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SECURITIES EXCHANGE AND COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DECEMBER 15, 1996
Date of Report (DATE OF EARLIEST EVENT REPORTED)
COCENSYS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-20954 33-0538836
(Commission File Number) (IRS Employer Identification No.)
213 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92718
(Address of principal executive offices and zip code)
(714) 753-6100
(Registrant's telephone number, including area code)
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Item 5. OTHER EVENTS.
On December 15, 1996, CoCensys, Inc. (the "Company") entered into a license
agreement with Massachusetts General Hospital ("MGH") pursuant to which the
Company licensed from MGH certain patent rights relating to the treatment of
migraine.
Item 7. EXHIBITS.
1. License Agreement between Massachusetts General Hospital and
CoCensys, Inc., dated December 15, 1996. *
* Confidential treatment requested
2.
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SIGNATURE
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.
COCENSYS, INC.
Dated: July 3, 1997 By: /s/ Peter E. Jansen
---------------------------
Peter E. Jansen
Vice President and Chief Financial Officer
3.
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1. License Agreement between Massachusetts General Hospital 5
and CoCensys, Inc., dated December 15, 1996.*
* Confidential treatment requested.
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LICENSE AGREEMENT
THIS AGREEMENT, effective as of December 15, 1996 ("EFFECTIVE DATE")
between THE GENERAL HOSPITAL CORPORATION, a not-for-profit corporation doing
business as Massachusetts General Hospital, having a place of business at Fruit
Street, Boston, Massachusetts 02114 ("GENERAL") and CoCensys, Inc., a
corporation having offices at 213 Technology Drive, Irvine, California 92618
("COMPANY").
WHEREAS, under research programs funded by the GENERAL and the U.S.
Government, the GENERAL through research conducted by Dr. Michael Moskowitz
has developed an invention pertaining to a method for treating vascular
headaches;
WHEREAS, GENERAL has filed a U.S. Patent Application covering said
invention and all Dr. Moskowitz's rights, title and interest in said
application have been assigned to GENERAL;
WHEREAS, GENERAL represents to the best of its knowledge and belief that it
is the owner of all rights, title and interest in said patent application and
has the right and ability to grant the license hereinafter described;
WHEREAS, as a center for research and education, GENERAL is interested in
licensing PATENT RIGHTS and thus benefiting the public and the GENERAL by
facilitating the dissemination of the results of its research in the form of
useful products, but is without capacity to commercially develop, manufacture,
and distribute any such product; and
WHEREAS, COMPANY having such capacity, desires to commercially develop,
manufacture, use and distribute such products throughout the world;
NOW THEREFORE, in consideration of the premises and of the faithful
performance of the covenants herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
1.1 The term "ACCOUNTING PERIOD" shall mean each six month period ending
June 30 and December 31.
1.2 The term "AFFILIATE" shall mean any corporation or other legal entity
other than COMPANY in whatever country organized, controlling, controlled by or
under common control with COMPANY. The term "control" means possession, direct
or indirect, of the powers to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities,
by contract or otherwise. The term "AFFILIATE" with respect to GENERAL shall
mean any company controlling, controlled by, or under common control, directly
or indirectly, with GENERAL.
* Confidential treatment requested.
1.
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1.3 The term "FIRST COMMERCIAL SALE" shall mean in each country the first
sale by COMPANY, its AFFILIATES or SUBLICENSEES of any PRODUCT used or intended
for use in the LICENSE FIELD.
1.4 The term "LICENSE FIELD" shall mean treatment of human or animal
diseases using NEUROSTEROID PRODUCTS.
1.4A The term "NEUROSTEROID PRODUCT" shall mean a product containing a
neuroactive steroid acting as a positive modulator of GABA(A) receptors.
1.5 The term "NET SALES PRICE" shall mean the GROSS SALES PRICE as defined
in (c) below received by COMPANY or any of its AFFILIATES or SUBLICENSEES
("SELLERS") for the sale or distribution of any PRODUCT, less (to the extent
appropriately documented) the amounts set forth in clause (a) below actually
paid out by COMPANY, its AFFILIATE or SUBLICENSEE or credited against the
amounts received by them from the sale or distribution of PRODUCT:
(a) (i) credits and allowances for price adjustment, rejection, or return
of PRODUCTS previously sold;
(ii) rebates and cash discounts to purchasers allowed and taken;
(iii) amounts for transportation, insurance, handling or shipping
charges to purchasers;
(iv) taxes, duties and other governmental charges levied on or measured by
the sale of PRODUCTS, whether absorbed by COMPANY, its AFFILIATES or
SUBLICENSEES or paid by the purchaser so long as COMPANY's, its AFFILIATES' or
SUBLICENSEES' price is reduced thereby, but not franchise or income taxes of any
kind whatsoever;
(b) For any sale by COMPANY, its AFFILIATES or SUBLICENSEES to the United
States or its designee, in which the United States government, on the basis of
its royalty-free license pursuant to 35 USC Sec. 202(c) to any of the PATENT
RIGHTS, requires that the GROSS SALES PRICE be reduced by the amount of royalty
owed GENERAL pursuant to paragraph 5.1, COMPANY, its AFFILIATES or SUBLICENSEES
shall have the right, in determining NET SALES for purposes of payment of the
royalty to GENERAL on such sales to the United States or its designee, to deduct
from the invoiced price the amount of such royalty otherwise owed GENERAL as
calculated using the deductions set forth in (a) above.
(c) For any bona fide sale to a bona fide customer by COMPANY or any of
its AFFILIATES or SUBLICENSEES, the GROSS SALES PRICE shall be the invoiced
price of the PRODUCT.
(d) If COMPANY or any of its AFFILIATES or SUBLICENSEES sell any PRODUCT
in a bona fide sale as a component of a combination of active functional
elements, the GROSS SALES PRICE of the PRODUCT shall be determined by
multiplying the GROSS
2.
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SALES PRICE of the combination by the fraction A over A + B, in which "A" is
the GROSS SALES PRICE of the PRODUCT portion of the combination when sold
separately during the ACCOUNTING PERIOD in the country in which the sale was
made, and "B" is the gross sales price of the other active elements of the
combination sold separately during said ACCOUNTING PERIOD in said country. In
the event that no separate sale of either such PRODUCT or active elements of
the combination is made during said ACCOUNTING PERIOD in said country, the
GROSS SALES PRICE of the PRODUCT shall be determined by multiplying the gross
sales price of such combination by the fraction C over C + D, in which "C" is
the standard fully-absorbed cost of the PRODUCT portion of such combination,
and "D" is the sum of the standard fully-absorbed costs of the other active
elements component(s), such costs being arrived at using the standard
accounting procedures of COMPANY which will be in accord with generally
accepted accounting practices.
(e) If a SELLER commercially uses or disposes of any PRODUCT by itself (as
opposed to a use or disposition of the PRODUCT as a component of a combination
of active functional elements) other than in a bona fide sale to a bona fide
customer, the GROSS SALES PRICE hereunder shall be the price which would be then
payable in an arm's length transaction. If a SELLER commercially uses or
disposes of any PRODUCT as a component of a combination of active functional
elements other than in a bona fide sale to a bona fide customer, the GROSS SALES
PRICE of the PRODUCT shall be determined in accordance with paragraph (c) above,
using as the GROSS SALES PRICE of the combination that price which would be then
payable in an arm's length transaction.
(f) Transfer of a PRODUCT within COMPANY or between COMPANY and an
AFFILIATE or a PARTNERING SUBLICENSEE for sale by the transferee shall not be
considered a sale, commercial use or disposition for the purpose of the
foregoing paragraphs, in the case of such transfer the GROSS SALES PRICE shall
be based on sale of the PRODUCT by the transferee.
1.5A The term "ANNUAL NET SALES" shall mean the sum of the NET SALES
PRICE of all PRODUCTS sold in any calendar year ending December 31.
1.6 The term "PATENT RIGHT" shall mean the U.S. Patent Application
Serial Number [ * ] by Dr. Moskowitz entitled "Method for Treating
Vascular Headaches", or the equivalent of such application, including any
division, continuation or any equivalent foreign patent application or
Letters Patent or the equivalent thereof issuing thereon or reissue,
reexamination or extension thereof. PATENT RIGHTS shall also include those
claims in any continuation-in-part of the aforementioned patent application
which claim an invention described or claimed in said patent application.
1.7 The term "PRODUCT" shall mean any article, device, composition,
method or service, the manufacture, use, or sale of which, absent the
licenses granted herein, would infringe a VALID CLAIM of any PATENT RIGHT.
* Confidential treatment requested.
3.
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1.8 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by COMPANY or by an AFFILIATE to make, have made, use, sell, offer for
sale or import any PRODUCT.
1.8A The term "PARTNERING SUBLICENSEE" shall mean any SUBLICENSEE with whom
COMPANY has entered into a strategic partnership or other arrangement in which
COMPANY and said SUBLICENSEE agree that PRODUCTS will be developed and/or sold
by Co-development, wherein the term "Co-development" shall mean the sharing of
research, development, marketing and/or manufacturing costs by COMPANY and a
SUBLICENSEE in accordance with a predefined formula.
1.9 The term "VALID CLAIM" shall mean any claim of any PATENT RIGHT that
has not been (i) finally rejected or (ii) declared invalid by a patent office or
court of competent jurisdiction in any unappealed and unappealable decision.
2. LICENSE
2.1 GENERAL hereby grants COMPANY, to the extent not prohibited by
existing contractual obligations to any other sponsor of research at GENERAL:
(a) an exclusive, worldwide, royalty-bearing license in the LICENSE FIELD
under GENERAL's rights in PATENT RIGHTS to make, have made, use, sell, offer for
sale, and import PRODUCTS;
(b) to the extent an exclusive license is not available to COMPANY in a
country, a non-exclusive, royalty-bearing license in the LICENSE FIELD under
PATENT RIGHTS to make, have made, use, sell, offer for sale, and import
PRODUCTS;
(c) the right to sublicense PATENT RIGHTS exclusively licensed to COMPANY,
provided that, if COMPANY's exclusive license in a country is converted to a
nonexclusive license in accordance with paragraph 2.1(b), and COMPANY has a
single PARTNERING SUBLICENSEE in said country, COMPANY shall retain the right to
sublicense PATENT RIGHTS solely to said PARTNERING SUBLICENSEE in said country.
All licenses pursuant to this paragraph 2.1 are subject to the rights,
conditions and limitations imposed by U.S. law with respect to inventions made
in the performance of federally funded research.
The above licenses to sell PRODUCTS include the right to grant to the
purchaser of products from COMPANY, its AFFILIATES, and SUBLICENSEES the right
to use such purchased PRODUCTS in a method coming within the scope of the PATENT
RIGHTS.
2.2 The granting of any license hereunder is subject to GENERAL's and
GENERAL's AFFILIATES' right to make and to use the subject matter described and
claimed in PATENT RIGHT for research and clinical purposes but not for
Commercial Purposes, as hereinafter
4.
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defined. For this paragraph, "Commercial Purposes" shall mean use of the
subject matter described and claimed in PATENT RIGHT in any product, or for
the purpose of producing a product, which is sold or otherwise commercially
distributed.
2.3 GENERAL shall have the right to license any PATENT RIGHT to any other
party for the purpose of manufacturing, using or selling of any PRODUCT outside
of the LICENSE FIELD. If GENERAL proposes to grant any third party an exclusive
license to PATENT RIGHTS in a field outside the LICENSE FIELD ("the Other
Field"), GENERAL shall so notify COMPANY, and COMPANY shall have thirty (30)
days to notify GENERAL of its interest in obtaining an exclusive license in the
Other Field, to provide GENERAL with proposed terms for such a license and a
statement of its capabilities for developing a PRODUCT in said Other Field.
GENERAL will consider COMPANY's offer in good faith, and will notify COMPANY of
its decision within thirty (30) days of GENERAL's receipt of COMPANY's offer, it
being understood that GENERAL shall be under no obligation to grant COMPANY a
license in any Other Field, and that GENERAL's decision on whether to grant
COMPANY a license in any Other Field shall take into account COMPANY's access or
rights to drugs within said Other Field.
2.4 It is understood that nothing herein shall be construed to grant
COMPANY a license express or implied under any patent owned solely or jointly by
GENERAL other than the PATENT RIGHTS expressly licensed hereunder.
3. DUE DILIGENCE OBLIGATIONS
3.1 COMPANY shall itself, or through its AFFILIATES or SUBLICENSEES, use
its commercially reasonable efforts to develop and make commercially available
PRODUCTS for commercial sales and distribution throughout the world in the
LICENSE FIELD. Such efforts shall consist of achieving the following objectives
within the time period designated below following the EFFECTIVE DATE:
(a) GENERAL acknowledges that COMPANY represents that it is developing the
drug ganaxolone for indications other than migraine headaches, and COMPANY
therefore agrees that it will commence a Phase II clinical trial of a PRODUCT
comprising ganaxolone ("GANAXOLONE PRODUCT") for an indication within the
LICENSE FIELD within twelve (12) months, and that it will thereafter diligently
pursue clinical evaluations of a GANAXOLONE PRODUCT for an indication in the
LICENSE FIELD as long as a GANAXOLONE PRODUCT continues to show clinical
efficacy against an indication in the LICENSE FIELD;
(b) within [ * ], complete all animal toxicity tests required in
connection with securing U.S. Food and Drug Administration approval of clinical
evaluations of a PRODUCT not comprising ganaxolone ("SECOND GENERATION
PRODUCT").
* Confidential treatment requested.
5.
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(c) within [ * ], initiate and thereafter diligently pursue clinical
evaluations of a SECOND GENERATION PRODUCT and in connection therewith take all
actions necessary under the Food, Drug and Cosmetic Act (21 USC 301-391);
(d) within [ * ], determine whether to manufacture either a GANAXOLONE
PRODUCT or a SECOND GENERATION PRODUCT for commercial sale and to inform GENERAL
of such determination;
(e) as a result of the determination in (d) above, either introduce a
GANAXOLONE PRODUCT in the United States, Europe and Japan within [ * ] of
the EFFECTIVE DATE or introduce a SECOND GENERATION PRODUCT in the United
States, Europe and Japan within [ * ] of the EFFECTIVE DATE; and
(f) within [ * ], announce and market for general commercial sale
either a GANAXOLONE PRODUCT or a SECOND GENERATION PRODUCT on a worldwide basis;
provided, however, that GENERAL shall not unreasonably withhold its consent to
any revision in such time periods whenever requested in writing by COMPANY and
supported by evidence of technical difficulties or delays in clinical studies or
regulatory processes that the parties could not have reasonably avoided. Failure
to achieve one or more of the above objectives within the above stated time
periods or within any extension granted by GENERAL shall result in GENERAL
having the right to cancel upon sixty (60) days notice any exclusive license
granted hereunder or convert any exclusive license to a non-exclusive license.
3.2 At intervals no longer than every twelve (12) months, COMPANY shall
report in writing to GENERAL on progress made toward the foregoing objectives.
4. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHT
4.1 GENERAL shall be responsible for the preparation, filing, prosecution
and maintenance of all patent applications and patents included in PATENT
RIGHTS. As long as GENERAL has not granted any licenses under PATENT RIGHTS to
any third party, COMPANY shall reimburse GENERAL for all reasonable costs
("Costs") incurred by GENERAL for the preparation, filing, prosecution and
maintenance of all PATENT RIGHTS as follows:
(a) Subject to paragraph 4.2, for all Costs incurred by GENERAL from and
after the EFFECTIVE DATE, COMPANY shall reimburse GENERAL within thirty (30)
days of receipt of invoices from GENERAL;
(b) For all Costs incurred by GENERAL prior to the EFFECTIVE DATE, COMPANY
shall reimburse GENERAL upon execution of this Agreement.
* Confidential treatment requested.
6.
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In the event GENERAL grants a license under PATENT RIGHTS to one or more
third parties (each a "Third Party Licensee"), COMPANY shall only be required to
reimburse GENERAL for the CoCensys Pro Rata Percentage of those Costs incurred
by GENERAL after the effective date of such license to a Third Party Licensee.
The "CoCensys Pro Rata Percentage" at any given point in time shall equal 1
divided by the number of licensees (i.e., CoCensys plus each Third Party
Licensee) under the PATENT RIGHTS at such point in time.
4.2 With respect to any PATENT RIGHT, each document or a draft thereof
pertaining to the filing, prosecution, or maintenance of such PATENT RIGHT,
including but not limited to each patent application, office action, response to
office action, request for terminal disclaimer, and request for reissue or
reexamination of any patent issuing from such application shall be provided to
COMPANY as follows. Documents received from any patent office or counsel's
analysis thereof shall be provided promptly after receipt. For a document to be
filed in any patent office, a draft of such document shall be provided
sufficiently prior to its filing, to allow for review and comment by the other
party. If as a result of the review of any such document, COMPANY shall elect
not to pay or continue to pay the Costs for such PATENT RIGHT, COMPANY shall so
notify GENERAL within thirty (30) days of COMPANY's receipt of such document and
COMPANY shall thereafter be relieved of the obligation to pay any additional
Costs regarding such PATENT RIGHT incurred after the receipt of such notice by
GENERAL. Such U.S. or foreign patent application or patent shall thereupon cease
to be a PATENT RIGHT hereunder and GENERAL shall be free to license its rights
to that particular U.S. patent application or patent to any other party on any
terms.
5. ROYALTIES
5.1 Beginning with the FIRST COMMERCIAL SALE in any country, on all sales
of PRODUCTS anywhere in the world by COMPANY, its AFFILIATES or SUBLICENSEES,
COMPANY shall pay GENERAL royalties in accordance with the following schedule,
such undertaking and schedule having been agreed to for the purpose of
reflecting and advancing the mutual convenience of the parties. For each PRODUCT
sold by COMPANY or its AFFILIATES and SUBLICENSEES;
(a) [ * ] of the NET SALES PRICE for ANNUAL NET SALES of [ * ] or less,
and [ * ] of the NET SALES PRICE for the portion of ANNUAL NET SALES that is
greater than [ * ] so long as the PRODUCT, its manufacture, use or sale is
covered by a VALID CLAIM of any PATENT RIGHT licensed exclusively to COMPANY;
and
(b) [ * ] of the NET SALES PRICE for ANNUAL NET SALES of [ * ] or
less, and [ * ] of the NET SALES PRICE for the portion of ANNUAL NET SALES
that is greater than [ * ] whenever the PRODUCT, its manufacture, use or
sale is covered by a VALID CLAIM of any PATENT RIGHT licensed non-exclusively to
COMPANY in the country in question pursuant to either paragraph 2.7(b) or 3.1
hereunder.
* Confidential treatment requested.
7.
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5.2 (a) In the event that more than one royalty rate under paragraph 5.1
is applicable to a PRODUCT, the highest of the applicable royalties shall apply.
(b) Only one royalty under paragraph 5.1 shall be due and payable to
GENERAL by COMPANY for any PRODUCT regardless of the number of PATENT RIGHTS
covering such PRODUCT.
5.3 If any license granted pursuant to Article 2 shall be or become non-
exclusive pursuant to either paragraph 2.1(b) or 3.1 hereunder and GENERAL shall
license any PATENT RIGHT to another licensee for the purpose of making, using or
selling PRODUCTS in the LICENSE FIELD and accept a royalty or royalties more
favorable to such licensee than herein provided for COMPANY, GENERAL shall give
written notice thereof to COMPANY and as of the effective date of such more
favorable royalty or royalties, COMPANY's obligation hereunder to pay royalty or
royalties to GENERAL shall be revised to the more favorable rate.
5.4 In addition to the royalties provided for above, COMPANY shall pay
GENERAL [ * ] of any and all non-royalty income received from its AFFILIATES
and SUBLICENSEES in consideration for the sublicensing of any right or license
granted to COMPANY hereunder, including without limitation license fees and
milestone payments, but not including amounts received by COMPANY (a) for
capital stock of COMPANY, (b) in the form of a loan or advance, (c) as payment
for research and development services performed or to be performed by COMPANY,
(d) as milestone payments in consideration for past or future research and
development expense in any sublicensing arrangement with a PARTNERING
SUBLICENSEE wherein COMPANY is sharing research and development costs with the
PARTNERING SUBLICENSEE and said milestone payments are solely reimbursements for
COMPANY's research and development costs actually incurred, (e) as payment for
manufacturing services in any sublicensing arrangement wherein COMPANY retains
the right to manufacture PRODUCT which is then sold to a SUBLICENSEE provided
that GENERAL receives the full royalty due for sales of PRODUCT by said
SUBLICENSEE under paragraph 5.1 hereunder or (f) from a PARTNERING SUBLICENSEE
as payment for marketing, sales or promotional activities which COMPANY or its
AFFILIATE has agreed to undertake as part of Co-development. It is understood
that this paragraph shall not apply to running royalties for PRODUCT sales
received by COMPANY from its AFFILIATES AND SUBLICENSEES, provided GENERAL
receives the royalties specified in paragraph 5.1 for such PRODUCT sales.
5.5 In addition to the payments provided for in paragraphs 5.1 and 5.4,
COMPANY shall pay GENERAL the following amounts upon the occurrence of the
following events:
[ * ] within five (5) business days of the execution of this Agreement,
which shall include the amount payable to GENERAL for past patent Costs pursuant
to paragraph 4.1(b);
[ * ] within thirty (30) days of the filing with the FDA of the first
NDA, PMA or PMA Supplement, or comparable application with respect to a PRODUCT;
and,
* Confidential treatment requested.
8.
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[ * ] within thirty (30) days of the actual approval by the FDA of the
first NDA, PMA or PMA Supplement, or comparable application with respect to a
PRODUCT.
5.6 (a) In the event that the royalty paid to GENERAL is a significant
factor in the return realized by COMPANY so as to diminish COMPANY's capability
to respond to competitive pressures in the market, GENERAL agrees to consider a
reasonable reduction in the royalty paid to GENERAL as to each such PRODUCT for
the period during which such market condition exists. Factors determining the
size of the reduction will include profit margin on PRODUCT and on analogous
products, prices of competitive products, total prior sales by COMPANY, and
COMPANY's expenditures in PRODUCT development.
(b) With respect to the definition of "NET SALES PRICE" (as contained in
Section 1.5) and the applicable rate of exchange for foreign currency conversion
(as set forth in Section 6.2) under this Agreement, it is understood that
COMPANY may enter into one or more agreements with SUBLICENSEES (each a
"SUBLICENSE AGREEMENT") pursuant to which COMPANY will be compensated by a
SUBLICENSEE based on net sales of PRODUCT and that, for sales outside the United
States, a foreign exchange rate will be applied. When negotiating a SUBLICENSE
AGREEMENT, COMPANY will use its best efforts to have such SUBLICENSE AGREEMENT
contain (i) a definition of net sales of PRODUCT and (ii) foreign exchange
provisions which are substantially equivalent to those contained in Sections 1.5
and 6.2, respectively, of this Agreement. In the event, however, that COMPANY is
unable to have its prospective SUBLICENSEE agree to provisions that are
identical to the provisions of this Agreement, it shall so notify GENERAL and
submit for GENERAL's review the proposed versions of such provisions in the
proposed SUBLICENSE AGREEMENT. Within thirty (30) days of its receipt of such
notice and proposed revisions, GENERAL shall either notify COMPANY of its
acceptance of such proposed provisions or indicate its reasons for withholding
approval. If the SUBLICENSE AGREEMENT includes such provisions that are
acceptable to GENERAL, which acceptance shall not unreasonably be withheld, then
for sales of PRODUCT made under such SUBLICENSE AGREEMENT, (i) the "NET SALES
PRICE" in this Agreement shall be deemed amended to conform to the definition of
net sales of PRODUCT contained in such SUBLICENSE AGREEMENT and (ii) the
applicable foreign exchange rates provided for under this Agreement shall be the
same as those provided for under the SUBLICENSE AGREEMENT. In the event that the
SUBLICENSE AGREEMENT includes provisions that are not acceptable to GENERAL and
COMPANY is unable to compensate GENERAL based on the NET SALES PRICE and foreign
exchange provisions set forth herein, any conflict between the provisions of the
SUBLICENSE AGREEMENT and the provisions of this Agreement shall be settled by
the procedures of paragraph 10.9.
5.7 The payments due under this Agreement shall, if overdue, bear interest
until payment at a per annum rate equal to one percent (1%) above the prime rate
in effect at the Bank of Boston on the due date, not to exceed the maximum
permitted by law. The payment of such interest shall not preclude GENERAL from
exercising any other rights it may have as a consequence of the lateness of any
payment.
* Confidential treatment requested.
9.
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6. REPORTS AND PAYMENTS
6.1 COMPANY shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES, if any, to keep full and accurate books of accounts containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to GENERAL. Such books of account shall be kept at their principal place
of business and, with all necessary supporting data shall, during all reasonable
times for the three (3) years next following the end of the calendar year to
which each shall pertain, be open for inspection at reasonable times by GENERAL
or its designee at GENERAL's expense for the purpose of verifying royalty
statements or compliance with this Agreement.
6.2 In each year the amount of royalty due shall be calculated
semiannually as of the end of each ACCOUNTING PERIOD and shall be paid
semiannually within the sixty (60) days next following such date, every such
payment to be supported by the accounting prescribed in paragraph 6.3 and to be
made in United States currency. Whenever conversion from any foreign currency
shall be required, such conversion shall be at the rate of exchange thereafter
published in the Wall Street Journal for the business day closest to the end of
the applicable ACCOUNTING PERIOD.
6.3 With each semiannual payment, COMPANY shall deliver to GENERAL a full
and accurate accounting to include at least the following information:
(a) Quantity of each PRODUCT sold or leased (by country) by COMPANY, and
its AFFILIATES or SUBLICENSEES;
(b) Total billings for each PRODUCT (by country, unless such information
is not provided to COMPANY by a SUBLICENSEE, in which case COMPANY shall list
total billings in as much detail as is available to COMPANY);
(c) Quantities of each PRODUCT used by COMPANY and its AFFILIATES or
SUBLICENSEES;
(d) Names and addresses of all SUBLICENSEES of COMPANY; and
(e) Total royalties payable to GENERAL.
7. INFRINGEMENT
7.1 GENERAL will protect its PATENT RIGHTS from infringement and prosecute
infringers when, in its sole judgement, such action may be reasonably necessary,
proper and justified.
7.2 If COMPANY shall have supplied GENERAL with written evidence
demonstrating to GENERAL's reasonable satisfaction prima facie infringement of a
claim of a PATENT RIGHT by a third party, COMPANY may by notice request GENERAL
to take steps
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to protect the PATENT RIGHT. GENERAL shall notify COMPANY within three (3)
months of the receipt of such notice whether GENERAL intends to prosecute the
alleged infringement. If GENERAL notifies COMPANY that it intends to so
prosecute, GENERAL shall, within three (three) months of its notice to
COMPANY either (i) cause infringement to terminate or (ii) initiate legal
proceedings against the infringer. In the event GENERAL notifies COMPANY that
GENERAL does not intend to prosecute said infringement COMPANY may, upon
notice to GENERAL, initiate legal proceedings against the infringer at
COMPANY's expense and in GENERAL's name if so required by law. No settlement,
consent judgment or other voluntary final disposition of the suit which
invalidates or restricts the claims of such PATENT RIGHTS may be entered into
without the consent of GENERAL, which consent shall not be unreasonably
withheld. COMPANY shall indemnify GENERAL against any order for payment that
may be made against GENERAL in such proceedings.
7.3 In the event one party shall initiate or carry on legal proceedings to
enforce any PATENT RIGHT against any alleged infringer, the other party shall
fully cooperate with and supply all assistance reasonably requested by the party
initiating or carrying on such proceedings. The party which institutes any suit
to protect or enforce a PATENT RIGHT shall have sole control of that suit and
shall bear the reasonable expenses (excluding legal fees) incurred by said other
party in providing such assistance and cooperation as is requested pursuant to
this paragraph. The party initiating or carrying on such legal proceedings shall
keep the other party informed of the progress of such proceedings and said other
party shall be entitled to counsel in such proceedings but at its own expense.
Any award paid by third parties as the result of such proceedings (whether by
way of settlement or otherwise) shall first be applied to reimbursement of the
unreimbursed legal fees and expenses incurred by either party and then the
remainder shall be divided between the parties as follows:
(a) (i) If the amount is based on lost profits, COMPANY shall receive an
amount equal to the damages the court determines COMPANY has suffered as a
result of the infringement less the amount of any royalties that would have been
due GENERAL on sales of PRODUCT lost by COMPANY as a result of the infringement
had COMPANY made such sales; and
(ii) GENERAL shall receive an amount equal to the royalties it would
have received if such sales had been made by COMPANY; or
(b) As to awards other than those based on lost profits, [ * ] to the
party initiating such proceedings and [ * ] to the other party.
7.4 For the purpose of the proceedings referred to in this Article 7, the
GENERAL and COMPANY shall permit the use of their names and shall execute such
documents and carry out such other acts as may be necessary. The party
initiating or carrying on such legal proceedings shall keep the other party
informed of the progress of such proceedings and said other party shall be
entitled to counsel in such proceedings but at its own expense, said expenses
* Confidential treatment requested.
11.
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to be off-set against any damages received by the party bringing suit in
accordance with the foregoing paragraph 7.3.
8. INDEMNIFICATION
8.1 (a) COMPANY shall indemnify, defend and hold harmless GENERAL and its
trustees, officers, medical and professional staff, employees, and agents and
their respective successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss or expense (including reasonable attorney's fees and
expenses of litigation) incurred by or imposed upon the Indemnitees or any one
of them in connection with any claims, suits, actions, demands or judgments
arising out of any theory of product liability (including, but not limited to,
actions in the form of tort, warranty, or strict liability) concerning any
product, process or service made, used or sold pursuant to any right or license
granted under this Agreement.
(b) COMPANY's indemnification under (a) above shall not apply to any
liability, damage, loss or expense to the extent that it is directly
attributable to the negligent activities, reckless misconduct or intentional
misconduct of the Indemnitees.
(c) COMPANY agrees, at its own expense to provide attorneys reasonably
acceptable to the GENERAL to defend against any actions brought or filed against
any party indemnified hereunder with respect to the subject of indemnity
contained herein, whether or not such actions are rightfully brought.
(d) This paragraph 8.1 shall survive expiration or termination of this
Agreement.
8.2 (a) Beginning at such time as any such product, process or service is
being commercially distributed or sold (other than for the purpose of obtaining
regulatory approvals) by COMPANY or by a SUBLICENSEE, AFFILIATE or agent of
COMPANY, COMPANY shall, at its sole cost and expense, procure and maintain
commercial general liability insurance in amounts not less than $2,000,000 per
incident and $2,000,000 annual aggregate and naming the Indemnitees as
additional insureds. Such commercial general liability insurance shall provide
(i) product liability coverage and (ii) broad form contractual liability
coverage for COMPANY's indemnification under paragraph 8.1 of this Agreement. If
COMPANY elects to self-insure all or part of the limits described above
(including deductibles or retentions which are in excess of $250,000 annual
aggregate) such self-insurance program must be acceptable to the GENERAL and the
Risk Management Foundation (GENERAL's current liability insurance carrier). The
minimum amounts of insurance coverage required under this paragraph 8.2 shall
not be construed to create a limit of COMPANY's liability with respect to its
indemnification under paragraph 8.1 of this Agreement.
(b) COMPANY shall provide GENERAL with written evidence of such insurance
upon request of GENERAL. COMPANY shall provide GENERAL with written notice at
least thirty (30) days prior to the cancellation, non-renewal or material change
in such insurance; if COMPANY does not obtain replacement insurance providing
comparable coverage prior to the expiration of such thirty (30) day period,
GENERAL shall have the right to terminate this
12.
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Agreement effective at the end of such thirty (30) day period without notice
or any additional waiting periods.
(c) COMPANY shall maintain such commercial general liability insurance
beyond the expiration or termination of this Agreement during (i) the period
that any such product, process, or service is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by COMPANY
or by a licensee, affiliate or agent of COMPANY and (ii) a reasonable period
after the period referred to in (c) (i) above which in no event shall be less
than ten (10) years.
(d) This paragraph 8.2 shall survive expiration or termination of this
Agreement.
8.3 OTHER THAN WARRANTIES SET FORTH HEREIN, GENERAL MAKES NO WARRANTY,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE RESEARCH
PROPERTY, INFORMATION OR DATA LICENSED OR OTHERWISE PROVIDED TO COMPANY
HEREUNDER AND HEREBY DISCLAIMS THE SAME.
9. TERMINATION
9.1 Unless otherwise terminated as provided for in this Agreement, the
license to PATENT RIGHT granted hereunder will continue on a country by country
basis:
(i) for two (2) years after the date COMPANY, its AFFILIATES, or
SUBLICENSEES shall last sell any PRODUCT in such country, it being understood
that GENERAL shall have the right to terminate such license upon written notice
in any country in the event that after the FIRST COMMERCIAL SALE of PRODUCT in
such country there is a continuous two (2) year period in which no PRODUCT is
sold in such country, provided such sale is not prevented by force majeure,
government regulation or intervention, or institution of a law suit by any third
party, or
(ii) until the last to expire of any PATENT RIGHT, the claims of which but
for this Agreement would be infringed by the manufacture, use or sale of any
PRODUCT in the applicable country,
whichever shall first occur.
9.2 If either party shall fail to faithfully perform any of its material
obligations under this Agreement except the due diligence milestones specified
in Article 3 herein, the nondefaulting party may give written notice of the
default to the defaulting party. Unless such default is corrected within sixty
(60) days after such notice, the notifying party may terminate this Agreement
and the license hereunder upon sixty (60) days prior written notice, provided
that only one such sixty (60) day grace period shall be available in any twelve
(12) month period
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with respect to a default of any particular provision hereunder. Thereafter
notice of default of said provision shall constitute termination.
9.3 In the event that any license granted to COMPANY under this Agreement
is terminated, any sublicense under such license granted prior to termination of
said license shall remain in full force and effect, provided that:
(i) the SUBLICENSEE is not then in breach of its sublicense agreement;
(ii) the SUBLICENSEE agrees to be bound to GENERAL as the licensor under
the terms and conditions of this sublicense agreement, as modified by the
provisions of this paragraph 9.3;
(iii) the SUBLICENSEE, at GENERAL's written request, assumes in a
signed writing the same obligations to GENERAL as those assumed by COMPANY under
Articles 8 and 10 hereof;
(iv) GENERAL shall have the right to receive any payments payable to
COMPANY under such sublicense agreement to the extent they are reasonably and
equitably attributable to such SUBLICENSEE's right under such sublicense to use
and exploit PATENT RIGHTS;
(v) the SUBLICENSEE agrees to be bound by the due diligence obligations of
COMPANY pursuant to paragraph 3.1 hereof (whether set by the parties or by
arbitration) in the field and territory of the sublicense;
(vi) GENERAL has the right to terminate such sublicense upon thirty (30)
days prior written notice to COMPANY and such SUBLICENSEE in the event of any
material breach of the obligation to make the payments described in clause (iv)
of this paragraph 9.3, unless such breach is cured prior to the expiration of
such thirty (30) day period, and shall further have the right to terminate such
sublicense in the event of SUBLICENSEE's failure to meet its due diligence
obligations pursuant to clause (v) hereof;
(vii) GENERAL shall not assume, and shall not be responsible to such
SUBLICENSEE for, any representations, warranties or obligations of COMPANY to
such SUBLICENSEE, other than to permit such SUBLICENSEE to exercise any rights
to PATENT RIGHTS that are granted under such sublicense agreement consistent
with the terms of this AGREEMENT.
9.4 Upon termination of any license granted hereunder COMPANY shall pay
GENERAL all royalties due or accrued on (i) the sale of PRODUCT up to and
including the date of termination and (ii) for twelve (12) months following the
date of termination, the sale of PRODUCT manufactured prior to the termination
date.
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10. MISCELLANEOUS
10.1 This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof.
10.2 In order to facilitate implementation of this Agreement, GENERAL and
COMPANY are designating the following individuals to act on their behalf with
respect to this Agreement for the matter indicated below:
(a) with respect to all royalty payments, any correspondence pertaining to
any PATENT RIGHT, or any notice of the use of GENERAL's name, for GENERAL, the
Director, Office of Technology Affairs, and for COMPANY the Senior Vice
President, R&D; provided that correspondence relating to the billing of patent
costs shall be copied to, for GENERAL, the Business Manager, Office of
Technology Affairs; and for COMPANY, the Chief Financial Officer.
(b) any amendment of or waiver under this Agreement, any written notice
including progress reports or other communication pertaining to the Agreement:
for GENERAL, the Director, Office of Technology Affairs; and for COMPANY, the
Senior Vice President, R&D.
(c) the above designations may be superseded from time to time by
alternative designations made by: for GENERAL, the President or the Senior Vice
President for Research and Technology Affairs; and for COMPANY, the President
and CEO.
10.3 This Agreement may be amended and any of its terms or conditions may
be waived only by a written instrument executed by the parties or, in the case
of a waiver, by the party waiving compliance. The failure of either party at any
time or times to require performance of any provision hereof shall in no manner
affect its rights at a later time to enforce the same. No waiver by either party
of any condition shall be deemed as a further or continuing waiver of such
condition or term or of any other condition or term.
10.4 This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
permitted assigns.
10.5 Any delays in or failures of performance by either party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to: Acts of God; acts, regulations or laws
of any government; strikes or their concerted acts of worker; fires; floods;
explosions; riots; wars; rebellion; and sabotage. Any time for performance
hereunder shall be extended by the actual time of delay caused by such
occurrence.
10.6 Neither party shall use the name of the other party or of any staff
member, officer, employee or student of the other party or any adaptation
thereof in any advertising, promotional or sales literature, publicity or in any
document employed to obtain funds or financing without the prior written
approval of the party or individual whose name is to be used.
15.
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For GENERAL, such approval shall be obtained from the Director of Public
Affairs. Notwithstanding the foregoing, GENERAL hereby consents to COMPANY's
use of the following statement regarding the existence of this license
agreement in connection with any disclosure or filing by COMPANY pursuant to
the rules and regulations of the Securities and Exchange Commission or in any
press release required by the same:
"CoCensys, Inc. has entered into an exclusive license agreement with
The General Hospital Corporation, doing business as Massachusetts
General Hospital, for certain patents and patent applications
pertaining to the use of neurosteroid drugs in the treatment of
vascular headaches"
In addition, COMPANY shall be permitted to disclose the name of GENERAL to the
extent required by federal, state or local law or regulation, including without
limitation federal and state securities laws.
10.7 This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
10.8 This Agreement shall not be assignable by GENERAL without COMPANY's
written consent except for the right to receive royalties or other payments
payable herein. COMPANY may at its own discretion and without approval by
GENERAL transfer its interest or any part thereof under this Agreement to a
wholly-owned subsidiary or any assignee or purchaser of the portion of its
business associated with the manufacture and sale of PRODUCT. In the event of
any such transfer, the transferee shall assume and be bound by the provisions of
this Agreement. Otherwise this Agreement shall be assignable by COMPANY only
with the consent in writing of GENERAL.
10.9 For any and all claims, disputes, or controversies arising under, out
of, or in connection with this Agreement, except issues relating to the
validity, construction or effect of any PATENT RIGHT, which the parties shall be
unable to resolve within sixty (60) days, the party raising such dispute shall
promptly advise the other party of such claim, dispute, or controversy in a
writing which describes in reasonable detail the nature of such dispute. By not
later than five (5) business days after the recipient has received such notice
of dispute, each party shall have selected for itself a representative who shall
have the authority to bind such party and shall additionally have advised the
other party in writing of the name and title of such representative. By not
later than ten (10) business days after the date of such notice of dispute, such
representatives shall agree upon a third party which is in the business of
providing Alternative Dispute Resolution (ADR) services (hereinafter, "ADR
Provider") and shall schedule a date with such ADR Provider to engage in ADR.
Thereafter, the representatives of the parties shall engage in good faith in an
ADR process under the auspices of the selected ADR Provider. If within the
aforesaid thirty (30) business days after the date of the notice of dispute the
representatives of the parties have not been able to agree upon an ADR Provider
and schedule a date to engage in ADR, or if they have not been able to resolve
the dispute within thirty (30) business days after the termination of ADR, the
parties shall have the right to pursue any other remedies legally available to
resolve such dispute. Notwithstanding the foregoing, nothing in this
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Paragraph 10.9 shall be construed to waive any rights or timely performance
of any obligations existing under this Agreement.
10.10 If any provision(s) of this Agreement are or become invalid, are
ruled illegal by any court of competent jurisdiction or are deemed unenforceable
under then current applicable law from time to time in effect during the term
hereof, it is the intention of the parties that the remainder of this agreement
shall not be effected thereby. It is further the intention of the parties that
in lieu of each such provision which is invalid, illegal or unenforceable, there
be substituted or added as part of this Agreement a provision which shall be as
similar as possible in economic and business objectives as intended by the
parties to such invalid, illegal or enforceable provision, but shall be valid,
legal and enforceable.
10.11 GENERAL represents that, to the best of its knowledge, it is the
owner of all rights, title and interest in PATENT RIGHTS, and it has no
obligations to other sponsors of research at GENERAL that would prevent
GENERAL from granting COMPANY the licenses granted hereunder.
THE PARTIES have duly executed this Agreement as of the date first shown
above written.
COMPANY THE GENERAL HOSPITAL
CORPORATION
BY: /s/ Eckard Weber BY: /s/ Nikki J. Zapol
--------------------------------- ----------------------------------
TITLE: Senior Vice President, TITLE: Managing Director,
------------------------------- --------------------------------
Research and Drug Discovery Office of Technology Affairs
------------------------------- --------------------------------
DATE: December 23, 1996 DATE: December 20, 1996
-------------------------------- ---------------------------------
17.
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Exhibit A
Targeted Doctors
[ * ]
