LICENSE AND COOPERATION AGREEMENT

EXHIBIT 10.1

THE SYMBOL ‘*’ IS USED THROUGHOUT THIS EXHIBIT TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

LICENSE AND COOPERATION AGREEMENT

This License and Cooperation Agreement (the “Agreement”) is made and is effective as of this date of April 16, 1998 (“Effective Date”), between

Merz + Co. GmbH & Co., a company organized under the laws of Germany, with its principal place of business at Eckenheimer Landstrase 100-104, 60318 Frankfurt a. M., Germany (“Merz”),

and

Neurobiological Technologies Inc., a company organized under the laws of the State of Delaware, U.S.A., with its principal place of business at 1387 Marina Way South, Richmond, CA 94804, U.S.A., (“NTI”),

and

Children’s Medical Center Corporation, a non-profit organization organized under the laws of the State of Massachusetts with its principal place of business at 300 Longwood Avenue, Boston, Massachusetts, U.S.A., (“CMCC”),

in reference to the following facts:

 

A.	Merz holds certain patent rights for the use of Memantine to treat cerebral ischemia and dementia relating to Alzheimer’s disease (as further defined in Exhibit B of this Agreement), and is further developing Memantine for the treatment of dementia and other diseases.

 

B.

NTI is the licensee of certain patent rights in Memantine for the treatment of neuropathic pain and AIDS related dementia and of other patent rights pertaining to Memantine licensed by CMCC on an exclusive basis in the field of use as defined in the Exclusive License Agreement entered into on September 11, 1995 between CMCC and NTI (hereinafter referred to as the “Exclusive License Agreement”).

 

C.	CMCC is the owner of certain patent rights to be further specified in Exhibit A, including patent rights in Memantine for the treatment of neuropathic pain and AIDS related dementia.

D.

In view of the cooperation between the parties under this Agreement, which will succeed the Exclusive License Agreement, CMCC and NTI will terminate their Exclusive License Agreement on the Effective Date of the Agreement, without any further obligations under that Exclusive License Agreement. CMCC and NTI will grant mutual releases with respect to any obligations under the Exclusive License Agreement. The termination of the Exclusive License Agreement shall be a condition precedent to Merz’ obligation to execute and perform this Agreement.

 

E.	CMCC desires to have the CMCC Patents, as hereinafter defined, utilized in the public interest and is willing to grant a license thereunder on the terms and conditions herein.

 

F.	NTI and Merz desire to combine their efforts to most efficiently market and license the Products in the Territory (as hereinafter defined) in accordance with the terms and conditions of this Agreement.

 

G.	The parties believe that the cooperation among the parties as provided under this Agreement is in their best interest and is the most efficient and effective way to commercialize the CMCC Indications and the Merz Indication as hereinafter defined.

Now, therefore, in consideration of the promises and the mutual covenants contained herein, the parties agree as follows:

Article 1—Definitions

1.1 “CMCC Indications” shall mean the use of the Product within the scope of the CMCC Patents.

1.2 “CMCC Patents” shall mean all of the following intellectual property rights:

(i) The United States and foreign patents and/or patent applications listed in Exhibit A hereto, including any patents or patent applications, divisionals and continuations thereof;

(ii) The United States and foreign patents issued from the applications listed in Exhibit A hereto and from divisionals and continuations of those applications;

(iii) Claims of United States and foreign continuation-in-part applications, and resulting patents, which relate to subject matter specifically described in the United States and foreign patent applications described in Exhibit A hereto;

(iv) Claims of all after filed foreign patent applications, and of the resulting patents, which relate to subject matter specifically described in the United States patent and/or patent applications described in subparagraphs (i), (ii) or (iii) of this Article 1.2; and

 

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(v) Any reissues, divisionals, amendments or extensions of the United States or foreign patents described in subparagraphs (i), (ii), (iii) or (iv) of this Article 1.2.

It is further understood that certain patents listed in Exhibit A hereto related to nitrosylating compositions, including nitrosomemantine, are not included in the CMCC Patents.

1.3 “Confidential Information” shall mean and include any and all data and information not in the public domain, including know-how and trade secrets relating to, or contained or embodied in the products, technology, services, business, finances, or affairs of any party. Confidential Information may be communicated orally, visually, in writing or in any other recorded or tangible form. Subject to the provisions set forth in Article 12.1 with respect to CMCC, all data and information hereunder will be considered to be Confidential Information (i) if the disclosing party has marked them as such, (ii) if the disclosing party has, orally or in writing, advised the receiving party of their confidential nature, or (iii) if, due to their character or nature, a reasonable person in a like position and under like circumstances would treat them as confidential.

1.4 “Compound” shall mean any raw material necessary for the manufacturing of the Products.

1.5 “First Commercial Sale” shall mean the date on which Merz first sells bulk Memantine, Products, or finished Products to a Marketing Partner or to any other Person for any of the Indications governed by this Agreement in a particular jurisdiction or receives Royalty Income from any Marketing Partner with respect to the sale of the Products in a particular jurisdiction.

1.6 “Indication” shall mean the use of the Product for potential diagnosis and treatment of diseases and conditions in human beings, except for ophthalmologic diseases.

1.7 “Intellectual Property Rights” shall mean and include all patents, copyrights, trademarks, trade names, or any other proprietary rights which the parties may own, adopt, use or register and which relate to, are embodied in, or are associated with any of the Products and/or any applications or registrations therefor.

1.8 “Marketing Partner(s)” shall mean any other Person with whom Merz enters into an agreement for the development, manufacture, marketing and/or distribution of the Products for any of the CMCC Indications and/or the Merz Indication.

 

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1.9 “Merz Indication” shall mean the use of the Product for potential treatment of dementia relating to Alzheimer’s disease.

1.10 “Merz Patents” shall mean the patent rights listed in Exhibit B hereto.

1.11 “Person” shall mean and include any individual, corporation, trust, estate, partnership, joint venture, company, association, governmental bureau or agency, or other entity regardless of its type or nature.

1.12 “Product(s)” shall mean (i) Memantine for the Indications neuropathic pain, AIDS related dementia and any other Indications developed or patented by CMCC and/or NTI, or licensed to CMCC and/or NTI, (ii) any other adamantan derivative developed and/or patented by CMCC and/or NTI and/or licensed to CMCC and/or NTI for the Indication neuropathic pain, AIDS related dementia and/or other neurological/neuropsychiatric Indications, (iii) any combination product which includes Memantine developed or patented by CMCC and/or NTI and/or licensed to CMCC and/or NTI, and (iv) Memantine for the Indication of dementia relating to Alzheimer’s disease, as developed by the parties heretofore and in the future.

1.13 “Representative” shall mean all partners, shareholders, officers, directors and employees of a party to this Agreement.

1.14 “Royalty Income” shall mean any royalty income derived from any license, development and/or marketing agreement for Products between Merz and any Marketing Partner as contemplated in this Agreement; provided, however, that “Royalty Income” shall not include any revenues from the supply and sale of Compound to any such Marketing Partner as set forth in Article 9 hereof, and shall not include any down-payments, lump-sum payments and/or milestone payments as specified in Article 8.5 hereof.

1.15 “Territory” shall mean the worldwide territory, unless otherwise expressly specified in this Agreement.

1.16 “Trademark” shall mean the designs, logos, marks, names and service marks used for the Product.

Article 2—Representation and Warranties

Each party represents and warrants:

2.1 That it possesses full power and authority to enter into this Agreement and to perform the obligations hereunder;

 

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2.2 That its Representative whose signature is affixed hereto has been fully authorized to sign this Agreement;

2.3 That upon its Effective Date, the provisions of this Agreement shall constitute its legal, valid and binding obligations enforceable in accordance with these terms;

2.4 That it has no agreement with any other Person nor any other conflict that would preclude it from fully complying with its obligations under this Agreement and/or any applicable law or regulations, and that all required consents of any and all third parties, if any, to enter into this Agreement and perform the obligations hereunder, have been obtained prior to the execution of the Agreement; provided, however, that the parties hereby acknowledge that no party has obtained any approval by or from the United States Food and Drug Administration for the sale, distribution and/or use of the Products in the Territory prior to the execution of this Agreement. Each party shall, at its sole expense, defend and hold one or both of the other parties and its Representatives harmless from any liabilities or actions brought against one or both of the other parties, if and to the extent such liabilities or actions are based on a claim that (i) the first party breached an agreement with any other Person for the marketing and licensing of the Product, or (ii) the first party misappropriated any trade secret or improperly disclosed any Confidential Information of any other Person; and

2.5 Without limiting the generality of the foregoing, CMCC hereby specifically represents and warrants that as of the Effective Date, to the best knowledge of the CMCC Technology Transfer Office, it alone owns the CMCC Patents, and that the CMCC Patents (i) have been duly registered as described in Exhibit A hereof, and (ii) have not been abandoned. CMCC further warrants and represents that the CMCC Technology Transfer Office has no knowledge of any pending or threatened claims of infringement and has not received any notice of any claim of infringement from any third party regarding the use of Memantine or any adamantan derivatives.

Article 3—Purpose and Scope of Cooperation

3.1 The purpose of the cooperation among the parties is [the performance of clinical trials, securing of regulatory approval, and] the development and commercialization of Products within the Territory, including but not limited to the marketing and licensing of the parties’ respective Intellectual Property Rights for the manufacture, distribution, sale and use of the Products throughout the Territory in accordance with the terms and conditions of this Agreement. In furtherance of this purpose, Merz shall be responsible for identifying one or more suitable Marketing Partners for the Products in the Territory in accordance with Article 3.2.

3.2 The Parties hereby agree that one (1) suitable Marketing Partner for the Merz Indication and the CMCC Indications should be identified. The parties hereby expressly

 

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acknowledge that in view of the anticipated market share and the amount of the currently available pre-clinical and clinical data, the search for a suitable Marketing Partner will initially focus on a Marketing Partner for the development and marketing of Memantine for the Merz Indication; provided, however, that all reasonable efforts shall be made to find one (1) Marketing Partner for all Indications covered by this Agreement, in accordance with Article 10 hereof. If, despite Merz’ reasonable commercial efforts, it is not possible to find one (1) Marketing Partner for the development of all such Indications, commercially reasonable efforts shall be employed to cooperate with such Marketing Partner to identify one or more additional Marketing Partners for the development of Memantine for the other Indications, in accordance with Article 10 hereof.

3.3 The parties acknowledge that it is in their best interest to expeditiously pursue the marketing and licensing opportunities for the Products in the Territory as set forth in this Agreement. Merz and NTI will therefore commit sufficient personnel, efforts and resources to this cooperation project to achieve the objectives of this Agreement, as reasonably determined by Merz.

3.4 Subject to Articles 7.3 and 10.1 and notwithstanding Article 3.1 hereof, nothing in this Agreement shall be construed to impose on any one of the parties the obligation to (i) perform joint development work with respect to the Products or any derivatives of the Products; (ii) assist any of the other parties in obtaining financing and funding for its research and development work; or (iii) engage in any sales activities for the Products in the Territory other than the activities expressly set forth in this Agreement.

3.5 The relationship of the parties established by this Agreement is one of independent contractors, and nothing in this Agreement shall be construed as giving any one of the parties the power to direct or control the daily activities of any other party, to constitute the parties as principal and agent, employer and employee, or partners. Neither one of the parties shall have any right, power or authority to act on behalf of, or bind, any of the other parties, and neither one of the parties shall represent to any third party that it has such right, power or authority, except as contemplated herein.

Article 4—License Grant

4.1 Subject to the provisions of this Article 4.1 and Articles 4.4 and 4.5 hereof, CMCC hereby grants to and Merz hereby accepts from CMCC the exclusive and fully transferable and/or sublicenseable license to CMCC Patents, as listed in Exhibit A hereto, to develop, make, have made, use and market the Products in the Territory in accordance with the terms and conditions described in this Agreement. Subject to Article 10 hereof, Merz shall have the right, at its sole option, to further research and develop, or to conduct or have conducted further clinical studies, regarding Memantine for the CMCC Indications. Merz shall use its commercially reasonable efforts to require any Marketing Partner who manufactures Products as they pertain to the CMCC Indications for the sale

 

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in the United States of America to substantially manufacture such Products in the United States of America. Notwithstanding the exclusive license granted to Merz under this Article 4.1, Merz hereby acknowledges that CMCC has granted a license to Allergan to utilize certain of the CMCC Patents solely in connection with Indications for ophthalmologic diseases. The license granted hereunder shall not be construed to confer upon Merz by implication, estoppel, or otherwise any rights as to any technology not governed by CMCC Patents.

4.2 NTI hereby grants an exclusive and fully transferable or sublicenseable license to Merz, and Merz hereby accepts such license, to use all of NTI’s Confidential Information related to and/or required for the commercial exploitation of the Products in the Territory; provided, however, that such license shall not include any Confidential Information relating to the general business information and financial information of NTI.

4.3 Subject to the obligations set forth in Article 10.1 hereof, Merz shall have the right to engage NTI’s services to further research and develop and to conduct further clinical studies on Memantine for the CMCC Indications on terms to be mutually agreed upon.

4.4 Notwithstanding anything herein to the contrary, CMCC shall retain a royalty-free, non-exclusive, irrevocable license to practice, and to sublicense other non-profit organizations to practice, the CMCC Patents it owns for non-commercial research purposes only. Merz shall not assert any claim of infringement of the Merz Patents against CMCC or any such non-profit organization, sublicensed by CMCC pursuant to this Article 4.4, provided that the CMCC Patents are utilized for non-commercial research purposes only.

4.5 Notwithstanding the provisions of Article 4.1 hereof, the license granted hereunder to Merz shall be subject to the rights of the United States government, if any, under Public Laws 96-517, 97-226, and 98-620, codified at 35 U.S.C. sec. 200-212 and regulations promulgated thereunder.

Article 5—Merz’ Responsibilities and Obligations

5.1 Merz shall have the exclusive right and the obligation to use commercially reasonable efforts to promote and market the Products for the Merz Indication as well as the CMCC Indications in the Territory and to identify one or more Marketing Partners for the development of these Indications in accordance with Articles 3.2 and 10.3 hereof.

5.2 The parties hereby expressly acknowledge that Merz has entered into marketing arrangements, license agreements and/or has business plans for the marketing, licensing and commercial exploitation of the Products for the Merz Indication in (i) Austria, Germany, Switzerland, (ii) Japan, and (iii) other countries as listed in Exhibit F and that the rights conferred upon Merz’ licensees under those marketing and/or license

 

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agreements shall remain unaffected by this Agreement. Notwithstanding the inclusion of the foregoing countries in the Territory and subject to Exhibit C, Merz shall have no obligation whatsoever hereunder to NTI and/or CMCC, including the sharing of Royalty Income, down-payments, lump-sum payments and/or milestone payments, with respect to any such marketing, licensing or the commercial exploitation of Products for the Merz Indication, in any of the foregoing countries.

5.3 Merz shall have the right to refer to this cooperation in connection with its negotiation of development, licensing and marketing agreements with Marketing Partners for Products for the Merz Indication and/or the CMCC Indications as provided for in this Agreement.

5.4 Merz hereby acknowledges that CMCC has licensed certain of the CMCC Patents to Allergan for use solely in the ophthalmologic field of use. It is the intent of CMCC that each of Merz and Allergan focus its commercial development efforts within its respective field of use. Merz has requested that CMCC provide Merz with the name, address, and description of the field of use of Allergan and the name and telephone number of the principal contact of Allergan within thirty (30) days of the Effective Date. Merz and CMCC agree that the provisions of Exhibit E hereto shall govern the interaction and communication between Merz and Allergan. To ensure that both Merz and Allergan are aware of these reciprocal provisions, CMCC shall make a copy of this Article 5.4 and Exhibit E available to Allergan, and CMCC shall provide copies of the corresponding provisions of its agreement with Allergan available to Merz, within twenty (20) days after the Effective Date.

Article 6—CMCC’s Responsibilities and Obligations

6.1 CMCC hereby authorizes NTI to provide Merz with any CMCC Confidential Information pertaining to and relevant for the commercial exploitation of the patent rights in Memantine for the CMCC Indications as previously provided by CMCC to NTI.

6.2 CMCC shall not, through its Technology Transfer Office or Public Affairs Office, or in any other official communication, without the prior written consent of Merz, (i) provide any information to any other Person regarding the capabilities, performance or use of the Products for any of the CMCC Indications; or (ii) make any representations to any other Person that Merz and/or the Marketing Partner has endorsed, warranted or guaranteed the Products for any of the CMCC Indications.

Article 7—NTI’s Responsibilities and Obligations

7.1 Subject to the provisions of this Agreement, NTI shall use commercially reasonable efforts, consistent with its financial and technical resources, to actively support Merz in the marketing of the Products in the Territory to Marketing Partners and

 

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licensees, including but not limited to (i) evaluating marketing and licensing opportunities; (ii) initiating contacts with potential Marketing Partners, and (iii) upon Merz’ request, assisting in the negotiation of marketing and licensing agreements.

7.2 NTI shall provide to Merz within thirty (30) days of the Effective Date a data package with all Confidential Information pertaining to and relevant for the commercial exploitation of the CMCC Patents in Memantine and/or any other adamantan derivatives for the CMCC Indications developed by NTI, including any Confidential Information heretofore or hereafter provided by CMCC to NTI pertaining to the CMCC Indications. NTI shall further provide Merz with periodic updates relating to any further research and development and/or improvement regarding the Products pursuant to Article 10 hereof. NTI hereby agrees that Merz shall have the right of access to, review and use of any and all Confidential Information of NTI relevant in the context of any required regulatory product approval (e.g., NDAs) provided, however, that NTI shall not be required to disclose any of its financial data to Merz.

7.3 NTI shall, upon Merz’ request, provide Merz with reasonable assistance in connection with any applications for any required regulatory approvals for the Products in any country within the Territory.

Article 8—License Fees and Profit Sharing

8.1 In consideration for the rights licensed by CMCC to Merz under Article 4.1 of this Agreement Merz shall pay to CMCC US $[*] (US Dollars [*]) as a one-time lump-sum license fee. The payment shall be due within five (5) business days of the signing of this Agreement by the last party and shall be made via wire transfer to the bank account of CMCC with [*](ABA # [*]), Account No. [*], Account Name: [*]; Contact: [*] (Tel. No. [*]).

8.2 Merz shall also pay US $2,100,000 (US Dollars Two Million One Hundred Thousand) to NTI for the license granted to Merz relating to NTI’s Confidential Information pursuant to Article 4.2 and the waiver of its licensee rights under the Exclusive License Agreement, provided, however, that any such payment shall be conditioned upon NTI delivering to Merz a board resolution approving this Agreement. The payment shall be due within five (5) business days of the execution of this Agreement by the last party and shall be made via wire transfer to the bank account of NTI with [*] (ABA # [*]), Account No. [*].

 

*	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

 

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8.3 Merz acknowledges and agrees that the payments payable to CMCC and NTI under Article 8.1 and 8.2 respectively are in addition to any share of Royalty Income payable to CMCC and NTI by Merz hereunder.

8.4 In consideration for the rights conveyed and the obligations undertaken hereunder by each one of the parties, each party shall be entitled to a percentage share in the Royalty Income derived from the marketing and licensing of Products for the Indications governed by this Agreement as set forth in Exhibit C attached hereto. Payment of the percentage share of Royalty Income, if any, due to CMCC and NTI shall be paid by Merz to CMCC and NTI respectively within thirty (30) days of the end of each calendar quarter by wire transfer to the bank accounts of CMCC and NTI respectively.

8.5 Merz shall pay to CMCC an amount equal to [*]% and to NTI an amount equal to [*]%, the aggregate of which shall not exceed [*] ([*])%, of all down-payments, lump-sum payments and milestone payments, other than Royalty Income, received by Merz pursuant to any licensing, development and marketing agreement entered into with any Marketing Partner for Products pursuant to this Agreement. The amounts payable by Merz to CMCC and NTI under this Article 8.5 shall be paid within thirty (30) days after the end of the calendar quarter in which such payments were received by Merz.

8.6 All amounts payable to CMCC and NTI shall be paid in United States Dollars (US$) and shall be paid to the accounts specified in Article 8.1 and 8.2 respectively. For purposes of determining the amounts payable with respect to any Royalty Income or any other amount payable by Merz to NTI and CMCC under Article 8.5, which Merz has not received in United States Dollars, the currency conversion shall be made by using the average of the exchange rate between the United States Dollars and the currency in which Royalty Income or other income under Article 8.5 was received by Merz prevailing at Deutsche Bank during the last calendar quarter prior to the due date of the payment.

8.7 In the event that any amount payable to CMCC and/or NTI hereunder is not paid on the due date as provided herein, such overdue amount shall bear interest at the rate of [*] ([*])% per year or the maximum amount permitted by law, whichever is less, until such time such overdue amount has been paid.

8.8 Merz shall furnish CMCC and NTI with a report on a quarterly basis, including the information listed in Exhibit D hereof. Each report shall be submitted to CMCC and NTI along with the amounts payable, if any, to CMCC and NTI respectively under Article 8.4. Merz shall keep full, true and accurate books of account in accordance with generally accepted accounting principles to enable CMCC and NTI to ascertain the payments made by Merz to NTI and CMCC under this Agreement. Said books of account shall be kept at

 

*	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

 

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Merz’ principal place of business for a period of at least five (5) years following the end of the calendar year to which they pertain. CMCC and NTI shall have the right, at their own expense, to audit such books of account to the extent they pertain to payments made pursuant to this Agreement and to the extent necessary to verify the reports provided by Merz to CMCC and NTI hereunder.

Article 9—Supply of Compound, Bulk Memantine and Finished Products

9.1 In the event that Merz supplies and sells the Compound, directly or indirectly, to one or more Marketing Partners for use in the manufacturing of any of the Products for any or all Indications governed by this Agreement, the parties hereby expressly acknowledge and agree that any and all revenues derived by Merz from the sale of such Compound shall be solely for the benefit of Merz, and Merz shall not be obligated to share any such revenues with any of the other parties to this Agreement; provided, however, that, subject to the provisions of Article 5.2 hereof, if the price for the Compound specified in Merz’ supply agreement with such Marketing Partner exceeds [*] existing at the time of the execution of this Agreement, Merz shall pay to CMCC and NTI their respective share of the excess revenue as defined hereafter in accordance with the allocation of Royalty Income as set forth in Article 8.4 and Exhibit C of this Agreement. For purposes of this Article “excess revenues” shall mean the difference between [*]. Merz shall (i) furnish CMCC and NTI with a certificate executed by an independent certified public accountant as to the [*] and (ii) provide NTI and CMCC with reports of such sales of the Compound in accordance with the provisions of Exhibit D hereof.

9.2 Subject to Article 5.2 hereof, in the event that Merz directly or indirectly supplies and sells bulk Memantine products or finished Products to one or more Marketing Partners or any other third party for any or all Indications governed by this Agreement, the parties shall in good faith negotiate an allocation among Merz, NTI and CMCC of a percentage share of the sales price for such bulk Memantine products or finished Memantine products; provided, however, that the allocation of revenue set forth in Article 9.1 above regarding the sale and supply of Compound to Marketing Partners shall be taken into consideration. Merz shall provide NTI and CMCC with reports of all such sales of bulk Memantine products and/or finished Products in accordance with the provisions of Exhibit D hereof. If the parties fail to reach an agreement on the appropriate allocation of such revenues within a period of sixty (60) days after the date on which such negotiations commenced, any party shall be entitled to institute arbitration proceedings in accordance with Article 18 hereof solely for the purpose of determining the respective percentage share of the sales price of each of the parties.

 

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Article 10—Further Development and Research

10.1 NTI shall, at its own risk and expense, initiate Phase IIb clinical studies for neuropathic pain. The Phase IIb clinical studies for neuropathic pain shall be initiated by December 31, 1998. NTI shall use commercially reasonable efforts to complete such studies for neuropathic pain within approximately fifteen (15) months after the commencement of the studies; provided, however, that any improvement of any Product developed as a result of such Phase IIb clinical studies for neuropathic pain pursuant to this Article 10.1 shall also be governed by the rights and obligations set forth in this Agreement. In addition, NTI shall at is own risk and expense, initiate and conduct the clinical studies for AIDS related dementia in accordance with the requirements of the AIDS Clinical Trial Group (“ACTG”); provided, however, that any improvement of any Product developed as a result of such clinical studies for AIDS related dementia pursuant to this Article 10.1 shall also be governed by the rights and obligations set forth in this Agreement. NTI shall inform Merz and CMCC on a regular basis about all such research and development work, including, but not limited to, Phase IIb clinical studies and ACTG studies, and Merz reserves the right to supervise any such further research and development as Merz reasonably deems necessary. Any submission that NTI proposes to make to the Food and Drug Administration with respect to all such research and development work, including, but not limited to, Phase IIb clinical studies and/or the ACTG studies shall be subject to the prior review, comment and approval by Merz. Merz hereby grants to NTI a limited, non-exclusive license to use the Merz Patents, and a limited, non-exclusive sublicense to use the CMCC Patents and any related CMCC Confidential Information licensed to Merz hereunder, if any for the sole and exclusive purpose of conducting such Phase IIb clinical studies and ACTG studies.

10.2 If NTI fails to initiate and conduct either the Phase IIb clinical studies for neuropathic pain and/or AIDS related dementia in accordance with the ACTG studies therefor, CMCC and Merz shall each have the right to terminate this Agreement with respect to NTI with immediate effect in accordance with Articles 17.2 and 17.6 hereof. Upon termination in accordance with this Article 10.2, NTI shall have no further rights under this Agreement; provided, however that Merz’ obligation to negotiate in good faith an allocation to NTI of a percentage share of any revenue derived by Merz from the commercialization and marketing of any Products or any derivatives thereof for any new Indication under, and limited to the circumstances set forth in Article 10.11 hereof, shall survive the termination of the Agreement. The relationship between Merz and CMCC shall remain unaffected by such termination, and the terms of this Agreement, to the extent they apply to CMCC and Merz, shall continue to govern the relationship between Merz and CMCC. Merz shall be entitled to retain NTI’s percentage share of the Royalty Income and any share of income under Article 8.5.

 

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10.3 In the event that (i) NTI does not initiate or conduct Phase IIb clinical studies for neuropathic pain and AIDS related dementia as set forth in Article 10.1 above; or (ii) NTI completes the Phase IIb clinical studies for neuropathic pain and AIDS related dementia in accordance with the ACTG studies therefor, and the results of such studies warrant further research and development work, including but not limited to Phase III clinical studies for the Indication neuropathic pain, as determined by Merz, Merz shall use its commercially reasonable efforts to cause a Marketing Partner to conduct further research and development of Memantine for the CMCC Indications. If the first Marketing Partner, who is willing to develop the Merz Indication, is not willing to conduct such further research and development of Memantine for the CMCC Indications, Merz shall use its commercially reasonable efforts to identify a second Marketing Partner for the further research and development of the CMCC Indications within [*] after concluding an agreement with the first Marketing Partner, and reach an agreement with such Marketing Partner as soon as practicable thereafter.

10.4 If Merz is unable to reach an agreement with any Marketing Partner within [*] ([*]) months for the CMCC Indications as set forth in Article 10.3 hereof, CMCC shall have the right to seek a Marketing Partner for the CMCC Indications within [*] ([*]) months. Merz will then use commercially reasonable efforts to enter into a sublicense with the Marketing Partner identified by CMCC.

10.5 If neither Merz nor CMCC is able to identify a Marketing Partner for the CMCC Indications as set forth in Articles 10.3 and 10.4 hereof, the Agreement may be terminated in accordance with Article 17 hereof by mutual agreement of CMCC and Merz. If this Agreement is terminated by mutual agreement of Merz and CMCC, Merz shall have no further rights in the CMCC Patents, and neither Merz nor NTI shall have any further obligations with respect to the CMCC Patents and/or the CMCC Indications. CMCC shall be free to conduct further research and development with respect to the CMCC Patents and the CMCC Indications. Upon termination of the Agreement in accordance with this Article 10.5, Merz shall have no further payment obligations of any Royalty Income, down-payments, milestone payments or lump sum payments to CMCC and/or NTI as set forth in Article 8 hereof, provided, however, that (i) nothing in this Article or in this Agreement shall be construed as to release any of the parties to this Agreement from any obligation, including payment obligations, that matured prior to the effective date of such termination, and (ii) Merz’ obligation to negotiate in good faith an allocation to NTI of a percentage share of any revenue derived by Merz from the commercialization and marketing of any Products or any derivatives thereof for any new Indication under, and limited to the circumstances set forth in Article 10.11 hereof, shall survive the termination of the Agreement. If Merz and CMCC jointly decide not to terminate the Agreement, the revenue sharing of all Royalty Income shall be in accordance with Exhibit C, Number 2.

 

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10.6 If further research and development, including clinical studies, with respect to the CMCC Indications present negative results, such as an intolerance of the Products or an inefficiency of the Products for the CMCC Indications, which Merz reasonably determines makes it unlikely that any regulatory agency will grant the approvals required for the marketing, distribution and use of the Products for the CMCC Indications, CMCC or Merz shall have the right to terminate this Agreement upon six (6) months’ written notice in accordance with Article 17.6 hereof; provided, however, that Merz’ obligation to negotiate in good faith an allocation to NTI of a percentage share of any revenue derived by Merz from the commercialization and marketing of any Products or any derivatives thereof for any new Indication under, and limited to the circumstances set forth in Article 10.11 hereof, shall survive the termination of the Agreement.

10.7 Subject to Article 10.1 hereof, NTI shall, upon Merz’ request, conduct further research and development with respect to the Products for the CMCC Indications if such further research and development is requested by a Marketing Partner for the development and marketing of such Indications at the sole cost and expense of such Marketing Partner.

10.8 Merz shall provide to NTI any data currently in possession of Merz and/or hereinafter developed by Merz on any side effects or other risks to human health and/or safety pertaining to Memantine for use by NTI solely in connection with the research and development activities pursuant to this Agreement. In connection with the research and development work hereunder, NTI shall be authorized to make reference to Merz’ IND data. Merz shall provide reasonable technical assistance to NTI, as Merz, in its sole discretion, determines to be necessary for further research and development of the CMCC Indications conducted by NTI in accordance with this Article 10.

10.9 CMCC may, but is not obligated to, conduct further research and development with respect to the Products as they pertain to the CMCC Indications, improving the effectiveness of such Products; provided, however, that any improvement of such Products, to the extent they are within the scope of the CMCC Patents, shall also be governed by the rights and obligations set forth in this Agreement. CMCC shall disclose to Merz and/or its Marketing Partner any information that is known to CMCC Technology Transfer Office on any side effects or other risks to human health and/or safety pertaining to Memantine, which is revealed or developed as a result of such further research and development by CMCC, for use by Merz and/or its Marketing Partner in connection with any and all applications for Food and Drug Administration or any other regulatory approval for the Products. CMCC shall provide Merz with written notice of any such research and development conducted by CMCC with respect to Memantine which is known to the CMCC Technology Transfer Office. CMCC shall also be free to

 

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research and develop any other Indications or derivatives of the Products for new Indications which shall not be governed by this Agreement. The parties agree that CMCC shall own all rights, title and interest in and to, or shall be the authorized licensee of the work product resulting from such further research and development with respect to such new Indications and/or any other derivatives of the Products for new Indications and shall be entitled to claim, register, file, prosecute and maintain any applicable Intellectual Property Rights without any restrictions and, subject to Merz’ right of first negotiation set forth in Article 10.10 below, neither Merz nor NTI shall have any rights therein or thereto. Nothing in this Article shall be construed to impose any obligation on CMCC to conduct such further research.

10.10 In the event that CMCC wishes to license its patent rights in Memantine for any such new Indication and/or any other derivative of the Products for new Indications, if any, except as provided in Article 1.2 as it relates to nitrosylating compositions, including nitrosomemantine, Merz shall have a right of first negotiation with respect to such patent rights. CMCC shall notify Merz promptly in writing of its intent to license its patent rights. Merz shall have an exclusive right to negotiate a license for such patent rights for a period of [*] ([*]) calendar days from the receipt of CMCC’s notice hereunder. If (i) Merz fails to exercise its right of first negotiation hereunder within this [*] ([*]) days’ period, or (ii) the parties cannot agree, despite good faith efforts, on the terms and conditions of such license during the [*] ([*]) days’ period, CMCC shall be free to license its patent rights in Memantine for any such new Indication and/or any other derivative of the Products for new Indications to a third party.

10.11 Merz may conduct further research and development with respect to the Merz indications. Merz shall also be free to research and develop any other Indications or derivatives of the Products for new Indications which shall not be governed by this Agreement. The parties agree that Merz shall own all rights, title and interests in and to, or shall be the authorized licensee of the work product resulting from such further research and development with respect to Merz Indications and/or any other derivatives of the Products for new Indications and shall be entitled to claim, register, file, prosecute and maintain any applicable Intellectual Property Rights without any restrictions, and neither CMCC nor NTI shall have any rights therein or thereto; provided, however, that NTI and Merz shall negotiate in good faith an allocation to NTI of a percentage share of any revenue derived by Merz from the commercialization and marketing of any Products or any derivatives thereof for any new Indication developed and marketed by Merz if (i) Merz used NTI Confidential Information provided to Merz by NTI pursuant to this Agreement for the development of the new Indication, and (ii) such NTI Confidential Information was not in the possession of or known to Merz prior to the disclosure by NTI

 

*	Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.

 

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to Merz, and (iii) NTI Confidential Information was an essential and fundamental element for the development of the new Indication, and (iv) it is established by NTI based on NTI’s business records that the conditions set forth under (i) and (iii) above are satisfied.

10.12 In furtherance of Merz’ rights hereunder, during the term of this Agreement, neither CMCC nor NTI shall enter into any other agreement with any third party regarding the licensing, development, manufacturing, distribution and/or marketing of the Products in the Territory.

10.13 Nothing in this Agreement will limit the right of any of the parties to further research and develop with respect to any products other than the Products, provided that such development activity does not violate any other provision of this Agreement. Nothing in this Agreement shall confer any rights to such independently developed products upon any other party hereto.

Article 11—Trademarks

11.1 Merz shall have the right to choose, at its sole discretion, the Trademarks under which the Products shall be marketed in the Territory, including without limitation, any Trademark proposed or required by any Marketing Partner hereunder, and Merz shall be the sole owner of such Trademark, unless Merz and its Marketing Partner agree to market the Products under a Trademark owned by the Marketing Partner. CMCC and NTI hereby acknowledge and agree that they shall have no rights whatsoever in or to such Trademarks.

11.2 This Agreement shall, however, not confer any right to any party to use any trademarks of any other party, unless such use is authorized by such party in writing and/or by separate license agreement.

Article 12—Confidentiality

12.1 Each party acknowledges that in the course of the performance of this Agreement, it may disclose to one or both of the other parties (the “Receiving Party’) certain of the first party’s Confidential Information. The Receiving Party shall refrain from using or copying any and all of the disclosing party’s Confidential Information for any purposes or activities whatsoever, other than those specifically authorized in this Agreement. Except as provided in Article 12.3 below, the Receiving Party shall not disclose any Confidential Information of the disclosing party to any third party, except to those of the Receiving Party’s employees, agents, or representatives with a need to know, each of whom shall have executed a reasonable nondisclosure agreement effectively prohibiting the unauthorized use or disclosure of any of the disclosing party’s Confidential Information, the terms and conditions of which are no less restrictive than those contained in this Agreement. The Receiving Party shall implement effective security procedures in order

 

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to avoid disclosure or misappropriation of the disclosing party’s Confidential Information. The Receiving Party shall immediately notify the disclosing party of any unauthorized disclosure or use of any Confidential Information that comes to the Receiving Party’s attention and shall take all action that the disclosing party reasonably requests to prevent any further unauthorized use or disclosure thereof. For purposes of this Article 12 the term “Receiving Party” as it pertains to CMCC shall mean the Technology Transfer Office of CMCC. CMCC hereby specifically acknowledges and agrees that (i) except as specifically provided in the Agreement, Merz has no obligation whatsoever to furnish or disclose any Merz Confidential Information to CMCC; (ii) any Merz Confidential Information to be disclosed to CMCC hereunder shall be disclosed solely to the Technology Transfer Office of CMCC, (iii) all information provided by Merz to CMCC under the Agreement, including all reports furnished under Article 8.8 hereof and all copies of proposed agreements with Marketing Partners furnished under Article 16.3 hereof, constitute Merz Confidential Information; and (iv) CMCC’s Technology Transfer Office will not furnish or disclose any such Merz Confidential Information to any other CMCC employee, agent or representative (or any other third party) without the prior written consent of Merz. If Merz discloses any information to any other employee, agent or representative of CMCC, such information shall not be regarded as Confidential Information.

12.2 Each party acknowledges the sensitivity of the business negotiations and the contemplated cooperation and agrees not to use or disclose any Confidential Information, except as reasonably required for the performance of this Agreement; provided, however, that CMCC and NTI hereby acknowledge that the disclosure by Merz of Confidential Information to one or more of the Marketing Partners may be required for Merz’ performance of its obligations hereunder. Furthermore, each party acknowledges that the terms and conditions of this Agreement shall be subject to this Article 12 and shall not be disclosed, except if the performance of this Agreement so requires and subject to Article 5.3 above. Notwithstanding this Article 12.2, NTI shall have the right to disclose certain information relating to this Agreement to third parties; provided, however, that (i) the prior written consent of Merz and CMCC is obtained, which shall not be unreasonably withheld, and (ii) NTI requires the party to whom such Confidential Information is disclosed by NTI with the consent of Merz and NTI not to disclose or misappropriate such Confidential Information.

12.3 The provisions of this Article 12 will not apply, or will cease to apply, to data and information supplied by the disclosing party that (i) was in the Receiving Party’s possession prior to receipt from the other party as reflected by files existing at the time of disclosure; (ii) has come into the public domain other than through a breach of confidentiality by the Receiving Party; (iii) was developed independently by employees of the Receiving Party or by persons who have not had access to the disclosing party’s Confidential Information; (iv) was or is lawfully obtained, directly or indirectly, by the

 

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Receiving Party from a third party under no obligation of confidentiality; or (v) is required to be disclosed pursuant to any statutory or regulatory provision, including without any limitation any and all applicable securities laws, court order, or regulatory approval requirement; provided, however, that, with the exception of any regulatory product approval proceedings, the Receiving Party shall be obliged to provide to the disclosing party as much advance notice as reasonably practicable of such statutory or regulatory provision, or court order requiring such disclosure, so that the disclosing party has a reasonable opportunity to obtain a protective order, or to take such other protective measures as necessary, with respect to such data or information. The Receiving Party shall have the burden of establishing the applicability of any of the exceptions set forth in this Article 12.3.

Article 13—Patent Prosecution

13.1 Merz shall during the term of this Agreement apply for, seek prompt issuance of, and maintain Merz Patents as set forth in Exhibit B. The other parties shall, upon reasonable request by Merz, cooperate with Merz in the filing, registration, prosecution and maintenance of the patent rights.

13.2 CMCC shall take reasonable actions to maintain all of the CMCC Patents during the term of this Agreement. Merz shall reimburse CMCC for all fees and costs relating to the filing, prosecution and maintenance of the CMCC Patents, as specified in Exhibit A hereto, incurred after the date of this Agreement,