<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 0-27628
SUPERGEN, INC.
--------------
(exact name of registrant as specified in its charter)
CALIFORNIA 94-3132190
---------- ----------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
TWO ANNABEL LANE, SUITE 220, SAN RAMON, CALIFORNIA 94583
- -------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(510) 327 - 0200
----------------
(Registrant's telephone number, including area code)
_____________________________ Not applicable _________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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 __ XX __ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the registrant's Common Stock, $.001 par value,
outstanding as of May 5, 1997, was 16,952,292.
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE NO.
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations for
the three month periods ended March 31, 1997 and
1996 and for the period from inception to March 31, 1997 4
Condensed Consolidated Statements of Cash Flows for
the three month periods ended March 31, 1997 and 1996
and for the period from inception to March 31, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 12
2
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SUPERGEN, INC.
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,931,782 $ 13,914,863
Accounts receivable, net of allowances
of $146,800 and $72,400 at March 31, 1997
and December 31, 1996, respectively 122,263 120,440
Inventories 1,579,905 1,573,951
Prepaid expenses and other current assets 777,894 540,376
------------ ------------
Total current assets 12,411,844 16,149,630
Property and equipment, at cost:
Research and development equipment 83,546 83,546
Office furniture and fixtures 654,157 517,859
Leasehold improvements 13,057 53,578
Construction in process 294,427 -
------------ ------------
1,045,187 654,983
Less accumulated depreciation and amortization 245,906 243,500
------------ ------------
799,281 411,483
Developed technology, net of amortization of $8,003
and $3,317 at March 31, 1997 and December 31,
1996, respectively 1,411,997 1,266,683
Other assets 43,749 45,620
------------ ------------
Total assets $ 14,666,871 $ 17,873,416
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 871,746 $ 836,534
Clinical trials accrual 194,065 205,620
Accrued compensation and related expenses 99,887 290,350
Due to related parties 206,500 334,074
Amount due under asset purchase agreement 500,000 500,000
------------ ------------
Total current liabilities 1,872,198 2,166,578
Shareholders' equity:
Preferred stock, $.001 par value; 2,000,000 shares
authorized; none outstanding - -
Common stock, $.001 par value; 40,000,000 shares
authorized; 16,952,292 and 16,930,292 shares
issued and outstanding at March 31, 1997 and
December 31, 1996, respectively 40,136,551 40,026,551
Deficit accumulated during the development
stage (27,341,878) (24,319,713)
------------ ------------
Total shareholders' equity 12,794,673 15,706,838
------------ ------------
Total liabilities and shareholders' equity $ 14,666,871 $ 17,873,416
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
SUPERGEN, INC.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
March 1, 1991
(inception)
Three months ended through
March 31, March 31,
1997 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Net sales $ 424,961 $ - $ 650,923
Grant revenues - 10,047 37,715
Contract revenues from related party - - 181,202
------------ ------------ ------------
Total revenues 424,961 10,047 869,840
Operating expenses:
Cost of sales 326,248 - 609,025
Research and development 2,366,756 900,593 17,618,388
Sales and marketing 295,466 70,534 1,831,305
General and administrative 598,306 245,337 4,401,591
Non-cash charges for acquisition of in-
process research and development - - 4,867,645
------------ ------------ ------------
Total operating expenses 3,586,776 1,216,464 29,327,954
------------ ------------ ------------
Loss from operations (3,161,815) (1,206,417) (28,458,114)
Interest income 139,650 47,457 1,116,236
------------ ------------ ------------
Net loss $ (3,022,165) $ (1,158,960) $(27,341,878)
------------ ------------ ------------
------------ ------------ ------------
Net loss per share $ (0.18) $ (0.09)
------------ ------------
------------ ------------
Weighted average shares used
in net loss per share calculation 16,938,181 13,268,330
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
SUPERGEN, INC.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
March 1, 1991
(inception)
Three months ended through
March 31, March 31,
1997 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Operating activities:
Net loss $ (3,022,165) $ (1,158,960) $ (27,341,878)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 57,353 13,988 306,333
Non-cash charges for
acquisition of in-process
research and development - - 4,867,645
Stock options granted to vendors - - 123,200
Changes in operating assets and
liabilities:
Accounts receivable (1,823) - (122,263)
Inventory (5,954) - (1,579,905)
Prepaid expenses and other
current assets (237,518) (192,741) (777,894)
Other assets 1,871 35,000 (43,749)
Accounts payable and accrued
liabilities (155,251) 298,838 971,633
Clinical trials accrual (11,555) - 194,065
Due to related parties (127,574) - 206,500
------------ ------------ -------------
Net cash used in operating activities (3,502,616) (1,003,875) (23,196,313)
Investing activities:
Purchase of property and
equipment (440,465) (2,206) (1,097,611)
Acquisition of developed technology (150,000) - (220,000)
------------ ------------ -------------
Net cash used in investing activities: (590,465) (2,206) (1,317,611)
Financing activities:
Issuance of common stock and warrants 110,000 18,778,476 32,358,961
Contract research funding from
affiliated partnerships - - 2,086,745
------------ ------------ -------------
Net cash provided by financing activities 110,000 18,778,476 34,445,706
------------ ------------ -------------
Net increase (decrease) in cash (3,983,081) 17,772,395 9,931,782
Cash and cash equivalents at beginning of period 13,914,863 1,815,420 -
------------ ------------ -------------
Cash and cash equivalents at end of period $ 9,931,782 $ 19,587,815 $ 9,931,782
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
SuperGen, Inc.
(a development stage company)
Notes to Condensed Consolidated Financial Statements
March 31, 1997
1. SuperGen, Inc. ("the Company") is a development stage pharmaceutical
company dedicated to the acquisition, development and commercialization of
products that treat life-threatening diseases, particularly cancer and
blood cell (hematological) disorders, and other serious conditions such as
obesity. The Company began marketing acquired products in late 1996 and is
developing its portfolio of drugs, many of which are proprietary. The
Company is also developing a group of proprietary blood cell disorder
products for the treatment of anemia associated with renal failure,
chemotherapy, radiotherapy and aplastic anemia. The Company's proprietary
obesity pill, which is being developed for chronic genetic obesity and
general obesity, is in Phase II clinical studies.
2. The accompanying unaudited condensed consolidated financial statements
at March 31, 1997 and 1996 and for the periods then ended, including the
period from inception to date, have been prepared in accordance with
generally accepted accounting principles for interim financial
information on a basis consistent with the audited financial statements
for the year ended December 31, 1996. The condensed consolidated
financial statements for the three months ended March 31, 1997 include
the accounts of its wholly-owned Israeli subsidiary, Rubicon
Pharmaceuticals, Ltd., formed in June, 1996. All intercompany
transactions and balances have been eliminated. The statements include
all adjustments (consisting of normal recurring accruals) which in the
opinion of the Company's management are necessary for a fair
presentation of the results for the interim and inception to date
periods presented. The interim results are not necessarily indicative
of results that may be expected for the full year. The accompanying
condensed financial statements should be read in conjunction with the
Company's audited financial statements for the year ended December 31,
1996 which are included in the Company's Annual Report on Form 10-K.
6
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3. Net loss per share information is computed using the weighted average
number of shares of common stock outstanding during each period. Common
equivalent shares issuable upon the exercise of outstanding options
and warrants to purchase shares of the Company's common stock (using the
treasury stock method) are not included in the current calculation of
the net loss per share because the effect of their inclusion is
anti-dilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share ("FAS 128") which is required to
be adopted December 31, 1997. Under the new requirements for calculating
primary (or basic) earnings per share, the dilutive effect of stock
options will be excluded. Options and warrants are currently excluded
from the computation of loss per share as their effect is anti-dilutive.
Therefore, the Company does not anticipate any impact on its calculated
loss per share as a result of the implementation of FAS 128.
4. On January 15, 1997, the Company purchased from Immunex Corporation
("Immunex") the rights to Immunex's version of the generic anticancer
drug etoposide. The acquisition included the Abbreviated New Drug
Application ("ANDA"), Immunex's inventory of the product, records
relating to the production of etoposide, and data, information and
know-how relating to the manufacture, testing, storage and regulatory
status of etoposide. The Company paid approximately $1,315,000 in cash
of which $334,000 was allocated to inventory and $150,000 was allocated
to developed technology. The remainder of the purchase price was
recorded as a non-recurring research and development expense for the
acquisition of in-process technology.
5. On April 8, 1997, the Company announced that it had reached an agreement
in principle with an investment entity owned by Lawrence J. Ellison,
Founder and Chairman of Oracle Corporation, for a private placement of
up to $15 million in the Company's common stock. Under the proposed
agreement the investment entity would be able to exercise rights and
options to purchase a total additional amount of up to $25 million of the
Company's common stock. The completion of any such transaction is
subject to the negotiation and execution of a mutually acceptable
definitive purchase agreement, as well as related documents, regulatory
clearance and satisfaction of other closing conditions, of which there
can be no assurance.
6. On April 17, 1997, a limited liability company controlled by the Company
purchased an industrial condominium building of approximately 9,600 square
feet in Pleasanton, California. The Company intends to relocate the
laboratory operations and certain personnel from its Illinois location
upon completion of improvements and installation of laboratory equipment.
The purchase price for this building was $744,000 and the Company expects
to incur further capital expenditures of approximately $750,000 for
building improvements and laboratory equipment.
7
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7. On April 11, 1997, the Company entered into a license agreement with
Inflazyme Pharmaceuticals Ltd. Of Vancouver, Canada ("Inflazyme"), a
public company. Under the terms of this license agreement, Inflazyme
granted the Company an exclusive license to develop and sell products
which utilize technology owned by Inflazyme for all uses except in the
area of inflammation. The Company shall purchase shares of common stock in
Inflazyme in the amount of $166,667 and will make milestone payments to
Inflazyme upon the attainment of specified goals. Such milestone
payments shall be payable in either cash, unregistered SuperGen common
stock or a combination thereof, subject to agreement by both parties.
SuperGen shall also pay Inflazyme royalties on sales of products
utilizing Inflazyme technology.
8. On May 7, 1997 the Company entered into a supply agreement for an
ongoing source of bulk paclitaxel, an anti-cancer drug currently sold by
Bristol-Myers Squibb under the tradename Taxol-registered trademark-.
Under this agreement the Company will provide funding totaling $1,000,000
to the supplier during their GMP development process and United States Food
and Drug Administration ("FDA") inspection period. Subsequent to FDA
approval of both the suppliers' production facility and of the Company's
Abbreviated New Drug Application for its paclitaxel product, the
supplier will provide the Company with bulk paclitaxel. The Company will
establish a letter of credit on behalf of the supplier, which, along
with prior amounts funded, will be applied to purchase specific
quantities of paclitaxel.
8
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Preliminary Note Regarding Forward-looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements represent the Company's expectations or beliefs
concerning future events and include statements, among others, regarding
incurring operating losses, requiring additional capital, consummating a
proposed financing and incurring capital expenditures. The Company's actual
results may differ materially from the results projected in the
forward-looking statements as a result of, among other things, lack of market
acceptance of and demand for the Company's products, intense price or product
competition and failure to sell existing inventories at prices sufficient to
cover related costs, unanticipated cash needs, failure to obtain additional
financing and other factors set forth below under "Factors Affecting Future
Operating Results."
Results of Operations
INCEPTION TO DATE.
From the inception of the Company in 1991 through March 31, 1997 the Company
incurred a cumulative net loss of approximately $27.3 million, including a
non-cash charge of $4.9 million for the acquisition of in-process research
and development from two affiliated limited partnerships. The Company expects
its operating expenses to increase over the next several years as it expands
its research and development and commercialization activities and operations.
The Company expects to continue to incur significant additional operating
losses.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996.
Total revenues increased to $424,961 in the first quarter of 1997. Product
sales, which were initiated in the fourth quarter of 1996, were responsible
for the increase in revenue over the same period in 1996. Product revenues
in the first quarter of 1997 consisted primarily of sales of
Nipent-Registered Trademark-acquired from a third party. However, until
manufacturing approval is obtained from the FDA, sales of Nipent-Registered
Trademark- are limited to supplies on hand. See "-----Factors Affecting
Future Operating Results."
Research and development expenses for the first quarter of 1997 were
$2,366,756, an increase of 163% over the same period in 1996. The principal
reason for the increased expense in 1997 was a non-recurring research and
development expense of $831,000 related to the acqusition of etoposide (see
footnote 4). In addition, the number of research and development personnel
and projects being undertaken was higher in the first quarter of 1997. Costs
associated with this higher headcount and activity levels, including the
Company's efforts to obtain approval of its designated manufacturing
facilities for NIPENT-Registered Trademark- also contributed to the higher
expense in 1997, as did expanded contract research and development efforts.
Sales and marketing expenses were $295,466 in the first quarter of 1997
compared to $70,534 in the same period in 1996. This increase was related to
the commencement of sales in the fourth quarter of 1996 and was primarily due
to the hiring of sales personnel which has resulted in increased salary,
travel and other expenses. Costs for promotional materials, sales related
services and sales and marketing facilities also contributed to the increased
expense in the first quarter of 1997.
9
<PAGE>
General and Administrative expenses were $598,306 in the first quarter of
1997, an increase of 144% over the same period in 1996. The increase was
largely due the greater administrative support needed for the increased
activities in research and development and sales and marketing. Increased
service and consultancy costs incurred subsequent to the Company's initial
public offering, which occurred late in the first quarter of 1996, also
contributed to the higher expense in the first quarter of 1997.
Interest income was $139,650 in the first quarter of 1997 compared to $47,457
in the same period in 1996. The increase was due primarily to higher
invested cash and cash equivalents balances in the first quarter of 1997
compared to the same period in 1996. Cash balances invested in the first
quarter of 1997 principally reflected the net proceeds received from the
Company's initial public offering late in the first quarter of 1996 of
approximately $21.5 million, less cash consumed by operations and other
activities subsequent to that offering.
Liquidity and Capital Resources
The Company has financed its operations since inception primarily through
private equity sales totaling $10.4 million, contract research funding of
$2.1 million from research and development agreements with its Affiliated
Partnerships and net proceeds of $21.5 million from the sale of Common Stock
and Warrants in its initial public offering in March 1996. Through March 31,
1997, the Company had incurred a cumulative net loss of $27.3 million, of
which $4.9 million related to the non-cash charges to operations for the
acquisition of in-process research and development.
The Company's cash and cash equivalents were $13.9 million at December 31,
1996 and $9.9 million at March 31, 1997. The net cash consumption of $4.0
million in the first quarter of 1997 was principally due to the net loss for
the quarter of $3.0 million. Cash was also consumed by expenditures on new
production facilities as well as acquisitions of developed technology and
prepaid assets.
The Company believes that its current cash and cash equivalents will satisfy
its budgeted cash requirements for approximately the next nine months, based
on the Company's current operating plan. Substantial additional capital will
be required not later than early 1998. Moreover, if the Company experiences
unanticipated cash requirements, the Company could require additional capital
prior to 1998 to fund operations, continue research and development programs
and pre-clinical and clinical testing of its potential generic, Extra-TM- and
proprietary products and commercialize and market any products that may be
developed, or acquire or license additional products. The Company
anticipates that capital expenditures for the remainder of 1997 will be at
least $1,500,000, principally for the new laboratory in Pleasanton,
California (see footnote 6). The Company is also committed to fund $1,000,000
towards the construction of a facility for bulk production of paclitaxel (see
footnote 8). Also, the Company is continuing to actively consider future
contractual arrangements which would require significant financial
commitments. The Company may seek such additional funding through public or
private financings or collaborative or other arrangements with third parties.
On April 8, 1997, the Company announced that it had reached an agreement in
principle with an investment entity for a private placement of up to $15
million in the Company's common stock with rights and options to purchase a
total additional amount of up to $25 million of the Company's common stock.
The completion of any such transaction is subject to the negotiation and
execution of a mutually acceptable definitive purchase agreement, as well as
related documents, regulatory clearance and satisfaction of other closing
conditions, of which there can be no assurance. The Company has no credit
facility or other committed sources of capital. There can be no assurance
that additional funds will be available on acceptable terms, if at all. See
"-Factors Affecting Future Operating Results".
10
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FACTORS AFFECTING FUTURE OPERATING RESULTS
The future operating results of the Company are highly uncertain, and the
following factors should be carefully reviewed in addition to the other
information contained in this quarterly report on Form 10-Q.
The Company has incurred losses in every fiscal period and expects to
continue to incur significant operating losses. The Company acquired the
right to distribute four anti-cancer products in the third quarter of 1996
and product sales commenced in October 1996. The Company acquired inventory
and manufacturing and distribution rights to a fifth anti-cancer product in
the first quarter of 1997 and sales of that product commenced in the first
quarter of 1997. However, there can be no assurance that product sales will
exceed the related product and selling expenses due to intense competition
and significant selling price and gross margin decline of drugs such as
etoposide. In addition, the Company currently has a limited supply of the
products it is marketing, including Nipent-Registered Trademark-. While the
Company is seeking to enter into manufacturing agreements to provide adequate
supplies to meet market demand, there is no assurance that the Company will
be able to replenish its supplies on a timely basis. Failure to do so would
materially, adversely affect the Company's results of operations. Also, there
is no assurance that any of the Company's proprietary products will ever be
successfully developed, receive and maintain required governmental regulatory
approvals, become commercially viable or achieve market acceptance.
The Company has no experience in manufacturing, and only limited experience
in procuring products in commercial quantities, selling pharmaceutical
products and negotiating, setting up or maintaining strategic relationships
and conducting clinical trials and other late stage phases of the regulatory
approval process. There can be no assurance that the Company will
successfully engage in any of these activities.
The Company's need for additional funding is expected to be substantial and
will be determined by the progress and cost of the development and
commercialization of its products and other activities. The Company is
continuing to actively consider future contractual arrangements which would
require significant financial commitments. Based on the Company's current
operating plan, additional funds will be needed by early 1998. Moreover, if
the Company experiences unanticipated cash requirements during the interim
period, the Company could require additional funds much sooner. The source,
availability, and terms of such funding have not been determined. Although
funds may be received from the sale of equity securities or the exercise of
outstanding warrants and options to acquire common stock of the Company,
there is no assurance any such funding will occur.
The Company faces numerous other risks in the operation of its business,
including, but not limited to, protecting its proprietary technology and
trade secrets and not infringing those of others; attaining market acceptance
and a competitive advantage; entering into agreements with others to source,
manufacture, market and sell its products; obtaining required governmental
approval for manufacturing and marketing its products; attracting and
retaining key personnel in research and development, manufacturing,
marketing, sales and other operational areas; managing growth, if any; and
avoiding potential claims by others in such areas as product liability and
environmental matters. In addition, competition in the pharmaceutical
industry is intense, and price competition for generic products is
particularly intense. For example, the prices for etoposide have decreased
significantly in recent months due to increased competition.
The above factors are not intended to be inclusive and there may be numerous
other areas subjecting the Company's operating results to risk. Failure to
satisfactorily achieve any of the Company's objectives or avoid any of the
above or other risks would likely have a material adverse effect on the
Company's business and results of operations.
11
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SUPERGEN, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No.
*10.25 License Agreement between Inflazyme Pharmaceuticals Ltd.
and Supergen, Inc. dated April 11, 1997.
*10.26 Supply Agreement dated May 7, 1997.
10.27 Assignment and Assumption Agreement between SuperGen,
Inc. and R&S, LLC, dated April 17, 1997.
27 Financial Data Schedule - electronic filing only
(b) No reports were filed on Form 8-K during the quarter
for which this report is filed.
- -----------------
*Confidential treatment requested for certain portions of this exhibit.
12
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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.
SuperGen, Inc.
Date May 14, 1997 By /s/Joseph Rubinfeld
--------------- -------------------------------------
Joseph Rubinfeld, Ph.D.
Chief Executive Officer, President,
Chief Scientific Officer and Director
(Principal Executive Officer)
Date May 14, 1997 By /s/Henry C. Settle, Jr.
--------------- -------------------------------------
Henry C. Settle, Jr.
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE>
INDEX OF EXHIBITS
The following exhibits are included herein:
*10.25 License Agreement between Inflazyme Pharmaceuticals Ltd. and
SuperGen, Inc. dated April 11, 1997.
*10.26 Supply Agreement dated May 7, 1997.
10.27 Assignment and Assumption Agreement between SuperGen, Inc. and
R&S, LLC, dated April 17, 1997.
27 Financial Data Schedule - electronic filing only
No reports were filed on Form 8-K during the quarter for which this report is
filed.
- --------------------
*Confidential treatment requested for certain portions of this exhibit.
14
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EXHIBIT 10.25
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
LICENSE AGREEMENT
between
INFLAZYME PHARMACEUTICALS LTD.
and
SUPERGEN, INC.
Dated for reference April 11, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Headings and Table of Contents . . . . . . . . . . . . . . . . . . 5
1.3 Section References . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Statutory References . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Number and Gender. . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Time of Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8 Use of the Word "Including." . . . . . . . . . . . . . . . . . . . 6
1.9 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.13 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Grant of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Grant of License . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Delivery of Know-How . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Research and Development . . . . . . . . . . . . . . . . . . . . . 8
2.4 Sublicenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Agreement Subject to VSE Approval. . . . . . . . . . . . . . . . . 8
3. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Development Payments . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Equity Investment. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Milestone Payments . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Option to Receive Stock. . . . . . . . . . . . . . . . . . . . . .10
3.5 Royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.6 Sublicense Fees. . . . . . . . . . . . . . . . . . . . . . . . . .11
3.7 Combination Licensed Products. . . . . . . . . . . . . . . . . . .11
3.8 One Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.9 Royalty Offsets. . . . . . . . . . . . . . . . . . . . . . . . . .12
3.10 Royalty Term . . . . . . . . . . . . . . . . . . . . . . . . . . .12
4. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
4.1 Timing of Payment of Royalties . . . . . . . . . . . . . . . . . .12
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<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
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4.2 Currency Conversion. . . . . . . . . . . . . . . . . . . . . . . .13
4.3 Restrictions on Payment. . . . . . . . . . . . . . . . . . . . . .13
5. Accounts and Records. . . . . . . . . . . . . . . . . . . . . . . . . . .13
5.1 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . .13
5.2 Royalty Statement. . . . . . . . . . . . . . . . . . . . . . . . .13
5.3 Application of GAAP. . . . . . . . . . . . . . . . . . . . . . . .13
5.4 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
6. Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
6.1 Obligations of SuperGen. . . . . . . . . . . . . . . . . . . . . .14
6.2 Obligations of Inflazyme . . . . . . . . . . . . . . . . . . . . .14
7. Proprietary Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
7.1 Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
7.2 Patent Prosecution . . . . . . . . . . . . . . . . . . . . . . . .15
7.3 Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
7.4 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
7.5 Infringement Claims. . . . . . . . . . . . . . . . . . . . . . . .17
7.6 Patent Term Extensions . . . . . . . . . . . . . . . . . . . . . .17
8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
8.1 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.1 Confidential Information . . . . . . . . . . . . . . . . . . . . .18
9.2 Permitted Use and Disclosures. . . . . . . . . . . . . . . . . . .19
9.3 Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . .20
9.4 Confidential Terms . . . . . . . . . . . . . . . . . . . . . . . .20
9.5 Confidentiality Obligations of Sublicensees. . . . . . . . . . . .20
10. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . .20
10.1 By Inflazyme . . . . . . . . . . . . . . . . . . . . . . . . . . .20
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<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
10.2 By SuperGen. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
10.3 Licensed Product Warranty. . . . . . . . . . . . . . . . . . . . .22
11. Disclaimer of Warranty. . . . . . . . . . . . . . . . . . . . . . . . . .22
11.1 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
12.1 SuperGen . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
12.2 Inflazyme. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
12.3 Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
13. Term and Termination. . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.2 Termination for Cause. . . . . . . . . . . . . . . . . . . . . . .23
13.3 Termination for Insolvency . . . . . . . . . . . . . . . . . . . .24
13.4 Termination by SuperGen. . . . . . . . . . . . . . . . . . . . . .24
13.5 Effects of Termination . . . . . . . . . . . . . . . . . . . . . .24
13.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
14. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
14.3 Independent Contractors. . . . . . . . . . . . . . . . . . . . . .25
14.4 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . .25
14.5 Enurement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
14.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
14.7 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
14.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . .26
14.9 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . .26
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .26
14.11 Delivery by Fax. . . . . . . . . . . . . . . . . . . . . . . . . .27
14.12 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
14.13 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . .27
14.14 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
14.15 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .28
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<PAGE>
Schedule A - Inflazyme Research Development Costs
Schedule B - Investment Representation Statement
-iv-
<PAGE>
LICENSE AGREEMENT
THIS AGREEMENT dated as of the 11th day of April, 1997.
BETWEEN:
INFLAZYME PHARMACEUTICALS LTD., a company incorporated under the
laws of the Province of British Columbia, having a principal place
of business at 999 West Broadway, Suite 880, Vancouver, British
Columbia, Canada, V5Z 1K5
("Inflazyme")
AND:
SUPERGEN, INC., a corporation incorporated under the laws of the
state of California, having a principal place of business at Two
Annabel Lane, Suite 220, San Ramon, California, U.S.A. 94583
("SuperGen")
WHEREAS:
A. Inflazyme is the owner of the Hapalosin Technology and the Rhizoxin
Technology (as those terms are defined herein);
B. SuperGen desires to obtain from Inflazyme, and Inflazyme wishes to
grant to SuperGen, an exclusive worldwide royalty bearing license of the
Hapalosin Technology and Rhizoxin Technology upon the terms and subject to the
conditions set forth in this Agreement.
IN CONSIDERATION OF the obligations and agreements in this Agreement, the
parties agree as follows:
1. INTERPRETATION.
1.1 DEFINITIONS. In this Agreement:
(a) "AFFILIATE" means a Person, other than a Person jointly
owned or controlled by the parties, that directly or indirectly controls, is
controlled by, or is under common control with the Person specified. For
purposes of this definition, "control" means the direct or indirect ownership of
greater than fifty percent (50%) of the outstanding shares or other voting
rights of the specified Person to elect directors or other management authority,
or if not meeting the preceding, that level of control which is the maximum
ownership right permitted in the jurisdiction where such Person exists.
<PAGE>
(b) "AGREEMENT" means this agreement including any recitals
and Schedules to this Agreement, as amended, supplemented or restated from time
to time.
(c) "APPLICABLE LAW" in respect of any Person, property,
transaction or event, means all present and future laws, statutes, regulations,
treaties, judgments and decrees applicable to that Person, property, transaction
or event and all applicable official directives, rules, consents, approvals,
authorizations, guidelines, orders and policies of any Governmental Authority
having or purported to have authority over that Person, property transaction or
event.
(d) "BUSINESS DAY" means a day other than a Saturday,
Sunday or statutory holiday in the United States and Canada.
(e) "DOMINATING PATENT" shall mean an unexpired patent that
has not been invalidated by a court or governmental agency which is owned by a
third party neither controlled, controlling, nor under common control with
Inflazyme and which covers essential features of a Licensed Product made and/or
sold by SuperGen or its sublicensees under circumstances such that SuperGen
elects to obtain a royalty-bearing license under such patent in order to
commercialize a Licensed Product.
(f) "EFFECTIVE DATE" means April 11, 1997.
(g) "FDA" means the United States Food and Drug
Administration.
(h) "FIELD" means all uses, including, without limitation,
all diagnostic, therapeutic, and prophylactic uses, except in the area of
Inflammation.
(i) "GAAP" means generally accepted accounting principles
in effect in the United States, consistently applied.
(j) "GOVERNMENTAL AUTHORITY" means any domestic or foreign
government, including any federal, provincial, state, territorial or municipal
government, and any government agency, tribunal, commission or other authority
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.
(k) "GROSS SALES" means the gross revenues actually
received by SuperGen (in cash or in kind) for the use, sale, rental or lease of
any Licensed Product.
(l) "HAPALOSIN KNOW-HOW" means all trade secrets, technical
information, know-how, improvements, discoveries, formulae, processes,
procedures, methods, techniques and data owned or controlled by Inflazyme or
its Affiliates during the term of this Agreement which relate to Hapalosin or
its analogs, conjugates, prodrugs, and/or derivatives, or the manufacture or
method of making or using any of the foregoing in the Field. Hapalosin Know-How
shall not include any invention, discovery, or improvement included in the
Hapalosin Patent Rights.
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<PAGE>
(m) "HAPALOSIN PATENT RIGHTS" means (i) any U.S. patent or
provisional or regular utility patent application relating to Hapalosin or its
analogs, conjugates, derivatives, and product forms, or the manufacture or
method of making or using any of the foregoing in the Field which is owned or
controlled by Inflazyme or its Affiliates during the term of this Agreement;
(ii) any division, continuation, continuation-in-part, or substitution of any of
the preceding; (iii) any foreign patent application corresponding to any of the
preceding applications or patents; and (iv) any U.S. or foreign patent issuing
on any of the preceding applications, including any extension, reissue, or
re-examinations, confirmation, or patent of addition.
(n) "HAPALOSIN PRODUCT" means any and all products, agents
or drugs of any nature or kind, including, without limitation, analogs, prodrugs
thereof, for any use in the Field which cannot be developed, manufactured, used,
or sold without infringing a Valid Claim within the Hapalosin Patent Rights or
without utilizing the Hapalosin Know-How.
(o) "HAPALOSIN TECHNOLOGY" means the Hapalosin Patent
Rights and the Hapalosin Know-How.
(p) "HPB" means the Canadian Health Protection Branch.
(q) "INFLAMMATION" means asthma, arthritis and inflammatory
bowel disease.
(r) "LICENSED PRODUCT" means a Hapalosin Product or a
Rhizoxin Product.
(s) "KNOW-HOW" means the Hapalosin Know-How and Rhizoxin
Know-How.
(t) "PATENT RIGHTS" means the Hapalosin Patent Rights and
Rhizoxin Patent Rights.
(u) "NDA" means a New Drug Application ("NDA") or Licensed
Product License Application ("PLA"), as defined in the U.S. Food, Drug and
Cosmetic Act and the regulations promulgated thereunder.
(v) "NET SALES" means Gross Sales less the following
deductions, without duplication:
(1) credits, allowances or refunds given in the normal
course of business on account of any returned Licensed Product or because of
retroactive price reductions;
(2) delivery charges actually charged;
(3) normal and customary rebates, and cash, trade, and
quantity discounts, actually taken;
-3-
<PAGE>
(4) costs incurred in connection with the recall of
any Licensed Product;
(5) Taxes, including, without limitation, excise
taxes, value added and other consumption taxes, duties and customs and other
compulsory payments on all sales which are required to be and are actually
remitted to the applicable Governmental Authority; and
(6) insurance costs and inboard transportation charges
prepaid or allowed.
(w) "NOTICE" means any notice, approval, election, demand,
direction, consent, designation, request, agreement, instrument, certificate or
other communication required or permitted to be given or made under this
Agreement.
(x) "PERSON" means any natural person, sole proprietorship,
partnership, corporation, trust, joint venture, any Governmental Authority or
any incorporated or unincorporated entity or association of any nature.
(y) "PHASE II" and "PHASE III" mean Phase II (or Phase
II/III) or Phase III clinical trials, respectively, in each case as prescribed
by applicable FDA Investigational New Drug ("IND") regulations.
(z) "RHIZOXIN KNOW-HOW" means all trade secrets, technical
information, know-how, improvements, discoveries, formulae, processes,
procedures, methods, techniques and data owned or controlled by Inflazyme or
its Affiliates during the term of this Agreement which relate to bacterial
derived Rhizoxin or its analogs, conjugates, prodrugs, and/or derivatives,
including, without limitation, any of the foregoing having improved water
solubility, or the manufacture or method of making or using any of the foregoing
in the Field. Rhizoxin Know-How shall not include any invention, discovery, or
improvement included in the Rhizoxin Patent Rights.
(aa) "RHIZOXIN PATENT RIGHTS" means (i) any U.S. patent or
provisional or regular utility patent application relating to bacterial derived
Rhizoxin or its analogs, conjugates, prodrugs, and/or derivatives, including,
without limitation, any of the foregoing having improved water solubility, or
the manufacture or method of making or using any of the foregoing in the Field
which is owned or controlled by Inflazyme or its Affiliates during the term of
this Agreement; (ii) any division, continuation, continuation-in-part, or
substitution of any of the preceding; (iii) any foreign patent application
corresponding to any of the preceding applications or patents; and (iv) any U.S.
or foreign patent issuing on any of the preceding applications, including any
extension, reissue, and re-examination, confirmation, or patent of addition.
(bb) "RHIZOXIN PRODUCT" means any and all products, agents
or drugs of any nature or kind, including without limitation, analogs,
conjugates, prodrugs, and/or derivatives, including, without limitation, any of
the foregoing having improved water solubility, for any use in the Field which
-4-
<PAGE>
cannot be developed or manufactured or sold without infringing a Valid Claim
within the Rhizoxin Patent Rights or without utilizing the Rhizoxin Know-How.
(cc) "RHIZOXIN TECHNOLOGY" means the Rhizoxin Patent Rights
and the Rhizoxin Know-How.
(dd) "TAX" or "TAXES" includes all present and future taxes,
surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues
and other charges of any nature imposed by any Governmental Authority (including
income, capital (including large corporations), withholding, consumption, sales,
use, transfer, goods and services or other value-added, excise, customs, anti-
dumping, countervail, net worth, stamp, registration, franchise, payroll,
employment, health, education, business, school, property, local improvement,
development, education development and occupation taxes, surtaxes, duties,
levies, imposts, rates, fees, assessments, withholdings, dues and charges),
together with all fines, interest, penalties on or in respect of, or in lieu of
or for non-collection of, those taxes, surtaxes, duties, levies, imposts, rates,
fees, assessments, withholdings, dues and other charges.
(ee) "TECHNOLOGY" means Patent Rights and Know-How.
(ff) "VALID CLAIM" means a claim of an issued and unexpired
patent which has not been held unenforceable or invalid by a court or other
governmental agency of competent jurisdiction, and which has not been disclaimed
or admitted to be invalid or unenforceable through reissue or otherwise.
(gg) "WRITTEN" includes printed, typewritten, faxed or
otherwise capable of being visibly reproduced at the point of reception and "in
writing" has a corresponding meaning.
1.2 HEADINGS AND TABLE OF CONTENTS. The division of this
Agreement into Sections, the insertion of headings and the provision of a table
of contents are for convenience only and do not form a part of this Agreement
and will not be used to interpret, define or limit the scope, extent or intent
of this Agreement.
1.3 SECTION REFERENCES. Unless otherwise specified, references
in this Agreement to "SECTIONS" and "SCHEDULES" are to Sections of, and
Schedules to, this Agreement.
1.4 STATUTORY REFERENCES. Unless otherwise specified, each
reference to a statute is deemed to be a reference to that statute, and to the
regulations made under that statute, as amended or re-enacted from time to time.
1.5 NUMBER AND GENDER. Unless otherwise specified, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.6 TIME OF DAY. Unless otherwise specified, references to time
of day mean the local time or date in Vancouver, British Columbia.
-5-
<PAGE>
1.7 BUSINESS DAY. If under this Agreement any payment or
calculation is to be made, or any other action is to be taken, on or as of a day
which is not a Business Day, the payment or calculation is to be made, or that
other action is to be taken, on or as of the next day that is a Business Day.
1.8 USE OF THE WORD "INCLUDING." The word "INCLUDING" when
following any general term or statement will not be construed as limiting the
general term or statement to the specific matter immediately following the word
"including" or to similar matters, and the general term or statement will be
construed as referring to all matters that reasonably could fall within the
broadest possible scope of the general term or statement.
1.9 CURRENCY. All references to amounts of money mean lawful
currency of the United States of America.
1.10 ACCOUNTING TERMS. An accounting term which is not otherwise
defined has the meaning assigned to it, and all accounting matters will be
determined, in accordance with GAAP.
1.11 GOVERNING LAW. This Agreement and each of the documents
contemplated by or delivered under or in connection with this Agreement are
governed exclusively by, and are to be enforced, construed and interpreted
exclusively in accordance with, the laws of the State of California, U.S.A.,
without reference to conflicts of laws principles.
1.12 SEVERABILITY. Each provision of this Agreement is
severable. If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, the illegality, invalidity or
unenforceability of that provision will not affect:
(a) the legality, validity or enforceability of the
remaining provisions of this Agreement; or
(b) the legality, validity or enforceability of that
provision in any other jurisdiction except that if:
(i) on the reasonable construction of this Agreement
as a whole, the applicability of the other provision presumes the validity and
enforceability of the particular provision, the other provision will be deemed
also to be invalid or unenforceable, and
(ii) as a result of the determination by a court of
competent jurisdiction that any part of this Agreement is unenforceable or
invalid and, as a result of this Section 1.12, the basic intentions of the
parties in this Agreement are entirely frustrated, the parties will use all
reasonable efforts to amend, supplement or otherwise vary this Agreement to
confirm their mutual intention in entering into this Agreement.
-6-
<PAGE>
1.13 SCHEDULES. The following Schedules are attached to and form
part of this Agreement:
SCHEDULE DESCRIPTION
Schedule "A" Hapalosin and Rhizoxin Research and
Development Plan and Budget
Schedule "B" Investment Representation Statement
2. GRANT OF RIGHTS.
2.1 GRANT OF LICENSE. Inflazyme hereby grants to SuperGen an
exclusive worldwide license, including the right to grant and authorize
sublicenses, under the Technology to make, have made, import, have imported,
export, have exported, use, have used, sell, offer for sale, have sold,
distribute, have distributed, promote, have promoted and otherwise exploit
Licensed Products in the Field.
2.2 DELIVERY OF KNOW-HOW.
(a) Promptly, but in no event later than forty-five (45)
days after the Effective Date, Inflazyme shall deliver to SuperGen in paper and,
to the extent reasonably feasible, electronic copies of all Know-How in
existence as of the Effective Date relating to the Field. Thereafter, and at
least semi-annually during the term of this Agreement, Inflazyme shall provide
to SuperGen, in paper and electronic form, all Know-How related to the Field
conceived, reduced to practice, or otherwise developed or generated by or on
behalf of Inflazyme or its Affiliates during the period since the last delivery
of Know-How to SuperGen.
(b) During the term of this Agreement, Inflazyme shall
actively cooperate with and use its best efforts to enable SuperGen or its
Affiliates or sublicensees to begin and continue the use of Know-How for the
manufacture of Licensed Products, and to provide such assistance to SuperGen as
may be required or helpful in using the Know-How to manufacture Licensed
Products. In this regard, if SuperGen or its Affiliates or sublicensees
requests in writing that Inflazyme provide such assistance, Inflazyme shall use
its best efforts to promptly after receipt of such request dispatch one or more
mutually agreed upon technical personnel to provide such assistance.
(c) To effectuate the purpose of this Agreement, if so
requested in writing by SuperGen, Inflazyme and SuperGen agree that at mutually
agreed times and locations, and for agreed payments, technical personnel
designated by SuperGen shall be given adequate opportunity to study and observe
the production of Licensed Products for use in research (not human use) at
Inflazyme's production and research facility and other appropriate locations, at
such reasonable times and for such reasonable periods as may be reasonably
requested by SuperGen. If SuperGen requests production of any Licensed Product
at research scale at Inflazyme's facilities, then, the Parties will negotiate
mutually agreeable financial terms for such production.
-7-
<PAGE>
2.3 RESEARCH AND DEVELOPMENT.
(a) At no additional cost to SuperGen (other than
reimbursement of actual costs pursuant to Section 3.1 below), the license
granted pursuant to Section 2.1 will include the results of the research and
development work conducted by Inflazyme and materials prepared by Inflazyme for
SuperGen's research and pre-clinical evaluation of each of the Hapalosin Product
and Rhizoxin Product as contemplated in attached Schedule "A" (the "Development
Work").
(b) Inflazyme shall maintain records relating to the
Development Work in sufficient detail so as to properly reflect all work
performed in the Field. SuperGen shall be given reasonable access to all such
records and data, and SuperGen may review, photocopy and, when possible, obtain
electronic versions thereof, and SuperGen shall have the right to use such
information for any development or commercial purpose within the Field.
(c) In the event that any employee or consultant of
Inflazyme involved in the Development Work conceives of, reduces to practice, or
otherwise develops an invention, discovery, or improvement relating to the
Field, whether or not patentable, related to a Licensed Product, Inflazyme shall
promptly notify SuperGen thereof in writing, such writing to contain a detailed
written description of such invention, discovery, or improvement.
2.4 SUBLICENSES. SuperGen will have the right to grant and
authorize sublicenses of the license granted to it under this Agreement,
provided that any such sublicense will contain obligations by the sublicensee on
terms and conditions similar to those in this Agreement so far as the same may
be applicable to such sublicense, including, without limitation, the provisions
for confidentiality, insurance and termination as set out in this Agreement. In
any case, SuperGen will notify Inflazyme of its intention to sublicense the
Licensed Products. To the extent it has the right to do so, SuperGen will
provide to Inflazyme executed copies of any sublicense within twenty
(20) Business Days after such sublicense is executed by all parties thereto.
2.5 AGREEMENT SUBJECT TO VSE APPROVAL. The issuance of shares
of the common stock of Inflazyme ("Inflazyme Common Stock") to SuperGen pursuant
to Section 3.2 of this Agreement is subject to Inflazyme obtaining any approvals
of the Vancouver Stock Exchange to the terms thereof. Upon execution of this
Agreement by both parties, Inflazyme will forthwith file and diligently take all
action necessary to obtain such approval in compliance with the Vancouver Stock
Exchange Policy 16 and any other applicable laws, rules and regulations.
Inflazyme shall provide SuperGen with copies of all news releases and all
filings and notices to be made with the Vancouver Stock Exchange prior to
publishing or filing, and such releases, filings and notices shall be subject to
SuperGen's approval.
3. PAYMENTS.
3.1 DEVELOPMENT PAYMENTS.
(a) Upon execution of this Agreement, SuperGen will pay to
Inflazyme, in cash, one-half of Inflazyme's estimated costs as set forth on
Schedule "A" for the Development Work
-8-
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
("Estimated Development Costs") as an advance on such Estimated Development
Costs (the "Advance"). Inflazyme will allocate such Advance between the
Hapalosin Technology and Rhizoxin Technology in the manner set forth in
Schedule "A". "Actual Development Costs" shall mean the actual research and
development costs of Inflazyme's Development Work, it being understood that such
costs shall include only the direct costs of materials, labor, equipment,
quality control, material handling, and utilities associated with the
Development Work ("Direct Manufacturing Costs"), together with a reasonable
allocation for Inflazyme's overhead costs associated with the Development Work
of up to twenty percent (20%) of Direct Manufacturing Costs, which allocation
shall be made in accordance with GAAP, and excluding costs associated with
excess capacity, excess direct labor, inefficiencies, unusable material, or any
other costs related to such manufacture which do not add value.
(b) If any time during the period Inflazyme is conducting
the Development Work, Inflazyme reasonably believes that the Actual Development
Costs will exceed the Estimated Development Costs, Inflazyme shall promptly
notify SuperGen in writing and shall deliver a new Schedule "A" setting forth
the additional expected costs and obtain SuperGen's prior approval to such costs
before incurring the same, such approval not to be unreasonably withheld or
delayed. In the event that SuperGen does not approve any such additional costs,
such excess costs shall not be included in the Actual Research Costs.
(c) Within thirty (30) days of completion of the
Development Work and delivery of all Know-How relating thereto to SuperGen in
accordance with the provisions of Section 2.3, SuperGen shall pay to Inflazyme
the outstanding balance of Actual Development Costs, if any.
3.2 EQUITY INVESTMENT. Subject to Section 2.5, in
partial consideration for the license granted herein, Inflazyme shall
issue and SuperGen shall purchase a number of shares (the "Shares") of
unregistered Inflazyme Common Stock equal to one hundred sixty six
thousand and six hundred sixty seven dollar ($166,667) divided by the
Inflazyme Common Stock Price. The "Inflazyme Common Stock Price" shall
mean the greater of (a) the lowest price allowable under the Vancouver
Stock Exchange Policy 16 and (b) the lesser of (i) 1.25 times the
average of the closing prices of Inflazyme's Common Stock over the ten
(10) trading days preceding the Effective Date as quoted on the
Vancouver Stock Exchange and (ii) two dollars and fifty cents ($2.50).
If the approval set forth in Section 2.5 is denied by the Vancouver
Stock Exchange, the parties shall, in good faith, renegotiate the terms
and conditions of SuperGen's one hundred sixty six thousand and six
hundred sixty seven dollar ($166,667) investment in Inflazyme,
provided, that, SuperGen shall not be obligated to make such an
investment if the parties cannot mutually agree on the terms and
conditions of such investment after good faith negotiations.
3.3 MILESTONE PAYMENTS. SuperGen will promptly notify (a
"Milestone Notice") Inflazyme upon achievement of each of the milestones listed
below with respect to each of the first
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[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
Hapalosin Products and the first Rhizoxin Product commercialized hereunder, and
within sixty (60) days of any Milestone Notice, SuperGen will pay to Inflazyme
the following:
(a) [*] dollars ($[*]) upon completion of Phase II clinical
trials for the first Hapalosin Product, and $[*] upon completion of Phase II
Trial for the first Rhizoxin Product;
(b) [*] dollars ($[*]) upon completion of Phase III
clinical trials for the first Hapalosin Product, and [*] dollars ($[*]) upon
completion of Phase III clinical trials for the first Rhizoxin Product;
(c) [*] dollars ($[*]) upon NDA filing for each of the
first Hapalosin Product and the first Rhizoxin Product;
(d) [*] dollars ($[*]) upon NDA approval for each of the
first Hapalosin Product and the first Rhizoxin Product.
In the event SuperGen, or an Affiliate or sublicensee of SuperGen elects to
commercialize the first Hapalosin Product or the first Rhizoxin Product in one
or more countries outside of the United States prior to commercialization in the
United States, the parties shall negotiate the milestone payments in respect of
such product at that time, it being understood, however, that in no event shall
the aggregate amount of the milestone payments payable under this Agreement
exceed the aggregate of the amounts set forth in (a)-(d) above (i.e. [*]
dollars ($[*]) for each of Hapalosin and Rhizoxin). Notwithstanding the
foregoing, once milestone payments have been paid for the first Hapalosin
Product or the first Rhizoxin Product, no additional milestone payment will
be payable hereunder in respect of another Hapalosin Product or Rhizoxin
Product, as the case may be, whether commercialized in or outside the United
States.
3.4 OPTION TO RECEIVE STOCK. At the election of either party,
any or all of the milestone payments due under Section 3.3 shall be payable in
unregistered shares of common stock, par value $0.01, of SuperGen ("SuperGen
Common Stock"), provided, that such party provides written notice of such
election (the "Election Notice") within thirty (30) days following any Milestone
Notice. The non-electing party shall have ten (10) days from the date of
receipt to notify the electing party of any objection to the proportion to be
paid in SuperGen Common Stock. The parties shall, within ten (10) days of the
receipt of such notice of objection, negotiate in good faith to determine a
mutually agreed upon proportion. If no agreement is reached on such proportion
within such ten (10) day period, the parties agree that fifty percent (50%) of
such milestone payment shall be made in SuperGen Common Stock and fifty percent
(50%) shall be paid in cash. In the event an election is made hereunder to pay,
or receive payment in unregistered shares of SuperGen Common Stock, SuperGen
will within thirty (30) days after giving or receiving notice to such effect, as
the case may be, deliver to Inflazyme share certificates representing such
shares registered in the name of Inflazyme or any other Person designated by
Inflazyme to receive and hold such shares, provided that Inflazyme shall have
first delivered to SuperGen a signed copy of an investment representation
statement substantially in the form attached hereto as Schedule "B." Any shares
issued pursuant to this Section 3.4 shall be issued to Inflazyme at
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[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
a price equal to the average closing price of SuperGen's registered common stock
as quoted on the NASDAQ National Market for the ten (10) day period preceding
the date on which SuperGen or Inflazyme, as the case may be, gives or receives
notice of such election, and subject to all applicable securities laws and
regulations.
3.5 ROYALTIES. In addition to all other amounts payable by
SuperGen to Inflazyme under this Agreement, and except to the extent the amounts
are paid pursuant to Section 3.6, SuperGen will pay Inflazyme royalties as
follows:
(a) on worldwide aggregate Net Sales of the Hapalosin
Products:
Royalty Rate: Aggregate Net Sales
------------- -------------------
[*]% $[*]
[*]% > $[*]
[*]% > $[*]
(b) on worldwide aggregate Net Sales of the Rhizoxin Products:
Royalty Rate Aggregate Net Sales
------------ -------------------
[*]% $[*]
[*]% > $[*]
[*]% > $[*]
The above royalty rates for Rhizoxin shall be reduced by fifty percent (50%) if
the applicable Licensed Products are not within the scope of an issued valid
claim of a patent within the Patent Rights.
3.6 SUBLICENSE FEES. SuperGen will pay to Inflazyme thirty
percent (30%) of all royalties and other consideration received by SuperGen from
its sublicensees for the grant of a sublicense of any or all of its rights
hereunder. SuperGen agrees to separately record all royalties and other
consideration paid to SuperGen from its sublicensees with respect to the
Licensed Products. For the purpose of calculating those amounts due Inflazyme
pursuant to this Section 3.6, SuperGen shall be entitled to deduct those amounts
received from a sublicensee in respect of the purchase of equity of SuperGen or
an Affiliate of SuperGen, debt financing, research and development payments, any
and all payments received in respect of the license, sublicense, or other grant
of rights in technology or intellectual property other than Technology, or
reimbursement for patent or other expenses incurred by SuperGen pursuant to such
sublicense.
3.7 COMBINATION LICENSED PRODUCTS. In the event that any
Licensed Product is sold in combination with one or more other product(s) which
are not Licensed Products, Net Sales from such sales for purposes of calculating
the amounts due under Section 3.5 above shall be calculated by multiplying the
Net Sales of that combination by the fraction A/(A + B), where A is the gross
selling price of the Licensed Product sold separately and B is the gross selling
price of the other product(s) sold
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separately. In the event that no such separate sales are made of the Licensed
Product or other product(s), Net Sales with respect to such combination product
shall be reasonably determined by agreement of Inflazyme and SuperGen based on
an allocation between such Licensed Product and such other product(s) based upon
taking into account the relative importance and proprietary protection with
respect to each component of such combination product.
3.8 ONE ROYALTY. No more than one royalty payment shall be due
with respect to a sale of a particular Licensed Product. No multiple royalties
shall be payable because any Licensed Product, or its manufacture, sale or use
is covered by more than one Valid Claim contained in the Hapalosin Patent Rights
or the Rhizoxin Patent Rights, as the case may be. No royalty shall be payable
under Section 3.5 above with respect to sales of Licensed Products among
SuperGen and its Affiliates, sublicensees and/or distributors for resale, nor
shall a royalty be payable under this Article 3 with respect to Licensed
Products distributed for use in research and/or development, in clinical trials,
or as promotional samples.
3.9 ROYALTY OFFSETS.
(a) THIRD PARTY ROYALTIES. In the event that as a result
of the manufacture, use, or sale of a Licensed Product by SuperGen or its
Affiliates, or sublicensees, or the distributors of any of them, SuperGen enters
into one or more license agreements with one or more third parties (other than
sublicensees) with respect to one or more Dominating Patents to avoid or settle
a possible claim of patent infringement, SuperGen shall be entitled to offset
the amounts paid to such third party(ies) from the royalties otherwise due to
Inflazyme hereunder in any quarter.
(b) INFRINGEMENT LITIGATION EXPENSES. In the event
SuperGen defends any allegation or claim of patent infringement made by a third
party (as provided in Section 7.5 below), SuperGen shall be entitled to offset
any costs and expenses, including attorneys' and other professional fees and
costs of litigation, incurred by SuperGen in such regard against royalties
payable to Inflazyme pursuant to Section 3.5.
3.10 ROYALTY TERM. Royalty obligations due under this Article 3
shall be payable on a country-by-country and Licensed Product-by-Licensed
Product basis in countries where there exists a Valid Claim within the Patent
Rights covering the particular Licensed Product. Such royalty payments shall be
payable until the expiration of the last-to-expire Valid Claim within the Patent
Rights in such country covering such Licensed Product.
4. PAYMENTS.
4.1 TIMING OF PAYMENT OF ROYALTIES. The payments payable under
Sections 3.5 and 3.6 will be due and paid within sixty (60) days of the end of
each calendar quarter (March 31, June 30, September 30 and December 31) (a
"Quarter") of each year during the term of this Agreement in which such amounts
accrued.
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4.2 CURRENCY CONVERSION. Unless otherwise specified, all
amounts set forth in this Agreement shall refer to U.S. dollars. All payments
due hereunder shall be made in U.S. dollars. If any currency conversion shall
be required in connection with the calculation of payments hereunder, such
conversion shall be made using the selling exchange rate for conversion of the
foreign currency into U.S. dollars, quoted for current "buy" transactions for
purchasing U.S. dollars as reported in THE WALL STREET JOURNAL for the last
business day of the calendar quarter to which such payment pertains.
4.3 RESTRICTIONS ON PAYMENT. To the extent and as long as the
laws and/or regulations in force in any country prohibit the payment, conversion
or remittance of any of the payments as hereby contemplated, SuperGen's
obligations under Article 4 may be discharged by the deposit thereof to the
account of Inflazyme, or its designee, in any commercial bank or trust company
selected by Inflazyme located in such country provided that no infraction of law
or regulation occurs in making such deposit. If due to restrictions or
prohibitions imposed by national or international authority, payments cannot be
so deposited, the parties shall consult with a view to finding a prompt and
acceptable solution.
5. ACCOUNTS AND RECORDS.
5.1 MAINTENANCE OF RECORDS. SuperGen will keep and maintain
during the term of this Agreement and for a period of three (3) years thereafter
true and accurate copies of all sublicense agreements entered into by SuperGen
pursuant to this Agreement, and the identity of any and all customers who are
not in an Arm's Length relationship with SuperGen. SuperGen will keep and
maintain all records of Net Sales for a period of three (3) years after the
creation thereof. Such records will be maintained at SuperGen's principal place
of business in the United States.
5.2 ROYALTY STATEMENT. SuperGen will deliver to Inflazyme
concurrent with the payments to be made pursuant to Sections 3.5 and 3.6, a
statement setting out in reasonable detail the calculation of the Net Sales, any
royalties and other money received from SuperGen's sublicensees (including any
deductions made and/or expenses incurred by SuperGen with respect to any
arrangement with a sublicensee), any third party royalties paid or other
permitted offsets taken, and the method by which the amounts payable to
Inflazyme under this Agreement were determined. Such reports shall be
Confidential Information of SuperGen subject to Article 9 herein.
5.3 APPLICATION OF GAAP. The calculation of royalties and other
amounts payable by SuperGen to Inflazyme under this Agreement will be carried
out in accordance with GAAP. If, upon conducting an audit of SuperGen's records
pursuant to Section 5.4 below, Inflazyme determines that:
(a) the calculation of Net Sales or the royalties and other money paid to
SuperGen by its sublicensees was not determined in accordance with GAAP; and (b)
the deviation from GAAP resulted in more than a ten percent (10%) underpayment
of royalties or other amounts payable to Inflazyme under this Agreement during
the period under review, then SuperGen will pay for Inflazyme's reasonable
expenses for conducting the audit as well as paying the deficiency in such
royalties and other amounts due to Inflazyme as shown by the audit.
5.4 AUDITS. Upon thirty (30) days prior notice to SuperGen,
independent certified public accountants selected by Inflazyme, and reasonably
acceptable to SuperGen, after entering into a
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confidentiality agreement with SuperGen, may have access to SuperGen's books and
records to conduct a review or audit once per calendar year, for the sole
purpose of verifying the accuracy of SuperGen's payments to Inflazyme hereunder
made during the two (2) years preceding such audit. The accounting firm shall
report to Inflazyme only whether there has been a royalty underpayment and, if
so, the amount thereof. Such access shall be permitted during Inflazyme's
normal business hours during the term of this Agreement and for two (2) years
after the expiration or termination of this Agreement. Any such inspection or
audit shall be at SuperGen's expense other than as set forth in Section 5.3.
SuperGen shall promptly pay any underpayment determined in the audit. SuperGen
will furnish such reasonable evidence as the accountant will deem necessary to
verify the statements provided to Inflazyme pursuant to Section 5.2.
6. OBLIGATIONS.
6.1 OBLIGATIONS OF SUPERGEN. SuperGen will:
(a) use its reasonable efforts to promote, market and sell
the Licensed Products in the Field and to use reasonable efforts to meet or
cause to be met the market demand for the Licensed Products in those countries
where SuperGen, in its sole discretion, determines such activities to be
commercially practicable;
(b) use reasonable efforts to file for and attempt to
obtain FDA or foreign regulatory approval of one or more Licensed Products;
(c) not knowingly manufacture, market, sell, distribute,
develop or sublicense the Hapalosin Technology or Rhizoxin Technology or any
Hapalosin Product or Rhizoxin Product for use outside the Field;
(d) comply with all Applicable Laws in the development,
manufacture, marketing, distribution or sale of the Licensed Products or the use
or development of the Technology; and
(e) provide to Inflazyme copies of any approvals of or
inspection reports from the FDA or an equivalent regulatory agency in another
jurisdiction relating to any Licensed Product, and copies of such approvals and
reports of any equivalent Governmental Authorities in any other country in which
a Licensed Product will be manufactured, marketed, distributed or sold.
6.2 OBLIGATIONS OF INFLAZYME. Inflazyme will:
(a) use its reasonable best efforts, at SuperGen's expense,
to carry out the Development Work, except to and extent such failure is caused
by or attributed to a failure of SuperGen to fulfill its financial obligations
under this Agreement;
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(b) not knowingly manufacture, market, sell, distribute or
develop the Hapalosin Technology or Rhizoxin Technology or any Hapalosin Product
or Rhizoxin Product for use inside the Field; and
(c) upon request from and at the expense of SuperGen,
provide to SuperGen copies of any approvals of or inspection reports from the
FDA or an equivalent regulatory agency in another jurisdiction relating to any
Licensed Product outside the Field, and copies of such approvals and reports of
any equivalent Governmental Authorities in any other country in which a Licensed
Product for use outside the Field will be manufactured, marketed, distributed or
sold.
6.3 OBLIGATIONS OF BOTH PARTIES. The parties shall enter into a
registration rights agreement within forty-five (45) days after the Effective
Date, pursuant to which Inflazyme shall provide SuperGen mutually agreed upon
registration rights relating to the Shares.
7. PROPRIETARY RIGHTS.
7.1 OWNERSHIP. Title to all inventions and other intellectual
property, including any improvements to the Technology, made solely by or on
behalf of SuperGen during the term of the Agreement shall be owned by SuperGen.
Title to all inventions and other intellectual property made solely by or on
behalf of Inflazyme during the term of the Agreement shall be owned by
Inflazyme. Title to all inventions and other intellectual property made jointly
by or on behalf of Inflazyme and SuperGen during the term of the Agreement shall
be jointly owned by SuperGen and Inflazyme (each a "Joint Invention").
Inventorship of inventions and other intellectual property rights conceived,
reduced to practice, or otherwise developed by or on behalf of the parties, and
ownership rights with respect thereto, shall be determined in accordance with
the patent laws of the United States, or the laws of the State of California, as
the case may be.
7.2 PATENT PROSECUTION.
(a) INFLAZYME RESPONSIBILITIES. Except as set forth in
Sections 7.2(b) and 7.2(c), Inflazyme shall have the right to control the
preparation, filing, prosecution and maintenance of the Patent Rights, and any
interferences, re-examinations, reissues and oppositions relating thereto, using
patent counsel of its choice. Inflazyme shall consult with SuperGen regarding
the conduct of all such activities, and shall provide SuperGen with an
opportunity to review and provide input on all proposed submissions to any
patent office at least thirty (30) days before submittal, and shall include in
such applications such claims as SuperGen may reasonably request. Inflazyme
shall keep SuperGen fully informed as to the status of such patent applications
by promptly providing SuperGen copies of all communications relating to such
patent applications that are received from or sent to any patent office,
including without limitation, notice of all interferences, reissues, re-
examinations or oppositions. The patent costs incurred in connection with such
activities will be paid by SuperGen, but the entire amount thereof shall be
creditable against royalties due to Inflazyme.
(b) INFLAZYME FAILURE TO PURSUE. In the event Inflazyme
elects not to prepare or file, or, having filed, elects not to further prosecute
or maintain any patent application or patent within
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the Patent Rights, or conduct any interference, re-examination, reissue or
opposition with respect thereto, it shall so notify SuperGen, and thereafter
SuperGen shall have the right to prepare, file, prosecute and maintain any such
patent application and patent in such countries worldwide it deems appropriate,
and conduct any interference, re-examination, reissue or opposition, using
patent counsel of its choice. In any such event, with respect to patent
applications and patents within the Patent Rights except those subject to
Section 7.2(c), SuperGen shall have the right to offset one hundred percent
(100%) of expenses incurred in connection with conducting any of the foregoing
activities against any payments due Inflazyme under this Agreement.
(c) JOINT INVENTIONS. The parties will cooperate to
prepare, file, prosecute, and maintain patent applications covering the Joint
Invention(s). The parties shall agree which party shall be responsible for
conducting such activities with respect to a particular Joint Invention and
agree on a plan for such activities. The party conducting such activities shall
keep the other party fully informed as to the status of such patent matters,
including, without limitation, by providing the other party the opportunity, at
the other party's expense, to review and comment on any documents relating to
the Joint Invention which will be filed in any patent office at least thirty
(30) days before such filing, and promptly providing the other party copies of
any documents relating to the Joint Invention which the party conducting such
activities receives from any patent office, including notice of all
interferences, reissues, reexaminations, oppositions, or requests for patent
term extensions. The parties will share equally all reasonable expenses and
fees associated with the preparation, filing, prosecution, issuance, and
maintenance of any patent application and resulting patent for a Joint Invention
in accordance with the agreed plan or a mutually agreed modification thereof.
(d) SUPERGEN RESPONSIBILITIES. SuperGen shall, at its sole
expense, have the right to control the preparation, filing, prosecution and
maintenance of any patent applications and patents solely owned by it, and any
interferences, re-examinations, reissues and oppositions relating thereto, using
patent counsel of its choice.
7.3 COPIES. Upon request by SuperGen, Inflazyme shall provide
to SuperGen a copy of any patent application within the Patent Rights filed by
Inflazyme or its Affiliates during the term of this Agreement promptly after
such application is filed. SuperGen shall treat any such patent application as
Confidential Information of Inflazyme until such application is published.
7.4 ENFORCEMENT. If either party hereto becomes aware that any
Patent Rights (including, without limitation, patents claiming any Joint
Invention) are being or have been infringed by any third party or are subject to
a declaratory judgment action, or that any Know-How has been misappropriated by
a third party, such party shall promptly notify the other party hereto in
writing describing the facts relating thereto in reasonable detail.
(a) INFLAZYME. Except as set forth in Section 7.4(c)
below, Inflazyme shall have the initial right, but not the obligation, to
institute, prosecute and control any action, suit or proceeding to abate any
such infringement or misappropriation, whether by suit, settlement, or otherwise
(an "Action"), at its expense, using counsel of its choice, and SuperGen shall
cooperate with Inflazyme in connection with any such Action, at Inflazyme's
expense; provided, however, that Inflazyme may not
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enter into any settlement in respect of the Technology or a Joint Invention
without SuperGen's prior written consent, which consent shall not be
unreasonably withheld. Any amounts recovered from third parties in any such
Action shall be used first to reimburse Inflazyme for its costs and expenses
associated with such Action (including, without limitation, reasonable
attorneys' and experts' fees), and the remainder shall be divided between the
parties with SuperGen receiving twenty-five percent (25%) of such remainder and
Inflazyme receiving seventy-five percent (75%).
(b) SUPERGEN. In the event Inflazyme fails to initiate or
defend any Action in respect of the Technology within ninety (90) days of
receiving notice of any alleged infringement or misappropriation thereof,
SuperGen shall have the right, but not the obligation, to initiate such an
Action, at its expense; provided, however, that SuperGen may not enter into any
settlement in respect of the Technology or a Joint Invention without Inflazyme's
prior written consent, which consent shall not be unreasonably withheld. Any
amounts recovered from third parties in any such Action shall be used first to
reimburse SuperGen for its costs and expenses associated with such Action
(including, without limitation, reasonable attorneys' and experts' fees) and the
remainder shall be divided by the parties with SuperGen receiving seventy-five
percent (75%) of such remainder and Inflazyme receiving twenty-five percent
(25%).
(c) JOINT INVENTIONS. SuperGen shall have the initial
right, but not the obligation, for a period of ninety (90) days following the
date written notice is given or received, as the case may be, to institute,
prosecute and control, at its expense and using counsel of its choice, any
Action with respect to any patent claiming a Joint Invention, and Inflazyme
shall cooperate with SuperGen in connection with any such Action, at SuperGen's
expense; provided, however, that SuperGen may not enter into any settlement
which admits that any patent claiming a Joint Invention is invalid or
unenforceable without the prior written consent of Inflazyme, which consent
shall not be unreasonably withheld. Any amounts recovered in any such Action
shall be used first to reimburse SuperGen for its costs and expenses associated
with such Action (including, without limitation, reasonable attorneys' and
experts' fees), and the remainder shall be divided between the parties, with
Inflazyme receiving twenty-five percent (25%) of such remainder and SuperGen
receiving seventy-five percent (75%).
7.5 INFRINGEMENT CLAIMS. If the practice by SuperGen under the
license granted with respect to the Technology results in any allegation or
claim of infringement of an intellectual property right of a third party against
SuperGen or Inflazyme (an "Infringement Claim"), SuperGen shall have the
exclusive right to defend any such Infringement Claim, at its own expense, and
using counsel of its own choice. SuperGen shall have the sole right and
authority to settle any such Infringement Claim, and shall indemnify Inflazyme
with respect thereto pursuant to Article 12; it being understood, however, that
Inflazyme shall cooperate with SuperGen, at SuperGen's reasonable request and
expense in connection with the defense of such Infringement Claim. SuperGen
shall be entitled to offset its costs and expenses (including reasonable
attorneys' and other professional fees) incurred in connection with any such
Infringement Claim against any amounts it would otherwise owe Inflazyme under
Article 3.
7.6 PATENT TERM EXTENSIONS. With respect to patents within the
Patent Rights, if Inflazyme has not itself earlier applied for a patent
extension or other governmental equivalent available under applicable law with
respect to a particular patent, at SuperGen's request following approval of a
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Licensed Product, Inflazyme shall, unless Inflazyme is developing a product
within the scope of such patent for use outside of the Field, and such product
has entered Phase II clinical trials as of the date of SuperGen's request and
Inflazyme notifies SuperGen that it intends to file a request for a patent
extension or equivalent based on such product, designate SuperGen (or its
designee) as Inflazyme's agent for obtaining an extension of such patent or
governmental equivalent which extends the exclusivity of any of the patented
subject matter where available in any country in the world, or if not feasible,
at SuperGen's option, permit SuperGen to file in Inflazyme's name to obtain such
extension for SuperGen or its Affiliates or sublicensee(s), at SuperGen's
expense. Furthermore, Inflazyme agrees to provide reasonable assistance to
facilitate SuperGen's or its Affiliates or sublicensee's efforts to obtain any
such extension. In the event that SuperGen elects not to seek such an extension
or equivalent in any country, it shall notify Inflazyme, and Inflazyme shall
have the right to seek such an extension or equivalent in such country, at
Inflazyme's expense.
8. INSURANCE.
8.1 INSURANCE. Prior to the first commercial sale of any
Licensed Product by SuperGen or its Affiliates or sublicensees, SuperGen will
obtain public liability and product liability insurance in respect of the
Licensed Product(s) with reputable and financially secure insurance carriers in
an amount which is customarily carried by companies at a comparable stage of
development or commercial introduction of new pharmaceutical products. Such
policy will name Inflazyme as an additional insured, and will provide primary
coverage with respect to the activities contemplated by this Agreement and the
Licensed Product(s). SuperGen will provide Inflazyme with certificate of
insurance evidencing such coverage prior to the commencement of the first
commercial sale of any Licensed Product.
9. CONFIDENTIALITY.
9.1 CONFIDENTIAL INFORMATION. In the course of fulfilling their
respective duties under this Agreement, the parties may disclose to one another
from time to time certain trade secrets and other proprietary or confidential
information. Except with the written consent of the other party, not to be
unreasonably withheld or delayed, and except as expressly provided herein,
neither SuperGen nor Inflazyme will at any time, either before or after the
termination of this Agreement, disclose any Confidential Information to any
Person, or permit any Person to examine or make copies of any Confidential
Information except as may be required to fulfill their respective rights and
duties under this Agreement or any sublicense hereof or to enforce the
provisions of this Agreement or any sublicense hereof. SuperGen and Inflazyme
will not use the Confidential Information of the other for any purpose except as
provided under this Agreement or with the written consent of the disclosing
party. As used in this Agreement, "Confidential Information" will include,
without limitation:
(a) information constituting trade secrets of either party;
(b) information relating to, whether existing or
contemplated, the Licensed Products, services, technology, designs, processes,
formulas and research and development (in whatever state) of either party;
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(c) information relating to business plans, methods of
doing business, sales or marketing methods, customer lists, customer usages
and/or requirements and supplier information of such party; and
(d) any other proprietary or confidential information or
material in tangible form disclosed hereunder which is marked "Confidential."
Confidential Information must be designated by an appropriate legend or
otherwise, such as, "Inflazyme Confidential" or "SuperGen Confidential". If
disclosed orally, Confidential Information will be described as such when
disclosed and will be confirmed in writing by the disclosing party to the
receiving party within thirty (30) days after the date of such oral disclosure.
Confidential Information will not include any information which, as established
by competent proof:
(a) at the time of disclosure, is generally known to the
public;
(b) after disclosure becomes public knowledge (by
publication or otherwise) other than by breach of this Agreement by the
receiving party;
(c) the receiving party can verify by contemporaneous
written documentation was in its possession at the time of disclosure and was
not obtained, directly or indirectly, from the other party;
(d) the receiving party can verify by contemporaneous
written documentation results from research and development by the receiving
party independent of disclosure by the other party; or
(e) the receiving party can establish was obtained from any
third party who had the legal right to disclose such information, provided that
such information was not obtained to the knowledge of the receiving party by
such third party, directly or indirectly, from the other party hereto on a
confidential basis.
It is understood that any Confidential Information combined with other
information will not be included in the foregoing exceptions merely because
individual parts of such combination were within the public domain, or were
within the prior possession of the receiving party, or were so received or
obtained by the receiving party, unless the combination itself falls within the
above exceptions.
9.2 PERMITTED USE AND DISCLOSURES. Each party hereto may use or
disclose Confidential Information disclosed to it by the other party to the
extent such use or disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation, complying with laws,
governmental regulations or court orders, submitting information to tax or other
governmental authorities, conducting pre-clinical research and development or
clinical trials, making a permitted sublicense or otherwise exercising its
rights hereunder, provided that if a party is required to make any such
disclosure of another party's Confidential Information, other than pursuant to a
confidentiality agreement containing confidentiality obligations at least as
restrictive as those set forth
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herein, it will give reasonable advance notice to the other party of such
disclosure and, save to the extent inappropriate in the case of patent
applications, will use reasonable efforts to secure confidential treatment of
such information prior to its disclosure, and provide the other party the
opportunity to seek confidential treatment of such Confidential Information,
whether through protective orders or otherwise.
9.3 PUBLIC DISCLOSURES. No public announcement or other
disclosure to third parties concerning the existence of this Agreement shall be
made, either directly or indirectly, by any party to this Agreement without
first obtaining the approval of the other party and agreement upon the nature
and text of such announcement or disclosure, which approval shall not be
unreasonably withheld, provided, that disclosures may be made as required by
securities or other applicable laws, or to actual or prospective investors or
corporate partners, or to a party's accountants, attorneys and other
professional advisors.. A party required to make any public announcement shall
use reasonable efforts to inform the other party of the proposed announcement in
reasonably sufficient time prior to public release, and shall use reasonable
efforts to provide the other party with an advance written copy thereof, in
order to allow such other party to comment upon such announcement. Once a
particular disclosure has been approved, further disclosures which do not differ
materially therefrom may be made without obtaining any further approval from
the other party.
9.4 CONFIDENTIAL TERMS. Except as expressly provided herein,
each party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party; provided, however, that disclosures may
be made as required by securities or other applicable laws, or to actual or
prospective investors or corporate partners, or to a party's accountants,
attorneys and other professional advisors.
9.5 CONFIDENTIALITY OBLIGATIONS OF SUBLICENSEES. SuperGen will
require each of its sublicensees to enter into confidentiality agreements with
obligations at least as stringent as those contained in Section 9.1.
10. REPRESENTATIONS AND WARRANTIES.
10.1 BY INFLAZYME. Inflazyme represents and warrants to SuperGen
that:
(a) it is a corporation duly organized and validly existing
and in good standing under the applicable laws of Canada;
(b) it has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder, to
sell and issue the Shares and to consummate the transactions contemplated
hereby;
(c) the execution, delivery and performance of this
Agreement and the issuance, sale and delivery of the Shares have been duly
authorized by all requisite corporate action;
(d) REPORTS. Inflazyme has filed all required material
reports (the "Inflazyme Securities Reports") with the Securities and Exchange
Commission and the securities commissions or
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<PAGE>
regulatory authority in each province of Canada in which Inflazyme is a
reporting issuer (the "Canadian Commissions") and has provided SuperGen with all
such reports. As of their respective dates, each of the Inflazyme Securities
Reports complied in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the Securities and
Exchange Commission thereunder and all applicable securities laws in each of the
provinces and territories of Canada in which Inflazyme is a reporting issuer,
the respective regulations and rules under such laws and the applicable by-laws
and published policy statements of the Canadian Commissions or similar
authorities in Canada and the Vancouver Stock Exchange and applicable to such
Inflazyme Securities Reports. As of their respective dates, the Inflazyme
Securities Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading;
(e) this Agreement constitutes a legal, valid and binding
obligation of Inflazyme, enforceable against Inflazyme in accordance with its
terms;
(f) the execution, delivery and performance by Inflazyme of
this Agreement and the issuance of the Shares does not conflict with, contravene
or constitute a default under any provision of any applicable law or of any
agreement, judgement, injunction, order, decree, contract, or other instrument
binding upon Inflazyme;
(g) it is the sole and exclusive owner of all right, title
and interest in the Know-How;
(h) it has the right to grant the rights and licenses
granted herein;
(i) the Technology is free and clear of any lien,
encumbrance, security interest or restriction on license;
(j) it has not previously granted any right, license or
interest in or to the Technology, or any portion thereof, inconsistent with the
license granted to SuperGen herein, and will not grant during the term of this
Agreement grant any right, license or interest in or to the Technology, or any
portion thereof, inconsistent with the license granted to SuperGen herein;
(k) there are no actions, threatened or pending, before any
court relating to the Technology;
(l) the Shares will be validly created, allotted and
issued, fully paid and nonassessable and be free of restrictions on transfer;
(m) the Shares will be issued in accordance with the
registration or qualification provision of the Securities Act of 1933, as
amended, and any relevant state securities laws or exemptions therefrom and all
applicable securities laws in each of the provinces and territories of Canada,
the respective regulations and rules under such laws and the applicable by-laws
and published
-21-
<PAGE>
policy statements of the applicable provincial and territorial securities
commissions or similar authorities in Canada and the Vancouver Stock Exchange.
10.2 BY SUPERGEN. SuperGen represents and warrants to Inflazyme
that:
(a) it is a corporation duly organized and validly existing
and in good standing under the laws of the state of California;
(b) it has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby;
(c) the execution, delivery and performance of this
Agreement have been duly authorized by all requisite corporate action;
(d) this Agreement constitutes a legal, valid and binding
obligation of SuperGen, enforceable against SuperGen in accordance with its
terms;
(e) the execution, delivery and performance by SuperGen of
this Agreement does not conflict with, contravene or constitute a default under
any provision of any applicable law or of any agreement, judgement, injunction,
order, decree or other instrument binding upon SuperGen.
10.3 LICENSED PRODUCT WARRANTY. Inflazyme expressly warrants
that the Licensed Products provided hereunder to SuperGen shall conform to the
specifications therefor set forth in Schedule "A".
11. DISCLAIMER OF WARRANTY.
11.1 DISCLAIMER. EXCEPT AS SPECIFICALLY PROVIDED IN ARTICLE 10,
INFLAZYME MAKES NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED WITH
RESPECT TO THE INFLAZYME TECHNOLOGY OR THE LICENSED PRODUCTS, AND SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. INFLAZYME WILL IN NO EVENT BE LIABLE FOR ANY LOSS OF PROFITS, BE THEY
DIRECT, CONSEQUENTIAL, INCIDENTAL, OR SPECIAL OR OTHER SIMILAR OR LIKE DAMAGES
ARISING FROM ANY DEFECT, ERROR OR FAILURE TO PERFORM WITH RESPECT TO INFLAZYME
TECHNOLOGY OR THE LICENSED PRODUCT, EVEN IF INFLAZYME HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
12. INDEMNIFICATION.
12.1 SUPERGEN. SuperGen shall indemnify, defend and hold
harmless Inflazyme and its directors, officers, employees and agents (each an
"Inflazyme Indemnitee") from and against any and all liabilities, damages,
losses, costs or expenses (including reasonable attorneys' and professional fees
-22-
<PAGE>
and other expenses of litigation and/or arbitration) (a "Liability") resulting
from any claim, suit or proceeding brought by a third party against an Inflazyme
Indemnitee, arising out of or in connection with (i) any misrepresentation with
regard to, or breach of, any of the representations and warranties of SuperGen
set forth in Section 10.2, or (ii) the use by SuperGen or its sublicensees of
the materials provided by Inflazyme to SuperGen, or the development,
manufacture, use and sale of Licensed Products by SuperGen or its sublicensees,
except, in each case, to the extent due to the negligence or willful misconduct
of Inflazyme.
12.2 INFLAZYME. Inflazyme shall indemnify, defend and hold
harmless SuperGen and its directors, officers, employees and agents (each a
"SuperGen Indemnitee") from and against any and all Liabilities resulting from
any claim, suit or proceeding brought by a third party against a SuperGen
Indemnitee, arising out of or in connection with (i) any misrepresentation with
regard to, or breach of, any of the representations and warranties of Inflazyme
set forth in Section 10.1, (ii) its activities with respect performance of its
obligations under Article 2 or (iii) the development, manufacture, use and sale
of Licensed Products for use outside the Field by Inflazyme or its Affiliates,
except, in each case, to the extent due to the negligence or wilful misconduct
of SuperGen.
12.3 PROCEDURE. In the event that any Indemnitee intends to
claim indemnification under this Article 12, it shall promptly notify the other
party in writing of such alleged Liability. The indemnifying party shall have
the right to control the defense or settlement of any claim, suit or proceeding
brought with respect thereto, using counsel of its own choice; provided,
however, that any Indemnitees shall have the right to retain its own counsel at
its expense. Any Indemnitees shall cooperate fully with the indemnifying party
and its legal representatives in the investigation and conduct of any claim,
suit or proceeding covered by this Article 12. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any claim, suit or proceeding in respect of a Liability for which
indemnification sought hereunder, if prejudicial to the indemnifying party's
ability to defend such claim, shall relieve the indemnifying party of its
obligations under this Article 12 in respect of that Liability. An Indemnitee
shall not, except at its own cost, voluntarily make any payment or incur any
expense with respect to any claim, suit or Liability, or make any admission of
liability or attempt to settle any claim without the prior written consent of
the indemnifying party, which such party shall not be required to give.
13. TERM AND TERMINATION.
13.1 TERM. This Agreement will commence on the Effective Date
and unless earlier terminated as provided in this Article 13, will continue in
full force and effect on a Licensed Product-by-Licensed Product basis until the
first to occur of: (i) the twentieth anniversary of the Agreement, or
(ii) expiration of the last to expire patent within the Patent Rights covering a
particular Licensed Product.
13.2 TERMINATION FOR CAUSE. If either party materially breaches
this Agreement, the other party may elect to give the breaching party written
notice describing the alleged breach. If the breaching party has not cured such
breach in the case of a payment breach, within thirty (30) days, and in the case
of all other breaches, within sixty (60) days after receipt of such notice, the
notifying party will be entitled, in addition to any other rights it may have
under this Agreement, to terminate this
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<PAGE>
Agreement effective immediately; provided, however, that if any breach (other
than a payment breach) is not reasonably curable within such sixty (60) day
period, the notifying party shall not be entitled to terminate this Agreement
until the end of such further reasonable period of time as may be necessary for
the curing such default. Notwithstanding the foregoing, if either party
receives notification from the other of a material breach and if the party
alleged to be in default notifies the other party in writing within thirty (30)
days of receipt of such default notice that it disputes the asserted default,
the matter will be submitted to arbitration as provided in Section 14.14 of this
Agreement. In such event, the nonbreaching party shall not have the right to
terminate this Agreement until it has been determined in such arbitration
proceeding that the other party materially breached this Agreement, and the
breaching party fails to cure such breach within sixty (60) days after the
conclusion of such arbitration proceeding.
13.3 TERMINATION FOR INSOLVENCY. Either party may terminate this
Agreement if the other becomes the subject of a voluntary or involuntary
petition in bankruptcy or any proceeding relating to insolvency, receivership,
liquidation, or composition or the benefit of creditors, if that petition or
proceeding is not dismissed with prejudice within sixty (60) days after filing
in the country such entity is incorporated.
13.4 TERMINATION BY SUPERGEN. SuperGen may terminate this
Agreement with respect to any country with sixty (60) days written notice to
Inflazyme.
13.5 EFFECTS OF TERMINATION.
(a) ACCRUED RIGHTS AND OBLIGATIONS. Expiration or
termination of this Agreement for any reason shall not release any party hereto
from any liability which, at the time of such expiration or termination, has
already accrued to the other party or which is attributable to a period prior to
such termination, nor preclude either party from pursuing any rights and
remedies it may have hereunder or at law or in equity which accrued or are based
upon any event occurring prior to such termination.
(b) RETURN OF CONFIDENTIAL INFORMATION. Upon any
termination, but not expiration, of this Agreement, each party shall promptly
return to the other party all Confidential Information received from the other
party (except one copy of which may be retained for archival purposes).
(c) STOCK ON HAND. In the event this Agreement is
terminated for any reason, SuperGen and its Affiliates, sublicensees, and
distributors of any of the foregoing shall have the right to sell or otherwise
dispose of the stock of any Licensed Product subject to this Agreement then on
hand, subject to Articles 4 and 5.
(d) SUBLICENSEES. In the event of any termination of this
Agreement any sublicensees granted by SuperGen shall remain in full force and
effect and shall be assigned by SuperGen to Inflazyme.
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<PAGE>
(e) NON-EXCLUSIVE LICENSES. Upon expiration of this
Agreement, SuperGen's rights and licenses with respect to Know-How shall
continue on a perpetual, fully paid-up basis, and SuperGen shall owe Inflazyme
no further obligation with respect thereto.
13.6 SURVIVAL. Sections 4.1, 13.5 and 13.6, and Articles 5, 9,
12 and 14 shall survive any termination or expiration of this Agreement.
14. GENERAL.
14.1 GOVERNING LAW. This Agreement and any dispute arising from
the construction performance or breach hereof shall be governed by, construed,
and enforced in accordance with the laws of the State of California, without
reference and conflicts of law principles.
14.2 ASSIGNMENT. Neither party may assign this Agreement, or its
rights and obligations hereunder, to any third party without the prior written
consent of the other party, and such consent shall not be unreasonably withheld;
provided, however, that such consent shall not be required in the event of a
merger, acquisition, change in control, or similar reorganization.
14.3 INDEPENDENT CONTRACTORS. Nothing in this Agreement will be
construed to create a partnership, joint venture, or agency relationship between
Inflazyme and SuperGen, and neither party will enter into agreements of any kind
or make any representations or warranties on behalf of the other without the
prior written consent of the other party.
14.4 FORCE MAJEURE. Neither party will be liable for its failure
to perform any of its obligations under this Agreement due to a cause beyond its
reasonable control (except those caused by its own lack of funds), including
acts of god, fire, flood, explosion, strikes, lockouts or other industrial
disturbances, laws, rules and regulations or orders of any constituted
governmental authority, or non-availability of materials or transportation.
14.5 ENUREMENT. This Agreement shall enure to the benefit of and
bind the parties and their respective successors and permitted assigns.
14.6 NOTICE. Each Notice to a party must be given in writing. A
Notice may be given by delivery to an individual or by fax, and will be validly
given if delivered on a Business Day to an individual at the following address,
or, if transmitted on a Business Day by fax, confirmed with a telephone call,
addressed to the following party:
(a) if to Inflazyme:
999 West Broadway, Suite 880
Vancouver, British Columbia
V5Z 1K5
Attention: President
Fax No. (604) 733-5281
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<PAGE>
if to SuperGen:
SuperGen, Inc.
Two Annabel Lane, Suite 220
San Ramon, CA
U.S.A. 94583
Attention: Dr. Joseph Rubinfeld
Fax No.: (510) 327-7347
or to any other address, fax number or individual that the party designates.
Any Notice:
(b) if validly delivered, will be deemed to have been given
when delivered;
(c) if validly transmitted by fax before 3:00 p.m. (local
time at the place of receipt) on a Business Day, will be deemed to have been
given on the Business Day; and
(d) if validly transmitted by fax after 3:00 p.m. local
time at the place of receipt on a Business Day, will be deemed to have been
given on the Business Day after the date of transmission.
14.7 WAIVERS. No waiver of any provision of this Agreement is
binding unless it is in writing and signed by all the parties to this Agreement,
except that any provision which does not give rights or benefits to both parties
may be waived in writing, signed only by that party who has rights under, or
holds the benefit of, the provision being waived if that party promptly sends a
copy of the executed waiver to the other party. No failure to exercise, and no
delay in exercising, any right or remedy under this Agreement will be deemed to
be a waiver of that right or remedy. No waiver of any breach of any provision
of this Agreement will be deemed to be a waiver of any subsequent breach of that
provision or of any similar provision.
14.8 FURTHER ASSURANCES. Each party will promptly execute and
deliver all further documents and take all further action reasonably necessary
or appropriate to give the provisions and intent of this Agreement and to
complete the transactions contemplated by this Agreement.
14.9 REMEDIES CUMULATIVE. The rights and remedies under this
Agreement are cumulative and are in addition to and not in substitution for any
other rights and remedies available at law or in equity or otherwise. No single
or partial exercise by a party of any right or remedy precludes or otherwise
affects the exercise of any other right or remedy to which that party may be
entitled.
14.10 COUNTERPARTS. This Agreement and all documents contemplated
by or delivered under or in connection with this Agreement may be executed and
delivered in any number of counterparts with the same effect as if all parties
had all signed and delivered the same document and all counterparts will be
construed together to be an original and will constitute one and the same
agreement.
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<PAGE>
14.11 DELIVERY BY FAX. Any party may deliver an executed copy of
this Agreement by fax but that party will promptly dispatch by delivery by
overnight courier (e.g., FedEx, DHL, UPS) or in person to the other party an
originally executed copy of this Agreement.
14.12 AMENDMENTS. No amendment, supplement or termination of any
provision of this Agreement is binding unless it is in writing and signed by
each Person that is a party to this Agreement at the time of the amendment,
supplement or termination.
14.13 SUBMISSION TO JURISDICTION. Each of the parties irrevocably
submits to the jurisdiction of the courts of the State of California in any
action brought under or in connection with this Agreement and each party to this
Agreement waives, and will not assert by way of motion, as a defense, or
otherwise, in any such action, any claim that:
(a) that party is not subject to the jurisdiction of the
courts of the state of California;
(b) such action is brought in an inconvenient forum;
(c) the venue of such action is improper, or
(d) any subject matter of such action may not be enforced
in or by the courts of the state of California.
In any suit or action brought to obtain a judgment for the recognition as
enforcement of any final judgment rendered in such action, not party to this
Agreement will seek any review with respect to the merits of any such action,
whether or not that party appears in or defends such suit or action.
14.14 ARBITRATION. Any dispute or claim arising out of or related
to this Agreement, or the interpretation, making, performance, breach, validity,
or termination hereof, which has not been resolved by negotiation or mediation
as set forth above, shall be finally settled by binding arbitration in San
Francisco, California under the Commercial Arbitration Rules and the
Supplementary Procedures for Large Complex Disputes of the American Arbitration
Association (together the "AAA Rules") by one arbitrator appointed in accordance
with the AAA Rules. The arbitration proceedings shall be governed procedurally
by federal arbitration law and by the AAA Rules, without reference to state
arbitration law, and at the request of either party, the arbitrator will enter
an appropriate protective order to maintain the confidentiality of information
produced or exchanged in the course of the arbitration proceedings. The
judgment of the arbitrator shall be in the form of a reasoned, written opinion,
and shall be issued within sixty (60) days of the conclusion of the arbitration
proceeding. Judgment on the award rendered by the arbitrator may be entered in
any court of competent jurisdiction. The parties may apply to any court of
competent jurisdiction for a temporary restraining order, preliminary
injunction, or other interim relief, as necessary, without breach of this
arbitration provision and without any abridgment of the powers of the
arbitrator. The arbitrator may award to the prevailing party, if any, as
determined by the arbitrator, its costs and fees, including, without limitation,
AAA administrative fees, arbitrator fees, travel expenses, out-of-pocket
expenses, witness fees, and reasonable attorneys' fees.
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<PAGE>
ENTIRE AGREEMENT. This Agreement and its Schedule A and B
and all documents contemplated by or delivered under or in connection with this
Agreement, constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior agreements,
negotiations, discussions, undertakings, representations, warranties and
understandings, whether written or oral, express or implied, statutory or
otherwise.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first above written.
SUPERGEN, INC.
By: /s/ Dr. Joseph Rubinfeld
-----------------------------------------
Name: Dr. Joseph Rubinfeld
Title: President, Chief Executive
Officer and Chief Scientific
Officer
INFLAZYME PHARMACEUTICALS LTD.
By: /s/Dr. Hassan Salari
------------------------
Name: Dr. Hassan Salari
Title: President and Chief
Executive Officer
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<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE A
Inflazyme Research and Development Costs
PROJECT #1 "HAPALOSIN"
Hapalosin [*]
PRODUCTION OF HAPALOSIN
1. Culture
[*]
2. Isolation of Hapalosin
[*]
BUDGET:
The budget is based on production of first [*] of Hapalosin at [*].
[*] CDN$[*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Benefits [*]
-------
Sub Total CDN$[*]
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
PROJECT #2 RHIZOXIN
[*]
BUDGET:
[*] CDN$[*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
-------
Sub Total CDN$[*]
<PAGE>
SCHEDULE B
INVESTMENT REPRESENTATION STATEMENT
INVESTOR :
COMPANY : SuperGen, Inc.
SECURITY :
AMOUNT :
DATE :
In connection with the transfer of the above-listed Securities, I, the
Investor, represent to the Company the following:
1. I am aware of the Company's business affairs and financial
condition and have acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. I am acquiring
these securities for my own account for investment purposes only and not with a
view to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act").
2. I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that,
in the view of the Securities and Exchange Commission (the "SEC"), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.
3. I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In
addition, I understand that the certificate evidencing the Securities will be
imprinted with a legend which prohibits the transfer of the Securities unless
they are registered or such registration is not required in an opinion of
counsel satisfactory to the Company.
4. I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, including, among other things:
(1) the resale occurring not less than one year after the later of the date the
securities were sold by the Company or
<PAGE>
the date they were sold by an affiliate of the Company within the meaning of
Rule 144; and in the case of an affiliate or of a non-affiliate who has held the
securities less than two years, (2) the availability of certain public
information about the Company, (3) the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934), and
(4) the amount of securities being sold during any three month period not
exceeding the specified limitations stated therein, if applicable.
5. I further understand that at the time I wish to sell the
Securities, the Company may not be satisfying the current public information
requirements of Rule 144, and that, in such event, I would be precluded from
selling the Securities under Rule 144 even if the one-year minimum holding
period had been satisfied.
6. I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.
7. I am aware that the issuance of the Securities to me has been
made pursuant to an exemption from the qualification requirements of the
California Corporate Securities Laws of 1968, and that the Commissioner of
Corporations has not reviewed any aspect of the terms of this offering.
SIGNATURE OF INVESTOR:
----------------------------------------
Date: , 19
--------------- --
<PAGE>
EXHIBIT 10.26
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
NON-EXCLUSIVE SUPPLY AGREEMENT
THIS AGREEMENT ENTERED INTO by and between [*] (hereinafter "[*]") with its
principal offices located at [*] and SuperGen, Inc.
(hereinafter "SuperGen") with its principal offices located at 2 Annabel Lane,
Suite 220, San Ramon, CA 94583, USA.
Whereas [*] has developed a process for the production of Paclitaxel [*] and
has sought to implement a process which meets Good Manufacturing Practices
(hereinafter "GMP") of the United States Food and Drug Administration;
Whereas SuperGen has consulted with [*] concerning the development plans for
production of Paclitaxel and other products, and has sought to assist [*] with
certain technical assistance relating to assays and stability testing resources
for this project;
Whereas SuperGen has a number of new products in Clinical trials and in other
stages of development [*];
Whereas [*] and SuperGen, both are interested in furthering a mutually
beneficial relationship particularly in relation to new products of potential
interest to both parties for development and marketing [*];
Whereas [*] and SuperGen have made disclosures to one another concerning the
future development plans for Paclitaxel and other products under development by
SuperGen and both parties favour pursuing discussions in connection with forming
particular joint projects [*] for the development and marketing of these
products [*];
Whereas [*] wishes to obtain certain advance consideration and guarantees for
the future purchase of Paclitaxel; and
Whereas SuperGen desires to secure assured supplies of Paclitaxel from a
qualified vendor on a non exclusive basis.
Now Therefore [*] and SuperGen agree as follows:
1. Definitions
A. "ANDA" shall mean Abbreviated New Drug Application.
B. "DMF" shall mean a drug master file, or its equivalent for the Product
filed with a regulatory agency by or on behalf of [*] which is adequate to
comply with the applicable requirements and standards of such regulatory agency
with respect to the Product.
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
C. "FDA" shall mean the United States Food and Drug Administration.
D. "GMP" shall mean good manufacturing practices as defined by the FDA in
21 Code of Federal Regulations part 211.
E. [*]
F. "Specifications" shall mean the particulars pertaining to composition,
-------------- quality and other characteristics for the Product as set
forth in Exhibit A hereto as may be amended from time to time by mutual
agreement of the parties.
G. "USP" shall mean United States Pharmacopoeia.
H. "Product" shall mean bulk Paclitaxel.
-------
I. "Dollars" shall mean United States Dollars.
-------
2. SuperGen shall pay [*] during the GMP development process and FDA
inspection period, the sum of $1,000,000 (one million dollars) to
be applied as follows:
A. A payment of Four Hundred Thousand Dollars ($400,000) to be paid
within 30 days of the acceptance by both parties of this Agreement.
B. A payment of Three Hundred Thousand Dollars ($300,000) to be paid
within 10 days after the conclusion of accelerated stability studies at
a testing facility to be agreed upon by the parties, showing that the
Product, produced according to GMP, is stable for the period of time
recommended [*] for accelerated stability protocols. In addition
SuperGen agrees to pay for costs of stability studies on certification
batches of Paclitaxel to be performed at a laboratory mutually agreed
upon by [*] and SuperGen for such stability studies, and the cost of a
method transfer protocol up to a total up to a total of [*] dollars ($[*])
and agrees to pay fifty percent (50%) of such costs exceeding a total
of [*] dollars ($[*]) but less than a total of [*]dollars ($[*]) for a
maximum additional amount of [*] dollars ($[*]). [*] agrees to supply
the Paclitaxel and container closure system for stability studies.
C. A payment of Three Hundred Thousand Dollars ($300,000) to be paid
within 10 days after the FDA has submitted its preapproval inspection
report on [*]'s facility [*] and the FDA has indicated that it is
satisfied with [*]'s response to any deficiency, if any is cited,
observed in this FDA inspection report. [*]agrees to send to SuperGen a
copy of the FDA inspectors initial observations and the official
Establishment Inspection Report of every FDA inspection of the [*]
facility for production of Bulk Paclitaxel.
2
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
3. SuperGen agrees to purchase a minimum of [*] of Paclitaxel before the end
of one year from the date of approval of SuperGen's ANDA for Paclitaxel
drug product. After SuperGen has purchased [*] of Paclitaxel the payments
pursuant to paragraph 2B and 2C, subject to the provisions of paragraph 7
shall be creditable against orders of Paclitaxel from [*] after commercial
production of Paclitaxel approved by the FDA has begun.
4. SuperGen agrees to an initial purchase price of [*] dollars ($[*]) per
kilogram of Paclitaxel; however, in the event that SuperGen's average
wholesale selling price to its customers of generic Paclitaxel drug product
falls below $[*] per 30 mg vial, [*] and SuperGen will implement a lower
bulk Paclitaxel purchase price which shall then be effective according to
the following schedule:
Average Wholesale Price
30 Mg/vial Paclitaxel Bulk Drug Cost (Kg)
--------------------- -------------------------
$[*]/30 mg vial, or higher $[*]/Kg
$[*]/30mg vial, or higher but below $[*] $[*]/Kg
$[*]/30 mg vial, or higher but below $[*] $[*]/Kg
$[*]/30 mg vial, or higher but below $[*] $[*]/Kg
Below $[*]/30 mg vial $[*]/Kg
SuperGen agrees to present in confidence to [*] reasonable evidence from
SuperGen's sales records of the immediately previous forty five days of any
average wholesale selling price decline of Paclitaxel before any price
change becomes effective.
5. SuperGen agrees to issue to [*] an irrevocable Letter of Credit on account
of a bank mutually acceptable to SuperGen and [*] in the amount of
[*] Dollars ($[*]) at the time of the payment pursuant to paragraph 2A of
this Agreement, an additional irrevocable Letter of Credit in the amount of
[*] Dollars ($[*]) at the time of payment pursuant to paragraph 2B of this
Agreement, and a further additional irrevocable Letter of Credit in the
amount of [*] Dollars ($[*]) at the time of the payment pursuant to
paragraph 2C, which shall be security for delivery of SuperGen's initial
purchase and partial subsequent purchases of Paclitaxel. The irrevocability
of the above-mentioned Letters of Credit shall be subject to the provisions
of paragraphs 7 and 12 F of this Agreement.
6. [*] shall be free to sell Paclitaxel to any party in any place for any
purpose and SuperGen shall be free to purchase Paclitaxel from third
parties.
7. If Bristol Myers-Squibb's exclusivity period for Taxol does not expire in
December 1997 because of further extension, addition or replacement by
another right or period of exclusivity, SuperGen's obligation to purchase
Paclitaxel in the agreed period shall be suspended at SuperGen's option,
3
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
the payments under paragraph 2B and 2C shall be refunded to SuperGen, and
all of the Letters of Credit issued under paragraph 5 of this Agreement
shall become revocable by SuperGen.
8. [*] agrees to send to SuperGen a complete copy of the Analytical Methods
used to characterize the Product, complete Validation Data for the
Analytical Methods, and copy of the Environmental Impact Statement for the
Product within one month of the signing of this Agreement.
9. None of the Product supplied to SuperGen under this Agreement shall be
adulterated or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act, as amended and in effect at the time of shipment (the "ACT"),
or within the meaning of any state or municipal laws applicable to
pharmaceuticals or the Product and containing terms with substantially
similar meanings as the meanings of adulteration or misbranding under the
Act; provided however, that this provision shall not apply to, and [*]
shall have no responsibility for, misbranding caused directly by SuperGen
as a result of labels or package text specified by SuperGen for the
Product.
[*] will provide written notice to SuperGen of any proposed alterations to
the Facility or to any Product manufacturing or testing process; provided
however, that under no circumstances shall any such alteration be made
without SuperGen's prior written consent, or before regulatory approval if
required for any such alteration is received in each country in which
Product is being sold.
The parties agree to the following terms concerning shipment, delivery and
return of non-conforming Products.
A. The agreed price per kilogram of Paclitaxel pursuant to paragraph 4 of
this Agreement includes [*]'s payment of all shipping, freight forwarding
fees, taxes, customs, duties, licenses, permits and other governmental fees
and documentation [*] [*]. After delivery, SuperGen shall be
responsible for all payments of all taxes, customs, duties, licenses,
permits, and any other governmental requirements [*]. [*] and [*] agrees to
replace such Product as maybe lost in shipment at this price.
B. The shipments shall each include a complete certificate of analysis
including lot number or numbers and expiration date of not less than
eighteen (18) months from the date of arrival [*].
C. In the event that a monograph for Paclitaxel is approved by the
U.S.P., the Product shall meet any specifications of the U.S.P. monograph
and all tests used to characterize the Product described by the U.S.P.
monograph will be run in conformity with the U.S.P. prescribed tests. In
4
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
the event that the requirements of the FDA conflict with the U.S.P.
monograph for the Product and [*]'s manufacturing and control process of
Product described in the DMF, the parties will consult to seek a mutually
acceptable solution.
D. The Product shall be delivered to SuperGen with a completed Materials
Safety Data Sheet, a letter authorizing SuperGen and its agents to refer to
the DMF filed with the FDA, a Certificate of Analysis describing all
current requirements of the Specifications, results of tests performed and
a copy of the Batch Release Sheet certifying that the batch(es) of Product
supplied has been manufactured, controlled, and released according to the
Specifications, valid DMF and all relevant and current GMP requirements at
the manufacturing facility.
E. [*] warrants that the Product is merchantable and fit for the intended
purpose of further sterile processing to make parenteral pharmaceutical
preparations, that the Product shipped in fulfilment of any order has been
made, stored, and shipped in full compliance with Current Good
Manufacturing Practices of the U.S. Food And Drug Administration and that
the Product conforms to current Specifications. Prior to each shipment of
Product, [*] shall perform quality control procedures to verify that all of
the Product to be shipped conforms fully with the Specifications.
F. SuperGen shall have 30 days from the date of delivery of the Product
to SuperGen to complete analysis of the Product. If the Product conforms to
Product Specifications agreed to by SuperGen and [*] as reflected by the
certificate of analysis, SuperGen shall authorize payment under the Letters
of Credit. If the Letters of Credit mentioned in paragraph 5 of this
Agreement are exhausted, SuperGen agrees, at its sole option, to issue a
new sufficient Letter of Credit or will tender a cash deposit in the amount
of 50% of the original purchase price at the time when order is placed. The
shipment will be delivered upon receipt of (i) the new Letter of Credit or
(ii) the deposit, and in the event that the shipment is made on deposit the
remaining 50% of the purchase price will be due within 30 days of arrival
of the shipment [*], provided that the Product conforms to
the certificate of analysis. For the analysis SuperGen agrees to use a
laboratory that has participated in and satisfactorily completed the method
transfer protocol for all methods used in the analysis of the Product.
G. If the Product fails to conform to the certificate of
analysis, SuperGen shall immediately notify the [*] and [*] offices of [*]
via facsimile, diligently investigate the failure, determine whether to
reassay or to resample and retest, and complete such reassay or retest
within six weeks of the date of receiving the Product. If the Product again
fails to conform, SuperGen shall immediately notify the [*] and [*] offices
of [*], and [*] shall replace the non-conforming Product with conforming
Product (the "First Replacement Goods") within 10 working days of such
notification. SuperGen shall have 30 days from the date of delivery of the
First Replacement Goods to SuperGen to complete analysis of the First
Replacement Goods. If the First Replacement Goods fail to conform to the
certificate of analysis, SuperGen shall immediately notify the [*] and [*]
offices of [*] via facsimile, and [*] shall replace the non-conforming
First Replacement Goods with conforming Product (the "Second Replacement
Goods") within 10 working days of such notification.
5
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
SuperGen shall have 30 days from the date of delivery of the Second
Replacement Goods to SuperGen to complete analysis of the Second
Replacement Goods. If the Second Replacement Goods fail to conform to the
certificate of analysis, SuperGen shall immediately notify the [*] and [*]
offices of [*] via facsimile. SuperGen and [*] agree to use a laboratory
mutually acceptable to the parties which shall have authority to arbitrate
the test results and objectively determine the results of the reassay, or
resample and retest as the case may be and complete such arbitration within
10 days. If the Product is found to conform to Product Specifications then
SuperGen agrees to accept the Product and pay for the arbitration costs
incurred. If the Product is found to be non-conforming to Product
Specifications, [*] shall pay for the arbitration costs incurred. SuperGen
agrees to hold the non-conforming Product for a period of two weeks for [*]
to investigate the failure and to return the shipment of non-conforming
Product to the [*] office of [*], if [*] decides not to investigate. If
[*] cannot supply conforming goods in the First Replacement Goods and the
Second Replacement Goods shipment, or cannot make an original shipment or
replacement shipment, SuperGen shall have the right to obtain bulk
Paclitaxel from any other vendor who can supply bulk Paclitaxel meeting the
acceptance specification for Paclitaxel, and [*] shall pay the increase in
cost, if any, up to Ten Percent (10%) of the agreed original purchase price
between [*] and SuperGen and the price for the same amount of bulk
Paclitaxel ordered from [*] but obtained from a third party.
H. SuperGen agrees to initially order [*] of Paclitaxel from [*] upon FDA
approval of [*]'s manufacturing facility. At the time of the initial order,
SuperGen shall notify [*] of the amount of Paclitaxel it expects to order
for the subsequent quarter. No less than thirty days before the subsequent
quarter, SuperGen shall confirm the amount. SuperGen shall order Paclitaxel
in this manner for all orders after the initial order.
10. Representations and Warranties
A. [*] [*] represents and warrants that: (I) it has full power to enter
into this Agreement and to grant and to assign to SuperGen, Inc. the rights
granted and assigned to SuperGen Inc. hereunder. (ii) it has obtained all
necessary corporate approvals to enter into and execute the Agreement.
(iii) it has not entered and will not enter into any Agreements with any
third party that are inconsistent with this Agreement; (iv) [*] shall fully
comply with the requirements of any and all applicable federal, state,
local and foreign laws regulations, rules and orders of any governmental
body having jurisdiction over the activities contemplated by this
Agreement [*].
B. SUPERGEN SuperGen represents and warrants that (i) it has full power
to enter into this agreement; and (ii) it has obtained all necessary
corporate approvals to enter into and execute the Agreement (iii) it has
not entered and will not enter into any agreements with any third party
that are inconsistent with this Agreement; (iv) SuperGen shall fully comply
with the requirements of any and all applicable federal, sate, local and
foreign laws regulations, rules and orders of any governmental body having
jurisdiction over the activities contemplated by this Agreement [*]
6
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
[*].
11A.SuperGen will indemnify defend and hold harmless [*] its directors,
officers, employees, agents, successors and assigns from and against any
liabilities, expenses or costs (including reasonable attorney's fees)
arising out of any claim, complaint, suit, proceeding or cause of action
against any of them by a third party alleging physical injury or death or
otherwise resulting from (i) the promotion, distribution, sale, handling,
possession or use of the Product by or on behalf of SuperGen following its
or their acceptance thereof in accordance with paragraph 9 of this
Agreement (ii) the clinical use or testing of SuperGen's pharmaceutical
products incorporating Product, (iii) the negligent or intentional wrongful
acts or omissions of SuperGen and (iv) any breach by SuperGen of its
representations and warranties under paragraph 10 of this agreement, in
each case subject to the requirements set forth in paragraph 11 C of this
agreement. Notwithstanding the foregoing, SuperGen shall have no
obligations under this paragraph for any liabilities, expenses or costs
arising out of on relating to claims covered under paragraph 11(B) below.
B. [*] shall indemnify defend and hold harmless SuperGen its directors,
officers, employees, agents, successors and assigns from and against any
liabilities, expenses or costs (including reasonable attorneys' fees)
arising out of any claim, complaint, suit, proceeding or cause of action
against any of them by a third party alleging physical injury or death or
otherwise resulting from (i) the negligent or intentionally wrongful acts
or omissions of [*]; (ii) the loss of Product for which [*] bears the risk
and (iii) any breach by [*] of paragraphs 9 and 10 of this Agreement, in
each case subject to the requirements set forth in paragraph 11 C of this
Agreement.
C. Any party seeking indemnification under this Article (the
"Indemnitee") shall (i) promptly notify the indemnifying party (the
"Indemnitor") of such claim (ii) provide the Indemnitor sole control over
the defense and or settlement thereof and (iii) at the Indemnitor's request
and expense provide full information and reasonable assistance to
Indemnitor with respect to such claims. Without limiting the forgoing with
respect to claims brought under paragraphs 11 A and 11 B above, the
Indemnitee, at its own expense shall have the right to participate with
counsel of its own choosing in the defense and/or settlement of any such
claim.
12. General Provisions
A. ASSIGNMENT. The parties agree that their rights and obligations under
this Agreement may not be assigned or otherwise transferred to a third
party without the prior written consent of the other party hereto.
Notwithstanding the foregoing, either party may transfer or assign its
rights and obligations under this Agreement to a successor to all or
substantially all of its business or assets relating to this Agreement
whether by sale, merger, operation of law or otherwise; provided that such
assignee or transferee has agreed to be bound by the terms and conditions
of this Agreement. Subject to the foregoing, this Agreement shall be
binding upon and insure to the benefit of the parties hereto, their
successors and assigns.
7
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
B. GOVERNING LAW. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of California without
reference to conflict of laws principles [*].
C. ARBITRATION. Any dispute or claim arising out of or in connection
with this Agreement or the performance, breach or termination thereof,
shall be finally settled by binding arbitration in San Francisco,
California under the Rules of Arbitration [*] by three (3) arbitrators
appointed in accordance with said rules. The decision and/or award
rendered by the arbitrators shall be written, final and non-appealable
and may be entered in any court of competent jurisdiction. The parties
agree that, any provision of applicable law notwithstanding, they will
not request, and the arbitrator shall have no authority to award,
punitive or exemplary damages against any party. The costs of any
arbitration, including administrative fees and fees of the arbitrators,
shall be shared equally by the parties, unless otherwise determined by
the arbitrators. Each party shall bear the cost of its own attorneys' and
expert fees [*]. Notwithstanding the foregoing, either party may apply
to any court of competent jurisdiction for injunctive relief without
breach of this arbitration provision.
D. NOTICES. Any notice or report required or permitted to be given or
made under this agreement by either party shall be in writing and delivered
to the other party at its address indicated below (or to such other address
as a party may specify by notice hereunder by courier or by registered or
certified airmail, postage prepaid, or by facsimile; provided, however,
that all facsimile notices shall be promptly confirmed, in writing, by
registered or certified airmail, postage prepaid. All notices shall be
effective as of the date received by the addressee:
If to SuperGen, Inc.: SuperGen, Inc.
2 Annabel Lane, Suite 220
San Ramon, CA 94583
Attn: Dr. Joseph Rubinfeld
With a copy to: Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Paige Maillard, Esq.
If to [*]: [*]
8
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
With a copy to: [*]
With a copy to: [*]
E. LIMITATION OF LIABILITY. Neither party shall be liable to the other
party or any third party for any special, consequential, exemplary or
incidental damages (including lost or anticipated revenues or profits
relating to the same), arising from any claim relating to this agreement,
whether such claim is based on contract, tort (including negligence) or
otherwise, even if an authorized representative of such party is advised of
the possibility or likelihood of same. These limitations shall apply
notwithstanding the failure of the essential purpose of any limited remedy,
and the parties acknowledge that this paragraph represents a reasonable
allocation of risk.
F. FORCE MAJEURE. Neither party will be liable for its failure to perform
any of its obligations hereunder during any period in which such
performance is delayed by acts of God, fire, war, embargo, riots, strikes
or other similar cause outside the control of such party; however,
notwithstanding the forgoing, if during such period, [*] fails for 90
consecutive days to deliver Product ordered by SuperGen, the balance of any
Letters of Credit not yet drawn upon shall be revoked, and payment under
paragraphs 2 B and 2 C which has not yet been credited against Product
already delivered to SuperGen, shall be refunded by [*] to SuperGen.
G. CONFIDENTIAL TERMS. Except as expressly provided herein, each party
agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party, except as required by securities or
other applicable laws, to prospective investors and to such party's
accountants, attorneys and other professional advisors.
H. HEADINGS. Headings included herein are for convenience only, do not
form a part of this Agreement and shall not be used in any way to construe
or interpret this Agreement.
I. NON-WAIVER. Any waiver of the terms and conditions hereof must be
explicitly in writing. The waiver by either of the parties of any breach of
any provision hereof by the other shall not be construed to be a waiver of
any succeeding breach of such provision or a waiver of the provision
itself.
J. SEVERABILITY. Should any section, or portion thereof, of this
Agreement be held invalid by reason of any law, statute or regulation
existing now or in the future in any jurisdiction by any court of competent
authority or by a legally enforceable directive of any governmental body,
such section or portion thereof shall be validly reformed so as to
approximate the intent of the parties
9
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
as nearly as possible and, if unreformable, shall be deemed divisible and
deleted with respect to such jurisdiction, but the Agreement shall not
otherwise be affected.
K. INDEPENDENT CONTRACTORS. The relationship of SuperGen, Inc. and [*]
established by this Agreement is that of independent contractors. Nothing
in this Agreement shall be construed to create any other relationship
between SuperGen, Inc., and [*]. Neither party shall have any right, power
or authority to assume, create or incur any expense, liability or
obligation, express or implied on behalf of the other.
L. ENTIRE AGREEMENT. The terms and provisions contained in the Agreement,
including the Exhibits hereto, constitute the entire Agreement between the
parties and shall supersede all previous communications, representations,
Agreements or understandings, either oral or written, between the parties
with respect to the subject matter hereof. No Agreement or understanding
varying or extending this Agreement shall be binding upon either party
hereto, unless set forth in a writing which specifically refers to the
Agreement signed by duly authorized officers or representatives of the
respective parties, and the provisions hereof not specifically amended
thereby shall remain in full force and effect.
M. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but which together shall constitute one
and the same instrument.
The forgoing is AGREED and ACCEPTED
For [*] For SuperGen
/s/ Dr. Joseph Rubinfeld
- ------------------------------------- ------------------------------
[*] Dr. Joseph Rubinfeld
President and Chief Executive Officer President and Chief Executive
Officer
[*] SuperGen, Inc.
May 7, 1997 May 7, 1997
- ----------------------------------- ------------------------------
Date Date
10
<PAGE>
[*] REDACTED CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A
Specification
The Product shall have the following minimum characteristics and limits
specified in the certificate of analysis and these limits, unless otherwise
agreed to between the parties, shall be SuperGen's acceptance criteria for the
Product:
1. Identity: [*]
2. Appearance:
3. Potency by HPLC: [*]
4. Related Substances: [*]
5. Moisture:
Both parties agree to further discuss the viability and necessity of including
batch information on the following characteristics of the Product: Specific
Rotation, Crystallinity, Residual Solvent, pH, Residue on Ignition, Heavy
Metals, Microbiological Counts and Endotoxin. [*] agrees to make its best effort
to ensure that any or all of the above characteristics required by FDA will meet
with FDA standards. SuperGen agrees to provide [*] with technical assistance in
finding the best method development for acquiring information on these
characteristics.
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is effective as
of April 17, 1997 (the "Effective Date"), by and between SUPERGEN, INC., a
California corporation ("Assignor") and R & S, LLC, a California limited
liability company ("Assignee").
RECITALS
A. Assignor and Ellwin E. Ashwill, trustee of the Ashwill Trust,
established 11/8/89 ("Seller"), entered into that certain Standard Offer,
Agreement and Escrow Instructions for Purchase of Real Estate dated, for
reference purposes only, as of December 11, 1996, and all of the exhibits and
addenda attached thereto (collectively, the "Agreement"), whereby Assignor
agreed to purchase from Seller and Seller agreed to sell to Assignor all of
Seller's right, title and interest in and to that certain condominium property
commonly known as 1059 Serpentine Lane, Unit B, Pleasanton, Alameda County,
California, as more particularly described in the Agreement.
B. Pursuant to Paragraph H of Addendum A to the Agreement, Assignor
desires to assign to Assignee, and Assignee desires to assume, all of Assignor's
rights and obligations under the Agreement.
NOW, THEREFORE, for and in consideration of the Premises, the Agreement and
the mutual covenants and agreements set forth herein, Assignor and Assignee
agree as follows:
1. ASSIGNMENT OF AGREEMENT. As of the Effective Date, Assignor hereby
conveys and assigns to Assignee all of Assignor's right, title and interest in
and to the Agreement.
2. ASSIGNMENT OF AGREEMENT. Assignee accepts the foregoing assignment
and agrees to assume, pay and perform all of the terms and obligations of
Assignor under the Agreement.
3. INDEMNIFICATION. As of the Effective Date, Assignee shall indemnify,
defend, protect and hold Assignor harmless of and from any and all claims,
demands, causes of action or liabilities arising out of or resulting in any way
from the Agreement.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement to
be effective as of the Effective Date.
ASSIGNOR: ASSIGNEE:
SuperGen , Inc., a California R & S, LLC, a California limited
corporation liability company
By: /s/ Dr. Joseph Rubinfeld By: /s/ Dr. Joseph Rubinfeld
--------------------------- ----------------------------
Name: Dr. Joseph Rubinfeld Name: Dr. Joseph Rubinfeld
------------------------ ---------------------------
Title: President Title:
----------------------- --------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SUPERGEN, INC. MARCH 31, 1997 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,931,782
<SECURITIES> 0
<RECEIVABLES> 122,263
<ALLOWANCES> 146,800
<INVENTORY> 1,579,905
<CURRENT-ASSETS> 12,411,844
<PP&E> 1,045,187
<DEPRECIATION> 245,906
<TOTAL-ASSETS> 14,666,871
<CURRENT-LIABILITIES> 1,872,198
<BONDS> 0
0
0
<COMMON> 40,136,551
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,666,871
<SALES> 424,961
<TOTAL-REVENUES> 424,961
<CGS> 326,248
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,260,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,022,165)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,022,165)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,022,165)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> 0
</TABLE>
