EXHIBIT 10.16 (REDACTED) LICENSE AGREEMENT

EXHIBIT 10.16 (REDACTED)

 

CONFIDENTIAL MATERIAL OMITTED AND

FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION ([* * *] Denotes Omission)

 

LICENSE AGREEMENT

 

This License Agreement (“Agreement”), dated as of December 21, 2004, is entered into by and between IMMUCELL CORPORATION, a corporation organized under the laws of the State of Delaware and having its principal place of business at 56 Evergreen Drive, Portland, Maine 04103 (“IMMUCELL”), and PFIZER INC., a corporation organized under the laws of the State of Delaware and operating through its Pfizer Animal Health Division with a principal place of business at 235 East 42^nd Street, New York, New York, 10017 (“PFIZER”).

 

WHEREAS, IMMUCELL owns or controls, or may acquire rights to, certain patents, patent applications, technology, know-how, trade secrets and scientific and technical information relating to nisin-based animal health products, including an intra-mammary pharmaceutical for treatment of bovine mastitis in lactating cows, and desires to engage a global development and marketing partner to further develop and commercialize said pharmaceutical in such field;

 

WHEREAS, PFIZER has extensive experience and expertise in the development and commercialization of animal health pharmaceuticals and desires to acquire exclusive licenses in the Territory (as defined below) to certain patents, patent applications, technology, know-how, trade secrets and scientific and technical information owned, controlled or to be acquired by IMMUCELL for PFIZER’s further development and commercialization of said pharmaceutical for use in the designated field; and

 

WHEREAS, IMMUCELL desires to grant such exclusive licenses to PFIZER, all upon the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in consideration of the mutual covenants and agreements provided herein, and intending to become legally bound, IMMUCELL and PFIZER hereby agree as follows:

 

Section 1.

DEFINITIONS.

 

For purposes of this Agreement, the following definitions shall be applicable:

 

1.1 “Affiliate” means any entity directly or indirectly controlled by, controlling, or under common control with, a party to this Agreement, but only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) means possession, direct or indirect, of (a) the power (shared or otherwise) to direct or cause direction of the management and policies of an entity (whether through ownership of securities or partnership or other

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests.

 

1.2 “Business Day” means a day other than a Saturday, Sunday, bank or other public holiday in New York, New York.

 

1.3 “Clinical Study” means a clinical study or studies addressing, without limitation, sub-clinical and clinical mastitis, with study design and statistical power intended to meet the requirements for approval of an NADA for the Licensed Product, including, without limitation those studies specified in Exhibit A attached hereto.

 

1.4 “Competing Product” means any nisin-based intra-mammary product for treatment of bovine mastitis in lactating cows, other than the Licensed Product.

 

1.5 “Confidentiality Agreements” mean those certain Mutual Confidentiality Agreements between IMMUCELL and Pfizer Limited, dated January 8, 2004, as thereafter amended, and August 17, 2001.

 

1.6 “Contract Manufacturer” means any third party manufacturer approved or designated by PFIZER, and identified to IMMUCELL by written notice, to fill plastets with Raw Material for purposes of conducting PFIZER’s clinical development plan, and/or to manufacture Licensed Product designed for commercial distribution or any other purpose permitted under the terms of this Agreement.

 

1.7 “CVM” means the United States Center for Veterinary Medicine and any successor agency thereto.

 

1.8 “Drug Product” means Raw Material further manufactured to finished, sterile intra-mammary unit dose (“plastet”) generally known as MastOut^®. For purposes of clarification only, “Active Drug Product” shall mean Drug Product with Raw Material, and “Placebo Drug Product” shall mean Drug Product without Raw Material.

 

1.9 “Effective Date” means the date that this Agreement has been fully executed by IMMUCELL and PFIZER.

 

1.10 “EMEA” means the European Medicines Agency and any successor agency thereto.

 

1.11 “European Patent Convention Countries” means countries under the European Patent Convention, which includes, for example, the United Kingdom, Spain, Italy, France, The Netherlands, Ireland, Sweden and Germany.

 

1.12 “European Union” means Member States as of the Effective Date consisting of Austria, Belgium, Cyprus, Czech Republic, Denmark, Finland, Estonia, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom, as well as any

 

country within the Territory which by execution of an accession treaty becomes a Member State during the Term.

 

1.13 “Field” means the use of nisin-based intra-mammary agents in the treatment of clinical and sub-clinical bovine mastitis in lactating cows.

 

1.14 “Governmental Authority” means any court, agency, department, authority or other instrumentality of any foreign, federal, state, county, city or other political subdivision.

 

1.15 “IMMUCELL Confidential Information” means all information about any element of IMMUCELL Technology, as well as any other information regarding the business or operations of IMMUCELL, that (A) is disclosed by IMMUCELL to PFIZER or its Affiliates during the Term of this Agreement and, if in written form, designated “confidential” by IMMUCELL at the time of disclosure or, if in oral form, memorialized in writing as “confidential” and delivered to PFIZER within thirty (30) days after disclosure, or (B) was deemed confidential and supplied by IMMUCELL to PFIZER prior to the Term of this Agreement under the Confidentiality Agreements (and, to the extent such prior disclosure was made after November 1, 2004, is memorialized in writing as confidential within 60 days after the Effective Date), except to the extent that PFIZER can show that such information (i) as of the date of disclosure to PFIZER, was already lawfully in PFIZER’s possession free from any obligation to keep it confidential at the time of receipt from the other party; or (ii) was or is, now or in the future, public knowledge through no act or omission of PFIZER or its officers, employees, agents, subcontractors, sublicensees, distributors or Affiliates; or (iii) was lawfully obtained by PFIZER from a third party having the right to disclose it free from any obligation of confidentiality; or (iv) was independently developed by or for PFIZER without violating the terms of this Agreement or the Confidentiality Agreements; or (v) is, in the reasonable opinion of legal counsel, required to be disclosed under Law; provided that, in the case of (v), PFIZER (x) provides IMMUCELL sufficient prior notice (to the extent practicable) of such disclosure and agrees to cooperate, at the request and sole expense of IMMUCELL with IMMUCELL’s efforts to preserve the confidentiality of such information and (y) complies with Section 7.1(b) hereof.

 

1.16 “IMMUCELL Improvements” shall have the meaning set forth in Section 6.3 hereof.

 

1.17 “IMMUCELL Patent Rights” means all Patent Rights within IMMUCELL Technology, including the Patent Rights listed in Exhibit B attached hereto.

 

1.18 “IMMUCELL Technology” means Technology that is or was:

 

(a) developed by employees of or consultants to IMMUCELL alone or jointly with third parties including, without limitation, IMMUCELL Improvements; or

 

(b) acquired by purchase, license, assignment or other means from third parties by IMMUCELL.

 

1.19 “Launch” means the first shipment of the Licensed Product for commercial sale by or for PFIZER, its Affiliates or its sublicensees to an unaffiliated third party after receipt by PFIZER of the first Registration for the Licensed Product.

 

1.20 “Law” or “Laws” means all laws, statutes, rules, regulations, orders, judgments and/or ordinances of any Governmental Authority.

 

1.21 “Licensed Product” means the animal health pharmaceutical MastOut^® or any other animal health pharmaceutical, the manufacture, use, sale, offer for sale or importation of which, in the absence of a license, would infringe any of the IMMUCELL Patent Rights or utilizes any IMMUCELL Technology.

 

1.22 “Major EU Markets” means the United Kingdom, France, Germany Spain, Italy and The Netherlands.

 

1.23 “Marketing Authorization Application” means the equivalent of an NADA, submitted under the EMEA or any comparable application required by a Governmental Authority in any country in the Territory.

 

1.24 “NADA” means a New Animal Drug Application submitted under the CVM or any comparable application required by a Governmental Authority in any other country in the Territory.

 

1.25 “Net Sales” means, subject at all times to Sections 5.1 and 5.2, gross sales of PFIZER, its Affiliates and sublicensees or distributors of Licensed Product to third parties, less bad debts related to the Licensed Product (with any subsequent adjustments for bad debts being appropriately credited to or accrued against Net Sales for the period in which the adjustment occurs), normal and customary trade discounts actually allowed or accrued, credits or allowances for rejected or returned Licensed Product previously sold, taxes the legal incidence of which falls on the purchaser and is separately shown on the seller’s invoices and transportation, insurance and postage charges, if prepaid by PFIZER, any of its Affiliates or any sublicensee of PFIZER and billed on the seller’s invoices as a separate item, and compulsory payments and rebates, accrued, paid or deducted pursuant to governmental regulations or agreements (other than employment agreements or agreements with Affiliates) with third parties (provided such agreements with third parties are identified and made available to IMMUCELL for review and deductions relating to such agreements are identified separately in any statements pursuant to Section 5.3). Net Sales shall be determined from books and records maintained by PFIZER, its Affiliates and sublicensees in accordance with generally acceptable accounting principles in the United States, consistently applied.

 

1.26 [* * *]

 

1.27 [* * *]

 

1.28 “Nutrition 21” means Nutrition 21, Inc., a New York corporation (formerly known as AMBI Inc.).

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

1.29 “Nutrition 21 Agreements” shall have the meaning set forth in Section 11.1 hereof.

 

1.30 “Patent Rights” means all the patents and patent applications issuing as patents relating to PFIZER Technology or IMMUCELL Technology, including all continuations, continuations-in-part, divisionals, provisionals and renewals, and letters of patent granted with respect to any of the foregoing, patents of addition, supplementary protection certificates, registration or confirmation patents and all reissues, re-examinations and extensions thereof. Patent Rights shall also include any patent restoration or extension period granted by a Governmental Authority, including but not limited to the compensation for patent term lost during the clinical trial or regulatory approval process.

 

1.31 “PFIZER Confidential Information” means all information about any element of PFIZER Technology, as well as any other information regarding the business or operations of PFIZER, that (A) is disclosed by PFIZER to IMMUCELL or its Affiliates during the Term of this Agreement and, if in written form, designated “Confidential” in writing by PFIZER at the time of disclosure or, if in oral form, memorialized in writing as “confidential” and delivered to IMMUCELL within thirty (30) days after disclosure, and (B) was deemed confidential and supplied by PFIZER to IMMUCELL prior to the Term of this Agreement under the Confidentiality Agreements (and, to the extent such disclosure was made orally after November 1, 2004, is memorialized in writing as confidential within 60 days after the Effective Date), except to the extent that IMMUCELL can show that such information (i) as of the date of disclosure to IMMUCELL, was already lawfully in IMMUCELL’s possession free from any obligation to keep it confidential at the time of receipt from the other party; or (ii) was or is, now or in the future, public knowledge through no act or omission of IMMUCELL or its officers, employees, agents, subcontractors, sublicensees, distributors or Affiliates; or (iii) was lawfully obtained by IMMUCELL from a third party having the right to disclose it free from any obligation of confidentiality; or (iv) was independently developed by or for IMMUCELL without violating the terms of this Agreement or the Confidentiality Agreements; or (v) in the reasonable opinion of legal counsel, is required to be disclosed under Law; provided that, in the case of (v), IMMUCELL provides PFIZER at least three Business Days’ prior notice (to the extent practicable) of such disclosure and agrees to cooperate with PFIZER’s efforts to preserve the confidentiality of such information and (y) complies with Section 7.1(b) hereof.

 

1.32 “PFIZER Quarter” means each of the four (4) thirteen (13) week periods (i) with respect to the United States, commencing on January 1 of any year, and (ii) with respect to any country in the Territory other than the United States, commencing on December 1 of any year.

 

1.33 “PFIZER Patent Rights” means all Patent Rights within PFIZER Technology.

 

1.34 “PFIZER Technology” means Technology that is or was:

 

(a) developed by employees of or consultants to PFIZER alone or jointly with third parties; or

 

(b) acquired by purchase, license, assignment or other means from third parties by PFIZER, except that Technology acquired under this Agreement shall constitute Pfizer Technology only to the extent expressly provided herein.

 

1.35 “Raw Material” means pharmaceutical-grade nisin.

 

1.36 “Registrations” means the marketing authorizations or approvals issued by the competent Governmental Authority of any country in the Territory, including without limitation, the CVM and the EMEA.

 

1.37 “Technology” means and includes all materials, technology, data, technical and scientific information, intellectual property, know-how, expertise and trade secrets that relate to or are used in connection with the manufacture of Raw Material for use in the intra-mammary treatment of bovine mastitis.

 

1.38 “Territory” means the entire world.

 

1.39 “Trademark” means the MastOut^® trademark, tradename and related rights with respect to the Licensed Product.

 

1.40 “Valid Claim” means any claim from an issued and unexpired patent included within the IMMUCELL Patent Rights or PFIZER Patent Rights which has not been revoked or held unenforceable or invalid by a final, nonappealable decision of a court or other Governmental Authority of competent jurisdiction or unappealed within the time allowable for appeal, and which has not been admitted to be invalid or unenforceable by IMMUCELL (as to IMMUCELL Patent Rights) or PFIZER (as to PFIZER Patent Rights), through reissue, disclaimer or otherwise.

 

Section 2.

LICENSE AND ADDITIONAL RIGHTS.

 

2.1 Exclusive License and Right to Sublicense.

 

(a) Subject to the terms of this Agreement including, without limitation, Section 2.1(b) hereof, IMMUCELL hereby grants to PFIZER, and PFIZER hereby accepts: (i) an exclusive sublicense under the IMMUCELL Patent Rights to the patents set forth in Exhibit B which are listed as “Licensed from Nutrition 21”, including the right to sublicense, under the said IMMUCELL Patent Rights to develop, make, have made, use, sell, offer for sale and import Licensed Product in the Field in the Territory, (ii) an exclusive license under the IMMUCELL Patent Rights to the patents and patent applications (and any patents issuing therefrom) set forth in Exhibit B which are listed as “Patents and Applications Filed by IMMUCELL”, including the right to sublicense, to use IMMUCELL Technology and IMMUCELL Confidential Information for the purpose of the development, manufacture, use, sale, offer for sale and importation of Licensed Product in the Field in the Territory, (iii) an exclusive license to IMMUCELL Technology which does not encompass the IMMUCELL Patent Rights set forth in Section 2.1(a)(i) and (ii), to develop, make, have made, use, sell, offer for sale and import Licensed Product in the Field in the Territory, including the right to sublicense, and (iv)

 

(b) an exclusive license, including the right to sublicense, to use and register the Trademark (collectively, the “License”). Any and all rights to sublicense the License granted hereunder shall be subject to the terms and conditions of this Agreement.

 

(c) PFIZER may sublicense any of its rights under Section 2.1(a)(i) of this Agreement to a third party (including a sublicense of manufacturing rights to a Contract Manufacturer), and make disclosures of IMMUCELL Confidential Information to such third party, only if (i) such third party is a Qualified Person (as defined below) and agrees to comply with the terms of this Agreement (including without limitation the confidentiality provisions hereof) and (ii) PFIZER gives notice of such third party to IMMUCELL at least three Business Days before entering into an agreement with any such third party. PFIZER agrees to provide a copy of each such third party agreement to IMMUCELL, PFIZER having the right to redact financial information from such copies. For purposes of this paragraph, a “Qualified Person” is a person or entity that is not otherwise involved in the manufacture of any Nisin Preparations, as defined hereinbelow (other than manufacture for delivery to, or for the benefit of, A&B, Nutrition 21, IMMUCELL, or their respective affiliates); “Nisin Preparations” means all products containing a measurable concentration of any form, variant, or derivative of nisin for incorporation into food additives for food preservation, food preservatives and food preservation methods or for human health products; and “A&B” means Aplin & Barrett, Limited, the company with whom Nutrition 21 entered into a License Agreement dated as of December 12, 1996.

 

2.2 Term of License Grant. Unless terminated earlier pursuant to Section 10, the License in each country shall commence on the Effective Date, and shall terminate, on a country-by-country basis on the latest date on which the Licensed Product is covered by a Valid Claim under the IMMUCELL Patent Rights in that country, or ten (10) years from the Launch of the Licensed Product in such country, whichever is later (the “Initial Term”); provided, however, that any time prior to termination of the Initial Term the parties may jointly agree in writing to extend the Initial Term for an additional three (3) year period, and thereafter may at any time jointly agree in writing to extend any such renewal term(s) for successive three-year periods (each, a “Renewal Term” and collectively with the Initial Term, the “Term”).

 

2.3 Additional Rights Outside the Field; Exclusivity.

 

(a) IMMUCELL shall be entitled to manufacture or have manufactured non-pharmaceutical grade nisin for applications outside the Field, subject at all times to the terms, conditions and restrictions contained in this Agreement.

 

(b) IMMUCELL agrees not to manufacture or have manufactured, directly or indirectly, Raw Material for applications outside the Field unless IMMUCELL first offers PFIZER an opportunity in writing to manufacture or supply, directly or indirectly, such Raw Material on substantially equivalent terms. PFIZER shall have sixty (60) days from receipt of such offer to communicate, in writing, its acceptance or rejection thereof. In the event PFIZER communicates its acceptance, the parties shall in good faith promptly negotiate and enter into a separate agreement setting forth the terms and conditions for

 

such manufacture or supply. In the event PFIZER does not accept the offer within the stated 60-day period, or if the parties for any reason fail to reach agreement on terms within ninety (90) days after PFIZER’s written acceptance of the offer, IMMUCELL shall be permitted to manufacture or have manufactured, directly or indirectly, Raw Material solely for applications outside the Field, subject at all times to the terms, conditions and restrictions contained in this Agreement.

 

(c) In respect of IMMUCELL Technology, but subject to Section 2.4 below, IMMUCELL retains all rights, including the right to sublicense, to develop, make, have made, use, sell, offer for sale and import products outside the Field, including without limitation nisin-based products for treatment of mastitis in non-lactating cows.

 

2.4 Additional Products. In the event that IMMUCELL should develop, acquire rights to or obtain, directly or indirectly, any other intra-mammary nisin-based animal health product during the Term of this Agreement, IMMUCELL agrees that PFIZER shall have the option to acquire exclusive distribution rights to such products, with distribution terms to be set forth in a separate agreement, negotiated promptly and in good faith; provided, however, that negotiations for such rights shall be limited in time to six (6) months after written notice to PFIZER by IMMUCELL of its development of, acquisition of rights to or obtaining such products. Any such notice shall include, at a minimum, a reasonably detailed description of technical and scientific information, ownership rights, clinical data and fields of application.

 

Section 3.

CLINICAL DEVELOPMENT AND COMMERCIALIZATION.

 

3.1 Clinical Development Plan. After the Effective Date, PFIZER shall have the exclusive right to, and responsibility for, preparing and implementing a clinical development plan, including the Clinical Studies as set forth in Exhibit A, for developing the Licensed Product and obtaining the Registrations. All decisions with respect to the creation, modification and implementation of such development plans shall be made by PFIZER in its sole discretion. PFIZER shall be solely responsible for conducting all Clinical Studies and for costs related thereto.

 

3.2 Joint Steering Committee. The parties shall establish a joint steering committee (the “Joint Steering Committee”) for the sole purpose of monitoring progress of PFIZER’s clinical development plan for the Licensed Product. The Joint Steering Committee shall consist of four (4) persons (or such greater number as the parties agree), with an equal number of representatives of PFIZER and IMMUCELL, and shall meet at least quarterly, or with such other frequency as the parties shall mutually agree, during the period commencing immediately after the Effective Date and ending on the Launch of the Licensed Product (the “Initial Period’) and as mutually agreed-upon thereafter, either in person at a location to be designated by PFIZER, or by videoconference or teleconference.

 

3.3 Clinical Supply.

 

(a) IMMUCELL shall use commercially reasonable efforts to make available to PFIZER by March 31, 2005, but in no event later than December 31, 2005, [* * *]

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

finished plastets of Active Drug Product and [* * *] finishe[d] plastets of Placebo Drug Product for purposes of PFIZER conducting the US Clinical Study trials (collectively, “Clinical Supply”), it being understood that IMMUCELL’s failure to deliver Clinical Supply prior to December 31, 2005 shall not, in and of itself, be deemed to constitute a breach of this Agreement. Such Clinical Supply shall be of a suitable specification to allow: (i) registerable efficacy trials to be initiated by PFIZER and (ii) registerable VICH stability Drug Product studies to be initiated by IMMUCELL. After delivery of the Clinical Supply, IMMUCELL shall make best efforts to furnish (subject to reimbursement by PFIZER at IMMUCELL’s cost, with no markup permitted) such additional Drug Product plastets and/or Raw Material as PFIZER may reasonably request in writing for purposes of those US Clinical Study trials. IMMUCELL shall bear the cost of all Raw Material contained within the Clinical Supply, and PFIZER shall pay IMMUCELL for the cost of manufacture of the Clinical Supply plastets and any such additional Drug Product plastets and/or Raw Material requested by PFIZER, each within 30 days from receipt of IMMUCELL’s invoice therefor. Exhibit A attached hereto shall contain mutually agreed quality requirements for the Clinical Supply.

 

(b) PFIZER shall have sole responsibility for approving the Contract Manufacturer to create Clinical Supply from the Raw Material, and PFIZER hereby consents to the selection of [* * *] as the Contract Manufacturer for such purpose.

 

(c) IMMUCELL shall be solely responsible for the characterization of minor nisin variants/impurities, validation of all required analytical methods agreed to by the parties and transfer of such methods to PFIZER or the Contract Manufacturer, and for IMMUCELL’s costs related to these studies. IMMUCELL shall provide access to PFIZER personnel as necessary for training as part of the transfer process. IMMUCELL shall be solely responsible for conducting stability studies on Clinical Supply “Drug Product” subject to CVM guideline 73. PFIZER shall ensure that IMMUCELL receives [* * *] finished plastets for this purpose from the initial Clinical Supply.

 

3.4 Regulatory Matters; Product Attributes.

 

(a) Subject to its rights to terminate this Agreement, PFIZER agrees to use commercially reasonable efforts to obtain registration of the Licensed Product, at least in the United States and Major EU Markets, within the time frames contemplated by this Agreement. PFIZER shall be responsible for the preparation, submission and prosecution of regulatory dossiers, including the NADA, the Marketing Authorization Application and their equivalents, of Licensed Product to Governmental Authorities in all markets in the Territory; all such filings shall be at PFIZER’s sole discretion. To assist PFIZER in its regulatory activities, IMMUCELL shall provide technical support and grant PFIZER access to existing data, including without limitation, IMMUCELL Technology.

 

(b) IMMUCELL shall use commercially reasonable efforts to prepare and deliver to PFIZER the documentation for the CMC section of the regulatory dossier by no later than [* * *], but the dossier shall be drafted and submitted to the CVM by PFIZER.

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

(c) All NADA’s, Marketing Authorization Applications and their equivalents in other Territories, shall be owned and maintained by PFIZER, subject to Section 10.4 below.

 

(d) PFIZER shall have sole responsibility for determining the attributes of the Licensed Products and achievable claims related thereto.

 

(e) PFIZER shall be responsible, at its sole cost and discretion, for pursuing additional claims related to the Licensed Product. Any studies that are required for enhancements to the Licensed Product shall be monitored by the Joint Steering Committee.

 

3.5 Manufacturing and Marketing.

 

(a) PFIZER shall have sole responsibility for approving the Contract Manufacturer (including itself) to create Raw Material and/or Licensed Product. PFIZER agrees to consider an assignment by IMMUCELL of that certain Contract Manufacture Agreement between IMMUCELL and [* * *] in draft form dated March 19, 2003 (the “[* * *] Agreement”), taking into account PFIZER’s supply and quality requirements, but reserves the right to condition any such assignment and assumption by PFIZER on [* * *] making such amendments to the [* * *] Agreement as may be requested by PFIZER in its sole discretion with prior notice to IMMUCELL. IMMUCELL agrees to cooperate with PFIZER in furtherance of any such negotiations. In the event PFIZER or [* * *] declines any such assignment or assumption for any reason, and provided that PFIZER does not in connection therewith enter into any similar replacement agreement with [* * *] IMMUCELL shall bear any costs of terminating the [* * *] Agreement.

 

(b) Subject to its rights to terminate this Agreement, PFIZER agrees to use commercially reasonable efforts to commercialize the Licensed Product, in at least the United States and Major EU Markets, within the time frames contemplated by this Agreement. Upon its receipt of notice from PFIZER identifying the commercial manufacturer (being either PFIZER or its designated Contract Manufacturer), IMMUCELL shall aid in the transfer of the manufacturing process for Raw Material and Licensed Product to such commercial manufacturer in accordance with the specifications set forth in Exhibit C attached hereto.

 

(c) No later than six (6) months after establishing the commercial manufacture operations in accordance with sub-section (a) above, PFIZER or its designated Contract Manufacturer shall supply up to a maximum of [* * *] of Raw Material to IMMUCELL per calendar year during the Term, free of charge, for the sole purpose of IMMUCELL’s investigations.

 

(d) PFIZER shall be solely responsible for all aspects of distribution, sales and marketing of the Licensed Product, and all related expenses. IMMUCELL’s name shall appear on product packaging as co-inventor/developer, in a format reasonably acceptable to IMMUCELL.

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

Section 4.

FEES AND ROYALTIES.

 

4.1 Fees. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement, PFIZER shall pay to IMMUCELL the following license fees:

 

(a) One Million Five Hundred Thousand Dollars (US$1,500,000) payable on the Effective Date by wire transfer according to instructions provided in writing by IMMUCELL;

 

(b) $[* * *] payable 18 months after the Effective Date or, if earlier, within forty-two (42) days of IMMUCELL’s invoice issuable to PFIZER after the successful transfer by IMMUCELL to PFIZER or its designated Contract Manufacturer of a commercially viable manufacturing process for Raw Material; provided, however, that the criteria for successful transfer shall be at PFIZER’s sole decision;

 

(c) $[* * *] payable within forty-two (42) days of completion of the Clinical Study in the United States; provided, however, that if PFIZER during such 42-day period gives notice of termination pursuant to Section 10.2(c) of this Agreement, then such amount shall not be deemed to have become payable;

 

(d) $[* * *] payable within forty-two (42) days of acceptance by the CVM of PFIZER’s NADA submission for the Licensed Product in the United States; provided, however, that if PFIZER during such 42-day period gives notice of termination pursuant to Section 10.2(c) of this Agreement, then such amount shall not be deemed to have become payable;

 

(e) $[* * *] payable within forty-two (42) days of the date of first acceptance by the EMEA of PFIZER’s Marketing Authorization Application for the Licensed Product in Europe; provided, however, that if PFIZER during such 42-day period gives notice of termination pursuant to Section 10.2(c) of this Agreement, then such amount shall not be deemed to have become payable;

 

(f) $[* * *] payable within forty-two (42) days of IMMUCELL’s invoice issuable to PFIZER after the last to file of either (i) a European National Phase Application of International Patent Application No. PCT/US03/31986 (entitled “Method of Purifying Lantibiotics”) in one of the European Patent Convention Countries, or (ii) a new United States patent application which claims a Nisin A Composition intended for use as a pharmaceutical preparation for intra-mammary infusion; and

 

(g) $[* * *] payable within forty-two (42) days of IMMUCELL’s invoice issuable to PFIZER following the issuance of a patent maturing from the European National Phase Application referred to in Section 4.1(f)(i), with claims directed toward a method for purifying nisin.

 

PFIZER agrees to give IMMUCELL prompt notice of any approval or other event giving rise to payment obligations under subsections (c), (d), or (e) above, and IMMUCELL shall then

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

promptly issue Pfizer an invoice for the relevant payment. Except as expressly stated in this Section 4.1, no payments shall be due or owing in respect of any other approvals of any Governmental Authority sought and/or obtained by PFIZER or IMMUCELL in any other countries within the Territory.

 

4.2 Payments for Certain Filing Delays.

 

(a) In addition to the payments under Section 4.1, and subject to the terms and conditions of this Agreement including, without limitation, the provisos set forth in sub-section (b) hereinbelow, in the event PFIZER fails to file the complete administrative NADA with the CVM by [* * *], then PFIZER shall pay to IMMUCELL the following amounts by the following dates until such time as such filing is made:

 

(i) $[* * *] for each calendar quarter ending [* * *], payable within forty-two (42) days after the end of each such quarter;

 

(ii) $[* * *] for each calendar quarter ending [* * *], payable within forty-two (42) days after the end of each such quarter;

 

(iii) $[* * *] for each calendar quarter ending September [* * *], payable within forty-two (42) days after the end of each such quarter; and

 

(iv) $[* * *] for each calendar quarter after the calendar quarter ending [* * *], payable within forty-two (42) days after the end of each such quarter.

 

(b) The timing of all of the payments specified in sub-section (a) above are expressly conditioned upon IMMUCELL:

 

(i) providing PFIZER with Clinical Supply in accordance with Section 3.3(a) before March 31, 2005 to allow: (A) registerable efficacy trials to be initiated by PFIZER and (B) registerable VICH stability drug product studies to be initiated by IMMUCELL;

 

(ii) preparing and transferring to PFIZER all CMC documentation in a suitable form, as reasonably requested by PFIZER, prior to end of 2005; and

 

(iii) otherwise cooperating with PFIZER and fulfilling its obligations as specified in the License Agreement.

 

(c) If any of the obligations specified in sub-section (b) above are not met by IMMUCELL for any reason, the timing of payments specified in sub-section (a) above shall be adjusted on a month-to-month basis in line with the delays caused thereby.

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

4.3 Royalty Payments. In addition to the payments under Section 4.1 and Section 4.2, and subject to the terms and conditions of this Agreement, PFIZER shall pay to IMMUCELL with respect to the Licensed Product:

 

(a) [* * *]% of Net Sales for the portion of Net Sales of Licensed Product in a calendar year in the Territory less than or equal to $[* * *]; plus

 

(b) [* * *]% of Net Sales for the portion of Net Sales of Licensed Product in a calendar year in the Territory greater than $[* * *].

 

4.4 Guaranteed Minimum Royalties for Designated Territories. Notwithstanding anything contained in this Agreement to the contrary, so long as this Agreement remains in effect and following approval of the NADA or Marketing Authorization Application by the CVM or EMEA, whichever shall first occur, PFIZER shall be obligated to pay IMMUCELL guaranteed minimum royalties for the United States and for the European Union (“Minimum Royalties”) as set forth in Exhibit D attached hereto, at all times taking into account the payments made under Section 4.3 for the United States or European Union, respectively, it being acknowledged and agreed that Minimum Royalties shall be due regardless of commercial sales of Licensed Product.

 

4.5 Duration of Royalty Payments. Payments under Section 4.3 on Net Sales in a given country shall continue until the expiration of the Term in such country.

 

4.6 Suspension of Further Payment Obligations. Notwithstanding the foregoing, upon due termination by PFIZER of this Agreement for any reason, PFIZER shall have no further obligation to make any payments specified in Sections 4.1, 4.2, 4.3 or 4.4 after the effective date of termination; provided, however, that any such payments made by PFIZER or otherwise accrued prior to the effective date of termination (except for those referenced in Sections 4.1 (c), (d) and (e) as not having become payable) shall not be refundable.

 

Section 5.

ACCOUNTING AND PROCEDURES FOR PAYMENT.

 

5.1 Inter-Company Sales. Sales between or among PFIZER, its Affiliates or sublicensees (except for sales to end users) shall not be counted toward Net Sales. PFIZER shall be responsible for payments on Net Sales of its Affiliates or sublicensees.

 

5.2 Calculation of Net Sales. All payments under Section 4 shall be computed and paid in United States dollars. For the purposes of determining the amount of royalties due under Section 4.3 for the relevant PFIZER Quarter, the amount of Net Sales in respect of sales originally denominated in a foreign currency shall be computed by converting such foreign currency amount into U.S. dollars at the prevailing commercial rate of exchange for purchasing dollars with such foreign currency as published in the Wall Street Journal for the close of the last Business Day of the PFIZER Quarter for which the relevant royalty payment is to be made to IMMUCELL.

 

5.3 Royalty Payments and Reports. PFIZER shall make royalty payments to IMMUCELL with respect to each PFIZER Quarter within 90 days after the end of each such period, and each payment shall be accompanied by a report identifying the country, Net Sales for each such country for the relevant PFIZER Quarter, and the amount payable to IMMUCELL, as well as computation thereof including any applicable offset. In addition, PFIZER shall use reasonable efforts, based on its current monitoring procedures used to track other similar

 

[* * *] Confidential Treatment Requested. The confidential portions have been filed separately with the Securities & Exchange Commission.

products, to provide IMMUCELL with sales estimates on a quarterly basis in regions where such procedures are commonly used, but shall not be obliged to provide binding estimates, it being understood that (i) such estimates shall not be used for calculation of royalties, and (ii) a failure to provide such estimates shall not be deemed to constitute a breach of this Agreement. Subject to Section 7.4, said reports shall be kept confidential by IMMUCELL and not disclosed to any other party other than IMMUCELL’s accountants or attorneys, who shall be obligated to keep such information confidential, and such information and reports shall only be used for purposes of this Agreement,.

 

5.4 Method of Payments. All payments hereunder shall be made by electronic transfer in immediately available funds via either a bank wire transfer, an ACH (automated clearing house) mechanism, or any other means of electronic funds transfer, at PFIZER’s election, to such bank account as IMMUCELL shall designate in writing at least five Business Days before the payment is due. In the event that any payment due hereunder is not paid when due, such payment obligation shall bear interest from the date on which the payment was due and payable, at 7.5% per annum.

 

5.5 Inspection of Records. PFIZER shall, and shall cause its Affiliates and sublicensees to, keep for two (2) years from the date of each payment of royalties complete and accurate records of gross sales of Licensed Product, Net Sales of Licensed Product, and amounts payable hereunder to IMMUCELL for the Licensed Product, all in sufficient detail to allow the accruing royalties to be determined accurately. IMMUCELL shall have the right for a period of two years after receiving any report or statement with respect to royalties due and payable to appoint at its expense an independent certified public accountant reasonably acceptable to PFIZER to inspect the relevant records of PFIZER, and its relevant Affiliates or sublicensees as the case may be, to verify such report or statement. PFIZER shall make such records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon prior written notice of at least ten (10) Business Days’ from IMMUCELL, to verify the accuracy of the reports and payments. Such accountants may be required by PFIZER to enter into a reasonably acceptable confidentiality agreement, and in no event shall such accountants disclose to IMMUCELL any information other than such as relates to the accuracy of reports and payments made or due hereunder. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. IMMUCELL agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for IMMUCELL to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law. The failure of IMMUCELL to request verification of any report or statement during said two-year period shall be considered final acceptance of the accuracy of such report, and neither PFIZER nor its Affiliates or sublicensees shall have any obligation to maintain records pertaining to such report or statement beyond said two-year period. The results of each inspection, if any, shall be binding on both parties unless PFIZER objects, by delivery to IMMUCELL of a written notice of objections, within thirty (30) days of receipt of a report of the independent certified public accountant retained by IMMUCELL. The costs and expenses of the independent certified public accountant retained by IMMUCELL pursuant to this Section to review the records of PFIZER or its Affiliates or sublicensees shall be paid by IMMUCELL; provided, however, that if the results of any review of such records shall reveal that the Net Sales

 

reported for any period covered by such review shall have been understated by ten percent (10%) or more, PFIZER shall reimburse IMMUCELL for all such costs and expenses.

 

5.6 Tax Matters. It is understood and agreed by the parties that any payments made under Section 4.1 of this Agreement are inclusive of any value added tax imposed against the payee under applicable Law. In addition, in the event any of the payments made by PFIZER pursuant to Section 4 are or become subject to withholding taxes under the Laws of any jurisdiction, PFIZER shall deduct and withhold the amount of such taxes for the account of IMMUCELL to the extent required by Law, such amounts payable to IMMUCELL shall be reduced by the amount of taxes deducted and withheld, and PFIZER shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to IMMUCELL an official tax certificate or other evidence of such tax obligations together with proof of payment from the relevant Governmental Authority of all amounts deducted and withheld sufficient to enable IMMUCELL to claim such payment of taxes and will otherwise provide IMMUCELL with reasonable assistance to enable IMMUCELL to recover its allocable portion of such taxes as permitted by Law.

 

Section 6.

PATENTS, TECHNOLOGY, TRADEMARK AND INFRINGEMENT.

 

6.1 IMMUCELL and PFIZER shall cooperate in connection with the continued prosecution and maintenance by IMMUCELL of the patents and patent applications under the IMMUCELL Patent Rights, it being acknowledged and agreed as follows:

 

(i) IMMUCELL agrees to prosecute and maintain all patents and patent applications under the IMMUCELL Patent Rights in the United States, such European Patent Convention Countries as Pfizer shall reasonably designate (to include, without limitation, the Major EU Markets), Australia, New Zealand, South Africa, Japan, Brazil, Canada, Mexico, Argentina, and such additional countries as PFIZER may reasonably designate or consent to in writing; provided, however, that IMMUCELL shall not be required to expend more than $150,000 on prosecution and maintenance of Patent Rights (including patent counsel fees) throughout the Term of this Agreement and, except as IMMUCELL may otherwise agree, shall not be required to expend more than $50,000 on such efforts in any calendar year during the Term.

 

(ii) The foregoing patent prosecution and maintenance obligations shall extend to and include such of the IMMUCELL Improvements as IMMUCELL or PFIZER reasonably selects from time to time for patent prosecution or maintenance.

 

(iii) Subject to the foregoing obligations, if IMMUCELL decides not to prosecute and/or maintain IMMUCELL Patent Rights in particular countries, or otherwise decides to abandon such Patent Rights, IMMUCELL shall give PFIZER at least 90 days prior written notice of such decision, provided that the Patent Rights will not lapse within the 90-day period, and if so, then IMMUCELL shall notify PFIZER at least 90 days in advance of any non-extendable response date. In all such cases, PFIZER retains the right (in its discretion) to prosecute and/or maintain such IMMUCELL Patent Rights at its own expense during the Term.

 

(iv) If PFIZER desires that an application be filed for a patent (including any extension or supplemental patent protection) on any IMMUCELL Technology relating to the Raw Material or the Licensed Product, PFIZER shall advise IMMUCELL of the desired application. Provided that IMMUCELL has no reasonable objection thereto, IMMUCELL shall thereupon file patent applications as requested, and (subject to IMMUCELL’s obligations set forth above) PFIZER shall pay all reasonable expenses, including reasonable fees for patent counsel, for filing and prosecuting such requested patent applications.

 

(v) PFIZER shall retain full discretion hereunder to prosecute, maintain, or abandon Patent Rights for any PFIZER Technology, at its own expense.

 

(vi) PFIZER shall have reasonable access to all documentation, filings and communications to or from the respective patent offices and shall be kept fully advised as to the status of all pending applications to the extent pertaining to the Raw Material and Licensed Product. IMMUCELL, its agents and attorneys will give due consideration to all suggestions and comments of PFIZER regarding any aspect of such patent prosecutions. IMMUCELL shall likewise have reasonable access to all documentation, filings and communications to or from the respective patent offices and shall be kept fully advised as to the status of all pending PFIZER applications to the extent pertaining to the Raw Material and Licensed Product. PFIZER, its agents and attorneys will give due consideration to all suggestions and comments of IMMUCELL regarding any aspect of such patent prosecutions.

 

The parties acknowledge that the IMMUCELL Patent Rights and Technology include patents and technology licensed from Nutrition 21 (the “N21 Rights”). Notwithstanding any provision herein to the contrary, IMMUCELL shall not be obligated to file additional patent applications under this Section 6 in respect of N21 Rights except with Nutrition 21’s consent or except as otherwise permitted under the Nutrition 21 Agreements.

 

6.2 Any new Technology developed by or for PFIZER during the Term will remain the property of PFIZER and shall constitute PFIZER Technology; provided, however, that (a) if any such Technology constitutes an improvement to the manufacture of Raw Material, then PFIZER shall notify IMMUCELL promptly in writing of any such new Technology, and IMMUCELL shall have an option, exercisable in writing by IMMUCELL within sixty (60) days after receipt of notice, to acquire a non-exclusive, world-wide right to sublicense, develop, and use any such Technology only for animal health applications outside the Field, with terms of such license to be set forth in a separate agreement, negotiated promptly and in good faith; provided, however, that negotiations for such rights shall be limited in time to six (6) months after written notice to IMMUCELL by PFIZER setting forth a reasonably detailed description of technical and scientific information, ownership rights, clinical data and fields of application in respect of such Technology; and (b) such agreement shall provide that in the event of a termination of this Agreement by PFIZER pursuant to Section 10.2(c), then all Technology created by or for PFIZER during the Term shall be subject to the provisions set forth in Section 10.5. Throughout the Term, PFIZER shall use commercially reasonable efforts to preserve viable

 

samples of all production culture stocks received or developed by PFIZER, and shall maintain reasonable records of all testing and development work with respect thereto.

 

6.3 Any new Technology developed or acquired by or for, or licensed to or for the benefit of, IMMUCELL during the Term, directly or indirectly (“IMMUCELL Improvements”), will remain the property of IMMUCELL and shall constitute IMMUCELL Technology. To the extent that IMMUCELL Improvements relate to the Field (including, without limitation, improvements to the manufacture of Raw Material), they shall constitute part of the IMMUCELL Technology subject to the License granted in this Agreement, including without limitation, IMMUCELL Patent Rights related thereto. IMMUCELL shall notify PFIZER in writing within forty-five (45) days of the development, acquisition or license of any IMMUCELL Improvements and new patents under IMMUCELL Patent Rights generated by IMMUCELL during the Term, and comply with the terms and conditions of this Agreement with respect thereto.

 

6.4 IMMUCELL agrees that it will, and will cause its Affiliates to, (i) execute and file such notices and other