LICENSE AGREEMENT between EMORY UNIVERSITY and PHARMASSET, LTD.

EXHIBIT 10.9

LICENSE AGREEMENT

between

EMORY UNIVERSITY

and

PHARMASSET, LTD.

(Enantiomerically Enriched FTC)

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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THIS LICENSE AGREEMENT is made and entered into as of this 8th day of December, 1998, by and between EMORY UNIVERSITY, a Georgia non-profit corporation with principal offices located at 1380 South Oxford Road, Atlanta, Georgia 30322 (hereinafter “EMORY”), and PHARMASSET, LTD., a Barbados corporation with corporate headquarters located at 1795 Peachtree Road, N.E., Suite 350, Atlanta, Georgia 30309-2339 (hereinafter “LICENSEE”).

WITNESSETH:

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

WHEREAS, Raymond F. Schinazi, Ph.D., Dennis Liotta, Ph.D. and Woo Baeg Choi, Ph.D., did, during their course of employment with Emory University, develop certain inventions claimed in the issued patents and patent applications identified in EXHIBIT “A” of this Agreement; and

WHEREAS, EMORY entered into a license agreement on April 17, 1996 with Triangle Pharmaceuticals, Inc., whereby EMORY granted Triangle exclusive rights to develop the compound sometimes called -FTC, which in the Triangle License Agreement is defined as any mixture of the +enantiomers of FTC wherein the ratio of such -enantiomer to +enantiomer is equal to or greater than 90/10; and

WHEREAS, EMORY, under the terms of the Triangle License Agreement, reserved the right to grant to PHARMASSET commercial rights to develop what is sometimes referred to as Racemic FTC defined as any compound wherein the ratio of the -enantiomer to the +enantiomer of FTC is less than 90/10; and

 

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WHEREAS, LICENSEE represents that it, either directly or through its Affiliates or sublicensees, has the necessary expertise and resources to fully develop and commercialize the inventions; and

WHEREAS, LICENSEE wishes to obtain certain rights to pursue the development and commercialization of the inventions; and

WHEREAS, EMORY wishes to grant LICENSEE such rights in accordance with the terms and conditions of this Agreement;

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. “Affiliate” shall mean any corporation, partnership or other business entity which is directly or indirectly controlled by LICENSEE or any entity which directly or indirectly controls LICENSEE. “Controls” as used herein means owns directly or indirectly at least thirty percent (30%) of the outstanding voting shares or, in the absence of such ownership or in the case of a non-corporate entity or a non-profit corporation, possession, directly or indirectly, of the power to materially influence the direction of the management and policies of such corporation or non-corporate entity.

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

1.3. “Effective Date” shall mean the later of (i) the date on which EMORY executes this Agreement, or (ii) the date on which LICENSEE executes this Agreement.

 

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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.

 

1.4. “EMORY Inventors” shall mean Raymond F. Schinazi, Ph.D., Dennis Liotta, Ph.D. and Woo Baeg Choi, Ph.D.

1.5. “Enantiomerically Enriched FTC” or “EEFTC” shall mean any mixture of the -enantiomer with the chemical name (2R-cis)-4-amino-5-fluoro-l-[2-(hydroxymethyl)-1,3-oxathiolan-5-yl]-2(1H)-pyrimidinone and the (+) enantiomer with the chemical name (2S-cis)-4-amino-5-fluoro-1-[2-(hydroxymethyl)-1,3-oxathiolan-5-yl]-2(lH)-pyrimidinone, in which the ratio of such (-) enantiomer to such (+) enantiomer is less than ninety (90) to ten (10), and any salts, esters and [***] derivatives thereof.

1.6. “Field of Use” shall mean all medical applications and uses of Enantiomerically Enriched FTC.

1.7. “Indemnitees” shall mean EMORY, its trustees, employees, students, and their heirs, executors, administrators, successors and legal representatives.

1.8. “License Agreement Year” shall mean the period from the Effective Date of this Agreement through the following one-year period of each year during the term of this Agreement.

1.9. “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.

1.10. “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.

 

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1.11. “Licensed Technology” shall mean all designs, technical information, know-how, knowledge, data, specifications, test results and other information, whether or not patented, which is known to the EMORY Inventors on the date of this Agreement and is useful for the manufacture, use or sale of any Licensed Product.

1.12. “Licensed Territory” shall mean the world.

1.13. “LICENSEE’s Development Plan” shall mean EXHIBIT “B” of this Agreement.

1.14. “Net Selling Price” of Licensed Products shall mean the gross invoiced price paid to LICENSEE, its Affiliates, or sublicensees 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; d) custom and excise taxes included in the invoiced amount, and e) to the extent separately stated on purchase orders, invoices or other documents of Sale, all taxes including VAT, and sales or similar taxes. 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 paid to LICENSEE in consideration of Sales of the same quantity of Licensed Products during the six (6) month period immediately preceding such Sale, without reduction of any kind (other than as provided for in a) - d) above). If no Sales of Licensed Products have occurred in the preceding six (6) months, then sales of comparable products shall be used in such determination.

1.15. “Net Selling Price” with respect to any Combination Product (a Licensed Product incorporating additional active ingredients) shall be negotiated in good faith by the parties with

 

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the intention of agreeing upon a fair and equitable formula; provided, however, that if the parties are unable to agree upon such definition within a reasonable period of time, Net Selling Price with respect to such Combination Product shall mean the gross selling price of such Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of Net Selling Price multiplied by a fraction, the numerator of which shall be the average invoice price per gram of compound contained in the most comparable stock keeping unit of a Licensed Product having the compound as the sole active ingredient during the applicable royalty period in a country of the Licensed Territory, when such comparable Licensed Product is Sold for the same indication as such Combination Product, and the denominator of which shall be the average invoice price per gram of the compound sold alone as described immediately above plus the average invoice price(s) per gram of the other active ingredient(s) contained in such Combination Product in such country during the applicable royalty period when such active ingredients are Sold alone for the same indication as such Combination Product. If there is no average invoice price per gram in a given country for a compound or for one or more of the active ingredients comprising a Combination Product, Net Selling Price with respect to such Combination Product shall be deemed to be Fifty Percent (50%) of the gross Sales price of such Combination Product paid by independent customers, less all the allowances, adjustments, reductions, discounts, taxes, duties, rebates or other charges referred to in the above definition of Net Selling Price.

1.16. “Major Market” shall mean the following countries: United States, Great Britain, France, Spain, Italy, Germany and Japan.

1.17. “NDA” shall mean new drug application relating to Licensed Patents and Licensed Technology.

 

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1.18. “IND” shall mean investigational new drug application relating to Licensed Patents and Licensed Technology.

1.19. “Registration” shall mean the approval to market or sell Enantiomerically Enriched FTC by the United States Food and Drug Administration (FDA) or any successor, agency or authority with similar approval powers.

1.20. “Sale” or “Sold” shall mean the sale, transfer, exchange, or other disposition of Licensed Products whether by gift or otherwise, including, but not limited to, the use of Licensed Products by any person authorized by LICENSEE other than LICENSEE. None of (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, nor (c) the provision of samples in reasonable quantities without charge for promotional purposes shall be deemed Sales for the purposes of this Agreement. 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.

1.21. “U.S. Government Licenses” shall mean the non-exclusive licenses to the U.S. Government or agencies thereof pursuant to NIH grant Nos.: AI26055 and A128731, copies of which licenses are attached hereto as EXHIBIT “C”.

 

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1.22. “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.

1.23. “PHARMASSET Letter” shall mean the Letter provided by PHARMASSET to EMORY in which PHARMASSET acknowledges its obligations to comply with Article 2 of the license agreement between Emory University and Triangle Pharmaceuticals of April 17, 1996. A copy of the PHARMASSET Letter is attached to this Agreement as EXHIBIT “D”.

ARTICLE 2.

GRANT OF LICENSE

2.1. License . EMORY hereby grants LICENSEE an exclusive right and license under the Licensed Patents to make, have made, use, import, offer for Sale, and Sell Licensed Products and to practice Licensed Technology for the Field of Use in the Licensed Territory during the term of this Agreement. If any Affiliate exercises any rights granted by EMORY hereunder, LICENSEE shall remain primarily liable to EMORY for the duties and obligations of any Affiliate hereunder, and any breach hereof by an Affiliate is deemed to be a breach by LICENSEE of this Agreement. Except for the right to grant sublicenses under Article 2.3 (as qualified by Articles 2.4 through 2.9), no other rights or licenses are granted.

2.2. Retained License . EMORY retains on behalf of itself, 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.

2.3. Sublicenses . Provided that written approval of EMORY is obtained in advance, which approval shall not be unreasonably withheld, (provided that if the approval of EMORY is withheld solely on the basis of the fact that the financial obligations of the sublicensee under the sublicense would be materially less favorable to EMORY than those of LICENSEE hereunder,

 

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such withholding of approval shall not be deemed to be unreasonable), LICENSEE shall have the right to grant sublicenses (including further sublicenses thereunder), consistent with this Agreement. If the proposed sublicensee is Triangle Pharmaceuticals, Inc. (“Triangle”) and EMORY has not responded to LICENSEE’s request to sublicense within ten (10) business days after receipt of a proposed sublicense agreement between PHARMASSET and Triangle, such agreement will be assumed to be approved. If the proposed sublicensee is any party other than Triangle and Licensee provides EMORY with a copy of a term sheet promptly following its adoption by Licensee and such sublicensee and EMORY has not responded to LICENSEE’s request to sublicense within fifteen (15) business days after receipt of a proposed sublicense agreement between PHARMASSET and such sublicense, such agreement will be assumed to be approved.

2.4. Sublicensee Performance . EMORY agrees that any sublicensee’s performance of its diligence obligations as set forth in a sublicense agreement approved by EMORY shall be deemed to be performance by LICENSEE of its diligence obligations under this License Agreement including, but not limited to, those set forth in Article 3 hereof. LICENSEE further agrees to attach redacted copies of pertinent portions of this Agreement to sublicense agreements.

2.5. Sublicense Restrictions . The right to sublicense granted to LICENSEE under Article 2.3 is subject to the following conditions:

2.5.1. Within thirty (30) days after LICENSEE enters into any sublicense, LICENSEE must deliver to EMORY a complete copy of the sublicense written in the English language.

 

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2.5.2. In the event of a termination hereof under Article 12.2, all payments then or thereafter due to LICENSEE from each of its sublicensees shall, upon notice from EMORY to any such sublicensee, become owed directly to EMORY for the account of LICENSEE; provided that EMORY shall remit to LICENSEE the amount by which such payments in the aggregate exceed the total amount owed by LICENSEE to EMORY.

2.5.3. Even if LICENSEE enters into sublicenses, LICENSEE shall remain primarily liable to EMORY for all of LICENSEE’s duties and obligations contained in this Agreement, and in the event of any act or omission of a sublicensee that would be a breach of its sublicense, LICENSEE shall be liable for the performance of its duties and obligations under this Agreement in respect of those matters as to which such breach by sublicensee has occurred.

2.6. Form of Sublicensee Payments . Except as provided for in Article 2.8, LICENSEE 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 EMORY.

2.7. Delivery of Sublicense Agreements . LICENSEE agrees to forward to EMORY a copy of any and all sublicense agreements promptly upon execution by the parties.

 

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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.

 

2.8. Sharing of Sublicensee Payments . LICENSEE and EMORY agree to share cash actually received from sublicensing Licensed Patents and Licensed Technology in the following manner:

 

2.9. Taxes . LICENSEE further agrees that all sublicenses shall contain an agreement substantially similar to Article 5.2 of this Agreement. If a sublicensee shall fail to comply with such provision (or the sublicense does not provide for such provision), then EMORY’s percentage, as determined in Article 2.8, shall be adjusted so that EMORY shall receive an amount equal to [***] Percent ([***]%) of the royalty, as calculated without reduction for Taxes withheld or due to be withheld on the payment.

2.10. Sublicense Royalty Floor . LICENSEE agrees that payments to EMORY in respect of royalties received by LICENSEE from any sublicensees shall not be less than [***] ([***]%) percent of the Net Selling Price of all Licensed Products Sold by the sublicensee.

2.11. Milestone Payment . LICENSEE shall pay EMORY, as additional partial consideration a Marketing Milestone of [***] ($[***]) Dollars. The Marketing Milestone shall be payable as follows: on each [***] ($[***]) Dollars in Net Sales (up to a cumulative total of [***] ($[***]) Dollars in Net Sales within the Licensed Territory, a Marketing Milestone

 

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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.

 

Payment of [***] ($[***]) Dollars will be due (up to an aggregate of [***] ($[***]) Dollars). Upon payment of the final [***] ($[***]) Dollars in respect of the first [***] ($[***]) Dollars in cumulative Net Sales within the Licensed Territory, the Marketing Milestone Payment obligation shall terminate. Each Marketing Milestone Payment shall be due at the same time the royalty report coveting the royalty period in which such incremental [***] ($[***]) Dollars in Net Sales has been achieved, is due.

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

2.13. 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. LICENSEE 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 and the U.S. Government Licenses, the United States government has certain rights in the Licensed Patents and Licensed Technology. LICENSEE shall take all action necessary to enable EMORY to satisfy its obligations under any federal law relating to the Licensed Patents or Licensed Technology. If the United States government should take action which renders it impossible or impractical for EMORY to grant the rights and license granted herein to LICENSEE under this Agreement or otherwise perform EMORY’s obligations under this Agreement, EMORY or LICENSEE may terminate this Agreement immediately by notice to the other party. LICENSEE shall not have any right to the return of any payments of any kind made by it to EMORY prior to the date of termination.

 

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2.14. Cooperation . During the term of this License Agreement, EMORY shall, at its expense, fully cooperate with LICENSEE in dealing with any persons or entities who may have been previously granted any rights, including manufacturing rights, in respect of any Licensed Patents, Licensed Products or Licensed Technology (all as defined in this License Agreement) including visits to the facilities of any such persons and entities if deemed advisable by EMORY. Without limiting the foregoing, in the event that Triangle is a sublicensee hereunder, EMORY shall use reasonable efforts to facilitate the collaboration between LICENSEE and Triangle, and regardless of the identity of sublicensees EMORY shall make available to LICENSEE any data or intellectual property or other rights relating to FTC obtained during the term hereof from GlaxoWellcome to the extent that making such items available does not violate any obligation of EMORY to GlaxoWellcome or other third party.

2.15. Access to Materials . During the term of this License Agreement, EMORY shall provide LICENSEE with full access upon reasonable notice to all documents and samples, including reagents, which may be in the possession or control of EMORY relating to both the Licensed Patents and Licensed Technology provided to LICENSEE hereunder and shall, within a reasonable period, provide LICENSEE with a true and complete list thereof.

2.16. Cooperation in Regulatory Activities . During the term of this License Agreement, EMORY shall cooperate fully with LICENSEE, in respect of LICENSEE’s pursuit of all regulatory approvals to market and sell Enantiomerically Enriched FTC, provided that all such activities shall be undertaken at the sole expense of LICENSEE.

 

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2.17. U.S. Manufacture . LICENSEE, either directly or through Affiliates or sublicensees, agrees to use its best efforts to manufacture Licensed Products for United States Sales substantially in the United States.

ARTICLE 3.

DILIGENCE AND COMMERCIALIZATION

3.1. Diligence and Commercialization . LICENSEE shall use its reasonable best efforts, either directly or through Affiliates or sublicensees, throughout the term of this Agreement to comply with LICENSEE’s Development Plan and to bring Licensed Products to market in accordance with LICENSEE’s Development Plan through a thorough, vigorous, and diligent program for exploitation of the right and license granted in this Agreement to LICENSEE and to create, supply, and service in the Licensed Territory as extensive a market as possible. In no instance shall LICENSEE’s reasonable best efforts be less than efforts customary in LICENSEE’s industry.

3.2. Lack of Diligence . If EMORY concludes that LICENSEE is not diligent in development or Sales of Licensed Products pursuant to Article 3.1 for any reason other than a) the withholding by a regulatory agency of marketing approval despite LICENSEE’s diligent effort to obtain such approval; or b) unanticipated technical or scientific problems which have been promptly reported to EMORY in writing; or (c) other causes beyond the reasonable control of LICENSEE which have been promptly reported to EMORY in writing; then EMORY may give notice to LICENSEE stating the basis for its conclusion and, upon the request of EMORY, LICENSEE shall show cause why the license granted hereunder should not be terminated. If within ninety (90) days after LICENSEE’s receipt of said notice, the parties have not resolved the matter through good faith negotiations in a mutually acceptable manner, the parties shall submit the dispute to arbitration under the provisions of Article 14 of this Agreement.

 

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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 4.

CONSIDERATION FOR LICENSE

4.1. Purchased Shares . In partial consideration for the license granted to LICENSEE under this Agreement, LICENSEE shall issue to EMORY such number of shares (the “Purchased Shares”) of LICENSEE’s Common Stock, no par value Common Stock, as will cause EMORY to own shares of Common Stock representing [***] percent ([***]%) (in addition to any percentage owned at the date hereof by virtue of any other extant license agreement between EMORY and LICENSEE) of the outstanding shares of the capital stock of LICENSEE on a fully diluted basis, assuming the exercise, conversion and/or exchange of all outstanding securities of LICENSEE for or into shares of Common Stock, all on the terms and conditions as set forth in the stock purchase agreement between LICENSEE and EMORY (“Stock Purchase Agreement”), a copy of which is attached as EXHIBIT “E”.

4.2. Antidilution . In partial consideration for the license granted to LICENSEE under this Agreement, until LICENSEE’s receipt of [***] ($[***]) cash in equity financing prior to (and excluding) the initial underwritten public offering for cash of LICENSEE’s equity securities, LICENSEE shall issue to EMORY, for no additional consideration, from time to time, such number of additional shares of Common Stock (collectively, the “Additional Purchased Shares”) as will cause EMORY to continue to hold shares of Common Stock representing such additional [***] percent ([***]%) of the outstanding capital stock of LICENSEE (referenced in Section 4.1 hereof) on a fully diluted basis, assuming the exercise, conversion and/or exchange of all outstanding securities of LICENSEE for or into shares of Common Stock.

4.3. Royalties . As partial consideration for the license granted to LICENSEE under this Agreement, LICENSEE or Affiliates which are not also sublicensees shall pay EMORY a

 

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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.

 

royalty equal to [***] percent ([***]%) of the Net Selling Price of all Licensed Products Sold by LICENSEE or such Affiliates during the term of this Agreement. Royalties shall be due and payable on a semi-annual basis on December 31 and June 30 of each year.

4.4. Minimum Royalties . LICENSEE shall pay annual minimum royalties to EMORY in accordance with the following schedule:

Year after NDA Registration in the First Major Market

 

If the actual royalties due under Article 4.3 in any year are greater than the minimum royalty payment due for that year, the minimum royalty will be credited against actual royalties due in that year.

If the minimum royalties due in any year are greater than the actual royalties due for that year, the difference shall become a future credit against [***] percent ([***]%) of each earned royalty payment which LICENSEE would be required to pay pursuant to Article 4.3 hereof until the entire credit is exhausted. In no event shall LICENSEE make a payment less than the minimum royalty due in that year.

Minimum royalties shall be paid for a period of [***] ([***]) years after NDA registration in the first Major Market. After such [***] ([***]) year period, minimum royalties shall be paid only so long as the manufacture, use, offer for Sale, Sale or importation of Licensed Products in the Licensed Territory would, in the absence of this license, infringe a Valid Claim.

 

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4.5. Reimbursement for Patent Expenses . LICENSEE shall reimburse EMORY for all reasonable external out-of-pocket fees, costs, and expenses heretofore and hereafter during the term of this Agreement paid or incurred by EMORY in filing, prosecuting, and maintaining the Licensed Patents in the Licensed Territory (excluding any currently pending legal proceedings), which expenses are not required to be reimbursed by Triangle or any prior licensee. LICENSEE shall deliver such reimbursement to EMORY within ninety (90) days after EMORY notifies LICENSEE of out-of-pocket fees, costs and expenses and provides LICENSEE with documentation, including copies of invoices, from time to time of the amount of such fees, costs, and expenses which have been paid or incurred by EMORY.

ARTICLE 5.

REPORTS AND PAYMENTS

5.1. Payments . Unless otherwise specified, all payments required under this Agreement shall be payable within thirty (30) days of the due date for each payment. All payments due under this Agreement shall be made in person or via the United States mail or private courier to the following address:

Director, Office of Technology Transfer

Emory University

2009 Ridgewood Drive

Atlanta, Georgia 30322

5.2. Tax Matters . All payments made to EMORY under the terms of this Agreement (without limitation including the delivery of the Purchased Stock and the Additional Purchased Stock, the royalties, the minimum royalties and the amounts due under Article 2.8 and 2.11) shall be made free and clear of any tax, withholding or other governmental charge or levy (other than taxes imposed on the net income of EMORY), all such non-excluded amounts being taxes.

 

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Should the LICENSEE be obligated by law to withhold any Taxes, the payment due hereunder shall be increased such that after the withholding of the appropriate amount EMORY receives the amount that would have been paid but for the Taxes withheld. Should EMORY be obligated to pay such Taxes, and such Taxes were not satisfied by way of withholding, LICENSEE shall promptly reimburse EMORY for such payment, in an amount such that after the payment of the Taxes, EMORY has received the same amount that it would have received had such Taxes not been payable.

5.3. Progress Reports . LICENSEE will provide EMORY with semi-annual progress reports detailing the activities of LICENSEE relevant to LICENSEE’s Development Plan.

5.4. Royalty Reports . Once royalties are due, within thirty (30) days of December 31 and June 30 of each year, throughout the term of this Agreement and of the year following the termination or expiration of this Agreement, LICENSEE shall render a written report setting forth for the preceding period in question, the following as may be applicable:

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

(b) the amount of royalty payable hereunder; and

(c) any other information reasonably necessary to show the basis on which such royalty has been computed, and

(d) any payments due EMORY pursuant to Article 4.4; and

(e) other income received by LICENSEE from sublicensees and the amounts thereof due to EMORY pursuant to Article 2.7, accompanied by an explanation of the basis of said income and the amount of such income due EMORY; 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.

 

(f) in case no payment is due, LICENSEE shall so report.

Each royalty report shall be accompanied by the payment of all royalties due for the six months in question. Any minimum royalty payment due under Article 4.4 shall accompany the report for six months ending on December 31 of the applicable License Agreement Year.

5.5. 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 six month period for which such payment is due.

5.6. Interest . Payments required under this Agreement shall, if overdue, bear interest until payment at a per annum rate [***] percent ([***]%) above the prime rate in effect as published in the Wall Street Journal on the due date. The payment of such interest shall not foreclose EMORY 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, LICENSEE shall keep at its principal place of business true and accurate records of all Sales in accordance with generally accepted accounting principles in the respective country where such Sales occur and in such form and manner so that all royalties and other payments owed to EMORY may be readily and accurately determined. LICENSEE shall, furnish EMORY copies of such records upon EMORY’s request, which shall not be made more often than once per License Agreement Year.

 

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6.2. Audit of Records . EMORY 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 LICENSEE 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 LICENSEE, the fees and expenses of performing such examination and verification shall be borne by EMORY. LICENSEE shall, subject to Article 14 hereof, immediately pay EMORY any underpayment identified by such independent certified public account. In addition, if such examination reveals an underpayment by LICENSEE of more than five percent (5%) for any six-month period examined, LICENSEE shall reimburse EMORY for all expenses of the accountant reasonably incurred in performing the examination.

ARTICLE 7.

PATENT PROSECUTION

7.1. Triangle License Agreement . LICENSEE acknowledges that the Licensed Patents are subject to an extant License Agreement made and entered into between EMORY and Triangle on April 17, 1996 (hereinafter the “Triangle License”), a redacted copy of which is attached hereto as EXHIBIT “F”. Under the Triangle License, EMORY agreed to prosecute, acquire from the relevant patent offices, defend and maintain and handle any litigation, interference, opposition or other action pertaining to the validity, enforceability, allowability or subsistence (all of the foregoing activities being referred to as “Patent Prosecution Activities”) of all such Licensed Patents in the following countries: United States, EPO countries, Japan, Canada and Australia. EMORY further agreed that if EMORY decided to abandon or allow to

 

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lapse any patent application or patent within the Licensed Patents or discontinue any other Patent Prosecution Activities in respect thereof in any country of the licensed territory thereunder, EMORY would inform Triangle and Triangle would be given the opportunity to assume such Patent Prosecution Activities. The Triangle License provides that Triangle shall reimburse EMORY for all such Patent Prosecution Activities. The Triangle License further provides mechanisms for Triangle to voluntarily discontinue its obligations to reimburse EMORY for such Patent Prosecution Activities, in which case EMORY may discontinue such activities, as well as mechanisms for the loss of Triangle’s license rights with respect to patent applications or issued patents for which Triangle fails to reimburse EMORY for Patent Prosecution Activities.

7.2. Management of Licensed Patents Subject to the Triangle License . To the extent not prohibited by the Triangle License, EMORY shall keep LICENSEE informed regarding significant developments and activities with respect to Licensed Patents which are subject to the Triangle License. LICENSEE shall, subject to the Triangle License, be afforded reasonable opportunities to advise EMORY and cooperate with EMORY in such Patent Prosecution Activities pertaining to the Licensed Patents. In the event that EMORY abandons or allows to lapse any Licensed Patent which is subject to the Triangle License or discontinues any other Patent Prosecution Activities in respect thereof in any country of the licensed territory thereunder, and Triangle does not assume such Patent Prosecution Activities (or in the event that Triangle discontinues reimbursement to EMORY for EMORY’s Patent Prosecution Activities), EMORY shall promptly so notify LICENSEE in writing in which case LICENSEE shall have the right, with patent attorneys selected by it, to perform such Patent Prosecution Activities or to reimburse EMORY therefor, as the case may be. In all cases, each party hereto shall give due consideration to the other party’s or its sublicensees’ position with request to Patent Prosecution

 

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Activities and provide the other party with copies of all domestic and foreign patent office correspondence with respect to such Licensed Patents as well as such additional documentation as a party hereto may reasonably request relating to such Licensed Patents.

7.3. Licensed Patents Not Subject to the Triangle License . If, during the term of this Agreement, LICENSEE wishes EMORY to undertake any Patent Prosecution Activities as that term is defined in Section 7.1, with respect to any Licensed Patent which, at such time, is not, for any reason, subject to the Triangle License, EMORY shall cooperate with LICENSEE in establishing appropriate procedures and mechanisms to undertake such activities. Unless otherwise agreed in writing, all such activities shall be primarily managed by EMORY (and EMORY shall inform and consult with LICENSEE with respect thereto). LICENSEE shall be responsible for promptly reimbursing EMORY for all its reasonable out-of-pocket costs incurred in pursuing such Patent Prosecution Activities.

7.4. Right of First Refusal . LICENSEE acknowledges that it is bound by the right of first refusal provisions of Section 2.7 of the Triangle License, a copy of which is in LICENSEE’s possession.

7.5. Extension of Licensed Patents . LICENSEE may request that EMORY have the normal term of any Licensed Patent extended or restored under a country’s procedure of extending life for time lost in government regulatory approval processes, and the expense of same shall be borne in accordance with the terms of Article 4.5 . LICENSEE shall assist EMORY to take whatever action is necessary to obtain such extension. In the case of such extension, royalties pursuant to Article 4 hereof shall be payable until the end of the extended life of the patent. In the event that LICENSEE does not elect to extend Licensed Patent(s), EMORY may, at its own expense, effect the extension of such Licensed Patent(s) and if in such

 

21

case EMORY elects to pay such expenses, such extended Licensed Patents shall not be subject to any license granted to LICENSEE hereunder.

7.6. Patent Prosecution Activities by Sublicensee . In the event that any sublicense hereunder provides that any Patent Prosecution Activities which LICENSEE is authorized to perform may be performed by such sublicensee, EMORY shall communicate directly with such sublicensee with respect thereto.

ARTICLE 8.

ABATEMENT OF INFRINGEMENT

8.1. Abatement . LICENSEE shall promptly inform EMORY and EMORY will promptly notify LICENSEE of any suspected infringement of any Licensed Patents. LICENSEE acknowledges that pursuant to the extant Triangle License, Triangle has been granted the first opportunity to pursue infringement activities with respect to all Licensed Patents falling within the scope of the Triangle License. During the term of this Agreement, but subject to any prior rights granted to Triangle, EMORY and LICENSEE 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 EMORY and LICENSEE agree to institute suit jointly, the suit shall be brought in both their names and the out-of-pocket costs thereof shall be borne by LICENSEE and any recovery shall first be used to reimburse all out-of-pocket costs. Any recovery or settlement received by EMORY and/or LICENSEE 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 LICENSEE, and LICENSEE shall pay to EMORY an amount representing the royalty which would have been paid by LICENSEE on such amount in accordance with the provisions of Article 4 had such amount been accrued by LICENSEE as Sales. LICENSEE and EMORY shall agree in good

 

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faith upon the manner in which they shall exercise control over such action. EMORY may, if it so desires, also be represented by separate counsel of its own selection, the fees for which counsel shall be paid by EMORY and first reimbursed from any recovery after reimbursement to LICENSEE as provided above in the event of joint suit;

(b) In the absence of agreement to institute a suit jointly, EMORY may institute suit, and, at its option, name LICENSEE as a plaintiff. EMORY shall bear the entire cost of such litigation 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 EMORY notifies LICENSEE that it has decided not to join in or institute a suit, as provided in (a) or (b) above, LICENSEE may institute suit and, at its option, name EMORY as a plaintiff. LICENSEE shall bear the entire cost of such litigation, including defending any counterclaims brought against EMORY and paying any judgements rendered against EMORY, and shall be entitled to retain the entire amount of any recovery or settlement.

8.2. Abandonment . Should either EMORY or LICENSEE 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 in good faith between EMORY and LICENSEE.

ARTICLE 9.

CONFIDENTIALITY

9.1. Non-Disclosure . LICENSEE shall not, without the express written consent of EMORY, for any reason or at any time for a period of five (5) years from the Effective Date of this Agreement disclose to third parties any information disclosed in the Licensed Patents or

 

23

Licensed Technology or any other information pertaining to the Licensed Patents and Licensed Technology disclosed to LICENSEE by EMORY, or the Inventors (such information shall be collectively referred to as “Proprietary Information”). This obligation of nondisclosure shall not extend to information:

(a) which LICENSEE can demonstrate through documentation to have been within LICENSEE’s legitimate possession prior to the time of disclosure of such information to LICENSEE by EMORY or the Inventors;

(b) which was in the public domain prior to disclosure by EMORY, or the Inventors, as evidenced by documents published prior to such disclosure;

(c) which, after disclosure by EMORY or the inventors, comes into the public domain through no fault of LICENSEE;

(d) which is disclosed to LICENSEE by a third party having legitimate possession of the information and the unrestricted right to make such disclosure;

(e) which is disclosed in an issued Licensed Patent or published patent application.

9.2. Limitations . 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 of 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;

 

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(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;

(d) a party may disclose the other party’s information where such disclosure is required by applicable law.

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

ARTICLE 10.

LIMITED WARRANTY, MERCHANTABILITY AND EXCLUSION OF WARRANTIES

EMORY 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 EMORY is a party. EMORY 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 LICENSEE or its Affiliates without infringing other patents.

LICENSEE possesses 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, EMORY MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE LICENSED PATENTS OR

 

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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.

ARTICLE 11.

DAMAGES, INDEMNIFICATION, AND INSURANCE

11.1. No Liability . EMORY shall not be liable to LICENSEE or LICENSEE’s customers or sublicensees, for special, incidental, indirect, or consequential damages resulting from defects in the design, testing, labeling, manufacture, or other application of Licensed Products manufactured, tested, designed, sublicensed, or Sold pursuant to this Agreement.

11.2. Indemnification . LICENSEE 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 (including death) and property damage caused or contributed to in whole or in part by LICENSEE’s or any sublicensee’s manufacture, testing, design, use, sale, or labeling of any Licensed Products, or the. practice of any Licensed Patents (and LICENSEE shall include a similar provision in any sublicense). LICENSEE’s obligations under this Article shall survive the expiration or termination of this Agreement for any reason.

11.3. Covenant Not to Sue . To the extent that the rights have not already been licensed exclusively to another party, EMORY agrees not to sue LICENSEE or its Affiliates or sublicensees for patent infringement for practicing a claim of a patent assigned to EMORY, as of

 

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the date of this Agreement, if practicing said claim is required to make, have made, use, import, offer for Sale, Sell or have Sold Licensed Products.

11.4. Insurance . Without limiting LICENSEE’s indemnity obligations under the preceding paragraph, if LICENSEE is Selling Licensed Products, LICENSEE shall maintain throughout the term of this Agreement and at least ten (10) years thereafter a “claims made” type liability policy. If LICENSEE is not able to obtain a “claims made” policy, LICENSEE shall procure a term liability policy with tail coverage for at least ten (10) years thereafter after expiration of this Agreement (and if an Affiliate or sublicensee is Selling Licensed Products, LICENSEE shall cause its agreement with such Affiliate or sublicensee to require such party to obtain such liability insurance policy) which:

(a) insures Indemnitees for all claims, damages, and actions mentioned in Article 11.2 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 EMORY with 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 Indemnitees product liability coverage in an amount no less than One Million ($1,000,000.00) Dollars per occurrence for bodily injury and One Million ($1,000,000.00) Dollars per occurrence for property damage, subject to a reasonable aggregate amount.

 

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11.5. Notice of Claims . LICENSEE shall promptly notify EMORY of all claims involving the Indemnitees and will advise EMORY 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 date hereof and shall continue until the date of expiration of the last to expire of the Licensed Patents, including any renewals or extensions thereof.

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

(a) failure of LICENSEE to make any payment required pursuant to this Agreement when due; or

(b) failure of LICENSEE to render reports to EMORY as required by this Agreement; or

(c) the insolvency of or cessation of business by LICENSEE; or

(d) the institution of any proceeding by LICENSEE under any insolvency, or moratorium law; or

(e) any assignment by LICENSEE of substantially all of its assets for the benefit of creditors; or

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

(g) the breach of any other material term of this Agreement.

 

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

12.4. Exercise . EMORY may exercise its rights of termination by giving LICENSEE, its trustees or receivers or assigns, sixty (60) days prior written notice of EMORY’s’ election to terminate. Upon the expiration of such period, this Agreement shall automatically terminate unless the LICENSEE has cured the breach. Such notice and termination shall not prejudice EMORY’s right to receive royalties or other sums due hereunder and shall not prejudice any cause of action or claim of EMORY accrued or to accrue on account of any breach or default by LICENSEE.

12.5. Failure to Enforce . The failure of EMORY 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 EMORY thereafter to enforce each and every such provision.

12.6. Termination by LICENSEE . LICENSEE may terminate this Agreement at its sole discretion upon three (3) months’ written notice to EMORY. In the event of such termination, LICENSEE agrees, upon the request of EMORY, to provide EMORY with all existing data in LICENSEE’s possession or control in support of registration of Licensed Products for the Field of Use with the relevant governmental agencies. EMORY shall have the unrestricted right to provide such data to third parties.

 

29

12.7. Effect . In the event this Agreement is terminated for any reason whatsoever, LICENSEE shall return, or at EMORY’s direction destroy, all plans, drawings, papers, notes, writings and other documents, samples, organisms, biological and chemical materials and models pertaining to the Licensed Patents or 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, and shall refrain from using or publishing any portion of the Licensed Technology as provided in Article 9 of this Agreement. Upon termination of this Agreement, LICENSEE shall cease manufacturing, processing, producing, using, or Selling Licensed Products; provided, however, that LICENSEE 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 LICENSEE’s normal inventory at the date of termination if (a) all monetary obligations of LICENSEE to EMORY have been satisfied and (b) royalties on such sales are paid to EMORY in the amounts and in the manner provided in this Agreement. However, nothing herein shall be construed to release either party of any obligation which matured prior to the Effective Date of such termination. In the event of termination, LICENSEE shall further cooperate fully with EMORY in allowing EMORY or any subsequent licensee of EMORY to cross reference, or through other lawful mechanisms, obtain access to all regulatory filings, approvals and data obtained by LICENSEE, its Affiliates and sublicensees in LICENSEE’s possession relating to Licensed Products, at no cost to LICENSEE. LICENSEE further agrees not to assert any patent or other right controlled by LICENSEE against EMORY or any subsequent EMORY licensee in connection with the importation, manufacture, use or sale of a Licensed Product.

 

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12.8. Survival . The provisions of Articles 9, 10, and 11 of this Agreement shall remain in full force and effect notwithstanding the termination of this Agreement.

ARTICLE 13.

ASSIGNMENT

Except for an assignment to a U. S. Affiliate, LICENSEE shall not grant, transfer, convey, or otherwise assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of EMORY which shall not be unreasonably withheld, except as explicitly permitted under this Agreement.

ARTICLE 14.

ARBITRATION

Any dispute related to this Agreement shall be settled by arbitration. Arbitration shall be conducted under the Commercial Arbitration Rules of the American Arbitration Association by three arbitrators, one to be appointed by EMORY, one to be appointed by LICENSEE, and one to be appointed by the two arbitrators appointed by EMORY and LICENSEE. Arbitration shall take place in Atlanta, Georgia, and the decision of the arbitrators shall be enforceable, but not appealable, in any court of competent jurisdiction. The fees and expenses incurred in connection with such arbitration shall be borne by the party initiating the arbitration proceeding (or equally by both parties if both parties jointly initiate such proceeding) subject to reimbursement by the party which does not prevail in such proceeding promptly upon the termination thereof in the event that the party initiating such proceeding is the prevailing party.

ARTICLE 15.

MISCELLANEOUS

15.1. Export Control . LICENSEE acknowledges that EMORY is subject to United States laws and regulations controlling the export of technical data, computer software,

 

31

laboratory prototypes, and other commodities and that EMORY’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 LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without the prior approval of certain United States agencies. EMORY neither represents that an export license shall not be required nor that, if required, such export license shall issue.

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

15.3. Independent Contractor . LICENSEE’s relationship to EMORY shall be that of a licensee only. LICENSEE shall not be the agent of EMORY and shall have no authority to act for or on behalf of EMORY in any matter. Persons retained by LICENSEE as employees or agents shall not by reason thereof be deemed to be employees or agents of EMORY.

15.4. Patent Marking . LICENSEE 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.

15.5. Use of Names . LICENSEE shall obtain the prior written approval of EMORY, or the EMORY Inventors prior to making use of their names for any commercial purpose, except as required by law. As an exception to the foregoing, both LICENSEE and EMORY shall have the right to disclose the existence of this Agreement; however, neither LICENSEE nor EMORY

 

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shall disclose any terms and conditions of this Agreement without the other party’s consent, except to sublicensees and as required by law.

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

15.7. 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 without regard to choice of law principles and of the United States of America.

15.8. Entire Agreement . This Agreement constitutes the entire agreement between EMORY and LICENSEE 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.

15.9. 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

 

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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 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.

15.10. 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.

 

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ARTICLE 16.

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 request 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:

 

Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by hand, three business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one business day after it is sent via a reputable nationwide overnight courier service, or when transmitted with electronic confirmation of receipt, if transmitted by facsimile (if such transmission is on a business day; otherwise, on the next business day following such transmission).

 

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

 

EMORY UNIVERSITY						PHARMASSET, LTD.
By:		/s/ Joseph W. Crooks				By:		/s/ Raymond F. Schinazi, Ph.D.
Name:		Joseph W. Crooks				Name:		Raymond F. Schinazi, Ph.D.
Title:		Senior Vice President and				Title:		Director
		General Counsel
						By:		/s/ Martin J. K. Pritchard
						Name:		Martin J. K. Pritchard
						Title:		Director

 

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EXHIBIT “A”

Licensed Patents

 

A-1

 

A-2

 

A-3

 

A-4

EXHIBIT “B”

Licensee’s Development Plan

EXHIBIT B

Pharmasset’s Development Plan for HIV

 

Depending on results obtained for HIV, the HBV studies will be delayed by approximately 12-16 months.

 

B-1

EXHIBIT “C”

U.S. Government Licenses

(Intentionally left blank in execution copy)

EXHIBIT “D”

Letter re: Triangle License

June 4, 1999

Emory University

Office of Technology Transfer

2009 Ridgewood Drive

Atlanta, Georgia 30322

 

Re:

Emory University/Pharmasset, Ltd. License Agreement (Racemic FTC)

Gentlemen:

The License Agreement by and between Emory University (“Emory”) and Triangle Pharmaceuticals, Inc. (“Triangle”) dated April 17, 1996 (“License Agreement”) under which Emory Granted to Triangle exclusive license rights to commercially develop the (-) enantiomer of FTC provides to Triangle, in Section 2.7 (b) thereof, a right of first refusal with respect to any license or assignment agreement with a third party relating to Emory’s rights to Enantiomerically Enriched FTC (as therein defined) and further provides, in Section 2.7(c) thereof, that a license or assignment to any Permitted Transferee (as therein defined) would be outside the scope of such right of first refusal so long as the Permitted Transferee agrees in writing to be bound by the terms of the right of first refusal prior to entering such license or assignment.

Pharmasset, Ltd. (“Pharmasset”) is a corporate entity formed by the Inventors (as defined therein) for the purposes, among others, of developing Enantiometrically Enriched FTC and hence is a Permitted Transferee. Pharmasset and Emory have negotiated a license agreement with Emory covering Enantiomerically Enriched FTC.

Pharmasset hereby agrees, in accordance with Section 2.7(c) of the License Agreement, to be bound by all of the terms of Section 2.79b) of the License Agreement to the same extent as Emory is bound thereby.

 

 

D-1

EXHIBIT “E”

Stock Purchase Agreement

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.

 

STOCK PURCHASE AGREEMENT

OF EMORY UNIVERSITY

This Stock Purchase Agreement (this “Agreement”) is made on December 10, 1998, by and between PHARMASSET, LTD., a Barbados corporation (“Licensee”) and EMORY UNIVERSITY, a Georgia nonprofit corporation with principal offices located at 1380 South Oxford Road, Atlanta, Georgia 30322 (“University”).

BACKGROUND

A. Concurrently with the execution of this Agreement, University is entering into a License Agreement with Licensee dated the date hereof in respect of enantiomerically enriched FTC (the “License Agreement”), whereby University is licensing to Licensee certain technology owned by University; and

B. In partial consideration for the execution and delivery of the License Agreement by University, Licensee has agreed to issue to University certain shares of Licensee’s capital stock in accordance with the terms and conditions of this Agreement;

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

ARTICLE I

PURCHASE OF SHARES

1.1 Purchase . In partial consideration for the execution and delivery of the License Agreement by University, Licensee hereby agrees to sell and issue to University such number of shares (the “Purchased Shares”) of Licensee’s common stock (“Common Stock”), as will cause University to own shares of Common Stock representing [***] percent ([***]%) (in addition to any percentage owned at the date hereof by virtue of any other extant license agreement between Licensee and University) of the outstanding and the reserved shares of the capital stock of Licensee on a fully diluted basis, assuming the exercise, conversion and/or exchange of all outstanding securities of Licensee for or into shares of Common Stock, on the terms and conditions as hereinafter set forth. Licensee presently anticipates that the initial equity capitalization of Licensee shall consist of [***] ([***]) shares of Common Stock, although not all of such shares are presently outstanding. The number of shares of Common Stock being issued simultaneously herewith is One Hundred Thousand (100,000).

1.2 Closing . The purchase and sale of the Purchased Shares shall occur contemporaneously with the execution and delivery of the License Agreement at a closing (the “Closing”) to be held at a time (the “Closing Date”) and place agreed upon by the parties. At the Closing, University shall deliver to Licensee an executed copy of each of this Agreement and the License Agreement (collectively, the “Transaction Documents”), and Licensee shall deliver to

 

E-1

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.

 

University a fully executed copy of each of the Transaction Documents and a stock certificate or certificates representing the Purchased Shares.

1.3 Additional Purchases . In partial consideration for the execution and delivery of the License Agreement by University, until Licensee has received [***] Dollars ($[***]) cash in equity financing prior to (and excluding) the initial underwritten public offering for cash of Licensee’s equity securities, Licensee shall issue to University, for no additional consideration, from time to time, such number of additional shares of Common Stock (collectively, the “Additional Purchased Shares”) as will cause University to continue to hold shares of Common Stock representing such additional [***] percent ([***]%) of the outstanding capital stock of Licensee (referenced in Section 1.1 hereof) on a fully diluted basis, assuming the exercise, conversion and/or exchange of all outstanding securities of Licensee for or into shares of Common Stock. Each purchase and sale of any Additional Purchased Shares shall occur at a time and place designated by Licensee, at which University shall deliver to Licensee such documents as Licensee may reasonably require and Licensee shall deliver to University a stock certificate or certificates representing such Additional Purchased Shares.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

2.1 Representations and Warranties of Licensee . Licensee hereby represents and warrants to University as follows:

(a) Organization and Good Standing . Licensee is a corporation duly organized, validly existing and in good standing under the laws of Barbados and has all requisite corporate power and corporate authority to carry on its business as now conducted and as proposed to be conducted.

(b) Capitalization . The capital stock Licensee is authorized to issue, and the number of outstanding shares are as set forth on Exhibit A attached hereto. Except as set forth on Exhibit A , no other person has any right of first refusal or any preemptive rights in connection with the issuance of the Purchased Shares or the Additional Purchased Shares (collectively, the “Shares”).

(c) Articles of Incorporation . A true and complete copy of the current version of Licensee’s Articles of Incorporation is attached hereto as Exhibit B . The Articles will be further modified as described in Exhibit B .

(d) Authorization . All corporate action on the part of Licensee, its officers, directors and shareholders necessary for the authorization, execution and delivery of the Transaction Documents and the transactions contemplated thereby, the performance of all obligations of Licensee under the Termination Documents and the authorization, issuance and delivery of the Shares pursuant to this Agreement has been taken. Each of the Transaction Documents constitute the valid and legally binding obligations of Licensee enforceable in accordance with its terms.

 

E-2

(e) Valid Issuance of the Shares . The Shares, when issued, sold and delivered in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable; free of any liens, options, encumbrances, proxies, adverse claims or restrictions; and, assuming the accuracy of University’s representations in this Agreement at the time of each such issuance, issued in compliance with all applicable federal and state securities laws. Issuance of the Shares is not subject to preemptive or any similar rights of Licensee or others.

(f) Governmental Consents . No consent, approval, order or authorization of, or registration, qualification, designation, declaration of filing with, any federal, state, or local governmental authority (other than filings required to be made under applicable Federal and State securities laws) on the part of Licensee is required in connection with the authorization, execution, delivery of this Agreement and performance of all obligations of Licensee under this Agreement, and the authorization, issuance and delivery of the Shares pursuant to this Agreement.

(g) Litigation . There is no action, suit, proceeding or investigation pending or, to Licensee’s knowledge, threatened against Licensee.

(h) No Conflict with Other Instruments . Licensee is not in violation or default of any provisions of Licensee’s Articles of Incorporation, Bylaws or other charter decree or contract to which Licensee is a party or by which Licensee is bound or of any provision of any statute, rule or regulation applicable to Licensee. The execution, delivery and performance of this Agreement will not result in any violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice: (i) any provision of the Articles of Incorporation and Bylaws of Licensee (collectively, the “Charter Documents”); (ii) any provision of any judgment, decree or order to which Licensee is a party or by which Licensee is bound; (iii) any material contract, obligation or commitment to which Licensee is a party or by which Licensee is bound; (iv) any statute, rule or regulation applicable to Licensee.

(i) Absence of Claims . There are no actions, suits, claims, investigations or legal or administrative proceedings pending or, to the best of Licensee’s knowledge and belief, threatened, against Licensee, and there are no judgments, decrees or orders of any court, or government department, commission or agency entered or existing against Licensee or any of its assets or properties.

(j) Solvency . Licensee has not admitted in writing its inability to pay its debts generally as they become due, filed or consented to the filing against it of a petition in bankruptcy or a petition to take advantage of any insolvency act, made an assignment for the benefit of creditors, consented to the appointment of a receiver for itself or for the whole or any substantial part of its property, or had a petition in bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other laws of the United States or any other jurisdiction.

 

E-3

(k) Compliance with Securities Laws . The offer, grant, sale, and/or issuance of the Shares will not be in violation of the Securities and Exchange Act of 1933, as amended (the “1933 Act”), the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), any state securities or “blue sky” law, any applicable securities law in any jurisdiction or the Charter Documents, when offered, sold and issued in accordance with this Agreement.

(l) Transfer Restrictions . The Board of Directors of Licensee has approved all transfers of shares of Common Stock contemplated hereunder. Accordingly, once the Articles of Incorporation are amended in the manner set forth in Exhibit B , t