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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED): FEBRUARY 19, 1998
NEOPHARM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 33-09516 51-0327886
STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION
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100 CORPORATE NORTH
SUITE 215
BANNOCKBURN, ILLINOIS 60015
(847) 295-8678
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
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Item 5. Other Events
On February 19, 1999, NeoPharm, Inc. (the "Company") entered into a
license agreement (the "License Agreement") with Pharmacia & Upjohn Company
("P&U") with respect to the Company's Liposomal Encapsulated Paclitaxel ("LEP")
and Liposomal Encapsulated Doxorubicin ("LED"), two of the Company's cancer
products. The License Agreement provides P & U with exclusive worldwide rights
to market and sell LED and LEP. Subject to future agreements and payments, the
Company and P & U have also agreed to work together to identify and develop
additional drugs in P&U's oncology portfolio using NeoPharm's proprietary
liposome technology.
Under the terms of the License Agreement, P & U agreed to make an
up-front payment to Company, which payment was received by the Company on
February 26, 1999. P & U has also agreed to provide all required funding for the
continuing clinical development of LEP and LED and to make subsequent milestone
payments as specified goals are achieved. In addition P & U will pay the Company
a royalty on all sales outside the United States and, within the United States,
the Company may elect a co-promotion arrangement under which profits will be
split between the two parties.
In connection with the License Agreement, the Company has also entered
into a Stock Purchase Agreement with P&U providing for P&U's purchase of
$8,000,000 of the Company's common stock based on 110% of the average closing
price per share of the Company's common stock as reported on the American Stock
Exchange during the 60-day period preceding the date upon which the Company
shall receive notification from the U.S. Food & Drug Administration ("FDA") that
the Company's IND filings for LED and LEP have been effectively transferred to
P&U. Assuming that the FDA notification is received within 60 days, the Company
anticipates issuing the above described shares of its common stock on or before
April 20, 1999. The sale of the shares will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), and will be made in
reliance on Section 4(2) of the Securities Act and Rule 506 of Regulation D. In
addition, P & U and the Company will enter into a registration rights agreement
providing P & U with certain demand and piggyback registration rights with
respect to the shares acquired from the Company.
Item 7. EXHIBITS.
*Exhibit 10.1. License Agreement, dated February 19, 1999, between Pharmacia and
Upjohn Company and NeoPharm, Inc.
Exhibit 10.2. Stock Purchase Agreement, dated February 19, 1999, between
Pharmacia and Upjohn and NeoPharm, Inc.
* Confidential treatment has been requested for portions of the referenced
agreement. The copy filed as an exhibit omits the information subject to the
confidentiality request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEOPHARM, INC.
By: /s/ JAMES M. HUSSEY
------------------------------------------
JAMES M. HUSSEY, President and Chief
Executive Officer
DATED: March 8, 1999
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EXHIBIT INDEX
*Exhibit 10.1 License Agreement, dated February 19, 1999, between Pharmacia and
Upjohn Company and NeoPharm, Inc.
Exhibit 10.2. Stock Purchase Agreement, dated February 19, 1999, between
Pharmacia and Upjohn Company and NeoPharm, Inc.
* Confidential treatment has been requested for portions of the referenced
agreement. The copy filed as an exhibit makes the information subject to
the confidentiality request.
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EXHIBIT 10.1
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended, and Rule 406 of the Securities Act of 1933, as amended.
These omitted portions have been marked with "***" and have been filed
separately with the Securities and Exchange Commission.
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LICENSE AGREEMENT
BY AND BETWEEN
PHARMACIA & UPJOHN COMPANY
AND
NEOPHARM, INC.
DATED AS OF FEBRUARY 19, 1999
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LICENSE AGREEMENT
This License Agreement (the "Agreement") is entered into as of February 19,
1999, by and between PHARMACIA & UPJOHN COMPANY, a Delaware corporation ("PNU"),
and NEOPHARM, INC., a Delaware corporation ("NeoPharm"). Capitalized terms used
in this Agreement shall have the meanings ascribed to them in Article I.
In consideration of the mutual promises hereinafter made and the mutual benefits
to be derived from this Agreement, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 "AAA" means the American Arbitration Association.
1.2 "AFFILIATE" means, with respect to any party (a) any of its
respective direct or indirect ultimate parent companies as may exist from time
to time, and (b) any company, firm or other entity (i) more than fifty percent
(50%) of whose issued and voting capital or share participation is now or
hereafter owned or (ii) now or hereafter controlled, in the case of either of
the foregoing clauses (i) or (ii), directly or indirectly by such party or by
its parent company. For the purpose of this definition, "control" means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of an individual, corporation or other legal entity,
whether through the ownership of voting securities, by contract, or otherwise.
1.3 "AGREEMENT TERM" means the term of this Agreement which commences
on the date hereof and ends on the first date that all of PNU's obligations to
pay any royalty or profit participation to NeoPharm on account of sales of the
Product in any country in the Territory.
1.4 "APPLICABLE LAWS" means all applicable laws, statutes, rules,
regulations, ordinances, orders, decrees, writs, judicial or administrative
decisions and the like of any nation or government, any state or other political
subdivision thereof, any entity exercising executive, judicial, regulatory or
administrative functions of or pertaining to government (including, without
limitation, any governmental authority, agency, department, board, commission or
instrumentality of any governmental unit or any political subdivision thereof),
any tribunal or arbitrator of competent jurisdiction, and any self-regulatory
organization.
1.5 "CLAIMS" means any and all claims, suits, proceedings, liabilities,
losses, damages, penalties, fines, assessments, expenses and costs of any kind
or nature, primary or secondary, direct or indirect, absolute or contingent,
known or unknown, including without limitation costs of settlement, reasonable
attorneys' fees and related costs and expenses and any liabilities for claims of
personal injury or death, suffered or incurred by an indemnified party
hereunder.
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1.6 "CO-PROMOTION ELECTION" means NeoPharm's election to co-promote the
Products in the Territory in lieu of receiving royalties in accordance with
Article VII hereof.
1.7 "COMPOUND" means LED or LEP, as the case may be, and "Compounds"
shall mean LED and LEP.
1.8 "COMPULSORY LICENSE" means a compulsory license under the NeoPharm
Patents or NeoPharm Know-How obtained by a Third Party through the order,
decree, or grant of a competent governmental authority, authorizing such Third
Party to develop, manufacture, process or use a Compound, or finish, market,
distribute detail or sell Products, in either case, in the Territory or in any
portion thereof.
1.9 "CONFIDENTIAL INFORMATION" means any and all data and information
of a proprietary or confidential nature that are owned or controlled by any
party hereto or their respective Affiliates and are made available by one party
or its Affiliates to any other party or its Affiliates prior to, during or after
the Agreement Term and that are directly or indirectly related to the Compounds,
Products and/or Improvements or the manufacture, use or sale thereof, including,
but without limitation, clinical or non-clinical data, formulations, processing
information, technical reports and specifications, marketing and sales
information, customer lists, supplier lists and pricing information.
Confidential Information shall not include information which:
(a) was known or used by the receiving party or its Affiliates prior to
its date of disclosure to the receiving party, as evidenced by the prior written
records of the receiving party or its Affiliates;
(b) either before or after the date of the disclosure to the receiving
party, is lawfully disclosed without restriction on disclosure to the receiving
party or its Affiliates by an independent, unaffiliated third party whose
disclosure of such information does not violate any obligation to or right of
the party owning or controlling the Confidential Information;
(c) either before or after the date of the disclosure to the receiving
party, becomes published or generally known in the industry through no fault or
admission on the part of the receiving party or its Affiliates or their
employees or agents; or
(d) can be shown by written documents to have been independently
developed by the receiving party or its Affiliates without breach of any of the
provisions of this Agreement.
(e) is disclosed by the receiving party pursuant to oral questions,
interrogatories, requests for information or documents, subpoena, or a civil
investigative demand of a court or governmental agency; provided that the
receiving party notifies the other party immediately upon receipt thereof (and
provided that the disclosing party furnishes only that portion of the
information which it is advised by counsel is legally required and impose such
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obligations of secrecy as are possible in that regard); or
(f) is required to be disclosed by a party under any statutory,
regulatory or similar legislative requirement or any rule of any stock exchange
to which it or any Affiliate is subject; provided, that the disclosing party
uses reasonable efforts to obtain confidential treatment of the Confidential
Information.
1.10 "CONTROL" means, with respect to any Know-How or intellectual
property right, that the party controlling owns or has a license to use such
Know-How or right and has the ability to grant the other party access, a license
or a sublicense to use such Know-How or right without violating the rights of
any Third Party.
1.11 "CORPORATE OVERHEAD" means general, administrative and facilities
expenses that are not generally directly charged to a department or Product.
1.12 "COST OF GOODS SOLD" means the sum of the following costs to the
extent allocable to Products to be sold hereunder: the cost of direct materials,
direct labor, manufacturing overhead, other allocable fixed and semi-fixed
costs, excess capacity developed in anticipation of reasonable forecasts of
Product sales, royalties payable in lieu of cash to third parties for the supply
and/or purchase of materials. The Cost of Goods Sold shall exclude the
following: Corporate Overhead, excess capacity costs not allocable to Products,
startup costs and Product royalties payable to NeoPharm under this Agreement.
The Cost of Goods Sold shall be calculated in a manner consistent with Generally
Accepted Accounting Principles ("GAAP") consistently applied and as generally
used by PNU.
1.13 "COUNTRY TERM" means the term during which PNU has any obligations
to NeoPharm with respect to a country within the Territory, including, but not
limited to, PNU's obligation to pay NeoPharm any royalty or profit participation
in such country.
1.14 "DIRECT COSTS" shall have the meaning set forth in Section 8.1.
1.15 "EX-U.S. TERRITORY" means all countries of the world outside the
U.S. Territory.
1.16 "FIELD OF USE" means collectively, the LED Field of Use and the
LEP Field of Use; provided, however, that Field of Use means specifically LED
Field of Use with respect to NeoPharm Patents and NeoPharm Know-How which relate
to LED; and provided further, that Field of Use specifically means LEP Field of
Use with respect to NeoPharm Patents and NeoPharm Know-How which relate to LEP.
1.17 "FORCE MAJEURE" means acts of God; acts, regulations, orders,
decrees or laws of any government or agency thereof that are not due to or
caused by any action or inaction of the party claiming the benefit of force
majeure where such action or inaction is in violation of such party's
obligations under this Agreement or Applicable Laws; war; damage to or
destruction of facilities; labor disturbances (whether or not any such labor
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disturbance is within the power of the affected party to settle); epidemic;
civil commotion; and failure of suppliers, public utilities or common carriers.
1.18 "FDA" means the United States Food and Drug Administration, or any
successor to its responsibilities with respect to pharmaceutical products such
as the Products.
1.19 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
1.20 "IMPROVEMENT" means any and all modifications or refinements
related to any Compound or Product or their use or the manufacturing processes
thereof, whether patented or not patented, which may be made, developed or
acquired by any party hereto or their Affiliates or Sublicensees, which arise
after the date of this Agreement.
1.21 "IND" means an Investigational New Drug application or its
equivalent for initiating clinical trials in the United States or any
corresponding foreign application, registration, or certification.
1.22 "JOINT INVENTION" means each invention or discovery related to the
Compound or the Product acquired or developed jointly (as determined by U.S. law
of inventorship) by NeoPharm and PNU (together with its employees, consultants
and subcontractors).
1.23 "KNOW-HOW" means clinical, technical, scientific and medical
information, knowledge, know-how, methods, inventions, practices and trade
secrets including, but without limitation, manufacturing processes and
techniques, quality control information and procedures and pharmacological,
toxicological and clinical test data and results having application in the Field
of Use;
1.24 "LED" means liposomal encapsulated doxorubicin, as more fully
described on Exhibit A hereto.
1.25 "LED FIELD OF USE" means any use in or with animals or humans.
1.26 "LED PRODUCT INTRODUCTION" means, with respect to each country in
the Territory, the first commercial sale of an LED Product in such country.
1.27 "LED PRODUCTS" means any finished products containing LED as the
active ingredient, in any formulation or dosage.
1.28 "LEP" means liposomal encapsulated paclitaxel, as more fully
described on Exhibit B hereto.
1.29 "LEP FIELD OF USE" means any use in or with animals or humans.
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1.30 "LEP PRODUCTS" means any finished products containing LEP as the
active ingredient, in any formulation or dosage.
1.31 "LICENSE(S)" shall mean the license(s) granted by NeoPharm to PNU
pursuant to Article II hereof.
1.32 "LICENSE EFFECTIVE DATE" means the date of this Agreement.
1.33 "MAJOR MARKETS" shall have the meaning set forth in Section
13.3(b).
1.34 "NDA" means (a) the single application or set of applications for
approval and/or pre-market approval to make and sell commercially a
pharmaceutical or biological therapeutic products or delivery systems or device
filed with the FDA or any successor agency having the administrative authority
to regulate the approval for marketing of new human pharmaceutical or biological
therapeutic products, delivery systems and devices in the United States,
including all information included in drug master files related to such
application(s), and (b) any related registrations with or notifications to the
FDA.
1.35 "NEOPHARM" means NeoPharm, Inc., a Delaware Corporation.
1.36 "NEOPHARM INDEMNIFIED PARTY" shall have the meaning set forth in
Section 17.1 hereof.
1.37 "NEOPHARM KNOW-HOW" means Know-How which is owned or controlled by
NeoPharm or its Affiliates on the License Effective Date of the Agreement to the
extent that such Know-How (i) pertains or relates to the Compounds or Products,
or (ii) is necessary for, directly used in or directly related to the
development or use of the Compounds or the development, registration,
manufacturing, formulation, sale, use and commercialization of the Products.
NeoPharm Know How does not include any NeoPharm Patents.
1.38 "NEOPHARM PATENTS" means:
(a) the Patents set forth on Exhibit C hereto;
(b) any applications for Patents listed in Exhibit C hereto, and any
division, continuation, or continuation-in-part of any such application, and any
Patent which shall issue based on such application, division, continuation or
continuation-in-part;
(c) any Patent which is a reissue or extension of, or addition to, any
Patent defined in (a) or any application maturing into a Patent defined in (b)
above;
(d) any Patent application or Patent corresponding to any Patent
application or Patent identified in (a), (b) or (c) above which is hereafter
filed or issued in any country.
(e) All Patents and Patent applications filed by either NeoPharm or PNU
in
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accordance with the provision of Sections 9.2, 9.3 or 9.5 hereof.
1.39 "NET PROFITS" means Net Sales less (i) Cost of Goods Sold,
royalties payable to parties other than NeoPharm, external pre-marketing costs,
non-personal promotion (NPP) (e.g., all external advertising and promotional
expenses, including samples, and Phase IV costs and other external costs
associated with sustaining the sales of Products, including legal fees incurred
by PNU in legal proceedings the defense of the Compounds or Products) determined
using the accrual basis of accounting in accordance with GAAP applied in a
manner consistent with PNU's customary practices, excluding the impact of
unusual and nonrecurring items; provided, however, salaries and benefits
associated with marketing, medical affairs, clinical and regulatory personnel,
as well as salaries and benefits of sales personnel (including travel and
automobile expenses) shall not be deducted in determining Net Profits.
1.40 "NET SALES" shall mean the gross revenues from the first
commercial sale of a Product by PNU, its Affiliates and/or Sublicensees, to
Third Parties, other than for the purpose of clinical studies, less deductions
for:
(a) standard transportation charges, including insurance, consistent
with custom in the industry;
(b) import, export, sales, use, value added, consumption and excise
taxes, tariffs and duties paid or allowed by a selling party and any other
governmental charges imposed upon the production, importation, use or sale of a
Product;
(c) normal and customary quantity discounts (including volume or
formulary or other positioning discounts paid or credited to any wholesaler,
purchaser or Third Party payor or other contractee as a result of a contractual
arrangement specific to a Product), cash discounts (including discounts for
prompt payment), and customary trade promotional allowances and credits, in the
ordinary course of business;
(d) discounts (including retroactive price reductions or a statutorily
required reimbursement) mandated by or granted in response to state, provincial
or federal law or regulation; allowances or credits to customers on account of
recalls, rejections or returns (including for spoiled, damaged and outdated
goods) in the ordinary course of business;
(e) rebates paid or credited to any government or agency or any Third
Party payor, administrator or contractee;
(f) wholesaler charge-backs allowed and taken in amounts customary in
the trade;
(g) deductions for uncollectible accounts;
(h) broker's or agent's commissions; and
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(i) the cost of any delivery system used with the Product (which may or
may not be bundled with the Product), that is not consumed with the Product or
an integral part of the Product.
1.41 "OTHER INFORMATION" means (a) information relating to a
disapproval or cancellation of an NDA (or any similar approval, disapproval or
cancellation outside of the United States); (b) information on modifications
required to be made in the contents of an NDA (or any similar approval outside
the United States) in order to prevent, or to warn against risks of, death or
bodily harm; (iii) information on withdrawal of a Product from the marketplace;
(iv) information on important revisions of the precautions in the usage of a
Product as set forth in the labeling pursuant to an NDA (or any similar
revisions outside the United States); and (v) any information which could
adversely impact the marketing of a Product.
1.42 "PATENT(S)" means valid and enforceable letters patent, and all
related reexaminations, reissues, renewals, extensions, inventor's certificates
and all foreign counterparts thereof.
1.43 "PNU" means Pharmacia & Upjohn Company, a Delaware corporation.
1.44 "PNU INDEMNIFIED PARTY" shall have the meaning set forth in
Section 17.2 hereof.
1.45 "PRODUCT(S)" means LED Products and LEP Products.
1.46 "PRODUCT KNOW-HOW" means all Know-How related to the Compounds or
the Products, other than NeoPharm Know-How.
1.47 "PRODUCT PATENTS" means (a) all the Patents related to the
Compounds or the Products, and any Patent which is a reissue or extension of, or
a Patent of addition to, any such Patent and (b) any Patent application based on
any Know-How related to the Compound or the Products, and any division,
continuation or continuation-in-part of any such application; and any Patent
which shall issue based on such application, division, continuation or
continuation-in-part, but specifically excluding from (a) and (b), any NeoPharm
Patent.
1.48 "PRODUCT TRADEMARKS" means all trademarks relating to the
Compounds or the Products.
1.49 "REASONABLE EFFORTS" shall have the meaning set forth in Section
13.3(a).
1.50 "REGULATORY APPROVAL" means (a) in the United States, approval by
the FDA of an NDA and satisfaction of any related applicable FDA registration
and notification requirements (if any) and (b) in any country other the United
States, approval by regulatory
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authorities having jurisdiction over such country of a single application or set
of applications comparable to an NDA and satisfaction of any related applicable
regulatory and notification requirements, if any, together with any other
approval necessary to make and sell commercially in such country a
pharmaceutical or biological therapeutic product or delivery system or device,
including, where applicable, satisfactory labeling and pricing approval, and, if
necessary for commercialization of a pharmaceutical or biological therapeutic
product or delivery system or device, governmental or third party reimbursement
approval and/or inclusion on any governmental formularies effective in such
country.
1.51 "RULES" means the rules of the AAA.
1.52 "STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement,
dated as of the License Effective Date, by and among NeoPharm and PNU.
1.53 "SUBLICENSEE" means any Affiliate or Third Party which shall be
granted a sublicense in accordance with Section 2.2. hereof.
1.54 "TERRITORY" means the U.S. Territory and the Ex-U.S. Territory.
1.55 "THIRD PARTY" means any individual, estate, trust, partnership,
joint venture, association, firm, corporation, company or other entity, other
than the parties hereto and their respective Affiliates.
1.56 "U.S. TERRITORY" means the United States and its territories and
possessions.
ARTICLE II.
GRANT OF LICENSES
2.1 GRANT OF LICENSES. In consideration of the payment of the License
Fee and the payment of royalties, or the profit participation, and subject to
Sections 2.5 and 2.6 below:
(a) Subject to NeoPharm's retained rights required to enable NeoPharm
to exercise its rights under Sections 6.2, 6.4 and 6.5 hereof and solely for
such purpose, NeoPharm hereby grants to PNU an exclusive license, throughout the
Territory, in the Field of Use, under the NeoPharm Patents, Product Trademarks
and NeoPharm Future Sole Inventions to make, have made, develop, use, market,
promote, sell and have sold the Compounds and the Products anywhere in the
Territory during the Agreement Term.
(b) Subject to NeoPharm's retained rights required to enable NeoPharm
to exercise its rights under Sections 6.2, 6.4 and 6.5 hereof and solely for
such purpose, NeoPharm hereby grants to PNU a royalty free, exclusive license to
use any and all NeoPharm Know-How, Improvements, Joint Inventions, Confidential
Information in the
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Field of Use throughout the Territory during the Agreement Term to make, have
made, market, promote, sell and have sold the Compounds and the Products.
(c) NeoPharm hereby grants to PNU access to all currently available or
later acquired information relating to the Compounds and the Products possessed
by NeoPharm, including, without limitation, pre-clinical data, clinical data,
regulatory submissions, NDAs (or the substantially equivalent foreign
approvals), patents, product registrations and authorizations, trademarks and
tradedress regarding the Compounds and the Products anywhere in the world for
exclusive use by PNU in the Field of Use.
2.2 RIGHT TO SUBLICENSE. PNU may sublicense, totally or in part, the
license rights granted under this Article II; provided, that (i) PNU must notify
NeoPharm in writing of any such sublicense other than to an Affiliate at least
forty-five (45) days in advance; (ii) PNU remains responsible to NeoPharm for
all contractual obligations of the Sublicensee, including, but not limited to,
payment of royalties, keeping of records and reporting of sales, as if the
Sublicensee's sales were PNU's sales; (iii) the Sublicensee agrees to be bound
by the terms of this Agreement to the same extent as PNU to the extent
applicable to the Sublicensee, and (iv) PNU and the Sublicensee comply with the
provisions set forth in Section 19.9.
2.3 PAID-UP LICENSE. Provided that PNU has satisfied all of its
obligations hereunder, including, but not limited to, the obligation to pay
royalties hereunder with respect to a particular Product, PNU shall have a
paid-up, non-exclusive royalty-free license to make, have made, use, distribute,
market, sell and have sold the Compounds and such Product within the Field of
Use in each country after the normal expiration of the applicable Country Term.
2.4 RIGHT TO PROPOSE ADDITIONAL LICENSES. PNU shall have the right to
propose additional licenses to allow for collaboration between PNU and NeoPharm
to develop, use, manufacture, or have manufactured, distribute, market, sell, or
have sold any other oncologic compounds using NeoPharm's proprietary liposomal
technology as may be mutually agreed to by NeoPharm and PNU from time to time.
The terms and conditions for such rights will be negotiated in good faith by the
parties to reflect the value added to any products by use of NeoPharm's
proprietary liposomal technology.
2.5 RETAINED RIGHTS. Notwithstanding anything in this Agreement,
NeoPharm shall have the right to develop any other products, with or without
other collaborators, and without regard to whether such products utilize or
incorporate any NeoPharm proprietary liposomal technology licensed to PNU
hereunder with the exception of the Compounds, the Products and other Compounds
in the class known as taxanes and anthracyclines.
2.6 EARLY TERMINATION. Should the Country Term be terminated early in
any country, pursuant to Section 15.1, then PNU's licenses pursuant to this
Article II shall terminate as to that country.
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ARTICLE III.
LICENSE FEE
3.1 License Fee. Subject to the terms and conditions of this Agreement,
in consideration of the Licenses granted to PNU, PNU shall, within three
business days after the License Effective Date, pay to NeoPharm *** Dollars ***.
ARTICLE IV.
MILESTONE PAYMENTS
4.1 LED MILESTONE PAYMENTS. The following milestone payments shall be
paid by PNU to NeoPharm within ten (10) business days of the occurrence of each
of the following milestones:
(a) PNU shall pay NeoPharm *** Dollars upon ***.
(b) PNU shall pay NeoPharm *** Dollars upon ***.
(c) PNU shall pay NeoPharm *** Dollars upon ***.
(d) PNU shall pay NeoPharm *** Dollars upon ***.
(e) PNU shall pay NeoPharm *** Dollars upon ***.
4.2 LEP MILESTONE PAYMENTS. The following milestone payments shall be
paid by PNU to NeoPharm within ten (10) business days of the occurrence of each
of the following milestones:
(a) PNU shall pay NeoPharm *** Dollars upon ***.
(b) PNU shall pay NeoPharm *** Dollars upon ***.
(c) PNU shall pay NeoPharm *** Dollars upon ***.
(d) PNU shall pay NeoPharm *** Dollars upon ***.
(e) PNU shall pay NeoPharm *** Dollars upon ***.
(f) PNU shall pay NeoPharm *** Dollars upon ***.
(g) PNU shall pay NeoPharm *** Dollars upon ***.
4.3 MILESTONE PAYMENTS PAYABLE ONCE. The milestone payments described
above shall only be payable once, upon the occurrence of an event requiring such
payment, and shall not be payable upon subsequent occurrences of such event.
*** Confidential Treatment Requested
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ARTICLE V.
EQUITY INVESTMENT
5.1 EQUITY INVESTMENT. PNU shall make certain equity investments in
NeoPharm in the form of purchases of NeoPharm Common Stock according to the
terms and conditions of the Stock Purchase Agreement, which shall be in a form
substantially similar to Exhibit D hereto.
ARTICLE VI.
ROYALTIES; PROFIT SHARING
6.1 LED PRODUCT PAYMENTS IN THE U.S. TERRITORY. At least ninety (90)
days prior to its filing of an NDA for the first LED Product with the FDA, PNU
shall provide NeoPharm with written notice of the date on which it intends to
make such NDA filing the "LED NDA Notice"). Thereafter, at the written request
of NeoPharm, which request must be received by PNU not later than the date set
forth in the LED NDA Notice for the NDA filing, NeoPharm shall have the right,
in the U.S. Territory, to elect to receive royalties for licensing the NeoPharm
Patents, NeoPharm Know-How and other intellectual property to PNU hereunder in
the U.S. Territory, on the sale of any LED Products or to participate, pursuant
to Article VII, in the profits of the sale of such LED Products pursuant to a
co- promotion arrangement. If no election is made, NeoPharm shall be deemed to
have elected to receive royalties.
(a) In the event NeoPharm shall have elected, or shall have been deemed
to have elected, to receive royalties, for licensing the NeoPharm Patents,
NeoPharm Know-How and other intellectual property to PNU hereunder in the U.S.
Territory, then PNU shall pay such royalties at the rate of *** of Net Sales of
LED Products sold in the U.S. Territory, commencing on LED Product Introduction
in the U.S. Territory and continuing for ten (10) years thereafter.
(b) In the event NeoPharm shall have elected to co-promote the LED
Products pursuant to Section 7.1 hereof, the profit-sharing arrangement shall be
agreed upon between NeoPharm and PNU based upon the methodology set forth in the
Profit and Loss Schedule attached hereto as Schedule 7.1.
6.2 LED PRODUCT ROYALTIES IN THE EX-U.S. TERRITORY. PNU shall pay to
NeoPharm royalties, for licensing the NeoPharm Patents, NeoPharm Know-How and
other intellectual property to PNU hereunder in the Ex-U.S. Territory, on a
country by country basis (during each applicable Country Term) on Net Sales of
LED Products in the Ex-U.S. Territory at the rate of (a) *** percent commencing
with the LED Product Introduction in each country and continuing for seven (7)
years thereafter, and (b) *** percent, commencing the day immediately after the
seventh anniversary of the LED Product Introduction in each country and
continuing for three (3) years. Following the expiration of PNU's obligations to
pay royalties to NeoPharm in any country in the Ex-U.S. Territory, (i) provided
PNU has paid all royalties due, PNU shall have a paid-up, non-exclusive, royalty
free license under
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Section 2.3 hereof, and (ii) NeoPharm shall have the right to sell any LED
Products in such country and, in furtherance of such right, PNU will (i) license
to NeoPharm, on a royalty free, non-exclusive basis, with a right to sublicense,
any Patents held or licensed to PNU that are applicable to LED Products in such
country and (ii) provide, or cause to be provided, to NeoPharm, on commercially
reasonable terms, a supply of cardiolipin sufficient to allow NeoPharm to
exploit the rights hereunder granted to NeoPharm under this Section 6.2.
6.3 LEP PRODUCT PAYMENTS IN THE U.S. TERRITORY. At least ninety (90)
days prior to its filing of an NDA for the first LEP Product with the FDA, PNU
shall provide NeoPharm with written notice of the date on which it intends to
make such NDA filing (the "LEP NDA Notice"). Thereafter, at the written request
of NeoPharm, which request must be received by PNU not later than the date set
forth in the LEP NDA Notice for the NDA filing, NeoPharm shall have the right,
in the U.S. Territory, to elect to receive royalties for licensing the NeoPharm
Patents, NeoPharm Know-How and other intellectual property to PNU hereunder in
the U.S. Territory, on the sale of any LEP Products or to participate, pursuant
to Article VII, in the profits of the sale of such LEP Products pursuant to a
co- promotion arrangement. If no election is made, NeoPharm shall be deemed to
have elected to receive royalties.
(a) In the event NeoPharm shall have, or shall have been deemed to
receive royalties for licensing the NeoPharm Patents, NeoPharm Know-How and
other intellectual property to PNU hereunder in the U.S. Territory, then PNU
shall pay such royalties at the rate of *** percent of Net Sales of LEP Products
sold in the U.S. Territory for so long as PNU has exclusivity as a result of
selling an LEP Product that is covered by at least one claim set forth in any of
the NeoPharm Patents, which claim has not expired and has not been declared
invalid or unenforceable by a U.S. District Court in a judgment that is either
not appealed or is not appealable.
(b) In the event NeoPharm shall have elected to co-promote the LEP
Products pursuant to Section 7.1 hereof, the profit-sharing arrangement shall be
agreed upon between NeoPharm and PNU based upon the methodology set forth in the
Profit and Loss Schedule attached hereto as Schedule 7.1.
6.4 LEP PRODUCT ROYALTIES IN THE EX-U.S. TERRITORY. PNU shall pay to
NeoPharm royalties for licensing the NeoPharm Patents, NeoPharm Know-How and
other intellectual property to PNU hereunder in the Ex-U.S. Territory, on Net
Sales by PNU of LEP Products in the Ex-U.S. Territory at the rate of *** % for
the valid life of the enforceable NeoPharm Patents, after which PNU shall have a
fully paid-up license to LEP and the LEP Products, and NeoPharm shall not be
entitled to any further royalties. Following the expiration of PNU's obligations
to pay royalties to NeoPharm in any country in the Ex- U.S. Territory, NeoPharm
shall have the right to sell any LEP Products in such country.
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6.5 ROYALTY REDUCTION ON SALES OF PRODUCTS; RIGHT TO SUPPLY.
(a) PNU shall use all commercially reasonable efforts so that the Cost
of Goods Sold plus royalties does not exceed *** % of Net Sales of the LEP or
LED Products, respectively, in any year. NeoPharm agrees to reduce the royalties
for any LEP Product sold or for any LED Product sold so that, in either case,
the total of Cost of Goods Sold plus royalties shall not exceed *** % of Net
Sales of LEP Products or LED Products, as the case may be, in any year.
(b) NeoPharm shall have the right to supply LEP or LED to PNU, its
Affiliates or Sublicensees if NeoPharm can supply such Product of the same
quality and specification and at a lower cost than PNU or any Third Party
supplier.
6.6 COMPULSORY LICENSE. PNU shall use all commercially reasonable
efforts to prevent or avoid any Third Party from obtaining or being granted a
Compulsory License, and to the extent that a Third Party does obtain or is
granted a Compulsory License, PNU will use all commercially reasonable efforts
to limit or reduce the scope or applicability of such Compulsory License. If,
notwithstanding PNU's use of commercially reasonable efforts, any Third Party
obtains a Compulsory License in any country, then NeoPharm or PNU (whoever has
first notice) shall promptly notify the other party. If the royalty rate payable
by the grantee of the Compulsory License is less than the above royalty rates,
the above royalty rates shall be reduced to such lower rate in the subject
country for so long as sales are made pursuant to the Compulsory License.
6.7 COMBINATION SALES. In the event any of the Products are packaged or
combined with any other products for sale in any country, the royalties payable
with respect to sales of such Product shall be calculated on the price of the
Product as if such Product had continued to be sold alone.
6.8 PAYMENTS. Royalties or profit participation payable hereunder will
be paid to NeoPharm not later than forty-five (45) calendar days following the
end of each calendar quarter and each such payment shall be accompanied by a
report in writing showing the period to which such payment applies, the amount
billed to unaffiliated Third Parties for Products during such calendar quarter,
the deductions from the amount billed to arrive at Net Sales, the total Net
Sales for the period, the Cost of Goods Sold and the royalties due on such Net
Sales or the profit allocable to NeoPharm, as the case may be.
6.9 CURRENCY OF PAYMENT. All payments to be made by PNU to NeoPharm
hereunder shall be made in U.S. Dollars. Net Sales outside the U.S. shall be
first determined in the currency of the country in which they are earned and
shall be converted quarterly into an amount in U.S. Dollars based on PNU's
internal exchange rates used in preparing PNU's consolidated earnings statements
for such quarter.
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6.10 SINGLE ROYALTY. Any royalties payable under Article VI will be
payable only once with respect to a particular unit of Product and will be paid
only once regardless of there being more than one NeoPharm Patent applicable to
such unit of Product.
6.11 RECORDS. PNU shall keep for three (3) years from the date of each
payment of royalties complete and accurate records of Net Sales by PNU, its
Affiliates and sublicensees of each Product in sufficient detail to allow
royalties to be determined accurately. NeoPharm shall have the right for a
period of three (3) years after receiving any report or statement with respect
to royalties due and payable to obtain at its expense from the independent
certified public accountant used by PNU an audit of the relevant records of PNU
to verify such report or statement. PNU shall make its records available for
inspection by such independent certified public accountant during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from NeoPharm, to the extent reasonably necessary to
verify the accuracy of the reports and payments. Such inspection right shall not
be exercised more than once in any calendar year nor more than once with respect
to sales in any given period, unless a subsequent inspection reveals
discrepancies which may have also occurred during such period. Such independent
certified public accountant shall report to NeoPharm only as to the accuracy of
the Net Sales computation and royalty payments. If the audit shows that PNU has
underpaid any royalties by five percent (5%) or more, for any period covered by
the audit, PNU shall, in addition to immediately remitting to NeoPharm the
amount of underpayment, (i) pay for the cost of such audit and (ii) pay interest
to NeoPharm at a per annum rate equal to 2% above the Prime Rate as announced
from time to time by Citibank, N.A. (the "Late Payment Rate") on such
underpayment from the date such amounts were accrued until the date such amounts
are paid. In the event the audit shows that PNU has overpaid any royalties due
to NeoPharm hereunder, PNU shall be allowed to deduct the amount of such
overpayment (plus interest on such overpayment at the Late Payment Rate from the
date of such underpayment) from the next royalty payment due to NeoPharm. The
independent certified public accountant agrees to hold in strict confidence all
information concerning royalty payments and reports, and all information learned
in the course of any audit or inspection, except to the extent necessary for
such party to reveal such information in order to allow NeoPharm to enforce its
rights under this Agreement or disclosure is required by law. The failure of
NeoPharm to request verification of any report or statement during the three (3)
year period shall be considered acceptance of the accuracy of such report, and
PNU shall have no obligation to maintain records pertaining to such report or
statement beyond the three (3) year period. The results of the inspection shall
be binding on both parties.
6.12 WITHHOLDING TAXES. All amounts owing to NeoPharm on account of
royalties or profits as specified in this Agreement shall be paid net of all
applicable taxes, fees and other charges required to be withheld. PNU shall use
its commercially reasonable efforts to reduce the amount of any withholding
taxes and to promptly remit all refunds and rebates to NeoPharm.
6.13 OTHER FORMS OF REMUNERATION. If PNU receives non-cash compensation
from sales of Products in a manner other than one for which royalties based on
Net Sales
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would be the appropriate measure, such as compensation through a co-marketing or
joint venture arrangement, the parties will negotiate in good faith an
appropriate compensation arrangement by which NeoPharm will be equitably
remunerated.
ARTICLE VII.
CO-PROMOTION
7.1 CO-PROMOTION. NeoPharm shall have the right in accordance with
Article VI, to co-promote the Products in the U.S. Territory under an
arrangement to be agreed upon between NeoPharm and PNU based upon the
methodology set forth in the Profit and Loss Schedule attached hereto as
Schedule 7.1 and upon the following terms:
(a) NeoPharm's participation in the Net Profits shall be in proportion
to its monetary contribution to the promotion of each Product (which shall
include an allocation of sales representatives as needed) but in no event shall
NeoPharm's share of profits exceed *** % of the total Net Profits.
(b) NeoPharm shall pay to PNU within sixty (60) days of notifying PNU
of its election to co-promote a Product in the U.S. Territory an amount equal to
PNU's development costs for such Product (which costs shall not exceed ***
percent of PNU's Development Costs throughout the Territory as calculated in
accordance with PNU's standard internal policies and procedures) multiplied by
NeoPharm's Net Profit percentage determined under Section 7.1(a) and multiplied
by a premium determined in accordance with *** hereto to reflect the development
risk incurred by PNU.
(c) If NeoPharm exercises the Co-promotion Election, no royalty shall
become payable by PNU to NeoPharm with respect to sales of any Product subject
to such arrangement, in the U.S. Territory.
(d) The co-promotion rights set forth herein are not sublicensable,
assignable or transferable by NeoPharm and shall not be sublicensed, assigned or
transferred without PNU's prior written consent. Without limiting the foregoing,
and except as may otherwise be agreed by the parties, in the event of a merger
with or acquisition by any third party (i) with interests in oncology, including
companies involved in cytotoxic compounds or products or (ii) which is a clear
competitor of PNU in the oncology business, such consent will not be given, and,
PNU shall have the right to terminate the co-promotion arrangement.
(e) In the event PNU terminates the co-promotion arrangement pursuant
to Section 7.1(d), PNU shall thereafter pay NeoPharm a royalty of (i) ***
percent on all sales of LED Products in the U.S. Territory for the remainder of
the otherwise applicable ten (10) year term and (ii) *** % on all sales of LEP
Products in the U.S. Territory for the duration that PNU has exclusive rights in
the NeoPharm Patents covering LEP.
(f) If NeoPharm exercises the Co-Promotion Election, the parties will
negotiate in good faith to conclude a co-promotion agreement within ninety (90)
days of such election,
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specifying the rights and obligations of the parties. PNU shall have final
decision making authority in the event the parties are unable to agree except
with respect to NeoPharm's right to decide its monetary contribution and level
of profit participation as specified in Section 7.1(a).
ARTICLE VIII.
TECHNICAL ASSISTANCE; DEVELOPMENT EXPENSES; REPORTS
8.1 FURTHER ASSURANCE. Without otherwise limiting the representations
and warranties of NeoPharm, NeoPharm shall use reasonable commercial efforts to
assist and enable PNU or any Affiliate or Sublicensee thereof to obtain and
confirm in PNU the rights granted to PNU pursuant to this Agreement to develop,
use, make and have made the Compounds and to develop, use, make, have made,
distribute, market, sell and have sold the Products and shall take all such
other actions as PNU may reasonably request to obtain and confirm in PNU such
rights. If NeoPharm, in connection with its reasonable commercial efforts,
shall, upon prior written request from, and subsequent written approval by, PNU,
incur any reasonable out of pocket expenses or costs ("Direct Costs") in
obtaining or confirming in PNU or any Affiliate or Sublicensee such rights, such
Direct Costs shall be promptly reimbursed by PNU except as may be provided in
Section 10.5 or Section 17.
8.2 DEVELOPMENT COSTS AND TECHNICAL ASSISTANCE. All of the development
costs, clinical and pre-clinical, regulatory and manufacturing scale-up expenses
(including capital investments for equipment and any other manufacturing
facilities required) for the Products incurred after the date hereof, shall be
borne by PNU. To the extent PNU requests NeoPharm to provide personnel or
supplies or to take any other action in connection with the foregoing, PNU shall
reimburse NeoPharm for all reasonable out-of-pocket costs incurred therewith.
8.3 REPORTS. PNU shall deliver to NeoPharm reports, at least quarterly,
providing NeoPharm with sufficient information so as to allow NeoPharm to be
adequately informed as to the strategic development of the Compounds and the
Products. In connection therewith, NeoPharm may request a meeting to discuss the
contents of the report.
ARTICLE IX.
INTELLECTUAL PROPERTY
9.1 EXISTING NEOPHARM PATENT APPLICATIONS. With respect to Patent
applications relating to any NeoPharm Know-How existing as of the License
Effective Date (a) NeoPharm shall remain the owner of the Patent application,
(b) NeoPharm shall continue to bear the full costs of and responsibility for
preparing, filing and prosecuting the application and (c) the Patent application
and any Patents issuing thereon shall constitute NeoPharm Patents for purposes
of this Agreement. NeoPharm will keep PNU reasonably informed of the status of
existing Patent applications.
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9.2 FUTURE PATENT APPLICATIONS ON EXISTING NEOPHARM KNOW-HOW. The
following provisions shall apply to each Patent application covering any
NeoPharm Know- How existing as of the date hereof in the Field of Use which
could be filed in the future.
(a) NeoPharm shall remain the owner of such NeoPharm Know-How subject
to such Patent application and shall own any such patent applications and any
Patent issued thereon.
(b) NeoPharm shall have the initial option whether or not to file a
Patent application for such NeoPharm Know-How; provided, that if NeoPharm does
not elect to exercise such option, then PNU may file such Patent application in
NeoPharm's name.
(c) If, anywhere in the Territory, NeoPharm determines to file a Patent
application for the NeoPharm Know-How within the Field of Use, the following
provisions shall apply: (i) NeoPharm will prepare a first draft of the Patent
application and furnish a copy of the draft to PNU for comment at least 30 days
before filing the Patent application, (ii) NeoPharm will revise the Patent
application as requested by PNU and file the Patent application in each country
in which PNU elects to do so, (iii) NeoPharm will bear the full costs of
preparing, filing and prosecuting the application and NeoPharm will control the
prosecution of the Patent application, (iv) in any country in which the NeoPharm
elects not to file the Patent application, PNU may file the Patent application
in NeoPharm's name, but at its own cost, and control the prosecution thereof (in
which event it will keep NeoPharm reasonably informed of the Patent
application's progress), and (v) each Patent application and any Patent issuing
thereon filed by NeoPharm or by PNU in NeoPharm's name will constitute NeoPharm
Patents for purposes of this Agreement and shall be exclusively licensed to PNU
by NeoPharm without any additional royalty within the Field of Use.
(d) If NeoPharm elects not to file a Patent application covering any
such NeoPharm Know-How anywhere in the Territory, the following provisions shall
apply: (i) the NeoPharm Know-How will remain a trade secret of NeoPharm (unless
(ii) below becomes applicable), (iii) will be deemed to be Confidential
Information (unless (iii) below becomes applicable) and (iv) PNU shall have the
right to file such Patent applications for the NeoPharm Know-How, at PNU's sole
cost and expense, anywhere in the Territory, with all rights in such Patent
application and any resulting Patent being licensed by NeoPharm to PNU without
the payment of any consideration and thereafter being deemed a NeoPharm Patent.
9.3 FUTURE PATENTS RELATED TO THE COMPOUND OR THE PRODUCTS DEVELOPED BY
NEOPHARM.
(a) NeoPharm shall be deemed the sole owner of all Know-How related to
the use, manufacture, form or delivery of a Compound or Product, acquired,
developed or discovered by NeoPharm or its Affiliates, employees, consultants or
subcontractors ("NeoPharm Future Sole Inventions"), after the License Effective
Date and any Patent application filed or any Patent issued thereon and shall
grant PNU a royalty free, non-
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exclusive license to use such Know-How, Patent application or Patent within the
Field of Use throughout the Territory during the Agreement Term.
(b) NeoPharm shall have an initial option whether or not to file a
Patent application for the NeoPharm Future Sole Invention; provided that if
NeoPharm does not elect such option, then PNU may file such Patent application
in NeoPharm's name.
(c) If PNU elects to file a Patent application in NeoPharm's name for a
NeoPharm Future Sole Invention, then the following provisions shall apply: (i)
PNU will prepare a first draft of the Patent application and furnish a copy of
the draft to NeoPharm for comment at least thirty (30) days before filing the
Patent application, (ii) PNU will bear the full costs of preparing, filing and
prosecuting the Patent application and maintaining any Patents that are issued
on the Patent application and PNU will control the prosecution of such Patent
application, and (iii) each Patent application and any Patent issuing thereon
filed by PNU in NeoPharm's Name shall be owned by NeoPharm and shall be deemed
to be a NeoPharm Patent.
(d) If NeoPharm and PNU initially elect not to file any Patent
application for NeoPharm Future Sole Inventions, then the following provisions
shall apply: (i) the NeoPharm Future Sole Invention will remain a trade secret,
(ii) the NeoPharm Future Sole Invention shall be deemed to be Confidential
Information and (iii) PNU shall not have the right to file any Patent
applications for the NeoPharm Future Sole Invention anywhere in the world at a
later date without the written permission of NeoPharm.
9.4 FUTURE PATENTS RELATED TO THE COMPOUND OR THE PRODUCTS DEVELOPED BY
PNU.
(a) PNU shall be deemed the sole owner of all Know-How related to the
use, manufacture, form or delivery of a Compound or Product, acquired, developed
or discovered by PNU or its Sublicensees or Affiliates, or any of their
respective employees, consultants or subcontractors ("PNU Future Sole
Inventions"), after the License Effective Date, and any Patent application filed
or Patent issued thereon, and, subject to the rights granted under Sections 2.5,
2.6, 6.2, 6.4, 6.5 and 9.10, PNU shall grant to NeoPharm a royalty free,
non-exclusive license to use such Know-How, Patent application or Patent within
the Field of Use throughout the Territory after expiration of the Agreement
Term.
(b) PNU shall be solely responsible for electing, in its sole
discretion, whether or not to file a Patent application for PNU Future Sole
Inventions.
(c) If PNU elects to file a Patent application for a PNU Future Sole
Invention in at least one country in the Territory, then the following
provisions shall apply: (i) PNU will prepare a first draft of the Patent
application, (ii) PNU will furnish a copy of the draft Patent application to
NeoPharm for informational purposes only at least thirty (30) days before filing
the Patent application, (iii) PNU will bear the full costs of preparing, filing
and prosecuting the Patent application and maintaining any patents that issue on
the Patent
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application, and (iv) the applications and Patents referred to herein will
constitute Product Patents for purposes of this Agreement.
(d) If PNU elects not to file any Patent application for PNU Future
Sole Inventions anywhere in the Territory, then the following provisions shall
apply: (i) the PNU Sole Future Invention will remain a trade secret to the
extent PNU so desires, (ii) the PNU Future Sole Invention shall be deemed to be
Confidential Information and (iii) NeoPharm will not have the right to file any
Patent applications for the PNU Future Sole Invention anywhere in the world.
9.5 JOINT INVENTIONS. To the extent it is practical to do so, Patent
applications for Joint Inventions shall be handled as if they were PNU Future
Sole Inventions under Section 9.4.
9.6 COOPERATION. Each party will cooperate with the other and will
cause its employees, consultants and subcontractors to also cooperate, in
completing any Patent applications for Joint Inventions, and in executing and
delivering any instrument required to permit PNU to exercise its rights under
this Article IX, including where appropriate instruments assigning its joint
ownership interest in any Joint Inventions.
9.7 NEOPHARM PATENTS. NeoPharm shall take all commercially reasonable
steps necessary to maintain, for the full life thereof, all NeoPharm Patents.
9.8 PATENT EXTENSIONS.
(a) PNU shall have the right, upon consultation with NeoPharm and
election by NeoPharm not to take the actions described in (i) and (ii) below, to
file on behalf of and as agent for NeoPharm, all applications and to take all
actions necessary (i) to obtain the benefits of the Drug Price Competition and
Patent Term Restoration Act of 1984 and any amendments thereto to the extent
such benefits relate to Products and (ii) to extend the lives of the NeoPharm
Patents that claim Compounds or Products constituting drug products or otherwise
involve the protection of such Products to the extent permitted by any other law
or regulation by, among other things, applying for supplemental protection
certificates. NeoPharm agrees to execute and deliver such further authorizations
and instruments and to take such further actions as may be requested by PNU to
implement the foregoing.
(b) To the extent the NeoPharm Patents are subject to regulations or
statutes comparable to those referred to in Section 9.8(a), NeoPharm agrees to
exercise its rights under such regulations and statutes in a fair and equitable
manner that takes into account the legitimate commercial interests of PNU, upon
consultation with PNU.
9.9 PUBLIC DISCLOSURE. Each party agrees to delay any public disclosure
of the subject matter of any Patent application to which this Article IX applies
until the filing of all U.S. and intended foreign applications but in no event
more than one (1) year from the first filed (priority) application.
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9.10 OWNERSHIP OF THE DATA, DATABASE AND IND'S. PNU will be the sole
owner of (a) all the data generated by the non-clinical and clinical testing of
the Products, including Product Know How (b) the database for such data, and (c)
all IND's filed for clinical studies of the Products and any comparable
regulatory filings in the Ex-U.S. Territory. Except as, and to the extent,
necessary to enable NeoPharm to exercise its rights under Section 6.5, NeoPharm
shall not have access to the database without PNU's prior written consent which
consent shall not be unreasonably withheld after expiration of the Agreement
Term. Upon PNU's request, NeoPharm shall promptly assist PNU, and shall use
commercially reasonable efforts to encourage its vendors and subcontractors to
assist PNU, in preparing and obtaining favorable review of IND's relating to the
Products and the foreign equivalents of such IND's. If PNU so desires, NeoPharm
shall transfer to PNU any IND's relating to the Products owned or Controlled by
NeoPharm.
9.11 REGULATORY FILINGS. PNU or its Sublicensees shall be responsible
for the preparation of suitable applications for Regulatory Approval in any
country in the Territory and shall be the owner and party of record of all such
applications, including all NDAs. PNU shall solely determine those countries of
the Territory in which to file such applications. At PNU's request, NeoPharm
shall promptly assist PNU, and shall use commercially reasonable efforts to
encourage its vendors and subcontractors to assist PNU in the preparation of
such applications and the obtaining of Regulatory Approvals by, among other
things, (a) providing PNU with all needed Know-How, reports, authorizations,
certificates, methodologies, specifications and other documentation which
NeoPharm owns or Controls, (b) making NeoPharm's facilities reasonably available
for inspections by the FDA and other governmental authorities, and making
NeoPharm's personnel reasonably available to the FDA and other governmental
authorities and (c) use commercially reasonable efforts to encourage its vendors
and subcontractors to make their facilities available for inspections by the FDA
and other governmental authorities and to make their personnel available to the
FDA and other governmental authorities.
9.12 PACKAGING. PNU shall own all Product Trademarks. If NeoPharm so
requests, and to the extent allowable by law, PNU will identify, in packaging
and package inserts for Products, NeoPharm as the licensor of the Compounds.
Notwithstanding the foregoing, if PNU reasonably believes, based on objective
information, that identifying NeoPharm or using the NeoPharm mark will have an
adverse impact on the image or commercialization of the Products, due to adverse
publicity relating to NeoPharm or its personnel, products or business or some
other event or circumstance, PNU will discuss the situation with NeoPharm and
may, after such discussion, discontinue identifying NeoPharm or using the
NeoPharm mark.
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ARTICLE X.
INFRINGEMENT OF THIRD PARTY RIGHTS
10.1 NOTICES. During the Agreement Term, PNU and NeoPharm shall each
promptly, but in any event no later than fifteen (15) calendar days after such
party receives notice of or becomes aware of any of the following, notify the
other in writing of:
(a) Any Claim by a Third Party against NeoPharm or PNU, or any
Affiliate or Sublicensee of NeoPharm or PNU, alleging infringement of such Third
Party's intellectual property rights as a result of the use, development or
manufacture of the Compound or the development, use, manufacture, use, marketing
or sale of the Products anywhere in the Territory; or
(b) Any patent nullity actions, declaratory judgment actions or alleged
Patent invalidity or non-infringement of Patent or Patents pursuant to a
paragraph IV patent certification by a party filing an ANDA with respect to the
NeoPharm Patents or Product Patents in the Territory;
The parties agree that time is of the essence with respect to the giving of
notices hereunder.
10.2 CONTROL OF DEFENSE AGAINST NEOPHARM PATENT CLAIMS. NeoPharm shall
have the initial right to manage solely the defense of the parties against any
Third Party Claims alleging infringement of such Third Party's intellectual
property rights as a result of the use, development or manufacture of the
Compounds or the development, use, manufacture, use, marketing or sale of the
Products anywhere in the Territory, that primarily involve the NeoPharm Patents.
If NeoPharm elects to exercise such right as to such a claim, PNU shall
cooperate with NeoPharm at NeoPharm's request, and shall have the right to be
represented by counsel selected by PNU at PNU's cost. If NeoPharm elects not to
exercise such right as to such a claim, PNU shall have the right to manage
solely the defense of the parties against the Claim, and NeoPharm shall
cooperate with PNU at PNU's request and shall have the right to be represented
by counsel selected by NeoPharm. In the event PNU desires to settle any such
claim, PNU shall notify NeoPharm, and PNU shall not be authorized to settle any
such claim without NeoPharm's consent (which consent shall not be unreasonably
withheld).
10.3 CONTROL OF DEFENSE AGAINST PRODUCT PATENT CLAIMS. PNU shall have
the initial right to manage solely the defense of the parties against any Third
Party Claims alleging infringement of such Third Party's intellectual property
rights as a result of the use, development or manufacture of the Compounds or
the development, use, manufacture, use, marketing or sale of the Products
anywhere in the Territory, that primarily involve the Product Patents. If PNU
elects to exercise such right as to such a Claim, NeoPharm shall cooperate with
PNU at PNU's request, and shall have the right to be represented by counsel
selected by NeoPharm at NeoPharm's cost. If PNU elects not to exercise such
right as to such a claim, NeoPharm shall have the right to manage solely the
defense of the parties against the claim, but only if the subject of the claim
relates to a Compound, and PNU shall
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cooperate with NeoPharm at NeoPharm's request and shall have the right to be
represented by counsel selected by PNU. In the event PNU desires to settle any
such claim, PNU shall notify NeoPharm, and PNU shall not be authorized to settle
any such claim without NeoPharm's consent (which consent shall not be
unreasonably withheld).
10.4 PAYMENTS TO THIRD PARTIES. If PNU is required by a final court
order or a settlement agreement entered into with NeoPharm's consent (which
consent shall not be unreasonably withheld) to make royalty payments or other
payments to a Third Party in connection with the disposition of any Claim
alleging infringement of such Third Party's intellectual property rights as a
result of the use, development or manufacture of the Compounds or the
development, use, manufacture, marketing or sale of the Products anywhere in the
Territory NeoPharm shall make, or provide reimbursement to PNU for, all such
payments; provided that in no event shall NeoPharm make or reimburse PNU for any
such payments with respect to any Claims which have arisen out of or relate to
any future changes in dosage, administration or manufacture of the Compounds or
the Products from that set forth in the NeoPharm Patents or the NeoPharm
Know-How existing on the License Effective Date.
10.5 NEOPHARM ACQUISITION OR LICENSE OF THIRD PARTY RIGHTS. The parties
shall discuss and mutually develop a plan for any actions to be taken with
respect to the intellectual property rights of Third Parties. In the event it is
mutually agreed that NeoPharm should acquire or license any intellectual
property rights of a Third Party having the effect of reducing or eliminating
the amount of any actual or potential indemnification to be provided pursuant to
Section 17.2, such amount shall be paid by NeoPharm without any right to
reimbursement from PNU.
10.6 NO THIRD PART EFFECT. Neither this Article X, nor any exercise of
rights or fulfillment of obligations under this Article X, shall affect by
itself any indemnification or contribution rights of either party against any
other party.
ARTICLE XI.
INFRINGEMENT BY THIRD PARTIES
11.1 NOTICE. During the Agreement Term, PNU and NeoPharm shall each
promptly, but in any event no later than fifteen (15) calendar days after such
party receives notice of or becomes aware of any of the following, notify the
other in writing of:
(a) Any actual or threatened unlawful disclosure or infringement by any
Third Party of all or any part of the NeoPharm Patents, NeoPharm Know-How,
Product Patents or Product Know-How in the Territory; or
(b) Any information that may reasonably be considered material to the
validity or enforceability of the NeoPharm Patents or Product Patents.
The parties agree that time is of the essence with respect to the giving of
notices hereunder.
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11.2 PROSECUTION OF ACTIONS.
(a) NeoPharm shall have the primary right, but not the obligation, to
institute, prosecute and control any action or proceeding with respect to any
infringement of any of the NeoPharm Patents or NeoPharm Know-How by counsel of
its own choice. PNU shall cooperate with NeoPharm at NeoPharm's request in the
prosecution of such action or proceeding. If NeoPharm determines that PNU is an
indispensable party to the action, PNU hereby consents to be joined. In such
event, PNU shall have the right to be represented in that action by counsel of
its own choice and expense.
(b) If NeoPharm fails to bring an action or proceeding within a period
of thirty (30) days after receiving written notice from PNU or otherwise having
knowledge of that infringement, PNU shall have the right to bring and control
any such action by counsel of its own choice and expense. If PNU determines that
NeoPharm is an indispensable party to the action, NeoPharm hereby consents to be
joined. In such event, NeoPharm shall have the right to be represented in that
action by counsel of its own choice and expense.
11.3 NOTICE. Any notice under this Article XI shall set forth the facts
of such infringement in reasonable detail.
11.4 PROSECUTION OF ACTIONS.
(a) PNU shall have the primary right, but not the obligation, to
institute, prosecute and control any action or proceeding with respect to any
infringement of any of the Product Patents or Product Know-How by counsel of its
own choice. NeoPharm shall cooperate with PNU at PNU's request in the
prosecution of such action or proceeding. If PNU determines that NeoPharm is an
indispensable party to the action, NeoPharm hereby consents to be joined. In
such event, NeoPharm shall have the right to be represented in that action by
counsel of its own choice and expense.
(b) If PNU fails to bring an action or proceeding within a period of
thirty (30) days after receiving written notice from NeoPharm or otherwise
having knowledge of that infringement, NeoPharm shall have the right to bring
and control any such action by counsel of its own choice and expense. If
NeoPharm determines that PNU is an indispensable party to the action, PNU hereby
consents to be joined. In such event, PNU shall have the right to be represented
in that action by counsel of its own choice and expense.
11.5 DIVISION OF PROCEEDS. No settlement, consent judgment or other
voluntary final disposition of a suit under this Article XI may be entered into
without the joint consent of PNU and NeoPharm, which consent shall not be
withheld unreasonably. If NeoPharm brings an action, any damages or other
monetary awards recovered by NeoPharm shall be applied first to defray the costs
and expenses incurred in the action. If any balance remains, NeoPharm shall pay
PNU *** of such balance. If NeoPharm fails to bring action and PNU brings action
any damages or other monetary awards recovered by PNU shall be applied first to
defray the costs and expenses incurred in the action. If any balance remains,
PNU shall
*** Confidential Treatment Requested
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pay NeoPharm *** of such balance.
ARTICLE XII.
REPRESENTATIONS AND WARRANTIES
12.1 REPRESENTATIONS AND WARRANTIES OF THE PARTIES. NeoPharm and PNU
each represent and warrant to the other, as of the License Effective Date, as
follows:
(a) It is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority, corporate or otherwise, to conduct its business
as now being conducted, to own, lease and operate its properties and to execute,
deliver and perform this Agreement.
(b) Neither it, nor any of its employees or consultants who shall be
undertaking any activities related to this Agreement or the Products, has been
debarred or the subject of debarment proceedings by the FDA.
(c) Except with respect to the filing of a pre-merger notification
report under the HSR Act, if necessary, or pursuant to Section 19.17, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency is required to be obtained or made by or
with respect to such party in connection with its execution, delivery and
performance of this Agreement.
(d) The execution, delivery, consummation and performance by it of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action and will not (a) require any consent or approval
of its stockholders, (b) violate any Applicable Laws or (c) result in a breach
of or constitute a default under any material agreement, mortgage, lease,
license, permit or other instrument or obligation to which it is a party or by
which it or its properties may be bound or affected.
(e) This Agreement is a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
(f) It is not under any obligation to any Third Party, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.
12.2 REPRESENTATIONS AND WARRANTIES OF NEOPHARM. NeoPharm represents
and warrants to PNU, as of the License Effective Date, that:
(a) To the best of its knowledge, NeoPharm has not committed any act or
failed to take any action which would cause a material omission or permit any
acts or omissions to occur which would be in conflict with its obligations under
this Agreement or diminish
*** Confidential Treatment Requested
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in any material respect the potential scope of the grant of rights to PNU under
this Agreement.
(b) NeoPharm has no knowledge that the license rights granted to PNU
with respect to the Compounds or Products are subject to any material retained
rights of any state, federal or foreign government or governmental entity.
(c) NeoPharm has no knowledge that making, using or selling any
Compounds or Products within the Field of Use may infringe the patent rights of
any Third Party nor does it have any knowledge that any third party is
infringing the NeoPharm Patents licensed hereunder.
(d) NeoPharm has delivered to PNU copies of all NeoPharm Know-How,
together with any other information now owned or controlled by NeoPharm that is
reasonably necessary or useful to a complete understanding of the prospects for
the Compounds and the Products including without limitation complete reports on
all serious adverse experiences associated with the use of the Compounds with
any pharmaceutical product or other substance. To the best of its knowledge, all
of such information is materially correct and complete.
(e) Exhibit C contains an accurate, correct and complete list of all
Patent applications owned or Controlled by NeoPharm claiming inventions that may
be useful or necessary in the LED Field of Use, and all NeoPharm Patents owned
or Controlled by NeoPharm claiming inventions that may be useful or necessary in
the LEP Field of Use, and NeoPharm has disclosed to PNU all material information
known to NeoPharm relating to the prospects for issuance of NeoPharm Patents
from such Patent applications and the validity and enforceability of such
NeoPharm Patents.
(f) To the best of its knowledge, the conduct of its business as
currently conducted does not violate, and the conduct of its business as
proposed under this Agreement would not violate, any of the intellectual
property rights of any other person or entity relating to the use of the
Compounds or the Products.
(g) To the best of its knowledge, there has been no, and there
currently is no, material unauthorized use, infringement or misappropriation of
any NeoPharm Know-How or NeoPharm Patents.
(h) To the best of its knowledge, the execution and delivery of this
Agreement by NeoPharm and its performance of its obligations under this
Agreement will not violate any federal, state, municipal statute or regulation
or any order of any court or other governmental department, authority, agency or
instrumentality.
(i) NeoPharm has not, and during the Agreement Term will not, grant any
right to any Third Party relating to the NeoPharm Patents and NeoPharm Know-How
which would conflict with the rights granted to PNU hereunder.
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(j) Any data submitted to the FDA for the Compounds was complete and
accurate in all material respects when submitted and continues to be complete
and accurate. Neither NeoPharm nor, to the best of its knowledge, its Affiliates
has, with respect to the Compounds, made an untrue statement of a material fact
or fraudulent statement to the FDA, failed to disclose a material fact required
to be disclosed to the FDA or committed an act, made a statement or failed to
make a statement that could reasonably be expected to provide a basis for the
FDA to invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery and Illegal Gratuities" as set forth in 56 Fed. Reg. 46191 (September
10, 1991).
(k) No proceedings have been instituted or are pending which challenge
any rights of NeoPharm with respect to the NeoPharm Know-How, or the validity of
the NeoPharm Patents. Neither the Compounds nor NeoPharm's business relating to
the development, use or manufacture of the Compounds is the subject of: (i) any
outstanding judgment, order, writ, injunction or decree of, or settlement
agreement with, any person, corporation, business entity, court, arbitrator or
administrative or governmental authority or agency, limiting, restricting or
affecting the Products or such business in a way that would have an adverse
effect on PNU's manufacture, sale and marketing of the Products as contemplated
herein; and (ii) any pending or, to the knowledge of NeoPharm, threatened Claim,
suit, proceeding, charge, inquiry, investigation or action of any kind.
(l) NeoPharm has sufficient legal and/or beneficial right, title and
interest in, to and under the NeoPharm Patents, the NeoPharm Know-How and its
other intellectual property rights to conduct its business as now conducted
under this Agreement and to grant the Licenses contained herein.
(m) To the best of its knowledge, the Compounds and the Products used
in clinical studies have been manufactured in registered GMP complaint
facilities in accordance with applicable Good Manufacturing Principles
regulations.
(n) All material registrations and filings, including the payment of
maintenance and renewal fees, have been timely made for the NeoPharm Patents as
are necessary to preserve the rights of NeoPharm or to prosecute Patent
applications in the ordinary course of NeoPharm's management of its intellectual
property rights.
12.3 MUTUAL LIMITATIONS ON WARRANTIES AND DAMAGES. OTHER THAN THE
REPRESENTATIONS AND WARRANTIES MADE BY THE PARTIES PURSUANT TO SECTIONS 12.1 AND
12.2 OR ELSEWHERE HEREIN, THE PARTIES DISCLAIM ANY AND ALL OTHER WARRANTIES
WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY WARRANTY ARISING FROM
COURSE OF DEALING OR USAGE OF TRADE.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by NeoPharm and by PNU in this Agreement are made as of the
License
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Effective Date, and they shall only be valid and survive for a period ending on
the third year anniversary of the License Effective Date and shall thereafter be
of no force or effect, except to the extent required to enforce the parties'
accrued rights and obligations hereunder following the end of such period for
any Claims which have been properly notified by one party to any other party
prior to the expiration of such period.
ARTICLE XIII.
COVENANTS
13.1 COVENANTS OF THE PARTIES. Throughout the Agreement Term, NeoPharm
and PNU shall:
(a) Comply in all material respects with all Applicable Laws.
(b) Promptly notify the other if it becomes aware of any Other
Information.
(c) Execute and deliver any further or additional instruments or
documents and perform any acts which may be reasonably necessary in order to
effectuate and carry out the purposes of this Agreement.
13.2 COVENANT OF NEOPHARM. From and after the License Effective Date,
NeoPharm shall:
(a) work in good faith with PNU to assure satisfactory arrangements for
the long term supply of bulk paclitaxel and cardiolipin.
(b) not provide any rights to any Third Party with respect to the
Products, the Compounds and other compounds in the class known as taxanes and
anthracyclines within the Field of Use.
(c) provide written notice to PNU of any Patent applications owned or
Controlled by NeoPharm arising after the License Effective Date claiming
inventions that may be useful or necessary in the LED Field of Use or the LEP
Field of Use, and all material information known to NeoPharm relating to the
prospects for issuance of NeoPharm Patents from such Patent applications and the
validity and enforceability of such NeoPharm Patents.
13.3 COVENANTS OF PNU.
(a) PNU shall use Reasonable Efforts to timely achieve the milestones
referenced in Sections 4.1 or 4.2 hereof and to introduce, promote, market and
sell the Products in the Territory and such efforts shall be consistent with
providing NeoPharm with the benefit of the royalty payments and/or co-promotion
of the Products as contemplated herein. PNU shall maintain adequate facilities,
Product inventory and personnel to ensure prompt handling and servicing of
customer inquiries and orders and prompt shipping and servicing of the Products.
For purposes of this section 13.3, "Reasonable Efforts" shall mean efforts and
resources commonly used in the research-based pharmaceutical industry for a
product at a
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similar stage in its product life taking into account the establishment of the
product in the marketplace, the competitiveness of the marketplace, the
proprietary position of the product, the regulatory structure involved, the
profitability of the product and other relevant factors. Such resources and
efforts shall be determined for a particular Product on a case-by-case basis;
and it is anticipated that the level of effort will change over time reflecting
changes in the status of the Product and the marketplace.
(b)PNU CEASES TO MARKET OR SELL PRODUCT. Unless otherwise mutually
agreed to by the parties, should PNU or its Affiliates or Sublicensees:
(1)cease to market or sell a Product for more than one year other than
because of legal or administrative actions causing the cessation of
marketing, Force Majeure or bona fide business reasons (provided that
PNU shall use Reasonable Efforts to avoid or eliminate any such action,
condition or business reasons) in (i) the United States, (ii) the U.K.,
Spain, Italy, France and Germany ("European Markets") or (iii) Japan;
or
(2) fail to launch a particular Product within one year from
the occurrence of the latest to occur of the following events (if
applicable in such countries): (m) issuance of a Product's NDA approval
(or equivalent regulatory approval), (n) governmental price approval
and approval for reimbursement or, (o) joint resolution of any other
bona fide business reasons for delaying such launch, in (x) the U.S.,
(y) the European Markets, or (z) Japan,
then in either case, PNU shall have no further rights to the applicable
Product in the countries where such cessation or failure to launch has
occurred, and PNU shall have no further obligations for the applicable
Product in the countries where such cessation or failure to launch has
occurred, except such obligations which accrued prior to divestment
from PNU of rights to the applicable Product.
In the event rights to a Product are divested from PNU in (i) the U.S.,
(ii) the European Markets, or (iii) Japan pursuant to this Section
13.3(b) and upon NeoPharm's request, PNU shall immediately transfer the
NDA approval (or equivalent regulatory approval) in the applicable
countries to NeoPharm or to an appointee of NeoPharm, provide to
NeoPharm all data in PNU's possession or control relating to that
Product and take all such other actions as are necessary or useful to
permit NeoPharm to obtain Regulatory Approvals to market the Product in
the applicable countries. NeoPharm shall market the Product under its
own tradenames or brands and shall not use PNU's tradenames or brands
and NeoPharm shall pay to PNU a royalty on Net Sales of all such
Products in the applicable countries at the same rate as PNU would have
been required to pay NeoPharm.
Failure by PNU to launch a Product or cessation of marketing or sale of
a Product pursuant to this Section 13.3(b) shall not be considered a
breach of this Agreement within the meaning of Article 15.
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For the avoidance of doubt, it is understood between the parties hereto
that the provisions of this Section 13.3(b) shall not apply in the
event that PNU or its Affiliates or Sublicensees cease to sell a
Product for reasons related to the safety or efficacy of a Product.
13.4 MAINTENANCE OF LICENSES FROM THIRD PARTIES. So as not to adversely
affect PNU's right to NeoPharm Patents and NeoPharm Know-How under this
Agreement, NeoPharm agrees during the Agreement Term: (a) not to take any
actions to terminate or restrict its rights under any Third Party license
agreements or other agreements which give rise to such rights, (b) to discharge
all of NeoPharm's obligations and responsibilities under any such Third Party
license agreements or other agreements, including without limitation, making all
required payments thereunder, (c) to notify PNU promptly of NeoPharm's receipt
of any notices of breach under any such Third Party license agreements or other
agreements, and (d) during the Agreement Term, NeoPharm will not knowingly
infringe any valid Third Party intellectual property rights in its conduct of
any activity related to this Agreement.
13.5 MANUFACTURE AND SUPPLY OF COMPOUNDS. NeoPharm will deliver to PNU
such quantities of Compound as are required in order to meet the development
needs of PNU, at PNU's cost and expense.
ARTICLE XIV.
CONFIDENTIAL INFORMATION
14.1 OWNERSHIP. Without limiting the rights granted to and by the
parties under this Agreement, Confidential Information furnished hereunder by
either party to the other shall remain the sole property of the disclosing
party; provided, however, that upon NeoPharm terminating this Agreement pursuant
to Section 15.2 or PNU terminating this Agreement pursuant to Section 15.3, PNU
shall grant NeoPharm a non-exclusive license to the Confidential Information
that PNU furnished to NeoPharm hereunder. Data and inventions concerning the
Products developed or made during the Agreement Term shall be owned by the
developing or inventing party.
14.2 CONFIDENTIALITY. Each party agrees that during the Agreement Term
and at all times thereafter, it shall use all commercially reasonable efforts to
keep, and cause its Affiliates and/or Sublicensees to keep, confidential all
Confidential Information, and neither party nor any of its Affiliates and/or
Sublicensees shall use or disclose the Confidential Information except as
expressly permitted in this Agreement. Each party acknowledges that the
Confidential Information is highly valuable, proprietary and confidential and
that any disclosure to any officer, employee, or agent of such party or any of
its Affiliates shall be made only to the extent necessary to carry out its
responsibilities under this Agreement and only if such officer, employee or
agent shall be bound by an Agreement to maintain such information in confidence.
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14.3 PUBLIC ANNOUNCEMENTS AND STATEMENTS. Neither NeoPharm nor PNU, nor
any Affiliate thereof, shall issue or cause publication of any press release or
other public announcement or public communication with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed.
Neither party shall use the name of the other party in any public statement or
press release without the prior written approval of the other party, which
approval may not be unreasonably withheld or delayed; provided, however, that
both parties shall give the other party a minimum of five (5) business days to
review any such press release or other public statement. Notwithstanding the
foregoing, each party may make any disclosure which such party, in the opinion
of its counsel, is obligated to make pursuant to applicable law, in which case
such party shall still endeavor to give the other party an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
the opinion of its counsel, be made without time for review. The failure of a
party to draft such disclosure in a timely fashion shall not be deemed a reason
to avoid submitting such disclosure to the other party hereto.
14.4 PUBLICITY RELATED TO THE PROJECT. Subject to the other provisions
of this Agreement, PNU may disclose information generated by studies sponsored
by PNU, or disclose any conclusions based on such information, after giving
NeoPharm a reasonable opportunity to review and comment (but not approve) any
such disclosure. In addition, each Party may announce periodically whether Phase
I, II or III studies involving the Products are underway or to be initiated. Any
other disclosures of information arising from or related to this Agreement shall
be approved by each of the parties hereto, except to the extent such information
is publicly known through no fault of NeoPharm or PNU or either party is
required, on advice of counsel, to make public disclosure relating to the
Project pursuant to any law, rule or regulation of any governmental agency,
including without limitation the United States Securities and Exchange
Commission or any securities exchange on which securities of the disclosing
party are then listed, in which case a party shall be permitted to make such
required disclosure provided advance notice is first given to the other party.
14.5 INVESTIGATOR PUBLICATIONS. Notwithstanding anything set forth in
this Agreement to the contrary, NeoPharm and PNU agree to use their best efforts
to cause investigators who conduct clinical studies of the Products sponsored by
PNU or NeoPharm, respectively, to agree to submit the results of their studies
and a draft of publication to PNU or NeoPharm, respectively for review a
reasonable period of time before submission to the publisher. PNU and NeoPharm
will share with each other the results of these studies and these drafts of such
publication as soon as practicable. Both parties understand that neither party
will have the right to approve or disapprove the publication.
14.6 POST-APPROVAL USE. Notwithstanding anything set forth in this
Agreement to the contrary, following approval of the Products, PNU shall be
permitted to use and publicize information generated by the Project in
connection with the commercialization and promotion of the Products, together
with all of NeoPharm's clinical data and Non-clinical data related to the
Products, in accordance with applicable laws and regulations. Likewise, PNU is
free to use information generated by PNU outside the scope of the Project as it
sees fit.
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14.7 USE OF NAME AND TRADEMARKS. Unless specifically authorized by this
Agreement, neither Party shall use in any manner the names or trademarks of the
other Party without the express written consent of such Party.
ARTICLE XV.
TERM AND TERMINATION
15.1 AGREEMENT TERM; COUNTRY TERM(S). This Agreement may be terminated
early pursuant to Sections 15.2 and 15.3 hereof by terminating the Agreement
Term. This Agreement, as applicable in a specific country in the Territory, may
be terminated early in such country by terminating the applicable Country Term,
without affecting the Agreement Term or the other Country Terms.
15.2 TERMINATION BY NEOPHARM. NeoPharm may terminate the Agreement Term
upon written notice to PNU at any time in the event of: (i) a material breach by
PNU or its Affiliates or its Sublicensees of this Agreement where such breach is
continuing for sixty (60) days (or thirty (30) days with respect to nonpayment
of a material amount due unless such amount is subject to a bona fide dispute
between the parties) after PNU has received written notice from NeoPharm of such
breach, specifying in reasonable detail the particulars of the alleged breach,
and such breach has not been cured within such sixty (60) day period (or thirty
(30) days with respect to nonpayment of a material amount due unless such amount
is subject to a bona fide dispute between the parties). In the event that such a
breach (other than the nonpayment of a material amount due unless such amount is
subject to a bona fide dispute between the parties) may not be reasonably cured
in sixty (60) days, then such cure period shall be extended provided PNU shall
demonstrate to NeoPharm's reasonable satisfaction that it is using all
commercially reasonable efforts to cure such breach. If NeoPharm terminates the
Agreement Term pursuant to this Section 15.2, PNU shall transfer back to
NeoPharm all rights to the NeoPharm Patents and NeoPharm Know-How granted to PNU
plus grant to NeoPharm a non-exclusive license (requiring payment to PNU of a
reasonable royalty rate) to any and all Improvements, enhancements, Confidential
Information, Other Information, NDAs, or the substantially equivalent approvals
in the respective countries owned or controlled by PNU which relate to the
Compounds, which license shall only allow NeoPharm to use such Improvements,
enhancements, Confidential Information, Other Information, NDAs, or the
substantially equivalent approvals in the respective countries in connection
with the Compounds. For the avoidance of doubt, upon NeoPharm's termination of
the Agreement Term pursuant to this Section 15.2, PNU's rights included in the
relevant licenses granted by NeoPharm to PNU hereunder shall immediately and
automatically revert to NeoPharm; provided, however, that PNU, with the consent
of NeoPharm, shall be entitled to complete the manufacture of any Product then
in progress and to sell any such completed Product, along with any Product then
in inventory, subject to payment of royalties pursuant to Article VI. Without
limiting the generality of the foregoing, all relevant licenses and sublicenses
granted by NeoPharm to PNU hereunder shall terminate automatically and PNU shall
promptly transfer to NeoPharm all related documents, materials and records in
its possession without retaining any copies thereof.
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15.3 TERMINATION BY PNU. PNU may terminate the Agreement Term upon
written notice to NeoPharm at any time in the event of: (i) a material breach by
NeoPharm or its Affiliates of this Agreement where such breach is continuing for
sixty (60) days after NeoPharm has received written notice from PNU of such
breach, specifying in reasonable detail the particulars of the alleged breach,
and such breach has not been cured within such sixty (60) day period; and (ii)
at any time, without penalty, provided that PNU shall not be entitled to refund
of any payments made to NeoPharm prior to such termination date. In the event
that a breach set forth in subclause (i) may not be reasonably cured in sixty
(60) days, then such cure period shall be extended provided NeoPharm shall
demonstrate to PNU's reasonable satisfaction that it is using commercially
reasonable effects to cure such breach. If PNU terminates the Agreement Term
pursuant to this Section 15.3, it shall transfer back to NeoPharm all rights to
the NeoPharm Patents and NeoPharm Know How granted to it plus grant to NeoPharm
a non-exclusive license (requiring payment to PNU of a reasonable royalty rate)
to any and all Improvements or enhancements owned or controlled by PNU which
relate to the Compounds, which license shall only allow NeoPharm to use in
connection with the Compounds. For the avoidance of doubt, upon PNU's
termination of the Agreement Term pursuant to this Section 15.3, PNU's rights
included in the relevant licenses granted by NeoPharm to PNU hereunder shall
immediately and automatically revert to NeoPharm; provided, however, that PNU,
with the consent of NeoPharm, shall be entitled to complete the manufacture of
any Product then in progress and to sell any such completed Product, along with
any Product then in inventory, subject to payment of royalties pursuant to
Article VI; and provided, further, that upon (or in lieu of) termination
pursuant to Section 15.3(i); PNU shall be entitled to all available legal and
equitable remedies (including, but not limited to, monetary damages and specific
performance) as a result of NeoPharm's material breach of this Agreement.
ARTICLE XVI.
RIGHTS AND DUTIES UPON TERMINATION OR EXPIRATION; REMEDIES
16.1 MONIES PAID OR DUE.
(a) Upon the termination or expiration of this Agreement and subject to
Section 17.5, each party shall have the right to retain all payments already
received from the other party pursuant to this Agreement, and each party shall
pay to the other all sums accrued hereunder which are then due.
(b) The termination of this Agreement by PNU under Section 15.3(i) or
(ii) hereof shall terminate PNU's obligation to make any payments under this
Agreement that would accrue after, and are not due and payable at the time of,
the effective date of the termination.
16.2 SURVIVAL OF RIGHTS. The termination or expiration of this
Agreement shall not affect the accrued rights and obligations of NeoPharm or PNU
arising under or out of this Agreement or Claims arising during the Agreement
Term, and the obligations relating to such Claims. In addition, any provision
required to interpret and enforce the parties' rights
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<PAGE> 35
and obligations under this Agreement shall survive to the extent
required for the full observation and performance of this Agreement by the
parties hereto. Notwithstanding any provision herein to the contrary, the rights
and obligations set forth in Sections 2.3, 6.2, 6.4, 6.11, 12.4 and 16.3 and
Articles XIV and XVII shall survive the expiration or termination of this
Agreement.
16.3 TRANSITION UPON TERMINATION. If this Agreement is terminated by
NeoPharm pursuant to Section 15.2 or by PNU pursuant to Section 15.3(ii), PNU
shall upon termination cooperate with NeoPharm and/or its Affiliates to transfer
back to NeoPharm all title and interest in and to the NeoPharm Patents and
NeoPharm Know-How and any Improvements developed by PNU or its Affiliates to use
solely with the Products.
16.4 REMEDIES. If either party shall fail to perform or observe or
otherwise breaches any of its material obligations under this Agreement, in
addition to any right to terminate this Agreement, the non-defaulting party may
elect to obtain other such equitable relief and remedies as shall be available
under applicable law.
ARTICLE XVII.
INDEMNIFICATION AND LIMITATION OF LIABILITY
17.1 INDEMNIFICATION BY PNU. In addition to any other rights NeoPharm
may have at law or in equity, PNU shall indemnify, defend and hold harmless
NeoPharm and its Affiliates, employees, agents, officers and directors, and
their successors and assigns (each, an "NeoPharm Indemnified Party"), from and
against any and all Claims which the NeoPharm Indemnified Party may incur,
suffer or be required to pay resulting from or arising out of: (i) the
marketing, distribution, promotion or sale of the Products by PNU, its
Affiliates or Sublicensees; (ii) the manufacture of the Products by PNU or its
Affiliates or Sublicensees or by a Third Party (other than an Affiliate of
NeoPharm) after the License Effective Date, except and unless in the case of
either (i) or (ii) any such claim arises out of the breach of any NeoPharm
representations, warranties or covenants hereunder or NeoPharm had knowledge as
of the License Effective Date that, based on facts in existence and
circumstances existing on the License Effective Date, the manufacture,
marketing, distribution, promotion or sale of the Products after the License
Effective Date would be likely to result in or create such Claims; and (iii) any
breach of any representation, warranty or covenant of PNU or its Affiliates or
Sublicensees in this Agreement or the Stock Purchase Agreement or any other
transaction documents.
17.2 INDEMNIFICATION BY NEOPHARM. In addition to any other rights PNU
may have at law or in equity, NeoPharm shall indemnify, defend and hold harmless
PNU and its Affiliates and Sublicensees and their respective employees, agents,
officers and directors, and their successors and assigns (each, a "PNU
Indemnified Party"), from and against any and all Claims which the PNU
Indemnified Party may incur, suffer or be required to pay resulting from or
arising out of: (i) the manufacture or use of the Compounds or the Products by
NeoPharm or their Affiliates; (ii) any liability arising prior to the License
Effective Date in any way relating to any Compound or the Products, regardless
of the date of first assertion
33
<PAGE> 36
of any Claim or action relating thereto; (iii) any material breach of any
representation, warranty or covenant by NeoPharm or any Affiliate in this
Agreement or the Stock Purchase Agreement or any other transaction documents; or
(iv) any infringement of the intellectual property rights of any third party
existing as of the date hereof as a result of the use and exploitation by PNU of
the NeoPharm Patents and the NeoPharm Know-How in connection with the
manufacture, use, marketing and sale of the Products in the Territory, except
that in no event shall NeoPharm be required to indemnify any PNU Indemnified
Party with respect to any Claims which have arisen out of or relate to any
future changes in dosage, administration or manufacture of the Compounds or the
Products from that set forth in the NeoPharm Patents or the NeoPharm Know-How
existing on the License Effective Date.
17.3 PROCESS OF INDEMNIFICATION. Promptly after an indemnified party
becomes aware of any potential Liability hereunder, such party shall deliver
written notice to the indemnifying party stating the nature of the potential
Liability; provided, however, that the failure to give such notification shall
not affect the indemnification provided hereunder except to the extent the
indemnifying party is actually prejudiced as a result of such failure. The
indemnified party shall give the indemnifying party such information with
respect to the potential Liability as the indemnifying party may from time to
time reasonably request. The indemnifying party shall have the right to conduct
the defense of any suit or Claim related to the Liability if it has assumed
responsibility for the suit, Claim or other proceeding in writing; provided,
however, that if in the reasonable judgment of the indemnified party such suit,
Claim or other proceeding involves an issue or matter which could have a
material adverse effect on the business, operations or assets of the indemnified
party, the indemnified party may elect, at its own expense, to conduct a
separate defense thereof, but in no event shall any such election be construed
as a waiver of any indemnification rights such indemnified party may have under
this Article XVII, at law or in equity, or otherwise. If the indemnifying party
defends the suit or Claim, the indemnified party may participate in (but not
control) the defense thereof at its sole cost and expense; provided, however,
that the indemnifying party shall pay the reasonable fees and costs of any
separate counsel required for the indemnified party to the extent such
representation is due to a conflict of interest between the parties.
17.4 SETTLEMENTS. Neither party may settle any Claim, action or
proceeding related to a Liability to a Third Party without the consent of the
other party, which consent shall not be unreasonably withheld or delayed, if
such settlement would impose any monetary obligation on the other party or
require the other party to submit to an injunction or otherwise limit the other
party's rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.
Notwithstanding the foregoing, the indemnifying party will be liable under this
Article XVII for any settlement effected without its consent if the indemnifying
party has refused to acknowledge liability for indemnification hereunder and/or
declines to defend the indemnified party in any such Claim, action or proceeding
and it is determined by arbitration pursuant to Article XVIII hereof that the
indemnifying party was liable to the indemnified party for indemnification
related to such settlement.
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<PAGE> 37
17.5 RIGHT OF SET-OFF. In addition to any other remedies any party may
have for indemnification under this Agreement or at law or in equity, any party
may set off against any amount otherwise due and yet unpaid to the other party
hereunder any amount owed by such first party to the other party under any
provision of this Agreement or any instrument or Agreement delivered pursuant
hereto, or otherwise; provided, however, any amounts owed to a party pursuant to
Claims under Sections 10.4, 17.1 or 17.2, shall not be set off against amounts
owed by such party until all appeals or other actions relating to such Claims
have been exhausted which result in that Claim being fixed and certain.
ARTICLE XVIII.
ARBITRATION
18.1 RESOLUTION OF DISPUTES BY PARTIES' REPRESENTATIVES. The parties
recognize that a bona fide dispute as to certain matters may from time to time
arise during the term of this Agreement which relate to either party's rights or
obligations hereunder. In the event of the occurrence of such a dispute, either
party may, by written notice to the other, have such dispute referred to their
respective officer designated below or their successors, for attempted
resolution by good faith negotiations within thirty (30) days after such notice
is received.
Said designated officers are as follows:
For NeoPharm - President
For PNU - Senior Vice President for Global Business Management
In the event the designated officers are not able to resolve such
dispute within such thirty (30) day period, any party may invoke the
provisions in Section 18.2 below.
18.2 ARBITRATION. Except as expressly provided in Section 18.1, and
except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order to preserve the status quo or to
prevent irreparable harm pending the selection and confirmation of a panel of
arbitrators in accordance herewith, any and all disputes arising out of or in
connection with the performance of this Agreement shall be finally settled by
arbitration in accordance with the rules of the American Arbitration
Association, except that each party will be entitled to select one (1)
arbitrator and the two (2) arbitrators so selected shall select a third
arbitrator and if they cannot agree, then the third arbitrator will be selected
by the American Arbitration Association. The arbitration shall be held in New
York, New York. The award rendered shall be final and binding upon the parties.
Judgment on any award may be entered in any court having jurisdiction over the
parties or their assets. To the extent any claims relate to the validity,
construction, scope, enforceability or infringement of any Patent, such claim
shall not be required to be submitted to arbitration hereunder and shall be
resolved by a court of competent jurisdiction. The costs of arbitration shall be
shared equally by the parties.
35
<PAGE> 38
ARTICLE XIX.
MISCELLANEOUS
19.1 FORCE MAJEURE. If the performance by any party of any obligation
under this Agreement is prevented, restricted, interfered with or delayed by
reason of Force Majeure, the party so affected shall, upon giving written notice
to the other party, be excused from such performance and shall not be in breach
of this Agreement to the extent of such prevention, restriction, interference or
delay, provided that the affected party uses its reasonable efforts to avoid or
remove such causes of non-performance and continues performance with the utmost
dispatch whenever such causes are removed. In the event of Force Majeure lasting
more than six (6) months (or which the parties acknowledge will last more than
six (6) months), the parties agree to meet and discuss how this Agreement can be
justly and fairly implemented under the circumstances.
19.2 GOVERNING LAW. This Agreement shall be deemed to have been made in
the State of New York and its form, execution, validity, construction and effect
shall be determined in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of law thereof.
19.3 HEADINGS AND REFERENCES. All section headings contained in this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
19.4 SINGULAR/PLURAL AND MASCULINE/FEMININE. Unless the context clearly
indicates otherwise, the use herein of the singular shall include the plural,
and the use of the masculine shall include the feminine, and vice versa.
19.5 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, it shall be
modified to the minimum extent necessary to make it valid and enforceable.
19.6 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and the Stock Purchase Agreement constitute the entire
agreement between the parties and their Affiliates relating to the subject
matter hereof and supersede all previous writings and understandings, whether
oral or written, including without limitation the Letter of Intent, dated
January 13, 1999, by and between NeoPharm and PNU, relating to the subject
matter of this Agreement.
19.7 AMENDMENT. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both parties
that specifically refers to this Agreement.
19.8 NOTICES. Any notice required or permitted under this Agreement
shall be in writing and sent by reputable courier service, charges prepaid, or
by facsimile transmission with confirmation by reputable courier service, to the
address or facsimile number specified below. Such notices shall be deemed given
three (3) business days after such deposit in the
36
<PAGE> 39
mail or with a courier or one (1) business day after such facsimile
transmission.
If to NeoPharm
NeoPharm, Inc.
100 Corporate North, Suite 215
Bannockburn, Illinois 60015
Fax Number: (847) 295-8854
Attention: President and Chief Executive Officer
with copies to:
Burke, Warren, MacKay & Serritella, P.C.
330 N. Wabash, Suite 2200
Chicago, Illinois 60611
Attention: Christopher R. Manning
If to PNU
Pharmacia & Upjohn Company
95 Corporate Drive
Bridgewater, New Jersey
Attention: General Counsel
Fax Number: (908) 306-4416
19.9 ASSIGNMENT, SUBLICENSE AND BINDING EFFECT. Subject to Section
7.1(d) and 7.1(e), each party shall have the right to assign or sublicense its
rights in whole or in part under this Agreement to an Affiliate of such party
without the other party's consent or to a third party with the other party's
prior written consent, which consent shall not be unreasonably withheld,
provided that (i) in either case such party guarantees to the other party all of
such party's obligations hereunder; and (ii) in the case of any sublicense by
PNU hereunder, the sublicensee agrees in a written, executed agreement delivered
to NeoPharm and naming NeoPharm as an intended third party beneficiary therein
to observe and perform those obligations of PNU hereunder reasonably determined
by PNU to relate to such sublicense.
19.10 AGENCY. Neither Party is, nor shall be deemed to be, an employee,
agent, co-venturer or legal representative of the other Party for any purpose.
Neither Party shall be entitled to enter into any contracts in the name of, or
on behalf of the other Party, nor shall either Party be entitled to pledge the
credit of the other Party in any way or hold itself out as having the authority
to do so.
19.11 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a Party to export, re-export or otherwise transfer any Information
transferred hereunder or Products manufactured therefrom without compliance with
applicable laws.
19.12 SECTIONS AND ARTICLES. Unless specified otherwise, references to
Sections and Articles are to Sections and Articles of this Agreement.
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<PAGE> 40
19.13 EUROPEAN UNION. The parties acknowledge that this Agreement may
need to be notified to the European Commission at some point during the
Agreement Term. Accordingly, upon reasonable request of either Party, the
Parties shall cooperate in notifying this Agreement and seeking a conclusion of
the notification process satisfactory to both Parties. If at any time the
European Commission determines that any provision of this Agreement is
unenforceable or otherwise not permitted under the laws, rules and regulations
of the European Union, the Parties agree to initiate good faith negotiations
aimed at modifying such provision in a manner that is acceptable to the European
Commission and the Parties.
19.14 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly
and shall not be strictly construed against either party.
19.15 WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a wavier of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver,
and no waiver shall be binding unless executed in writing by the party making
the waiver.
19.16 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original as against any party whose signature appears
thereon but all of which together shall constitute one and the same instrument.
19.17 THIRD PARTY APPROVAL. Georgetown University has approved
NeoPharm's agreeing to the terms and conditions of this Agreement.
19.18 INDEPENDENT PATENT COUNSEL OPINION. Prior to PNU's first
commercial sale or manufacture in the U.S. of any Compound or Product, NeoPharm
shall provide PNU with an opinion from independent patent counsel that in such
counsel's opinion, as of the License Effective Date, the manufacture, sale and
use of any Compound or Product, which is made in accordance with the NeoPharm
Patents and NeoPharm Know-How in existence as of the License Effective Date,
will not infringe any valid claims of U.S. Patent Nos. ***
and
IN WITNESS WHEREOF, the parties, through their authorized officers,
have duly executed this as of the date first written above.
NEOPHARM, INC PHARMACIA & UPJOHN COMPANY
By: /s/ James M. Hussey By: /s/ Fred Hassan
---------------------------- ---------------------------------
Name: James M. Hussey Name: Fred Hassan
Title: President Title: Chief Executive Officer
*** Confidential Treatment Requested
38
<PAGE> 41
EXHIBIT A
LED
LED is defined as liposome encapsulated doxorubicin.
<PAGE> 42
EXHIBIT B
LEP
LEP is defined as liposome encapsulated paclitaxel.
<PAGE> 43
EXHIBIT C
***
*** Confidential Treatment
<PAGE> 44
EXHIBIT D
(Filed as Exhibit 10.2)
<PAGE> 45
Schedule 7.1
***
*** Confidential Treatment Requested
<PAGE> 46
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
<PAGE> 1
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (the "Agreement") dated as of February 19,
1999 by and between NeoPharm. Inc. (the "Company"), a Delaware corporation, and
Pharmacia & Upjohn, Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Purchaser and the Company have entered into that certain
License Agreement of even date herewith (the "License Agreement") providing for
the Purchaser's acquisition of shares of the Company's common stock par value
$0.0002145 per share (the "Common Stock"); and
WHEREAS, the sale of the shares of Common Stock hereunder is being made
without registration of the Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and is being made only to Purchaser as an "accredited
investor" (as such term is defined in Rule 501 of Regulation D promulgated by
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act); and
WHEREAS, subject to the terms and conditions of this Agreement, the
Purchaser desires to purchase from the Company the Shares (as defined below),
and the Company desires to sell such Shares to the Purchaser;
NOW, THEREFORE, in consideration of the premises, representations and
warranties, and the mutual covenants herein contained, the Company and Purchaser
hereby agree as follows:
1. Purchase and Sale of Shares. Subject to the terms and conditions set
forth herein, the Purchaser hereby irrevocably subscribes for and agrees to
purchase, and the Company hereby agrees to sell to Purchaser, that number of
shares of Common Stock (the "Shares") as shall equal $8,000,000 divided by 110%
of the average closing price per share of the Common Stock as reported on the
American Stock Exchange during the sixty (60) day period preceding the Closing
as herein defined.
2. The Closing: Payment. Provided that the License Agreement is then in
full force and effect, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the Company's offices commencing
at 10:00 a.m., local time on a date (as agreed to by the Company and Purchaser)
that is within ten (10) days after receipt by NeoPharm of notification from the
U.S. Food and Drug Administration that the U.S. IND filings for LED and LEP (as
those terms are defined in the License Agreement) have been effectively
transferred to Purchaser and activated.
At the Closing, the Company shall deliver to Purchaser:
(a) one or more stock certificates representing the Shares;
<PAGE> 2
(b) a Registration Rights Agreement, in the form annexed hereto as
Exhibit A, duly executed by the Company; and
(c) an opinion of the Company's counsel to the effect that the
transactions contemplated in this Agreement are exempt from registration under
the Securities Act and the rules and regulations promulgated thereunder.
At or prior to the Closing, the Purchaser shall deliver to the Company
a certified or bank cashier's check or wire transfer to an account designated in
writing by the Company, in the amount of $8,000,000.
3. Representations by the Company. The Company represents and warrants
to the Purchaser that:
(a) The Company has been duly organized and is validly existing and in
good standing as a corporation under the laws of state of Delaware, with power
and authority (corporate and other) to own, lease and operate its properties and
to conduct its business as currently being conducted by the Company and is duly
qualified to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the business,
financial condition or results of operations of the Company (a "Material Adverse
Effect");
(b) The Company has all requisite corporate power and authority to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of the Company. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms;
(c) The execution and delivery by the Company of this Agreement, the
consummation by the Company of the transactions contemplated hereby, and
compliance by the Company with the terms and provisions hereof will not result:
i. in a violation of any provision of the certificate of
incorporation, bylaws or any other organizational documents of
the Company;
ii. in any violation of any statute, code, ordinance, rule,
regulation, judgment, ruling, order, writ, decree, injunction
or other restriction of any government, governmental agency or
court to which the Company, its subsidiaries or any of its
properties or assets, is subject, or
iii. conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require
any notice under any agreement, contract, lease, license.
instrument or other arrangement to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries is
2
<PAGE> 3
bound or to which any of its assets is subject, or result in
the creation of any mortgage, pledge, lien, encumbrance,
charge or other security interest (each a "Security Interest")
upon any of the assets of the Company, except where any such
violation, conflict, breach. default, acceleration,
termination, modification, cancellation. failure to give
notice or creation of a Security Interest could not have and
are not reasonably likely to have a Material Adverse Effect
(d) The Company is not required to obtain any consent, approval. order,
authorization, registration, declaration from, or to make any filing with, any
court, agency, or governmental authority or instrumentality or any other third
party in connection with (i) the Company's execution and delivery of this
Agreement or any document, agreement or instrument to be executed pursuant to
this Agreement or (ii) the consummation by the Company of the transactions
contemplated hereby;
(e) The business of the Company is being conducted in compliance with
all laws, ordinances and regulations of any government entity applicable to the
Company, except for violations, if any, which alone or in the aggregate have not
had and are not reasonably likely to have a Material Adverse Effect; all
governmental approvals, permits and licenses required by the Company in
connection with the conduct of its business have been obtained and are in full
force and effect and are being complied with, except for such as alone or in the
aggregate have not had or are not reasonably likely to have a Material Adverse
Effect;
(f) Upon payment for the Shares as provided herein, the Purchaser will
receive good and valid title to the Shares purchased hereunder which shall be
fully paid and nonassessable shares of the Company, free and clear of all liens,
claims, restrictions and encumbrances;
(g) The Company is a reporting company under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and is current in all forms, reports
and documents required to be filed pursuant to the 1934 Act. All such filings at
the time they were filed with the Securities and Exchange Commission complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder and, as of the Closing Date, the most
recent Form 10-K and Annual Report to Shareholders of the Company, when read
together with filings made subsequent thereto, including the Form 10-Q for the
quarter ending September 30, 1998 and the Report on Form 8 filed to report the
execution of the License Agreement, do not contain an 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 not misleading. Since the respective
dates as of which information is given in such filings, (i) there has been no
material adverse change in the condition, financial or otherwise, of the
Company, or in the business, operations, or prospects of the Company except for
any changes resulting from entering into the Licensing Agreement, whether or not
arising in the ordinary course of business, (ii) there have been no transactions
entered into by the Company or any of its subsidiaries which are material to the
Company and its subsidiaries considered as a whole, other than those in the
ordinary course of business and those contemplated by this Agreement, and (iii)
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
3
<PAGE> 4
(h) The authorized, issued and outstanding capital stock of the Company
as of January 31, 1999 is set forth in Schedule A. All of the issued and
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable. As of January 31, 1999, there are no
outstanding options, warrants or other rights of any kind to acquire any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for, or which otherwise confer on the holder thereof any right
to acquire, any such additional shares, nor is any Company committed to issue
any such option, warrant, right or security, except as set forth on Schedule A;
(i) The Company has filed with the appropriate governmental agencies
(whether national, regional or local) all material tax returns and tax reports
(the "Returns") required to be filed by it on or before the date hereof with
respect to any period ending on or before the date hereof. As of the time of
filing, the Returns correctly reflected or will correctly reflect the tax
liability of the Company for the relevant period and any other information
required to be shown thereon. The Company has timely paid or made provision for
all taxes that have been shown as due and payable on its Returns. The Company
has made or will make provision for any tax payable for any period ending on or
before the date hereof that has not been paid on or before the date hereof. No
deficiency for any tax has been proposed, asserted or assessed against the
Company, and no delinquencies in the payment of any tax exist for which the
Company could be liable that have not been reserved for in the Company's
financial statements;
(j) Based in part on the representations and warranties made by the
Purchaser herein, the sale of the Shares by the Company to the Purchaser is
exempt from the registration provisions of the Securities Act.
4. Representations by the Purchaser. The Purchaser represents and
warrants to the
(a) The Purchaser is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, with corporate
power and authority to perform its obligations under this Agreement;
(b) This Agreement has been duly authorized, executed and delivered by
Purchaser and constitutes a valid and binding agreement of the Purchaser
enforceable in accordance with its terms;
(c) The Purchaser is not required to obtain any consent, approval,
order, authorization, registration, declaration from, or to make any filing
with, any court, agency, or governmental authority or instrumentality or any
other third party in connection with (i) Purchaser's execution and delivery of
this Agreement or any document, agreement or instrument to be executed pursuant
to this Agreement or (ii) the consummation by Purchaser of the transactions
contemplated hereby;
(d) The Purchaser understands that the Shares have not been registered
under the Securities Act and that the sale provided for in this Agreement is
being made pursuant to an exemption provided in the Securities Act or the rules
and regulations promulgated thereunder and
4
<PAGE> 5
that the reliance of the Company on such exemption is predicated in part on the
Purchaser's representations set forth herein, and that none of the Shares may be
offered, sold, pledged or otherwise transferred except in compliance with the
registration requirements of the Securities Act and other applicable securities
laws, pursuant to an exemption therefrom or in a transaction not subject thereto
and, in each case, in compliance with the conditions for transfer set forth in
paragraph (g)below;
(e) The Purchaser is acquiring the Shares for the Purchaser's own
account, for investment and not with a view to, or for sale in connection with,
any distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control, and any sale, transfer or other
disposition of the Shares by the Purchaser will be made in compliance with all
applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder; and it agrees and each subsequent holder of Shares by
its acceptance thereof will be deemed to agree, to offer, sell or otherwise
transfer such Shares prior to the date which is two years after the later of the
original issuance date thereof and the last date on which the Company or any
"affiliate" of the Company was the owner of such Shares (or any predecessor
Shares) (the "Resale Restriction Termination Date") only (a) to the Company, (b)
pursuant to registration statement which has been declared effective under the
Securities Act, or (c) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of its property
be at all times within its control and to compliance with any applicable state
securities laws; it being understood further that the Company reserves the right
prior to any offer, sale or other transfer prior to the Resale Restriction
Termination Date pursuant to clause (c) above to require the delivery of an
opinion of counsel, certifications and other information satisfactory to the
Company. Purchaser consents to the placement of the following legend (or a
substantially similar legend) on each certificate representing the Shares:
THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THE
SHARES OF COMMON STOCK EVIDENCED HEREBY NOR ANY INTEREST OR PARTICIPATION
THEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS;
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS CERTIFICATE (OR ANY PREDECESSOR
OF
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<PAGE> 6
THIS CERTIFICATE) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, AND (C)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
(f) The Purchaser is experienced in evaluating companies such as the
Company, has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of its investment, and has the
ability to bear the economic risks of such investment for an indefinite period.
The Purchaser further represents that it has conducted its own independent
review and analysis of the business, assets, condition, operation and prospects
of the Company and acknowledges that it has had access during the course of the
transaction and prior to the purchase of the Shares to such information
(including audited financial statements) relating to the Company as it has
desired and that it has had the opportunity to ask questions of and receive
answers from the Company concerning the business, management and financial
affairs of the Company and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify the accuracy of any information furnished
to each Purchaser or to which Purchaser has had access; the Purchaser further
understands that no federal or state agency has passed upon the Shares or made
any finding or determination concerning the fairness or advisability of this
investment;
(g) The Purchaser represents that the Purchaser is not an "affiliate"
(as defined in Rule 144 under the Securities Act) of the Company or acting on
behalf of the Company, and the Purchaser is an "accredited investor" within the
meaning of subparagraph (a) of Rule 501 under the Securities Act;
(h) The Purchaser is not (i) acquiring Shares with "plan assets" of an
employee benefit plan or other plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986 (the "Code") (each a "Plan"), an entity whose
underlying assets include 'plan assets" by reason of any Plan's investment in
the entity, or (ii) is acquiring and holding the Shares in a transaction that is
not otherwise prohibited by either ERISA or the Code.
(i) The Purchaser's true and correct federal tax identification or
social security number, as applicable, is indicated below on the signature page
below.
5. No Additional Representations. In entering into this Agreement, the
Purchaser acknowledges that the Company has not made any representations or
warranties of any kind
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whatsoever, except as expressly provided in Paragraph 3 of this Agreement or in
the License Agreement. The Purchaser acknowledges that it has relied solely upon
its own investigation and analysis in determining to acquire the Shares, and
acknowledges that neither the Company nor any of its directors, officers,
employees, affiliates, agents or representatives makes any representation or
warranty, either express or implied, as to the Company or the accuracy or
completeness of any of the information regarding the Company provided or made
available to the Purchaser or its agents or representatives.
6. Further Assurances. The Company and the Purchaser will promptly
execute and deliver such further instruments and documents and take such further
actions as may be necessary or desirable for the parties to obtain the full
benefits of this Agreement.
7. Survival of Representations.
All representations, warranties and agreements made by the parties to
this Agreement shall survive the consummation of the transactions contemplated
hereby.
8. Brokers.
Neither the Company nor the Purchaser has entered into any agreement to
pay any broker's or finder's fee to any person, with respect to this Agreement
or the transactions contemplated hereby.
9. Miscellaneous.
(a) This Agreement, along with the License Agreement, contains the
entire understanding of the parties with respect to the subject matter hereof
and supersedes any prior understandings, agreements or representations by or
among the Purchaser and the Company, written or oral, to the extent they related
in any way to the subject matter hereof this Agreement or any provision hereof
may only be amended, modified or waived by a written instrument duly executed by
each of the parties hereto.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by the Purchaser (whether by operation
of law or otherwise) without the prior written consent of the Company. Subject
to the preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) The Company agrees to pay any stock transfer taxes which may be
imposed in connection with the transfer of the Shares. All other fees and
expenses incurred by either party in connection with this Agreement will be
borne by such party.
(d) This Agreement shall be governed by the laws of the State of
Illinois, without giving effect to the principles of conflicts of laws thereof.
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(e) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
(f) The headings of Paragraphs in this Agreement are for convenience of
reference only and shall not, nor shall they be construed to, qualify or in any
other respect affect the meaning of the text.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement on the date first above written in the City of New York in the State
of New York.
COMPANY: NEOPHARM, INC.
By: /s/ James M. Hussey
-----------------------------
Name:
Title:
Address for Notices:
PURCHASER: PHARMACIA & UPJOHN, INC.
By: /s/ Fred Hassar
-----------------------------
Name:
Title:
Address for Notices:
Taxpayer Identification Number: ________________
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<PAGE> 10
SCHEDULE A
CAPITAL STRUCTURE OF COMPANY
Common Stock:
As of January 31, 1999, the Company had 15,000,000 shares of its Common
Stock, $0.0002145 par value, authorized, of which 8,343,779 shares were
issued and outstanding.
Warrants:
As of January 31, 1999, the Company had 837,067 Warrants issued and
outstanding each of which authorizes the holder to acquire two shares
of Common Stock at an exercise price of $9.80 ($4.90/share). In
addition, at the time of the Company's initial public offering Warrants
were issued to the underwriter, National Securities Corporation, which
are currently exercisable for 270,000 shares of Common Stock at a price
of $4.90 per share, and 67,500 Representative's Warrants, which may be
exercised to acquire 135,000 additional shares at a price of $6.86 per
share.
Options:
As of December 31, 1998 the Company had issued options to employees,
officers, directors and consultants for approximately 1,188,824 shares
of Common Stock. At the present time the Company's 1998 Equity
Incentive Plan provides for the reservation of 2,000,000 shares of
Common Stock for issuance in accordance with the terms of that Plan. In
addition, up to 100,000 shares of Common Stock may be granted to
non-employee directors of the Company pursuant to the 1995 Director
Option Plan.
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<PAGE> 11
EXHIBIT A
[FORM OF REGISTRATION RIGHTS AGREEMENT]
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REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is entered into this [ ] day of __________, 1999, by and
between NeoPharm, Inc. (the "Company") and Pharmacia & Upjohn, Inc. (the
"Investor") in the common stock, par value $0.0002145 per share of the Company
(the "Common Stock");
WHEREAS, pursuant to a Stock Purchase Agreement by and between the
Company and the Investor dated February 19, 1999 (the "Stock Purchase
Agreement"), the Investor has agreed to purchase, and the Company has agreed to
issue and sell, that number of shares of the Company's Common Stock (the
"Shares") as shall equal $8,000,000 divided by 110% of the average closing price
per share of Common Stock as reported on the American Stock Exchange during the
sixty day period preceding the Closing (as defined in the Stock Purchase
Agreement); and
WHEREAS, the Investor will acquire the Shares for investment, and not
with a view to reselling or distributing any of the Shares, and has no present
intention of reselling or otherwise disposing of any of the Shares, except to
the extent that the Shares are registered under the Securities Act of 1933, as
amended and appropriate state securities laws, or exempt from such laws; and
WHEREAS, as a condition to its willingness to purchase the Shares, the
Investor desires that the Shares be registerable, and the Company is willing to
provide for the registration of the Shares upon the terms and conditions herein
contained.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained, the Investor and the Company hereby agree as follows:
1. Definitions.
As used herein:
(a) The term "Demand Registration" shall have the meaning set forth in
Section 2(a) herein.
(b) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(c) The term "Holder" means the holder or holders of Registrable
Securities.
(d) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(e) The term "Person" shall have the meaning set forth in Section 2(2)
of the Securities Act.
<PAGE> 13
(f) The term "Prospectus" shall have the meaning set forth in Section
2(10) of the Securities Act.
(g) The term "Registrable Securities" means all of the Company's Common
Stock which the Investor has acquired pursuant to the Stock Purchase Agreement.
(h) The term "Registration Expenses" shall mean any and all expenses
incident to the performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. (the "NASD") registration and filing fees, including, if
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of Registrable
Securities in accordance with the rules and regulations of the NASD, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of one counsel for
any underwriters or Holder in connection with blue sky qualification of any of
the Registrable Securities) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus and any
amendments or supplements thereto, and in preparing or assisting in preparing,
printing and distributing any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the fees and disbursements
of counsel for the Company and of the independent certified public accountants
of the Company, including the expenses of any "cold comfort" letters required by
or incident to such performance and compliance, (vi) the fees and expenses of
any exchange agent or custodian, (vii) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges, and (viii) the reasonable fees and expenses of
any special experts retained by the Company in connection with any Registration
Statement.
(i) The term "Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
(j) The term "Securities Act" means the Securities Act of 1933, as
amended.
(k) The term "SEC" means the Securities and Exchange Commission.
2. Demand Registration.
(a) Subject to subsection (c) below, if at any time the Company shall
receive a written request from the Holders of at least 66.67% of the Registrable
Securities requesting that the Company effect the registration of all of the
Registerable Securities held by such Holders under the Securities Act, the
Company shall use its best efforts to effect such registration as soon as
practicable. The Company shall not be required to effect any registration
pursuant to this Section 2(a) unless such registration can be made on Form S-3
or any similar short-form registration. The
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registration requested pursuant to this Section 2(a) is referred to herein as
the "Demand Registration". The request for the Demand Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within twenty (20) days
after receipt of the request, the Company will give written notice of such
requested registration to all other Holders of Registrable Securities, if any,
and, subject to Section 2(b) below, will include in the Demand Registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the giving of the Company's
notice.
(b) Priority on Demand Registration. Subject to the provisions of
Paragraph 5, the Company may include in the Demand Registration other securities
which the Company has been requested or otherwise desires to register on behalf
of itself or others, but which are not Registrable Securities; provided,
however, that no securities other than the Registrable Securities shall be
included in such Demand Registration if the Demand Registration is an
underwritten registration and the managing underwriter advises the Company that
the inclusion of securities other than the Registerable Securities would
adversely affect such Demand Registration unless a majority of the Holders who
had requested the Demand Registration shall have consented in writing to the
inclusion of such other securities.
(c) Restrictions on Demand Registration. The Company shall not be
obligated to effect the Demand Registration within 120 days after the effective
date of a previous registration by the Company of any shares of its Common
Stock, other than shares registered pursuant to Form S-8 or Form S-4 in which
the Holders of Registrable Securities were given rights pursuant to Section 3.
(d) Selection of Underwriters. The Holders of a majority of the
Registrable Securities included in the Demand Registration shall have the right
to select the investment banker(s) and manager(s) to administer the offering,
subject to the Company's approval which shall not be unreasonably withheld.
3. Company Registration.
If at any time or from time to time, the Company shall determine to
register any of its equity securities, either for its own account or the account
of a security holder or holder (including, without limitation pursuant to any
public offering or a demand for registration of any shareholder of the Company)
under the Securities Act other than on Form S-8 or Form S-4, the Company will:
(a) promptly give to the Holder written notice thereof (which shall include a
list of the jurisdictions in which the Company intends to attempt to qualify
such securities under the applicable blue sky or other state securities laws);
and (b) include in such registration (and any related qualification under blue
sky laws or other compliance) and in any underwriting involved therein, all the
Registrable Securities specified in a written request made within thirty days
after receipt of such written notice from the Company by the Holder; except that
if, in connection with any offering involving an underwriting of Common Stock to
be issued by the Company, the managing underwriter shall impose a limitation on
the number of shares of Common Stock which may be included in the Registration
Statement because, in its judgment, such limitation is necessary to effect an
orderly public distribution, then the Company shall be obligated to include in
such Registration Statement
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only such limited portion (or none, if so required by the managing underwriter)
of the Registrable Securities with respect to which such Holder has requested
inclusion hereunder.
4. Effectiveness.
A Registration Statement pursuant to which any Registrable Securities
are being offered will not be deemed to have become effective unless it has been
declared effective by the SEC; provided, however, that if, after it has been
declared effective, the offering of the Registrable Securities pursuant to such
registration statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
registration statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such registration statement may legally resume. The Company will be
deemed not to have used best efforts to cause the registration statement to
become, or to remain, effective during the requisite period if it voluntarily
takes any action that would result in any such registration statement not being
declared effective or that would result in the Holder not being able to offer
and sell the Registrable Securities during that period unless such action is
required by applicable laws and regulations or currently prevailing
interpretations of the staff of the SEC. The Company shall use best efforts to
maintain the effectiveness for up to one hundred twenty (120) days (or such
shorter period of time as the underwriters need to complete the distribution of
the registered offering) of any Registration Statement pursuant to which any of
the Registrable Securities are being offered, and from time to time will amend
or supplement such Registration Statement and the Prospectus contained therein
to the extent necessary to comply with the Securities Act and any applicable
state securities laws or regulations. The Company shall also provide the Holder
with as many copies of the Prospectus contained in any such Registration
Statement as the Holder may reasonably request.
5. Expenses of Registration.
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement shall be borne by the
Company. Except as provided herein, the Holder shall pay all fees and expenses
of its legal counsel, underwriters' fees, discounts or com missions or transfer
taxes, if any, relating to the sale or disposition of the Holder's Registrable
Securities.
6. Registration Procedures.
In the case of each registration, qualification, or compliance effected
by the Company pursuant to this Agreement, the Company will keep the Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense, the Company will:
(a) Prepare and file with the SEC a Registration Statement with respect to such
Registrable Securities as described in Sections 2 or Section 3 and use its best
efforts to cause such Registration Statement to become effective and to remain
effective in accordance with Section 4 (provided that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the
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<PAGE> 16
Company will furnish to the counsel selected by the Holder copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel);
(b) Prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and current for a period
of not less than one hundred twenty (120) days and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof as set forth in such Registration
Statement;
(c) (i) Furnish to the Holder, and to each underwriter, if any, without charge,
such number of copies of such Registration Statement, each amendment and
supplement thereto, the Prospectus included in such Registration Statement
(including each preliminary Prospectus), and such other documents as the Holder
or underwriters may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Holder; and (ii) consent to the use of
the Prospectus or any amendment or supplement thereto by the Holder of
Registrable Securities included in the Registration Statement in connection with
the offering and sale of the Registrable Securities covered by the Prospectus or
any amendment or supplement thereto;
(d) Use its best efforts to register or qualify such Registrable Securities
under all applicable securities or blue sky laws of such jurisdictions of the
United States by the time the applicable Registration Statement is declared
effective by the SEC as the Holder and any underwriters reason ably request in
writing and do any other related acts which may be reasonably necessary or
advisable to enable the Holder and underwriters to consummate the disposition in
such jurisdictions of the Registrable Securities owned by the Investor;
provided, however, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(d), (ii) file
any general consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(e) Notify the Holder, its counsel, and the managing underwriters, if any,
promptly, and promptly confirm such notice in writing, (i) at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which, or the fact that, the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of the Investor, the Company will prepare a
supplement or amendment to such Prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such Prospectus will not contain
any untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading; (ii) when a Registration Statement
has become effective and when any post-effective amendments and supplements
thereto become effective, (iii) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration Statement
or Prospectus or for additional information after the Registration Statement has
become effective, (iv) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the qualification of the Registrable Securities or the initiation
of any proceedings for that purpose, (v) if, between the effective date of
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a Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any purchase agreement, securities sales agreement or other similar agreement,
if any, cease to be true and correct in all material respects, and (vi) the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) If applicable, use its best efforts to cause all such Registrable Securities
to be listed or quoted on each securities exchange or interdealer quotation
system on which similar securities issued by the Company are then listed or
quoted;
(g) Provide a transfer agent for all such Registrable Securities not later than
the effective date of such Registration Statement;
(h) Enter into such customary agreements (including underwriting agreements on
customary terms) and take all such other actions as the Investor or the
underwriters, if any, reasonably requests in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) Obtain for delivery to the Company and the managing underwriters, if any,
with copies to the Holder of the Registrable Securities being registered, a
comfort letter from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by comfort
letters as the Holder shall reasonably request, dated the effective date of the
Registration Statement and brought down to the closing;
(j) If necessary, obtain a CUSIP number for the Registrable Securities not later
than the effective date of the Registration Statement; and
(k) Make available for inspection by the Holder, any underwriter participating
in any disposition pursuant to such Registration Statement and any attorney,
accountant or any other agent retained by the Investor or any such underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by the Holder, any such underwriter,
attorney, accountant or agent in connection with such Registration Statement.
(l) Cooperate with the Holder to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends and registered in such names as the Holder or the
underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Registration
Statement;
(m) Cooperate with the Holder to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends and registered in such names as the Holder or the
underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Registration
Statement;
(n) upon the occurrence of any circumstance contemplated by Section 6(e)(iii),
6(e)(iv), or 6(e)(v) hereof, use best efforts to prepare a supplement or
post-effective amendment to such
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Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and to notify the Holder to suspend
use of the Prospectus as promptly as practicable after the occurrence of such an
event, and the Holder hereby agrees to suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission;
(n) cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD; and
(o) use best efforts to take all other steps necessary to effect the
registration of the Registrable Securities covered by a Registration Statement
contemplated hereby.
7. Indemnification and Contribution.
(a) In connection with any Registration Statement, the Company shall
indemnify and hold harmless the Holder and each underwriter who participates in
an offering of the Registrable Securities, each Person, if any, who controls any
of such parties within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each of their respective directors, officers,
employees and agents, as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of counsel chosen
by Holder or any underwriter (except to the extent otherwise expressly
provided in Section 7(c) hereof)), incurred in investigating,
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preparing or defending against any litigation, or any
investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 7(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company by the Holder, or any underwriter with respect to the Holder, or any
underwriter, as the case may be, expressly for use in a Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) and (ii) the Company shall not be liable to the Holder, any underwriter
or controlling Person, with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary Prospectus to the
extent that any such loss, liability, claim, damage or expense of the Holder,
any underwriter or controlling Person results from the fact that the Holder or
any underwriter, sold Shares to a Person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the final
Prospectus as then amended or supplemented if the Company had previously
furnished copies thereof to the Holder or any underwriter or controlling Person
and the loss, liability, claim, damage or expense of the Holder or underwriter,
or controlling Person results from an untrue statement or omission of a material
fact contained in the preliminary Prospectus which was corrected in the final
Prospectus. Any amounts advanced by the Company to an indemnified party pursuant
to this Section 6 as a result of such losses shall be returned to the Company if
it shall be finally determined by such a court in a judgment not subject to
appeal or final review that such indemnified party was not entitled to
indemnification by the Company.
(b) The Holder agrees to indemnify and hold harmless the Company, any
underwriter and each of their respective directors, officers (including each
officer of the Company who signed the Registration Statement), employees and
agents, any underwriter or any other selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 7(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in a Registration Statement or any Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such selling Holder with respect to such Holder expressly for use in
such Registration Statement, or any such Prospectus;
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 7, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action, or, if it so elects within a reasonable time after
receipt of such notice, assume the defense of any suit brought to enforce any
such claim; but if it so elects to assume the defense, such defense shall be
conducted by
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counsel chosen by it and approved by the indemnified party or parties, which
approval shall not be unreasonably withheld. In the event that an indemnifying
party elects to assume the defense of any such suit and retain such counsel, the
indemnified party or parties shall bear the fees and expenses of any additional
counsel thereafter retained by such indemnified party or parties; provided,
however, that the indemnified party or parties shall have the right to employ
counsel (in addition to local counsel) to represent the indemnified party or
parties who may be subject to liability arising out of any action in respect of
which indemnity may be sought against the indemnifying party if, in the
reasonable judgment of counsel for the indemnified party or parties, there may
be legal defenses available to such indemnified party or parties which are
different from or in addition to those available to the indemnifying party, in
which event the fees and expenses of appropriate separate counsel shall be borne
by the indemnifying party. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel), separate from its own counsel, for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release in form and substance satisfactory to the
indemnified parties of each indemnified party from ail liability arising out of
such litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 7 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company and the Holder
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by the
Company and the Holder, as incurred; provided that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the Company and the
Holder, such parties shall contribute to such aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect the relative
fault of the Company, on the one hand, and the Holder, on the other hand, with
respect to the statements or omissions which resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and of the Holder, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by or on behalf of the
Holder, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holder agree that it would not be just and equitable if
contribution pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this
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Section 7, each affiliate of the Holder, and each director, officer, employee,
agent and Person, if any, who controls a Holder or such affiliate within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Holder, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company.
8. Information by Holder.
The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such written information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification, or compliance referred to in
this paragraph.
9. Transfer of Registration Rights.
The rights to cause the Company to register the Registrable Securities
granted to the Holder by the Company under Section 2 or Section 3 may be
assigned by a Holder to a transferee or assignee of any of such Holder's
Registrable Securities, provided, that the Company is given written notice by
such Holder at the time of, or within a reasonable time after, said transfer,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being assigned.
10. No Inconsistent Agreements.
The Company has not entered into nor will the Company on or after the
date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Investor with respect to the Shares in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Investor hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
11. Assignability.
This Agreement shall be binding upon and inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
12. Changes in Capital Stock.
If, and as often as, there is any change in the Common Stock by way of
a stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Shares
as so changed.
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13. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of Illinois, without regard to the conflict of laws provisions thereof.
14. Amendment.
Any modification, amendment or waiver of this Agreement or any
provision hereof shall be in writing and executed by Holders of not less than
66-2/3 percent of the Registrable Securities; provided, however, that no such
modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of the record or beneficial holders
of no less than 90 percent of the Registrable Securities.
15. Severability.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
16. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors, assigns and transferees of the Holder, including, without limitation
and without the need for an express assignment, subsequent Holders. If any
transferee of the Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
17. Entire Agreement.
This Agreement and the other writings referred to herein contain the
entire understandings among the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to its subject matter.
18. Headings.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
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19. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned holder of securities and the
Company have executed this Agreement on the day and year first above written.
COMPANY: NEOPHARM, INC.
By: ______________________________
Name:
Title:
Address for Notices:
INVESTOR: PHARMACIA & UPJOHN, INC.
By: ______________________________
Name:
Title (if applicable):
Address for Notices:
