"Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by [***], have been
separately filed with the Commission."
GENE THERAPY COLLABORATION AND LICENSE
AGREEMENT This Agreement ("Agreement"), effective as of the 28th of June,
1996 (the "EFFECTIVE DATE"), by and among Human Genome Sciences, Inc., a
corporation organized under the laws of the State of Delaware, United States of
America, having a place of business at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, for itself and its AFFILIATES, as defined below (collectively including
such AFFILIATES "HGS"), and Schering Corporation, a corporation organized under
the laws of the State of New Jersey, United States of America, having a place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and Schering
Plough Ltd., a Swiss corporation having its principal place of business at
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, each for itself and its
AFFILIATES, as defined below (collectively including such AFFILIATES "SP").
WITNESSETH THAT:
----------------
WHEREAS HGS is in possession of certain human gene sequence information and
has the capacity and ability to rapidly obtain full or meaningful partial
▇▇▇▇▇▇▇▇ ▇▇▇▇ for expressed human genes,
WHEREAS SP is a multinational human healthcare company which has the
capacity and ability to develop practical applications in the human healthcare
field of the gene ▇▇▇▇▇▇▇▇ ▇▇▇▇ in the possession of or within the capacity and
ability of HGS to obtain.
WHEREAS HGS and SP wish to collaborate to discover human and/or animal
therapeutic products based on human genomic information for use in gene therapy.
NOW, THEREFORE, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, and otherwise to be bound by proper
and reasonable conduct, the parties agree as follows:
1. DEFINITIONS
-----------
1.1 "AFFILIATES" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with, the
specified individual or entity. For purposes of this Agreement, the direct or
indirect ownership of over fifty percent (50%) of the outstanding voting
securities of an entity, or the right to receive over fifty (50%) of the profits
or earnings of an entity shall be deemed to constitute control. Such other
relationship as in fact gives such individual or entity the power or ability to
control the management, business and affairs of an entity shall also be deemed
to constitute control.
1.2 "ANTISENSE" shall mean inhibiting or preventing in vivo expression
in a human or animal of a gene product by use of an oligonucleotide or modified
oligonucleotide which binds to RNA or DNA and prevents and/or impairs expression
of the gene product.
1.3 "DIAGNOSTICS" shall mean any product, process, substance,
composition or service intended to predict, detect or identify a disease or
determine the presence of a pathologic condition in a human.
1.4 "DISCOVERED" shall mean with respect to any product, process,
substance, composition or service, the earlier of the following events (i) the
specific disclosure of such product, process, substance, composition or service
in a patent application filed by the discovering party or (ii) the specific
disclosure of such product, process, substance, composition
2
or service by the discovering party in a written document (including, but not
limited to, laboratory notebooks) other than a filed patent application.
1.5 "EFFECTIVE DATE" shall mean June 28, 1996.
1.6 "EXCLUSIVE SP PRODUCT" means an SP PRODUCT in the FIELD as to which
SP has exercised an option under Paragraph 2.5 and been granted a license under
Paragraph 2.3.
1.7 "EXTENDED TERM" shall mean the additional period defined in
Paragraph 4.2.
1.8 "FIELD" shall mean the intervention treatment and/or prevention of
disease in humans and animals by GENE THERAPY and excluding GENE THERAPY
VACCINES, except as provided in Section 2.4(c), and shall also include ANTISENSE
for each SP PRODUCT as to which a license is granted under Paragraph 2.10. For
the avoidance of doubt, in the event an SP PRODUCT has both therapeutic and
DIAGNOSTIC use, the therapeutic use of such SP PRODUCT shall be included in the
FIELD.
1.9 "GENE" shall mean a human gene or a portion thereof or cDNA
corresponding thereto.
1.10 "GENE THERAPY" shall mean treatment or prevention of a disease, or
remedying a gene deficiency of humans or animals by genetic modification of
somatic cells (in vivo, in vitro or ex vivo) with DNA (RNA) for the purpose of
expressing a protein or oligo(poly)nucleotide encoded by said DNA (RNA) in a
human or animal.
1.11 "GENE THERAPY VACCINE" shall mean a substance that achieves a
therapeutic or prophylactic effect by inducing an antigen-specific humoral
and/or cellular immune system response by GENE THERAPY.
3
1.12 "HGS FIELD" shall mean (i) ANTISENSE and (ii) biotransformation of
a chemical to prepare pharmaceutically active agents for human or animal use, or
intermediates therefor, which active agents were DISCOVERED before the EFFECTIVE
DATE, and (iii) DIAGNOSTICS.
1.13 "INITIAL RESEARCH TERM" shall mean the term beginning on the
EFFECTIVE DATE and ending five (5) years from the EFFECTIVE DATE.
1.14 "LICENSED PATENT(S)" shall mean all patents and patent
applications to the extent that they claim LICENSED TECHNOLOGY, which are or
become owned by HGS or to which HGS otherwise has, now or in the future, the
right to grant licenses. Included within the definition of LICENSED PATENTS are
all continuations, continuations-in-part, divisions, patents of addition,
reissues, renewals, registrations, confirmations, re-examinations or extensions,
and any provisional applications thereof and all SPCs.
1.15 "LICENSED TECHNOLOGY" shall mean, the following which is provided
to SP by or on behalf of HGS: (a) ▇▇▇▇▇▇▇▇ ▇▇▇▇ with respect to human DNA (and
the corresponding clones) and expression products thereof in each case developed
by or on behalf of HGS prior to or during the INITIAL RESEARCH TERM, (b)
information on biological function of GENES developed by or on behalf of HGS
prior to the INITIAL RESEARCH TERM, (c) HGS clones, cell lines and vectors and
all information and data provided to SP pursuant to Section 5 and (d) SOFTWARE.
1.16 "MAJOR MARKET" means the United States, Canada, Germany, United
Kingdom, France, Italy or Japan.
4
1.17 "NET SALES" shall mean proceeds actually received from sales of SP
PRODUCT (calculated on a SP PRODUCT by SP PRODUCT basis) by SP or, except as
provided below, its respective licensees, distributors trading on SP's account
or joint ventures or other associated companies, less deductions for (i)
transportation, shipping and postage charges, including transportation insurance
and customs duties to the extent separately invoiced; (ii) sales and excise
taxes and duties paid or allowed by a selling party and any other governmental
charges imposed upon the production, importation, use or sale of such SP PRODUCT
(including value added taxes or other governmental charges otherwise measured by
the billing amount when included in billing); (iii) normal and customary trade,
quantity and cash discounts allowed and charge back payments and rebates granted
to managed health care organizations or to federal, state and local governments,
their agencies and purchasers and reimbursees, including but not limited to
Medicaid rebates or to trade customers, including but not limited to
wholesalers, chain and pharmacy buying groups; (iv) rebates (or equivalents
thereof) granted to or charged by national, state or local government
authorities in countries other than the United States; and (v) allowances or
credits to customers on account of rejection or return of such product or on
account of retroactive price reductions affecting such SP PRODUCT. Sales between
or among SP and its licensees, distributors trading on SP's account, or joint
ventures or other associated companies shall be included within NET SALES only
if such purchaser is an end-user of the SP PRODUCT. Otherwise, NET SALES shall
only include the subsequent, final sales to THIRD PARTIES.
1.18 "PROOF OF EFFICACY" shall mean proof of therapeutic effectiveness
in a Phase II(a) Clinical Test based on biostatistical methods, that supports a
determination to proceed
5
with expanded controlled clinical trials. "Phase II(a) Clinical Test" shall mean
a well-controlled clinical study conducted to evaluate the effectiveness of the
drug for a particular indication or indications in patients with the disease or
condition under study and to determine the common short-term side effects and
risks associated with the drug.
1.19 "RESEARCH PLAN" shall mean a plan for research and development of
an EXCLUSIVE SP PRODUCT in the FIELD which includes, at a minimum, scientific
data, research and development efforts, research and development milestones, and
is sufficient to reasonably monitor diligence of research/development of such
EXCLUSIVE SP PRODUCT. A representative example of such a plan is shown in
Appendix A.
1.20 "RESEARCH TERM" shall mean the INITIAL RESEARCH TERM and the
EXTENDED TERM, if any.
1.21 "SOFTWARE" shall mean software (together with the source code
therefor and maintenance files and "Documentation" as defined below) designed
and developed by HGS prior to or during the INITIAL RESEARCH TERM for analysis
of ▇▇▇▇▇▇▇▇ ▇▇▇▇ with respect to human DNA and expression products thereof,
including, without limitation, the specific software modules set forth in the
attached Appendix B. "Documentation" shall include all operating and user
manuals, training materials guides, listings, specifications and other material
used with the SOFTWARE.
1.22 "SP PATENT(s)" shall mean all patents and patent applications to
the extent that they claim SP TECHNOLOGY, which are or become owned by SP or to
which SP otherwise has, now or in the future, the right to grant licenses.
Included within the definition of SP PATENTS are all continuations,
continuations-in-part, divisions, patents of addition, reissues,
6
renewals, extensions, registrations, confirmations, re-examinations, and any
provisional applications and all SPCs.
1.23 "SP PRODUCT(S)" shall mean any product, process, substance,
composition or service in the FIELD which (i) is based on the use of or derived
by use of LICENSED TECHNOLOGY and/or SP TECHNOLOGY and/or (ii) is covered by a
LICENSED PATENT and/or claim of an SP PATENT which claims SP TECHNOLOGY.
Notwithstanding the previous sentence, an incidental or immaterial use of
LICENSED TECHNOLOGY and/or SP TECHNOLOGY shall not cause a product, process,
substance, composition or service to become an SP PRODUCT. Appendix C contains
representative examples of material and incidental or immaterial use, but is not
intended by the parties to be an exhaustive list of such uses.
1.24 "SP TECHNOLOGY" shall mean:
(i) peptides and/or polypeptides, and/or polynucleotides and/or the
sequences thereof which are based on use of and/or which are derived by use of
LICENSED TECHNOLOGY by or on behalf of SP.
(ii) products or potential products in the FIELD which are based on use
of and/or derived from use of item (i) and/or LICENSED TECHNOLOGY by or on
behalf of SP;
(iii) biological information developed by or on behalf of SP
specifically related to item (i) and/or item (ii);
Items (i) through (iii) are included as SP TECHNOLOGY only to the
extent they are obtained or derived by or on behalf of SP after the EFFECTIVE
DATE and before four years after the end of the RESEARCH TERM. Notwithstanding
the above, an incidental or immaterial use of LICENSED TECHNOLOGY and/or SP
TECHNOLOGY shall not cause data,
7
substances, materials, know-how, inventions or information to become SP
TECHNOLOGY. Appendix C contains representative examples of material and
incidental or immaterial use, but is not intended by the parties to be an
exhaustive list of such uses.
SP TECHNOLOGY shall not include technology developed by or on behalf of
SP, or otherwise acquired by SP, which relates to vectors, gene expression
delivery technologies, processes for propagation, purification, storage and
characterization, etc.
1.25 "SPC" shall mean a right based upon an underlying patent such as a
Supplementary Protection Certificate.
1.26 "TERRITORY" shall mean all the countries and territories in the
world.
1.27 "THERAPEUTIC AGREEMENT" shall mean that certain Therapeutic
Collaboration and License Agreement effective as of the EFFECTIVE DATE as to
which SP and HGS are parties.
1.28 "THERAPEUTIC PROTEIN" shall mean a polypeptide derived from a GENE
(excluding antibodies) which is potentially useful for the treatment or
prevention of a disease or disorder in humans.
1.30 "THIRD PARTY(IES)" shall mean any party other than a party to this
Agreement or an AFFILIATE of SP or HGS.
2. GRANTS AND COVENANTS
--------------------
2.1 Subject to the terms and conditions of this Agreement, HGS grants
to SP a non-exclusive, non-transferable, worldwide license under LICENSED
TECHNOLOGY and LICENSED PATENTS to perform research and development in the FIELD
(and ANTISENSE
8
research and development with respect to EXCLUSIVE SP PRODUCTS) during the
RESEARCH TERM.
2.2 Subject to the terms and conditions of this Agreement, HGS grants
to SP an exclusive, non-transferable, worldwide license under LICENSED
TECHNOLOGY and LICENSED PATENTS to perform research and development in the FIELD
after the RESEARCH TERM with respect to an EXCLUSIVE SP PRODUCT (and ANTISENSE
research and development with respect to EXCLUSIVE SP PRODUCTS).
2.3 Subject to the terms and conditions of this Agreement, HGS grants
to SP an exclusive worldwide license under LICENSED TECHNOLOGY and LICENSED
PATENTS to make, have made, use, import, export, offer to sell and sell
EXCLUSIVE SP PRODUCTS in the FIELD.
2.4 (a) During and after the RESEARCH TERM, SP agrees to use SP
TECHNOLOGY and SP PATENTS only in the FIELD. After the RESEARCH TERM, the use of
SP TECHNOLOGY to the extent available to the general public through publications
made by THIRD PARTIES independent of SP shall not be a breach of this Paragraph
2.4.
(b) During and after the RESEARCH TERM, SP agrees to use LICENSED
TECHNOLOGY and LICENSED PATENTS only as licensed and permitted hereunder. After
the RESEARCH TERM, (i) an incidental or immaterial use of LICENSED TECHNOLOGY
and/or (ii) the use of LICENSED TECHNOLOGY to the extent available to the
general public and to the extent not covered by a granted LICENSED PATENT shall
not be a breach of this Paragraph 2.4.
9
(c) HGS agrees that the FIELD shall include GENE THERAPY
VACCINES to the extent that HGS has the right as of the EFFECTIVE DATE to
include GENE THERAPY VACCINES in the FIELD. No additional fee will be due for
inclusion of GENE THERAPY VACCINES in the FIELD.
(d) The license granted under this Agreement with respect to
SOFTWARE is limited to SOFTWARE which is (i) owned by HGS and/or (ii) is owned
or licensed by a THIRD PARTY and licensed to HGS which license to HGS includes
the right to grant sublicenses. To the extent that acceptance of the license
granted under this Agreement to SOFTWARE would obligate SP or HGS to pay
royalties and/or license fees to a THIRD PARTY based solely upon SP's use of
SOFTWARE owned or licensed by said THIRD PARTY and sublicensed to SP by HGS, SP
shall, in its sole discretion elect to (i) accept the SOFTWARE in its entirety
and pay all such royalties and/or licensee fees, (ii) obtain a direct license
from the THIRD PARTY owner of the SOFTWARE, or (iii) accept the SOFTWARE with
the exception of the THIRD PARTY SOFTWARE for which royalties and/or license
fees would have been due. To the extent that SOFTWARE includes software owned or
licensed by THIRD PARTIES which is not sublicensable by HGS, HGS will promptly
provide written notice to SP identifying all such software and its owner, and SP
acknowledges and agrees that it must obtain the necessary license(s) prior to
using any such software.
2.5 HGS hereby grants to SP a non-exclusive option to obtain an
exclusive license under Paragraph 2.3. Each SP PRODUCT for which SP is granted
such license shall become an EXCLUSIVE SP PRODUCT.
10
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
During the RESEARCH TERM such option may be exercised at any
time and from time to time by written notice by SP to HGS and such exclusive
license will only be granted if HGS has not previously granted a license to a
THIRD PARTY as permitted by Paragraph 2.11 and/or HGS has not previously begun
to develop a product in the FIELD which is "essentially the same" as such SP
PRODUCT. For purposes of this Agreement the term "essentially the same" means
that the sequence of nucleotides comprising the gene incorporated in a product
for GENE THERAPY licensed to a third party, or under development by HGS, is at
least seventy-five percent (75%) homologous to such SP PRODUCT. In the event
that HGS indicates to SP that HGS has previously begun to develop a product in
the FIELD which is essentially the same as such SP PRODUCT, within sixty (60)
days thereafter SP shall have the right to notify HGS that SP at its cost and
expense will have an independent THIRD PARTY reasonably acceptable to HGS
inspect HGS' records with respect thereto solely for the purpose of verifying
that HGS has previously begun such development. HGS shall permit such
independent THIRD PARTY to effect such inspection within a reasonable time after
such notification provided that such THIRD PARTY signs an agreement of
confidentiality acceptable to HGS which includes a covenant that the only
information which will be provided to SP is whether or not HGS has in fact begun
such development.
For each EXCLUSIVE SP PRODUCT for which the license is
granted, at the time the option is exercised, SP shall pay to HGS the following
amounts :
(i) For the first two EXCLUSIVE SP PRODUCTS, [***].
(ii) For the third EXCLUSIVE SP PRODUCT - [***].
11
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
(iii) For the fourth EXCLUSIVE SP PRODUCT and each one
thereafter - [***].
SP shall provide HGS with a RESEARCH PLAN for each EXCLUSIVE SP PRODUCT
at the time the license is granted.
2.6 In the event that an SP PRODUCT is DISCOVERED after the RESEARCH
TERM for which royalties are due to HGS under this Agreement, SP may request in
writing that HGS grant a non-exclusive license in the FIELD under LICENSED
PATENTS covering such SP PRODUCT to develop, make, have made, use, import,
export, offer to sell and sell such SP PRODUCT. HGS shall grant such a license,
to the extent that it has the ability to do so, provided, however, that HGS can
refuse to grant the license if, at the time of receipt of the request from SP,
HGS has an ongoing program of research and development for a product which is
"essentially the same" as such SP PRODUCT. SP shall have a right to inspect as
provided in Paragraph 2.5.
2.7 Except as permitted under Section 7, SP agrees not to grant to any
THIRD PARTY (IES) any rights or licenses in or to an SP PRODUCT until SP has
established PROOF OF EFFICACY for such SP PRODUCT.
2.8 The rights and licenses granted to SP by HGS under this Agreement
and rights to SP TECHNOLOGY and SP PATENTS are licensable and/or transferable by
SP to a THIRD PARTY only with respect to an SP PRODUCT, and only pursuant to an
Agreement by which SP grants a license to a THIRD PARTY to an SP PRODUCT as
permitted under Paragraph 2.7 or as permitted under Section 7 and in which the
THIRD PARTY (IES) agree(s) to covenants and obligations which limit the use of
SP PRODUCTS, LICENSED TECHNOLOGY,
12
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
LICENSED PATENTS, SP TECHNOLOGY and SP PATENTS which are essentially identical
to the covenants and obligations of SP to HGS under this Agreement.
2.9 Subject to the terms and conditions of this Agreement, SP grants
to HGS a non-exclusive, worldwide royalty-free license (with the right to
sublicense) under SP PATENTS to make, have made, use and sell any and all
products in the HGS FIELD. To the extent that HGS has granted SP a license with
respect to an SP PRODUCT for ANTISENSE pursuant to Paragraph 2.10 the HGS FIELD
shall not include ANTISENSE for such SP PRODUCT.
2.10 In the event that SP desires to extend the licenses under
LICENSED TECHNOLOGY and/or LICENSED PATENT(S) to the field of ANTISENSE with
respect to the DNA (RNA) or gene product of an EXCLUSIVE SP PRODUCT, HGS will
grant such a license to SP, to the extent that HGS has the right to grant such a
license, and HGS has not previously begun to develop a product against DNA (RNA)
which is essentially the same as DNA (RNA) to which SP desires a license
extension. SP shall have a right to inspect in this respect as set forth in
Paragraph 2.5. It is expressly understood, however, that HGS is under no
obligation to maintain the ability to grant such a license to SP. With respect
to each SP PRODUCT for which a license is granted pursuant to this Paragraph
2.10, such SP PRODUCT will be subject to the milestone payments and royalties
provided in this Agreement, but shall not be subject to any additional license
fee.
2.11 (a) The parties acknowledge and agree that HGS may in the future
add additional collaboration partners for GENE THERAPY by entering into similar
Gene Therapy Collaboration and License Agreements with one or more THIRD
PARTIES, provided, however, that there shall at no time be more than [***]
parties (inclusive of SP) collaborating on GENE
13
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
THERAPY with HGS. To the extent that HGS enters into such an agreement or any
amendment or supplement thereto, then SP may, within sixty (60) days of SP's
receipt from HGS of a full, complete and correct copy of such agreement,
amendment or supplement elect to substitute all material terms of any such
agreement for the material terms of this Agreement. HGS agrees to make
representatives who are knowledgeable as to the terms and conditions of any such
agreement available to discuss such terms and conditions with representatives of
SP in order to permit SP to fairly determine whether or not to exercise such
option. Nothing in this Paragraph 2.11(a) and subject to Paragraph 2.11(b) is to
be construed as limiting HGS' ability to grant to THIRD PARTIES licenses to
specific genes.
(b) In the event that during the RESEARCH TERM HGS desires to
offer a license to a THIRD PARTY in the FIELD with respect to a specific GENE,
HGS shall notify SP in writing that such GENE is available to SP for licensing
as an EXCLUSIVE SP PRODUCT in the FIELD and SP shall have thirty (30) days after
such notice to exercise the option granted to SP under Paragraph 2.5 with
respect to such GENE. If SP fails to exercise the option within such thirty (30)
day period, HGS shall have the right to grant licenses to a THIRD PARTY(IES)
with respect to such GENE in the FIELD.
3. PAYMENTS AND ROYALTIES
----------------------
3.1 (a) SP agrees to pay to HGS as an upfront fee an amount equal to
[***] which shall be due and payable in five equal payments of [***] with the
first payment being due and payable ten (10) days after the EFFECTIVE DATE and
each of the second through fifth payments being due and payable on the first
through fourth anniversaries of the EFFECTIVE DATE,
14
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
respectively. All payments to be made hereunder shall be by wire transfer of
immediately available funds to an account designated by HGS.
(b) In the event that any payment due and payable under
Paragraph 3.1(a) is not paid when due and payable and remains unpaid for a
period of thirty (30) days after written notice by HGS to SP of such failure, or
if this Agreement is terminated by HGS, pursuant to Section 10 hereof, then all
amounts which are to be paid under Paragraph 3.1(a) which have not been paid
shall become immediately due and payable at the end of such thirty (30) day
period.
3.2 (a) Subject to Paragraphs 3.3 and 3.5, SP shall pay to HGS the
following royalties on NET SALES of each SP PRODUCT sold by SP or its respective
licensees, distributors trading on SP's account or joint ventures or other
associated companies, which royalty shall be calculated on a SP PRODUCT by SP
PRODUCT basis, with the applicable royalty rate for each SP PRODUCT in a
calendar year being based on worldwide sales for such SP PRODUCT in the calendar
year and this determined royalty rate being applied to all worldwide NET SALES
of such SP PRODUCT in such calendar year.
Calendar Year Net Sales Royalty On
(U.S. Dollars in Millions) SP Product
[***] [***]
[***] [***]
[***] [***]
15
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
By way of example and for avoidance of doubt, if an SP PRODUCT, shall
have applicable worldwide NET SALES in a calendar year of [***], then the
royalty rates and royalties owed shall be [***] on all NET SALES of such SP
PRODUCT.
(b) SP's royalty obligations to HGS with respect to SP
PRODUCTS (as defined herein) are solely as set forth in this Paragraph 3.2 and
no additional royalty obligations shall be incurred for sales of SP PRODUCTS
under any other agreements between the parties, including the THERAPEUTIC
AGREEMENT relating to SP DRUG PRODUCTS, SP ANTIBODY PRODUCTS and SP PROTEIN
PRODUCTS in each case as defined in the THERAPEUTIC AGREEMENT.
(c) There shall be no royalty or milestone obligations for SP
PRODUCTS where SP independently identifies 95-100% of the full length gene
sequence (start to stop codon in cDNA) without use of LICENSED TECHNOLOGY or SP
TECHNOLOGY provided the SP PRODUCT does not infringe a claim of a granted
LICENSED PATENT.
(d) If an SP PRODUCT is not covered by a claim of a LICENSED
PATENT, HGS shall not receive royalties for SP PRODUCTS DISCOVERED more than
four (4) years after the end of the RESEARCH TERM.
No royalty shall be due for an SP PRODUCT (i) which is DISCOVERED after
the end of the RESEARCH TERM and (ii) which is not an EXCLUSIVE SP PRODUCT and
(iii) which is an SP PRODUCT only as a result of the use of unpatented LICENSED
TECHNOLOGY after the RESEARCH TERM which, at the time of use, is generally
available to the public, or SP TECHNOLOGY developed after the RESEARCH TERM
which is SP TECHNOLOGY only as
16
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
a result of use of unpatented LICENSED TECHNOLOGY which is generally available
to the public at the time of such use.
3.3 (a) With respect to any SP PRODUCT in any country in any calendar
year, in the event that SP also owes royalties to a THIRD PARTY for such SP
PRODUCT in such country for such calendar year and the royalties actually owed
to such THIRD PARTY when aggregated with the royalties owed to HGS for such SP
PRODUCT in such country in such calendar year (hereafter for the purposes of
this Paragraph 3.3 shall be "Aggregated Royalties") causes the royalty rate on
NET SALES for such SP PRODUCT in such country in such calendar year to exceed
5%, then one-half of the royalties which are to be actually paid to such THIRD
PARTY may be credited against the royalties due to HGS for such SP PRODUCT in
such country in such calendar year, but in no event shall the royalty rate
payable to HGS be reduced to less than 3%, nor shall the Aggregated Royalties
for such SP PRODUCT be reduced to less than 5%.
3.4 SP shall make the following milestone payments to HGS for each SP
PRODUCT, which milestone payment shall be due and payable within thirty (30)
days after the milestone event is achieved by or on behalf of SP or a licensee
of SP:
(i) [***] upon successful completion of Phase I for
an SP PRODUCT;
(ii) [***] upon successful completion of Phase II for
SP PRODUCT;
(iii) [***] upon first submission of an application
for regulatory approval of an SP PRODUCT in a MAJOR MARKET;
17
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
(iv) [***] or [***] if the option fee has not been
paid under Section 2.5 for an SP PRODUCT) upon the first approval of an SP
PRODUCT for commercial sale in a MAJOR MARKET (provided, however, that any
pricing and/or third party reimbursement approvals as necessary for sale of the
SP PRODUCT are also received).
The milestone payments provided in this paragraph shall only be made
once for each SP PRODUCT and shall not be made in the case of improvements or
modifications such as but not limited to changed forms, formats, formulations,
indications, processes or protocols of an SP PRODUCT for which the payments were
previously made.
In no event shall the aggregate of the fee paid under Paragraph 2.5 and
the milestone payments under Paragraph 3.4 for each SP PRODUCT exceed the
following:
(i) For the first two SP PRODUCTS, [***];
(ii) For the third SP PRODUCT, [***];
(iii) For the fourth SP PRODUCT and each SP PRODUCT
thereafter, [***].
3.5 Royalty obligations under this Agreement and any agreements that SP
shall enter into with a licensee, with respect to SP PRODUCT, shall terminate on
a country-by-country and product-by-product basis on the later of (i) ten (10)
years after first country-wide launch of each product in each country or (ii)
expiration of the last to expire SP PATENT or LICENSED PATENT licensed to SP
under this Agreement which covers the making, having made, importing, exporting,
offering to sell or using or selling of each product in each country.
18
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
3.6 [***] of all payments to be made by SP pursuant to
Sections 3.1 and 3.4 shall be paid by [***] and [***] shall be paid by [***].
All payments to be made by SP pursuant to Section 3.2 shall be apportioned
between [***] and [***]. According to the provisions of Section 9.4. In the
event that (i) payments made by [***] cause HGS to be subject to additional
taxes and/or withholding tax, and (ii) such additional taxes and/or withholding
tax are due solely as a result of such payments being made by [***], then SP and
HGS shall agree upon an alternative manner of payment. The foregoing
notwithstanding, [***] and [***] are jointly and severally liable for any and
all payments by SP to HGS pursuant to this Section 3, provided that payments
made by [***] does not cause HGS to be subject to additional taxes and/or a
withholding tax solely as a result of such payments being made by [***].
3.7 The manner in which statements and remittances of royalty payments
are handled are as set forth in Section 9 hereof.
3.8 All payments to be made hereunder shall be by wire transfer of
immediately available funds to an account designated by HGS.
4. RESEARCH TERM
-------------
4.1 The INITIAL RESEARCH TERM shall terminate five years after the
EFFECTIVE DATE.
4.2 The INITIAL RESEARCH TERM may be extended for up to one five
additional years, in the event the INITIAL RESEARCH TERM is extended under the
THERAPEUTIC AGREEMENT, by written notice provided to HGS by SP at least sixty
(60) days prior to the
19
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
end of the INITIAL RESEARCH TERM or at least sixty (60) days prior to the end of
any one year extension thereof. A payment of [***] for each additional year
shall be due within ten (10) days of the end of the INITIAL RESEARCH TERM or the
end of any one year extension thereof, as the case may be.
4.3 In any extension of the INITIAL RESEARCH TERM, the rights and
licenses granted to SP under Paragraph 2.1 shall be further granted for the
EXTENDED TERM but limited to research and development of SP PRODUCTS and
EXCLUSIVE SP PRODUCTS in the FIELD.
5. TECHNOLOGY TRANSFER
-------------------
5.1 (a) Promptly after the EFFECTIVE DATE, HGS shall disclose to SP all
information which is LICENSED TECHNOLOGY.
(b) Throughout the INITIAL RESEARCH TERM, except as provided
in Paragraph 5.2, HGS shall promptly provide to SP all information which is
LICENSED TECHNOLOGY and materials (as available to HGS and as reasonably
requested by SP) which are LICENSED TECHNOLOGY including, without limitation,
(i) preliminary annotation data of DNA sequences which are LICENSED TECHNOLOGY
such as tissue source; library specifications for libraries from which DNA
sequences which are LICENSED TECHNOLOGY are obtained; (ii) sequence homologies
and motif searches with respect to DNA sequences (and encoded polypeptides)
which are LICENSED TECHNOLOGY; (iii) biological information obtained by HGS with
respect to DNA sequences and encoded polypeptides which are LICENSED TECHNOLOGY;
and (iv) clones containing sequences which are LICENSED TECHNOLOGY as available
to HGS and as reasonably requested by SP; and (v) expression cell
20
lines and vectors, as reasonably requested by SP and as available to HGS and to
the extent that HGS is not contractually precluded from providing them, for the
sole purpose of research and development in the FIELD. SP understands and agrees
that experimental data relating to characterization of DNA and encoded
polypeptides are not included in this Paragraph 5.1(b).
(c) Except as otherwise set forth herein, LICENSED TECHNOLOGY
to be provided to SP pursuant to Paragraphs 5.1(a) and 5.1(b)(i), (ii) and (iii)
shall be in the form of electronic transfers of the LICENSED TECHNOLOGY and HGS
shall deliver the LICENSED TECHNOLOGY to SP in a manner and format which is
compatible for use with the SOFTWARE.
(d) Promptly after the EFFECTIVE DATE, HGS will provide SP
with printouts of HGS full length gene reports to the extent that they include
LICENSED TECHNOLOGY and to the extent that they exist on the EFFECTIVE DATE.
5.2 HGS shall not be required to transfer to SP ▇▇▇▇▇▇▇▇ ▇▇▇▇
consisting of second walks and full length sequences or biological information
or clones, in each case which are LICENSED TECHNOLOGY with respect to potential
THERAPEUTIC PROTEINS, until HGS obtains exclusive rights thereto under the
THERAPEUTIC AGREEMENT. The preceding sentence shall not apply to second walks
performed by HGS at the specific request of SP.
5.3 The transfer of LICENSED TECHNOLOGY to SP shall be documented by
HGS. Such documentation shall include, but not be limited to, transfer of
LICENSED TECHNOLOGY to SP electronically and/or in writing and/or, in the case
of oral transfer, by written notice to SP of the substance of such oral
transfer.
21
5.4 At the end of the RESEARCH TERM, SP shall promptly return to HGS
any and all LICENSED TECHNOLOGY other than LICENSED TECHNOLOGY as to which SP
retains a license hereunder, including, without limitation, LICENSED TECHNOLOGY
which is not deemed confidential in accordance with Paragraph 7.2.
5.5 SP agrees to maintain security measures (including but not limited
to computer and computer network security measures) for LICENSED TECHNOLOGY
which are similar to the measures currently employed by SP to safeguard its own
confidential information. These security measures have been discussed with HGS
and HGS agrees that such security measures are acceptable to HGS.
5.6 (a) To the extent it has not already been provided to SP, HGS shall
provide to SP, promptly following the EFFECTIVE DATE, without additional charge,
initial copies of the SOFTWARE and thereafter, during the INITIAL RESEARCH TERM,
as they become available, copies of any enhancements to the SOFTWARE made by HGS
during the INITIAL RESEARCH TERM, including all modifications to the SOFTWARE
which increase the speed, efficiency or ease of operation of the SOFTWARE, or
add additional capabilities to or otherwise improve the functions of the
SOFTWARE.
(b) For a period of two years after the EFFECTIVE DATE, HGS
shall provide to SP, without additional charge, all necessary telephone or
on-site consultation requested by SP in connection with its use and operation of
the SOFTWARE or any problems therewith. Telephone consultation shall be provided
by HGS during normal business hours.
(c) SP shall have the right, in its own discretion, to
independently modify the SOFTWARE for its own purposes and use SOFTWARE, through
the services of its own
22
employees or of independent contractors, provided that same agree not to
disclose or distribute any part of the SOFTWARE to any other person or entity or
otherwise violate HGS's proprietary rights therein. SP shall be the owner of any
such modification. SP may, at its sole discretion, provide such SOFTWARE
modifications to HGS, which will be retained by HGS in confidence and will not
be disclosed to any THIRD PARTY without the prior written consent of SP. HGS
shall not incorporate any such modification into its software for distribution
to THIRD PARTY(IES) unless SP (in its sole discretion) first consents in writing
and HGS first agrees to pay SP a reasonable royalty, pursuant to mutually agreed
upon terms. SP acknowledges and agrees that SOFTWARE and any modified SOFTWARE
developed by or on behalf of SP may only be used by or for SP and may not be
transferred to a THIRD PARTY.
6. PRODUCT DEVELOPMENT
-------------------
6.1 SP shall use diligent efforts to develop, market, promote and sell
royalty bearing EXCLUSIVE SP PRODUCT equivalent to those efforts it uses with
respect to its products of similar value and status, subject to SP's right to
terminate such efforts and surrender all rights in and to such SP EXCLUSIVE
PRODUCTS.
6.2 Within sixty (60) days after the end of each calendar year, SP
shall provide to HGS in writing annual reports with respect to work performed by
or for SP under RESEARCH PLANS.
23
7. CONFIDENTIALITY
---------------
7.1 Subject to Paragraphs 7.2, 7.3 and 7.4 the parties agree not to
disclose and/or provide to a THIRD PARTY any information and/or materials
received from the other party and to use the information and materials received
from the other party only as licensed hereunder.
7.2 Unless otherwise restricted by this Agreement, the confidentiality
obligations of paragraph 7.1 shall not apply to information and/or materials
which:
(i) was known to the receiving party or generally known to the
public prior to its disclosure hereunder; or
(ii) subsequently becomes known to the public by some means
other than a breach of this Agreement;
(iii) is subsequently disclosed to the receiving party by a
THIRD PARTY having a lawful right to make such disclosure and who is not under
an obligation of confidentiality to the disclosing party;
(iv) is required by law or bona fide legal process regulation,
rule, act or order of any governmental agency or authority to be disclosed,
provided that the party required to make the disclosure takes all reasonable
steps to restrict and maintain confidentiality of such disclosure and provides
reasonable notice to the party providing the information and/or materials;
(v) is approved for release by the parties, or (vi) is
independently developed by the employees or agents of a party or their
respective AFFILIATES, without any knowledge of the information and/or materials
provided by the other party, provided that such
24
independent development can be properly demonstrated by the party disclosing the
information and/or materials.
7.3 (a) Notwithstanding Paragraph 7.1, SP may disclose and/or provide
LICENSED TECHNOLOGY to a THIRD PARTY who (i) receives a license from SP to
LICENSED TECHNOLOGY in conjunction with a license to an SP PRODUCT as permitted
by Paragraph 2.8 hereof or (ii) is a THIRD PARTY contractor assisting SP with
respect to an SP PRODUCT, provided that such THIRD PARTY enters into an
agreement as provided in Paragraph 7.4, and such THIRD PARTY agrees to
confidentiality and non-use obligations essentially identical to Paragraph 7.1.
(b) Unless restricted by other provisions of this Agreement,
the obligations of Paragraph 7.1 shall not restrict the ability of HGS to
disclose information and/or provide materials to a THIRD PARTY, provided that
such THIRD PARTY enters into an agreement by which the THIRD PARTY agrees to
confidentiality obligations essentially identical to Paragraph 7.1.
7.4 In the event that SP intends to transfer or disclose LICENSED
TECHNOLOGY to a THIRD PARTY contractor as permitted by Paragraph 7.3 no such
transfer or disclosure shall take place until such THIRD PARTY enters into an
agreement with SP by which SP is granted ownership of or a license (including
the right to grant sublicenses) to all inventions (and patent rights based
thereon) which result from the use of LICENSED TECHNOLOGY. Any such inventions
and patents shall be SP TECHNOLOGY and SP PATENTS subject to the terms and
conditions of this Agreement, provided, however, that any such inventions and
patents which
25
result from any incidental or immaterial use of LICENSED TECHNOLOGY shall not be
SP TECHNOLOGY or SP PATENTS.
7.5 All confidential information disclosed by one party to the other
party shall remain the intellectual property of the disclosing party. In the
event that a court or other legal or administrative tribunal, directly or
through an appointed master, trustee or receiver, assumes partial or complete
control over the assets of a party to this Agreement based on the insolvency or
bankruptcy of such party, the bankrupt or insolvent party shall promptly notify
the court or other tribunal (i) that confidential information received from the
other party under this Agreement remains the property of the other party and
(ii) of the confidentiality obligations under this Agreement. In addition, the
bankrupt or insolvent party shall, to the extent permitted by law, take all
steps necessary or desirable to maintain the confidentiality of the other
party's confidential information and to insure that the court, other tribunal or
appointee maintains such information in confidence in accordance with the terms
of this Agreement.
7.6 (a) No public announcement concerning (i) the existence of or terms
of this Agreement, (ii) research and/or discoveries made by SP, (iii) milestones
achieved by SP, and (iv) exercise by SP of rights and options granted under this
Agreement, shall be made, either directly or indirectly, by any party to this
Agreement without prior written notice to the other party and, except as may be
legally required, or as may be legally required for a public offering of
securities, or as may be required for recording purposes, without first
obtaining the approval of the other party and agreement upon the nature and text
of such announcement. The party desiring to make any such public announcement
shall inform the other party of the proposed announcement or disclosure in
reasonably sufficient time prior to public release, and shall
26
provide the other party with a written copy thereof, in order to allow such
other party to comment upon such announcement or disclosure. This paragraph 7.6
shall not apply to any information in a public announcement which is information
essentially identical to that contained in a previous public announcement agreed
to pursuant to this paragraph.
(b) HGS may provide a THIRD PARTY who enters into an agreement
with HGS of the type contemplated by Paragraph 2.11(a) with a copy of this
Agreement after they enter into such agreement.
7.7 Without the written consent of HGS, SP shall not submit for written
or oral publication any manuscript, abstract or the like which includes SP
TECHNOLOGY which is or is directed to a SP PRODUCT prior to the earlier of (i)
eighteen months after SP files an SP PATENT which claims such SP PRODUCT or (ii)
the date on which such SP PRODUCT is disclosed in a printed publication other
than through breach of this paragraph.
7.8 HGS agrees that all RESEARCH PLANS submitted by SP pursuant to this
Agreement shall be strictly confidential and shall be provided to only those
employees at HGS who are to be responsible for determing whether or not SP shall
receive an exclusive license to an SP PRODUCT pursuant to Paragraph 2.5, and for
monitoring SP's obligations under Section 6, not to exceed five (5) employees.
HGS further agrees that all such RESEARCH PLANS will not be utilized by or on
behalf of HGS for any other purpose.
8. PATENT PROSECUTION AND LITIGATION
---------------------------------
8.1 Each party shall have and retain sole and exclusive title to all
inventions, discoveries, designs, works of authorship and other know-how which
are made, conceived, reduced to practice or generated by its employees, agents,
or other persons acting under its
27
authority. As to all inventions, discoveries, designs, works of authorship and
other know-how made, conceived, reduced to practice or generated jointly by
employees, agents, or other persons acting under the authority of HGS and SP,
the parties shall own an equal undivided interest therein. In the event of
jointly owned inventions, HGS shall be responsible for the filing, prosecution
and maintenance of patents and patent applications directed thereto under the
terms and conditions of Paragraph 8.2, however, each of HGS and SP shall be
responsible for an equal share of the cost and expense thereof. HGS shall
consult with SP with respect to strategies for filing, prosecution and
maintenance of patents and patent applications for which it bears responsibility
under this Section 8.1, and shall keep SP reasonably informed with regard to
filing, prosecution and maintenance activity for such patents and patent
applications, provided, however, that HGS shall have final decision-making
authority with respect to filing, prosecution and maintenance of any patents and
patent applications for which it is responsible. If a joint owner does not
desire to file, prosecute or maintain a patent or patent application to a joint
invention, such owner shall assign its ownership interest therein to the other
joint owner and shall no longer be responsible for the cost and expense thereof,
and shall have no further right to consult, review or comment with respect to
the filing, prosecution and maintenance of said patent or patent application.
All patents and patent applications to joint inventions which are LICENSED
TECHNOLOGY and/or SP TECHNOLOGY shall be LICENSED PATENTS and SP PATENTS,
respectively, subject to the terms and conditions of this Agreement; otherwise,
any joint owner shall be free to dispose of its interest therein without
accounting to any other owner.
28
8.2 (a) HGS shall have the right within its sole discretion to
prepare, file, prosecute and maintain LICENSED PATENTS owned by HGS. With
respect to LICENSED PATENTS as to which SP retains a license hereunder, subject
to Paragraph 8.10, HGS shall keep SP reasonably informed with respect to the
filing and prosecution thereof (including interference proceedings). In the
event that HGS does not intend to prepare, file, prosecute and/or maintain
patent protection in any country with respect to LICENSED TECHNOLOGY other than
expressed sequence tags (ESTs) as to which SP retains a license hereunder, HGS
shall, at SP's option, do so at the cost and expense of SP. In the event that a
THIRD PARTY who has entered into an agreement with HGS as contemplated by
Paragraph 2.11(a) also makes such a request in a country, such costs shall be
apportioned between SP and such THIRD PARTY.
(b) SP shall have the right within its sole discretion to
prepare, file, prosecute and maintain SP PATENTS. With respect to SP PATENTS as
to which HGS retains a license hereunder, subject to Paragraph 8.11, SP shall
keep HGS reasonably informed with respect to the filing and prosecution thereof
(including interference proceedings). In the event that SP does not intend to
prepare, file, prosecute and/or maintain patent protection in any country with
respect to SP TECHNOLOGY as to which HGS retains a license hereunder, SP shall,
at HGS' option, do so at the cost and expense of HGS.
(c) SP will provide HGS reasonable assistance to enable HGS to
prepare, file, prosecute and maintain LICENSED PATENTS pursuant to section
8.2(a). HGS will provide SP reasonable assistance to enable SP to prepare, file,
prosecute and maintain SP PATENTS pursuant to section 8.2(b).
29
8.3 Each party, on behalf of itself, its AFFILIATES and its and their
respective directors, employees, officers, shareholders, agents, successors and
assigns hereby waives any and all actions and causes of action, claims and
demands whatsoever, in law or equity of any kind it or they may have against the
other party, its AFFILIATES and its or their respective officers, directors,
employees, shareholders, agents, successors and assigns, which may arise from
performance of patent activities under this Section, except those which result
from gross negligence, recklessness, or willful misconduct.
8.4 (a) In the event of the institution of any suit by a THIRD PARTY
against SP or its licensees for patent infringement involving the manufacture,
use, import, export, offer for sale, sale, distribution or marketing of SP
PRODUCT, SP shall promptly notify HGS in writing. As between HGS and SP, SP
shall be solely responsible for the cost and expense of such action and any
liability which results therefrom.
(b) In the event of the institution of any suit by a THIRD
PARTY against HGS or its licensees, for patent infringement involving the
manufacture, use, import, export, offer for sale, sale, distribution or
marketing of any product sold by HGS or its licensees involving or developed
using LICENSED TECHNOLOGY and/or SP TECHNOLOGY, HGS shall promptly notify SP in
writing. As between HGS and SP, HGS shall be solely responsible for the cost and
expense of such action and any liability which results therefrom.
8.5 In the event that HGS or SP becomes aware of actual or threatened
infringement of a SP PATENT or LICENSED PATENT anywhere in the TERRITORY, that
party shall promptly notify the other party in writing. The owner of the SP
PATENT or LICENSED PATENT shall have the first right but not the obligation to
bring, at its own expense, an
30
infringement action against any THIRD PARTY and to use the other party's name in
connection therewith. If the owner of the patent does not commence a particular
infringement action within ninety (90) days, the other party, after notifying
the owner in writing, shall be entitled to bring such infringement action, in
its own name and/or in the name of the patent owner, at its own expense to the
extent that such party is licensed thereunder. The foregoing notwithstanding, in
the event that an alleged infringer certifies pursuant to 21 U.S.C.
ss.355(b)(2)(A)(iv) against an issued SP PATENT or LICENSED PATENT covering a
product, as between the patent owner and the owner of the product, the party
receiving notice of such certification shall immediately notify the other party
of such certification, and if fourteen (14) days prior to expiration of the
forty five (45) day period set forth in 21 U.S.C. ss.355(c)(3)(C), the owner of
the SP PATENT or LICENSED PATENT fails to commence an infringement action, the
party receiving notice, in its sole discretion, at its own expense and to the
extent that it is licensed under the SP PATENT or LICENSED PATENT, shall be
entitled to bring such infringement action in its own name and/or in the name of
the patent owner. The party conducting an action under this Paragraph 8.5 shall
have full control over its conduct, including settlement thereof provided such
settlement shall not be made without the prior written consent of the other
licensing party or licensed party if it would adversely affect the patent rights
of such party. The licensing party (i.e., the patent owner) and the licensed
party (e.g., the owner of the product) shall reasonably assist one another and
cooperate in any such litigation at the other's request, each such party paying
its own costs and expenses. The party conducting the litigation shall
periodically reimburse the other party for its reasonable and actual
out-of-pocket expenses for assisting in the litigation, which reimbursement
shall be made within thirty (30) days of receipt by the party
31
conducting the litigation of itemized invoices from the assisting party
documenting such expenses.
8.6 Any recovery made by a party as the result of an action for patent
infringement it has conducted under Paragraph 8.5 shall be distributed as
follows:
(i) The party conducting the action shall recover its actual
out -of-pocket expenses.
(ii) To the extent that the recovery exceeds the total of item
(i), the excess shall be kept by the party conducting the
action, provided, however, that to the extent that (a) the
recovery is based on an award of lost sales/profits, and (b)
the party conducting the action would have incurred a royalty
obligation to the other party based upon such sales, the party
to whom such royalties would have been due shall receive a
proportion of the excess recovery corresponding to the royalty
percentage it would have otherwise been due.
8.7 The parties shall periodically keep one another reasonably informed
of the status of and of, their respective activities regarding, any such
litigation or settlement thereof.
8.8 To the extent that the owner of a SP PATENT or a LICENSED PATENT
also owns a product (covered by an NDA or HRD) which product is covered by a
granted claim of said SP PATENT or LICENSED PATENT, the owner of said SP PATENT
or LICENSED PATENT shall have the first right to seek extensions of the terms of
the patent and to seek to obtain SPCs. If the owner of a SP PATENT or a LICENSED
PATENT does not own a product covered by a granted claim of said SP PATENT or
LICENSED PATENT, then the owner of a product (covered by an NDA or HRD) which
product is licensed under and is covered by a
32
granted claim of said SP PATENT or LICENSED PATENT shall have the right to seek
extensions of the terms of the patent and to seek to obtain SPCs. Where more
than one (1) product is covered by a granted claim of the same SP PATENT or the
same LICENSED PATENT, as between SP and HGS, the right to seek extensions of the
terms of the patent and to obtain SPCs shall be granted by the patent owner to
the first of SP, HGS or licensee of HGS, who is licensed thereunder to submit to
the patent owner, in writing, a request to obtain such rights with respect to a
product (covered by an NDA or HRD) which is approved for marketing and/or sale
in at least one country in which said SP PATENT or LICENSED PATENT is in force.
Each party shall assist the other in the obtaining of such extensions or SPCs
including by authorizing the other party to act as its agent.
8.9 (a) All rights and licenses granted under or pursuant to this
Agreement by one party to another party are, for all purposes of Section 365(n)
of Title 11 of the U.S. Code ("Title 11"), licenses of rights to intellectual
property as defined in Title 11. The licensing party agrees during the term of
this Agreement to maintain and preserve any current copies of all such
intellectual property which are in existence and in its possession as of the
commencement of a case under Title 11 by or against the licensing party. If a
case is commenced by or against the licensing party under Title 11, then, unless
and until this Agreement is rejected as provided in Title 11, the licensing
party (in any capacity, including debtor-in-possession) and its successors and
assigns (including, without limitation, a Title 11 Trustee) shall, as the party
who is a licensee may elect in a written request, immediately upon such request
(A) (i) perform all of the obligations provided in this Agreement to be
performed by the licensing party, or (ii) provide to the party who is a licensee
all such intellectual property (including all embodiments thereof)
33
held by the licensing party and such successors and assigns as of the
commencement of a case under Title 11 by or against the licensing party and from
time to time thereafter, and (B) not interfere with the rights of the licensing
party as provided in this Agreement, or any agreement supplementary hereto, to
such intellectual property (including all such embodiments thereof, including
any right of the licensing party to obtain such intellectual property or such
embodiment) from any other entity.
(b) If a Title 11 case is commenced by or against the
licensing party, this Agreement is rejected as provided in Title 11 and the
party who is a licensee elects to retain its rights hereunder as provided in
Title 11, then the licensing party (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without,
limitation, a Title 11 Trustee) shall provide to the party who is a licensee all
such intellectual property (including all embodiments thereof) held by the
licensing party and such successors and assigns immediately upon the party who
is a licensee's written request thereof. Whenever, the licensing party or any of
its successors or assigns provides to the party who is a licensee any of the
intellectual property licensed hereunder (or any embodiment thereof) pursuant to
this Paragraph 8.9, the party who is a licensee shall have the right to perform
the obligations of the licensing party hereunder with respect to such
intellectual property, but neither such provision nor such performance by the
party who is a licensee shall release the licensing party from any such
obligation or liability for failing to perform it; provided, however, that in
such event the party who is a licensee shall not be entitled to compel specific
performance by the licensing party under this Agreement except to the extent of
enforcing the exclusivity of the license granted hereunder.
34
(c) All rights, powers, remedies, obligations and conditions
of the party who is a licensee provided herein are in addition to and not in
substitution for any and all other rights, powers, remedies, obligations and
conditions of the licensing party or the party who is a licensee now or
hereafter existing at law or in equity (including, without limitation, Title 11)
in the event of the commencement of a Title 11 case by or against the licensing
party. The party who is a licensee, in addition to the rights, powers and
remedies expressly provided herein, shall be subject to all obligations and
conditions, and shall be entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or hereafter exist at law or in
equity (including, without limitation, Title 11) in such event. The parties
agree that they intend the foregoing rights and obligations of the party who is
a licensee to apply to the maximum extent permitted by law, including without
limitation for purposes of Title 11, (i) the right of access to any intellectual
property (including all embodiments thereof) of the licensing party, or any
third party with whom the licensing party contracts to perform an obligation of
the licensing party under this Agreement, and, in the case of the third party,
which is necessary for the development, registration and manufacture of a
product licensed hereunder, and (ii) the right to contract directly with any
third party described in clause (i) in this sentence to complete the contracted
work.
8.10 The obligations of HGS to keep SP informed under Paragraphs
8.2(a) shall only apply to LICENSED PATENTS which claim LICENSED TECHNOLOGY
which HGS is required to disclose to SP pursuant to Section 5.
35
8.11 The obligations of SP to keep HGS informed under Paragraph 8.2(b)
shall not apply to any SP PATENT directed to SP PRODUCTS until the earlier of
publication of the SP PATENT and/or SP obtaining exclusive rights to the SP
PRODUCT under Section 2.5.
9. STATEMENTS AND REMITTANCES
--------------------------
9.1 SP shall keep and require its licensees to keep complete and
accurate records of all NET SALES of SP PRODUCT for which royalties are due
hereunder. HGS shall have the right, at its expense, through a certified public
accountant or like person reasonably acceptable to SP, to examine pertinent
financial records during regular business hours upon proper advance written
notice during the life of this Agreement and for six (6) months after its
termination for the purpose of verifying and reporting to HGS as to the
computation of the royalty payments made hereunder; provided, however, that such
examination shall not take place more often than once a year and not later than
forty-five (45) days after written request is made; provided further that such
accountant shall report only as to the accuracy of the royalty statements and
payments, including the magnitude and source of any discrepancy. Neither SP nor
its licensees shall be required to maintain such records for more than three (3)
years. The accountant shall execute customary confidentiality agreements prior
to any examination, reasonably satisfactory in form and substance to SP, to
maintain in confidence all information obtained during the course of any such
examination, except for disclosure to HGS, as necessary for the above purpose.
9.2 Within sixty (60) days after the close of each calendar quarter, SP
shall deliver to HGS a true accounting of all SP PRODUCT subject to royalty
hereunder sold by it and its licensees and distributors during such calendar
quarter and shall at the same time pay all royalties due. In the event that the
royalty rate changes in a calendar quarter with respect to an
36
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
SP PRODUCT as a result of the NET SALES of such SP PRODUCT for such calendar
year reaching a level at which there is a change in royalty rate as provided in
Paragraph 3.2 ("New Royalty Rate") then the royalties which are paid by SP for
such calendar quarter and the subsequent calendar quarters for such calendar
year (until the royalty rate is again changed) shall be determined and paid
based on the New Royalty Rate, and in addition, the royalties for the previous
calendar quarters for such calendar year for such SP PRODUCT shall be recomputed
at the New Royalty Rate, and the payment for the calendar quarter in which there
is a New Royalty Rate shall be adjusted for the difference between the royalties
paid for such SP PRODUCT for the previous calendar quarters for such calendar
year and the royalties for such previous calendar quarters for such calendar
year calculated by use of the New Royalty Rate. Such accounting shall show
sales, each calculation of NET SALES and the calculation of currency conversion
on a country-by-country basis and SP-PRODUCT-by-SP-PRODUCT basis, and
recalculation of royalties based on a New Royalty Rate, if applicable..
9.3 All royalties and other payments due under this Agreement shall be
payable in U.S. dollars.
9.4 All royalties, with the exception of those payable on sales to
customers in the United States, shall be paid by [***] from its office in[***].
Royalties payable on U.S. sales shall be paid directly to HGS by Schering
Corporation from its offices in Kenilworth, New Jersey. Royalties payable on
sales in countries other than the United States shall be calculated by
multiplying the appropriate royalty rate times the sales in each currency in
which they are made and converting the resulting amount into United States
dollars, at the rates of exchange used by Schering Corporation, for reporting
such sales for United States
37
financial statement purposes. A copy of SP's current policy for bookkeeping
exchange rates is set forth in Appendix D. If, due to restrictions or
prohibitions imposed by a national or international authority, payments cannot
be made as aforesaid, the parties shall consult with a view to finding a prompt
and acceptable solution, and SP will deal with such monies as HGS may lawfully
direct at no additional out-of-pocket expense to SP. Notwithstanding the
foregoing, if royalties cannot be remitted to HGS for any reason within six (6)
months after the end of the calendar quarter during which they are earned, then
SP shall be obligated to deposit the royalties in a bank account in Switzerland
in the name of HGS. SP shall deduct any taxes which SP is obligated to pay
and/or withhold in a country based on milestones or based on royalties due to
HGS based on sales in such country from royalty or milestone payments due HGS
for such country under this Agreement and pay them to the proper authorities as
required by applicable laws. SP shall maintain official receipts of payment of
any such taxes and forward these receipts to HGS within sixty (60) days.
10. TERM AND TERMINATION
--------------------
10.1 This Agreement shall come into effect as of the EFFECTIVE DATE and
shall remain in full force and effect unless earlier terminated as provided in
this Section 10.
10.2 (a) In the event SP fails to make a royalty or milestone payment
to HGS under this Agreement with respect to a SP PRODUCT, when due, or fails to
meet its obligations under Section 6 of this Agreement with respect to an
EXCLUSIVE SP PRODUCT, in addition to any other remedy which it may have, HGS may
notify SP in writing that all of SP's rights with respect to such SP PRODUCT or
EXCLUSIVE SP PRODUCT, as the case may be, shall
38
terminate as of thirty (30) days after such written notice and SP's rights with
respect thereto shall terminate unless such payment is made or such failure is
cured, prior to the expiration of such thirty (30) day period.
(b) In the event that the THERAPEUTIC AGREEMENT is terminated
by HGS for failure of SP to pay the amounts which are due under Paragraph 3.1 or
Paragraph 5.1 of the THERAPEUTIC AGREEMENT, then by written notice to SP, HGS
shall have the right to terminate this Agreement effective as of the date of
such notice.
10.3 In the event that SP fails to make a payment to HGS under Section
3.1 when due, in addition to any other remedy which HGS may have, HGS may notify
SP in writing of such failure and that this Agreement shall terminate in its
entirety and if SP fails to make such payment within thirty (30) days
thereafter, this Agreement shall terminate.
10.4 In the event that HGS fails to meet its obligations under Section
5, in addition to any other remedy which SP may have, SP may notify HGS of such
failure and that this Agreement shall terminate in its entirety, and if HGS
fails to cure such failure within thirty (30) days thereafter, this Agreement
shall terminate in its entirety.
10.5 Either party, may terminate this Agreement if, at any time, the
other party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver or
trustee of the party or of its assets, or if the other party proposes a written
agreement of composition or extension of its debts, or if the other party shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if the other party shall propose
39
or be a party to any dissolution or liquidation, or if the other party shall
make an assignment for the benefit of creditors.
10.6 Neither party shall have the right to terminate this Agreement
except under paragraphs 10.2, 10.3, 10.4, and 10.5, provided however that
nothing in this Agreement shall limit any remedies for breach which may be
available pursuant to a judgment of a court, in law or equity, including
termination of this Agreement or of any or all rights hereunder, except that any
action seeking remedies for breach of this Agreement shall be conducted in
accordance with Section 18.
11. RIGHTS AND DUTIES UPON TERMINATION
----------------------------------
11.1 Notwithstanding termination of this agreement, the rights and
obligations of the parties under Sections 7, 9, 11, 13, 15 and 26, and
Paragraphs 2.4(a) and (b), 2.7, 2.8, and 3.1(b) shall survive such termination.
11.2 Termination of the Agreement in accordance with the provisions
hereof shall not limit remedies which may be otherwise available in law or
equity.
11.3 Other than termination of this Agreement pursuant to Paragraph
10.4 or with respect to an SP PRODUCT as to which rights have been terminated
under Paragraph 10.2. SP's obligation to pay royalties and milestone payments
for SP PRODUCT shall survive such termination.
40
12. WARRANTIES AND REPRESENTATIONS
------------------------------
12.1 Each of HGS and SP hereby represents, warrants and covenants to
the other, as of the EFFECTIVE DATE, as follows:
(a) it is a corporation duly organized and validity existing
under the laws of the state or other jurisdiction of incorporation or formation;
(b) the execution, delivery and performance of this Agreement
by such party has been duly authorized by all requisite corporate action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, including, without
limitation, the right, power and authority to grant the licenses under Section
2;
(d) the execution, delivery and performance by such party of
this Agreement and its compliance with the terms and provisions hereof to such
party's best knowledge does not conflict with or result in a breach of any of
the terms and provisions of or constitute a default under (i) a loan agreement,
guaranty, financing agreement, agreement affecting a product or other agreement
or instrument binding or affecting it or its property; (ii) the provisions of
its charter documents or bylaws; or (iii) any order, writ, injunction or decree
of any court or governmental authority entered against it or by which any of its
property is bound;
(e) this Agreement constitutes such party's legal, valid and
binding obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to the
availability of particular remedies under general equity principles.
41
12.2 HGS and SP, as the case may be, hereby represent, warrant, and
covenant to a party receiving a license hereunder as follows:
(a) as of the EFFECTIVE DATE, there are no claims, judgments
or settlements against or owed by HGS or pending or threatened claims or
litigation, in each case relating to HGS' interest in or to LICENSED PATENTS or
LICENSED TECHNOLOGY; and
(b) HGS and SP, as the case may be, has not and will not grant
any rights or licenses to any person or entity which is inconsistent with the
rights and licenses granted by HGS or SP, as the case may be, to a party under
this Agreement.
12.3 HGS hereby represents and warrants to SP that as of the EFFECTIVE
DATE:
(a) without having made any inquiry or investigation, no
information has come to HGS' attention which causes HGS to reasonably believe
that SP will not be able to negotiate license rights from each THIRD PARTY, who
is a licensor to HGS of the SOFTWARE identified in Appendix B as owned by said
THIRD PARTY, on terms that are at least as favorable to SP as those given by
such THIRD PARTY to HGS;
(b) without having made an inquiry or investigation, no
information has come to HGS' attention which causes HGS to reasonably believe
that the SOFTWARE to be provided to SP by HGS as of the EFFECTIVE DATE infringes
any patent, copyright, trademark or trade secret right of any THIRD PARTY which
has not been licensed by HGS;
(c) to HGS' best knowledge, the list of SOFTWARE contained in
Appendix B is true, complete and correct in all material respects;
(d) to HGS' best knowledge, the list of hardware components
set forth in Appendix B includes all of the material components SP will require
to utilize the SOFTWARE
42
at its facilities in the manner contemplated by this Agreement and to receive in
an electronic format compatible with the SOFTWARE all LICENSED TECHNOLOGY that
is available in electronic format; and
(e) for a period of one (1) year from the date that the
SOFTWARE is installed and is fully operational at SP's facilities, the SOFTWARE
located at HGS and which is and will be used by HGS to input, format, and
transmit LICENSED TECHNOLOGY to SP in an electronic format will function in the
manner intended by the parties.
12.4 No party to this Agreement has in effect, and after the EFFECTIVE
DATE no party shall enter into any written agreement that would be inconsistent
with its obligations under this Agreement.
12.5 NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY THAT SP
PATENTS OR LICENSED PATENTS ARE VALID OR ENFORCEABLE OR THAT THEIR EXERCISE OR
THE EXERCISE OF LICENSED TECHNOLOGY OR SP TECHNOLOGY DOES NOT INFRINGE ANY
PATENT RIGHTS OF THIRD PARTIES. A HOLDING OF INVALIDITY OR UNENFORCEABILITY OF
ANY SUCH PATENT, FROM WHICH NO FURTHER APPEAL IS OR CAN BE TAKEN, SHALL NOT
AFFECT ANY OBLIGATION HEREUNDER, BUT SHALL ONLY ELIMINATE ROYALTIES OTHERWISE
DUE UNDER SUCH PATENT FROM THE DATE SUCH HOLDING BECOMES FINAL.
12.6 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN HGS and SP MAKE NO
REPRESENTATIONS OR EXTEND ANY WARRANTIES OF ANY KIND,
43
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
12.7 Each party represents and warrants to the other parties hereto
that any materials provided by one party to another under this Agreement shall
be used in compliance with all applicable laws and regulations.
12.8 HGS hereby warrants and represents that to the extent any data
and/or information included within LICENSED TECHNOLOGY was obtained from The
Institute for Genomic Research (TIGR), TIGR has granted rights to HGS to all
such data and/or information.
12.9 No claim can be made or shall exist with respect to a breach of
warranty, representation or covenant under Paragraph 12.1(a); (b), (d) and (e)
Paragraph 12.2(a) or Paragraph 12.3, unless such claim is made prior to the end
of the RESEARCH TERM.
12.10 In the event that a THIRD PARTY pursuant to an agreement
contemplated by Paragraph 2.11(a) has a publication provision which is more
favorable to SP than Paragraph 7.7 of this Agreement, then SP may substitute
such more favorable publication provision for Paragraph 7.7 by written notice to
HGS within sixty (60) days of receipt thereof.
13. INDEMNIFICATION
---------------
13.1 SP shall defend, indemnify and hold harmless HGS, licensors of HGS
and each of their respective directors, officers, shareholders, agents and
employees, from and against any and all liability, loss, damages and expenses
(including reasonable attorneys' fees) as the result of claims, demands, costs
or judgments which may be made or instituted against any of them arising out of
the manufacture, possession, distribution, use, testing, sale or other
disposition
44
of any SP PRODUCT by or through SP or any THIRD PARTY granted rights by SP under
this Agreement. SP's obligation to defend, indemnify and hold harmless shall
include claims, demands, costs or judgments, whether for money damages or
equitable relief by reason of alleged personal injury (including death) to any
person or alleged property damage, provided, however, the indemnity shall not
extend to any claims against an indemnified party which result from the gross
negligence or willful misconduct of such indemnified party. SP shall have the
exclusive right. to control the defense of any action which is to be indemnified
in whole by SP hereunder, including the right to select counsel reasonably
acceptable to HGS to defend HGS, and to settle any claim, provided that, without
the written consent of HGS (which shall not be unreasonably withheld or
delayed), SP shall not agree to settle any claim against HGS to the extent such
claim has a material adverse effect on HGS. The provisions of this paragraph
shall survive and remain in full force and effect after any termination,
expiration or cancellation of this Agreement and the obligation hereunder shall
apply whether or not such claims are rightfully brought. SP shall require each
licensee to agree to indemnify HGS, in a manner consistent with this paragraph.
13.2 HGS shall defend, indemnify and hold harmless SP, licensors of SP
and each of their respective directors, officers, shareholders, agents and
employees, from and against any and all liability, loss, damages and expenses
(including reasonable attorneys' fees) as the result of claims, demands, costs
or judgments which may be made or instituted against any of them arising out of
the manufacture, possession, distribution, use, testing, sale or other
disposition by or through HGS or any THIRD PARTY granted rights by HGS under
this Agreement of any product in the HGS FIELD as to which HGS is granted a
license under an SP PATENT. HGS's
45
obligation to defend, indemnify and hold harmless shall include claims, demands,
costs or judgments, whether for money damages or equitable relief by reason of
alleged personal injury (including death) to any person or alleged property
damage, provided, however, the indemnity shall not extend to any claims against
an indemnified party which result from the gross negligence or willful
misconduct of such indemnified party. HGS shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by HGS
hereunder, including the right to select counsel reasonably acceptable to SP to
defend SP and to settle any claim, provided that, without the written consent of
SP (which shall not be unreasonably withheld or delayed), HGS shall not agree to
settle any claim against SP to the extent such claim has a material adverse
effect on SP. The provisions of this paragraph shall survive and remain in full
force and effect after any termination, expiration or cancellation of this
Agreement and HGS' obligation hereunder shall apply whether or not such claims
are rightfully brought. HGS shall require each licensee to agree to indemnify SP
in a manner consistent with this Paragraph 13.2.
13.3 A person or entity that intends to claim indemnification under
this Section 13 (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of any loss, claim, damage, liability, or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor,
after it determines that indemnification is required of it, shall assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume
the defense; or, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be
46
inappropriate due to actual or potential differing interests between such
Indemnitee and any other party represented by such counsel in such proceedings.
The indemnity agreement in this Section 13 shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement is
effected without the consent of the Indemnitor, which consent shall not be
withheld unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any liability to
the Indemnitee under this Section 13, but the omission so to deliver notice to
the Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Section 13. The Indemnitee under this
Section 13, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigations of any action, claim or
liability covered by this indemnification. In the event that each party claims
indemnity from the other and one party is finally held liable to indemnify the
other, the Indemnitor shall additionally be liable to pay the reasonable legal
costs and attorneys' fees incurred by the Indemnitee in establishing its claim
for indemnity.
14. FORCE MAJEURE
-------------
14.1 If the performance of any party of this Agreement, or of any
obligation under this Agreement, is prevented, restricted, interfered with or
delayed by reason of any cause beyond the reasonable control of the party liable
to perform, unless conclusive evidence to the contrary is provided, the party so
affected shall, upon giving written notice to the other party, be excused from
such performance to the extent of such prevention, restriction, interference or
delay, provided that the affected party shall use its reasonable best efforts to
avoid or remove such
47
causes of non-performance and shall continue performance with the utmost
dispatch whenever such causes are removed. When such circumstances arise, the
parties shall discuss what, if any, modification of the terms of this Agreement
may be required in order to arrive at an equitable solution.
15. GOVERNING LAW
-------------
15.1 Except for disputes under Section 8 which will be governed by
Federal law and brought in the Federal District Court of Delaware, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to the conflict of laws provisions thereof and
the exclusive jurisdiction and venue of any action with respect to this
Agreement shall be in a state court of the State of Delaware. Each of the
parties hereto agrees to submit to the exclusive jurisdiction and venue of such
court for the purpose of any such action. Service of process in any such action
may be effected in the manner provided in Section 18 for delivery of notice or
in any other manner consistent with Delaware law. In the event that a state
court or Federal District Court of the State of Delaware holds that an action
cannot be brought and maintained in a state court or Federal District Court of
the State of Delaware, then such action may be brought in any court having
proper jurisdiction.
16. SEPARABILITY
------------
16.1 In the event any portion of this Agreement shall be held illegal,
void or ineffective, the remaining portions hereof shall remain in full force
and effect.
48
16.2 If any of the terms or provisions of this Agreement are in
conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law.
16.3 In the event that the terms and conditions of this Agreement are
materially altered as a result of paragraphs 16.1 or 16.2, the parties will, in
good faith, renegotiate the terms and conditions of this Agreement to resolve
any inequities.
17. ENTIRE AGREEMENT
----------------
17.1 This Agreement, together with the Schedules, exhibits, Appendices
or other attachments hereto, entered into as of the date written above
constitutes the entire agreement between the parties relating to the subject
matter hereof and supersedes all previous writings and understandings. 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, except that the
parties may amend this Agreement by written instruments specifically referring
to and executed in the same manner as this Agreement.
18. NOTICES
-------
18.1 Any notice required or permitted under this Agreement shall be
hand-delivered or sent by express delivery service or certified or registered
mail, postage prepaid, or by fax with written confirmation by mail, to the
following addresses of the parties:
49
HGS
HUMAN GENOME SCIENCES, INC.
Suite 300
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
(Fax #▇▇▇-▇▇▇-▇▇▇▇)
copy to:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Carella, Byrne, Bain, Gilfillan, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
& Olstein
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(Fax #▇▇▇-▇▇▇-▇▇▇▇)
SP
SCHERING CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Business Development
(Fax #: ▇▇▇-▇▇▇-▇▇▇▇)
cc: Director of Licensing
(Fax #: ▇▇▇-▇▇▇-▇▇▇▇
and
SCHERING-PLOUGH LTD.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: President
(Fax # ▇▇ ▇▇ ▇▇▇▇▇▇▇)
18.2 Any notice required or permitted to be given concerning this
Agreement shall be effective upon receipt by the party to whom it is addressed.
50
19. ASSIGNMENT
----------
19.1 This Agreement and the licenses herein granted shall be binding
upon and inure to the benefit of the assignees and successors in interest of the
respective parties. Neither this Agreement nor any interest hereunder shall be
assignable by a party without the written consent of the other parties and any
attempted assignment contrary to this paragraph shall be void and without force
and effect provided, however, that a party may assign this Agreement or any of
its rights or obligations hereunder to any AFFILIATE or to any THIRD PARTY with
which it may merge or consolidate, or to which it may transfer all or
substantially all of its assets to which this Agreement relates, without
obtaining the consent of the other party, provided that the assigning party
remains liable under this Agreement and that the THIRD PARTY assignee or
surviving entity assumes in writing all of its obligations under this Agreement.
20. RECORDING
---------
20.1 SP and HGS each shall have the right, at any time, to record,
register, or otherwise notify this Agreement in appropriate governmental or
regulatory offices anywhere in the TERRITORY, and HGS or SP, as the case may be,
shall provide reasonable assistance to the other in effecting such recording,
registering or notifying.
20.2 The parties acknowledge that this Agreement may be notified to the
European Community for compliance with applicable laws.
51
21. COUNTERPARTS
------------
21.1 This Agreement may be executed in any number of counterparts, and
each such counterpart shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
22. WAIVER.
-------
22.1 Any delay or failure in enforcing a party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such party's rights to the future enforcement of its
rights under this Agreement, nor operate to bar the exercise or enforcement
thereof at any time or times thereafter, excepting only as to an express written
and signed waiver as to a particular matter for a particular period of time.
22.2 Notwithstanding the foregoing, in the event SP challenges whether
any payments contemplated hereunder (including, without limitation upfront
payments, royalties or milestones) is due, it shall have the right to make such
payments under protest (reserving all rights hereunder) pending resolution of
such dispute.
23. INDEPENDENT RELATIONSHIP.
-------------------------
23.1 Nothing herein contained shall be deemed to create an employment,
agency, joint venture or partnership relationship between the parties hereto or
any of their agents or employees, or any other legal arrangement that would
impose liability upon one party for the act or failure to act of the other
party. No party shall have any power to enter into any contracts or commitments
or to incur any liabilities in the name of, or on behalf of, the other parties,
or to bind the other parties in any respect whatsoever.
52
24. EXPORT CONTROL.
---------------
24.1 This Agreement is made subject to any restrictions concerning the
export of products or technical information from the United States of America
which may be imposed upon or related to HGS or SP from time to time by the
government of the United States of America. Furthermore, SP agrees that it will
not export, directly or indirectly, any technical information acquired from HGS
under this Agreement or any products using such technical information to any
country for which the United States government or any agency thereof at the time
of export requires an export license or other governmental approval, without
first obtaining the written consent to do so from the Department of Commerce or
other agency of the United States government when required by an applicable
statute or regulation.
25. CHANGE OF CONTROL.
------------------
25.1 In the event that a "Change of Control" causes HGS' rights and
obligations hereunder to pass to a "Major Pharmaceutical Company" (as defined
below) then such Major Pharmaceutical Company shall set up appropriate
procedures to ensure that RESEARCH PLANS submitted by SP are not used for
purposes other than those of Section 6 and Paragraph 2.5 of this Agreement. SP
shall have the right, at its expense,through its own designated experts or like
person reasonably acceptable to such Major Pharmaceutical Company, to examine
HGS' records relating to such procedures to verify and report to SP that such
Major Pharmaceutical Company has complied with such procedures, Such examination
shall occur during regular business hours upon proper advance written notice
during the life of this Agreement and for six (6) months after its termination,
provided, however, that such examination shall not take place
53
more often than once a year and not later than forty-five (45) days after
written request is made and provided, further, that such expert executes
customary confidentiality agreements prior to any such audit satisfactory in
form and substance to such Major Pharmaceutical Company, to maintain in
confidence all information obtained during the course of any such audit except
for disclosure to SP as necessary for the above purpose.
As used herein "Change of Control" shall mean (i) any merger,
reorganization, consolidation or combination in which HGS is not the surviving
corporation, (ii) any "person" (within the meaning of Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934), excluding SP and/or its
AFFILIATES, is or becomes the beneficial owner, directly or indirectly, of
securities of HGS representing 50% or more of either (a) the then-outstanding
shares of common stock of HGS or (b) the combined voting power of HGS'
then-outstanding voting securities; or (iii) approval by the shareholders of HGS
of a complete liquidation or the complete dissolution of HGS.
As used herein the term "Major Pharmaceutical Company" means any entity
(including any corporation, joint venture, partnership or unincorporated
entity), as well as any AFFILIATES or division(s) of such entity, that is
engaged in the research, development, manufacturing, registration and/or
marketing of drug products that are approved under NDAs, HRDs, ANDAs, Product
License Applications (including without limitation any entity that is a member
of PhRMA). "Major Pharmaceutical Company" shall also mean any entity which,
through or following a Change of Control, at any time would either itself meet
the definition of "Major Pharmaceutical Company" in the prior sentence or would
be an AFFILIATE of any entity which is or would meet such definition.
54
26. GUARANTEE
---------
26.1 Schering Corporation and Schering Plough Ltd. jointly and
severally guarantee that their respective AFFILIATES will perform all
obligations under this Agreement as if the AFFILIATES were signatories of this
Agreement.
27. FURTHER ACTIONS
---------------
27.1 Each party agrees to execute, acknowledge and deliver such further
instruments and to do all such other acts, as may be necessary or appropriate in
order to carry out the purposes and intent of this Agreement.
IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this Agreement as of the date first written above.
SCHERING CORPORATION SCHERING-PLOUGH LTD.
BY:________________________ BY:__________________________
Title: Title:
HUMAN GENOME SCIENCES, INC.
BY:________________________
Title:
55
TABLE OF CONTENTS
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Page
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1. DEFINITIONS.............................................. 2
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2. GRANTS AND COVENANTS..................................... 8
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3. PAYMENTS AND ROYALTIES................................... 14
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4. RESEARCH TERM ........................................... 19
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5. TECHNOLOGY TRANSFER...................................... 20
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6. PRODUCT DEVELOPMENT...................................... 23
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7. CONFIDENTIALITY.......................................... 24
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8. PATENT PROSECUTION AND LITIGATION........................ 27
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9. STATEMENTS AND REMITTANCES............................... 36
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10. TERM AND TERMINATION..................................... 38
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11. RIGHTS AND DUTIES UPON TERMINATION ...................... 40
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12. WARRANTIES AND REPRESENTATIONS........................... 41
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13. INDEMNIFICATION.......................................... 44
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14. FORCE MAJEURE............................................ 47
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15. GOVERNING LAW .......................................... 48
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16. SEPARABILITY............................................. 48
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17. ENTIRE AGREEMENT......................................... 49
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18. NOTICES.................................................. 49
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19. ASSIGNMENT............................................... 51
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20. RECORDING................................................ 51
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21. COUNTERPARTS............................................. 52
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22. WAIVER................................................... 52
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23. INDEPENDENT RELATIONSHIP................................. 52
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24. EXPORT CONTROL........................................... 53
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25. CHANGE OF CONTROL........................................ 53
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26. GUARANTEE................................................ 55
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27. FURTHER ACTIONS.......................................... 55
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