Patent and Technology License Agreement [Amendment No. 1] - University of Texas, the University of Texas M. D. Anderson Cancer Center and BioKeys Pharameuticals Inc.
AMENDMENT NO. 1 TO
PATENT AND TECHNOLOGY LICENSE AGREEMENT
This AMENDMENT NO. 1 dated and effective as of the 15th day of June,
2000, to the Patent and Technology License Agreement dated June 14, 1996
(hereinafter referred to as the "AGREEMENT") is between THE UNIVERSITY OF TEXAS
M.D. ANDERSON CANCER CENTER (hereinafter referred to as "MDA"), located at 1515
Holcombe Boulevard, Houston, Texas, and which is a component institution of THE
UNIVERSITY OF TEXAS SYSTEM (hereinafter referred to as "SYSTEM") which is
governed by a BOARD OF REGENTS (hereinafter referred to as "BOARD") and
BioQuest, Inc., which subsequently merged to become BIOKEYS PHARMACEUTICALS,
INC., a Delaware corporation, located at 333 N. Sam Houston Parkway, Suite 1035,
Houston, Texas 77060 (hereinafter referred to as "LICENSEE").
RECITALS
A. On or about __________________, BIOQUEST, INC. merged to become BIOKEYS
PHARMACEUTICALS, INC., wherein LICENSEE agreed to accept all terms and
conditions of the 1996 Agreement.
B. MDA, BOARD and LICENSEE wish to amend the terms of the AGREEMENT as set
forth below to modify the consideration for the license granted under
the AGREEMENT to provide for the payment by LICENSEE of a portion of
such modified consideration by issuing and delivering shares of Common
Stock of LICENSEE to MDA as prepaid royalties, and to incorporate
additional LICENSED SUBJECT MATTER.
NOW, THEREFORE, it is hereby agreed as follows:
The AGREEMENT is hereby amended as follows:
1. EXHIBIT 1 of the AGREEMENT is hereby replaced in its entirety
with the following:
EXHIBIT I Ralph Arlinghaus, Ph.D., et al, Principal
Investigator
1) MDA Ref: UTSC:060-1 (CIP of UTSC:060) entitled
"Prophylaxis and Therapy of Acquired Immunodeficiency
Syndrome"
2) U.S. Patent No. 5,128,319 entitled "Prophylaxis and
Therapy of Acquired Immunodeficiency Syndrome", (MDA
Ref: UTSC:234)
3) MDA Ref: UTSC:242 entitled "Methods and Compositions
for the
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Priming of Specific Cytotoxic T-Lymphocyte Response"
4) MDA Ref: UTSC:267 (Divisional of UTSC:234)
"Prophylaxis and Therapy of Acquired Immunodeficiency
Syndrome"
5) MDA Ref: UTSC:305 entitled "Compositions and Methods
for Eliciting Immune or Anti-Infective Responses"
6) MDA Ref: UTSC:331 entitled "CD4 Peptides for Binding
to Viral Envelope Proteins"
7) MDA Ref: UTSC:381 entitled "Peptides for Inhibiting
the Infection of Target Cells by Lentiviruses"
8) MDA Ref: UTSC:538 entitled "Compositions and Methods
for Eliciting Immune or Anti-Infective Responses"
9) MDA Ref: UTSC:561PZ1 entitled "HIV-Specific T-Cell
Induction"
10) MDA Ref: UTSC:561PZ2 entitled "HIV-Specific T-Cell
Induction"
2. New Section 5.2 below is added to the existing Article 5:
5.2 The parties agree that all amounts and balances due to MDA or
the BOARD under existing sponsored research agreements (i)
SR96-006 Studies on Therapeutic Potential of HIV Synthetic
Peptides, (ii) SR96-006/A1 Studies on Therapeutic Potential of
HIV Synthetic Peptides: Clinical and Preclinical Studies and
(iii) SR96-006/A2 Studies on Therapeutic Potential of HIV
Synthetic Peptides: Development of Peptidometic Form of R15K
((i), (ii) and (iii) collectively referred to as the "Existing
Sponsored Research Agreements"), shall be considered paid in
full and upon the execution by all parties of this AMENDMENT
NO. 1 LICENSEE shall owe nothing to MDA or BOARD under the
Existing Sponsored Research Agreements. The parties agree that
all amounts paid under AMENDMENT NO. 1, paragraph 3 relating
to Section 4.1(e) for new sponsored research agreements,
further relating to AMENDMENT No. 4 to Research
Agreement(SR96-006/A4), are not part of the amounts and
balances due under the Existing Sponsored Research Agreements.
The parties also agree to terminate the Existing Sponsored
Research Agreements and enter into new sponsored research
agreements in compliance with this AMENDMENT NO. 1.
3. Article 4.1 is hereby replaced in its entirety with the
following:
In consideration of rights granted by BOARD to LICENSEE under
this AGREEMENT, LICENSEE agrees to pay MDA the following:
(a) Payment of $172,490.24 for reimbursement of
all out-of-pocket expenses paid by MDA
through June 15, 2000 in filing,
prosecuting, enforcing and maintaining
PATENT RIGHTS
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licensed hereunder (the "Balance Payment"),
to be paid by LICENSEE within six (6) weeks
of the date the Office of the General
Counsel of MDA approves this AMENDMENT NO.
1. LICENSEE agrees to pay all future
expenses paid by MDA, for so long as, and in
such countries as this Agreement remains in
effect. The Balance Payment may be made to
MDA either in the form of a cash payment or
in lieu of such cash payment, LICENSEE will
give BOARD a total of 71,555 duly
authorized, validly issued and fully paid
shares of Common Stock of LICENSEE, the
amount of such shares of Common Stock being
calculated by dividing the Balance Payment
by the average stock-split adjusted closing
price of the LICENSEE's Common Stock during
the 10-day period, beginning May 28, 2000
and ending June 7, 2000. Such shares of
Common Stock shall be issued by LICENSEE in
the name of BOARD within six (6) weeks of
the date The University of Texas System
Office of the General Counsel approves this
AMENDMENT NO. 1. In connection with its
receipt of such shares, BOARD is making the
representations, and shall have the
registration and other rights (subject to
the conditions), set forth in Exhibit 2
hereto; and
(b) A running royalty equal to (SPACE) of
LICENSEE's NET SALES of LICENSED PRODUCTS in
national political jurisdictions in the
LICENSED TERRITORY where LICENSED SUBJECT
MATTER is covered by one (1) or more issued
patents or pending patent applications;
(SPACE) of LICENSEE'S NET SALES of LICENSED
PRODUCTS in national political jurisdictions
in the LICENSED TERRITORY where LICENSED
SUBJECT MATTER is not covered by one (1) or
more issued patents or pending patent
applications; and (SPACE) of all
consideration other than payments covering
direct, out-of-pocket Research and
Development (R&D) expenses received by
LICENSEE from (i) any sublicensee pursuant
to Paragraphs 3.3 and 3.4 of the PATENT AND
TECHNOLOGY LICENSE AGREEMENT, and (ii) any
assignee pursuant to Paragraph 12.1 of the
PATENT AND TECHNOLOGY LICENSE AGREEMENT,
including but not limited to royal-ties,
up-front payments, marketing, distribution,
franchise, option, license, or documentation
fees, bonus and milestone payments and
equity securities, all payable within thirty
(30) days after March 31, June 30, September
30, and December 31 of each year during the
term of this AGREEMENT, at which time
LICENSEE shall also deliver to MDA a true
and accurate report, giving such particulars
of the business conducted by LICENSEE and
its sublicensees, if any, during the
preceding three (3) calendar months under
this AGREEMENT as necessary for MDA to
account for LICENSEE's payments hereunder.
Such
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report shall include all pertinent data,
including, but not limited to: (a) the total
quantities of LICENSED PRODUCTS produced;
(b) the total SALES, (c) the calculation of
royalties thereon; (d) the total royalties
(or minimum royalties) so computed and due
MDA; and (e) all other amounts covered and
due herein and (f) copies of all executed
agreements between LICENSEE and third
parties pursuant to Paragraphs 3.3, 3.4 and
12.1 of the PATENT AND TECHNOLOGY LICENSE
AGREEMENT. Simultaneously with the delivery
of each such report, LICENSEE shall pay to
MDA the amount, if any, due for the period
of such report. If no payments are due, it
shall be so reported. Should LICENSEE be
obligated to pay running royalties to third
parties to avoid infringing such third
parties' patent rights which dominate
BOARD's PATENT RIGHTS, LICENSEE may reduce
the running royalty due MDA by such running
royalties to such third parties, provided,
however, the running royalty due MDA shall
in no case be less than one-half the rates
stated herein. For the avoidance of any
doubt, the parties hereto acknowledge and
agree that any running royalties due MDA
under this Paragraph 4.1(b) shall in no
event be reduced by any of the consideration
due MDA under Paragraph 4.1(a), (c), (d) and
(e).
(c) As a prepaid royalty, Four Hundred and
Fourteen Thousand Eight Hundred and Thirty
(414,830) duly authorized, validly issued
and fully paid shares of Common Stock in
LICENSEE, which, the parties agree, had a
value of One Million Dollars ($1,000,000),
calculated by dividing $1,000,000 by the
average stock-split adjusted closing price
of the LICENSEE's Common Stock for the ten
(10) day period of May 28, 2000 through June
7, 2000. Such shares of Common Stock shall
be issued in the name of BOARD within five
days following execution of this AMENDMENT
NO. 1, and, in connection with its receipt
of such shares, MDA is making the
representations, and shall have the
limitations as well as registration and
other rights (subject to the conditions),
set forth in Exhibit 2 hereto.
(d) As a prepaid royalty, the number of duly
authorized, validly issued and fully paid
shares of Common Stock in LICENSEE equal to
a value of One Million Dollars ($1,000,000),
calculated by dividing $1,000,000 by the
average closing price of the LICENSEE's
Common Stock during the ten (10)day period
immediately prior to the LICENSEE enrolling
the first patient in the first Phase I Trial
of any product which utilizes LICENSED
SUBJECT MATTER; provided, however, that, the
minimum price of the shares so calculated
shall be no lower than $0.99 per share and
that no more than One Million Five Thousand
and Fifty (1,005,000) shares will
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be issued under this paragraph, as adjusted
for stock splits. Such shares of Common
Stock shall be issued in the name of BOARD
within fifteen days following such
enrollment of the first patient, and, in
connection with its receipt of such shares,
MDA is making the representations, and shall
have the registration and other rights
(subject to the conditions), set forth in
Exhibit 2 hereto.
(e) LICENSEE shall enter into one or more
sponsored research agreement(s) with MDA
(which agreement shall be satisfactory in
form and substance to the parties), in which
LICENSEE agrees to provide MDA researchers
with at least one million dollars
($1,000,000) in sponsored research funding
by December 31, 2001. The monies owed MDA
under Amendment No. 4 to Research Agreement
(SR96-006/A4) signed September 7, 2000 shall
count towards this one million dollars
($1,000,000) owed MDA under this section.
4. New Section 6.2 below is added to the existing Article 6:
6.2 Any new invention, development, or discovery made in the
laboratories of a MDA researchers receiving sponsored research
monies from LICENSEE and resulting from the LICENSED SUBJECT
MATTER (the "New Technology") shall be promptly disclosed in
writing to the LICENSEE under a confidentiality agreement
(which agreement shall be satisfactory in form and substance
to the parties), provided that the LICENSEE has a sponsored
research agreement(s) in effect with MDA at that time under
which MDA is due to receive payments from LICENSEE aggregating
at least Two Hundred Thousand ($200,000) Dollars per year.
LICENSEE is hereby granted, without an option fee other than
consideration of research sponsored by LICENSEE and the
reimbursement of the BOARD for all patent expenses incurred to
the date of disclosure related to the New Technology, an
option to acquire an exclusive, worldwide, royalty bearing
license of BOARD' rights to such New Technology, which option
shall continue for a period of one hundred and twenty (120)
days after LICENSEE' receipt of a reasonable written
disclosure concerning the New Technology; If LICENSEE notifies
BOARD in writing of its intent to exercise its option within
the option period, then the parties will proceed in good faith
to negotiate a license agreement on commercially reasonable
terms within one hundred and twenty (120) days of BOARD's
notification to LICENSEE of New Technology. If LICENSEE does
not exercise this option, or notifies BOARD that it will not
exercise this option, or the parties fail to sign a license
agreement within said one hundred and twenty (120) day period,
then LICENSEE shall no longer have an option or any other
rights in the New Technology.
5. Article 13.3 is hereby replaced in its entirety with the
following:
13.3 Subject to any rights herein, which survive termination, this
AGREEMENT will earlier terminate in its entirety:
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(a) automatically if LICENSEE shall become bankrupt or
insolvent and/or if the business of LICENSEE shall be
placed in the hands of a receiver or trustee, whether
by voluntary act of LICENSEE or otherwise; or
(b) (i) upon thirty (30) days written notice by MDA if
LICENSEE shall breach or default on the payment
obligations of ARTICLE IV, or use of name obligations
of ARTICLE X, ; (ii) or upon ninety (90) days written
notice by MDA if LICENSEE shall breach or default on
any other obligation under this AGREEMENT; provided,
however, LICENSEE may avoid such termination if
before the end of such thirty (30) or ninety (90) day
period, LICENSEE provides notice and accurate,
written evidence satisfactory to MDA that such breach
has been cured and the manner of such cure; or
(c) at any time by mutual written agreement between
LICENSEE and MDA, or without cause upon one hundred
eighty (180) days written notice by LICENSEE to MDA,
subject to any terms herein which survive
termination.
6. New Section 13.6 below is added to the existing Article 13:
13.6 Termination of the AGREEMENT will not obligate MDA, the SYSTEM
or the BOARD to return the shares of Common Stock issued
pursuant to Article 4, nor will it affect the status of such
shares as duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock.
OTHERWISE, the terms and provisions of the AGREEMENT shall remain in full force
and effect, provided, however, that in the event of a conflict in the terms and
conditions between this AMENDMENT NO. 1 and the AGREEMENT, AMENDMENT NO. 1 shall
prevail. THIS AMENDMENT NO. 1 and AGREEMENT constitute the entire agreement
between the parties in connection with the subject matter hereof and thereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this AMENDMENT NO. 1.
THE UNIVERSITY OF TEXAS BOARD OF REGENTS OF THE
M.D. ANDERSON CANCER CENTER UNIVERSITY OF TEXAS SYSTEM
By: /s/ LEON LEACH By: /s/ JOHN MENDELSOHN, M.D.
------------------------------------ --------------------------------
Leon Leach John Mendelsohn, M.D.
Executive Vice President President, MDA
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Date: Date:
------------------------------------ ------------------------------
APPROVED AS TO CONTENT APPROVED AS TO FORM
By: /s/ WILLIAM J. DOTY By: /s/ BETHLYNN MAXWELL, ESQ.
------------------------------------- --------------------------------
William J. Doty BethLynn Maxwell, Esq.
Director, Technology Development Office of General Counsel
Date: Date:
------------------------------------ ------------------------------
BIOKEYS PHARMACEUTICALS, INC.
By: /s/ WARREN LAU
-------------------------------------
Warren Lau
President
Date:
-----------------------------------
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EXHIBIT 2
The following additional provisions shall apply to the securities being
issued to MDA under this Agreement:
(a) MDA, SYSTEM AND BOARD (collectively or singly,
LICENSOR) acknowledge that the securities (together
with any securities issued in respect thereof upon
any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, the
"Registrable Securities") being issued under this
AGREEMENT, are being acquired from LICENSEE in a
transaction not involving a public offering, that
they are not being registered for public sale prior
to such issuance and that, under such laws and
applicable regulations, such securities may not be
transferred or resold without registration under the
Securities Act of 1933, as amended (the "Securities
Act"), or pursuant to an exemption therefrom. For
purposes of this Agreement, "HOLDER" shall mean any
LICENSOR who holds any of the Registrable Securities
and any holder of Registrable Securities to whom the
registration rights conferred by this Agreement have
been transferred pursuant hereto. In this connection,
LICENSOR represents that it is familiar with Rule 144
under the Securities act as presently in effect, and
understands the resale limitations imposed by the
Securities Act and Rule 144.
(b) LICENSOR is acquiring such securities solely for
investment purposes and not with a view to a
distribution of all or any part thereof. LICENSOR has
the financial ability to bear the economic risk of
its investment for an indefinite period, and has
adequate means of providing for its current needs and
anticipated contingencies without reference to the
liquidity of the securities, which may be issued to
it. LICENSOR is a not-for-profit organization with
more than $5,000,000 in total assets. LICENSOR has
such knowledge and experience in financial and
business matters that it is fully capable of
evaluating the merits and risks of an investment in
LICENSEE.
(c) If the LICENSEE proposes to make an underwritten
public offering of securities solely for cash (except
in the case of a first public offering of securities
by LICENSEE) the LICENSEE shall, no later than 10
days prior to the filing of a registration statement,
send notice of such proposed filing, accompanied by a
draft copy of the preliminary prospectus included in
such registration statement, to each
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Holder. Upon the written request of a Holder to be
included in such registration statement as a selling
stockholder, given within 20 days after receipt of
such notice, the LICENSEE shall include in such
registration statement all or any portion of the
securities of such Holder, as such Holder shall so
request. However, if the managing underwriter of such
public offering shall express objection to the
inclusion of all or part of such securities of Holder
in such public offering because of prevailing market
conditions or other factors, the amount of such
securities of such Holder to be so registered in such
offering shall be reduced to the level which such
managing underwriter deems appropriate in relation to
the size of the underwritten offering and the ability
of the market to accommodate the sale of such
securities of such Holder, provided, however, that if
any securities are being included in such offering on
behalf of any selling stockholders other than such
Holder, any reduction of offered securities imposed
on such Holder shall be proportional to any reduction
imposed on such other selling stockholders.
Notwithstanding any provision hereof to the contrary,
LICENSEE shall not be required to include any
securities of Holder in a registration statement
covering a first public offering of securities by
LICENSEE.
(d) Each Holder hereby agrees that such Holder will not,
without the prior written consent of the LICENSEE,
during the period commencing on the date hereof and
ending March 15, 2002 (i) lend, offer, pledge, sell,
contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or
indirectly, any Common Stock or (ii) enter into any
swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing
provisions of this paragraph (d) shall not apply to
the sale of any shares to an underwriter pursuant to
an underwriting agreement.
(e) If Holder does not sell all of the Common Stock owned
by it under paragraph (c) above, such Holder shall
have additional rights to include such securities in
any underwritten public offering of securities to be
undertaken by the LICENSEE, and the terms and
conditions of
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paragraph (c) above and this paragraph (e) shall be
applicable to any registration request of such Holder
in connection with any such subsequent public
offering. The rights of Holder under this paragraph
(e) shall cease when it no longer owns at least 1% of
the outstanding Common Stock.
(f) Whenever required under this Exhibit 2 to effect the
registration of any securities, the LICENSEE shall,
as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration
statement with respect to such securities
and use its best efforts to cause such
registration statement to become effective,
and, upon the request of the Holder, keep
such registration statement effective for at
least nine (9) months.
(ii) Prepare and file with the SEC such
amendments and supplements to such
registration statement and the prospectus
used in connection with such registration
statement as may be necessary to comply with
the provisions of the Securities Act with
respect to the disposition of all securities
covered by such registration statement.
(iii) Furnish to the Holder such numbers of copies
of a prospectus, including a preliminary
prospectus, in conformity with the
requirements of the Act, and such other
documents as they may reasonably request in
order to facilitate the disposition of
securities owned by them.
(iv) Use its best efforts to register and qualify
the securities covered by such registration
statement under the securities laws of such
jurisdictions as shall be reasonably
requested by the Holder for the distribution
of the securities covered by the
registration statement, provided that the
LICENSEE 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
jurisdiction.
(v) In the event of an underwritten public
offering, enter into and perform its
obligations under an underwriting agreement
with terms generally
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satisfactory to the LICENSEE and the
managing underwriter of such offering.
(vi) Notify the Holders promptly after the
LICENSEE shall have received notice thereof,
of the time when the registration statement
becomes effective or any supplement to any
prospectus forming a part of the
registration statement has been filed.
(vii) Notify the Holders of any stop order
suspending the effectiveness of the
registration statement and use its
reasonable best efforts to remove such stop
order.
(viii) Notify the Holders if the registration
statement is no longer effective or the
registration statement or the prospectus or
any prospectus supplement is required to be
amended in order to comply with the
provisions of the Securities Act with
respect to the disposition of all securities
covered by such registration statement.
(g) It shall be a condition precedent to the obligations
of the LICENSEE to take any action pursuant to this
Exhibit 2 that the Holder shall furnish to the
LICENSEE such information in writing regarding
itself, the securities held by it, and the intended
method of disposition of such securities, as the
LICENSEE shall reasonably request and as shall be
required to effect the registration of such
securities. In that connection, the Holder shall be
required to represent to the LICENSEE that all such
information, which is given, is both complete and
accurate in all material respects. Holder shall also
deliver to the LICENSEE a statement in writing that
it has a bona fide intention to sell, transfer or
otherwise dispose of such securities.
(h) "Registration Expenses" shall mean all expenses
incurred by the LICENSEE in complying with this
Exhibit 2, including, without limitation, all
registration and filing fees, printing expenses, fees
and disbursements of counsel for the LICENSEE, blue
sky fees and expenses, and the expense of any special
audits incident to or required by any such
registration. Registration Expenses shall also
include fees and disbursements of one special counsel
for Holders and other selling stockholders, in an
amount not to exceed $10,000. "Selling Expenses"
shall mean all underwriting
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discounts, selling commissions and underwriters'
expense allowances applicable to the sale of the
securities of Holders. All Registration Expenses
incurred in connection with any registration,
qualification or compliance pursuant to this Exhibit
2 shall be borne by the LICENSEE, and all Selling
Expenses shall be borne by the Holders.
(i) If the Holders propose to distribute their securities
through an underwriter, the LICENSEE shall enter into
an underwriting agreement in customary form with the
underwriter or underwriters, provided that the terms
thereof shall not be materially less favorable to the
LICENSEE than those customarily arranged in
comparable underwritten offerings.
(j) Holders shall have no right to obtain or seek an
injunction restraining or otherwise delaying any such
registration as the result of any controversy that
might arise with respect to the interpretation or
implementation of this Exhibit 2.
(k) Nothing contained herein shall be deemed to limit the
rights of the Holders to offer or make a public sale
of all or any portion of such securities under Rule
144 of the SEC or any other applicable provisions of
federal and state securities laws. Furthermore, if,
in the opinion of counsel for a Holder, the offering
or transfer by such Holder in the manner proposed
(including, without limitation, the number of shares
proposed to be offered or transferred and the method
of offering or transfer) is exempt from the
registration requirements of the Securities Act under
Rule 144 or otherwise, LICENSEE shall not be required
to effect any registration of such securities under
the Securities Act.
(l) At such time as LICENSEE is eligible to register its
Common Stock for public sale under the Securities Act
using Form S-3 (or similar successor form), Holders
shall have a one-time right to demand that the
LICENSEE file a registration statement on Form S-3
covering the offering and sale by Holders of all or a
portion of the shares owned by them, such sales to be
either at the market from time to time or in an
underwritten public offering, or both. LICENSEE will
as promptly as practicable after the receipt of such
demand file such registration statement and take such
other actions with respect to such registration
statement as are required by the provisions of
paragraphs (f) through (i) of this Exhibit 2. The
rights of the Holders under this paragraph (k) shall
cease when they no longer
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own collectively at least 1% of the outstanding
Common Stock of LICENSEE.
(m) The rights to cause LICENSOR to register a Holder's
securities granted by LICENSOR under this Exhibit 2
may be transferred or assigned by a Holder to a
transferee or assignee of any Registrable Securities.
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