UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 2 TO
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-27282
MANHATTAN PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3898269
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
787 Seventh Avenue, 48th Floor, New York, New York 10019
(Address of principal executive offices)
(212) 554-4525
(Issuer's telephone number)
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
As of March 11, 2004, there were 26,731,033 shares of the issuer's common stock,
$.001 par value, outstanding.
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INTRODUCTORY NOTE
This Amendment No. 2 to the Quarterly Report on Form 10-QSB (the
"10-QSB/A") for Manhattan Pharmaceuticals, Inc. (the "Company") for the quarter
ended March 31, 2003, as originally filed with the Securities and Exchange
Commission ("SEC") on May 15, 2003, is being filed solely for the purpose of
amending Exhibit 10.6 thereto and correcting the exhibit index accordingly. The
amendment to Exhibit 10.6 is based upon the SEC's review of the Company's
confidentiality treatment request previously filed with respect to such exhibit.
This 10-QSB/A does not reflect events occurring after the filing of the
original Form 10-QSB or Amendment No. 1 thereto filed on August 11, 2003, or
modify or update the disclosures therein in any way other than as required to
reflect the amendment set forth above. The filing of this Form 10-QSB/A shall
not be deemed an admission that the original filing, when made, included any
untrue statement of a material fact or omitted to state a material fact
necessary to make a statement not misleading.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
---------- -----------
3.1 Certificate of incorporation, as amended through February 21,
2003 (incorporated by reference to the same exhibit number to
the Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 2002).*
4.1 Form of warrant issued by Manhattan Research Development,
Inc., which automatically converted into warrants to purchase
shares of the Registrant's common stock upon the merger
transaction with such company.*
10.1 Third Amendment to Employment Agreement dated February 21,
2003 between the Registrant and Frederic. P. Zotos.*
10.2 Third Amendment to Employment Agreement dated February 21,
2003 between the Registrant and A. Joseph Rudick.*
10.3 Second Amendment to Employment Agreement dated February 21,
2003 between the Registrant and Nicholas J. Rossettos.*
10.4 Employment Agreement dated January 2, 2003, between Manhattan
Research Development, Inc. and Leonard Firestone, as assigned
to the Registrant effective as of February 21, 2003.*
10.5 Employment Agreement dated February 28, 2003, between the
Registrant and Nicholas J. Rossettos.*
10.6 License Agreement dated on or about February 28, 2002 between
Manhattan Research Development, Inc. (f/k/a Manhattan
Pharmaceuticals, Inc.) and Oleoyl-Estrone Developments SL.**
99.1 Certifications of Chief Executive and Chief Financial
Officer.*
- ------------------
* As previously filed.
** Filed herewith.
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SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MANHATTAN PHARMACEUTICALS, INC.
Date: March 11, 2004 By: /s/ Leonard Firestone
---------------------------------------------
Leonard Firestone
President and Chief Executive Officer
Date: March 11, 2004 By: /s/ Nicholas J. Rossettos
---------------------------------------------
Nicholas J. Rossettos
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
---------- -----------
3.1 Certificate of incorporation, as amended through February 21,
2003 (incorporated by reference to the same exhibit number to
the Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 2002).*
4.1 Form of warrant issued by Manhattan Research Development,
Inc., which automatically converted into warrants to purchase
shares of the Registrant's common stock upon the merger
transaction with such company.*
10.1 Third Amendment to Employment Agreement dated February 21,
2003 between the Registrant and Frederic. P. Zotos.*
10.2 Third Amendment to Employment Agreement dated February 21,
2003 between the Registrant and A. Joseph Rudick.*
10.3 Second Amendment to Employment Agreement dated February 21,
2003 between the Registrant and Nicholas J. Rossettos.*
10.4 Employment Agreement dated January 2, 2003, between Manhattan
Research Development, Inc. and Leonard Firestone, as assigned
to the Registrant effective as of February 21, 2003.*
10.5 Employment Agreement dated February 28, 2003, between the
Registrant and Nicholas J. Rossettos.*
10.6 License Agreement dated on or about February 28, 2002 between
Manhattan Research Development, Inc. (f/k/a Manhattan
Pharmaceuticals, Inc.) and Oleoyl-Estrone Developments SL.**
99.1 Certifications of Chief Executive and Chief Financial
Officer.*
- ------------------
* As previously filed.
** Filed herewith.
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Exhibit 10.6
LICENSE AGREEMENT
This License Agreement (hereinafter referred to as this "Agreement"),
effective as of February 15, 2002 (the "Effective Date"), is entered into by and
between Oleoyl-Estrone Developments SL (the "Licensor") and Manhattan
Pharmaceuticals, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the "Company").
WHEREAS, the Licensor is the owner of the intellectual property set forth
in Appendix I hereto which is based on inventions and confidential information
discovered at the University of Barcelona (the "University") relating to the use
of fatty acid monoesters of estrone for the treatment of obesity and/or
overweight (the "Invention"); and
WHEREAS, the Licensor may discover or develop, or acquire ownership of
pursuant to a Contract Research Agreement dated December 15, 2001, between
Licensor, Dr. Maria Alemany and the University (the "University Contract"),
additional intellectual property, technical information or proprietary rights
which may be subject to the terms of this Agreement; and
WHEREAS, the Licensor desires to grant to the Company and the Company
desires to obtain a license to the Invention and to further developments thereto
upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, it is agreed as follows:
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ARTICLE 1 - DEFINITIONS
-----------------------
For the purposes of this License Agreement, the following words and
phrases shall have the following meanings:
1.1 The "Company" shall mean Manhattan Pharmaceuticals, Inc., a Delaware
corporation.
1.2 "Affiliate" shall mean, with respect to any Entity (as hereinafter
defined), any Entity that directly or indirectly controls, is controlled by, or
is under common control with such Entity.
1.2.1 "Control" shall mean, for this purpose, the direct or indirect
control of more than fifty percent (50%) of the voting securities of an Entity
or, if such Entity does not have outstanding voting securities, more than 50% of
the directorships or similar positions with respect to such Entity.
1.2.2 "Entity" shall mean any corporation, association, joint
venture, partnership, limited liability company, trust, university, business,
individual, government or political subdivision thereof, including an agency, or
any other organization that can exercise independent legal standing.
1.3 "Patent Rights" shall mean:
1.3.1 all U.S. and foreign patents and patent applications set forth
in Appendix I;
1.3.2 Any other United States and/or foreign patent applications
and/or patents together with any and all patents issuing thereon, including
parent patents, continuation, divisionals and re-issue applications,
re-examinations and continuation-in-part applications and any United States or
foreign patents granted upon such applications, based upon any Improvements, any
and all of which shall be deemed added to Appendix I;
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1.3.3 Any later-filed United States and/or foreign patent
applications based on the patent applications and/or patents listed in Appendix
I, or corresponding thereto, including any continuations, continuations-in-part,
divisional, reissues, reexaminations, or extensions thereof;
1.3.4 Any United States and/or foreign patents issuing from any of
the foregoing; and 1.3.5 Any United States and/or foreign trademark applications
filed by or on behalf of the Licensor related to the Invention.
1.4 "Know-how" shall mean all tangible information (other than that
contained in the Patent Rights) whether patentable or not (but which has not
been patented) and physical objects related to the Invention or to the Licensed
Product, including but not limited to formulations, materials, data, drawings
and sketches, designs, testing and test results, regulatory information of a
like nature, owned by any of the Licensor as of the Effective Date or
subsequently generated or acquired by the Licensor during the term of this
Agreement, which the Licensor has the right to disclose and license to the
Company, and which arose in Dr. Alemany's, Dr. Xavier Remesar's and Dr. Jose A.
Fernandez' respective laboratory under one or all of their direction.
1.5 "Licensed Product(s)" shall mean:
1.5.1 Any product that is covered in whole or in part by a valid and
unexpired claim contained in the Patent Rights in the country in which the
product is made, used, leased or sold;
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1.5.2 Any product which is used according to a method, which is
covered in whole or in part by a valid and unexpired claim, contained in the
Patent Rights in the country in which the method is used.
1.6 "Improvements" means any inventions or improvements to the Invention,
in each case, within the scope of one or more claims of any of the Patent
Rights, acquired, created or made by the Licensor during the term of this
Agreement and which arose in Dr. Alemany's, Dr. Xavier Remesar's and Dr. Jose A.
Fernandez' respective laboratory under one or all of their direction.
ARTICLE 2 - GRANT
-----------------
2.1 The Licensor hereby grants to the Company, and the Company accepts,
subject to the terms and conditions of this Agreement, a worldwide license in
all fields of use to practice under the Patent Rights and to utilize the
Know-how, to make, have made, use, lease and/or sell the Licensed Products, to
the full end of the term for which the Patent Rights are granted, unless sooner
terminated as hereinafter provided.
2.2 Notwithstanding any other provision contained in this Agreement, the
Licensor retains an irrevocable, non-exclusive, royalty-free right to use the
technology, ideas and enhancements reflected in the Patent Rights and the
Know-how solely for its internal, non-commercial use.
2.3 The Licensor owns the Patent Rights, free and clear of all liens,
charges, encumbrances or other restrictions or limitations of any kind
whatsoever and, to the Licensor's knowledge and belief, there are no licenses,
options, restrictions, liens, rights of third parties, disputes, royalty
obligations, proceedings or claims relating to, affecting, or limiting its
rights or the rights of the Company under this Agreement with respect to, or
which may lead to a claim of infringement or invalidity regarding, any part or
all of the Patent Rights and their use as contemplated in the underlying patent
applications as presently drafted.
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2.4 Prior to execution of this Agreement, the Licensor has made available
to the Company a fully executed copy of the Declaration of Assignment between
the Licensor and the University (a copy of which is attached hereto as Exhibit
2.4) granting the Licensor exclusive, absolute, irrevocable right, title and
interest to practice the rights granted thereunder together with the right to
grant the license granted to the Company hereunder. The Licensor further
represents to the Company that it requires no consent from any third party
(including without limitations, the University, the Licensor's stockholders to
any governmental agency) to grant to the Company the rights granted hereunder
and that it has made all regulatory filings required in order to secure the
rights granted under the Declaration of Assignment, including filing with the
Commercial Registry..
2.5 To the Licensor's knowledge and belief there is no claim, pending or
threatened, of infringement, interference or invalidity regarding, any part or
all of the Patent Rights and their use as contemplated in the underlying patent
applications as presently drafted.
2.6 The Licensor has disclosed certain information to the Company or its
Affiliates subject to the terms of the Confidentiality Agreement entered into
prior to the execution of this Agreement, which, to Licensor's knowledge,
constitutes all material information in Licensor" possession relating to the
Invention.
2.7 The Licensor grants to the Company the right to grant sublicenses to
third-parties under the license granted hereunder, subject, solely in the case
of a sublicense to an Affiliate of the Company, to the prior written consent of
the Licensor which will not be unreasonably withheld. In
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order to enable the Licensor to make a determination regarding any such proposed
sublicense that is subject to Licensor's consent pursuant to the immediately
preceding sentence, the Company shall give the Licensor prior written notice
thereof, such notice to be accompanied by the proposed sublicense agreement, if
available, or, if such agreement is not then available, by a description setting
forth in reasonable detail, the identity of the proposed sublicensee and the
terms and conditions of such sublicense. The Licensor shall respond to any
request for consent by the Company within fourteen (14) days following the
Licensor's receipt of the Company's notice and accompanying information. The
failure by Licensor timely to respond to any such request for consent shall be
deemed to constitute Licensor's consent to the sublicense described in the
Company's notice. The Company shall remain responsible for the performance
hereunder by its sublicensees.
2.7.1 Within 30 days after execution or receipt thereof, as
applicable, the Company shall provide the Licensor with a copy of each
sublicense issued hereunder.
2.7.2 Upon termination of this Agreement other than by expiration in
accordance with paragraph 7.7 or as a result of a breach of Section 3 hereof,
any and all sublicenses shall survive such termination provided that (a) the
sublicensee is not in default as of the date of termination and (b) the Licensor
shall be entitled to receive all royalties and other payments payable by the
sublicensee to the Company in respect of such sublicense for all periods from
and after the date on which this Agreement terminates and shall be entitled to
enforce the provisions of such sublicense against the sublicensee and to
exercise the remedies of the Company thereunder fully and to the same extent as
if the Licensor were the original sublicensor thereunder. The Company shall
cause each sublicense it enters into hereunder to contain a provision to the
effect set forth in this Section 2.7.2
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2.7.3 The Company's right to sublicense hereunder shall be subject
to the Company obtaining the sublicensee's agreement to be bound by the terms of
this Agreement directly or indirectly applicable to sublicensees, including
without limitation, confidentiality and indemnitifcation of the Licensor
(provided that such agreement shall not relieve the Company of its own
obligations under this Agreement).
2.8 Licensor agrees that it will promptly disclose to the Company, or any
persons designated by the Company, all Improvements and Know-how acquired by it
during the term of this Agreement, which Improvements and Know-how shall be
owned by Licensor and licensed to the Company pursuant to this Agreement. The
Licensor further agrees to assist the Company in every proper way (but at the
Company's expense) to obtain and from time to time enforce patents, copyrights
or other rights on any such Improvements in any and all countries, and to that
end the Licensor will execute all documents necessary:
2.8.1 to apply for, obtain and vest in the name of the Licensor
letters patent, copyrights or other analogous protection in any country
throughout the world and when so obtained or vested to renew and restore the
same, all of which shall be subject to the license granted hereby; and
2.8.2 to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters patent, copyright or other analogous protection.
ARTICLE 3 - DUE DILIGENCE
-------------------------
The Company shall use its commercially reasonable efforts to bring Licensed
Products to market through a thorough, vigorous and diligent program for
exploitation of the Patent Rights and Know-how and continue active, diligent
marketing efforts for Licensed Products throughout the life of this Agreement.
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Schedule B hereto contains the Company's good faith estimates of the timing of
the initial phases of the exploitation of the Patent Rights and Know-how,
although the parties acknowledge and agree that such estimates are based on the
Company's current plans and will be subject to change based upon actual
pre-clinical and clinical testing results and other factors outside of the
Company's control. The Company will deliver to the Licensor written status and
progress reports, or hold meetings with the Licensor, concerning the status of
such exploitation and marketing efforts, upon the written request of the
Licensor, which reports or meetings may be requested no more than quarterly. The
Licensor may also request oral or informal information from the Company with
respect to such matters from time to time.
ARTICLE 4 - EQUITY AND MILESTONE PAYMENTS
-----------------------------------------
4.1 On the Effective Date, (i) upon execution and delivery of the
Stockholders Agreement (as hereinafter defined) by the parties thereto, the
Company shall issue to the Licensor a number of shares of common stock of the
Company, par value $.001 per share ("Common Stock") representing twenty percent
(20%) of the outstanding shares of Common Stock of the Company as of the
Effective Date; (ii) the Company, the Licensor and the principal stockholder of
the Company shall execute and deliver a Stockholders' Agreement containing,
among other things, certain rights and obligations relating to the ownership of
the Common Stock by the Licensor (the "Stockholders Agreement"); and (iii) the
Company and the Licensor shall execute and deliver a Consulting Agreement
pursuant to which the Licensor will provide the services of the Inventors to
consult with the Company, upon the terms and conditions set forth therein.
4.2 The Company shall pay to the Licensor the following cash payments:
4.2.1 $175,000 upon execution of this Agreement;
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4.2.2 $250,000 upon the treatment of the first patient in a phase I
clinical trial under a Company sponsored Investigational New Drug Application
("IND");
4.2.3 $250,000 upon the treatment of the first patient in a phase II
clinical trial under a Company sponsored IND;
4.2.4 $750,000 upon the first successful completion of a Company
sponsored phase II clinical trial under a Company sponsored IND;
4.2.5 $2,000,000 upon the first successful completion of a Company
sponsored phase III clinical trial under a Company-sponsored IND;
4.2.6 $6,000,000 upon the first final approval of the first New Drug
Application ("NDA") for the first Licensed Product by the United States Food and
Drug Administration (the "FDA");
4.3 All payments pursuant to paragraph 4.2 above shall become due and
payable within 30 days after achievement of the indicated milestone. The Company
shall give the Licensor prompt notice of the achievement, if any, of each such
milestone.
4.4 All payments shall be made in U.S. dollars. Payments shall be made by
wire transfer of funds to an account designated in writing by the Licensor.
ARTICLE 5 - REPORTS AND RECORDS
-------------------------------
5.1 Within sixty (60) days from the end of each calendar quarter, the
Company shall deliver to the Licensor complete and accurate reports, giving such
particulars of the business conducted by the Company during the preceding
quarter under this License Agreement as shall be pertinent to the Licensor.
These shall include at least the following:
5.1.1 Names and addresses of all sublicensees and Affiliates of the
Company.
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5.1.2 A copy of any report, which is in substance similar to the
report required by this Article 5, received from any sublicensee and other
documents received from any sublicensee as the Licensor may reasonably request.
5.2 The Licensor agrees to hold in confidence each report delivered by the
Company pursuant to this Article 5 until the termination of this Agreement.
Notwithstanding the foregoing, the Licensor may disclose any such information
required to be disclosed pursuant to any judicial, administrative or
governmental request, subpoena, requirement or order, provided that the Licensor
takes reasonable steps to provide the Company with the opportunity to contest
such request, subpoena, requirement or order.
ARTICLE 6 - PATENT PROSECUTION AND MAINTENANCE
----------------------------------------------
6.1 The Company, at its sole cost and expense, shall diligently prosecute
and maintain the Patent Rights as set forth in Appendix I hereto (as the same
may be amended or supplemented from time to time after the date hereof),
including, but not limited to, the filing of patent applications for
Improvements, utilizing such patent counsel as may be mutually agreed upon by
the parties hereto. The Company agrees to keep the Licensor reasonably well
informed with respect to the status and progress of any such applications,
prosecutions and maintenance activities including and to consult in good faith
with the Licensor and take into account the Licensor's comments and requests
with respect thereto. Both parties agree to provide reasonable cooperation to
each other to facilitate the application and prosecution of patents pursuant to
this Agreement.
6.2 The Company may, in its discretion, elect to abandon any patent
application or issued patent comprising the Patent Rights, in which case the
Company shall make no further use of such Patent Rights and such rights
10
shall revert to the Licensor. Prior to any such abandonment, the Company shall
give the Licensor at least 60 days notice and a reasonable opportunity to take
over prosecution of such Patent Rights. In such event, the Licensor shall have
the right, but not the obligation, to commence or continue such prosecution and
to maintain any such Patent Rights under its own control and at its expense and
the Company shall then make no further use of any such Patent Rights and shall
have no royalty or other obligation to the Licensor in respect of any Licensed
Products, the manufacture, use or sale of which is covered by a valid and
unexpired claim of such Patent Rights. The Company agrees to cooperate in such
activities, including execution of any assignments or other documents necessary
to enable the Licensor to obtain and retain sole ownership and control of such
Patent Rights.
ARTICLE 7 - TERMINATION
-----------------------
7.1 If the Company shall become bankrupt, or shall file a petition in
bankruptcy, or if the business of the Company shall be placed in the hands of a
receiver, assignee or trustee for the benefit of creditors, whether by the
voluntary act of the Company or otherwise, this License Agreement shall
automatically terminate.
7.2 In the event that the Company fails to make payment to the Licensor of
amounts due in accordance with the terms of this Agreement or any other
agreement between the Licensor and the Company, provided such failure to make
payment is not as a result of a bona fide dispute between the Licensor and the
Company, the Licensor shall have the right to terminate this License Agreement
within thirty (30) days after giving said notice of termination unless the
Company shall pay to the Licensor, within the 30-day period, all such amounts
due and payable (together with interest thereon until receipt of payment in full
at a rate equal to 10% per annum). Subject to Article 8, upon the expiration of
the 30-day period, if the Company shall not have paid all such amounts due and
payable, the rights, privileges and license granted hereunder shall, at the
option of the Licensor, immediately terminate.
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7.3 Upon any material breach or default of this License Agreement by the
Company, other than as set forth in Paragraphs 7.1 and 7.2 hereinabove, the
Licensor shall have the right to terminate this Agreement and the rights,
privileges and license granted hereunder upon giving sixty (60) days notice to
the Company. Such termination shall become effective immediately unless the
Company shall have cured any such breach or default prior to the expiration of
the sixty (60) day period referred to above.
7.4 The Company shall have the right at any time to terminate this
Agreement in whole or as to any portion of the Patent Rights by giving sixty
(60) days notice thereof in writing to the Licensor.
7.5 If the University Contract shall cease to be in full force and effect
or the Licensor and the University enter into any amendment or modification of
the University Contract that adversely affects the rights of the Company
hereunder (each, an "Adverse Condition"), the Company shall have the right to
terminate this Agreement upon thirty (30) days notice to the Licensor. Such
termination shall become effective immediately unless such Adverse Condition
shall have been cured prior to the expiration of such thirty (30) day period.
7.6 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination or obligations under Articles 5,
8, 9, 10, 15 and 16. The Company and/or any sublicensee thereof may, however, at
any time after the effective date of such termination and continuing for a
period not to exceed six (6) months thereafter, sell all completed Licensed
Products, and any Licensed Products in the process of manufacture at the time of
such termination, and sell the same, provided that the Company shall pay or
cause to be paid to the Licensor the royalties thereon as required by Article 4
of this License Agreement and shall submit the reports required by Article 5
hereof on the sales of Licensed Products.
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7.7 If not terminated sooner, this Agreement shall terminate on the date
of the last to expire claim contained in the Patent Rights.
7.8 Upon termination of this Agreement, except pursuant to 7.7 hereof, the
Company shall have no further rights to the Patent Rights and Know-how granted
hereunder, and shall make no further use thereof, including the manufacture, use
or sale of Licensed Products, except as otherwise set forth herein.
7.9 Upon termination of this Agreement, the Company agrees to cooperate
fully with the Licensor or its respective nominees: (i) to take whatever steps
are reasonably necessary and appropriate to effect reversion to the Licensor of
all rights to the Patent Rights and Know How in all relevant countries; and (ii)
to transfer, or to hand over, to the Licensor or such nominees, all information
obtained by the Licensor in connection with the exploitation of the Licensed
Patents and Know How and/or marketing of Licensed Products during the term of
this Agreement, including information derived in any pre-clinical and clinical
trials, and all regulatory filings, health registrations and sales permissions
regarding Licensed Products in all countries in which such regulatory filings,
health registrations or sales permissions have been obtained with respect
thereto.
ARTICLE 8 - ARBITRATION
-----------------------
8.1 Any dispute arising from or relating to this Agreement shall be
determined before a tribunal of three (3) arbitrators in New York, New York in
accordance with the rules of the American Arbitration Association. The Licensor
shall select one arbitrator; the Company shall select one arbitrator and the
third arbitrator shall be selected by mutual agreement of the first two
arbitrators.
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8.2 Any claim, dispute, or controversy concerning the validity,
enforceability, or infringement of any patent contained in the Patent Rights
licensed hereunder shall be resolved in court having jurisdiction thereof.
8.3 In the event that, in any arbitration proceeding, any issue shall
arise concerning the validity, enforceability, or infringement of any patent
contained in the Patent Rights licensed hereunder, the arbitrators shall, to the
extent possible, resolve all issues other than validity, enforceability, and
infringement; in any event, the arbitrators shall not delay the arbitration
proceeding for the purpose of obtaining or permitting either party to obtain
judicial resolution of such issues, unless an order staying the arbitration
proceeding shall be entered by a court of competent jurisdiction. Neither party
shall raise any issue concerning the validity, enforceability, or infringement
of any patent contained in the Patent Rights licensed hereunder, in any
proceeding to enforce any arbitration award hereunder, or in any proceeding
otherwise arising out of any such arbitration award.
8.4 The costs of such arbitration shall be borne proportionate to the
finding of fault as determined by the Arbitrator. Judgment on the arbitration
award may be entered by any court of competent jurisdiction.
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ARTICLE 9 - INFRINGEMENT AND OTHER ACTIONS
------------------------------------------
9.1 The Company and the Licensor shall promptly provide written notice, to
the other party, of any alleged infringement by a third party of the Patent
Rights and provide such other party with any available evidence of such
infringement.
9.2 During the term of this Agreement, the Company shall have the right,
but not the obligation, to prosecute and/or defend, at its own expense and
utilizing counsel of its choice, any infringement of, and/or challenge to, the
Patent Rights. In furtherance of such right, the Licensor hereby agrees that the
Company may join the Licensor as a party in any such suit, without expense to
the Licensor. No settlement, consent judgment or other voluntary final
disposition of any such suit which would adversely affect the rights of the
Licensor may be entered into without the consent of the Licensor, which consent
shall not be unreasonably withheld. The Company shall indemnify and hold the
Licensor harmless against any costs, expenses or liability that may be found or
assessed against the Licensor in any such suit other than resulting from the
Licensor's gross negligence, recklessness or willful misconduct.
9.3 In the event that a claim or suit is asserted or brought against the
Company alleging that the manufacture or sale of any Licensed Product by the
Company, an Affiliate of the Company, or any sublicensee, or the use of such
Licensed Product by any customer of any of the foregoing, infringes proprietary
rights of a third party, the Company shall give written notice thereof to the
Licensor. The Company may, in its sole discretion, modify such Licensed Product
to avoid such infringement and/or may settle on terms that it deems advisable in
its sole discretion, subject to paragraph 9.2. Otherwise, the Company shall have
the right, but not the obligation, to defend any such claim or suit. In the
event the Company elects not to defend such suit, the Licensor shall have the
right, but not the obligation to do so at its sole expense.
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9.4 Any recovery of damages by the Company, in any such suit brought by
the Company, shall be applied first in satisfaction of any unreimbursed expenses
and legal fees of the Company relating to the suit. The balance remaining from
any such recovery shall be shared 80% to the Company and 20% to the Licensor.
Any recovery of damages by the Licensor, in any such suit brought by the
Licensor, shall be applied first in satisfaction of any unreimbursed expense and
legal fees of the Licensor relating to such suit. The balance remaining from any
such recovery shall be shared 80% to the Licensor and 20% to the Company.
9.5 If within six (6) months after receiving notice of any alleged
infringement, the Company shall have been unsuccessful in persuading the alleged
infringer to desist, or shall not have brought and shall not be diligently
prosecuting an infringement action, or if the Company shall notify the Licensor,
at any time prior thereto, of its intention not to bring suit against the
alleged infringer, then, and in those events only, the Licensor shall have the
right, but not the obligation, to prosecute, at its own expense and utilizing
counsel of its choice, any infringement of the Patent Rights, and the Licensor
may, for such purposes, join the Company as a party plaintiff. The total cost of
any such infringement action commenced solely by the Licensor shall be borne by
the Licensor and the Licensor shall keep any recovery or damages for
infringement or otherwise derived therefrom and such shall not be applicable to
any payment obligation of the Company.
9.6 In any suit to enforce and/or defend the Patent Rights pursuant to
this License Agreement, the party not in control of such suit shall, at the
request and expense of the controlling party, cooperate in all respects and, to
the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.
16
ARTICLE 10 - LIMITATION OF LIABILITY, INDEMNITY
-----------------------------------------------
10.1 The Licensor, by this License Agreement, makes no representations or
warranties as to the validity and/or breadth of the inventions contained in the
Patent Rights and the Company so acknowledges. The Licensor, by this License
Agreement, makes no representations or warranties as to patents now held or
which will be held by others in the field of the Licensed Products for a
particular purpose.
10.2 EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN, THE LICENSORS DO NOT
MAKE, AND EXPRESSLY DISCLAIM ANY WARRANTIES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, AS TO ANY MATTER WHATSOEVER, INCLUDING MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
10.3 The Company agrees to defend, indemnify and hold harmless the
Licensor, its affiliates, directors, employees and officers from and against all
liability, demands, damages, including without limitation, reasonable legal fees
and expenses and losses including death, personal injury, illness or property
damage arising directly or indirectly: (a) out of the use by the Company or its
transferees of inventions licensed or information furnished under this License
Agreement or (b) out of any testing, use, manufacture, import, sale or other
disposition by the Company or its transferees of Patent Rights, Know-how or
Licensed Products, in each case which are not the result of the Licensor's gross
negligence or willful misconduct.
10.4 Subject to the Stockholders Agreement, prior to entering into human
clinical trials for a proposed Licensed Product, the Company shall purchase and
maintain, at its own expense, during the term of this Agreement, and for a
minimum of two (2) years following the expiration,
17
termination or cancellation of this Agreement, a product liability policy from
an insurance company or companies reasonably satisfactory to the Licensor.
During any clinical development of Licensed Product, such coverage shall be for
at least $2,000,000 per occurrence. Promptly upon commercial introduction of
Licensed Product, the parties shall negotiate in good faith an increase in such
coverage. The insurance policy relating to such coverage shall name the Licensor
as an additional insured by way of endorsement or otherwise as its interests may
appear. Within thirty (30) days following the Effective Date, the Company shall
cause to be delivered to the Licensor an insurance certificate evidencing the
insurance coverage required by this Section 10.4. Such insurance certificate
shall name the Licensor as an additional insured as its interests may appear.
ARTICLE 11 - ASSIGNMENT
-----------------------
This Agreement and the rights and duties appertaining hereto may not be
assigned by either party without first obtaining the written consent of the
other, which consent shall not be unreasonably withheld; or by the Company to an
Affiliate Any such purported assignment, without the written consent of the
other party, shall be null and of no effect. Notwithstanding the foregoing, the
Company may assign this Agreement (i) subject to clause (ii) below, to a
purchaser, merging or consolidating corporation, or acquiror of substantially
all of the Company's assets or business and/or pursuant to any reorganization
qualifying under section 368 of the Internal Revenue Code of 1986 as amended, as
may be in effect at such time, or (ii) to an Affiliate of the Company subject to
the consent of the Licensor which consent shall not be unreasonably withheld. In
order to enable the Licensor or the Company, as the case may be, to make a
determination regarding any such proposed assignment that is subject to the
other party's consent pursuant to this paragraph, the party seeking such consent
shall give the other party prior written notice thereof, such notice to be
accompanied by the proposed assignment agreement, if available, or, if such
agreement is not then available, by a description setting
18
forth in reasonable detail, the identity of the proposed assignee and the terms
and conditions of such assignment. The party entitled to consent to such
assignment shall respond to any request for consent by the other party within
fourteen (14) days following such party's receipt of the applicable notice and
accompanying information. The failure of such party timely to respond to any
such request for consent shall be deemed a consent to the assignment described
in the other party's request.
ARTICLE 12 - PAYMENT OF FEES AND EXPENSES
-----------------------------------------
Each of the Company and the Licensor shall be responsible for their own
expenses relating to the preparation and consummation of this Agreement and the
agreements and transactions contemplated hereby.
ARTICLE 13 - USE OF NAMES AND PUBLICATION
-----------------------------------------
13.1 Nothing contained in this Agreement shall be construed as granting
any right to the Company or its Affiliates to use in advertising, publicity, or
other promotional activities any name, trade name, trademark, or other
designation of the Licensor or any of its units (including contraction,
abbreviation or simulation of any of the foregoing) without the prior, written
consent of the Licensor; provided, however, that the Licensor acknowledges and
agrees that the Company may use the name of the Licensor in various documents
used by the Company for capital raising and financing without such prior written
consent where the use of such names may be required by law. The Company agrees
to promptly provide the Licensor with a copy of any documents used by the
Company, which contain the name of the Licensor.
13.2 Nothing herein shall be deemed to establish a relationship of
principal and agent between the Licensor and the Company, nor any of their
agents or employees for any purpose whatsoever. This Agreement
19
shall not be construed as creating a partnership between the Licensor and the
Company, or as creating any other form of legal association or arrangement,
which would impose liability upon one party for the act or failure to act of the
other party.
13.3 Notwithstanding the provisions of Article 15 hereof, in the event
that the Licensor desires to publish or disclose, by written, oral or other
presentation, Know-how, Patent Rights, or any material information related
thereto then the Licensor shall notify the Company in writing by facsimile where
confirmed by the receiving party, and/or by certified or registered mail (return
receipt requested) of its intention at least sixty (60) days prior to any
speech, lecture or other oral presentation and at least sixty (60) days before
any written or other publication or disclosure. The Licensor shall include with
such notice a description of any proposed oral presentation or, in any proposed
written or other disclosure, a current draft of such proposed disclosure or
abstract. The Company may request that the Licensor, no later than sixty (60)
days following the receipt of such notice, delay such presentation, publication
or disclosure in order to enable the Company to file, or have filed on their
behalf, a patent application, copyright or other appropriate form of
intellectual property protection related to the information to be disclosed or
request that the Licensor does so. Upon receipt of such request to delay such
presentation, publication or disclosure, the Licensor shall arrange for a delay
of such presentation, publication or disclosure until such time as the Company
or the Licensor has filed, or has had filed on its behalf, such patent
application, copyright or other appropriate form of intellectual property
protection in form and in substance reasonably satisfactory to the Company and
the Licensor. This delay will not exceed thirty (30) days. If the Licensor does
not timely receive any such request from the Company to delay such presentation,
publication or disclosure, the Licensor may submit such material for
presentation, publication or other form of disclosure.
20
ARTICLE 14 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
-------------------------------------------------------
14.1 Any payment, notice or other communication required or permitted to
be given pursuant to this Agreement shall be in writing and sent by certified
first class mail, postage prepaid, by hand delivery or by facsimile if confirmed
in writing, in each case effective upon receipt, at the addresses below or as
otherwise designated by written notice given to the other party:
In the case of the Licensor:
Chief Executive Officer
Oleoyl-Estrone Developments SL
Josep Samitier 1-5
Barcelona Science Park
08028 Barcelona, Spain
Facsimile: 011 34 93 403 7098
with a copy to:
Ezra G. Levin
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Fax: 212-715-8000
In the case of the Company:
Manhattan Pharmaceuticals, Inc.
c/o Horizon Biomedical Ventures, LLC
787 Seventh Avenue
New York, New York 10019
Tel: 212-554-4350
Fax: 212-554-4355
Attn: David M. Tanen
15 - CONFIDENTIALITY
--------------------
15.1 Any proprietary or confidential information relating to the Invention
(including but not limited to Know-how and patent prosecution
21
documents relating to Patent Rights) collectively constitute the "Confidential
Information." The Company and the Licensor agree that they will not use the
Confidential Information for any purpose unrelated to this Agreement or the
University Contract, and will hold it in confidence during the term of this
Agreement and for a period of five (5) years after the termination or expiration
date of this Agreement. The Company and the Licensor shall exercise with respect
to such the Confidential Information the same degree of care as the Company and
the Licensor exercise with respect to their own confidential or proprietary
information of a similar nature, and shall not disclose it or permit its
disclosure to any third party (except to those of its employees, consultants, or
agents who are bound by the same obligation of confidentiality as the Company of
the Licensor is bound by pursuant to this Agreement). However, such undertaking
of confidentiality by the Company or the Licensor shall not apply to any
information or data which:
15.1.1 The receiving party receives at any time from a third party
lawfully in possession of same and having the right to disclose same.
15.1.2 Is, as of the date of this Agreement, in the public domain,
or subsequently enters the public domain through no fault of the receiving
party.
15.1.3 Is independently developed by the receiving party as
demonstrated by written evidence without reference to information disclosed to
the receiving party.
15.1.4 Is disclosed pursuant to the prior written approval of the
disclosing party.
15.1.5 Is required to be disclosed pursuant to law or legal process
(including, without limitation, to a governmental authority) provided, in the
case of disclosure pursuant to legal process, reasonable notice of the impending
disclosure is provided to the disclosing party and disclosing party has agreed
to such disclosure in writing or has exhausted its right to contest such
disclosure.
22
ARTICLE 16 - MISCELLANEOUS PROVISIONS
-------------------------------------
16.1 This License Agreement shall be construed, governed, interpreted and
applied in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws
16.2 If this Agreement or any associated transaction is required by the
law of any nation to be either approved or registered with any governmental
agency, the Company shall assume all legal obligations to do so and the costs in
connection therewith.
16.3 The Company shall observe all applicable United States and foreign
laws with respect to the use, sale manufacture and transfer of Licensed Products
and related technical data to foreign countries, including, without limitation,
the regulations of the Food and Drug Administration and its foreign equivalents,
the International Traffic in Arms Regulations (ITAR), the Export Administration
Regulations.
16.4 The parties hereto acknowledge that this Agreement, including the
Appendices and documents incorporated by reference, sets forth the entire
agreement and understanding of the parties hereto as to the subject matter
hereof, and shall not be subject to any change of modification except by the
execution of a written instrument subscribed to by the parties hereto.
16.5 The provisions of this License Agreement are severable, and in the
event that any provision of this License Agreement shall be determined to be
invalid or unenforceable under any controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
23
16.6 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this License Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
16.7 The headings of the several articles are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
16.8 This Agreement will not be binding upon the parties until it has been
signed below on behalf of each party, in which event, it shall be effective as
of the date recited on page one.
16.9 This Agreement embodies the entire understanding of the parties and
shall supersede all previous communications, representations or understandings,
either oral or written, between the parties relating to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. This Agreement may be
delivered by facsimile transmission with the same legal effect as if delivery of
an original were made in person.
16.10 Each party hereto shall be excused from any breach of this
Agreement, which is proximately caused by governmental regulation, act of war,
strike, act of God or other similar circumstance normally deemed outside the
control of the parties.
24
IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement, in triplicate by proper persons thereunto duly authorized.
MANHATTAN PHARMACEUTICALS INC.
By: /s/ David M. Tanen
-----------------------------------
Name: David M. Tanen
Title: President
-----------------------------------
Date: 2/15/02
OLEOYL-ESTRONE DEVELOPMENTS SL
By: /s/ Emilla Pola
-----------------------------------
Name: Emilla Pola
Title: CEO
-----------------------------------
Date: 2/28/02
[Signature Page of License Agreement, effective as of January __, 2002,
between Oleoyl-Estrone Developments SL, as Licensor, and
Manhattan Pharmaceuticals, Inc., as Licensee]
25
APPENDIX I
----------
1. United States Patent No. 5,798,348 entitled "Fatty-acid monoesters of
estrogens for the treatment of obesity and/or overweight (October 30,
1996) (M. Alemany, Inventor)
2. European Patent Application No. 771,817 entitled "Fatty-acid monoesters of
estrogens for the treatment of obesity and/or overweight" (October 28,
1996) (M. Alemany, Inventor)
3. Spanish Patent Application No. ES 200100785 entitled "Fatty-acid
monoesters of estrogens acting as anti-diabetic and "hipolipemiante"
agents" (March 28, 2001) (M. Alemany Lamana, Francisco Javier Remesar
Betiloch and Jose Antonio Fernandez Lopez, Inventors)
4. Canadian Patent Application No. 2,316,330 entitled "Estrone and estrone
esters and fat deposition promoting compounds in humans" (August 9, 2000)
(M. Alemany Lamana, Francisco Javier Remesar Betiloch and Jose Antonio
Fernandez Lopez, Inventors)
26