EXHIBIT 10.4
TO
ICOS CORPORATION'S
FORM 10-Q
FOR THE QUARTER ENDED
SEPTEMBER 30, 1998
"[ * ]" = omitted, confidential material, which material has been
separately filed with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
EXHIBIT 10.4
RESEARCH AND DEVELOPMENT SERVICE AGREEMENT
BETWEEN
LILLY ICOS LLC
AND
ICOS CORPORATION
AND
▇▇▇ ▇▇▇▇▇ AND COMPANY
EFFECTIVE SEPTEMBER 30, 1998
RESEARCH AND DEVELOPMENT SERVICE AGREEMENT
THIS RESEARCH AND DEVELOPMENT SERVICE AGREEMENT ("AGREEMENT") is entered
into as of the 30th day of September ("EFFECTIVE DATE") between ▇▇▇ ▇▇▇▇▇ AND
COMPANY, a corporation incorporated under the laws of Indiana ("LILLY");
ICOS Corporation, a corporation incorporated under the laws of Delaware
("ICOS");
AND
Lilly ICOS LLC, a limited liability company organized under the laws of
Delaware ("COMPANY").
RECITALS
WHEREAS, the Company desires to have a project conducted on its behalf to
research and develop PDE5 Products for the [ * ] as contemplated under this
Agreement; and
WHEREAS, the Company is interested in having Lilly and ICOS perform the
Project by providing services in connection with the research and development of
PDE5 Products; and
WHEREAS, the Company, ICOS and Lilly believe that each party can bring
significant and complementary strengths to the Project and wish to proceed in
accordance with the terms of the following Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter recited, the parties agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, each of the following terms shall have the
meanings as set forth below:
1.1 "[ * ]" OR "API" shall mean [ * ].
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1.2 "AFFILIATE" shall have the meaning as set forth in the LLC Agreement,
except the parties shall not be deemed to be Affiliates of each other.
1.3 "ANNUAL PROJECT OPERATIONAL PLAN" shall have the meaning as set forth
in Section 3.4(b) of this Agreement.
1.4 "BACKGROUND TECHNOLOGY" shall have the meaning as set forth in the
PDE5 License Agreement. For purposes of this Section 1.4 of this Agreement,
"PDE5 License Agreement" means the PDE5 License Agreement to be entered into
between the Company and ICOS as of the date even herewith that is attached as
Exhibit B to the LLC Agreement.
1.5 "CALENDAR QUARTER" shall mean the three (3) month period ending on
March 31, June 30, September 30, or December 31.
1.6 "CALENDAR YEAR" shall mean the twelve month period ending on December
31.
1.7 "COMPANY TECHNOLOGY" SHALL mean: (a) Background Technology and (b)
any technology (including, without limitation, any Patents, Patent Applications,
trade secrets, know-how or other information) owned or controlled by the Company
and its Affiliates, with right to license (or sublicense) including, without
limitation, ICOS Enabling Technology, Lilly Enabling Technology and PDE5 Project
Inventions.
1.8 "DILIGENT EFFORTS" shall mean at least that degree of effort that is
consistent with that effort used by ICOS and Lilly in developing and
commercializing its respective other products in countries of similar commercial
potential and at similar stages of development. For avoidance of any doubt,
Diligent Efforts, as used in this Agreement, shall not be construed to require
either ICOS or Lilly to assign, license or otherwise transfer intellectual
property to the Company.
1.9 "EFFECTIVE DATE" shall mean the date indicated at the beginning of
this Agreement.
1.10 "FIELD" shall mean [ * ].
1.11 "FTE" means a full-time equivalent person Calendar Year (or [ * ]
/Calendar Year or [ * ]/Calendar Quarter or 12 months/Calendar Year) within
each party's respective research and development organizations of Project
Services carried out by the employees of the parties (specifically excluding
Project Services carried out by Third Parties including, without limitation,
Project Services carried out by consultants, outside contractors, and temporary
employees). The FTE rate for Project
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Services carried out under this Agreement during 1998 and 1999 Calendar Years
shall be [ * ]. FTE Rate is calculated using the methodology described in
SCHEDULE 1.11 of this Agreement.
Commencing on the first Calendar Quarter of 1999 and for each Calendar Year
thereafter, the FTE rate will be validated and adjusted (if appropriate) for the
next Calendar Year immediately following the Calendar Quarter in which the
validation occurred. Such FTE rate will be validated by [ * ]. The FTE rate
for the Calendar Year immediately following the Calendar Quarter in which the
validation occurred shall be adjusted to [ * ].
1.12 "IC351" shall mean the PDE5 Agent, commonly referred to by ICOS as
IC351.
1.13 "ICOS ENABLING TECHNOLOGY" shall mean: (a) any Patent or Patent
Application, trade secret, know-how or other information that is necessary or
useful to use, make, have made, sell, offer for sale, and import an API, PDE5
Agent or PDE5 Product that ICOS, in its sole discretion, elects in writing to
include within the scope of the Project and that is owned or controlled by ICOS
or its Affiliates, with right to license (or sublicense); and (b) any Patent,
Patent Application, trade secret, know-how or other information that: (i) is
owned or controlled by ICOS or its Affiliates, with right to license (or
sublicense); (ii) was developed or discovered outside the Project or not
included in PDE5 Project Inventions; (iii) was, in rendering Project Services,
incorporated in the development of an API, PDE5 Agent or PDE5 Product,
including, without limitation, their use or method of manufacture; and (iv)
covers or relates to the composition, use or method of making an API, PDE5
Agents or PDE5 Product. ICOS Enabling Technology does not include Background
Technology.
1.14 "JOINT INVENTIONS" shall mean: inventions that arose from the Project
Services and as to which one or more employees from both ICOS and Lilly (or any
of their Affiliates) would be inventors under the patent laws of the United
States.
1.15 "LILLY ENABLING TECHNOLOGY" shall mean: (a) any Patent, Patent
Application, trade secret, know-how or other information that is necessary or
useful to use, make, have made, sell, offer for sale, and import an API, PDE5
Agent or PDE5 Product that Lilly, in its sole discretion, elects in writing to
include within the scope of the Project and that is owned or controlled by Lilly
or its Affiliates, with right to license (or sublicense); and (b) any Patent,
Patent Application, trade secret, know-how or other information that: (i) is
owned or controlled by Lilly or its Affiliates, with right to license (or
sublicense); (ii) was developed or discovered outside the Project or not
included in PDE5 Project Inventions; (iii) was, in rendering Project Services,
incorporated in the
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development of an API, PDE5 Agent or PDE5 Product, including, without
limitation, their use or method of manufacture and (iv) covers or relates to the
composition, use or method of making an API, PDE5 Agents or PDE5 Product.
1.16 "LLC AGREEMENT" shall mean the Limited Liability Company Agreement of
Lilly ICOS LLC entered into by and between ICOS and Lilly of even date herewith.
1.17 "MANUFACTURING PLAN" shall mean the plan that details the overall
manufacturing plan, which shall address fully, consistent with the terms of this
Agreement, the key elements reasonably necessary for the clinical and commercial
manufacture and control (including, without limitation, analytical methods for
raw materials and component release, in process control, release and stability
testing) of the API and the PDE5 Product and the Project Services related
thereto reasonably necessary to achieve the goals of the Project including,
without limitation, Project Services reasonably necessary to ensure the [ * ].
Except as the Company may otherwise determine, in developing a Manufacturing
Plan the Product Team shall consider, without limitation, establishing
procedures and assigning responsibilities reasonably necessary to address the
items set forth in the [ * ] attached hereto as SCHEDULE 1.17.
1.18 "PATENT" shall mean (a) Letters Patent and utility models, including,
without limitation, any extension, continuations, divisionals, continuation-in-
part, registration, confirmation, reissue, re-examination, Supplementary
Protection Certificate or renewal thereof, and any and all foreign equivalents
thereof and (b) any rights that are granted by a Patent granting authority
thereunder.
1.19 "PATENT APPLICATION" shall mean an application for Patent.
1.20 " PDE5" shall mean the [ * ] phosphodiesterase.
1.21 "PDE5 AGENT" means [ * ].
1.22 "PDE5 PRODUCT" shall mean [ * ].
1.23 "PDE5 PROJECT INVENTIONS" shall have the meaning set forth in Section
7.1.
1.24 "PRODUCT TEAM" shall mean the team consisting of ICOS and Lilly
personnel assigned by ICOS and Lilly to carry out the Project. The Product Team
Leader is a member of the Product Team.
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1.25 "PRODUCT TEAM LEADER" shall mean such person mutually designated by
ICOS and Lilly as the Product Team Leader. The Product Team Leader shall be
responsible for, among other things, coordinating the activities of the Product
Team.
1.26 "PRODUCT TEAM LIFECYCLE PLAN" shall have the meaning set forth in
Section 3.4(a) of this Agreement.
1.27 "PROJECT" shall mean the collaborative research, development and
other efforts to be conducted by ▇▇▇▇ and Lilly, for and on behalf of the
Company, as contemplated under this Agreement.
1.28 "PROJECT GUIDELINES" shall mean, as the case may be, either:
(a) The then-current (i) Product Team Lifecycle Plan (as approved by
the Company), (ii) Annual Project Operational Plan (as approved by the Company);
(iii) the terms set forth under this Agreement; and (iv) other guidelines and
policies as may be established by the Company from time to time; or
--
(b) In connection with the first [ * ] following the Effective Date
and only to the extent a Product Team Lifecycle Plan and Annual Project
Operational Plan has not been approved by the Company the (i) [ * ] Plan; (ii)
the terms set forth under this Agreement; and (iii) other guidelines and
policies as may be established by the Company from time to time.
1.29 "PROJECT SERVICES" the services rendered and to be rendered by ICOS
and Lilly for and on behalf of the Company pursuant to this Agreement that are
reasonably necessary to carry out the Project.
1.30 "QUARTERLY PROJECT REPORT" shall have the meaning set forth in
Section 3.4(d) of this Agreement.
1.31 "REGULATORY APPROVAL" shall mean all authorizations by the
appropriate governmental entity or entities necessary for commercial sale of
PDE5 Product including, without limitation, approval of labeling, price,
reimbursement and manufacturing.
1.32 "REGULATORY PLAN" shall mean that plan that details the overall
regulatory plan of the Company which shall address fully, consistent with the
terms of this Agreement, the key elements of achieving the goals of the Project
as such goals relate to obtaining Regulatory Approval for PDE5 Product and
compliance with relevant regulatory requirements. The Regulatory Plan will
include, without limitation, regulatory agency filing responsibilities and
procedures, ownership of regulatory submissions, regulatory agency
communication, formulary and marketing approval strategy and
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adverse event reporting. Except as the Company may otherwise determine, the
proposed Regulatory Plan will be prepared by the Product Team for Company
approval and will be consistent with the guidelines set forth in the [ * ]
attached hereto as SCHEDULE 1.32.
1.33 "RESEARCH PLAN" shall mean that plan that details the overall
Research Program, which shall address fully, consistent with the terms of this
Agreement, the key elements reasonably necessary for achieving the goals of the
Research Program. The parties hereby agree that part of the Research Program
may include, without limitation, [ * ].
1.34 "RESEARCH PROGRAM" means the program described in subsection (b) of
Article 2 of this Agreement.
1.35 "THIRD PARTY" shall mean any party that is not a party or Affiliate
of any party to this Agreement.
ARTICLE 2
PROJECT CHARTER AND SCOPE
Consistent with the terms described herein, the Company wishes to engage
ICOS and Lilly to provide Project Services for and on behalf of the Company, and
ICOS and Lilly agree to collaborate in rendering such Project Services to
Company. ICOS and Lilly shall use Diligent Efforts in carrying out Project
Services and shall cooperate with each other on matters related thereto. As
more fully described in this Agreement, ICOS and Lilly shall carry out Project
Services through the Product Team in accordance with the Project Guidelines.
The immediate goals of the Project shall be as follows:
[ * ].
ARTICLE 3
PROJECT SERVICES
3.1 GOVERNING AUTHORITY OF PROJECT. The Project shall be conducted by the
Product Team. The Project Services provided by the Product Team to the Company
will be carried out in accordance with the Project Guidelines. The parties
recognize that the Product Team may engage Third Parties to provide services
with respect to certain aspects of the Project Services provided that such
engagement of Third Parties is in accordance with the Project Guidelines.
Notwithstanding anything to the contrary in this Agreement, the Company
shall be the ultimate authority with respect to all matters and activities under
this Agreement and, therefore, to the extent it deems appropriate it may at any
time accept, reject or modify
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any proposal of the Product Team for providing Project Services as well as,
without limitation, discontinue the Project, disband or redirect the Product
Team or terminate this Agreement.
All Project Services shall be carried out in compliance with any applicable
laws including, without limitation, federal, state, or local laws, regulations,
or guidelines governing the work at the site where such work is being conducted.
In the event any party receives notice of an inspection or notification by a
governmental entity, including the FDA, relating to the Project, the party
receiving such inspection or notification will notify the other parties as soon
as possible but in no event later than twenty-four (24) hours after the receipt
of such notice or notification is received, and provide to such other parties,
within seventy-two (72) hours, copies of all documents and other correspondence
and notifications, as such other parties may request. The parties each agree to
cooperate with each other during any inspection, investigation or other inquiry
by the FDA or any other governmental entity, including providing information
and/or documentation, as requested by the FDA or other governmental entity, or
any of the parties to this Agreement. The parties each also agree to discuss
any response to observations or notifications received and to give the other
parties an opportunity to comment on any proposed response before it is made.
In the event of disagreement concerning the form or content of such response,
however, the Company will be responsible for deciding the appropriate form and
content of any response with respect to the PDE5 Product ("Regulatory
Response"). Each party agrees to conform its respective activities, with
respect to the PDE5 Product, only to any commitments made by such party in a
Regulatory Response.
3.2 PRODUCT TEAM. The Product Team shall consist of such number of Lilly
and ICOS personnel as such parties reasonably deem necessary to carry out the
Project Services in accordance with the Project Guidelines. One member of the
Product Team shall be designated by ICOS and Lilly as the Product Team Leader.
ICOS and Lilly will have reasonable access on an informal basis to the other's
personnel assigned to the Product Team. The parties acknowledge that
maintaining the continuity of certain functional members on the Product Team
(including the Product Team Leader) is of key importance to the success of the
Project and, therefore, ICOS and Lilly agree that each will, to the extent
practicable, make good faith efforts to minimize changes to Product Team
membership under circumstances where such continuity loss would likely have an
adverse impact on the Project.
3.3 MEETINGS AND DECISIONS OF THE PRODUCT TEAM. Except as Company may
otherwise determine, the Product Team shall meet (including meeting by
teleconference) at least on a monthly basis to discuss the status of the Project
and matters related thereto. Decisions of the Product Team shall be made by
consensus regarding matters related to Project Services including, without
limitation, matters such as which party (ICOS, Lilly or a Third Party) should
carry out a particular Project Service as contemplated under this
Research and Development Service Agreement - Confidential - Page 7
Agreement. If the Product Team fails to agree on a particular matter, such
matter shall be referred to the Company for resolution.
3.4 PLANS & REPORTS. Except with respect to the [ * ] Plan as described
below in this Section 3.4(c), the Product Team shall prepare the following plans
and reports:
(a) PRODUCT TEAM LIFECYCLE PLAN. The Product Team shall prepare
[ * ] an overall Product Team Lifecycle plan (the "PRODUCT TEAM LIFECYCLE
PLAN"). The Product Team Lifecycle Plan will provide the Product Team with
[ * ]. The Product Team Lifecycle Plan (as amended) shall not become effective
until such plan is [ * ]. Except as [ * ] may otherwise determine, the
initial Product Team Lifecycle Plan shall be prepared for [ * ]. Attached
hereto as SCHEDULE 3.4(A) is [ * ].
(b) ANNUAL PROJECT OPERATIONAL PLAN. Except as otherwise provided in
this Section 3.4(b) or [ * ] may otherwise require, the Product Team will
annually prepare and submit for approval [ * ] an annual operational plan
consistent with the then-current Product Team Lifecycle Plan no later than
[ * ] for each subsequent Calendar Year that immediately precedes the Calendar
Year at issue. The Annual Project Operational Plan shall include, without
limitation, [ * ]. The initial Annual Project Operational Plan shall be
prepared for Company approval [ * ]. The first Annual Operational Project Plan
shall cover the period commencing as of the Effective Date and expire on
December 31, 1999, thereafter, each Annual Project Operational Plan shall only
pertain to the Calendar Year at issue.
(c) [ * ] PLAN. The Project Services conducted by the Product
Team hereunder for [ * ] following the Effective Date shall be carried out in
accordance with the plan entitled [ * ] that has been mutually agreed to and
exchanged between ICOS and Lilly concurrent with the execution of this
Agreement.
(d) QUARTERLY REPORTS. The Product Team will provide to the Company a
quarterly status report of Project Services provided to the Company for a
particular Calendar Quarter (the "Quarterly Project Report"). The Quarterly
Project Report shall include, without limitation, the progress to date and any
other matters that the Company may deem appropriate
(e) MONTHLY STATUS REPORTS. The Product Team, on a monthly basis,
will prepare a report for the Company generally summarizing the status of the
Project including, without limitation, important events, personnel changes,
learning points and other matters that the Product Team may deem appropriate
that occurred during the month at issue (the "Monthly Status Report").
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3.5 NO DEBARMENT. Each party represents and warrants to the other that
it will comply at all times with the provisions of the Generic Drug Enforcement
Act of 1992 and will upon request each party will certify in writing to the
other parties that neither such party, its employees, nor any person providing
services on behalf of such party in connection with the Project Services
contemplated by this Agreement has been debarred under the provisions of such
Act.
ARTICLE 4
PROJECT SERVICE FUNDING
4.1 FTE FUNDING, REIMBURSEMENT OF THIRD PARTY EXPENSES.
(a) FTE FUNDING. For Project Services rendered in accordance with
Project Guidelines after the Effective Date, Company agrees to pay ICOS and
Lilly, as applicable, under this Agreement. Except as otherwise provided for in
this Article 4, payment by Company for Project Services hereunder shall be based
on the FTE rate set forth in Section 1.10 of this Agreement.
(b) REIMBURSEMENT OF THIRD PARTY COSTS. In the event that Third
Parties are utilized with respect to the Project, Company shall only reimburse
----
[ * ].
Except as set forth in this Section 4.1(b) or to the extent Third Party
costs are used in determining the FTE rate, ICOS and Lilly shall not be entitled
to any compensation or reimbursement with respect to Third Party cost incurred
in connection with Project Services rendered hereunder. Notwithstanding the
foregoing, the parties hereby acknowledge that to the extent that Third Party
costs are included in determining the FTE rate under this Agreement, such Third
Party cost shall not be reimbursable under this Section 4.1(b) of this
Agreement.
4.2 QUARTERLY REPORT/INVOICE. Within [ * ] following the end of each
Calendar Quarter, ICOS and Lilly each shall prepare a report ("Invoice")
detailing any Third Party costs incurred, together with the [ * ] during such
Calendar Quarter. Within [ * ] following the end of each Calendar Quarter,
ICOS and Lilly each will forward its Invoice to the Company with a copy to the
other party for review and approval by a designated representative of each
party. If an objection by a party with respect to an Invoice is not raised
within [ * ] of receipt thereof, such Invoice will be deemed approved (such
approval shall not be construed as a waiver of any audit or other rights related
thereto). Once approved as described above in this Section 4.2, each invoice
will be submitted to the Company for payment in accordance with the terms set
forth in Section 4.3 of this Agreement. If necessary, adjustments or corrections
to an invoice as agreed to by both ICOS and Lilly will be made to the Invoice
before it is submitted for payment. Otherwise adjustments will be made in the
subsequent Invoice. Company, or its
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representatives, shall have the right to audit both ICOS and Lilly records with
respect to such reports, in accordance with Section 5.2 of this Agreement.
4.3 PROJECT PAYMENTS. Company shall make the payments due under this
Article 4 on a quarterly basis due to ICOS and Lilly, net fifteen (15) days
after approval (including a deemed approval as described above in Section 4.2)
of an Invoice as described in Section 4.2 of the Agreement.
4.4 CAPITAL EXPENDITURES FOR PROJECT PURPOSES. ICOS and Lilly each shall
be [ * ]. Any deviation from this Section 4.4 shall be approved in writing by
the Company.
4.5 SUBCONTRACTING PERMITTED. The Company acknowledges and agrees that
portions of the work involved in the Project may be performed on behalf of
Company by Third Parties hired by ICOS or Lilly, provided that for any
significant subcontract Company shall have previously approved the hiring of a
Third Party to handle such matter and also the cost associated thereto (such
approval may occur in the Annual Project Operational Plan). Moreover, in
connection with Third Party subcontractors, ICOS or Lilly, as applicable, shall
first, prior to engaging a Third Party to perform Project Services, have
obtained written confidentiality agreements with the subcontractors and written
assignments of all patent rights and know-how that such subcontractors may
develop by reason of work performed under this Agreement. Finally, except as the
Company may otherwise determine, in connection with Third Party subcontractors,
such subcontractors, as applicable based on the services to be performed by such
subcontractor, shall be required to conduct services for Project purposes in
accordance with current Good Manufacturing Practices ("cGMP"), current Good
Laboratory Practices ("cGMP") and current Good Clinical Practices ("cGCP"). In
reimbursing ICOS and Lilly, as applicable for the costs associated with such
Third Parties' work, ICOS and Lilly shall provide Company with all reasonable
documentation of such costs as may be required by Company.
ARTICLE 5
RECORD-KEEPING AND AUDITS
5.1 RECORDS KEEPING. Each Party shall record, to the extent practical,
all information relating to the Project in written form. To the extent
practical, such written records shall be kept separately from written records
documenting other research and development of such party. All such written
records of each party shall be maintained in a form sufficient to satisfy
regulatory authorities. Each party shall require its employees and consultants
to disclose any inventions relating to the Project in writing promptly after
conception. Furthermore, the parties, as applicable, shall keep complete and
accurate
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records pertaining to the Project Services rendered by such party in sufficient
detail to permit the other parties to confirm such Project Services.
Except as the Company may otherwise require, records shall be maintained
for the following periods:
(a) ACCURACY OF BILLING. For those records maintained for the sole
purpose of verifying the accuracy of any payment due hereunder, such records
shall be maintained for a [ * ] period following the Calendar Year in which
any such Project Services were rendered hereunder.
(b) R&D RECORDS. For all records pertaining to information regarding
research and development conducted hereunder such records shall be maintained
for the later of either: (i) a [ * ] period following the Calendar Year in
which any such research and development efforts were made hereunder; or (ii)
such other period as is necessary to comply with applicable regulatory
requirements. Neither party will destroy or otherwise dispose of records as
described under this Section 5.1(b) without the written consent of the other
parties, such consent not to be unreasonably withheld.
(c) REGULATORY FILINGS. For those records pertaining to regulatory
filing and other regulatory commitments (e.g. manufacturing tickets,
manufacturing procedures, etc.) such records shall be maintained for the later
of either: (i) such period as is mutually agreed upon between the parties in
writing; or (ii) such other period as is necessary to comply with applicable
regulatory requirements. Neither party will destroy or otherwise dispose of
records as described under this Section 5.1(c) without the written consent of
the other parties, such consent not to be unreasonably withheld.
5.2 GENERAL AUDIT REQUEST. Each of the parties shall have the right to
request an audit of such records (to the extent relevant to the issue at hand),
at its own expense and on an annual basis, to determine, with respect to any of
the [ * ], the correctness of any report or payment made under this Agreement.
If a party desires to audit such records, it shall utilize the independent,
certified public accountant of the audited party, to examine such records. Such
accountant shall be instructed to provide the party desiring the audit a report
on the findings of the agreed upon procedures which verifies any previous report
made or payment submitted by the audited party during such period. The expense
of such audit shall be borne by the auditing party; provided, however, that if
an error in favor of the auditing party of more than [ * ] is discovered, then
such expenses shall be paid by the audited party. Any information received by a
Party pursuant to this Section 5.2 shall be deemed to be confidential
information hereunder.
Upon the expiration of [ * ] following the end of any calendar year, the
audit right hereunder shall expire with respect to such Calendar Year and the
calculation of
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amounts payable with respect to such Calendar Year shall be binding and
conclusive upon both parties and each party shall be released from any liability
or accountability with respect to payments for such Calendar Year.
5.3 QUALITY ASSURANCE AUDIT REQUEST. Except as the parties may otherwise
agree in writing, ICOS and Lilly shall each have the right to conduct reasonable
quality assurance audits with respect to all facilities, operations and
laboratories where Project Services are conducted and to verify their
conformance with applicable cGMP, cGLP, cGCP and other regulatory requirements.
Such audits shall only be conducted upon reasonable notice during reasonable
business hours.
5.4 SURVIVAL. This Article 5 shall survive any termination of this
Agreement for a period of [ * ].
ARTICLE 6
LICENSES
6.1 RESEARCH LICENSE FROM COMPANY TO ICOS. Company hereby grants to ICOS
[ * ] license under Company Technology but only to the extent useful or
--------
necessary to fulfill Project Service obligations under this Agreement.
6.2 RESEARCH LICENSE FROM COMPANY TO LILLY. Company hereby grants to
Lilly [ * ] license under Company Technology but only to the extent useful or
--------
necessary to fulfill Project Service obligations under this Agreement. This
license as set forth in this Section 6.2 of this Agreement shall not be
construed to limit the license agreement of even date herewith by and between
Company and Lilly.
6.3 OTHER LICENSE FROM COMPANY TO ICOS. Company hereby grants to ICOS
[ * ] license, with right to sublicense, to use PDE5 Project Inventions to
make, have made, use, sell, offer for sale and import products that are not, or
do not incorporate, an [ * ].
6.4 OTHER LICENSE FROM COMPANY TO LILLY. Company hereby grants to Lilly a
[ * ] license, with right to sublicense, to use PDE5 Project Inventions to
make, have made, use, sell, offer for sale and import products that are not, or
do not incorporate, an [ * ].
6.5 LICENSE FROM ICOS TO COMPANY. ICOS hereby grants Company [ * ]
license, with right to sublicense, under ICOS Enabling Technology to use, make,
have made, sell, offer for sale and import API, PDE5 Agents, and PDE5 Products.
This license as set forth in this Section 6.5 of this Agreement shall not be
construed to limit the license agreement of even date herewith by and between
ICOS and Company.
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6.6 LICENSE FROM LILLY TO COMPANY. Lilly hereby grants Company a [ * ]
license, with right to sublicense, under Lilly Enabling Technology to use,
make, have made, sell, offer for sale and import [ * ].
ARTICLE 7
INTELLECTUAL PROPERTY
7.1 OWNERSHIP OF INVENTIONS. All data, inventions and discoveries
(including, without limitation, any Patents, Patent Applications, trade secrets,
know-how or other information) acquired or developed solely or jointly by
employee(s) or agents of ICOS, Lilly or their Affiliates in the course of
rendering Project Services that [ * ] shall be referred to as "PDE5 Project
Inventions") shall be the property of the Company. Each party hereby assigns to
the Company any PDE5 Project Inventions and shall cooperate with each other in
pursuing intellectual property protection, including Patents, relating to PDE5
Project Inventions, and in executing and delivering any additional instruments
required to assign, convey or transfer to the Company its interest in PDE5
Project Inventions.
7.2 PATENT FILINGS INVOLVING PDE5 PROJECT INVENTIONS AND OTHER INVENTIONS
OWNED BY COMPANY. In accordance with the Project Guidelines and direction of
the Company, the Product Team shall establish, in conjunction with appropriate
legal advice, an overall strategy for filing and prosecuting Patent Applications
for Patents and otherwise protecting intellectual property of the Company,
including, without limitation, an appropriate publication strategy as more fully
described in Article 8 of this Agreement, together with addressing other
pertinent matters that will maximize patent protection for the API, PDE5 Agents
and PDE5 Product.
Unless the patent strategy established by the Product Team and approved by
the Company provides otherwise or the Company may otherwise determine, the
Company, through the Product Team, will prepare, file, prosecute, maintain and
defend Patents and Patent Applications covering PDE5 Project Inventions and
other Patents and Patent Applications owned or controlled by Company. The
Product Team will endeavor to ensure that Patent Applications are filed before
any public disclosure by any party in order to maintain the validity of Patent
Applications filed outside of the United States. In the event that either ICOS
or Lilly prepare, file, prosecute and/or maintain a particular Patent
Application for PDE5 Project Inventions(s) or for other inventions owned or
controlled by Company, at least [ * ] prior to the contemplated filing date,
such filing party shall submit to the Product Team a substantially completed
draft of such Patent Application and will, in good faith, take into account,
with appropriate advice of legal counsel, the Product Team's suggestions
regarding such draft. The Product Team will copy ICOS and Lilly with any
official actions and submissions in such Patents and Patent
* Confidential Treatment Requested
Research and Development Service Agreement - Confidential - Page 13
Applications. The Company shall [ * ] under this Section 7.2 for PDE5 Project
Inventions and other inventions owned or controlled by Company.
Unless the Company determines otherwise, should the Company elect not to
file, prosecute, maintain or issue any Patent Application, or maintain a Patent
issuing from any such Patent Application, for PDE5 Project Inventions or any
other Patent that it may own or control with the right to license (or
sublicense) in any particular country, the Company will so notify ICOS and Lilly
of its intentions (the "Discontinuance Notice"). Under such circumstances ICOS
and Lilly (either individually or jointly, as the case may be) shall upon
providing written notice to the Company of its intention to continue to file,
prosecute, maintain or issue any such Patent or Patent Application within
[ * ] of receipt of the Discontinuance Notice, obtain the right to file,
prosecute, maintain or issue any such Patent or Patent Application at its own
expense and the Company shall grant to ICOS or Lilly (either individually or
jointly, as the case may be) any necessary authority to file, prosecute, issue
and maintain such Patent Application or maintain such Patent in the name of ICOS
or Lilly (either individually or jointly, as the case may be). If ICOS and/or
Lilly (either individually or jointly, as the case may be) elect to file,
prosecute, maintain or issue any such Patent or Patent Application at its own
expense, the Company shall assign such Patent or Patent Application to ICOS
and/or Lilly and such Patent or Patent Application shall [ * ]
notwithstanding any license agreement to the contrary. In the event that either
ICOS or Lilly is assigned various rights as described in this Section 7.2, such
assignee party shall grant the Company [ * ] license, [ * ], to practice any
and all rights so assigned to use, make, have made, sell, offer for sale and
import API, PDE5 Agents and PDE5 Products.
7.3 [ * ].
7.4 NOTICE OF CERTIFICATION. Each party hereto shall immediately give
notice to the other parties of any certification filed under the U.S. "Drug
Price Competition and Patent Term Restoration Act of 1984" claiming that a
Company Patent is invalid or that any infringement will not arise from the
manufacture, use, import, offer for sale or sale of any product by a Third
Party. [ * ]. For this purpose, the Company shall execute such legal papers
necessary for the prosecution of such suit as may be reasonably requested by the
party bringing suit.
ARTICLE 8
PUBLICATIONS
A publication strategy involving Public Disclosures (as defined below) will
be developed by the Product Team. Publications whether written or oral
including, without limitation, abstracts, posters and manuscripts covering or
involving information generated
* Confidential Treatment Requested
Research and Development Service Agreement - Confidential - Page 14
within the scope of the Project (collectively, the "Public Disclosures") must be
submitted for and obtain the approval of the Product Team, or designee thereof,
prior to external dissemination of any Public Disclosures. The Product Team or
its designee shall review each such proposed publication in order to avoid the
unauthorized disclosure of a party's or Company's confidential information and
to preserve the patentability of inventions and data package exclusivity arising
from the research and development performed in the course of the Agreement, as
well as to ensure compliance with the Company's publications strategy.
ARTICLE 9
TERM AND TERMINATION OF AGREEMENT
9.1 TERM. This Agreement shall become effective on the Effective Date
and shall continue in effect until the Company is dissolved or this Agreement is
terminated earlier as described hereunder or by mutual written agreement of the
parties.
9.2 TERMINATION FOR MATERIAL BREACH. In the event that either ICOS or
Lilly are in material breach of this Agreement, Company shall have the right to
terminate this Agreement after [ * ] written notice to ICOS and Lilly
(collectively or individually, as the case may be, "Breaching Party") unless the
Breaching Party cures the breach before the expiration of such period of time.
Such notice shall set forth in reasonable detail the specifics of the breach.
Similarly, in the event that the Company is in material breach of this
Agreement, the party whom the breach has been committed against (either ICOS or
Lilly) shall have the right to terminate this Agreement after [ * ] written
notice to Company (with a copy to the other party to this Agreement) unless the
Company cures the breach before the expiration of such period of time. Such
notice shall set forth in reasonable detail the specifics of the breach.
9.3 VOLUNTARY TERMINATION BY COMPANY. The Company may terminate this
Agreement for any reason at any time during the term of this Agreement and such
termination shall be effective on [ * ] written notice to each party. During
such [ * ], each party shall appropriately commence wind down efforts
including reasonable termination of its efforts under the Project and Company
shall be responsible for costs incurred under the Project for such period; but
only to the extent that such costs are unavoidable costs and expenditures,
including necessary expenses associated with personnel, non-cancelable
commitments and cash outlays in connection with the Project that cannot be
avoided, including, without limitation, all equipment ordered therefor which is
non-cancelable or non-returnable, even if such costs and expenditures are paid
* Confidential Treatment Requested
Research and Development Service Agreement - Confidential - Page 15
after such [ * ] period provided such costs and expenses arise out of
commitments incurred prior to termination.
9.4 TERMINATION UPON INSOLVENCY. This Agreement may be terminated by a
party hereto upon notice to the other parties should a party:
(a) become insolvent; or
(b) file a petition under any bankruptcy or insolvency law or have
any such petition filed against it which has not been stayed within [ * ] of
such filing.
9.5 LLC MEMBERSHIP CHANGE. Except under circumstances that are described
in Section 13.4 of the LLC Agreement (which shall be handled in accordance with
the provisions thereunder), Lilly shall have the right, but not the obligation,
to terminate this Agreement if either Lilly or ICOS ceases to be a Member (as
defined in Section 1.1 of the LLC Agreement) of the Company. Similarly, except
under circumstances that are described in Section 13.4 of the LLC Agreement
(which shall be handled in accordance with the provisions thereunder), ICOS
shall have the right, but not the obligation, to terminate this Agreement if
either ICOS or Lilly ceases to be a Member of the Company. Termination under
this Section 9.5 shall be effective upon [ * ] written notice from the party
that desires to exercise such termination right to the other parties.
9.6 SURVIVAL. Termination of the Agreement shall not affect any accrued
rights of either party or obligations of the parties or the provisions. of
Sections 6.3, 6.4, 6.5, 6.6, 11.12 and the last sentence of Section 7.2 and
Articles 5 and 10 of this Agreement.
ARTICLE 10
GOVERNING LAW
The Agreement shall be governed by the laws of the State of Delaware,
without regard to Delaware choice of law provisions.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail addressed to the signatory to whom such notice is required or permitted to
be given and transmitted by facsimile to the number indicated below. All
notices shall be deemed to have been given when mailed as evidenced by the
postmark at the point of mailing or a confirmed facsimile transmission.
* Confidential Treatment Requested
Research and Development Service Agreement - Confidential - Page 16
All notices to Lilly shall be addressed to Lilly as follows:
▇▇▇ ▇▇▇▇▇ and Company
Lilly Corporate Center
Indianapolis, IN 46285
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices to Company shall be addressed as follows:
Lilly ICOS LLC
c/o ▇▇▇ ▇▇▇▇▇ and Company
Lilly Corporate Center
Indianapolis, IN 46285
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and:
Lilly ICOS LLC
c/o ICOS Corporation
▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
Bothell, Washington 98021
Attention: Legal Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Coie LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices to ICOS shall be addressed as follows:
ICOS Corporation
▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
Bothell, Washington 98021
Attention: Legal Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by written notice to the others, designate a new address or fax
number to which notices to the party giving the notice shall thereafter be
mailed or faxed.
Research and Development Service Agreement - Confidential - Page 17
11.2 ENTIRETY OF AGREEMENT. This Agreement, and its schedules sets forth
the entire agreement and understanding of the parties relating to the subject
matter contained herein and merges all prior discussions and agreements between
them. No party shall be bound by any representation other than as expressly
stated in this Agreement, or by a written amendment to this Agreement signed by
authorized representatives of both parties.
11.3 NON-WAIVER. The failure of a party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment, to any extent,
of the right to assert or rely upon any such terms or conditions on any future
occasion.
11.4 DISCLAIMER OF AGENCY. This Agreement shall not constitute any party
the legal representative or agent of another, nor shall any party have the right
or authority to assume, create, or incur any Third Party liability or obligation
of any kind, express or implied, against or in the name of or on behalf of
another except as expressly set forth in this Agreement. Therefore, it is
understood and agreed that ICOS and Lilly shall have the status of an
independent contractor under this Agreement and that nothing in this Agreement
shall be construed as authorization for any party hereunder to act as agent for
the other.
11.5 SEVERABILITY. In the event any term of this Agreement is or becomes
or is declared to be invalid or void by any court of competent jurisdiction,
such term or terms shall be null and void and shall be deemed deleted from this
Agreement, and all the remaining terms of the Agreement shall remain in full
force and effect.
11.6 ASSIGNMENT. Except as otherwise provided herein, neither this
Agreement nor any interest hereunder shall be assignable by any party without
the prior written consent of the other (which consent shall not be unreasonably
withheld); provided, however, that either Party may assign this Agreement to any
wholly-owned subsidiary or to any successor by merger or sale of substantially
all of its business unit to which this Agreement relates in a manner such that
the assignor (if it continues as a separate entity) shall remain liable and
responsible for the performance and observance of all its duties and obligations
hereunder. This Agreement shall be binding upon the successors and permitted
assignees of the parties and the name of a party appearing herein shall be
deemed to include the names of such party's successor's and permitted assigns to
the extent necessary to carry out the intent of this Agreement. Any assignment
not in accordance with this Section shall be void.
11.7 HEADINGS. The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.
11.8 LIMITATION OF LIABILITY. No party shall be liable to another for
indirect, incidental, consequential or special damages, including but not
limited to lost profits,
Research and Development Service Agreement - Confidential - Page 18
arising from or relating to any breach of this Agreement, regardless of any
notice of the possibility of such damages.
11.9 INTERPRETATION This Agreement has been jointly prepared by the
parties and their respective legal counsel and shall not be strictly construed
against either party.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
11.11 COMPLIANCE WITH LAWS. Each party shall, and shall cause its
respective Affiliates to, comply in all material respects with all federal,
state, local and foreign laws, statutes, rules and regulations applicable to the
parties and their respective activities under this Agreement.
11.12 CONFIDENTIALITY. Each party hereto agrees to abide by the
confidentiality provisions of Section 2.7 of the LLC Agreement with respect to
confidential information generated under or disclosed to each other pursuant to
the Project.
[signatures on following page]
Research and Development Service Agreement - Confidential - Page 19
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
▇▇▇ ▇▇▇▇▇ AND COMPANY ICOS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------- -----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and Chief Chairman of the Board, President
Executive Officer and Chief Executive Officer
LILLY ICOS LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
On behalf of ▇▇▇ ▇▇▇▇▇ and
Company, Member
By: /s/ ▇▇▇▇▇▇ ▇/ ▇▇▇▇▇▇▇
-----------------------------
On behalf of ICOS Corporation,
Member
Research and Development Service Agreement - Confidential
SCHEDULE 1.11
TO
RESEARCH AND DEVELOPMENT SERVICE AGREEMENT BETWEEN
ICOS CORPORATION AND
▇▇▇ ▇▇▇▇▇ AND COMPANY
FTE METHODOLOGY RATE CALCULATION
____________________________________________________________
[ * ].
From time to time, Product Team will review this methodology to determine
the extent such methodology is appropriate for the then-current Project
Services.
*Confidential Treatment Requested
Attachment A to Schedule 1.11 -- Confidential
ATTACHMENT A
TO SCHEDULE 1.11
[ * ]
*Confidential Treatment Requested
Schedule 1.11 -- Confidential -- Page 2
SCHEDULE 1.17
TO
RESEARCH AND DEVELOPMENT SERVICE AGREEMENT BETWEEN
ICOS CORPORATION AND
▇▇▇ ▇▇▇▇▇ AND COMPANY
[ * ]
____________________________________________________________
Except as the Company may otherwise determine, in developing a
Manufacturing Plan the Product Team shall, without limitation, consider
establishing procedures and assigning responsibilities to address the following
items:
[ * ]
*Confidential Treatment Requested
Schedule 1.17 -- Confidential
SCHEDULE 1.27
TO
RESEARCH AND DEVELOPMENT SERVICE AGREEMENT BETWEEN
ICOS CORPORATION AND
▇▇▇ ▇▇▇▇▇ AND COMPANY
[ * ]
____________________________________________________________
Except as [ * ] may otherwise determine, the Regulatory Plan shall be
prepared in a manner consistent with the following guidelines:
[ * ]
*Confidential Treatment Requested
Schedule 1.27 -- Confidential
SCHEDULE 3.4(a)
TO
RESEARCH AND DEVELOPMENT SERVICE AGREEMENT BETWEEN
ICOS CORPORATION AND
▇▇▇ ▇▇▇▇▇ AND COMPANY
[ * ]
____________________________________________________________
[ * ]
*Confidential Treatment Requested
Schedule 1.27 -- Confidential