EXHIBIT 10.6
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN
PORTIONS OF THIS DOCUMENT. SUCH PORTIONS HAVE BEEN
REDACTED AND MARKED WITH ASTERISKS (**). THE NON-
REDACTED VERSION OF THIS DOCUMENT HAS BEEN SENT TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT.
LICENSE AGREEMENT
BY AND BETWEEN
SYNTHELABO
AND
PRAECIS PHARMACEUTICALS, INC.
May 13, 1997
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS................................................2
ARTICLE 2 GRANT OF EXCLUSIVE LICENSE TO
SYNTHELABO................................................14
2.1 Exclusive License and Sublicense
For Licensed Products.....................................14
2.2 PRAECIS Covenant to Honor
Synthelabo's Exclusive Rights.............................15
2.3 Acknowledgement of PRAECIS'
Retained Rights...........................................16
2.4 Sublicenses...............................................18
2.5 Agreement Regarding Sales in
Section B Territory Countries.............................19
2.6 Use of Improvements by IUF and IU.........................21
ARTICLE 3 MANUFACTURING.............................................21
3.1 PRAECIS' Supply Commitment................................21
3.2 Preliminary Three-Year Forecasts..........................21
3.3 Long-Term Forecasts.......................................22
3.4 Long-Term Forecasts Nonbinding............................22
3.5 Short-Term Forecasts......................................23
3.6 Purchase Orders...........................................24
3.7 PRAECIS' Supply Obligations and
Rights....................................................25
3.8 [Intentionally Omitted]
3.9 Manufacturing Rights of Synthelabo Upon
PRAECIS Material Breach...................................26
3.10 Payment for Licensed Products
Manufacture By Synthelabo;
Synthelabo Duty to Mitigate...............................27
3.11 Suspension of Manufacture By
Synthelabo; Termination of
Manufacturing License.....................................29
3.12 Agreement Regarding Third Party
Manufacturers.............................................30
3.13 Direct Billing............................................32
3.14 Force Majeure.............................................33
3.15 Form and Terms of License Product
Shipments.................................................33
3.16 Supply of Licensed Product For
Certain Supplemental Development
Plan Clinical Studies.....................................35
ARTICLE 4 DEVELOPMENT AND APPROVAL OF
LICENSED PRODUCTS.........................................35
4.1 Diligence.................................................35
4.2 Development Program and Plans.............................36
i
4.3 Additional Applications...................................38
4.4 Regulatory Meetings.......................................39
4.5 Development Costs.........................................39
4.6 Registration and Reimbursement
Approvals.................................................41
4.7 Development Costs Records.................................42
4.8 Technical Information.....................................43
4.9 Clinical Trials...........................................44
4.10 Material Adverse Development;
Material Adverse Patent
Development; Competition..................................45
4.11 Synthelabo Formulation....................................47
4.12 Reporting on Adverse Reaction.............................47
ARTICLE 5 MARKETING AND SALES OBLIGATIONS OF
SYNTHELABO................................................47
5.1 Diligence Generally.......................................47
5.2 Advertising...............................................47
ARTICLE 6 GOVERNANCE................................................48
6.1 Joint Steering Committee..................................48
6.2 Operations of the Parties Under the
Collaboration.............................................48
6.3 Timing of Regular Meetings; Agendas
.........................................................49
6.4 Special Meetings..........................................49
6.5 Decisions and Disputes....................................49
6.6 Development Subcommittee..................................51
6.7 Cooperation...............................................51
6.8 Visitation................................................52
6.9 Committee and Certain Other Costs.........................52
ARTICLE 7 CONFIDENTIALITY...........................................53
7.1 General...................................................53
7.2 Certain Exceptions........................................54
7.3 Publications..............................................55
ARTICLE 8 TRADEMARKS................................................56
8.1 Exclusive License for Rel-Ease(TM)
Trademark.................................................56
8.2 PRAECIS Approval Right....................................57
8.3 Trademark Designations....................................58
8.4 Labelling, etc............................................58
8.5 Indemnification By PRAECIS................................59
8.6 Licensed Products Names and
Trademarks................................................59
ii
8.7 PRAECIS Registration of Licensed
Product Territory Trademark Outside
the Territory.............................................61
ARTICLE 9 PAYMENTS..................................................62
9.1 Signing and Milestone Payments............................62
9.2 Benchmark Transfer Price..................................64
9.3 Determination of Selling Price of
Licensed Products.........................................65
9.4 Transfer Price............................................66
9.5 Payment of Benchmark Transfer Price
.........................................................66
9.6 Adjustments; Reports......................................67
9.7 Miscellaneous Sales Costs.................................68
9.8 Royalties.................................................68
9.9 Samples...................................................69
9.10 Currency..................................................70
9.11 PRAECIS Audit Rights......................................70
ARTICLE 10 REMEDIES FOR NON-PAYMENT..................................72
10.1 Interest..................................................72
10.2 Other.....................................................72
10.3 Collateral................................................73
10.4 Insurance on Unsold Goods.................................74
ARTICLE 11 COOPERATION AND ASSISTANCE................................74
11.1 General...................................................74
11.2 Specific Cooperation of Synthelabo........................75
11.3 Specific Cooperation of PRAECIS...........................75
11.4 Patent Prosecution and Maintenance........................76
ARTICLE 12 REPRESENTATIONS AND WARRANTIES............................77
12.1 Conformity to Specifications..............................77
12.2 Representations as to Intellectual
Property..................................................79
12.3 Authority; Binding Agreement; Other
Matters...................................................80
12.4 IUF License Agreement.....................................81
12.5 Warranty Disclaimer.......................................81
ARTICLE 13 INDEMNIFICATION...........................................82
13.1 Synthelabo Indemnification of
PRAECIS...................................................82
13.2 PRAECIS' Indemnification of
Synthelabo................................................83
13.3 Mutual Indemnification for Breach.........................83
13.4 Procedure For Third Party Claims..........................84
iii
ARTICLE 14 INSURANCE.................................................85
ARTICLE 15 NON-COMPETITION...........................................85
15.1 Mutual Non-Competition Covenant...........................85
15.2 Competitive Acquisition...................................86
ARTICLE 16 IMPROVEMENTS..............................................86
ARTICLE 17 TERM & TERMINATION........................................90
17.1 Term; Expiration..........................................90
17.2 Bankruptcy, Etc...........................................91
17.3 Breach....................................................92
17.4 Effect of Termination.....................................93
17.5 Surviving Provisions......................................94
17.6 Continuation of Sublicense Rights.........................94
17.7 Termination for Material Adverse
Events....................................................95
17.8 Right to Sell Inventory...................................95
ARTICLE 18 ARBITRATION...............................................96
18.1 Procedure; Decision Final and
Binding...................................................96
18.2 Assumption Regarding Intellectual
Property Rights...........................................97
18.3 Exception to Exclusive Dispute
Resolution Procedure......................................97
ARTICLE 19 INFRINGEMENT AND MAINTENANCE..............................98
19.1 Infringement by Third Parties.............................98
19.2 Infringement Suit By Third Parties........................99
19.3 Cooperation...............................................99
19.4 Differing Interests......................................100
ARTICLE 20 ASSIGNMENT...............................................100
ARTICLE 21 COMMUNICATIONS...........................................101
ARTICLE 22 MISCELLANEOUS PROVISIONS.................................102
22.1 Relationship of the Parties..............................102
22.2 Advertising; Trademarks, Etc.............................103
22.3 Public Disclosures.......................................103
22.4 Governing Law............................................104
22.5 Entire Agreement.........................................104
22.6 Severability.............................................104
22.7 No Waiver................................................105
22.8 Captions and References..................................105
22.9 Counterparts.............................................105
iv
APPENDICES
Appendix I PRAECIS Proposed Core Development Studies
Appendix II Patent Applications
Appendix III IUF License Agreement
Appendix IV PPI-149 Definition
Appendix V Territory
Appendix VI Additional Supply Provisions
Appendix VII Example Form of Quality Charter
v
LICENSE AGREEMENT
This Agreement is made as of the 13th day of May, 1997 (the "Effective
Date"), by and between Synthelabo, a societe anonyme organized in France, having
principal offices at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
("Synthelabo"), and PRAECIS PHARMACEUTICALS, INC., a Delaware corporation having
principal offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("PRAECIS").
R E C I T A L S:
PRAECIS(TM) is the owner of patent applications and know-how related to
its depot formulation Rel-Ease(TM) system (the "Rel-Ease System") and certain
uses of LHRH Antagonist Compounds, and is the exclusive licensee of PPI-149 and
the other PPI Licensed Rights.
Synthelabo wishes to enter into a license agreement with PRAECIS for the
development and commercialization of therapeutic LHRH antagonist products which
contain PPI-149 or potentially other LHRH Antagonist Compounds and which are
formulated by or on behalf of PRAECIS.
PRAECIS is willing to enter into a license agreement with Synthelabo for
the development and commercialization of therapeutic LHRH antagonist products
which contain PPI-149 or potentially other LHRH Antagonist Compounds and which
are formulated by or on behalf of PRAECIS.
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements contained herein, the
parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
For the purposes of this Agreement, the following words and phrases shall
have the following meanings:
1.1 "Advertise" shall mean to create, distribute and display
information and artistic material for the purpose of promoting sales of the
Licensed Products to Third Parties, including but not limited to articles, print
ads, brochures, symposia, commercial exhibits, video and audio recordings, and
television, radio, and internet advertisements or commercials (hereinafter
"Forms").
1.2 "Adjustment Amount" is defined in Section 9.6.
1.3 An "Affiliate" of a party shall mean a company or other entity
which controls, is controlled by, or is under common control with such party. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
fifty percent (50%) of the voting stock or other ownership interest of the other
corporation or entity, or if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the corporation
or other entity or the power to elect or appoint fifty percent (50%) or more of
the members of the governing body of the corporation or other entity; provided
that for all purposes of this Agreement, the following
2
entities shall be deemed to be Affiliates of Synthelabo: Synthemedic (Morocco),
Synthelabo - Byk Pharma GmbH (Austria), Astra Synthelabo AB (Sweden) and Leiras
Synthelabo Oy (Finland).
1.4 [INTENTIONALLY OMITTED]
1.5 "Applications" shall mean all existing and future therapeutic
uses for Licensed Products, including without limitation the treatment of
prostate cancer, breast cancer, endometriosis, uterine fibroids, benign
prostatic hypertrophy (BPH), infertility, and precocious puberty.
1.6 "Benchmark Transfer Price" is defined in Section 9.2.
1.7 "Binding Estimate" is defined in Section 3.5(b).
1.8 "Clinical Trials" shall mean research in which Licensed Products
are used to treat human patients for the purpose of evaluating the safety,
efficacy and performance of the Licensed Products in such use, and for the
purpose of preparing reports as may be required in order to obtain Registration
Approval or Reimbursement Approval or for the purpose of preparing marketing
studies.
1.9 "Confidential Information" shall mean private information
transmitted by one party to the other pursuant to this Agreement or the
collaboration contemplated hereby, including but not limited to plans, results,
data, ideas, concepts, Improvements, conclusions, suggestions, know-how,
show-how, inventions, discoveries, products, processes, trade secrets, and all
information relating to the Licensed Products (including
3
without limitation, the information set forth in Appendix IV); any financial or
business information relating to the Licensed Products, this Agreement or the
collaboration contemplated hereby; strategies with respect to Clinical Trials;
and any other information marked "Confidential" prior to transmittal. With
regard to oral communications, information conveyed thereby shall be considered
"Confidential Information" if made in the context of discussions specifically
relating to the Licensed Products, this Agreement or the collaboration
contemplated hereby, or if reduced to a writing marked "CONFIDENTIAL" and
transmitted to the other party within forty-five (45) days after said oral
communication. Confidential Information shall not include information which the
recipient can show: (i) is generally known or readily available to the public at
the time of disclosure other than as a result of a breach of any obligation of
confidentiality (including hereunder); (ii) was already known to the recipient
without a breach of any obligation of confidentiality (including hereunder);
(iii) became available to the public independent of the recipient; (iv) was
disclosed to the recipient by a Third Party having legal rights to same, which
disclosure did not violate a confidentiality obligation of such Third Party; or
(v) is subsequently and independently developed by an employee of the recipient
who did not have knowledge of the information disclosed by the disclosing party.
1.10 "Core Development Plan" shall mean the development plan to be
prepared and revised as necessary by
4
Synthelabo and PRAECIS, in accordance with Section 4.2, which will include on an
annual basis a detailed set of milestones, timeframes and operating plans with
respect to the Core Development Studies.
1.11 "Core Development Studies" shall mean preclinical studies and
Clinical Trials to be undertaken by PRAECIS in the United States and/or other
countries in order to seek and obtain FDA Registration Approval for (i) the
Application of prostate cancer and (ii) the Applications of endometriosis or
uterine fibroids as the Joint Steering Committee shall determine, and (iii) any
other Application approved for development by the Joint Steering Committee and
the Development Subcommittee as provided in Section 4.3. The Core Development
Studies proposed by PRAECIS as of the Effective Date are summarized in Appendix
I.
1.12 "Cost of Goods" or its abbreviation "COGS" shall mean the unit
cost of manufacture of a given Licensed Product, as determined in accordance
with generally accepted accounting principles in the place of manufacture of
such Licensed Product, which cost in any event includes, without limitation,
costs of direct labor, contracts with Third Parties, manufacturing overhead
(including fixed costs), materials and supplies, all freight, duties, taxes
assessed on sales and transportation costs, but excludes any amount payable as
royalties in respect of the PPI Licensed Rights.
1.13 "Development Costs" shall mean all external costs (e.g., costs
of contracts with clinical research organizations)
5
and direct internal costs (including direct labor, materials, supplies, and
specially procured essential equipment, but excluding rent, utilities,
administrative, secretarial, clerical, accounting and management allocations),
plus a fixed amount for overhead equal to ten percent (10%) of the direct
internal costs, which in each case are incurred after the Effective Date and
during the term hereof by PRAECIS or Synthelabo, as applicable, in connection
with a Development Phase (but excluding such costs incurred before or after the
Effective Date in connection with the prostate cancer Clinical Trials (IND
#51,170, Protocol #149-96-01) which are underway as of the Effective Date).
1.14 "Development Phase" in any country with respect to any
Application for any Licensed Product shall mean the period commencing on the
Effective Date and continuing until Registration Approval and Reimbursement
Approval of such Licensed Product for such Application in such country has been
obtained.
1.15 "Development Program" shall mean the collaboration by PRAECIS
and Synthelabo hereunder during the Development Phase.
1.16 "Diligence" or "diligent efforts" shall mean commercially
reasonable efforts consistent with efforts made by businesses of similar size
and resources for similar products in a similar context.
1.17 "Dispute Notice" is defined in Section 6.4.
1.18 "Disputed Matter" is defined in Section 6.4.
6
1.19 "Effective Date" is defined in the first paragraph of this
Agreement.
1.20 "FDA" shall mean the United States Food and Drug Administration
or any successor agency.
1.21 "Field" shall mean the field as defined by the Applications
taken collectively.
1.22 "First Commercial Sale" of a Licensed Product shall mean the
first commercial sale by Synthelabo or its Affiliates for use or consumption by
the general public of such Licensed Product based on Registration Approval of
such Licensed Product in any Territory Country.
1.23 "Improvements" shall mean changes in composition, design or
manufacture of the Licensed Products which result in enhancements or alterations
of any component of the Licensed Products with respect to, without limitation,
efficacy, safety, drug delivery profiles, stability, shelf-life, dosage, cost,
ease of use, or styling, except that for purposes of Section 2.6 only,
"Improvements" shall have the meaning set forth in the IUF License Agreement.
1.24 "Incoterms" shall mean that body of trade rules as published in
1990 by the International Chamber of Commerce, Paris, France.
1.25 "Intellectual Property Rights" shall mean all rights, including
unpatented inventions and know-how, of PRAECIS in and to or with respect to the
Licensed Products, including the rights in the Territory in and to the patent
applications listed
7
in Appendix II (which is incorporated herein by reference), and all patents
issuing therefrom and all continuations, continuations-in-part, reissues,
divisionals, extensions, supplementary certificates of protection and
equivalents of any of the foregoing throughout the Territory; and further
including all other rights, including unpatented inventions and know-how, in and
to or with respect to the Licensed Products as may subsist or may be secured by
PRAECIS under and in accordance with the patent, copyright, and trade secret
statutes, rules, regulations, orders and decrees of any governments of the
Territory, or which otherwise exist or can be obtained under constitutions,
treaties, common law, or civil law of any and all Territory Countries, together
with all rights of PRAECIS under contracts, licenses and other agreements
relating to the Licensed Products or any Intellectual Property Rights; but
excluding trademark rights and the PPI Licensed Rights which are provided for
separately hereunder.
1.26 "Inventions" and "Invention Rights" shall have the respective
meanings set forth in the IUF License Agreement.
1.27 "IU" shall mean Indiana University.
1.28 "IUF" shall mean Indiana University Foundation.
1.29 "IUF License Agreement" shall mean the License Agreement dated
as of October 17, 1996 between IUF and PRAECIS as in effect from time to time, a
copy of which Agreement as currently in effect is attached hereto as Appendix
III.
8
1.30 "Joint Steering Committee" is defined in Section 6.1
1.31 "LHRH Antagonist Compounds" shall mean compounds which exhibit
Lutenizing Hormone Releasing Hormone (LHRH) antagonist activity.
1.32 "Licensed Products" shall mean therapeutic products which
contain PPI-149, or any other LHRH Antagonist Compound as to which PRAECIS has
all the rights necessary to make the grants to Synthelabo hereunder, in either
case in a depot or other formulation owned by or licensed to PRAECIS. Unless
otherwise specified herein, references to Licensed Products include
Improvements.
1.33 "Licensed Product Territory Trademark" is defined in Section
8.5.
1.34 "Long-Term Forecast" is defined in Section 3.3.
1.35 "Material Adverse Development" means, with respect to a
Licensed Product for a particular Application, an event or development (other
than a Material Adverse Patent Development) which occurs after the date of this
Agreement (other than an event or development which constitutes or arises from a
breach hereof by Synthelabo) which results in a material adverse change in the
commercial prospects of such Licensed Product for such Application.
1.36 "Material Adverse Patent Development" means the occurrence of
any of the events described in clauses (A), (B) or (C): (A) the reasonable
determination of Synthelabo, at any stage
9
in the patent procedure after receipt of the European search report and the
first official letter from the European Patent Office referred to in Section
11.4, that it is not reasonably likely that a European patent will be granted on
PPI-149 or the formulation, respectively, substantially as described in the
respective European equivalents of patent applications PCT/US96/09852 or US
08/762,747, respectively (the "Material Patent Applications"); (B) the lack of
any valid or enforceable patent issued substantially as described in the
Material Patent Applications as the individual or combined result of (i) no such
patents having issued and the unrevivable abandonment of any of the Material
Patent Applications, (ii) all such patents having been finally and unappealably
declared invalid or unenforceable, or (iii) all such patents having prematurely
expired for failure to pay maintenance fees or annuities; or (C) a timely filed
action by a Third Party to annul, cancel or revoke a patent issued substantially
as described in the Material Patent Applications, other than any such action
which has no reasonable likelihood of success on the merits.
1.37 "Net Sales" shall mean the sales price per unit of a Licensed
Product invoiced by Synthelabo or an Affiliate thereof to a Third Party with
respect to the sale of Licensed Products to a Third Party, less, to the extent
such amounts are included in the invoiced sales price, the direct cost of trade
discounts, credits for returns and rebates, discounts for prompt payments to the
extent such discounts are customary in the
10
applicable Territory Country, insurance and transportation charges (unless
reimbursed by a Third Party), and duties and taxes assessed on sales; provided
that neither Synthelabo nor its Affiliates shall (i) sell Licensed Products in
combination with other products unless the price of the Licensed Products is
separately identified in the invoice with such other products, nor (ii) discount
Licensed Products by a greater percentage than other products with which such
Licensed Products are sold. Units of Licensed Products which are provided to
Synthelabo or its Affiliates at Cost of Goods in accordance with Section 9.9 for
use as salesman's exhibits or as Promotional free samples, shall not be
considered sales for purposes of this definition, but units of Licensed Products
which are provided to Synthelabo or its Affiliates in connection with any Phase
IV Clinical Trials shall be considered sales for purposes of this definition.
For purposes of this definition as used throughout this Agreement, any
co-marketing partner of Synthelabo or its Affiliates shall be deemed an
"Affiliate" and not a Third Party.
1.38 "Notice" is defined in Article 21.
1.39 "Notice Address" means the addresses listed as such in Article
21.
1.40 "Patent Rights" shall have the meaning set forth in the IUF
License Agreement.
1.41 "Plateau Amount" is defined in Section 3.9.
1.42 "PPI-149" shall have the meaning set forth in Appendix IV.
11
1.43 "PPI Licensed Rights" shall mean all rights licensed to PRAECIS
pursuant to Section 3.01(a) of the IUF License Agreement, together with, if
applicable, any rights to LHRH Antagonist Compounds licensed to PRAECIS in
accordance with Section 3.01(b) of the IUF License Agreement.
1.44 "Promote" shall mean to encourage Third Parties to consider
purchasing the Licensed Products, through in-person calls by qualified and
trained salespeople, and through such other promotional means as are reasonable
and customary in the pharmaceutical industry in each Territory Country for
products which are similar to Licensed Products.
1.45 "Quarterly Shortfall" is defined in Section 3.7(b).
1.46 "Registration Application" shall mean a registration dossier
filed with the appropriate regulatory authorities of a country or with an agency
representing a group of countries to obtain Registration Approval and
Reimbursement Approval for a Licensed Product in such country or group of
countries.
1.47 "Registration Approval" shall mean governmental approval for
marketing and sale of a Licensed Product in a country prior to the commencement
of sales of Licensed Product in such country.
1.48 "Reimbursement Approval" shall mean approval by the
governmental health care cost reimbursement agency or agencies in a country,
including any required pricing approval,
12
required in order for patients in such country to receive reimbursement for
purchases of a Licensed Product.
1.49 "Requesting Party" is defined in Section 4.7.
1.50 "Revenue" or its abbreviation "REV" shall mean the arithmetic
average of Net Sales for a given Licensed Product during a given calendar
quarter.
1.51 "Reviewed Party" is defined in Section 4.7.
1.52 "Short-Term Forecast" is defined in Section 3.5(a).
1.53 "Startup Date" is defined in Section 3.3.
1.54 "Supplemental Development Plan" shall mean the supplemental
development plan to be prepared and revised, as necessary, by Synthelabo in
accordance with Section 4.2, which will include on an annual basis a detailed
set of milestones, timeframes and operating plans with respect to the
Supplemental Development Studies.
1.55 "Supplemental Development Studies" shall mean preclinical
studies and Clinical Trials to be undertaken by Synthelabo in order to fulfill
the requirements for Registration Approval and Reimbursement Approval in any
Territory Country which have not fully been satisfied by the Core Development
Studies.
1.56 "Synthelabo Formulation" shall mean any formulation for PPI-149
or for any other LHRH Antagonist Compound licensed to Synthelabo hereunder,
which formulation is
13
discovered, conceived or developed solely by or on behalf of Synthelabo, its
employees or agents.
1.57 "Territory" shall mean the geographic areas which, as of the
Effective Date, are denominated as set forth in Appendix V, including their
respective territories and possessions, irrespective of any changes in
government or name after the Effective Date.
1.58 "Territory Countries" shall mean the countries which make up
the Territory as defined hereinabove and in Appendix V, both individually and
collectively.
1.59 "Third Party" shall mean any person or entity other than
PRAECIS, Synthelabo and their respective Affiliates.
1.60 "Transfer Price" is defined in Section 9.4.
ARTICLE 2 - GRANT OF EXCLUSIVE LICENSE TO SYNTHELABO
2.1 Exclusive License and Sublicense For Licensed Products. Subject
to the other terms and conditions herein, PRAECIS hereby grants Synthelabo and
its Affiliates (i) an exclusive license under the Intellectual Property Rights
and an exclusive sublicense under the PPI Licensed Rights to develop Licensed
Products, to use Licensed Products, to import Licensed Products from PRAECIS, to
offer to sell Licensed Products to Third Parties, to Advertise and Promote
Licensed Products, and to distribute and sell Licensed Products to Third
Parties, with each such licensed and sublicensed right being limited to the
Field and to the Territory and (ii) an exclusive sublicense under the PPI
Licensed Rights and with respect to any LHRH Antagonist
14
Compound not included in the PPI Licensed Rights as to which PRAECIS has all the
rights necessary to make the grant set forth in this clause (ii), to develop
Synthelabo Formulations. The right to manufacture Licensed Products or have
Licensed Products manufactured and the right to import Licensed Products from
other than PRAECIS are included in this grant in accordance with and only to the
extent permitted by Article 3. Notwithstanding the foregoing or any other
provision of this Agreement, (i) in no event shall the scope of the grant of a
sublicense with respect to the PPI Licensed Rights as set forth herein be deemed
to exceed the scope of the grant of rights to PRAECIS pursuant to the IUF
License Agreement and (ii) the grant of a sublicense with respect to the PPI
Licensed Rights as set forth herein shall be subject to any reservations or
restrictions with respect to PPI Licensed Rights contained in the IUF License
Agreement.
2.2 PRAECIS Covenant to Honor Synthelabo's Exclusive Rights. PRAECIS
and its Affiliates shall honor the exclusive license rights of Synthelabo
hereunder and shall neither take, nor permit to be taken, any action which is
inconsistent with such exclusive rights, including, by way of example and not
limitation, by (i) offering to sell or selling Licensed Products inside the
Territory, (ii) knowingly offering to sell or knowingly selling Licensed
Products to Third Parties who intend to transport or use same inside the
Territory, (iii) knowingly offering to sell or knowingly selling any Licensed
Products to Third Parties who intend to sell same in the Territory or (iv)
15
maintaining any branch or distribution depot for the purpose of selling Licensed
Products in the Territory; however, subject to the foregoing restrictions on
PRAECIS, nothing herein shall obligate PRAECIS to impose any restriction upon
the use or resale of any Licensed Product by a purchaser (except for a licensee
of PRAECIS outside the Territory) thereof from PRAECIS, and the use or resale of
any Licensed Product in the Territory by such a purchaser (except for a licensee
of PRAECIS outside the Territory) shall not constitute a breach of any provision
of this Agreement by PRAECIS. Neither PRAECIS nor Synthelabo shall be under any
obligation to procure the termination of such use or resale, but either may, at
their discretion, seek to do so.
2.3 Acknowledgement of PRAECIS' Retained Rights. Synthelabo and its
Affiliates hereby agree and acknowledge that PRAECIS and its Affiliates may
develop Licensed Products and Improvements, distribute, offer for sale,
Advertise, Promote, and sell the Licensed Products, and otherwise develop and
exploit the market for Licensed Products outside of the Territory, either on
their own behalf or through marketing partnerships, strategic alliances, or
other relationships with Third Parties, as PRAECIS may determine in its sole
discretion, and without any obligation to Synthelabo therefor. In addition,
Synthelabo and its Affiliates hereby agree that PRAECIS and its Affiliates,
either on their own behalf or through marketing partnerships, strategic
alliances, or other relationships with Third Parties, shall have the right
within the Territory to (i) develop the Licensed
16
Products and Improvements, conduct Clinical Trials and engage in academic
research and publication (so long as in accordance with the confidentiality and
publication provisions herein) and (ii) with the prior approval of Synthelabo
which will not be unreasonably withheld or delayed, hold, sponsor and
participate in conferences and symposia related to the Licensed Products or LHRH
Antagonist Compounds generally. Synthelabo and its Affiliates shall honor the
exclusive rights of PRAECIS outside of the Territory and shall neither take, nor
permit to be taken, any action which is inconsistent with such exclusive rights,
including, by way of example and not limitation, by (i) offering to sell or
selling Licensed Products outside the Territory, (ii) knowingly offering to sell
or knowingly selling Licensed Products to Third Parties who intend to transport
or use same outside the Territory, (iii) knowingly offering to sell or knowingly
selling any Licensed Products to Third Parties who intend to sell same outside
of the Territory or (iv) maintaining any branch or distribution depot for the
purpose of selling Licensed Products outside the Territory; however, subject to
the foregoing restrictions on Synthelabo, nothing herein shall obligate
Synthelabo to impose any restriction upon the use or resale of any Licensed
Product by a purchaser thereof (except for a licensee of Synthelabo inside the
Territory) from Synthelabo or its Affiliates, and the use or resale of any
Licensed Product outside of the Territory by such a purchaser (except for a
licensee of Synthelabo inside the Territory) shall not constitute
17
a breach of any provision of this Agreement by Synthelabo. Neither PRAECIS nor
Synthelabo shall be under any obligation to procure the termination of such use
or resale, but either may, at their discretion, seek to do so.
2.4 Sublicenses. Pursuant to sublicense or similar agreements,
Synthelabo and its Affiliates may, with the written consent of PRAECIS which
shall not be unreasonably withheld or delayed, extend the grant of Section 2.1,
along with its other rights hereunder, to one or more Third Parties; provided
such agreement is consistent with the terms hereof and the IUF License Agreement
and contains all of the terms required by the IUF License Agreement to be
included in any sublicense granted by PRAECIS. By granting any such sublicense,
Synthelabo shall be deemed to have consented to the amendment of this Agreement
to render the license and sublicense provided for herein co-exclusive as between
Synthelabo and its Affiliates on the one hand, and their respective
sublicensee(s) on the other, but not as between any such parties, on the one
hand, and any other Third Party on the other. Synthelabo will deliver to PRAECIS
a true and correct copy of each agreement entered into by Synthelabo and a Third
Party pursuant to this Section 2.4 and shall promptly advise PRAECIS in writing
of any modification (and shall supply a copy of the same) or termination of each
such agreement. If IUF should object that the IUF License Agreement does not
entitle PRAECIS to grant any such sublicense, Synthelabo may request PRAECIS to
grant such sublicense directly to such Third Party.
18
Any such agreement shall automatically terminate upon termination (but not
expiration) of this Agreement, unless such termination is pursuant to Section
17.2 due to an event described therein with respect to PRAECIS or such
termination is by Synthelabo for breach pursuant to Section 17.3 and the special
provisions of Section 17.4 are applicable.
2.5 Agreement Regarding Sales in Section B Territory Countries. It
is the intention of the parties that Synthelabo, either alone or acting through
its Affiliates or its or their permitted assigns or permitted sublicensees, will
itself take full responsibility for the marketing and distribution activities
contemplated herein. As such, Synthelabo hereby agrees that it and its
Affiliates shall not, in those Territory Countries listed in Section A of
Appendix V ("Section A Territory Countries"), knowingly sell or otherwise
transfer Licensed Products to a Third Party which has substantially assumed or
will substantially assume the marketing responsibilities of Synthelabo hereunder
with respect to Licensed Products purchased by such Third Party, provided that
the foregoing shall not prohibit Synthelabo and its Affiliates from entering
into co-marketing arrangements with Third Parties on customary terms, it being
understood and agreed that any such arrangement shall not affect Synthelabo's
responsibility for the performance of its obligations hereunder and Synthelabo's
indemnification obligations hereunder shall apply to the acts or omissions of
any such co-marketing partner as if such acts or omissions were those of
Synthelabo. However,
19
the parties agree that in certain of the Territory Countries listed in Section B
of Appendix V (the "Section B Territory Countries"), direct marketing by
Synthelabo or its Affiliates or by a co-marketing partner thereof may not be
possible, practicable or feasible. Therefore, in the Section B Territory
Countries, Synthelabo may have its marketing activities in such countries
performed by other Third Parties to the extent such performance of such
activities is customarily performed by such Third Parties in such countries, and
Synthelabo may sell Licensed Products through any distribution channels in each
such country as are considered normal and customary for such country; provided
that Synthelabo shall remain responsible for the performance of its obligations
hereunder and Synthelabo's indemnification obligations hereunder shall apply to
the acts or omissions of any such Third Party as if such acts or omissions were
those of Synthelabo. If more than 20% of cumulative Net Sales in the Territory
during any calendar year is from sales of Licensed Products in the Section B
Territory Countries, then PRAECIS and Synthelabo shall promptly negotiate in
good faith a special Transfer Price for Licensed Products sold in the Section B
Territory Countries, with a view to preserving for both PRAECIS and Synthelabo
the economic benefits intended to be provided hereunder. If agreement with
respect to such a special Transfer Price cannot be reached within 30 days after
the commencement of such negotiations, the parties hereby agree that the dispute
20
resolution procedures set forth in Sections 6.5 and 18.1 may be invoked by
either party and the resolution achieved through such procedures shall be
binding on the parties.
2.6 Use of Improvements by IUF and IU. Synthelabo hereby grants to
PRAECIS, for further grant to IUF and IU, a royalty-free, nonexclusive license,
to use for research and educational purposes only, and without the right to
sublicense, any and all Improvements made by or on behalf of Synthelabo or any
Affiliate thereof.
ARTICLE 3 - MANUFACTURING
3.1 PRAECIS' Supply Commitment. PRAECIS shall provide Synthelabo
with all of its requirements for the Licensed Products, upon the terms and
subject to the conditions and limitations specified herein. PRAECIS shall be
entitled to subcontract the manufacture of all or part of such requirements to
one or more Third Party manufacturers, but any such subcontract shall not
diminish or alter PRAECIS' obligations hereunder. All manufacture of Licensed
Products shall be in accordance with current Good Manufacturing Practices (cGMP)
applicable to the pharmaceutical industry.
3.2 Preliminary Three-Year Forecasts. As promptly as practicable
after the Effective Date, but in any event at least eighteen (18) months prior
to the date which Synthelabo reasonably expects will be the date of First
Commercial Sale of a Licensed Product in the Territory, Synthelabo shall prepare
and deliver to PRAECIS a preliminary, good-faith, non-binding
21
forecast of its total estimated requirements for Licensed Products during the
first three years following the projected date of First Commercial Sale of
Licensed Products in the Territory. Such non-binding three-year forecast shall
be updated by Synthelabo from time to time during the Development Phase to
reflect changes in Synthelabo's projected requirements for the first three years
following the anticipated date of such First Commercial Sale, provided that such
updates shall be prepared by Synthelabo no less frequently than annually during
the Development Phase.
3.3 Long-Term Forecasts. Not less than six months prior to the
actual date of First Commercial Sale of Licensed Products in the Territory (the
"Startup Date"), Synthelabo shall provide PRAECIS with a non-binding forecast (a
"Long-Term Forecast") of its total good-faith estimate of its requirements for
Licensed Products during the first three annual periods following the Startup
Date, with such projected requirements to be broken down on a quarter-by-quarter
basis for each such annual period. Not later than the first December 1 following
the Startup Date and, thereafter, on each anniversary of such date, Synthelabo
shall provide PRAECIS with a revised Long-Term Forecast covering the three
calendar years following the year in which such revised Long-Term Forecast is
provided, with such projected requirements to be broken down on a
quarter-by-quarter basis for each such calendar year.
22
3.4 Long-Term Forecasts Nonbinding. It is acknowledged and agreed
that the Long-Term Forecasts are intended solely to assist the parties in their
long-range planning and shall not be binding on the parties in any respect, and
neither party shall have any liability to the other with respect to any
Long-Term Forecast.
3.5 Short-Term Forecasts.
(a) Periods Covered By and Delivery Dates for Short-Term Forecasts.
Synthelabo shall also provide PRAECIS with short-term forecasts of its
good-faith estimate of its requirements for Licensed Products on a rolling five
calendar quarter basis (i.e., covering five successive calendar quarters from
January-March, April-June, July-September and October-December, as applicable)
(each a "Short-Term Forecast"). The initial Short-Term Forecast shall be
delivered to PRAECIS simultaneously with the initial Long-Term Forecast to be
delivered six months prior to the Startup Date pursuant to the first sentence of
Section 3.3 above, and shall cover the calendar quarter in which the Startup
Date occurs and the next four succeeding calendar quarters. Each subsequent
Short-Term Forecast shall be delivered to PRAECIS not later than the first day
of each succeeding calendar quarter.
(b) Binding Estimates. Each Short-Term Forecast shall be provided at
least six months in advance of the commencement of the five-quarter period
covered by such Short-Term Forecast. The forecast for the first calendar quarter
covered by each Short-
23
Term Forecast shall be treated as a binding forecast with respect to such
quarter (each a "Binding Estimate"), subject to the remaining provisions of this
Article 3. Each Short-Term Forecast shall revise and update the projections set
forth in the applicable Long-Term Forecast.
(c) Synthelabo's Purchase Commitment Based on Binding Estimates.
Subject to the provisions of Section 3.7 below, Synthelabo's delivery to PRAECIS
of each Short-Term Forecast shall constitute Synthelabo's binding commitment to
purchase during the first calendar quarter covered thereby at least 80% of the
Binding Estimate contained in such Short-Term Forecast.
3.6 Purchase Orders. Synthelabo shall submit written purchase orders
for Licensed Products to PRAECIS at least ninety days prior to the requested
delivery date. Subject only to the volume limitations set forth in Section 3.7,
each purchase order shall be accepted and confirmed by PRAECIS within ten days
of its receipt. The parties agree that no term or provision contained in any
Synthelabo purchase order, or in any PRAECIS sales confirmation form, shall
modify or supersede any of the terms or provisions of this Agreement, and that
this Agreement shall dominate any such purchase order or sales confirmation form
in all respects, unless otherwise agreed in a separate written instrument
executed by duly authorized representatives of both Synthelabo and PRAECIS.
Toward this end, the parties agree that all purchase orders and confirmations
shall state on their face:
24
"ALL TERMS AND CONDITIONS OF THE AGREEMENT OF MAY 13, 1997 SHALL APPLY TO THIS
TRANSACTION."
3.7 PRAECIS' Supply Obligations and Rights.
(a) Maximum and Minimum Quantities. Notwithstanding anything to the
contrary herein, unless otherwise agreed in writing by PRAECIS, in no event
shall PRAECIS be obligated to deliver quantities of Licensed Products during any
calendar quarter which exceed in the aggregate 120% of the Binding Estimate
previously provided by Synthelabo with respect to such calendar quarter. Subject
to the immediately preceding sentence, PRAECIS shall be obligated to supply
Licensed Products in an amount not less than 90% of the amount of Licensed
Products set forth in purchase orders submitted by Synthelabo pursuant to and in
accordance with the terms of Section 3.6.
(b) Quarterly Shortfalls. If the aggregate quantity of Licensed
Products actually ordered by Synthelabo for delivery during any calendar quarter
is less than 80% of the Binding Estimate for such calendar quarter (a "Quarterly
Shortfall"), then at the election of Synthelabo set forth in a notice which
Synthelabo shall give to PRAECIS within 15 days after the end of such calendar
quarter (i) PRAECIS shall have the right, exercisable within 45 days after the
end of such calendar quarter, to deliver to Synthelabo a quantity of Licensed
Products equal to such Quarterly Shortfall, and Synthelabo shall make timely
payment for such additional goods in accordance with Article 9, in the same
manner as if Synthelabo had ordered such goods or
25
(ii) Synthelabo shall pay for such goods without requiring delivery thereof. The
purchase price payable by Synthelabo for the goods comprising any Quarterly
Shortfall shall be the average Transfer Price paid by Synthelabo to PRAECIS for
all deliveries made during the calendar quarter in which such Quarterly
Shortfall occurs, or if no such deliveries were made during such calendar
quarter, shall be equal to the average Transfer Price for the most recent
calendar quarter in which orders were placed and deliveries were made hereunder.
3.8 [INTENTIONALLY OMITTED]
3.9 Manufacturing Rights of Synthelabo Upon PRAECIS Material Breach.
If PRAECIS shall fail to materially comply with its supply obligations
hereunder, then PRAECIS shall provide Synthelabo with manufacturing protocols
and other manufacturing know-how and information, all of which shall be
Confidential Information hereunder, in order that Synthelabo may prepare to make
or have made such Licensed Products. If any other such material non-compliance
occurs within eight calendar quarters of the first such material noncompliance,
then PRAECIS shall grant to Synthelabo a sole, non-exclusive license under the
Intellectual Property Rights and PPI Licensed Rights to make and have made such
Licensed Products in such quantities as Synthelabo may thereafter require which
exceed the quantity which PRAECIS is able to supply in accordance with the terms
hereof (hereinafter, the "Plateau Amount"). In the event that Synthelabo has
such Licensed Products made by a Third Party, the agreement with such
26
Third Party shall contain the same confidentiality provisions as this Agreement,
and a copy of such agreement shall promptly be provided to PRAECIS. No such
agreement shall have a term of more than one year, unless PRAECIS otherwise
agrees. Synthelabo shall continue to obtain from PRAECIS the Plateau Amount. If
Synthelabo makes or has made Licensed Products pursuant to this Section 3.9,
then Synthelabo shall, or shall have the Third Party manufacturer, apply for and
obtain a supplementary manufacturing approval with the appropriate regulatory
agencies, such that the PRAECIS manufacturing regulatory approval status remains
active with the appropriate regulatory agency, and the cost and expenses thereof
shall be included in Synthelabo's "Cost of Goods" for purposes of Section 3.10.
3.10 Payment for Licensed Products Manufacture By Synthelabo;
Synthelabo Duty to Mitigate. Synthelabo shall pay to PRAECIS the Transfer Price
for all Licensed Products made or had made by Synthelabo within forty-five (45)
days following the sale of same to Third Parties, less Synthelabo's Cost of
Goods; and Synthelabo shall timely pay to PRAECIS the Adjustment Amounts due and
payable for same, in accordance with Article 9. Subject to Section 3.14, if
Synthelabo's Cost of Goods for Licensed Products made or had made by Synthelabo
in accordance with Section 3.9 shall be greater than the Transfer Price, then
PRAECIS shall credit the difference to the account of Synthelabo, which credit
shall be reduced by any Adjustment Amounts due and payable for same, of which
PRAECIS shall be timely notified. Any remaining
27
credits to Synthelabo will be applied to future payments due hereunder until
such credits are used in full. For purposes of this Section 3.10, Synthelabo's
"Cost of Goods" shall include the items set forth in Section 1.12 as well as
Synthelabo's reasonable costs of cover and other reasonable expenses incident to
any material breach by PRAECIS of its supply obligations hereunder, including,
without limitation, the cost of making Licensed Products itself or having such
products made by a Third Party and the costs and expenses referred to in the
last sentence of Section 3.9. At any time during which Synthelabo is making or
having made Licensed Products pursuant to Section 3.9, (i) Synthelabo shall be
required to minimize its Cost of Goods to the extent commercially reasonable,
and (ii) if PRAECIS can arrange to have a reputable Third Party manufacturer
provide Licensed Products to Synthelabo that are of the same quality and in the
same quantity as are being made or had made by Synthelabo, but at a cost that is
less than Synthelabo's (or its Affiliate's) Cost of Goods by ten percent (10%)
or more, and if such Third Party manufacturer is willing to enter into a supply
contract for same with a term of at least one (1) year, on supply terms at least
as favorable as those of this Agreement, then PRAECIS may contract for such
manufacture with such Third Party manufacturer and Synthelabo shall, as soon
thereafter as is commercially practicable (without requiring it to breach its
supply agreement with any Third Party unless PRAECIS obtains a release of
Synthelabo from such agreement), discontinue making or having
28
made such Licensed Products, and shall instead order and obtain same from
PRAECIS and PRAECIS shall have such Licensed Products made by such Third Party
manufacturer for delivery to Synthelabo upon instruction by PRAECIS. In such
instance, all other terms and conditions hereof shall apply, as if PRAECIS were
manufacturing such Licensed Products itself; and PRAECIS shall continue to be
responsible for performance of its supply obligations hereunder notwithstanding
the manufacture of Licensed Products by such Third Party manufacturer.
Consistent with the foregoing and with Synthelabo's obligation to minimize its
Cost of Goods to the extent commercially reasonable, Synthelabo will not itself
construct a manufacturing facility to manufacture Licensed Products unless it
demonstrates with commercially reasonable evidence that (i) PRAECIS will
permanently be unable to comply in all material respects with its supply
obligations hereunder or (ii) no commercially feasible alternative source of
supply is available or will be available in the reasonably foreseeable future.
The provisions of Section 3.9 and this Section 3.10 set forth the sole remedy of
Synthelabo for any breach by PRAECIS of its supply obligations hereunder unless
Synthelabo has validly terminated this Agreement in accordance with Section
17.3, in which event, as contemplated by the first sentence of Section 17.4,
Synthelabo shall have available all remedies with respect to any liability or
obligation that matured prior to the effective date of termination.
29
3.11 Suspension of Manufacture By Synthelabo; Termination of
Manufacturing License. Should PRAECIS provide Synthelabo with commercially
reasonable evidence that it is ready, willing and able, directly or through
subcontractors, to resume material compliance with its supply obligations
hereunder, Synthelabo shall suspend its manufacture of Licensed Products or
having the Licensed Products manufactured, provided that in no event shall
Synthelabo be required to (i) suspend such manufacture until it has continued
for at least nine (9) months from its inception or (ii) prematurely terminate
any Third Party manufacturing agreement the terms of which are in compliance
with Section 3.9. If PRAECIS shall thereafter materially comply with its supply
obligations hereunder for four (4) consecutive calendar quarters, then the
Synthelabo license to make or have Licensed Products made which was granted in
accordance with Section 3.9 shall thereupon terminate, subject to being
re-granted if the conditions precedent stated in Section 3.9 are again met.
3.12 Agreement Regarding Third Party Manufacturers. Without
limitation of Sections 3.10 and 3.11, PRAECIS acknowledges its obligation to
undertake commercially reasonable measures to keep the average Cost of Goods at
an amount such that, on average, the share of Net Sales retained by Synthelabo
(prior to making the royalty payments pursuant to Section 9.8)
30
pursuant to Article 9 is at least *** percent (***%). If (i) PRAECIS is making
or having made Licensed Products hereunder, (ii) the Transfer Price for a given
Licensed Product exceeds *** percent (***%) of REV for any two consecutive
calendar quarters and (iii) Synthelabo presents PRAECIS with commercially
reasonable evidence that a one (1) year supply agreement can be concluded with a
reputable Third Party manufacturer whereby such Third Party manufacturer will
agree to make such Licensed Product in the same quality, quantity and on
delivery terms at least as favorable as those of PRAECIS, but at a Cost of Goods
that is at least *** percent (***%) less than PRAECIS's average Cost of Goods
for such two quarters, then PRAECIS shall either (A) match that Cost of Goods
for all quantities of such Licensed Product ordered by Synthelabo for one (1)
year, irrespective of whether it must suffer a loss in order to do so, or (B)
enter into such one (1) year supply contract with such Third Party manufacturer
and provide the Licensed Products manufactured by such Third Party manufacturer
to Synthelabo in accordance with the remaining provisions of this Agreement. Any
such Third Party manufacturer shall be subject to approval by PRAECIS, which
shall not be unreasonably withheld; and PRAECIS shall provide a manufacturing
license under the Intellectual Property Rights and the PPI Licensed Rights as
may be required for such Third Party manufacturer to make such Licensed Product.
In the event that a Third Party manufacturer shall assume manufacturing
31
responsibilities in accordance with this Section, PRAECIS shall, as soon as
reasonably commercially practicable, discontinue making or having made Licensed
Products hereunder. Synthelabo shall pay PRAECIS for all Licensed Products
obtained from such Third Party manufacturer in accordance with Article 9. Should
PRAECIS, prior to renewal or extension of any one-year contract between PRAECIS
and such Third Party manufacturer, notify Synthelabo (and provide it with
commercially reasonable evidence) that it is ready, willing and able to make or
have made such Licensed Products and deliver such Licensed Products to
Synthelabo at a Transfer Price which is less than ***% of then-current Net
Sales, then PRAECIS may allow the above-described Third Party manufacturer
contract to expire, terminate the license of Intellectual Property Rights and
PPI Licensed Rights granted in accordance with this Section 3.12, and resume
manufacturing of Licensed Products itself in accordance with the terms hereof or
make supply arrangements with another Third Party manufacturer of its own
choosing, but without prejudice to Synthelabo's right to invoke the provisions
of this Section 3.12 at a later date if the conditions described in the second
sentence of this Section again become applicable.
3.13 Direct Billing. Synthelabo shall obtain PRAECIS's agreement
before issuing orders for direct billing, showing payment due to Synthelabo, and
shipping of Licensed Products from PRAECIS to a Third Party. If PRAECIS agrees
and accepts such orders, Synthelabo shall include such sales in all
32
reports required hereunder and shall make payment to PRAECIS therefor as if such
products had been shipped to Synthelabo and then shipped by Synthelabo to such
Third Party as provided herein, less any remittances therefor received by
PRAECIS from such Third Party.
3.14 Force Majeure. Each party shall take all actions that are
commercially reasonable in order to assure that it can perform its obligations
hereunder. Notwithstanding the foregoing, however, a party shall not be liable
for loss or damage resulting from any cause beyond its reasonable control,
including, but not limited to, acts of God, acts or omissions of the other
party, acts of civil or military authorities, fires, strikes, facilities
shutdowns or alterations, embargoes, war, riot, epidemic, delays in
transportation, or inability to obtain necessary labor, manufacturing facilities
or materials from usual sources, and any delays resulting from any such cause
shall extend the time for performance correspondingly. Should any such force
majeure result in a shortfall or delay and the consequent grant to Synthelabo of
a manufacturing license pursuant to Section 3.9 hereinabove, then Sections 3.10
and 3.11 shall also apply, except that PRAECIS shall not be required to make any
credits to the account of Synthelabo and any excess of Synthelabo's Cost of
Goods over the Transfer Price shall be borne by Synthelabo. In no event shall
either party be liable for consequential or special damages arising out of force
majeure.
33
3.15 Form and Terms of License Product Shipments. Licensed Products
manufactured and delivered hereunder shall meet the specifications set forth in
the Registration Approval for such Licensed Product and shall be adequately
labelled to fulfill all customs, legal, regulatory and patent requirements
required for delivery as provided hereunder. If Licensed Products are delivered
in bulk, they will subsequently be packaged and labelled by Synthelabo in
compliance with all local market and regulatory requirements for the respective
Territory Countries, and shall clearly identify PRAECIS as the
manufacturer/developer of the formulation and Rel-Ease(TM) (if the Rel-Ease(TM)
system is utilized), together with appropriate trademarks. Licensed Products
shall be delivered to Synthelabo CIP (as such term is defined by the Incoterms)
Paris, France. Each shipment shall be accompanied by a certificate of analysis,
and a batch report containing information reasonably required by Synthelabo,
with respect to the batch or batches of Licensed Product contained therein.
Synthelabo shall inspect all shipments for obvious defects within thirty (30)
days of receipt thereof. Claims for shortages, breakage, damage or non-obvious
defects must be made by Synthelabo to PRAECIS within thirty (30) days of when
such shortage, breakage, damage or non-obvious defect is or reasonably should
have been discovered. Without limitation of any other provision of this
Agreement and subject thereto, (i) the parties agree to the additional supply
provisions set forth in Appendix VI and (ii) PRAECIS and Synthelabo agree that
prior to commence-
34
ment of the manufacture of Licensed Products for commercial sale they will
execute and deliver a Quality Charter that shall reflect the general spirit of
the example form of Quality Charter set forth as Appendix VII hereto and which
shall be adapted in a manner intended to be consistent with this Agreement and
which is reasonable under the circumstances in light of the specific facts
pertaining to the particular Licensed Product, the particular situation of the
parties and other relevant considerations, it being understood and agreed (with
respect to both clauses (i) and (ii)) that in the event of any conflict or
inconsistency between such additional supply provisions or such executed Quality
Charter and any other provision(s) of this Agreement, such other provision(s) of
this Agreement shall control.
3.16 Supply of Licensed Product For Certain Supplemental Development
Plan Clinical Studies. PRAECIS shall supply Synthelabo with all Licensed
Products required for Synthelabo to conduct the Supplemental Development Studies
pursuant to the Supplemental Development Plan. Such supply of Licensed Products
shall be (i) at a price equal to PRAECIS' COGS if Synthelabo is not entitled,
pursuant to Section 4.5, to receive reimbursement from PRAECIS for a portion of
its Development Costs incurred in connection with such Supplemental Development
Studies and (ii) otherwise charged to Synthelabo as a Development Cost pursuant
to Sections 1.13 and 4.5.
ARTICLE 4 - DEVELOPMENT AND APPROVAL OF LICENSED PRODUCTS
35
4.1 Diligence. During the Development Phase, Synthelabo and PRAECIS
shall diligently seek to develop the Licensed Products for (i) the Application
of prostate cancer and (ii) the Applications of endometriosis or uterine
fibroids as the Joint Steering Committee shall determine and (iii) any other
Application approved for development by the Joint Steering Committee and the
Development Subcommittee as provided in Section 4.3 in accordance with the Core
Development Plan, and the Supplemental Development Plan, in each case subject to
the further provisions of this Article 4. The Development Program shall be
directly supervised by the Development Subcommittee to be established pursuant
to Article 6 hereof, working with designated individuals at PRAECIS and
Synthelabo and subject to the oversight and direction of the Joint Steering
Committee. The Development Subcommittee will have oversight responsibilities
with respect to pre-clinical testing and Clinical Trials for Licensed Products
and will coordinate the preparation of regulatory filings for Licensed Products
in accordance with the Core Development Plan and the Supplemental Development
Plan, provided that Synthelabo shall have responsibility for filing and
obtaining Registration Approval and Reimbursement Approval for the Licensed
Products for each Application to be developed by the parties as contemplated by
the first sentence of this Section 4.1 in all of the Territory Countries in
which such Licensed Product will be commercialized pursuant to the terms hereof.
PRAECIS
36
shall cooperate with Synthelabo in connection with such filing(s) and any
amendments or supplements thereto.
4.2 Development Program and Plans. The Development Program shall be
conducted in accordance with the Core Development Plan and Supplemental
Development Plan, as defined in this Section 4.2, which shall describe the work
to be supervised by the Development Subcommittee with respect to the development
of the Licensed Products, each of which shall include annual budgets. These
plans shall include detailed milestones, timeframes, operating plans and
objectives, including with respect to pre-clinical studies, toxicology and
Clinical Trials and obtaining Registration Approvals and Reimbursement
Approvals, and shall be updated annually. Without limitation of the foregoing,
these plans shall also set forth in detail the studies to be performed by each
party for purposes of obtaining Registration Approvals and Reimbursement
Approvals. The initial Core Development Plan shall be prepared by PRAECIS and
Synthelabo as promptly as practicable after the Effective Date (and shall
provide that initially the parties will seek to develop and commercialize as
soon as practicable Licensed Products (i) for the Application of prostate
cancer, and (ii) the Applications of endometriosis or uterine fibroids as the
Joint Steering Committee shall determine) and the initial Supplemental
Development Plan shall be prepared by Synthelabo as promptly as practicable
after the Effective Date, and each shall be subject to approval by the
Development Subcommittee and the Joint Steering Committee.
37
Thereafter, these plans will be updated by these same parties, respectively, and
submitted to the Development Subcommittee and the Joint Steering Committee no
later than thirty (30) days prior to the beginning of each calendar year. The
Joint Steering Committee shall, with guidance from the Development Subcommittee,
approve such plans within thirty (30) days of the commencement of each calendar
year, or alternatively, shall return same to their source for revision and
resubmission.
4.3 Additional Applications. If the development and marketing of a
given Licensed Product for a given Application other than (i) prostate cancer or
(ii) endometriosis or uterine fibroids is proposed by PRAECIS to the Development
Subcommittee (on the cost-sharing basis set forth in Section 4.5) but not
approved, then PRAECIS may, but shall not be required to, carry out Development
Phase activities with respect to such Licensed Product for such Application, at
its own expense. If the Joint Steering Committee determines that Phase II or
Phase III Clinical Trials funded by PRAECIS demonstrate safety and efficacy of
such Licensed Product for such Application and that such Application is
commercially viable, and Synthelabo determines that the commercialization of
such Application should be pursued in the Territory, then Synthelabo shall
promptly reimburse PRAECIS for *** (***%) of all Development Costs theretofore
incurred by PRAECIS with respect to such Licensed Product for such Application
and shall share on an equal basis all future Development Costs required for FDA
Registration Approval of such
38
Licensed Product for such Application, Section 4.5 notwithstanding. Within sixty
(60) days after such determination, the Development Subcommittee shall add the
continued development and marketing of such Licensed Product for such
Application to the Core Development Plan and/or the Supplemental Development
Plan by amendment, which amendment shall be approved by the Joint Steering
Committee within thirty (30) days thereafter; and Synthelabo and PRAECIS, as
applicable, shall promptly and diligently pursue such continued development and
marketing, in accordance with Article 4 and Article 5 hereof.
4.4 Regulatory Meetings. PRAECIS or Synthelabo, as the case may be,
will provide the other party with reasonable prior notice of all meetings
between its representatives and regulatory authorities regarding any
Registration Approval of the Licensed Products in any jurisdiction. The
recipient of such notice shall have the right to have a representative present
at all important meetings. Each of PRAECIS and Synthelabo will furnish, at the
other's request, a representative to attend regulatory meetings of the other
regarding Registration Approval of the Licensed Products.
4.5 Development Costs. Except as provided in Section
4.3, PRAECIS shall pay seventy-five percent (75%), and Synthelabo
shall pay twenty-five percent (25%), of all Development Costs incurred in
carrying out the Core Development Plan. The foregoing cost sharing provisions
shall also apply if PRAECIS enters into an agreement with a Third Party under
which such
39
Third Party shall undertake PRAECIS' development activities pursuant to the Core
Development Plan, unless PRAECIS and Synthelabo shall agree otherwise.
Synthelabo shall pay all Development Costs which are incurred in carrying out
the Supplemental Development Plan, provided that PRAECIS shall reimburse
Synthelabo for seventy-five percent (75%) of such Development Costs to the
extent the results of the Development Phase activities in respect of which such
Development Costs were incurred are used to seek or obtain Registration
Approvals or Reimbursement Approvals in the United States. If (i) PRAECIS or its
licensee or sublicensee wishes to use both outside of the Territory and outside
of the United States the results of the Supplemental Development Studies
obtained by Synthelabo in carrying out the Supplemental Development Plan and
(ii) PRAECIS is not required hereunder to reimburse Synthelabo 75% of the
Development Costs incurred in connection with such Supplemental Development
Studies, then PRAECIS and Synthelabo shall meet to negotiate in good faith an
equitable sharing of such Development Costs. Anything herein to the contrary
notwithstanding, (i) each of Synthelabo and PRAECIS shall have full and complete
access to and use of the safety data of the other regarding each Licensed
Product, and each may use the safety data of the other for Advertising and
Promotion, in each case without any cost or reimbursement therefor and (ii)
regulatory submission, registration fees and maintenance fees in the Territory
shall be paid by Synthelabo, and registration fees and maintenance fees
40
outside the Territory shall be paid by PRAECIS. If a party is claiming
reimbursement pursuant to this Section 4.5, then within forty-five (45) days
after the end of a calendar quarter during which the Development Costs for which
reimbursement is being claimed were incurred, a party will submit to the other a
statement (each a "Development Cost Statement") itemizing in reasonable detail
such Development Costs and setting forth the total amount, if any, of such
Development Costs to be reimbursed by the other party pursuant to this Section
4.5. Such reimbursement amounts shall be paid within twenty (20) days after
receipt of a Development Cost Statement, except to the extent such Development
Cost Statement is being disputed in good faith. Except as otherwise provided
herein, each party shall assume full responsibility for its own Development
Costs.
4.6 Registration and Reimbursement Approvals. All Registration
Approvals and Reimbursement Approvals within the Territory shall be applied for,
obtained and maintained in the name of Synthelabo; provided that Synthelabo
hereby agrees to promptly take any and all action necessary to transfer or
assign such Registration Approvals and Reimbursement Approvals to PRAECIS or its
designee upon the termination of this Agreement pursuant to Section 17.2 upon
the occurrence of an event described therein with respect to Synthelabo or
pursuant to Section 17.3 as a result of Synthelabo's breach. Without limitation
of the immediately preceding sentence, upon termination of this Agreement in its
entirety by Synthelabo
41
pursuant to Section 17.7, Synthelabo shall provide PRAECIS with such
documentation, authorization, or permission as may be available to Synthelabo to
enable PRAECIS to obtain access to, and to officially make reference to, the
Synthelabo Registration Approval and Reimbursement Approval files, data,
correspondence and records throughout the entire period of their existence. All
Registration Approvals and Reimbursement Approvals outside the Territory shall
be applied for and obtained by PRAECIS in its own name and/or in the name of its
one or more marketing partners, and PRAECIS shall provide Synthelabo with such
documentation, authorization, or permission as may be available to PRAECIS to
enable Synthelabo to obtain access to, and to officially make reference to, such
Registration Approval and Reimbursement Approval files, data, correspondence and
records throughout the entire period of their existence.
4.7 Development Costs Records. Each party shall keep complete and
accurate records of its Development Costs, which records each party shall retain
for five (5) years after the end of the calendar year in which such expenses
were incurred. The records shall conform to generally accepted accounting
principles consistently applied in the country where such Development Costs were
incurred. Each party shall have the right at its own expense during each year of
a Development Phase and during the subsequent five (5) year period to appoint an
independent public accountant reasonably acceptable to the other party to
inspect said records or to have its own representatives inspect such
42
records. Upon reasonable notice from the other party (the "Requesting Party"), a
party (the "Reviewed Party") shall make its records available during regular
business hours for inspection by the requesting party's representatives and the
independent public accountant at the place or places where the Reviewed Party
customarily keeps such records, to the extent reasonably necessary to verify the
accuracy of the expenditures. The right of inspection shall not be exercised by
a party more than once in any calendar year. A Requesting Party shall hold in
strict confidence all information concerning such expenditures and all
confidential information learned in the course of any audit or inspection,
except to the extent necessary for the Requesting Party to enforce any rights it
may have pursuant to this Agreement or if disclosure is required by law. Absent
fraud or manifest material error, the failure of either party to request
verification of any expenditures during the period the other party is required
to retain the records for any calendar year shall be considered acceptance of
the accuracy of the reports concerning such expenditures.
4.8 Technical Information. To the best knowledge and belief of
PRAECIS, as of the Effective Date PRAECIS has provided Synthelabo with all
material information concerning the Licensed Products that PRAECIS believes in
its reasonable business judgment would be relevant to Synthelabo's decision to
enter into this Agreement. PRAECIS will provide Synthelabo with access to all
confidential technical information in PRAECIS' possession
43
from the Effective Date and during the term of this Agreement relating to the
Licensed Products, including all documentation in the possession of PRAECIS
based on work performed by PRAECIS with the Licensed Products. Upon request,
PRAECIS shall provide copies of such materials to Synthelabo. In addition, as
further provided in Section 11.4, PRAECIS shall keep Synthelabo informed
regarding progress in prosecution of the patent applications licensed hereunder,
shall timely provide Synthelabo with copies of all applications, office actions,
amendments, and other documents pertaining thereto, and shall provide Synthelabo
with reasonable opportunities to discuss same with PRAECIS's patent counsel.
Furthermore, PRAECIS and Synthelabo shall extend to one another the same
information and access with regard to patent applications covering Improvements.
4.9 Clinical Trials. Synthelabo shall from time to time notify
PRAECIS of any Clinical Trial or technical activity which it intends to
undertake with respect to any Licensed Product; and PRAECIS shall communicate
any reasonable technical or scientific concerns in relation thereto within
fifteen (15) days of notification in which event the parties shall promptly
discuss the same. In the event that PRAECIS has any such technical or scientific
concerns which cannot be satisfied, then PRAECIS may notify Synthelabo to that
effect and Synthelabo shall not undertake the Clinical Trial or other technical
activity contemplated, provided that no such determination shall (i) be made
unreasonably by PRAECIS or (ii) prevent Synthelabo from
44
applying for, obtaining or maintaining a Registration Approval or Reimbursement
Approval in the Territory. Synthelabo and PRAECIS will provide one another with
a copy of each master dossier and all correspondence and submissions regarding
each Registration Approval or Reimbursement Approval which they (or their
respective sublicensees or co-marketing partners) seek, on or prior to the date
of submitting the same; and shall also promptly provide one another with the
results of all toxicology and pharmacology studies and Clinical Trials conducted
by or under their supervision with respect to the Licensed Products. Synthelabo
will specify the data and processes required from PRAECIS in order to obtain
Registration Approval and Reimbursement Approval in the Territory Countries at
least eighteen (18) months in advance of such data and processes being needed.
All relevant documents in support of each such Registration Approval and
Reimbursement Approval will be archived by each party in compliance with
applicable regulatory and legal requirements.
4.10 Material Adverse Development; Material Adverse Patent
Development; Competition. If (i) the results of Clinical Trials of a Licensed
Product with respect to an Application in a Territory Country constitute a
Material Adverse Development, or (ii) a Material Adverse Patent Development
shall occur, or (iii) a competitor makes a product containing the same LHRH
Antagonist Compound as a Licensed Product in a functionally equivalent delivery
system and has Registration Approval to sell such
45
product for the same Application, and the number of units of such product sold
by such competitor in a Territory Country over any calendar year equals more
than *** percent (***%) of the number of units of Licensed Product, if any, sold
in such Territory Country for such Application by Synthelabo or its Affiliates
over such calendar year, then, in the case of clauses (i) and (iii) Synthelabo
shall be entitled to terminate this Agreement with respect to such Licensed
Product for such Application in such Territory Country only, and, in the case of
clause (ii), Synthelabo shall be entitled to terminate this Agreement in its
entirety only, subject, however, in the case of each of clauses (i), (ii) or
(iii), to compliance with Section 17.7. If the parties reasonably and in good
faith disagree as to whether an event described in clause (i), (ii) or (iii)
above has occurred, such matter may be resolved by the dispute resolution
procedures described in Section 6.5 and Article 18.
4.11 Synthelabo Formulation. In the event that (i) four years have
elapsed from the Effective Date, (ii) safety and efficacy in humans of a depot
or other formulation owned by or licensed to PRAECIS for PPI-149 or any other
LHRH Antagonist Compound licensed by PRAECIS to Synthelabo hereunder for at
least one of the Applications then included in the Core Development Plan has not
been demonstrated in Phase II Clinical Trials and (iii) Synthelabo has, pursuant
to license rights granted hereunder, developed a Synthelabo Formulation for at
least one of the Applications then included in the Core Development Plan,
46
which formulation has demonstrated safety and efficacy in humans in Phase II
clinical trials, then, without prejudice to Synthelabo's rights under Section
17.7, Synthelabo shall have the right to propose that such Synthelabo
Formulation be used in connection with PPI-149 or any other LHRH Antagonist
Compound licensed hereunder for such Application. In such event, the parties
shall negotiate in good faith appropriate adjustments to the terms and
conditions of this Agreement to permit the incorporation of such Synthelabo
Formulation as aforesaid. Such good faith negotiations shall give due regard to
the costs incurred by the parties in the development of their respective
formulations and the relative benefits, if any, derived therefrom.
4.12 Reporting on Adverse Reaction. Each party shall promptly inform
the other about any suspected serious and/or unexpected adverse drug reaction
associated with the use of a Licensed Product. The parties shall, quarterly,
exchange reports of suspected, deemed "non-serious" adverse drug reactions
associated with the use of the Licensed Products.
ARTICLE 5 - MARKETING AND SALES OBLIGATIONS OF SYNTHELABO
5.1 Diligence Generally. Throughout the term of this Agreement,
promptly after Registration Approval of a Licensed Product for a particular
Application has been obtained in or with respect to a Territory Country,
Synthelabo shall use diligent efforts to Advertise, Promote and sell such
Licensed Product for
47
such Application throughout such Territory Country, provided such
commercialization is reasonably economically viable.
5.2 Advertising. Subject to Section 5.1, Synthelabo shall at its own
expense develop, procure, and supervise distribution of appropriate and
effective Advertising for each of the Licensed Products throughout the Territory
where permitted by applicable law, and assess and revise same as needed; and
shall actively Promote and, where permitted, actively Advertise same in a manner
that is commercially reasonable and is reasonably designed to be effective in
each Territory Country.
ARTICLE 6 - GOVERNANCE
6.1 Joint Steering Committee. Within thirty (30) days after the
Effective Date, Synthelabo and PRAECIS shall notify one another of the names,
addresses, and telephone numbers of three (3) senior representatives that they
have appointed to a committee which shall be charged with coordinating and
overseeing the collaboration in the manner and to the extent provided hereunder
(the "Joint Steering Committee") including, without limitation, approval of the
Core Development Plan and Supplemental Development Plan, and the attempted
resolution of any disputes which arise in connection with the collaboration
hereunder. The Joint Steering Committee shall be chaired by one of the three
appointees of PRAECIS, which Chairperson shall initially be designated in the
above-required notice from PRAECIS to Synthelabo. Synthelabo and PRAECIS shall
be permitted at their own discretion at any time to remove and/or replace those
48
members of the Joint Steering Committee which they have appointed.
6.2 Operations of the Parties Under the Collaboration. It is
intended that the strategy for the clinical development, Regulatory Approval and
Reimbursement Approval of Licensed Products in the Territory shall be jointly
conceived, and that the parties shall communicate regularly. Decisions of the
Joint Steering Committee shall be binding on the parties; provided however, that
the operations of the parties in connection with the collaboration hereunder
shall be conducted by the operating management and employees of PRAECIS and
Synthelabo, respectively, as their obligations and responsibilities under this
Agreement require.
6.3 Timing of Regular Meetings; Agendas. The Joint Steering
Committee shall hold quarterly or more frequent regular meetings on mutually
agreeable dates, with the location of the meetings to alternate between PRAECIS
and Synthelabo facilities. For any such meeting, the Chairman of the Joint
Steering Committee shall prepare an agenda which shall be provided to the other
members at least five business days prior to the meeting.
6.4 Special Meetings. Any member of the Joint Steering Committee may
call a special meeting of the Joint Steering Committee upon notice duly given in
person or by telephone to each other member (which notice shall include an
agenda for the meeting) at least forty-eight (48) hours in advance of the
meeting (unless such member waives receipt of
49
notice either before or after the meeting or by attending the meeting without
protestation); provided that such special meeting (and any other meeting) may
take place by means of a telephone or video conference.
6.5 Decisions and Disputes. The objective of the Joint Steering
Committee and of any Subcommittee (as defined in Section 6.6) shall be to seek
to reach agreement on all matters by consensus. Each of PRAECIS and Synthelabo
shall have one (1) vote on the Joint Steering Committee and on any Subcommittee.
Concurring votes of both parties shall be required for any decision by the Joint
Steering Committee or any Subcommittee. A quorum of the Joint Steering Committee
or any Subcommittee, respectively, shall consist of the representatives from
each party with authority to cast the vote of the party on issues before the
Joint Steering Committee or any Subcommittee, respectively, and each party shall
use reasonable efforts to assure that its representatives so authorized are
present at all meetings. If the Joint Steering Committee is unable to reach a
decision on any matter, including any matter referred to the Joint Steering
Committee by any Subcommittee pursuant to Section 6.6 (a "Disputed Matter"),
PRAECIS and Synthelabo shall engage in good faith discussions in an effort to
resolve the Disputed Matter in a mutually satisfactory manner. If the Disputed
Matter is not resolved within thirty (30) days of the date such matter was
initially considered by the Joint Steering Committee, the Chairperson of the
Joint Steering Committee shall notify the
50
respective Chief Executive Officers of PRAECIS and Synthelabo, in writing, of
the nature and basis of the Disputed Matter (the "Dispute Notice") within five
(5) days after the end of such thirty (30) day period. The Chief Executive
Officers of PRAECIS and Synthelabo shall use their best efforts to resolve the
Disputed Matter. If the Disputed Matter is not resolved by the Chief Executive
Officers within thirty (30) days after the date of the Dispute Notice, either
Party may request, in writing, that the matter be resolved by binding
arbitration in accordance with the provisions of Article 18 of this Agreement.
6.6 Development Subcommittee. The Joint Steering Committee shall be
authorized to establish subcommittees consisting of an equal number of
representatives from each of PRAECIS and Synthelabo (each, a "Subcommittee"). At
the first meeting of the Joint Steering Committee, it shall establish a
Development Subcommittee comprised of at least three (3) Synthelabo
representatives and three (3) PRAECIS representatives, which shall be charged
with overseeing and coordinating the preparation and implementation of the Core
Development Plan and Supplemental Development Plan by PRAECIS and Synthelabo,
respectively, and strategies generally with respect to the clinical development
of, and obtaining Registration Approvals and Reimbursement Approvals for,
Licensed Products (the "Development Subcommittee"). If any Subcommittee
(including without limitation the Development Subcommittee) is unable to reach a
decision on any matter, such matter shall be referred to the
51
Joint Steering Committee for resolution as contemplated by Section 6.5.
6.7 Cooperation. Each party agrees to make its employees and
non-employee consultants reasonably available at their respective places of
employment to consult with the other party on issues arising during the
Development Phase and thereafter and in connection with any request from any
regulatory agency, including regulatory, scientific, technical and clinical
testing issues, or otherwise, throughout the term of this Agreement.
6.8 Visitation. Representatives of PRAECIS and Synthelabo may, with
the other party's prior approval, which approval shall not be unreasonably
withheld, visit the sites of any Clinical Trials or other experiments being
conducted by such other party in connection with the Development Phase and,
subject to any necessary approvals of the relevant Third Party, which either
PRAECIS or Synthelabo shall obtain for the other, manufacturing sites used for
making or having made any Licensed Products. Each party hereto shall have the
right to audit the quality control records of the other or any Third Party
manufacturers regarding Licensed Products, and shall sign customary "quality
charters" as required by the other party. If requested by the other party,
PRAECIS and Synthelabo shall cause appropriate individuals to be available for
meetings at the location of the facilities where such individuals are employed
at
52
times reasonably convenient to the party responding to such request.
6.9 Committee and Certain Other Costs. Each of Synthelabo and
PRAECIS shall bear their own costs and expenses arising from the appointment,
operation, and maintenance of the Joint Steering Committee, the Development
Subcommittee and any other subcommittee established by the Joint Steering
Committee or arising from any other visitation, consultation or inspection
provided for in this Article 6.
ARTICLE 7 - CONFIDENTIALITY
7.1 General. Synthelabo and PRAECIS hereby agree to, and to use
their best efforts to cause their respective officers, directors, employees and
agents to, maintain one another's Confidential Information in strict secrecy,
through at a minimum the use of the same security measures as each uses to
protect its own confidential records and information of the same nature, but in
no case less than a reasonable degree of care for such information. Synthelabo
and PRAECIS each hereby agree that they shall cause each of their respective
officers, directors, employees, Affiliates and agents who receive Confidential
Information to maintain such Confidential Information in secrecy. Synthelabo and
PRAECIS further agree that each of their respective directors, employees,
officers, and agents who receive Confidential Information have been and will be
so bound in writing upon their employment. Synthelabo and PRAECIS also agree
that Confidential Information will be provided only to directors,
53
officers, employees and agents who will utilize such information in their work
as permitted under this Agreement, and that all directors, officers, employees
and agents receiving such Confidential Information will be informed of the
obligations of confidentiality hereunder. Synthelabo and PRAECIS agree that they
will not, and will use their best efforts to cause their respective Affiliates,
directors, officers, employees and agents not to, communicate Confidential
Information of the other party to directors, officers, employees or agents of
any Third Party unless (i) such Third Party has a need to know in order for the
disclosing party or for such Third Party to meet its obligations hereunder or
those undertaken by either party in conformity with this Agreement (e.g.,
clinical research organizations, Affiliates and sublicensees); (ii) such persons
are bound by confidentiality obligations no less stringent than those of this
Article 7, and (iii) such persons are first made aware of the confidential
nature of the information being provided.
7.2 Certain Exceptions. Notwithstanding Section 7.1, Synthelabo and
PRAECIS acknowledge that there may be key trade secrets, Licensed Product
formulas, patient identification information, and other extremely confidential
information which is entitled to special treatment; and neither party shall be
required to disclose such Confidential Information to the other unless the other
party agrees to undertake special security precautions and agrees not to further
distribute same without specific written permission from the disclosing party,
which
54
shall not be unreasonably withheld. Notwithstanding anything contained herein to
the contrary, the disclosure restrictions set forth in this Article 7 shall not
preclude disclosure of Confidential Information by either party hereto (or any
of their respective Affiliates, officers, directors, employees or agents) (i)
with the prior written consent of the other party hereto, (ii) to the extent
necessary to comply with law or the valid order of a court or other governmental
or regulatory body of competent jurisdiction, in which event the party making
such disclosure shall so notify the other party hereto as promptly as
practicable (and, if possible, prior to making such disclosure) and shall seek
confidential treatment of such Confidential Information, (iii) to any
not-for-profit, governmental or quasi-governmental organization which may
require such disclosure, in which event the party making such disclosure shall
take all available measures to have such organization maintain such Confidential
Information in confidence, provided the party making such disclosure shall
notify the other party hereto as promptly as practicable (and, if possible,
prior to making such disclosure), in order to allow the other party to consider
and to undertake the filing of patent applications or other protective measures,
(iv) to the extent required to file this Agreement or file and prosecute a
patent with respect thereto and (v) to the extent required to commercialize a
Licensed Product. This Article shall remain in effect during the term of the
Agreement and shall survive for a period of ten (10) years following
55
termination or expiration of this Agreement, notwithstanding any provision to
the contrary in this Agreement.
7.3 Publications. The following restrictions shall apply with
respect to the disclosure in scientific journals, publications or scientific
presentations by any party relating to any scientific work performed as part of
the collaboration hereunder:
(a) a party (the "Publishing Party") shall provide the other party
with an advance copy of any proposed publication containing Confidential
Information prior to submission for publication, and such other party shall have
a reasonable opportunity to recommend any changes it reasonably believes are
necessary to preserve the Confidential Information belonging in whole or in part
to PRAECIS or Synthelabo, and the incorporation of such recommended changes
shall not be unreasonably refused;
(b) if such other party informs the Publishing Party, within thirty
(30) days of receipt of an advance copy of a proposed publication, that such
publication in its reasonable judgment could be expected to have a material
adverse effect on the commercial value of any Confidential Information belonging
in whole or in part to PRAECIS or Synthelabo, the Publishing Party shall delay
or prevent such publication as proposed. In the case of inventions, the delay
shall be sufficiently long to permit the timely preparation and filing of a
patent application(s) or application(s) with respect to such invention(s); and
56
(c) the parties shall use their best efforts to gain the right to
review proposed publications relating to the collaboration hereunder by
consultants or contractors of a party, and shall use their best efforts to
protect any Confidential Information of either party that may be contained in
any such publication.
ARTICLE 8 - TRADEMARKS
8.1 Exclusive License for Rel-Ease(TM) Trademark. Subject to the
review and approval of each of Synthelabo's uses of same, as set forth in
Section 8.2, PRAECIS hereby grants to Synthelabo an exclusive royalty-free
license to use the Rel-Ease(TM) trademark in the Field throughout the Territory,
such license to cover the existing and all future forms of such trademark and
all associated logos, but shall be limited to use only on Licensed Products that
conform to the specifications for such Licensed Products on which Registration
Approval of such Licensed Products was based. Such license shall be perpetual
fully paid up and royalty free, except that it may be revoked by PRAECIS for
breach of Sections 8.2 or 8.3 or upon the termination of this Agreement in any
Territory Country pursuant to Section 17.3 by reason of breach by Synthelabo,
and shall survive any other termination or expiration of this Agreement. PRAECIS
agrees that it will promptly file for registration of the Rel-Ease(TM) trademark
in each Territory Country designated by Synthelabo where such registration is
possible and affords potential protection for such trademark in such Territory
57
Country, and will take all such actions as are necessary or appropriate and
commercially reasonable to secure such registration and, thereafter, to
maintain such registration for the benefit of Synthelabo. PRAECIS shall further
take all such actions as are necessary or appropriate and commercially
reasonable to protect the Rel-Ease(TM) trademark against impairment or
infringement in such Territory Countries.
8.2 PRAECIS Approval Right. Prior to the first use of the
Rel-Ease(TM) trademark on any materials in any form, Synthelabo shall first
provide PRAECIS with at least one sample of same in each such form; or if not
yet made, shall provide an artist's rendering of same. If PRAECIS does not
reasonably object to same within ten (10) business days of receipt, PRAECIS
shall be deemed to have approved such use. Synthelabo may thereafter use the
Rel-Ease(TM) trademark in the manner and form so approved, provided that such
use is on materials which have substantially the same content and are of
substantially the same quality as the samples that were the basis for approval.
8.3 Trademark Designations. Synthelabo hereby agrees that each use
of the Rel-Ease(TM) trademark shall be accompanied by the designation "(R)" or
"TM", as is appropriate depending upon whether such ▇▇▇▇ has been registered in
the Territory Country of use; or by such other designation as may be appropriate
under the trademark laws of the Territory Country of use.
8.4 Labelling, etc. Synthelabo shall be responsible for labelling
Licensed Products and repackaging Licensed Products
58
in such form as is suitable and in compliance with all applicable laws for
resale in each Territory Country. To the extent permitted by law, Licensed
Products shall be represented in all labelling and other documentation as
jointly developed by PRAECIS and Synthelabo, and all packaging shall, among
other things, clearly bear the following language: "Licensed from PRAECIS
PHARMACEUTICALS INCORPORATED", or its translation in the language of the country
of commercialization, and shall clearly bear the Rel-Ease(TM) trademark (if the
Rel-Ease(TM) system is utilized).
8.5 Indemnification By PRAECIS. PRAECIS hereby agrees to indemnify
and hold Synthelabo harmless against any liability, damages, loss or expense
(including reasonable attorneys fees and expenses of litigation) arising out of
the proper use by Synthelabo in accordance with the provisions of this Article 8
of the Rel-Ease(TM) trademark and the name PRAECIS PHARMACEUTICALS INCORPORATED.
8.6 Licensed Products Names and Trademarks. Prior to First
Commercial Sale of a Licensed Product in each Territory Country, the parties
shall consult and agree on an appropriate name and trademark for such Licensed
Product to be used in such Territory Country (any such name and trademark so
agreed upon being referred to as a "Licensed Product Territory Trademark").
PRAECIS shall not unreasonably withhold its agreement to the Licensed Product
Territory Trademark selected by Synthelabo. The parties agree that, subject to
the further provisions of this Article 8, Synthelabo shall be the owner in the
Territory of each
59
Licensed Product Territory Trademark, together with all associated logos and
related goodwill, and may sublicense same to its Affiliates and Third Parties to
whom it sublicenses its other rights hereunder. Synthelabo (i) acknowledges and
agrees that (A) PRAECIS shall be the owner of each Licensed Product Territory
Trademark outside the Territory and (B) neither Synthelabo nor any Affiliate
thereof will, directly or indirectly, so long as this Agreement is in force and
thereafter if this Agreement is terminated pursuant to Section 17.2 by reason of
the occurrence of one or more of the events described therein with respect to
Synthelabo or pursuant to Section 17.3 due to breach by Synthelabo, (1)
challenge or in any way oppose such ownership rights of PRAECIS or (2) file for
the registration outside the Territory of any Licensed Product Territory
Trademark, (ii) agrees that it will promptly file for the registration in each
Territory Country of each Licensed Product Territory Trademark to be used by
Synthelabo in such Territory Country, provided such registration is possible and
affords potential protection for such Licensed Product Territory Trademark in
such Territory Country, and will take all such other actions as are necessary or
appropriate and commercially reasonable to protect such Licensed Product
Territory Trademark against impairment or infringement anywhere in the Territory
where such Licensed Product Territory Trademark is so used and (iii)
acknowledges and agrees that (A) automatically upon termination of this
Agreement pursuant to Section 17.2 by reason of the occurrence of one or
60
more of the events described therein with respect to Synthelabo or pursuant to
Section 17.3 due to breach by Synthelabo, and without any further action by
PRAECIS or Synthelabo, ownership in the Territory of each Licensed Product
Territory Trademark, together with its good will, shall be deemed assigned to,
and vested solely in, PRAECIS, and Synthelabo shall have no further right or
interest therein, (B) following any such termination for breach, Synthelabo
shall promptly, at PRAECIS' request, and without further consideration, execute
and deliver and file or cause to be filed in all jurisdictions in the Territory
where such a filing is necessary or appropriate to protect the rights of PRAECIS
as assignee appropriate instruments of assignment reflecting and confirming the
foregoing assignment(s) and (C) PRAECIS shall be, and hereby is, constituted
Synthelabo's true and lawful attorney-in-fact with full power and authority to
execute and deliver in the name and on behalf of Synthelabo the instrument(s)
referred to in clause (iii)(B) above, which shall be binding upon Synthelabo
with the same effect as if executed and delivered by it. If clause (iii)
immediately above applies, the value of the Licensed Product Territory Trademark
and associated goodwill assigned to PRAECIS shall be available as an offset
against any damages for the breach by Synthelabo referred to in such clause
(iii). Without limitation of and subject to the foregoing terms and conditions
of this Section 8.6 and Synthelabo's compliance therewith, during the term of
this Agreement and thereafter (i) Synthelabo shall retain all
61
ownership rights in the Territory in and to each Licensed Product Territory
Trademark (and no compensation or indemnity shall be payable in respect of such
ownership rights) and (ii) neither PRAECIS nor any of its Affiliates shall,
directly or indirectly, challenge or in any way oppose the ownership rights of
Synthelabo in any Licensed Product Territory Trademark in any of the Territory
Countries.
8.7 PRAECIS Registration of Licensed Product Territory Trademark
Outside the Territory. If PRAECIS intends to use a Licensed Product Territory
Trademark in one or more countries outside the Territory, it will promptly file
for the registration in each such country of each Licensed Product Territory
Trademark to be so used in such country, provided such registration is possible
and affords potential protection for such Licensed Product Territory Trademark
in such country, and will take all such other actions as are necessary or
appropriate and commercially reasonable to protect such Licensed Product
Territory Trademark against impairment or infringement in each such country
where such Licensed Product Territory Trademark is so used.
ARTICLE 9 - PAYMENTS
9.1 Signing and Milestone Payments. Synthelabo shall make the
following payments to PRAECIS (without withholding deductions of any kind other
than required withholding taxes as to which Synthelabo shall secure and send to
PRAECIS proof of any such taxes withheld and paid by Synthelabo), all of which
shall be non-refundable:
62
(i) Upon signature of this Agreement, (A) *** dollars ($***)
in partial consideration of the sublicense granted hereunder with respect
to the PPI Licensed Rights, (B) *** dollars ($***) in partial
consideration of the license granted hereunder with respect to the
Intellectual Property Rights, and (C) *** dollars ($***) in consideration
of the license granted hereunder with respect to the Rel-Ease(TM)
trademark; and
(ii) Within thirty (30) days after the date of each occurrence
shown below, the occurrence of which shall be demonstrated by providing
reasonable documentary evidence of same, the amounts shown opposite such
occurrence below, *** of each of such amounts being in consideration of
the sublicense granted hereunder with respect to the PPI Licensed Rights
and *** of each of such amounts being in consideration of the license
granted hereunder with respect to the Intellectual Property Rights. Should
one or more occurrence set forth below occur substantially (but not
exactly) as described, and Synthelabo proceeds in commercialization
despite such inexact occurrence without a written waiver by PRAECIS, such
63
occurrence shall be deemed to have occurred for the purposes of this
Section 9.1:
Occurrence Payment
---------- -------
*** $***
*** $***
*** $***
*** $***
*** $***
*** $***
*** $***
*** $***
TOTAL $63,000,000.00
Notwithstanding the foregoing, Synthelabo shall be required to make
any of the payments otherwise payable with respect to any of the second through
the eighth occurrences set forth above only if (i) forty-five (45) days have
elapsed after Synthelabo's receipt of the European search report and the first
official letter from the European Patent Office referred to in Section 11.4 and
(ii) on or before the end of such forty-five (45) day period Synthelabo has not
validly elected to terminate this Agreement pursuant to Section 17.7 due to a
Material Adverse Patent Development by delivering to PRAECIS on or before the
end of such forty-five (45) day period a Section 17.7 Notice setting forth a
Section 17.7 Termination Date which is not later than thirty (30) days after the
end of such forty-five (45) day period.
64
Only one payment in the amount set forth opposite each occurrence
set forth above shall be payable in respect of such occurrence, and the maximum
aggregate amount payable by Synthelabo in respect of all such occurrences
(excluding amounts paid pursuant to subparagraph (i) above) shall be sixty-three
million dollars ($63,000,000) regardless of the number of Licensed Products or
Applications developed hereunder.
9.2 Benchmark Transfer Price. As of the Effective Date, Synthelabo
and PRAECIS hereby agree to a Benchmark Transfer Price for the first Licensed
Product of *** United States dollars ($U.S.***) per unit (the "Benchmark
Transfer Price"), which Benchmark Transfer Price shall not change for the first
two (2) quarters after the date of First Commercial Sale of such Licensed
Product. At the end of the second calendar quarter of sales of such Licensed
Product, the first Adjustment Amount is to be paid or credited in accordance
with Section 9.6 with respect to the preceding quarter; and the report showing
the Adjustment Amount due or creditable shall state the Transfer Price for each
Licensed Product during such first calendar quarter of sales, as determined in
accordance with Section 9.4. Thereafter, the Benchmark Transfer Price for a
given calendar quarter of sales of such Licensed Product shall be equal to the
actual Transfer Price for Licensed Products which were shipped by PRAECIS to
Synthelabo two calendar quarters earlier. At least thirty (30) days prior to the
First Commercial Sale in the Territory of any other Licensed Product, Synthelabo
and PRAECIS shall meet to determine
65
an initial Benchmark Transfer Price for such Licensed Product; and such
Benchmark Transfer Price shall apply for the first two quarters of sales, and
shall thereafter be adjusted in accordance with this paragraph.
9.3 Determination of Selling Price of Licensed Products. Synthelabo
shall determine the price at which it shall sell the Licensed Products it
obtains from PRAECIS. The Benchmark Transfer Prices of this Agreement are solely
for the purposes of determining the initial amount that Synthelabo shall pay to
PRAECIS for Licensed Products, and shall not be considered by Synthelabo,
PRAECIS or any Third Party to dictate prices at which Synthelabo should offer to
sell or sell Licensed Products to Third Parties.
9.4 Transfer Price. The Transfer Price is hereby defined as:
***Approximately 22 lines omitted***
.33 multiplied by REV for cumulative Net Sales for all Licensed Products
in a given calendar year that exceed $***; Notwithstanding the foregoing, (i) in
no instance shall the Transfer Price be less than COGS + .06 times REV, except
to the extent otherwise expressly provided in Section 3.10 and (ii) the Transfer
Price with respect to Licensed Products sold in Latin America shall in all cases
be .33 for such Net Sales.
9.5 Payment of Benchmark Transfer Price. When received by PRAECIS,
and as a condition to approval by PRAECIS,
66
each Synthelabo purchase order shall show on its face a stated transfer amount
equal to the Benchmark Transfer Price times the number of units ordered; and
such stated amount shall be followed by the phrase, "plus or minus Adjustment
Amounts", which refers to the adjustment payments or credits to be made pursuant
to Section 9.6. Within forty five (45) days of the issuance by PRAECIS to
Synthelabo of an invoice for Licensed Products pursuant to a Synthelabo purchase
order (the date of such invoice to be no earlier than the date of delivery),
Synthelabo shall pay PRAECIS the amount stated on the invoice. Any other
provision of this Agreement notwithstanding, under no circumstances shall
PRAECIS be required to ship Licensed Products to Synthelabo pursuant to a given
Synthelabo purchase order if a payment due and payable under this Section 9.5
with regard to a prior Synthelabo purchase order has not been paid to PRAECIS,
unless and to the extent that such payment is being disputed in good faith by
Synthelabo.
9.6 Adjustments; Reports. Within seventy (70) days after the end of
each calendar quarter of Licensed Product sales, Synthelabo shall submit to
PRAECIS a sales, adjustment and royalty report, which shall specify (i) the
Transfer Price for Licensed Products ordered by Synthelabo during such calendar
quarter, as determined pursuant to Section 9.4; (ii) the number of units of
Licensed Products delivered by PRAECIS during such quarter; (iii) the cumulative
Transfer Price owed to PRAECIS for such Licensed Products, calculated as the
Transfer Price for such
67
quarter times the number of units delivered during such quarter; (iv) the
Benchmark Transfer Price applicable to such quarter; (v) the cumulative payments
already made to PRAECIS for such quarter, calculated as the Benchmark Transfer
Price for such quarter times the number of units delivered during such quarter;
(vi) the "Adjustment Amount", which is defined as the cumulative Transfer Price
owed to PRAECIS (as described in (iii) above) less the cumulative payments
already made to PRAECIS (as described in (v) above), (vii) the total Net Sales,
and Net Sales on a country-by-country basis, during such calendar quarter and
(viii) the total amount of royalties, and the amount of royalties on a
country-by-country basis, payable to PRAECIS pursuant to Section 9.8. If the
Adjustment Amount is a positive number, Synthelabo shall make payment to PRAECIS
of same along with such report. If the Adjustment Amount is negative, then
Synthelabo shall so report; and PRAECIS shall credit such amount to the account
of Synthelabo, which credit shall be applied against future amounts due from
Synthelabo to PRAECIS.
9.7 Miscellaneous Sales Costs. PRAECIS shall be responsible for
shipping and handling costs arising from the return and replacement of defective
goods. Synthelabo shall itself directly pay all license fees, sales, use,
service use, occupation, service occupation, personal property, and excise taxes
and any other fees, assessments or taxes which may be assessed or levied by any
foreign, national, state or local
68
government and any departments or subdivisions thereof, against any of the
Licensed Products ordered by Synthelabo and under Synthelabo's direct or
indirect control. Each party shall be directly responsible for the payment of
all other taxes properly levied or assessed against it with respect to its
obligations hereunder.
9.8 Royalties.
(a) Royalty Rate; Payments to IUF. Synthelabo shall pay to
PRAECIS a running royalty equal to either (i) ***, or (ii) ***. PRAECIS
shall remit to IUF all royalty payments made by Synthelabo hereunder at
the times required under the IUF License Agreement.
(b) Accrual of Royalties. Royalties pursuant to this Section
9.8 shall accrue when Licensed Products are sold or otherwise transferred
by Synthelabo or an Affiliate thereof to a Third Party, and Licensed
Products shall be considered sold when each invoice of Synthelabo or an
Affiliate thereof is issued to the Third Party. Synthelabo shall make
payments to PRAECIS in accordance with the requirements of subsection
9.8(d) below.
(c) Royalty Reduction. In the event that IUF and PRAECIS agree
to a lower royalty rate pursuant to Section 14.01 of the IUF License
Agreement, or otherwise, the royalty rate payable by Synthelabo to PRAECIS
hereunder shall be adjusted downward to match such lower royalty rate.
69
(d) Semi-Annual Royalty Payments. Payments of royalties from
Synthelabo to PRAECIS pursuant to this Section 9.8 shall be made by
Synthelabo to PRAECIS on a semi-annual basis, not later than sixty (60)
days after the last day of June and the last day of December for as long
as such obligations continue under this Agreement.
(e) Single Royalty Liability. Synthelabo and its Affiliates
shall be liable for only one royalty hereunder with respect to the sale of
Licensed Products.
(f) Deduction for Taxes. Any tax required to be withheld by
Synthelabo or its Affiliates on any royalty payments payable to PRAECIS
hereunder shall be deducted from the total amount of the payment otherwise
due. Synthelabo shall secure and send to PRAECIS proof of any such taxes
withheld and paid by Synthelabo or its Affiliates.
9.9 Samples. PRAECIS hereby agrees that it shall upon written
request provide Synthelabo with "free samples" of Licensed Product in a quantity
no greater than one tenth of one percent (0.1%) of the amount of Licensed
Product that Synthelabo has ordered during the calendar quarter immediately
prior to such request. Synthelabo shall pay PRAECIS only the Cost of Goods for
such samples. PRAECIS shall ▇▇▇▇ such samples "not for sale;" and Synthelabo
agrees that such samples will be used only as salesman's exhibits and as
promotional free samples, and will not in any instance be sold.
70
9.10 Currency. All payments hereunder shall be made by wire transfer
of U.S. Dollars in immediately available funds to PRAECIS as follows:
c/o Chase Manhattan Bank, NY
ABA #▇▇▇-▇▇▇▇-▇▇
A/C ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
A/C #▇▇▇-▇-▇▇▇▇▇▇
FFC A/C Name: PRAECIS PHARMACEUTICALS INCORPORATED
Account #: ▇▇▇-▇▇▇▇▇-▇
In the event that any currency conversions are required in the calculating of or
making of payments hereunder, such conversions shall be made using the
conversion rates set forth in The Wall Street Journal on the day that such
payments become due and payable to PRAECIS.
9.11 PRAECIS Audit Rights. Synthelabo hereby agrees that Synthelabo
shall, and shall cause its Affiliates to, keep and maintain full and accurate
books of account and records showing for each calendar quarter, without
limitation, the number of units of each Licensed Product sold for each
Application in each Territory Country, and showing cumulative Net Sales for each
Licensed Product sold for each Application in each Territory Country, as well as
copies of invoices and other normal and customary sales records. All such books
and records shall be maintained for at least four (4) years after the latest
calendar quarter to which they pertain. Synthelabo further agrees that PRAECIS
shall have the right to engage (at its own cost and expense, except as otherwise
provided below in this Section 9.11) an independent accounting firm to examine
Synthelabo's books and records pertaining to the sale of Licensed Products, and
that
71
Synthelabo shall cause its Affiliates' to allow such firm to examine its
Affiliates' books and records pertaining to the sale of Licensed Products, in
order to confirm the accuracy and timeliness of reports and payments hereunder.
Such examination shall be made at the location of Synthelabo or the relevant
Affiliate, during normal business hours, and with reasonable advance notice.
Prior to any such examination, Synthelabo may require the accounting firm to
maintain all information of Synthelabo and its Affiliate confidential, through
the execution of a confidentiality agreement having reasonable terms and
conditions; however, such firm shall be permitted to disclose to PRAECIS
sufficient information to allow PRAECIS to confirm the accuracy and timeliness
of reports and payments hereunder, and to fully understand any discrepancy or
underpayment. Such examination shall not be performed more than once per year
for each of Synthelabo and each Affiliate, and the right to examine records for
a given calendar quarter shall expire four (4) years following that quarter. If
such an examination discloses an underpayment, Synthelabo shall immediately
remit such amount to PRAECIS unless and to the extent that the amount in
question is being disputed in good faith by Synthelabo; and any such unpaid
amount shall be subject to interest as provided in Section 10.1. If such
examination reveals an underpayment of seven and one-half percent (7.5%) or more
for the period examined, Synthelabo shall also reimburse PRAECIS for the
reasonable cost of the examination, in-
72
cluding without limitation all reasonable travel costs, meals, and other
reasonable costs incidental thereto.
ARTICLE 10 - REMEDIES FOR NON-PAYMENT
10.1 Interest. Amounts due and payable hereunder but not paid by the
date due hereunder will be subject to an interest charge from the date such
payment was due until payment equal to the highest U.S. Prime Interest Rate per
annum published in The Wall Street Journal on the first business day after the
payment first became due, plus 3.0 percentage points.
10.2 Other. Failure on the part of Synthelabo to timely pay for
Licensed Products when such payment is due as provided herein shall give PRAECIS
the right (without prejudice to any other remedies):
10.2.1 to enforce its security interest granted pursuant to
Section 10.3; or
10.2.2 to give written notice to Synthelabo that Synthelabo
shall not sell or part with possession of the Licensed Products until the
transfer payments set forth in Article 9 shall have been paid in full, with
which Synthelabo shall comply.
10.3 Collateral. As collateral security for the due and punctual
payment by Synthelabo of all amounts payable by it either under this Agreement
or on account of any sale of one or more Licensed Products from PRAECIS to
Synthelabo, Synthelabo hereby grants to PRAECIS a purchase money security
interest in all Licensed Products hereafter acquired by Synthelabo from PRAECIS,
together with the proceeds (including, without limita-
73
tion, proceeds under insurance policies) therefrom, and in all right, title and
interest of Synthelabo in and to all instruments and other documents, whenever
arising, covering or relating to such Licensed Products and proceeds and all
rights, remedies and claims of Synthelabo under or with respect to such
documents, whether now existing or hereafter arising, in each case until the
purchase price for such Licensed Products has been paid in full in accordance
with the terms hereof; provided, however, that PRAECIS hereby releases such
security interest effective upon such payment in full, and provided further,
that the security arrangements hereunder shall in no way impair Synthelabo's
right to sell any Licensed Products to any Third Party. PRAECIS shall have all
the rights, powers, privileges and remedies with respect to such collateral as
shall be permitted for a secured party under the Uniform Commercial Code of the
State of New York as is in effect at such time. Synthelabo agrees that it will
join with PRAECIS in executing, filing and refiling such documents as PRAECIS
may reasonably deem necessary or appropriate to perfect, preserve and deliver
such additional documents as PRAECIS may reasonably deem necessary or
appropriate to carry into effect the purpose of this Section 10.3 or to better
assure and confirm to PRAECIS its rights, powers and remedies under this Section
10.3. Synthelabo hereby authorizes PRAECIS, in its discretion, to file financing
statements and similar documents relative to all or any part of the
above-described collateral without the signature of Synthelabo wherever
permitted by law.
74
10.4 Insurance on Unsold Goods. Synthelabo at its own cost and
expense shall keep all of the Licensed Products in which PRAECIS has an
interest, and which are under Synthelabo's direct or indirect control, insured
under a standard policy with coverage and in an amount which shall be sufficient
to prevent PRAECIS from sustaining any financial loss caused by the loss, damage
or destruction of such Licensed Products unless and until such Licensed Products
undergo manufacturing transformation by Synthelabo or a Third Party
manufacturer.
ARTICLE 11 - COOPERATION AND ASSISTANCE
11.1 General. Subject to the other provisions of this Agreement,
Synthelabo and PRAECIS shall each take such steps as are reasonably necessary to
assist one another in securing their trademark rights, intellectual property
rights and any other rights in connection with the Licensed Products, and to
assist one another in taking any steps necessary to defend such rights. Except
as otherwise provided in Article 19, any reasonable expenses incurred in this
regard by an assisting party shall be refunded by the party receiving such
assistance, provided that such party has agreed to such expenses in advance.
11.2 Specific Cooperation of Synthelabo. Synthelabo shall cooperate
with PRAECIS in the following ways with respect to Licensed Products:
11.2.1 Synthelabo shall inform PRAECIS of any suggested
Improvements;
75
11.2.2 Synthelabo shall give representatives from PRAECIS
reasonable opportunity to participate in sales meetings and exhibitions in order
to enable PRAECIS to understand marketing problems and opportunities within the
Territory, and to give adequate assistance when and where required; and
11.2.3 Synthelabo shall submit to PRAECIS from time to time
and at the end of each December reports detailing all relevant information as to
the prevailing market situation, the attitude of customers, and the activities
of competitors, in each Territory Country.
11.3 Specific Cooperation of PRAECIS. PRAECIS shall cooperate with
Synthelabo in the following ways with respect to Licensed Products:
11.3.1 PRAECIS shall inform Synthelabo of any suggested
Improvements;
11.3.2 PRAECIS shall give representatives from Synthelabo
reasonable opportunity to participate in sales meetings and exhibitions in order
to enable Synthelabo to understand marketing problems and opportunities outside
of the Territory, and to give adequate assistance when and where required; and
11.3.3 PRAECIS shall submit to Synthelabo from time to time
and at the end of each December reports detailing all relevant information as to
the prevailing market situation, the attitude of customers, and the activities
of competitors, in each country outside of the Territory.
76
11.4 Patent Prosecution and Maintenance. The parties agree that they
will coordinate with each other in all reasonable respects the worldwide
prosecution of all patents and patent applications relating to this Agreement,
subject to the provisions of this Section 11.4. PRAECIS shall, at its expense,
diligently pursue the filing, prosecution and maintenance of all patents and
patent applications included in the Intellectual Property Rights and the PPI
Licensed Rights (except for Improvements owned exclusively by Synthelabo) in all
Territory Countries where protection of intellectual property rights in general
is available, Synthelabo reasonably requires such protection and such protection
is available, and PRAECIS shall bear all costs associated therewith. PRAECIS
shall furnish Synthelabo with copies of any patent application concerning the
Intellectual Property Rights sufficiently in advance of the anticipated filing
date therefor (but in no event less than 20 business days before filing) so as
to give Synthelabo a reasonable opportunity to review and comment thereon.
PRAECIS shall also furnish copies to Synthelabo of all communications to and
from United States and foreign patent offices regarding patents or patent
applications relating to this Agreement within a reasonable time prior to filing
such communication or promptly following the receipt thereof. PRAECIS shall
reasonably consider any comments Synthelabo may have related to such patent
applications or communications. Each of Synthelabo and PRAECIS shall have the
right, at its expense, to file, prosecute and
77
maintain patents in all countries on Improvements owned solely by it. Each party
shall have the reasonable right to review and comment on such filings by the
other party and all patent office communications related thereto to the same
extent as Synthelabo is permitted by this Section 11.4 with respect to filings
made by PRAECIS. PRAECIS shall designate Synthelabo its European patent agent,
and shall deliver any power of attorney required to give effect to such
designation, in order that Synthelabo may, and Synthelabo agrees to, implement
and diligently carry out an accelerated procedure to obtain a European search
report and the first official letter from the European Patent Office with
respect to the patentability of PPI-149 and the formulation, respectively,
described in the European patent applications to be filed based on the
respective Material Patent Applications (as defined in Section 1.36).
ARTICLE 12 - REPRESENTATIONS AND WARRANTIES
12.1 Conformity to Specifications. PRAECIS warrants that each
Licensed Product delivered to Synthelabo for sale to Third Parties shall conform
to the specifications for such Licensed Product as shall be developed by PRAECIS
and provided to Synthelabo from time to time, which shall be consistent with
those upon which Registration Approval of such Licensed Product was based, and
shall have a minimum remaining shelf life at delivery of at least 83% of the
total shelf life of such Licensed Product. PRAECIS further warrants that (i)
neither it nor any Third Party manufacturer engaged by it shall make any change
to
78
its Licensed Product manufacturing process or place of manufacture which would
adversely affect Registration Approvals in the Territory, unless consent to such
change is first obtained from Synthelabo and (ii) PRAECIS will make any change
to the manufacturing process or place of manufacture required by regulatory
authorities to maintain Registration Approval in a Territory Country. Synthelabo
warrants that any Licensed Products manufactured by, or pursuant to agreements
with, it or any of its Affiliates, pursuant to Article 3, for sale to Third
Parties shall conform to the specifications for such Licensed Product as shall
be developed by PRAECIS and provided to Synthelabo from time to time, which
shall be consistent with those upon which Registration Approval of such Licensed
Product was based. Synthelabo further warrants that neither it nor any of its
Affiliates nor any Third Party manufacturer which it engages, shall make any
change to any Licensed Product manufacturing process which it employs which
would adversely affect Registration Approvals in the Territory, unless consent
to such change is first obtained from PRAECIS.
12.2 Representations as to Intellectual Property. PRAECIS represents
and warrants that PRAECIS owns or possesses adequate licenses or other rights to
use all patents, patent rights, inventions and know-how included in the
Intellectual Property Rights and the PPI Licensed Rights being licensed to
Synthelabo hereunder and to grant the licenses granted herein. To the best
knowledge of PRAECIS, the manufacture, use or sale of
79
the Licensed Products pursuant to this Agreement will not infringe or conflict
with any Third Party right or patent and PRAECIS is not aware of any pending
patent application that if issued would be infringed by the manufacture, use or
sale of the Licensed Products pursuant to this Agreement. Appendix II hereto
correctly identifies all patent applications included within the Intellectual
Property Rights and the PPI Licensed Rights as of the date hereof. With respect
to all such patent applications, except as disclosed in writing by PRAECIS to
Synthelabo prior to the Effective Date, PRAECIS has no knowledge of any prior
patent or publication, public use, offer for sale or actual sale that would
invalidate the claims of such patent applications, and PRAECIS has no knowledge
of any actions heretofore taken by a patent office that would render such patent
unenforceable. As of the Effective Date, neither Synthelabo nor PRAECIS has
knowledge that any infringement referred to above in this Section 12.2 has
occurred, and neither party has been notified or is aware of any actual or
potential claims of infringement.
12.3 Authority; Binding Agreement; Other Matters. Each of Synthelabo
and PRAECIS hereby represent and warrant to one another that:
12.3.1 They are duly incorporated and are validly existing
corporations in good standing under the laws of their respective jurisdictions
of incorporation.
12.3.2 Each has the corporate power and authority to execute,
deliver and perform this Agreement.
80
12.3.3 This Agreement constitutes a valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by the principles governing the availability of equitable
remedies.
12.3.4 Neither it nor any of its Affiliates is a party to,
subject to, or bound by any agreement, understanding or judgment, award, order,
writ, injunction or decree of any court, governmental body or arbitrator which
would (i) prevent it from carrying out of this Agreement or (ii) conflict with
or be breached by the execution, delivery or performance by it of this
Agreement. There is no action, suit, dispute or governmental, administrative,
arbitration or regulatory proceeding pending or, to the best of such party's
knowledge, threatened against or relating to such party which, in each case,
could prevent such party from carrying out its obligations under this Agreement.
12.4 IUF License Agreement. PRAECIS represents and warrants that, as
of the date of this Agreement, (i) the IUF License Agreement is in full force
and effect, (ii) PRAECIS is in compliance in all material respects with its
obligations thereunder and has heretofore delivered to Synthelabo a true and
complete copy thereof, (iii) there have been no amendments or modifications
thereof and (iv) IUF has not breached the IUF License Agreement. So as not to
adversely affect Synthelabo's
81
rights under this Agreement, PRAECIS will not, during the term of this
Agreement, take any actions to terminate or restrict its rights under the IUF
License Agreement as the same relate to the Licensed Products, and will
discharge all of its obligations and responsibilities thereunder, including,
without limitation, making any required payments. If PRAECIS receives any notice
of default under the IUF License Agreement, PRAECIS will promptly notify
Synthelabo thereof.
12.5 Warranty Disclaimer. PRAECIS MAKES NO WARRANTIES, EXPRESSED OR
IMPLIED, AS TO THE MERCHANTABILITY OR FITNESS FOR ANY PURPOSE OF ANY LICENSED
PRODUCTS. PRAECIS SHALL NOT BE LIABLE FOR ANY DIRECT, CONSEQUENTIAL OR OTHER
DAMAGES SUFFERED BY SYNTHELABO OR ANY THIRD PARTY RESULTING FROM THE USE OF THE
LICENSED PRODUCTS, EXCEPT TO THE EXTENT OF (I) ANY BREACH OF A REPRESENTATION OR
WARRANTY OF PRAECIS SET FORTH HEREIN, OR (II) ANY EXPRESS INDEMNIFICATION BY
PRAECIS HEREUNDER.
ARTICLE 13 - INDEMNIFICATION
13.1 Synthelabo Indemnification of PRAECIS. Synthelabo hereby agrees
to indemnify and hold harmless PRAECIS, its directors, officers, employees,
agents, subsidiaries and Affiliates against any and all liability, damages, loss
or expenses (including those arising out of personal injury claims), including
reasonable attorney fees and expenses of litigation, arising out of the actions
of Synthelabo, its directors, officers, employees, agents, subsidiaries or
Affiliates, or any Third Party acting on behalf of or under authorization by
82
Synthelabo, in connection with Synthelabo's development, Improvement, testing,
importation, Advertising, Promotion, marketing, distribution, manufacture
(whether complete manufacture or "fill and finish"), use, transport, offering
for sale, sale, labeling, handling, storage or support of the Licensed Products,
or otherwise arising out of or resulting from such actions by Synthelabo or its
customers, or arising out of Synthelabo's failure to procure insurance as
required hereunder. These provisions shall survive for six (6) years beyond the
termination or expiration of this Agreement. Without limiting the foregoing, in
the event that any of the duties and obligations of Synthelabo hereunder are
performed by any Affiliate or permitted third party sublicensee of Synthelabo,
PRAECIS shall be indemnified by Synthelabo for the acts or omissions of such
other party to the same extent as PRAECIS is indemnified for the acts and
omissions of Synthelabo under this Section 13.1.
13.2 PRAECIS' Indemnification of Synthelabo. PRAECIS hereby agrees
to indemnify and hold harmless Synthelabo, its directors, officers, employees,
agents, subsidiaries and Affiliates against any and all liability, damages, loss
or expenses (including those arising out of personal injury claims), including
reasonable attorney fees and expenses of litigation, arising out of the actions
of PRAECIS, its directors, officers, employees, agents, subsidiaries or
Affiliates, or any Third Party acting on behalf of or under authorization by
PRAECIS, in connection with PRAECIS's design, development, Improvement,
83
testing, manufacture, labeling, handling or support of Licensed Products, or
otherwise arising out of or resulting from such actions by PRAECIS or its
customers, or arising out of PRAECIS' failure to procure insurance as required
hereunder. These provisions shall survive for six (6) years beyond the
termination or expiration of this Agreement. Without limiting the foregoing, in
the event that any of the duties and obligations of PRAECIS hereunder are
performed by any Affiliate or permitted third party licensee of PRAECIS,
Synthelabo shall be indemnified by PRAECIS for the acts or omissions of such
other party to the same extent as Synthelabo is indemnified for the acts and
omissions of PRAECIS under this Section 13.2.
13.3 Mutual Indemnification for Breach. PRAECIS hereby agrees to
indemnify and hold Synthelabo harmless against any liability, damages, loss or
expense (including reasonable attorneys fees and expenses of litigation) arising
out of the breach of any representation, warranty, covenant or agreement of
PRAECIS contained herein. Synthelabo hereby agrees to indemnify and hold PRAECIS
harmless against any liability, damages, loss or expense (including reasonable
attorneys fees and expenses of litigation) arising out of the breach of any
representation, warranty, covenant or agreement of Synthelabo contained herein.
13.4 Procedure For Third Party Claims. Any person that intends to
claim indemnification under this Article 13 (an "Indemnitee") arising out of a
Third Party claim shall promptly notify the indemnifying party (the
"Indemnitor") of such claim in respect of which the Indemnitee intends to claim
such indemnifi-
84
cation, and the Indemnitor shall, to the extent applicable, 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
reasonable fees and expenses thereof to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceedings. The parties' indemnity obligations under this Article 13 shall not
apply to amounts paid in settlement of any loss, claim, liability or action if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. Any Indemnitee's failure to deliver notice
to the Indemnitor within a reasonable time after the commencement of any such
action, if materially prejudicial to the Indemnitor's ability to defend such
action, shall relieve the Indemnitor of any liability to the Indemnitee under
this Article 13, but not any liability that it may have to the Indemnitee
otherwise than under this Article 13. The Indemnitee and its employees and
agents shall cooperate fully with the Indemnitor and its legal representatives
in the investigation and defense of any action, claim or liability covered by
this indemnification.
ARTICLE 14 - INSURANCE
The parties shall maintain insurance coverage with respect to their
activities and potential liabilities in
85
connection with the collaboration hereunder as is commercially reasonable in the
circumstances.
ARTICLE 15 - NON-COMPETITION
15.1 Mutual Non-Competition Covenant. Except as provided in Section
15.2, neither PRAECIS nor Synthelabo shall, during the term of this Agreement or
any extension thereof and for one (1) year thereafter, without the consent of
the other party, be concerned or interested, directly or indirectly (including
through a licensing arrangement), in the advertising, promotion, manufacture,
use, importation, offering for sale, sale or marketing in any Territory Country
of any products containing an LHRH Antagonist, other than, in the case of
Synthelabo, Licensed Products. For the avoidance of doubt, activities undertaken
by Synthelabo to discover, conceive or invent Improvements or Synthelabo
Formulations shall not be prohibited by this Section 15.1. The above restriction
on competition shall not apply after termination of this Agreement (i) to a
party if this Agreement has terminated pursuant to Section 17.2 by reason of the
occurrence of one or more of the events described therein with respect to the
other party or if this Agreement has been validly terminated by such party for
breach by the other party pursuant to Section 17.3 or (ii) to Synthelabo or
PRAECIS if this Agreement has been terminated in its entirety pursuant to
Section 17.7 (including without limitation as contemplated by Section 9.1).
15.2 Competitive Acquisition. Synthelabo shall promptly notify
PRAECIS if Synthelabo shall acquire, or
86
Synthelabo or substantially all its business or assets shall be acquired by,
directly or indirectly, an entity which, directly or indirectly, is developing,
or which Advertises, Promotes, manufactures, imports, offers for sale, sells or
markets, any product which contains an LHRH Antagonist and which is competitive
with any Licensed Product in the Territory. The occurrence of any of the events
described in the preceding sentence shall not relieve either party of its
obligations hereunder or otherwise modify or vary the rights and obligations of
the parties hereunder, including without limitation Synthelabo's general
obligation as provided herein to diligently develop, market and sell Licensed
Products in the Territory.
ARTICLE 16 - IMPROVEMENTS
It is contemplated that PRAECIS and Synthelabo, separately or
jointly, may discover, conceive or develop Improvements as defined herein, and
that Synthelabo may discover, conceive or develop Synthelabo Formulations. All
intellectual property rights in and to Improvements discovered, conceived or
developed by PRAECIS, its employees or agents shall be owned by PRAECIS, and
shall be included in the Intellectual Property Rights licensed hereunder. All
intellectual property rights in and to Improvements discovered, conceived or
developed by Synthelabo, its employees or agents shall be owned by Synthelabo,
and an exclusive fully paid-up, royalty-free license, with the right to grant
sublicenses in connection with licenses granted by PRAECIS related to Licensed
Products, under such rights for use only with Licensed Products outside the
Territory is hereby
87
granted to PRAECIS, it being understood and agreed that, subject to Section
15.1, Synthelabo may use or license such Improvement (i) in the Territory in
connection with Licensed Products to the extent provided in this Agreement and
(ii) in or outside the Territory for uses other than in connection with Licensed
Products. Such license to PRAECIS shall be perpetual, except that such license
shall automatically terminate if this Agreement is terminated by Synthelabo
pursuant to Section 17.2 by reason of the occurrence of one or more of the
events described therein with respect to PRAECIS or is validly terminated by
Synthelabo pursuant to and in accordance with Section 17.3 by reason of any
material breach of this Agreement by PRAECIS. All intellectual property rights
in and to Synthelabo Formulations shall be owned by Synthelabo. All intellectual
property rights in and to Improvements jointly discovered, conceived or
developed by PRAECIS and Synthelabo employees or agents shall be jointly owned
by PRAECIS and Synthelabo, as dictated by U.S. law regarding ownership of
jointly discovered, conceived or developed intellectual property rights; and the
rights of each of PRAECIS and Synthelabo in and to same shall be licensed to the
other as provided for Improvements made by each alone, as set forth hereinabove.
Each party shall promptly disclose to the other any Improvements developed by
its employees or agents acting on its behalf and Synthelabo shall promptly
disclose to PRAECIS any Synthelabo Formulations. The parties shall discuss in
good faith the manner in which such Improvements or such Synthelabo
Formulations, as applicable, may be incorporated into the
88
Licensed Products which have been commercialized (or are in the course of
development for commercialization) hereunder. If and to the extent that any
Synthelabo Formulation is incorporated into any Licensed Product as aforesaid,
the term "Licensed Product" hereunder shall be amended in the manner mutually
agreed upon by the parties as provided below. The Joint Steering Committee shall
determine in good faith whether any Improvement or Synthelabo Formulation should
be incorporated into any Licensed Product intended for sale in the Territory.
Notwithstanding the foregoing, if incorporation of such Improvement or
Synthelabo Formulation would have a material impact on the economic terms and
conditions of this Agreement applicable to either party, then the parties shall
negotiate in good faith appropriate adjustments to the economic terms and
conditions of this Agreement with a view to preserving the relative economic
benefits of the parties under this Agreement (except as otherwise mutually
agreed) to permit the incorporation of such Improvement. If mutual agreement of
the parties is reached as to the incorporation of any Synthelabo Formulation as
aforesaid, then Synthelabo shall be deemed to have granted to PRAECIS a
fully-paid up, royalty-free exclusive license, with the right to grant
sublicenses in connection with licenses granted by PRAECIS related to the
Licensed Products or other products containing PPI-149 or another LHRH
Antagonist Compound licensed to Synthelabo hereunder and formulated in such
Synthelabo Formulation, of its rights in such Synthelabo Formulation solely for
use outside the Territory with Licensed Products or other
89
products containing PPI-149 or another LHRH Antagonist Compound licensed to
Synthelabo hereunder and formulated in such Synthelabo Formulation. Such license
shall be perpetual, except that such license shall automatically terminate if
this Agreement is terminated by Synthelabo pursuant to Section 17.2 by reason of
the occurrence of one or more of the events described therein with respect to
PRAECIS or is validly terminated by Synthelabo pursuant to and in accordance
with Section 17.3 by reason of any material breach of this Agreement by PRAECIS.
It is understood and agreed that, subject to Section 15.1, Synthelabo may use or
license a Synthelabo Formulation (i) in the Territory to the extent provided in
this Agreement and (ii) in or outside the Territory for uses other than in
connection with (A) Licensed Products or (B) other products containing PPI-149
or other LHRH Antagonist Compounds licensed to Synthelabo hereunder and
formulated in such Synthelabo Formulation. Each of PRAECIS and Synthelabo hereby
represent and warrant that their relevant employees are bound by a written
agreement which requires them to assign to their employer all intellectual
property rights arising within the scope of their employment.
ARTICLE 17 - TERM & TERMINATION
17.1 Term; Expiration. Unless terminated earlier, as provided
herein, the term of this Agreement shall expire, and the licenses granted by
PRAECIS to Synthelabo hereunder shall become fully paid-up, perpetual and
royalty-free and shall continue without any further obligation, with respect to
a Territory Country, upon the expiration in such Territory Country of the
90
last to expire of the patents and any extensions thereof or supplementary
certificates of protection included in the Intellectual Property Rights or the
PPI Licensed Rights, respectively, which are licensed or sublicensed
respectively, hereunder and which cover a Licensed Product in such Territory
Country. In the event that no Intellectual Property Rights, Patent Rights or
Invention Rights licensed or sublicensed hereunder cover a Licensed Product in a
Territory Country, the term of this Agreement in such Territory Country for such
Licensed Product shall expire ten (10) years after the date of Registration
Approval of such Licensed Product in such Territory Country, whereupon the
licenses granted herein shall become fully paid-up, perpetual, royalty-free and
shall continue without any further obligation in such Territory Country. Upon
the expiration of this Agreement in a Territory Country pursuant to this Section
17.1, PRAECIS shall cease to have any further obligations to Synthelabo
hereunder with respect to such Territory Country, including to manufacture and
supply Licensed Products with respect to such Territory Country, and Synthelabo
shall cease to have any further obligations to PRAECIS hereunder with respect to
such Territory Country, except that such expiration shall not release either
party from any liability or obligation that matured prior to such expiration,
including for this purpose the obligation of Synthelabo to timely make all
payments required by Article 9 for Licensed Products ordered by Synthelabo or
its Affiliates pursuant hereto prior to such expiration.
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17.2 Bankruptcy, Etc.
(a) Automatic Termination. If either party (i) shall make a
general assignment for the benefit of creditors, (ii) shall file a
voluntary petition of bankruptcy, (iii) shall be adjudged a bankrupt or
insolvent, or have had entered against it an order for relief in any
bankruptcy or insolvency proceeding, (iv) shall file a petition or answer
seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation, (v) shall file an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against it
in any proceeding specified in (vii) below, (vi) shall seek, consent to or
acquiesce in the appointment of a trustee, receiver or liquidator of said
party or of all or any substantial part of the assets of said party or
(vii) shall fail to obtain dismissal within 60 days of the commencement of
any proceeding against said party seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any statute, law or regulation, or the entry of any order appointing
a trustee, liquidator or receiver of said party or of said party's assets
or any substantial portion thereof, this Agreement shall automatically
terminate, inasmuch as permitted under applicable and prevailing law.
(b) Bypass of Payments. If PRAECIS enters into an arrangement
of creditors and/or bankruptcy, one week
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prior to such arrangement of creditors and/or bankruptcy Synthelabo shall
have the right to be notified by PRAECIS of such arrangement and/or
bankruptcy, and any and all license fees owed directly to PRAECIS by
Synthelabo pursuant to this Agreement shall thereafter be paid by
Synthelabo directly to IUF at the same royalty rate as set forth in this
Agreement.
17.3 Breach. Subject to the further provisions of this Section 17.3,
upon any material breach or default of this Agreement by either party, the
non-breaching party shall have the right to serve notice upon the breaching
party of its intention to terminate this Agreement upon the expiration of ninety
(90) days after the date said notice is given, unless the breaching party shall
cure any such breach or default within said ninety (90) day period. Upon the
expiration of said ninety (90) day period, if the breaching party shall not have
so cured, and if the non-breaching party gives a notice of final termination,
final termination of this Agreement shall be effective on the date such notice
is given. Notwithstanding the foregoing, in the case of a breach of a payment
obligation hereunder, the ninety day (90) period referred to above shall instead
be thirty (30) days.
17.4 Effect of Termination. Upon expiration or termination of this
Agreement as provided herein, this Agreement shall, except as otherwise provided
herein, be void and of no further force or effect and neither party shall have
any further liability hereunder, and except that no such expiration or
termination shall release either party from any liability or
93
obligation that arose or is based upon events which occurred prior to the
effective date of such expiration or termination. The following special
provisions shall be applicable if this Agreement (i) terminates pursuant to
Section 17.2 by reason of the occurrence of one or more of the events described
therein with respect to PRAECIS or (ii) is validly terminated by Synthelabo
pursuant to and in accordance with Section 17.3 by reason of any material breach
of this Agreement by PRAECIS other than breach by PRAECIS of its supply
obligations hereunder:
(a) all of the license and sublicense rights granted to
Synthelabo and its Affiliates hereunder shall remain in full force and
effect on a fully paid-up, perpetual and royalty-free basis; and
(b) Synthelabo shall have a fully paid-up, perpetual,
royalty-free license of all manufacturing protocols, know-how and related
information and data necessary to enable Synthelabo to develop, have
developed, make and have made Licensed Products in the Territory from and
after the effective date of such termination.
17.5 Surviving Provisions. The parties agree that, subject to the
first sentence of Section 17.4, upon termination of this Agreement, the
following shall survive (subject to the limitations set forth in this Section
17.5): Section 4.6 (only upon termination as provided in such Section) and
Section 4.7, the confidentiality obligations of Article 7 hereof (to the extent
provided therein), the obligations of Synthelabo set forth in Section 8.6 (only
in the case of termination pursuant to
94
Section 17.2 due to the occurrence of one or more of the events described
therein with respect to Synthelabo or termination by PRAECIS pursuant to Section
17.3 for breach by Synthelabo), the non-competition obligations set forth in
Section 15.1 (to the extent provided therein), Section 17.4 (with respect to the
special provisions set forth therein, only upon termination as provided in such
Section), this Section 17.5 and Section 17.8 (only upon termination as provided
in such Section).
17.6 Continuation of Sublicense Rights. The sublicense granted
hereunder with respect to the PPI Licensed Rights shall survive the termination
of the IUF License Agreement. Upon termination of the IUF License Agreement for
any reason during the term of this Agreement, PRAECIS shall assign to IUF all of
PRAECIS' rights in the PPI Licensed Rights in accordance with Section 12.05 of
the IUF License Agreement, and upon IUF's complete assumption of all of PRAECIS'
future obligations hereunder with respect to such sublicense, PRAECIS shall have
no further obligation whatsoever with respect thereto, except for any liability
or obligation of PRAECIS that matured prior to the effective date of such
assumption.
17.7 Termination for Material Adverse Events. Synthelabo may
terminate this Agreement to the extent provided in Section 4.10. However, such
termination right shall be exercisable only if, with respect to any event
referred to in Section 4.10 giving rise to such termination right, within nine
months after first becoming aware of the occurrence of such event (such date on
which Synthelabo first becomes aware of the
95
occurrence of such event being referred to as a "Termination Right Trigger
Date"), Synthelabo notifies PRAECIS in writing of such event (a "Section 17.7
Notice"), which notice shall set forth a date (the "Section 17.7 Termination
Date") not less than sixty (60) days (except as provided in Section 9.1) and not
more than twelve months after the Termination Right Trigger Date on which this
Agreement shall terminate to the extent provided in Section 4.10, it being
understood and agreed that until the Section 17.7 Termination Date, the
obligations of the parties hereunder shall remain in effect, including without
limitation Synthelabo's general obligation as provided herein to diligently
develop, market and sell Licensed Products in the Territory.
17.8 Right to Sell Inventory. Upon termination of this Agreement
pursuant to Section 17.2 due to the occurrence of one or more of the events set
forth therein with respect to Synthelabo or pursuant to Section 17.3 due to a
breach by Synthelabo, Synthelabo may, for a period of six (6) months after the
termination date, sell all Licensed Products on hand as of the termination date,
provided that all payments therefor are timely paid in compliance with Article 9
hereof.
ARTICLE 18 - ARBITRATION
18.1 Procedure; Decision Final and Binding. Except as to issues
relating to the validity, construction or effect of any patent right licensed
hereunder, any and all claims, disputes or controversies arising under, out of,
or in connection with this Agreement, which have not been resolved by good faith
negotiations between the parties may be referred by either party
96
to arbitration and finally settled in accordance with the UNCITRAL Arbitration
Rules (as supplemented or modified by this Section 18.1) in effect on the date
hereof (hereinafter, the "Rules"), by three arbitrators appointed in accordance
with said Rules. The appointing authority shall be the Court of Arbitration of
the International Chamber of Commerce ("ICC") located in Paris, France. The
place of arbitration shall be London, England. All arbitrators shall be fully
conversant with the English language and the opinion shall be rendered in
English. The English language shall be used in all documents, briefs, evidence
and any other writings submitted. All proceedings shall be in the English
language. Except as provided in Section 18.3 the procedures set forth in this
Section 18.1 shall be the sole and exclusive means of settling or resolving any
dispute hereunder. Accordingly, each party covenants and agrees with the other
party that except as expressly provided in Section 18.3, it will not seek to
have any such dispute adjudicated (except to enforce the provisions of this
Section 18.1 as provided below and except for the limited right to seek
injunctive relief where appropriate) in any court or other official forum of any
government, or otherwise seek to invalidate or circumvent the procedures set
forth in this Section 18.1 as the sole and exclusive means of settling or
resolving any such dispute.
The decision of the arbitrators contemplated by this Section 18.1
shall be final and binding on the parties and may be
97
presented by either party for enforcement in any court of competent
jurisdiction; provided, however, that if such enforcement is sought in the
United States, it may only be sought in the state courts of the Commonwealth of
Massachusetts, or a United States federal court in the Commonwealth of
Massachusetts. The parties understand and agree that the provisions of this
Article 18 may be specifically enforced by injunction or otherwise in any court
of competent jurisdiction.
18.2 Assumption Regarding Intellectual Property Rights. In any
arbitration proceedings hereunder, the arbitrators shall assume the validity and
enforceability of any patent rights licensed hereunder.
18.3 Exception to Exclusive Dispute Resolution Procedure. Claims,
disputes or controversies concerning the validity, construction or effect of any
patent rights licensed hereunder shall be resolved in a court having subject
matter jurisdiction thereof.
ARTICLE 19 - INFRINGEMENT AND MAINTENANCE
19.1 Infringement by Third Parties. Synthelabo and PRAECIS shall
promptly inform one another in writing of any alleged infringement, unauthorized
use or misappropriation, of which either shall have notice of any trademarks or
Intellectual Property Rights or the PPI Licensed Rights licensed hereunder and
provide each other with any reasonably available evidence of infringement. Upon
such notice, the PRAECIS and Synthelabo
98
representatives to the Joint Steering Committee shall promptly confer with their
respective patent counsel regarding such apparent infringement; and the Joint
Steering Committee shall promptly thereafter meet in person or by telephone to
discuss possible courses of action. Unless the Joint Steering Committee
recommends otherwise, PRAECIS shall, with respect to any such alleged
infringement, take action to compel such alleged infringers to cease and desist;
and that failing, shall bring legal action against such alleged infringers. All
costs of such legal action, including reasonable attorneys' fees and
disbursements, shall be borne by PRAECIS, and all judgments, settlements,
damages, license fee payments and future royalties shall first be applied to pay
or reimburse PRAECIS for all costs of such action, including reasonable
attorneys' fees and disbursements, and shall thereafter be split ***% for
Synthelabo and ***% for PRAECIS.
19.2 Infringement Suit By Third Parties. In the event that
Synthelabo (i) issued in an action which alleges infringement, unauthorized use
or misappropriation by Synthelabo in any Territory Country of any Intellectual
Property Rights or PPI Licensed Rights or which is based on the development,
importation, use, sale or distribution by Synthelabo in the Territory of any
Licensed Product as provided hereunder, or (ii) is sued in a declaratory
judgment or similar action alleging invalidity or unenforceability in any
Territory Country of any Intellectual Property Rights or PPI Licensed Rights,
Synthelabo shall promptly notify PRAECIS; and the PRAECIS and Synthelabo
99
representatives to the Joint Steering Committee shall promptly confer with their
respective patent counsel regarding such alleged infringement. The Joint
Steering Committee shall promptly thereafter meet in person or by telephone to
discuss possible courses of action. Unless the Joint Steering Committee
recommends otherwise, PRAECIS shall take action to defend against such suit, and
Synthelabo shall cooperate fully with PRAECIS in such action. All costs of such
legal action, including reasonable attorneys' fees, and the cost of all
judgments, damages, settlements, license fee payments and future royalties shall
be borne by PRAECIS.
19.3 Cooperation. In any legal action contemplated under Article 8
or this Article 19, the parties shall provide reasonable cooperation and support
to each other, subject to applicable legal privileges, which each party shall
have the right to assert and maintain, and confidentiality requirements imposed
by a court or other competent tribunal. PRAECIS shall keep Synthelabo reasonably
informed of the status of any such legal action. Without limiting the foregoing,
the parties shall, to the extent possible, make their directors, officers,
employees and agents available to testify when reasonably requested and make
available relevant records, papers, information, samples, specimens, and the
like. The costs to Synthelabo of such cooperation shall be borne by PRAECIS.
19.4 Differing Interests. Synthelabo recognizes that PRAECIS may
have interests in the trademarks, the Intellectual Property Rights and the PPI
Licensed Rights licensed hereunder
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which are outside of the scope of the rights licensed to Synthelabo. Synthelabo
therefore hereby agrees that in any legal action under Article 8 or this Article
19, without limitation of PRAECIS' obligations under such Articles, PRAECIS
shall have the right to seek to protect the entirety of those separate interests
in any litigation regarding such trademarks, the Intellectual Property Rights or
the PPI Licensed Rights.
ARTICLE 20 - ASSIGNMENT
Subject to Section 2.4, Synthelabo may not assign or otherwise
transfer this Agreement or any rights acquired by it hereunder without the prior
written consent of PRAECIS, except for any such assignment to an entity which
acquires or acquires control of its entire business or that part of its business
to which this Agreement relates, whether pursuant to a merger, consolidation,
stock purchase, recapitalization, asset sale or otherwise. Notwithstanding the
foregoing, Synthelabo may have certain of its duties and obligations hereunder
performed by its Affiliates without an assignment or sublicense thereof. In such
cases, Synthelabo shall continue to be obligated to PRAECIS to perform
Synthelabo's obligations hereunder and Synthelabo's indemnification obligations
shall apply to the acts or omissions of any such Affiliate as if such acts or
omissions were those of Synthelabo. PRAECIS may assign this Agreement or its
rights hereunder to an entity which acquires, by license or otherwise, rights to
Licensed Products outside the Territory (provided that in such event PRAECIS
shall continue to be obligated to Synthelabo to perform PRAECIS' obligations
hereunder), or which
101
acquires or acquires control of its entire business or that part of its business
to which this Agreement relates, whether pursuant to a merger, consolidation,
stock purchase, recapitalization, asset sale or otherwise (provided that in any
such event, PRAECIS or the successor entity in such transaction shall continue
to be liable to perform PRAECIS' obligations hereunder). This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
heirs, executors, administrators, successors and permitted assigns.
ARTICLE 21 - COMMUNICATIONS
Any notice, request, report, recommendation, consent or other
communication (collectively, a "Notice") under this Agreement shall be effective
if it is in writing and (i) personally delivered, (ii) sent by certified or
registered mail, postage prepaid, return receipt requested, (iii) sent by an
internationally recognized overnight delivery service, with delivery confirmed,
or (iv) telexed or telecopied, with receipt confirmed, addressed as set forth in
this Article 21 or to such address as shall be furnished by either party hereto
to the other party hereto in accordance with the method of Notice set forth
herein. A Notice shall be deemed to have been given as of (i) the date when
personally delivered, (ii) seven (7) days after being deposited with the U.S or
French Postal Service, certified or registered mail, properly addressed, return
receipt requested, postage prepaid, (iii) three days after being sent by said
overnight delivery service properly addressed, or (iv) confirmation of receipt
of the telex or telecopy, as the case may
102
be, unless the sending party has actual knowledge that a Notice was not received
by the intended recipient. All Notices shall specifically state: (i) the
Sections (or Sections) of this Agreement with respect to which such Notice is
given, and (ii) the relevant time period, if any, in which the party receiving
the Notice must respond.
Notice Addresses:
Synthelabo: Synthelabo
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇▇▇▇
Attention: General Counsel
Facsimile No. 011-33-1-45-37-58-04
PRAECIS: PRAECIS Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director of Business Development
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
ARTICLE 22 - MISCELLANEOUS PROVISIONS
22.1 Relationship of the Parties. Each party shall conduct its
business hereunder as a principal for its own account and at its own expense and
risk, except as otherwise provided herein. This Agreement does not in any way
create the relationship of principal and agent, or any similar relationship,
between PRAECIS and Synthelabo. Each party covenants and warrants that it will
not act or represent itself directly or by implication as agent for the other
party, and will not attempt to create any obligation, or make any
representation, on behalf of or in the name of the other party.
22.2 Advertising; Trademarks, Etc. Neither party shall use the other
party's name in its advertising or elsewhere, or any trademark or trade name (or
any ▇▇▇▇ or name closely
103
resembling the same) now or hereafter owned or licensed by the other party or
any of its Subsidiaries or Affiliates other than to the extent specifically
provided herein, without the prior written approval of the other party, except
as required by law.
22.3 Public Disclosures. The parties agree that public disclosures
regarding this Agreement, Regulatory Approvals, Reimbursement Approvals and
Licensed Products may be made at the time and in such manner as both parties
shall both approve; provided that such approval will not be unreasonably
withheld and shall not be required for any such disclosure which a party's
counsel advises is required by law or for public disclosure by such party in any
disclosure document in connection with any financing, strategic transaction,
acquisition or disposition involving PRAECIS or Synthelabo. The restriction on
disclosure contained herein shall not apply to any information disseminated to
the public which is information essentially identical to that contained in a
previous disclosure authorized hereunder.
22.4 Governing Law. This Agreement shall be construed, governed,
interpreted and applied in accordance with the laws of the State of New York,
U.S.A. without regard to the conflict of law principles thereof, and the United
Nations Convention on Contracts for the International Sale of Goods is expressly
disclaimed.
22.5 Entire Agreement. The parties hereto acknowledge that this
Agreement and the other agreements between the parties hereto referred to herein
set forth the entire agreement and
104
understanding of the parties hereto as to the subject matter hereof and thereof.
This Agreement shall not be subject to any change or modification except by the
execution of a written instrument subscribed to by the parties hereto; provided
that all obligations of the parties under this Agreement and the Sublicense
Option Agreement shall be considered cumulative rather than contradictory, and
the more stringent or burdensome obligations of a party under one agreement
shall control over any less stringent or less burdensome obligation under the
other.
22.6 Severability. The provisions of this Agreement are severable,
and in the event that any provision of this Agreement shall be determined to be
invalid or unenforceable under any controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
22.7 No Waiver. The failure of either party to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition by the other party.
22.8 Captions and References. Unless otherwise indicated, references
to Sections and Articles are references to Sections and Articles of this
Agreement. Headings, titles and captions of this Agreement are for convenience
only and shall not be used for the construction or interpretation of this
Agreement.
105
22.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same instrument.
106
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement through their duly authorized representatives, with the intention to
become bound thereby.
SYNTHELABO
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
PRAECIS PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman & CEO
107
APPENDIX I
PRAECIS PROPOSED CORE DEVELOPMENT STUDIES
*** Appendix I, which including the Confidential
Information contains 22 pages,
has been omitted in its entirety. ***
108
APPENDIX II
PATENT APPLICATIONS
LHRH Related Patents
-----------------------------------------------------------------------------------------------------------------
Type Serial Number Title and Inventors Status
US, CIP, (PPI Number)
PCT
-----------------------------------------------------------------------------------------------------------------
US 08/480,94 LHRH Antagonist Peptides by Filed 6/7/95;
(PPI-007) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Pending
-----------------------------------------------------------------------------------------------------------------
PCT PCT/US96/09852 LHRH Antagonist Peptides by Filed 6/7/96;
(PPI-007CPPC) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Pending
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
US 08/573,109 Methods for Treating Prostate Cancer Filed **;
with LHRH Antagonists by ▇▇▇▇ ▇. Pending
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------
US, CIP of 08/755,593 Methods for Treating Prostate Cancer Filed **;
08/573,109 (PPI-013CP) with LHRH Antagonists by ▇▇▇▇ ▇. Pending
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------
PCT PCT/US96/18911 Methods for Treating Prostate Cancer Filed 11/25/96;
(PPI-013CPPC) with LHRH Antagonists by ▇▇▇▇ ▇. Pending
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
US 08/762,747 Pharmaceutical Formulations for Sus- Filed **;
tained Drug Delivery by ▇▇▇▇▇▇, L. Pending
Gefter, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------------------
110
APPENDIX III
IUF LICENSE AGREEMENT
See Exhibit 10.10 to
the Registration Statement
111
APPENDIX IV
PPI-149 DEFINITION
PPI-149 shall mean a peptide compound having the following structure:
***
112
APPENDIX V
TERRITORY
SECTION A
Europe, consisting of:
Austria Belgium Denmark Greece
Finland *France *Germany Luxembourg
Ireland *Italy Liechtenstein *Spain
Monaco Netherlands Norway Portugal
San Marino Sweden Switzerland *United Kingdom
Vatican Iceland
Andora
*Major European Territory Countries
SECTION B
Latin America, consisting of:
Belize Costa Rica Guatemala Honduras
Mexico Nicaragua Panama San Salvador
Argentina Bolivia Brazil Chile
Columbia Ecuador French Guyana Guyana
Paraguay Peru Uruguay Venezuela
Eastern Europe, consisting of:
Albania Armenia Azerbaijan Belarusse
Bosnia-Herzegovina Bulgaria Croatia Czech Republic
Estonia Georgia Hungary Kazakhstan
Kyrgyz Latvia Lithuania Macedonia
Moldova Poland Roumania Russia
Slovakia Slovenia Tadzhikistan Turkmenistan
Ukrainia Uzbekistan Yugoslavia
The following countries of Africa, consisting of:
Algeria Benin Burkina-▇▇▇▇▇ Cameroun
Central African Republic Chad Congo Djibouti
Gabon Guinea Guinea Bissau Ivory Coast
Madagascar Mali Mauritania Morocco
Niger Rwanda Senegal Seychelles
Tunisia Zaire South Africa
Middle East, consisting of:
Iran Iraq ▇▇▇▇▇▇ ▇▇▇▇▇▇
Kuwait Lebanon Oman Saudi Arabia
South Yemen Syria Turkey Yemen
Cyprus United Arab Bahrain
Malta Emirates Qatar
113
APPENDIX VI
ADDITIONAL SUPPLY PROVISIONS
114
APPENDIX VI
Additional Supply Terms
MANUFACTURING AND PRODUCT QUALITY
1. Licensed Products shall be delivered as finished products according to the
specifications in the Registration Approval and any further specifications
agreed to by the parties. Finished products shall be deemed to mean powder
and diluent in separate closed sterile and unlabeled vials packed in an
appropriately labeled bulk shipment container as per section 3.15 PRAECIS
shall not be responsible for final commercial packaging and labeling.
PRAECIS shall ensure that unlabeled vials shall at all times, until final
packaging by Synthelabo, be traceable.
2. Synthelabo and PRAECIS shall collaborate in the definition of
specifications in the registration processes within the Territory.
3. Synthelabo agrees, where in the best interest of the Parties to diligently
seek to obtain approval by the appropriate regulatory authorities in the
respective Territory Countries, of the specifications of the Licensed
Product proposed by PRAECIS.
4. The following is a general description of the manufacturing operations for
Licensed Products:
o purchasing, reception, storage of raw materials and bulk packing
material of Licensed Products,
o manufacturing and bulk packaging of Licensed Products,
o control of raw material, bulk packaging material, in process control
and control of Licensed Products as defined in the Quality Charter,
o Packing and storage of bulk Licensed Product,
o Releasing of bulk Licensed Products
o file maintenance and storage of batch records and samples for
analysis.
5. The place of manufacture of the Licensed Products shall be communicated to
Synthelabo at least 6 months in advance of anticipated commencement of
manufacture of Licensed Product for commercial sale.
6. The raw materials and bulk packaging materials shall be stored by PRAECIS
or its subcontractor under its sole responsibility.
7. PRAECIS is solely responsible for the safe storage of the bulk Licensed
Products until delivery.
8. PRAECIS covenants to store in appropriate conditions the raw materials,
packaging materials and finished Licensed Products, according to cGMP.
9. PRAECIS undertakes to manufacture and package the Licensed Products
according to good manufacturing practices reasonably acceptable in Europe
as well as in accordance with the process set out in the Quality Charter.
In the absence of specific guidelines in the Quality Charter PRAECIS shall
follow the current European Guide and in particular chapter 7 of such
Guide.
10. PRAECIS undertakes to control raw materials, packaging materials and
Licensed Products according to the techniques and instructions for
analysis set out in the Quality Charter.
11. Any dispute as to whether or not the procedure is being correctly followed
shall be resolved in accordance with the provisions of the Quality
Charter.
12. PRAECIS must ensure that its representative signing the Quality Charter
has the appropriate experience and holds the appropriate position in
PRAECIS's manufacturing unit.
13. Synthelabo or its representative has the right to verify at any time that
the manufacture of the Licensed Products is being carried out in the
proper manner. To this end PRAECIS agrees, upon reasonable advance notice
by Synthelabo, to allow Synthelabo or such designee to have access to the
manufacturing and control areas, to take samples and in general to inspect
the manufacturing operations during
reasonable business hours provided any such inspection does not interrupt
or impair in any significant manner the manufacturing operations. Access
to certain areas, information and samples may be restricted to the extent
PRAECIS reasonably determines that such verification, access, sampling or
inspection would constitute a transfer of technology prior to the events
which would mandate such transfer as contemplated in 3.9.
14. Critical and major deficiencies raised during such audit or inspection
shall be promptly notified to PRAECIS.
15. PRAECIS will send to Synthelabo a timetable of the corrective actions
within a prompt and reasonable period following the receipt of the written
audit report.
16. The timetable for correction of deficiencies will be commensurate with
their criticality.
17. PRAECIS may only ship the Licensed Products to Synthelabo after such
products have been released by PRAECIS according to the procedure defined
in the Quality Charter.
18. PRAECIS shall provide Synthelabo with the necessary documents and samples
specified in the Quality Charter, and shall do so in accordance with the
conditions (time limit, nature of documents etc.) set out in such Quality
Charter.
19. PRAECIS undertakes to prepare records of all stages of manufacture and
quality control on the basis of the Quality Charter and to keep them for
at least 5 years unless otherwise stipulated.
20. Synthelabo reserves the right to reject any batch which does not conform
to the specifications in the Quality Charter. In this event, PRAECIS may
then recover at PRAECIS's expense the rejected products according to the
rework process as described in the Quality Charter.
21. In the event the parties agree in writing that a batch does not conform to
the specifications, PRAECIS shall at its own expense, within forty-five
(45) days of Synthelabo's rejection thereof, replace the defective batch.
22. In the event of a dispute as to the acceptance of a batch, the parties
agree to discuss the problem with a view to finding an amicable solution
to the extent that the dispute
cannot be resolved amicably, the issue shall be referred to an independent
expert nominated by PRAECIS and to whom Synthelabo does not reasonably
object.
23. If the parties are not able to agree on an expert within two (2) months of
a party's objection thereto, an expert will be appointed by the President
of the Court of Arbitration of the ICC upon request by either one of the
parties.
24. The expert so appointed will determine whether the batch in question
conforms with the general standards and with the procedure for analytical
control set out in the Quality Charter, and whether the manufacturing
conditions have been properly followed, having particular regard to the
file provided by PRAECIS for each Licensed Product.
25. The parties agree to accept the findings and conclusion reached by the
expert. If the expert considers the Licensed Products to be clearly
defective, all his fees, expenses and the cost of destruction of Licensed
Products will be paid for by PRAECIS, which party shall also be bound to
reimburse whatever sums Synthelabo has already paid for the defective
batch.
26. If the expert considers the Licensed Products to be not defective, all
fees and expenses of the expert will be paid for by Synthelabo.
27. The Parties agree to develop and register rework processes and procedures.
In the event a defective batch can not be reworked and necessitates
destruction, all destruction shall be performed by PRAECIS. Following
destruction, PRAECIS will send to Synthelabo a certificate of destruction
indicating the following:
o name of the Licensed Products
o batch number
o quantity
o name of the company who has destroyed the Licensed Products
28. Each party agrees to make the relevant Authorities such declarations as
are necessary to comply with pharmaceutical law applicable to such party.
29. Any term of this Agreement that does not comply with the law regulating
the pharmaceutical profession must be modified accordingly within the
shortest possible time.
Capitalized terms used but not defined in this Appendix VI shall have the
respective meaning ascribed thereto in the License Agreement dated as of May 13,
1997 (the "License Agreement") between PRAECIS and Synthelabo to which this
Appendix VI is attached
[LOGO Synthelabo]
Mr. ▇▇▇▇ ▇▇▇▇▇▇
Vice President
Business Development
PRAECIS PHARMACEUTICALS, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
Etats-Unis
Le Plessis-▇▇▇▇▇▇▇▇, 31 July, 1997
Ref.: BJJ/fm - 231
Sent via telefax: ▇▇.▇.▇▇▇.▇▇▇.▇▇▇▇
Dear Marc,
I refer to the discussions and deliberations we have had over the past few weeks
relating to the contribution that SYNTHELABO is to make to the costs of the core
development studies for PPI-149 for the treatment of prostate cancer (which
includes all pre-clinical costs for all indications).
At the Steering Committee of 24 July, it was agreed that, notwithstanding any
other term of our license agreement, SYNTHELABO's total contribution to these
core development costs shall be limited to 30 million French francs paid as
follows: 5 million every six months commencing 1 September 1997 (to be paid
within 30 days of this date and within 30 days of every subsequent six months
period). This will be the maximum paid for this programme and includes the cost
of all pre-clinical (for all indications) and clinical studies for the treatment
of prostate cancer whether performed by PRAECIS, SYNTHELABO or contact research
organisations, total formulated drug costs, any CMC studies and internal costs
incurred by PRAECIS.
As I discussed with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the above core development costs are the
costs of all the studies necessary to obtain a full NDA including the mandatory
phase IV studies if the first approval is conditional.
If you agree with the above, would you please arrange for PRAECIS to sign both
copies of this letter returning one copy for our files.
Best regards, Agreed and accepted by
PRAECIS PHARMACEUTICALS, INC.
Name: ▇▇▇▇ ▇. Silver
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Signature: /s/ ▇▇▇▇ ▇. Silver
▇.▇. ▇▇▇▇▇▇ Date: September 5, 1997
Director of Licensing Department