SECOND AMENDMENT TO LICENSE AGREEMENT
USC FILES 2520, 2521, 2522, AND 2523
This Second Amendment [the "Amendment"], to the License Agreement dated as
of March 1, 1995, [the "License Agreement"] between the University of Southern
California, ["USC"], and PharmaPrint Inc., a California corporation,
["Licensee"] is made by and between USC and Licensee, with respect to the
following facts:
RECITALS
i. USC and Licensee wish to amend the License Agreement as provided
below:
II. Licensee is currently in compliance with all of the terms of the
license agreement and the First Amendment to License Agreement dated August 6,
1996.
AGREEMENT
1. USC and Licensee hereby agree as follows:
A. Section 2, Subsection G of the License Agreement is amended to
read in its entirety as follows:
g. "NET SALES PRICE" shall mean the gross billing price of any
PRODUCT (which includes PRODUCTS which are Pharmaceuticals (Rx),
Over-The-Counter (OTC), and Dietary Supplement Health and Education Act
(DSHEA) extracts or compounds) received by Licensee for the sale or
distribution of any PRODUCT, less the following amounts actually paid by
Licensee in reference to the following PRODUCTS:
(1) PHARMACEUTICALS (RX) AND/OR OVER THE COUNTER (OTC)
PRODUCTS ALLOWED DEDUCTIONS:
i. Discounts allowed.
ii. Returns;
iii. Transportation charges or allowances.
iv. Packing and transportation packing material costs [not
including product
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containers or product packing containers as manufactured by the Company]:
v. Customs and duties charges; and
vi. Sales, transfer and other excise taxes or other governmental
charges levied on or measured by the sales, but no franchise or income tax of
any kind whatsoever.
(2) DIETARY SUPPLEMENT HEALTH AND EDUCATION ACT (DSHEA) PRODUCTS
ALLOWED DEDUCTIONS:
i. Discounts allowed.
ii. Returns;
iii. Transportation charges or allowances.
iv. Packing and transportation packing material costs [not
including product containers or product packing containers as manufactured by
the Company]:
v. Customs and duties charges; and
vi. Sales, transfer and other excise taxes or other governmental
charges levied on or measured by the sales, but no franchise or income tax of
any kind whatsoever.
vii. Direct business expenditures for actual development,
manufacturing and production costs relating to a contract for sale of products
or products, direct manufacturing costs, including but not limited to, raw
materials, manufacturing, encapsulation, and, capital expenditures related to
manufacturing and production equipment or components.
Every commercial use or disposition of any PRODUCT, in addition to a
bonafide sale to a customer, shall be considered a sale of such PRODUCT. The
NET SALES PRICE, in the case of a use or disposition other than a bona fide
sale, shall be equivalent to the then payable NET SALES PRICE of such PRODUCT in
an arms length transaction.
B. Section 4, subSections [a] and [b] are amended to read in their
entirety as follows:
[a]. On all sales of PATENT PRODUCTS anywhere in the world by
Licensee or a SUBLICENSEE, licensee shall pay USC a royalty of one percent [1%]
of the NET SALES PRICE.
[b]. On all sales of TECHNOLOGY PRODUCTS anywhere in the world by
Licensee or a SUBLICENSEE, Licensee shall pay to USC a royalty of one percent
[1%] of the NET SALES PRICE.
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C. Section 8, subsections [a] and [b] are amended to read in their
entirety as follows:
[a]. Defensive Controversy:
Except for the placing in escrow of a portion of royalties, referred
to hereinafter, USC shall have no obligation or liability in the event that
legal action is brought against Licensee for patent infringement. Licensee may
choose legal counsel and defend the patent infringement lawsuit. During such
lawsuit, Licensee may place all of the royalties derived from sales of the
PRODUCT in the country where such lawsuit is pending in an interest bearing
escrow account. The escrow account shall be established in a bank mutually
acceptable to both parties under escrow instructions insulating the funds from
claims of any creditor. Upon termination of the action, any judgment amount,
reasonable attorneys' fees and costs, may be paid from this escrow account.
Should the settlement of any such patent infringement lawsuit involve payment of
royalties by Licensee to a third-party for the continued right to manufacture,
use and sell the PRODUCT, then funds in the escrow account, and royalties
payable to USC may be applied against said payments up to one-half [1/2] of such
royalties to a third-party. Any royalty funds thereafter remaining in the
escrow shall be paid to USC. The above shall constitute USC's sole liability in
the event of such action. Royalties paid to third-parties as provided for above
shall be included when determining whether the minimum royalty provided for in
this Agreement has been paid in a given year. During the patent infringement
litigation, both parties shall keep each other informed in writing of
significant developments in the lawsuit.
[b]. OFFENSIVE CONTROVERSY:
[1]. In the event that a third party infringes on a PATENT,
Licensee shall have the right, but not an obligation, to bring legal action to
enforce any such patent. If Licensee exercises such right, Licensee shall
select legal counsel and pay all legal fees and costs of prosecution of such
action. In the event that Licensee shall choose not to take such action, USC
shall have the right, at its option and at its own expense, to prosecute any
action to enjoin such infringement or to prosecute any claim for damages. The
party prosecuting any such action shall be entitled to retain any funds received
as a result of settlement or judgment of such action.
[2]. The parties may also agree to jointly pursue infringers.
The parties shall deduct and pay to the parties their respective costs and fees
incurred in prosecuting any such actions, the net funds obtained as a result of
settlement or of judgment of any such jointly prosecuted action shall be divided
in the following manner:
[a]. Twenty-five percent [25%] of all net funds shall be
divided equally by the parties, and seventy-five percent [75%] of all net funds
shall be divided between the parties in the proportion to the amount of legal
fees and costs incurred by the parties in the prosecution of such actions.
[b]. If funds are insufficient to pay all costs and fees,
then all of the
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funds shall be paid to the parties in said proportion.
2. Except as amended by this Amendment, the License Agreement and First
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, this Amendment is executed as of
, 1997.
"USC"
THE UNIVERSITY OF SOUTHERN CALIFORNIA
By:
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XXXXXX X. XXXXXXXXX,
Senior Vice President, Administration.
"LICENSEE"
PHARMAPRINT INC., a California corporation,
By:
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PHILLLIP G. TRAD
EXECUTIVE VICE-PRESIDENT
GENERAL COUNSEL
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