EXHIBIT 10.15
DATED 29 MAY, 2002
SCHERING AKTIENGESELLSCHAFT (1)
- and -
PHARMION GMBH (2)
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DISTRIBUTION AND DEVELOPMENT AGREEMENT
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PAGE INDEX
1. DEFINITIONS 4
2. APPOINTMENT OF PHARMION 11
3. EXISTING MARKETING AUTHORIZATIONS 13
4 DEVELOPMENT AND COMMERCIALIZATION EFFORTS IN TERRITORY 15
5. COORDINATION OF DEVELOPMENT; ADDITIONAL INDICATIONS 18
6. CONSIDERATION 21
7. MANUFACTURE AND SUPPLY OF PRODUCT 24
8. PRODUCT RETURNS 28
9. FORECASTING AND ORDERING 29
10. PACKAGING AND LABELING; USE OF NAME 32
11. QUALITY OF PRODUCT 33
12. DELIVERY 36
13. SUPPLY PRICE 39
14. ADVERSE REPORTS; COMPLAINTS 42
15. UNDERTAKINGS OF PHARMION; IMPROVEMENTS 43
16. UNDERTAKINGS AND WARRANTIES OF SCHERING 46
17. RIGHT OF FIRST REFUSAL 48
18. CONFIDENTIALITY 48
19. INDEMNITIES AND INSURANCE 50
20. DURATION AND ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. CONSEQUENCES OF ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. RIGHTS AND REMEDIES 54
23. FORCE MAJEURE 54
24. NOTICE 55
25. ENTIRE AGREEMENT; VARIATIONS 56
26. SEVERANCE OF TERMS 56
27. PUBLICATIONS/ PRESS RELEASES 57
28. PARTNERSHIP; AGENCY 57
29. ASSIGNMENT 57
30. AUDIT RIGHTS 57
31. NOVARTIS AGREEMENT 59
32. GOVERNING LAW AND JURISDICTION 59
32. GUARANTEE 60
DISTRIBUTION AND DEVELOPMENT AGREEMENT
THIS AGREEMENT is made the 29th day of May 2002
BETWEEN:
(1) SCHERING AKTIENGESELLSCHAFT, a company registered in Germany and having
its principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("Schering")
and
(2) PHARMION GMBH, a company registered in Switzerland and having its
Registered Office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
("Pharmion")
RECITALS:
(A) Schering is the owner or licensee of patents and trade marks relating
to the Product (as hereinafter defined), and is currently marketing and
selling the Product for the Initial Indication (as hereinafter
defined), through an affiliated company, in North America.
(B) Schering is the holder or is entitled to be registered as the holder of
Marketing Authorizations (as hereinafter defined) for the Product in
various countries of the Territory (as hereinafter defined), and is in
a position to supply Product to Pharmion for distribution in the
Territory on the terms hereinafter described.
(C) Pharmion's personnel have expertise and experience in the development,
registration, marketing and distribution of pharmaceutical products in
the Territory.
(D) Pharmion wishes to obtain rights to the Marketing Authorizations and to
distribute the Product under the Trade Marks (as hereinafter defined)
for the Initial Indication, and to develop, obtain Marketing
Authorizations for and distribute the Product under the Product Patents
for Additional Indications (both as hereinafter defined) in the
Territory, and Schering is willing to grant such rights to Pharmion and
to supply Pharmion's requirements of the Product, all on the terms and
conditions set out in this Agreement.
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(E) Schering and Pharmion have, today, entered into a Sales Representation
Agreement as an interim measure pending a timely resolution of certain
manufacturing supply issues, and this Agreement is intended to
automatically come into effect if such issues can be resolved during
the term of the Sales Representation Agreement.
IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1. In this Agreement, the following terms shall have the following
meanings unless the context requires otherwise:
"ACS INDICATION" means the treatment of Acute Coronary Syndrome.
"ADDITIONAL INDICATION" means any indication other than the Initial
Indication, including (without limitation) the ACS Indication.
"AFFILIATE" means any corporation, firm, partnership, organization or
entity that directly or indirectly controls, is controlled by or is
under common control with such entity. For the purpose of this
definition the term "control" means direct or indirect ownership of at
least fifty percent (50%) of the outstanding equity voting stock (or
such lesser percentage which is the maximum allowed to be owned by a
foreign corporation in a particular jurisdiction) of an entity.
"AGENCY" means any governmental authority in the Territory responsible
for granting approvals and clearance for marketing and sale of the
Product.
"AVENTIS" means Aventis Behring GmbH
"AVENTIS SUPPLY AGREEMENT" means the Manufacturing and Supply Agreement
entered into on July 27, 2001 by Aventis and Schering for the
Manufacture and supply of Product to Schering - a copy of which
agreement, as the same exists on the date hereof, has been provided to
Pharmion - and any amendments to such Manufacturing and Supply
Agreement.
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"BULK" means the purified drug concentrate (PDC) as active ingredient
in a form intended for further processing into Product for sale in the
Territory or the Schering Territory.
"BUSINESS DAY" means every day except a Saturday, Sunday or a day which
is a statutory holiday in Germany, Switzerland or in the United States.
"CHIRON" means Chiron Corporation.
"CHIRON LICENSE AGREEMENT" means the Schering-Chiron Hirudin License
Agreement entered into between Chiron and Schering dated August 7/14,
2001 and effective from October 2, 2001.
"COMMERCIALLY REASONABLE EFFORTS" means efforts by a Party consistent
with the prudent exercise of business judgments which shall not be less
than for the development, manufacturing, registration or
commercialization (as the case may be) of such Party's own
pharmaceutical products of similar commercial potential.
"COMPONENT" means any excipients, raw materials and packaging materials
used in the Manufacturing and/or packaging of the Product.
"CONTROL" OR "CONTROLLED" means possession of the ability to grant a
license or sublicense of patent rights, know-how, Data or other
intangible rights as provided for herein without violating the terms of
any agreement or other arrangement with any third party.
"DATA" means information in the possession and Control of Schering
relating to the Product and the Marketing Authorizations and necessary
or desirable for the marketing and sale of the Product in the Territory
or for the clinical development of the Product for Additional
Indications in the Territory including, without limitation, any such
information relating to the pre-clinical and clinical testing and
approval of the Product, any adverse patient reactions to the Product
and any toxicological, pharmacological or pharmacokinetic studies
relating to the Product.
"DEVELOPMENT AND MARKETING COMMITTEE" means the Development and
Marketing Committee described in Section 5.1.
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"DEVELOPMENT PLAN" means an outline proposal for the development of the
Product for an Additional Indication, to be submitted to the
Development and Marketing Committee in accordance with Section 5.3.
"EFFECTIVE DATE" means the first day of the calendar month following
the month in which the Manufacturing Milestone Date occurred, provided
that the Manufacturing Milestone Date occurs during the term of the
Interim Agreement.
"EMEA" means The European Agency for the Evaluation of Medical
Products.
"EXISTING MARKETING AUTHORIZATIONS" means those Marketing
Authorizations held by or on behalf of Schering and listed in Schedule
3 to this Agreement.
"FDA" means the United States Food and Drug Administration.
"FINISHED GOODS" means Product packaged and ready for sale to the
ultimate customer.
"FIRM ORDER" shall have the meaning set forth in Section 9.2.
"GMP" means current good manufacturing practices as established by the
relevant Agency in each country within the Territory in which the
Product is then being marketed or sold.
"IMPROVEMENTS" means all improvements, modifications or adaptations to
any part of the Data made or acquired by either Party during the term
of this Agreement but excluding any clinical data generated by a Party
and any data and improvements relating to the formulation or
Manufacture of the Product.
"INCEPTION DATE" means the first day of the calendar month following
the month in which the Interim Agreement is executed and delivered.
"INITIAL INDICATION" means the treatment of heparin-induced
thrombocytopenia type II.
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"INTERIM AGREEMENT" means the Interim Sales Representation Agreement
between Schering and Pharmion executed concurrently with this Agreement
on the date hereof.
"LONG-RANGE FORECAST" has the meaning set out in Section 9.1 herein.
"MANUFACTURE" OR "MANUFACTURING" means all the operations required to
manufacture, test, release, handle, store, ship and destroy the
Product, or any step thereof, as the case may be.
"MANUFACTURER" means (i) initially Aventis and (ii) any successor
entity chosen by Schering for Manufacturing and Packing the Product for
supply in the Territory in accordance with the procedures contemplated
by Section 7.6 hereof.
"MANUFACTURER'S SUPPLY PRICE" means the amount(s) payable by Schering
to the Manufacturer with respect to Product.
"MANUFACTURING MILESTONE DATE" means the date on which Schering shall
have delivered to Pharmion written notice signed by its Head of
Production that Aventis has produced three standard batches of Bulk
that it is then holding as safety stock.
"MARKETING AUTHORIZATIONS" means any approvals, product and/or
establishment licenses, marketing authorizations or registrations of
any federal, state or local Agency necessary for the commercial
manufacture, use, storage, import, export, transport, marketing or sale
of the Product in any country or regulatory jurisdiction of the
Territory.
"NET SALES" means the amount invoiced by Pharmion or Schering as the
case may be for sales of Product to a third party less deductions for:
(i) shipping, freight charges or insurance paid; (ii) sales and excise
taxes and any other direct taxes paid by the selling Party; (iii)
customs duties and surcharges and other governmental charges incurred
in connection with the exportation and importation of such Product;
(iv) rebates, premiums, non-cash rebates or allowances actually
incurred; (v) quantity discounts, cash discounts or chargebacks
actually incurred in the ordinary course of business in connection with
the sale of such Product; and (vi) allowances or credits actually
incurred to customers, not in excess of the selling price of such
Product on
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account of governmental laws, written regulations or code, price
differences, rejection, outdating, spoiled, damaged, recalls or returns
of such Product.
"PACK" OR "PACKING" means the operations which comprise the labeling
and packaging of the Product or any step thereof, as the case may be.
"PACKAGING" means the packaging in which the Product is supplied by
Schering to Pharmion.
"PARTIES" means Schering and Pharmion and "PARTY" means either of them
as the context indicates.
"PATENTS" means patents that relate to the Product owned or Controlled
by Schering as of the Effective Date which are listed in Schedule 1 to
this Agreement, and any continuations, continuations-in-part,
divisions, provisionals or any substitute applications, any patent
issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplemental patent
certificate) of any such patent, and any confirmation patent or patent
of addition based on any such patent, and all foreign counterparts of
any of the foregoing.
"PROCESS PATENTS" means those Patents that relate to the Manufacture or
formulation of the Product.
"PRODUCT" means pharmaceutical products containing the recombinant
hirudin analogue known as Lepirudin sold under the Trade ▇▇▇▇ and more
particularly identified in the Marketing Authorizations.
"PRODUCT MARKETING MATERIALS" means all marketing materials used with
respect to the Product in the Territory that are in existence as of the
Effective Date, in any form, to the extent such materials are in the
possession and Control of Schering and are legally permitted to be
transferred to Pharmion including, without limitation, all advertising
materials, product data, price lists, mailing lists, customer lists,
sales materials, marketing information, promotional materials,
scientific and commercial publications, market research, artwork for
the production of packaging components, television masters and other
materials associated with the Product in the Territory. Product
Marketing Materials shall also include marketing materials developed by
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Schering during the term of the Agreement for use in connection with
the sale of the Product in the Schering Territory or developed by
Pharmion for use in connection with the sale of the Product in the
Territory.
"PRODUCT PATENTS" means all Patents other than Process Patents.
"QUALIFIED PERSON" shall mean the qualified person working for the
Manufacturer who is responsible for batch release (as described in
detail in Directive 75/319/EEC and 2001/83/EC) as set out in Section
12.5.
"RECAPTURE AMOUNT" means, at any point in time, the aggregate amount of
payments made by Pharmion from time to time to Schering pursuant to
Sections 6.1, 6.2 and 6.3 hereof or pursuant to Section 6.1 and 6.2 of
the Interim Agreement.
"RECOGNIZED AGENT" shall mean an entity other than an Affiliate of
Pharmion through which Pharmion regularly distributes and sells
products in a particular region and who has been appointed in
accordance with the terms of Section 3.5 of this Agreement.
"REQUESTED ORDER" shall have the meaning set out in Section 9.2.2 of
the Interim Agreement.
"SCHERING TERRITORY" means the United States of America and Canada.
"SEMI-FINISHED GOODS" shall mean the Product finished and filled in
unlabelled vials.
"SKU" means stock keeping unit, the unit of finished packs as prepared
for distribution to the market.
"SPECIFICATIONS" means all Manufacturing, Packing, quality assurance
and quality release specifications, standard test methods and sampling
plans as approved by any Agency.
"SUPPLY INTERRUPTION EVENT" shall be deemed to have occurred upon the
completion of either (i) two (2) consecutive quarters or (ii) any three
(3) quarters in a period of seven (7) consecutive quarters, in each
case during which Pharmion has received
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less than fifty percent (50%) of the amount of Finished Goods or
Semi-Finished Product for which Pharmion had placed a Firm Order,
without regard to the limitation on quantities set out in Sections 9.5
or the application of Sections 7.3, 7.4 and 7.6.
"TECHNICAL ASSISTANCE AGREEMENT" means the Technical Assistance
Agreement entered into by Schering and Aventis as described in Section
2.3 of the Manufacturing and Supply Agreement.
"TERRITORY" means all countries of the world except the United States
of America and Canada.
"TRADE MARKS" means the trade marks, including registrations and
applications for registration thereof (and all renewals, modifications
and extensions thereof), listed on Schedule 2 attached hereto, and used
in connection with the Product in the Territory.
1.2. Construction and Interpretation
In the interpretation of this Agreement:
1.2.1 the headings are for convenience only and shall not affect the
interpretation hereof;
1.2.2 references in this Agreement to Sections, Schedules and
Exhibits are to the sections of, and schedules and exhibits
to, this Agreement;
1.2.3 unless the context otherwise requires the singular shall
include the plural and vice versa, reference to any gender
shall include reference to the other gender, and references to
persons shall include bodies corporate, unincorporated
associations and partnerships; and
1.2.4 this Agreement includes the Schedules and Exhibits hereto.
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1.3 Effectiveness of this Agreement
This Agreement shall become effective upon, and only upon, the
occurrence of the Manufacturing Milestone Date during the term of the
Interim Agreement (including any renewal term). If such condition is
met, then this Agreement shall become effective on the Effective Date
and the Interim Agreement shall terminate and be of no further force
and effect from and after the Effective Date. If the term of the
Interim Agreement (including any renewal term) expires prior to the
occurrence of the Manufacturing Milestone Date, then this Agreement
shall never come into effect and neither Party shall have any rights or
obligations under this Agreement.
2. APPOINTMENT OF PHARMION
2.1 Subject to the terms and conditions of this Agreement, with effect from
the Effective Date, Schering hereby grants to Pharmion the exclusive
right:
2.1.1 to purchase the Product from Schering for resale in the Territory;
2.1.2 to advertise, market, promote, distribute, use and sell the Product
under and by reference to the Trade Marks and under the Patents in the
Territory for the Initial Indication and for any Additional Indications
that are approved by the Development and Marketing Committee and
covered by an appropriate Marketing Authorization in the country of
sale;
2.1.3 to acquire the Existing Marketing Authorizations within the Territory
as contemplated by Section 3, and to use the Data to apply for, obtain
and or maintain Marketing Authorizations for the Product in the Initial
Indication in all countries in the Territory which are in the European
Union and in such other countries in the Territory in which it is
commercially reasonable for Pharmion to do so.
2.1.4 to develop the Product under the Product Patents, Data and Improvements
for any Additional Indications approved by the Development and
Marketing Committee and to apply for and obtain Marketing
Authorizations for the sale of the Product for such Additional
Indications in such countries within the Territory in which Pharmion
deems it commercially reasonable to do so.
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2.1.5 to use the Product Marketing Materials in connection with the
advertising, marketing, promotion and distribution of the Product in
the Territory.
2.2 Pharmion will not seek customers or establish any branch or
distribution depot for the Product in any country which is outside the
Territory. Pharmion will not supply the Product to any customer outside
the Territory or to any customer within the Territory for resale
outside the Territory.
2.3 Subject as hereinafter provided, Schering will not, during the term of
the Agreement:
2.3.1 seek customers or establish any branch or distribution depot
for the Product in any country which is within the Territory;
or
2.3.2 supply the Product in the Territory for use or resale in the
Territory to any person other than Pharmion, unless Schering
(a) receives orders for such supply which have not been
directly or indirectly solicited by or on behalf of Schering
and (b) Schering is then advised by its counsel that it is
obliged to respond to such unsolicited orders and supply
Product in relation to such orders to comply with European
Union or national or international competition law or other
legislative requirements. In the event that Schering believes
that the foregoing criteria shall have been met as to any
order, it shall promptly so advise Pharmion, identifying the
purchaser and the quantity of Product sold in connection with
such transaction.
2.4 From and after the Effective Date, Schering will transfer or procure
the transfer to Pharmion of such elements of the Data, as well as the
then current Product Marketing Materials, which Pharmion may request
from time to time and that are not otherwise contained in the materials
transferred as part of the Existing Marketing Authorizations
transferred in accordance with Section 3.1, all such materials having
been provided by Aventis. During the term of this Agreement, each Party
shall, upon the reasonable request of the other, transfer such data
developed by such Party as comprise Improvements, as well as such new
Product Marketing Materials as have been developed by such Party. All
such transfers shall be coordinated through the Development and
Marketing Committee, and each Party shall have the right, consistent
with Agency regulations in the countries within the Territory or the
Schering
12
Territory, to use the Product Marketing Materials developed by the
other within its own territory.
3. EXISTING MARKETING AUTHORIZATIONS
3.1 Schering will, at the expense of Pharmion, apply for a transfer of
ownership of the Existing Marketing Authorizations naming Pharmion or a
designated Recognized Agent as the new Marketing Authorization holder
in place of Schering. In those countries of the Territory where the
Marketing Authorizations have not yet been transferred to Schering,
Schering will, where practicable, procure that such Marketing
Authorizations are transferred directly to Pharmion or such designated
Recognized Agent. Schering will procure the transfer to Pharmion of all
available regulatory documentation relating to the Product for such
countries, such documentation to include paper files and, if available,
electronic versions to enable Pharmion to apply for and maintain
Marketing Authorizations in such countries. In cases where the
foregoing procedure is not reasonably practicable, such Marketing
Authorizations will first be transferred to Schering and then to
Pharmion or any such designated Recognized Agent. All costs incurred by
Schering in effecting transfer of Existing Marketing Authorizations
directly to Pharmion or such designated Recognized Agent (and not to
Schering) shall be reimbursed by Pharmion. The Parties hereby agree to
use Commercially Reasonable Efforts to complete the filing of the
transfer of the Marketing Authorizations within six (6) months of the
Effective Date. Schering, in collaboration, with Pharmion, will
establish a mutually acceptable communication and interaction process
to facilitate a smooth transfer of the Marketing Authorizations.
3.2 Until such time as each of the foregoing changes of holder is effected:
(i) Schering will maintain the Existing Marketing Authorizations, and
Schering shall bear all costs and expenses incurred in connection with
such maintenance, and (ii) Schering will appoint Pharmion or its
designated Recognized Agent as Schering's exclusive distributor or
subdistributor of the Product in the country within the Territory in
which such change of ownership has not yet been effected. For the
avoidance of doubt, the Parties agree that if Pharmion has not, within
three (3) months of the Effective Date for EMEA countries and six (6)
months of the Effective Date for non-EMEA countries, nominated
Recognized Agents who have been accepted by the Parties in accordance
with Section 3.5 below, then Schering may transfer (or direct Aventis
to transfer as appropriate) Existing Marketing Authorizations directly
to Pharmion, and Pharmion
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shall be responsible for their maintenance until such time as the
Recognized Agents are appointed.
3.3 Following the transfer of ownership, Pharmion shall keep Schering
informed of any changes to the Existing Marketing Authorizations which
Pharmion wishes to make or is required to make, and, except for changes
which Pharmion is required to make by an Agency in the Territory, no
changes to the Existing Marketing Authorizations will be made by
Pharmion or the Recognized Agents without the prior written consent of
Schering, such consent not to be unreasonably withheld or delayed.
However, in case an EMEA request disables the implementation of
requirements of an Agency in the Schering Territory, then Schering may
object to a change to the Existing Marketing Authorizations and the
Parties will negotiate in good faith to solve this issue. In the event
that a change requested by Pharmion and consented to by Schering or
required by an Agency should require Schering to make any process or
production changes, Schering shall make such change, and all
incremental costs incurred by Schering in making and implementing such
change shall be borne by Pharmion. However, if such change is also
required by an Agency in the Schering Territory, then Schering and
Pharmion shall share equally the cost of any such change. Schering will
keep Pharmion informed of Manufacturing or other changes to the Product
reportable to an Agency, including without limitation those changes
submitted to the U.S. or Canadian Agency and Pharmion shall be
responsible for making any necessary regulatory filings and obtaining
any necessary approvals of the resulting variations to the Marketing
Authorizations from Agencies, in accordance with the terms of Section
11.1 below.
3.4 Pharmion will not use the Data or the Marketing Authorizations which it
obtains except as required for the purposes of this Agreement and
within the Territory. Pharmion will not grant access to the Data to any
third party (other than a Recognized Agent, or a medical professional
or an investigator or another consultant who has entered into
confidentiality and other applicable obligations equivalent to those
set out in this Agreement and who requires access to such Data in
connection with the development or distribution of the Product) or
refer, or authorize reference, to its Marketing Authorization dossier
to enable it or any such third party to obtain a product license for
any products whatsoever.
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3.5 Schedule 5 to this Agreement sets forth a list of those persons
Pharmion wishes to appoint as Recognized Agents for the Product in each
country of the Territory - to the extent known as of the Inception
Date. If, after the Inception Date, Pharmion wishes to appoint further
Recognized Agents, the names of such Recognized Agents will be proposed
to the President of Specialized Therapeutics, Berlipharm, Inc. (an
Affiliate of Schering) who will respond to Pharmion within ten (10)
Business Days. In the event that, within such ten (10) Business Days,
Schering does not consent to the appointment of any such Recognized
Agent and Pharmion nevertheless wishes to proceed with such
appointment, the issue will be referred to both the CEO of Pharmion and
the President of Specialized Therapeutics, Berlipharm, Inc. for
resolution. In the event that within ten (10) Business Days of such
referral, such individuals cannot resolve the disagreement, Pharmion
shall have the right to appoint such Recognized Agent without the
consent of Schering unless Schering can demonstrate that such
appointment is likely to have a material adverse effect on Schering or
its interests in the Product.
3.6 Notwithstanding the appointment by Pharmion of the Recognized Agents,
it is expressly agreed between the Parties that Pharmion shall retain
full responsibility for the performance of all of its obligations under
this Agreement and shall be responsible for all acts or omissions of
the Recognized Agents in the same way as if such acts or omissions were
those of Pharmion itself. Schering shall have no obligation to
communicate with Recognized Agents but only with Pharmion.
4. DEVELOPMENT AND COMMERCIALIZATION EFFORTS IN THE TERRITORY
4.1 Pharmion's Development Efforts: Pharmion shall use Commercially
Reasonable Efforts to develop the Product for the Initial Indication
and for any Additional Indications approved by the Development and
Marketing Committee in all countries of the Territory where it is
commercially reasonable to do so, taking into account both the
commercial potential of the Product on a country-by-country basis and
Pharmion's reasonable judgment regarding the optimization of the sale
of the Product in the Territory taken as a whole (collectively, "the
Product's Commercial Potential"). Such efforts shall include pursuing
and obtaining Marketing Authorizations for the Product in all countries
of the Territory where it is commercially reasonable to do so, taking
into account the Product's Commercial Potential. Pharmion shall bear
all costs of obtaining and maintaining Marketing Authorizations for the
Product in the Territory.
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Within 180 days of the Effective Date, Pharmion agrees to provide
Schering with a written plan for obtaining Marketing Authorizations for
the Product in the Initial Indication in those countries in which
Existing Marketing Authorizations are not available, as required by
this Section 4.1.
Schering shall be notified in advance of any meeting related to the
Product between Pharmion or the Recognized Agents and any Agencies in
the Territory where, in the reasonable judgment of Pharmion, any such
meeting could have an adverse effect on the development or sale by
Schering of the Product in the Schering Territory or the Manufacture
and supply of the Product. Similarly, Pharmion shall be notified in
advance of any meeting related to the Product between Schering and any
regulatory agencies in the Schering Territory where, in the reasonable
judgment of Schering, any such meeting could have an adverse effect on
the development or sale by Pharmion of the Product in the Territory or
the Manufacture and supply of the Product.
4.2 If: (a) in any country of the Territory in which Existing Marketing
Authorizations exist, Pharmion either: (i) fails to use Commercially
Reasonable Efforts to market the Product, for reasons other than
Pharmion's judgment relating to the Product's Commercial Potential; or
(ii) decides to withdraw the Marketing Authorizations or (b) in any
country of the Territory in which Existing Marketing Authorizations do
not exist, Pharmion either: (i) decides not to apply for a Marketing
Authorization, for reasons other than Pharmion's judgment relating to
the Product's Commercial Potential, or (ii) having opted to apply for
such Marketing Authorizations pursuant to its written plan, fails to
proceed diligently with such applications, then in each such case
Pharmion shall first provide Schering with an appropriate written
notice and shall grant Schering a period of three months during which
the Parties - if Schering decides to take up the matter - will
negotiate in good faith and on commercially reasonable terms to
retransfer the rights to the Product in the respective country of the
Territory to Schering. If the Parties come to an agreement any such
country shall be removed from the Territory, and such country shall
thenceforth be part of the Schering Territory.
4.3 Pharmion's Marketing Efforts: Pharmion shall use Commercially
Reasonable Efforts to commercialize Product in each country of the
Territory in which a Marketing
16
Authorization is granted and in which it is commercially reasonable to
do so, taking into account the Product's Commercial Potential.
4.4 Non-Compete Obligation of Pharmion: Pharmion shall not develop,
manufacture, have manufactured, market or sell a direct thrombin
inhibitor for the Initial Indication (other than the Product) or any
other product for the Initial Indication in the Territory. Such
non-compete obligation shall expire, as far as any countries of the
European Union are concerned, five years from the Effective Date of
this Agreement.
4.5 Non-Compete Obligation of Schering: Schering shall not develop,
manufacture, have manufactured, market or sell a direct thrombin
inhibitor for the Initial Indication or any other product for the
Initial Indication in any country of the Territory (for as long as such
country is part of the Territory), provided however, that,
notwithstanding the foregoing, Schering may at any time:
(i) manufacture, have manufactured, market or sell a product which
includes, as an approved indication, the Initial Indication,
where such product is developed, manufactured, marketed or
sold by Schering only for indications other than the Initial
Indication; and
(ii) develop, manufacture, have manufactured, market or sell any
product (including a direct thrombin inhibitor) for the
Initial Indication where such product is acquired by Schering
from a third party, either by way of a corporate acquisition
or by way of a product acquisition where the product which
competes with the Product accounts for less than twenty-five
percent (25%) of the value of the assets to be acquired by
Schering.
The non-compete obligation set out in this section shall expire, as far
as any countries of the European Union are concerned, five years from
the Effective Date of this Agreement.
4.6 Pharmion and Schering shall cooperate with one another to keep the
other Party informed of any significant interface or communication with
the Agencies which might adversely affect Schering's or Pharmion's or
the Recognized Agents' activities under this Agreement. With respect to
any country in the Territory in which the Existing Marketing
Authorization has not yet been transferred to Pharmion or a designated
17
Recognized Agent, Schering shall consult with Pharmion on the content
and tenor of any significant communication to or from the Agencies
regarding the Product in the Territory prior to such communication and
before initiating or responding to the Agencies.
5. COORDINATION OF DEVELOPMENT EFFORTS; DEVELOPMENT FOR ADDITIONAL
INDICATIONS
5.1 Development and Marketing Committee: Within thirty (30) days of the
Effective Date, Schering and Pharmion will establish a Development and
Marketing Committee. The Development and Marketing Committee will be
composed of six (6) members, three representatives appointed by
Schering and three representatives appointed by Pharmion. Such
representatives will include individuals with expertise in areas such
as clinical development, manufacturing, marketing and regulatory
affairs. Either Party may replace any or all of its representatives at
any time upon written notice to the other Party. The Development and
Marketing Committee will meet (in person, telephonically or via
videoconference) at least quarterly or more frequently if reasonably
requested by either Party.
5.2 Functions of Development and Marketing Committee: The Development and
Marketing Committee shall: (a) exchange information on the development
of the Product in the Schering Territory and the Territory, including
the exchange of information regarding ongoing and new clinical studies,
regulatory strategy and commercial development, Improvements and new
Product Marketing Materials; (b) discuss the need, desirability of,
structure and/or allocation of costs of any clinical studies or other
development efforts relating to the Product to be carried out in the
Schering Territory or the Territory; (c) discuss actions planned by
either Party in respect of the Product where such actions could
reasonably be expected to have a material impact on the Product in the
Territory or the Schering Territory; (d) discuss collaboration in the
development of the Product for indications other than the Initial
Indication; and (e) discuss in good faith other issues relating to the
marketing of the Product in the Territory and the Schering Territory.
5.3 Development of Product for Additional Indications: Neither Party shall
proceed with the development of the Product for an Additional
Indication without first submitting a Development Plan to the
Development and Marketing Committee. If a Development Plan submitted by
a Party is not unanimously approved by the members of the
18
Development and Marketing Committee, then the dispute shall be referred
to the CEO of Pharmion and the President of Specialized Therapeutics,
Berlipharm, Inc. for resolution. In the event that the dispute is not
resolved by these individuals, Schering shall have the final right to
decide whether either Party may proceed with such plan. Where the
development of a Product for an Additional Indication being sought
exclusively by Pharmion and approved by the Development and Marketing
Committee or by Schering requires process development or manufacturing
changes, Pharmion will reimburse Schering for all costs incurred by
Schering in making such changes unless the Parties have agreed to share
the costs of such development pursuant to Section 5.4 below, in which
case Schering's process development and manufacturing costs will be
included in the costs to be divided between the Parties.
5.4 Sharing of Cost and Data: Where Schering and Pharmion agree, prior to
the commencement of any clinical study or other study related to the
Product for the Initial Indication or an Additional Indication, that
the results of such study may be used for regulatory or commercial
purposes in both the Schering Territory and the Territory, the costs of
the study shall be shared by the Parties and the cost allocation,
structure, timelines and other details of the study shall be agreed
between the Parties in good faith taking account of the relative
importance and value to each Party of the study in question. The
results of and data generated by any study jointly funded by the
Parties will be owned by Schering but Schering hereby grants Pharmion
an exclusive license to use such results and data for the purpose of
obtaining Marketing Authorization for the Product in an Additional
Indication in the Territory or for such other uses in connection with
the sale of the Product for the Initial Indication and the Additional
Indication in the Territory as are permitted under the laws of the
particular country within the Territory for the term of and subject to
the conditions of this Agreement.
5.5 Funded Studies: In the event that either Party (a "Non Funding Party")
is unwilling to share in the cost of any clinical or other study to be
carried out by the other Party (the "Funding Party") and approved by
the Development and Marketing Committee with respect to the Product,
and such study generates data which the Funding Party reasonably
believes may be used by the Non Funding Party to obtain Marketing
Authorization for the Product in an Additional Indication in any
country(ies) of the Territory or the Schering Territory, as the case
may be, then the following provisions shall apply:
19
The Funding Party shall, by notice, require the Non Funding Party to
decide within ninety (90) days of receipt of a data package containing
a summary of the clinical data whether the Non Funding Party elects to
use such data for the purpose of obtaining Marketing Authorization for
the Product in an Additional Indication in any country(ies) of the
Territory or the Schering Territory as the case may be. If the Non
Funding Party so elects, then:
(i) the Parties shall agree upon a development programme for such
purpose and the Non Funding Party shall undertake to perform
the necessary work at its own cost and to reimburse the
Funding Party, by means of a royalty of 5% on Net Sales of the
Product for such Additional Indication, up to an amount equal
to 75% of the costs incurred by the Funding Party in
generating the clinical data made available by the Funding
Party to the Non Funding Party for the purpose of obtaining
Marketing Authorization for the Product in the relevant
Additional Indication in the Territory or the Schering
Territory as the case may be: and
(ii) the results of and data generated by any study funded by the
Funding Party will be owned by the Funding Party but such
Party shall grant to the Non-Funding Party an exclusive
license to use such results and data for the purpose of
obtaining Marketing Authorization for the Product in an
Additional Indication in the Territory or the Schering
Territory, as the case may be, or for such other uses in
connection with the sale of the Product for the Initial
Indication and the Additional Indication in such territory as
are permitted under the laws of the particular country within
such territory for the term of and subject to the conditions
of this Agreement..
5.6 Development for ACS Indication: In the event that Pharmion elects, at
its sole discretion and succeeds in obtaining approval of the Product
in any country of the Territory for the ACS Indication on the basis of
Data provided by Schering as of the Effective Date and without carrying
out pivotal clinical trials in the ACS Indication, then Pharmion shall
pay to Schering an additional royalty of 5% of incremental Net Sales of
Product resulting from Marketing Authorization for the ACS Indication.
Such incremental Net Sales will be deemed to be those Net Sales in
excess of the average monthly sales of Product in the six months prior
to approval of the Product for the
20
ACS Indication. Pharmion shall pay Schering a royalty of 7% (in lieu of
5%) on annual incremental Net Sales in excess of (euro)100 million (one
hundred million Euros).
6. CONSIDERATION
6.1 Purchase Price Payable on Execution: Pharmion shall pay to Schering via
wire transfer the sum of $10,000,000 (ten million dollars) as partial
payment of purchase price for the rights granted under this Agreement,
within five (5) Business Days of the Effective Date.
6.2 Purchase Price Payable on First Anniversary of Effective Date: Within
five (5) Business Days of the first anniversary of the Effective Date,
Pharmion shall pay to Schering via wire transfer the sum of $10,000,000
(ten million dollars) as additional purchase price for the rights
granted under this Agreement.
6.3 Additional Purchase Price: Pharmion shall make the following payments
to Schering as additional purchase price for the rights granted under
this Agreement, within twenty (20) Business Days after the end of the
calendar quarter in which the first achievement of each of the
corresponding events occurs (except in the case of (d) which shall be
paid within 60 days after the closing of the year described in such
clause):
(a) $2,000,000 (two million dollars) when Pharmion's cumulative
Net Sales reach $30,000,000 (thirty million dollars);
(b) $2,500,000 (two million, five hundred thousand dollars) when
Pharmion's cumulative Net Sales reach $40,000,000 (forty
million dollars);
(c) $2,500,000 (two million, five hundred thousand dollars) when
Pharmion's cumulative Net Sales reach $60,000,000 (sixty
million dollars);
(d) $2,500,000 (two million, five hundred thousand dollars) at the
end of the first calendar year in which the Manufacturer
Supply Price of Product sold during such year in the aggregate
represents 15% (fifteen percent) or less of Pharmion's Net
Sales during such calendar year.
Pharmion shall deliver to Schering, within twenty (20) Business Days
after the end of the calendar quarter in which the first achievement of
each of the foregoing events occurs (except in the case of (e) which
shall be delivered within 60 days after the closing of the year
described in such clause) a certificate of its chief financial officer
21
setting forth in reasonable detail the data relating to the particular
achievement giving rise to the payment of such additional purchase
price, together with the payment of the applicable additional purchase
price. Net Sales of Pharmion recorded under the Interim Agreement shall
be included in calculating the cumulative Net Sales described above.
Collectively, the payments described in the foregoing Sections 6.1, 6.2
and 6.3 shall be referred to as the "Purchase Price".
6.4 Partial Refund of Purchase Price. Upon the occurrence of a Supply
Interruption Event, Schering shall be obligated to continue to supply
Product to Pharmion to the extent provided in this Agreement unless
Pharmion exercises its right to be paid the Recapture Amount as
provided in clause (a) below.
(a) Payment of Recapture Amount. Unless Pharmion has exercised its
right to obtain Manufacturing rights as set forth in clause
(b) below, Pharmion shall have the right and option,
exercisable at any time within thirty (30) days following the
occurrence of a Supply Interruption Event, by delivering
written notice to Schering, to cause Schering to pay by wire
transfer to a bank account designated by Pharmion that portion
of the Recapture Amount as is calculated as set forth below:
Period of
Occurrence of Supply Interruption Event Percent of Recapture Amount
--------------------------------------- ---------------------------
Prior to 1st Anniversary of Inception Date 80%
Between 1st Anniversary and
2nd Anniversary of Inception Date 70%
Between 2nd Anniversary and
3rd Anniversary of Inception Date 60%
Between 3rd Anniversary and
4th Anniversary of Inception Date 45%
Between 4th Anniversary and
5th Anniversary of Inception Date 30%
Between 5th Anniversary and
6th Anniversary of Inception Date 10%
After 6th Anniversary of Inception Date 0%
22
The payment to Pharmion of the percentage of the Recapture
Amount shall be without prejudice to any other rights or
remedies that Pharmion may have against Schering under German
law under this Agreement, provided that Pharmion shall not be
entitled to any duplicative recovery against Schering for
damages based upon the same cause of action. Upon the payment
to Pharmion of the percentage of the Recapture Amount as set
forth above, this Agreement shall terminate and the provisions
of Section 21 (Consequences of Termination) shall thereafter
apply.
(b) Transfer of Manufacturing Rights. Unless Pharmion has
exercised its option to be paid the Recapture Amount as set
forth in clause (a) above, upon the occurrence and during the
continuation of a Supply Interruption Event, upon thirty (30)
days prior written notice from Pharmion to Schering, Schering
will permit Pharmion to Manufacture or have Manufactured the
Product for the term of this Agreement under the Patents and
by reference to the Trade Marks, and to supply such Product in
the Territory. Upon such grant of Manufacturing rights to
Pharmion, Schering will, if requested by Pharmion, provide to
Pharmion all such reasonable access to Manufacturing know-how,
Data and other information within the Control of Schering as
is reasonably necessary to enable Pharmion to Manufacture or
have Manufactured Product according to the requirements of the
Marketing Authorizations. Such know-how, Data and other
information will be treated as confidential unless the
exceptions specified in Section 18.1 apply. To the extent that
confidential Data, know-how or other information is required
to be disclosed by Schering for the purpose of Manufacturing
or having Manufactured the Product, Pharmion will adopt
measures to prevent unauthorized disclosure thereof and shall
enforce obligations of confidentiality on any employees or
other third parties to which any such confidential Data,
know-how or other information is disclosed. Any third party
manufacturer must be acceptable to Schering (such acceptance
not to be unreasonably withheld) and Schering must have the
right on reasonable notice to inspect the facilities where the
Product is being Manufactured. At such time as Pharmion's
designated manufacturer is capable of Manufacturing the
Product on behalf of Pharmion in accordance with the Marketing
Authorizations, (i) the requirement contained in Section 7.1
of Pharmion to purchase all of its requirements for the
Product from
23
Schering and (ii) the last sentence of Section 7.4 shall, in
each case, no longer apply.
6.5 Credit of Payments Under Interim Agreement. All payments made by
Pharmion to Schering under the Interim Agreement in respect of the
Initial Rights Acquisition Fee or any Renewal Rights Acquisition Fee as
defined in Sections 6.1 and 6.2 of the Interim Agreement shall be fully
credited against the payments of Purchase Price described in Sections
6.1 and 6.2 of this Agreement, applied in the sequence in which such
payments of Purchase Price are due.
6.6 Adjustment to Purchase Price. If during the term of the Interim
Agreement, deliveries of Product to Pharmion by Schering were
materially below the amounts requested by Pharmion through the
submission of Requested Orders or if during the term of the Interim
Agreement there were material disruptions in the timing of the delivery
of Product by Schering, but such short-falls in supply or disruptions
of supply were not at a level sufficient to constitute a Supply
Interruption Event under the provisions of this Agreement, the Parties
will negotiate in good faith a reduction of the payments of Purchase
Price called for by Section 6.1, 6.2 and 6.3, to take into account the
reduced market potential for the Product in the Territory.
7. MANUFACTURE AND SUPPLY OF PRODUCT
7.1 Requirements Purchase and Sale. Subject to Sections 7.3, 7.4, 7.5 and
7.6 below, Pharmion will purchase all of its requirements for the
Product from Schering during the term of this Agreement and Schering
will supply the Product to Pharmion in accordance with Section 12,
provided always that Pharmion fulfils its forecasting and ordering
obligations hereunder and subject always to the overall limitation on
quantities set out in Section 9.3.1 below. Schering will supply Product
to Pharmion as Finished Goods as long as Aventis is the Manufacturer
and as Semi-Finished Goods thereafter, at which point Pharmion will be
responsible for all further Packaging of the Product. Except as
otherwise provided herein, Schering will supply the Product exclusively
to Pharmion for sale in the Territory.
7.2 European Union Limitation. Pharmion's obligation to purchase all of its
requirements for the Product from Schering for sale in the European
Union shall expire on the fifth
24
anniversary of the Effective Date, unless Pharmion notifies Schering in
writing at least six (6) months prior to said fifth anniversary of its
intention to continue to purchase all of its requirements for such
Product for sale in the European Union from Schering for the remainder
of the term of this Agreement. If no such notice is given, Pharmion
shall purchase and Schering shall supply such quantities of the Product
for sale in the European Union as are agreed between them on an annual
basis and included in the Long-Range Forecast, as contemplated by
Section 9. For the avoidance of doubt, it is understood and agreed that
this subsection 7.2 shall apply only to Pharmion's requirements for the
European Union, and nothing contained in this subsection shall be
construed to limit Schering's obligation to supply Pharmion's
requirements of the Product for countries in the remainder of the
Territory.
7.3 If, for any reason during the term of the Agreement, Schering decides
to cease marketing of the Product in the Schering Territory and
therefore wishes to permanently cease supply of the Product in the
Territory, the following provisions shall apply:
7.3.1 Except in the circumstances described in Section 7.4 below, Schering
shall give Pharmion at least twenty-four (24) months' prior notice of
cessation of supply. Schering shall use Commercially Reasonable Efforts
during the twenty-four (24) month notice period to locate another
Manufacturer willing and able to supply the Product to Pharmion on
similar terms as to supply and price but not otherwise to those
contained in this Agreement. Schering does not warrant that such an
alternative Manufacturer will be found.
7.3.2 If Schering locates another Manufacturer as aforesaid, the terms and
conditions under which the Product will be Manufactured and supplied
will be negotiated in good faith between Pharmion and the said
Manufacturer, and such terms and conditions will be incorporated into
an agreement between Pharmion and the said Manufacturer.
7.3.3 If Schering fails, within a period of six (6) months from commencement
of the twenty-four (24) month notice period to locate another supplier
in accordance with the terms of Section 7.3.2 above or if Pharmion, on
reasonable grounds, rejects such alternative supplier (such decision to
be taken by Pharmion no later than four (4) weeks after receipt of
details of the proposed supplier from Schering), then Schering will
permit Pharmion, with effect from the expiry of the twenty-four (24)
month notice period
25
referred to above, to Manufacture or have Manufactured the Product for
the term of this Agreement under the Patents and by reference to the
Trade Marks, and to supply such Product in the Territory on the terms
set out in Section 7.6 below.
7.3.4 If Schering grants Manufacturing rights to Pharmion pursuant to Section
7.3.3, then Schering will, if requested by Pharmion, provide to
Pharmion all such reasonable access to Manufacturing know-how, Data and
other information within the Control of Schering as is reasonably
necessary to enable Pharmion to Manufacture Product according to the
requirements of the Marketing Authorizations. Such know-how, Data and
other information will be treated as confidential unless the exceptions
specified in Section 18.1 apply. To the extent that confidential Data,
know-how or other information is required to be disclosed by Schering
for the purpose of Manufacturing or having Manufactured the Product,
Pharmion will adopt measures to prevent unauthorized disclosure thereof
and shall enforce obligations of confidentiality on any employees or
other third parties to which any such confidential Data, know-how or
other information is disclosed. Any third party manufacturer must be
acceptable to Schering (such acceptance not to be unreasonably withheld
or delayed) and Schering must have the right on reasonable notice to
inspect the facilities where the Product is being manufactured.
7.4 Schering may permanently cease supplying the Product without giving the
twenty-four (24) months notice required under Section 7.3.1 if an
Agency in the Schering Territory requires the Product to be withdrawn
from a market in the Schering Territory for reasons of drug safety or
if Schering makes a commercially reasonable decision to withdraw the
Product from a market in the Schering Territory for reasons of drug
safety. In such event, Schering will give Pharmion such notice as is
reasonable in the circumstances. Schering will further notify Pharmion
of the reasons for the action and shall discuss in good faith whether
the concerns can be resolved in a reasonable manner. Following notice
by Schering pursuant to this Section 7.4, the provisions of Sections
7.3.2, 7.3.3 and 7.3.4 shall apply mutatis mutandis. In addition,
Schering may permanently cease supplying the Product on provision of
twelve (12) months notice in the event that, either: (i) the contract
Manufacturer then supplying Product to Schering agrees to continue
supply of Product to Pharmion on the same terms as Product was supplied
to Schering prior to termination; or (ii) such contract Manufacturer
agrees to novate the applicable supply agreement to Pharmion.
26
7.5 Aventis Supply Agreement: Pharmion has been provided with a copy of the
Aventis Supply Agreement, as the same exists on the date hereof, and
acknowledges that, as long as Product to be supplied by Schering to
Pharmion hereunder is Manufactured by Aventis and/or its authorized
sub-contractors, the supply of such Product is subject to the terms and
conditions of the Aventis Supply Agreement and any amendments thereto
which were consented to by Pharmion. Schering will promptly notify
Pharmion of any proposed amendment to the Aventis Supply Agreement
(whether proposed by Aventis or Schering) and provide Pharmion with the
text of any such proposed amendment and an opportunity to discuss the
changes contemplated by such proposed amendment with Schering and will
take any reasonable comments by Pharmion into account. Promptly after
the execution of any such amendment, Schering will provide a copy of
such amendment in its final form to Pharmion. Pharmion shall be deemed
to have accepted any such amendment unless it notifies Schering, within
ten (10) Business Days of its receipt of such amendment, of Pharmion's
decision to reject the provisions of such amendment.
7.6 Change of Manufacturer: Pharmion is aware that Schering intends, on or
before July 27, 2009 to transfer Manufacture of the Product from
Aventis to another Manufacturer. Schering shall only select a
Manufacturer that holds current Manufacturing authorisation with, or
holds an internationally recognized equivalent certificate to, the
standards detailed in European Community Directive 91/356/EEC. Schering
will notify Pharmion promptly and in any event at least twelve (12)
months before such transfer of Manufacture is expected to be completed
and the Parties will negotiate in good faith any necessary changes to
Sections 9 and 12 of this Agreement, and any procedures developed
thereunder. Pharmion acknowledges that the transfer of Manufacture from
Aventis to another Manufacturer is likely to result in changes to the
Manufacturing process and specifications of the Product, some of which
may require variations to the Marketing Authorizations. Such variations
to the Marketing Authorizations will be made by Pharmion at its own
expense. However, Schering will use Commercially Reasonable Efforts to
ensure that the change of Manufacturer will not affect the safety or
efficacy of the Product. The necessary steps for the improvement of the
Manufacturing process and the change of the Manufacturer will be
handled within the scope of variation reports submitted to the EMEA.
Schering will cooperate with Pharmion by providing the available
Manufacturing and other data required to support any required
application for variation of Marketing Authorizations. Pharmion is
obliged to submit the variations related to changes of the
Manufacturing
27
process/Manufacturer without delay to the Agencies in the countries
within the Territory in which it holds a Marketing Authorization and in
which it is marketing and selling the Product. Such change of
Manufacturer may also require changes to the forecasting and ordering
procedures listed in this Agreement, and the Parties agree to make any
reasonable changes to such procedures resulting from such change of
Manufacturer. Costs associated with such change of Manufacturer will be
borne by Schering except where such costs are associated with changes
requested by Pharmion or where additional work is required only in
order to comply with new regulatory or other requirements in the
Territory, in which case such costs will be reimbursed by Pharmion.
7.7 Safety Stock. Schering will request Aventis under the Aventis Supply
Agreement to produce and maintain two batches of Bulk in order to
reduce any gap in supply. Schering will allocate thirty percent (30%)
of such safety stock batches for production for Pharmion to alleviate a
gap in supply, and Pharmion will reimburse Schering 30,000 Euros per
year towards the cost of maintaining such safety batches.
7.8 Communication: Schering will keep Pharmion informed, on a regular
basis, of key developments in the plan for transfer of Manufacturing.
7.9 Absence of Claim. Except as otherwise provided in Section 6.4, where
Schering has complied with its obligations under this Section 7,
Pharmion shall have no claim or remedy against Schering arising from
Schering's cessation or failure to supply Product.
7.10 Chiron License. In case Pharmion takes over the full or partial
responsibility for the Manufacture of Product under the terms of this
Agreement Pharmion will use Commercially Reasonable Efforts to obtain a
license from Chiron under the Chiron License Agreement. In such
scenario, pending receipt by Pharmion of such a direct license from
Chiron, Schering will grant to Pharmion the appropriate sublicense
subject to the terms of the Chiron License Agreement.
8. PRODUCT RETURNS
8.1 Returns: Schering will accept returns of Product, in accordance with
Schering's standard policies, from entities within the Territory that
purchased the Product prior to
28
the Inception Date and which are returned prior to the First
Anniversary of the Inception Date (whether from Schering or Aventis)
and shall keep Pharmion informed, on a regular basis, of both the
volume of such returns and the customers from whom such returned
Product was obtained.
9. FORECASTING AND ORDERING
9.1 Long-Range Forecast: On the Effective Date, and on a monthly basis
thereafter, Pharmion shall furnish Schering with a rolling monthly
forecast of the quantities by SKU that Pharmion intends to order during
the succeeding twenty-one (21) month period (the "Long-Range
Forecast"). The Long-Range Forecast shall represent the most current
estimates for planning purposes but shall not be purchase commitments.
9.2 Firm Orders:
To the extent consistent with the volume limitations set forth in
Section 9.3 below, the first three (3) months of the Long-Range
Forecast, as updated monthly, shall be non-cancelable legally binding
commitments on the part of Schering to supply and on the part of
Pharmion to purchase, the quantity of Product by SKU as set forth in
the Long-Range Forecast (each such first 3 month commitment, a "Firm
Order"). Pharmion shall confirm monthly each Firm Order for the next
three month period in writing to Schering; provided, however, that
Pharmion's failure to deliver such confirmation shall not impact
Pharmion's obligation to purchase such quantities.
9.3 Variations of Long-Range Forecasts:
9.3.1 With every monthly update of the Long-Range Forecast, each of
months four through six can be increased or decreased without
regard to SKU by twenty percent (20%) of the quantity forecast
in the Long-Range Forecast of the previous month. Each of
months seven through eighteen can be increased or decreased
without regard to SKU by fifty percent (50%) of the quantity
forecasted in the Long-Range Forecast of the previous month.
Within each Long-Range Forecast period the quantity forecast
for any given month may not exceed three hundred and sixty
percent (360%) of the quantity forecast for the fourth month
of such Long-Range Forecast, always subject to the limitation
on
29
monthly order increase or decrease set out above in this
Section 9.3.1. Unless consented to in writing by the Parties,
each Firm Order must be for that quantity of Product that is
consistent with the variations permitted in the Long-Range
Forecast under this Section 9.3.1.
9.3.2 If Schering is informed by the Manufacturer that the
Manufacturer anticipates that it will be unable to meet any
Firm Order for Product, Schering shall promptly notify
Pharmion
9.4 Terms of Firm Orders: Any Firm Orders, or related purchase orders,
purchase order releases, confirmations, acceptances, advices and
similar documents submitted by either Party in conducting the
activities contemplated under this Agreement are for administration
purposes only and shall not add to or modify the terms of this
Agreement. To the extent of any conflict or inconsistency between this
Agreement and any such document, the terms and conditions of this
Agreement shall control as to a particular order, unless otherwise
agreed to in writing by the Parties.
9.5 Priority of Supply for the Initial Indication: Schering shall use
Commercially Reasonable Efforts to satisfy Pharmion's requirements for
Product with respect to the Initial Indication. However, Schering's
obligation to supply Product under this Agreement shall (in addition to
the other limitations included in this Section 9) at all times be
subject to the condition that Schering is able to obtain a sufficient
supply of such Product for sale both inside and outside the Territory
with respect to the Initial Indication. In the event that Product
available to Schering for such purpose is in short supply, Schering
shall notify Pharmion of such shortage as soon as possible. In the
event there is a short supply of Product with respect to the Initial
Indication and Schering cannot supply Product to Pharmion in an amount
equal to Pharmion's Firm Order, then Schering shall allocate Product
between the Schering Territory and the Territory in proportions
equivalent to the average of:
(i) the percentage of total units of Product sold with respect to
the Initial Indication in the Schering Territory and in the
Territory, and
(ii) the percentage of total Net Sales of Product sold with respect
to the Initial Indication in the Schering Territory and in the
Territory,
30
in each case during the six (6) months preceding such period of short
supply; provided, however, that a minimum of thirty percent (30%) of
the available Product will be allocated to each Party.
9.6 Priority of Supply for the Additional Indications: In the event that
Pharmion and Schering are marketing the Product for the Initial
Indication and either Pharmion or Schering markets the Product for an
Additional Indication (the "Marketing Party") such that Firm Orders
placed by the Marketing Party for supply of Product (together with
those placed by the other Party) would cause the Manufacturer to exceed
the normal maximum capacity of its Manufacturing facility (the "Output
Ceiling"), as determined by the written statement of such Manufacturer,
then
(a) Schering will allocate Product such that each of Pharmion and
Schering will receive an allocation of Product equal to the
average of the last two quarterly orders placed by such Party
for the Product with respect to the Initial Indication in its
territory, provided that such orders were made to reasonably
meet the market needs for the Initial Indication; and
(b) Schering will then allocate an amount equal to the excess of
the Output Ceiling over the aggregate amount of allocations
under Section 9.6(a) (the "Additional Indication Allocation")
to the Marketing Party; and
(c) In the event that Pharmion and Schering are each a Marketing
Party, Schering will then allocate the Additional Indication
Allocation between Schering and Pharmion on the basis of
proportionality of orders placed by each of the Parties for
the Product in the Additional Indication, subject to the
application of the calculation rules contained in the
provisions of Section 9.5 mutatis mutandis; and
(d) In the event that the Additional Indication Allocation is
insufficient to fulfill the remaining orders for the Product
(the "Unfulfilled Orders"), then Schering will notify Pharmion
of such fact as soon as possible and then (i) both Parties
shall together request the Manufacturer for an expansion in
capacity (in order to raise the Output Ceiling) sufficient to
satisfy Unfulfilled Orders for the ensuing three years and
(ii) in the event that the Manufacturer is unwilling to, or
cannot, increase the Output Ceiling, then the Marketing Party
with Unfulfilled
31
Orders shall have the right, at its own expense and risk, to
contract with another production company (the "Back-Up
Manufacturer") for the production and supply of Product to the
extent necessary to attract such manufacturer, and Section
7.3.4 shall apply mutatis mutandis to the extent Pharmion is
the Marketing Party seeking the Back-Up Manufacturer; and
(e) In the event that firm orders placed by both Pharmion and
Schering as a Marketing Party exceed the capacity of the
Back-Up Manufacturer to satisfy Unfulfilled Orders, Schering
will then allocate Product Manufactured by the Back-Up
Manufacturer to each Marketing Party on the basis of the
calculation rules contained in the provisions of Section 9.5
mutatis mutandis.
9.7 Output Ceiling. Schering hereby represents to Pharmion that to its
knowledge the Output Ceiling of Aventis on the Effective Date is
Finished Goods that equate to 90 kg of Bulk per annum. Schering shall
promptly notify Pharmion upon receipt of any notice from Aventis of any
change in the Output Ceiling. In addition, upon a change in the
Manufacturer contemplated by Section 7.6, Schering shall notify
Pharmion of the Output Ceiling of such Manufacturer when its
Manufacturing of Product commences on a commercial scale and thereafter
upon receipt of any notice from the Manufacturer of any change in the
Output Ceiling.
10. PACKAGING AND LABELING; USE OF NAME
10.1 Packaging and Labeling.
10.1.1 Pharmion shall be responsible for all costs of developing new
Packaging and labeling for the Product, provided, however,
that for obsolete inventory of Packaging and labeling
materials, such responsibility will only extend to obsolete
inventories sufficient for up to six (6) months, and shall
provide Schering all art work (from vendors approved by
Pharmion) and wording to be applied to each Product, which
shall be consistent with Agency approved labeling for the
Product in the Territory.
10.1.2 Pharmion shall be responsible for ensuring that all Packaging
and labeling, including, but not limited to, the package
make-up, package inserts and other elements relating to
Packaging as well as all promotional material, complies
32
with all laws and regulations applicable to such Packaging and
labeling in the Territory.
10.1.3 Pharmion shall provide the information required under this
Section 10 to Schering in advance of delivery requirements for
the Product set forth in this Agreement.
10.1.4 In case Schering or the Manufacturer requires changes to the
Packaging for technical reasons (e.g. changes to Packaging
technology or equipment), Schering shall bear all costs of
such changes and the obsolete inventory of Packaging and label
materials, if any, resulting therefrom.
10.1.5 After each change of Packaging material, twenty-five (25)
samples of each new Packaging material shall be provided to
Pharmion.
10.2 Name Use: Schering grants Pharmion a non-exclusive, royalty-free
limited right and sub-license, under Schering's rights pursuant to the
Aventis Supply Agreement, to use the "Aventis" name solely for the
purpose of identifying Aventis as the Manufacturer on all Packaging
materials, labels, inserts and any other printed matter included in the
Product to the extent required by law, regulations and codes of
practice in the Territory, on a country-by-country basis.
11. QUALITY OF PRODUCT
11.1 Manufacturing and Product Changes
11.1.1 PRODUCT CHANGES: Except for the Required Changes defined in
Section 11.1.2 below, Schering shall not make or allow to be
made any changes to the Product, Specifications, Manufacturing
or Packaging that would require variations to the Marketing
Authorization or notification in any country of the Territory,
without the prior written consent of Pharmion, such consent
not to be unreasonably withheld or delayed. Schering will use
Commercially Reasonable Efforts to ensure that the timing of
Schering's notice to Pharmion of any such change shall permit
adequate time for Pharmion to make any necessary regulatory
filings and obtain any necessary approval of the
33
corresponding variation to the Marketing Authorization thereof
from Agencies prior to the change being implemented.
11.1.2 REQUIRED CHANGES: The following changes shall constitute
Required Changes: (i) changes to the Specifications or
Manufacturing or Packaging processes that are required by laws
(including, without limitation, GMP), or by medical or
scientific concerns as to the toxicity, safety and/or efficacy
of the Product (collectively "Required Changes"); (ii) changes
to the Specifications or Manufacturing or Packaging processes
which arise out of the change of Manufacturer from Aventis to
a third party as provided in Sections 7.5 ; and (iii) changes
which Schering reasonably considers necessary or desirable and
which do not change the character or identity of the Product
in such a way as to have an adverse effect on Pharmion's
interest in the Product in the Territory. The Parties shall
cooperate in making such Required Changes promptly. If a
Required Change is necessary because of laws that apply in the
Territory but not in the Schering Territory, all costs of
making such Required Change shall be borne by Pharmion.
Conversely, if a Required Change is necessary because of laws
that apply in the Schering Territory but not in the Territory,
all costs of making such Required Change shall be borne by
Schering. If a Required Change is required by Agencies in both
the Territory and the Schering Territory, then Schering and
Pharmion shall share equally the cost of such Required Change.
If, despite the exercise of Commercially Reasonable Efforts,
Schering is unable to make or have such Required Change made
without material adverse effects on the Product in the
Schering Territory, Schering shall not be required to make
such change.
11.1.3 DISCRETIONARY CHANGES: Pharmion may request changes to the
Specifications or Manufacturing or Packaging process that are
not Required Changes, including, but not limited to, changes
to the existing Product, Product line extensions, or changes
to the existing or additional Packaging because the Product
will be commercialized in countries other than those where the
Product is commercialized as of the Effective Date
(collectively "Discretionary Changes"). Schering shall use
Commercially Reasonable Efforts to have such Discretionary
Changes made unless Schering in good faith considers that such
Discretionary Changes requested by Pharmion will have a
material adverse effect on the Product or on Schering's
ability to
34
Manufacture the Product or on Schering's interests in the
Product in the Schering Territory.
11.1.4 COSTS OF DISCRETIONARY CHANGES: Any and all costs associated
with Discretionary Changes which are not requested by Schering
(including internal administrative costs and the use of
external technical consultants by Schering with the written
consent of Pharmion, which shall not be unreasonably withheld
or delayed, in effectuating such changes) shall be borne by
Pharmion. Any and all costs associated with Discretionary
Changes initiated by Schering shall be borne by Schering.
11.2 Representations and Warranties by Schering Regarding Manufacturing:
Schering hereby warrants that during the Term:
11.2.1 it will use Commercially Reasonable Efforts to have or procure
the necessary expertise, personnel, facilities and equipment
to Manufacture and Pack the Product as Finished Goods or
Semi-Finished Goods in accordance with this Agreement;
11.2.2 it will use Commercially Reasonable Efforts to procure that
the premises, plant and machinery, equipment and procedures
used with respect to Product are in compliance with applicable
GMP or guidelines of other relevant Agencies; and
11.2.3 all Product will be Manufactured and Packed by or on behalf of
Schering in material compliance with applicable provisions of
the requirements of any relevant Agency and in accordance with
the Specifications.
11.3 Stability and Record-Keeping: Schering shall ensure that the
Manufacturer shall:
11.3.1 select and retain samples of each batch and lot of Finished
Goods or Semi-Finished Goods and conduct an ongoing stability
program in accordance with the provisions of any Marketing
Authorization on selected batches and maintain all legally
required samples, documents, and records including, without
limitation, batch and lot production, quality control and
stability records, for such period as is required by any
Agency in the Territory, and
35
11.3.2 make available for review by Pharmion, at any reasonable time,
all records relevant to the performance of the Manufacturer
hereunder and necessary for the discharge by Pharmion of its
obligations as Marketing Authorization holder in the
Territory, including written investigations of any deviations
that may have been generated from Manufacturing, Packaging,
inspection or testing processes.
11.4 Inspection: Upon reasonable notice to Schering, and in a manner
calculated not to unreasonably interfere with Schering's or the
Manufacturer's conduct of business, Schering shall, subject to delivery
to Schering and the Manufacturer of appropriate confidentiality
agreements, allow Pharmion's employees or representatives to inspect
the Manufacturing, Packaging, testing, storing, stability and quality
control facilities and/or programs of the Manufacturer or Schering
which relate to the Product in the Territory and which Pharmion
reasonably needs to inspect in order to discharge its obligations as
Marketing Authorization holder in the Territory. The right of
inspection shall not be deemed to encompass a GMP audit.
12. DELIVERY
12.1 Delivery Dates: Unless otherwise agreed to by the Parties, deliveries
shall be made on a monthly basis. Product ordered for a particular
month shall be delivered within ninety (90) days of the date in which
such month in the Long-Range Forecast first becomes a Firm Order. At
the time Pharmion places a Firm Order, Pharmion will provide Schering
with specific delivery dates. To the extent that such delivery dates
are consistent with such ninety (90) day period, Schering shall
acknowledge such delivery dates in its order confirmations, whereupon
such delivery dates shall become binding.
12.2 Delivery: Deliveries of Product shall be made Ex Works ("EXW") (as such
term is defined in the INCOTERMS 2000) Manufacturer's Packing facility.
Title in the Product and all risks of loss or damage to Product shall
remain with Schering until Product is delivered to the carrier for
shipment at the EXW point at which time title and all risks of loss or
damage shall transfer to Pharmion. Schering agrees to, in accordance
with Pharmion's reasonable written instructions, arrange for shipping
and insurance, to be paid by Pharmion from the EXW point to such
locations as are requested by Pharmion. Pharmion may select the freight
carrier used by Schering to
36
ship the Product and may monitor Schering's shipping and freight
practices as they pertain to this Agreement; provided, however, if the
freight carrier selected by Pharmion fails to arrive on the scheduled
date and time, all risks of loss or damage shall transfer to Pharmion
at the time when the selected carrier was scheduled to arrive.
12.3 Timing of Delivery: Schering shall use Commercially Reasonable Efforts
to meet the delivery dates and order quantities indicated in Pharmion's
binding and accepted Firm Orders for the Product. If any circumstances
occur that could result in any delivery delay or significant variation
in quantity, Schering shall immediately inform Pharmion thereof in
sufficient detail for Pharmion to assess the likelihood that such
delivery delay or variation in quantity will adversely affect its
inventory situation. Any shipment delivered that is within plus or
minus five percent (+/-5%) of the quantity ordered and/or plus or minus
five (+/-5) Business Days of the delivery date specified on the
relevant Firm Order will be considered as delivered on time.
12.4 Inspection and Acceptance
12.4.1 DEFECTS
(a) Promptly, but in no case later than eight (8)
Business Days of receipt of a shipment of Product,
Pharmion shall inspect (or have inspected) such
shipment for transport damages, completeness and, as
far as reasonably possible, any other defects.
Pharmion shall promptly, and in no event more than
eight (8) Business Days after receipt of such
Product, notify Schering of such defect.
(b) Within forty-five (45) days after the Inception Date,
the Parties will agree upon the quality control
procedures to be used by Pharmion to determine if the
Product is in compliance with Specifications (the
"Quality Control Procedures"). Pharmion shall
promptly, and in no event more than eight (8)
Business Days after such defect was discovered using
the Quality Control Procedures (but in no event later
than forty-five (45) days after receipt of such
shipment) notify Schering if any shipment of Product
includes Product that is not in conformance with the
applicable Specifications
37
12.4.2 LATENT DEFECTS: In the case of Product with latent defects not
readily discoverable within the forty-five (45) days set forth
in Section 12.4.1(b) using the Quality Control Procedures,
Pharmion shall promptly, and in no event more than eight (8)
Business Days of discovery of such latent defect, notify
Schering of such latent defect.
12.4.3 FAILURE TO NOTIFY: If Pharmion fails to notify Schering of a
defect in accordance with Section 12.4.1 or 12.4.2, the
Product shall be deemed to be acceptable to Pharmion.
12.4.4 DISAGREEMENT REGARDING DEFECTIVE PRODUCT: If Schering does not
agree with Pharmion's analysis that a shipment includes a
Product with a defect ("Defective Product"), then the parties
will submit the Shipment Samples (as defined in Section 12.6)
taken from the batch corresponding to the allegedly Defective
Product, to a mutually agreeable independent testing
laboratory to verify the alleged nonconformity in accordance
with the testing procedures set forth in the Technical
Assistance Agreement. Such independent laboratory shall
determine if the Shipment Samples are in compliance with the
Specifications using the Quality Control Procedures. The
findings of such independent laboratory shall be binding upon
the Parties. The fees and expenses charged by such laboratory
shall be paid by the Party in error.
12.4.5 REPLACEMENT OF DEFECTIVE PRODUCT: If any shipment of Product
does not comply with the Specifications, for reasons primarily
attributable to Schering or the Manufacturer, Schering shall
remedy or have remedied such defect at its own cost and in
agreement with Pharmion. If this is not possible or advisable
for regulatory, technical, quality, medical or economic
reasons, the shipment shall be properly destroyed and/or
disposed of at Schering's expense. Schering shall not be
entitled to any remuneration for any such unusable shipment.
Schering shall use Commercially Reasonable Efforts to provide
a replacement delivery as quickly as possible contingent upon
the receipt or availability of all Pharmion supplied
Components and Bulk.
12.4.6 ABSENCE OF CLAIM: Except as otherwise provided in this
Agreement, where Schering has complied with its obligations
under this Section 12, Pharmion
38
shall have no claim or remedy against Schering arising from
the delivery of defective Product.
12.5 Certificates of Analysis and Compliance: Schering shall deliver to
Pharmion, together with each delivery of each batch of Product, the
corresponding Certificate of Compliance and the Certificate of Analysis
relating to such batch. The Certificate of Analysis shall give full
analytical results with respect to regulatory Specifications for each
batch. The Qualified Person working for the Manufacturer shall sign a
Certificate of Compliance confirming that the Product has been made and
tested in accordance with the master batch record, the Specifications
and the test methods specified in the approved registration dossier.
Schering shall promptly inform Pharmion of significant events and/or
results including, but not limited to, quality incidents and batch
deviations which may have occurred during the Manufacturing and/or
Packing and which might affect the quality of the Product.
12.6 Shipment Samples: Schering shall ensure that Manufacturing and quality
control documentation as well as sufficient and representative retained
samples of the relevant Semi-Finished Goods or Finished Goods
("Shipment Samples") are maintained, in compliance with GMP. The
responsible persons for quality control for both Parties shall agree
upon the amount of Shipment Samples to be retained for this purpose.
The amount of retained shipment samples shall be sufficient to perform
at least two (2) full tests, as described in Section 5.5 of the
Technical Assistance Agreement.
13. SUPPLY PRICE
13.1 Schering shall supply Product to Pharmion at the Manufacturer's Supply
Price plus a five percent (5%) ▇▇▇▇-up (the "Supply Payment").
13.2 For as long as Aventis is the Manufacturer, increases in Manufacturer's
Supply Price will be calculated in accordance with the provisions of
Article 7 of the Aventis Supply Agreement. Schering shall keep Pharmion
informed of all proposed and actual increases in the Manufacturer's
Supply Price as soon as such increases are notified to Schering.
39
13.3 Pharmion acknowledges that Schering is obliged to pay royalties to
Chiron under the terms of the Chiron License Agreement in respect of
the global Product sales. Pharmion will therefore make the following
payments in addition to the Supply Payments for the term of the Chiron
License Agreement:
4% on all payments from Pharmion to Schering in respect of
Product supplied to Pharmion by Schering ("Pharmion Supply
Payments") until the total of sales by Schering to Pharmion
for the Territory and sales by Schering to third parties in
the Schering Territory ("Schering Net Chiron Sales") reach
(euro)51,129,200 per calendar year;
3.5% on all Pharmion Supply Payments in respect of Schering
Net Chiron Sales between DM100 million and (euro)153,387,600
per calendar year;
3% on all Pharmion Supply Payments in respect of Schering Net
Chiron Sales between DM300 million and (euro)306,775,200 per
calendar year; and
2.5% on all Pharmion Supply Payments in respect of Schering
Net Chiron Sales in excess of (euro)306,775,200 per calendar
year.
13.3.1 PAYMENT MECHANISM FOR CHIRON ROYALTIES. Pharmion shall pay the
royalties described in Section 13.3 to Schering on a calendar
quarterly basis, commencing with the quarter in which the
Effective Date occurs, based upon Pharmion Supply Payments
made during the preceding quarter, such payments to be made
within 45 days after the end of each such calendar quarterly
period. During the course of each calendar year, the royalty
rate paid by Pharmion to Schering on a quarterly basis, will
be the weighted average royalty rate applicable to the
Schering Net Chiron Sales achieved during the immediately
preceding calendar year, with the running rate for the
calendar year in which the Effective Date occurs being hereby
established at 4.0%. Within sixty (60) days after the
completion of each calendar year during the term of this
Agreement, Schering will deliver a certificate to Pharmion,
prepared by a senior officer in its accounting department,
setting forth a calculation of the royalties actually paid by
Schering to Chiron under the Chiron License Agreement, the
applicable percentage royalty rates utilized to determine such
royalties, the amount of minimum royalties paid to Chiron that
40
were not otherwise credited against running royalties payable
to Chiron, and an allocation of such payments between Schering
and Pharmion ("Allocated Royalty Payments"). Such certificate
shall also set forth a calculation of the amount by which the
Allocated Royalty Payments attributable to Pharmion Supply
Payments were either greater than or less than the royalty
payments actually made by Pharmion to Schering in respect of
Chiron royalties during the immediately preceding calendar
year. If such certificate shows that the amounts paid by
Pharmion to Schering during such calendar year exceeded the
Allocated Royalty Payments attributable to Pharmion, Schering
shall promptly pay the difference to Pharmion by wire
transfer, and, conversely, if such certificate shows that the
Allocated Royalty Payments attributable to Pharmion exceeded
the amounts paid by Pharmion to Schering during such calendar
year in respect of Chiron royalties, Pharmion shall promptly
pay the difference to Schering by wire transfer.
13.4 Payment for the Product shall be made by Pharmion to Schering in the
following manner and provided that Pharmion has first received an
invoice from Schering in respect thereof:
13.4.1 payment shall be made within thirty (30) days of the end of
the calendar month in which Schering delivers the Product to
Pharmion and Pharmion accepts such Product in accordance with
Section 12.4.1;
13.4.2 payment shall be made by Pharmion in Euro to such bank account
as Schering shall from time to time in writing designate; and
13.4.3 payment shall be made together with any value added or other
sales tax which may be due thereon.
13.5 Payments not made on the due date shall bear interest beginning the due
date and ending the payment date at the one-month EURIBOR fixed on the
due date plus 1% per annum, calculated on the basis of a 360-day year,
actual days elapsed. The interest rate shall be adjusted and interest
shall be compounded in arrears each month from the due date.
41
14. ADVERSE REACTIONS; COMPLAINTS
14.1 Preparation of Standard Operating Procedure: Each Party will have
reporting responsibility in its own territory and for exchange of drug
related information arising out of its territory with the other Party.
Within sixty (60) days of execution of this Agreement, the Parties
agree to enter into a standard operating procedure to govern
collection, investigation and reporting to regulatory authorities and
to each other of Product-related adverse drug experience reports,
quality reports, and complaint reports, such that each of the Parties
can comply with its legal obligations worldwide. The standard operating
procedure will be promptly amended as changes in legal obligations
require.
14.2 Agency Action: The Parties agree to notify each other as soon as
possible of any information received by a Party regarding any
threatened or pending action by an Agency which may affect the safety
or efficacy claims of the product or the continued marketing of the
Product.
14.3 Each Party shall have the sole responsibility for responding to
questions and complaints from its customers and for reporting adverse
drug events (as defined by the applicable regulations) to the relevant
health authorities in the countries in its respective territory in
which it holds Marketing Authorization, unless otherwise required by
applicable laws, rules or regulations. Each Party is responsible for
providing submissions and information to appropriate regulatory
authorities and the other Party regarding regulatory issues, including
pharmaco-vigilance and safety submissions concerning the Product, in
the Territory. Each Party will cooperate with the other Party in
reporting adverse events as provided in this Article 14.
14.4 Product Recalls
If any governmental authority having jurisdiction requires or
reasonably requests either Party to recall any Product due to a defect
in the Manufacture, processing, packaging or labeling of the Product or
for any other reason whatsoever, such Party shall immediately notify
the other Party to this Agreement. Each Party shall also have the right
to initiate a recall in its own territory in the absence of a request
from a governmental authority after consultation with the other Party.
42
Prior to commencing any recall, the Party commencing such recall shall
review with the other Party the proposed manner in which the recall is
to be carried out. Each Party agrees to follow any reasonable advice of
the other Party as to the manner of carrying out the recall, so long as
such advice is not contrary to any instructions of any governmental
authority involved in the recall. The Party commencing the recall shall
carry out the recall in the manner agreed upon between Schering and
Pharmion in as expeditious a manner as possible and in such a way as to
cause the least disruption to sales of the Product and to preserve the
goodwill and reputation attached to the Product and to the names of the
Parties. Without prejudice to Pharmion's rights against Schering
pursuant to this Agreement, Pharmion shall bear all costs of any
product recall carried out in the Territory; provided that Schering
shall promptly reimburse Pharmion for cost of any recall resulting from
the Product having latent defect.
15. UNDERTAKINGS OF PHARMION; IMPROVEMENTS
15.1 Throughout the term of this Agreement, Pharmion shall:
15.1.1 at its own expense, use Commercially Reasonable Efforts actively to
promote sales of the Product, after the Effective Date, in all
countries in the Territory in which it is commercially reasonable to do
so, taking into account the Product's Commercial Potential;
15.1.2 obtain and maintain all necessary consents, permits and approvals to
sell the Product in the Territory, including the Marketing
Authorizations, and comply with all relevant laws and regulations in
connection therewith;
15.1.3 recognise the exclusive ownership by Schering of the Patents and of any
proprietary Schering name, logotype or Trade Marks furnished by
Schering (including Schering's affiliates) for use in connection with
the Product;
15.1.4 not, either while this Agreement is in effect or at any time
thereafter, register, use or challenge or assist others to challenge
the Trade Marks or attempt to obtain any right in or to any such name,
logotype or trade ▇▇▇▇ similar to the Trade Marks in relation to the
Product as defined in this Agreement;
43
15.1.5 subject to the provisions of Sections 6.4, 7 and 9.6(d), not grant
sublicenses or assignments to third parties under the Patents or the
Trade Marks and not pledge the Patents or the Trade Marks or make them
the subject of any other rights in rem; provided that Pharmion shall
have the right, without the consent of Schering but on written
notification to Schering to sublicense its distribution and Data rights
hereunder (but not any further rights under this Agreement) to: (i)
Affiliates; and (ii) a Recognized Agent who would otherwise be
prevented legally from distributing the Product in the country in which
he has been selected to act as Recognized Agent.
15.1.6 ensure that each designated Recognized Agent shall fully abide by the
terms and conditions in this Agreement, including without limitation
the confidentiality obligations contained in Section 18 of this
Agreement ;
15.1.7 notify Schering:
(a) as soon as reasonably practicable of any complaints
received by it from customers, users or prescribers
in relation to the Product in the Territory; and
(b) forthwith of any actual, suspected or alleged adverse
effect of or defects with or in the Manufacture of
the Product of which it becomes aware. In determining
what constitutes "forthwith" notification as referred
to above, Pharmion recognises and acknowledges that
at all times Schering is subject to certain
pharmacovigilance obligations under Directive
75/319/EEC and any applicable Regulations, Directives
or guidance amending, replacing or implementing the
same;
it being understood that once the standard operating
procedures contemplated by Section 14.1 are established
between the Parties, the foregoing notices shall be provided
in accordance with such procedures;
15.1.8 not cause or permit anything which may damage or endanger the Trade
Marks or the Patents or other intellectual property of Schering or
Schering's title to it or assist or allow others to do so;
44
15.1.9 notify Schering of any suspected infringement of the Trade Marks or the
Patents and take such reasonable action as Schering may direct at
Schering's expense in relation to such infringement.
15.1.10 not modify or alter the Trade Marks or do anything which might
reasonably be expected to damage the Trade Marks;
15.1.11 indemnify Schering from any damage claims of third parties if Pharmion
should use the Patents or the Trade ▇▇▇▇ contrary to the provisions of
this Agreement;
15.1.12 market, sell and distribute the Product only in livery and in packaging
as notified by Pharmion to Schering and agreed by Schering, such
agreement not to be unreasonably withheld or delayed. Pharmion will be
responsible for the accuracy of any information which it supplies to
Schering in connection with the requirements for the Manufacture,
packaging, labelling, marketing and sale of the Product, to the extent
that the accuracy of such information may relate to compliance with
legal and regulatory requirements, and will indemnify Schering against
any failure on its part to fulfil its obligations under this section;
15.1.13 following the transfer of the Marketing Authorizations, ensure the
compliance of the Product' labels and packaging with the requirements
of the Marketing Authorizations and notify Schering of any breach of
those requirements; and
15.2 Pharmion hereby warrants that:
15.2.1 This Agreement is a legal and valid obligation binding upon Pharmion
and enforceable in accordance with its terms. The execution, delivery
and performance of the Agreement by Pharmion does not conflict with any
agreement, instrument or understanding, oral or written, to which it is
a party or by which it is bound, nor violate any law or regulation of
any court, governmental body or administrative or other agency having
jurisdiction over it.
15.2.2 Pharmion has not, and during the term of this Agreement will not, grant
any right to any third party which would conflict with the rights
granted to Schering hereunder.
45
15.2.3 Pharmion is a wholly owned subsidiary of Pharmion Corporation, a
Delaware corporation. The execution, delivery and performance of the
Agreement by Pharmion Corporation for purposes of the guarantee
contained in Section 33 below does not conflict with any agreement,
instrument or understanding, oral or written, to which Pharmion
Corporation is a party or by which it is bound, nor violate any law or
regulation of any court, governmental body or administrative or other
agency having jurisdiction over it.
15.3 Improvements: Each Party shall forthwith disclose to the other Party
details of all Improvements made by it during the term of the
Agreement. Such Party shall grant to the other Party a non-exclusive,
irrevocable, worldwide, royalty-free license, without limit of time,
with the right to assign and to grant sub-licenses thereunder, to use
all Improvements made by or on behalf of it during the term of this
Agreement and to use and exploit all intellectual property rights in
respect thereof owned by it or any assign or successor in title of it.
16. UNDERTAKINGS AND WARRANTIES OF SCHERING
16.1 Throughout the term of this Agreement, Schering shall:
16.1.1 notify Pharmion:
(a) as soon as reasonably practicable of any complaints
received by it from customers, users or prescribers
in relation to the Product in the Schering Territory;
and
(b) forthwith of any actual, suspected or alleged adverse
effect of or defects with or in the Manufacture of
the Product of which it becomes aware. In determining
what constitutes "forthwith" notification as referred
to above, Pharmion recognises and acknowledges that
at all times Schering is subject to certain
pharmacovigilance obligations under Directive
2001/83/EC and any applicable Regulations, Directives
or guidance amending, replacing or implementing the
same, and Schering recognizes and acknowledges that
similar obligations will apply to Pharmion upon the
transfer of the Marketing Authorizations;
46
it being understood that once the standard operating
procedures contemplated by Section 14.1 are established
between the Parties, the foregoing notices shall be provided
in accordance with such procedures;
16.1.2 at its own expense, maintain the Trade Marks and the Patents, including
the payment of all renewal fees, and not assign or license the Trade
Marks to any person without Pharmion's prior written consent, such
consent not to be unreasonably withheld;
16.1.3 at its own expense, take all such steps, including initiating
proceedings, as Pharmion may reasonably require to stop any alleged
infringement of the Trade Marks or the Patents in the Territory or to
defend the Trade Marks or the Patents from any attack, including any
invalidity or revocation proceedings; at Schering's request, Pharmion
shall give Schering all reasonable assistance in respect of any such
proceedings, subject to Schering meeting all reasonable costs and
expenses incurred by Pharmion in giving such assistance. If Schering is
not willing or interested in initiating action against an infringer,
Pharmion shall be entitled, but not obligated, to enter an action in
its own name based on the infringement of the Trade Marks or Patents
subject to Schering's consent. Schering may only refuse its consent for
good cause and will give Pharmion all assistance as Pharmion may
reasonably request in connection with any such action;
16.1.4 Schering shall have the exclusive right to enter oppositions against
the filing or registration of trade marks. The same shall apply for
petitions for cancellations and actions for cancellations entered
against the registration of the trade marks of third parties; and
16.1.5 not cause or permit anything which may damage or endanger the Trade
Marks or the Patents or other intellectual property of Schering or
Schering's title to it or assist or allow others to do so.
16.2 Schering hereby warrants that:
16.2.1 This Agreement is a legal and valid obligation binding upon Schering
and enforceable in accordance with its terms. The execution, delivery
and performance of the Agreement by Schering does not conflict with any
agreement, instrument or understanding, oral or written, to which it is
a Party or by which it is bound, nor violate
47
any law or regulation of any court, governmental body or administrative
or other agency having jurisdiction over it.
16.2.2 Schering has not, and during the term of this Agreement will not, grant
any right to any third party which would conflict with the rights
granted to Pharmion hereunder.
16.2.3 it is the owner or licensee of the Trade Marks and, unless indicated
otherwise in Schedule 4, to the best of the knowledge and belief of
Schering, the use of the Trade Marks and the supply of the Product in
the Territory by Pharmion will not infringe the intellectual property
rights of any third party; and
16.2.4 it is the owner of, or it has the right to use, and is entitled to
permit Pharmion to use in accordance with the terms of this Agreement,
the Data.
17. RIGHT OF FIRST REFUSAL
In the event that: (i) Schering or an Affiliate should decide to
license or sell all of its rights to the Product in the Schering
Territory to a third party; or (ii) Pharmion should decide to license
or sell all of its rights to the Product in the Pharmion Territory, in
each case in a stand-alone transaction, Schering or Pharmion, as the
case may be, shall first provide the other Party with notice of this
intention and shall provide the other Party with a period of six weeks
during which the Parties - if the receiving Party so decides - will
negotiate in good faith to obtain rights to the Product in the other
Party's Territory. If the Parties shall not come to an agreement within
such six weeks period, the disposing Party shall be entitled to license
or sell such rights to any third party provided that it does not do so
on terms more favorable to the third party than those offered to the
other Party.
18. CONFIDENTIALITY
18.1 Except to the extent expressly authorized by this Agreement or
otherwise agreed in writing, the Parties agree that, for the term of
this Agreement and for seven (7) years thereafter, the receiving Party
shall keep confidential and shall not publish or otherwise disclose or
use for any purpose other than as provided for it by this Agreement any
Data or other information and materials furnished to it by the other
Party pursuant to this Agreement (collectively "Confidential
Information"), except to
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the extent that it can be established by the receiving Party that such
Confidential Information:
(a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by
the other Party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving
Party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through
any act or omission of the receiving Party in breach of this
Agreement;
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a third party who had no
obligation to the disclosing Party not to disclose such
information to others; or
(e) was subsequently developed by the receiving Party without use
of the Confidential Information as demonstrated by competent
written records.
18.2 Each Party may disclose Confidential Information hereunder to the
extent that such disclosure is reasonably necessary for exercising its
rights and carrying out its obligations under this Agreement and in
complying with applicable governmental regulations or conducting
preclinical or clinical trials as authorized under this Agreement,
provided that if a Party is required by law or regulation to make any
such disclosure of the other Party's Confidential Information it will,
except where impracticable for necessary disclosures (for example, in
the event of medical emergency), give reasonable advance notice to the
other Party of such disclosure requirement and, except to the extent
inappropriate in the case of patent applications, will use its
reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed.
18.3 This Article 18 shall survive termination or expiration of this
agreement for a period of ten (10) years.
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18.4 Publications. Each Party shall use Commercially Reasonable Efforts to
ensure, as to any clinical study of the Product which is supported by
such Party (a "Sponsoring Party") (whether for the Initial Indication
or any Additional Indication), that the principal investigator for such
study agrees to send to both Parties, or permit the Sponsoring Party to
send to the other Party (the "Receiving Party"), prior to submission
for publication, a copy of a manuscript describing the results of such
clinical study. The Receiving Party will promptly review such
manuscript and send any comments which it may have to the Sponsoring
Party, no later than thirty (30) days after receipt of such manuscript.
Provided such comments are given on a timely basis, the Sponsoring
Party will give due consideration to the comments of the Receiving
Party and will use Commercially Reasonable Efforts to ensure that such
principal investigator will give due consideration to the comments of
the Receiving Party and will not submit such manuscript for publication
until the Sponsoring Party has had an opportunity to consider the
comments of the Receiving Party. Nothing herein contained, however,
shall preclude the Sponsoring Party or the principal investigator from
submitting any such manuscript for publication after the procedures
described above have been followed, nor shall either the Sponsoring
Party or the principal investigator be required to accept any
amendments, additions or deletions in any such manuscript proposed by
the Receiving Party. Following publication of any such manuscript, each
Party shall be entitled to make such manuscript available to physicians
in its Territory, or the Schering Territory, as the case may be.
19. INDEMNITIES AND INSURANCE
19.1 Schering will indemnify and hold Pharmion and its Affiliates, and their
employees, officers and directors harmless against any loss, damages,
action, suit, claim, demand, liability, expense, bodily injury, death
or property damage (a "Loss"), that may be brought, instituted or arise
against or be incurred by such persons to the extent such Loss is based
on or arises out of: (a) the development or Manufacture of a Product by
Schering or its Affiliates, the Manufacturer or their representatives,
agents or subcontractors under this Agreement, or any actual or alleged
violation of law resulting therefrom; or (b) the breach by Schering of
any of its covenants, representations or warranties set forth in this
Agreement; provided that the foregoing indemnification shall not apply
to any Loss to the extent such Loss is caused by the negligent or
wilful misconduct of Pharmion and its Affiliates.
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19.2 Pharmion will indemnify and hold Schering, and its Affiliates, and
their employees, officers and directors harmless against any Loss that
may be brought, instituted or arise against or be incurred by such
persons to the extent such Loss is based on or arises out of the
development, Manufacture (but only if Pharmion is then entitled to
Manufacture Product under the terms of this Agreement), use, sale,
storage or handling of Product by Pharmion or its Affiliates or their
representatives, agents or subcontractors under this Agreement, or any
actual or alleged violation of law resulting therefrom; or (b) the
breach by Pharmion of any of its covenants, representations or
warranties set forth in this Agreement; provided that the foregoing
indemnification shall not apply to any Loss to the extent such Loss is
caused by the negligent or wilful misconduct of Schering or its
Affiliates.
Each Party entitled to be indemnified by the other Party (an
"Indemnified Party") pursuant to Section 19.1 or 19.2 hereof shall give
notice to the other Party (an "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any threatened or asserted
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such Party's
expense (unless (i) the employment of counsel by such Indemnified Party
has been authorized by the Indemnifying Party; or (ii) the Indemnified
Party shall have reasonably concluded that there may be a conflict of
interest between the Indemnifying Party and the Indemnified Party in
the defense of such action, in each of which cases the Indemnifying
Party shall pay the reasonable fees and expenses of one law firm
serving as counsel for the Indemnified Party, which law firm shall be
subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Agreement to the
extent that the failure to give notice did not result in harm to the
Indemnifying Party. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the approval of each
Indemnified Party which approval shall not be unreasonably withheld,
consent to entry of any judgment or enter into any settlement which (i)
would result in injunctive or other relief being imposed against the
Indemnified Party; or (ii) does not include as an unconditional term
thereof giving by
51
the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each Indemnified
Party shall furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in writing and
shall be reasonably required in connection with the defense of such
claim and litigation resulting therefrom.
19.3 Each Party shall obtain and maintain in full force and effect
throughout the term of this Agreement insurance in respect of its
obligations to indemnify the other under this Section 19. Each Party
shall, on the request of the other, provide the other with a copy of
any such insurance policy and shall pay all premiums due in respect of
any such insurance policy as soon as they become due and on request
provide evidence to the other that such payment has been made.
20. DURATION AND TERMINATION
20.1 This Agreement will come into force on the Effective Date and, subject
to the Parties' rights of termination in Sections 20.2 and 20.3
hereunder, will continue in force for a period of twenty (20) years
from the Effective Date. Within the twelve (12) month period
immediately preceding expiry, the Parties shall discuss in good faith
entering into a new form of co-operation with one another, to take
effect after expiry of this Agreement as aforesaid.
20.2 In addition to its rights of termination in accordance with Section 23,
Pharmion shall have the right at any time by giving notice in writing
to Schering to terminate this Agreement forthwith if Schering:
20.2.1 commits a material breach of this Agreement which is not
remedied within thirty (30) days of receipt of a notice from
Pharmion specifying the breach and requiring it to be remedied
(or, in the case of a breach not capable of being remedied
within such 30-day period, Schering has failed within such
period to take good faith steps to remedy such breach); or
20.2.2 enters into liquidation whether compulsorily or voluntarily
(otherwise than for the purposes of amalgamation or
reconstruction), compounds with its creditors, has a receiver
or manager appointed in respect of all or any part of its
assets, or is the subject of an application for an
administration order or
52
undergoes any analogous or similar act or proceeding under the
laws of any other jurisdiction in consequence of debt.
20.3 In addition to its rights of termination in accordance with Section 23,
Schering shall have the right at any time by giving notice in writing
to Pharmion to terminate this Agreement forthwith if Pharmion:
20.3.1 commits a material breach of this Agreement which is not
remedied within thirty (30) days of receipt of a notice from
Pharmion specifying the breach and requiring it to be remedied
(or, in the case of a breach not capable of being remedied
within such 30-day period, Pharmion has failed within such
period to take good faith steps to remedy such breach); or
20.3.2 enters into liquidation whether compulsorily or voluntarily
(otherwise than for the purposes of amalgamation or
reconstruction), compounds with its creditors, has a receiver
or manager appointed in respect of all or any part of its
assets, or is the subject of an application for an
administration order or undergoes any analogous or similar act
or proceeding under the laws of any other jurisdiction in
consequence of debt.
21. CONSEQUENCES OF TERMINATION
21.1 Subject to the provisions of this Section 21, upon termination or
expiry of this Agreement:
21.1.1 Pharmion shall cease to make use of the Trade Marks, Patents and Data,
and all rights in the Trade Marks, Patents and Data will revert to
Schering; and
21.1.2 any Manufacturing rights held by Pharmion will cease.
21.2 Notwithstanding the provisions of Section 21.1, upon termination or
expiry of this Agreement, Pharmion will be entitled:
21.2.1 to fulfil orders it has received for the Product in the Territory up to
and including the date of termination, and, unless Schering is no
longer supplying Product to Pharmion immediately prior to the date of
termination, Schering shall supply or procure the
53
supply of such Product to Pharmion on the terms of this Agreement to
enable such orders to be fulfilled for a maximum of one (1) year after
the date of termination; and
21.2.2 to use any stock of Product in its possession or ordered from Schering
as at the date of termination to fulfil any orders referred to in
Section 21.2.1 and, in addition, Pharmion shall be entitled to supply
any Product forming part of such stock which are in excess of those
required to fulfil such orders on terms to be agreed with Schering.
Where Pharmion supplies any Product in accordance with this
Section 21.2, it shall be entitled to do so under and by
reference to the Trade Marks and shall supply such Product
subject to the terms and conditions of this Agreement.
21.3 Pharmion will, at the request of Schering, as soon as reasonably
practicable following the cessation of all Pharmion's supplies of
Product in accordance with Section 21.2, apply for a change in
ownership of the Marketing Authorizations naming Schering or Schering's
nominee as the new Marketing Authorization holder in the place of
Pharmion and return to Schering all Data and other information relating
to the Product provided to Pharmion by Schering pursuant to this
Agreement.
21.4 Termination or expiry of this Agreement for any reason shall be without
prejudice to the accrued rights of either Party.
22. RIGHTS AND REMEDIES
22.1 The failure on the part of either Party hereto to exercise or enforce
any rights conferred upon it by this Agreement shall not be a waiver of
any such rights nor shall any single or partial exercise of any right,
power or privilege or further exercise thereof operate so as to bar the
later exercise or enforcement thereof.
22.2 The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
23. FORCE MAJEURE
Neither Party shall be in breach of this Agreement if there is any
total or partial failure of performance by it of its duties and
obligations under this Agreement by reason of
54
force majeure. If either Party is unable to perform its duties and
obligations under this Agreement as a direct result of force majeure,
such Party shall give written notice to the other of such inability
stating the reason in question. Without prejudice to Pharmion's right
to Manufacture Product pursuant to Sections 6.4, 7 and 9.6(d), the
operation of this Agreement shall be suspended during the period in
which the force majeure continues. Forthwith upon the reason ceasing to
exist, the Party relying upon it shall give notice to the other of this
fact. If the force majeure continues for a period of more than ninety
(90) days, the Party not relying on force majeure shall be entitled to
terminate this Agreement forthwith by written notice to the other.
24. NOTICE
24.1 Any notice or other document required to be given under this Agreement
shall be in writing and shall be served by:
24.1.1 delivery by hand;
24.1.2 sending the same by first class post or express or air mail or other
fast postal services or registered or recorded delivery post; or
24.1.3 facsimile transmission (together with postal confirmation);
addressed:
if to Schering: Schering AG
D13342 Berlin
Germany
Attention: Legal Department
Fax: +49-30-4 ▇▇-▇ ▇▇ ▇▇
if to Pharmion: Pharmion GmbH
c/o Pharmion Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: Chief Executive Officer
Fax: ▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
or to such other address as may be designated in writing from time to
time by either Party to the other.
24.2 Any notice given under Section 24.1 shall be deemed to have been
received:
(i) in the case of delivery by hand, when delivered;
(ii) in the case of pre-paid post, on the third day following the
day of posting; or
(iii) in the case of facsimile, on acknowledgement by the recipient
facsimile receiving equipment provided that the facsimile is
confirmed by post.
25. ENTIRE AGREEMENT/VARIATIONS
25.1 This Agreement and the Interim Agreement constitute the entire
agreement and understanding between the parties and supersedes all
prior oral or written understandings, arrangements, representations or
agreements between them relating to the subject matter of this
Agreement. No director, employee or agent of either of the parties is
authorised to make any representation or warranty to the other not
contained in this Agreement, and each of the parties acknowledges that
it has not relied on any such oral or written representations or
warranties.
25.2 No variations, amendments, modifications or supplements to this
Agreement shall be valid unless made in writing in English and signed
by a duly authorised representative of each of the parties.
26. SEVERANCE OF TERMS
26.1 If the whole or any part of this Agreement is or shall become or be
declared illegal, invalid or unenforceable in any jurisdiction for any
reason whatsoever:
56
26.1.1 in the case of the illegality, invalidity or unenforceability of the
whole of this Agreement, it shall terminate in relation to the
jurisdiction in question; or
26.1.2 in the case of the illegality, invalidity or unenforceability of part
of this Agreement, such part shall be severed from this Agreement in
the jurisdiction in question, and such illegality, invalidity or
unenforceability shall not in any way whatsoever prejudice or affect
the remaining parts of this Agreement, which shall continue in full
force and effect.
27. PUBLICATION/PRESENTATION/PRESS RELEASE
The text of any press release or other communication to be published by
or in the media by or on behalf of either of the parties concerning the
subject matter of this Agreement shall require the approval of both
parties, which approval shall not be unreasonably withheld or delayed.
28. PARTNERSHIP/AGENCY
None of the provisions of this Agreement shall be deemed to constitute
the relationship of partnership or agency between the parties, and
neither shall have any authority to bind the other in any way except as
provided in this Agreement.
29. ASSIGNMENT
Neither Party may assign the benefit or burden of this Agreement
without the prior written consent of the other Party except to a
successor to all or substantially all of such Party's business relating
to the Product
30. AUDIT RIGHTS
Each Party shall maintain books of account relating to its payment
obligations and reimbursement rights pursuant to this Agreement all in
accordance with International Accounting Standards with appropriate
controls to insure that transactions are properly recorded. Each Party
shall have the right, at its own expense, to have an independent
certified public accountant of its own selection, reasonably acceptable
to
57
the other Party, examine at a time reasonably acceptable to the other,
during normal business hours but not more than once each calendar year,
the relevant books and records of account of the other, to determine
whether appropriate accounting has been made hereunder. Such
independent certified accountant shall treat as confidential and shall
not disclose to the Party engaging such accountant any information
other than that which is relevant to the rights of the engaging Party
hereunder or the performance by the other Party of its obligations
hereunder. In the event of a dispute between the independent certified
public accountants of Pharmion and Schering with respect to any matter
called for by this Agreement, the parties shall select a third
independent public accounting firm to arbitrate the dispute, provided,
that such firm shall have the authority only to select from among the
positions of the original two firms that position which it deems most
accurate. The fees of such third firm shall be borne by the Party whose
position is not approved of by such arbitrator.
If there is a dispute between the Parties following any audit performed
pursuant to Section 30, either Party may refer the issue (an "Audit
Disagreement") to an independent certified public accountant for
resolution. In the event an Audit Disagreement is submitted for
resolution by either Party, the Parties shall comply with the following
procedures:
i. The Party submitting the Audit Disagreement for resolution
shall provide written notice to the other Party that it is
invoking the procedures of this Section 30.
ii. Within thirty (30) business days of the giving of such notice,
the Parties shall jointly select a recognised international
accounting firm to act as an independent expert to resolve
such Audit Disagreement.
iii. The Audit Disagreement submitted for resolution shall be
described by the Parties to the independent expert, which
description may be in written or oral form, within ten (10)
business days of the selection of such independent expert.
iv. The independent expert shall render a decision on the matter
as soon as practicable.
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v. The decision of the independent expert shall be final and
binding unless such Audit Disagreement involves alleged fraud,
breach of this Agreement or construction or interpretation of
any of the terms and conditions thereof.
vi. All fees and expenses of the independent expert, including any
third party support staff or other costs incurred with respect
to carrying out the procedures specified at the direction of
the independent expert in connection with such Audit
Disagreement, shall be borne by each Party in inverse
proportion to the disputed amounts awarded to the Party by the
independent expert through such decision (e.g. party A
disputes $100, the independent expert awards party A $60, then
party A pays forty (40%) percent and party B pays sixty (60%)
percent of the independent expert's costs)."
31. NOVARTIS AGREEMENT
Pharmion acknowledges that Aventis and Novartis AG, Switzerland, have
entered into a freedom of suit agreement with respect to certain
intellectual property rights in the area of Hirudin (the "Novartis
Agreement") and that Schering has taken over the obligations from
Aventis in a separate contract (the "Assignment Contract"). The
Novartis Agreement and the Assignment Contract are attached in Schedule
6. Pharmion agrees to be bound by the obligations of Schering under the
Novartis Agreement and the Assignment Contract with respect to the
Patents which are covered by such agreements.
32. GOVERNING LAW AND JURISDICTION
The validity, interpretation and performance of this Agreement as well
as any disputes connected herewith shall be construed in accordance
with the laws of Germany. The United Nations Convention on Contracts
for The International Sale of Goods ("CISG") shall not apply. Each
Party agrees and hereby submits to the exclusive jurisdiction of the
functionally competent Court in ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, with respect to any dispute arising under or in
connection with this Agreement, and each Party hereby waives any
objection it may now have or hereafter have to such jurisdiction or the
laying of venue in such courts.
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33. GUARANTEE
Pharmion Corporation hereby unconditionally guarantees the prompt
payment and full performance by Pharmion of its obligations under this
Agreement, subject to Pharmion Corporation having all of the rights,
remedies and defenses of Pharmion under this Agreement.
Remainder of page intentionally left blank.
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AS WITNESS, the hands of the parties or their duly authorised representatives
the day and year first above written.
SCHERING AKTIENGESELLSCHAFT
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: Prof. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇. ▇▇▇▇▇▇ Kostlin
Title: Vice Chairman of the Executive Board Title: Member of the Executive Board
PHARMION GMBH PHARMION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director Title: President & CEO