Exhibit 10.5
SUBLICENSE AGREEMENT
This revised SUBLICENSE AGREEMENT ("Sublicense" or "Agreement") is made and
entered into by and BioDelivery Sciences International, Inc. and BioDelivery
Sciences Inc. (herein jointly referred to as "BDS") and Tatton Technologies, LLC
("Tatton") as of this 10th day of August, 2001.
W I T N E S S E T H :
WHEREAS, BDS is developing and commercializing a cochleate delivery system
pursuant to patents, pending patent applications and proprietary and trade
secret information (herein the "BDS Technology"); and
WHEREAS, Tatton is developing and commercializing technology regarding
certain apoptotic pharmaceutical and apoptotic nutriceutical treatments as
described in the License Agreement dated July 20, 2000 between GreyCell
Pharmaceutical Research, Inc. and Wm. Tatton, MD, PhD and Tatton, and in the
License Agreement dated July 5, 2000 between The University of Toronto
Innovations Foundation and Tatton (hereinafter jointly referred to as the
"Tatton Technology"); and
WHEREAS, BDS wishes to grant to Tatton a sublicense to all of the BDS
Technology, whether patented or unpatented, for the delivery of apoptotic
pharmaceuticals and apoptotic nutriceuticals, pursuant to the Tatton Technology.
NOW THEREFORE, for good and valuable consideration, in hand received,
including the mutual covenants and promises of the parties as set forth in this
Agreement, the parties mutually agree as follows:
1. SUBLICENSE. BDS hereby grants Tatton the exclusive, perpetual,
worldwide right to commercialize, manufacture, sell, market, apply, and utilize
all of the BDS Technology, whether patented or unpatented, for, but only for,
the purposes of delivery of antiapoptotic pharmaceuticals and antiapoptotic
nutriceuticals, which are specifically part of the Tatton Technology (the
"Designated Use"). The parties expressly acknowledge that on the date hereof,
BDS granted a separate sublicense to Warex, Inc. for use of the BDS Technology
for the delivery of apoptotic pharmaceutical and apoptotic nutriceutical
treatment of retinal disease and glaucoma, pursuant to the sublicense granted by
Tatton to Warex on January 4, 2001 (the "Warex Sublicense"). The uses of the BDS
Technology granted to Warex, Inc., pursuant to the Warex Sublicense are
expressly excluded from the Designated Use granted to Tatton pursuant to this
Agreement. Except as permitted in the Warex Sublicense, BDS shall not permit any
other person or entity to use or apply the BDS Technology, or any part thereof,
for the Designated Use, as defined herein, without the prior written permission
of Tatton which may be withheld in the sole discretion of Tatton. Other than the
specific restriction as set forth in the preceeding sentence which is by its
terms limited to the Designated Use as defined herein, BDS shall be unrestricted
in all application and uses of its technology during and following the term
hereof. Further, BDS agrees to immediately notify Tatton of any use,
infringement or claim threatened or asserted by any third party relating to the
BDS Technology used for the Designated Use and
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will cooperate with Tatton in the defense of such infringement or claim as same
relates to the Designated Use.
2. COMMERCIALIZATION. Tatton agrees to exercise its reasonable efforts to
commercialize the BDS Technology for the Designated Use through commercial
sales, sublicenses, joint development agreements, and other commercialization
efforts as determined appropriate in the sole discretion and judgment of Tatton.
3. ROYALTY. Tatton agrees to pay BDS a royalty equal to thirty percent
(30%) of all net profits earned by Tatton from the sale of products
incorporating the BDS Technology or net proceeds from the sale, assignment or
sublicense of the BDS Technology for the Designated Use as permitted herein
("Net Profit"). For purposes hereof, Net Profit, whether from the sale of
products, sublicenses, assignments or other disposition, shall be: (i) computed
in a consistent manner, in accordance with generally accepted accounting
principles; (ii) giving full effect to and deducting all expenses reasonably
related to the development, commercialization, manufacture and sale of products
incorporating the BDS Technology and Tatton Technology, including, but not
limited to, royalty payments due to third parties; and (ii) make reasonable
allocation of all costs and expenses including, but not limited to development
costs and overhead costs, among its various activities (including those related
to the BDS Technology and those which do not relate to the BDS Technology but
which relate to or support the development or commercialization of Tatton
products which are reasonably anticipated to utilize the BDS Technology) so that
the allocation of such expenses and royalties to the sale of products
incorporating the BDS Technology are reasonable in relationship to the overall
business and activities being conducted by Tatton. Tatton shall pay all
royalties due hereunder, on or before the 10th day of each month. All royalty
payments shall be accompanied by a written report specifying Net Profits. BDS
shall have the right to inspect the books and records of Tatton at any
reasonable time during normal business hours. Notwithstanding the foregoing,
royalties due BDSI shall not be less than five percent (5%) of the gross
proceeds realized by Tatton Technologies in connection with the marketing, sale,
assignment or sublicense of the BDSI Technology (the "Gross Proceeds"). Tatton
Technologies shall pay all royalties due hereunder, on or before the 10th day of
each month. All royalty payments shall be accompanied by a written report
specifying Profits and Gross Proceeds. BDSI shall have the right to inspect the
books and records of Tatton Technologies at any reasonable time during normal
business hours.
(i) SUBLICENSE AND ASSIGNMENT. Tatton may sublicense or assign the BDS
Technology for the Designated Uses, or any part thereof, in the exercise of its
discretion provided that the assignee or sublicensee is bound by the terms of
this Agreement which are applicable thereto and that the appropriate royalty, as
provided in Paragraph 3 above, is paid to BDS. Any sublicense or assignment
shall require the prior approval of BDS which shall not be unreasonably withheld
and which may provide reasonable protection that any Royalties due BDS will be
timely paid and imposing termination provisions in the Sublicense or Assignment
in the event of failure to timely pay Royalties. In the event of a subsequent
merger of any of the parties hereto this agreement shall continue to be binding
on and enforcible against the successor and the other parties to this Agreement.
4.
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5. REPRESENTATIONS AND WARRANTIES OF BDS. BDS makes the following
representations and warranties to Tatton, each of which shall survive the
closing of this Agreement:
a) BDS is the licensee of the BDS Technology, subject to no claims,
interests, or rights of any third party, which are inconsistent with or which
will be breached by virtue of this Agreement.
b) BDS has full right and authority to enter into this Agreement and
to grant the Agreement provided for herein.
c) BDS agrees to defend the BDS Technology for the Designated Uses
from infringement upon the rights thereof by any third party.
The grant of this Sublicense does not require the prior approval of any third
party which has not been obtained and does not violate or breach any agreement,
license, or other obligations to which BDS is a party or to which the BDS
Technology is subject.
6. REPRESENTATIONS AND WARRANTIES OF TATTON. Tatton makes the following
the representations and warranties to BDS, each of which shall survive the
closing:
a) Tatton has full right and authority to enter into this Agreement.
b) Tatton is the licensee of the Tatton Technology, subject to no
claims, interests, or rights of any third party, which are inconsistent with or
which will be breached by virtue of this Agreement.
c) The execution of this Agreement by Tatton will not breach any
agreement to which Tatton is a party.
d) Entering into and carrying out of this Agreement by Tatton does
not require the consent or approval of any party which has not given such
consent or approval.
e) Tatton will exercise its reasonable efforts and good faith to
commercialize the BDS Technology for Designated Uses.
Tatton will exercise its best efforts and good faith to assist BDS in the
defense of the BDS Technology for Designated Uses in the event of infringement
by any third party.
7. NON-FRUSTRATION. Neither party to this Agreement shall commit any act
or take any action which would frustrate or hamper the rights of the other
parties under this Agreement. Each party shall act in good faith and engage in
fair dealing when taking any action under or related to this Agreement.
8. TERM. This Agreement shall continue in effect for the period of time in
which the BDS Technology is protected by any patent. In the event of a material
breach of this Agreement, the non-breaching party may terminate this Agreement
providing the material default is not cured by the breaching party within 30
days written notice specifying the event of default and the intention to
terminate. Tatton may terminate this Agreement upon 30 days written notice,
provided that all Royalties due from Tatton and any Sublicensee or Assignee are
paid in full.
9. ARBITRATION. Any dispute arising under this Agreement shall be resolved
solely by binding arbitration before the American Arbitration Association
located in St. Louis,
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Missouri. The finding of the arbitrators shall be final and binding and shall
constitute the sole and exclusive means for resolving any dispute under this
Agreement. The rules of the American Arbitration Association shall be binding
upon said arbitration. The determination of arbitrators may be reduced to a
final judgment in any court of competent jurisdiction.
10. MISCELLANEOUS.
(ii) This Agreement constitutes the entire understanding of the
parties and shall not be amended or otherwise altered, except in writing, and
executed by the parties hereto. This Agreement supersedes and replaces any and
all prior oral and written agreements related to the subject matter hereof.
(iii) Tatton and BDS each acknowledges that certain of their
shareholders including, but not limited to the Xxxxxxx Capital Group and its
affiliates, are stockholders and/or members of management of BDS, its Parent and
Tatton (the "Overlapping and Conflicted Interest"). Such Overlapping and
Conflicted Interest has been the subject of full disclosure and BDS, its Parent
and Tatton have each had the opportunity to ask questions and obtain further
information regarding the Overlapping and Conflicted Interest. Tatton and BDS,
by virtue of the execution of this Agreement, expressly waived the Overlapping
and Conflicted Interest and any conflicts of interest which may result
therefrom. By execution of this Agreement, BDS and Tatton each waive said
Overlapping and Conflicted Interest and the resulting conflicts of interest as a
defect or defense with regard to this Agreement or the subject matter hereof.
(iv) This Agreement shall not be construed more stringently
against either party, regardless of which party may have served as the
draftsman.
(v) This Agreement and the resolution of any dispute shall be
governed by the laws of the State of Missouri.
(vi) This Agreement has been prepared by Xxxxxx X. Xxxxxx, Xxxxxx
& Xxxxx, PA, which has, in the past, and may, in the future, provide advice or
consultation to BDS, its Parent, Tatton and Xxxxxxx Capital Group and their
affiliates ("Disclosed Relationships"). Further, Xx. Xxxxxx has disclosed that
entities or Trusts affiliated with members of his family are stockholders of
BDS' Parent. Xx. Xxxxxx has advised BDS, its Parent and Tatton that he
represented or has given advice to no party to this Agreement and that each
party to this Agreement has been advised of their right to consult with
independent legal counsel. BDS and Tatton, by execution of this Agreement, each
expressly waive and release Xx. Xxxxxx and Xxxxxx & Xxxxx, PA from any and all
conflicts of interest related to or resulting from the Disclosed Relationships
or otherwise related to this Agreement or the subject matter hereof.
IN WITNESS WHEREOF, the parties have set their hand and seal on the day and
year first above written.
Tatton Technologies, LLC
By: /s/ Xxxxx X'Xxxxxxx
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Xxxxx X'Xxxxxxx, Manager
BioDelivery Sciences Inc.
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, President
BioDelivery Sciences International, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx Xx. Exec. V.P.
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Xxxxxx X. Xxxxxxxx, Senior Executive
Vice President
