EXHIBIT 10.28
COLLABORATIVE DEVELOPMENT AND
MARKETING AGREEMENT
by and between
ZymoGenetics, Inc.
and
Ares Trading S.A.
Effective Date: August 30, 2001
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
CONTENTS
ARTICLE ONE Definitions and Terminology................................................................... 1
ARTICLE TWO Scope and Exclusivity of the Collaboration.................................................... 15
2.1 Exclusivity...................................................................................... 15
2.2 [*].............................................................................................. 15
ARTICLE THREE Coordination of the Collaboration............................................................. 18
3.1 Steering Committee Role and Responsibilities..................................................... 18
3.2 Product Team and Project Contacts Roles and Responsibilities..................................... 19
3.3 Commercialization Team and Commercialization Contacts Roles and Responsibilities................. 20
ARTICLE FOUR Discovery and Development of Licensed Products................................................ 21
4.1 Research and Development Efforts................................................................. 21
4.2 Invention Disclosures; Provision of Information.................................................. 22
4.3 Regulatory Matters............................................................................... 22
4.4 Selection and Supervision of Personnel........................................................... 22
4.5 Development Costs Attributable to Japan.......................................................... 22
4.6 Other Development Costs; Quarterly Accountings................................................... 23
4.7 Third Party Development Fees..................................................................... 23
4.8 Early Termination of Development Project Roles and Responsibilities.............................. 23
ARTICLE FIVE Commercialization of Licensed Products in North America....................................... 24
5.1 Co-Promotion in North America; Election Not to Co-Promote........................................ 24
5.2 North American Commercialization Costs; Election Not to Co-Fund.................................. 24
5.3 Selection and Supervision of Personnel........................................................... 25
5.4 Third Party Commercial Use Fees.................................................................. 25
5.5 Quarterly Accounting and Balancing Payments...................................................... 25
5.6 North American Product Term Extension............................................................ 25
ARTICLE SIX Diligence; Adjustment to Territory............................................................ 26
6.1 Responsibility for Commercialization............................................................. 26
6.2 Reports of Sales in North America................................................................ 26
6.3 Early Termination of Commercialization Responsibilities.......................................... 27
ARTICLE SEVEN Initial Fee; Milestone Fees................................................................... 27
7.1 Initial Fee...................................................................................... 27
7.2 Milestone Fees................................................................................... 27
7.3 Reporting of Milestones; Payment of Milestone Fees............................................... 28
ARTICLE EIGHT Royalty Calculation and Payment............................................................... 28
8.1 Payments to ZGI on North American Net Sales If Co-Fund........................................... 28
8.2 Royalties on North American Net Sales If No Co-Fund.............................................. 28
8.3 Royalties on Rest of World Net Sales............................................................. 30
8.4 Royalties on Declined Product Sublicensing Revenues.............................................. 33
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
8.5 Reporting and Payment............................................................................. 33
ARTICLE NINE Records, Reporting, Payment and Audits......................................................... 34
9.1 Form of Payment; Currency Conversion.............................................................. 34
9.2 Late Payment...................................................................................... 34
9.3 Records of Development Costs, North American Commercialization Costs, and Third
Party Royalties............................................................................... 34
9.4 Records and Audits................................................................................ 34
9.5 Payments Based on Audit Results................................................................... 35
9.6 Withholding....................................................................................... 35
9.7 [*]............................................................................................... 35
ARTICLE TEN Intellectual Properties; Licenses.............................................................. 36
10.1 Ownership of Intellectual Properties.............................................................. 36
10.2 Development Project Licenses...................................................................... 36
10.3 Co-Promotion Licenses............................................................................. 37
10.4 License to Serono in the Territory................................................................ 37
10.5 Sublicenses as to Licensed Products............................................................... 38
10.6 Declined Products Sublicenses..................................................................... 38
10.7 License to ZGI in ZGI Territory................................................................... 38
10.8 Sublicenses....................................................................................... 38
10.9 Patent Marking.................................................................................... 39
10.10 Trademark License Quality Controls................................................................ 39
10.11 St Jude License Agreement......................................................................... 39
10.12 Existing Third Party Agreements................................................................... 39
ARTICLE ELEVEN Patent and Trademark Prosecution and Enforcement............................................. 39
11.1 Ig Fusion Technology.............................................................................. 39
11.2 St. Jude Patent Rights............................................................................ 40
11.3 Prosecution and Maintenance....................................................................... 40
11.4 Defense and Enforcement Actions................................................................... 41
11.5 Patent Extensions................................................................................. 43
11.6 Protection of the Licensed Product Trademarks..................................................... 43
ARTICLE TWELVE Elective Termination of Certain Roles and Responsibilities................................... 43
12.1 Termination at Election of ZGI.................................................................... 43
12.2 Termination at Election of Serono................................................................. 47
ARTICLE THIRTEEN Confidentiality; Research Materials; Publicity............................................. 50
13.1 Confidentiality and Non-Use....................................................................... 50
13.2 Exceptions........................................................................................ 50
13.3 Permitted Disclosures............................................................................. 51
13.4 Research Materials; Permitted Uses................................................................ 51
13.5 Press Releases.................................................................................... 51
13.6 Publications...................................................................................... 52
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
ARTICLE FOURTEEN Representations and Warranties.............................................................. 52
14.1 Representations, Warranties and Covenants of Serono............................................. 52
14.2 Representations, Warranties and Covenants of ZGI................................................ 53
14.3 Research Materials.............................................................................. 55
14.4 Warranty Disclaimer............................................................................. 55
ARTICLE FIFTEEN Indemnification; Insurance.................................................................. 55
15.1 Serono Indemnification.......................................................................... 55
15.2 ZGI Indemnification............................................................................. 56
15.3 Notice and Defense of Claims.................................................................... 57
15.4 Insurance....................................................................................... 58
ARTICLE SIXTEEN Change of Control........................................................................... 59
16.1 Loss of Co-Promotion Right for a Licensed Product............................................... 59
16.2 Decisions Regarding Commercialization Budget.................................................... 60
ARTICLE SEVENTEEN Term and Termination........................................................................ 60
17.1 Term............................................................................................ 60
17.2 Termination for Material Breach................................................................. 60
17.3 Termination Upon Serono's Bankruptcy............................................................ 60
17.4 No Termination Upon ZGI's Bankruptcy............................................................ 61
17.5 Termination of License With Respect to [*]...................................................... 61
17.6 Accrued Rights and Surviving Provisions......................................................... 61
ARTICLE EIGHTEEN Dispute Resolution.......................................................................... 62
18.1 Cooperative Decision Making; [*]................................................................ 62
18.2 [*]............................................................................................. 62
18.3 [*]............................................................................................. 62
18.4 [*]............................................................................................. 63
ARTICLE NINETEEN General..................................................................................... 63
19.1 Entire Agreement................................................................................ 63
19.2 Controlling Law................................................................................. 63
19.3 Notices......................................................................................... 64
19.4 Force Majeure................................................................................... 64
19.5 Subcontracting.................................................................................. 65
19.6 Assignability................................................................................... 65
19.7 Amendments and Waivers.......................................................................... 65
19.8 Severability.................................................................................... 66
19.9 Counterparts.................................................................................... 66
19.10 Relationship.................................................................................... 66
19.11 Use of Names, Trade Names and Trademarks........................................................ 66
19.12 Headings........................................................................................ 66
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
LIST OF EXHIBITS
Exhibit 1.20.....................................................Development Costs and Principles
Exhibit 1.34......................................................Existing Third Party Agreements
Exhibit 1.36.................................................................Ig Fusion Technology
Exhibit 1.46................................North American Commercialization Costs and Principles
Exhibit 1.70.........................................................Serono Background Technology
Exhibit 1.85............................................................ZGI Background Technology
Exhibit 13.5..........................................................Initial Joint Press Release
Exhibit 14.2(j).............................................................Transferred Materials
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
COLLABORATIVE DEVELOPMENT AND MARKETING AGREEMENT
This Collaborative Development and Marketing Agreement (this "Agreement")
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is made as of the Effective Date defined below by and between ZymoGenetics,
Inc., a Washington corporation having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("ZGI"), and Ares Trading S.A.,
---
a Swiss corporation having offices at ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ("Serono"), with respect to the following recitals:
------
A. ZGI is engaged generally in the research and development of
biopharmaceutical products and has developed and acquired certain intellectual
property relating to certain receptors that play a role in one or more
autoimmune and/or other diseases.
B. Serono is engaged generally in the research, development, manufacture,
marketing, distribution, and sales of biopharmaceutical products.
C. Serono and ZGI wish collaboratively to fund and conduct activities
focused primarily on discovery and development of one or more new products
related to such receptors, securing regulatory approval for marketing thereof,
and marketing and co-promotion thereof, in North America and elsewhere
worldwide.
THEREFORE, the parties hereby agree as follows:
ARTICLE ONE
Definitions and Terminology
In addition to other terms defined elsewhere in this Agreement, the
following words and phrases shall have the following stated or referenced
meanings:
1.1 "Affiliate" means any company, joint venture, partnership, or other
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business entity that controls, is controlled by, or is under common control with
a party hereto. A business entity shall be deemed to control another business
entity if it possesses, directly or indirectly, the power to order or cause the
direction, management and policies of such other business entity through the
ownership of over fifty percent (50%) of the voting securities of that entity.
1.2 "Allocated Net Sales" means [*]
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[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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1.3 "Alternative Ligand" means [*]
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1.4 "Alternative Receptor" means [*]
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1.5 "Background Technology" means the Serono Background Technology and the
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ZGI Background Technology.
1.6 "BCMA" means the receptor described in International Patent
----
Application [*].
1.7 "Calendar Quarter" means each three (3) month period commencing
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January 1, April 1, July 1, or October 1.
1.8 "CEO" means the Chief Executive Officer of each party, except that in
---
the case of Serono it shall mean the Chief Executive Officer of S.A.
1.9 "cGMP" means the legal and regulatory requirements established from
----
time to time by the FDA for current Good Manufacturing Practices for human
pharmaceutical products and such standards of good manufacturing practice as are
required by other Regulatory Authorities, to the extent such standards are not
less stringent than cGMP standards promulgated by the FDA.
1.10 "Combination Product" means [*] that are not Licensed Products.
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1.11 "Commercial Use" means use for a revenue-generating purpose,
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inclusive of samples intended for promotional purposes, and does not mean use
for purposes such as research, development or clinical testing conducted in
conjunction with obtaining Regulatory Approval.
1.12 "Commercialization Contacts" means the persons appointed by each
--------------------------
party to serve as contact persons between the parties from time to time in
relation to a Commercialization Team, if any. Subject to Section 3.3, the
parties' initial Commercialization Contacts shall be
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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designated, respectively, by each party within thirty (30) days following
Initiation of Phase III Clinical Trials for a Licensed Product. Each party shall
promptly notify the other party of any substitution of other personnel as its
Commercialization Contact.
1.13 "Commercialization Plan and Budget" means the detailed written
---------------------------------
description of approved promotional, co-promotional, marketing, and sales
activities with respect to a Licensed Product in North America, together with a
budget therefor, approved or to be approved by Steering Committee Action.
1.14 "Commercialization Team" means a committee to be formed as provided
----------------------
in Section 3.3, two (2) members of which shall be the Commercialization
Contacts. The number of members of the Commercialization Team may be increased
from time to time by Steering Committee Action. While the parties need not be
equally represented in number of members on the Commercialization Team, the
Commercialization Team will be co-led by the two (2) Commercialization Contacts.
1.15 "Contractor" means a Third Party or an Affiliate to which a party
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desires to subcontract any portion of its Development Tasks or North American
Co-Promotion Tasks, to the extent permitted pursuant to this Agreement. For
purposes of this Agreement, payments to a Contractor that is an Affiliate of the
payor shall be limited to the applicable costs described in Exhibit 1.20 or
Exhibit 1.46.
1.16 "Controls" and "Controlled" mean that the entity referenced has the
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ability to exploit and to license or sublicense the right to exploit the
referenced technology or rights, as provided for in this Agreement, without
(assuming the timely payment of all applicable royalties) violating any
intellectual property rights of a Third Party or the terms of any agreement or
other arrangement with any Third Party.
1.17 "Declined Product" means any Licensed Product, which, at the time of
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the grant of a sublicense pursuant to Section 10.6, is not subject to a
Development Project.
1.18 "Declined Product Sublicensing Revenues" means [*]
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1.19 "Derivative" means [*]
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[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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1.20 "Development Costs" means those costs incurred or otherwise borne or
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to be borne by the parties or their Affiliates or Contractors in accordance with
the Development Plan and Budget and in the course of the Development Project, as
more fully described in Exhibit 1.20. The Development Costs shall be accounted
for by each party in accordance with the cost accounting principles described in
Exhibit 1.20.
1.21 "Development Plan and Budget" means the detailed written description
---------------------------
of the parties' and their Contractors' respective Development Tasks, together
with a budget therefor, approved or to be approved by Steering Committee Action.
1.22 "Development Project" means, as to any Licensed Product, the project
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contemplated under this Agreement and directed at the development, manufacture,
testing and registration of such Licensed Product in the Territory excluding
Japan. A Development Project for a particular Licensed Product shall end either
upon the Regulatory Approval for such Licensed Product, upon termination of the
post-launch clinical studies or market surveillance for such Licensed Product as
described in Section 1.24(g) or otherwise as provided in Section 1.23.
1.23 "Development Project Term" means the period from the Effective Date
------------------------
until the date when the last Development Project in effect for any Licensed
Product has terminated and the last of any development projects for the Licensed
Product in Japan has terminated; provided, however, that if no Licensed Product
has received Regulatory Approval on or before the fifteenth anniversary of the
Effective Date, the "Development Project Term" shall end at such anniversary;
provided, however, that: (a) any Development Project, or development project
for the Licensed Product in Japan, then in effect shall continue until one or
more parties terminates its roles and responsibilities thereunder either
pursuant to Section 4.8 or otherwise, and the Development Project Term shall be
extended accordingly; and (b) the Development Project Term may, for purposes of
Section 2.l, be extended by approval of both the parties hereto in their
discretion.
1.24 "Development Tasks" means those activities and responsibilities of
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each party that will be part of the Development Project, as more fully described
from time to time in the Development Plan and Budget. The Development Tasks
shall include with respect to a particular Licensed Product, as more fully
described in the Development Plan and Budget:
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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Unless the parties agree otherwise, [*]
1.25 "Discovered Antibody" means [*]
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1.26 "Distributor" means a person or entity, including any cooperative or
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group, involved in the acquisition of Licensed Products for distribution either
to other such persons or entities or to End Users, and who does not require, and
is not granted, any sublicense under any of the Project Technology or the
Background Technology (other than implied sublicenses to use and sell such
Licensed Products, by virtue of such Distributor's acquisition of the Licensed
Products from a person or entity authorized to sell them).
1.27 "Effective Date" means August 30, 2001.
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1.28 "Election Not to Co-Fund" means either (a) an election by ZGI made
-----------------------
pursuant to Section 5.2 or Section 5.6 that ZGI will not, or will no longer,
fund and bear any of the North
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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American Commercialization Costs with respect to a particular Licensed Product
or (b) an election by Serono made pursuant to Section 5.6 following the end of
the Product Term for a Licensed Product in North America (determined under
Section 1.60 without regard to Section 5.6) that Serono will no longer fund and
bear any of the North American Commercialization Costs with respect to that
Licensed Product.
1.29 "Election Not to Co-Promote" means an election by ZGI made pursuant
--------------------------
to Section 5.1 that ZGI will not participate in North American Co-Promotion
Tasks with respect to a particular Licensed Product.
1.30 "End Use" means the retail sale, distribution or administration of a
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Licensed Product by a pharmacy or other pharmaceutical dispensary or health
practitioner to a patient. "End User" means such pharmacy, dispensary or
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practitioner.
1.31 "Europe" means countries that are, at the relevant time, member
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countries of the European Union, together with Switzerland and Norway; provided,
however, that for purposes of Section 7.2, an event that occurs in or with
respect to "Europe" shall mean any such event in or with respect to (a) [*] or
(b) [*]
1.32 "Exclusivity Period" means, with respect to each Licensed Product:
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(a) with respect to any country of the European Union (and any other
country in the Territory in which applicable law would restrict the
permissible duration of a period of exclusivity to the life of
applicable patents), the period during the Product Term for such
Licensed Product, until the Patent Expiration Date in such country
with respect to the Patent Claims under Patent Rights in or to the
ZGI IP or the Joint Project Technology applicable to such Licensed
Product, or, if later, until all ZGI IP and Joint Project Technology
applicable to such Licensed Product has been disclosed without
restriction to the public (but, in this case, the Exclusivity Period
will not last longer in such country than [*] years from the first
Commercial Use of such Licensed Product in any country in the
European Union unless and to the extent that European law or rules
permit a longer such period of exclusivity); and
(b) with respect to any other country, the Product Term.
1.33 "Exhibit" means an exhibit explicitly referenced as such in this
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Agreement. All such Exhibits are by such references incorporated into this
Agreement as if fully set forth herein.
1.34 "Existing Third Party Agreement" means any Third Party Agreement
------------------------------
existing on the Effective Date and listed in Exhibit 1.34.
1.35 "FDA" means the United States Food and Drug Administration or any
---
successor agency vested with administrative and regulatory authority to approve
testing and marketing of human pharmaceutical or biological therapeutic or
diagnostic products in the United States.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-6-
1.36 "Ig Fusion Technology" means the Patent Rights for the items listed
--------------------
in Exhibit 1.36.
1.37 "IND" means an Investigational New Drug application, or its non-U.S.
---
equivalent, filed with a Regulatory Agency.
1.38 "Information" means: (a) all unpublished scientific and technical
-----------
information received by a party from the other party pursuant to this Agreement,
or so received prior to the Effective Date but in contemplation of this
Agreement; and (b) all trade secrets or information relating to the business
affairs or finances of the disclosing party or its Affiliates, or of their
suppliers, agents, distributors, licensees or customers, designated confidential
and disclosed in tangible form by the disclosing party to the other party
pursuant to this Agreement.
1.39 "Initiation" of Phase I, Phase II or Phase III Clinical Trials means
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the first administration of a Licensed Product to a patient in any such trial.
1.40 "Known Ligand" means [*]
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1.41 "Licensed Product" means any product intended for use in humans that
----------------
(a) [*] and (b) either (i) the manufacture, use, sale, offer to sell or import
of which, in the absence of a license granted under this Agreement or ownership
thereof, would directly or indirectly infringe one or more Patent Claims under
any Patent Rights in or to [*]; or (ii) the research, development, formulation,
composition or manufacture of which was performed with the use of or
incorporates the [*]; or (iii) the development of which was in part funded by
ZGI under this Agreement. [*]
1.42 "Licensed Product Trademarks" means any trademark adopted or used by
---------------------------
Serono to designate a Licensed Product anywhere in the Territory, together with
all rights therein to the extent applicable to particular jurisdictions.
1.43 "Marketing Region" means each of North America, Europe and Japan.
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1.44 "Net Sales" of a Licensed Product means the sum of:
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(a) [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-7-
provided, however, that
[*]
(b) [*]
1.45 "North America" means Canada and the United States of America.
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[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-8-
1.46 "North American Commercialization Costs" means [*] The North American
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Commercialization Costs shall be accounted for by each party in accordance with
the cost accounting principles described in Exhibit 1.46.
1.47 "North American Co-Promotion Tasks" means those tasks with respect to
---------------------------------
the co-promotion of a Licensed Product in North America, as more fully described
from time to time in an applicable Commercialization Plan and Budget. Unless
and until ZGI makes an Election Not to Co-Promote or an Election Not to Co-Fund,
the North American Co-Promotion Tasks will include, as more fully described in
the applicable Commercialization Plan and Budget:
[*]
1.48 "Patent Claim" means a claim of any unexpired granted Patent Rights
------------
that have not: (a) lapsed, been disclaimed, withdrawn, canceled, or abandoned
or admitted to be invalid or unenforceable; (b) been finally rejected or held
invalid by a decision of a patent-granting authority beyond right of review or
appeal; or (c) been held invalid or unenforceable in an unappealable decision of
a court or competent body having jurisdiction (including a decision which was
appealable, but which was not timely appealed).
1.49 "Patent Contacts" means the patent practitioners appointed by each
---------------
party to serve as contact persons between the parties from time to time in
relation to patent matters under this Agreement. The parties' initial Patent
Contacts shall be designated, respectively, by each party within thirty (30)
days following the Effective Date. Each party shall promptly notify the other
party of any substitution of other personnel as its Patent Contact(s).
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-9-
1.50 "Patent Country" means, with respect to particular Patent Rights, the
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country in which such Patent Rights are pending or granted.
1.51 "Patent Defense and Enforcement Costs" means all internal and
------------------------------------
external costs associated with the enforcement of Patent Rights against actual
or suspected infringers, defense of Patent Rights against attacks on their
validity, or defense of a Licensed Product against Third Party claims of patent
infringement.
1.52 "Patent Expiration Date" means, on a Patent Country-by-Patent Country
----------------------
basis, the first date on which no Patent Claims exist within such Patent
Country.
1.53 "Patent Prosecution Costs" means all internal and external costs
------------------------
associated with the preparation (of applications and otherwise), filing,
prosecution, maintenance, conduct of opposition or interference proceedings
under or with respect to Patent Rights.
1.54 "Patent Rights" means: (a) patent applications; (b) all provisional,
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divisional, continuation (in whole or in part) or substitute applications with
respect to any of the applications described in (a); (c) all non-U.S.
applications based on the applications described in (a) or (b); (d) all issued
or granted patents resulting from any of the applications described above; and
(e) all issued or granted reissue, re-examination, renewal or extension patents,
supplementary protection certificates, and confirmation or registration patents
or patents of addition based on any of the patents described in (d).
1.55 "Phase I Clinical Trials" means human clinical trials intended to
-----------------------
obtain initial data regarding the safety of a Licensed Product, whether
constituting Phase I trials in the United States or similar trials in any other
part of the Territory.
1.56 "Phase II Clinical Trials" means human clinical trials intended to
------------------------
study the safety, dose range and efficacy of a Licensed Product that do not
constitute Phase III Clinical Trials of such Licensed Product, whether
constituting Phase II trials in the United States or similar trials in any other
part of the Territory.
1.57 "Phase III Clinical Trials" means human clinical trials intended to
-------------------------
determine the statistical efficacy and safety of a Licensed Product and which
are intended to be the final stage of clinical testing prior to and in support
of the filing of a PLA, whether constituting Phase III trials in the United
States or similar trials in any other part of the Territory.
1.58 "PLA" means a Product License Application, a Biologics License
---
Application or a non-U.S. equivalent of either filed with a Regulatory Agency.
1.59 "Product Team" means the committee described in Section 3.2, two (2)
------------
members of which shall be the Project Contacts. The Product Team may have any
number of other members as may be nominated from time to time by either or both
of ZGI and Serono and approved as Product Team members by Steering Committee
Action. While the parties need not be equally represented in number of members
on the Product Team, the Product Team will be co-led by the two (2) Project
Contacts.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-10-
1.60 "Product Term" except as is otherwise provided in Section 5.6, means
------------
with respect to each Licensed Product in each country in the Territory or the
ZGI Territory, if any, the period from the Effective Date until the later of:
(a) the last Patent Expiration Date in such country with respect to the
Patent Claims under Patent Rights in or to the [*], as applicable to
such Licensed Product; and
(b) the expiration of [*] years following the first Commercial Use of such
Licensed Product in such country;
provided, however, that if as of the [*] anniversary of the Effective Date, such
Patent Expiration Date has occurred in such country, and there has been no
Commercial Use of such Licensed Product in such country, then the Product Term
as to such Licensed Product shall end on such [*] anniversary of the Effective
Date.
1.61 "Project Contacts" means the persons appointed by each party to serve
----------------
as contact persons between the parties from time to time in relation to the
coordination of research and development efforts under this Agreement. The
parties' initial Project Contacts shall be designated, respectively, by each
party within thirty (30) days following the Effective Date. Each party shall
promptly notify the other party of any substitution of other personnel as its
Project Contact.
1.62 "Project Technology" means all inventions, discoveries, know-how,
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methods, processes, data, information, technology, research tools, compositions,
tangible materials (including nucleic acids, peptides, vectors, proteins,
assays, and the like) and formulas that are invented, discovered, developed or
otherwise generated by either party, their respective Affiliates or both parties
jointly during and in the course of a Development Project conducted pursuant to
this Agreement and co-funded pursuant to Article Four, and all Patent Rights,
trade secrets, and other intellectual property rights therein and thereto
anywhere in the world. Project Technology invented, discovered, developed or
otherwise generated by Serono and its Affiliates is the "Serono Project
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Technology." Project Technology invented, discovered, developed or otherwise
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generated by ZGI and its Affiliates is the "ZGI Project Technology." Project
----------------------
Technology that is jointly invented, discovered, developed or otherwise
generated by Serono and ZGI or their respective Affiliates is the "Joint Project
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Technology." The parties shall follow the principles of inventorship under U.S.
----------
patent law in order to determine the party that invented, discovered, developed
or otherwise generated any item of Project Technology.
1.63 "Reasonable Commercial Efforts" means the exertion on a substantially
-----------------------------
continuous basis of efforts as would normally be devoted to the applicable task
by commercial parties with similar resources to those of the applicable party,
where such parties are highly motivated to accomplish such task to the maximum
extent practicable, taking into account, without limitation, consideration of
the anticipated safety and efficacy of a subject product, its likely
competition, the strength of its proprietary position, regulatory factors, and
other scientific, medical and commercial factors. Reasonable Commercial Efforts
will not mean that a party commits that it will actually accomplish the
applicable task, or that it will devote thereto efforts
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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or resources beyond those that a prudent commercial enterprise would devote,
even though remaining motivated to do so as described above.
1.64 "Regulatory Agency" means (a) the FDA or (b) any regulatory body with
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similar regulatory authority in any other jurisdiction anywhere in the world.
1.65 "Regulatory Approval" means the authorization by an appropriate
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Regulatory Agency to market and sell a Licensed Product in a jurisdiction,
including, to the extent required, any governmental pricing approval for such
Licensed Product in such jurisdiction; provided, however, that with respect to
jurisdictions in which the government is the primary provider of insurance, or
otherwise pays, for prescription drugs to consumers, the authorization for
Regulatory Approval shall include approval of government price reimbursement
levels, unless the Licensed Product is distributed without such reimbursement
authorization.
1.66 "Research Materials" means any tangible materials that are delivered
------------------
by one party to the other (or to the other's Contractors) either (a) as part of
the delivering party's Background Technology for use in the Development Project
or that are developed in the course of the Development Project and are provided
by either party to the other as part of the Project Technology or (b) for use in
connection with any Development Task, even though such materials are not
themselves part of the Background Technology or Project Technology, such as
[*], and other reagents and materials to be used in comparative studies
such as toxicology studies.
1.67 "Rest of World" means all countries of the world except those within
-------------
North America.
1.68 "S.A." means Serono S.A., a Swiss corporation having offices at Case
----
▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇.
1.69 "Senior Executives" means one or more executive officers of a party
-----------------
or its Affiliates (other than members of the Steering Committee), who have
direct reporting responsibility to the CEO of that party, and who are appointed
from time to time by the CEO of that party, to conduct one or more of the
dispute resolution processes described in Section 18.1 hereof.
1.70 "Serono Background Technology" means (a) any inventions, discoveries,
----------------------------
know-how, methods, processes, data, information, technology, research tools,
compositions, formulas and tangible materials Controlled by Serono or its
Affiliates that (i) as of the Effective Date, Serono knows or should know (based
on at least preliminary data) to be necessary, (ii) other than Project
Technology, are actually used by Serono or its Affiliates, during and in the
course of the Development Project, or (iii) are included in Serono Background
Technology by consent of the Controlling party pursuant to Section 4.2, in any
case for the development, manufacture or use of Licensed Products, including the
technology listed in Exhibit 1.70 hereto (the "Serono Technology"); (b) other
-----------------
than Project Technology, any and all improvements to the Serono Technology, to
the extent invented, discovered, developed or otherwise generated by Serono or
its Affiliates during any Development Project Term and prior to the time, if
any, at which Serono
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-12-
has elected to terminate its roles and responsibilities with respect to all
Development Projects pursuant to Section 4.8; and (c) all Patent Rights, trade
secrets, and other intellectual property rights anywhere in the world in and to
any of the Serono Technology and improvements described in (a) or (b) of this
Section.
1.71 "Serono IP" means the Serono Project Technology, the Serono
---------
Background Technology, and the Serono Production Technology.
1.72 "Serono Production Technology" means the most current form of any and
----------------------------
all technology, know-how, biological materials, and reagents Controlled by
Serono that are actually applied by Serono or its Affiliates to the scale up or
manufacture of a Licensed Product under or in connection with this Agreement, to
the extent such technology is useful for the, manufacture of the Licensed
Product, and all Patent Rights, trade secrets, and other intellectual property
rights anywhere in the world therein and thereto.
1.73 "Steering Committee" means a committee of six (6) members, three (3)
------------------
of whom will be designated in writing by each of ZGI and Serono. The parties'
respective representatives on the initial Steering Committee shall be designated
by the parties within thirty (30) days following the Effective Date. If at any
time a vacancy occurs (whether due to death, disability, resignation, removal by
a party of its designee by written notice to the other party, or otherwise), the
vacancy will be filled as soon as is reasonably practicable by designation by
the party that originally designated the prior incumbent. In the meantime, the
Steering Committee shall continue to function with its remaining members,
provided that any Steering Committee Action described in subsection 1.74(a) will
continue to require the consent of at least four (4) members.
1.74 "Steering Committee Action" means an official act, decision, or
-------------------------
ruling of the Steering Committee, which shall require in each case that at least
one (1) of the following applies:
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-13-
A Steering Committee Action may include the rescinding or amendment of any prior
Steering Committee Action.
1.75 "St. Jude License Agreement" means that certain License Agreement
--------------------------
with St. Jude Children's Research Hospital, as listed in Exhibit 1.34 as a Third
Party Agreement, as amended.
1.76 "Sublicensee" means a Third Party to whom Serono or ZGI has extended
-----------
a sublicense consistent with Article Ten.
1.77 "TACI" means the receptor described in International Patent
----
Application [*].
1.78 "Term" shall have the meaning set forth in Section 17.1.
----
1.79 "Territory" means the world, unless and until any country or
---------
countries are removed from the Territory and made part of the ZGI Territory as
provided herein, in which case "Territory" means the remainder of the world
other than such country or countries.
1.80 "Third Party" means any person or entity other than ZGI, Serono, or
-----------
their respective Affiliates.
1.81 "Third Party Agreement" means any agreement entered into with a Third
Party by either ZGI, Serono, or their respective Affiliates, or any amendment
thereto, whereby royalties, fees or other payments are to be made to the Third
Party based on (a) exploitation of intellectual property rights of the Third
Party or (b) the provision of products, materials or services sourced from the
Third Party, where (a) and/or (b) are used in the course of the research,
development or manufacturing, marketing, distribution or sales of a Licensed
Product, or whereby any other restrictions, limitations or conditions are
imposed on making, using, selling, offering for sale, importing, or otherwise
exploiting any Licensed Product.
1.82 "Third Party Commercial Use Fees" means [*]
-------------------------------
1.83 "Third Party Development Fees" means [*]
----------------------------
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-14-
1.84 "United States of America" or "United States" means the United States
------------------------ -------------
of America and its territories and possessions, including the Commonwealth of
Puerto Rico.
1.85 "ZGI Background Technology" means (a) any inventions, discoveries,
-------------------------
know-how, methods, processes, data, information, technology, research tools,
compositions, formulas and tangible materials Controlled by ZGI or its
Affiliates that (i) as of the Effective Date, ZGI knows or should know (based on
at least preliminary data) to be necessary, (ii) other than Project Technology,
are actually used by ZGI or its Affiliates, during and in the course of the
Development Project, or (iii) are included in ZGI Background Technology by
consent of the Controlling party pursuant to Section 4.2, in any case for the
development, manufacture or use of Licensed Products, including the technology
listed in Exhibit 1.85 hereto (the "ZGI Technology"); (b) other than Project
--------------
Technology, any and all improvements to the ZGI Technology, to the extent
invented, discovered, developed or otherwise generated by ZGI or its Affiliates
during any Development Project Term and prior to the time, if any, at which ZGI
has elected to terminate its roles and responsibilities with respect to all
Development Projects pursuant to Section 4.8; and (c) all Patent Rights, trade
secrets, and other intellectual property rights anywhere in the world in and to
any of the ZGI Technology and improvements described in (a) or (b) of this
Section. Notwithstanding the foregoing, the Ig Fusion Technology shall not be
deemed to fall within the term "ZGI Background Technology".
1.86 "ZGI IP" means the ZGI Project Technology and the ZGI Background
------
Technology.
1.87 "ZGI Territory" means such country or countries, if any, that is or
-------------
are removed from the Territory and made part of the ZGI Territory as provided
herein.
1.88 Certain Terminology. Where words and phrases are used herein in the
-------------------
singular, such usage is intended to include the plural forms where appropriate
to the context, and vice versa. The words "including", "includes" and "such as"
--------- --------
are used in their non-limiting sense and have the same meaning as "including
without limitation" and "including but not limited to". References to Articles,
Sections, subsections, and clauses are to the same with all their subparts as
they appear in this Agreement. "Herein" means anywhere in this Agreement.
------
"Hereunder" and "hereto" means under or pursuant to any provision of this
---------- ------
Agreement.
ARTICLE TWO
Scope and Exclusivity of the Collaboration
2.1 Exclusivity. Except as otherwise provided herein, ZGI and Serono
-----------
agree to work exclusively with each other (and each other's Contractors, if any)
during the Development Project Term with respect to the discovery and
development of products [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-15-
2.2 [*]
------------------------------------------
(a) Unless and until an [*] is made the subject of an agreement pursuant to
this Section, the parties acknowledge and agree that [*] are not within the
scope of their collaboration or the Development Project.
(b) ZGI hereby agrees, with respect to any known or suspected [*], any
known or suspected [*] and any known or suspected [*] known to or suspected by
it as of the Effective Date, or discovered by it during the Development Project
Term (or that is so known to, suspected by, or so discovered by its Affiliates,
to the extent ZGI Controls rights to such [*]), that it shall, on or before the
[*] after the Effective Date, the [*] day after the identification of a known or
suspected [*], or the [*] day after the expiration of any and all prior rights
of Novo Nordisk A/S or its Affiliates with respect to such [*] whichever occurs
last, notify Serono of such [*] and concurrently provide to Serono ZGI's reasons
for categorizing it as an [*] and all data and information then available to ZGI
with respect to such [*].
(c) ZGI hereby agrees, with respect to any known or suspected [*] any
known or suspected [*] and any known or suspected [*] of which it is required to
give notice to Serono under subsection (b) above:
(i) ZGI will, during the [*] following its notice under subsection (b),
if requested by Serono, make appropriate representatives available to
meet with Serono's representatives to provide a ▇▇▇▇▇▇ description of
the data and information then available to ZGI with respect to such
[*], and to answer serono's questions in that regard;
(ii) ZGI shall engage in good faith negotiators with Serono over a period
of at least [*] following the end of the [*] period described in
clause (i) above, in an attempt to reach agreement with Serono
(either in a definitive agreement or a mutually signed term sheet
which both parties thereafter diligently work to memorialize in a
definitive agreement) with respect to the development and
commercialization by Serono of one or more products based on or
incorporating that [*]
(iii) if no agreement is reached pursuant to clause (ii) above, ZGI hereby
agrees that it shall promptly notify Serono if at any time during the
Term ZGI or any of its Affiliates desires to grant to any Third Party
any right or license in or to such [*] anywhere in the
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-16-
Territory, or desires to develop or commercialize one or more
products based on or incorporating such [*] anywhere in the
Territory, and in that event ZGI shall again engage in good faith
negotiations with Serono over a period of at least [*] following such
notice under this clause, to reach agreement with Serono (either in a
definitive agreement or a mutually signed term sheet which both
parties thereafter diligently work to memorialize in a definitive
agreement) with respect to the development and commercialization by
Serono of one or more products based on or incorporating that [*];
and
(iv) if no agreement is reached pursuant to clause (iii) above, ZGI shall
give Serono at least [*] written notice prior to signing any agreement
with any Third Party (either as a definitive agreement or a mutually
signed term sheet) with respect to such [*] in which agreement ZGI is
willing to extend to such Third Party terms that are, in any material
respect, more favorable for the Third Party than the terms ZGI was
willing to extend to Serono in the course of the negotiations pursuant
to clause (iii) above, and it shall afford Serono the opportunity
during such notice period to accept and agree to such agreement on
such more favorable terms in lieu of such Third Party; provided,
however, that if ZGI has not entered into an agreement (either in a
definitive agreement or a mutually signed term sheet) with a Third
Party pursuant to this clause [*], then clause (iii) above (and
potentially this clause (iv)) shall again be applicable to any right
or license in or to such [*] which ZGI or any of its Affiliates may
thereafter desire to grant to any Third Party anywhere in the
Territory.
(d) Serono hereby agrees, with respect to any known or suspected [*], any
known or suspected [*] or any known or suspected [*] known to, or suspected by,
it as of the Effective Date, or discovered by it during the Development Project
Term (or that is so known to, suspected by, or so discovered by its Affiliates,
to the extent Serono Controls rights to such [*] that it shall promptly notify
ZGI if at any time during the Development Project Term hereunder Serono or any
of its Affiliates desires to grant to any Third Party any right or license in or
to such [*] in North America. Such notification will include all data and
information then available to Serono with respect to such [*] and Serono's
reasons for categorizing it as [*].
(e) Serono hereby agrees, with respect to any known or suspected [*] any
known or suspected [*] or any known or suspected [*] of which it is required to
give notice to ZGI under subsection (d) above:
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-17-
(i) Serono will, during the [*] following its notice under subsection
(d), if requested by ZGI, make appropriate representatives available
to meet with ZGI's representatives to provide a ▇▇▇▇▇▇ description of
the data and information then available to Serono with respect to
such [*], and to answer ZGI's questions in that regard;
(ii) Serono shall engage in good faith negotiations with ZGI over a period
of at least [*] described in clause (i) above, in an attempt to reach
agreement with ZGI (either in a definitive agreement or a mutually
signed term sheet which both parties thereafter diligently work to
memorialize in a definitive agreement) with respect to the
development and commercialization by ZGI of one or more products
based on or incorporating that [*] for the North American market; and
(iii) if no agreement is reached pursuant to clause (ii) above, Serono
shall give ZGI at least [*] written notice prior to signing any
agreement with any Third Party (either as a definitive agreement or a
mutually signed term sheet) with respect to such [*] for the North
American market in which agreement, Serono is willing to extend to
such Third Party terms that are, in any material respect, more
favorable for the Third Party than the terms Serono was willing to
extend to ZGI in the course of the negotiations pursuant to clause
(ii) above, and it shall afford ZGI the opportunity during such
notice period to accept and agree to such agreement on such more
favorable terms in lieu of such Third Party; provided, however, that
if Serono has not entered into an agreement (either in a definitive
agreement or a detailed and mutually signed term sheet) with a Third
Party pursuant to this clause (iii) [*], then clause (ii) above (and
potentially this clause (iii)) shall again be applicable to any right
or license in or to such [*] which Serono or any of its Affiliates
may thereafter desire to grant to any Third Party for North America.
ARTICLE THREE
Coordination of the Collaboration
3.1 Steering Committee Role and Responsibilities.
--------------------------------------------
(a) The Steering Committee shall be responsible for the overall direction
of the parties' collaboration hereunder, including oversight of the Product
Team, if any, the Patent Contacts and the Commercialization Team, if any. The
responsibilities of the Steering Committee shall include adoption and amendment
of the Development Plan and Budget, adoption and amendment of Commercialization
Plans and Budgets, if any, and resolution of disputes occurring at the Product
Team or Commercialization Team levels or between the parties' respective
Contacts. The Steering Committee may on its own initiative and at any
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-18-
time act, or reverse action, within the scope of the Product Team's, Patent
Contacts', or Commercialization Team's responsibilities. The Steering Committee
shall be guided by the general principle that Development Tasks and North
American Co-Promotion Tasks will be allotted to the respective parties, directly
or working through one or more Contractors, as shall appear most likely to
expedite the timely development and marketing, distribution and sales of
Licensed Products hereunder, taking into account as appropriate the parties'
respective capabilities, facilities, and personnel, and the timely availability
thereof for such purposes. The Steering Committee shall have no oversight with
respect to the commercialization of any Licensed Product for which either party
has made an Election Not to Co-Fund and all matters relating to the
commercialization of such Licensed Product shall be determined by the party that
continues to fund such commercialization.
(b) The Steering Committee shall meet face-to-face at least semi-annually
at mutually agreed upon times and locations. Unless otherwise agreed, the
location of such meetings will alternate between the parties' headquarters.
Either or both of the parties may bring other personnel employed by them or
their Contractors to meetings of the Steering Committee as observers or to
present data and information relative to the Development Projects; provided that
the attendance of employees of a Contractor shall be subject to the consent of
the other party, which consent shall not be unreasonably withheld. The Steering
Committee shall also address issues as they arise in the interim via telephone
conference, videoconference or electronic mail. A written agenda for each face-
to-face meeting shall be circulated in advance of the meeting, and written
minutes of each meeting shall be taken and shall include the issues discussed
and action items, if any, arising from the meeting. Meeting minutes and written
summaries of any action taken by way of interim communications shall be promptly
submitted (i) to the Project Contacts, (ii) to all members of the Steering
Committee, (iii) to the extent such minutes or action involve Patent Rights, to
the Patent Contacts, and (iv) to the extent such minutes or action involve
matters related to commercialization of a Licensed Product, to the
Commercialization Contacts. Each face-to-face meeting of the Steering Committee
shall include a review and approval (or amendment) by Steering Committee Action
of minutes from the prior meeting and of all actions taken through interim
communications.
(c) [*]
(d) All formal actions of the Steering Committee must be taken by Steering
Committee Action as defined herein.
3.2 Product Team and Project Contacts Roles and Responsibilities.
------------------------------------------------------------
(a) The Product Team, consisting of at least the two (2) Project Contacts,
shall be responsible for managing day-to-day research and development activities
relating to Licensed Products, in accordance with the Development Plan and
Budget. The Product Team shall be responsible for the preparation and submission
to the Steering Committee, within [*] after the Effective Date, of an initial
Development Plan and Budget covering at least [*] following the Effective Date.
The Product Team shall be disbanded following the [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-19-
of the Effective Date unless the Steering Committee determines that it should
continue to function beyond that time.
(b) The Product Team shall meet as often as is deemed necessary by the
Project Contacts. Such meetings shall take place in person, by videoconference
or by telephone conference as mutually agreed by the Project Contacts. There
shall be an agenda for each meeting of the Product Team and minutes of each
meeting shall be taken and shall include the issues discussed and action items,
if any, arising from such meeting. Meeting minutes shall be submitted to the
members of the Product Team and the Steering Committee.
(c) All formal actions of the Product Team must receive the approval of the
two (2) Project Contacts, either in writing (including by email or facsimile) or
by vote at a meeting of the Product Team, and all formal actions shall
subsequently be entered into the minutes of meetings of the Product Team. In the
absence of such mutual approval, either Project Contact may by formal written
notice to the Steering Committee declare the existence of a dispute at the
Project Team level, and thereby request that such dispute be resolved by the
Steering Committee.
(d) In addition to the formal activities of the Product Team, each party's
Project Contact will also be available throughout the Development Project Term
(including, following any disbanding of the Product Team) to answer any
reasonable questions from the other party's Project Contact.
3.3 Commercialization Team and Commercialization Contacts Roles and
---------------------------------------------------------------
Responsibilities.
----------------
(a) A Commercialization Team shall be formed by the Commercialization
Contacts, with approval by Steering Committee Action, with respect to any
Licensed Product developed in whole or part in the Development Project. Each
such Commercialization Team shall be formed within [*] following the appointment
of the Commercialization Contacts or prior to [*] following the Initiation of
Phase III Clinical Trials of such Licensed Product, whichever is later.
(b) The Commercialization Team shall be responsible for (i) the preparation
and submission to the Steering Committee of an initial Commercialization Plan
and Budget with respect to a Licensed Product, covering a period of at least [*]
following the first Regulatory Approval of such Licensed Product, and, as
appropriate from time to time and not less often than annually, for the
preparation of proposed updates and amendments to the Commercialization Plan and
Budget, to cover a rolling, multi-year period of at least [*] for submission to
the Steering Committee and (ii) planning and coordinating the North American Co-
Promotion Tasks of the parties.
(c) If (i) ZGI makes an Election Not to Co-Promote or (ii) either party
makes an Election Not to Co-Fund, with respect to a Licensed Product, the
Commercialization Team with respect to that Licensed Product, if any such
Commercialization Team shall theretofore have been formed, shall be disbanded.
If either party makes an Election Not to Co-Fund with respect to a Licensed
Product, no further Commercialization Plans and Budgets need be prepared with
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-20-
respect to that Licensed Product. For so long as ZGI is co-funding the North
American Commercialization Costs for a Licensed Product and without regard to
the fact that the Commercialization Team with respect to such Licensed Product
has been disbanded because ZGI has made an Election Not to Co-Promote, Serono
shall continue to prepare and provide to ZGI a Commercialization Plan and Budget
and shall make appropriate employees reasonably available to ZGI to review and
answer questions regarding such Commercialization Plan and Budget; provided that
such Commercialization Plan and Budget shall not be subject to approval by
Steering Committee Action.
(d) The Commercialization Team shall monitor the parties' conduct of the
North American Co-Promotion Tasks, in relation to the planned timelines and
budgets, including details regarding external costs and internal costs incurred
against the budgeted costs. The Commercialization Team shall report any actual
or anticipated cost overruns in excess of [*] in any budgeted category to the
Steering Committee. Likewise, the Commercialization Team shall monitor progress
of the marketing, distribution and sales of Licensed Products versus plans and
report any actual or anticipated timeline delays to the Steering Committee.
(e) The Commercialization Team shall meet as often as is deemed necessary
by the Commercialization Contacts. Such meetings shall take place in person, by
videoconference or by telephone conference as mutually agreed by the
Commercialization Contacts. There shall be an agenda for each meeting of the
Commercialization Team and minutes of each meeting shall be taken and shall
include the issues discussed and action items, if any, arising from such
meeting. Meeting minutes shall be submitted to the members of the
Commercialization Team and the Steering Committee.
(f) All formal actions of the Commercialization Team must receive the
approval of the two (2) Commercialization Contacts, either in writing (including
by email or facsimile) or by vote at a meeting of the Commercialization Team,
and all formal actions shall subsequently be entered into the minutes of
meetings of the Commercialization Team. In the absence of such mutual approval,
either Commercialization Contact may by formal written notice to the Steering
Committee declare the existence of a dispute at the Commercialization Team
level, and thereby request that such dispute be resolved by the Steering
Committee.
(g) In addition to the formal activities of the Commercialization Team,
except to the extent that a party duly makes an Election Not to Co-Fund with
respect to a Licensed Product or ZGI duly makes an Election Not to Co-Promote,
each party's Commercialization Contact will also be available to answer any
reasonable questions from the other party's Commercialization Contact.
ARTICLE FOUR
Discovery and Development of Licensed Products
4.1 Research and Development Efforts. Each of the parties shall use its
--------------------------------
respective Reasonable Commercial Efforts throughout the Development Project Term
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-21-
[*]
Each party agrees that Development Tasks shall be established and assigned to
expedite the timely and efficient development of Licensed Products hereunder. In
the event ZGI has terminated its roles and responsibilities under a Development
Project for a Licensed Product pursuant to Section 4.8, Serono shall use
Reasonable Commercial Efforts to expedite the timely development of the Licensed
Product.
4.2 Invention Disclosures; Provision of Information. ZGI shall provide
-----------------------------------------------
Serono full and prompt disclosure of the ZGI Background Technology and Ig Fusion
Technology as required for the development of Licensed Products hereunder. Each
party will provide to the other party full and prompt disclosure of any new
Project Technology and any new improvements described in subsection 1.84(b),
including any invention disclosures submitted to its patent department which
disclose such Project Technology or improvements. Each party shall from time to
time in the course of performing Development Tasks bring to the attention of the
Product Team any inventions, discoveries, know-how, methods, processes, data,
information, technology, research tools, compositions, formulas and tangible
materials Controlled by a party or its Affiliates that it reasonably believes
may be useful for development, manufacture or use of a Licensed Product and any
such items may be included in Serono Background Technology or ZGI Background
Technology, as appropriate, under reasonable conditions and upon written consent
of the Controlling party of each such item. Nothing herein or otherwise shall
require any party to disclose information with respect to which such party has
an obligation of confidentiality to a Third Party, but each party will exert its
Reasonable Commercial Efforts to bring to the attention of the Steering
Committee any such Third Party restrictions as may be relevant hereunder.
4.3 Regulatory Matters.
------------------
(a) Serono shall have the sole right to obtain Regulatory Approvals and
approvals to manufacture Licensed Product in the Territory which shall be held
by and in the name of Serono or its designees, and Serono shall own all
submissions made in connection therewith. All formulary, price, reimbursement
or other marketing approvals in the Territory shall also be obtained by and in
the name of Serono or its designees.
(b) Serono shall be the sole contact for and will otherwise take the lead
in all interactions with Regulatory Agencies concerning the Licensed Product.
ZGI at the request of Serono will supply representatives to meet with Regulatory
Agencies, if necessary in view of the Development Tasks assigned to ZGI to
obtain or maintain Regulatory Approvals.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-22-
4.4 Selection and Supervision of Personnel. Each party shall be
--------------------------------------
responsible for the selection and supervision of its personnel who are assigned
any Development Tasks pursuant to this Agreement.
4.5 Development Costs Attributable to Japan. Serono shall fund and shall
---------------------------------------
bear one hundred percent (100%) of the costs of any and all tasks that are
attributable exclusively to the development, testing or registration of a
Licensed Product for Japan or the Japanese market or to seeking Regulatory
Approval in Japan, whether or not such tasks are performed wholly or partly
outside of Japan and whether or not they are performed by ZGI or Serono.
4.6 Other Development Costs; Quarterly Accountings. [*] of all Development
----------------------------------------------
Costs incurred following the Effective Date and pursuant to the Development Plan
and Budget, other than those to be borne by Serono under Section 4.5, shall be
funded and borne by Serono, and [*] of such Development Costs shall be funded
and borne by ZGI, regardless of which party is allocated or performs one or more
of the relevant Development Tasks. Each party shall submit to the Product Team
at least quarterly (or on such other schedule as may be determined by Steering
Committee Action) a written and itemized accounting of the expenditures, costs,
and other resources actually devoted by it to the Development Tasks in
accordance with the Development Plan and Budget since the last such accounting.
Such accountings shall be considered to be Information subject to protection
under Article Thirteen. The parties' quarterly accountings will be reviewed and
approved in whole or in part (and/or returned in whole or in part to a party for
correction or adjustment prior to resubmission) by action of the Product Team.
The Product Team will notify each party on a quarterly basis of the results of
such review by it of the accountings of both parties. To the extent that both
parties' accountings for prior expenditures, costs and other resources for the
Development Plan and Budget have been so approved, the Product Team will direct
by a quarterly invoice (with copies to both parties) that the party which has
borne less than its share of the aggregate Development Costs (net of those to be
borne by Serono under Section 4.5), taking into account all prior reconciliation
invoices under this section, shall reconcile such disparity by paying to the
other party an amount sufficient to bring the respective amounts borne by each
party, as of the end of the period covered by such accountings, back to the
ratio of [*]. Any such invoice shall be payable by Serono or ZGI, as the case
may be, to the other party hereto in accordance with Article Nine and within [*]
after receipt of invoice.
4.7 Third Party Development Fees. [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-23-
4.8 Early Termination of Development Project Roles and Responsibilities.
-------------------------------------------------------------------
Either ZGI or Serono may at its election terminate all (but not less than all)
of its own roles and responsibilities in and with respect to a Development
Project as to a Licensed Product [*]. Any such elective early termination of a
party's roles and responsibilities in such Development Project shall have the
effects provided in Article Twelve below.
ARTICLE FIVE
Commercialization of Licensed Products in North America
5.1 Co-Promotion in North America; Election Not to Co-Promote.
---------------------------------------------------------
(a) Since as a result of its co-promotion of a Licensed Product in North
America ZGI would be entitled to participate in decisions regarding promotion of
such Licensed Product, [*]. The initial Commercialization Plan and Budget shall
set forth in detail the North American Co-Promotion Tasks to be allocated to
each of ZGI and Serono. [*]
(b) Subject to subsection (a) above, ZGI and Serono shall co-promote all
Licensed Products in North America, as more fully described in the applicable
Commercialization Plan and Budget, unless and until ZGI elects, as to one or
more Licensed Products, that it will not do so, or that it will no longer do so
(an "Election Not to Co-Promote"). An Election Not to Co-Promote, if any, as to
--------------------------
a Licensed Product shall be made by ZGI by written notice to Serono. [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-24-
5.2 North American Commercialization Costs; Election Not to Co-Fund.
---------------------------------------------------------------
Unless and until ZGI elects, as to one or more Licensed Products, that it will
not (or that it will no longer) bear any of the North American Commercialization
Costs with respect to such Licensed Product (an "Election Not to Co-Fund" by
-----------------------
ZGI), each of Serono and ZGI shall fund and bear fifty percent (50%) of such
North American Commercialization Costs, regardless of which party is allocated
or performs one or more of the relevant North American Co-Promotion Tasks. [*]
5.3 Selection and Supervision of Personnel. Each party shall be
--------------------------------------
responsible for the selection and supervision of its personnel who are assigned
any North American Co-Promotion Tasks pursuant to this Agreement.
5.4 Third Party Commercial Use Fees. [*]
5.5 Quarterly Accounting and Balancing Payments. Unless and until ZGI has
-------------------------------------------
made an Election Not to Co-Fund, the Commercialization Team shall develop
procedures for, and shall implement and coordinate, quarterly accountings and
balancing payments between ZGI and Serono within [*] following the end of each
Calendar Quarter, such that each of ZGI and Serono, after such balancing
payments, will on a net basis at least as current as quarterly, bear fifty
percent (50%) of all North American Commercialization Costs.
5.6 North American Product Term Extension. Notwithstanding Section 1.60,
-------------------------------------
the "Product Term" for a Licensed Product in North America shall extend, if
------------
later than the end of the period that otherwise would be such term under Section
1.60, until either party makes an Election Not to Co-Fund with respect to that
Licensed Product. Upon any such Election Not to Co-Fund by Serono, subsection
12.2(b) shall apply and upon any such Election Not to Co-Fund by ZGI, subsection
12.1(b) shall apply. Any such Election Not to Co-Fund must be made by either
party,
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-25-
if at all, by written notice to the other party prior to August 1 of the year
prior to the calendar year as to which it shall become effective.
ARTICLE SIX
Diligence; Adjustment to Territory
6.1 Responsibility for Commercialization.
------------------------------------
(a) Serono shall, prior to the effectiveness of an Election Not to Co-
Promote or an Election Not to Co-Fund, either directly or through one or more
Sublicensees or (subject to Section 5.1(a)) Contractors, exert its Reasonable
Commercial Efforts to accomplish the North American Co-Promotion Tasks allocated
to it under the applicable Commercialization Plan and Budget. ZGI shall, prior
to the effectiveness of an Election Not to Co-Promote or an Election Not to Co-
Fund, either directly or (subject to Section 5.1(a)) through one or more
Contractors, exert its Reasonable Commercial Efforts to accomplish the North
American Co-Promotion Tasks allocated to it under the applicable
Commercialization Plan and Budget. Serono shall otherwise, from Regulatory
Approval until the end of the Product Term for each Licensed Product, either
directly or through one or more Sublicensees or Contractors, exert its
Reasonable Commercial Efforts to distribute, market, promote and sell such
Licensed Product in all Marketing Regions in the Territory, and shall exert its
Reasonable Commercial Efforts to maximize the sales of such Licensed Product in
each Marketing Region.
(b) As the manufacturer and seller of the Licensed Products, Serono shall
be responsible for making and booking all sales of the Licensed Product in the
Territory. Serono shall also be responsible for making decisions as to the
pricing or other terms of sale of the Licensed Products, for handling returns or
recalls of the Licensed Product, for interaction with the appropriate Regulatory
Authorities with respect to the Licensed Product and for the maintenance and
provision to such Regulatory Authorities of records and reports with respect to
the Licensed Product as required by applicable law. For North America, so long
as ZGI has not made an Election Not to Co-Promote or an Election Not to Co-Fund,
Serono shall make such decisions in consultation with the Commercialization Team
in accordance with the Commercialization Plan and Budget.
(c) Without limitation on its other responsibilities hereunder, Serono
specifically agrees (subject to Sections 6.3 and 12.2) that it shall, at all
times throughout the Product Term applicable to a Licensed Product, exert
Reasonable Commercial Efforts to have and maintain adequate and available
manufacturing, storage, and shipping facilities; supplies; qualified personnel;
regulatory approvals and registrations; and all other resources required to
manufacture and supply sufficient quantities of such Licensed Product to meet
the then-current and reasonably anticipated marketplace demands for such
Licensed Product in all countries in the Territory in which such Licensed
Product has received Regulatory Approval, and that Serono shall apply the same
to accomplish such manufacture and supply.
6.2 [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-26-
6.3 Early Termination of Commercialization Responsibilities. Serono may at
-------------------------------------------------------
its election terminate its roles and responsibilities with respect to the
marketing, distribution and sales of a Licensed Product at any time upon [*]
days prior written notice to ZGI. Any such elective termination of such Serono
roles and responsibilities shall have the effects provided in Section 12.2
below. [*]
[*] in which such elective termination by Serono is effective shall
thereby be removed from the Territory for such Licensed Product and be
added to the ZGI Territory;
(b) the provisions of subsections (i), (ii), (iii), (vi), and (viii) in
Section 12.2(a) shall apply, but only to the extent they are
applicable to such Licensed Product [*] in which such elective
termination by Serono is effective; and
(c) Serono shall manufacture and supply such Licensed Product to ZGI [*]
pursuant to subsection (xii) of Section 12.2(a).
ARTICLE SEVEN
Initial Fee; Milestone Fees
7.1 Initial Fee. In consideration for ZGI's entering into this Agreement
-----------
and making the license grants hereunder, Serono shall pay to ZGI an initial fee
of [*], which amount is non-creditable and payable in accordance with Article
Nine within [*] days after execution and delivery of this Agreement.
7.2 Milestone Fees. Serono shall in addition pay to ZGI the following
--------------
amounts (the "Milestone Fees") with respect to the first Licensed Product that
--------------
achieves the applicable events (the "Milestones") (such payments to be made only
----------
once with respect to each such Milestone Fee), which amounts are non-creditable,
regardless of whether such Milestone is achieved by Serono, its Affiliates,
Sublicensees or any other marketer authorized by Serono (other than where such a
Milestone is achieved pursuant to a sublicense granted under Section 10.6 and as
to which sublicense royalties are payable as described in Section 8.4):
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-27-
-------------------------------------------------------------------------------
Milestone Milestone Fee
--------- -------------
-------------------------------------------------------------------------------
[*]
7.3 Reporting of Milestones; Payment of Milestone Fees. Serono shall
--------------------------------------------------
report to ZGI the occurrence of any Milestone within [*] following such
occurrence, and shall pay the applicable Milestone Fee to ZGI in accordance with
Article Nine within [*] following the occurrence of the Milestone.
ARTICLE EIGHT
Royalty Calculation and Payment
8.1 [*] North American Net Sales If Co-Fund. Unless and until an Election
-----------------------------------
Not to Co-Fund becomes effective for a Licensed Product as described in Section
5.2, Serono shall pay ZGI [*] in North America for such Licensed Product during
the applicable Product Term.
8.2 Royalties on North American Net Sales If No Co-Fund. With respect to
---------------------------------------------------
any Licensed Product for which an Election Not to Co-Fund by ZGI is effective,
in lieu of [*] called for under Section 8.1, Serono shall pay ZGI:
(a) [*], royalties equal to [*] during the applicable Product Term in the
United States of America or Canada of a Licensed Product whose
manufacture, use, sale, offer to sell or import would, without a
license or ownership interest, directly or indirectly infringe one or
more Patent Claims under any Patent Rights in or to the ZGI Background
Technology in such country.
(b) [*], royalties equal to [*] during the applicable Product Term in the
United States of America or Canada of a Licensed Product whose
manufacture, use, sale, offer to sell or import would, without a
license or ownership interest, directly or indirectly infringe one or
more Patent Claims under any Patent Rights in or to any Project
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-28-
Technology in such country and would not directly or indirectly
infringe any Patent Claims under any Patent Rights in or to the ZGI
Background Technology in such country.
(c) Royalties at a rate equal to [*] of the rate determined in accordance
with subsection (a) of the Net Sales during the applicable Product
Term in the United States of America or Canada of a Licensed Product
whose manufacture, use, sale, offer to sell or import would not
infringe any Patent Claims under any Patent Rights in or to the ZGI
Background Technology or any Project Technology in such country.
(d) [*]
Provided, however, that:
(x) The royalties due to ZGI from Serono pursuant to subsections (a) or
(b) for each Calendar Quarter, for the United States of America or
Canada, for Net Sales of each Licensed Product, shall be reduced, in
the case of royalties payable pursuant to subsection (a), by [*] and,
in the case of royalties payable pursuant to subsection (b), by [*] of
the amount of [*]
(y) In no event shall any such royalty payments due to ZGI from Serono
pursuant to subsections (a) or (b) for a Licensed Product in a country
be thereby reduced to be [*]
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-29-
8.3 Royalties on Rest of World Net Sales.
---------------------------------------
With respect to Net Sales of a Licensed Product in the Rest of World Serono
shall pay ZGI:
(a) Royalties at a rate determined in accordance with the table set forth
below on Net Sales during the applicable Exclusivity Period in a
country of a Licensed Product whose manufacture, use, sale, offer to
sell or import would, without a license or ownership interest,
directly or indirectly infringe one or more Patent Claims under any
Patent Rights in or to the ZGI Background Technology in such country:
------------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
Rest of World Net Sales
------------- ---------
------------------------------------------------------------------------
[*]
------------------------------------------------------------------------
[*], royalties at a rate determined in accordance with the table set
forth below on Net Sales during the applicable Exclusivity Period in a
country of a Licensed Product whose manufacture, use, sale, offer to
sell or import would, without a license or ownership interest,
directly or indirectly infringe one or more Patent Claims under any
Patent Rights in or to any Project Technology in such country and
would not directly or indirectly infringe any Patent Claims under any
Patent Rights in or to the ZGI Background Technology in such country:
-----------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
Rest of World Net Sales
------------- ---------
-----------------------------------------------------------------------
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-30-
[*] Net Sales of a Licensed Product in a country during the applicable
Exclusivity Period whose manufacture, use, sale, offer to sell or
import would not directly or indirectly infringe any Patent Claims
under any Patent Rights in or to the ZGI Background Technology or any
Project Technology in such country, it being understood that if some
of the Net Sales of a Licensed Product in the Rest of World would be
covered by this subsection (c) and other Net Sales of that Licensed
Product in the Rest of World would be covered by either subsection (a)
or (b), all such Net Sales shall be aggregated for purposes of
determining the royalty rates for such Licensed Product in each
calendar year as described in subsections (a), (b) and (c).
[*]
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-31-
[*]
[*]
(x) The royalties due to ZGI from Serono pursuant to subsections (a) or
(b) for each Calendar Quarter, for each country, for Net Sales of each
Licensed Product, [*] for such Calendar Quarter, Licensed Product and
country
(y) In no event shall any such royalty payments due to ZGI from Serono
pursuant to subsections (a) or (b) for a Licensed Product in a country
be thereby reduced to be [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-32-
[*]
8.4 Royalties on Declined Product Sublicensing Revenues. Serono shall pay
---------------------------------------------------
ZGI royalties equal to [*] of the difference obtained by subtracting B from A,
where
A equals [*]
B equals [*] in [*] connection with the research, development and
registration of such Declined Product under any Third Party Agreement
and [*]
[*]
8.5 Reporting and Payment. All amounts and royalties payable under this
---------------------
Article Eight shall be due quarterly within [*] days following the end of each
Calendar Quarter with respect to Net Sales and Declined Product Sublicensing
Revenues in such Calendar Quarter. Each such payment shall be accompanied by a
statement of Net Sales and Declined Product Sublicensing Revenues for the
quarter on a per Licensed Product and country-by-country basis and the
calculation of the royalties payable hereunder.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-33-
ARTICLE NINE
Records, Reporting, Payment and Audits
9.1 Form of Payment; Currency Conversion. All monies due to ZGI hereunder
------------------------------------
shall be paid by wire transfer or other method designated from time to time by
ZGI, in United States Dollars to ZGI in Seattle, WA, USA. The rate of exchange
to be used shall be the average rate of exchange for the thirty (30) days
preceding the date of payment for the conversion of local currency to United
States Dollars as published by The Wall Street Journal (or if it ceases to be
published, a comparable publication to be agreed upon by the parties) or, for
those countries for which such average exchange rate is not published by The
Wall Street Journal, the exchange rate used by Serono for its own corporate
consolidation purposes.
9.2 Late Payment. Without limitation on other available rights or
------------
remedies, all amounts payable under this Agreement will bear interest at the
rate of [*] per month or the maximum legal rate, whichever is less, from the
date due through the date of payment.
9.3 Records of Development Costs, North American Commercialization Costs,
---------------------------------------------------------------------
and Third Party Royalties. Both Serono and ZGI shall keep true and accurate
-------------------------
records of revenues, deductions from revenue, expenditures and employees' time
devoted to the collaborative effort undertaken pursuant to this Agreement and
Development Plans and Budgets and Commercialization Plans and Budgets, such that
their Development Costs, North American Commercialization Costs, Third Party
Development Fees, Third Party Commercial Use Fees, Patent Prosecution Costs, and
Patent Defense and Enforcement Costs will be accurately accounted for and
determined hereunder. Serono shall keep and shall cause its Affiliates and
Sublicensees to keep complete, true and accurate records for the purpose of
showing the derivation of all royalties payable to ZGI under this Agreement.
All such records shall be retained for a period of at [*] following the end of
the calendar year to which they rela te.
9.4 Records and Audits. At the other party's request, Serono and ZGI shall
------------------
permit such records kept and maintained pursuant hereto to be inspected at any
time during regular business hours, but not more often than once per calendar
year, by an independent public accountant, appointed by the other party for this
purpose and reasonably acceptable to the audited party. The independent public
accountant shall report to the auditing party and the party under audit only its
conclusions regarding the amount of the allowed costs or deductions and/or the
payments due hereunder. The parties shall mutually determine a general strategy
for such audit in advance of its conduct. Any such audit shall be at the expense
of the party requesting the same, unless the audit concludes that, with respect
to the period under audit, the party under audit overstated or understated any
amounts to such an extent that a payment made or called for under this Agreement
(whether to balance the parties' shares of costs or of royalties) was more than
[*] in error and in the favor of the party under audit, in which event if such
conclusion is undisputed, the party under audit shall pay or reimburse the
auditing party for the reasonable expenses of such audit. ZGI and Serono agree
that unless covered by one or more exceptions described in Sections 13.2(a) -
(e), all information subject to audit under this Section
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-34-
is confidential and that it shall cause its accounting firm to retain all such
information subject to the confidentiality restrictions of Article Thirteen
hereof.
9.5 Payments Based on Audit Results. If the independent public accountant
-------------------------------
makes an undisputed determination that any amounts to be paid hereunder have
been under-paid or over-paid, the party that benefited therefrom shall promptly
make a payment to the other party such that all amounts paid hereunder shall
conform to the amounts so determined to be payable.
9.6 Withholding. Other than with respect to those matters described in
-----------
Section 9.7 hereof which are covered by the terms and conditions set forth
therein, if any amounts are required to be withheld or any taxes are required to
be paid on behalf of, or with respect to, any party hereto by reason of any
payment to such party by the other party, the payor may withhold such amounts
and make the tax payments so required. All such tax payments made on behalf of
a party shall be considered to be paid to such party for purposes of this
Agreement. The party withholding the same shall promptly secure and deliver to
the other party appropriate official receipts for the taxes withheld and other
documents necessary to enable such other party to claim appropriate foreign tax
credits for such taxes paid.
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-35-
ARTICLE TEN
Intellectual Properties; Licenses
10.1 Ownership of Intellectual Properties. ZGI shall own any and all
------------------------------------
intellectual property covering ZGI Project Technology, Serono shall own any and
all intellectual property covering Serono Project Technology, and ZGI and Serono
shall jointly own any and all intellectual property covering Joint Project
Technology, in each case subject to the licenses granted hereunder. Serono
shall own the intellectual property covering the Licensed Product Trademarks.
Serono agrees to the extent practicable to select a single worldwide trademark
for each Licensed Product. The parties agree that the laws and rights
applicable under U.S. law with respect to the joint ownership of patents and
inventions shall also be applied in other nations giving effect to this
Agreement, subject to the licenses granted hereunder. Except for the rights
expressly granted under Section 2.2, in this Article Ten, or pursuant to Article
Twelve, no right,
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-36-
option or license is granted or implied to Serono or ZGI, under any patent or
other intellectual property or to any other product, in any field, or in any
geographic territory. Neither party makes any grant of rights by implication.
10.2 Development Project Licenses. Serono hereby grants to ZGI a
----------------------------
worldwide, royalty-free license, with right to sublicense to Contractors, to
practice and use the Serono Project Technology for research and development
purposes within the scope of ZGI's Development Tasks during and in the course of
any Development Project. In addition, Serono hereby irrevocably covenants to
refrain from and to cause its Affiliates to refrain from, directly or
indirectly, asserting any claim or demand, or commencing, instituting or causing
to be commenced, any proceeding of any kind against ZGI, its Affiliates or
Contractors based upon any infringement or alleged infringement of Serono
Background Technology by such person in connection with their activities within
the scope of ZGI's Development Tasks during and in the course of any Development
Project.
10.3 Co-Promotion Licenses. Unless and until any Election Not to Co-
---------------------
Promote or Election Not to Co-Fund made by ZGI becomes effective, Serono hereby
grants to ZGI a nonexclusive, royalty-free license, with right to sublicense to
Contractors, to the Licensed Product Trademark and to practice and use the
Serono Project Technology in the performance of its North American Co-Promotion
Tasks.
10.4 License to Serono in the Territory. ZGI hereby grants to Serono a
----------------------------------
royalty-bearing license under the ZGI IP, Ig Fusion Technology and ZGI's
interest in Joint Project Technology to make, have made, use, sell, offer to
sell, and import Licensed Products in the Territory during the Product Term
applicable to each such Licensed Product. Subject to:
(a) ZGI's retained rights to practice and use the ZGI IP, Ig Fusion
Technology and ZGI's interest in the Joint Project Technology within
the scope of ZGI's Development Tasks;
(b) ZGI's retained rights to practice and use the ZGI IP, Ig Fusion
Technology and ZGI's interest in the Joint Project Technology to
perform its North American Co-Promotion Tasks; and
(c) with respect to the Background Technology licensed under the St. Jude
License Agreement, the rights retained by the U.S. government and the
academic research and educational use rights retained by St. Jude
Children's Research Hospital and other researchers, all as described
in the St. Jude License Agreement,
such license shall be exclusive in a country during the Exclusivity Period
applicable to such country for such Licensed Product, and shall otherwise be
nonexclusive.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-37-
10.5 Sublicenses as to Licensed Products.
-----------------------------------
(a) Serono shall have the right to grant sublicenses under the license
granted in Section 10.4 as to Licensed Products (other than Declined Products)
in the Rest of World; provided, however, that any such sublicense:
(i) shall provide that it is subject to and shall be governed by this
Agreement and that the Sublicensee shall conform to all of Serono's
obligations hereunder;
(ii) shall be disclosed to ZGI in its entirety, subject to ZGI's
obligations under Article Thirteen to the extent applicable thereto;
and
(iii) shall provide that, upon any removal from the Territory pursuant
hereto of any country covered by such sublicense, ZGI may at its
option (but shall not be required to) continue such sublicense in
effect in the ZGI Territory, with ZGI substituted thereunder in place
of Serono.
(b) Serono shall have the right to grant sublicenses under the license
granted in Section 10.4 as to Licensed Products (other than Declined Products)
in North America; provided, however, that any such sublicense conforms to
clauses (i) - (iii) of subsection 10.5(a) and, unless an Election Not to Co-Fund
made by ZGI with respect to the applicable Licensed Product has become
effective, that Serono has obtained ZGI's prior written consent to such
sublicense, which consent shall not be unreasonably withheld or delayed.
10.6 Declined Products Sublicenses. Serono shall have the right to grant
-----------------------------
anywhere in the Territory sublicenses under the license granted in Section 10.4
to make, have made, use, sell, offer to sell, and import Declined Products;
provided, however, that any such sublicense conforms to clauses (i) - (iii) of
subsection 10.5(a) and that Serono has obtained ZGI's prior written consent to
such sublicense, which consent shall not be unreasonably withheld or delayed.
10.7 License to ZGI in ZGI Territory. Serono hereby grants to ZGI a
-------------------------------
royalty-bearing license under the Serono Project Technology and Serono's
interest in the Joint Project Technology and the Licensed Product Trademarks to
make, have made, use, sell, offer to sell, and import Licensed Products in the
ZGI Territory, if any, during the Product Term applicable to such Licensed
Product. Such license shall be exclusive in a country during the Exclusivity
Period applicable to such country for such Licensed Product (treating, for this
purpose, references in Section 1.32 to ZGI IP as being references instead to
Serono Project Technology), and shall otherwise be nonexclusive.
10.8 Sublicenses. ZGI shall have the right to grant sublicenses under the
-----------
license granted in Section 10.7; provided, however, that any such sublicense:
(a) shall provide that it is subject to and shall be governed by this
Agreement and that the Sublicensee shall conform to all of ZGI's
obligations hereunder; and
(b) shall be disclosed to Serono in its entirety, subject to Serono's
obligations under Article Thirteen to the extent applicable thereto.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-38-
10.9 Patent Marking. Each party agrees to ▇▇▇▇ with notices of patent,
--------------
and to have so marked by its Affiliates and Sublicensees, every marketed
Licensed Product, in accordance with the laws of the United States of America or
other applicable countries relating to the marking of patented articles.
10.10 Trademark License Quality Controls. Each party, as a licensee
----------------------------------
hereunder with respect to any trademark or service ▇▇▇▇, agrees to abide by
reasonable quality control and labeling and usage standards and procedures, such
as periodic rights to inspect goods, services, packaging, and advertising
provided with or under such ▇▇▇▇, as may be requested by the licensor of such
▇▇▇▇, subject to the approval of such standards and procedures by Steering
Committee Action.
10.11 St. Jude License Agreement. [*]
10.12 Existing Third Party Agreements. ZGI shall be responsible for
-------------------------------
making [*] and, in the event that in order to commercialize a Licensed Product
Serono requires a license to the technology that is licensed under the
agreements with [*] listed in Exhibit 1.34 and a Third Party Agreement as
described within Section 1.81(a) but not (b) is entered into with either of such
Third Parties with respect to such technology (an "Existing Third Party
--------------------
Agreement Replacement"), [*] ZGI shall not commit any acts or omissions that
---------------------
would cause a breach of any Existing Third Party Agreement such that the
relevant Third Party would be entitled to terminate the Existing Third Party
Agreement and will not exercise any rights of termination it may have with
respect to any of the Existing Third Party Agreements without the prior written
consent of Serono, which consent shall not be unreasonably withheld.
ARTICLE ELEVEN
Patent and Trademark Prosecution and Enforcement
11.1 Ig Fusion Technology.
--------------------
ZGI shall be solely responsible, as it shall determine and at its own
expense, for the filing and prosecution of the Ig Fusion Technology, for
opposition or interference proceedings with respect thereto, and for the
maintenance, enforcement and defense of any available patent
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-39-
protection with respect thereto; [*]
11.2 St. Jude Patent Rights.
----------------------
ZGI's rights to prosecute, maintain, enforce and defend the Patent Rights
included in the St. Jude License Agreement are stated in the St. Jude License
Agreement. ZGI shall provide Serono's Patent Contact with the opportunity to
review and comment on prosecution and maintenance of such Patent Rights to the
extent that ZGI is actually provided the opportunity to review and comment on
prosecution and maintenance of such Patent Rights. ZGI's and Serono's rights to
enforce and defend such Patent Rights shall be governed by Section 11.4 below.
[*]
11.3 Prosecution and Maintenance.
---------------------------
(a) ZGI Background Technology (Other Than Under St. Jude License
------------------------------------------------------------
Agreement) and ZGI Project Technology. ZGI shall be solely responsible, as it
-------------------------------------
shall determine [*], for the filing and prosecution of any and all patent
applications with respect, in whole or in part, to any ZGI Background Technology
(other than Patent Rights included in the St. Jude License Agreement) and ZGI
Project Technology, for opposition or interference proceedings with respect
thereto, and for the maintenance of any available patent protection with respect
thereto. For purposes of this Article 11 and with respect to ZGI Background
Technology (other than Patent Rights included in the St. Jude License Agreement)
and ZGI Project Technology, ZGI shall be the "Patent Prosecution Party".
(b) Serono Project Technology. Serono shall be solely responsible, as it
-------------------------
shall determine [*], for the filing and prosecution of any
and all patent applications with respect, in whole or in part, to any Serono
Project Technology, for opposition or interference proceedings with respect
thereto, and for the maintenance of any available patent protection with respect
thereto. For purposes of this Article 11 and with respect to Serono Project
Technology, Serono shall be the "Patent Prosecution Party".
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-40-
(c) Joint Project Technology. ZGI and Serono shall share
------------------------
responsibilities with regard to patent matters relating to Joint Project
Technology, [*]. The Patent Contacts shall be responsible for assigning specific
tasks to each of the parties with respect to the filing and prosecution of any
and all patent applications with respect, in whole or in part, to any such Joint
Project Technology, for opposition or interference proceedings with respect
thereto, and for the maintenance of any available patent protection with respect
thereto. For each such patent application or proceeding, the Patent Contacts
shall designate whether ZGI or Serono is the "Patent Prosecution Party".
(d) Patent Prosecution Party's Efforts. For each patent application,
----------------------------------
patent and proceeding described in this Section 11.3, the Patent Prosecution
Party shall exert its Reasonable Commercial Efforts, consistent with its
customary practices, with respect to its activities, to the extent such
activities bear on Licensed Products. In particular, the Patent Prosecution
Party shall: deliver to the other party copies of communications between the
Patent Prosecution Party and relevant patent offices, promptly after receipt
from, or delivery to, such patent office; take the other party's comments and
suggestions into consideration when framing responses and submissions to patent
offices; provided that the Patent Prosecution Party shall have no obligation to
solicit comments or suggestions from the other party, and provided that the
Patent Prosecution Party shall have final authority over the content of
responses and submissions to patent offices. A Patent Prosecution Party may, at
any time, elect, by written notice to the other party, to discontinue support
for one or more patents or patent applications (a "Discontinued Patent") and
-------------------
shall not be responsible for any costs relating to a Discontinued Patent that
are incurred more than sixty (60) days after receipt of that notice by the other
party. In such case, and so long as the other party is not in default under
this Agreement, the other party may elect, at its sole discretion, to continue
preparation, filing, prosecution and/or maintenance of the Discontinued Patent
at its sole expense. The party so continuing shall own any such Discontinued
Patent, and the party electing to discontinue support shall execute such
documents of transfer or assignment and perform such acts as may be reasonably
necessary to transfer sole ownership of the Discontinued Patent to the other
party and enable that party to file or to continue prosecution or maintenance of
the Discontinued Patent, if the other party elects to do so. In the event that
Serono continues a Discontinued Patent for which ZGI is the Patent Prosecution
Party, such Discontinued Patent shall not be considered as included in Patent
Rights in or to any ZGI Background Technology or Project Technology for the
purpose of calculating royalties under Sections 8.2(a) or (b) and 8.3(a) or (b).
11.4 Defense and Enforcement Actions.
-------------------------------
(a) Notification. During the Product Term, each party shall notify the
------------
other party of any attack on the validity or enforceability of any Patent Rights
within the ZGI Background Technology or the Project Technology, or of any
infringement of any such Patent Rights, or of any certification filed under the
U.S. Drug Price Competition and Patent Term Restoration Act of 1984 claiming
that any patent within the ZGI Background Technology or Project Technology is
invalid or that infringement will not arise from the manufacture, use or sale of
any product by a Third Party, as soon as reasonably practicable after it becomes
aware of such attack, infringement or certification.[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-41-
(c) Sharing of awards. Any award of damages granted in a legal proceeding
-----------------
covered by this Article 11 [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-42-
11.5 Patent Extensions.
-----------------
The parties shall cooperate in seeking any available extension of the term
of any Patent Rights in and to the ZGI IP, the Serono IP or the Joint Project
Technology. Such cooperation shall include: (a) advising each other in a
timely manner of any action by any Regulatory Agency that is pertinent to any
such extension; (b) reasonably supplying each other with all information in its
control pertaining to the extension of any such Patent Rights; and (c)
cooperating with each other to execute all supporting affidavits or documents
required in connection with the extension of any such Patent Rights.
11.6 Protection of the Licensed Product Trademarks.
---------------------------------------------
[*]
ARTICLE TWELVE
Elective Termination of Certain Roles and Responsibilities
12.1 Termination at Election of ZGI.
------------------------------
(a) If ZGI elects to terminate its roles and responsibilities under the
Development Project for a Licensed Product pursuant to Section 4.8, the
following will apply with respect to the Licensed Product involved:
(i) Article Three shall no longer apply with respect to the Licensed
Product involved, and Serono shall take over all control and decision
making roles with respect to further Development Project activities
and marketing, distribution and sales activities with respect to any
such Licensed Product;
(ii) notwithstanding any provision of Article Eleven to the contrary,
Serono shall at its expense have control over the prosecution,
maintenance, defense and enforcement of Patent Rights in and to
Project Technology that covers only such Licensed Product; provided,
however, that if Serono elects to abandon any patent or trademark
application or not to defend or enforce (or not to continue to
attempt to defend or enforce) any such Patent Rights or the Licensed
Product Trademarks applicable only to such Licensed Product, it shall
promptly so inform ZGI in sufficient time that ZGI may at its
election continue to prosecute such application or bring (or
continue) such enforcement action at ZGI's risk and expense;
(iii) the trademark and service ▇▇▇▇ quality control and labeling and usage
standards and procedures referred to in Section 10.10 with respect to
any trademarks or
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-43-
service marks applicable only to such Licensed Product shall no
longer be subject to approval by Steering Committee Action;
(iv) ZGI will have no further responsibility to conduct or to assist with
any Development Tasks with respect to such Licensed Product,
although it will cooperate reasonably with Serono at Serono's
expense to transition any then on-going Development Tasks conducted
by ZGI with respect to such Licensed Product to Serono for use
within the scope of the Development Project;
[*]
[*]
(vii) Serono's obligation under Section 2.1 shall not continue with
respect to the Licensed Product;
(viii) ZGI will be deemed to have made an Election Not to Co-Promote with
respect to such Licensed Product;
(ix) ZGI will be deemed to have made an Election Not to Co-Fund with
respect to such Licensed Product;
(x) Serono's obligations hereunder, including those with respect to
Milestone Fees under Section 7.2, as to royalties on Declined
Product Sublicensing Revenues under Section 8.4, and as to diligence
under Sections 4.1 and 6.1 shall continue in effect hereunder as
limitations upon and conditions to the licenses to it hereunder
throughout the applicable Product Term;
(xi) Royalties under Section 8.2(a) shall be determined in accordance
with the royalty rates set forth in the following tables and for the
purpose of applying such royalty rates Net Sales shall be allocated
in the same manner as set forth in Section 8.3(e):
(A) If the termination of ZGI's roles and responsibilities with
respect to a Licensed Product pursuant to Section 4.8 becomes
effective after the
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-44-
[*]
--------------------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
North America Net Sales
------------- --------
[*]
(B) If the termination of ZGI's roles and responsibilities with respect
to a Licensed Product pursuant to Section 4.8 becomes effective
prior to [*] then the following royalty rates shall apply:
--------------------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
North America Net Sales
------------- ---------
[*]
(xii) Royalties under Section 8.2(b) shall be determined in accordance the
royalty rates set forth in the following tables and for the purpose of
applying such royalty rates Net Sales shall be allocated in the same
manner as set forth in Section 8.3(e):
(A) If the termination of ZGI's roles and responsibilities with respect
to a Licensed Product pursuant to Section 4.8 becomes effective
after [*] then the following royalty rates shall apply:
--------------------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
North America Net Sales
------------- --------
--------------------------------------------------------------------------------
[*]
(B) If the termination of ZGI's roles and responsibilities with respect
to a Licensed Product pursuant to Section 4.8 becomes effective
prior to [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-45-
then the following royalty rates shall apply:
-----------------------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
North America Net Sales
------------- ---------
-----------------------------------------------------------------------------------
[*]
(xiii) If the termination of ZGI's roles and responsibilities
with respect to a Licensed Product pursuant to Section
4.8 becomes effective prior to [*] then for the purpose
of calculating royalties under Section 8.3(b) the table
set forth in such Section shall be replaced with the
table set forth below:
-----------------------------------------------------------------------------------
Net Sales in a calendar year in Royalty rate for such
------------------------------- ---------------------
Rest of World Net Sales
------------- ---------
-----------------------------------------------------------------------------------
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-46-
12.2 Termination at Election of Serono.
------------------------------------
(a) If Serono elects to terminate its roles and responsibilities under
the Development Project for a Licensed Product pursuant to Section 4.8, or if
Serono elects to terminate its roles and responsibilities with respect the
marketing, distribution and sales of a Licensed Product pursuant to Section 6.3,
the following will apply with respect to the Licensed Product involved:
(i) Article Three shall no longer apply with respect to the Licensed
Product involved, and ZGI shall take over all control and decision
making roles with respect to further Development Project activities
and marketing, distribution and sales activities with respect to any
such Licensed Product;
(ii) notwithstanding any provision of Article Eleven to the contrary, ZGI
shall at its expense have control over the prosecution, maintenance,
defense and enforcement of Patent Rights in and to Project Technology
covering only such Licensed Product and over the use, registration
and protection of the Licensed Product Trademarks applicable only to
such Licensed Product; provided, however, that if ZGI elects to
abandon any patent or trademark application or not to defend or
enforce (or not to continue to attempt to defend or enforce) any such
Patent Rights or Licensed Product Trademarks, it shall promptly so
inform Serono in sufficient time that Serono may at its election
continue to prosecute such application or bring (or continue) such
enforcement action at Serono's risk and expense;
(iii) the trademark and service ▇▇▇▇ quality control and labeling and usage
standards and procedures referred to in Section 10.10 with respect to
any trademarks or service marks applicable only to such Licensed
Product shall no longer be subject to approval by Steering Committee
Action, but nevertheless, to the extent applicable to such Serono
trademarks and service marks licensed to ZGI, shall be only such as
are commercially reasonable and necessary to preserve Serono's rights
as licensor of any such ▇▇▇▇;
(iv) with respect to such a termination under Section 4.8 regarding a
Licensed Product, Serono will have no further responsibility to
conduct or to assist with any Development Tasks with respect to such
Licensed Product, although it will cooperate reasonably with ZGI at
ZGI's expense to transition any then on-going Development Tasks
conducted by or on behalf of Serono with respect to such Licensed
Product to ZGI for use within the scope of the Development Project;
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-47-
[*]
(vii) all countries in the world shall automatically thereby be removed
from the Territory and shall become part of the ZGI Territory with
respect to that Licensed Product;
(viii) Serono shall have no further obligation to pay Milestone Fees with
respect to that Licensed Product pursuant to Section 7.2 hereof;
(ix) the licenses granted by Serono to ZGI under Article Ten with
respect to such Licensed Product shall continue in effect for the
duration of the Development Project Term or the Product Term, as
stated in such Article for such licenses, respectively, and subject
to ZGI's obligations under this Agreement with respect to such
Licensed Product; provided, however, that the license to ZGI under
Section 10.7 shall be expanded to include [*]
(x) ZGI's obligation under Section 2.1 shall not continue with respect
to the Licensed Product;
(xi) if the termination of Serono's Development Project roles and
responsibilities pursuant to Section 4.8 with respect to a Licensed
Product first becomes effective prior to [*] then the following
shall apply with respect to such Licensed Product:
[*]
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-48-
(xii) if the termination of Serono's Development Project roles and
responsibilities pursuant to Section 4.8 with respect to a Licensed
Product or if the termination of Serono's roles and responsibilities
with respect to the marketing, distribution and sales of a Licensed
Product pursuant to Section 6.3 first becomes effective at any time
after [*], then the following shall apply with respect to such
Licensed Product:
(A) Serono shall transfer to ZGI all then-existing clinical and
commercial stocks of the Licensed Product, and shall also
complete any on-going manufacturing runs and supply the
Licensed Product made in such runs to ZGI, in each such case
[*] except with respect to stocks or manufacturing runs the
costs of which were or are to be included in the quarterly
accountings and balancing payments called for under either
Section 4.6 or Section 5.5 (which stocks and manufacturing runs
shall be provided by Serono under this clause without any
further charge to ZGI, except as provided for in Section 4.6 or
Section 5.5);
(B) to the extent supplies in addition to those to be provided
under clause (A) above are required, Serono shall, at all times
between the effectiveness of its termination of such roles and
responsibilities pursuant to Section 4.8 or 6.3 and [*]
manufacture and supply to ZGI all of ZGI's and its Affiliates'
and Sublicensees' worldwide requirements for the Licensed
Product, provided such requirements do not exceed [*] of the
requirements for the Licensed Product for that period described
in the Development Plan and Budget. ZGI shall exert [*]
to find and qualify an alternative manufacturing source for
such Licensed Product as promptly as possible, and, unless ZGI
terminates this supply arrangement earlier at its option, ZGI,
[*] shall purchase all of such requirements from Serono, which
Licensed Products will be supplied pursuant to a supply
agreement [*]
(C) if and to the extent that any Serono Production Technology in
existence on the effective date of such termination that is
applicable to such Licensed
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-49-
Product is not already covered by Serono's licenses to ZGI
under Sections 10.2 and 10.7, the same shall hereby be deemed
to be included in such licenses, but on a nonexclusive basis;
and
(D) Serono shall promptly provide to ZGI a full disclosure of all
Serono Production Technology, if any, that shall not have prior
thereto been provided to ZGI to the extent the same is
reasonably necessary to enable an experienced cGMP manufacturer
to manufacture the applicable Licensed Product. Serono further
agrees to cooperate in the transfer of manufacturing operations
for such Licensed Product to ZGI or its designated Sublicensee
or contract manufacturer and agrees to provide all information,
data, and copies of documents constituting Serono Production
Technology reasonably necessary or useful for regulatory
filings (including authorization to use such information, data
and copies of documents in later regulatory filings) for such
Licensed Product and to allow ZGI or such Sublicensee or
contract manufacturer to manufacture such Licensed Product
throughout the Product Term.
[*]
ARTICLE THIRTEEN
Confidentiality; Research Materials; Publicity
13.1 Confidentiality and Non-Use. During all Product Terms under this
---------------------------
Agreement, and for a period of [*] thereafter, each party shall maintain the
other party's Information as confidential, using the same degree of care it uses
to protect its own confidential information. During the Term of this Agreement
and at all times thereafter, neither party shall use the other party's
Information, except for the activities contemplated by this Agreement.
13.2 Exceptions. The obligations of Section 13.1 shall not apply to
----------
Information that:
(a) was known by the receiving party or its Affiliates prior to
disclosure by the disclosing party, as evidenced by prior written
records;
(b) becomes part of the public domain through no fault of the receiving
party or its Affiliates;
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-50-
(c) was obtained, on a non-confidential basis, by the receiving party or
its Affiliates from a third party having no direct or indirect
obligation of confidentiality to the disclosing party or its
Affiliates;
(d) was disclosed by the disclosing party to a third party on a non-
confidential basis; or
(e) is developed by the receiving party or its Affiliates independently
of disclosures made hereunder.
13.3 Permitted Disclosures. Notwithstanding Section 13.1, Serono and
---------------------
ZGI shall each be permitted to disclose the other party's Information: (a) to
its Affiliates, Contractors and Sublicensees, or prospective Affiliates,
Contractors or Sublicensees, and its licensors under Third Party Agreements, who
are subject to confidentiality requirements at least as stringent as those
contained herein; (b) to its employees, and its Affiliates', Contractors' or
Sublicensee's employees who require the same for the purposes contemplated by
this Agreement and who are subject to confidentiality requirements at least as
stringent as those contained herein; (c) to its patent attorney or agent or any
patent authority in any country as shall be reasonably required for filing or
prosecuting any patent application with respect to any Patent Rights in
accordance with Article Eleven (subject to Article Twelve); (d) in support of or
in connection with any actions to defend or enforce any Patent Rights in
accordance with Article Eleven (subject to Article Twelve); (e) to Regulatory
Agencies in connection with obtaining and maintaining Regulatory Approval and
approval for the manufacture of the Licensed Product and (f) if such disclosure
is required to meet the requirements of any stock exchange or securities laws or
regulations to which either party may be subject, or by any court or other
governmental authorities of competent jurisdiction, but only after having
provided the other party written notice within a period sufficiently prior to
such disclosure to permit the other party to apply for a protective order or
take other appropriate action to restrict such disclosure and, if disclosure is
still required, so far as reasonably practicable, having minimized the degree of
such disclosure and provided such disclosure under conditions of
confidentiality.
13.4 Research Materials; Permitted Uses. Any Research Materials
----------------------------------
transferred by one party to the other pursuant to this Agreement shall be used
by the receiving party and its Contractors solely for the purposes contemplated
by this Agreement and pursuant to the Development Plan and Budget. Any
Contractor shall be bound by terms at least as stringent as the confidentiality
and non-use obligations hereunder with respect to such Research Materials. Any
person using Research Material on behalf of the receiving party will be advised
of, and is subject to, the terms of this Section.
13.5 Press Releases. The parties hereby each approve the form of joint
--------------
press release set forth in Exhibit 13.5 hereto, and will cooperate in the
release thereof as soon as practicable after the signature of this Agreement by
the parties. No other public announcement or other disclosure to Third Parties
(other than Sublicensees and Contractors) concerning the existence or terms of
this Agreement shall be made, either directly or indirectly, by either party
hereto, without first obtaining the written approval of the other party, which
shall include agreement upon the nature and text of such announcement or
disclosure. The party desiring to make any
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-51-
such public announcement or other disclosure shall inform the other party of the
proposed announcement or disclosure by providing the other party with a written
copy thereof, and allowing reasonably sufficient time prior to public release to
permit such other party to comment upon such announcement or disclosure. Once
any such public announcement or disclosure has been approved in accordance with
this Section, then either party may appropriately communicate information
contained in such permitted announcement or disclosure. Each party agrees that
it shall reasonably cooperate with the other with respect to all disclosures
regarding this Agreement to the Securities Exchange Commission and any other
governmental or regulatory agencies, including requests for confidential
treatment of proprietary information of either party included in any such
disclosure.
13.6 Publications. Each party agrees that the parties' personnel
------------
involved in the Development Project, separately, together or with other authors,
shall be permitted to present at symposia, national, or regional professional
meetings and to publish in journals, theses, or dissertations, or otherwise the
research conducted pursuant to the Development Project. The foregoing
permission is subject to each party's right to receive copies of any proposed
publication or presentation in advance of the submission of such proposed
publication or presentation to a journal, editor, or other third party. Each
party shall have forty-five (45) days after receipt of said copies to object to
such proposed presentation or proposed publication either: (a) because there is
subject matter which either party desires to maintain in secrecy to maximize the
commercial value of this Agreement; or (b) because there is patentable subject
matter which needs protection. If either party makes an objection under (a)
above, such subject matter shall remain subject to Article 13 and shall not be
published or otherwise disclosed without the written consent of both parties.
If either party makes an objection under (b) above, the parties shall negotiate
a mutually-acceptable version, and both parties and such other authors (if any)
shall withhold such subject matter from such publication or presentation for a
maximum of six (6) months from the date of receipt of such objection from either
party.
ARTICLE FOURTEEN
Representations and Warranties
14.1 Representations, Warranties and Covenants of Serono. Serono
---------------------------------------------------
represents and warrants to and covenants with ZGI that:
(a) Serono is a corporation duly organized, validly existing and in
corporate good standing under the laws of Switzerland and has the
corporate and legal right, title, authority and power to enter into
and to perform this Agreement;
(b) This Agreement is a legal and valid obligation binding upon Serono
and enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable
principles. Serono has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. The execution,
delivery and performance of Serono's obligations under this Agreement
will not conflict with or result in a breach of or a default under
any agreements, contracts,
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-52-
commitments or other arrangements to which Serono is a party or by
which it or its properties are bound or violate any order, law or
regulation of any court, governmental authority or administrative or
other agency having authority over it;
(c) Serono has in place with all of its officers and employees who will
perform this Agreement written agreements in proper form and
substance requiring the assignment to Serono of all inventions made
during the course of their employment by Serono and requiring such
individuals to maintain the confidentiality of Serono's own
information and information that is entrusted to Serono in confidence
by others;
(d) Serono will not during the Term of this Agreement enter into any
agreements, contracts, commitments or other arrangements that would
prevent Serono from meeting its obligations hereunder;
(e) Serono will comply and will cause its Contractors to comply with all
applicable laws and regulations in connection with the performance of
Serono's obligations and other activities pursuant to this Agreement,
including all applicable product safety, product testing, product
labeling, package marking, and product promotion and advertising
laws; all applicable rules and regulations relating to the use of
Research Materials, including those relating to research involving
the use of human and animal subjects or recombinant DNA; and all laws
and regulations of the United States and any other relevant country
concerning any export or other transfer of technology, services or
products;
(f) There are, as of the Effective Date, no Third Party Agreements to
which Serono or any of its Affiliates are a party;
(g) Serono has the right, power and authority to grant the licenses
granted by Serono herein; and
(h) To the best of Serono's knowledge after due inquiry, as of the
Effective Date [*] the ZGI Background Technology (as described on
Exhibit 1.85).
14.2 Representations, Warranties and Covenants of ZGI. ZG1 represents
------------------------------------------------
and warrants to and covenants with Serono that:
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-53-
(a) ZGI is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Washington and
has the corporate and legal right, title, authority and power to
enter into and to perform this Agreement;
(b) This Agreement is a legal and valid obligation binding upon ZGI and
enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general equitable principles. ZGI
has taken all necessary action to authorize the execution, delivery
and performance of this Agreement. The execution, delivery and
performance of ZGI's obligations under this Agreement will not
conflict with or result in a breach of or a default under any
agreements, contracts, commitments or other arrangements to which ZGI
is a party or by which it or its properties are bound or violate any
order, law or regulation of any court, governmental authority or
administrative or other agency having authority over it;
(c) ZGI has in place with all of its officers and employees who will
perform this Agreement written agreements in proper form and
substance requiring the assignment to ZGI of all inventions made
during the course of their employment by ZGI and requiring such
individuals to maintain the confidentiality of ZGI's own information
or information that is entrusted to ZGI in confidence by others;
(d) ZGI will not during the Term of this Agreement enter into any
agreements, contracts, commitments or other arrangements that would
prevent ZGI from meeting its obligations hereunder;
(e) ZGI will comply and will cause its Contractors to comply with all
applicable laws, regulations in connection with the performance of
ZGI's obligations and other activities pursuant to this Agreement,
including all applicable product safety, product testing, product
labeling, package marking, and product promotion and advertising
laws; all applicable rules and regulations relating to the use of
Research Materials, including those relating to research involving
the use of human and animal subjects or recombinant DNA; and all laws
and regulations of the United States and any other relevant country
concerning any export or other transfer of technology, services or
products;
(f) There are, as of the Effective Date, no Third Party Agreements to
which ZGI or any of its Affiliates are a party, other than as listed
in Exhibit 1.34, true and complete copies of which have been provided
to Serono;
(g) ZGI has the right, power and authority to grant the licenses granted
by ZGI herein;
(h) [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-54-
provided however that nothing in this Agreement shall be construed as
a representation or warranty as to the scope or validity of any patent
application or patent identified or described in this Agreement;
(i) As of the Effective Date, ZGI has notified Serono in writing of all
patents and patent applications, of which the ZGI intellectual
property department is aware, that are issued to or filed by [*] as
an element of a claim and that may cover the development, manufacture,
importation, sale or use of a product [*]
(j) As of the Effective Date, ZGI has notified Serono in writing of all
patents and patent applications, of which the ZGI intellectual
property department is aware, that are issued to or filed by [*]
(k) Novo Nordisk A/S is not an Affiliate as defined in Section 1.1.
14.3 Research Materials. ANY RESEARCH MATERIALS PROVIDED OR TO BE PROVIDED
------------------
HEREUNDER ARE EXPERIMENTAL IN NATURE AND ARE TRANSFERRED BETWEEN THE PARTIES "AS
IS" AND WITH ALL FAULTS. NEITHER SERONO NOR ZGI MAKES ANY WARRANTY OR
REPRESENTATION WITH RESPECT TO THE UTILITY, EFFICACY, NONTOXICITY, SAFETY OR
APPROPRIATENESS OF USING THE RESEARCH MATERIALS. NEITHER PARTY SHALL BE LIABLE
TO THE OTHER FOR ANY USE OF RESEARCH MATERIALS, OR ANY LOSS THAT MAY ARISE FROM
SUCH USE.
14.4 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
-------------------
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO THE ZGI IP, SERONO
IP, JOINT PROJECT TECHNOLOGY, GOODS, SERVICES OR OTHER SUBJECT MATTER OF THIS
AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE
FOREGOING.
ARTICLE FIFTEEN
Indemnification; Insurance
15.1 Serono Indemnification. Serono (as the "Indemnifying Party" under this
---------------------- ------------------
Section) shall defend, indemnify and hold ZGI and its Affiliates, Contractors,
Sublicensees and their respective employees and agents (the "Indemnified
-----------
Parties" under this Section) harmless from and against any and all claims,
-------
actions, judgments, costs, awards, expenses (including reasonable attorneys'
fees, experts' fees, and other costs of defense at any stage of proceedings) or
liability of any kind to the extent arising out of:
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-55-
(a) Third Party claims or actions for [*]
(b) Third Party claims or actions arising from [*]
(c) Third Party claims or actions arising in connection with any breach
of any warranties, representations or covenants made by Serono or
with its authorization hereunder; or
(d) [*] to the extent arising from or related to matters within the scope
of Serono's responsibilities or allocated tasks hereunder or arising
from the conduct of any Development Tasks or any activities related
to the manufacturing, marketing, distribution, sale or promotion of
Licensed Products by or for Serono.
provided, however, that Serono will not be required to defend, indemnify or hold
any Indemnified Party harmless from any claims, actions, judgments, costs,
awards, expenses or other liabilities to the extent resulting from:
(i) the negligence or willful malfeasance of any Indemnified Party;
(ii) any breach of ZGI's warranties, representations or covenants under
Article Fourteen or other breach by ZGI of this Agreement; or
(iii) any settlement or admission of liability made or purported to be
15.2 ZGI Indemnification. ZGI (as the "Indemnifying Party" under this
------------------- ------------------
Section) shall defend, indemnify and hold Serono and its Affiliates,
Contractors, Sublicensees and their respective employees and agents (the
"Indemnified Parties" under this Section) harmless from and against any and all
--------------------
claims, actions, judgments, costs, awards, expenses (including reasonable
attorneys' fees, experts' fees, and other costs of defense at any stage of
proceedings) or liability of any kind to the extent arising out of:
(a) Third Party claims or actions for [*]
(b) Third Party claims or actions arising from [*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
-56-
(c) Third Party claims or actions arising in connection with any breach
of any warranties, representations or covenants made by ZGI or with
its authorization hereunder;
provided, however, that ZGI will not be required to defend, indemnify or hold
any Indemnified Party harmless from any claims, actions, judgments, costs,
awards, expenses or other liabilities to the extent resulting from:
(i) the negligence or willful malfeasance of any Indemnified Party;
(ii) any breach of Serono's warranties, representations or covenants under
Article Fourteen or other breach by Serono of this Agreement; or
(iii) any settlement or admission of liability made or purported to be
made by any Indemnified Party without ZGI's prior written approval.
15.3 Notice and Defense of Claims. Serono agrees, at its own expense,
----------------------------
to provide attorneys to defend against any claims or actions brought or filed
against the Indemnified Parties with respect to the subject of the indemnity
contained in Section 15.1, whether or not such claims or actions are rightfully
brought or filed. ZGI agrees, at its own expense, to provide attorneys to
defend against any claims or actions brought or filed against the Indemnified
Parties with respect to the subject of the indemnity contained in Section 15.2,
whether or not such claims or actions are rightfully brought or filed. An
Indemnified Party seeking indemnification hereunder shall
(a) notify the Indemnifying Party in writing promptly after the assertion
of any claim within the scope of the Indemnifying Party's indemnity
agreement hereunder; provided, however, that the failure or delay so
to notify the Indemnifying Party shall not relieve it of any
obligation hereunder except to the extent that it demonstrates that
such failure or delay adversely affected its ability to defend or
resolve such claim; and
(b) tender to the Indemnifying Party the right to control the defense of
any such claims or actions, including any decisions regarding the
settlement or disposition thereof; provided, however, that
(i) the Indemnifying Party shall not settle any such claim or action
in a way that prejudices or adversely impacts an Indemnified
Party without the prior approval of such Indemnified Party,
which approval shall not be unreasonably withheld or delayed;
(ii) if the defendants in any such claims or action include both the
Indemnifying Party and such Indemnified Party, and either of
them concludes that there may be legal defenses available to it
which are different from, additional to, or inconsistent with
those available to the other party, that party shall have the
right to select separate counsel to participate in the defense
of such claim or action on its behalf, and such party shall bear
the cost and expense of such separate defense, unless and
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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to the extent the parties otherwise agree, or it is determined
pursuant to Article Eighteen hereunder that such costs and
expense are or were required to be indemnified by the
Indemnifying Party hereunder and are or were required to be
incurred separately due to such different, additional, or
inconsistent defenses; and
(iii) if the Indemnifying Party determines not to defend such claim
or action, or otherwise fails to do so diligently, the
Indemnified Party shall have the right to maintain the defense
of such claim or action and the Indemnifying Party shall
provide reasonable assistance to it in the defense of such
claim or action and shall bear the reasonable cost and expense
of such defense (including reasonable attorneys' fees, experts'
fees, and other costs of defense at any stage of proceedings).
Either Serono or ZGI, as applicable, shall provide, and shall cause the
Indemnified Party to provide, reasonable assistance to the Indemnifying Party in
the defense, settlement or other disposition of such claim or action, including
by making available all pertinent information and personnel under its control to
the Indemnifying Party
15.4 Insurance.
---------
(a) From and after the Initiation of Phase I Clinical Trials for any
Licensed Product, each of ZGI and Serono shall obtain and keep in force, in form
and with insurers reasonably acceptable to the other party hereto, insurance
covering its indemnification obligations hereunder in amounts of not less than
[*]. It is understood that such insurance shall not be construed to limit a
party's liability with respect to such indemnification obligations.
(b) From and after the first Regulatory Approval for a Licensed Product
to be manufactured by or on behalf of Serono hereunder and/or otherwise to be
marketed, distributed or sold by it or its Affiliates or Sublicensees, and until
three years after the end Product Term with respect thereto, Serono shall obtain
and keep in force, in form and with insurers reasonably acceptable to ZGI,
insurance covering its indemnification obligations hereunder in amounts of not
less than [*] provided, however, that ZGI shall, by notice to Serono from time
to time during such Product Term, but not more often than bi-annually, have the
right reasonably to increase the foregoing coverage amounts such that they
remain commensurate with the insurance coverage levels generally maintained by
entities manufacturing or marketing products for human use in the pharmaceutical
industry. It is understood that such insurance shall not be construed to limit a
party's liability with respect to such indemnification obligations.
(c) From and after the first Regulatory Approval for a Licensed Product
to be manufactured by or on behalf of ZGI hereunder and/or otherwise to be
marketed, distributed or sold by it or its Affiliates or Sublicensees, and until
three years after the end Product Term with
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
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respect thereto, ZGI shall obtain and keep in force, in form and with insurers
reasonably acceptable to Serono, insurance covering its indemnification
obligations hereunder in amounts of not less than [*]; provided, however, that
Serono shall, by notice to ZGI from time to time during such Product Term, but
not more often than bi-annually, have the right reasonably to increase the
foregoing coverage amounts such that they remain commensurate with the insurance
coverage levels generally maintained by entities manufacturing or marketing
products for human use in the pharmaceutical industry. It is understood that
such insurance shall not be construed to limit a party's liability with respect
to such indemnification obligations.
(d) Each party shall provide to the other party upon request a
certificate evidencing the insurance such party is required to obtain and keep
in force under this Article. Such certificate shall provide that such insurance
shall not expire or be cancelled or modified without at least thirty (30) days'
prior notice to the other party.
ARTICLE SIXTEEN
Change of Control
16.1 Loss of Co-Promotion Right for a Licensed Product. [*]
-------------------------------------------------
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the commission.
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16.2 Decisions Regarding Commercialization Budget. [*]
--------------------------------------------
ARTICLE SEVENTEEN
Term and Termination
17.1 Term. This Agreement shall become effective as of the Effective Date
----
and shall continue in full force and effect until the later of (i) the
expiration of the Development Project Term or (ii) the expiration of the last
Product Term for any Licensed Product hereunder (such period hereinafter the
"Term"). Upon expiration of the Product Term of a Licensed Product in Commercial
Use in a country, all rights licensed hereunder as to such Licensed Product and
country shall become irrevocable and fully-paid upon payment of any amounts due
that have accrued hereunder prior to expiration, and thereafter Serono shall
have exclusive rights to all Licensed Product Trademarks and Regulatory
Approvals and, except in such countries where restricted by applicable law,
shall have an exclusive license, with the right to sublicense, to ZGI IP, Ig
Fusion Technology and ZGI's interest in Joint Project Technology to make, have
made, use, sell, offer to sell, and import such Licensed Product in such
country.
17.2 Termination for Material Breach. Serono and ZGI shall have the
-------------------------------
right to terminate this Agreement, including the licenses granted herein, in the
event that any material term or condition of this Agreement is breached by the
other party, and such breach is not remedied within a period of [*] days after
the other party's receipt of written notice of such breach; provided, however,
that if the party claimed to be in breach disputes in good faith that the
claimed breach exists, such [*] day period will not start to run until such
dispute has been resolved, provided that:
(a) the party claimed to be in breach shall, within [*] days after the
notice to it of breach under this Section, remedy any breach to the
extent its existence is not the subject of such good faith dispute;
and
(b) either of the parties has, within [*] days after the notice of breach
under this Section, initiated the escalation procedures of Article
Eighteen in order to resolve such good faith dispute.
If such material breach is corrected within the [*] day period, this Agreement
and the rights granted hereunder shall continue in full force and effect.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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17.3 Termination Upon Serono's Bankruptcy. This Agreement will
------------------------------------
automatically terminate if Serono becomes insolvent, makes an assignment for the
benefit of its creditors, appoints or suffers appointment of a receiver or
trustee over its property, files a petition under any bankruptcy or insolvency
act or has such a petition filed against it and any such event shall have
continued for [*] days undismissed or undischarged.
17.4 No Termination Upon ZGI's Bankruptcy. All rights and licenses granted
------------------------------------
under or pursuant to this Agreement by ZGI to Serono are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, as amended from time to time (the "Bankruptcy Code"), licenses of rights
to "intellectual property" as defined under Section 101(35A) of the Bankruptcy
Code. The parties agree that Serono, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code. The parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against ZGI under the Bankruptcy
Code that is not dismissed within sixty (60) days after it is filed, Serono
shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, and the same, if not already in its possession, shall be
promptly delivered to Serono (i) upon any such commencement of a bankruptcy
proceeding upon written request therefor by Serono, unless ZGI elects to
continue to perform all of its obligations under this Agreement, or (ii) if not
delivered under (i) above, upon the rejection of this Agreement by or on behalf
of ZGI, upon written request therefor by Serono. Following the commencement of
such a bankruptcy proceeding and so long as such proceeding continues, ZGI will
not, without Serono's prior written consent, sell, transfer, assign or otherwise
dispose of, or purport to sell, transfer, assign or otherwise dispose of, any
right, title or interest in, to or under the ZGI IP or the Joint Project
Technology that has been licensed to Serono under this Agreement.
17.5 Termination of License With Respect to [*]
--------------------------------------
17.6 Accrued Rights and Surviving Provisions. Expiration or termination of
---------------------------------------
this Agreement shall not affect the parties' rights and obligations that have
accrued as of the expiration or termination date, including the parties'
obligations to bear Development Costs or North American Commercialization Costs
incurred prior to the effectiveness of the expiration or termination and their
obligations with respect to royalties or Milestone Fees hereunder that have
accrued prior to the effectiveness of the expiration or termination. Upon any
termination of this Agreement, Serono shall have the right to sell its inventory
of Licensed Products for a period of six (6) months from the date of
termination, provided Serono complies with the provisions of Articles Eight,
Nine and Twelve hereof. The parties' rights and obligations under Sections 4.6
and 5.5 and those provisions of Articles Nine, Twelve, Thirteen, Fifteen, and
Seventeen through Nineteen that by their context are intended to survive, shall
so survive. Any right to terminate
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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this Agreement shall be in addition to and not in lieu of all other rights or
remedies that the party giving notice of termination may have at law, in equity
or otherwise, including rights under the United States Bankruptcy Code.
ARTICLE EIGHTEEN
Dispute Resolution
18.1 Cooperative Decision Making; [*] The parties intend that, to the
---------------------------
maximum extent practicable, they shall reach decisions hereunder cooperatively
through the deliberations of the Steering Committee and by consent of its
members as described in subsection 1.74(a). In situations in which that does not
occur, [*] may as described in subsection 1.74(b) institute the procedure
described in this Article. In such circumstances, a summary of the proposed
Steering Committee Action and the unresolved dispute will be provided in writing
to [*] If either party has not then [*], such summary shall be provided to [*]
with a request that one or more [*] [*] and forward the summary to them. The [*]
the proposed Steering Committee Action, and [*]
18.2 [*] Any dispute or difference between the parties arising
out of or in connection with this Agreement, including a disagreement over a
proposed Steering Committee Action, that cannot be resolved pursuant to Section
18.1 [*]
18.3 Arbitration. [*]
-----------
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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[*]
ARTICLE NINETEEN
General
19.1 Entire Agreement. This Agreement, together with all of the Exhibits
----------------
hereto, constitutes the entire agreement between the parties and supersedes all
prior and contemporaneous oral and written agreements, understandings or
arrangements relating to the subject matter hereof. This Agreement has been
submitted to the scrutiny of, and has been negotiated by, both parties and their
counsel, and shall be given a fair and reasonable interpretation in accordance
with its terms, without consideration or weight being given to any such term's
having been drafted by any party or its counsel.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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19.2 Controlling Law. This Agreement shall be governed by and construed in
---------------
in accordance with the laws of the State of New York, without giving effect to
the doctrine of conflict of laws, except that the issues of patentability,
validity, enforceability and scope of any Patent Rights shall be determined
according to the patent laws of the Patent Country of such Patent Rights.
19.3 Notices. All notices, reports and other communications by ZGI or
-------
Serono to the other shall: (a) be in writing; (b) refer specifically to this
Agreement; and (c) be sent by electronic or facsimile transmission for which a
confirmation of delivery is obtained or by express courier services providing
evidence of delivery, in each case to the respective address specified below (or
to such updated address as may be specified in writing to the other party from
time to time).
If to Serono:
Ares Trading S.A.
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attn: General Manager
FAX: ▇▇-▇▇-▇▇▇-▇▇▇▇
with a copy to:
Serono S.A.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇.▇.
▇▇ ▇▇▇, ▇▇▇▇▇▇ des Mines
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attn: General Counsel
FAX: ▇▇-▇▇-▇▇▇-▇▇▇▇
If to ZGI:
ZymoGenetics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
Attn: Senior Director, Intellectual Property
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Such notice, report or other communication will be deemed effective as of
the date so delivered either by courier service or by electronic or facsimile
transmission.
19.4 Force Majeure. If either party hereto is prevented from carrying out
-------------
its obligations under this Agreement by events beyond its reasonable control,
including acts or omissions of the
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-64-
other party, acts of God or government, natural disasters or storms, fire,
political strife, labor disputes, failure or delay of transportation, default by
suppliers or unavailability of raw materials, then such party's performance of
its obligations hereunder shall be excused during the period of such events and
for a reasonable period of recovery thereafter, and the time for performance of
such obligations shall be automatically extended for a period of time equal to
the duration of such events; provided, however, that the party claiming force
majeure shall promptly notify the other party of the existence of such force
majeure, shall use commercially reasonable efforts to avoid or remedy such force
majeure and shall continue performance hereunder with the utmost dispatch
whenever such force majeure is avoided or remedied.
19.5 Subcontracting. Neither party may delegate or subcontract any of its
--------------
its obligations hereunder except to a Contractor in accordance with Section
1.15.
19.6 Assignability. Except an assignment that does not relieve the
-------------
assigning party of any of its responsibilities or obligations hereunder and in
which the acquiring party agrees to be bound by all obligations of the
transferring party under this Agreement, and that is made in connection with the
transfer of all or substantially all of the assets of a party and its Affiliates
related to their respective pharmaceutical businesses to a single buyer or
pursuant to a merger or other corporate reorganization, neither this Agreement
nor any right herein granted may be assigned by either party to any Affiliate or
Third Party, without the prior, express written consent of the other party,
which consent shall not be unreasonably withheld. Notwithstanding the forgoing,
Serono may assign its rights and interests under this Agreement to an entity
that was an Affiliate of Serono as of the Effective Date and that is also an
Affiliate of Serono as of the date of such assignment; [*]
19.7 Amendments and Waivers. No terms or provisions of this Agreement
----------------------
shall be varied or modified by any prior or subsequent statement, conduct or act
of either of the parties, whether oral or written, except that the parties may
amend this Agreement by written instruments
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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specifically referring to, and executed in the same manner as, this Agreement.
No waiver of any right or remedy hereunder shall be effective unless in a
writing signed by the party to be bound, nor shall any wavier in one instance
constitute a waiver of the same or any other right or remedy in any other
instance.
19.8 Severability. If any provision hereof should be held invalid, illegal
------------
or unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law: (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as is possible; and (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, ZGI and Serono hereby waive their right to
enforce any provision of law that would render any provision hereof prohibited
or unenforceable in any respect. If the terms and conditions of this Agreement
are materially altered as a result of this Section 19.8, the parties shall
attempt to renegotiate the terms and conditions of this Agreement, in good
faith, to resolve any inequities.
19.9 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, and all of such counterparts taken together
shall constitute one and the same instrument.
19.10 Relationship. This Agreement shall not create any employer-employee
------------
relationship between ZGI and Serono, nor shall it be deemed to establish a joint
venture or partnership between ZGI and Serono. Neither party shall at any time
enter into or incur, or hold itself out to third parties as having the authority
to enter into or incur, on behalf of the other party, any commitment, expense or
liability whatsoever. Nothing contained in this Agreement shall be construed, by
implication or otherwise, as an obligation incurred by either party to enter
into any further agreement with the other party.
19.11 Use of Names, Trade Names and Trademarks. Except as provided herein,
----------------------------------------
nothing contained in this Agreement shall be construed as conferring any right
on either party to use in advertising, publicity or other promotional activities
any name, trade name, trademark or other designation of the other party hereto
or of any of its licensors under any Third Party Agreement, including any
contraction, abbreviation or simulation of any of the foregoing, unless the
express written permission of such other party has been obtained.
19.12 Headings. The article and section headings contained herein are for
--------
reference only and shall not be considered a part of this Agreement, nor shall
they in any way affect the interpretation hereof.
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
to be effective as of the Effective Date.
Ares Trading S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: Authorized Representative
ZymoGenetics, Inc.
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, Ph.D.
Its: President and Chief Executive Officer
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
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EXHIBIT 1.20
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
DEVELOPMENT COSTS AND PRINCIPLES
1 Definitions.
Words and phrases used in this Exhibit shall have the meanings defined
elsewhere in the Agreement. In addition, the following words and phrases shall
have the following stated or referenced meanings in this Exhibit:
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission.
-1-
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-2-
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-3-
EXHIBIT 1.34
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
EXISTING THIRD PARTY AGREEMENTS
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-1-
EXHIBIT 1.36
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
IG FUSION TECHNOLOGY
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-1-
EXHIBIT 1.46
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
NORTH AMERICAN COMMERCIALIZATION COSTS AND PRINCIPLES
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-1-
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-2-
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-3-
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-4-
EXHIBIT 1.70
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
SERONO BACKGROUND TECHNOLOGY
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-1-
EXHIBIT 1.85
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
ZGI BACKGROUND TECHNOLOGY
[*]
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-1-
EXHIBIT 13.5
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
INITIAL JOINT PRESS RELEASE
Contact:
▇▇▇▇▇▇▇ ▇▇▇▇ Name
Sr. Director, Corporate Communication & Title
Investor Relations Serono S.A.
ZymoGenetics, Inc. Phone
(▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇.▇▇▇▇▇▇.▇▇
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ -------------
--------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Director
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Healthcare
(▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇
----------------
DRAFT - NOT FOR PUBLIC RELEASE
ZymoGenetics and Serono Establish Collaboration
for Co-Development of Products for Autoimmune Disease
Seattle, WA and Geneva, Switzerland, [Month XX], 2001 -
ZymoGenetics and Serono S.A. (SWX Swiss Exchange: SEO and NYSE: SRA) announced
that they have entered into an exclusive co-development and commercialization
agreement focused on two preclinical product candidates derived from
ZymoGenetics' discovery research. Using a genomics-driven approach,
ZymoGenetics' scientists identified the two molecules, termed TACI and BCMA, as
key regulators of the human immune system. These two proteins are cell-surface
receptors found on B-lymphocytes, cells involved in the production of
antibodies.
The companies intend to focus their activities on the development of one or more
products based on these receptors for the treatment of autoimmune diseases where
there is an over production of autoantibodies (antibodies that attack ones own
cells). Serono has extensive experience in the research and treatment of
autoimmune diseases such as multiple sclerosis and rheumatoid arthritis, where
there remains significant unmet medical needs.
"This exciting collaboration with Serono underscores the power of ZymoGenetics'
product discovery engine," stated ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇, Ph.D., President and Chief
Executive Officer of ZymoGenetics. "In addition to working with a world leader
in the development of protein
[*] designates portions of this document that have been omitted pursuant to a
request for confidential treatment filed separately with the Commission
-1-
therapeutics we will also benefit from Serono's long-standing expertise as we
build our own clinical development and manufacturing capabilities here at
ZymoGenetics."
"This collaboration exemplifies Serono's approach to access novel genomics-based
technologies through strategic partnerships and emphasizes our commitment to the
treatment of autoimmune and serious inflammatory diseases," commented ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Head of Research and Pharmaceutical Development at Serono.
"ZymoGenetics' expertise in functional genomics combined with our own experience
in product development and commercialization will help take these preclinical
product candidates through development."
Under the terms of the agreement, ZymoGenetics could receive license fees and
milestone payments of up to $52.5 million linked to the development and approval
of products, and will receive undisclosed royalties on product sales. The two
companies will share research and development expenses worldwide, excluding
Japan where Serono will cover all expenses. ZymoGenetics retains an option to
co-promote products with Serono in North America. If ZymoGenetics exercises
this option the two companies will share commercialization expenses and profits
equally. Serono will have exclusive rights to market products in the remainder
of the world. Serono will manufacture all products for both clinical trials and
commercial sale.
"A key component of this agreement is ZymoGenetics' participation in the sales
and marketing of products resulting from the collaboration," ▇▇. ▇▇▇▇▇▇ added.
"We see this as critical to the long-term development of our business. Our
ultimate goal is to be a fully integrated company that spans from initial drug
discovery to the sale of biopharmaceutical products. By partnering with Serono,
we believe that we have enhanced our efforts toward this goal."
For further information please contact:
Serono International S.A., Geneva, Switzerland:
Media Relations: Investor Relations: ▇▇▇▇▇▇/▇▇▇▇▇ Communications:
Tel: ▇▇▇-▇▇-▇▇▇ 36 00 Tel: ▇▇▇-▇▇-▇▇▇ 3601 Tel: ▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇ 30 85 Fax: ▇▇▇-▇▇-▇▇▇ 3022 Fax: ▇▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇.▇▇▇▇▇▇.▇▇▇ Reuters: SEOZ.VX ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------- Bloomberg: SEO VX -------------------
EQUITY / SRA US
Serono, Inc., Norwell, MA
Media Relations:
Tel. ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
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About ZymoGenetics
ZymoGenetics is an independent biopharmaceutical company focused on the
discovery and development of protein therapeutics for the prevention or
treatment of significant human
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diseases. Using its proven product discovery engine, comprising genomics,
bioinformatics, protein chemistry and preclinical biology, ZymoGenetics has
generated a broad pipeline of proprietary product candidates. ZymoGenetics will
commercialize these products through internal development, collaborations with
biopharmaceutical partners, and out-licensing of its extensive patent portfolio.
For further information, visit ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
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About Serono
Serono is a global biotechnology leader. The Company has six recombinant
products on the market, Gonal-F(R), Luveris(R), Ovidrel(R), Rebif(R),
Serostim(R) and Saizen(R), (Rebif(R) and Luveris(R) are not approved in the
USA). In addition to being the world leader in reproductive health, Serono has
strong market positions in neurology, metabolism and growth. The Company's
research programs are focused on growing these businesses and on establishing
new therapeutic areas. Currently, there are thirteen molecules in development.
In 2000, Serono achieved worldwide revenues of US$1.240 billion, and a net
income of US$301 million, making it the third largest biotech company in the
world based on revenues. The Company operates in 45 countries, and its products
are sold in over 100 countries. Bearer shares of Serono S.A., the holding
company, are traded on the SWX Swiss Exchange (SEO) and its American Depositary
Shares are traded on the New York Stock Exchange (SRA).
Some of the statements in this press release are forward looking. Such
statements are inherently subject to known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of
Serono S.A. and affiliates to be materially different from those expected or
anticipated in the forward-looking statements. Forward-looking statements are
based on Serono's current expectations and assumptions, which may be affected by
a number of factors, including those discussed in this press release and more
fully described in Serono's Annual Report on Form 20-F filed with the U.S.
Securities and Exchange Commission on April 23, 2001. These factors include any
failure or delay in Serono's ability to develop new products, any failure to
receive anticipated regulatory approvals, any problems in commercializing
current products as a result of competition or other factors, our ability to
obtain reimbursement coverage for our products, and government regulations
limiting our ability to sell our products. Serono has no responsibility to
update the forward-looking statements contained in this press release to reflect
events or circumstances occurring after the date of this press release.
###
BACKGROUND INFORMATION
Autoimmune Disease Progression
------------------------------
One of the key components of the autoimmune disease process is the development
of antibodies to an individual's own healthy tissues. When normal immune
function goes awry due to altered development, inherited disorders or
environmental factors, the body's B cells (B lymphocytes) produce
"autoantibodies." These autoantibodies then attack the individual, leading to
destruction of specific tissues. Depending upon the type of autoimmune
disorder, targeted tissues may be the kidney, as in systemic lupus erythematosus
(SLE); the muscle system, as in myasthenia gravis and multiple sclerosis; or
portions of the joint, as in rheumatoid arthritis. Currently available
treatments for these conditions are often limited due to toxic side effects,
including their overall suppressive effects on the human immune system. New
therapies that act specifically on destructive B cell pathways provide a novel
opportunity to improve patient outcomes.
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TACI and BCMA Product Candidates
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The two product candidates, TACI and BCMA, are receptors found on B cells, that
when stimulated, induce the production of antibodies. In the case of autoimmune
disease these are autoantibodies (antibodies that attack one's own cells). Using
their bioinformatics gene discovery platform, scientists at ZymoGenetics
initially identified a growth factor called BlyS (also known as BAFF, TALL-1,
THANK and zTNF4) that is a key mediator in regulating the human immune system.
This factor was found to bind to B cells, stimulating the replication and
survival of these cells, and inducing their production of antibodies. Using
their expertise in pairing growth factors with their corresponding receptors,
the ZymoGenetics scientists subsequently identified two receptors, TACI and
BCMA, that are found on the surface of B cells and that bind BLyS. These
receptors also bind a second growth factor called APRIL. The importance of this
pathway for regulating B cell function is demonstrated in a recent publication
from ZymoGenetics (Immunity, 15;289-302,2001) where the gene for BLyS was
eliminated in mice, thereby preventing the production of BLyS protein. These
mice had virtually no mature B cells present and had reduced serum antibody
response to immunization. ZymoGenetics scientists further showed that mice
genetically engineered to over express the gene for BlyS develop symptoms of the
autoimmune disease systemic lupus erythematosus (SLE), including the generation
of autoantibodies (Nature 404;995-999, 2000). Reports from ZymoGenetics and
others have also demonstrated an association between elevated levels of
circulating BLyS and autoimmune disease, including SLE in mice and humans and
rheumatoid arthritis in humans.
By using the receptor portions of TACI and BCMA responsible for binding the
growth factors, ZymoGenetics researchers have produced antagonist proteins that
can "mop up" increased BLyS and APRIL growth factor present in the blood. Such
a soluble TACI- or BCMA- molecule thus prevents binding of the growth factors to
the B cells, regulating the development of mature B cells and antibody
production. In published studies (Immunity, 2001), scientists at ZymoGenetics
demonstrated that in TACI transgenic mice, mice that have been genetically
engineered to over express a soluble form of the TACI receptor, there are fewer
mature B cells and reduced levels of circulating antibody. Similar results were
observed in normal mice treated with soluble TACI receptor.
Through the ability of soluble receptors to bind to and eliminate the BLyS and
APRIL growth factors and consequently avert production of destructive
autoantibodies, it may be possible to limit the extent of tissue damage observed
in patients with autoimmune disease. In animal models of SLE, for example,
scientists at ZymoGenetics demonstrated that a soluble form of TACI-receptor was
effective in limiting progression of the disease (Nature, 2000). Similarly, in a
mouse model of collagen-induced arthritis, ZymoGenetics scientists demonstrated
that treatment with soluble TACI-receptor was able to inhibit the development of
collagen-specific antibodies and the incidence of disease (Immunity, 2001).
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EXHIBIT 14.2(j)
to the Collaborative Development and Marketing Agreement, dated August 30, 2001,
by and between ZGI and Serono (the "Agreement")
MATERIALS TO BE TRANSFERRED BY ZGI TO SERONO
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