty of completeness,
accuracy, merchantability or fitness for a particular purpose thereof.
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<PAGE>
18.2 GENTA JAGO represents and warrants that it has all rights regarding
Patents, GEOMATRIX(R)Technology and Know-How necessary to grant the
License hereunder. Notwithstanding the preceding sentence, GENTA JAGO
does not assume any responsibility and makes no warranty that the
performance of this Agreement and any product developed hereunder,
including Prototype Formulation(s) and Final Products, do not infringe
any third party's patents, patent applications or other intellectual
property rights. Notwithstanding the preceding sentence, GENTA JAGO
represents and warrants that, as of the effective date of this
Agreement, it is not aware and has not knowledge of any such
infringement of any third party rights. If, however, during the course
of this Agreement either Party discovers that the Prototype
Formulation(s) and/or the Final Products infringe or may infringe any
third party's intellectual property rights, it shall promptly inform
the other Party thereof and the Parties shall meet to discuss the
course of action to be taken with regard thereto.
18.3 Nothing in this Agreement shall be construed as a representation made,
or warranty given by GENTA JAGO that any patent will issue based upon
any pending patent application encompassed by the term Patents, and
that any patent encompassed by the term Patents which issues will be
valid or enforceable.
18.4 GENTA JAGO assumes no liability or responsibility for any damages
caused to KRYPTON, third parties, animals and/or the environment by the
manufacturing, marketing or use of the Prototype Formulations or Final
Products or the active ingredient contained therein, except to the
extent that any of the above are attributable to the gross negligence
or willful misconduct of GENTA JAGO in performing its obligations
hereunder.
18.5 Subject to the specific representations and warranties given and
specific disclaimers of representations and warranties included in this
Article 18, and further subject to anything to the contrary contained
in this Agreement, either Party shall, as to third parties, be
indemnified and held harmless by the other Party from and against any
and all losses, liabilities and damages arising from any claim, action
or other proceeding by any third party relating to any acts or
omissions of the other Party, its directors, officers, employees or
agents, or the gross negligence or willful misconduct of such other
Party, its directors, officers, employees or agents in performing any
of its obligations under this Agreement.
18.6 Any liability, warranty and undertaking contained herein shall be
limited to the payment by either Party for direct damages to the other
Party and in any event, neither Party shall be liable to the other
Party for any special, indirect, punitive or consequential damages
and/or loss of profits or anticipated profits, respectively.
18.7 KRYPTON shall, at its own expense, purchase from an insurance company
of its choice and shall maintain during the entire term of this
Agreement an appropriate and customary policy of general liability and
product liability insurance covering its responsibilities regarding
Prototype Formulation(s) and Final Products developed, manufactured,
marketed
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<PAGE>
and sold under this Agreement and the Active Ingredient contained
therein and the use thereof. Upon request, KRYPTON shall provide GENTA
JAGO with evidence that such insurances are existing and are
maintained.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Agreement: The terms, covenants, conditions and provisions
contained in this Agreement, including its Appendices referred to
herein, constitute the total and complete agreement of the Parties and
supersede all prior understandings and agreements hereto made, and
there are no other representations, understandings or agreements
relating to the subject matter hereof. The provisions of this Agreement
may not be waived, altered, amended or repealed in whole or in part
except by the written consent of both of the Parties to this Agreement.
19.2 Assignment: This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right
or obligation hereunder be assigned or transferred by either Party,
other than to an Affiliate of such Party, without the consent of the
other Party; provided however, that either Party may, without such
consent, assign this Agreement and its rights and obligations hereunder
in connection with the transfer or sale of all or substantially all of
its business, or in the event of its merger, consolidation, change
in control or similar transaction; and provided further that GENTA JAGO
may without the consent of KRYPTON assign any and all of its rights and
obligations hereunder to the Licensor and/or any of the Licensor's
Affiliates. Any permitted assignee shall assume all obligations of its
assignor under this Agreement or under the respective rights or
obligations actually assigned.
19.3 Successors: This Agreement and all rights hereunder shall ensure to the
benefit of all successors and assigns of both Parties.
19.4 Notices: Any consent, notice or report required or permitted to be
given or made under this Agreement by one Party to the other shall be
in English and in writing, delivered personally or by courier service
or by facsimile (promptly confirmed by personal delivery or courier
service) addressed to the other Party at its address indicated below,
or to such other address as shall have been notified in writing to the
sending Party by the receiving party from time to time, and shall take
effect upon receipt by the addressee.
IF TO KRYPTON: KRYPTON LTD.
East Wing, Second Level
Hadfield House
Library Street
Gibraltar
attn.: PRESIDENT
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<PAGE>
WITH COPIES TO: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
attn.: COMPANY SECRETARY
AND: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
IF TO GENTA JAGO: GENTA JAGO Technologies B.V.
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz, Switzerland
attn.: MANAGEMENT COMMITTEE
WITH COPIES TO: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
8002 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
AND: PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
attn.: THOMAS E. SPARKS, JR., ESQ.
19.5 Independent Contractors: It is expressly agreed that the Parties shall
be independent contractors and that the relationship between the
Parties shall not constitute a partnership, joint venture or agency.
Neither Party 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 Party, without the prior written
consent of the other Party to do so.
19.6 Severability: Each Party hereby acknowledges that it does not intend to
violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries.
Should one or more provisions of this Agreement be or become invalid,
the Parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their
economic effect are sufficiently similar to the invalid provisions that
it can be reasonably assumed that the parties would have entered into
this Agreement with such provisions. In case such provisions cannot be
agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as
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<PAGE>
a whole, unless the invalid provisions are of such essential importance
to this Agreement that it is to be reasonably assumed that the Parties
would not have entered into this Agreement without the invalid
provisions.
19.7 Force Majeure: Neither Party hereto shall be held liable or responsible
to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any
term of this Agreement when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party
including but not limited to fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of God
or acts, omissions or delays in acting by any governmental authority or
the other Party hereto.
19.8 Interest: In the event any amount due and payable under this Agreement
is not paid by the due date, then the Party owing such amount shall pay
to the creditor, without being requested by the other Party, interest
on the total outstanding amount at the rate equal to the London
Interbank Offered Rate ("LIBOR"), as published in the Wall Street
Journal (Europe) on the date that such payment falls due, increased by
three percent (3%), in United States Dollars and adjusted on the first
day of every calendar quarter.
19.9 Headings: The titles and headings used in this Agreement are intended
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
19.10 Waiver: The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be
deemed a waiver of any other right hereunder or of any other breach or
failure by said other Party whether of a similar nature or otherwise.
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<PAGE>
19.11 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
ARTICLE 20
DISPUTE RESOLUTION AND ARBITRATION
20.1 In the event of any dispute arising between the Parties concerning this
Agreement, GENTA JAGO and KRYPTON agree that in the first place they
shall meet for good faith discussions in an attempt to negotiate an
amicable solution.
20.2 Any dispute arising between the Parties out of or in connection with
this Agreement, or the interpretation, breach or enforcement thereof,
which cannot be amicably resolved pursuant to Section 20.1 above within
two (2) months as from the first appearance of such dispute, shall be
finally resolved by binding arbitration. Whenever a Party shall decide
to institute arbitration proceedings, it shall give written notice to
that effect to all of the other Parties. Any arbitration hereunder
shall be conducted under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce. Any such arbitration shall be
conducted in the English language by a panel of three (3) arbitrators
appointed in accordance with such rules, and shall be held in PARIS,
FRANCE. The arbitrators shall have the authority to grant specific
performance, and to allocate among the parties the costs of arbitration
in such equitable manner as they determine. Judgment upon the award so
rendered may be entered in any court having jurisdiction or application
may be made to such court for judicial acceptance of any award so
rendered and an order of enforcement, as the case may be. Whether a
claim, dispute or other matter in question would be barred by the
applicable statute of limitations, which also shall apply to any
arbitration under this section, shall be determined by binding
arbitration pursuant to this section.
20.3 Notwithstanding anything contained in this Article 20, either Party may
seek preliminary or injunctive measures or relief in any competent
court having jurisdiction.
ARTICLE 21
APPLICABLE LAW
The Parties hereto agree that this Agreement, all transactions executed
hereunder and all relationships between the Parties in connection
therewith shall be construed under and be governed by the laws of
Switzerland without reference to the conflict of law principals
thereof, and shall not be governed by the United Nations Convention on
Contracts for the International Sale of Goods.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 31st day
of October 1996.
GENTA JAGO TECHNOLOGIES B.V.
/s/ Thomas H. Adams /s/ Jacques Gonella
- - - ------------------- -------------------
by: Dr. Thomas H. Adams by: Dr. Jacques Gonella
its: Managing Director its: Managing Director
KRYPTON LTD.
/s/
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by:
its:
The Licensor, Jagotec AG, hereby agrees to be bound by the obligations contained
in Section 17.5 of this Agreement.
JAGOTEC AG
/s/ Jacques Gonella
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by: by:
its: its:
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EXHIBIT 10.93
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT & SUB-LICENSE AGREEMENT
*
This DEVELOPMENT AND SUB-LICENSE AGREEMENT (this "AGREEMENT"), effective from
the date last written hereunder, is entered into between GENTA JAGO TECHNOLOGIES
B.V., a Dutch company, having a place of business at Grundstrasse 12, 6343
Rotkreuz, Switzerland (hereinafter referred to as "GENTA JAGO"), and KRYPTON
LTD., a Gibraltar limited company, having a place of business at East Wing,
Second Level, Hadfield House, Library Street, Gibraltar (hereinafter referred to
as "KRYPTON")
WITNESSTH:
WHEREAS, GENTA JAGO has expertise in the development of controlled-release
formulations for pharmaceutical agents and in particular has exclusive rights to
proprietary know-how and technology generally known and commercialized under the
registered trademark GEOMATRIX(R) and as described and embodied in the Patents
(as defined below) with respect to a Bioequivalent Product (as defined below) to
*; and
WHEREAS, KRYPTON is a company which markets pharmaceutical products and is
interested in developing Prototype Formulations (as defined below) for the Final
Product (as defined below) and in seeking the approval of Regulatory Authorities
(as defined below) to manufacture, or have manufactured and market the Final
Product in the Territory (as defined below); and
WHEREAS, GENTA JAGO is prepared to conduct or have conducted certain studies and
the development of the Prototype Formulations and Final Product; and
WHEREAS, GENTA JAGO is prepared to grant to KRYPTON under the terms and
conditions set forth hereafter a sub-license under the Patents, GEOMATRIX(R)
Technology and Know-How (as defined below) to conduct studies relating to the
Prototype Formulations and, upon receipt of approval by the Regulatory Authority
(as defined below), to manufacture or have manufactured, market and sell the
Final Product in the Territory.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
Parties hereby agree as follows:
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the following meanings:
1.1 "Active Ingredient" shall mean *.
1.2 "Affiliate" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct
or indirect beneficial ownership of more than 50% of the voting power
of, or more than 50% of ownership interest in, such corporation,
partnership or other entity.
1.3 "ANDA" shall mean any Abbreviated New Drug Application filed with the
FDA, by or for KRYPTON requesting authorization to manufacture, have
manufactured or sell the Final Product in the United States of America,
or any equivalent application to a Regulatory Authority in any other
country of the Territory.
1.4 "Bioequivalent Product" shall mean a drug product meeting the
bioequivalence requirements imposed by the FDA for in vitro and/or in
vivo testing as set forth in the regulations of the FDA at 21 C.F.R.
ss.320 ("AB Equivalent Rating"), as they may be amended from time to
time.
1.5 "Competitive Product" shall mean any product other than the Final
Product or the Originator which is a Bioequivalent Product of the
Originator and is marketed and sold in the Territory on a
country-to-country basis.
1.6 "FDA" shall mean the U.S. Federal Food and Drug Administration and any
successor agency thereof.
1.7 "Final Product" shall mean the pharmaceutical orally-administered
controlled-release formulation(s) containing the Active Ingredient,
presented as a compressed tablet developed pursuant to this Agreement,
based on the GEOMATRIX(R) Technology and being a Bioequivalent Product
of the Originator, of a Competitive Product or of any other product
containing the Active Ingredient.
1.8 "GEOMATRIX(R) Technology" shall mean the oral controlled-release drug
delivery and related technology licensed to GENTA JAGO by the Licensor
which utilizes a hydrophilic drug-containing matrix tablet which
controls the release of the drug through the use of one or more barrier
layers.
1.9 "Gross Margin" shall mean, with respect to any Final Product, Net
Sales less only the direct cost of such Final Product sold, i.e. (a)
raw material cost, (b) direct labor cost, (c) reasonably directly
allocatable overhead cost (e.g. energy cost), (d) packaging and
labeling cost, and (e) other costs directly associated with the
manufacturing of such Final Product (e.g. quality control). No other
deductions from Net Sales are permissible for the calculation of Gross
Margin, including without limitation, sales, marketing and distribution
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
costs. Alternatively, in the event that KRYPTON sub-contracts the
manufacturing of any Final Product to a third party, then "Gross
Margin" with respect to such Final Product shall mean Net Sales less
only the manufacturing costs as invoiced by such manufacturing third
party sub-contractor and actually paid by KRYPTON.
1.10 "Know-How" shall mean all information and data, which are not generally
known including, but not limited to, patent claims and related
information not yet disclosed to the public, formulae, procedures,
protocols, techniques and results of experimentation and testing,
which (a) relate to the GEOMATRIX(R)Technology, any Prototype
Formulation or any Final Product, or (b) are necessary or useful to
develop, make or use any Prototype Formulation, or (c) are necessary
or useful to develop, seek regulatory approval, make, use or sell any
Final Product, all to the extent presently or during the term of this
Agreement licensed or otherwise available to and at the free
disposition of GENTA JAGO.
1.11 "License Agreements" shall mean the license agreements entered into by
and between GENTA JAGO and the Licensor, under which the Licensor
granted GENTA JAGO the rights in the Patents, the Know-How and the
GEOMATRIX(R) Technology, which are the subject matter of the
sub-license referred to in Article 11. below.
1.12 "Licensor" shall mean Jagotec AG, a Swiss corporation, having its
place of business at Seestrasse 91, CH-6052 Hergiswil, Switzerland.
1.13 "Net Sales" shall mean, with respect to any Final Product, the
invoiced sales price of such Final Product in finished package form
invoiced by KRYPTON and/or its Affiliates to any independent customer
other than KRYPTON's Affiliates, less (a) credits, allowances,
discounts and rebates to, and chargebacks from the account of, such
independent customers for spoiled, damaged, out-dated, rejected or
returned Final Product; (b) actual freight and insurance costs
incurred and paid by KRYPTON and/or its Affiliates in transporting
such Final Product in final form to such customers; (c) customary
cash, quantity and trade discounts and other price reduction programs;
(d) sales, use, value- added and other direct taxes (but excluding any
income tax) actually incurred and paid by KRYPTON and/or its
Affiliates; and (e) customs duties, surcharges and other governmental
charges incurred by KRYPTON and/or its Affiliates in connection with
the exportation or importation of such Final Product in final form.
1.14 "Originator" shall mean * actually marketed in the United States by *
or any other pharmaceutical products containing the Active Ingredient
and being marketed in the Territory
1.15 "Patents" shall mean all patents and patent applications heretofore or
hereafter filed or having presently or in the future legal force in
any country of the Territory, licensed by the Licensor to GENTA JAGO
which claim the GEOMATRIX(R)Technology or the process to manufacture
Prototype Formulations and/or Final Product by use of, or the use of,
the GEOMATRIX(R)Technology, including but not limited to the patents
and patent applications listed in APPENDIX A hereto, together with all
patents that in the future issue therefrom in any country of the
Territory, including utility, model and design patents and
certificates of invention, and all divisionals, continuations,
continuations-in-part, reissues,
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
renewals, extensions, substitutions, confirmations or additions to any
such patents and patent applications, all to the extent presently or
during the term of this Agreement licensed or otherwise available to
and at the free disposition of GENTA JAGO.
1.16 "Prototype Formulations" shall mean the oral delivery system for the
Active Ingredient based on the GEOMATRIX(R) Technology that reasonably
meet the Specifications.
1.17 "Regulatory Authority" shall mean the FDA or any equivalent competent
regulatory authority in any other countries of the Territory.
1.18 "Specifications" shall mean the Products specifications set forth in
APPENDIX B attached hereto.
1.19 "Territory" shall mean *.
ARTICLE 2
DEVELOPMENT PREAMBLE
2.1 At the date of execution of this Agreement, GENTA JAGO has performed
certain preliminary development efforts for the Prototype Formulation.
This development is hereby incorporated in this Agreement.
2.2 GENTA JAGO undertakes to conduct the development of the Prototype
Formulation(s) and the Final Product in an efficient and professional
manner. KRYPTON shall actively support GENTA JAGO regarding the
development and studies to be executed by GENTA JAGO as may be
reasonably required by GENTA JAGO from time to time. In particular,
KRYPTON shall provide information reasonably requested by GENTA JAGO
relating to the Originator and to the Active Ingredient for the
purposes of carrying out this development, including, but not limited
to, physico-chemical characteristics, safe-handling instructions,
in-vitro analytical methods, degradation products and standards and
analytical methods therefore. Additionally, KRYPTON shall provide to
GENTA JAGO requested data and adequate quantities of samples of the
Originator for the purposes of conducting the Feasibility Study.
KRYPTON, however, shall not be required to provide information
regarding the Originator which is not in the public domain, unless
KRYPTON is duly authorized to possess and disclose such non-public
information. Any costs and expenses incurred by KRYPTON in connection
with such support shall be borne by KRYPTON.
2.3 Due to the nature and complexity of the development and the respective
studies as set forth in this Agreement, the Parties recognize and
acknowledge that problems and delays may occur which render the time
limits set forth in this Agreement and/or the time-frame of the
development as mutually agreed upon difficult or impossible to
accomplish. The Parties agree that they shall immediately inform each
other in writing in the event that significant problems or delays are
encountered or envisaged during the course of the development and
shall discuss such problems and delays in order to agree on a mutually
acceptable revision of the time limits set in this Agreement and/or
the time-frame as previously mutually agreed upon.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
2.4 Together with the notice from KRYPTON referred to in Section 3.1
below, KRYPTON, or its designated supplier, shall supply GENTA JAGO on
a free-of-charge basis with sufficient quantities of Active Ingredient
to perform the development program intended hereunder. Such supplies
shall be accompanied with respective certificates of analysis and
conformity. GENTA JAGO shall use all Active Ingredient supplied to it
by KRYPTON hereunder solely and exclusively in connection with the
development program as mutually agreed upon.
Alternatively, KRYPTON may request that GENTA JAGO obtain a supply of
Active Ingredient from a reputable source having the necessary
regulatory clearances in place to allow future marketing of the Final
Product in the Territory. Should KRYPTON so require and GENTA JAGO so
agree, the chosen supplier's facilities, processes and procedures
shall be audited by GENTA JAGO, or a third party mutually acceptable
to KRYPTON and GENTA JAGO, in order to ensure compliance with the
appropriate regulatory requirements. KRYPTON shall * of GENTA JAGO
incurred in carrying out, or having carried out such audit. GENTA JAGO
shall provide KRYPTON with a copy of the audit report within thirty
(30) days as of the completion of the audit.
2.5 In the event that the Parties mutually agree that GENTA JAGO becomes
responsible for the supply of Active Ingredient, KRYPTON shall * GENTA
JAGO for any and all shipping and transportation costs, import duties,
taxes or other costs incurred by GENTA JAGO in connection with such
supply of Active Ingredient upon receipt of GENTA JAGO's respective
invoices.
ARTICLE 3
FEASIBILITY STUDY
3.1 KRYPTON shall initiate the development program contemplated hereunder
as soon as technically feasible and within the time limits set forth
in the mutually accepted development program by giving written notice
to that effect to GENTA JAGO. Not later than two (2) months after
receipt of (i) such notice, (ii) a * and (iii) the Active Ingredient,
GENTA JAGO shall commence the feasibility study under this Article 3.
and shall use its commercially reasonable efforts to develop the
Prototype Formulations. Up to three (3) of the developed Prototype
Formulations shall be chosen by mutual agreement by the Parties for
further study and development.
The Parties recognize that the Specifications mutually agreed uopn
eventually will need to be updated with more detailed specifications
for the Final Product in the course of the development, and in such
case the Parties agree to mutually agree on any reasonable amendment of
the Specifications.
3.2 The development of the Prototype Formulations shall include, but not
necessarily be limited to, the following elements:
(a) Development and establishment of analytical methodology specific
to the
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
characterization of such Prototype Formulations;
(b) Qualitative and quantitative characterization of such Prototype
Formulation;
(c) In-vitro release profile characterization of such Prototype
Formulations and the Originator by using appropriate methodology
mutually agreed to by the Parties;
(d) Elaboration of pre-scale up procedures and the production of
samples (2000 units +/- 10%) of the chosen Prototype Formulations
for evaluation by KRYPTON, and for use in the Pilot
Pharmacokinetic Study under Article 4. below; and
(e) Accelerated stability testing of Prototype Formulations to
provide *.
3.3 GENTA JAGO will ensure the use of generally accepted standards of Good
Laboratory and Manufacturing Practices during the performance of the
feasibility study.
3.4 Within thirty (30) days of the completion of the feasibility study,
GENTA JAGO shall supply KRYPTON with a report (the "Feasibility Study
Report") reasonably detailing the development of the Prototype
Formulation(s) and containing one (1) month accelerated stability data
only. A supplement to the Feasibility Study Report containing the *
accelerated stability data will be forwarded sixty (60) days later.
3.5 Prior to the commencement of the Feasibility Study GENTA JAGO shall
submit to KRYPTON * for the entire Feasibility Study which * shall be
reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's
*, reasonably incurred by GENTA JAGO during the Feasibility Study,
including but not limited to costs, expenses and fees paid to Jago
Pharma and third party contractors, by the payment of non-refundable
development fees. Such development costs shall be refunded by KRYPTON
to GENTA JAGO * upon receipt by KRYPTON of an invoice from GENTA JAGO
or Jago Pharma AG.
3.6 In the event that the results of the feasibility study conclusively
demonstrate that no Prototype Formulation has been developed which
reasonably meets the Specifications to the good faith mutual
satisfaction of KRYPTON and GENTA JAGO, the Parties agree to enter
into good faith negotiations in order to determine an appropriate
course of action, including, but not limited to, that the Parties may
mutually agree to abandon the development program under this
Agreement, and terminate this Agreement with immediate effect.
ARTICLE 4
PILOT PHARMACOKINETIC STUDY
4.1 Included as part of the feasibility study described in Article 3.
above, KRYPTON shall, at its own responsibility and its own cost,
sub-contract under confidentiality commitments comparable in all
material respects to the provisions set forth herein between GENTA
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
JAGO and KRYPTON to an external qualified clinical research
organization (hereinafter "CRO") to perform a pilot pharmacokinetic
study pursuant to this Article 4.
4.2 The Pilot Pharmacokinetic Study shall consist of commercially
reasonable and appropriately designed * of the Prototype Formulations
and the Originator. KRYPTON shall reasonably consult with GENTA JAGO
in the design of the Pilot Pharmacokinetic Study and shall review the
final protocol with GENTA JAGO prior to initiating work with the
selected sub-contractor. The Pilot Pharmacokinetic Study shall be
conducted in accordance with generally accepted standards of Good
Clinical Practice and in compliance with Ethical Committee
requirements or equivalent requirements, where applicable.
4.3 Prior to the commencement of the Pilot Pharmacokinetic Study GENTA JAGO
shall submit to KRYPTON * for the entire Pilot Pharmacokinetic Study
which * shall be reasonably acceptable to KRYPTON. KRYPTON shall
reimburse GENTA JAGO's *, reasonably incurred by GENTA JAGO during the
Pilot Pharmacokinetic Study, including but not limited to costs,
expenses and fees paid to Jago Pharma and third party contractors, by
the payment of non-refundable development fees. Such development costs
shall be refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of
an invoice from GENTA JAGO or Jago Pharma AG.
4.4 KRYPTON shall provide GENTA JAGO with a copy of the report (hereinafter
referred to as the "Pilot Pharmacokinetic Study Report") reasonably
detailing the results of the Pilot Pharmacokinetic Study within six (6)
weeks as of the study's completion and presentation of the preliminary
data for GENTA JAGO's file.
4.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Pilot Pharmacokinetic Study, including without
limitation the availability or quality of the results and data from
such Pilot Pharmacokinetic Study to be carried out by KRYPTON and the
CRO.
4.6 In the event that the results of the Pilot Pharmacokinetic Study
conclusively demonstrate that it is not fully demonstrated to the good
faith mutual satisfaction of KRYPTON and GENTA JAGO that at least one
of the Prototype Formulations reasonably meet the respective
Specifications, the Parties may mutually agree to abandon the
development program and terminate this Agreement with respect to such
Prototype Formulation.
ARTICLE 5
PRE-SCALE-UP ACTIVITIES
5.1 Upon completion of the Pilot Pharmacokinetic Study, KRYPTON may, at its
option, request and charge GENTA JAGO to carry out the pre-scale-up
activities as described in this Article 5. (hereinafter referred to as
the ,,Pre-Scale-Up Activities"). KRYPTON shall, within thirty (30) days
as from the date of the Pilot Pharmacokinetic Study Report notify in
writing GENTA JAGO of its decision whether to proceed with and to have
GENTA
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
JAGO perform the Pre-Scale-Up Activities.
5.2 Prior to the commencement of the Pre-Scale-Up Activities GENTA JAGO
shall submit to KRYPTON * for the entire Pre-Scale-Up Activities which
* shall be reasonably acceptable to KRYPTON. KRYPTON shall reimburse
GENTA JAGO's *, reasonably incurred by GENTA JAGO during the Pre-Scale
Up activity, including but not limited to costs, expenses and fees
paid to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such pre scale up costs shall be
refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
5.3 The Pre-Scale-Up Activities to be performed by GENTA JAGO shall
comprise all reasonable activities necessary to allow the technology
transfer to, and subsequent scale-up at, the mutually established
manufacturing site, including, but not limited to, final optimization
of the Prototype Formulation (where necessary), development and
validation of the scale-up manufacturing procedure and analytical
validation. Such Pre-Scale-Up Activities shall be completed within the
time period mutually agreed upon by the Parties in Appendix D hereto,
calculated as from the date of receipt of the KRYPTON's notice by
GENTA JAGO pursuant to Section 5.1 above.
5.4 In the event that additional clinical testing, including without
limitation, confirming pharmacokinetic studies, is reasonably required
or deemed necessary beyond the program envisaged in this Agreement in
order to satisfy the FDA requirements for an NDA or ANDA approval of
the Product, KRYPTON and GENTA JAGO shall meet to discuss in good
faith the appropriate course of action to be followed and agree upon
any such additional testing to be performed, provided that any such
additional testing shall in any event be funded solely by KRYPTON.
5.5 Not later than upon the initiation of the Pre-Scale-Up Activities, the
Parties shall establish and mutually agree upon a manufacturing site,
where the Bio-Batches referred to in Section 7.2 below required for the
pivotal clinical studies will be produced and where the Final Product
shall be manufactured for commercial use after FDA approval(s) for the
Final Product have been granted.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
ARTICLE 6
PRE-PIVOTAL PHARMACOKINETIC STUDY
6.1 Included as part of the Pre-Scale-Up Activities, KRYPTON shall at its
own responsibility and its own cost, perform or have performed with a
CRO selected by KRYPTON, a pre-pivotal pharmacokinetic study pursuant
to this Article 6. (hereinafter referred to as "Pre-Pivotal Study").
Such Pre-Pivotal Study shall consist of *, to select the best of the
Prototype Formulations for each dose strength to be used in the
further development under this Agreement.
6.2 The Pre-Pivotal Study shall be performed in the United States of
America. KRYPTON shall consult, review and mutually agree with GENTA
JAGO on the design and final protocol of such Pre-Pivotal Study prior
to initiating work with the selected CRO.
6.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to
cover its workload for preparation and consulting of such Pre-Pivotal
Study. Such development costs shall be paid by KRYPTON * upon receipt
by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
6.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailling
the results of the Pre-Pivotal Study within ten (10) days of its
completion for GENTA JAGO's file. GENTA JAGO shall have no liability or
responsibility whatsoever with resupect to such Pre-Pivotal Study,
including without limitation, the performance or conduct of such Pre-
Pivotal Study or the availability or quality of the results and data
from such Pre-Pivotal Study to be carried out by KRYPTON and the CRO.
6.5 Upon completion of the Pre-Pivotal Study and availability of the
results of such Pre- Pivotal Study, the Parties shall consult with
each other on such results and mutually agree in writing upon the
Prototype Formulation to be selected for further development under
this Agreement. In the event that the results of the Pre-Pivotal Study
are unsatisfactory in that it is not fully demonstrated to the good
faith mutual satisfaction of the Parties that at least one of the
Prototype Formulations meet the respective Specifications, KRYPTON may
elect to abandon the development program and terminate this Agreement
with respect to such Prototype Formulation by giving written notice to
that effect to GENTA JAGO.
ARTICLE 7
FURTHER ACTIVITIES
7.1 Technology Transfer
Upon mutual agreement of the Prototype Formulation to be used for
development as referred to in Section 6.5 above, GENTA JAGO shall be
responsible for and initiate the technology transfer to, and perform
the scale-up at, the manufacturing site mutually established and agreed
upon by the Parties. GENTA JAGO agrees that such technology transfer,
and in particular the aspects of scale-up and validation of the
manufacturing process shall be carried out by GENTA JAGO on such
equipment as shall eventually be used by KRYPTON or a third party to
manufacture the Final Product. Upon completion
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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of such scale-up, GENTA JAGO shall notify KRYPTON thereof in writing.
7.2 Production of Industrial Scale Batches
Upon receipt by KRYPTON of GENTA JAGO's notice referred to in Section
7.1 above, the Parties shall initiate the production of three (3)
industrial scale batches (hereinafter "Bio-Batches") on such equipment
as shall eventually be used KRYPTON or a third party to commercially
manufacture the Final Product, based on the Prototype Formulation (the
size of each Bio-Batch to be not less than the greater of (i) 10% (ten
percent) of the anticipated initial commercial batch size, or (ii)
100'000 tablets), according to Current Good Manufacturing Practices,
such Bio-Batches to be subsequently used for stability testing and
pivotal clinical studies; provided however, that GENTA JAGO shall have
the ultimate responsibility with respect of any and all technical
aspects of such production of batches related to the technology
transfer and the implementation of such technology in the manufacturing
site.
7.3 Funding of Further Activities
(a) Prior to the commencement of any activities under Sections 7.1
and 7.2 above GENTA JAGO shall submit to KRYPTON * for such
further activities which budget and forecast shall be reasonably
acceptable to KRYPTON. KRYPTON shall refund GENTA JAGO's *
reasonably incurred by GENTA JAGO under Sections 7.1 and 7.2
above, including but not limited to costs, expenses and fees paid
to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such further development costs
shall be refunded by KRYPTON * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
(b) Furthermore, KRYPTON shall be responsible, at its own cost, for
the supply of all raw material including, but not limited to, the
Active Ingredients required or necessary for, and all additional
costs and expenses whatsoever arising out of or in connection
with, the production of the Bio-Batches described in Section 7.2
above and all other costs associated with the use of facilities,
technology transfer, equipment and analytical services.
7.4 Stability Testing
(a) KRYPTON shall be responsible for and perform or have performed at
its own cost, the stability testing of the Final Product according
to the then current requirements of the FDA in bulk packaging and
in the final packaging materials. GENTA JAGO shall have no
liability or responsibility whatsoever with respect to such
stability testing, including without limitation, the performance
or conduct of such stability testing or the availability or
quality of the results and data from such stability testing to be
carried out or requested by KRYPTON.
(b) KRYPTON shall provide to GENTA JAGO with a copy of all stability
testing data within thirty (30) days after the completion of each
stability testing period (hereinafter
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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referred to as the Final Stability Testing Report") for GENTA
JAGO's file.
(c) GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON in
connection with the stability testing of the Final Product.
KRYPTON shall pay to GENTA JAGO for such services provided by
GENTA JAGO's or Jago Pharma's personnel an amount of USD * or
part thereof spent, and furthermore, KRYPTON shall reimburse
GENTA JAGO for all reasonable and documented travel related
expenses of GENTA JAGO personnel who travel at KRYPTON's request
to locations remote from such personnel's usual working location.
7.5 Further Provisions
In the event that KRYPTON and GENTA JAGO shall reasonably deem the
results or data from any of the activities to be performed by either
Party under this Article 7. with respect to any dose strength be
unsatisfactory for any reason, the Parties may mutually agree to
abandon the development program and terminate this Agreement with
immediate effect.
ARTICLE 8
PIVOTAL CLINICAL STUDY
8.1 Promptly upon completion of the further activities referred to in
Article 7. above, KRYPTON shall, at its own responsibility and its own
cost, sub-contract under confidentiality commitments comparable to the
provisions set forth herein between GENTA JAGO and KRYPTON to an
external qualified CRO of its choice, reasonably acceptable to GENTA
JAGO, to perform and manage a series of pivotal clinical studies
(hereinafter "Clinical Studies") in man required and/or necessary for
any subsequent NDA or ANDA for the Final Product in accordance with
the then current requirements of the FDA.
8.2 KRYPTON shall consult, review and agree with GENTA JAGO on the design
and the final protocol of such Clinical Studies prior to initiating
work with the selected subcontractor.
8.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to
cover its workload for preparation and consulting of such Clinical
Studies. Such development costs shall be paid by * upon receipt by
KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
8.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing
the results of the Clinical Studies within ten (10) days of its
completion for GENTA JAGO's file.
8.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Clinical Studies, including without limitation, the performance or
conduct of such Clinical Studies or the availability or quality of the
results and data from such Clinical Studies to be carried out or
requested by KRYPTON.
8.6 In the event that the results of the Pivotal Clinical Studies are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of KRYPTON and GENTA JAGO that the Prototype
Formulation reasonably meets the respective Specifications, the Parties
may mutually agree to abandon the development program and terminate
this Agreement with respect to such dose strength.
ARTICLE 9
THE REGULATORY (NDA OR ANDA) SUBMISSION
9.1 Upon completion of the Clinical Studies, KRYPTON may, at its option,
elect to prepare and submit to the FDA an NDA or ANDA. KRYPTON shall
notify GENTA JAGO of its election to exercise or not to exercise this
option by giving written notice thereof to GENTA JAGO within thirty
(30) days as of the availability of the results of the Clinical
Studies.
9.2 In the event that KRYPTON elects pursuant to Section 9.1 above to make
NDA or ANDA submission(s) to any Regulatory Authority with respect to
a Final Product, KRYPTON shall have sole liability and responsibility
for the prosecution, conduct and results of such NDA or ANDA and shall
bear all costs in connection therewith. KRYPTON, at KRYPTON's option,
may elect by written notice to GENTA JAGO prior to commencement of the
technology transfer referred to in Section 7.1 above to have the NDA
or ANDA dossier prepared on its behalf by a qualified third party
acceptable to GENTA JAGO. KRYPTON shall be liable and responsible for
any and all costs associated with such sub-contracting.
9.3 KRYPTON or its chosen sub-contractor shall consult with GENTA JAGO,
and GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON or the chosen
sub-contractor, in connection with the preparation and prosecution of
any NDA or ANDA or with the preparation of the dossier to be submitted
to the FDA. KRYPTON shall pay to GENTA JAGO for such services and
consultation provided by GENTA JAGO's personnel an amount of USD * or
any part thereof spent. Furthermore, KRYPTON shall reimburse GENTA
JAGO for reasonable and documented travel-related expenses of GENTA
JAGO personnel who travel at KRYPTON's request to the elected
manufacturing facility(ies) or other locations remote from such
personnel's usual working location.
ARTICLE 10
PROPRIETARY RIGHTS AND PATENTS
10.1 Patents and Proprietary Rights of GENTA JAGO
(a) The Licensor and GENTA JAGO, respectively, shall retain title to
and ownership of
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Patents, Know-How and GEOMATRIX(R) Technology licensed to GENTA
JAGO, including, but not limited to, any and all developments and
inventions relating to Patents, Know-How and GEOMATRIX(R)
Technology (hereinafter collectively referred to as ,,GENTA JAGO
IPR").
(b) KRYPTON shall not, directly or indirectly through its officers,
directors, employees, agents, customers or other controlled or
associated third parties, acquire any proprietary interest in or
other right to GENTA JAGO IPR, other than provided in this
Agreement.
(c) GENTA JAGO shall use all commercially reasonable efforts, at its
own cost, to cause the Licensor to prepare, prosecute and
maintain all patent applications and patents constituting
Patents, and shall keep KRYPTON fully and promptly informed on
any developments or changes relating thereto. If the Licensor
decides not to further prosecute any patent application
constituting Patents, GENTA JAGO shall promptly inform KRYPTON of
such decision in writing, and the Parties shall, upon KRYPTON's
reasonable written request, meet with the Licensor to discuss any
reasonable appropriate action. During the term of this Agreement,
GENTA JAGO shall, at its sole cost, use all commercially
reasonable efforts to cause the Licensor to take all steps
necessary to maintain Patents to the extent GENTA JAGO deems
commercially reasonable. If the Licensor decides not to maintain
any patent constituting Patents, GENTA JAGO shall promptly inform
KRYPTON of such decision in writing, and the Parties shall, upon
KRYPTON's reasonable written request, meet with the Licensor to
discuss any reasonable appropriate action. Notwithstanding the
foregoing, KRYPTON acknowledges to GENTA JAGO that Licensor has
the final authority regarding such preparation, prosecution and
maintenance of all patent applications and patents.
10.2 Patents and Proprietary Rights for Final Products
(a) KRYPTON shall retain title to and ownership of all developments,
whether patentable or not, relating specifically and exclusively
to the Final Products, provided that such developments are
entirely independent of any and all GENTA JAGO IPR (hereinafter
collectively referred to ,,Final Product IPR").
(b) KRYPTON shall be responsible for and shall control, at its own
cost, the preparation, prosecution and maintenance of all Final
Product IPR and shall keep GENTA JAGO fully and promptly informed
on any developments or changes relating thereto. During the term
of this Agreement, KRYPTON shall, at its sole cost, take all
steps necessary to prosecute and/or maintain all Final Product
IPR to the extent KRYPTON deems commercially reasonable. If
KRYPTON intends not to further prosecute and/or maintain any of
the Final Product IPR, KRYPTON shall promptly inform GENTA JAGO
of such intention in writing, and GENTA JAGO shall have the right
and option, but not the obligation, to have transferred to it
sole title to and ownership in such Final Product IPR free of any
charge by giving respective written notice thereof to KRYPTON
within thirty (30) days after GENTA JAGO's receipt of KRYPTON's
notice referred to above.
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(c) In the event GENTA JAGO has and exercises its right and option
referred to Section 10.2 (b) above to have transferred to it any
such Final Product IPR, KRYPTON shall promptly undertake any and
all steps required and/or necessary to transfer title to and
ownership of such Final Product IPR to GENTA JAGO. In the event
that GENTA JAGO exercises its option to have transferred such
Final Product IPR from KRYPTON to GENTA JAGO, GENTA JAGO shall
maintain such Final Product IPR during the term of this Agreement
to the extent GENTA JAGO deems commercially reasonable and shall
bear all cost associated therewith incurred after the date of
GENTA JAGO's notice to KRYPTON exercising its option referred to
in Section 10.2 (b) above. In such case, the Parties shall
negotiate in good faith the terms and condition, under which such
Final Product IPR transferred to GENTA JAGO shall be included in
the License pursuant to Article 11. below.
10.3 Notification of Infringement
(a) kind that involves or may involve an infringement or violation of
GENTA JAGO IPR or Final Product IPR or (ii) any third-party
action, claim or dispute (including, but not limited to, actions
for declaratory judgment alleging the invalidity or
non-infringement) based upon or arising out of GENTA JAGO IPR or
Final Product IPR, then KRYPTON shall promptly notify GENTA JAGO
in writing of any such infringement, violation, action, claim or
dispute.
(b) If GENTA JAGO becomes aware of (i) any product or activity of any
kind that involves or may involve an infringement or violation of
GENTA JAGO IPR with respect to Final Products or of Final Product
IPR; or (ii) any third-party action, claim or dispute (including,
but not limited to, actions for declaratory judgment alleging the
invalidity or non-infringement) based upon or arising out of
GENTA JAGO IPR with respect to Final Products or of Final Product
IPR, then GENTA JAGO shall promptly notify KRYPTON in writing of
any such infringement, violation, action, claim or dispute.
10.4 Enforcement of GENTA JAGO IPR
(a) GENTA JAGO, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of action
to enforce, or otherwise abate the infringement of, or defend
third-party actions regarding, GENTA JAGO IPR, (ii) to take, or
refrain from taking, appropriate action to enforce, or defend
third-party actions regarding, GENTA JAGO IPR, (iii) to control
any litigation or other enforcement action regarding GENTA JAGO
IPR, and (iv) to enter into, or permit, the settlement of any
such litigation or other enforcement action regarding GENTA JAGO
IPR. GENTA JAGO shall keep KRYPTON informed on a regular basis on
its taking or refraining from taking, and the development of, any
of the foregoing actions, and shall consider, in good faith, the
interests of KRYPTON under this Agreement when taking any of the
foregoing actions, to the extent that any such action or such
infringement may have an adverse effect on Final Product. KRYPTON
shall, at its own cost, fully cooperate with GENTA JAGO in the
planing and execution of any suit or other action to enforce, or
defend third-party actions regar-
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ding, GENTA JAGO IPR as reasonably required or requested by GENTA
JAGO.
(b) If GENTA JAGO does not within one-hundred-twenty (120) days, or
any shorter delay imposed by any applicable law or regulation or
court or authority having jurisdiction, after receiving notice of
any infringement or violation of GENTA JAGO IPR which may
adversely affect Final Products, or of any third-party action,
claim or dispute based upon or arising out of GENTA JAGO IPR
which may adversely affect Final Products, commence or take an
action to enforce, or otherwise abate such infringement, or
defend against such third-party action, then the Parties shall,
upon KRYPTON's written request, promptly meet to discuss any
reasonable appropriate action with regard to such enforcement of
GENTA JAGO IPR which may adversely affect Final Products,
provided however, that KRYPTON is aware and acknowledges that in
such case the Licensor will have the right to enforce any and all
GENTA JAGO IPR pursuant to the License Agreements.
(c) Subject to the right of the Licensor to control any suit or other
action with regard to GENTA JAGO IPR as outlined in the preceding
section, KRYPTON, upon its written request and at its sole
expense, shall be made an additional, but not controlling party,
in any such suit or other action where necessary to obtain
complete relief regarding the subject infringement or violation.
10.5 Enforcement of Final Product IPR
(a) KRYPTON, at its sole expense, shall have the right, but not the
obligation, (i) to determine the appropriate course of action to
enforce, or otherwise abate the infringement of, or defend
third-party actions regarding, Final Product IPR, (ii) to take,
or refrain from taking, appropriate action to enforce, or defend
third-party actions regarding, Final Product IPR, (iii) to
control any litigation or other enforcement action regarding
Final Product IPR, and (iv) to enter into, or permit, the
settlement of any such litigation or other enforcement action
regarding Final Product IPR. Notwithstanding anything contained
in the preceding sentence, KRYPTON shall not settle any suit or
action or otherwise consent to an adverse judgment in such suit
or action without the prior written consent of GENTA JAGO, which
consent shall not be withheld unreasonably. KRYPTON shall keep
GENTA JAGO informed on a regular basis on its taking or
refraining from taking, and the development of, any of the
foregoing actions, and shall consider, in good faith, the
interests of GENTA JAGO under this Agreement and in GENTA JAGO
IPR, when taking any of the foregoing actions.
(b) If KRYPTON does not, within one-hundred-and-twenty (120) days, or
any shorter delay imposed by any applicable law or regulation or
court or authority having jurisdiction, after receiving notice of
any infringement or violation of Final Product IPR, or of any
third-party action, claim or dispute based upon or arising out of
Final Product IPR, commence or take an action to enforce, or
otherwise abate such infringement, or defend against such
third-party action, then GENTA JAGO shall have the right, but not
the obligation, at its sole expense, to take and control such
action as it deems appropriate to enforce, or abate the
infringement of, or defend against such third-party action,
regarding Final Product IPR. GENTA JAGO shall
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keep KRYPTON informed on a regular basis of any such action and
consider, in good faith, the interests of KRYPTON under this
Agreement when taking any of the foregoing actions. KRYPTON, upon
its written request and at its sole expense, shall be made an
additional, but not controlling party, in any such suit or other
action controlled by GENTA JAGO where necessary to obtain complete
relief regarding the subject infringement or violation.
10.6 Application of Monies Recovered
Subject always to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in Section
10.4(c) and any right to receive any monies recovered therefrom as
provided for in the License Agreements, all monies recovered upon the
final judgment or settlement of any suit or other action under this
Sections 10.4 or 10.5 shall be applied as follows:
(i) to cover any and all costs and expenses (including attorney's
fees) incurred by the Party controlling such suit or other
action;
(ii) to cover any and all costs and expenses (including attorney's
fees) reasonably, or upon request of the controlling Party,
incurred by the other Party in connection with such suit or other
action, if any;
(iii) the remainder, if any, to the Party controlling any such suit or
other action.
ARTICLE 11
SUB-LICENSE AGREEMENT
11.1 GENTA JAGO hereby grants to KRYPTON the exclusive and sublicenseable
right and sub-license (hereinafter referred to as the "License") to
use, manufacture, have manufactured, sell and market the Final
Products in the Territory and to use the Patents, GEOMATRIX(R)
Technology and Know How exclusively for that purpose subject to the
payment of the * and the Royalties pursuant to Articles 13. and 14.
below.
11.2 The rights of KRYPTON to grant any sub-license in any part of the
Territory shall be subject to the requirement that KRYPTON shall obtain
the written approval of GENTA JAGO prior to executing any such
sub-license agreement, which approval shall not unreasonably be
withheld, provided however, that no such approval by GENTA JAGO shall
be required for any sub-license to an Affiliate of KRYPTON .
11.3 In any event KRYPTON shall be responsible for any and all acts, deeds
and undertakings of its permitted sub-licensee(s) and KRYPTON and its
permitted sub-licensee(s) shall continue to be bound by all terms and
provisions under this Agreement throughout its term. In case that
KRYPTON sub-licenses rights and/or the License to any sub-licensee(s)
approved by GENTA JAGO, such sub-licensee(s) shall agree in writing to
any and all of KRYPTON's obligations and undertakings under this
Agreement, including but not limited to its confidentiality
obligations set forth hereinafter. Furthermore, KRYPTON undertakes
that any and all sub-license agreements shall provide for inspection
and audit provisions
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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identical to the provisions set forth below in order to enable GENTA
JAGO to control and audit and receive any and all fees and Royalties
due as provided in this Agreement. KRYPTON shall provide GENTA JAGO
promptly with reasonable appropriate information on its sub-licensee(s)
and copies of all agreements with such sub-licensee(s) (with only the
commercial terms may be redacted).
ARTICLE 12
MANUFACTURING AND PRODUCT LIABILITY
12.1 In the event that KRYPTON, subject to Section 5.5 above, elects GENTA
JAGO, and GENTA JAGO expressly agrees to such manufacture, or any of
its Affiliates shall manufacture Final Products, then the Parties
agree to enter into good faith negotiations on and to use commercially
reasonable efforts to execute in due time a respective Manufacturing
and Supply Agreement, according to which GENTA JAGO or its Affiliates
shall undertake to manufacture and supply Final Products in sufficient
quantities to meet KRYPTON's requirements, at a sale price for such
Final Products manufactured equal to GENTA JAGO's *. In the event and
for such period of time, that GENTA JAGO or its Affiliate manufactures
and supplies Final Product under such Manufacturing and Supply
Agreement, the Royalty Rate referred to in Section 14.1 below shall be
*.
12.2 In the event that KRYPTON or any of its Affiliates or any third party
is elected pursuant to Section 5.5 above to manufacture Final Product,
then KRYPTON undertakes and agrees that at all times the
Specifications and to any and all laws, rules and regulations imposed
by any competent authority on the manufacturing, marketing,
distribution and sale of Final Products are strictly adhered to by the
manufacturer, and KRYPTON shall during the entire term of this
Agreement be solely and fully liable and responsible for the
compliance with all such laws, rules and regulations when
manufacturing, having manufactured, marketing, distributing and
selling Final Products itself and/or through Affiliates or sub-
licensee(s).
12.3 KRYPTON shall indemnify, defend and hold GENTA JAGO, its Affiliates
and the Licensor harmless from and against any losses, claims,
liabilities, costs and expenses (including reasonable attorney's fees)
that may be imposed upon or asserted against GENTA JAGO and/or its
Affiliates and/or the Licensor as a result of the marketing,
distributing, manufacture, use or sale of Final Products by or on
behalf of KRYPTON, its Affiliates, agents or sub-licensee(s), except
for those claims, liabilities, costs and expenses arising from gross
negligence or intentional misconduct on the part of GENTA JAGO, its
Affiliates or the Licensor.
ARTICLE 13
* PAYMENTS AND OTHER CONSIDERATION
13.1 As consideration for GENTA JAGO's preliminary development efforts for
the Prototype Formulation performed prior to the execution of this
Agreement as referred to in Section 2.1 above, KRYPTON undertakes to
pay to GENTA JAGO an initial *, payable upon execution of this
Agreement.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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13.2 As consideration for the License granted by GENTA JAGO to KRYPTON under
this Agreement and in consideration of certain major development steps
achieved hereunder, KRYPTON undertakes to pay to GENTA JAGO *.
(a) * upon KRYPTON's receipt of GENTA JAGO's notice referred to in
Section 7.1 above; and
(b) *; and
(c) * for the Final Product; and
(d) * for the Final Product.
13.3 The Parties agree that an * as set forth in Section 14.4 below.
13.4 Unless otherwise agreed by the Parties in writing, all payments under
this Article 13. shall be made in United States Dollars and to such
place or account as GENTA JAGO reasonably requests from time to time in
writing.
ARTICLE 14
ROYALTIES
14.1 During a period commencing upon the first commercial sale of Final
Product in each country of the Territory and ending upon the earlier
of (i) the fifteenth (15th) anniversary of the first commercial sale
of Final Product in such country of the Territory, and (ii) the
expiration of the last of the Patents covering Final Product in such
country of the Territory (hereinafter referred to as the "Royalty
Term"), and in further consideration of the License granted to KRYPTON
by GENTA JAGO, KRYPTON shall pay to GENTA JAGO a royalty (hereinafter
referred to as the "Royalty") of an amount equal to * of the Final
Product in the Territory.
14.2 The Parties agree that * shall be applicable for the first time on
sales of such
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Final Product in such country of the Territory after the beginning of
the calendar quarter immediately following the first commercial sale of
such Competitive Product.
14.3 Royalties shall be payable on a quarterly basis. KRYPTON shall remit
to GENTA JAGO within six (6) weeks after the end of each calendar
quarter the amount of Royalty due with respect to Net Sales and/or
Gross Margin, as the case may be, achieved in the preceding quarter,
beginning with the calendar quarter in which the first commercial sale
of the Final Product is made in any country of the Territory. KRYPTON
shall deliver to GENTA JAGO, along with such remittance of Royalty
payments, a detailed statement (hereinafter referred to as
the "Royalty Report") of the Net Sales and/or Gross Margin, as the
case may be, of the Final Product on a country-by-country basis to
which the Royalty payment relates.
14.4 All Royalty Reports shall be prepared in accordance with generally
accepted accounting principles consistently applied from applicable
period to period and shall be certified by an officer of KRYPTON as
being so prepared, true, accurate and correct.
14.5 In recognition of the * by KRYPTON to GENTA JAGO prior to the
commercial sale of the Final Products, the amount of Royalty payments
due to GENTA JAGO under Article 14.2 above with respect to each
calendar quarter shall be * until such time as the aggregate amount of
all *.
14.6 Unless otherwise agreed by the Parties in writing, payments of
Royalties shall be made in United States Dollars and to such place or
account as GENTA JAGO reasonably requests from time to time in
writing. Any conversions into United States Dollars from the currency
in which the corresponding Net Sales and/or Gross Margin for such
Royalties were made, are to be calculated as using the average closing
buying rate for such currency quoted in the continental terms method
of quoting exchange rates (local currency per USD 1) published in the
Wall Street Journal on the last business day of the applicable
reporting period covered by such Royalty Report.
ARTICLE 15
INSPECTION AND AUDIT
15.1 During the term of this Agreement and during a period of twelve (12)
months after its expiration or termination for any reason, upon the
written request of GENTA JAGO and not more than once each calendar
year, KRYPTON shall permit an independent certified public accountant
of internationally recognized standing selected by GENTA JAGO, at
GENTA JAGO's expense, to have access during regular business hours to
such of the records of KRYPTON and its Affiliates as may be reasonably
necessary to verify the accuracy of the Royalty Reports for any year
ending not more than thirty-six (36) months prior to the date of such
request. The accounting firm shall disclose to GENTA JAGO only whether
the Royalty Reports and records of KRYPTON and its Affiliates and the
amount of Royalties actually paid are correct or not and the specific
details concerning
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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any discrepancies; no other information shall be shared. The Parties
agree to accept such written audit report as final and binding upon
them.
15.2 If such independent accounting firm correctly concludes that
additional Royalties were owed during any such period audited, KRYPTON
shall pay such additional Royalties within ten (10) days of the date
GENTA JAGO delivers to KRYPTON such accounting firm's written report
so concluding. The fees and expenses charged by such accounting firm
with respect to such audit shall be paid by GENTA JAGO; provided
however, if any such audit correctly discloses that Royalties payable
by KRYPTON for the audited period are more *, then KRYPTON shall pay
all reasonable fees and expenses charged by such accounting firm with
respect to such audit.
15.3 GENTA JAGO shall treat all financial information subject to review
under this Article 15. as confidential and subject to the
confidentiality obligations in Article 16. below.
ARTICLE 16
CONFIDENTIALITY
16.1 Confidential Information. KRYPTON shall maintain in confidence all
Know-How and other information of GENTA JAGO (including samples)
disclosed by GENTA JAGO and identified as, or acknowledged to be,
confidential (the,,Confidential Information"), and shall not use,
disclose or grant the use of the Confidential Information except on a
need- to-know basis to its directors, officers, employees, agents,
consultants, clinical investigators or other permitted contractors, to
the extent such disclosure is reasonably necessary in connection with
KRYPTON's activities as expressly authorized by this Agreement. To the
extent that disclosure is authorized by this Agreement, prior to
disclosure, KRYPTON hereto shall obtain agreement in writing of any
such person to hold in confidence and not make use of the Confidential
Information for any purpose other than those authorized by this
Agreement. KRYPTON shall notify GENTA JAGO promptly upon the discovery
of the unauthorized use or disclosure of the Confidential Information.
16.2 Permitted Disclosures. The obligations of confidentiality and non-use
contained in Section 16.1 above shall not apply to the extent that (a)
KRYPTON (i) is required to disclose information by law, regulation or
order of a governmental agency or a court of competent jurisdiction,
or (ii) is required to disclose information to any governmental agency
for purposes of obtaining approval to test or market Final Product,
provided in each case that KRYPTON shall give GENTA JAGO written
notice thereof and sufficient opportunity to object to any disclosure
or to request confidential treatment thereof, or (b) KRYPTON can
demonstrate that (i) the disclosed information was public knowledge at
the time of such disclosure to it, or thereafter became public
knowledge, other than as a result of actions of KRYPTON, its
directors, officers and employees in violation hereof; (ii) the
disclosed information was rightfully known by KRYPTON (as shown by its
written records) prior to the date of disclosure to it by GENTA JAGO
hereunder; (iii) the disclosed information was disclosed to KRYPTON on
an unrestricted basis from a source unrelated to any party to this
Agreement and not under a duty of confidentiality to GENTA JAGO or the
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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Licensor; or (iv) the disclosed information was independently developed
by KRYPTON without the use of Confidential Information disclosed by
GENTA JAGO.
16.3 Terms of this Agreement. Except as otherwise provided in Section 16.2
above, neither Party shall disclose any terms or conditions of this
Agreement to any third party (other than the Licensor) without the
prior consent of the other Party. Notwithstanding the foregoing, prior
to the execution of this Agreement, the Parties shall agree upon the
substance of information that can be used to describe the terms of
this transaction, and the Parties may disclose such information only
without the other Party's consent. Notwithstanding the foregoing,
prior to the execution of the Agreement, the Parties shall agree upon
the substance of information that can be used to describe the terms of
this transaction, and the Parties may disclose such information
without the other Party's consent.
16.4 Term of Confidentiality. The confidentiality obligations under this
Article 16 shall be effective during the term of this Agreement and
for a period of ten (10) years after the expiration or earlier
termination hereof.
16.5 Injunctive Remedies. GENTA JAGO shall be entitled to injunctive
remedies and relief against KRYPTON and its Affiliates and any third
parties for any breach or threatened breach of the confidentiality
obligations under this Article 16.
16.6 Damages. In the event of a breach of the confidentiality provisions
under this Article 16 by KRYPTON, its Affiliates or its directors,
officers, employees or any other person who were given access to the
Confidential Information by KRYPTON, GENTA JAGO shall be entitled to
receive from KRYPTON any and all actual costs and damages caused by
such breach.
16.7 other public announcements or disclosures regarding the execution and
the existence of this Agreement or any activities conducted hereunder,
including development results, filings and registrations, without the
prior written consent of the other Party, except for such public
disclosure as may be necessary in the opinion of any party's legal
advisor in order not to be in violation of or default under any
applicable law, regulation or governmental order, in such later event
the party having an obligation to disclose shall submit to the other
party a draft of the required announcement and shall give the other
party the opportunity to request reasonable amendments and
modifications of such required announcement.
ARTICLE 17
TERM AND TERMINATION
17.1 Term and Expiration
(a) This Agreement shall expire on a country-by-country basis upon the
expiration of the Royalty Term.
(b) Upon the expiration of this Agreement in each country of the
Territory pursuant to
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Section 17.1 (a) above and payment of all fees, including but not
limited to the *, and all Royalties and other payments by KRYPTON
due GENTA JAGO under this Agreement, the License shall be deemed
to be a perpetual, fully paid-up and royalty-free license for such
Final Product and each such country of the Territory.
17.2 Termination Prior to Registration
During the development, test, study and registration phases as
specified in Articles 3. through 8. above, and until the first
successful registration approval of any Final Product by any Regulatory
Authority, this Agreement may be terminated in accordance with the
provisions set forth in Sections 3.6, 4.6, 6.5, 7.5 and 8.6 above.
17.3 Termination for Cause
During the entire term of this Agreement either Party may terminate
this Agreement by giving to the other Party written notice to that
effect, if any of the following events occur:
(a) the other Party is in default or in breach of a term or provision
hereof and such default or breach continues and is not remedied
within thirty (30) days upon the other Party's written request to
remedy such default or breach; or
(b) the other Party shall commit a breach of any of the
confidentiality provisions of Article 16. above; or
(c) the other Party goes into liquidation, voluntarily or otherwise,
other than for the sole purpose of reorganization, or goes into
bankruptcy or makes an assignment for the benefit of creditors, or
in the event of a receiver being appointed of the other Party's
property or parts thereof.
17.4 Effect of Termination
(a) If KRYPTON elects to so terminate the Agreement under Section
17.2 above prior to filing of the ANDA in the United States,
then: (i) such termination shall be without penalty or liability
to KRYPTON; (ii) all rights and licenses granted by GENTA JAGO
hereunder shall revert to GENTA JAGO with respect to such
country(ies) so terminated, (iii) KRYPTON be relieved of any
payments that are scheduled or may be made in the future under
this Agreement, (iv) KRYPTON shall return to GENTA JAGO all
materials, documentation, information, data and other things
furnished by GENTA JAGO in connection with this Agreement,
including without limitation any and all Confidential
Information, together with all copies thereof in KRYPTON's
possession or under its control, (v) all Registrations pertaining
to the marketing of the Product shall be transferred to and be
owned by GENTA JAGO as to the affected country(ies) and the data
generated under this Agreement shall be provided to and
thereafter may be freely used by GENTA JAGO to develop,
manufacture and market the Product; and (vi) GENTA JAGO and its
Affiliates shall thereafter be entitled to exercise such rights
as they may have under their own license agreements to make, have
made, use or sell the Product in the country(ies) so terminated
without compensation or obligation to KRYPTON; provided, that the
foregoing rights under
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<PAGE>
(iv) and (vi) shall not create or imply any right or license under
any patent rights, copyright rights, trademarks or trade names,
know-how, or other intellectual property rights owned or
controlled by KRYPTON or its Affiliates.
(b) If KRYPTON elects to so terminate this Agreement subsequent to
the filing of the ANDA in the United States, then: (i) such
termination shall be without penalty or liability to KRYPTON;
(ii) all rights and licenses granted by GENTA JAGO hereunder
shall revert to GENTA JAGO with respect to such country(ies) so
terminated; (iii) KRYPTON shall be relieved of any payments that
are scheduled or may be made in the future under this Agreement,
(iv) KRYPTON shall return to GENTA JAGO all materials,
documentation, information, data and other things furnished by
GENTA JAGO in connection with this Agreement, including without
limitation any and all Confidential Information, together with
all copies thereof in KRYPTON's possession or under its control,
(v) GENTA JAGO and its Affiliates shall thereafter be entitled to
make, have made, use or sell the Product in the country(ies) so
terminated (and, provided, that the foregoing shall not create or
imply any right or license under any patent rights, copyright
rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by KRYPTON or
its Affiliates); (vi) all Registrations pertaining to the Product
shall be transferred to and be owned by GENTA JAGO as to the
affected country(ies) and the data generated hereunder shall be
provided to and thereafter may be freely used by GENTA JAGO to
develop, manufacture and market the Product; and (vii) GENTA JAGO
shall pay to KRYPTON the same royalty, which shall be paid in the
same manner and subject to the same terms and conditions as would
otherwise have applied to KRYPTON, as KRYPTON would otherwise
have paid (absent such termination) hereunder to GENTA JAGO on
Net Sales (or on the Gross Margin of such Net Sales, as the case
may be) of the Product in the country(ies) to which such
termination applies (with such royalty to be paid by GENTA JAGO
and its Affiliates in each such country until expiration of the
Royalty Term in each such country), until such time as the
royalties paid to KRYPTON equal the aggregate amount that had
been paid by KRYPTON to GENTA JAGO prior to such termination
under the Sections 3.5, 4.3, 5.2, 6.3, 7.3,8.3, 9.2 and 13., at
which time the royalty rate then prevailing on Net Sales (or on
the Gross Margin of such Net Sales, as the case may be) in the
United States shall be reduced by two percent (2 %) (but shall
not be reduced for sales outside the United States).
(c) Otherwise the termination of this Agreement shall be without
prejudice to any rights and obligations of either Party accrued
prior to the effective date of termination. KRYPTON shall
forthwith make all payments due and outstanding to GENTA JAGO at
the date of termination. Except as explicitly otherwise stated in
this Agreement, GENTA JAGO shall not be obligated to refund upon
termination of this Agreement to KRYPTON any payments, including
without limitation the *, made by KRYPTON to GENTA JAGO prior to
such termination pursuant to the provisions of this Agreement.
(d) The termination of this Agreement pursuant to Section 17.3 above
by either Party shall not limit remedies which may be otherwise
available in law or equity to either Party.
- - - ---------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
-20-
<PAGE>
17.5 Early Termination of the License Agreements
(a) In the event that the License Agreements are terminated prior to
the expiration of the last to expire of the Patents licensed to
GENTA JAGO in the Territory, then the License granted hereunder to
KRYPTON shall also terminate upon KRYPTON's receipt of the
respective termination notice from the Licensor. KRYPTON may give
written notice to the Licensor of KRYPTON's desire to continue the
License granted under this Agreement within sixty (60) days as of
KRYPTON's receipt of the Licensor's notice referred to above.
(b) In the event that KRYPTON timely notifies the Licensor of its
desire to continue the License granted under this Agreement, the
Licensor shall have the right, at its sole discretion, to elect to
assume in writing within sixty (60) days upon the Licensor's
receipt of KRYPTON's notice any and all rights of GENTA JAGO under
this Agreement and to promptly cure all defaults of GENTA JAGO
under this Agreement, if any.
(c) In the event that the Licensor does not timely gives notice to
KRYPTON and cures all of GENTA JAGO's defaults hereunder pursuant
to Section 17.5(b) above, then KRYPTON shall promptly assume in
writing any and all rights and obligations of GENTA JAGO under the
License Agreements with the Licensor, but with regard to the
rights encompassed by the License granted hereunder only, and
promptly cure all defaults of GENTA JAGO under the License
Agreements with regard to the rights encompassed by the License
granted hereunder only, if any.
(d) Notwithstanding anything contained in this Section 17.5, no action
taken by the Licensor and/or KRYPTON to continue or not to
continue the License shall relieve GENTA JAGO from any liability
for any uncured defaults under this Agreement or the License
Agreements, and such action by the Licensor and/or KRYPTON shall
be without prejudice to any other rights or remedies the Licensor
and/or KRYPTON may have in law or equity.
ARTICLE 18
WARRANTIES
18.1 GENTA JAGO shall carry out and undertake the studies and tests
specified in this Agreement in a careful and diligent manner. GENTA
JAGO agrees to carefully choose, instruct and supervise any employees,
officers, Affiliates or third parties to be chosen by GENTA JAGO
pursuant to this Agreement, who are involved with the tests and
studies. Nothing in this Agreement shall be construed as a
representation made, or warranty given, by GENTA JAGO that any
development performed by or for GENTA JAGO under this Agreement will
be successful in whole or in part, or that any product, including
Final Product, which may be developed, will be successful in the
commercial marketplace. Furthermore, GENTA JAGO makes no
representation or warranty, express or implied, with respect to
GEOMATRIX(R)Technology and/or Know-How, including without limitation,
any warranty of completeness, accuracy, merchantability or fitness for
a
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<PAGE>
particular purpose thereof.
18.2 GENTA JAGO represents and warrants that it has all rights regarding
Patents, GEOMATRIX(R)Technology and Know-How necessary to grant the
License hereunder. Notwithstanding the preceding sentence, GENTA JAGO
does not assume any responsibility and makes no warranty that the
performance of this Agreement and any product developed hereunder,
including Prototype Formulation(s) and Final Products, do not infringe
any third party's patents, patent applications or other intellectual
property rights. Notwithstanding the preceding sentence, GENTA JAGO
represents and warrants that, as of the effective date of this
Agreement, it is not aware and has not knowledge of any such
infringement of any third party rights. If, however, during the course
of this Agreement either Party discovers that the Prototype
Formulation(s) and/or the Final Products infringe or may infringe any
third party's intellectual property rights, it shall promptly inform
the other Party thereof and the Parties shall meet to discuss the
course of action to be taken with regard thereto.
18.3 Nothing in this Agreement shall be construed as a representation made,
or warranty given by GENTA JAGO that any patent will issue based upon
any pending patent application encompassed by the term Patents, and
that any patent encompassed by the term Patents which issues will be
valid or enforceable.
18.4 GENTA JAGO assumes no liability or responsibility for any damages
caused to KRYPTON, third parties, animals and/or the environment by the
manufacturing, marketing or use of the Prototype Formulations or Final
Products or the active ingredient contained therein, except to the
extent that any of the above are attributable to the gross negligence
or willful misconduct of GENTA JAGO in performing its obligations
hereunder.
18.5 Subject to the specific representations and warranties given and
specific disclaimers of representations and warranties included in
this Article 18, and further subject to anything to the contrary
contained in this Agreement, either Party shall, as to third parties,
be indemnified and held harmless by the other Party from and against
any and all losses, liabilities and damages arising from any claim,
action or other proceeding by any third party relating to any acts or
omissions of the other Party, its directors, officers, employees or
agents, or the gross negligence or willful misconduct of such other
Party, its directors, officers, employees or agents in performing any
of its obligations under this Agreement.
18.6 Any liability, warranty and undertaking contained herein shall be
limited to the payment by either Party for direct damages to the other
Party and in any event, neither Party shall be liable to the other
Party for any special, indirect, punitive or consequential damages
and/or loss of profits or anticipated profits, respectively.
18.7 KRYPTON shall, at its own expense, purchase from an insurance company
of its choice and shall maintain during the entire term of this
Agreement an appropriate and customary policy of general liability and
product liability insurance covering its responsibilities regarding
Prototype Formulation(s) and Final Products developed, manufactured,
marketed and sold under this Agreement and the Active Ingredient
contained therein and the use thereof. Upon request, KRYPTON shall
provide GENTA JAGO with evidence that such
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<PAGE>
insurances are existing and are maintained.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Agreement: The terms, covenants, conditions and provisions
contained in this Agreement, including its Appendices referred to
herein, constitute the total and complete agreement of the Parties and
supersede all prior understandings and agreements hereto made, and
there are no other representations, understandings or agreements
relating to the subject matter hereof. The provisions of this
Agreement may not be waived, altered, amended or repealed in whole or
in part except by the written consent of both of the Parties to this
Agreement.
19.2 Assignment: This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any
right or obligation hereunder be assigned or transferred by either
Party, other than to an Affiliate of such Party, without the consent
of the other Party; provided however, that either Party may, without
such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or
substantially all of its business, or in the event of its merger,
consolidation, change in control or similar transaction; and provided
further that GENTA JAGO may without the consent of KRYPTON assign any
and all of its rights and obligations hereunder to the Licensor and/or
any of the Licensor's Affiliates. Any permitted assignee shall assume
all obligations of its assignor under this Agreement or under the
respective rights or obligations actually assigned.
19.3 Successors: This Agreement and all rights hereunder shall ensure to the
benefit of all successors and assigns of both Parties.
19.4 Notices: Any consent, notice or report required or permitted to be
given or made under this Agreement by one Party to the other shall be
in English and in writing, delivered personally or by courier service
or by facsimile (promptly confirmed by personal delivery or courier
service) addressed to the other Party at its address indicated below,
or to such other address as shall have been notified in writing to the
sending Party by the receiving party from time to time, and shall take
effect upon receipt by the addressee.
IF TO KRYPTON: KRYPTON LTD.
East Wing, Second Level
Hadfield House
Library Street
Gibraltar
attn.: PRESIDENT
WITH COPIES TO: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
attn.: COMPANY SECRETARY
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<PAGE>
AND: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
IF TO GENTA JAGO: GENTA JAGO Technologies B.V.
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz, Switzerland
attn.: MANAGEMENT COMMITTEE
WITH COPIES TO: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
8002 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
AND: PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
attn.: THOMAS E. SPARKS, JR., ESQ.
19.5 Independent Contractors: It is expressly agreed that the Parties shall
be independent contractors and that the relationship between the
Parties shall not constitute a partnership, joint venture or agency.
Neither Party 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 Party, without the prior written
consent of the other Party to do so.
19.6 Severability: Each Party hereby acknowledges that it does not intend
to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries.
Should one or more provisions of this Agreement be or become invalid,
the Parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their
economic effect are sufficiently similar to the invalid provisions
that it can be reasonably assumed that the parties would have entered
into this Agreement with such provisions. In case such provisions
cannot be agreed upon, the invalidity of one or several provisions of
this Agreement shall not affect the validity of this Agreement as a
whole, unless the invalid provisions are of such essential importance
to this Agreement that it is to be reasonably assumed that the Parties
would not have entered into this Agreement without the invalid
provisions.
19.7 Force Majeure: Neither Party hereto shall be held liable or responsible
to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any
term of this Agreement when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party
including but not limited to fire, floods, embargoes, war, acts of war
(whether war be
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<PAGE>
declared or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other Party
hereto.
19.8 Interest: In the event any amount due and payable under this Agreement
is not paid by the due date, then the Party owing such amount shall pay
to the creditor, without being requested by the other Party, interest
on the total outstanding amount at the rate equal to the London
Interbank Offered Rate (,,LIBOR"), as published in the Wall Street
Journal (Europe) on the date that such payment falls due, increased by
three percent (3%), in United States Dollars and adjusted on the first
day of every calendar quarter.
19.9 Headings: The titles and headings used in this Agreement are intended
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
19.10 Waiver: The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be
deemed a waiver of any other right hereunder or of any other breach or
failure by said other Party whether of a similar nature or otherwise.
19.11 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
ARTICLE 20
DISPUTE RESOLUTION AND ARBITRATION
20.1 In the event of any dispute arising between the Parties concerning this
Agreement, GENTA JAGO and KRYPTON agree that in the first place they
shall meet for good faith discussions in an attempt to negotiate an
amicable solution.
20.2 Any dispute arising between the Parties out of or in connection with
this Agreement, or the interpretation, breach or enforcement thereof,
which cannot be amicably resolved pursuant to Section 20.1 above
within two (2) months as from the first appearance of such dispute,
shall be finally resolved by binding arbitration. Whenever a Party
shall decide to institute arbitration proceedings, it shall give
written notice to that effect to all of the other Parties. Any
arbitration hereunder shall be conducted under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce.
Any such arbitration shall be conducted in the English language by a
panel of three (3) arbitrators appointed in accordance with such
rules, and shall be held in PARIS, FRANCE. The arbitrators shall have
the authority to grant specific performance, and to allocate among the
parties the costs of arbitration in such equitable manner as they
determine. Judgment upon the award so rendered may be entered in any
court having jurisdiction or application may be made to such court for
judicial acceptance of any award so rendered and an order of
enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this
section, shall be determined by binding arbitration pursuant to this
section.
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<PAGE>
20.3 Notwithstanding anything contained in this Article 20, either Party may
seek preliminary or injunctive measures or relief in any competent
court having jurisdiction.
ARTICLE 21
APPLICABLE LAW
The Parties hereto agree that this Agreement, all transactions executed
hereunder and all relationships between the Parties in connection
therewith shall be construed under and be governed by the laws of
Switzerland without reference to the conflict of law principals
thereof, and shall not be governed by the United Nations Convention on
Contracts for the International Sale of Goods.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 31st day
of October 1996.
GENTA JAGO TECHNOLOGIES B.V.
/s/ Thomas M. Adams /s/ Jacques Gonella
- - - ------------------- -------------------
by: Dr. Thomas H. Adams by: Dr. Jacques Gonella
its: Managing Director its: Managing Director
KRYPTON LTD.
/s/
- - - ------------------
by:
its:
The Licensor, Jagotec AG, hereby agrees to be bound by the obligations contained
in Section 17.5 of this Agreement.
JAGOTEC AG
/s/ Jacques Gonella /s/
- - - ------------------- -------------------
by: by:
its: its:
-26-
Exhibit 10.94
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT & SUB-LICENSE AGREEMENT
DICLOFENAC
This DEVELOPMENT AND SUB-LICENSE AGREEMENT (this "AGREEMENT"), effective from
the date last written hereunder, is entered into between GENTA JAGO TECHNOLOGIES
B.V., a Dutch company, having a place of business at Grundstrasse 12, 6343
Rotkreuz, Switzerland (hereinafter referred to as "GENTA JAGO"), and KRYPTON
LTD., a Gibraltar limited company, having a place of business at East Wing,
Second Level, Hadfield House, Library Street, Gibraltar (hereinafter referred to
as "KRYPTON")
WITNESSTH:
WHEREAS, GENTA JAGO has expertise in the development of controlled-release
formulations for pharmaceutical agents and in particular has exclusive rights to
proprietary know-how and technology generally known and commercialized under the
registered trademark GEOMATRIX(R) and as described and embodied in the Patents
(as defined below) with respect to a Bioequivalent Product (as defined below) to
* and
WHEREAS, KRYPTON is a company which markets pharmaceutical products and is
interested in developing Prototype Formulations (as defined below) for the Final
Product (as defined below) and in seeking the approval of Regulatory Authorities
(as defined below) to manufacture, or have manufactured and market the Final
Product in the Territory (as defined below); and
WHEREAS, GENTA JAGO is prepared to conduct or have conducted certain studies and
the development of the Prototype Formulations and Final Product; and
WHEREAS, GENTA JAGO is prepared to grant to KRYPTON under the terms and
conditions set forth hereafter a sub-license under the Patents, GEOMATRIX(R)
Technology and Know-How (as defined below) to conduct studies relating to the
Prototype Formulations and, upon receipt of approval by the Regulatory Authority
(as defined below), to manufacture or have manufactured, market and sell the
Final Product in the Territory.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
Parties hereby agree as follows:
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
<PAGE>
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings:
1.1 "Active Ingredient" shall mean Diclofenac.
1.2 "Affiliate" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct or
indirect beneficial ownership of more than 50% of the voting power of,
or more than 50% of ownership interest in, such corporation,
partnership or other entity.
1.3 "ANDA" shall mean any Abbreviated New Drug Application filed with the
FDA, by or for KRYPTON requesting authorization to manufacture, have
manufactured or sell the Final Product in the United States of America,
or any equivalent application to a Regulatory Authority in any other
country of the Territory.
1.4 "Bioequivalent Product" shall mean a drug product meeting the
bioequivalence requirements imposed by the FDA for in vitro and/or in
vivo testing as set forth in the regulations of the FDA at 21 C.F.R.
ss.320 (,,AB Equivalent Rating"), as they may be amended from time to
time.
1.5 "Competitive Product" shall mean any product other than the Final
Product or the Originator which is a Bioequivalent Product of the
Originator and is marketed and sold in the Territory on a
country-to-country basis.
1.6 "FDA" shall mean the U.S. Federal Food and Drug Administration and any
successor agency thereof.
1.7 "Final Product" shall mean the pharmaceutical orally-administered
controlled-release formulation(s) containing the Active Ingredient,
presented as a compressed tablet developed pursuant to this Agreement,
based on the GEOMATRIX(R) Technology and being a Bioequivalent Product
of the Originator, of a Competitive Product or of any other product
containing the Active Ingredient.
1.8 "GEOMATRIX(R) Technology" shall mean the oral controlled-release drug
delivery and related technology licensed to GENTA JAGO by the Licensor
which utilizes a hydrophilic drug-containing matrix tablet which
controls the release of the drug through the use of one or more barrier
layers.
1.9 "Gross Margin" shall mean, with respect to any Final Product, Net Sales
less only the direct cost of such Final Product sold, i.e. (a) raw
material cost, (b) direct labor cost, (c) reasonably directly
allocatable overhead cost (e.g. energy cost), (d) packaging and
labeling cost, and (e) other costs directly associated with the
manufacturing of such Final
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<PAGE>
Product (e.g. quality control). No other deductions from Net Sales are
permissible for the calculation of Gross Margin, including without
limitation, sales, marketing and distribution costs. Alternatively, in
the event that KRYPTON sub-contracts the manufacturing of any Final
Product to a third party, then ,,Gross Margin" with respect to such
Final Product shall mean Net Sales less only the manufacturing costs as
invoiced by such manufacturing third party sub-contractor and actually
paid by KRYPTON.
1.10 "Know-How" shall mean all information and data, which are not
generally known including, but not limited to, patent claims and
related information not yet disclosed to the public, formulae,
procedures, protocols, techniques and results of experimentation and
testing, which (a) relate to the GEOMATRIX(R)Technology, any Prototype
Formulation or any Final Product, or (b) are necessary or useful to
develop, make or use any Prototype Formulation, or (c) are necessary
or useful to develop, seek regulatory approval, make, use or sell any
Final Product, all to the extent presently or during the term of this
Agreement licensed or otherwise available to and at the free
disposition of GENTA JAGO.
1.11 "License Agreements" shall mean the license agreements entered into by
and between GENTA JAGO and the Licensor, under which the Licensor
granted GENTA JAGO the rights in the Patents, the Know-How and the
GEOMATRIX(R) Technology, which are the subject matter of the
sub-license referred to in Article 11. below.
1.12 "Licensor" shall mean Jagotec AG, a Swiss corporation, having its place
of business at Seestrasse 91, CH-6052 Hergiswil, Switzerland.
1.13 "Net Sales" shall mean, with respect to any Final Product, the
invoiced sales price of such Final Product in finished package form
invoiced by KRYPTON and/or its Affiliates to any independent customer
other than KRYPTON's Affiliates, less (a) credits, allowances,
discounts and rebates to, and charge-backs from the account of, such
independent customers for spoiled, damaged, out-dated, rejected or
returned Final Product; (b) actual freight and insurance costs
incurred and paid by KRYPTON and/or its Affiliates in transporting
such Final Product in final form to such customers; (c) customary
cash, quantity and trade discounts and other price reduction programs;
(d) sales, use, value-added and other direct taxes (but excluding any
income tax) actually incurred and paid by KRYPTON and/or its
Affiliates; and (e) customs duties, surcharges and other governmentl
charges incurred by KRYPTON and/or its Affiliates in connection with
the exportation or importation of such Final Product in final form.
1.14 "Originator" shall mean * actually marketed in the United States by *
or any other pharmaceutical products containing the Active Ingredient
and being marketed in the Territory.
1.15 "Patents" shall mean all patents and patent applications heretofore or
hereafter filed or having presently or in the future legal force in any
country of the Territory, licensed by the Licensor to GENTA JAGO which
claim the GEOMATRIX(R) Technology or the process to manufacture
Prototype Formulations and/or Final Product by use of, or the
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
use of, the GEOMATRIX(R) Technology, including but not limited to the
patents and patent applications listed in APPENDIX A hereto, together
with all patents that in the future issue therefrom in any country of
the Territory, including utility, model and design patents and
certificates of invention, and all divisionals, continuations,
continuations-in- part, reissues, renewals, extensions, substitutions,
confirmations or additions to any such patents and patent applications,
all to the extent presently or during the term of this Agreement
licensed or otherwise available to and at the free disposition of GENTA
JAGO.
1.16 "Prototype Formulations" shall mean the oral delivery system for the
Active Ingredient based on the GEOMATRIX(R) Technology that reasonably
meet the Specifications.
1.17 "Regulatory Authority" shall mean the FDA or any equivalent competent
regulatory authority in any other countries of the Territory.
1.18 "Specifications" shall mean the Products specifications to be mutually
agreed upon.
1.19 "Territory" shall mean *.
ARTICLE 2
DEVELOPMENT PREAMBLE
2.1 At the date of execution of this Agreement, GENTA JAGO has performed
certain preliminary development efforts for the Prototype Formulation.
This development is hereby incorporated in this Agreement.
2.2 GENTA JAGO undertakes to conduct the development of the Prototype
Formulation(s) and the Final Product in an efficient and professional
manner. KRYPTON shall actively support GENTA JAGO regarding the
development and studies to be executed by GENTA JAGO as may be
reasonably required by GENTA JAGO from time to time. In particular,
KRYPTON shall provide information reasonably requested by GENTA JAGO
relating to the Originator and to the Active Ingredient for the
purposes of carrying out this development, including, but not limited
to, physico-chemical characteristics, safe- handling instructions,
in-vitro analytical methods, degradation products and standards and
analytical methods therefore. Additionally, KRYPTON shall provide to
GENTA JAGO requested data and adequate quantities of samples of the
Originator for the purposes of conducting the Feasibility Study.
KRYPTON, however, shall not be required to provide information
regarding the Originator which is not in the public domain, unless
KRYPTON is duly authorized to possess and disclose such non-public
information. Any costs and expenses incurred by KRYPTON in connection
with such support shall be borne by KRYPTON.
2.3 Due to the nature and complexity of the development and the respective
studies as set forth in this Agreement, the Parties recognize and
acknowledge that problems and delays may occur which render the time
limits set forth in this Agreement and/or the time-frame of the
development as mutually agreed upon difficult or impossible to
accomplish. The Parties agree that they shall immediately inform each
other in writing in the event that
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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significant problems or delays are encountered or envisaged during the
course of the development and shall discuss such problems and delays
in order to agree on a mutually acceptable revision of the time limits
set in this Agreement and/or the time-frame as previously mutually
agreed upon.
2.4 Together with the notice from KRYPTON referred to in Section 3.1
below, KRYPTON, or its designated supplier, shall supply GENTA JAGO on
a free-of-charge basis with sufficient quantities of Active Ingredient
to perform the development program intended hereunder. Such supplies
shall be accompanied with respective certificates of analysis and
conformity. GENTA JAGO shall use all Active Ingredient supplied to it
by KRYPTON hereunder solely and exclusively in connection with the
development program as mutually agreed upon.
Alternatively, KRYPTON may request that GENTA JAGO obtain a supply of
Active Ingredient from a reputable source having the necessary
regulatory clearances in place to allow future marketing of the Final
Product in the Territory. Should KRYPTON so require and GENTA JAGO so
agree, the chosen supplier's facilities, processes and procedures
shall be audited by GENTA JAGO, or a third party mutually acceptable
to KRYPTON and GENTA JAGO, in order to ensure compliance with the
appropriate regulatory requirements. KRYPTON shall * of GENTA JAGO
incurred in carrying out, or having carried out such audit. GENTA JAGO
shall provide KRYPTON with a copy of the audit report within thirty
(30) days as of the completion of the audit.
2.5 In the event that the Parties mutually agree that GENTA JAGO becomes
responsible for the supply of Active Ingredient, KRYPTON shall * GENTA
JAGO for any and all shipping and transportation costs, import duties,
taxes or other costs incurred by GENTA JAGO in connection with such
supply of Active Ingredient upon receipt of GENTA JAGO's respective
invoices.
ARTICLE 3
FEASIBILITY STUDY
3.1 KRYPTON shall initiate the development program contemplated hereunder
as soon as technically feasible and within the time limits set forth
in the mutually accepted development program by giving written notice
to that effect to GENTA JAGO. Not later than two (2) months after
receipt of (i) such notice, (ii) * and (iii) the Active Ingredient,
GENTA JAGO shall commence the feasibility study under this Article 3.
and shall use its commercially reasonable efforts to develop the
Prototype Formulations. Up to three (3) of the developed Prototype
Formulations shall be chosen by mutual agreement by the Parties for
further study and development.
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The Parties recognize that the Specifications mutually agreed upon
eventually will need to be updated with more detailed specifications
for the Final Product in the course of the development, and in such
case the Parties agree to mutually agree on any reasonable amendment of
the Specifications.
3.2 The development of the Prototype Formulations shall include, but not
necessarily be limited to, the following elements:
(a) Development and establishment of analytical methodology specific
to the characterization of such Prototype Formulations;
(b) Qualitative and quantitative characterization of such Prototype
Formulation;
(c) In-vitro release profile characterization of such Prototype
Formulations and the Originator by using appropriate methodology
mutually agreed to by the Parties;
(d) Elaboration of pre-scale up procedures and the production of
samples (2000 units +/- 10%) of the chosen Prototype Formulations
for evaluation by KRYPTON, and for use in the Pilot
Pharmacokinetic Study under Article 4. below; and
(e) Accelerated stability testing of Prototype Formulations to
provide *.
3.3 GENTA JAGO will ensure the use of generally accepted standards of Good
Laboratory and Manufacturing Practices during the performance of the
feasibility study.
3.4 Within thirty (30) days of the completion of the feasibility study,
GENTA JAGO shall supply KRYPTON with a report (the ,,Feasibility Study
Report") reasonably detailing the development of the Prototype
Formulation(s) and containing one (1) month accelerated stability data
only. A supplement to the Feasibility Study Report containing the
* accelerated stability data will be forwarded sixty (60) days later.
3.5 Prior to the commencement of the Feasibility Study GENTA JAGO shall
submit to KRYPTON * for the entire Feasibility Study which * shall be
reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's
*, reasonably incurred by GENTA JAGO during the Feasibility Study,
including but not limited to costs, expenses and fees paid to Jago
Pharma and third party contractors, by the payment of non-refundable
development fees. Such development costs shall be refunded by KRYPTON
to GENTA JAGO * upon receipt by KRYPTON of an invoice from GENTA JAGO
or Jago Pharma AG.
3.6 In the event that the results of the feasibility study conclusively
demonstrate that no Prototype Formulation has been developed which
reasonably meets the Specifications to the good faith mutual
satisfaction of KRYPTON and GENTA JAGO, the Parties agree to enter
into good faith negotiations in order to determine an appropriate
course of action, including, but not limited to, that the Parties may
mutually agree to abandon the
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development program under this Agreement, and terminate this Agreement
with immediate effect.
ARTICLE 4
PILOT PHARMACOKINETIC STUDY
4.1 Included as part of the feasibility study described in Article 3.
above, KRYPTON shall, at its own responsibility and its own cost,
sub-contract under confidentiality commitments comparable in all
material respects to the provisions set forth herein between GENTA JAGO
and KRYPTON to an external qualified clinical research organization
(hereinafter ,,CRO") to perform a pilot pharmacokinetic study pursuant
to this Article 4.
4.2 The Pilot Pharmacokinetic Study shall consist of commercially
reasonable and appropriately designed * of the Prototype Formulations
and the Originator. KRYPTON shall reasonably consult with GENTA JAGO
in the design of the Pilot Pharmacokinetic Study and shall review the
final protocol with GENTA JAGO prior to initiating work with the
selected sub- contractor. The Pilot Pharmacokinetic Study shall be
conducted in accordance with generally accepted standards of Good
Clinical Practice and in compliance with Ethical Committee
requirements or equivalent requirements, where applicable.
4.3 Prior to the commencement of the Pilot Pharmacokinetic Study GENTA JAGO
shall submit to KRYPTON * for the entire Pilot Pharmacokinetic Study
which * shall be reasonably acceptable to KRYPTON. KRYPTON shall
reimburse GENTA JAGO's *, reasonably incurred by GENTA JAGO during the
Pilot Pharmacokinetic Study, including but not limited to costs,
expenses and fees paid to Jago Pharma and third party contractors, by
the payment of non-refundable development fees. Such development costs
shall be refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of
an invoice from GENTA JAGO or Jago Pharma AG.
4.4 KRYPTON shall provide GENTA JAGO with a copy of the report (hereinafter
referred to as the ,,Pilot Pharmacokinetic Study Report") reasonably
detailing the results of the Pilot Pharmacokinetic Study within six (6)
weeks as of the study's completion and presentation of the preliminary
data for GENTA JAGO's file.
4.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Pilot Pharmacokinetic Study, including without
limitation the availability or quality of the results and data from
such Pilot Pharmacokinetic Study to be carried out by KRYPTON and the
CRO.
4.6 In the event that the results of the Pilot Pharmacokinetic Study
conclusively demonstrate that it is not fully demonstrated to the good
faith mutual satisfaction of KRYPTON and GENTA JAGO that at least one
of the Prototype Formulations reasonably meet the
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respective Specifications, the Parties may mutually agree to abandon
the development program and terminate this Agreement with respect to
such Prototype Formulation.
ARTICLE 5
PRE-SCALE-UP ACTIVITIES
5.1 Upon completion of the Pilot Pharmacokinetic Study, KRYPTON may, at its
option, request and charge GENTA JAGO to carry out the pre-scale-up
activities as described in this Article 5. (hereinafter referred to as
the "Pre-Scale-Up Activities"). KRYPTON shall, within thirty (30) days
as from the date of the Pilot Pharmacokinetic Study Report notify in
writing GENTA JAGO of its decision whether to proceed with and to have
GENTA JAGO perform the Pre-Scale-Up Activities.
5.2 Prior to the commencement of the Pre-Scale-Up Activities GENTA JAGO
shall submit to KRYPTON * for the entire Pre-Scale-Up Activities which
* shall be reasonably acceptable to KRYPTON. KRYPTON shall reimburse
GENTA JAGO's *, reasonably incurred by GENTA JAGO during the Pre-Scale
Up activity, including but not limited to costs, expenses and fees
paid to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such pre scale up costs shall be
refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
5.3 The Pre-Scale-Up Activities to be performed by GENTA JAGO shall
comprise all reasonable activities necessary to allow the technology
transfer to, and subsequent scale- up at, the mutually established
manufacturing site, including, but not limited to, final optimization
of the Prototype Formulation (where necessary), development and
validation of the scale-up manufacturing procedure and analytical
validation. Such Pre-Scale-Up Activities shall be completed within the
time period mutually agreed upon by the Parties in Appendix D hereto,
calculated as from the date of receipt of the KRYPTON's notice by
GENTA JAGO pursuant to Section 5.1 above.
5.4 In the event that additional clinical testing, including without
limitation, confirming pharmacokinetic studies, is reasonably required
or deemed necessary beyond the program envisaged in this Agreement in
order to satisfy the FDA requirements for an NDA or ANDA approval of
the Product, KRYPTON and GENTA JAGO shall meet to discuss in good
faith the appropriate course of action to be followed and agree upon
any such additional testing to be performed, provided that any such
additional testing shall in any event be funded solely by KRYPTON.
5.5 Not later than upon the initiation of the Pre-Scale-Up Activities, the
Parties shall establish and mutually agree upon a manufacturing site,
where the Bio-Batches referred to in Section 7.2 below required for the
pivotal clinical studies will be produced and where the Final Product
shall be manufactured for commercial use after FDA approval(s) for the
Final Product have been granted.
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ARTICLE 6
PRE-PIVOTAL PHARMACOKINETIC STUDY
6.1 Included as part of the Pre-Scale-Up Activities, KRYPTON shall at its
own responsibility and its own cost, perform or have performed with a
CRO selected by KRYPTON, a pre- pivotal pharmacokinetic study pursuant
to this Article 6. (hereinafter referred to as "Pre- Pivotal Study").
Such Pre-Pivotal Study shall consist of *, to select the best of the
Prototype Formulations for each dose strength to be used in the
further development under this Agreement.
6.2 The Pre-Pivotal Study shall be performed in the United States of
America. KRYPTON shall consult, review and mutually agree with GENTA
JAGO on the design and final protocol of such Pre-Pivotal Study prior
to initiating work with the selected CRO.
6.3 KRYPTON shall reimburse to GENTA JAGO the * incurred by GENTA JAGO to
cover its workload for preparation and consulting of such Pre-Pivotal
Study. Such development costs shall be paid by KRYPTON * upon receipt
by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
6.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailling
the results of the Pre-Pivotal Study within ten (10) days of its
completion for GENTA JAGO's file. GENTA JAGO shall have no liability or
responsibility whatsoever with resupect to such Pre-Pivotal Study,
including without limitation, the performance or conduct of such Pre-
Pivotal Study or the availability or quality of the results and data
from such Pre-Pivotal Study to be carried out by KRYPTON and the CRO.
6.5 Upon completion of the Pre-Pivotal Study and availability of the
results of such Pre- Pivotal Study, the Parties shall consult with
each other on such results and mutually agree in writing upon the
Prototype Formulation to be selected for further development under
this Agreement. In the event that the results of the Pre-Pivotal Study
are unsatisfactory in that it is not fully demonstrated to the good
faith mutual satisfaction of the Parties that at least one of the
Prototype Formulations meet the respective Specifications, KRYPTON may
elect to abandon the development program and terminate this Agreement
with respect to such Prototype Formulation by giving written notice to
that effect to GENTA JAGO.
ARTICLE 7
FURTHER ACTIVITIES
7.1 Technology Transfer
Upon mutual agreement of the Prototype Formulation to be used for
development as referred to in Section 6.5 above, GENTA JAGO shall be
responsible for and initiate the technology transfer to, and perform
the scale-up at, the manufacturing site mutually established and
agreed upon by the Parties. GENTA JAGO agrees that such technology
transfer, and in particular the aspects of scale-up and validation of
the manufacturing
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process shall be carried out by GENTA JAGO on such equipment as shall
eventually be used by KRYPTON or a third party to manufacture the
Final Product. Upon completion of such scale-up, GENTA JAGO shall
notify KRYPTON thereof in writing.
7.2 Production of Industrial Scale Batches
Upon receipt by KRYPTON of GENTA JAGO's notice referred to in Section
7.1 above, the Parties shall initiate the production of three (3)
industrial scale batches (hereinafter "Bio-Batches") on such equipment
as shall eventually be used KRYPTON or a third party to commercially
manufacture the Final Product, based on the Prototype Formulation (the
size of each Bio-Batch to be not less than the greater of (i) 10% (ten
percent) of the anticipated initial commercial batch size, or (ii)
100,000 tablets), according to Current Good Manufacturing Practices,
such Bio-Batches to be subsequently used for stability testing and
pivotal clinical studies; provided however, that GENTA JAGO shall have
the ultimate responsibility with respect of any and all technical
aspects of such production of batches related to the technology
transfer and the implementation of such technology in the manufacturing
site.
7.3 Funding of Further Activities
(a) Prior to the commencement of any activities under Sections
7.1 and 7.2 above GENTA JAGO shall submit to KRYPTON * for
such further activities which * shall be reasonably
acceptable to KRYPTON. KRYPTON shall refund GENTA JAGO's *
reasonably incurred by GENTA JAGO under Sections 7.1 and 7.2
above, including but not limited to costs, expenses and fees
paid to Jago Pharma and third party contractors, by the
payment of non-refundable development fees. Such further
development costs shall be refunded by KRYPTON * upon
receipt by KRYPTON of an invoice from GENTA JAGO or Jago
Pharma AG.
(b) Furthermore, KRYPTON shall be responsible, at its own cost,
for the supply of all raw material including, but not limited
to, the Active Ingredients required or necessary for, and all
additional costs and expenses whatsoever arising out of or in
connection with, the production of the Bio-Batches described
in Section 7.2 above and all other costs associated with the
use of facilities, technology transfer, equipment and
analytical services.
7.4 Stability Testing
(a) KRYPTON shall be responsible for and perform or have
performed at its own cost, the stability testing of the
Final Product according to the then current requirements of
the FDA in bulk packaging and in the final packaging
materials. GENTA JAGO shall have no liability or
responsibility whatsoever with respect to such stability
testing, including without limitation, the performance or
conduct of such stability testing or the availability or
quality of the results and data from such
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stability testing to be carried out or requested by KRYPTON.
(b) KRYPTON shall provide to GENTA JAGO with a copy of all
stability testing data within thirty (30) days after the
completion of each stability testing period (hereinafter
referred to as the "Final Stability Testing Report") for
GENTA JAGO's file.
(c) GENTA JAGO agrees to provide additional technical assistance
and consultation as may be reasonably requested by KRYPTON
in connection with the stability testing of the Final
Product. KRYPTON shall pay to GENTA JAGO for such services
provided by GENTA JAGO's or Jago Pharma's personnel an
amount of USD * or part thereof spent, and furthermore,
KRYPTON shall reimburse GENTA JAGO for all reasonable and
documented travel related expenses of GENTA JAGO personnel
who travel at KRYPTON's request to locations remote from
such personnel's usual working location.
7.5 Further Provisions
In the event that KRYPTON and GENTA JAGO shall reasonably deem the
results or data from any of the activities to be performed by either
Party under this Article 7. with respect to any dose strength be
unsatisfactory for any reason, the Parties may mutually agree to
abandon the development program and terminate this Agreement with
immediate effect.
ARTICLE 8
PIVOTAL CLINICAL STUDY
8.1 Promptly upon completion of the further activities referred to in
Article 7. above, KRYPTON shall, at its own responsibility and its own
cost, sub-contract under confidentiality commitments comparable to the
provisions set forth herein between GENTA JAGO and KRYPTON to an
external qualified CRO of its choice, reasonably acceptable to GENTA
JAGO, to perform and manage a series of pivotal clinical studies
(hereinafter,,Clinical Studies") in man required and/or necessary for
any subsequent NDA or ANDA for the Final Product in accordance with
the then current requirements of the FDA.
8.2 KRYPTON shall consult, review and agree with GENTA JAGO on the design
and the final protocol of such Clinical Studies prior to initiating
work with the selected subcontractor.
8.3 KRYPTON shall reimburse to GENTA JAGO the * incurred by GENTA JAGO to
cover its workload for preparation and consulting of such Clinical
Studies. Such development costs shall be paid by KRYPTON * upon receipt
by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
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8.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing
the results of the Clinical Studies within ten (10) days of its
completion for GENTA JAGO's file.
8.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Clinical Studies, including without limitation, the
performance or conduct of such Clinical Studies or the availability or
quality of the results and data from such Clinical Studies to be
carried out or requested by KRYPTON.
8.6 In the event that the results of the Pivotal Clinical Studies are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of KRYPTON and GENTA JAGO that the Prototype
Formulation reasonably meets the respective Specifications, the Parties
may mutually agree to abandon the development program and terminate
this Agreement with respect to such dose strength.
ARTICLE 9
THE REGULATORY (NDA OR ANDA) SUBMISSION
9.1 Upon completion of the Clinical Studies, KRYPTON may, at its option,
elect to prepare and submit to the FDA an NDA or ANDA. KRYPTON shall
notify GENTA JAGO of its election to exercise or not to exercise this
option by giving written notice thereof to GENTA JAGO within thirty
(30) days as of the availability of the results of the Clinical
Studies.
9.2 In the event that KRYPTON elects pursuant to Section 9.1 above to make
NDA or ANDA submission(s) to any Regulatory Authority with respect to
a Final Product, KRYPTON shall have sole liability and responsibility
for the prosecution, conduct and results of such NDA or ANDA and shall
bear all costs in connection therewith. KRYPTON, at KRYPTON's option,
may elect by written notice to GENTA JAGO prior to commencement of the
technology transfer referred to in Section 7.1 above to have the NDA
or ANDA dossier prepared on its behalf by a qualified third party
acceptable to GENTA JAGO. KRYPTON shall be liable and responsible for
any and all costs associated with such sub-contracting.
9.3 KRYPTON or its chosen sub-contractor shall consult with GENTA JAGO, and
GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON or the chosen
sub-contractor, in connection with the preparation and prosecution of
any NDA or ANDA or with the preparation of the dossier to be submitted
to the FDA. KRYPTON shall pay to GENTA JAGO for such services and
consultation provided by GENTA JAGO's personnel an amount of USD * or
any part thereof spent. Furthermore, KRYPTON shall reimburse GENTA JAGO
for reasonable and documented travel-related expenses of GENTA JAGO
personnel who travel at KRYPTON's request to the elected manufacturing
facility(ies) or other locations remote from such personnel's usual
working location.
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ARTICLE 10
PROPRIETARY RIGHTS AND PATENTS
10.1 Patents and Proprietary Rights of GENTA JAGO
(a) The Licensor and GENTA JAGO, respectively, shall retain title
to and ownership of Patents, Know-How and GEOMATRIX(R)
Technology licensed to GENTA JAGO, including, but not limited
to, any and all developments and inventions relating to
Patents, Know-How and GEOMATRIX(R) Technology (hereinafter
collectively referred to as "GENTA JAGO IPR").
(b) KRYPTON shall not, directly or indirectly through its
officers, directors, employees, agents, customers or other
controlled or associated third parties, acquire any
proprietary interest in or other right to GENTA JAGO IPR,
other than provided in this Agreement.
(c) GENTA JAGO shall use all commercially reasonable efforts, at
its own cost, to cause the Licensor to prepare, prosecute
and maintain all patent applications and patents
constituting Patents, and shall keep KRYPTON fully and
promptly informed on any developments or changes relating
thereto. If the Licensor decides not to further prosecute
any patent application constituting Patents, GENTA JAGO
shall promptly inform KRYPTON of such decision in writing,
and the Parties shall, upon KRYPTON's reasonable written
request, meet with the Licensor to discuss any reasonable
appropriate action. During the term of this Agreement, GENTA
JAGO shall, at its sole cost, use all commercially
reasonable efforts to cause the Licensor to take all steps
necessary to maintain Patents to the extent GENTA JAGO deems
commercially reasonable. If the Licensor decides not to
maintain any patent constituting Patents, GENTA JAGO shall
promptly inform KRYPTON of such decision in writing, and the
Parties shall, upon KRYPTON's reasonable written request,
meet with the Licensor to discuss any reasonable appropriate
action. Notwithstanding the foregoing, KRYPTON acknowledges
to GENTA JAGO that Licensor has the final authority
regarding such preparation, prosecution and maintenance of
all patent applications and patents.
10.2 Patents and Proprietary Rights for Final Products
(a) KRYPTON shall retain title to and ownership of all
developments, whether patentable or not, relating specifically
and exclusively to the Final Products, provided that such
developments are entirely independent of any and all GENTA
JAGO IPR (hereinafter collectively referred to "Final Product
IPR").
(b) KRYPTON shall be responsible for and shall control, at its own
cost, the preparation, prosecution and maintenance of all
Final Product IPR and shall keep GENTA JAGO fully and promptly
informed on any developments or changes relating thereto.
During the term of this Agreement, KRYPTON shall, at its sole
cost, take all steps necessary to prosecute and/or maintain
all Final Product IPR
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to the extent KRYPTON deems commercially reasonable. If
KRYPTON intends not to further prosecute and/or maintain any
of the Final Product IPR, KRYPTON shall promptly inform GENTA
JAGO of such intention in writing, and GENTA JAGO shall have
the right and option, but not the obligation, to have
transferred to it sole title to and ownership in such Final
Product IPR free of any charge by giving respective written
notice thereof to KRYPTON within thirty (30) days after GENTA
JAGO's receipt of KRYPTON's notice referred to above.
(c) In the event GENTA JAGO has and exercises its right and
option referred to Section 10.2 (b) above to have
transferred to it any such Final Product IPR, KRYPTON shall
promptly undertake any and all steps required and/or
necessary to transfer title to and ownership of such Final
Product IPR to GENTA JAGO. In the event that GENTA JAGO
exercises its option to have transferred such Final Product
IPR from KRYPTON to GENTA JAGO, GENTA JAGO shall maintain
such Final Product IPR during the term of this Agreement to
the extent GENTA JAGO deems commercially reasonable and
shall bear all cost associated therewith incurred after the
date of GENTA JAGO's notice to KRYPTON exercising its option
referred to in Section 10.2 (b) above. In such case, the
Parties shall negotiate in good faith the terms and
condition, under which such Final Product IPR transferred to
GENTA JAGO shall be included in the License pursuant to
Article 11. below.
10.3 Notification of Infringement
(a) If KRYPTON becomes aware of (i) any product or activity of any
kind that involves or may involve an infringement or violation
of GENTA JAGO IPR or Final Product IPR or (ii) any third-party
action, claim or dispute (including, but not limited to,
actions for declaratory judgment alleging the invalidity or
non- infringement) based upon or arising out of GENTA JAGO IPR
or Final Product IPR, then KRYPTON shall promptly notify GENTA
JAGO in writing of any such infringement, violation, action,
claim or dispute.
(b) If GENTA JAGO becomes aware of (i) any product or activity
of any kind that involves or may involve an infringement or
violation of GENTA JAGO IPR with respect to Final Products
or of Final Product IPR; or (ii) any third-party action,
claim or dispute (including, but not limited to, actions for
declaratory judgment alleging the invalidity or
non-infringement) based upon or arising out of GENTA JAGO
IPR with respect to Final Products or of Final Product IPR,
then GENTA JAGO shall promptly notify KRYPTON in writing of
any such infringement, violation, action, claim or dispute.
10.4 Enforcement of GENTA JAGO IPR
(a) GENTA JAGO, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of
action to enforce, or otherwise abate the infringement of, or
defend third-party actions regarding, GENTA JAGO IPR, (ii)
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to take, or refrain from taking, appropriate action to
enforce, or defend third-party actions regarding, GENTA JAGO
IPR, (iii) to control any litigation or other enforcement
action regarding GENTA JAGO IPR, and (iv) to enter into, or
permit, the settlement of any such litigation or other
enforcement action regarding GENTA JAGO IPR. GENTA JAGO shall
keep KRYPTON informed on a regular basis on its taking or
refraining from taking, and the development of, any of the
foregoing actions, and shall consider, in good faith, the
interests of KRYPTON under this Agreement when taking any of
the foregoing actions, to the extent that any such action or
such infringement may have an adverse effect on Final Product.
KRYPTON shall, at its own cost, fully cooperate with GENTA
JAGO in the planing and execution of any suit or other action
to enforce, or defend third-party actions regarding, GENTA
JAGO IPR as reasonably required or requested by GENTA JAGO.
(b) If GENTA JAGO does not within one-hundred-twenty (120) days,
or any shorter delay imposed by any applicable law or
regulation or court or authority having jurisdiction, after
receiving notice of any infringement or violation of GENTA
JAGO IPR which may adversely affect Final Products, or of
any third-party action, claim or dispute based upon or
arising out of GENTA JAGO IPR which may adversely affect
Final Products, commence or take an action to enforce, or
otherwise abate such infringement, or defend against such
third-party action, then the Parties shall, upon KRYPTON's
written request, promptly meet to discuss any reasonable
appropriate action with regard to such enforcement of GENTA
JAGO IPR which may adversely affect Final Products, provided
however, that KRYPTON is aware and acknowledges that in such
case the Licensor will have the right to enforce any and all
GENTA JAGO IPR pursuant to the License Agreements.
(c) Subject to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in the
preceding section, KRYPTON, upon its written request and at
its sole expense, shall be made an additional, but not
controlling party, in any such suit or other action where
necessary to obtain complete relief regarding the subject
infringement or violation.
10.5 Enforcement of Final Product IPR
(a) KRYPTON, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of
action to enforce, or otherwise abate the infringement of,
or defend third-party actions regarding, Final Product IPR,
(ii) to take, or refrain from taking, appropriate action to
enforce, or defend third- party actions regarding, Final
Product IPR, (iii) to control any litigation or other
enforcement action regarding Final Product IPR, and (iv) to
enter into, or permit, the settlement of any such litigation
or other enforcement action regarding Final Product IPR.
Notwithstanding anything contained in the preceding
sentence, KRYPTON shall not settle any suit or action or
otherwise consent to an adverse judgment in such suit or
action without the prior written consent of GENTA
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JAGO, which consent shall not be withheld unreasonably.
KRYPTON shall keep GENTA JAGO informed on a regular basis on
its taking or refraining from taking, and the development of,
any of the foregoing actions, and shall consider, in good
faith, the interests of GENTA JAGO under this Agreement and in
GENTA JAGO IPR, when taking any of the foregoing actions.
(b) If KRYPTON does not, within one-hundred-and-twenty (120)
days, or any shorter delay imposed by any applicable law or
regulation or court or authority having jurisdiction, after
receiving notice of any infringement or violation of Final
Product IPR, or of any third-party action, claim or dispute
based upon or arising out of Final Product IPR, commence or
take an action to enforce, or otherwise abate such
infringement, or defend against such third-party action,
then GENTA JAGO shall have the right, but not the
obligation, at its sole expense, to take and control such
action as it deems appropriate to enforce, or abate the
infringement of, or defend against such third-party action,
regarding Final Product IPR. GENTA JAGO shall keep KRYPTON
informed on a regular basis of any such action and consider,
in good faith, the interests of KRYPTON under this Agreement
when taking any of the foregoing actions. KRYPTON, upon its
written request and at its sole expense, shall be made an
additional, but not controlling party, in any such suit or
other action controlled by GENTA JAGO where necessary to
obtain complete relief regarding the subject infringement or
violation.
10.6 Application of Monies Recovered
Subject always to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in Section
10.4(c) and any right to receive any monies recovered therefrom as
provided for in the License Agreements, all monies recovered upon the
final judgment or settlement of any suit or other action under this
Sections 10.4 or 10.5 shall be applied as follows:
(i) to cover any and all costs and expenses (including attorney's
fees) incurred by the Party controlling such suit or other
action;
(ii) to cover any and all costs and expenses (including attorney's
fees) reasonably, or upon request of the controlling Party,
incurred by the other Party in connection with such suit or other
action, if any;
(iii) the remainder, if any, to the Party controlling any such suit or
other action.
ARTICLE 11
SUB-LICENSE AGREEMENT
11.1 GENTA JAGO hereby grants to KRYPTON the exclusive and sublicenseable
right and sub-license (hereinafter referred to as the ,,License") to
use, manufacture, have manufactured, sell and market the Final Products
in the Territory and to use the Patents,
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GEOMATRIX(R) Technology and Know How exclusively for that purpose subject to the
payment of the * and the Royalties pursuant to Articles 13. and 14.
below.
11.2 The rights of KRYPTON to grant any sub-license in any part of the
Territory shall be subject to the requirement that KRYPTON shall obtain
the written approval of GENTA JAGO prior to executing any such
sub-license agreement, which approval shall not unreasonably be
withheld, provided however, that no such approval by GENTA JAGO shall
be required for any sub-license to an Affiliate of KRYPTON .
11.3 In any event KRYPTON shall be responsible for any and all acts, deeds
and undertakings of its permitted sub-licensee(s) and KRYPTON and its
permitted sub-licensee(s) shall continue to be bound by all terms and
provisions under this Agreement throughout its term. In case that
KRYPTON sub-licenses rights and/or the License to any sub- licensee(s)
approved by GENTA JAGO, such sub-licensee(s) shall agree in writing to
any and all of KRYPTON's obligations and undertakings under this
Agreement, including but not limited to its confidentiality
obligations set forth hereinafter. Furthermore, KRYPTON undertakes
that any and all sub-license agreements shall provide for inspection
and audit provisions identical to the provisions set forth below in
order to enable GENTA JAGO to control and audit and receive any and
all fees and Royalties due as provided in this Agreement. KRYPTON
shall provide GENTA JAGO promptly with reasonable appropriate
information on its sub-licensee(s) and copies of all agreements with
such sub-licensee(s) (with only the commercial terms may be redacted).
ARTICLE 12
MANUFACTURING AND PRODUCT LIABILITY
12.1 In the event that KRYPTON, subject to Section 5.5 above, elects GENTA
JAGO, and GENTA JAGO expressly agrees to such manufacture, or any of
its Affiliates shall manufacture Final Products, then the Parties
agree to enter into good faith negotiations on and to use commercially
reasonable efforts to execute in due time a respective Manufacturing
and Supply Agreement, according to which GENTA JAGO or its Affiliates
shall undertake to manufacture and supply Final Products in sufficient
quantities to meet KRYPTON's requirements, at a sale price for such
Final Products manufactured equal to GENTA JAGO's *. In the event and
for such period of time, that GENTA JAGO or its Affiliate manufactures
and supplies Final Product under such Manufacturing and Supply
Agreement, the Royalty Rate referred to in Section 14.1 below shall be
*
12.2 In the event that KRYPTON or any of its Affiliates or any third party
is elected pursuant to Section 5.5 above to manufacture Final Product,
then KRYPTON undertakes and agrees that at all times the
Specifications and to any and all laws, rules and regulations imposed
by any competent authority on the manufacturing, marketing,
distribution and sale of Final Products are strictly adhered to by the
manufacturer, and KRYPTON shall during the entire term of this
Agreement be solely and fully liable and responsible for the
compliance with all such laws, rules and regulations when
manufacturing, having manufactured,
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
marketing, distributing and selling Final Products itself and/or
through Affiliates or sub-licensee(s).
12.3 KRYPTON shall indemnify, defend and hold GENTA JAGO, its Affiliates
and the Licensor harmless from and against any losses, claims,
liabilities, costs and expenses (including reasonable attorney's fees)
that may be imposed upon or asserted against GENTA JAGO and/or its
Affiliates and/or the Licensor as a result of the marketing,
distributing, manufacture, use or sale of Final Products by or on
behalf of KRYPTON, its Affiliates, agents or sub-licensee(s), except
for those claims, liabilities, costs and expenses arising from gross
negligence or intentional misconduct on the part of GENTA JAGO, its
Affiliates or the Licensor.
ARTICLE 13
* PAYMENTS AND OTHER CONSIDERATION
13.1 As consideration for GENTA JAGO's preliminary development efforts for
the Prototype Formulation performed prior to the execution of this
Agreement as referred to in Section 2.1 above, KRYPTON undertakes to
pay to GENTA JAGO an initial *, payable upon execution of this
Agreement.
13.2 As consideration for the License granted by GENTA JAGO to KRYPTON under
this Agreement and in consideration of certain major development steps
achieved hereunder, KRYPTON undertakes to pay to GENTA JAGO *:
(a) * KRYPTON's receipt of GENTA JAGO's notice referred to in Section
7.1 above; and
(b) *; and
(c) * for the Final Product; and
(d) * for the Final Product.
13.3 Unless otherwise agreed by the Parties in writing, all payments under
this Article 13. shall be made in United States Dollars and to such
place or account as GENTA JAGO reasonably requests from time to time in
writing.
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
ARTICLE 14
ROYALTIES
14.1 During a period commencing upon the first commercial sale of Final
Product in each country of the Territory and ending upon the earlier
of (i) the fifteenth (15th) anniversary of the first commercial sale
of Final Product in such country of the Territory, and (ii) the
expiration of the last of the Patents covering Final Product in such
country of the Territory (hereinafter referred to as the,,Royalty
Term"), and in further consideration of the License granted to KRYPTON
by GENTA JAGO, KRYPTON shall pay to GENTA JAGO a royalty (hereinafter
referred to as the,,Royalty") of an amount equal to * of the Final
Product in the Territory.
14.2 The Parties agree that * shall be applicable for the first time on
sales of such Final Product in such country of the Territory after the
beginning of the calendar quarter immediately following the first
commercial sale of such Competitive Product.
14.3 Royalties shall be payable on a quarterly basis. KRYPTON shall remit
to GENTA JAGO within six (6) weeks after the end of each calendar
quarter the amount of Royalty due with respect to Net Sales and/or
Gross Margin, as the case may be, achieved in the preceding quarter,
beginning with the calendar quarter in which the first commercial sale
of the Final Product is made in any country of the Territory. KRYPTON
shall deliver to GENTA JAGO, along with such remittance of Royalty
payments, a detailed statement (hereinafter referred to as
the "Royalty Report") of the Net Sales and/or Gross Margin, as the
case may be, of the Final Product on a country-by-country basis to
which the Royalty payment relates.
14.4 All Royalty Reports shall be prepared in accordance with generally
accepted accounting principles consistently applied from applicable
period to period and shall be certified by an officer of KRYPTON as
being so prepared, true, accurate and correct.
14.5 Unless otherwise agreed by the Parties in writing, payments of
Royalties shall be made in United States Dollars and to such place or
account as GENTA JAGO reasonably requests from time to time in
writing. Any conversions into United States Dollars from the currency
in which the corresponding Net Sales and/or Gross Margin for such
Royalties were made, are to be calculated as using the average closing
buying rate for such currency quoted in the continental terms method
of quoting exchange rates (local currency per USD 1) published in the
Wall Street Journal on the last business day of the applicable
reporting period covered by such Royalty Report.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
ARTICLE 15
INSPECTION AND AUDIT
15.1 During the term of this Agreement and during a period of twelve (12)
months after its expiration or termination for any reason, upon the
written request of GENTA JAGO and not more than once each calendar
year, KRYPTON shall permit an independent certified public accountant
of internationally recognized standing selected by GENTA JAGO, at
GENTA JAGO's expense, to have access during regular business hours to
such of the records of KRYPTON and its Affiliates as may be reasonably
necessary to verify the accuracy of the Royalty Reports for any year
ending not more than thirty-six (36) months prior to the date of such
request. The accounting firm shall disclose to GENTA JAGO only whether
the Royalty Reports and records of KRYPTON and its Affiliates and the
amount of Royalties actually paid are correct or not and the specific
details concerning any discrepancies; no other information shall be
shared. The Parties agree to accept such written audit report as final
and binding upon them.
15.2 If such independent accounting firm correctly concludes that
additional Royalties were owed during any such period audited, KRYPTON
shall pay such additional Royalties within ten (10) days of the date
GENTA JAGO delivers to KRYPTON such accounting firm's written report
so concluding. The fees and expenses charged by such accounting firm
with respect to such audit shall be paid by GENTA JAGO; provided
however, if any such audit correctly discloses that Royalties payable
by KRYPTON for the audited period are more *, then KRYPTON shall pay
all reasonable fees and expenses charged by such accounting firm with
respect to such audit.
15.3 GENTA JAGO shall treat all financial information subject to review
under this Article 15. as confidential and subject to the
confidentiality obligations in Article 16. below.
ARTICLE 16
CONFIDENTIALITY
16.1 Confidential Information. KRYPTON shall maintain in confidence all
Know-How and other information of GENTA JAGO (including samples)
disclosed by GENTA JAGO and identified as, or acknowledged to be,
confidential (the ,,Confidential Information"), and shall not use,
disclose or grant the use of the Confidential Information except on a
need- to-know basis to its directors, officers, employees, agents,
consultants, clinical investigators or other permitted contractors, to
the extent such disclosure is reasonably necessary in connection with
KRYPTON's activities as expressly authorized by this Agreement. To the
extent that disclosure is authorized by this Agreement, prior to
disclosure, KRYPTON hereto shall obtain agreement in writing of any
such person to hold in confidence and not make use of the Confidential
Information for any purpose other than those authorized by this
Agreement. KRYPTON shall notify GENTA JAGO promptly upon the discovery
of the unauthorized use or disclosure of the Confidential Information.
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
16.2 Permitted Disclosures. The obligations of confidentiality and non-use
contained in Section 16.1 above shall not apply to the extent that (a)
KRYPTON (i) is required to disclose information by law, regulation or
order of a governmental agency or a court of competent jurisdiction,
or (ii) is required to disclose information to any governmental agency
for purposes of obtaining approval to test or market Final Product,
provided in each case that KRYPTON shall give GENTA JAGO written
notice thereof and sufficient opportunity to object to any disclosure
or to request confidential treatment thereof, or (b) KRYPTON can
demonstrate that (i) the disclosed information was public knowledge at
the time of such disclosure to it, or thereafter became public
knowledge, other than as a result of actions of KRYPTON, its
directors, officers and employees in violation hereof; (ii) the
disclosed information was rightfully known by KRYPTON (as shown by its
written records) prior to the date of disclosure to it by GENTA JAGO
hereunder; (iii) the disclosed information was disclosed to KRYPTON on
an unrestricted basis from a source unrelated to any party to this
Agreement and not under a duty of confidentiality to GENTA JAGO or the
Licensor; or (iv) the disclosed information was independently
developed by KRYPTON without the use of Confidential Information
disclosed by GENTA JAGO.
16.3 Terms of this Agreement. Except as otherwise provided in Section 16.2
above, neither Party shall disclose any terms or conditions of this
Agreement to any third party (other than the Licensor) without the
prior consent of the other Party. Notwithstanding the foregoing, prior
to the execution of this Agreement, the Parties shall agree upon the
substance of information that can be used to describe the terms of
this transaction, and the Parties may disclose such information only
without the other Party's consent. Notwithstanding the foregoing,
prior to the execution of the Agreement, the Parties shall agree upon
the substance of information that can be used to describe the terms of
this transaction, and the Parties may disclose such information
without the other Party's consent.
16.4 Term of Confidentiality. The confidentiality obligations under this
Article 16 shall be effective during the term of this Agreement and for
a period of ten (10) years after the expiration or earlier termination
hereof.
16.5 Injunctive Remedies. GENTA JAGO shall be entitled to injunctive
remedies and relief against KRYPTON and its Affiliates and any third
parties for any breach or threatened breach of the confidentiality
obligations under this Article 16.
16.6 Damages. In the event of a breach of the confidentiality provisions
under this Article 16 by KRYPTON, its Affiliates or its directors,
officers, employees or any other person who were given access to the
Confidential Information by KRYPTON, GENTA JAGO shall be entitled to
receive from KRYPTON any and all actual costs and damages caused by
such breach.
16.7 Public Announcements. Neither Party shall make any press releases or
other public announcements or disclosures regarding the execution and
the existence of this Agreement or any activities conducted hereunder,
including development results, filings and registrations, without the
prior written consent of the other Party, except for such public
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<PAGE>
disclosure as may be necessary in the opinion of any party's legal
advisor in order not to be in violation of or default under any
applicable law, regulation or governmental order, in such later event
the party having an obligation to disclose shall submit to the other
party a draft of the required announcement and shall give the other
party the opportunity to request reasonable amendments and
modifications of such required announcement.
ARTICLE 17
TERM AND TERMINATION
17.1 Term and Expiration
(a) This Agreement shall expire on a country-by-country basis upon
the expiration of the Royalty Term.
(b) Upon the expiration of this Agreement in each country of the
Territory pursuant to Section 17.1 (a) above and payment of all
fees, including but not limited to the *, and all Royalties and
other payments by KRYPTON due GENTA JAGO under this Agreement,
the License shall be deemed to be a perpetual, fully paid-up and
royalty-free license for such Final Product and each such country
of the Territory.
17.2 Termination Prior to Registration
During the development, test, study and registration phases as
specified in Articles 3. through 8. above, and until the first
successful registration approval of any Final Product by any Regulatory
Authority, this Agreement may be terminated in accordance with the
provisions set forth in Sections 3.6, 4.6, 6.5, 7.5 and 8.6 above.
17.3 Termination for Cause
During the entire term of this Agreement either Party may terminate
this Agreement by giving to the other Party written notice to that
effect, if any of the following events occur:
(a) the other Party is in default or in breach of a term or provision
hereof and such default or breach continues and is not remedied
within thirty (30) days upon the other Party's written request to
remedy such default or breach; or
(b) the other Party shall commit a breach of any of the
confidentiality provisions of Article 16. above; or
(c) the other Party goes into liquidation, voluntarily or otherwise,
other than for the sole purpose of reorganization, or goes into
bankruptcy or makes an assignment for the benefit of creditors,
or in the event of a receiver being appointed of the other
Party's property or parts thereof.
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<PAGE>
17.4 Effect of Termination
(a) If KRYPTON elects to so terminate the Agreement under Section
17.2 above prior to filing of the ANDA in the United States,
then: (i) such termination shall be without penalty or liability
to KRYPTON; (ii) all rights and licenses granted by GENTA JAGO
hereunder shall revert to GENTA JAGO with respect to such
country(ies) so terminated, (iii) KRYPTON be relieved of any
payments that are scheduled or may be made in the future under
this Agreement, (iv) KRYPTON shall return to GENTA JAGO all
materials, documentation, information, data and other things
furnished by GENTA JAGO in connection with this Agreement,
including without limitation any and all Confidential
Information, together with all copies thereof in KRYPTON's
possession or under its control, (v) all Registrations pertaining
to the marketing of the Product shall be transferred to and be
owned by GENTA JAGO as to the affected country(ies) and the data
generated under this Agreement shall be provided to and
thereafter may be freely used by GENTA JAGO to develop,
manufacture and market the Product; and (vi) GENTA JAGO and its
Affiliates shall thereafter be entitled to exercise such rights
as they may have under their own license agreements to make, have
made, use or sell the Product in the country(ies) so terminated
without compensation or obligation to KRYPTON; provided, that the
foregoing rights under (iv) and (vi) shall not create or imply
any right or license under any patent rights, copyright rights,
trademarks or trade names, know-how, or other intellectual
property rights owned or controlled by KRYPTON or its Affiliates.
(b) If KRYPTON elects to so terminate this Agreement subsequent to
the filing of the ANDA in the United States, then: (i) such
termination shall be without penalty or liability to KRYPTON;
(ii) all rights and licenses granted by GENTA JAGO hereunder
shall revert to GENTA JAGO with respect to such country(ies) so
terminated; (iii) KRYPTON shall be relieved of any payments that
are scheduled or may be made in the future under this Agreement,
(iv) KRYPTON shall return to GENTA JAGO all materials,
documentation, information, data and other things furnished by
GENTA JAGO in connection with this Agreement, including without
limitation any and all Confidential Information, together with
all copies thereof in KRYPTON's possession or under its control,
(v) GENTA JAGO and its Affiliates shall thereafter be entitled to
make, have made, use or sell the Product in the country(ies) so
terminated (and, provided, that the foregoing shall not create or
imply any right or license under any patent rights, copyright
rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by KRYPTON or
its Affiliates); (vi) all Registrations pertaining to the Product
shall be transferred to and be owned by GENTA JAGO as to the
affected country(ies) and the data generated hereunder shall be
provided to and thereafter may be freely used by GENTA JAGO to
develop, manufacture and market the Product; and (vii) GENTA JAGO
shall pay to KRYPTON the same royalty, which shall be paid in the
same manner and subject to the same terms and conditions as would
otherwise have applied to KRYPTON, as KRYPTON would otherwise
have paid (absent such termination) hereunder to GENTA JAGO on
Net Sales (or on
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the Gross Margin of such Net Sales, as the case may be) of the
Product in the country(ies) to which such termination applies
(with such royalty to be paid by GENTA JAGO and its Affiliates in
each such country until expiration of the Royalty Term in each
such country), until such time as the royalties paid to KRYPTON
equal the aggregate amount that had been paid by KRYPTON to GENTA
JAGO prior to such termination under the Sections 3.5, 4.3, 5.2,
6.3, 7.3,8.3, 9.2 and 13., at which time the royalty rate then
prevailing on Net Sales (or on the Gross Margin of such Net
Sales, as the case may be) in the United States shall be reduced
by two percent (2 %) (but shall not be reduced for sales outside
the United States).
(c) Otherwise the termination of this Agreement shall be without
prejudice to any rights and obligations of either Party accrued
prior to the effective date of termination. KRYPTON shall
forthwith make all payments due and outstanding to GENTA JAGO at
the date of termination. Except as explicitly otherwise stated in
this Agreement, GENTA JAGO shall not be obligated to refund upon
termination of this Agreement to KRYPTON any payments, including
without limitation the *, made by KRYPTON to GENTA JAGO prior to
such termination pursuant to the provisions of this Agreement.
(d) The termination of this Agreement pursuant to Section 17.3 above
by either Party shall not limit remedies which may be otherwise
available in law or equity to either Party.
17.5 Early Termination of the License Agreements
(a) In the event that the License Agreements are terminated prior to
the expiration of the last to expire of the Patents licensed to
GENTA JAGO in the Territory, then the License granted hereunder
to KRYPTON shall also terminate upon KRYPTON's receipt of the
respective termination notice from the Licensor. KRYPTON may give
written notice to the Licensor of KRYPTON's desire to continue
the License granted under this Agreement within sixty (60) days
as of KRYPTON's receipt of the Licensor's notice referred to
above.
(b) In the event that KRYPTON timely notifies the Licensor of its
desire to continue the License granted under this Agreement, the
Licensor shall have the right, at its sole discretion, to elect
to assume in writing within sixty (60) days upon the Licensor's
receipt of KRYPTON's notice any and all rights of GENTA JAGO
under this Agreement and to promptly cure all defaults of GENTA
JAGO under this Agreement, if any.
(c) In the event that the Licensor does not timely gives notice to
KRYPTON and cures all of GENTA JAGO's defaults hereunder pursuant
to Section 17.5(b) above, then KRYPTON shall promptly assume in
writing any and all rights and obligations of GENTA JAGO under
the License Agreements with the Licensor, but with regard to the
rights encompassed by the License granted hereunder only, and
promptly
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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<PAGE>
cure all defaults of GENTA JAGO under the License Agreements with
regard to the rights encompassed by the License granted hereunder
only, if any.
(d) Notwithstanding anything contained in this Section 17.5, no
action taken by the Licensor and/or KRYPTON to continue or not to
continue the License shall relieve GENTA JAGO from any liability
for any uncured defaults under this Agreement or the License
Agreements, and such action by the Licensor and/or KRYPTON shall
be without prejudice to any other rights or remedies the Licensor
and/or KRYPTON may have in law or equity.
ARTICLE 18
WARRANTIES
18.1 GENTA JAGO shall carry out and undertake the studies and tests
specified in this Agreement in a careful and diligent manner. GENTA
JAGO agrees to carefully choose, instruct and supervise any employees,
officers, Affiliates or third parties to be chosen by GENTA JAGO
pursuant to this Agreement, who are involved with the tests and
studies. Nothing in this Agreement shall be construed as a
representation made, or warranty given, by GENTA JAGO that any
development performed by or for GENTA JAGO under this Agreement will
be successful in whole or in part, or that any product, including
Final Product, which may be developed, will be successful in the
commercial marketplace. Furthermore, GENTA JAGO makes no
representation or warranty, express or implied, with respect to
GEOMATRIX(R)Technology and/or Know-How, including without limitation,
any warranty of completeness, accuracy, merchantability or fitness for
a particular purpose thereof.
18.2 GENTA JAGO represents and warrants that it has all rights regarding
Patents, GEOMATRIX(R)Technology and Know-How necessary to grant the
License hereunder. Notwithstanding the preceding sentence, GENTA JAGO
does not assume any responsibility and makes no warranty that the
performance of this Agreement and any product developed hereunder,
including Prototype Formulation(s) and Final Products, do not infringe
any third party's patents, patent applications or other intellectual
property rights. Notwithstanding the preceding sentence, GENTA JAGO
represents and warrants that, as of the effective date of this
Agreement, it is not aware and has not knowledge of any such
infringement of any third party rights. If, however, during the course
of this Agreement either Party discovers that the Prototype
Formulation(s) and/or the Final Products infringe or may infringe any
third party's intellectual property rights, it shall promptly inform
the other Party thereof and the Parties shall meet to discuss the
course of action to be taken with regard thereto.
18.3 Nothing in this Agreement shall be construed as a representation made,
or warranty given by GENTA JAGO that any patent will issue based upon
any pending patent application encompassed by the term Patents, and
that any patent encompassed by the term Patents which issues will be
valid or enforceable.
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<PAGE>
18.4 GENTA JAGO assumes no liability or responsibility for any damages
caused to KRYPTON, third parties, animals and/or the environment by the
manufacturing, marketing or use of the Prototype Formulations or Final
Products or the active ingredient contained therein, except to the
extent that any of the above are attributable to the gross negligence
or willful misconduct of GENTA JAGO in performing its obligations
hereunder.
18.5 Subject to the specific representations and warranties given and
specific disclaimers of representations and warranties included in
this Article 18, and further subject to anything to the contrary
contained in this Agreement, either Party shall, as to third parties,
be indemnified and held harmless by the other Party from and against
any and all losses, liabilities and damages arising from any claim,
action or other proceeding by any third party relating to any acts or
omissions of the other Party, its directors, officers, employees or
agents, or the gross negligence or willful misconduct of such other
Party, its directors, officers, employees or agents in performing any
of its obligations under this Agreement.
18.6 Any liability, warranty and undertaking contained herein shall be
limited to the payment by either Party for direct damages to the other
Party and in any event, neither Party shall be liable to the other
Party for any special, indirect, punitive or consequential damages
and/or loss of profits or anticipated profits, respectively.
18.7 KRYPTON shall, at its own expense, purchase from an insurance company
of its choice and shall maintain during the entire term of this
Agreement an appropriate and customary policy of general liability and
product liability insurance covering its responsibilities regarding
Prototype Formulation(s) and Final Products developed, manufactured,
marketed and sold under this Agreement and the Active Ingredient
contained therein and the use thereof. Upon request, KRYPTON shall
provide GENTA JAGO with evidence that such insurances are existing and
are maintained.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Agreement: The terms, covenants, conditions and provisions
contained in this Agreement, including its Appendices referred to
herein, constitute the total and complete agreement of the Parties and
supersede all prior understandings and agreements hereto made, and
there are no other representations, understandings or agreements
relating to the subject matter hereof. The provisions of this
Agreement may not be waived, altered, amended or repealed in whole or
in part except by the written consent of both of the Parties to this
Agreement.
19.2 Assignment: This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any
right or obligation hereunder be assigned or transferred by either
Party, other than to an Affiliate of such Party, without the consent
of the other Party; provided however, that either Party may, without
such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or
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<PAGE>
sale of all or substantially all of its business, or in the event of
its merger, consolidation, change in control or similar transaction;
and provided further that GENTA JAGO may without the consent of
KRYPTON assign any and all of its rights and obligations hereunder to
the Licensor and/or any of the Licensor's Affiliates. Any permitted
assignee shall assume all obligations of its assignor under this
Agreement or under the respective rights or obligations actually
assigned.
19.3 Successors: This Agreement and all rights hereunder shall ensure to the
benefit of all successors and assigns of both Parties.
19.4 Notices: Any consent, notice or report required or permitted to be
given or made under this Agreement by one Party to the other shall be
in English and in writing, delivered personally or by courier service
or by facsimile (promptly confirmed by personal delivery or courier
service) addressed to the other Party at its address indicated below,
or to such other address as shall have been notified in writing to the
sending Party by the receiving party from time to time, and shall take
effect upon receipt by the addressee.
IF TO KRYPTON: KRYPTON LTD.
East Wing, Second Level
Hadfield House
Library Street
Gibraltar
attn.: PRESIDENT
WITH COPIES TO: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
attn.: COMPANY SECRETARY
AND: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
IF TO GENTA JAGO: GENTA JAGO Technologies B.V.
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz, Switzerland
attn..: MANAGEMENT COMMITTEE
WITH COPIES TO: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
8002 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
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<PAGE>
AND: PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
attn.: THOMAS E. SPARKS, JR., ESQ.
19.5 Independent Contractors: It is expressly agreed that the Parties shall
be independent contractors and that the relationship between the
Parties shall not constitute a partnership, joint venture or agency.
Neither Party 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 Party, without the prior written
consent of the other Party to do so.
19.6 Severability: Each Party hereby acknowledges that it does not intend
to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries.
Should one or more provisions of this Agreement be or become invalid,
the Parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their
economic effect are sufficiently similar to the invalid provisions
that it can be reasonably assumed that the parties would have entered
into this Agreement with such provisions. In case such provisions
cannot be agreed upon, the invalidity of one or several provisions of
this Agreement shall not affect the validity of this Agreement as a
whole, unless the invalid provisions are of such essential importance
to this Agreement that it is to be reasonably assumed that the Parties
would not have entered into this Agreement without the invalid
provisions.
19.7 Force Majeure: Neither Party hereto shall be held liable or
responsible to the other Party nor be deemed to have defaulted under
or breached this Agreement for failure or delay in fulfilling or
performing any term of this Agreement when such failure or delay is
caused by or results from causes beyond the reasonable control of the
affected Party including but not limited to fire, floods, embargoes,
war, acts of war (whether war be declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by
any governmental authority or the other Party hereto.
19.8 Interest: In the event any amount due and payable under this Agreement
is not paid by the due date, then the Party owing such amount shall pay
to the creditor, without being requested by the other Party, interest
on the total outstanding amount at the rate equal to the London
Interbank Offered Rate (,,LIBOR"), as published in the Wall Street
Journal (Europe) on the date that such payment falls due, increased by
three percent (3%), in United States Dollars and adjusted on the first
day of every calendar quarter.
19.9 Headings: The titles and headings used in this Agreement are intended
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
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<PAGE>
19.10 Waiver: The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be
deemed a waiver of any other right hereunder or of any other breach or
failure by said other Party whether of a similar nature or otherwise.
19.11 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
ARTICLE 20
DISPUTE RESOLUTION AND ARBITRATION
20.1 In the event of any dispute arising between the Parties concerning this
Agreement, GENTA JAGO and KRYPTON agree that in the first place they
shall meet for good faith discussions in an attempt to negotiate an
amicable solution.
20.2 Any dispute arising between the Parties out of or in connection with
this Agreement, or the interpretation, breach or enforcement thereof,
which cannot be amicably resolved pursuant to Section 20.1 above
within two (2) months as from the first appearance of such dispute,
shall be finally resolved by binding arbitration. Whenever a Party
shall decide to institute arbitration proceedings, it shall give
written notice to that effect to all of the other Parties. Any
arbitration hereunder shall be conducted under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce.
Any such arbitration shall be conducted in the English language by a
panel of three (3) arbitrators appointed in accordance with such
rules, and shall be held in PARIS, FRANCE. The arbitrators shall have
the authority to grant specific performance, and to allocate among the
parties the costs of arbitration in such equitable manner as they
determine. Judgment upon the award so rendered may be entered in any
court having jurisdiction or application may be made to such court for
judicial acceptance of any award so rendered and an order of
enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this
section, shall be determined by binding arbitration pursuant to this
section.
20.3 Notwithstanding anything contained in this Article 20, either Party may
seek preliminary or injunctive measures or relief in any competent
court having jurisdiction.
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<PAGE>
ARTICLE 21
APPLICABLE LAW
The Parties hereto agree that this Agreement, all transactions executed
hereunder and all relationships between the Parties in connection therewith
shall be construed under and be governed by the laws of Switzerland without
reference to the conflict of law principals thereof, and shall not be governed
by the United Nations Convention on Contracts for the International Sale of
Goods.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 31st day
of October 1996.
GENTA JAGO TECHNOLOGIES B.V.
/s/ Thomas H. Adams /s/ Jacques Gonella
- - - ------------------- -------------------
by Dr. Thomas H. Adams by: Dr. Jacques Gonella
its: Managing Director its: Managing Director
KRYPTON LTD.
/s/
- - - -------------------
by:
its:
The Licensor, Jagotec AG, hereby agrees to be bound by the obligations contained
in Section 17.5 of this Agreement.
JAGOTEC AG
/s/ Jacques Gonella /s/
- - - ------------------- ------------------------
by: by:
its: its
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EXHIBIT 10.95
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT & SUB-LICENSE AGREEMENT
NAPROXEN
This DEVELOPMENT AND SUB-LICENSE AGREEMENT (this "AGREEMENT"), effective from
the date last written hereunder, is entered into between GENTA JAGO TECHNOLOGIES
B.V., a Dutch company, having a place of business at Grundstrasse 12, 6343
Rotkreuz, Switzerland (hereinafter referred to as "GENTA JAGO"), and KRYPTON
LTD., a Gibraltar limited company, having a place of business at East Wing,
Second Level, Hadfield House, Library Street, Gibraltar (hereinafter referred to
as "KRYPTON")
WITNESSETH:
WHEREAS, GENTA JAGO has expertise in the development of controlled-release
formulations for pharmaceutical agents and in particular has exclusive rights to
proprietary know-how and technology generally known and commercialized under the
registered trademark GEOMATRIX(R) and as described and embodied in the Patents
(as defined below) with respect to a Bioequivalent Product (as defined below) to
* and
WHEREAS, KRYPTON is a company which markets pharmaceutical products and is
interested in developing Prototype Formulations (as defined below) for the Final
Product (as defined below) and in seeking the approval of Regulatory Authorities
(as defined below) to manufacture, or have manufactured and market the Final
Product in the Territory (as defined below); and
WHEREAS, GENTA JAGO is prepared to conduct or have conducted certain studies and
the development of the Prototype Formulations and Final Product; and
WHEREAS, GENTA JAGO is prepared to grant to KRYPTON under the terms and
conditions set forth hereafter a sub-license under the Patents, GEOMATRIX(R)
Technology and Know-How (as defined below) to conduct studies relating to the
Prototype Formulations and, upon receipt of approval by the Regulatory Authority
(as defined below), to manufacture or have manufactured, market and sell the
Final Product in the Territory.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
Parties hereby agree as follows:
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
<PAGE>
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings:
1.1 "Active Ingredient" shall mean Naproxen.
1.2 "Affiliate" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct or
indirect beneficial ownership of more than 50% of the voting power of, or
more than 50% of ownership interest in, such corporation, partnership or
other entity.
1.3 "ANDA" shall mean any Abbreviated New Drug Application filed with the FDA,
by or for KRYPTON requesting authorization to manufacture, have
manufactured or sell the Final Product in the United States of America, or
any equivalent application to a Regulatory Authority in any other country
of the Territory.
1.4 "Bioequivalent Product" shall mean a drug product meeting the
bioequivalence requirements imposed by the FDA for in vitro and/or in vivo
testing as set forth in the regulations of the FDA at 21 C.F.R. ss.320
("AB Equivalent Rating"), as they may be amended from time to time.
1.5 "Competitive Product" shall mean any product other than the Final Product
or the Originator which is a Bioequivalent Product of the Originator and
is marketed and sold in the Territory on a country-to-country basis.
1.6 "FDA" shall mean the U.S. Federal Food and Drug Administration and any
successor agency thereof.
1.7 "Final Product" shall mean the pharmaceutical orally-administered
controlled-release formulation(s) containing the Active Ingredient,
presented as a compressed tablet developed pursuant to this Agreement,
based on the GEOMATRIX(R) Technology and being a Bioequivalent Product of
the Originator, of a Competitive Product or of any other product
containing the Active Ingredient.
1.8 "GEOMATRIX(R) Technology" shall mean the oral controlled-release drug
delivery and related technology licensed to GENTA JAGO by the Licensor
which utilizes a hydrophilic drug-containing matrix tablet which controls
the release of the drug through the use of one or more barrier layers.
1.9 "Gross Margin" shall mean, with respect to any Final Product, Net Sales
less only the direct cost of such Final Product sold, i.e. (a) raw
material cost, (b) direct labor cost, (c) reasonably directly allocable
overhead cost (e.g. energy cost), (d) packaging and labeling
- 2 -
<PAGE>
cost, and (e) other costs directly associated with the manufacturing of
such Final Product (e.g. quality control). No other deductions from Net
Sales are permissible for the calculation of Gross Margin, including
without limitation, sales, marketing and distribution costs.
Alternatively, in the event that KRYPTON sub-contracts the manufacturing
of any Final Product to a third party, then "Gross Margin" with respect
to such Final Product shall mean Net Sales less only the manufacturing
costs as invoiced by such manufacturing third party sub-contractor and
actually paid by KRYPTON.
1.10 "Know-How" shall mean all information and data, which are not generally
known including, but not limited to, patent claims and related information
not yet disclosed to the public, formulae, procedures, protocols,
techniques and results of experimentation and testing, which (a) relate to
the GEOMATRIX(R)Technology, any Prototype Formulation or any Final
Product, or (b) are necessary or useful to develop, make or use any
Prototype Formulation, or (c) are necessary or useful to develop, seek
regulatory approval, make, use or sell any Final Product, all to the
extent presently or during the term of this Agreement licensed or
otherwise available to and at the free disposition of GENTA JAGO.
1.11 "License Agreements" shall mean the license agreements entered into by
and between GENTA JAGO and the Licensor, under which the Licensor granted
GENTA JAGO the rights in the Patents, the Know-How and the GEOMATRIX(R)
Technology, which are the subject matter of the sub-license referred to in
Article 11. below.
1.12 "Licensor" shall mean Jagotec AG, a Swiss corporation, having its place of
business at Seestrasse 91, CH-6052 Hergiswil, Switzerland.
1.13 "Net Sales" shall mean, with respect to any Final Product, the invoiced
sales price of such Final Product in finished package form invoiced by
KRYPTON and/or its Affiliates to any independent customer other than
KRYPTON's Affiliates, less (a) credits, allowances, discounts and rebates
to, and charge-backs from the account of, such independent customers for
spoiled, damaged, out-dated, rejected or returned Final Product; (b)
actual freight and insurance costs incurred and paid by KRYPTON and/or its
Affiliates in transporting such Final Product in final form to such
customers; (c) customary cash, quantity and trade discounts and other
price reduction programs; (d) sales, use, value- added and other direct
taxes (but excluding any income tax) actually incurred and paid by KRYPTON
and/or its Affiliates; and (e) customs duties, surcharges and other
governmental charges incurred by KRYPTON and/or its Affiliates in
connection with the exportation or importation of such Final Product in
final form.
1.14 "Originator" shall mean * actually marketed in the United States by * or
any other pharmaceutical products containing the Active Ingredient and
being marketed in the Territory.
1.15 "Patents" shall mean all patents and patent applications heretofore or
hereafter filed or having presently or in the future legal force in any
country of the Territory, licensed by the Licensor to GENTA JAGO which
claim the GEOMATRIX(R) Technology or the
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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<PAGE>
process to manufacture Prototype Formulations and/or Final Product by use
of, or the use of, the GEOMATRIX(R) Technology, including but not limited
to the patents and patent applications listed in APPENDIX A hereto,
together with all patents that in the future issue therefrom in any
country of the Territory, including utility, model and design patents and
certificates of invention, and all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions, substitutions,
confirmations or additions to any such patents and patent applications,
all to the extent presently or during the term of this Agreement licensed
or otherwise available to and at the free disposition of GENTA JAGO.
1.16 "Prototype Formulations" shall mean the oral delivery system for the
Active Ingredient based on the GEOMATRIX(R) Technology that reasonably
meet the Specifications.
1.17 "Regulatory Authority" shall mean the FDA or any equivalent competent
regulatory authority in any other countries of the Territory.
1.18 "Specifications" shall mean the Products specifications to be mutually
agreed upon.
1.19 "Territory" shall mean *.
ARTICLE 2
DEVELOPMENT PREAMBLE
2.1 At the date of execution of this Agreement, GENTA JAGO has performed
certain preliminary development efforts for the Prototype Formulation.
This development is hereby incorporated in this Agreement.
2.2 GENTA JAGO undertakes to conduct the development of the Prototype
Formulation(s) and the Final Product in an efficient and professional
manner. KRYPTON shall actively support GENTA JAGO regarding the
development and studies to be executed by GENTA JAGO as may be reasonably
required by GENTA JAGO from time to time. In particular, KRYPTON shall
provide information reasonably requested by GENTA JAGO relating to the
Originator and to the Active Ingredient for the purposes of carrying out
this development, including, but not limited to, physico-chemical
characteristics, safe-handling instructions, in-vitro analytical methods,
degradation products and standards and analytical methods therefore.
Additionally, KRYPTON shall provide to GENTA JAGO requested data and
adequate quantities of samples of the Originator for the purposes of
conducting the Feasibility Study. KRYPTON, however, shall not be required
to provide information regarding the Originator which is not in the public
domain, unless KRYPTON is duly authorized to possess and disclose such
non-public information. Any costs and expenses incurred by KRYPTON in
connection with such support shall be borne by KRYPTON.
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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<PAGE>
2.3 Due to the nature and complexity of the development and the respective
studies as set forth in this Agreement, the Parties recognize and
acknowledge that problems and delays may occur which render the time
limits set forth in this Agreement and/or the time-frame of the
development as mutually agreed upon difficult or impossible to accomplish.
The Parties agree that they shall immediately inform each other in writing
in the event that significant problems or delays are encountered or
envisaged during the course of the development and shall discuss such
problems and delays in order to agree on a mutually acceptable revision of
the time limits set in this Agreement and/or the time-frame as previously
mutually agreed upon.
2.4 Together with the notice from KRYPTON referred to in Section 3.1 below,
KRYPTON, or its designated supplier, shall supply GENTA JAGO on a
free-of-charge basis with sufficient quantities of Active Ingredient to
perform the development program intended hereunder. Such supplies shall be
accompanied with respective certificates of analysis and conformity. GENTA
JAGO shall use all Active Ingredient supplied to it by KRYPTON hereunder
solely and exclusively in connection with the development program as
mutually agreed upon.
Alternatively, KRYPTON may request that GENTA JAGO obtain a supply of
Active Ingredient from a reputable source having the necessary regulatory
clearances in place to allow future marketing of the Final Product in the
Territory. Should KRYPTON so require and GENTA JAGO so agree, the chosen
supplier's facilities, processes and procedures shall be audited by GENTA
JAGO, or a third party mutually acceptable to KRYPTON and GENTA JAGO, in
order to ensure compliance with the appropriate regulatory requirements.
KRYPTON shall * of GENTA JAGO incurred in carrying out, or having carried
out such audit. GENTA JAGO shall provide KRYPTON with a copy of the audit
report within thirty (30) days as of the completion of the audit.
2.5 In the event that the Parties mutually agree that GENTA JAGO becomes
responsible for the supply of Active Ingredient, KRYPTON shall * GENTA
JAGO for any and all shipping and transportation costs, import duties,
taxes or other costs incurred by GENTA JAGO in connection with such supply
of Active Ingredient upon receipt of GENTA JAGO's respective invoices.
ARTICLE 3
FEASIBILITY STUDY
3.1 KRYPTON shall initiate the development program contemplated hereunder as
soon as technically feasible and within the time limits set forth in the
mutually accepted development program by giving written notice to that
effect to GENTA JAGO. Not later than two (2) months after receipt of (i)
such notice, (ii) a * and (iii) the Active Ingredient, GENTA JAGO shall
commence the feasibility study under
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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<PAGE>
this Article 3. and shall use its commercially reasonable efforts to
develop the Prototype Formulations. Up to three (3) of the developed
Prototype Formulations shall be chosen by mutual agreement by the Parties
for further study and development.
The Parties recognize that the Specifications mutually agreed upon
eventually will need to be updated with more detailed specifications for
the Final Product in the course of the development, and in such case the
Parties agree to mutually agree on any reasonable amendment of the
Specifications.
3.2 The development of the Prototype Formulations shall include, but not
necessarily be limited to, the following elements:
(a) Development and establishment of analytical methodology specific to
the characterization of such Prototype Formulations;
(b) Qualitative and quantitative characterization of such Prototype
Formulation;
(c) In-vitro release profile characterization of such Prototype
Formulations and the Originator by using appropriate methodology
mutually agreed to by the Parties;
(d) Elaboration of pre-scale up procedures and the production of samples
(2000 units +/- 10%) of the chosen Prototype Formulations for
evaluation by KRYPTON, and for use in the Pilot Pharmacokinetic
Study under Article 4. below; and
(e) Accelerated stability testing of Prototype Formulations to provide
*.
3.3 GENTA JAGO will ensure the use of generally accepted standards of Good
Laboratory and Manufacturing Practices during the performance of the
feasibility study.
3.4 Within thirty (30) days of the completion of the feasibility study, GENTA
JAGO shall supply KRYPTON with a report (the "Feasibility Study Report")
reasonably detailing the development of the Prototype Formulation(s) and
containing one (1) month accelerated stability data only. A supplement to
the Feasibility Study Report containing the * accelerated stability data
will be forwarded sixty (60) days later.
3.5 Prior to the commencement of the Feasibility Study GENTA JAGO shall submit
to KRYPTON * for the entire Feasibility Study which * shall be reasonably
acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's *, reasonably
incurred by GENTA JAGO during the Feasibility Study, including but not
limited to costs, expenses and fees paid to Jago Pharma and third party
contractors, by the payment of non-refundable development fees. Such
development costs shall be refunded by KRYPTON to GENTA JAGO * upon
receipt by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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<PAGE>
3.6 In the event that the results of the feasibility study conclusively
demonstrate that no Prototype Formulation has been developed which
reasonably meets the Specifications to the good faith mutual satisfaction
of KRYPTON and GENTA JAGO, the Parties agree to enter into good faith
negotiations in order to determine an appropriate course of action,
including, but not limited to, that the Parties may mutually agree to
abandon the development program under this Agreement, and terminate this
Agreement with immediate effect.
ARTICLE 4
PILOT PHARMACOKINETIC STUDY
4.1 Included as part of the feasibility study described in Article 3. above,
KRYPTON shall, at its own responsibility and its own cost, sub-contract
under confidentiality commitments comparable in all material respects to
the provisions set forth herein between GENTA JAGO and KRYPTON to an
external qualified clinical research organization (hereinafter "CRO") to
perform a pilot pharmacokinetic study pursuant to this Article 4.
4.2 The Pilot Pharmacokinetic Study shall consist of commercially reasonable
and appropriately designed * of the Prototype Formulations and the
Originator. KRYPTON shall reasonably consult with GENTA JAGO in the design
of the Pilot Pharmacokinetic Study and shall review the final protocol
with GENTA JAGO prior to initiating work with the selected sub-contractor.
The Pilot Pharmacokinetic Study shall be conducted in accordance with
generally accepted standards of Good Clinical Practice and in compliance
with Ethical Committee requirements or equivalent requirements, where
applicable.
4.3 Prior to the commencement of the Pilot Pharmacokinetic Study GENTA JAGO
shall submit to KRYPTON * for the entire Pilot Pharmacokinetic Study which
* shall be reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA
JAGO's *, reasonably incurred by GENTA JAGO during the Pilot
Pharmacokinetic Study, including but not limited to costs, expenses and
fees paid to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such development costs shall be refunded
by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of an invoice from
GENTA JAGO or Jago Pharma AG.
4.4 KRYPTON shall provide GENTA JAGO with a copy of the report (hereinafter
referred to as the "Pilot Pharmacokinetic Study Report") reasonably
detailing the results of the Pilot Pharmacokinetic Study within six (6)
weeks as of the study's completion and presentation of the preliminary
data for GENTA JAGO's file.
4.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Pilot Pharmacokinetic Study, including without limitation
the availability or quality of the
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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<PAGE>
results and data from such Pilot Pharmacokinetic Study to be carried out
by KRYPTON and the CRO.
4.6 In the event that the results of the Pilot Pharmacokinetic Study
conclusively demonstrate that it is not fully demonstrated to the good
faith mutual satisfaction of KRYPTON and GENTA JAGO that at least one of
the Prototype Formulations reasonably meet the respective Specifications,
the Parties may mutually agree to abandon the development program and
terminate this Agreement with respect to such Prototype Formulation.
ARTICLE 5
PRE-SCALE-UP ACTIVITIES
5.1 Upon completion of the Pilot Pharmacokinetic Study, KRYPTON may, at its
option, request and charge GENTA JAGO to carry out the pre-scale-up
activities as described in this Article 5. (hereinafter referred to as the
"Pre-Scale-Up Activities"). KRYPTON shall, within thirty (30) days as from
the date of the Pilot Pharmacokinetic Study Report notify in writing GENTA
JAGO of its decision whether to proceed with and to have GENTA JAGO
perform the Pre-Scale-Up Activities.
5.2 Prior to the commencement of the Pre-Scale-Up Activities GENTA JAGO shall
submit to KRYPTON * for the entire Pre-Scale-Up Activities which * shall
be reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's
*, reasonably incurred by GENTA JAGO during the Pre-Scale Up activity,
including but not limited to costs, expenses and fees paid to Jago Pharma
and third party contractors, by the payment of non-refundable development
fees. Such pre scale up costs shall be refunded by KRYPTON to GENTA JAGO *
upon receipt by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
5.3 The Pre-Scale-Up Activities to be performed by GENTA JAGO shall comprise
all reasonable activities necessary to allow the technology transfer to,
and subsequent scale-up at, the mutually established manufacturing site,
including, but not limited to, final optimization of the Prototype
Formulation (where necessary), development and validation of the scale-up
manufacturing procedure and analytical validation. Such Pre-Scale-Up
Activities shall be completed within the time period mutually agreed upon
by the Parties in Appendix D hereto, calculated as from the date of
receipt of the KRYPTON's notice by GENTA JAGO pursuant to Section 5.1
above.
5.4 In the event that additional clinical testing, including without
limitation, confirming pharmacokinetic studies, is reasonably required or
deemed necessary beyond the program envisaged in this Agreement in order
to satisfy the FDA requirements for an NDA or ANDA approval of the
Product, KRYPTON and GENTA JAGO shall meet to discuss in good faith the
appropriate course of action to be followed and agree upon any such
additional testing to be performed, provided that any such additional
testing shall in any
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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<PAGE>
event be funded solely by KRYPTON.
5.5 Not later than upon the initiation of the Pre-Scale-Up Activities, the
Parties shall establish and mutually agree upon a manufacturing site,
where the Bio-Batches referred to in Section 7.2 below required for the
pivotal clinical studies will be produced and where the Final Product
shall be manufactured for commercial use after FDA approval(s) for the
Final Product have been granted.
ARTICLE 6
PRE-PIVOTAL PHARMACOKINETIC STUDY
6.1 Included as part of the Pre-Scale-Up Activities, KRYPTON shall at its own
responsibility and its own cost, perform or have performed with a CRO
selected by KRYPTON, a pre- pivotal pharmacokinetic study pursuant to this
Article 6. (hereinafter referred to as "Pre- Pivotal Study"). Such
Pre-Pivotal Study shall consist of *, to select the best of the Prototype
Formulations for each dose strength to be used in the further development
under this Agreement.
6.2 The Pre-Pivotal Study shall be performed in the United States of America.
KRYPTON shall consult, review and mutually agree with GENTA JAGO on the
design and final protocol of such Pre-Pivotal Study prior to initiating
work with the selected CRO.
6.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to cover
its workload for preparation and consulting of such Pre-Pivotal Study.
Such development costs shall be paid by KRYPTON * upon receipt by KRYPTON
of an invoice from GENTA JAGO or Jago Pharma AG.
6.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing the
results of the Pre-Pivotal Study within ten (10) days of its completion
for GENTA JAGO's file. GENTA JAGO shall have no liability or
responsibility whatsoever with respect to such Pre-Pivotal Study,
including without limitation, the performance or conduct of such Pre-
Pivotal Study or the availability or quality of the results and data from
such Pre-Pivotal Study to be carried out by KRYPTON and the CRO.
6.5 Upon completion of the Pre-Pivotal Study and availability of the results
of such Pre- Pivotal Study, the Parties shall consult with each other on
such results and mutually agree in writing upon the Prototype Formulation
to be selected for further development under this Agreement. In the event
that the results of the Pre-Pivotal Study are unsatisfactory in that it is
not fully demonstrated to the good faith mutual satisfaction of the
Parties that at least one of the Prototype Formulations meet the
respective Specifications, KRYPTON may elect to abandon the development
program and terminate this Agreement with respect to such Prototype
Formulation by giving written notice to that effect to GENTA JAGO.
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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ARTICLE 7
FURTHER ACTIVITIES
7.1 Technology Transfer
Upon mutual agreement of the Prototype Formulation to be used for
development as referred to in Section 6.5 above, GENTA JAGO shall be
responsible for and initiate the technology transfer to, and perform the
scale-up at, the manufacturing site mutually established and agreed upon
by the Parties. GENTA JAGO agrees that such technology transfer, and in
particular the aspects of scale-up and validation of the manufacturing
process shall be carried out by GENTA JAGO on such equipment as shall
eventually be used by KRYPTON or a third party to manufacture the Final
Product. Upon completion of such scale-up, GENTA JAGO shall notify KRYPTON
thereof in writing.
7.2 Production of Industrial Scale Batches
Upon receipt by KRYPTON of GENTA JAGO's notice referred to in Section 7.1
above, the Parties shall initiate the production of three (3) industrial
scale batches (hereinafter "Bio-Batches") on such equipment as shall
eventually be used KRYPTON or a third party to commercially manufacture
the Final Product, based on the Prototype Formulation (the size of each
Bio-Batch to be not less than the greater of (i) 10% (ten percent) of the
anticipated initial commercial batch size, or (ii) 100,000 tablets),
according to Current Good Manufacturing Practices, such Bio-Batches to be
subsequently used for stability testing and pivotal clinical studies;
provided however, that GENTA JAGO shall have the ultimate responsibility
with respect of any and all technical aspects of such production of
batches related to the technology transfer and the implementation of such
technology in the manufacturing site.
7.3 Funding of Further Activities
(a) Prior to the commencement of any activities under Sections 7.1 and
7.2 above GENTA JAGO shall submit to KRYPTON * for such further
activities which * shall be reasonably acceptable to KRYPTON.
KRYPTON shall refund GENTA JAGO's * reasonably incurred by GENTA
JAGO under Sections 7.1 and 7.2 above, including but not limited to
costs, expenses and fees paid to Jago Pharma and third party
contractors, by the payment of non-refundable development fees. Such
further development costs shall be refunded by KRYPTON * upon
receipt by KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
(b) Furthermore, KRYPTON shall be responsible, at its own cost, for the
supply of all raw material including, but not limited to, the Active
Ingredients required or necessary for, and all additional costs and
expenses whatsoever arising out of or in connection with, the
production of the Bio-Batches described in Section 7.2
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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above and all other costs associated with the use of facilities,
technology transfer, equipment and analytical services.
7.4 Stability Testing
(a) KRYPTON shall be responsible for and perform or have performed at
its own cost, the stability testing of the Final Product according
to the then current requirements of the FDA in bulk packaging and in
the final packaging materials. GENTA JAGO shall have no liability or
responsibility whatsoever with respect to such stability testing,
including without limitation, the performance or conduct of such
stability testing or the availability or quality of the results and
data from such stability testing to be carried out or requested by
KRYPTON.
(b) KRYPTON shall provide to GENTA JAGO with a copy of all stability
testing data within thirty (30) days after the completion of each
stability testing period (hereinafter referred to as the "Final
Stability Testing Report") for GENTA JAGO's file.
(c) GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON in connection
with the stability testing of the Final Product. KRYPTON shall pay
to GENTA JAGO for such services provided by GENTA JAGO's or Jago
Pharma's personnel an amount of USD * or part thereof spent, and
furthermore, KRYPTON shall reimburse GENTA JAGO for all reasonable
and documented travel related expenses of GENTA JAGO personnel who
travel at KRYPTON's request to locations remote from such
personnel's usual working location.
7.5 Further Provisions
In the event that KRYPTON and GENTA JAGO shall reasonably deem the results
or data from any of the activities to be performed by either Party under
this Article 7. with respect to any dose strength be unsatisfactory for
any reason, the Parties may mutually agree to abandon the development
program and terminate this Agreement with immediate effect.
ARTICLE 8
PIVOTAL CLINICAL STUDY
8.1 Promptly upon completion of the further activities referred to in Article
7. above, KRYPTON shall, at its own responsibility and its own cost,
sub-contract under confidentiality commitments comparable to the
provisions set forth herein between GENTA JAGO and KRYPTON to an external
qualified CRO of its choice, reasonably acceptable to GENTA JAGO, to
perform and manage a series of pivotal clinical studies
(hereinafter"Clinical Studies") in man required and/or necessary for any
subsequent NDA or ANDA for the Final Product in accordance with the then
current requirements of the FDA.
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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8.2 KRYPTON shall consult, review and agree with GENTA JAGO on the design and
the final protocol of such Clinical Studies prior to initiating work with
the selected subcontractor.
8.3 KRYPTON shall reimburse to GENTA JAGO the * incurred by GENTA JAGO to
cover its workload for preparation and consulting of such Clinical
Studies. Such development costs shall be paid by KRYPTON * upon receipt by
KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
8.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing the
results of the Clinical Studies within ten (10) days of its completion for
GENTA JAGO's file.
8.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Clinical Studies, including without limitation, the
performance or conduct of such Clinical Studies or the availability or
quality of the results and data from such Clinical Studies to be carried
out or requested by KRYPTON.
8.6 In the event that the results of the Pivotal Clinical Studies are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of KRYPTON and GENTA JAGO that the Prototype
Formulation reasonably meets the respective Specifications, the Parties
may mutually agree to abandon the development program and terminate this
Agreement with respect to such dose strength.
ARTICLE 9
THE REGULATORY (NDA OR ANDA) SUBMISSION
9.1 Upon completion of the Clinical Studies, KRYPTON may, at its option, elect
to prepare and submit to the FDA an NDA or ANDA. KRYPTON shall notify
GENTA JAGO of its election to exercise or not to exercise this option by
giving written notice thereof to GENTA JAGO within thirty (30) days as of
the availability of the results of the Clinical Studies.
9.2 In the event that KRYPTON elects pursuant to Section 9.1 above to make NDA
or ANDA submission(s) to any Regulatory Authority with respect to a Final
Product, KRYPTON shall have sole liability and responsibility for the
prosecution, conduct and results of such NDA or ANDA and shall bear all
costs in connection therewith. KRYPTON, at KRYPTON's option, may elect by
written notice to GENTA JAGO prior to commencement of the technology
transfer referred to in Section 7.1 above to have the NDA or ANDA dossier
prepared on its behalf by a qualified third party acceptable to GENTA
JAGO. KRYPTON shall be liable and responsible for any and all costs
associated with such sub-contracting.
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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9.3 KRYPTON or its chosen sub-contractor shall consult with GENTA JAGO, and
GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON or the chosen
sub-contractor, in connection with the preparation and prosecution of any
NDA or ANDA or with the preparation of the dossier to be submitted to the
FDA. KRYPTON shall pay to GENTA JAGO for such services and consultation
provided by GENTA JAGO's personnel an amount of USD * or any part thereof
spent. Furthermore, KRYPTON shall reimburse GENTA JAGO for reasonable and
documented travel-related expenses of GENTA JAGO personnel who travel at
KRYPTON's request to the elected manufacturing facility(ies) or other
locations remote from such personnel's usual working location.
ARTICLE 10
PROPRIETARY RIGHTS AND PATENTS
10.1 Patents and Proprietary Rights of GENTA JAGO
(a) The Licensor and GENTA JAGO, respectively, shall retain title to and
ownership of Patents, Know-How and GEOMATRIX(R) Technology licensed
to GENTA JAGO, including, but not limited to, any and all
developments and inventions relating to Patents, Know-How and
GEOMATRIX(R) Technology (hereinafter collectively referred to as
"GENTA JAGO IPR").
(b) KRYPTON shall not, directly or indirectly through its officers,
directors, employees, agents, customers or other controlled or
associated third parties, acquire any proprietary interest in or
other right to GENTA JAGO IPR, other than provided in this
Agreement.
(c) GENTA JAGO shall use all commercially reasonable efforts, at its own
cost, to cause the Licensor to prepare, prosecute and maintain all
patent applications and patents constituting Patents, and shall keep
KRYPTON fully and promptly informed on any developments or changes
relating thereto. If the Licensor decides not to further prosecute
any patent application constituting Patents, GENTA JAGO shall
promptly inform KRYPTON of such decision in writing, and the Parties
shall, upon KRYPTON's reasonable written request, meet with the
Licensor to discuss any reasonable appropriate action. During the
term of this Agreement, GENTA JAGO shall, at its sole cost, use all
commercially reasonable efforts to cause the Licensor to take all
steps necessary to maintain Patents to the extent GENTA JAGO deems
commercially reasonable. If the Licensor decides not to maintain any
patent constituting Patents, GENTA JAGO shall promptly inform
KRYPTON of such decision in writing, and the Parties shall, upon
KRYPTON's reasonable written request, meet with the Licensor to
discuss any reasonable appropriate action. Notwithstanding the
foregoing, KRYPTON acknowledges to GENTA JAGO that Licensor has the
final authority regarding such preparation, prosecution and
maintenance of all patent applications and patents.
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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10.2 Patents and Proprietary Rights for Final Products
(a) KRYPTON shall retain title to and ownership of all developments,
whether patentable or not, relating specifically and exclusively to
the Final Products, provided that such developments are entirely
independent of any and all GENTA JAGO IPR (hereinafter collectively
referred to "Final Product IPR").
(b) KRYPTON shall be responsible for and shall control, at its own cost,
the preparation, prosecution and maintenance of all Final Product
IPR and shall keep GENTA JAGO fully and promptly informed on any
developments or changes relating thereto. During the term of this
Agreement, KRYPTON shall, at its sole cost, take all steps necessary
to prosecute and/or maintain all Final Product IPR to the extent
KRYPTON deems commercially reasonable. If KRYPTON intends not to
further prosecute and/or maintain any of the Final Product IPR,
KRYPTON shall promptly inform GENTA JAGO of such intention in
writing, and GENTA JAGO shall have the right and option, but not the
obligation, to have transferred to it sole title to and ownership in
such Final Product IPR free of any charge by giving respective
written notice thereof to KRYPTON within thirty (30) days after
GENTA JAGO's receipt of KRYPTON's notice referred to above.
(c) In the event GENTA JAGO has and exercises its right and option
referred to Section 10.2 (b) above to have transferred to it any
such Final Product IPR, KRYPTON shall promptly undertake any and all
steps required and/or necessary to transfer title to and ownership
of such Final Product IPR to GENTA JAGO. In the event that GENTA
JAGO exercises its option to have transferred such Final Product IPR
from KRYPTON to GENTA JAGO, GENTA JAGO shall maintain such Final
Product IPR during the term of this Agreement to the extent GENTA
JAGO deems commercially reasonable and shall bear all cost
associated therewith incurred after the date of GENTA JAGO's notice
to KRYPTON exercising its option referred to in Section 10.2 (b)
above. In such case, the Parties shall negotiate in good faith the
terms and condition, under which such Final Product IPR transferred
to GENTA JAGO shall be included in the License pursuant to Article
11. below.
10.3 Notification of Infringement
(a) If KRYPTON becomes aware of (i) any product or activity of any kind
that involves or may involve an infringement or violation of GENTA
JAGO IPR or Final Product IPR or (ii) any third-party action, claim
or dispute (including, but not limited to, actions for declaratory
judgment alleging the invalidity or non- infringement) based upon or
arising out of GENTA JAGO IPR or Final Product IPR, then KRYPTON
shall promptly notify GENTA JAGO in writing of any such
infringement, violation, action, claim or dispute.
(b) If GENTA JAGO becomes aware of (i) any product or activity of any
kind that
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involves or may involve an infringement or violation of GENTA JAGO
IPR with respect to Final Products or of Final Product IPR; or (ii)
any third-party action, claim or dispute (including, but not limited
to, actions for declaratory judgment alleging the invalidity or
non-infringement) based upon or arising out of GENTA JAGO IPR with
respect to Final Products or of Final Product IPR, then GENTA JAGO
shall promptly notify KRYPTON in writing of any such infringement,
violation, action, claim or dispute.
10.4 Enforcement of GENTA JAGO IPR
(a) GENTA JAGO, at its sole expense, shall have the right, but not the
obligation, (i) to determine the appropriate course of action to
enforce, or otherwise abate the infringement of, or defend
third-party actions regarding, GENTA JAGO IPR, (ii) to take, or
refrain from taking, appropriate action to enforce, or defend
third-party actions regarding, GENTA JAGO IPR, (iii) to control any
litigation or other enforcement action regarding GENTA JAGO IPR, and
(iv) to enter into, or permit, the settlement of any such litigation
or other enforcement action regarding GENTA JAGO IPR. GENTA JAGO
shall keep KRYPTON informed on a regular basis on its taking or
refraining from taking, and the development of, any of the foregoing
actions, and shall consider, in good faith, the interests of KRYPTON
under this Agreement when taking any of the foregoing actions, to
the extent that any such action or such infringement may have an
adverse effect on Final Product. KRYPTON shall, at its own cost,
fully cooperate with GENTA JAGO in the planing and execution of any
suit or other action to enforce, or defend third-party actions
regarding, GENTA JAGO IPR as reasonably required or requested by
GENTA JAGO.
(b) If GENTA JAGO does not within one-hundred-twenty (120) days, or any
shorter delay imposed by any applicable law or regulation or court
or authority having jurisdiction, after receiving notice of any
infringement or violation of GENTA JAGO IPR which may adversely
affect Final Products, or of any third-party action, claim or
dispute based upon or arising out of GENTA JAGO IPR which may
adversely affect Final Products, commence or take an action to
enforce, or otherwise abate such infringement, or defend against
such third-party action, then the Parties shall, upon KRYPTON's
written request, promptly meet to discuss any reasonable appropriate
action with regard to such enforcement of GENTA JAGO IPR which may
adversely affect Final Products, provided however, that KRYPTON is
aware and acknowledges that in such case the Licensor will have the
right to enforce any and all GENTA JAGO IPR pursuant to the License
Agreements.
(c) Subject to the right of the Licensor to control any suit or other
action with regard to GENTA JAGO IPR as outlined in the preceding
section, KRYPTON, upon its written request and at its sole expense,
shall be made an additional, but not controlling party, in any such
suit or other action where necessary to obtain complete relief
regarding the subject infringement or violation.
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10.5 Enforcement of Final Product IPR
(a) KRYPTON, at its sole expense, shall have the right, but not the
obligation, (i) to determine the appropriate course of action to
enforce, or otherwise abate the infringement of, or defend
third-party actions regarding, Final Product IPR, (ii) to take, or
refrain from taking, appropriate action to enforce, or defend
third-party actions regarding, Final Product IPR, (iii) to control
any litigation or other enforcement action regarding Final Product
IPR, and (iv) to enter into, or permit, the settlement of any such
litigation or other enforcement action regarding Final Product IPR.
Notwithstanding anything contained in the preceding sentence,
KRYPTON shall not settle any suit or action or otherwise consent to
an adverse judgment in such suit or action without the prior written
consent of GENTA JAGO, which consent shall not be withheld
unreasonably. KRYPTON shall keep GENTA JAGO informed on a regular
basis on its taking or refraining from taking, and the development
of, any of the foregoing actions, and shall consider, in good faith,
the interests of GENTA JAGO under this Agreement and in GENTA JAGO
IPR, when taking any of the foregoing actions.
(b) If KRYPTON does not, within one-hundred-and-twenty (120) days, or
any shorter delay imposed by any applicable law or regulation or
court or authority having jurisdiction, after receiving notice of
any infringement or violation of Final Product IPR, or of any
third-party action, claim or dispute based upon or arising out of
Final Product IPR, commence or take an action to enforce, or
otherwise abate such infringement, or defend against such
third-party action, then GENTA JAGO shall have the right, but not
the obligation, at its sole expense, to take and control such action
as it deems appropriate to enforce, or abate the infringement of, or
defend against such third-party action, regarding Final Product IPR.
GENTA JAGO shall keep KRYPTON informed on a regular basis of any
such action and consider, in good faith, the interests of KRYPTON
under this Agreement when taking any of the foregoing actions.
KRYPTON, upon its written request and at its sole expense, shall be
made an additional, but not controlling party, in any such suit or
other action controlled by GENTA JAGO where necessary to obtain
complete relief regarding the subject infringement or violation.
10.6 Application of Monies Recovered
Subject always to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in Section
10.4(c) and any right to receive any monies recovered therefrom as
provided for in the License Agreements, all monies recovered upon
the final judgment or settlement of any suit or other action under
this Sections 10.4 or 10.5 shall be applied as follows:
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(i) to cover any and all costs and expenses (including attorney's fees)
incurred by the Party controlling such suit or other action;
(ii) to cover any and all costs and expenses (including attorney's fees)
reasonably, or upon request of the controlling Party, incurred by
the other Party in connection with such suit or other action, if
any;
(iii) the remainder, if any, to the Party controlling any such suit or
other action.
ARTICLE 11
SUB-LICENSE AGREEMENT
11.1 GENTA JAGO hereby grants to KRYPTON the exclusive and sublicenseable right
and sub-license (hereinafter referred to as the "License") to use,
manufacture, have manufactured, sell and market the Final Products in the
Territory and to use the Patents, GEOMATRIX(R) Technology and Know How
exclusively for that purpose subject to the payment of the * and the
Royalties pursuant to Articles 13. and 14. below.
11.2 The rights of KRYPTON to grant any sub-license in any part of the
Territory shall be subject to the requirement that KRYPTON shall obtain
the written approval of GENTA JAGO prior to executing any such sub-license
agreement, which approval shall not unreasonably be withheld, provided
however, that no such approval by GENTA JAGO shall be required for any
sub-license to an Affiliate of KRYPTON .
11.3 In any event KRYPTON shall be responsible for any and all acts, deeds and
undertakings of its permitted sub-licensee(s) and KRYPTON and its
permitted sub-licensee(s) shall continue to be bound by all terms and
provisions under this Agreement throughout its term. In case that KRYPTON
sub-licenses rights and/or the License to any sub-licensee(s) approved by
GENTA JAGO, such sub-licensee(s) shall agree in writing to any and all of
KRYPTON's obligations and undertakings under this Agreement, including but
not limited to its confidentiality obligations set forth hereinafter.
Furthermore, KRYPTON undertakes that any and all sub-license agreements
shall provide for inspection and audit provisions identical to the
provisions set forth below in order to enable GENTA JAGO to control and
audit and receive any and all fees and Royalties due as provided in this
Agreement. KRYPTON shall provide GENTA JAGO promptly with reasonable
appropriate information on its sub-licensee(s) and copies of all
agreements with such sub-licensee(s) (with only the commercial terms may
be redacted).
ARTICLE 12
MANUFACTURING AND PRODUCT LIABILITY
12.1 In the event that KRYPTON, subject to Section 5.5 above, elects GENTA
JAGO, and GENTA JAGO expressly agrees to such manufacture, or any of its
Affiliates shall
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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manufacture Final Products, then the Parties agree to enter into good
faith negotiations on and to use commercially reasonable efforts to
execute in due time a respective Manufacturing and Supply Agreement,
according to which GENTA JAGO or its Affiliates shall undertake to
manufacture and supply Final Products in sufficient quantities to meet
KRYPTON's requirements, at a sale price for such Final Products
manufactured equal to GENTA JAGO's * In the event and for such period of
time, that GENTA JAGO or its Affiliate manufactures and supplies Final
Product under such Manufacturing and Supply Agreement, the Royalty Rate
referred to in Section 14.1 below shall be *.
12.2 In the event that KRYPTON or any of its Affiliates or any third party is
elected pursuant to Section 5.5 above to manufacture Final Product, then
KRYPTON undertakes and agrees that at all times the Specifications and to
any and all laws, rules and regulations imposed by any competent authority
on the manufacturing, marketing, distribution and sale of Final Products
are strictly adhered to by the manufacturer, and KRYPTON shall during the
entire term of this Agreement be solely and fully liable and responsible
for the compliance with all such laws, rules and regulations when
manufacturing, having manufactured, marketing, distributing and selling
Final Products itself and/or through Affiliates or sub- licensee(s).
12.3 KRYPTON shall indemnify, defend and hold GENTA JAGO, its Affiliates and
the Licensor harmless from and against any losses, claims, liabilities,
costs and expenses (including reasonable attorney's fees) that may be
imposed upon or asserted against GENTA JAGO and/or its Affiliates and/or
the Licensor as a result of the marketing, distributing, manufacture, use
or sale of Final Products by or on behalf of KRYPTON, its Affiliates,
agents or sub-licensee(s), except for those claims, liabilities, costs and
expenses arising from gross negligence or intentional misconduct on the
part of GENTA JAGO, its Affiliates or the Licensor.
ARTICLE 13
* PAYMENTS AND OTHER CONSIDERATION
13.1 As consideration for GENTA JAGO's preliminary development efforts for the
Prototype Formulation performed prior to the execution of this Agreement
as referred to in Section 2.1 above, KRYPTON undertakes to pay to GENTA
JAGO an initial *, payable upon execution of this Agreement.
13.2 As consideration for the License granted by GENTA JAGO to KRYPTON under
this Agreement and in consideration of certain major development steps
achieved hereunder, KRYPTON undertakes to pay to GENTA JAGO a *:
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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(a) * KRYPTON's receipt of GENTA JAGO's notice referred to in Section
7.1 above; and
(b) *; and
(c) * for the Final Product; and
(d) * for the Final Product.
13.3 Unless otherwise agreed by the Parties in writing, all payments under this
Article 13. shall be made in United States Dollars and to such place or
account as GENTA JAGO reasonably requests from time to time in writing.
ARTICLE 14
ROYALTIES
14.1 During a period commencing upon the first commercial sale of Final Product
in each country of the Territory and ending upon the earlier of (i) the
fifteenth (15th) anniversary of the first commercial sale of Final Product
in such country of the Territory, and (ii) the expiration of the last of
the Patents covering Final Product in such country of the Territory
(hereinafter referred to as the"Royalty Term"), and in further
consideration of the License granted to KRYPTON by GENTA JAGO, KRYPTON
shall pay to GENTA JAGO a royalty (hereinafter referred to as
the"Royalty") of an amount equal to * of the Final Product in the
Territory.
14.2 The Parties agree that * shall be applicable for the first time on sales
of such Final Product in such country of the Territory after the beginning
of the calendar quarter immediately following the first commercial sale of
such Competitive Product.
14.3 Royalties shall be payable on a quarterly basis. KRYPTON shall remit to
GENTA JAGO within six (6) weeks after the end of each calendar quarter the
amount of Royalty due with respect to Net Sales and/or Gross Margin, as
the case may be, achieved in the preceding quarter, beginning with the
calendar quarter in which the first commercial sale of the Final Product
is made in any country of the Territory. KRYPTON shall deliver to GENTA
JAGO, along with such remittance of Royalty payments, a detailed statement
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* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
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(hereinafter referred to as the "Royalty Report") of the Net Sales and/or
Gross Margin, as the case may be, of the Final Product on a
country-by-country basis to which the Royalty payment relates.
14.4 All Royalty Reports shall be prepared in accordance with generally
accepted accounting principles consistently applied from applicable period
to period and shall be certified by an officer of KRYPTON as being so
prepared, true, accurate and correct.
14.5 Unless otherwise agreed by the Parties in writing, payments of Royalties
shall be made in United States Dollars and to such place or account as
GENTA JAGO reasonably requests from time to time in writing. Any
conversions into United States Dollars from the currency in which the
corresponding Net Sales and/or Gross Margin for such Royalties were made,
are to be calculated as using the average closing buying rate for such
currency quoted in the continental terms method of quoting exchange rates
(local currency per USD 1) published in the Wall Street Journal on the
last business day of the applicable reporting period covered by such
Royalty Report.
ARTICLE 15
INSPECTION AND AUDIT
15.1 During the term of this Agreement and during a period of twelve (12)
months after its expiration or termination for any reason, upon the
written request of GENTA JAGO and not more than once each calendar year,
KRYPTON shall permit an independent certified public accountant of
internationally recognized standing selected by GENTA JAGO, at GENTA
JAGO's expense, to have access during regular business hours to such of
the records of KRYPTON and its Affiliates as may be reasonably necessary
to verify the accuracy of the Royalty Reports for any year ending not more
than thirty-six (36) months prior to the date of such request. The
accounting firm shall disclose to GENTA JAGO only whether the Royalty
Reports and records of KRYPTON and its Affiliates and the amount of
Royalties actually paid are correct or not and the specific details
concerning any discrepancies; no other information shall be shared. The
Parties agree to accept such written audit report as final and binding
upon them.
15.2 If such independent accounting firm correctly concludes that additional
Royalties were owed during any such period audited, KRYPTON shall pay such
additional Royalties within ten (10) days of the date GENTA JAGO delivers
to KRYPTON such accounting firm's written report so concluding. The fees
and expenses charged by such accounting firm with respect to such audit
shall be paid by GENTA JAGO; provided however, if any such audit correctly
discloses that Royalties payable by KRYPTON for the audited period are
more *, then KRYPTON shall pay all reasonable fees and expenses charged by
such accounting firm with respect to such audit.
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
- 20 -
<PAGE>
15.3 GENTA JAGO shall treat all financial information subject to review under
this Article 15. as confidential and subject to the confidentiality
obligations in Article 16. below.
ARTICLE 16
CONFIDENTIALITY
16.1 Confidential Information. KRYPTON shall maintain in confidence all
Know-How and other information of GENTA JAGO (including samples) disclosed
by GENTA JAGO and identified as, or acknowledged to be, confidential
(the"Confidential Information"), and shall not use, disclose or grant the
use of the Confidential Information except on a need- to-know basis to its
directors, officers, employees, agents, consultants, clinical
investigators or other permitted contractors, to the extent such
disclosure is reasonably necessary in connection with KRYPTON's activities
as expressly authorized by this Agreement. To the extent that disclosure
is authorized by this Agreement, prior to disclosure, KRYPTON hereto shall
obtain agreement in writing of any such person to hold in confidence and
not make use of the Confidential Information for any purpose other than
those authorized by this Agreement. KRYPTON shall notify GENTA JAGO
promptly upon the discovery of the unauthorized use or disclosure of the
Confidential Information.
16.2 Permitted Disclosures. The obligations of confidentiality and non-use
contained in Section 16.1 above shall not apply to the extent that (a)
KRYPTON (i) is required to disclose information by law, regulation or
order of a governmental agency or a court of competent jurisdiction, or
(ii) is required to disclose information to any governmental agency for
purposes of obtaining approval to test or market Final Product, provided
in each case that KRYPTON shall give GENTA JAGO written notice thereof and
sufficient opportunity to object to any disclosure or to request
confidential treatment thereof, or (b) KRYPTON can demonstrate that (i)
the disclosed information was public knowledge at the time of such
disclosure to it, or thereafter became public knowledge, other than as a
result of actions of KRYPTON, its directors, officers and employees in
violation hereof; (ii) the disclosed information was rightfully known by
KRYPTON (as shown by its written records) prior to the date of disclosure
to it by GENTA JAGO hereunder; (iii) the disclosed information was
disclosed to KRYPTON on an unrestricted basis from a source unrelated to
any party to this Agreement and not under a duty of confidentiality to
GENTA JAGO or the Licensor; or (iv) the disclosed information was
independently developed by KRYPTON without the use of Confidential
Information disclosed by GENTA JAGO.
16.3 Terms of this Agreement. Except as otherwise provided in Section 16.2
above, neither Party shall disclose any terms or conditions of this
Agreement to any third party (other than the Licensor) without the prior
consent of the other Party. Notwithstanding the foregoing, prior to the
execution of this Agreement, the Parties shall agree upon the substance of
information that can be used to describe the terms of this transaction,
and the Parties may disclose such information only without the other
Party's consent. Notwithstanding the foregoing, prior to the execution of
the Agreement, the Parties shall
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<PAGE>
agree upon the substance of information that can be used to describe the
terms of this transaction, and the Parties may disclose such information
without the other Party's consent.
16.4 Term of Confidentiality. The confidentiality obligations under this
Article 16 shall be effective during the term of this Agreement and for a
period of ten (10) years after the expiration or earlier termination
hereof.
16.5 Injunctive Remedies. GENTA JAGO shall be entitled to injunctive remedies
and relief against KRYPTON and its Affiliates and any third parties for
any breach or threatened breach of the confidentiality obligations under
this Article 16.
16.6 Damages. In the event of a breach of the confidentiality provisions under
this Article 16 by KRYPTON, its Affiliates or its directors, officers,
employees or any other person who were given access to the Confidential
Information by KRYPTON, GENTA JAGO shall be entitled to receive from
KRYPTON any and all actual costs and damages caused by such breach.
16.7 Public Announcements. Neither Party shall make any press releases or other
public announcements or disclosures regarding the execution and the
existence of this Agreement or any activities conducted hereunder,
including development results, filings and registrations, without the
prior written consent of the other Party, except for such public
disclosure as may be necessary in the opinion of any party's legal advisor
in order not to be in violation of or default under any applicable law,
regulation or governmental order, in such later event the party having an
obligation to disclose shall submit to the other party a draft of the
required announcement and shall give the other party the opportunity to
request reasonable amendments and modifications of such required
announcement..
ARTICLE 17
TERM AND TERMINATION
17.1 Term and Expiration
(a) This Agreement shall expire on a country-by-country basis upon the
expiration of the Royalty Term.
(b) Upon the expiration of this Agreement in each country of the
Territory pursuant to Section 17.1 (a) above and payment of all
fees, including but not limited to the *, and all Royalties and
other payments by KRYPTON due GENTA JAGO under this Agreement, the
License shall be deemed to be a perpetual, fully paid-up and
royalty-free license for such Final Product and each such country of
the Territory.
17.2 Termination Prior to Registration
- - - -------------
* Confidential treatment requested. The redacted material has been separately
filed wit the Commission.
- 22 -
<PAGE>
During the development, test, study and registration phases as specified
in Articles 3. through 8. above, and until the first successful
registration approval of any Final Product by any Regulatory Authority,
this Agreement may be terminated in accordance with the provisions set
forth in Sections 3.6, 4.6, 6.5, 7.5 and 8.6 above.
17.3 Termination for Cause
During the entire term of this Agreement either Party may terminate this
Agreement by giving to the other Party written notice to that effect, if
any of the following events occur:
(a) the other Party is in default or in breach of a term or provision
hereof and such default or breach continues and is not remedied
within thirty (30) days upon the other Party's written request to
remedy such default or breach; or
(b) the other Party shall commit a breach of any of the confidentiality
provisions of Article 16. above; or
(c) the other Party goes into liquidation, voluntarily or otherwise,
other than for the sole purpose of reorganization, or goes into
bankruptcy or makes an assignment for the benefit of creditors, or
in the event of a receiver being appointed of the other Party's
property or parts thereof.
17.4 Effect of Termination
(a) If KRYPTON elects to so terminate the Agreement under Section 17.2
above prior to filing of the ANDA in the United States, then: (i)
such termination shall be without penalty or liability to KRYPTON;
(ii) all rights and licenses granted by GENTA JAGO hereunder shall
revert to GENTA JAGO with respect to such country(ies) so
terminated, (iii) KRYPTON be relieved of any payments that are
scheduled or may be made in the future under this Agreement, (iv)
KRYPTON shall return to GENTA JAGO all materials, documentation,
information, data and other things furnished by GENTA JAGO in
connection with this Agreement, including without limitation any and
all Confidential Information, together with all copies thereof in
KRYPTON's possession or under its control, (v) all Registrations
pertaining to the marketing of the Product shall be transferred to
and be owned by GENTA JAGO as to the affected country(ies) and the
data generated under this Agreement shall be provided to and
thereafter may be freely used by GENTA JAGO to develop, manufacture
and market the Product; and (vi) GENTA JAGO and its Affiliates shall
thereafter be entitled to exercise such rights as they may have
under their own license agreements to make, have made, use or sell
the Product in the country(ies) so terminated without compensation
or obligation to KRYPTON; provided, that the foregoing rights under
(iv) and (vi) shall not create or imply any right or license under
any patent rights, copyright rights, trademarks or trade names,
know-how, or other intellectual property rights owned or controlled
by KRYPTON or its Affiliates.
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<PAGE>
(b) If KRYPTON elects to so terminate this Agreement subsequent to the
filing of the ANDA in the United States, then: (i) such termination
shall be without penalty or liability to KRYPTON; (ii) all rights
and licenses granted by GENTA JAGO hereunder shall revert to GENTA
JAGO with respect to such country(ies) so terminated; (iii) KRYPTON
shall be relieved of any payments that are scheduled or may be made
in the future under this Agreement, (iv) KRYPTON shall return to
GENTA JAGO all materials, documentation, information, data and other
things furnished by GENTA JAGO in connection with this Agreement,
including without limitation any and all Confidential Information,
together with all copies thereof in KRYPTON's possession or under
its control, (v) GENTA JAGO and its Affiliates shall thereafter be
entitled to make, have made, use or sell the Product in the
country(ies) so terminated (and, provided, that the foregoing shall
not create or imply any right or license under any patent rights,
copyright rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by KRYPTON or its
Affiliates); (vi) all Registrations pertaining to the Product shall
be transferred to and be owned by GENTA JAGO as to the affected
country(ies) and the data generated hereunder shall be provided to
and thereafter may be freely used by GENTA JAGO to develop,
manufacture and market the Product; and (vii) GENTA JAGO shall pay
to KRYPTON the same royalty, which shall be paid in the same manner
and subject to the same terms and conditions as would otherwise have
applied to KRYPTON, as KRYPTON would otherwise have paid (absent
such termination) hereunder to GENTA JAGO on Net Sales (or on the
Gross Margin of such Net Sales, as the case may be) of the Product
in the country(ies) to which such termination applies (with such
royalty to be paid by GENTA JAGO and its Affiliates in each such
country until expiration of the Royalty Term in each such country),
until such time as the royalties paid to KRYPTON equal the aggregate
amount that had been paid by KRYPTON to GENTA JAGO prior to such
termination under the Sections 3.5, 4.3, 5.2, 6.3, 7.3,8.3, 9.2 and
13., at which time the royalty rate then prevailing on Net Sales (or
on the Gross Margin of such Net Sales, as the case may be) in the
United States shall be reduced by two percent (2 %) (but shall not
be reduced for sales outside the United States).
(c) Otherwise the termination of this Agreement shall be without
prejudice to any rights and obligations of either Party accrued
prior to the effective date of termination. KRYPTON shall forthwith
make all payments due and outstanding to GENTA JAGO at the date of
termination. Except as explicitly otherwise stated in this
Agreement, GENTA JAGO shall not be obligated to refund upon
termination of this Agreement to KRYPTON any payments, including
without limitation the *, made by KRYPTON to GENTA JAGO prior to
such termination pursuant to the provisions of this Agreement.
(d) The termination of this Agreement pursuant to Section 17.3 above by
either Party shall not limit remedies which may be otherwise
available in law or equity to either Party.
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<PAGE>
17.5 Early Termination of the License Agreements
(a) In the event that the License Agreements are terminated prior to the
expiration of the last to expire of the Patents licensed to GENTA
JAGO in the Territory, then the License granted hereunder to KRYPTON
shall also terminate upon KRYPTON's receipt of the respective
termination notice from the Licensor. KRYPTON may give written
notice to the Licensor of KRYPTON's desire to continue the License
granted under this Agreement within sixty (60) days as of KRYPTON's
receipt of the Licensor's notice referred to above.
(b) In the event that KRYPTON timely notifies the Licensor of its desire
to continue the License granted under this Agreement, the Licensor
shall have the right, at its sole discretion, to elect to assume in
writing within sixty (60) days upon the Licensor's receipt of
KRYPTON's notice any and all rights of GENTA JAGO under this
Agreement and to promptly cure all defaults of GENTA JAGO under this
Agreement, if any.
(c) In the event that the Licensor does not timely gives notice to
KRYPTON and cures all of GENTA JAGO's defaults hereunder pursuant to
Section 17.5(b) above, then KRYPTON shall promptly assume in writing
any and all rights and obligations of GENTA JAGO under the License
Agreements with the Licensor, but with regard to the rights
encompassed by the License granted hereunder only, and promptly cure
all defaults of GENTA JAGO under the License Agreements with regard
to the rights encompassed by the License granted hereunder only, if
any.
(d) Notwithstanding anything contained in this Section 17.5, no action
taken by the Licensor and/or KRYPTON to continue or not to continue
the License shall relieve GENTA JAGO from any liability for any
uncured defaults under this Agreement or the License Agreements, and
such action by the Licensor and/or KRYPTON shall be without
prejudice to any other rights or remedies the Licensor and/or
KRYPTON may have in law or equity.
ARTICLE 18
WARRANTIES
18.1 GENTA JAGO shall carry out and undertake the studies and tests specified
in this Agreement in a careful and diligent manner. GENTA JAGO agrees to
carefully choose, instruct and supervise any employees, officers,
Affiliates or third parties to be chosen by GENTA JAGO pursuant to this
Agreement, who are involved with the tests and studies. Nothing in this
Agreement shall be construed as a representation made, or warranty given,
by GENTA JAGO that any development performed by or for GENTA JAGO under
this Agreement will be successful in whole or in part, or that any
product, including Final Product, which may be developed, will be
successful in the commercial marketplace. Furthermore, GENTA JAGO makes no
representation or warranty, express or implied,
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<PAGE>
with respect to GEOMATRIX(R) Technology and/or Know-How, including without
limitation, any warranty of completeness, accuracy, merchantability or
fitness for a particular purpose thereof.
18.2 GENTA JAGO represents and warrants that it has all rights regarding
Patents, GEOMATRIX(R)Technology and Know-How necessary to grant the
License hereunder. Notwithstanding the preceding sentence, GENTA JAGO does
not assume any responsibility and makes no warranty that the performance
of this Agreement and any product developed hereunder, including Prototype
Formulation(s) and Final Products, do not infringe any third party's
patents, patent applications or other intellectual property rights.
Notwithstanding the preceding sentence, GENTA JAGO represents and warrants
that, as of the effective date of this Agreement, it is not aware and has
not knowledge of any such infringement of any third party rights. If,
however, during the course of this Agreement either Party discovers that
the Prototype Formulation(s) and/or the Final Products infringe or may
infringe any third party's intellectual property rights, it shall promptly
inform the other Party thereof and the Parties shall meet to discuss the
course of action to be taken with regard thereto.
18.3 Nothing in this Agreement shall be construed as a representation made, or
warranty given by GENTA JAGO that any patent will issue based upon any
pending patent application encompassed by the term Patents, and that any
patent encompassed by the term Patents which issues will be valid or
enforceable.
18.4 GENTA JAGO assumes no liability or responsibility for any damages caused
to KRYPTON, third parties, animals and/or the environment by the
manufacturing, marketing or use of the Prototype Formulations or Final
Products or the active ingredient contained therein, except to the extent
that any of the above are attributable to the gross negligence or willful
misconduct of GENTA JAGO in performing its obligations hereunder.
18.5 Subject to the specific representations and warranties given and specific
disclaimers of representations and warranties included in this Article 18,
and further subject to anything to the contrary contained in this
Agreement, either Party shall, as to third parties, be indemnified and
held harmless by the other Party from and against any and all losses,
liabilities and damages arising from any claim, action or other proceeding
by any third party relating to any acts or omissions of the other Party,
its directors, officers, employees or agents, or the gross negligence or
willful misconduct of such other Party, its directors, officers, employees
or agents in performing any of its obligations under this Agreement.
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<PAGE>
18.6 Any liability, warranty and undertaking contained herein shall be limited
to the payment by either Party for direct damages to the other Party and
in any event, neither Party shall be liable to the other Party for any
special, indirect, punitive or consequential damages and/or loss of
profits or anticipated profits, respectively.
18.7 KRYPTON shall, at its own expense, purchase from an insurance company of
its choice and shall maintain during the entire term of this Agreement an
appropriate and customary policy of general liability and product
liability insurance covering its responsibilities regarding Prototype
Formulation(s) and Final Products developed, manufactured, marketed and
sold under this Agreement and the Active Ingredient contained therein and
the use thereof. Upon request, KRYPTON shall provide GENTA JAGO with
evidence that such insurances are existing and are maintained.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Agreement: The terms, covenants, conditions and provisions
contained in this Agreement, including its Appendices referred to herein,
constitute the total and complete agreement of the Parties and supersede
all prior understandings and agreements hereto made, and there are no
other representations, understandings or agreements relating to the
subject matter hereof. The provisions of this Agreement may not be waived,
altered, amended or repealed in whole or in part except by the written
consent of both of the Parties to this Agreement.
19.2 Assignment: This Agreement may not be assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or obligation
hereunder be assigned or transferred by either Party, other than to an
Affiliate of such Party, without the consent of the other Party; provided
however, that either Party may, without such consent, assign this
Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business, or in the
event of its merger, consolidation, change in control or similar
transaction; and provided further that GENTA JAGO may without the consent
of KRYPTON assign any and all of its rights and obligations hereunder to
the Licensor and/or any of the Licensor's Affiliates. Any permitted
assignee shall assume all obligations of its assignor under this Agreement
or under the respective rights or obligations actually assigned.
19.3 Successors : This Agreement and all rights hereunder shall ensure to the
benefit of all successors and assigns of both Parties.
19.4 Notices: Any consent, notice or report required or permitted to be given
or made under this Agreement by one Party to the other shall be in English
and in writing, delivered personally or by courier service or by facsimile
(promptly confirmed by personal delivery or courier service) addressed to
the other Party at its address indicated below, or to such
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<PAGE>
other address as shall have been notified in writing to the sending Party
by the receiving party from time to time, and shall take effect upon
receipt by the addressee.
IF TO KRYPTON: KRYPTON LTD.
East Wing, Second Level
Hadfield House
Library Street
Gibraltar
attn.: PRESIDENT
WITH COPIES TO: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
attn.: COMPANY SECRETARY
AND: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
IF TO GENTA JAGO: GENTA JAGO Technologies B.V.
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz, Switzerland
attn..: MANAGEMENT COMMITTEE
WITH COPIES TO: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
8002 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
AND: PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
attn.: THOMAS E. SPARKS, JR., ESQ.
19.5 Independent Contractors: It is expressly agreed that the Parties shall be
independent contractors and that the relationship between the Parties
shall not constitute a partnership, joint venture or agency. Neither Party
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 Party, without the prior written consent of the other Party to
do so.
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<PAGE>
19.6 Severability: Each Party hereby acknowledges that it does not intend to
violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of
any country or community or association of countries. Should one or more
provisions of this Agreement be or become invalid, the Parties hereto
shall substitute, by mutual consent, valid provisions for such invalid
provisions which valid provisions in their economic effect are
sufficiently similar to the invalid provisions that it can be reasonably
assumed that the parties would have entered into this Agreement with such
provisions. In case such provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the
validity of this Agreement as a whole, unless the invalid provisions are
of such essential importance to this Agreement that it is to be reasonably
assumed that the Parties would not have entered into this Agreement
without the invalid provisions.
19.7 Force Majeure: Neither Party hereto shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of
this Agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected Party including but
not limited to fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other Party hereto.
19.8 Interest: In the event any amount due and payable under this Agreement is
not paid by the due date, then the Party owing such amount shall pay to
the creditor, without being requested by the other Party, interest on the
total outstanding amount at the rate equal to the London Interbank Offered
Rate ("LIBOR"), as published in the Wall Street Journal (Europe) on the
date that such payment falls due, increased by three percent (3%), in
United States Dollars and adjusted on the first day of every calendar
quarter.
19.9 Headings: The titles and headings used in this Agreement are intended for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
19.10 Waiver: The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by
said other Party whether of a similar nature or otherwise.
19.11 Counterparts: This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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<PAGE>
ARTICLE 20
DISPUTE RESOLUTION AND ARBITRATION
20.1 In the event of any dispute arising between the Parties concerning this
Agreement, GENTA JAGO and KRYPTON agree that in the first place they shall
meet for good faith discussions in an attempt to negotiate an amicable
solution.
20.2 Any dispute arising between the Parties out of or in connection with this
Agreement, or the interpretation, breach or enforcement thereof, which
cannot be amicably resolved pursuant to Section 20.1 above within two (2)
months as from the first appearance of such dispute, shall be finally
resolved by binding arbitration. Whenever a Party shall decide to
institute arbitration proceedings, it shall give written notice to that
effect to all of the other Parties. Any arbitration hereunder shall be
conducted under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce. Any such arbitration shall be conducted
in the English language by a panel of three (3) arbitrators appointed in
accordance with such rules, and shall be held in PARIS, FRANCE. The
arbitrators shall have the authority to grant specific performance, and to
allocate among the parties the costs of arbitration in such equitable
manner as they determine. Judgment upon the award so rendered may be
entered in any court having jurisdiction or application may be made to
such court for judicial acceptance of any award so rendered and an order
of enforcement, as the case may be. Whether a claim, dispute or other
matter in question would be barred by the applicable statute of
limitations, which also shall apply to any arbitration under this section,
shall be determined by binding arbitration pursuant to this section.
20.3 Notwithstanding anything contained in this Article 20, either Party may
seek preliminary or injunctive measures or relief in any competent court
having jurisdiction.
ARTICLE 21
APPLICABLE LAW
The Parties hereto agree that this Agreement, all transactions
executed hereunder and all relationships between the Parties in
connection therewith shall be construed under and be governed by the
laws of Switzerland without reference to the conflict of law
principals thereof, and shall not be governed by the United Nations
Convention on Contracts for the International Sale of Goods.
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<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 31st day
of October 1996.
GENTA JAGO TECHNOLOGIES B.V.
/s/ Thomas H. Adams /s/ Jacques Gonella
- - - ------------------------ --------------------------
By Dr. Thomas H. Adams By: Dr. Jacques Gonella
Its: Managing Director Its: Managing Director
KRYPTON LTD.
/s/
- - - -----------------------
By:
Its:
The Licensor, Jagotec AG, hereby agrees to be bound by the obligations contained
in Section 17.5 of this Agreement.
JAGOTEC AG
/s/ Jacques Gonella /s/
- - - -------------------------- --------------------------
By: By:
Its: Its:
- 31 -
EXHIBIT 10.96
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT & SUB-LICENSE AGREEMENT
VERAPAMIL
This DEVELOPMENT AND SUB-LICENSE AGREEMENT (this "Agreement"), effective from
the date last written hereunder, is entered into between GENTA JAGO TECHNOLOGIES
B.V., a Dutch company, having a place of business at Grundstrasse 12, 6343
Rotkreuz, Switzerland (hereinafter referred to as "GENTA JAGO"), and KRYPTON
LTD., a Gibraltar limited company, having a place of business at East Wing,
Second Level, Hadfield House, Library Street, Gibraltar (hereinafter referred to
as "KRYPTON")
WITNESSTH:
WHEREAS, GENTA JAGO has expertise in the development of controlled-release
formulations for pharmaceutical agents and in particular has exclusive rights to
proprietary know-how and technology generally known and commercialized under the
registered trademark GEOMATRIX(R) and as described and embodied in the Patents
(as defined below) with respect to a * and
WHEREAS, KRYPTON is a company which markets pharmaceutical products and is
interested in developing Prototype Formulations (as defined below) for the Final
Product (as defined below) and in seeking the approval of Regulatory Authorities
(as defined below) to manufacture, or have manufactured and market the Final
Product in the Territory (as defined below); and
WHEREAS, GENTA JAGO is prepared to conduct or have conducted certain studies and
the development of the Prototype Formulations and Final Product; and
WHEREAS, GENTA JAGO is prepared to grant to KRYPTON under the terms and
conditions set forth hereafter a sub-license under the Patents, GEOMATRIX(R)
Technology and Know-How (as defined below) to conduct studies relating to the
Prototype Formulations and, upon receipt of approval by the Regulatory Authority
(as defined below), to manufacture or have manufactured, market and sell the
Final Product in the Territory.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
Parties hereby agree as follows:
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
<PAGE>
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings:
1.1 "Active Ingredient" shall mean Verapamil.
1.2 "Affiliate" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct or
indirect beneficial ownership of more than 50% of the voting power of,
or more than 50% of ownership interest in, such corporation,
partnership or other entity.
1.3 "ANDA" shall mean any Abbreviated New Drug Application filed with the
FDA, by or for KRYPTON requesting authorization to manufacture, have
manufactured or sell the Final Product in the United States of America,
or any equivalent application to a Regulatory Authority in any other
country of the Territory.
1.4 "Bioequivalent Product" shall mean a drug product meeting the
bioequivalence requirements imposed by the FDA for in vitro and/or in
vivo testing as set forth in the regulations of the FDA at 21 C.F.R.
ss.320 ("AB Equivalent Rating"), as they may be amended from time to
time.
1.5 "Competitive Product" shall mean any product other than the Final
Product or the Originator which is a Bioequivalent Product of the
Originator and is marketed and sold in the Territory on a
country-to-country basis.
1.6 "FDA" shall mean the U.S. Federal Food and Drug Administration and any
successor agency thereof.
1.7 "Final Product" shall mean the pharmaceutical orally-administered
controlled-release formulation(s) containing the Active Ingredient,
presented as a compressed tablet developed pursuant to this Agreement,
based on the GEOMATRIX(R) Technology and being a Bioequivalent Product
of the Originator, of a Competitive Product or of any other product
containing the Active Ingredient.
1.8 "GEOMATRIX(R) Technology" shall mean the oral controlled-release drug
delivery and related technology licensed to GENTA JAGO by the Licensor
which utilizes a hydrophilic drug-containing matrix tablet which
controls the release of the drug through the use of one or more barrier
layers.
1.9 "Gross Margin" shall mean, with respect to any Final Product, Net Sales
less only the direct cost of such Final Product sold, i.e. (a) raw
material cost, (b) direct labor cost, (c) reasonably directly
allocatable overhead cost (e.g. energy cost), (d) packaging and
labeling cost, and (e) other costs directly associated with the
manufacturing of such Final Product
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(e.g. quality control). No other deductions from Net Sales are
permissible for the calculation of Gross Margin, including without
limitation, sales, marketing and distribution costs. Alternatively, in
the event that KRYPTON sub-contracts the manufacturing of any Final
Product to a third party, then "Gross Margin" with respect to such
Final Product shall mean Net Sales less only the manufacturing costs as
invoiced by such manufacturing third party sub-contractor and actually
paid by KRYPTON.
1.10 "Know-How" shall mean all information and data, which are not generally
known including, but not limited to, patent claims and related
information not yet disclosed to the public, formulae, procedures,
protocols, techniques and results of experimentation and testing, which
(a) relate to the GEOMATRIX(R)Technology, any Prototype Formulation or
any Final Product, or (b) are necessary or useful to develop, make or
use any Prototype Formulation, or (c) are necessary or useful to
develop, seek regulatory approval, make, use or sell any Final Product,
all to the extent presently or during the term of this Agreement
licensed or otherwise available to and at the free disposition of GENTA
JAGO.
1.11 "License Agreements" shall mean the license agreements entered into by
and between GENTA JAGO and the Licensor, under which the Licensor
granted GENTA JAGO the rights in the Patents, the Know-How and the
GEOMATRIX(R) Technology, which are the subject matter of the
sub-license referred to in Article 11. below.
1.12 "Licensor" shall mean Jagotec AG, a Swiss corporation, having its place
of business at Seestrasse 91, CH-6052 Hergiswil, Switzerland.
1.13 "Net Sales" shall mean, with respect to any Final Product, the invoiced
sales price of such Final Product in finished package form invoiced by
KRYPTON and/or its Affiliates to any independent customer other than
KRYPTON's Affiliates, less (a) credits, allowances, discounts and
rebates to, and chargebacks from the account of, such independent
customers for spoiled, damaged, out-dated, rejected or returned Final
Product; (b) actual freight and insurance costs incurred and paid by
KRYPTON and/or its Affiliates in transporting such Final Product in
final form to such customers; (c) customary cash, quantity and trade
discounts and other price reduction programs; (d) sales, use, value-
added and other direct taxes (but excluding any income tax) actually
incurred and paid by KRYPTON and/or its Affiliates; and (e) customs
duties, surcharges and other governmental charges incurred by KRYPTON
and/or its Affiliates in connection with the exportation or importation
of such Final Product in final form.
1.14 "Originator" shall mean * actually marketed in the United States by *
or any other pharmaceutical products containing the Active Ingredient
and being marketed in the Territory
1.15 "Patents" shall mean all patents and patent applications heretofore or
hereafter filed or having presently or in the future legal force in any
country of the Territory, licensed by the Licensor to GENTA JAGO which
claim the GEOMATRIX(R) Technology or the process to manufacture
Prototype Formulations and/or Final Product by use of, or the use
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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of, the GEOMATRIX(R) Technology, including but not limited to the
patents and patent applications listed in APPENDIX A hereto, together
with all patents that in the future issue therefrom in any country of
the Territory, including utility, model and design patents and
certificates of invention, and all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions, substitutions,
confirmations or additions to any such patents and patent applications,
all to the extent presently or during the term of this Agreement
licensed or otherwise available to and at the free disposition of GENTA
JAGO.
1.16 "Prototype Formulations" shall mean the oral delivery system for the
Active Ingredient based on the GEOMATRIX(R) Technology that reasonably
meet the Specifications.
1.17 "Regulatory Authority" shall mean the FDA or any equivalent competent
regulatory authority in any other countries of the Territory.
1.18 "Specifications" shall mean the Products specifications set forth in
Appendix B attached hereto.
1.19 "Territory" shall mean *.
ARTICLE 2
DEVELOPMENT PREAMBLE
2.1 At the date of execution of this Agreement, GENTA JAGO has performed
certain preliminary development efforts for the Prototype Formulation.
This development is hereby incorporated in this Agreement.
2.2 GENTA JAGO undertakes to conduct the development of the Prototype
Formulation(s) and the Final Product in an efficient and professional
manner. KRYPTON shall actively support GENTA JAGO regarding the
development and studies to be executed by GENTA JAGO as may be
reasonably required by GENTA JAGO from time to time. In particular,
KRYPTON shall provide information reasonably requested by GENTA JAGO
relating to the Originator and to the Active Ingredient for the
purposes of carrying out this development, including, but not limited
to, physico-chemical characteristics, safe-handling instructions,
in-vitro analytical methods, degradation products and standards and
analytical methods therefore. Additionally, KRYPTON shall provide to
GENTA JAGO requested data and adequate quantities of samples of the
Originator for the purposes of conducting the Feasibility Study.
KRYPTON, however, shall not be required to provide information
regarding the Originator which is not in the public domain, unless
KRYPTON is duly authorized to possess and disclose such non-public
information. Any costs and expenses incurred by KRYPTON in connection
with such support shall be borne by KRYPTON.
2.3 Due to the nature and complexity of the development and the respective
studies as set forth in this Agreement, the Parties recognize and
acknowledge that problems and delays may occur which render the time
limits set forth in this Agreement and/or the time-frame of the
development as mutually agreed upon difficult or impossible to
accomplish. The
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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Parties agree that they shall immediately inform each other in writing
in the event that significant problems or delays are encountered or
envisaged during the course of the development and shall discuss such
problems and delays in order to agree on a mutually acceptable revision
of the time limits set in this Agreement and/or the time-frame as
previously mutually agreed upon.
2.4 Together with the notice from KRYPTON referred to in Section 3.1 below,
KRYPTON, or its designated supplier, shall supply GENTA JAGO on a
free-of-charge basis with sufficient quantities of Active Ingredient to
perform the development program intended hereunder. Such supplies shall
be accompanied with respective certificates of analysis and conformity.
GENTA JAGO shall use all Active Ingredient supplied to it by KRYPTON
hereunder solely and exclusively in connection with the development
program as mutually agreed upon.
Alternatively, KRYPTON may request that GENTA JAGO obtain a supply of
Active Ingredient from a reputable source having the necessary
regulatory clearances in place to allow future marketing of the Final
Product in the Territory. Should KRYPTON so require and GENTA JAGO so
agree, the chosen supplier's facilities, processes and procedures shall
be audited by GENTA JAGO, or a third party mutually acceptable to
KRYPTON and GENTA JAGO, in order to ensure compliance with the
appropriate regulatory requirements. KRYPTON shall * of GENTA JAGO
incurred in carrying out, or having carried out such audit. GENTA JAGO
shall provide KRYPTON with a copy of the audit report within thirty
(30) days as of the completion of the audit.
2.5 In the event that the Parties mutually agree that GENTA JAGO becomes
responsible for the supply of Active Ingredient, KRYPTON shall * GENTA
JAGO for any and all shipping and transportation costs, import duties,
taxes or other costs incurred by GENTA JAGO in connection with such
supply of Active Ingredient upon receipt of GENTA JAGO's respective
invoices.
ARTICLE 3
FEASIBILITY STUDY
3.1 KRYPTON shall initiate the development program contemplated hereunder
as soon as technically feasible and within the time limits set forth in
the mutually accepted development program by giving written notice to
that effect to GENTA JAGO. Not later than two (2) months after receipt
of (i) such notice, (ii) a * and (iii) the Active Ingredient, GENTA
JAGO shall commence the feasibility study under this Article 3. and
shall use its commercially reasonable efforts to develop the Prototype
Formulations. Up to three (3) of the developed Prototype Formulations
shall be chosen by mutual agreement by the Parties for further study
and development.
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* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
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The Parties recognize that the Specifications mutually agreed uopn
eventually will need to be updated with more detailed specifications
for the Final Product in the course of the development, and in such
case the Parties agree to mutually agree on any reasonable amendment of
the Specifications.
3.2 The development of the Prototype Formulations shall include, but not
necessarily be limited to, the following elements:
(a) Development and establishment of analytical methodology
specific to the characterization of such Prototype
Formulations;
(b) Qualitative and quantitative characterization of such
Prototype Formulation;
(c) In-vitro release profile characterization of such Prototype
Formulations and the Originator by using appropriate
methodology mutually agreed to by the Parties;
(d) Elaboration of pre-scale up procedures and the production of
samples (2000 units +/- 10%) of the chosen Prototype
Formulations for evaluation by KRYPTON, and for use in the
Pilot Pharmacokinetic Study under Article 4. below; and
(e) Accelerated stability testing of Prototype Formulations to
provide *.
3.3 GENTA JAGO will ensure the use of generally accepted standards of Good
Laboratory and Manufacturing Practices during the performance of the
feasibility study.
3.4 Within thirty (30) days of the completion of the feasibility study,
GENTA JAGO shall supply KRYPTON with a report (the "Feasibility Study
Report") reasonably detailing the development of the Prototype
Formulation(s) and containing one (1) month accelerated stability data
only. A supplement to the Feasibility Study Report containing the
* accelerated stability data will be forwarded sixty (60) days later.
3.5 Prior to the commencement of the Feasibility Study GENTA JAGO shall
submit to KRYPTON * for the entire Feasibility Study which * shall be
reasonably acceptable to KRYPTON. KRYPTON shall reimburse GENTA JAGO's
*, reasonably incurred by GENTA JAGO during the Feasibility Study,
including but not limited to costs, expenses and fees paid to Jago
Pharma and third party contractors, by the payment of non-refundable
development fees. Such development costs shall be refunded by KRYPTON
to GENTA JAGO at the end of each quarter upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
3.6 In the event that the results of the feasibility study conclusively
demonstrate that no Prototype Formulation has been developed which
reasonably meets the Specifications to the good faith mutual
satisfaction of KRYPTON and GENTA JAGO, the Parties agree to enter into
good faith negotiations in order to determine an appropriate course of
action,
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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including, but not limited to, that the Parties may mutually agree to
abandon the development program under this Agreement, and terminate
this Agreement with immediate effect.
ARTICLE 4
PILOT PHARMACOKINETIC STUDY
4.1 Included as part of the feasibility study described in Article 3.
above, KRYPTON shall, at its own responsibility and its own cost,
sub-contract under confidentiality commitments comparable in all
material respects to the provisions set forth herein between GENTA JAGO
and KRYPTON to an external qualified clinical research organization
(hereinafter "CRO") to perform a pilot pharmacokinetic study pursuant
to this Article 4.
4.2 The Pilot Pharmacokinetic Study shall consist of commercially
reasonable and appropriately designed * of the Prototype Formulations
and the Originator. KRYPTON shall reasonably consult with GENTA JAGO in
the design of the Pilot Pharmacokinetic Study and shall review the
final protocol with GENTA JAGO prior to initiating work with the
selected sub-contractor. The Pilot Pharmacokinetic Study shall be
conducted in accordance with generally accepted standards of Good
Clinical Practice and in compliance with Ethical Committee requirements
or equivalent requirements, where applicable.
4.3 Prior to the commencement of the Pilot Pharmacokinetic Study GENTA JAGO
shall submit to KRYPTON * for the entire Pilot Pharmacokinetic Study
which * shall be reasonably acceptable to KRYPTON. KRYPTON shall
reimburse GENTA JAGO's *, reasonably incurred by GENTA JAGO during the
Pilot Pharmacokinetic Study, including but not limited to costs,
expenses and fees paid to Jago Pharma and third party contractors, by
the payment of non-refundable development fees. Such development costs
shall be refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of
an invoice from GENTA JAGO or Jago Pharma AG.
4.4 KRYPTON shall provide GENTA JAGO with a copy of the report (hereinafter
referred to as the "Pilot Pharmacokinetic Study Report") reasonably
detailing the results of the Pilot Pharmacokinetic Study within six (6)
weeks as of the study's completion and presentation of the preliminary
data for GENTA JAGO's file.
4.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Pilot Pharmacokinetic Study, including without
limitation the availability or quality of the results and data from
such Pilot Pharmacokinetic Study to be carried out by KRYPTON and the
CRO.
4.6 In the event that the results of the Pilot Pharmacokinetic Study
conclusively demonstrate that it is not fully demonstrated to the good
faith mutual satisfaction of KRYPTON and GENTA JAGO that at least one
of the Prototype Formulations reasonably meet the
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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respective Specifications, the Parties may mutually agree to abandon
the development program and terminate this Agreement with respect to
such Prototype Formulation.
ARTICLE 5
PRE-SCALE-UP ACTIVITIES
5.1 Upon completion of the Pilot Pharmacokinetic Study, KRYPTON may, at its
option, request and charge GENTA JAGO to carry out the pre-scale-up
activities as described in this Article 5. (hereinafter referred to as
the "Pre-Scale-Up Activities"). KRYPTON shall, within thirty (30) days
as from the date of the Pilot Pharmacokinetic Study Report notify in
writing GENTA JAGO of its decision whether to proceed with and to have
GENTA JAGO perform the Pre-Scale-Up Activities.
5.2 Prior to the commencement of the Pre-Scale-Up Activities GENTA JAGO
shall submit to KRYPTON * for the entire Pre-Scale-Up Activities which
* shall be reasonably acceptable to KRYPTON. KRYPTON shall reimburse
GENTA JAGO's *, reasonably incurred by GENTA JAGO during the Pre-Scale
Up activity, including but not limited to costs, expenses and fees paid
to Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such pre scale up costs shall be
refunded by KRYPTON to GENTA JAGO * upon receipt by KRYPTON of an
invoice from GENTA JAGO or Jago Pharma AG.
5.3 The Pre-Scale-Up Activities to be performed by GENTA JAGO shall
comprise all reasonable activities necessary to allow the technology
transfer to, and subsequent scale-up at, the mutually established
manufacturing site, including, but not limited to, final optimization
of the Prototype Formulation (where necessary), development and
validation of the scale-up manufacturing procedure and analytical
validation. Such Pre-Scale-Up Activities shall be completed within the
time period mutually agreed upon by the Parties in Appendix D hereto,
calculated as from the date of receipt of the KRYPTON's notice by GENTA
JAGO pursuant to Section 5.1 above.
5.4 In the event that additional clinical testing, including without
limitation, confirming pharmacokinetic studies, is reasonably required
or deemed necessary beyond the program envisaged in this Agreement in
order to satisfy the FDA requirements for an NDA or ANDA approval of
the Product, KRYPTON and GENTA JAGO shall meet to discuss in good faith
the appropriate course of action to be followed and agree upon any such
additional testing to be performed, provided that any such additional
testing shall in any event be funded solely by KRYPTON.
5.5 Not later than upon the initiation of the Pre-Scale-Up Activities, the
Parties shall establish and mutually agree upon a manufacturing site,
where the Bio-Batches referred to in Section 7.2 below required for the
pivotal clinical studies will be produced and where the Final Product
shall be manufactured for commercial use after FDA approval(s) for the
Final Product have been granted.
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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ARTICLE 6
PRE-PIVOTAL PHARMACOKINETIC STUDY
6.1 Included as part of the Pre-Scale-Up Activities, KRYPTON shall at its
own responsibility and its own cost, perform or have performed with a
CRO selected by KRYPTON, a pre- pivotal pharmacokinetic study pursuant
to this Article 6. (hereinafter referred to as "Pre- Pivotal Study").
Such Pre-Pivotal Study shall consist of *, to select the best of the
Prototype Formulations for each dose strength to be used in the further
development under this Agreement.
6.2 The Pre-Pivotal Study shall be performed in the United States of
America. KRYPTON shall consult, review and mutually agree with GENTA
JAGO on the design and final protocol of such Pre-Pivotal Study prior
to initiating work with the selected CRO.
6.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to cover
its workload for preparation and consulting of such Pre-Pivotal Study.
Such development costs shall be paid by KRYPTON * upon receipt by
KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
6.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailling
the results of the Pre-Pivotal Study within ten (10) days of its
completion for GENTA JAGO's file. GENTA JAGO shall have no liability or
responsibility whatsoever with resupect to such Pre-Pivotal Study,
including without limitation, the performance or conduct of such Pre-
Pivotal Study or the availability or quality of the results and data
from such Pre-Pivotal Study to be carried out by KRYPTON and the CRO.
6.5 Upon completion of the Pre-Pivotal Study and availability of the
results of such Pre- Pivotal Study, the Parties shall consult with each
other on such results and mutually agree in writing upon the Prototype
Formulation to be selected for further development under this
Agreement. In the event that the results of the Pre-Pivotal Study are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of the Parties that at least one of the Prototype
Formulations meet the respective Specifications, KRYPTON may elect to
abandon the development program and terminate this Agreement with
respect to such Prototype Formulation by giving written notice to that
effect to GENTA JAGO.
ARTICLE 7
FURTHER ACTIVITIES
7.1 Technology Transfer
Upon mutual agreement of the Prototype Formulation to be used for
development as referred to in Section 6.5 above, GENTA JAGO shall be
responsible for and initiate the technology transfer to, and perform
the scale-up at, the manufacturing site mutually established and agreed
upon by the Parties. GENTA JAGO agrees that such technology
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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transfer, and in particular the aspects of scale-up and validation of
the manufacturing process shall be carried out by GENTA JAGO on such
equipment as shall eventually be used by KRYPTON or a third party to
manufacture the Final Product. Upon completion of such scale-up, GENTA
JAGO shall notify KRYPTON thereof in writing.
7.2 Production of Industrial Scale Batches
Upon receipt by KRYPTON of GENTA JAGO's notice referred to in Section
7.1 above, the Parties shall initiate the production of three (3)
industrial scale batches (hereinafter "Bio-Batches") on such equipment
as shall eventually be used KRYPTON or a third party to commercially
manufacture the Final Product, based on the Prototype Formulation (the
size of each Bio-Batch to be not less than the greater of (i) 10% (ten
percent) of the anticipated initial commercial batch size, or (ii)
100,000 tablets), according to Current Good Manufacturing Practices,
such Bio-Batches to be subsequently used for stability testing and
pivotal clinical studies; provided however, that GENTA JAGO shall have
the ultimate responsibility with respect of any and all technical
aspects of such production of batches related to the technology
transfer and the implementation of such technology in the manufacturing
site.
7.3 Funding of Further Activities
(a) Prior to the commencement of any activities under Sections 7.1
and 7.2 above GENTA JAGO shall submit to KRYPTON * for such
further activities which * shall be reasonably acceptable to
KRYPTON. KRYPTON shall refund GENTA JAGO's * reasonably
incurred by GENTA JAGO under Sections 7.1 and 7.2 above,
including but not limited to costs, expenses and fees paid to
Jago Pharma and third party contractors, by the payment of
non-refundable development fees. Such further development
costs shall be refunded by KRYPTON * upon receipt by KRYPTON
of an invoice from GENTA JAGO or Jago Pharma AG.
(b) Furthermore, KRYPTON shall be responsible, at its own cost,
for the supply of all raw material including, but not limited
to, the Active Ingredients required or necessary for, and all
additional costs and expenses whatsoever arising out of or in
connection with, the production of the Bio-Batches described
in Section 7.2 above and all other costs associated with the
use of facilities, technology transfer, equipment and
analytical services.
7.4 Stability Testing
(a) KRYPTON shall be responsible for and perform or have performed
at its own cost, the stability testing of the Final Product
according to the then current requirements of the FDA in bulk
packaging and in the final packaging materials. GENTA JAGO
shall have no liability or responsibility whatsoever with
respect to such stability testing, including without
limitation, the performance or conduct of such
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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stability testing or the availability or quality of the
results and data from such stability testing to be carried out
or requested by KRYPTON.
(b) KRYPTON shall provide to GENTA JAGO with a copy of all
stability testing data within thirty (30) days after the
completion of each stability testing period (hereinafter
referred to as the "Final Stability Testing Report") for GENTA
JAGO's file.
(c) GENTA JAGO agrees to provide additional technical assistance
and consultation as may be reasonably requested by KRYPTON in
connection with the stability testing of the Final Product.
KRYPTON shall pay to GENTA JAGO for such services provided by
GENTA JAGO's or Jago Pharma's personnel an amount of USD * or
part thereof spent, and furthermore, KRYPTON shall reimburse
GENTA JAGO for all reasonable and documented travel related
expenses of GENTA JAGO personnel who travel at KRYPTON's
request to locations remote from such personnel's usual
working location.
7.5 Further Provisions
In the event that KRYPTON and GENTA JAGO shall reasonably deem the
results or data from any of the activities to be performed by either
Party under this Article 7. with respect to any dose strength be
unsatisfactory for any reason, the Parties may mutually agree to
abandon the development program and terminate this Agreement with
immediate effect.
ARTICLE 8
PIVOTAL CLINICAL STUDY
8.1 Promptly upon completion of the further activities referred to in
Article 7. above, KRYPTON shall, at its own responsibility and its own
cost, sub-contract under confidentiality commitments comparable to the
provisions set forth herein between GENTA JAGO and KRYPTON to an
external qualified CRO of its choice, reasonably acceptable to GENTA
JAGO, to perform and manage a series of pivotal clinical studies
(hereinafter "Clinical Studies") in man required and/or necessary for
any subsequent NDA or ANDA for the Final Product in accordance with the
then current requirements of the FDA.
8.2 KRYPTON shall consult, review and agree with GENTA JAGO on the design
and the final protocol of such Clinical Studies prior to initiating
work with the selected subcontractor.
8.3 KRYPTON shall reimburse to GENTA JAGO * incurred by GENTA JAGO to cover
its workload for preparation and consulting of such Clinical Studies.
Such development costs shall be paid by KRYPTON * upon receipt by
KRYPTON of an invoice from GENTA JAGO or Jago Pharma AG.
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* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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8.4 KRYPTON shall provide GENTA JAGO with a copy of the report detailing
the results of the Clinical Studies within ten (10) days of its
completion for GENTA JAGO's file.
8.5 GENTA JAGO shall have no liability or responsibility whatsoever with
respect to such Clinical Studies, including without limitation, the
performance or conduct of such Clinical Studies or the availability or
quality of the results and data from such Clinical Studies to be
carried out or requested by KRYPTON.
8.6 In the event that the results of the Pivotal Clinical Studies are
unsatisfactory in that it is not fully demonstrated to the good faith
mutual satisfaction of KRYPTON and GENTA JAGO that the Prototype
Formulation reasonably meets the respective Specifications, the Parties
may mutually agree to abandon the development program and terminate
this Agreement with respect to such dose strength.
ARTICLE 9
THE REGULATORY (NDA OR ANDA) SUBMISSION
9.1 Upon completion of the Clinical Studies, KRYPTON may, at its option,
elect to prepare and submit to the FDA an NDA or ANDA. KRYPTON shall
notify GENTA JAGO of its election to exercise or not to exercise this
option by giving written notice thereof to GENTA JAGO within thirty
(30) days as of the availability of the results of the Clinical
Studies.
9.2 In the event that KRYPTON elects pursuant to Section 9.1 above to make
NDA or ANDA submission(s) to any Regulatory Authority with respect to a
Final Product, KRYPTON shall have sole liability and responsibility for
the prosecution, conduct and results of such NDA or ANDA and shall bear
all costs in connection therewith. KRYPTON, at KRYPTON's option, may
elect by written notice to GENTA JAGO prior to commencement of the
technology transfer referred to in Section 7.1 above to have the NDA or
ANDA dossier prepared on its behalf by a qualified third party
acceptable to GENTA JAGO. KRYPTON shall be liable and responsible for
any and all costs associated with such sub-contracting.
9.3 KRYPTON or its chosen sub-contractor shall consult with GENTA JAGO, and
GENTA JAGO agrees to provide additional technical assistance and
consultation as may be reasonably requested by KRYPTON or the chosen
sub-contractor, in connection with the preparation and prosecution of
any NDA or ANDA or with the preparation of the dossier to be submitted
to the FDA. KRYPTON shall pay to GENTA JAGO for such services and
consultation provided by GENTA JAGO's personnel an amount of USD * or
any part thereof spent. Furthermore, KRYPTON shall reimburse GENTA JAGO
for reasonable and documented travel-related expenses of GENTA JAGO
personnel who travel at KRYPTON's request to the elected manufacturing
facility(ies) or other locations remote from such personnel's usual
working location.
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ARTICLE 10
PROPRIETARY RIGHTS AND PATENTS
10.1 Patents and Proprietary Rights of GENTA JAGO
(a) The Licensor and GENTA JAGO, respectively, shall retain title
to and ownership of Patents, Know-How and GEOMATRIX(R)
Technology licensed to GENTA JAGO, including, but not limited
to, any and all developments and inventions relating to
Patents, Know-How and GEOMATRIX(R) Technology (hereinafter
collectively referred to as "GENTA JAGO IPR").
(b) KRYPTON shall not, directly or indirectly through its
officers, directors, employees, agents, customers or other
controlled or associated third parties, acquire any
proprietary interest in or other right to GENTA JAGO IPR,
other than provided in this Agreement.
(c) GENTA JAGO shall use all commercially reasonable efforts, at
its own cost, to cause the Licensor to prepare, prosecute and
maintain all patent applications and patents constituting
Patents, and shall keep KRYPTON fully and promptly informed on
any developments or changes relating thereto. If the Licensor
decides not to further prosecute any patent application
constituting Patents, GENTA JAGO shall promptly inform KRYPTON
of such decision in writing, and the Parties shall, upon
KRYPTON's reasonable written request, meet with the Licensor
to discuss any reasonable appropriate action. During the term
of this Agreement, GENTA JAGO shall, at its sole cost, use all
commercially reasonable efforts to cause the Licensor to take
all steps necessary to maintain Patents to the extent GENTA
JAGO deems commercially reasonable. If the Licensor decides
not to maintain any patent constituting Patents, GENTA JAGO
shall promptly inform KRYPTON of such decision in writing, and
the Parties shall, upon KRYPTON's reasonable written request,
meet with the Licensor to discuss any reasonable appropriate
action. Notwithstanding the foregoing, KRYPTON acknowledges to
GENTA JAGO that Licensor has the final authority regarding
such preparation, prosecution and maintenance of all patent
applications and patents.
10.2 Patents and Proprietary Rights for Final Products
(a) KRYPTON shall retain title to and ownership of all
developments, whether patentable or not, relating specifically
and exclusively to the Final Products, provided that such
developments are entirely independent of any and all GENTA
JAGO IPR (hereinafter collectively referred to "Final Product
IPR").
(b) KRYPTON shall be responsible for and shall control, at its own
cost, the preparation, prosecution and maintenance of all
Final Product IPR and shall keep GENTA JAGO fully and promptly
informed on any developments or changes relating thereto.
During the term of this Agreement, KRYPTON shall, at its sole
cost, take all steps necessary to prosecute and/or maintain
all Final Product IPR
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to the extent KRYPTON deems commercially reasonable. If
KRYPTON intends not to further prosecute and/or maintain any
of the Final Product IPR, KRYPTON shall promptly inform GENTA
JAGO of such intention in writing, and GENTA JAGO shall have
the right and option, but not the obligation, to have
transferred to it sole title to and ownership in such Final
Product IPR free of any charge by giving respective written
notice thereof to KRYPTON within thirty (30) days after GENTA
JAGO's receipt of KRYPTON's notice referred to above.
(c) In the event GENTA JAGO has and exercises its right and option
referred to Section 10.2 (b) above to have transferred to it
any such Final Product IPR, KRYPTON shall promptly undertake
any and all steps required and/or necessary to transfer title
to and ownership of such Final Product IPR to GENTA JAGO. In
the event that GENTA JAGO exercises its option to have
transferred such Final Product IPR from KRYPTON to GENTA JAGO,
GENTA JAGO shall maintain such Final Product IPR during the
term of this Agreement to the extent GENTA JAGO deems
commercially reasonable and shall bear all cost associated
therewith incurred after the date of GENTA JAGO's notice to
KRYPTON exercising its option referred to in Section 10.2 (b)
above. In such case, the Parties shall negotiate in good faith
the terms and condition, under which such Final Product IPR
transferred to GENTA JAGO shall be included in the License
pursuant to Article 11. below.
10.3 Notification of Infringement
(a) If KRYPTON becomes aware of (i) any product or activity of any
kind that involves or may involve an infringement or violation
of GENTA JAGO IPR or Final Product IPR or (ii) any third-party
action, claim or dispute (including, but not limited to,
actions for declaratory judgment alleging the invalidity or
non- infringement) based upon or arising out of GENTA JAGO IPR
or Final Product IPR, then KRYPTON shall promptly notify GENTA
JAGO in writing of any such infringement, violation, action,
claim or dispute.
(b) If GENTA JAGO becomes aware of (i) any product or activity of
any kind that involves or may involve an infringement or
violation of GENTA JAGO IPR with respect to Final Products or
of Final Product IPR; or (ii) any third-party action, claim or
dispute (including, but not limited to, actions for
declaratory judgment alleging the invalidity or
non-infringement) based upon or arising out of GENTA JAGO IPR
with respect to Final Products or of Final Product IPR, then
GENTA JAGO shall promptly notify KRYPTON in writing of any
such infringement, violation, action, claim or dispute.
10.4 Enforcement of GENTA JAGO IPR
(a) GENTA JAGO, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of
action to enforce, or otherwise abate the infringement of, or
defend third-party actions regarding, GENTA JAGO IPR, (ii)
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to take, or refrain from taking, appropriate action to
enforce, or defend third-party actions regarding, GENTA JAGO
IPR, (iii) to control any litigation or other enforcement
action regarding GENTA JAGO IPR, and (iv) to enter into, or
permit, the settlement of any such litigation or other
enforcement action regarding GENTA JAGO IPR. GENTA JAGO shall
keep KRYPTON informed on a regular basis on its taking or
refraining from taking, and the development of, any of the
foregoing actions, and shall consider, in good faith, the
interests of KRYPTON under this Agreement when taking any of
the foregoing actions, to the extent that any such action or
such infringement may have an adverse effect on Final Product.
KRYPTON shall, at its own cost, fully cooperate with GENTA
JAGO in the planing and execution of any suit or other action
to enforce, or defend third-party actions regarding, GENTA
JAGO IPR as reasonably required or requested by GENTA JAGO.
(b) If GENTA JAGO does not within one-hundred-twenty (120) days,
or any shorter delay imposed by any applicable law or
regulation or court or authority having jurisdiction, after
receiving notice of any infringement or violation of GENTA
JAGO IPR which may adversely affect Final Products, or of any
third-party action, claim or dispute based upon or arising out
of GENTA JAGO IPR which may adversely affect Final Products,
commence or take an action to enforce, or otherwise abate such
infringement, or defend against such third-party action, then
the Parties shall, upon KRYPTON's written request, promptly
meet to discuss any reasonable appropriate action with regard
to such enforcement of GENTA JAGO IPR which may adversely
affect Final Products, provided however, that KRYPTON is aware
and acknowledges that in such case the Licensor will have the
right to enforce any and all GENTA JAGO IPR pursuant to the
License Agreements.
(c) Subject to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in the
preceding section, KRYPTON, upon its written request and at
its sole expense, shall be made an additional, but not
controlling party, in any such suit or other action where
necessary to obtain complete relief regarding the subject
infringement or violation.
10.5 Enforcement of Final Product IPR
(a) KRYPTON, at its sole expense, shall have the right, but not
the obligation, (i) to determine the appropriate course of
action to enforce, or otherwise abate the infringement of, or
defend third-party actions regarding, Final Product IPR, (ii)
to take, or refrain from taking, appropriate action to
enforce, or defend third-party actions regarding, Final
Product IPR, (iii) to control any litigation or other
enforcement action regarding Final Product IPR, and (iv) to
enter into, or permit, the settlement of any such litigation
or other enforcement action regarding Final Product IPR.
Notwithstanding anything contained in the preceding sentence,
KRYPTON shall not settle any suit or action or otherwise
consent to an adverse judgment in such suit or action without
the prior written consent of GENTA
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<PAGE>
JAGO, which consent shall not be withheld unreasonably.
KRYPTON shall keep GENTA JAGO informed on a regular basis on
its taking or refraining from taking, and the development of,
any of the foregoing actions, and shall consider, in good
faith, the interests of GENTA JAGO under this Agreement and in
GENTA JAGO IPR, when taking any of the foregoing actions.
(b) If KRYPTON does not, within one-hundred-and-twenty (120) days,
or any shorter delay imposed by any applicable law or
regulation or court or authority having jurisdiction, after
receiving notice of any infringement or violation of Final
Product IPR, or of any third-party action, claim or dispute
based upon or arising out of Final Product IPR, commence or
take an action to enforce, or otherwise abate such
infringement, or defend against such third-party action, then
GENTA JAGO shall have the right, but not the obligation, at
its sole expense, to take and control such action as it deems
appropriate to enforce, or abate the infringement of, or
defend against such third-party action, regarding Final
Product IPR. GENTA JAGO shall keep KRYPTON informed on a
regular basis of any such action and consider, in good faith,
the interests of KRYPTON under this Agreement when taking any
of the foregoing actions. KRYPTON, upon its written request
and at its sole expense, shall be made an additional, but not
controlling party, in any such suit or other action controlled
by GENTA JAGO where necessary to obtain complete relief
regarding the subject infringement or violation.
10.6 Application of Monies Recovered
Subject always to the right of the Licensor to control any suit or
other action with regard to GENTA JAGO IPR as outlined in Section
10.4(c) and any right to receive any monies recovered therefrom as
provided for in the License Agreements, all monies recovered upon the
final judgment or settlement of any suit or other action under this
Sections 10.4 or 10.5 shall be applied as follows:
(i) to cover any and all costs and expenses (including attorney's
fees) incurred by the Party controlling such suit or other
action;
(ii) to cover any and all costs and expenses (including attorney's
fees) reasonably, or upon request of the controlling Party,
incurred by the other Party in connection with such suit or
other action, if any;
(iii) the remainder, if any, to the Party controlling any such suit
or other action.
ARTICLE 11
SUB-LICENSE AGREEMENT
11.1 GENTA JAGO hereby grants to KRYPTON the exclusive and sublicenseable
right and sub-license (hereinafter referred to as the "License") to
use, manufacture, have manufactured, sell and market the Final Products
in the Territory and to use the Patents,
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<PAGE>
GEOMATRIX(R) Technology and Know How exclusively for that purpose
subject to the payment of the * and the Royalties pursuant to Articles
13. and 14. below.
11.2 The rights of KRYPTON to grant any sub-license in any part of the
Territory shall be subject to the requirement that KRYPTON shall obtain
the written approval of GENTA JAGO prior to executing any such
sub-license agreement, which approval shall not unreasonably be
withheld, provided however, that no such approval by GENTA JAGO shall
be required for any sub-license to an Affiliate of KRYPTON .
11.3 In any event KRYPTON shall be responsible for any and all acts, deeds
and undertakings of its permitted sub-licensee(s) and KRYPTON and its
permitted sub-licensee(s) shall continue to be bound by all terms and
provisions under this Agreement throughout its term. In case that
KRYPTON sub-licenses rights and/or the License to any sub-licensee(s)
approved by GENTA JAGO, such sub-licensee(s) shall agree in writing to
any and all of KRYPTON's obligations and undertakings under this
Agreement, including but not limited to its confidentiality obligations
set forth hereinafter. Furthermore, KRYPTON undertakes that any and all
sub-license agreements shall provide for inspection and audit
provisions identical to the provisions set forth below in order to
enable GENTA JAGO to control and audit and receive any and all fees and
Royalties due as provided in this Agreement. KRYPTON shall provide
GENTA JAGO promptly with reasonable appropriate information on its
sub-licensee(s) and copies of all agreements with such sub- licensee(s)
(with only the commercial terms may be redacted).
ARTICLE 12
MANUFACTURING AND PRODUCT LIABILITY
12.1 In the event that KRYPTON, subject to Section 5.5 above, elects GENTA
JAGO, and GENTA JAGO expressly agrees to such manufacture, or any of
its Affiliates shall manufacture Final Products, then the Parties agree
to enter into good faith negotiations on and to use commercially
reasonable efforts to execute in due time a respective Manufacturing
and Supply Agreement, according to which GENTA JAGO or its Affiliates
shall undertake to manufacture and supply Final Products in sufficient
quantities to meet KRYPTON's requirements, at a sale price for such
Final Products manufactured equal to GENTA JAGO's * In the event and
for such period of time, that GENTA JAGO or its Affiliate manufactures
and supplies Final Product under such Manufacturing and Supply
Agreement, the Royalty Rate referred to in Section 14.1 below shall be
*
12.2 In the event that KRYPTON or any of its Affiliates or any third party
is elected pursuant to Section 5.5 above to manufacture Final Product,
then KRYPTON undertakes and agrees that at all times the Specifications
and to any and all laws, rules and regulations imposed by any competent
authority on the manufacturing, marketing, distribution and sale of
Final Products are strictly adhered to by the manufacturer, and KRYPTON
shall during the entire term of this Agreement be solely and fully
liable and responsible for the compliance with all such laws, rules and
regulations when manufacturing, having manufactured,
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
marketing, distributing and selling Final Products itself and/or
through Affiliates or sub- licensee(s).
12.3 KRYPTON shall indemnify, defend and hold GENTA JAGO, its Affiliates and
the Licensor harmless from and against any losses, claims, liabilities,
costs and expenses (including reasonable attorney's fees) that may be
imposed upon or asserted against GENTA JAGO and/or its Affiliates
and/or the Licensor as a result of the marketing, distributing,
manufacture, use or sale of Final Products by or on behalf of KRYPTON,
its Affiliates, agents or sub-licensee(s), except for those claims,
liabilities, costs and expenses arising from gross negligence or
intentional misconduct on the part of GENTA JAGO, its Affiliates or the
Licensor.
ARTICLE 13
PAYMENTS AND OTHER CONSIDERATION
13.1 As consideration for GENTA JAGO's preliminary development efforts for
the Prototype Formulation performed prior to the execution of this
Agreement as referred to in Section 2.1 above, KRYPTON undertakes to
pay to GENTA JAGO an initial *, payable upon execution of this
Agreement.
13.2 As consideration for the License granted by GENTA JAGO to KRYPTON under
this Agreement and in consideration of certain major development steps
achieved hereunder, KRYPTON undertakes to pay to GENTA JAGO *:
(a) * KRYPTON's receipt of GENTA JAGO's notice referred to in
Section 7.1 above; and
(b) *; and
(c) * for the Final Product; and
(d) * a for the Final Product.
13.3 The Parties agree that * as set forth in Section 14.4 below.
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
13.4 Unless otherwise agreed by the Parties in writing, all payments under
this Article 13. shall be made in United States Dollars and to such
place or account as GENTA JAGO reasonably requests from time to time in
writing.
ARTICLE 14
ROYALTIES
14.1 During a period commencing upon the first commercial sale of Final
Product in each country of the Territory and ending upon the earlier of
(i) the fifteenth (15th) anniversary of the first commercial sale of
Final Product in such country of the Territory, and (ii) the expiration
of the last of the Patents covering Final Product in such country of
the Territory (hereinafter referred to as the "Royalty Term"), and in
further consideration of the License granted to KRYPTON by GENTA JAGO,
KRYPTON shall pay to GENTA JAGO a royalty (hereinafter referred to as
the "Royalty") of * of the Final Product in the Territory.
14.2 The Parties agree that * shall be applicable for the first time on
sales of such Final Product in such country of the Territory after the
beginning of the calendar quarter immediately following the first
commercial sale of such Competitive Product.
14.3 Royalties shall be payable on a quarterly basis. KRYPTON shall remit to
GENTA JAGO within six (6) weeks after the end of each calendar quarter
the amount of Royalty due with respect to Net Sales and/or Gross
Margin, as the case may be, achieved in the preceding quarter,
beginning with the calendar quarter in which the first commercial sale
of the Final Product is made in any country of the Territory. KRYPTON
shall deliver to GENTA JAGO, along with such remittance of Royalty
payments, a detailed statement (hereinafter referred to as the "Royalty
Report") of the Net Sales and/or Gross Margin, as the case may be, of
the Final Product on a country-by-country basis to which the Royalty
payment relates.
14.4 All Royalty Reports shall be prepared in accordance with generally
accepted accounting principles consistently applied from applicable
period to period and shall be certified by an officer of KRYPTON as
being so prepared, true, accurate and correct.
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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14.5 In recognition of the * by KRYPTON to GENTA JAGO prior to the
commercial sale of the Final Products, the amount of Royalty payments
due to GENTA JAGO under Article 14.2 above with respect to each
calendar quarter shall be * until such time as the aggregate amount of
*
14.6 Unless otherwise agreed by the Parties in writing, payments of
Royalties shall be made in United States Dollars and to such place or
account as GENTA JAGO reasonably requests from time to time in writing.
Any conversions into United States Dollars from the currency in which
the corresponding Net Sales and/or Gross Margin for such Royalties were
made, are to be calculated as using the average closing buying rate for
such currency quoted in the continental terms method of quoting
exchange rates (local currency per USD 1) published in the Wall Street
Journal on the last business day of the applicable reporting period
covered by such Royalty Report.
ARTICLE 15
INSPECTION AND AUDIT
15.1 During the term of this Agreement and during a period of twelve (12)
months after its expiration or termination for any reason, upon the
written request of GENTA JAGO and not more than once each calendar
year, KRYPTON shall permit an independent certified public accountant
of internationally recognized standing selected by GENTA JAGO, at GENTA
JAGO's expense, to have access during regular business hours to such of
the records of KRYPTON and its Affiliates as may be reasonably
necessary to verify the accuracy of the Royalty Reports for any year
ending not more than thirty-six (36) months prior to the date of such
request. The accounting firm shall disclose to GENTA JAGO only whether
the Royalty Reports and records of KRYPTON and its Affiliates and the
amount of Royalties actually paid are correct or not and the specific
details concerning any discrepancies; no other information shall be
shared. The Parties agree to accept such written audit report as final
and binding upon them.
15.2 If such independent accounting firm correctly concludes that additional
Royalties were owed during any such period audited, KRYPTON shall pay
such additional Royalties within ten (10) days of the date GENTA JAGO
delivers to KRYPTON such accounting firm's written report so
concluding. The fees and expenses charged by such accounting firm with
respect to such audit shall be paid by GENTA JAGO; provided however, if
any such audit correctly discloses that Royalties payable by KRYPTON
for the audited period are *, then KRYPTON shall pay all reasonable
fees and expenses charged by such accounting firm with respect to such
audit.
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
15.3 GENTA JAGO shall treat all financial information subject to review
under this Article 15. as confidential and subject to the
confidentiality obligations in Article 16. below.
ARTICLE 16
CONFIDENTIALITY
16.1 Confidential Information. KRYPTON shall maintain in confidence all
Know-How and other information of GENTA JAGO (including samples)
disclosed by GENTA JAGO and identified as, or acknowledged to be,
confidential (the "Confidential Information"), and shall not use,
disclose or grant the use of the Confidential Information except on a
need- to-know basis to its directors, officers, employees, agents,
consultants, clinical investigators or other permitted contractors, to
the extent such disclosure is reasonably necessary in connection with
KRYPTON's activities as expressly authorized by this Agreement. To the
extent that disclosure is authorized by this Agreement, prior to
disclosure, KRYPTON hereto shall obtain agreement in writing of any
such person to hold in confidence and not make use of the Confidential
Information for any purpose other than those authorized by this
Agreement. KRYPTON shall notify GENTA JAGO promptly upon the discovery
of the unauthorized use or disclosure of the Confidential Information.
16.2 Permitted Disclosures. The obligations of confidentiality and non-use
contained in Section 16.1 above shall not apply to the extent that (a)
KRYPTON (i) is required to disclose information by law, regulation or
order of a governmental agency or a court of competent jurisdiction,
or (ii) is required to disclose information to any governmental agency
for purposes of obtaining approval to test or market Final Product,
provided in each case that KRYPTON shall give GENTA JAGO written
notice thereof and sufficient opportunity to object to any disclosure
or to request confidential treatment thereof, or (b) KRYPTON can
demonstrate that (i) the disclosed information was public knowledge at
the time of such disclosure to it, or thereafter became public
knowledge, other than as a result of actions of KRYPTON, its
directors, officers and employees in violation hereof; (ii) the
disclosed information was rightfully known by KRYPTON (as shown by its
written records) prior to the date of disclosure to it by GENTA JAGO
hereunder; (iii) the disclosed information was disclosed to KRYPTON on
an unrestricted basis from a source unrelated to any party to this
Agreement and not under a duty of confidentiality to GENTA JAGO or the
Licensor; or (iv) the disclosed information was independently
developed by KRYPTON without the use of Confidential Information
disclosed by GENTA JAGO.
16.3 Terms of this Agreement. Except as otherwise provided in Section 16.2
above, neither Party shall disclose any terms or conditions of this
Agreement to any third party (other than the Licensor) without the
prior consent of the other Party. Notwithstanding the foregoing, prior
to the execution of this Agreement, the Parties shall agree upon the
substance of information that can be used to describe the terms of this
transaction, and the Parties may disclose such information only without
the other Party's consent. Notwithstanding the foregoing, prior to the
execution of the Agreement, the Parties shall agree upon the substance
of information that can be used to describe the terms of this
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transaction, and the Parties may disclose such information without the
other Party's consent.
16.4 Term of Confidentiality. The confidentiality obligations under this
Article 16 shall be effective during the term of this Agreement and for
a period of ten (10) years after the expiration or earlier termination
hereof.
16.5 Injunctive Remedies. GENTA JAGO shall be entitled to injunctive
remedies and relief against KRYPTON and its Affiliates and any third
parties for any breach or threatened breach of the confidentiality
obligations under this Article 16.
16.6 Damages. In the event of a breach of the confidentiality provisions
under this Article 16 by KRYPTON, its Affiliates or its directors,
officers, employees or any other person who were given access to the
Confidential Information by KRYPTON, GENTA JAGO shall be entitled to
receive from KRYPTON any and all actual costs and damages caused by
such breach.
16.7 Public Announcements. Neither Party shall make any press releases or
other public announcements or disclosures regarding the execution and
the existence of this Agreement or any activities conducted hereunder,
including development results, filings and registrations, without the
prior written consent of the other Party, except for such public
disclosure as may be necessary in the opinion of any party's legal
advisor in order not to be in violation of or default under any
applicable law, regulation or governmental order, in such later event
the party having an obligation to disclose shall submit to the other
party a draft of the required announcement and shall give the other
party the opportunity to request reasonable amendments and
modifications of such required announcement..
ARTICLE 17
TERM AND TERMINATION
17.1 Term and Expiration
(a) This Agreement shall expire on a country-by-country basis upon
the expiration of the Royalty Term.
(b) Upon the expiration of this Agreement in each country of the
Territory pursuant to Section 17.1 (a) above and payment of
all fees, including but not limited to the *, and all
Royalties and other payments by KRYPTON due GENTA JAGO under
this Agreement, the License shall be deemed to be a perpetual,
fully paid-up and royalty-free license for such Final Product
and each such country of the Territory.
17.2 Termination Prior to Registration
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
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<PAGE>
During the development, test, study and registration phases as
specified in Articles 3. through 8. above, and until the first
successful registration approval of any Final Product by any Regulatory
Authority, this Agreement may be terminated in accordance with the
provisions set forth in Sections 3.6, 4.6, 6.5, 7.5 and 8.6 above.
17.3 Termination for Cause
During the entire term of this Agreement either Party may terminate
this Agreement by giving to the other Party written notice to that
effect, if any of the following events occur:
(a) the other Party is in default or in breach of a term or
provision hereof and such default or breach continues and is
not remedied within thirty (30) days upon the other Party's
written request to remedy such default or breach; or
(b) the other Party shall commit a breach of any of the
confidentiality provisions of Article 16. above; or
(c) the other Party goes into liquidation, voluntarily or
otherwise, other than for the sole purpose of reorganization,
or goes into bankruptcy or makes an assignment for the benefit
of creditors, or in the event of a receiver being appointed of
the other Party's property or parts thereof.
17.4 Effect of Termination
(a) If KRYPTON elects to so terminate the Agreement under Section
17.2 above prior to filing of the ANDA in the United States,
then: (i) such termination shall be without penalty or
liability to KRYPTON; (ii) all rights and licenses granted by
GENTA JAGO hereunder shall revert to GENTA JAGO with respect
to such country(ies) so terminated, (iii) KRYPTON be relieved
of any payments that are scheduled or may be made in the
future under this Agreement, (iv) KRYPTON shall return to
GENTA JAGO all materials, documentation, information, data and
other things furnished by GENTA JAGO in connection with this
Agreement, including without limitation any and all
Confidential Information, together with all copies thereof in
KRYPTON's possession or under its control, (v) all
Registrations pertaining to the marketing of the Product shall
be transferred to and be owned by GENTA JAGO as to the
affected country(ies) and the data generated under this
Agreement shall be provided to and thereafter may be freely
used by GENTA JAGO to develop, manufacture and market the
Product; and (vi) GENTA JAGO and its Affiliates shall
thereafter be entitled to exercise such rights as they may
have under their own license agreements to make, have made,
use or sell the Product in the country(ies) so terminated
without compensation or obligation to KRYPTON; provided, that
the foregoing rights under (iv) and (vi) shall not create or
imply any right or license under any patent rights, copyright
rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by KRYPTON or
its Affiliates.
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(b) If KRYPTON elects to so terminate this Agreement subsequent to
the filing of the ANDA in the United States, then: (i) such
termination shall be without penalty or liability to KRYPTON;
(ii) all rights and licenses granted by GENTA JAGO hereunder
shall revert to GENTA JAGO with respect to such country(ies)
so terminated; (iii) KRYPTON shall be relieved of any payments
that are scheduled or may be made in the future under this
Agreement, (iv) KRYPTON shall return to GENTA JAGO all
materials, documentation, information, data and other things
furnished by GENTA JAGO in connection with this Agreement,
including without limitation any and all Confidential
Information, together with all copies thereof in KRYPTON's
possession or under its control, (v) GENTA JAGO and its
Affiliates shall thereafter be entitled to make, have made,
use or sell the Product in the country(ies) so terminated
(and, provided, that the foregoing shall not create or imply
any right or license under any patent rights, copyright
rights, trademarks or trade names, know-how, or other
intellectual property rights owned or controlled by KRYPTON or
its Affiliates); (vi) all Registrations pertaining to the
Product shall be transferred to and be owned by GENTA JAGO as
to the affected country(ies) and the data generated hereunder
shall be provided to and thereafter may be freely used by
GENTA JAGO to develop, manufacture and market the Product; and
(vii) GENTA JAGO shall pay to KRYPTON the same royalty, which
shall be paid in the same manner and subject to the same terms
and conditions as would otherwise have applied to KRYPTON, as
KRYPTON would otherwise have paid (absent such termination)
hereunder to GENTA JAGO on Net Sales (or on the Gross Margin
of such Net Sales, as the case may be) of the Product in the
country(ies) to which such termination applies (with such
royalty to be paid by GENTA JAGO and its Affiliates in each
such country until expiration of the Royalty Term in each such
country), until such time as the royalties paid to KRYPTON
equal the aggregate amount that had been paid by KRYPTON to
GENTA JAGO prior to such termination under the Sections 3.5,
4.3, 5.2, 6.3, 7.3,8.3, 9.2 and 13., at which time the royalty
rate then prevailing on Net Sales (or on the Gross Margin of
such Net Sales, as the case may be) in the United States shall
be reduced by two percent (2 %) (but shall not be reduced for
sales outside the United States).
(c) Otherwise the termination of this Agreement shall be without
prejudice to any rights and obligations of either Party
accrued prior to the effective date of termination. KRYPTON
shall forthwith make all payments due and outstanding to GENTA
JAGO at the date of termination. Except as explicitly
otherwise stated in this Agreement, GENTA JAGO shall not be
obligated to refund upon termination of this Agreement to
KRYPTON any payments, including without limitation the *, made
by KRYPTON to GENTA JAGO prior to such termination pursuant to
the provisions of this Agreement.
(d) The termination of this Agreement pursuant to Section 17.3
above by either Party shall not limit remedies which may be
otherwise available in law or equity to either Party.
- - - ------------------
* Confidential treatment requested. The redacted material has been
separately filed with the Commission.
-24-
<PAGE>
17.5 Early Termination of the License Agreements
(a) In the event that the License Agreements are terminated prior
to the expiration of the last to expire of the Patents
licensed to GENTA JAGO in the Territory, then the License
granted hereunder to KRYPTON shall also terminate upon
KRYPTON's receipt of the respective termination notice from
the Licensor. KRYPTON may give written notice to the Licensor
of KRYPTON's desire to continue the License granted under this
Agreement within sixty (60) days as of KRYPTON's receipt of
the Licensor's notice referred to above.
(b) In the event that KRYPTON timely notifies the Licensor of its
desire to continue the License granted under this Agreement,
the Licensor shall have the right, at its sole discretion, to
elect to assume in writing within sixty (60) days upon the
Licensor's receipt of KRYPTON's notice any and all rights of
GENTA JAGO under this Agreement and to promptly cure all
defaults of GENTA JAGO under this Agreement, if any.
(c) In the event that the Licensor does not timely gives notice to
KRYPTON and cures all of GENTA JAGO's defaults hereunder
pursuant to Section 17.5(b) above, then KRYPTON shall promptly
assume in writing any and all rights and obligations of GENTA
JAGO under the License Agreements with the Licensor, but with
regard to the rights encompassed by the License granted
hereunder only, and promptly cure all defaults of GENTA JAGO
under the License Agreements with regard to the rights
encompassed by the License granted hereunder only, if any.
(d) Notwithstanding anything contained in this Section 17.5, no
action taken by the Licensor and/or KRYPTON to continue or not
to continue the License shall relieve GENTA JAGO from any
liability for any uncured defaults under this Agreement or the
License Agreements, and such action by the Licensor and/or
KRYPTON shall be without prejudice to any other rights or
remedies the Licensor and/or KRYPTON may have in law or
equity.
ARTICLE 18
WARRANTIES
18.1 GENTA JAGO shall carry out and undertake the studies and tests
specified in this Agreement in a careful and diligent manner. GENTA
JAGO agrees to carefully choose, instruct and supervise any employees,
officers, Affiliates or third parties to be chosen by GENTA JAGO
pursuant to this Agreement, who are involved with the tests and
studies. Nothing in this Agreement shall be construed as a
representation made, or warranty given, by GENTA JAGO that any
development performed by or for GENTA JAGO under this Agreement will be
successful in whole or in part, or that any product, including Final
Product, which may be developed, will be successful in the commercial
marketplace. Furthermore, GENTA JAGO makes no representation or
warranty, express or implied,
-25-
<PAGE>
with respect to GEOMATRIX(R) Technology and/or Know-How, including
without limitation, any warranty of completeness, accuracy,
merchantability or fitness for a particular purpose thereof.
18.2 GENTA JAGO represents and warrants that it has all rights regarding
Patents, GEOMATRIX(R)Technology and Know-How necessary to grant the
License hereunder. Notwithstanding the preceding sentence, GENTA JAGO
does not assume any responsibility and makes no warranty that the
performance of this Agreement and any product developed hereunder,
including Prototype Formulation(s) and Final Products, do not infringe
any third party's patents, patent applications or other intellectual
property rights. Notwithstanding the preceding sentence, GENTA JAGO
represents and warrants that, as of the effective date of this
Agreement, it is not aware and has not knowledge of any such
infringement of any third party rights. If, however, during the course
of this Agreement either Party discovers that the Prototype
Formulation(s) and/or the Final Products infringe or may infringe any
third party's intellectual property rights, it shall promptly inform
the other Party thereof and the Parties shall meet to discuss the
course of action to be taken with regard thereto.
18.3 Nothing in this Agreement shall be construed as a representation made,
or warranty given by GENTA JAGO that any patent will issue based upon
any pending patent application encompassed by the term Patents, and
that any patent encompassed by the term Patents which issues will be
valid or enforceable.
18.4 GENTA JAGO assumes no liability or responsibility for any damages
caused to KRYPTON, third parties, animals and/or the environment by the
manufacturing, marketing or use of the Prototype Formulations or Final
Products or the active ingredient contained therein, except to the
extent that any of the above are attributable to the gross negligence
or willful misconduct of GENTA JAGO in performing its obligations
hereunder.
18.5 Subject to the specific representations and warranties given and
specific disclaimers of representations and warranties included in this
Article 18, and further subject to anything to the contrary contained
in this Agreement, either Party shall, as to third parties, be
indemnified and held harmless by the other Party from and against any
and all losses, liabilities and damages arising from any claim, action
or other proceeding by any third party relating to any acts or
omissions of the other Party, its directors, officers, employees or
agents, or the gross negligence or willful misconduct of such other
Party, its directors, officers, employees or agents in performing any
of its obligations under this Agreement.
18.6 Any liability, warranty and undertaking contained herein shall be
limited to the payment by either Party for direct damages to the other
Party and in any event, neither Party shall be liable to the other
Party for any special, indirect, punitive or consequential damages
and/or loss of profits or anticipated profits, respectively.
18.7 KRYPTON shall, at its own expense, purchase from an insurance company
of its choice and shall maintain during the entire term of this
Agreement an appropriate and customary
-26-
<PAGE>
policy of general liability and product liability insurance covering
its responsibilities regarding Prototype Formulation(s) and Final
Products developed, manufactured, marketed and sold under this
Agreement and the Active Ingredient contained therein and the use
thereof. Upon request, KRYPTON shall provide GENTA JAGO with evidence
that such insurances are existing and are maintained.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Entire Agreement: The terms, covenants, conditions and provisions
contained in this Agreement, including its Appendices referred to
herein, constitute the total and complete agreement of the Parties and
supersede all prior understandings and agreements hereto made, and
there are no other representations, understandings or agreements
relating to the subject matter hereof. The provisions of this Agreement
may not be waived, altered, amended or repealed in whole or in part
except by the written consent of both of the Parties to this Agreement.
19.2 Assignment: This Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any
right or obligation hereunder be assigned or transferred by either
Party, other than to an Affiliate of such Party, without the consent
of the other Party; provided however, that either Party may, without
such consent, assign this Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or
substantially all of its business, or in the event of its merger,
consolidation, change in control or similar transaction; and provided
further that GENTA JAGO may without the consent of KRYPTON assign any
and all of its rights and obligations hereunder to the Licensor and/or
any of the Licensor's Affiliates. Any permitted assignee shall assume
all obligations of its assignor under this Agreement or under the
respective rights or obligations actually assigned.
19.3 Successors: This Agreement and all rights hereunder shall ensure to the
benefit of all successors and assigns of both Parties.
19.4 Notices: Any consent, notice or report required or permitted to be
given or made under this Agreement by one Party to the other shall be
in English and in writing, delivered personally or by courier service
or by facsimile (promptly confirmed by personal delivery or courier
service) addressed to the other Party at its address indicated below,
or to such other address as shall have been notified in writing to the
sending Party by the receiving party from time to time, and shall take
effect upon receipt by the addressee.
IF TO KRYPTON: KRYPTON LTD.
East Wing, Second Level
Hadfield House
Library Street
Gibraltar
attn.: PRESIDENT
-27-
<PAGE>
WITH COPIES TO: SKYEPHARMA PLC
105 Piccadilly
London W1V 9FN, England
attn.: COMPANY SECRETARY
AND: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
P.O. Box 4451
CH-8022 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
IF TO GENTA JAGO: GENTA JAGO Technologies B.V.
Swiss Branch
Grundstrasse 12
CH-6343 Rotkreuz, Switzerland
attn.: MANAGEMENT COMMITTEE
WITH COPIES TO: RINDERKNECHT GLAUS & STADELHOFER
Beethovenstrasse 7
8002 Zurich, Switzerland
attn.: DR. THOMAS M. RINDERKNECHT
-28-
<PAGE>
AND: PILLSBURY MADISON & SUTRO LLP
235 Montgomery Street, 15th Floor
San Francisco, CA 94104, U.S.A.
attn.: THOMAS E. SPARKS, JR., ESQ.
19.5 Independent Contractors: It is expressly agreed that the Parties shall
be independent contractors and that the relationship between the
Parties shall not constitute a partnership, joint venture or agency.
Neither Party 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 Party, without the prior written
consent of the other Party to do so.
19.6 Severability: Each Party hereby acknowledges that it does not intend
to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries.
Should one or more provisions of this Agreement be or become invalid,
the Parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their
economic effect are sufficiently similar to the invalid provisions
that it can be reasonably assumed that the parties would have entered
into this Agreement with such provisions. In case such provisions
cannot be agreed upon, the invalidity of one or several provisions of
this Agreement shall not affect the validity of this Agreement as a
whole, unless the invalid provisions are of such essential importance
to this Agreement that it is to be reasonably assumed that the Parties
would not have entered into this Agreement without the invalid
provisions.
19.7 Force Majeure: Neither Party hereto shall be held liable or responsible
to the other Party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any
term of this Agreement when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party
including but not limited to fire, floods, embargoes, war, acts of war
(whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, acts of God
or acts, omissions or delays in acting by any governmental authority or
the other Party hereto.
19.8 Interest: In the event any amount due and payable under this Agreement
is not paid by the due date, then the Party owing such amount shall pay
to the creditor, without being requested by the other Party, interest
on the total outstanding amount at the rate equal to the London
Interbank Offered Rate ("LIBOR"), as published in the Wall Street
Journal (Europe) on the date that such payment falls due, increased by
three percent (3%), in United States Dollars and adjusted on the first
day of every calendar quarter.
19.9 Headings: The titles and headings used in this Agreement are intended
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
-29-
<PAGE>
19.10 Waiver: The waiver by either Party hereto of any right hereunder or the
failure to perform or of a breach by the other Party shall not be
deemed a waiver of any other right hereunder or of any other breach or
failure by said other Party whether of a similar nature or otherwise.
19.11 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
ARTICLE 20
DISPUTE RESOLUTION AND ARBITRATION
20.1 In the event of any dispute arising between the Parties concerning this
Agreement, GENTA JAGO and KRYPTON agree that in the first place they
shall meet for good faith discussions in an attempt to negotiate an
amicable solution.
20.2 Any dispute arising between the Parties out of or in connection with
this Agreement, or the interpretation, breach or enforcement thereof,
which cannot be amicably resolved pursuant to Section 20.1 above within
two (2) months as from the first appearance of such dispute, shall be
finally resolved by binding arbitration. Whenever a Party shall decide
to institute arbitration proceedings, it shall give written notice to
that effect to all of the other Parties. Any arbitration hereunder
shall be conducted under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce. Any such arbitration shall be
conducted in the English language by a panel of three (3) arbitrators
appointed in accordance with such rules, and shall be held in PARIS,
FRANCE. The arbitrators shall have the authority to grant specific
performance, and to allocate among the parties the costs of arbitration
in such equitable manner as they determine. Judgment upon the award so
rendered may be entered in any court having jurisdiction or application
may be made to such court for judicial acceptance of any award so
rendered and an order of enforcement, as the case may be. Whether a
claim, dispute or other matter in question would be barred by the
applicable statute of limitations, which also shall apply to any
arbitration under this section, shall be determined by binding
arbitration pursuant to this section.
20.3 Notwithstanding anything contained in this Article 20, either Party may
seek preliminary or injunctive measures or relief in any competent
court having jurisdiction.
ARTICLE 21
APPLICABLE LAW
The Parties hereto agree that this Agreement, all transactions executed
hereunder and all relationships between the Parties in connection therewith
shall be construed under and be governed by the laws of Switzerland without
reference to the conflict of law principals thereof, and shall not be governed
by the United Nations Convention on Contracts for the International Sale of
Goods.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 31st day
of October 1996.
GENTA JAGO TECHNOLOGIES B.V.
/s/ Thomas H. Adams /s/ Jacques Gonella
- - - ------------------- -------------------
by: Dr. Thomas H. Adams by: Dr. Jacques Gonella
its: Managing Director its: Managing Director
KRYPTON LTD.
/s/
- - - -------------------
by:
its:
The Licensor, Jagotec AG, hereby agrees to be bound by the obligations contained
in Section 17.5 of this Agreement.
-30-
<PAGE>
JAGOTEC AG
/s/ Jacques Gonella /s/
- - - ------------------- -------------------
by: by:
its: its
-31-
EXHIBIT 10.97
CONFIDENTIAL TREATMENT REQUESTED
LICENSE TERMINATION AGREEMENT
BETWEEN THE UNDERSIGNED:
Wilton Licensing AG, Postfach, Ch - 6052 Hergiswil ("Wilton")
AND
Genta, Inc., 3350 General Atomics Court, San Diego, CA 92121, and Genta
Pharmaceuticals Europe SA, 146 Rue Paradis, F - 13006 Marseille.
WHEREAS:
On 28th October 1991, Genta and Wilton signed a contract for a duration of * or
for the life of the PATENT in each country of the TERRITORY, whichever is longer
under the terms and conditions of which Wilton granted to Genta a right and
license to make, have made, use and sell the PRODUCT as regards to the new
chemical entity (SCY ER).
On 28th October 1991, Genta and Wilson also signed a contract for a duration of
* or for the life of the PATENT in each country of the TERRITORY, whichever is
longer under the terms and conditions of which Wilton granted to Genta a right
and license to make, have made, use and sell the PRODUCT as regards to the new
chemical entity (SCY).
These agreements (hereafter referred to as the CONTRACTS enclosed in appendix
are governed by the laws of the State of California).
Due to various circumstances Genta has agreed to terminate the CONTRACTS. Wilson
has agreed to such termination.
THEREFORE GENTA, WILSON AND PERMATEC HAVE AGREED TO FIND AN AMICABLE SOLUTION ON
THE FOLLOWING TERMS:
- - - ----------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 1 -
<PAGE>
Article 1
Upon payment by Permatec of the lump sum as described in article 2, hereafter,
Wilton and Genta acknowledge that the CONTRACTS shall be terminated and be
transferred back to Wilton effective on 25th November 1996. Genta agrees that
with such termination all development results, studies, dossiers, files and
documents in connection with the CONTRACTS or which have been acquired by Genta
in connection with its activities under the CONTRACTS ("Development Results")
shall be transferred and assigned to Wilton and that Wilton shall be solely
entitled to utilize the Development Results.
Article 2
So as to avoid any dispute of whatsoever nature arising out of the above,
Permatec undertakes to pay to Genta upon execution of the Agreement the sum of *
and on 5th December 1996 a further amount of * in full and final settlement of
all mutual claims under the CONTRACTS and for the transfer of the Development
Results.
Article 3
Genta will acknowledge receipt of the sum described in Article 2 above, and
acknowledges that all its rights arising out of the performance of the CONTRACTS
with Wilton have been fulfilled and transferred back to Wilton and Genta shall
not continue any activity in respect of the subject matter of the CONTRACTS or
shall not use anymore the Development Results. Genta agrees to execute any such
other documents which may be necessary for the transfer and assignment of the
Development Results.
Wilton also acknowledges that all its rights arising out of the performance and
termination of the CONTRACTS between Genta and Wilton have been fulfilled and
that Genta shall be fully released from any obligation to Wilton in connection
with the CONTRACTS, except for the transfer and assignment of the Development
Results. Wilton acknowledges that Genta does not give any guarantee or warranty
in respect of the Development Results.
Wilton and Genta also declare that all their rights arising out of the legal
relations and/or out of the CONTRACTS which existed between them have been
fulfilled.
Article 4
The existence and contents of this agreement are strictly confidential and shall
not be disclosed to any third party, unless and only to the extent that such
disclosure is required by laws or regulations, are legally required by a
competent authority. Any such disclosure shall not relieve either party of its
obligation of confidentiality thereunder in respect of any other legal or
physical person other than those to whom disclosure is required by law
regulations or competent authorities.
- - - ----------------
* Confidential treatment requested. The redacted material has been separately
filed with the Commission.
- 2 -
<PAGE>
Article 5
Any and all rights and interpretation arising out of this settlement are
governed by reference to the CONTRACTS and the provision contained herein.
Article 6
This agreement shall not constitute an admission of liability by either of the
parties, except as expressly set forth herein.
The above provisions, which have been fully discussed and agreed upon between
the parties represent the entirety of their agreement and constitute a
settlement.
Made in Muttenz, on Monday, 2nd December 1996, in three (3) originals.
/s/ /s/
- - - ---------------------- -------------------------
Genta, Inc. Wilton Licensing AG
Enclosures: *Appendix
*Power of Attorney
- 3 -
LEGAL LANGUAGE SERVICES
- - - -------------------------------------------------------------------------------
[LOGO] A Division of ALS International Telephone (212) 766-4111
18 John Street Toll Free (800) 788-0450
Suite 300 Telefax (212) 349-0964
New York, NY 10038-4011
March 25, 1997
To Whom It May Concern:
This is to certify that the attached translation from French into English is an
accurate representation of the document received by this office. This document
is designated as:
CONTRACT NO. A 93 08 222 U 00, BETWEEN AGENCE NATIONALE DE
VALORISATION DE LA RECHERCHE (ANVAR) AND GENTA PHARMACEUTICALS
EUROPE ET. AL.
Richard Grose, who performed this translation, is certified by this agency as
fluent in French and standard North American English and is qualified to
translate. He attests to the following:
"To the best of my knowledge, the accompanying text is a true, full and accurate
translation of the specified document."
/s/ Richard Grose
- - - ------------------------------------
Signature of Richard Grose
Subscribed and sworn to before me this 3-25, 1997
/s/ Sherry Riedel
- - - ------------------------------------
Sherry Riedel
Notary Public, State of New York
No. 43-5041034
Qualified in Richmond County
Certificate Filed in New York County
Commissin Expires March 27, 1999
Sincerely,
Victor J. Hertz
President
EXHIBIT 22.1
GENTA INCORPORATED
SUBSIDIARIES OF THE REGISTRANT
JBL Scientific, Inc., a California corporation, is a wholly owned subsidiary of
Genta Incorporated.
Genta Pharmaceuticals Europe S.A., a French corporation, is a wholly owned
subsidiary of Genta Incorporated.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements on Forms S-3 and S-8 of our reports dated February 28, 1997, with
respect to the consolidated financial statements of Genta Incorporated and the
financial statements of Genta Jago Technologies B.V., included in the Genta
Incorporated Annual Report (Form 10-K) for the year ended December 31, 1996.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Diego, California
March 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS
OF OPERATIONS CONTAINED IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 532,013
<SECURITIES> 0
<RECEIVABLES> 664,696
<ALLOWANCES> 0
<INVENTORY> 992,243
<CURRENT-ASSETS> 2,374,116
<PP&E> 5,951,568
<DEPRECIATION> 2,317,287
<TOTAL-ASSETS> 11,169,384
<CURRENT-LIABILITIES> 4,328,609
<BONDS> 2,766,543
0
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<COMMON> 39,992
<OTHER-SE> 4,033,711
<TOTAL-LIABILITY-AND-EQUITY> 11,169,384
<SALES> 4,924,694
<TOTAL-REVENUES> 5,297,955
<CGS> 2,479,337
<TOTAL-COSTS> 13,951,784
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