UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1998; OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______ TO _______ .
Commission File Number
0-23076
Sparta Pharmaceuticals, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 56-1755527
------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
111 Rock Rd. Horsham, PA 19044
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(215) 442-1700
----------------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
As of May 14, 1998, there were outstanding 3,434,950 shares of Common Stock,
$.001 par value per share.
1
<PAGE>
FORM 10-Q
QUARTERLY REPORT
-----------------
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page No.
--------
<S> <C>
Item 1. Consolidated Financial Statements (unaudited):
Consolidated Balance Sheets as of March 31, 1998 and
December 31, 1997 3
Consolidated Statements of Operations for the three-month
periods ended March 31, 1998 and 1997 and for the period
from June 12, 1990 (inception) to March 31, 1998 4
Consolidated Statements of Cash Flows for the three-month
periods ended March 31, 1998 and 1997 and for the period
from June 12, 1990 (inception) to March 31, 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II. OTHER INFORMATION
Item 2. Changes in Securities 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
SPARTA PHARMACEUTICALS, INC.
(A Development Stage Company)
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1998 1997
---------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,087,905 $ 4,767,317
Short-term investments --- 1,473,275
Prepaid expenses and other assets 222,349 68,778
-------------- ----------------
Total current assets 5,310,254 6,309,370
Fixed assets, net 293,344 336,695
Other assets:
License agreements, net of amortization
of $96,152 in 1998 and $92,912 in 1997 18,636 21,876
Restricted Cash 149,519 148,310
-------------- ---------------
$ 5,771,753 $ 6,816,251
============== ===============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 629,655 $ 741,240
-------------- --------------
Total current liabilities 629,655 741,240
-------------- --------------
Stockholders' equity:
Preferred Stock, not designated, $.001 par value;
authorized and unissued 8,730,160 shares --- ---
Series B' Convertible Preferred Stock, $.001 par value;
authorized 2,269,840 shares; issued and outstanding
966,312 shares in 1998 and 1,020,747 shares in 1997 966 1,021
Common Stock, $.001 par value; authorized 72,000,000
shares; issued and outstanding 3,271,541 shares in
1998 and 3,116,154 shares in 1997 3,272 3,116
Additional paid-in capital 28,661,937 28,616,607
Stock subscriptions receivable (133,333) (133,333)
Deferred compensation (150,851) (167,654)
Deficit accumulated during the development stage (23,239,893) (22,244,746)
-------------- --------------
Total stockholders' equity 5,142,098 6,075,011
-------------- --------------
$ 5,771,753 $ 6,816,251
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------- Period From
June 12, 1990
(Inception) to
March 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Revenue:
Grant income and contract revenue $ 144,252 $ 16,500 $ 427,328
Interest income 76,745 125,627 1,110,743
-------------- --------------- ---------------
Total revenue 220,997 142,127 1,538,071
-------------- --------------- ---------------
Operating expenses:
Research and development 931,577 986,376 13,860,940
General and administrative 284,567 343,146 7,619,111
Charge for acquired research
and development ---- ---- 3,297,913
-------------- --------------- ---------------
Net loss $ (995,147) $ (1,187,395) $ (23,239,893)
============== =============== ===============
Basic and diluted net loss per share $ (.31) $ (.61)
============== ===============
Basic and diluted weighted average
number of shares outstanding (Note 4) 3,189,207 1,953,611
============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31, Period from June 12, 1990
-------------------------------------- (Inception) to
1998 1997 March 31, 1998
------------------ ---------------- -------------------------
<S> <C> <C> <C>
Operating activities:
Net loss........................................$ (995,147) $ (1,187,395) $ (23,239,893)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on investments......................... - - 3,316
Depreciation and amortization............... 50,937 54,487 989,371
Write down of license agreement............. - - 45,200
Acquired research & development............. - - 3,197,913
Issuance of convertible notes for services.. - - 220,474
Issuance of stock for services.............. 45,431 - 267,390
Compensation expense related to stock
options and warrants granted................ 16,803 14,989 451,786
Compensation expense related to forgiveness
of stock subscriptions receivable........... - - 66,667
Changes in operating assets and liabilities,
net of effect from acquisition:
Prepaid expenses and other assets.......... (153,571) (93,008) (222,349)
Restricted cash............................ (1,209) (2,354) 97,830
Accounts payable and accrued expenses...... (111,585) (31,945) 479,655
---------------- --------------- ----------------------
Net cash used in operating activities... (1,148,341) (1,245,226) (17,642,640)
---------------- --------------- ----------------------
Investing activities:
Payment of acquisition related fees & expenses.. - - (128,842)
Purchases of available-for-sale securities...... - - (2,576,468)
Maturities of available-for-sale securities..... 1,473,275 - 2,573,152
Purchases of fixed assets....................... (4,346) - (147,943)
Acquisition of license agreements............... - - (160,078)
---------------- --------------- ----------------------
Net cash provided by (used in) investing
activities.................................. 1,468,929 - (440,179)
---------------- --------------- ----------------------
Financing activities:
Proceeds from issuance of convertible notes and
notes payable................................... - - 4,488,650
Repayment of notes payable...................... - - (640,000)
Proceeds from issuance of Common Stock.......... - - 4,992,031
Repurchase of Common Stock...................... - - (45)
Proceeds from issuance of Preferred Stock....... - - 14,800,038
Increase in debt issuance costs................. - - (469,950)
---------------- --------------- ----------------------
Net cash provided by financing activities... - - 23,170,724
---------------- --------------- ----------------------
Increase (Decrease) in cash and cash equivalents 320,588 (1,245,226) 5,087,905
Cash and cash equivalents at beginning of period 4,767,317 10,246,812 -
---------------- --------------- ----------------------
Cash and cash equivalents at end of period......$ 5,087,905 $ 9,001,586 $ 5,087,905
================ =============== ======================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
1. Company Background
Sparta Pharmaceuticals, Inc. (and together with its subsidiary, the
"Company"), a development stage biopharmaceutical company incorporated in 1990,
is engaged in the business of acquiring rights to, and developing for
commercialization, technologies and drugs for the treatment of a number of life
threatening diseases, including cancer, cardiovascular disorders, chronic
metabolic diseases and inflammation.
The Company has generated no product revenues to date and has incurred
losses since its inception. The Company anticipates incurring additional losses
over at least the next several years and such losses are expected to increase as
the Company expands its research and development activities. Substantial
financing will be needed by the Company to fund its operations and to develop
its products commercially. There is no assurance that such financing will be
available when needed. Operations of the Company are subject to certain risks
and uncertainties including, among others, uncertainty of product development,
technological uncertainty, dependence on collaborative partners, uncertainty
regarding patents and proprietary rights, comprehensive government regulations,
marketing and sales capability and experience, limited clinical trial
experience, and dependence on key personnel.
2. Basis of Presentation
The consolidated financial statements include the accounts of Sparta
Pharmaceuticals, Inc. and Orizon Pharmaceuticals, Inc., a 95% owned subsidiary.
The Company recognizes 100% of Orizon's net loss in its consolided results of
operations. All intercompany balances and transactions have been eliminated.
The accompanying unaudited interim financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, considered necessary for a fair presentation,
have been included in the accompanying unaudited financial statements. For more
complete financial information, these financial statements should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997. Results for the interim periods are not necessarily indicative of the
results for any other interim period or for the full fiscal year.
3. Recapitalization
At the Company's Annual Meeting of Stockholders held on May 11, 1998, the
stockholders approved an amendment to the Company's Restated Certificate of
Incorporation effecting a one-for-five reverse stock split of its common stock.
The Company's common stock began trading on a post-reverse split basis at the
commencement of trading on May 13, 1998. All common stock and per share amounts
in the accompanying Consolidated Financial Statements have been retroactively
restated to reflect the reverse stock split.
4. Net Loss Per Share of Common Stock
The Company has adopted SFAS No. 128 ("SFAS 128"), "Earnings per Share,"
which supersedes APB Opinion No. 15 ("APB 15"), "Earnings per Share," and
which is effective for all periods ending after
6
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December 15, 1997. SFAS 128 requires dual presentation of basic and diluted
earnings per share ("EPS") for complex capital structures on the face of the
Statements of Operations. Basic EPS is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution from the exercise or conversion of securities
into common stock. For the three months ended March 31, 1998 and 1997, the
effects of the (i) exercise of outstanding stock options and warrants and (ii)
conversion of the outstanding shares of convertible preferred stock (as if
converted on their dates of issuance) were excluded from the calculation of
diluted EPS because their effect was antidilutive.
5. Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 130 "Reporting Comprehensive Income" ("SFAS No. 130"), which
requires that all items that are required to be recognized under accounting
standards or components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS No. 130 became effective for fiscal years beginning after
December 15, 1997, with initial application as of the beginning of the Company's
1998 fiscal year. SFAS No. 130 requires comparative financial statements
provided for earlier periods to be reclassified to reflect application of the
provisions of this new standard.
The Company has reviewed SFAS No. 130 and has determined that for the
quarters ended March 31, 1998 and 1997, no items meeting the definition of
comprehensive income as specified in SFAS No. 130 existed in the financial
statements. As a result, no disclosure is necessary to comply with SFAS No.
130.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Sparta is a development stage pharmaceutical company engaged in the
business of acquiring rights to, and developing for commercialization,
technologies and drugs for the treatment of a number of life- threatening
diseases including cancer, cardiovascular disorders, chronic metabolic diseases
and inflammation. Sparta has not derived revenues from the sale of any products
and expects to incur substantial operating losses for the next several years. As
of March 31, 1998, the Company's accumulated deficit was $23,239,893.
General
In February 1998, Sparta announced that the United States Patent and
Trademark Office has granted United States Patent #5,703,130 submitted by Drs.
Rui Han and Zong-Ru Guo of The Beijing Institute of Materia Medica, Chinese
Academy of Medical Sciences, Beijing, China. The patent, entitled "Chalcone
Retinoids and Methods of Use of Same" is the first United States patent to be
granted through Sparta's collaboration with the Institute of Materia Medica.
Sparta has an exclusive, world-wide license, excluding China, to this patent.
In March 1998, the Company announced the election by the Board of Directors of
Jerry Hook, Ph.D., Sparta's current President and Chief Executive Officer, as
Chairman of the Board of Directors. Dr. Hook replaced William M. Sullivan who,
together with Dr. Lindsay Rosenwald, founded Sparta in 1991. In April 1998,
the Company announced pharmacokinetic results of an ongoing Spartaject(TM)
busulfan Phase I clinical trial. Safety and bioavailability at low and high
dose were assessed. No unexpected toxicities were noted. As expected, to date,
the data has demonstrated that the busulfan blood levels were less variable
after Spartaject busulfan than after oral busulfan. Also in April 1998, the
Company announced that it had signed a license agreement with Schering-Plough
Corporation for the application of the Spartaject technology to
Schering-Plough's oral anticancer agent, TEMODAL (R) (temozolomide), which is
currently in development for the treatment of patients with recurrent
malignant gliomas, such as giobastoma multiforme and anaplastic astrocytoma.
Sparta will be entitled to receive up-front licensing fees, milestone
payments and royalties on sales.
7
<PAGE>
Results of Operations
Three Months Ended March 31, 1997 and 1998
Revenue increased from $142,127 for the three months ended March 31, 1997
to $220,997 for the three months ended March 31, 1998 due primarily to a higher
level of grant income. The Company recorded grant income of $144,252 for the
three months ended March 31, 1998 under a Phase II Small Business Innovation
Research grant ("Phase II SBIR grant") awarded in 1997. Interest income
decreased from $125,627 in the first quarter of 1997 to $76,745 in the first
quarter of 1998 due to a lower level of funds available for investment as the
Company has consumed funds for continuing operations. Interest income is likely
to decrease in subsequent quarters unless the Company is able to secure
additional funding. The amount of revenues may vary significantly year-to-year
and quarter-to-quarter and depend on, among other factors, the timing and amount
of future financings and the potential awarding of future grants and contracts.
Research and development expenses decreased from $986,376 in the first
quarter of 1997 to $931,577 in the first quarter of 1998. This decrease is
attributable to (a) decreased legal expenses, primarily for patent filings, and
(b) decreased facilities expenditures as a result of the sublease of a portion
of the Company's office facility in the second quarter of 1997, partially offset
by increases in personnel expenses and clinical trial and license agreement
costs. Subject to the availability of funding, the Company expects research and
development expenses to increase during the next several years as product
development, preclinical activity, clinical trials, and regulatory activities
increase.
General and administrative expenses decreased from $343,146 in the first
quarter of 1997 to $284,567 in the first quarter of 1998. This decrease is
principally due to a decrease in (a) legal expenses, (b) facilities expense as a
result of the sublease of a portion of the Company's office facility in the
second quarter of 1997, and (c) professional fees and personnel expenses,
partially offset by an increase in investor/public relations expense.
The Company expects to incur substantial operating losses over the next
several years. The amount of net losses may vary significantly from year-to-year
and quarter-to-quarter and depend on, among other factors, the timing of
research and the progress of preclinical and clinical development programs.
Liquidity and Capital Resources
The Company has used $17,642,640 to fund operations from inception through
March 31, 1998. The Company has financed its operations to date from the
proceeds of its private placements concluded in 1996, its initial public
offering in 1994, prior placements of equity and convertible debt securities and
investment income. In 1998, the Company is obligated under its license
agreements to make minimum royalty payments and an annual maintenance fee in the
aggregate amount of $327,000, of which $152,000 had been paid as of April 20,
1998. Under a collaboration and option agreement, the term of which has been
extended, the Company may have to make payments of up to $80,000 based on the
fulfillment of certain benchmarks during the term of said agreement.
The Company is a party to several research agreements, clinical trial
production contracts and agreements with clinical research organizations which
require future payments in cash, and under the terms of one agreement, with a
combination of cash and common stock. The Company anticipates making aggregate
payments of approximately $730,000 during the terms of the agreements that were
in effect as of April 20, 1998. Provided that there is adequate financing, the
amount of the Company's obligations under research agreements can be expected to
increase. In addition, the Company is a party to employment agreements with
three of its executive officers as well as certain consulting agreements which
provide for aggregate annual, minimum payments of $546,000 and $262,000,
respectively, of which approximately $606,000 is still owed as of April 20,
1998. The Company is a party to an operating lease agreement which will require
the Company to make payments of approximately $108,000 in 1998, of which
approximately
8
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$35,000 has already been paid. The agreement also requires the Company to pay a
certain amount of contingent rentals based upon operating, maintenance,
management, and repair expenses incurred by the lessor.
The Series B' Preferred Stock is convertible at any time at the option of
the holder into shares of the Company's common stock at a conversion price of
$3.75 per share, after giving effect to the reverse stock split, effective May
13, 1998, such that 10,000 shares of the Company's Series B' Preferred Stock are
convertible into 26,667 shares of the Company's common stock. In the event of a
Liquidation Event (as defined in the Certificate of Designation relating to the
Series B' Preferred Stock), the holders of the Series B' Preferred Stock are
entitled to be paid out of the assets of the Company available for distribution
to its stockholders an amount equal to $13.00 per share, plus an amount equal to
all declared and unpaid dividends thereon, before any payment is made in respect
of stock junior to the Series B' Preferred Stock, including common stock.
Holders of Series B' Preferred Stock are also entitled to dividends, if any, as
shall be declared on the Company's common stock or on any other class of
preferred stock, unless holders of at least 66 2/3% of the outstanding Series B'
Preferred Stock consent otherwise. The Company has the option to order mandatory
conversion of the Series B' Preferred Stock into fully paid shares of common
stock if the closing price of the common stock exceeds $7.50 for 20 out of any
30 consecutive trading days. At March 31, 1998, after giving effect to the
reverse stock split, the outstanding Series B' Preferred Stock was convertible
into 2,576,832 shares of common stock.
As of March 31, 1998, the Company had cash and cash equivalents of
$5,087,905, accounts payable and accrued expenses of $629,655, and working
capital of $4,680,599.
The Company currently anticipates that the available cash, cash
equivalents, and investments will be sufficient to fund operations through the
first quarter of 1999. However, the Company may be required to obtain additional
financing to continue operations during such period in the event of cost
overruns or unanticipated expenses. Continuing development of the Company's
product candidates is critical and will require substantial additional funds to
finance such activities on an ongoing basis. The Company's future capital
requirements will depend on numerous factors, including, but not limited to,
progress in its research and development programs, including preclinical and
clinical trials, costs of filing and prosecuting patent applications and, if
necessary, enforcing issued patents or obtaining additional licenses of patents,
competing technological and market developments, the cost and timing of
regulatory approvals, the ability of the Company to establish collaborative
relationships, and the cost of establishing manufacturing, sales and marketing
capabilities. The Company has no current commitment to obtain additional funding
and is unable to state the amount or potential source of such additional funds.
Moreover, because of the Company's potential long-term capital requirements, it
may undertake additional equity offerings whenever conditions are favorable,
even if it does not have an immediate need for additional capital at that time.
There can be no assurance that the Company will be able to obtain additional
funding when needed, or that such funding, if available, will be obtainable on
reasonable terms. Any such additional funding may result in significant dilution
to existing stockholders. If adequate funds are not available, the Company may
be required to delay, reduce or eliminate research and development programs,
capital expenditures, and other operating expenses. Additionally, the Company
continues to evaluate expressions of interest from other pharmaceutical and
biotech companies related to strategic alliances and transactions including, but
not limited to, the potential licensing or acquisition of the Company's
technologies and/or product candidates. The Company may be required to obtain
funds through arrangements with collaborative partners that may require the
Company to relinquish certain material rights to its products that it would not
otherwise relinquish.
The Company was notified by Nasdaq that it failed to meet the continued
listing requirements for the Nasdaq SmallCap Market related to the maintenance
of a $1.00 minimum bid price for the Company's common stock and that it was
required to so comply with the $1.00 minimum bid price requirement by May 28,
1998. In order to comply, the Company's common stock must attain and maintain
the minimum bid price for a period of 10 consecutive trading days prior to the
deadline of May 28, 1998. There can be no
9
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assurance that the Company's common stock will maintain the minimum bid price of
$1.00 or that the Company will be able to continue to maintain its listing on
the Nasdaq SmallCap market either now or in the future.
Impact of Year 2000
The "Year 2000 Issue" is the result of computer programs being written
using two digits rather than four to define the applicable year. Some computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in systems failures
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions or engage in similar
normal business activities.
Based on a recent assessment, the Company believes that the exposure of its
internal systems to the Year 2000 Issue is immaterial as internal systems are
Year 2000 compliant. The Company intends to contact its significant suppliers to
determine the extent to which the Company is vulnerable to those third parties'
failure to remediate their own Year 2000 Issues. To date, the Company is unaware
of any situations of noncompliance that would adversely affect its operations.
However, there can be no assurance that a failure to convert by another company
would not have a material adverse effect on the Company.
This quarterly report contains certain forward-looking statements within
the meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, including without limitation, the length of time that
available cash and equivalents will be sufficient to fund operations. Such
statements are made based on management's current expectations and beliefs, and
actual results may vary from those currently anticipated based upon a number of
factors, including uncertainties inherent in the drug development process,
progress in the Company's research and development programs, including
preclinical and clinical trials, costs of filing and prosecuting patent
applications and, if necessary, enforcing issued patents or obtaining additional
licenses of patents, competing technological and market developments, the cost
and timing of regulatory approvals, the ability of the Company to establish
collaborative relationships, and the cost of establishing manufacturing, sales
and marketing capabilities. The Company undertakes no obligation to release
publicly any revisions which may be made to reflect events or circumstances
after the date hereof.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
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PART II-OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds
(c) The Company issued 51,138 shares of common stock on March 4, 1998
to CATO Holdings Corp. in exchange for services performed by that
company over the course of 1997. The aggregate amount of
consideration received by the Company in the form of services
rendered was $45,431. The aforementioned common stock issued by
the Company was issued pursuant to section 4(2) of the Securities
Act of 1933 inasmuch as the stock was issued by the issuer in a
transaction not involving a public offering.
ITEM 5. Other Information
On April 1, 1998, Sparta issued the press release filed as Exhibit 99.28
hereto announcing pharmacokinetic results of an ongoing SpartajectTM
busulfan Phase I clinical trial.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.101 -- Form of Non-Qualified Stock Option Grant for Directors, dated May 11, 1998.
10.102!-- Exclusive License Agreement by and between Sparta Pharmaceuticals, Inc. and Schering
Corporation.
10.103!-- Exclusive License Agreement by and between Sparta Pharmaceuticals, Inc. and Schering-
Plough Ltd.
27 -- Financial Data Schedule.
99.28 -- Press Release, dated as of April 1, 1998 announcing pharmacokinetic results of an
ongoing Spartaject busulfan Phase I clinical trial.
</TABLE>
---------------
! Confidential Treatment has been requested from the Securities and
Exchange Commission.
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the quarter:
On April 28, 1998, a report on form 8-K dated April 22, 1998 was filed
with the Securities and Exchange Commission announcing the signing of a
license agreement with Schering-Plough Corporation for the application of
Sparta's Spartaject(TM) technology to Schering-Plough's oral anticancer agent,
TEMODAL (R) (temozolomide).
On May 11, 1998, a report on form 8-K dated May 11, 1998 was filed with
the Securities and Exchange Commission announcing that Sparta's stockholders had
approved a one-for-five reverse split in the Company's Common Stock. Other
changes in the Company's securities were discussed.
11
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Signatures
Pursuant to the requirements 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.
Sparta Pharmaceuticals, Inc.
May 15, 1998 By: /s/ Jerry B. Hook
--------------- -------------------------------------------------
Date Jerry B. Hook, Ph.D.
Chairman of the Board, President and Chief Executive
Officer (principal executive officer)
May 15, 1998 By: /s/ Ronald H. Spair
---------------- -------------------------------------------------
Date Ronald H. Spair
Sr. Vice President and Chief Financial
Officer (principal financial officer)
<PAGE>
EXHIBIT INDEX
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----
<S> <C> <C>
10.101 -- Form of Non-Qualified Stock Option Grant for Directors, 14
dated May 11, 1998.
10.102 -- Exclusive License Agreement by and between Sparta 26
Pharmaceuticals, Inc. and Schering Corporation.
10.103 -- Exclusive License Agreement by and between Sparta 62
Pharmaceuticals, Inc. and Schering-Plough Ltd.
27 -- Financial Data Schedule. 100
99.28 -- Press Release, dated as of April 1, 1998 announcing pharmacokinetic 101
results of an ongoing Spartaject busulfan Phase I clinical trial.
</TABLE>
<PAGE>
Exhibit 10.101
SPARTA PHARMACEUTICALS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
AGREEMENT made as of the __th day of ___, 199_, between Sparta
Pharmaceuticals, Inc. (the "Company"), a Delaware corporation having a principal
place of business at 111 Rock Road, Horsham, Pennsylvania, and ________________,
an individual having his office at _________________________________, (sometimes
referred to below as the "Director" and as the "Optionee").
WHEREAS, the Company desires to grant to the Director an Option to
purchase shares of its common stock, $.001 par value (the "Shares") under and
for the purposes of the 1991 Stock Plan of the Company (the "Plan");
WHEREAS, the Company and the Director understand and agree that any
terms used and not defined herein have the same meanings as in the Plan;
WHEREAS, the Company and the Director each intend and understand that
the Option granted herein is not an Incentive Stock Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION
The Company hereby irrevocably grants to the Director, as of the date
first set forth above (the "Effective Date"), the right and option to purchase
all or any part of an aggregate of _____________________ (__________) Shares on
the terms and conditions and subject to all the limitations set forth herein and
in the Plan, which is incorporated herein by reference. The number of Shares is
subject to adjustment, as provided in the Plan, in the event of a stock split,
reverse stock split or other events affecting the holders of Shares after the
date hereof. Determinations made in connection with this Option pursuant to the
Plan shall be governed by the Plan as it exists on this date. The Director
acknowledges receipt of a copy of the Plan.
<PAGE>
This Option is in addition to any other options heretofore or hereafter
granted to the Director by the Company, but a duplicate original of this
instrument shall not effect the grant of another option.
2. PURCHASE PRICE
The purchase price of the Shares covered by the Option shall be at a
price per Share of _______________________ ($_____) (subject to adjustment, as
provided in the Plan, in the event of a stock split, a further reverse stock
split or other events affecting the holders of Shares). Payment may be by cash
or certified check.
3. EXERCISE OF OPTION
If Director's service to the Company has continued on the following
dates, the Director may exercise the Option for the number of Shares (subject to
adjustment as provided in the Plan) set opposite the applicable date:
Prior to the first anniversary as to no Shares
of the Effective Date
On or after the first anniversary up to __________ Shares
of the Effective Date
The foregoing rights are cumulative and subject to the other terms and
conditions of this Agreement and the Plan, including, without limitation, the
term of the Option and the provisions affecting the Director's ability to
exercise the Option after termination of the employment.
4. TERM OF OPTION
The Option shall terminate ten (10) years from the date of this
Agreement, but shall be subject to earlier termination as provided herein or in
the Plan.
a. Termination of Service (Other than for Death or Disability)
If the Director's service to the Company ceases (for any reason other
than death or Disability), the Option may be exercised within three (3) months
after the date the Director's employment ceases, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter.
<PAGE>
Notwithstanding the foregoing, in the event of the Director's death
within three (3) months after the termination of such service, the Optionee's
Survivors may exercise the Option within one (1) year after the date of the
Director's death, but in no event after the date of expiration of the term of
the Option.
b. Termination of Service as a Result of Disability or Death
In the event the Director's service to the Company terminates by reason
of Disability, as determined in accordance with the Plan, or death, the Option
shall be exercisable only within one (1) year after the date of such Disability
or death, as the case may be, or if earlier, the term originally prescribed by
the Option.
c. Change of Status
The term, "service to the Company" as used in this Agreement shall
include service as a member of the Board of Directors of the Company or as a
consultant to the Company, or any of its Affiliates, and a change of status from
consultant to Director or Director to consultant shall not be treated as a
termination of "service to the Company" hereunder.
5. METHOD OF EXERCISING OPTION
Subject to the terms and conditions of this Agreement, including,
without limitation, Section 10 hereof, the Option may be exercised by written
notice to the Company, at the principal executive office of the Company. Such
notice shall state the election to exercise the Option and the number of Shares
in respect of which it is being exercised, shall be signed by the person or
persons so exercising the Option, and shall be in substantially the form
attached hereto as Exhibit A. Such notice shall be accompanied by payment of the
full purchase price for such Shares in United States dollars, and the Company
shall deliver a certificate or certificates representing such Shares as soon as
practicable after the notice shall be received, provided, however, that the
Company may delay issuance of such Shares until completion of any action or
obtaining of any consent, which the Company deems necessary under any applicable
law (including, without limitation, state securities or "blue sky" laws). The
certificate or certificates for the Shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option (or, if the Option shall be exercised by Director and if
Director shall so request in the notice exercising the Option, shall be
registered in the name of the Director and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person or persons exercising the Option. In the event the Option
shall be exercised,
<PAGE>
pursuant to Section 4 hereof, by any person or persons other than the Director,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option. All Shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
non-assessable.
6. PARTIAL EXERCISE
Exercise of this Option to the extent above stated may be made in part
at any time and from time to time within the above limits, except that no
fractional Share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY
The Option shall not be transferable by the Director otherwise than by
will or by the laws of descent and distribution and shall be exercisable, during
the Director's lifetime, only by the Director. Except as provided in the
preceding sentence, the Option shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option or such rights, shall be null
and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE
The Director shall have no rights as a stockholder with respect to
Shares subject to this Agreement until a stock certificate therefor has been
issued to the Director and is fully paid for. Except as is expressly provided in
the Plan with respect to certain changes in the capitalization of the Company,
no adjustment shall be made for dividends or similar rights for which the record
date is prior to the date such stock certificate is issued.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS
The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits and mergers and sales of the
Company. Provisions in the Plan for adjustment with respect to stock subject to
Options and the related provisions with respect to successors to the business of
the Company are hereby made applicable hereunder and are incorporated herein by
reference.
<PAGE>
10. TAXES AND WITHHOLDING
The Director acknowledges that any income or other taxes due from him
or her with respect to this Option or the Shares issuable pursuant to this
Option shall be the Director's responsibility.
In the event of the exercise of this Option, the Company may withhold
from the Director's fees, if any, or other remuneration, or as a condition of
the exercise hereof, may require the Director to pay, additional federal, state,
and local income tax withholding and if applicable at such time, Director
contributions to employment taxes, in respect of the amount that is considered
compensation includable in such person's gross income.
11. PURCHASE FOR INVESTMENT
Unless the offering and sale of the Shares to be issued upon the
particular exercise of the Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the
certificate(s) evidencing the Shares issued pursuant to such
exercise:
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, unless (1) either (a) a registration
statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been compliance
with all applicable state securities laws."
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the Act without
registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until
<PAGE>
completion of any action or obtaining of any consent which the
Company deems necessary under any applicable law (including
without limitation state securities or "blue sky" laws).
12. NO OBLIGATION TO RETAIN
Neither the Company nor any subsidiary is by the Plan or this Agreement
obligated to continue the Director as an Director to the Company or any
subsidiary or in any other capacity.
13. OPTION IS NOT AN INCENTIVE STOCK OPTION
The parties each intend and understand that the Option is not an incentive
stock option. Director should consult with Director's own tax advisors regarding
the tax effects of the Option.
14. CONSULTATION WITH TAX ADVISOR
Director should consult with Director's own tax advisors regarding the
tax effects of the Option and the consequences of the nonqualified status of the
Option.
15. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given when delivered in person or by overnight courier with a
receipt obtained therefor, or by registered or certified mail, return receipt
requested, addressed as follows:
To the Company:
Sparta Pharmaceuticals, Inc.
111 Rock Road
Horsham, PA 19044-2310
Attn: President
<PAGE>
To the Director:
----------------------
----------------------
----------------------
----------------------
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
received in accordance with the foregoing provisions.
16. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
law of the State of Delaware.
17. BENEFIT OF AGREEMENT
Subject to the provisions of the Plan and the other provisions hereof,
this Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
18. ENTIRE AGREEMENT
This Agreement, together with the Plan, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
19. MODIFICATIONS AND AMENDMENTS
The terms and provisions of this Agreement may be modified or amended
only by written agreement executed by all parties hereto.
<PAGE>
20. WAIVERS AND CONSENTS
The terms and provisions of this Agreement may be waived, or consent
for the departure therefrom granted, only by written document executed by the
party entitled to the benefits of such terms or provisions. No such waiver or
consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement, whether or not
similar. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
21. HEADINGS AND CAPTIONS
The headings and captions of the various subdivisions of this Agreement
are for convenience of reference only and shall in no way modify, or affect the
meaning or construction of, any of the terms or provisions hereof.
22. SURVIVAL
The expiration or other termination of the Option granted to the
Director shall neither affect nor alter the Director's obligations under
Sections 10 and 11 hereof.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Nonqualified Stock
Option Agreement to be executed by a duly authorized officer, and the Director
has hereunto set his or her hand, all as of the day and year first above
written.
SPARTA PHARMACEUTICALS, INC.
By__________________________________
Jerry B. Hook, Ph.D.
Chairman of the Board
____________________________
Director (Signature)
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
To: Sparta Pharmaceuticals, Inc.
Ladies and Gentlemen:
I hereby exercise my Nonqualified Option to purchase _____ shares (the
"Shares") of the common stock, $.001 par value, of Sparta Pharmaceuticals, Inc.
(the "Company"), at the exercise price of $ per share, pursuant to and subject
to the terms of that certain Nonqualified Stock Option Agreement between the
undersigned and the Company dated as of __________________.
I am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act") or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Shares; (2) I have had the opportunity to ask questions
concerning the Shares and the Company and all questions posed have been answered
to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Shares and the Company; and (4) I have such
knowledge and experience in financial and business matters that I am able to
evaluate the merits and risks of purchasing the Shares and to make an informed
investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the
1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Shares cannot be sold unless the Shares are subsequently
registered under applicable federal and state securities laws or an exemption
from such registration requirements is available.
<PAGE>
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless (1) there is an effective registration
statement under the 1933 Act and applicable state securities laws covering any
such transaction involving the Shares or (2) the Company receives an opinion of
my legal counsel (concurred in by legal counsel for the Company) stating that
such transaction is exempt from registration or the Company otherwise satisfies
itself that such transaction is exempt from registration.
I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Shares until the Shares may be legally resold or distributed without
restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Shares by me. I understand that the Company has no
obligation to me to register the Shares with the SEC and has not represented to
me that it will register the Shares.
I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
My check payable to the order of the Company in the amount of
$_______ is enclosed in payment of 100% of the option exercise price for the
Shares.
I acknowledge that the Company is authorized to withhold from my wages,
if any, or other remuneration, or may require me, as a condition of the exercise
of the Option, to pay, additional federal, state and local income tax
withholding and if applicable, Director contributions to employment taxes in
respect of the amount that is considered compensation includable in my gross
income.
Please issue the stock certificate for the Shares (check one):
_____ to me
_____ to me and _________ as joint tenants with right of survivorship
<PAGE>
and mail the certificate to me at the following address:
________________________________
________________________________
My mailing address, if different from the address listed above, for
shareholder communications is:
________________________________
________________________________
Very truly yours,
________________________________
Director (signature)
________________________________
Print Name
________________________________
Date
________________________________
Social Security Number
<PAGE>
Exhibit 10.102
EXCLUSIVE LICENSE AGREEMENT
by and between
SPARTA PHARMACEUTICALS, INC.
and
SCHERING CORPORATION
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is made as of the
last date on the signature page hereof (the "Effective Date") by and between
SPARTA PHARMACEUTICALS, INC., a Delaware corporation having its principal place
of business at 111 Rock Road, Horsham, Pennsylvania 19044-2310, (hereinafter
referred to as "Sparta") and SCHERING CORPORATION, a New Jersey corporation
having its principal place of business at 2000 Galloping Hill Road, Kenilworth,
New Jersey 07033, (hereinafter referred to as "Schering"). Sparta and Schering
are sometimes referred to herein individually as a party and collectively as the
parties. References to "Schering" and "Sparta" shall include their respective
Affiliates (as hereinafter defined).
WHEREAS, Sparta has developed certain Sparta Know-How and has rights to
the Licensed Patent Rights relating to Drug Delivery Systems (each as
hereinafter defined); and
WHEREAS, Schering has the exclusive rights to the product known as
Temozolomide; and
WHEREAS, Schering, together with its Affiliates (as hereinafter
defined) possesses extensive capabilities in the development and
commercialization of pharmaceutical products on a worldwide basis; and
WHEREAS, Schering desires to obtain and Sparta is willing to grant to
Schering, an exclusive license under Licensed Patent Rights and to use the
Sparta Know-How in combination with Temozolomide, upon the terms and conditions
set forth herein; and
WHEREAS, simultaneously with entering into this Agreement Sparta and
Schering's Affiliate, Schering-Plough Ltd., have entered into a license
agreement relating to countries and territories outside of the United States
(hereinafter the "Ex-U.S. License Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, Schering and Sparta hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following capitalized terms, whether
used in the singular or plural, shall have the respective meanings set forth
below:
1.1 "Affiliate" shall mean any individual or entity directly
or indirectly
<PAGE>
controlling, controlled by or under common control with, a party to this
Agreement. For purposes of this Agreement, the direct or indirect ownership of
fifty percent (50%) or more of the outstanding voting securities of an entity,
or the right to receive fifty percent (50%) or more of the profits or earnings
of an entity shall be deemed to constitute control. Such other relationship as
in fact results in actual control over the management, business and affairs of
an entity shall also be deemed to constitute control.
1.2 "Calendar Quarter" shall mean the respective periods of
three (3) consecutive calendar months ending on March 31, June 30, September 30
or December 31, for so long as this Agreement is in effect.
1.3 "Calendar Year" shall mean each successive period of
twelve (12) months commencing on January 1 and ending on December 31, for so
long as this Agreement is in effect.
1.4 "Drug Delivery System" shall mean all formulations,
materials, methods and other technology included in or related to the
application of the Spartaject(TM) technology to parenteral administration
(including, without limitation, intrathecal administration) of Temozolomide and
which is owned by Sparta or licensed to Sparta with the right to grant
sublicenses.
1.5 "First Commercial Sale" shall mean, with respect to any
Licensed Product, the first sale for end use of such Licensed Product.
1.6 "Improvement" shall mean any enhancement in the
formulation, ingredients, preparation, dosage, packaging or manufacture of the
Drug Delivery System for use in combination with Temozolomide developed prior to
or during the Term of this Agreement by or on behalf of Sparta.
1.7 "IND" shall mean an investigational new drug application
submitted to the United States Food and Drug Administration or its equivalent in
countries outside the United States, approval of which permits the clinical
investigation of Licensed Product.
1.8 "Licensed Patent Rights" shall mean the RTP Patent Rights
and the Sparta Patent Rights.
1.9 "Licensed Product(s)" shall mean any form or dosage of
pharmaceutical composition or preparation for parenteral administration, in
final form for sale, which utilizes the Drug Delivery System and contains as an
active ingredient Temozolomide.
1.10 "NDA" shall mean a New Drug Application, Product License
Application or its equivalent filed with the United States Food and Drug
Administration
<PAGE>
seeking approval to market and sell a Licensed Product in the United States.
1.11 "Net Sales" shall mean [Information omitted and filed
separately with the Commission under Rule 24b-2.]
1.12 "Proprietary Information" shall mean Sparta Know-How,
Schering Know-How and all other scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether communicated in writing,
verbally or electronically, which is provided by one party to the other party in
connection with this Agreement. When Propriety Information is disclosed in a
manner other than in writing, it shall be reduced to written form, marked
"Confidential" and transmitted to the receiving party within ten (10) business
days of disclosure to the receiving party.
1.13 "RTP Patent Rights" shall mean those patents and pending
patent applications listed in Schedule 1.12 which are licensed to Sparta under
the Amended and Restated Sublicense Agreement, dated January 1, 1997, by and
between Sparta and Research Triangle Pharmaceuticals Ltd. (the "RTP/Sparta
Sublicense Agreement") and any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates or any like
filing thereof, or provisional applications of any such patents and patent
applications.
1.14 "Regulatory Approval" shall mean any applications or
approvals, and marketing authorizations based upon such approvals (including any
prerequisite manufacturing approvals or authorizations related thereto), and
labeling approval(s), technical, medical and scientific licenses, registrations
or authorizations of any national, regional, state or local regulatory agency or
other governmental entity, necessary for the manufacture, distribution,
marketing, promotion, use, import, export or sale of Licensed Product(s) and/or
Temozolomide in a regulatory jurisdiction.
1.15 "Sparta Know-How" shall mean any of Sparta's or its
Affiliates' information and materials relating to the research, development,
registration, manufacture, marketing, use or sale of Licensed Product which
during the Term of this Agreement are in Sparta's or its Affiliates' possession
or control, through license or otherwise, and which are not generally known.
Sparta Know-How shall include, without limitation, discoveries, methods,
knowledge, Improvements, processes, formulas, data, ideas, experience,
inventions, know-how, technology, trade secrets, manufacturing procedures,
purification and isolation techniques, test data and other intellectual
property, patentable or otherwise, developed by or on behalf of Sparta relating
to Licensed Product or otherwise relating to the combination of Temozolomide and
the Drug Delivery System including without limitation, test procedures and other
new technologies derived therefrom.
<PAGE>
1.16 "Sparta Patent Rights" shall mean any and all patents and
pending patent applications, excluding the RTP Patent Rights, which during the
Term of this Agreement are owned by Sparta, or to which Sparta through license
or otherwise acquires rights, including, but not limited to, those listed in
Schedule 1.12, and which have claims covering: (i) the Drug Delivery System or
any use thereof in conjunction with Temozolomide, or any apparatus, material or
method of manufacture useful in the development, manufacture, use or sale
thereof; or (ii) Licensed Product or any use thereof, or any apparatus, material
or method of manufacture useful in the development, manufacture, use or sale
thereof; or (iii) Improvements; or (iv) the Sparta Know-How; or (v) are
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates or any like filing thereof, or provisional
applications of any such patents and patent applications.
1.17 "Schering Know-How" shall mean any of Schering's or its
Affiliates' information and materials relating to the research, development,
registration, manufacture, marketing, use or sale of Temozolomide and/or
Licensed Product which during the Term of this Agreement are in Schering's or
its Affiliates' possession or control, through license or otherwise, and which
are not generally known. Schering Know-How shall include, without limitation,
discoveries, methods, knowledge, Improvements, processes, formulas, data, ideas,
experience, inventions, know-how, technology, trade secrets, manufacturing
procedures, purification and isolation techniques, test data and other
intellectual property, patentable or otherwise, developed by or on behalf of
Schering or its Affiliates relating to Licensed Product, including without
limitation, test procedures and other new technologies derived therefrom.
1.18 "Schering Trademark" shall mean any trademark(s)
proposed, chosen, owned or controlled by Schering or its Affiliates for use with
Temozolomide and/or the Licensed Product in the Territory.
1.19 "Territory" shall mean the United States of America, its
territories, possessions and commonwealths.
1.20 "Term" shall mean the period commencing on the Effective
Date and unless terminated earlier pursuant to the relevant provisions of
Article VIII shall continue until the expiration of the last to expire of the
Licensed Patent Rights incorporating a Valid Claim.
1.21 "Transaction Agreements" shall mean collectively this
Agreement and the Ex-U.S. License Agreement.
<PAGE>
1.22 "Valid Claim" shall mean a composition of matter or
method of use claim, or equivalent thereof, of an issued and unexpired patent in
the Territory covering Licensed Product(s) included within the Licensed Patent
Rights, which (i) has not been revoked or held 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; or (ii) has not
been abandoned, disclaimed, denied or admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise.
ARTICLE II
LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND
COMMERCIALIZATION
2.1 Exclusive License Grant.
(a) License to Sparta Patent Rights. Sparta hereby
grants to Schering, as of the Effective Date, an exclusive license,
exclusive even as to Sparta, in the Territory under the Sparta Patent
Rights, and to use Sparta Know-How to develop, make, have made, import,
export, use, distribute, market, promote, offer for sale and sell
Licensed Product(s). Any Improvements relating to the Licensed Product,
or otherwise relating to the use of the Drug Delivery System in
combination with Temozolomide, developed prior to or during the Term of
this Agreement by or on behalf of Sparta shall be included in Sparta
Know-How or Sparta Patent Rights, as the case may be, for all purposes
of this Agreement.
(b) Right to Sublicense. The licenses granted to
Schering under Section 2.1(a) shall include the right to grant
sublicenses to Affiliates and/or any third party.
(c) Sublicense to RTP Patent Rights. Subject to the
terms and conditions set forth in Section 2.1.2 of the RTP/Sparta
Sublicense Agreement Sparta hereby grants to Schering and its
Affiliates, as of the Effective Date, an exclusive sublicense,
exclusive even as to Sparta, in the Territory under the RTP Patent
Rights to develop, make, have made, import, export, use, distribute,
market, promote, offer for sale and sell Licensed Product(s).
2.2 Disclosure of Information. Promptly after the Effective
Date, Sparta shall disclose to Schering in writing, or via electronic media
acceptable to Schering, all Sparta Know-How not previously disclosed to Schering
in order to enable Schering to exploit its rights granted under Section 2.1 of
this Agreement. In addition, during the Term of this Agreement Sparta shall
promptly disclose to Schering in writing, or via electronic media acceptable to
Schering, Sparta Know-How relating to any Improvements. Such Sparta Know-How and
other information shall be automatically deemed to be within the scope of the
licenses granted herein without payment of any additional compensation.
<PAGE>
2.3 Schering's Development Obligations. Schering shall, at
Schering's expense, use reasonable commercial efforts to develop, obtain
Regulatory Approval for, and commercialize Licensed Product(s) in the Territory.
(a) Schering Diligence. The parties acknowledge and
agree that all business decisions including, without limitation,
decisions relating to the research, development, registration,
manufacture, sale, commercialization, design, price, distribution,
marketing and promotion of Licensed Product(s) covered under this
Agreement, shall be within the sole discretion of Schering. Sparta
acknowledges that Schering is in the business of developing,
manufacturing and selling pharmaceutical products and, subject to the
provisions of this Section 2.3, nothing in this Agreement shall be
construed as restricting such business or imposing on Schering the duty
to market and/or sell and exploit Licensed Product(s) for which
royalties are payable hereunder to the exclusion of, or in preference
to, any other product, or in any way other than in accordance with its
normal commercial practices.
(b) Opportunity to Cure. In the event that if, in
Sparta's reasonable opinion, Schering fails to meet its diligence
obligations under Section 2.3(a), then Sparta shall have the right to
give Schering written notice thereof stating in detail the particular
failure. Schering shall have a period of [Information omitted and filed
separately with the Commission under Rule 24b-2.] days from the receipt
of such notice to correct the failure or, in the event that the failure
cannot be reasonably cured within a [Information omitted and filed
separately with the Commission under Rule 24b-2.] day period, then
Schering shall initiate actions reasonably expected to cure the failure
within [Information omitted and filed separately with the Commission
under Rule 24b-2.] days of receiving notice and shall thereafter
diligently pursue such actions to cure the failure (even if requiring
longer than the [Information omitted and filed separately with the
Commission under Rule 24b-2.] days specified in Section 8.3(a)(i)). In
the event of a dispute as to whether or not Schering has failed to
exercise due diligence under Section 2.3(a) or whether Schering is
diligently pursuing actions reasonably expected to cure such failure
under this Section 2.3(b), such dispute shall be resolved through
binding arbitration in accordance with Section 9.2.
(c) Research and Development Activities. Subject to
its diligence obligations set forth in Section 2.3(a), following the
Effective Date, Schering shall be responsible, at its cost and expense,
and in its sole judgment, for all research and development activities
which are necessary to obtain Regulatory Approval for Licensed
Product(s) in the Territory and any post approval studies required as a
condition of obtaining any Regulatory Approval for the Licensed
Product. In addition, Schering shall be responsible for any other
studies (or portions of studies) necessary or desirable, in its sole
judgment, for maintaining any Regulatory
<PAGE>
Approval in the Territory, as well as any pre-marketing studies prior
to Regulatory Approval and post-marketing studies conducted following a
Regulatory Approval.
(d) Licensed Product Registrations. Subject to its
diligence obligations set forth in Section 2.3(a), Schering shall be
responsible, at its cost and expense, and in its sole judgment, for
determining the appropriate regulatory strategy, for obtaining and
maintaining all Regulatory Approvals for the sale of Licensed Product
in the Territory. Each Regulatory Approval shall be placed in
Schering's name or the name of a Schering Affiliate.
(e) Data. All data arising out of studies performed
under this Article II shall be owned by Schering.
(f) Assistance by Sparta. During the Term of this
Agreement Sparta shall provide to Schering all Sparta Know-How which
may be relevant to obtain any Regulatory Approval relating to Licensed
Product(s). In connection with any NDA or other application for
Regulatory Approval relating to Licensed Product(s), Sparta shall, at
Schering's request, provide to Schering in a prompt manner responses to
questions which have been raised by any regulatory authority in
connection with such application for Regulatory Approval and further
provide to Schering estimates of Sparta's out-of-pocket costs for
rendering such assistance.
2.4 Excused Performance. In addition to the provisions of
Article VIII and Section 9.9, the obligations of Schering with respect to a
Licensed Product under Sections 2.3(a), 2.3(c) and 2.3(d) are expressly
conditioned upon the continuing absence of any adverse condition or event which
warrants a delay in commercialization of the Licensed Product including, but not
limited to, an adverse condition or event relating to the safety or efficacy of
a Licensed Product or unfavorable labeling or lack of Regulatory Approval, and
the obligation of Schering to develop or market any such Licensed Product shall
be delayed or suspended so long as in Schering's opinion any such condition or
event exists.
2.5 Other Studies. Sparta shall conduct no studies or
preclinical or clinical trials with Temozolomide alone or in combination with
the Drug Delivery System without the express written consent of Schering,
including the prior written approval of any protocols to be used and any
amendments thereto. Such consent may be granted by Schering in its sole
discretion. If a study is approved by Schering, at Schering's request, Sparta
shall provide to Schering the results from the study and any background
information requested. At the option of Schering, Schering may have its
representative(s) monitor any approved preclinical, clinical or other studies
conducted by Sparta pursuant to this Section 2.5.
<PAGE>
2.6 Reports. Schering shall provide Sparta with twice yearly
written reports summarizing the status of the research and development
activities and progress of any Regulatory Approval, as applicable, in connection
with Licensed Product in the Territory.
ARTICLE III
PAYMENTS; ROYALTIES AND REPORTS
3.1 Consideration for License. In partial consideration for
the licenses granted to Schering hereunder, Schering shall make an upfront
payment to Sparta, payable in installments on the first occurrence of the
indicated triggering events.
[Information omitted and filed separately with the Commission under Rule 24b-2.]
Each of the installments set forth in this Section 3. 1 shall be payable once
upon the initial achievement of such event and no amounts shall be due hereunder
for subsequent or repeated achievement of such event.
3.2 Royalties.
(a) Royalty Rates. In further consideration for the
licenses granted to Schering hereunder, starting with the First
Commercial Sale of Licensed Product, Schering shall pay to Sparta,
[Information omitted and filed separately with the Commission under
Rule 24b-2.]
[Information omitted and filed separately with the Commission under Rule 24b-2.]
(b) Term and Scope of Royalty Obligations. Subject to
the terms of Sections 4.3(b) and 8.1, royalties on each Licensed
Product at the rate set forth in Section 3.2(a) shall continue until
the expiration of the last applicable Licensed Patent Right
incorporating a Valid Claim. No royalties shall be due upon the sale or
other transfer among Schering, its Affiliates or sublicensees, but in
such cases the royalty shall be due and calculated upon Schering's or
its Affiliates' or its sublicensees' Net Sales to the first independent
third party. No royalties shall accrue on the disposition of Licensed
Product by Schering, its Affiliates or its sublicensees as donations
(for example, to nonprofit institutions or government agencies for a
non-commercial purpose) or for clinical studies.
<PAGE>
(c) Third Party Licenses. In the event that patent
licenses from third parties are required by Schering, its Affiliates
and sublicensees in order to practice the Licensed Patent Rights to
develop, make, have made, import, export, use, distribute, promote,
market, offer for sale or sell Licensed Product(s) (hereinafter "Third
Party Patent Licenses"), then the royalty rates set forth in Section
3.2(a) shall be adjusted such that the royalty rate for Net Sales of
Licensed Product which Schering is obligated to pay Sparta shall be
[Information omitted and filed separately with the Commission under
Rule 24b-2.] By way of example and for avoidance of doubt, if Schering
is obligated to pay royalties to Sparta on Net Sales of a Licensed
Product and is also obligated to pay a [Information omitted and filed
separately with the Commission under Rule 24b-2.] under a Third Party
Patent License, then the royalty rate under this Agreement would
[Information omitted and filed separately with the Commission under
Rule 24b-2.] For further example, if the third party royalty obligation
in the above example were [Information omitted and filed separately
with the Commission under Rule 24b-2.], the calculated royalty rate
would [Information omitted and filed separately with the Commission
under Rule 24b-2.], but the actual royalty rate to Sparta could
[Information omitted and filed separately with the Commission under
Rule 24b-2.]
3.3 Reports and Payment of Royalty.
(a) Royalties Paid Quarterly. Within sixty (60)
calendar days following the close of each Calendar Quarter, following
the First Commercial Sale of a Licensed Product, Schering shall furnish
to Sparta a written report for the Calendar Quarter showing the Net
Sales of Licensed Product sold by Schering, its Affiliates and its
sublicensees in the Territory during such Calendar Quarter and the
royalties payable under this Agreement for such Calendar Quarter.
Simultaneously with the submission of the written report, Schering
shall pay to Sparta, for the account of Schering or the applicable
Affiliate or sublicensee, as the case may be, a sum equal to the
aggregate royalty due for such Calendar Quarter calculated in
accordance with this Agreement (reconciled for any previous
overpayments or underpayments).
(b) Method of Payment. Payments to be made by
Schering to Sparta under this Agreement shall be paid by bank wire
transfer in immediately available funds to such bank account as is
designated in writing by Sparta from time to time. Royalty payments
shall be made in United States dollars.
<PAGE>
3.4 Maintenance of Records: Audits.
(a) Record Keeping by Schering. Schering and its
Affiliates shall keep complete and accurate records in sufficient
detail to enable the royalties payable hereunder to be determined. Upon
forty-five (45) days prior written notice from Sparta, Schering shall
permit an independent certified public accounting firm of nationally
recognized standing selected by Sparta and reasonably acceptable to
Schering, at Sparta's expense, to have access during normal business
hours to examine pertinent books and records of Schering and/or its
Affiliates as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder. The examination shall be limited to
pertinent books and records for any year ending not more than
twenty-four (24) months prior to the date of such request. An
examination under this Section 3.4(a) shall not occur more than once in
any Calendar Year. Schering may designate competitively sensitive
information which such auditor may not disclose to Sparta, provided,
however, that such designation shall not encompass the auditor's
conclusions. The accounting firm shall disclose to Sparta only whether
the royalty reports are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be provided to
Sparta. All such accounting firms shall sign a confidentiality
agreement (in form and substance reasonably acceptable to Schering) as
to any of Schering's or its Affiliate's confidential information which
they are provided, or to which they have access, while conducting any
audit pursuant to this Section 3.4(a).
(b) Underpayments/Overpayments. If such accounting
firm correctly concludes that additional royalties were owed during
such period, Schering shall pay the additional royalties within thirty
(30) days of the date Sparta delivers to Schering such accounting
firm's written report so correctly concluding. If such underpayment
exceeds [Information omitted and filed separately with the Commission
under Rule 24b-2.] of the royalty correctly due Sparta then the fees
charged by such accounting firm for the work associated with the
underpayment audit shall be paid by Schering. Any overpayments by
Schering will be credited against future royalty obligations. In the
event that Schering disagrees with the audit report and the chief
financial officers of Schering and Sparta fail to resolve such
disagreement, the dispute will be resolved through the dispute
resolution mechanism set forth in Section 9.2.
3.5 Separate Payment Obligations. The parties acknowledge
that Schering's payment obligations as set forth in Sections 3.1 and 3.2 of
this Agreement are separate from and in addition to the payment obligations of
Schering-Plough Ltd. as set forth in the Ex-U.S. License Agreement.
<PAGE>
ARTICLE IV
PATENTS
4.1 Filing. Prosecution and Maintenance of Patents. Sparta
agrees to diligently file, prosecute and maintain in the Territory, upon
appropriate consultation with Schering, any Licensed Patent Rights owned in
whole or in part by Sparta and licensed to Schering under this Agreement. Sparta
shall give Schering an opportunity to review the text of the applications before
filing, shall consult with Schering with respect thereto, and shall supply
Schering with a copy of the applications as filed, together with notice of its
filing date and serial number. Sparta shall keep Schering advised of the status
of all actual and prospective patent filings and upon the written request of
Schering shall provide advance copies of any substantive papers related to the
filing, prosecution and maintenance of such patent filings.
4.2 Option of Schering to Prosecute and Maintain Patents.
Sparta shall give one hundred and eighty (180) day notice to Schering of any
desire to cease prosecution and/or maintenance of a particular Licensed Patent
Right and, in such case, subject to the rights of RTP under the RTP/Sparta
Sublicense Agreement with respect to RTP Patent Rights, shall permit Schering,
at its sole discretion, to continue prosecution or maintenance at its own
expense. If Schering elects to continue prosecution or maintenance, Sparta shall
execute such documents and perform such acts, at Schering's expense, as may be
reasonably necessary to effect an assignment of such Licensed Patent Rights to
Schering. Any such assignment shall be completed in a timely manner to allow
Schering to continue such prosecution or maintenance. Any patents or patent
applications so assigned shall thereafter not be considered Licensed Patent
Rights.
4.3 Enforcement. In the event that either Schering or Sparta
becomes aware of any infringement within the Territory of any issued patent
within the Licensed Patent Rights, it will notify the other party in writing to
that effect. Any such notice shall include evidence to support an allegation of
infringement by such third party.
(a) Discontinuance of Infringement. Sparta shall use
its reasonable best efforts to obtain a discontinuance of such
infringement or bring suit against the third party infringer within
[Information omitted and filed separately with the Commission under
Rule 24b-2.] from the date of said notice. Sparta shall bear all the
expenses of any suit brought by it. Schering shall have the right,
prior to commencement of the trial, suit or action brought by Sparta,
to join any such suit or action, and in such event shall pay one-half
of the costs of such suit or action. In the event that Schering has
joined in the action and shared in the costs thereof as set forth
above, no settlement, consent judgment or other voluntary final
disposition of the suit may be entered into without the consent of
Schering. In the event that Schering has not joined the suit or action,
Schering will reasonably cooperate with Sparta in any such suit or
action and shall have the right to consult with Sparta and
<PAGE>
be represented by its own counsel at its own expense, provided that
Sparta shall periodically reimburse Schering for its out-of-pocket
costs (excluding the costs of retaining its own outside counsel)
incurred in cooperating with Sparta. Any recovery or damages derived
from a suit which Schering has joined and shared costs shall be used
first to reimburse each of Sparta and Schering for its documented
out-of-pocket legal expenses relating to the suit, with any remaining
amounts to be shared equally by the parties. Any recovery or damages
derived from a suit which Schering has not joined shall be retained by
Sparta.
(b) Continuance of Infringement. If, after the
expiration of the [Information omitted and filed separately with the
Commission under Rule 24b-2.] period Sparta has not commenced, or if
commenced is not actively pursuing legal action against an infringer as
specified in Subsection 4.3(a), then, notwithstanding the limitations
on royalty rate reduction set forth in Section 3.2 (c), Schering shall
have no further obligation to pay any royalty on the Net Sales of
Licensed Product under Section 3.2(a) in the Territory. No royalties
shall be due until said infringement ceases and, thereafter, the
royalty shall revert to the applicable full royalty set forth in
Section 3.2(a). In the event that said infringement does not cease, no
royalties shall be due to Sparta. In addition, Schering shall have the
right, but not the obligation, to bring suit against such infringer
under the Licensed Patent Rights and join Sparta as a party plaintiff,
provided that Schering shall bear all the expenses of such suit. Sparta
will cooperate with Schering in any suit for infringement of a Licensed
Patent Right brought by Schering against a third party, and shall have
the right to consult with Schering and to participate in and be
represented by independent counsel in such litigation at its own
expense. Schering shall periodically reimburse Sparta for its
out-of-pocket costs (excluding Sparta's costs of retaining independent
counsel) incurred in cooperating with Schering. Schering shall incur no
liability to Sparta as a consequence of such litigation or any
unfavorable decision resulting therefrom, including any decision
holding any of the Licensed Patent Rights invalid or unenforceable. In
the event that Schering recovers any sums in such litigation by way of
damages or in settlement thereof, Schering shall retain all such sums.
4.4 Infringement and Third Party Licenses. In the event that
Schering's, its Affiliates' or its sublicensees' practicing of the Licensed
Patent Rights in connection with making, having made, importing, exporting,
using, distributing, marketing, promoting, offering for sale or selling Licensed
Product(s) infringes, will infringe or is alleged by a third party to infringe a
third party's patent, the party becoming aware of same shall promptly notify the
other.
(a) Sparta Option to Negotiate. Sparta shall in the
first instance have the right to negotiate with said third party for a
suitable license or assignment. In the event that such negotiation
results in a consummated agreement, then any lump
<PAGE>
sum payment made thereunder shall be paid by Sparta. Should such
agreement require the payment of royalties, Schering shall continue to
pay the royalties due Sparta hereunder and Sparta shall pay any
royalties due said third party on Schering's behalf.
(b) Schering Option to Negotiate. Should Sparta fail
to consummate an agreement with said third party within one (1) year of
initiating negotiations, then Schering shall have the right to
negotiate with said third party for a suitable license or assignment.
In the event that such negotiation results in a consummated agreement,
then any lump sum payment made thereunder shall be paid by Schering
[Information omitted and filed separately with the Commission under
Rule 24b-2.] Any royalty payments to be made by Schering under such
Third Party Patent License shall be offset against any royalties due
Sparta in accordance with Section 3.2. Any unused amounts not so offset
can be carried over to subsequent quarters.
4.5 Third Party Infringement Suit. In the event that a third
party sues Schering alleging that Schering's, its Affiliates' or its
sublicensees' practicing of the Licensed Patent Rights in connection with
making, having made, importing, exporting, using, distributing, marketing,
promoting, offering for sale or selling Licensed Product(s) infringes or will
infringe said third party's patent, then Schering may elect to defend such suit
and, during the period in which such suit is pending, Schering shall have the
right to [Information omitted and filed separately with the Commission under
Rule 24b-2.] Upon Schering's request and in connection with Schering's defense
of any such third party infringement suit, Sparta shall provide reasonable
assistance to Schering for such defense.
4.6 Certification under Drug Price Competition and Patent
Restoration Act. Sparta and Schering each shall immediately give written notice
to the other of any certification of which they become aware filed pursuant to
21 U.S.C. Section 355(b)(2)(A) (or any amendment or successor statute thereto)
claiming that Licensed Patent Rights covering Licensed Product(s) are invalid or
not infringed by the manufacture, use or sale of products by a third party.
Notwithstanding any provision herein to the contrary, in the event that the
Licensed Patent Rights at issue are owned and/or controlled by Sparta and Sparta
has failed to bring an infringement action against such third party at least
fourteen (14) days prior to expiration of the forty five (45) day period set
forth in 21 U.S.C. Section 355(c)(3)(C) (or any amendment or successor statute
thereto), Schering shall have the right to bring such an infringement action, in
its sole discretion and at its own expense, in its own name and/or in the name
of Sparta. At Schering's request, Sparta shall, at its own expense, provide
Schering reasonable assistance to conduct such infringement action, including,
without limitation, causing the execution of such legal documents as Schering
may deem necessary for the prosecution of such action. Schering shall
periodically reimburse Sparta for its out-of-pocket costs (excluding any of
Sparta's costs of retaining independent counsel) incurred in assisting Schering.
Schering shall incur no liability to Sparta as a consequence of such litigation
or any unfavorable decision resulting therefrom, including
<PAGE>
any decision holding any of the Licensed Patent Rights invalid or unenforceable.
In the event that Schering recovers any sums in such litigation by way of
damages or in settlement thereof, Schering shall have the right to retain all
such sums to offset its costs, losses and expenses.
4.7 Abandonment. Subject to Schering's rights pursuant to
Section 4.2, Sparta shall at the earliest known date give notice to Schering of
the grant lapse, revocation, surrender, invalidation or abandonment of any
Licensed Patent Rights licensed to Schering for which Sparta is responsible for
the filing, prosecution and maintenance under this Agreement.
4.8 Notices Regarding Patents. All notices, inquiries and
communications in connection with this Article IV shall be sent in the manner
set forth in Section 9.7 to the parties at the addresses and facsimile numbers
indicated below.
If to Sparta: Sparta Pharmaceuticals, Inc.
111 Rock Road
Horsham, Pennsylvania 19044-2310
Attn.: Chief Executive Officer
Fax No. (215) 442-1827
If to Schering: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Staff Vice President - Patents and Trademarks
Fax No.: (908) 298-5388
<PAGE>
ARTICLE V
CONFIDENTIALITY AND PUBLICATION
5.1 Confidentiality.
(a) Nondisclosure Obligation. Each of Sparta and
Schering shall use only in accordance with this Agreement and shall not
disclose to any third party any Proprietary Information received by it
from the other party, without the prior written consent of the other
party. The foregoing obligations shall survive the expiration or
termination of this Agreement for a period of ten (10) years. These
obligations shall not apply to Proprietary Information that:
(i) is known by the receiving party at the
time of its receipt, and not through a prior disclosure by the
disclosing party, as documented by business records;
(ii) is at the time of disclosure or
thereafter becomes published or otherwise part of the public domain
without breach of this Agreement by the receiving party;
(iii) is subsequently disclosed to the
receiving party by a third party who has the right to make such
disclosure;
(iv) is developed by the receiving party
independently of Proprietary Information or other information
received from the disclosing party and such independent development
can be documented by the receiving party;
(v) is disclosed to any institutional
review board of any entity conducting clinical trials or any
governmental or other regulatory agencies in order to obtain patents
or to gain approval to conduct clinical trials or to market
Temozolomide and/or Licensed Product, but such disclosure may be made
only to the extent reasonably necessary to obtain such patents or
authorizations; or
(vi) is required by law, regulation, rule,
act or order of any governmental authority or agency to be disclosed
by a party, provided that notice is promptly delivered to the other
party in order to provide an opportunity to seek a protective order
or other similar order with respect to such Proprietary Information
and thereafter the disclosing party discloses to the requesting
entity only the minimum Proprietary Information required to be
disclosed in order to comply with the request, whether or not a
protective order or other similar order is obtained by the other
party.
Nothing herein shall be interpreted to prohibit Schering from
publishing the results
<PAGE>
of its studies in accordance with industry practices.
(b) Disclosure to Agents. Notwithstanding the
provisions of Section 5.1(a) and subject to the other terms of this
Agreement, Schering shall have the right to disclose Sparta Proprietary
Information to Schering's sublicensees, agents, consultants, Affiliates
or other third parties (collectively "Agents") in accordance with this
Section 5.1 (b). Such disclosure shall be limited only to those Agents
directly involved in the research, development, manufacturing,
marketing or promotion of Licensed Product(s) (or for such Agents to
determine their interest in performing such activities) in accordance
with this Agreement. Any such Agents must agree in writing to be bound
by confidentiality and non-use obligations essentially the same as
those contained in this Agreement. The term of confidentiality and
non-use obligations for such Agents shall be no less than ten (10)
years.
(c) Disclosure to a Third Party. Notwithstanding
anything herein to the contrary, Sparta shall not disclose, provide or
transfer to any third party without the prior written approval of
Schering (i) any Schering Know-How, or (ii) any Sparta Know-How
relating to Licensed Product(s), or otherwise relating to the
combination of the Drug Delivery System and Temozolomide.
5.2 No Publicity. A party may not use the name of the other
party in any publicity or advertising and, except as provided in Section 5.1,
may not issue a press release or otherwise publicize or disclose any information
related to the existence of this Agreement or the terms or conditions hereof,
without the prior written consent of the other party. The parties shall agree on
a form and timing of the initial press release that may be used by either party
to describe this Agreement. Nothing in the foregoing, however, shall prohibit a
party from making such disclosures to the extent deemed necessary under
applicable federal or state securities laws or any rule or regulation of any
nationally recognized securities exchange. In such event, however, the
disclosing party shall use good faith efforts to consult with the other party
prior to such disclosure and, where applicable, shall request confidential
treatment to the extent available.
5.3 Publication. Schering and Sparta each acknowledge the
potential benefit in publishing results of certain studies to obtain recognition
within the scientific community and to advance the state of scientific
knowledge. Each party also recognizes the mutual interest in obtaining valid
patent protection and in protecting business interests and trade secret
information. No publication of a party's Proprietary Information may be made by
the other party without the prior written consent of such party. The parties
agree that Schering, its Affiliates, employees or consultants shall be free to
make any publication which does not disclose Sparta's Proprietary Information.
In the event that any proposed publication (as defined below) discloses
Proprietary Information, the following procedure shall apply: either party, its
Affiliates, employees or consultants wishing to make a publication shall deliver
to the other party a copy of the proposed written publication or an
<PAGE>
outline of an oral disclosure at least sixty (60) days prior to submission for
publication or presentation. For purposes of this Agreement, the term
"publication" shall include, without limitation, abstracts and manuscripts for
publication, slides and texts of oral or other public presentations, and texts
of any transmission through any electronic media, e.g. any computer access
system such as the Internet or World Wide Web. The reviewing party shall have
the right (i) to propose modifications to the publication for patent reasons,
trade secret reasons or business reasons or (ii) to request delay of the
publication or presentation in order to protect patentable information. If the
reviewing party requests a delay, the publishing party shall delay submission or
presentation for a period not less than eighteen (18) months from the filing
date of the first patent application covering the information contained in the
proposed publication or presentation. If the reviewing party requests
modifications to the publication, the publishing party may edit such publication
to prevent disclosure of trade secret or proprietary business information prior
to submission of the publication or presentation.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Each Party. Each of
Sparta and Schering hereby represents, warrants and covenants to the other party
hereto as follows:
(a) it is a corporation or entity duly organized and
validly existing under the laws of the state or other jurisdiction of
its incorporation or formation;
(b) the execution, delivery and performance of this
Agreement by such party has been duly authorized by all requisite
corporate action, subject only to receipt of requisite approval of its
board of directors;
(c) it has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such
party of this Agreement and its compliance with the terms and
provisions hereof does not and will not conflict with or result in a
breach of any of the terms and provisions of or constitute a default
under (i) a loan agreement, guaranty, financing agreement, agreement
affecting a product or other agreement or instrument binding or
affecting it or its property; (ii) the provisions of its charter or
operative documents or bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered against it or by
which any of its property is bound;
(e) except for the governmental and Regulatory
Approvals required to market the Licensed Product in the Territory, the
execution, delivery and performance of this Agreement by such party
does not require
<PAGE>
the consent, approval or authorization of, or notice, declaration, filing or
registration with, any governmental or regulatory authority and the execution,
delivery or performance of this Agreement will not violate any law, rule or
regulation applicable to such party;
(f) this Agreement has been duly authorized, executed
and delivered and constitutes such party's legal, valid and binding
obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to the availability of particular remedies under general
equity principles; and
(g) it shall comply with all applicable material laws
and regulations relating to its activities under this Agreement.
6.2 Sparta's Representations. Sparta hereby represents,
warrants and covenants to Schering as follows:
(a) the Licensed Patent Rights are subsisting and
are not invalid or unenforceable, in whole or in part;
(b) it has the full right, power and authority to
grant all of the right, title and interest in the licenses granted
under Article II hereof;
(c) it is the sole and exclusive owner of the Sparta
Patent Rights and Sparta Know-How, and the exclusive licensee of the
RTP Patent Rights, all of which are free and clear of any liens,
charges and encumbrances, and no other person, corporate or other
private entity, or governmental entity or subdivision thereof, has or
shall have any claim of ownership with respect to the Licensed Patent
Rights or Sparta Know-How, whatsoever;
(d) to the best of its knowledge, the Licensed Patent
Rights and Sparta Know-How, and the development, manufacture, use,
distribution, marketing, promotion and sale of Licensed Products, do
not interfere or infringe on any intellectual property rights owned or
possessed by any third party;
(e) to the best of its knowledge, there are no third
party pending patent applications which, if issued, may cover the
development, manufacture, use or sale of Licensed Product;
(f) there are no claims, judgments or settlements
against or owed by Sparta, or pending or threatened claims or
litigation, relating to Drug Delivery System, the Licensed Patent
Rights or Sparta Know-How;
<PAGE>
(g) it has disclosed to Schering all Sparta Know-How
and other relevant information relating to the combination of
Temozolomide and the Drug Delivery System, and Licensed Product;
(h) during the Term of this Agreement it will use
reasonable best efforts not to diminish the rights under the Licensed
Patent Rights and Sparta Know-How licensed to Schering hereunder,
including, without limitation, by not committing or permitting any
actions or omissions which would cause the breach of any agreements
between itself and third parties which provide for intellectual
property rights applicable to the development, manufacture, use or sale
of the Drug Delivery System and/or Licensed Product(s), that it will
provide Schering promptly with notice of any such alleged breach, and
that as of the Effective Date, it is in compliance in all material
respects with any agreements with third parties, including, without
limitation, the RTP/Sparta Sublicense Agreement;
(i) it has no knowledge of any circumstances that
would materially and adversely affect the commercial utility of the
Licensed Product and/or the use of the Drug Delivery System in
combination with Temozolomide, or that would render Schering liable to
a third party for patent infringement as a consequence of Schering's
sale of Licensed Product;
(j) data summaries provided to Schering by Sparta
prior to the Effective Date relating to pre-clinical and/or clinical
studies of Temozolomide in combination with the Drug Delivery System
accurately represent all the underlying raw data;
(k) there are no collaborative, licensing, material
transfer, supply, distributorship or marketing agreements or
arrangements or other similar agreements to which it or any of its
Affiliates are party relating to the combination of the Drug Delivery
System and Temozolomide, nor has it granted any rights to any third
party with respect to such combination; and
(l) Sparta and/or its Affiliates shall neither use
nor seek to register any trademarks which are confusingly similar to
any Schering Trademark, or any other trademarks, trade names, trade
dress or logos used in connection with the Licensed Product.
6.3 Schering's Representations. Schering hereby represents,
warrants and covenants to Sparta as follows:
(a) it is the sole and exclusive owner and/or
licensee of all rights to Temozolomide which is free and clear of any
liens, charges and encumbrances, and no other person, corporate or
other private entity, or governmental entity or
<PAGE>
subdivision thereof, has or shall have any claim of ownership with
respect to Temozolomide, whatsoever;
(b) Temozolomide and the development, manufacture,
use, distribution, marketing, promotion and sale of Temozolomide does
not interfere or infringe on any intellectual property rights owned or
possessed by any third party; and
(c) there are no claims, judgments or settlements
against or owed by Schering or pending or threatened claims or
litigation relating to Temozolomide.
6.4 Continuing Representations. The representations and
warranties of each party contained in Sections 6.1, 6.2 and 6.3 shall survive
the execution of this Agreement and shall remain true and correct after the date
hereof with the same effect as if made as of the date hereof.
6.5 No Inconsistent Agreements. Neither party has in effect
and after the Effective Date neither party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations under
this Agreement.
6.6 Representation by Legal Counsel. Each party hereto
represents that it has been represented by legal counsel in connection with this
Agreement and acknowledges that it has participated in the drafting hereof. In
interpreting and applying the terms and provisions of this Agreement, the
parties agree that no presumption shall exist or be implied against the party
which drafted such terms and provisions.
ARTICLE VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.1 Indemnification by Schering.
(a) Schering shall indemnify, defend and hold
harmless Sparta and its Affiliates, and each of its and their
respective employees, officers, directors and agents (each, a "Sparta
Indemnified Party") from and against any and all liability, loss,
damage, cost, and expense (including reasonable attorneys' fees),
subject to the limitations in Section 7.5 (collectively, a "Liability")
which the Sparta Indemnified Party may incur, suffer or be required to
pay resulting from or arising out of the development, manufacture,
promotion, distribution, use, testing, marketing, sale or other
disposition of Temozolomide and/or Licensed Product by Schering, its
Affiliates or sublicensees. Notwithstanding the foregoing, Schering
shall have no obligation under this Agreement to indemnify, defend or
hold harmless any Sparta Indemnified Party with respect to claims,
demands, costs or judgments which result from willful misconduct or
negligent acts or omissions of Sparta, its Affiliates, or any
<PAGE>
of their respective employees, officers, directors or agents.
(b) Schering shall indemnify, defend, and hold
harmless RTP, its directors, officers, employees and Affiliates, RTP
Pharma, Inc., its officers and directors, Cato Holding Company, its
trustees, officers, employees and Affiliates, Duncan Haynes, Anthony
Kirkpatrick, Pharma Logic, Inc. and the University of Miami (all as set
forth in Section 2.1.2 of the RTP/Sparta Sublicense Agreement), (each a
RTP Indemnified Party) from and against any liability which the RTP
Indemnified Party may incur, suffer, or be required to pay resulting
from or arising out of the development, manufacture, promotion,
distribution, use, testing, marketing, sale or other disposition of
Temozolomide and/or Licensed Product by Schering, its Affiliates,
sublicensees or agents; or, resulting from or arising out of any claim
that the Licensed Product contains any latent or nonlatent defects or
is inherently unsafe or dangerous; or, resulting from or arising out of
some obligation of Schering or Sparta under this Agreement.
Notwithstanding the foregoing, Schering shall have no obligation under
this Agreement to indemnify, defend or hold harmless any RTP
Indemnified Party with respect to claims, demands, costs, or judgments
which result from willful misconduct or negligent acts or omissions of
the RTP Indemnified Party, its Affiliates or any of its respective
employees, officers, directors or agents.
7.2 Indemnification by Sparta. Sparta shall indemnify, defend
and hold harmless Schering and its Affiliates, and each of its and their
respective employees, officers, directors and agents (each, a "Schering
Indemnified Party") from and against any Liability which the Schering
Indemnified Party may incur, suffer or be required to pay resulting from or
arising in connection with (i) the breach by Sparta of any covenant,
representation or warranty contained in this Agreement; or (ii) the successful
enforcement by a Schering Indemnified Party of its rights under this Section
7.2. Notwithstanding the foregoing, Sparta shall have no obligation under this
Agreement to indemnify, defend or hold harmless any Schering Indemnified Party
with respect to claims, demands, costs or judgments which result from willful
misconduct or negligent acts or omissions of Schering, its Affiliates, or any of
their respective employees, officers, directors or agents.
7.3 Conditions to Indemnification. The obligations of the
indemnifying party under Sections 7.1 and 7.2 are conditioned upon the delivery
of written notice to the indemnifying party of any potential Liability promptly
after the indemnified party becomes aware of such potential Liability. The
indemnifying party shall have the right to assume the defense of any suit or
claim related to the Liability if it has assumed responsibility for the suit or
claim in writing; however, if in the reasonable judgment of the indemnified
party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business operations or assets of the
indemnified party, the indemnified party may waive its rights to indemnity under
this Agreement and control the defense or settlement thereof, but in no event
shall any such waiver be construed as a waiver of any
<PAGE>
indemnification rights such party may have at law or in equity. If the
indemnifying party defends the suit or claim, the indemnified party may
participate in (but not control) the defense thereof at its sole cost and
expense.
7.4 Settlements. Neither party may settle a claim or action
related to a Liability without the consent of the other party, if such
settlement would impose any monetary obligation on the other party or require
the other party to submit to an injunction or otherwise limit the other party's
rights under this Agreement. Any payment made by a party to settle any such
claim or action shall be at its own cost and expense.
7.5 Limitation of Liability. With respect to any claim by one
party against the other arising out of the performance or failure of performance
of the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a party be liable for, punitive, exemplary or consequential
damages.
7.6 Insurance. Each party acknowledges and agrees that during
the Term of this Agreement it shall maintain adequate insurance and/or a
self-insurance program for liability insurance, including products liability and
contractual liability insurance, to cover such party's obligations under this
Agreement. Each party shall provide the other party with evidence of such
insurance and/or self-insurance program, upon request.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term and Expiration. This Agreement shall be effective as
of the Effective Date and unless terminated earlier by mutual written agreement
of the parties or pursuant to Sections 8.2 or 8.3 below, the Term of this
Agreement shall continue in effect until expiration of the last to expire
Licensed Patent Right incorporating a valid Claim. The expiration or termination
of this Agreement shall not have the effect of causing the expiration or
termination of the Ex-U.S. License Agreement. Upon expiration of this Agreement
due to expiration of the last to expire Licensed Patent Right incorporating a
Valid Claim, Schering's licenses pursuant to Section 2.1 and 2.2 shall become
fully paid-up, perpetual licenses.
8.2 Termination by Schering.
(a) [Information omitted and filed separately with
the Commission under Rule 24b-2.] In the event of the exercise by
Schering of such termination rights, the rights and obligations
hereunder, including any payment obligations not due and owing as of
the termination date shall terminate and all rights to Licensed Patent
Rights and Sparta Know-How shall revert to Sparta.
<PAGE>
(b) Any notice of termination by Schering hereunder or under
Section 8.3 (a), below, shall also be provided to RTP for information.
8.3 Termination.
(a) Termination for Cause. This Agreement may be
terminated by notice by either party at any time during the Term of
this Agreement:
(i) subject to Section 9.2, if the other
party is in breach of its material obligations hereunder and has not
cured such breach within [Information omitted and filed separately
with the Commission under Rule 24b-2.] after notice requesting cure
of the breach with reasonable detail of the particulars of the
alleged breach or initiated actions reasonably expected to cure the
cited failure within [Information omitted and filed separately with
the Commission under Rule 24b-2.] of receiving notice and thereafter
diligently pursued such actions to cure the failure (even if
requiring longer than the [Information omitted and filed separately
with the Commission under Rule 24b-2.] days set forth in this
subsection); or
(ii) upon the filing or institution of
bankruptcy, reorganization, liquidation or receivership proceedings,
or upon an assignment of a substantial portion of the assets for the
benefit of creditors by the other party, or in the event a receiver
or custodian is appointed for such party's business, or if a
substantial portion of such party's business is subject to attachment
or similar process; provided, however, that in the case of any
involuntary bankruptcy proceeding such right to terminate shall only
become effective if the proceeding is not dismissed within
[Information omitted and filed separately with the Commission under
Rule 24b-2.] after the filing thereof.
(b) Effect of Termination for Cause on License.
(i) Termination by Schering under Section
8.3(a)(i). In the event Schering terminates this Agreement under
Section 8.3(a)(i), Schering's licenses pursuant to Sections 2.1 and
2.2 shall become fully paid-up, perpetual licenses.
(ii) Other Terminations. In the event of a
termination of this Agreement for any reason other than by Schering
under Section 8.3 (a) (i), then the rights and licenses granted to
Schering under Sections 2.1 and 2.2 of this Agreement shall terminate
and all rights to Licensed Patent Rights and Sparta Know-How shall
revert to Sparta.
(iii) Effect of Bankruptcy. In the event
Schering terminates this Agreement under Section 8.3(a)(ii) or this
Agreement is otherwise terminated under Section 8.3(a)(ii), the
parties agree that Schering, as a licensee of rights to intellectual
property under this Agreement, shall retain and may fully exercise
all of its rights and elections under Title 11, including as set
forth in Section 9.8 hereof.
<PAGE>
(iv) Termination of RTP/Sparta Sublicense
by Sparta. In the event that Sparta terminates the RTP/Sparta
Sublicense Agreement, all of Sparta's rights and obligations under
this Agreement shall revert to RTP.
8.4 Effect of Termination. Expiration or termination of the
Agreement shall not relieve the parties of any obligation accruing prior to such
expiration or termination, and the provisions of Articles V and VII shall
survive the expiration of the Agreement. Any expiration or early termination of
this Agreement shall be without prejudice to the rights of either party against
the other accrued or accruing under this Agreement prior to termination,
including the obligation to pay royalties for Licensed Product(s) sold prior to
such termination. Schering shall have the right to continue to sell its existing
inventory of Licensed Product(s) during the six (6) month period immediately
following such termination, provided that Schering shall continue to make
royalty payments with respect to such sales.
ARTICLE IX
MISCELLANEOUS
9.1 Assignment. Neither this Agreement nor any or all of the
rights and obligations of a party hereunder shall be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation of law or otherwise, to any third party other than an
Affiliate of such party, without the prior written consent of the other party,
and any attempted assignment, delegation, sale, transfer, sublicense or other
disposition, by operation of law or otherwise, of this Agreement or of any
rights or obligations hereunder contrary to this Section 9.1 shall be a material
breach of this Agreement by the attempting party, and shall be void and without
force or effect. The forgoing notwithstanding, either party may, without such
consent, assign the Agreement and its rights and obligations hereunder to an
Affiliate or in connection with the transfer or sale of all or substantially all
of its assets related to the division or the subject business, or in the event
of its merger or consolidation or change in control or similar transaction. This
Agreement shall be binding upon, and inure to the benefit of, each party, its
Affiliates, and its permitted successors and assigns. Each party shall be
responsible for the compliance by its Affiliates with the terms and conditions
of this Agreement.
9.2 Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the State of New
Jersey, without giving effect to conflict of law principles. Subject to the
terms of this Agreement, all disputes under this Agreement shall be governed by
binding arbitration pursuant to the mechanism set forth in Schedule 9.2 attached
hereto and incorporated hereby.
9.3 Waiver. Any delay or failure in enforcing a party's rights
under this Agreement or any waiver as to a particular default or other matter
shall not constitute a
<PAGE>
waiver of such party's rights to the future enforcement of its rights under this
Agreement, nor operate to bar the exercise or enforcement thereof at any time or
times thereafter, excepting only as to an express written and signed waiver as
to a particular matter for a particular period of time.
9.4 Independent Relationship. Nothing herein contained shall
be deemed to create an employment, agency, joint venture or partnership
relationship between the parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one party for the
act or failure to act of the other party. Neither party shall have any power to
enter into any contracts or commitments or to incur any liabilities in the name
of, or on behalf of, the other party, or to bind the other party in any respect
whatsoever.
9.5 Export Control. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States of America which may be imposed upon or related to Sparta or
Schering from time to time by the government of the United States of America.
Furthermore, Schering Corporation agrees that it will not export, directly or
indirectly, any technical information acquired from Sparta under this Agreement
or any products using such technical information to any country for which the
United States government or any agency thereof at the time of export requires an
export license or other governmental approval, without first obtaining the
written consent to do so from the Department of Commerce or other agency of the
United States government when required by an applicable statute or regulation.
9.6 Entire Agreement: Amendment. This Agreement, including the
Exhibits and Schedules hereto and all the covenants, promises, agreements,
warranties, representations, conditions and understandings sets forth the
complete, final and exclusive agreement between the parties and supersedes and
terminates all prior and contemporaneous agreements and understandings between
the parties, whether oral or in writing. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings, either
oral or written, between the parties other than as are set forth herein. No
subsequent alteration, amendment, change, waiver or addition to this Agreement
shall be binding upon the parties unless reduced to writing and signed by an
authorized officer of each party. No understanding, agreement, representation or
promise, not explicitly set forth herein, has been relied on by either party in
deciding to execute this Agreement.
9.7 Notices. Except as provided under Section 4.8 hereof, any
notice required or permitted to be given or sent under this Agreement shall be
hand delivered or sent by express delivery service or certified or registered
mail, postage prepaid, or by facsimile transmission (with written confirmation
copy by registered first-class mail) to the parties at the addresses and
facsimile numbers indicated below.
<PAGE>
If to Sparta, to: Sparta Pharmaceuticals, Inc.
111 Rock Road
Horsham, Pennsylvania 19044-2310
Attn.: Chief Executive Officer
Fax No.: (215) 442-1827
If to RTP, to: RTP Pharma, Inc.
810 Chemin du Golf/Nun's Island
Verdun, PQ H3E 1A8, Canada
Attn.: Gary W. Pace, President and CEO
Fax No: (514) 362-1172
with copies to: Walter E. Daniels
Daniels & Daniels, P.C.
1000 Park Forty Plaza, Suite 280
Durham, North Carolina 27713
If to Schering, to: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Law Department - Senior Legal Director, Licensing
Fax No.: (908) 298-2739
with copies to: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Vice President, Business Development
Fax No.: (908) 298-5379
Any such notice shall be deemed to have been received on the date actually
received. Either party may change its address or its facsimile number by giving
the other party written notice, delivered in accordance with this Section.
9.8 Provisions for Insolvency. All rights and licenses granted
under or pursuant to this Agreement by Sparta to Schering are, for all purposes
of Section 365(n) of Title 11 of the United States Code ("Title 11"), licenses
of rights to "intellectual property" as defined in Title 11.
(a) Effect on Licenses. Sparta agrees that Schering,
as licensee of such rights under this Agreement shall retain and may
fully exercise all of its rights and elections under Title 11. Sparta
agrees during the Term of this Agreement to
<PAGE>
create and maintain current copies or, if not amenable to copying,
detailed descriptions or other appropriate embodiments, to the extent
feasible, of all such intellectual property. If a case is commenced by
or against Sparta under Title 11, Sparta (in any capacity, including
debtor-in-possession) and its successors and assigns (including,
without limitation, a Title 11 Trustee) shall,
(i) as Schering may elect in a written
request, immediately upon such request:
(A) perform all of the
obligations provided in this Agreement to be performed by Sparta
including, where applicable and without limitation, providing to
Schering portions of such intellectual property (including
embodiments thereof) held by Sparta and such successors and assigns
or otherwise available to them; or
(B) provide to Schering all
such intellectual property (including all embodiments thereof) held
by Sparta and such successors and assigns or otherwise available to
them; and
(ii) not interfere with the rights of
Schering under this Agreement, or any agreement supplemental hereto,
to such intellectual property (including such embodiments), including
any right to obtain such intellectual property (or such embodiments)
from another entity.
(b) Rights to Intellectual Property. If a title 11
case is commenced by or against Sparta, and this Agreement is rejected
as provided in Title 11, and Schering elects to retain its rights
hereunder as provided in Title 11, then Sparta (in any capacity,
including debtor-in-possession) and its successors and assigns
(including, without limitation, a title 11 Trustee) shall provide to
Schering all such intellectual property (including all embodiments
thereof held by Sparta and such successors and assigns, or otherwise
available to them, immediately upon Schering's written request.
Whenever Sparta or any of its successors or assigns provides to
Schering any of the intellectual property licensed hereunder (or any
embodiment thereof) pursuant to this Section 9.8, Schering shall have
the right to perform the obligations of Sparta hereunder with respect
to such intellectual property, but neither such provision nor such
performance by Schering shall release Sparta from any such obligation
or liability for failing to perform it.
(c) Schering's Rights. All rights, powers and
remedies of Schering provided herein are in addition to and not in
substitution for any and all other rights, powers and remedies now or
hereafter existing at law or in equity (including, without limitation,
Title 11) in the event of the commencement of a Title 11 case by or
against Sparta. Schering, in addition to the rights, power and remedies
expressly
<PAGE>
provided herein, shall be entitled to exercise all other such rights
and powers and resort to all other such remedies as may now or
hereafter exist at law or in equity (including, without limitation,
Title 11) in such event. The parties agree that they intend the
foregoing Schering rights to extend to the maximum extent permitted by
law, including, without limitation, for purposes of Title 11:
(i) the right of access to any
intellectual property (including all embodiments thereof) of Sparta,
or any third party with whom Sparta contracts to perform an
obligation of Sparta under this Agreement, and, in the case of the
third party, which is necessary for the development, registration,
manufacture and marketing of Temozolomide and/or Licensed Products;
and
(ii) the right to contract directly with
any third party described in (i) to complete the contracted work.
9.9 Force Majeure. Failure of any party to perform its
obligations under this Agreement (except the obligation to make payments when
properly due) shall not subject such party to any liability or place them in
breach of any term or condition of this Agreement to the other party if such
failure is due to any cause beyond the reasonable control of such non-performing
party ("force majeure"), unless conclusive evidence to the contrary is provided.
Causes of nonperformance constituting force majeure shall include, without
limitation, acts of God, fire, explosion, flood, drought, war, riot, sabotage,
embargo, strikes or other labor trouble, failure in whole or in part of
suppliers to deliver on schedule materials, equipment or machinery, interruption
of or delay in transportation, a national health emergency or compliance with
any order or regulation of any government entity acting with color of right. The
party affected shall promptly notify the other party of the condition
constituting force majeure as defined herein and shall exert reasonable efforts
to eliminate, cure and overcome any such causes and to resume performance of its
obligations with all possible speed. If a condition constituting force majeure
as defined herein exists for more than [Information omitted and filed separately
with the Commission under Rule 24b-2.], the parties shall meet to negotiate a
mutually satisfactory resolution to the problem, if practicable.
9.10 Severability. If any provision of this Agreement is
declared illegal, invalid or unenforceable by a court having competent
jurisdiction, it is mutually agreed that this Agreement shall endure except for
the part declared invalid or unenforceable by order of such court, provided,
however, that in the event that the terms and conditions of this Agreement are
materially altered, the parties will, in good faith, renegotiate the terms and
conditions of this Agreement to reasonably substitute such invalid or
unenforceable provisions in light of the intent of this Agreement.
9.11 Counterparts. This Agreement shall become binding when
any one or more counterparts hereof, individually or taken together, shall bear
the signatures of each
<PAGE>
of the parties hereto. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against either party whose
signature appears thereon, but all of which taken together shall constitute but
one and the same instrument.
9.12 Captions. The captions of this Agreement are solely for
the convenience of reference and shall not affect its interpretation.
9.13 Recording. Each party shall have the right, at any time,
to record, register, or otherwise notify this Agreement in appropriate
governmental or regulatory offices anywhere in the world, and each party shall
provide reasonable assistance to the other in effecting such recording,
registering or notifying.
9.14 Further Actions. Each party agrees to execute,
acknowledge and deliver such further instruments, and to do all other acts, as
may be necessary or appropriate in order to carry out the purposes and intent of
this Agreement including, without limitation, any filings with any antitrust
agency which may be required.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of the parties as of the date set forth below.
SPARTA PHARMACEUTICALS, INC. SCHERING CORPORATION
By: /s/ Jerry B. Hook By: /s/ David Poorvin
----------------- ------------------
Title: Chairman, President & CEO Title: Vice President
------------------------- --------------
Date: 4/8/98 Date: 17 April 1998
------ -------------
<PAGE>
SCHEDULE 1.12
PATENT RIGHTS
RTP Patent Rights: Consisting of the US patents and patent applications listed
in Schedule 1 to the RTP/Sparta Sublicense Agreement, which schedule is attached
to this Schedule 1.12.
Sparta Patent Rights: None as of the date of execution of this Agreement.
<PAGE>
SCHEDULE 1
[Information omitted and filed separately with the Commission under Rule 24b-2.]
<PAGE>
SCHEDULE 9.2
ARBITRATION PROVISIONS
(a) Scope. Subject to and in accordance with the
terms of this Agreement and this Schedule 9.2, all differences,
disputes, claims or controversies arising out of or in any way
connected or related to this Agreement, whether arising before or after
the expiration of the term of this Agreement, and including, without
limitation, its negotiation, execution, delivery, enforceability,
performance, breach, discharge, interpretation and construction,
existence, validity and any damages resulting therefrom or the rights,
privileges, duties and obligations of the parties under or in relation
to this Agreement (including any dispute as to whether an issue is
arbitrable) shall be referred to binding arbitration in accordance with
the rules set forth herein and of the American Arbitration Association,
as in effect at the time of the arbitration. The time frames set forth
herein shall control the timing of the arbitration procedure.
(b) Parties to Arbitration. For the purposes of each
arbitration under this Agreement, Schering shall constitute one party
to the arbitration and Sparta shall constitute the other party to the
arbitration.
(c) Notice of Arbitration. A party requesting
arbitration hereunder (the "Requesting Party") shall give a notice of
arbitration to the other party (the "Non-requesting Party") containing
a concise description of the matter submitted for arbitration (a
"Notice of Arbitration"). Notice of Arbitration shall be delivered to
the other party in accordance with Section 9.7 of the Agreement.
(d) Response. The Non-requesting Party must respond
in writing within thirty (30) days of receiving a Notice of Arbitration
with an explanation, including references to the relevant provisions of
the Agreement. The Non-requesting Party may add additional issues to be
resolved.
(e) Meeting. Within fifteen (15) days of receipt of
the response from the Non-requesting Party pursuant to Paragraph (d),
the parties shall meet and discuss in good faith options for resolving
the dispute. The Requesting Party must initiate the scheduling of this
resolution meeting. Each party shall make available appropriate
personnel to meet and confer with the other party during such fifteen
(15) day period.
(f) Selection of Arbitrator. Any and all disputes
that cannot be resolved pursuant to Paragraphs (c), (d) and (e) shall
be submitted to an arbitrator (the "Arbitrator") to be selected by
mutual agreement of the parties. The Arbitrator shall be a retired
judge of a state or federal court, to be chosen from a list of such
retired judges to be prepared jointly by the parties within fifteen)
days following the response, with each party entitled to submit the
names of three such retired judges
<PAGE>
for inclusion in the list, provided that to the extent the dispute
involves issues of patent law the parties shall limit such list to
judges from federal courts having jurisdiction over patent law issues.
Upon completion of the list, the parties shall decide within ten (10)
days thereafter which of the retired judges will be selected as the
Arbitrator. No Arbitrator appointed or selected hereunder shall be an
employee, director or shareholder of, or otherwise have any current or
previous relationship with, any party or its respective Affiliates. If
the parties fail to agree on the selection of the Arbitrator within the
allotted time frame, the Arbitrator shall be designated by the then
President of the American Arbitration Association.
(g) Powers of Arbitrator. The Arbitrator may
determine all questions of law and jurisdiction (including questions as
to whether a dispute is arbitrable) and all matters of procedure
relating to the arbitration, except that the Arbitrator shall be bound
by the time frames set forth herein in connection with such
arbitration. The Arbitrator shall have the right to grant legal and
equitable relief (including injunctive relief and to award costs
(including reasonable legal fees and costs of arbitration) and
interest. Nothing contained herein shall be construed to permit the
Arbitrator to award punitive, exemplary or any similar damages.
(h) Arbitration Procedure. The arbitration shall take
place in the City and State of New York at such place and time,
consistent with the time frames set forth herein, as the Arbitrator may
fix for the purpose of hearing the evidence and representations that
the parties may present. The law applicable to the arbitration shall be
the law of the State of New Jersey. No later than twenty (20) business
days after hearing the representations and evidence of the parties, the
Arbitrator shall make its determination in writing and deliver one copy
to each of the parties.
(i) Discovery and Hearing. During the meeting
referred to in Paragraph (e), the parties shall negotiate in good faith
the scope and schedule of discovery, relating to depositions, document
production and other discovery devices, taking into account the nature
of the dispute submitted for resolution. If the parties are unable to
reach agreement as to the scope and schedule of discovery, the
Arbitrator may order such discovery as it deems necessary. The parties
and the Arbitrator must adhere to the following schedule: (1) all
discovery shall be completed within sixty (60) days from the date of
the selection of the Arbitrator, and (2) the arbitration hearing shall
commence within twenty (20) days after completion of such discovery. At
the arbitration hearing, the parties may present testimony (either live
witness or deposition), subject to cross-examination, and documentary
evidence. To the extent practicable taking into account the nature of
the dispute submitted for resolution and the availability of the
Arbitrator, the hearing shall be conducted
<PAGE>
over a period not to exceed thirty (30) consecutive business days, with each
party entitled to approximately half of the allotted time.
(j) Witness Lists. At least twenty (20) business days
prior to the date set for the hearing, each party shall submit to each
other party and the Arbitrator a list of all documents on which such
party intends to rely in any oral or written presentation to the
Arbitrator and a list of all witnesses, if any, such party intends to
call at such hearing and a brief summary of each witness' testimony.
Each party shall be given the opportunity to depose any such designated
witnesses not already deposed during the discovery phase. At least five
(5) business days prior to the hearing, each party must submit to the
Arbitrator and serve on each other party a proposed findings of fact
and conclusions of law on each issue to be resolved. Following the
close of hearings, the parties shall each submit such post-hearing
briefs to the Arbitrator addressing the evidence and issues to be
resolved as may be required or permitted by the Arbitrator.
(k) Confidentiality. The arbitration proceedings
shall be confidential and, except as required by law, no party shall
make, or instruct the Arbitrator to make, any public announcement with
respect to the proceedings or decision of the Arbitrator without the
prior written consent of the other party. The existence of any dispute
submitted to arbitration and the award of the Arbitrator shall be kept
in confidence by the parties and the Arbitrator, except as required in
connection with the enforcement of such award or as otherwise required
by law.
(l) Awards and Appeal. Subject to the provisions of
this Schedule 9.2, the decision of the Arbitrator shall be final and
binding upon the parties in respect of all matters relating to the
arbitration, the conduct of the parties during the proceedings, and the
final determination of the issues in the arbitration. There shall be no
appeal from the final determination of the Arbitrator to any court,
except in the case of fraud or bad faith on the part of the Arbitrator
or any party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the
Arbitrator may be entered in any court having jurisdiction thereof.
(m) Costs of Arbitration. The costs of any
arbitration hereunder shall be borne by the parties in the manner
specified by the Arbitrator in its determination.
(n) Performance of the Agreement. During the pendency
of the arbitration proceedings, the parties shall continue to fully
perform their respective obligations under the Agreement. Any aspects
of such performance which encompass the matter which is the subject of
such arbitration proceedings shall be performed by the parties in
accordance with Schering's position with respect to such matter. For
purposes of this
<PAGE>
Paragraph (n) the term "pendency of the arbitration proceeding" shall mean the
period starting on the date on which arbitration proceedings are commenced by a
party in accordance with Paragraph (c) of this Schedule 9.2 and ending on the
date on which the Arbitrator delivers its final determination in writing to the
parties.
<PAGE>
Exhibit 10.103
EXCLUSIVE LICENSE AGREEMENT
by and between
SPARTA PHARMACEUTICALS, INC.
and
SCHERING-PLOUGH LTD.
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is made as of the
last date on the signature page hereof (the "Effective Date") by and between
SPARTA PHARMACEUTICALS, INC., a Delaware corporation having its principal place
of business at 111 Rock Road, Horsham, Pennsylvania 19044-2310, (hereinafter
referred to as "Sparta") and SCHERING-PLOUGH LTD., a corporation organized and
existing under the laws of Switzerland and having its principal place of
business at Topferstrasse 5, 6004 Lucerne, Switzerland (hereinafter referred to
as "SP Ltd."). Sparta and SP Ltd. are sometimes referred to herein individually
as a party and collectively as the parties. References to "SP Ltd." and "Sparta"
shall include their respective Affiliates (as hereinafter defined).
WHEREAS, Sparta has developed certain Sparta Know-How and has rights to
the Licensed Patent Rights relating to Drug Delivery Systems (each as
hereinafter defined); and
WHEREAS, SP Ltd. has the exclusive rights to the product known as
Temozolomide; and
WHEREAS, SP Ltd., together with its Affiliates (as hereinafter defined)
possesses extensive capabilities in the development and commercialization of
pharmaceutical products on a worldwide basis; and
WHEREAS, SP Ltd. desires to obtain and Sparta is willing to grant to SP
Ltd., an exclusive license under Licensed Patent Rights and to use the Sparta
Know-How in combination with Temozolomide, upon the terms and conditions set
forth herein; and
WHEREAS, simultaneously with entering into this Agreement Sparta and SP
Ltd.'s Affiliate, Schering Corporation, have entered into a license agreement
relating to the United States, its territories and possessions (hereinafter the
"U.S. License Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, SP Ltd. and Sparta hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following capitalized terms, whether
used in the singular or plural, shall have the respective meanings set forth
below:
1.1 "Affiliate" shall mean any individual or entity directly
or indirectly controlling, controlled by or under common control with, a party
to this Agreement.
<PAGE>
For purposes of this Agreement, the direct or indirect ownership of fifty
percent (50%) or more of the outstanding voting securities of an entity, or the
right to receive fifty percent (50%) or more of the profits or earnings of an
entity shall be deemed to constitute control. Such other relationship as in fact
results in actual control over the management, business and affairs of an entity
shall also be deemed to constitute control.
1.2 "Calendar Quarter" shall mean the respective periods of
three (3) consecutive calendar months ending on March 31, June 30, September
30 or December 31, for so long as this Agreement is in effect.
1.3 "Calendar Year" shall mean each successive period of
twelve (12) months commencing on January 1 and ending on December 31, for so
long as this Agreement is in effect.
1.4 "Drug Delivery System" shall mean all formulations,
materials, methods and other technology included in or related to the
application of the Spartaject(TM) technology to parenteral administration
(including, without limitation, intrathecal administration) of Temozolomide and
which is owned by Sparta or licensed to Sparta with the right to grant
sublicenses.
1.5 "First Commercial Sale" shall mean, with respect to any
Licensed Product, the first sale for end use of such Licensed Product.
1.6 "HRD" shall mean a health registration dossier or its
equivalent, submitted to a national government or a supranational governmental
authority, consisting of the chemical, pharmaceutical and biological
documentation; the toxicological and pharmacological documentation; and the
clinical documentation respectively, and covering a Licensed Product which is
filed in any country outside the United States and which is analogous to a new
drug application, biologics license application or its equivalent filed with the
United States Food and Drug Administration seeking approval to market and sell a
Licensed Product in the Territory and including, where applicable, applications
for pricing, pricing reimbursement approval, labeling and Regulatory Approval.
1.7 "Improvement" shall mean any enhancement in the
formulation, ingredients, preparation, dosage, packaging or manufacture of the
Drug Delivery System for use in combination with Temozolomide developed prior to
or during the Term of this Agreement by or on behalf of Sparta.
1.8 "IND" shall mean an investigational new drug application
submitted to the United States Food and Drug Administration or its equivalent in
any country of the Territory, approval of which permits the clinical
investigation of Licensed Product.
1.9 "Licensed Patent Rights" shall mean the RTP Patent Rights
and the Sparta Patent Rights.
<PAGE>
1.10 "Licensed Product(s)" shall mean any form or dosage of
pharmaceutical composition or preparation for parental administration, in final
form for sale, which utilizes the Drug Delivery System and contains as an active
ingredient Temozolomide.
1.11 "Net Sales" shall mean, [Information omitted and filed
separately with the Commission under Rule 24b-2.]
1.12 "Proprietary Information" shall mean Sparta Know-How,
Schering Know-How and all other scientific, clinical, regulatory, marketing,
financial and commercial information or data, whether communicated in writing,
verbally or electronically, which is provided by one party to the other party in
connection with this Agreement. When Proprietary Information is disclosed in a
manner other than in writing, it shall be reduced to written form, marked
"Confidential" and transmitted to the receiving party with ten (10) business
days of disclosure to the receiving party.
1.13 "Regulatory Approval" shall mean any applications or
approvals, and marketing authorizations based upon such approvals (including any
prerequisite manufacturing approvals or authorizations related thereto) and
pricing, third party reimbursement or labeling approval(s), technical, medical
and scientific licenses, registrations or authorizations of any national,
supra-national (e.g. the European Commission, the Council of the European Union,
or the European Agency for the Evaluation of Medicinal Products), regional,
state or local regulatory agency or other governmental entity, necessary for the
development, manufacture, distribution, marketing promotion, use, import, export
or sale of Licensed Product(s) and/or Temozolomide in a regulatory jurisdiction.
1.14 "RTP Patent Rights" shall mean those patents and pending
patent applications listed in Schedule 1.13 which are licensed to Sparta under
the Amended and Restated Sublicense Agreement, dated January 1, 1997 (the
"RTP/Sparta Sublicense Agreement"), by and between Sparta and Research Triangle
Pharmaceuticals Ltd. and any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates or any like
filing thereof, or provisional applications of any such patents and patent
applications.
1.15 "Sparta Know-How" shall mean any of Sparta's or its
Affiliates' information and materials relating to the research, development,
registration, manufacture, marketing, use or sale of Licensed Product which
during the Term of this Agreement are in Sparta's or its Affiliates' possession
or control, through license or otherwise, and which are not generally known.
Sparta Know-How shall include, without limitation, discoveries, methods,
knowledge, Improvements, processes, formulas, data, ideas, experience,
inventions, know-how, technology, trade secrets, manufacturing procedures,
purification and isolation techniques, test data and other intellectual
property, patentable or otherwise, developed by or on behalf of Sparta relating
to Licensed Product or otherwise relating to the combination of Temozolomide and
the Drug Delivery System, including without limitation, test procedures and
other new technologies derived therefrom.
<PAGE>
1.16 "Sparta Patent Rights" shall mean any and all patents and
pending patent applications, excluding the RTP Patent Rights, which during the
Term of this Agreement are owned by Sparta, or to which Sparta through license
or otherwise acquires rights, including, but not limited to, those listed in
Schedule 1.13, and which have claims covering: (i) the Drug Delivery System or
any use thereof in conjunction with Temozolomide, or any apparatus, material or
method of manufacture useful in the development, manufacture, use or sale
thereof; or (ii) Licensed Product or any use thereof, or any apparatus, material
or method of manufacture useful in the development, manufacture, use or sale
thereof; or (iii) Improvements; or (iv) the Sparta Know-How; or (v) are
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates or any like filing thereof, or provisional
applications of any such patents and patent applications.
1.17 "Schering Know-How" shall mean any of SP Ltd.'s or its
Affiliates' information and materials relating to the research, development,
registration, manufacture, marketing, use or sale of Temozolomide and/or
Licensed Product which during the Term of this Agreement are in SP Ltd.'s or its
Affiliates' possession or control, through license or otherwise, and which are
not generally known. Schering Know-How shall include, without limitation,
discoveries, methods, knowledge, Improvements, processes, formulas, data, ideas,
experience, inventions, know-how, technology, trade secrets, manufacturing
procedures, purification and isolation techniques, test data and other
intellectual property, patentable or otherwise, developed by or on behalf of SP
Ltd. or its Affiliates relating to Licensed Product, including without
limitation, test procedures and other new technologies derived therefrom.
1.18 "Schering Trademark" shall mean any trademark(s)
proposed, chosen, owned or controlled by SP Ltd. or its Affiliates for use with
Temozolomide and/or the Licensed Product in the Territory.
1.19 "Territory" shall mean the entire world except the United
States of America, its territories, possessions and commonwealths.
1.20 "Term" shall mean the period commencing on the Effective
Date and unless terminated earlier pursuant to the relevant provisions of
Article VIII shall continue until the expiration of the last to expire of the
Licensed Patent Rights incorporating a Valid Claim.
1.21 "Transaction Agreements" shall mean collectively this
Agreement and the U. S. License Agreement.
1.22 "Valid Claim" shall mean a composition of matter or
method of use claim, or equivalent thereof, of an issued and unexpired patent in
the Territory covering the use of Licensed Product(s) included within the
Licensed Patent Rights, which (i) has not been revoked or held unenforceable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the
<PAGE>
time allowed for appeal; or (ii) has not been abandoned, disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.
ARTICLE II
LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND
COMMERCIALIZATION
2.1 Exclusive License Grant.
(a) License to Sparta Patent Rights. Sparta hereby
grants to SP Ltd. as of the Effective Date, an exclusive license,
exclusive even as to Sparta, in the Territory under the Sparta Patent
Rights, and to use the Sparta Know-How to develop, make, have made,
import, export, use, distribute, market, promote, offer for sale and
sell Licensed Product(s). Any Improvements relating to the Licensed
Product, or otherwise relating to the use of the Drug Delivery System
in combination with Temozolomide, developed prior to or during the Term
of this Agreement by or on behalf of Sparta shall be included in Sparta
Know-How or Sparta Patent -Rights, as the case may be, for all purposes
of this Agreement.
(b) Right to Sublicense. The licenses granted to SP
Ltd. under Section 2.1(a) shall include the right to grant sublicenses
to Affiliates and/or any third party.
(c) Sublicense to RTP Patent Rights. Subject to the
terms and conditions set forth in Section 2.1.2 of the RTP/Sparta
Sublicense Agreement, Sparta hereby grants to SP Ltd. and its
Affiliates, as of the Effective Date, an exclusive sublicense,
exclusive even as to Sparta, in the Territory under the RTP Patent
Rights to develop, make, have made, import, export, use, distribute,
market, promote, offer for sale and sell Licensed Product(s).
2.2 Disclosure of Information. Promptly after the Effective
Date, Sparta shall disclose to SP Ltd. in writing, or via electronic media
acceptable to SP Ltd., all Sparta Know-How not previously disclosed to SP Ltd.
in order to enable SP Ltd. to exploit its rights granted under Section 2.1 of
this Agreement. In addition, during the Term of this Agreement Sparta shall
promptly disclose to SP Ltd. in writing, or via electronic media acceptable to
SP Ltd., Sparta Know-How relating to any Improvements. Such Sparta Know-How and
other information shall be automatically deemed to be within the scope of the
licenses granted herein without payment of any additional compensation.
2.3 SP Ltd.'s Development Obligations. SP Ltd. shall, at SP
Ltd.'s expense, use reasonable commercial efforts to develop, obtain Regulatory
Approval for, and commercialize Licensed Product(s) in such countries in the
Territory where in SP Ltd.'s opinion it is commercially viable to do so.
(a) SP Ltd. Diligence. The parties acknowledge and
agree that all business decisions including, without limitation,
decisions relating to the research,
<PAGE>
development, registration, manufacture, sale, commercialization,
design, price, distribution, marketing and promotion of Licensed
Product(s) covered under this Agreement, shall be within the sole
discretion of SP Ltd. Sparta acknowledges that SP Ltd. is in the
business of developing, manufacturing and selling pharmaceutical
products and, subject to the provisions of this Section 2.3, nothing in
this Agreement shall be construed as restricting such business or
imposing on SP Ltd. the duty to market and/or sell and exploit Licensed
Product(s) for which royalties are payable hereunder to the exclusion
of, or in preference to, any other product, or in any way other than in
accordance with its normal commercial practices.
(b) Opportunity to Cure. In the event that if, in
Sparta's reasonable opinion, SP Ltd. fails to meet its diligence
obligations under Section 2.3(a), then Sparta shall have the right to
give SP Ltd. written notice thereof stating in detail the particular
failure. SP Ltd. shall have a period of [Information omitted and filed
separately with the Commission under Rule 24b-2.] days from the receipt
of such notice to correct the failure or, in the event that the failure
cannot be reasonably cured within a [Information omitted and filed
separately with the Commission under Rule 24b-2.] day period, then SP
Ltd. shall initiate actions reasonably expected to cure the failure
within [Information omitted and filed separately with the Commission
under Rule 24b-2.] days of receiving notice and shall thereafter
diligently pursue such actions to cure the failure (even if requiring
longer than the [Information omitted and filed separately with the
Commission under Rule 24b-2.] days specified in Section 8.3(a)(i)). In
the event of a dispute as to whether or not SP Ltd. has failed to
exercise due diligence under Section 2.3(a) or whether SP Ltd. is
diligently pursuing actions reasonably expected to cure such failure
under this Section 2.3(b), such dispute shall be resolved through
binding arbitration in accordance with Section 9.2.
(c) Research and Development Activities. Subject to
its diligence obligations set forth in Section 2.3(a), following the
Effective Date, SP Ltd. shall be responsible, at its cost and expense,
and in its sole judgment, for all research and development activities
which are necessary to obtain Regulatory Approval for Licensed
Product(s) in the Territory and any post-approval studies required as a
condition of obtaining any Regulatory Approval for the Licensed
Product. In addition, SP Ltd. shall be responsible for any other
studies (or portions of studies) necessary or desirable, in its sole
judgment, for maintaining any Regulatory Approval and/or pricing and
reimbursement approvals in the Territory, as well as any premarketing
studies prior to Regulatory Approval and postmarketing studies
conducted following a Regulatory Approval.
(d) Licensed Product Registrations: Pricing
Reimbursement Approvals. Subject to its diligence obligations set forth
in Section 2.3(a), SP Ltd. shall be responsible, at its cost and
expense, and in its sole judgment, for determining the appropriate
regulatory strategy, for obtaining and maintaining all Regulatory
Approvals and for obtaining and maintaining any pricing and
reimbursement approvals required for the sale of Licensed Product in
each country in the Territory. Each Regulatory Approval and each
pricing and reimbursement approval shall be
<PAGE>
placed in SP Ltd.'s name or the name of a SP Ltd. Affiliate.
(e) Data. All data arising out of studies performed
under this Article II shall be owned by SP Ltd.
(f) Assistance by Sparta. During the Term of this
Agreement, Sparta shall provide to SP Ltd. all Sparta Know-How, which
may be relevant to obtain any Regulatory Approval relating to Licensed
Product(s). In connection with any HRD or other application for
Regulatory Approval relating to Licensed Product(s), Sparta shall, at
SP Ltd.'s request, provide to SP Ltd. in a prompt manner responses to
questions which have been raised by any regulatory authority in
connection with such application for Regulatory Approval and further
provide to SP Ltd. estimates of Sparta's out-of-pocket costs for
rendering such assistance.
2.4 Excused Performance. In addition to the provisions of
Article VIII and Section 9.9, the obligations of SP Ltd. with respect to a
Licensed Product under Sections 2.3(a), 2.3(c) and 2.3(d) are expressly
conditioned upon the continuing absence of any adverse condition or event which
warrants a delay in commercialization of the Licensed Product including, but not
limited to, an adverse condition or event relating to the safety or efficacy of
a Licensed Product or unfavorable pricing, pricing reimbursement, labeling or
lack of Regulatory Approval, and the obligation of SP Ltd. to develop or market
any such Licensed Product shall be delayed or suspended so long as in SP Ltd.'s
opinion any such condition or event exists.
2.5 Other Studies. Sparta shall conduct no studies or
preclinical or clinical trials with Temozolomide alone or in combination with
the Drug Delivery System without the express written consent of SP Ltd.,
including the prior written approval of any protocols to be used and any
amendments thereto. Such consent may be granted by SP Ltd. in its sole
discretion. If SP LTD. approves a study, at SP Ltd.'s request, Sparta shall
provide to SP Ltd. the results from the study and any background information
requested. At the option of SP Ltd., SP Ltd. may have its representative(s)
monitor any approved preclinical, clinical or other studies conducted by Sparta
pursuant to this Section 2.5.
2.6 Reports. SP Ltd. shall provide Sparta with twice yearly
written reports summarizing the status of the research and development
activities and progress of any Regulatory Approval, as applicable, in connection
with Licensed Product in the Territory.
ARTICLE III
PAYMENTS; ROYALTIES AND REPORTS
3.1 Consideration for License. In partial consideration for
the licenses granted to SP Ltd. hereunder, SP Ltd. shall make an upfront payment
to Sparta, payable in installments, on the first occurrence of the indicated
triggering events.
[Information omitted and filed separately with the Commission under Rule 24b-2.]
[Information omitted and filed separately with the Commission under Rule 24b-2.]
<PAGE>
Each of the installments set forth in this Section 3. 1 shall be payable once
upon the initial achievement of such event and no amounts shall be due hereunder
for subsequent or repeated achievement of such event.
3.2 Royalties.
(a) Royalty Rates. In further consideration for the
licenses granted to SP Ltd. hereunder, starting with the First
Commercial Sale of Licensed Product, SP Ltd. shall pay to Sparta,
[Information omitted and filed separately with the Commission under
Rule 24b-2.]
(b) Term and Scope of Royalty Obligations. Subject to
the terms of Sections 4.3(b) and 8.1, royalties on each Licensed
Product at the rate set forth in Section 3.2(a) shall continue until
the expiration of the last applicable Licensed Patent Right
incorporating a Valid Claim. No royalties shall be due upon the sale or
other transfer among SP Ltd., its Affiliates or sublicensees, but in
such cases the royalty shall be due and calculated upon SP Ltd's or its
Affiliates' or its sublicensees' Net Sales to the first independent
third party. No royalties shall accrue on the disposition of Licensed
Product by SP Ltd., its Affiliates or its sublicensees as donations
(for example, to nonprofit institutions or government agencies for a
non-commercial purpose) or for clinical studies.
(c) Third Party Licenses. In the event that patent
licenses from third parties are required by SP Ltd., its Affiliates and
sublicensees in order to practice the Licensed Patent Rights to
develop, make, have made, import, export, use, distribute, promote,
market, offer for sale or sell Licensed Product(s) (hereinafter "Third
Party Patent Licenses"), then the royalty rates set forth in Section
3.2(a) shall be adjusted such that the royalty rate for Net Sales of
Licensed Product which SP Ltd. is obligated to pay Sparta shall be
[Information omitted and filed separately with the Commission under
Rule 24b-2.] By way of example and for avoidance of doubt, if SP Ltd.
is obligated to pay royalties to Sparta on Net Sales of a Licensed
Product and is also obligated to [Information omitted and filed
separately with the Commission under Rule 24b-2.] under a Third Party
Patent License, then the royalty rate under this Agreement would
[Information omitted and filed separately with the Commission under
Rule 24b-2.] For further example, if the third party royalty obligation
in the above example were [Information omitted and filed separately
with the Commission under Rule 24b-2.]
<PAGE>
[Information omitted and filed separately with the Commission under Rule
24b-2.], the calculated royalty rate would [Information omitted and filed
separately with the Commission under Rule 24b-2.], but the actual royalty rate
to Sparta could [Information omitted and filed separately with the Commission
under Rule 24b-2.]
(d) Compulsory Licenses. If a compulsory license is
granted to a third party with respect to Temozolomide and/or Licensed
Product in any country in the Territory with a royalty rate lower than
the royalty rate provided by Section 3.2(a),- then the royalty rate to
be paid by SP Ltd. on Net Sales in that country under Section 3.2(a)
shall be reduced to the rate paid by the compulsory licensee.
3.3 Reports: Payment of Royalty: Payment Exchange Rate and
Currency Conversions.
(a) Royalties Paid Quarterly. Within sixty (60)
calendar days following the close of each Calendar Quarter, following
the First Commercial Sale of a Licensed Product, SP Ltd. shall furnish
to Sparta a written report for the Calendar Quarter showing the Net
Sales of Licensed Product sold by SP Ltd., its Affiliates and its
sublicensees in the Territory during such Calendar Quarter and the
royalties payable under this Agreement for such Calendar Quarter.
Simultaneously with the submission of the written report, SP Ltd. shall
pay to Sparta, for the account of SP Ltd. or the applicable Affiliate
or sublicensee, as the case may be, a sum equal to the aggregate
royalty due for such Calendar Quarter calculated in accordance with
this Agreement (reconciled for any previous overpayments or
underpayments).
(b) Method of Payment. Payments to be made by SP Ltd.
to Sparta under this Agreement shall be paid by bank wire transfer in
immediately available funds to such bank account as is designated in
writing by Sparta from time to time. Royalties shall be deemed payable
by the entity making the Net Sales from the country in which earned in
local currency and subject to foreign exchange regulations then
prevailing. Royalty payments shall be made in United States dollars to
the extent that free conversions to United States dollars is permitted.
The rate of exchange to be used in any such conversion from the
currency in the country where such Net Sales are made shall be the rate
of exchange used by SP Ltd. for reporting such sales for United States
financial statement purposes. A copy of SP Ltd.'s current policy for
bookkeeping exchange rates is set forth in Schedule 3.3. If, due to
restrictions or prohibitions imposed by national or international
authority, payments cannot be made as aforesaid, the parties shall
consult with a view to finding a prompt and acceptable solution, and SP
Ltd. will deal with such monies as Sparta may lawfully direct at no
additional out-of-pocket expense to SP Ltd. Notwithstanding the
foregoing, if royalties in any country cannot be remitted to Sparta for
any reason within six (6) months after the end of the Calendar Quarter
during which they are earned, then SP Ltd. shall be obligated to
deposit the royalties in a bank account in such country in the name of
Sparta.
<PAGE>
3.4 Maintenance of Records: Audits.
(a) Record Keeping by SP Ltd. SP Ltd. and its
Affiliates shall keep complete and accurate records in sufficient
detail to enable the royalties payable hereunder to be determined. Upon
forty-five (45) days prior written notice from Sparta, SP Ltd. shall
permit an independent certified public accounting firm of nationally
recognized standing selected by Sparta and reasonably acceptable to SP
Ltd., at Sparta's expense, to have access during normal business hours
to examine pertinent books and records of SP Ltd. and/or its Affiliates
as may be reasonably necessary to verify the accuracy of the royalty
reports hereunder. The examination shall be limited to pertinent books
and records for any year ending not more than twenty-four (24) months
prior to the date of such request. An examination under this Section
3.4(a) shall not occur more than once in any Calendar Year. SP Ltd. may
designate competitively sensitive information which such auditor may
not disclose to Sparta, provided, however, that such designation shall
not encompass the auditor's conclusions. The accounting firm shall
disclose to Sparta only whether the royalty reports are correct or
incorrect and the specific details concerning any discrepancies. No
other information shall be provided to Sparta. All such accounting
firms shall sign a confidentiality agreement (in form and substance
reasonably acceptable to SP Ltd.) as to any of SP Ltd.'s or its
Affiliate's confidential information which they are provided, or to
which they have access, while conducting any audit pursuant to this
Section 3.4(a).
(b) Underpayments/Overpayments. If such accounting
firm correctly concludes that additional royalties were owed during
such period, SP Ltd. shall pay the additional royalties within thirty
(30) days of the date Sparta delivers to SP Ltd. such accounting firm's
written report so correctly concluding. If such underpayment exceeds
[Information omitted and filed separately with the Commission under
Rule 24b-2.] of the royalty correctly due Sparta then the fees charged
by such accounting firm for the work associated with the underpayment
audit shall be paid by SP Ltd. Any overpayments by SP Ltd. will be
credited against future royalty obligations. In the event that SP Ltd.
disagrees with the audit report and the chief financial officers of SP
Ltd. and Sparta fail to revolve such disagreement, the dispute will be
resolved through the dispute resolution mechanism set forth in Section
9.2.
3.5 Separate Payment Obligations. The parties acknowledge that
SP Ltd.'s payment obligations as set forth in Sections 3.1 and 3.2 of this
Agreement are separate from and in addition to the payment obligations of SP
Ltd.'s Affiliate, Schering Corporation, as set forth in the U.S. License
Agreement.
3.6 Income Tax Withholding. If at any time, any jurisdiction
within the Territory requires the withholding of income taxes or other taxes
imposed upon payments set forth in this Article III, SP Ltd. shall make such
withholding payments as required and subtract such withholding payments from the
payments set forth in this Article III, or if applicable, Sparta will promptly
reimburse SP Ltd. or its designee(s) of the amount of such payments. SP Ltd.
shall provide Sparta with documentation of such withholding and payment in a
manner that is satisfactory for purposes of the U.S. Internal Revenue Service.
<PAGE>
Any withholdings paid when due hereunder shall be for the account of Sparta and
shall not be included in the calculation of Net Sales. Sparta shall be liable
for any deficiency, and any fine, assessment or penalty imposed by any taxing
authority in the Territory for any deficiency in the amount of any such
withholding or the failure to make such withholding payment. If SP Ltd. is
required to pay any such deficiency, or any fine, assessment or penalty for any
such deficiency, Sparta shall promptly reimburse SP Ltd. for such payments,
which shall not be included in the calculation of Net Sales.
3.7 Direct Affiliate Licenses. Whenever SP Ltd. shall
reasonably demonstrate to Sparta that, in order to facilitate direct royalty
payments by an Affiliate, it is desirable that a separate license agreement be
entered into between Sparta and such Affiliate, Sparta will grant such licenses
directly to such Affiliate by means of an agreement which shall be consistent
with all of the provisions hereof, provided that SP Ltd. guarantees the
Affiliate's obligations thereunder.
ARTICLE IV
PATENTS
4.1 Filing. Prosecution and Maintenance of Patents. Sparta
agrees to diligently file, prosecute and maintain in the Territory, upon
appropriate consultation with SP Ltd., any Licensed Patent Rights owned in whole
or in part by Sparta and licensed to SP Ltd. under this Agreement. Sparta shall
give SP Ltd. an opportunity to review the text of the applications before
filing, shall consult with SP Ltd. with respect thereto, and shall supply SP
Ltd. with a copy of the applications as filed, together with notice of its
filing date and serial number. Sparta shall keep SP Ltd. advised of the status
of all actual and prospective patent filings and upon the written request of SP
Ltd. shall provide advance copies of any substantive papers related to the
filing, prosecution and maintenance of such patent filings.
4.2 Option of SP Ltd. to Prosecute and Maintain Patents.
Sparta shall give one hundred and eighty (180) days notice to SP Ltd. of any
desire to cease prosecution and/or maintenance of a particular Licensed Patent
Right and, in such case, subject to the rights of RTP under the RTP/Sparta
Sublicense Agreement with respect to RTP Patent Rights, shall permit SP Ltd., at
its sole discretion, to continue prosecution or maintenance at its own expense.
If SP Ltd. elects to continue prosecution or maintenance, Sparta shall execute
such documents and perform such acts, at SP Ltd.'s expense, as may be reasonably
necessary to effect an assignment of such Licensed Patent Rights to SP Ltd. Any
such assignment shall be completed in a timely manner to allow SP Ltd. to
continue such prosecution or maintenance. Any patents or patent applications so
assigned shall not be considered Licensed Patent Rights.
4.3 Enforcement. In the event that either SP Ltd. or Sparta
becomes aware of any infringement in a country in the Territory of any issued
patent within the Licensed Patent Rights, it will notify the other party in
writing to that effect. Any such notice shall include evidence to support an
allegation of infringement by such third party.
(a) Discontinuance of Infringement. Sparta shall
use its reasonable
<PAGE>
best efforts to obtain a discontinuance of such infringement or bring
suit against the third party infringer within [Information omitted and
filed separately with the Commission under Rule 24b-2.] from the date
of said notice. Sparta shall bear all the expenses of any suit brought
by it. SP Ltd. shall have the right, prior to commencement of the
trial, suit or action brought by Sparta, to join any such suit or
action, and in such event shall pay one-half of the costs of such suit
or action. In the event that SP Ltd. has joined in the action and
shared in the costs thereof as set forth above, no settlement, consent
judgment or other voluntary final disposition of the suit may be
entered into without the consent of SP Ltd. In the event that SP Ltd.
has not joined the suit or action, SP Ltd. will reasonably cooperate
with Sparta in any such suit or action and shall have the right to
consult with Sparta and be represented by its own counsel at its own
expense, provided that Sparta shall periodically reimburse SP Ltd. for
its out-of-pocket costs (excluding the costs of retaining its own
outside counsel) incurred in cooperating with Sparta. Any recovery or
damages derived from a suit which SP Ltd. has joined and shared costs
shall be used first to reimburse each of Sparta and SP Ltd. for its
documented out-of-pocket legal expenses relating to the suit, with any
remaining amounts to be shared equally by the parties. Any recovery or
damages derived from a suit which SP Ltd. has not joined shall be
retained by Sparta.
(b) Continuance of Infringement. If, after the
expiration of the [Information omitted and filed separately with the
Commission under Rule 24b-2.] period Sparta has not commenced, or if
commenced is not actively pursuing legal action against an infringer as
specified in Subsection 4.3(a), then, notwithstanding the limitations
on royalty rate reduction set forth in Section 3.2(c), SP Ltd. shall
have no further obligation to pay any royalty on the Net Sales of
Licensed Product under Section 3.2(a) in those countries in the
Territory where the alleged infringement occurred. No royalties shall
be due until said infringement ceases and, thereafter, the royalty
shall revert to the applicable full royalty set forth in Section
3.2(a). In the event that said infringement does not cease, no
royalties shall be due to Sparta. In addition, SP Ltd. shall have the
right, but not the obligation, to bring suit against such infringer
under the Licensed Patent Rights and join Sparta as a party plaintiff,
provided that SP Ltd. shall bear all the expenses of such suit. Sparta
will cooperate with SP Ltd. in any suit for infringement of a Licensed
Patent Right brought by SP Ltd. against a third party, and shall have
the right to consult with SP Ltd. and to participate in and be
represented by independent counsel in such litigation at its own
expense. SP Ltd. shall periodically reimburse Sparta for its
out-of-pocket costs (excluding Sparta's costs of retaining independent
counsel) incurred in cooperating with SP Ltd. SP Ltd. shall incur no
liability to Sparta as a consequence of such litigation or any
unfavorable decision resulting therefrom, including any decision
holding any of the Licensed Patent Rights invalid or unenforceable. In
the event that SP Ltd. recovers any sums in such litigation by way of
damages or in settlement thereof, SP Ltd. retain all such sums.
4.4 Infringement and Third Party Licenses. In the event that
SP Ltd.'s, its Affiliates' or its sublicensees' practicing of the Licensed
Patent Rights in connection with making, having made, importing, exporting,
using, distributing, marketing, promoting,
<PAGE>
offering for sale or selling Licensed Product(s) infringes, will infringe or is
alleged by a third party to infringe a third party's patent, the party becoming
aware of same shall promptly notify the other.
(a) Sparta Option to Negotiate. Sparta shall in the
first instance have the right to negotiate with said third party for a
suitable license or assignment. In the event that such negotiation
results in a consummated agreement, then any lump sum payment made
thereunder shall be paid by Sparta. Should such agreement require the
payment of royalties, SP Ltd. shall continue to pay the royalties due
Sparta hereunder and Sparta shall pay any royalties due said third
party on SP Ltd.'s behalf.
(b) SP Ltd. Option to Negotiate. Should Sparta fail
to consummate an agreement with said third party within one (1) year of
initiating negotiations, then SP Ltd. shall have the right to negotiate
with said third party for a suitable license or assignment. In the
event that such negotiation results in a consummated agreement, then
any lump sum payment made thereunder shall be paid by SP Ltd.
[Information omitted and filed separately with the Commission under
Rule 24b-2.] Any royalty payments to be made by SP Ltd. under such
Third Party Patent License shall be offset against any royalties due
Sparta in accordance with Section 3.2. Any unused amounts not so offset
can be carried over to subsequent quarters.
4.5 Third Party Infringement Suit. In the event that a third
party sues SP Ltd. alleging that SP Ltd.'s, its Affiliates' or its sublicensees'
practicing of the Licensed Patent Rights in connection with making, having made,
importing, exporting, using, distributing, marketing, promoting, offering for
sale or selling Licensed Product(s) infringes or will infringe said third
party's patent, then SP Ltd. may elect to defend such suit and, during the
period in which such suit is pending, SP Ltd. shall have the right to
[Information omitted and filed separately with the Commission under Rule 24b-2.]
<PAGE>
[Information omitted and filed separately with the Commission under Rule 24b-2.]
Upon SP Ltd.'s request and in connection with SP Ltd.'s defense of any such
third party infringement suit, Sparta shall provide reasonable assistance to SP
Ltd. for such defense.
4.6 Abandonment. Subject to SP Ltd.'s rights pursuant to
Section 4.2, Sparta shall at the earliest known date give notice to SP Ltd. of
the grant lapse, revocation, surrender, invalidation or abandonment of any
Licensed Patent Rights licensed to SP Ltd. for which Sparta is responsible for
the filing, prosecution and maintenance under this Agreement.
4.7 Notices Regarding Patents. All notices, inquiries and
communications in connection with this Article IV shall be sent in the manner
set forth in Section 9.7 to the parties at the addresses and facsimile numbers
indicated below.
If to Sparta: Sparta Pharmaceuticals, Inc.
111 Rock Road
Horsham, Pennsylvania 19044-2310
Attn.: Chief Executive Officer
Fax No.: (215) 442-1827
If to SP Ltd.: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Staff Vice President - Patents and Trademarks
Fax No.: (908) 298-5388
ARTICLE V
CONFIDENTIALITY AND PUBLICATION
5.1 Confidentiality.
(a) Nondisclosure Obligation. Each of Sparta and SP
Ltd. shall use only in accordance with this Agreement and shall not
disclose to any third party any Proprietary Information received by it
from the other party, without the prior written consent of the other
party. The foregoing obligations shall survive the expiration or
termination of this Agreement for a period of ten (10) years. These
obligations shall not apply to Proprietary Information that:
(i) is known by the receiving party at the
time of its receipt, and not through a prior disclosure by the
disclosing party, as documented by business records;
<PAGE>
(ii) is at the time of disclosure or
thereafter becomes published or otherwise part of the public domain
without breach of this Agreement by the receiving party;
(iii) is subsequently disclosed to the
receiving party by a third party who has the right to make such
disclosure;
(iv) is developed by the receiving party
independently of Proprietary Information or other information
received from the disclosing party and such independent development
can be documented by the receiving party;
(v) is disclosed to any institutional
review board of any entity conducting clinical trials or any
governmental or other regulatory agencies in order to obtain patents
or to gain approval to conduct clinical trials or to market
Temozolomide and/or Licensed Product, but such disclosure may be made
only to the extent reasonably necessary to obtain such patents or
authorizations; or
(vi) is required by law, regulation, rule,
act or order of any governmental authority or agency to be disclosed
by a party, provided that notice is promptly delivered to the other
party in order to provide an opportunity to seek a protective order
or other similar order with respect to such Proprietary Information
and thereafter the disclosing party discloses to the requesting
entity only the minimum Proprietary Information required to be
disclosed in order to comply with the request, whether or not a
protective order or other similar order is obtained by the other
party.
Nothing herein shall be interpreted to prohibit SP Ltd. from publishing the
results of its studies in accordance with industry practices.
(b) Disclosure to Agents. Notwithstanding the
provisions of Section 5.1(a) and subject to the other terms of this
Agreement, SP Ltd. shall have the right to disclose Sparta Proprietary
Information to its sublicensees, agents, consultants, Affiliates or
other third parties (collectively "Agents") in accordance with this
Section 5.1(b). Such disclosure shall be limited only to those Agents
directly involved in the research, development, manufacturing,
marketing or promotion of Licensed Product (or for such Agents to
determine their interest in performing such activities) in accordance
with this Agreement. Any such Agents must agree in writing to be bound
by confidentiality and non-use obligations essentially the same as
those contained in this Agreement. The term of confidentiality and
non-use obligations for such Agents shall be no less than ten (10)
years.
(c) Disclosure to a Third Party. Notwithstanding
anything herein to the contrary, Sparta shall not disclose, provide or
transfer to any third party without the prior written approval of SP
Ltd. (i) any Schering Know-How, or (ii) any Sparta Know-How relating to
Licensed Product(s), or otherwise relating to the combination of the
Drug Delivery System and Temozolomide.
<PAGE>
5.2 No Publicity. A party may not use the name of the other
party in any publicity or advertising and, except as provided in Section 5.1,
may not issue a press release or otherwise publicize or disclose any information
related to the existence of this Agreement or the terms or conditions hereof,
without the prior written consent of the other party. The parties shall agree on
a form and timing of the initial press release that may be used by either party
to describe this Agreement. Nothing in the foregoing, however, shall prohibit a
party from making such disclosures to the extent deemed necessary under
applicable federal or state securities laws or any rule or regulation of any
nationally recognized securities exchange. In such event, however, the
disclosing party shall use good faith efforts to consult with the other party
prior to such disclosure and, where applicable, shall request confidential
treatment to the extent available.
5.3 Publication. SP Ltd. and Sparta each acknowledge the
potential benefit in publishing results of certain studies to obtain recognition
within the scientific community and to advance the state of scientific
knowledge. Each party also recognizes the mutual interest in obtaining valid
patent protection and in protecting business interests and trade secret
information. No publication of a party's Proprietary Information may be made
without the prior written consent of such party. The parties agree that SP Ltd.,
its Affiliates, employees or consultants shall be free to make any publication
which does not disclose Sparta's Proprietary Information. In the event that any
proposed publication (as defined below) discloses Proprietary Information, the
following procedure shall apply: either party, its Affiliates, employees or
consultants wishing to make a publication shall deliver to the other party a
copy of the proposed written publication or an outline of an oral disclosure at
least sixty (60) days prior to submission for publication or presentation. For
purposes of this Agreement, the term "publication" shall include, without
limitation, abstracts and manuscripts for publication, slides and texts of oral
or other public presentations, and texts of any transmission through any
electronic media, e.g. any computer access system such as the Internet or World
Wide Web. The reviewing party shall have the right (i) to propose modifications
to the publication for patent reasons, trade secret reasons or business reasons
or (ii) to request delay of the publication or presentation in order to protect
patentable information. If the reviewing party requests a delay, the publishing
party shall delay submission or presentation for a period not less than eighteen
(18) months from the filing date of the first patent application covering the
information contained in the proposed publication or presentation. If the
reviewing party requests modifications to the publication, the publishing party
may edit such publication to prevent disclosure of trade ecret or proprietary
business information prior to submission of the publication or presentation.
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Each Party. Each of
Sparta and SP Ltd. hereby represents, warrants and covenants to the other party
hereto as follows:
(a) it is a corporation or entity duly organized and
validly existing under the laws of the state or other jurisdiction of
incorporation or formation;
(b) the execution, delivery and performance of this
Agreement by such party has been duly authorized by all requisite
corporate action, subject only to receipt of requisite approval of its
board of directors;
(c) it has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such
party of this Agreement and its compliance with the terms and
provisions hereof does not and will not conflict with or result in a
breach of any of the terms and provisions of or constitute a default
under (i) a loan agreement, guaranty, financing agreement, agreement
affecting a product or other agreement or instrument binding or
affecting it or its property; (ii) the provisions of its charter or
operative documents or bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered against it or by
which any of its property is bound;
(e) except for the governmental and Regulatory
Approvals required to market the Licensed Product in the Territory, the
execution, delivery and performance of this Agreement by such party
does not require the consent, approval or authorization of, or notice,
declaration, filing or registration with, any governmental or
regulatory authority and the execution, delivery or performance of this
Agreement will not violate any law, rule or regulation applicable to
such party;
(f) this Agreement has been duly authorized, executed
and delivered and constitutes such party's legal, valid and binding
obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to the availability of particular remedies under general
equity principles; and
(g) it shall comply with all applicable material laws
and regulations relating to its activities under this Agreement.
<PAGE>
6.2 Sparta's Representations. Sparta hereby represents,
warrants and covenants to SP Ltd. as follows:
(a) the Licensed Patent Rights are subsisting and
are not invalid or unenforceable, in whole or in part;
(b) it has the full right, power and authority to
grant all of the right, title and interest in the licenses granted
under Article II hereof;
(c) it is the sole and exclusive owner of the Sparta
Patent Rights and Sparta Know-How, and the exclusive licensee of the
RTP Patent Rights, all of which are free and clear of any liens,
charges and encumbrances, and no other person, corporate or other
private entity, or governmental entity or subdivision thereof, has or
shall have any claim of ownership with respect to the Licensed Patent
Rights or Sparta Know-How, whatsoever;
(d) to the best of its knowledge, the Licensed Patent
Rights and Sparta Know-How, and the development, manufacture, use,
distribution, marketing, promotion and sale of Licensed Products do not
interfere or infringe on any intellectual property rights owned or
possessed by any third party;
(e) to the best of its knowledge, there are no third
party pending patent applications which, if issued, may cover the
development, manufacture, use or sale of Licensed Product;
(f) there are no claims, judgments or settlements
against or owed by Sparta or pending or threatened claims or litigation
relating to Drug Delivery System, the Licensed Patent Rights or Sparta
Know-How;
(g) it has disclosed to SP Ltd. all Sparta Know-How
and other relevant information relating to the combination of
Temozolomide and the Drug Delivery System, and Licensed Product;
(h) during the Term of this Agreement it will use
reasonable best efforts not to diminish the rights under the Licensed
Patent Rights and Sparta Know-How granted to SP Ltd. hereunder,
including, without limitation, by not committing or permitting any
actions or omissions which would cause the breach of any agreements
between itself and third parties which provide for intellectual
property rights applicable to the development, manufacture, use or sale
of the Drug Delivery System and/or Licensed Product(s), that it will
provide SP Ltd. promptly with notice of any such alleged breach, and
that as of the Effective Date, it is in compliance in all material
respects with any agreements with third parties including, without
limitation, the RTP/Sparta Sublicense Agreement;
<PAGE>
(i) it has no knowledge of any circumstances that
would materially and adversely affect the commercial utility of the
Licensed Product and/or the use of the Drug Delivery System in
combination with Temozolomide, or that would render SP Ltd. liable to a
third party for patent infringement as a consequence of SP Ltd.'s sale
of Licensed Product;
(j) data summaries provided to SP Ltd. by Sparta
prior to the Effective Date relating to the pre-clinical and clinical
studies of Temozolomide in combination with the Drug Delivery System
accurately represent all the underlying raw data;
(k) there are no collaborative, licensing, material
transfer, supply, distributorship or marketing agreements or
arrangements or other similar agreements to which it or any of its
Affiliates are party relating to the combination of the Drug Delivery
System and Temozolomide, nor has it granted any rights to any third
party with respect to such combination; and
(l) Sparta and/or its Affiliates shall neither use
nor seek to register any trademarks which are confusingly similar to
any Schering Trademark, or any other trademarks, trade names, trade
dress or logos used in connection with the Licensed Product.
6.3 SP Ltd.'s Representations. SP Ltd. hereby represents,
warrants and covenants to Sparta as follows:
(a) it is the sole and exclusive owner and/or
licensee of all rights to Temozolomide which are free and clear of any
liens, charges and encumbrances, and no other person, corporate or
other private entity, or governmental entity or subdivision thereof,
has or shall have any claim of ownership with respect to Temozolomide,
whatsoever;
(b) Temozolomide and the development, manufacture,
use, distribution, marketing, promotion and sale of Temozolomide does
not interfere or infringe on any intellectual property rights owned or
possessed by any third party; and
(c) there are no claims, judgments or settlements
against or owed by SP Ltd. or pending or threatened claims or
litigation relating to Temozolomide.
6.4 Continuing Representations. The representations and
warranties of each party contained in Sections 6.1, 6.2 and 6.3 shall survive
the execution of this Agreement and shall remain true and correct after the date
hereof with the same effect as if made as of the date hereof.
<PAGE>
6.5 No Inconsistent Agreements. Neither party has in effect
and after the Effective Date neither party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations under
this Agreement.
6.6 Representation by Legal Counsel. Each party hereto
represents that it has been represented by legal counsel in connection with this
Agreement and acknowledges that it has participated in the drafting hereof. In
interpreting and applying the terms and provisions of this Agreement, the
parties agree that no presumption shall exist or be implied against the party
which drafted such terms and provisions.
ARTICLE VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.1 Indemnification by SP Ltd.
(a) SP Ltd. shall indemnify, defend and hold harmless
Sparta and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "Sparta Indemnified
Party") from and against any and all liability, loss, damage, cost, and
expense (including reasonable attorneys' fees), subject to the
limitations in Section 7.5 (collectively, a "Liability") which the
Sparta Indemnified Party may incur, suffer or be required to pay
resulting from or arising out of the development, manufacture,
promotion, distribution, use, testing, marketing, sale or other
disposition of Temozolomide and/or Licensed Product by SP Ltd., its
Affiliates or sublicensees. Notwithstanding the foregoing, SP Ltd.
shall have no obligation under this Agreement to indemnify, defend or
hold harmless any Sparta Indemnified Party with respect to claims,
demands, costs or judgments which result from willful misconduct or
negligent acts or omissions of Sparta, its Affiliates, or any of their
respective employees, officers, directors or agents.
(b) SP Ltd. shall indemnify, defend and hold harmless RTP, its
directors, officers, employees and Affiliates, RTP Pharma, Inc. its
officers and directors, Cato Holding Company, its trustees, officers,
employees and Affiliates, Duncan Haynes, Anthony Kirkpatrick, Pharma
Logic, Inc. and the University of Miami (all as set forth in Section
2.1.2 of the RTP/Sparta Sublicense Agreement), (each, a RTP Indemnified
Party) from and against any Liability which the RTP Indemnified Party
may incur, suffer, or be required to pay resulting from or arising out
of the development, manufacture, promotion, distribution, use, testing,
marketing, sale or other disposition of Temozolomide and/or Licensed
Product by SP Ltd., its Affiliates, sublicensees or agents; or,
resulting from or arising out of any claim that the Licensed Product
contains any latent or non- latent defects or is inherently unsafe or
dangerous; or, resulting from or arising out of some obligation of SP
Ltd. or Sparta under this Agreement. Notwithstanding the foregoing, SP
<PAGE>
Ltd. shall have no obligation under this Agreement to indemnify, defend
or hold harmless any RTP Indemnified Party with respect to claims,
demands, costs or judgments which result from willful misconduct or
negligent acts or omissions of the RTP Indemnified Party, its
Affiliates or any of its respective employees, officers, directors or
agents.
7.2 Indemnification by Sparta. Sparta shall indemnify, defend
and hold harmless SP Ltd. and its Affiliates, and each of its and their
respective employees, officers, directors and agents (each, a "SP Ltd.
Indemnified Party") from and against any Liability which the SP Ltd. Indemnified
Party may incur, suffer or be required to pay resulting from or arising in
connection with (i) the breach by Sparta of any covenant, representation or
warranty contained in this Agreement; or (ii) the successful enforcement by a SP
Ltd. Indemnified Party of its rights under this Section 7.2. Notwithstanding the
foregoing, Sparta shall have no obligation under this Agreement to indemnify,
defend or hold harmless any SP Ltd. Indemnified Party with respect to claims,
demands, costs or judgments which result from willful misconduct or negligent
acts or omissions of SP Ltd., its Affiliates, or any of their respective
employees, officers, directors or agents.
7.3 Conditions to Indemnification. The obligations of the
indemnifying party under Sections 7.1 and 7.2 are conditioned upon the delivery
of written notice to the indemnifying party of any potential Liability promptly
after the indemnified party becomes aware of such potential Liability. The
indemnifying party shall have the right to assume the defense of any suit or
claim related to the Liability if it has assumed responsibility for the suit or
claim in writing; however, if in the reasonable judgment of the indemnified
party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business operations or assets of the
indemnified party, the indemnified party may waive its rights to indemnity under
this Agreement and control the defense or settlement thereof, but in no event
shall any such waiver be construed as a waiver of any indemnification rights
such party may have at law or in equity. If the indemnifying party defends the
suit or claim, the indemnified party may participate in (but not control) the
defense thereof at its sole cost and expense.
7.4 Settlements. Neither party may settle a claim or action
related to a Liability without the consent of the other party, if such
settlement would impose any monetary obligation on the other party or require
the other party to submit to an injunction or otherwise limit the other party's
rights under this Agreement. Any payment made by a party to settle any such
claim or action shall be at its own cost and expense.
7.5 Limitation of Liability. With respect to any claim by one
party against the other arising out of the performance or failure of performance
of the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement
<PAGE>
or otherwise at law or equity to direct damages only and in no event shall a
party be liable for, punitive, exemplary or consequential damages.
7.6 Insurance. Each party acknowledges and agrees that during
the Term of this Agreement it shall maintain adequate insurance and/or a
self-insurance program for liability insurance, including products liability and
contractual liability insurance, to cover such party's obligations under this
Agreement. Each party shall provide the other party with evidence of such
insurance and/or self-insurance program, upon request.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term and Expiration. This Agreement shall be effective as
of the Effective Date and unless terminated earlier by mutual written agreement
of the parties or pursuant to Sections 8.2 or 8.3 below, the Term of this
Agreement shall continue in effect until expiration of the last to expire
Licensed Patent Right incorporating a Valid Claim. The expiration or termination
of this Agreement shall not have the effect of causing the expiration or
termination of the U.S. License Agreement. Upon expiration of this Agreement due
to expiration of the last to expire Licensed Patent Right incorporating a Valid
Claim, SP Ltd.'s licenses pursuant to Section 2.1 and 2.2 shall become fully
paid-up, perpetual licenses.
8.2 Termination by SP Ltd.
(a) [Information omitted and filed separately with
the Commission under Rule 24b-2.] In the event of the exercise by SP Ltd.
of such termination rights, the rights and obligations hereunder,
including any payment obligations not due and owing as of the termination
date shall terminate and all rights to Licensed Patent Rights and Sparta
Know-How shall revert to Sparta
(b) Any notice of termination by SP Ltd. hereunder
or under Section 8.3 (a) below shall also be provided for information to
RTP.
8.3 Termination.
(a) Termination for Cause. This Agreement may be
terminated by notice by either party at any time during the Term of
this Agreement:
(i) subject to Section 9.2, if the other
party is in breach of its material obligations hereunder and has not
cured such breach within [Information omitted and filed separately
with the Commission under Rule 24b- 2.] after notice requesting cure
of the breach with reasonable detail of the particulars of the
alleged breach or initiated actions reasonably
<PAGE>
expected to cure the cited failure within [Information omitted and
filed separately with the Commission under Rule 24b-2.] of receiving
notice and thereafter diligently pursued such actions to cure the
failure (even if requiring longer than the [Information omitted and
filed separately with the Commission under Rule 24b-2.] set forth in
this subsection); or
(ii) upon the filing or institution of
bankruptcy, reorganization, liquidation or receivership proceedings,
or upon an assignment of a substantial portion of the assets for the
benefit of creditors by the other party, or in the event a receiver
or custodian is appointed for such party's business, or if a
substantial portion of such party's business is subject to attachment
or similar process; provided, however, that in the case of-any
involuntary bankruptcy proceeding such right to terminate shall only
become effective if the proceeding is not dismissed within
[Information omitted and filed separately with the Commission under
Rule 24b-2.] after the filing thereof.
(b) Effect of Termination for Cause on License.
(i) Termination by SP Ltd. In the event SP
Ltd. terminates this Agreement under Section 8.3(a)(i), SP Ltd.'s
licenses pursuant to Sections 2.1 and 2.2 shall become fully paid-up,
perpetual licenses.
(ii) Other Terminations. In the event of a
termination of this Agreement for any reason other than by SP Ltd,
under Section 8.3 (a) (i), then the rights and licenses granted to SP
Ltd. under Sections 2.1 and 2.2 of this Agreement shall terminate and
all rights to Licensed Patent Rights and Sparta Know-How shall revert
to Sparta.
(iii) Effect of Bankruptcy. In the event
SP Ltd. terminates this Agreement under Sections 8.3(a)(ii) or this
Agreement is otherwise terminated under Section 8.3(a)(ii), the
parties agree that SP Ltd., as a licensee of rights to intellectual
property under this Agreement, shall retain and may fully exercise
all of its rights and elections under the Insolvency Statute,
including as set forth in Section 9.8 hereof, or any foreign
equivalent thereof.
(iv) Termination of RTP/Sparta Sublicense
by Sparta. In the event that Sparta terminates the RTP/Sparta
Sublicense Agreement, all of Sparta's rights and obligations under
this Agreement shall revert to RTP.
8.4 Effect of Termination. Expiration or termination of the
Agreement shall not relieve the parties of any obligation accruing prior to such
expiration or termination, and the provisions of Article V and VII shall survive
the expiration of the Agreement. Any expiration or early termination of this
Agreement shall be without prejudice to the rights of either party against the
other accrued or accruing under this Agreement prior to termination, including
the obligation to pay royalties for Licensed Product(s) sold prior to such
termination. SP Ltd. shall have the right to continue to sell its existing
inventory of Licensed Product(s) during the
<PAGE>
six (6) month period immediately following such termination, provided that SP
Ltd. shall continue to make royalty payments with respect to such sales.
ARTICLE IX
MISCELLANEOUS
9.1 Assignment. Neither this Agreement nor any or all of the
rights and obligations of a party hereunder shall be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation of law or otherwise, to any third party other than
Affiliate of such party, without the prior written consent of the other party,
and any attempted assignment, delegation, sale, transfer, sublicense or other
disposition, by operation of law or otherwise, of this Agreement or of any
rights or obligations hereunder contrary to this Section 9.1 shall be a material
breach of this Agreement by the attempting party, and shall be void and without
force or effect. The foregoing notwithstanding, either party may, without such
consent, assign the Agreement and its rights and obligations hereunder to an
Affiliate or in connection with the transfer or sale of all or substantially all
of its -assets related to the division or the subject business, or in the event
of its merger or consolidation or change in control or similar transaction. This
Agreement shall be binding upon, and inure to the benefit of, each party, its
Affiliates, and its permitted successors and assigns. Each party shall be
responsible for the compliance by its Affiliates with the terms and conditions
of this Agreement.
9.2 Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the laws of Switzerland, without
giving effect to conflict of law principles. The parties expressly exclude
application of the United Nations Convention for the International Sale of
Goods. Subject to the terms of this Agreement, all disputes, controversies and
claims arising out of, relating to or in connection with this Agreement shall be
settled by arbitration pursuant to the Rules of Arbitration of the International
Chamber of Commerce before a panel of three arbitrators appointed in accordance
with such Rules. The arbitration decision shall be final and binding. The
prevailing party may enforce such decision against the other party in any court
having jurisdiction. The arbitration shall take place in Zurich, Switzerland and
shall be conducted in the English language. Attorney's fees may be awarded to
the prevailing party by the panel of arbitrators.
9.3 Waiver. Any delay or failure in enforcing a party's rights
under this Agreement or any waiver as to a particular default or other matter
shall not constitute a waiver of such party's rights to the future enforcement
of its rights under this Agreement, nor operate to bar the exercise or
enforcement thereof at any time or times thereafter, excepting only as to an
express written and signed waiver as to a particular matter for a particular
period of time.
9.4 Independent Relationship. Nothing herein contained shall
be
<PAGE>
deemed to create an employment, agency, joint venture or partnership
relationship between the parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one party for the
act or failure to act of the other party. Neither party shall have any power to
enter into any contracts or commitments or to incur any liabilities in the name
of, or on behalf of, the other party, or to bind the other party in any respect
whatsoever.
9.5 Export Control. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States of America which may be imposed upon or related to Sparta or SP
Ltd. from time to time by the government of the United States of America.
Furthermore, Schering Plough Ltd. agrees that it will not export, directly or
indirectly, any technical information acquired from Sparta under this Agreement
or any products using such technical information to any country for which the
United States government or any agency thereof at the time of export requires an
export license or other governmental approval, without first obtaining the
written consent to do so from the Department of Commerce or other agency of the
United States government when required by an applicable statute or regulation.
9.6 Entire Agreement: Amendment. This Agreement, including the
Exhibits and Schedules hereto and all the covenants, promises, agreements,
warranties, representations, conditions and understandings sets forth the
complete, final and exclusive agreement between the parties and supersedes and
terminates all prior and contemporaneous agreements and understandings between
the parties whether oral or in writing. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings, either
oral or written, between the parties other than as are set forth herein. No
subsequent alteration, amendment, change, waiver or addition to this Agreement
shall be binding upon the parties unless reduced to writing and signed by an
authorized officer of each party. No understanding, agreement, representation or
promise, not explicitly set forth herein, has been relied on by either party in
deciding to execute this Agreement.
9.7 Notices. Except as provided under Section 4.7 hereof, any
notice required or permitted to be given or sent under this Agreement shall be
hand delivered or sent by express delivery service or certified or registered
mail, postage prepaid, or by facsimile transmission (with written confirmation
copy by registered first-class mail) to the parties at the addresses and
facsimile numbers indicated below.
If to Sparta, to:
Sparta Pharmaceuticals, Inc.
111 Rock Road
Horsham, Pennsylvania 19044-2310
Attn.: Chief Executive Officer
Fax No.: (215) 442-1827
<PAGE>
If to SP Ltd., to: with copies to:
Schering-Plough Ltd. Schering Corporation
Topferstrasse 5 2000 Galloping Hill Road
6004 Lucerne Kenilworth, New Jersey 07033
Switzerland Attn.: Vice President, Business
Attn.: President Development
Fax No.: (41)(41)418 16 30 Fax No.: (908) 298-5379
And:
Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Law Department - Senior
Legal Director, Licensing
Fax No.: (908) 298-2739
If to RTP, to:
RTP Pharma, Inc.
810 Chemin du Golf/Nun's Island
Verdun, PQ H3E 1A8, Canada
Attn.: Gary W. Pace, President and CEO
Fax No: (514) 362-1172
with copies to: Walter E. Daniels
Daniels & Daniels, P.C.
1000 Park Forty Plaza, Suite 280
Durham, North Carolina 27713
Any such notice shall be deemed to have been received on the date actually
received. Either party may change its address or its facsimile number by giving
the other party written notice, delivered in accordance with this Section.
9.8 Provisions for Insolvency.
(a) Effect on Licenses. All rights and licenses
granted under or pursuant to this Agreement by Sparta to SP Ltd. are,
for all purposes of Section 365(n) of Title 11 of the United States
Code (with its foreign equivalent, the "Insolvency Statute"), licenses
of rights to "intellectual property" as defined in the Insolvency
Statute. Sparta agrees that SP Ltd., as licensee of such rights under
this Agreement shall retain and may fully exercise all of its rights
and elections under the Insolvency Statute. Sparta
<PAGE>
agrees during the Term of this
Agreement to create and maintain current copies or, if not amenable
to copying, detailed descriptions or other appropriate embodiments,
to the extent feasible, of all such intellectual property. If a case
is commenced by or against Sparta under the Insolvency Statute,
Sparta (in any capacity, including debtor-in- possession) and its
successors and assigns (including, without limitation, an Insolvency
Statute Trustee) shall,
(i) as SP Ltd. may elect in a written
request, immediately upon such request:
(A) perform all of the
obligations provided in this Agreement to be performed by Sparta
including, where applicable and without limitation, providing to SP
Ltd. portions of such intellectual property (including embodiments
thereof) held by Sparta and such successors and assigns or otherwise
available to them; or
(B) provide to SP Ltd. all such
intellectual property (including all embodiments thereof) held by
Sparta and such successors and assigns or otherwise available to
them; and
(ii) not interfere with the rights of SP
Ltd. under this Agreement, or any agreement supplemental hereto, to
such intellectual property (including such embodiments) including any
right to obtain such intellectual property (or such embodiments) from
another entity.
(b) Rights to Intellectual Property. If an Insolvency
Statute case is commenced by or against Sparta, and this Agreement is
rejected as provided in the Insolvency Statute, and SP Ltd. elects to
retain its rights hereunder as provided in the Insolvency Statute, then
Sparta (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, an Insolvency
Statute Trustee) shall provide to SP Ltd. all such intellectual
property (including all embodiments thereof held by Sparta and such
successors and assigns, or otherwise available to them, immediately
upon SP Ltd.'s written request. Whenever Sparta or any of its
successors or assigns provides to SP Ltd. any of the intellectual
property licensed hereunder (or any embodiment thereof) pursuant to
this Section 9.8, SP Ltd. shall have the right to perform the
obligations of Sparta hereunder with respect to such intellectual
property, but neither such provision nor such performance by SP Ltd.
shall release Sparta from any such obligation or liability for failing
to perform it.
(c) SP Ltd.'s Rights. All rights, powers and remedies
of SP Ltd. provided herein are in addition to and not in substitution
for any and all other rights, powers and remedies now or hereafter
existing at law or in equity (including, without limitation, the
Insolvency Statute) in the event of the
<PAGE>
commencement of an Insolvency Statute case by or against Sparta. SP
Ltd., in addition to the rights, power and remedies expressly provided
herein, shall be entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or hereafter exist at
law or in equity (including, without limitation, the Insolvency
Statute) in such event. The parties agree that they intend the
foregoing SP Ltd. rights to extend to the maximum extent permitted by
law, including, without limitation, for purposes of the Insolvency
Statute:
(i) the right of access to any
intellectual property (including all embodiments thereof) of Sparta,
or any third party with whom Sparta contracts to perform an
obligation of Sparta under this Agreement, and, in the case of the
third party, which is necessary for the development, registration,
manufacture and marketing of Temozolomides and/or Licensed Products;
and
(ii) the right to contract directly with
any third party described in (i) to complete the contracted work.
(d) Deemed Grant of Rights. In the event of any
insolvency of Sparta and if any statute and/or regulation in any
country in the Territory requires that there be a specific grant or
specific clause(s) in order for SP Ltd. to obtain the rights and
benefits as licensee under this Agreement which are analogous to those
rights under Section 365(n) of Title 11 of the United States Code, then
this Agreement shall be deemed to include any and all such required
grant(s), clause(s) and/or requirements.
(e) Security Interests. In addition to any other
rights granted to SP Ltd. hereunder, with respect to any country in the
Territory in which SP Ltd. reasonably determines that its rights set
forth in this Section 9.8 are nonexistent or inadequate to protect SP
Ltd.'s interests in the licenses granted hereunder, Sparta shall, upon
SP Ltd.'s request, execute a security agreement, or any foreign
equivalent, for each country in the Territory, granting SP Ltd. a
secured interest in all intellectual property licensed to SP Ltd. under
this Agreement.
9.9 Force Majeure. Failure of any party to perform its
obligations under this Agreement (except the obligation to make payments when
properly due) shall not subject such party to any liability or place them in
breach of any term or condition of this Agreement to the other party if such
failure is due to any cause beyond the reasonable control of such
non-perforllling party ("force majeure"), unless conclusive evidence to the
contrary is provided. Causes of nonperformance constituting force majeure shall
include, without limitation, acts of God, fire, explosion, flood, drought, war,
riot, sabotage, embargo, strikes or other labor trouble, failure in whole or in
part of suppliers to deliver on schedule materials, equipment or machinery,
interruption of or delay in transportation, a national health emergency or
compliance with any order or regulation of any government entity acting with
color of right. The party affected shall promptly notify the other party of
<PAGE>
the condition constituting force majeure as defined herein and shall exert
reasonable efforts to eliminate, cure and overcome any such causes and to resume
performance of its obligations with all possible speed. If a condition
constituting force majoure as defined herein exists for more than [Information
omitted and filed separately with the Commission under Rule 24b-2.] the parties
shall meet to negotiate a mutually satisfactory resolution to the problem, if
practicable.
9.10 Severability. If any provision of this Agreement is
declared illegal, invalid or unenforceable by a court having competent
jurisdiction, it is mutually agreed that this Agreement shall endure except for
the part declared invalid or unenforceable by order of such court, provided,
however, that in the event that the terms and conditions of this Agreement are
materially altered, the parties will, in good faith, renegotiate the terms and
conditions of this Agreement to reasonably substitute such invalid or
unenforceable provisions in light of the intent of this Agreement.
9.11 Counterparts. This Agreement shall become binding when
any one or more counterparts hereof, individually or taken together, shall bear
the signatures of each of the parties hereto. This Agreement may be executed in
any number of counterparts, each of which shall be an original as against either
party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
9.12 Captions. The captions of this Agreement are solely for
the convenience of reference and shall not affect its interpretation.
9.13 Recording. Each party shall have the right, at any time,
to record, register, or otherwise notify this Agreement in appropriate
governmental or regulatory offices anywhere in the world, and each party shall
provide reasonable assistance to the other in effecting such recording,
registering or notifying. The parties acknowledge that this Agreement may be
notified to the European Community for compliance with applicable laws.
9.14 Further Actions. Each party agrees to execute,
acknowledge and deliver such further instruments, and to do all other acts, as
may be necessary or appropriate in order to carry out the purposes and intent of
this Agreement including, without limitation, any filings with any antitrust
agency which may be required.
IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized representatives of the parties as of the date set forth below.
<PAGE>
SPARTA PHARMACEUTICALS, LTD. SCHERING-PLOUGH LTD.
By: /s/ Jerry B. Hook By: /s/ David Poorvin
----------------------------- ------------------------
Title: Chairman, President & CEO Title:_Prokurist_____________
Date: 4/8/98 Date: 17 April 1998
------ -------------
<PAGE>
SCHEDULE 1.13
-------------
PATENT RIGHTS
RTP Patent Rights: Consisting of the non-US patents and patent applications
listed in Schedule 1 to the RTP/Sparta Sublicense Agreement, which schedule is
attached to this Schedule 1.13
Sparta Patent Rights: None as of the date of execution of this Agreement
<PAGE>
SCHEDULE 1
----------
[Information omitted and filed separately with the Commission under Rule 24b-2.]
<PAGE>
SCHEDULE 3.3
------------
POLICY ON BOOKKEEPING AND EXCHANGE RATES
(Attached)
<PAGE>
Exhibit 99.28
Contact: Jerry B. Hook, Ph.D. Martin Rose, M.D., J.D.
Chairman, President & CEO Vice President, Clinical & Regulatory
Sparta Pharmaceuticals, Inc. Affairs
(215) 442-1700, Ext. 205 Sparta Pharmaceuticals, Inc.
(215) 442-1700, Ext. 219
FOR IMMEDIATE RELEASE
Sparta Pharmaceuticals, Inc. Announces Clinical Findings at
-----------------------------------------------------------
American Association for Cancer Research Conference
Horsham, PA, April 1, 1998, Sparta Pharmaceuticals, Inc. (NASDAQ: SPTA, SPTAU,
SPTAW, SPTAZ AND SPTAL) announced pharmacokinetic results of an ongoing
SpartajectTM busulfan Phase I clinical trial. The Company's SpartajectTM
Technology is a drug delivery system that accommodates poorly water soluble and
water insoluble compounds by encapsulating fine particles with a fatty
(phospholipid) layer, thereby permitting the creation of a suspension of the
drug, and allowing its intravenous injection without the use of potentially
toxic solubilizing agents.
The study was presented yesterday by Lori Hollis, Pharm. D., Louise Grochow,
M.D., colleagues at Johns Hopkins University School of Medicine and Duke
University, at a meeting of the American Association for Cancer Research at
Ernest N. Moral Convention Center, New Orleans, Louisiana. Patients in the
ongoing study are being treated with a new intravenous (i.v.) form of busulfan
for bone marrow ablation prior to bone marrow transplantation. Busulfan is
currently available only in tablet form. Use of the tablet is associated with
substantial variability in busulfan blood levels. This variability may
contribute to toxicity or problems with bone marrow engraftment or relapse of
the patients' underlying disease.
As presented, parenteral administration (i.v.) of busulfan may permit more
consistent drug exposure, simplify drug administration and therapeutic
monitoring, and may further reduce the incidence of VOD (vascular occlusion
disease). Busulfan (oral) and Spartaject busulfan (i.v.) were administered to
patients. Safety and bioavailability at low and high dose were assessed. No
unexpected toxicities have been noted. As expected, to date, the data
demonstrate the busulfan blood levels were less variable after Spartaject
busulfan than after oral busulfan.
Approximately 11,000-12,000 patients in the U.S. receive bone marrow transplants
each year. The European market is believed to be of similar size. If approved,
Spartaject busulfan will be directed at this large and expanding market
opportunity. Administering busulfan intravenously rather than requiring patients
to take a hundred tablets a day would be an attractive treatment. Spartaject
busulfan is nearing the end of Phase I trials in the U.S. and U.K. and the
Company presently plans to initiate major Phase II trials late this year.
This press release contains certain forward-looking statements within the
meaning of the "safe
<PAGE>
harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such
statements are made based on management's current expectations and beliefs, and
actual results may vary from those currently anticipated based upon a number of
factors, including uncertainties inherent in the drug development process,
including the success and timing clinical trials and the receipt of necessary
approvals by the FDA. The Company undertakes no obligation to release publicly
any revisions which may be made to reflect events or circumstances after the
date hereof.
Sparta is a development stage pharmaceutical company engaged in the business of
acquiring rights to, and developing for commercialization, technologies and
drugs for the treatment of a number of life threatening diseases including
cancer, cardiovascular disorders, chronic metabolic diseases and inflammation.
The Company has focused on acquiring compounds that have been previously tested
in humans and animals and technologies that may improve the delivery or
effectiveness of previously tested, and in some cases marketed, drugs. Sparta's
portfolio of compounds in development includes four potential oncology products
and one for the treatment of Type II diabetes in clinical trials and an emerging
platform technology in recombinant and small molecule protease inhibitors.
# # #
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S MARCH 31, 1998 REPORT ON FORM
10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,087,905
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,310,254
<PP&E> 716,523
<DEPRECIATION> 423,179
<TOTAL-ASSETS> 5,771,753
<CURRENT-LIABILITIES> 629,655
<BONDS> 0
0
966
<COMMON> 3,272
<OTHER-SE> 5,137,860
<TOTAL-LIABILITY-AND-EQUITY> 5,771,753
<SALES> 0
<TOTAL-REVENUES> 220,997
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,216,144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (995,147)
<INCOME-TAX> 0
<INCOME-CONTINUING> (995,147)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (995,147)
<EPS-PRIMARY> (.31)<F1>
<EPS-DILUTED> (.31)<F1>
<FN>
PER SHARE DATA HAVE BEEN ADJUSTED TO REFLECT A ONE-FOR-FIVE REVERSE SPLIT
OF THE COMPANY'S OUTSTANDING COMMON STOCK WHICH WAS EFFECTED ON
MAY 13, 1998.
</FN>
</TABLE>
