EXHIBIT 10.2
COLLABORATIVE DEVELOPMENT AND MARKETING AGREEMENT
This COLLABORATIVE DEVELOPMENT AND MARKETING AGREEMENT is entered into
as of August 12, 2004 (the "Effective Date"), by and between PALATIN
TECHNOLOGIES, INC., a Delaware corporation having an address of Cedar Brook
Corporate Center, 0X Xxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 ("Palatin")
and KING PHARMACEUTICALS, INC., a Tennessee corporation having an address of 000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, ("King"). Each of King and Palatin is
sometimes referred to individually herein as a "Party" and collectively as the
"Parties".
WHEREAS, Palatin Controls and develops certain Technology and/or
Proprietary Materials related to its proprietary treatment for sexual
dysfunction; and
WHEREAS, King is engaged in the development and marketing of human
therapeutics; and
WHEREAS, the Parties desire to enter into a collaboration for the
purpose of Developing and Marketing Products derived from Palatin Technology and
Proprietary Materials; and
WHEREAS, King has also agreed to make, simultaneous with the Closing and
upon the occurrence of certain milestones specified herein, equity investments
in Palatin common stock, such investments to be made pursuant to the terms of
the Securities Purchase Agreement, in the form attached hereto as Exhibit H (the
"Securities Purchase Agreement"), dated as of the date of the Closing, which
Securities Purchase Agreement requires the issuance by Palatin of Warrants
pursuant to Section 6.2.4 hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration the receipt and
sufficiency of which are acknowledged by the Parties, the Parties hereto,
intending to be legally bound, agree as follows.
1. DEFINITIONS
Whenever used in this Agreement with an initial capital letter, the
terms defined in this Section 1 shall have the meanings specified.
1.1 "ACCOUNTING AND FINANCE PLANS" means the written plans (which shall include
a detailed strategy, budget, proposed timelines and all Collaboration Costs)
describing the financial plans to be carried out by each Party during each
Calendar Year pursuant to this Agreement which, with respect to Palatin, shall
include the activities for which responsibility has been allocated to Palatin
and, with respect to King, shall include the activities for which responsibility
has been allocated to King. In addition, the Accounting and Finance Plan shall
include all budgets for the Collaboration, including budgets for the overall
Development and Marketing Program and each of the Program Plans. After the date
hereof, each Accounting and Finance Plan will be set forth in a written document
prepared by the Parties and approved by the JDMC and annexed as an amendment to
Exhibit G. The Accounting and Finance Plans shall not create an obligation on
the Parties to coordinate their accounting methods or undertake any sort of
joint accounting, except to the extent specified in the definition of
Collaboration Costs.
1.2 "ACTION" HAS THE MEANING SET FORTH IN SECTION 12.5.
1.3 "ADVERSE EVENT" means any life-threatening drug experience, serious adverse
drug experience, unexpected adverse drug experience, expected drug experience or
non-serious drug experience, all as defined in ICH Guidance ICH E2A or in any
provision of the Food and Drug Act, any law, rule or regulation promulgated
thereunder, or any foreign equivalent, or other similar experience in a human
who is administered a Product, whether or not considered Product related,
including, without limitation, any undesirable sign (including abnormal
laboratory findings of clinical concern), symptom or disease associated with the
use, abuse, or withdrawal of or from such Product.
1.4 "AFFILIATE" means any corporation, firm, partnership or other entity which
directly or indirectly controls or is controlled by or is under common control
with a Party to this Agreement. For purposes of this definition, (x) "control"
means ownership, directly or through one or more Affiliates, of (a) fifty
percent (50%) or more of the shares or voting rights in case of a corporation or
limited company, (b) fifty percent (50%) or more of the shares of stock entitled
to vote for the election of directors, in the case of a corporation, (c) fifty
percent (50%) or more of the equity or controlling interests in the case of any
other type of legal entity (including, without limitation, joint ventures) or
status as a general partner in any partnership, or (d) any other arrangement
whereby a Party controls or has the right to control the Board of Directors or
equivalent governing body of an entity, and (y) following the Merger, shall
exclude Somerset Pharmaceuticals, Inc.
1.5 "AGREEMENT" means this Collaborative Development and Marketing Agreement,
including all attached exhibits, as well as all amendments, supplements and/or
restatements thereof.
1.6 "API" means, with respect to a Product, the active pharmaceutical ingredient
used in the Product.
1.7 "APPLICABLE LAW" means applicable U.S. and foreign laws, rules, regulations,
guidelines and standards, including but not limited to those of the FDA and
comparable foreign Regulatory Authorities.
1.8 "ASSETS" has the meaning set forth in Section 5.5.2.
1.9 "BANKRUPTCY CODE" means the U.S. Bankruptcy Code, 11 U.S.C. xx.xx. 101 et
seq.
1.10 "CALENDAR QUARTER" means, with respect to the first such Calendar Quarter,
the period beginning on the Effective Date and ending on the last day of the
calendar quarter within which the Effective Date falls and, thereafter, each
successive period of three (3) consecutive calendar months ending on March 31,
June 30, September 30 or December 31. In the event that the termination of this
Agreement does not fall on the last day of a Calendar Quarter, the "FINAL
CALENDAR QUARTER" shall mean the period from the last day of the most recent
Calendar Quarter through the applicable date of termination of this Agreement.
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1.11 "CALENDAR YEAR" means each successive twelve (12) month period commencing
on January 1 and ending on December 31. The first Calendar Year of this
Collaboration shall begin on the Effective Date and end on December 31, 2004. In
the event that the termination of this Agreement does not fall on the last day
of a Calendar Year, the "FINAL CALENDAR YEAR" shall mean the period from the
last day of the most recent Calendar Year through the applicable date of
termination of this Agreement.
1.12 "CHAIRMAN" has the meaning set forth in Section 2.2.
1.13 "CHANGE OF CONTROL" means that any of the following events, to the extent
permitted hereunder, has occurred: (i) any person (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than a Party, any employee benefit plan of a Party or any entity
organized, appointed or established by a Party for or pursuant to the terms of
any such plan, together with all "affiliates" and "associates" (as such terms
are defined in Rule 12b-2 under the Exchange Act) becomes the beneficial owner
or owners (as defined in Rule 13d-3 and 13d-5 promulgated under the Exchange
Act), directly or indirectly, of more than 50% of the outstanding equity
securities of the Party, or otherwise becomes entitled, directly or indirectly,
to vote more than 50% of the voting power entitled to be cast at elections for
directors ("Voting Power") of the Party; (ii) a consolidation or merger (in one
transaction or a series of related transactions) of a Party pursuant to which
the holders of a Party's equity securities immediately prior to such transaction
or series of related transactions would not be the holders, directly or
indirectly, immediately after such transaction or series of related transactions
of more than 50% of the Voting Power of the entity surviving such transaction or
series of related transactions; (iii) the sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of a Party; (iv) the liquidation or dissolution
of a Party or a Party ceasing to do business; and (v) a permitted assignment
pursuant to Section 15.10.
1.14 "CLINICAL PLANS" means the written plans (which shall include a detailed
strategy, budget and proposed timelines) describing the clinical Development
activities to be carried out by each Party during each Calendar Year pursuant to
this Agreement which, with respect to Palatin, shall include the activities for
which responsibility has been allocated to Palatin and, with respect to King,
shall include the activities for which responsibility has been allocated to
King. After the date hereof, each Clinical Plan will be set forth in a written
document prepared by the Parties and approved by the JDMC and annexed as an
amendment to Exhibit C.
1.15 "CLOSING" shall mean, subject to the satisfaction or waiver of the
conditions set forth in Section 6.1.3, the closing of the transactions
contemplated by this Agreement.
1.16 "CLOSING DATE" shall mean the earlier of: (i) the first (1st) day, unless
the first (1st) day falls on a weekend or holiday, in which case it shall be the
next business day, after the expiration or termination of all applicable waiting
periods under the HSR Act or (ii) the first (1st) day, unless the first (1st)
day falls on a weekend or holiday, in which case it shall be the next business
day, after the joint determination (by certification from each Party to the
other) that notification under the HSR Act is not required.
1.17 "CMC" means chemistry, manufacturing and controls activities related to
Product and/or API for any Product.
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1.18 "COLLABORATION" means the association of Palatin and King established
pursuant to this Agreement for the purpose of conducting the Development and
Marketing Program so as to accomplish the objectives of the Development and
Marketing Program, including the Marketing of Products.
1.19 "COLLABORATION COSTS" means, to the extent approved by the JDMC, the sum of
(a) Development Costs, (b) Manufacturing/CMC Costs, (c) Marketing Costs, (d)
Regulatory and IP Costs, (e) product liability costs, as contemplated by Section
5.4, (f) any other cost or expense expressly stated to be a Collaboration Cost
in this Agreement or under a Program Plan, (g) quantity, trade or cash
discounts, chargebacks, returns, allowances, rebates (including without
limitation any and all federal, state or local government rebates, such as
Medicaid rebates) and costs incurred in connection with processing the foregoing
and price adjustments, to the extent actually allowed in any invoice relating to
Product (to the extent not already deducted as part of the calculation of Net
Sales), (h) sales and other excise taxes and duties or similar governmental
charges directly related to the sale of Product (to the extent not already
deducted as part of the calculation of Net Sales), and (i) any other direct and
allocable internal costs and direct and allocable external costs incurred in
conducting the Development and Marketing Program, all calculated in accordance
with GAAP and all approved by the JDMC. Except to the extent this Agreement
expressly provides for payments that do not require JDMC approval, and except to
the extent the JDMC has approved any payment hereunder, neither Party shall (y)
be obligated to incur any costs or expend any funds that have not been approved
by such Party or (z) have the authority to cause the other party to incur any
costs or expend any funds that have not been approved by such other Party.
Notwithstanding anything to the contrary contained herein, Collaboration Costs
shall not include (i) indirect costs, overhead, general and administrative costs
and other similar costs, (ii) any costs which relate to the business of a Party
as a whole without specifically referencing a Product or (iii) costs required to
be paid by Palatin under the CT License Agreement (which shall be the
responsibility of Palatin), including without limitation pursuant to the
indemnification provisions thereof except to the extent the same are the result
of the acts or omissions of King. In calculating the Collaboration Costs, the
following principles shall apply: (x) there shall be no double counting of any
costs or expenses or of any revenues, and to the extent a cost or expense has
been included in one category or sub-category, it shall not be included in
another, and to the extent any revenue has been taken into account in one
category or sub-category, it shall not be taken into account in another; (y)
when allocating costs and expenses under this Agreement, each Party shall
utilize the same policies and principles as it utilizes consistently within its
group and business units when making internal cost allocations; and (z) all
costs and expenses shall be determined, and all calculations shall be made, in
accordance with GAAP.
1.20 "COLLABORATION LICENSE FEE" has the meaning set forth in Section 6.2.1.
1.21 "COLLABORATION MANAGER" has the meaning set forth in Section 2.5.
1.22 "COLLABORATION REVENUE" means the sum of (a) Net Sales and (b) all other
consideration or revenue paid to or received by or on the account of a Party in
connection with this Agreement, the Collaboration or the Development and
Marketing Program (including, without limitation, any and all Net Sales and all
consideration and revenues resulting from Development and Marketing in the ROW).
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1.23 "COMPLETION OF PHASE II CLINICAL TRIALS" means achievement of clinical
endpoints agreed upon by the Clinical Committee for specific Phase II Clinical
Trials for the relevant Product for a specific indication and the specific
dosage strengths, which data enables the Parties to proceed with Phase III
Clinical Trials, without any objection from the FDA that prevents proceeding
with such Phase III Clinical Trials, as documented by FDA contact reports. For
the avoidance of doubt, the "Completion of Phase II Clinical Trials" for FSD and
for ED shall be independent events, and the conduct of additional Preclinical
Plan and Clinical Plan activities for a given Product for a given indication
(including, without limitation, additional Phase II Clinical Trials for such
Product and such indication) subsequent to the first Completion of Phase II
Clinical Trials for such Product shall not be deemed to and shall not be
dispositive of the prior occurrence of the Completion of Phase II Clinical
Trials for such Product and for such indication.
1.24 "COMPLETION OF PHASE III CLINICAL TRIALS" means achievement of clinical
endpoints agreed upon by the Clinical Committee for Phase III Clinical Trials,
which data enables the Parties to file for Regulatory Approval on the relevant
Product for the relevant indication.
1.25 "CONFIDENTIAL INFORMATION" means (a) all Technology produced or developed
by either Party in the Development and Marketing Program, (b) all information
exchanged by the Parties prior to the date hereof, and (c) with respect to a
Party (the "Receiving Party"), all information, Technology and Proprietary
Materials which are disclosed by the other Party (the "Disclosing Party") to the
Receiving Party hereunder or to any of its employees, Consultants, Affiliates or
Sublicensees, except to the extent that any such information (i) as of the date
of disclosure is demonstrably known to the Receiving Party or its Affiliates, as
demonstrated by credible written documentation; (ii) as of the date of
disclosure is in, or subsequently enters, the public domain, through no fault or
omission of the Receiving Party; (iii) is obtained from a Third Party having a
lawful right to make such disclosure free from any obligation of confidentiality
to the Disclosing Party; or (iv) is independently developed by or for the
Receiving Party without reference to or reliance upon any Confidential
Information of the Disclosing Party as demonstrated by credible written
documentation. All Palatin Technology, King Technology and Joint Technology that
is used in or, in the judgment of the JDMC, reasonably likely to be used in the
Development and Marketing Program shall be considered, during the Term and, if
the Agreement terminates earlier pursuant to Article 11, for so long as any
Product is being Developed or Marketed, Confidential Information of both
Parties, regardless of which Party provided or developed same; provided,
however, that (x) during the Term hereof, neither Party shall be restricted from
using any of its own Confidential Information outside the Field, provided, and
only to the extent, that such use outside the Field does not, and would not
reasonably be expected to adversely impact any intellectual property rights or
commercial interests of the Collaboration, including without limitation the
Development and Marketing Program; and (y) after termination of this Agreement
pursuant to Section 11.2, (i) the Party with the right to Develop and Market
Product after termination shall be permitted to use any of either party's
Confidential Information as reasonably required in connection with such
Development and Marketing and (ii) neither Party shall be restricted from using
any of its own Confidential Information outside the Field, provided, and only to
the extent, that such use outside the Field does not, and would not reasonably
be expected to adversely impact any intellectual property rights or commercial
interests of the Party with the right to Develop and Market Product after
termination, with respect to such Development and Marketing.
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1.26 "CONSULTANT" means a third party who has entered into or hereafter enters
into a written agreement with Palatin or King or both to provide consulting
services that are material or are reasonably likely, in the judgment of the
JDMC, to become material to the Development and Marketing Program, which written
agreement, (a) includes an assignment of all right, title and interest in and to
all work product and all inventions arising from the performance of such
agreement, and all intellectual property rights attaching thereto, to Palatin or
King, as applicable and (b) binds the relevant third party by obligations of
confidentiality and non-use with respect to all such work product, inventions,
Confidential Information and intellectual property rights that are at least as
stringent as those set forth herein.
1.27 "CONTROL" or "CONTROLLED" means (a) with respect to Technology (other than
Proprietary Materials) and/or Patent Rights, the possession by a Party of the
ability to grant a license or sublicense of such Technology and/or Patent Rights
as provided herein without the payment of additional consideration (other than
any additional consideration to be paid pursuant to the CT License Agreement)
and/or without violating the terms of any agreement or arrangement between such
Party and any Third Party and (b) with respect to Proprietary Materials, the
possession by a Party of the ability to supply such Proprietary Materials to the
other Party as provided herein without the payment of additional consideration
and without violating the terms of any agreement or arrangement between such
Party and any Third Party.
1.28 "COPROMOTE" or "COPROMOTION" means the right of Palatin, consistent with
the allocation of responsibilities under the Marketing Plan, to the extent
amended pursuant to Section 5.1, to copromote with King, Product in any legal
manner in the Territory to the urology specialty only.
1.29 "COPROMOTION OPTION" has the meaning set forth in Section 5.1.
1.30 "CT LICENSE AGREEMENT" means the License Agreement dated as of March 31,
1998 by and between Palatin and Competitive Technologies, Inc. ("CT"), a copy of
which has been provided to King, as it may be amended from time to time
hereafter, with the consent of King, to the extent required pursuant to Section
7.4.
1.31 "CTM" or "CLINICAL TRIAL MATERIALS" means any Product manufactured,
packaged and labeled as required by Applicable Law to be used as investigational
drug or placebo for use in the conduct of clinical trials in humans.
1.32 "DEFAULT" means (a) a material breach, default or violation, (b) the
occurrence of an event that with or without the passage of time or the giving of
notice, or both, would constitute a material breach, default or violation or
cause any material mortgages, liens, security interests, charges, covenants,
options, claims, restrictions and encumbrances of any kind to arise, or (c)
respect to a contract, the occurrence of an event that with or without the
passage of time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a material right to receive
damages or a payment of material monies or penalties of or under such contract
by a party other than a Party.
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1.33 "DEFAULTING PARTY" has the meaning set forth in Section 3.10.
1.34 "DEVELOPING PARTY" has the meaning set forth in Section 11.2.2(d).
1.35 "DEVELOPMENT" or "DEVELOP" means, with respect to a Product, all research,
preclinical, pharmaceutical and clinical activities and other activities
undertaken in order to obtain Regulatory Approval of such Product in accordance
with this Agreement prior to Regulatory Approval of such Product. These
activities shall include preclinical and clinical drug development activities,
including, among other things: research, test method development and stability
testing, toxicology, animal studies, statistical analysis and report writing,
clinical trial design and performance prior to obtaining Regulatory Approvals,
obtaining Regulatory Approvals, and regulatory affairs related to the foregoing.
"Development" shall also include relevant formulation, process development,
manufacturing, manufacturing scale-up, CMC, development-stage manufacturing,
quality assurance, and quality control development. All of the items in the
immediately preceding sentence shall be subject to King's final decision-making
authority to the extent set forth in Section 2.10.2 hereof, notwithstanding the
inclusion of any or all of the foregoing activities in the Preclinical Plans or
Clinical Plans.
1.36 "DEVELOPMENT AND MARKETING PROGRAM" means the collaborative development and
marketing program in the Field commencing on the date hereof and conducted by
Palatin and King pursuant to this Agreement and the Preclinical Plans, Clinical
Plans, Manufacturing/CMC Plans, Regulatory Plans, Marketing Plans, and
Accounting and Finance Plans.
1.37 "DEVELOPMENT COSTS" means, with respect to a Product, all costs incurred by
a Party directly attributable to Development of such Product, but not including
applicable Manufacturing/CMC Costs and Regulatory Costs.
1.38 "DISCRETIONARY FUNDING" has the meaning set forth in Section 2.8.2.
1.39 "ED" means erectile dysfunction and all related sub-indications.
1.40 "EFFECTIVE DATE" has the meaning set forth in the first paragraph of this
Agreement.
1.41 "EVENT OF BANKRUPTCY" has the meaning set forth in Section 11.2.4.
1.42 "EXPENSE PAYMENT" has the meaning set forth in Section 6.2.2.
1.43 "FAMC" means the fully absorbed manufacturing costs which includes direct
costs and allocated costs, but not indirect and overhead costs.
1.44 "FDA" means the United States Food and Drug Administration or any successor
agency.
1.45 "FIELD" means the palliative, prophylactic or therapeutic treatment of
human sexual dysfunction, including ED and FSD.
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1.46 "FILING PARTY" has the meaning set forth in Section 9.1.2.
1.47 "FIRST COMMERCIAL SALE" means, with respect to any Product, the first sale
for end-use or consumption, including any sale to a wholesaler or distributor,
of such Product in a country after the applicable Regulatory Authority has
granted Regulatory Approval. For purposes of this definition, any sale to an
Affiliate or Sublicensee will not constitute a First Commercial Sale.
1.48 "FORCE MAJEURE" means an event beyond the reasonable control of a Party
that prevents the performance, in whole or in part, by the Party of any of its
obligations hereunder, including by reason of any act of God, flood, fire,
explosion, earthquake, breakdown of plant, shortage of critical equipment, loss
or unavailability of manufacturing facilities or material, strike, lockout,
labor dispute, casualty or accident, or war, terrorist act, revolution, civil
commotion, acts of public enemies, blockage or embargo, or any injunction, law,
order, proclamation, regulation, ordinance, demand or requirement of any
government or of any subdivision, authority or representative of any such
government, if and only if the Party affected shall have used commercially
reasonable efforts to avoid the effects of such occurrence and to remedy it
promptly if it has occurred.
1.49 "FSD" means female sexual dysfunction and all related subindications.
1.50 [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
1.51 [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
1.52 "GAAP" means United States generally accepted accounting principles.
1.53 "GOOD CLINICAL PRACTICES" means the international ethical and scientific
quality standards for designing, conducting, recording, and reporting trials
that involve the participation of human subjects. Good Clinical Practices are
established through FDA guidances (including but not limited to ICH E6).
1.54 "GOOD LABORATORY PRACTICES" means the minimum standards for conducting
nonclinical laboratory studies that support or are intended to support
applications for research or marketing permits for products regulated by the
FDA, including food and color additives, animal food additives, human and animal
drugs, medical devices for human use, biological products, and electronic
products. Good Laboratory Practices are established through FDA regulations
(including but not limited to 21 CFR Part 58), FDA guidances, FDA current review
and inspection standards and current industry standards.
1.55 "GOOD MANUFACTURING PRACTICES" means the minimum standards for methods to
be used in, and the facilities or controls to be used for, the manufacture,
processing, packing, or holding of a drug to assure that such drug meets the
requirements of the Federal Food, Drug and Cosmetic Act of 1938, as amended, as
to safety, and has the identity and strength and meets the quality and purity
characteristics that it purports or is represented to possess. Good
Manufacturing Practices are established through FDA regulations (including but
not limited to 21 CFR Parts 210-211), FDA guidance and FDA current review and
inspection standards and current industry standards.
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1.56 "HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Act of 1976, as amended.
1.57 "IND" means (a) an Investigational New Drug Application (as defined in 21
CFR ss. 312.3) that is required to be filed with the FDA before beginning
clinical testing of a Product in human subjects, or any successor application or
procedure or (b) any counterpart of a U.S. Investigational New Drug Application
that is required in any other country or region in the Territory before
beginning clinical testing of a Product in human subjects in such country or
region.
1.58 "INDEMNIFIED PARTY" has the meaning set forth in Section 13.3.
1.59 "INDEMNIFYING PARTY" has the meaning set forth in Section 13.3.
1.60 "INFRINGEMENT" has the meaning set forth in Section 9.2.1.
1.61 "INFRINGEMENT NOTICE" has the meaning set forth in Section 9.2.1.
1.62 "INITIAL SHARE PAYMENT" has the meaning set forth in Section 6.2.3.
1.63 "INITIAL SHARES" has the meaning set forth in Section 6.2.3.
1.64 "IRB" has the meaning set forth in Section 12.8.
1.65 "JOINT DECISION" means any decision which must be made by the JDMC after
appropriate consultations with, and discussions concerning the same by, the JDMC
representatives of Palatin and King. Joint Decisions shall include any decisions
expressly identified as such hereunder and any other decisions not specifically
reserved to either Party hereunder.
1.66 "JOINT DEVELOPMENT AND MARKETING COMMITTEE" or "JDMC" means the committee
of Palatin and King representatives established pursuant to Section 2.1 to
administer the affairs of the Collaboration.
1.67 "JOINT PATENT RIGHTS" means Patent Rights claiming Joint Technology.
1.68 "JOINT TECHNOLOGY" means any Technology or Proprietary Materials (a)
jointly developed or conceived by employees of King or Palatin, or Consultants
to both King and Palatin, during the conduct of the Development and Marketing
Program or (b) developed or conceived by one Party during the conduct of the
Development and Marketing Program as a result of its material use of the
Technology or Proprietary Materials of the other Party.
1.69 "KING ACTIVITIES" means those activities to be performed by King pursuant
to this Agreement or the Program Plans.
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1.70 "KING BACKGROUND TECHNOLOGY" means any Technology useful in the Field that
is (a) Controlled by King as of the Closing Date or (b) developed or conceived
by employees of, or Consultants to, King on and after the Closing Date in the
conduct of activities outside the Development and Marketing Program and without
the material use of any Palatin Technology, Palatin Proprietary Materials or
Joint Technology.
1.71 "KING INDEMNITEES" has the meaning set forth in Section 13.1.
1.72 "KING PATENT RIGHTS" means all Patent Rights claiming King Technology.
1.73 "KING PROGRAM TECHNOLOGY" means any Technology developed or conceived by
employees of, or Consultants to, King, alone or jointly with Third Parties, in
the conduct of the Development and Marketing Program without the material use of
any Palatin Technology, Palatin Proprietary Materials or Joint Technology.
1.74 "KING PROPRIETARY MATERIALS" means any Proprietary Materials that are
useful in the Field that are (a) Controlled by King as of the Closing Date or
(b) developed or conceived by employees of, or Consultants to, King on and after
the Closing Date in the conduct of activities outside the Development and
Marketing Program and without the material use of any Palatin Technology,
Palatin Proprietary Materials or Joint Technology.
1.75 "KING TECHNOLOGY" means, collectively, King Background Technology and King
Program Technology.
1.76 "LICENSE FEES" means all upfront payments, milestone payments, license
fees, royalties or other payments, payable to any Third Party by either Party
under any Third Party license agreement or other similar agreement or
arrangement (including the existing Third Party agreements utilized as part of
the Collaboration, other than the CT License Agreement which shall be the sole
responsibility of Palatin) to the extent such payments are attributable to the
Development or Marketing of Product. If the rights under any Third Party license
agreement are also attributable to products other than Products, then only an
equitable portion of any amounts payable under it shall be allocated to Products
as License Fees.
1.77 "LOSSES" has the meaning set forth in Section 13.1.
1.78 "MANUFACTURING/CMC COSTS" means FAMC attributable to the manufacture of a
Product and consistent with the Manufacturing/CMC Plan and includes, without
limitation, the costs of all Third Party manufacturing, direct material, direct
labor, direct services costs and manufacturing overhead consumed (including
depreciation), provided or procured by manufacturing facilities in the
manufacture of a Product and any other direct and/or allocated costs of all
goods manufactured.
1.79 "MANUFACTURING/CMC PLANS" means the written plans (which shall include a
detailed strategy, budget and proposed timelines) describing the API, synthesis,
choice of Manufacturers and third party suppliers, expected manufacturing
scale-up, manufacture, formulation, process development, development-stage
manufacture, quality assurance/quality control development, filling and/or
shipping requirements for each Product (in accordance with customary standards
for a product of comparable market potential), including all CMC, and the
activities to be carried out by each Party during the applicable Calendar Year
which, with respect to Palatin, shall include the activities for which
responsibility has been allocated to Palatin and, with respect to King, shall
include the activities for which responsibility has been allocated to King.
After the date hereof, each Manufacturing/CMC Plan will be set forth in a
written document prepared by the Parties and approved by the JDMC and annexed as
an amendment to Exhibit D.
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1.80 "MANUFACTURING PARTY" has the meaning set forth in Section 11.2.2(d).
1.81 "MARKET" or "MARKETING" means any and all activities directed to the
marketing, detailing and promotion of a Product for commercial sale and shall
include pre-launch and post-launch marketing, promoting, detailing,
distributing, offering to sell and selling a Product, importing a Product for
sale, and any and all clinical and marketing studies conducted after obtaining
marketing approval for any Product (but not including any preclinical studies),
including, without limitation, all Phase IV trials that are not performed as a
condition to obtaining any Regulatory Approval for a Product (which Phase IV
trials shall be Development activities), and interacting with Regulatory
Authorities regarding the foregoing. If a Phase IV trial is performed as a
condition to obtaining any Regulatory Approval for a Product, such trial shall
be considered a Development activity.
1.82 "MARKETING COSTS" means the sum of (a) all reasonable out-of-pocket costs
and expenses incurred by a Party directly attributable to the following
functions for the sale, promotion and marketing of a Product in the Territory:
(i) market research on such Product or relevant indications, (ii) marketing
communications, (iii) corporate accounts, (iv) managed care, (v) sales force
training, (vi) product hotlines, (vii) reimbursement support, (viii)
contracting, (ix) pricing, (x) telemarketing services, (xi) distribution costs,
including freight, insurance, warehousing, order entry and billing, (xii) the
cost of Product detailing of a Party's sales force plus reasonable out-of-pocket
costs and expenses paid to Third Parties for product details provided by such
Third Parties, (xiii) patient registries, if required, (xiv) the cost of Product
samples, and (xv) all reasonable out-of-pocket costs and expenses incurred by a
Party and directly attributable to the promotion of a Product in the Territory
and (b) Personnel Costs incurred by a Party directly attributable to marketing
personnel and support staff working (either full time or part of the time) on
the Marketing of Products in the Territory. Examples of functions that would be
included in the marketing headcount cost are: Marketing, marketing
communications, clinical research and educational managers, clinical support
managers, corporate accounts, managed care, product hotlines, sales forecasting,
reimbursement support (government economic managers), marketing research,
contracting and pricing.
1.83 "MARKETING PLANS" means the written plans (which shall include a detailed
strategy, budget and proposed timelines and the pre-launch and launch activities
to be undertaken) describing the Marketing activities to be carried out by each
Party during each applicable Calendar Year pursuant to this Agreement which,
with respect to Palatin, shall include the activities for which responsibility
has been allocated to Palatin and, with respect to King, shall include the
activities for which responsibility has been allocated to King. After the date
hereof, each Marketing Plan will be set forth in a written document prepared by
the Parties and approved by the JDMC and annexed hereto as an amendment to
Exhibit F.
11
1.84 "MERGER" means the merger contemplated by the Agreement and Plan of Merger
by and among Mylan Laboratories Inc., Summit Merger Corporation and King, dated
as of July 23, 2004.
1.85 "NA" means the countries and jurisdictions in North America, including
Canada, Mexico, and Puerto Rico, and any other US protectorates, territories and
possessions.
1.86 "NDA" means a New Drug Application to market the Product in the Territory
or similar application submitted to the FDA, or its foreign equivalent submitted
to any Regulatory Authority in the ROW, and all supplements and amendments
thereto.
1.87 "NET SALES" means the gross amount invoiced to non-Affiliate Third Parties
for sale of Products, less, to the extent deducted from or on such invoice
consistent with GAAP, the following items: (i) quantity, trade or cash
discounts, chargebacks, returns, allowances, rebates (including without
limitation any and all federal, state or local government rebates, such as
Medicaid rebates) and price adjustments, to the extent actually allowed; (ii)
sales and other excise taxes and duties or similar governmental charges directly
related to such sale, to the extent such items are included in the gross invoice
price; (iii) amounts actually refunded due to rejected, spoiled, damaged,
outdated or returned Product; and (iv) freight, shipment and insurance costs
actually incurred in transporting Product to a Third Party purchaser. If any
Products are sold to Third Parties in transactions that are not at arm's length
between the buyer and seller, then the gross amount to be included in the
calculation of Net Sales for such sales shall be the amount that would have been
invoiced had the transaction been conducted at arm's length, which amount shall
be determined, whenever possible, by reference to the average selling price of
the relevant Product in arm's-length transactions in the country of sale at the
time of sale. If any Products are sold to Third Parties for consideration other
than cash or for consideration that is not readily ascertainable, then the gross
amount to be included in the calculation of Net Sales for such sales shall be
determined based on the reasonable value of the consideration given, taking into
account the average selling price of the relevant Product in arm's-length
transactions in the country of sale at the time of sale. Any goods or services
provided in exchange of the supply, disposal of Product for, or use of Product,
in clinical or preclinical trials or as free samples (such samples to be in
quantities common in the industry for this sort of Product) shall not give rise
to any deemed sale under this Section.
1.88 "NON-DEFAULTING PARTY" has the meaning set forth in Section 3.10.
1.89 "NON-PROCEEDING PARTY" has the meaning set forth in Section 11.2.3(g).
1.90 "NON-TARGET PARTY" has the meaning set forth in Section 5.5.2.
1.91 "PALATIN ACTIVITIES" means those activities to be performed by Palatin
pursuant to this Agreement and the Program Plans.
1.92 "PALATIN BACKGROUND TECHNOLOGY" means any Technology that is used or useful
in the Field and that is (a) Controlled by Palatin as of the Closing Date or (b)
developed, acquired or conceived by employees of, or Consultants to, Palatin on
and after the Closing Date in the conduct of activities outside the Development
and Marketing Program and without the material use of any King Technology, King
Proprietary Materials, Joint Technology or Palatin Program Technology.
12
1.93 "PALATIN INDEMNITEES" has the meaning set forth in Section 13.2.
1.94 "PALATIN PATENT RIGHTS" means all Patent Rights claiming Palatin
Technology. For the avoidance of doubt, the Palatin Patent Rights are understood
to include, without limitation, United States Patent No. 6,579,968 and United
States Patent Application Nos. 10/040,547 and 10/638,071, including any patents
issuing from such applications, along with all patent rights included in the CT
License Agreement.
1.95 "PALATIN PROGRAM TECHNOLOGY" means any Technology developed or conceived by
employees of, or Consultants to, Palatin, alone or jointly with Third Parties,
in the conduct of the Development and Marketing Program, without the material
use of any King Technology, King Proprietary Materials or Joint Technology.
1.96 "PALATIN PROPRIETARY MATERIALS" means any Proprietary Materials that are
useful in the Field and that are (a) Controlled by Palatin as of the Closing
Date or (b) developed or conceived by employees of, or Consultants to, Palatin
on and after the Closing Date in the conduct of activities outside the
Development and Marketing Program and without the material use of any King
Technology, King Proprietary Materials, or Joint Technology.
1.97 "PALATIN TECHNOLOGY" means, collectively, Palatin Background Technology and
Palatin Program Technology.
1.98 "PATENT COORDINATOR" has the meaning set forth in Section 8.3.
1.99 "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications (which for purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates of
invention and priority rights) in any country, including all provisional
applications, substitutions, continuations, continuations-in-part, divisions,
and renewals, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof, Controlled by a Party.
1.100 "PERSONNEL COSTS" means the reasonable costs of employment of personnel
employed by or under contract to a Party, including, but not limited to,
salaries, benefits (including the costs of cars or allowances therefor), travel,
lodging, meals and office and computing supplies.
1.101 "PHASE II CLINICAL TRIAL" means a human clinical trial in any country that
is intended to evaluate the effectiveness of the drug for a particular
indication or indications in patients with the disease or condition under study
and to determine the common short-term side effects and risks associated with
the drug or that would otherwise meet the definition of 21 CFR 312.21(b), or its
foreign equivalent.
1.102 "PHASE III CLINICAL TRIAL" means a human clinical trial in any country
that would otherwise meet the definition of 21 CFR 312.21(c), or its foreign
equivalent.
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1.103 "PRECLINICAL PLANS" means the written plans (which shall include a
detailed strategy, budget and proposed timelines) describing the preclinical
Development activities to be carried out by each Party during each Calendar Year
pursuant to this Agreement which, with respect to Palatin, shall include the
activities for which responsibility has been allocated to Palatin and, with
respect to King, shall include the activities for which responsibility has been
allocated to King. After the date hereof, each Preclinical Plan will be set
forth in a written document prepared by the Parties and approved by the JDMC and
annexed as an amendment to Exhibit B.
1.104 "PROCEEDING PARTY" has the meaning set forth in Section 11.2.3(g).
1.105 "PRODUCT" means (1) any product for use in the Field (including without
limitation, any composition of matter, procedure, process or method) (a) the
manufacture, use or sale of which infringes any claim included within the
Palatin Patent Rights, (b) which incorporates, is discovered as a result of the
use of, or is otherwise derived from, PT-141 or any fragment or variant thereof
or any analog thereof or, to the extent applicable, any pro-drug, metabolite,
isomer, enantiomer, salt or ester thereof or any combination of any of the
foregoing, including the use of PT-141 in combination with one or more other
actives and in any formulation including, without limitation, in any delivery
method, or (c) which incorporates, is derived from or is discovered as a result
of the use of melanocortin agonists and (2) any other product the JDMC agrees to
Develop or Market pursuant to this Agreement and (3) any device containing any
of the foregoing.
1.106 "PRODUCT TRADEMARK(S)" means any trademarks and trade names, whether or
not registered, and any trademark applications, renewals, extensions or
modifications thereto in the Territory together with all goodwill associated
therewith, trade dress and packaging which are applied to or used with Products,
and any promotional materials relating thereto.
1.107 "PROGRAM PLANS" means the Preclinical Plans, the Clinical Plans, the
Manufacturing/CMC Plans, the Regulatory Plans, the Marketing Plans, and the
Accounting and Finance Plans.
1.108 "PROPRIETARY MATERIALS" means any tangible chemical, biological or
physical research materials that are furnished by or on behalf of one Party to
the other Party in connection with this Agreement, regardless of whether such
materials are specifically designated as proprietary by the transferring Party.
1.109 "PT-141" means the peptide sequence Ac-Nle-cyclo(-Asp-His-D-Phe-Arg-Trp-
Lys)-OH.
1.110 "RECIPIENT" has the meaning set forth in Section 3.9.
1.111 "REGULATORY APPROVAL" means approval by the FDA or other Regulatory
Authority to market a Product in a regulatory jurisdiction.
1.112 "REGULATORY AUTHORITY" means the FDA or any counterpart of the FDA outside
the United States, or other national, supra-national, regional, state or local
regulatory agency, department, bureau, commission, council or other governmental
entity with authority over the distribution, importation, exportation,
manufacture, production, use, storage, transport or clinical testing, pricing
and/or sale of a Product, including any device incorporating the Product.
1.113 "REGULATORY FILINGS" means, collectively, any and all INDs and drug master
files (DMFS), NDAs, applications for any device incorporating the Product,
applications for designation of a Product as an "Orphan Product(s)" under the
Orphan Drug Act or any other similar filings (including any foreign equivalents
and further including any related correspondence and discussions), and all data
contained therein, as may be required by or submitted to any Regulatory
Authority for the Regulatory Approval.
1.114 "REGULATORY AND IP COSTS" means Personnel Costs, reasonable out-of-pocket
costs and expenses (e.g., filing fees, user fees, annual product and facility
registration fees, permit fees and the like) incurred by a Party directly
attributable (i) to obtaining or maintaining Regulatory Approvals for a Product
(including any device incorporating the Product) (including, for example,
communications and meetings with Regulatory Authorities) and satisfying all
registration and other requirements of Regulatory Authorities within the
Territory (including, for example, adverse event reporting and Product pricing
approvals) in connection with each Party's activities under the Development and
Marketing Program, and (ii) to preparing, filing, prosecuting, maintaining,
enforcing and defending Patent Rights or Technology as contemplated in Section 9
hereof.
14
1.115 "REGULATORY PLANS" means the written plans (which shall include a detailed
strategy, budget and proposed timelines) describing the regulatory activities,
including the timing and conduct of meetings, discussions and correspondence
with Regulatory Authorities, to be carried out by each Party during the
applicable Calendar Year which, with respect to Palatin, shall include the
activities for which responsibility has been allocated to Palatin and, with
respect to King, shall include the activities for which responsibility has been
allocated to King, and the expected Regulatory Filings to be completed and
maintained by the Collaboration, for each Product. After the date hereof, each
Regulatory Plan will be set forth in a written document prepared by the Parties
and approved by the JDMC and annexed as an amendment to Exhibit E.
1.116 "ROW" means all countries and jurisdictions in the world, other than NA.
1.117 "SECURITIES PURCHASE AGREEMENT" has the meaning set forth in the recitals
to this Agreement.
1.118 "SUBLICENSEE" means any Third Party (other than an Affiliate) to which a
Party or both Parties grant a sublicense of some or all of the rights granted to
one another under this Agreement as permitted by this Agreement.
1.119 "SUPPLY" has the meaning set forth in Section 11.2.2(d).
1.120 "SURVIVING ENTITY" has the meaning set forth in Section 5.5.1.
1.121 "TARGET PARTY" has the meaning set forth in Section 5.5.1.
1.122 "TECHNOLOGY" means and includes all inventions, discoveries, improvements,
trade secrets and proprietary methods and materials, whether or not patentable,
relating to the Field, including but not limited to (a) samples of, methods of
production or use of, and structural and functional information pertaining to,
chemical compounds, proteins or other biological substances and (b) data,
formulations, techniques and know-how (including any negative results).
15
1.123 "TERM" means the term of this Agreement as set forth in Section 11.1.
1.124 "TERMINATED REGION" has the meaning set forth in Section 11.2.
1.125 "TERRITORY" means NA.
1.126 "THIRD PARTY" means any person or entity other than King and Palatin and
their respective Affiliates.
1.127 "THIRD PARTY AGREEMENTS" has the meaning set forth in Section 3.10.
1.128 "TRANSFEROR" has the meaning set forth in Section 3.9.
1.129 "VICE CHAIRMAN" has the meaning set forth in Section 2.2.
2. ADMINISTRATION OF THE COLLABORATION
2.1 ESTABLISHMENT AND FUNCTION OF JDMC. Palatin and King shall establish the
JDMC within thirty (30) days of the Closing Date to plan, administer and monitor
the Development and Marketing Program, including all activities set forth in the
Program Plans. In particular, the JDMC shall review and approve, or recommend
revisions to, the Program Plans, review and monitor the progress of the
Development and Marketing Program and recommend necessary adjustment to the
Development and Marketing Program. In planning, administering and monitoring the
Development and Marketing Program, the JDMC shall allocate tasks and
responsibilities, taking into account each Party's respective specific research
and development capacities and expertise in order to avoid duplication and to
enhance synergies, as well as comply with the requirements of this Agreement.
2.2 MEMBERSHIP. Each Party shall appoint, in its sole discretion, three (3)
members to the JDMC (which members shall be employees of such Party). Unless
otherwise agreed by the members of the JDMC, the chairmanship and vice
chairmanship of the JDMC shall rotate between the Parties. The first appointment
period shall begin on the date hereof and end on December 31, 2005. For such
period, in light of the fact that Palatin has solely developed the Product prior
to the date hereof, Palatin shall designate the chairman (the "Chairman") and
King shall designate the vice chairman (the "Vice Chairman"). Thereafter,
appointments of Chairman and Vice Chairman shall rotate on a Calendar Year
basis. Each Party shall have the right at any time to substitute individuals, on
a permanent or temporary basis, for any of its previously designated
representatives to the JDMC, by giving written notice thereof to the other
Party.
16
2.3 COMMITTEES. The JDMC will appoint an Accounting and Finance Committee
Preclinical Committee, Clinical Committee, Manufacturing/CMC Committee and the
Marketing Committee pursuant to Section 2.4 (each of whose members shall be
employees of such Party). Otherwise, the JDMC shall have the right and power to
appoint and delegate its responsibilities to other committees as reasonably
needed to accomplish their work and the composition and eligibility requirements
for the same shall be agreed by the members of the JDMC. Such committees may
include, for the oversight and administration of each Program Plan, the
Regulatory Committee. Except as otherwise mandated by the JDMC in its minutes,
each committee established by the JDMC shall be governed by the rules and
guidelines applicable to the JDMC set forth in this Agreement. The JDMC shall
set forth clearly each such committee's decision making responsibilities that
have been delegated to it by the JDMC. Any member of a committee may send a
designee to observe a committee if such member is unable to attend, but such
observer shall not vote in such member's place unless given a written proxy from
such member of the committee. Each Party shall have the right at any time to
substitute individuals, on a permanent or temporary basis, for any of its
previously designated representatives to any committee, by giving written notice
thereof to the other Party. If an issue to be addressed by a committee appears
to fall within the oversight and administration of more than one committee, such
committees shall confer with each other to determine which committee shall
oversee and administer such issue.
2.4 APPOINTMENT OF COMMITTEES.
2.4.1 Accounting and Finance Committee. Promptly after the appointment of the
JDMC, the JDMC will appoint an Accounting and Finance Committee composed of two
(2) members designated by each Party, both of whom shall be employees of the
relevant Party. The JDMC shall delegate to the Accounting and Finance Committee
its responsibility for making all decisions, subject to final JDMC review and
approval, relating to accounting, budgets, Collaboration Cost allocation,
Collaboration Revenue allocation and all other matters related to accounting and
finance. Except as otherwise mandated by the JDMC in its minutes, the Accounting
and Finance Committee shall otherwise be governed by the rules and guidelines
applicable to the JDMC set forth in this Agreement.
2.4.2 Preclinical Committee. Promptly after the appointment of the JDMC, the
JDMC will appoint a Preclinical Committee comprised of two (2) members
designated by each Party, both of whom shall be employees of the relevant Party.
The JDMC shall delegate to the Preclinical Committee its responsibility for
making all decisions, subject to final JDMC review and approval, relating to the
Preclinical Plans. Except as otherwise mandated by the JDMC in its minutes, the
Preclinical Committee shall otherwise be governed by the rules and guidelines
applicable to the JDMC set forth in this Agreement.
2.4.3 Clinical Committee. Promptly after the appointment of the JDMC, the JDMC
will appoint a Clinical Committee comprised of two (2) members designated by
each Party, both of whom shall be employees of the relevant Party. The JDMC
shall delegate to the Clinical Committee its responsibility for making all
decisions, subject to final JDMC review and approval, relating to the Clinical
Plans. Except as otherwise mandated by the JDMC in its minutes, the Clinical
Committee shall otherwise be governed by the rules and guidelines applicable to
the JDMC set forth in this Agreement. [INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION UNDER RULE 24B-2.]
17
2.4.4 Manufacturing/CMC Committee. Promptly after the appointment of the JDMC,
the JDMC will appoint a Manufacturing/CMC Committee comprised of two (2) members
designated by each Party, both of whom shall be employees of the relevant Party.
The JDMC shall delegate to the Manufacturing/CMC Committee its responsibility
for making all decisions, subject to final JDMC review and approval, relating to
the Manufacturing/CMC Plans. Except as otherwise mandated by the JDMC in its
minutes, the Manufacturing/CMC Committee shall otherwise be governed by the
rules and guidelines applicable to the JDMC set forth in this Agreement.
2.4.5 Marketing Committee. Promptly after the appointment of the JDMC, the JDMC
will appoint a Marketing Committee comprised of two (2) members designated by
each Party, both of whom shall be employees of the relevant Party. The JDMC
shall delegate to the Marketing Committee its responsibility for making all
decisions, subject to final JDMC review and approval, relating to the Marketing
Plans. Except as otherwise mandated by the JDMC in its minutes, the Marketing
Committee shall otherwise be governed by the rules and guidelines applicable to
the JDMC set forth in this Agreement.
2.5 COLLABORATION MANAGER. Promptly after the Effective Date, each Party shall
appoint a collaboration manager (the "Collaboration Manager"). The Collaboration
Managers shall be the primary contact between the JDMC and all committees
appointed by the JDMC. The Collaboration Managers shall regularly consult with
the heads of each such committee and each Party will cause each such committee
head to cooperate fully with each Collaboration Manager. The Collaboration
Managers shall timely address all issues and concerns raised by any member of
the JDMC or any committee, as well as collect and provide to the JDMC or to any
committee all information requested by the JDMC or such committee concerning any
aspect of the Development and Marketing Program. Each Party shall have the
right, upon prior written notice to the other Party, to substitute for its
current Collaboration Manager another of its employees, on a permanent or
temporary basis.
2.6 MEETINGS.
2.6.1 SCHEDULE OF MEETINGS. The JDMC shall establish a schedule of times for
meetings, taking into account, without limitation, the planning needs of the
Development and Marketing Program and the need of the JDMC to consult and/or
render decisions with respect to any Joint Decisions. Meetings shall also be
convened upon the determination of any member, by prior written notice thereof
of not less than three (3) business days to the remaining members of the JDMC,
that a meeting of the JDMC is required to discuss and/or resolve any matter or
matters with respect to the Collaboration. In no event shall the JDMC meet less
frequently than quarterly. Meetings shall alternate between the respective
offices of the Parties in Cranbury, New Jersey; Bristol, Tennessee; Princeton,
New Jersey, or Cary, North Carolina; or another mutually agreed upon location;
provided, however, that the Parties may mutually agree to meet by teleconference
or video conference or may act by a written memorandum executed by the members
of the JDMC.
18
2.6.2 QUORUM; VOTING; DECISIONS. At each JDMC meeting, one member designated by
each Party shall constitute a quorum. Each Party's JDMC members present at any
meeting shall together have one vote on all matters before the JDMC. All
decisions of the JDMC shall be made by unanimous vote. Whenever any action by
the JDMC is called for hereunder during a time period in which the JDMC is not
scheduled to meet, the Chairman shall cause the JDMC to take the action in the
requested time period by calling a special meeting or by causing the JDMC to
take such action without a formal meeting by written memorandum, as provided in
Section 2.6.1. The Chairman shall provide prior written notice of not less than
three (3) business days of the same to all JDMC members. Representatives of each
Party or of its Affiliates who are not members of the JDMC, may attend JDMC
meetings or committee meetings as non-voting observers at the invitation of
either Party with the prior approval of the other Party, which approval shall
not be unreasonably withheld. In the event that the JDMC is unable to resolve
any matter before it, such matter shall be resolved as set forth in Section 2.10
hereof.
2.6.3 AGENDA AND MINUTES. An agenda for each JDMC meeting shall be circulated no
less than three (3) days prior to the meeting, to the extent practicable. The
JDMC shall keep accurate minutes of its deliberations which record all proposed
decisions and all actions recommended or taken. Drafts of the minutes shall be
delivered to the members of the JDMC within a reasonable time, not to exceed ten
(10) days after the meeting. The Party not filling the Chairmanship of the JDMC
shall have responsibility for the preparation and circulation of the draft
minutes. Draft minutes shall be then be edited by the Chairman and Vice Chairman
and shall be issued in final form within a reasonable time not to exceed
fourteen (14) days after the meeting.
2.6.4 EXPENSES. Palatin and King shall each bear all expenses of their
respective JDMC members related to their participation on the JDMC and
attendance at JDMC meetings.
2.7 DECISION-MAKING RESPONSIBILITIES. The JDMC shall be solely responsible for
making all decisions specified as Joint Decisions hereunder and all decisions
not specifically reserved to either Party hereunder, including, but not limited
to, decisions with respect to the following matters:
2.7.1 the definition, review, approval and amendment (not less than annually) of
each Program Plan and all related strategy and objectives (but not the actual
conduct of such plans);
2.7.2 definition, review and approval of and changes to the strategy and
objectives (but not the actual conduct) of the Collaboration;
2.7.3 management and allocation of resources of the Collaboration;
2.7.4 management and oversight of all Patent Rights and Technology used in
connection with Product;
2.7.5 proposal of all budgets for the Collaboration;
19
2.7.6 review and approval of all subcontracts, sublicenses and Third Party
licenses (other than the CT License Agreement and expressly including, without
limitation, any and all supply and manufacturing agreements) and other
agreements required or entered into in connection with the Collaboration, and
any and all amendments thereto, including without limitation a determination,
with respect to each such subcontract, sublicense, license or agreement,
regarding whether it is appropriate to require the inclusion of the
bankruptcy-protection provision set forth in Section 3.10 hereof;
2.7.7 performance of such other functions as appropriate to further the purposes
of this Agreement and the Collaboration as determined from time to time by the
Parties.
2.8 COLLABORATION COSTS OVERRUNS AND ADDITIONAL EXPENDITURES.
2.8.1 The Accounting and Finance Plans shall set forth a budget with respect to
all material tasks required to be conducted by the Parties pursuant to the other
Program Plans. Each Party shall use commercially reasonable efforts to complete
all tasks assigned to it pursuant to the Program Plans in accordance with the
funding allocated to such tasks in the Accounting and Finance Plans. In the
event either Party anticipates or becomes aware that the actual costs of any
given task assigned to it may or will likely exceed the funds allocated to such
task, such Party shall promptly notify the JDMC. The Accounting and Finance
Committee, and the committee charged with primary oversight responsibility for
the task in question, shall work together in good faith for up to thirty (30)
days to determine whether to readjust the budget to allocate additional funds to
such task, to revise the scope of such task to permit satisfactory completion at
the then-budgeted funding level, or both. In the event no decision is reached,
the matter shall be subject to the provisions of Section 2.10 hereof.
2.8.2 Notwithstanding the foregoing, either Party may, in its discretion, spend
additional amounts above and beyond those allocated in the Accounting and
Finance Plans ("Discretionary Funding") on any task assigned to such Party
pursuant to the other Program Plans or on any other task the JDMC has approved.
In such event, the Party wishing to expend Discretionary Funding shall first
inform the other Party of its intent to do so. If such other Party consents to
such Discretionary Funding being deemed a Collaboration Cost, such Discretionary
Funding shall constitute a Collaboration Cost, and the rights and obligations of
the Parties with respect to such Collaboration Costs, and any Collaboration
Revenues and intellectual property, regulatory or other intangible rights
derived from or generated by such Discretionary Funding, shall be determined in
accordance with the terms and conditions of this Agreement as they apply to the
Collaboration. If such other Party does not consent, then such Discretionary
Funding shall not constitute a Collaboration Cost, but shall be borne solely by
the Party undertaking the Discretionary Funding, and the Parties shall negotiate
in good faith, prior to the expenditure of the Discretionary Funding, the rights
and obligations of the Parties with respect to such Discretionary Funding and
any Collaboration Revenues and intellectual property, regulatory or other
intangible rights derived therefrom or generated thereby.
2.8.3 Except to the extent this Agreement expressly provides for payments that
do not require JDMC approval, and except to the extent the JDMC has approved any
payment hereunder, neither Party shall (i) be obligated to incur any costs or
expend any funds that have not been approved by such Party or (ii) have the
authority to cause the other party to incur any costs or expend any funds that
have not been approved by such other Party.
20
2.9 INTERESTS OF THE PARTIES. Notwithstanding any other provisions of this
Agreement, all decisions made and all actions taken by the JDMC, by Palatin or
by King with respect to any Collaboration matter, shall be made or taken in the
best interest of the Collaboration, subject in all respects to the fiduciary
duties of the Parties to their respective shareholders.
2.10 DISPUTE RESOLUTION.
2.10.1 In the event any committee shall not be able to reach a decision or take
an action appointed to it, then such decision or matter shall first be referred
for resolution to the JDMC. In the event that the JDMC shall not be able to
reach a decision or take an action on any matter referred by a committee, any
Joint Decision or any other matter which is reserved to the JDMC or the
Accounting and Finance Committee or any other committee delegated
decision-making authority by the JDMC hereunder, then such Joint Decisions or
such other unresolved matters shall first be referred for resolution to the
Chief Executive Officer of each Party for attempted resolution by good faith
negotiation. Such good faith negotiation may include the appointment by either
Party of an unaffiliated Consultant, who shall be a scientific expert chosen
based on such person's experience and expertise in the particular type of issue
which is unresolved to advise such officers on the matter.
2.10.2 If such officers are unable to resolve the matter within ten (10) days,
then
(a) [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
(b) [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
(c) [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
(d) [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
(e) [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
(f) [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
3. DEVELOPMENT AND MARKETING PROGRAM
3.1 OBJECTIVES OF THE DEVELOPMENT AND MARKETING PROGRAM. The objectives of the
Development and Marketing Program shall be the Development, manufacture and
Marketing of Products within the Field in the Territory and the joint licensing
of the rights under this Agreement to Third Parties for development and
marketing of Product in the ROW.
21
3.2 PROGRAM PLANS GENERALLY. In consultation with the JDMC and in accordance
with the strategy and objectives of the Program Plans, each Party shall be
primarily responsible for those tasks assigned it as set forth on each Program
Plan attached hereto and such obligations set forth in this Agreement. Unless
otherwise set forth in any Program Plan, Palatin shall have the sole right and
responsibility to conduct all Palatin Activities and King shall have the sole
right and responsibility to conduct all King Activities. Annexed hereto as
Exhibit A is a preliminary plan for the Development and Marketing Program.
Within thirty (30) days after the Effective Date and after consideration of the
Exhibit A, the JDMC shall take such actions necessary to define, generate and
approve each Program Plan for the first Calendar Year, which Program Plans shall
supplant Exhibit A as operational documents for the conduct of the Development
and Marketing Program. The JDMC shall ensure that the Program Plans, including
without limitation all timelines set forth therein, are consistent with each
other and accurately reflect the objectives set forth in the Development and
Marketing Plan. Each Program Plan for such first Calendar Year will then be
attached hereto as Exhibit B (Preclinical Plan), Exhibit C (Clinical Plan),
Exhibit D (Manufacturing/CMC Plan), Exhibit E (Regulatory Plan), Exhibit F
(Marketing Plan), and Exhibit G (Accounting and Finance Plan). For each year of
the Development and Marketing Program commencing with the second Calendar Year,
the Program Plans shall be amended and updated by Palatin and King and approved
by the JDMC as directed by the JDMC no later than thirty (30) days prior to the
end of the prior Calendar Year and shall be attached hereto as Xxxxxxxx X-0,
X-0, X-0, X-0, etc. Each Program Plan shall be in writing and shall set forth,
with reasonable specificity, research objectives and tasks to be performed by
each of the Parties for the period covered by the Program Plan as agreed by the
JDMC and as specifically set forth in this Agreement. Any Program Plan may be
amended by the JDMC at any time upon the unanimous request of the
representatives of the applicable committee. Except to the extent specifically
directed by the JDMC in each Program Plan, the decisions as to how to perform
the tasks assigned to Palatin and King in any Program Plan shall be Palatin
decisions and King decisions, respectively. Although not specifically a part of
a Program Plan, all issues and activities relating to Patent Rights and
Technology used in connection with a Product shall be subject to oversight of
the JDMC.
3.3 Preclinical Plans. Unless and until otherwise agreed by the JDMC, the
following terms and conditions are hereby incorporated into each Preclinical
Plan. [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
3.4 Clinical Plans. Unless and until otherwise agreed by the JDMC, the following
terms and conditions are hereby incorporated into each Clinical Plan.
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
3.5 MANUFACTURING/CMC PLANS. Unless and until otherwise agreed by the JDMC, the
following terms and conditions are hereby incorporated into each
Manufacturing/CMC Plan. [INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION UNDER RULE 24B-2.]
3.6 REGULATORY PLANS. Unless and until otherwise agreed by the JDMC, the
following terms and conditions are hereby incorporated into each Regulatory
Plan. [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
22
3.7 MARKETING PLANS.
3.7.1 Unless and until otherwise agreed by the JDMC, the following terms and
conditions are hereby incorporated into each Marketing Plan. [INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
3.7.2 With respect to King's activities under the Marketing Plan, King shall use
commercially reasonable efforts to Develop and Market the Product commensurate
with industry standards in accordance with Section 3.13 hereof. With respect to
King's activities under the Marketing Plan, King hereby agrees, as part of any
Marketing Plan and in a manner consistent with Section 3.13 hereof, to establish
and maintain its infrastructure and staffing and otherwise maintain its
expertise for Marketing Product at levels (i) commensurate with industry
standards for products of similar market potential and at a similar stage in
development as the applicable Product, taking into account the competitiveness
of the marketplace, the proprietary position of the Product, and the efforts and
resources available to a company having a comparable market capitalization
(taking King and its Affiliates together) and (ii) customary and reasonable in
light of then-current market conditions. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
3.8 Accounting and Finance Plans. Unless and until otherwise agreed by the JDMC,
the following terms and conditions are hereby incorporated into each Accounting
and Finance Plan. [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
UNDER RULE 24B-2.]
3.9 SUPPLY OF PROPRIETARY MATERIALS. From time to time during the Term of this
Agreement, either Party (the "Transferor") may supply the other Party (the
"Recipient") with its Proprietary Materials to the extent the parties, the JDMC
or the relevant committee reasonably believe that such Proprietary Materials
would be useful in the Development and Marketing Program or to the extent such
Proprietary Materials are required to be so provided pursuant to any Program
Plan. In connection therewith, the Recipient hereby agrees that (a) it shall not
use Proprietary Materials for any purpose other than exercising any rights or
fulfilling any obligations granted to it or reserved by it hereunder; (b) it
shall use the Proprietary Materials only in compliance with all applicable,
federal, state, and local laws and regulations; (c) it shall not transfer any
Proprietary Materials to any Third Party for use without the prior written
consent of the Transferor, except as expressly permitted hereby; (d) the
Transferor shall retain full ownership of all such Proprietary Materials; and
(e) upon the expiration or termination of this Agreement, the Recipient shall at
the instruction of the Transferor either destroy or return any Proprietary
Materials which are not the subject of the grant of a continuing license
hereunder. In addition, each of Palatin and King agrees that, during the
Development and Marketing Program neither Party shall transfer to any Third
Party, without the approval of the other Party, any Joint Technology, including
without limitation any tangible embodiments thereof.
23
3.10 THIRD PARTY LICENSES AND COLLABORATIONS. Subject to Section 2.7.6, King,
Palatin or both may enter into such Third Party licenses, collaborations, and
supply and manufacturing agreements and, solely with respect to the ROW,
sublicenses as are reasonably necessary in the judgment of the JDMC to
accomplish the objectives and purposes of the Collaboration. Each such agreement
shall (a) if only one Party is a party to the agreement, name the other Party as
a third party beneficiary to such agreement, (b) include an assignment of all
right, title and interest in and to all work product and all inventions arising
from the performance of such agreement, and all intellectual property rights
attaching thereto to the contracting Party, and (c) bind the relevant third
party by obligations of confidentiality and non-use with respect to all such
work product, inventions, and intellectual property rights that are at least as
stringent as those set forth herein. In order to ensure the ability of a Party
("Non-Defaulting Party") to proceed with the Development and Marketing Program
notwithstanding the occurrence of any Default or Event of Bankruptcy on behalf
of the other Party ("Defaulting Party"), the JDMC shall, in its discretion,
require the inclusion, in those subcontracts, sublicenses, licenses and other
agreements (including manufacturing and supply agreements) entered into in
connection with the Collaboration and subject to the JDMC's approval pursuant to
Section 2.7.6 hereof ("Third Party Agreements") that are or are likely to become
material to the conduct of the Development and Marketing Program, of an
enforceable provision granting to the Non-Defaulting Party hereto an automatic
assignment, contingent upon an Event of Bankruptcy of the Defaulting Party or a
Default by the Defaulting Party of that Third Party Agreement, pursuant to which
all of the Defaulting Party's rights and obligations under such Third Party
Agreement shall automatically and without any acts of any Party hereto or
thereto be assigned to the Non-Defaulting Party, who hereby agrees to assume
such obligations.
3.11 OPTION TO PERFORM. In the event that a Party does not perform a task or
tasks assigned to it by the JDMC under a Program Plan, including, without
limitation, due to a dispute as to the budget or scope of such task, and the
omission of performance or initiation of performance of such task could
reasonably be expected to have a material adverse effect on the Collaboration,
the other Party has the right but not the obligation, to perform such task or
tasks. [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
3.12 COLLABORATIVE EFFORTS AND REPORTS. The Parties hereby acknowledge and agree
that the successful execution of the Development and Marketing Program will
require the collaborative use of both Parties' areas of expertise. Each Party
shall, through their Collaboration Manager, keep the JDMC fully informed about
the status of the portions of the Development and Marketing Program it performs
separately and/or jointly with the other Party by providing to their
Collaboration Manager for submission to the JDMC a written report describing the
progress of the separate and joint work done by it under the Development and
Marketing Program in reasonable detail, at least fifteen (15) days prior to each
quarterly meeting of the JDMC, and promptly upon the occurrence of any material
event relevant to the Development and Marketing Program, including activities
assigned to that Party.
3.13 DILIGENCE. Each Party will exercise its commercially reasonable efforts and
diligence (i) in Developing, Marketing, manufacturing and seeking Regulatory
Approval in accordance with its business, legal, medical and scientific
judgment, and in undertaking investigations and actions required to obtain
appropriate Regulatory Approvals necessary to market Products in the Field in
the Territory and (ii) to meet its obligations (including without limitation its
financial obligations) hereunder. For purposes of this Section, such
commercially reasonable efforts and diligence shall be in accordance with the
efforts and resources a company having a comparable market capitalization (when
taken together with its Affiliates) in the biotechnology and pharmaceutical
industry would devote to a compound owned by it or to which it has rights, which
is of similar market potential and at a similar stage in development as the
applicable Product, taking into account the competitiveness of the marketplace,
the proprietary position of the Product, the relative potential safety and
efficacy of the Product, the regulatory requirements involved in its Development
and Marketing, and the cost of goods and availability of capacity to manufacture
and supply the Product at commercial scale.
24
4. INFORMATION EXCHANGE
4.1 RECORDS.
4.1.1 RECORD KEEPING. Palatin and King shall each maintain records in sufficient
detail and in accordance with Good Laboratory Practice, Good Clinical Practice
and Good Manufacturing Practice, and as will properly reflect and document, in a
manner appropriate for purposes of supporting the filing of potential patent
applications and Regulatory Filings, all work done and results achieved in the
performance of the Development and Marketing Program (including all data in the
form required under any Applicable Law); provided however, prior to Completion
of Phase II Clinical Trials, Palatin is responsible for maintaining master files
in accordance with Good Clinical Practices, Good Laboratory Practices and Good
Manufacturing Practices, to the extent applicable, and provided, further, if
Palatin elects not to maintain such records upon Completion of Phase II Clinical
Trials, Palatin shall transfer such records to King. Subject to Section 6.4.6
hereof, Palatin and King each hereby provides the other the right to inspect and
copy such records to the extent reasonably required for the performance of its
obligations or exercise of its rights under this Agreement, and neither Party
shall use such records or information except to the extent otherwise permitted
by this Agreement.
4.1.2 TECHNICAL REPORTS. Each Party shall keep the JDMC fully informed about the
status of the Development and Marketing Program including, without limitation,
furnishing the JDMC with copies of all reports which relate to the Development
and Marketing Program. In particular, without limitation, each Party shall (a)
provide periodic reports in reasonable detail to the JDMC as requested from time
to time by the JDMC; (b) provide the other Party with access to all Technology
and information employed in or arising out of the Development and Marketing
Program solely for the purpose of conducting their respective roles hereunder;
and (c) provide the other Party with information concerning the Development and
Marketing Program as such other Party shall reasonably request.
4.1.3 INFORMATION EXCHANGE. Subject to any confidentiality obligations to Third
Parties, Palatin and King shall cooperate in the performance of the
Collaboration, including in the performance of the Development and Marketing
Program, and shall exchange information and materials (including without
limitation financial statements) as necessary to carry out the Collaboration,
including to carry out the Development and Marketing Program. The Parties expect
that such exchange of information and materials may involve short-term on-site
visits by scientists of one Party to the facilities of the other Party. Such
visits will have defined purposes, include a reasonable number of participants
and be scheduled reasonably in advance.
25
4.2 UPDATES; ADVERSE EVENT INFORMATION.
4.2.1 UPDATES AND REPORTS. Each Party shall keep the JDMC regularly informed of
the progress of the Party's efforts to Develop and Market Products in the Field
in the Territory and ROW through periodic progress reports related to the
Program Plans as provided in this Section 4.2.1 by providing the JDMC with
written updates to the Program Plans, as the case may be, no less frequently
than each Calendar Quarter during the Term (commencing on the second Calendar
Quarter during the Term) and promptly upon the occurrence of any material event
relevant to the Development and Marketing Program, including activities assigned
to that Party. Such updates shall (a) summarize the Party's efforts to Develop
and Market all Products hereunder, (b) identify the Regulatory Filings with
respect to any Product that have been filed, sought or obtained by the Party
during the proceeding Calendar Quarter and any they reasonably expect to make,
seek or attempt to obtain in the following twelve (12)-month period and (c)
summarize all preclinical and clinical data generated by the Party with respect
to Products. In addition, the Party (or its Sublicensees) shall provide the JDMC
with prompt written notice of the occurrence of any event giving rise to an
obligation to make a milestone payment to Palatin under Section 6.3, and shall
provide the JDMC with prompt written notice of the occurrence of the First
Commercial Sale of any Product. Thereafter, all updates shall include updates as
to the sales and Marketing efforts for Products.
4.2.2 ADVERSE EVENT REPORTS. In addition to the updates described in Section
4.2.1 above, each Party shall provide the JDMC with all Adverse Event
information and product complaint information relating to Products as compiled
and prepared in the normal course of business in connection with the
Development, Marketing or sale of any Product, within time frames consistent
with reporting obligations under Applicable Law.
4.2.3 CONFIDENTIAL INFORMATION. Except as otherwise required in connection with
disclosures to Regulatory Authorities required by Applicable Law, all reports,
updates, Adverse Event or product complaint and other information provided by a
Party under this Agreement (including under this Section 4.2.3), shall be
considered Confidential Information of both Parties, regardless of who provided
the same, and shall be subject to the terms of Section 10.
5. COPROMOTION; [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
UNDER RULE 24B-2.]; AND CERTAIN OTHER PROVISIONS
5.1 EXERCISE OF OPTION. Provided the JDMC approves the Marketing of Products to
the urology specialty, Palatin shall have the option (the "Copromotion Option"),
but not the obligation, to Copromote each Product in the Territory. [INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.] If Palatin
duly exercises its Copromotion Option with respect to any Product, the Marketing
Plan with respect to such Product shall be updated to reflect the same. All
reasonable marketing costs and expenses of Palatin and King related to the
copromotion pursuant hereto shall be Marketing Costs. Palatin shall keep the
JDMC informed as to its Copromotion efforts in order to permit the JDMC to
coordinate and direct the sales and marketing activities of each of the Parties
in the Territory.
26
Palatin shall have no right to market, offer for sale, sell or distribute any
Product in the Territory, unless and until Palatin has duly exercised its
Copromotion Option. Within one hundred eighty days of the Effective Date, the
Marketing Committee shall prepare and submit to the JDMC for approval a
copromotion schedule, to be attached hereto as an amendment to the Marketing
Plan, which will set forth the size of Palatin's permitted sales force in the
event Palatin exercises its Copromotion Option (which, if King deploys a sales
force in connection with the Copromotion, shall in no event be greater than
twenty percent (20%) of the total urology sales force of King and Palatin
combined) along with such other specifics concerning Palatin's copromotion
rights as the Marketing Committee determines are appropriate.
5.2 COPROMOTION RIGHTS. If Palatin elects to Copromote a Product as permitted in
Section 5.1, Palatin shall ensure that such Copromotion is executed, in all
material respects, in a manner consistent with the decisions of the JDMC and the
Marketing Plan, as amended pursuant to the copromotion schedule identified in
Section 5.1.
5.3 [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]
5.4 PRODUCT LIABILITY COSTS. The Parties understand and agree that, because of
the nature of the collaborative effort set forth in this Agreement, should any
Third Party claims be asserted against either Party or both Parties or any of
their Affiliates, agents or representatives that are in the nature of product
liability claims, the Parties will cooperate through the JDMC to ensure that
such claims are defended and settled or compromised in a manner that best
protects the interests of the Parties in accordance with Section 2.8. In
addition, the Parties will procure and maintain product liability insurance with
first-class carriers in coverages and amounts and with deductibles not less than
those as determined by the JDMC and, in any event, sufficient to cover the
Parties' respective indemnification obligations hereunder. All costs incurred by
a Party in connection with a product liability claim after the date hereof,
including costs for insurance coverage required by the JDMC, shall be deemed
Collaboration Costs,except to the extent that such costs are indemnifiable
pursuant to or payable by a Party pursuant to Section 13 or attributable to
products of a Party other than a Product.
5.5 CHANGE OF CONTROL.
5.5.1 In the event of a Change of Control of a Party (the "Target Party") (i) in
which a Party shall not be the surviving entity in the event of a merger, the
proposed surviving entity (the "Surviving Entity"), (ii) in which there is an
acquisition, lease, exchange or other transfer of all or substantially all of
the assets of a Party, or in which there is an acquisition of the rights
hereunder upon a liquidation or dissolution of a Party, in each case, the
acquiror, or (iii) in which there is a permitted assignment pursuant to Section
15.10, the assignee, shall, prior to such Change of Control, agree in writing to
assume all of the existing and future obligations, rights, title and interest of
every nature in, to and under this Agreement of the Party in which it is
entering into such Change of Control transaction; provided, however, that if the
Surviving Entity, the acquiror or the assignee, as the case may be, does not
assume the same in writing prior to such Change of Control, this Agreement shall
be deemed to have been materially breached just prior to the consummation of the
Change of Control by the Target Party.
27
5.5.2 In the event that a Change of Control is contingent upon or results in the
Target Party or Surviving Entity being required by a court, governmental
authority or a regulatory authority to sell or otherwise dispose or divest
itself of its assets, rights or obligations relating to the Collaboration or
this Agreement (the "Assets"), the Target Party shall provide written notice of
the proposed divestiture to the other Party (the "Non-Target Party") promptly
following the Target Party's receipt from such court, government authority or
Regulatory Authority of all details with respect to such disposition or
divestiture. [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24B-2.] If the Non-Target Party does not make a written offer, then the
Target Party may sell the Assets without any further obligations under this
Section 5.5.2. If the Non-Target Party makes a written offer [INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.] the Target
Party may accept such offer or solicit bona fide written offers from Third
Parties; [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24B-2.]. In the event the Target Party receives a bona fide written offer
from a Third Party, then the Non-Target Party shall have the right to match any
bona fide written offer of such Third Party to purchase the Assets [INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.] following
the Non-Target Party's receipt of written notice from the Target Party
identifying all relevant details of such Third Party offer.
6. CLOSING, INITIAL PAYMENTS, COLLABORATION COST AND COLLABORATION REVENUE
SHARING
6.1 CLOSING.
6.1.1 COVENANTS PENDING CLOSING.
(a) Reasonable Efforts. Subject to the terms and conditions of this Agreement,
each of the Parties agrees to use all reasonable efforts to take, or cause to be
taken, all reasonable actions and to do, or cause to be done, all things
necessary and appropriate to satisfy all conditions of and to consummate the
transactions contemplated by this Agreement, including the satisfaction of the
applicable conditions set forth in Section 6.1.2 below and the Closing.
(b) Filings. The Parties shall cooperate with one another in the preparation,
execution and filing of all documents that are required or permitted to be filed
on or before the Closing, including, without limitation, filings pursuant to the
HSR Act and will promptly file the same after the Effective Date. The related
filing fees incurred by each Party shall be paid by King.
6.1.2 CLOSING. As promptly as practicable after the Effective Date and after the
satisfaction by each Party or, if permissible, waiver of the conditions set
forth in Sections 6.1.3(a) and (b), the parties hereto shall cause the Closing
to occur on the Closing Date. The Closing shall be held at the offices of Xxxxx
Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx PC, The Chrysler Center, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties shall agree, for
the purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Sections 6.1.3(a) and (b).
28
6.1.3 CONDITIONS TO CLOSING.
(a) The obligation of Palatin to close shall be subject to the satisfaction
on or before the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by Palatin:
(i) the expiration or termination of all applicable waiting periods under
the HSR Act, unless a joint determination is made by Palatin and King
(by certification from Palatin and King to each other) that
notification under the HSR Act is not required;
(ii) the representations and warranties made by King in Article 12 shall be
true and correct in all material respects as of the Effective Date and
as of the Closing Date with the same force and effect as if they had
been made as of the Closing Date, and King shall have performed all
obligations and conditions herein required to be performed or observed
by it on or prior to Closing;
(iii) the provision by King to Palatin of an officer's certificate certifying
that (i) and (ii) above are true and correct as of the Closing Date;
(iv) the payment to Palatin of the Collaboration License Fee, the Expense
Payment and the Initial Share Payment by King; and
(v) the execution and delivery of the Securities Purchase Agreement by
King.
(b) The obligation of King to close shall be subject to the satisfaction on
or before the Closing Date of the following conditions any or all of
which may be waived in whole or in part by King:
(i) the expiration or termination of all applicable waiting periods under
the HSR Act, unless a joint determination is made by Palatin and King
(by certification from Palatin and King to each other) that
notification under the HSR Act is not required;
(ii) the representations and warranties made by Palatin in Article 12 shall
be true and correct in all material respects as of the Effective Date
and as of the Closing Date with the same force and effect as if they
had been made as of the Closing Date, and Palatin shall have performed
all obligations and conditions herein required to be performed or
observed by it on or prior to Closing;
(iii) the provision by Palatin to King of an officer's certificate certifying
that (i) and (ii) above are true and correct as of the Closing Date;
and
29
(iv) the execution and delivery of the Securities Purchase Agreement and
Warrant by Palatin.
6.2 INITIAL PAYMENTS AND EQUITY PURCHASE.
6.2.1 COLLABORATION LICENSE FEE. Simultaneous with the Closing, King shall pay
to Palatin a one-time, fully-earned, nonrefundable license fee in the amount of
Ten Million Dollars ($10,000,000) (the "Collaboration License Fee"),
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.]. The Collaboration License Fee shall be paid by King in U.S. Dollars by
wire to an account designated by Palatin.
6.2.2 REIMBURSEMENT OF EXPENSES. Simultaneous with the Closing, King shall pay
to Palatin a one-time, fully-earned, nonrefundable payment for partial
reimbursement of expenses attributable to preclinical, clinical development, and
CMC costs for Product incurred by Palatin prior to the date hereof in the amount
of Five Million Dollars ($5,000,000) (the "Expense Payment"). The Expense
Payment shall be paid by King in U.S. Dollars by wire to an account designated
by Palatin.
6.2.3 INITIAL PURCHASE OF EQUITY. Simultaneous with the Closing, and in partial
consideration of the preclinical, clinical, and CMC costs for Product incurred
by Palatin prior to the date hereof and in consideration of the rights granted
to King pursuant to Sections 2.9, 3.5, 3.6 and 3.7 and subject to the terms and
conditions of the Securities Purchase Agreement dated the date hereof, King
shall purchase from Palatin, and Palatin shall issue and sell to King, shares of
Palatin's common stock par value $0.01 per share (the "Initial Shares") for an
aggregate purchase price of Five Million Dollars ($5,000,000) (the "Initial
Share Payment") in accordance with the terms and conditions of the Securities
Purchase Agreement.
6.2.4 ISSUANCE OF WARRANT. In partial consideration of the Initial Share Payment
and the first equity purchase ED Product milestone indicated below, Palatin
agrees to issue to King, pursuant to the terms of the Securities Purchase
Agreement, warrants to purchase Palatin common stock in the form set forth in
Exhibit I hereto.
6.3 MILESTONE PAYMENTS.
6.3.1 DEVELOPMENT MILESTONES. King will make the following nonrefundable,
noncreditable payments to and purchases of equity from Palatin within ten (10)
days after the determination of the first achievement of each of the milestones
set forth below. Each of the following milestone payments shall only be payable
once.
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ED PRODUCT FSD PRODUCT
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Milestone Cash Equity Cash Equity Total
------------------------------------------------------------------------------------------
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[*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*]
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[*] [*] [*] [*] [*] [*]
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Total Development
Milestones [*] [*] [*] [*] $100 Million
------------------------------------------------------------------------------------------
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.
30
6.3.2 DEVELOPMENT MILESTONE EQUITY PURCHASES. All equity purchases to be made by
King in connection with the development milestones set forth in Section 6.3.1
above, shall be made pursuant to the terms of the Securities Purchase Agreement;
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
6.3.3 SALES MILESTONES. King will make the following nonrefundable,
noncreditable payments to Palatin within ten (10) days after the determination
of the first achievement of each of the milestones set forth below. Each of the
following milestone payments shall only be payable once. In the event that more
than one milestone is reached in any given Calendar Year, each such milestone
shall be due and payable.
--------------------------------------------------------------------------------
Total Net Sales in a Single Calendar Year Total Cash Payment for Such Calendar
Year for all Products in the Territory
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
[*] [*]
--------------------------------------------------------------------------------
Total Sales Milestones $130 Million
--------------------------------------------------------------------------------
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.
6.3.4 DETERMINATION THAT PAYMENTS ARE DUE.
(a) The Party having control or oversight over achievement of a particular
milestone shall provide the JDMC with prompt written notice upon its achievement
of each of the milestones set forth above. In the event that, notwithstanding
the fact that such Party has not given any such notice, the other Party believes
any such milestone payment is due, it shall so notify such Party and the JDMC in
writing, and shall provide to such Party and the JDMC the data and information
demonstrating that the conditions for payment have been achieved. Within ten
(10) days of its receipt of such notice, the JDMC shall review the data and
information and shall certify in writing whether or not the conditions for
payment have been achieved. Any negative determination shall be accompanied by a
detailed explanation of the reasons therefor. If the JDMC does not take action
within such ten (10) day period (or such other period as the Parties shall
mutually agree to be reasonable), the conditions for payment shall be deemed to
have been achieved (unless the JDMC did not take action because a Party did not
participate in meetings of the JDMC). King shall have the right to dispute in
good faith the obligation to make a milestone payment pursuant to this Section
6.3.
31
(b) Notwithstanding anything to the contrary contained herein, any dispute under
this Section that relates to whether or not a milestone has been achieved shall
not be subject to final determination of either Party but shall be resolved
pursuant to Section 2.10.
6.4 COLLABORATION COSTS AND COLLABORATION REVENUE.
6.4.1 ALLOCATION. All Collaboration Costs incurred and Collaboration Revenue
received by a Party on and after the Effective Date shall be allocated between
the Parties according to the percentages set forth below. For the avoidance of
doubt, (i) a single percentage allocation shall ultimately be applied to all
Collaboration Costs incurred and all Collaboration Revenues received in a given
Calendar Year, based on an end-of-year determination of aggregate Collaboration
Revenues for such Calendar Year, [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24B-2.]
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COLLABORATION COSTS AND COLLABORATION REVENUE ALLOCATION
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Aggregate Collaboration Revenue in a Aggregate Collaboration
Calendar Year Reaches Up to, but Revenue in a Calendar Year Exceeds
Region Does Not Exceed, [*] in Region [*] in Region
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Territory [*] [*]
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[*] [*]
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ROW [*] [*]
------------------------
[*] [*]
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[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.
6.4.2 DETERMINATION AND ALLOCATION OF COLLABORATION COSTS. Within ten (10) days
following the end of each Calendar Quarter, Palatin and King shall submit to the
Accounting and Finance Committee an accounting of all Collaboration Costs
incurred by it with respect to all Products and the Collaboration, allocated
between the Territory and ROW, in the relevant time period. Within ten (10) days
thereafter, the Accounting and Finance Committee shall produce a report setting
forth the calculation of Collaboration Costs and its allocation between the
Parties in accordance with Section 6.4.1 above, [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
6.4.3 DETERMINATION AND ALLOCATION OF COLLABORATION REVENUE. Within ten (10)
days following the end of each Calendar Quarter commencing on and after the date
of First Commercial Sale of each Product or the date on which a Party received
Collaboration Revenue, Palatin and King shall submit to the Accounting and
Finance Committee an accounting of all Collaboration Revenue received by it with
respect to all Products and the Collaboration, allocated between the Territory
and ROW. Within ten (10) days thereafter, the Accounting and Finance Committee
shall produce a report setting forth the calculation of Collaboration Revenue
and its allocation between the Parties in accordance with Section 6.4.1.
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
32
6.4.4 ADVANCE PAYMENTS AND OFFSET. Each of the Parties shall fund projected
Collaboration Costs on a monthly, prospective basis, such that all anticipated
Collaboration Costs identified in the Accounting and Finance Plan for a given
month, or that are otherwise determined by the Accounting and Finance Committee
to be reasonably likely to be incurred in such month, shall be allocated between
the Parties according to the appropriate percentage set forth in Section 6.4.1,
as determined by the Accounting and Finance Committee by reference to
anticipated Collaboration Revenues for the relevant Calendar Year. At the end of
each Calendar Quarter, the Parties shall reconcile their respective funding
payments pursuant to Section 6.4.2 hereof, and, at the discretion of the Party
who has funded an amount greater than the Collaboration Costs allocable to such
Party for the relevant Calendar Quarter shall be reimbursed by the other Party
within ten (10) days after the end of such Calendar Quarter or, at its
discretion, shall receive a credit against Collaboration Costs payable by that
Party in the subsequent Calendar Quarter(s), which credit amount shall be
carried forward until fully credited.
6.4.5 CURRENCY CONVERSION. All Collaboration Costs incurred and Collaboration
Revenue received in currencies other than U.S. Dollars shall be converted to
U.S. Dollars using the method agreed by the Parties and set forth in the
Accounting and Finance Plan.
6.4.6 RECORDS. Each Party shall maintain, for three (3) years from the date of
each quarterly reconciliation of Collaboration Costs, complete and accurate
records of the same for a Party, its Affiliates and Sublicensees, in sufficient
detail to allow calculation and verification of Collaboration Costs and
Collaboration Revenue. Each Party shall have the right for a period of three (3)
years after receiving any report or statement with respect to Collaboration
Costs or Collaboration Revenue to appoint at its expense an independent
certified public accountant reasonably acceptable to the other Party to inspect
the relevant records of such other Party and its Affiliates and Sublicensees to
verify such report or statement. Such other Party, its Affiliates and
Sublicensees shall each make its records available for inspection by such
independent certified public accountant (who agree to confidentiality provisions
consistent with Article 10) during regular business hours at such place or
places where such records are customarily kept, upon reasonable notice from the
auditing Party, solely to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any Calendar Year and
not more than once with respect to sales of any Product in any given period.
Palatin agrees to hold in strict confidence all information concerning such
payments and reports, and all information learned in the course of any audit or
inspection, except to the extent necessary for Palatin to reveal such
information in order to enforce its rights under this Agreement or if disclosure
is required by law. The results of each inspection, if any, shall be binding on
both Parties. In the event that any such inspection shall conclude that
Collaboration Costs were overstated or Collaboration Revenue underreported by up
to three percent (3%) in any given Calendar Year,
33
the inspected Party shall pay for one-half of the reasonable costs of the
inspecting Party incurred in respect of the inspection, as well as make any
payments required to remedy the overstatement or underreporting. In the event
that any such inspection shall conclude that Collaboration Costs were overstated
or Collaboration Revenue underreported by more than three percent (3%) in any
give Calendar Year, the inspected Party shall pay for all the reasonable costs
of the inspecting Party incurred in respect of the inspection, as well as make
any payments required to remedy the overstatement or underreporting. Any dispute
regarding the results of any such inspection hereunder shall be subject to the
dispute resolution provisions of Section 2.10 hereof, provided that if the
non-paying party is the party with final decision-making authority over the
subject matter in dispute, and the CEO's are unable to reach agreement even
after good faith discussions in accordance with Section 2.10, then the dispute
shall not be subject to the sole discretion of either party.
6.4.7 OVERDUE PAYMENTS. All overdue payments, not subject to a bona fide
dispute, due and payable pursuant to this Agreement shall bear interest at a
rate of one percent (1%) per month from the due date until paid in full.
6.4.8 WITHHOLDING TAXES. All payments made by a Party hereunder shall be made to
the other Party free and clear of any taxes, duties, levies, fees or charges,
except for withholding taxes (to the extent applicable). The Party making the
withholding payment shall make any applicable withholding payments due on behalf
of other Party and shall promptly provide the other Party with written
documentation of any such payment sufficient to satisfy the requirements of the
United States Internal Revenue Service relating to an application by such other
Party for a foreign tax credit for such payment. If by law, regulations or
fiscal policy of a particular country in the Territory, remittance of
Collaboration Revenue payments in United States Dollars is restricted or
forbidden, written notice thereof shall promptly be given by the selling Party
to the other Party, and such payment shall be made by the deposit thereof in
local currency to the credit of such other Party in a recognized banking
institution designated by the other Party. When in any country in the Territory
the law or regulations prohibit both the transmittal and the deposit of
Collaboration Revenue payments, such payments shall be suspended for as long as
such prohibition is in effect and as soon as such prohibition ceases to be in
effect, all Collaboration Revenue payments that the selling Party would have
been under an obligation to transmit or deposit but for the prohibition shall
forthwith be deposited or transmitted, to the extent allowable.
7. LICENSES AND CT LICENSE AGREEMENT
7.1 LICENSE TO KING. Subject to the terms and conditions of this Agreement,
beginning on the Closing Date and thereafter during the Term, Palatin hereby
grants to King a co-exclusive (with Palatin only) license, limited to the Field,
with the right to grant sublicenses only as explicitly permitted hereunder in
furtherance of the Collaboration, under Palatin Technology and Palatin Patent
Rights and under Palatin's ownership interest in Joint Technology and Joint
Patent Rights, to develop, have developed, make, have made, use, sell,
distribute for sale, have distributed for sale, offer for sale, have sold,
import and have imported Products in the Territory, which license shall be
exercisable by King only as part of the Collaboration and for the conduct of the
activities required in the performance of its obligations or exercise of its
rights hereunder.
34
7.2 LICENSE TO PALATIN. Subject to the terms and conditions of this Agreement,
beginning on the Closing Date and thereafter during the Term, King hereby grants
to Palatin a co-exclusive (with King only) license, limited to the Field, with
the right to grant sublicenses only as explicitly permitted hereunder in
furtherance of the Collaboration, under King Technology and King Patent Rights
and under King's ownership interest in Joint Technology and Joint Patent Rights
to develop, have developed, make, have made, use, sell, distribute for sale,
have distributed for sale, offer for sale, have sold, import and have imported
Products in the Territory. The foregoing license to Palatin shall be exercisable
by Palatin only as part of the Collaboration and for the conduct of the
activities required in the performance of its obligations or exercise of its
rights hereunder. For the avoidance of doubt, Palatin shall have no right to
sell, distribute for sale, have distributed for sale, offer for sale, or have
sold Products in the Territory except and to the extent (a) permitted in the
Marketing Plans or otherwise expressly first agreed to by King in writing or (b)
set forth in Section 5.1 hereof.
7.3 RIGHT TO DEVELOP AND MARKET IN ROW. Subject to the terms and conditions of
this Agreement, beginning on the Closing Date and thereafter during the Term of
this Agreement, Palatin hereby grants to King the exclusive right, and King
agrees, to collaborate equally with Palatin (including the sharing of
Collaboration Costs and Collaboration Revenues relating to the same as set forth
in Section 6.4 and decision making as set forth herein) in licensing or
sublicensing to or collaboration with one or more Third Parties with respect to
the right to Develop and Market Products in the ROW. Neither Palatin nor King
shall have the right to grant, or shall grant, any rights to any Palatin
Technology, King Technology, Palatin Patent Rights, King Patent Rights, Joint
Technology or Joint Patent Rights to any third party in the ROW without the
consent and participation of the other Party, except as set forth in Section
3.11 hereof.
7.4 FULFILLMENT AND OBSERVANCE OF CERTAIN OBLIGATIONS. In furtherance of the
grant of rights set forth in Section 7.1, Palatin acknowledges that it is
responsible for the fulfillment of its obligations under the CT License
Agreement and agrees to use its commercially reasonable efforts to fulfill same,
and King hereby agrees to abide by the provisions of the CT License Agreement
and not to knowingly cause Palatin to be in breach of or under the same. Palatin
shall not amend, terminate or cause to be terminated the CT License Agreement,
if such amendment or termination would alter the rights of the parties to the CT
License Agreement in such a way as to alter the rights of King under this
Agreement (it being expressly understood and agreed that any modification to any
of the financial provisions of the CT License Agreement shall be deemed to alter
the rights of King under this Agreement), or exercise or fail to exercise any of
Palatin's material rights or obligations under the CT License Agreement, in each
case without the prior written consent of King, not to be unreasonably withheld.
7.5 NO OTHER RIGHTS. King shall receive no rights to utilize Palatin Technology,
Palatin Patent Rights, or Palatin Proprietary Materials except as expressly set
forth herein. Palatin shall receive no rights to utilize King Technology, King
Patent Rights or King Proprietary Materials except as expressly set forth
herein. Notwithstanding their joint ownership interest in Joint Technology and
Joint Patent Rights, each Party hereby agrees that it shall have no right to use
same except as expressly set forth herein.
35
7.6 LIMITATION ON DEVELOPMENT AND MARKETING. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
7.7 RIGHTS OUTSIDE THE FIELD. The co-exclusive rights of the Parties hereunder
will extend to all indications outside the Field with respect to PT-141,
including the use of PT-141 in combination with one or more other actives and in
any formulation including, without limitation, in any delivery method. In the
event King or Palatin make any invention or discovery with respect to PT-141
outside the Field, such new invention or discovery shall be part of the
Collaboration and the rights of the Parties with respect thereto shall be
subject to the terms and conditions hereof. Any activities of the Parties with
respect to PT-141 outside the Field shall only be undertaken by the Parties
pursuant to their mutual consent and pursuant to the framework established by
the Collaboration and this Agreement. Neither Party shall have any right to, and
neither Party shall, undertake any research, development, manufacture or
commercialization of PT-141 outside the Field outside the Collaboration, either
on its own or with any third party.
8. INTELLECTUAL PROPERTY RIGHTS
8.1 INVENTIONS DISCLOSURE AND GENERALLY. Each Party shall promptly provide the
JDMC with written notice concerning all Technology that is conceived, made or
developed in the course of carrying out the Development and Marketing Program by
employees or Consultants of either of them or their Affiliates, alone or jointly
with employees or Consultants of the other Party or its Affiliates. Such notice
shall be treated as the Confidential Information of both parties hereunder. The
provisions of this Section 8 shall apply to rights in the Technology conceived,
made or developed by Palatin or King, or both, during the course of carrying out
the Development and Marketing Program.
8.2 OWNERSHIP.
8.2.1 PALATIN INTELLECTUAL PROPERTY RIGHTS. Palatin shall have sole and
exclusive ownership of all right, title and interest on a worldwide basis in and
to any and all Palatin Technology and Palatin Patent Rights, with full rights to
license or sublicense, subject to the obligations to King as set forth herein.
Without limiting the foregoing, and except as expressly set forth in this
Agreement, Palatin shall be the sole owner of all Patent Rights, all trade
secret rights, all know-how and any other intellectual property rights in the
Palatin Technology and Palatin Patent Rights, including the sole and exclusive
right to exclude others from making, using, selling, offering for sale or
importing the Palatin Technology and Palatin Patent Rights, or any products that
infringe any Palatin Technology and Palatin Patent Rights.
8.2.2 KING INTELLECTUAL PROPERTY RIGHTS. King shall have sole and exclusive
ownership of all right, title and interest on a worldwide basis in and to any
and all King Technology and King Patent Rights, with full rights to license or
sublicense, subject to the obligations to Palatin as set forth herein. Without
limiting the foregoing, and except as expressly set forth in this Agreement,
King shall be the sole owner of all Patent Rights, all trade secret rights, all
know-how and any other intellectual property rights in the King Technology and
King Patent Rights including the sole and exclusive right to exclude others from
making, using, selling, offering for sale or importing the King Technology and
King Patent Rights or any products that infringe any King Technology and King
Patent Rights.
36
8.2.3 JOINT TECHNOLOGY RIGHTS. King and Palatin shall jointly own all Joint
Technology and Joint Patent Rights, subject to the rights of, and the licenses
granted to, each Party hereunder. The Parties hereby agree that as joint owners
of such rights, each Party may use or license or sublicense to any Affiliate or
Third Party all such rights for any or all purposes without restriction outside
the Field; provided, that, each Party agrees, prior to using, licensing or
sublicensing any such Joint Technology for commercial purposes, to first
negotiate in good faith and agree with the other Party an appropriate royalty to
be paid to such other Party in connection with such activities.
8.3 PATENT COORDINATORS. Palatin and King shall each appoint a patent
coordinator (each, a "Patent Coordinator" and, collectively, the "Patent
Coordinators"), reasonably acceptable to the other Party, who shall serve as
such Party's primary liaison with the other Party on matters relating to patent
filing, prosecution, maintenance and enforcement. Each Party may replace its
Patent Coordinator at any time by notice in writing to the other Party.
8.4 INVENTORSHIP. The JDMC, with the advice of the Patent Coordinators and, in
the event of a dispute between the Parties, their legal counsel, shall determine
the inventorship of any patent rights arising hereunder. Solely for purposes of
this Agreement, and for determining inventorship and ownership of any Palatin
Patent Rights, King Patent Rights and Joint Patent Rights and the rights and
obligations of the Parties hereunder, the standards contained in United States
patent law shall apply. For the avoidance of doubt, the inventorship set forth
in any particular patent application or patent within the Palatin Patent Rights,
King Patent Right or Joint Patent Right shall be made, as a legal matter, in
accordance with the patent laws of the relevant jurisdiction. The JDMC, with the
advice of the Patent Coordinators, shall also, in the case of dispute, make the
determination as to whether an invention is King Technology, Palatin Technology
or Joint Technology. All such determinations shall be treated as Joint Decisions
hereunder. If the JDMC cannot resolve the dispute, it shall be resolved by
independent patent counsel, not otherwise engaged by either of the Parties,
selected by the Patent Coordinators. The reasonable expenses of such independent
patent counsel shall be Collaborating Costs.
9. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS
9.1 PATENT FILING, PROSECUTION AND MAINTENANCE.
9.1.1 PATENT FILING. During the Term of this Agreement, with respect to any
Patent Rights arising hereunder:
(a) Palatin, acting through patent attorneys or agents of its choice, shall be
responsible for the preparation, filing, prosecution and maintenance of all
patents and patent applications claiming the Palatin Patent Rights. At Palatin's
request, King shall reasonably cooperate with and assist Palatin in connection
with such activities.
(b) King, acting through patent attorneys or agents of its choice, shall be
responsible for the preparation, filing, prosecution and maintenance of all
patents and patent applications claiming the King Patent Rights. At King's
request, Palatin shall reasonably cooperate with and assist King in connection
with such activities.
37
(c) Except as expressly provided in Section 12, neither Party makes any warranty
with respect to the validity, perfection or dominance of any patent or other
proprietary right or with respect to the absence of rights in Third Parties
which may be infringed by the manufacture or sale of any Product. Each Party
agrees to bring to the attention of the JDMC any patent or patent application it
discovers which relates to the rights of either Party under this Agreement.
(d) King and Palatin will cooperate through their respective Patent Coordinators
to jointly select outside patent counsel to handle the filing, prosecution and
maintenance of patents and patent applications comprising the Joint Patent
Rights. The Parties shall share equally, through the JDMC, the control related
to patents and patent applications claiming inventions that are Joint
Technology. Should one Party desire not to share in the control, filing,
prosecution or maintenance of any such patent or patent applications, the other
Party shall gain sole control of the filing, prosecution or maintenance of such
patents or patent applications, and such patents or patent applications shall be
deemed to be the Palatin Program Technology or King Program Technology, as
applicable, and such Party shall have the sole right to file, prosecute and
maintain same, at its own expense.
(e) All reasonable fees and expenses of counsel and other reasonable costs and
expenses of each Party attributable to the filing, prosecution and maintenance
of Patent Rights or Technology used or reasonably expected, in the judgment of
the JDMC to be used or useful in the Development and Marketing Program shall be
deemed Regulatory and IP Costs.
9.1.2 INFORMATION AND COOPERATION. Each Party responsible for Patent Rights
described in this Agreement (the "Filing Party") shall keep the JDMC regularly
informed of the status of the Patent Rights for which it is responsible in
accordance with this Section 9.1.2. The Filing Party shall provide the JDMC with
(a) copies of all filings and correspondence with the patent offices,
administrative boards or courts which the Filing Party sends or receives in
connection with filing, prosecution, maintenance and defense of the Patent
Rights for which it is responsible, and (b) copies of filings and correspondence
under subsection (a) sufficiently in advance of the due date so as to give the
other Party sufficient time to comment and shall give good faith consideration
to the other Party's comments and incorporate same to the extent not
inconsistent with the legal or commercial position of the Filing Party. The
Filing Party shall carefully follow the advice and direction of the JDMC with
respect to strategy for the Patent Rights for which it is responsible.
9.1.3 ABANDONMENT. If a Filing Party decides to abandon or to allow to lapse any
of its Patent Rights described in this Agreement, the Filing Party shall inform
the other Party and the JDMC at least forty-five (45) days prior to the
effective date of such decision, and the JDMC shall decide what actions should
be taken with respect to such Patent Rights. If the JDMC has not reached a
decision fifteen (15) days prior to such effective date, then the non-Filing
Party shall have the right to take any actions it deems reasonably necessary and
appropriate to prevent the abandonment or lapse of the relevant Patent Rights,
in the Filing Party's name, in order to maintain the status quo. The Filing
Party hereby authorizes the non-
38
Filing Party to make, constitute, and appoint any representative as such other
Party may select, in its sole discretion, as the true and lawful
attorney-in-fact for the Filing Party, with power to endorse the Filing Party's
name on all applications, documents, papers, and instruments necessary or
desirable for the non-Filing Party to give effect to the provisions of this
Section 9.13 and the intent of the parties hereto. This power of attorney is
coupled with an interest and is supported by the consideration set forth in this
Agreement. The Filing Party hereby ratifies all that such attorney-in-fact may
lawfully do or cause to be done by virtue hereof. This power of attorney is
irrevocable until the earlier of the expiration of the last to expire of the
Palatin Patent Rights, King Patent Rights and Joint Patent Rights or the
termination of this Agreement. In rendering its determination, the JDMC shall
decide how to respond to the activities of such non-Filing Party, what the
rights of the Parties shall be with respect to the relevant Patent Rights, and
how to allocate responsibility for any costs incurred in connection with same.
9.2 LEGAL ACTION.
9.2.1 ACTUAL OR THREATENED INFRINGEMENT.
(a) In the event either Party becomes aware of any possible infringement or
unauthorized possession, knowledge or use of any Patent Right which is the
subject matter of this Agreement, including any Joint Technology (collectively,
an "Infringement"), that Party shall promptly notify the JDMC and other Party
and provide it with full details (an "Infringement Notice"). The JDMC shall
decide which actions are to be taken with respect to such matters, subject to
the provisions of this Section 9.2. All reasonable costs and expenses expended
by a Party in connection herewith and monies or other assets recovered by a
Party pursuant hereto shall be deemed Collaboration Costs and Collaboration
Revenue, as the case may be, to the extent the same are related to a Product.
(b) King shall have the first right and option, but not the obligation, to
prosecute or prevent the Infringement of or relating to King Patent Rights. If
King does not commence an action to prosecute, or otherwise take steps to
prevent or terminate the Infringement within one hundred eighty (180) days from
any Infringement Notice, expressly excluding any immaterial infringement, then
Palatin shall have the right and option to take such action as Palatin will
consider appropriate to prosecute or prevent such Infringement, but only if such
Infringement is in the Field and only with respect to any King Patent Rights
that are actually then being used in the Development and Marketing Program or
are, in the judgment of the JDMC, reasonably likely to be used or useful in the
Development or Marketing of any Products hereunder. If either Party determines
that it is necessary or desirable for the other to join any such suit, action or
proceeding, the other Party shall, upon written notice from the prosecuting
Party, execute all papers and perform such other acts as may be reasonably
required in the circumstances.
(c) Palatin shall have the first right and option, but not obligation, to
prosecute or prevent the Infringement of or relating to Palatin Patent Rights.
If Palatin does not commence an action to prosecute, or otherwise take steps to
prevent or terminate the Infringement within one hundred eighty (180) days from
any Infringement Notice, expressly excluding any immaterial infringement, then
King shall have the right and option to take such action as King will consider
appropriate to prosecute or prevent such Infringement, but only if such
Infringement is in the Field and only with respect to any Palatin Patent Rights
that are actually then being used in the Development and Marketing Program or
are, in the reasonable judgment of the JDMC, reasonably likely to be used or
useful in the Development or Marketing of any Products hereunder. If either
Party determines that it is necessary or desirable for the other to join any
such suit, action or proceeding, the first Party shall, upon written notice from
the prosecuting Party, execute all papers and perform such other acts as may be
reasonably required in the circumstances.
39
(d) In the event of an Infringement of a Joint Patent Right, the JDMC shall
determine whether and how to prosecute or prevent the Infringement.
(e) Each Party shall always have the right to be represented by counsel of its
own selection in any suit instituted under this Section by the other Party for
Infringement. If either Party lacks standing and the other Party has standing to
bring any such suit, action or proceeding, then such other Party shall bring
such suit at the request of the first Party. No suit under this Section 9.2.1
may be settled without the approval of the JDMC.
(f) In any action under this Section, the Parties shall fully cooperate with and
assist each other.
(g) In the event that the scope of an action under this Section 9.2.1 goes
beyond the scope of the Field in that any aspect of the Infringement is
predicated on activities outside the Field, then the JDMC shall determine what
percentage of all costs incurred and all damages awarded or royalties granted in
connection with such action represent activity inside the Field, which shall be
treated as Collaboration Costs and Collaboration Revenues. All other costs,
damages and royalties shall be the responsibility of, and shall belong to, the
Party who owns the Patent Rights in suit.
9.2.2 DEFENSE OF CLAIMS.
(a) In the event that any action, suit or proceeding is brought against Palatin
or King or any Affiliate or Sublicensee of either Party alleging the
infringement of the Technology or intellectual property rights of a Third Party
by reason of any Party's activities performed pursuant to this Agreement, the
JDMC shall determine how the Parties will defend themselves in such action and,
subject to Section 9.2.2(b) below. All costs related to the same shall be deemed
Regulatory and IP Costs. Each Party shall have the right to separate counsel in
any such action or proceeding. The Parties shall cooperate with each other in
the defense of any such suit, action or proceeding. Subject to the foregoing,
each Party shall have the option to assume control of the defense of any action,
suit or proceeding which principally relates to the use of such Party's own
Technology. The Parties will give each other prompt written notice of the
commencement of any such suit, action or proceeding or claim of infringement and
will furnish each other a copy of each communication relating to the alleged
infringement. Neither Party shall compromise, litigate, settle or otherwise
dispose of any such suit, action or proceeding which involves the use of the
other's Technology or Patent Rights without the other Party's advice and prior
consent, provided that the Party not defending the suit shall not unreasonably
withhold its consent to any settlement which does not have a material adverse
effect on its business or business prospects. If the defending Party agrees that
the other Party should institute or join any suit, action or proceeding pursuant
to this Section, the defending Party may join the other Party as a Party to the
suit, action or proceeding, and the Party so joined shall execute all documents
and take all other actions, including giving testimony, which may reasonably be
required in connection with the prosecution of such suit, action or proceeding.
40
(b) If as a consequence of such action, suit or proceeding by a Third Party
claiming that the discovery, development, manufacture, use or sale of a Product
infringes such Third Party's intellectual property rights, the Parties shall
examine and discuss in good faith the consequences of such prohibition or
restriction or other conditions on this Agreement and on possible modifications
thereto.
9.3 TRADEMARK PROSECUTION. The JDMC will decide which Party shall be responsible
(using mutually acceptable outside counsel) for the filing, prosecution, defense
and maintenance before all trademark offices of the Product Trademarks and all
related and reasonable costs and expenses shall be deemed Regulatory and IP
Costs.
10. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY; NON-SOLICITATION.
10.1 CONFIDENTIALITY.
10.1.1 CONFIDENTIALITY OBLIGATIONS. Palatin and King each acknowledges and
agrees that the other Party's Confidential Information constitutes highly
valuable and proprietary confidential information and materials. Palatin and
King each agrees that during the Term of the Collaboration and for an additional
five (5) years (or, in the case of any Confidential Information identified as a
trade secret by the Disclosing Party at the time of disclosure, for so long as
such trade secret Confidential Information is susceptible of remaining a trade
secret), it will use commercially reasonable efforts to keep confidential, and
will use commercially reasonable efforts to cause its employees, Consultants,
Affiliates, agents, advisors and Sublicensees to keep confidential, all
Confidential Information and Proprietary Materials of the other Party. Neither
Palatin nor King nor any of their respective employees, Consultants, Affiliates
or Sublicensees shall use Confidential Information or Proprietary Materials of
the other Party for any purpose whatsoever except as expressly permitted in this
Agreement.
10.1.2 LIMITED DISCLOSURE. Palatin and King each agree that any disclosure of
the other Party's Confidential Information or any transfer of the other Party's
Proprietary Materials to any officer, employee, Consultant, agent or Affiliate
of Palatin or King, as the case may be, shall be made only if and to the extent
necessary to carry out its rights and responsibilities under this Agreement,
shall be limited to the maximum extent possible consistent with such rights and
responsibilities, and shall only be made to persons who are bound by written
confidentiality obligations to maintain the confidentiality thereof and not to
use such Confidential Information or Proprietary Materials except as expressly
permitted by this Agreement. Palatin and King each further agree not to disclose
or transfer the other Party's Confidential Information or Proprietary Materials
to any Third Parties under any circumstance without the prior written approval
from the other Party (such approval not to be unreasonably withheld), except as
otherwise required by law, and except as otherwise expressly permitted by
41
this Agreement. Each Party shall take such action, and shall cause its
Affiliates and Sublicensees to take such action, to preserve the confidentiality
of each other's Confidential Information and Proprietary Materials as it would
customarily take to preserve the confidentiality of its own Confidential
Information and Proprietary Materials, using a level of care that shall not
under any circumstances be less than reasonable and prudent care. If a court or
other government authority orders that the Receiving Party disclose Confidential
Information, or proposes such an order, the receiving party must notify the
Disclosing Party immediately after learning of the order, so as to provide the
Disclosing Party an opportunity to protect the information, and the Receiving
Party must limit the disclosure to the minimum that will comply with the order.
Each Party, upon the request of the other Party, will return all the Proprietary
Information and Confidential Materials disclosed or transferred to it by the
other Party pursuant to this Agreement, including all copies and extracts of
documents and all manifestations in whatever form, within sixty (60) days of the
request or, if earlier, the termination or expiration of this Agreement;
provided however, that a Party may retain Confidential Information and
Proprietary Materials of the other Party relating to any license or right to use
Technology which survives such termination and one copy of all other
Confidential Information may be retained in inactive archives solely for the
purpose of establishing the contents thereof.
10.1.3 EMPLOYEES AND CONSULTANTS. Palatin and King each hereby agrees that all
of its employees, and all of the employees of its Affiliates, and any
Consultants to such Party or its Affiliates, in any case that participate in the
activities of the Collaboration and who shall have access to Confidential
Information or Proprietary Materials of the other Party shall be bound by
written obligations to maintain the same in confidence and not to use such
information except as expressly permitted herein. Each Party agrees to enforce
confidentiality obligations to which its employees and Consultants (and those of
its Affiliates) are obligated.
10.1.4 EQUITABLE RELIEF. Each Party acknowledges that a breach by it of the
provisions of this Article 10 and Section 7.6 cannot reasonably or adequately be
compensated in damages in an action at law and that such a breach may cause the
other Party irreparable injury and damage. By reason thereof, each Party agrees
that the other Party may be entitled to seek, in addition to any other remedies
it may have under this Agreement or otherwise, preliminary and permanent
injunctive and other equitable relief to prevent or curtail any breach of this
Article 10 by the other Party; provided, however, that no specification in this
Agreement of a specific legal or equitable remedy shall be construed as a waiver
or prohibition against the pursuing of other legal or equitable remedies in the
event of such a breach. Each Party agrees that the existence of any claim,
demand, or cause of action of it against the other Party, whether predicated
upon this Agreement, or otherwise, shall not constitute a defense to the
enforcement by the other Party, or its successors or assigns, of the covenants
contained in this Article 10.
10.2 PUBLICITY. Neither Party may publicly disclose the existence or terms of
this Agreement without the prior written consent of the other Party; provided,
however, that either Party may make such a disclosure (a) to the extent required
by law or by the requirements of any nationally recognized securities exchange,
quotation system or over-the-counter market on which such Party has its
securities listed or traded or (b) to any investors, prospective investors,
lenders and other potential financing sources who are obligated to keep such
information confidential. In the event that such disclosure is required as
aforesaid, the disclosing Party shall make reasonable efforts to provide the
other Party with notice beforehand and to coordinate with the other Party with
respect to the wording and timing of any such disclosure. The Parties, upon the
execution of this Agreement, will mutually agree to a press release with respect
to the Collaboration for publication. Once such press release or any other
written statement is approved for disclosure by both Parties, either Party may
make subsequent public disclosure of the contents of such statement without the
further approval of the other Party.
42
10.3 PUBLICATION. It is expected that each Party may wish to publish the results
of its research under this Agreement. In order to safeguard patent rights and
other intellectual property, the Party wishing to publish or otherwise publicly
disclose the results of any research being conducted by the Parties in the
Collaboration shall first submit a draft of the proposed manuscript to the JDMC
for review, comment and consideration of appropriate patent action at least
sixty (60) days prior to any submission for publication or other public
disclosure. Within thirty (30) days of receipt of the prepublication materials,
the JDMC, with the advice of the Patent Coordinators and after consultation with
the respective medical affairs or medical services departments or professionals
of each Party, will notify the Party seeking publication as to whether a patent
application shall be prepared and filed (in which case the Party seeking
publication shall delay submission until the first to occur of the filing of a
patent application and ninety (90) days from such notice provided by the JDMC)
or whether such publication must be revised to eliminate Confidential
Information of a Party (in which case the Party seeking publication shall delete
from any proposed publication all such Confidential Information contained
therein).
10.4 PROHIBITION ON SOLICITATION. Without the written consent of the other
Party, neither Party nor its Affiliates shall, during the Term of this Agreement
or for a period of one (1) year following the expiration or termination of this
Agreement, solicit (directly or indirectly) any person who was employed by such
Party or its Affiliates and participated in the Development and Marketing
Program at any time during the Term of this Agreement. This provision shall not
restrict either Party or its Affiliates from advertising employment
opportunities in any manner that does not directly target the other Party or its
Affiliates.
11. TERM AND TERMINATION
11.1 TERM. This Agreement shall commence on the Effective Date and shall
continue for so long as any Product is being Developed or Marketed, or, if
later, the expiration of the last Patent Right licensed or developed hereunder,
unless earlier terminated in accordance with the provisions of this Section 11
(the "Term").
11.2 TERMINATION. This Agreement may be terminated as follows, in each case in
the Territory, in the ROW, or in both (in each case, the "Terminated Region").
Termination in the Terminated Region, under any provision of this Section 11.2,
shall not impact the rights and obligations of the Parties outside the
Terminated Region, and this Agreement shall be deemed amended, mutatis mutandis,
to exclude the Terminated Region. [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24B-2.]
43
11.2.1 MUTUAL TERMINATION. The Parties may agree in writing to mutually
terminate this Agreement at any time. If a Party has given notice of termination
of this Agreement pursuant to Sections 11.2.2 or 11.2.3 hereof, the other Party
may not invoke this Section 11.2.1 by agreeing to such termination. In the event
of termination pursuant to this Section 11.2.1 the Parties shall negotiate in
good faith within thirty (30) days after the date of such termination the terms
and conditions of such termination. Such terms shall include that each Party
will make its personnel and other resources reasonably available to the other
Party as necessary to effect an orderly transition of responsibilities. In
addition, the Parties shall make reconciling payments due and payable for the
Final Calendar Year as required by Sections 6.3 and 6.4, as well as pay any
other amounts due and owing on the date of termination.
11.2.2 TERMINATION AT WILL. Either Party may terminate this Agreement in the
Territory and ROW (together, but not in one or the other) at any time, at will,
(x) upon ninety (90) days prior written notice to the other Party if such
termination occurs prior to the Completion of Phase II Clinical Trials and (y)
upon one-hundred and eighty (180) days prior written notice to the other Party
if such termination occurs on or after the Completion of Phase II Clinical
Trials. In connection with a termination pursuant to this Section 11.2.2, the
following shall apply: (a) The terminating Party shall, at its own expense,
execute and deliver to the other Party such documents, material, data, records,
analyses and information and do such things as reasonably requested by the other
Party in order to permit the other Party to Develop and Market Products in the
Terminated Regions in the Field including the following, in each case only to
the extent reasonably necessary or relevant to such Development and Marketing in
the Terminated Regions in the Field: (i) the terminating Party shall use its
commercially reasonable efforts to effect a smooth and orderly transition of any
ongoing clinical studies, regulatory approval or pre-marketing efforts to the
other Party (including all data and reports in the possession of the terminating
Party), including without limitation the assignment of any relevant third party
contracts and Regulatory Filings and the use of commercially reasonable efforts
to cancel all cancelable costs already incurred and mitigate all other costs
incurred in connection with the Development and Marketing Program; (ii) the
terminating Party shall make its personnel and other resources reasonably
available to the other Party as necessary to effect an orderly transition of
development responsibilities, with the reasonable cost of such personnel and
resources to be borne by the terminating Party after the effective date of
termination; (iii) the terminating Party, for no additional consideration, shall
pay its share of the costs for the completion of any of the ongoing clinical
trials of Product, but only for such costs directly incurred for those patients
already enrolled in the study at the time of giving the termination notice; (iv)
all rights and licenses granted herein to the terminating Party in the
Terminated Regions in the Field shall, for no additional consideration,
immediately terminate with respect to the terminating Party, and thereafter, the
non-terminating Party shall have the sole and exclusive right and license
(exclusive even as to the terminating Party) to make, have made, use, sell,
offer for sale and import Product in the Terminated Regions in the Field under
the Palatin Technology, the Palatin Patent Rights, the King Technology and King
Patent Rights and an exclusive right and license under the Joint Patent Rights
and Joint Technology to make, have made, use, sell, offer for sale and import
Product in the Terminated Regions in the Field; and (v) the terminating Party
shall, within ten (10) days after the termination date, provide and assign to
the other Party, at the terminating Party's expense, all clinical data, INDs,
NDAs, Regulatory Approvals, Regulatory Filings and all other documentation
reasonably useful in respect of Products in the Terminated Regions in the Field.
44
(b) In connection with any termination by Palatin pursuant to this Section
11.2.2, Palatin will use its commercially reasonable efforts to assign or
transfer to King Palatin's rights and benefits under the CT License Agreement
(or otherwise provide to King the benefit of the same if assignment or transfer
is not possible after using its commercially reasonable efforts) to the extent
reasonably necessary for King to Develop and Market Product in the Terminated
Regions in the Field, and King agrees to thereafter assume all subsequent
responsibilities, liabilities, obligations (financial and otherwise) related
thereto as of the relevant termination date, including any relating to a breach
by King of the CT License Agreement, it being understood and agreed that King
shall not be liable for, and Palatin shall remain liable for, any and all
responsibilities, liabilities, breaches and obligations attributable to periods
or accruing prior to or on such termination date. Should King not agree to
assume such subsequent responsibilities, Palatin shall have no obligation to
assign or transfer to King any of its rights or benefits under the CT License
Agreement (or otherwise offer to King the benefit of the same if assignment or
transfer is not possible after using its commercially reasonable efforts).
(c) The Parties shall make reconciling payments due and payable for the Final
Calendar Year as required by Sections 6.3 and 6.4, as well as pay any other
amounts due and owing on the date of termination.
(d) If the Party that is not proceeding with Development and Marketing of
Products pursuant to this Section is responsible for supplying CTM, API, or
Product for Development or Marketing (the "Manufacturing Party"), the
Manufacturing Party shall agree to supply to the other Party (the "Developing
Party"), at the Developing Party's election, all its requirements of such CTM,
API or Product (the "Supply") at [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24B-2.] as is reasonably required by the Developing
Party in order to Develop and Market Product for the shorter of (i) eighteen
(18) months or (ii) as long as is reasonably required by the Developing Party to
obtain Supply from a Third Party supplier or to manufacture such Supply on its
own.
11.2.3 TERMINATION FOR MATERIAL BREACH. In the event that either Party breaches
any material term of this Agreement that applies to it, the other Party shall
have the right to terminate this Agreement in the Territory and ROW (together,
but not in one or the other) (x) by giving thirty (30) days' prior written
notice to the breaching Party in the case of a breach of any payment term of
this Agreement and (y) by giving ninety (90) days' prior written notice to the
breaching Party in the case of any other breach; provided, however, that in the
case of a breach capable of being cured, if the breaching Party shall cure the
breach within such notice period after notice shall have been given, then such
notice shall not be effective. For purposes of this Section 11.2.3, (i) the
failure to timely make any payment or fulfill any funding obligation under this
Agreement that is not subject to a bona fide dispute, (ii) the failure, after
use of commercially reasonable efforts, to timely supply API or finished Product
in the quantities required, and (iii) the commission of any act or the
occurrence of any omission, in each case that constitutes a breach of any
material term of this Agreement and that has a material adverse impact, or is
reasonably likely, in the judgment of the JDMC, to have a material adverse
impact, on the ability of the Parties to timely Develop or Market a Product that
conforms with the Program Plans shall each constitute a material breach of this
Agreement (but the list set forth in clauses (i) through (iii) shall not be
deemed an exhaustive list of material breaches of this Agreement). In the event
of a termination pursuant to this Section 11.2.3, the following shall apply:
45
(a) The breaching Party shall, at its own expense, execute and deliver to the
nonbreaching Party such documents, material, data, records, analyses and
information and do such things as reasonably requested by the nonbreaching Party
in order to permit the nonbreaching Party to Develop and Market of Product in
the Terminated Regions in the Field, including the following, in each case only
to the extent reasonably necessary or relevant to such Development and Marketing
in the Terminated Regions in the Field: (i) the breaching Party shall use its
commercially reasonable efforts to effect a smooth and orderly transition of any
ongoing clinical studies, regulatory approval or pre-marketing efforts to the
nonbreaching Party (including all data and reports in the possession of the
breaching Party), including without limitation the assignment of any relevant
third party contracts and Regulatory Filings; (ii) the breaching Party shall
make its personnel and other resources reasonably available to the nonbreaching
Party as necessary to effect an orderly transition of development
responsibilities, with the reasonable cost of such personnel and resources to be
borne by the breaching Party after the effective date of termination; (iii) the
breaching Party, for no additional consideration, shall pay its share of the
costs for the completion of any of the ongoing clinical trials of Product, but
only for such costs directly incurred for those patients already enrolled in the
study at the time of giving the termination notice; (iv) all rights and licenses
granted herein to the breaching Party in the Terminated Regions in the Field
shall, for no additional consideration, immediately terminate with respect to
the breaching Party; thereafter, the nonbreaching Party shall have the sole and
exclusive right and license (exclusive even as to the breaching Party) to make,
have made, use, sell, offer for sale and import Product in the Terminated
Regions in the Field under the Palatin Technology, the Palatin Patent Rights,
the King Technology and King Patent Rights and an exclusive right and license
under the Joint Patent Rights and Joint Technology to make, have made, use,
sell, offer for sale and import Product in the Terminated Regions in the Field;
and (v) the breaching Party shall, within ten (10) days after the date of
termination, provide and assign to the nonbreaching Party, at the breaching
Party's expense, all clinical data, INDs, NDAs, Regulatory Approvals, Regulatory
Filings and all other documentation reasonably useful in respect of Product in
the Terminated Regions in the Field.
(b) In connection with any termination by King pursuant to this Section 11.2.3,
Palatin will use its commercially reasonable efforts to assign or transfer to
King Palatin's rights and benefits under the CT License Agreement (or otherwise
provide to King the benefit of the same if assignment or transfer is not
possible after using its commercially reasonably efforts) to the extent
reasonably necessary for King to Develop and Market Product in the Terminated
Regions in the Field, and King agrees to thereafter assume all subsequent
responsibilities, liabilities, obligations (financial and otherwise) related
thereto as of the relevant termination date, including any relating to a breach
by King of the CT License Agreement, it being understood and agreed that King
shall not be liable for, and Palatin shall remain liable for, any and all
responsibilities, liabilities, breaches and obligations attributable to periods
or accruing prior to or on such termination date. Should King not agree to
assume such subsequent responsibilities, Palatin shall have no obligation to
assign or transfer to King any of its rights or benefits under the CT License
Agreement (or otherwise offer to King the benefit of the same if assignment or
transfer is not possible after using its commercially reasonably efforts).
46
(c) The Parties shall make reconciling payments due and payable for the Final
Calendar Year as required by Sections 6.3 and 6.4, as well as pay any other
amounts due and owing on the date of termination.
(d) The Parties agree that the following royalties will be paid to the breaching
Party in consideration of the monies paid to date by the breaching Party, the
work completed to date by the breaching Party, and the licenses granted pursuant
to this Section by the breaching Party.
With respect to royalties to be paid by King to Palatin only:
------------------------------------------------------------------------------------------------------------
Royalty Payable on Net Sales by King
of Product in the Field or on Royalty Payable on Consideration
Consideration Received by King from Received by King from Licensing or
Termination Date Licensing or Sublicensing of Product Sublicensing of Product in the Field
Occurs in the Field in Territory in ROW
------------------------------------------------------------------------------------------------------------
Prior to the Closing Date No Royalty No Royalty
------------------------------------------------------------------------------------------------------------
[*] [*] [*]
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[*] [*] [*]
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[*] [*] [*]
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[*] [*] [*]
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[*] [*] [*]
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[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.
Notwithstanding the foregoing, King shall not be required to pay to Palatin any
royalty or other payment based on consideration paid to it as upfront licensing
or sublicensing fees or license or sublicense maintenance fees.
With respect to royalties to be paid by Palatin to King only:
---------------------------------------------------------------------------------------------------------------
Royalty Payable on Net Sales by
Palatin of Product in the Field Royalty Payable on Consideration
or on Consideration Received by Palatin Received by Palatin from Licensing or
Termination Date from Licensing or Sublicensing of Sublicensing of Product in the
Occurs Product in the Field in Territory Field in ROW
----------------------------------------------------------------------------------------------------------------
Prior to the Closing Date No Royalty No Royalty
----------------------------------------------------------------------------------------------------------------
[*] [*] [*]
----------------------------------------------------------------------------------------------------------------
[*] [*] [*]
----------------------------------------------------------------------------------------------------------------
[*] [*] [*]
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[*] [*] [*]
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[*] [*] [*]
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[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24B-2.
Notwithstanding the foregoing, Palatin shall not be required to pay to King (i)
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
and (ii) any royalty or other payment based on consideration paid to it as
upfront licensing or sublicensing fees or license or sublicense maintenance
fees.
47
(e) If the Party that is not proceeding with Development and Marketing of
Products pursuant to this Section is the Manufacturing Party, the
Manufacturing Party shall agree to supply to the Developing Party, at
the Developing Party's election, all its requirements of Supply at
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24B-2.] as is reasonably required by the Developing Party in order
to Develop and Market Product for the shorter of (i) eighteen (18)
months or (ii) as long as is reasonably required by the Developing
Party to obtain Supply from a Third Party supplier or to manufacture
such Supply on its own.
(f) In the event of a termination pursuant to this Section 11.2.3, the
parties shall negotiate in good faith customary royalty protection
provisions that shall be applicable to the payment of royalties
post-termination, including without limitation anti-stacking
protections and reductions in royalties for generic competition and
infringing third-party sales, provided that the royalty rates set forth
herein shall remain in full force and effect.
(g) Reporting. The Party that is proceeding with the Development and
Marketing of the Product hereunder ("Proceeding Party") shall keep, and
shall require each of its Affiliates to keep, full and accurate books
of account containing all particulars relevant to its sales of Products
that may be necessary for the purpose of calculating all royalties
payable to the other Party ("Non-proceeding Party") hereunder. Such
books of account, as well as all reasonably necessary supporting data,
shall be kept at the principal place of business of the Proceeding
Party and each Affiliate, as applicable, for the five (5) years next
following the end of the Calendar Year to which each shall pertain, and
shall be open for inspection by an independent certified public
accountant reasonably acceptable to the Proceeding Party, upon
reasonable notice during normal business hours at the Non-proceeding
Party's expense, as the case may be, for the sole purpose of verifying
royalty statements or compliance with this Agreement. In the event the
inspection determines that royalties due Non-proceeding Party for any
period have been underpaid by five percent (5%) or more, which
underpayment has not since been remedied, then the Proceeding Party
and/or its Affiliate, as applicable, shall pay for all costs of the
inspection. All royalty payments set forth in this Agreement shall, if
overdue, bear interest until payment at a per annum rate of two percent
(2%) above the prime rate published in the Wall Street Journal, New
York edition, on the due date. The payment of such interest shall not
foreclose the Non-proceeding Party from exercising any other rights it
may have as a consequence of the lateness of any payment. All
information and data reviewed in the inspection shall be used only for
the purpose of verifying royalties and shall be treated as the
Proceeding Party's Confidential Information subject to the obligations
of this Agreement. No audit shall be conducted hereunder more
frequently than once during any twelve (12) month period.
(h) Quarterly Payments and Reports. In each year the amount of royalty due
shall be calculated quarterly as of the end of each Calendar Quarter
and shall be paid quarterly within the forty-five (45) days next
following such date. Every such payment shall be supported by the
accounting described herein. All royalties due hereunder are payable in
United States dollars. When Products are sold for currency other than
United States dollars, the earned royalties will first be determined in
the foreign currency of the country in which such Products were sold
and then converted into equivalent United States funds. The exchange
rate will be that rate quoted in the Wall Street Journal, NY Edition on
the last business day of the Calendar Quarter in which such sales were
made.
48
(i) Accounting Reports. With each quarterly payment, the Proceeding Party
shall deliver to the Non-proceeding Party a full and accurate
accounting to include at least the following information:
(i) Quantity of Product subject to royalty manufactured and sold, by
country, by the Proceeding Party and its Affiliates;
(ii) Total sales for each Product subject to royalty, by country and, to the
extent used in any royalty calculations during such quarter, the
exchange rate set forth herein;
(iii) Deductions applicable as provided herein or as otherwise agreed by the
parties and all Net Sales calculations;
(iv) Compensation on Products received from sublicensees hereunder; and
(v) Total royalties and/or compensation payable to the Non-proceeding
Party.
11.2.4 TERMINATION FOR INSOLVENCY. In the event that either Party files for
protection under bankruptcy laws, makes an assignment for the benefit of
creditors, appoints or suffers appointment of a receiver or trustee over its
property, files a petition under any bankruptcy or insolvency act, has any such
petition filed against it, or is unable to pay its debts as they come due (each,
an "Event of Bankruptcy"), then the other Party may terminate this Agreement
effective immediately upon written notice to such Party. In the event of a
termination pursuant to this Section 11.2.4, the following shall apply:
(a) The non-terminating Party shall (i) at the election of the terminating
party, remain responsible to supply Product or API to the extent and in the same
quantity it was obligated to supply at the time of such termination for a
reasonable period of time to allow the other Party to find an alternate source
of supply, or as otherwise required under a manufacturing and supply agreement
between the Parties and (ii) make its personnel and other resources reasonably
available to the other Party as necessary to effect an orderly transition of
responsibilities, with the reasonable cost of such personnel and resources to be
borne by the terminating Party after the effective date of termination.
(b) The Parties shall make reconciling payments due and payable for the Final
Calendar Quarter as required by Sections 6.3 and 6.4, as well as pay any other
amounts due and owing on the date of termination. The Parties agree that the
licensor under this Agreement shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code in the event of a bankruptcy by
the other Party. The Parties further agree that in the event of the commencement
of a bankruptcy proceeding by or against one Party under the Bankruptcy Code,
the other Party shall be entitled to complete access to any such intellectual
property pertaining to the rights granted in the licenses hereunder of the Party
by or against whom a bankruptcy proceeding has been commenced and all
embodiments of such intellectual property.
49
(c) If the Party that is not proceeding with Development and Marketing of
Products pursuant to this Section is the Manufacturing Party, the Manufacturing
Party shall agree to supply to the Developing Party, at the Developing Party's
election, all its requirements of Supply at FAMC plus ten percent (10%) as is
reasonably required by the Developing Party in order to Develop and Market
Product for the longer of (i) one (1) year or (ii) as long as is reasonably
required by the Developing Party to obtain Supply from a Third Party supplier or
to manufacture such Supply on its own.
11.2.5 REQUIRED ASSIGNMENTS. If a Party is required by the terms of this
Agreement to assign or transfer to the other Party any agreement, document or
right and such Party, after utilizing the level of efforts required hereunder,
is unable to do so as the result of forces beyond its reasonable control, then
the Party shall use its commercially reasonable efforts to make available to the
other Party the material benefits of such agreement, document or right in lieu
of such assignment or transfer.
11.3 SURVIVING PROVISIONS. Termination and expiration of this Agreement for any
reason shall be without prejudice to:
(a) the rights and obligations of the Parties under this Agreement, which by
their nature should survive the termination or expiration of this Agreement,
including those set forth in Sections 8.2, 10, 11, 13, 14, 15.1, and 15.2, which
shall survive; and
(b) any other rights or remedies provided at law or equity which either Party
may otherwise have against the other. Nothing herein shall relieve any Party
from liability from any breach of any covenant or agreement of such Party
contained herein or any willful or intentional breach of any representation or
warranty of such Party contained herein.
11.4 TREATMENT UNDER BANKRUPTCY CODE. All rights related to and licenses of
intellectual property granted under this Agreement by one Party to the other
Party are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the Bankruptcy Code, licenses of rights to "intellectual property" as defined
under Section 101 (35A) of the Bankruptcy Code. The Parties agree that this
Agreement and the Patent Rights and Technology licensed hereunder are considered
by the Parties to be intellectual property subject to 11 U.S.C. ss. 365(n) of
the Bankruptcy Code.
11.5 DAMAGES; RELIEF. Termination of this Agreement shall not preclude any party
from claiming any other damages, compensation or legal or equitable relief that
it may be entitled to upon such termination.
12. REPRESENTATIONS AND WARRANTIES
Palatin and King each represents and warrants to the other as of the
Effective Date as follows:
12.1 ORGANIZATION. It is a corporation duly organized, validly existing and is
in good standing under the laws of the jurisdiction of its organization, is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the performance of its obligations hereunder requires
such qualification and, except as would not have a material adverse effect on
the ability of the Party to perform its obligations hereunder, has all requisite
power and authority, corporate or otherwise, to conduct its business as now
being conducted, to own, lease and operate its properties and to execute,
deliver and perform this Agreement.
50
12.2 AUTHORIZATION AND RIGHT TO GRANT LICENSES. The execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
corporate action and does not and will not (a) require any consent or approval
of its stockholders or (b) violate any provision of any agreement, law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it or any provision of its charter
documents. Each Party has the right, power and authority to grant licenses
granted by it hereunder.
12.3 BINDING AGREEMENT. This Agreement is a legal, valid and binding obligation
of it enforceable against it in accordance with its terms and conditions, except
as enforceability may be limited by bankruptcy, insolvency, or other laws
affecting the enforcement of creditors' rights generally, and except that the
availability of the remedy of specific performance or other equitable relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
12.4 NO INCONSISTENT OBLIGATION. It is not under any obligation to any person,
or entity, contractual or otherwise, that is conflicting or inconsistent in any
respect with the terms of this Agreement or that would impede the diligent and
complete fulfillment of its obligations hereunder and that it has all power and
authority under all instruments or agreements to which it is a Party to enter
into this Agreement and to perform its obligations hereunder.
12.5 ABSENCE OF ACTIONS. It is not a party to or object of any litigation, suit,
claim, action, proceeding, judgment, settlement, or investigation (an "Action")
pending or, to the knowledge of it, threatened against it, or any of its
Affiliates, or any of its properties or assets, before any governmental or
regulatory authority that might reasonably be expected to have a material
adverse effect on its ability to diligently and completely fulfill its
obligations hereunder. A material breach of or inaccuracy in this Section 12.5
with respect to a Party shall constitute a material breach of this Agreement by
such Party pursuant to Section 11.2.3.
12.6 APPLICABLE LAW. It has complied with and shall continue to comply with and
shall perform all its duties and obligations hereunder in accordance with all
Applicable Law.
12.7 DEBARMENT. As of the date hereof, neither it nor any of its respective
employees or agents, in their capacity as such, have been disqualified or
debarred by the FDA, pursuant to 21 U.S.C. xx.xx. 335(a) or (b), or been charged
with or convicted under United States Law for conduct relating to the
development or approval, or otherwise relating to the regulation of any Product
under the Generic Drug Enforcement Act of 1992, or any other relevant law, rule
or regulation or been disbarred, disqualified or convicted under or for any
equivalent or similar applicable foreign law, rule or regulation.
Palatin further represents and warrants to King as of the Effective Date
as follows:
51
12.8 CLINICAL TRIALS. All preclinical and clinical work, studies and trials
conducted, supervised or monitored by Palatin with respect to any Product have,
to the knowledge of Palatin, having made a reasonable inquiry, been conducted
and/or performed in compliance with Applicable Laws, including Good Laboratory
Practice, Good Clinical Practice and Good Manufacturing Practice requirements
and ICH Guidelines. Palatin has, or, as applicable, any third parties with whom
Palatin has contracted to perform any clinical trials or modifications thereto
with respect to any Product has, to the knowledge of Palatin, having made a
reasonable inquiry, obtained and maintained any necessary Institutional Review
Board ("IRB") approvals of clinical trials or modifications thereto sponsored by
Palatin. To the knowledge of Palatin, having made a reasonable inquiry, in no
clinical trial sponsored, conducted, supervised or monitored by Palatin with
respect to any Product has any IRB, ethics committee, or European competent
authority approval ever been suspended, terminated, put on clinical hold, or
voluntarily withdrawn.
12.9 DISCLOSURE. To Palatin's knowledge, no employees or agents of Palatin have
made an untrue statement of material fact on behalf of Palatin to any Regulatory
Authority with respect to any Product or failed to disclose a material fact
required to be disclosed to any Regulatory Authority with respect to any
Product.
12.10 INTELLECTUAL PROPERTY. (a) There is no litigation or proceeding pending
or, to the actual knowledge of Palatin, having made a reasonable inquiry,
threatened, concerning the validity or enforceability of any Palatin Patent
Rights; (b) to Palatin's actual knowledge, after having made a reasonable
inquiry, each of the issued patents a part of the Palatin Patent Rights is valid
and enforceable; (c) Palatin is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Palatin Patent
Rights, free and clear of any liens, charges, encumbrances and adverse claims,
including pledges, assignments, licenses, registered user agreements and
covenants by Palatin not to xxx third Persons; and (d) to the actual knowledge
of Palatin, after having made a reasonable inquiry, neither the manufacture,
use, offer for sale, sale or importation of Products currently being developed
by Palatin, nor to the knowledge of Palatin, the conduct of the Development and
Marketing Program as set forth in the portion of the Development and Marketing
Plan set forth in Exhibit A provided by Palatin, will infringe or misappropriate
the intellectual property rights of any third party.
12.11 THE CT LICENSE AGREEMENT. Neither Palatin nor, to the knowledge of Palatin
without the obligation to perform due diligence, CT is in material breach of the
CT Agreement and, to the knowledge of Palatin without the obligation to perform
due diligence, the CT License Agreement is legal, valid, binding, enforceable
and in full force and effect in all material respects.
12.12 GOVERNMENT FUNDING. To the extent Palatin has obtained or used any
government funding in connection with the research or development of any
Products or any subject matter disclosed in any Palatin Patent Rights, including
without limitation pursuant to any grants from the National Institutes of
Health, Palatin has complied in all material respects with the terms and
conditions of such funding agreements and grants, and with all Applicable Laws
with respect thereto.
King further represents and warrants to Palatin as follows:
52
12.13 STATEMENTS IN CONNECTION WITH INVESTIGATIONS. Each communication by King
or its representatives to Palatin or its representatives, whether oral, written,
electronic or otherwise, relating to an investigation of Medicaid claims and the
state and local equivalents thereof by the SEC, the Office of Inspector General
at the Department of Health & Human Services, the Department of Justice, the
Department of Veterans Affairs, and the Centers for Medicare and Medicaid
Services and all other governmental entities investigating any Medicaid claims,
did not when made, and does not, contain any untrue statement of material fact,
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
13. INDEMNIFICATION
13.1 INDEMNIFICATION OF KING BY PALATIN. Palatin shall indemnify, defend and
hold harmless King, its Affiliates and their respective directors, officers,
employees, and agents (the "King Indemnitees"), against any liability, damage,
loss or expense (including reasonable attorneys' fees and expenses of
litigation) (collectively, "Losses") incurred by or imposed upon the King
Indemnitees, or any one of them, in connection with any investigations,
settlements, corporate integrity agreements or other similar agreements, claims,
causes of action, liabilities, suits, actions, demands or judgments of third
parties, including without limitation personal injury and product liability
matters and claims of suppliers and Palatin employees (except in cases where
such claims, suits, actions, demands or judgments result from a material breach
of this Agreement, negligence or willful misconduct, on the part of King)
arising out of (a) any act or omission of Palatin in the performance of the
Development and Marketing Program, (b) the breach of this Agreement, including
the breach of any representation or warranty of Palatin under Section 12 hereof,
(c) the negligence or willful misconduct of Palatin, its Affiliates or their
respective employees or agents in the performance of any obligation under this
Agreement, (d) acts or omissions of Palatin prior to the Effective Date,
irrespective of when the relevant claim, cause of action, etc. is filed, (e) any
government funding received by Palatin prior to the Effective Date in connection
with the research or development of any Products or any subject matter disclosed
in any Palatin Patent Rights, including without limitation pursuant to any
grants from the National Institutes of Health, and the failure of Palatin to
comply in all material respects with the terms and conditions of such funding
agreements and grants, and with all Applicable Laws with respect thereto,
including without limitation to obtain any necessary permits or waivers
thereunder, and (f) any and all Marketing and Development of Products by Palatin
post-termination, as permitted pursuant to Section 11.2 hereof.
13.2 INDEMNIFICATION OF PALATIN BY KING. King shall indemnify, defend and hold
harmless Palatin and its Affiliates and their respective directors, officers,
employees, and agents (the "Palatin Indemnitees"), against any Losses incurred
by or imposed upon the Palatin Indemnitees, or any one of them, in connection
with any investigations, settlements, corporate integrity agreements or other
similar agreements, claims, causes of action, liabilities, suits, actions,
demands or judgments of third parties, including without limitation personal
injury and product liability matters, government or regulatory investigations,
and claims of suppliers and King employees (except in cases where such claims,
suits, actions, demands or judgments result from a material breach of this
Agreement, negligence or willful misconduct on the part of Palatin), arising out
of (a) any act or omission of King in the performance of the Development and
Marketing Program, (b) the breach of this Agreement, including the breach of any
representation or warranty of King under Section 12 hereof, (c) the negligence
or willful misconduct of King, its Affiliates or their respective employees or
agents in the performance of any obligation under this Agreement, (d) acts or
omissions of King prior to the Effective Date, irrespective of when the relevant
claim, cause of action etc. is filed and (e) any and all Marketing and
Development of Products by King post-termination, as permitted pursuant to
Section 11.2 hereof.
53
13.3 CONDITIONS TO INDEMNIFICATION. A Party seeking indemnification under this
Section 13 (the "Indemnified Party") shall give prompt notice of the claim to
the other Party (the "Indemnifying Party") and, provided that the Indemnifying
Party is not contesting the indemnity obligation, shall permit the Indemnifying
Party to control any litigation relating to such claim and disposition of any
such claim. The Indemnifying Party shall act reasonably and in good faith with
respect to all matters relating to the settlement or disposition of any claim as
the settlement or disposition relates to Parties being indemnified under this
Section 13. The Indemnifying Party shall not settle or otherwise resolve any
claim without prior notice to the Indemnified Party and the consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed) if such settlement involves anything other than the payment of money
by the Indemnifying Party. The Indemnified Party shall reasonably cooperate with
the Indemnifying Party in its defense of any claim for which indemnification is
sought under this Section 13 and shall have the right to be present in person or
through counsel at all legal proceedings giving rise to the right of
indemnification.
13.4 INSURANCE. In addition to the insurance coverages required by Section 5.4
hereof, each Party shall obtain other insurance coverage from first class
insurers in types and amounts commensurate with industry standards for such
Party's activities hereunder.
13.5 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY,
GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY
DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
13.6 LIMITED LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, NEITHER PALATIN NOR KING WILL BE LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY
OR SERVICES.
14. REMEDIES
Subject to the terms of this Agreement, the Parties are not excluded
from exercising or seeking any and all rights and remedies available, in law or
in equity, under applicable law.
54
15. MISCELLANEOUS
15.1 NOTICES. All notices and communications shall be in writing, mailed via
certified mail, return receipt requested, courier, facsimile transmission or
e-mail with acknowledgment of receipt by overnight courier addressed as follows,
or to such other address as may be designated from time to time:
If to King: If to Palatin:
000 Xxxxx Xxxxxx Palatin Technologies, Inc.
Xxxxxxx, Xxxxxxxxx 00000 Cedar Brook Corporate Centre
Tel: (000) 000-0000 0-X Xxxxx Xxxxx Xxxxx
Fax: Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Attention: Xxxx Xxxxx, Ph.D.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000 With a copy to:
Tel: (000) 000-0000 Xxxxxxx X. Xxxxx
Fax: Palatin Technologies, Inc.
Attention: Business Development Cedar Brook Corporate Centre
0-X Xxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
And a copy to:
Mintz Xxxxx Xxxx Xxxxxx
Glovsky and Popeo PC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Except as otherwise expressly provided in this Agreement or in writing
by both Parties, any notice, communication or payment required to be given or
made shall be deemed given or made and effective when received.
15.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
application of principles of conflicts of law.
15.3 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective legal representatives, successors
and permitted assigns.
15.4 HEADINGS. Section and subsection headings are inserted for convenience of
reference only and do not form a part of this Agreement.
15.5 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
55
15.6 AMENDMENT; WAIVER. This Agreement may be amended, modified, superseded or
canceled, and any of the terms may be waived, only by a written instrument
executed by each Party or, in the case of waiver, by the Party or Parties
waiving compliance. The delay or failure of any Party at any time or times to
require performance of any provisions shall in no manner affect the rights at a
later time to enforce the same. No waiver by any Party of any condition or of
the breach of any term contained in this Agreement, whether by conduct, or
otherwise, in any one or more instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.
15.7 NO THIRD PARTY BENEFICIARIES. No Third Party, including any employee of any
Party to this Agreement, shall have or acquire any rights by reason of this
Agreement.
15.8 PURPOSES AND SCOPE. The Parties hereto understand and agree that this
Collaboration is limited solely to the Field in the Territory and in the ROW,
and to the activities, rights and obligations as set forth in this Agreement.
Nothing in this Agreement shall be construed (a) to create or imply a general
partnership between the Parties, (b) to make either Party the agent of the other
for any purpose, (c) to alter, amend, supersede or vitiate any other
arrangements between the Parties with respect to any subject matters not covered
hereunder, (d) to give either Party the right to bind the other, (e) to create
any duties or obligations between the Parties except as expressly set forth
herein, or (f) to grant any direct or implied licenses or any other right other
than as expressly set forth herein.
15.9 PERFORMANCE BY AFFILIATES. Each Party shall have the right to direct its
wholly-owned Affiliates to act in satisfaction of such Party's or Affiliate's
obligations hereunder or make an assignment to an Affiliate in accordance with
Section 15.10, provided that such Party shall remain liable and fully
responsible for the performance of such Affiliate hereunder.
15.10 ASSIGNMENT AND SUCCESSORS. Neither this Agreement nor any obligation of a
Party hereunder may be assigned by either Party without the consent of the other
which shall not be unreasonably withheld, except that each Party may assign this
Agreement and the rights, obligations and interests of such Party, in whole or
in part, to any of its Affiliates (subject to Section 15.9), to any purchaser of
all of its assets and/or all of its assets to which this Agreement relates or to
any successor corporation resulting from any merger or consolidation of such
Party with or into such corporation. Any attempted assignment in violation of
this Section 15.10 shall be null, void and of no effect. This Agreement shall be
binding upon and inure to the benefit of all permitted successors-in-interest
and assigns.
15.11 FORCE MAJEURE. In the event of the occurrence of a Force Majeure, the
Parties shall not be deemed in breach of their obligations to the extent of the
Force Majeure. The Party affected thereby shall use reasonable efforts to cure
or overcome the same and resume performance of its obligations hereunder.
56
15.12 INTERPRETATION. The Parties hereto acknowledge and agree that: (a) each
Party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (b) the rule of construction to
the effect that any ambiguities are resolved against the drafting Party shall
not be employed in the interpretation of this Agreement; and (c) the terms and
provisions of this Agreement shall be construed fairly as to all Parties hereto
and not in a favor of or against any Party, regardless of which Party was
generally responsible for the preparation of this Agreement.
15.13 INTEGRATION; SEVERABILITY. This Agreement, the Securities Purchase
Agreement, and the Warrant are the sole agreements with respect to the subject
matter hereof and supersedes all other agreements and understandings between the
Parties with respect to same. If any provision of this Agreement (including
without limitation the temporal and substantive scope of the restrictions set
forth in Section 7.6) is or becomes invalid or is ruled invalid by any court of
competent jurisdiction or is deemed unenforceable, such provision or portion
thereof will be modified or deleted in such a manner so as to make this
Agreement as modified legal and enforceable to the fullest extent permitted
under applicable law, and it is the intention of the Parties that the remainder
of the Agreement shall not be affected.
15.14 FURTHER ASSURANCES. Each of Palatin and King agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other Party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other Party its rights and remedies under, this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
57
IN WITNESS WHEREOF, the Parties have caused this Collaborative
Development and Marketing Agreement to be executed by their duly authorized
representatives as of the Effective Date.
PALATIN TECHNOLOGIES, INC.,
By:
----------------------------------
Xx. Xxxx Xxxxx
President and Chief Executive Officer
KING PHARMACEUTICALS, INC.,
By:
----------------------------------
Name:
Title:
58
EXHIBIT A
INITIAL PLAN FOR DEVELOPMENT AND MARKETING PROGRAM
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2]
EXHIBIT B
PRECLINICAL PLAN
EXHIBIT C
CLINICAL PLAN
EXHIBIT D
MANUFACTURING/CMC PLAN
EXHIBIT E
REGULATORY PLAN
EXHIBIT F
MARKETING PLAN
EXHIBIT G
ACCOUNTING AND FINANCE PLAN
EXHIBIT H
FORM OF SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is made effective
as of ______________, _______ (the "Effective Date") by and between Palatin
Technologies, Inc. a Delaware corporation, with its principal place of business
at Cedar Brook Corporate Center, 0X Xxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx
00000 (the "Company"), and King Pharmaceuticals, Inc., a Tennessee corporation
with a place of business at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 (the
"Purchaser"). The Company and the Purchaser are sometimes hereafter referred to
individually as a "Party" and together as the "Parties." Capitalized terms not
defined in this Agreement shall have the meaning given to them in the
Collaborative Development and Marketing Agreement by and between the Company and
the Purchaser, dated August 12, 2004 (the "Collaboration Agreement").
WHEREAS, the Company and the Purchaser have previously entered into the
Collaboration Agreement for the purpose of developing and marketing Products
derived from Palatin Technology, Palatin Patent Rights, and Proprietary
Materials; and
WHEREAS, the Company desires to issue and sell to the Purchaser, from
time to time, and the Purchaser desires to acquire, from time to time, on the
terms and subject to the conditions set forth in this Agreement, shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), and
warrants to purchase shares of Common Stock for an aggregate purchase price of
up to [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE
24b-2.] (the "Purchase Price") in a private placement basis pursuant to an
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), as provided in this Agreement and the
Collaboration Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Parties hereto agree as follows:
ARTICLE 1 PURCHASE AND SALE OF THE COMMON STOCK AND WARRANT
1.1 INITIAL CLOSING. Subject to the terms and conditions set forth in this
Agreement, and in reliance on the representations and warranties set forth in
this Agreement, the Company hereby issues and sells to the Purchaser, and the
Purchaser hereby purchases from the Company on the date hereof (i)
_____________(1) (_________) shares of Common Stock (the "Initial Common Stock")
and (ii) a three (3) year warrant to purchase _____________ shares of the
Company's Common Stock at an exercise price of $________ per share, for an
aggregate purchase price of $5 million. The warrant shall be in the form
attached to the Collaboration Agreement as Exhibit I, (the "Warrant"). The
closing of the purchase and sale of the Initial Common Stock and Warrant (the
"Initial Closing") shall take place at the offices of Xxxxx Xxxxx Xxxx Xxxxxx
Xxxxxxx and Xxxxx PC, 000 Xxxxx Xxx., Xxx Xxxx, XX 00000 at 10:00 a.m. on the
date hereof, or at such time and date thereafter as the Purchaser and the
Company may agree (the "Initial Closing Date"). At the Initial Closing, the
Company will execute, issue, and deliver to the
--------
(1) The number of shares of common stock shall be determined by dividing $5
million by the product of (i) one and one-fourth (1.25) and (ii) the average
closing price of the company's common stock as listed on the American Stock
Exchange for the twenty (20) trading day period immediately preceding the
Effective Date of the Collaboration Agreement.
Purchaser (i) a certificate in the name of the Purchaser for the number of
shares of Initial Common Stock being purchased against delivery by such
Purchaser to the Company of the applicable portion of the Purchase Price by wire
transfer or other method acceptable to the Company and (ii) the Warrant.
1.2 SUBSEQUENT CLOSINGS. In accordance with Section 6.3 of the Collaboration
Agreement, and subject to Article 7 hereof, upon achievement of the development
milestones as determined and identified in Section 6.3 of the Collaboration
Agreement, additional closings (each a "Subsequent Closing") of the issuance of
Common Stock ("Additional Common Stock") and the issuance of an additional
Warrant (the "Additional Warrant") shall take place at the offices of Xxxxx
Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx PC, 000 Xxxxx Xxx., Xxx Xxxx, XX 00000 on
the date that is within ten (10) days after the determination of the first
achievement of each such development milestone, or at such time and date
thereafter as the Purchaser and the Company may agree (each a "Subsequent
Closing Date"), but in no event later than the date milestone payments are made
pursuant to Section 6.3.1 of the Collaboration Agreement. At each Subsequent
Closing, the Company will execute, issue and deliver to the Purchaser a
certificate in the name of the Purchaser for the number of shares of Additional
Common Stock being purchased against delivery by such Purchaser to the Company
of the applicable portion of the purchase price by wire transfer or other method
acceptable to the Company. In addition, at the Subsequent Closing that occurs in
connection with the milestone identified in Section 1.2(a) below, the Company
will execute, issue and deliver to the Purchaser the Additional Warrant. Subject
to the terms and conditions set forth in this Agreement, and in reliance on the
representations and warranties as shall be made on each Subsequent Closing Date,
the Company agrees to issue to the Purchaser at the applicable Subsequent
Closing, such number of shares of Additional Common Stock, and the Company
further agrees to issue to the Purchaser the Additional Warrant upon completion
of the milestone identified in (a) below, in each case as shall be determined as
follows:
(a) upon [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24b-2.] for ED Product, as determined in accordance with Section 6.3.4 of
the Collaboration Agreement, by dividing [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.] (the aggregate Purchase Price
to be paid by the Purchaser for the number of shares to be issued pursuant to
this Section 1.2(a)) by the product of (i) one and one-fourth (1.25) and (ii)
the average closing price of the Company's common stock as listed on the
American Stock Exchange ("AMEX") (or, if not listed on AMEX, such other
principal national securities exchange or market system on which the shares are
listed)) for the twenty (20) trading day period (the "20 Day Average")
immediately preceding the date of achievement of such development milestone;
(b) upon [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24b-2.] for ED Product, as determined in accordance with Section 6.3.4 of
the Collaboration Agreement, by dividing [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.] (the aggregate Purchase Price
to be paid by the Purchaser for the number of shares to be issued pursuant to
this Section 1.2(b)) by the product of (i) one and one-fourth (1.25) and (ii)
the 20 Day Average for the period immediately preceding the date of achievement
of such development milestone;
(c) upon [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24b-2.] for FSD Product, as determined in accordance with Section 6.3.4 of
the Collaboration Agreement, by dividing [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.] (the aggregate Purchase Price
to be paid by the Purchaser for the number of shares to be issued pursuant to
this Section 1.2(c)) by the product of (i) one and one-fourth (1.25) and (ii)
the 20 Day Average for the period immediately preceding the date of achievement
of such development milestone;
(d) upon [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24b-2.] for ED Product, as determined in accordance with Section 6.3.4 of
the Collaboration Agreement, by dividing [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.] (the aggregate Purchase Price
to be paid by the Purchaser for the number of shares to be issued pursuant to
this Section 1.2(d)) by the product of (i) one and one-fourth (1.25) and (ii)
the 20 Day Average for the period immediately preceding the date of achievement
of such development milestone; and
(e) upon [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
RULE 24b-2.] for FSD Product, as determined in accordance with Section 6.3.4 of
the Collaboration Agreement, by dividing [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.] (the aggregate purchase price
to be paid by the Purchaser for the number of shares to be issued pursuant to
this Section 1.2(d)) by the product of (i) one and one-fourth (1.25) and (ii)
the 20 Day Average for the period immediately preceding the date of achievement
of such development milestone;
provided; however that, if the purchase of Additional Common Stock pursuant to
any or all of the foregoing clauses would result in the Purchaser becoming the
"beneficial owner" (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act")) of 5% or greater of the total shares of Common Stock
outstanding on such Subsequent Closing Date, then the Purchaser shall have the
right to, at its sole option, make a nonrefundable, noncreditable cash milestone
payment to the Company pursuant to Section 6.3.1 of the Collaboration Agreement
in lieu of purchasing Additional Common Stock.
Notwithstanding the foregoing, on any Subsequent Closing Date, the Purchaser
may, at its sole option, elect to make a nonrefundable, noncreditable cash
milestone payment to the Company pursuant to Section 6.3.1 of the Collaboration
Agreement in lieu of purchasing Additional Common Stock and, in the case of
Section 1.2(a), the Additional Warrant. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
If at any time following the Initial Closing or any Subsequent Closing the
Company takes any actions that would result in the Common Stock beneficially
owned by the Purchaser representing 5% or greater of the then outstanding Common
Stock of the Company, the Company shall be obligated, at the written request of
the Purchaser, to purchase an amount of Common Stock from the Purchaser, within
5 business days of the Purchaser's written request, in an aggregate amount such
that following such purchase by the Company, the Purchaser will be the
beneficial owner of less than 5% of the then outstanding Common Stock. The price
to be paid by the Company for such purchase shall be the 20 Day Average for the
period immediately preceding such purchase.
The purchase price shall be paid by wire transfer or other method acceptable to
the Purchaser and the Purchaser shall deliver to the Company the certificate(s)
representing the shares of Common Stock purchased by the Company.
In the event fractional shares result from the calculations identified in this
Section 1.2, such fractional share shall be rounded down to the nearest whole
number of shares.
The shares of Common Stock underlying each of the Warrant and the Additional
Warrant shall be referred to herein as the "Warrant Shares" and the form of
Warrant attached to the Collaboration Agreement as Exhibit I shall be the form
for each of the Warrant and the Additional Warrant with the date of issuance,
the number of shares, the exercise price and the expiration date, being the only
differences between the two warrants, unless otherwise agreed to in writing by
the Company and the Purchaser.
ARTICLE 2 THE COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, and except as set forth on the
Company Disclosure schedule attached hereto as Exhibit A, if any, the Company
represents and warrants to the Purchaser as follows:
2.1 INCORPORATION, STANDING AND QUALIFICATION OF THE COMPANY. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has the requisite power and authority
to own, lease and operate its properties and assets and to carry on its business
as now being conducted and to the extent described in the Company's SEC Filings
(as defined below). The Company is duly qualified or licensed to do business as
a foreign corporation and is in good standing in each jurisdiction in which the
failure to be so qualified would have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of operations
or prospects of the Company or its subsidiaries considered as a whole (a
"Material Adverse Effect").
2.2 CORPORATE POWER AND AUTHORITY. The Company has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, including the authorization, issuance and delivery of the Warrant and
the Initial Common Stock at the Initial Closing, the Additional Common Stock,
and the Additional Warrant, as applicable, at each of the Subsequent Closings,
if any, and the Warrant Shares upon the valid exercise of the Warrant and the
Additional Warrant, as applicable, and to engage in the transactions
contemplated hereby. The Company has taken all requisite corporate action to
make all the provisions of this Agreement the valid and enforceable obligations
they purport to be. No consent of any stockholder of the Company is required for
the valid execution, issuance and delivery by the Company of the Agreement, the
Initial Common Stock, the Warrant, the Additional Warrant, the Warrant Shares
or, to the Company's knowledge, the Additional Common Stock. Upon the execution
and delivery hereof and thereof, this Agreement and the Warrant will be the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, subject to laws of general
application from time to time in effect affecting creditors' rights and the
exercise of judicial discretion in accordance with general equitable principles.
2.3 CAPITALIZATION. The authorized capital stock of the Company consists of
75,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, par
value $0.01 per share, of which 264,000 shares have been designated Series A
Convertible Preferred Stock ("Series A Preferred Stock"). The Company has
adopted its 1996 Stock Option Plan (the "Plan") under which 5,000,000 shares of
Common Stock are reserved for issuance. As of August 10, 2004, there were (i)
52,804,381 shares of Common Stock issued and outstanding, (ii) 11,697 shares of
Series A Preferred Stock issued and outstanding, which are convertible into
444,752 shares of Common Stock, (iii) 308 shares of Common Stock reserved for
issuance to previous holders of Series A Preferred Stock due to a retroactive
conversion price adjustment, (iv) 4,392,775 shares of Common Stock reserved for
issuance on exercise of outstanding options, and (v) 8,019,300 shares of Common
Stock reserved for issuance on exercise of outstanding warrants. The Company has
delivered to its stockholders a proxy statement in connection with a special
meeting in order to increase the authorized common stock from 75,000,000 to
150,000,000 shares and to increase the number of shares available for issuance
under the Plan from 5,000,000 to 10,000,000. If the stockholders approve both
the proposed increase in authorized common stock and the proposed increase in
shares available for issuance under the Plan, then options to purchase 906,200
shares under the Plan, granted subject to stockholder approval of the increases,
will become effective and outstanding. Except as described above, there are no
subscriptions, options, warrants or other rights (contingent or otherwise) to
purchase or otherwise acquire shares of capital stock or other securities of the
Company authorized, issued or outstanding, nor is the Company obligated in any
other manner to issue shares of its capital stock, subscriptions, warrants,
options, convertible securities, or other such rights or to distribute to
holders of any of its equity securities any evidence of indebtedness or asset.
No holder of any security of the Company is entitled to preemptive, first
refusal or similar statutory, contractual or other rights, either arising
pursuant to any agreement or instrument to which the Company is a party, or
which are otherwise binding upon the Company, or to the Company's knowledge, to
which any other person is a party.
2.4 NO VIOLATION. Neither the Company nor any of its subsidiaries is in
violation of any term or provision of their respective charter or by-laws or of
any franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation would result in a Material
Adverse Effect.
2.5 NO DEFAULT. Neither the execution, delivery and performance of this
Agreement or the Collaboration Agreement by the Company nor the consummation of
any of the transactions contemplated hereby or thereby (including, without
limitation, the issuance and sale by the Company of the shares of Initial Common
Stock and Additional Common Stock and the issuance of the Warrant, the
Additional Warrant and the Warrant Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, accelerate the
share issuance under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the Company or its subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which either the Company or its subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its subsidiaries in
each case, that would result in a Material Adverse Effect or that would violate
any provision of the charter or by-laws of the Company or any of its
subsidiaries.
2.6 VALID ISSUANCE; SECURITIES LAWS. The Initial Common Stock and the Warrant,
upon the Initial Closing and the Additional Warrant and Additional Common Stock,
if any, when issued upon each of the Subsequent Closings sold and delivered in
accordance with the terms hereof for the consideration set forth herein, will be
duly and validly authorized and issued, fully paid and non-assessable and,
assuming the representations and warranties of the Purchaser contained in
Article 3 of this Agreement are and will be true and correct, will be issued in
compliance with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the securities at the Initial Closing and
each Subsequent Closing. Assuming the proper and valid exercise of the Warrant
and Additional Warrant, if any, in accordance with their terms, the Warrant
Shares, will be validly issued, fully paid and non-assessable. The Initial
Common Stock, the Additional Common Stock and the Warrant Shares will be free of
transfer restrictions other than the restrictions set forth in Article 5 hereof
and the transfer restrictions imposed by any federal or state securities laws.
2.7 GOVERNMENTAL CONSENTS. All consents, approvals, orders, authorizations or
registrations, qualifications, designations, declarations or filings with any
federal, state or local governmental authority on the part of the Company
required in connection with the consummation of the issuance of the securities
contemplated herein shall have been obtained prior to and be effective as of the
Initial Closing and each Subsequent Closing, including any securities or blue
sky filings in connection with the purchase and sale of the securities at the
Initial Closing and each of the Subsequent Closings, if any.
2.8 SEC FILINGS. The Company has timely filed with the Securities and Exchange
Commission (the "SEC") all reports, registration statements and other documents
required to be filed by it since July 1, 2003 (the "SEC Filings") under the
Securities Act and the Exchange Act. The SEC Filings were prepared in accordance
and, as of the date on which each such SEC Filing was filed with the SEC,
complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be. None of such SEC
Filings, including, without limitation, any financial statements, exhibits or
schedules included therein or documents incorporated therein by reference, at
the time filed, declared effective or mailed, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except to
the extent information contained in any of the SEC Filings has been revised,
corrected, superseded or updated by a later filing of any such form, report or
document, none of the SEC Filings currently contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2.9 LITIGATION. Except and to the extent disclosed in the Company's SEC Filings,
there is no action, litigation or proceeding pending or, to the Company's
knowledge, threatened against or involving the Company in any court or before or
by any agency or regulatory body which could result in a judgment or liability
against the Company or which would result in a Material Adverse Effect.
2.10 BROKERS AND FINDERS. No person or entity will have, as a result of the
transactions contemplated by this Agreement or the Collaboration Agreement, any
right, interest or valid claims against or upon the Company or the Purchaser for
any commission, fee or other compensation as a finder or broker because of any
act or omission by the Company or its agents.
2.11 INDEPENDENT ACCOUNTANTS. KPMG LLP, whose reports are included as a part of
the SEC Filings, are and, during the periods covered by their reports, were
independent public accountants as required by the Securities Act, and the rules
and regulations of the SEC thereunder.
2.12 AMEX COMPLIANCE; LISTING. The Company is in compliance with the
requirements of the AMEX for continued listing of the Common Stock thereon and
has not received any notification that, and has no knowledge that, the AMEX is
contemplating terminating such listing nor, to the Company's knowledge, is there
any basis therefor. The transactions contemplated by this Agreement do not and
will not contravene the rules and regulations of the AMEX.
2.13 SOLICITATION; OTHER ISSUANCES OF SECURITIES. Neither the Company nor any of
its subsidiaries or affiliates, nor any Person acting on its or their behalf,
(i) has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection with
the offer or sale of the Common Stock, the Warrant or the Warrant Shares, (ii)
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under any circumstances that would
require registration of the Common Stock or the Warrants, under the Securities
Act or (iii) has issued any shares of Common Stock or shares of any series of
preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the sale of the Initial Common
Stock, Additional Common Stock, the Warrant, the Additional Warrant or the
Warrant Shares to such Purchaser for purposes of the Securities Act or of any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor will the
Company or any of its subsidiaries or affiliates take any action or steps that
would require registration of any of the Initial Common Stock, Additional Common
Stock, the Warrant, the Additional Warrant or the Warrant Shares under the
Securities Act or cause the offering of the Initial Common Stock, Additional
Common Stock, the Warrant, the Additional Warrant or the Warrant Shares to be
integrated with other offerings. Assuming the accuracy of the representations
and warranties of Purchasers, the offer and sale of the Initial Common Stock,
the Additional Common Stock, the Warrant, the Additional Warrant or the Warrant
Shares by the Company to the Purchaser pursuant to this Agreement will be exempt
from the registration requirements of the Securities Act.
2.14 INVESTMENT COMPANY. The Company is not and, after giving effect to the
offering and sale of the Common Stock, the Warrant, the Additional Warrant or
the Warrant Shares as contemplated by this Agreement, will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE 3 THE PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as follows:
3.1 INVESTMENT REPRESENTATIONS. The Purchaser's present intention is to acquire
the Initial Common Stock and the Warrant at the Initial Closing and the
Additional Common Stock at each Subsequent Closing, if any, and the Warrant
Shares upon exercise of the Warrant, for its own account and for the purpose of
investment, and not with a view to distribution or resale thereof. The Purchaser
acknowledges that it possesses such knowledge, sophistication and experience in
financial and business matters as to be able to evaluate the merit and risks of
an investment in such securities and that it can bear the economic risk of its
investment.
3.2 LEGENDS ON STOCK CERTIFICATES. The Purchaser further represents that it
understands and agrees that all certificates evidencing the Warrant, the
Additional Warrant, the Warrant Shares and any of the Common Stock issued at the
Initial Closing and the Subsequent Closings, if any, shall bear a legend,
prominently stamped or printed thereon, reading substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND SUCH SECURITIES MAY
NOT BE SOLD, OFFERED FOR SALE, DELIVERED AFTER SALE, TRANSFERRED,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT COVERING THE SALE OF SUCH SECURITIES OR UNLESS
SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
UNLESS THE HOLDER SHALL HAVE OBTAINED A WRITTEN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION
IS NOT REQUIRED IN CONNECTION WITH SUCH SALE OR OTHER TRANSFER."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES PURCHASE
AGREEMENT, DATED ________________, _____ BETWEEN THE COMPANY AND THE
REGISTERED OWNER OF SUCH SECURITIES (OR SUCH OWNER'S PREDECESSOR IN
INTEREST). THE COMPANY WILL FURNISH A COPY OF SUCH AGREEMENT WITHOUT
CHARGE UPON WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE."
3.3 ACCESS TO INFORMATION. The Purchaser acknowledges that it has had (i) the
opportunity to ask questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the sale and issuance of the securities contemplated herein, (ii) access to
information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment, and (iii) the opportunity to obtain such
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to such investment. The foregoing, however, does not limit
or modify the representation and warranties of the Company in Section 2 of the
Agreement or the right of the Purchaser to rely thereon.
3.4 ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
3.5 TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS. The Purchaser understands
that none of the Warrant, the Additional Warrant, the Warrant Shares, the shares
of Common Stock issued at the Initial Closing or each Subsequent Closing, if
any, have been registered under the Securities Act or any other applicable
securities laws, and, therefore, cannot be resold unless they are subsequently
registered under the Securities Act and other applicable securities laws or
unless an exemption from such registration is available. The Purchaser agrees
not to resell or otherwise dispose of all or any part of such Common Stock,
except as permitted by law, including, without limitation, any regulations under
the Securities Act and other applicable securities laws; required herein, the
Company does not have any present intention and is under no obligation to
register the securities issued at the Initial Closing and each Subsequent
Closing, if any under the Securities Act and other applicable securities laws.
Accordingly, Purchaser acknowledges it may be required to hold such securities
and bear the economic risk of its investment for an indefinite period of time.
3.6 BROKERS AND FINDERS. No person or entity will have, as a result of the
transactions contemplated by this Agreement or the Collaboration Agreement, any
right, interest or valid claims against or upon the Company or the Purchaser for
any commission, fee or other compensation as a finder or broker because of any
act or omission by the Purchaser or its agents.
ARTICLE 4 CLOSING CONDITIONS
4.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE INITIAL CLOSING AND THE
SUBSEQUENT CLOSINGS. The Purchaser's obligation to purchase and pay for the
securities to be purchased by it at the Initial Closing and each Subsequent
Closing, if any, is subject to the satisfaction by the Company, on or before the
date hereof, in the case of the Initial Closing, or on or before the relevant
Subsequent Closing Date, in the case of a Subsequent Closing, of the following
conditions:
(a) Representations and Warranties. The Company's representations and
warranties contained in Article 2 shall be true and correct in all
material respects on and as of the date hereof and on the relevant
Subsequent Closing Date with the same effect as made on and as of such
date.
(b) Performance of Obligations. The Company shall have performed and
complied with all agreements, obligations and conditions contained in
this Agreement in all material respects that are required to be
performed or complied with by it on or before the Initial Closing Date
or the relevant Subsequent Closing Date, as the case may be.
(c) Officer's Certificate. The Purchaser shall have received a certificate
signed by the President and Chief Executive Officer of the Company
attesting as to satisfaction of the conditions in Section 4.1(a) and
(b) hereof.
(d) Secretary's Certificate. The Company shall have delivered to the
Purchaser a certificate of the secretary of the Company dated as of the
Initial Closing Date, certifying that (A) attached thereto is a true
and complete copy of the by-laws of the Company as in effect on the
date of such certification; (B) that
attached thereto is a true and complete copy of all resolutions adopted
by the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement, the issuance, sale and
delivery of the Common Stock, the Warrant, the Additional Warrant and
the Warrant Shares and that all resolutions are in full force and
effect and are all the resolutions adopted in connection with the
transactions contemplated hereby; (C) that attached thereto is a true
and complete copy of the Company's Certificate of Incorporation as in
effect on the date of such certification; and (D) to the incumbency and
specimen signature of certain officers of the Company.
(e) Good Standing Certificate. The Company shall have delivered to the
Purchaser a good standing certificate with respect to the Company from
the Secretary of State of the State of Delaware dated no more than 15
days prior to the Initial Closing Date or the relevant Subsequent
Closing Date, as the case may be.
(f) Consents and Waivers. The Company shall have obtained any and all
consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement or the Collaboration
Agreement.
(f) Listing. The Company will file a Listing of Additional Shares
Application with AMEX, as applicable, with respect to the shares of
Common Stock that may be issued at the Initial Closing, the Additional
Common Stock that may be issued at each Subsequent Closing and the
Warrant Shares.
(g) Legal Opinion. The Company shall have delivered to the Purchaser a
Legal Opinion, dated as of the Subsequent Closing, from Xxxxx Xxxxx
Xxxx Xxxxxx Glovsky and Popeo, PC, counsel to the Company, in the form
attached as Annex A hereto.
(h) Milestone Achievement. The relevant milestone with respect to the
applicable Subsequent Closing identified in Section 1.2 shall have been
achieved as determined and identified in Section 6.3 of the
Collaboration Agreement.
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE INITIAL CLOSING AND THE
SUBSEQUENT CLOSINGS. The Company's obligation to issue to the Purchaser the
securities at the Initial Closing and each Subsequent Closing, if any, is
subject to the satisfaction by the Purchaser, on or before such applicable
closing, of the following conditions:
(a) Representations and Warranties. The representations and warranties of
the Purchaser contained in Article 3 shall be true and correct in all
material respects on and as of the date hereof and on and as of the
relevant Subsequent Closing Date with the same effect as made on and as
of such date.
(b) Performance of Obligations. The Purchaser shall have performed and
complied with all agreements, obligations and conditions contained in
this Agreement in all material respects that are required to be
performed or complied with by it on or before the Initial Closing Date
or the relevant Subsequent Closing Date, as the case may be.
(c) Officer's Certificate. The Company shall have received a certificate
signed by the President and Chief Executive Officer of the Purchaser
attesting as to satisfaction of the conditions in Section 4.2(a) and
(b) hereof.
(d) Payment of Purchase Price. The Purchaser shall have delivered to the
Company and the Company shall have received payment in full of the
purchase price relating to the securities to be purchased by such
Purchaser at the Initial Closing Date and such relevant Subsequent
Closing in accordance with Sections 1.1 and 1.2, respectively.
(e) Consents and Waivers. The Purchaser shall have obtained any and all
consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement and the Collaboration
Agreement.
(f) Milestone Achievement. The relevant milestone with respect to the
applicable Subsequent Closing identified in Section 1.2 shall have been
achieved as determined and identified in Section 6.3 of the
Collaboration Agreement.
ARTICLE 5 FURTHER AGREEMENTS
5.1 AGREEMENT NOT TO SELL. Except as otherwise contemplated by this Agreement,
notwithstanding the provisions of Article 6, the Purchaser hereby agrees that
for a one (1) year period commencing from (i) the date of the Initial Closing
with respect to the securities issued at the Initial Closing and (ii) the dates
of each of the Subsequent Closings, if any, with respect to the securities
issued at each Subsequent Closing, the Purchaser shall not sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights
(collectively, a "Disposition") with respect to the securities issued pursuant
at the Initial Closing and the Subsequent Closings, if any, as well as the
Common Stock underlying the Warrant and the Additional Warrant, if any, or any
other securities of the Company issued in respect of the Warrant, the Additional
Warrant or the Common Stock underlying the Warrant or the Additional Warrant (by
way of stock split, stock dividend or other distribution, recapitalization or
otherwise) (for purposes of this Section 5.1, collectively, the "Securities"),
otherwise than with the prior written consent of the Company. The foregoing
restriction has been expressly agreed to preclude the holder of the Securities
from engaging in any hedging or other transaction that is designed to or
reasonably expected to lead to or result in a Disposition of Securities during
the applicable restricted period, even if such Securities would be disposed of
by someone other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Securities. The
Purchaser also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent against the transfer of Securities held by the
Purchaser except in compliance with the foregoing restrictions.
5.2 20 DAY AVERAGE ADJUSTMENTS. The Company hereby agrees that if during any of
the twenty (20) day periods that are used to calculate the 20 Day Average under
Sections 1.2(a) - (e), the Company undertakes a stock split or combination that
causes an immediate adjustment to the market price of its common stock during
such twenty (20) day period, then the closing prices used to calculate the 20
Day Average that were unaffected by such split or combination shall be adjusted
as if such split or combination had occurred prior to the calculation of the 20
Day Average.
ARTICLE 6 REGISTRATION RIGHTS
6.1 DEMAND REGISTRATION.
(a) At any time following the one (1) year anniversary of the
Initial Closing Date (or such earlier date if the Company waives in writing the
transfer restrictions contained in Article 5 hereof) if there is no registration
statement in effect pursuant to Section 6.2 hereof, the Purchaser may make two
(2) written requests for registration under the Securities Act covering the
resale of the Initial Common Stock, the Warrant Shares and the Additional Common
Stock, if any (all of them, together with any shares of capital stock issued or
issuable, from time to time, upon any reclassification, share combination, share
subdivision, stock split, share dividend, merger, consolidation or similar
transaction or event or otherwise as a distribution on, in exchange for or with
respect to any of the foregoing, in each case held at the relevant time by the
Purchaser, the "Registrable Securities") by the Purchaser (each, a "Demand
Registration"), it being understood that the Purchaser shall not be able to
exercise its second right for a Demand Registration until after the achievement
of the development milestone set forth in Section 1.2(e) hereof. Any such
request will specify the number of shares of Registrable Securities proposed to
be offered for sale by the Purchaser and will also specify the intended method
of disposition thereof. Any Registration Statement filed pursuant to this
Section 6.1 is referred to as a "Demand Registration Statement."
(b) If the Purchaser elects, the offering of the Registrable
Securities pursuant to such Demand Registration Statement will be in the form of
an underwritten offering. Subject to the reasonable approval of the Company (not
to be unreasonably withheld or delayed), the Purchaser will select the managing
underwriter and any additional underwriters in connection with the offering. If,
in connection with any Demand Registration that is to be an underwritten
offering, the Company or any other stockholders also desire to sell shares of
Common Stock and the managing underwriter of an underwritten public offering
determines and advises in writing that the inclusion of all Registrable
Securities proposed to be included in the underwritten public offering, together
with any shares proposed to be sold by the Company for its own account and any
other issued and outstanding shares of Common Stock or other securities proposed
to be included therein by holders other than the holders of Registrable
Securities (such other holders' shares hereinafter collectively referred to as
the "Other Shares"), would interfere with the successful marketing of the
securities proposed to be included in the underwritten public offering,
including the price at which such securities can be sold, then the Company will
include in such registration (i) first, the Registrable Securities requested to
be included by the Purchaser so that the total number of Registrable Securities
to be included in such offering for the account of the Purchaser will not exceed
the number recommended by such managing underwriter, (ii) second, the shares of
Common Stock the Company proposes to offer for sale, which number of shares to
be registered will be reduced to the extent necessary to reduce the total number
of shares to be included in such offering to the number recommended by such
managing underwriter and (iii) third, such number of Other Shares as the holders
thereof desire to offer for sale and the Company and the managing underwriter
recommend be included in such offering. The Purchaser shall be permitted to
remove all or any part of the Registrable Securities held by it from any Demand
Registration Statement at any time prior to the effective date of the
registration statement covering such Registrable Securities.
6.2 PIGGYBACK REGISTRATION. If the Company at any time proposes to register any
of its securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both (except
with respect to (i) any universal shelf registration statement on Form S-3 filed
or which may be filed by the Company for its own account, (ii) registration
statements on Forms X-0, X-0 or their successors, or any other form for a
similar limited purpose, (iii) any registration statement covering only
securities proposed to be issued in exchange for securities or assets of another
corporation or (iv) another form not available for registering the Registrable
Securities for sale to the public), each such time it will promptly give written
notice to the Purchaser of its intention to do so. Upon the written request of
the Purchaser, received by the Company within 20 days after the giving of any
such notice by the Company (or such longer period as set forth in the Company's
notice), to register any of its RegistrableSecurities, the Company will use its
best efforts to cause the Registrable Securities as to which registration shall
have been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the Purchaser of the
Registrable Securities. In the event that any registration pursuant to this
Section 6.2 shall be, in whole or in part, an underwritten public offering of
Common Stock, the Purchaser's participation in such underwriting shall be on the
terms set forth herein. Notwithstanding the foregoing, if the managing
underwriter of an underwritten public offering determines and advises in writing
that the inclusion of all Registrable Securities proposed to be included in the
underwritten public offering, together with any shares proposed to be sold by
the Company for its own account and any Other Shares held by other holders would
interfere with the successful marketing of the securities proposed to be
included in the underwritten public offering, including the price at which such
securities can be sold, then the Company will include in such registration (i)
first, the Common Stock requested to be included by the Company so that the
total number of shares of Common Stock included in the offering will not exceed
the number recommended by the managing underwriter (ii) second, the Registrable
Securities requested to be included by the Purchaser so that the total number of
Registrable Securities to be included in such offering for the account of the
Purchaser will not exceed the number recommended by such managing underwriter,
and (iii) third, such number of Other Shares of Common Stock as the holders
thereof desire to offer for sale and the Company and the managing underwriter
recommend be included in such offering.
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 6.2 without thereby incurring
any liability to the Purchaser. The Purchaser may elect, in writing, no less
than five (5) business days prior to the anticipated effective date of a
Registration Statement, not to register any of its Registrable Securities.
Notwithstanding anything to the contrary contained herein, the Purchaser shall
not have the right to include all or any portion of the Registrable Securities
in a registration statement, pursuant to this Section 6.2, if all of the
Registrable Securities then held by the Purchaser becomes eligible for sale in
any three (3) month period pursuant to Rule 144 under the Securities Act or any
successor rule.
6.3 REGISTRATION PROCEDURES. If and whenever the Company is under an obligation
pursuant to the provisions of this Article 6 to effect the registration of any
Registrable Securities, the Company shall use its best efforts to:
(a) (i) prepare and file with the SEC a registration statement with
respect to such Registrable Securities, using such form of available
registration statement as is reasonably selected by the Company (unless
otherwise specified herein), and (ii) to cause such registration statement to
become effective within ninety (90) days of the filing date;
(b) prepare and file with the SEC such amendments and supplements to the
registration statement and the prospectus used in connection therewith as may be
necessary to keep the registration statement continuously effective until the
earlier (x) up to ninety (90) days or (y) the date that all Registrable
Securities then held by the Purchaser becomes eligible for sale in any three (3)
month period pursuant to Rule 144 under the Securities Act or any successor
rule;
(c) so long as a registration statement is effective covering the resale of
Registrable Securities owned by the Purchaser, furnish to the Purchaser with
respect to the Registrable Securities registered under such registration
statement (and to each underwriter, if any, of such Registrable Securities) such
reasonable number of copies of prospectuses and such other documents as the
Purchaser may reasonably request in order to facilitate the public sale or other
disposition of all or any of the Registrable Securities by the Purchaser;
(d) to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Purchaser as may be legally required,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) at any time when a prospectus covered by a registration statement is
required to be delivered under the Securities Act, notify the Purchaser of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and, at the request of the Purchaser prepare, file
and furnish to the Purchaser a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statement therein not misleading in
the light of the circumstances then existing. The Company may delay amending or
supplementing the prospectus for a period of up to 30 business days in any 365
day period if the Company is then engaged in negotiations regarding a material
transaction that has not been publicly disclosed, and the Purchaser shall
suspend their sale of Registrable Securities until an appropriate supplement or
prospectus has been forwarded to them or the proposed transaction is abandoned;
(f) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering (it being understood and
agreed that, as a condition to the Company's obligations under this Article 6,
the Purchaser participating in such underwriting shall also enter into and
perform its obligations under such an agreement);
(g) use commercially reasonable efforts to prevent the issuance of any stop
order or other order suspending the effectiveness of such registration statement
and, if such an order issued, to
obtain the withdrawal thereof at the earliest possible time and to notify the
Purchaser of the issuance of such order and the resolution thereof;
(h) permit counsel for the Purchaser to review and reasonably approve the
Registration Statement and all amendments and supplements thereto, and any
comments made by the staff of the SEC and the Company's responses thereto,
within a reasonable period of time prior to the filing thereof with the SEC (or,
in the case of comments made by the staff of the SEC, within a reasonable period
of time following the receipt thereof by the Company).
6.4 FURNISH INFORMATION. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 6 that the Purchaser
shall furnish to the Company such information as the Company shall reasonably
request regarding itself, the Registrable Securities held by it and the intended
method of disposition of such securities as shall be required to timely effect
the registration of its Registrable Securities.
6.5 EXPENSES. All expenses incurred in connection with a registration pursuant
to Section 6.1 (excluding underwriters' and brokers' discounts and commissions
incurred by the Purchaser), including, without limitation all federal and "blue
sky" registration and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company shall be borne by the Company.
6.6 INDEMNIFICATION. In the event any Registrable Securities are included in a
registration statement under Section 6.1 hereof:
6.6.1 By the Company. To the extent permitted by applicable law, the
Company will indemnify and hold harmless the Purchaser, each of its officers and
directors and any person, if any, who controls the Purchaser within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") (collectively, the "Purchaser Indemnitees"), against any losses,
claims, damages, expenses or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto;
(ii) any omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading; or
(iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any federal or state securities law or any rule
or regulation promulgated under the Securities Act, the Exchange Act or
any federal or state securities law in connection with the offering
covered by such registration statement;
and the Company will reimburse each Purchaser Indemnitee for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 6.6.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Purchaser Indemnitees.
6.6.2 By the Purchaser. To the extent permitted by applicable law,
Purchaser will indemnify and hold harmless the Company, each of its directors
and officers who have signed the registration statement, and any person, if any,
who controls the Company within the meaning of the Securities Act or Exchange
Act (collectively, the "Company Indemnitees"), against any losses, claims,
damages, expenses or liabilities (joint or several) to which they become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by the Purchaser expressly for
use in connection with such registration; and Purchaser will reimburse any legal
or other expenses reasonably incurred by the Company Indemnitees in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 6.6.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Purchaser, which consent shall not be unreasonably withheld; and
provided further, that the total amounts payable in indemnity by the Purchaser
under this Section 6.6.2 in respect of any Violation shall not exceed the
Purchase Price paid on the Initial Closing Date or any Subsequent Closing Date
by the Purchaser out of which such Violation arises.
6.6.3 Notice. Promptly after receipt by an indemnified party under this
Section 6.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties in their reasonable discretion; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, but only if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.6, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 6.6.
6.6.4 Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Purchaser are subject to the condition that,
insofar as they relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus (i) was furnished to the indemnified
party and (ii) was not furnished to the person asserting the loss, liability,
claim or damage at or prior to the time such action is required by the
Securities Act.
ARTICLE 7 TERMINATION AND NO CROSS DEFAULT
7.1 TERMINATION BY THE PURCHASER. The Purchaser may terminate its obligation to
purchase Additional Common Stock at any Subsequent Closing under this Agreement
if the Purchaser's obligations to make development milestone payments under
Section 6.3.1 of the Collaboration Agreement are terminated in accordance with
Article 11 of the Collaboration Agreement.
7.2 NO CROSS DEFAULT. Notwithstanding anything contained herein, the Parties
hereby agree that a breach by either of the Parties under this Agreement shall
not be and shall not be deemed to be a breach under the Collaboration Agreement.
ARTICLE 8 MISCELLANEOUS
8.1 NOTICES. All notices and communications shall be in writing, mailed via
certified mail, return receipt requested, courier, facsimile transmission or
e-mail with acknowledgment of receipt by overnight courier addressed as follows,
or to such other address as may be designated from time to time:
If to King: If to Palatin:
000 Xxxxx Xxxxxx Palatin Technologies, Inc.
Xxxxxxx, Xxxxxxxxx 00000 Cedar Brook Corporate Centre
Tel: (000) 000-0000 0-X Xxxxx Xxxxx Xxxxx
Fax: Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Attention: Xxxx Xxxxx, Ph.D.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000 With a copy to:
Tel: (000) 000-0000 Xxxxxxx X. Xxxxx
Fax: Palatin Technologies, Inc.
Attention: Business Development Cedar Brook Corporate Centre
0-X Xxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
And a copy to:
Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx PC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Except as otherwise expressly provided in this Agreement or in writing
by both Parties, any notice, communication or payment required to be given or
made shall be deemed given or made and effective when received.
8.2 GOVERNING LAW. This Agreement will be construed, interpreted and applied in
accordance with the laws of the State of New York (excluding its body of law
controlling conflicts of law).
8.3 AMENDMENT; WAIVER. This Agreement may be amended, modified, superseded or
canceled, and any of the terms may be waived, only by a written instrument
executed by each Party or, in the case of waiver, by the Party or Parties
waiving compliance. The delay or failure of any Party at any time or times to
require performance of any provisions shall in no manner affect the rights at a
later time to enforce the same. No waiver by any Party of any condition or of
the breach of any term contained in this Agreement, whether by conduct, or
otherwise, in any one or more instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.
8.4 HEADINGS. Section and subsection headings are inserted for convenience of
reference only and do not form part of this Agreement.
8.5 PERFORMANCE BY AFFILIATES. Each Party shall have the right to direct its
wholly-owned Affiliates to act in satisfaction of such Party's or Affiliate's
obligations hereunder, provided that such Party shall remain liable for and
unconditionally guarantee to the other Party the performance of such Affiliate
hereunder. Notwithstanding the foregoing, the Company shall not have the right
to direct a wholly-owned Affiliate, if any, to act in satisfaction of its
obligations under Sections 1.1 and 1.2.
8.6 ASSIGNMENT AND SUCCESSORS. Neither this Agreement nor any obligation of a
Party hereunder may be assigned by either Party without the consent of the other
which shall not be unreasonably withheld, except that each Party may assign this
Agreement and the rights, obligations and interests of such Party, in whole or
in part, to any purchaser of all of its assets and/or all of its assets to which
this Agreement relates or to any successor corporation resulting from any merger
or consolidation of such Party with or into such corporation. Any attempted
assignment in violation of this Section 8.5 shall be null, void and of no
effect.
8.7 FORCE MAJEURE. In the event of the occurrence of a Force Majeure, the
Parties shall not be deemed in breach of their obligations to the extent of the
Force Majeure. The Party affected thereby shall use reasonable efforts to cure
or overcome the same and resume performance of its obligations hereunder.
8.8 INTERPRETATION. The Parties hereto acknowledge and agree that: (i) each
Party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision, (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting Party shall
not be employed in the interpretation of this Agreement, and (iii) the terms
and provisions of this Agreement shall be construed fairly as to all Parties
hereto and not in favor of or against any Party, regardless of which Party was
generally responsible for the preparation of this Agreement. In addition, in the
event conflicting terms exist between this Agreement and the Collaboration
Agreement, the substance and interpretation of such terms shall be determined
pursuant to the Collaboration Agreement.
8.9 INTEGRATION; SEVERABILITY. This Agreement, the Warrant and the Collaboration
Agreement are the sole agreements with respect to the subject matter hereof and
supersede all other agreements and understandings between the Parties with
respect to the same. If any provision of this Agreement is or becomes invalid or
is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the Parties that the remainder of the
Agreement shall not be affected.
8.10 FURTHER ASSURANCES. Each of the Company and Purchaser agrees to duly
execute and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including,
without limitation, the filing of such agreements, documents and instruments,
that may be necessary or as the other Party hereto may at any time and from time
to time reasonably request in connection with this Agreement or to carry out
more effectively the provisions and purposes of, or to better assure and confirm
unto such other Party its rights and remedies under, this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.12 PUBLICITY. Neither Party may publicly disclose the existence or terms of
this Agreement without the prior written consent of the other Party; provided,
however, that either Party may make such a disclosure (a) to the extent required
by law or by the requirements of any nationally recognized securities exchange,
quotation system or over-the-counter market on which such Party has its
securities listed or traded or (b) to any investors, prospective investors,
lenders and other potential financing sources who are obligated to keep such
information confidential for at least as long as either Party has obligations to
keep such information confidential under this Agreement. In the event that such
disclosure is required as aforesaid, the disclosing Party shall make reasonable
efforts to provide the other Party with notice beforehand and to coordinate with
the other Party with respect to the wording and timing of any such disclosure.
The Parties, upon the execution of this Agreement, will mutually agree to a
press release with respect to the Collaboration Agreement for publication. Once
such press release or any other written statement is approved for disclosure by
both Parties, either Party may make subsequent public disclosure of the contents
of such statement without the further approval of the other Party.
8.13 EXPENSES. Except as set forth herein, each Party shall bear its own costs
and expenses, including legal fees, in connection with the sale and issuance of
the securities contemplated by this Agreement.
8.14 ARBITRATION. Any dispute, controversy or claim initiated by either Party
arising out of, resulting from or relating to this Agreement, shall be resolved
by binding arbitration in accordance with the provisions of Section 14 of the
Collaboration Agreement.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement or
caused this Agreement to be executed by their duly authorized representatives,
as of the date first written above.
PALATIN TECHNOLOGIES, INC.,
By:
-----------------------------------
Xx. Xxxx Xxxxx
President and Chief Executive Officer
KING PHARMACEUTICALS, INC.,
By:
-----------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
EXHIBIT I
FORM OF WARRANTS
FORM OF
WARRANT CERTIFICATE
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE ACT, AND ANY
OTHER APPLICABLE SECURITIES LAWS, UNLESS THE HOLDER SHALL HAVE OBTAINED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER SET FORTH IN THE SECURITIES PURCHASE AGREEMENT, DATED ___________,
_____________ BETWEEN THE COMPANY AND THE REGISTERED OWNER OF SUCH SECURITIES
(OR SUCH OWNER'S PREDECESSOR IN INTEREST). THE COMPANY WILL FURNISH A COPY OF
SUCH AGREEMENT WITHOUT CHARGE UPON WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE."
_________ Warrants(1)
PALATIN TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THE WARRANTS EVIDENCED BY THIS CERTIFICATE
ARE NOT EXERCISABLE AFTER 5:00 P.M.,
NEW YORK CITY TIME, ON
_________________, ____, 20____
THIS CERTIFIES THAT:
KING PHARMACEUTICALS, INC., or its registered assigns, is the
registered holder (the "Registered Holder") of the number of Warrants
set forth above, each of which represents the right to purchase from
Palatin Technologies, Inc., a Delaware corporation (the "Company"),
_____ ____ fully paid and nonassessable shares of common stock, par
value $0.01 per share (the "Common Stock"), of the Company, exercisable
on one or more occasions, in whole or in part, at the initial exercise
price of $_____(2) per Warrant, as adjusted from time to time (the
"Exercise Price") at any time prior to the Expiration Date (as
hereinafter defined), by surrendering this Warrant Certificate, with
the Form of Election to Purchase duly executed at the principal office
of the Company and by paying in full the Exercise Price, plus transfer
taxes, if any. The term "Warrants" as used herein shall include this
Warrant Certificate, and any warrants delivered in substitution or
exchange therefor as provided herein. Payment of the Exercise Price
shall be made in United States currency, by cash, certified or official
bank check, checks, money order or wire transfer of commercially
available funds payable to the order of the Company.
This Warrant Certificate is issued under and in accordance with the
Securities Purchase Agreement (the "Purchase Agreement"), dated as of
[August __], 2004, between the Company and the Registered Holder, and
is subject to the terms and provisions contained in the Purchase
Agreement. Article 6 of the Purchase Agreement governs the registration
rights of the shares of Common Stock underlying the Warrants. Unless
otherwise defined herein, the capitalized terms used herein shall have
the meaning assigned to such terms in the Purchase Agreement.
----------
(1) [Upon (a) execution of the Collaboration Agreement, the number of shares of
Common Stock underlying this Warrant will be input and will be equal to the
product of (i) 20% and (ii) the number of shares of Common Stock issued to
Registered Holder pursuant to Section 1.1 of the Securities Purchase Agreement
and (b) completion of the milestone identified in Section 1.2(a) of the
Securities Purchase Agreement, the number of shares of Common Stock underlying
this Warrant will be input and will be equal to the product of (i) 16% and (ii)
the number of shares of Common Stock issued to Registered Holder pursuant to
Section 1.2(a) of the Securities Purchase Agreement.]
2 [Upon (a) execution of the Collaboration Agreement, the exercise price will be
input and will be equal to one and one-fourth (1.25) times the per share
purchase price as identified in Section 1.1 of the Securities Purchase Agreement
(the average closing price of the Company's common stock as listed on the
American Stock Exchange for the twenty (20) trading day period immediately
preceding the Effective Date of the Collaboration Development and Marketing
Agreement) and (b) completion of the milestone identified in Section 1.2(a) of
the Securities Purchase Agreement, the exercise price will be input and will be
equal to one and one-fourth (1.25) times the per share purchase price as
identified in Section 1.2(a) of the Securities Purchase Agreement (the average
closing price of the Company's common stock as listed on the American Stock
Exchange for the twenty (20) trading day period immediately preceding the date
of achievement of such development milestone).]
As soon as practicable after the date of exercise of any Warrants, the
Company shall issue, or cause the transfer agent for the Common Stock,
if any, to issue a certificate or certificates for the number of full
shares of Common Stock to which the Registered Holder is entitled as a
result of its exercise of the Warrant, registered in accordance with
the instructions set forth in the Form of Election to Purchase. All
shares of Common Stock issued upon the exercise of any Warrant shall be
validly authorized and issued, fully paid and nonassessable, and free
from all taxes, liens and charges created by the Company in respect of
the issue thereof. Each person in whose name any such certificate for
shares of Common Stock is issued shall for all purposes be deemed to
have become the holder of record of the Common Stock represented
thereby on the date of exercise of the Warrants resulting in the
issuance of such shares, irrespective of the date of issuance or
delivery of such certificate for shares of Common Stock. As of the date
of exercise, the holder of such shares of Common Stock shall, among
other things, be entitled to vote such shares of Common Stock or to
consent or to receive notice as a stockholder of the Company.
In the event that less than all of the Warrants represented by a
Warrant Certificate are exercised, the Company shall execute and mail,
by first-class mail, within 30 days of the date of exercise, to the
Registered Holder, or such other person as shall be designated in the
Form of Election to Purchase, a new Warrant Certificate evidencing the
right to purchase the shares of Common Stock representing the
unexercised portion of the Warrant which shall be in all other respects
identical to the Warrant Certificate. In no event shall a fraction of a
Warrant be exercised, and the Company shall distribute no Warrant
Certificates representing fractions of Warrants. Final fractions of
shares shall be treated as provided for herein.
The Company shall at all times reserve and keep available for issuance
upon the exercise of the Warrants, or a portion thereof, such number of
its authorized but unissued shares of Common Stock as is sufficient to
permit the exercise in full of all outstanding Warrants.
Subject to the provisions hereof, the Exercise Price in effect from
time to time shall be subject to adjustment, as follows:
(a) In case the Company shall at any time after the date hereof
(i) declare a dividend on the outstanding Common Stock payable in shares of its
capital stock, (ii) subdivide or convert the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares, or (iv)
issue any shares or otherwise increase or decrease the number of issued shares
of its capital stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then, in each case, the Exercise Price,
and the number of shares of Common Stock issuable upon exercise of the Warrants
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination, or reclassification, shall be
proportionately adjusted so that the Registered Holder of the Warrants after
such time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrants had been exercised immediately prior to such time,
such Registered Holders would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or exchangeable for
Common Stock) less than the Current Market Price per share of Common Stock (as
determined below) on such record date, then, in each case, the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of Common Stock which the aggregate offering price of the total number of shares
of Common Stock so to be offered (or the aggregate initial conversion or
exchange price of the convertible or exchangeable securities so to be offered)
would purchase at such Current Market Price and the denominator of which shall
be the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock so issued or to be offered for
subscription or purchase (or into which the convertible or exchangeable
securities so to be offered are initially convertible or exchangeable). Such
adjustment shall become effective at the close of business on such record date;
provided, however, that, to the extent the shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock) are not delivered,
the Exercise Price shall be readjusted after the expiration of such rights,
options, or warrants (but only with respect to Warrants exercised after such
expiration), to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights, options, or warrants been
made upon the basis of delivery of only the number of shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock) actually
issued and the Exercise Price shall also be adjusted for any subsequent
adjustment or other change to the number of shares of Common Stock issuable upon
exercise, exchange or conversion of such rights, options, warrants or other
securities. Notwithstanding anything to the contrary contained herein, no
adjustment shall be made to the Exercise Price until any condition to the
vesting of such rights, options or warrants shall be fulfilled or satisfied (and
than only with respect to the portion thereof which shall have vested). In case
any subscription price may be paid in a consideration part or all of which shall
be in a form other than cash, the value of such consideration shall be as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation. If any
event occurs of the type contemplated by the provisions of this paragraph but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights or other rights with equity features),
then the board of directors of the Company shall make an appropriate adjustment
in the Exercise Price so as to equitably protect the rights of holders of this
Warrant.
(c) In case the Company shall distribute to all holders of Common
Stock (including any such distribution made to the stockholders of the Company
in connection with a
consolidation or merger in which the Company is the continuing corporation)
evidences of its indebtedness, cash (other than any cash dividend which,
together with any cash dividends paid within the twelve (12) months prior to the
record date for such distribution, does not exceed 5% of the Current Market
Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or exchangeable for shares of Common Stock excluding those with
respect to the issuance of which an adjustment of the Exercise Price is provided
pursuant to the foregoing paragraph, then, in each case, the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the record date for the determination of stockholders entitled to receive
such distribution by a fraction, the numerator of which shall be the Current
Market Price per share of Common Stock on such record date, less the fair market
value (as determined in good faith by the board of directors of the Company,
whose determination shall be conclusive absent manifest error) of the portion of
the evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants or convertible or exchangeable securities, or the amount of
such cash, applicable to one share, and the denominator of which shall be such
Current Market Price per share of Common Stock. Such adjustment shall become
effective at the close of business on such record date.
For the purpose of any computation under this Warrant, the "Current
Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices for the five (5) consecutive
trading days immediately preceding the date in question. The closing
price for each day shall be (a) the last reported sales price regular
way or, in case no such reported sale takes place on such day, the
closing bid price regular way, in either case on the principal national
securities exchange or market system (including, for purposes hereof,
the AMEX on which the Common Stock is listed for trading), (b) if the
Common Stock is not then listed or admitted to trading on any national
securities exchange or market system, the highest reported bid price
for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc. or a similarorganization if AMEX is no longer
reporting such information, or (c) if on any such date the Common Stock
is not listed or admitted to trading on any national securities
exchange and is not quoted by AMEX or any similar organization, as
determined by reference to the "Pink Sheets" published by the National
Quotation Bureau or, if not so published, by such other method of
determining the market value of a share of Common Stock, as the board
of directors of the Company shall in good faith from time to time deem
to be fair, whose determination shall be conclusive absent manifest
error shall be used.
No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments
which by reason of this Warrant are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Warrant shall be made to the nearest cent
or to the nearest one thousandth of a share, as the case may be.
In any case in which this Warrant Certificate shall require that an
adjustment in the Exercise Price be made effective as of a record date
for a specified event, the Company may elect to defer, until the
occurrence of such event, issuing to the Registered Holder, if
the Registered Holder has exercised a Warrant after such record date,
the shares of Common Stock, if any, issuable upon such exercise over
and above the shares of Common Stock, if any, issuable upon such
exercise on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to the
Registered Holder a due xxxx or other appropriate instrument evidencing
the Registered Holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
Upon each adjustment of the Exercise Price as a result of the
calculations made pursuant to (b) and (c) above the Warrants shall
thereafter evidence the right to purchase, at the adjusted Exercise
Price, that number of shares (calculated to the nearest thousandth)
obtained by dividing (A) the product obtained by multiplying the number
of shares purchasable upon exercise of the Warrants prior to adjustment
of the number of shares by the Exercise Price in effect prior to
adjustment of the Exercise Price by (B) the Exercise Price in effect
after such adjustment of the Exercise Price.
In case of any capital reorganization, other than in the cases referred
to above, or the consolidation or merger of the Company with or into
another corporation (other than a merger or consolidation in which the
Company is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock or the
conversion of such outstanding shares of Common Stock into shares of
other stock or other securities or property), or the sale of the
property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise
of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the kind and number of shares of stock or
other securities or property to which the Registered Holder of the
number of shares of Common Stock which would otherwise have been
deliverable upon the exercise of such Warrant would have been entitled
upon such Reorganization if such Warrant had been exercised in full
immediately prior to such Reorganization or for relevant record date
for such entitlement. In case of any Reorganization, appropriate
adjustment, as determined in good faith by the Board of Directors of
the Company, shall be made in the application of the provisions herein
set forth with respect to the rights and interests of the Registered
Holder so that the provisions set forth herein shall thereafter be
applicable, as nearly as practicable, in relation to any shares or
other property thereafter deliverable upon exercise of Warrant. The
Company shall not effect any such Reorganization, unless upon or prior
to the consummation thereof the successor corporation, or if the
Company shall be the surviving corporation in any such Reorganization
and is not the issuer of the shares of stock or other securities or
property to be delivered to holders of shares of the Common Stock
outstanding at the effective time thereof, then such issuer, shall
assume by written instrument the obligation to deliver to the
Registered Holder of any warrant certificate such shares of stock,
securities, cash or other property as such holder shall be entitled to
purchase in accordance with the foregoing provisions. Notwithstanding
anything to the contrary contained herein, in the event of sale or
conveyance or other transfer of all or substantially all of the assets
of the Company as a part of a plan for liquidation of the Company, all
rights to exercise any Warrant shall terminate thirty (30) days after
the Company gives written notice to each Registered
Holder that such sale or conveyance of other transfer has been
consummated.
In case of any reclassification or change of the shares of Common Stock
issuable upon exercise of the Warrant, including, without limitation,
in any reorganization (other than a change in par value or from no par
value to a specified par value, or as a result of a subdivision or
combination, but including any change in the shares into two or more
classes or series of shares), the Registered Holder of the Warrant
shall have the right thereafter to receive upon exercise of the Warrant
solely the kind and amount of shares of stock and other securities,
property, cash, or any combination thereof receivable upon such
reclassification or change by the Registered Holder of the number of
shares of Common Stock for which the Warrant might have been exercised
immediately prior to such reclassification or change and the term
"Common Stock" shall thereafter include, without limitation, such stock
and other securities or right to cash distribution. Thereafter,
appropriate provision shall be as nearly equivalent as practicable to
the adjustments in this Warrant. The above provisions of this paragraph
shall similarly apply to successive reclassifications and changes of
shares of Common Stock.
Notwithstanding anything to the contrary herein contained, in the event
of a transaction contemplated by the prior paragraph in which the
surviving, continuing, successor, or purchasing corporation demands
that all outstanding Warrant be extinguished prior to the closing date
of the contemplated transaction, the Company shall give prior notice
(the "Merger Notice") thereof to the Registered Holder advising it of
such transaction. The Registered Holder shall have ten (10) days after
the date of the Merger Notice to elect to (i) exercise the Warrant in
the manner provided herein or (ii) receive from the surviving,
continuing, successor, or purchasing corporation, with respect to
outstanding Warrant, the same consideration receivable by a Registered
Holder of the number of shares of Common Stock for which the Warrant
might have been exercised immediately prior to such consolidation,
merger, sale, or purchase reduced by such amount of the consideration
as has a market value equal to the exercise price of the Warrant, as
determined by the Board of Directors of the Company, whose
determination shall be conclusive absent manifest error. If a
Registered Holder fails to timely notify the Company of its election,
it shall be deemed for all purposes to have elected the option set
forth in (ii) above. Any amounts receivable by a Registered Holder who
has elected the option set forth in (ii) above shall be payable at the
same time as amounts payable to stockholders in connection with any
such transaction.
Whenever the Exercise Price is adjusted as provided in this Warrant,
the Company will promptly obtain a certificate of the chief financial
officer of the Company setting forth the Exercise Price as so adjusted
and a brief statement of the facts accounting for such adjustment.
Whenever any adjustment is made pursuant to this Warrant, the Company
shall cause notice of such adjustment to be mailed to the Registered
Holder within fifteen (15) days thereafter, such notice to include in
reasonable detail (i) the events precipitating the adjustment, (ii) the
computation of any adjustments, and (iii) the Exercise Price, the
number of shares or the securities or other property purchasable upon
exercise of each Warrant after giving effect to such adjustment.
In no event shall the Exercise Price be adjusted below the par value
per share of the Common Stock.
In case at any time the Company shall propose:
(a) to pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a
greater amount per share than the most recent such cash dividend) to
all holders of Common Stock; or
(b) to issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional
shares of Common Stock or any other rights, warrants, or other
securities; or
(c) to effect any reclassification or change of outstanding
shares of Common Stock, or any consolidation, merger, sale, lease, or
conveyance of property, described above; or
(d) to effect any liquidation, dissolution, or winding-up of
the Company;
then, in each such case, the Company shall cause notice of such
proposed action to be mailed to the Registered Holder of a warrant
certificate. Such notice shall be mailed, at least ten (10) days prior
to the record date for determining holders of the Common Stock for
purposes of receiving such payment or offer or at least ten (10) days
prior to the earlier of the date upon which such action is to take
place or any record date to determine holders of Common Stock entitled
to receive such securities or other property, as the case may be.
Whenever any adjustment is made pursuant to this Warrant, the Company
shall cause notice of such adjustment to be mailed to each Registered
Holder of a Warrant Certificate within fifteen (15) days thereafter,
such notice to include in reasonable detail (i) the events
precipitating the adjustment, (ii) the computation of any adjustments,
and (iii) the Exercise Price, the number of shares or the securities or
other property purchaseable upon exercise of each Warrant after giving
effect to such adjustment.
Irrespective of any adjustments pursuant to this Warrant, Warrant
Certificates theretofore or thereafter issued need not be amended or
replaced, but certificates thereafter issued shall bear an appropriate
legend or other notice of any adjustments.
The Company shall not be required upon the exercise of any Warrant to
issue fractional shares of Common Stock which may result from
adjustments in accordance with this Warrant to the Exercise Price or
number of shares of Common Stock purchasable under each Warrant. If
more than one Warrant is exercised at one time by the same Registered
Holder, the number of full shares of Common Stock which shall be
deliverable shall be computed based on the number of shares deliverable
in exchange for the aggregate number of Warrant exercised. With respect
to any final fraction of a share called for upon the exercise of any
Warrant or portion thereof, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the same fraction
of the Current Market Price of a share of Common Stock calculated in
accordance with this Warrant.
The Registered Holder hereby agrees not to sell, contract to sell, or
otherwise sell, dispose of, loan, pledge or grant any rights
(collectively, a "Disposition") with respect to the Warrants or the
Common Stock underlying the Warrants or any other securities of the
Company issued in respect of the Warrants or the Common Stock
underlying the Warrants (by way of stock split, stock dividend or other
distribution, recapitalization or otherwise) (collectively,
"Securities") now owned or hereafter acquired directly by the
Registered Holder or with respect to which such Registered Holder has
or hereafter acquires the power of Disposition, otherwise than with the
prior written consent of the Company. The foregoing restrictions shall
commence on the date hereof and end on the one-year anniversary of the
date hereof (the "Lock-up Period"). The foregoing restriction has been
expressly agreed to preclude the holder of the Securities from engaging
in any hedging or other transaction that is designed to or reasonably
expected to lead to or result in a Disposition of Securities during the
Lock-up Period, even if such Securities would be disposed of by someone
other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to
any Securities or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or
derives any significant part of its value from the Securities. The
Registered Holder also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the
transfer of Securities held by the Registered Holder except in
compliance with the foregoing restrictions.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
expiration date (the "Expiration Date") which will be __________ ___,
20___. The Warrant evidenced hereby shall thereafter become void.
No Warrant Certificate shall entitle the registered holder thereof to
any of the rights of a stockholder of the Company, including, without
limitation, the right to vote, to receive dividends and other
distributions, to receive any notice of, or to attend, meetings of
stockholders or any other proceedings of the Company.
If any Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company in its discretion may execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated
Warrant Certificate, or in lieu of or in substitution for a lost,
stolen or destroyed Warrant Certificate, a new Warrant Certificate for
the whole or partial Warrant represented by the Warrant Certificate so
mutilated, lost, stolen or destroyed but only upon receipt of evidence
of such loss, theft or destruction of such Warrant Certificate, and of
the ownership thereof, and indemnity, if requested, all satisfactory to
the Company. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other
reasonable charges incidental thereto as the Company may prescribe. Any
such new Warrant Certificate shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
Prior to the latest time at which the Warrant may be exercised, subject
to any applicable laws, rules or regulations restricting
transferability, Warrant Certificates, subject to the provisions
hereof, may be split up, combined or exchanged for other Warrant
Certificates representing a like Warrant, or portion thereof or may be
transferred in whole or in part. Any holder desiring to split up,
combine or exchange a Warrant Certificate or Warrant Certificates shall
make such request in writing delivered to the Company at its principal
office and shall surrender the Warrant Certificate or Warrant
Certificates so to be split up, combined or exchanged at said office
with the Form of Assignment. Upon any such surrender for split up,
combination, exchange or transfer, the Company shall execute and
deliver to the person entitled thereto a Warrant Certificate or Warrant
Certificates, as the case may be, as so requested in the Form of
Assignment. The Company may require the Registered Holder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed
in connection with any split up, combination, exchange or transfer of
Warrant Certificates prior to the issuance of any new Warrant
Certificate.
Any Warrant Certificate surrendered upon the exercise of Warrant or for
split up, combination, exchange or transfer, or purchased or otherwise
acquired by the Company, shall be canceled and shall not be reissued by
the Company; and, except as otherwise provided herein in case of the
exercise of less than all of the Warrant evidenced by a Warrant
Certificate or in case of a split up, combination, exchange or
transfer, no Warrant Certificate shall be issued hereunder in lieu of
such canceled Warrant Certificate. Any Warrant Certificate so canceled
shall be destroyed by the Company.
Every holder of a Warrant Certificate by accepting the same consents
and agrees with the Company and with every other holder of a Warrant
Certificate that:
(a) transfer of the Warrant Certificates shall be registered
on the books of the Company only if surrendered at the principal office
of the Company, duly endorsed or accompanied by a proper instrument of
transfer; and
(b) prior to due presentment for registration of transfer, the
Company may deem and treat the person in whose name the Warrant
Certificate is registered as the absolute owner thereof and of the
Warrant evidenced thereby (notwithstanding any notations of ownership
or writing on the Warrant Certificates made by anyone other than the
Company) for all purposes whatsoever, and the Company shall not be
affected by any notice to the contrary.
The laws of the State of New York shall govern this Warrant
Certificate.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed.
PALATIN TECHNOLOGIES, INC.,
By:
-------------------------------
FORM OF
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise of the Warrant
represented by this Warrant Certificate and to purchase the shares of
Common Stock issuable upon the exercise of said Warrant, and requests
that certificates for such shares be issued and delivered as follows:
ISSUE
TO:
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(NAME)
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
at
-------------------------------------------------------------------------------
(SOCIAL SECURITY OR OTHER TAX IDENTIFYING NUMBER)
DELIVER
TO:
-------------------------------------------------------------------------------
(NAME)
at
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
If the portion of the Warrants hereby exercised is less than the full
Warrant represented by this Warrant Certificate, the undersigned
requests that a new Warrant Certificate representing the number of full
Warrant not exercised be issued and delivered as set forth below.
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In full payment of the purchase price with respect to the Warrant
exercised and transfer taxes, if any, the undersigned hereby tenders
payment of $ by cash, certified or official bank check or money order
payable in United States currency to the order of the Company.
Dated:
----------
-------------------------------------------------------------------------------
(Insert Social Security or other identifying number of holder) (Signature of
registered holder)
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(Signature of registered holder, if co-owned)
NOTE: Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the
Warrant, [or potion thereof], set forth below:
Name of Assignee Address Portion of Warrant
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and does hereby irrevocably constitute and appoint Attorney to make
such transfer on the books of Palatin Technologies, Inc. maintained for
that purpose, with full power of substitution in the premises.
Dated: __________
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(Insert Social Security or other (Signature of registered holder)
identifying number of holder)
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate.)
