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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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F O R M 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 12, 1998
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Cytoclonal Pharmaceutics Inc.
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(Exact name of Registrant as Specified in Charter)
Delaware 0-26918 75-2402409
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(State or Other Jurisdiction (Commission) (IRS Employer
of Incorporation) File Number) Identification No.)
9000 Harry Hines Boulevard, Suite 330, Dallas, Texas 75235
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 353-2922
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N/A
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On June 12, 1998, Cytoclonal Pharmaceutics Inc. (the "Company") entered
into a Master License Agreement (the "BMS License Agreement") and a Sponsored
Research Agreement (the "R&D Agreement") with Bristol-Meyers Squibb Company
("BMS"). Pursuant to the BMS License Agreement, the Company granted to BMS
an exclusive sublicense under (i) the Company's License Agreement with The
Research & Development Institute, Inc. at Montana State University ("RDI")
(the "RDI Agreement"), and (ii) the Company's License Agreement with the
Washington State University Research Foundation ("WSURF") (the "WSURF
Agreement"). Pursuant to the RDI Agreement, the Company acquired a license
to certain patents and technology relating to the use of microorganisms for
the production of paclitaxel and other taxanes and components. Pursuant to
the WSURF Agreement, the Company acquired a license to certain patents and
technology relating to the several genes coded for the enzymes involved in
the biosynthesis of paclitaxels and other taxanes. The term of the BMS
License Agreement shall run, subject to earlier termination in certain
circumstances, as to each CPI-Covered Product (as defined) in each country of
the Territory (as defined) until the later of (i) ten (10) years from the
First Commercial Sale (as defined) of such CPI-Covered Product in such
country, or (ii) such time as neither the making, use nor sale at the time by
BMS, its affiliates or sublicensees in such country of such CPI-Covered
Product would not infringe (a) any U.S. or foreign patents or patent
applications, including reissues, renewals, extensions, continuations or
continuations-in-part, copyrights or trademarks owned and licensed by RDI to
the Company under the RDI Agreement, (b) certain U.S. and foreign patents or
patent applications owned by WSURF and licenced by WSURF to the Company under
the WSURF Agreement and (c) other licensed property, including Licensed Cell
Lines, the Licensed Gene Materials, the Novel Taxanes from Fermentation, the
Novel Taxanes from Covered Cell Line, the Licensed CPI-Technology and the
Improvements (as those terms are defined), together with all patent rights
pertaining thereto, to the extent that such patent rights are not already
part of the RDI Agreement and WSURF Agreement. BMS shall have the right to
terminate the BMS License Agreement after December 12, 1998, effective upon
ninety (90) days notice, in which event the BMS sublicense under the RDI
Agreement and WSURF Agreement would terminate.
In addition, pursuant to the BMS License Agreement, BMS was granted a
right of first negotiation during the term of the BMS License Agreement to
obtain from the Company an exclusive, world-wide right to license or sublease
to all or a part of any CPI Technology (as defined). The BMS License
Agreement contemplates sales based royalty payments and payments by BMS to
the Company against the advent of certain milestones and royalties.
The R&D Agreement, renewable by BMS for successive one-year periods
thereafter, provided that the BMS License Agreement remains in effect at the
time, contemplates a program directed toward developing microbial fermentation
and genetic engineering technologies for the production of paclitaxel and
other taxanes.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CYTOCLONAL PHARMACEUTICS INC.
Date: September 9, 1998 By: /s/ Daniel Shusterman
----------------------------------------
Daniel Shusterman, J.D.
Vice President Operations
Treasurer and Chief Financial Officer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
10.1* Master License Agreement, dated as of June 12, 1998,
between the Company and Bristol-Myers Squibb Company
10.2* Sublicense Agreement, dated May 27, 1998, between the
Company and Bristol-Myers Squibb Company under The Research
& Development Institute, Inc. License Agreement, as amended,
dated June 10, 1993
10.3* Sublicense Agreement, dated May 19, 1998, between the
Company and Bristol-Myers Squibb Company under
the Washington State University Research Foundation
License Agreement, dated July 8, 1996
10.4* Amended and Restated License Agreement, dated June 3, 1998,
between the Washington State University Research Foundation
and the Company
10.5* Amendment, dated May 27, 1998, to that certain License
Agreement, dated June 10, 1993, between The Research
and Development Institute, Inc. and the Company
</TABLE>
- --------------------------
* Confidential Portions omitted and filed separately with the U.S. Securities
Commission pursuant to Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended.
4
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MASTER LICENSE AGREEMENT
THIS MASTER LICENSE AGREEMENT (this "AGREEMENT") is dated as of June 12,
1998 between Cytoclonal Pharmaceutics Inc., a Delaware corporation, having
offices at 9000 Henry Hines Boulevard, Dallas, Texas 75235 ("CPI"), and
Bristol-Myers Squibb Company, a Delaware corporation, having offices at Route
206 and Province Line Road, Princeton, New Jersey 08540 ("BMS").
PRELIMINARY STATEMENTS
A. CPI has acquired a license to certain patents and technology relating
to the use of microorganisms for the production of paclitaxel, other taxanes and
other compounds pursuant to a license agreement dated as of June 10, 1993
between Research & Development Institute, Inc. ('"RDI") and CPI, as amended by
amendments dated as of August 13, 1993, February 22, 1995 and May 27, 1998,
respectively, and supplemented by letter dated March 31, 1998 from CPI to RDI
(as so amended and supplemented, the "RDI/CPI LICENSE AGREEMENT").
B. CPI has also acquired a license to certain patents and technology
relating to the several genes coded for the enzymes involved in the biosynthesis
of paclitaxel and other taxanes pursuant to a license agreement effective as of
July 8, 1996 between The Washington State University Research Foundation
("WSURF") and CPI, as amended and restated in its entirety as of June 3, 1998
(as so amended and restated, "WSURF/CPI LICENSE AGREEMENT").
C. BMS desires to obtain, and CPI desires to grant to BMS, a license
under each of the RDI/CPI License Agreement and the WSURF/CPI License Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the Parties contained in this Agreement, the Parties agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall those meanings set
forth in this Section 1 unless the context dictates otherwise.
1.1 "AFFILIATE", with respect to any Party, shall mean any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Party. For these purposes, "control" shall refer to: (i) the
possession, directly or indirectly, of the power to direct the management or
policies of a Person or to veto any material decision relating to the management
or policies of a Person, in each case, whether through the ownership of equity
participation, voting securities or beneficial interests, by contract, by
agreement, or otherwise.
<PAGE>
1.2 "APPLICABLE ROYALTY RATE" shall mean the percentage rate or rates at
which BMS shall pay royalties to CPI hereunder, determined on a calendar
year-by-calendar year basis, as follows:
(a) Subject to Clause (c) below, with respect to using the
RDI-Intellectual Property Rights to produce (i) paclitaxel to be
commercialized as TAXOL-Registered Trademark- or another compound (which is
not a Novel Taxane/BMS Compound) to be used by BMS, its Affiliates or its
Sublicensees in commercialization as such without further chemical
transformation into another compound, or (ii) baccatin III or a miscellaneous
taxane mixture as a starting material for paclitaxel or any other compound
(which is not a Novel Taxane/BMS Compound) ; or where the WSURF-Covered
Product in question is (A) paclitaxel to be commercialized as
TAXOL-Registered Trademark- or another compound (which is not a Novel
Taxane/BMS Compound), in each case as a Direct WSURF-Covered Product, or (B)
paclitaxel or any other compound (which is not a Novel Taxane/BMS Compound),
as an Indirect WSURF-Covered Product, made from baccatin III or a mixture of
miscellaneous taxanes produced by the WSURF Covered Cell Line in question:
<TABLE>
<CAPTION>
Portion of Annual Net Sales "Pac/direct" "Bac" or "TT"
--------------------------- ------------ -------------
<C> <C> <C>
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
</TABLE>
As used in the foregoing table, the terms ""Pac/direct", "Bac" and "TT" are
as defined in Section 5.2(b) below.
(b) Subject to Clause (c) below, with respect to (i) using the
RDI-Intellectual Property Rights to produce any compound that is a Novel
Taxane/BMS Compound or is produced using a Novel Taxane/BMS Compound As a
starting material or (ii) any RDI-Licensed Product that is a Novel Taxane/BMS
Compound or, as commercialized by BMS, its Affiliates or its Sublicensees, is
produced using a Novel Taxane/BMS Compound as a starting material and in
either case is produced otherwise than using the RDI-Intellectual Property
Rights; or where the WSURF-Covered Product in question is a Novel Taxane/BMS
Compound or is produced using a Novel Taxane/BMS Compound as a starting
material:
<TABLE>
<CAPTION>
Portion of Annual Net Sales "Direct" "Indirect"
--------------------------- -------- ----------
<C> <C> <C>
[ ] [ ] [ ]
2
<PAGE>
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
</TABLE>
As used in the foregoing table:
"DIRECT" refers to where the RDI-Intellectual Property Rights are used
to produce the Novel Taxane/BMS Compound in question which is used by BMS,
its Affiliates or its Sublicensees in commercialization as such without
further chemical transformation into a different compound or where the
WSURF-Covered Product in question is a Direct WSURF-Covered Product.
"INDIRECT" refers to where (i) the RDI-Intellectual Property Rights
are used to produce (1) the Novel Taxane/BMS Compound in question which is
subsequently chemically transformed into the product commercialized by BMS,
its Affiliates or its Sublicensees or (2) a compound which is subsequently
chemically transformed into the product (being the Novel Taxane/BMS
Compound in question) commercialized by BMS, its Affiliates or its
Sublicensees or (ii) the CPI-Covered Product in question is a Novel
Taxane/BMS Compound or, as commercialized by BMS, its Affiliates or its
Sublicensees, is produced using a Novel Taxane/BMS Compound as a starting
material and in either case is produced otherwise than using the
RDI-Intellectual Property Rights; or where (A) the WSURF-Covered Product in
question is an Indirect WSURF-Covered Product or (B) the WSURF-Covered
Product, as commercialized by BMS, its Affiliates or its Sublicensees, is
produced otherwise than using a WSURF-Covered Cell Line.
(c) In the event that the WSURF-Technology is incorporated into a
cell line not covered by the RDI-Intellectual Property Rights which cell line is
in-licensed by BMS otherwise than pursuant to this Agreement and from a party
not an Affiliate of BMS (in which case a product produced by such cell line
would be a WSURF-Covered Product but not an RDI-Licensed Product), the
Applicable Royalty Rate for such WSURF-Covered Product shall be: (a) [ ] or
(b)[ ], whichever is higher, where
A = the Applicable Royalty Rate as otherwise determined in accordance with
Clause (a) or (b) above, as the case may be
B = the royalty rate at which BMS is required to pay royalties otherwise
than pursuant to this Agreement in respect of such WSURF-Covered
Product.
For the avoidance of doubt, there shall be no stacking of royalties that would
otherwise result from Clauses (a) and (b) above both applying to the same
product (in any such case, Clause (b) shall control and supersede Clause (a));
and, in each of the two tables above, the amounts under the heading ""Portion of
Annual Net Sales" refer to only the amounts of Net Sales of the
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particular product in question (for example, only Net Sales of
TAXOL-Registered Trademark- containing paclitaxel made by BMS using the
RDI-Intellectual Property Rights (as a direct fermentation product) are used
to determine the Applicable Royalty Rate under the heading "Pac/Direct" in
Clause (a) above).
1.3 "CONFIDENTIAL INFORMATION" shall mean the collection of technical
information included in the Other Licensed Property or technical information of
BMS, all information required to be kept confidential by CPI pursuant to the
terms of the RDI/CPI License Agreement or the WSURF/CPI License Agreement, and
confidential non-public information concerning BMS's or CPI's business plans,
strategy and the like. All information which shall be disclosed in confidence by
the disclosing party to the receiving party, and which affords a competitive
advantage to the disclosing party or its Affiliates, shall be presumed to be
Confidential Information, even though limited portions of such technical
information may be in the public domain.
The following information shall be excluded from the definition of
Confidential Information: (a) information which the receiving party demonstrates
was in the receiving party's possession in written or other tangible form prior
to any disclosure; (b) information which the receiving party demonstrates was
received from a Third Party which Third Party did not obtain the same, directly
or indirectly, from the disclosing party; (c) information which is independently
discovered or invented by personnel of a party who do not have direct or
indirect access to the information provided to that party by the other party; or
(d) from the time it becomes so known, any information which the receiving party
demonstrates was in or subsequently enters the public domain.
1.4 "CPI-COVERED PRODUCTS" shall mean any product of BMS, its Affiliates
or its Sublicensee that constitutes an RDI-Licensed Product or a WSURF-Covered
Product, or both.
1.5 "DIRECT WSURF-COVERED PRODUCTS" shall have the same meaning as
ascribed to the term "Direct Covered Products" in the WSURF Sublicense
Agreement.
1.6 "EFFECTIVE DATE" shall mean the date first above written as the date
of this Agreement.
1.7 "FDA" shall mean the United States Food and Drug Administration, or
the successor thereto.
1.8 "FIRST COMMERCIAL SALE" shall mean, in each country in the Territory,
the date that a CPI-Covered Product is first sold, marketed or publicly made
available for sale. A CPI-Covered Product distributed or used for clinical
trials or experimental purposes only shall not be considered sold, marketed or
made publicly available and shall not establish the First Commercial Sale.
4
<PAGE>
1.9 "IMPROVEMENTS" shall have the meaning set forth in Section 4.3(e).
1.10 "INDIRECT WSURF-COVERED PRODUCTS" shall have the same meaning as
ascribed to the term "Indirect Covered Products" in the WSURF Sublicense
Agreement.
1.11 "LICENSED CELL LINES" shall have the meaning set forth in Section
4.3(b).
1.12 "LICENSED CPI-TECHNOLOGY" shall have the meaning set forth in Section
4.3(d).
1.13 "LICENSED GENE MATERIALS" shall have the meaning set forth in Section
4.3(c).
1.14 "NET SALES" shall mean the gross revenues received by BMS, its
Affiliates or its Sublicensees for CPI-Covered Products sold less the sum of the
following deductions, where applicable: sales, use, tariff, import/export duties
or other excise taxes imposed on particular sales; allowances, credits,
chargebacks and refunds to non-affiliated third parties because of rejections,
returns or price reduction of product; freight costs and insurance charges on
shipments to customers included in invoiced amounts; and rebates and price
reductions/adjustments required by law, regulations or contract. In the case of
rebates and price reductions/adjustments required by contract, the same shall
not be deductible to the extent that the contract in question is between
Affiliates or related companies or the price concessions in question are given
in connection with the marketing/sales of other product or products such as in
the case of "bundling" of products.
1.15 "NEW CPI-TECHNOLOGY" shall mean, to the extent that they are not
already included under the RDI-Intellectual Property Rights, the
WSURF-Technology or the other Licensed Property, and regardless of whether or
not the same may be covered by any patent or patentable: (a) any process,
method or material relating to the production of paclitaxel or other taxanes,
including, without limitation, any plant cell line created by WSU; (b) any
theretofore unknown non-taxane compound having anticancer (therapeutic or
prophylactic) utility isolated from microbial fermentation as a natural
product; and (c) all knowhow, data and other enabling information relevant to
the process, method, material or non-taxane compound referred to in Clause
(a) or (b) above, in each case owned or controlled by CPI, now or in the
future.
1.16 "NOVEL BMS COMPOUND FROM COVERED CELL LINE" shall the meaning ascribed
to that term in the RDI-Sublicense Agreement.
1.17 "NOVEL BMS COMPOUND FROM FERMENTATION" shall have the meaning ascribed
to that term in the RDI-Sublicense Agreement.
1.18 "NOVEL TAXANE/BMS COMPOUND" shall mean, in singular form, a Novel
Taxane from Fermentation, Novel Taxane from Covered Cell Line, Novel BMS
Compound from Fermentation or Novel BMS Compound from Covered Cell Line and, in
plural form, any combination of Novel Taxanes from Fermentation, Novel Taxanes
from Covered Cell Line,
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Novel BMS Compounds from Fermentation and/or Novel BMS Compounds from Covered
Cell Line, collectively.
1.19 "NOVEL TAXANE FROM COVERED CELL LINE" shall have the meaning ascribed
to that term in the RDI-Sublicense Agreement.
1.20 "NOVEL TAXANE FROM FERMENTATION" shall have the meaning ascribed to
that term in the RDI-Sublicense Agreement.
1.21 "OTHER LICENSED PROPERTY" shall mean, collectively, the Licensed Cell
Lines, the Licensed Gene Materials, the Novel Taxanes from Fermentation, the
Novel Taxanes from Covered Cell Line, the Licensed CPI-Technology and the
Improvements, together with all patent rights pertaining thereto, to the extent
that such patent rights are not already part of the RDI-Intellectual Property
Rights or the WSURF-Technology.
1.22 "PARTY" shall mean CPI or BMS and, when used in the plural, shall mean
CPI and BMS.
1.23 "PERSON" shall mean any natural person, corporation, firm, business
trust, joint venture, association, organization, company, partnership or other
business entity, or any government or any agency or political subdivision
thereof, or any organization which can exercise independent legal standing.
1.24 "RDI-INTELLECTUAL PROPERTY RIGHTS" shall have the same meaning as
ascribed to the term "Intellectual Property Rights" in the RDI-Sublicense
Agreement.
1.25 "RDI-LICENSED PRODUCTS" shall have the same meaning as ascribed to the
term "Licensed Products" in the RDI Sublicense Agreement.
1.26 "RDI-SUBLICENSE AGREEMENT" shall have the meaning set forth in Section
4.1.
1.27 "WSURF-COVERED CELL LINES" shall have the same meaning as ascribed to
the term "Covered Cell Lines" in the WSURF Sublicense Agreement.
1.28 "WSURF-COVERED PRODUCTS" shall have the same meaning as ascribed to
the term "Covered Products" in the WSURF Sublicense Agreement.
1.29 "WSURF-SUBLICENSE AGREEMENT" shall have the meaning set forth in
Section 4.2.
1.30 "WSURF-TECHNOLOGY" shall have the same meaning as ascribed to the term
"Technology" in the WSURF Sublicense Agreement.
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1.31 "SUBLICENSEE" shall mean any non-Affiliate Third Party who is granted
sublicense rights by BMS pursuant to this Agreement, the RDI-Sublicense
Agreement or the WSURF-Sublicense Agreement.
1.32 "TERRITORY" shall mean the entire world.
1.33 "THIRD PARTY" shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.
2. REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES. Each Party represents
and warrants to the other Party that: (i) it is free to enter into this
Agreement; (ii) in so doing, it will not violate any other agreement to which
it is a party; (iii) it has taken all corporate action necessary to authorize
the execution and delivery of this Agreement and the performance of its
obligations under this Agreement; and (iv) no Person has or will have, as a
result of the transactions contemplated by this Agreement, any right,
interest or valid claim against or upon such Party for any commission, fee or
other compensation as a finder or broker because of any act or omission by
such Party or any of its agents.
2.2 REPRESENTATIONS AND WARRANTIES OF CPI. CPI he represents and warrants
to BMS that:
(a) Each of the RDI/CPI License Agreement and the WSURF/CPI License
Agreement is in full force and effect; CPI has complied with all provisions of
each such agreement; there does not exist any event of default with respect to
CPI under any said agreement which, after notice or lapse of time or both, would
constitute an event of default with respect to CPI under said agreement; and CPI
has no knowledge of any breach or anticipated breach by any other party to any
said agreement;
(b) CPI has all consents necessary to grant the rights and licenses
granted to BMS under this Agreement;
(c) Without having conducted any investigation, to the best of CPI's
knowledge, all of the patents constituting part of the RDI-Intellectual Property
Rights or the WSURF-Technology in existence on the Effective Date are valid and
enforceable and have been maintained to date; and
(d) CPI has not entered into any agreement with any Third Party which
is in conflict with the rights granted to BMS pursuant to this Agreement.
3. PRODUCT DEVELOPMENT.
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3.1 DEVELOPMENT BY BMS.
(a) BMS shall use commercially reasonable efforts to develop, and
where appropriate to obtain legal and regulatory approval for, the RDI-
Intellectual Property Rights, the WSURF-Technology and the Other Licensed
Property with a view to using the same, either alone or in combination with each
other or with other technologies, for the commercial production of taxanes and
other compounds, as applicable, to be used as the active ingredients in BMS's
products.
(b) BMS shall use commercially reasonable efforts to market and sell
each CPI-Covered Product in each country in the Territory as soon as practicable
following receipt of all governmental approvals in such country necessary
therefor.
3.2 SPONSORED RESEARCH AND DEVELOPMENT.
(a) BMS agrees to provide funding to CPI in the amount of [ ], at
the rate of [ ] per each 12-month period, to enable CPI to continue research
and development. To that end, the Parties have concurrently with the execution
of this Agreement, entered into a sponsored research agreement (the "Research
Agreement") containing a mutually agreed outline of research description and
resource allocation. A portion of the sponsored research and development
activities may be undertaken by, and accordingly a portion of the BMS funding
may be paid over by CPI to, MSU and/or WSU.
(b) BMS's funding of CPI's research and development activities will
be subject to extension beyond the initial [ ] 12-month periods as and if
mutually agreed by the Parties.
(c) BMS's funding commitment under this Section 3.2 shall survive any
termination of this Agreement pursuant to Section 12.3, unless such termination
occurred by reason of failure by CPI to comply with any of the material
obligations on its part contained in this Agreement.
4. GRANT OF RIGHTS.
4.1 GRANT OF SUBLICENSE UNDER RDI/CPI LICENSE AGREEMENT. Subject to
Section 4.5 below, CPI grants to BMS an exclusive sublicense, under the RDI/CPI
License Agreement, pursuant to the terms and conditions set forth in the
Sublicense Agreement by and between BMS and CPI, dated as of May 27, 1998 (the
"RDI-SUBLICENSE AGREEMENT").
4.2 GRANT OF SUBLICENSE UNDER WSURF/CPI LICENSE AGREEMENT. Subject to
Section 4.5 below, CPI grants to BMS an exclusive sublicense, under the
WSURF/CPI License
8
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Agreement, pursuant to the terms and conditions set forth in the Sublicense
Agreement by and between BMS and CPI, dated as of May 19, 1998 (the
"WSURF-SUBLICENSE AGREEMENT").
4.3 OTHER LICENSED PROPERTY.
(a) Subject to Section 4.5 below, CPI hereby grants to BMS an
exclusive, worldwide license, under the Other Licensed Property to make, have
made, use and sell CPI-Covered Products and otherwise to use the Other Licensed
Property to make, have made, use and sell human and animal health care products.
(b) For purposes of this Agreement, "LICENSED CELL LINES" means,
collectively, the cells lines listed on SCHEDULE 4.3(b) hereto and all other
paclitaxel and other taxane-producing microbial cell lines in CPI's possession
now or in the future. CPI shall from time to time promptly provide BMS with
suspension (or another form, if appropriate) culture samples of any Licensed
Cell Line or Improvement thereto that is then in its possession, or use its best
efforts to obtain such samples from RDI and Montana State University ("MSU"), in
each case as BMS shall reasonably request.
(c) For purposes of this Agreement, "LICENSED GENE MATERIALS" means,
collectively, the structural genes, genetic sequences, promoters, enhancers,
probes, linkage probes, vectors, plasmids, transformed cell lines, proteins,
biological modifiers, antigens and antibodies relating to the enzymes listed on
SCHEDULE 4.3(c) hereto and all other such types of materials relating to the
biosynthesis of paclitaxel and other taxanes, including those relating to other
enzymes, in CPI's possession now or in the future. CPI shall from time to time
promptly provide BMS with samples, in an appropriate form, of any Licensed Gene
Material or Improvement thereto that is then in its possession, or use its best
efforts to obtain such samples from WSURF and Washington State University
("WSU"), in each case as BMS shall reasonably request.
(d) For purposes of this Agreement, "LICENSED CPI-TECHNOLOGY" means,
collectively, regardless of whether or not the same may be covered by any patent
or patentable, (i) the process and method of using microbial fermentation,
including the use of any Licensed Cell Line, including any WSURF-Covered Cell
Line or any other cell line constituting an Improvement, to produce paclitaxel
or any other taxane (including the use thereof as an intermediate or precursor
for the production of other chemical entities); (ii) the process and method of
using any Licensed Gene Material or any other genetic material constituting an
Improvement to produce a WSURF-Covered Cell Line; and (iii) all such know-how,
data and other enabling information in CPI's possession now or in the future as
are relevant to such processes and methods or otherwise relevant to BMS's
development and use of microbial fermentation for the production of paclitaxel
or other taxanes, including the use of any Licensed Cell Line or WSURF-COVERED
Cell Line, as contemplated hereby, including, without limitation, those
pertaining to cell preservation, stability, propagation, production media and
genetic engineering to create WSURF-Covered Cell Lines and other conditions, use
of growth
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regulators and promoters and technology for the enhancement of paclitaxel or
other taxane production. CPI shall promptly transfer to BMS all know-how,
data and enabling information includable under the Licensed CPI-Technology or
any Improvement thereto and use its best efforts to obtain the same from RDI
and MSU or WSURF and WSU, as the case may be, in each case as BMS shall
reasonably request.
(e) For purposes of this Agreement, "IMPROVEMENTS" means,
collectively, regardless of whether the same may be covered by any patent or
patentable, (A) with respect to any Licensed Cell Line or WSURF-Covered Cell
Line: (i) all improved, enhanced or otherwise modified forms of, and other
improvements to, such Licensed Cell Line by whatsoever means accomplished
(including by way of artificial genetic manipulation, natural genetic mutation
and alternative cell screening and selection method); (ii) all progeny and
derivatives of such Licensed Cell Line or WSURF-Covered Cell Line; and (iii) all
DNA sequences derived from such Licensed Cell Line, WSURF-Covered Cell Line or
any of the items referred to in clause (i) or (ii) above; (B) with respect to
any Licensed Gene Material: (i) all improved, enhanced or otherwise modified
forms of, and other improvements to, such Licensed Gene Material by whatsoever
means accomplished (including by way of artificial enzymatic or chemical
manipulation, natural genetic mutation and alternative cell screening and
selection method); and (ii) all progeny and derivatives of such Licensed Gene
Material; and (C) with respect to the Licensed CPI-Technology, all improvements,
enhancements and other modifications to the know-how, data and other enabling
information constituting Licensed CPI-Technology, in each case (A), (B) and (C)
as the same may hereafter be developed or otherwise become owned or controlled
by CPI. For the purpose of effectuating BMS's right to any Improvement, CPI
shall from time to time, promptly upon its knowing the same, notify BMS of any
fact or circumstance that may tend to suggest the existence of any Improvement.
(f) For purposes of ensuring the transfer of the Other Licensed
Property to BMS and assisting BMS in its development and application of the
Other Licensed Property, CPI-shall, upon reasonable request of BMS, make
available its technical personnel for consultation and other technical
assistance and shall use its best efforts to cause RDI and MSU or WSURF and WSU,
as the case may be, to provide like consultation and assistance. BMS shall
reimburse CPI's, together with such other parties' reasonable out-of-pocket
expenses in connection with such consultation and assistance.
4.4 SUBLICENSE RIGHTS.
(a) BMS shall have the right to grant sublicenses to its Affiliates,
provided that BMS shall guarantee and be responsible for the making of all
payments due, and the making of reports under this Agreement, by reason of sales
of any CPI-Covered Products by its Affiliates and their compliance with all
applicable terms of this Agreement.
(b) BMS shall have the right to grant sublicenses to Sublicensees,
provided that BMS shall guarantee and be responsible for the making of all
payments due, and the making
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of reports under this Agreement, by reason of sales of any CPI-Covered
Products by its Sublicensees and their compliance with all applicable terms
of this Agreement.
4.5 RESERVATION OF RIGHTS BY CPI. CPI may continue to pursue research and
development, either on its own or in collaboration with BMS, MSU and/or WSU, but
not with any other Third Party, in the field of microbial fermentation
production of paclitaxel and other taxanes. More specifically, CPI shall retain
the right to use the Other Licensed Property to make paclitaxel and other
taxanes solely in pursuit of further research and development with respect to
the Other Licensed Property and otherwise for non-commercial internal research
and development purposes. CPI shall not be entitled to, and shall not, assign or
sublicense such right to any Third Party. For the avoidance of doubt, CPI shall
not be entitled to, and shall not, transfer any WSURF-Covered Cell Line,
Licensed Cell Line or cell line constituting Improvement to any Third Party, nor
shall CPI use the same, or any part of the RDI-Intellectual Property Rights, the
WSURF-Technology or the Other Licensed Property, for the benefit of any Third
Party; and CPI retains all rights to its technologies and intellectual property
rights that are not covered by this Agreement.
5. UP-FRONT; MILESTONE AND ROYALTY PAYMENTS.
5.1 UP-FRONT FEE. As consideration to CPI for the grant of the sublicenses
to BMS pursuant to the RDI-Sublicense Agreement and the WSURF-Sublicense
Agreement and the license hereunder to the Other Licensed Property, BMS shall
pay to CPI the sum of [ ], reduced by the sum of the up-front fees being
made by BMS to CPI pursuant to Article III.A(1) of the RDI-Sublicense Agreement
and Paragraph 3.1(a) of the WSURF Sublicense Agreement. Such up-front fee shall
be paid within ten (10) business days of the execution of this Agreement by both
Parties. Such sum shall be non-refundable.
5.2 MILESTONE PAYMENTS. As consideration to CPI for the sublicenses to BMS
pursuant to the RDI-Sublicense Agreement and the WSURF-Sublicense Agreement and
the license hereunder to the Other Licensed Property, BMS shall pay to CPI the
following milestone payments upon the occurrence of each event set forth below:
(a) [ ] upon BMS's attainment, using a fungal strain furnished by
CPI, of production level of not less than [ ] of paclitaxel, reduced by the
sum of the corresponding payment being made by BMS to CPI pursuant to Article
III.A(2) of the RDI Sublicense Agreement;
(b) the following amount or amounts, as applicable, depending on the
attainable productivity and the actual primary products being pursued by BMS, in
each case reduced by the sum of the corresponding payments being made by BMS to
CPI pursuant to Article III.A(3) of the RDI-Sublicense Agreement and Paragraph
3.1(b) of the WSURF-Sublicense Agreement:
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<TABLE>
<CAPTION>
Productivity in mg/1
-------------------------------------
Milestone Payment "Pac/Direct" "Bac" "TT"
----------------- ------------ ----- ----
<S> <C> <C> <C>
[ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
</TABLE>
As used in the foregoing table:
Productivity refers to commercially feasible production, using the
RDI-Intellectual Property Rights, or using a WSURF-Covered Cell Line, of
the product or products in question, of (i) the Direct WSURF-Covered
Product in question or (ii) the compound or compounds which are
subsequently converted into the Indirect WSURF-Covered Product in question,
in each case with fermentation time per production cycle of not more than
[ ].
"PAC/DIRECT" refers to where the primary fermentation product is
paclitaxel or another product which is used by BMS in commercialization as
such without further chemical transformation into a different compound or
the primary product produced by the WSURF-Covered Cell Line in question is
a Direct WSURF-Covered Product.
"BAC" refers to where the primary fermentation product is baccatin III
used by BMS, its Affiliates or its Sublicensees as a starting material for
the final commercial product or the primary product produced by the
WSURF-Covered Cell Line in question is baccatin III used by BMS, its
Affiliates or its Sublicensees as a starting material for the Indirect
WSURF-Covered Product in question.
"TT" refers to where the primary fermentation product from using the
RDI-Intellectual Property Rights is a mixture of miscellaneous taxanes used
by BMS, its Affiliates or its Sublicensees as starting materials for the
final commercial product or the primary product produced by the
WSURF-Covered Cell Line in question is the mixture of miscellaneous taxanes
used by BMS, its Affiliates or its Sublicensees as starting materials for
the Indirect WSURF-Covered Product in question.
For the avoidance of doubt: (1) it shall not be implied that BMS is required, or
otherwise intends, to pursue more than one of the "Pac/direct," "Bac" and "TT"
alternatives; however, the milestone payments in respect of the two different
levels of productivity, if attained, are cumulative); (2) each milestone payment
shall be payable only once regardless of the number of times the same
development milestone has been achieved using different cell lines; and (3)
should BMS in fact be pursuing different primary products using a single cell
line, the different milestone payments pertaining to each such different primary
product shall become applicable.
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(c) [ ] (in each case reduced by the sum of the corresponding
payments being made by BMS to CPI pursuant to Article III.A(4) of the
RDI-Sublicense Agreement and Paragraph 3.1(c) of the WSURF-Sublicense
Agreement) upon the FDA's approval of a Supplemental New Drug Application
(hereinafter called "SNDA") for using, or in the case of a product other than
TAXOL-Registered Trademark- (which product is not a Novel Taxane/BMS
Compound) a New Drug Application (including an Abbreviated New Drug
Application, hereinafter called "NDA") that embodies the use of, (i) the
RDI-INTELLECTUAL Property Rights for the commercial production of paclitaxel
as the active ingredient in BMS's product TAXOL-Registered Trademark- or such
other product or (ii) the use of, a WSURF-Covered Cell Line for the
commercial production of paclitaxel as the active ingredient in BMS's product
TAXOL-Registered Trademark- or such other product, in each case as a Direct
WSURF-Covered Product;
(d) [ ] (in each case reduced by the sum of the corresponding
payments being made by BMS to CPI pursuant to Article III.A(5) of the
RDI-Sublicense Agreement and Paragraph 3.1(d) of the WSURF-Sublicense
Agreement) upon the FDA's approval of an SNDA for using, or in the case of a
product other than TAXOL-Registered Trademark- (which product is not a Novel
Taxane/BMS Compound) an NDA that embodies the use of, (i) the RDI-
Intellectual Property Rights for commercial production of baccatin III to
serve as a starting material for TAXOL-Registered Trademark- or such other
product, as the case may be, or (ii) a WSURF-Covered Cell Line for the
commercial production of baccatin III to serve as a starting material for
TAXOL-Registered Trademark- or such other product, as the case may be, as an
Indirect WSURF-Covered Product;
Clause (c) above and this Clause (d), together, shall not imply that
BMS is required, or otherwise intends, to pursue both alternatives.
(e) [ ] (in each case reduced by the sum of the corresponding
payments being made by BMS to CPI pursuant to Article III.A(5) of the
RDI-Sublicense Agreement and Paragraph 3.1(d) of the WSURF-Sublicense
Agreement) upon the FDA's approval of an Investigational New Drug Application
covering a Novel Taxane/BMS Compound; and
(f) [ ] (in each case reduced by the sum of the corresponding
payments being made by BMS to CPI pursuant to Article III.A(6) of the
RDI-Sublicense Agreement and Paragraph 3.1(e) of the WSURF-Sublicense
Agreement) upon the FDA's approval of a NDA covering a Novel Taxane/BMS
Compound.
Each of the payments required pursuant to this Section 5.2 shall be
paid within 30 days after such milestone has been achieved, and shall be
non-refundable.
5.3 EARNED ROYALTY PAYMENTS. As consideration to CPI for the
sublicenses to BMS pursuant to the RDI-Sublicense Agreement and the
WSURF-Sublicense Agreement and the license hereunder to the Other Licensed
Property, during the term of this Agreement, BMS shall pay to CPI a royalty
on Net Sales of any CPI-Covered Product commencing on the First Commercial
Sale of such CPI-Covered Product by BMS, its Affiliates or its Sublicensees
at the
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<PAGE>
Applicable Royalty Rate, reduced by the sum of the corresponding payments
being made by BMS to CPI pursuant to Article III.C of the RDI-Sublicense
Agreement and Paragraph 3.1(g) of the WSURF-Sublicense Agreement.
5.4 MINIMUM ROYALTIES. In consideration of the maintenance of the
sublicenses to BMS pursuant to the RDI-Sublicense Agreement and the
WSURF-Sublicense Agreement and the license hereunder to the other Licensed
Property, from and after BMS attains a commercially feasible production level
of at least [ ] of paclitaxel using the RDI-Intellectual Property Rights
and/or a WSURF-Covered Cell Line, BMS shall pay CPI a minimum royalty of
[ ] (reduced by the corresponding payments being made by BMS to CPI
pursuant to Article III.B of the RDI-Sublicense Agreement) per each
consecutive 12-month period, which shall be payable within 30 days of the
initial attainment of such production level and subsequently within 30 days
of each anniversary of such attainment. The minimum royalties paid under this
Section 5.4 shall not be refundable, but shall be fully creditable towards
current and future earned royalties under Section 5.3 above.
5.5 SHARING OF FEES FROM SUBLICENSEES. BMS shall promptly pay over to CPI
[ ] of whatever license fee or milestone payments that it receives from any
Sublicensee on account of its sublicensing of the RDI-Intellectual Property
Rights, the WSURF-Technology or both.
5.6 NO STACKING. The obligation to pay royalties to CPI under this
Section 5 is imposed only once with respect to the same unit of CPI-Covered
Product regardless of the extent to which the RDI-Intellectual Property
Rights, the WSURF-Technology and/or the Other Licensed Property cover the
product in question.
5.7 AMOUNTS PAID TO PRIMARY LICENSORS. This Agreement provides that
each up-front, milestone or royalty payment due CPI hereunder shall be net of
the amounts of the corresponding payments to CPI pursuant to the
RDI-Sublicense Agreement and the WSURF-Sublicense Agreement. Such crediting
of the amount paid under either the RDI-Sublicense Agreement or the
WSURF-Sublicense Agreement against the amount of the corresponding payment
under this Agreement shall continue to be in effect even if at that time the
RDI-Sublicense Agreement has been assumed by RDI in place of CPI or the
WSURF-Sublicense Agreement has been assumed by WSURF in place of CPI, as the
case may be.
6. PAYMENTS AND REPORTS.
6.1 REPORTS; PAYMENTS. Except as otherwise specifically provided in
this Agreement, all payments due under this Agreement shall be paid quarterly
within 50 days after the end of each calendar quarter. Each such payment for
earned royalties shall be accompanied by a statement, CPI-Covered
Product-by-CPI-Covered Product and country-by-country, of the amount of Net
Sales during such quarter and the amount of royalties due on such Net Sales.
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<PAGE>
6.2 MODE OF PAYMENT. All payments due under this Agreement shall be
paid by wire transfer of funds to an account at CPI's designated bank in the
United States, and shall be paid in U.S. Dollars, calculated at BMS's
customary internal corporate monthly exchange rates for the last month of the
calendar quarter for which remittance is made for royalties. For each month
and each currency, BMS's customary internal corporate monthly exchange rate
shall equal the arithmetic average of the daily exchange rates (obtained as
described below) during the period from (i) the 20th day of the preceding
month (or, if such 20th day is not a business day, the immediately preceding
business day) through (ii) the 19th day of the current month (or, if such
19th day is not a business day, the immediately preceding business day); each
daily exchange rate shall be obtained from the Reuters Daily Rate Report or
The Wall Street Journal, Eastern U.S. Edition, or, if not so available, as
furnished by BMS's local Affiliates.
6.3 WITHHOLDING TAX. Any and all withholding taxes or similar charges
imposed by any government on amounts due from BMS, its Affiliates or its
Sublicensees will be deducted from the amounts due CPI, will be paid by the
payer to the proper taxing authority, and proof of payment of said tax will
be secured and sent to CPI as evidence of such payment.
6.4 RECORDS RETENTION. BMS and its Affiliates and Sublicensees shall
keep accurate records of all operations affecting payments hereunder, and
shall permit CPI or its duly authorized agent to inspect all such records and
to make copies of or extracts from such records during regular business hours
throughout the term of this Agreement and for a reasonable period of not less
than 3 years thereafter.
6.5 AUDIT REQUEST. At the request and expense of CPI, BMS and its
Affiliates and Sublicensees-shall permit an independent, certified public
accounting firm appointed by CPI and reasonably acceptable to BMS, at
reasonable times and upon reasonable notice, to examine those records as may
be necessary to: (i) determine the correctness of any report or payment made
under this Agreement; or (ii) obtain all information as to Net Sales and the
royalties payable for any calendar quarter. Such accounting firm shall not
disclose to CPI any information other than information relating to said
reports, royalties and payments. Results of any such examination shall be
made available to both Parties.
6.6 COST OF AUDIT. CPI shall bear the full cost of the performance of
any such audit except as hereinafter set forth. If, as a result of any
inspection of the books and records of BMS, its Affiliates or its
Sublicensees, it is shown that BMS's payments under this Agreement were less
than the amount which should have been paid, then BMS shall make all payments
required to be made to eliminate any discrepancy revealed by said inspection
within 30 days after CPI's demand therefor. Furthermore, if the payments were
less than the amount which should have been paid by an amount in excess of
five percent of the payments actually made during the period in question, BMS
shall also reimburse CPI for the costs of such audit in addition to the
payment required to be made to eliminate any discrepancy.
7. INDEMNIFICATION.
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<PAGE>
7.1 INDEMNIFICATION.
(a) CPI shall defend, indemnify and hold BMS and its Affiliates
and Sublicensees, and each of their respective directors, officers and
employees, harmless from and against any and all claims, suits or demands for
liability, damages, losses, costs and expenses (including the costs and
expenses of attorneys and other professionals) arising out of Third Party
claims or suits resulting from a breach of CPI's representations and
warranties set forth in Section 2.
(b) BMS shall defend, indemnify and hold CPI, its Affiliates, and
their respective directors, officers and employees, harmless from and against
any and all claims, suits or demands for liability, damages, losses, costs
and expenses (including the costs and expenses of attorneys and other
professionals) arising out of: (i) Third Party claims or suits resulting from
(1) a breach of BMS's representations and warranties set forth in Section 2,
(2) the manufacture, packaging, use, sale, rental or lease of CPI-Covered
Products or (3) the use of the RDI-Intellectual Property Rights, the
WSURF-Technology or the Other Licensed Property by BMS, its Affiliates or its
Sublicensees.
7.2 CONDITIONS TO INDEMNIFICATION. A person or entity that intends to
claim indemnification under Section 7.1 (the "Indemnitee") shall promptly
notify the other Party (the "Indemnitor") of any loss, claim, damage,
liability or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall assume the defense thereof with
counsel mutually satisfactory to the Indemnitee whether or not such claim is
rightfully brought; provided, however, that an Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
Indemnitor if Indemnitor does not assume the defense, or if representation of
such Indemnitee by the counsel retained by the Indemnitor would be
inappropriate due to actual or potential differing interests between such
Indemnitee and any other person represented by such counsel in such
proceedings. The indemnity agreement in Section 7.1 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which
consent shall not be withheld or delayed unreasonably. The failure to deliver
notice to the Indemnitor within a reasonable time after the commencement of
any such action, only if prejudicial to its ability to defend such action,
shall relieve such Indemnitor of any liability to the Indemnitee under
Section 7.1, but the omission so to deliver notice to the Indemnitor will not
relieve it of any liability that it may have to any Indemnitee otherwise than
under Section 7.1. The Indemnitee under Section 7.1, its officers, directors,
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigations of any action, claim or liability
covered by this indemnification.
8. PATENT PROSECUTION AND MAINTENANCE.
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8.1 CERTAIN PATENTABLE INVENTIONS. CPI shall promptly inform BMS of any
patentable invention discovered, conceived or reduced to practice by CPI that
may constitute a part of the Other Licensed Property. CPI shall diligently
prosecute and maintain all patent applications (including, without
limitation, such patent applications in such countries as BMS may request)
and patents. CPI shall provide BMS with copies of all relevant documentation
so that BMS will be given an opportunity in advance to provide reasonable
comments thereon and may otherwise be informed and apprised of the
prosecution. BMS agrees to keep such documentation confidential. BMS shall
promptly upon CPI's presentment of invoice reimburse CPI for all related
costs of patent preparation, filing and maintenance incurred by CPI from and
after the date hereof with respect to the Other Licensed Property.
8.2 TRADE SECRET PROTECTION. Recognizing that proprietary rights and
interests in certain aspects of the technology in the field may be better
protected by way of trade secrets or other legal doctrines rather than by
patents, the Parties agree to consult with each other, on a case-by-case
basis, with a view to arriving at a consensus as to whether to file, or to
withdraw after filing, a patent application.
8.3 PATENT EXTENSION. Either Party shall be entitled to apply for an
extension of the term of any patent included within the Other Licensed
Property if appropriate under any applicable law in any jurisdiction. If a
Party decides to apply for said extension, it shall notify the other Party,
who shall cooperate by supplying all documents in its possession and signing
all papers which may be necessary to apply for said extension. The Party
applying for said extension shall not be liable to the other Party for any
failure to obtain said extension.
9. PATENT ENFORCEMENT.
9.1 OTHER LICENSED PROPERTY. For the avoidance of doubt, the provisions
of this Section 9 govern with respect to any matter only to the extent that
such matter is not governed by Article IX of the RDI-Sublicense Agreement or
Article VII of the WSURF-Sublicense Agreement.
9.2 THIRD PARTY INFRINGEMENT.
(a) In the event of any infringement by a Third Party of any
aspect of the Other Licensed Property, BMS shall have the first right (but
not the obligation) to pursue any and all injunctive, compensatory and other
remedies and reliefs (collectively, "REMEDIES") against such Third Party.
Should BMS determine not to pursue Remedies within 180 days after written
notice from CPI requesting BMS to do so, then CPI shall have the right (but
not the obligation) to pursue Remedies against such Third Party.
(b) The Party pursuing Remedies shall bear its own costs and
expenses and shall be entitled to retain all damages and other recoveries or
awards. Such Party shall be entitled from any damages, awards or other
recovery to cover its costs and expenses; any remaining
17
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balance shall be used to cover the costs and expenses, if any, of the other
Party and then shared 75% to the Party pursuing Remedies and 25% to the other
Party.
(c) Each Party agrees to cooperate, at its own costs and expense,
with the other in the latter's pursuit of Remedies. Any pursuit of Remedies
will be controlled by the Party initiating the pursuit.
10. CERTAIN RIGHT TO NEW CPI-TECHNOLOGY.
10.1 RIGHT OF FIRST NEGOTIATION.
(a) BMS shall have a right of first negotiation, during the term
of this Agreement, to obtain from CPI an exclusive, worldwide,
royalty-bearing license or sublicense, as applicable (with the right to grant
sublicenses) to all or a part of any New CPI-Technology. Accordingly, CPI
shall not license or sublicense any part of any New CPI-Technology without
first complying with the provisions of Clauses (b) and (c) below.
(b) A ninety (90) day negotiation period (the "Negotiation
Period") shall commence upon CPI, reasonably believing that sufficient data
exist for evaluating the New Technology in question, giving written notice to
BMS to the effect of its intention to out-license such New CPI-Technology. If
BMS exercises its right of first negotiation within thirty (30) days of
receipt of such notice, the Parties shall promptly commence, and continue,
negotiation in good faith with a view to entering into an agreement
containing customary, commercially reasonable terms and conditions in
implementation of an appropriate license, which terms and conditions may
include those relating to product development plans and commitments. If BMS
does not exercise its right of first negotiation within such thirty-day
period by giving written notice to CPI, it shall have no further right under
this Section 10.1 with respect to the New CPI-Technology in question.
(c) In the event that the Parties fail to reach an agreement
within the Negotiation Period, then (and only then) may CPI offer the New
CPI-Technology in question to a Third Party, provided that, within the next
eighteen (18) months, CPI may not conclude any transaction with any Third
Party on terms less advantageous to CPI than those last offered to BMS
without first offering such less advantageous terms to BMS. ANY OFFER SO MADE
TO BMS SHALL BE SUFFICIENT IF IT DISCLOSES IN SUMMARY FASHION: (i) THE RIGHTS
OF INTERESTS INVOLVED; (ii) THE DEGREE, IF ANY, TO WHICH THE LICENSE OR
SUBLICENSE, AS THE CASE MAY BE, IS EXCLUSIVE; (iii) THE ROYALTIES OR OTHER
CONSIDERATION TO BE PAID TO CPI; (iv) THE TERRITORIES COVERED; (v) THE TERMS
OF ANY IMPROVEMENTS LICENSE OR IMPROVEMENTS BACKLICENSE; AND (v) THE TERM OF
THE LICENSE OR SUBLICENSE, AS THE CASE MAY BE. BMS SHALL HAVE 45 DAYS FROM
ITS RECEIPT THEREOF TO DETERMINE WHETHER IT WISHES TO ACCEPT SUCH OFFER.
11. CONFIDENTIALITY AND NON-USE.
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11.1 NOTIFICATION. The Parties recognize the importance of the
protection of inventions, discoveries and other developments by patent or
under the doctrine of trade secrets. Consequently, any proposed publication
by either Party of the same shall be subject to the provisions of this
Section 11. At least 60 days before a manuscript is to be submitted to a
publisher, the publishing Party will provide the other Party with a copy of
the manuscript. If the publishing Party wishes to make an oral presentation,
it will provide the other Party with a copy of the abstract (if one is
submitted) or otherwise a summary of the contents of the proposed publication
at least 40 days before it is to be submitted. The publishing Party will also
provide to the other Party a copy of the text of the presentation, including
all slides, posters, and any other visual aids, at least 40 days before the
presentation is made.
11.2 REVIEW OF PROPOSED PUBLICATIONS. The receiving Party will review
the manuscript, abstract, summary, text or any other material provided under
Section 11.1 to determine if patentable subject matter is disclosed or if the
publication would jeopardize any desirable trade secret claim. The reviewing
Party will notify the publishing Party within 30 days of receipt of the
proposed publication if the reviewing Party, in good faith, determines that
patentable subject matter is or may be disclosed or trade secret protection
may be at stake, or if the reviewing Party, in good faith, believes
Confidential Information or proprietary information is or may be disclosed.
If it is determined by the reviewing Party that patent applications should be
filed, the publishing Party shall delay its publication or presentation for a
period not to exceed 90 days from the reviewing Party's receipt of the
proposed publication to allow time for the filing of patent applications
covering patentable subject matter. In the event that the delay needed to
complete the filing of any necessary patent application will exceed the 90
day period, the Parties will discuss the need for obtaining an extension of
the publication delay beyond the 90 day period. If it is determined that
trade secret protection is at stake, the publishing party shall eliminate
from publication such materials as are reasonable to preserve trade secret
protection. If it is determined in good faith by the reviewing Party that
Confidential Information or proprietary information is being disclosed, the
Parties will consult in good faith to arrive at an agreement on mutually
acceptable modifications to the proposed publication to avoid such disclosure.
11.3 CONFIDENTIALITY AND NON-USE; EXCEPTIONS. Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing, the
Parties agree that, for the term of this Agreement and for five (5) years
thereafter the receiving Party and its Affiliates and Sublicensees shall
keep, and shall ensure that its officers, directors, employees and agents
keep, completely confidential and shall not publish or otherwise disclose and
shall not use for any purpose any Confidential Information furnished to it by
the other Party or its Affiliates or Sublicensees or developed under this
Agreement.
11.4 AUTHORIZED DISCLOSURE. Each Party may disclose the other's data and
information, including Confidential Information, to its Affiliates, licensors
and Sublicensees, and its and their officers, directors, employees and
outside consultants, as reasonably necessary, and to others to the extent
such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental laws and
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regulations, undertaking basic research with outside collaborators,
conducting preclinical or clinical trials or pursuing product registrations
provided that if a Party is required to make any such disclosure of the other
Party's Confidential Information it will, except where impracticable for
necessary disclosures, for example to physicians conducting studies or to
health authorities, give reasonable advance notice to the other Party of such
disclosure requirement and, except to the extent inappropriate in the case of
patent applications, will use all reasonable efforts to secure confidential
treatment of such information required to be disclosed.
12. TERM; TERMINATION.
12.1 TERM. This Agreement shall commence as of the Effective Date and,
unless sooner terminated as provided hereunder, shall expire, as to each
CPI-Covered Product in each country in the Territory, upon the later to occur
of: (a) 10 years from the First Commercial Sale of such CPI-Covered Product
in such country; or (b) such time as neither the making, use nor sale at the
time by BMS, its Affiliates or Sublicensees in such country of such
CPI-Covered Product, without giving effect to the sublicenses pursuant to the
RDI-Sublicense Agreement and the WSURF-Sublicense Agreement and the license
hereunder to the Other Licensed Property, would infringe any patent included
in the RDI-Intellectual Property Rights, the WSURF-Technology or the Other
Licensed Property, it being understood that the term "patent" shall include
any patent that may issue upon any pending patent application being
prosecuted diligently by or on behalf of RDI, WSURF or CPI, as the case may
be. Following such expiration, on a country-by-country basis, BMS shall
retain a paid-up, non-exclusive licenses as otherwise provided in Sections
4.1., 4.2 and 4.3. This Agreement shall expire in its entirety upon its
expiration with respect to all CPI-Covered Products in all countries in the
Territory as provided in the foregoing.
12.2 BREACH. Failure by BMS to comply with any of the material
obligations on its part contained in this Agreement shall entitle CPI to give
notice to BMS specifying the nature of the default and requiring it to cure
such default. If such default is not cured within 60 days after the receipt
of such notice (or, if such default cannot be cured within such 60 day
period, if BMS does not commence and diligently continue actions to cure such
default), CPI shall be entitled, without prejudice to any of its other rights
conferred on it by this Agreement, in addition to any other remedies
available to it by law or in equity, to terminate this-Agreement by giving
written notice to take effect immediately. The right to terminate this
Agreement, as hereinabove provided, shall not be affected in any way by CPI's
waiver or failure to take action with respect to any previous default.
12.3 TERMINATION BY BMS.
(a) BMS shall be entitled at any time, other than during the first
six months following the date hereof, to terminate this Agreement in
whole by giving notice in writing to CPI. Such termination shall be effective
90 days from the date of such notice. Upon such termination, each of the
RDI-Sublicense Agreement and the WSURF-Sublicense Agreement
20
<PAGE>
shall forthwith terminate, regardless of whether BMS has invoked its right to
terminate such agreements pursuant to Article VI.A of the RDI-Sublicense
Agreement and Paragraph 12.3 of the WSURF-Sublicense Agreement, respectively.
(b) In the event that BMS terminates both the RDI-Sublicense
Agreement and the WSURF-Sublicense Agreement pursuant to Article VI.A of the
RDI-Sublicense Agreement and Paragraph 12.3 of the WSURF-Sublicense
Agreement, this Agreement shall forthwith terminate, regardless of whether
BMS has invoked its right to terminate this Agreement pursuant to this
Section 12.3.
12.4 EFFECT OF TERMINATION.
(a) Termination, relinquishment or expiration of this Agreement
for any reason shall be without prejudice to any rights which shall have
accrued to the benefit of either Party prior to such termination,
relinquishment or expiration, including, without limitation, BMS's continued
obligation to make royalty payments, license fee payments and reports, if
any, as provided in Sections 5 and 6 above. Such termination, relinquishment
or expiration shall not relieve either Party from obligations which are
expressly indicated to survive termination or expiration of this Agreement.
(b) All of the Parties' rights and obligations under Sections 3.2,
7 and 11 shall survive termination or expiration.
12.5 RIGHT TO SELL STOCK ON HAND. If BMS is not in material breach of
this Agreement at the time of termination of this Agreement, then BMS, its
Affiliates and its Sublicensees shall have the right for one year thereafter
to dispose of all Licensed Products then in its inventory, and shall pay
royalties thereon, in accordance with the provisions of this Agreement, as
though this Agreement had not terminated.
12.6 TERMINATION OF SUBLICENSES. Upon any termination of this Agreement,
all sublicenses-granted by BMS under this Agreement shall terminate
simultaneously, subject, nevertheless, to Section 12.5 above.
12.7 BANKRUPTCY.
(a) Either Party may, by Notice to the other Party, terminate this
Agreement as a whole if such other Party becomes insolvent, makes an
assignment for the benefit of creditors, becomes the subject of proceedings
in voluntary or involuntary bankruptcy instituted on behalf of or against
such other party, or has a receiver or trustee appointed for all or
substantially all of its property; provided, however, that, in the case of an
involuntary bankruptcy proceeding, such right to terminate shall become
effective only if such other Party consents to the involuntary bankruptcy or
such proceeding is not dismissed within ninety (90) days following the filing
thereof.
21
<PAGE>
(b) All rights and licenses granted under or pursuant to each of
this Agreement, the RDI-Sublicense Agreement and the WSURF-Sublicense
Agreement by one Party to the other are, for all purposes of Section 365(n)
of Title 11 of the United States Code ("TITLE 11"), licenses of rights to
"intellectual property" as defined in Title 11. Each Party agrees during the
term of this Agreement to create and maintain current copies to the extent
practicable of all such intellectual property. The Parties further agree
that, in the event of the commencement of a bankruptcy proceeding by or
against one party under Title 11, the other Party shall be entitled to a
complete duplicate of any and all such intellectual property and all
embodiments of such intellectual property, and the same, if not already in
the possession of such other Party, shall be promptly delivered to it (a)
upon such other Party's written request following the commencement of such
bankruptcy proceeding, unless the Party subject to such bankruptcy
proceeding, or its trustee or receiver, elects to continue to perform all of
its obligations under each of this Agreement, the RDI-Sublicense Agreement
and the WSURF-Sublicense Agreement, or (b) if not delivered as provided under
Clause (a) above, upon such other Party's request following the rejection of
this Agreement, the RDI-Sublicense Agreement or the WSURF-Sublicense
Agreement by-or on behalf of the Party subject to such bankruptcy proceeding.
13. MISCELLANEOUS.
13.1 RELATIONSHIP OF PARTIES. Nothing in this Agreement is intended
or shall be deemed to constitute a partnership, agency, employer-employee or
joint venture relationship between the Parties. No Party shall incur any
debts or make any commitments for the other, except to the extent, if at all,
specifically provided herein.
13.2 FORCE MAJEURE. Neither Party shall be liable to the other for
loss or damages or shall have-any right to terminate this Agreement for any
default or delay attributable to any act of God, flood, fire, explosion,
strike, lockout, labor dispute, shortage of raw materials, casualty or
accident, war, revolution, civil commotion, act of public enemies, blockage
or embargo, injunction, law, order, proclamation, regulation, ordinance,
demand or requirement of any government or subdivision, authority or
representative of any such government, or any other cause beyond the
reasonable control of such Party, if the Party affected shall give prompt
notice of any such cause to the other Party. The Party giving such notice
shall thereupon be excused from such of its obligations hereunder as it is
thereby disabled from performing for so long as it is so disabled and for 30
days thereafter. Notwithstanding the foregoing, nothing in this Section 13.2
shall excuse or suspend the obligation to make any payment due hereunder in
the manner and at the time provided.
13.3 ASSIGNMENT. Neither Party shall be entitled to assign its rights
hereunder. No assignment and transfer shall be valid and effective unless and
until the assignee/transferee shall agree in writing to be bound by the
provisions of this Agreement.
22
<PAGE>
13.4 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of
this Agreement.
13.5 NOTICE. Any notice or request required or permitted to be
given under or in connection with this Agreement shall be deemed to have been
sufficiently given if in writing and personally delivered by messenger or
express courier service (signature required), prepaid, to the Party for which
such notice is intended, at the address set forth for such Party below:
(a) In the case of CPI, to:
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Blvd., Suite 330
Dallas, Texas 75235
Attention: President
(b) In the case of BMS, to:
Bristol-Myers Squibb Company
Route 206 & Province Line Road
Princeton, New Jersey 08540
Attention: President, Technical Operations
or to such other address for such Party as it shall have specified by like
notice to the other Party, provided that notices of a change of address shall
be effective only upon receipt thereof. If sent by messenger or express
courier service, the date of receipt (in the case of personal delivery) or
dispatch (in the case of courier service) shall be deemed to be the date on
which such notice or request has been given.
13.6 USE OF NAME. Except as otherwise provided herein, neither
Party shall have any right, express or implied, to use in any manner the name
or other designation of the other Party or any other trade name or trademark
of the other Party for any purpose in connection with the performance of this
Agreement.
13.7 PUBLIC ANNOUNCEMENTS. Except as required by applicable law,
neither Party shall issue any press release or make any other public
announcement concerning this Agreement or the subject matter hereof without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld. In the event of a required press release or other
public announcement, the Party making such announcement shall provide the
other Party with a copy of the proposed text prior to such announcement. The
Parties agree that if either is required to file this Agreement with any
governmental agency, such Party will redact the financial terms of this
Agreement to the extent possible in order to keep the financial terms of this
Agreement confidential to the extent permitted by law.
23
<PAGE>
13.8 COSTS AND EXPENSES. Except as otherwise expressly provided in
this Agreement, each Party shall bear all costs and expenses associated with
the performance of such Party's obligations under this Agreement.
13.9 WAIVER. A waiver by either Party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed
to be a waiver of such term or condition for the future, or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement
of either Party.
13.10 SEVERABILITY. When possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
13.11 AMENDMENT. No amendment, modification or supplement of any
provisions of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each Party.
13.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ITS CHOICE OF LAW PRINCIPLES.
13.13 ARBITRATION. Any dispute arising out of or relating to any
provisions of this Agreement shall be finally settled by arbitration to be
held in New York, New York, under the auspices and then current commercial
arbitration rules of the American Arbitration Association. Such arbitration
shall be conducted by three arbitrators appointed according to said rules.
Judgment upon any award rendered may be entered in any court having
jurisdiction, or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be.
13.14 ENTIRE AGREEMENT. This Agreement, together with the
RDI-Sublicense Agreement, the WSURF-Sublicense Agreement, the side letter
agreement dated May, 19, 1998 entered into among BMS, CPI and WSURF, the side
letter agreement dated May 27, 1998 entered into among BMS, CPI and RDI and
the Research Agreement, sets forth the entire agreement and understanding
between the Parties as to the subject matter hereof and merges all prior
discussions and negotiations between them, and neither of the Parties shall
be bound by any conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or as duly set forth on or subsequent to the date hereof in
24
<PAGE>
writing and signed by a proper and duly authorized officer or representative
of the Party to be bound thereby.
13.15 COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, any one of which need not contain the signature
of more than one Party but all such counterparts taken together shall
constitute one and the same agreement.
13.16 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are for convenience only, and shall be of no force or effect in
construing or Interpreting any of the provisions of this, Agreement.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed and delivered by its duly authorized officer as of the day and year
first above written.
CYTOCLONAL PHARMACEUTICS INC.
By: /s/ ARTHUR P. BOLLON
---------------------------------
Arthur P. Bollon, Ph.D.
President and CEO
BRISTOL-MEYERS SQUIBB COMPANY
By: /s/ HAMED M. ABDOU
---------------------------------
Hamed M. Abdou, Ph.D.
President, Technical Operations
25
<PAGE>
SCHEDULE 4.3(b)
LIST OF CELL LINES
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
26
<PAGE>
SCHEDULE 4.3(c)
LIST OF ENZYMES AND RELATED GENE MATERIALS
1) Plasmid containing [ ]
2) Plasmids containing [ ]
3) Plasmids containing genes such as [ ]
27
<PAGE>
SUBLICENSE AGREEMENT
UNDER
RESEARCH & DEVELOPMENT INSTITUTE, INC. LICENSE AGREEMENT
THIS AGREEMENT, is made and entered into as of the 27th of May, 1998
("AGREEMENT DATE"), by and between CYTOCLONAL PHARMACEUTICS INC.
(hereinafter called "CPI"), a Delaware corporation having an operating
office in Dallas, Texas, and BRISTOL-MYERS SQUIBB COMPANY (hereinafter called
"BMS"), a Delaware corporation having a principal place of business in
Princeton, New Jersey.
W I T N E S S E T H:
WHEREAS, CPI and Research & Development Institute, Inc. (hereinafter
called "RDI") entered into a License Agreement dated as of June 10, 1993,
which License Agreement is proposed by CPI and BMS to be amended and restated
in its entirety pursuant to a certain form of amendment and restatement
agreed by the parties (as so amended and restated, hereinafter called the
"RDI/CPI LICENSE AGREEMENT");
WHEREAS, Under the RDI/CPI License Agreement CPI licensed from RDI
patent and other intellectual property rights relating to a "Taxol Producing
Organism System";
WHEREAS, RDI and CPI also entered into a related Research and
Development Agreement (such agreement, as may be amended, supplemented and
extended from time to time, (the "CPI/RDI RESEARCH AGREEMENT"), which would
give rise to patent and other intellectual property rights to be licensed to
CPI under the RDI/CPI License Agreement;
WHEREAS, BMS wishes to obtain from CPI an exclusive sublicense to all
patent and other intellectual property rights licensed by CPI from RDI under
the RDI/CPI License Agreement; and
WHEREAS, CPI is willing to sublicense exclusively such patent and other
intellectual property rights to BMS subject to the conditions as set forth
herein;
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, CPI and BMS hereby agree as follows:
I. DEFINITIONS
A. The term "MICROBIAL DRUG SUBSTANCE PRODUCING SYSTEM" shall mean a
system developed by Dr. Gary A. Strobel, Dr. Andrea Stierle and Dr.
Donald Stierle of Montana State University and Montana College of
Mineral Science and
<PAGE>
Technology and/or which otherwise emanates from any of their
laboratories comprising:
(1) Isolation methods for and use of TAXOMYCES ANDREANAE, other
fungi and other microorganisms that produce paclitaxel, other
taxanes and other chemical compounds which are useful in
treating one or more diseases (diseases, as used in this
Clause A, include all human diseases and disorders);
(2) Components derived from the Pacific Yew tree or other sources
that produce or effect the production of paclitaxel, other
taxanes and other chemical compounds useful for the treatment
of one or more diseases; and
(3) Any and all written material developed by Dr. Gary A. Strobel,
Dr. Andrea Stierle and Dr. Donald Stierle disclosing the
isolation, characterization and determination of the role of
T. BREVIFOLIA leaves and other components useful for the
treatment of one or more diseases.
B. The term "INTELLECTUAL PROPERTY RIGHTS" shall mean all U.S. and
Foreign patents or applications for patents owned by RDI, insofar as
the claims of such patents or applications cover in whole or in part
the Microbial Drug Substance Producing system, including any
reissues, renewals, extensions, continuations or
continuations-in-part; know-how relating to the Microbial Drug
Substance Producing System; and any other intellectual property,
including copyrighted works and any trademarks relating to the
development and use of the Microbial Drug Substance Producing
System, in each case as was licensed by RDI to CPI under the
RDI/CPI License Agreement, which include all
paclitaxel/taxane-related technology, including, without limitation,
all organisms, recombinants, constructs, derivatives and components
thereof which produce or affect the production of paclitaxel and
other taxanes or any chemical or factor which affects the production
level or activity of paclitaxel and other taxanes and any chemical
modification and/or production of paclitaxel or other taxanes in
treating cancer or any other disease or other commercial uses
emanating from the laboratories of Dr. Gary Strobel, Dr. Andrea
Stierle and/or Dr. Donald Stierle, and/or produced or developed by,
or under the direction/sponsorship of CPI from materials supplied to
CPI pursuant to the RDI/CPI License Agreement or the CPI/RDI
Research Agreement. The patent applications and patents includable
in the Intellectual Property Rights as of date hereof are set forth
in Attachment A.
C. "LICENSED PRODUCTS", as used herein, means any product, apparatus,
kit or component part thereof, or any subject matter whose
manufacture, sale or use as covered by any Intellectual Property
Rights, and any improvements, modifications, or applications thereof
as may exist at the execution of the
2
<PAGE>
RDI/CPI License Agreement whether or not described in issued
patents, and additionally any Novel Taxane from Fermentation, Novel
BMS Compound from Fermentation and any compound made using either
of them as starting material.
D. "LICENSED METHOD", as used herein, means any method, procedure,
process or any other subject matter whose manufacture, use or sale
is covered by any Intellectual Property Rights.
E. "NET SALES", as used herein, means the gross revenues received by
BMS or its sublicensees either for (a) Licensed Products sold or (b)
services performed using Licensed Products or Licensed Method less
the sum of the following deductions, where applicable: sales, use,
tariff, import/export duties or other excise taxes imposed on
particular sales; allowances, credits, chargebacks and refunds to
non-affiliated third parties because of rejections, returns or price
reduction of product; freight costs and insurance charges on
shipments to customers included in invoiced amounts; and rebates and
price reductions/adjustments required by law, regulations or
contract. In the case of rebates and price reductions/adjustments
required by contract as referred to in the preceding sentence, the
same shall not be deductible to the extent that the contract in
question is between affiliates or related companies or the price
concessions in question are given in connection with the
marketing/sales of other product or products such as in the case of
"bundling" of products.
F. "INVENTIONS", as used herein, shall mean the Licensed Products and
the Licensed Method as described above, or any part thereof.
G. "APPLICABLE ROYALTY RATE", as used herein, shall mean the percentage
rate or rates at which BMS shall pay royalties to CPI hereunder,
determined on a calendar year-by-calendar year basis, as follows:
(1) With respect to using the Intellectual Property Rights
licensed hereunder to produce (a) paclitaxel to be
commercialized as TAXOL-Registered Trademark- or another
compound (which is neither a Novel Taxane from Fermentation
nor a Novel-BMS Compound from Fermentation) to be used by BMS
in commercialization as such without further chemical
transformation into another compound, or (b) baccatin III or a
miscellaneous taxane mixture as a starting material for
paclitaxel or any other compound (which is neither a Novel
Taxane from Fermentation nor a Novel BMS Compound from
Fermentation):
3
<PAGE>
<TABLE>
<CAPTION>
PORTION OF ANNUAL NET SALES "PAC/DIRECT" "BAC" OR "TT"
--------------------------- ------------ -------------
<S> <C> <C>
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
</TABLE>
As used in the foregoing table, the italicized, lower rates in parentheses
shall apply with respect to a Licensed Product if (and only if) BMS in
respect of the same product is paying a royalty to CPI pursuant to the
Sublicense Agreement dated as of May 19, 1998 (the "WSURF-SUBLICENSE
AGREEMENT") between CPI and BMS under The Washington State University
Research Foundation License Agreement; and the terms "PAC/DIRECT", "BAC" and
"TT" are as defined in Clause A(3) in Article III below.
(2) With respect to (a) using the Intellectual Property Rights
licensed hereunder to produce any compound that is a Novel
Taxane from Fermentation or a Novel BMS Compound from
Fermentation or is produced using a Novel Taxane from
Fermentation or a Novel BMS Compound from Fermentation as a
starting material or (b) any Licensed Product that is a Novel
Taxane from Fermentation or a Novel BMS Compound from
Fermentation or, as commercialized by BMS or its sublicensees,
is produced using a Novel Taxane from Fermentation or a Novel
BMS Compound from Fermentation as a starting material but in
either case is produced otherwise than using the Intellectual
Property Rights:
<TABLE>
<CAPTION>
PORTION OF ANNUAL NET SALES "DIRECT" "INDIRECT"
--------------------------- -------- ----------
<S> <C> <C>
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
</TABLE>
4
<PAGE>
As used in the foregoing table:
The italicized, lower rates in parentheses shall apply with respect
to a Licensed Product if (and only if) BMS in respect of the same
product is paying a royalty to CPI pursuant to the WSURF-Sublicense
Agreement.
"DIRECT" refers to where the Intellectual Property Rights are used
to produce the Novel Taxane from Fermentation or Novel BMS Compound
from Fermentation in question which is used by BMS in
commercialization as such without further chemical transformation
into a different compound.
"INDIRECT" refers to where (a) the Intellectual Property Rights are
used to produce (1) the Novel Taxane from Fermentation or Novel BMS
Compound from Fermentation in question which is subsequently
chemically transformed into the product commercialized by BMS or (2)
a compound which is subsequently chemically transformed into the
product (being the Novel Taxane from Fermentation or Novel BMS
Compound from Fermentation in question) commercialized by BMS or (b)
the Licensed Product in question is a Novel Taxane from Fermentation
or Novel BMS Compound from Fermentation or, as commercialized by
BMS, is produced using a Novel Taxane from Fermentation or Novel BMS
Compound from Fermentation as a starting material and in either case
is produced otherwise than using the Intellectual Property Rights.
"INDIRECT" also refers to where the Licensed Product in question is
a Novel Taxane from Fermentation or a Novel BMS Compound from
Fermentation or, as commercialized by BMS or its sublicensees, is
produced using a Novel Taxane from Fermentation or a Novel BMS
Compound from Fermentation as a starting material but in either case
is produced otherwise than using the Intellectual Property Rights.
For the avoidance of doubt, there shall be no stacking of royalties
that would otherwise result from Clauses (1) and (2) above both
applying to the same product (in any such case, Clause (2) shall
control and supersede Clause (1)); and, in each of the two tables
above, the amounts under the heading "PORTION OF ANNUAL NET SALES"
refer to only the amounts of Net Sales of the particular product in
question (for example, only Net Sales of TAXOL-Registered Trademark-
containing paclitaxel made by BMS using the Intellectual Property
Rights (as a direct fermentation product) are used to determine the
Applicable Royalty Rate under the heading "BAC/DIRECT" in Clause (1)
above).
H. "NOVEL TAXANE FROM FERMENTATION", as used herein, shall mean a
theretofore unknown taxane discovered by CPI or BMS as a natural
product produced by a microorganism in the course of the use of the
Intellectual Property Rights.
5
<PAGE>
I. "NOVEL BMS COMPOUND FROM FERMENTATION", as used herein, shall mean a
theretofore unknown non-taxane compound discovered by BMS as a
natural product produced by a microorganism in the course of the use
of the Intellectual Property Rights.
II. LICENSE TERMS
A. Subject to Clause C below, CPI hereby grants to BMS an exclusive
(exclusive even as to CPI) sublicense, under the RDI/CPI License
Agreement, to practice the Intellectual Property Rights, including
the right to make, have made, sell and use the Inventions throughout
the world, including reissues.
B. CPI also grants to BMS the right further to sublicense to third
parties to practice the Intellectual Property Rights so licensed by
CPI from RDI, including the right to make, have made, sell and use
the Inventions.
C. CPI may continue to pursue research and development, either on its
own or in collaboration with BMS, MSU and/or WSU, but not with any
other third party, in the field of microbial fermentation production
of paclitaxel and other taxanes. More specifically, CPI shall retain
the right to use the Intellectual Property Rights to make paclitaxel
and other taxanes solely in pursuit of further research and
development with respect to the Intellectual Property Rights and
otherwise for non-commercial internal research and development
purposes. CPI shall not be entitled to, and shall not, assign or
sublicense such right to any third party. For the avoidance of
doubt, CPI shall not be entitled to, and shall not, transfer or
license and cell line covered by the Intellectual Property Rights to
any third party, or otherwise to use the Intellectual Property
Rights for the benefit of any third party.
III. PAYMENT
A. BMS shall pay CPI:
(1) [ ] within ten (10) business days following the date
hereof;
(2) [ ] upon BMS's attainment, using a fungal strain furnished
by CPI, of production level of not less than [ ]of
paclitaxel;
(3) the following amount or amounts, as applicable, depending on
the attainable productivity and the actual primary products
being pursued by BMS:
6
<PAGE>
<TABLE>
<CAPTION>
PRODUCTIVITY IN MG/1
--------------------------------------------------
MILESTONE PAYMENT "PAC/DIRECT" "BAC" "TT"
----------------- ------------ ------- -------
<S> <C> <C> <C>
[ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
</TABLE>
As used in the foregoing table:
"PRODUCTIVITY" refers to commercially feasible production, using the
Intellectual Property Rights licensed hereunder, of the product or
products in question, with fermentation time per production cycle of
not more than [ ].
"PAC/DIRECT" refers to where the primary fermentation product is
paclitaxel or another product which is used by BMS in
commercialization as such without further chemical transformation
into a different compound.
"BAC" refers to where the primary fermentation product is baccatin
III used by BMS as a starting material for the final commercial
product.
"TT" refers to where the primary fermentation product from using the
Intellectual Property Rights is the mixture of miscellaneous taxanes
used by BMS as starting materials for the final commercial product.
For the avoidance of doubt: (1) it shall not be implied that
BMS is required, or otherwise intends, to pursue more than one
of the "PAC/DIRECT", "SAC" and "TT" alternatives; however, the
milestone payments in respect of the two different levels of
productivity, if attained, are cumulative); (2) each milestone
payment shall be payable only once regardless of the number of
times the same development milestone has been achieved using
different cell lines; and (3) should BMS in fact be pursuing
different primary products using a single cell line, the
different milestone payments pertaining to such different
primary products shall become applicable of productivity, if
attained, are cumulative.
(4) [ ] upon the U.S. FDA's approval of a Supplemental New
Drug Application (hereinafter called "SNDA") for using, or in
the case of a product other than TAXOL-Registered Trademark-
(which product is not a Novel Taxane from Fermentation or a
Novel BMS Compound from Fermentation) a New Drug Application
(including an Abbreviated New Drug Application, hereinafter
called "NDA") that embodies the use of, the Intellectual
7
<PAGE>
Property Rights for the commercial production of paclitaxel as
the active ingredient in BMS's product TAXOL-Registered
Trademark- or such other product;
(5) [ ] upon the U.S. FDA's approval of an SNDA for using, or
in the case of a product other than TAXOL-Registered
Trademark- (which product is not a Novel Taxane from
Fermentation or a Novel BMS Compound from Fermentation) an NDA
that embodies the use of, the Intellectual Property Rights for
commercial production of baccatin III to serve as a starting
material for TAXOL-Registered Trademark- or such other
product, as the case may be;
Clause (4) above and this Clause (5), together, shall
not imply that BMS is required, or otherwise intends, to
pursue both alternatives.
(6) [ ] upon filing with the U.S. FDA of an Investigational
New Drug Application covering a Novel Taxane from Fermentation
or a Novel BMS Compound from Fermentation; and
(7) [ ] upon the U.S. FDA's approval of a NDA covering a Novel
Taxane from Fermentation or Novel BMS Compound from
Fermentation.
B. From and after BMS attains a commercially feasible production
level of at least [ ]of paclitaxel using the Intellectual Property
Rights, BMS shall pay CPI a minimum royalty of [ ] per each consecutive
12-month period, which shall be payable within 30 days of the initial
attainment of such production level and subsequently within 30 days of each
anniversary of such attainment. The minimum royalties paid under this Clause
B shall not be refundable, but shall be fully creditable towards current and
future earned royalties under Clause C below.
C. BMS shall pay to CPI earned royalties on Net Sales of Licensed
Products at the Applicable Royalty Rate.
D. BMS shall pay to CPI royalties at the same Applicable Royalty Rate
as provided in Clause B above on Net sales with respect to
manufacture, use, or sale of the Inventions by sublicensees.
IV. DUE DILIGENCE
A. As a condition of this sublicense, BMS agrees that it shall use
commercially reasonable efforts and diligent endeavor to fully
develop and commercially exploit the Intellectual Property Rights
licensed hereunder.
8
<PAGE>
B. BMS agrees, upon reasonable request by CPI, to apprise CPI and RDI
of the current status of the development and regulatory approval of
the Intellectual Property Rights for commercial use.
V. BOOKS AND RECORDS
A. BMS shall keep books and records accurately, showing all Licensed
Products manufactured, used or sold under the terms of this
Agreement. Such books and records shall be open to inspection by a
certified public accounting firm appointed by CPI, and reasonably
acceptable to BMS, at reasonable times and after reasonable advanced
notice for the purpose of verifying the accuracy of the quarterly
reports and the royalties due or paid.
B. The fees and expenses of the accounting firm performing such an
examination shall be borne by CPI, unless it is determined that
royalties or other payments due CPI were underpaid by Five Percent
(5%) or more.
VI. TERM; TERMINATION BY PARTIES
A. This Agreement shall take effect as of the date hereof and shall by
its term expire as of the later to occur of (1) the tenth (10th)
anniversary of the first commercial sale of a Licensed Product or
(2) such time as neither the making, use nor sale at the time by BMS
of any and all Licensed Products, without giving effect to the
sublicense hereunder, would infringe any patent included in the
Intellectual Property Right. Following such expiration, BMS shall
retain a paid-up, nonexclusive license to the Intellectual Property
Rights as otherwise provided in Article II above.
B. Either party has the right to terminate this Agreement in whole in
the event of a material breach of this. Agreement by the other
party, by giving notice in writing to such other party setting forth
the purported breach and the relief sought. Such termination shall
be effective ninety (90) days from such notice if such other party
does not cure the default specified. PROVIDED, HOWEVER, BMS shall
have thirty (30) days to cure a default in its obligations to make
any payment due CPI hereunder.
C. In addition to the right of termination under Clause B above, BMS
shall be entitled at any time, other than during the first six
months following the date hereof, to terminate this Agreement in
whole by giving notice in writing to CPI. Such termination shall be
effective ninety (90) days from the date of such notice.
D. This Agreement will not terminate automatically if either party
shall become bankrupt or insolvent and/or if the business of
Licensee shall be placed in the
9
<PAGE>
hands of a receiver, assignee, or trustee, whether by voluntary act
or otherwise; PROVIDED, HOWEVER, this Agreement is and shall remain,
throughout the term hereof, an executory contract which requires
full and timely performance of all its terms by BMS in order to
prevent it from terminating, bankruptcy or insolvency
notwithstanding.
VII. BANKRUPTCY
A. All rights and licenses granted under or pursuant to this Agreement
by CPI and BMS are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code (the
"BANKRUPTCY CODE"), an executory contract. The parties hereto agree
that BMS, as licensee of such rights under this Agreement, shall
retain and may fully exercise all of its rights and elections under
the Bankruptcy Code. The parties hereto further agree that, in the
event that any proceeding shall be instituted by or against CPI as
licensor seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization
relief or debtors, or seeking an entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it
or any substantial part of its property or it shall take any action
to authorize any of the foregoing actions, BMS as licensee shall
have the right to retain and enforce its exclusive rights and
licenses under this Agreement, including, without limitation, the
exclusive right to continue to make, use, manufacture and distribute
the Microbial Drug Substance Producing System.
VIII. PROCUREMENT PROGRAM
A. CPI shall, at its sole cost, diligently prosecute and maintain the
United States and foreign patents and patent applications or any
necessary intellectual property protection using counsel of its
choice and after due consultation with BMS. CPI shall provide BMS
with copies of all relevant documentation so that BMS may be
informed and apprised of the continuing prosecution and BMS agrees
to keep this documentation confidential.
B. BMS shall pay and or reimburse CPI for all out-of-pocket expenses
incurred after the execution of this Agreement in filing,
prosecuting and maintaining the Intellectual Property Rights
licensed hereunder.
C. Subject to the rights, if any, of the Government of the United
States, as set forth hereinbelow, CPI warrants that it has the
lawful right to grant the sublicense under this Agreement.
10
<PAGE>
IX. INFRINGEMENT
A. BMS acknowledges that under the RDI/CPI License Agreement:
"A. In the event that CPI shall learn of the infringement of any
patent licensed under [the RDI/CPI License) Agreement, CPI
shall call RDI's attention thereto in writing, and shall
provide RDI with reasonable evidence of such infringement. RDI
and CPI shall jointly use their reasonable efforts to
terminate such infringement."
"B. CPI and RDI shall jointly enforce any patent exclusively
licensed [under the RDI License Agreement] against
infringement by third parties and shall be entitled to first
recover their respective costs thereof; and, thereafter, shall
share on a negotiated basis the balance of any recovery from
such enforcement."
B. Accordingly, CPI and BMS agree that:
(1) As between BMS and CPI, BMS shall control CPI's dealings with
respect to its joint efforts with RDI to end any infringement
of any patent licensed under this Agreement.
(2) As between BMS and CPI, BMS shall control any action taken
jointly by CPI and RDI to enforce any patent to BMS hereunder
against infringement by third parties and the ensuing
negotiation of sharing of any recovery. CPI shall pay over to
BMS Seventy-Five Percent (75%) of CPI's share of such
recovery.
X. WAIVER
A. It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent breach or default.
XI. ASSIGNABILITY
A. This Agreement is binding upon and shall inure to the benefit of
each party, its successors and assigns; and may not be assigned by
either party without the express written consent of the other party,
which consent shall not be unreasonably withheld. Any successor or
assignee shall be bound by all of the duties and obligations set
forth in this Agreement.
11
<PAGE>
XII. CONFIDENTIAL INFORMATION
A. BMS and CPI hereby undertake to maintain as secret and confidential
all information communicated to one another regarding the Inventions
and the Intellectual Property Rights made the subject of this
Agreement, with the exception of information:
(i) Previously known to the recipient;
(ii) In the public domain; or
(iii) Which may enter the public domain without the fault or
negligence of either party;
provided that BMS can communicate the information on a confidential
basis to its sublicensees.
B. BMS and CPI agree to take all reasonable measures to prevent their
employees or agents, including employees or agents of their
respective licensees or related companies, as well as distributors,
sub-distributors, dealers, or official installers, from divulging
any secret and confidential information in a manner that may be
contrary to the interests of either party. This covenant will extend
beyond the term of this Agreement.
XIII. INDEMNIFICATION
A. Any decision regarding the use and/or safety of the Intellectual
Property Rights shall be the sole responsibility of BMS; and as
further consideration for the license granted hereunder, BMS shall
indemnify and hold. CPI harmless for and against all claims for
damages, whether personal or property, resulting from BMS's use of
the Intellectual Property Rights and/or other exercise of any rights
granted under this Agreement.
XIV. MISCELLANEOUS
A. In the event that any patent or claim thereof included within the
Intellectual Property Rights shall be held invalid in a decision by
a Court of competent jurisdiction and no appeal of such decision can
or has been taken, all obligation to pay royalties based on such a
patent or claim shall cease as of the date of such decisions.
12
<PAGE>
B. No amendment or modification hereof shall be valid or binding upon
the parties unless made in writing and signed as aforesaid.
C. This Agreement embodies the entire understanding of the parties and
shall supersede all previous communications, representations or
understandings, either oral or written between the parties relating
to the subject matter hereof.
D. In case any one or more provisions contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall
not affect any other provision hereof, but this Agreement shall be
construed as if such invalid or illegal or unenforceable provisions
had never been contained herein.
XV. NOTICES
A. Any payment, notice, or other communication required or permitted to
be given to either party hereto shall be deemed to have been
properly given and shall be effective on the date of delivery in
person on the fourth day after mailing if mailed by first class
mail, postage paid, to the respective address given below, or to
such other address as it shall designate by written notice given to
the other party as follows:
In the case of CPI:
Arthur P. Bollon, Ph.D.
Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Blvd., Suite 330
Dallas, Texas 75235
In the case of BMS:
Bristol-Myers Squibb Company
Route 206 & Province Line Road
Princeton, New Jersey 08540
Attention: President, Technical Operations
IN WITNESS WHEREOF, parties hereto have caused their duly authorized
representatives to execute this Agreement.
CYTOCLONAL PHARMACEUTICS INC. Dated: May 28, 1998
-------------------
13
<PAGE>
By /s/ ARTHUR P. BOLLON
-----------------------------------
Arthur P. Bollon, Ph.D.
President and CEO
BRISTOL-MYERS SQUIBB COMPANY
By: /s/ K. ALICE LEUNG Dated: May 27, 1998
----------------------------------- -------------------
Name: K. Alice Leung
Title: Vice President, Licensing
14
<PAGE>
ATTACHMENT A
SUBLICENSE AGREEMENT - CPI AND BMS
U.S. Patent Application, Ser. No. 07/971,508
Patent No. 5,322,779, issued June 21, 1994
"TAXOL PRODUCTION BY TAXOMYCES ANDREANAE (Amended)"
Gary A. Strobel, Andrea Stierle, Donald Stierle
filed November 4, 1992
Australian Patent Application, Ser. No. 41020/93
Patent No. 675,428 issued May 26, 1997
"TAXOL PRODUCTION BY A MICROBE"
Gary A. Strobel et al filed April 13, 1993
Canadian Patent Application, Ser. No. 2140935
"TAXOL PRODUCTION BY A MICROBE"
Gary A. Strobel et al filed April 13, 1993
European Patent Application, Ser. No. 93910583.9
"TAXOL PRODUCTION BY A MICROBE"
Gary A. Strobel et al filed April 13, 1993
Japanese Patent Application, Ser. No. 5-518531
"TAXOL PRODUCTION BY A MICROBE"
Gary A. Strobel et al Filed April 13, 1993
South Korean Patent Application, Ser. No. 94-703681
"TAXOL PRODUCTION BY A MICROBE"
Gary A. Strobel et al filed April 13, 1993
PCT Patent Application, Ser. No. PCT/US93/03416
"TAXOL PRODUCTION BY A MICROBE"
Gary A. Strobel et al filed April 13, 1993
[ ]
[ ]
[ ]
[ ]
15
<PAGE>
[ ]
[ ]
[ ]
United States Patent, No. 5,445,809
"Production of Taxol from the Yew Tree"
United States Patent, No. 5,451,392
"Production of Taxol"
16
<PAGE>
SUBLICENSE AGREEMENT
BETWEEN
CYTOCLONAL PHARMACEUTICS INC.
AND
BRISTOL-MYERS SQUIBB COMPANY
UNDER
THE WASHINGTON STATE UNIVERSITY RESEARCH FOUNDATION
LICENSE AGREEMENT
This Agreement, effective as of May 19, 1998, is made by and
between Cytoclonal Pharmaceutics Inc., a corporation duly organized under the
laws of Delaware and having its principal office at 9000 Harry Hines
Boulevard, Dallas, Texas 75235 (hereinafter "CPI"), and Bristol-Myers Squibb
Company, a corporation duly organized under the laws of Delaware and having a
principal office at Route 206 and Province Line Road, Princeton, New Jersey
08540 (hereinafter "BMS").
RECITALS
WHEREAS, CPI and The Washington State University Research
Foundation (hereinafter "WSURF") entered into a License Agreement effective
as of July 8, 1996, which License Agreement is proposed by CPI and BMS to be
amended and restated in its entirety pursuant to a certain form of amendment
and restatement agreed by the parties (as so amended and restated,
hereinafter the "WSURF/CPI License Agreement");
WHEREAS, pursuant to the WSURF/CPI License Agreement, WSURF
exclusively licensed to CPI certain rights that WSURF obtained by assignment
from Washington State University relating to WSURF Case #307, generally
referred to as "Genes for Taxol Biosynthesis" and covered by the "Technology"
as defined in the WSURF/CPI License Agreement;
WHEREAS, BMS wishes to obtain from CPI an exclusive sublicense to
said "Technology" licensed by CPI from WSURF under the WSURF/CPI License
Agreement; and
WHEREAS, CPI is willing to sublicense said "Technology" exclusively
to BMS upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
<PAGE>
ARTICLE I.
DEFINITIONS
For the purposes of the Agreement, the following words and phrases
shall have the following meanings:
1.1 "TECHNOLOGY" shall include all of the following WSURF
intellectual property, which is licensed to CPI under the WSURF/CPI License
Agreement:
(a) All United States and foreign patents and/or patent
applications listed in Appendix A; and
(b) All United States and foreign patents issued or reissued
from the patent applications listed in Appendix A (or above) and from
any divisional and continuations or continuations-in-part of these
applications, or from any subject matter specifically described in
these applications.
1.2 "PROSPECTIVE TECHNOLOGY" shall mean any and all prospective
patent filings for genes for enzymes and the associated gene products,
including the enzymes, in the biosynthetic pathway for paclitaxel and other
taxanes only, as isolated and characterized in the Washington State
University ("WSU") laboratories of Dr. Rodney Croteau; or prospective patent
filings owned by WSURF made by others at WSU using materials related to genes
for enzymes and the associated gene products, including the enzymes, in the
biosynthetic pathways for paclitaxel and other taxanes only as obtained from
Dr. Rodney Croteau; but not any other paclitaxel-related technology from Dr.
Rodney Croteau or Washington State University. A partial list of genes whose
sequences are expected to be isolated by Dr. Rodney Croteau is included as
Appendix B. For the avoidance of doubt, Prospective Technology under this
Agreement shall not include the portion of "Prospective Technology" referred
to in Clause (b) in the definition thereof in Paragraph 1.2 of the WSURF/CPI
License Agreement.
1.3 "COVERED PRODUCT(S)" shall mean any product which, as
commercialized by BMS, is produced using a Covered Cell Line, either:
(a) directly, in which case the compound produced by such
Covered Cell Line is used by BMS in commercialization as such without
further chemical transformation into a different compound; or
(b) indirectly, in which case the compound produced by such
Covered Cell Line is subsequently chemically transformed into the
compound (being the Covered Product in question) commercialized by
BMS;
2
<PAGE>
Accordingly, "DIRECT COVERED PRODUCT(S)" shall mean a Covered Product falling
within the description in Clause (a) above; and "INDIRECT COVERED PRODUCT(S)"
shall mean a Covered Product falling within the description in Clause (b)
above.
Additionally, "COVERED PRODUCT" shall mean any Novel Taxane from Covered Cell
Line, Novel BMS Compound from Covered Cell Line or any compound made using
any of them as a starting material, in each case even if such compound, as
commercialized by BMS, is not produced using any Covered Cell Line.
1.4 "COVERED CELL LINE(S)" shall mean a cell line, be it
microbial, plant, mammalian or otherwise, which:
(a) is covered in whole or in part by an issued, unexpired,
pending, or prospective claim contained in the Technology in the
country in which such cell line is made or used; or
(b) was created using a process which is covered in whole or in
part by an issued, unexpired, pending or prospective claim contained
in the Technology in the country in which such cell line was made or
used.
For the avoidance of doubt, nothing herein shall be construed as conferring
upon BMS any right to any cell line that may be created by WSU to the extent
that such right has not been licensed to CPI under the WSURF/CPI License
Agreement; and Covered Cell Lines shall not include any cell line referred to
in Clause (b) in the definition of "Prospective Technology" in Paragraph 1.2
of the WSURF/CPI License Agreement.
1.5 "NET SALES" shall mean the amount billed or invoiced by BMS or
its Sublicensees for Covered Product(s) in the Territory less the sum of the
following:
(a) sales, use, tariff, import/export duties or other excise
taxes imposed on particular sales;
(b) allowances, credits, chargebacks and refunds to
non-affiliated third parties because of rejections, returns or price
reduction of product;
(c) freight costs and insurance charges on shipments to
customers included in invoiced amounts; and
(d) rebates and price reductions/adjustments required by law,
regulations or contract.
No deductions shall be made for commissions paid to individuals whether they
be with independent sales agencies or regularly employed by BMS and on its
payroll, or for cost of collections. In the
3
<PAGE>
case of rebates and price reductions/adjustments required by contract as
referred to in Clause (d) above, the same shall not be deductible to the
extent that the contract in question is between affiliates or related
companies or the price concessions in question are given in connection with
the marketing/sales of other product or products such as in the case of
"bundling" of products.
1.6 "BMS" shall include a related company of BMS, the voting stock
of which is directly or indirectly at least fifty percent (50%) owned or
controlled by BMS, an organization which directly or indirectly controls more
than fifty percent (50%) of the voting stock of BMS and an organization, the
majority ownership of which is directly or indirectly common to the ownership
of BMS.
1.7 "FIELD-OF-USE" shall mean for any field-of-use, including but
not limited to, research, diagnostic and therapeutic uses of the Technology.
1.8 "TERRITORY" shall mean the world.
1.9 "SUBLICENSE" means any exchange for value, including but not
limited to cash, promissory notes, equity, upfront payments, milestone
payments, royalties, manufacturing contracts, distribution contracts,
sponsored research contracts, partnerships, or joint ventures, received or
entered into by BMS with respect to any transfer of any right, whether
present, future or contingent, to make, manufacture, use, practice,
distribute, or otherwise sell any aspect of the Technology or Covered
Products to any third party (hereinafter a "SUBLICENSEE").
1.10 "APPLICABLE ROYALTY RATE" shall mean the percentage rate or
rates at which BMS shall pay royalties to CPI hereunder, determined on a
calendar year-by-calendar year basis, as follows:
(a) Where the Covered Product in question is (i) paclitaxel to
be commercialized as TAXOL-Registered Trademark- or another compound
(which is neither a Novel Taxane from Covered Cell Line nor a BMS
Compound from Covered Cell Line), in each case as a Direct Covered
Product, or (ii) paclitaxel or any other compound (which is neither a
Novel Taxane from Covered Cell Line nor a BMS Compound from Covered
Cell Line), as an Indirect Covered Product, made from baccatin III or
a mixture of miscellaneous taxanes produced by the Covered Cell Line
in question:
<TABLE>
<CAPTION>
Portion of
Annual Net Sales "Pac/direct" "Bac" or "TT"
---------------- ------------ -------------
<S> <C> <C>
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
</TABLE>
4
<PAGE>
As used in the foregoing table, the italicized, lower rates in parentheses
shall apply with respect to a Covered Product if (and only if) BMS in respect
of the same product is paying a royalty to CPI pursuant to the Sublicense
Agreement dated as of May 19, 1998 (the "RDI-SUBLICENSE AGREEMENT") between
CPI and BMS under the Research & Development Institute, Inc. License
Agreement; and the terms "PAC/DIRECT", "BAC" and "TT" are as defined in
Clause (b) in Paragraph 3.1 below.
(b) Where the Covered Product in question is a Novel Taxane from
Covered Cell Line or a Novel BMS Compound from Covered Cell Line or is
produced using a Novel Taxane from Covered Cell Line or a Novel BMS
Compound from Covered Cell Line as a starting material:
<TABLE>
<CAPTION>
Portion of
Annual Net Sales "Direct" "Indirect"
---------------- -------- ----------
<S> <C> <C>
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
[ ] [ ] [ ]
</TABLE>
As used in the foregoing table:
The italicized, lower rates in parentheses. shall apply with respect to a
Covered Product if (and only if) BMS in respect of the same product is paying
a royalty to CPI pursuant to the RDI-Sublicense Agreement.
"DIRECT" refers to where the Covered Product in question is a Direct
Covered Product.
"INDIRECT" refers to where (i) the Covered Product in question is an
Indirect Covered Product or (ii) the Covered Product, as
commercialized by BMS or its Sublicensees, is produced otherwise than
using a Covered Cell Line.
For the avoidance of doubt, there shall be no stacking of royalties
that would otherwise result from Clauses (a) and (b) above both applying to
the same product (in any such case, Clause (b) shall control and supersede
Clause (a); and, in each of the two tables above, the amounts under the
heading "Portion of Annual Net Sales" refer to only the amounts of Net Sales
of the particular product in question (for example, only Net Sales of
TAXOL-Registered Trademark- containing paclitaxel made
5
<PAGE>
by BMS using a Covered Cell Line (as a Direct Covered Product) are used to
determine the Applicable Royalty Rate under the heading "Pac/Direct" in
Clause (a) above)).
1.11 "NOVEL TAXANE FROM COVERED CELL LINE" shall mean a theretofore
unknown taxane discovered by CPI or BMS as a natural product produced by a
Covered Cell Line.
1.12 "NOVEL BMS COMPOUND FROM COVERED CELL LINE" shall mean a
theretofore unknown non-taxane compound discovered by BMS as a natural
product produced by a Covered Cell Line.
ARTICLE II.
GRANT
2.1 Subject to Paragraph 2.5 below, CPI grants to BMS an exclusive
(exclusive even as to CPI) sublicense, under the WSURF/CPI License Agreement,
to practice the Technology, including to make, have made, use, lease and sell
Covered Cell Lines, for the production of Covered Products or otherwise, in
the Territory for the Field-of-Use until the expiration or termination of
this Agreement. For the avoidance of doubt, no right is granted to BMS
hereunder with respect to the portion of the "Prospective Technology"
referred to in Clause (b) in the definition thereof in Paragraph 1.2 of the
WSURF/CPI License Agreement.
2.2 CPI grants to BMS the right further to Sublicense the
sublicense hereunder, including the rights to make, have made, use, lease and
sell Covered Cell Lines.
2.3 BMS acknowledges that, under the WSURF/CPI License Agreement,
WSURF retains an irrevocable nonexclusive right to permit the use of the
Technology by students and employees of WSU exclusively for educational and
research purposes to the extent that the retention of this non-exclusive
right is not otherwise inconsistent with rights granted to CPI under Article
15 of the WSURF/CPI License Agreement. The WSURF/CPI License Agreement also
provides that: "such right does not include any right, and accordingly WSURF
shall not permit [[WSU], to assign or sublicense such right to any third
party or to transfer-or license any cell line created using the Technology or
any material covered by the Technology to any third party, or otherwise to
use the Technology for the benefit of any third party."
2.4 BMS further agrees that it shall, to the extent applicable,
abide by all rights and limitations of 35 USC Chapter 38, and implementing
regulations thereof, for all patent applications and patents invented in
whole or in part with federal money.
2.5 CPI may continue to pursue research and development, either on
its own or in collaboration with BMS, MSU and/or WSU, but not with any other
third party, in the field of
6
<PAGE>
microbial fermentation production of paclitaxel and other taxanes. More
specifically, CPI shall retain the right to use the Technology to make
paclitaxel and other taxanes solely in pursuit of further research and
development with respect to the Technology and otherwise for non-commercial
internal research and development purposes. CPI shall not be entitled to, and
shall not, assign or sublicense such right to any third party. For the
avoidance of doubt, CPI shall not be entitled to, and shall not, transfer or
license and cell line created using the Technology or any material covered by
the Technology to any third party, nor shall CPI otherwise use the Technology
for the benefit of any third party.
2.6 The WSURF/CPI License Agreement provides that:
WSURF grants to [CPI] the Option (hereinafter Option) until July
1, 2006 (hereinafter Option Period) to license any Prospective
Technology as this is developed and disclosed from time to time at
WSU. [CPI] may exercise this Option during the Option Period by paying
the patent costs for any patent filing for the Prospective Technology
and executing a confirmatory license, which confirmatory license shall
then become an addendum to this Agreement. Upon execution of the
confirmatory license, the Prospective Technology shall become a part
of the Technology as defined in Section 1.1 of [the WSURF/CPI License]
Agreement. The Option Period may be extended upon mutual agreement of
the parties.
Accordingly, CPI and BMS agree that, as between BMS and CPI, BMS shall
control CPI's dealings with WSURF under the foregoing and that, more
specifically, CPI shall, as and if requested by BMS, on behalf of BMS
promptly exercise the option referred to therein; provided, however, that:
(a) should BMS not desire that CPI exercise the Option with
respect to certain Prospective Technology, CPI shall nevertheless have
the right to do so, in which case such Prospective Technology shall,
notwithstanding anything else herein, not become a part of the
Technology licensed to BMS hereunder; and
(b) this Paragraph 2.6 shall not be construed as conferring upon
BMS control over the portion of "Prospective Technology" referred to
in Clause (b) in the definition thereof in Paragraph 1.2 of the
WSURF/CPI License Agreement.
For the avoidance of doubt, subject to Clauses (a) and (b) in the foregoing
proviso, any Prospective Technology so licensed to CPI shall become a part of
the Technology sublicensed to BMS under this Agreement.
ARTICLE III.
FEES AND ROYALTIES
7
<PAGE>
3.1 For the rights, privileges and license granted hereunder, BMS
shall pay fees and royalties to CPI in the manner hereinafter provided to the
end of the term of this Agreement or until the Agreement is terminated:
(a) A sublicense issue fee of [ ] due and payable within ten
(10) business days following the date hereof;
(b) The following milestone payment or payments, as applicable,
depending on the attainable productivity and the actual primary
products being pursued by BMS:
<TABLE>
<CAPTION>
Productivity in mg/1
--------------------------------
Milestone Payment "Pac/Direct" "Bac" "TT"
----------------- ------------ ------- -------
<S> <C> <C> <C>
[ ] [ ] [ ] [ ]
[ ] [ ] [ ] [ ]
</TABLE>
As used in the foregoing table:
Productivity refers to commercially feasible production, using a
Covered Cell Line, of (i) the Direct Covered Product in question or
(ii) the compound or compounds which are subsequently converted into
the Indirect Covered Product in question, with fermentation time per
production cycle of not more than [ ].
"PAC/DIRECT" refers to where the primary product produced by the
Covered Cell Line in question is a Direct Covered Product.
"BAC" refers to where the primary product produced by the Covered
Cell Line in question is baccatin III used by BMS as a starting
material for the Indirect Covered Product in question.
"TT" refers to where the primary product produced by the Covered
Cell Line in question is a mixture of miscellaneous taxanes used by
BMS as starting materials for the Indirect Covered Product in
question.
For the avoidance of doubt: (1) it shall not be implied that BMS is
required, or otherwise intends, to pursue more than one of the
"Pac/direct," "Bac" and "TT" alternatives; however, the milestone
payments in respect of the two different levels of productivity, if
attained, are cumulative); (2) each milestone payment shall be payable
only once regardless of the number of times the same development
milestone
8
<PAGE>
has been achieved using different cell lines; and (3) should BMS in
fact be pursuing different primary products using a single cell line,
the different milestone payments pertaining to each such different
primary product shall become applicable.
(c) A milestone payment of [ ] upon the U.S. FDA's approval
of a Supplemental New Drug Application (hereinafter called "SNDA") for
using, or in the case of a product other than TAXOL-Registered
Trademark- (which product is not a Novel Taxane from Covered Cell Line
or a Novel BMS Compound from Covered Cell Line) a New Drug Application
(including an Abbreviated New Drug Application, hereinafter "NDA")
that embodies the use of, a Covered Cell Line for the commercial
production of paclitaxel as the active ingredient in BMS's product
TAXOL-Registered Trademark- or such other product, in each case as a
Direct Covered Product;
(d) A milestone payment of [ ] upon the U.S. FDA's approval
of an SNDA for using, or in the-case of a product other than
TAXOL-Registered Trademark- (which product is not a Novel Taxane from
Covered Cell Line or a Novel BMS Compound from Covered Cell Line) an
NDA that embodies the use of, a Covered Cell Line for the commercial
production of baccatin III to serve as a starting material for
TAXOL-Registered Trademark- or such other product, as the case may be,
as an Indirect Covered Product;
Clause (c) above and this Clause (d), together, shall not imply
that BMS is required, or otherwise intends, to pursue both
alternatives.
(e) A milestone payment of [ ] upon the filing with the U.S.
FDA's of an Investigational New Drug Application covering a Novel
Taxane from Covered Cell Line or a Novel BMS Compound from Covered
Cell Line;
(f) A milestone payment of [ ] upon the U.S. FDA's approval
of a NDA covering a Novel Taxane from Covered Cell Line or a Novel BMS
Compound from Covered Cell Line; and
(g) Running royalty On Net Sales of Covered Products at the
Applicable Royalty Rate; such Royalty shall be due and payable within
fifty (50) days of March 31, June 30, September 30 and December 31 for
royalties earned during the preceding calendar quarter.
3.2 Royalties on sales in currencies other than U.S. Dollars shall
be calculated using the appropriate BMS's customary internal corporate
monthly exchange rates for the last month of the calendar quarter in
question. For each month and each currency, BMS's customary internal
corporate monthly exchange rate shall equal the arithmetic average of the
daily exchange rates (obtained as described below) during the period from (i)
the 20th day of the preceding month (or, if such 20th day is not a business
day, the immediately preceding business day) through (ii) the 19th day of the
current month (or, if such 19th day is not a business day, the immediately
preceding
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business day); each daily exchange rate is obtained from the Reuters Daily
Rate Report or The Wall Street Journal, Eastern U.S. Edition, or, if not so
available, as furnished by BMS's local subsidiaries. Royalties and payments
to CPI shall be in U.S. Dollars.
3.3 BMS shall also pay to CPI a running royalty on Net Sales of
any and all Covered Products by any and all of BMS's Sublicensees occurring
during the term of this Agreement on the same terms and schedule as though
the Net Sales by such Sublicensees were made by BMS.
ARTICLE IV.
REPORTS, PAYMENTS AND RECORDS
4.1 BMS shall keep full, true and accurate books of account
containing all particulars that may be necessary, and are accessible to a
certified public accounting firm appointed by CPI and reasonably satisfactory
to BMS, for the purpose of verifying BMS's royalty statement or compliance in
other respects with this Agreement.
4.2 Within fifty (50) days after March 31, June 30, September 30
and December 31 of each year, commencing the first commercial sale of a
Covered Product, BMS shall deliver to CPI true and accurate royalty
statements, giving such particulars relating to the Net Sales of BMS and its
Sublicensees during the preceding calendar quarter under this Agreement as
shall be reasonably pertinent to a royalty accounting hereunder. Such
statements shall include at least the following:
(a) number of Covered Products sold;
(b) deductions applicable as provided in Paragraph 1.4 to
determine Net Sales thereof;
(c) total royalties due; and
(d) names and addresses of all Sublicensees, if any, of BMS.
4.3 With each report submitted, BMS shall pay to CPI the royalties
due and payable under this Agreement.
4.4 The royalty payments set forth in this Agreement shall, if
overdue, bear interest until payment at a per annum rate four percent (4%)
above the prime rate in effect in THE WALL STREET JOURNAL on the due date.
The payment of such interest shall not foreclose CPI from exercising any
other rights it may have as a consequence of the lateness of any payment.
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ARTICLE V.
DUE DILIGENCE
5.1 BMS shall use commercially reasonable efforts and diligent
endeavor to fully develop and commercially exploit the Technology licensed
hereunder.
5.2 BMS agrees that Covered Products sold in the United States
shall be manufactured substantially in the United States, when, as and if
required by 35 USC Section 204.
5.3 BMS agrees, upon reasonable request by CPI, to apprise CPI and
WSURF of the current status of the development and regulatory approval of the
Technology for commercial use.
ARTICLE VI.
PATENT PROSECUTION
6.1 BMS acknowledges that, under the WSURF/CPI License Agreement:
"WSURF shall apply for, seek prompt issuance of, and maintain
during the term of [the WSURF/CPI License] Agreement the patent rights
for the Technology and Prospective technology in the United States and
the foreign countries listed in Appendix C [thereto]. Appendix C
[thereto] may be amended by the verbal agreement of [WSURF and CPI],
such agreement to be confirmed in writing within ten (10) days. The
prosecution, filing and maintenance of all patents and applications
shall be the primary responsibility of WSURF; provided, however, that
[CPI] shall have Reasonable Opportunity to advise WSURF and shall
cooperate with WSURF in such prosecution, filing and maintenance.
Reasonable Opportunity means that WSURF shall provide [CPI] with
copies of all correspondence regarding any patent application for the
Technology, including but not limited to, any filing, notice,
restriction requirement, office action, response to office action,
request for terminal disclaimer, and request for reissue or
reexamination of any patent or patent application under the
Technology."
Accordingly, CPI and BMS agree that, as between BMS and CPI, BMS shall
control CPI's dealings with WSURF under the foregoing and that CPI shall
promptly forward to BMS copies of any and all documents and other materials
that it receives from WSURF pursuant thereto.
6.2 BMS agrees to reimburse CPI for its payment of all reasonable
fees and costs relating to the filing, prosecution and maintenance of patents
included in the Technology, to the extent that such fees and costs are
incurred after the date of this Agreement.
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6.3 The WSURF/CPI License Agreement provides that:
"WSURF shall employ its best efforts not to allow any of the
Technology under which BMS is licensed, and for which [CPI] is
underwriting the filing, prosecution and maintenance costs thereof, to
lapse or become abandoned without [CPI]'s authorization and/or
reasonable notice to [CPI]. WSURF shall notify [CPI] sixty (60) days
prior to any proposed intentional abandonment of any rights in any
territory. Within thirty (30) days after receipt of the notice [CPI]
shall, in writing, either (a) concur with abandonment or (b) elect to
resume responsibility for the prosecution and maintenance of all the
Technology that WSURF proposes to abandon."
Accordingly, CPI and BMS agree that, as between CPI and BMS, BMS shall
control CPI's dealings with WSURF pursuant to the foregoing and, in
particular, CPI shall promptly copy BMS on any notice received from WSURF
thereunder and defer to BMS all decisions pertaining thereto.
ARTICLE VII.
INFRINGEMENT
7.1 BMS shall inform CPI promptly in writing of any alleged
infringement or declaratory judgment action alleging invalidity or
non-infringement of patents sublicensed under this Agreement by third parties
and provide any evidence thereof.
7.2 The WSURF/CPI License Agreement provides that:
"During the term of [the WSURF/CPI License] Agreement, [CPI]
shall have the first right, but shall not be obligated, to prosecute
at its own expense and with attorneys of its choice, all infringements
of patents licensed under [the WSURF/CPI License] Agreement. For such
purposes, WSURF agrees to be joined as party plaintiff. No settlement,
consent judgment or other voluntary final disposition of the suit may
be entered into without the consent of WSURF, which consent shall not
be unreasonably withheld. [CPI] shall indemnify WSURF against any
order for costs or damages that may be made against WSURF in such
proceedings."
Accordingly, CPI and BMS agree that, as between CPI and BMS, BMS shall
control CPI's dealings with WSURF pursuant to the foregoing and, in
particular, BMS shall be permitted, in place of CPI, to pursue any and all
infringement actions and other proceedings against third parties.
7.3 The WSURF/CPI License Agreement provides that:
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"In the event that [CPI] shall undertake the enforcement and/or
defense of the patents by litigation, [CPI] may withhold up to fifty
percent (50%) of the royalties otherwise thereafter due WSURF [under
the WSURF/CPI License Agreement] and apply the same toward
reimbursement of up to half of [CPI]'s expenses, including reasonable
attorneys' fees in connection therewith. Any recovery of damages by
[CPI] for any such suit shall be applied first in satisfaction of any
unreimbursed expenses and legal fees of [CPI] relating to the suit,
and next toward reimbursement of WSURF for any royalties past due or
withheld and applied pursuant to . . . Article VII [of the WSURF/CPI
License Agreement]. The balance remaining from any such recovery shall
be divided equally between [CPI] and WSURF."
Accordingly, CPI and BMS agree that, as between CPI and BMS, BMS shall
control CPI's dealings with WSURF pursuant to the foregoing and, in
particular, BMS shall be entitled, in place of CPI, to undertake the
enforcement and/or defense of the patents by litigation; in any such case,
BMS may withhold up to fifty percent (50%) of the royalties otherwise
thereafter due CPI hereunder and apply the same toward reimbursement of up to
half of BMS's expenses, including reasonable attorneys' fees in connection
therewith; any recovery of damages by BMS for any such suit shall be applied
first in satisfaction of any unreimbursed expenses and legal fees of BMS
relating to the suit, and next toward reimbursement of CPI for any royalties
past due or withheld and applied pursuant to this Article VII. Fifty percent
(50%) of the balance remaining from any such recovery shall be paid over to
WSURF as required by the WSURF/CPI License Agreement, the remaining fifty
percent (50%) shall be divided between BMS (75%) and CPI (25%).
7.4 BMS acknowledges that, as provided in the WSURF/CPI License
Agreement:
"In the event that a [declaratory] judgment action alleging
invalidity or noninfringement of Patents shall be brought against
[CPI] or [CPI] chooses not to prosecute an infringement action, WSURF
shall, at its option, have the right, within thirty (30) days after
commencement of such action or notification by [CPI], to intervene and
take over the sole defense of the action at its own expense. Any
recovery of damages by WSURF for any such suit shall be applied first
in satisfaction of any unreimbursed expenses and legal fees of WSURF
relating to the suit, and next toward reimbursement of [CPI] for any
direct legal fees and reasonable expenses relating to the suit. The
balance remaining from any such recovery shall be retained solely by
WSURF."
7.5 In any infringement suit that either party may institute to
enforce the Patents pursuant to this Agreement, the other party hereto shall,
at the request and expense of the party initiating such suit, cooperate in
all respects and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information, samples,
specimens, and the like.
7.6 BMS acknowledges that, as provided in the WSURF/CPI, License
Agreement:
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"Regardless of which party is controlling the infringement suit,
during the period of the [WSURF/CPI License] Agreement, CPI shall have
the sole right (to the exclusion of WSURF) in accordance with the
terms and conditions [t]herein to sublicense any alleged infringer for
future use of the Patents."
As between CPI and BMS, however, CPI shall have no right, and BMS alone shall
have sole right (to the exclusion of CPI), to sublicense any part of the
Technology to any third party infringer.
ARTICLE VIII.
PRODUCT LIABILITY
8.1 BMS shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold harmless CPI and CPI's directors,
officers and employees against all claims and expenses, including legal
expenses and reasonable attorneys' fees, arising out of the death of or
injury to any person or persons or out of any damage to property and against
any other claim, proceeding, demand, expense and liability of any kind
whatsoever resulting from the production, manufacture, sale, use, lease,
consumption or advertisement of the Licensed Products made or sold by BMS or
its Sublicensee and/or BMS or its Sublicensee's practice of Licensed
Processes.
8.2 BMS shall obtain and carry in full force and effect liability
insurance which shall protect BMS and CPI in regard to events covered by
Paragraph 8.1 above.
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT OR
IN THE LETTER AGREEMENT DATED MAY 19, 1998 BETWEEN WSURF, CPI AND BMS, CPI
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT
RIGHT CLAIMS, ISSUER OR PENDING.
ARTICLE IX.
EXPORT CONTROLS
It is understood that CPI is subject to the United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export
Control Act, as amended, and the Export Administration Act of 1979), and that
the obligations hereunder are contingent on compliance with applicable United
States export laws and regulations. The transfer of certain technical data
and commodities may require a license from the cognizant agency of the United
States Government and/or written
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assurances by BMS that BMS shall not export data or commodities to certain
foreign countries without prior approval of such agency. CPI makes no
representation that a license shall not be required or that, if required, it
shall be issued.
ARTICLE X.
USE OF NAMES AND SYMBOLS
BMS shall not use the names of the Washington State University,
Washington State University Research Foundation, nor of any of its employees,
nor any adaptation or symbol thereof, in any advertising promotional or sales
literature without prior written permission from WSURF in each case.
ARTICLE XI.
ASSIGNMENTS
Neither party may sell, assign or transfer this Agreement except
with prior written permission of the other party.
ARTICLE XII.
TERM AND TERMINATION
12.1 This Agreement shall be in full force and effect from the date
hereof until the later to occur of (a) the tenth (10th) anniversary of the
first commercial sale of a Covered Product or (b) the latest to expire of the
patents licensed under the Technology. Following the expiration if this
Agreement as aforesaid, BMS shall retain a paid-up, non-exclusive license,
with the right to grant sublicenses, to the Technology as otherwise provided
in Article II above.
12.2 If BMS shall cease to carry on its business for any reason,
this Agreement shall terminate immediately upon written notice by CPI.
12.3 BMS may terminate this Agreement at any time, other than
during the first six months following the date hereof, by providing written
notice to CPI ninety (90) days prior to the effective date of termination
selected by BMS and upon payment of all amounts due hereunder including
interest due CPI through the effective date of the termination.
12.4 CPI may terminate this Agreement by ninety (90) days written
notice if BMS:
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(a) Is in forty-five (45) days default in payment of fees and/or
royalties; or
(b) Is in breach of this Agreement in any material respect; or
(c) Provides any materially false report; or
(d) Institutes bankruptcy, insolvency, liquidation or
receivership proceeding or proceedings for reorganization under
bankruptcy law or has a petition for bankruptcy filed against it or
makes a general assignment for the benefit of creditors; and
BMS fails to remedy any such default, breach or false report within
forty-five (45) days after written notice by CPI.
12.5 Upon termination of this Agreement for any reason, nothing
herein shall be construed as releasing either party from any obligation that
matured prior to the effective date of such termination. BMS and any
Sublicensee thereof may, however, after the effective date of such
termination, sell all Covered Products, including Covered Products to be
derived from work in process at the time of such termination, provided that
BMS shall pay to CPI the royalties thereon as required by this Agreement and
shall submit the reports required on such sales of Covered Products.
12.6 Surviving any termination are:
(a) BMS's obligation to pay any royalties and fees accrued or
accruable;
(b) Any cause of action or claim of BMS or CPI, accrued or to
accrue, because of any breach or default by the other party.
(c) The provisions of Articles IV, VII, VIII, IX and X.
ARTICLE XIII.
PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
Any payment, notice or other communication pursuant to the
Agreement shall be sufficiently made or given on the date of mailing if sent
to such party by certified first class mail, postage prepaid, addressed to
the other party as below:
If to BMS: Bristol-Myers Squibb Company
Route 206 and Province Line Road
Princeton, NJ 08540
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Attention: President, Technical Operations
If to CPI: Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Dallas, TX 75235
Attention: President
ARTICLE XIV.
SUBLICENSING
BMS shall provide to CPI written notification of any Sublicense it
may grant under Paragraph 2.2. BMS agrees to provide such written
notification indicating the effective date of execution and effective term,
within thirty (30) days of execution of such Sublicense.
ARTICLE XV.
CONFIDENTIALITY
15.1 Except to the extent expressly authorized in this Agreement,
BMS and CPI agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving party of materials marked confidential by the
providing party, shall keep those materials completely confidential and shall
not publish or otherwise disclose such information and shall not use it
except to the extent that it can be established by the receiving party by
competent proof that such information:
(a) Is now or hereafter becomes public knowledge through no
fault of the other party;
(b) Was in the receiving party's possession prior to the date of
this Agreement;
(c) Was received from a third party source independent of and
without obligation to the sending party.
15.2 Each party may disclose the other's information to the extent
such disclosure is reasonably necessary in filing and prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or conducting clinical trials.
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15.3 If materials are transferred to any third party which relate
to any genes for enzymes and the associated gene products, including the
enzymes, in the biosynthetic pathway for paclitaxel [or other taxanes] as
isolated and characterized in the Washington State University laboratories of
Dr. Rodney Croteau or using related materials from his laboratory, and the
related materials are not otherwise covered by patent filings, BMS shall
obtain a valid and executed materials transfer agreement before transferring
the materials to the third party.
15.4 The freedom of Washington State University faculty members to
publish shall not be inhibited by BMS. However, in order to protect any
material of a proprietary nature, CPI shall promptly forward to BMS with a
copy of any proposed publication relating to the Technology for that it
receives from WSURF as contemplated in the WSURF/CPI License Agreement. BMS
understands that CPI will have forty-five (45) days to request a delay of the
publication in question. BMS agrees to provide CPI with an explanation for
any request to delay and shall give its reasons for such delay in writing not
later than the end of such fortyfive (45) day review period. As between CPI
and BMS, CPI agrees that BMS shall control in all matters relating to
proposed publications of Washington State University faculty members.
ARTICLE XVI.
MISCELLANEOUS
16.1 None of the terms, covenants and conditions of this Agreement
may be waived except by the written consent of the party waiving compliance.
16.2 This Agreement shall be construed, interpreted and applied in
accordance with the laws of the State of Washington.
16.3 The provisions of this Agreement are severable, and in the
event that any provisions of this Agreement shall be determined to be invalid
or unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability
of the remaining provisions hereof.
16.4 All Covered Products shipped to or sold in any country in the
Territory shall be marked in such manner as to conform with the patent laws
and practice of the country of manufacture or sale.
16.5 The failure of either party to assert a right hereunder or to
insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
This Agreement, together with the Master License Agreement dated as
of the date hereof between CPI and BMS and the letter agreement dated as of
the date hereof among CPI, BMS
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and WSURF, embodies the entire understanding between the parties and shall
supersede all previous communications, representations, or understandings,
either oral or written, relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
the day and year set forth below:
CYTOCLONAL PHARMACEUTICS INC. BRISTOL-MEYERS SQUIBB COMPANY
By: /s/ ARTHUR P. BOLLON By: /s/ ROSLYN FEDER
--------------------------------- ---------------------------------
Name: Arthur P. Bollon Name: Roslyn Feder, M.D. Ph.D.
------------------------------- -------------------------------
Title: President and CEO Title: Senior VP, External Development
------------------------------ ------------------------------
Date: May 19, 1998 Date: May 19, 1998
------------------------------- -------------------------------
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APPENDIX A:
CURRENT PATENTS AND PATENT APPLICATIONS
1) [ ]
2) [ ]
3) [ ]
4) [ ]
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APPENDIX B:
GENES FOR ENZYMES WHICH ARE EXPECTED TO BE THE SUBJECT OF FUTURE PATENT FILINGS
1) [ ]
2) [ ]
3) [ ]
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AMENDED AND RESTATED LICENSE AGREEMENT
BETWEEN
THE WASHINGTON STATE UNIVERSITY RESEARCH FOUNDATION
AND
CYTOCLONAL PHARMACEUTICS INC.
This Amended and Restated License Agreement, effective the date of the last
signature, is made by and between the Washington State University Research
Foundation, a non-profit corporation duly organized and existing under the laws
of the State of Washington and having its principal office at NE 1615 Eastgate
Boulevard, Pullman, Washington 99163 (hereinafter WSURF), and Cytoclonal
Pharmaceutics Inc., a corporation duly organized under the laws of Delaware and
having its principal office at 9000 Harry Hines Boulevard, Dallas, TX 75235
(hereinafter LICENSEE).
RECITALS
WHEREAS, WSURF is the owner of certain rights by assignment from Washington
State University relating to WSURF Case #307, generally referred to as "Genes
for Taxol Biosynthesis" and covered by "the Technology" as defined below; and
WHEREAS, LICENSEE acknowledges that the United States Government has
certain right in this invention under 37 CFR Section 401 including a
non-exclusive, nontransferable, paid-up license heretofore granted by the
WSURF, and
WHEREAS, WSURF wishes to have these rights utilized in the public interest
and is willing to grant a license thereunder; and
WHEREAS, LICENSEE wishes to obtain certain rights from WSURF upon the terms
and conditions set forth herein for the commercial development, use and sale of
the Technology so that public utilization shall result, and
WHEREAS, WSURF and LICENSEE entered into the original License Agreement
effective as of July 8, 1996 (hereinafter the "Original License Agreement"), and
WHEREAS, said original License Agreement has been amended in the meantime
and further amendment is deemed desirable by the parties, and
<PAGE>
WHEREAS, for the purpose of consolidating all such amendments, the parties
hereby restate said License Agreement, as amended to date, in its entirety (as
so amended and restated, hereinafter "this Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual covenant
contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of the Agreement, the following words and phrases shall
have the following meanings:
1.1 "The Technology" shall include all of the following WSURF intellectual
property:
(a) All United States and foreign patents and/or patent applications
listed in Appendix A; and
(b) All United States and foreign patents issued or reissued from the
patent applications listed in Appendix A (or above) and from any divisional
and continuations or continuations-in-part of these applications, or from
any subject matter specifically described in these applications.
1.2 "Prospective Technology" shall mean (a) any and all prospective patent
filings for genes for enzymes and the associated gene products, including the
enzymes, in the biosynthetic pathway for paclitaxel and other taxanes only, as
isolated and characterized in the Washington State University laboratories of
Dr. Rodney Croteau; or prospective patent filings owned by WSURF made by others
at WSU using materials related to genes for enzymes and the associated gene
products, including the enzymes, in the biosynthetic pathways for paclitaxel and
other taxanes only as obtained from Dr. Rodney Croteau, and (b) any and all
prospective patent filings relating to suspension cell cultures from the genus
Taxus, or suspension cell cultures from other genera, which produce paclitaxel
or other taxanes, as developed in the WSU laboratories of Dr. Rodney Croteau;
but not any other paclitaxel-related technology from Dr. Rodney Croteau or
Washington State University. A partial list of genes whose sequences are
expected to be isolated by Dr. Rodney Croteau is included as Appendix B.
1.3 "Covered Product(s)" shall mean any product which, as commercialized
by LICENSEE or its SUBLICENSEE, is produced using a Covered Cell Line, either:
(a) directly, in which case the compound produced by such Covered
Cell Line is used by LICENSEE or its SUBLICENSEE, as the case may be, in
commercialization as such without further chemical transformation into a
different compound; or
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(b) indirectly, in which case the compound produced by such Covered
Cell Line is subsequently chemically transformed into the compound (being
the Covered Product in question) commercialized by LICENSEE or its
SUBLICENSEE, as the case may be.
1.4 "Covered Cell Line(s)" shall mean a cell line, be it microbial, plant,
mammalian or otherwise, which:
(a) is covered in whole or in part by an issued, unexpired, pending,
or prospective claim contained in the Technology in the country in which
such cell line is made or used; or
(b) was created using a process which is covered in whole or in part
by an issued, unexpired, pending or prospective claim contained in the
Technology in the country in which such cell line was made or used.
1.5 "Net Sales" shall mean the amount billed or invoiced by LICENSEE for
Covered Product(s) in the Territory less the sum of the following:
(a) sales, use, tariff, import/export duties or other excise taxes
imposed on particular sales;
(b) allowances, credits, chargebacks and refunds to non-affiliated
third parties because of rejections, returns or price reduction of product;
(c) freight costs and insurance charges on shipments to customers
included in invoiced amounts; and
(d) rebates and price reductions/adjustments required by law,
regulations or contract.
No deductions shall be made for commissions paid to individuals whether they be
with independent sales agencies or regularly employed by LICENSEE and on its
payroll, or for cost of collections. In the case of rebates and price
reductions/adjustments required by contract as referred to in Clause (d) above,
the same shall not be deductible to the extent that the contract in question is
between affiliates or related companies or the price concessions in question are
given in connection with the marketing/sales of other product or products such
as in the case of "bundling" of products.
1.6 "LICENSEE" shall include a related company of LICENSEE, the voting
stock of which is directly or indirectly at least fifty percent (50%) owned or
controlled by LICENSEE, an organization which directly or indirectly controls
more than fifty percent (50%) of the voting stock of LICENSEE and an
organization, the majority ownership of which is directly or indirectly common
to the ownership of LICENSEE.
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1.7 "Field-of-Use" shall mean for any field-of-use, including but not
limited to, research, diagnostic and therapeutic uses of the Technology.
1.8 "Territory" shall mean the world.
1.9 "Sublicense" means any exchange for value, including but not limited
to cash, promissory notes, equity, up-front payments, milestone payments,
royalties, manufacturing contracts, distribution contracts, sponsored research
contracts, partnerships, or joint ventures, received or entered into by LICENSEE
with respect to any transfer of any right, whether present, future or
contingent, to make, manufacture, use, practice, distribute, or otherwise sell
any aspect of the Technology or Covered Products to any third party (hereinafter
SUBLICENSEE), except that Sublicense fees shall not include bona-fide payments
by a SUBLICENSEE that represent the reimbursement of research fees paid to third
parties or other documented development costs. LICENSEE shall provide to WSURF
documentation of a such research expenses with copies of each sublicense
agreement and shall negotiate in good faith with WSURF for a fair allocation of
consideration in any such hybrid agreement.
ARTICLE II
GRANT
2.1 WSURF grants to LICENSEE the exclusive right and license to practice
the Technology and to make, have made, use, lease and sell Covered Cell Lines,
for the production of Covered Products or otherwise, in the Territory for the
Field-of-Use until the expiration or termination of this Agreement.
2.2 WSURF grants to LICENSEE the right to Sublicense rights to practice
the Technology and to make, have made, use, lease and sell Covered Products
under provisions provided below.
2.3 WSURF grants to LICENSEE the Option (hereinafter Option) until July 1,
2006 (hereinafter Option Period) to license any Prospective Technology as this
is developed and disclosed from time to time at WSU. LICENSEE may exercise this
Option during the Option Period by paying the patent costs for any patent filing
for the Prospective Technology and executing a confirmatory license, which
confirmatory license shall then become an addendum to this Agreement. Upon
execution of the confirmatory license, the Prospective Technology shall become a
part of the Technology as defined in Section 1.1 of this Agreement. The Option
Period may be extended upon mutual agreement of the parties.
2.4 WSURF retains an irrevocable nonexclusive right to permit the use of
the Technology by students and employees of Washington State University
exclusively for educational and research purposes to the extent that the
retention of this non-exclusive right is not otherwise inconsistent with rights
granted to LICENSEE under this Agreement. For the avoidance of doubt, such right
does not include any right, and accordingly WSURF shall not permit Washington
State University, to assign
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or sublicense such right to any third party or to transfer or license any
cell line created using the Technology or any material covered by the
Technology to any third party, or otherwise to use the Technology for the
benefit of any third party. For the further avoidance of doubt, Dr. Croteau
and Washington State University shall be able to transfer materials relating
to the Technology for educational and research, but not commercial, purposes
in accord with Section 15.3 of this Agreement. In each such instance WSURF
shall obtain the prior permission of LICENSEE, and its permitted
Sublicensees, which permission shall not be unreasonably withheld.
ARTICLE III
FEES AND ROYALTIES
3.1 For the rights, privileges and license granted hereunder, LICENSEE
shall pay fees and royalties to WSURF in the manner hereinafter provided to the
end of the term of this Agreement or until the Agreement is terminated:
(a) License Issue Fees of [ ], and past Patent Costs of [ ],
which Fee and Costs were paid to WSURF following the execution of the
Original License Agreement. LICENSEE has also granted WSURF 36,000 warrants
to purchase LICENSEE's common stock at the price of [ ] per share, such
warrants to be exercisable in 12,000 share lots on each the third, fourth
and fifth anniversary of the Effective Date of the Original Agreement.
LICENSEE agrees that any shares obtained under said warrants shall be
included under equal terms for registration in any registration statement
filed by LICENSEE and shall be included on equal terms in any stock split
or other changes to LICENSEE'S capital structure.
(b) An Annual Minimum Royalty of [ ] per year due and payable on
July 1, 1999, an Annual Minimum Royalty of [ ] per year due and payable
on July 1, 2000, an Annual Minimum Royalty of [ ] per year due and
payable on July 1, 2001 and on July 1 of each year thereafter during the
exclusive period of this Agreement: provided that each year's Running
Royalties under subpart (c) below and/or consideration for a Sublicense
under subpart (d) received by WSURF shall be credited to the extent paid
against LICENSEE's requirement to pay the Annual Minimum Royalty otherwise
due for that fiscal year during the exclusive period of this Agreement.
(c) With respect to sales by LICENSEE of each Covered Product,
Running Royalty in an amount equal to [ ] of such Covered Product for
each gene incorporated into the Covered Cell Line that was used to produce
such Covered Product as commercialized, except that such Running Royalty on
account of all genes shall not exceed [ ] of the Net Sales of the
Covered Product in question. Such Royalty shall be due and payable within
sixty (60) days of June 30 and December 31 for royalties earned the
preceding six (6) month period, together with, in the case of each Covered
Product that, as commercialized, is being produced using a Covered Cell
Line covered by patent rights referred to in Clause (b) in the definition
of "Prospective Technology" in Paragraph 1.2, an additional running royalty
in an amount equal to [ ].
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(d) With respect to Sublicenses, [ ] of any sublicense issue fees,
milestone payments, sublicense maintenance fees, sublicense royalties or
any other consideration including equity and interests in strategic
partnerships received for the grant of a Sublicense in accordance with
Paragraph 2.2. LICENSEE may make any commercially reasonable proposal
regarding form of payment of the WSURF share of these Sublicense issue
fees, which proposal may include equity, warrants or other forms of payment
at LICENSEE'S sole discretion, and WSURF'S consent to any commercially,
reasonable proposal made by LICENSEE shall not be unreasonably withheld.
(i) Should it become necessary to license the rights of Montana
State University, or those of its assignee in interest the Research &
Development Institute, with regards to the fungal production system to
produce Covered Products the percentage otherwise due to WSURF under
subpart (d) above shall be further reduced to [ ] of any
consideration received by Licensee in connection with the issue or
maintenance of any Sublicense.
(e) LICENSEE may make a commercially reasonable proposal regarding
reduction of Sublicense royalty percentages based upon a showing of
commercial impracticability of the above rates, and WSURF may, at its sole
discretion and upon its express written approval, reduce the royalty rate
charged under any given Sublicense.
3.2 Royalties on sales in currencies other than U.S. Dollars shall be
calculated using the appropriate foreign exchange rate for such currency quoted
by the Wall Street Journal, on the close of business on the last banking day of
each calendar half year. Royalties and payments to WSURF shall be in U.S.
Dollars.
ARTICLE IV
REPORTS, PAYMENTS AND RECORDS
4.1 LICENSEE shall keep full, true and accurate books of account
containing all particulars that may be necessary for WSURF or its agents for the
purpose of verifying LICENSEE's royalty statement or compliance in other
respects with this Agreement.
4.2 Within sixty (60) days after June 30 and December 31 of each year,
LICENSEE shall deliver to WSURF true and accurate reports, giving such
particulars of the business conducted by LICENSEE and its SUBLICENSEES during
the preceding six (6) month period under this Agreement as shall be pertinent to
a royalty accounting hereunder. Such reports shall include at least the
following:
(a) number of Covered Products manufactured and sold;
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(b) deductions applicable as provided in Paragraph 1.4 to determine
Net Sales thereof;
(c) total royalties due;
(d) names and addresses of all SUBLICENSEES of LICENSEE;
(e) status of agency approvals for new Covered Products; and
(f) plans for increased sales or introduction of new Covered
Products.
4.3 With each report submitted, LICENSEE shall pay to WSURF the royalties
due and payable under this Agreement. If no royalties are due, LICENSEE shall so
report.
4.4 On or before the ninetieth (90th) day following the close of
LICENSEE's fiscal year, LICENSEE shall provide WSURF with LICENSEE'S certified
financial statements for the preceding fiscal year including, at a minimum, a
Balance Sheet and Operating Expense Statement.
4.5 The royalty payments set forth in this Agreement shall, if overdue,
bear interest until payment at a per annum rate of four percent (4%) above the
prime rate in effect in the Wall Street Journal on the due date. The payment of
such interest shall not foreclose WSURF from exercising any other rights it may
have as a consequence of the lateness of any payment.
ARTICLE V
DUE DILIGENCE
5.1 LICENSEE shall use, or cause a SUBLICENSEE to use, commercially
reasonable efforts and diligent endeavor, to fully develop and commercially
exploit the Technology licensed hereunder.
5.2 LICENSEE agrees that Covered Products sold in the United States shall
be manufactured substantially in the United States, when, as and if required by
35 USC Section 204.
5.3 LICENSEE agrees, upon reasonable request by WSURF, to apprise WSURF of
the current status of the development and regulatory approval of the Technology
for commercial use.
ARTICLE VI
PATENT PROSECUTION
6.1 WSURF shall apply for, seek prompt issuance of, and maintain during
the term of this Agreement the patent rights for the Technology and Prospective
technology in the United States and the foreign countries listed in Appendix C.
Appendix C may be amended by the verbal agreement of both parties, such
agreement to be confirmed in writing within ten (10) days. The
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prosecution, filing and maintenance of all patents and applications shall be
the primary responsibility of WSURF; provided, however, that LICENSEE shall
have Reasonable Opportunity to advise WSURF and shall cooperate with WSURF in
such prosecution, filing and maintenance. Reasonable Opportunity means that
WSURF shall provide LICENSEE with copies of all correspondence regarding any
patent application for the Technology, including but not limited to, any
filing, notice, restriction requirement, office action, response to office
action, request for terminal disclaimer, and request for reissue or
reexamination of any patent or patent application under the Technology.
6.2 Payment of all fees and costs relating to the filing, prosecution and
maintenance of patents shall be the responsibility of LICENSEE, whether such
fees and costs were incurred before or after the Effective Date of this
Agreement. Payment of all fees and costs relating to the filing, prosecution and
maintenance of patents shall be made promptly and in no case later than thirty
(30) days from date of invoice.
6.3 WSURF shall employ its best efforts not to allow any of the Technology
under which LICENSEE is licensed, and for which LICENSEE is underwriting the
filing, prosecution and maintenance costs thereof, to lapse or become abandoned
without LICENSEE'S authorization and/or reasonable notice to LICENSEE. WSURF
shall notify LICENSEE sixty (60) days prior to any proposed intentional
abandonment of any rights in any territory. Within thirty (30) days after
receipt of the notice LICENSEE shall, in writing, either (a) concur with
abandonment or (b) elect to resume responsibility for the prosecution and
maintenance of all the Technology that WSURF proposes to abandon.
ARTICLE VII
INFRINGEMENT
7.1 LICENSEE shall inform WSURF promptly in writing of any alleged
infringement or declaratory judgment action alleging invalidity or
non-infringement of patents licensed under this Agreement by third parties
and provide any evidence thereof.
7.2 During the term of this Agreement, LICENSEE shall have the first
right, but shall not be obligated, to prosecute at its own expense and with
attorneys of its choice, all infringements of patents licensed under this
Agreement. For such purposes, WSURF agrees to be joined as party plaintiff. No
settlement, consent judgment or other voluntary final disposition of the suit
may be entered into without the consent of WSURF, which consent shall not be
unreasonably withheld. LICENSEE shall indemnify WSURF against any order for
costs or damages that may be made against WSURF in such proceedings.
7.3 In the event that LICENSEE shall undertake the enforcement and/or
defense of the patents by litigation, LICENSEE may withhold up to fifty percent
(50%) of the royalties otherwise thereafter due WSURF hereunder and apply the
same toward reimbursement of up to half of LICENSEE'S expenses, including
reasonable attorneys' fees in connection therewith. Any recovery of damages by
LICENSEE for any such suit shall be applied first in satisfaction of any
unreimbursed
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expenses and legal fees of LICENSEE relating to the suit, and next toward
reimbursement of WSURF for any royalties past due or withheld and applied
pursuant to this Article VII. The balance remaining from any such recovery
shall be divided equally between LICENSEE and WSURF.
7.4 In the event that a declaratory judgment action alleging invalidity or
noninfringement of Patents shall be brought against LICENSEE or LICENSEE chooses
not to prosecute an infringement action, WSURF shall, at its option, have the
right, within thirty (30) days after commencement of such action or notification
by LICENSEE, to intervene and take over the sole defense of the action at its
own expense. Any recovery of damages by WSURF for any such suit shall be applied
first in satisfaction of any unreimbursed expenses and legal fees of WSURF
relating to the suit, and next toward reimbursement of LICENSEE for any direct
legal fees and reasonable expenses relating to the suit. The balance remaining
from any such recovery shall be retained solely by WSURF.
7.5 In any infringement suit that either party may institute to enforce
the Patents pursuant to this Agreement, the other party hereto shall, at the
request and expense of the party initiating such suit, cooperate in all respects
and, to the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.
7.6 Regardless of which party is controlling the infringement suit, during
the period of this Agreement, CPI shall have the sole right (to the exclusion of
WSURF) in accordance with the terms and conditions herein to sublicense any
alleged infringer for future use of the Patents.
ARTICLE VIII
PRODUCT LIABILITY
8.1 LICENSEE shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold harmless WSURF's trustees, officers,
employees and affiliates against all claims and expenses, including legal
expenses and reasonable attorneys' fees, arising out of the death of or injury
to any person or persons or out of any damage to property and against any other
claim, proceeding, demand, expense and liability of any kind whatsoever
resulting from the production, manufacture, sale, use, lease, consumption or
advertisement of the Licensed Products and/or Licensed Processes or arising from
any obligation of LICENSEE hereunder.
8.2 LICENSEE shall obtain and carry in full force and effect liability
insurance which shall protect LICENSEE and WSURF in regard to events covered by
Paragraph 8.1 above.
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, WSURF MAKES
NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHT CLAIMS, ISSUED OR PENDING.
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ARTICLE IX
EXPORT CONTROLS
It is understood that WSURF is subject to the United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended, and the Export Administration Act of 1979), and that the
obligations hereunder are contingent on compliance with applicable United States
export laws and regulations. The transfer of certain technical data and
commodities may require a license from the cognizant agency of the United States
Government and/or written assurances by LICENSEE that LICENSEE shall not export
data or commodities to certain foreign countries without prior approval of such
agency. WSURF neither represents that a license shall not be required nor that,
if required, it shall be issued.
ARTICLE X
USE OF NAMES AND SYMBOLS
LICENSEE shall not use the names of the Washington State University,
Washington State University Research Foundation, nor of any of its employees,
nor any adaptation or symbol thereof, in any advertising promotional or sales
literature without prior written permission from WSURF in each case, except that
LICENSEE may state that it is licensed by WSURF under one or more agreements.
ARTICLE XI
ASSIGNMENTS
LICENSEE may not sell, assign or transfer this Agreement except with prior
written permission of WSURF, which consent shall not be unreasonably withheld.
ARTICLE XII
TERM AND TERMINATION
12.1 This Agreement shall be in full force and effect from the Effective
Date of the Original License Agreement until the later to occur of (a) the tenth
(10th) anniversary of the first commercial sale of a Covered Product or (b) the
latest to expire of the patents licensed under the Technology. Following the
expiration if this Agreement as aforesaid, Licensee shall retain a paid up,
non-exclusive license, with the right to grant sublicenses, to the Technology
as otherwise provided in Article 11 above.
12.2 If LICENSEE shall cease to carry on its business for any reason, this
Agreement shall terminate immediately upon written notice by WSURF.
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12.3 LICENSEE may terminate this Agreement by providing written notice to
WSURF ninety (90) days prior to the effective date of termination selected by
LICENSEE and upon payment of all amounts including interest due WSURF through
the effective date of the termination.
12.4 WSURF may terminate this Agreement by ninety (90) days written notice
if LICENSEE:
(a) Is in forty-five (45) days default in payment of fees and/or
royalties or providing of reports; or,
(b) Is in breach of any provision hereof, or,
(c) Provides any materially false report; or
(d) Institutes bankruptcy, insolvency, liquidation or receivership
proceeding or proceedings for reorganization under bankruptcy law or has
a petition for bankruptcy filed against it or makes a general assignment
for the benefit of creditors; and
LICENSEE fails to remedy any such default, breach, or false report within
forty-five (45) days after written notice by WSURF.
12.5 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination. LICENSEE and any SUBLICENSEE
thereof may, however, after the effective date of such termination, sell all
Covered Products, provided that LICENSEE shall pay to WSURF the royalties
thereon as required by this Agreement and shall submit the reports required on
such sales of Covered Products.
12.6 Upon termination of this Agreement for any reason, any SUBLICENSEE not
then in default shall have the right to seek a license from WSURF.
12.7 Surviving any termination are:
(a) LICENSEE'S obligation to pay any royalties and fees accrued or
accruable;
(b) Any cause of action or claim of LICENSEE or WSURF, accrued or to
accrue, because of any breach or default by the other party; and
(c) The provisions of Articles IV, VII VIII and IX.
ARTICLE XIII
PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
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Any payment, notice or other communication pursuant to the Agreement shall
be sufficiently made or given on the date of mailing if sent to such party by
certified first class mail, postage prepaid, addressed to the other party as
below:
If to WSURF: Washington State University
Research Foundation
NE 1615 Eastgate Boulevard
Pullman, WA 99163
Attn: President
If to LICENSEE: Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Dallas, TX 75235
Attn: President
ARTICLE XIV
SUBLICENSING
LICENSEE shall provide to WSURF written notification of any Sublicense it
may grant under Paragraph 2.2. LICENSEE agrees to provide such written
notification indicating the effective date of execution, effective term and
up-front payments, within thirty (30) days of execution of such Sublicense.
ARTICLE XV
CONFIDENTIALITY
15.1 Except to the extent expressly authorized in this Agreement, LICENSEE
and WSURF agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving party of materials marked confidential by the
providing party, shall keep those materials completely confidential and shall
not publish or otherwise disclose such information and shall not use it except
to the extent that it can be established by the receiving party by competent
proof that such information:
(a) Is now or hereafter becomes public knowledge through no fault of
the other party;
(b) Was in the receiving party's possession prior to Effective Date;
(c) Was received from a third party source independent of and without
obligation to the sending party.
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15.2 Each party may disclose the other's information to the extent such
disclosure is reasonably necessary in filing and prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or conducting clinical trials.
15.3 If materials are transferred to any third party which relate to any
genes for enzymes and the associated gene products, including the enzymes, in
the biosynthetic pathway for paclitaxel. as isolated and characterized in the
Washington State University laboratories of Dr. Rodney Croteau or using related
materials from his laboratory, and the related materials are not otherwise
covered by patent filings, WSURF shall obtain a valid and executed materials
transfer agreement before transferring the materials to the third party.
15.4 The freedom of Washington State University faculty members to publish
shall not be inhibited by LICENSEE. However, in order to protect any material of
a proprietary nature, WSURF shall provide LICENSEE with a copy of any proposed
publication relating to the Technology for at least forty-five (45) days prior
to submission for publication. At Washington State University's discretion, the
proposed publication may be delayed for forty-five (45) days beyond the end of
LICENSEE's forty-five (45) day review period, with possible extensions at the
discretion of Washington State University. LICENSEE agrees to provide WSURF with
an explanation for any request to delay and shall give its reasons for such
delay in writing not later than the end of its forty-five (45) day review
period.
ARTICLE XVI
MISCELLANEOUS
16.1 None of the terms, covenants and conditions of this Agreement may be
waived except by the written consent of the party waiving compliance.
16.2 This Agreement shall be construed, interpreted and applied in
accordance with the laws of the State of Washington.
16.3 The provisions of this Agreement are severable, and in the event that
any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
16.4 All Licensed Products shipped to or sold in other countries shall be
marked in such manner as to conform with the patent laws and practice of the
country of manufacture or sale.
16.5 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
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This Agreement embodies the entire understanding between the parties and
shall supersede all previous communications, representations, or understandings,
either oral or written, relating to the subject matter hereof,
IN WITNESS WHEREOF, the parties have duly executed this Agreement the day and
year set forth below:
THE WASHINGTON STATE UNIVERSITY CYTOCLONAL PHARMACEUTICS INC.
RESEARCH FOUNDATION
By: /s/ KEN SPITZER By: /s/ ARTHUR P. BOLLON
---------------------------------- -----------------------------------
Name: Ken Spitzer Name: Arthur P. Bollon, Ph.D.
-------------------------------- ---------------------------------
Title: Corporate Secretary Title: President and CEO
-------------------------------- --------------------------------
Date: June 3, 1998 Date: May 19, 1998
-------------------------------- ---------------------------------
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APPENDIX A: CURRENT PATENTS AND PATENT APPLICATIONS
1) [ ]
2) [ ]
3) [ ]
4) [ ]
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APPENDIX B: GENES FOR ENZYMES WHICH ARE EXPECTED TO BE THE SUBJECT OF FUTURE
PATENT FILINGS(1)
1) [ ]
2) [ ]
3) [ ]
- ------------------------
(1) To be updated.
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APPENDIX C: COUNTRIES AGREED UPON IN WHICH CURRENT AND FUTURE PATENTS AND PATENT
APPLICATIONS WILL BE DILIGENTLY PURSUED UNDER THIS AGREEMENT
United States
European Patent Office
Japan
Canada
Mexico
South Africa
Australia
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AMENDMENT TO LICENSE AGREEMENT
This Amendment to that certain License Agreement dated June 10, 1993, by
and between THE RESEARCH AND DEVELOPMENT INSTITUTE, INC. ("RDI") and CYTOCLONAL
PHARMACEUTICS INC. ("CPI") as previously amended, is entered into this 27th day
of May, 1998.
W I T N E S S E T H :
WHEREAS, RDI has been designated the licensing agency for MONTANA STATE
UNIVERSITY-BOZEMAN (hereinafter "UNIVERSITY") technologies; and,
WHEREAS, on June 10, 1993 RDI and CPI entered into a License Agreement
whereby RDI granted an exclusive license to CPI to taxol and other technologies
(hereinafter "Technology") developed at UNIVERSITY and MONTANA TECH OF THE
UNIVERSITY OF MONTANA (hereinafter "MONTANA TECH'); and
WHEREAS, the parties are desirous of clarifying their intent with regard to
the payment of royalties and other payments due RDI under the aforesaid License
Agreement.
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. Paragraph III C. is hereby amended to add a subsection (5) which
shall read in its entirety as follows:
(5) Any and all minimum royalties shall be credited against
royalties earned or other payment due to RDI pursuant to subparagraphs
D, E, F and/or H of this Section III and any such payment pursuant to
sub-paragraphs D, E, F and/or H of this Section III shall be credited
against the minimum royalties provided for in this subparagraph C.
<PAGE>
2. Paragraph III D. is hereby amended in its entirety to read as
follows:
D. CPI shall pay to RDI an amount earned royalty of [ ]
on CPI's Net Sales for Licensed Products if covered by an issued
patent, the payment thereof to be paid quarterly within thirty (30)
days of the close thereof.
3. Paragraph III E. is hereby amended in its entirety to read as
follows:
E. CPI shall pay to RDI an amount earned royalty of [ ]
on CPI's Net Sales for Licensed Products not covered by an issued
patent or patent pending claim, but covered by or incorporating
know-how or trade secrets relating to the Taxol Producing Organism
System, the payment thereof to be paid quarterly within thirty (30)
days of the closed thereof, provided, however, should it be the
reasonable opinion of patent counsel that the Licensed Products
under this Paragraph E are subject to patentable claims, but the
parties agree to treat said inventions as trade secrets, the
royalty rate shall then be [ ] on Nets Sales.
4. Paragraph III F. is hereby amended to read as follows:
F. CPI shall pay to RDI [ ] of all royalties received with
respect to manufacture, use, or sale of the inventions by
sublicensees, which royalty shall be reduced to [ ] in the event
CPI is required to pay royalties to others, the payment thereof to
be made within thirty (30) days of CPI's receipt thereof.
5. A new Paragraph III H. is hereby added to read in its entirety
as follows:
CPI shall pay RDI all up-front, milestone and royalty
payments it may receive from Bristol-Myers Squibb Company
("BMS") pursuant to Section I and III of that certain
SUBLICENSE AGREEMENT UNDER RESEARCH & DEVELOPMENT INSTITUTE,
INC. LICENSE AGREEMENT between CPI and BMS. The aforesaid
payments shall be in the amount of the full share of
payments due RDI under the license agreement as amended
pursuant to paragraph 4 above.
IN WITNESS WHEREOF, the parties have entered into this Addendum to License
Agreement on the 27th day of May, 1998.
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THE RESEARCH AND DEVELOPMENT INSTITUTE, INC.
By: /s/ ROGER BLAIR
-----------------------------------------
Title: President
--------------------------------------
CYTOCLONAL PHARMACEUTICS INC.
By: /s/ ARTHUR P. BOLLON
-----------------------------------------
Title: President and CEO
--------------------------------------
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