EXHIBIT 10.1
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (this "Agreement") is dated as
of May 16, 2005 (the "Effective Date") and is made by and between LEXICON
GENETICS INCORPORATED, a corporation organized under the laws of the State of
Delaware, United States of America ("Lexicon"), N.V. ORGANON, a registered
company organized under the laws of the Netherlands ("Organon"), and (only with
respect to Section 9.4) INTERVET Inc., a corporation organized under the laws of
the State of Delaware, United States of America ("Intervet"). Lexicon and
Organon are sometimes referred to herein individually as a "party" and
collectively as the "parties."
R E C I T A L S
WHEREAS, Lexicon and Organon are each in the business of discovering,
developing and commercializing products for the prevention or treatment of human
diseases and conditions;
WHEREAS, Lexicon has technology for and expertise in the identification
and validation of gene and protein targets for use in the discovery of such
products, including potential antibody and protein therapeutics, as well as
expertise in the research and development of such products;
WHEREAS, Organon has expertise in the research, development and
manufacture of such products; and
WHEREAS, Lexicon and Organon are interested in collaborating in the
discovery and development of antibody and protein therapeutics for selected gene
and protein targets;
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings specified below:
1.1 "Acquiring Party" has the meaning specified in Section 17.3 hereof.
1.2 "Adverse Drug Reaction" means any untoward medical occurrence in a
patient or subject who is administered a Collaboration Product or Opt-out
Product, whether or not considered related to the Collaboration Product or
Opt-out Product, as applicable, including any undesirable sign (including
abnormal laboratory findings of clinical concern), symptom or disease temporally
associated with the use of such Collaboration Product or Opt-out Product.
1.3 "Affiliate" means any corporation, company, partnership, joint
venture or firm that controls, is controlled by or is under common control with
a party to this Agreement. For purposes hereof, "control" means (a) in the case
of a corporate entity, direct or indirect ownership of more than fifty percent
(50%) of the stock or shares entitled to vote for the election of directors; and
(b) in the case of a non-corporate entity, direct or indirect ownership of more
than fifty percent (50%) of the equity interests with the power to direct the
management and policies of such non-corporate entity.
1.4 "Affiliated Subcontractor" has the meaning specified in Section
2.2.4 hereof.
1.5 "Allowable Costs" means the sum of the following (without any item
being accounted for more than once): (a) Target Function Discovery Program
Costs; (b) Biotherapeutics Research Program Costs; (c) Development Costs; (d)
Product Supply Costs; and (e) reasonable out-of-pocket expenses associated with
Patent Prosecution of Program Patent Rights. For clarity, Allowable Costs shall
not include costs and expenses attributable to the research, development,
manufacture or supply of Opt-out Products from and after the effectiveness of
the relevant Opt Out.
1.6 "Antibody" means a composition comprising a whole antibody, or any
fragment thereof.
1.7 "Antisense Compound" means a composition comprising an
oligonucleotide or oligonucleotide analog, whether single or double-stranded,
that hybridizes to a selected mRNA or otherwise interferes with translation or
transcription of such mRNA.
1.8 "Background Materials" means Lexicon Background Materials and
Organon Background Materials.
1.9 "Background Technology" means Lexicon Background Technology and
Organon Background Technology.
1.10 "Back-up Product" means a Collaboration Product selected for
Development by the Joint Management Committee as a possible [**] a
previously-designated Collaboration Product for the same Program Target;
provided, that a Collaboration Product may be deemed to have been selected as a
[**] a previously-designated Collaboration Product for the same Program Target
only if both Collaboration Products [**]. For clarity, a Collaboration Product
selected as a possible [**] a previously-designated Collaboration Product shall
be a Back-up Product if it [**].
1.11 "BLA" means a Biologics Licensing Application (as defined in the
FDC Act) filed with the FDA and any other equivalent marketing authorization
application or other license, registration or other application seeking approval
from a Regulatory Authority to market a Collaboration Product in the
Collaboration Field in any country or region within the Territory.
1.12 "Biotherapeutics Research" means the conduct of activities
relating to the generation of Antibodies, Antisense Compounds and Proteins
relating to Program Targets that have not become Opt-out Targets and the
identification, characterization, selection, optimization and research of
Program Antibodies, Program Antisense Compounds and Program Proteins prior to
their designation as Collaboration Products. Biotherapeutics Research may
include, without limitation, (a) the expression of Proteins comprising Program
Targets, (b) the generation of Program Antibodies that bind to Program Targets,
(c) the generation of Antisense Compounds that hybridize with mRNA encoded by
Program Targets or otherwise interfere with translation or transcription of such
mRNA, (d) the development of assays for Program Antibodies, Program Antisense
Compounds and Program Proteins to, inter alia, confirm the activity of such
Program Antibodies, Program Antisense Compounds or Program Proteins, and (e) the
optimization of such Program Antibodies, Program Antisense Compounds or Program
Proteins, as the case may be, in each case with the objective of identifying
Program Antibodies, Program Antisense Compounds and Program Proteins that are
suitable for Development and meet the criteria required for designation as
Collaboration Products.
1.13 "Biotherapeutics Research Plan" means the plan to be developed by
the Joint Research Committee and approved by the Joint Management Committee for
each Contract Year in accordance with Section 5.2 hereof.
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1.14 "Biotherapeutics Research Program" means the conduct of
Biotherapeutics Research activities in accordance with an applicable
Biotherapeutics Research Plan.
1.15 "Biotherapeutics Research Program Costs" means costs and expenses
that are incurred after the Effective Date by either party and Affiliated
Subcontractors in performing Biotherapeutics Research activities in accordance
with an applicable Biotherapeutics Research Plan and associated budget approved
by the Joint Management Committee, including:
(a) the costs of internal scientific, medical, technical and
managerial personnel engaged in Biotherapeutics Research activities
(together with all associated laboratory supplies, facilities and
occupancy costs), which costs shall be determined based on FTE Costs,
unless another basis is otherwise agreed upon by the parties in
writing;
(b) out-of-pocket expenditures directly related to such
Biotherapeutics Research activities, including payments to contract
research organizations, consultants and other subcontractors, subject
to Section 2.2.4; and
(c) any other costs expressly provided for and actually
incurred in accordance with such Biotherapeutics Research Plan.
1.16 "Change in Control" means, with respect to either party, the
occurrence of either (a) a Third Party becoming the "beneficial owner" (as
defined in the rules and regulations promulgated under the Securities Exchange
Act of 1934), directly or indirectly, of securities of such party representing
fifty percent (50%) or more of the combined voting power of such party's
then-outstanding voting securities or (b) the sale by such party, in one or more
related transactions, of all or substantially all of such party's property and
assets to any Third Party.
1.17 "cGMP Requirements" means the FDA's current good manufacturing
practice requirements as promulgated under the FDC Act at 21 C.F.R. (parts 210
and 211), and as further defined by FDA guidance documents, as amended from time
to time.
1.18 "Collaboration" means the program described in this Agreement in
which Lexicon and Organon will collaborate to identify, characterize and carry
out the Biotherapeutics Research, Development and Manufacturing of Antibodies
(and, if appropriate, Antisense Compounds) that act through and Proteins that
are encoded by Program Targets for use in the Collaboration Field.
1.19 "Collaboration Committee" means the Joint Management Committee,
Joint Research Committee or Joint Development Committee.
1.20 "Collaboration Field" means the diagnosis, prevention, control and
treatment in humans of any disease or condition.
1.21 "Collaboration Product" means a Program Antibody, Program
Antisense Compound or Program Protein that has been selected for Development by
the Joint Management Committee in accordance with Section 3.4 hereof and that
has not become an Opt-out Product.
1.22 "Collaboration Term" has the meaning specified in Section 2.1.2
hereof.
1.23 "Confidential Information" means any proprietary information and
data received by a party or its Affiliates (the "Receiving Party") from the
other party or its Affiliates (the "Disclosing Party") in connection with this
Agreement (including, without limitation, any research, testing, clinical,
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regulatory, marketing or other scientific or business information, plans, or
data pertaining to any Collaboration Product or Opt-out Product of the
Disclosing Party). Notwithstanding the foregoing, Confidential Information shall
not include any part of such information or data that:
(a) is or becomes part of the public domain other than by
unauthorized acts of the Receiving Party or its Affiliates;
(b) can be shown by written documents to have been already in
the possession of the Receiving Party or its Affiliates prior to
disclosure under this Agreement, provided such Confidential Information
was not obtained directly or indirectly from the Disclosing Party under
an obligation of confidentiality;
(c) can be shown by written documents to have been disclosed
to the Receiving Party or its Affiliates by a Third Party, provided
such Confidential Information was not obtained directly or indirectly
from the Disclosing Party under an obligation of confidentiality; or
(d) can be shown by written documents to have been
independently developed by the Receiving Party or its Affiliates
without use of, or access to, Confidential Information of the
Disclosing Party.
Specific Confidential Information of a Disclosing Party shall not be deemed to
come under the foregoing exceptions merely because it is embraced by more
general information that is or becomes part of the public domain, or is known
by, disclosed to or independently developed by the Receiving Party.
1.24 "Continuing Party" has the meaning specified in Section 10.1
hereof.
1.25 "Contract Year" means (a) with respect to the first Contract Year,
the period beginning on the Effective Date and ending on December 31, 2005 (the
"First Contract Year"), and (b) with respect to each subsequent Contract Year,
the twelve (12) month period beginning on the day following the end of the First
Contract Year and each succeeding twelve (12) month period thereafter. Each
Contract Year (other than the First and last Contract Year, as applicable) shall
be divided into four (4) "Contract Quarters" comprised of successive three (3)
month periods. In the First Contract Year, the first Contract Quarter shall
begin on the Effective Date and end on June 30, 2005.
1.26 "Control" or "Controlled" means, with respect to any (a) material,
document, item of information, method, data or other know-how or (b) Patent
Right or other intellectual property right, the possession (whether by ownership
or license, other than by a license granted pursuant to this Agreement) by a
party or its Affiliates of the ability to grant to the other party access,
ownership, a license or a sublicense as provided herein under such item or right
without violating the terms of any agreement or other arrangement with any Third
Party as of the time such party would first be required hereunder to grant the
other party such access, ownership, license or sublicense.
1.27 "Cost Sharing Ratio" means (a) with respect to Lexicon, fifty
percent (50%), and (b) with respect to Organon, fifty percent (50%), subject, in
each case to adjustment in accordance with Section 11.4.
1.28 "Cover," "Covered" or "Covering" means, with respect to a Patent
Right, that, but for rights granted to a person or entity under such Patent
Right, the practice by such person or entity of an invention claimed in such
Patent Right would infringe a Valid Claim included in such Patent Right, or in
the case of a Patent Right that is a patent application, would infringe a Valid
Claim in such patent application if it were to issue as a patent.
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1.29 "Development" or "Develop" means the conduct of all tests,
clinical and other studies and other activities (including test method
development, toxicology studies, statistical analysis and report writing,
preclinical and other testing, packaging and regulatory affairs, product
approval and registration activities) set forth in, or required to obtain the
information set forth in, applicable Development Plan(s), including such tests,
studies (including Post-Approval Studies) and other activities as may be
required or recommended from time to time by any Regulatory Authority to obtain,
maintain or expand Regulatory Approval of a Collaboration Product in the
Collaboration Field, but excluding any (a) Post-Approval Studies that are not so
required or recommended by the applicable Regulatory Authority and (b) such
studies which are required for purposes of obtaining or maintaining a pricing or
reimbursement approval.
1.30 "Development Costs" means the costs and expenses that are incurred
by either party or their Affiliated Subcontractors in the Development of a
Collaboration Product in accordance with an applicable Development Plan and
associated budget approved by the Joint Management Committee, including (without
duplication):
(a) the costs of internal scientific, medical, technical and
managerial personnel engaged in Development activities with respect to
such Collaboration Product (together with all associated laboratory
supplies, facilities and occupancy costs), in each case to the extent
not accounted for in other provisions of this definition (e.g., in
Manufacturing Development Costs under clause (c) below or in Product
Supply Costs under clause (e) below), which costs shall be determined
based on FTE Costs, unless another basis is otherwise agreed upon by
the parties in writing;
(b) out-of-pocket expenditures directly related to the
Development of such Collaboration Product, including (i) payments to
investigators, contract research organizations, consultants and other
subcontractors for preclinical studies, pharmacodynamic and
pharmacokinetic studies, toxicology studies, data management,
statistical design, programming and analysis, clinical studies,
clinical trial management, document preparation and review, subject
recruitment and reimbursement, insurance, contract negotiation and
travel relating to such activities; (ii) payments to investigators,
contract research organizations, consultants and other subcontractors
in connection with the preparation, filing and submission of INDs, BLAs
and other regulatory filings with Regulatory Authorities (including
pharmacoeconomic studies and any other clinical studies reasonably
necessary for Regulatory Approval by relevant Regulatory Authorities to
sell such Collaboration Product in a given country); and (iii) filing,
submission and similar fees payable to Regulatory Authorities in
connection with the preparation, filing and submission of such INDs,
BLAs and other regulatory filings; in each case, subject to Section
2.2.4;
(c) Manufacturing Development Costs relating to such
Collaboration Product;
(d) out-of-pocket expenditures under any Third Party licenses
related to the Development of such Collaboration Product entered into
(i) prior to the Effective Date and disclosed to the other party prior
to the Effective Date or (ii) in accordance with Section 2.8, in each
case other than royalty and other amounts paid to Third Parties in
connection with the commercialization of such Collaboration Product or
otherwise payable with respect to activities attributable to a given
country and occurring after Regulatory Approval of such Collaboration
Product in such country;
(e) the costs and expenses of clinical supplies and related
charges directly related to the Development of such Collaboration
Product as set forth in the Development Plan, including: (i) the
Product Supply Costs of clinical supplies of such Collaboration
Product; (ii) costs and
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expenses incurred to purchase or package comparator or combination
drugs or devices; and (iii) costs and expenses of disposal of clinical
samples; subject, as applicable, to Section 2.2.4; and
(f) any other costs expressly provided for and actually
incurred in accordance with such Development Plan.
1.31 "Development Plan" means the plan(s) to be developed by the Joint
Development Committee and approved by the Joint Management Committee for each
Contract Year [**] with respect to the Development of a Collaboration Product in
accordance with Section 6.3 hereof.
1.32 "Development Program" means the conduct of Development activities
with respect to a Collaboration Product in accordance with an applicable
Development Plan.
1.33 "Diligent Efforts" means the carrying out of obligations or tasks
by a party (or, as applicable, its Affiliates) in a sustained manner using good
faith commercially reasonable and diligent efforts, which efforts shall be
consistent with the exercise of prudent scientific and business judgment in
accordance with the efforts such party devotes to products or research,
development or marketing projects of similar scientific and commercial
potential. Diligent Efforts requires that the party or its applicable
Affiliates: (a) promptly assign responsibility for such obligations to specific
employees who are held accountable for progress and monitor such progress on an
on-going basis, (b) set and consistently seek to achieve specific and meaningful
objectives for carrying out such obligations, and (c) consistently make and
implement decisions and allocate resources designed to advance progress with
respect to such objectives.
1.34 "Disclosing Party" has the meaning specified in Section 1.23
hereof.
1.35 "Effective Date" means the date specified in the initial paragraph
of this Agreement.
1.36 "EMEA" means the European Agency for the Evaluation of Medicinal
Products, or any successor thereto.
1.37 "Event of Default" means an event described in Section 16.2
hereof.
1.38 "FDA" means the United States Food and Drug Administration, or any
successor thereto.
1.39 "FDC Act" means the United States Food, Drug and Cosmetic Act (or
any successor thereto), as amended, and the rules and regulations promulgated
thereunder.
1.40 "First Commercial Sale" means the first sale for use or
consumption by the general public of a Collaboration Product or Opt-out Product
in a country after Regulatory Approval has been obtained in such country. For
clarity, First Commercial Sale shall not include the sale of any Collaboration
Product or Opt-out Product for use in clinical trials or for compassionate use
prior to the approval of a BLA.
1.41 "FTE" means a full-time-equivalent person-year of scientific,
technical or managerial work on or directly related to Target Function Discovery
Program, Biotherapeutics Research or Development activities, as applicable.
1.42 "FTE Costs" means the amounts (which amounts include salaries,
fringe benefits, overtime and all other costs of employing FTEs, including
overhead such as laboratory supplies, facilities
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and occupancy costs) determined by multiplying (a) the number of FTEs allocated
by a party or its Affiliated Subcontractor(s) during the relevant time period,
subject to any limitations set forth in the applicable Biotherapeutics Research
Plan or Development Plan or otherwise established by the Joint Management
Committee, by (b) the applicable FTE Rate(s).
1.43 "FTE Rate" means the agreed-upon cost per FTE by functional area,
to be adjusted annually (beginning in January 2006) for inflation using the
latest available U.S. Producer Price Index for Total Manufacturing Industries,
unadjusted (PCUOMFG#) as a simple percentage. Such adjustments shall be the
responsibility of the Joint Management Committee. The initial FTE Rate is [**]
on a per annum basis for the following areas: Biotherapeutics Research,
preclinical Development, clinical Development, regulatory affairs, technical
development, process development, technical transfer, project management and
drug safety and quality assurance. The Joint Management Committee shall approve
common FTE Rates for any new functional areas that come within the scope of the
Collaboration. Notwithstanding the foregoing, if [**], then, [**].
1.44 "GAAP" means United States or international generally accepted
accounting principles, as they exist from time to time, consistently applied.
1.45 "IND" means an Investigational New Drug application filed with the
FDA or a similar application for the clinical testing of a Collaboration Product
in human subjects filed with a foreign Regulatory Authority.
1.46 "Joint Development Committee" has the meaning specified in Section
3.1.3.
1.47 "Joint Development Project Team" has the meaning specified in
Section 3.1.3.
1.48 "Joint Management Committee" has the meaning specified in Section
3.1.1 hereof.
1.49 "Joint Marketing/Development Collaborator" has the meaning
specified in Section 8.3 hereof.
1.50 "Joint Marketing/Development Collaborator Revenue" means all
license fees, royalties, milestone payments and other income or items of value
(including, without limitation, any premium received on an equity investment in
Lexicon, Organon or their respective Affiliates, as the case may be, by such
Joint Marketing/Development Collaborator) received from a Joint
Marketing/Development Collaborator in respect of a Collaboration Product (or an
Opt-out Product for which the parties entered into a definitive agreement with
such Joint Marketing/Development Collaborator prior to the effectiveness of such
Opt Out, but only with respect to countries within the Territory covered by such
definitive agreement), less any amounts specifically incurred in connection with
acquiring such revenue (e.g., attorneys' fees to establish underlying agreements
with a Joint Marketing/Development Collaborator or any potential Joint
Marketing/Development Collaborator) and less any reasonable amounts of indemnity
actually paid by either party under any agreements with a Joint
Marketing/Development Collaborator.
1.51 "Joint Research Committee" has the meaning specified in Section
3.1.2 hereof.
1.52 "Joint Research Project Team" has the meaning specified in Section
3.1.2 hereof.
1.53 "[**]" means [**].
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1.54 "Laws" means all laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
domestic or foreign.
1.55 "Level 1 Phenotypic Analysis" means the analyses of the phenotypes
of Mutant Mice described in Exhibit 1.55.
1.56 "Level 2 Phenotypic Analysis" means any one or more of the
analyses of the phenotypes of Mutant Mice described in Exhibit 1.56.
1.57 "Lexicon Background Materials" means any Antibodies, Antisense
Compounds, Proteins, Mutant Mice, reagents, assays or other materials that are
(a) necessary or useful for the conduct of the Collaboration, (b) Controlled by
Lexicon, (c) utilized in the Collaboration (but only to the extent so utilized)
and (d) either in Lexicon's or any of its Affiliates' possession as of the
Effective Date or are discovered or acquired by Lexicon or any of its Affiliates
during the Collaboration Term but outside of the conduct of the Collaboration.
Lexicon Background Materials excludes Program Targets, Program Antibodies,
Program Antisense Compounds and Program Proteins.
1.58 "Lexicon Background Technology" means any inventions, information,
methods, know-how, trade secrets or data that (a) are necessary or useful for
the performance of the Collaboration, (b) are Controlled by Lexicon, (c) are
utilized in the Collaboration (but only to the extent so utilized) and (d)
either are in Lexicon's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by Lexicon or any of its Affiliates during
the Collaboration Term but outside of the conduct of the Collaboration. Lexicon
Background Technology includes any inventions, information, method, know-how,
trade secrets or data, other than Program Technology, that are first identified
or discovered in the conduct of the Target Function Discovery Program. Lexicon
Background Technology also includes any inventions, information, methods,
know-how, trade secrets or data (i) relating to research and development methods
and processes first identified or discovered by Lexicon or its Affiliated
Subcontractor(s) in the course of performing Biotherapeutics Research or
Development activities under the Collaboration or (ii) relating to manufacturing
and analytical methods and processes first identified or discovered by Lexicon
or its Affiliated Subcontractor(s) in the course of Manufacture of a
Collaboration Product, in each case that are not Program Technology.
1.59 "Lexicon Product" means any Collaboration Product as to which
Organon has Opted Out in accordance with Section 10.1 and, if applicable [**],
any Program Antibodies, Program Antisense Compounds or Program Proteins that
have not been designated for Development relating to the same Opt-out Target.
1.60 "Lexicon Opt-out Target" means any Program Target as to which
Organon has Opted Out in accordance with Section 10.1.
1.61 "Major Market" means the United States, the European Union (under
the centralized process or any other process), Germany, the United Kingdom,
France, Italy, Spain or Japan.
1.62 "Manufacturing" or "Manufacture" means all activities set forth in
the applicable Manufacturing Plan associated with the production, processing,
filling, finishing, packaging, labeling, shipping and storage of Collaboration
Products in the Collaboration Field, including stability testing, formulation,
manufacturing process development, process validation, manufacturing scale-up,
preclinical, clinical and commercial manufacture and analytical development and
quality assurance and quality control activities.
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1.63 "Manufacturing Development Costs" means, with respect to the
Development of a Collaboration Product as set forth in the applicable
Manufacturing Plan and associated budget approved by the Joint Management
Committee, (a) the reasonable internal costs of the applicable party or its
Affiliated Subcontractor(s), which costs shall be determined based on FTE Costs,
unless another basis is otherwise agreed upon by the parties in writing, plus
reasonable out-of-pocket expenditures and (b) the actual costs billed to such
party or parties or to their Affiliated Subcontractors by Third Parties, subject
to Section 2.2.4, each in accordance with the budget set forth in the applicable
Manufacturing Plan, incurred in process development, process validation, process
improvement, formulation development, facility and plant validation (which are
product-specific), manufacturing scale-up and recovery costs, the development of
standard operating procedures, batch records, and quality assurance and quality
control methods and procedures, and the production of qualification lots, all
costs incurred in obtaining and maintaining approval specifically for the
manufacture of such Collaboration Product for commercial sale, and the costs for
preparing, submitting, reviewing or developing data or information for the
purpose of a drug master file or for submission to a Regulatory Authority to
obtain or retain such approvals.
1.64 "Manufacturing Plan" has the meaning specified in Section 7.2
hereof.
1.65 "Mutant Mouse" means mouse cell or mouse containing a selected
mutation in the murine ortholog of a Program Target that is made or produced by
Lexicon. A "line of Mutant Mice" means Mutant Mice having the same selected
mutation.
1.66 "Net Sales" means, with respect to a Collaboration Product or
Opt-out Product, as the case may be, the gross amount invoiced for sales of such
Collaboration Product or Opt-out Product by Lexicon and its Affiliates, Organon
and its Affiliates, Joint Marketing/Development Collaborators and their
Affiliates, and (sub)licensees of the Continuing Party and their Affiliates, in
each case as applicable, to customers which are not Affiliates (or which are
Affiliates but are end users of such Collaboration Product or Opt-out Product),
less:
(a) trade, quantity and cash discounts actually allowed;
(b) discounts, refunds, rebates, chargebacks, retroactive
price adjustments, billing errors and any other allowances (including,
without limitation, government-mandated and managed health
care-negotiated rebates) actually granted which effectively reduce the
net selling price;
(c) product returns credits and allowances actually granted;
(d) any tax imposed on the production, sale, delivery or use
of the product (excluding federal, state or local taxes based on
income);
(e) freight, postage, shipping, customs duties, excises,
tariffs, surcharges, other governmental charges (excluding federal,
state or local taxes based on income) and insurance charges actually
allowed or paid for delivery of the product;
(f) payments or rebates paid with respect to such
Collaboration Product or Opt-out Product, as applicable, in connection
with state or federal Medicare, Medicaid or similar programs in the
United States or in connection with similar programs in other countries
in which there are sales; and
(g) adjustments for bad debts actually incurred.
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Such amounts shall be determined from the books and records of the Lexicon and
its Affiliates, Organon and its Affiliates, Joint Marketing/Development
Collaborators and their Affiliates, and (sub)licensees of the Continuing Party
and their Affiliates, as the case may be, maintained in accordance with GAAP.
In the event the Collaboration Product or Opt-out Product, as
applicable, is sold as part of a Combination Product (as defined below), the Net
Sales from the Combination Product, for the purposes of determining royalty
payments, will be determined by multiplying the Net Sales of the Combination
Product by the fraction, A/A+B where A is the average sale price of such
Collaboration Product or Opt-out Product when sold separately in finished form
and B is the average sale price of the other active compounds or ingredients in
the Combination Product sold separately in finished form.
In the event that the average sale price of the Collaboration Product
or Opt-out Product, as applicable, can be determined but the average sale price
of the other active compounds or ingredients cannot be determined, Net Sales for
purposes of determining royalty payments will be calculated by multiplying the
Net Sales of the Combination Product by the fraction C/C+D where C is the
selling party's average sales price of the Collaboration Product or Opt-out
Product and D is the difference between the average selling price of the
Combination Product and the average selling price of the Collaboration Product
or Opt-out Product. If the average sale price of the other active compounds or
ingredients can be determined but the average price of the Collaboration Product
or Opt-out Product, as applicable, cannot be determined, Net Sales for purposes
of determining royalty payments will be calculated by multiplying the Net Sales
of the Combination Product by the following formula: one minus C/C+D where C is
the average selling price of the other product(s) and D is the difference
between the average selling price of the Combination Product and the average
selling price of the other active compounds or ingredients.
In the event that the average sales price of both the Collaboration
Product or Opt-out Product, as applicable, and the other active compounds or
ingredients in the Combination Product cannot be determined, the Net Sales of
the Collaboration Product or Opt-out Product shall be negotiated in good faith
by the parties.
The Net Sales price for a Combination Product in a given country will
be calculated once each Contract Year and such price will be used during all
applicable royalty reporting periods for the entire Contract Year for such
country, absent extraordinary conditions or events. When determining the average
sale price of a Collaboration Product or Opt-out Product, as applicable, or the
other active compounds or ingredients in the Combination Product, the average
sale price will be calculated using data arising from the twelve (12) months
preceding the calculation of the Net Sales price for the Combination Product. As
used above, the term "Combination Product" means any Collaboration Product or
Opt-out Product, as applicable, sold in conjunction with any other active
component(s) (whether packaged together or in the same therapeutic formulation).
Free samples of Collaboration Product or Opt-out Product, as
applicable, and the disposition of Collaboration Product or Opt-out Product for,
or the use of Collaboration Product or Opt-out Product in, ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇ Clinical Trials, Phase 3 Clinical Trials or Post-Approval
Studies in which such Collaboration Product or Opt-out Product is provided to
patients without any payment shall not result in any Net Sales.
1.67 "Oncology/Immunology Field" means the diagnosis, prevention,
control and treatment in humans of (a) cancer and (b) diseases and conditions of
the immune system other than those associated with diabetes, obesity,
cardiovascular disease, diseases and conditions of the eye, and diseases and
conditions of the central and peripheral nervous system.
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1.68 "Opt Out" has the meaning specified in Section 10.1 hereof.
1.69 "Opt-out Party" has the meaning specified in Section 10.1 hereof.
1.70 "Opt-out Product" means a Lexicon Product or an Organon Product.
1.71 "Opt-out Target" means a Lexicon Opt-out Target or an Organon
Opt-out Target.
1.72 "Organon Background Materials" means any Antibodies, Antisense
Compounds, Proteins, assays, reagents or other materials that are (a) necessary
or useful for the conduct of the Collaboration, (b) Controlled by Organon, (c)
utilized in the Collaboration (but only to the extent so utilized) and (d)
either in Organon's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by Organon or any of its Affiliates during
the Collaboration Term but outside of the conduct of the Collaboration. Organon
Background Materials excludes Program Targets, Program Antibodies, Program
Antisense Compounds and Program Proteins.
1.73 "Organon Background Technology" means any inventions, information,
methods, know-how, trade secrets or data that (a) are necessary or useful for
the performance of the Collaboration, (b) are Controlled by Organon, (c) are
utilized in the Collaboration (but only to the extent so utilized) and (d)
either are in Organon's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by Organon or any of its Affiliates during
the Collaboration Term but outside of the conduct of the Collaboration. Organon
Background Technology also includes any inventions, information, methods,
know-how, trade secrets or data (i) relating to research and development methods
and processes first identified or discovered by Organon or its Affiliated
Subcontractor(s) in the course of performing Biotherapeutics Research or
Development activities under the Collaboration or (ii) relating to manufacturing
and analytical methods and processes first identified or discovered by Organon
or its Affiliated Subcontractor(s) in the course of Manufacture of a
Collaboration Product, in each case that are not Program Technology.
1.74 "Organon Product" means any Collaboration Product as to which
Lexicon has Opted Out in accordance with Section 10.1 and, if applicable [**],
any Program Antibodies, Program Antisense Compounds or Program Proteins that
have not been designated for Development relating to the same Opt-out Target.
1.75 "Organon Opt-out Target" means any Program Target as to which
Lexicon has Opted Out in accordance with Section 10.1.
1.76 "Patent Prosecution" has the meaning specified in Section 12.2.1
hereof.
1.77 "Patent Rights" means all existing patents and patent applications
and all patent applications hereafter filed and patents hereafter issued,
including, without limitation, any continuations, continuations-in-part,
divisions, provisionals or any substitute applications, any patent issued with
respect to any such patent applications, any reissue, reexamination, renewal or
extension (including any supplemental protection certificate) of any such
patent, and any confirmation patent or registration patent or patent of addition
based on any such patent, and all foreign counterparts of any of the foregoing.
1.78 "Phase 1 Clinical Trial" means a human clinical trial in any
country that is intended to initially evaluate the safety or pharmacological
effect of a Collaboration Product in subjects or that would otherwise satisfy
requirements of 21 CFR 312.21(a), or its foreign equivalent. For purposes of
this Agreement, "commencement of a Phase 1 Clinical Trial" for a Collaboration
Product means the first introduction of such Collaboration Product into a human
patient in a Phase 1 Clinical Trial.
11
1.79 "Phase 2 Clinical Trial" means a human clinical trial in any
country that is intended to initially evaluate the effectiveness of a
Collaboration Product for a particular indication or indications in patients
with the disease or indication under study or that would otherwise satisfy
requirements of 21 CFR 312.21(b), or its foreign equivalent. For purposes of
this Agreement, "commencement of a Phase 2 Clinical Trial" for a Collaboration
Product means the first introduction of such Collaboration Product into a human
patient in a Phase 2 Clinical Trial.
1.80 "Phase 2b Clinical Trial" means any Phase 2 Clinical Trial of a
Collaboration Product that follows the completion of an initial Phase 2 Clinical
Trial of such Collaboration Product, and that is a well-controlled clinical
trial with the purpose of evaluating safety and efficacy in subjects who have
the disease condition to be treated, diagnosed or prevented. For purposes of
this Agreement, "commencement of a Phase 2b Clinical Trial" for a Collaboration
Product means the first introduction of such Collaboration Product into a human
patient in a Phase 2b Clinical Trial.
1.81 "Phase 3 Clinical Trial" means a pivotal human clinical trial in
any country the results of which could be used to establish safety and efficacy
of a Collaboration Product as a basis for a BLA or that would otherwise satisfy
the requirements of 21 CFR 312.21(c) or its foreign equivalent. For purposes of
this Agreement, "commencement of a Phase 3 Clinical Trial" for a Collaboration
Product means the first introduction of such Collaboration Product into a human
patient in a Phase 3 Clinical Trial.
1.82 "Plan" means a Biotherapeutics Research Plan, Development Plan or
Manufacturing Plan, as the case may be.
1.83 "Post-Approval Study" means a clinical trial conducted after
Regulatory Approval of the applicable Collaboration Product for the applicable
indication has been obtained in the relevant country.
1.84 "Pre-existing Obligations" means the obligations of Lexicon or
Organon, as the case may be, existing under agreements in effect prior to the
Effective Date with respect to Background Materials and Background Technology,
in each case as disclosed to the other party as applicable during the
Collaboration Term.
1.85 "Product Supply Costs" means (a) to the extent that a
Collaboration Product is sourced from a party or its Affiliated
Subcontractor(s), the cost of Manufacture of such Collaboration Product,
including (i) direct material and direct labor costs, (ii) manufacturing
overhead fairly allocated to such Collaboration Product and (iii) [**], all
calculated in accordance with GAAP and without regard to whether or not such
costs result in usable products or materials, and (b) to the extent that a
Collaboration Product is sourced from a Third Party, subject to Sections 2.2.4
and 7.1.2, the actual price paid to such Third Party for the manufacture, supply
and packaging of such Collaboration Product. For purposes of the foregoing, (i)
"direct material costs" means actual costs incurred in manufacturing or
purchasing materials, including freight-in costs, sales and excise taxes imposed
thereon and customs duty and charges levied by government authorities, and all
costs of packaging components; (ii) "direct labor costs" means actual cost of
employees engaged in direct manufacturing activities and quality control and
quality assurance activities who are directly employed in manufacturing and
packaging such Collaboration Product; and (iii) "manufacturing overhead"
attributable to such Collaboration Product will include a reasonable allocation
of indirect labor (not previously included in direct labor costs), a reasonable
allocation of administrative costs, and a reasonable allocation of facilities
costs, all in accordance with GAAP, but will not include corporate
administrative overhead or plant start-up costs or costs associated with excess
capacity. All allocations will be based on the assumption that such party's
plant and equipment are utilized to their reasonable full capacity (except with
respect to equipment that is specific to the Collaboration Product being
Manufactured), and all costs and allocations shall be consistent with
12
the methods used for such costs and allocations for such party's internal
purposes. More specifically, the components of Product Supply Costs shall
comprise: (A) direct labor (fermentation, purification personnel); (B) direct
materials; (C) facility costs (rent, property taxes, depreciation of leaseholds,
utilities, spare parts, maintenance contracts); (D) manufacturing equipment
depreciation; (E) allocations for information technology, document control,
quality engineering, purchasing, warehouse management, microbiology (with such
allocations to be based on estimated service levels, headcount or square footage
occupancy, depending on the category); (F) indirect labor (manufacturing
supervision); (G) manufacturing department overhead (uniforms, materials used in
plant maintenance); (H) quality assurance/quality control; and (I) such other
similar costs as may be reasonably included in such definition.
1.86 "Program Director" has the meaning specified in Section 3.2
hereof.
1.87 "Program Antibody" means an Antibody that: (a) (i) is selected by
the Joint Research Committee for research, optimization or preclinical
evaluation in the conduct of the Collaboration, (ii) is Controlled by a party,
(iii) either is in a party's or any of its Affiliates' possession as of the
Effective Date or is discovered or acquired by either or both parties or any of
their respective Affiliates during the Collaboration Term but outside the
conduct of the Collaboration, and (iv) binds to or otherwise modulates a Program
Target; (b) is first [**] in the conduct of the Collaboration; or (c) is
otherwise designated a Program Antibody by the Joint Management Committee;
provided, however, that in no event shall [**] become a Program Antibody unless
such designation is affirmatively agreed to by the Joint Management Committee
after disclosure of the nature of such Pre-existing Obligation by the applicable
party.
1.88 "Program Antisense Compound" means an Antisense Compound that:
(a)(i) is selected by the Joint Research Committee for research, optimization or
preclinical evaluation in the conduct of the Collaboration, (ii) is Controlled
by a party, (iii) either is in a party's or any of its Affiliates' possession as
of the Effective Date or is discovered or acquired by either or both parties or
any of their respective Affiliates during the Collaboration Term but outside the
conduct of the Collaboration, and (iv) binds to or otherwise modulates a Program
Target; (b) is first [**] in the conduct of the Collaboration; or (c) is
otherwise designated a Program Antisense Compound by the Joint Management
Committee; provided, however, that in no event shall [**] become a Program
Antisense Compound unless such designation is affirmatively agreed to by the
Joint Management Committee after disclosure of the nature of such Pre-existing
Obligation by the applicable party.
1.89 "Program Intellectual Property" means Program Patent Rights and
any other proprietary rights in Program Material and Program Technology.
1.90 "Program Materials" means (a) any Program Antibodies, (b) any
Program Antisense Compounds, (c) any Program Proteins, and (d) any materials
other than Program Antibodies, Program Antisense Compounds or Program Proteins
first identified or discovered in the conduct of the Collaboration.
1.91 "Program Patent Rights" means any Patent Rights that are
Controlled by one or both parties and that Cover any Program Technology or
Program Materials. For clarification, such Program Patent Rights include the
entire scope of all of the claims contained in such Patent Rights.
1.92 "Program Protein" means a Protein that: (a) (i) is selected by the
Joint Research Committee for research, optimization or preclinical evaluation in
the conduct of the Collaboration, (ii) is Controlled by a party, (iii) either is
in a party's or any of its Affiliates' possession as of the Effective Date or is
discovered or acquired by either or both parties or any of their respective
Affiliates during the Collaboration Term but outside the conduct of the
Collaboration, and (iv) is encoded by a Program Target
13
or derived from (e.g., by means of amino acid substitutions, additions,
deletions, and C- and N-terminal fusions) a Protein encoded by a Program Target;
(b) is first [**] in the conduct of the Collaboration; or (c) is otherwise
designated a Program Protein by the Joint Management Committee; provided,
however, that in no event shall [**] become a Program Protein unless such
designation is affirmatively agreed to by the Joint Management Committee after
disclosure of the nature of such Pre-existing Obligation by the applicable
party.
1.93 "Program Target" means one of the three hundred (300) human genes
selected in accordance with Section 2.3 (in each case, identified by the
full-length cDNA or amino acid sequence of the gene or, in the event the gene
has more than one splice variant form, by the full-length cDNA or amino acid
sequence of at least one splice variant form of such gene) and the products
encoded by such gene, including, without limitation, (a) any [**] from such gene
[**], (b) any [**] encoded by any such gene, and (c) any [**] encoded by any
such gene.
1.94 "Program Technology" means any inventions, information, methods,
know-how, trade secrets or data that (a) are Controlled by a party or jointly by
the parties and (b)(i) relate to the use of Program Antibodies, Program
Antisense Compounds or Program Proteins, (ii) relate to the use of a Program
Target to identify Antibodies or Antisense Compounds acting through such Program
Targets, and the use of such Antibodies or Antisense Compounds in the
Collaboration Field or Veterinary Field, (iii) relate to the use of Protein(s)
encoded by such Program Target in the Collaboration Field or Veterinary Field,
or (iv) are first identified or discovered in the conduct of the Collaboration.
For clarity, Program Technology excludes Program Materials. Notwithstanding the
foregoing, Program Technology does not include any inventions, information,
methods, know-how, trade secrets or data (A) relating to [**] or (B) relating to
[**], in each case that do not [**].
1.95 "Protein" means a composition comprising a high molecular weight
(i.e., weighing more than [**]), polymer compound composed of a variety of amino
acids joined by peptide linkages, or any fragment thereof.
1.96 "Receiving Party" has the meaning specified in Section 1.23
hereof.
1.97 "Regulatory Approval" means any and all approvals (including any
applicable governmental price and reimbursement approvals), licenses,
registrations, or authorizations of any federal, national, multinational, state,
provincial or local regulatory agency, department bureau or other governmental
entity that are necessary for the Manufacture, use, storage, import, transport,
promotion, marketing and sale of a Collaboration Product in the Collaboration
Field in a country or group of countries.
1.98 "Regulatory Authority" means any governmental authority in a
country or region that regulates the manufacture or sale of pharmaceutical
products, including the FDA and the EMEA, and any successors thereto.
1.99 "Small Molecule Compound" means a composition comprising a
chemical compound, whether synthetic or naturally-derived, having a molecular
weight of less than [**]. For clarity, Small Molecule Compounds specifically
exclude: (a) Antibodies, (b) Antisense Compounds and (c) Proteins.
1.100 "Specifications" means, with respect to any Collaboration
Product, the applicable written specifications for Manufacturing, filling,
packaging and warehousing such Collaboration Product in effect at a particular
time and approved by the Joint Development Committee, including, but not limited
to, specifications provided in any Regulatory Approval for such Collaboration
Product.
14
1.101 "Target Function Discovery Program" has the meaning specified in
Section 2.1.1 hereof.
1.102 "Target Function Discovery Program Costs" means the following
amounts:
(a) [**] for each Program Target for which Lexicon or its
Affiliated Subcontractor(s) [**] in the conduct of the Target Function
Discovery Program;
(b) the costs of internal scientific, medical, technical and
managerial personnel engaged in [**] (together with all associated
laboratory supplies, facilities and occupancy costs), which costs shall
be determined based on FTE Costs, unless another basis is otherwise
agreed upon by the parties in writing; and
(c) out-of-pocket expenditures, if any, expressly approved by
the Joint Management Committee and actually incurred after the
Effective Date by Lexicon or its Affiliated Subcontractor(s) in
conducting the Target Function Discovery Program, subject to Section
2.2.4.
1.103 "Target Function Discovery Program Term" has the meaning
specified in Section 4.1.2 hereof.
1.104 "Territory" means all of the countries of the world.
1.105 "Therapeutic Area" means any one of the following areas with
respect to which the Joint Research Committee may approve ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ of Mutant Mice relating to a Program Target: (a) metabolism and
endocrinology, (b) cardiology, (c) neurology, (d) oncology, (e) immunology, (f)
ophthalmology and (g) any other therapeutic area for which Lexicon subsequently
develops Level 2 Phenotypic Analysis capabilities and focuses its own internal
drug discovery efforts.
1.106 "Third Party" means any person or entity other than Lexicon,
Organon and their respective Affiliates.
1.107 "Valid Claim" means a claim of an issued and unexpired patent
which has not been held permanently revoked, unenforceable or invalid by a
decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal and that is not
admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise.
1.108 "Veterinary Field" means the diagnosis, prevention, control and
treatment in animals other than humans of any disease or condition.
ARTICLE 2. COLLABORATION OVERVIEW
2.1 General.
2.1.1 Objectives. The parties intend to carry out their
obligations and responsibilities under the Collaboration, consistent
with the objectives set forth in and the resources allocated to such
activities in the applicable Plan(s). It is intended that the
Collaboration will be conducted as a unified collaborative effort with
activities by the parties carried out primarily at each party's
respective facilities, and this intent shall be reflected in the
applicable Plan(s). It is further intended that each party shall
contribute to Target Function Discovery Program Costs, Biotherapeutics
Research Program Costs and Development Costs in proportion to the
applicable Cost Sharing Ratio, and the Plans will be consistent with
and provide for such proportional contribution. In support of the
Collaboration, Lexicon will conduct efforts, using its technology
15
for the generation and analysis of the phenotypes of Mutant Mice, to
identify and validate Program Targets with potential utility in the
Collaboration Field (the "Target Function Discovery Program").
2.1.2 Collaboration Term. The Collaboration shall commence on
the Effective Date and continue until the earlier of (a) the time that
one or the other party has Opted Out of all Program Targets or (b) the
expiration or earlier termination of this Agreement pursuant to Article
16 hereof (the "Collaboration Term").
2.2 Conduct of Collaboration.
2.2.1 Efforts. The Joint Management Committee shall adopt
project progression guidelines, including criteria for the designation
of Collaboration Products for Development, the filing of INDs, the
commencement of Phase 1 Clinical Trials, Phase 2 Clinical Trials and
Phase 3 Clinical Trials, and the filing of BLAs. The parties shall
conduct the Collaboration in good scientific manner in accordance with
such project progression guidelines and in compliance with applicable
Laws. Each party shall use Diligent Efforts to conduct the activities
of the Collaboration that are assigned to it in the then-applicable
Plan(s), and each shall devote sufficient resources to carry out such
respective activities. While the parties acknowledge and agree that
neither party guarantees the success of the Collaboration or any
individual task undertaken thereunder, each party agrees that it will
perform the activities assigned to it under the Collaboration in a
professional manner in accordance with the highest industry standards.
2.2.2 Resources. Over the course of the Collaboration, tasks
will be allocated between the parties in accordance with the following
principles and objectives: (a) Lexicon will be solely responsible for
conducting the Target Function Discovery Program; (b) except to the
extent otherwise provided in an applicable Biotherapeutics Research
Plan, Lexicon will be principally, but not exclusively, responsible for
conducting Biotherapeutics Research activities involving the generation
of research Program Antibodies, Program Antisense Compounds and Program
Proteins and the conduct of in vivo research and proof of concept
studies (although Organon may also be involved in such activities),
Organon will be responsible for conducting Biotherapeutics Research
activities involving [**] and the process development of Program
Antibodies, Program Antisense Compounds and Program Proteins in
preparation for Development, and the parties shall be allocated
responsibility substantially pursuant to the applicable Cost Sharing
Ratio; (c) each party's participation in Development activities (based
on FTE utilization and out-of-pocket expenditures) will be
substantially pursuant to the applicable Cost Sharing Ratio; and (d)
each party's share of Target Function Discovery Program Costs,
Biotherapeutics Research Program Costs and Development Costs will be
substantially pursuant to the applicable Cost Sharing Ratio. Subject to
and in accordance with the foregoing, particular tasks and
responsibilities shall be assigned in a manner consistent with each
party's respective capabilities, capacity and expertise. For purposes
of this Agreement, "out-of-pocket expenditures" includes, but is not
limited to, the cost of subcontractors related to the Collaboration,
subject to Section 2.2.4, but specifically excludes the cost of
laboratory supplies and facilities and occupancy costs (such as, for
example, costs for laboratory space, equipment and utilities).
2.2.3 FTE Levels. The parties agree to commit to the
Collaboration the personnel necessary to meet their respective
responsibilities set forth in each Plan. The Plans shall set forth
specific FTE levels for each Contract Year to be assigned to specific
activities.
2.2.4 Subcontractors. In accordance with Section 2.2.2, the
parties will endeavor to optimize the allocation of their resources for
the conduct of the Collaboration. As necessary and
16
in furtherance of the Collaboration, however, (a) Lexicon may enter
into agreements or subcontracts for Target Function Discovery Program
activities in accordance with this Section 2.2.4 and (b) either party
may enter into agreements or subcontracts for Biotherapeutics Research,
Development or Manufacturing activities in accordance with this Section
2.2.4; provided that (i) none of the rights of the other party
hereunder are diminished or otherwise adversely affected as a result of
such subcontracting, (ii) such party obtains the written approval of
the other party prior to engaging any subcontractor, which approval
shall not be unreasonably withheld or delayed (for purposes of which it
shall not be deemed unreasonable for a party to withhold consent when
the withholding party is capable of conducting the activities proposed
to be conducted by such subcontractor and is willing to do so on terms,
including cost, time and quality, equivalent to those offered by such
contractor), and (iii) the subcontractor undertakes in writing
obligations of confidentiality and non-use regarding the other party's
Confidential Information that are substantially the same as those
undertaken by Organon and Lexicon pursuant to Article 13 hereof. In the
event a party performs one or more of its obligations under the
Collaboration through a subcontractor, then such party shall at all
times be responsible for the performance of such subcontractor. The
Joint Management Committee shall decide the allocation of the cost of
any such agreement between the parties or if the cost is to be borne by
one party and whether it can be allocated to offset other obligations
set forth in the applicable Plan(s). Notwithstanding the foregoing
provisions of this Section 2.2.4, either party may subcontract Target
Function Discovery Program, Biotherapeutics Research, Development or
Manufacturing activities to an Affiliate without the other party's
prior consent (such party, an "Affiliated Subcontractor").
2.2.5 Reports. Lexicon shall submit [**] reports to the Joint
Management Committee detailing its activities under the Target Function
Discovery Program. Each party shall submit [**] reports to the Joint
Management Committee, as may be required by the then-current Plan(s),
detailing its activities under the Biotherapeutics Research Program and
Development Program. The Joint Management Committee shall use such [**]
reports to monitor the parties' respective contributions to the
Collaboration. The Joint Management Committee may amend the Plan(s) as
necessary to maintain substantial compliance over the course of the
Collaboration in resources devoted and participation by the parties in
accordance with the principles and objectives set forth in Section
2.2.2.
2.2.6 Adjustments. If either party believes that the parties
are not devoting resources and participation to the Collaboration
substantially in accordance with the principles and objectives set
forth in Section 2.2.2, such party may submit the matter to the Joint
Management Committee in writing, providing a reasonably detailed
description of its reasons for such belief. Taking into account
historical and prospective participation and resource devotion of the
Parties during the current [**] and the immediately following [**], the
Joint Management Committee shall take such steps as may be reasonably
necessary to ensure substantial compliance in resources devoted and
participation by the parties in the Collaboration with the principles
and objectives set forth in Section 2.2.2.
2.3 Selection of Program Targets. Within [**] after the Effective Date,
the Joint Management Committee shall select, from the list of available genes
provided by Lexicon to Organon prior to the Effective Date, [**] Program Targets
in addition to the two Program Targets separately designated as of the Effective
Date. [**]. In the event that the Joint Management Committee is unable, within
the relevant time periods specified above, to reach agreement with respect to
the designation of the full number of Program Targets contemplated hereby,
Organon shall have the right, during the period of [**] thereafter, to designate
any remaining Program Targets from the relevant list of available genes.
17
2.4 Exclusivity. During the Collaboration Term, each party shall work
exclusively with the other party under the terms of this Agreement with respect
to Biotherapeutics Research, Development and commercialization of (a) Program
Antibodies, Program Antisense Compounds and other Antibodies and Antisense
Compounds acting through Program Targets and (b) Program Proteins and other
Protein(s) encoded by Program Targets. For clarity, a Continuing Party and,
subject to Section 10.2, an Opt-out Party shall have no further obligation under
this Section 2.4 with respect to Opt-out Products and Opt-out Targets.
2.5 Collaboration Records.
2.5.1 All work conducted by each party in the course of the
Collaboration shall be completely and accurately recorded, in
reasonable detail and in good scientific manner, in separate laboratory
notebooks. On reasonable notice, and at reasonable intervals, each
party shall have the right to inspect and copy all such records of the
other party reflecting Program Technology or work done under the
Collaboration, to the extent reasonably required to carry out its
respective obligations and to exercise its respective rights hereunder.
Notwithstanding the definition of "Confidential Information," all such
records shall constitute Confidential Information of the party owning
such records.
2.5.2 In order to protect the parties' Patent Rights under
U.S. law in any inventions conceived or reduced to practice during or
as a result of the Collaboration, each party agrees to maintain a
policy that requires its employees to record and maintain all data and
information developed during the Collaboration in such a manner as to
enable the parties to use such records to establish the earliest date
of invention or diligence to reduction to practice. At a minimum, the
policy shall require such individuals to record all inventions
generated by them in standard laboratory notebooks or other suitable
means that are dated and corroborated by non-inventors on a regular,
contemporaneous basis.
2.6 Disclosure of Collaboration Results. Subject to restrictions
imposed by a party's confidentiality obligations to any Third Party with respect
to Background Materials or Background Technology, each party will disclose to
the Joint Research Committee or Joint Development Committee, as applicable, all
Program Technology that is discovered, invented or made by such party during the
course of the Collaboration and that is useful in or relates to the
Collaboration, including, without limitation, information regarding Program
Targets, Program Antibodies, Program Antisense Compounds and Program Proteins
and uses thereof and the results of all Biotherapeutics Research and Development
studies and other activities. Such Program Technology will be promptly disclosed
to the Joint Research Committee or Joint Development Committee, as applicable,
with meaningful discoveries or advances being communicated as promptly as
practicable after such information is obtained or its significance is
appreciated. Upon written request by any member of the Joint Research Committee
or Joint Development Committee, as applicable, each party will provide the other
with copies of the raw data generated in the course of the Collaboration, if
reasonably necessary to the other party's work under the Collaboration. Any
information disclosed pursuant to this Section 2.6 may be used by the other
party solely for the purposes of the Collaboration or as otherwise expressly
permitted in this Agreement.
2.7 Material Transfer. In order to facilitate the Collaboration, either
party may provide to the other party certain Program Materials and Background
Materials Controlled by the supplying party (other than under this Agreement)
for use by the other party in furtherance of the Collaboration. All such Program
Materials shall be considered the Confidential Information of both parties and
shall be subject to the restrictions in Article 13. All Background Materials
shall be considered the Confidential Information of the supplying party and
shall be subject to the restrictions in Article 13. Except as otherwise provided
under this Agreement, all such Program Materials and Background Materials
delivered to the other party
18
shall remain the sole property of the supplying party, shall be used only in
furtherance of the Collaboration and solely under the control of the other party
and its Affiliates, shall not be used or delivered to or for the benefit of any
Third Party without the prior written consent of the supplying party and shall
not be used in research or testing involving human subjects. The Program
Materials and Background Materials supplied under this Section 2.7 must be used
with prudence and appropriate caution in any experimental work, since not all of
their characteristics may be known. THE PROGRAM MATERIALS AND BACKGROUND
MATERIALS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.
2.8 Third Party Licenses. Either party may propose that the Joint
Management Committee determine whether a Third Party license is required or
beneficial for Biotherapeutics Research of a Program Target or the Development
or commercialization of a Collaboration Product in the Collaboration Field. In
the event the Joint Management Committee determines that such Third Party
license is required or beneficial, the Joint Management Committee shall
determine which party shall be responsible for obtaining such license, as
applicable. In making any such determination provided for in this Section 2.8 as
to the need for or benefit of any such Third Party license, due consideration
shall be given to the advisability of seeking an opinion of counsel and the
efforts required to design around the patents at issue.
ARTICLE 3. COLLABORATION MANAGEMENT
3.1 Collaboration Committees.
3.1.1 Joint Management Committee. As soon as practicable after
the Effective Date, Organon and Lexicon shall establish a Joint
Management Committee (the "Joint Management Committee") comprised of
[**] representatives designated by Organon and [**] representatives
designated by Lexicon, each of whom shall have experience and seniority
sufficient to enable him or her to make decisions on behalf of the
party he or she represents; provided that Organon and Lexicon may, by
mutual agreement, designate an appropriate number of additional
representatives from time to time.
3.1.2 Joint Research Committee. As soon as practicable after
the Effective Date, Organon and Lexicon shall establish a Joint
Research Committee (the "Joint Research Committee") comprised of [**]
representatives designated by Organon and [**] representatives
designated by Lexicon, each of whom shall have experience and seniority
sufficient to enable him or her to make decisions on behalf of the
party he or she represents; provided that Organon and Lexicon may, by
mutual agreement, designate an appropriate number of additional
representatives from time to time. From time to time during the
Collaboration Term, the Joint Research Committee may establish one or
more Joint Research Project Teams (each, a "Joint Research Project
Team") to implement various aspects of the applicable Biotherapeutics
Research Plan. Such teams shall be governed in the same manner and
subject to the relevant requirements as set forth herein for the Joint
Research Committee.
3.1.3 Joint Development Committee. As soon as practicable
after the designation of the first Collaboration Product, Organon and
Lexicon shall establish a Joint Development Committee (the "Joint
Development Committee") comprised of [**] representatives designated by
Organon and [**] representatives designated by Lexicon, each of whom
shall have experience and seniority sufficient to enable him or her to
make decisions on behalf of the party he or she
19
represents; provided that Organon and Lexicon may, by mutual agreement,
designate an appropriate number of additional representatives from time
to time. From time to time during the Collaboration Term, the Joint
Development Committee may establish one or more Joint Development
Project Teams (each, a "Joint Development Project Team") to implement
various aspects of the applicable Development Plan(s). Such teams shall
be governed in the same manner and subject to the relevant requirements
as set forth herein for the Joint Development Committee.
3.2 Program Directors. Each party shall appoint one of its designees on
the Joint Management Committee (and who may, but need not also be, a member of
the Joint Research Committee or Joint Development Committee) to serve as a
program director (each, a "Program Director") with responsibility for overseeing
the day-to-day activities of the parties with respect to the Collaboration and
for being the primary point of contact between the parties with respect to the
Collaboration.
3.3 Replacement of Collaboration Committee Representatives and Program
Directors. Each party shall be free to replace its representative members of any
Collaboration Committee and its Program Director with new appointees who have
authority to act on behalf of such party, on notice to the other party.
3.4 Responsibilities of Joint Management Committee. The Joint
Management Committee shall be responsible for overseeing and directing the
parties' interaction and performance of their respective obligations under this
Agreement. Without limiting the generality of the foregoing, its duties shall
include:
(a) preparing such procedures as may be necessary for the
operation of the Joint Management Committee, Joint Research Committee,
and Joint Development Committee, and other committees the Joint
Management Committee decides to establish to assure the efficient
operation of the Collaboration;
(b) approving strategy for the overall Biotherapeutics
Research, Development and Manufacturing of Collaboration Products in
the Collaboration Field and for all other activities conducted by the
parties hereunder;
(c) reviewing and approving the annual Biotherapeutics
Research Plans proposed by the Joint Research Committee and approving
the budget therefor and any modifications thereto as recommended by the
Joint Research Committee;
(d) reviewing and approving the annual [**] Development Plans
proposed by the Joint Development Committee and approving the budgets
therefor and any modifications thereto as recommended by the Joint
Development Committee;
(e) reviewing and approving the Manufacturing Plans proposed
by Organon or its Affiliated Subcontractor(s) and approving the budget
therefor and any modifications thereto as recommended by Organon or
such Affiliated Subcontractor(s);
(f) overseeing the implementation of the Plans and allocation
of resources and other activities in support of the Collaboration,
including the matters contemplated by Section 2.2 hereof;
(g) establishing criteria for designation of Collaboration
Products;
(h) designating Collaboration Products;
20
(i) facilitating the transfer of technology between the parties
through the Joint Research Committee and the Joint Development Committee;
(j) overseeing Patent Prosecution and other matters contemplated
by Article 12 and, if appropriate, delegating responsibility for such matters,
subject to oversight by the Joint Management Committee, to a committee appointed
by the Joint Management Committee for such purpose;
(k) evaluating potential licenses from Third Parties, and
determining their utility in the Collaboration (if any);
(l) upon the recommendation of the Joint Development Committee,
decisions with respect to the preclinical and clinical Development of
Collaboration Products, including the pursuit of additional indications;
(m) developing and overseeing the implementation of a strategy for
the commercialization of Collaboration Products;
(n) deciding whether a Collaboration Product should be
commercialized by or through one or more of the parties or their respective
Affiliates as contemplated by Section 8.2;
(o) deciding whether a Collaboration Product should be
commercialized by or through a Joint Marketing/Development Collaborator as
contemplated by Section 8.3, monitoring the progress of any negotiations
conducted in accordance with Section 8.3 and approving the terms of any final
agreement arising therefrom;
(p) evaluating the progress of the Joint Research Committee and
Joint Development Committee, and on a quarterly basis at a minimum, evaluating
the progress of the Biotherapeutics Research Plan and applicable Development
Plan(s) against their respective timelines;
(q) overseeing the maintenance of an inventory of the assets
generated pursuant to the Collaboration;
(r) resolving matters within the responsibilities of the Joint
Research Committee and Joint Development Committee as to which the members of
such Collaboration Committee are unable to reach a consensus, and dissolving
each such Collaboration Committee when its duties under the Collaboration are
complete;
(s) resolving disagreements between the parties with respect to
the matters contemplated by Article 8 and 10 hereof; and
(t) addressing issues and resolving differences that may arise
between the parties.
The Joint Management Committee shall not have the power to amend the
terms of or waive compliance with this Agreement.
3.5 Responsibilities of Joint Research Committee. The Joint
Research Committee shall be responsible for preparing for approval by the Joint
Management Committee and implementing the applicable annual Biotherapeutics
Research Plan, with the objective of expeditiously identifying Program
Antibodies, Program Antisense Compounds and Program Proteins meeting the
criteria for designation as Collaboration Products. Without limiting the
generality of the foregoing, its duties shall include:
21
(a) overseeing the implementation of the Target Function Discovery
Program;
(b) establishing criteria for the selection of Program Antibodies,
Program Antisense Compounds and Program Proteins;
(c) selecting Program Antibodies, Program Antisense Compounds and
Program Proteins for characterization and optimization in the conduct of the
Collaboration;
(d) monitoring, reviewing and reporting on the progress of the
Biotherapeutics Research Program;
(e) recommending Program Antibodies, Program Antisense Compounds
and Program Proteins for designation by the Joint Management Committee as
Collaboration Products; and
(f) performing such other activities as are contemplated by the
terms of this Agreement.
The Joint Research Committee shall report its activities and make
proposals to the Joint Management Committee at least [**], but more frequently
as appropriate. The Joint Research Committee shall not have the power to amend
or waive compliance with this Agreement.
3.6 Responsibilities of Joint Development Committee. The Joint
Development Committee shall be responsible for preparing for approval by the
Joint Management Committee and implementing the applicable annual [**]
Development Plan(s). Without limiting the generality of the foregoing, its
duties shall include:
(a) proposing and overseeing the Development strategy of
Collaboration Products;
(b) overseeing the filing of INDs with the FDA or other Regulatory
Authority by the designated party pursuant to Section 6.4.1;
(c) establishing advisory committees comprised of scientific,
medical or other appropriate experts not affiliated with either party to advise
the Joint Development Committee on matters related to the preclinical and
clinical Development of Collaboration Products;
(d) approving the protocol of any clinical trials of Collaboration
Products;
(e) overseeing the clinical trials of Collaboration Products;
(f) providing all appropriate information regarding the progress
of the Development Plan(s) to the Joint Management Committee in advance of each
quarterly Joint Management Committee meeting;
(g) overseeing the filing of BLAs with the FDA or other Regulatory
Authority by the designated party pursuant to Section 6.4.1; and
(h) performing such other activities as are contemplated by the
terms of this Agreement.
22
The Joint Development Committee shall report its activities and make
proposals to the Joint Management Committee at least [**], but more frequently
as appropriate. The Joint Development Committee shall not have the power to
amend or waive compliance with this Agreement.
3.7 Meetings of Collaboration Committees. As applicable, each
Collaboration Committee shall meet at least [**], and more frequently as the
parties deem appropriate, on such dates and at such times as the parties shall
agree, on [**] written notice to the other party unless such notice is waived by
the parties. The first meeting of the Joint Management Committee shall take
place within [**] after the Effective Date, at Lexicon's facility in The
Woodlands, Texas, United States of America. Each Collaboration Committee may
convene or be polled or consulted from time to time by means of
telecommunications, videoconferences or correspondence, as deemed necessary or
appropriate by the parties. To the extent that meetings are held in person, they
shall alternate between the offices of the parties unless the parties otherwise
agree.
3.8 Decisions.
3.8.1 Quorum; Voting. A quorum for a meeting of a
Collaboration Committee shall require the presence of at least one
Lexicon member (or designee) and at least one Organon member (or
designee) in person or by telephone. All decisions made or actions
taken by a Collaboration Committee shall be made unanimously by its
members, with the Lexicon members cumulatively having one vote and the
Organon members cumulatively having one vote; provided that, in the
event the members of the Joint Research Committee are unable to reach
unanimity as to a decision under [**] with respect to [**], then either
party may, in its sole discretion, [**].
3.8.2 Dispute Resolution.
3.8.2.1 In the event that unanimity cannot be reached by the
Joint Research Committee, or Joint Development Committee, as the case
may be, with respect to a matter that is a subject of its
decision-making authority, respectively, then the matter shall be
referred for further review and resolution to the Joint Management
Committee. In the event that unanimity cannot be reached by the Joint
Management Committee with respect to a matter that is a subject of its
decision-making authority, then the matter shall be referred for
further review and resolution to the Chief Executive Officer of
Organon, or such other similar position designated by Organon from time
to time, and the Chief Executive Officer of Lexicon, or such other
similar position designated by Lexicon from time to time. The
designated officers of each party shall use reasonable efforts to
resolve the matter within [**] after the matter is referred to them.
3.8.2.2 If the designated officers cannot resolve any matter
pursuant to Section 3.8.2.1 within such [**] period, the matter shall
be referred to a Third Party arbitrator or arbitrators, in accordance
with the following procedures, whose decision shall be [**]. The
parties shall attempt to mutually agree upon a single independent Third
Party arbitrator (who shall be a professional with appropriate
experience in the subject matter at issue in such disagreement) within
[**] after the initial referral of such matter to the designated
officers. If the parties are unable to mutually agree upon one such
person, then each party shall appoint one independent Third Party
professional with appropriate experience in the subject matter at issue
in such disagreement prior to the expiration of such [**] period, and
within [**] after the initial referral of such matter to the designated
officers, such person(s) shall select a single independent Third Party
arbitrator, who shall be a professional with appropriate experience in
the subject matter at issue in such disagreement. Each party shall
present all information presented pursuant
23
to Section 3.8.2.1 and all other information as such party reasonably
desires regarding such disagreement. Within [**] after the initial
referral of such matter to the designated officers, the arbitrator
shall provide written notice to the parties regarding his or her
determination regarding such disagreement.
3.9 Administration. The chairperson of each Collaboration
Committee shall be designated annually on an alternating basis between the
parties. The initial chairperson shall be selected by Organon. The party not
designating the chairperson shall designate one of its representative members as
secretary to such Collaboration Committee for such year. The chairperson shall
be responsible for calling meetings of such Collaboration Committee, sending
notices of meetings to all members and for leading such meetings.
3.10 Minutes. Within [**] after each Collaboration Committee
meeting, the secretary of such Collaboration Committee shall prepare and
distribute minutes of the meeting, which shall provide a description in
reasonable detail of the discussions had at the meeting and a list of any
actions, decisions or determinations approved by such Collaboration Committee.
The secretary shall be responsible for circulation of all draft and final
minutes. Draft minutes shall be first circulated to the chairperson, edited by
the chairperson and then circulated in final draft form to all members of such
Collaboration Committee sufficiently in advance of the next meeting to allow
adequate review and comment prior to the meeting. Minutes shall be approved or
disapproved, and revised as necessary, at the next meeting. Final minutes shall
be distributed to the members of such Collaboration Committee.
3.11 Term. The Joint Management Committee shall exist until the
termination orexpiration of the Collaboration Term. Each other Collaboration
Committee shall exist until the termination or expiration of the Collaboration
Term unless earlier dissolved by the Joint Management Committee following the
completion of its duties under the Collaboration.
3.12 Expenses. Each party shall be responsible for all travel and
related costs for its representatives to attend meetings of, and otherwise
participate on, a Collaboration Committee.
ARTICLE 4. TARGET FUNCTION DISCOVERY PROGRAM
4.1 General.
4.1.1 Generation and Analysis of Mutant Mice. In the Target
Function Discovery Program, Lexicon shall use Diligent Efforts to
complete (a) the development and ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Mutant
Mice for each Program Target and (b) Level 2 Phenotypic Analysis of
such lines of Mutant Mice that displayed a phenotype suggestive, as
determined by the Joint Research Committee, of the potential utility of
the corresponding Program Target in the Collaboration Field.
4.1.2 Target Function Discovery Program Term. The Target
Function Discovery Program shall continue until the end of the fourth
year of the Collaboration Term on May 16, 2009 and all work under the
Target Function Discovery Program shall be completed by that date (the
"Target Function Discovery Program Term").
4.2 Annual Budget. Lexicon shall prepare and the Joint Management
Committee shall approve the annual budget for the Target Function Discovery
Program for every Contract Year (other than the First Contract Year) during the
Target Function Discovery Program Term at least [**] prior to the commencement
of such Contract Year. The annual budget for the Target Function Discovery
Program for the First Contract Year shall be prepared by Lexicon and approved by
the Joint Management
24
Committee within [**] after the Effective Date. Each such annual budget shall be
in writing and shall set forth with reasonable specificity expected timelines
for the development of Mutant Mice and the conduct of ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ Analysis, together with associated Target
Function Discovery Program Costs. The Joint Research Committee may agree on
modifications, and recommend that the Joint Management Committee approve such
modifications, to the provisions of any such annual budget at any time.
4.3 Reporting and Oversight of Target Function Discovery Program
Progress. Lexicon shall keep the Joint Research Committee fully informed of the
progress of its activities under the Target Function Discovery Program. At a
minimum, within [**] following the last day of each [**] during the Target
Function Discovery Program Term, Lexicon shall prepare, and provide to the Joint
Research Committee, a reasonably detailed written summary report which shall
describe (a) the work performed by Lexicon during the preceding [**], including,
without limitation, the status of Lexicon's development of Mutant Mice and the
conduct of Level 1 Phenotypic Analysis and Level 2 Phenotypic Analysis (or only
Level 1 Phenotypic Analysis if Level 2 Phenotypic Analysis has not been
performed) of such Mutant Mice, and (b) identify phenotypes identified through
such ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ Analysis that are
suggestive, in Lexicon's good faith scientific judgment, of the potential
utility of the corresponding Program Targets in the Collaboration Field. In
addition, Lexicon shall provide the Joint Research Committee with access to all
data, information and conclusions from such Level 1 Phenotypic Analysis and/or
Level 2 Phenotypic Analysis of Mutant Mice, in each case promptly following the
generation thereof, so as to enable the Joint Research Committee to make its own
determinations as to which Mutant Mice exhibit a phenotype suggestive of the
potential utility of the corresponding Program Target in the Collaboration
Field.
4.4 Third Party Licenses. Notwithstanding anything herein to the
contrary, but subject to the requirement of unanimously agreed budgets set forth
in Section 4.2, Lexicon shall be responsible for the licensing of technologies
or patents owned or controlled by Third Parties that are required or beneficial
for the conduct of the Target Function Discovery Program. For the avoidance of
doubt, no such technologies or patents shall be used by Lexicon in the Target
Function Discovery Program unless the Joint Management Committee has agreed and
consented to the financial implications of such use.
ARTICLE 5. BIOTHERAPEUTICS RESEARCH PROGRAM
5.1 General. The parties shall jointly pursue Biotherapeutics
Research relating to Program Targets that have not become Opt-out Targets under
the direction of the Joint Research Committee in accordance with annual
Biotherapeutics Research Plans. Unless otherwise agreed by the Joint Management
Committee, (a) Lexicon will be principally, but not exclusively, responsible for
conducting Biotherapeutics Research activities involving the generation of
research Program Antibodies, Program Antisense Compounds and Program Proteins
and the conduct of in vivo research and proof of concept studies (although
Organon may also be involved in such activities) and (b) Organon will be
responsible for conducting Biotherapeutics Research activities involving the
generation of human or humanized Program Antibodies and the process development
of Program Antibodies, Program Antisense Compounds and Program Proteins in
preparation for Development.
5.2 Biotherapeutics Research Plans.
5.2.1 The Joint Research Committee shall prepare and the
Joint Management Committee shall approve the Biotherapeutics Research
Plan for every Contract Year (other than the First Contract Year)
during the Collaboration Term at least [**] prior to the commencement
of such Contract Year. The Biotherapeutics Research Plan for the First
Contract Year shall be prepared by the Joint Research Committee and
approved by the Joint Management Committee
25
within [**] after the Effective Date. The responsibility of the Joint
Research Committee to prepare annual Biotherapeutics Research Plans
shall terminate upon the agreement of the parties to cease further
Biotherapeutics Research regarding Program Targets.
5.2.2 Each annual Biotherapeutics Research Plan shall be in
writing and shall set forth with reasonable specificity the
Biotherapeutics Research objectives, priorities, activities,
milestones, budgets, personnel requirements, other resources and
allocations of responsibilities between the parties for the period
covered by such annual Biotherapeutics Research Plan in a manner
consistent with the terms of this Agreement, including, without
limitation, the objectives set forth in Section 2.1.1 and the terms and
conditions set forth in Section 2.2. The Biotherapeutics Research Plans
shall cover all aspects of Biotherapeutics Research relating to the
generation of Antibodies, Antisense Compounds and Proteins relating to
Program Targets that have not become Opt-out Targets and the
identification, characterization, selection, optimization and research
of Program Antibodies, Program Antisense Compounds and Program Proteins
prior to their designation as Collaboration Products, and shall
include, with reasonable specificity, the Biotherapeutics Research
activities to be performed by each party and the Biotherapeutics
Research activities, if any, to be performed by subcontractors.
5.2.3 The Joint Research Committee may agree on
modifications, and recommend that the Joint Management Committee
approve such modifications, to the provisions of any Biotherapeutics
Research Plan at any time. Without limiting the foregoing, the Joint
Research Committee shall conduct a [**] review of each Biotherapeutics
Research Plan and shall recommend that the Joint Management Committee
approve such modifications to the applicable Biotherapeutics Research
Plan as the Joint Research Committee may deem to be appropriate as a
result of such review.
ARTICLE 6. DEVELOPMENT PROGRAMS
6.1 General. The parties shall jointly pursue the Development of
Collaboration Products in the Collaboration Field under the direction of the
Joint Development Committee in accordance with annual [**] Development Plans.
Notwithstanding the foregoing, the Joint Development Committee shall consider,
and make recommendations to the Joint Management Committee regarding all other
commercially reasonable arrangements for the Development of Collaboration
Products, including proposals from one or both of the parties and proposals from
one or more Third Parties. At its option, each party may designate an Affiliated
Subcontractor to carry out its responsibilities under the Development Plan(s)
relating to any Collaboration Product, on a Collaboration
Product-by-Collaboration Product basis.
6.2 Designation of Collaboration Products. The Joint Management
Committee shall adopt criteria for the designation of Program Antibodies,
Program Antisense Compounds and Program Proteins as Collaboration Products,
which criteria shall include, without limitation, (a) identification and
characterization by the parties of a chimeric, humanized or human Program
Antibody, a Program Antisense Compound or a human Program Protein, as
applicable, that is suitable for the initiation of preclinical studies designed
to support the filing of an IND; and (b) achievement of appropriate results in
proof of concept studies conducted in the Biotherapeutics Research Program. The
Joint Management Committee shall be responsible for designating Collaboration
Products in accordance with Section 3.4.
6.3 Development Plans.
6.3.1 Following the first Contract Year in which the
parties designate a Collaboration Product, the Joint Development
Committee shall prepare and the Joint Management Committee
26
shall approve a Development Plan for each Collaboration Product for
every Contract Year at least [**] prior to the commencement of such
Contract Year. In the first Contract Year in which the parties
designate a Collaboration Product, the Joint Development Committee
shall prepare the first Development Plan for such Collaboration Product
as soon as commercially reasonable after its designation. The
responsibility of the Joint Development Committee to prepare a
Development Plan for a Collaboration Product shall terminate upon the
earlier of (a) a party Opting Out of further Development of such
Collaboration Product or (b) the agreement of the parties to cease
further Development of such Collaboration Product.
6.3.2 Each Development Plan shall be in writing and shall
set forth with reasonable specificity the Development objectives,
priorities, activities, milestones, budgets, personnel requirements,
other resources and allocations of responsibilities between the parties
for the period covered by such Development Plan in a manner consistent
with the terms of this Agreement, including, without limitation, the
objectives set forth in Section 2.1.1 and the terms and conditions set
forth in Section 2.2. The Development Plans shall cover all aspects of
Development relating to Collaboration Products, and shall include, with
reasonable specificity, the Development activities to be performed by
each party and the Development activities, if any, to be performed by
subcontractors.
6.3.3 The Joint Development Committee may agree on
modifications, and recommend that the Joint Management Committee
approve such modifications, to the provisions of any Development Plan
at any time.
6.4 Regulatory Matters.
6.4.1 Regulatory Responsibility. The preparation, filing,
prosecution and maintenance of INDs, BLAs and other regulatory filings
required to be filed with any Regulatory Authority with regard to each
Collaboration Product will be in the name of and the responsibility of
the party so designated in the Development Plan covering such
Collaboration Product. The party so designated in the Development Plan
covering such Collaboration Product shall oversee, monitor and
coordinate all regulatory actions, communications and filings with and
submissions, including filings and submissions of supplements and
amendments thereto, to Regulatory Authorities with respect to each
Collaboration Product, shall give the other party a reasonable
opportunity for prior review of and comment on all such substantive
communications, filings and submissions and shall incorporate those of
such comments as can reasonably be incorporated into such
communications, filings and submissions.
6.4.2 Regulatory Meetings and Correspondence. The party so
designated in the Development Plan covering a particular Collaboration
Product shall be responsible for interfacing, corresponding and meeting
with Regulatory Authorities with respect to such Collaboration Product,
and the other party will promptly refer any contacts or questions from
Regulatory Authorities to the party so designated. Both parties will be
entitled to attend all meetings and, if reasonably practicable,
telephone conferences with Regulatory Authorities.
6.4.3 Reporting Adverse Drug Reactions. The parties will
develop and agree upon safety data exchange procedures governing the
collection, investigation, reporting, and exchange of information
concerning Adverse Drug Reactions, product quality and product
complaints involving Adverse Drug Reactions, sufficient to permit each
party to comply with its legal obligations, including to the extent
applicable, those obligations contained in ICH guidelines E2A, E2B and
E2C and the FDC Act. The safety data exchange procedures will be
promptly updated if required by changes in the Law or by agreement
between the parties. The party so
27
designated in the applicable Development Plan will be responsible for
reporting all Adverse Drug Reactions to the appropriate Regulatory
Authorities in the applicable Region(s) in accordance with applicable
Laws.
ARTICLE 7. MANUFACTURING AND SUPPLY
7.1 Designation of Manufacturing Party.
7.1.1 Manufacture of Collaboration Products by Organon.
7.1.1.1 Manufacture of Collaboration Products for
Development. Unless otherwise agreed by the Joint Management
Committee, Organon or its Affiliated Subcontractor(s) shall
Manufacture and supply all quantities of a Collaboration
Product necessary for Development; provided that Organon may
decline to Manufacture and supply such quantities of a
Collaboration Product for any reason by giving Lexicon written
notice to such effect no later than [**] after the Joint
Management Committee's designation of such Collaboration
Product in accordance with Section 3.4.
7.1.1.2 Manufacture of Collaboration Products for
Commercialization. Unless otherwise agreed by the Joint
Management Committee within [**] after the commencement of the
first Phase 2 Clinical Trial with respect to any Collaboration
Product, the parties shall enter into a Manufacturing and
Supply Agreement substantially in the form attached to this
Agreement as Exhibit 7.1.1.2 under which Organon or its
Affiliated Subcontractor(s) shall be responsible for the
Manufacture and supply all quantities of such Collaboration
Product necessary for commercialization; provided that Organon
may decline to enter into such agreement for any reason by
giving Lexicon written notice to such effect no later than
[**] after the expiration of such [**] period.
7.1.2 Manufacture of Collaboration Products by Third
Parties. In the event that the Joint Management Committee determines
that it is in the best interests of the Collaboration for any one or
more Manufacturing activities with respect to a Collaboration Product
to be undertaken by an identified Third Party (whether as a result of a
decision by Organon in accordance with Section 7.1.1 not to undertake
such Manufacturing activities or otherwise), the negotiations with such
Third Party relating to such Manufacturing activities shall be led by
[**]; provided that [**] (a) shall keep [**] informed of the substance
and status of such negotiations, and allow [**] to participate in such
negotiations and (b) shall take into account in such negotiations the
reasonable commercial interests of [**] and the best interests of the
Collaboration. The parties each agree to grant such (sub)licenses under
their respective Background Materials, Background Technology, Program
Materials and Program Technology to any such Third Party as may be
reasonably necessary for such Third Party to manufacture the
Collaboration Product.
7.1.3 Manufacture of Lexicon Products.
7.1.3.1 Manufacture of Lexicon Products for
Development. If requested by Organon within [**] following
Organon's Opting Out with respect to a Collaboration Product
Manufactured by Organon or its Affiliated Subcontractor(s) for
Development pursuant to Section 7.1.1.1, Lexicon shall enter
into good faith negotiations with Organon, for a period of
[**] following such request, with respect to the continued
manufacture of such Lexicon Product by Organon or its
Affiliated Subcontractor(s) for Development. In the event
Lexicon and Organon or its Affiliated Subcontractor(s) do not
29
enter into a definitive agreement with respect to such
manufacturing activities within such [**] period, Lexicon will
be free, at any time thereafter, to enter into negotiations
and agreements with one or more Third Parties for the
manufacture and supply of such Lexicon Product. Nothing in
this Section 7.1.3.1 shall be deemed to affect the rights and
obligations of the parties under Section 10.3.3.
7.1.3.2 Manufacture of Lexicon Products for
Commercialization. Within h [**] after the commencement of the
first Phase 2 Clinical Trial with respect to any Lexicon
Product which is manufactured for Development by Organon or
its Affiliated Subcontractor(s) pursuant to Section 7.1.3.1,
Lexicon shall offer to Organon the opportunity to manufacture
such Lexicon Product for commercialization. If requested by
Organon within [**] of such offer, Lexicon shall enter into
good faith negotiations with Organon, for a period of [**]
following such request, with respect to the continued
manufacture of such Lexicon Product by Organon or its
Affiliated Subcontractor(s) for commercialization. In the
event Lexicon and Organon or its Affiliated Subcontractor(s)
do not enter into a definitive agreement with respect to such
manufacturing activities within such [**] period, Lexicon will
be free, at any time thereafter, to enter into negotiations
and agreements with one or more Third Parties for the
manufacture and supply of such Lexicon Product [**]. Nothing
in this Section 7.1.3.2 shall be deemed to affect the rights
and obligations of the parties under Section 10.3.3.
7.2 Manufacturing Plans. With respect to all Collaboration
Products that Organon or its Affiliated Subcontractor(s) Manufactures pursuant
to this Article 7, Organon shall be responsible for implementing all aspects of
Manufacturing necessary for Development under the direction and oversight of the
Joint Management Committee, as set forth in Section 3.4, and in accordance with
a manufacturing plan for the applicable Collaboration Product(s) in the
Collaboration Field proposed by Organon and subject to review and approval by
the Joint Management Committee, which manufacturing plan shall describe the
specific Manufacturing activities to be undertaken by Organon, shall include a
general description of the personnel and other resources to be used in the
implementation thereof and shall set forth a unanimously agreed budget for such
activities (each, as may be modified or amended and approved from time to time
in accordance with this Agreement, a "Manufacturing Plan").
7.3 Orders; Forecasts for Clinical Requirements. If Organon or its
Affiliated Subcontractor(s) is the designated manufacturer for a particular
Collaboration Product as provided in Section 7.1.1, the party primarily
responsible for running a particular clinical trial hereunder will be
responsible for generating periodic [**] forecasts of the anticipated
requirements for such Collaboration Product that is the subject of such trial
and updates of such forecast not less than [**] thereafter, such forecasts and
updates to be promptly provided to Organon or its Affiliated Subcontractor. Not
less than [**] prior to the required delivery of a specified quantity of
Collaboration Product for such purposes, the Joint Development Committee shall
meet and agree on a demand order for the Collaboration Product so required;
provided, that if the total amount of any demand order for delivery in any [**]
period exceeds [**] of the most recent forecast for such period, Organon shall
use Diligent Efforts, but shall have no obligation, to deliver the quantities in
excess of [**] of the estimated amount for such period. Organon shall ship the
Collaboration Product to the facility or facilities designated by the party with
responsibility for distribution of clinical requirements of the Collaboration
Product at the times set forth in the relevant demand order. For clarity, this
paragraph shall not apply in the event that Organon or its Affiliated
Subcontractor is not the designated manufacturer for such Collaboration Product.
7.4 Certain Covenants. Organon and its Affiliated Subcontractor(s)
agree and covenant that, in the event that it Manufactures a Collaboration
Product pursuant to Section 7.1.1, it will (a) use Diligent Efforts to avoid
shortfalls of supply based on the forecasts provided to it in accordance with
Section 7.3,
29
shall promptly notify the parties in the event it becomes aware of any probable
shortfall and shall use Diligent Efforts to remedy any shortfall of supply as
soon as practicable; (b) be responsible for Manufacturing, filling, packaging
and warehousing of the Collaboration Product in conformity with applicable cGMP
Requirements [**], and in accordance, in all material respects, with all other
applicable Law; (c) maintain or cause to be maintained all records necessary and
appropriate to demonstrate compliance with applicable cGMP Requirements and the
applicable Specifications; and (d) grant Lexicon the right, on reasonable
advance notice and during normal business hours during the term of this
Agreement, to have its personnel or representatives with quality control or
quality assurance responsibilities inspect and audit the facilities and
operations directly related to the Manufacture and supply of the Collaboration
Product in order to confirm compliance with the covenants contained in this
Section 7.4; provided that the foregoing inspection and audit right shall be
limited to [**] and [**] per visit; and provided, further, that such personnel
or representatives shall be subject to Organon's prior approval, such approval
not to be unreasonably withheld.
7.5 Third Party Licenses. Notwithstanding anything herein to the
contrary but subject to the requirement of unanimously agreed budgets set forth
in Section 7.2, in the event that Organon or its Affiliated Subcontractor(s)
Manufactures a Collaboration Product, Organon shall be responsible for the
licensing of technologies or patents owned or controlled by Third Parties that
are required or beneficial for the Manufacturing of such Collaboration Product.
For the avoidance of doubt, no such technologies or patents shall be used by
Organon in the Development or Manufacturing of any Product unless the Joint
Management Committee has agreed and consented to the financial implications of
such use.
ARTICLE 8. COMMERCIALIZATION
8.1 General. Subject to the provisions of this Article 8, the
Joint Management Committee shall consider all commercially reasonable
arrangements for the commercialization of Collaboration Products, including
proposals from one or both of the parties and proposals from one or more Third
Parties.
8.2 Commercialization by the Parties or Their Affiliates. In the
event the Joint Management Committee determines that a particular Collaboration
Product should be commercialized entirely by or through one or more of the
parties or their respective Affiliates throughout the Territory or in one or
more particular countries or regions, then subject to the parties' entry, in
their respective sole discretion, into a definitive agreement with respect
thereto with the applicable party, parties or Affiliate(s):
(a) the parties shall grant to each such applicable
party, parties or Affiliate(s) appropriate rights and licenses under
their respective rights in (i) the Lexicon Background Materials, the
Lexicon Background Technology, the Organon Background Materials and the
Organon Background Technology, including, without limitation, any
Patent Rights Controlled by either party Covering the foregoing, and
(ii) the Program Intellectual Property, in each case to Develop, make,
have made, import, use, have used, offer for sale, sell and have sold
Collaboration Products in the Collaboration Field throughout the
Territory or in such country, countries or region(s), as applicable;
and
(b) each party shall take, or cause to be taken, all
actions reasonably necessary to consummate and make effective any such
agreement with such party, parties or Affiliate(s).
8.3 Commercialization by Joint Marketing/Development
Collaborators. In the event the Joint Management Committee determines that a
particular Collaboration Product should be commercialized entirely by or through
one or more Third Parties (each, a "Joint Marketing/Development Collaborator")
throughout the Territory or in one or more particular countries or regions, then
subject to the parties'
30
entry, in their respective sole discretion, into a definitive agreement with
respect thereto with the applicable Joint Marketing/Development Collaborator(s):
(a) the parties shall grant to each such Joint
Marketing/Development Collaborator(s) appropriate rights and licenses
under their respective rights in (i) the Lexicon Background Materials,
the Lexicon Background Technology, the Organon Background Materials and
the Organon Background Technology, including, without limitation, any
Patent Rights Controlled by either party Covering the foregoing, and
(ii) the Program Intellectual Property, in each case to Develop, make,
have made, import, use, have used, offer for sale, sell and have sold
Collaboration Products in the Collaboration Field throughout the
Territory or in such country, countries or region(s), as applicable;
and
(b) each party shall take, or cause to be taken, all
actions reasonably necessary to consummate and make effective any such
agreement with such Joint Marketing/Development Collaborator.
8.4 Option to Co-Commercialize Collaboration Products. In the
event that, within [**], there remain one or more countries with respect to
which the parties have not entered into a definitive agreement pursuant to
Section 8.2 or 8.3 for the commercialization of a Collaboration Product in the
Collaboration Field (or, if applicable, if the parties have not entered into a
definitive agreement pursuant to Section 8.2 or 8.3 with respect to the
commercialization of a Collaboration Product in the Collaboration Field in any
country within the Territory), either party may provide the other party with
written notice of its offer to enter into an agreement in the form attached
hereto as Exhibit 8.4 for the joint commercialization of such Collaboration
Product in the Collaboration Field in all countries within the Territory for
which the parties have not entered a definitive agreement pursuant to Section
8.2 or 8.3. The other party shall have the right, within the period of [**]
following such notice, to accept such offer and enter into such joint
commercialization agreement. In the event the other party fails to accept such
offer and enter into such joint commercialization agreement within such [**]
period, such other party shall be deemed to have Opted Out with respect to such
Collaboration Product pursuant to Section 10.1.1 or 10.1.2, as applicable.
8.5 Notice of Adverse Reactions. Each party shall advise the other
as promptly as reasonably practical by facsimile or overnight delivery service
addressed to the attention of its Vice President, Regulatory Affairs (or
equivalent), of any Adverse Drug Reaction that has been brought to that party's
attention.
8.6 Product Recall. In the event that either party determines that
an event, incident or circumstance has occurred that may result in the need for
a recall or other removal of any Collaboration Product, or any lot or lots
thereof, from a market in any Region, it shall advise and consult with the other
party with respect thereto. The owner of the relevant Regulatory Approval (or
proposed Regulatory Approval), determined in accordance with Section 6.4, shall
make the final determination to recall or otherwise remove the Collaboration
Product or any lot or lots thereof from the market.
ARTICLE 9. GRANTS OF RIGHTS
9.1 Grants of Research Licenses.
9.1.1 By Lexicon. Subject to the terms of this Agreement
and any applicable [**], during the Collaboration Term, Lexicon hereby
grants to Organon and its Affiliates, within the Territory, (a) a
non-exclusive right and license (without any right to sublicense,
except as set forth below) under Lexicon's rights in the Lexicon
Background Materials and the Lexicon
31
Background Technology, including, without limitation, any Patent Rights
Controlled by Lexicon Covering the foregoing, and (b) a co-exclusive
right and license (without any right to sublicense, except as set forth
below) under Lexicon's rights in the Program Intellectual Property, in
each case to (i) generate Antibodies, Antisense Compounds and Proteins
relating to Program Targets that have not become Lexicon Opt-out
Targets and (ii) identify, characterize, select, optimize and research
Program Antibodies, Program Antisense Compounds and Program Proteins
relating to such Program Targets prior to their designation as
Collaboration Products, in each case in the conduct of the
Collaboration. Such right and license shall include the right to grant
sublicenses to Affiliates of Organon and to Third Parties that are
approved by the Joint Management Committee.
9.1.2 By Organon. Subject to the terms of this Agreement
and any applicable [**], during the Collaboration Term, Organon hereby
grants to Lexicon and its Affiliates, within the Territory, (a) a
non-exclusive right and license (without any right to sublicense,
except as set forth below) under Organon's rights in the Organon
Background Materials and the Organon Background Technology, including,
without limitation, any Patent Rights Controlled by Organon Covering
the foregoing, and (b) a co-exclusive right and license (without any
right to sublicense, except as set forth below) under Organon's rights
in the Program Intellectual Property, in each case to (i) generate
Antibodies, Antisense Compounds and Proteins relating to Program
Targets that have not become Organon Opt-out Targets and (ii) identify,
characterize, select, optimize and research Program Antibodies, Program
Antisense Compounds and Program Proteins relating to such Program
Targets prior to their designation as Collaboration Products, in each
case in the conduct of the Collaboration. Such right and license shall
include the right to grant sublicenses to Affiliates of Lexicon and to
Third Parties that are approved by the Joint Management Committee.
9.1.3 Restrictions on Clinical Development of Collaboration
Products. Neither party nor their respective Affiliates shall
administer to humans any Program Antibody, Program Antisense Compound,
Program Protein or Collaboration Product or Opt-out Product that
incorporates or is derived from any Program Antibody, Program Antisense
Compound or Program Protein, unless and until (and then only to the
extent that) such party has received a license under Section 9.2 for
the clinical Development of such Collaboration Product, Opt-out
Product, Program Antibody, Program Antisense Compound or Program
Protein.
9.2 Grants of Development and Commercialization Licenses.
9.2.1 By Lexicon.
9.2.1.1 Development of Collaboration Products in
Collaboration Field. Subject to the terms of this Agreement
and any applicable [**], Lexicon hereby grants to Organon and
its Affiliates, within the Territory, a co-exclusive right and
license, with the limited right to sublicense (as set forth
below), under Lexicon's rights in (a) the Lexicon Background
Materials and the Lexicon Background Technology, including,
without limitation, any Patent Rights Controlled by Lexicon
Covering the foregoing, and (b) the Program Intellectual
Property, in each case to Develop Collaboration Products in
the Collaboration Field, including rights to make, have made,
import, use, or have used any Collaboration Products in the
Collaboration Field solely for purposes of such Development.
Such right and license shall include the right to grant
sublicenses to Affiliates of Organon and to Third Parties that
are approved by the Joint Management Committee.
32
9.2.1.2 Development and Commercialization of Organon
Products in Collaboration Field. Subject to the terms of this
Agreement and any applicable [**], Lexicon hereby grants to
Organon and its Affiliates, within the Territory, an exclusive
right and license, with the right to sublicense, under
Lexicon's rights in (a) the Lexicon Background Materials and
the Lexicon Background Technology, including, without
limitation, any Patent Rights Controlled by Lexicon Covering
the foregoing, and (b) the Program Intellectual Property to
Develop, make, have made, import, use, have used, offer for
sale, sell and have sold Organon Products (and, except for
Collaboration Products relating to the same Program Target as
to which Lexicon has not Opted Out, any Program Antibodies,
Program Antisense Compounds and Program Proteins relating to
the foregoing) in the Collaboration Field. Any such sublicense
shall be set forth in a written agreement containing
confidentiality, non-use, ownership of intellectual property
and audit provisions consistent with and no less restrictive
than those contained herein, shall be subject and subordinate
to the terms and conditions of this Agreement, and shall
obligate the (sub)licensee to make the royalty payments
required hereunder; provided that Organon shall remain
responsible for all payments due to Lexicon hereunder. Organon
shall provide Lexicon with a copy of each sublicense agreement
promptly after executing the same; provided, however, that
subject to the exceptions set forth in Section 1.23, each such
sublicense agreement shall be Confidential Information of
Organon.
9.2.2 By Organon.
9.2.2.1 Development of Collaboration Products in
Collaboration Field. Subject to the terms of this Agreement
and any applicable [**], Organon hereby grants to Lexicon and
its Affiliates, within the Territory, a co-exclusive right and
license, with the limited right to sublicense (as set forth
below), under Organon's rights in (a) the Organon Background
Materials and the Organon Background Technology, including,
without limitation, any Patent Rights Controlled by Organon
Covering the foregoing, and (b) the Program Intellectual
Property, in each case to Develop Collaboration Products in
the Collaboration Field, including rights to make, have made,
import, use, or have used any Collaboration Products in the
Collaboration Field solely for purposes of such Development.
Such right and license shall include the right to grant
sublicenses to Affiliates of Lexicon and to Third Parties that
are approved by the Joint Management Committee.
9.2.2.2 Development and Commercialization of Lexicon
Products in Collaboration Field. Subject to the terms of this
Agreement and any applicable [**], Organon hereby grants to
Lexicon and its Affiliates, within the Territory, an exclusive
right and license, with the right to sublicense, under
Organon's rights in (a) the Organon Background Materials and
the Organon Background Technology, including, without
limitation, any Patent Rights Controlled by Organon Covering
the foregoing, and (b) the Program Intellectual Property to
Develop, make, have made, import, use, have used, offer for
sale, sell and have sold Lexicon Products (and, except for
Collaboration Products relating to the same Program Target as
to which Organon has not Opted Out, any Program Antibodies,
Program Antisense Compounds and Program Proteins relating to
the foregoing) in the Collaboration Field. Any such sublicense
shall be set forth in a written agreement containing
confidentiality, non-use, ownership of intellectual property
and audit provisions consistent with and no less restrictive
than those contained herein, shall be subject and subordinate
to the terms and conditions of this Agreement, and shall
obligate the (sub)licensee to make the royalty payments
required hereunder; provided that Lexicon shall remain
responsible for all payments due to Organon hereunder. Lexicon
33
shall provide Organon with a copy of each sublicense agreement
promptly after executing the same; provided, however, that
subject to the exceptions set forth in Section 1.23, each such
sublicense agreement shall be Confidential Information of
Lexicon.
9.2.3 Restrictions on Commercialization of Collaboration
Products. Neither party nor their respective Affiliates (a) shall make,
have made, import, use, or have used any Collaboration Products in the
Collaboration Field for any purpose other than Development or (b) shall
offer for sale, sell or have sold Collaboration Products in the
Collaboration Field, unless and until (and then only to the extent
that) such party has received a license in accordance with Section 8.2
or 8.4 for the commercialization of such Collaboration Product.
9.3 Small Molecule Research and Development.
9.3.1 Option to Collaborate in Oncology/Immunology Field.
Subject to the terms of this Agreement and any applicable [**], in the
event that either party believes that (a) [**] and (b) [**], such party
may, at any time during the Target Function Discovery Program Term
before Opting Out with respect to such Program Target, notify the other
party of its desire to enter into a collaboration for the research,
development and commercialization of Small Molecule Compounds
modulating such Program Target in the Oncology/Immunology Field.
Promptly following such notice, Organon and Lexicon shall enter into a
definitive agreement for the research, development and
commercialization of Small Molecule Compounds modulating such Program
Target in the Oncology/Immunology Field on substantially the same terms
applicable to the research, development and commercialization of
Collaboration Products under this Agreement. In such case, any Small
Molecule Compound selected for Development in accordance with the terms
of such definitive agreement that is not a Back-up Product under the
terms of such definitive agreement shall be deemed to be a
Collaboration Product for purposes of Sections 11.3 and 11.4 if (y)
[**] or (z) [**].
9.3.2 Option to Collaborate Outside the Oncology/Immunology
Field. Subject to the terms of this Agreement, any applicable [**], in
the event that either party believes that (a) [**] and (b) [**], such
party may, at any time during the Target Function Discovery Program
Term before Opting Out with respect to such Program Target, notify the
other party of its desire to enter into a collaboration for the
research, development and commercialization of Small Molecule Compounds
modulating such Program Target in the Collaboration Field outside the
Oncology/Immunology Field. Promptly following such notice, Organon and
Lexicon shall enter into a definitive agreement for the research,
development and commercialization of Small Molecule Compounds
modulating such Program Target in the Collaboration Field outside the
Oncology/Immunology Field on substantially the same terms applicable to
the research, development and commercialization of Collaboration
Products under this Agreement. In such case, any Small Molecule
Compound selected for Development in accordance with the terms of such
definitive agreement that is not a Back-up Product under the terms of
such definitive agreement shall be deemed to be a Collaboration Product
for purposes of Sections 11.3 and 11.4 if (y) [**] or (z) [**]. Nothing
herein shall obligate Lexicon to provide any notice to or enter into
any agreement with Organon under this Section 9.3.2 with respect to a
collaboration for the research, development and commercialization of
Small Molecule Compounds modulating a Program Target in the
Collaboration Field outside the Oncology/Immunology Field in the event
Lexicon has any obligations to a Third Party with respect thereto at
the time it proposes to commence such activities.
9.3.3 Organon License to Lexicon Outside the
Oncology/Immunology Field. In the event that any applicable [**] that
either party believes that (a) [**] and (b) [**] would preclude
34
Lexicon from entering into a collaboration for the research,
development and commercialization of Small Molecule Compounds
modulating such Program Target in the Collaboration Field outside the
Oncology/Immunology Field pursuant to Section 9.3.2, or if Organon
elects not to enter into a definitive agreement with respect thereto,
then Organon shall grant to Lexicon and its Affiliates, within the
Territory, an exclusive right and license, with the right to
sublicense, under Organon's rights in Program Intellectual Property, if
any, Covering the research, development or commercialization of Small
Molecule Compounds modulating such Program Target, to research,
develop, make, have made, import, use, have used, offer for sale, sell
and have sold Small Molecule Compounds that modulate such Program
Target in all fields of use other than the Oncology/Immunology Field.
Nothing in this Section 9.3.3 shall be deemed to grant Lexicon or its
Affiliates any right or license under any Patent Rights or other
intellectual property rights Controlled by Organon in or to (a) any
inventions, information, methods, know-how, trade secrets or data
relating to Small Molecule Compounds developed in collaboration with
Lexicon in accordance with Section 9.3.1 or 9.3.2 or (b) any other
inventions, information, methods, know-how, trade secrets or data other
than Program Intellectual Property.
9.4 Right of First Negotiation for Development and
Commercialization of Collaboration Products and Opt-out Products in the
Veterinary Field. Prior to commencing development or commercialization of any
Collaboration Product or Opt-out Product in the Veterinary Field or granting any
license or otherwise transferring any rights to any Third Party with respect
thereto, the Joint Management Committee (or the Continuing Party, in the case of
an Opt-out Product) shall first offer to Intervet (or its designated Affiliate)
the opportunity to develop and commercialize such Collaboration Product or
Opt-out Product in the Veterinary Field. If requested by Intervet within [**] of
such offer, the Joint Management Committee (or the Continuing Party, in the case
of an Opt-out Product) shall enter into good faith negotiations with Intervet,
for a period of [**] following such request, with respect to such an agreement
for the development and commercialization of such Collaboration Product or
Opt-out Product in the Veterinary Field. In the event Lexicon and Organon (or
the Continuing Party, in the case of an Opt-out Product) and Intervet do not
enter into a definitive agreement with respect to such an agreement within such
[**] period, the Joint Management Committee (or the Continuing Party, in the
case of an Opt-out Product) will be free, at any time thereafter, to enter into
negotiations and agreements with one or more Third Parties for the development
or commercialization of such Collaboration Product or Opt-out Product in the
Veterinary Field [**]. All license fees, royalties, milestone payments and other
income or items of value received from Intervet, its Affiliates or a Third Party
with respect to Collaboration Products shall be considered Joint
Marketing/Developer Collaboration Revenues under this Agreement.
9.5 No Grant of Other Technology or Patent Rights. Except as
otherwise expressly provided in this Agreement, under no circumstances shall a
party hereto, as a result of this Agreement, obtain any ownership interest in or
other right to any technology, know-how, patents, patent applications, gene or
genomic ▇▇▇▇▇▇▇▇ ▇▇▇▇ or information, products, or biological materials of the
other party, including items owned, controlled or developed by, or licensed to,
the other party, or transferred by the other party to said party, at any time
pursuant to this Agreement.
ARTICLE 10. OPT-OUT PROVISIONS
10.1 Opt Out of Program Targets and Collaboration Products.
10.1.1 Right to Opt Out. Either party (the "Opt-out Party")
may decline to participate in ("Opt Out" of) any further (a)
Biotherapeutics Research with respect to a Program Target, on a Program
Target-by-Program Target basis, or (b) Development of a Collaboration
Product, on a Collaboration Product-by-Collaboration Product basis, by
providing [**] prior written notice to the other party (the "Continuing
Party") specifying the relevant provision below under which
35
such Opt-out Party is making such Opt Out election and, as applicable,
the Program Target(s) and Collaboration Product(s) as to which such Opt
Out election relates.
10.1.1.1 Opt Out of All Biotherapeutics Research,
Development and Commercialization Relating to a Program
Target. The Opt-out Party may elect to Opt Out of all further
Biotherapeutics Research and Development associated with a
Program Target and related Collaboration Products, Program
Antibodies, Program Antisense Compounds and Program Proteins.
In such event, following the end of the [**] notice period
specified above, such Program Target and any related
Collaboration Products shall become an Opt-out Target and
Opt-out Product(s), respectively, and the Continuing Party
shall have exclusive (even as to the Opt-out Party) licenses
under Section 9.2 with respect to such Program Target and all
Opt-out Products, Program Antibodies, Program Antisense
Compounds and Program Proteins relating thereto.
10.1.1.2 Opt Out of Biotherapeutics Research and
Development of Follow-on Collaboration Products. The Opt-out
Party may elect to continue to participate in the Development
of Collaboration Product(s) that are at a more advanced stage
of Development or that have been commercialized, while Opting
Out of all further Biotherapeutics Research, Development
associated with a Program Target and related Collaboration
Products, Program Antibodies, Program Antisense Compounds and
Program Proteins at an earlier stage of Development. In such
event, following the end of the [**] notice period specified
above, the Continuing Party shall have exclusive (even as to
the Opt-out Party) licenses under Section 9.2 with respect to
such Program Target and all Collaboration Products, Program
Antibodies, Program Antisense Compounds and Program Proteins
relating thereto other than the Collaboration Product(s) for
which the Opt-out Party continues to participate.
10.1.2 Deemed Opt Out. In the event that a party desires to
proceed with (a)(i) Biotherapeutics Research with respect to a Program
Target or (ii) designation as a Collaboration Product and the
commencement of Development of a Program Antibody, Program Antisense
Compound or Program Protein with respect to a Program Target, in each
case for which no material Biotherapeutics Research activity has been
authorized by the Joint Management Committee (in a Biotherapeutics
Research Plan or otherwise) for a period of [**] and for which no
Collaboration Product is then in active Development, or (b) Development
of a Collaboration Product (i) for which no material Development
activity has been authorized by the Joint Management Committee (in a
Development Plan or otherwise) for a period of [**] and (ii) relating
to a Program Target for which no material Biotherapeutics Research
activity has been authorized by the Joint Management Committee (in a
Biotherapeutics Research Plan or otherwise) for a period of [**] and
for which no other Collaboration Product is then in active Development,
such party may request that the Joint Management Committee authorize
such Biotherapeutics Research, designation as a Collaboration Product
and the commencement of Development of such Program Antibody, Program
Antisense Compound or Program Protein, or Development of such
Collaboration Product, as applicable. In the event the Joint Management
Committee fails to approve such request within [**] (otherwise than as
a result of the requesting party's failure to vote in favor of
authorizing such activities), then, effective upon such failure, the
other party shall be deemed to have Opted Out of such Program Target
and related Opt-out Products, Program Antibodies, Program Antisense
Compounds and Program Proteins with the same effect as if such other
party had Opted Out under Section 10.1.1.1.
10.2 Opt-out Party Noncompetition Covenant. For a period of [**]
from the date the Opt-out Party gives the Continuing Party a written notice
under Section 10.1.1 (or, if applicable, is deemed to
36
have Opted Out under Section 10.1.2), such Opt-out Party and its Affiliates
shall not research, develop or commercialize (a) any Program Antibody, Program
Antisense Compound or other Antibody or Antisense Compound acting through such
Opt-out Target or (b) any Program Protein or other Protein encoded by such
Opt-out Targets, except for the specific Collaboration Product(s), if any, for
which the Opt-out Party retains Development or commercialization rights and
obligations hereunder. For clarity, the expiration of such Opt-out Party's
obligations under this Section 10.2 shall not be deemed to grant any right or
license to such Opt-out Party.
10.3 Certain Effects of Opting Out.
10.3.1 Opt-out Targets Generally. Following the expiration
of the [**] notice period specified in Section 10.1.1 with respect to
any Opt-out Target (or, if applicable, of the [**] request period under
Section 10.1.2), (a) the Biotherapeutics Research of such Opt-out
Target shall no longer be carried out jointly by the parties or as part
of the Collaboration; (b) the Party that has Opted Out shall have no
rights to develop or commercialize, or to participate in Operating
Profits from the commercialization of, any Antibodies or Antisense
Compounds that act through or Proteins that are encoded by such Opt-out
Target; and (c) the Continuing Party shall be free to conduct research
activities relating to such Opt-out Target and develop and
commercialize any Antibodies or Antisense Compounds that act through or
Proteins that are encoded by such Opt-out Target, either alone or with
one or more Third Parties. For clarity, the research activities with
respect to any Opt-out Target shall not be subject to the oversight or
direction of the Committees and shall not be the subject of any
Biotherapeutics Research Plans.
10.3.2 Opt-out Products Generally. Following the expiration
of the [**] notice period specified in Section 10.1.1 with respect to
any Opt-out Product (or, if applicable, of the [**] request period
under Section 10.1.2), (a) the Development and commercialization of
such Opt-out Product shall no longer be carried out jointly by the
parties or as part of the Collaboration; (b) the Party that has Opted
Out shall have no rights to develop or commercialize, or to participate
in Net Sales (except as provided in Section 11.5) from the
commercialization of such Opt-out Product and shall not bear any of the
costs related to commercialization of such Opt-out Product; and (c) the
Continuing Party shall be free to develop and commercialize such
Opt-out Product, either alone or with one or more Third Parties. For
clarity, the development and commercialization of any Opt-out Product
shall not be subject to the oversight or direction of the Committees
and shall not be the subject of any Development Plans or plans relating
to commercialization.
10.3.3 Manufacturing Obligation. Subject to the other
provisions of this Agreement regarding expiration and termination, in
the event Organon Opts Out as to a particular Collaboration Product
and, at the time of such Opt-Out Organon or its Affiliated
Subcontractor(s) is manufacturing such Collaboration Product pursuant
to Article 7, at Lexicon's election, the manufacture and supply
provisions of Article 7 shall nonetheless apply to such Collaboration
Product for a period of (a) [**] following such Opt Out in the event
Organon Opts Out prior to [**] and (b) [**] following such Opt Out in
the event Organon Opts Out after [**].
10.3.4 Regulatory Matters. Following an Opt Out, the
Continuing Party shall own all INDs, BLAs and other regulatory filings
and submissions with respect to the relevant Opt-out Product(s) and all
Regulatory Approvals with respect thereto. To the extent any such
regulatory filings or submissions or Regulatory Approvals are held by
the Opt-out Party, the Opt-out Party shall use Diligent Efforts to
effect the assignment and transfer thereof to the Continuing Party.
Notwithstanding any Opt Out, The Continuing Party and the Opt-out Party
shall have the same obligations under Sections 8.5 and 8.6 with respect
to an Opt-out Product as with respect to a Collaboration Product.
37
10.3.5 Diligence Obligations with Respect to Opt-out
Products.
10.3.5.1 Diligent Efforts. Each Continuing Party
shall use Diligent Efforts to actively Develop and obtain
Regulatory Approval for at least one Opt-out Product acting
through an Opt-out Target, and following such Regulatory
Approval to maximize Net Sales of such Opt-out Product.
10.3.5.2 Effect of Failure to Satisfy Diligence
Obligations.
(a) With respect to each Opt-out Target
for which the Continuing Party fails to timely
satisfy its diligence obligations under Section
10.3.5.1 above, at the option of the Opt-out Party as
its sole and exclusive remedy therefor, subject to
Sections 3.8.2 and 17.7 hereof, (i) the commercial
licenses granted under Section 9.2 with respect to
Opt-out Products acting through such Opt-out Target
shall terminate, (ii) the Continuing Party shall
deliver to the other party copies of all data,
information, registrations and applications therefor
relating to Opt-out Products acting through such
Opt-out Target, and (iii) the Opt-out Party shall
have the right, within the period of [**] following
the Continuing Party's delivery of such copies, to
obtain a commercial license under Section 9.2 for
such Opt-out Products by delivering written notice
thereof to the Continuing Party (in which case the
Opt-out Party exercising such right shall become the
Continuing Party with respect to such Opt-out
Product).
(b) With respect to each Opt-out
Product for which a party exercises its right, under
Section 10.3.5.2(a), to obtain a commercial license
regarding such Opt-out Product, the other party
promptly shall deliver to such party all materials
and copies of all data and information, and shall
assign and transfer to such party all regulatory
filings and submissions and Regulatory Approvals
relating to such Opt-out Product.
ARTICLE 11. FINANCIAL TERMS
11.1 Up-Front Payment. Organon shall pay Lexicon an upfront access
fee of twenty-two million five hundred thousand dollars (U.S. $22,500,000),
which access fee shall be invoiced within [**] of the Effective Date and due and
payable in accordance with Section 11.11. For clarity, the upfront access fee
paid by Organon under this Section 11.1 shall not be considered part of, or
included in the calculation of Organon's Allowable Costs.
11.2 Research Funding During the Target Function Discovery Program
Term. During the Target Function Discovery Program Term, Organon and/or Lexicon
shall fund its proportion of the net Allowable Costs incurred by the other party
in excess of the Cost Sharing Ratio as follows:
(a) Organon shall make annual research payments to
Lexicon of [**] for each of the first two (2) years of the Target
Function Discovery Program Term. To the extent those payments exceed
Organon's proportionate share of overall Allowable Costs based on the
Cost Sharing Ratio, such payments will be credited against payments to
be made by Organon after the second year in accordance with Section
11.6.1.4; and
(b) Subject to Section 11.6.1, Organon or Lexicon shall
make annual research payments to the other party in the final two (2)
years of the Target Function Discovery Program Term in an amount equal
to such party's proportionate share of the net Allowable Costs to be
38
incurred by the other party in excess of the Cost Sharing Ratio during
such year in accordance with the annual budget agreed upon by the Joint
Management Committee prior to the start of such year.
Notwithstanding the foregoing, the amounts payable by Organon to Lexicon under
this Section 11.2 shall not exceed an aggregate of fifty million dollars (U.S.
$50,000,000) for Allowable Costs incurred during the Target Function Discovery
Program Term, unless expressly authorized by the Joint Management Committee. The
annual research payments for each such year shall be payable in [**]
installments, which installments shall be invoiced within [**] of the start of
each [**] and due and payable in accordance with Section 11.11. Such amounts
shall be reconciled in accordance with Section 11.6.1 on a quarterly basis with
actual Allowable Costs incurred by the parties.
11.3 Research Program Milestone Payments. Organon shall pay Lexicon
a milestone payment of [**] for each Collaboration Product in excess of five (5)
designated by the Joint Management Committee during the Collaboration Term;
provided that Back-up Products for previously-designated Collaboration Products
shall be excluded from such number. Each such milestone payment shall be
invoiced within [**] following the designation by the Joint Management Committee
of the applicable Collaboration Product and shall be due and payable in
accordance with Section 11.11. For clarity, milestone payment(s) made by Organon
under this Section 11.3 shall not be considered part of, or included in the
calculation of, Organon's Allowable Costs.
11.4 Collaboration Revenue and Cost Sharing. All revenue from
Collaboration Products, Joint Marketing/Development Collaborator Revenue and
Allowable Costs shall be shared in accordance with the applicable Cost Sharing
Ratio. In the event that (a) fewer than five (5) Collaboration Products in total
have been designated over the course of the Collaboration Term (including, in
such number, Collaboration Products that have become Opt-out Products but
excluding Back-up Products) and (b) Organon has Opted Out with respect to all
Program Targets other than those for which Collaboration Products have been
designated, then, effective upon Organon's Opt Out with respect to the last such
Program Target, the Cost Sharing Ratio shall be adjusted [**] as follows: (i) in
the event that four (4) such Collaboration Products in total have been
designated over the course of the Collaboration Term (including, in such number,
Collaboration Products that have become Opt-out Products but excluding Back-up
Products), the Cost Sharing Ratio shall be adjusted to be, with respect to
Lexicon, [**], and with respect to Organon, [**]; (ii) in the event that three
(3) such Collaboration Products in total have been designated over the course of
the Collaboration Term (including, in such number, Collaboration Products that
have become Opt-out Products but excluding Back-up Products), the Cost Sharing
Ratio shall be adjusted to be, with respect to Lexicon, [**], and with respect
to Organon, [**]; (iii) in the event that two (2) Collaboration Products in
total have been designated over the course of the Collaboration Term (including,
in such number, Collaboration Products that have become Opt-out Products but
excluding Back-up Products), the Cost Sharing Ratio shall be adjusted to be,
with respect to Lexicon, [**], and with respect to Organon, [**]; and (iv) in
the event that one (1) Collaboration Product in total has been designated over
the course of the Collaboration Term (including, in such number, Collaboration
Products that have become Opt-out Products but excluding Back-up Products), the
Cost Sharing Ratio shall be adjusted to be, with respect to Lexicon, [**], and
with respect to Organon, [**]. Notwithstanding the foregoing, no adjustment
shall be made with respect to any Collaboration Product for which a Phase 2b
Clinical Trial shall have commenced prior to the time such adjustment would
otherwise have been made. In such event, the Cost Sharing Ratio applicable to
Collaboration Product(s) for which no Phase 2b Clinical Trial shall have
commenced shall be adjusted as set forth above, but the Cost Sharing Ratio
applicable to Collaboration Product(s) for which a Phase 2b Clinical Trial shall
have commenced shall remain unchanged from that in effect immediately prior to
such adjustment. Notwithstanding the foregoing, in the event that Lexicon has
not [**], then the previous two sentences shall not apply until such time as
[**].
39
11.5 Royalties Payable with Respect to Opt-out Products in the
Collaboration Field.
11.5.1 Royalty Rates for Opt-out Products. The Continuing
Party shall pay royalties on Net Sales of Opt-out Products in the
Collaboration Field at the rates specified below:
DEVELOPMENT STATUS OF OPT-OUT PRODUCT AT THE TIME OF OPT-OUT NOTICE ROYALTY RATE
------------------------------------------------------------------- ------------
No IND Filed [**]%
IND filed, but no Phase 2 Clinical Trial commenced [**]%
Phase 2 Clinical Trial commenced but no Phase 3 Clinical Trial
commenced [**]%
Phase 3 Clinical Trial commenced but no Regulatory Approval
in a Major Market [**]%
Regulatory Approval in a Major Market [**]%
[**]. For the avoidance of doubt, no royalties shall be payable under this
Section 11.5.1 with respect to Net Sales of Opt-out Products in countries within
the Territory for which the parties share Joint Marketing/Development
Collaborator Revenue pursuant to Section 11.4.
11.5.2 Royalty Term. Royalties shall be payable, on a
product-by-product and country-by-country basis, on Net Sales of
Opt-out Products in the Collaboration Field for the longer of (a) the
term of any Patent Rights Controlled by a party with a Valid Claim
Covering the composition of matter or therapeutic use of such Opt-out
Product in such country or (b) [**] after the First Commercial Sale of
such Opt-out Product in such country.
11.5.3 Royalty Reduction.
11.5.3.1 Third Party Patents. If a Continuing
Party, in its reasonable judgment, is required to obtain a
license from any Third Party under any patent in order to
import, manufacture, use or sell any Opt-Out Product, and if
such party is required to pay to such Third Party a royalty
under such license calculated on sales of such Opt-out Product
and the infringement of such patent cannot reasonably be
avoided by such party, or if such party is required by a court
of competent jurisdiction to pay such a royalty to such a
Third Party (and the infringement of such patent cannot
reasonably be avoided by such party), then such party's
obligation to pay royalties under Section 11.5.1 hereof shall
be reduced by [**] of the amount of the royalty paid to such
Third Party; provided however, that the royalties payable
under Section 11.5.1 hereof shall not be reduced in any such
event below [**] of the amounts set forth in Section 11.5.1.
Such party shall use commercially reasonable efforts to
minimize the amount of any of the foregoing payments owed by
such party to a Third Party.
11.5.3.2 Generic Competition. In the event that (a)
an Opt-Out Product is not Covered by any Valid Claim in a
country providing marketing exclusivity with respect to such
Opt-out Product in such country and (b) generic competition
with respect to such Opt-out Product accounts for more than
[**] of the market share of units sold in that country, the
royalty rate with respect to such Opt-out Product (as set
forth in Section 11.5.1 and adjusted, if applicable, in
accordance with Section 11.5.3.1) shall be reduced by [**] in
such country for so long as such conditions exist; provided
however, that the royalties payable under Section 11.5.1
hereof shall not be reduced in any such event below [**] of
the amounts set forth in Section 11.5.1. For purposes of the
foregoing, "generic competition" with respect to such Opt-out
Product refers to the marketing and sale of one or more Third
Party products that (i) comprise the same Antibody, Antisense
40
Compound or Protein as such Opt-out Product or Collaboration
Product and (ii) have been approved by the relevant Regulatory
Authority for such country through an expedited process that
relies in whole or in part on safety and efficacy data
generated for such Opt-out Product.
11.6 Allowable Cost, Joint Marketing/Development Collaborator
Revenue and Royalty Reports.
11.6.1 Allowable Cost and Joint Marketing/Development
Collaborator Revenue Reports.
11.6.1.1 Reports of Allowable Costs. During the
term of this Agreement, each party shall, within [**] after
each [**], furnish to the other party a written [**] report
showing in reasonable detail the Allowable Costs incurred by
such party during such [**] in each of the categories
specified in Section 1.5, on a Program Target-by-Program
Target and Collaboration Product-by-Collaboration Product
basis. [**]. Reports provided by either party with respect to
all other activities will include, but not be limited to, a
breakdown of FTE Costs by category of work, including the
number of persons under each such category performing the work
and the number of hours of work performed by each such person.
11.6.1.2 Reports of Joint Marketing/Development
Collaborator Revenue. During the term of this Agreement, each
party shall, within [**] after each [**], furnish to the other
party a written [**] report showing in reasonable detail the
Joint Marketing/Development Collaborator Revenue received by
such party during such [**], on a Program Target-by-Program
Target and Collaboration Product-by-Collaboration Product
basis.
11.6.1.3 Lexicon Report of Net Payments Due. During
the term of this Agreement, Lexicon shall, within [**] after
each [**], furnish to Organon a written [**] report showing in
reasonable detail:
(a) the Allowable Costs incurred by
Lexicon and Organon, respectively, and in total,
during such Calendar Quarter in each of the
categories specified in Section 1.5, on a Program
Target-by-Program Target and Collaboration
Product-by-Collaboration Product basis;
(b) the Joint Marketing/Development
Collaborator Revenue received by Lexicon and Organon,
respectively, and in total, during such Calendar
Quarter, if any; and
(c) the amount, if any, owed by one
party to the other party in reconciliation of the
amounts set forth in subsections (a) and (b) above
with the Cost Sharing Ratio.
11.6.1.4 Payment of Amounts Owed. Following receipt
of the report delivered in accordance with Section
11.6.1.3(c), amounts shown as owed by one party shall be
invoiced within [**] following the delivery of such report and
shall be due and payable in accordance with Section 11.11.
Notwithstanding the foregoing, during the Target Function
Discovery Program Term, amounts, if any, owed by Lexicon to
Organon shall not be invoiced or paid under this Section
11.6.1.4 but instead shall be carried over
41
and credited against the amount of the next succeeding
research payment(s) payable by Organon under Section 11.2(b).
11.6.1.5 Exchange Rates. Allowable Costs and Joint
Marketing/Development Collaborator Revenue attributable to
countries other than the United States shall be calculated in
accordance with the standard exchange rate published in the
Wall Street Journal (New York edition) and otherwise in
accordance with conversion practices used by the reporting
party for financial accounting purposes. The currency
conversion system used by a party hereunder shall be subject
to audit by the other party as described in Section 11.6.3
and, if not determined to be a system reflecting the fair
market value of the currencies in question, shall be modified
as necessary to effect currency conversion at fair market
value.
11.6.1.6 Records. The parties shall each keep
accurate books and accounts of record in connection with the
Target Function Discovery Program, the Biotherapeutics
Research Program and the Development, Manufacture and
commercialization of Collaboration Products in a manner
consistent with GAAP and in sufficient detail to permit
accurate determination of all figures necessary for
verification of Allowable Costs and Net Sales hereunder.
11.6.2 Royalty Reporting and Payment.
11.6.2.1 Royalty Reports. During the term of this
Agreement following the First Commercial Sale of any Opt-out
Product (or, as applicable, of any Collaboration Product in
the Veterinary Field), the Continuing Party (or, as
applicable, Organon) shall, within [**] after each [**],
furnish to the other party a written [**] report showing, on a
product-by-product and country-by-country basis:
(a) the gross sales and Net Sales of
Opt-out Products (or, as applicable, of any
Collaboration Product in the Veterinary Field) sold
by such Continuing Party (or, as applicable,
Organon), its (sub)licensees and their respective
Affiliates during the reporting period and the
calculation of Net Sales from such gross sales;
(b) the royalties payable in United
States dollars which shall have accrued hereunder in
respect of such Net Sales;
(c) withholding taxes, if any, required
by law to be deducted in respect of such royalties;
(d) the dates of the First Commercial
Sales of Opt-out Products (or, as applicable, of
Collaboration Product in the Veterinary Field) in any
country during the reporting period; and
(e) the exchange rates used in
determining the amount of United States dollars
payable hereunder.
Royalties payable on sales in countries other than the United
States shall be calculated in accordance with the standard
exchange rate conversion practices used by the Continuing
Party (or, as applicable, Organon) for financial accounting
purposes. If no royalty or payment is due for any royalty
period hereunder, such party shall so report. Each party
42
shall keep, and shall require its (sub)licensees to keep (all
in accordance with generally accepted accounting principles,
consistently applied), complete and accurate records in
sufficient detail to properly reflect all gross sales and Net
Sales and to enable the royalties payable hereunder to be
determined. Each party shall include in each agreement with
each applicable (sub)licensee a provision requiring such
(sub)licensee to make reports to such party, to keep and
maintain records of sales made pursuant to such agreement and
to grant access to such records by the other party's
independent certified public accountant to the same extent
required of a party under this Agreement.
11.6.2.2 Royalty Payment Terms. Royalty payments
for each [**] shall be invoiced at the time the applicable
report under Section 11.6.2.1 for such [**] shall be due and
shall be payable in accordance with Section 11.11.
11.6.3 Audits. Upon the written request of a party, the
other party shall permit an independent certified public accountant
selected by the requesting party and acceptable to the other party,
which acceptance shall not be unreasonably withheld, to have access, at
reasonable times and during normal business hours, to such records of
such other party as may be reasonably necessary to verify the accuracy
of the reports described herein, in respect of any fiscal year ending
not more than [**] prior to the date of such request. Each party shall
use commercially reasonable efforts to schedule all such verifications
within [**] after the requesting party makes its written request. All
such verifications shall be conducted not more than [**]. The report of
the requesting party's independent certified public accountant shall be
made available to both parties. Subject to the other party's rights
under Section 17.7, in the event requesting party's independent
certified public accountant concludes that additional amounts were owed
to the requesting party for such period, the additional amounts shall
be paid by the other party within [**] of the date the requesting party
delivers to the other party such independent certified public
accountant's written report so concluding, unless such report contains
manifest error. In the event requesting party's independent certified
public accountant concludes that there was an overpayment to such party
during such period, the overpayment shall be repaid by the requesting
party within [**] of the date the requesting party received such
independent certified public accountant's written report so concluding,
unless such report contains manifest error. The fees charged by such
independent certified public accountant shall be paid by the requesting
party unless such audit discloses an underpayment or overpayment of
more than [**] of the amount due under this Agreement for the period in
question, in which case the party responsible for such underpayment or
overpayment will bear the full cost of such audit. Each party agrees
that all information subject to review under this Section 11.6.3 or
under any agreement with a (sub)licensee of a party is confidential and
that the party receiving such information shall cause its independent
certified public accountant to retain all such information in
confidence. The requesting party's independent certified public
accountant shall only report to the requesting party as to the
computation of Allowable Costs, Joint Marketing/Development
Collaborator Revenue or royalties payable under this Agreement, and
shall not disclose to the requesting party any other information of the
other party or any (sub)licensee of a Continuing Party.
11.7 Withholding Taxes. In the event that any royalties or other
payments due to a party are subject to withholding tax required by law to be
paid to the taxing authority of any foreign country, the amount of such tax may
be withheld from the applicable royalties or other payment due such party. The
party owing such payment shall promptly pay such tax on behalf of the party to
which such payment is owed and shall furnish the party to which such payment is
owed with a certificate of withholding tax so deducted for such party's
avoidance of duplicate taxation in multiple countries. The party owing such
payment may not deduct any other withholding or any other governmental charges
from the payments agreed upon under this Agreement, except to the extent same
are paid on behalf of, or for the benefit of,
43
the party to which such payment is owed. The party owing such payment shall
maintain official receipts of payment of any such withholding taxes and shall
forward such receipts to the party to which such payment is owed.
11.8 Blocked Currency. If by law, regulation, or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds
of a convertible currency to the United States is restricted or forbidden, the
party owing such payment shall give the party to which such payment is owed
prompt written notice and shall make such payment due under this Article 11
through such means or methods as are lawful in such country as the party to
which such payment is owed may reasonably designate. Failing the designation by
the party to which such payment is owed of such lawful means or methods within
[**]after such written notice is given to such party, the party owing such
payment shall deposit such royalty payment in local currency to the credit of
the party to which such payment is owed in a recognized banking institution
designated by such party, or if none is designated by such party within the [**]
period described above, in a recognized banking institution selected by the
party owing such payment and identified in a written notice to other party, and
such deposit shall fulfill all obligations of the party owing such payment to
the other party with respect to such payment.
11.9 Interest on Late Payments. A party to which payment is owed
under this Agreement shall have the right to seek to collect interest on any
payments that are not paid on or before [**] after the date such payments are
due under this Agreement at a rate equal to [**], calculated on the total number
of days payment is delinquent. The party to which interest is owed shall send a
written notice to the delinquent party notifying it of any such delinquency;
provided, that such party shall not be required to send more than two (2) such
notices in any Contract Year and; provided, further, that the date of delivery
of such notice shall not affect the calculation of the amount of interest owed
hereunder.
11.10 Manner of Payment. Except as provided in Section 11.8,
payments to be made by one party to the other under this Agreement shall be
payable in United States dollars and shall be paid by bank wire transfer in
immediately available funds to such bank account in the state and country in
which such principal office is located as is designated in writing by such party
from time to time.
11.11 Invoices. All amounts to be paid under this Agreement shall be
due and payable within [**] after receipt by the party owing such payment of an
invoice setting forth the amounts owed and the calculations for determining such
amounts owed. Invoices shall be sent to the following addresses:
For Lexicon: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Accounts Payable
For Organon: N.V. Organon
Purchase Accounting (KA1041)
▇.▇. ▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: Manager, Research Alliances
44
ARTICLE 12. INTELLECTUAL PROPERTY
12.1 Ownership of Intellectual Property.
12.1.1 Ownership by Lexicon of the Lexicon Background
Materials and Lexicon Background Technology. Subject to the rights and
licenses granted under this Agreement, Lexicon (and its licensors, as
applicable) shall own and retain all rights to the Lexicon Background
Materials and Lexicon Background Technology.
12.1.2 Ownership by Organon of the Organon Background
Materials and Organon Background Technology. Subject to the rights and
licenses granted under this Agreement, Organon (and its licensors, as
applicable) shall own and retain all rights to the Organon Background
Materials and Organon Background Technology.
12.1.3 Ownership of Program Intellectual Property.
12.1.3.1 Inventorship. Inventorship for patentable
inventions and discoveries conceived or reduced to practice
during the course of the performance of activities pursuant to
this Agreement shall be determined in accordance with U.S.
patent laws for determining inventorship. In the event of a
dispute regarding inventorship, if the parties are unable to
resolve such inventorship dispute, the Joint Management
Committee shall establish a procedure to resolve such dispute,
which may include engaging a Third Party patent attorney
jointly selected by the parties to resolve such dispute, which
resolution by such patent attorney shall be binding upon the
parties.
12.1.3.2 Ownership of Program Technology and Program
Intellectual Property for Program Targets and Related
Antibodies, Antisense Compounds and Proteins. Subject to the
rights and licenses granted under this Agreement, the parties
shall jointly own all Program Technology and Program
Intellectual Property that directly relates to (a) a Program
Target, (b) the utility of such Program Target, (c) the use of
a Program Target to identify Antibodies or Antisense Compounds
acting through such Program Target, and the use of such
Antibodies or Antisense Compounds in the Collaboration Field
or Veterinary Field, (d) the use of Protein(s) encoded by such
Program Target in the Collaboration Field or Veterinary Field,
(e) Program Antibodies, (f) Program Antisense Compounds, (g)
Program Proteins and (h) Collaboration Products, whether
invented or discovered by employees, Affiliates, agents,
independent contractors or consultants of Lexicon, Organon or
both parties. In the event either party would otherwise be
deemed to be the sole owner of any such invention, then such
party shall assign to the other party an undivided joint
interest in such invention.
12.1.3.3 Ownership of Other Program Technology and
Program Intellectual Property. Except as set forth in Section
12.1.3.2, title to all Program Technology and Program
Intellectual Property shall be based upon the inventorship for
such Program Technology and Program Intellectual Property.
Except as set forth in Section 12.1.3.2, (a) Lexicon shall own
Program Technology and Program Intellectual Property invented
solely by employees, agents, consultants or contractors of
Lexicon or a Lexicon Affiliate; (b) Organon shall own Program
Technology and Program Intellectual Property invented solely
by employees, agents, consultants or contractors of Organon or
a Organon Affiliate; and (c) Lexicon and Organon shall jointly
own Program Technology and Program Intellectual Property
invented jointly by employees, agents, consultants or
contractors of both Lexicon and Organon or Affiliates of
Lexicon and Organon. Each
45
party shall disclose to the other party promptly any
inventions within the Program Technology and Program
Intellectual Property made by such party's Affiliates,
employees, agents or consultants.
12.2 Prosecution and Maintenance of Program Patent Rights.
12.2.1 Primary Prosecution Rights. The responsibility for (a)
preparing, filing and prosecuting patent applications (including, but
not limited to, provisional, reissue, continuing, continuation,
continuation-in-part, divisional, and substitute applications and any
foreign counterparts thereof) Covering inventions within the Program
Technology and Program Intellectual Property; (b) maintaining any
Program Patent Rights; and (c) managing any interference or opposition
or similar proceedings relating to the foregoing ((a) through (c),
collectively, "Patent Prosecution") shall be the responsibility of
Lexicon, unless otherwise determined by the Joint Management Committee.
In making such determination, the Joint Management Committee shall
consider, among other factors, the nature of the claimed subject
matter, the relative contribution of each party to the claimed subject
matter and the relatedness of the claimed subject matter to that in
other patent applications being prosecuted by the parties.
Notwithstanding the foregoing, all decisions related to (y) [**] or (z)
[**], shall be the responsibility of the Joint Management Committee.
12.2.2 Secondary Prosecution Rights. If the prosecuting party
elects not to continue pursuing Patent Prosecution for an invention
within the Program Technology and Program Intellectual Property (and
the other party has joint ownership of or a license under such Program
Patent Rights pursuant to this Agreement), then the prosecuting party
shall notify the other party in writing of such election at least [**]
prior to the last available date for action to preserve such Program
Patent Rights. If such other party elects to continue Patent
Prosecution, it will not be liable to the other party in any way with
respect to its handling of, or the results obtained from, such Patent
Prosecution. The other party will provide the party taking over Patent
Prosecution with such assistance and execute such documents as are
necessary to continue or permit such Patent Prosecution.
12.2.3 Right of Review. The prosecuting party under Sections
12.2.1 or 12.2.2 shall provide the other party with a reasonable
opportunity to review and provide substantive input to material
decisions relating to Patent Prosecution. The prosecuting party shall
furnish to the other party copies of any substantive actions prepared
for the U.S. Patent and Trademark Office or its foreign counterparts
that may materially affect the Program Patent Rights being prosecuted
or maintained reasonably in advance of the filing of such action in
order to provide such party with a meaningful opportunity to comment
thereon. Such action filed by the prosecuting party shall reflect any
comments received from the other party that are received in a
reasonably timely manner and are reasonably directed to maximizing the
coverage of the claims of such Program Patent Rights being prosecuted
or maintained.
12.2.4 Patent Prosecution Costs. All Patent Prosecution
expenses, including attorneys' fees, incurred in the performance of
Patent Prosecution under Section 12.2.1 or 12.2.2 shall be shared by
the parties in accordance with the Cost Sharing Ratio.
12.2.5 Cooperation. Each party hereby agrees:
(a) to take all reasonable additional actions and
execute such agreements, instruments and documents as may be
reasonably required to perfect the other's
46
ownership interest in accordance with the intent of this
Agreement, including, without limitation, requiring inventors
to make appropriate patent assignments;
(b) to make its employees, Affiliates, agents,
independent contractors and consultants reasonably available
to the other party (or to the other party's authorized
attorneys, agents or representatives), to the extent
reasonably necessary to enable the prosecuting party to
undertake Patent Prosecution;
(c) to provide the other party with copies of all
material correspondence with the U.S. Patent and Trademark
Office or its foreign counterparts;
(d) to cooperate, if necessary and appropriate, with
the other party in gaining patent term extensions wherever
applicable to Program Patent Rights for Program Inventions;
and
(e) to endeavor in good faith to coordinate its
efforts with the other party to minimize or avoid interference
with the Patent Prosecution of the other party's patent
applications related to inventions within the Program
Technology and Program Intellectual Property.
12.3 Patent Term Extension. Each party shall cooperate with the other
in obtaining patent term extension or supplemental protection certificates or
their equivalents in any country with respect to the Program Patent Rights.
12.4 Enforcement of the Program Patent Rights.
12.4.1 Notices of Third Party Infringement. Each Party shall
promptly provide the other Party with written notice reasonably
detailing any known or alleged infringement of Program Patent Rights by
a Third Party.
12.4.2 ▇▇▇▇▇-▇▇▇▇▇▇ Notifications. Each party shall provide to
the other party copies of any allegations of alleged patent invalidity,
unenforceability or non-infringement of a patent or patents with
respect to Program Technology, Program Materials or Collaboration
Products pursuant to a Paragraph IV Patent Certification by a Third
Party filing an Abbreviated New Drug Application (i.e., an action under
the ▇▇▇▇▇-▇▇▇▇▇▇ Act). Such copies shall be provided promptly after
receipt of such certification.
12.4.3 Other Notifications. Each party shall provide to the
other party copies of any notices it receives from Third Parties
regarding any patent nullity actions, any declaratory judgment actions,
any alleged infringement of Program Patent Rights or any alleged
misappropriation of intellectual property with respect to Program
Technology, Program Materials or Collaboration Products. Such copies
shall be provided promptly following receipt thereof.
12.4.4 Product-Related Infringement.
12.4.4.1 Lexicon shall have the first right, but not
the obligation, to institute and direct legal proceedings
against any Third Party believed to be infringing the Program
Patent Rights of either party by the manufacture, use,
importation, offer for sale or sale of a product competitive
with a Collaboration Product (whether a clinical or commercial
product). Each party will bear its own costs, including
attorneys' fees, relating to such legal proceedings; provided
that Lexicon shall bear Organon's out-of-
47
pocket expenses, including attorneys' fees, incurred in
complying with requests for cooperation made by Lexicon. Any
recovery in connection with such suit or proceeding will first
be applied to reimburse the parties for their out-of-pocket
expenses, including attorneys' fees. All recoveries resulting
from such legal proceedings that are in excess of the parties'
costs of bringing or participating in such action, including
attorneys' fees, shall be allocated in accordance with the
Cost Sharing Ratio.
12.4.4.2 If Lexicon elects not to institute and
direct legal proceedings against any Third Party believed to
be infringing the Program Patent Rights of either party as
described in Section 12.4.4.1, Organon shall have the right,
but not the obligation, to institute and direct such legal
proceedings. Each party will bear its own costs, including
attorneys' fees, relating to such legal proceedings; provided
that Organon shall bear Lexicon's out-of-pocket expenses,
including attorneys' fees, incurred in complying with requests
for cooperation made by Organon. Any recovery in connection
with such suit or proceeding will first be applied to
reimburse the parties for their out-of-pocket expenses,
including attorneys' fees. All recoveries resulting from such
legal proceedings that are in excess of the parties' costs of
bringing or participating in such action, including attorneys'
fees, shall be allocated in accordance with the Cost Sharing
Ratio.
12.4.4.3 In the event that a party takes action under
this Section 12.4.4, the other party shall cooperate to the
extent reasonably necessary at the sole expense of the party
taking such action. Upon the reasonable request of the party
taking such action, the other party shall join the suit and
shall be represented in any such legal proceedings using
counsel of its own choice. Neither party shall settle or
otherwise agree to the final disposition of any claim or
proceeding relating to Program Patent Rights Controlled in
whole or in part by the other party or licensed under this
Agreement to the other party without the prior written consent
of such other party, which consent shall not be unreasonably
withheld.
12.4.5 Non-Product-Related Infringement. Each party shall have
the sole right, but not the obligation, to institute and direct legal
proceedings against any Third Party believed to be infringing the
Program Patent Rights solely owned by such party other than
infringement relating to a Collaboration Product. All costs, including
attorneys' fees, relating to such legal proceedings shall be borne by
the party instituting such legal proceedings, and all recoveries
resulting from such legal proceedings shall be retained by such party.
The parties shall consult with each other regarding the institution,
prosecution and control of any action or proceeding with respect to
infringement of any of the Program Patent Rights jointly owned by the
parties other than infringement relating to a Collaboration Product.
12.5 Notices of Other Proceedings.
12.5.1 Each party shall notify the other in writing of any
allegations it receives from a Third Party that the manufacture, use,
sale, offer for sale or import of Program Technology, Program Materials
or any Collaboration Product infringes the intellectual property rights
of such Third Party. Such notice shall be provided promptly following
receipt of such allegations.
12.5.2 In the event that a party receives notice that it or
any of its Affiliates have been individually named as a defendant in a
legal proceeding by a Third Party alleging infringement of a Third
Party patent or other intellectual property right as a result of the
manufacture, use, sale, offer for sale or import of Program Technology,
Program Materials or a Collaboration Product,
48
such party shall immediately notify the other party in writing after
the receipt of such notice. Such written notice shall include a copy of
any summons or complaint (or the equivalent thereof) received regarding
the foregoing.
ARTICLE 13. CONFIDENTIALITY
13.1 Nondisclosure Obligations.
13.1.1 General. Except as otherwise provided in this Article
13, during the term of this Agreement and for a period of five (5)
years thereafter, each Receiving Party shall maintain the Confidential
Information of each Disclosing Party in confidence and use it only for
purposes specifically authorized under this Agreement.
13.1.2 Limitations. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under
this Agreement and subject to advance written notification to the
Disclosing Party: (a) a party may disclose to Third Parties
Confidential Information it is otherwise obligated not to disclose
under this Section 13.1, to its Affiliates, (sub)licensees,
consultants, outside contractors and clinical investigators, on a
strict need-to-know basis for the purposes contemplated by this
Agreement and on condition that such entities or persons agree to keep
the Confidential Information confidential for the same time periods and
to the same extent as such party is required to keep the Confidential
Information confidential hereunder; and (b) a party or its
(sub)licensees may disclose, using appropriate measures to preserve
confidentiality, such Confidential Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain authorizations to conduct clinical trials of, and
to commercially market, Collaboration Products pursuant to this
Agreement. Furthermore, a Receiving Party may request permission from
the Disclosing Party to disclose such Confidential Information to the
extent that such disclosure is reasonably necessary to [**].
13.1.3 Required Disclosure. A Receiving Party may disclose
Confidential Information pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued
by a court or governmental agency or as otherwise required by law;
provided, however, that the Receiving Party shall notify the Disclosing
Party promptly upon receipt thereof, giving [**] the Disclosing Party
sufficient advance notice to permit it to oppose, limit or seek
confidential treatment for such disclosure; and provided, further, that
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by counsel is legally required whether
or not a protective order or other similar order is obtained by the
Disclosing Party.
13.2 Injunctive Relief. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 13 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of injunctive
relief by a court of competent jurisdiction against any action that constitutes
any such breach of this Article 13.
13.3 Publication. Organon and Lexicon (each, a "Submitting Party") may
each publish or present data and results relating to a Collaboration Product or
Opt-out Product for which the Submitting Party holds a commercial license under
Section 9.2 hereof, subject to the prior review of the proposed disclosure by
the other party (each, a "Reviewing Party"), solely to determine (a) whether the
proposed disclosure contains the Confidential Information of the Reviewing Party
or (b) whether the information contained in the proposed disclosure should be
the subject of a patent application to be filed by the Reviewing Party prior to
such disclosure. Each Submitting Party shall provide the Reviewing Party with
49
the opportunity to review any proposed abstract, manuscript or presentation by
delivering a copy thereof to the Reviewing Party no less than [**] before its
intended submission for publication or presentation. The Reviewing Party shall
have [**] from its receipt of any such abstract, manuscript or presentation in
which to notify the Submitting Party in writing of any specific objections to
the disclosure, based on either the need to seek patent protection or concern
regarding the specific disclosure of the Confidential Information of the
Reviewing Party. In the event the Reviewing Party objects to the disclosure, the
Submitting Party agrees not to submit the publication or abstract or make the
presentation containing the objected-to information until the Reviewing Party is
given a reasonable additional period of time (not to exceed an additional [**])
to seek patent protection for any material in the disclosure which the Reviewing
Party believes is patentable (subject, in all events, to Section 13.2) or, in
the case of Confidential Information, to allow the Submitting Party to delete
any Confidential Information of the Reviewing Party from the proposed
disclosure. The Submitting Party agrees to delete from the proposed disclosure
any Confidential Information of the Reviewing Party upon request.
ARTICLE 14. REPRESENTATIONS AND WARRANTIES
14.1 Representations, Warranties and Covenants of Lexicon. Lexicon
represents and warrants to and covenants with Organon that:
14.1.1 Lexicon is a corporation duly organized, validly
existing and in corporate good standing under the laws of the State of
Delaware, United States of America;
14.1.2 Lexicon has the corporate and legal right, authority
and power to enter into this Agreement, and to extend the rights and
licenses granted to Organon in this Agreement;
14.1.3 Lexicon has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
14.1.4 upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of Lexicon,
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
14.1.5 the performance of Lexicon's obligations under this
Agreement will not conflict with its charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party;
14.1.6 Lexicon will not during the term of this Agreement
enter into any agreements, contracts or other arrangements that would
be inconsistent with its obligations under this Agreement;
14.1.7 Lexicon has no Pre-existing Obligations with respect to
the genes in the list provided by Lexicon to Organon prior to the
Effective Date from which Program Targets are to be selected in
accordance with Section 2.3 to which the licenses granted by Lexicon in
Article 9 would be subject; and
14.1.8 To the best of Lexicon's knowledge after reasonable
inquiry, Lexicon is not aware of any patent or other intellectual
property rights of any Third Party that would be
50
infringed by its conduct of the Target Function Discovery Program, and
has received no notice from any Third Party claiming any such
infringement.
14.2 Representations, Warranties and Covenants of Organon. Organon
represents and warrants to and covenants with Lexicon that:
14.2.1 Organon is a registered company duly organized, validly
existing and in good standing under the laws of the Netherlands;
14.2.2 Organon has the corporate and legal right, authority
and power to enter into this Agreement, and to extend the rights and
licenses granted to Lexicon in this Agreement;
14.2.3 Organon has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
14.2.4 upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of Organon
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
14.2.5 the performance of its obligations under this Agreement
will not conflict with Organon's charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party; and
14.2.6 Organon will not after the Effective Date enter into
any agreements, contracts or other arrangements that would be
inconsistent with its obligations under this Agreement.
14.3 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY PRODUCT,
PATENT RIGHTS, GOODS, SERVICES, BACKGROUND MATERIALS OR ANY OTHER SUBJECT MATTER
OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING. IN ADDITION, THE PARTIES ACKNOWLEDGE
THAT THE GENERATION OR USE OF BACKGROUND MATERIALS MAY BE COVERED BY ONE OR MORE
VALID PATENTS OF THIRD PARTIES. EACH PARTY ACKNOWLEDGES THAT EXERCISE BY IT OF
THE RIGHTS AND LICENSES GRANTED TO IT PURSUANT TO ARTICLE 9 HEREOF MAY BE
COVERED BY ONE OR MORE VALID PATENTS OF THIRD PARTIES.
14.4 Limited Liability. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, NEITHER LEXICON NOR ORGANON WILL BE LIABLE WITH RESPECT TO ANY MATTER
ARISING UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS.
ARTICLE 15. INDEMNITY
15.1 Lexicon Indemnity Obligations. Lexicon agrees to defend, indemnify
and hold Organon, its Affiliates and their respective employees and agents
harmless from all claims, losses, damages or
51
expenses (including reasonable attorneys' fees and costs of litigation) arising
as a result of: (a) actual or asserted violations of any applicable law or
regulation by Lexicon, its (sub)licensees and their respective Affiliates by
virtue of which any Lexicon Products manufactured, distributed or sold by
Lexicon hereunder as Continuing Party shall be alleged or determined to be
adulterated, misbranded, mislabeled or otherwise not in compliance with any
applicable law or regulation; (b) claims for bodily injury, death or property
damage attributable to the manufacture, distribution, sale or use of any Lexicon
Products by Lexicon as Continuing Party, its (sub)licensees and their respective
Affiliates; (c) a recall of a Lexicon Product manufactured, distributed or sold
by Lexicon hereunder as the Continuing Party ordered by a governmental agency or
required by a confirmed Lexicon Product failure as reasonably determined by the
parties hereto; or (d) Lexicon's breach of any of its representations,
warranties or covenants hereunder.
15.2 Organon Indemnity Obligations. Organon agrees to defend, indemnify
and hold Lexicon, its Affiliates and their respective employees and agents
harmless from all claims, losses, damages or expenses (including reasonable
attorneys' fees and costs of litigation) arising as a result of: (a) actual or
asserted violations of any applicable law or regulation by Organon, its
(sub)licensees and their respective Affiliates by virtue of which any Organon
Products manufactured, distributed or sold by Organon hereunder as the
Continuing Party shall be alleged or determined to be adulterated, misbranded,
mislabeled or otherwise not in compliance with any applicable law or regulation;
(b) claims for bodily injury, death or property damage attributable to the
manufacture, distribution, sale or use of any Organon Products by Organon as
Continuing Party hereunder, its (sub)licensees and their respective Affiliates;
(c) a recall of an Organon Product manufactured, distributed or sold by Organon
hereunder as the Continuing Party ordered by a governmental agency or required
by a confirmed Organon Product failure as reasonably determined by the parties
hereto; or (d) Organon's breach of any of its representations, warranties or
covenants hereunder.
15.3 Limitation on Indemnity Obligations. Neither party, its Affiliates
or their respective employees and agents shall be entitled to the indemnities
set forth in Sections 15.1 or 15.2, respectively, to the comparative extent the
claim, loss, damage or expense for which indemnification is sought was caused by
a grossly negligent, reckless or intentional act or omission by such party, its
directors, officers, employees or authorized agents.
15.4 Procedure. If a party or any of its Affiliates or their respective
employees or agents (collectively, the "Indemnitee") intends to claim
indemnification under this Article 15, the Indemnitee shall promptly notify the
other party (the "Indemnitor") of any loss, claim, damage, liability or action
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel selected by the
Indemnitor and reasonably acceptable to the Indemnitee, provided, however, that
an Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitee, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceedings. The Indemnitor shall have the
right to settle or compromise any claims for which it is providing
indemnification under this Article 15, provided that the consent of the
Indemnitee (which shall not be unreasonably withheld or delayed) shall be
required in the event any such settlement or compromise would adversely affect
the interests of the Indemnitee. The indemnity agreement in this Article 15
shall not apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Indemnitor. The failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action, if prejudicial to the
Indemnitor's ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 15, but the omission so to
deliver notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Article 15. The Indemnitee
under this Article 15, its employees and agents, shall
52
cooperate fully with the Indemnitor and its legal representatives in the
investigation of any action, claim or liability covered by this indemnification.
15.5 Insurance. Each party shall maintain appropriate product liability
insurance with respect to Development, Manufacture and commercialization of
Collaboration Products by such party in such amount as such party customarily
maintains with respect to sales of its other products. Each party shall maintain
such insurance for so long as it continues to manufacture or sell Collaboration
Products, and thereafter for so long as such party customarily maintains
insurance with respect to sales of its other products.
ARTICLE 16. EXPIRATION AND TERMINATION
16.1 Term of Agreement. The term of this Agreement shall commence on
the Effective Date and shall continue until the later of (a) the expiration or
termination of the last to expire of any Valid Claim included in the Program
Patent Rights and (b) the cessation of Development or commercialization
activities with respect to all Collaboration Products generated pursuant to the
terms hereof.
16.2 Events of Default. An Event of Default by either party shall have
occurred upon (a) the occurrence of a material breach of this Agreement if such
party fails to remedy such breach within [**] after written notice thereof by
the non-breaching party ([**] in the event of a party's failure to make a
payment required hereunder) or, if remediation of such breach in [**] is not
practicable, if such party fails to commence and diligently pursue such
remediation during such [**] period, or (b) the commencement of any proceeding
in or for bankruptcy, insolvency, dissolution or winding up by or against such
party that is not dismissed or otherwise disposed of within [**] thereafter.
16.3 Effect of an Event of Default. In the event of an Event of
Default, the non-defaulting party shall have the right, at its option
exercisable in its sole discretion, in addition to any other rights or remedies
available to it at law or in equity and subject to the limitations set forth in
Sections 3.8.2, 14.4 and 17.7 hereof, to terminate this Agreement upon [**]
notice thereof to the other party, in which case (a) the licenses granted to the
defaulting party pursuant to Article 9 shall terminate and (b) the defaulting
party shall return to the non-defaulting party or, upon the non-defaulting
party's written instruction, destroy all information, materials or documentation
provided by the non-defaulting party pursuant to this Agreement; provided that
such termination shall apply to the rights and licenses granted to the
defaulting party under Sections 9.1 and 9.2 with respect to a Collaboration
Product or Opt-out Product only in the event, and to the extent, that such Event
of Default relates to such specific Collaboration Product or Opt-out Product, in
which case the defaulting party shall be deemed to have Opted Out of any such
Collaboration Product with the same effect (subject to any other rights or
remedies available to the non-defaulting party at law or in equity) as if such
breaching party had Opted Out under Section 10.1.1.1. For the avoidance of
doubt, the termination rights of the non-defaulting party under this Section
16.3 shall be in addition to any other rights or remedies available to it at law
or in equity. The rights and licenses granted to the defaulting party under
Sections 9.1 and 9.2 with respect to any Collaboration Product or Opt-out
Product with respect to which no Event of Default has occurred shall, subject to
such party's applicable obligations under this Agreement with respect thereto,
continue. In the event that this Agreement is terminated pursuant to this
Section 16.3, the defaulting party's obligations under the exclusivity
provisions set forth in Section 2.4 shall survive for five (5) years following
such termination.
16.4 Effect of Expiration or Termination of Agreement. The expiration
or termination of this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination. The provisions of Articles 12,
13 and 15, Sections 8.5, 8.6 and 17.2 and Sections 17.4 through 17.7 hereof
shall survive the expiration or termination of this Agreement. The rights and
licenses granted to the non-defaulting party under Sections 9.1 and 9.2 hereof
shall survive any termination of this Agreement by
53
such non-defaulting party pursuant to Section 16.3. The provisions of Sections
11.2 through 11.11 hereof shall survive any termination of this Agreement under
which a party, its (sub)licensees or their respective Affiliates retains the
right to sell Collaboration Products until such time as this Agreement would
have expired with respect to any Collaboration Product, as the case may be, in
any country pursuant to Section 16.1 hereof had this Agreement not been earlier
terminated.
ARTICLE 17. MISCELLANEOUS
17.1 Force Majeure. Neither party shall be held liable or responsible
to the other party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any obligation under
this Agreement when such failure or delay is caused by or results from causes
beyond the reasonable control of the affected party, including but not limited
to fire, floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided, however, that the party so affected shall use
reasonable commercial efforts to avoid or remove such causes of nonperformance,
and shall continue performance hereunder with reasonable dispatch whenever such
causes are removed. Either party shall provide the other party with prompt
written notice of any delay or failure to perform that occurs by reason of force
majeure. The parties shall mutually seek a resolution of the delay or the
failure to perform as noted above.
17.2 Assignment. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by either party without the consent of the
other party; provided, however, that either Lexicon or Organon may, without such
consent, assign its rights and obligations under this Agreement (i) to any
Affiliate, or (ii) in connection with a merger, consolidation or sale of such
portion of a party's assets that includes rights under this Agreement to an
unrelated Third Party; provided, further, that such party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including those business assets
that are the subject of this Agreement. Any purported assignment in violation of
the preceding sentence shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement, unless the parties otherwise
agree. Any permitted assignee shall also, within [**] following such assignment,
provide the continuing party with a written summary of how it intends to fulfill
its obligations under this Agreement with respect to each-Collaboration Product.
17.3 Change in Control.
17.3.1 Notice of and Reasonable Assurances upon a Change in
Control. Within [**] after any Change in Control of a party, the
surviving party to such Change in Control (the "Acquiring Party") (a)
will notify the other party of the occurrence of such Change in Control
and (b) will provide the other party with reasonable assurances of its
commitment to fulfill its obligations under this Agreement and any
applicable Biotherapeutics Research Plan(s), Development Plan(s) and
Manufacturing Plan(s) then in effect.
17.3.2 Effect of Failure to Provide Assurances upon a Change
in Control Occurring during the Target Discovery Program Term. To the
extent that a Change in Control occurs during the Target Function
Discovery Program Term and the Acquiring Party fails to provide the
assurances contemplated by Section 17.3.1 within the [**] period set
forth therein, and does not cure such failure within [**] after notice
from the other party, the other party shall have the right, with
respect to any matter under Sections [**] as to which the Joint
Management Committee is unable to reach unanimity and that remains
unresolved following the procedures set forth in Section 3.8.2, to make
the final decision with respect to such matter, consistent with the
terms and conditions of this Agreement.
54
17.3.3 Effect of Failure to Provide Assurances upon a Change
in Control Occurring after the Target Function Discovery Program Term.
To the extent that a Change in Control occurs following the conclusion
of the Target Function Discovery Program Term and the Acquiring Party
fails to provide the assurances contemplated by Section 17.3.1 within
the [**] period set forth therein, and does not cure such failure
within [**] after notice from the other party, the Acquiring Party
shall be deemed to have Opted Out of any Collaboration Product to which
such failure reasonably relates, with the same effect as if the
Acquiring Party had Opted Out under Section 10.1.1.1; provided that the
Acquiring Party shall not [**] with respect to (a) [**] or (b) [**].
17.3.4 Option to Negotiate for Rights to Collaboration Product
upon a Change in Control Occurring after the Target Function Discovery
Program Term. Without limiting the foregoing, if requested by the other
party at any time within the [**] period following the Acquiring
Party's notice under Section 17.3.1 of a Change in Control occurring
following the conclusion of the Target Function Discovery Program Term,
the Acquiring Party and the other party shall enter into good faith
negotiations, for a period of [**] following such request, for the
other party to obtain from the Acquiring Party the exclusive rights to
Develop and commercialize any Collaboration Product. In the event the
Acquiring Party and the other party do not enter into a definitive
agreement with respect to such exclusive rights within such [**]
period, except to the extent set forth in Section 17.3.5 below, the
Acquiring Party and the other party shall each maintain their
respective rights with respect to any such Collaboration Product as
otherwise described in this Agreement.
17.3.5 [**] upon a Change in Control Occurring after the
Target Function Discovery Program Term. In the event that (a) the
Acquiring Party and the other party enter into negotiations in
accordance with Section 17.3.4 with respect to a Collaboration Product
but do not enter into a definitive agreement within the [**] period
contemplated thereby and (b) the Acquiring Party (i) [**] and (ii) has
not [**], the other party shall have the right, by delivering written
notice thereof within [**] after the expiration of such [**] period, to
[**] consisting of (i) [**] and (ii) [**]. [**] at the time such notice
is delivered or as soon thereafter as [**] in accordance with the terms
of this Section 17.3.5. Unless otherwise agreed by the Acquiring Party
and the other party, [**], shall be determined by binding arbitration
in accordance with the following provisions. The parties shall attempt
to mutually agree upon a single independent Third Party arbitrator (who
shall be a professional with appropriate experience in [**]) within
[**] after the other party's delivery of the written notice in
accordance with this Section 17.3.5 of [**]. If the parties are unable
to mutually agree upon one such person, then each party shall appoint
one independent Third Party professional with appropriate experience in
[**] prior to the expiration of such [**] period, and within [**] after
the initial notice, such person(s) shall select a single independent
Third Party arbitrator, who shall be a professional with appropriate
experience in [**]. Each party shall present all information as such
party reasonably desires regarding [**]. Within [**] after the initial
notice, the arbitrator shall provide written notice to the parties
regarding his or her determination regarding [**].
17.4 Severability. Each party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions in lieu of such invalid provisions. In case
such valid provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall
55
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the parties would not have entered into this Agreement
without the invalid provisions.
17.5 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the notification parties hereto to
the other shall be in writing, delivered personally or by facsimile (and
promptly confirmed by telephone, personal delivery or courier) or courier,
postage prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
If to Lexicon: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Lexicon Genetics Incorporated
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lexicon Genetics Incorporated
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Organon: N.V. Organon
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ Oss
The Netherlands
Attention: General Manager
Telephone: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇
Facsimile: 31 412 663 529
With a copy to: Director Legal Affairs Akzo Nobel Pharma B.V.
Wethouder van ▇▇▇▇▇▇▇▇▇▇ ▇
▇.▇. ▇▇▇ ▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
If to Intervet: Intervet, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
56
Attention: Director of Business Development
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All such communications shall be effective upon receipt.
17.6 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, United States of America,
without reference to the conflicts of law principles thereof.
17.7 Dispute Resolution. Subject to Section 3.8.2, the parties hereby
agree that they will first attempt in good faith to resolve any controversy or
claim arising out of or relating to this Agreement promptly by negotiations. If
a controversy or claim should arise hereunder, the matter shall be referred to
an individual designated by the Chief Executive Officer (or the equivalent
position) of Lexicon and by the Chief Executive Officer (or the equivalent
position) of Organon (the "Representatives"). If the matter has not been
resolved within [**] of the first meeting of the Representatives of the parties
(which period may be extended by mutual agreement) concerning such matter, the
parties shall be free to pursue all available recourse both at law and in
equity.
17.8 Entire Agreement. This Agreement, together with the exhibits and
appendices hereto and any confidentiality agreement(s) executed in contemplation
of this Agreement, contains the entire understanding of the parties with respect
to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties
hereto.
17.9 Publicity. Lexicon and Organon each agree not to disclose any
terms or conditions of this Agreement to any Third Party without consulting the
other party prior to such disclosure. Notwithstanding the foregoing, prior to
execution of this Agreement, Lexicon and Organon shall agree upon the substance
of information that can be used as a routine reference in the usual course of
business to describe the existence and general nature of this transaction, and
Lexicon and Organon may disclose such information without consulting the other
party. The parties may thereafter from time to time mutually agree on revisions
to material to be used as a routine reference, which revisions shall be
submitted by one party for the review and approval of the other party at least
[**] prior to the anticipated use or disclosure of the revised material, such
approval not to be unreasonably withheld. The terms of this Agreement shall be
treated as the Confidential Information of Lexicon and Organon, and, except to
the extent required by applicable law, shall not be disclosed to anyone (except
for the parties' respective employees, consultants, agents and attorneys
assisting in the review and negotiation of this Agreement who have a need to
know the terms of this Agreement) without the written permission of Organon or
Lexicon. If either party desires to release a separate announcement relating to
this Agreement, it shall first allow the other party to approve in writing such
proposed announcement; provided that such approval shall not be unreasonably
withheld or delayed.
17.10 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
17.11 No Partnership. It is expressly agreed that the relationship
between Lexicon and Organon shall not constitute a partnership, joint venture or
agency. Neither Lexicon nor Organon shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior consent of the other
party to do so.
57
17.12 Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. Lexicon and Organon agree not to export or re-export, directly
or indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control laws or governmental regulations. Lexicon and
Organon agree to obtain similar covenants from their licensees, (sub)licensees,
or corporate partners, as the case may be, and contractors with respect to the
subject matter of this Section 17.12.
17.13 Waiver. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
17.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
58
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute and deliver this Agreement as of the Effective Date.
LEXICON GENETICS INCORPORATED
By: Date:
----------------------------------- --------------------------------
Name:
--------------------------------
Title:
-----------------------------
N.V. ORGANON
By: Date:
----------------------------------- --------------------------------
Name:
--------------------------------
Title:
-----------------------------
By: Date:
----------------------------------- --------------------------------
Name:
--------------------------------
Title:
-----------------------------
INTERVET INC.
By: Date:
----------------------------------- --------------------------------
Name:
--------------------------------
Title:
-----------------------------
By: Date:
----------------------------------- --------------------------------
Name:
--------------------------------
Title:
-----------------------------
59
EXHIBIT 1.55
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ Analysis is an initial screen designed to identify
primary characteristics resulting from selected mutations in Mutant Mice. Level
1 Phenotypic Analysis currently includes the following assays, which may be
changed from time to time at the Joint Research Committee's reasonable
scientific discretion.
[**]
60
EXHIBIT 1.56
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ Analysis is an advanced screen designed to provide
more detailed and focused data relating to primary characteristics identified as
a result of ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The Joint Research Committee may
determine that Level 2 Phenotypic Analysis be performed for any one or more
Therapeutic Area(s). Level 2 Phenotypic Analysis currently includes (a) assays
previously performed for ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ with respect to such
Therapeutic Area(s) (utilizing greater numbers of Mutant Mice) and (b)
additional assays represented by those described below, which may be changed
from time to time at the Joint Research Committee's reasonable scientific
discretion.
METABOLISM AND ENDOCRINOLOGY
[**]
CARDIOLOGY
[**]
NEUROLOGY
[**]
ONCOLOGY
[**]
IMMUNOLOGY
[**]
OPHTHALMOLOGY
[**]
61
EXHIBIT 7.1.1.2
MANUFACTURING AND SUPPLY AGREEMENT
THIS MANUFACTURING AND SUPPLY AGREEMENT (this "Agreement") is dated as
of _____, 2005 (the "Effective Date") and is made by and among LEXICON GENETICS
INCORPORATED, a corporation organized under the laws of the State of Delaware,
United States of America ("Lexicon"), and N.V. ORGANON, a registered company
organized under the laws of the Netherlands ("Organon"). Lexicon and Organon are
sometimes referred to herein individually as a "party" and collectively as the
"parties." All terms not otherwise defined herein shall have the meanings given
to such terms in the Collaboration Agreement (as defined below) and all exhibits
thereto.
R E C I T A L S
WHEREAS, Lexicon and Organon are parties to that certain Collaboration
and License Agreement dated as of May 16, 2005 (the "Collaboration Agreement")
under which Lexicon and Organon are collaborating in the discovery and
development of antibody and protein therapeutics for selected gene and protein
targets;
WHEREAS, pursuant to the terms and conditions set forth in the
Collaboration Agreement, unless otherwise specified by the Joint Management
Committee or declined by Organon in accordance with the terms thereof, Organon
or its Affiliated Subcontractor(s) shall be responsible for the Manufacture and
supply of all quantities of any Collaboration Product necessary for
commercialization;
WHEREAS, pursuant to the terms and conditions set forth in the
Collaboration Agreement, Organon or its Affiliated Subcontractor(s) shall
Manufacture and supply all quantities of the [insert Collaboration Product
description] (the "Collaboration Product") necessary for commercialization;
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. MANUFACTURING AND SUPPLY
1.1 Manufacturing and Supply Generally. Organon or its Affiliated
Subcontractor(s) shall Manufacture and supply all quantities of the
Collaboration Product necessary for commercialization and shall be responsible
for implementing all aspects of Manufacturing under the direction and oversight
of the Joint Management Committee, as set forth in the Collaboration Agreement
and in accordance with the Manufacturing Plan established for the Collaboration
Product. Organon and its Affiliated Subcontractor(s) shall use their Diligent
Efforts to provide an adequate and timely supply of all properly forecasted
requirements of the Collaboration Product in accordance with this Article 1.
1.2 Orders; Forecasts for Commercial Requirements. The party with
principal responsibility for sales and distribution of the Collaboration Product
(the "Responsible Party") will be responsible for generating periodic [**]
forecasts of the anticipated requirements for such Collaboration Product for
commercialization purposes and updates of such forecasts not less than [**]
thereafter, such forecasts and updates to be promptly provided to Organon and
its Affiliated Subcontractor(s). The Responsible Party shall provide to Organon
and its Affiliated Subcontractor(s) a firm order for the amount of Collaboration
Product to be delivered during each [**] following the filing of a BLA relating
to the Collaboration Product, such firm order to be delivered no later than [**]
prior to the requested delivery date for such order. Notwithstanding the
foregoing, (i) if the total of such party's firm orders for delivery in any
Contract Quarter is less than [**] of its most recent estimate for such Contract
Quarter, such party shall be
required to purchase at least [**] of the estimate for such Contract Quarter and
(ii) if the total of such party's firm orders for delivery in any Contract
Quarter exceeds [**] of its most recent estimate for such Contract Quarter,
Organon and its Affiliated Subcontractor(s) shall use Diligent Efforts, but
shall have no obligation, to deliver quantities in excess of [**] of the
estimate for such Contract Quarter. Organon and its Affiliated Subcontractor(s)
shall package for shipment and ship all quantities of the Collaboration Product,
samples or other materials in accordance with full written and reasonable
instructions provided by the Responsible Party. Freight terms for such shipment
shall be Ex Works according to Incoterms 2000. In the event that all of the
Responsible Party's commercialization activities with respect to the
Collaboration Product become the responsibility of a Third Party in accordance
with the terms of the Collaboration Agreement, then the foregoing obligations of
such party in this Section 1.2 shall become obligations of such Third Party with
respect to the Collaboration Product; provided that in no event shall such party
be relieved of any responsibility therefor unless Organon and its Affiliated
Subcontractor(s) is a party to an agreement with such Third Party with respect
to the commercialization of the Collaboration Product (in which case such party
shall be relieved of all responsibility therefor).
1.3 Certain Covenants. Organon and its Affiliated Subcontractor(s)
agree and covenant that it will (a) use Diligent Efforts to avoid shortfalls of
supply based on the forecasts provided to it in accordance with Section 1.2,
shall promptly notify the parties in the event it becomes aware of any probable
shortfall and shall use Diligent Efforts to remedy any shortfall of supply as
soon as practicable; (b) be responsible for Manufacturing, filling, packaging
and warehousing of the Collaboration Product in conformity with applicable cGMP
Requirements [**], and in accordance, in all material respects, with all other
applicable Law; (c) maintain or cause to be maintained all records necessary and
appropriate to demonstrate compliance with applicable cGMP Requirements and the
Specifications; and (d) grant Lexicon the right, on reasonable advance notice
and during normal business hours during the term of this Agreement, to have its
personnel or representatives with quality control or quality assurance
responsibilities inspect and audit the facilities and operations directly
related to the Manufacture and supply of the Collaboration Product in order to
confirm compliance with the covenants contained in this Section 1.3; provided
that the foregoing inspection and audit right shall be limited to [**] and [**]
per visit; and provided, further, that such personnel or representatives shall
be subject to Organon's prior approval, such approval not to be unreasonably
withheld.
ARTICLE 2. FINANCIAL TERMS
2.1 Payment. Either Lexicon or Organon, as determined by the Joint
Management Committee, shall pay Organon's Affiliated Subcontractor(s) an amount
equal to the Product Supply Costs for quantities of the Collaboration Product
Manufactured and supplied by such Affiliated Subcontractor(s) hereunder, [**].
Payment for quantities of the Collaboration Product Manufactured and supplied
during each [**] shall be due within [**] of receipt of the [**] report
specified in Section 2.2, or earlier if invoiced pursuant to the Affiliated
Subcontractor's standard practices based on delivery of the applicable product
or services. Such Product Supply Costs shall be subject to review by the Joint
Management Committee and subject to audit as provided in Section 2.3.
2.2 Reports and Records. Within [**] after each [**], Organon's
Affiliated Subcontractor(s) shall furnish to Lexicon and Organon a written [**]
report showing the Product Supply Costs for quantities of the Collaboration
Product Manufactured and supplied by the Affiliated Subcontractor during such
[**], including a reasonably detailed calculation of such Product Supply Costs.
The Affiliated Subcontractor shall keep accurate books and records in connection
with the Manufacture and supply of the Collaboration Product in a manner
consistent with GAAP and in sufficient detail to permit accurate determination
of all figures necessary for verification of Product Supply Costs for the
Collaboration Product.
2
2.3 Audits. Upon the written request of Lexicon or Organon, the
Affiliated Subcontractor shall permit an independent certified public accountant
selected by the requesting party and acceptable to the Affiliated Subcontractor,
which acceptance shall not be unreasonably withheld, to have access, at
reasonable times and during normal business hours, to such records of the
Affiliated Subcontractor as may be reasonably necessary to verify the accuracy
of the Product Supply Costs for the Collaboration Product, in respect of any
fiscal year ending not more than [**] prior to the date of such request. Each
party shall use commercially reasonable efforts to schedule all such
verifications within [**] after the requesting party makes its written request.
All such verifications shall be conducted not more than [**]. The report of the
requesting party's independent certified public accountant shall be made
available to all parties. Each party agrees that all information subject to
review under this Section 2.3 is confidential and that the party receiving such
information shall cause its independent certified public accountant to retain
all such information in confidence. The requesting party's independent certified
public accountant shall only report to the requesting party as to the
computation of Product Supply Costs and shall not disclose to the requesting
party any other information of the other party.
2.4 Interest on Late Payments. The Affiliated Subcontractor(s) shall
have the right to seek to collect interest on any payments that are not paid on
or before [**] after the date such payments are due under this Agreement at a
rate equal to [**], calculated on the total number of days payment is
delinquent.
2.5 Manner of Payment. Payments to be made by a party to the Affiliated
Subcontractor(s) under this Agreement shall be payable in the currency of the
Affiliated Subcontractor(s) and shall be paid by bank wire transfer in
immediately available funds to such bank account in the state and country in
which such principal office is located as is designated in writing by the
Affiliated Subcontractor from time to time.
ARTICLE 3. CONFIDENTIALITY
3.1 Nondisclosure Obligations.
3.1.1 General. Except as otherwise provided in this Article 3,
during the term of this Agreement and for a period of [**] thereafter,
each Receiving Party shall maintain the Confidential Information of
each Disclosing Party in confidence and use it only for purposes
specifically authorized under this Agreement.
3.1.2 Limitations. To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under
this Agreement and subject to advance written notification to the
Disclosing Party: (a) a party may disclose to Third Parties
Confidential Information it is otherwise obligated not to disclose
under this Section 3.1, to its Affiliates, (sub)licensees, consultants,
outside contractors and clinical investigators, on a strict
need-to-know basis for the purposes contemplated by this Agreement and
on condition that such entities or persons agree to keep the
Confidential Information confidential for the same time periods and to
the same extent as such party is required to keep the Confidential
Information confidential hereunder; and (b) a party or its
(sub)licensees may disclose, using appropriate measures to preserve
confidentiality, such Confidential Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to Manufacture the Collaboration Product pursuant to this
Agreement.
3.1.3 Required Disclosure. A Receiving Party may disclose
Confidential Information pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued
by a court or governmental agency or as otherwise required by law;
provided, however, that the Receiving Party shall notify the Disclosing
Party promptly upon receipt thereof,
3
giving [**] the Disclosing Party sufficient advance notice to permit it
to oppose, limit or seek confidential treatment for such disclosure;
and provided, further, that the Receiving Party shall furnish only that
portion of the Confidential Information which it is advised by counsel
is legally required whether or not a protective order or other similar
order is obtained by the Disclosing Party.
3.2 Injunctive Relief. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 3 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of injunctive
relief by a court of competent jurisdiction against any action that constitutes
any such breach of this Article 3.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
4.1 Representations, Warranties and Covenants of Lexicon. Lexicon
represents and warrants to and covenants with the other parties that:
4.1.1 Lexicon is a corporation duly organized, validly
existing and in corporate good standing under the laws of the State of
Delaware, United States of America;
4.1.2 Lexicon has the corporate and legal right, authority and
power to enter into this Agreement;
4.1.3 Lexicon has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
4.1.4 upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of Lexicon,
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
4.1.5 the performance of Lexicon's obligations under this
Agreement will not conflict with its charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party; and
4.1.6 Lexicon will not during the term of this Agreement enter
into any agreements, contracts or other arrangements that would be
inconsistent with its obligations under this Agreement.
4.2 Representations, Warranties and Covenants of Organon. Organon
represents and warrants to and covenants with the other parties that:
4.2.1 Organon is a corporation duly organized, validly
existing and in corporate good standing under the laws of the
Netherlands;
4.2.2 Organon has the corporate and legal right, authority and
power to enter into this Agreement, and to extend the rights and
licenses granted to Lexicon in this Agreement;
4
4.2.3 Organon has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
4.2.4 upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of Organon
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
4.2.5 the performance of its obligations under this Agreement
will not conflict with Organon's charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party; and
4.2.6 Organon will not after the Effective Date enter into any
agreements, contracts or other arrangements that would be inconsistent
with its obligations under this Agreement.
4.3 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NO PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY COLLABORATION PRODUCT
OR ANY OTHER SUBJECT MATTER OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
4.4 Limited Liability. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, NO PARTY WILL BE LIABLE WITH RESPECT TO ANY MATTER ARISING UNDER THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OR LOST PROFITS.
ARTICLE 5. EXPIRATION AND TERMINATION
5.1 Term of Agreement. The term of this Agreement shall commence on the
Effective Date and shall continue until the expiration or termination of the
Collaboration Agreement.
5.2 Events of Default. An Event of Default by a party shall have
occurred upon (a) the occurrence of a material breach of this Agreement if such
party fails to remedy such breach within [**] after written notice thereof by a
non-breaching party ([**] in the event of a party's failure to make a payment
required hereunder) or, if remediation of such breach in [**] is not
practicable, if such party fails to commence and diligently pursue such
remediation during such [**] period, or (b) the commencement of any proceeding
in or for bankruptcy, insolvency, dissolution or winding up by or against such
party that is not dismissed or otherwise disposed of within [**] thereafter.
5.3 Effect of an Event of Default. In the event of an Event of Default,
any non-defaulting party that is not an Affiliate of the defaulting party shall
have the right, at its option exercisable in its sole discretion, in addition to
any other rights or remedies available to it at law or in equity and subject to
the limitations set forth in Sections 4.4 and 6.6 hereof, to terminate this
Agreement upon [**] notice thereof to the other party.
5.4 Effect of Expiration or Termination of Agreement. The expiration or
termination of this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination.
5
The provisions of Article 3 and Sections 6.2 through 6.6 hereof shall survive
the expiration or termination of this Agreement.
ARTICLE 6. MISCELLANEOUS
6.1 Force Majeure. No party shall be held liable or responsible to any
other party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any obligation under this Agreement
when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party, including but not limited to fire,
floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided, however, that the party so affected shall use
reasonable commercial efforts to avoid or remove such causes of nonperformance,
and shall continue performance hereunder with reasonable dispatch whenever such
causes are removed. Each party shall provide the other party with prompt written
notice of any delay or failure to perform that occurs by reason of force
majeure. The parties shall mutually seek a resolution of the delay or the
failure to perform as noted above.
6.2 Assignment. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by any party without the consent of the other
party; provided, however, that any party may, without such consent, assign its
rights and obligations under this Agreement (i) to any Affiliate, or (ii) in
connection with a merger, consolidation or sale of such portion of a party's
assets that includes rights under this Agreement to an unrelated Third Party;
provided, further, that such party's rights and obligations under this Agreement
shall be assumed by its successor in interest in any such transaction and shall
not be transferred separate from all or substantially all of its other business
assets, including those business assets that are the subject of this Agreement.
Any purported assignment in violation of the preceding sentence shall be void.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement, unless the parties otherwise agree.
6.3 Severability. Each party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions in lieu of such invalid provisions. In case
such valid provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this Agreement as
a whole, unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the parties would not have
entered into this Agreement without the invalid provisions.
6.4 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the notification parties hereto to
any other party shall be in writing, delivered personally or by facsimile (and
promptly confirmed by telephone, personal delivery or courier) or courier,
postage prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
6
If to Lexicon: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Organon: N.V. Organon
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ Oss
The Netherlands
Attention: General Manager
Telephone: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇
Facsimile: 31 412 663 529
With copies to: Akzo Nobel Pharma
Wethouder van ▇▇▇▇▇▇▇▇▇▇ ▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: Director Legal Affairs
Organon International Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
All such communications shall be effective upon receipt.
6.5 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, United States of America,
without reference to the conflicts of law principles thereof.
6.6 Dispute Resolution. Subject to Section 3.8.2 of the Collaboration
Agreement, the parties hereby agree that they will first attempt in good faith
to resolve any controversy or claim arising out of or relating to this Agreement
promptly by negotiations. If a controversy or claim should arise hereunder, the
matter shall be referred to an individual designated by the Chief Executive
Officer (or the equivalent position) of Lexicon and by the Chief Executive
Officer (or the equivalent position) of Organon (the "Representatives"). If the
matter has not been resolved within [**] of the first meeting of the
Representatives of the parties (which period may be extended by mutual
agreement) concerning such matter, the parties shall be free to pursue all
available recourse both at law and in equity.
6.7 Entire Agreement. This Agreement, together with the exhibits and
appendices hereto and any confidentiality agreement(s) executed in contemplation
of this Agreement, contains the entire
7
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of this Agreement. In
the event of any discrepancy between the terms and conditions contained herein
and those contained in the Collaboration Agreement, the terms and conditions of
the Collaboration Agreement shall control. This Agreement may be amended, or any
term hereof modified, only by a written instrument duly executed by both parties
hereto.
6.8 Publicity. Each party agrees not to disclose any terms or
conditions of this Agreement to any Third Party without consulting the other
parties prior to such disclosure. Notwithstanding the foregoing, prior to
execution of this Agreement, the parties shall agree upon the substance of
information that can be used as a routine reference in the usual course of
business to describe the existence and general nature of this transaction, and
the parties may disclose such information without consulting the other party.
The parties may thereafter from time to time mutually agree on revisions to
material to be used as a routine reference, which revisions shall be submitted
by one party for the review and approval of the other parties at least [**]
prior to the anticipated use or disclosure of the revised material, such
approval not to be unreasonably withheld. The terms of this Agreement shall be
treated as the Confidential Information of the parties, and, except to the
extent required by applicable law, shall not be disclosed to anyone (except for
the parties' respective employees, consultants, agents and attorneys assisting
in the review and negotiation of this Agreement who have a need to know the
terms of this Agreement) without the written permission of the other parties. If
any party desires to release a separate announcement relating to this Agreement,
it shall first allow the other parties to approve in writing such proposed
announcement; provided that such approval shall not be unreasonably withheld or
delayed.
6.9 Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
6.10 No Partnership. It is expressly agreed that the relationship
between the parties shall not constitute a partnership, joint venture or agency.
No party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on
another party, without the prior consent of the other party to do so.
6.11 Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. The parties agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control laws or governmental regulations. The parties
agree to obtain similar covenants from their licensees, (sub)licensees, or
corporate partners, as the case may be, and contractors with respect to the
subject matter of this Section 6.11.
6.12 Waiver. The waiver by any party hereto of any right hereunder or
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
6.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
8
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute and deliver this Agreement as of the Effective Date.
LEXICON GENETICS INCORPORATED
By: Date:
----------------------------- -------------------------
Name:
--------------------------
Title:
-----------------------
N.V. ORGANON
By: Date:
----------------------------- -------------------------
Name:
--------------------------
Title:
-----------------------
9
EXHIBIT 8.4
JOINT COMMERCIALIZATION AGREEMENT
THIS JOINT COMMERCIALIZATION AGREEMENT (this "Agreement") is dated as
of _____, _____ (the "Effective Date") and is made by and between LEXICON
GENETICS INCORPORATED, a corporation organized under the laws of the State of
Delaware, United States of America ("Lexicon"), and N.V. ORGANON, a registered
company under the laws of the Netherlands ("Organon"). [Affiliates of Lexicon
and Organon may be designated as the signatories to this Agreement] Lexicon and
Organon are sometimes referred to herein individually as a "party" and
collectively as the "parties."
RECITALS
WHEREAS, Lexicon and Organon are parties to a Collaboration and License
Agreement dated May 16, 2005 (the "Collaboration Agreement");
WHEREAS, Lexicon and Organon are Developing the Collaboration Product
described in Schedule A hereto (the "Licensed Product"); and
WHEREAS, Lexicon and Organon desire to collaborate in the
commercialization of the Licensed Product in the Collaboration Field in the
Co-Commercialization Territory (as defined herein);
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings specified below:
1.1 "Acquiring Party" has the meaning specified in Section 11.3
hereof.
1.2 "Affiliate" means any corporation, company, partnership, joint
venture or firm that controls, is controlled by or is under common control with
a party to this Agreement. For purposes hereof, "control" means (a) in the case
of a corporate entity, direct or indirect ownership of more than fifty percent
(50%) of the stock or shares entitled to vote for the election of directors; and
(b) in the case of a non-corporate entity, direct or indirect ownership of more
than fifty percent (50%) of the equity interests with the power to direct the
management and policies of such non-corporate entity.
1.3 "Allocable Overhead" means costs incurred by a party with
respect to the Licensed Product that (a) are attributable to such party's [**]
and (b) are allocated to company departments based on [**]. Allocable Overhead
shall not include any costs attributable to [**].
1.4 "Allowable Commercialization Costs" means the sum of the
following (without any item being accounted for more than once): (a) Cost of
Goods Sold for Commercialization (without duplication of Product Supply Costs
for Development under the Collaboration Agreement); (b) Regulatory and Licensing
Costs; (c) Distribution Costs; and (d) Sales and Marketing Costs.
1.5 "Background Materials" has the meaning specified in the
Collaboration Agreement.
1
1.6 "Background Technology" has the meaning specified in the
Collaboration Agreement.
1.7 "BLA" means a Biologics Licensing Application (as defined in
the FDC Act) filed with the FDA and any other equivalent marketing authorization
application or other license, registration or other application seeking approval
from a Regulatory Authority to market the Licensed Product in the Collaboration
Field in any country or region within the Co-Commercialization Territory.
1.8 "Bundled Transaction" has the meaning specified in Section
1.40 hereof.
1.9 "Change in Control" has the meaning specified in the
Collaboration Agreement.
1.10 "Co-Commercialization Territory" means [all of the countries
of the world other than those for which rights have been granted to a Joint
Marketing/Development Collaborator]. For clarity, the Co-Commercialization
Territory shall not include any country for which rights have been granted to a
Joint Marketing/Development Collaborator from and after the effectiveness of the
parties' grant of such rights to such Joint Marketing/Development Collaborator.
1.11 "Collaboration Field" has the meaning specified in the
Collaboration Agreement.
1.12 "Combination Product" has the meaning specified in Section
1.40 hereof.
1.13 "Commercialization" or "Commercialize" means any and all
activities associated with marketing, promoting, communicating (including
medical communications and publishing), distributing, importing, exporting or
selling the Licensed Product in the Collaboration Field as set forth in the
applicable Commercialization Plan, including the conduct of any activities
(including any Post-approval Studies) directed to obtaining pricing and
reimbursement approvals and any other Post-approval Studies not included in
Development, in each case by a party, its Affiliates or (sub)licensees.
1.14 "Commercialization Plan" means the plan to be developed by the
Joint Commercialization Committee and approved by the Joint Management Committee
for each Contract Year with respect to the Licensed Product in accordance with
Section 4.2 hereof.
1.15 "Confidential Information" means any information and data
received by a party or its Affiliates (the "Receiving Party") from the other
party or its Affiliates (the "Disclosing Party") in connection with this
Agreement (including, without limitation, any research, testing, clinical,
regulatory, marketing or other scientific or business information, plans, or
data pertaining to the Licensed Product). Notwithstanding the foregoing,
Confidential Information shall not include any part of such information or data
that:
(a) is or becomes part of the public domain other than by
unauthorized acts of the Receiving Party or its Affiliates;
(b) can be shown by written documents to have been
already in the possession of the Receiving Party or its Affiliates
prior to disclosure under this Agreement, provided such Confidential
Information was not obtained directly or indirectly from the Disclosing
Party under an obligation of confidentiality;
(c) can be shown by written documents to have been
disclosed to the Receiving Party or its Affiliates by a Third Party,
provided such Confidential Information was not obtained directly or
indirectly from the Disclosing Party under an obligation of
confidentiality; or
2
(d) can be shown by written documents to have been
independently developed by the Receiving Party or its Affiliates
without use of, or access to, Confidential Information of the
Disclosing Party.
Specific Confidential Information of a Disclosing Party shall not be deemed to
come under the foregoing exceptions merely because it is embraced by more
general information that is or becomes part of the public domain, or is known
by, disclosed to or independently developed by the Receiving Party.
1.16 "Contract Year" means (a) with respect to the first Contract
Year, the period beginning on the Effective Date and ending on December 31,
______ (the "First Contract Year"), and (b) with respect to each subsequent
Contract Year, the twelve (12) month period beginning on the day following the
end of the First Contract Year and each succeeding twelve (12) month period
thereafter. Each Contract Year (other than the First and last Contract Year, as
applicable) shall be divided into four (4) "Contract Quarters" comprised of
successive three (3) month periods. In the First Contract Year, the first
Contract Quarter shall begin on the Effective Date and end on ______.
1.17 "Control" or "Controlled" has the meaning specified in the
Collaboration Agreement.
1.18 "Cost and Revenue Sharing Ratio" means (a) with respect to
Lexicon, [fifty percent (50%)], and (b) with respect to Organon, [fifty percent
(50%)]. [Ratio in effect under Collaboration Agreement when Joint
Commercialization Agreement is signed]
1.19 "Cost of Goods Sold" means (a) to the extent that the Licensed
Product is sourced from a party, the unit cost of manufacture of the Licensed
Product (i.e., direct material and direct labor costs, plus manufacturing
overhead fairly allocated to the Licensed Product, all calculated in accordance
with GAAP), and (b) to the extent that the Licensed Product is sourced from [the
applicable Organon Affiliated Subcontractor under that certain Manufacturing and
Supply Agreement dated ____] [and/or] [a Third Party, subject to Section 2.2.3],
the actual price paid to such [Organon Affiliated Subcontractor] [and/or] [Third
Party] for the manufacture, supply and packaging of the Licensed Product. For
purposes of the foregoing, (i) "direct material costs" means actual costs
incurred in manufacturing or purchasing materials, including freight-in costs,
sales and excise taxes imposed thereon and customs duty and charges levied by
government authorities, and all costs of packaging components; (ii) "direct
labor costs" means actual cost of employees engaged in direct manufacturing
activities and quality control and quality assurance activities who are directly
employed in manufacturing and packaging the Licensed Product; and (iii)
"manufacturing overhead" attributable to the Licensed Product will include a
reasonable allocation of indirect labor (not previously included in direct labor
costs), a reasonable allocation of administrative costs, and a reasonable
allocation of facilities costs, all in accordance with GAAP, but will not
include corporate administrative overhead or plant start-up costs or costs
associated with excess capacity. All allocations will be based on the assumption
that such party's plant and equipment are utilized to their reasonable full
capacity, and all costs and allocations shall be consistent with the methods
used for such costs and allocations for such party's internal purposes. More
specifically, the components of Cost of Goods Sold shall comprise: (A) direct
labor (fermentation, purification personnel); (B) direct materials; (C) facility
costs (rent, property taxes, depreciation of leaseholds, utilities, spare parts,
maintenance contracts); (D) manufacturing equipment depreciation; (E)
allocations for information technology, document control, quality engineering,
purchasing, warehouse management, microbiology (with such allocations to be
based on estimated service levels, headcount or square footage occupancy,
depending on the category); (F) indirect labor (manufacturing supervision); (G)
manufacturing department overhead (uniforms, materials used in plant
maintenance); (H) quality assurance/quality control; and (I) such other similar
costs as may be reasonably included in such definition.
3
1.20 "Detail" means a sales presentation by a professional sales
representative to a target physician involved in prescribing the Licensed
Product in which the primary purpose is to discuss the benefits and features of
the Licensed Product.
1.21 "Detail Costs" means the direct compensation and benefits paid
to professional sales representatives making Details.
1.22 "Development" or "Develop" has the meaning specified in the
Collaboration Agreement.
1.23 "Diligent Efforts" has the meaning specified in the
Collaboration Agreement.
1.24 "Disclosing Party" has the meaning specified in Section 1.15
hereof.
1.25 "Distribution Costs" means a party's reasonable costs and
expenses (including direct labor) related to storage and distribution of the
Licensed Product incurred in accordance with a budget approved by the Joint
Management Committee, including: (a) handling and transportation to fulfill
orders; (b) customer services, including order entry, billing and adjustments,
inquiry and credit and collection; (c) cost of facilities and labor utilized for
the storage or distribution of the Licensed Product; and (d) amounts paid to
Third Parties in respect of storage or distribution of the Licensed Product.
1.26 "Effective Date" means the date specified in the initial
paragraph of this Agreement.
1.27 "Event of Default" means an event described in Section 10.2
hereof.
1.28 "FDA" has the meaning specified in the Collaboration
Agreement.
1.29 "FDC Act" has the meaning specified in the Collaboration
Agreement.
1.30 "GAAP" means United States or international generally accepted
accounting principles, as they exist from time to time, consistently applied.
1.31 "Joint Commercialization Committee" has the meaning specified
in Section 3.1.2 hereof.
1.32 "Joint Management Committee" has the meaning specified in
Section 3.1.1 hereof.
1.33 "Joint Marketing/Development Collaborator" has the meaning
specified in the Collaboration Agreement.
1.34 "Joint Marketing/Development Collaborator Revenue" has the
meaning specified in the Collaboration Agreement.
1.35 "[**]" means [**].
1.36 "Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, domestic or foreign.
1.37 "Lexicon Background Materials" has the meaning specified in
the Collaboration Agreement.
1.38 "Lexicon Background Technology" has the meaning specified in
the Collaboration Agreement.
4
1.39 "Manufacturing" or "Manufacture" has the meaning specified in
the Collaboration Agreement.
1.40 "Net Sales" means the gross amount invoiced for sales of the
Licensed Product by Lexicon, Organon and their respective Affiliates to
customers which are not Affiliates (or which are Affiliates but are end users of
the Licensed Product), less:
(a) trade, quantity and cash discounts actually allowed;
(b) discounts, refunds, rebates, chargebacks, retroactive
price adjustments, billing errors and any other allowances (including,
without limitation, government-mandated and managed health
care-negotiated rebates) actually granted which effectively reduce the
net sales price;
(c) product returns credits and allowances actually
granted;
(d) any tax imposed on the production, sale, delivery or
use of the product (excluding federal, state or local taxes based on
income);
(e) freight, postage, shipping, customs duties, excises,
tariffs, surcharges, other governmental charges (excluding federal,
state or local taxes based on income) and insurance charges actually
allowed or paid for delivery of the product;
(f) payments or rebates paid with respect to the Licensed
Product in connection with state or federal Medicare, Medicaid or
similar programs in the United States or in connection with similar
programs in other countries in which there are sales; and
(g) adjustments for bad debts.
Such amounts shall be determined from the books and records of Lexicon, Organon
and their respective Affiliates maintained in accordance with GAAP.
In the event the Licensed Product is sold as part of a Combination
Product (as defined below), the Net Sales of the Licensed Product attributable
to the Combination Product will be determined by multiplying the Net Sales of
the Combination Product by the fraction, A/A+B where A is the average sales
price of the Licensed Product when sold separately in finished form and B is the
average sales price of the other active compounds or ingredients in the
Combination Product sold separately in finished form.
In the event that the average sale price of the Licensed Product can be
determined but the average sales price of the other active compounds or
ingredients cannot be determined, the Net Sales of the Licensed Product
attributable to the Combination Product will be determined by multiplying the
Net Sales of the Combination Product by the fraction C/C+D where C is the
selling party's average sales price of the Licensed Product and D is the
difference between the average sales price of the Combination Product and the
average sales price of the Licensed Product. If the average sales price of the
other active compounds or ingredients can be determined but the average sales
price of the Licensed Product cannot be determined, the Net Sales of the
Licensed Product attributable to the Combination Product will be determined by
multiplying the Net Sales of the Combination Product by the following formula:
one minus C/C+D where C is the average sales price of the other product(s) and D
is the difference between the average sales price of the Combination Product and
the average sales price of the other active compounds or ingredients.
5
In the event that the average sales price of both the Licensed Product,
as applicable, and the other active compounds or ingredients in the Combination
Product cannot be determined, the Net Sales of the Licensed Product attributable
to the Combination Product shall be negotiated in good faith by the parties.
The Net Sales price for a Combination Product in a given country will
be calculated once each Contract Year and such price will be used during all
applicable revenue reporting periods for the entire Contract Year for such
country, absent extraordinary conditions or events. When determining the average
sales price of the Licensed Product or the other active compounds or ingredients
in the Combination Product, the average sales price will be calculated using
data arising from the twelve (12) months preceding the calculation of the Net
Sales price for the Combination Product. As used above, the term "Combination
Product" means the Licensed Product sold in conjunction with any other active
component(s) (whether packaged together or in the same therapeutic formulation).
If Lexicon, Organon or their Affiliates sells the Licensed Product to a
customer which also purchases other products or services from such seller in a
bundled, combination or capitated transaction (a "Bundled Transaction"), and
such seller discounts the sales price of the Licensed Product to a greater
degree than such seller generally discounts the price of its other products to
such customer, then the aggregate amount received with respect to such Bundled
Transaction shall be allocated to Net Sales pursuant to the formula set forth in
Exhibit 1.40 hereto. For purposes of the foregoing, "discounting" includes
establishing the list price at lower than the seller's normal pricing level.
Free samples of Licensed Product and the disposition of Licensed
Product for, or the use of Licensed Product in Post-approval Studies in which
such Licensed Product is provided to patients without any payment shall not
result in any Net Sales.
1.41 "Operating Profit/Loss" means (a) Net Sales of the Licensed
Product in the Collaboration Field in the Co-Commercialization Territory during
the relevant time period less (b) the Allowable Commercialization Costs incurred
by Lexicon and Organon in respect of the Licensed Product during such time
period. For clarity, Operating Profit/Loss shall not include (i) Net Sales or
Regulatory and Licensing Costs from and after the effectiveness of a party's
Opting Out of the Licensed Product or (ii) Joint Marketing/Development
Collaborator Revenue.
1.42 "Opt Out" has the meaning specified in the Collaboration
Agreement.
1.43 "Organon Background Materials" has the meaning specified in
the Collaboration Agreement.
1.44 "Organon Background Technology" has the meaning specified in
the Collaboration Agreement.
1.45 "Patent Rights" has the meaning specified in the Collaboration
Agreement.
1.46 "Post-approval Study" means a clinical trial conducted after
Regulatory Approval of the Licensed Product for the applicable indication has
been obtained in the relevant country.
1.47 "Pre-existing Obligations" has the meaning specified in the
Collaboration Agreement.
1.48 "Product Collaboration" has the meaning specified in Section
2.1.1 hereof.
1.49 "Product Collaboration Committee" means the Joint Management
Committee or Joint Commercialization Committee.
6
1.50 "Product Trademark" means one or more trademarks or logos that
are used for the Commercialization of the Licensed Product in the Collaboration
Field in the Co-Commercialization Territory.
1.51 "Program Director" has the meaning specified in Section 3.2
hereof.
1.52 "Program Intellectual Property" has the meaning specified in
the Collaboration Agreement.
1.53 "Receiving Party" has the meaning specified in Section 1.15
hereof.
1.54 "Regulatory Approval" means any and all approvals (including
any applicable governmental price and reimbursement approvals), licenses,
registrations, or authorizations of any federal, national, multinational, state,
provincial or local regulatory agency, department bureau or other governmental
entity that are necessary for the manufacture, use, storage, import, transport,
promotion, marketing and sale of the Licensed Product in the Collaboration Field
in a country or group of countries within the Co-Commercialization Territory.
1.55 "Regulatory Authority" has the meaning specified in the
Collaboration Agreement.
1.56 "Regulatory and Licensing Costs" means the following costs and
expenses attributable to Commercialization of the Licensed Product that are
incurred in accordance with an applicable Commercialization Plan and associated
budget approved by the Joint Management Committee, including direct labor costs
and Allocable Overhead: (a) costs and expenses related to Post-approval Studies
related to the Licensed Product; (b) infrastructure required to support and
maintain patient/safety surveillance as required by applicable Regulatory
Authorities attributable to the Licensed Product, including medical staff
support and pharmacovigilance systems and procedures; (c) out-of-pocket costs
and expenses of maintaining Regulatory Approvals; (d) royalty and other amounts
paid to Third Parties related to the Commercialization of the Licensed Product
under Third Party licenses entered into (i) prior to the Effective Date and
disclosed to the other party prior to the Effective Date or (ii) in accordance
with the Collaboration Agreement; (e) the costs of product recalls, product
liability claims, awards and damages which are not subject to the indemnities
set forth in Article 9, and Licensed Product liability insurance premiums; and
(f) costs and expenses incurred in connection with pricing and reimbursement
matters, managed care and formulary management, and governmental affairs
activities directly relating to the Licensed Product.
1.57 "Sales and Marketing Costs" means all costs and expenses
attributable to the distribution, sale, promotion and marketing of the Licensed
Product other than Cost of Goods Sold, Regulatory and Licensing Costs,
Distribution Costs and Detail Costs. Sales and Marketing Costs include the
following:
(a) all costs and expenses associated with advertising of
the Licensed Product;
(b) all costs and expenses associated with programs to
promote the Licensed Product directly to the prescriber or end user,
including expenses associated with promoting the Licensed Product
directly to the professional community such as professional samples,
professional literature, promotional material costs, patient aids and
detailing aids;
(c) all costs and expenses associated with professional
education with respect to the Licensed Product through any means,
including articles appearing in journals, newspapers, magazines or
other media; seminars, and conventions; symposia, advisory boards and
opinion leader development activities; and the costs and expense of
medical liaisons;
7
(d) all compensation and departmental expenses for market
and consumer research personnel and payments to Third Parties related
to conducting and monitoring professional and consumer appraisals of
existing, new or proposed competitors to the Licensed Product, such as
market share services (e.g., IMS data), special research testing and
focus groups;
(e) all product management and sales promotion management
compensation and departmental costs and expenses, including costs
associated with developing overall sales and marketing strategies
(e.g., product line or customer segment), as well as planning and
programs for the Licensed Product; and
(f) all field sales force management and departmental
costs and expenses, including costs associated with field sales
offices; district, regional and home offices; staffs directly involved
in the management of the selling functions; sales training and
meetings; and call reporting and other monitoring/tracking activities.
1.58 "Third Party" means any person or entity other than Lexicon,
Organon and their respective Affiliates.
1.59 "Valid Claim" has the meaning specified in the Collaboration
Agreement.
ARTICLE 2. COLLABORATION OVERVIEW
2.1 General. The parties intend to carry out a program in which
Lexicon and Organon will collaborate to Commercialize the Licensed Product in
the Collaboration Field in the Co-Commercialization Territory (the
"Collaboration"), consistent with the objectives set forth in and the resources
allocated to such activities in the applicable Commercialization Plan(s). It is
intended that the Collaboration will be conducted as a unified collaborative
effort, and this intent shall be reflected in the applicable Commercialization
Plan(s). It is intended that each party shall bear its own Detail Costs;
provided, however, that one party may retain the other party at a commercially
reasonable rate to perform all or a part of its obligations with respect to
Details. It is further intended that each party shall contribute to Allowable
Commercialization Costs in proportion to the Cost and Revenue Sharing Ratio, and
the Commercialization Plan(s) will be consistent with and provide for such
proportional contribution.
2.2 Conduct of Collaboration.
2.2.1 Efforts. The Joint Management Committee shall adopt
project progression guidelines for Commercialization activities. The
parties shall conduct the Collaboration in good scientific manner in
accordance with such project progression guidelines and in compliance
with applicable Laws. Each party shall use Diligent Efforts to conduct
the activities of the Collaboration that are assigned to it in the
then-applicable Commercialization Plan(s), and each shall devote
sufficient resources to carry out such respective activities. While the
parties acknowledge and agree that neither party guarantees the success
of the Collaboration or any individual task undertaken thereunder, each
party agrees that it will perform the activities assigned to it under
the Collaboration in a professional manner in accordance with the
highest industry standards.
2.2.2 Personnel. The parties agree to commit to the
Collaboration the personnel necessary to meet their respective
responsibilities set forth in each Commercialization Plan.
2.2.3 Subcontractors. As necessary and in furtherance of
the Collaboration, either party may enter into agreements or
subcontracts for Commercialization activities in accordance with
8
this Section 2.2.3; provided that (a) none of the rights of the other
party hereunder are diminished or otherwise adversely affected as a
result of such subcontracting, (b) such party obtains the written
approval of the other party prior to engaging any subcontractor, which
approval shall not be unreasonably withheld or delayed (for purposes of
which it shall not be deemed unreasonable for a party to withhold
consent when the withholding party is capable of conducting the
activities proposed to be conducted by such subcontractor and is
willing to do so on terms, including cost, time and quality, equivalent
to those offered by such contractor), and (c) the subcontractor
undertakes in writing obligations of confidentiality and non-use
regarding the other party's Confidential Information that are
substantially the same as those undertaken by Organon and Lexicon
pursuant to Article 7 hereof. In the event a party performs one or more
of its obligations under the Collaboration through a subcontractor,
then such party shall at all times be responsible for the performance
of such subcontractor. The Joint Management Committee shall decide the
allocation of the cost of any such agreement between the parties or if
the cost is to be borne by one party and whether it can be allocated to
offset other obligations set forth in the applicable Commercialization
Plan(s).
2.2.4 Reports. Each party shall submit [**] reports to the
Joint Management Committee, as may be required by the then-current
Commercialization Plan(s), detailing its activities under the
Collaboration. The Joint Management Committee shall use such [**]
reports to monitor the parties' respective contributions to the
Collaboration. The Joint Management Committee may amend the
Commercialization Plan(s) as necessary to maintain substantial
compliance over the course of the Collaboration in resources devoted
and participation by the parties in accordance with the principles and
objectives set forth in Section 2.2.2.
2.3 Conduct of Post-approval Studies. All Post-approval Studies
shall be conducted and the results thereof recorded and reported to the parties
in accordance with the terms and conditions set forth in Sections 2.5 through
2.7 of the Collaboration Agreement. Any inventions, information, methods,
know-how, trade secrets or data that (a) are Controlled by a party or jointly by
the parties and (b)(i) relate to the use of the Licensed Product or (ii) are
first identified or discovered in the conduct of Post-approval Studies shall be
deemed to be Program Technology and shall be subject to the provisions of
Article 12 of the Collaboration Agreement.
2.4 Opt Out Rights. The rights of either party to Opt Out with
respect to the Licensed Product shall be governed by Article 10 of the
Collaboration Agreement.
ARTICLE 3. COLLABORATION MANAGEMENT
3.1 Product Collaboration Committees.
3.1.1 Joint Management Committee. As soon as practicable
after the Effective Date, Organon and Lexicon shall establish a Joint
Management Committee (the "Joint Management Committee") comprised of
[**] representatives designated by Organon and [**] representatives
designated by Lexicon, each of whom shall have experience and seniority
sufficient to enable him or her to make decisions on behalf of the
party he or she represents; provided that Organon and Lexicon may, by
mutual agreement, designate an appropriate number of additional
representatives from time to time.
3.1.2 Joint Commercialization Committee. As soon as
practicable after the Effective Date, Organon and Lexicon shall
establish a Joint Commercialization Committee (the "Joint
Commercialization Committee") comprised of [**] representatives
designated by Organon and [**] representatives designated by Lexicon,
each of whom shall have experience and seniority
9
sufficient to enable him or her to make decisions on behalf of the
party he or she represents; provided that Organon and Lexicon may, by
mutual agreement, designate an appropriate number of additional
representatives from time to time
3.2 Program Directors. Each party shall appoint one of its
designees on the Joint Management Committee (and who may, but need not also be,
a member of the Joint Commercialization Committee) to serve as a program
director (each, a "Program Director") with responsibility for overseeing the
day-to-day activities of the parties with respect to the Collaboration and for
being the primary point of contact between the parties with respect to the
Collaboration.
3.3 Replacement of Product Collaboration Committee Representatives
and Program Directors. Each party shall be free to replace its representative
members of any Product Collaboration Committee and its Program Director with new
appointees who have authority to act on behalf of such party, on notice to the
other party.
3.4 Responsibilities of Joint Management Committee. The Joint
Management Committee shall be responsible for overseeing and directing the
parties' interaction and performance of their respective obligations under this
Agreement. Without limiting the generality of the foregoing, its duties shall
include:
(a) preparing such procedures as may be necessary for the
operation of the Joint Management Committee and Joint Commercialization
Committee, and other committees the Joint Management Committee decides
to establish to assure the efficient operation of the Collaboration;
(b) approving strategy for the overall Commercialization
of the Licensed Product in the Collaboration Field in the
Co-Commercialization Territory and for all other activities conducted
by the parties hereunder;
(c) reviewing and approving the annual Commercialization
Plans proposed by the Joint Commercialization Committee and approving
any modifications thereto as recommended by the Joint Commercialization
Committee;
(d) in connection with such annual Commercialization
Plans, approving the budget(s) for Regulatory and Licensing Costs and
Third Party Sales and Marketing Costs associated therewith and
approving any modifications thereto as recommended by the Joint
Commercialization Committee;
(e) overseeing the implementation of the
Commercialization Plans and allocation of resources and other
activities in support of the Collaboration, including the matters
contemplated by Section 2.2 hereof;
(f) coordinating with the Joint Management Committee
under the Collaboration Agreement with respect to (i) deciding whether
the Licensed Product should be Commercialized by or through a Joint
Marketing/Development Collaborator in any country or countries within
the Co-Commercialization Territory; (ii) overseeing the progress of the
applicable Development Plan(s) for the Licensed Product under the
Collaboration Agreement and evaluating such progress against their
respective timelines; and (iii) overseeing Manufacturing and supply of
the Licensed Product;
10
(g) resolving matters within the responsibilities of the
Joint Commercialization Committee as to which the members thereof are
unable to reach a consensus; and
(h) addressing issues and resolving differences that may
arise between the parties.
The Joint Management Committee shall not have the power to amend the
terms of or waive compliance with this Agreement.
3.5 Responsibilities of Joint Commercialization Committee. The
Joint Commercialization Committee shall be responsible for preparing for
approval by the Joint Management Committee and implementing the
Commercialization Plans. Without limiting the generality of the foregoing, its
duties shall include:
(a) proposing to the Joint Management Committee the
Commercialization strategy for the Licensed Product throughout the
Co-Commercialization Territory;
(b) reviewing and overseeing the activities of the
parties with respect to the Commercialization of the Licensed Product
in such countries and regions;
(c) providing all appropriate information regarding the
progress of the Commercialization Plan(s) to the Joint Management
Committee in advance of each [**] Joint Management Committee meeting;
and
(d) performing such other activities as are contemplated
by the terms of this Agreement.
The Joint Commercialization Committee shall report its activities and
make proposals to the Joint Management Committee at least once each [**], but
more frequently as appropriate. The Joint Commercialization Committee shall not
have the power to amend or waive compliance with this Agreement.
3.6 Meetings of Product Collaboration Committees. As applicable,
each Product Collaboration Committee shall meet at least [**], and more
frequently as the parties deem appropriate, on such dates and at such times as
the parties shall agree, on [**] written notice to the other party unless such
notice is waived by the parties. The first meeting of the Joint Management
Committee shall take place within [**] after the Effective Date, at Lexicon's
facility in The Woodlands, Texas, United States of America. Each Product
Collaboration Committee may convene or be polled or consulted from time to time
by means of telecommunications, videoconferences or correspondence, as deemed
necessary or appropriate by the parties. To the extent that meetings are held in
person, they shall alternate between the offices of the parties unless the
parties otherwise agree.
3.7 Decisions.
3.7.1 Quorum; Voting. A quorum for a meeting of a Product
Collaboration Committee shall require the presence of at least one
Lexicon member (or designee) and at least one Organon member (or
designee) in person or by telephone. All decisions made or actions
taken by a Product Collaboration Committee shall be made unanimously by
its members, with the Lexicon members cumulatively having one vote and
the Organon members cumulatively having one vote.
11
3.7.2 Dispute Resolution.
3.7.2.1 In the event that unanimity cannot be
reached by Joint Commercialization Committee with respect to a
matter that is a subject of its decision-making authority,
then the matter shall be referred for further review and
resolution to the Joint Management Committee. In the event
that unanimity cannot be reached by the Joint Management
Committee with respect to a matter that is a subject of its
decision-making authority, then the matter shall be referred
for further review and resolution to the Chief Executive
Officer of Organon, or such other similar position designated
by Organon from time to time, and the Chief Executive Officer
of Lexicon, or such other similar position designated by
Lexicon from time to time. The designated officers of each
party shall use reasonable efforts to resolve the matter
within [**] after the matter is referred to them.
3.7.2.2 If the designated officers cannot resolve
any matter pursuant to Section 3.7.2.1 within such [**]
period, the matter shall be referred to a Third Party
arbitrator or arbitrators, in accordance with the following
procedures, whose decision shall be [**]. The parties shall
attempt to mutually agree upon a single independent Third
Party arbitrator (who shall be a professional with appropriate
experience in the subject matter at issue in such
disagreement) within [**] after the initial referral of such
matter to the designated officers. If the parties are unable
to mutually agree upon one such person, then each party shall
appoint one independent Third Party professional with
appropriate experience in the subject matter at issue in such
disagreement prior to the expiration of such [**] period, and
within [**] after the initial referral of such matter to the
designated officers, such person(s) shall select a single
independent Third Party arbitrator, who shall be a
professional with appropriate experience in the subject matter
at issue in such disagreement. Each party shall present all
information presented pursuant to Section 3.7.2.1 and all
other information as such party reasonably desires regarding
such disagreement. Within [**] after the initial referral of
such matter to the designated officers, the arbitrator shall
provide written notice to the parties regarding his or her
determination regarding such disagreement.
3.8 Administration. The chairperson of each Product Collaboration
Committee shall be designated annually on an alternating basis between the
parties. The initial chairperson shall be selected by Organon. The party not
designating the chairperson shall designate one of its representative members as
secretary to such Product Collaboration Committee for such year. The chairperson
shall be responsible for calling meetings of such Product Collaboration
Committee, sending notices of meetings to all members and for leading such
meetings.
3.9 Minutes. Within [**] after each Product Collaboration
Committee meeting, the secretary of such Product Collaboration Committee shall
prepare and distribute minutes of the meeting, which shall provide a description
in reasonable detail of the discussions had at the meeting and a list of any
actions, decisions or determinations approved by such Product Collaboration
Committee. The secretary shall be responsible for circulation of all draft and
final minutes. Draft minutes shall be first circulated to the chairperson,
edited by the chairperson and then circulated in final draft form to all members
of such Product Collaboration Committee sufficiently in advance of the next
meeting to allow adequate review and comment prior to the meeting. Minutes shall
be approved or disapproved, and revised as necessary, at the next meeting. Final
minutes shall be distributed to the members of such Product Collaboration
Committee.
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3.10 Expenses. Each party shall be responsible for all travel and
related costs for its representatives to attend meetings of, and otherwise
participate on, a Product Collaboration Committee.
ARTICLE 4. COMMERCIALIZATION
4.1 General. The parties shall jointly pursue the
Commercialization of the Licensed Products in the Collaboration Field under the
direction of the Joint Commercialization Committee in accordance with annual
Commercialization Plans.
4.2 Commercialization Plans.
4.2.1 The Joint Commercialization Committee shall prepare
the first Commercialization Plan for the Licensed Product as soon as
commercially reasonable after the Effective Date and annually
thereafter.
4.2.2 Each annual Commercialization Plan shall be in
writing and shall set forth with reasonable specificity the
Commercialization objectives, priorities, activities, milestones,
personnel requirements, other resources and allocations of
responsibilities between the parties for the period covered by such
annual Commercialization Plan, together with budget(s) for Regulatory
and Licensing Costs and Sales and Marketing Costs associated therewith
and for the Details to be performed by each party in connection
therewith, in a manner consistent with the terms of this Agreement,
including, without limitation, the objectives set forth in Section 2.1
and the terms and conditions set forth in Section 2.2. The
Commercialization Plans shall cover all aspects of Commercialization
relating to the Licensed Product, and shall include, with reasonable
specificity, the Commercialization activities to be performed by each
party and the Commercialization activities, if any, to be performed by
subcontractors.
4.2.3 The Joint Commercialization Committee may agree on
modifications, and recommend that the Joint Management Committee
approve such modifications, to the provisions of any Commercialization
Plan at any time.
4.3 Marketing and Marketing Plans. The Joint Commercialization
Committee shall coordinate and implement the marketing and detailing strategies
and tactics, sales force training programs, sales forecasts and Post-approval
Studies for the Licensed Product for each Contract Year in the
Co-Commercialization Territory.
4.4 Sales Force. Except to the extent otherwise agreed by the
Joint Management Committee, the parties shall be responsible for providing
Details in proportion to their respective Cost and Revenue Sharing Ratio.
Notwithstanding the foregoing, if either party elects to provide less than its
proportionate share of Details, it may pay the other party to fulfill those
obligations at a commercially reasonable rate. For clarity, the measurement of
the provision of Details by each party will be made based on the number of
Details provided and not based on the Detail Costs.
4.5 Labeling and Promotion. Unless otherwise agreed with a Joint
Marketing/Development Collaborator: (a) the Licensed Product will be marketed in
each country with one label and will bear one or more Product Trademarks; and
(b) all advertising and promotional material in respect of the Licensed Product
in each country (including any Licensed Product labeling or packaging inserts to
the extent permitted by law or required by any Regulatory Authority and approved
by the Joint Commercialization Committee) will include both parties' respective
name and address, with the size and placement of each such name and address to
be determined by the Joint Commercialization Committee.
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4.6 Regulatory and Other Inquiries. Upon being contacted by any
Regulatory Authority for any regulatory purpose pertaining to this Agreement or
to the Licensed Product, each party shall promptly notify and consult with the
other, and the party that prepared the relevant portion(s) of the regulatory
filing to which such contact relates (or, in the event the contact does not
relate to a particular portion of a regulatory filing, the owner (or proposed
owner) of the relevant Regulatory Approval (or proposed Regulatory Approval),
determined in accordance with Section 6.4 of the Collaboration Agreement) shall
prepare a response as it deems appropriate, and such party shall (a) have
principal responsibility for responding to all inquiries to either party, as the
case may be, regarding such portion of such regulatory filing (or, in the event
the contact does not relate to a particular portion of a regulatory filing, such
Regulatory Approval or proposed Regulatory Approval), (b) give the other party a
reasonable opportunity for prior review of and comment on all such responses,
(c) consider in good faith the incorporation of such comments and (d)
incorporate into such responses those of such comments as are reasonable and not
inconsistent with the overall response initially prepared by such party.
4.7 Product Recall. In the event that either party determines that
an event, incident or circumstance has occurred that may result in the need for
a recall or other removal of the Licensed Product, or any lot or lots thereof,
from a market in any country, it shall advise and consult with the other party
with respect thereto. The owner of the relevant Regulatory Approval (or proposed
Regulatory Approval), determined in accordance with Section 6.4 of the
Collaboration Agreement, shall make the final determination to recall or
otherwise remove the Licensed Product or any lot or lots thereof from the
market. The costs and expenses of such recall or removal in each country,
including expenses and other costs or obligations to Third Parties, the cost and
expense of notifying customers and costs and expenses associated with shipment
of the recalled Licensed Product from a customer to either party shall be
included in Regulatory and Licensing Costs.
ARTICLE 5. GRANTS OF RIGHTS
5.1 Grants of Commercialization Licenses.
5.1.1 By Lexicon. Subject to the terms of this Agreement
and any applicable [**], Lexicon hereby grants to Organon and its
Affiliates, within the Co-Commercialization Territory, a co-exclusive
right and license, with the limited right to sublicense (as set forth
below), under Lexicon's rights in (a) the Lexicon Background Materials
and the Lexicon Background Technology, including, without limitation,
any Patent Rights Controlled by Lexicon Covering the foregoing, and (b)
the Program Intellectual Property, in each case to make, have made,
import, use, have used, offer for sale, sell and have sold the Licensed
Product in the Collaboration Field. Such right and license shall
include the right to grant sublicenses to Affiliates of Organon and to
Third Parties that are approved by the Joint Management Committee.
5.1.2 By Organon. Subject to the terms of this Agreement
and any applicable [**], Organon hereby grants to Lexicon and its
Affiliates, within the Co-Commercialization Territory, a co-exclusive
right and license, with the limited right to sublicense (as set forth
below), under Organon's rights in (a) the Organon Background Materials
and the Organon Background Technology, including, without limitation,
any Patent Rights Controlled by Organon Covering the foregoing, and (b)
the Program Intellectual Property, in each case to make, have made,
import, use, have used, offer for sale, sell and have sold the Licensed
Product in the Collaboration Field. Such right and license shall
include the right to grant sublicenses to Affiliates of Lexicon and to
Third Parties that are approved by the Joint Management Committee.
5.2 No Grant of Other Technology or Patent Rights. Except as
otherwise expressly provided in this Agreement, under no circumstances shall a
party hereto, as a result of this Agreement, obtain any
14
ownership interest in or other right to any technology, know-how, patents,
patent applications, gene or genomic ▇▇▇▇▇▇▇▇ ▇▇▇▇ or information, products, or
biological materials of the other party, including items owned, controlled or
developed by, or licensed to, the other party, or transferred by the other party
to said party, at any time pursuant to this Agreement.
ARTICLE 6. FINANCIAL TERMS
6.1 Collaboration Cost and Revenue Sharing. Beginning with the
Effective Date and throughout the term of this Agreement, all Operating
Profit/Loss shall be shared in accordance with the Cost and Revenue Sharing
Ratio.
6.2 Reporting of Operating Profit/Loss and Detail Efforts
6.2.1 Reports of Net Sales, Allowable Commercialization
Costs and Details. During the term of this Agreement, each party shall,
within [**] after each [**], furnish to the other party a written [**]
report showing in reasonable detail (a) Net Sales and, [**], gross
sales of the Licensed Product sold by such party, its (sub)licensees
and their respective Affiliates during such [**] and, [**], the
calculation of Net Sales from such gross sales, in each case on a
country-by-country basis, (b) the Allowable Commercialization Costs
incurred by such party during such [**] in each of the categories
specified in Section 1.4, and (c) the Details performed by such party
during such [**] in accordance with the applicable Commercialization
Plan.
6.2.2 Consolidated Report of Operating Profit/Loss and
Detail Efforts. During the term of this Agreement, Lexicon shall,
within [**] after each [**], furnish to Organon a written [**] report
showing in reasonable detail and in United States Dollars:
(a) the Net Sales and, [**], gross sales of the
Licensed Product sold by the parties and their respective
(sub)licensees and Affiliates during such [**] and, [**], the
calculation of Net Sales from such gross sales, in each case
on a country-by-country basis;
(b) the Allowable Commercialization Costs
incurred by Lexicon and Organon, respectively, and in total,
during such [**] in each of the categories specified in
Section 1.4;
(c) Operating Profit/Loss for such [**], and the
amount, if any, owed by one party to the other party in
respect thereof; and
(d) the Details performed by Lexicon and
Organon, respectively, and in total, during such [**] in
accordance with the applicable Commercialization Plan, and the
amount, if any, owed by one party to the other party in
respect thereof.
6.3 Payment of Operating Profit/Loss Amounts Owed. Amounts shown
as owed by one party to the other party under the report delivered in accordance
with Section 6.2.2 shall be payable within [**] following the delivery of such
report.
6.4 Exchange Rates. Gross sales, Net Sales, Allowable
Commercialization Costs and Operating Profit/Loss attributable to countries
other than the United States shall be calculated in accordance with the standard
exchange rates published in the Wall Street Journal (New York edition) and
otherwise in accordance with the standard exchange rate conversion practices
used by the reporting party for financial accounting purposes.
15
6.5 Records. The parties shall each keep accurate books and
accounts of record in connection with the Commercialization of the Licensed
Product in a manner consistent with GAAP and in sufficient detail to permit
accurate determination of all figures necessary for verification of gross sales,
Net Sales, Allowable Commercialization Costs, Operating Profit/Loss and Details
performed hereunder.
6.6 Audits. Upon the written request of a party, the other party
shall permit an independent certified public accountant selected by the
requesting party and acceptable to the other party, which acceptance shall not
be unreasonably withheld, to have access, at reasonable times and during normal
business hours, to such records of such other party as may be reasonably
necessary to verify the accuracy of the reports described herein (and, if not
included in such reports, the gross sales of the Licensed Product sold by such
party, its (sub)licensees and their respective Affiliates along with the
calculation of Net Sales from such gross sales, in each case, on a
country-by-country basis), in respect of any fiscal year ending not more than
[**] prior to the date of such request. Each party shall use commercially
reasonable efforts to schedule all such verifications within [**] after the
requesting party makes its written request. All such verifications shall be
conducted not more than [**]. The report of the requesting party's independent
certified public accountant shall be made available to both parties. Subject to
the other party's rights under Section 11.7, in the event requesting party's
independent certified public accountant concludes that additional amounts were
owed to the requesting party for such period, the additional amounts shall be
paid by the other party within [**] of the date the requesting party delivers to
the other party such independent certified public accountant's written report so
concluding, unless such report contains manifest error. In the event requesting
party's independent certified public accountant concludes that there was an
overpayment to such party during such period, the overpayment shall be repaid by
the requesting party within [**] of the date the requesting party received such
independent certified public accountant's written report so concluding, unless
such report contains manifest error. The fees charged by such independent
certified public accountant shall be paid by the requesting party unless such
audit discloses an underpayment or overpayment of more than [**] of the amount
due under this Agreement for the period in question, in which case the party
responsible for such underpayment or overpayment will bear the full cost of such
audit. Each party agrees that all information subject to review under this
Section 6.6 or under any agreement with a (sub)licensee of a party is
confidential and that the party receiving such information shall cause its
independent certified public accountant to retain all such information in
confidence. The requesting party's independent certified public accountant shall
only report to the requesting party as to the computation of Operating
Profit/Loss or royalties payable under this Agreement, as applicable, and shall
not disclose to the requesting party any other information of the other party or
any (sub)licensee of a Continuing Party.
6.7 Withholding Taxes. In the event that any royalties or other
payments due to a party are subject to withholding tax required by law to be
paid to the taxing authority of any foreign country, the amount of such tax may
be withheld from the applicable royalties or other payment due such party. The
party owing such payment shall promptly pay such tax on behalf of the party to
which such payment is owed and shall furnish the party to which such payment is
owed with a certificate of withholding tax so deducted for such party's
avoidance of duplicate taxation in multiple countries. The party owing such
payment may not deduct any other withholding or any other governmental charges
from the payments agreed upon under this Agreement, except to the extent same
are paid on behalf of, or for the benefit of, the party to which such payment is
owed. The party owing such payment shall maintain official receipts of payment
of any such withholding taxes and shall forward such receipts to the party to
which such payment is owed.
6.8 Blocked Currency. If by law, regulation, or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds
of a convertible currency to the United States is restricted or forbidden, the
party owing such payment shall give the party to which such payment is owed
prompt written notice and shall make such payment due under this Article 6
through such means or
16
methods as are lawful in such country as the party to which such payment is owed
may reasonably designate. Failing the designation by the party to which such
payment is owed of such lawful means or methods within [**] after such written
notice is given to such party, the party owing such payment shall deposit such
royalty payment in local currency to the credit of the party to which such
payment is owed in a recognized banking institution designated by such party, or
if none is designated by such party within the [**] period described above, in a
recognized banking institution selected by the party owing such payment and
identified in a written notice to other party, and such deposit shall fulfill
all obligations of the party owing such payment to the other party with respect
to such payment.
6.9 Interest on Late Payments. A party to which payment is owed
under this Agreement shall have the right to seek to collect interest on any
payments that are not paid on or before [**] after the date such payments are
due under this Agreement at a rate equal to [**], calculated on the total number
of days payment is delinquent.
6.10 Manner of Payment. Except as provided in Section 6.8, payments
to be made by one party to the other under this Agreement shall be payable in
United States dollars and shall be paid by bank wire transfer in immediately
available funds to such bank account in the state and country in which such
principal office is located as is designated in writing by such party from time
to time.
ARTICLE 7. CONFIDENTIALITY
7.1 Nondisclosure Obligations.
7.1.1 General. Except as otherwise provided in this Article
7, during the term of this Agreement and for a period of five (5) years
thereafter, each Receiving Party shall maintain the Confidential
Information of each Disclosing Party in confidence and use it only for
purposes specifically authorized under this Agreement.
7.1.2 Limitations. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under
this Agreement and subject to advance written notification to the
Disclosing Party: (a) a party may disclose to Third Parties
Confidential Information it is otherwise obligated not to disclose
under this Section 7.1, to its Affiliates, (sub)licensees, consultants,
outside contractors and clinical investigators, on a strict
need-to-know basis for the purposes contemplated by this Agreement and
on condition that such entities or persons agree to keep the
Confidential Information confidential for the same time periods and to
the same extent as such party is required to keep the Confidential
Information confidential hereunder; and (b) a party or its
(sub)licensees may disclose, using appropriate measures to preserve
confidentiality, such Confidential Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain authorizations to conduct clinical trials of, and
to commercially market, the Licensed Product pursuant to this
Agreement. Furthermore, a Receiving Party may request permission from
the Disclosing Party to disclose such Confidential Information to the
extent that such disclosure is reasonably necessary [**].
7.1.3 Required Disclosure. A Receiving Party may disclose
Confidential Information pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued
by a court or governmental agency or as otherwise required by law;
provided, however, that the Receiving Party shall notify the Disclosing
Party promptly upon receipt thereof, giving [**] the Disclosing Party
sufficient advance notice to permit it to oppose, limit or seek
confidential treatment for such disclosure; and provided, further, that
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by counsel is legally
17
required whether or not a protective order or other similar order is
obtained by the Disclosing Party.
7.2 Injunctive Relief. The parties hereto understand and agree
that remedies at law may be inadequate to protect against any breach of any of
the provisions of this Article 7 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of injunctive
relief by a court of competent jurisdiction against any action that constitutes
any such breach of this Article 7.
7.3 Publication. Organon and Lexicon (each, a "Submitting Party")
may each publish or present data and results relating to the Licensed Product,
subject to the prior review of the proposed disclosure by the other party (each,
a "Reviewing Party"), solely to determine (a) whether the proposed disclosure
contains the Confidential Information of the Reviewing Party or (b) whether the
information contained in the proposed disclosure should be the subject of a
patent application to be filed by the Reviewing Party prior to such disclosure.
Each Submitting Party shall provide the Reviewing Party with the opportunity to
review any proposed abstract, manuscript or presentation by delivering a copy
thereof to the Reviewing Party no less than [**] before its intended submission
for publication or presentation. The Reviewing Party shall have [**] from its
receipt of any such abstract, manuscript or presentation in which to notify the
Submitting Party in writing of any specific objections to the disclosure, based
on either the need to seek patent protection or concern regarding the specific
disclosure of the Confidential Information of the Reviewing Party. In the event
the Reviewing Party objects to the disclosure, the Submitting Party agrees not
to submit the publication or abstract or make the presentation containing the
objected-to information until the Reviewing Party is given a reasonable
additional period of time (not to exceed an additional [**]) to seek patent
protection for any material in the disclosure which the Reviewing Party believes
is patentable (subject, in all events, to Section 7.2) or, in the case of
Confidential Information, to allow the Submitting Party to delete any
Confidential Information of the Reviewing Party from the proposed disclosure.
The Submitting Party agrees to delete from the proposed disclosure any
Confidential Information of the Reviewing Party upon request.
ARTICLE 8. REPRESENTATIONS AND WARRANTIES
8.1 Representations, Warranties and Covenants of Lexicon. Lexicon
represents and warrants to and covenants with Organon that:
8.1.1 Lexicon is a corporation duly organized, validly
existing and in corporate good standing under the laws of the State of
Delaware, United States of America;
8.1.2 Lexicon has the corporate and legal right, authority
and power to enter into this Agreement, and to extend the rights and
licenses granted to Organon in this Agreement;
8.1.3 Lexicon has taken all necessary action to authorize
the execution, delivery and performance of this Agreement;
8.1.4 upon the execution and delivery of this Agreement,
this Agreement shall constitute a valid and binding obligation of
Lexicon, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
18
8.1.5 the performance of Lexicon's obligations under this
Agreement will not conflict with its charter documents or result in a
breach of any agreements, contracts or other arrangements to which it
is a party; and
8.1.6 Lexicon will not during the term of this Agreement
enter into any agreements, contracts or other arrangements that would
be inconsistent with its obligations under this Agreement.
8.2 Representations, Warranties and Covenants of Organon. Organon
represents and warrants to and covenants with Lexicon that:
8.2.1 Organon is a corporation duly organized, validly
existing and in corporate good standing under the laws of the
Netherlands;
8.2.2 Organon has the corporate and legal right, authority
and power to enter into this Agreement, and to extend the rights and
licenses granted to Lexicon in this Agreement;
8.2.3 Organon has taken all necessary action to authorize
the execution, delivery and performance of this Agreement;
8.2.4 upon the execution and delivery of this Agreement,
this Agreement shall constitute a valid and binding obligation of
Organon enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
8.2.5 the performance of its obligations under this
Agreement will not conflict with Organon's charter documents or result
in a breach of any agreements, contracts or other arrangements to which
it is a party; and
8.2.6 Organon will not after the Effective Date enter into
any agreements, contracts or other arrangements that would be
inconsistent with its obligations under this Agreement.
8.3 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY PRODUCT,
PATENT RIGHTS, GOODS, SERVICES, BACKGROUND MATERIALS OR ANY OTHER SUBJECT MATTER
OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING. IN ADDITION, THE PARTIES ACKNOWLEDGE
THAT THE GENERATION OR USE OF BACKGROUND MATERIALS MAY BE COVERED BY ONE OR MORE
VALID PATENTS OF THIRD PARTIES. EACH PARTY ACKNOWLEDGES THAT EXERCISE BY IT OF
THE RIGHTS AND LICENSES GRANTED TO IT PURSUANT TO ARTICLE 5 HEREOF MAY BE
COVERED BY ONE OR MORE VALID PATENTS OF THIRD PARTIES.
8.4 Limited Liability. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT, NEITHER LEXICON NOR ORGANON WILL BE LIABLE WITH RESPECT TO ANY MATTER
ARISING UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS.
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ARTICLE 9. INDEMNITY
9.1 Lexicon Indemnity Obligations. Lexicon agrees to defend,
indemnify and hold Organon, its Affiliates and their respective employees and
agents harmless from all claims, losses, damages or expenses (including
reasonable attorneys' fees and costs of litigation) arising as a result of
Lexicon's breach of any of its representations, warranties or covenants
hereunder.
9.2 Organon Indemnity Obligations. Organon agrees to defend,
indemnify and hold Lexicon, its Affiliates and their respective employees and
agents harmless from all claims, losses, damages or expenses (including
reasonable attorneys' fees and costs of litigation) arising as a result of
Organon's breach of any of its representations, warranties or covenants
hereunder.
9.3 Limitation on Indemnity Obligations. Neither party, its
Affiliates or their respective employees and agents shall be entitled to the
indemnities set forth in Sections 9.1 or 9.2, respectively, to the comparative
extent the claim, loss, damage or expense for which indemnification is sought
was caused by a grossly negligent, reckless or intentional act or omission by
such party, its directors, officers, employees or authorized agents.
9.4 Procedure. If a party or any of its Affiliates or their
respective employees or agents (collectively, the "Indemnitee") intends to claim
indemnification under this Article 9, the Indemnitee shall promptly notify the
other party (the "Indemnitor") of any loss, claim, damage, liability or action
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel selected by the
Indemnitor and reasonably acceptable to the Indemnitee, provided, however, that
an Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitee, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceedings. The Indemnitor shall have the
right to settle or compromise any claims for which it is providing
indemnification under this Article 15, provided that the consent of the
Indemnitee (which shall not be unreasonably withheld or delayed) shall be
required in the event any such settlement or compromise would adversely affect
the interests of the Indemnitee. The indemnity agreement in this Article 9 shall
not apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the Indemnitor. The
failure to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to the Indemnitor's ability to
defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 9, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Article 9. The Indemnitee under this
Article 9, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigation of any action, claim or
liability covered by this indemnification.
9.5 Insurance. Each party shall maintain appropriate product
liability insurance with respect to Commercialization of the Licensed Product by
such party in such amount as such party customarily maintains with respect to
sales of its other products. Each party shall maintain such insurance for so
long as it continues to manufacture or sell the Licensed Product, and thereafter
for so long as such party customarily maintains insurance with respect to sales
of its other products.
ARTICLE 10. EXPIRATION AND TERMINATION
10.1 Term of Agreement. The term of this Agreement shall commence
on the Effective Date and shall continue until the earliest to occur of (a) a
party Opting Out of the Licensed Product, (b) the parties' grant of
Commercialization rights with respect to the Licensed Product to a Joint
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Marketing/Development Collaborator in all countries within the
Co-Commercialization Territory or (c) the agreement of the parties to cease all
Development and Commercialization of the Licensed Product.
10.2 Events of Default. An Event of Default by either party shall
have occurred upon (a) the occurrence of a material breach of this Agreement if
such party fails to remedy such breach within [**] after written notice thereof
by the non-breaching party ([**] in the event of a party's failure to make a
payment required hereunder) or, if remediation of such breach in [**] is not
practicable, if such party fails to commence and diligently pursue such
remediation during such [**] period, or (b) the commencement of any proceeding
in or for bankruptcy, insolvency, dissolution or winding up by or against such
party that is not dismissed or otherwise disposed of within [**] thereafter.
10.3 Effect of an Event of Default. In the event of an Event of
Default, the non-defaulting party shall have the right, at its option
exercisable in its sole discretion, in addition to any other rights or remedies
available to it at law or in equity and subject to the limitations set forth in
Sections 3.7.2, 9.4 and 11.7 hereof, to terminate this Agreement upon [**]
notice thereof to the other party, in which case (a) the defaulting party shall
be deemed to have Opted Out with respect to the Licensed Product and (b) the
defaulting party shall return to the non-defaulting party or, upon the
non-defaulting party's written instruction, destroy all information, materials
or documentation provided by the non-defaulting party pursuant to this
Agreement.
10.4 Effect of Expiration or Termination of Agreement. The
expiration or termination of this Agreement shall not relieve the parties of any
obligation accruing prior to such expiration or termination. The provisions of
Articles 7 and 9 and Sections 11.2 and 11.4 through 11.7 hereof shall survive
the expiration or termination of this Agreement.
ARTICLE 11. MISCELLANEOUS
11.1 Force Majeure. Neither party shall be held liable or
responsible to the other party nor be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any obligation
under this Agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected party, including but not
limited to fire, floods, embargoes, war, acts of war (whether war is declared or
not), insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided, however, that the party so affected shall use
reasonable commercial efforts to avoid or remove such causes of nonperformance,
and shall continue performance hereunder with reasonable dispatch whenever such
causes are removed. Either party shall provide the other party with prompt
written notice of any delay or failure to perform that occurs by reason of force
majeure. The parties shall mutually seek a resolution of the delay or the
failure to perform as noted above.
11.2 Assignment. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by either party without the consent of the
other party; provided, however, that either Lexicon or Organon may, without such
consent, assign its rights and obligations under this Agreement (i) to any
Affiliate, or (ii) in connection with a merger, consolidation or sale of such
portion of a party's assets that includes rights under this Agreement to an
unrelated Third Party; provided, further, that such party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including those business assets
that are the subject of this Agreement. Any purported assignment in violation of
the preceding sentence shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement, unless the parties otherwise
agree.
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11.3 Change in Control.
11.3.1 Notice of and Reasonable Assurances upon a Change in
Control. Within [**] after any Change in Control of a party, the
surviving party to such Change in Control (the "Acquiring Party") (a)
will notify the other party of the occurrence of such Change in Control
and (b) will provide the other party with reasonable assurances of its
commitment to fulfill its obligations under this Agreement and the
applicable Commercialization Plan(s) then in effect.
11.3.2 Effect of Failure to Provide Assurances upon a Change
in Control. If the Acquiring Party fails to provide the assurances
contemplated by Section 11.3.1 within the [**] period set forth
therein, and does not cure such failure within [**] after notice from
the other party, the Acquiring Party shall be deemed to have Opted Out
of the Licensed Product, with the same effect as if the Acquiring Party
had Opted Out under Section 10.1.1.1 of the Collaboration Agreement;
provided that the Acquiring Party shall not [**] with respect to (a)
[**] or (b) [**].
11.3.3 Option to Negotiate for Rights to Collaboration
Product. Without limiting the foregoing, if requested by the other
party at any time within the [**] period following the Acquiring
Party's notice under Section 11.3.1 of a Change in Control, the
Acquiring Party and the other party shall enter into good faith
negotiations, for a period of [**] following such request, for the
other party to obtain from the Acquiring Party the exclusive rights to
Commercialize the Licensed Product. In the event the Acquiring Party
and the other party do not enter into a definitive agreement with
respect to such exclusive rights within such [**] period, except to the
extent set forth in Section 11.3.4 below, the Acquiring Party and the
other party shall each maintain their respective rights with respect to
the Commercialization of the Licensed Product as otherwise described in
this Agreement.
11.3.4 [**] upon a Change in Control. In the event that (a)
the Acquiring Party and the other party enter into negotiations in
accordance with Section 11.3.3 with respect to the Licensed Product but
do not enter into a definitive agreement within the [**] period
contemplated thereby and (b) the Acquiring Party (i) [**] and (ii) has
not [**], the other party shall have the right, by delivering written
notice thereof within [**] after the expiration of such [**] period, to
[**] consisting of (i) [**] and (ii) [**]. [**]at the time such notice
is delivered or as soon thereafter as [**] in accordance with the terms
of this Section 11.3.4. Unless otherwise agreed by the Acquiring Party
and the other party, [**], shall be determined by binding arbitration
in accordance with the following provisions. The parties shall attempt
to mutually agree upon a single independent Third Party arbitrator (who
shall be a professional with appropriate experience in [**]) within
[**] after the other party's delivery of the written notice in
accordance with this Section 11.3.4 of [**]. If the parties are unable
to mutually agree upon one such person, then each party shall appoint
one independent Third Party professional with appropriate experience in
[**] prior to the expiration of such [**] period, and within [**] after
the initial notice, such person(s) shall select a single independent
Third Party arbitrator, who shall be a professional with appropriate
experience in [**]. Each party shall present all information as such
party reasonably desires regarding [**]. Within [**] after the initial
notice, the arbitrator shall provide written notice to the parties
regarding his or her determination regarding [**].
11.4 Severability. Each party hereby agrees that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more provisions
of this Agreement be or become invalid, the parties hereto shall substitute, by
mutual consent, valid provisions for such invalid provisions which valid
provisions in their economic effect are sufficiently similar to the invalid
provisions that it can be reasonably assumed that the parties would have entered
into this Agreement with such valid provisions in lieu of such invalid
provisions. In case such valid provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall
22
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the parties would not have entered into this Agreement
without the invalid provisions.
11.5 Notices. Any consent, notice or report required or permitted
to be given or made under this Agreement by one of the notification parties
hereto to the other shall be in writing, delivered personally or by facsimile
(and promptly confirmed by telephone, personal delivery or courier) or courier,
postage prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
If to Lexicon: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lexicon Genetics Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Organon: N.V. Organon
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ Oss
The Netherlands
Attention: General Manager
Telephone: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇
Facsimile: 31 412 663 529
With a copy to: Director Legal Affairs Akzo Nobel Pharma B.V.
Wethouder van ▇▇▇▇▇▇▇▇▇▇ ▇
▇.▇. ▇▇▇ ▇▇
5340 BH Oss
The Netherlands
All such communications shall be effective upon receipt.
11.6 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, United States of
America, without reference to the conflicts of law principles thereof.
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11.7 Dispute Resolution. Subject to Section 3.7.2, the parties
hereby agree that they will first attempt in good faith to resolve any
controversy or claim arising out of or relating to this Agreement promptly by
negotiations. If a controversy or claim should arise hereunder, the matter shall
be referred to an individual designated by the Chief Executive Officer (or the
equivalent position) of Lexicon and by the Chief Executive Officer (or the
equivalent position) of Organon (the "Representatives"). If the matter has not
been resolved within [**] of the first meeting of the Representatives of the
parties (which period may be extended by mutual agreement) concerning such
matter, the parties shall be free to pursue all available recourse both at law
and in equity.
11.8 Entire Agreement. This Agreement, together with the exhibits
and appendices hereto and any confidentiality agreement(s) executed in
contemplation of this Agreement, contains the entire understanding of the
parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by both parties hereto.
11.9 Publicity. Lexicon and Organon each agree not to disclose any
terms or conditions of this Agreement to any Third Party without consulting the
other party prior to such disclosure. Notwithstanding the foregoing, prior to
execution of this Agreement, Lexicon and Organon shall agree upon the substance
of information that can be used as a routine reference in the usual course of
business to describe the existence and general nature of this transaction, and
Lexicon and Organon may disclose such information without consulting the other
party. The parties may thereafter from time to time mutually agree on revisions
to material to be used as a routine reference, which revisions shall be
submitted by one party for the review and approval of the other party at least
[**] prior to the anticipated use or disclosure of the revised material, such
approval not to be unreasonably withheld. The terms of this Agreement shall be
treated as the Confidential Information of Lexicon and Organon, and, except to
the extent required by applicable law, shall not be disclosed to anyone (except
for the parties' respective employees, consultants, agents and attorneys
assisting in the review and negotiation of this Agreement who have a need to
know the terms of this Agreement) without the written permission of Organon or
Lexicon. If either party desires to release a separate announcement relating to
this Agreement, it shall first allow the other party to approve in writing such
proposed announcement; provided that such approval shall not be unreasonably
withheld or delayed.
11.10 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
11.11 No Partnership. It is expressly agreed that the relationship
between Lexicon and Organon shall not constitute a partnership, joint venture or
agency. Neither Lexicon nor Organon shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior consent of the other
party to do so.
11.12 Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. Lexicon and Organon agree not to export or re-export, directly
or indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control laws or governmental regulations. Lexicon and
Organon agree to obtain similar covenants from their licensees, (sub)licensees,
or corporate partners, as the case may be, and contractors with respect to the
subject matter of this Section 11.12.
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11.13 Waiver. The waiver by either party hereto of any right
hereunder or the failure to perform or of a breach by the other party shall not
be deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.
11.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute and deliver this Agreement as of the Effective Date.
LEXICON GENETICS INCORPORATED
By: Date:
--------------------------------------- ----------------------
Name:
-------------------------------------
Title:
------------------------------------
N.V. ORGANON
By: Date:
--------------------------------------- ----------------------
Name:
-------------------------------------
Title:
------------------------------------
By: Date:
--------------------------------------- ----------------------
Name:
-------------------------------------
Title:
------------------------------------
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EXHIBIT 1.40
ALLOCATION OF NET SALES IN BUNDLED TRANSACTION
With respect to Licensed Product sold in a Bundled Transaction in which
Organon, Lexicon or any of their respective Affiliates or (sub)licensees
discounts the sales price of the Licensed Product to a greater degree than such
seller generally discounts the price of its other products to such customer, the
amount to be included in Net Sales of the Licensed Product shall be calculated
in accordance with the following formula:
ASP-P x N-P
NS-P = ______________________________x BTF
(SIGMA)=1 ASP-pi x N-pi
Where:
NS-P = Amount allocated to Net Sales of the Licensed
Product
ASP-P = Average Selling Price (as defined below) per
unit, during the applicable period, of the
Licensed Product when sold alone
ASP-pi = Average Selling Price per unit,
during the applicable period, of the
Licensed Product or each product
other than a Licensed Product in the
Bundled Transaction when sold alone
N-P = Total number of units of Licensed Product
included in the Bundled Transaction during
the applicable period
N-pi = Total number of units (i.e., corresponding to
the same ASP-pi) of the Licensed Product or
product other than a Licensed Product
included in the Bundled Transaction during
the applicable period
(SIGMA)=1 = The sum of the products of the
formula ASP-pi ? N-pi for each and
every Licensed Product or product
other than a Licensed Product
included in the Bundled Transaction
during the applicable period
BTF = The aggregate amounts paid to the seller for
the Bundled Transaction during the applicable
period
The Average Selling Price shall be based on the actual average selling
price of the Licensed Product or product other than a Licensed Product, as the
case may be, determined for the applicable period.
If the Licensed Product or other product is not sold separately and no
bona fide list price exists for the Licensed Product or other product, the
parties shall agree upon an imputed bona fide list price for the Licensed
Product or other product, and Net Sales with respect thereto shall be based on
such imputed list price.