A definitive agreement, also called a “definitive purchase agreement,” “stock purchase agreement,” or “definitive merger agreement,” is a binding contract that records the final terms and conditions between two companies. These agreements are used between parties entering a merger, acquisition, divestiture, joint venture, or another form of strategic alliance. The terms and conditions may include assets purchased, purchase considerations, representations and warranties, closing conditions, etc.
There are two types of definitive agreements. 1) Share Purchase Agreement or Stock Sale, where the seller transfers the shares of the entity to the buyer. The buyer owns the assets and liabilities previously owned by the selling entity. 2) Asset Purchase Agreement, where the individual assets are transferred from the seller to the buyer, rather than the entire company. The seller remains the owner of the entity and the buyer merges the assets into his existing company or forms a new company with those assets.
Below is a list of common sections included in Definitive Agreements. These sections are linked to the below sample agreement for you to explore.
Portions Subject to Confidential Treatment Request Under Rule 24b-2
1311 Mamaroneck Avenue, Suite 310
White Plains, NY 10605 USA
303B College Road East
Princeton, NJ 08540 USA
This Definitive Agreement (the “Agreement”) is made as of the 27th day of June, 2012 (the “Effective Date”) by and between The Leukemia and Lymphoma Society, a New York nonprofit corporation with its principal place of business at 1311 Mamaroneck Avenue, White Plains, New York 10605, United States of America (“LLS”) and Celator Pharmaceuticals, Inc., a Delaware corporation with its principal place of business at 303B College Road East, Princeton, NJ 08540 (“Company”). LLS and Company are sometimes hereinafter referred to individually as the “Party” and together as the “Parties”.
WHEREAS, LLS is a national voluntary health agency which, among other activities encourages and sponsors research relating to leukemia, lymphoma, Hodgkin’s disease and myeloma and to increase understanding and public awareness of the disease by, among other means, making grants, business alliances to support research and education efforts to the public about blood cancers. To further this mission, LLS provides research funding to entities that can demonstrate through LLS’s review process that their proposed research project holds scientific promise to advance LLS’s effort to find treatments and cures for blood cancers and its complications.
WHEREAS, Company is in the business of developing and commercializing pharmaceutical products and/or biotechnology products and has received funding from LLS pursuant to Definitive Agreement dated as of January 15, 2009 as amended on September 4, 2009 (collectively the “2009 Agreement”) to conduct a human clinical trial of CPX-351 (cytarabine:daunorubicin);
WHEREAS, Company has submitted a project proposal for funding a Phase III clinical trial in persons with secondary acute myelogenous leukemia in order to accumulate data necessary to file a New Drug Application with the FDA attached hereto as Exhibit A (Phase III Clinical Trial Plan as laid out in Company Proposal), and such Clinical Trial Plan has been approved as the Research Program by LLS through its Therapy Acceleration Program Committee; and
WHEREAS, nothing in this Agreement shall restrict LLS from funding other research and development efforts, including without limitation efforts by other researchers, companies or entities that fall within the scope of the Research Program.
NOW, THEREFORE, in consideration of the mutual premises herein contained and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties agree as follows.
| 1. | Certain Definitions . |
1.1 “Confidential Information” means any scientific, technical, trade or business information possessed, obtained by, developed for or given to the other party which is treated by the disclosing party as confidential or proprietary including, without limitation, Proprietary Material, Research Results, research materials and developments, formulations, techniques, methodology, assay systems, formulae, procedures, tests, equipment, data, reports, know-how, sources of supply, patent positioning, relationships with consultants and employees, business plans and business developments, information concerning the existence, scope or activities of any research, development, manufacturing, marketing or other projects of either party, and any other confidential information about or belonging to either party’s suppliers, licensors, licensees, partners, affiliates, customers, potential customers or others. All information of a confidential or proprietary nature supplied in written, electronic, oral or visual form pursuant to this Agreement shall be considered as being Confidential Information.
1.2 “Deliverables” means any and all items prepared or required to be delivered in accordance with Exhibit B attached hereto and are collectively referred to herein as the Deliverables.
1.3 “Field” means acute myelogenous leukemia.
1.4 “First Commercial Sale” means the first sale for end use of the Product in a Major Market in the Field after receipt of the requisite regulatory approvals. Sales for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale.
1.5 “Intellectual Property Rights” means any and all rights in and to discoveries, concepts, ideas, Proprietary Material, developments, specifications, methods, drawings, designs, flow charts, diagrams, models, formulae, procedures, processes, schematics, specifications, algorithms, apparatus, inventions, ideas, know-how, materials, techniques, methodologies, modifications, improvements, works of authorship and data (whether or not protectable under patent, copyright, trade secrecy or similar laws), including Patents, utility models, and registered and unregistered designs, including mask works, copyrights, trade secrets, design history, manufacturing documentation, and any other form of protection afforded by law to inventions, models, designs, works of authorship, databases or technical information and applications and registrations with respect thereto.
1.6 “ Liquidity Event ” means (a) an acquisition or exclusive license or transfer of all or substantially all of the assets of Company relating to the Product, or (b) a transaction or series of transactions involving Company or its outstanding capital stock, whether by consolidation, merger, purchase of shares of capital stock or other reorganization or combination or otherwise, in which in each case the holders of the Company’s outstanding capital stock immediately prior to such transaction own, immediately after such transaction, securities representing less than fifty percent (50%) of the voting power of the entity surviving such transaction.
1.7 “Major Market” means each of the United States, a Major European Country or Japan. A “Major European Country” shall mean any of France, Germany, Italy, Spain or the United Kingdom.
1.8 “Milestones” means achievement of an agreed upon milestone pertaining to the Deliverables and Milestones as outlined in Exhibit B and herein referred collectively as the achievement of Milestones.
1.9 “Net Sales” means the gross amount invoiced on sales or other dispositions of the Product in the Field by Company and its affiliates from non-affiliate third party customers, less customary deductions as determined in accordance with Generally Accepted Accounting Principles (“GAAP”) and as generally and consistently applied throughout Company’s organization, limited to the following: (i) customary trade, quantity, or cash discounts and commissions to non-affiliated brokers or agents to the extent actually allowed and taken; (ii) amounts repaid or credited by reason of rejection or return; (iii) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a product which is paid by or on behalf of Company; and (iv) outbound transportation costs prepaid or allowed and costs of insurance in transit.
1.9.1 Should Product be in a combination package containing other therapeutically active materials than Product, the “Net Sales Price”, for the purpose of determining payments due to LLS on the Product within that combination package, shall be calculated by multiplying the Net Sales Price of that combination package by the fraction A/A+B; where A is the net selling price, during the period in question to which the payment refers, of the Product sold separately and B is the aggregate of the net selling prices, during the payment period in question, of the other therapeutically active materials sold separately.”
1.10 “Product” means Company’s proprietary compound identified as CPX-351, including any metabolites, prodrugs, free forms, salts, solvates, hydrates, anhydrous forms, optical isomers and polymorphs thereof.
1.11 “Project Inventions” means any and all new discoveries, concepts, ideas, Proprietary Material, developments, specifications, methods, drawings, designs, flow charts, diagrams, models, formulae, procedures, processes, schematics, specifications, algorithms, apparatus, inventions, ideas, know-how, materials, techniques, methodologies, modifications, improvements, works of authorship and data (whether or not protectable under patent, copyright, trade secrecy or similar laws and whether or not patentable or reduced to practice), know-how, materials, methods, models, procedures, processes, schematics, specifications, techniques, tools, and any other forms of technology that are conceived, created, discovered, developed, generated, made or reduced to practice or tangible medium of expression during the performance of this Agreement, whether solely by one or more employees or consultants of Company, solely by one or more employees or consultants of LLS, or jointly by one or more employees or consultants of Company and one or more employees or consultants of LLS, in each case relating to the Research Program and/or the Product, together with all related Intellectual Property Rights.
1.12 “Proprietary Material” means any and all (i) molecules and/or reagents owned by, licensed to or otherwise proprietary to Company, and (ii) derivatives, modifications, improvements, fragments, metabolites, analogs or homologs thereof, which could not have been discovered or made but for the use of Proprietary Materials.
1.13 “Research Program” means the clinical development activities based on the Company Proposal and certain other activities requested by LLS, including presentations to donors and other interested parties, which have been mutually agreed to by the Parties.
1.14 “Research Results” means all data sets, data analyses, reports detailing all optimized conditions and procedures, test results, laboratory notes, techniques, know-how, and any other results that are obtained in the performance of the Research Program.
1.15 “Research Advisory Committee” means an oversight group consisting of equal representation from LLS and Company and as further described in Section 3.
1.16 “Term” shall have the meaning set forth in Section 15.1.
1.17 “Total Funding” shall mean the total amount of funding received by Company under this Agreement and the 2009 Agreement.
| 2. | Research Program and Funding . |
2.1 The Funding and its Distribution . LLS agrees to provide funds (the “Funding”) to Company to partially fund the Research Program according to the timeline with specific Deliverables and Milestones and the budget attached hereto as Exhibit C. The sum total of the Funding shall not exceed Five Million U.S. Dollars (US$5,000,000) for the Phase III clinical trial and shall be paid in accordance with the amounts and achievement of Milestones. The Deliverables and the Milestone payments may be revised by written agreement of the Parties from time to time, as determined in the reasonable discretion of the LLS, provided that the total amount of the Funding requested by Company to conduct the Research Program shall not be increased and the timely payment of each of these amounts is subject to the availability of funds from LLS. If any delay in payment interferes with Company’s ability to continue the Research Program or meet a Milestone in a timely manner, Company may terminate this Agreement pursuant to Section 15.4.
2.2 Use of Funding . Funding shall be used exclusively for the payment or reimbursement of the expenses of clinical development activities of the Research Program by Company as specified in and in accordance with and subject to the terms and conditions contained in this Agreement. Should Funding exceed the costs incurred or committed by Company for the Research Program, upon completion of the Research Program the Parties agree to discuss the use of excess Funding for other Company programs in the Field or which may fall within the mandate of LLS during the meeting referenced in Section 7.1, provided, that in the event the Parties do not come to mutually agreeable terms for a new agreement during such meeting, and if such agreement is not documented through a written agreement signed and delivered on behalf of the parties within thirty (30) days thereafter, then excess Funding (after taking into account all committed but not paid or accrued expenditures, reasonably agreed upon by the Parties in good faith) shall be returned to LLS within forty-five (45) days of the expiration or termination of this Agreement.
2.3 Costs-Permissible and Impermissible . Company hereby agrees to limit the expenditure of Funding as set forth in this Section 2.3.
2.3.1 Permissible Costs . Company and LLS have agreed that Funding shall be used as per the budget attached hereto as Exhibit C. Should additional expenditures directly related to the performance of the Research Program be required, Company shall so notify the Research Advisory Committee, and the Parties agree to collaborate to determine if these expenditures shall be considered permissible costs.
2.3.2 Impermissible Costs . Company and LLS will collaborate to identify impermissible costs. Without limitation of the foregoing, the following costs will be impermissible costs, except as the parties otherwise agree in writing, (a) capital costs, including but not limited to, purchase of land, buildings, construction and equipment; and (b) other costs collaboratively identified by the parties in writing as impermissible.
2.4 Donor Designated Funds . Where Funding is, in part or whole, provided by a donor to LLS who requests that the donated funds be restricted for support of Company, Company agrees as a condition to receiving Funding under this Agreement to participate in promotional/publicity activities (including but not limited to meeting the Board of Trustees of the donor’s affiliated organization, being interviewed for their newsletter, etc.) upon reasonable advance notice and such participation shall not be unreasonably withheld or delayed, provided, however, Company shall have no obligation to publish or disseminate information that contains Company Confidential Information or proprietary know-how or trade secrets or will compromise securing patent protection of Project Inventions or to participate in any promotional/publicity activities that violate federal or state law. Company shall acknowledge the support of LLS in all such activities. Notwithstanding the foregoing, Company shall be obligated to participate in no more than two (2) such promotional/publicity activities per calendar year, and Company’s participation shall be in compliance with all obligations of Company under applicable securities and stock exchange rules and regulations. Additional meeting requests shall be discussed and mutually agreed upon by both Parties.
2.5 Presentations . As a condition to receiving Funding under this Agreement, Company agrees to provide, upon reasonable advance notice, a representative(s) acceptable to LLS for internal and external presentations or meetings regarding the Research Program, provided, however, Company shall have no obligation to publish or disseminate information that contains Company Confidential Information or proprietary know-how or trade secrets or will compromise securing patent protection of Project Inventions. Such Company representative(s) shall discuss the presentation or meeting with the Team Leaders (as defined in Section 3) and designated Society representatives at least ten (10) days prior to the presentation. Company shall acknowledge the support of LLS in all such presentations. Notwithstanding the foregoing, Company shall be obligated to participate in no more than two (2) LLS presentations or meetings regarding the Research Program per calendar year. Additional presentation requests shall be discussed and mutually agreed upon by both Parties.
2.6 Funding Audit . LLS will have the right, during normal business hours and upon at least ten (10) business days’ written notice, to have a mutually acceptable independent audit firm inspect Company’s records as they relate to the Funding to verify that Company has complied with Sections 2.2. and 2.3. The independent audit firm will be required to agree in writing with Company to comply with confidentiality restrictions at least as stringent as those set forth in this Agreement and to provide a non-confidential summary of the results of the audit to both of the Parties. In the event that any such examination shows a misuse of funds in excess of (i) five percent (5%) for any
twelve (12) month period, then Company shall pay the cost of the examination as well as reimburse the full amount equal to the expenditures of Funding spent but not used by Company in accordance with Sections 2.2 and 2.3, plus ten percent (10%). For a misuse of funds of less than five percent (5%), Company shall pay the difference within thirty (30) days without interest charge. In the event that either party disputes the independent audit firm’s determination, the dispute shall be resolved pursuant to the provisions of Section 14. Company agrees to maintain books and records documenting the expenditure of the Funding in accordance with Generally Accepted Accounting Principles (“GAAP”) as generally and consistently applied throughout Company’s organization and will make these books and records relating to the Funding available to LLS and its representatives for review at the place where such books and records are maintained by Company, upon reasonable request for a period of three (3) years following expiration or termination of this Agreement. LLS shall have the right to have any financial report or document related to the expenditure of the Funding reviewed by external consultants and may include external consultants in any meeting or teleconference, subject to execution by such external consultants of appropriate confidentiality agreements with Company and mutual agreement by the parties that there is no conflict of interest by the external consultants.
2.7 Expanded Access/Compassionate Use Program . During the course of the Research Program, the Parties will work together will work together in an effort to create a plan for expanded access/compassionate use that would provide the neediest patients with the opportunity to receive the Product; provided, however, that only upon mutual agreement of the Parties will any such plan be implemented. The cost to develop such plan will be the responsibility of LLS.
| 3. | Research Advisory Committee . |
3.1 Research Advisory Committee . It is agreed that the Parties shall form a Research Advisory Committee for the Research Program. The Research Advisory Committee shall consist of four (4) members, two (2) members to be appointed by each Party. Each Party may appoint or substitute any of its members serving on the Research Advisory Committee by written notice to the other Party. One (1) representative from each Party shall be designated as Team Leader. LLS shall have the right to appoint one (1) of its members to be the chairperson of the Research Advisory Committee to oversee the administration of the Research Advisory Committee. A listing of the initial members of the Research Advisory Committee is included as Exhibit D.
3.2 Meetings . The Research Advisory Committee shall hold meetings (in person or by teleconference) at such times and places as the Team Leaders may mutually agree, provided, meetings shall be held at least every three (3) months during the Term, and more frequently if requested by either Team Leader. The first meeting of the Research Advisory Committee shall be held within ninety (90) days of the Effective Date. The quorum for Research Advisory Committee meetings shall be two (2) members, provided there is at least one member from each Party. The Research Advisory Committee shall keep minutes of its meetings which shall reflect in reasonable detail all actions recommended or taken. Such minutes shall not be deemed to amend or waive any provisions of this Agreement. From time to time, between scheduled meetings the Research Advisory Committee shall consult with Company to confirm that commercially reasonable efforts are ongoing to ensure the achievement of Milestones and to ensure that any Project Inventions generated from the Research Program are exploited so that public utilization will result therefrom. LLS shall have the
right to invite external parties/consultants to any meeting or teleconference, provided that such external consultants are under confidentiality terms no less stringent than this Agreement, subject to execution by such external parties/consultants of appropriate confidentiality agreement with Company and mutual agreement that there is no conflict of interest by external parties/consultants.
3.3 Recommendations . The Research Advisory Committee shall be an advisory body, with recommendations rendered by unanimous vote. Implementation of any recommendations of the Research Advisory Committee is subject to the prior approval of an authorized officer of LLS and the Chief Executive Officer or Board of Directors of Company. Notwithstanding the foregoing, if Company proposes to make any material change in the Research Program that is not reasonably satisfactory to the Research Advisory Committee, LLS shall have the right to terminate this Agreement and, upon such termination, LLS shall have the rights set forth in Section 15.5.
3.4 Responsibilities . Company and LLS shall be kept informed by the Team Leaders of the Research Advisory Committee of material matters relating to the Research Program, including, but not limited to: (a) the progress of the Research Program, including Research Results, or summaries thereof, deemed relevant by either Team Leader; (b) recommendations regarding modifications or amendments to the Research Program from time to time in such manner as may be appropriate based on any interim Research Results, and (c) substantiation regarding the accomplishment of Milestones. This reporting responsibility will be a communication that will take place no less than once a quarter in the form of a quarterly report as described in Section 4 or as is necessary to inform LLS of a potential delay in a Deliverable or Milestone. While Company maintains all control over the Research Program, the Research Advisory Committee jointly makes decisions about changes in direction of the Research Program, the outcomes of which may determine LLS’s remaining commitment to fund the Research Program.
4.1 Quarterly Reports . Company shall submit, in addition to reports of the achievement of any Milestones and Deliverables, to the Research Advisory Committee within thirty (30) days after the end of each calendar quarter during the Term the following reports which together herein defined as the Quarterly Report (“Quarterly Report”):
(a) a confidential written report documenting the status and progress of the Research Program conducted therein during such period, including a description of Milestones and Deliverables achieved, and a summary of Research Results together with copies of relevant data supporting significant findings (“Progress Report”) as agreed upon by LLS and Company, and
(b) a general description of any Project Inventions (“Invention Report”),
(c) a detailed report of expenditures for the Research Program (“Expenditure Report”), and
The Quarterly Report will provide an opportunity for the Parties to review the progress of the Research Program towards the Milestones and Deliverables and discuss any need for revision of the timeline for Deliverables and Milestones or directions of the Research Program that may be appropriate. LLS shall have the right to have any Quarterly Report or other data submitted by
Company reviewed and validated by external consultants, provided that such external consultants are under confidentiality terms no less stringent than this Agreement, and may include external consultants in any meeting or teleconference, subject to execution by such external consultants of appropriate confidentiality agreement with Company and mutual agreement that there is no conflict of interest by external parties/consultants. If following the quarterly review LLS requests a meeting (either in person or via telephone) to discuss the progress and results of the Research Program with Company, Company shall make appropriate representative(s) available for such reasonably requested meetings at mutually convenient times and locations within ten (10) days of the request.
4.2 Financial Reports . Company shall submit its company financial reports to LLS every six (6) months during the Term. Furthermore, if, in an effort to raise investment capital, Company issues any document, including but not limited to an offering prospectus or private placement memorandum, during the Term, it shall promptly submit a copy of such document to LLS. Company shall make its financial representatives available, in person or by phone, to explain and discuss such financial reports or documents, as reasonably requested by LLS. LLS shall have the right to have any financial report or document submitted by Company reviewed by external consultants and may include external consultants in any meeting or teleconference, subject to execution by such external consultants of appropriate confidentiality agreements with Company and mutual agreement that there is no conflict of interest by external parties/consultants.
4.3 Company Status Reports .
(a) Within ten (10) days after the end of each calendar month, Company will furnish to the Research Advisory Committee a report setting forth the patients accrued by Company for the Research Program on a monthly basis versus Company’s projected rates of patient accrual.
(b) Within ten (10) days of becoming aware thereof, Company must report to LLS any event that Company believes will materially impair or enhance Company’s ability to conduct the Research Program (“Company Status Report”).
4.4 Upon Expiration or Termination of this Agreement : Company shall submit to LLS the following reports which together herein defined as the Final Report (“Final Report”): (a) within thirty (30) days of the expiration or termination of this Agreement, a written report summarizing the status and progress of the Research Program conducted since the Effective Date of the Agreement, including a description of Milestones and Deliverables achieved, and a summary of significant Research Results together with copies of relevant data (not previously submitted) supporting significant findings (“Final Progress Report”), and (b) within thirty (30) days of the expiration or termination of this Agreement, a general description of any Project Inventions since the Effective Date of the Agreement (“Final Invention Report”), and (c) within thirty (30) days after all invoices for Research Program expenses have been submitted to Company, a detailed report of expenditures of the Funding for the Research Program since the Effective Date (“Final Expenditure Report”).
| 5. | Conduct of Research Program . |