Exhibit 10.18(a)
[********] Certain confidential information
contained in this document, marked by brackets, has been omitted
and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as
amended.
LICENSE AGREEMENT
THIS AGREEMENT, made and entered
into this 26 th day of May, 1999, (the Effective
Date) by and between the University of Kentucky Research
Foundation, a corporation duly organized and existing under the
laws of the Commonwealth of Kentucky and having its principle
office at Lexington, Kentucky, U.S.A. (hereinafter referred to as
UKRF), and Targacept, Inc., (“TARGACEPT”) a subsidiary
of R.J.R. Reynolds Tobacco Company (“RJR”).
WITNESSETH
WHEREAS, TARGACEPT desires to obtain
a license under the Patent Rights upon the terms and conditions
hereinafter set forth, and
WHEREAS, UKRF previously has entered
into agreements with RJR (and subsequently, TARGACEPT) regarding
research and development activities concerning nicotinic compounds
for use in therapeutic applications. RJR (and subsequently,
TARGACEPT) have funded activities involving collaborative research
as well as activities involving a sabbatical program. As a result,
UKRF and TARGACEPT jointly own certain technologies (listed in
Attachment A, which becomes a part of this agreement), and UKRF has
assigned certain technologies to TARGACEPT (listed in Attachment B,
which becomes part of this agreement) but which are subject to the
terms of that agreement regarding sharing of royalty income,
and
WHEREAS, TARGACEPT has entered into
an agreement with Rhone-Poulene Rorer, whereby as part of that
agreement, certain technologies of TARGACEPT were licensed to
Phone-Poulene Rorer; and TARGACEPT is entitled to certain royalty
and milestone income, and
WHEREAS, in previous agreements
between UKRF and RJR (and subsequently TARGACEPT), it was agreed
that UKRF and RJR would negotiate in good faith towards arriving at
terms relating to further use of the technology developed during
the
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collaborative research and sabbatical programs.
UKRF and TARGACEPT acknowledge negotiating in good faith towards
terms by which that technology can best be developed for commercial
application.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants contained herein, the parties
hereto agree as follows:
ARTICLE 1-
Definitions
For the purposes of this agreement,
the following words and phrases shall have the following
meanings:
1.1 “TARGACEPT” shall
mean Targacept and any subsidiary or affiliate of
Targacept.
1.2 “Patent Rights”
shall mean the United States and Foreign pending patent
applications set forth in Attachments “A” and
“B” attached hereto and made a part hereof (hereinafter
referred to as the “Patent Rights Patent
Application(s)”), and the United States patents and Foreign
patents issuing from said pending United States and Foreign patent
applications or later-filed foreign applications based upon any of
said United States patents and applications (hereinafter referred
to as the “Patent Rights Patent(s)”) and any
continuations, continuations-in-part, divisions reissues or
extensions or any of the foregoing.
1.3 “Licensed
Product(s)” shall mean any product made or covered by a
pending or issued patent included in the Patent Rights.
ARTICLE 2- Grant
2.1 UKRF hereby grants to TARGACEPT
the world-wide right and license to the Patent Rights set forth in
Attachment A to the full end of the term of each patent included
therein unless sooner terminated as hereinafter provided. This
grant is expressly subject to the rights of the U.S. Government, if
any.
2.2 In order to establish a period
of exclusivity for TARGACEPT, UKRF hereby agrees that it shall not
grant any other license to make, have made, use, lease and sell the
Patent Rights during the period of time commencing with the
Effective Date of this Agreement and terminating with the full end
of the term of this Agreement, unless sooner terminated as
hereinafter provided.
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2.3 TARGACEPT shall have the right
to sublicense worldwide any of the rights, privileges and license
granted hereunder.
2.4 Notwithstanding the foregoing,
on behalf of itself and its affiliates, UKRF reserves the right to
use the Patent Rights for internal research purposes.
2.5 TARGACEPT agrees that any
sublicenses granted by it shall include a contractual provision
granting UKRF the right and ability to proceed directly against the
sublicensee to require such sublicensee to comply with all terms of
the sublicense agreement. TARGACEPT further agrees to include the
substance of ARTICLES 4, 5, 8, 9, and 10 of this Agreement in all
sublicense agreements.
2.6 TARGACEPT agrees to forward to
UKRF a copy of any and all fully executed sublicense agreements,
and further agrees to forward to UKRF annually a copy of such
reports received by TARGACEPT from its sublicensees during the
preceding twelve (12) month period under the sublicenses as shall
be pertinent to a royalty accounting under said sublicense
agreements.
ARTICLE 3- Due
Diligence
TARGACEPT shall use its best efforts
to bring the Patent Rights to market through a thorough, vigorous
and diligent program for exploitation of the Patent
Rights.
ARTICLE 4-
Royalties
4.1 For the rights, privileges and
license granted hereunder, TARGACEPT shall pay to UKRF in the
manner hereinafter provided to the end of the term of the Patent
Rights or until this Agreement shall be terminated as hereinafter
provided:
(a) A license issue fee of
$20,000.00 Dollars, which said license issue fee shall be deemed
earned and due immediately upon the execution of this
Agreement.
(b) For each of the patents
described in Attachment A, a royalty in the amount of
[********] .
(c) For each of the patents
described in Attachment B, a royalty in the amount of
[********] . Such payments shall only be made if income is
based on technology claimed in those patents listed in Attachment
B, in countries where those patents are in force. Such payments
shall be made for the life of the patents listed in Attachment
B.
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4.2 As used herein, the phrase
“Net Sales Price” shall mean TARGACEPT’s billings
for the Licensed Product(s) produced hereunder less the sum of the
following:
(a) Discounts allowed in amounts
customary in the trade;
(b) Sales, tariff duties and/or use
taxes directly imposed and with reference to particular
sales;
(c) Outbound transportation prepaid
or allowed; and
(d) Amounts allowed or credited on
returns.
No deductions shall be made for
commissions paid to individuals whether they be with independent
sales agencies or regularly employed by TARGACEPT and on its
payroll, or for cost of collections. Licensed Product(s) shall be
considered “sold” when billed out or
invoiced.
4.3 No multiple royalties shall be
payable because the Licensed Product(s), its manufacture, lease or
sale are or shall be covered by more than one patent application or
patent license under this Agreement.
4.4 Royalty payments shall be paid
in United States dollars in Lexington, Kentucky, or at such other
place as UKRF may reasonably designate consistent with the laws and
regulations controlling in any foreign country. Any withholding
taxes which TARGACEPT or any sublicensee shall be required by law
to withhold on remittance of the roy
