LICENSE AGREEMENT BETWEEN BUKWANG PHARM. CO., LTD. AND PHARMASSET, INC.

EXHIBIT 10.2

Execution Copy

LICENSE AGREEMENT

BETWEEN

BUKWANG PHARM. CO., LTD.

AND

PHARMASSET, INC.

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

TABLE OF CONTENTS

 

 

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LICENSE AGREEMENT

THIS LICENSE AGREEMENT is executed as of June 23, 2005, by and between BUKWANG PHARM. CO., LTD., with its principal offices at 398-1, Daebang-Dong, Dongjak-Ku, Seoul 156-020, Korea (“ Bukwang ”), and PHARMASSET, INC., with principal offices located at 1860 Montreal Road, Tucker, Georgia 30084, U.S.A. (“ Pharmasset ”).

WITNESSETH:

WHEREAS, Bukwang has evidenced the in vitro and in vivo activity of an L- nucleoside compound known generically as “L-FMAU” OR “CLV” or “Clevudine”;

WHEREAS, L-FMAU is covered by patents and patent applications filed in various countries throughout the world;

WHEREAS, Bukwang has entered into that certain license agreement, dated December 28, 1995, as amended effective September 1, 1997, December 1, 1997, February 27, 1998 (now ineffective) and July 15, 2001 (collectively the “ Primary License Agreement ”) with Yale University (“ Yale ”) and University of Georgia Research Foundation, Inc. (“ UGARF ”) (Yale and UGARF collectively, the “ Primary Licensors ”), a copy of which Primary License Agreement is attached hereto as Exhibit A , pursuant to which Bukwang has obtained an exclusive worldwide license under the Primary Licensors’ patents and patent applications and has acquired the right to grant licenses under such patents and patent applications;

WHEREAS, effective February 2, 1998, Bukwang entered into a License Agreement with Triangle Pharmaceuticals covering the Compound (the “ Triangle License Agreement ”), which Triangle License Agreement was terminated effective August 6, 2003, in accordance with that certain Termination Procedure Letter dated July 5, 2003 attached hereto as Exhibit B .

WHEREAS, Bukwang possesses certain technology and know-how relating to L-FMAU and has the right to grant licenses in respect of such technology and know-how; and

WHEREAS, Pharmasset desires to obtain, and Bukwang desires to grant, an exclusive license for the Territory under such patents, patent applications, technology and know-how.

 

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NOW, THEREFORE, in consideration of the premises and the covenants herein contained, the parties agree as follows:

ARTICLE 1. DEFINITIONS

The following terms as used herein, when written with an initial capital letter, shall have the meanings ascribed to them below:

1.1 “ Acquisition Cost ” shall mean the actual invoiced price paid by a party to any non-Affiliate third party for acquiring any item (e.g., a Compound or other active ingredient), including but not limited to, shipping and handling costs and customs duties incurred and paid by such party in connection with the acquisition of such item.

1.2 “ Affiliate ” shall mean any corporation or non-corporate business entity which controls, is controlled by, or is under common control with a party to this Agreement. A corporation or non-corporate business entity shall be regarded as in control of another corporation if it owns, or directly or indirectly controls, at least fifty (50%) percent of the voting stock of the other corporation, or (a) in the absence of the ownership of at least fifty (50%) percent of the voting stock of a corporation or (b) in the case of a non-corporate business entity, or non-profit corporation, if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation or non-corporate business entity, as applicable.

1.3 “ Agreement ” shall mean this Agreement, including all Exhibits attached hereto.

1.4 “ Bukwang Know-How ” shall mean all Know-How that is necessary or useful for the development, manufacture, use, sale, offer for sale, import, export and/or registration of the Compounds or the Licensed Products that is Controlled by Bukwang as of the Effective Date (including, but not limited to, any Know-How licensed to Bukwang under the Primary License Agreement), or which is not Joint Know-How or Joint Inventions, or at anytime during the term of this Agreement including, but not limited to, all manufacturing and synthesis Know-How.

1.5 “ Bukwang Patents ” shall mean all Patents in the Territory Controlled by Bukwang as of the Effective Date (including, but not limited to, all Patents licensed to Bukwang

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

under the Primary License Agreement (the “ Primary License Patents ”) and under the Triangle License Agreement) or during the term of this Agreement and that claim the development, registration, manufacture, use or sale, offer for sale, import and/or export of the Compounds or Licensed Products. All Bukwang Patents as of the Effective Date are listed in Exhibit C attached hereto (all Bukwang Patents coming into existence after the Effective Date shall be listed on amendments to Exhibit C and attached hereto by the parties hereto within ten (10) days from the date such Patent comes into existence). For the avoidance of doubt, Pharmasset acknowledges that the Primary License Patents do not include certain patents related to delta hepatitis virus applications, specifically, the patent family identified by U.S. patent number [***] and U.S. patent application serial number [***] and all foreign counterpart patents and patent applications thereto.

1.6 “ Bulk Drug Substance ” shall mean the Compound in bulk form which, if appropriately formulated and finished, would be suitable for preclinical or clinical use.

1.7 “ cGMP ” shall mean all applicable standards relating to manufacturing practices for fine chemicals, active pharmaceutical ingredients, intermediates, bulk products or finished pharmaceutical products, including (i) the principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 210 and 211 and The Rules Governing Medicinal Products in the European Community, Volume IV Good Manufacturing Practice for Medicinal Products as each may be amended from time to time, (ii) the principles detailed in the ICH Q7A guidelines, (iii) laws promulgated by any governmental authority having jurisdiction over the manufacture of Compound or Licensed Product within the Territory, and (iv) publicly available guidance documents promulgated by any governmental authority having jurisdiction over the manufacture of Compound or Licensed Product (including but not limited to publicly available advisory opinions, compliance policy guides and guidelines), which guidance documents are being implemented within the pharmaceutical manufacturing industry.

1.8 “ Combination Product ” shall mean any Licensed Product that contains Compound and one or more pharmaceutically active ingredients in addition to Compound.

 

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1.9 “ Compounds ” shall mean the compound known as L-FMAU, with the chemical name 2’-fluoro-5-methyl-ß-L-arabinofuranosyluracil, including any salts, esters, isomers, solutes, polymorphs and derivatives thereof.

1.10 “ Control ” shall mean, with respect to any intellectual property right or other intangible property, that a party or one of its Affiliates owns or has a license or sublicense to such item or right, and has the ability to grant access, license or sublicense in or to such right without violating the terms of any agreement or other arrangement with any third party.

1.11 “ Development Program ” shall mean the research and development program described in Article 6 of this Agreement.

1.12 “ Dollars ” shall mean United States dollars.

1.13 “ Effective Date ” shall mean the later of (a) the date first written above and (b) the date, if any, that all of the conditions set forth in Section 14.1 shall have been satisfied or, if applicable, waived.

1.14 “ FDA ” shall mean the United States Food and Drug Administration or any successor entity thereto and any domestic equivalent within the Territory.

1.15 “ Field ” shall mean all human antiviral applications and uses.

1.16 “ First Commercial Sale ” shall mean, with respect to a Licensed Product and on a country-by-country basis, the first commercial sale after receipt of Registration of such Licensed Product in such country. Sales for clinical studies, compassionate use, named patient programs, or under a treatment IND, where the Licensed Product is supplied with or without charge shall not constitute a First Commercial Sale.

1.17 “ HBV ” shall mean hepatitis B virus.

1.18 “ IND ” shall mean an Investigational New Drug Application, and any domestic equivalent within the Territory, filed with the FDA.

 

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1.19 “ Indemnitees ” shall mean (a) in the case of the indemnity set forth in Sections 12.1, Bukwang, its Affiliates and sublicensees, the Primary Licensors, the Primary Licensors’ officers and directors, the University of Georgia and its employees, the Inventors (as that term is defined in the Primary License Agreement) and their heirs, executors, administrators, and legal representatives; (b) in the case of the indemnity set forth in Section 12.2, Pharmasset, its Affiliates and sublicensees, and their directors, officers and employees; and (c) in the case of the Indemnitees referenced in Section 12.3, the parties identified in Subsections 1.19(a) and 1.19 (b) above, as applicable.

1.20 “ Invention ” shall mean any discovery (whether patentable or not) conceived during the term of this Agreement and necessary or useful for the manufacture, use, development, import and/or export of Compounds or Licensed Products or the sale or offer for sale of Licensed Products.

1.21 “ Joint Inventions ” shall mean any Inventions that are jointly made by at least one (1) Bukwang employee or permitted contractor and at least one (1) Pharmasset employee or permitted contractor.

1.22 “ Joint Know-How ” shall mean all Know-How that is necessary or useful for the development, registration, manufacture, use, sale, offer for sale, import and/or export of the Compounds or the Licensed Products that is developed jointly by at least one (1) Bukwang employee or permitted contractor and at least one (1) Pharmasset employee or permitted contractor during the term of this Agreement. All Joint Know-How shall be owned jointly by the parties hereto.

1.23 “ Joint Project Committee ” shall mean the committee described in Article 7 hereof.

1.24 “ Know-How ” shall mean any non-public information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including without limitation, databases, ideas, discoveries, inventions, trade secrets, practices, methods, tests, assays, techniques, specifications, processes, formulations, formulae, knowledge, know-how, skill, experience, materials, including pharmaceutical, chemical and biological materials, products and

 

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compositions, scientific, technical or test data (including pharmacological, biological, chemical, biochemical, toxicological and clinical test data), analytical and quality control data, stability data, studies and procedures, drawings, plans, designs, diagrams, sketches, technology, documentation, and patent-related and other legal information or descriptions.

1.25 “ Licensed Product(s) ” shall mean any pharmaceutical product containing one or more Compounds as an active ingredient, alone or in combination with other active ingredients.

1.26 “ Manufacturing Cost ” shall mean, with respect to a particular item (e.g., a Compound or other active ingredient), the costs of direct labor (including allocable employee benefits and employment taxes), direct material, direct energy, direct utilities and other charges incurred directly by a party in the manufacture by it of such item and, without duplication, normal production overhead (i.e., indirect labor, utilities, maintenance, depreciation of the manufacturing equipment and facilities and other allocable overhead of the manufacturing facility), all determined in accordance with U.S. GAAP.

1.27 “ NDA ” shall mean a New Drug Application, and any domestic equivalent within the Territory, filed with the FDA.

1.28 “ NDA Acceptance ” shall mean the written notification without qualification by the FDA that the NDA has met all the criteria for filing acceptance pursuant to 21 C.F.R. § 314.101.

1.29 “ Net Sales ” shall mean, with respect to a Licensed Product, the gross sales price of such Licensed Product billed by Pharmasset, its Affiliates or sublicensees to independent customers less (to the extent actually given, paid or allowed, as appropriate, without duplication): (a) normal and customary trade, quantity and cash discounts, all rebates (including those paid to third party payors), price reductions, reimbursements, credits or chargebacks, including any credits, volume rebates, charge-back and prime vendor rebates, fees, fees for services or reimbursements granted or given to wholesalers and other distributors, buying groups, health care insurance carriers, pharmacy benefit management companies, health maintenance organizations or other institutions or health care organizations; (b) sales, value added, use, or other similar taxes, and tariffs, custom duty, excise or other duty and any other official

 

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governmental charges; (c) transportation, freight, insurance and handling charges; (d) adjustments, allowances or credits (calculated on a per unit basis) to customers, including without limitation on account of price adjustments, official governmental requirements, billing errors, rejection, damage, recalls, or returns (including allowances actually given for spoiled damaged, out-dated, rejected, returned Licensed Product sold, withdrawals and recalls) of such Licensed Product; (e) payments or rebates paid in connection with sales of Licensed Products to any governmental or regulatory authority in respect of any state or federal Medicare, Medicaid, P.P.R.S., or similar programs or to social or welfare systems, and (f) any item in the future substantially similar in character/substance to the foregoing, all determined in accordance with U.S. GAAP. For purposes hereof, a sale shall be deemed to occur when a Licensed Product is billed.

In the event that Pharmasset or its Affiliates or sublicensees distribute any Licensed Products to a third party for non-monetary consideration (e.g., barter or exchange), such distribution shall be considered a sale for accounting and royalty purposes; provided, however, the disposition of a Licensed Product or the use of the Licensed Product in clinical studies, compassionate use, named patient programs, under a treatment IND, introduction, without sales, into a formulary or equivalent thereof, any nonregistrational non-commercial studies, patient assistance program or any similar instance shall not result in any Net Sales. Net Sales for any such distributions shall be determined on a country-by-country basis and shall be the average price of “arm’s length” sales by Pharmasset or its Affiliates or sublicensees in such country in the Territory during the royalty period in which such sale occurs or, if no such “arm’s length” sales occurred in such country in the Territory during such royalty period, during the last royalty period in which such “arm’s length” sales occurred. If no “arm’s length” sales have occurred in a particular country in the Territory, Net Sales for any such distributions in such country in the Territory, shall be the average price of “arm’s length” sales in all countries in the Territory during such royalty period.

For purposes of determining Net Sales of a Licensed Product that is sold as a Combination Product, the Net Sales of any such Combination Product shall be determined in any accounting period by multiplying the Net Sales of the Combination Product by the fraction A/(A+B), where A is the average invoiced price per unit of the Licensed Product when sold as a

 

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stand-alone Licensed Product in finished form in the applicable country in the Territory and B is the average invoice price of the other product(s) sold as stand-alone product(s) in finished form in the applicable country in the Territory. In the event that such average invoiced price cannot be determined for the Licensed Product or the other product(s), the fraction applied to Net Sales in the applicable country in the Territory for purposes of determining royalties shall be one-half (1/2). In the event that a Combination Product containing a Compound and two or more other compound as active ingredients is sold in a country before a Licensed Product containing only one or more Compounds is sold in that country, the portion of gross sales price of such Combination Products attributable to Compounds until a Licensed Product containing only one or more Compounds as active ingredients is sold in that country shall be the percentage determined by dividing one by the number of active ingredients in that Combination Product.

1.30 “ Patent ” shall mean (i) patents, re-examinations, reissues, renewals, extensions, supplementary protection certificates and term restorations, any confirmation patent or registration patent or patent of addition based on any such patent, (ii) pending applications for patents, including without limitation continuations, continuations-in-part, divisional, provisional and substitute applications, and inventors’ certificates, (iii) all foreign counterparts of any of the foregoing, and (iv) all priority applications of any of the foregoing.

1.31 “ Pharmasset Know-How ” shall mean all Know-How Controlled by Pharmasset and arising solely out of the Development Program or the manufacture, use or sale of the Compounds that is useful for the development, registration, manufacturing, using or selling of the Compounds that is not Joint Know-How or Joint Inventions during the term of this Agreement. For the avoidance of doubt, the Pharmasset Know-How shall not include any Know-How covering the development, registration, manufacturing, using or selling of Racivir.

1.32 “ Pharmasset Patents ” shall mean all Patents Controlled by Pharmasset claiming the development, registration, manufacturing, using or selling of the Compounds. As of the Effective Date, there are no Pharmasset Patents. All Pharmasset Patents coming into existence after the Effective Date shall be listed on amendments to Exhibit D and attached hereto by the parties hereto within ten (10) days from the date such Patent comes into existence. For the

 

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avoidance of doubt, the Pharmasset Patents shall not include any Patent claiming the development, registration, manufacturing, using or selling of Racivir.

1.33 “ Registration ” shall mean, in relation to any Licensed Product, such approvals by the regulatory authorities in a given country (including pricing and reimbursement approvals, if any) as may be legally required before such Licensed Product may be commercialized or sold in such country.

1.34 “ Retained Territory ” shall mean all countries of the world other than those in the Territory.

1.35 “ Territory ” shall mean all the countries in Central America, North America, South America, Europe, the Caribbean and Israel, including those countries set forth on Exhibit E , and any and all territories and possessions of any such countries.

1.36 “ U.S. GAAP ” shall mean generally accepted accounting principles in the United States, consistently applied.

1.37 “ Valid Claim ” shall mean an issued or granted claim of any issued and unexpired patent included among the Bukwang Patents that is listed on Exhibit C and that has not been held unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, which is unappealable or unappealed within the time allowed for appeal, which has not been rendered unenforceable through disclaimer or otherwise or which has not been lost through an interference or opposition proceeding.

ARTICLE 2. LICENSES

2.1 License Under Bukwang Patents and Bukwang Know-How . Bukwang hereby grants Pharmasset the exclusive right and license under the Bukwang Patents and the Bukwang Know-How to develop, have developed, make, have made, use, import and export Compounds and Licensed Products for the purposes of offering for sale, selling and having sold Licensed Products (including, but not limited to, Bulk Drug Substance) in the Territory in the Field during the term of this Agreement.

 

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2.2 Extension to Affiliates . Pharmasset shall have the right to extend its rights under the license granted in Section 2.1 to one or more of its Affiliates; provided, that Pharmasset (a) gives Bukwang at least thirty (30) days’ prior written notice of such extension and (b) shall remain responsible for such Affiliate’s compliance with all Pharmasset’s obligations under this Agreement which apply to such Affiliate.

2.3 Sublicenses to Third Parties . Pharmasset may grant sublicenses to non-Affiliate third parties without any consent; provided, however, in the event that Pharmasset proposes to grant a sublicense to a prospective non-Affiliate sublicensee which is not listed among the top one hundred (100) pharmaceutical companies (based solely on pharmaceutical sales) by IMS, Pharmasset must first obtain the prior written consent of Bukwang and the Primary Licensors, which consent shall not be unreasonably withheld or delayed; provided, further, however, the grant of rights to a third-party distributor authorized to import Licensed Product (“ Distributor ”) to distribute a Licensed Product shall not be considered a sublicense and, therefore, Pharmasset shall not be required to obtain the prior consent of either Bukwang or the Primary Licensors prior to granting such rights to such Distributor. No sublicense granted by Pharmasset shall relieve it of any obligation hereunder. With respect to any sublicense for which Bukwang’s consent is not required pursuant to this Section 2.3, Pharmasset shall provide Bukwang with notice of its intention to grant a sublicense at least fifteen (15) days prior to entering into the applicable sublicense agreement. Pharmasset shall promptly provide Bukwang with a copy of any executed sublicense agreement subject to any third party confidentiality obligations.

2.4 License Under Pharmasset Patents and Pharmasset Know-How . Pharmasset hereby grants Bukwang a non-exclusive right and license under the Pharmasset Patents and Pharmasset Know-How to make, have made, use, import, offer for sale, sell and have sold Licensed Products, with a right to sublicense, in the Retained Territory in the Field and in the event Pharmasset’s license granted under Section 2.1 is terminated in a given country within the Territory (other than by expiration or by Pharmasset pursuant to Section 15.2 hereof) in such country from and after the date of termination. The license granted pursuant to this Section 2.4 shall be royalty free; provided that if Pharmasset would be required to pay any amounts to any third party under the Pharmasset Patents and/or Pharmasset Know-How in the Retained

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

Territory, Bukwang shall be responsible for any and all such amounts solely with respect to the Retained Territory.

2.5 Covenant Not to Sue . Pharmasset and Bukwang agree that, during the term of this Agreement, neither it nor any of its Affiliates will assert against the other party (a “licensed party”) or its Affiliates or sublicensees any patent not included in the Bukwang Patents or Pharmasset Patents, as applicable, that is or might be infringed by reason of such licensed party’s or its Affiliates’ or sublicensees’ exercise of the license granted to it hereunder.

2.6 Right of First Refusal for Racivir . Subject to any rights of third parties, including Gilead Sciences, Inc. or its successors (“ Gilead ”), as of the Effective Date, Pharmasset hereby grants Bukwang a right of first refusal to license under existing and future Patents and Know-How Controlled by Pharmasset relating to the development, making, using, marketing and selling of Racivir for the treatment of HBV in Korea [***] and with a royalty of [***] percent ([***]%) of net sales of pharmaceutical product containing Racivir as an active ingredient. For purposes of this Section, “Racivir” means (±)-FTC, with the chemical name (±)-ß-2’,3’-dideoxy-5-fluoro-3’-thiacytosine. In the event that Bukwang determines to exercise such right of first refusal it shall so notify Pharmasset (“ Bukwang Notice ”) and Pharmasset shall, within five (5) days of its receipt of the Bukwang Notice, notify each third party with rights to Racivir of Bukwang’s election to exercise its right of first refusal hereunder, and Pharmasset shall notify Bukwang within five (5) days of a third party’s timely exercise or failure to timely exercise its right of first refusal such that Bukwang may exercise its right without giving effect to an additional opportunity of such third party to exercise its right of first refusal. If a third party has not exercised its right of first refusal, the parties shall negotiate in good faith for a period of ninety (90) days a separate agreement for the license rights contemplated by this Section 2.6. If the parties are unable to reach agreement during such time period, Pharmasset shall have no further obligation to Bukwang under this Section 2.6.

2.7 Retained License . Pharmasset acknowledges that, pursuant to paragraph 2.2 of the Primary License Agreement, the Primary Licensors have retained on their behalf and on the behalf of any of their research collaborators a royalty-free right and license to make and use

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

Compounds and Licensed Products and to practice the Licensed Technology (as defined therein) for research and educational purposes only.

2.8 United States Government Rights . Pharmasset acknowledges that the Bukwang Patents licensed under the Primary License Agreement, Bukwang Know-How licensed under the Primary License Agreement, or portions thereof were developed with financial or other assistance through grants or contracts funded by the United States government. Pharmasset acknowledges that, in accordance with Public Law 96-517, other applicable statutes, regulations and Executive Orders now in existence or as may be amended or subsequently enacted, the United States government has certain rights in the Bukwang Patents licensed under the Primary License Agreement and Bukwang Know-How licensed under the Primary License Agreement. Pharmasset shall take all reasonable actions necessary to enable the Primary Licensors to satisfy their obligations of which Pharmasset is notified under any federal law relating to the Bukwang Patents or Bukwang Know-How. If, at any time during the term of this Agreement, the United States government should take action which terminates the Primary License Agreement or requires that the Primary License Agreement be terminated, Pharmasset acknowledges that, upon such termination, Pharmasset shall become a direct licensee with the Primary Licensors for the Territory pursuant to paragraph 2.5 of the Primary License Agreement and this Agreement shall continue with respect to any Bukwang Patents and Bukwang Know-How that are not licensed under the Primary License Agreement. If, due to such government action, Pharmasset becomes a direct licensee with the Primary Licensors, the parties hereto shall negotiate in good faith, in light of amendments, if any, to the Primary License Agreement, as to a reduction of royalty obligations hereunder as may then be necessary to ensure that the royalty due to Bukwang shall not be more than [***] percent ([***]%) and the total royalty due to both the Primary Licensors and Bukwang shall not be more than [***] percent ([***]%). In the event that the Primary License Agreement is terminated and Pharmasset becomes a direct licensee with the Primary Licensors and the royalty due to Bukwang immediately prior to such termination of the Primary License Agreement is less than [***] percent ([***]%) for any country in the Territory, the royalty due to Bukwang for such country shall decrease proportionately and shall not be more than [***] percent ([***]%) of the royalty due to Bukwang before such termination. As an example, in the event that the Primary License Agreement is terminated and Pharmasset becomes a direct licensee with the Primary Licensors and the royalty payable by Pharmasset to Bukwang

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

in a given country immediately prior to such termination was [***] percent ([***]%), then the royalty due to Bukwang for such country shall not be more than [***] percent ([***]%).

2.9 No Implied License . The license and rights granted in this Agreement to Pharmasset shall not be construed to confer any rights upon Pharmasset by implication, estoppel or otherwise as to any technology, know-how or any other intellectual property not specifically identified as Bukwang Patents or Bukwang Know-How. The license and rights granted in this Agreement to Bukwang shall not be construed to confer any rights upon Bukwang by implication, estoppel or otherwise as to any technology, know-how or any other intellectual property not specifically identified as Pharmasset Patents or Pharmasset Know-How.

2.10 Joint Know-How . During the term of this Agreement, with respect to Compounds or Licensed Products, Pharmasset shall have the exclusive right to use all Joint Know-How in the Territory, and Bukwang and its sublicensee shall have the exclusive right to use all Joint Know-How within the Retained Territory.

ARTICLE 3. LICENSE FEE, ROYALTIES, AND MILESTONE PAYMENTS

3.1 License Fee . As partial consideration for entering into this Agreement, Pharmasset shall pay Bukwang a license fee of six million United States Dollars (USD $6,000,000) (“ License Fee ”), provided that one million United States Dollars (USD $1,000,000) of the License Fee shall be paid within ten (10) days after the full execution hereof (“ Initial Payment ”) and the remaining five million United States Dollars (USD $5,000,000) shall be paid within fifteen days after receipt of an invoice specifying the satisfaction or waiver of all conditions precedent contained in Article 14; provided, further, that in the event that any such condition precedent remains unsatisfied and is not waived at the close of business on the forty-fifth (45th) day following the date of full execution hereof (subject to one fifteen (15) day extension at the election of either party if the only such condition then remaining unsatisfied and not waived is the condition set forth in Section 14.1(a) hereof), then the Initial Payment shall be returned to Pharmasset forthwith, no further payment of the remaining License Fee shall be payable and the Effective Date shall be deemed not to have occurred, such that this Agreement shall be of no further force and effect.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

3.2 Milestone Payments . So long as the Primary License Agreement is then in effect, Pharmasset shall pay Bukwang the milestone payments (each, a “ Milestone Payment ”) in the amounts specified below no later than thirty (30) days after the occurrence of the corresponding event designated below, unless Pharmasset has given Bukwang notice of termination of this Agreement in the entire Territory prior to such due date.

 

3.3 Earned Royalties; Duration and Reduction .

(a) Pharmasset shall pay Bukwang a royalty equal to [***] percent ([***]%) of the Net Sales of Licensed Products sold in the Territory by Pharmasset and its Affiliates and sublicensees; provided, however, if a sublicensee is listed among the top one hundred (100) pharmaceutical companies (based solely on pharmaceutical sales) by IMS, then Pharmasset shall only pay Bukwang a royalty equal to [***] percent ([***]%) of the Net Sales of Licensed Products sold in the Territory by any such sublicensee.

(b) Royalties under this Article 3 shall be paid in respect of Licensed Products in a given country for a period of [***] ([***]) years after the First Commercial Sale of a Licensed Product in such country in case that, in such particular country, no Valid Claim is

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

granted. For the countries where a Valid Claim is granted, royalties shall be paid in respect of a given Licensed Product in such country only so long as the manufacture (excluding packaging), use, offer for sale, sale or importation of such Licensed Product in such country would, in the absence of this license, infringe a Valid Claim in such country.

(c) Subject to Article 9 of this Agreement, if at any time during the term of this Agreement, (i) a third party or third parties commence selling a product in a country of the Territory and (ii) such product contains any Compound (“ Unlicensed Unit Sales ”), then (A) if such Unlicensed Unit Sales for any royalty period amount to more than [***] percent ([***]%) and less than [***] percent ([***]%) of Pharmasset’s Unit Sales of Licensed Product containing such Compound in such country in such royalty period, determined in accordance with Section 3.3(d) below, then Pharmasset’s royalty obligation in such country with respect to such Licensed Product shall be reduced by [***] percent ([***]%) of the Net Sales, or (B) if such Unlicensed Unit Sales for any royalty period amount to more than [***] percent ([***]%) of Pharmasset’s Unit Sales of Licensed Product containing such Compound in such country in such royalty period, determined in accordance with Section 3.3(d) below, then Pharmasset’s royalty obligation in such country with respect to such Licensed Product shall be reduced by [***] percent ([***]%) of the Net Sales. Notwithstanding the foregoing, in no event shall the royalty due to Bukwang be reduced to less than [***] percent ([***]%); provided that, it will not be deemed to be commercially unreasonable for Pharmasset not to sell Product in any country in which Unlicensed Unit Sales for any royalty period amount to more than [***] percent ([***]%) of Pharmasset’s Unit Sales in such country in the last prior royalty period, determined in accordance with Section 3.3(d) below.

(d) For purposes of this Section 3.3, (i) “Unlicensed Unit Sales” and “Pharmasset’s Unit Sales” shall be deemed to mean the Compound contained in the third party products (irrespective of dosage form) and the Licensed Product (irrespective of dosage form), respectively, as reflected on the label of each such unit; and (ii) Unlicensed Unit Sales shall be determined by the sales reports of IMS or any successor to IMS or any other independent marketing auditing firm selected by Pharmasset and reasonably acceptable to Bukwang. If Pharmasset is entitled to a royalty reduction based on Unlicensed Unit Sales pursuant to Section 3.3(c) for any royalty period, Pharmasset shall submit the sales report of IMS or such other

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

independent firm, as applicable for the relevant royalty period to Bukwang, together with Pharmasset’s sales report for the relevant royalty period. Such sales reports for each royalty period in which Pharmasset is entitled to such royalty reduction shall be submitted with the royalty report for such royalty period submitted pursuant to Section 4.1.

3.4 Annual Minimum Royalties . In the event that, during the [***] full calendar year following the year during which the FDA Registration for an HBV indication is granted for a Licensed Product or any calendar year thereafter for as long as royalty obligations exist in at least [***] Major Market Countries (as defined below), Pharmasset’s total annual royalty payments to Bukwang pursuant to Section 3.3 above are less than $[***] (the “ Annual Minimum ”), Pharmasset shall make a payment to Bukwang together with the royalty report for the fourth quarter of such year required in Section 4.1 of this Agreement equal to the difference between such Annual Minimum and the royalties paid to Bukwang for the preceding year pursuant to Section 3.3 above. As used in this Section 3.4, “ Major Market Countries ” shall mean the [***].

3.5 Accrual of Royalties . No royalty shall be payable on a Licensed Product made, sold, or used for tests or development purposes, or distributed as samples. No royalties shall be payable on sales of Licensed Products among Pharmasset, its Affiliates and sublicensees, but royalties shall be payable on subsequent sales by Pharmasset, its Affiliates or sublicensees to a third party. No multiple royalty shall be payable because the manufacture, use or import of Compounds or a Licensed Product or offer for sale or sale of a Licensed Product is covered by more than one Valid Claim or by at least one Valid Claim and the Bukwang Know-How.

3.6 Compulsory Licenses . Should a compulsory license be granted to any third party in any country of the Territory to make, have made, use, import, offer for sale or sell Licensed Products, the royalty rate payable hereunder for sales of the Licensed Products by Pharmasset in such country shall be adjusted to match any lower royalty rate granted to the third party for such country.

3.7 Third Party Patents . If Pharmasset, due to a claim of infringement by a third party, is required, after consultation with Bukwang, to obtain a license from any third party under any patent in order to use, make, have made, offer for sale or sell a Licensed Product, or if

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

Pharmasset is required, after consultation with Bukwang, to pay a royalty under such license calculated on sales of a Licensed Product in any country, and the infringement of such third party patent cannot reasonably be avoided by Pharmasset, or if Pharmasset is required by a court of competent jurisdiction to pay such a royalty, then Pharmasset’s obligation to pay royalties to Bukwang based on sales of the same Licensed Product in such country under this Article 3 shall be reduced by [***] percent ([***]%) of the amount of the royalty paid to such third party. In addition, if Pharmasset is required to pay upfront payments, license fees, milestone payments or other similar payments to such third party in consideration for such license, then Pharmasset may amortize the amount of such other payment equally over a [***] period and apply such amounts as a credit against its royalty payment obligations. Notwithstanding the foregoing, in no event shall the royalty due to Bukwang pursuant to Section 3.3(a) be reduced to less than [***] percent ([***]%).

ARTICLE 4. REPORTS AND ACCOUNTING

4.1 Royalty Reports and Records .

(a) During the term of this Agreement commencing with the First Commercial Sale of the first Licensed Product, Pharmasset shall furnish, or cause to be furnished to Bukwang, written reports governing each of Pharmasset’s fiscal quarters showing:

(i) the gross sales of all Licensed Products sold by Pharmasset, its Affiliates and sublicensees during the reporting period, together with the calculations of Net Sales in accordance with Sections 1.29; and

(ii) the royalties payable in Dollars, which shall have accrued hereunder in respect of such Net Sales; and

(iii) the exchange rates used, if any, in determining the amount of Dollars; and

(iv) any Withholding Taxes (as defined below).

 

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(b) With respect to sales of the Licensed Product invoiced in Dollars, the gross sales, Net Sales, and royalties payable shall be expressed in Dollars. With respect to sales of the Licensed Product invoiced in a currency other than Dollars, the gross sales, Net Sales, and royalties payable shall be expressed in the domestic currency of the party making the sale together with the Dollar equivalent of the royalty payable, calculated using the simple average of the exchange rates published in the Wall Street Journal on the last day of each month during the reporting period. If any Pharmasset Affiliate or sublicensee makes any sales invoiced in a currency other than its domestic currency, the gross sales and Net Sales shall be converted to its domestic currency in accordance with the Affiliate’s or sublicensee’s normal accounting practices.

(c) Reports shall be made on a quarterly basis. Quarterly reports shall be due within sixty (60) days after the close of every Pharmasset fiscal quarter and shall be prepared in accordance with U.S. GAAP. Pharmasset shall keep accurate records in sufficient detail to enable royalties and other payments payable hereunder to be determined. Pharmasset shall be responsible for all royalties and late payments that are due to Bukwang that have not been paid by Pharmasset’s Affiliates and sublicensees. Pharmasset’s Affiliates and sublicensees shall have, and shall be notified by Pharmasset that they have, the option of making any royalty payment directly to Bukwang.

(d) Withholding Taxes . Bukwang will be responsible for any and all income or other taxes owed by Bukwang and required by applicable law to be withheld or deducted from any of the royalty and other payments made by or on behalf of Pharmasset to Bukwang hereunder (“ Withholding Taxes ”), and Pharmasset may deduct from any amounts that Pharmasset is required to pay hereunder an amount equal to such Withholding Taxes. Pharmasset will provide Bukwang with reasonable advance notice of tax withholding obligations to which it reasonably believes that it is subject. Bukwang will provide Pharmasset any information available to Bukwang that is necessary to determine the Withholding Taxes. Such Withholding Taxes will be paid by Pharmasset to the proper taxing authority for Bukwang’s account and evidence of such payment will be secured and sent to Bukwang within one (1) month of such payment.

 

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4.2 Records of Sales . In order to enable Bukwang to exercise its audit rights pursuant to Section 4.3, Pharmasset, its Affiliates and sublicensees shall keep at their respective principal place of businesses true and accurate records of all sales hereunder in accordance with generally accepted accounting principles in such form and manner so that all royalties owed to Bukwang may be readily and accurately determined. Pharmasset shall furnish Bukwang copies of such records upon Bukwang’s request, which request shall not be made more often than once per calendar year.

4.3 Right to Audit . Bukwang (or the Primary Licensors on Bukwang’s behalf if authorized in writing to Pharmasset by Bukwang and provided they agree to be bound by the provisions of Sections 4.3 and 4.4) shall have the right, upon prior notice to Pharmasset, not more than once in each Pharmasset fiscal year nor more than once in respect of any calendar year, through an independent certified public accountant selected by Bukwang or the Primary Licensors, as applicable, and acceptable to Pharmasset, which acceptance shall not be unreasonably refused, to have access during normal business hours to those records of Pharmasset as may be reasonably necessary to verify the accuracy of the royalty reports required to be furnished by Pharmasset pursuant to Section 4.1 of the Agreement. Such accountant may report only the accuracy or inaccuracy of the royalty reports furnished by Pharmasset and, in the event they are determined to be inaccurate, the corrections in the amounts which need to be made to such reports. Pharmasset shall include in any sublicenses granted pursuant to this Agreement a provision requiring the sublicensee to keep and maintain records of sales made pursuant to such sublicense in accordance with U.S. GAAP and to grant access to such records by Bukwang’s or the Primary Licensors’ independent certified public accountant, as applicable, under the same terms that Bukwang has access to Pharmasset’s records. If such independent certified public accountant’s report shows any underpayment of royalties by Pharmasset its Affiliates or sublicensees, within thirty (30) days after Pharmasset’s receipt of such report, Pharmasset shall remit or shall cause its sublicensees to remit to Bukwang:

(a) the amount of such underpayment; and

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

(b) if such underpayment exceeds [***] percent ([***]%) of the total royalties owed for the fiscal year then being reviewed, the reasonably necessary fees and expenses of such independent certified public accountant performing the audit.

Otherwise, Bukwang’s accountant’s fees and expenses shall be borne by Bukwang. Any overpayment of royalties shall be fully creditable against future royalties payable in any subsequent royalty periods or if this Agreement terminates or expires before such overpayment is fully credited, Bukwang agrees to refund the uncredited portion of such overpayment within thirty (30) days after receipt of the final royalty payment hereunder. Upon the expiration of [***] ([***]) months following the end of any fiscal year during the term of this Agreement or until the end of Pharmasset’s next subsequent fiscal year after the termination or expiration of this Agreement, the calculation of royalties payable with respect to such fiscal year shall be binding and conclusive on Bukwang and Pharmasset, unless an audit for such fiscal year is initiated before expiration of such period. Pharmasset shall retain, and shall cause its Affiliates and sublicensees to retain, those records required to be maintained pursuant to this Section 4.3 in respect of each fiscal year for a period of [***] ([***]) months after the end of such fiscal year during the term of this Agreement and until the end of Pharmasset’s next subsequent fiscal year thereafter. If Pharmasset disputes the findings generated pursuant to this Section 4.3, the parties shall meet and discuss such dispute. If such dispute is not resolved within forty-five (45) days, then it shall be subject to Article 19.

4.4 Confidentiality of Records . All information subject to review under this Article 4 shall be confidential. Except where otherwise required by law, Bukwang and its accountant shall retain all such information in confidence.

ARTICLE 5. PAYMENTS

5.1 Payments and Due Dates . Except as otherwise provided herein, royalties and other amounts payable to Bukwang as a result of activities occurring during the period covered by each royalty report provided for under Article 4 of this Agreement shall be due and payable on the date such royalty report is due. Payments of royalties and other amounts in whole or in part may be made in advance of such due date. Bukwang and Pharmasset agree that unless otherwise agreed by the parties, Pharmasset will remit all royalties and other amounts due

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

pursuant to Article 3 of this Agreement to Bukwang and Bukwang shall, in turn, be responsible for paying any amounts owed to the Primary Licensors pursuant to the Primary License Agreement.

In the event the Primary License Agreement is terminated (including as contemplated by Section 2.8 hereof), Pharmasset and Bukwang acknowledge and agree that, upon such termination, Pharmasset shall become a direct licensee with the Primary Licensors and this Agreement shall continue with respect to any Bukwang Patents and Bukwang Know-How that are not licensed under the Primary License Agreement. If Pharmasset becomes a direct licensee with the Primary Licensors, the parties hereto shall negotiate in good faith, in light of the royalties to be paid by Pharmasset directly to the Primary Licensors, as to a reduction of royalty obligations hereunder as may then be necessary to ensure that the royalty due to Bukwang shall not be more than [***] percent ([***]%) and the total royalty due to both the Primary Licensors and Bukwang shall not be more than [***] percent ([***]%). In the event that the Primary License Agreement is terminated and Pharmasset becomes a direct licensee with the Primary Licensors and the royalty due to Bukwang immediately prior to such termination of the Primary License Agreement is less than [***] percent ([***]%) for any country in the Territory, the royalty due to Bukwang for such country shall decrease proportionately and shall not be more than [***] percent ([***]%) of the royalty due to Bukwang before such termination. As an example, in the event that the Primary License Agreement is terminated and Pharmasset becomes a direct licensee with the Primary Licensors and the royalty payable by Pharmasset to Bukwang in a given country immediately prior to such termination was [***] percent ([***]%), then the royalty due to Bukwang for such country shall not be more than [***] percent ([***]%).

5.2 Wire Transfer . All payments to Bukwang shall be made by wire transfer to an account of Bukwang designated by Bukwang from time to time; provided, however, that in the event that Bukwang fails to designate such account, Pharmasset or its Affiliates and sublicensees may remit payment to Bukwang to the address applicable for the receipt of notices hereunder; provided, further, that any notice by Bukwang of such account or change in such account, shall not be effective until fifteen (15) days after receipt thereof by Pharmasset.

 

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5.3 Currency Restrictions . Except as hereinafter provided in this Section 5.3, all royalties and other amounts shall be paid in Dollars. If, at any time, legal restrictions prevent the prompt remittance of part of or all royalties with respect to any country in the Territory where Licensed Products are sold, Pharmasset or its sublicensee shall have the right and option to make such payments by depositing the amount thereof in local currency to Bukwang’s accounts in a bank or depository in such country.

5.4 Overdue Payments . In the event any payment due hereunder is not made when due, the payment shall accrue simple interest (beginning on the date such payment is due) at the lower of (a) the US Prime Rate, as reported in the Wall Street Journal, Eastern Edition, on the due date (or, if the due date is not a business day, on the last business day prior to such due date), or (b) the maximum rate permitted by applicable law, and such payment when made shall be accompanied all interest so accrued; provided that such interest shall not be due to the extent that such payment is the subject of a good faith dispute by Pharmasset. The remittance of such interest shall not foreclose Bukwang from exercising any other rights it may have pursuant to this Agreement because such payment is late.

ARTICLE 6. DEVELOPMENT PROGRAM

6.1 Development Program . Within ninety (90) days following transfer by Gilead or Bukwang to Pharmasset of the IND for the United States in respect of the Compound and Licensed Product (or, in the event that Pharmasset demonstrates that such time period is impracticable, then as such time period is extended by the parties hereto), Pharmasset will prepare a detailed development plan with the objective of filing an NDA with the FDA in the United States and demonstrating that it has or will have the resources, marketing and medical expertise to attain such goal. Subject to Bukwang’s timely performance of its obligations hereunder, and in complete fulfillment of Pharmasset’s diligence obligations hereunder and any such obligations implied by law, Pharmasset will undertake, or, if applicable, will cause its Affiliates and sublicensees to undertake, the development activities described in this Article 6. Pharmasset shall, at its expense, use Commercially Reasonable Efforts (a) to conduct a development program (the “ Development Program ”) relating to the use of the Licensed Product for HBV and (b) if the results of the Development Program so justify, to seek Registration for such Licensed Product in the United States and Europe. The Development Program shall be

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

mutually discussed by the parties hereto at the meetings of the Joint Project Committee held pursuant to Article 7 and shall take into consideration studies and experiments carried out, or to be carried out by, Bukwang and its licensees, if any, outside the Territory, but the activities within the Territory comprising the Development Program shall be determined at Pharmasset’s sole discretion. Anything in this Agreement to the contrary notwithstanding, Pharmasset shall be entitled to exercise prudent and justifiable business judgment in meeting its Commercially Reasonable Efforts obligations hereunder, provided, however, that (a) Pharmasset shall initiate a clinical study no later than [***] ([***]) months after the above-referenced transfer of the IND to Pharmasset, or such longer period as may be required to address any FDA requirements, provided that Pharmasset is actively addressing such requirements (it being understood that, if a clinical study has not been initiated within such [***] ([***]) month period, Pharmasset shall amend the Development Program in a manner reasonably satisfactory to Bukwang to address Pharmasset’s response to any such FDA requirements); and (b) in no event shall Pharmasset’s filing of an NDA with the FDA in the United States occur later than the [***] ([***]) anniversary of such IND transfer to Pharmasset, subject to extension, as negotiated in good faith by the parties hereto, in the event of regulatory actions beyond the control of the parties hereto or in the event that Bukwang fails to supply Pharmasset with sufficient quantities of clinical supply to enable Pharmasset to conduct the development activities. For purposes of this Article 6, “ Commercially Reasonable Efforts ” shall mean the efforts and resources which would be used (including without limitation the promptness in which such efforts and resources would be applied) by Pharmasset consistent with its normal business practices, with respect to a product or potential product at a similar stage in its development or product life taking into account efficacy, safety, commercial value, the competitiveness of alternative products that are in the marketplace or under development, and the patent and other proprietary position of such product.

ARTICLE 7. JOINT PROJECT COMMITTEE

7.1 Appointment of Coordinators . As soon as practicable after the Effective Date, Bukwang and Pharmasset shall each appoint an authorized representative (each, a “ Coordinator ”). Each party shall provide notice to the other as to the identity of the individual so appointed. Each Coordinator shall be responsible for communications, other than legal notices,

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

between the parties with respect to the subject matter of this Agreement. Each party may replace its Coordinator at any time for any or no reason by providing written notice to the other party.

7.2 Joint Project Committee . The Coordinators shall establish the Joint Project Committee consisting of representatives of Pharmasset and Bukwang. The Joint Project Committee will consist of at least three (3) persons from each of Pharmasset and Bukwang, such persons having significant responsibility for the development and/or marketing of the Licensed Product. The Joint Project Committee will meet from time to time at mutually agreeable times via teleconference or in-person, but no less than semi-annually during the term of this Agreement. The Coordinators shall set the agenda for each meeting, and each Coordinator shall determine which regular members of Joint Project Committee and other representatives of such Coordinator’s party shall attend in light of the agenda. Each party shall bear its own costs incurred in connection with participation in the Joint Project Committee.

7.3 Objective of the Joint Project Committee . The primary objective of the Joint Project Committee will be to facilitate the expeditious Registration of a Licensed Product in the United States and Europe by Pharmasset and in Korea by Bukwang by, inter alia :

(a) subject to Section 7.5, facilitating the exchange of data and study results between the parties;

(b) providing a forum for protocol and development plan review; and

(c) coordinating the developmental efforts of the parties so as to avoid duplication and inconsistency of such efforts.

7.4 Due Consideration . Each party agrees to give due consideration to any input received from the other party at such Joint Project Committee meetings; provided, however, that all final decisions relating to the development of Licensed Products in the [***] will be made by [***] and all final decisions relating to the development of Licensed Products in [***] will be made by [***].

7.5 Exchange of Study Results . Each party shall submit a report detailing the results of each non-clinical and clinical study which it performs to the other party within thirty (30) days

 

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after completion of the final statistical analyses of the results of such study. In addition, each party will provide the other party with semi-annual progress reports summarizing its activities in respect of the development of Licensed Products during the relevant semi-annual period. Such reports shall cover the semi-annual periods ending each June 30 and December 31 and shall be due on or before July 15 and January 15 of each year, respectively.

Each party shall permit the other party, including sublicensees of other party, access to and grant such other party the right to reference and use for any purpose, all data, regulatory filings and regulatory communications associated with any submissions for regulatory approval or other issues associated with any Licensed Product. To the extent that any such data, regulatory filings or regulatory communications are held by a third party, the Party shall arrange direct access to the portions of such data, regulatory filings or regulatory communications for the other party. Notwithstanding the foregoing, in the event any such data, filings or communications of Pharmasset relate to a Combination Product, Bukwang shall only be entitled to reference such data, filings or communications in Korea and no other country in the Retained Territory and shall not be entitled to share such data, filings or communications with any third party.

7.6 Publications . Each party reserves the right to publish or publicly present the results of its own development activities in respect of the Licensed Products (the “ Results ”). The party proposing to publish or publicly present the Results (the “ publishing party ”) will, however, submit a draft of any proposed manuscript, abstract, speech, transparencies, presentation materials and press releases to the other party (the “ non-publishing party ”) for comments at least thirty (30) days prior to submission for publication or oral presentation, except, in the case of press releases, where applicable law, in the reasonable opinion of the publishing party, requires such press release to be issued within time constraints which would make such review impractical. The non-publishing party shall notify the publishing party in writing within thirty (30) days of receipt of such draft whether such draft contains Information (as hereinafter defined) of the non-publishing party which it considers to be confidential under the provisions of Article 13 hereof, or information that if published would have an adverse effect on a patent application for which non-publishing party has initial patent prosecution responsibility pursuant to Article 8 of this Agreement. In the latter case, the non-publishing party shall have the right to request a

 

25

delay and the publishing party shall delay such publication for a period not exceeding sixty (60) days. In any such notification the non-publishing party shall indicate with specificity its suggestions regarding the manner and degree to which the publishing party may disclose such information. The publishing party shall have the final authority to determine the scope and content of any publication, provided that such authority shall be exercised with reasonable regard for the interests of the non-publishing party, except that no publication will contain any Information disclosed by the non-publishing party to the publishing party without the non-publishing party’s prior written permission. Each party shall cause its Affiliates, licensees or sublicensees, as the case may be, to comply with the requirements of this Section 7.5 with respect to any of their proposed publications.

ARTICLE 8. PATENT PROSECUTION & TRADEMARK

8.1 Title to Inventions . Each party shall have and retain sole title in Inventions, whether or not patentable, made by it or on its behalf (as by its employees or agents) in the course of work performed under this Agreement.

8.2 Bukwang Patents .

(a) During the period ending ninety (90) days after the Effective Date, Bukwang shall, in consultation with Pharmasset, file, prosecute and maintain all patent applications and patents included in the Bukwang Patents which Bukwang owns, if any, at Bukwang’s sole expense. At the end of such ninety (90) day period, in the Territory, Pharmasset shall assume responsibility for filing, prosecution and maintenance of the Bukwang Patents owned by Bukwang, if any, at Pharmasset’s expense. Bukwang and its patent counsel will cooperate fully with Pharmasset and its patent counsel to effect an orderly transfer of such prosecution and maintenance responsibilities.

(b) With respect to any Bukwang Patents licensed to it pursuant to the Primary License Agreement in the Territory, Pharmasset shall have those rights relating to the prosecution and maintenance of such Bukwang Patents as are set forth in Article 7 of the Primary License Agreement.

 

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(c) Except as otherwise expressly set forth in the first sentence of Section 8.2(a), Pharmasset agrees to reimburse the Primary Licensors or Bukwang, as applicable, for all external fees, costs and expenses incurred by them after the period provided in Section 8.2(a) in filing, prosecuting and maintaining the Bukwang Patents in the Territory. Invoices, including reasonable substantiation thereof, shall be submitted once in respect of each fiscal quarter as promptly as practicable after the end of such quarter. Payments shall be due net thirty (30) days from the date of receipt of the invoice. If Pharmasset fails to reimburse Bukwang or the Primary Licensors, as applicable, for any undisputed patent prosecution expenses respecting any patent application or issued patent included in the Bukwang Patents within the time allowed therefor, upon at least thirty (30) days’ prior written notice to Pharmasset, Bukwang or the Primary Licensors, as applicable, may remove such patent application or issued patent from the Bukwang Patents and Bukwang or the Primary Licensors shall be free, at its or their election, to abandon or maintain the prosecution of such patent application or issued patent or grant rights to such patent application or issued patent to third parties.

(d) Pharmasset reserves the right to terminate its obligations pursuant to this Section 8.2 with respect to any patent application or patent included in the Bukwang Patents in any country or countries upon at least ninety (90) days’ prior written notice to Bukwang and the Primary Licensors. After the date specified in such notice on which Pharmasset’s obligation to pay further expenses terminates, such patent application or patent, as the case may be, shall no longer be included in the Bukwang Patents in those countries in which Pharmasset has exercised its rights to terminate such obligations.

8.3 Pharmasset Inventions . Pharmasset shall, in consultation with Bukwang, file such patent applications regarding any of the Pharmasset Patents and thereafter shall diligently and in the exercise of its discretion in a manner reasonably consistent with the goals and expectations of the parties hereunder, giving due and reasonable consideration to Bukwang’s position, prosecute and maintain in force the resulting Pharmasset Patents, all at Pharmasset’s expense. Pharmasset shall enable Bukwang to directly contact and confer with Pharmasset’s patent counsel, at Bukwang’s expense, with respect to the prosecution of any patent applications constituting part of the Pharmasset Patents and shall use its reasonable efforts to amend, correct or refile any patent or patent application included in the Pharmasset Patents to include claims reasonably

 

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requested by Bukwang. The territorial scope of such filings shall be the subject of specific discussion between the parties. If for any reason Pharmasset declines to file a patent application or, having filed, declines to prosecute or maintain any of the Pharmasset Patents in any country, Bukwang may so file, prosecute or maintain in Pharmasset’s name and at Bukwang’s expense in such country, in which event, Pharmasset shall, at Bukwang’s request and expense, provide all reasonable assistance.

8.4 Joint Inventions . With respect to Joint Inventions: (a) all patent applications and patents with respect thereto shall be jointly owned by Bukwang and Pharmasset; (b) Pharmasset and its sublicensees and assignees shall be free to use such patent application and patents in the Territory and Bukwang and its licensees and assignees shall be free to use such patent applications and patents in the Retained Territory, in each event, without payment of royalty or accounting therefor; (c) each party agrees to consult with the other party and to give due and reasonable consideration to the other party’s position in determining the territorial scope of patent filings within the Territory (in the case of Pharmasset) and outside the Territory (in the case of Bukwang), and the prosecution and maintenance of resulting patent rights based on Joint Inventions; and (d) Pharmasset shall have the sole right and discretion to file within the Territory, and Bukwang shall have the sole right and discretion to file within the Retained Territory, any patent application and prosecute and maintain any resulting patent rights on Joint Inventions, in which event, the non-filing party shall, at the filing party’s request, provide all reasonable assistance and shall promptly reimburse the filing party with fifty percent (50%) of the reasonable out-of-pocket expenses so incurred by the filing party.

8.5 Further Obligations .

(a) Except as otherwise provided in Article 9 and 18, each party’s responsibilities for patent prosecution activities pursuant to this Article 8 shall also include all activities relating to the relevant patent applications and patents, including all interference, opposition and observation proceedings before any patent offices and litigation to determine the validity, enforceability, allowability or subsistence of such patent applications and patents. Each party agrees to give due consideration to the other party’s position with respect to any such patent prosecution activities (which term, as used herein, shall include without limitation, any

 

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activities of the type described in the first sentence of this Section 8.5(a)). In the event a party fails to initiate or pursue any patent prosecution activities for which it is responsible, or having commenced such patent prosecution activities, declines to pursue such patent prosecution activities, the other party may initiate, pursue or assume such patent prosecution activities, at its sole expense.

(b) In conducting its patent prosecution activities under this Agreement, each party may use patent attorneys selected by it in its own discretion. In addition to the other obligations set forth in this Article 8, each party undertakes to keep the other party, throughout the term of this Agreement, regularly informed of the status and progress of the patent prosecution activities it undertakes under this Agreement including, but not limited to, supplying the other, upon reasonable request and at reasonable intervals, with all correspondence with the United States and European patent office counterparts with respect to the United States and European patents and patent applications. To the extent that a party has not previously done so, or promptly upon request by the other party in order to assist such other party in connection with any of its activities or the exercise of any of its rights pursuant to Articles 8 and 9, such party shall provide the other party with such additional relevant documentation which such other party may reasonably request relating to such patent applications and patents in the Bukwang Patents, Pharmasset Patents or those relating to Joint Inventions, as applicable, including but not limited to, copies thereof and access to laboratory notebooks, other supporting data and relevant employees. If a party decides to abandon or allow to lapse any patent application or patent or not to initiate any other patent prosecution activity for which it has patent prosecution responsibility pursuant to this Article 8, it shall give the other party notice thereof in a sufficiently timely manner so as to enable such other party to determine whether to assume patent prosecution activity in connection therewith. Each party shall use its best efforts to give such notice at least sixty (60) days before any abandonment, lapse or any other relevant deadline.

(c) Each party will require all of its and its Affiliates’ employees to assign all Inventions that are the subject of patent applications claiming Inventions that are developed, made or conceived by such employees according to the ownership principles described in this Article 8. Each party will require any agents or independent contractors performing an activity pursuant to this Agreement to assign all Inventions that are the subject of patent applications

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

claiming Inventions that are developed, made or conceived by such agents or independent contractors to Bukwang and/or Pharmasset according to the ownership principles described in this Article 8.

8.6 Trademark . The Licensed Products shall be commercialized in the Territory under trademarks and trade dress selected by Pharmasset (the “ Pharmasset Trademarks ”) in its sole discretion. With the prior approval of Bukwang, such approval not to be unreasonably withheld or delayed, Pharmasset may select a trademark owned by Bukwang (a “ Bukwang Trademark ”) for use in connection with a Licensed Product in the Territory. If Pharmasset elects to utilize a Bukwang Trademark in connection with a Licensed Product, Bukwang hereby grants to Pharmasset an exclusive license to use the Bukwang Trademark in the Territory during the term of this Agreement solely in conjunction with the Licensed Products. In the event of termination or expiration of this Agreement, Pharmasset may continue such use of the Bukwang Trademark; provided that, for a period of [***] ([***]) years after the effective date of such termination or expiration, Pharmasset shall pay to Bukwang a royalty in the amount of [***] percent ([***]%) of Net Sales of Licensed Products commercialized under the Bukwang Trademark. At the end of such [***] ([***]) year period, Pharmasset shall have a fully-paid, royalty-free, exclusive, perpetual and irrevocable right and license to use such Bukwang Trademark in connection with the Products in the Territory.

ARTICLE 9. INFRINGEMENT

9.1 Third Party Infringement . If Pharmasset or Bukwang becomes aware of any activity that it believes represents an infringement of a Bukwang Patent, Pharmasset Patent or a Patent relating to Joint Inventions, the party obtaining such knowledge shall promptly advise the other of all relevant facts and circumstances pertaining to the potential infringement.

9.2 Pharmasset’s Rights Against Third Party Infringers . Except to the extent otherwise provided in paragraph 8.1 of the Primary License Agreement in respect of those Bukwang Patents licensed to Bukwang thereunder, Pharmasset shall have the first right to enforce or have enforced, at no expense to Bukwang, any Bukwang Patents or patent rights relating to Joint Inventions against infringement by third parties and shall be entitled to retain recovery from such enforcement as prescribed by this Subsection 9.2. Upon Pharmasset’s

 

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undertaking to pay all expenditures reasonably incurred by Bukwang, Bukwang shall reasonably cooperate in any such enforcement and, as necessary, join as a party therein. After first deducting its costs and expenses incurred in respect of enforcement (to the extent not otherwise awarded by settlement or a court), Pharmasset shall pay royalties (calculated per Section 3.3) on the balance of any monetary recovery attributable to lost sales (provided that such monetary recovery shall, subject to Pharmasset demonstrating otherwise, be presumed attributable to lost sales). In the event that Pharmasset does not file suit against or commence settlement negotiations with a substantial infringer of the Bukwang Patents or patent rights relating to Joint Inventions within six (6) months after receipt of a written demand from Bukwang that Pharmasset bring suit, then the parties will consult with one another in an effort to determine whether a reasonably prudent licensee would institute litigation to enforce the patent in question in light of all relevant business and economic factors (including, but not limited to, the projected cost of such litigation, the likelihood of success on the merits, the probable amount of any damage award, the prospects for satisfaction of any judgment against the alleged infringer, the possibility of counterclaims against Pharmasset and Bukwang, the diversion of Pharmasset’s human and economic resources, the impact of any possible adverse outcome on Pharmasset and the effect any publicity might have on Pharmasset’s and Bukwang’s respective reputations and goodwill). If the parties cannot agree, the determination will be made by a mutually and reasonably acceptable third party consultant. If, after such process, it is determined that a suit should be filed and Pharmasset does not file suit or commence settlement negotiations forthwith against the substantial infringer, then Bukwang shall have the right to enforce any patent not being enforced by Pharmasset that has been licensed hereunder on behalf of itself and Pharmasset (with Bukwang retaining all recoveries from such enforcement).

ARTICLE 10. TRANSFER OF KNOW-HOW; TECHNICAL ASSISTANCE

10.1 Transfer by Bukwang .

(a) Within fifteen (15) days following the Effective Date and as far as it has not previously done so, Bukwang shall supply Pharmasset with all Bukwang Know-How, including, but not limited to pharmacology, toxicology, preclinical testing, clinical testing, CMC data, batch records, trials and studies, safety and efficacy, manufacturing information, analytical and quality control. Bukwang shall also supply Pharmasset with copies of all study reports

 

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prepared with respect to the Compounds and/or Licensed Products. With respect to any Bukwang Know-How developed by Bukwang during the term of this Agreement, such disclosure will be made at least on a quarterly basis or sooner, if practicable.

(b) Bukwang hereby agrees to assign, and hereby does assign as of the Effective Date, to Pharmasset all INDs assignable by Bukwang relating to the Compound and/or Licensed Product in the Territory, upon which assignment all Bukwang obligations in respect of such INDs shall be assumed by Pharmasset and shall terminate as obligations of Bukwang. Effective as of the Effective Date, Bukwang shall execute a letter in the form attached hereto as Exhibit F notifying the FDA of the transfer of such INDs to Pharmasset. In the event that Bukwang obtains any INDs relating to the Compound and/or Licensed Product solely in the Territory after the execution of this Agreement, Bukwang hereby agrees to assign, and hereby does assign, to Pharmasset all such INDs obtained after the Effective Date.

10.2 Technical Assistance .

(a) Bukwang shall, upon request by Pharmasset, provide Pharmasset with reasonable cooperation and assistance, consistent with the other provisions hereof, in connection with the transfer of Bukwang Know-How. Such assistance may include, but is not limited to, development of the formulations of the Licensed Products; procurement of supplies and raw materials; initial developmental and production batch manufacturing runs; process, specification and analytical methodology design and improvement; and, in general, such other assistance as may contribute to the efficient application by Pharmasset of the Bukwang Know-How. In this regard, Bukwang agrees to make appropriate employees of Bukwang reasonably available to assist Pharmasset, and Bukwang agrees to provide reasonable numbers of appropriate Pharmasset personnel with access during normal business hours to the appropriate personnel and operations of Bukwang for such periods of time as may be reasonable in order to familiarize Pharmasset personnel with the Bukwang Know-How as applied by Bukwang. At Pharmasset’s reasonable request, such assistance shall be furnished at Pharmasset’s or its subcontractors’ or sublicensees’ facilities in the Territory, subject to a mutually agreed upon schedule. Such technical assistance shall include but not be limited to the following:

(i) Bukwang shall: (A) provide Pharmasset with access to any and all Drug Master File(s) or counterparts thereof in any countries of the Territory (“ DMF ”) of Bukwang relating to the manufacture of Bulk Drug Substance existing as of the Effective Date; (B) provide Pharmasset with letters of authorization to the FDA and other applicable government authorities in other countries of the Territory to refer to Bukwang’s DMFs; and (C) reasonably cooperate with Pharmasset in obtaining access to and letters of authorization to refer to the DMFs of Bukwang’s subcontractors which are, or will be, supplying any Bulk Drug Substance; and

 

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(ii) Within fifteen (15) days after the Effective Date, Bukwang shall provide Pharmasset with copies of all documentation in Bukwang’s possession reasonably necessary for Pharmasset to effectuate its Development Program.

(b) Subject to Article 21, in the event Bukwang supplies any Bulk Drug Substance to Pharmasset for the purpose of preclinical studies or clinical studies, Pharmasset will reimburse Bukwang for its Manufacturing Cost or Acquisition Cost therefor, subject, however, to reasonable substantiation thereof.

10.3 Transfer by Pharmasset . With respect to any Pharmasset Know-How developed by Pharmasset during the term of this Agreement, subject to the terms and conditions of this Agreement, Pharmasset shall supply Bukwang with such Pharmasset Know-How on at least a quarterly basis or sooner, if practicable.

10.4 Language of Disclosures . All disclosures pursuant to this Agreement will be in English.

10.5 Pharmacovigilance . As soon as reasonably practicable following the date of this Agreement, the pharmacovigilance departments of each of Pharmasset and Bukwang and any of their respective licensees of the Licensed Product shall meet and determine the approach to be taken for the collection, review, assessment, tracking and filing of information related to adverse events associated with the Licensed Products. Such approach shall be documented in a separate and appropriate written pharmacovigilance agreement between each of Pharmasset and Bukwang. Bukwang agrees to share relevant information it receives (either directly or

 

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indirectly) with Pharmasset in a timely manner so as to allow Pharmasset to comply with its responsibility to report pharmacovigilance information. Bukwang shall be responsible for maintaining a global safety database for the Compound and the Licensed Products consistent with industry standard practices. Pursuant to the terms of the pharmacovigilance agreement, Bukwang shall provide Pharmasset access to the global safety database.

ARTICLE 11. WARRANTIES AND REPRESENTATIONS; LIMITATION OF

LIABILITY; AND DISCLAIMERS

11.1 Warranties and Representations of Bukwang . Bukwang warrants and represents the following as of the Effective Date hereof:

(a) It possesses the rights and corporate authorizations necessary to enter into this Agreement;

(b) Exhibit A is a true, complete and accurate copy of the Primary License Agreement;

(c) Exhibit B is a true, complete and accurate copy of the Termination Procedure Letter;

(d) Exhibit C is a complete list of all Patents included in the Bukwang Patents as of the Effective Date;

(e) Exhibit G is a complete list of all persons or entities to whom Bukwang has granted a license under the Bukwang Patents and/or Bukwang Know-How;

(f) It is not aware of any material facts which it has not disclosed to Pharmasset regarding the development, manufacture or use of any Compounds or Licensed Products or the sale of any Licensed Product or the practice of any inventions included in the Bukwang Patents or the use of the Bukwang Know-How by Pharmasset (except, potentially, details regarding the Bukwang Know-How to be provided under Article 10), including without limitation any material facts regarding the possibility that such development, manufacture, use, sale or practice might infringe any third party’s Know-How, Patents or other intellectual property in the Territory;

 

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(g) It is aware of no third party using or infringing all or any of the Bukwang Patents in derogation of the rights granted pursuant to this Agreement;

(h) It is aware of no third party claim to any rights in the Bukwang Patents or the Bukwang Know-How;

(i) It is aware of no pending interference or opposition proceeding or litigation or any communication which threatens an interference or opposition proceeding or litigation before any patent and trademark office, court, or any other governmental entity or court in any jurisdiction in regard to the Bukwang Patent;

(j) The Primary License Agreement is in full force and effect and Bukwang will: (i) use its reasonable best efforts to fulfill all of its obligations under the Primary License Agreement, including, but not limited to any due diligence obligations outside the Territory set forth therein; (ii) take no action or fail to take any action which will cause it to be in breach of any provision of the Primary License Agreement; (iii) immediately notify Pharmasset in the event that Bukwang receives written notice from the Primary Licensors (or their successors) that Bukwang is in default under the Primary License Agreement or that the Primary Licensors (or their successors) have terminated or intend to terminate the Primary License Agreement; and (iv) not amend the Primary License Agreement in a manner which adversely affects Pharmasset’s rights and obligations hereunder;

(k) It is not aware of any action or proceeding, pending or threatened, with respect to Licensed Products and/or the Compound, including without limitation the conduct of any clinical trials, manufacturing activities or other activities, that questions the validity of this Agreement or any action taken by Bukwang in connection with the execution of this Agreement. There are no material unsatisfied judgments or outstanding orders, injunctions, decrees, stipulations or awards (whether rendered by a court, an administrative agency or by an arbitrator) against Bukwang with respect to Licensed Products and/or the Compound, including without limitation the conduct of any clinical trials, manufacturing activities or other activities;

 

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(l) Attached hereto as Exhibit H is a true, correct and complete list of all INDs and drug approval applications filed with a governmental authority in the Territory relating to the Compound or a Licensed Product;

(m) Intellectual Property .

(i) Bukwang and, to its knowledge, the Primary Licensors have submitted all information related to the Compound, Licensed Product and/or Bukwang Patents to the United States Patent and Trademark Office required to be submitted in accordance with 37 C.F.R. 1.56, 1.97 and 1.98;

(ii) The Bukwang Patents and Bukwang Know-How constitute all intellectual property Controlled by Bukwang that is necessary or useful to manufacture, develop, use or commercialize the Compound and/or Licensed Product, and to the knowledge of Bukwang there is not any other intellectual property necessary for such purposes that is not Controlled by Bukwang;

(iii) Other than in respect of the Primary License, each of Bukwang and its Affiliates owns all right, title and interest in and to, or has a license, sublicense or otherwise permission to use and license, all of the Bukwang Know-How or Bukwang Patents free and clear of all encumbrances and no person other than Bukwang (including any current or former employee or consultant of Bukwang) has any proprietary, commercial or other interest in any of the Bukwang Know-How or Bukwang Patents;

(iv) To its knowledge, all Patents within the Bukwang Patents are in full force and effect, valid, subsisting and, in the case of issued Patents, enforceable, and inventorship of the Bukwang Patents is properly identified on such Bukwang Patents. None of the Bukwang Patents is currently involved in any interference, reissue, reexamination, or opposition proceeding, and neither Bukwang nor any of its Affiliates has received any written notice from any person, or has knowledge, of such actual or threatened proceeding;

(v) It is aware of no actions or proceedings (including any inventorship challenges) pending or threatened with respect to any of the Bukwang Know-How, Bukwang Patents, Compound or Licensed Products nor have any such actions or proceedings

 

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been brought or, to the knowledge of Bukwang, threatened during the past four (4) years, in each case which have not been resolved without impairment of Bukwang’s rights in and to any of the Bukwang Know-How, Bukwang Patents, Compound or Licensed Products and without the obligation to pay any royalties or other amounts to any Third Party with respect to the use of such technology or the sale of such products;

(vi) All official fees, maintenance fees and annuities for the Bukwang Patents have been paid through the Effective Date;

(n) Compliance with Law .

(i) Bukwang and its Affiliates and, to its knowledge, any licensees, outsourcing company and contract research organization to which Bukwang or its Affiliates have subcontracted activities in connection with Compound and Licensed Products (the “ Contractors ”) have complied in all material respects with all applicable laws, permits, governmental licenses, registrations, approvals, concessions, franchises, authorizations, orders, injunctions and decrees in the research, development, manufacture and use of the Licensed Product and Compound, and neither Bukwang nor any of its Affiliates or, to the knowledge of Bukwang, its Contractors, has received any written notice from any governmental authority claiming that any such activities as conducted by them are not in such compliance;

(ii) Since January 1, 2002, no governmental authority has served notice on Bukwang or any of its Affiliates that the Bukwang Know-How or Bukwang Patents were or are in violation of any law or the subject of any investigation;

(iii) Since January 1, 2002, none of Bukwang or any of its Affiliates have received written notice from any governmental authority that there are any circumstances currently existing that might reasonably be expected to lead to any loss or refusal to renew any material governmental licenses, permits, registrations, concessions, franchises and authorizations relating to the Licensed Product, Compound or any of the Bukwang Know-How or Bukwang Patents;

(iv) It is aware of no governmental authority (including the FDA) which has commenced or, to Bukwang’s knowledge, threatened to initiate any action to enjoin

 

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production of the Compound or Licensed Product at any facility, nor has Bukwang or any of its Affiliates or, to the knowledge of Bukwang, any of its Contractors, received any notice to such effect since January 1, 2002;

(v) All manufacturing operations conducted by Bukwang and its Affiliates and, to its knowledge, Contractors since January 1, 2002 relating to the manufacturing of the Licensed Product and/or Compound have been conducted in material compliance with all applicable laws;

(vi) All development activities conducted by Bukwang and its Affiliates and, to its knowledge, Contractors since January 1, 2002 relating to the Licensed Product and/or Compound have been conducted in material compliance with all laws;

(vii) Bukwang has delivered or otherwise made available to Pharmasset copies of any substantive or material (A) reports of FDA Form 483 inspection observations in its possession, (B) establishment inspection reports, (C) warning letters, and (D) other documents that assert ongoing lack of compliance in any material respect with any applicable laws (including those of the FDA), in each case to the extent received by Bukwang or any of its Affiliates or, to the knowledge of Bukwang, any of its Contractors from the FDA relating to a Licensed Product and/or Compound. Neither Bukwang nor any of its Affiliates has received any such reports, letters or other documents from any other governmental authority relating to a Licensed Product and/or Compound; and

(viii) Bukwang and its Affiliates do not have any knowledge of any preliminary or other results from any clinical trials relating to the lack of activity of the Compound or Licensed Product in human beings.

11.2 Warranties and Representations by Pharmasset . Pharmasset represents and warrants the following as of the Effective Date:

(a) It has or will obtain, the skill and expertise in the technical areas relating to the Bukwang Patents and Bukwang Know-How to make or have made an evaluation of the capabilities, safety, utility and commercial application of the Bukwang Patent and the Bukwang Know-How.

 

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(b) It possesses the rights and corporate authorizations necessary to enter into this Agreement;

(c) There are currently no Pharmasset Patents; and

(d) It is not aware of any action or proceeding pending or threatened, with respect to the validity of this Agreement or any action taken by Pharmasset in connection with the execution of this Agreement.

11.3 Warranties and Representations of Each Party . Each party hereto warrants and represents the other that: (a) it is free to enter into this Agreement (including the receipt of all corporate authorizations) and to carry out all of the provisions hereof, including, its grant to the other of the licenses described in Article 2; (b) to its knowledge, there is no failure to comply with, no violation of or any default under, any law, permit or court order applicable to it which might have a material adverse effect on its ability to execute, deliver and perform this Agreement or on its ability to consummate the transactions contemplated hereby; and (c) it shall comply with laws and regulations relating to the performance of its obligations or the exercise of its rights hereunder including, in the case of Pharmasset, those relating to the manufacture, processing, producing or use of Compounds and Licensed Products and the sale or distribution of Licensed Products; and that it shall not take any action which would cause it or the other party to violate such laws and regulations.

11.4 Disclaimer and Limitation of Warranties . Bukwang makes no warranty as to validity of the Bukwang Patents licensed hereunder and, except as expressly stated in Section 11.1, makes no representation whatsoever with regard to the scope of the Bukwang Patents or Bukwang Know-How, or that the Bukwang Patents or Bukwang Know-How may be exploited by Pharmasset or its Affiliates or sublicensees without infringing intellectual property rights of third parties. EXCEPT AS OTHERWISE SET FORTH IN THIS ARTICLE 11, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, INCLUDING WITH RESPECT TO THE BUKWANG PATENTS OR BUKWANG KNOW-HOW, AND EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER IMPLIED WARRANTIES WITH RESPECT TO THE CAPABILITIES, SAFETY, UTILITY, OR COMMERCIAL APPLICATION OF COMPOUNDS OR LICENSED PRODUCT, BUKWANG PATENTS OR BUKWANG KNOW-HOW.

 

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11.5 Limitation of Liability . NEITHER BUKWANG AND THE PRIMARY LICENSORS, ON THE ONE HAND, NOR PHARMASSET, ON THE OTHER HAND, SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING UNDER ANY CAUSE OF ACTION AND ARISING IN ANY WAY OUT OF THIS AGREEMENT. THE FOREGOING LIMITATIONS WILL NOT LIMIT EITHER PARTY’S OBLIGATIONS TO THE OTHER PARTY UNDER ARTICLE 12.

11.6 Insurance . Without limiting either party’s indemnity obligations under Article 12, each party shall maintain throughout the term of this Agreement, and shall use its best efforts to maintain for a reasonable period of time thereafter, a commercial, general liability insurance policy, written by a reputable insurance company authorized to do business in the United States, that:

(a) insures for all claims, damages, and actions mentioned in Section 12.1 and 12.2 of this Agreement;

(b) includes a contractual endorsement providing coverage for all liability arising out of bodily injury and property damage;

(c) requires the insurance carrier to provide no less than thirty (30) days’ written notice of any change in the terms or coverage of the policy or its cancellation; and

(d) provides product liability coverage in an amount no less than One Million Dollars ($1,000,000) per occurrence for bodily injury and One Million Dollars ($1,000,000) per occurrence for property damage, subject to a reasonable aggregate amount.

Each party shall provide the other party with certificates of insurance evidencing the above insurance coverage.

 

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11.7 Notice of Claims . Pharmasset shall promptly notify Bukwang and Primary Licensors of all claims involving the Indemnitees and will advise Bukwang and Primary Licensors of the policy amounts that might be needed to defend and pay any such claims.

ARTICLE 12. INDEMNIFICATION

12.1 Pharmasset’s Indemnification . Subject to compliance by the Indemnitees with the provisions set forth in Section 12.3, Pharmasset shall defend, indemnify, and hold harmless the Indemnitees, from and against any and all claims, demands, losses, liabilities, expenses, and damages including investigative costs, court costs and reasonable attorneys’ fees (collectively, the “ Liabilities ”) arising in connection with any and all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations or injunctions by a third party (each, a “ Third Party Claim ”) resulting from (a) any breach by Pharmasset of any of its representations, warranties, covenants or obligations set forth in this Agreement, (b) the negligence, recklessness, or intentional acts or omissions of Pharmasset or its Affiliates, sublicensees or subcontractors and their respective directors, officers, employees and agents, or (c) any and all personal injury (including death) and physical property damage caused or contributed to, in whole or in part, by manufacture, testing, design or use of any Compounds or Licensed Products, sale or labeling of any Licensed Products or the practice of the Bukwang Patents or Bukwang Know-How by Pharmasset or Pharmasset’s Affiliates or sublicensees, except to the extent that such Liabilities result from the negligence or willful misconduct of Bukwang or are an item for which Bukwang must indemnify Pharmasset pursuant to Section 12.2. Pharmasset’s obligations under this Article shall survive expiration or termination of this Agreement for any reason.

12.2 Bukwang’s Indemnification . Subject to compliance by the Indemnitees with the provisions set forth in Section 12.3, Bukwang shall indemnify and hold harmless the Indemnitees from and against any and all Liabilities arising in connection with any Third Party Claim resulting from: (a) any breach by Bukwang of any of its representations, warranties, covenants or obligations set forth in this Agreement; (b) any claims or suits asserted or commenced by the Primary Licensors regarding any payments owed by Bukwang pursuant to the Primary License Agreement, (c) Bukwang’s (or its agent’s, contractor’s or other designee’s) failure to comply with applicable cGMP, applicable product specifications or applicable law in connection with the

 

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manufacture of Compound or any Licensed Product supplied to Pharmasset hereunder; or (d) the negligence, recklessness or intentional acts or omissions of Bukwang or its Affiliates, sublicensees or subcontractors, and their respective directors, officers, employees and agents, except to the extent that same is an item for which Pharmasset must indemnify Bukwang pursuant to Section 12.1. Bukwang’s obligations under this Article shall survive expiration or termination of this Agreement for any reason.

12.3 Indemnification Procedures . Any Indemnitee which intends to claim indemnification under this Article shall, promptly after becoming aware thereof, notify the party from whom it is seeking indemnification (the “ Indemnitor ”) in writing of any matter in respect of which the Indemnitee or any of its employees intend to claim such indemnification. The Indemnitee shall permit, and shall cause its employees to permit, the Indemnitor, at its discretion, to settle any such matter and agrees to the complete control of such defense or settlement by the Indemnitor; provided, however, that such settlement does not adversely affect the Indemnitee’s rights hereunder or impose any obligations on the Indemnitee in addition to those set forth herein in order for it to exercise such rights. No such matter shall be settled by such Indemnitor without the prior written consent of the Indemnitee and neither the Indemnitor nor the Indemnitee shall be responsible for any legal fees or other costs incurred other than as provided herein. The Indemnitee and its employees shall cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of any matter covered by the applicable indemnification. The Indemnitee shall have the right, but not the obligation, to be represented by counsel of its own selection and expense.

ARTICLE 13. CONFIDENTIALITY

13.1 Treatment of Confidential Information. Except as otherwise provided hereunder or as required by law, during the term of this Agreement and for a period of five (5) years thereafter:

(a) Pharmasset and its Affiliates and sublicensees shall retain in confidence and use only for purposes of this Agreement, any written information and data supplied by or on behalf of Bukwang under this Agreement and the Mutual Non-disclosure Agreement, dated January 12, 2005, between Bukwang and Pharmasset (the “Confidentiality Agreement”); and

 

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(b) Bukwang shall retain in confidence and use only for purposes of this Agreement any written information and data supplied by or on behalf of Pharmasset to Bukwang under this Agreement.

For Purposes of this Agreement, “ Information ” shall mean all information and materials received by either party from the other party pursuant to this Agreement and all information and materials developed in the course of the performance of the Development Program, including, without limitation, information, data, know-how, and all other scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing or orally or otherwise, which is provided or disclosed by one party to the other party in connection with this Agreement.

13.2 Right to Disclose . To the extent that it is reasonably necessary to fulfill its obligations or exercise its rights under this Agreement, or any rights which survive termination or expiration hereof, each party may disclose Information to its Affiliates, sublicensees (actual or prospective), consultants, outside contractors, actual or prospective investors (including, commercial banks, investment banks and venture capital firms), and clinical investigators on condition that such entities (other than the venture capital firms, as to which Pharmasset will use its reasonable best efforts to obtain the venture capital firm’s execution of such nondisclosure agreement) or persons agree in writing:

(a) to keep the Information confidential for a period of at least five (5) years from the date of disclosure by such party to the same extent as such party is required to keep the Information confidential; and

(b) to use the Information only for those purposes for which the disclosing party is authorized to use the Information.

Each party or its Affiliates or sublicensees, as applicable, may disclose Information to the extent that such disclosure (i) is for authorizations to conduct preclinical or clinical trials to commercially market Licensed Products, provided such party is then otherwise entitled to engage in such activities in accordance with the provisions of this Agreement, (ii) is legally required, (iii) is necessary for the purpose of filing, prosecuting or maintaining patent applications,

 

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prosecuting, enforcing or defending litigation, (iv) is necessary to comply with applicable governmental regulations, submitting information to tax or other governmental authorities (including regulatory authorities), or (v) is necessary to comply with applicable stock exchange or NASDAQ regulation.

13.3 Release from Restrictions . The obligation not to disclose or use Information shall not apply to any part of such Information that:

(a) is or becomes patented (but the existence of a patent shall only permit disclosure and not, unless otherwise provided hereunder, use), published or otherwise part of the public domain, other than by unauthorized acts of the party obligated not to disclose such Information (for purposes of this Article 13 the “receiving party”) or its Affiliates or sublicensees in contravention of this Agreement; or

(b) is disclosed to the receiving party or its Affiliates or sublicensees by a third party provided that such Information was not obtained by such third party directly or indirectly from the other party to this Agreement; or

(c) prior to disclosure under the Confidentiality Agreement or this Agreement, as the case may be, was already in the possession of the receiving party, its Affiliates or sublicensees, provided that such Information was not obtained directly or indirectly from the other party to this Agreement; or

(d) result from research and development by the receiving party or its Affiliates or sublicensees, independent of disclosure from the other party to this Agreement, provided that the persons developing such information have not had exposure to the information received from the other party to this Agreement; or

(e) is required by law to be disclosed by the receiving party, provided that in the case of disclosure in connection with any litigation, the receiving party uses reasonable efforts to notify the other party immediately upon learning of such requirement in order to give the other party reasonable opportunity to oppose such requirement; or

(f) Pharmasset and Bukwang agree in writing may be disclosed.

 

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ARTICLE 14. CONDITIONS PRECEDENT

14.1 Conditions to Agreement Becoming Effective . This Agreement will not become effective until all of the following conditions shall have been satisfied or, if applicable, waived by Pharmasset:

(a) the Primary Licensors and Bukwang shall have properly executed and delivered all required consents and an Amendment to the Primary License Agreement to Pharmasset in the form and substance attached hereto as Exhibit I ;

(b) promptly after the execution date of this Agreement, Bukwang shall provide access to and request that Gilead provide access to and allow Pharmasset to review all files in Bukwang’s and Gilead’s possession or control, respectively, relating to the Compound and/or a Licensed Product, including without limitation, any and all studies undertaken by or on behalf of Gilead, all data and information, regulatory correspondence and associated dossiers, in each case with respect to the Compound and/or a Licensed Product (and Bukwang shall make Commercially Reasonable Efforts to obtain same from Gilead). Such files, data and information, regulatory correspondence and associated dossiers must be reasonably acceptable to Pharmasset in form and substance;

(c) promptly after the execution date of this Agreement, Bukwang shall provide access to and allow Pharmasset to review all files in Bukwang’s control regarding the protocol and data with respect to any carcinogenicity studies with respect to the Compound and/or a Licensed Product, all data and information, regulatory correspondence and associated dossiers associated therewith. Such files, data and information, regulatory correspondence and associated dossiers must be reasonably acceptable to Pharmasset in form and substance;

(d) Bukwang shall request Gilead to provide directly a written statement that (i) all studies undertaken by or on behalf of Gilead with respect to the Compound and/or a Licensed Product were conducted in accordance with the current Good Clinical Practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses, and reporting of clinical trials, including the requirements in 21 C.F.R. Parts 11, 50, 54, 56, 312, and 314, (ii) provides assurance that the data and reported results are credible and accurate, and (iii)

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

the rights, integrity, and confidentiality of trial subjects are protected. Such statement must be reasonably acceptable to Pharmasset in form and substance; and

(e) Bukwang or Gilead, as applicable, shall have assigned to Pharmasset all INDs to the Compound and/or Licensed Product in the Territory.

ARTICLE 15. TERM AND TERMINATION

15.1 Term . Unless sooner terminated as otherwise provided in this Agreement, the term of this Agreement shall commence on the execution date of this Agreement and shall expire on a country-by-country basis upon the expiration of the last to expire of the Bukwang Patents including any renewals or extensions thereof in such country or the invalidation of all Valid Claims covering the Bukwang Patents in such country. In the event that there are no Valid Claims in a country, this Agreement shall expire in such country on the [***] ([***]) anniversary of the Effective Date.

15.2 Termination by Default . If either party defaults in the performance of, or fails to be in compliance with, any material agreement, condition or covenant of this Agreement, the non-defaulting party may terminate this Agreement with respect to the defaulting party if such default or noncompliance shall not have been remedied, or, in the event the default or non-compliance cannot be remedied within such period, reasonable steps shall not have been initiated to remedy the same, within sixty (60) days after receipt by the defaulting party of a written notice thereof from the non-defaulting party.

15.3 Termination by Pharmasset . Pharmasset shall have the right to terminate this Agreement in the Territory or one or more countries of the Territory (without affecting this Agreement in the remaining countries of the Territory), by giving Bukwang one hundred eighty (180) calendar days’ prior written notice thereof.

 

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15.4 Effects of Termination .

(a) Termination for Pharmasset Breach or by Pharmasset at Will . If this Agreement is terminated by Bukwang as a result of Pharmasset’s breach pursuant to Section 15.2, or is terminated by Pharmasset in accordance with Section 15.3, then:

(i) in the case of termination in the entire Territory, Pharmasset shall use, and shall cause its Affiliates and sublicensees to use, its and their Commercially Reasonable Efforts to return, or, in the sole discretion of Bukwang, destroy, all Information supplied to Pharmasset by Bukwang properly organized and to provide Bukwang with reasonable transition assistance; provided that Pharmasset may keep one copy of such Information for record keeping purposes;

(ii) Bukwang shall have the option, exercisable within thirty (30) days following the effective date of such termination, to take delivery and title to any inventory of Compound and Licensed Products affected by such termination, without charge. Bukwang may exercise such option by written notice to Pharmasset during such thirty (30)-day period. Upon such exercise, the parties will establish mutually agreeable delivery terms for the return of such inventory. If Bukwang does not exercise such option during such thirty (30)-day period, or if Bukwang provides Pharmasset with written notice of its intention not to exercise such option, then Pharmasset and its Affiliates and sublicensees will be entitled, during the period ending on the last day of the sixth (6th) full month following the effective date of such termination, to sell any inventory of Licensed Products affected by such termination that remain on hand as of the effective date of the termination, so long as Pharmasset pays to Bukwang the royalties applicable to said subsequent sales, with respect to sales in the Territory, in accordance with the terms and conditions set forth in this Agreement;

(iii) with respect to those countries with respect to which termination occurs, Pharmasset shall provide Bukwang with full and complete copies of all toxicity, efficacy, and other data generated by Pharmasset or Pharmasset’s Affiliates and sublicensees, in the course of Pharmasset’s efforts to develop Licensed Products or to obtain governmental approval for the sale of Licensed Products, including but not limited to any regulatory filings with any government agency in such countries. All such data regulatory approvals related to Compound

 

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and/or Licensed Product, including all INDs and NDAs, in the particular terminated jurisdiction shall be assigned to Bukwang. Bukwang shall be authorized to cross-reference any such regulatory filings made by Pharmasset, its Affiliates and sublicensees in the countries in which termination occurs where permitted by law. Bukwang shall be entitled to provide information pertaining to the Pharmasset Patents, Pharmasset Know-How and Joint Know-How to any third party with a bona fide interest in licensing such technology in the countries in which termination occurs; provided that such third party is bound by obligations of confidentiality at least as stringent as those contained in this Agreement. Such data shall be provided on a confidential basis; provided, however, that if such third party concludes a license with Bukwang, such third party shall be free to use such data for all purposes, including to obtain government approvals to sell any product containing any Compound in such countries without obligation to Pharmasset;

(iv) Pharmasset agrees to grant and hereby grants to Bukwang, effective upon such termination of this Agreement, an exclusive, perpetual royalty-free right and license, with the right to sublicense and authorize the grant of further sublicenses, under any Pharmasset Patents and Pharmasset’s rights and interest in the Joint Patents to make, have made, use, sell, offer for sale, and import Compound or Licensed Products affected by such termination in the country for which such termination is effective; provided, however, that Bukwang will be responsible for any payments associated with the grant of any license pursuant to the preceding sentence (including, without limitation, any royalty or other payment obligations to an upstream licensor of any such Patents). In addition, if any Pharmasset Know-How is then used in connection with the manufacture, development or commercialization of Compound or a Licensed Product in the applicable territory, Pharmasset agrees to grant and hereby grants to Bukwang, effective upon such termination of this Agreement, a non-exclusive, royalty-free right and license, with the right to grant sublicenses, under such Pharmasset Know-How, to make, have made, use, sell, offer for sale, and import Licensed Products in the country for which such termination is effective; and

(v) Each of Pharmasset’s sublicensees with respect to any affected Licensed Products in any affected country at such time will continue to have the rights and license set forth in their sublicense agreements, subject to the continued performance of the obligations thereunder; provided, however, that such sublicensee agrees in writing that Bukwang

 

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is entitled to enforce all relevant terms and conditions of such sublicense agreement directly against such sublicensee; and provided, further, that such sublicensee is not then in breach of its sublicense agreement.

(b) Termination for Bukwang Breach . In the event this Agreement is terminated by Pharmasset for Bukwang’s breach pursuant to Section 15.2, then:

(i) Bukwang shall use, and shall cause its Affiliates and sublicensees to use, its and their Commercially Reasonable Efforts to return, or, in the sole discretion of Pharmasset, destroy, all Information supplied to Bukwang by Pharmasset properly organized; provided that Bukwang may keep one copy of such Information for record keeping purposes;

(ii) upon Pharmasset’s request, assign to Pharmasset all of Bukwang’s right, title and interest in and to any agreements between Bukwang and third parties that are freely assignable by Bukwang without consent not to be unreasonably withheld or delayed and that relate solely to the manufacture of any Compound or Licensed Products for the Territory;

(iii) provide copies of any books, records, documents and instruments to the extent related to Compound or Licensed Product;

(iv) upon Pharmasset’s request, if Bukwang is then manufacturing Compound or Licensed Product, supply Pharmasset with clinical and commercial quantities of such Compound or Licensed Product for the shorter of (x) the period until Pharmasset or its designee has established and validated a manufacturing process for such Compound or Licensed Product and is approved to manufacture clinical trial and commercial supplies of such Compound or Licensed Product or (y) eighteen (18) months from the effective date of such termination; provided, however, that Pharmasset will reimburse Bukwang for Bukwang’s Acquisition Cost or Manufacturing Cost for such Compound or Licensed Product;

(v) if Bukwang is then manufacturing Compound or Licensed Product, provide, at Pharmasset’s request, Pharmasset or its designee with copies of such information including plans and specifications relating to the manufacturing process for such Compound or Licensed Product, and reasonably cooperate with Pharmasset or its designee, at Pharmasset’s cost and expense, to facilitate the transition of such manufacturing responsibilities; and

 

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(vi) with respect to any Bukwang Patents or Bukwang Know-How that are sublicensed to Pharmasset from the Primary Licensors, to the extent permitted by the Primary Licensors, Pharmasset shall assume Bukwang’s obligations under the Primary License Agreement and be a direct licensee of the Primary Licensors, and with respect to all other Bukwang Patents and Bukwang Know-How, each license granted by Bukwang to Pharmasset shall, effective upon such termination of this Agreement, become an exclusive, perpetual, non-terminable, royalty-free right and license, with the right to sublicense and authorize the grant of further sublicenses, and shall include the right to manufacture Compound and Licensed Products.

(c) Effects of Expiration . Upon expiration of this Agreement pursuant to Section 15.1, on a country-by-country basis, (i) each license granted by Bukwang to Pharmasset under the Bukwang Patents, Bukwang Know-How, Bukwang Trademark, if any, and Bukwang’s rights in any Joint Know-How and Joint Inventions shall become an exclusive, perpetual, non-terminable, royalty-free right and license within the Field and in the Territory, with the right to sublicense and authorize the grant of further sublicenses, and shall include the right to manufacture Compound, and (ii) each license granted by Pharmasset to Bukwang under the Pharmasset Patents, Pharmasset Know-How and Pharmasset’s rights in any Joint Know-How and Joint Inventions shall become an exclusive, perpetual, non-terminable, royalty-free right and license within the Field and in the Retained Territory, with the right to sublicense and authorize the grant of further sublicenses.

(d) General Effects of Expiration or Termination .

(i) Bukwang will have the right to receive all payments accrued prior to the effective date of termination;

(ii) termination or expiration of this Agreement for any reason shall have no effect on the parties’ obligations under Articles 9, 11, 12 and 13 or their respective rights in Joint Know-How or Joint Inventions; and

(iii) the parties’ shall retain any other remedies for breach of this Agreement they may otherwise have.

 

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15.5 Default by Pharmasset’s Affiliates and Sublicensees . For purposes of this Article 15 but subject to the cure provisions of Section 15.2(a), any breach or default of the provisions of this Agreement by Pharmasset’s Affiliates or sublicensees shall be deemed to be breach of this Agreement by Pharmasset, and Pharmasset shall be liable to Bukwang for such breach or default to the same extent as if such breach or default had been made directly by Pharmasset.

ARTICLE 16. ASSIGNMENT

Neither party shall assign this Agreement or any part thereof without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. Each party may, however, without such consent, assign or sell its rights under this Agreement (a) in connection with the sale or transfer of all or substantially all of its pharmaceutical business to a third party; (b) in the event of a merger or consolidation with a third party; or (c) to an Affiliate. No assignment shall relieve any party of responsibility for the performance of any accrued obligation which such party has under this Agreement. Any assignment shall be contingent upon the assignee assuming in writing all of the obligations of its assignor under this Agreement.

ARTICLE 17. REGISTRATION OF LICENSE

Pharmasset, at its expense, may register the license granted under this Agreement in any country of the Territory where the use or manufacture of Compounds or a Licensed Product or the sale of a Licensed Product in such country would be covered by a Valid Claim. Upon request by Pharmasset, Bukwang agrees promptly to execute any “short form” licenses submitted to it by Pharmasset reasonably necessary in order to effect the foregoing registration in such country.

ARTICLE 18. NOTIFICATION AND AUTHORIZATION UNDER DRUG PRICE

COMPETITION AND PATENT TERM RESTORATION ACT

18.1 Notices Relating to the Act . Bukwang shall use its diligent efforts to cause the Primary Licensors to notify Pharmasset of (a) the issuance of each U.S. patent included among the Bukwang Patents, giving the date of issue and patent number for each such patent; and (b) each notice pertaining to any patent included among the Bukwang Patents which the Primary Licensors receive as patent owners pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter the “ Act ”), including but not necessarily limited to notices

 

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pursuant to §§101 and 103 of the Act from persons who have filed an abbreviated NDA (“ ANDA ”) or a “paper” NDA. Bukwang shall request that such notices be given promptly, and in any event within ten (10) days of notice of each such patent’s date of issue or receipt of each such notice pursuant to the Act, whichever is applicable.

18.2 Authorization Relating to Patent Term Extension . Bukwang hereby authorizes Pharmasset and will use its diligent efforts to obtain the Primary Licensors’ authorization for Pharmasset (a) to include in any NDA for a Licensed Product, as Pharmasset may deem appropriate under the Act, a list of patents included among the Bukwang Patents that relate to such Licensed Product and such other information as Pharmasset in its reasonable discretion believes is appropriate to be filed pursuant to the Act; (b) to commence suit for any infringement of the Bukwang Patents under § 271 (e) (2) of Title 35 of the United States Code occasioned by the submission by a third party of an IND or a paper NDA for a Licensed Product pursuant to §§101 or 103 of the Act; and (c) in consultation with Bukwang and the Primary Licensors, to exercise any rights that may be exercisable by Bukwang or the Primary Licensors, as applicable, as patent owners under the Act to apply for an extension of the term of any patent included among the Bukwang Patents. In the event that applicable law in any other country of the Territory hereafter provides for the extension of the term of any patent included among the Bukwang Patents in such country, upon request by Pharmasset, Bukwang shall authorize Pharmasset and shall use its diligent efforts to obtain the Primary licensors’ authorization for Pharmasset or, if requested by Pharmasset or its sublicensees, to apply for such extension, in consultation with Bukwang and the Primary Licensors. Bukwang agrees to cooperate and shall use its diligent efforts to cause the Primary Licensors to cooperate with Pharmasset or its sublicensees, as applicable, in the exercise of the authorizations granted herein or which may be granted pursuant to this Section 18.2 and will execute such documents and take such additional action and use its diligent efforts to cause the Primary Licensors to execute such documents and to take such additional actions as Pharmasset may reasonably request in connection therewith, including, if necessary, permitting itself and using its diligent efforts to cause the Primary Licensors to permit themselves, if required by law or if required in order to permit Pharmasset or its sublicensees to bring suit or take legal action, to be joined as proper parties in any suit for infringement brought by Pharmasset under subsection (b) above. Pharmasset shall bear the costs

 

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and expenses, including but not limited to attorneys’ fees, of any suit for infringement brought by Pharmasset under subsection (b) above.

ARTICLE 19. DISPUTE RESOLUTION AND ARBITRATION

19.1 Initial Resolution . In the case of any disputes between the parties arising from this Agreement, and in case this Agreement does not provide a solution for how to resolve such disputes, the parties shall discuss and negotiate in good faith a solution acceptable to both parties and in the spirit of this Agreement. If after negotiating in good faith pursuant to the foregoing sentence, the parties fail to reach agreement within thirty (30) days, then the President, Chief Executive Officer or Chief Operating Officer of Bukwang and the President, Chief Executive Officer or Chief Operating Officer of Pharmasset shall discuss in good faith an appropriate resolution to the dispute. If these executives fail, after good faith discussions not to exceed thirty (30) days, to reach an amicable agreement then the parties shall submit to binding arbitration pursuant to Section 19.2 (“ Arbitration ”). The date of submission of the matter to arbitration shall be the “ Dispute Date ”.

19.2 Arbitration . The following provisions shall govern any Arbitration pursuant to this Agreement.

(a) Arbitration shall be conducted in accordance with the Rules of the American Arbitration Association. In the event of any conflict between the Rules and this Section, the provisions of this Section shall govern. The Arbitration shall be conducted in Atlanta, Georgia, USA.

(b) The Arbitration shall be heard by a panel of three arbitrators (each an “ Arbitrator ”). Pharmasset and Bukwang shall each select one Arbitrator. Such Arbitrators shall be attorneys, licensed to practice law in the State of Georgia, actively engaged in the full-time practice of law for a period of no less than seven (7) years. Such Arbitrators shall not be affiliated, directly or indirectly, with the parties or the attorneys representing the parties in the Arbitration and shall not have any prior involvement in the matter. In the event that either party fails within fifteen (15) days after the Dispute Date (i) to select an Arbitrator who, to its knowledge, meets the requirements set forth in this subsection (b) and (ii) to notify the other party of the selection, the other party will then have the right to select such Arbitrator. The third

 

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Arbitrator shall be selected by mutual agreement of the parties from a list of neutral arbitrators compiled by the American Arbitration Association for the parties. Such Arbitrator shall be an attorney, licensed to practice law in the State of Georgia, actively engaged in the full time practice of law for a period of no less than ten (10) years. The third Arbitrator shall not have any prior or current relationship, direct or indirect, with any party to this Agreement. If the parties to the Arbitration are unable to agree upon the third Arbitrator within fifteen (15) days from the Dispute Date, the appointment of the third Arbitrator shall be made as expeditiously as possible and in compliance with this Section 19.2 by the two Arbitrators selected by the parties. If those Arbitrators cannot agree on the third Arbitrator within ten (10) days, then the third Arbitrator shall be designated by the American Arbitration Association or the appropriate designated representative thereof upon the written request of any party with simultaneous notice of such request to the other party to the Arbitration. The third Arbitrator shall preside over the panel of Arbitrators and the Arbitration.

(c) The Arbitrators shall apply the substantive laws of the State of Georgia to the validity, construction and interpretation of this Agreement as is applicable to contracts made wholly performable within the state.

(d) The Arbitration shall be resolved no later than sixty (60) days from the date of acceptance by the third Arbitrator of his or her appointment unless otherwise agreed to by the parties to the Arbitration.

(e) Each party shall bear the expenses and costs of the Arbitrator selected by that party. The third Arbitrator shall be compensated for services rendered at the prevailing hourly rate of compensation and reimbursed for any expenses incurred in connection with rendering such services. The non-prevailing party shall bear the costs and expenses of compensation and reimbursement for the third Arbitrator.

(f) The decision of the Arbitrators shall be rendered in writing and shall be final and binding and may be enforced at the request of either party to the Arbitration in the United States District Court for the Northern District of Georgia or any court of the State of Georgia having competent jurisdiction. Such decision may not be appealed except upon a claim of bad faith or fraud by the Arbitrators.

 

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(g) This Article 19 shall not apply to issues relating to the validity, construction or effect of the Bukwang Patents. In the event that in any Arbitration, any issue arises concerning the validity, construction or effect of any of the Bukwang Patents, the Arbitrators shall assume the validity of all claims as set forth in such Bukwang Patents. Matters, controversies or disputes concerning the Bukwang Patents shall be resolved in any court having jurisdiction thereof or in any other manner mutually agreed to by the parties.

ARTICLE 20. GENERAL PROVISIONS

20.1 Export Controls . Bukwang acknowledges that Pharmasset is subject to United States laws and regulations controlling the export of technical data, biological materials, chemical compositions and other commodities and that Pharmasset’s obligations under this Agreement are contingent upon compliance with applicable United States export laws and regulations. The transfer of technical data, biological materials, chemical compositions and commodities may require a license from the cognizant agency of the United States government or written assurances by Bukwang that Bukwang shall not export data or commodities to certain foreign countries without the prior approval of certain United States agencies, or as otherwise prescribed by applicable law or regulation. Pharmasset neither represents that an export license shall not be required nor that, if required, such export license shall issue.

20.2 Independent Contractors . It is understood and agreed that the parties hereto are independent contractors and are engaged in the operation of their own respective businesses, and neither party hereto is to be considered the agent of the other party for any purpose whatsoever, and neither party shall have any authority to enter into any contracts or assume any obligations for the other party nor make any warranties or representations on behalf of that other party.

20.3 Patent Marking . Pharmasset shall mark Licensed Products sold in the United States with United States patent numbers. Licensed Products manufactured or sold in other countries shall be marked in compliance with the intellectual property laws in force in such countries. The foregoing obligations shall be subject to size and space limitations in accordance with any regulatory requirements and any later agreement between the parties. If Bukwang believes that a Licensed Product should be marked with the number of a Bukwang Patent, Bukwang shall provide written notice to Pharmasset which identifies the patent number and the

 

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Licensed Product on which it should appear. It shall also be Bukwang’s responsibility to inform Pharmasset in writing when marking with a Bukwang Patent number should be discontinued. To the extent that Pharmasset complies with Bukwang’s instructions, Bukwang shall indemnify and hold Pharmasset harmless for any liability, claim or action for false patent marking or non-marking.

20.4 Publicity . The parties agree to issue mutual press releases concerning their entry into this Agreement, with the content of such releases to be approved (which consent shall not be unreasonably withheld or delayed) in advance by the parties. In all other respects, except as required by law, neither party shall use the name of the other party or the Primary Licensors, the University of Georgia, or the Inventors (as defined in the Primary License Agreement) in any publicity release without the prior written permission of such other party or Primary Licensors, the University of Georgia, or the Inventors (as defined in the Primary License Agreement), as applicable, which shall not be unreasonably withheld or delayed. The other party shall have a reasonable opportunity to review and comment on any such proposed publicity release. Except as required by law, neither party shall publicly disclose the terms of this Agreement or issue any publicity release with regard thereto unless expressly authorized to do so by the other party which authorization shall be agreed upon.

20.5 Governing Law . This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the parties hereunder, shall be construed under and governed by the laws of the State of Georgia exclusive of its conflicts of laws principles.

20.6 Entire Agreement . This Agreement, together with the Exhibits attached hereto, constitutes the entire agreement between Bukwang and Pharmasset with respect to the subject matter hereof and shall not be modified, amended or terminated, except as herein provided or except by another agreement in writing executed by the parties hereto.

20.7 Waiver . No provision of this Agreement may be waived except by a writing signed by the party entitled to the benefit thereof, and no such waiver of any provision hereof in one instance shall constitute a waiver of any other provision or of such provision in any other instance. No omission, delay or failure on the part of any party hereto in exercising any rights hereunder will constitute a waiver of such rights or of any other rights hereunder.

 

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20.8 Severability . All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision or portion of any provision of this Agreement, not essential to the commercial purpose of this Agreement, shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining provisions or portions thereof shall constitute their agreement with respect to the subject matter hereof, and all such remaining provisions, or portions thereof, shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement shall be replaced by a valid provision which shall implement the commercial purpose of the illegal, invalid or unenforceable provision. In the event that any provision essential to the commercial purpose of this Agreement, this Agreement and the rights granted herein shall terminate.

20.9 Force Majeure .

(a) Any delays in, or failure of performance of, any party to this Agreement, shall not constitute a default hereunder, or give rise to any claim for damages, if and to the extent caused by occurrences beyond the control of the party affected, including, but not limited to, acts of God, strikes or other concerted acts of workmen, civil disturbances, terrorism, fires, floods, explosions, riots, war, rebellion, sabotage, acts of governmental authority or failure of governmental authority to issue licenses or approvals which may be required (“ Force Majeure ”).

(b) The party asserting the Force Majeure shall promptly notify the other party of the event constituting Force Majeure and of all relevant details of occurrence and where appropriate an estimate of how long such Force Majeure event shall continue.

(c) If such Force Majeure event continues thereafter and in any event, the parties shall consult with each other in order to find a fair solution and shall use all reasonable endeavors to minimize the consequences of such Force Majeure.

 

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20.10 Counterparts . This Agreement may be executed in one or more counterparts (including by facsimile), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

20.11 Notices . All notices, statements, and reports required to be given under this Agreement shall be in writing and shall be deemed to have been given upon delivery in person or, when deposited in the mail in the country of residence of party giving the notice, registered or certified postage prepaid or with a professional courier service (e.g., FedEx or UPS), and addressed as follows:

 

Any party hereto may change the address to which notices to such party are to be sent by giving notice to the other party at the address and in the manner provided above. Any notice may be given, in addition to the manner set forth above, by telex, facsimile or cable, provided that the party giving such notice obtains acknowledgment by telex, facsimile or cable that such notice has been received by the party to be notified. Notices made in this manner shall be deemed to have been given when such acknowledgment has been transmitted. Any provision of this Section 20.11 to the contrary notwithstanding, any notice to Bukwang shall be effective if given as to Bukwang prescribed above by Pharmasset, despite any failure to deliver copies as prescribed above.

20.12 Interpretation . In the event of any conflict between the terms hereof and the terms of the Primary License Agreement, the terms of the Primary License Agreement shall control. Any amendment to the Primary License Agreement effective subsequent to the date hereof, to the extent such amendment would adversely affect the rights and obligations of Pharmasset hereunder, shall not be effective unless Pharmasset has given prior written consent thereto in writing.

 

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20.13 Bankruptcy . All rights and licenses granted under or pursuant to this Agreement by a party hereto are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101(56) of the Bankruptcy Code. The parties agree that a party, as a licensee of such rights and licenses, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. The parties further agree that, in the event than any proceeding shall be instituted by or against a party as seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking an entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or seeking to take any action to authorize any of the foregoing actions (each a “ Proceeding ”), the other party, as licensee, shall have the right to retain and enforce its rights under this Agreement, including but not limited to the following rights:

(a) the right to continue to use the relevant licensed Patents and Know-How and all documentation and other supporting material related thereto, in accordance with the terms and conditions of this Agreement; and

(b) the right to a complete duplicate of (or complete access to, as appropriate) all relevant licensed Patents and Know-How and all embodiments of such, and the same if not already in such licensee’s possession, shall be promptly delivered to such licensee (i) upon any such commencement of a Proceeding upon written request therefor by such licensee, unless the other party as licensor elects to continue to perform all of its obligations under this Agreement; or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of the other party as licensor upon written request therefor by licensee;

(c) the right to obtain from the other party as licensor all documentation and other supporting materials related to the relevant licensed Patent and Know-How.

 

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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

ARTICLE 21. SUPPLY OF COMPOUND

21.1 General . Pharmasset may, at its option, act as, or appoint a third party to act as, primary supplier for Pharmasset’s requirements of the Compound for the Territory. To the extent allowed by law and subject to Pharmasset’s right pursuant to this Article to act as primary supplier, Pharmasset, at its option, may purchase from Bukwang, its Affiliates or Bukwang’s designated suppliers all of Pharmasset’s requirements of the Compound for the Territory; provided that such Compound has been manufactured in a timely manner and in accordance with applicable cGMPs, laws and the specifications. If Pharmasset exercises its option to have Bukwang manufacture Compound, Bukwang agrees to supply Pharmasset with all of its requirements of the Compound, in accordance with this Agreement. The Compound will be supplied by Bukwang in form of Bulk Drug Substance.

21.2 Clinical Supply . Pharmasset shall place orders for clinical supplies of Compound and clinical supplies of Licensed Product on a purchase order basis on at least thirty (30) days written notice prior to the requested delivery date.

21.3 Commercial Supply . If Pharmasset exercises its option to have Bukwang manufacture Compound, the parties will establish the terms and conditions applicable to the commercial supply of Compound by Bukwang to Pharmasset, and enter into an appropriate supply agreement with respect thereto containing terms and conditions consistent with the terms of this Agreement, and at a minimum those terms and conditions as set forth on Exhibit J .

21.4 Back-Up Manufacturing Rights . If Pharmasset exercises its option to have Bukwang manufacture Compound, subject to Exhibit J , Pharmasset will retain the right to act as, or to appoint a third party to act as, a second source to supply Compound for up to [***] percent ([***]%) of Pharmasset’s requirements for the Territory. In the event that Bukwang does not properly administer any agreement with a third party manufacturer for the manufacture of Compound or otherwise is at fault in permitting circumstances to exist such that there is a reasonable likelihood of insufficient quantities of Compound to satisfy the need thereof for the manufacture of Licensed Products, then Pharmasset shall be entitled, but not be required, to assume in whole or in part Bukwang’s rights and related obligations under such agreement (to the extent permissible thereunder) or otherwise direct the exercise of rights and performance of obligations by Bukwang under such agreement, including the establishment of additional third party manufacturers or manufacture by Pharmasset.

 

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IN WITNESS WHEREOF, Bukwang and Pharmasset have caused this Agreement to be signed by their duly authorized representatives, under seal, as of the day and year indicated above.

 

 

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EXHIBIT A

PRIMARY LICENSE AGREEMENT BETWEEN

BUKWANG, YALE UNIVERSITY AND UNIVERSITY OF GEORGIA RESEARCH

FOUNDATION, INC. DATED DECEMBER 28, 1995 AND AS AMENDED

LICENSE AGREEMENT

between

UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC.,

YALE UNIVERSITY, AND

BUKWANG PHARM. IND. CO., LTD.

TABLE OF CONTENTS

 

THIS LICENSE AGREEMENT is dated the 28th day of December, 1995, by and among the UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC., a nonprofit Georgia corporation with offices located in Boyd Graduate Studies Research Center, The University of Georgia, Athens, Georgia 30602 (hereinafter “UGARF”), and YALE UNIVERSITY (hereinafter “YALE”), located in New Haven, Connecticut, and BUKWANG PHARM. IND. CO. LTD., a Korean corporation with headquarters located at 398-1, Daebang-Dong, Dongjak-ku, Seoul 156-020, Republic of Korea (hereinafter “BUKWANG”).

WITNESSETH

WHEREAS, Dr. Chung K. Chu, during the course of his employment at The University of Georgia, and Dr. Yung-chi Cheng, during the course of his employment at YALE, developed certain inventions as more fully defined herein; and

WHEREAS, UGARF is the assignee of all right, title, and interest in inventions developed by employees of The University of Georgia and is responsible for the protection and commercial development of such inventions; and

WHEREAS, UGARF and YALE want to have the inventions further developed and made available for commercial use by the public; and

WHEREAS, BUKWANG represents that it has the necessary expertise and resources to fully develop and commercialize the inventions; and

WHEREAS, UGARF and YALE wish to grant BUKWANG such a license in accordance with the terms and conditions of this Agreement.

 

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NOW, THEREFORE, for and in consideration of the mutual covenants and the premises herein contained, the parties, intending to be legally bound, hereby agree as follows.

ARTICLE 1. DEFINITIONS

The following terms as used herein shall have the following meaning:

1.1 “Affiliates” shall mean any corporation, partnership or other business entity which is directly or indirectly controlled by BUKWANG or any entity which directly or indirectly controls BUKWANG. “Controls” as used herein means owns directly or indirectly at least thirty percent (30%) of the voting shares.

1.2 “Agreement” or “License Agreement” shall mean this Agreement, including all Exhibits attached to this Agreement.

1.3 “BUKWANG’s Development Plan” shall mean the development plan reproduced as EXHIBIT B of this Agreement.

1.4 “Field of Use” shall mean the treatment of viral infections.

1.5 “Indemnitees” shall mean UGARF, UGARF’s officers and directors, UGA, UGA’s employees, YALE, YALE’s officers and directors, the Inventors, and their heirs, executors, administrators, and legal representatives.

1.6 “Inventors” shall mean Dr. Yung-chi Cheng and Dr. Chung K. Chu.

1.7 “License Agreement Year” shall mean and include each twelve-month period, beginning with the Operative Date, during the term of this Agreement.

1.8 “Licensed Patents” shall mean the patent applications and patents identified in EXHIBIT A hereof, together with all divisionals, continuations, reissues, reexaminations and foreign counterparts of such applications or patents.

 

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1.9 “Licensed Product(s)” shall mean any process, service, or product, the manufacture, use, or sale of which is covered by a Valid Claim or incorporates or uses any Licensed Technology.

1.10 “Licensed Technology” shall mean all designs, technical information, know-how, knowledge, data, specifications, test results and other information, whether or not patented, which are known to the Inventors, except such technology already existing in the public domain or such technology already known to BUKWANG, on the date of this Agreement, and which are useful for the development, commercialization, manufacture, use or sale of any Licensed Product.

1.11 “Licensed Territory” shall mean the world.

1.12 “LICENSOR” shall mean UGARF and YALE, jointly.

1.13 “Net Selling Price” of Licensed Products shall mean the total invoiced price paid to BUKWANG or its Affiliates by a purchaser of a Licensed Product less the following discounts: a) customary trade, quantity and cash discounts actually allowed and taken; b) credits actually given for rejected or returned Licensed Products; c) freight and insurance costs, if separately itemized on the invoice paid by the customer; and d) excise taxes and customs duties included in the invoiced amount. Where a Sale is deemed consummated by a gift, use, or other disposition of Licensed Products for other than a selling price stated in cash, the term “Net Selling Price” shall mean the average gross selling price billed by BUKWANG for the same quantity of Sales of Licensed Products during the three (3) month period immediately preceding such Sale, without reduction of any kind.

1.14 “Operative Date” of this Agreement shall mean the date on which LICENSOR receives notification from the United States Government of its approval of the grant of rights made to BUKWANG hereunder.

1.15 “Sale” or “Sold” shall mean the sale, transfer, exchange, or other disposition of Licensed Products whether by gift or otherwise, by BUKWANG, its Affiliates or any other

 

3

person authorized by BUKWANG. For the purposes of this Agreement, the following activities shall not be deemed a Sale: (a) the provision of Licensed Products, prior to the approval of Licensed Products in a country and pursuant to a requirement issued by the appropriate governmental agency in that country, for consumption by or administration to persons for humanitarian purposes or compassionate use, (b) the provision of Licensed Products for use in clinical trials, or (c) the provision of samples of Licensed Products without charge by BUKWANG for promotional purposes. Sales of Licensed Products shall be deemed consummated upon the first to occur of: (a) receipt of payment from the purchaser; (b) delivery of Licensed Products to the purchaser or a common carrier; (c) release of Licensed Products from consignment; (d) if deemed Sold by use, when first put to such use; or (e) if otherwise transferred, exchanged, or disposed of whether by gift or otherwise when such transfer, exchange, gift, or other disposition occurs.

1.16 “UGA” shall mean The University of Georgia.

1.17 “Valid Claim” shall mean a claim included among the Licensed Patents so long as such claim shall not have been irrevocably abandoned or held invalid in an unappealable decision of a court or other authority of competent jurisdiction.

ARTICLE 2. GRANT OF LICENSE

2.1 License . LICENSOR hereby grants BUKWANG an exclusive right and license under the Licensed Patents to make, have made, use, and Sell Licensed Products and to practice Licensed Technology for the Field of Use in the Licensed Territory during the term of this Agreement.

2.2 Retained License . LICENSOR retains on behalf of UGARF, YALE, and UGA and any research collaborators, a royalty-free right and license to make and use Licensed Products and to practice Licensed Technology for research and educational purposes only.

 

4

2.3 No Implied License . The license and right granted in this Agreement shall not be construed to confer any rights upon BUKWANG by implication, estoppel, or otherwise as to any technology not specifically identified in this Agreement as Licensed Patents or Licensed Technology.

2.4 United States Government Rights . The Licensed Patents, Licensed Technology, or portions thereof were developed with financial or other assistance through grants or contracts funded by the United States government. BUKWANG acknowledges that in accordance with Public Law 96-517 and other statutes, regulations, and Executive Orders as now exist or may be amended or enacted, the United States government has certain rights in the Licensed Patents and Licensed Technology. BUKWANG shall take all reasonable actions necessary to enable LICENSOR to satisfy its obligations under any federal law relating to the Licensed Patents or Licensed Technology. BUKWANG acknowledges that LICENSOR must obtain a waiver from the United States government, pursuant to United States Code of Federal Regulations, Section 37, 401.14(i), to enable LICENSOR to grant the rights and license hereunder. LICENSOR has requested such a waiver, but if this Agreement is executed prior to the granting of said waiver, BUKWANG agrees that this Agreement will automatically terminate if the request for waiver is denied. LICENSOR shall notify BUKWANG within ten (10) days of receipt of notice of denial of said waiver from the United States government. If at any time during the term of this Agreement, the United States government should take action which renders it impossible or impractical for LICENSOR to grant the rights and license granted herein to BUKWANG under this Agreement or otherwise perform LICENSOR’s obligations, LICENSOR or BUKWANG may terminate this Agreement immediately by notice to the other party. BUKWANG shall not have any right to the return of any payments of any kind made by it to LICENSOR prior to the date of termination.

2.5 Republic of Korea Government Approval . It will be necessary for The Fair Trade Committee in Economic Planning Ministry of the Republic of Korea to approve this Agreement. If this Agreement is executed prior to the granting of such approval, LICENSOR agrees that this Agreement shall automatically terminate if approval is denied. BUKWANG shall not have any right to the return of any payments of any kind made by it to LICENSOR prior to the date of termination.

 

5

ARTICLE 3. DILIGENCE AND COMMERCIALIZATION

3.1 Diligence and Commercialization . BUKWANG shall use its best efforts throughout the term of this Agreement to diligently pursue BUKWANG’s Development Plan and to bring Licensed Products to market through a thorough, rigorous, and diligent program for exploitation of the rights and license herein granted to BUKWANG and to create, supply, and service in the Licensed Territory as extensive a market as possible. In no instance shall BUKWANG’s best efforts be less than efforts customary in the pharmaceutical industry.

3.2 Lack of Diligence . If LICENSOR concludes that BUKWANG is not diligent in developing and Selling Licensed Products pursuant to paragraph 3.1 for any reason other than a) the withholding by a regulatory agency of marketing approval despite BUKWANG’s diligent effort to obtain such approval; or b) unanticipated technical or scientific problems which have been reported to LICENSOR in writing; or c) other causes beyond the reasonable control of BUKWANG; then LICENSOR may, at its sole discretion, terminate this Agreement pursuant to paragraph 12.4 hereof.

3.3 No Competing Products . BUKWANG agrees that it will not concurrently develop a compound or composition with the same mode or mechanism of action as compound(s) or compositions (s) covered by the Licensed Patents. BUKWANG shall provide, on a semi-annual basis, a certified statement from a corporate officer of BUKWANG that BUKWANG is not concurrently developing a competing compound or composition with the same mode or mechanism of action as compound(s) or compositions (s) covered by the Licensed Patents. In the event that BUKWANG undertakes the concurrent development of such a competing product or does not provide certification as stipulated in this paragraph, LICENSOR shall have the right, at its sole discretion, to terminate this Agreement upon thirty (30) days written notice to BUKWANG.

 

6

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

ARTICLE 4. CONSIDERATION FOR LICENSE

4.1 Research Gift . As partial consideration for the license granted to BUKWANG under this Agreement, BUKWANG shall provide nonrefundable research funding to UGARF and YALE according to the following schedule:

 

(a)

On the Operative Date of this Agreement:

US$[***] payable to UGARF, and

US$[***] (including US$[***] for administrative fees) payable to Yale School of Medicine

 

(b)

On the First Day of the Second License Agreement Year:

US$[***] payable to UGARF, and

US$[***] (including US$[***] for administrative fees) payable to Yale School of Medicine

 

(c)

On the First Day of the Third License Agreement Year:

US$[***] payable to UGARF, and

US$[***] (including US$[***] for administrative fees) payable to Yale School of Medicine

 

(d)

On the First Day of the Fourth License Agreement Year:

US$[***] payable to UGARF, and

US$[***] (including US$[***] for administrative fees) payable to Yale School of Medicine

Such payments shall be made on a quarterly basis on each of the first (1st), ninetieth (90th), one-hundred eightieth (180th), and two-hundred seventieth (270th) days of the indicated License Agreement Year. In the event that this Agreement is terminated for any reason during one of the first four (4) License Agreement Years, BUKWANG agrees to make all four quarterly payments due under this paragraph for the License Agreement Year in which this Agreement is terminated.

 

7

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

4.2 Milestone Payments . As partial consideration for the license granted to BUKWANG under this Agreement, BUKWANG shall pay LICENSOR nonrefundable milestone payments according to the following schedule:

 

[***] percent ([***]%) of the milestone payments shall be credited against royalties actually due and payable under Article 4.3; provided, however, that in any single License Agreement Year, such credit shall not exceed [***] percent ([***]%) of the royalties otherwise due.

4.3 Royalties . As partial consideration for the license granted to BUKWANG under this Agreement, BUKWANG shall pay LICENSOR a royalty equal to [***] percent ([***]%) of the Net Selling Price of all Licensed Products Sold by BUKWANG or its Affiliates during the term of this Agreement.

4.4 Reimbursement for Patent Expenses . BUKWANG shall reimburse LICENSOR for all external fees, costs, and expenses heretofore and hereafter during the term of this Agreement paid or incurred by LICENSOR in filing, prosecuting, and maintaining the Licensed Patents in the Licensed Territory.

ARTICLE 5. REPORTS AND PAYMENTS

5.1 Payments . All royalty payments required under this Agreement pursuant to Article 4.3 shall be due sixty (60) days following the end of a quarter, for Sales occurring during the immediately preceding quarter of each License Agreement Year. Such royalties shall be

 

8

accompanied by a royalty report, as detailed in paragraph 5.3. All other payments required under this Agreement are payable on the due date, or, for payments due under Article 4.4, such reimbursement shall be delivered within thirty (30) days after receipt by BUKWANG from time to time of an invoice from UGARF, including all supportive documentation of such fees and costs.

 

(a)

Payments due under Articles 4.2 and 4.3 shall be made in person, via the United States mail, or by private carrier to the following addresses:

 

 

(b)

Payments due under Article 4.4 shall be made payable to UGARF and sent to the address give in 5.1(a) for UGARF.

5.2 Progress Reports . BUKWANG will provide UGARF with semi-annual progress reports detailing the activities of BUKWANG described in BUKWANG’s Development Plan. Such reports shall be due on July 1 and January 1 of each License Agreement Year, beginning with July 1, 1996, for the immediately preceding half-year.

5.3 Royalty Reports . Within sixty (60) days of the first (1st), ninetieth (90th), one-hundred eightieth (180th), and two-hundred seventieth (270th) days of each License Agreement Year, beginning with the License Agreement Year in which the first approval for marketing

 

9

Licensed Products in any country of the Licensed Territory is granted, and ending with the year following the termination or expiration of this Agreement, BUKWANG shall provide a written report to LICENSOR setting forth for the preceding calendar quarter, the following as may be applicable:

 

(a)

all Sales (including Net Selling Price of each product sold) of Licensed Products by BUKWANG and its Affiliates on a country-by-country basis throughout the Licensed Territory;

 

(b)

the amount of royalties payable pursuant to this Agreement;

 

(c)

any other information reasonably necessary to show the basis on which such royalties have been computed;

 

(d)

the amount of any credits taken pursuant to Article 4.2;

 

(e)

in case no payment is due, BUKWANG shall so report.

5.4 Currency Conversion . If any Licensed Products are Sold for monies other than United States dollars, the Net Selling Price of such Licensed Products shall first be determined in the foreign currency of the country in which such Licensed Products are Sold and then converted to United States dollars at the spot rate published by the Wall Street Journal (U.S. edition) for conversion of that foreign currency into United States dollars on the last day of the quarter for which such payment is due.

5.5 Interest . Payments required under this Agreement shall, if overdue, bear interest until payment at a per annum rate two percent (2%) above the prime rate in effect at the Trust Company Bank in Atlanta, Georgia, on the due date. The payment of such interest shall not foreclose LICENSOR from exercising any other rights it may have because any payment is late.

ARTICLE 6. RECORDS

6.1 Records of Sales . During the term of this Agreement and for a period of three (3) years thereafter, BUKWANG shall keep at its principal place of business true and accurate

 

10

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

records of all Sales in accordance with generally accepted accounting principles and in such form and manner so that all royalties owed to LICENSOR may be readily and accurately determined. BUKWANG shall furnish LICENSOR copies of such records upon LICENSOR’s request, which shall not be made more often than once per License Agreement Year.

6.2 Audit of Records . LICENSOR shall have the right, from time to time at reasonable times during normal business hours through an independent certified public accountant, to examine the records of BUKWANG maintained in accordance with the provisions of paragraph 6.1 in order to verify the calculation of any royalties payable under this Agreement. Such examination and verification shall not occur more than once each License Agreement Year and the calendar year immediately following termination of this Agreement. Unless otherwise agreed in writing by BUKWANG, the fees and expenses of performing such examination and verification shall be borne by LICENSOR. If such examination reveals an underpayment by BUKWANG of more than five percent (5%) for any quarter examined, BUKWANG shall pay LICENSOR the amount of such underpayment plus interest and shall reimburse LICENSOR for all expenses of the accountant performing the examination.

ARTICLE 7. PATENT PROSECUTION

7.1 Prosecution and Maintenance of Licensed Patents . The prosecution and maintenance of the Licensed Patents shall be the primary responsibility of LICENSOR. LICENSOR shall keep BUKWANG informed as to all developments with respect to Licensed Patents. BUKWANG shall be afforded reasonable opportunities to advise LICENSOR and cooperate with LICENSOR in such prosecution and maintenance. On or before March 1, 1996, BUKWANG shall notify LICENSOR of the countries in which BUKWANG wishes the International Patent Cooperation Treaty Application No. [***], filed [***], to be filed. LICENSOR may, at its own expense, file patent applications in those countries in which BUKWANG elects not to file national applications. Such non-elected countries in which LICENSOR has filed a patent application will no longer be included in the Licensed Territory, and BUKWANG shall not have the right to Sell Licensed Products in non-elected countries.

 

11

Prior to the execution of any third party licenses in such non-elected countries, LICENSOR shall offer BUKWANG a right of first refusal, which, if it is to be exercised, shall be exercised within thirty (30) days of BUKWANG’s receipt in writing from LICENSOR of a written proposal outlining the terms of a third party license. If BUKWANG elects to exercise its right of first refusal, then LICENSOR and BUKWANG shall execute a license on the same terms and conditions as those referred to in the third party license. If BUKWANG elects not to exercise its right of first refusal or fails to exercise its right of first refusal before the expiration of the aforesaid thirty (30) day period, then LICENSOR shall be free to execute the third party license.

If BUKWANG should fail to timely make reimbursement for patent expenses incurred in filing, prosecuting or maintaining applications or patents in a particular country(ies) as required by Article 4.4 of this Agreement, LICENSOR shall have no further obligation to prosecute or maintain the Licensed Patents in said country(ies).

BUKWANG, upon ninety (90) days advance written notice to LICENSOR, may advise LICENSOR that it no longer wishes to pay expenses for filing, prosecuting or maintaining one or more Licensed Patents. LICENSOR may, at its option, elect to pay such expenses or permit such Licensed Patents to become abandoned or lapsed. If LICENSOR elects to pay such expenses, such patents shall not be subject to any license granted to BUKWANG hereunder.

7.2 Extension of Licensed Patents . In the event that it is possible to have the normal term of any Licensed Patent extended or restored under a country’s procedure of extending patent terms for time lost in government regulatory approval processes, BUKWANG agrees to cooperate fully with LICENSOR and provide all necessary documentation and information needed to enable LICENSOR to timely apply for such extension(s). All out-of-pocket expenses incurred by LICENSOR in applying for such extension(s) shall be borne in accordance with the terms of Article 4.4. In the case of such extension(s), royalties due LICENSOR pursuant to Article 4.3 hereof shall be payable until the end of the extended term of the Licensed Patent.

 

12

ARTICLE 8. ABATEMENT OF INFRINGEMENT

8.1 BUKWANG shall promptly inform LICENSOR of any suspected infringement of any Licensed Patents. During the term of this Agreement, LICENSOR and BUKWANG shall have the right to institute an action for infringement of the Licensed Patents against such third party in accordance with the following:

 

(a)

If LICENSOR and BUKWANG agree to institute suit jointly, the suit shall be brought in both their names and the out-of-pocket costs thereof shall be borne equally. Any recovery or settlement received by LICENSOR and/or BUKWANG for punitive or exemplary damages shall be shared equally, and any other recovery or settlement received, including compensatory damages or damages based on a loss of revenues, shall be paid to BUKWANG, and BUKWANG shall pay to LICENSOR an amount representing the royalty which would have been paid by BUKWANG on such amount in accordance with the provisions of Article 4 had such amount been accrued by BUKWANG as Sales. BUKWANG and LICENSOR shall agree upon the manner in which they shall exercise control over such action. LICENSOR may, if it so desires, also be represented by separate counsel of its own selection, the fees for which counsel shall be paid by LICENSOR;

 

(b)

In the absence of agreement to institute a suit jointly, LICENSOR may institute suit, and, at its option, name BUKWANG as a plaintiff. LICENSOR shall bear the entire cost of such litigation, including defending any counterclaims brought against BUKWANG and paying any judgments rendered against BUKWANG, and shall be entitled to retain the entire amount of any recovery or settlement; and

 

(c)

In the absence of agreement to institute a suit jointly and if LICENSOR notifies BUKWANG that it has decided not to join in or institute a suit, as provided in (a) or (b) above, BUKWANG may institute suit and, at its option, name LICENSOR as a plaintiff. BUKWANG shall bear the entire cost of such litigation, including

 

13

defending any counterclaims brought against LICENSOR and paying any judgments rendered against LICENSOR, and shall be entitled to retain the entire amount of any recovery or settlement.

8.2 Should either LICENSOR or BUKWANG commence a suit under the provisions of this Article and thereafter elect to abandon such suit, the abandoning party shall give timely notice to the other party who may, if it so desires, continue prosecution of such suit, provided that the sharing of expenses and any recovery in such suit shall be as agreed upon between LICENSOR and BUKWANG.

ARTICLE 9. DISCLOSURE OF INFORMATION AND CONFIDENTIALITY

9.1 It will be necessary for LICENSOR to disclose to BUKWANG and for BUKWANG to disclose to LICENSOR such information and technology as will assist the parties to successfully carry out the objectives of this Agreement. BUKWANG will need to disclose to LICENSOR such information and technology relating to the filing of any patents related to Licensed Products and such other information as may be requested by LICENSOR which is necessary for LICENSOR to ascertain that BUKWANG is performing its obligations pursuant to this Agreement. All such information and technology to be exchanged will be in writing and marked “CONFIDENTIAL”. BUKWANG or LICENSOR, as the case may be, shall not, during the life of this Agreement and for a period of five (5) years after the termination or expiration of this Agreement, disclose to any third party the other’s technology, except to an Affiliate under appropriate written confidentiality provisions who requires such information to carry out the objectives of this Agreement; shall use the same degree of care as is exercised with respect to its own confidential information to prevent disclosure of the same to any third party; and shall not use the same for any purpose other than exercising any right or rights granted to it herein; provided, however, that nothing herein contained shall restrict either party with respect to the disclosure or use of information which the recipient party can show:

 

(a)

was in its possession at the time of its receipt of same from the disclosing party; or

 

14

(b)

was part of the public knowledge or literature at the time of its receipt from the disclosing party, or thereafter becomes part of the public knowledge or literature through no fault of either party, their Affiliates, employees, representatives or any third party to whom such information was disclosed in accordance with the provisions of this Agreement; or

 

(c)

was received from a third party having the right to disclose such information.

Specific technology disclosed by one party to the other hereunder shall not be deemed to be within any of the above three (3) exclusions merely because it is embraced by more general information included within one of the exclusions.

9.2 Notwithstanding the provisions of paragraph 9.1 above, and to the extent necessary:

 

(a)

a party may disclose and use the other party’s information for purposes of securing the registration of, and or governmental approval to market, pursuant to this Agreement, any Licensed Products;

 

(b)

a party may disclose and use the other party’s information where the disclosure and use of such will be necessary to the procurement of patent protection, pursuant to this Agreement, for a Licensed Product;

 

(c)

a party may disclose and use the other party’s information to the extent that it is necessary to aid in the development and commercialization, pursuant to this Agreement, of any Licensed Product provided that any such disclosure of the disclosing party’s information shall be in confidence and subject to provisions the same, or substantially the same, as those in paragraph 9.1 hereof.

 

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If this Agreement is terminated for any reason whatsoever, LICENSOR shall have the unrestricted right to use and disclose information generated by LICENSOR or BUKWANG pertaining to methods of synthesis, pharmacokinetics, toxicology, efficacy, clinical and other technical data related to Licensed Products. Such use and disclosure shall not be subject to the confidentiality provisions of paragraph 9.1 that survive termination of this Agreement.

9.3 Prior Agreements . The provisions of this Agreement supersede and shall be substituted for any terms of any prior confidentiality agreements between BUKWANG and LICENSOR which are not consistent with this Agreement.

ARTICLE 10. REPRESENTATIONS, MERCHANTABILITY AND EXCLUSION OF WARRANTIES

10.1 LICENSOR represents and warrants that it has the right and authority to enter into this Agreement and that neither the execution of this Agreement nor the performance of its obligations hereunder will constitute a breach of the terms and provisions of any other agreement to which UGARF or YALE is a party. LICENSOR does not warrant the validity of the Licensed Patents licensed hereunder and makes no representation whatsoever with regard to the scope of the Licensed Patents or that such Licensed Patents may be exploited by BUKWANG or its Affiliates without infringing other patents.

10.2 BUKWANG has the necessary expertise and skill in the technical areas in which the Licensed Products and Licensed Technology are involved to make, and has made, its own evaluation of the capabilities, safety, utility, and commercial application of the Licensed Patents and Licensed Technology. ACCORDINGLY, LICENSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE LICENSED PATENTS OR LICENSED TECHNOLOGY AND EXPRESSLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER IMPLIED WARRANTIES WITH RESPECT TO THE CAPABILITIES, SAFETY, UTILITY, OR COMMERCIAL APPLICATION OF LICENSED PATENTS OR LICENSED TECHNOLOGY.

 

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ARTICLE 11. DAMAGES, INDEMNIFICATION, AND INSURANCE

11.1 NO LIABILITY . LICENSOR shall not be liable to BUKWANG or BUKWANG’s customers for special, incidental, indirect, or consequential damages resulting from defects in the testing, labeling, manufacture, or other application of Licensed Products manufactured, tested, or Sold pursuant to this Agreement.

11.2 Indemnification . BUKWANG shall defend, indemnify, and hold harmless the Indemnitees from and against any and all claims, demands, loss, liability, expense, or damage (including investigative costs, court costs and attorneys’ fees) Indemnitees may suffer, pay, or incur as a result of claims, demands or actions against any of the Indemnitees arising or alleged to arise by reason of or in connection with any and all personal injury and property damage caused or contributed to in whole or in part by BUKWANG’s manufacture, testing, use, sale, or labeling of any Licensed Products, or the practice by BUKWANG of any Licensed Patents. BUKWANG’s obligations under this Article shall survive the expiration or termination of this Agreement for any reason.

11.3 Insurance . Without limiting LICENSEE’s indemnity obligations under the preceding paragraph, LICENSEE shall maintain throughout the term of this Agreement and for ten (10) years thereafter a commercial, general liability insurance policy, written by a reputable insurance company authorized to do business in the United States of America, which:

 

(a)

insures Indemnitees for all claims, damages, and actions mentioned in Article 11.1 of this Agreement;

 

(b)

includes a contractual endorsement providing coverage for all liability which may be incurred by Indemnitees in connection with this Agreement;

 

(c)

Requires the insurance carrier to provide UGARF with no less than thirty (30) days written notice of any change in the terms or coverage of the policy or its cancellation; and

 

17

(d)

Provides Indemnitees product liability coverage in an amount no less than One Million Dollars ($1,000,000) per occurrence for bodily injury and One Million Dollars ($1,000,000) per occurrence for property damage, subject to a reasonable aggregate amount.

BUKWANG shall provide LICENSOR with Certificates of Insurance evidencing the above.

11.4 Notice of Claims . BUKWANG shall promptly notify LICENSOR of all claims involving the Indemnitees and will advise LICENSOR of the policy amounts that might be needed to defend and pay any such claims.

ARTICLE 12. TERM AND TERMINATION

12.1 Term . Unless sooner terminated as otherwise provided in this Agreement, the term of this Agreement shall commence on the Operative Date and shall continue until the date of expiration of the last-to-expire of the Licensed Patents, including any renewals or extensions thereof. In the event that there are no Valid Claims, this Agreement shall terminate on the tenth anniversary of the date of this Agreement.

12.2 Termination by LICENSOR . LICENSOR shall have the right to terminate this Agreement upon the occurrence of any one or more of the following events:

 

(a)

failure of BUKWANG to make any payment required pursuant to this Agreement when due; or

 

(b)

failure of BUKWANG to render reports to LICENSOR as required by this Agreement; or

 

(c)

failure of BUKWANG to comply with BUKWANG’s Development Plan, attached hereto as Exhibit B; or

 

(d)

the insolvency of BUKWANG; or

 

(e)

the institution of any proceeding by BUKWANG under any bankruptcy, insolvency, or moratorium law; or

 

18

(f)

any assignment by BUKWANG of substantially all of its assets for the benefit of creditors; or

 

(g)

placement of BUKWANG’s assets in the hands of a trustee or a receiver unless the receivership or trust is dissolved within thirty (30) days thereafter; or

 

(h)

the breach of any other material term of this Agreement by BUKWANG.

12.3 Notice of Bankruptcy . BUKWANG must inform LICENSOR of its intention to file a voluntary petition in bankruptcy or of another’s intention to file an involuntary petition in bankruptcy to be received at least thirty (30) days prior to filing such a petition. A party’s filing without conforming to this requirement shall be deemed a material, pre-petition incurable breach.

12.4 Exercise . LICENSOR may exercise its right of termination by giving BUKWANG, its trustees or receivers or assigns, thirty (30) days prior written notice of the occurrence of an event giving cause for termination hereunder and of LICENSOR’s election to terminate. Upon the expiration of such period, this Agreement shall automatically terminate unless BUKWANG has cured the breach. Such notice and termination shall not prejudice LICENSOR’s right to receive royalties or other sums due hereunder and shall not prejudice any cause of action or claim of LICENSOR accrued or to accrue on account of any breach or default by BUKWANG.

12.5 Failure to Enforce . The failure of LICENSOR at any time, or for any period of time, to enforce any of the provisions of this Agreement shall not be construed as a waiver of such provisions or as a waiver of the right of LICENSOR thereafter to enforce each and every such provision.

12.6 Termination by BUKWANG . LICENSEE may terminate this Agreement at its sole discretion upon six (6) months’ written notice to UGARF.

12.7 Effect .

 

(a)

In the event this Agreement is terminated for any reason whatsoever, BUKWANG shall return, or at LICENSOR’s direction destroy, all plans, notes,

 

19

writings and other documents, samples, and other materials pertaining to the Licensed Patents and Licensed Technology, retaining only one copy in its corporate counsel’s office for the sole purpose of compliance with surviving terms of this Agreement or defense against any legal actions related to this Agreement. Immediately upon termination of this Agreement, BUKWANG shall cease manufacturing, processing, producing, using, Selling, or distributing Licensed Products; provided, however, that BUKWANG may continue to Sell in the ordinary course of business for a period of three (3) months reasonable quantities of Licensed Products which are fully manufactured and in BUKWANG’s normal inventory at the date of termination if (a) all monetary obligations of BUKWANG to LICENSOR have been satisfied and (b) royalties on such sales are paid to LICENSOR in the amounts and in the manner provided in this Agreement.

 

(b)

Upon termination of the Agreement for any reason whatsoever, BUKWANG shall provide LICENSOR with full and complete copies of all toxicology, pharmacokinetics, efficacy, clinical and other technical data and all correspondence to and from regulatory agencies relating to approval of Licensed Products generated by BUKWANG and/or its Affiliates, contractors and agents in the course of BUKWANG’s efforts to develop Licensed Products and/or obtain governmental approval for the Sale of Licensed Products.

12.8 Survival . The provisions of Articles 9 (except as explicitly stated in paragraph 9.2), 10, and 11 of this Agreement shall remain in full force and effect notwithstanding the termination of this Agreement.

ARTICLE 13. ASSIGNMENT

This Agreement is dependent upon the special relationship between the parties and the special knowledge and unique skills of BUKWANG. Therefore, BUKWANG shall not grant, transfer, convey, or otherwise assign any of its rights or delegate any of its obligations under this

 

20

Agreement, without the prior written consent of LICENSOR. This Agreement shall be assignable by UGARF to UGA, the University of Georgia Foundation, or any other nonprofit corporation which promotes the research purposes of UGA.

ARTICLE 14. MISCELLANEOUS

14.1 Export Controls . BUKWANG acknowledges that LICENSOR is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities and that LICENSOR’s obligations under this Agreement are contingent upon compliance with applicable United States export laws and regulations. The transfer of technical data and commodities may require a license from the cognizant agency of the United States government or written assurances by BUKWANG that BUKWANG shall not export data or commodities to certain foreign countries without the prior approval of certain United States agencies. LICENSOR neither represents that an export license shall not be required nor that, if required, such export license shall issue.

14.2 Legal Compliance . BUKWANG shall comply with all laws and regulations relating to its manufacture, processing, producing, use, Selling, or distributing of Licensed Products. BUKWANG shall not take any action which would cause LICENSOR or BUKWANG to violate any laws and regulations.

14.3 Independent Contractor . BUKWANG’s relationship to LICENSOR shall be that of a licensee only. BUKWANG shall not be the agent of LICENSOR and shall have no authority to act for or on behalf of LICENSOR in any matter. Persons retained by BUKWANG as employees or agents shall not by reason thereof be deemed to be employees or agents of UGARF, UGA or YALE.

14.4 Patent Marking . BUKWANG shall mark Licensed Products Sold in the United States with United States patent numbers. Licensed Products manufactured or Sold in other countries shall be marked in compliance with the intellectual property laws in force in such foreign countries.

 

21

14.5 Use of Names . BUKWANG shall obtain the prior written approval of YALE, UGARF, UGA, or the Inventors prior to making use of their names for any commercial purpose, except as required by law. As an exception to the foregoing, both BUKWANG and LICENSOR shall have the right to publicize the existence of this Agreement; however, neither BUKWANG nor LICENSOR shall disclose the terms and conditions of this Agreement without the other party’s consent, except as may be required by law.

14.6 Place of Execution . This Agreement and any subsequent modifications or amendments hereto shall be deemed to have been executed in the State of Georgia, U.S.A.

14.7 Governing Law . This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the parties hereunder, shall be construed under and governed by the laws of the State of Georgia and the United States of America.

14.8 Entire Agreement . This Agreement constitutes the entire agreement between LICENSOR and BUKWANG with respect to the subject matter hereof and shall not be modified, amended or terminated except as herein provided or except by another agreement in writing executed by the parties hereto.

14.9 Severability . All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision or portion of any provision of this Agreement not essential to the commercial purpose of this Agreement shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining provisions or portions thereof shall constitute their agreement with respect to the subject matter hereof, and all such remaining provisions or portions thereof shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement shall be replaced by a valid provision which will implement the commercial purpose of the illegal, invalid or unenforceable provision. In the event that any provision essential to the commercial purpose of this Agreement is held to be illegal, invalid or

 

22

unenforceable and cannot be replaced by a valid provision which will implement the commercial purpose of this Agreement, this Agreement and the rights granted herein shall terminate.

14.10 Force Majeure . Any delays in, or failure of, performance of any party to this Agreement shall not constitute default hereunder, or give rise to any claim for damages, if and to the extent caused by occurrences beyond the control of the party affected, including, but not limited to, acts of God, strikes or other work stoppages; civil disturbances, fires, floods, explosions, riots, war, rebellion, sabotage, acts of governmental authority or failure of governmental authority to issue licenses or approvals which may be required.

ARTICLE 15. NOTICES

All notices and other communications shall be hand delivered, sent by private overnight mail service, or sent by registered or certified U.S. mail, postage prepaid, return receipt requested, and addressed to the party to receive such notice or other communication at the address given below, or such other address as may hereafter be designated by notice in writing:

 

Such notices or other communications shall be effective upon receipt by an employee, agent or representative of the receiving party authorized to receive notices or other communications sent or delivered in the manner set forth above.

 

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IN WITNESS WHEREOF, LICENSOR and BUKWANG have caused this Agreement to be signed by their duly authorized representatives, under seal, as of the day and year indicated above.

 

LICENSOR:						BUKWANG:
UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC.						BUKWANG PHARM.IND.CO.LTD.
By:		/s/ Joe L. Key				By:		/s/ C. H. Koo
Name:		Joe L. Key				Name:		C. H. Koo
Title:		Executive Vice President				Title:		Managing Director
(corporate seal)						(corporate seal)
YALE UNIVERSITY
By:		/s/ Janet H. Ackerman
Name:		Janet Ackerman
Title:		Associate V.P. for Finance

 

24

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

EXHIBIT A

Licensed Patents

U.S.S.N. [***] filed [***], entitled [***].

U.S.S.N. [***] filed [***], entitled [***].

U.S.S.N. [***] filed [***], entitled [***].

International Patent Cooperation Treaty (PCT) Application No. [***], filed [***].

 

25

EXHIBIT B

BUKWANG’s L-FMAU Development Plan

 

 

26

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

<The Development Schedule for L-FMAU>

 

BUKWANG PHARM. IND. CO., LTD.: Research & Development Dept.

 

27

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

AMENDMENT

to

LICENSE AGREEMENT

between

UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC.,

YALE UNIVERSITY, and

BUKWANG PHARM. INC. CO., LTD.

This AMENDMENT to LICENSE AGREEMENT (AMENDMENT) is effective on September 1, 1997, by and among the UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC., a nonprofit Georgia corporation with offices located in Boyd Graduate Studies Research Center, The University of Georgia, Athens, Georgia 30602-7411 (UGARF), YALE UNIVERSITY, located in New Haven, Connecticut (YALE), and BUKWANG PHARM. IND. CO., LTD., a Korean corporation with headquarters located at 398-1 Daebong-dong, Dongjak-ku, Seoul 156-020, Republic of Korea (BUKWANG).

WITNESSETH

WHEREAS, UGARF, YALE and BUKWANG entered into a License Agreement (LICENSE) as of December 28, 1995; and

WHEREAS, UGARF, YALE and BUKWANG desire to amend the LICENSE to provide sublicensing rights to BUKWANG;

NOW, THEREFORE, UGARF, YALE and BUKWANG agree as follows:

 

1.	In partial consideration of the grant by UGARF and YALE of sublicensing rights to BUKWANG, BUKWANG agrees to pay a one-time, nonrefundable, nonceditable fee of [***] Dollars ($[***]) to be split equally between UGARF and YALE.

 

2.	The following new paragraphs are added to the LICENSE:

 

2.5

BUKWANG shall have the right to enter into sublicensing agreements for the rights, privileges and licenses granted hereunder. Upon any termination of this Agreement, sublicensees’ rights shall also terminate.

 

2.6

BUKWANG agrees that any sublicenses granted by it shall provide that the obligations to UGARF and YALE of Articles 2, 3.3, 5, 6, 8, 9, 10, 11, 12 and 14 of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. BUKWANG further agrees to attach copies of these Articles to sublicense agreements.

 

Page 1 of 3

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

2.7

BUKWANG shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement without the prior written permission of UGARF and YALE.

 

2.8

BUKWANG shall obtain in advance the written approval of UGARF and YALE before it enters into any sublicense agreements. However, in the event that the sublicense from BUKWANG is with a company on the list of 100 largest pharmaceutical companies, then such written approval is not needed in advance.

 

2.9

BUKWANG agrees to forward to UGARF and YALE a copy of any and all sublicense agreements promptly upon execution by the parties.

 

2.10

BUKWANG agrees that any sublicense agreement shall contain a provision for the payment of a royalty of no less than [***] percent ([***]%) of the Net Selling Price of all Licensed Products by the sublicensee.

 

2.11

BUKWANG, UGARF and YALE agree to share income from sublicensing in the following manner:

 

Except as otherwise modified herein, the LICENSE remains in full force and effect.

 

Page 2 of 3

IN WITNESS WHEREOF, the parties have caused this AMENDMENT to be executed by their duly authorized representatives, under seal, as of the effective date.

 

UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC.						BUKWANG PHARM. IND. CO., LTD.
By:		/s/ Joe L. Key				By:		/s/ C. H. Koo
Name:		Joe L. Key				Name:		C. H. Koo
Title:		Executive Vice President				Title:		Managing Director
(corporate seal)						(corporate seal)
						BUKWANG PHARM. IND. CO., LTD.
						398-1, Daebang-Dong, Dongjak-Ku
						Seoul, 156-920, KOREA
YALE UNIVERSITY
By:		/s/ Gregory E. Gardiner
Name:		Gregory E. Gardiner, Ph.D.
Title:		Director, Cooperative Research
(corporate seal)

 

Page 3 of 3

Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets and asterisks [***], have been separately filed with the Commission.

 

AMENDMENT NUMBER 2

to