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License Termination Agreement

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INTELLECTUAL PROPERTY ASSIGNMENT AND

LICENSE TERMINATION AGREEMENT



This Intellectual Property Assignment and License Termination Agreement (the " Agreement "), effective as of March 6, 2009 ( ? Effective Date "), is by and between SARcode Corporation , a Delaware corporation having its principal place of business at 343 Sansome Street, Suite 505, San Francisco, CA 94104 (" SARcode "), and Sunesis Pharmaceuticals, Inc. , a Delaware corporation having its principal place of business at 395 Oyster Point Boulevard, Suite 400, South San Francisco, CA 94080 (" Sunesis ").



BACKGROUND



A. SARcode and Sunesis entered into a license agreement dated March 30, 2006, as amended on December 4, 2006 (the " License Agreement "), pursuant to which SARcode obtained from Sunesis an exclusive license to certain patents, know-how, and other intellectual property owned or controlled by Sunesis related to certain small molecule LFA-1 antagonists (as further defined below, the " Sunesis LFA-1 Intellectual Property "); and



B. SARcode now desires to acquire, and Sunesis wishes to sell and transfer to SARcode, the Sunesis LFA-1 Intellectual Property, on the terms and conditions set forth in this Agreement.



C. In conjunction with such sale and acquisition of the Sunesis LFA-1 Intellectual Property, SARcode and Sunesis wish to terminate the License Agreement, on the terms and conditions set forth in this Agreement.



Now Therefore , in consideration of the foregoing premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:



ARTICLE 1



DEFINITIONS



For the purposes of this Agreement, the following terms when used with initial capital letters shall have the respective meanings set forth below:



1.1 " Affiliate " of a Party means any person, corporation, joint venture or other business entity which, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Party, as the case may be. As used in this Section 1.1, " control " means: (a) to possess, directly or indirectly, the power to affirmatively direct the management and policies of such person, corporation, joint venture or other business entity, whether through ownership of voting securities or by contract relating to voting rights or corporate governance; or (b) direct or indirect beneficial ownership of fifty percent (50%) or more of the voting share capital in such person, corporation, joint venture or other business entity.
















1.2 " Control " (including any variations such as " Controlled " and " Controlling "), in the context of intellectual property rights, means the rights or power to disclose, assign or grant the applicable license or sublicense, as applicable, under this Agreement, without violating the terms of any written agreement or other written arrangement with any Third Party under which the party disclosing, assigning or granting such rights first acquired such intellectual property.



1.3 " Encumbrances " means any security interest, pledge, mortgage, lien, charge, adverse claim, interest or encumbrance of any kind or nature whatsoever, including any license or restriction on use, transfer, disclosure or receipt of income.



1.4 "Generally Applicable Sunesis LFA-1 Know-How " means any Sunesis LFA-1 Know-How to the extent that such Know-How: (a) is generally applicable to the discovery of novel compounds and not primarily specifically applicable to the discovery of any LFA-1 Antagonist; and (b) is necessary or reasonably useful in connection with the research, development, manufacture, or commercialization of products other than Products by Sunesis, its successors, permitted assignees and/or collaboration partners.



1.5 " Know-How " means information and tangible materials, including: (a) inventions, discoveries, ideas, improvements, or trade secrets; (b) methods, databases, tests, assays, formulas, procedures, processes, techniques and data, including pre-clinical data and clinical data (including investigator reports, statistical analyses, expert opinions and reports, safety and other electronic databases) and chemical, pharmacological and toxicological data, as well as technical information and manufacturing information and descriptions; (c) pharmaceutical, chemical and biological materials, products and compositions of matter; and (d) other know-how and technology.



1.6 " LFA-1 " means that certain naturally occurring protein known as LFA-1, as described in Proc. Nat'l Acad. Sci. , Jul;78(7):4535-9, "Lymphocyte function-associated antigen 1 (LFA-1): a surface antigen distinct from Lyt-2,3 that participates in T lymphocyte-mediated killing," Davignon D, Martz E, Reynolds T, Kurzinger K, Springer TA.



1.7 " LFA-1 Antagonist " means a small molecule that inhibits the activity of LFA-1. For such purposes, any "small molecule ? means a synthetic chemical compound with a molecular weight less than 1000 Daltons and to "inhibit" LFA-1 means a compound meets the inhibition criteria described in Exhibit 1.7 hereto; provided, however that a compound that meets the criteria in Exhibit 1.7 shall nonetheless not be deemed an LFA-1 Antagonist if in fact its primary therapeutic mechanism of action is by a means other than inhibition of LFA-1.



1.8 " LFA-1 Compound " means any compound the composition of matter of which is covered by a claim within the Sunesis LFA-1 Patents.







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1.9 " LFA-1 Records " means all books, records, files, documents, written and other tangible materials, documentation, databases and correspondence (including, in each case, in electronic form to the extent the same exist in electronic form) pertaining to or embodying any of the Sunesis LFA-1 Patents and/or Sunesis LFA-1 Know-How, to the extent available to Sunesis from its server storage, its corporate database (known internally at Sunesis as the RS 3 database), legal files, other corporate records, laboratory notebooks and other research records, including: (a) all records with respect to supply sources; (b) all pre-clinical, research, and process development data, results, and reports relating to LFA-1 or of any materials used in the discovery, research, and development of LFA-1 and/or any LFA-1 Compounds; (b) all laboratory notebooks and associated materials solely to the extent that they relate to LFA-1 and/or any LFA-1 Compounds or to the biological, physiological, mechanical, or other properties or compositions of any of the foregoing; (c) all invention disclosures, patent applications and other documents pertaining to the Sunesis LFA-1 Patents and/or other Sunesis LFA-1 Intellectual Property (including, subject to Section 2.2(d), any memoranda and legal opinions and other legal advice regarding the patentability of any inventions claimed or disclosed in the Sunesis LFA-1 Patents and/or any of the Sunesis LFA-1 Know-How, collectively, " LFA-1 Legal Records ") that would be necessary or useful in prosecuting, maintaining, and enforcing any of the Sunesis LFA-1 Patents; and (d) all written communications to and from the patent office in any jurisdiction pertaining to any of the Sunesis LFA-1 Patents, including all office actions, responses to office actions, notices of allowance, notices of issuance and certificates with respect to any of the Sunesis LFA-1 Patents. The LFA-1 Records include, without limitation, those items identified in Exhibit 1.9 .



1.10 " Liability " means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, or determined or determinable, including those arising under: (a) any applicable law, rule or regulation; (b) any order, writ, judgment, decree or award entered with or by any governmental, regulatory or administrative authority, agency or commission or any court, tribunal or judicial or arbitral body; and (c) any contract, agreement, arrangement, commitment or undertaking.



1.11 " Party " means SARcode and Sunesis, individually; and " Parties " means SARcode and Sunesis, collectively.



1.12 " Patent " means any patents and patent applications, together with all additions, divisions, continuations, continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent term extensions, supplemental protection certificates, renewals, and the like with respect to any of the foregoing.



1.13 " Permitted Encumbrances " means: (a) the security interest granted by SARcode to Sunesis pursuant to Section 6.2(b) of the License Agreement and Section 9.8 of each of the Promissory Notes; and (b) the license granted by SARcode to Sunesis under the Generally Applicable Sunesis LFA-1 Know-How pursuant to Section 2.4(b) of this Agreement and any sublicenses granted by Sunesis under and in accordance with such license.



1.14 " Product " means any pharmaceutical preparation which incorporates an LFA-1 Compound or other LFA-1 Antagonist as an active ingredient.



1.15 " Sunesis LFA-1 Intellectual Property " means Sunesis LFA-1 Patents and Sunesis LFA-1 Know-How.







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1.16 " Sunesis LFA-1 Know-How " means (a) all Know-How relating to the development or commercialization of any Product, including the Know-How set out on Exhibit 1.16 attached to this Agreement, that was licensed to SARcode by Sunesis pursuant to the License Agreement; and (b) all other Know-How, if any, owned or Controlled by Sunesis as of the Effective Date and that relates directly to the development or commercialization of any LFA-1 Antagonist or any Product; including, in the case of each of paragraphs (a) and (b), all intellectual property rights therein.



1.17 " Sunesis LFA-1 Patents " means all Patents in any country of the world that are identified in Exhibit 1.17 attached to this Agreement, together with all additions, divisions, continuations, continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent term extensions, supplemental protection certificates, renewals, and the like with respect to any of the foregoing.



1.18 " Third Party " means any person, corporation, joint venture or other business entity, other than Sunesis, SARcode and their respective Affiliates.



ARTICLE 2



ASSIGNMENT AND DELIVERY



2.1 Assignment . As of the Effective Date, and upon the terms and conditions set forth in this Agreement, Sunesis hereby irrevocably sells, assigns, conveys, and transfers to SARcode, and SARcode hereby acquires from Sunesis, free and clear of any Encumbrances (other than the Permitted Encumbrances), all right, title, and interest in, to and under the following assets (collectively, the " Transferred Assets "):



(a) the Sunesis LFA-1 Know-How;



(b) the Sunesis LFA-1 Patents;



(c) the LFA-1 Records; and



(d) together with all income, damages, royalties, and payments due or payable as of the Effective Date (other than any payments that have accrued but not been paid by SARcode to Sunesis under the License Agreement as of the Effective Date) or thereafter relating to the Sunesis LFA-1 Intellectual Property (including damages and payments for past or future infringements or misappropriations thereof), remedies against infringements or misappropriations of any of the Sunesis LFA-1 Intellectual Property (including the right to sue and recover damages for any past infringement or misappropriations thereof) and any and all other rights that now or hereafter may arise or be secured under the laws of any jurisdiction, with respect to any item within paragraphs (a) through (d) above.



The transfer of the Transferred Assets pursuant to this Agreement includes the assumption of all Liabilities related to the Transferred Assets that arise after the Effective Date, and shall not include the assumption of any Liability related to any Transferred Asset that is existing as of the Effective Date or that arose prior to the Effective Date (including payment that became due). The preceding sentence is not intended to limit: (A) any remedy of SARcode as a result of any breach of any representation or warranty of Sunesis made or undertaken in Section 6.1 or Section 6.2 below; (B) the Parties' respective indemnification obligations pursuant to Section 8.4 below; nor (C) any surviving indemnification obligations of either Party under the License Agreement pursuant to Section 3.1 below with respect to any matters existing as of or occurring prior to the Effective Date.







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2.2 Delivery .



(a) Promptly following the Effective Date, and in no event later than forty-five (45) days after the Effective Date, Sunesis shall deliver to SARcode all LFA-1 Records and all other physical embodiments of the Sunesis LFA-1 Know-How in accordance with Section 2.1(a) above; provided that the delivery of any LFA-1 Legal Records shall be subject to Section 2.2(d) below and any LFA-1 Records contained within Mixed Original Records (as further defined in Section 2.3(a) below) shall be handled in accordance with Section 2.3 below.



(b) Sunesis agrees to make its personnel reasonably available by telephone to answer questions regarding the Sunesis LFA-1 Intellectual Property for a period of ninety (90) days following the Effective Date. In addition, in the case of former employees and contractors of Sunesis, Sunesis agrees to use reasonable efforts to locate personnel who may be able to provide further assistance to SARcode in understanding, utilizing and assimilating the Sunesis LFA-1 Intellectual Property.



(c) If, within twelve (12) months after the transfer and delivery of the LFA-1 Records and other physical embodiments of the Sunesis LFA-1 Know-How in accordance with this Section 2.2, SARcode identifies specific items within such LFA-1 Records and/or Sunesis LFA-1 Know-How that were not delivered to SARcode, Sunesis shall use all reasonable efforts to deliver such items to SARcode promptly following SARcode's written request for such items. After the expiration of such twelve (12) month period, if SARcode identifies specific items within such LFA-1 Records and/or Sunesis LFA-1 Know-How that were not delivered to SARcode and SARcode would be materially impeded with respect to the development or commercialization of any LFA-1 Antagonist or Product by not having such item, Sunesis shall use reasonable efforts to deliver such items to SARcode as soon as practicable following SARcode's written request for such items. It is understood that, if any such items requested by SARcode pursuant to this Section 2.2(c) are LFA-1 Legal Records or included in the Mixed Original Records, Sunesis shall deliver to SARcode copies of the same in the same manner as described in Section 2.2(d) or Section 2.3(a) below, respectively. This Section 2.2(c) shall constitute Sunesis' sole liability and SARcode's sole remedy for any failure of Sunesis to deliver LFA-1 Records and/or Sunesis LFA-1 Know-How in accordance with the timing set forth in Section 2.2(a), provided that such failure was not the result of Sunesis' negligence or willful misconduct. For clarity, nothing in the preceding sentence is intended to limit: (i) Sunesis' obligations to assign and transfer to SARcode the LFA-1 Records and and/or Sunesis LFA-1 Know-How in accordance with Section 2.1(a) above, nor any remedies of SARcode in the event that Sunesis does so fail to assign and transfer the same to SARcode; (ii) Sunesis' obligations and SARcode ?s rights with respect to the Mixed Original Records under Sections 2.3(b) and 2.3(c) below; nor (iii) any obligations of Sunesis and/or any rights of SARcode pursuant to Section 5.1 below.



(d) With respect to any LFA-1 Legal Records, if the delivery of any such LFA-1 Legal Records by Sunesis to SARcode would be reasonably likely to result in a loss of Sunesis' attorney-client privilege with respect to such records or any limitation on either Party's ability to claim attorney-client privilege therein, then the Parties shall discuss in good faith any additional terms upon which such records will be delivered by Sunesis to SARcode to protect against such loss or limitation of attorney-client privilege, such as the execution of a reasonable common interest agreement mutually acceptable to the Parties or the like.







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2.3 Mixed Original Records .



(a) The Parties acknowledge and agree that, notwithstanding Section 2.1(c) above, the physical possession of certain records included in the LFA-1 Records may not be able to be delivered to SARcode because: (i) such records contain information pertaining to or embodying any Sunesis LFA-1 Know-How and/or Sunesis LFA-1 Patents and to other programs conducted by Sunesis (including any such programs conducted by Sunesis in collaboration with a Third Party); and/or (ii) it is a laboratory notebook or it is otherwise essential that the physical integrity of such records be maintained (collectively, " Mixed Original Records "). Sunesis shall provide SARcode with: (A) a complete inventory of all Mixed Original Records promptly following the Effective Date, and in no event later than forty-five (45) days following the Effective Date; and (B) copies (including in electronic form, to the extent such items exist in electronic form) of such Mixed Original Records (subject to redaction of any information unrelated to any of the Sunesis LFA-1 Know-How and/or Sunesis LFA-1 Patents) within ninety (90) days following the Effective Date.



(b) On and from the Effective Date, Sunesis shall use all reasonable efforts to continue to safely store and maintain the integrity of the Mixed Original Records and Sunesis shall not destroy or otherwise dispose of any such records without first complying with the procedures identified in Section 2.3(c) below.



(c) To the extent that Sunesis at any time after the Effective Date wishes to destroy or otherwise dispose of any Mixed Original Records, Sunesis shall notify SARcode in writing at least sixty (60) days prior to the date of such intended destruction or disposal and shall provide SARcode with an opportunity to review and have access to such Mixed Original Records and, to the extent that SARcode indicates that it wishes to obtain physical possession of such records, Sunesis will promptly deliver the same to SARcode, in each case subject to redaction of any information unrelated to any of the Sunesis LFA-1 Know-How and/or Sunesis LFA-1 Patents. To the extent that it is not reasonably practicable for Sunesis to redact from such Mixed Original Records all Third Party information (or information with respect to which Sunesis has confidentiality obligations imposed by a written agreement with a Third Party) that is unrelated to any of the Sunesis LFA-1 Know-How and/or Sunesis LFA-1 Patents, SARcode's review or taking possession of such Mixed Original Records under this Section 2.3 shall be contingent upon SARcode entering into an appropriate confidentiality agreement that reasonably addresses any written confidentiality obligations imposed by such Third Party on Sunesis with respect to relevant Mixed Original Records.







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2.4 License Grants.



(a) License to SARcode . Subject to the terms and conditions of this Agreement, Sunesis hereby grants to SARcode a non-exclusive, sublicensable, worldwide, royalty-free, fully-paid up and irrevocable right and license under any and all Patents Controlled by Sunesis or its Affiliates as of the Effective Date that cover the development, manufacture, use, sale, importation or other exploitation of any Product in order to research, develop, make, have made, use, offer for sale, sell, import and otherwise exploit Products.



(b) License to Sunesis . Subject to the terms and conditions of this Agreement, SARcode hereby grants to Sunesis a non-exclusive, sublicensable, worldwide, royalty-free, fully paid, and irrevocable right and license, under the Generally Applicable Sunesis LFA-1 Know-How to research, develop, make, have made, use, offer for sale, sell, import and otherwise exploit products other than Products by Sunesis, its successors, permitted assignees and/or collaboration partners.



ARTICLE 3



TERMINATION OF LICENSE AGREEMENT



3.1 Termination of License Agreement . Effective as of the Effective Date, notwithstanding the provisions set forth in the License Agreement, SARcode and Sunesis agree that the License Agreement shall be, and is hereby, terminated. SARcode and Sunesis further agree that, the survival provisions set forth in Article 11 of the License Agreement are hereby amended, such that only the following provisions of the License Agreement shall survive termination:



(a) Article 9, it being understood, however, that the Sunesis LFA-1 Know-How and LFA-1 Records shall as of the Effective Date no longer be Proprietary Information of Sunesis and Sunesis' use and disclosure of the Sunesis LFA-1 Know-How (including the Generally Applicable Sunesis LFA-1 Know-How) and LFA-1 Records following the Effective Date shall be governed solely by Section 7.1 of this Agreement;



(b) Sections 13.1, 13.2 and 13.3 (but only to the extent necessary to cover the performance of each Party under the License Agreement up to and including the termination of the License Agreement);



(c) Section 14.5 and 14.7; and



(d) any definition of capitalized terms that are used in any of the foregoing Articles and/or Sections, whether such capitalized terms are defined in Article 1 or any other provision of the License Agreement.



For the avoidance of doubt, all payment and reporting obligations of SARcode under the License Agreement (including pursuant to Sections 5.3, 6.3, 6.4, 7.1 and 8.1 of such agreement) shall terminate and be of no further force or effect as of the Effective Date.







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3.2 Promissory Notes .



(a) Concurrently with the termination of the License Agreement, SARcode and Sunesis shall amend and restate each promissory note issued by SARcode to Sunesis pursuant to Section 6.2 of the License Agreement (each, a " Promissory Note ," and collectively, the " Promissory Notes ") and each such amended and restated Promissory Note shall be substantially the same as the form of secured convertible promissory attached as Exhibit 3.2 to this Agreement.



(b) Notwithstanding termination of the License Agreement pursuant to Section 3.1 above or the amendment and restatement of the Promissory Notes pursuant to Section 3.2(a) above, each of Sunesis and SARcode hereby acknowledge and agree that neither the termination of the License Agreement nor the amendment and restatement of the Promissory Notes triggers an acceleration of a payment obligation of SARcode or any event of default or penalty on the part of SARcode under the Promissory Notes, including pursuant to the provision contained in clause (e)(ii) of Section 5 - "Acceleration" of each Promissory Note prior to the amendment and restatement of the same.



ARTICLE 4



CONSIDERATION



4.1 Fee . As consideration for the Transferred Assets and the rights granted by Sunesis to SARcode under this Agreement, SARcode will pay Sunesis a one-time payment in the amount of Two Million Dollars (US$2,000,000), which amount shall be payable by wire transfer in immediately available funds into an account designated by Sunesis in two installments as follows:



(a) One Million Eight Hundred Thousand Dollars (US$1,800,00
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