TECHNOLOGY LICENSE
AGREEMENT
License
Agreement (“ Agreement ”), effective as of
August 3, 2006 between THE BOARD OF TRUSTEES OF THE UNIVERSITY
OF ILLINOIS, (the “ University ”), and ACUITY
PHARMACEUTICALS, INC., a Delaware corporation, having its principle
place of business at 3701 Market Street, Philadelphia, PA, 19104
(“ Licensee ” or “ Acuity
”).
University
holds certain rights to the Technology described below and desires
to have the Technology commercialized. Licensee wishes to obtain
the right to use the Technology for commercial purposes. Therefore,
in consideration of the mutual obligations set forth below and
other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, University and Licensee agree as
follows.
The
following capitalized terms are used in this Agreement with the
following meanings:
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1.1.
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“ Effective Date
” means August 3, 2006.
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1.2.
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“FDA”
means the United States
Food and Drug Administration, or any successor thereto.
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1.3.
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“ IND ” means an
“investigational new drug application” as defined by
the United States Food, Drug, and Cosmetic Act, as amended (the
“Act”), and applicable FDA rules and regulations or a
foreign equivalent.
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1.4.
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“Inventions
” means all
devices, machines, methods, processes, manufactures, compositions
of matter and uses, and Technical Information, contained in the
disclosure entitled “CW081 Silencing of TGF ß Receptor
Expression by SiRNA.”
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1.5.
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“ Licensed Field
” means the inhibition of and treatment of ophthalmic
disease.
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1.6.
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“ Licensed Patents
” means (a) the patents and patent applications listed
on Schedule 1 and any continuations, divisionals, reissues,
renewals, re-examinations, foreign counterparts, or substitutions
of or to the above.
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1.7.
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“ Licensed Product
” means any product or process or license for information, in
the Field of Use, that is distributed by Licensee that is covered
by any of the University’s rights in the
Technology.
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1.8.
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“NDA”
means a “new drug
application,” as defined in the Act and applicable FDA rules
and regulations, including an application of the type described in
section 505(b)(2) of the Act.
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1.9.
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“ Net Sales ”
means the total gross proceeds to Licensee on sales and any other
distributions of Licensed Products to third parties, less
deductions for the following to the extent actually paid with
respect to such sales or distributions:
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(a)
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Customary rebates;
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(b)
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Commissions allowed to distributors
or direct sales force;
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(c)
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Amounts repaid or credited to
customers on account of rejections or returns of specified products
for which a royalty was paid under this Agreement; and
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(d)
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Freight and other transportation
costs, including insurance charges, and duties, tariffs, sales and
excise taxes and other governmental charges based directly on
sales, turnover or delivery of the specified products;
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1.10.
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“ Net Sublicense
Payments ” means (a) cash payments made to Licensee
in consideration of the sublicense; and (b) the fair market
value of any non-cash consideration received by Licensee from a
Sublicense in consideration of a Sublicense; provided, however that
the following shall not be included in the calculation of Net
Sublicense Payments (i) reasonable amounts received in
exchange for equity investments in Licensee where no Sublicense is
granted in consideration for such amounts received in exchange for
equity investments; (ii) sponsored research funding paid to
Licensee by a sublicensee in a bona fide transaction for future
research to be performed by Licensee, where no Sublicense is
granted in consideration for such amounts received in exchange for
future research to be performed by Licensee; (iii) payments
for consulting services actually performed by Licensee in a bona
fide transaction at arms length rates where the consulting services
do not utilize the Technology; and (iv) intellectual property
rights received by Licensee from a Sublicensee, including, but not
limited to, licenses or sublicenses to intellectual property
rights, covenants not to compete against Licensee, or agreements
not to assert claims against Licensee where no sublicense to
Technology is granted in exchange for such rights.
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1.11.
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“ Royalty ” or
“ Royalties ” means all amounts payable under
Section 3 of this Agreement.
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1.12.
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“ Sublicense ”
means any grant by Licensee of any rights to a Sublicensee in
accordance with Article II of this Agreement.
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1.13.
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“ Sublicensee ”
means any person or entity to which a Sublicense is granted in
accordance with Article II of this Agreement.
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1.14.
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“ Technical Information
” means the non-patented technical information and know-how
belonging to University that is (a) relating to the Inventions
or Licensed Patents or Licensed Products, (b) communicated,
transferred or otherwise conveyed to Licensee by any of the
University or any employee or agent of the University, and
(c) which, at the time it is communicated to Licensee, is not
in the public domain in the same form as communicated to
Licensee.
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1.15.
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Technology ” means the Inventions,
Licensed Patents and Technical Information,
collectively.
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1.16.
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“ Territory ”
means all countries where patent rights are enforceable with
respect to patents, and worldwide for Technical
Information.
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ARTICLE II
GRANT OF LICENSE
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2.1.
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Grant . Subject to Licensee’s
compliance with the terms and conditions of this Agreement,
University hereby grants to Licensee the exclusive right and
license, including the right to sublicense, to use the Technology,
and to the extent not prohibited by law, to make, have made, use,
import, sell or otherwise commercialize Licensed Products within
the Licensed Field and within the Territory, which shall be
worldwide for pending patent applications and Technical
Information, and which shall be any country in which claims of a
Licensed Patent are issued and enforceable.
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2.2.
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Reservations .
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(a)
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University reserves for itself all
rights not granted herein and the irrevocable right to identify,
make, have made, use and have used only for any research or
educational purpose, the Technology within the Licensed Field and
within the Territory.
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(b)
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Inventions may have been conceived
with the use of United States government funds under a grant from
an agency or department of the United States Government. Therefore,
there is reserved from the rights granted hereunder the rights, if
any, of the United States government to practice the Inventions for
its own purposes in such manner to which it is entitled. University
further reserves for itself the right to grant to the United States
Government a royalty-free license or licenses, with the right to
sublicense, to the Technology to the extent that such grant of
license(s) is or may be required by funding agreements between the
University and the United States Government relating to the
Technology.
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(c)
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Rights to any Technology not
expressly granted to Licensee hereunder or reserved to third
parties are hereby expressly reserved to the University, and such
Technology are licensed under this Agreement only to the extent
owned by, or assigned to, the University. No title in or to the
Technology is transferred to Licensee pursuant to this Agreement.
The University does not and shall not have any obligation to pay
Licensee a royalty or any other fee for any of the rights reserved
to the University in this Section 2.2.
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2.3.
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Sublicenses . In the event that Licensee
sublicenses any of its rights to any Sublicensee, such Sublicense
shall contain license, audit and confidentiality terms no less
restrictive than those set forth herein and no terms shall create a
conflict with this Agreement, and if requested, Licensee shall
provide a complete copy of all Sublicenses entered into by Licensee
within five (5) business days of University’s request.
Licensee further agrees to provide University with a copy of each
report received by Licensee from a Sublicensee pertinent to any
royalties or other sums owing to Licensee. University shall be a
third party beneficiary in all Sublicenses, and shall be named as
such in writing in all Sublicenses.
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2.4.
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No Obligation to Update
Technology .
Except as expressly stated in this Agreement, none of University or
any faculty, staff, employee or student of the University shall
have any
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obligation to
provide Licensee or any Sublicensee with any updates of or
additional Technical Information owned, controlled or in the
possession of any of them.
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3.1.
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Royalties and
Reimbursements . For the licenses granted in
Section 2.1 of this Agreement, Licensee shall:
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(a)
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within three (3) business days
of the execution of this Agreement, pay University a non-refundable
licensing fee in the amount of $25,000;
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(b)
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within thirty (30) days of the
first and second anniversary of the Effective Date, pay University
a non-refundable licensing fee in the amount of $25,000;
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(c)
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within thirty (30) days of the
third anniversary of the Effective Date, pay University a
non-refundable licensing fee in the amount of $50,000;
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(d)
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within thirty (30) days of the
fourth anniversary of the Effective Date, pay University a
non-refundable licensing fee in the amount of $50,000;
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(e)
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within thirty (30) days of the
fifth anniversary of the Effective Date and each subsequent
anniversary thereafter until the Licensee receives NDA approval on
its first Licensed Product, pay University an annual non-refundable
licensing fee in the amount of $100,000;
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(f)
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pay
University a Royalty equal to three percent (3%) of Net Sales of
Licensed Products sold, leased, rented, licensed or otherwise
distributed by Licensee during the term of this Agreement, if any.
If no valid claim of any issued patent among the Licensed Patents
covers the Licensed Products in a country of the Territory, then
the royalties shall be reduced to one and one-half percent (1.5%)
of Net Sales of Licensed Products sold, leased, rented, licensed or
otherwise distributed by Licensee in such country of the
Territory.
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3.2.
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Milestones and Milestone
Payments .
Licensee agrees to make the milestone payments to University as set
forth below (the “ Milestone Payments ”) within
forty-five (45) days after the occurrence of each event set
forth on such Schedule.
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Milestone
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Payment
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First Phase I Clinical Trial
initiated
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$
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100,000
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First Phase III Clinical Trial
initiated
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$
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350,000
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First NDA Approval in the U.S
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$
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500,000
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First NDA Equivalent Approval outside of
US
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$
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500,000
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Upon first $25,000,000 of commercial sales of
any Licensed Products
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$
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1,000,000
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Each of the
foregoing payments shall be made only once. Thereafter, no
additional Milestone Payments shall be due or payable by Licensee
for License Products.
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3.3.
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Calculations and Payment of
Royalties.
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(a)
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Royalties shall be paid in quarterly
increments (the “Royalty Period”). Royalties shall be
calculated for each Royalty Period as of the last day of each such
Royalty Period. Payment of Royalties with respect to each Royalty
Period shall be due within sixty (60) days after the end of
Royalty Period, beginning with the earlier of (i) the Royalty
Period in which the first sale of a Licensed Product occurs, or
(ii) the Royalty Period for which Annual Minimum Royalties are
due.
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(b)
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Within sixty (60) days of the
end of each Royalty Period (whether or not Royalties are due),
Licensee shall deliver to University a true and complete accounting
of sales or distributions of any Licensed Product and revenues from
those sales by Licensee and its Sublicensees for each country of
sales origin during such Royalty Period and deductions taken, with
a separate accounting for each Licensed Product of sales and
receipts by country, and a detailed calculation of the Royalty
payment due University for such Royalty Period, in each case in
form and substance as set forth on Exhibit A attached
to this Agreement. If no sales of Licensed Products were made or
other payments due in such Royalty Period, then Licensee’s
statement shall so state.
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(c)
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Each Annual Minimum Royalty payment
shall be accompanied by a calculation of the Annual Minimum Royalty
such that University can verify the amount of the
payment.
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3.4.
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Royalty stacking and combination
products :
The royalty rate will not diminish for combination products or
stacking royalties.
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3.5.
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Annual Minimum Payments
. Beginning one year
after the Licensee or any Sublicensee receives NDA approval on its
first Licensed Product, it the total payments actually paid to
University payments (including any payments required pursuant to
this Article III) for any annual period are less than
$400,000, Licensee shall pay University an amount (the “
Annual Minimum Royalty ”) for that annual period equal
to the difference between the payments actually paid for such
annual period and the Annual Minimum Royalty owing for that annual
period. Such payment shall be made within forty five days of the
end of each year of this Agreement beginning one year after the
Licensee receives NDA approval on its first Licensed Product. If
this Agreement is terminated by Licensee for any reason during any
year, a pro-rata Annual Minimum Royalty shall be paid.
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3.6.
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Sublicense Fees.
During the Term,
Licensee will pay to University a sublicense fee equal to twelve
(12%) of the Net Sublicense Payments received by Licensee from
Sublicensees who sell Licensed Products pursuant to a
Sublicense.
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3.7.
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Records . Licensee shall keep, and shall
cause Sublicensees to keep, accurate records in sufficient and
customary detail such that the amounts payable may be verified.
During the term of this Agreement and for a period of seven
(7) years following termination, upon the written request of
University, but not more than once in any calendar year, Licensee
shall provide a copy of its books and records regarding the sale of
Licensed Products, to a representative of University that is
trained in auditing to audit such books and records. If Licensee
disputes the findings of such representative and the parties are
unable to resolve the matter in 30 days, then, at
Licensee’s expense, University shall select an auditor from
an independent certified public accounting firm from Ernst and
Young, KPMG, PWC or
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Deloitte &
Touche to perform an audit, and the results shall be binding upon
the University provided Licensee provides the auditors all
reasonably requested information. Such records shall include but
not be limited to invoice registers and original invoices; product
sales analysis reports; price lists, accounting general ledgers;
sublicense and distributor agreements; price lists, product
catalogues and marketing materials; financial statements and income
tax returns; sales tax returns; inventory and production records
and shipping documents. No separate confidentiality agreement will
be required to conduct such an examination or audit, and the
results of the audit shall be treated as Confidential Information
unless and until a related legal action is taken. Additionally, it
is understood that the University or its representative will be
allowed to keep a copy of all documents provided by the Licensee
hereunder and all documents created by the University or its
representative in connection with such examination or audit for
archival purposes.
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3.8.
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Payments . All amounts owing to University
under this Agreement shall be paid in U.S. dollars, by check or
other instrument representing immediately available funds payable
to “The University of Illinois,” or in a wire transfer
sent to an account listed below or such other account as may be
designated by University from time to time.
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JPMorgan Chase
Bank, NA
New York NY
ABA/Routing No. 021000021
Account Title: University of Illinois Operations
Account Number: 11-12201
Reference: OTM/CW081/Acuity
Swift code: CHASUS33 if from foreign country
Please email
cashmgmt@uillinois.edu with anticipated wire amount, where it is
coming from, etc.
If Licensee or
any Sublicensee receives payment in a currency other than U.S.
dollars, such currency will be converted directly from the currency
in the country of sales origin to U.S. dollars on the date initial
payment was made, without intermediate conversions, and payments
will be made based on such conversion. The conversion rate shall be
the applicable rate of exchange of Citibank, N.A., in New York, New
York, on the last day of each month during which revenues are
received by Licensee during the Royalty Period .
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3.9.
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Overdue Payments
. Overdue Payments shall
bear simple interest until paid at the lower of the annual rate of
18% or the highest rate permitted by law. Interest accruing under
this Section shall be due University on demand
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3.10.
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Termination Report and
Payment .
Within sixty (60) days after the date of termination of this
Agreement, Licensee shall make a final report and payment to
University as set forth in this Agreement for the then-current
Royalty Period.
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3.11.
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Commercialization; Progress
Report .
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(a)
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Licensee shall use its commercially
reasonable efforts to bring Licensed Products to market within the
Licensed Field in the United States and other large markets in the
Territory, and to develop such markets through a thorough and
vigorous program for
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the commercial
exploitation of the Licensed Products and Technology. In the event
that (i) neither Licensee nor any of its Sublicensees files an
IND, or its equivalent, with the FDA, or a similar agency in
another jurisdiction, for a Licensed Product before or on the 4th
anniversary of the Effective Date; or (ii) neither Licensee
nor any of its Sublicensees files an NDA, or its equivalent, with
the FDA, or a similar agency for the a Licensed Product within ten
(10) years after filing the related IND, University shall have
the right to terminate the Agreement upon 90 days notice to
Licensee and Licensee’s failure cure within such 90 day
period.
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(b)
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Licensee shall further provide to
the University:
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(i)
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a
copy of all business plans distributed to prospective investors and
all financial information distributed to any shareholder regardless
of class of shares;
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(ii)
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promptly as made available by
Licensee to any third party, any updates of the above;
and
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(iii)
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on
or before the anniversary date of each year during the term of this
Agreement, a written report summarizing performance against the
goals set forth in the Milestones.
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(a)
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Licensee agrees to pay
$3,74
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