EXHIBIT 10.12
COLLABORATION LICENSE AND ROYALTY AGREEMENT
Between
SCHERING AG
AND
COLLATERAL THERAPEUTICS, INC.
MAY 6, 1996
TABLE OF CONTENTS
Page No.
Section I DEFINITIONS.......................................................2
Section II RESEARCH; COMMERCIALIZATION; OWNERSHIP OF REGULATORY
APPLICATION(S); CONTINUED ACCESS TO INVENTIONS IN THE FIELD.......6
Section III MANAGEMENT; RESEARCH AND DEVELOPMENT PLAN AND
BUDGET............................................................6
Section IV OWNERSHIP OF INVENTIONS; LICENSES; RIGHTS TO
PRODUCTS AND GENE PRESENTATION....................................9
Section V PAYMENT FOR RESEARCH AND DEVELOPMENT OF
PRODUCTS.........................................................11
Section VI MILESTONE PAYMENTS; DILIGENCE....................................13
Section VII INVENTORY OF DEVELOPED TECHNOLOGY; NEW
PRODUCTS; PRODUCTS OUTSIDE THE FIELD; RIGHT OF
FIRST REFUSAL; RIGHT OF FIRST OFFER..............................15
Section VIII ROYALTY PAYMENTS; NEW PRODUCTS AND PRODUCTS......................17
Section IX REPORTS, BOOKS AND TAX MATTERS...................................20
Section X PATENTS..........................................................21
Section XI CONFIDENTIALITY..................................................24
Section XII REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLLATERAL..........27
Section XIII REPRESENTATIONS, WARRANTIES AND COVENANTS OF SCHERING............29
Section XIV DISCLAIMERS; SURVIVAL AND INDEMNIFICATION........................30
Section XV TERM, TERMINATION, AND EXPIRATION................................32
Section XVI MISCELLANEOUS....................................................36
COLLABORATION, LICENSE AND ROYALTY AGREEMENT
This Collaboration, License and Royalty Agreement (the "Agreement") is
made and entered into as of May 3, 1996 (hereinafter "Effective Date") by and
between Schering AG, a German corporation ("Schering") and Collateral
Therapeutics, Inc., a California corporation ("Collateral"). Each of Schering on
one hand and Collateral on the other hand, is referred to as a "Party" and
collectively as the "Parties".
WHEREAS, Collateral is the exclusive licensee to technology relating to
the use of growth factor genes for gene therapy to promote angiogenesis from The
Regents of the University of California and it is seeking any required
proprietary rights to a growth factor gene from a Third Party;
WHEREAS, Collateral has the capability to conduct research and wishes to
further research and develop such angiogenesis technology with Schering for
therapy and diagnosis in humans;
WHEREAS, Schering has the capability to research, develop, manufacture and
market pharmaceuticals/biologics;
WHEREAS, Schering, in its discretion, will cooperate with Collateral in an
effort to secure a growth factor gene;
WHEREAS, Schering and Collateral wish to collaborate in the further
research and development of pharmaceuticals/biologics to promote angiogenesis;
WHEREAS, Schering loaned Collateral Five Hundred Thousand ($500,000.00)
Dollars pursuant to two Promissory Notes dated August 6, 1995 and October 12,
1995;
WHEREAS, Collateral by this Agreement has granted Schering certain
licenses including a sublicense to the UC License;
WHEREAS, The Regents of the University of California consented in writing
to accept Schering as a sublicensee and allow Schering to cure Collateral's
defaults, if any, under the UC License (Attached as Exhibit A); and
WHEREAS, Collateral and Schering have entered into a letter agreement
(Attached as Exhibit B) whereby Collateral agrees to seek additional assurances
from the Regents of the University of California regarding the non-cancellation
of the sublicense to Schering;
WHEREAS, Schering Berlin Venture Corporation, a Delaware corporation, an
Affiliate of Schering, is entering into a Series A Stock Purchase Agreement and
Investors' Rights Agreement ("the Stock Agreement") with Collateral as of the
Effective Date hereof.
In consideration of the mutual covenants and conditions hereinafter set
forth in this Agreement, the Parties hereby agree as follows:
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I
DEFINITION
1.1 Defined Terms. The following terms when used herein shall have the following
meanings:
"Acceptance of a Qualified Gene" is defined in Section 4.8.
"Affiliate means any company controlled by, controlling, or under common
control with Schering or Collateral and shall include any company fifty percent
(50%) or more of whose voting stock or participating profit interest is owned or
controlled, directly or indirectly by Schering or Collateral, and any company
which owns or controls, directly or indirectly fifty percent (50%) or more of
the voting stock of Schering or Collateral, and any company which Schering or
Collateral or a company owned or controlled by or owning or controlling Schering
or Collateral at the maximum control or ownership right permitted in the country
where the company exists.
"Budget" means the annual budget forming part of the Research and
Development Plan. The initial version is as attached as Exhibit C hereto.
"CABG" means coronary artery by-pass graft surgery.
"COGS" means Schering's costs of supplying Product(s) calculated in
accordance with Schering's accounting methods consistently applied which
methodology shall be calculated in, compliance with applicable accounting
principles for U.S. Affiliates. Expenses include but are not limited to
Schering's manufacturing costs are listed in Exhibit D. COGS includes idle
capacity to the extent that the portion of facility and equipment which is idle
is completed and received Regulatory Approval for such Product. Such accounting
method must be reasonable in the context of the international pharmaceutical
industry.
"Collateral Base Technology" means all technology and know-how, including,
but not limited to, patents, patent applications, continuations and
continuations-in-part, divisional and provisional patent applications, trade
secrets, methods, processes, techniques, materials, compositions, information,
data, results of tests or studies and expertise which are used or useful for the
research, development, manufacture, use or sale of products in the Field or in
conducting research and development pursuant to this Agreement which: (a) is
under the Control of Collateral at the Effective Date, including but not limited
to the technology disclosed in the patent applications serial number ***
entitled *** filed *** by *** , and assigned to *** and serial number ***
entitled *** filed *** and the continuation in part related thereto filed on ***
by *** and assigned to *** technology licensed under the *** , and any
adenovirus drug delivery technology and continuations, continuations in part,
divisionals or any patent issuing from any technology Controlled by Collateral
and any foreign counterparts, and/or; (b) is invented, developed, acquired or
otherwise comes within the Control of Collateral
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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after the Effective such as a gene licensed solely by Collateral and which
Collateral can demonstrate does not constitute Developed Technology.
"Competing Product" is defined in Section 4.10.
"Contribution" is defined in Section 5.2.
"Control" or "Controlled" shall refer to possession of the ability to
grant a license or sublicense of patent rights, know-how or other intangible
rights as provided for herein without
"Developed Technology" means all technology and know-how, including, but
not limited to, patents, patent applications, continuations and
continuations-in-part, divisional and provisional patent applications, trade
secrets, methods, processes, techniques, materials, compositions, information,
data, results of tests or studies and expertise which are used or useful for the
research, development, manufacture, use or sale of products in the Field which
is conceived of during the Term either (i) solely by Collateral, by a Third
Party on Collateral's behalf, jointly by Collateral and a Third Party as
permitted by this Agreement, or jointly by Schering and Collateral or (ii)
solely by Schering if conceived solely in connection with the performance of the
Research and Development Plan.
"Drug Approval Application" means an application for Regulatory Approval
required to be approved before marketing and commercial sale of a Product in
humans as a biologic or a drug in a regulatory jurisdiction.
"Field" means gene therapy to promote angiogenesis.
"First Commercial Sale" means the date Schering or Affiliate or a
Sublicensee of Schering first sells commercially, pursuant to Regulatory
Approval, Products in the United States, Japan or any country of the EU,
provided that where such a First Commercial Sale has occurred in a country for
which pricing or reimbursement approval is necessary for widespread sale, then
such sale shall not be deemed a First Commercial Sale until such pricing or
reimbursement approval has been obtained.
"Force Majeure" is defined in Section 16.10.
"Fundamental Change" means a change to any existing Product, including the
Initial Product which meets all of the following criteria: (i) in respect of
which the governing regulatory authority would require new Pivotal Clinical
Trials before granting Regulatory Approval, and (ii) which is for a deferent
label indication than such Product, and (iii) which targets a different organ
than such Product.
"Gene Presentation Period" means the later of (i) October 1, 1997, or (ii)
any extensions of such date pursuant to this Agreement or, if earlier than those
dates, the Acceptance of a Qualified Gene.
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"Gene Presentation Procedure" is defined in Section 4.7.
"IND" means the document filed by Schering pursuant to 21 CFR 312, as such
regulations may be amended with the United States Federal Food and Drug
Administration to test the Products in humans.
"Initial Product" means the Product described in the initial Research and
Development Plan with the initial indication to prevent, ameliorate, mitigate or
cure of (i) ischemic heart disease alone or in conjunction with CABG surgery,
angioplasty or medical therapy and/or (ii) peripheral arterial occlusive disease
such as limb-salvage, rest pain (Stage IV), healing of ischemic ulcers (Stage
III) and claudication and improvement of exercise tolerance (Stage II), and any
change to such Product which does not constitute a Fundamental Change.
"Information" is defined in Section 11.1 (a).
"Laboratory Notebooks" is defined in Section 3.8.
"Milestone Payments" are defined in Sections 6.1.
"Net Sales" shall be defined as amounts invoiced by Schering, or its
Affiliates from worldwide sales of each Product(s) to end users, less deductions
for: (i) transportation charges, charges, including insurance relating thereto;
(ii) sales and excise taxes or customs duties paid by selling party and any
other governmental charges imposed upon the sale of the Product(s); (iii)
distributors fees, rebates or allowances actually granted, allow or incurred;
(iv) quantity discounts, cash discounts or chargebacks actually granted, allowed
or incurred in the ordinary course of business in connection with the sale of
the Product(s); (v) allowances or credits to customers, not in excess of the
selling price of the Product(s), on account of governmental requirements,
rejection, outdating, recalls or return of the Product(s); and (vi) less actual
amounts for uncollectable accounts. Sales of the Product(s) between Schering and
its Affiliates solely for the research or clinical testing purposes in
connection with the Research and Development Plan shall be excluded from the
computation of Net Sales. In the event that Schering enters into a sublicense
covering sale of the Product(s) without the consent of Collateral, Net Sales
shall be computed based on unit or volume sales multiplied by Schering's average
selling price(s) of the Product(s) by country. In the event that Schering enters
into a sublicense covering sale of the Product(s) with the consent of
Collateral, Net Sales and royalties payable thereunder shall be as agreed by the
Parties.
"New Product" is any Product other than the Initial Product. A Fundamental
Change to a Product is a New Product so long as the result is in the Field.
"Pivotal Clinical Trials" means clinical trials which when completed will
have demonstrated that the Product(s) (i) is safe and efficacious, (ii) has an
established dose, (iii) has an established route of administration and (iv) has
a treatment schedule in the target population, all sufficient for the purpose of
supporting a Drug Approval Application.
"Product(s)" means any pharmaceutical/biologic in the Field.
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"Promissory Notes" means the promissory notes signed by Collateral dated
August 16, 1995 and on October 12, 1995.
"Qualified Gene" means a gene that Collateral presents to Schering
pursuant to Section 4.7, under which Schering has the sole discretion to accept
or reject such gene.
"Regulatory Approval" means any approvals, product and/or establishment
licenses, registrations or authorizations of any federal, state or local
regulatory agency, department, bureau or other governmental entity, necessary
for the manufacture, use, storage, importation, export, transport, or sale of
Product(s) in a regulatory jurisdiction.
"Research and Development Plan" means a written plan agreed to by Schering
and Collateral which includes the Budget and outlines the joint effort of the
Parties in conducting research and development of Product(s).
"Returned Product" is defined in Section 4.10.
"Royalty Term" is defined in Section 8.1 (a).
"Steering Committee" is defined in Section 3.3.
"Sublicensees" means, with respect to Products, a Third Party to whom
Schering has granted a sublicense under this Agreement to make, have made, use
or sell, import or offer to import such Products.
"Term" is defined in Section 15.1.
"Third Party" means an entity other than Schering, Collateral or any of
their respective Affiliates.
"UC License" means that certain exclusive license agreement effective as
of September 27, 1995, entered into by and between Collateral and The Regents of
the University of California concerning certain patent applications within the
Collateral Base Technology.
*** means that certain exclusive license agreement effective as of ***
entered into by and between Collateral and *** concerning technology in the
Field.
"Winddown Payment" is defined in Section 15.2(g).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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II
RESEARCH; COMMERCIALIZATION; OWNERSHIP OF REGULATORY APPLICATION(S);
CONTINUED ACCESS TO INVENTIONS IN THE FIELD
2.1 Research and Development. The Parties hereto agree to diligently conduct
and perform their respective obligations in respect of research and
development hereunder pursuant to the Research and Development Plan and
Budget. Research and development shall include all activities relating to
obtaining Regulatory Approval of Product(s) and all activities relating to
the development of the ability to manufacture the same.
2.2 Exclusive Research. During the Term, Collateral will conduct research and
development in the Field solely with Schering.
2.3 Commercialization. Schering is solely responsible for the preparation and
filing of ail Drug Approval Applications and all activities relating to
the manufacture, marketing and sale of the Products. Such Drug Approval
Applications will be filed in the name of Schering. Collateral shall be
provided copies with all final drafts of such Drug Approval Application
for comments which Schering, in its sole discretion, may or may not
incorporate in such Drug Approval Applications. With respect to such
activities, Schering will conduct itself according to international
pharmaceutical industry standards using commercially reasonable efforts in
an attempt to commercialize Products.
2.4 Ownership of IND and Drug Approval Applications. Schering owns the
regulatory submissions including all IND's and Drug Approval Applications
for all Products Collateral will have the right to cross-reference such
Schering submissions for Collateral's own IND and drug approval
applications filed solely for New Products that Collateral files pursuant
to Section 7.2. During the Term, at Collateral's reasonable requests and
at Collateral's sole expense, Schering shall provide Collateral with
copies of all regulatory submissions and material correspondence with
respect to Products.
2.5 Continuing Access to Future Inventions in the Field by *** . Collateral
will use its commercially reasonable efforts to (i) continue *** as a
consultant exclusive in the Field during the Term with exclusive rights to
any of his inventions in the Field, and (ii) obtain access to any
inventions made by *** during the Term in the Field outside of his
consulting relationship with Collateral.
III
MANAGEMENT; RESEARCH AND DEVELOPMENT PLAN AND BUDGET
3.1 Research and Development Plan and Budget. The Research and Development
Plan and Budget shall detail the research and development activities to be
undertaken by the Parties, shall set forth the personnel commitments of
Collateral and shall account
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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for how the payments made by Schering pursuant to Section V shall be
spent. The initial Research and Development Plan and Budget for the
Initial Product attached as Exhibits C and F is adopted by the Parties.
3.2 Chances to the Research and Development Plan. Changes to any Research and
Development Plan may only be made with the express written consent of both
Parties. Such Research and Development Plan will be reviewed in the ninth
(9th) month of each calendar year and signed by both Parties at least
annually.
3.3 Establishment of Steering Committee. The Steering Committee ("Steering
Committee") shall be ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ for Schering and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ for Collateral. The Steering
Committee shall exist during the Term. Members of the Steering Committee
shall serve on such terms and conditions as shall be determined by the
Party selecting such persons for membership on the Steering Committee.
Alternative members designated by a Party may serve in the absence of or
be substituted for a permanent member designated by such Party. The Chief
Executive Officer of Collateral and the President of Berlex Biosciences, a
division of Berlex Laboratories, Inc., an Affiliate of Schering ("Berlex
Biosciences") or their respective designees may attend the meetings of the
Steering Committee as observers.
3.4 Meetings of the Steering Committee. The Steering Committee:
(a) shall hold meetings at such times and places as shall be determined
by majority approval of the Steering Committee members, but in no
event shall such meetings be held less frequently than once every
month;
(b) may conduct meetings in person or by telephone conference, provided
that any decision made during a telephone conference meeting is
evidenced in a confirmed writing signed by one of the members of
such Steering Committee from each of the Parties;
(c) shall keep minutes reflecting actions taken at meetings;
(d) may act without a meeting if prior unanimous written consent thereto
is signed by all members of the Committee; and
(e) may amend or expand upon the foregoing procedures for its internal
operation by unanimous written consent.
3.5 Functions and Powers of the Steering Committee. The activities of the
Parties under the Research and Development Plan and Budget shall be
managed by the Steering Committee only to the extent set forth herein. The
Steering Committee shall perform the following functions:
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(a) prepare for and coordinate research and manpower commitments
pursuant to the Research and Development Plan and Budget including
approval of the use of Third Parties for research and development of
Products;
(b) subject to Section V, review and approve Budgets;
(c) engage in exchanges of information and joint planning activities;
(d) provide quarterly written research and development reports to the
Parties;
(e) notify the Parties of inventions (patentable or not) arising out of
research and development conducted pursuant to the Research and
Development Plan and for Collateral any other inventions or
discoveries whatsoever (whether patentable or not) in the Field,
including, but without limitation, any potential new applications of
the Initial Product, any potential Fundamental Changes to existing
Products and any New Products; and
(f) develop criteria for selection of development candidates and back up
candidates.
3.6 Steering Committee Actions.
(a) Limitations of Powers of the Steering Committee. The Steering
Committee shall have only such powers as are specifically delegated
to it hereunder. The Steering Committee is not a substitute for the
rights of He Parties and is intended for coordination of the
research and development of Product(s) during the Term.
(b) Decisions. All decisions to be made and actions to be taken by the
Steering Committee pursuant to the terms of this Agreement shall
require majority approval of the Steering Committee members, and, if
the Steering Committee cannot reach a majority decision on any
matter, the matter shall be referred to (i) the Vice President, Head
of Cardiovascular Research for Beltex Biosciences and Chief
Scientific Officer of Collateral to attempt to reach an agreement,
and if they cannot agree, (ii) then to the President of Berlex
Biosciences, and President of Collateral (iii) then in writing by
the President of Berlex Biosciences or the President of Collateral
to the Chairman of Berlex Laboratories, Inc., (hereinafter "Beltex")
and the Chairman of Collateral. If the two Chairman cannot resolve
the matter within ten (10) days of the written referral, either
Party may terminate this Agreement pursuant to Section 15.2(f).
3.7 Visit to Facilities; Records. Representatives of each Party may, upon
reasonable notice and at times reasonably acceptable to the other Party,
(i) visit the facilities including research laboratories and clinics where
the activities under the Research and Development Plan are being
conducted, and (ii) consult informally, during such visits and by
telephone, with personnel of the Parties. Each Party shall maintain
records in sufficient detail and in good scientific manner appropriate for
patent and Regulatory
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Approval purposes and so as to properly reflect all work done and results
achieved in the performance of this Agreement. Such records shall include
books, records, reports, research notes, charts, graphs, comments,
computations, analyses, recordings, photographs, computer programs and
documentation thereof, samples of materials and other graphic or written
data generated in connection with the Research and Development Plan,
including any data required to be maintained pursuant to applicable
governmental regulations. During the Term each Party shall respond to
reasonable requests from the other for information based on such records.
Each Party shall cause appropriate individuals working on the Research and
Development Plan to be available for meetings at the facilities where such
individuals are employed at times reasonably convenient to the Party
responding to such request.
3.8 Laboratory Notebooks. Collateral and Schering will each maintain
laboratory notebooks designed specifically for the research conducted
pursuant to the Research and Development Plan (hereinafter "Laboratory
Notebooks"), and, upon the reasonable request of a Party will give copies
of entries of such Laboratory Notebooks to the requesting Party.
IV
OWNERSHIP OF INVENTIONS; LICENSES; RIGHTS TO PRODUCTS
AND GENE PRESENTATION
4.1 Ownership. Each Party shall solely own any inventions made solely by that
Party's employees or consultants in the course of performing work under
this Agreement. Inventions made jointly by employees or consultants of
both Collateral and Schering with or without Third Parties in the course
of performing work under this Agreement, shall be jointly owned by
Collateral and Schering, and each Party shall retain full joint ownership
under any patents resulting from such inventions.
4.2 Non-Exclusive Sublicense to Schering. Collateral hereby grants Schering a
worldwide, perpetual (except under the sole circumstance of automatic
termination pursuant to Section 4.4), nonexclusive license or a
sublicense, as the case may be, with the right to sublicense, under all of
its rights in Collateral Base Technology, to make, have made, use, sell,
offer to sell or import any product in the Field.
4.3 Non-Exclusive License to Schering. Collateral hereby grants Schering a
worldwide, perpetual, nonexclusive license, with the right to sublicense,
under all of its rights in Developed Technology to make, have made, use,
sell, offer to sell or import any product.
4.4 Acceptance of Qualified Gene. Upon the Acceptance of a Qualified Gene, the
licenses to Schering under Section 4.2 and 4.3 shall automatically
terminate, and Schering shall automatically have in its place the license
in Section 4.5.
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4.5 Exclusive License to Schering. Upon Acceptance of a Qualified Gene,
Collateral automatically grants to Schering a worldwide, exclusive license
or exclusive sublicense, as the case may be, to all its rights in (i)
Collateral Base Technology, and (ii) Developed Technology in each case, to
make, have made, use, sell, import and offer to import any Product.
Schering has the right to sublicense to its Affiliates without the consent
of Collateral and the right to sublicense to Third Parties with the
consent of Collateral which shall not be unreasonably withheld. Collateral
retains its right to Collateral Base Technology and Developed Technology
for the purposes of research and development pursuant to the Research and
Development Plan and, subject to Section VII, with respect to Collateral
Base Technology and, Collateral solely invented Developed Technology and
Developed Technology jointly invented by Collateral and Schering to make,
have made, use, sell, offer to sell or import products outside the Field.
Schering hereby grants Collateral a nonexclusive license in the United
States, without the right to sublicense, to use Schering solely invented
Developed Technology solely for the purposes of research and development
pursuant to the Research and Development Plan.
4.6 Restriction on Licensing. (a) For the period from the Effective Date,
through the Gene Presentation Period, Schering shall exercise the rights
granted to it pursuant to Section 4.2 only for the purpose of conducting
research and development pursuant to this Agreement. (b) For the period
from the Effective Date, through the Gene Presentation Period, Collateral
shall not grant to any Third Party any other licenses or sublicenses, as
the case may be, to the Collateral Base Technology, or Developed
Technology. Before and after the license granted pursuant to Section 4.5
takes effect, Collateral may only grant licenses to its rights in
Collateral Base Technology, or Developed Technology consistent with
Section 4.5.
4.7 Gene Presentation Procedure; Collateral Presentation. At any time, but no
later than October 1, 1997, Collateral must present written evidence to
Schering that it believes it has secured rights to a gene which would be
acceptable by Schering or, in any case, Collateral must present by October
1, 1997 a summary of its good faith efforts to secure a gene and a full,
detailed report of the result of those efforts. During the Gene
Presentation Period, Collateral may make as many gene presentations as it
wishes ("Gene Presentation(s)"). The Gene Presentations may include all
the elements of scientific criteria listed in Exhibit E and evidence of
Collateral's belief that the gene is capable of being patented and used
without infringement of rights of Third Parties.
4.8 Gene Presentation Procedure; Schering Response. Schering shall have sixty
(60) days from each written Gene Presentation to review the evidence
presented concerning whether Collateral has a gene or secured rights to a
gene acceptable to Schering. If Schering rejects such presented gene or
gene license, it shall give Collateral written reasons for such rejection;
provided however, if Collateral makes any Gene Presentations after August
1, 1997, Schering is not required to give Collateral written or oral
reasons for such rejection. Schering has the right, in its sole
discretion, to accept or reject the presented gene with or without (i) a
reason, or (ii) cause, and without the regard for the legitimacy for the
rejection or the reasonableness of the rejection. The decision to accept
or reject the presented gene is completely free of
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any legal challenge. Schering may terminate this Agreement pursuant to
Section 15.2(e) due to the failure of Collateral to present Schering an
acceptable gene by the end of the Gene Presentation Period; provided
however, to allow for Collateral to present a gene that is acceptable to
Schering, and provided the Parties agree on a mutually acceptable Budget
for an extension of the Gene Presentation Period, Schering has the sole
right and, in its sole discretion, to extend the Gene Presentation Period
for an additional period of not shorter than three (3) months and no
longer than six (6) months. Notwithstanding anything to the contrary in
this Agreement, including any informal discussions between Schering and
Collateral concerning a presented gene or Schering responding to
Collateral's Gene Presentations with written reasons for rejection,
Schering does not waive its rights to accept such gene in its sole,
absolute discretion and Schering shall not be restricted in any manner
from exercising its sole discretion to accept or reject the presented
gene. If Schering accepts the gene, such acceptance shall be in writing
and is defined as the "Acceptance of a Qualified Gene."
4.9 Schering License Grants with Respect to New Products. If Collateral and
Schering cannot agree to the funding of research and development of a
particular New Product according to the procedure set forth in Section
7.2, except as provided in Section 7.3, at the time stated in Section
7.2(c), Schering will automatically grant Collateral a worldwide,
exclusive sublicense, without the right to sublicense, to the licenses
granted to Schering pursuant to Section 4.5, solely for the purpose of
making, having made, using, selling, offering to sell or importing the
particular New Product presented in the New Product Opportunity Report.
Schering shall retain all rights with respect to Section 4.5 for all other
purposes, Products, New Products and applications except such New Product.
4.10 Restriction on Schering Concerning Competing Products. If during the
Royalty Term, Schering first sells commercially in the U.S., Japan, or any
country of the EU, a product in the Field (herein "Competing Product"),
with the same label indication as a Product then being sold commercially
in the same country pursuant to this Agreement, then Schering will (i)
grant Collateral a sublicense to its licenses granted pursuant to Section
4.5 to make, have made, use, sell, offer to sell or import such Product
(herein "Returned Product") into such of only U.S., Japan, or any country
of the EU where such Competing Product is being sold commercially, and
(ii) stop selling such Returned Product into such of only the U.S., Japan
or any country of the EU where such Competing Product is being sold.
Collateral will pay Schering the same range of royalties for the full time
period set forth in Section VIII on Net Sales of any such Returned
Products. Schering agrees to manufacture such Returned Product for
Collateral for a period of at least twelve (12) months after this license
grant takes effect for a manufacturing transfer price to be negotiated.
V
PAYMENT FOR RESEARCH AND DEVELOPMENT OF PRODUCTS
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5.1 Phase One. Until the end of the Gene Presentation Period, Schering will
pay Collateral the amounts provided in this Section for the activities it
under takes pursuant to the critical studies plan and budget for each of
three (3) six (6) month periods (collectively, the "Phase One Plan and
Budgets"). The first Phase One Plan and Budget is attached as Exhibit 5.1.
At any time during the Gene Presentation Period, the Parties may meet to
prepare the second and third Phase One Plan and Budget to be attached as
successive Exhibits pursuant to this Section. The second and third Phase
One Plan and Budget shall be negotiated in good faith between the parties;
provided, that the second Phase One Budget shall be a minimum of
$1,000,000. Schering, in its sole discretion, subject to good faith
negotiation, will decide how much cash, if any, it will provide to
Collateral for the third Phase One Plan and Budget. Within three (3) days
of the Effective Date, Schering will wire transfer $625,000 Dollars to
Collateral's account number 0600795375 at Silicon Valley Bank (ABA No.
▇▇▇▇▇▇▇▇▇) for the account of Collateral.
5.2 Schering's Cash and Services Contribution. Subject to continued technical
and regulatory success as defined by the Steering Committee, and pursuant
to the Research and Development Plan and Budget, for the period beginning
after the Acceptance of a Qualified Gene, for the remainder of the Term,
Schering shall contribute up to a maximum of Five Million ($5,000,000.00)
Dollars per year to the research and development of the Initial Product
("Contribution"). Such Contribution shall be advanced as follows:
(a) Cash Contribution:
(i) Up to *** for the *** after the Acceptance of a Qualified Gene
*** ("Case Contribution"), to Collateral pursuant to a
mutually agreed Research and Development Plan and Budget
administered by the Steering Committee may be spent on
research and development of the Initial Product which includes
up to *** for Collateral's general and administrative
expenses.
(ii) Collateral may spend up to *** of the Cash Contribution for
New Product research or for additional indications for the
Initial Product or Product(s) pursuant to a separate research
and development plan agreed to and signed by the Parties.
Collateral shall not receive such *** until such research and
development plan is signed by both Parties and attached as
successive Exhibits 5.2(a)(ii) to this Agreement.
(b) Carryover of Cash Contribution.
Any portion of the Cash Contribution not spent each year will be
carried over to subsequent years ("Carryovers") and may be spent
pursuant to Section 5.2(c).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
12
(c) Additional Funding.
Up to an additional *** per year plus the Carryover payable in any
combination to: (i) Collateral for research pursuant to the Research
and Development Plan, (ii) Berlex for services for the research and
development pursuant to the Research and Development Plan and (iii)
the contracting Party to be paid to Third Parties for services
pursuant to the Research and Development Plan, may be spent as
administered by the Steering Committee.
(d) Any Contribution not spent pursuant to 5.2(c) will be retained by
Schering and spent according to Schering's sole discretion.
5.3 Cash Payments to Collateral. After Acceptance of a Qualified Gene and
provided Collateral is not in breach of this Agreement, and depending on
the reconciliation stated below, on the first day of each three (3) month
period for the Term, Schering shall pay Collateral up to *** by wire
transfer to Collateral's account number *** at Silicon Valley Bank *** for
the account of Collateral. During the Term, the Parties shall reconcile
Collateral's costs and expenses each three (3) month period to determine
the actual amount of the Schering payments per quarter toward the Cash
Contribution and the amount of Carryover. Such reconciliation shall begin
six (6) months from the Effective Date, at which time Collateral will
provide Schering within, thirty (30) days from the end of each quarter a
reconciliation of actual expenses incurred during the preceding quarter
reported consistently with the detail specified in Exhibit C.
5.4 Audit Rights of Parties. During the Term, each Party shall have the right,
at it's sole expense, through a certified public accountant reasonably
acceptable to the other Party, and following reasonable notice, to examine
financial records (including COGS) of the other Party of or relating to
the other Party's performance of it obligations and duties pursuant to
this Agreement during regular business hours during the Term, subject to
the confidentiality obligation contained in Section 11.1 (b).
VI
MILESTONE PAYMENTS; DILIGENCE
6.1 Milestone Payments on Products. Subject to this Agreement, Schering shall
make the payments to Collateral stated below once for the Initial Product
and once for each New Product ("Milestone Payments").
6.2 Milestone Payment Paid Once Per Product. Each milestone may be met in any
of the United States, Japan or any country of the EU. Each Milestone
Payment will be paid
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
13
*** *** . Such Milestone Payments shall be made within forty-five
(45) days of Schering reaching the particular Milestone.
6.3 Milestones
6.3.1 *** . Two Million ($2,000,000.00) Dollars upon the earlier of (i)
submission of an IND or (ii) equivalent filing in Japan or any
country of the EU, to conduct clinical trials for each Product;
6.3.2 *** . *** upon the initiation of Pivotal Clinical Trials for each
Product, of which, *** of the first such *** Milestone will be paid
by Schering in the form of forgiveness of the Promissory Notes if
such Promissory Notes are outstanding.
6.3.3 *** . *** upon the submission of a Drug Approval Application for
each Product.
6.3.4 *** . *** upon the First Commercial Sale of each Product;
6.3.5 *** . *** spread out as follows:
a. *** upon Schering achieving a cumulative total of *** of each
Product; and
b. *** upon Schering achieving a cumulative total of *** in ***
of each Product; and
c. *** upon Schering achieving a cumulative total of *** in ***
of each Product.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
14
VII
INVENTORY OF DEVELOPED TECHNOLOGY; NEW PRODUCTS; PRODUCTS OUTSIDE
THE FIELD; RIGHT OF FIRST REFUSAL; RIGHT OF FIRST OFFER
7.1 Inventory of Developed Technology. At least six (6) months prior to the
end of the Term, the Parties shall create a written inventory of the
Developed Technology. Such written inventory shall include, but not be
limited to patents, patent applications, invention disclosures,
description of know how and all tangible materials.
7.2 Milestone Payments and Royalties. The Milestone Payments and Royalties
stated in this Agreement apply separately to the Initial Product and each
New Product. The Parties may negotiate in good faith different research
and development funding for each New Product than that provided for in
Section V for the Initial Product according to the procedure stated below.
7.3 Procedure For New Products Within Seven Years of the Effective Date.
(a) For seven (7) years from the Effective Date, Collateral shall keep
Schering informed of all research concerning New Products that arise
out of Collateral Base Technology and/or Developed Technology
Controlled or created during the Term. For every such potential New
Product which is the subject of research in the Field by Collateral
and has reached the stage of proof of concept as demonstrated by in
vivo animal data, Collateral shall first and exclusively present as
a New Product opportunity to Schering, in writing, and, good faith,
giving as much detail and as complete as possible, a report on the
New Product which includes, but is not limited to a description of
technology, test data, animal test results, proof of concept,
preliminary product description, proposed indication and market
data, and patent and license analysis ("New Product Opportunity
Report");
(b) Schering has thirty (30) days from receipt of the New Product
Opportunity Report to respond in writing to Collateral whether it
wishes to proceed with a good faith negotiation of funding support
for the research and development of such New Product;
(c) If Schering notifies Collateral that it does not wish to proceed to
negotiate the funding of the research and development of such New
Product, or, If the Parties cannot agree on the amount of funding
amounts for research and development for the New Product within
three (3) months of receipt of the New Product Opportunity Report by
Schering, then Collateral may proceed as follows:
(i) if Collateral researches, develops, commercializes and sells
such New Product, alone without any Third Party, and is not an
Affiliate of any Third Party, Collateral shall pay Schering
the range of Royalties on Net Sales of such New Product as
Schering is paying or could pay pursuant to Section VIII;
15
(ii) ***
***
***
***
***
***
***
***
***
***
***
***
***
(iii) if Schering and Collateral cannot agree on the terms and
conditions of an agreement with respect to Section 7.3(c)(ii)
and Collateral commercializes such New Product, Collateral and
such Third Party shall pay Schering the range of Royalties on
Net Sales of such New Product as Schering is paying or could
pay pursuant to Section VIII.
7.4 Procedure For Products Outside the Field *** of the Effective Date.
For *** from the Effective Date, Collateral shall keep Schering informed
in writing of all research, technology and know how with respect to
potential products outside the Field for which Developed Technology was
used or useful. For such *** Collateral grants Schering a right of first
negotiation in good faith to exclusively license all technology that arose
out of Developed Technology or for which Developed Technology was used and
is Controlled by Collateral to make, have made, use, sell, offer to sell
or import any product outside the Field. Collateral may not disclose
and/or negotiate with any Third Party during the three (3) month period
stated in this Section 7.5. Each right of first negotiation is initiated
by a written offer from Collateral describing the product outside the
Field and the terms of an agreement suggested by Collateral. If after ***
of good faith negotiations, the Parties cannot agree, Collateral shall not
offer, sell, license or enter into any collaboration concerning such
technology, that was described in the written offer, on better terms than
were offered to Schering for *** from the end of the each *** for each
written offer.
7.5 Procedure for New Products and Products Outside the Field For the Period
Beginning After *** After the Effective Date Through the *** Anniversary
of the Effective Date.
For the period beginning after *** after the Effective Date through the
*** of the Effective Date, Collateral grants Schering the ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
16
to any potential New Product, product outside the Field, technology, or
know how that arose out of Developed Technology or for which Developed
Technology was used and is Controlled by Collateral.
VIII
ROYALTY PAYMENTS; NEW PRODUCTS AND PRODUCTS
8.1 Royalty Term.
(a) Royalty Term; Products. Schering or Collateral as provided in this
Agreement, shall pay the other Party royalties on the Net Sales of
each Product on a *** from the first commercial sale, until the
later of *** *** or until the expiration of the last to expire
patent within
Collateral Base Technology or Developed Technology which has valid
claims covering such Product in such country ("Royalty Term"). A
patent will be deemed to be expired when all the claims covering a
Product has been held invalid or unenforceable by a final,
unappealable decision of a court of competent jurisdiction.
(b) Paid-Up: License. At the end of the period for which any royalties
on each Product are due pursuant to this Agreement, Schering or
Collateral as provided in this Agreement, shall have a fully paid
license granted pursuant to this Agreement.
8.2 Royalties on Annual Net Sales of Each Product. During the Royalty Term,
Schering or Collateral shall pay the other Party a *** on annual Net Sales
of each Product of *** plus:
(a) *** if:
(i) Annual Net Sales are greater than *** , but less than *** and
COGS is less than or equal to ***;
(ii) Annual Net Sales are greater than *** , but less than *** and
COGS is greater than *** and less than or equal to ***;
(b) *** if:
(i) Annual Net Sales are greater than *** and less than *** and
COGS is greater than *** and less than or equal to ***;
(ii) Annual Net Sales are greater than *** and COGS is greater than
*** and less than or equal to ***;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
17
(c) *** if:
(i) Annual Net Sales are greater than *** but less than or equal
to *** and COGS is less than or equal to ***.
(ii) Annual Net Sales are greater than *** and COGS is greater than
*** and less than or equal to ***;
(d) *** if:
(i) Annual Net Sales are greater than *** and COGS is less than or
equal to ***.
Each Product shall meet its own Net Sales threshold for purposes of
calculating the royalties due under this Section 8.2
8.3 Payment of Royalties.
(a) Royalty Report. Each Party shall provide the other Party a royalty
report based on the *** and, if applicable, a royalty payment to the
other Party on a quarterly calendar basis. The report relating to
Net Sales within the U.S. shall be provided within thirty (30) days
after the end of the calendar quarter to which such report and
payment apply and the report relating to Net Sales for countries
other than the U.S. shall be provided within one hundred and twenty
(120) days after the end of the calendar quarter to which such
report and payment apply. Within sixty (60) days at the end of each
calendar year for the U.S. and within ninety (90) days for the
remainder of the world, the paying Party shall provide an annual
royalty report and payments, if any, relating to the annual Net
Sales and any additional amounts due, pursuant to Section 8.2.
(b) Records Retention. Each Party shall keep, and require any
Sublicensee and Affiliate to keep, for a period of not less than ***
, complete and accurate records of all Net Sales of Products. Each
Party shall have the right, at such Party's sole expense, through a
certified public accountant reasonably acceptable to the other
Party, and following reasonable notice, to examine such royalty
records during regular business hours during the life of the other
Party's obligation to pay royalties on Products; provided however,
that such examination shall not (i) be of records for more than the
prior three (3) years, (ii) take place more often than once a year,
and (iii) shall not cover any records which date prior to the date
of the last examination, and provided further that, such accountants
shall report to the auditing Party only as to the accuracy of the
royalty statements and payments and the amount of any underpayment;
provided further if there is a greater than ten (10%) percent under
reporting between the amount of Net Sales reported by the Party
obligated to pay
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
18
royalties and that reported in such audit such Party shall pay the
costs of the audit plus any discrepancy in the amount of royalty
due.
(c) Tax on Royalties. Any tax paid or required to be withheld by
Schering or Collateral for the benefit of the other Party on account
of royalties payable to the other Party under this Agreement shall
be deducted from the amount of royalties otherwise due. Each Party
shall secure and send to the other Party proof of any such taxes
withheld and paid by Schering or Collateral for the benefit of the
other Party and shall, at the other Party's request, provide
reasonable assistance to the other Party in recovering said taxes,
if possible.
(d) Form of Payment. All payments due to Schering or Collateral
hereunder shall be made in United States dollars, for the other
Party's account, by wire to a bank in the United States designated
in writing by such Party; provided, that where payments in respect
of Net Sales are based on Net Sales in non-U.S. currencies, the
amount of Net Sales and any deductions used to calculate Net Sales,
if any, shall be converted monthly to United States dollars at the
average of the average daily "bid" and "asked" exchange rates as
provided by Reuters for the applicable month.
8.4 Royalty Payments to Third Parties. Except as provided in Section 10.6,
Collateral will pay all royalties and/or lump sum payments, if any, due to
Third Parties with respect to the Products and, if Collateral has failed
to make such payments in a timely manner, Schering may pay such royalties
to such Third Parties and credit such payments against any royalties due
Collateral pursuant to this Agreement.
8.5 Net Sales Exclusions. In the event that Schering or its Sublicensees
distributes Products to any entity for research or clinical testing
purposes, or indigent or other public support programs, and determines
that such distributions shall be excluded from the computation of Net
Sales, then Schering shall exclude such distributions from Net Sales and
provide Collateral such information with the royalty report provided for
in Section 8.3(a) describing such distribution of all such Products, the
purpose for which such Products were distributed, and the quantities of
Products and so distributed in the preceding calendar year.
8.6 Cross Royalties for products in the Field. In the event Schering
terminates this Agreement pursuant to Section 15.2(e), Schering shall pay
Collateral a royalty of *** on *** that are claimed by one or more issued
patents in *** and Collateral shall pay Schering a royalty of *** on ***
are claimed in one or more issued patents in *** . In both circumstances,
Collateral shall pay all royalties due pursuant to the UC License. The Net
Sales definition of this Agreement applies to such product net sales. For
purposes of this Section 8.6, Sections 8.3, 8.4 and 8.5 shall apply.
Royalties will be paid on the Net Sales of each product for a period from
the date of the first commercial sale on a country by country basis until
the last to expire patent within Collateral Base Technology or Developed
Technology.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
19
8.7 Schering Right to Negotiate Reductions in Royalties and Milestones.
The Parties agree that Collateral is solely responsible for all payments
and royalties to Third Parties with respect to Collateral gaining access
to a gene that may be acceptable to Schering. The Parties agree that the
Royalties and Milestones negotiated in this Agreement, and the basis for
Schering proceeding with this Agreement is the assumption that Collateral
will obtain exclusive rights to a gene in the Field and Collateral will
not grant any rights in the Field to Third Parties.
(a) If Collateral obtains less than exclusive rights to a gene in the
Field from a Third Party and, if Schering, in its sole discretion,
decides to permit and proceed with such an arrangement Schering and
Collateral will discuss reductions in the Milestone Payments and
Royalties and other aspects of this Agreement.
(b) If Collateral obtains less than exclusive rights to a gene in the
Field from a Third Party, and, if Schering, in its sole discretion,
decides to permit and proceed with such an arrangement, and if such
Third Party sells a product in the Field, Schering and Collateral
will in good faith negotiate reductions in the Milestone Payments
and Royalties and other aspects of this Agreement to take into
account such Third Party selling products in the Field.
(c) If Collateral obtains less than exclusive rights to a gene in the
Field from a Third Party and, if Schering, in its sole discretion,
decides to permit and proceed with such an arrangements and/or such
Third Party requires access to Collateral Base Technology, Developed
Technology or Products, Schering and Collateral will in good faith
negotiate reductions in Milestone Payments and Royalties and other
aspects of this Agreement to take into account such Third Party
participating in the business opportunity that is the subject matter
of this Agreement.
IX
REPORTS, BOOKS AND TAX MATTERS
9.1 Examination of Books. Each of the Parties shall keep and maintain complete
and accurate books in respect of its activities under this Agreement.
Unless otherwise provided, each Party shall provide the other the right to
inspect such records, and shall provide copies of all requested records,
to the extent reasonably related to the performance of the other's
obligations under this Agreement. The Parties shall retain such records
for so long as the Parties shall mutually determine.
9.2 Tax Matters. Collateral agrees that Schering is entitled to all tax
benefits, including in particular, tax credits and/or tax deductions
attributable to amounts Schering has funded hereunder excepting amounts
funded and paid by Collateral. Collateral shall file its federal, state,
and local tax returns on a basis consistent with this Agreement, and shall
not take any action inconsistent with Schering's entitlement to such tax
20
benefits. In the event that either Party, in its reasonable judgment,
determines that it must obtain information and verification regarding the
use or application of such expenditures in order to prepare its tax
returns or to respond to an inquiry during a tax audit or any other
inquiry relating to such treatment of its tax return, or to defend its tax
position in any proceeding including litigation, each Party shall
reasonably cooperate with the other Party and furnish it with such
information as it may reasonably require at such Party's request and sole
expense.
X
PATENTS
10.1 Disclosure by Employees, Agents or Independent Contractors. Schering and
Collateral agree that as to any employees, agents, or independent
contractors of Schering and Collateral presently in their employ or who
are hired or retained by Schering or Collateral to perform, manage
performance of, or participate in the research done pursuant to this
Agreement, Schering and Collateral will ensure that such employees,
agents, or independent contractors will promptly disclose and assign to
the party engaging them any and all rights to inventions, developments, or
improvements, (whether patentable or not) conceived and/or reduced to
practice during the course of their duties. Each Party will notify the
other Party promptly of the subject matter of any inventions within the
Developed Technology or Collateral Base Technology.
10.2 Patent Prosecution and Related Activities.
(a) Collateral Base Technology and Collateral Solely Invented Developed
Technology. Collateral shall be responsible, at its sole expense,
for preparing, filing, prosecuting and maintaining in at least
United States and Canada, Europe, Japan and Australia ("Countries
and Territories"), and conducting any interferences,
re-examinations, reissues and oppositions, relating to patent
applications and patents all relating to Collateral Base Technology
and Collateral solely invented Developed Technology ("Collateral
Inventions") in the Countries and Territories. If Schering wishes to
fife and prosecute patent applications disclosing Collateral
Inventions in countries and territories other than where Collateral
has or will file, then Schering has the right to do so at Schering's
expense using attorneys designated by Schering and reasonably
acceptable to Collateral.
(b) Jointly Invented Developed Technology and Schering Solely Invented
Developed Technology. Schering shall be responsible, at its sole
expense, for preparing, filing, prosecuting and maintaining in at
least the Countries and Territories, and conducting any
interferences, re-examinations, reissues and oppositions relating to
patent applications and patents all relating to Developed Technology
solely invented by Schering and jointly invented by Schering and
Collateral with or without Third Parties ("Schering Inventions") in
such Countries and Territories. If Collateral wishes to file and
prosecute patent applications
21
disclosing Schering Inventions in countries and territories other
than where Schering has or will file, then Collateral has the right
to do so at Collateral's expense using attorneys designated by
Collateral reasonably acceptable to Schering.
(c) Comments on Patent Applications and Patent Prosecution. Each Party
has the right of prior review and comment on the other Party's
patent applications and patent prosecutions filed and/or prosecuted
pursuant to Sections 10.2 (a) and (b).
(d) Election Not to Prosecute. With ninety (90) days prior notice to the
other Party, either Party may elect, not to file and/or to
discontinue the prosecution of any proceeding of or relating to any
patent applications filed in any country pursuant to Section 10.2
above. In the event Schering or Collateral respectively decline to
file or having filed fail to further prosecute or maintain any
patent applications or patents subject to this Agreement, or conduct
any interferences, re- examinations, reissues, oppositions with
respect thereto, the other Party shall have the right to prepare,
file, prosecute and maintain such patent applications and patents,
in such countries worldwide as it deems appropriate, and conduct any
interferences, re-examinations, reissues or oppositions at its sole
expense.
10.3 Cooperation. Each of Schering and Collateral shall keep the other fully
informed as to the status of patent matters described in this Section X
including, without limitation, by providing the other Party the
opportunity to fully review and comment on any documents which will be
flied in any patent office as far in advance of filing dates as feasible,
and providing the other copies of any documents that such party receives
from such patent offices promptly after receipt, including office actions,
notices of all interferences, reissues, re-examinations, oppositions or
requests for patent term extensions. Schering and Collateral shall each
reasonably cooperate with and assist the other at its own expense in
connection with such activities, at the other party's request.
10.4 Permitted Disclosures. Following a written notice from the other Party
hereto, the Parties shall in good ▇▇▇▇▇ ▇▇▇▇▇ each other permission, not
to be unreasonably withheld, to disclose in the specification of a patent
application filed by the other Party pursuant to this Agreement, any
Collateral Base Technology, or Developed Technology necessary to support
and enable claims in such patent applications.
10.5 Third Party Infringement.
(a) Schering Rights. Subject to the rights of Collateral's licensors,
Schering, at its sole discretion and sole expense, shall have the
sole right to initiate and control any legal action to enforce any
patent rights it Controls pursuant to this Agreement, with respect
to any infringing Third Party product that in Schering's opinion
competes with any Product(s) or defend any declaratory judgment
action relating thereto ("Product Infringement Offenses").
22
(b) Collateral Rights. Subject to the rights of Collateral's licensors,
Collateral may initiate and control any legal action that is not a
Product Infringement Offense to enforce any of its patent rights it
Controls against any Third Party; provided however if an adverse
ruling in such legal action could adversely affect Schering's
research, development, manufacture or sale of Product(s), Collateral
may not initiate such legal actions without the prior written
permission of Schering which will not be unreasonably withheld.
(c) Recoveries. (a) Any recovery received in connection with a suit
brought by Schering pursuant to Section 10.5(a) shall be paid first
to reimburse Schering for its expenses including attorneys fees,
second to reimburse Collateral for its expenses including attorneys
fees with the remainder being paid eighty-five (85%) percent to
Schering and fifteen (15%) percent to Collateral. (b) Any recovery
received in connection with a suit brought by Collateral pursuant to
Section 10.5(b) shall be paid first to reimburse Collateral for its
expenses including attorneys' fees, second to reimburse Schering for
its expenses including attorneys' fees, with the remainder being
paid Collateral.
(d) No Settlement without Consent. Neither Party shall enter into any
settlement of any claim, suit or proceeding under Section 10.5 which
admits or concedes that any aspect of the Collateral Base
Technology, or Developed Technology is invalid or unenforceable
without the prior written consent of the other Party which shall not
be unreasonably withheld.
(e) Cooperation. Unless both Parties are sued or are joined in such
lawsuit, each Party shall keep the other reasonably informed of the
progress of any claim, suit or proceeding subject to this Section
10.5 and cooperate reasonably in connection with such activities at
the request of the Party involved in such claim, suit or proceeding.
Each Party may be represented by counsel of its choice.
10.6 Infringement Claims by Third Parties.
(a) Schering Control. If the manufacture, sale, offer for sale, use or
import of any Product(s) pursuant to this Agreement results in any
claim, suit or proceeding alleging patent infringement against
Schering (or its Sublicensees) by reason of its use or sale of a
Product ("Defense Proceeding"), Schering shall promptly notify
Collateral in writing setting forth the facts of such claim in
reasonable detail. Schering shall have the first right to defend and
control the defense and settlement of any such Defense Proceeding.
(b) Schering Control; Sharing of Costs and Damages. In the event
Schering so notified Collateral of its decision to control the
defense, Schering shall be entitled to select counsel of its choice
and direct and instruct such counsel and control the defense. All
costs of defense and any amounts paid by way of judgment or
settlement shall be borne fifty (50%) percent by Collateral and
fifty (50%) by Schering according to Section 10.6 (d). Provided,
however, in the event any judgment is entered (which becomes final
with all rights of appeal
23
exhausted) which specifically awards damages for willful
infringement, Schering shall be solely responsible to pay the amount
of such willful damages in excess of actual damages.
(c) Collateral Control; and Damages. if Schering decides not to control
such Defense Proceeding, it shall give Collateral reasonable notice
of such decision, and Collateral shall control such Defense
Proceeding and Collateral shall bear all costs, damages, including
damages for willful infringement.
(d) Reserve. In the event that Schering establishes, according to its
normal and customary accounting practices, a reserve for the Defense
Proceeding it defends pursuant to (a) and (b) above, at the time of
the establishment of the reserve, the Parties shall agree upon a
payment schedule for Collateral whereby Schering may reduce the
amount of royalties due pursuant to Section VIII by the amounts to
be paid by Collateral pursuant to this Section. If no royalty is
being paid to Collateral, then such amounts will be paid by Schering
with the right to credit against future royalties. Provided however,
Schering's deduction from royalties due for Collateral's payments to
such reserve in any one calendar year cannot be greater than
one-half of the result of (a) the total royalty due Collateral under
Section 8.2 less (b) the royalty due pursuant to the UC License.
(e) No Settlement without Consent. Neither Party shall enter into any
settlement of any claim, suit or proceeding under this Section 10.6
which admits or concedes that any aspect of the Collateral Base
Technology, or Developed Technology is invalid or unenforceable
without the prior written consent of the other Party which shall not
be unreasonably withheld.
(f) Cooperation. Unless both Parties are sued or are joined in such
lawsuit, each Party shall keep the other reasonably informed of the
progress of any claim, suit or proceeding subject to this Section
10.6 and cooperate reasonably in connection with such activities at
the request of the Party involved in such claim, suit or proceeding.
Each Party may be represented by counsel of its choice.
XI
CONFIDENTIALITY
11.1 Confidentiality.
(a) Information. As used in this Section 11.1, the term "Information"
means the non-public, proprietary or otherwise confidential
information, specifications, know-how, materials, data and other
communications, oral or written, disclosed or provided to either
Party (the "Recipient") by or on behalf of the other Party (the
"Disclosing Party") pursuant hereto or in connection herewith,
together with
24
all portions of analyses, studies and other documents prepared by or
for the benefit of the Recipient which contain or otherwise reflect
any of the foregoing.
(b) Term of Confidentiality. The Recipient will keep all Information
provided by the disclosing party confidential for the Term and ten
(10) years thereafter and shall use such Information solely for the
purposes of this Agreement. Without the prior written consent of the
Disclosing Party, the Recipient will not disclose any Information to
any Third Party, except to the officers, employees, agents, or
representatives of the Recipient or the Recipient's Affiliates
(collectively "Representatives"), who, in each case, need to know
any such Information for purposes of the implementation and
performance by the Recipient of this Agreement, and will use the
Information provided by the disclosing party only for such limited
purposes.
(c) Warranty of Obligation. Each Party warrants that each of its
Representatives to whom any Information provided by the disclosing
party is revealed shall previously have been informed of the
confidential nature of the Information and shall have agreed to be
bound by the terms and conditions of this Agreement applicable to
the Recipient. The Recipient shall use commercially reasonable
efforts ensure that the Information provided by the Disclosing Party
is not used or disclosed by such Representatives except as permitted
by this Agreement and shall be responsible for any breach of this
Agreement.
(d) Ownership of Information. All Information shall remain the property
of the Disclosing Party; provided however, each Party may keep a
copy of such information for archival purposes. Upon the written
request of the Disclosing Party (i) all tangible Information
provided by the Disclosing Party (including all copies thereof and
all unused samples) except for Information consisting of analyses,
studies and other documents prepared by or for the benefit of the
Recipient, shall be promptly returned to the Disclosing Party, and
(ii) ail portions of such analyses, studies and other documents
prepared by or for the benefit of the Recipient (including all
copies thereof) which are within the definition of Information shall
be destroyed, with such destruction certified in writing to the
Disclosing Party by the Recipient; provided however, the Recipient
may keep one archival copy of such Information.
(e) Obligation of Confidentiality. The obligations of confidentiality
and non-use set forth in this Agreement shall not apply to any
portion of the Information which:
(i) is or becomes public or available to the general public
otherwise than through the act or default of the Recipient or
its Representatives; or
(ii) is obtained by the Recipient from a Third Party who is
lawfully in possession of such Information and is not subject
to an obligation of confidentiality or non-use owed to the
Disclosing Party or others; or
25
(iii) is previously known to the Recipient prior to disclosure to
the Recipient by the Disclosing Party under this Agreement, as
shown by written evidence, and is not obtained or derived
directly or indirectly from the Disclosing Party; or
(iv) is disclosed by the Recipient pursuant to the requirement of
law, provided that the Recipient has complied the provisions
set forth in this Section 11.1; or
(v) is independently developed by Recipient without the use of or
reliance on any Information provided by the Disclosing Party
hereunder, as shown by contemporaneous written evidence.
(f) Legal Disclosure. If the Recipient becomes legally required to
disclose any Information provided by the disclosing party, the
Recipient will give the Disclosing Party prompt notice of such fact
so that the Disclosing Party may obtain a protective order or other
appropriate remedy concerning any such disclosure and/or waive
compliance with the non-disclosure provision of this Agreement.
Recipient will reasonably cooperate with the Disclosing Party in
connection with the Disclosing Party's efforts to obtain any such
order or other remedy. If any such order or other remedy does not
fully preclude disclosure or the Disclosing Party waives such
compliance, Recipient will make such disclosure only to the extent
that such disclosure is legally required and will use its reasonable
efforts to have confidential treatment accorded to the disclosed
Information.
(g) No Warranty As To Reliability. Each of the parties acknowledges that
neither party makes any representation or warranty as to the
reliability, accuracy or completeness of any of the Information,
except for any specific representation or warranty made in other
sections of this Agreement. Recipient agrees that neither the
Disclosing Party nor any of the Disclosing Party's Representatives
shall have any liability to Recipient arising from the Information
provided by the Disclosing Party except as otherwise provided
herein.
(h) No Implied License. Except as otherwise set forth in this Agreement,
nothing herein shall be construed as giving Recipient any right,
title, interest in or ownership of the Information provided by the
Disclosing Party, and with respect to any portion thereof which is
or becomes public information and is now or hereafter becomes
covered by any patent, Recipient's rights with respect thereto shall
be subject to all rights of the patent owner and/or licenses.
(i) Public Domain. For the purpose of this Agreement, specific
information disclosed as part of Information shall not be deemed to
be in the public domain or in the prior possession of Recipient
merely because it is embraced by more general information in the
public domain or by more general information in the prior possession
of Recipient.
26
(j) Prior Confidentiality Agreements. To the extent the duties and
obligations undertaken pursuant to Section XI conflict with the
Confidential Disclosure Agreements between the Parties dated June 6,
1995 the duties and obligations undertaken pursuant to Section XI
shall control.
11.2 Publications. The Steering Committee will discuss and review proposed
publications describing the scientific results of the Research and
Development Plan. Subject to the rights of Collateral's licensers, either
Party may, in its sole discretion, decide not to permit publication of
confidential Information by the other Party of any scientific results of
the Research and Development Plan.
XII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLLATERAL
12.1 Collateral represents and warrants and covenants to Schering as follows:
(a) Organization. It is a corporation duly organized, validly existing
and in good standing under the laws of the State of California.
(b) Authority. It has full corporate power and authority to execute and
deliver this Agreement and the other agreements and instruments to
be executed and delivered by Collateral pursuant hereto and to
consummate the transactions contemplated hereby and thereby. All
corporate acts and other proceedings required to be taken to
authorize such execution, delivery, and consummation have been duly
and properly taken and obtained.
(c) Enforceability. This Agreement has been duly executed and delivered
by Collateral and constitutes, and such other agreements and
instruments when duly executed and delivered by Collateral will
constitute, legal, valid, and binding obligations of Collateral
enforceable against Collateral in accordance with their respective
forms.
(d) Approvals, Consents. Etc. No approval, authorization, consent, or
other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution
and delivery by Collateral of this Agreement and the execution and
delivery by Collateral of such other agreements and instruments or
the consummation of the transactions contemplated hereby or thereby.
(e) No Conflicts. None of the execution, delivery, or performance of
this Agreement or the other agreements and instruments to be
executed and delivered by Collateral (i) conflicts with or results
in a breach under the charter documents or any material contractual
undertaking of Collateral, including but not limited to the UC
License and the *** or (ii) conflicts with or results in a violation
of any of the laws of the jurisdiction of incorporation of
Collateral.
27
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Collateral has not entered and will not and enter into any written
or oral agreement before or after the Effective Date that is or
would be inconsistent with its obligations under this Agreement.
(f) Title. As of the Effective Date, it has good title to or valid
leases or licenses for all its properties, rights, and assets
necessary for the fulfillment of its obligations and
responsibilities under this Agreement.
(g) Patent Infringement. As of the Effective Date, it is not aware of a
Third Party patent that would be infringed by the research and
development contemplated under the Research and Development Plan.
(h) Sufficient Rights. (i) Except as contemplated herein, as of the
Effective Date it owns or possesses adequate licenses or other
rights to use all patents, patent rights, inventions, know-how,
including technology in the Field licensed pursuant to the UC
License and the *** to conduct research and development, to grant
rights and licenses to Schering, and to fulfill its other duties and
obligations pursuant to this Agreement. As of the Effective Date,
the rights and licenses granted to Schering hereunder do not violate
the rights of any Third Party to which Collateral has granted a
license. Collateral has not and will not during the Term of this
Agreement enter into any contract, agreement, or other arrangement
with a Third Party pertaining to the Field inconsistent with this
Agreement, and (ii) as of the Effective Date and as long as ▇▇▇▇
▇▇▇▇▇▇▇ is an employee of The Regents of the University of
California all his inventions in the Field conceived during the Term
(except for the inventions he conceives as a consultant of
Collateral) will be at the *** governed by the *** .
(i) License. It is not in material breach of, and this Agreement will
not result in any material breach of the UC License and/or the *** .
(j) No Prior Grant or Patents. As of the Effective Date and through the
end of the Royalty Term, Collateral has not and will not grant any
assignments, licenses or sublicenses or otherwise transfer to Third
Parties, Collateral Base Technology, Developed Technology or the UC
License in a manner inconsistent with this Agreement.
(k) No Sublicense Royalties Under Collateral Base Technology. As of the
Effective Date and through the end of the Royalty Term, there are no
and will not be any licenses between Collateral and Third Parties to
the Collateral Base Technology that would require Schering to pay a
Third Party a royalty to make, have made, use, sell, offer to sell
or import Product(s).
(l) Use of Contribution. As of the Effective Date and through the end of
the Royalty Term, except for that portion of the Cash Contribution
made pursuant to Section 5.2(a)(ii) which Collateral covenants will
only be used pursuant to such Section, Collateral will use the
Contribution and the payments made pursuant to
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
28
Section 5.2 solely for the research and development of Product(s)
pursuant to the Research and Development Plan and this Agreement and
permitted overhead allocations.
XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SCHERING
13.1 Schering represents and warrants to Collateral as follows:
(a) Organization. It is a corporation duly organized, validly existing
and in good standing under the laws of Germany.
(b) Authority. It has full corporate power and authority to execute and
deliver this Agreement and the other agreements and instruments to
be executed and delivered by Schering pursuant hereto and to
consummate the transactions contemplated hereby and thereby. All
corporate acts and other proceedings required to be taken to
authorize such execution, delivery, and consummation have been duly
and properly taken and obtained.
(c) Enforceability. This Agreement has been duly executed and delivered
by Schering and constitutes, and such other agreements and
instruments when duly executed and delivered by Schering will
constitute, legal, valid, and binding obligations of Schering
enforceable against Schering in accordance with their respective
terms.
(d) Approvals Consents. Etc. No approval, authorization, consent, or
other order or action of or filing with any court, administrative
agency or other governmental authority is required for the execution
and delivery by Schering of this Agreement and the execution and
delivery by Schering of such other agreements and instruments or the
consummation by Schering of the transactions contemplated hereby or
thereby (other than contemplated Products Regulatory Approvals).
(e) No Conflicts. None of the execution, delivery, or performance of
this Agreement or the other agreements and instruments to be
executed and delivered by Schering, (i) conflict with (or will
conflict with) or results in a breach under (or will result in a
breach under) the charter documents or any material contractual
undertaking of Schering or its Affiliates or (ii) conflicts with (or
will conflict with) or results in a violation of (or will result in
a violation of) any of the laws of the jurisdiction of incorporation
of Schering.
(f) Title. As of the Effective Date, it has good title to or valid
leases or licenses for all its properties, rights, and assets
necessary for the fulfillment of its obligations and
responsibilities under this Agreement.
29
XIV
DISCLAIMERS; SURVIVAL INDEMNIFICATION
14.1 Disclaimer. Schering and Collateral specifically disclaim any guarantee
that the research will be successful, in whole or in part. The failure of
the Parties to successfully develop Products will not constitute a breach
of any representation or warranty or other obligation under this
Agreement. Neither Schering nor Collateral makes any representation or
warranty or guaranty that the Research and Development Plan will be
sufficient for the successful completion of the research. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, COLLATERAL AND SCHERING
MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY
KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLATERAL BASE
TECHNOLOGY AND DEVELOPED TECHNOLOGY, PRODUCTS, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
VALIDITY OF COLLATERAL BASE TECHNOLOGY OR DEVELOPED TECHNOLOGY, PATENTED
OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES.
14.2 Survival of Representations Warranties, Covenants, and Agreements. The
representations, warranties, covenants, and agreements contained in this
Agreement, and in other agreements and instruments to be executed and
delivered by the Parties pursuant to this Agreement, shall survive the
Term and the completion of the other actions set forth herein and shall
remain in full force and effort. Except as expressly provided herein, the
representations, warranties, covenants, and agreements contained herein,
and in the other agreements and instruments to be executed and delivered
by the Parties hereto the Parties confirm that they have not relied upon
any and other representations, warranties, covenants. and agreements as an
inducement to enter into this Agreement or the other agreements and
instruments to be executed and delivered by the Parties pursuant to this
Agreement.
14.3 Indemnification By Collateral. Collateral hereby agrees to indemnify and
hold Schering, its Affiliates and their respective officers, directors,
stockholders, employees, agents. and representatives (collectively, the
"Schering Indemnitees") harmless on an after-tax basis from and against
any and all claims, liabilities, losses damages, costs and expenses in
respect of claims against the Schering Indemnitees by parties other than
the Schering Indemnitees, including reasonable fees and disbursements of
counsel and expenses of reasonable investigation (collectively, "Schering
Losses"), arising out of, based upon or caused by: (i) the inaccuracy of
any material representation or the material breach of any warranty,
covenant or agreement of Collateral contained in this Agreement or in any
other agreement or instrument delivered by Collateral pursuant to this
Agreement; (ii) the material breach by Collateral of this Agreement or of
any other agreement or instrument delivered by Collateral pursuant to this
Agreement; (iii) any material failure by Collateral, its Affiliates or
designee to conduct the research pursuant
30
to the Research and Development Plan in a diligent and professional manner
and/or in accordance with applicable U.S. laws and regulations; (iv) any
gross negligence or intentional wrongdoing in the research conducted by
Collateral, its Affiliates or designees (except in each case to the extent
that any Schering Loss is due to the negligence or willful misconduct of
Schering Indemnitees.)
14.4 Indemnification By Schering. Schering hereby agrees to indemnify and hold
Collateral, its Affiliates, subcontractors and their respective officers,
directors, shareholders. employees, agents, and representatives
(collectively, the "Collateral Indemnitees") harmless on an after-tax
basis from and against any and all claims, liabilities, losses, damages,
costs and expenses in respect of claims against the Collateral Indemnitees
by parties other than the Collateral Indemnitees, including reasonable
fees and disbursements of counsel and expenses of reasonable investigation
(collectively, "Collateral Losses"), arising out of, based upon or caused
by: (i) the material inaccuracy of any representation or the material
breach of any warranty, covenant or agreement of Schering contained in
this Agreement or in any other agreement or instrument delivered by
Schering pursuant to this Agreement; (ii) any material failure by
Schering, its Affiliates or designee to conduct the research pursuant to
the Research and Development Plan in a diligent and professional manner
and in accordance with applicable laws and regulations; (iii) any gross
negligence or intentional wrongdoing in the research conducted by
Schering, its Affiliates or designees; or (iv) except for Third Party
patents, the development, pre-clinical and clinical testing, manufacture,
distribution, sale and/or use (including but not limited to Products
liability claims) of any Products made, used or distributed by Schering or
its licensees (except in each case to the extent that any Collateral Loss
is due to the negligence or willful misconduct of Collateral indemnitees).
14.5 Notices, Etc. Each indemnified party agrees to give the indemnifying party
prompt written notice of any action, claim, demand, discovery of fact,
proceeding or suit (collectively, "Claims") for which such indemnified
party intends to assert a right to indemnification under this Agreement;
provided however, that failure to give such notification shall not affect
the indemnified party's entitlement to indemnification hereunder except to
the extent that the indemnifying party shall have been prejudiced as a
result of such failure. The indemnifying party shall have the initial
right (but not the obligation) to defend, settle or otherwise dispose of
any Claim for which the indemnified party intends to assert a right to
indemnification under this Agreement as contemplated in the preceding
sentence if and so long as the indemnifying party has recognized in a
written notice to the indemnified party provided within thirty (30) days
of such written notice its obligation to indemnify the indemnified party
for any Collateral Losses or Schering Losses (as the case may be) relating
to such Claim, provided however that the indemnifying party shall obtain
the written consent of the indemnified party prior to ceasing to defend,
settling or otherwise disposing of any Claim. If the indemnifying party
fails to state in a written notice during such thirty (30) day period its
willingness to assure the defense of such a Claim, the Collateral or
Schering Indemnitee, as the case may be, shall have the right to defend,
settle or otherwise dispose of such claim, subject to the applicable
provisions of 14.3 and 14.4 above.
31
14.6 Agreement Not to ▇▇▇. Notwithstanding anything to the contrary in this
Agreement or any other agreement or instrument delivered by Collateral or
Schering pursuant to this Agreement, Schering and Schering, on behalf of
themselves, their Affiliates and designees, agrees not to ▇▇▇ or initiate
legal action on any legal theory against any of Collateral's or Schering's
past, current or future shareholders, officers, or directors.
XV
TERM, TERMINATION, AND EXPIRATION
15.1 Term. Unless earner terminated, the Term of this Agreement is five (5)
years from the Effective Date. The licenses granted herein shall be
effective as of the Effective Date and shall continue in full force and
effect on a country-by-country basis until Schering and its Sublicensees
have no remaining royalty obligations in a country, at which time Schering
shall have a fully paid up license in such country and the surviving terms
of this Agreement shall terminate in such country.
15.2 Termination.
(a) Breach. If either Party materially breaches, or materially defaults
in the performance of, or fails to be in compliance with, any
material warranty, representation, agreement or covenant of this
Agreement, including any payment obligations, and such default or
noncompliance shall not have been substantially remedied, or steps
initiated to substantially remedy the same to the other Party's
reasonable satisfaction, within sixty (60) days after receipt by the
defaulting Party of a written notice thereof and demand to cure such
default from the other Party; provided however, the defaulting Party
has just one opportunity to initiate the steps to cure such default
or noncompliance, the Party not in default or breach may terminate
this Agreement. In such instance the terminating Party may maintain
the licenses and, subject to damages for such breach, obligations
pursuant to this Agreement.
(b) Bankruptcy. Either Party may terminate this Agreement or the
licenses granted by such Party, if, at any time, the other Party
shall file in any court pursuant to any statute, a petition in
bankruptcy or insolvency or for reorganization in bankruptcy or for
an arrangement or for the appointment of a receiver or trustee of
such Party or of its assets, or if such Party proposes a written
agreement of composition or extension of its debts, or if such Party
shall be served with an involuntary petition against it, filed in
any insolvency proceeding, and such petition shall not be dismissed
within sixty (60) days after the filing thereof, or if such Party
shall propose or be a party to any dissolution, or if such Party
shall make an assignment for the benefit of creditors.
(c) Change in Control During the Term. During the Term, if any Third
Party shall purchase substantially all the assets of Collateral or
if there is a change of control of Collateral, the other Party may
terminate this Agreement upon ninety
32
(90) days written notice. As used herein, change of control shall
mean the acquisition by a Third Party which is a competitor of
Schering or Collateral, respectively, of forty-nine (49%) percent or
more of the voting stock of Collateral, respectively.
(d) Lack of Technical Feasibility. If the Steering Committee issues a
written report that research and development of a Product(s) is no
longer technically feasible, Schering may terminate this Agreement,
upon sixty (60) days written notice.
(e) No Acceptance of a Qualified Gene. If there has not been an
Acceptance of a Qualified Gene, Schering may in its sole discretion
terminate the Agreement upon five (5) days prior written notice to
Collateral. If Collateral fails to make the Gene Presentation(s) by
October 1, 1997, Schering, in its sole discretion, may terminate
this Agreement.
(f) Unresolved Chairman Dispute. In the event any dispute submitted to
the Chairmen of Berlex and Collateral pursuant to Section 3.6(b)
cannot be resolved, either Party may terminate this Agreement on
sixty (60) days notice to the other Party; provided however,
Collateral may not terminate this Agreement pursuant to this Section
1 5.2(f) during the Gene Presentation Period.
(g) Schering Unilateral Right to Terminate. Schering shall have a
unilateral right to terminate this Agreement by providing
sixty (60) days prior written notice to Collateral *** . Upon such
termination notice, Schering shall (i) pay Collateral *** as a *** ,
and (ii) provide Collateral with copies of and the right to
reference any IND's anchor Drug Approval Applications. If
Collateral commercializes a Product or a product outside the Field
after such termination it shall reimburse Schering in the amount of
the *** within *** of the first commercial sale of such Product or
product outside the Field.
(h) Rights in Law or Equity. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN, TERMINATION BY EITHER PARTY PURSUANT TO THIS SECTION 15
SHALL NOT PREJUDICE ANY OTHER REMEDY THAT A PARTY MIGHT HAVE IN LAW
OR EQUITY, EXCEPT THAT NEITHER PARTY MAY CLAIM COMPENSATION FOR LOST
OPPORTUNITY OR LIKE CONSEQUENTIAL DAMAGES ARISING OUT OF THE FACT OF
SUCH TERMINATION.
15.3 Effect of Termination.
(a) Accrued Obligations. Termination of this Agreement for any reason
shall not release any Party hereto from any liability which, at the
time of such termination, has already accrued to the other Party or
which is attributable to a period prior to such termination nor
preclude either Party from pursuing all rights and remedies it may
have hereunder or at law or in equity with respect to any breach of
this Agreement.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
33
(b) Return of Materials. Upon any termination of this Agreement and upon
written request from the other Party, Schering or Collateral shall
promptly return to Me other Party all confidential Information,
including any biological materials, received from the other Party
(except one copy of which may be retained for archival purposes).
(c) Licenses.
(i) Termination by Schering.
(a) Termination Pursuant to Section 15.2 (a). In the event
of termination by Schering under Section 15.2 (a) above,
the licenses granted hereunder to Collateral shall
terminate; provided however, if the breach or material
breach relates only to a specific Product(s) or
product(s) for which there has been a material breach or
determination of a material breach then just the
licenses granted hereunder to Collateral for such
specific Product or product shall terminate and any
licenses granted by Collateral hereunder shall remain in
effect, subject to the terms and conditions of this
Agreement.
(b) Termination Pursuant to Section 15.2 (b) or (c). In the
event of termination by Schering pursuant to Section
15.2 (b) or (c) above, any licenses granted by Schering
to Collateral shall terminate and any licenses granted
by Collateral hereunder shall remain in effect, subject
to the terms and conditions of this Agreement.
(c) Termination Pursuant to Section 15.2 (d). In the event
of termination by Schering pursuant to Section 15.2 (d)
above, any licenses granted by Schering to Collateral
and by Collateral to Schering shall terminate
concurrently.
(d) Termination Pursuant to Section 15.2(e). In the event of
termination by Schering pursuant to Section 15.2(e)
above, the licenses granted by Collateral to Schering
pursuant to Sections 4.2 and 4.3 are in effect; provided
however, the Schering license to Collateral Base
Technology shall not include any gene Controlled solely
by Collateral. Collateral shall pay Schering royalties
pursuant to Section 8.6.
(e) Termination Pursuant to Section 15.2(f). In the event of
termination by Schering pursuant to Section 15.2(f)
above, any licenses, or sublicenses, as the case may be,
granted by Collateral to Schering shall terminate at the
end of the sixty (60) day notice.
34
(f) Termination Pursuant to Section 15.2(g). In the event of
termination by Schering pursuant to Section 15.2(g)
above, any licenses or sublicenses, as the case may be,
granted by Collateral to Schering shall terminate at the
end of the sixty (60) day notice and the following
licenses shall be in effect: (i) Collateral grants
Schering a paid-up, irrevocable, royalty-free,
nonexclusive, worldwide license, with the right to
sublicense, to Collateral's rights in Developed
Technology, and (ii) Schering grants Collateral a
paid-up, irrevocable, royalty-free, nonexclusive,
worldwide license, with the right to sublicense, to
Schering's rights in Developed Technology, both to make,
have made, use, sell, offer to sell or import any
products.
(ii) Termination by Collateral.
(a) Termination Pursuant to Sections 15.2 (a). In the event
of termination by Collateral under Section 15.2 (a)
above, the licenses granted hereunder to Schering shall
terminate; provided however, if the breach or material
breach relates only to a specific Product(s) or
product(s) for which there has been a material breach or
determination of a material breach then just the
licenses granted hereunder to Schering for such specific
Product or product shall terminate and any licenses
granted by Schering hereunder shall remain in effect,
subject to the terms and conditions of this Agreement.
(b) Termination Pursuant to Sections 15.2 (b). In the event
of any termination by Collateral pursuant to Section
15.2 (b) above, any licenses granted by Collateral to
Schering shall terminate and any licenses granted by
Schering hereunder shall remain in effect, subject to
the terms and conditions of this Agreement.
(c) Termination Pursuant to Section 15.2(f). In the event of
termination by Collateral pursuant to Section 15.2(f),
the licenses granted by Collateral to Schering pursuant
to Section 4.5 shall automatically become the licenses
granted by Collateral to Schering pursuant to Sections
4.2 and 4.3 and Schering shall pay Collateral royalties
pursuant to Section 8.6.
15.4 Surviving Rights. The rights and obligations set forth in this Agreement
shall extend beyond the Term or termination of this Agreement only to the
extent expressly provided for herein, or to the extent that the survival
of such rights or obligations are necessary to permit their complete
fulfillment or discharge without limiting the foregoing, the Parties have
identified various rights and obligations which are understood to survive
as follows: Sections IV, VIII, IX, X, XI, XII, XIII, XV.
35
XVI
MISCELLANEOUS
16.1 Notices. Any notice or other communication required or permitted to be
given by either Party under this Agreement shall be effective when
delivered, if delivered by hand or by electronic facsimile with receipt
verified or five days after mailing if mailed by registered or certified
mail, postage prepaid and return receipt requested, and shall be addressed
to each Party at the following addresses or such other address as may be
designated by notice pursuant to this Section:
If to Collateral: If to Schering:
▇▇▇▇ ▇▇▇▇▇, President ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Schering AG
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇-▇▇▇▇▇▇▇
Vice President
Office of Corporate Development
Berlex Laboratories, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with copies to: with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Phleger & General Counsel
▇▇▇▇▇▇▇▇ Berlex Biosciences
▇▇▇ ▇▇▇▇ ▇ ▇▇., ▇▇▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
16.2 Amendments. No amendment, modification or addition hereto shall be
effective or binding on either Party unless set forth in writing and
executed by duly authorized representatives of both parties.
16.3 Waiver. No waiver of any rights under this Agreement shall be deemed
effective unless contained in writing signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed a waiver of any future breach or failure to perform or any other
right arising under this Agreement.
36
16.4 Headings. The section headings contained in this Agreement are included
for convenience only and form no part of the agreement between the
Parties.
16.5 Applicable Law. This Agreement shall be governed by, subject to and
construed in accordance with the laws of the State of California.
16.6 Severability. If any provision of this Agreement is held to be invalid,
void or unenforceable for any reason, it shall be adjusted, if possible,
rather than voided in order to achieve the intent of the Parties to the
maximal extent possible. In any event, all other provisions of this
Agreement shall be deemed valid and enforceable to the fullest extent
possible.
16.7 Assignment; Binding Effect. Neither this Agreement, nor any rights granted
hereunder, shall be assignable by any Party hereto without the prior
written consent of the other Party; provided however, that either Party
may assign this Agreement without the consent of the other Party to its
Affiliates, if the assigning Party guarantees the full performance of its
Affiliates' obligations hereunder, or in connection with the sale or
transfer of all or substantially all of its assets relating to this
Agreement, whether by merger, sale of stock, operation of law or
otherwise. Any purported assignment in contravention of this Section
shall, at the option of the non-assigning Party, be null and void and of
no effect.
16.8 No Implied licenses. Only the licenses granted expressly herein shall be
of legal force and effect. No license rights shall be created hereunder by
implication, estoppel or otherwise.
16.9 Further Assurances. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts as may be
necessary or appropriate in order to carry out the purposes and intent of
this Agreement.
16.10 Force Majeure. Except for royalty payments due to each other, no Party
shall be liable for any failure or delay in performance under this
Agreement to the extent such failure or delay arises from Force Majeure. A
Force Majeure is fire, explosion, earthquake, storm, flood, strike, labor
difficulties, war, insurrection, riot, act of God or the public enemy, or
any law, act, order, export or import control regulations, proclamation,
decree, regulation, ordinance, or instructions of local, state, federal or
foreign governmental or other public authorities, or judgment or decree of
a court of competent jurisdiction (but excluding a court injunction
against a Party's performance) and not otherwise arising out of breach by
such Party of this Agreement. In the event of the occurrence of such an
event, the Party so affected shall give prompt written notice to the other
Party, stating the period of time the occurrence is expected to continue
and shall use best efforts to end the failure or delay and ensure that the
effects of such Force Majeure are minimized.
37
16.11 Negation of Agency. Nothing herein contained shall be deemed to create an
agency, joint venture, amalgamation, partnership, or similar relationship
between Schering and Collateral. The relationship between the Parties
established by this Agreement is that of independent contractors.
16.12 Publicity. No public announcement concerning the existence or the terms of
this Agreement shall be made, either directly or indirectly, by Collateral
or Schering, except as may be legally required by applicable laws,
regulations, or judicial order, without first obtaining the approval of
the other Party and agreement upon the nature, text, and timing of such
announcement, which approval and agreement shall not be unreasonably
withheld; provided however, it shall not be unreasonable for Schering to
withhold permission to use the name "Schering." The Party desiring to make
any such public announcement shall provide the other Party with a written
copy of the proposed announcement in sufficient time prior to public
release to allow such other Party to comment upon such announcement, prior
to public release. Neither Party shall issue any press release or make any
public announcement which includes or otherwise uses the name of the other
Party in any public statement or document except with the prior written
consent of such Party.
16.13 Registration and Filing of the Agreement. To the extent, if any, that a
Party concludes in good faith that it is required to file or register this
Agreement or a notification thereof with any governmental authority,
including without limitation the U.S. Securities and Exchange Commission
and the Competition Directorate of the Commission of the European
Communities, in accordance with applicable laws and regulations, such
Party may do so, and the other Party shall cooperate in such filing or
notification and shall execute all documents reasonably required in
connection therewith at the expense of the requesting party. The Parties
shall promptly inform each other as to the activities or inquiries of any
such governmental authority relating to this Agreement, and shall
cooperate to respond to an request for further information therefrom at
the expense of the requesting party.
16.14 Entire Agreement. This Agreement together with all Exhibits and the Stock
Agreement of even date herewith contains the entire agreement between the
Parties with respect to the subject matter hereof. Except for the
Nondisclosure Agreement previously entered into between the Parties, any
prior agreement, arrangement or undertaking, whether oral or in writing is
hereby superseded.
16.15 Beneficiaries. No person, other than Schering or Collateral and their
permitted assignees hereunder, shall be deemed an intended beneficiary
hereunder or have any right to enforce any obligation of this Agreement.
16.16 Affiliates of Parties. Each Party may perform its obligations hereunder
personally or through one or more Affiliates and shall be responsible for
the performance of such obligations, and any liabilities resulting
therefrom. Neither Party shall permit any of its Affiliates to commit any
act (including any act of omission) which such Party is prohibited
hereunder from committing directly.
38
16.17 Compliance with Laws. In exercising their rights under this Agreement, the
parties shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this Agreement.
16.18 Patent Marking. Schering agrees to ▇▇▇▇ and have its Affiliates and
Sublicensees ▇▇▇▇ all Products sold pursuant to this Agreement in
accordance with the applicable statute or regulations relating to patent
marking in the country or countries of manufacture and sale thereof.
16.19 Ambiguities. Ambiguities, if any, in this Agreement shall not be construed
against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
THE REMAINDER OF THIS PAGE INTENTIONAL LEFT BLANK
39
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.
SCHERING AKTIENGESELLSCHAFT COLLATERAL THERAPEUTICS,
INC.
By: /s/ illegible By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------- ----------------------------
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇,
Its: Member of Executive Board of Directors President
--------------------------------------
By: /s/ illegible By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------ ----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Its: Vice Chairman Secretary
------------------------
[SIGNATURE PAGE TO COLLABORATION LICENSE
AND ROYALTY AGREEMENT]
EXHIBIT A
[LETTERHEAD OF UNIVERSITY OF CALIFORNIA]
March 19, 1996
Schering AG
c/o Berlex Biosciences
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re:
UC Case No.
Ladies and Gentlemen:
This letter will serve to confirm our agreement that, recognizing the
sublicense being granted by Collateral Therapeutics, Inc. ("Collateral") to
Schering AG ("Schering") under the Exclusive License Agreement dated September
27, 1995 (the "License Agreement"), the undersigned (1) will send Schering a
copy of any Notice of Default (as defined in Section 9.1 of the License
Agreement) sent to Collateral and (2) will permit Schering to cure any such
default under the License Agreement on behalf of Collateral which is capable of
being cured.
THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA
By: /s/ illegible
-----------------------------------
(Authorized Signatory)
Title: Licensing Manager
--------------------------------
Approval as to legal form /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ 3/20/96
-------------------------------------- -------
P. ▇▇▇▇ ▇▇▇▇▇▇▇, President Counsel Date
Office of Technology Transfer
University of California
EXHIBIT B
[LETTERHEAD OF COLLATERAL THERAPEUTICS, INC.]
May 6, 1996
HAND DELIVERED
Schering AG
c/o Berlex Biosciences
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: U.C. Agreement Control Number 96-04-0203
Ladies and Gentlemen:
This letter will confirm our agreement that Collateral Therapeutics will
use its commercially reasonable efforts to obtain the agreement of The Regents
of the University of California under the Exclusive License Agreement dated
September 27, 1995, that upon termination of such Agreement for any reason, the
sublicenses granted to Schering AG under the Collaboration, License and Royalty
Agreement dated May 6, 1996, will not be cancelled but will be assigned to The
Regents.
If the Regents of the University of California do not agree to such a
request within ninety (90) days of the Effective Date of this Agreement,
Collateral hereby consents to Schering approaching The Regents of the University
of California directly to attempt to obtain such assurance.
Very truly yours,
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
------------------------------
▇▇. ▇▇▇▇ ▇▇▇▇▇, President
EXHIBIT C
COLLATERAL THERAPEUTICS INC.
Budget Review - Annualized
Research Admin. Total
-------- ------ -----
Executive, Administrative
Regulatory, Research &
Development Salaries and
Related Employment Benefits *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board $15,000 *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Other, Supplies *** *** ***
Equipment Leases *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Research & Development *** *** *** ***
--- -------- -------- -------
Total *** *** ***
-------- -------- -------
-Percent *** *** ***
Research & Development: *** *** *** ***
--- -------- -------- -------
Grand Total *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D.
------------------------------ --------------------------------
By Schering AG By Collateral Therapeutics, Inc.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Exhibit 5.1
CTI8879A COLLATERAL THERAPEUTICS, INC.
Phase One First 6 Month Budget
Research Admin. Total
-------- ------ -----
Executive, Administrative,
Regulatory, Research &
Development Salaries
and Related Benefits *** *** ***
-------- -------- -------
Research & Development*
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Supplies Utilities Etc *** *** ***
Other Misc. *** *** ***
Equipment Leasing *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Total 1996 Budget *** *** ***
-------- -------- -------
-Percent *** *** ***
Less: Collateral Funding ***
-------
Shering AG Funding (Net) ***
-------
-------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
CTI8879A COLLATERAL THERAPEUTICS INC. -- 6 Mos. 1996
Exhibit 5.1
Research Admin. Total
-------- ------ -----
President & CEO *** *** ***
Vice President COO & CFO *** *** ***
Vice President - Reg. *** *** ***
Vice President - Admin/R&D Svs. *** *** ***
Vice President - R & D *** *** ***
Vice President - Medical *** *** ***
Director - Regulatory *** *** ***
Director - Accounting *** *** ***
Director - R & D *** *** ***
Administration - Regulatory *** *** ***
Administration - Clinical *** *** ***
Administration - Executive *** *** ***
Administration - General *** *** ***
Administration - Accounting *** *** ***
Administration - Reception *** *** ***
Accured & Deferred Salaries *** *** ***
Employment Benefits *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Research & Development
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Supplies Utilities Etc *** *** ***
Other Misc. *** *** ***
Equipment Leasing *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Total 1996 Budget *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
CTI8893 COLLATERAL THERAPEUTICS INC.
Budget Review - Annualized
Research Admin. Total
-------- ------ -----
Executive, Administrative,
Regulatory, Research &
Development Salaries and
Related Employment Benefits *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Other, Supplies Utilities Etc *** *** ***
Equipment Leases *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Research & Development *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
-Percent *** *** ***
Research & Development: *** *** ***
-------- -------- -------
Grand Total *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
CTI8893 COLLATERAL THERAPEUTICS INC.
Budget Review - Annualized
Research Admin. Total
-------- ------ -----
President & CEO *** *** ***
Vice President COO & CFO *** *** ***
Vice President - Reg. *** *** ***
Vice President - Admin. *** *** ***
Vice President - R & D *** *** ***
Vice President - Medical *** *** ***
Director - Regulatory *** *** ***
Director - Accounting *** *** ***
Director - R & D *** *** ***
Administration - Regulatory *** *** ***
Administration - Clinical *** *** ***
Administration - Executive *** *** ***
Administration - General *** *** ***
Administration - Accounting *** *** ***
Administration - Reception *** *** ***
Employment Benefits *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Professional Fees & Services:
Legal Counsel *** *** ***
Patent Counsel *** *** ***
Public Accountants *** *** ***
Scientific Advisory Board *** *** ***
Licensing Fees & Expenses *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Support Services:
Office Rent *** *** ***
Travel Expenses *** *** ***
Other, Supplies Utilities Etc *** *** ***
Equipment Leases *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
Other Research & Development *** *** ***
-------- -------- -------
Total *** *** ***
-------- -------- -------
-Percent *** *** ***
Research & Development - Berlex *** *** ***
-------- -------- -------
Grand Total *** *** ***
-------- -------- -------
-------- -------- -------
-Percent *** *** ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Exhibit D
Expenses for COGS
Expenses included in, but not limited to, the *** manufacturing cost:
1. Direct materials
2. Salaries, wages and benefits of personnel directly engaged in
manufacturing the product.
3. Overhead associated with direct production, including, but not limited to:
a. Depreciation, leasehold improvements and equipment leases
b. Repair and maintenance
c. Manufacturing supplies
4. Reasonable allocable General manufacturing overhead,
a. Manufacturing Administration
b. Materials Management
c. Validation and Calibration
d. Documentation and Compliance
e. Quality Assurance/Quality Control
f. Technical Services
g. Regulatory Compliance
5. Reasonable allocable General facilities overhead, including, but not
limited to:
a. Rent, utilities, property tax, insurance and other assigned general
facilities' costs
b. Purchasing
c. Environmental Health and Safety
d. Management Information Systems
e. Engineering
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
6. Royalties paid to Third Parties for the manufacturing process of the
Initial Product or Products.
Exhibit E
Qualified Gene Criteria
(1) Efficacy in the pig chronic myocardial ischemia model
o Documented transgene expression in the heart (2 weeks)
o Significant improvement in function (systolic wall thickening
assessed by transthoracic echocardiography) and perfusion (contrast
echocardiography) 2 weeks following gene transfer
o Functional data should be sufficiently similar to results obtained
with FGF-5 to warrant further preclinical development
(2) Acceptable safety profile
o No evidence for presence of extracardiac transgene expression in
specific target organs from technically acceptable experiments
o No evidence of inflammation using histologic and immunocytochemical
criteria
(3) Proprietary position
o Ownership of or license for pending or issued patent
Exhibit F
RESEARCH AND DEVELOPMENT PLAN
Research Plan: Major Milestone Years 1 - 5
Year 1
o ***
o ***
Year 2
o ***
o ***
o ***
o ***
Year 3
o ***
o ***
o ***
o ***
Year 4
o ***
o ***
o ***
o ***
***
***
o ***
o ***
Year 5
o ***
o ***
o ***
o ***
***
o ***
o ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Exhibit 5.1
First Phase One Plan and Budget
Specific Studies to be Performed
***
***
***
***
***
o ***
***
o ***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
***
***
o ***
***
o ***
***
o ***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
SUMMARY
Critical Studies for First Six (6) Months and Budget
STUDY BUDGET*
----- -------
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
------
Total ***
* ***
+ Funding to be determined following review of study proposal. Not included
in total.
/s/ ▇▇▇▇ ▇. ▇▇▇▇, Ph.D.
---------------------------- ----------------------------------
By Schering AG By Collateral Therapeutics, Inc.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.